As filed with the Securities and Exchange Registration No. 33-34370*
Commission on February 21, 1997 Registration No. 811-2512
- - --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- - --------------------------------------------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 26 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
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code: (860) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
- - --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
60 days after filing pursuant to paragraph (a)(2) of Rule
-------- 485
X on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485
--------
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 expects to file a Rule 24f-2 Notice for the fiscal year ended
December 31, 1996 on or before February 28, 1997.
*Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has
included a combined prospectus under this Registration Statement which includes
all the information which would currently be required in a prospectus relating
to the following earlier Registration Statement: 33-87932.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION
<S> <C> <C>
1 Cover Page........................................... Cover Page
2 Definitions.......................................... Definitions
3 Synopsis............................................. Prospectus Summary; Fee Table
4 Condensed Financial Information...................... Condensed Financial Information
5 General Description of Registrant, Depositor, and The Company; Variable Annuity Account
Portfolio Companies.................................. B; The Funds
6 Deductions and Expenses.............................. Charges and Deductions; Distribution
7 General Description of Variable Annuity Contracts.... Purchase; Miscellaneous
8 Annuity Period....................................... Annuity Period
9 Death Benefit........................................ Death Benefit During Accumulation
Period; Death Benefit Payable During
the Annuity Period
10 Purchases and Contract Value......................... Purchase; Contract Valuation
11 Redemptions.......................................... Right to Cancel; Withdrawals
12 Taxes................................................ Tax Status
13 Legal Proceedings.................................... Miscellaneous - Legal Matters and
Proceedings
14 Table of Contents of the Statement of Additional Contents of the Statement of
Information.......................................... Additional Information
<PAGE>
FORM N-4 PART B (STATEMENT OF
ITEM NO. ADDITIONAL INFORMATION) LOCATION
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; 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>
PROSPECTUS
=============================================================================
The Contracts offered in connection with this Prospectus are the "Aetna Marathon
Plus" [Growth Plus (New York)] group and individual deferred variable annuity
contracts ("Contracts") issued by Aetna Life Insurance and Annuity Company (the
"Company"). The Contracts are available as (1) nonqualified deferred annuity
contracts, (2) Individual Retirement Annuities ("IRA") under Section 408(b) of
the Internal Revenue Code (may be subject to approval by state regulatory
agencies); or (3) qualified contracts issued in connection with certain employer
sponsored retirement plans (may be subject to approval by the Company and state
regulatory agencies). Currently, the IRA is not available as a "SIMPLE IRA" as
defined in Section 408(p) of the Internal Revenue Code. In most states, group
Contracts are offered, generally to certain broker-dealers or banks which have
agreed to act as Distributors of the Contracts. Individuals who have established
accounts with those broker-dealers or banks are eligible to participate in the
Contract. Individual Contracts are offered only in those states where the group
Contracts are not authorized for sale. (See "Purchase.")
The Contracts provide that Purchase Payments may be allocated to the ALIAC
Guaranteed Account (the "Guaranteed Account"), a credited interest option, or
to one or more of the Subaccounts of Variable Annuity Account B, a separate
account of the Company. The Subaccounts invest directly in shares of the
following Funds:
(bullet) Aetna Variable Fund
(bullet) Aetna Income Shares
(bullet) Aetna Variable Encore Fund
(bullet) Aetna Investment Advisers Fund, Inc.
(bullet) Aetna Ascent Variable Portfolio
(bullet) Aetna Crossroads Variable Portfolio
(bullet) Aetna Legacy Variable Portfolio
(bullet) Aetna Variable Capital Appreciation Portfolio
(bullet) Aetna Variable Growth Portfolio
(bullet) Aetna Variable Index Plus Portfolio
(bullet) Aetna Variable Small Company Portfolio
(bullet) Alger American Balanced Portfolio
(bullet) Alger American Growth Portfolio
(bullet) Alger American Income and Growth Portfolio
(bullet) Alger American Leveraged AllCap Portfolio
(bullet) Alger American MidCap Growth Portfolio
(bullet) Alger American Small Cap Portfolio
(bullet) American Century VP Balanced (formerly "TCI Balanced")
(bullet) American Century VP Capital Appreciation (formerly "TCI Growth")
(bullet) American Century VP International (formerly "TCI International")
(bullet) Federated American Leaders Fund II
(bullet) [Federated Equity Income Fund II]
(bullet) Federated Fund for U.S. Government Securities II
(bullet) [Federated Growth Strategies Fund II]
(bullet) Federated High Income Bond Fund II
(bullet) [Federated International Equity Fund II]
(bullet) [Federated Prime Money Fund II]
(bullet) Federated Utility Fund II
(bullet) Fidelity VIP Equity-Income Portfolio
(bullet) Fidelity VIP Growth Portfolio
(bullet) Fidelity VIP High Income Portfolio
(bullet) Fidelity VIP Overseas Portfolio
(bullet) Fidelity VIP II Asset Manager Portfolio
(bullet) Fidelity VIP II Contrafund Portfolio
(bullet) Fidelity VIP II Index 500 Portfolio
(bullet) Fidelity VIP II Investment Grade Bond Portfolio
(bullet) Janus Aspen Aggressive Growth Portfolio
(bullet) Janus Aspen Balanced Portfolio
(bullet) Janus Aspen Flexible Income Portfolio
(bullet) Janus Aspen Growth Portfolio
(bullet) Janus Aspen Short-Term Bond Portfolio
(bullet) Janus Aspen Worldwide Growth Portfolio
(bullet) Lexington Emerging Markets Fund, Inc.
(bullet) Lexington Natural Resources Trust
(bullet) MFS Emerging Growth Series
(bullet) MFS Research Series
(bullet) MFS Total Return Series
(bullet) MFS Value Series
(bullet) MFS World Governments Series
(bullet) Oppenheimer Capital Appreciation Fund
(bullet) Oppenheimer Global Securities Fund
(bullet) Oppenheimer Growth & Income Fund
(bullet) Oppenheimer Strategic Bond Fund
Except as specifically mentioned, this Prospectus describes only investments
through the Separate Account. The Guaranteed Account is described in the
Appendix to this Prospectus, as well as in the Guaranteed Account's
prospectus. The availability of the Funds and the Guaranteed Account is
subject to applicable regulatory authorization; not all options may be
available in all jurisdictions or under all Contracts. (See "Investment
Options.")
This Prospectus provides investors with the information about the Separate
Account that they should know before investing in the Contracts. Additional
information about the Separate Account is contained in a Statement of
Additional Information ("SAI") which is available at no charge. The SAI has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Table of Contents for the SAI is printed on page
of this Prospectus. An SAI may be obtained by indicating the request on your
Application or by calling the number listed under the "Inquiries" section of
the Prospectus Summary.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE FUNDS AND THE ALIAC GUARANTEED ACCOUNT. ALL PROSPECTUSES SHOULD BE READ
AND RETAINED FOR FUTURE REFERENCE.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED BY ANY BANK,
NOR ARE THEY INSURED BY THE FDIC; THEY ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
=============================================================================
DEFINITIONS DEFINITIONS - 1
PROSPECTUS SUMMARY SUMMARY - 1
FEE TABLE FEE TABLE - 1
CONDENSED FINANCIAL INFORMATION AUV HISTORY - 1
THE COMPANY 1
VARIABLE ANNUITY ACCOUNT B 1
INVESTMENT OPTIONS 1
The Funds 1
Credited Interest Option 6
PURCHASE 6
Contract Availability 6
Purchasing Interests in the Contract 6
Purchase Payments 7
Contract Rights 7
Designations of Beneficiary and Annuitant 7
Right to Cancel 7
CHARGES AND DEDUCTIONS 8
Daily Deductions from the Separate Account 8
Mortality and Expense Risk Charge 8
Administrative Charge 8
Maintenance Fee 8
Reduction or Elimination of Administrative Charge and Maintenance Fee 8
Deferred Sales Charge 8
Reduction or Elimination of the Deferred Sales Charge 9
Fund Expenses 10
Premium and Other Taxes 10
CONTRACT VALUATION 10
Account Value 10
Accumulation Units 10
Net Investment Factor 10
TRANSFERS 11
Dollar Cost Averaging Program 11
Account Rebalancing Program 11
WITHDRAWALS 11
ADDITIONAL WITHDRAWAL OPTIONS 12
DEATH BENEFIT DURING ACCUMULATION PERIOD 12
Death Benefit Amount 12
Death Benefit Payment Options 13
Nonqualified Contracts 13
Qualified Contracts 13
<PAGE>
ANNUITY PERIOD 14
Annuity Period Elections 14
Partial Annuitization 14
Annuity Options 15
Annuity Payments 15
Charges Deducted During the Annuity Period 16
Death Benefit Payable During the Annuity Period 16
TAX STATUS 16
Introduction 16
Taxation of the Company 16
Tax Status of the Contract 17
Taxation of Annuity Contracts 18
Contracts Used with Certain Retirement Plans 20
Qualified Contracts in General 20
Individual Retirement Annuities and Simplified
Employee Pension Plans 22
Withholding 22
MISCELLANEOUS 22
Distribution 22
Delay or Suspension of Payments 23
Performance Reporting 23
Voting Rights 23
Modification of the Contract 23
Transfers of Ownership; Assignment 24
Involuntary Terminations 24
Legal Matters and Proceedings 24
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION 25
APPENDIX--ALIAC GUARANTEED ACCOUNT 26
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY
PERSON TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THE OFFERING CONTAINED IN THIS PROSPECTUS EXCEPT AS OTHERWISE CONTAINED
HEREIN.
<PAGE>
DEFINITIONS
=============================================================================
The following terms are defined as they are used in this Prospectus:
Account: A record that identifies contract values accumulated on each
Certificate Holder's behalf during the Accumulation Period.
Account Value: The total dollar value of amounts held in an Account as of
each Valuation Date during the Accumulation Period.
Account Year: A period of twelve months measured from the date on which an
Account is established (the effective date) or from an anniversary of such
effective date.
Accumulation Period: The period during which Purchase Payment(s) credited to
an Account are invested to fund future annuity payments.
Accumulation Unit: A measure of the value of each Subaccount before annuity
payments begin.
Adjusted Account Value: The Account Value, plus or minus the aggregate market
value adjustment for amounts allocated to the Guaranteed Account.
Annuitant: The person on whose life or life expectancy the annuity payments
are based.
Annuity: A series of payments for life, a definite period or a combination of
the two.
Annuity Date: The date on which annuity payments begin.
Annuity Period: The period during which annuity payments are made.
Annuity Unit: A measure of the value of each Subaccount selected during the
Annuity Period.
Application: The form or collection of information required by the Company to
purchase an interest in a group contract or an individual contract.
Beneficiary(ies): The person or persons who are entitled to receive any death
benefit proceeds. Under Nonqualified Contracts, Individual Retirement
Annuities, and Section 403(b) Contracts, Beneficiary refers to the
beneficiary named under the Contract. Under Qualified Contracts sold in
conjunction with 401(a) or 457 Plans, Beneficiary refers to the beneficiary
under the plan.
Certificate: The document issued to a Certificate Holder for an Account
established under a group contract.
Certificate Holder (You): A person or entity who purchases an individual
Contract or acquires an interest under a group Contract.
Company (We, Us): Aetna Life Insurance and Annuity Company.
Contract: The group and individual deferred, variable annuity contracts
offered by this Prospectus.
Distributor(s): The registered broker-dealer(s), or banks that may be acting
as broker-dealers without separate registration under the Securities Exchange
Act of 1934, which have entered into selling agreements with the Company to
offer and sell the Contracts. The Company may also serve as a Distributor.
Fund(s): An open-end registered management investment company whose shares
are purchased by the Separate Account to fund the benefits provided by the
Contract.
Group Contract Holder: The entity to which a group Contract is issued.
Home Office: The Company's principal executive offices located at 151
Farmington Avenue, Hartford, Connecticut 06156.
Individual Contract Holder: A person or entity who has purchased an
individual variable annuity contract (also referred to as a "Certificate
Holder").
- - --------------------------------------------------------------------------------
DEFINITIONS - 1
<PAGE>
Individual Retirement Annuity: An individual or group variable deferred
annuity intended to qualify under Code Section 408(b).
Nonqualified Contract: A contract established 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 the Company under an
Account.
Qualified Contracts: Contracts available for use with plans entitled to
special federal income tax treatment under Code Sections 401(a), 403(b),
408(b) or 457.
Registered Representative: The individual who is registered with a
broker-dealer acting as Distributor to offer and sell securities, or who is
an employee of a bank acting as Distributor that is exempt from broker-dealer
registration under the Securities Exchange Act of 1934. Registered
Representatives must also be licensed as insurance agents to sell variable
annuity contracts.
Separate Account: Variable Annuity Account B, a separate account established
for the purpose of funding variable annuity contracts issued by the Company.
Subaccount(s): The portion of the assets of the Separate Account that is
allocated to a particular Fund. Each Subaccount invests in the shares of only
one corresponding Fund.
Surrender Value: The amount payable upon the withdrawal of all or any portion
of an Account Value.
Valuation Date: The date and time at which the Accumulation Unit Value and
Annuity Unit Value of a Subaccount is calculated. Currently, this calculation
occurs after the close of business of the New York Stock Exchange on any
normal business day, Monday through Friday, that the New York Stock Exchange
is open.
- - --------------------------------------------------------------------------------
DEFINITIONS - 2
<PAGE>
PROSPECTUS SUMMARY
=============================================================================
Contracts Offered
The Contracts offered in connection with this Prospectus are group and
individual deferred variable annuity contracts issued by Aetna Life Insurance
and Annuity Company (the "Company"). The purpose of the Contract is to
accumulate values and to provide benefits upon retirement. The Contracts are
currently available for (1) individual nonqualified purchases (we reserve the
right to limit the ownership of nonqualified contracts to natural persons);
(2) Individual Retirement Annuities ("IRA"), other than "SIMPLE IRAs" as
defined in Section 408(p) of the Internal Revenue Code (may be subject to
approval by state regulatory agencies); and (3) purchases made in conjunction
with employer sponsored retirement plans under Sections 401(a), 403(b) or 457
of the Code (may be subject to approval by the Company and by state
regulatory agencies).
In most states, group Contracts are offered, generally to certain
broker-dealers or banks which have agreed to act as Distributors of the
Contracts. Individuals who have established accounts with those
broker-dealers or banks are eligible to participate in the Contract.
Individual Contracts are offered in those states where the group Contracts
are not authorized for sale. Joint Certificate Holders are allowed only on
Nonqualified Contracts. A joint Certificate Holder must be the spouse of the
other joint Certificate Holder except in New York and Pennsylvania.
References to "Certificate Holders" in this Prospectus mean both of the
Certificate Holders on joint Accounts.
Contract Purchase
You may purchase an interest in the Contract by completing an Application
and submitting it to the Company. Purchase Payments can be applied to the
Contract either through a lump-sum payment or through ongoing contributions.
(See "Purchase.")
Free Look Period
You may cancel the Contract or Certificate within 10 days after you
receive it (or longer if required by state law) by returning it to the
Company along with a written notice of cancellation. Unless state law
requires otherwise, the amount you will receive upon cancellation will
reflect the investment performance of the Subaccounts into which your
Purchase Payments were deposited. In some cases this may be more or less than
the amount of your Purchase Payments. Under a Contract issued as an
Individual Retirement Annuity, you will receive a refund of your Purchase
Payment. (See "Purchase--Right to Cancel.")
Investment Options
The Company has established Variable Annuity Account B, a registered unit
investment trust, for the purpose of funding the variable portion of the
Contracts. The Separate Account is divided into Subaccounts which invest
directly in shares of the Funds described herein. The Contract allows
investment in the Subaccounts, as well as in the Guaranteed Account described
below subject to the limitations described in "Investment Options," see p 1.
For a complete list of the Funds available under the Contracts, and a
description of the investment objectives of each of the Funds and their
investment advisers, see "Investment Options--The Funds" in this Prospectus,
as well as the prospectuses for each of the Funds.
The Guaranteed Account is the credited interest option available under the
Contract which allows you to earn a fixed rate of interest, if held for the
guaranteed term. (See the Appendix to this Prospectus and the prospectus for
the Guaranteed Account.)
Charges and Deductions
Certain charges are associated with these Contracts. These charges include
daily deductions from the Separate Account (the mortality and expense risk
charge and an administrative charge), as well as any applicable maintenance
fee, transfer fees and premium and other taxes. The Funds also incur certain
fees and expenses which are deducted directly from the Funds. A deferred
sales charge may apply upon a full or partial withdrawal of the Account
Value. (See the Fee Table and "Charges and Deductions.")
- - --------------------------------------------------------------------------------
SUMMARY - 1
<PAGE>
Transfers
Prior to the Annuity Date, and subject to certain limitations, you can
transfer Account Values among the Subaccounts and the Guaranteed Account.
During the Annuity Period, if you have elected variable payments you can make
transfers among the Subaccounts available during the Annuity Period.
Currently, during the Accumulation Period, transfers are without charge.
However, the Company reserves the right to charge up to $10 for each
additional transfer if more than 12 transfers are made in a calendar year.
Transfers can be requested in writing or by telephone in accordance with the
Company's transfer procedures. During the Annuity Period, you can currently
make up to four transfers each calendar year. There is no charge for these
transfers. (Transfers from the Guaranteed Account may be restricted and
subject to a market value adjustment. See the Appendix.)
The Company also offers a Dollar Cost Averaging Program and an Account
Rebalancing Program. The Dollar Cost Averaging Program permits the automatic
transfer of amounts from any of the Subaccounts and the one-year Guaranteed
Account term to any of the other Subaccounts on a monthly or quarterly basis.
The Account Rebalancing Program allows you to request that each year We
automatically reallocate your Account Value to specified percentages among
the Subaccounts in which you invest. (See "Transfers.")
Withdrawals
All or a part of the Account Value may be withdrawn prior to the Annuity
Date by properly completing a disbursement form and sending it to the
Company. Certain charges may be assessed upon withdrawal. Amounts withdrawn
from the Guaranteed Account may be subject to a market value adjustment. (See
the Appendix.) The taxable portion of the withdrawal may also be subject to
income tax and a federal tax penalty. (See "Withdrawals.")
The Contract also offers certain Additional Withdrawal Options during the
Accumulation Period subject to certain criteria. Some Additional Withdrawal
Options are not available in all states and may not be suitable in every
situation. (See "Additional Withdrawal Options.")
Guaranteed Death Benefit
These Contracts contain a guaranteed death benefit feature. Upon the death
of the Annuitant, the Account Value may be increased under certain
circumstances. (See "Death Benefit During Accumulation Period.")
After Annuity Payments have commenced, a death benefit may be payable to
the Beneficiary depending upon the terms of the Contract and the Annuity
Option selected. (See "Death Benefit Payable During the Annuity Period.")
The Annuity Period
On the Annuity Date, you may elect to begin receiving Annuity Payments.
Annuity Payments can be made on either a fixed, variable or combination fixed
and variable basis. If a variable payout is selected, the payments will
continue to vary with the investment performance of the Subaccount(s)
selected. The Company reserves the right to limit the number of Subaccounts
that may be available during the Annuity Period. (See "Annuity Period.")
Taxes
Earnings are not generally taxed until you or your Beneficiary(ies)
actually receive a distribution from the Contract. A 10% federal tax penalty
may be imposed on certain withdrawals. (See "Tax Status.")
Inquiries
Questions, inquiries or requests for additional information can be
directed to your agent or local representative, or you may contact the
Company as follows:
(bullet) Write to:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156-5996
Attention: Customer Service
(bullet) Call Customer Service:
1-800-531-4547 (for automated transfers or changes in the allocation of
Account Values, call: 1-800-262-3862)
This Prospectus and the Statement of Additional Information
are Dated May 1, 1997.
- - --------------------------------------------------------------------------------
SUMMARY - 2
<PAGE>
FEE TABLE
=============================================================================
This Fee Table describes the various charges and expenses associated with the
Contract. No sales charge is paid upon purchase of the Contract. All costs
that are borne directly or indirectly under the Subaccounts and Funds are
shown below. Some expenses may vary as explained under "Charges and
Deductions." The charges and expenses shown below do not include premium
taxes that may be applicable. For more information regarding expenses paid
out of assets of a particular Fund, see the Fund's prospectus.
DIRECT CHARGES. These charges are deducted directly from the Account Value.
They include:
Deferred Sales Charge. The deferred sales charge is deducted as a percentage
of each Purchase Payment withdrawn. The amount of the deferred sales charge
is calculated as follows:
Years from Receipt Deferred Sales
of Purchase Payment Charge Deduction
------------------------------- ---------------------
Less than 2 7%
2 or more but less than 4 6%
4 or more but less than 5 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more 0%
Contracts or Certificates issued in New York:
Years from Receipt Deferred Sales
of Purchase Payment Charge Deduction
------------------------------- ---------------------
Less than 1 7%
1 or more but less than 2 6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more 0%
Annual Maintenance Fee $30.00
The maintenance fee, if applicable, will generally be deducted
from each Account annually and if the full Account Value is
withdrawn. The maintenance fee is waived when the Account Value
is $50,000 or more on the date the maintenance fee is due. The
amount shown is the maximum maintenance fee that can be
deducted under the Contract.
Transfer Charge $ 0.00
During the Accumulation Period We currently allow an unlimited
number of transfers without charge. However, we reserve the
right to impose a fee of $10 for each transfer in excess of 12
per year.
INDIRECT CHARGES. Each Subaccount pays these expenses out of its assets. The
charges are reflected in the Subaccount's daily Accumulation Unit Value and
are not charged directly to an Account. They include:
During the Accumulation Period:
Mortality and Expense Risk Charge 1.25%
Administrative Charge. 0.15%
-----
Total Subaccount Annual Expenses 1.40%
During the Annuity Period:
Mortality and Expense Risk Charge 1.25%
Administrative Charge 0.00%*
-----
Total Subaccount Annual Expenses 1.25%
*We currently do not impose an Administrative Charge during the Annuity
Period. However, we reserve the right to deduct a daily charge of not more
than 0.25% per year from the Subaccounts.
- - --------------------------------------------------------------------------------
FEE TABLE - 1
<PAGE>
Annual Expenses of the Funds
The following table illustrates the advisory fees and other expenses
applicable to the Funds. Except as noted, the following figures are a
percentage of average net assets and, except where otherwise indicated, are
based on figures for the year ended December 31, 1996. A Fund's "Other
Expenses" include operating costs of the Fund. These expenses are reflected
in the Fund's net asset value and are not deducted from the Account Value.
<TABLE>
<CAPTION>
Investment
Advisory Other Total
Fees(1) Expenses Mutual Fund
(after expense (after expense Annual
reimbursement) reimbursement) Expenses
-------------- -------------- ------------
<S> <C> <C> <C>
Aetna Variable Fund(2) 0.50% 0.06% 0.56%
Aetna Income Shares(2) 0.40% 0.08% 0.48%
Aetna Variable Encore Fund(2) 0.25% 0.10% 0.35%
Aetna Investment Advisers Fund, Inc.(2) 0.50% 0.08% 0.58%
Aetna Ascent Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Crossroads Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Legacy Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Capital Appreciation Portfolio(2)
Aetna Variable Growth Portfolio(2)
Aetna Variable Index Plus Portfolio(2)
Aetna Variable Small Company Portfolio(2)
Alger American Balanced Portfolio 0.75%
Alger American Growth Portfolio 0.75%
Alger American Income and Growth Portfolio 0.63%
Alger American Leveraged AllCap Portfolio(3) 0.85%
Alger American MidCap Growth Portfolio 0.80%
Alger American Small Cap Portfolio 0.85%
American Century VP Balanced (formerly "TCI Balanced")(4) 1.00%
American Century VP Capital Appreciation (formerly "TCI
Growth")(4) 1.00%
American Century VP International (formerly "TCI
International")(4) 1.50%
Federated American Leaders Fund II(5) 0.00%
[Federated Equity Income Fund II(5) 0.00%]
Federated Fund for U.S. Government Securities II(5) 0.00%
[Federated Growth Strategies Fund II(5) 0.00%]
Federated High Income Bond Fund II(5) 0.00%
[Federated International Equity Fund II(5) 0.00%]
[Federated Prime Money Fund II(5) 0.00%]
Federated Utility Fund II(5) 0.00%
Fidelity VIP Equity-Income Portfolio 0.51%
Fidelity VIP Growth Portfolio 0.61%
Fidelity VIP High Income Portfolio(6) 0.60%
Fidelity VIP Overseas Portfolio 0.76%
Fidelity VIP II Asset Manager Portfolio(6) 0.71%
Fidelity VIP II Contrafund Portfolio(6) 0.61%
Fidelity VIP II Index 500 Portfolio(7) 0.00%
Fidelity VIP II Investment Grade Bond Portfolio 0.45%
Janus Aspen Aggressive Growth Portfolio(8) 0.75%
Janus Aspen Balanced Portfolio(8) 0.82%
Janus Aspen Flexible Income Portfolio 0.65%
Janus Aspen Growth Portfolio(8) 0.65%
Janus Aspen Short-Term Bond Portfolio(8) 0.00%
Janus Aspen Worldwide Growth Portfolio(8) 0.68%
Lexington Emerging Markets Fund, Inc.(9) 0.85%
Lexington Natural Resources Trust 1.00%
MFS Emerging Growth Series(10) 0.75%
MFS Research Series(10) 0.75%
MFS Total Return Series(10) 0.75%
MFS World Governments Series(10) 0.75%
MFS Value Series(10)
Oppenheimer Capital Appreciation Fund
Oppenheimer Global Securities Fund
Oppenheimer Growth & Income Fund
Oppenheimer Strategic Bond Fund
</TABLE>
- - --------------------------------------------------------------------------------
FEE TABLE - 2
<PAGE>
(1) Certain of the unaffiliated Fund advisers reimburse the Company for
administrative costs incurred in connection with administering the
Funds as variable funding options under the Contract. These
reimbursements are paid out of the investment advisory fees and are
not charged to investors.
(2) The Company will provide administrative services to the Fund and will
assume the Fund's ordinary recurring direct costs under an
Administrative Services Agreement. The "Other Expenses" shown reflect
the fee payable under that Agreement.
(3) The Fund's expenses were voluntarily reduced by the Fund's investment
adviser. Absent such reimbursement, the other expenses and total
expenses of the Fund would have been % and %, respectively.
The Adviser can terminate this voluntary waiver at any time in its
sole discretion.
(4) The Portfolio's investment adviser pays all expenses of the Portfolio
except brokerage commissions, taxes, interest, fees, expenses of the
non-interested person directors (including counsel fees) and
extraordinary expenses. These expenses have historically represented
a very small percentage (less than 0.01%) of total net assets in a
fiscal year.
(5) The management fee for each of the Funds has been reduced to reflect a
voluntary waiver of the management fee. The Adviser can terminate this
voluntary waiver at any time in its sole discretion. The maximum
management fee for each of the Funds is as follows: 0.60% High Income
Bond Fund II and the Fund for U.S. Government Securities II; and 0.75%
American Leaders Fund II and Utility Fund II.
The total operating expenses of each of the Funds, absent the voluntary
waiver of the management fee and the voluntary reimbursement of certain
other operating expenses, would have been: % for the American Leaders
Fund II; % for the Fund for U.S. Government Securities II; % for the
High Income Bond Fund II; and % for the Utility Fund II.
(6) A portion of the brokerage commissions the Fund paid was used to
reduce its expenses. Without this reduction, total operating expenses
would have been % for the High Income Portfolio, % for the
Asset Manager Portfolio; and % for the Contrafund Portfolio.
(7) The Fund's expenses were voluntarily reduced by the Fund's investment
adviser. Absent reimbursement, the management fee, other expenses and
total expenses would have been %, % and %, respectively,
for the Index 500 Portfolio.
(8) The information for each Portfolio is net of fee waivers or
reductions from Janus Capital. Fee reductions for the Aggressive
Growth, Balanced, Growth, and Worldwide Growth Portfolios reduce the
management fee to the level of the corresponding Janus retail fund.
Other waivers, if applicable, are first applied against the
management fee and then against other expenses. Without such waivers
or reductions, the Management Fee, Other Expenses and Total Fund
Annual Expenses would have been %, %, and % for
Aggressive Growth Portfolio; %, %, % for Balanced
Portfolio; %, % and % for Growth Portfolio; %, %
and % for Short-Term Bond Portfolio; and %, % and %
for Worldwide Growth Portfolio; respectively. Janus Capital may
modify or terminate the waivers or reductions at any time upon 90
days' notice to the Portfolio's Board of Trustees.
(9) The Fund's investment adviser has agreed to voluntarily limit the
total expenses of the Fund (excluding interest, taxes, brokerage, and
extraordinary expenses, but including management fees and operating
expenses) to an annual rate of % of the Fund's average net assets
through April 30, 1997. Without this agreement, the Fund's Investment
Advisory Fee, Total Other Expenses and Total Fund Annual Expenses
would have been %, % and % for the most recent fiscal
year.
(10) The Adviser has agreed to bear, subject to reimbursement, expenses
for each of the Funds such that each Fund's aggregate operating
expenses shall not exceed, on an annualized basis, 1.00% of the
average daily net assets of the Funds from November 2, 1994 through
December 31, 1996; 1.25% of the average daily net assets of the Funds
from January 1, 1997 through December 31, 1998; and 1.50% of the
average daily net assets of the Funds from January 1, 1999 through
December 31, 2004; provided, however, that this obligation may be
terminated or revised at any time. Absent this expense arrangement,
"Other Expenses" for the MFS Emerging Growth Series, MFS Research
Series, MFS Total Return Series and MFS Value Series would have been
%, %, % and %, respectively, and "Total Annual Fund
Expenses" would have been %, %, % and %,
respectively.
The Adviser has agreed to bear, subject to reimbursement, until
December 31, 2004, expenses of the World Governments Series such that
the Fund's aggregate expenses do not exceed 1.00% on an annualized
basis, of its average daily net assets. Absent this expense
arrangement, "Other Expenses" and "Total Annual Fund Expenses" for the
Fund would have been % and %, respectively.
- - --------------------------------------------------------------------------------
FEE TABLE - 3
<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.
The following Examples illustrate the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. For
the purposes of these Examples, the maximum maintenance fee of $30.00 that
can be deducted under the Contract has been converted to a percentage of
assets equal to _____%.
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
-------------------------------------- ---------------------------------------
If you withdraw the entire Account If you do not withdraw the Account
Value at the end of the periods shown, Value, or if you annuitize at the end
you would pay the following expenses, of the periods shown, you would pay the
including any applicable deferred following expenses (no deferred sales
sales charge: charge is reflected):*
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
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers
Fund, Inc
Aetna Ascent Variable
Portfolio
Aetna Crossroads Variable
Portfolio
Aetna Legacy Variable
Portfolio
Aetna Variable Capital
Appreciation Portfolio
Aetna Variable Growth
Portfolio
Aetna Variable Index Plus
Portfolio
Aetna Variable Small
Company Portfolio
Alger American Balanced
Portfolio
Alger American Growth
Portfolio
Alger American Income and
Growth Portfolio
Alger American Leveraged
AllCap Portfolio
Alger American MidCap
Growth Portfolio
Alger American Small Cap
Portfolio
American Century VP
Balanced (formerly "TCI
Balanced")
American Century VP
Capital Appreciation
(formerly "TCI Growth")
American Century VP
International (formerly
"TCI International")
Federated American Leaders
Fund II
Federated Fund for U.S.
Government Securities II
Federated High Income Bond
Fund II
Federated Utility Fund II
Fidelity VIP Equity-Income
Portfolio
Fidelity VIP Growth
Portfolio
Fidelity VIP High Income
Portfolio
Fidelity VIP Overseas
Portfolio
Fidelity VIP II Asset
Manager Portfolio
Fidelity VIP II Contrafund
Portfolio
Fidelity VIP II Index 500
Portfolio
Fidelity VIP II Investment
Grade Bond Portfolio
Janus Aspen Aggressive
Growth Portfolio
Janus Aspen Balanced
Portfolio
Janus Aspen Flexible
Income Portfolio
Janus Aspen Growth
Portfolio
Janus Aspen Short-Term
Bond Portfolio
Janus Aspen Worldwide
Growth Portfolio
</TABLE>
- - --------------------------------------------------------------------------------
FEE TABLE - 4
<PAGE>
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
-------------------------------------- ---------------------------------------
If you withdraw the entire Account If you do not withdraw the Account
Value at the end of the periods shown, Value, or if you annuitize at the end
you would pay the following expenses, of the periods shown, you would pay the
including any applicable deferred following expenses (no deferred sales
sales charge: charge is reflected):*
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>
Lexington Emerging Markets
Fund, Inc
Lexington Natural
Resources Trust
MFS Emerging Growth Series
MFS Research Series
MFS Total Return Series
MFS World Governments
Series
MFS Value Series
Oppenheimer Capital
Appreciation Fund
Oppenheimer Global
Securities Fund
Oppenheimer Growth &
Income Fund
Oppenheimer Strategic Bond
Fund
</TABLE>
* This Example would not apply if a nonlifetime variable annuity option is
selected, and a lump sum settlement is requested within three years after
annuity payments start, since the lump sum payment will be treated as a
withdrawal during the Accumulation Period and will be subject to any deferred
sales charge that would then apply. (Refer to Example A.)
- - --------------------------------------------------------------------------------
FEE TABLE - 5
<PAGE>
Hypothetical Illustration (Example)
The following Examples illustrate the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. For
the purposes of these Examples, the maximum maintenance fee of $30.00 that
can be deducted under the Contract has been converted to a percentage of
assets equal to ____%.
<TABLE>
<CAPTION>
Contracts or Certificates Issued in New York
EXAMPLE C EXAMPLE D
-------------------------------------- ---------------------------------------
If you withdraw the entire Account If you do not withdraw the Account
Value at the end of the periods shown, Value, or if you annuitize at the end
you would pay the following expenses, of the periods shown, you would pay the
including any applicable deferred following expenses (no deferred sales
sales charge: charge is reflected):*
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
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers
Fund, Inc.
Aetna Ascent Variable
Portfolio
Aetna Crossroads Variable
Portfolio
Aetna Legacy Variable
Portfolio
Aetna Variable Capital
Appreciation Portfolio
Aetna Variable Growth
Portfolio
Aetna Variable Index Plus
Portfolio
Aetna Variable Small
Company Portfolio
Alger American Balanced
Portfolio
Alger American Growth
Portfolio
Alger American Income and
Growth Portfolio
Alger American Leveraged
AllCap Portfolio
Alger American MidCap
Growth Portfolio
Alger American Small Cap
Portfolio
American Century VP
Balanced (formerly "TCI
Balanced")
American Century VP
Capital Appreciation
(formerly "TCI Growth")
American Century VP
International (formerly
"TCI International")
Federated American Leaders
Fund II
[Federated Equity Income
Fund II]
Federated Fund for U.S.
Government Securities II
[Federated Growth Strategies
Fund II]
Federated High Income Bond
Fund II
[Federated International Equity
Fund II]
[Federated Prime Money
Fund II]
Federated Utility Fund II
Fidelity VIP Equity-Income
Portfolio
Fidelity VIP Growth
Portfolio
Fidelity VIP High Income
Portfolio
Fidelity VIP Overseas
Portfolio
Fidelity VIP II Asset
Manager Portfolio
Fidelity VIP II Contrafund
Portfolio
Fidelity VIP II Index 500
Portfolio
Fidelity VIP II Investment
Grade Bond Portfolio
Janus Aspen Aggressive
Growth Portfolio
Janus Aspen Balanced
Portfolio
Janus Aspen Flexible
Income Portfolio
Janus Aspen Growth
Portfolio
Janus Aspen Short-Term
Bond Portfolio
Janus Aspen Worldwide
Growth Portfolio
Lexington Emerging Markets
Fund, Inc.
Lexington Natural
Resources Trust
</TABLE>
- - --------------------------------------------------------------------------------
FEE TABLE - 6
<PAGE>
<TABLE>
<CAPTION>
Contracts or Certificates Issued in New York
EXAMPLE C EXAMPLE D
-------------------------------------- ---------------------------------------
If you withdraw the entire Account If you do not withdraw the Account
Value at the end of the periods shown, Value, or if you annuitize at the end
you would pay the following expenses, of the periods shown, you would pay the
including any applicable deferred following expenses (no deferred sales
sales charge: charge is reflected):*
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>
MFS Emerging Growth Series
MFS Research Series
MFS Total Return Series
MFS World Governments
Series
MFS Value Series
Oppenheimer Capital
Appreciation Fund
Oppenheimer Global
Securities Fund
Oppenheimer Growth &
Income Fund
Oppenheimer Strategic Bond
Fund
</TABLE>
* This Example would not apply if a nonlifetime variable annuity option is
selected, and a lump sum settlement is requested within three years after
annuity payments start, since the lump sum payment will be treated as a
withdrawal during the Accumulation Period and will be subject to any deferred
sales charge that would then apply. (Refer to Example C.)
- - --------------------------------------------------------------------------------
FEE TABLE - 7
<PAGE>
CONDENSED FINANCIAL INFORMATION
(Selected data for accumulation units outstanding throughout each period)
=============================================================================
The condensed financial information presented below for the three years ended
December 31, 1996 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, 1996 and the independent auditors' report thereon, are
included in the Statement of Additional Information.
<TABLE>
<CAPTION>
1996 1995 1994
----- ---------- -----------
<S> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $10.737 $10.000
Value at end of period $14.001 $10.737
Increase (decrease) in value of accumulation units(1) 30.40% 7.37%(2)
Number of accumulation units outstanding at end of period 3,068,782 3,178,712
AETNA INCOME SHARES
Value at beginning of period $10.324 $10.000
Value at end of period $12.037 $10.324
Increase (decrease) in value of accumulation units(1) 16.59% 3.24%(3)
Number of accumulation units outstanding at end of period 988,199 983,357
AETNA VARIABLE ENCORE FUND
Value at beginning of period $10.489 $10.000
Value at end of period $10.968 $10.489
Increase (decrease) in value of accumulation units(1) 4.57% 4.89%(2)
Number of accumulation units outstanding at end of period 2,694,034 3,407,448
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $10.828 $10.000
Value at end of period $13.602 $10.828
Increase (decrease) in value of accumulation units(1) 25.62% 8.42%(4)
Number of accumulation units outstanding at end of period 919,744 911,281
AETNA ASCENT VARIABLE PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.645
Increase (decrease) in value of accumulation units(1) 6.45%(5)
Number of accumulation units outstanding at end of period 15,832
AETNA CROSSROADS VARIABLE PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.587
Increase (decrease) in value of accumulation units(1) 5.87%(5)
Number of accumulation units outstanding at end of period 27,089
AETNA LEGACY VARIABLE PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.438
Increase (decrease) in value of accumulation units(1) 4.38%(6)
Number of accumulation units outstanding at end of period 28,778
AETNA VARIABLE INDEX PLUS PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation units(1)
Number of accumulation units outstanding at end of period
ALGER AMERICAN BALANCED PORTFOLIO
Value at beginning of period $10.000
Value at end of period $12.588
Increase (decrease) in value of accumulation units(1) 25.88%(7)
Number of accumulation units outstanding at end of period 54,737
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $10.000
Value at end of period $12.980
Increase (decrease) in value of accumulation units(1) 29.80%(8)
Number of accumulation units outstanding at end of period 615,697
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.660
Increase (decrease) in value of accumulation units(1) 6.60%(9)
Number of accumulation units outstanding at end of period 95,829
</TABLE>
- - --------------------------------------------------------------------------------
AUV HISTORY - 1
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
=============================================================================
<TABLE>
<CAPTION>
1996 1995 1994
----- ----------- -------------
<S> <C> <C> <C>
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
Value at beginning of period $10.000
Value at end of period $12.265
Increase (decrease) in value of accumulation units(1) 22.65%(9)
Number of accumulation units outstanding at end of period 159,379
ALGER AMERICAN MIDCAP PORTFOLIO
Value at beginning of period $10.000
Value at end of period $13.974
Increase (decrease) in value of accumulation units(1) 39.74%(7)
Number of accumulation units outstanding at end of period 233,110
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period $10.000
Value at end of period $13.295
Increase (decrease) in value of accumulation units(1) 32.95%(10)
Number of accumulation units outstanding at end of period 507,425
AMERICAN CENTURY VP BALANCED (formerly "TCI BALANCED")
Value at beginning of period $10.152 $10.000
Value at end of period $12.124 $10.152
Increase (decrease) in value of accumulation units(1) 19.42% 1.52%(4)
Number of accumulation units outstanding at end of period 40,407 3,477
AMERICAN CENTURY VP CAPITAL APPRECIATION (formerly "TCI GROWTH")
Value at beginning of period $10.847 $10.000
Value at end of period $14.021 $10.847
Increase (decrease) in value of accumulation units(1) 29.27% 8.47%(4)
Number of accumulation units outstanding at end of period 1,014,612 893,534
AMERICAN CENTURY VP INTERNATIONAL (formerly "TCI INTERNATIONAL")
Value at beginning of period $9.441 $10.000
Value at end of period $10.446 $9.441
Increase (decrease) in value of accumulation units(1) 10.64% (5.59)%(4)
Number of accumulation units outstanding at end of period 57,691 3,745
FEDERATED AMERICAN LEADERS FUND II
Value at beginning of period $9.838 $10.000
Value at end of period $12.971 $9.838
Increase (decrease) in value of accumulation units(1) 31.84% (1.62)%(11)
Number of accumulation units outstanding at end of period 2,057,364 188,708
[FEDERATED EQUITY INCOME FUND II
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation units(1)
Number of accumulation units outstanding at end of period]
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II
Value at beginning of period $10.073 $10.000
Value at end of period $10.804 $10.073
Increase (decrease) in value of accumulation units(1) 7.25% 0.73%(11)
Number of accumulation units outstanding at end of period 417,293 12,714
[FEDERATED GROWTH STRATEGIES FUND II
Value at beginning of period $10.000
Value at end of period $10.277
Increase (decrease) in value of accumulation units(1) 2.77%(11)
Number of accumulation units outstanding at end of period 17,503]
FEDERATED HIGH INCOME BOND FUND II
Value at beginning of period $9.814 $10.000
Value at end of period $11.640 $9.814
Increase (decrease) in value of accumulation units(1) 18.61% (1.86)%(11)
Number of accumulation units outstanding at end of period 1,020,321 31,309
[FEDERATED INTERNATIONAL EQUITY FUND II
Value at beginning of period $10.000
Value at end of period $10.255
Increase (decrease) in value of accumulation units(1) 2.55%
Number of accumulation units outstanding at end of period 158,319]
[FEDERATED PRIME MONEY FUND II
Value at beginning of period $10.033 $10.000
Value at end of period $10.406 $10.033
Increase (decrease) in value of accumulation units(1) 3.71% 0.33%
Number of accumulation units outstanding at end of period 554,934 51,949]
FEDERATED UTILITY FUND II
Value at beginning of period $9.881 $10.000
Value at end of period $12.095 $9.881
Increase (decrease) in value of accumulation units(1) $22.40% (1.19)%(11)
Number of accumulation units outstanding at end of period 727,601 41,191
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.002 $10.000
Value at end of period $13.324 $10.002
Increase (decrease) in value of accumulation units(1) 33.21% 0.02%(14)
Number of accumulation units outstanding at end of period 913,517 17,013
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $10.423 $10.000
Value at end of period $13.913 $10.423
Increase (decrease) in value of accumulation units(1) 33.48% 4.23%(14)
Number of accumulation units outstanding at end of period 885,545 17,013
</TABLE>
- - --------------------------------------------------------------------------------
AUV HISTORY - 2
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
=============================================================================
<TABLE>
<CAPTION>
1996 1995 1994
----- ----------- -------------
<S> <C> <C> <C>
FIDELITY VIP HIGH INCOME PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.701
Increase (decrease) in value of accumulation units(1) 7.01%(9)
Number of accumulation units outstanding at end of period 112,819
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $10.000
Value at end of period $11.143
Increase (decrease) in value of accumulation units(1) 11.43%(7)
Number of accumulation units outstanding at end of period 150,017
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Value at beginning of period $10.000
Value at end of period $11.664
Increase (decrease) in value of accumulation units(1) 16.64%(7)
Number of accumulation units outstanding at end of period 116,810
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $10.000
Value at end of period $11.658
Increase (decrease) in value of accumulation units(1) 16.58%(9)
Number of accumulation units outstanding at end of period 684,272
FIDELITY VIP II INDEX 500 PORTFOLIO
Value at beginning of period $10.000
Value at end of period $11.336
Increase (decrease) in value of accumulation units(1) 13.36%(9)
Number of accumulation units outstanding at end of period 191,671
FIDELITY VIP II INVESTMENT GRADE BOND PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.600
Increase (decrease) in value of accumulation units(1) 6.00%(15)
Number of accumulation units outstanding at end of period 66,574
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $10.374 $10.000
Value at end of period $13.040 $10.374
Increase (decrease) in value of accumulation units(1) 25.71% 3.74%(12)
Number of accumulation units outstanding at end of period 187,584 0
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.000
Value at end of period $12.104
Increase (decrease) in value of accumulation units(1) 21.04%(7)
Number of accumulation units outstanding at end of period 53,016
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $9.884 $10.000
Value at end of period $12.071 $9.884
Increase (decrease) in value of accumulation units(1) 22.13% (1.16)%(13)
Number of accumulation units outstanding at end of period 45,714 0
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.109 $10.000
Value at end of period $12.975 $10.109
Increase (decrease) in value of accumulation units(1) 28.35% 1.09%(4)
Number of accumulation units outstanding at end of period 176,111 9,588
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.765
Increase (decrease) in value of accumulation units(1) 7.65%(7)
Number of accumulation units outstanding at end of period 67,034
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $10.000
Value at end of period $12.341
Increase (decrease) in value of accumulation units(1) 23.41%(10)
Number of accumulation units outstanding at end of period 252,485
</TABLE>
- - --------------------------------------------------------------------------------
AUV HISTORY - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
=============================================================================
<TABLE>
<CAPTION>
1996 1995 1994
----- -------- ------------
<S> <C> <C> <C>
LEXINGTON EMERGING MARKETS FUND, INC.
Value at beginning of period $9.795 $10.000
Value at end of period $9.277 $9.795
Increase (decrease) in value of accumulation units(1) (5.28)% (2.05)%(4)
Number of accumulation units outstanding at end of period 36,773 1,500
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $9.056 $10.000
Value at end of period $10.436 $9.056
Increase (decrease) in value of accumulation units(1) 15.24% (9.44)%(3)
Number of accumulation units outstanding at end of period 16,933 537
MFS EMERGING GROWTH SERIES
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation units(1)
Number of accumulation units outstanding at end of period
MFS RESEARCH SERIES
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation units(1)
Number of accumulation units outstanding at end of period
MFS TOTAL RETURN SERIES
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation units(1)
Number of accumulation units outstanding at end of period
MFS VALUE SERIES
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation units(1)
Number of accumulation units outstanding at end of period
MFS WORLD GOVERNMENT SERIES
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation units(1)
Number of accumulation units outstanding at end of period
</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. The initial
Accumulation Unit value was established at $10.000 during August
1995, when the Fund became available under the Contract.
(6) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during September
1995, when the Fund became available under the Contract.
(7) Reflects less than a full year of performance activity. Funds were
first received in this option during January 1995.
(8) Reflects less than a full year of performance activity. Funds were
first received in this option during February 1995.
(9) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during June 1995,
when the Fund became available under the Contract.
(10) Reflects less than a full year of performance activity. Funds were
first received in this option during April 1995.
(11) Reflects less than a full year of performance activity. Funds were
first received in this option during September 1994.
(12) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during May 1995,
when the Fund became available under the Contract.
(13) Reflects less than a full year of performance activity. Funds were
first received in this option during November 1994.
(14) Reflects less than a full year of performance activity. Funds were
first received in this option during December 1994.
(15) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during August
1995, when the Fund became available under the Contract.
- - --------------------------------------------------------------------------------
AUV HISTORY - 4
<PAGE>
THE COMPANY
=============================================================================
Aetna Life Insurance and Annuity Company (the "Company") is the issuer of
the Contract, and as such, it is responsible for providing the insurance and
annuity benefits under the Contract. The Company is a stock life insurance
company organized under the insurance laws of the State of Connecticut in
1976. Through a merger, it succeeded to the business of Aetna Variable
Annuity Life Insurance Company (formerly Participating Annuity Life Insurance
Company, an Arkansas life insurance company organized in 1954). The Company
is engaged in the business of issuing life insurance policies and variable
annuity contracts in all states of the United States. The Company's principal
executive offices are located at 151 Farmington Avenue, Hartford, Connecticut
06156.
The Company is a wholly owned subsidiary of Aetna Retirement Holdings,
Inc., which is in turn a wholly owned subsidiary of Aetna Retirement
Services, Inc. and an indirect wholly owned subsidiary of Aetna Inc.
VARIABLE ANNUITY ACCOUNT B
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The Company established Variable Annuity Account B (the "Separate
Account") in 1976 as a segregated asset account for the purpose of funding
its variable annuity contracts. The Separate Account is registered as a unit
investment trust under the Investment Company Act of 1940 (the "1940 Act"),
and meets the definition of "separate account" under federal securities laws.
The Separate Account is divided into "subaccounts" which do not invest
directly in stocks, bonds or other investments. Instead, each Subaccount buys
and sells shares of a corresponding Fund.
Although the Company holds title to the assets of the Separate Account,
such assets are not chargeable with liabilities of any other business
conducted by the Company. Income, gains or losses of the Separate Account are
credited to or charged against the assets of the Separate Account without
regard to other income, gains or losses of the Company. All obligations
arising under the Contracts are general corporate obligations of the Company.
INVESTMENT OPTIONS
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The Funds
Purchase Payments may be allocated to one or more of the Subaccounts as
designated on the Application. In turn, the Subaccounts invest in the
corresponding Funds at net asset value. The total number of investment
options you may select during the Accumulation Period is currently limited to
18. Each Subaccount and each Guaranteed Term of the same duration count as an
option once you have made an allocation to it, even if you no longer have
amounts allocated to that option.
The availability of Funds may be subject to regulatory authorization. In
addition, the Company may add or withdraw Funds, as permitted by applicable
law. Not all Funds may be available in all jurisdictions or under all
Contracts.
Subject to state regulatory approval, if the shares of any Fund should no
longer be available for investment by the Separate Account or if in the
judgment of the Company, further investment in such shares should become
inappropriate in view of the purpose of the Contract, we may cease to make
such Fund shares available for investment under the Contract prospectively.
The Company may, alternatively, substitute shares of another Fund for shares
already acquired. The Company reserves the right to substitute shares of
another Fund for shares already acquired without a proxy vote. Any
elimination, substitution or addition of Funds will be done in accordance
with applicable state and federal securities laws.
The investment results of the Funds described below are likely to differ
significantly and there is no assurance that any of the Funds will achieve
their respective investment objectives. Except where otherwise noted, all of
the Funds are diversified, as defined in the 1940 Act.
(bullet) Aetna Variable Fund seeks to maximize total return through
investments in a diversified portfolio of common stocks and
securities convertible into common stock.(1)
(bullet) Aetna Income Shares seeks to maximize total return, consistent
with reasonable risk, through investments in a
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diversified portfolio consisting primarily of debt securities.(1)
(bullet) Aetna Variable Encore 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.(1)
(bullet) Aetna Investment Advisers Fund, Inc. is a managed 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.(1)
(bullet) Aetna Generation Portfolios, Inc.--Aetna Ascent Variable
Portfolio seeks to provide capital appreciation by allocating its
investments among equities and fixed income securities. The
Portfolio is managed for investors who generally have an
investment horizon exceeding 15 years, and who have a high level
of risk tolerance.(1)
(bullet) 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. The
Portfolio is managed for investors who generally have an
investment horizon exceeding 10 years and who have a moderate
level of risk tolerance.(1)
(bullet) 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. The Portfolio is managed
for investors who generally have an investment horizon exceeding
five years and who have a low level of risk tolerance.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Capital
Appreciation Portfolio seeks growth of capital primarily through
investment in a diversified portfolio of common stocks and
securities convertible into common stock. The Portfolio will use
a value-oriented approach in an attempt to outperform the total
return performance of publicly traded common stocks represented
by the S & P 500 Composite Stock Price Index ("S & P 500"), a
broad based stock market index composed of 500 common stocks
selected by the Standard & Poor's Corporation. The Portfolio uses
the S & P 500 as a comparative benchmark because it represents
approximately two-thirds of the total market value of all U.S.
common stocks, and is well known to investors.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Growth Portfolio
seeks growth of capital through investment in a diversified
portfolio of common stocks and securities convertible into common
stocks believed to offer growth potential.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Index Plus
Portfolio seeks to outperform the total return performance of
publicly traded common stocks represented by the S & P 500.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Small Company
Portfolio seeks growth of capital primarily through investment in
a diversified portfolio of common stocks and securities
convertible into common stocks of companies with smaller market
capitalizations. Companies with smaller market capitalizations
generally will have market capitalization at the time of purchase
of $1 billion or less.(1)
(bullet) 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.(2)
(bullet) Alger American Fund--Alger American Growth Portfolio seeks
long-term capital appreciation by investing in a diversified,
actively managed portfolio of equity securities. The Portfolio
primarily invests in equity securities of companies which have a
market capitalization of $1 billion or greater.(2)
(bullet) 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.(2)
(bullet) 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.(2)
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(bullet) Alger American Fund--Alger American MidCap Growth Portfolio seeks
long-term capital appreciation. Except during temporary defensive
periods, the portfolio invests at least 65% of its total assets
in equity securities of companies that, at the time of purchase
of the securities, have total market capitalization within the
range of companies included in the S&P Midcap 400 Index, updated
quarterly. The S&P Midcap 400 Index is designed to track the
performance of medium capitalization companies. As of , the
range of market capitalization of these companies was $
million to $ billion.(2)
(bullet) Alger American Fund--Alger American Small Capitalization
Portfolio seeks long-term capital appreciation. Except during
temporary defensive periods, the Portfolio invests at least 65%
of its total assets in equity securities of companies that, at
the time of purchase of such securities, have total market
capitalization within the range of companies included in the
Russell 2000 Growth Index, updated quarterly. The Russell 2000
Growth Index is designed to track the performance of small
capitalization companies. As of , the range of market
capitalization of these companies was $ million to $
billion.(2)
(bullet) American Century VP Balanced (formerly "TCI Balanced") seeks
capital growth and current income. It seeks capital growth by
investing in approximately 60% of the Portfolio's assets 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. Management intends to maintain approximately 40% of
the Portfolio's assets in fixed income securities.(3)
(bullet) American Century VP Capital Appreciation (formerly "TCI Growth")
seeks capital growth. The Fund seeks to achieve its objective 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 investment manager, have better than average potential for
appreciation.(3)
(bullet) American Century VP International (formerly "TCI International")
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.(3)
(bullet) Federated Insurance Series--Federated American Leaders Fund II
(formerly IMS Equity Growth and Income Fund) seeks to achieve
long-term growth of capital and to provide income. The Fund
pursues its investment objective 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.(4)
(bullet) [Federated Insurance Series--Federated Equity Income Fund II
seeks to provide above average income and capital appreciation. The
Fund attempts to achieve its objective by investing at least 65% of
its assets in income-producing equity securities. Equity securities
include common stocks, preferred stocks, and securities (including
debt securities) that are convertible into common stocks. The
portion of the Fund's total assets invested in common stocks,
preferred stocks, and convertible securities will vary according to
the Fund's assessment of market and economic conditions and
outlook.(4)]
(bullet) Federated Insurance Series--Federated Fund for U.S. Government
Securities II (formerly IMS U.S. Government Bond Fund) seeks to
provide current income. The 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, its agencies or
instrumentalities.(4)
(bullet) [Federated Insurance Series--Federated Growth Strategies Fund II
(formerly IMS Growth Stock Fund) seeks capital appreciation. The
Fund pursues its objective by investing at least 85% 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.(4)]
(bullet) Federated Insurance Series--Federated High Income Bond Fund II
(formerly IMS Corporate Bond Fund) seeks high current income by
investing primarily in a diversified portfolio of professionally
managed fixed income securities. The fixed-income securities in
which the Fund intends to invest are lower-rated corporate debt
obligations (commonly known as "junk bonds" or "high yield, high
risk bonds" which involve significant degree of risk). (See the
Fund's prospectus for a discussion of the risk factors involved
in investing in lower-rated corporate debt obligations).(4)
(bullet) [Federated Insurance Series--Federated International Equity Fund II
(formerly IMS International Stock Fund) seeks total return on its
assets by investing at least 85% 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.(4)]
(bullet) [Federated Insurance Series--Federated Prime Money Fund II (formerly
IMS Prime Money Fund) seeks 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. An
investment in this Fund is neither insured nor guaranteed by the
U.S. government.(4)]
(bullet) Federated Insurance Series--Federated Utility Fund II (formerly
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 Fund will invest at least 65% of its total assets
in securities of utility companies.(4)
(bullet) Fidelity Investments Variable Insurance Products Fund--
Equity-Income Portfolio seeks reasonable income by investing
primarily in income-producing equity securities. In selecting
investments, the Fund also considers the potential for capital
appreciation.(5)
(bullet) Fidelity Investments Variable Insurance Products Fund--Growth
Portfolio seeks capital appreciation by investing mainly in
common stocks, although its investments are not restricted to any
one type of security.(5)
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(bullet) Fidelity Investments Variable Insurance Products Fund--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 Fund's prospectus for a
discussion of the risk factors involved in investing in
lower-rated corporate debt obligations).(5)
(bullet) Fidelity Investments Variable Insurance Products Fund--Overseas
Portfolio seeks long-term growth by investing mainly in foreign
securities (at least 65% of the Fund's total assets in securities
of issuers from at least three countries outside of North
America).(5)
(bullet) Fidelity Investments Variable Insurance Products Fund II--Asset
Manager Portfolio seeks high total return with reduced risk over
the long-term by allocating its assets among domestic and foreign
stocks, bonds and short- term fixed-income instruments.(5)
(bullet) Fidelity Investments Variable Insurance Products Fund
II--Contrafund Portfolio seeks maximum total return over the long
term by investing mainly in equity securities of companies that
are undervalued or out-of-favor.(5)
(bullet) Fidelity Investments Variable Insurance Products Fund II--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 Composite Index of 500 Stocks.(5)
(bullet) Fidelity Investments Variable Insurance Products Fund
II--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.(5)
(bullet) Janus Aspen Series--Aggressive Growth Portfolio is a
nondiversified portfolio that seeks long-term growth of capital.
The Portfolio pursues its investment objective by normally
investing at least 50% of its equity assets in securities issued
by medium-sized companies. Medium- sized companies are those
whose market capitalizations fall within the range of companies
in the S & P MidCap 400 Index, which as of included
companies with capitalizations between approximately $ million
and $ billion, but which is expected to change on a regular
basis.(6)
(bullet) Janus Aspen Series--Balanced Portfolio seeks long-term capital
growth, consistent with preservation of capital and balanced by
current income. The Portfolio pursues its investment objective by
investing 40%-60% of its assets in securities selected primarily
for their growth potential and 40%-60% of its assets in
securities selected for their income potential.(6)
(bullet) Janus Aspen Series--Flexible Income Portfolio seeks to obtain
maximum total return, consistent with preservation of capital.
Total return is expected to result from a combination of current
income and capital appreciation. The Portfolio invests in all
types of income producing securities and may have substantial
holdings of debt securities rated below investment grade (e.g.,
junk bonds).(6)
(bullet) Janus Aspen Series--Growth Portfolio seeks long-term growth of
capital in a manner consistent with the preservation of capital.
The Portfolio pursues its investment objective by investing in
common stocks of companies of any size.(6)
(bullet) Janus Aspen Series--Short-Term Bond Portfolio seeks as high a
level of current income as is consistent with preservation of
capital. The Portfolio pursues its investment objective by
investing primarily in short- and intermediate-term fixed income
securities.(6)
(bullet) Janus Aspen Series--Worldwide Growth Portfolio seeks long-term
growth of capital in a manner consistent with preservation of
capital. The Portfolio pursues its investment objective primarily
through investments in common stocks of foreign and domestic
issuers.(6)
(bullet) Lexington Emerging Markets Fund, Inc. 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.(7)
(bullet) 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.(7)
(bullet) MFS Emerging Growth Series seeks to provide long-term growth of
capital by investing primarily (i.e., at least 80% of its assets
under normal circumstances) in common
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stocks of companies that MFS believes are early in their life
cycle but which have the potential to become major enterprises
(emerging growth companies). Dividend and interest income from
portfolio securities, if any, is incidental to the Series'
investment objective of long-term growth of capital.(8)
(bullet) MFS Research Series seeks to provide long-term growth of capital
and future income by allocating the Series' assets to industry
groups (e.g., pharmaceuticals, retail and computer software). A
substantial proportion of the Series' assets will be invested in
the common stocks or securities convertible into common stocks of
companies believed to possess better than average prospects for
long- term growth. A smaller proportion of its assets may be
invested in bonds, short-term obligations, preferred stocks or
common stocks whose principal characteristic is income production
rather than growth.(8)
(bullet) MFS Total Return Series seeks to provide above-average income
(compared to a portfolio invested entirely in equity securities)
consistent with the prudent employment of capital. Its secondary
objective is to provide a reasonable opportunity for growth of
capital and income. Under normal market conditions, at least 25%
of the Total Return Series' assets will be invested in fixed
income securities, and at least 40% and no more than 75% of the
Series' assets will be invested in equity securities.(8)
(bullet) MFS World Governments Series seeks not only preservation, but
also growth of capital, together with moderate current income.
The Series seeks to achieve its objective through a
professionally managed, internationally diversified portfolio
consisting primarily of debt securities and to a lesser extent
equity securities. Consistent with its investment objective and
policies, the Series may invest up to 100% (and generally expects
to invest not more than 80%) of its net assets in foreign
securities which are not traded on a U.S. exchange.(8)
(bullet) MFS Value Series seeks capital appreciation. Dividend income, if
any, is a consideration incidental to the Series' objective of
capital appreciation.(8)
(bullet) Oppenheimer Capital Appreciation Fund seeks to achieve capital
appreciation by investing in "growth-type" companies.(9)
(bullet) Oppenheimer Global Securities Fund seeks long-term capital
appreciation by investing a substantial portion of its assets in
securities of foreign issuers, "growth-type" companies, cyclical
industries and special situations which are considered to have
appreciation possibilities. Current income is not an objective.
These securities may be considered to be speculative.(9)
(bullet) Oppenheimer Growth & Income Fund seeks a high total return (which
includes growth in the value of its shares as well as current
income) from equity and debt securities. From time to time this
Fund may focus on small to medium capitalization common stocks,
bonds and convertible securities.(9)
(bullet) Oppenheimer Strategic Bond Fund seeks a high level of current
income principally derived from interest on debt securities and
seeks to enhance such income by writing covered call options on
debt securities. The Fund intends to invest principally in: (i)
foreign government and corporate debt securities, (ii) U.S.
Government securities, and (iii) lower-rated high yield domestic
debt securities, commonly known as "junk bonds", which are
subject to a greater risk of loss of principal and nonpayment of
interest than higher-rated securities. These securities may be
considered to be speculative.(9)
Investment Advisers for each of the Funds:
(1) Aetna Life Insurance and Annuity Company (adviser);
Aeltus Investment Management, Inc. (sub-adviser)
(2) Fred Alger Management, Inc.
(3) American Century Investment Management, Inc.
(4) Federated Advisers
(5) Fidelity Research & Management Company
(6) Janus Capital Corporation
(7) Lexington Management Corporation (adviser);
Market Systems Research Advisors, Inc. serves as the
subadviser for the Lexington Natural Resources Trust
(8) Massachusetts Financial Services Company ("MFS")
(9) OppenheimerFunds, Inc.
Risks Associated with Investment in the Funds. Some of the Funds may use
instruments known as derivatives as part of their investment strategies. The
use of certain derivatives may involve high risk of volatility to a Fund, and
the use of leverage in connection with such derivatives can also increase
risk of losses. Some of the Funds may also invest in foreign or international
securities which involve greater risks than U.S. investments.
More comprehensive information, including a discussion of potential risks,
is found in the respective Fund prospectuses which accompany this Prospectus.
You should read the Fund prospectuses and consider carefully, and on a
continuing basis, which Fund or combination of Funds is best suited to your
long-term investment objectives.
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Conflicts of Interest (Mixed and Shared Funding). Shares of the Funds are
sold to each of the Subaccounts for funding the variable annuity contracts
issued by the Company. Shares of the Funds may also be sold to other
insurance 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 contracts issued by the Company or by third parties. This is
referred to as "mixed funding."
Because the Funds available under the Contract are sold to fund variable
annuity contracts and variable life insurance policies issued by us or by
other companies, certain conflicts of interest could arise. If a conflict of
interest were to occur, one of the separate accounts might withdraw its
investment in a Fund, which might force that Fund to sell portfolio
securities at disadvantageous prices, causing its per share value to
decrease. Each Fund's Board of Directors or Trustees has agreed to monitor
events in order to identify any material irreconcilable conflicts which might
arise and to determine what action, if any, should be taken to address such
conflict.
Credited Interest Option
Purchase Payments may be allocated to the ALIAC Guaranteed Account (the
"Guaranteed Account"). Through the Guaranteed Account, we guarantee
stipulated rates of interest for stated periods of time. Amounts must remain
in the Guaranteed Account for specified periods to receive the quoted
interest rates, or a market value adjustment (which may be positive or
negative) will be applied. (See the Appendix.)
PURCHASE
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Contract Availability
The Contracts are offered as (1) nonqualified deferred annuity contracts
(we reserve the right to limit ownership of nonqualified Contracts to natural
persons); (2) Individual Retirement Annuities, other than "SIMPLE IRAs" as
defined in Section 408(p) of the Internal Revenue Code; or (3) Qualified
Contracts used in conjunction with certain employer sponsored retirement
plans. Individual Retirement Annuities are currently available as rollovers,
and may permit ongoing contributions subject to state regulatory approval.
Additionally, availability of the Qualified Contracts described under item
(3) is subject to approval by the Company and state regulatory agencies.
Eligible persons seeking to invest and accumulate money for retirement can
purchase individual interests in group Contracts, or, where required by state
law, they may purchase individual Contracts. In most states, group Contracts
are offered, generally to certain broker-dealers or banks which have agreed
to act as Distributors of the Contracts, and individual accounts are
established by the Company for each Certificate Holder. In some states, an
individual Contract will be owned by the Certificate Holder. In both cases, a
Certificate Holder's interest in the Contract is known as his or her
"Account."
The maximum issue age for the Annuitant is 90 (age 80 for those Contracts
or Certificates issued in the state of New York, and age 85 for those
Contracts or Certificates issued in the state of Pennsylvania).
Joint Certificate Holders. Nonqualified Contracts may be purchased by
spouses as joint Certificate Holders. In New York and Pennsylvania, the joint
Certificate Holders do not need to be spouses. References to "Certificate
Holders" in this Prospectus mean both of the Certificate Holders on joint
Accounts. Tax law prohibits the purchase of Qualified Contracts by joint
Certificate Holders.
Purchasing Interests in the Contract
Group Contracts. Groups will generally consist of those eligible
individuals who have established an account with a broker-dealer or bank
which has agreed to act as a Distributor for the Contracts. A group Contract
is issued to the group Contract Holder. Certificate Holders may purchase
interests in a group Contract by submitting an Application. Once the
Application is accepted a Certificate will be issued.
Individual Contracts. Certain states will not allow a group Contract due
to provisions in their insurance laws. In those states, an eligible
individual will submit an Application and will be issued a Contract rather
than a Certificate.
Regardless of whether you have purchased an interest in a group Contract
or an individual Contract, the Company must accept or reject the Application
within two business days of receipt. If the Application is incomplete, the
Company may hold any forms and accompanying Purchase Payments for five days.
Purchase Payments may be held for longer periods only with the consent of the
Certficiate Holder, pending acceptance of the Application. If the Application
is rejected, the Application and any Purchase Payments will be returned to
the Certificate Holder.
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Purchase Payments
You may make Purchase Payments under the Contract in one lump sum, through
periodic payments or as a transfer from a pre-existing plan.
The minimum initial Purchase Payment amount is $5,000 for Nonqualified
Contracts and $1,500 for Qualified Contracts. In some states, a Contract
issued as an Individual Retirement Annuity can accept only a lump sum,
rollover Purchase Payment. Additional Purchase Payments made to an existing
Contract must be at least $1,000 or at least $50 per month by electronic
funds transfer, and are subject to the terms and conditions published by us
at the time of the subsequent payment. A Purchase Payment of more than
$1,000,000 will be allowed only with the Company's consent. We also reserve
the right to reject any Purchase Payment to a prospective or existing Account
without advance notice (unless not allowed by state law).
For Qualified Contracts the Code imposes a maximum limit on annual
Purchase Payments which may be excluded from a participant's gross income.
(See "Tax Status.")
Allocation of Purchase Payments. Purchase Payments will initially be
allocated to the Subaccounts or the Guaranteed Account as specified on the
Application. Changes in such allocation may be made in writing or by
telephone transfer. Allocations must be in whole percentages, and there may
be limitations on the number of investment options that can be selected. (See
"Transfers.")
Contract Rights
Under individual Contracts, Certificate Holders have all Contract rights.
Under group Contracts, the group Contract Holder has title to the Contract
and generally only the right to accept or reject any modifications to the
Contract. You have all other rights to your Account under the Contract.
However, under a Nonqualified Contract, if you and the Annuitant are not the
same, and the Annuitant dies first, your rights are automatically transferred
to the Beneficiary. (See "Death Benefit.")
Joint Certificate Holders have equal rights under the Contract and with
respect to their 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 Benefit.") All rights under the Contract must be exercised by both
joint Certificate Holders with the exception of transfers among investment
options; which can be exercised by one joint Certificate Holder, after the
Account has been established.
Designations of Beneficiary and Annuitant
You generally designate the Beneficiary under the Contract on the
Application. However, for Qualified Contracts issued in conjunction with a
Code Section 401(a) qualified pension or profit sharing plan or a Code
Section 457 deferred compensation plan, the employer or trustee must be both
the Certificate Holder and the Beneficiary under the Contract, and the
participant on whose behalf the Account was established must be the
Annuitant. Under such plans the participant is generally allowed to designate
a beneficiary under the plan, and the Certificate Holder may direct that we
pay any death proceeds to the plan beneficiary. "Beneficiary" as used in this
Prospectus refers to the person who is ultimately entitled to receive such
proceeds.
For Qualified Contracts issued in conjunction with a Code Section 403(b)
tax deferred annuity program subject to the Employee Retirement Income
Security Act (ERISA), the spouse of a married participant must be the
Beneficiary of at least 50% of the Account Value. If the married participant
is age 35 or older, the participant may name an alternate Beneficiary
provided the participant furnishes a waiver and spousal consent which meets
the requirements of ERISA Section 205. The participant on whose behalf the
Account was established must be the Annuitant.
For Qualified Contracts issued as an Individual Retirement Annuity, the
Certificate Holder must be the Annuitant. For Nonqualified Contracts, the
Certificate Holder and the Annuitant, may, but need not, be the same person.
(See "Purchase--Contract Availability.")
Right to Cancel
You may cancel the Contract or Certificate without penalty by returning it
to the Company with a written notice of your intent to cancel. In most
states, you have ten days to exercise this "free look" right; some states
allow you longer. Unless state law requires otherwise, the amount you will
receive upon cancellation will reflect the investment performance of the
Subaccounts into which your Purchase Payments were deposited. In some cases
this may be more or less than the amount of your Purchase Payments;
therefore, you bear the entire investment risk for amounts allocated among
the Subaccounts during the free look period. Under Contracts issued as
Individual Retirement Annuities, you will receive a refund of your Purchase
Payment. Account Values will be determined as of the Valuation Date on which
we receive your request for cancellation at our Home Office.
- - --------------------------------------------------------------------------------
7
<PAGE>
CHARGES AND DEDUCTIONS
=============================================================================
Daily Deductions from the Separate Account
Mortality and Expense Risk Charge. The Company makes a daily deduction
from each of the Subaccounts for the mortality and expense risk charge. The
charge is equal, on an annual basis, to 1.25% of the daily net assets of the
Subaccounts and compensates the Company for the assumption of the mortality
and expense risks under the Contract. The mortality risks are those assumed
for our promise to make lifetime payments according to annuity rates
specified in the Contract. The expense risk is the risk that the actual
expenses for costs incurred under the Contract will exceed the maximum costs
that can be charged under the Contract.
If the amount deducted for mortality and expense risks is not sufficient
to cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess may be used to
recover distribution expenses relating to the Contracts and as a source of
profit to the Company. The Company expects to make a profit from the
mortality and expense risk charge.
Administrative Charge. During the Accumulation Period, the Company makes a
daily deduction from each of the Subaccounts for an administrative charge.
The charge is equal, on an annual basis, to 0.15% of the daily net assets of
the Subaccounts and compensates the Company for administrative expenses that
exceed revenues from the maintenance fee described below. The charge is set
at a level which does not exceed the average expected cost of the
administrative services to be provided while the Contract is in force. The
Company does not expect to make a profit from this charge.
During the Annuity Period, the Company reserves the right to make a
deduction for the administrative charge of an amount equal, on an annual
basis, to a maximum of 0.25% of the daily net assets of the Subaccounts.
There is currently no administrative charge during the Annuity Period. Once
an Annuity Option is elected, the charge will be established and will be
effective during the entire Annuity Period.
Maintenance Fee
During the Accumulation Period, the Company will deduct an annual
maintenance fee from the Account Value. The maintenance fee is to reimburse
the Company for some of its administrative expenses relating to the
establishment and maintenance of the Accounts.
The maximum maintenance fee deducted under the Contract is $30. The
maintenance fee will be deducted annually on the anniversary of the Contract
effective date. It is deducted on a pro rata basis from each investment
option in which you have an interest. If your entire Account Value is
withdrawn, the full maintenance fee, if applicable, will be deducted at the
time of withdrawal. The maintenance fee will not be deducted (either annually
or upon withdrawal) if your Account Value is $50,000 or more on the day the
maintenance fee is due.
Reduction or Elimination of Administrative Charge and Maintenance Fee
The administrative charge and maintenance fee may be reduced or eliminated
when sales of the Contracts are made to individuals or to a group of
individuals in such a manner that results in savings of administrative
expenses. The entitlement to such a reduction will be based on:
(1) the size and type of the group of individuals to whom the Contract is
offered; and
(2) the amount of expected Purchase Payments.
Any reduction or elimination of the administrative charge or maintenance
fees will not be unfairly discriminatory against any person. We will make any
reduction in the administrative charge or annual maintenance fees according
to our own rules in effect at the time the Contract is issued. We reserve the
right to change these rules from time to time.
Deferred Sales Charge
Withdrawals of all or a portion of the Account Value may be subject to a
deferred sales charge. The deferred sales charge is a percentage of Purchase
Payments withdrawn from the Subaccounts and the Guaranteed Account and is
based on the number of years which have elapsed since the Purchase Payment
was made. The deferred sales charge for each Purchase Payment is determined
by multiplying the Purchase Payment withdrawn by the appropriate percentage,
in accordance with the schedule set forth in the tables below.
Withdrawals are taken first against Purchase Payments, then against any
increase in value. However, the deferred sales charge only applies to the
Purchase Payment (not to any associated changes in value). To satisfy a
partial withdrawal, the deferred sales charge is calculated as if the
Purchase Payments are withdrawn from the Subaccounts in the same
- - --------------------------------------------------------------------------------
8
<PAGE>
order they were applied to the Account. Partial withdrawals from the
Guaranteed Account will be treated as described in the Appendix and the
prospectus for the Guaranteed Account. The total charge will be the sum of
the charges applicable for all of the Purchase Payments withdrawn.
Years since receipt Deferred Sales
of Purchase Payment Charge Deduction
- - ------------------------------- ---------------------
Less than 2 7%
2 or more but less than 4 6%
4 or more but less than 5 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more 0%
Contracts or Certificates Issued in New York
Years since receipt Deferred Sales
of Purchase Payment Charge Deduction
- - ------------------------------- ---------------------
Less than 1 7%
1 or more but less than 2 6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more 0%
A deferred sales charge will not be deducted from any portion of a Purchase
Payment withdrawn if the withdrawal is:
(bullet) applied to provide Annuity benefits;
(bullet) paid to a Beneficiary due to the Annuitant's death before Annuity
payments start, up to a maximum of the Purchase Payment(s) in the
Account on the Annuitant's date of death;
(bullet) made due to the election of an Additional Withdrawal Option (see
"Additional Withdrawal Options");
(bullet) under a Qualified Contract when the amount withdrawn is equal to
the minimum distribution required by the Code for this Contract
calculated using a method permitted under the Code and agreed to
by Aetna;
(bullet) paid upon a full withdrawal where the Account Value is $2,500 or
less and no amount has been withdrawn during the prior 12 months;
or
(bullet) paid if we close out your Account when the value is less than
$2,500 (or other amount required by state law).
After the first Account Year, you may withdraw all or a portion of your
Purchase Payments without a deferred sales charge, provided that (1) such
withdrawal occurs within three years of the Annuitant's admission to a
licensed nursing care facility (including non-licensed facilities in New
Hampshire) and (2) the Annuitant has spent at least 45 consecutive days in
such facility. This waiver of deferred sales charge does not apply if the
Annuitant is in a nursing care facility at the time the Account is
established. It will also not apply if otherwise prohibited by state law.
The Company does not anticipate that the deferred sales charge will cover
all sales and administrative expenses which it incurs in connection with the
Contract. The difference will be covered by the general assets of the Company
which are attributable, in part, to mortality and expense risk charges under
the Contract described above.
Free Withdrawals. At least 12 months after the date the first Purchase
Payment is applied to your Account and subject to the restrictions described
below, you may withdraw up to 10% of your current Account Value (up to 15% of
your current Account Value for Contracts or Certificates issued in the State
of New York) during each calendar year without imposition of a deferred sales
charge. The free withdrawal applies only to the first partial or full
withdrawal in each calendar year. The free withdrawal amount will be based on
the Account Value calculated on the Valuation Date next following our receipt
of your request for withdrawal. If your withdrawal exceeds the applicable
free withdrawal allowance, we will deduct a deferred sales charge on the
excess amount. (See the Appendix for a discussion of withdrawals from the
Guaranteed Account.) This provision may not be exercised if an Additional
Withdrawal Option is in effect (See "Additional Withdrawal Options") or if
you have withdrawn a minimum distribution required by the Code for which the
deferred sales charge has been waived in the same calendar year.
Reduction or Elimination of the Deferred Sales Charge.
We may reduce or eliminate the deferred sales charge when sales of the
Contracts are made to individuals or a group of individuals in such a manner
that results in savings of sales expenses. The entitlement to such a
reduction in the deferred sales charge will be based on the following:
(1) the size and type of the group of individuals to whom the Contract is
offered;
(2) the amount of expected Purchase Payments; and
- - --------------------------------------------------------------------------------
9
<PAGE>
(3) whether there is a prior or existing relationship with the Company such
as being an employee of the Company or an affiliate, receiving
distributions or making internal transfers from other Contracts issued by
the Company, or making transfers of amounts held under qualified plans
sponsored by the Company or an affiliate.
Any reduction or elimination of the deferred sales charge will not be
unfairly discriminatory against any person.
Fund Expenses
Each Fund incurs certain expenses which are paid out of its net assets.
These expenses include, among other things, the investment advisory or
"management" fee. The expenses of the Funds are set forth in the Fee Table in
this Prospectus and described more fully in the accompanying Fund
prospectuses.
Premium and Other Taxes
Several states and municipalities currently impose a premium tax on
Annuities. These taxes currently range from 0% to 4%. Ordinarily, any
applicable state premium tax will be deducted from the Account Value when it
is applied to an Annuity Option. However, we reserve the right to deduct
state premium tax from the Purchase Payment(s) or from the Account Values at
any time, but no earlier than when we have a tax liability under state law.
Any municipal premium tax assessed at a rate in excess of 1% will be
deducted from the Purchase Payment(s) or from the amount applied to an
Annuity Option based on our determination of when such tax is due. We will
absorb any municipal premium tax which is assessed at 1% or less. We reserve
the right, however, to reflect this added expense in our Annuity purchase
rates for residents of such municipalities.
CONTRACT VALUATION
=============================================================================
Account Value
Until the Annuity Date, the Account Value is the total dollar value of
amounts held in the Account as of any Valuation Date. The Account Value at
any given time is based on the value of the units held in each Subaccount,
plus the value of amounts held in the Guaranteed Account.
Accumulation Units
The value of your interests in a Subaccount is expressed as the number of
"Accumulation Units" that you hold multiplied by an "Accumulation Unit Value"
(or "AUV") for each unit. The AUV on any Valuation Date is determined by
multiplying the value on the immediately preceding Valuation Date by the net
investment factor of that Subaccount for the period between the immediately
preceding Valuation Date and the current Valuation Date. (See "Net Investment
Factor" below.) The Accumulation Unit Value will be affected by the
investment performance, expenses and charges of the applicable Fund and is
reduced each day by a percentage that accounts for the daily assessment of
mortality and expense risk charges and the administrative charge.
Initial Purchase Payments will be credited to your Account at the AUV
computed on the next Valuation Date following our acceptance of the
Application as described under "Purchasing Interests in the Contract." Each
subsequent Purchase Payment (or amount transferred) received by the Company
by the close of business of the New York Stock Exchange will be credited to
your Account at the AUV computed on the next Valuation Date following our
receipt of your payment or transfer request. The value of an Accumulation
Unit may increase or decrease.
Net Investment Factor
The net investment factor is used to measure the investment performance of
a Subaccount from one Valuation Date to the next. The net investment factor
for a Subaccount for any valuation period is equal to the sum of 1.0000 plus
the net investment rate. The net investment rate equals:
(a) the net assets of the Fund held by the Subaccount on the current
Valuation Date, minus
(b) the net assets of the Fund held by the Subaccount on the preceding
Valuation Date, plus or minus
(c) taxes or provisions for taxes, if any, attributable to the operation
of the Subaccount;
(d) divided by the total value of the Subaccount's Accumulation and
Annuity Units on the preceding Valuation Date;
(e) minus a daily charge at the annual effective rate of 1.25% for
mortality and expense risks, and an administrative charge of 0.15%
(unless reduced or eliminated) during the Accumulation Period and up
to 0.25% during the Annuity Period (currently 0% during the Annuity
Period).
The net investment rate may be either positive or negative.
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10
<PAGE>
TRANSFERS
=============================================================================
At any time prior to the Annuity Date, you can transfer amounts held under
your Account among the investment options available subject to certain
limitations. (See "Investment Options.") Transfers from the Guaranteed
Account may be subject to certain restrictions and to a market value
adjustment. (See the Appendix.) During the Annuity Period, if you have
elected a variable Annuity, you can make transfers only among the Subaccounts
available during the Annuity Period. (See "Annuity Options.") A request for
transfer can be made either in writing or by telephone. The telephone
transfer privilege is available automatically; no special election is
necessary. All transfers must be in accordance with the terms of the
Contract. Any transfer will be based on the Accumulation Unit Value next
determined after the Company receives a valid transfer request at its Home
Office.
During the Accumulation Period, twelve free transfers are allowed per
calendar year. Thereafter, the Company reserves the right to charge up to $10
for each additional transfer. The Company currently does not impose this
charge. Currently, during the Annuity Period, four transfers are allowed each
calendar year.
Dollar Cost Averaging Program
You may establish automated transfers of Account Values on a monthly or
quarterly basis through the Company's Dollar Cost Averaging Program. Dollar
cost averaging is a system for investing a fixed amount of money at regular
intervals over a period of time. The Dollar Cost Averaging Program permits
the transfer of amounts from any of the variable funding options and the
one-year Guaranteed Term to any of the Subaccounts. A market value adjustment
will not be applied to dollar cost averaging transfers from the one-year
Guaranteed Term. (See the Appendix for a discussion of the restrictions and
features attributable to the Guaranteed Account.)
Dollar cost averaging does not ensure a profit nor guarantee against loss
in a declining market. You should consider your financial ability to continue
purchases through periods of low price levels. For additional information,
please refer to the "Inquiries" section of the Prospectus Summary, which
describes how you can obtain further information.
The Dollar Cost Averaging Program is not available to individuals who have
elected an Additional Withdrawal Option or the Account Rebalancing Program.
Account Rebalancing Program
The Account Rebalancing Program allows you to have portions of your
Account Value automatically reallocated annually to a specified percentage.
Only Account Values accumulating in the Subaccounts can be rebalanced. You
may participate in this program by completing the Account Rebalancing section
of the Application, or by sending a written request to the Company at its
Home Office. The Account Rebalancing Program does not ensure a profit nor
guarantee against loss in a declining market.
The Account Rebalancing Program is not available to Certificate Holders
who have elected the Dollar Cost Averaging Program.
WITHDRAWALS
=============================================================================
All or a portion of your Account Value may be withdrawn at any time during
the Accumulation Period. Withdrawal restrictions applicable to Section 403(b)
Contracts are described below. To request a withdrawal, you must properly
complete a disbursement form and send it to our Home Office. Payments for
withdrawal requests will be made in accordance with Securities and Exchange
Commission requirements, but normally not later than seven calendar days
following our receipt of a disbursement form. Withdrawals may be subject to a
deferred sales charge (see "Charges and Deduction") and to taxes and to tax
penalties (see "Tax Status").
Withdrawals may be requested in one of the following forms:
(bullet) Full Withdrawal of an Account: The amount paid for a full withdrawal
will be the Adjusted Account Value minus any applicable deferred
sales charge and maintenance fee due.
(bullet) Partial Withdrawals: (Percentage): The amount paid will be the
percentage of the Adjusted Account Value requested minus any
applicable deferred sales charge.
(bullet) Partial Withdrawals: (Specified Dollar Amount): The amount paid will
be the dollar amount requested. However, the amount withdrawn from
your Account will
- - --------------------------------------------------------------------------------
11
<PAGE>
equal the amount you request plus any applicable deferred sales
charge and plus or minus any applicable market value adjustment.
For any partial withdrawal, the value of the Accumulation Units canceled
will be withdrawn proportionately from the Guaranteed Account or each
Subaccount in which your Account is invested, unless you request otherwise in
writing. All amounts paid will be based on your Account Value as of the next
Valuation Date after we receive a request for withdrawal at our Home Office,
or on such later date as the disbursement form may specify.
The tax treatment of withdrawals from each Nonqualified Contract may be
affected if you own other annuity contracts issued by us (or our affiliates)
that were purchased on or after October 21, 1988. (See "Tax Status.")
Withdrawal Restrictions from 403(b) Plans. Under Section 403(b) Contracts,
the withdrawal of salary reduction contributions and earnings on such
contributions is generally prohibited prior to the participant's death,
disability, attainment of age 59-1/2, separation from service or financial
hardship. (See "Tax Status.")
ADDITIONAL WITHDRAWAL OPTIONS
=============================================================================
The Company offers certain withdrawal options under the Contract that are
not considered Annuity Options ("Additional Withdrawal Options"). To exercise
these options, your Account Value must meet the minimum dollar amount and age
criteria applicable to that option.
The Additional Withdrawal Options currently available under the Contract
include the following:
(bullet) SWO--Systematic Withdrawal Option. SWO is 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 accumulated under a Contract.
(bullet) ECO--Estate Conservation Option. 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. ECO
is available only under Qualified Contracts. Under ECO, the Company
calculates the minimum distribution amount required by law, and pays
you that amount once a year. (See "Tax Status.")
Other Additional Withdrawal Options may be added from time to time.
Additional information relating to any of the Additional Withdrawal Options
may be obtained from your local representative or from the Company at its
Home Office.
If you select one of the Additional Withdrawal Options, you will retain
all of the rights and flexibility permitted under the Contract during the
Accumulation Period. Your Account Value will continue to be subject to the
charges and deductions described in this Prospectus.
Once you elect an Additional Withdrawal Option, you may revoke it any time
by submitting a written request to our Home Office. Once an option is
revoked, it may not be elected again for three years, nor may any other
Additional Withdrawal Option be elected unless permitted by the Code. The
Company reserves the right to discontinue the availability of one or all of
these Additional Withdrawal Options for new elections at any time, and/or to
change the terms of future elections.
DEATH BENEFIT DURING ACCUMULATION PERIOD
=============================================================================
A death benefit will be payable to the Beneficiary(ies) if the Certificate
Holder or the Annuitant dies before annuity payments have commenced. Upon the
death of a joint Certificate Holder prior to the Annuity Date, the surviving
Certificate Holder, if any, will become the designated Beneficiary. Any other
Beneficiary designation on record with the Company at the time of death will
be treated as a contingent Beneficiary.
The amount of death benefit proceeds will be determined as of the date of
death. Under some circumstances, the amount of the death benefit is
guaranteed, as described below.
Death Benefit Amount
Upon the death of the Annuitant, the guaranteed death benefit proceeds
will be the greatest of:
(1) the total Purchase Payment(s) applied to the Account, minus the sum of
all amounts withdrawn, annuitized or deducted from such Account;
(2) the highest step-up value as of the date of death. The step-up value is
determined on each anniversary of the
- - --------------------------------------------------------------------------------
12
<PAGE>
Effective Date, up to the Annuitant's 75th birthday (85th birthday for
Contracts or Certificates issued in New York). Each step-up value is
calculated as the Account Value on the Effective Date anniversary,
increased by Purchase Payments applied, and decreased by partial
withdrawals, annuitizations and deductions taken from the Account since
the Effective Date anniversary; or
(3) the Account Value as of the date of death.
The excess, if any, of the guaranteed death benefit value over the Account
Value is determined as of the date of death. Any excess amount will be
deposited and allocated to the money market Subaccount available under the
Contract. The Account Value on the claim date plus any excess amount
deposited into the Account becomes the Certificate Holder's Account Value.
The claim date is the date we receive valid proof of death and the
Beneficiary's claim at our Home Office.
Upon the death of the Annuitant's spousal Beneficiary who continued the
Account in his or her own name, the amount of the death benefit proceeds will
be equal to the Adjusted Account Value on the claim date, less any deferred
sales charge applicable to any Purchase Payments made since the death of the
Annuitant.
If the spousal beneficiary continued the Account after the death of a
Certificate Holder who was not the Annuitant, the amount of death benefit
proceeds payable upon the spousal beneficiary's death will be equal to the
Adjusted Account Value on the claim date. Full or partial Withdrawals may be
subject to a deferred sales charge in accordance with the usual rules
regarding the deferred sales charge. (See "Deferred Sales Charge.")
Under Nonqualifed Contracts only, if the Certificate Holder is not the
Annuitant and dies, the amount of death benefit proceeds will be equal to the
Adjusted Account Value on the claim date. Full or partial withdrawals may be
subject to a deferred sales charge.
For amounts held in the Guaranteed Account, see the Appendix for a
discussion of the calculation of death benefit proceeds.
Death Benefit Payment Options
Death benefit proceeds may be paid to the Beneficiary as described below.
If you die and no Beneficiary exists, the death benefit will be paid in a
lump sum to your estate. Prior to any election by the Beneficiary, the
Account Value will remain in the Account and the Account Value will continue
to be affected 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 option (subject to a market value adjustment, as
applicable). The Code requires that distributions begin within a certain time
period, as described below. If no elections are made, no distributions will
be made. Failure to commence distributions within those time periods can
result in tax penalties.
Nonqualified Contracts. Under a Nonqualified Contract, if you die, or if you
are a nonnatural person and the Annuitant dies, and the Beneficiary is your
surviving spouse, he or she automatically becomes the successor Certificate
Holder. The successor Certificate Holder may exercise all rights under the
Account and (1) continue in the Accumulation Period; (2) elect to apply some or
all of the Adjusted Account Value to any of the Annuity Options; or (3) receive
at any time a lump sum payment equal to all or a portion of the Adjusted Account
Value. If you die and you are not the Annuitant, any applicable deferred sales
charge will be applied if a lump sum payment is elected. Under the Code,
distributions are not required until the successor Certificate Holder's death.
If you die and the Beneficiary is not your surviving spouse, he or she may
elect option (2) or (3) above. According to the Code, any portion of the
Adjusted Account Value not distributed in installments over the life or life
expectancy beginning within one year of your death, must be paid within five
years of your death. (See "Tax Status of the Contract.")
If you are a natural person but not the Annuitant and the Annuitant dies, the
Beneficiary may elect to apply the Adjusted Account Value to an Annuity Option
within 60 days or to receive a lump sum payment equal to the Adjusted Account
Value, subject to state regulatory approval. If the Beneficiary does not elect
an Annuity Option within 60 days of the date of death, the gain, if any, will be
includable in the Beneficiary's income in the year the Annuitant dies.
If SWO is in effect, payments will cease at the Certificate Holder's or
Annuitant's death. A Beneficiary, however, may elect to continue SWO.
Qualified Contracts. Under a Qualified Contract, the death benefit is paid at
the death of the participant, who is the Annuitant under the Contract. The
Beneficiary has the following options: (1) apply some or all of the Adjusted
Account Value to any of the Annuity Options, subject to the
- - --------------------------------------------------------------------------------
13
<PAGE>
distribution rules in Code Section 401(a)(9), or (2) receive at any time a
lump sum payment equal to all or a portion of the Adjusted Account Value. If
the Account was established in conjunction with a Section 401(a) qualified
pension or profit sharing plan or a Section 457 deferred compensation plan,
payment will be made, as directed by the Certificate Holder, to either the
Certificate Holder or to the plan beneficiary.
If ECO or SWO is in effect and the participant dies before the required
beginning date for minimum distributions, payments will cease. A Beneficiary,
or the Certificate Holder on behalf of a plan Beneficiary, may elect ECO or
SWO provided the election would satisfy the Code minimum distribution rules.
If ECO or SWO is in effect and the participant dies after the required
beginning date for minimum distributions, payments will continue as permitted
under the Code minimum distribution rules, unless the option is revoked.
Death benefit payments must satisfy the distribution rules in Code Section
401(a)(9). (See "Tax Status of the Contract.")
ANNUITY PERIOD
=============================================================================
Annuity Period Elections
You must notify us in writing of the date you want Annuity Payments to
start (the "Annuity Date") and the Annuity Option elected. Payments may not
begin earlier than one year after purchase, or, unless we consent, 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 (fifth
anniversary for Contracts issued in Pennsylvania). For Contracts or
Certificates issued in New York, Annuity Payments may not begin later than
the first day of the month following the Annuitant's 90th birthday.
Annuity Payments will not begin until you have selected an Annuity Date
and an Annuity Option. Until a date and option are elected, the Account will
continue in the Accumulation Period.
As of January 1, 1997, the Code generally requires that for Qualified
Contracts, other than IRAs and for five- percent owners in other Qualified
Contracts, minimum annual distributions of the Account Value begin by April
1st of the calendar year following the calendar year in which a participant
attains age 70-1/2 or retires, whichever occurs later. For IRA depositors and
for five-percent owners, minimum distributions must begin by April 1 of the
calendar year following the calendar year in which the participant attains
age 70-1/2. In addition, distributions must be in a form and amount
sufficient to satisfy the Code requirements. These requirements may be
satisfied by the election of certain Annuity Options or Additional Withdrawal
Options. (See "Tax Status.") For Nonqualified Contracts, failure to select an
Annuity Option and an Annuity Date, or postponement of the Annuity Date past
the Annuitant's 85th birthday or tenth anniversary of your last Purchase
Payment may have adverse tax consequences. You should consult with a
qualified tax adviser if you are considering such a course of action.
At least 30 days prior to the Annuity Date, you must notify us in writing
of the following:
(bullet) the date on which you would like Annuity Payments to begin;
(bullet) the Annuity Option under which you want payments to be calculated
and paid;
(bullet) whether the payments are to be made monthly, quarterly,
semi-annually or annually; and
(bullet) the investment option(s) used to provide Annuity Payments (i.e., a
fixed Annuity using the general account or a variable Annuity using
any of the Subaccounts available at the time of annuitization or a
combination of the two).
Once Annuity Payments begin, the Annuity Option may not be changed. (See
"Annuity Options" below for more information about transfers during the
Annuity Period.)
Partial Annuitization
You may elect an Annuity Option with respect to a portion of your Account
Value, while leaving the remaining portion of your Account Value invested in
the Accumulation Period. The Code and the regulations do not specifically
address the tax treatment applicable to payments provided in this way.
Whether such payments are taxable as annuity payments or as withdrawals is
currently unclear; therefore, you should consult with a qualified tax adviser
if you are considering a partial annuitization of your Account.
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14
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Annuity Options
The Certificate Holder may choose one of the following Annuity Options:
Lifetime Annuity Options:
(bullet) Option 1--Life Annuity--An annuity with payments ending on the
Annuitant's death.
(bullet) Option 2--Life Annuity with Guaranteed Payments--An annuity with
payments guaranteed for 5-30 years.
(bullet) Option 3--Life Annuity with Cash Refund Feature--An annuity with a
cash refund feature. Payments are guaranteed for the amount applied
to the Annuity option. If the Annuitant dies before the amount
applied to the Annuity Option (less any applicable premium tax) has
been paid, any remaining balance will be paid in one sum to the
Beneficiary. This option is available only when all payments are as
a fixed Annuity.
(bullet) Option 4--Life Annuity Based Upon the Lives of Two Annuitants--An
annuity paid during the lives of the Annuitant and a second
Annuitant. The Certificate Holder selects an Annuity with 100%,
66-2/3% or 50% of the payment to continue after the first death, or
an Annuity with 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.
(bullet) Option 5--Life Annuity Based Upon the Lives of Two Annuitants with
Guaranteed Payments--An Annuity with Payments for a minimum of 5-30
years, with 100% of the payment to continue after the first death.
(bullet) Option 6--Life Annuity Based Upon the Lives of Two Annuitants with a
Cash Refund Feature--An Annuity with 100% of the payment to continue
after the first death with a cash refund feature. Payments are
guaranteed for the amount applied to the Annuity Option. If both
Annuitants die prior to the total payment of the amount applied to
the Annuity Option (less any premium tax), any remaining balance
will be paid in one sum to the beneficiary. This option is available
only when all payments are as a Fixed Annuity.
If Option 1 or 4 is elected, it is possible that only one Annuity Payment
will be made if the Annuitant under Option 1, or the surviving Annuitant
under Option 4, should die prior to the due date of the second Annuity
Payment. Once lifetime Annuity payments begin, the Certificate Holder cannot
elect to receive a lump-sum settlement.
Nonlifetime Annuity Option:
Under the nonlifetime option, payments may be made for generally 5-30
years, as selected by the Certificate Holder. If this option is elected as a
variable Annuity, the Certificate Holder may request that the present value
of all or any portion of the remaining variable payments be paid in one sum.
However, 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.") If the nonlifetime option is elected on
a fixed basis, you cannot elect to receive a lump-sum settlement.
We may also offer additional Annuity Options under your Contract from time
to time. You can call the number listed in the "Inquiries" section of the
Prospectus Summary, to determine which options are available and the terms of
such options. Additional or enhanced options may not be available to those
already receiving Annuity payments.
Annuity Payments Date Payments Start. When payments start, the age of the
Annuitant plus the number of years for which payments are guaranteed must not
exceed 95. For Qualified Contracts only, Annuity Payments may not extend beyond
(a) the life of the Annuitant, (b) the joint lives of the Annuitant and
beneficiary, (c) a period certain greater than the Annuitant's life expectancy,
or (d) a period certain greater than the joint life expectancies of the
Annuitant and Beneficiary.
Amount of Each Annuity Payment. The amount of each payment depends on how
you allocate your Account Value between fixed and variable payouts (some
options require all payments be made on a fixed basis). No election may be
made that would result in the 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 Date is insufficient to elect an
option for the minimum amount specified, a lump-sum payment must be elected.
We 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.
If Annuity Payments are to be made on a variable basis, the first and
subsequent payments will vary depending on the assumed net investment rate
selected (3-1/2% or 5% per
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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 exceeds 5% on an annualized basis. Annuity Payments would decline if the
rate were below 5%. 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. (See the Statement of
Additional Information for further discussion on the impact of selecting an
assumed net investment rate.)
Charges Deducted During the Annuity Period
We make a daily deduction for mortality and expense risks from any amounts
held on a variable basis. Therefore, electing the nonlifetime option on a
variable basis will result in a deduction being made even though we assume no
mortality risk. We may also deduct a daily administrative charge from amounts
held under the variable options. This charge, established when a variable
Annuity Option is elected, will not exceed 0.25% per year of amounts held on
a variable basis. Once established, the charge will be effective during the
entire Annuity Period. (See "Charges and Deductions.")
Death Benefit Payable During the Annuity Period
The death benefit, if any, due when the Annuitant dies after Annuity
Payments have begun, will depend on the terms of the Contract and the Annuity
Option selected. If Option 1 or Option 4 was elected, Annuity Payments will
cease on the death of the Annuitant under Option 1 or the death of the
surviving Annuitant under Option 4.
If Lifetime Option 2 or Option 5 was elected and the death of the
Annuitant under Option 2, or the surviving Annuitant under Option 5, occurs
prior to the end of the guaranteed minimum payment period, we will continue
payments to the Beneficiary unless the Beneficiary elects a lump sum.
If the nonlifetime option was elected, and the Annuitant dies before all
payments are made, the value of any remaining payments will be paid to the
Beneficiary unless the Beneficiary elects a lump sum.
When the Annuitant dies after Annuity Payments have begun and if there is
a death benefit payable under the Annuity option elected, the remaining value
must be distributed to the Beneficiary at least as rapidly as under the
original method of distribution.
Any lump-sum payment paid under the applicable lifetime or nonlifetime
Annuity options will be made within seven calendar days after acceptable
proof of death, and a request for payment are received at our Home Office.
The value of any death benefit proceeds will be determined as of the next
Valuation Date after we receive acceptable proof of death and a request for
payment. Under Options 2 and 5, such value will be reduced by any payments
made after the date of death.
TAX STATUS
=============================================================================
Introduction
The following provides a general discussion and is not intended as tax
advice. This discussion reflects the Company's understanding of current
federal income tax law. Such laws may change in the future, and it is
possible that any change could be retroactive (i.e., effective prior to the
date of the change). In addition, this discussion does not cover the
potential application of federal estate and gift tax laws, or state, local or
any other tax law. The Company makes no guarantee regarding the tax treatment
of any contract or transaction involving a Contract.
The Contract may be purchased on a non-tax qualified basis ("Nonqualified
Contract") or purchased and used in connection with certain retirement
arrangements entitled to special income tax treatment under Section 401(a),
403(b), 408(b) or 457 of the Code ("Qualified Contracts"). 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,
Certificate Holder or Beneficiary may depend upon the tax status of the
individual concerned. Any person concerned about these tax implications
should consult a competent tax adviser before initiating any transaction.
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, it will not be
taxed separately as a "regulated investment company" under the Code.
Investment income and realized 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 realized
net capital gains will not be taxed to the extent that such income and gains
are applied to increase the reserves under the Contracts.
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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 interpretation 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 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 addition, 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 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 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 Distributions--Nonqualified Contracts: 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 in effect at the time of the Certificate Holder'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 Account may be
continued with the surviving spouse as the new Certificate Holder.
The Nonqualifed 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 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.
The discussion under "Taxation of Annuities" below is based on the
assumption that the Contract qualifies as an annuity contract for federal
income tax purposes.
Required Distributions--Qualified Contracts: The Code has required
distribution rules for Section 401(a), 403(b) and 457 Plans and Individual
Retirement Annuities. Other than for IRAs and for five-percent owners in
other Qualified Contracts distributions must generally begin by April 1 of
the calendar year following the calendar year in which the participant
attains age 70-1/2 or retires, whichever occurs later. For IRA depositors and
for five-percent owners, minimum distributions must begin by April 1 of the
calendar year following the calendar year in which the participant attains
age 70-1/2. Under 403(b) plans, if the Company maintains separate records,
distribution of amounts held as of December 31, 1986 must generally
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17
<PAGE>
begin by the end of the calendar year in which the participant attains age 75
(or retires, whichever occurs later). However, special rules require that
some or all of the balance be distributed earlier if any distributions are
taken in excess of the minimum required amount.
To comply with these provisions, distributions must be in a form and
amount sufficient to satisfy the minimum distribution and minimum
distribution incidental death benefit rules specified in Section 401(a) (9)
of the Code.
In general, annuity payments must be distributed over the participant's
life or the joint lives of the participant and beneficiary, or over a period
not greater than the participant's life expectancy or the joint life
expectancies of the participant and beneficiary. Also, any distribution under
a Section 457 Plan payable over a period of more than one year must be made
in substantially nonincreasing amounts.
If the participant dies on or after the required beginning date for
minimum distributions, distributions to the beneficiary must be made at least
as rapidly as the method of distribution in effect at the time of the
participant's death. However, if the required minimum distribution is
calculated each year based on the participant's single life expectancy or the
joint life expectancies of the participant and beneficiary, the regulations
for Code Section 401(a)(9) provide specific rules for calculating the
required minimum distributions at the participant's death. For example, if
ECO was elected with the calculation based on the participant's single life
expectancy, and the life expectancy is recalculated each year, the
recalculated life expectancy becomes zero in the calendar year following the
participant's death and the entire remaining interest must be distributed to
the beneficiary by December 31 of the year following the participant's death.
However, a spousal beneficiary, other than under a Section 457 Plan, has
certain rollover rights which can only be exercised in the year of the
participant's death. The rules are complex and the participant should consult
a tax adviser before electing the method of calculation to satisfy the
minimum distribution requirements.
If the participant dies before the required beginning date for minimum
distributions, the entire interest must be distributed by December 31 of the
calendar year containing the fifth anniversary of the date of the
participant's death. Alternatively, payments may be made over the life of the
beneficiary or over a period not extending beyond the life expectancy of the
beneficiary, not to exceed 15 years for a non-spousal beneficiary under a
Section 457 Plan, provided the distribution begins to a non-spouse
beneficiary by December 31 of the calendar year following the calendar year
of the participant's death. If payments are made to a spousal beneficiary,
distributions must begin by the later of December 31 of the calendar year
following the calendar year of the death or December 31 of the calendar year
in which the participant would have attained age 70-1/2.
An exception applies for a spousal beneficiary under an Individual
Retirement Annuity. In lieu of taking a distribution under these rules, a
spousal Beneficiary may elect to treat the Account as his or her own IRA and
defer taking a distribution until his or her age 70-1/2. The surviving spouse
is deemed to have made such an election if the surviving spouse makes a
rollover to or from the Account or fails to take a distribution within the
required time period.
If the participant or beneficiary fails to take the required minimum
distribution for any tax year, a 50% excise tax is imposed on the required
amount that was not distributed.
Taxation of Annuity Contracts
In General: Section 72 of the Code governs taxation of annuities in
general. The Company believes that a Certificate Holder under a Nonqualified
Contract who is a natural person generally is not taxed on increases in the
Account 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 taxable portion of a distribution (in the form of a single sum
payment or an Annuity) is taxable as ordinary income.
Non-Natural Holders of a Nonqualified Contract: If the Certificate Holder
is not a natural person, a Nonqualified Contract is not treated as an annuity
for income tax purposes and the "income on the contract" for the taxable year
is currently taxable as ordinary income. "Income on the contract" is any
increase over the year in the Surrender Value, adjusted for Purchase Payments
made during the year, amounts previously distributed and amounts previously
included in income. There are some exceptions to the rule and a non-natural
person should consult with its tax adviser prior to purchasing this Contract.
A non-natural person exempt from federal income taxes should consult with its
tax adviser regarding treatment of "income on the contract" for purposes of
the unrelated business income tax. When the Certificate Holder is not a
natural person, the Annuitant is considered
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the Certificate Holder for the purpose of meeting the required
distribution-at-death rules. In addition, when the Certificate Holder is not
a natural person, a change in Annuitant is treated as the death of the
Certificate Holder.
The following discussion generally applies to Qualified Contracts or
Nonqualified Contracts owned by a natural person.
Withdrawals: In the case of a withdrawal under a Qualified Contract,
including withdrawals under SWO or ECO, the amount taxable is generally based
on the ratio of the "investment in the contract" to Account 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 a Qualified
Contract, the "investment in the contract" can be zero. Special tax rules may
be available for certain distributions from a Qualified Contract.
With respect to Nonqualified Contracts, partial withdrawals, including
withdrawals under SWO, are generally treated as taxable income to the extent
that the Account Value immediately before the withdrawal exceeds the
"investment in the contract" at that time. The Account 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 Certificate 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 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 Account 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.
Penalty Tax: In the case of a distribution pursuant to a Nonqualified
Contract, or a Qualified Contract other than a Qualified Contract sold in
conjunction with a Code Section 457 Plan, there may be imposed a federal
income tax penalty equal to 10% of the amount treated as taxable income.
In general, there is no penalty tax on distributions from a Nonqualified
Contract: (1) made on or after the date on which the taxpayer attains age
59-1/2; (2) made as a result of the death of the Certificate Holder; (3)
attributable to the taxpayer's total and permanent disability; (4) received
in substantially equal periodic payments (at least annually) over the life or
life expectancy of the taxpayer or the joint lives or joint life expectancies
of the taxpayer and a "designated beneficiary;" or (5) allocable to
"investment in the contract" before August 14, 1982.
If a distribution is made from a Qualified Contract sold in conjunction
with a Section 401(a) Plan or Section 403(b) Plan, the penalty tax will not
apply on distribution made when the participant (a) attains age 59-1/2, (b)
becomes permanently and totally disabled, (c) dies, (d) separates from
service with the plan sponsor at or after age 55, (e) rolls over the
distribution amount to another plan of the same type in accordance with the
terms of the Code, or (f) takes the distributions in substantially equal
periodic payments (at least annually) over his or her life or life expectancy
or the joint lives or joint life expectancies of the participant and plan
beneficiary, provided the participant has separated from service with the
plan sponsor. In addition, the penalty tax does not apply for the amount of a
distribution equal to unreimbursed medical expenses incurred by the
participant that qualify for deduction as specified in the Code. The Code may
impose other penalty taxes in other circumstances.
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In general, the same exceptions described in the preceding paragraph will
apply to distributions made from an Individual Retirement Annuity. Beginning
January 1, 1997, the penalty tax is also waived on distributions made from an
IRA to pay for health insurance premiums for certain unemployed individuals.
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. The assignment, pledge, or agreement to assign or pledge any
portion of the Account Value generally will be treated as a distribution. The
assignment or transfer of ownership of a Qualified Contract generally is not
allowed. 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.
CONTRACTS USED WITH CERTAIN RETIREMENT PLANS
=============================================================================
Qualified Contracts in General
The Qualified Contract is designed for use as an Individual Retirement
Annuity or as a Contract used in connection with certain employer sponsored
retirement plans. The tax rules applicable to participants and beneficiaries
in Qualified Contracts 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.
The Company makes no attempt to provide more than general information
about use of the Contracts with the various types of retirement plans.
Participants and beneficiaries under Qualified Contracts may be subject to
the terms and conditions of the retirement plans themselves, in addition to
the terms and conditions of the Contract issued in connection with such
plans. Some retirement plans are subject to distribution and other
requirements that are not incorporated in the provisions of the Contracts.
Purchasers are responsible for determining that contributions, distributions
and other transactions with respect to the Contracts satisfy applicable laws,
and should consult their legal counsel and tax adviser regarding the
suitability of the Contract.
Section 457 Plans. Code Section 457 provides for certain deferred
compensation plans. These plans may be offered with respect to service for
state governments, local governments, political subdivisions, agencies,
instrumentalities and certain affiliates of such entities, and tax exempt
organizations. These plans are subject to various restrictions on
contributions and distributions. The plans may permit participants to specify
the form of investment for their deferred compensation account. Prior to the
August 20, 1996 enactment of the Small Business Job Protection Act of 1996
(the "Small Business Act") compensation deferred under the plans, all
property and rights purchased with such amounts, and all income attributable
to such amounts, property or rights remained solely the property and rights
of the employer (without being restricted to the provision of benefits)
subject only to the claims of the employer's general creditors. For that
reason, depending on the terms of the particular plan, the employer may have
been entitled to draw on deferred amounts for purposes unrelated to its
Section 457 plan obligations.
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Under the Small Business Act, plans maintained by State or local
governments, their political subdivisions, agencies, instrumentalities and
certain affiliates will be required to hold all assets and income of the Plan
in trust for the exclusive benefit of plan participants and their
beneficiaries. For purposes of meeting the new requirement, custodial
accounts and annuity contracts are treated as trusts. State and local
government plans that were in existence on August 20, 1996 are allowed a
transition period that ends January 1, 1999 to comply with the new
requirement.
In general, all amounts received under a Section 457 plan are taxable and
reportable to the IRS as taxable income. Also, all amounts except death
benefit proceeds are subject to federal income tax withholding as wages. If
we make payments directly to a participant on behalf of the employer as
owner, we will withhold federal taxes (and state taxes, if applicable).
The Code imposes a maximum limit on annual Purchase Payments which may be
excluded from the participant's gross income. Such limit is generally the
lesser of $7,500 (as adjusted to reflect changes in the cost of living) or
33-1/3% of the participant's includible compensation (25% of gross
compensation).
Section 401(a) Plans. Section 401(a) permits corporate employers to
establish various types of retirement plans for employees, and permits
self-employed individuals to establish various types of retirement plans for
themselves and for their employees. These retirement plans may permit the
purchase of the Contract to accumulate retirement savings under the plans.
Adverse tax consequences to the plan, to the participant or to both may
result if this Contract is assigned or transferred to an individual except to
a participant as a means to provide benefit payments.
The Code imposes a maximum limit on annual Purchase Payments that may be
excluded from a participant's gross income. Such limit must be calculated
under the Plan by the employer in accordance with Section 415 of the Code.
This limit is generally the lesser of 25% of the participant's compensation
or $30,000. In addition, Purchase Payments will be excluded from a
participant's gross income only if the Section 401(a) Plan meets certain
nondiscrimination requirements.
All distributions will be taxed as they are received unless the
distribution is rolled over to another plan of the same type or to an
individual retirement annuity/account ("IRA") in accordance with the Code, or
unless the participant has made after-tax contributions to the plan, which
are not taxed upon distribution. The Code has specific rules that apply,
depending on the type of distribution received, if after-tax contributions
were made.
In general, payments received by a beneficiary after the participant's
death are taxed in the same manner as if the participant had received those
payments, except that a limited death benefit exclusion may apply for
payments due to deaths that occurred on or before August 20, 1996. This
exclusion no longer applies to payments due to deaths occurring after August
20, 1996.
Section 403(b) Plans. Under Section 403(b), contributions made by public
school systems or nonprofit healthcare organizations and other Section
501(c)(3) tax exempt organizations to purchase annuity contracts for their
employees are generally excludable from the gross income of the employee.
In order to be excludable from taxable income, total annual contributions
made by the participant and his or her employer cannot exceed either of two
limits set by the Code. The first limit, under Section 415, is generally the
lesser of 25% of includible compensation or $30,000. The second limit, which
is the exclusion allowance under Section 403(b), is usually calculated
according to a formula that takes into account the participant's length of
employment and any pretax contributions to certain other retirement plans.
These two limits apply to the participant's contributions as well as to any
contributions made by the employer on behalf of the participant. There is an
additional limit that specifically limits salary reduction contributions to
generally no more than $9,500 annually (subject to indexing); a participant's
own limit may be higher or lower, depending on certain conditions. In
addition, Purchase Payments will be excluded from a participant's gross
income only if the Plan meets certain nondiscrimination requirements.
Section 403(b)(11) restricts the distribution under Section 403(b)
contracts of: (1) salary reduction contributions made after December 31,
1988; (2) earnings on those contributions; and (3) earnings during such
period on amounts held as of December 31, 1988. Distribution of those amounts
may only occur upon death of the participant, attainment of age 59-1/2,
separation from service, total and permanent disability, or financial
hardship. In addition, income attributable to salary reduction contributions
may not be distributed in the case of hardship.
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Individual Retirement Annuities and Simplified Employee Pension Plans
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity,
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. Employers may establish Simplified Employee Pension (SEP) Plans and
contribute to an IRA owned by the employee. Purchasers of a Qualified
Contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service. Purchasers should seek competent
advice as to the suitability of the Contract for use with IRAs.
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 may be
provided the opportunity to elect not to have tax withheld from
distributions; however, certain distributions from Section 401(a) Plans and
Section 403(b) tax-deferred annuities are subject to mandatory 20% federal
income tax withholding. We will report to the IRS the taxable portion of all
distributions.
MISCELLANEOUS
=============================================================================
Distribution
The Company will serve as the principal underwriter for the securities
sold by this Prospectus. The Company is registered as a broker-dealer with
the Securities and Exchange Commission ("SEC") and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). As principal
underwriter, the Company will contract with one or more registered
broker-dealers, or with banks that may be acting as broker-dealers without
separate registration under the Securities Exchange Act of 1934 pursuant to
legal and regulatory exceptions ("Distributors") to offer and sell the
Contracts. The Company and one or more of its affiliates may also sell the
Contracts directly. All individuals offering and selling the Contracts must
either be registered representatives of a broker-dealer, or employees of a
bank exempt from registration under the Securities Exchange Act of 1934, and
must also be licensed as insurance agents to sell variable annuity contracts.
{From time to time, the Company may offer customers of certain
broker-dealers special guaranteed rates in connection with the Guaranteed
Account offered through the Contracts, and may negotiate different
commissions for these broker-dealers.}
{The Company may also contract with independent third party broker-dealers
who will act as wholesalers by assisting the Company in finding
broker-dealers or banks 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 Federated Insurance Series, may enter into agreements with some of
the Distributors to provide services to customers in connection with the 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 paid by FSC to
Distributors for these services may be based on the total number of assets in
the Funds attributable to the Distributor's customers.]
Payment of Commissions. {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. In addition, some sales personnel may receive various
types of non-cash compensation as special sales incentives, including trips and
educational and/or business seminars. Supervisory and other management personnel
of the Company may receive compensation that will vary based on the relative
profitablity to the Company of the funding options you select. Funding options
that invest in Funds advised by the Company or its affiliates are generally more
profitable to the Company.}
{We pay these commissions, fees and related distribution expenses out of
any deferred sales charges
- - --------------------------------------------------------------------------------
22
<PAGE>
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.}
[Commissions will be paid to Distributors who sell the Contracts.
Distributors will be paid commissions, up to an amount currently equal to 6.5%
of Purchase Payments for promotional or distribution expenses associated with
the marketing of the Contracts.]
Delay or Suspension of Payments
The Company reserves the right to suspend or postpone the date of payment
for any benefit or values (a) on any Valuation Date on which the New York
Stock Exchange ("Exchange") is closed (other than customary weekend and
holiday closings) or when trading on the Exchange is restricted; (b) when an
emergency exists, as determined by the SEC, so that disposal of securities
held in the Subaccounts is not reasonably practicable or is not reasonably
practicable for the Company fairly to determine the value of the Subaccount's
assets; or (c) during such other periods as the SEC may by order permit for
the protection of investors. The conditions under which restricted trading or
an emergency exists shall be determined by the rules and regulations of the
SEC.
Performance Reporting
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account. The Company may
advertise the "standardized average annual total returns" of the Subaccounts,
calculated in a manner prescribed by the SEC, as well as the
"non-standardized returns." "Standardized average annual total returns" are
computed according to a formula in which a hypothetical investment of $1,000
is applied to the Subaccount and then related to the ending redeemable values
over the most recent one, five and ten-year periods (or since inception, if
less than ten years). Standardized returns will reflect the reduction of all
recurring charges during each period (e.g., mortality and expense risk
charges, annual maintenance fees, administrative charge and any applicable
deferred sales charge). "Non-standardized returns" 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 monthly, quarterly, year-to-date and
three-year periods.
The Company may also advertise certain ratings, rankings or other
information related to the Company, the Subaccounts or the Funds. Further
details regarding performance reporting and advertising are described in the
Statement of Additional Information.
Voting Rights
Each Contract Holder may direct us in the voting of shares at
shareholders' meetings of the appropriate Funds(s). The number of votes to
which each Contract Holder may give direction will be determined as of the
record date. The number of votes each Contract Holder is entitled to direct
with respect to a particular Fund during the Accumulation Period equals the
portion of the Account Values(s) of the Contract 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 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.
If you are a Certificate Holder under a group Contract, you have a fully
vested (100%) interest in the benefits provided to you under your Account.
Therefore, you may instruct the group Contract Holder how to direct the
Company to cast the votes for the portion or the value of valuation reserve
attributable to your Account. Votes attributable to those Certificate Holders
who do not instruct the group Contract Holder will be cast by the Company in
the same proportion as votes for which instructions have been received by the
group Contract Holder. Votes attributable to individual or group Contract
Holders who do not direct us will be cast by us in the same proportion as
votes for which directions we have 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 Account.
Modification of the Contract
The Company may change the Contract as required by federal or state law.
In addition, the Company may, upon 30 days written notice to the Contract
Holder, make other changes to group Contracts that would apply only to
individuals who become Certificate Holders under that Contract after the
effective date of such changes. If the Contract Holder does not agree to a
change, the Company reserves the right to refuse to establish new Accounts
under the Contract. Certain changes will require the approval of appropriate
state or federal regulatory authorities.
- - --------------------------------------------------------------------------------
23
<PAGE>
Transfers of Ownership; Assignment
Assignments or transfers of ownership of a Qualified Contract generally
are not allowed except as permitted under the Code, incident to a divorce.
The prohibition does not apply to a Qualified Contract sold in conjunction
with (1) a Section 457 deferred compensation plan, or (2) a Section 401(a)
plan where the Contract is owned by a trustee. We will accept assignments or
transfers of ownership of a Nonqualified Contract or a Qualified Contract
where assignments or transfers of ownership are not prohibited, with proper
notification. The date of any such transfer will be the date we receive the
notification at our Home Office. (Refer to "Tax Status" for general tax
information.) If you are contemplating a transfer of ownership or assignment
you should consult a tax adviser due to the potential for tax liability.
No assignment of a Contract will be binding on us unless made in writing
and sent to us at our Home Office. The Company will use reasonable procedures
to confirm that the assignment is authentic, including verification of
signature. If the Company fails to follow its procedures, it would be liable
for any losses to you directly resulting from the failure. Otherwise, we are
not responsible for the validity of any assignment. The rights of the
Certificate Holder and the interest of the Annuitant and any Beneficiary will
be subject to the rights of any assignee of record.
Involuntary Terminations
We reserve the right to terminate any Account with a value of $2,500 or
less immediately following a partial withdrawal (unless otherwise required by
state law). However, an Individual Retirement Annuity may only be closed out
when Purchase Payments have not been received for a 24-month period and the
paid-up annuity benefit at maturity would be less than $20 per month. If such
right is exercised, you will be given 90 days advance written notice. No
deferred sales charge will be deducted for involuntary terminations. 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.
Legal Matters and Proceedings
The Company knows of no material legal proceedings pending to which the
Separate Account or the Company is a party or which would materially affect
the Separate Account. The validity of the securities offered by this
Prospectus has been passed upon by Counsel to the Company.
- - --------------------------------------------------------------------------------
24
<PAGE>
CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
=============================================================================
The Statement of Additional Information contains more specific information
on the Separate Account and the Contract, as well as the financial statements
of the Separate Account and the Company. A list of the contents of the SAI is
set forth below:
General Information and History
Variable Annuity Account B
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Annuity Payments
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of the Company
25
<PAGE>
APPENDIX
ALIAC GUARANTEED ACCOUNT
=============================================================================
The ALIAC Guaranteed Account (the "Guaranteed Account") is a credited
interest option available during the Accumulation Period under the Contracts.
This Appendix is a summary of the Guaranteed Account and is not intended to
replace the Guaranteed Account prospectus. You should read the accompanying
Guaranteed Account prospectus carefully before investing.
The Guaranteed Account is a credited interest option in which we guarantee
stipulated rates of interest for stated periods of time on amounts directed
to the Guaranteed Account. 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 for one year. Guaranteed interest rates
will never be less than an annual effective rate of 3%.
During a 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. 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.
Except for transfers from the one-year Guaranteed Term in connection with the
Dollar Cost Averaging Program, withdrawals taken in connection with an Estate
Conservation or Systematic Withdrawal distribution option, and withdrawals for
minimum distributions required by the Code for which the deferred sales charge
is waived, 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 the Certificate Holder receiving an amount which is
less than the amount paid into the Guaranteed Account.
For partial withdrawals during the Accumulation Period, amounts to be
withdrawn from the Guaranteed Account 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.
As a Guaranteed Term matures, assets accumulating under the Guaranteed
Account may be (a) transferred to a new Guaranteed Term, (b) transferred to
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.
If you do not provide instructions 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.
- - --------------------------------------------------------------------------------
26
<PAGE>
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 MVA will be applied to
transfers made due to annuitization under one of the lifetime Annuity Options
described in item (2) above.
The Certificate Holder may select a maximum of 18 different investment
options during the Accumulation Period. Under the 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
investment option.
Transfers of the Guaranteed Account 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 Account.
By notifying us at least 30 days prior to the Annuity Date, you may elect
a variable annuity and have amounts that have been accumulating under the
Guaranteed Account transferred to one or more of the Subaccounts available
during the Annuity Period. The Guaranteed Account 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.
Death Benefit
Full and partial withdrawals and transfers made from the Guaranteed
Account within six months after the date of the Annuitant's death will be the
greater of:
(1) the aggregate MVA amount (i.e., the sum of all market value adjusted
amounts calculated due to a withdrawal of amounts) which may be greater
or less than the Account Value of those amounts; or
(2) the applicable portion of the Account Value attributable to the
Guaranteed Account.
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
Account Value of those amounts.
Distribution
The Company is the principal underwriter of the Contract. The Company is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a broker-dealer, and is a member of the National
Association of Securities Dealers, Inc.
From time to time, the Company may offer customers of certain
broker-dealers special guaranteed rates in connection with the Guaranteed
Account offered through the Contracts, and may negotiate different
commissions for these broker-dealers.
- - --------------------------------------------------------------------------------
27
<PAGE>
- - --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT B
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- - --------------------------------------------------------------------------------
Statement of Additional Information dated May 1, 1997
Marathon Plus
New York Growth Plus
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account B (the
"Separate Account") dated May 1, 1997.
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
Customer Service
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
Page
----
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........................................ 9
Sales Material and Advertising.......................... 10
Independent Auditors.................................... 11
Financial Statements of the Separate Account............ S-1
Financial Statements of the Company..................... F-1
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company") is a stock life
insurance company which was organized under the insurance laws of the State of
Connecticut in 1976. Through a merger, it succeeded to the business of Aetna
Variable Annuity Life Insurance Company (formerly Participating Annuity Life
Insurance Company organized in 1954). As of December 31, 1996, the Company had
assets of $___ billion (subject to $___ billion of customer and other
liabilities, $___ billion of shareholder equity) which includes $___ billion in
assets held in the Company's separate accounts. The Company had $___ billion in
assets under management, including $__ billion in its mutual funds. As of
_________________, it ranked among the top __% of all U.S. life insurance
companies by size. The Company is a wholly owned subsidiary of Aetna Retirement
Holdings, Inc., which is in turn a wholly owned subsidiary of Aetna Retirement
Services, Inc. and an indirect wholly owned subsidiary of Aetna Inc. The
Company is engaged in the business of issuing life insurance policies and
annuity contracts in all states of the United States. The Company's Home Office
is located at 151 Farmington Avenue, Hartford, Connecticut 06156.
In addition to serving as the principal underwriter and the depositor for the
Separate Account, the Company is also a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. The Company 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 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 some unaffiliated sponsors of the Funds used as funding options under the
Contract. These fees generally range up 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 each of the Subaccounts of the Separate
Account will be invested exclusively in shares of the Funds described in the
prospectus. Purchase Payments made under the Contract may be allocated to one or
more of the Subaccounts. The Company may make additions to, deletions from or
substitution of available investment options as permitted by law and subject to
the conditions of the Contract. The availability of the Funds is subject to
applicable regulatory authorization. Not all Funds are available in all
jurisdictions or under all Contracts.
- 2 -
<PAGE>
The Funds currently available under the Contract are as follows:
<TABLE>
<S> <C> <C>
Aetna Variable Fund Federated Prime Money Fund II
Aetna Income Shares Federated Utility Fund II
Aetna Variable Encore Fund Fidelity VIP Equity-Income Portfolio
Aetna Investment Advisers Fund, Inc. Fidelity VIP Growth Portfolio
Aetna Ascent Variable Portfolio Fidelity VIP High Income Portfolio
Aetna Crossroads Variable Portfolio Fidelity VIP Overseas Portfolio
Aetna Legacy Variable Portfolio Fidelity VIP II Asset Manager Portfolio
Aetna Variable Capital Appreciation Portfolio Fidelity VIP II Contrafund Portfolio
Aetna Variable Growth Portfolio Fidelity VIP II Index 500 Portfolio
Aetna Variable Index Plus Portfolio Fidelity VIP II Investment Grade Bond Portfolio
Aetna Variable Small Company Portfolio Janus Aspen Aggressive Growth Portfolio
Alger American Balanced Portfolio Janus Aspen Balanced Portfolio
Alger American Growth Portfolio Janus Aspen Flexible Income Portfolio
Alger American Income and Growth Portfolio Janus Aspen Growth Portfolio
Alger American Leveraged AllCap Portfolio Janus Aspen Short-Term Bond Portfolio
Alger American MidCap Growth Portfolio Janus Aspen Worldwide Growth Portfolio
Alger American Small Cap Portfolio Lexington Emerging Markets Fund, Inc.
American Century VP Balanced Lexington Natural Resources Trust
(formerly "TCI Balanced") MFS Emerging Growth Series
American Century VP Capital Appreciation MFS Research Series
(formerly "TCI Growth") MFS Total Return Series
American Century VP International MFS Value Series
(formerly "TCI International") MFS World Governments Series
Federated American Leaders Fund II Oppenheimer Capital Appreciation Fund
Federated Fund for U. S. Government Securities II Oppenheimer Global Securities Fund
Federated Growth Strategies Fund II Oppenheimer Growth & Income Fund
Federated High Income Bond Fund II Oppenheimer Strategic Bond Fund
Federated International Equity Fund II
</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
The Company is both the depositor and the principal underwriter for the
securities sold by the prospectus. The Company offers the Contracts through life
insurance agents licensed to sell variable annuities who are Registered
Representatives as defined in the prospectus. 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 "Purchase" and "Contract
Valuation."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account available under the
Contracts. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and
- 3 -
<PAGE>
Exchange Commission (the "standardized return"), as well as "non-standardized
returns," 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 various Subaccounts under the Contract, and then
related to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. The standardized figures reflect the deduction of all recurring charges
during 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 the Contracts described in the prospectus.
The non-standardized figures will be calculated in a similar manner, except that
they 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 monthly, quarterly,
year-to-date and three-year periods.
If a Fund was in existence prior to the date it became available under the
Contract, standardized and non-standardized total returns may include periods
prior to such date. 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.
Investment results of the Subaccounts will fluctuate over time, and any
presentation of the Subaccounts' total return quotations for any prior period
should not be considered as a representation of how the Subaccounts will perform
in any future period. Additionally, the Account Value upon redemption may be
more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables shown below reflect the average annual standardized and
non-standardized total return quotation figures for the periods ended December
31, 1996 for the Subaccounts available under the Contract. Table A reflects the
total return quotations for Contracts issued nationwide (other than Contracts or
Certificates issued in New York). Table B reflects the total return quotations
for Marathon Plus and Growth Plus Contracts or Certificates issued in the state
of New York. For those Subaccounts where results are not available for the full
calendar period indicated, the percentage shown is an average annual return
since inception (denoted with an asterisk).
- 4 -
<PAGE>
<TABLE>
<CAPTION>
TABLE A
-------------------------------------------------------------------------------------------
FUND
($30 MAINTENANCE FEE) STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
-----------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund 04/30/75
- - -----------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares 06/01/78
- - -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund 09/01/75
- - -----------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc. 06/23/89
-----------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio 07/03/95
-----------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio 07/03/95
-----------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio 07/03/95
- - -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio 09/12/96
- - -----------------------------------------------------------------------------------------------------------------------------------
Alger American Balanced Portfolio 09/05/89
-----------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 01/08/89
-----------------------------------------------------------------------------------------------------------------------------------
Alger American Income and Growth
Portfolio 11/14/88
-----------------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap
Portfolio 01/25/95
-----------------------------------------------------------------------------------------------------------------------------------
Alger American MidCap Growth Portfolio 04/30/93
-----------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap Portfolio 09/21/88
-----------------------------------------------------------------------------------------------------------------------------------
American Century VP Balanced 05/01/91
-----------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital
Appreciation 11/20/87
-----------------------------------------------------------------------------------------------------------------------------------
American Century VP International 05/01/94
-----------------------------------------------------------------------------------------------------------------------------------
Federated American Leaders Fund II 02/10/94
-----------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government
Securities II 03/28/94
-----------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II 03/01/94
-----------------------------------------------------------------------------------------------------------------------------------
Federated Utility Fund II 02/10/94
-----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 10/22/86
- - -----------------------------------------------------------------------------------------------------------------------------------
- 5 -
<PAGE>
TABLE
-------------------------------------------------------------------------------------------
FUND
($30 MAINTENANCE FEE) STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
-----------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 11/07/86
- - -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 10/11/85
- - -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 02/13/87
- - -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager 09/06/89
Portfolio
- - -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 01/03/95
- - -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Index 500 Portfolio 08/27/92
- - -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Investment Grade
Bond Portfolio 12/05/88
- - -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth 09/13/93
Portfolio
- - -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 09/13/93
- - -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 09/13/93
- - -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 09/13/93
- - -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio 09/13/93
- - -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 09/13/93
- - -----------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund, Inc. 03/31/94
- - -----------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 10/14/91
- - -----------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series 07/24/95
- - -----------------------------------------------------------------------------------------------------------------------------------
MFS Research Series 07/26/95
- - -----------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series 01/03/95
- - -----------------------------------------------------------------------------------------------------------------------------------
MFS Value Series
- - -----------------------------------------------------------------------------------------------------------------------------------
MFS World Governments Series 06/14/94
- - -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund
- - -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund
- - -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Growth & Income Fund
- - -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
- 6 -
<PAGE>
TABLE B
CONTRACTS OR CERTIFICATES ISSUED IN NEW YORK
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Fund
($30 annual maintenance fee) STANDARDIZED NON-STANDARDIZED Inception
Date
------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund 04/30/75
- - ------------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares 06/01/78
- - ------------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund 09/01/75
- - ------------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc. 06/23/89
- - ------------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio 07/03/95
- - ------------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio 07/03/95
- - ------------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio 07/03/95
- - ------------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio 09/12/96
- - ------------------------------------------------------------------------------------------------------------------------------------
Alger American Balanced Portfolio 09/05/89
- - ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 01/08/89
- - ------------------------------------------------------------------------------------------------------------------------------------
Alger American Income and Growth
Portfolio 11/14/88
- - ------------------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap
Portfolio 01/25/95
- - ------------------------------------------------------------------------------------------------------------------------------------
Alger American MidCap Growth 04/30/93
Portfolio
- - ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap Portfolio 09/21/88
- - ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Balanced 05/01/91
- - ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital
Appreciation 11/20/87
- - ------------------------------------------------------------------------------------------------------------------------------------
American Century VP International 05/01/94
- - ------------------------------------------------------------------------------------------------------------------------------------
Federated American Leaders Fund II 02/10/94
- - ------------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government
Securities II 03/28/94
- - ------------------------------------------------------------------------------------------------------------------------------------
Federated Growth Strategies Fund II 11/01/95
- - ------------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II 03/01/94
- - ------------------------------------------------------------------------------------------------------------------------------------
Federated International Equity Fund 04/04/95
II
- - ------------------------------------------------------------------------------------------------------------------------------------
Federated Prime Money Fund II 11/14/94
- - ------------------------------------------------------------------------------------------------------------------------------------
Federated Utility Fund II 02/10/94
- - ------------------------------------------------------------------------------------------------------------------------------------
- 7 -
<PAGE>
------------------------------------------------------------------------------------------
Fund
($30 annual maintenance fee) STANDARDIZED NON-STANDARDIZED Inception
Date
------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- - ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 10/22/86
- - ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 11/07/86
- - ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 10/11/85
- - ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 02/13/87
- - ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager 09/06/89
Portfolio
- - ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 01/03/95
- - ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Index 500 Portfolio 08/27/92
- - ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Investment Grade
Bond Portfolio 12/05/88
- - ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth 09/13/93
Portfolio
- - ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 09/13/93
- - ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 09/13/93
- - ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 09/13/93
- - ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio 09/13/93
- - ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth 09/13/93
Portfolio
- - ------------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund, Inc. 03/31/94
- - ------------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 10/14/91
- - ------------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series 07/24/95
- - ------------------------------------------------------------------------------------------------------------------------------------
MFS Research Series 07/26/95
- - ------------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series 01/03/95
- - ------------------------------------------------------------------------------------------------------------------------------------
MFS Value Series
- - ------------------------------------------------------------------------------------------------------------------------------------
MFS World Governments Series 06/14/94
- - ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund
- - ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund
- - ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Growth & Income Fund
- - ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
- 8 -
<PAGE>
ANNUITY PAYMENTS
When Annuity payments are to begin, the value of the Account is determined using
Accumulation Unit values as of the tenth Valuation Date before the first Annuity
payment is due. Such 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 Date to the
next; such fluctuations reflect changes in the net investment factor for the
appropriate Subaccount(s) (with a ten Valuation Date 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 Account and that the value of an
Accumulation Unit for the tenth Valuation Date 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 Date on 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 Subaccount is
1.0015000 as of the tenth Valuation Date 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 the prior Valuation Date (assume such value to be
$13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation
Date on which the second payment is due.
- 9 -
<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.
SALES MATERIAL AND ADVERTISING
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.
We may distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Subaccounts to established market
indices such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average or to the percentage change in values of other management
investment companies that have investment objectives similar to the Subaccount
being compared.
We may publish in advertisements and reports, 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
Services, Inc. The purpose of the ratings is to reflect our 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. We may illustrate in advertisements the performance of the
underlying funds, if accompanied by performance which also shows the performance
of such funds, reduced by applicable charges under the Separate Account. We may
also show in advertisements the portfolio holdings of the underlying funds,
updated at various intervals. 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.
The Company may provide in advertising, sales literature, periodic publications
or other materials information on various topics of interest to current and
prospective Certificate Holders. These topics may include the relationship
between sectors of the economy and the economy as a whole and its effect on
various securities markets, investment strategies and techniques (such as value
investing, market timing, dollar cost averaging, asset allocation, constant
ratio transfer and account rebalancing), the advantages and disadvantages of
investing in tax-deferred and taxable investments, customer profiles and
hypothetical purchase and investment scenarios, financial management and tax and
retirement planning, and investment alternatives to certificates of deposit and
other financial instruments, including comparison between the Contracts and the
characteristics of and market for such financial instruments.
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.
- 10 -
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT B
Index
Independent Auditors' Report................................. S-
Statement of Assets and Liabilities.......................... S-
Statement of Operations...................................... S-
Statements of Changes in Net Assets.......................... S-
Notes to Financial Statements................................ S-
Condensed Financial Information.............................. S-
FINANCIAL STATEMENTS OF VARIABLE ANNUITY ACCOUNT B AND OF AETNA LIFE
INSURANCE AND ANNUITY COMPANY TO BE FILED BY AMENDMENT
S-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY ACCOUNT B
VARIABLE ANNUITY CONTRACTS
issued by
AETNA LIFE INSURANCE AND ANNUITY COMPANY
<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, 1996
- Statement of Operations for the year ended December 31, 1996
- Statements of Changes in Net Assets for the years ended
December 31, 1996 and 1995
- Notes to Financial Statements
Financial Statements of the Depositor:
- Independent Auditors' Report
- Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994
- Consolidated Balance Sheets as of December 31, 1996 and 1995
- Consolidated Statements of Changes in Shareholder's Equity
for the years ended December 31, 1996, 1995 and 1994
- Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
- 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)
(3.3) Form of Federated Broker Dealer Agreement (9/2/94)(4)
(4.1) Form of Variable Annuity Contract G-MP1(5/96)
(4.2) Form of Variable Annuity Contract Certificate MP1Cert (5/96)
(4.3) Form of Variable Annuity Contract I-MP1(5/96)
(4.4) Form of Variable Annuity Contract G-CDA-96(NY)
(4.5) Form of Variable Annuity Contract Certificate GMCC-96(NY)
(4.6) Form of Endorsements MP1IRA(5/97) and I-MP1IRA(5/97) to
Contracts G-MP1(5/96) and MP1CERT(5/96)
(4.7) Form of Endorsements MP1QP(5/97) and I-MP1QP(5/97) to
Contracts G-MP1(5/96) and MP1CERT(5/96)
<PAGE>
(4.8) Form of Endorsements MP1TDA(5/97) and I-MP1TDA(5/97) to
Contracts G-MP1(5/96) and MP1CERT(5/96)
(4.9) Form of Endorsements MP1DC(5/97) and I-MP1(5/97) to Contracts
G-MP1(5/96) and MP1CERT(5/96)
(4.10) Form of Endorsements G-MP1IRA(11/96) to Contracts G-CDA-96(NY)
and GMCC-96(NY)
(4.11) Form of Endorsements MP1END(5/97) and I-MP1END (5/97) to
Contracts GMP1(5/96) and MP1CERT(5/96)
(5) Form of Variable Annuity Contract Applications (300-MAR-IB and
710.6.13)(5)
(6.1) Certificate of Incorporation and By-Laws of Aetna Life
Insurance and Annuity Company(7)
(6.2) Amendment of Certificate of Incorporation of Aetna Life
Insurance and Annuity Company(8)
(7) Not applicable
(8.1) Fund Participation Agreement (Amended and Restated) between
Aetna Life Insurance and Annuity Company, Alger American Fund
and Fred Alger Management, Inc. dated as of March 31, 1995(3)
(8.2) Form of Fund Participation Agreement by and among Aetna Life
Insurance and Annuity Company, Insurance Management Series and
Federated Advisors (12/12/94)(9)
(8.3) Fund Participation Agreements between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1996, May 1, 1995, January 1,
1996 and March 1, 1996(8)
(8.4) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1996, May 1, 1995,
January 1, 1996 and March 1, 1996(8)
(8.5) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations
Company dated as of November 1, 1995(10)
(8.6) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994,
and amended March 1, 1996(3)
(8.7) 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(3)
(8.8) 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(2)
(8.9) Fund Participation Agreement among MFS Variable Insurance
Trust, Aetna Life Insurance and Annuity Company and
Massachusetts Financial Services Company
<PAGE>
(8.10) First Amendment dated September 3,1996 to Fund Participation
Agreement among MFS Variable Insurance Trust, Aetna Life
Insurance and Annuity Company and Massachusetts Financial
Services Company(11)
(8.11) Form of Fund Participation Agreement between Aetna Life
Insurance and Annuity Company and Oppenheimer Variable Annuity
Account Funds and OppenheimerFunds, Inc.
(8.12) 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(3)
(8.13) Form of Administrative Service Agreement between Aetna Life
Insurance and Annuity Company and Agency, Inc.(2)
(9) Opinion of Counsel*
(10.1) Consent of Independent Auditors*
(10.2) Consent of Counsel*
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data(11)
(14) Not applicable
(15.1) Powers of Attorney(8)
(15.2) Authorization for Signatures(3)
(27) Financial Data Schedule*
*To be filed by amendment
1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75986), as filed electronically on April
22, 1996.
2. Incorporated by reference to Post-Effective Amendment No. 22 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on April 22, 1996.
3. Incorporated by reference to Post-Effective Amendment No. 5 to Registration
Statement on Form N-4 (File No. 33-75986), as filed electronically on April
12, 1996.
4. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-79122), as filed electronically on
August 16, 1995.
5. Incorporated by reference to Post-Effective Amendment No. 15 to
Registration Statement on Form N-4 (File No. 33-34370), as filed on April
19, 1994.
6. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-87932), as filed electronically on
September 18, 1996.
7. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form S-1 (File No. 33-60477), as filed electronically on April
15, 1996.
8. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 11, 1997.
9. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-79122), as filed on September 15, 1994.
<PAGE>
10. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-88720), as filed electronically on June
28, 1996.
11. Incorporated by reference to Post-Effective Amendment No. 24 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on September 16, 1996.
<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
Timothy A. Holt Director, Senior Vice President and Chief Financial
Officer
Christopher J. Burns Director and Senior Vice President
Laura R. Estes Director and Senior Vice President
Gail P. Johnson Director and Vice President
John Y. Kim Director and Senior Vice President
Shaun P. Mathews Director and Vice President
Glen Salow Director and Vice President
Creed R. Terry Director and Vice President
Deborah Koltenuk Vice President and Treasurer, Corporate Controller
Frederick D. Kelsven Vice President and Chief Compliance Officer
Kirk P. Wickman Vice President, General Counsel and Secretary
* 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 reference to Item 26 of Post-Effective Amendment No.
12 to the Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 11, 1997.
Item 27. Number of Contract Owners
As of December 31, 1996, there were 47,053 individuals holding interests in
variable annuity contracts funded through Variable Annuity Account B.
<PAGE>
Item 28. Indemnification
Reference is hereby made to Section 33-771(f) of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and Section 33-776(4)
regarding indemnification of officers, employees and agents of Connecticut
corporations. These statutes provide in general that Connecticut corporations
incorporated prior to January 1, 1997 shall indemnify their officers, directors,
employees and agents against "liability" (defined as the obligation to pay a
judgment, settlement, penalty, fine, excise tax in the case of an employee
benefit plan or reasonable expenses incurred with respect to a proceeding). In
the case of a proceeding by or in the right of the corporation, indemnification
is limited to reasonable expenses incurred in connection with the proceeding
against the corporation to which the individual was named a party. The
corporation's obligation to provide such indemnification does not apply unless
(1) the individual has met the standard of conduct set forth in Section 33-771;
and (2) a determination is made (by majority vote of a quorum of the board of
directors who were not parties to the proceeding, or if a quorum cannot be
obtained, by a committee of the board selected as described in Section
33-775(b)(2); by special legal counsel selected by the board of directors or
members thereof as described in Section 33-775(b)(3); by shareholders) that the
individual met the standard set forth in Section 33-771; 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. Also, unless limited by
its Certificate of Incorporation, a corporation must indemnify an individual who
was wholly successful on the merits or otherwise against reasonable expenses
incurred by him in connection with a proceeding to which he was a party because
of his relationship as director, officer, employee or agent of the corporation.
The statute does specifically authorize a corporation to procure indemnification
insurance on behalf of an individual who is or was a director, officer, employer
or agent of the corporation. Consistent with the statute, Aetna Inc. 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.
Item 29. Principal Underwriter
(a) In addition to serving as the principal underwriter and depositor for
the Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also
acts as the principal underwriter and investment adviser for Aetna
Variable Encore Fund, Aetna Variable Fund, Aetna Series Fund, Inc.,
Aetna Generation Portfolios, Inc., Aetna Income Shares, Aetna
Investment Advisers Fund, Inc., Aetna GET Fund, and Aetna Variable
Portfolios, Inc. (all registered management investment companies under
the 1940 Act). Additionally, ALIAC acts as the principal underwriter
and depositor for Variable Life Account B and Variable Annuity Accounts
C and G (separate accounts of ALIAC registered as unit investment
trusts under the 1940 Act). ALIAC is also the principal underwriter for
Variable Annuity Account I (a separate account of Aetna Insurance
Company of America registered as a unit investment trust under the 1940
Act).
(b) See Item 25 regarding the Depositor.
<PAGE>
(c) Compensation as of December 31, 1996:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commissions Compensation*
- - ----------- ---------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Aetna Life Insurance $288,029 $17,661,810
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
Variable Annuity Account B.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules under it relating to the securities
described in and issued under this Registration Statement 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
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
<PAGE>
(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) The Company hereby represents that it is relying upon and will comply
with the provisions of Paragraphs (1) through (4) of the SEC Staff's
No-Action Letter dated November 22, 1988 with respect to language
concerning withdrawal restrictions applicable to plans established
pursuant to Section 403(b) of the Internal Revenue Code. See American
Counsel of Life Insurance; SEC No-Action Letter, [1989 Transfer Binder]
Fed. SEC. L. Rep. (CCH) P. 78,904 at 78,523 (November 22, 1988).
(e) 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.
(f) Aetna Life Insurance and Annuity Company represents that the fees and
charges deducted under the contracts covered by this registration
statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Variable Annuity Account B of Aetna Life Insurance and
Annuity Company has duly caused this Post-Effective Amendment No. 26 to its
Registration Statement on Form N-4 (File No. 33-34370) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut, on the 21st day of February, 1997.
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, this Post-Effective Amendment
No. 26 to the Registration Statement on Form N-4 (File No. 33-34370) has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- - --------- ----- ----
<S> <C> <C>
Daniel P. Kearney* Director and President )
- - ------------------------------------ (principal executive officer) )
Daniel P. Kearney )
)
Timothy A. Holt* Director, Senior Vice President and Chief )
- - ----------------------------------- Financial Officer )
Timothy A. Holt )
)
Christopher J. Burns* Director ) February
- - ------------------------------------ )
Christopher J. Burns ) 21, 1997
)
Laura R. Estes* Director )
- - ------------------------------------ )
Laura R. Estes )
)
Gail P. Johnson* Director )
- - ------------------------------------ )
Gail P. Johnson )
<PAGE>
)
John Y. Kim* Director )
- - ------------------------------------ )
John Y. Kim )
)
Shaun P. Mathews* Director )
- - ------------------------------------ )
Shaun P. Mathews )
)
Glen Salow* Director )
- - ------------------------------------ )
Glen Salow )
)
Creed R. Terry* Director )
- - ------------------------------------ )
Creed R. Terry )
)
Deborah Koltenuk* Vice President and Treasurer, Corporate Controller )
- - ------------------------------------ )
Deborah Koltenuk )
</TABLE>
By: /s/Julie E. Rockmore
------------------------------------------------------------
Julie E. Rockmore
*Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT B
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- - ----------- ------- ----
<S> <C> <C>
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.3.3 Form of Federated Broker Dealer Agreement (9/2/94) *
99-B.4.1 Form of Variable Annuity Contract G-MP1(5/96)
-----------------
99-B.4.2 Form of Variable Annuity Contract Certificate MP1Cert(5/96)
-----------------
99-B.4.3 Form of Variable Annuity Contract I-MP1(5/96)
-----------------
99-B.4.4 Form of Variable Annuity Contract G-CDA-96(NY)
-----------------
99-B.4.5 Form of Variable Annuity Contract Certificate GMCC-96(NY)
-----------------
99-B.4.6 Form of Endorsements MP1IRA(5/97) and I-MP1IRA(5/97) to Contracts
G-MP1(5/96) and MP1CERT(5/96)
-----------------
99-B.4.7 Form of Endorsements MP1QP(5/97) and I-MP1QP(5/97) to Contracts G-MP1(5/96)
and MP1CERT(5/96)
-----------------
99-B.4.8 Form of Endorsements MP1TDA(5/97) and I-MP1TDA(5/97) to Contracts
G-MP1(5/96) and MP1CERT(5/96)
-----------------
99-B.4.9 Form of Endorsements MP1DC(5/97) and I-MP1DC(5/97) to Contracts G-MP1DC(5/96)
and MP1CERT(5/96)
-----------------
99-B.4.10 Form of Endorsements G-MP1IRA(11/96)) to Contracts
G-CDA-96(NY) and GMCC-96(NY)
-----------------
99-B.4.11 Form of Endorsements MP1END(5/97) and I-MP1END(5/97) to Contract GMP1(5/96)
and MP1CERT(5/96)
-----------------
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- - ----------- ------- ----
99-B.5 Form of Variable Annuity Contract Applications (300-MAR-IB and 710.6.13 *
99-B.6.1 Certificate of Incorporation and By-Laws of Depositor *
99-B.6.2 Amendment of Certificate of Incorporation of Depositor *
99-B.8.1 Fund Participation Agreement (Amended and Restated) between Aetna Life *
Insurance and Annuity Company, Alger American Fund and Fred Alger
Management, Inc. dated March 31, 1995
99-B.8.2 Form of Fund Participation Agreement by and among Aetna Life Insurance and *
Annuity Company, Insurance Management Series and Federated Advisors
(12/12/94)
99-B.8.3 Fund Participation Agreements between Aetna Life *
Insurance and Annuity Company, Variable Insurance
Products Fund and Fidelity Distributors Corporation dated
February 1, 1994 and amended on December 15, 1994,
February 1, 1996, May 1, 1995, January 1, 1996 and March
1, 1996
99-B.8.4 Fund Participation Agreement between Aetna Life Insurance *
and Annuity Company, Variable Insurance Products Fund
II and Fidelity Distributors Corporation dated February
1, 1994 and amended on December 15, 1994, February 1,
1996, May 1, 1995, January 1, 1996 and March 1, 1996
99-B.8.5 Service Agreement between Aetna Life Insurance and Annuity Company and *
Fidelity Investments Institutional Operations Company dated as of November
1, 1995
99-B.8.6 Fund Participation Agreement between Aetna Life Insurance and Annuity *
Company and Janus Aspen Series dated April 19, 1994, and amended March 1,
1996
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- - ----------- ------- ----
99-B.8.7 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
99-B.8.8 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.8.9 Fund Participation Agreement among MFS Variable Insurance Trust, Aetna Life
Insurance and Annuity Company and Massachusetts Financial Services Company -----------------
99-B.8.10 First Amendment dated September 3,1996 to Fund Participation Agreement among *
MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and
Massachusetts Financial Services Company
99-B.8.11 Form of Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Oppenheimer Variable Annuity Account Funds and -----------------
OppenheimerFunds, Inc.
99-B.8.11.a Form of Service Agreement between OppenheimerFunds, Inc. and Aetna Life
Insurance and Annuity Company -----------------
99-B.8.12 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.8.13 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 Schedule for Computation of Performance Data *
99-B15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule **
</TABLE>
*Incorporated by reference
**To be filed by amendment
[Aetna logo] Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800) 531-4547
You may call the toll-free number shown above for answers to questions or to
resolve a complaint.
Aetna Life Insurance and Annuity Company, a stock company,
herein called Aetna, agrees to pay the benefits stated in this Contract.
Specifications
- - --------------------------------------------------------------------------------
Plan
SPECIMEN
- - --------------------------------------------------------------------------------
Type of Plan
SPECIMEN
- - --------------------------------------------------------------------------------
Contract Holder
SPECIMEN
- - --------------------------------------------------------------------------------
Contract Number
SPECIMEN
- - --------------------------------------------------------------------------------
Effective Date
SPECIMEN
- - --------------------------------------------------------------------------------
This Contract is delivered in SPECIMEN and is subject to the laws of that
jurisdiction
The variable features of the Group Contract are described in parts III and IV.
Right to Cancel
- - --------------------------------------------------------------------------------
The Group Contract Holder may cancel this Contract within 10 days by returning
it to the agent from whom it was purchased, or to Aetna at the address shown
above. Within seven days of receiving the Contract at its home office, Aetna
will return the amount of Certificate Holder Purchase Payment(s) received, plus
any increase, or minus any decrease, on the amount, if any, allocated to the
Separate Account fund(s).
This page and the pages that follow constitute the entire Contract.
Signed at the home office on the Effective Date.
/s/Daniel Kearney /s/Susan M. Schechter
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.
<PAGE>
Specifications
- - --------------------------------------------------------------------------------
Guaranteed There is a guaranteed interest rate for Purchase
Interest Rate Payment(s) 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(s) are subject to a deduction for
Purchase premium 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. THEREFORE, IT IS 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%
ALIAC Guaranteed Account (AG Account)
- - --------------------------------------------------------------------------------
Minimum Guaranteed 3.0% (effective annual rate of return)
Interest Rate:
Separate Account and AG Account
- - --------------------------------------------------------------------------------
Transfers: An unlimited number of Transfers are allowed
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.
Maintenance Fee: The annual Maintenance Fee is $30. If the
Account's Current Value is $50,000 or more on the
date the Maintenance Fee is to be deducted, the
Maintenance Fee is $0.
3
<PAGE>
Contract Schedule I (Continued)
Accumulation Period
Separate Account and AG Account (Cont'd)
- - --------------------------------------------------------------------------------
Surrender Fee: For each surrender, the Surrender Fee will be
determined as follows:
<TABLE>
<CAPTION>
Length of Time from Deposit of Net Surrender Fee
Purchase Payment (Years) (as percentage of
Net Purchase Payment)
<S> <C>
Less than 1 year 3%
More than 1 but less than 2 years 2%
More than 2 but less than 3 years 1%
More than 3 years 0%
</TABLE>
Systematic Withdrawal The specified payment or specified percentage may
Option (SWO): not be greater than 10% of the Account's Current
Value at time of election.
See 1. GENERAL DEFINITIONS for explanations.
4
<PAGE>
Contract Schedule II
Annuity Period
Separate Account
- - --------------------------------------------------------------------------------
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% (effective annual rate of return)
Interest Rate:
See 1. GENERAL DEFINITIONS for explanations.
5
<PAGE>
TABLE OF CONTENTS
I. GENERAL DEFINITIONS
- - --------------------------------------------------------------------------------
Page
1.01 Account ........................................................... 9
1.02 Accumulation Period ............................................... 9
1.03 Adjusted Current Value ............................................ 9
1.04 ALIAC Guaranteed Account (AG Account) ............................. 9
1.05 Annuitant ......................................................... 9
1.06 Annuity ........................................................... 9
1.07 Beneficiary ....................................................... 9
1.08 Certificate Holder ................................................ 9
1.09 Code .............................................................. 9
1.10 Contract .......................................................... 9
1.11 Contract Holder ................................................... 9
1.12 Current Value ..................................................... 9
1.13 Deposit Period .................................................... 10
1.14 Dollar Cost Averaging ............................................. 10
1.15 Fixed Annuity ..................................................... 10
1.16 Fund(s) ........................................................... 10
1.17 General Account ................................................... 10
1.18 Guaranteed Rates - AG Account ..................................... 10
1.19 Guaranteed Term ................................................... 10
1.20 Guaranteed Term(s) Groups ......................................... 10
1.21 Maintenance Fee ................................................... 11
1.22 Market Value Adjustment (MVA) ..................................... 11
1.23 Matured Term Value ................................................ 11
1.24 Matured Term Value Transfer ....................................... 11
1.25 Maturity Date ..................................................... 11
1.26 Net Purchase Payment(s) ........................................... 11
1.27 Nonunitized Separate Account ...................................... 11
1.28 Purchase Payment(s) ............................................... 11
1.29 Reinvestment ...................................................... 11
6
<PAGE>
Page
1.30 Separate Account .................................................. 12
1.31 Surrender Value ................................................... 12
1.32 Transfers ......................................................... 12
1.33 Valuation Period (Period) ......................................... 12
1.34 Variable Annuity .................................................. 12
II. GENERAL PROVISIONS
- - --------------------------------------------------------------------------------
2.01 Change of Contract ................................................ 12
2.02 Change of Fund(s) ................................................. 13
2.03 Nonparticipating Contract ......................................... 13
2.04 Payments and Elections ............................................ 14
2.05 State Laws ........................................................ 14
2.06 Control of Contract ............................................... 14
2.07 Designation of Beneficiary ........................................ 14
2.08 Misstatements and Adjustments ..................................... 14
2.09 Incontestability .................................................. 14
2.10 Grace Period ...................................................... 15
2.11 Individual Certificates ........................................... 15
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
- - --------------------------------------------------------------------------------
3.01 Net Purchase Payment .............................................. 15
3.02 Certificate Holder's Account ...................................... 15
3.03 Fund(s) Record Units -- Separate Account .......................... 15
3.04 Net Return Factor(s) -- Separate Account .......................... 16
3.05 Fund Record Unit Value -- Separate Account ........................ 16
3.06 Market Value Adjustment ........................................... 16
3.07 Transfer of Current Value from the Funds or AG Account ............ 17
3.08 Notice to the Certificate Holder .................................. 18
3.09 Loans ............................................................. 18
3.10 Systematic Withdrawal Option (SWO) ................................ 18
3.11 Death Benefit Amount .............................................. 20
7
<PAGE>
Page
3.12 Death Benefit Options Available to Beneficiary .................... 20
3.13 Liquidation of Surrender Value .................................... 22
3.14 Surrender Fee ..................................................... 22
3.15 Payment of Surrender Value ........................................ 23
3.16 Payment of Adjusted Current Value ................................. 23
IV. ANNUITY PROVISIONS
- - --------------------------------------------------------------------------------
4.01 Choices ........................................................... 23
4.02 Terms of Annuity Options .......................................... 24
4.03 Death of Annuitant/Beneficiary .................................... 25
4.04 Fund(s) Annuity Units -- Separate Account ......................... 26
4.05 Fund(s) Annuity Unit Value -- Separate Account .................... 26
4.06 Annuity Net Return Factor(s) -- Separate Account .................. 26
4.07 Annuity Options ................................................... 27
8
<PAGE>
I. GENERAL DEFINITIONS
- - --------------------------------------------------------------------------------
1.01 Account: A record established for each Certificate Holder
to maintain the value of all Net Purchase Payments
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 an Account to provide
future Annuity payment(s).
1.03 Adjusted Current Value: The Current Value of an Account plus or minus any
aggregate AG Account MVA, if applicable. (See
1.22)
1.04 ALIAC Guaranteed An accumulation option where Aetna guarantees
Account (AG Account): stipulated rate(s) of interest for 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
death benefit due under the Contract. 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.
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 the 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 3.11 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.
9
<PAGE>
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 and 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. Dollar Cost Averaging is not
available with the Systematic Withdrawal Option
or the Estate Conservation Option.
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.
1.17 General Account: The Account holding the assets of Aetna, other
than those assets held in Aetna's separate
accounts.
1.18 Guaranteed Rates -- Aetna will declare the interest rate(s) applicable
AG Account: to a specific Guaranteed Term at the start of the
Deposit Period for that Guaranteed Term. The
rate(s) are guaranteed by Aetna for the Deposit
Period and the ensuing Guaranteed Term. The
Guaranteed Rates are annual effective yields. 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.
For Guaranteed Terms of one year or less, one
Guaranteed Rate is credited for the full
Guaranteed Term. For longer Guaranteed Terms, an
initial Guaranteed Rate is credited from the date
of deposit to the end of a specified period within
the Guaranteed Term. There may be different
Guaranteed Rate(s) declared for subsequent
specified time intervals throughout the Guaranteed
Term.
1.19 Guaranteed Term: The period of time for which AG Account Guaranteed
Rates are guaranteed on 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 Certificate
Holder may allocate 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
Groups: length of time from the close of the Deposit
Period until the designated Maturity Date.
10
<PAGE>
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 Account is established and upon surrender of
the entire Account.
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.
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
Transfer: 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(s): The Purchase Payment less premium taxes, as
applicable.
1.27 Nonunitized Separate A separate account set up by Aetna under Title 38,
Account: 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 or Certificate Holder.
1.29 Reinvestment: Aetna will mail a notice to the Certificate Holder
at least 18 calendar days before a Guaranteed
Term's Maturity Date. This notice will contain the
Terms available during the current Deposit Periods
with their Guaranteed Rate(s) 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
11
<PAGE>
1.29 Reinvestment will be used. Aetna will mail a confirmation
(Cont'd): statement to the Certificate Holder the next
business day after the Maturity Date. This notice
will state the Guaranteed Term and Guaranteed
Rate(s) 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 The period of time for which a Fund determines its
(Period): 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 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.
Aetna reserves the right to refuse to accept any
Purchase Payment at any time for any reason. This
applies to an initial Purchase Payment to
establish a new Account or to subsequent Purchase
Payments to existing Accounts under the Contract.
No advance notice will be given to the Contract
Holder or Certificate Holder.
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 apply to all present and future
Accounts.
12
<PAGE>
2.01 Change of Contract Aetna reserves the right to change the terms of
(Cont'd): the Systematic Withdrawal Option (3.10) for future
elections and discontinue the availability of this
option after proper notification.
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 (1.18)
(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 Interest Rates (4.01)
(i) Transfers (1.32).
Any change that affects the Annuity options and
the tables for the options may be made:
(a) No earlier than 12 months after the effective
date of this Contract; and
(b) No earlier than 12 months after the effective
date of any prior change.
Any Account established on or after the effective
date of any change will be subject to the change.
If the Contract Holder does not agree to any
change under this provision, no new Accounts may
be established under this Contract. This Contract
may also be changed as deemed necessary by Aetna
to comply with federal or state law.
2.02 Change of Fund(s): The assets of the Separate Account are segregated
by Fund. If the shares of any Fund are no longer
available for investment by the Separate Account
or if in our judgment, further investment in such
shares should become inappropriate in view of the
purpose of the Contract, Aetna may cease to make
such Fund shares available for investment under
the Contract prospectively, or Aetna may
substitute shares of another Fund for shares
already acquired. Aetna may also, from time to
time, add additional Funds. Any elimination,
substitution or addition of Funds will be done in
accordance with applicable state and federal
securities laws. Aetna reserves the right to
substitute shares of another Fund for shares
already acquired without a proxy vote.
2.03 Nonparticipating The Contract Holder, Certificate Holders or
Contract: Beneficiaries will not have a right to share in
the earnings of Aetna.
13
<PAGE>
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 seven 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 or 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. Choices made under this
Contract must be in writing. If the Account is
owned jointly, both 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 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 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. If
the Account is owned jointly, at the death of one
joint Certificate Holder, the survivor will be
deemed the Beneficiary; any other Beneficiary on
record will be deemed a contingent Beneficiary.
2.08 Misstatements and If Aetna finds the age of any Annuitant to be
Adjustments: misstated, the correct facts will be used to
adjust payments.
2.09 Incontestability: Aetna cannot cancel this Contract because of any
error of fact.
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2.10 Grace Period: This Contract will remain in effect even if
Purchase Payments are not continued except as
provided in the Payment of Adjusted Current Value
provision (see 3.17).
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
- - --------------------------------------------------------------------------------
3.01 Net Purchase Payment: This amount is the actual Purchase Payment less
any premium tax. Aetna reserves the right to pay
premium taxes when due and deduct the amount from
the Current Value when we pay the tax or at a
later date.
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 when the
Contract was purchased. 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.
3.02 Certificate Aetna will maintain an Account for each
Holder's Account: Certificate Holder.
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(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.
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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(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 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(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 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 multiplying the net return factors for the current
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 An MVA will apply to any withdrawal from the AG
Adjustment: Account before the end of a Guaranteed Term when
the withdrawal is:
(a) A Transfer; except for Transfers from the
one-year AG Account Guaranteed Account under
the Dollar Cost Averaging program or, as
specified in 1.24 Matured Term Value Transfer;
(b) A full or partial surrender (including a 10%
free withdrawal under 3.14); except for a
partial withdrawal under the Systematic
Withdrawal Option; or
(c) Due to election of an Annuity (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.
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3.06 Market Value After the six-month period, the surrender or
Adjustment (Cont'd): 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 2 or 3 (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.
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.
3.07 Transfer of Current Before an Annuity option is elected, all or any
Value from the Funds portion of the Adjusted Current Value of the
or AG Account: Certificate Holder's Account 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.
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3.07 Transfer of Current Transfer requests can be submitted as a percentage
Value from the Funds or as a dollar amount. Aetna may establish a
or AG Account (Cont'd): minimum transfer amount. 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
one calendar month of a 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) Matured Term Value(s) during
the calendar month following the Term's Maturity
Date; (2) amounts used as a premium for an Annuity
option; (3) amounts transferred from the one-year
AG Account Guaranteed Term under the Dollar Cost
Averaging program; and (4) amounts distributed
under the Systematic Withdrawal Option.
3.08 Notice to the The Certificate Holder will receive quarterly
Certificate Holder: statements from 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.
3.09 Loans: Loans are not available under this Contract.
3.10 Systematic Withdrawal A distribution option under which a portion of
Option (SWO): the Account's Current Value will automatically be
surrendered and distributed each year. SWO
payments will be calculated on the Account's full
Current Value. The distributed amount is withdrawn
pro rata from each investment option 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
adviser 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
Option (SWO) may elect one of the three payment methods
(Cont'd): described below.
(1) Specified Payment: Payments of a
designated dollar amount. The annual
amount may not be greater than the
percentage of the Current Value at time of
election as shown on Contract Schedule I.
This annual dollar amount will remain
constant. At its discretion, Aetna may
require a minimum initial payment amount;
(2) Specified Period: Payments which are made
over a period of time which must be at
least 10 years. The annual amount paid each
year is calculated by dividing the Current
Value as of December 31 of the prior year
by the number of payment years remaining;
or
(3) Specified Percentage: Payment 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 by the
designated percentage.
(b) Minimum Initial Current Value: At its discretion,
Aetna may require a minimum initial Current Value
for election of this option. If after election of
this option the Current Value is insufficient to
make a scheduled SWO payment, Aetna will distribute
the entire Account balance.
(c) Date of Distribution: The Certificate Holder shall
specify the initial distribution date. The earliest
date for distribution is the date on which the
Certificate Holder attains age 59 1/2. 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 calendar
year. Subsequent distributions will be made on the
15th of any month or such other date Aetna may
designate or allow.
(d) SWO payments will cease upon the Certificate
Holder's or Annuitant's death. A Beneficiary,
however, may elect to continue SWO as provided
in 3.12.
(e) Election and Revocation: SWO may be elected 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
spousal Beneficiary.
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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 when the Certificate
Holder is the Annuitant: The guaranteed death
benefit is the greatest of:
(1) The sum of all 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, prior to the Annuitant's 75th
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 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 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).
(c) Death of spousal Beneficiary who continued the
Account: The death benefit amount equals the
Account's Adjusted Current Value on the claim
date, less any applicable Surrender Fee on
Purchase Payments made since the death of the
Certificate Holder or Annuitant.
3.12 Death Benefit Options Prior to any election, or until amounts must
Available to be otherwise distributed under this section, the
Beneficiary: Current Value will be retained in the Account. The
Beneficiary has the right to allocate or
reallocate any amount to any of the available
investment options (subject to an MVA if
applicable). The following options are available
to the Beneficiary:
(a) When the Certificate Holder is the Annuitant
if the the Annuitant dies (or when the
Certificate Holder is a nonnatural person if
the Annuitant dies):
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<PAGE>
3.12 Death Benefit Options (1) If the Beneficiary is the surviving
Available to spouse, the spousal Beneficiary will be
Beneficiary (Cont'd): the successor Certificate Holder and may
exercise all Certificate Holder rights
under the Contract and continue in the
Accumulation Period, or may elect (i) or
(ii) 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 to an Annuity option
(see 4.07);
(ii) 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
surviving spouse, options (i) or (ii) above
apply. Any portion of the Adjusted Current
Value not applied to an Annuity option
within one year of the 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
must be made to the Annuitant's estate
within five years of the date of death.
(4) If the Beneficiary is an entity, a lump sum
payment equal to the Adjusted Current Value
must be made within five years of the date
of death.
(b) When the Certificate Holder is not the Annuitant
when the Certificate Holder dies:
(1) If the Beneficiary is the Certificate Holder's
surviving spouse, the spousal Beneficiary will
be the successor Certificate Holder and may
exercise all Certificate Holder rights under
the Contract and continue in the Accumulation
Period, or may elect (i) or (ii), 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 to Annuity option 2 or 3 (see 4.07);
(ii) 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, options
(i) or (ii) under (1) above apply. Any portion
of the death benefit not applied to an Annuity
option within one year of the Certificate
Holder's death must be distributed within
five years of the date of death.
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<PAGE>
3.12 Death Benefit Options (3) If no Beneficiary exists, a lump sum
Available to Beneficiary payment equal to the Surrender Value must
(Cont'd): be made to the Certificate Holder's estate
within five years of the date of death.
(4) If the Beneficiary is an entity, a lump
sum payment equal to the Surrender Value
must be made within five years of the date
of death.
(c) When the Certificate Holder is a natural
person and not the Annuitant, when the
Annuitant dies, the Beneficiary (or the
Certificate Holder if no Beneficiary exists)
may elect to:
(i) Apply all or some of the Adjusted Current
Value to an Annuity option within 60 days
of the date of death; or
(ii) Receive a lump sum payment equal to the
Adjusted Current Value.
3.13 Liquidation of All or any portion of the Account's Current Value
Surrender Value: may be surrendered at any time. Surrender requests
can be submitted as a percentage of the Account
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.
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 Current Value 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 (see
4.07);
(c) As a distribution under the SWO provision
(see 3.10);
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3.14 Surrender Fee (d) At least 12 months after the date of the
(Cont'd): first Purchase Payment to the Account, in an
amount equal to or less than 10% 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 Certificate Holder while SWO is in
effect;
(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 Account within the prior 12 months;
(f) By Aetna under 3.16; or
(g) If the Annuitant has spent at least 45
consecutive days in a licensed nursing care
facility and each of the following conditions
are met:
(1) more than one calendar year has elapsed
since the date the certificate was
issued; and
(2) the surrender is requested within 3 years
of admission to a licensed nursing care
facility.
This waiver does not apply if
the Annuitant was in a nursing care
facility at the time the certificate was
issued.
3.15 Payment of Under certain emergency conditions, Aetna may
Surrender Value: defer payment:
(a) For a period of up to 6 months (unless not
allowed by state law); or
(b) As provided by federal law.
3.16 Payment of Adjusted Current Value:
Upon 90 days' written notice to the Certificate
Holder, Aetna will terminate any Account if the
Current Value becomes less than $2,500
immediately following any partial surrender.
Aetna does not intend to exercise this right in
cases where an Account Current Value is reduced
to $2,500 or less solely due to investment
performance. A Surrender Fee will not be deducted
from the Adjusted Current Value.
IV. ANNUITY PROVISIONS
- - --------------------------------------------------------------------------------
4.01 Choices: The Certificate Holder may tell Aetna to apply any
portion of the Adjusted Current Value (minus any
premium tax, if applicable,) to any Annuity option
(see 4.07). The first Annuity payment may not be
earlier than one calendar year after the initial
Purchase Payment nor 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. In lieu of the election of an
Annuity, the Certificate Holder may tell
Aetna to make a lump sum payment.
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4.01 Choices When an Annuity option is chosen, Aetna must also
(Cont'd): 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 the Minimum
Guaranteed Interest Rate (see Contract Schedule
II), but may reflect higher interest rates. 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
Options: 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 Annuity payment amount based upon
increases reflected in the Consumer Price
Index-Urban, (CPI-U) since July 1, 1993.
(c) If a Fixed Annuity is chosen and a larger
payment would result from applying the
Surrender Value 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 2 and 3
are based on mortality from 1983 Table a.
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4.02 Terms of Annuity (e) Assumed Annual Net Return Rate is the
Options (Cont'd): 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 risks 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 1 (see
4.07). The life expectancy of the
Annuitant or 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
Beneficiary: the Certificate Holder is the Annuitant
and the Annuitant dies under option 1 or
2, or both the Annuitant and the second
Annuitant die under option 3(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 3
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 Holder's, 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 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 Holder's, the surviving joint
Certificate Holder will be deemed the
successor payee.
If the Annuitant dies under option 1 or
2, or both the Annuitant and the second
Annuitant die under option 3(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 3
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, 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.
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<PAGE>
4.03 Death of Annuitant/ (d) If the Beneficiary or the successor payee
Beneficiary (Cont'd): 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.
(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.
4.04 Fund(s) Annuity Units -- The number of each Fund's Annuity Units is
Separate Account: 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
Value -- Separate Account: For any Valuation Period, a Fund Annuity 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
values 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
Factor(s) -- Separate compute all Separate Account Annuity Payments
Account: for any 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
26
<PAGE>
4.06 Annuity Net Return (b) The value of the shares of the Fund held
Factor(s) -- Separate by the Separate Account at the start of
Account (Cont'd): 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(s) record
units and Fund(s) 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 -- 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 Certificate Holder, the
period selected may not extend beyond the
Beneficiary's life expectancy.
Option 2 -- 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 3 -- 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.
27
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
3 3.00% $ 28.99 $ 86.76 $ 172.88 $ 343.23
4 3.00% 22.06 66.02 131.56 261.19
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
28
<PAGE>
OPTION 2
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
Adjusted
Age of None 60 120 180 240
Annuitant
- - --------------------------------------------------------------------------------
50 $ 4.05 $ 4.05 $ 4.03 $ 3.99 $ 3.93
51 4.12 4.11 4.09 4.05 3.99
52 4.19 4.19 4.16 4.11 4.04
53 4.27 4.26 4.23 4.18 4.10
54 4.35 4.34 4.31 4.25 4.16
55 4.44 4.42 4.39 4.32 4.22
56 4.53 4.51 4.47 4.40 4.29
57 4.62 4.61 4.56 4.48 4.35
58 4.72 4.71 4.65 4.56 4.42
59 4.83 4.81 4.75 4.64 4.49
60 4.95 4.93 4.86 4.73 4.55
61 5.07 5.05 4.97 4.83 4.62
62 5.20 5.17 5.08 4.92 4.69
63 5.34 5.31 5.20 5.02 4.76
64 5.49 5.45 5.33 5.12 4.83
65 5.65 5.61 5.47 5.22 4.89
66 5.82 5.77 5.61 5.33 4.96
67 6.01 5.94 5.75 5.44 5.02
68 6.20 6.13 5.91 5.54 5.08
69 6.41 6.33 6.07 5.65 5.14
70 6.64 6.54 6.23 5.76 5.19
71 6.88 6.76 6.41 5.86 5.24
72 7.14 7.00 6.59 5.97 5.28
73 7.43 7.26 6.77 6.06 5.32
74 7.73 7.53 6.96 6.16 5.35
75 8.06 7.82 7.14 6.25 5.38
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
29
<PAGE>
OPTION 3
Life Income for Two Payees
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>
Adjusted Ages
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.03
55 55 3.88 4.25 4.47 3.87 4.14
55 60 3.99 4.44 4.71 3.98 4.42
60 55 3.99 4.44 4.71 3.98 4.42
60 60 4.24 4.71 4.99 4.23 4.57
60 65 4.38 4.97 5.32 4.38 4.93
65 60 4.38 4.97 5.32 4.38 4.93
65 65 4.72 5.33 5.70 4.71 5.14
65 70 4.93 5.68 6.15 4.91 5.66
70 65 4.93 5.68 6.15 4.91 5.66
70 70 5.40 6.21 6.70 5.36 5.96
70 75 5.69 6.68 7.32 5.62 6.67
75 70 5.69 6.68 7.32 5.62 6.67
75 75 6.37 7.45 8.15 6.23 7.12
75 80 6.78 8.11 8.99 6.54 8.13
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
30
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
3 3.50% $ 29.19 $ 87.33 $ 173.91 $ 344.86
4 3.50% 22.27 66.61 132.65 263.04
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 28.85 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
31
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
3 5.00% $ 29.80 $ 89.04 $ 176.99 $ 349.72
4 5.00% 22.89 68.38 135.93 268.58
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 84.88
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
32
<PAGE>
OPTION 2
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
Adjusted
Age of None 60 120 180 240
Annuitant
- - --------------------------------------------------------------------------------
50 $ 4.34 $ 4.34 $ 4.31 $ 4.27 $ 4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.70 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
33
<PAGE>
OPTION 2
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
Adjusted
Age of None 60 120 180 240
Annuitant
- - --------------------------------------------------------------------------------
50 $ 5.26 $ 5.25 $ 5.22 $ 5.17 $ 5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 6.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
34
<PAGE>
OPTION 3
Life Income for Two Payees
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>
Adjusted Ages
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.97 $ 4.35 $ 4.56 $ 3.97 $ 4.31
55 55 4.16 4.54 4.76 4.15 4.42
55 60 4.27 4.73 5.00 4.26 4.48
60 55 4.27 4.73 5.00 4.26 4.70
60 60 4.51 4.99 5.27 4.50 4.84
60 65 4.66 5.25 5.61 4.65 4.93
65 60 4.66 5.25 5.61 4.65 5.22
65 65 4.99 5.61 5.99 4.98 5.42
65 70 5.19 5.97 6.44 5.17 5.54
70 65 5.19 5.97 6.44 5.17 5.93
70 70 5.67 6.49 6.99 5.62 6.23
70 75 5.95 6.96 7.61 5.87 6.40
75 70 5.95 6.96 7.61 5.87 6.95
75 75 6.64 7.73 8.43 6.48 7.40
75 80 7.04 8.39 9.29 6.79 7.64
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
35
<PAGE>
OPTION 3
Life Income for Two Payees
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>
Adjusted Ages
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.88 $ 5.26 $ 5.48 $ 4.88 $ 5.23
55 55 5.04 5.44 5.66 5.04 5.32
55 60 5.15 5.63 5.91 5.14 5.38
60 55 5.15 5.63 5.91 5.14 5.59
60 60 5.37 5.87 6.16 5.37 5.72
60 65 5.52 6.14 6.51 5.51 5.80
65 60 5.52 6.14 6.51 5.51 6.10
65 65 5.83 6.49 6.87 5.82 6.29
65 70 6.04 6.84 7.34 6.00 6.41
70 65 6.04 6.84 7.34 6.00 6.81
70 70 6.49 7.35 7.87 6.44 7.08
70 75 6.77 7.84 8.51 6.68 7.25
75 70 6.77 7.84 8.51 6.68 7.81
75 75 7.45 8.60 9.33 7.27 8.25
75 80 7.86 9.28 10.20 7.57 8.49
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
36
<PAGE>
[Aetna logo]
Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800) 531-4547
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.
[Aetna logo] Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800) 531-4547
You may call the toll-free number shown above for answers to questions or to
resolve a complaint.
Aetna Life Insurance and Annuity Company, a stock company,
herein called Aetna, agrees to pay the benefits stated in this 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 or endorsements 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 your Account within 10 days by
Cancel returning it to the agent from whom it was
purchased, or to Aetna at the address shown above.
Within seven days of receiving this Certificate at
its home office, Aetna will return the amount of
Purchase Payment(s) received, plus any increase,
or minus any decrease, on the amount, if any, of
Purchase Payment(s) allocated to the Separate
Account fund(s).
/s/Daniel Kearney /s/Susan M. Schechter
President Secretary
- - --------------------------------------------------------------------------------
Contract Holder Group Annuity Contract No.
SPECIMEN SPECIMEN
- - --------------------------------------------------------------------------------
Certificate Holder Certificate No.
SPECIMEN
SPECIMEN SPECIMEN
- - --------------------------------------------------------------------------------
Annuitant Name Type of Plan
SPECIMEN SPECIMEN
- - --------------------------------------------------------------------------------
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 CERTIFICATE 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.
<PAGE>
Specifications
- - --------------------------------------------------------------------------------
Guaranteed There are guaranteed interest rates for amounts held
Interest Rate in the AG Account (See Certificate Schedule I).
- - --------------------------------------------------------------------------------
Deductions from There will be deductions for mortality and expense
the Separate risks and administrative fees. (See Certificate
Account Schedule I and II).
- - --------------------------------------------------------------------------------
Deduction from The 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. (See
Fee Certificate 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%
ALIAC Guaranteed Account (AG Account)
- - --------------------------------------------------------------------------------
Minimum Guaranteed 3.0% (effective annual rate of return)
Interest Rate:
Separate Account and AG Account
- - --------------------------------------------------------------------------------
Transfers: An unlimited number of Transfers are allowed
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.
Maintenance Fee: The annual Maintenance Fee is $30. If the
Account's Current Value is $50,000 or more on the
date the Maintenance Fee is to be deducted, the
Maintenance Fee is $0.
3
<PAGE>
Contract Schedule I (Continued)
Accumulation Period
Separate Account and AG Account (Cont'd)
- - --------------------------------------------------------------------------------
Surrender Fee: For each surrender, the Surrender Fee will be
determined as follows:
<TABLE>
<CAPTION>
Length of Time from Deposit of Net Surrender Fee
Purchase Payment (Years) (as percentage of
Net Purchase Payment)
<S> <C>
Less than 1 year 3%
More than 1 but less than 2 years 2%
More than 2 but less than 3 years 1%
More than 3 years 0%
</TABLE>
Systematic Withdrawal The specified payment or specified percentage may
Option (SWO): not be greater than 10% of the Account's Current
Value at time of election.
See 1. GENERAL DEFINITIONS for explanations.
4
<PAGE>
Contract Schedule II
Annuity Period
Separate Account
- - --------------------------------------------------------------------------------
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% (effective annual rate of return)
Interest Rate:
See 1. GENERAL DEFINITIONS for explanations.
5
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TABLE OF CONTENTS
I. GENERAL DEFINITIONS
- - --------------------------------------------------------------------------------
Page
1.01 Account ........................................................... 9
1.02 Accumulation Period ............................................... 9
1.03 Adjusted Current Value ............................................ 9
1.04 ALIAC Guaranteed Account (AG Account) ............................. 9
1.05 Annuitant ......................................................... 9
1.06 Annuity ........................................................... 9
1.07 Beneficiary ....................................................... 9
1.08 Certificate Holder ................................................ 9
1.09 Code .............................................................. 9
1.10 Contract .......................................................... 9
1.11 Contract Holder ................................................... 9
1.12 Current Value ..................................................... 9
1.13 Deposit Period .................................................... 10
1.14 Dollar Cost Averaging ............................................. 10
1.15 Fixed Annuity ..................................................... 10
1.16 Fund(s) ........................................................... 10
1.17 General Account ................................................... 10
1.18 Guaranteed Rates - AG Account ..................................... 10
1.19 Guaranteed Term ................................................... 10
1.20 Guaranteed Term(s) Groups ......................................... 10
1.21 Maintenance Fee ................................................... 11
1.22 Market Value Adjustment (MVA) ..................................... 11
1.23 Matured Term Value ................................................ 11
1.24 Matured Term Value Transfer ....................................... 11
1.25 Maturity Date ..................................................... 11
1.26 Net Purchase Payment(s) ........................................... 11
1.27 Nonunitized Separate Account ...................................... 11
1.28 Purchase Payment(s) ............................................... 11
1.29 Reinvestment ...................................................... 11
6
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Page
1.30 Separate Account .................................................. 12
1.31 Surrender Value ................................................... 12
1.32 Transfers ......................................................... 12
1.33 Valuation Period (Period) ......................................... 12
1.34 Variable Annuity .................................................. 12
II. GENERAL PROVISIONS
- - --------------------------------------------------------------------------------
2.01 Change of Contract ................................................ 12
2.02 Change of Fund(s) ................................................. 13
2.03 Nonparticipating Contract ......................................... 13
2.04 Payments and Elections ............................................ 14
2.05 State Laws ........................................................ 14
2.06 Control of Contract ............................................... 14
2.07 Designation of Beneficiary ........................................ 14
2.08 Misstatements and Adjustments ..................................... 14
2.09 Incontestability .................................................. 14
2.10 Grace Period ...................................................... 15
2.11 Individual Certificates ........................................... 15
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
- - --------------------------------------------------------------------------------
3.01 Net Purchase Payment .............................................. 15
3.02 Certificate Holder's Account ...................................... 15
3.03 Fund(s) Record Units -- Separate Account .......................... 15
3.04 Net Return Factor(s) -- Separate Account .......................... 16
3.05 Fund Record Unit Value -- Separate Account ........................ 16
3.06 Market Value Adjustment ........................................... 16
3.07 Transfer of Current Value from the Funds or AG Account ............ 17
3.08 Notice to the Certificate Holder .................................. 18
3.09 Loans ............................................................. 18
3.10 Systematic Withdrawal Option (SWO) ................................ 18
3.11 Death Benefit Amount .............................................. 20
7
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Page
3.12 Death Benefit Options Available to Beneficiary .................... 20
3.13 Liquidation of Surrender Value .................................... 22
3.14 Surrender Fee ..................................................... 22
3.15 Payment of Surrender Value ........................................ 23
3.16 Payment of Adjusted Current Value ................................. 23
IV. ANNUITY PROVISIONS
- - --------------------------------------------------------------------------------
4.01 Choices ........................................................... 23
4.02 Terms of Annuity Options .......................................... 24
4.03 Death of Annuitant/Beneficiary .................................... 25
4.04 Fund(s) Annuity Units -- Separate Account ......................... 26
4.05 Fund(s) Annuity Unit Value -- Separate Account .................... 26
4.06 Annuity Net Return Factor(s) -- Separate Account .................. 26
4.07 Annuity Options ................................................... 27
8
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I. GENERAL DEFINITIONS
- - --------------------------------------------------------------------------------
1.01 Account: A record established for each Certificate Holder
to maintain the value of all Net Purchase Payments
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 an Account to provide
future Annuity payment(s).
1.03 Adjusted Current Value: The Current Value of an Account plus or minus any
aggregate AG Account MVA, if applicable. (See
1.22)
1.04 ALIAC Guaranteed An accumulation option where Aetna guarantees
Account (AG Account): stipulated rate(s) of interest for 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
death benefit due under the Contract. 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.
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 the 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 3.11 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.
9
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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 Net Purchase Payment(s),
Transfers and 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. Dollar Cost Averaging is not
available with the Systematic Withdrawal Option
or the Estate Conservation Option.
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.
1.17 General Account: The Account holding the assets of Aetna, other
than those assets held in Aetna's separate
accounts.
1.18 Guaranteed Rates -- Aetna will declare the interest rate(s) applicable
AG Account: to a specific Guaranteed Term at the start of the
Deposit Period for that Guaranteed Term. The
rate(s) are guaranteed by Aetna for that Deposit
Period and the ensuing Guaranteed Term. The
Guaranteed Rates are annual effective yields. 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.
For Guaranteed Terms of one year or less, one
Guaranteed Rate is credited for the full
Guaranteed Term. For longer Guaranteed Terms, an
initial Guaranteed Rate is credited from the date
of deposit to the end of a specified period within
the Guaranteed Term. There may be different
Guaranteed Rate(s) declared for subsequent
specified time intervals throughout the Guaranteed
Term.
1.19 Guaranteed Term: The period of time for which AG Account Guaranteed
Rates are guaranteed on 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 Certificate
Holder may allocate 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
Groups: length of time from the close of the Deposit
Period until the designated Maturity Date.
10
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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 Account is established and upon surrender of
the entire Account.
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.
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
Transfer: 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(s): The Purchase Payment less premium taxes, as
applicable.
1.27 Nonunitized Separate A separate account set up by Aetna under Title 38,
Account: 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 or Certificate Holder.
1.29 Reinvestment: Aetna will mail a notice to the Certificate Holder
at least 18 calendar days before a Guaranteed
Term's Maturity Date. This notice will contain the
Terms available during the current Deposit Periods
with their Guaranteed Rate(s) 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
11
<PAGE>
1.29 Reinvestment will be used. Aetna will mail a confirmation
(Cont'd): statement to the Certificate Holder the next
business day after the Maturity Date. This notice
will state the Guaranteed Term and Guaranteed
Rate(s) 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 The period of time for which a Fund determines its
(Period): 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 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.
Aetna reserves the right to refuse to accept any
Purchase Payment at any time for any reason. This
applies to an initial Purchase Payment to
establish a new Account or to subsequent Purchase
Payments to existing Accounts under the Contract.
No advance notice will be given to the Contract
Holder or Certificate Holder.
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 apply to all present and future
Accounts.
12
<PAGE>
2.01 Change of Contract Aetna reserves the right to change the terms of
(Cont'd): the Systematic Withdrawal Option (3.10) for future
elections and discontinue the availability of this
option after proper notification.
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 (1.18)
(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 Interest Rates (4.01)
(i) Transfers (1.32).
Any change that affects the Annuity options and
the tables for the options may be made:
(a) No earlier than 12 months after the effective
date of this Contract; and
(b) No earlier than 12 months after the effective
date of any prior change.
Any Account established on or after the effective
date of any change will be subject to the change.
If the Contract Holder does not agree to any
change under this provision, no new Accounts may
be established under this Contract. This Contract
may also be changed as deemed necessary by Aetna
to comply with federal or state law.
2.02 Change of Fund(s): The assets of the Separate Account are segregated
by Fund. If the shares of any Fund are no longer
available for investment by the Separate Account
or if in our judgment, further investment in such
shares should become inappropriate in view of the
purpose of the Contract, Aetna may cease to make
such Fund shares available for investment under
the Contract prospectively, or Aetna may
substitute shares of another Fund for shares
already acquired. Aetna may also, from time to
time, add additional Funds. Any elimination,
substitution or addition of Funds will be done in
accordance with applicable state and federal
securities laws. Aetna reserves the right to
substitute shares of another Fund for shares
already acquired without a proxy vote.
2.03 Nonparticipating The Contract Holder, Certificate Holders or
Contract: Beneficiaries will not have a right to share in
the earnings of Aetna.
13
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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 seven 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 or 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. Choices made under this
Contract must be in writing. If the Account is
owned jointly, both 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 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 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. If
the Account is owned jointly, at the death of one
joint Certificate Holder, the survivor will be
deemed the Beneficiary; any other Beneficiary on
record will be deemed a contingent Beneficiary.
2.08 Misstatements and If Aetna finds the age of any Annuitant to be
Adjustments: misstated, the correct facts will be used to
adjust payments.
2.09 Incontestability: Aetna cannot cancel this Contract because of any
error of fact.
14
<PAGE>
2.10 Grace Period: This Contract will remain in effect even if
Purchase Payments are not continued except as
provided in the Payment of Adjusted Current Value
provision (see 3.17).
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
- - --------------------------------------------------------------------------------
3.01 Net Purchase Payment: This amount is the actual Purchase Payment less
any premium tax. Aetna reserves the right to pay
premium taxes when due and deduct the amount from
the Current Value when we pay the tax or at a
later date.
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 when the
Contract was purchased. 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.
3.02 Certificate Aetna will maintain an Account for each
Holder's Account: Certificate Holder.
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(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.
15
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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(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 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(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 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 multiplying the net return factors for the current
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 An MVA will apply to any withdrawal from the AG
Adjustment: Account before the end of a Guaranteed Term when
the withdrawal is:
(a) A Transfer; except for Transfers from the
one-year AG Account Guaranteed Account under
the Dollar Cost Averaging program or, as
specified in 1.24 Matured Term Value Transfer;
(b) A full or partial surrender (including a 10%
free withdrawal under 3.14); except for a
partial withdrawal under the Systematic
Withdrawal Option; or
(c) Due to election of an Annuity (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.
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3.06 Market Value After the six-month period, the surrender or
Adjustment (Cont'd): 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 2 or 3 (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.
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.
3.07 Transfer of Current Before an Annuity option is elected, all or any
Value from the Funds portion of the Adjusted Current Value of the
or AG Account: Certificate Holder's Account 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.
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3.07 Transfer of Current Transfer requests can be submitted as a percentage
Value from the Funds or as a dollar amount. Aetna may establish a
or AG Account (Cont'd): minimum transfer amount. 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
one calendar month of a 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) Matured Term Value(s) during
the calendar month following the Term's Maturity
Date; (2) amounts used as a premium for an Annuity
option; (3) amounts transferred from the one-year
AG Account Guaranteed Term under the Dollar Cost
Averaging program; and (4) amounts distributed
under the Systematic Withdrawal Option.
3.08 Notice to the The Certificate Holder will receive quarterly
Certificate Holder: statements from 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.
3.09 Loans: Loans are not available under this Contract.
3.10 Systematic Withdrawal A distribution option under which a portion of
Option (SWO): the Account's Current Value will automatically be
surrendered and distributed each year. SWO
payments will be calculated on the Account's full
Current Value. The distributed amount is withdrawn
pro rata from each investment option 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
adviser 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
Option (SWO) may elect one of the three payment methods
(Cont'd): described below.
(1) Specified Payment: Payments of a
designated dollar amount. The annual
amount may not be greater than the
percentage of the Current Value at time of
election as shown on Contract Schedule I.
This annual dollar amount will remain
constant. At its discretion, Aetna may
require a minimum initial payment amount;
(2) Specified Period: Payments which are made
over a period of time which must be at
least 10 years. The annual amount paid each
year is calculated by dividing the Current
Value as of December 31 of the prior year
by the number of payment years remaining;
or
(3) Specified Percentage: Payment 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 by the
designated percentage.
(b) Minimum Initial Current Value: At its discretion,
Aetna may require a minimum initial Current Value
for election of this option. If after election of
this option the Current Value is insufficient to
make a scheduled SWO payment, Aetna will distribute
the entire Account balance.
(c) Date of Distribution: The Certificate Holder shall
specify the initial distribution date. The earliest
date for distribution is the date on which the
Certificate Holder attains age 59 1/2. 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 calendar
year. Subsequent distributions will be made on the
15th of any month or such other date Aetna may
designate or allow.
(d) SWO payments will cease upon the Certificate
Holder's or Annuitant's death. A Beneficiary,
however, may elect to continue SWO as provided
in 3.12.
(e) Election and Revocation: SWO may be elected 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
spousal Beneficiary.
19
<PAGE>
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 when the Certificate
Holder is the Annuitant: The guaranteed death
benefit is the greatest of:
(1) The sum of all 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, prior to the Annuitant's 75th
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 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 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).
(c) Death of spousal Beneficiary who continued the
Account: The death benefit amount equals the
Account's Adjusted Current Value on the claim
date, less any applicable Surrender Fee on
Purchase Payments made since the death of the
Certificate Holder or Annuitant.
3.12 Death Benefit Options Prior to any election, or until amounts must be
Available to otherwise distributed under this section, the
Beneficiary: Current Value will be retained in the Account. The
Beneficiary has the right to allocate or
reallocate any amount to any of the available
investment options (subject to an MVA if
applicable). The following options are available
to the Beneficiary:
(a) When the Certificate Holder is the Annuitant
if the Annuitant dies (or when the
Certificate Holder is a nonnatural person if
the Annuitant dies):
20
<PAGE>
3.12 Death Benefit Options (1) If the Beneficiary is the surviving
Available to spouse, the spousal Beneficiary will be
Beneficiary (Cont'd): the successor Certificate Holder and may
exercise all Certificate Holder rights
under the Contract and continue in the
Accumulation Period, or may elect (i) or
(ii) 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 to an Annuity option
(see 4.07);
(ii) 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
surviving spouse, options (i) or (ii) above
apply. Any portion of the Adjusted Current
Value not applied to an Annuity option
within one year of the 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
must be made to the Annuitant's estate
within five years of the date of death.
(4) If the Beneficiary is an entity, a lump sum
payment equal to the Adjusted Current Value
must be made within five years of the date
of death.
(b) When the Certificate Holder is not the Annuitant
when the Certificate Holder dies:
(1) If the Beneficiary is the Certificate Holder's
surviving spouse, the spousal Beneficiary will
be the successor Certificate Holder and may
exercise all Certificate Holder rights under
the Contract and continue in the Accumulation
Period, or may elect (i) or (ii), 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 to Annuity option 2 or 3 (see 4.07);
(ii) 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, options
(i) or (ii) under (1) above apply. Any portion
of the death benefit not applied to an Annuity
option within one year of the Certificate
Holder's death must be distributed within
five years of the date of death.
21
<PAGE>
3.12 Death Benefit Options (3) If no Beneficiary exists, a lump sum
Available to Beneficiary payment equal to the Surrender Value must
(Cont'd): be made to the Certificate Holder's estate
within five years of the date of death.
(4) If the Beneficiary is an entity, a lump
sum payment equal to the Surrender Value
must be made within five years of the date
of death.
(c) When the Certificate Holder is a natural
person and not the Annuitant, when the
Annuitant dies, the Beneficiary (or the
Certificate Holder if no Beneficiary exists)
may elect to:
(i) Apply all or some of the Adjusted Current
Value to an Annuity option within 60 days
of the date of death; or
(ii) Receive a lump sum payment equal to the
Adjusted Current Value.
3.13 Liquidation of All or any portion of the Account's Current Value
Surrender Value: may be surrendered at any time. Surrender requests
can be submitted as a percentage of the Account
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.
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 Current Value 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 (see
4.07);
(c) As a distribution under the SWO provision
(see 3.10);
22
<PAGE>
3.14 Surrender Fee (d) At least 12 months after the date of the
(Cont'd): first Purchase Payment to the Account, in an
amount equal to or less than 10% 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 Certificate Holder while SWO is in
effect;
(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 Account within the prior 12 months;
(f) By Aetna under 3.16; or
(g) If the Annuitant has spent at least 45
consecutive days in a licensed nursing care
facility and each of the following conditions
are met:
(1) more than one calendar year has elapsed
since the date the certificate was
issued; and
(2) the surrender is requested within 3 years
of admission to a licensed nursing care
facility.
This waiver does not apply if
the Annuitant was in a nursing care
facility at the time the certificate was
issued.
3.15 Payment of Under certain emergency conditions, Aetna may
Surrender Value: defer payment:
(a) For a period of up to 6 months (unless not
allowed by state law); or
(b) As provided by federal law.
3.16 Payment of Adjusted Upon 90 days' written notice to the Certificate
Current Value: Holder, Aetna will terminate any Account if the
Current Value becomes less than $2,500
immediately following any partial surrender.
Aetna does not intend to exercise this right in
cases where an Account Current Value is reduced
to $2,500 or less solely due to investment
performance. A Surrender Fee will not be deducted
from the Adjusted Current Value.
IV. ANNUITY PROVISIONS
- - --------------------------------------------------------------------------------
4.01 Choices: The Certificate Holder may tell Aetna to apply any
portion of the Adjusted Current Value (minus any
premium tax, if applicable,) to any Annuity option
(see 4.07). The first Annuity payment may not be
earlier than one calendar year after the initial
Purchase Payment nor 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. In lieu of the election of an
Annuity, the Certificate Holder may tell
Aetna to make a lump sum payment.
23
<PAGE>
4.01 Choices When an Annuity option is chosen, Aetna must also
(Cont'd): 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 the Minimum
Guaranteed Interest Rate (see Contract Schedule
II), but may reflect higher interest rates. 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
Options: 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 Annuity payment amount based upon
increases reflected in the Consumer Price
Index-Urban, (CPI-U) since July 1, 1993.
(c) If a Fixed Annuity is chosen and a larger
payment would result from applying the
Surrender Value 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 2 and 3
are based on mortality from 1983 Table a.
24
<PAGE>
4.02 Terms of Annuity (e) Assumed Annual Net Return Rate is the
Options (Cont'd): 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 risks 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 1 (see
4.07). The life expectancy of the
Annuitant or 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
Beneficiary: the Certificate Holder is the Annuitant
and the Annuitant dies under option 1 or
2, or both the Annuitant and the second
Annuitant die under option 3(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 3
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 Holder's, 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 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 Holder's, the surviving joint
Certificate Holder will be deemed the
successor payee.
If the Annuitant dies under option 1 or
2, or both the Annuitant and the second
Annuitant die under option 3(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 3
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, 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.
25
<PAGE>
4.03 Death of Annuitant/ (d) If the Beneficiary or the successor payee
Beneficiary (Cont'd): 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.
(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.
4.04 Fund(s) Annuity Units -- The number of each Fund's Annuity Units is
Separate Account: 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
Value -- Separate Account: For any Valuation Period, a Fund Annuity unit
value is equal to:
(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
values 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
Factor(s) -- Separate compute all Separate Account Annuity Payments
Account: for any 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
26
<PAGE>
4.06 Annuity Net Return (b) The value of the shares of the Fund held
Factor(s) -- Separate by the Separate Account at the start of
Account (Cont'd): 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(s) record
units and Fund(s) 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 -- 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 Certificate Holder, the
period selected may not extend beyond the
Beneficiary's life expectancy.
Option 2 -- 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 3 -- 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.
27
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
3 3.00% $ 28.99 $ 86.76 $ 172.88 $ 343.23
4 3.00% 22.06 66.02 131.56 261.19
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
28
<PAGE>
OPTION 2
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
Adjusted
Age of None 60 120 180 240
Annuitant
- - --------------------------------------------------------------------------------
50 $ 4.05 $ 4.05 $ 4.03 $ 3.99 $ 3.93
51 4.12 4.11 4.09 4.05 3.99
52 4.19 4.19 4.16 4.11 4.04
53 4.27 4.26 4.23 4.18 4.10
54 4.35 4.34 4.31 4.25 4.16
55 4.44 4.42 4.39 4.32 4.22
56 4.53 4.51 4.47 4.40 4.29
57 4.62 4.61 4.56 4.48 4.35
58 4.72 4.71 4.65 4.56 4.42
59 4.83 4.81 4.75 4.64 4.49
60 4.95 4.93 4.86 4.73 4.55
61 5.07 5.05 4.97 4.83 4.62
62 5.20 5.17 5.08 4.92 4.69
63 5.34 5.31 5.20 5.02 4.76
64 5.49 5.45 5.33 5.12 4.83
65 5.65 5.61 5.47 5.22 4.89
66 5.82 5.77 5.61 5.33 4.96
67 6.01 5.94 5.75 5.44 5.02
68 6.20 6.13 5.91 5.54 5.08
69 6.41 6.33 6.07 5.65 5.14
70 6.64 6.54 6.23 5.76 5.19
71 6.88 6.76 6.41 5.86 5.24
72 7.14 7.00 6.59 5.97 5.28
73 7.43 7.26 6.77 6.06 5.32
74 7.73 7.53 6.96 6.16 5.35
75 8.06 7.82 7.14 6.25 5.38
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
29
<PAGE>
OPTION 3
Life Income for Two Payees
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>
Adjusted Ages
- - ---------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.03
55 55 3.88 4.25 4.47 3.87 4.14
55 60 3.99 4.44 4.71 3.98 4.42
60 55 3.99 4.44 4.71 3.98 4.42
60 60 4.24 4.71 4.99 4.23 4.57
60 65 4.38 4.97 5.32 4.38 4.93
65 60 4.38 4.97 5.32 4.38 4.93
65 65 4.72 5.33 5.70 4.71 5.14
65 70 4.93 5.68 6.15 4.91 5.66
70 65 4.93 5.68 6.15 4.91 5.66
70 70 5.40 6.21 6.70 5.36 5.96
70 75 5.69 6.68 7.32 5.62 6.67
75 70 5.69 6.68 7.32 5.62 6.67
75 75 6.37 7.45 8.15 6.23 7.12
75 80 6.78 8.11 8.99 6.54 8.13
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
30
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
3 3.50% $ 29.19 $ 87.33 $ 173.91 $ 344.86
4 3.50% 22.27 66.61 132.65 263.04
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 28.85 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
31
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
3 5.00% $ 29.80 $ 89.04 $ 176.99 $ 349.72
4 5.00% 22.89 68.38 135.93 268.58
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
32
<PAGE>
OPTION 2
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
Adjusted
Age of None 60 120 180 240
Annuitant
- - --------------------------------------------------------------------------------
50 $ 4.34 $ 4.34 $ 4.31 $ 4.27 $ 4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
33
<PAGE>
OPTION 2
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
Adjusted
Age of None 60 120 180 240
Annuitant
- - --------------------------------------------------------------------------------
50 $ 5.26 $ 5.25 $ 5.22 $ 5.17 $ 5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 6.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
34
<PAGE>
OPTION 3
Life Income for Two Payees
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>
Adjusted Ages
- - ---------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.97 $ 4.35 $ 4.56 $ 3.97 $ 4.31
55 55 4.16 4.54 4.76 4.15 4.42
55 60 4.27 4.73 5.00 4.26 4.48
60 55 4.27 4.73 5.00 4.26 4.70
60 60 4.51 4.99 5.27 4.50 4.84
60 65 4.66 5.25 5.61 4.65 4.93
65 60 4.66 5.25 5.61 4.65 5.22
65 65 4.99 5.61 5.99 4.98 5.42
65 70 5.19 5.97 6.44 5.17 5.54
70 65 5.19 5.97 6.44 5.17 5.93
70 70 5.67 6.49 6.99 5.62 6.23
70 75 5.95 6.96 7.61 5.87 6.40
75 70 5.95 6.96 7.61 5.87 6.95
75 75 6.64 7.73 8.43 6.48 7.40
75 80 7.04 8.39 9.29 6.79 7.64
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
35
<PAGE>
OPTION 3
Life Income for Two Payees
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>
Adjusted Ages
- - ---------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.88 $ 5.26 $ 5.48 $ 4.88 $ 5.23
55 55 5.04 5.44 5.66 5.04 5.32
55 60 5.15 5.63 5.91 5.14 5.38
60 55 5.15 5.63 5.91 5.14 5.59
60 60 5.37 5.87 6.16 5.37 5.72
60 65 5.52 6.14 6.51 5.51 5.80
65 60 5.52 6.14 6.51 5.51 6.10
65 65 5.83 6.49 6.87 5.82 6.29
65 70 6.04 6.84 7.34 6.00 6.41
70 65 6.04 6.84 7.34 6.00 6.81
70 70 6.49 7.35 7.87 6.44 7.08
70 75 6.77 7.84 8.51 6.68 7.25
75 70 6.77 7.84 8.51 6.68 7.81
75 75 7.45 8.60 9.33 7.27 8.25
75 80 7.86 9.28 10.20 7.57 8.49
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
36
<PAGE>
[Aetna logo]
Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800) 531-4547
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 CERTIFICATE 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.
[Aetna logo] Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800) 531-4547
You may call the toll-free number shown above for answers to
questions or to resolve a complaint.
Aetna Life Insurance and Annuity Company, a stock company,
herein called Aetna, agrees to pay the benefits stated in
this Contract.
Specifications
- - --------------------------------------------------------------------------------
Plan
SPECIMEN
- - --------------------------------------------------------------------------------
Type of Plan
SPECIMEN
- - --------------------------------------------------------------------------------
Contract Holder
SPECIMEN
SPECIMEN
- - --------------------------------------------------------------------------------
Annuitant
SPECIMEN
- - --------------------------------------------------------------------------------
Contract Number
SPECIMEN
- - --------------------------------------------------------------------------------
Effective Date
SPECIMEN
- - --------------------------------------------------------------------------------
This Contract is delivered in YOUR STATE 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 by returning
it to the agent from whom it was purchased, or to Aetna at the address shown
above. Within seven days of receiving the Contract at its home office, Aetna
will return the amount of Certificate Holder Purchase Payment(s) received, plus
any increase, or minus any decrease, on the amount, if any, allocated to the
Separate Account fund(s).
This page and the pages that follow constitute the entire Contract.
Signed at the home office on the Effective Date.
/s/Daniel Kearney /s/Susan M. Schechter
President Secretary
Individual Variable, Fixed, or Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE 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.
<PAGE>
Specifications
- - --------------------------------------------------------------------------------
Guaranteed There is a guaranteed interest rate for Purchase
Interest Rate Payment(s) 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(s) are subject to a deduction for
Purchase premium 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. THEREFORE, IT IS 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%
ALIAC Guaranteed Account (AG Account)
- - --------------------------------------------------------------------------------
Minimum Guaranteed 3.0% (effective annual rate of return)
Interest Rate:
Separate Account and AG Account
- - --------------------------------------------------------------------------------
Transfers: An unlimited number of Transfers are allowed
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.
Maintenance Fee: The annual Maintenance Fee is $30. If the
Account's Current Value is $50,000 or more on the
date the Maintenance Fee is to be deducted, the
Maintenance Fee is $0.
3
<PAGE>
Contract Schedule I (Continued)
Accumulation Period
Separate Account and AG Account (Cont'd)
- - --------------------------------------------------------------------------------
Surrender Fee: For each surrender, the Surrender Fee will be
determined as follows:
<TABLE>
<CAPTION>
Length of Time from Deposit of Net Surrender Fee
Purchase Payment (Years) (as percentage of
Net Purchase Payment)
<S> <C>
Less than 2 years 7%
2 or more but less than 4 years 6%
4 or more but less than 5 years 5%
5 or more but less than 6 years 4%
6 or more but less than 7 years 3%
7 years or more 0%
</TABLE>
Systematic Withdrawal The specified payment or specified percentage may
Option (SWO): not be greater than 10% of the Account's Current
Value at time of election.
See 1. GENERAL DEFINITIONS for explanations.
4
<PAGE>
Contract Schedule II
Annuity Period
Separate Account
- - --------------------------------------------------------------------------------
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% (effective annual rate of return)
Interest Rate:
See 1. GENERAL DEFINITIONS for explanations.
5
<PAGE>
TABLE OF CONTENTS
I. GENERAL DEFINITIONS
- - --------------------------------------------------------------------------------
Page
1.01 Accumulation Period ............................................... 9
1.02 Adjusted Current Value ............................................ 9
1.03 ALIAC Guaranteed Account (AG Account) ............................. 9
1.04 Annuitant ......................................................... 9
1.05 Annuity ........................................................... 9
1.06 Beneficiary ....................................................... 9
1.07 Code .............................................................. 9
1.08 Contract .......................................................... 9
1.09 Contract Holder ................................................... 9
1.10 Current Value ..................................................... 9
1.11 Deposit Period .................................................... 9
1.12 Dollar Cost Averaging ............................................. 10
1.13 Fixed Annuity ..................................................... 10
1.14 Fund(s) ........................................................... 10
1.15 General Account ................................................... 10
1.16 Guaranteed Rates - AG Account ..................................... 10
1.17 Guaranteed Term ................................................... 10
1.18 Guaranteed Term(s) Groups ......................................... 10
1.19 Maintenance Fee ................................................... 10
1.20 Market Value Adjustment (MVA) ..................................... 11
1.21 Matured Term Value ................................................ 11
1.22 Matured Term Value Transfer ....................................... 11
1.23 Maturity Date ..................................................... 11
1.24 Net Purchase Payment(s) ........................................... 11
1.25 Nonunitized Separate Account ...................................... 11
1.26 Purchase Payment(s) ............................................... 11
1.27 Reinvestment ...................................................... 11
1.28 Separate Account .................................................. 12
1.29 Surrender Value ................................................... 12
6
<PAGE>
Page
1.30 Transfers ......................................................... 12
1.31 Valuation Period (Period) ......................................... 12
1.32 Variable Annuity .................................................. 12
II. GENERAL PROVISIONS
- - --------------------------------------------------------------------------------
2.01 Change of Contract ................................................ 12
2.02 Change of Fund(s) ................................................. 13
2.03 Nonparticipating Contract ......................................... 13
2.04 Payments and Elections ............................................ 13
2.05 State Laws ........................................................ 13
2.06 Control of Contract ............................................... 13
2.07 Designation of Beneficiary ........................................ 14
2.08 Misstatements and Adjustments ..................................... 14
2.09 Incontestability .................................................. 14
2.10 Grace Period ...................................................... 14
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
- - --------------------------------------------------------------------------------
3.01 Net Purchase Payment .............................................. 14
3.02 Fund(s) Record Units -- Separate Account .......................... 15
3.03 Net Return Factor(s) -- Separate Account .......................... 15
3.04 Fund Record Unit Value -- Separate Account ........................ 15
3.05 Market Value Adjustment ........................................... 15
3.06 Transfer of Current Value from the Funds or AG Account ............ 17
3.07 Notice to the Certificate Holder .................................. 17
3.08 Loans ............................................................. 17
3.09 Systematic Withdrawal Option (SWO) ................................ 18
3.10 Death Benefit Amount .............................................. 19
3.11 Death Benefit Options Available to Beneficiary .................... 20
3.12 Liquidation of Surrender Value .................................... 21
3.13 Surrender Fee ..................................................... 21
3.14 Payment of Surrender Value ........................................ 22
7
<PAGE>
Page
3.15 Payment of Adjusted Current Value ................................. 22
IV. ANNUITY PROVISIONS
- - --------------------------------------------------------------------------------
4.01 Choices ........................................................... 23
4.02 Terms of Annuity Options .......................................... 23
4.03 Death of Annuitant/Beneficiary .................................... 24
4.04 Fund(s) Annuity Units -- Separate Account ......................... 25
4.05 Fund(s) Annuity Unit Value -- Separate Account .................... 25
4.06 Annuity Net Return Factor(s) -- Separate Account .................. 26
4.07 Annuity Options ................................................... 26
8
<PAGE>
I. GENERAL DEFINITIONS
- - --------------------------------------------------------------------------------
1.01 Accumulation Period: The period during which the Net Purchase
Payment(s) are applied to a Contract to
provide future Annuity payment(s).
1.02 Adjusted The Current Value of a Contract plus or
Current Value: minus any aggregate AG Account MVA, if
applicable. (See 1.20)
1.03 ALIAC Guaranteed An accumulation option where Aetna
Account (AG Account): guarantees stipulated rate(s) of
interest for 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.
1.04 Annuitant: The person whose life is measured for
purposes of the Guaranteed Death Benefit
and the duration of Annuity payments
under this Contract.
1.05 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).
1.06 Beneficiary: The individual or estate entitled to
receive any death benefit under the
Contract. If the Contract is held by
joint Contract Holders, the survivor
will be deemed the designated
Beneficiary and any other Beneficiary on
record will be treated as the contingent
Beneficiary.
1.07 Code: The Internal Revenue Code of 1986, as it
may be amended from time to time.
1.08 Contract: This agreement between Aetna and the
Contract Holder.
1.09 Contract Holder: A person who purchases this Contract.
Aetna reserves the right to limit
ownership to natural persons. The
Contract Holder has all right, title and
interest under the Contract. If more
than one Contract Holder owns the
Contract, each Contract Holder will be a
joint Contract Holder. Any joint
Contract Holder must be the spouse of
the other joint Contract Holder. Joint
Contract Holders have joint ownership
rights and both must authorize
exercising any ownership rights unless
Aetna allows otherwise.
1.10 Current Value: As of the most recent Valuation Period,
the Net Purchase Payment and any
additional amount deposited pursuant to
3.10 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.
1.11 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 and
Reinvestments are accepted into the AG
Account for one or more Guaranteed
Terms. Aetna reserves the right to
extend the Deposit Period.
9
<PAGE>
1.12 Dollar Cost Averaging: A program that permits the Contract
Holder to systematically transfer
amounts from any of the Funds and the
one-year AG Account Guaranteed Term to
any of the Funds. Dollar Cost Averaging
is not available with the Systematic
Withdrawal Option or the Estate
Conservation Option.
1.13 Fixed Annuity: An Annuity with payments that do not
vary in amount.
1.14 Fund(s): The open-end management investment
companies (mutual funds) in which the
Separate Account invests.
1.15 General Account: The Account holding the assets of Aetna,
other than those assets held in Aetna's
separate accounts.
1.16 Guaranteed Rates -- Aetna will declare the interest rate(s)
AG Account: applicable to a specific Guaranteed Term
at the start of the Deposit Period for
that Guaranteed Term. The rate(s) are
guaranteed by Aetna for that Deposit
Period and the ensuing Guaranteed Term.
The Guaranteed Rates are annual
effective yields. 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.
For Guaranteed Terms of one year or
less, one Guaranteed Rate is credited
for the full Guaranteed Term. For longer
Guaranteed Terms, an initial Guaranteed
Rate is credited from the date of
deposit to the end of a specified period
within the Guaranteed Term. There may be
different Guaranteed Rate(s) declared
for subsequent specified time intervals
throughout the Guaranteed Term.
1.17 Guaranteed Term: The period of time for which AG Account
Guaranteed Rates are guaranteed on 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
Net Purchase Payments and Transfers into
any or all of the available Guaranteed
Terms.
1.18 Guaranteed Term(s) Groups: All AG Account Guaranteed Term(s) with
the same length of time from the close
of the Deposit Period until the
designated Maturity Date.
1.19 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
surrender of the entire Contract.
10
<PAGE>
1.20 Market Value Adjustment An adjustment that may apply to an
(MVA): amount 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 3.05. The adjustment is
expressed as a percentage of each dollar
withdrawn or transferred.
1.21 Matured Term Value: The amount due on an AG Account
Guaranteed Term's Maturity Date.
1.22 Matured Term Value During the calendar month following an
Transfer: AG Account Maturity Date, the Contract
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 Contract
Holder during this period for any
Matured Term Value.
1.23 Maturity Date: The last day of an AG Account Guaranteed
Term.
1.24 Net Purchase Payment(s): The Purchase Payment less premium taxes,
if applicable.
1.25 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
Contract 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.
1.26 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.
1.27 Reinvestment: Aetna will mail a notice to the Contract
Holder at least 18 calendar days before
a Guaranteed Term's Maturity Date. This
notice will contain the Terms available
during current Deposit Periods with
their Guaranteed Rate(s), and projected
Matured Term Value. If no specific
direction is given by the Contract
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 Contract Holder the
next business day after the Maturity
Date. This notice will state the
Guaranteed Term and Guaranteed Rate(s)
which will apply to the reinvested
Matured Term Value.
11
<PAGE>
1.28 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.
1.29 Surrender Value: The amount payable by Aetna upon the
surrender of any portion of the
Contract.
1.30 Transfers: The movement of invested amounts among
the available Fund(s) and the AG Account
under this Contract during the
Accumulation Period.
1.31 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.
1.32 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.
Aetna reserves the right to refuse to
accept any Purchase Payment at any time
for any reason. This applies to
subsequent Purchase Payments under the
Contract. No advance notice will be
given to the Contract Holder.
Aetna may make any change that affects
the AG Account Market Value Adjustment
(3.05) with at least 30 days' advance
written notice to the Contract Holder.
Any such change shall become effective
for any new Term.
Aetna reserves the right to change the
terms of the Systematic Withdrawal
Option (3.09) for future elections and
discontinue the availability of this
option after proper notification.
The following will not be changed:
(a) Net Purchase Payment (1.24)
(b) AG Account Guaranteed Rate (1.16)
(c) Net Return Factor(s) -- Separate
Account (3.03)
(d) Current Value (1.10)
(e) Surrender Value (1.29)
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2.01 Change of Contract (f) Fund(s) Annuity Unit Value --
(Cont'd): Separate Account (4.05)
(g) Annuity options (4.07)
(h) Fixed Annuity Interest Rates (4.01)
(i) Transfers (1.30).
Any change that affects the Annuity
Options and the tables for the Options
may be made:
(a) No earlier than 12 months after the
effective date of this Contract; and
(b) No earlier than 12 months after the
effective date of any prior change.
This Contract may be changed as deemed
necessary by Aetna to comply with
federal or state law.
2.02 Change of Fund(s): The assets of the Separate Account are
segregated by Fund. If the shares of any
Fund are no longer available for
investment by the Separate Account or if
in our judgment, further investment in
such shares should become inappropriate
in view of the purpose of the Contract,
Aetna may cease to make such Fund shares
available for investment under the
Contract prospectively, or Aetna may
substitute shares of another Fund for
shares already acquired. Aetna may also,
from time to time, add additional Funds.
Any elimination, substitution or
addition of Funds will be done in
accordance with applicable state and
federal securities laws. Aetna reserves
the right to substitute shares of
another Fund for shares already acquired
without a proxy vote.
2.03 Nonparticipating Contract: The Contract Holder or Beneficiaries
will not have a right to share in the
earnings of Aetna.
2.04 Payments and Elections: While the Contract Holder is living,
Aetna will pay the Contract Holder any
Annuity payments as and when due. After
the Contract Holder's death, or at the
death of the first Contract Holder if
the Contract 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 3.14.
2.05 State Laws: The Contract complies with the laws of
the state in which it is 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 This is a Contract between the Contract
of Contract: Holder and Aetna. The Contract Holder
has all rights, title and interest for
amounts held in the Contract. Choices
made under this Contract must be in
writing. If the Contract is owned
jointly, both joint Contract Holders
must authorize any Contract Holder
change in writing. Until receipt of such
choices at Aetna's home office, Aetna
may rely on any previous choices made.
13
<PAGE>
2.06 Control of Contract The Contract is not subject to the
(Cont'd): claims of any creditors of the Contract
Holder, except to the extent permitted
by law. The Contract 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 under the Contract must be
submitted to Aetna's home office in
writing and will not be effective until
accepted by Aetna.
2.07 Designation of Each Contract Holder shall name his or
Beneficiary: her Beneficiary. If the Contract is
owned jointly, both Contract 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. If
the Contract is owned jointly, at the
death of one Certificate Holder, the
survivor will be deemed the Beneficiary;
any other Beneficiary on record will be
deemed a contingent Beneficiary.
2.08 Misstatements and If Aetna finds the age of any Annuitant
Adjustments: to be misstated, the correct facts will
be used to adjust payments.
2.09 Incontestability: Aetna cannot cancel this Contract
because of any error of fact on the
application.
2.10 Grace Period: This Contract will remain in effect even
if Purchase Payments are not continued
except as provided in the Payment of
Adjusted Current Value provision (see
3.16).
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
reserves the right to pay premium taxes
when due and deduct the amount from the
current value when we pay the tax or at
a later date.
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
Contract 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.
Aetna will declare from time to time the
acceptability and the minimum amount for
additional Purchase Payments.
14
<PAGE>
3.02 Fund(s) Record Units -- The portion of the Net Purchase
Separate Account: Payment(s) 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 3.04) for the
Valuation Period in which the Purchase
Payment is received in good order at
Aetna's home office.
3.03 Net Return Factor(s) -- The net return factor(s) are used to
Separate Account: compute 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.
3.04 Fund Record Unit Value -- A Fund record unit value is computed by
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.
3.05 Market Value An MVA will apply to any withdrawal from
Adjustment: 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 1.22 Matured Term
Value Transfer;
(b) A full or partial surrender
(including a 10% free withdrawal
under 3.13) except for a partial
withdrawal under the Systematic
Withdrawal Option (see 3.09); or
(c) An election of an Annuity option
(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:
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<PAGE>
3.05 Market Value (a) The aggregate MVA amount which is
Adjustment the sum of all market value
(Cont'd): 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 2 or 3 (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.
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.
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<PAGE>
3.06 Transfer of Current Value Before an Annuity option is elected, all
from the Funds or AG or any portion of the Adjusted Current
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. Aetna
may establish a minimum transfer amount.
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 Contract 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 AG Account
Guaranteed Term under the Dollar Cost
Averaging program, or amounts
transferred as a Matured Term Value on
or within one calendar month after a
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) Matured Term Value(s)
during the calendar month following the
Term's Maturity Date; (2) amounts used
as a premium for an Annuity option; (3)
amounts transferred from the one-year AG
Account Guaranteed term under the Dollar
Cost Averaging Program; and (4) amounts
distributed under the Systematic
Withdrawal Option.
3.07 Notice to the The Contract Holder will receive
Contract Holder: quarterly statements from 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.
3.08 Loans: Loans are not available under this
Contract.
17
<PAGE>
3.09 Systematic Withdrawal A distribution option under which a
Option (SWO): portion of the Current Value will
automatically be surrendered and
distributed each year. SWO payments will
be calculated on the Contract's full
Current Value. The distributed amount is
withdrawn pro rata from each investment
option used under the Contract. A
Surrender Fee will not be deducted from
any portion of the Current Value which
is paid as a distribution under SWO.
Contract 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
Contract Holder may elect one of
the three payment methods described
below.
(1) Specified Payment: Payments of
a designated dollar amount.
The annual amount may not be
greater than the percentage of
the Current Value on the date
of the SWO election as shown
on Contract Schedule I. This
annual dollar amount will
remain constant. At its
discretion, Aetna may require
a minimum payment amount; 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.
SWO Payments will cease upon the
Contract Holder's or Annuitant's
death. A Beneficiary, however, may
elect to continue SWO as provided
in 3.11.
(b) Minimum Initial Current Value: At
its discretion, Aetna may require a
minimum initial Current Value for
election of this option. 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. 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
18
<PAGE>
3.09 Systematic Withdrawal due each year. Subsequent payments
Option (SWO) will be made on the 15th of the
(Cont'd): appropriate months or on such other
date Aetna may designate or allow.
(d) Election and Revocation: SWO may be
elected by submitting a completed
and signed election form to Aetna's
home office. Once elected, this
option may be revoked by the
Contract Holder or spousal
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. SWO may be
elected only once by the Contract
Holder or by the spouse
Beneficiary.
3.10 Death Benefit Amount: If the Contract Holder or Annuitant dies
before Annuity payments start, the
Beneficiary is entitled to a death
benefit under the Contract. If the
Contract is owned jointly, the death
benefit is paid at the death of the
first joint Contract 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 when the
Contract Holder is the Annuitant.
The guaranteed death benefit is the
greatest of:
(1) The sum of all Net Purchase
Payment(s) made to the
Contract (as of the date of
death) minus the sum of all
amounts surrendered, applied
to an Annuity, or deducted
from the Contract;
(2) The highest step-up value, as
of the date of death, prior to
the Annuitant's 75th birthday.
A step-up value is determined
on each anniversary of the
Effective Date. Each step-up
value is calculated as the
Contract'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 Contract's Current Value
as of the date of death.
The excess, if any, of the
guaranteed death benefit value over
the Contract's Current Value is
determined as of the date of death.
Any excess amount will be deposited
to the Contract 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
Contract's Current Value.
(b) Death of the Contract Holder if the
Contract Holder is not the
Annuitant: The death benefit amount
is the Adjusted Current Value on
the claim date. A Surrender Fee may
apply to any full or partial
surrender (see 3.13 and Contract
Schedule I).
(c) At the death of a spousal
Beneficiary who continued the
Contract in his or her own name,
the death benefit amount is equal
to the Adjusted Current Value less
any applicable Surrender Fee on the
amount of any Purchase Payment(s)
made since the death of the
Contract Holder.
19
<PAGE>
3.11 Death Benefit Options Prior to any election, or until amounts
available to Beneficiary: must be otherwise distributed under this
section, the Current Value will be
retained in the Contract. The
Beneficiary has the right to allocate or
reallocate any amount to any of the
available investment options (subject to
an MVA, if applicable). The following
options are available to the
Beneficiary:
(a) When the Contract Holder is the
Annuitant: If the Annuitant dies,
(or when the Contract Holder is a
nonnatural person):
(1) If the Beneficiary is the
surviving spouse, the spousal
Beneficiary will be the
successor Contract Holder and
may exercise all Contract
Holder rights under the
Contract and continue in the
Accumulation Period, or may
elect (i) or (ii) below. Under
the Code, distributions from
the Contract 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 to
an Annuity option (see
4.07); or
(ii) Receive, at any time, a
lump sum payment equal to
the Adjusted Current
Value.
(2) If the Beneficiary is other
than the surviving spouse,
then options (i) or (ii) above
apply. Any portion of the
death benefit not applied to
an Annuity option within one
year of the Contract 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 must be
made to the Contract Holder's
estate within five years of
the date of death. If the
Contract Holder is a
nonnatural person, the death
benefit is paid in one lump
sum to the Contract Holder.
(4) If the Beneficiary is an
entity, a lump sum payment
equal to the Adjusted Current
Value must be made within five
years of the date of death.
(b) When the Contract Holder is not the
Annuitant when the Contract Holder
dies:
(1) If the Beneficiary is the
Contract Holder's surviving
spouse, the spousal
Beneficiary will be the
successor Contract Holder and
may exercise all Contract
Holder rights under the
Contract and continue in the
Accumulation Period, or may
elect (i) or (ii) below. Under
the Code, distributions from
the Contract 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 to
an Annuity option (see
4.07); or
20
<PAGE>
3.11 Death Benefit Options (ii) Receive, at any time, a
available to Beneficiary lump sum payment equal to
(Cont'd): the Surrender Value.
(2) If the Beneficiary is other
than the Contract Holder's
surviving spouse, then options
(i) or (ii) under (1) above
apply. Any portion of the
death benefit not applied to
an Annuity option within one
year of the Contract Holder's
death will be subject to a
Surrender Fee, if applicable,
and 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 must be made
to the Contract Holder's
estate within five years of
the date of death.
(4) If the Beneficiary is an
entity, a lump sum payment
equal to the Surrender Value
must be made within five years
of the date of death.
(c) When the Contract Holder is a
natural person and not the
Annuitant, when the Annuitant dies,
the Beneficiary (or the Contract
Holder if no Beneficiary exists)
may elect to:
(i) Apply all or some of the
Adjusted Current Value to an
Annuity option within 60 days
of the date of death; or
(ii) Receive a lump sum payment
equal to the Adjusted Current
Value.
3.12 Liquidation of All or any portion of the Current Value
Surrender Value: may be surrendered at any time.
Surrender requests can be submitted as a
percentage of the 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.
3.13 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:
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<PAGE>
3.13 Surrender Fee (a) To a Beneficiary due to the
(Cont'd): 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
(see 4.07);
(c) As a distribution under the SWO
provision (see 3.09);
(d) At least 12 months after the date
of the first Purchase Payment to
the Contract, in an amount equal to
or less than 10% 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;
(e) For a full surrender where the
Contract's Current Value is $2,500
or less and no surrenders have been
taken from the Contract within the
prior 12 months;
(f) By Aetna under 3.15; or
(g) If the Annuitant has spent at least
45 consecutive days in a licensed
nursing care facility and each of
the following conditions are met:
(1) more than one calendar year
has elapsed since the date the
Contract was issued; and
(2) the surrender is requested
within 3 years of admission to
a licensed nursing care
facility.
This waiver does not apply if the
Annuitant was in a nursing
care facility at the time the
Contract was issued.
3.14 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.
3.15 Payment of Adjusted Upon 90 days' written notice to the
Current Value: Contract Holder, Aetna will terminate
any Contract if the Current Value
becomes less than $2,500 immediately
following any partial surrender. Aetna
does not intend to exercise this right
in cases where the Current Value is
reduced to $2,500 or less solely due to
investment performance. A surrender fee
will not be deducted from the Adjusted
Current Value.
22
<PAGE>
IV. ANNUITY PROVISIONS
- - --------------------------------------------------------------------------------
4.01 Choices: The Contract Holder may tell Aetna to
apply any portion of the Adjusted
Current Value (minus any premium tax, if
applicable,) to any Annuity under option
(see 4.07). The first Annuity payment
may not be earlier than one calendar
year after the initial Purchase Payment
nor 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. In lieu of the
election of an Annuity, the
Contract Holder may tell Aetna to
make a lump sum payment.
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
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
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 is chosen and a
larger payment would result from
applying the Surrender Value 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
23
<PAGE>
4.02 Terms of Annuity second Annuitant's age will be
Options (Cont'd): 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 2 and 3 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 risks 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 1 (see 4.07).
The life expectancy of the
Annuitant and the Annuitant and
second Annuitant shall be
irrevocable upon the election of an
Annuity option.
4.03 Death of Annuitant/ (a) Contract Holder is Annuitant: When
Beneficiary: the Contract Holder is the
Annuitant and the Annuitant dies
under option 1 or 2, or if both the
Annuitant and the second Annuitant
die under option 3(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 3 has been
elected and the Contract 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 Contract has joint Contract
Holders, the surviving joint
Contract Holder will be deemed the
successor payee.
(b) Contract Holder is Not Annuitant:
When the Contract Holder is not the
Annuitant and the Contract 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 Contract has joint Contract
Holders, the surviving joint
Contract Holder will be deemed the
successor payee.
If the Annuitant dies under option
1 or 2, or if both the Annuitant
and the second Annuitant die under
option 3(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 3 has been
elected, and the Annuitant dies,
the remaining payments will
continue to the Contract Holder.
24
<PAGE>
4.03 Death of Annuitant/ (c) No Beneficiary Named/Surviving: If
Beneficiary there is no Beneficiary, the
(Cont'd): present value of any remaining
payments will be paid in one sum to
the Contract Holder, or if the
Contract Holder is not living, then
to the Contract Holder's estate.
(d) 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.
(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.
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
values and Annuity payments may go up or
down due to investment gain or loss.
25
<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 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 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 -- 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 3.13).
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 2 -- 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 3 -- 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;
26
<PAGE>
4.07 Annuity Options (d) Payments for a minimum of 120
(Cont'd): 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 is
delivered.
27
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
3 3.00% $ 28.99 $ 86.76 $ 172.88 $ 343.23
4 3.00% 22.06 66.02 131.56 261.19
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
28
<PAGE>
OPTION 2
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
Adjusted
Age of
Annuitant None 60 120 180 240
- - --------------------------------------------------------------------------------
50 $ 4.05 $ 4.05 $ 4.03 $ 3.99 $ 3.93
51 4.12 4.11 4.09 4.05 3.99
52 4.19 4.19 4.16 4.11 4.04
53 4.27 4.26 4.23 4.18 4.10
54 4.35 4.34 4.31 4.25 4.16
55 4.44 4.42 4.39 4.32 4.22
56 4.53 4.51 4.47 4.40 4.29
57 4.62 4.61 4.56 4.48 4.35
58 4.72 4.71 4.65 4.56 4.42
59 4.83 4.81 4.75 4.64 4.49
60 4.95 4.93 4.86 4.73 4.55
61 5.07 5.05 4.97 4.83 4.62
62 5.20 5.17 5.08 4.92 4.69
63 5.34 5.31 5.20 5.02 4.76
64 5.49 5.45 5.33 5.12 4.83
65 5.65 5.61 5.47 5.22 4.89
66 5.82 5.77 5.61 5.33 4.96
67 6.01 5.94 5.75 5.44 5.02
68 6.20 6.13 5.91 5.54 5.08
69 6.41 6.33 6.07 5.65 5.14
70 6.64 6.54 6.23 5.76 5.19
71 6.88 6.76 6.41 5.86 5.24
72 7.14 7.00 6.59 5.97 5.28
73 7.43 7.26 6.77 6.06 5.32
74 7.73 7.53 6.96 6.16 5.35
75 8.06 7.82 7.14 6.25 5.38
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
29
<PAGE>
OPTION 3
Life Income for Two Payees
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>
Adjusted Ages
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.03
55 55 3.88 4.25 4.47 3.87 4.14
55 60 3.99 4.44 4.71 3.98 4.42
60 55 3.99 4.44 4.71 3.98 4.42
60 60 4.24 4.71 4.99 4.23 4.57
60 65 4.38 4.97 5.32 4.38 4.93
65 60 4.38 4.97 5.32 4.38 4.93
65 65 4.72 5.33 5.70 4.71 5.14
65 70 4.93 5.68 6.15 4.91 5.66
70 65 4.93 5.68 6.15 4.91 5.66
70 70 5.40 6.21 6.70 5.36 5.96
70 75 5.69 6.68 7.32 5.62 6.67
75 70 5.69 6.68 7.32 5.62 6.67
75 75 6.37 7.45 8.15 6.23 7.12
75 80 6.78 8.11 8.99 6.54 8.13
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
30
<PAGE>
OPTION 1
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%
Monthly Quarterly Semi-Annual Annual
Years Payment Payment Payment Payment
- - ------------------------------------------------------------------
3 $ 29.19 $ 87.33 $ 173.91 $ 344.86
4 22.27 66.61 132.65 263.04
5 18.12 54.19 107.92 213.99
6 15.35 45.92 91.44 181.32
7 13.38 40.01 79.69 158.01
8 11.90 35.59 70.88 140.56
9 10.75 32.16 64.05 127.00
10 9.83 29.42 58.59 116.18
11 9.09 27.18 54.13 107.34
12 8.46 25.32 50.42 99.98
13 7.94 23.75 47.29 93.78
14 7.49 22.40 44.62 88.47
15 7.10 21.24 42.31 83.89
16 6.76 20.23 40.29 79.89
17 6.47 19.34 38.51 76.37
18 6.20 18.55 36.94 73.25
19 5.97 17.85 35.54 70.47
20 5.75 17.22 34.28 67.98
21 5.56 16.65 33.15 65.74
22 5.39 16.13 32.13 63.70
23 5.24 15.66 31.19 61.85
24 5.09 15.24 30.34 60.17
25 4.96 14.85 29.56 58.62
26 4.84 14.49 28.85 57.20
27 4.73 14.15 28.19 55.90
28 4.63 13.85 27.58 54.69
29 4.53 13.57 27.02 53.57
30 4.45 13.30 26.49 52.53
31
<PAGE>
OPTION 1
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%
Monthly Quarterly Semi-Annual Annual
Years Payment Payment Payment Payment
- - -----------------------------------------------------------------
3 $ 29.80 $ 89.04 $ 176.99 $ 349.72
4 22.89 68.38 135.93 268.58
5 18.74 56.00 111.33 219.98
6 15.99 47.77 94.96 187.64
7 14.02 41.90 83.30 164.59
8 12.56 37.52 74.58 147.35
9 11.42 34.11 67.81 133.99
10 10.51 31.40 62.42 123.34
11 9.77 29.19 58.03 114.66
12 9.16 27.36 54.38 107.45
13 8.64 25.81 51.31 101.39
14 8.20 24.50 48.69 96.21
15 7.82 23.36 46.44 91.75
16 7.49 22.37 44.47 87.88
17 7.20 21.51 42.75 84.88
18 6.94 20.74 41.23 81.47
19 6.71 20.06 39.88 78.80
20 6.51 19.46 38.68 76.42
21 6.33 18.91 37.59 74.28
22 6.17 18.42 36.62 72.35
23 6.02 17.98 35.73 70.61
24 5.88 17.57 34.93 69.02
25 5.76 17.20 34.20 67.57
26 5.65 16.87 33.53 66.25
27 5.54 16.56 32.92 65.04
28 5.45 16.28 32.35 63.93
29 5.36 16.01 31.83 62.90
30 5.28 15.77 31.35 61.95
32
<PAGE>
OPTION 2
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 3.5%
Payments Guaranteed for a Stated Period of Months
Age of
Annuitant None 60 120 180 240
- - --------------------------------------------------------------------------------
50 $ 4.34 $ 4.34 $ 4.31 $ 4.27 $ 4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.70 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
33
<PAGE>
OPTION 2
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 5.0%
Payments Guaranteed for a Stated Period of Months
Age of
Annuitant None 60 120 180 240
- - --------------------------------------------------------------------------------
50 $ 5.26 $ 5.25 $ 5.22 $ 5.17 $ 5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 6.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
34
<PAGE>
OPTION 3
Life Income for Two Payees
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>
Adjusted Ages
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.97 $ 4.35 $ 4.56 $ 3.97 $ 4.31
55 55 4.16 4.54 4.76 4.15 4.42
55 60 4.27 4.73 5.00 4.26 4.48
60 55 4.27 4.73 5.00 4.26 4.70
60 60 4.51 4.99 5.27 4.50 4.84
60 65 4.66 5.25 5.61 4.65 4.93
65 60 4.66 5.25 5.61 4.65 5.22
65 65 4.99 5.61 5.99 4.98 5.42
65 70 5.19 5.97 6.44 5.17 5.54
70 65 5.19 5.97 6.44 5.17 5.93
70 70 5.67 6.49 6.99 5.62 6.23
70 75 5.95 6.96 7.61 5.87 6.40
75 70 5.95 6.96 7.61 5.87 6.95
75 75 6.64 7.73 8.43 6.48 7.40
75 80 7.04 8.39 9.29 6.79 7.64
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
35
<PAGE>
OPTION 3
Life Income for Two Payees
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>
Adjusted Ages
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.88 $ 5.26 $ 5.48 $ 4.88 $ 5.23
55 55 5.04 5.44 5.66 5.04 5.32
55 60 5.15 5.63 5.91 5.14 5.38
60 55 5.15 5.63 5.91 5.14 5.59
60 60 5.37 5.87 6.16 5.37 5.72
60 65 5.52 6.14 6.51 5.51 5.80
65 60 5.52 6.14 6.51 5.51 6.10
65 65 5.83 6.49 6.87 5.82 6.29
65 70 6.04 6.84 7.34 6.00 6.41
70 65 6.04 6.84 7.34 6.00 6.81
70 70 6.49 7.35 7.87 6.44 7.08
70 75 6.77 7.84 8.51 6.68 7.25
75 70 6.77 7.84 8.51 6.68 7.81
75 75 7.45 8.60 9.33 7.27 8.25
75 80 7.86 9.28 10.20 7.57 8.49
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
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.
36
<PAGE>
[Aetna logo]
Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800) 531-4547
Individual Variable, Fixed, or Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE 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.
[Aetna logo] Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
Aetna Life Insurance and Annuity Company, herein called
Aetna, agrees to pay the benefits stated in this Contract.
Specifications
- - --------------------------------------------------------------------------------
Plan
SPECIMEN
- - --------------------------------------------------------------------------------
Type of Plan
SPECIMEN
- - --------------------------------------------------------------------------------
Contract Holder
SPECIMEN
- - --------------------------------------------------------------------------------
Annuitant
SPECIMEN
- - --------------------------------------------------------------------------------
Contract No.
SPECIMEN
- - --------------------------------------------------------------------------------
Effective Date
SPECIMEN
- - --------------------------------------------------------------------------------
This Contract is delivered in NEW YORK and is Subject to the Laws of that
Jurisdiction
THE VARIABLE FEATURES OF THE GROUP 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.
This page, the following pages, and the application make up the entire Contract.
Signed at the Home Office on the Effective Date.
/s/Daniel Kearney /s/Susan M. Schechter
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.
<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 and
the Separate 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 Contract
Fee 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 (money market fund)
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Aetna Variable Index Plus 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 Federated American Leaders Fund II
(Cont'd) Federated Fund for U.S. Government Securities II
Federated American Leaders Fund II
Federated Utility Fund II
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
MFS Emerging Growth Series
MFS Research Series
MFS Total Return Series
MFS World Governments Series
MFS Value Series
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 $1,000,000
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)
- - --------------------------------------------------------------------------------
Surrender Fee: For each surrender, the Surrender Fee will be
determined as follows:
<TABLE>
<CAPTION>
Length of Time from Deposit of Net Surrender Fee
Purchase Payment (Years) (as percentage of
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%
</TABLE>
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 $20,000
Current Value:
SWO Minimum Payment $100
Amount:
See 1. GENERAL DEFINITIONS for explanations.
5
<PAGE>
Contract Schedule II
Annuity Period
Separate Account
- - --------------------------------------------------------------------------------
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.
6
<PAGE>
TABLE OF CONTENTS
I. GENERAL DEFINITIONS
Page
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 Fixed Annuity ...................................................... 11
1.15 Fund(s) ............................................................ 11
1.16 General Account .................................................... 11
1.17 Guaranteed Rate -- AG Account ...................................... 11
1.18 Guaranteed Term .................................................... 11
1.19 Guaranteed Term(s) Groups .......................................... 11
1.20 Maintenance Fee .................................................... 12
1.21 Market Value Adjustment (MVA)....................................... 12
1.22 Matured Term Value ................................................. 12
1.23 Matured Term Value Transfer ........................................ 12
1.24 Maturity Date ...................................................... 12
1.25 Net Purchase Payment(s) ............................................ 12
1.26 Nonunitized Separate Account ....................................... 12
1.27 Purchase Payment(s) ................................................ 12
1.28 Rebalancing Program ................................................ 12
1.29 Reinvestment ....................................................... 12
7
<PAGE>
Page
1.30 Separate Account ................................................... 13
1.31 Surrender Value .................................................... 13
1.32 Transfers .......................................................... 13
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 ............................................. 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
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 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
8
<PAGE>
Page
3.13 Liquidation of Surrender Value ..................................... 23
3.14 Surrender Fee ...................................................... 24
3.15 Payment of Surrender Value ......................................... 24
IV. ANNUITY PROVISIONS
4.01 Choices to be Made ................................................. 24
4.02 Terms of Annuity Options ........................................... 25
4.03 Death of Annuitant/Beneficiary ..................................... 26
4.04 Fund(s) Annuity Units -- Separate Account .......................... 27
4.05 Fund(s) Annuity Unit Value -- Separate Account ..................... 27
4.06 Annuity Net Return Factor(s) -- Separate Account ................... 27
4.07 Annuity Options .................................................... 28
9
<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 guarantees
Account (AG Account): stipulated rate(s) of interest for 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 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.
Unless we allow otherwise in response to a
written request prior to Contract issue, 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.
10
<PAGE>
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 and 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 Fixed Annuity: An Annuity with payments that do not vary in
amount.
1.15 Fund(s): The open-end management investment companies
(mutual funds) in which the Separate Account
invests (see Contract Schedule I for specific
fund options).
1.16 General Account: The Account holding the assets of Aetna,
other than those assets held in Aetna's
separate accounts.
1.17 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.
1.18 Guaranteed Term: The period of time for which the AG Account
Guaranteed Rate is guaranteed on 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 Net Purchase
Payments and Transfers into any or all of the
available Guaranteed Terms.
1.19 Guaranteed Term(s) All AG Account Guaranteed Term(s) with the
Groups: same length of time from the close of the
Deposit Period until the designated Maturity
Date.
1.20 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 surrender of the entire
Contract.
11
<PAGE>
1.21 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.
1.22 Matured Term Value: The amount payable on an AG Account
Guaranteed Term's Maturity Date.
1.23 Matured Term Value During the calendar month following an AG
Transfer: 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.
1.24 Maturity Date: The last day of an AG Account Guaranteed
Term.
1.25 Net Purchase Payment(s): The Purchase Payment less premium taxes, if
applicable.
1.26 Nonunitized Separate A separate account subject to the laws of New
Account: York set up by Aetna under 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.
1.27 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.
1.28 Rebalancing Program: A program that allows Contract Holders to
have portions of their Current Value
automatically reallocated annually to a
specified percentage. Only the portion of the
Current Value held in the separate account
can be rebalanced. Contract Holders may
participate in this program by completing the
Rebalancing Section of the enrollment form,
or by requesting the service in writing from
the Company's Home Office. Reallocations
under the Rebalancing Program will not be
counted for purposes of any transfer
limitations imposed under the contract.
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.
12
<PAGE>
1.29 Reinvestment (Cont'd): 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 state 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.
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
applicable only if it is more favorable to
the Contract Holder and/or the Certificate
Holder.
13
<PAGE>
2.01 Change of Contract Any change that affects any of the following
Cont'd: 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): The assets of the Separate Account are
segregated by Fund. If the shares of any Fund
are no longer available for investment by the
Separate Account or if in our judgment,
further investment in such shares should
become inappropriate in view of the purpose
of the contract, Aetna may cease to make such
Fund shares available for investment under
the Contract prospectively, or Aetna may
substitute shares of another Fund for shares
already acquired. Aetna may also, from time
to time, add additional Funds. Aetna reserves
the right to substitute shares of another
Fund for shares already acquired without a
proxy vote.
Any elimination, substitution or addition of
Funds will be done in accordance with federal
securities laws and 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 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.
14
<PAGE>
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. Nothing in the group
annuity contract invalidates or impairs any
right granted to the Certificate Holder. 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
Contract Holder or 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.
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 charged 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.
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.
15
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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.
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
16
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3.04 Net Return Factor(s) -- (c) Taxes (or reserves for taxes) on the
Separate Account Separate Account (if any); divided by
(Cont'd) (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 as
specified in 1.23, 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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<PAGE>
3.06 Market Value Market value adjusted amounts will be equal
Adjustment (Cont'd): 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.
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 Before an Annuity option is elected, all or
Value from the Funds any portion of the Adjusted Current Value may
or AG Account: 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.
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<PAGE>
3.07 Transfer of Current Value Transfer requests can be submitted as a
from the Funds or percentage or as a dollar amount. The
AG Account (Cont'd): 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 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 a Matured
Term Value(s) during the calendar month
following the Term's Maturity Date.
Transfers from Guaranteed Terms of the AG
Account are subject to the MVA provisions in
3.06.
3.08 Notice to the The Certificate Holder will receive quarterly
Contract Holder: statements from 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.
3.09 Loans: Loans are not available under this Contract.
3.10 Systematic Withdrawal The following distribution options may be
Option (SWO): elected by the Certificate Holder or a
Beneficiary 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 on
the Accounts' full Current Value. The
distributed amount is 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 or a Beneficiary may elect one of
the three payment methods described
below.
19
<PAGE>
3.10 Systematic Withdrawal (1) Specified Payment: Payments of a
Option (SWO) designated dollar amount. The
(Cont'd): 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 or a Beneficiary 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 Annuitant's
90th 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
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 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
Beneficiary.
20
<PAGE>
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;
(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;
(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.
21
<PAGE>
3.11 Death Benefit Amount The excess, if any, of the guaranteed
(Cont'd): 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.
(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
Available to Beneficiary: 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 Certificate Holder is the
Annuitant: If the Certificate
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
(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.
22
<PAGE>
3.12 Death Benefit Options (b) When the Certificate Holder is not
Available to Beneficiary the Annuitant and the Certificate
(Cont'd) 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.
3.13 Liquidation of All or any portion of the Account's Current
Surrender Value: Value may be surrendered at any time as
requested by the Certificate Holder.
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.
23
<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
first 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
Surrender Value: 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 initial Purchase
Payment nor later than the first day of the
month following the Annuitant's 90th
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).
24
<PAGE>
4.01 Choices to be Made If a Fixed Annuity is chosen, the Annuity
(Cont'd): 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
Options:
(a) When payments start, the age of the
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 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.
(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 risks
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 the Annuitant and second
Annuitant shall be irrevocable upon the
election of an Annuity option.
25
<PAGE>
4.03 Death of Annuitant/ (a) Certificate Holder is Annuitant: When
Beneficiary: 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.
(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.
26
<PAGE>
4.04 Fund(s) Annuity Units -- The number of each Fund's Annuity units is
Separate Account: 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 unit
Value -- Separate 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.
4.06 Annuity Net Return The Annuity net return factor(s) are used to
Factor(s) -- Separate compute Annuity payments 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 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.
27
<PAGE>
4.07 Annuity Options: Option 1 -- 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 2 -- 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 3 -- 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.
28
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
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
29
<PAGE>
OPTION 2
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 5.96 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.
30
<PAGE>
OPTION 3
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.
31
<PAGE>
OPTION 3
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.
32
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
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 28.85 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
33
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
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
34
<PAGE>
OPTION 2
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.
35
<PAGE>
OPTION 2
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 5.97 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 9.65 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.
36
<PAGE>
OPTION 3
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.
37
<PAGE>
OPTION 3
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.
38
<PAGE>
OPTION 3
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.
39
<PAGE>
OPTION 3
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 the 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.
40
<PAGE>
[Aetna logo]
Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
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.
[Aetna logo] Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
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 Cancel You may cancel this Certificate within 10 days of
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.
/s/ Daniel Kearney /s/ Susan M. Schechter
President Secretary
- - -------------------------------------------------------------------------------
Contract Holder Group Annuity Contract No.
SPECIMEN SPECIMEN
- - -------------------------------------------------------------------------------
Certificate Holder Certificate No.
SPECIMEN
SPECIMEN SPECIMEN
- - -------------------------------------------------------------------------------
Annuitant Name Type of Plan
SPECIMEN SPECIMEN
- - -------------------------------------------------------------------------------
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 CERTIFICATE 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.
<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 The Purchase Payment is subject to a deduction for
Purchase premium taxes, if any. (See 3.01.)
Payment
- - -------------------------------------------------------------------------------
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:
Federated American Leaders Fund II
Federated Fund for U.S. Government Securities II
Federated Growth Strategies Fund II
Federated High Income Bond Fund II
Federated International Equity Fund II
Federated Prime Money Fund II
Federated Utility Fund II
Federated Equity Income Fund II
ALIAC Guaranteed Account (AG Account)
- - -------------------------------------------------------------------------------
Minimum Guaranteed 3.0%.
Interest Rate (effective
annual rate of return):
3
<PAGE>
Contract Schedule I (Cont'd)
Accumulation Period
Separate Account and AG Account
- - -------------------------------------------------------------------------------
Minimum Initial Purchase $5,000
Payment:
Maximum Initial Purchase $1,000,000
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:
<TABLE>
<CAPTION>
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%
</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.
4
<PAGE>
Contract Schedule I (Cont'd)
Accumulation Period
Separate Account and AG Account (Cont'd)
- - -------------------------------------------------------------------------------
SWO Minimum Initial $20,000
Current Value:
SWO Minimum Payment $100
Amount:
See 1. GENERAL DEFINITIONS for explanations.
5
<PAGE>
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.
<PAGE>
TABLE OF CONTENTS
1. GENERAL DEFINITIONS
- - -------------------------------------------------------------------------------
Page
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 Fixed Annuity......................................................... 11
1.15 Fund(s)............................................................... 11
1.16 General Account....................................................... 11
1.17 Guaranteed Rate -- AG Account......................................... 11
1.18 Guaranteed Term....................................................... 11
1.19 Guaranteed Term(s) Groups............................................. 11
1.20 Maintenance Fee....................................................... 12
1.21 Market Value Adjustment (MVA)......................................... 12
1.22 Matured Term Value.................................................... 12
1.23 Matured Term Value Transfer........................................... 12
1.24 Maturity Date......................................................... 12
1.25 Net Purchase Payment(s)............................................... 12
1.26 Nonunitized Separate Account.......................................... 12
1.27 Purchase Payment(s)................................................... 12
1.28 Rebalancing Program................................................... 12
1.29 Reinvestment.......................................................... 12
7
<PAGE>
Page
1.30 Separate Account...................................................... 13
1.31 Surrender Value....................................................... 13
1.32 Transfers............................................................. 13
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................................................ 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
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 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
8
<PAGE>
Page
3.13 Liquidation of Surrender Value........................................ 23
3.14 Surrender Fee......................................................... 24
3.15 Payment of Surrender Value............................................ 24
IV. ANNUITY PROVISIONS
- - -------------------------------------------------------------------------------
4.01 Choices to be Made.................................................... 24
4.02 Terms of Annuity Options.............................................. 25
4.03 Death of Annuitant/Beneficiary........................................ 26
4.04 Fund(s) Annuity Units -- Separate Account............................. 27
4.05 Fund(s) Annuity Unit Value -- Separate Account........................ 27
4.06 Annuity Net Return Factor(s) -- Separate Account...................... 27
4.07 Annuity Options....................................................... 28
9
<PAGE>
1. 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 The Current Value of a Contract plus or minus any
Current Value: aggregate ALIAC Guaranteed Account MVA, if
applicable. (See 1.21)
1.04 ALIAC Guaranteed An accumulation option where Aetna guarantees
Account stipulated rate(s) of interest for specified periods
(AG Account): 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 the 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. Unless we allow otherwise in response to a
written request prior to Contract issue, 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.
10
<PAGE>
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 and 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 Fixed Annuity: An Annuity with payments that do not vary in amount.
1.15 Fund(s): The open-end management investment companies (mutual
funds) in which the Separate Account invests (see
Contract Schedule I for specific fund options).
1.16 General Account: The Account holding the assets of Aetna, other than
those assets held in Aetna's separate accounts.
1.17 Guaranteed Rate -- Aetna will declare the interest rate applicable to a
AG Account: 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.
1.18 Guaranteed Term: The period of time for which the AG Account
Guaranteed Rate is guaranteed on 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 Net Purchase Payments and Transfers into any
or all of the available Guaranteed Terms.
1.19 Guaranteed Term(s) All AG Account Guaranteed Term(s) with the same
Groups: length of time from the close of the Deposit Period
until the designated Maturity Date.
1.20 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 surrender of the
entire Contract.
11
<PAGE>
1.21 Market Value An adjustment that may apply to an amount withdrawn
Adjustment (MVA): 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
tranferred.
1.22 Matured Term Value: The amount payable on an AG Account Guaranteed Term's
Maturity Date.
1.23 Matured Term Value During the calendar month following an AG Account
Transfer: 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.
1.24 Maturity Date: The last day of an AG Account Guaranteed Term.
1.25 Net Purchase The Purchase Payment less premium taxes, if
Payment(s): applicable.
1.26 Nonunitized A separate account subject to the laws of New York
Separate Account: set up by Aetna under 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.
1.27 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.
1.28 Rebalancing Program: A program that allows Contract Holders to have
portions of their Current Value automatically
reallocated annually to a specified percentage.
Only the portion of the Current Value held in the
separate account can be rebalanced. Contract Holders
may participate in this program by completing the
Rebalancing Section of the enrollment form, or by
requesting the service in writing from the Company's
Home Office. Reallocations under the Rebalancing
Program will not be counted for purposes of any
transfer limitations imposed under the contract.
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.
12
<PAGE>
1.29 Reinvestment This notice will contain the Terms available during
(Cont'd): 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 state 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 the Contract during
the Accumulation Period.
1.33 Valuation Period The period of time for which a Fund determines its
(Period): 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.
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
applicable only if it is more favorable to the
Contract Holder and/or the Certificate Holder.
13
<PAGE>
2.01 Change of Contract: Any change that affects any of the following under
(Cont'd): the 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): The assets of the Separate Account are segregated by
Fund. If the shares of any Fund are no longer
available for investment by the Separate Account or
if in our judgment, further investment in such
shares should become inappropriate in view of the
purpose of the contract, Aetna may cease to make
such Fund shares available for investment under the
Contract prospectively, or Aetna may substitute
shares of another Fund for shares already acquired.
Aetna may also, from time to time, add additional
Funds. Aetna reserves the right to substitute shares
of another Fund for shares already acquired without
a proxy vote.
Any elimination, substitution or addition of Funds
will be done in accordance with federal securities
laws and 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 The Contract Holder, Certificate Holder's or
Contract: Beneficiaries will not have a right to share in the
earnings of Aetna.
2.04 Payments and While the Certificate Holder is living, Aetna will
Elections: 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.
14
<PAGE>
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: The Contract is between the Contract Holder and
Aetna. The Contract Holder has title to the Contract.
Nothing in the group annuity contract invalidates or
impairs any right granted to the Certificate Holder.
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 Contract
Holder or 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.
2.08 Misstatements and If Aetna finds the age or sex of any Annuitant to
Adjustments: 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 charged 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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3.01 Net Purchase This amount is the actual Purchase Payment less any
Payment: 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
Account: Holder.
3.03 Fund(s) Record The portion of the Net Purchase Payment(s) applied
Units -- Separate to each Fund under the Separate Account will
Account: 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 The net return factor(s) are used to compute all
Factor(s) -- Separate Account record units for any Fund.
Separate Account:
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 (c) Taxes (or reserves for taxes) on the Separate
Factors(s) -- Account (if any); divided by
Separate Account: (d) The total value of the Fund record units and
(Cont'd) 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
Value -- Separate the net return factors for the current Valuation
Account: 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
Adjustment: withdrawal from the AG Account before the end of a
Guaranteed Term when the withdrawal is due to:
(a) a Transfer; except 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
Adjustment (Cont'd): 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.
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 Before an Annuity option is elected, all or any
Value from the Funds portion of the Adjusted Current Value may be
or AG Account: 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.
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<PAGE>
3.07 Transfer of Current Transfer requests can be submitted as a percentage
Value from the Funds or as a dollar amount. The minimum transfer amount
or AG Account is shown on Contract Schedule I. Within a
(Cont'd): 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 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 a Matured Term Value(s) during
the calendar month following the Term's Maturity
Date.
Transfers from Guaranteed Terms of the AG Account
are subject to the MVA provisions in 3.06.
3.08 Notice to the The Certificate Holder will receive quarterly
Contract Holder: statements from 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.
3.09 Loans: Loans are not available under this Contract.
3.10 Systematic Withdrawal The following distribution options may be elected
Option (SWO): by the Certificate Holder or a Beneficiary 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 on the Accounts' full Current Value.
The distributed amount is 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
or a Beneficiary may elect one of the three
payment methods described below.
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<PAGE>
3.10 Systematic Withdrawal (1) Specified Payment: Payments of a designated
Option (SWO) (Cont'd): 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 or a
Beneficiary 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 Annuitant's
90th 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 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 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 Beneficiary.
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<PAGE>
3.11 Death Benefit If the Certificate Holder or Annuitant dies before
Amount: 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;
(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.
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<PAGE>
3.11 Death Benefit The excess, if any, of the guaranteed death
Amount benefit value over the Account's Current Value
(Cont'd): 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.
(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
Available to otherwise distributed under this section, the
Beneficiary: 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 Certificate Holder is the Annuitant:
If the Certificate 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
(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.
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<PAGE>
3.12 Death Benefit Options (b) When the Certificate Holder is not the
Available to Annuitant and the Certificate Holder dies,
Beneficiary and:
(Cont'd):
(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.
3.13 Liquidation of All or any portion of the Account's Current
Surrender Value: Value may be surrendered at any time as
requested by the Certificate Holder. 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.
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<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
first 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
Surrender Value: 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 initial Purchase Payment nor later than the
first day of the month following the Annuitant's
90th 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).
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<PAGE>
4.01 Choices to be Made If a Fixed Annuity is chosen, the Annuity
(Cont'd): 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
Options: 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
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.
(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 risks 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 the
Annuitant and second Annuitant shall be
irrevocable upon the election of an Annuity
option.
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<PAGE>
4.03 Death of Annuitant/ (a) Certificate Holder is Annuitant: When the
Beneficiary: 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.
(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.
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<PAGE>
4.04 Fund(s) Annuity Units-- The number of each Fund's Annuity units is based
Separate Account: 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 unit
Value -- Separate 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.
4.06 Annuity The Annuity net return factor(s) are used to
Net Return Factor(s) -- compute Annuity payments for any Fund.
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
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.
27
<PAGE>
4.07 Annuity Options: Option 1 -- 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 2 -- 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 3 -- 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 the Contract and this Certificate is
delivered.
28
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
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
29
<PAGE>
OPTION 2
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 5.96 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.
30
<PAGE>
OPTION 3
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.
31
<PAGE>
OPTION 3
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.
32
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
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 28.85 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
33
<PAGE>
OPTION 1
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%
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- - --------------------------------------------------------------------------------
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
34
<PAGE>
OPTION 2
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.
35
<PAGE>
OPTION 2
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 5.97 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 9.65 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.
36
<PAGE>
OPTION 3
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.
37
<PAGE>
OPTION 3
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.
38
<PAGE>
OPTION 3
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.
39
<PAGE>
OPTION 3
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 the 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.
40
<PAGE>
[Aetna logo]
Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
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 CERTIFICATE 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.
MP1IRA
Aetna Life Insurance and Annuity Company
Endorsement
The Contract and Certificate are endorsed to meet the qualification requirements
for an Individual Retirement Annuity under Internal Revenue Code ("Code")
Section 408(b). The following provisions apply and, in the case of a conflict
with any provision in the Contract, this Endorsement controls.
Certificate Holder. The Certificate Holder and the Annuitant must be the same
person. Joint Certificate Holders are not permitted.
Nontransferable/Nonforfeitable. The Contract is nontransferable. The Certificate
Holder may not sell, assign, transfer, pledge or use as collateral for a loan or
as security for the performance of an obligation or for any other purpose, his
or her interest in the Contract to any person other than the issuer of the
Contract or to a spouse incident to a divorce under the provisions of Code
Section 408(d)(6). The Certificate Holder's entire interest in the Contract is
nonforfeitable.
Exclusive Benefit. The Account is established for the exclusive benefit of the
Certificate Holder or his or her Beneficiary(ies).
Contributions. All contributions must be in cash. Except in the case of a
rollover contribution as permitted by Code Section 402(c), 403(a)(4), 403(b)(8),
or 408(d)(3) or a contribution made in accordance with the terms of a Simplified
Employee Pension (SEP) as described in Code Section 408(k), the total
contributions shall not exceed $2,000 for any taxable year.
Distributions. All distributions will be made in accordance with the
requirements of Code Section 401(a)(9). Any periodic payments will be paid only
to the Certificate Holder.
Required Beginning Date. No later than the April 1 following the calendar year
in which the Certificate Holder attains age 70 1/2, the Certificate Holder may
elect to receive the entire interest in a lump sum, or may elect to begin
periodic payments under a systematic distribution option which must be
distributed over:
(a) The life of the Certificate Holder, or the lives of the Certificate Holder
and his or her designated Beneficiary, or
(b) A period certain not extending beyond the life expectancy of the
Certificate Holder or the joint and last survivor expectancy of the
Certificate Holder and his or her designated Beneficiary.
Periodic payments must be made at intervals of no longer than one year. In
addition, payments made as an annuity must be either nonincreasing or they may
increase only as provided in Section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
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. Life expectancy for
distributions under an Annuity option may not be recalculated.
Payment of Death Benefit. Section 3.12 is deleted in its entirety. The death
benefit amount is determined in accordance with the provisions of Sections 3.11
and 3.06. At the death of the Certificate Holder:
(a) If the Certificate Holder dies on or after the date distribution of his or
her interest has begun, the remaining portion of such interest, if any,
will continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Certificate Holder's death.
(b) If the Certificate Holder dies before distribution of his or her interest
begins, the death benefit payable to the Beneficiary will be distributed no
later than December 31 of the calendar year which contains the fifth
anniversary of the date of the Certificate Holder's death, except to the
extent that an election is made to receive a distribution in accordance
with (i) or (ii) below.
<PAGE>
(i) Distributions to the Beneficiary may be made in installments over the
life of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary, commencing no later than December 31 of
the calendar year immediately following the calendar year in which the
Certificate Holder died.
(ii)If the Beneficiary is the Certificate Holder's surviving spouse, and
distributions are to be made in accordance with (i) above,
distributions must begin on or before the later of December 31 of the
calendar year immediately following the calendar year in which the
Certificate Holder died or December 31 of the calendar year in which
the Certificate Holder would have attained age 70 1/2.
If the Certificate Holder dies before Annuity payments begin, a spousal
Beneficiary may elect an Annuity option, a systematic distribution option, a
lump sum payment or to treat the Account as his or her own IRA. The election to
treat the Account as his or her own IRA will be deemed to have been made if such
surviving spouse makes a rollover to or from such Account, or fails to elect to
receive a distribution in accordance with (b) above.
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. Life expectancies for
distributions under an Annuity option may not be recalculated.
Distributions under this section are considered to have begun if distributions
are made on account of the Certificate Holder reaching the required beginning
date or if prior to the required beginning date distributions irrevocably
commence over a period permitted and in an Annuity option acceptable under
Section 1.401(a)(9) of the Proposed Income Tax Regulations.
Annual Reports. Aetna will furnish annual calendar year reports concerning the
status of the Certificate Holder's Account.
Termination of Account. Upon 90 days written notice to the Certificate Holder,
Aetna may terminate the Certificate Holder's Account if no Purchase Payments
have been received for two full consecutive Certificate years and the paid-up
Annuity benefit at maturity would be less than $20 per month.
Right to Cancel. The Certificate Holder may cancel the Certificate within 10
days of receiving it by returning it to Aetna at the address above or to the
person from whom is was purchased. Within seven days from the cancellation
request, Aetna will return all the Certificate Holder's Purchase Payments.
Endorsed and made a part of the Contract and Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
<PAGE>
I-MP1IRA
Aetna Life Insurance and Annuity Company
Endorsement
The Contract is endorsed to meet the qualification requirements for an
Individual Retirement Annuity under Internal Revenue Code ("Code") Section
408(b). The following provisions apply and, in the case of a conflict with any
provision in the Contract, this Endorsement controls.
Contract Holder. The Contract Holder and the Annuitant must be the same person.
Joint Contract Holders are not permitted.
Nontransferable/Nonforfeitable. The Contract is nontransferable. The Contract
Holder may not sell, assign, transfer, pledge or use as collateral for a loan or
as security for the performance of an obligation or for any other purpose, his
or her interest in the Contract to any person other than the issuer of the
Contract or to a spouse incident to a divorce under the provisions of Code
Section 408(d)(6). The Contract Holder's entire interest in the Contract is
nonforfeitable.
Exclusive Benefit. The Contract is established for the exclusive benefit of the
Contract Holder or his or her Beneficiary(ies).
Contributions. All contributions must be in cash. Except in the case of a
rollover contribution as permitted by Code Section 402(c), 403(a)(4), 403(b)(8),
or 408(d)(3) or a contribution made in accordance with the terms of a Simplified
Employee Pension (SEP) as described in Code Section 408(k), the total
contributions shall not exceed $2,000 for any taxable year.
Distributions. All distributions will be made in accordance with the
requirements of Code Section 401(a)(9). Any periodic payments will be paid only
to the Contract Holder.
Required Beginning Date. No later than the April 1 following the calendar year
in which the Contract Holder attains age 70 1/2, the Contract Holder may elect
to receive the entire interest in a lump sum, or may elect to begin periodic
payments under a systematic distribution option which must be distributed 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.
Periodic payments must be made at intervals of no longer than one year. In
addition, payments made as an annuity must be either nonincreasing or they may
increase only as provided in Section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
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. Life expectancy for
distributions under an Annuity option may not be recalculated.
Payment of Death Benefit. Section 3.12 is deleted in its entirety. The death
benefit amount is determined in accordance with the provisions of Sections 3.11
and 3.06. At the death of the Contract Holder:
(a) If the Contract Holder dies on or after the date distribution of his or her
interest has begun, the remaining portion of such interest, if any, will
continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Contract Holder's death.
(b) If the Contract Holder dies before distribution of his or her interest
begins, the death benefit payable to the Beneficiary will be distributed no
later than December 31 of the calendar year which contains the fifth
anniversary of the date of the Contract Holder's death, except to the
extent that an election is made to receive a distribution in accordance
with (i) or (ii) below.
(i) Distributions to the Beneficiary may be made in installments over the
life of the Beneficiary or over
<PAGE>
a period not extending beyond the life expectancy of the Beneficiary,
commencing no later than December 31 of the calendar year immediately
following the calendar year in which the Contract Holder died.
(ii)If the Beneficiary is the Contract Holder's surviving spouse, and
distributions are to be made in accordance with (i) above,
distributions must begin on or before the later of December 31 of the
calendar year immediately following the calendar year in which the
Contract Holder died or December 31 of the calendar year in which the
Contract Holder would have attained age 70 1/2.
If the Contract Holder dies before Annuity payments begin, a spousal Beneficiary
may elect an Annuity option, a systematic distribution option, a lump sum
payment or to treat the Contract as his or her own IRA. The election to treat
the Contract as his or her own IRA will be deemed to have been made if such
surviving spouse makes a rollover to or from such Contract, or fails to elect to
receive a distribution in accordance with (b) above.
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. Life expectancies for
distributions under an Annuity option may not be recalculated.
Distributions under this section are considered to have begun if distributions
are made on account of the Contract Holder reaching the required beginning date
or if prior to the required beginning date distributions irrevocably commence
over a period permitted and in an Annuity option acceptable under Section
1.401(a)(9) of the Proposed Income Tax Regulations.
Annual Reports. Aetna will furnish annual calendar year reports concerning the
0status of the Contract.
Termination of Contract. Upon 90 days written notice to the Contract Holder,
Aetna may terminate the Contract if no Purchase Payments have been received for
two full consecutive Contract years and the paid-up Annuity benefit at maturity
would be less than $20 per month.
Right to Cancel. The Contract Holder may cancel the Contract within 10 days of
receiving it by returning it to Aetna at the address above or to the person from
whom is was purchased. Within seven days from the cancellation request, Aetna
will return all the Contract Holder's Purchase Payments.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
MP1QP
Aetna Life Insurance and Annuity Company
Endorsement
The Contract and Certificate are endorsed to permit the Contract to be used to
fund a pension or profit sharing plan qualified under Section 401(a) of the
Internal Revenue Code ("Code") and, if applicable, the Employee Retirement
Income Security Act (ERISA). The following provisions apply and, in the case of
a conflict with any provision in the Contract, this Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract or any Account may not be sold, assigned, transferred or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose, except pursuant to a qualified domestic
relations order as described in Code Section 414(p). This restriction shall not
apply to the trustee of any trust described in Code Section 401(a), which is
exempt from tax under Section 501(a).
Certificate Holder. The Certificate Holder must be the employer sponsoring the
plan or, if the plan has a trust, the trustee of such trust.
Participant. The Participant is the participant under the Code Section 401(a)
plan on whose behalf the Account is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Beneficiary is the Certificate Holder.
Death Benefit Options. Section 3.12 is deleted in its entirety. At the death of
the Annuitant, Aetna will pay the death benefit amount, determined under
Sections 3.11 and 3.06, as directed by the Certificate Holder. The Certificate
Holder is responsible for complying with the minimum distribution requirements
of Code Section 401(a)(9). The Certificate Holder may elect a lump sum payment,
or periodic payments under a systematic distribution option or any of the
Annuity options provided the election satisfies the Code minimum distribution
rules. If the Account is subject to ERISA and the Certificate Holder directs
payment to a non-spouse plan beneficiary, the Certificate Holder must certify to
Aetna that the distribution complies with the waiver and spousal consent
requirements of Code Section 417. In the absence of such certification, payment
will be made to the Certificate Holder.
Distributions. The Certificate Holder may elect a lump sum payment, or periodic
payments under a systematic distribution option or any of the Annuity options
provided the election satisfies the Code minimum distribution rules. Any
periodic payments will be paid only to the Certificate Holder, or to the
Participant at the direction of the Certificate Holder. The Certificate Holder
is responsible for complying with the minimum distribution requirements of Code
Section 401(a)(9).
<PAGE>
If the Account is subject to ERISA and a distribution is made to a married
Participant in a form other than a "Qualified Joint and Survivor Annuity," the
Certificate Holder must certify to Aetna that the distribution complies with the
waiver and spousal consent requirements of Code Section 417. In the absence of
such certification, payment will be made to the Certificate Holder. A "Qualified
Joint and Survivor Annuity" is an annuity payable for the joint lives of the
Participant and spouse with at least 50% of the payment to continue to the
surviving spouse after the Participant's death.
Annuity Purchase Rates. Gender-based annuity purchase rates do not apply to this
Contract and Certificate. The tables provided in Addendum B apply.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
<PAGE>
I-MP1QP
Aetna Life Insurance and Annuity Company
Endorsement
The Contract is endorsed to permit its use to fund a pension or profit sharing
plan qualified under Section 401(a) of the Internal Revenue Code ("Code") and,
if applicable, the Employee Retirement Income Security Act (ERISA). The
following provisions apply and, in the case of a conflict with any provision in
the Contract, this Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract may not be sold, assigned, transferred or pledged as
collateral for a loan or as security for the performance of an obligation or for
any other purpose, except pursuant to a qualified domestic relations order as
described in Code Section 414(p). This restriction shall not apply to the
trustee of any trust described in Code Section 401(a), which is exempt from tax
under Section 501(a).
Contract Holder. The Contract Holder must be the employer sponsoring the plan
or, if the plan has a trust, the trustee of such trust.
Participant. The Participant is the participant under the Code Section 401(a)
plan on whose behalf the Contract is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Beneficiary is the Contract Holder.
Death Benefit Options. Section 3.12 is deleted in its entirety. At the death of
the Annuitant, Aetna will pay the death benefit amount, determined under
Sections 3.11 and 3.06, as directed by the Contract Holder. The Contract Holder
is responsible for complying with the minimum distribution requirements of Code
Section 401(a)(9). The Contract Holder may elect a lump sum payment, or periodic
payments under a systematic distribution option or any of the Annuity options
provided the election satisfies the Code minimum distribution rules. If the
Contract is subject to ERISA and the Contract Holder directs payment to a
non-spouse plan beneficiary, the Contract Holder must certify to Aetna that the
distribution complies with the waiver and spousal consent requirements of Code
Section 417. In the absence of such certification, payment will be made to the
Contract Holder.
Distributions. The Contract Holder may elect a lump sum payment, or periodic
payments under a systematic distribution option or any of the Annuity options
provided the election satisfies the Code minimum distribution rules. Any
periodic payments will be paid only to the Contract Holder, or to the
Participant at the direction of the Contract Holder. The Contract Holder is
responsible for complying with the minimum distribution requirements of Code
Section 401(a)(9).
<PAGE>
If the Contract is subject to ERISA and a distribution is made to a married
Participant in a form other than a "Qualified Joint and Survivor Annuity," the
Contract Holder must certify to Aetna that the distribution complies with the
waiver and spousal consent requirements of Code Section 417. In the absence of
such certification, payment will be made to the Contract Holder. A "Qualified
Joint and Survivor Annuity" is an annuity payable for the joint lives of the
Participant and spouse with at least 50% of the payment to continue to the
surviving spouse after the Participant's death.
Annuity Purchase Rates. Gender-based annuity purchase rates do not apply to this
Contract. The tables provided in Addendum B apply.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
MP1TDA
Aetna Life Insurance and Annuity Company
Endorsement
The Contract and Certificate are endorsed in order to meet the qualification
requirements of Section 403(b) of the Internal Revenue Code ("Code") and, if
applicable, the Employee Retirement Income Security Act (ERISA). The following
provisions apply and, in the case of a conflict with any provision in the
Contract, this Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract or any Account may not be sold, assigned, transferred or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose, except pursuant to a qualified domestic
relations order as described in Code Section 414(p).
Certificate Holder. The Certificate Holder must be either (1) the employer who
sponsors a Code Section 403(b) Tax Deferred Annuity program or, (2) if the
Purchase Payments are derived solely from a rollover or transfer amount, the
Participant under a Code Section 403(b) Tax Deferred Annuity program.
Participant. The Participant is the participant under the Code Section 403(b)
Tax Deferred Annuity program on whose behalf the Account is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Participant shall name a Beneficiary. If the 403(b) program is
subject to ERISA and the Participant is married, the spouse must be named as
Beneficiary of 50% of the Account value. However, if the Participant has
attained age 35, an alternate Beneficiary may be named for this portion of the
Account provided the Certificate Holder furnishes to Aetna a waiver and spousal
consent satisfying the requirements of ERISA Section 205. Any Beneficiary may be
named for the balance of the Account without the consent of the spouse.
Contributions. The Contract will accept on-going contributions and amounts
rolled over or transferred from (1) another contract qualified under Code
Section 403(b), or (2) from an Individual Retirement Account or Annuity
qualified under Code Sections 408(a) or 408(b) that contains only amounts
previously rolled over from a 403(b) Tax Deferred Annuity.
Limitations on Contributions. Except in the case of a rollover or transfer
contribution, the Purchase Payments made to the Account in any calendar year
cannot exceed the lesser of (1) the maximum exclusion allowance determined under
Code Section 403(b)(2), or (2) the annual additions limitation of Code Section
415(c)(1). In addition, in no event may annual Purchase Payment(s) attributable
to elective deferrals, as defined in Code Section 402(g), exceed $9,500, or such
larger amount as adjusted by the Secretary of the Treasury, unless the alternate
limitation of Code Section 402(g)(8) applies. The Certificate Holder is
responsible for ensuring that the contributions do not exceed the prescribed
limits.
<PAGE>
Withdrawal Restrictions. In accordance with Code Section 403(b)(11), withdrawals
attributable to Purchase Payments made pursuant to a salary reduction agreement
may be made only after the Participant attains age 59 1/2, separates from
service, dies, becomes totally and permanently disabled (as defined in Code
Section 72(m)(7)) or in the case of hardship (as defined in Treasury
Regulations). In the case of hardship, only Purchase Payments, and not the
earnings, may be withdrawn. These restrictions do not apply to amounts held in a
403(b) Tax Deferred Annuity program as of December 31, 1988. The Contract will
not accept transfers from a Code Section 403(b)(7) custodial account.
Distributions. All distributions from the Account must satisfy the minimum
distribution rules set forth in Code Section 401(a)(9). Any periodic payments
will be paid only to the Certificate Holder or, if the Certificate Holder is the
employer, payments will be made to the Participant at the direction of the
Certificate Holder.
Required Beginning Date. Distributions must generally begin no later than April
1 following the year the Participant attains age 70 1/2. However, if the 403(b)
program is sponsored by a government or church employer, distribution must begin
no later than April 1 following the later of the year the Participant attains
age 70 1/2 or retires. The entire value of the Account must be distributed, or
distribution must be made over the life of the Participant, the joint lives of
the Participant and Beneficiary or over a period that does not extend beyond the
life expectancy of the Participant or the joint life expectancies of the
Participant and Beneficiary.
If Aetna maintains separate records of the value as of December 31, 1986, this
value is not required to be taken before December 31 of the year the Participant
attains age 75. Aetna will maintain separate records provided the Certificate
Holder does not take any distribution other than the minimum distribution
required under Code Section 401(a)(9).
Payment of Death Benefit. Section 3.12 is deleted in its entirety. The
Beneficiary must elect payment of the death benefit amount, determined under
Sections 3.11 and 3.06, in accordance with the minimum distribution requirements
of Code Section 401(a)(9). The Beneficiary may elect a lump sum payment, or
periodic payments under the Systematic Withdrawal Option (SWO), Estate
Conservation Option (ECO) or any of the Annuity options provided the election
satisfies the Code minimum distribution rules. The Beneficiary may make any
investment choices permitted under the Contract while the Contract remains in
the Accumulation Period.
Death Before Distributions Begin. If the Participant dies before distributions
begin in accordance with the provisions of Code Section 401(a)(9), the entire
value of the Account must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of the Participant's death.
Alternatively, if the Participant has a designated Beneficiary, payments may be
made over the life of the Beneficiary or over a period not extending beyond the
life expectancy of the Beneficiary provided distribution to a non-spouse
Beneficiary begins by December 31 of the calendar year following the calendar
year of the Participant's death.
For a spousal Beneficiary, such payments must begin by the later of December 31
of the calendar year following the calendar year of the Participant's death or
December 31 of the calendar year in which the Participant would have attained
age 70 1/2.
<PAGE>
Death After Distributions Begin. If the Participant dies after distributions
begin in accordance with the provisions of Code Section 401(a)(9), payments to
the Beneficiary must be made at least as rapidly as the method of distribution
in effect at the time of the Participant's death. If the minimum distribution
requirements have been met by partial withdrawals based on the Participant's
life expectancy or the joint life expectancies of the Participant and
Beneficiary, death benefit payments to the Beneficiary must also satisfy any
additional requirements of Code Section 401(a)(9).
Spousal Consent. If the Account is subject to ERISA and the Participant does not
die before payments begin, distribution to a married Participant must be in the
form of a "Qualified Joint and Survivor Annuity" unless the Certificate Holder
furnishes to Aetna a waiver and spousal consent satisfying the requirements of
ERISA Section 205. A Qualified Joint and Survivor Annuity is an annuity payable
for the joint lives of the Participant and spouse with at least 50% of the
payment to continue to the surviving spouse after the Participant's death.
If the Account is subject to ERISA, the Annuitant dies before the payments begin
and the Beneficiary is not the current spouse, Aetna will pay 50% of the death
benefit to the current spouse in the form of a "Qualified Preretirement Survivor
Annuity" unless (1) a waiver and spousal consent, satisfying the requirements of
ERISA Section 205, is furnished to Aetna, or (2) a prior spouse is entitled to
all or a portion of the death benefit under a qualified domestic relations order
as described in Code Section 414(p). A Qualified Preretirement Survivor Annuity
is an annuity payable for the life of the surviving spouse which can be
purchased by 50% of the Account's Adjusted Current Value.
Annuity Purchase Rates. Gender-based annuity purchase rates do not apply to this
Contract and Certificate. The tables provided in Addendum B apply.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
<PAGE>
I-MP1TDA
Aetna Life Insurance and Annuity Company
Endorsement
The Contract is endorsed in order to meet the qualification requirements of
Section 403(b) of the Internal Revenue Code ("Code") and, if applicable, the
Employee Retirement Income Security Act (ERISA). The following provisions apply
and, in the case of a conflict with any provision in the Contract, this
Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract may not be sold, assigned, transferred or pledged as
collateral for a loan or as security for the performance of an obligation or for
any other purpose, except pursuant to a qualified domestic relations order as
described in Code Section 414(p).
Contract Holder. The Contract Holder must be either (1) the employer who
sponsors a Code Section 403(b) Tax Deferred Annuity program or, (2) if the
Purchase Payments are derived solely from a rollover or transfer amount, the
Participant under a Code Section 403(b) Tax Deferred Annuity program.
Participant. The Participant is the participant under the Code Section 403(b)
Tax Deferred Annuity program on whose behalf the Contract is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Participant shall name a Beneficiary. If the 403(b) program is
subject to ERISA and the Participant is married, the spouse must be named as
Beneficiary of 50% of the Contract value. However, if the Participant has
attained age 35, an alternate Beneficiary may be named for this portion of the
Contract provided the Contract Holder furnishes to Aetna a waiver and spousal
consent satisfying the requirements of ERISA Section 205. Any Beneficiary may be
named for the balance of the Contract without the consent of the spouse.
Contributions. The Contract will accept on-going contributions and amounts
rolled over or transferred from (1) another contract qualified under Code
Section 403(b), or (2) from an Individual Retirement Account or Annuity
qualified under Code Sections 408(a) or 408(b) that contains only amounts
previously rolled over from a 403(b) Tax Deferred Annuity.
Limitations on Contributions. Except in the case of a rollover or transfer
contribution, the Purchase Payments made to the Contract in any calendar year
cannot exceed the lesser of (1) the maximum exclusion allowance determined under
Code Section 403(b)(2), or (2) the annual additions limitation of Code Section
415(c)(1). In addition, in no event may annual Purchase Payment(s) attributable
to elective deferrals, as defined in Code Section 402(g), exceed $9,500, or such
larger amount as adjusted by the Secretary of the Treasury, unless the alternate
limitation of Code Section 402(g)(8) applies. The Contract Holder is responsible
for ensuring that the contributions do not exceed the prescribed limits.
<PAGE>
Withdrawal Restrictions. In accordance with Code Section 403(b)(11), withdrawals
attributable to Purchase Payments made pursuant to a salary reduction agreement
may be made only after the Participant attains age 59 1/2, separates from
service, dies, becomes totally and permanently disabled (as defined in Code
Section 72(m)(7)) or in the case of hardship (as defined in Treasury
Regulations). In the case of hardship, only Purchase Payments, and not the
earnings, may be withdrawn. These restrictions do not apply to amounts held in a
403(b) Tax Deferred Annuity program as of December 31, 1988. The Contract will
not accept transfers from a Code Section 403(b)(7) custodial account.
Distributions. All distributions from the Contract must satisfy the minimum
distribution rules set forth in Code Section 401(a)(9). Any periodic payments
will be paid only to the Contract Holder or, if the Contract Holder is the
employer, payments will be made to the Participant at the direction of the
Contract Holder.
Required Beginning Date. Distributions must generally begin no later than April
1 following the year the Participant attains age 70 1/2. However, if the 403(b)
program is sponsored by a government or church employer, distribution must begin
no later than April 1 following the later of the year the Participant attains
age 70 1/2 or retires. The entire value of the Contract must be distributed, or
distribution must be made over the life of the Participant, the joint lives of
the Participant and Beneficiary or over a period that does not extend beyond the
life expectancy of the Participant or the joint life expectancies of the
Participant and Beneficiary.
If Aetna maintains separate records of the value as of December 31, 1986, this
value is not required to be taken before December 31 of the year the Participant
attains age 75. Aetna will maintain separate records provided the Contract
Holder does not take any distribution other than the minimum distribution
required under Code Section 401(a)(9).
Payment of Death Benefit. Section 3.12 is deleted in its entirety. The
Beneficiary must elect payment of the death benefit amount, determined under
Sections 3.11 and 3.06, in accordance with the minimum distribution requirements
of Code Section 401(a)(9). The Beneficiary may elect a lump sum payment, or
periodic payments under the Systematic Withdrawal Option (SWO), Estate
Conservation Option (ECO) or any of the Annuity options provided the election
satisfies the Code minimum distribution rules. The Beneficiary may make any
investment choices permitted under the Contract while the Contract remains in
the Accumulation Period.
Death Before Distributions Begin. If the Participant dies before distributions
begin in accordance with the provisions of Code Section 401(a)(9), the entire
value of the Contract must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of the Participant's death.
Alternatively, if the Participant has a designated Beneficiary, payments may be
made over the life of the Beneficiary or over a period not extending beyond the
life expectancy of the Beneficiary provided distribution to a non-spouse
Beneficiary begins by December 31 of the calendar year following the calendar
year of the Participant's death.
For a spousal Beneficiary, such payments must begin by the later of December 31
of the calendar year following the calendar year of the Participant's death or
December 31 of the calendar year in which the Participant would have attained
age 70 1/2.
<PAGE>
Death After Distributions Begin. If the Participant dies after distributions
begin in accordance with the provisions of Code Section 401(a)(9), payments to
the Beneficiary must be made at least as rapidly as the method of distribution
in effect at the time of the Participant's death. If the minimum distribution
requirements have been met by partial withdrawals based on the Participant's
life expectancy or the joint life expectancies of the Participant and
Beneficiary, death benefit payments to the Beneficiary must also satisfy any
additional requirements of Code Section 401(a)(9).
Spousal Consent. If the Contract is subject to ERISA and the Participant does
not die before payments begin, distribution to a married Participant must be in
the form of a "Qualified Joint and Survivor Annuity" unless the Contract Holder
furnishes to Aetna a waiver and spousal consent satisfying the requirements of
ERISA Section 205. A Qualified Joint and Survivor Annuity is an annuity payable
for the joint lives of the Participant and spouse with at least 50% of the
payment to continue to the surviving spouse after the Participant's death.
If the Contract is subject to ERISA, the Annuitant dies before the payments
begin and the Beneficiary is not the current spouse, Aetna will pay 50% of the
death benefit to the current spouse in the form of a "Qualified Preretirement
Survivor Annuity" unless (1) a waiver and spousal consent, satisfying the
requirements of ERISA Section 205, is furnished to Aetna, or (2) a prior spouse
is entitled to all or a portion of the death benefit under a qualified domestic
relations order as described in Code Section 414(p). A Qualified Preretirement
Survivor Annuity is an annuity payable for the life of the surviving spouse
which can be purchased by 50% of the Contract's Adjusted Current Value.
Annuity Purchase Rates. Gender-based annuity purchase rates do not apply to this
Contract and Contract. The tables provided in Addendum B apply.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
MP1DC
Aetna Life Insurance and Annuity Company
Endorsement
The Contract and Certificate are endorsed to permit purchase of an interest in
the Contract by an employer or trustee in conjunction with a deferred
compensation plan established under Section 457 of the Internal Revenue Code
("Code"). The following provisions apply and, in the case of a conflict with any
provision in the Contract, this Endorsement controls.
Certificate Holder. The Certificate Holder must be the employer who sponsors the
Code Section 457 deferred compensation plan or trustee of such plan.
Annuitant. The Annuitant is a participant in the employer's Code Section 457
deferred compensation plan.
Beneficiary. The Beneficiary is the Certificate Holder.
Exclusive Benefit of Participant. If the Contract and Certificate are issued in
conjunction with a Code Section 457 plan established by a governmental employer
described in Code Section 457(e)(1)(A), then, the Contract Holder and
Certificate Holder agree that all amounts maintained under the Contract or under
the Certificate, and any amounts withdrawn or paid from the Contract or
Certificate, will be utilized for the exclusive benefit of plan participants and
their beneficiaries in accordance with Code Section 457(g). This provisions
shall be effective (1) in the case of a plan not yet in existence on August 20,
1996, when the endorsement becomes part of the Contract or Certificate, and (2)
in the case of a plan in existence on August 20, 1996, upon the earlier of (a)
the employer's election to maintain set-asides for the exclusive benefit of
participants and beneficiaries in accordance with Code Section 457(g), (b)
January 1, 1999.
Death Benefit Options. Section 3.12 is deleted in its entirety. At the death of
the Annuitant, Aetna will pay the death benefit amount determined under Sections
3.11 and 3.06, as directed by the Certificate Holder. The Certificate Holder may
elect a lump sum payment, or periodic payments under a systematic distribution
option or any of the Annuity options provided the election satisfies the
distribution requirements of Code Section 457(d). The Certificate Holder is
responsible for complying with the distribution requirements of Code Section
457(d).
Distributions. The Certificate Holder may elect on behalf of the annuitant a
lump sum payment, or periodic payments under a systematic distribution option or
any of the Annuity options provided the election satisfies the distribution
requirements of Code Section 457(d). Any periodic payments will only be paid to
the Certificate Holder or, at the direction of the Certificate Holder, to the
Annuitant. The Certificate Holder is responsible for complying with the
distribution requirements of Code Section 457(d).
Annuity Purchase Rates. Gender-based annuity purchase rates do not apply to this
Contract and Certificate. The tables provided in Addendum B apply.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
<PAGE>
I-MP1DC
Aetna Life Insurance and Annuity Company
Endorsement
The Contract is endorsed to permit purchase of the Contract by an employer or
trustee in conjunction with a deferred compensation plan established under
Section 457 of the Internal Revenue Code ("Code"). The following provisions
apply and, in the case of a conflict with any provision in the Contract, this
Endorsement controls.
Contract Holder. The Contract Holder must be the employer who sponsors the Code
Section 457 deferred compensation plan or trustee of such plan.
Annuitant. The Annuitant is a participant in the employer's Code Section 457
deferred compensation plan.
Beneficiary. The Beneficiary is the Contract Holder.
Exclusive Benefit of Participant. If the Contract is issued in conjunction with
a Code Section 457 plan established by a governmental employer described in Code
Section 457(e)(1)(A), then, the Contract Holder and Participant agree that all
amounts maintained under the Contract, and any amounts withdrawn or paid from
the Contract, will be utilized for the exclusive benefit of plan participants
and their beneficiaries in accordance with Code Section 457(g). This provisions
shall be effective (1) in the case of a plan not yet in existence on August 20,
1996, when the endorsement becomes part of the Contract, and (2) in the case of
a plan in existence on August 20, 1996, upon the earlier of (a) the employer's
election to maintain set-asides for the exclusive benefit of participants and
beneficiaries in accordance with Code Section 457(g), (b) January 1, 1999.
Death Benefit Options. Section 3.12 is deleted in its entirety. At the death of
the Annuitant, Aetna will pay the death benefit amount determined under Sections
3.11 and 3.06, as directed by the Contract Holder. The Contract Holder may elect
a lump sum payment, or periodic payments under a systematic distribution option
or any of the Annuity options provided the election satisfies the distribution
requirements of Code Section 457(d). The Contract Holder is responsible for
complying with the distribution requirements of Code Section 457(d).
Distributions. The Contract Holder may elect on behalf of the annuitant a lump
sum payment, or periodic payments under a systematic distribution option or any
of the Annuity options provided the election satisfies the distribution
requirements of Code Section 457(d). Any periodic payments will only be paid to
the Contract Holder or, at the direction of the Contract Holder, to the
Annuitant. The Contract Holder is responsible for complying with the
distribution requirements of Code Section 457(d).
Annuity Purchase Rates. Gender-based annuity purchase rates do not apply to this
Contract. The tables provided in Addendum B apply.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
G-MP1IRA
Aetna Life Insurance and Annuity Company
Endorsement
The Contract and Certificate are endorsed to meet the qualification requirements
for an Individual Retirement Annuity under Internal Revenue Code ("Code")
Section 408(b). The following provisions apply and, in the case of a conflict
with any provision in the Contract, this Endorsement controls.
Certificate Holder. The Certificate Holder and the Annuitant must be the same
person. Joint Certificate Holders are not permitted.
Nontransferable/Nonforfeitable. The Contract is nontransferable. The Certificate
Holder may not sell, assign, transfer, pledge or use as collateral for a loan or
as security for the performance of an obligation or for any other purpose, his
or her interest in the Contract to any person other than the issuer of the
Contract or to a spouse incident to a divorce under the provisions of Code
Section 408(d)(6). The Certificate Holder's entire interest in the Contract is
nonforfeitable.
Exclusive Benefit. The Account is established for the exclusive benefit of the
Certificate Holder or his or her Beneficiary(ies).
Contributions. All contributions must be in cash. Except in the case of a
rollover contribution as permitted by Code Section 402(c), 403(a)(4), 403(b)(8),
or 408(d)(3) or a contribution made in accordance with the terms of a Simplified
Employee Pension (SEP) as described in Code Section 408(k), the total
contributions shall not exceed $2,000 for any taxable year.
Distributions. All distributions will be made in accordance with the
requirements of Code Section 401(a)(9), including the incidental death benefit
requirements of Section 401(a)(9)(G) of the Code and the regulations there under
including the minimum distribution incidental death benefit requirements of
Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any periodic
payments will be paid only to the Certificate Holder.
Required Beginning Date. No later than the April 1 following the calendar year
in which the Certificate Holder attains age 70 1/2, the Certificate Holder may
elect to receive the entire interest in a lump sum, or may elect to begin
periodic payments which must be distributed over:
(a) The life of the Certificate Holder, or the lives of the Certificate Holder
and his or her designated Beneficiary, or
(b) A period certain not extending beyond the life expectancy of the
Certificate Holder or the joint and last survivor expectancy of the
Certificate Holder and his or her designated Beneficiary.
Periodic payments must be made at intervals of no longer than one year. In
addition, payments made as an annuity must be either nonincreasing or they may
increase only as provided in Section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
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.
(Continued on Next Page)
<PAGE>
Payment of Death Benefit. Section 3.12 is deleted in its entirety. The death
benefit amount is determined in accordance with the provisions of Sections 3.11
and 3.06. At death of the Certificate Holder:
(a) if the Certificate Holder dies on or after the date distribution of his or
her interest has begun, the remaining portion of such interest, if any,
will continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Certificate Holder's death.
(b) If the Certificate Holder dies before distribution of his or her interest
begins, the death benefit payable to the Beneficiary will be distributed no
later than December 31 of the calendar year which contains the fifth
anniversary of the date of the Certificate Holder's death, except to the
extent that an election is made to receive a distribution in accordance
with (i) or (ii) below.
(i) Distributions to the Beneficiary may be made in installments over the
life of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary, commencing no later than December 31 of
the calendar year immediately following the calendar year in which the
Certificate Holder died.
(ii) If the Beneficiary is the Certificate Holder's surviving spouse, and
distributions are to be made in accordance with (i) above,
distributions must begin on or before the later of December 31 of the
calendar year immediately following the calendar year in which the
Certificate Holder died or December 31 of the calendar year in which
the Certificate Holder would have attained age 70 1/2.
If the Certificate Holder dies before Annuity payments begin, a spousal
Beneficiary may elect an Annuity option, ECO, SWO, a lump sum payment or to
treat the Account as his or her own IRA. The election to treat the Account as
his or her own IRA will be deemed to have been made if such surviving spouse
makes a rollover to or from such Account, or fails to elect to receive a
distribution in accordance with (b) above.
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.
Distributions under this section are considered to have begun if distributions
are made on account of the Certificate Holder reaching the required beginning
date or if prior to the required beginning date distributions irrevocably
commence over a period permitted and in an Annuity option acceptable under
Section 1.401(a)(9) of the Proposed Income Tax Regulations.
Estate Conservation Option. The Estate Conservation Option (ECO) is a
distribution option under which a portion of the Account's Current Value will
automatically be surrendered and distributed each calendar year. The distributed
amount is withdrawn pro rata from each investment option under the Account.
Election and Revocation. The Certificate Holder or a Beneficiary may elect ECO
by submitting a completed and signed election form to Aetna's Home Office. Once
elected, the Certificate Holder or Beneficiary may revoke the option by
submitting a written request to Aetna's Home Office. Any revocation will apply
only to amounts not yet paid.
Surrender Fee/Market Value Adjustment. A Surrender Fee will not be deducted
from, and a Market Value Adjustment will not be applied to, any portion of the
Current Value which is paid under ECO.
Amount of Distribution. Each year that ECO is in effect, Aetna will calculate
and distribute an amount equal to the minimum required distribution under the
Code. The annual distribution will be determined by dividing the Account's
Current Value as of December 31 of the year prior to the year for which payment
is to be made by a life expectancy factor based on expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. The Certificate
Holder shall elect either the single or joint life expectancy factor. If the
Certificate Holder elects the joint life expectancy, the second life must be a
Beneficiary under the Contract.
<PAGE>
If a Beneficiary elects ECO after the Certificate Holder's death, only a single
life expectancy factor may be used, except that a spousal Beneficiary who has
elected to treat the Account as his or her own IRA may elect either a single or
a joint life expectancy factor. The life expectancy or joint life expectancy
factor will be recalculated each year in accordance with the rules under Code
Section 401(a)(9).
Minimum Current Value. The minimum Contract Value required for the election of
ECO is $20,000. If after election of this option the Current Value is
insufficient to make a scheduled ECO payment, Aetna will distribute the entire
Account balance.
Date of Distribution. The Certificate Holder shall specify the initial
distribution date. The earliest date is the first day of the calendar year in
which the Certificate Holder attains age 70 1/2. For a Beneficiary electing ECO
after the Certificate Holders death, the earliest date is the date of the
Certificate Holders death. Subsequent distributions will be made annually on
such date as Aetna may designate or allow.
Reservation of Rights. Aetna reserves the right to change the terms of ECO for
future elections and to discontinue the availability of this option after proper
notification of not less than 60 days. Aetna also reserves the right to allow
payments to be made more frequently than annually.
Systematic Withdrawal Option. If distributions are made under the Systematic
Withdrawal Option (SWO) after payments are required to begin under the minimum
distribution requirements of Code Section 401(a)(9), the amount distributed in
any year will be increased if required under the Code minimum distribution
rules. For this purpose, the minimum amount to be distributed each year will be
determined by dividing the Accounts Current Value, as of December 31 of year
prior to the year for which payment is to be made by a life expectancy factor,
which for the initial distribution year shall be based on either the single life
expectancy factor or the joint life expectancy factor in Tables V or VI of
Section 1.72-9 of the Income Tax Regulations, as elected by the Certificate
Holder. If the Certificate Holder elects the joint life expectancy factor, the
second life must be a Beneficiary under the Contract.
If a Beneficiary elects SWO after the Certificate Holders death, only a single
life expectancy factor may be used, except that a spousal Beneficiary who has
elected to treat the Account as his or her own IRA may elect either a single or
a joint life expectancy factor. Distributions for any subsequent year will be
calculated based on such life expectancy reduced by one for each calendar year
which has elapsed since the life expectancy was first calculated.
If the specified period method is elected, the maximum specified period will be
limited by the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Certificate Holder. If elected by a Beneficiary, only a single life expectancy
factor may be used, except that a spousal Beneficiary who has elected to treat
the Account as his or her own IRA may elect either a single or a joint life
expectancy factor.
Availability of ECO and SWO. An individual who has revoked ECO or SWO may not
subsequently elect that option again, nor may the individual elect another
withdrawal option unless permitted under the Code minimum distribution rules.
If ECO or SWO is in effect and the Certificate Holder dies before the required
beginning date for minimum distributions, payments will cease. A Beneficiary may
elect ECO or SWO provided the election would satisfy the Code minimum
distribution rules.
If ECO or SWO is in effect and the Certificate Holder dies after the required
beginning date for minimum distributions, payments will continue as permitted
under the Code minimum distribution rules, unless revoked.
In no event may ECO or SWO distributions extend beyond the date the Certificate
Holder or Beneficiary, as applicable, attains age 90.
Annual Reports. Aetna will furnish annual calendar year reports concerning the
status of the Certificate Holder's Account.
<PAGE>
Termination of Account. Upon 90 days written notice to the Certificate Holder,
Aetna may terminate the Certificte Holder's Account if no Purchase Payments have
been received for three full consecutive Certificate years and the paid-up
Annuity benefit at maturity would be less than $20 per month.
Surender Fee. Subsection (d) of Section 3.14 will not apply while either ECO or
SWO is in effect
This endorsement may be amended to comply with any changes in state or federal
law. Any such change is subject to the prior approval of the New York Insurance
Department.
Endorsed and made a part of the Contract and Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
MP1END
Aetna Life Insurance and Annuity Company
Endorsement
The Contract and Certificate are endorsed as follows.
1. Add the following to Contract Schedule I.
Annual Waiver of Surrender Fee:
As provided in 3.14 (d), the amount that may be withdrawn without a
surrender fee cannot exceed [10%] of the Current Value calculated on
the date Aetna receives a surrender request in good order at its Home
Office.
2. Delete the last sentence in Section 1.14, Dollar Cost Averaging, and
replace it with the following.
Dollar Cost Averaging is not available when a systematic distribution
option is in effect.
3. Delete Section 1.32, Transfers, and replace it with the following.
1.32 Transfers
The movement of invested amounts among the available Funds and the
AG Account during the Accumulation Period or, during the Annuity
Period, among the available Funds under a Variable Annuity.
4. Delete the fourth paragraph under Section 2.01, Change of Contract.
5. Delete the first subsection (b) under Section 3.06, Market Value
Adjustment, and replace it with the following.
(b) A full or partial surrender (including a 10% free withdrawal under
3.14), except for a payment made (1) under an SDO (see 3.10), or
(2) under a qualified Contract, when the amount withdrawn is equal
to the required minimum distribution for the Account calculated
using a method permitted under the Code and agreed to by Aetna.
6. Delete the title of Section 3.07, Transfer of Current Value from the
Funds or AG Account, and replace it with the following.
3.07 Transfer of Current Value from the Funds or AG Account During the
Accumulation Period
7. Delete Section 3.10, Systematic Withdrawal Option (SWO), and replace it
with the following.
<PAGE>
3.10 Systematic Distribution Options
Without further endorsement of the Contract or Certificate, Aetna may,
from time to time, make one or more systematic distribution options
(SDOs) available during the Accumulation Period. When an SDO is
elected, Aetna will make automatic payments from the Certificate
Holder's Account. No Surrender Fee or MVA will apply to the automatic
payments made under an SDO.
Any SDO will be subject to the following criteria:
(a) Any SDO will be available to similarly situated contracts
uniformly, and on the basis of objective criteria consistently
applied;
(b) The availability of any SDO may be limited by terms and conditions
applicable to the election of such SDO; and
(c) Aetna may discontinue the availability of an SDO at any time.
Except to the extent required to comply with applicable law,
discontinuance of an SDO will apply only to future elections and
will not affect SDOs in effect at the time an option is
discontinued.
8. Delete the first sentence in Subsection (a) of Section 3.11, Death
Benefit Amount, and replace it with the following.
(a) Death of Annuitant:
9. Delete the Subsection (c) under Section 3.11, Death Benefit Amount, and
replace it with the following.
(c) Death of the Annuitant's spousal beneficiary who continued the
Account: The death benefit amount equals the Account's Adjusted
Current Value on the claim date, less any applicable Surrender Fee
on Purchase Payments made since the death of the Annuitant.
10. In Section 3.11, Death Benefit Amount, add the following additional
subsection.
(d) Death of the spousal beneficiary of a Certificate Holder who was
not the Annuitant and who continued the Account: The death benefit
amount equals 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).
11. Delete Subsection (c) under Section 3.14, Surrender Fee, and replace it
with the following.
(c) As a distribution under an SDO (see 3.10)
12. Delete Subsection (d) under Section 3.14, Surrender Fee, and replace it
with the following
(d) At least 12 months after the date of the first Purchase Payment to
the Account, in an amount not to exceed the amount shown on
Contract Schedule I under Annual Waiver of Surrender Fee. This
waiver of the Surrender Fee applies to the first full or partial
surrender in the
<PAGE>
calendar year. This waiver is not available if a systematic
distribution option has been in effect at any time during the
calendar year.
13. In Section 3.14, Surrender Fee, add the following additional
subsection.
(h) Under a qualified Contract when the amount withdrawn is equal to
the minimum distribution required by the Code for the Account
calculated using a method permitted under the Code and agreed to
by Aetna.
14. Insert the following as the last paragraph in Section 4.01, Choices.
During the Annuity Period when a Variable Annuity has been elected, at
the request of the Certificate Holder, all or any portion of the amount
allocated to a Fund may be transfered to any other Fund available
during the Annuity Period. Four transfers, without charge, are allowed
each calendar year.
Aetna reserves the right to change the number of transfers allowed.
Transfer requests must be expressed as a percentage of the allocation
among the Funds of the amount upon which the Variable Annuity will be
based. Aetna reserves the right to establish a minimum transfer amount.
Transfers will be effective as of the Valuation Period in which Aetna
receives a transfer request in good order at its Home Office.
15. Delete Subsection (c) under Section 4.02 Terms of Annuity Options, and
replace it with the following.
(c) If a Fixed Annuity is chosen, Aetna will use the applicable
current settlement rate if it will provide higher Fixed Annuity
payments.
16. Delete Section 4.07, Annuity Options, and replace it with the
following.
4.07 Annuity Options
Option 1. Payments for a Specified Period: Payments are made for the
number of years specified by the Certificate Holder. The number of
years must be at least five and not more than 30.
Option 2. Life income based on the life of the Annuitant: Payments are
made until the death of the Annuitant. When this option is elected, the
Certificate Holder must also choose one of the following:
(a) payments cease at the death of the Annuitant;
(b) payments are guaranteed for a specified period from five to 30 \
years;
(c) cash refund: when the Annuitant dies, the Beneficiary will receive
a lump sum payment equal to the amount applied to the Annuity
option (less any premium tax, if applicable) less the total amount
of Annuity payments made prior to such death. This cash refund
feature is only available if the total amount applied to the
Annuity option is allocated to a Fixed Annuity.
Option 3. Life income based on the lives of two Annuitants: Payments
are made for the lives of two Annuitants, one of whom is designated the
second Annuitant, and cease only when both
<PAGE>
Annuitants have died. When this option is elected, the Certificate
Holder must also choose one of the following:
(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) 100% of the payment to continue after the first death and payments
are guaranteed for a period of five to 30 years;
(e) 100% of the payment to continue at the death of the designated
second Annuitant and 50% of the payment to continue at the death
of the Annuitant; or
(f) 100% of the payment continues after the first death with a cash
refund feature. When the Annuitant and designated second Annuitant
die, the Beneficiary will receive a lump sum payment equal to the
amount applied to the Annuity option (less any premium tax) less
the total amount of Annuity payments paid prior to such death.
This cash refund feature is only available if the total amount
applied to the Annuity option is allocated to a Fixed Annuity.
If a Fixed Annuity is chosen under Option 1, Option 2 (a) or (b), or
Option 3 (a) or (d), the Certificate Holder may elect, at the time the
Annuity option is selected, an annual increase of one, two or three
percent compounded annually.
As allowed under applicable state law, Aetna reserves the right to
offer additional Annuity options.
17. Delete the tables showing rates for Annuity Options 1, 2 and 3 and
replace them with the tables provided in Addendum A attached.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
<PAGE>
I-MP1END
Aetna Life Insurance and Annuity Company
Endorsement
The Contract is endorsed as follows.
1. Add the following to Contract Schedule I.
Annual Waiver of Surrender Fee:
As provided in 3.14 (d), the amount that may be withdrawn without a
surrender fee cannot exceed [10%] of the Current Value calculated on
the date Aetna receives a surrender request in good order at its Home
Office.
2. Delete the last sentence in Section 1.14, Dollar Cost Averaging, and
replace it with the following.
Dollar Cost Averaging is not available when a systematic distribution
option is in effect.
3. Delete Section 1.32, Transfers, and replace it with the following.
1.32 Transfers
The movement of invested amounts among the available Funds and the
AG Account during the Accumulation Period or, during the Annuity
Period, among the available Funds under a Variable Annuity.
4. Delete the fourth paragraph under Section 2.01, Change of Contract.
5. Delete the first subsection (b) under Section 3.06, Market Value
Adjustment, and replace it with the following.
(b) A full or partial surrender (including a 10% free withdrawal under
3.14), except for a payment made (1) under an SDO (see 3.10), or
(2) under a qualified Contract, when the amount withdrawn is equal
to the required minimum distribution for the Contract calculated
using a method permitted under the Code and agreed to by Aetna.
6. Delete the title of Section 3.07, Transfer of Current Value from the
Funds or AG Account, and replace it with the following.
3.07 Transfer of Current Value from the Funds or AG Account During the
Accumulation Period
7. Delete Section 3.10, Systematic Withdrawal Option (SWO), and replace it
with the following.
<PAGE>
3.10 Systematic Distribution Options
Without further endorsement of the Contract, Aetna may, from time to
time, make one or more systematic distribution options (SDOs) available
during the Accumulation Period. When an SDO is elected, Aetna will make
automatic payments from the Contract. No Surrender Fee or MVA will
apply to the automatic payments made under an SDO.
Any SDO will be subject to the following criteria:
(a) Any SDO will be available to similarly situated contracts
uniformly, and on the basis of objective criteria consistently
applied;
(b) The availability of any SDO may be limited by terms and conditions
applicable to the election of such SDO; and
(c) Aetna may discontinue the availability of an SDO at any time.
Except to the extent required to comply with applicable law,
discontinuance of an SDO will apply only to future elections and
will not affect SDOs in effect at the time an option is
discontinued.
8. Delete the first sentence in Subsection (a) of Section 3.11, Death
Benefit Amount, and replace it with the following.
(a) Death of Annuitant:
9. Delete the Subsection (c) under Section 3.11, Death Benefit Amount, and
replace it with the following.
(c) Death of the Annuitant's spousal beneficiary who continued the
Contract: The death benefit amount equals the Adjusted Current
Value on the claim date, less any applicable Surrender Fee on
Purchase Payments made since the death of the Annuitant.
10. In Section 3.11, Death Benefit Amount, add the following additional
subsection.
(d) Death of the spousal beneficiary of a Contract Holder who was not
the Annuitant and who continued the Contract: The death benefit
amount equals the 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).
11. Delete Subsection (c) under Section 3.14, Surrender Fee, and replace it
with the following.
(c) As a distribution under an SDO (see 3.10)
12. Delete Subsection (d) under Section 3.14, Surrender Fee, and replace it
with the following.
(d) At least 12 months after the date of the first Purchase Payment to
the Contract, in an amount not to exceed the amount shown on
Contract Schedule I under Annual Waiver of Surrender Fee. This
waiver of the Surrender Fee applies to the first full or partial
surrender in the calendar year. This waiver is not available if a
systematic distribution option has been in effect at any time
during the calendar year.
<PAGE>
13. In Section 3.14, Surrender Fee, add the following additional
subsection.
(h) Under a qualified Contract when the amount withdrawn is equal to
the minimum distribution required by the Code for the Contract
calculated using a method permitted under the Code and agreed to
by Aetna.
14. Insert the following as the last paragraph in Section 4.01, Choices.
During the Annuity Period when a Variable Annuity has been elected, at
the request of the Contract Holder, all or any portion of the amount
allocated to a Fund may be transfered to any other Fund available
during the Annuity Period. Four transfers, without charge, are allowed
each calendar year. Aetna reserves the right to change the number of
transfers allowed.
Transfer requests must be expressed as a percentage of the allocation
among the Funds of the amount upon which the Variable Annuity will be
based. Aetna reserves the right to establish a minimum transfer amount.
Transfers will be effective as of the Valuation Period in which Aetna
receives a transfer request in good order at its Home Office.
15. Delete Subsection (c) under Section 4.02 Terms of Annuity Options, and
replace it with the following.
(c) If a Fixed Annuity is chosen, Aetna will use the applicable
current settlement rate if it will provide higher Fixed Annuity
payments.
16. Delete Section 4.07, Annuity Options, and replace it with the
following.
4.07 Annuity Options
Option 1. Payments for a Specified Period: Payments are made for the
number of years specified by the Contract Holder. The number of years
must be at least five and not more than 30.
Option 2. Life income based on the life of the Annuitant: Payments are
made until the death of the Annuitant. When this option is elected, the
Contract Holder must also choose one of the following:
(a) payments cease at the death of the Annuitant;
(b) payments are guaranteed for a specified period from five to 30
years;
(c) cash refund: when the Annuitant dies, the Beneficiary will receive
a lump sum payment equal to the amount applied to the Annuity
option (less any premium tax, if applicable) less the total amount
of Annuity payments made prior to such death. This cash refund
feature is only available if the total amount applied to the
Annuity option is allocated to a Fixed Annuity.
Option 3. Life income based on the lives of two Annuitants: Payments
are made for the lives of two Annuitants, one of whom is designated the
second Annuitant, and cease only when both Annuitants have died. When
this option is elected, the Contract Holder must also choose one of the
following:
<PAGE>
(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) 100% of the payment to continue after the first death and payments
are guaranteed for a period of five to 30 years;
(e) 100% of the payment to continue at the death of the designated
second Annuitant and 50% of the payment to continue at the death
of the Annuitant; or
(f) 100% of the payment continues after the first death with a cash
refund feature. When the Annuitant and designated second Annuitant
die, the Beneficiary will receive a lump sum payment equal to the
amount applied to the Annuity option (less any premium tax) less
the total amount of Annuity payments paid prior to such death.
This cash refund feature is only available if the total amount
applied to the Annuity option is allocated to a Fixed Annuity.
If a Fixed Annuity is chosen under Option 1, Option 2 (a) or (b), or
Option 3 (a) or (d), the Contract Holder may elect, at the time the
Annuity option is selected, an annual increase of one, two or three
percent compounded annually.
As allowed under applicable state law, Aetna reserves the right to
offer additional Annuity options.
17. Delete the tables showing rates for Annuity Options 1, 2 and 3 and
replace them with the tables provided in Addendum A attached.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of this 11th day of November,
1994, by Aetna Life Insurance Company ("Aetna Life") and MFS Investor Services,
Inc. ("MFS");
WHEREAS, the MFS Total Return Fund ("Fund") is an open end investment
company registered under the Investment Company Act of 1940, as amended (" 1940
Act");
WHEREAS, MFS and its affiliates are engaged in the distribution of shares
of the Fund;
WHEREAS, Aetna Life is an insurance company that provides various
administrative services to employee pension benefit plans, including an employee
pension benefit plan covering its own employees (the "Plan); and
WHEREAS, Aetna Life and MFS desire to facilitate the purchase and
redemption of Fund shares on behalf of the Plan and its participants and
beneficiaries ("Participant"), subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Administration of Plan.
Aetna Life is authorized by the sponsor or other properly designated
fiduciary of the Plan ("Plan Representative") to provide administrative services
to the Plan. As part of these services, Aetna Life is authorized to make
available to each Plan Representative shares of registered investment companies
that the Plan Representative may select as investment options under the Plan.
The parties acknowledge and agree that the role of Aetna Life is only to make
such investment options available to Plan sponsors. The selection of particular
investment companies for inclusion under a Plan is made by a Plan Representative
and the decision to invest assets in a particular investment company included in
a Plan is made at the direction of a Participant in accordance with the terms of
the Plan. It is understood that both the Plan Representatives and the
Participants may change their respective selections from time to time. Plan
assets invested in such investment options will be held in the name of a nominee
or trustee of the Plan ("Nominee").
2. Omnibus Account.
The parties agree that a single omnibus account held in the name of the
Nominee shall be maintained for those Plan assets directed for investment in the
Fund ("Account"). MFS shall be registered as broker dealer of record on the
Account. Aetna Life, as service agent
<PAGE>
for the Plan, shall facilitate purchase and sale transactions with respect to
the Account in accordance with the following terms.
3. Pricing Information, Orders, Settlement.
(a) MFS will make shares of the Fund available to be purchased by the
Nominee on behalf of the Account at the net asset value applicable to each
order. Fund shares shall be purchased and redeemed on a net basis in such
quantity and at such time determined by Aetna Life or the Nominee to correspond
with investment instructions received by Aetna Life from Plan Representatives or
Participants.
(b) MFS or an affiliate will use its best efforts to provide to Aetna Life
closing net asset value, dividend and capital gain information determined for
the Fund at the close of trading each day that the New York Stock Exchange
("Exchange") is open ("Business Day") no later than 6:30 p.m., Eastern Time, on
each Business Day. Aetna Life will send directly to MFS or a specified agent
orders to purchase or redeem Fund shares by 9:00 a.m., Eastern Time, the
following Business Day. Payment for net purchases will be wired by the Nominee
by 2:30 p.m., Eastern Time, to a custodial account designated by MFS or an
affiliate on the same Business Day that an order for shares of the Fund is
received by MFS.
(c) MFS or an affiliate hereby appoints Aetna Life as its agent for the
limited purpose of accepting purchase and redemption orders for Fund shares from
Plan Representatives or Participants. Orders from Plan Representatives or
Participants received by Aetna Life acting as agent for MFS or an affiliate
prior to the close of the Exchange on any given Business Day will be executed by
MFS or an affiliate at the net asset value determined as of the close of the
Exchange on such Business Day. Any such orders received by Aetna Life acting as
such agent after the close of the Exchange on a given Business Day will be
executed by the Fund at the net asset value determined as of the close of the
Exchange on the Business Day next following the day of receipt of such order.
(d) Payment for net redemption orders that are timely received by MFS or an
affiliate will be wired by MFS or an affiliate from the Fund's custodial account
to an account designated by the Nominee or its agent no later than 2:30 p.m.,
Eastern Time, the same Business Day such order is received by MFS or an
affiliate.
(e) Aetna Life and the Nominee shall not, without the written consent of
MFS, make representations concerning the Fund or its shares except those
contained in the then current prospectus and in current printed sales literature
approved by MFS.
4. Expenses.
(a) Except as otherwise provided in this Agreement, each party shall pay
its own expenses incident to its obligations hereunder. MFS or an affiliate will
pay all expenses
<PAGE>
incident to the management and operation of the Fund, including the cost of
registration of the Fund shares with the SEC and in states where required.
(b) MFS or an affiliate shall provide advance notice of, and distribute to,
Aetna Life or the Nominee its proxy material, periodic Fund reports to
shareholders and other materials to be sent to Plan Representatives or
Participants. In addition, MFS or an affiliate shall provide Aetna Life or
Nominee with a sufficient quantity of Fund prospectuses to be used in connection
with the transactions contemplated by this Agreement. The cost of preparing and
printing all such materials shall be paid by the Fund or MFS or an affiliate,
and the cost of distributing such materials to Plan Representatives or
Participants shall be paid by Aetna Life; provided, however, that if at any time
MFS or an affiliate reasonably deems the usage of such items to be excessive,
each may require that Aetna Life pay the cost of printing (including press time
and paper) any additional copies of such materials that are requested by Aetna
Life or the Nominee.
5. Administration of Account.
(a) The provision of administrative services to the Plan shall be the
responsibility of Aetna Life or the Nominee and shall not be the responsibility
of the Fund or MFS. These administrative services include, but are not limited
to, maintenance of Plan and Participant records; preparation, maintenance, and
transmittal of periodic account statements; various services related to the
purchase and redemption of Fund shares; and other related services. MFS
recognizes the Nominee as the sole shareholder of Fund shares purchased under
this Agreement.
(b) MFS will pay Aetna Life an administrative service fee each quarter in
an amount equal to the average daily net assets invested in the Fund during the
quarter multiplied by the applicable per annum rate (i.e., up to, but not
necessarily all of, 0.25% of the average daily net asset value of shares of the
Fund held by the Plan during each quarter, as specified in writing from time to
time by MFS) by a fraction, the numerator of which is the number of days in the
quarter and the denominator of which is 365.
(c) Aetna Life or an affiliate will calculate the amount of the fee
described in Section 5(b) to be paid to Aetna Life at the end of each quarter
and MFS will make such payment to Aetna Life within thirty (30) days after its
receipt of an invoice therefore from Aetna Life. Each invoice will be
accompanied by a statement showing the calculation of the fee payable by MFS for
the relevant quarter and such other supporting data as may be reasonably
requested by MFS.
6. Termination.
This Agreement shall terminate as to the maintenance of the Account:
(a) At the option of either of Aetna Life or MFS, upon six (6) months'
advance written notice to the other;
<PAGE>
(b) At the option of Aetna Life, if shares of the Fund are not available
for any reason to meet the investment requirements of the Plan; provided,
however, that prompt advance notice of election to terminate shall be furnished
by the terminating entity;
(c) At the option of either Aetna Life or MFS, upon institution of formal
disciplinary or investigative proceedings against Aetna Life, the Fund, or MFS
by the NASD, the SEC or any other regulatory body;
(d) At the option of MFS, if it shall reasonably determine in good faith
that shares of the Fund are not being offered in conformity with the terms of
this Agreement, the Fund's prospectus or applicable laws and regulations;
(e) At the option of Aetna Life, upon termination of the management
agreement between the Fund and its investment adviser, notice of the occurrence
of which shall be promptly furnished to Aetna Life; provided, however, that this
Subsection (e) shall not apply if contemporaneously with such termination a new
contract of substantially similar terms is entered into between the Fund and
such investment adviser;
(f) Upon assignment of this Agreement by any party, unless made with the
written consent of all other parties hereto; provided, however, that (i) Aetna
Life may assign, without agreement of MFS or an affiliate, its duties and
responsibilities under this Agreement to any Aetna Life affiliate, and (ii) MFS
may assign, without agreement of Aetna Life, its duties and responsibilities
under this Agreement to any of its affiliates; or
(g) If the Fund's shares are not registered, issued or sold in conformance
with Federal law or such law precludes the use of Fund shares as an investment
vehicle for the Plan; provided, however, that prompt notice shall be given by
any party should such situation occur.
7. Continuation of Agreement.
Termination as the result of any cause listed in Section 6 shall not affect
MFS' obligation to continue to maintain the Account as an investment option for
those Participants who purchased shares of the Fund prior to the termination of
this Agreement; provided, however, that MFS shall not be obligated to pay the
fee described in Section 5 to Aetna Life after such termination.
8. Advertising Materials.
(a) Advertising and literature with respect to the Fund prepared by Aetna
Life or the Nominee or its agents for use with the general public, the Plan, or
any Plan Representative or Participant shall be submitted to MFS for review and
approval before such material is used. MFS shall advise the submitting party in
writing within ten (10) Business Days of receipt of such materials by MFS of its
approval or disapproval of such
<PAGE>
materials. MFS, its affiliates and agents shall not use the name or any
trademark of Aetna Life or any of its affiliates without Aetna Life's written
approval.
(b) MFS will provide to Aetna Life at least one complete copy of all
registration statements, (if requested), prospectuses, statements of additional
information, annual and semiannual reports and proxy statements of the Fund, and
all amendments or supplements to any of the above promptly after the completion
of each such document.
9. Proxy Voting.
Aetna Life or the Nominee will distribute to Plan Representatives or
Participants all proxy materials furnished by the Fund, MFS, or their
affiliates. Aetna Life shall use their best efforts to obtain the agreement of
Plan Representatives or Participants to pass through voting privileges of Plan
Representatives or Participants to vote Fund shares for which no voting
instructions are received from Plan Representatives or Participants in the same
proportion as shares for which such instructions have been received. Aetna Life
and the Nominee shall assist in the solicitation of proxies for Fund shares held
for such beneficial owners.
10. Indemnification.
(a) Aetna Life agrees to indemnify and hold harmless MFS, the Fund, the
Fund's investment adviser, transfer agent and/or custodian, and each of their
respective directors, officers, employees, agents and each person, if any, who
controls MFS, the Fund, the Fund's investment adviser, transfer agent and/or
custodian within the meaning of the Securities Act of 1933 (" 1933 Act") against
any losses, claims, damages or liabilities to which MFS, the Fund, the Fund's
investment adviser, transfer agent, and/or custodian or any such director,
officer, employee, agent, or controlling person may become subject, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof) (i)
arise out of or are based upon the provision of administrative services by Aetna
Life or (ii) result from a breach of a material provision of this Agreement.
Aetna Life will reimburse any legal or other expenses reasonably incurred by
MFS, the Fund, the Fund's investment adviser, transfer agent and/or custodian,
or any such director, officer, employee, agent, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that Aetna Life will not be liable for
indemnification hereunder to the extent that any such loss, claim, damage or
liability arises out of or is based upon the gross negligence or willful
misconduct of MFS, the Fund, the Fund's investment adviser, transfer agent
and/or custodian, or their respective directors, officers, employees, agents or
any controlling person herein defined in performing their obligations under this
Agreement.
(b) MFS agrees to indemnify and hold harmless Aetna Life, the Nominee and
each of their respective directors, officers, employees, agents and each person,
if any, who controls Aetna Life and the Nominee within the meaning of the 1933
Act against any losses, claims, damages or liabilities to which Aetna Life, the
Nominee, or any such
<PAGE>
director, officer, employee, agent or controlling person may become subject,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of any material
fact contained in the registration statement, prospectus or sales literature of
the Fund or the omission to state therein a material fact required to be stated
therein or material fact required to be stated therein or necessary to make the
statements therein not misleading. MFS will reimburse any legal or other
expenses reasonably incurred by Aetna Life, the Nominee, or any such director,
officer, employee, agent, or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that MFS will not be liable for indemnification hereunder to the extent
that any such loss, claim, damage or liability arises out of, or is based upon,
the gross negligence or willful misconduct of Aetna Life, the Nominee, or their
respective directors, officers, employees, agents or any controlling person
herein defined in the performance of their obligations under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability that it may have
to any indemnified party otherwise than under this Section 10. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 10 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
11. Representations and Warranties.
(a) Representations of Aetna Life. Aetna Life represents and warrants:
(i) that it (1) is a life insurance company organized under the laws of
the State of Connecticut, (2) is in good standing in that jurisdiction, (3) is
in material compliance with all applicable federal laws and state securities and
insurance laws, (4) is duly licensed and authorized to conduct business in every
jurisdiction where such license or authorization is required, and will maintain
such license or authorization in effect at all times during the term of this
Agreement, and (5) has full authority to enter into this Agreement and carry out
its obligations pursuant to it terms;
(ii) that it is authorized under the Plan to (1) provide administrative
services to the Plan and (2) facilitate transactions in the Account through the
Fund; and
<PAGE>
(iii) that the receipt of the fees described in Section 5 by Aetna Life
will not constitute a non-exempt "prohibited transaction" as such term is
defined in Section 406 of the Employee Retirement Income Security Act of 1974
and Section 4975 of the Internal Revenue Code of 1986, as amended.
(b) MFS Representations on behalf of the Fund. On behalf of the Fund, MFS
represents and warrants:
(i) that the Fund (1) is a duly organized Massachusetts business trust,
(2) is in good standing in that jurisdiction, (3) is in material compliance with
all applicable federal, state and securities laws, and (4) is duly licensed and
authorized to conduct business in every jurisdiction where such license or
authorization is required;
(ii) that the shares of the Fund are registered under the 1933 Act,
duly authorized for issuance and sale in compliance with all applicable federal,
state, and securities laws; that the Fund amends its registration statement
under the 1933 Act and the 1940 Act from time to time as required or in order to
effect the continuous offering of its shares; and that the Fund has registered
and qualified its shares for sale in accordance with the laws of each
jurisdiction where it is required to do so; and
(iii) that the Fund is currently qualified as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended, and
will make every effort to maintain such qualification; and that it will notify
Aetna Life immediately upon having a reasonable basis for believing that the
Fund has ceased to so qualify or that it might not qualify in the future.
(c) Representations of MFS. MFS represents and warrants:
(i) that it (1) is a corporation duly organized under the laws of the
State of Delaware, (2) is in good standing in that jurisdiction, (3) is in
material compliance with all applicable federal, state, and securities laws, (4)
is duly licensed or registered as a broker-dealer with the SEC and every
jurisdiction where such license or registration is required, (5) will maintain
such license or registration in effect at all times during the term of this
Agreement, (6) is and will continue to be a member in good standing of the NASD,
and (7) has full authority to enter into this Agreement and carry out its
obligations pursuant to the terms of this Agreement.
12. Miscellaneous.
(a) Amendment and Waiver. Neither this Agreement nor any provision hereof
may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by the parties hereto.
(b) Notices. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery
<PAGE>
or registered or certified mail, postage prepaid, return receipt requested, to
the party or par-ties to whom they are directed at the following address, or at
such other addresses as may be designated by notice from such party to all other
parties.
To Aetna Life:
Aetna Life Insurance Company
151 Farmington Avenue, RE4C
Hartford, Connecticut 06156
Attention: Barrett N. Sidel
To MFS:
MFS Investor Services, Inc.
500 Boylston Street
Boston, MA 02116
Attention: Douglas C. Grip
<PAGE>
Any notice, demand or other communication given in a manner prescribed in this
subsection (b) shall be deemed to have been delivered on receipt.
(c) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
(e) Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
(f) Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto and supersedes all prior agreement and
understandings relating to the subject matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representatives as
of the date specified below.
Aetna Life Insurance Company MFS Investor Services, Inc.
By /s/ Laura R. Estes By /s/ Arnold D. Scott
------------------------------- -----------------------------
Name Laura R. Estes Name Arnold D. Scott
---------------------------- --------------------------
Title Vice President Title Director
----------------------------- ---------------------------
FUND PARTICIPATION AGREEMENT
Aetna Life Insurance and Annuity Company (the "Company") Oppenheimer
Variable Account Funds (the "Fund") and OppenheimerFunds, Inc. (the "Adviser")
hereby agree to an arrangement whereby the Fund shall be made available to serve
as underlying investment media for Variable Annuity or Variable Life Contracts
("Contracts") to be issued by the Company.
1. Establishment of Accounts; Availability of Fund.
(a) The Company represents that it has established Variable Annuity
Accounts B, C, D and Variable Life Account B and may establish
such other accounts as may be set forth in Schedule A attached
hereto and as may be amended from time to time with the mutual
consent of the parties hereto (the "Accounts"), each of which is a
separate account under Connecticut Insurance law, and has
registered or will register each of the Accounts (except for such
Accounts for which no such registration is required) as a unit
investment trust under the Investment Company Act of 1940 (the
"1940 Act"), to serve as an investment vehicle for the Contracts.
Each Contract provides for the allocation of net amounts received
by the Company to an Account for investment in the shares of one
of more specified open-end management investment companies
available through that Account as underlying investment media.
Selection of a particular investment management company and
changes therein from time to time are made by the participant or
Contract owner, as applicable under a particular Contract.
(b) The Fund and the Adviser represent and warrant that the
investments of the series of the Fund (each designated a
"Portfolio") specified in Schedule B attached hereto (as may be
amended from time to time with the mutual consent of the parties
hereto) will at all times be adequately diversified within the
meaning of Section 817(h) of the Internal Revenue Service Code of
1986, as amended (the "Code"), and the Regulations thereunder, and
that at all times while this agreement is in effect, all
beneficial interests will be owned by one or more insurance
companies or by any other party permitted under Section
1.817-5(f)(3) of the Regulations promulgated under the Code or by
the successor thereto, or by any other party permitted under a
Revenue Ruling or private letter ruling granted by the Internal
Revenue Service.
2. Pricing Information; Orders; Settlement.
(a) The Fund will make Fund shares available to be purchased by the
Company, and will accept redemption orders from the Company, on
behalf of each Account at the net asset value applicable to each
order on those days on which the Fund calculates its net asset
value (a "Business Day"). Fund shares shall be purchased and
redeemed in such quantity and at such time determined by the
Company to be necessary to meet the requirements of those
Contracts for which the Fund serve as underlying investment media,
provided, however, that the Board of Trustees of the Fund
(hereinafter the "Trustees") may upon reasonable notice to the
Company, refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio
<PAGE>
if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees,
acting in good faith and in the best interests of the shareholders
of any Portfolio and is acting in compliance with their fiduciary
obligations under federal and/or any applicable state laws.
(b) The Fund will provide to the Company closing net asset value,
dividend and capital gain information at the close of trading each
Business Day, """"and in no event later than 7:00 p.m. Eastern
time on such business day. The Fund shall be liable to the Company
for systems and out of pocket costs incurred by the Company in
making a Contract owner's or a participant's account whole,
if such costs or expenses are a result of the Fund's failure to
provide timely or correct net asset values, dividend and capital
gains information or if such information is not corrected within
48 hours of releasing such incorrect information. If a mistake is
caused in supplying such information or confirmations, which
results in a reconciliation with incorrect information, the amount
required to make a Contract owner's or a Participant's account
whole shall be borne by the party providing the incorrect
information. The Company will send via facsimile or electronic
transmission to the Fund or its specified agent orders to purchase
and/or redeem Fund shares by 10:00 a.m. Eastern Time the following
business day. Payment for net purchases will be wired by the
Company to an account designated by the Fund to coincide with the
order for shares of the Fund.
(c) The Fund hereby appoints the Company as its agent for the limited
purpose of accepting purchase and redemption orders for Fund
shares relating to the Contracts from Contract owners or
participants. Orders from Contract owners or participants received
from any distributor of the Contracts (including affiliates of the
Company) by the Company, acting as agent for the Fund, prior to
the close of the Exchange on any given business day will be
executed by the Fund at the net asset value determined as of the
close of the Exchange on such business day, provided that the Fund
receives written (or facsimile) notice of such order by 10 a.m.
Eastern Standard Time on the next following Business Day. Any
orders received by the Company acting as agent on such day but
after the close of the Exchange will be executed by the Fund at
the net asset value determined as of the close of the Exchange on
the next business day following the day of receipt of such order,
provided that the Fund receives written (or facsimile) notice of
such order by 10 a.m. Eastern Standard Time within two days
following the day of receipt of such order.
(d) Payments for net redemptions of shares of the Fund will be wired
by the Fund to an account designated by the Company. Payments for
net purchases of the Fund will be wired by the Company to an
account designated by the Fund on the same Business Day the
Company places an order to purchase Fund shares. Payments shall be
in federal funds transmitted by wire.
(e) Each party has the right to rely on information or confirmations
provided by the other party (or by any affiliate of the other
party), and shall not be liable in the event that an error is a
result of any misinformation supplied by the other party.
<PAGE>
(f) The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule A offered by the then current
prospectus and statement of additional information of the Fund in
accordance with the provisions of such prospectus and statement of
additional information. The Company shall not permit any person
other than a Contract owner or Participant to give instructions to
the Company which would require the Company to redeem or exchange
shares of the Fund. This provision shall not be construed to
prohibit the Company from substituting shares of another fund, as
permitted by law.
3. Expenses.
(a) Except as otherwise provided in this Agreement, all expenses
incident to the performance by the Fund under this Agreement shall
be paid by the Fund, including the cost of registration of Fund
shares with the Securities and Exchange Commission (the "SEC") and
in states where required. The Fund and Adviser shall pay no fee or
other compensation to the Company under this Agreement, and the
Company shall pay no fee or other compensation to the Fund or
Adviser, except as provided herein. All expenses incident to
performance by each party of its respective duties under this
Agreement shall be paid by that party, unless otherwise specified
in this Agreement.
(b) The Fund or the Adviser shall distribute to the Company a camera
ready copy of periodic fund reports to shareholders and other
materials that are required by law to be sent to Contract owners.
In addition, the Fund or the Adviser shall provide the Company
with a sufficient quantity of its prospectuses, and any
supplements thereto, to be used in connection with the offerings
and transactions contemplated by this Agreement. Subject to
subsection (c) and (d) below, 50% of the cost of preparing and
printing such materials shall be paid by the Fund or the Adviser,
and the cost of distributing such material plus 50% of the cost of
typesetting and printing such material shall be paid by the
Company. In addition, the Fund shall provide the Company, at the
Fund's expense, with a sufficient quantity of its proxy material
that is required to be sent to Contract owners. The Adviser shall
be permitted to review and approve the typeset form of such
material prior to such printing provided such material has been
provided by the Adviser to the Company within a reasonable period
of time prior to typesetting.
(c) In lieu of the Fund's providing printed copies of prospectuses,
supplements, and periodic fund reports to shareholders, the
Company shall have the right to request that the Fund transmit a
copy of such materials in an electronic format (PDF file
preferred), which the Company may use to have such materials
printed together with similar materials of other Account funding
media that the Company or any distributor will distribute to
existing or prospective Contract owners or participants. The
Adviser and the Company shall each bear 50% of the pro rata cost
for such materials determined by the same proportion of the total
printing expense for such materials as the number of pages in each
such printed document provided by the Fund bears to the total
number of pages in such printed document.
<PAGE>
(d) The cost associated with proxy preparation, group authorization
letters, programming for tabulation and necessary materials
(including postage) will be paid by the Fund.
4. Representations.
The Company agrees that it and its agents shall not, without the written
consent of the Fund or the Adviser, make representations concerning the Fund, or
its shares except those contained in the then current prospectuses and in
current printed sales literature approved by or deemed approved by the Fund or
the Adviser.
5. Termination.
This agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of either the Company or the Fund, upon sixty days
advance written notice to the other;
(b) at the option of the Company, upon one week advance written notice
to the Fund, if Fund shares are not available for any reason to
meet the requirement of Contracts as determined by the Company.
Reasonable additional advance notice of election to terminate
shall be furnished by Company;
(c) at the option of either the Company or the Fund, immediately upon
institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Account, the Company,
the Fund or the Adviser by the National Association of Securities
Dealers, Inc. (the "NASD"), the SEC or any other regulatory body;
(d) upon the determination of the Accounts to substitute for the
Fund's shares the shares of another investment company in
accordance with the terms of the applicable Contracts. The Company
will give 60 days written notice to the Fund of any decision to
replace the Fund's' shares;
(e) upon assignment of this Agreement, unless made with the written
consent of all other parties hereto;
(f) if Fund shares are not registered, issued or sold in conformance
with Federal law or such law precludes the use of Fund shares as
an underlying investment medium for Contracts issued or to be
issued by the Company. Prompt notice shall be given by either
party should such situation occur.
6. Continuation of Agreement.
Termination as the result of any cause listed in Section 6 shall not
affect the Fund's obligation to furnish its shares to Contracts then in force
for which its shares serve or may serve as the underlying medium unless such
further sale of Fund shares is prohibited by law or the SEC
<PAGE>
or other regulatory body, or is determined by the Fund's Board to be necessary
to remedy or eliminate an irreconcilable conflict pursuant to Section 10 hereof.
7. Advertising Materials; Filed Documents.
(a) All advertising or sales literature with respect to the Fund
prepared by the Company or its agents for use in marketing its
Contracts will be submitted to the Fund or its designee for review
before such material is submitted to any regulatory body for
review or placed in use. No such material shall be used if the
Fund or its designee reasonably object to such use in writing,
transmitted by facsimile within five business days after receipt
of such material.
(b) The Fund will provide at least one complete copy of its financials
as soon as available to the Company and at least one complete copy
of all registration statements, prospectuses, statements of
additional information, annual and semi-annual reports, proxy
statements and all amendments or supplements to any of the above
that relate to the Fund promptly after the filing of such document
with the SEC or other regulatory authorities. At the Fund's
request, the Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses,
statements of additional information, annual and semi-annual
reports, proxy statements, and all amendments or supplements to
any of the above that relate to the Account promptly after the
filing of such document with the SEC or other regulatory
authority.
(c) The Fund will provide via Excel spreadsheet diskette format to the
Company at least quarterly portfolio information necessary to
update Fund profiles.
8. Proxy Voting.
(a) The Company shall provide pass-through voting privileges on Fund
shares held by registered separate accounts to all Contract owners
and participants to the extent the SEC continues to interpret the
1940 Act as requiring such privileges. The Company shall provide
pass-through voting privileges on Fund shares held by unregistered
separate accounts to all Contract owners.
(b) The Company will distribute to Contract owners and participants,
as appropriate, all proxy material furnished by the Fund and will
vote Fund shares in accordance with instructions received from
such Contract owners and participants. If and to the extent
required by law, the Company, with respect to each group Contract
and in each Account, shall vote Fund shares for which no
instructions have been received in the same proportion as shares
for which such instructions have been received. The Company and
its agents shall cooperate with the solicitation of proxies for
Fund shares held for such Contract owners and participants.
9. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Fund and the
Adviser, and each of their directors, officers, employees, agents
and each person, if any, who
<PAGE>
controls the Fund or its Adviser within the meaning of the
Securities Act of 1933 (the "1933 Act") against any losses,
claims, damages or liabilities to which the Fund or the Adviser or
any such director, officer, employee, agent, or controlling person
may become subject, under the 1933 Act or otherwise, insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement, prospectus or sales
literature of the Company or the Contracts, or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, or arise out of or as a
result of conduct, statements or representations (other than
statements or representations contained in the prospectuses or
sales literature of the Fund) of the Company or its agents, with
respect to the sale and distribution of Contracts for which Fund
shares are the underlying investment. The Company will reimburse
any legal or other expenses reasonably incurred by the Fund or any
such director, officer, employee, agent, investment adviser, or
controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises
out of or is based upon (i) an untrue statement or omission or
alleged omission made in such Registration Statement or prospectus
in conformity with written materials furnished to the Company by
the Fund specifically for use therein or (ii) the willful
misfeasance, bad faith, or gross negligence by the Fund or Adviser
in the performance of its duties or the Fund's or Adviser's
reckless disregard of obligations or duties under this Agreement
or to the Company, whichever is applicable. This indemnity
agreement will be in addition to any liability which Company may
otherwise have.
(b) The Fund and the Adviser agree to indemnify and hold harmless the
Company and its directors, officers, employees, agents and each
person, if any, who controls the Company within the meaning of the
1933 Act against any losses, claims, damages or liabilities to
which the Company or any such director, officer, employee, agent
or controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, prospectuses or sales
literature of the Fund or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Fund will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer,
employee, agent, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability
or action; provided, however, that the Fund will not be liable in
any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon (i) an untrue statement
or omission or alleged omission made in such Registration
Statement or prospectuses which are in conformity with written
materials furnished to the Fund by the Company specifically for
use therein or (ii) the willful misfeasance, bad faith, or gross
negligence by the Company in the performance of its duties or the
Company's reckless disregard of
<PAGE>
obligations or duties under this Agreement or to the Fund or the
Adviser, whichever is applicable. This indemnity agreement will be
in addition to any liability which the Fund or the Adviser may
otherwise have.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 10. In case
any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to
the extent that it may wish to, assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 10
for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
10. Potential Conflicts.
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by the Fund on March 28, 1986 and on
June 9, 1986 with the SEC and the order issued by the SEC dated
July 16, 1986 (File No. 812-6324) in response thereto (the "Shared
Funding Exemptive Order"). The Company has reviewed the conditions
to the requested relief set forth in such application for
exemptive relief. As set forth in such application, the Board of
Directors of Fund (the "Board") will monitor the Fund for the
existence of any material irreconcilable conflict between the
interests of the contractholders of all separate accounts
("Participating Companies") investing in the Fund. An
irreconcilable material conflict may arise for a variety of
reasons, including: (i) an action by any state insurance
regulatory authority; (ii) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretative letter,
or any similar actions by insurance, tax or securities regulatory
authorities; (iii) an administrative or judicial decision in any
relevant proceeding; (iv) the manner in which the investments of
any portfolio are being managed; (v) a difference in voting
instructions given by variable annuity contractholders and
variable life insurance contractholders; or (vi) a decision by an
insurer to disregard the voting instructions of contractholders.
The Board shall promptly inform the Company if it determines that
an irreconcilable material conflict exists and the implications
thereof.
(b) The Company agrees to be bound by the responsibilities of a
participating insurance company as set forth in the Mixed and
Shared Funding Exemptive Order, including without limitation the
requirement that the Company report any potential or existing
conflicts of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under the
Shared Funding Exemptive Order by providing the Board with all
information reasonably necessary for the Board to
<PAGE>
consider any issues raised. This includes, but is not limited to,
an obligation by the Company to inform the Board whenever
contractholder voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict
exists with regard to contractholder investments in a Fund, the
Board shall give prompt notice to all Participating Companies. If
the Board determines that the Company is responsible for causing
or creating said conflict, the Company shall at its sole cost and
expense, and to the extent reasonably practicable (as determined
by a majority of the disinterested Board members), take such
action as is necessary to remedy or eliminate the irreconcilable
material conflict. Such necessary action may include but shall not
be limited to:
(i) withdrawing the assets allocable to the Account from the Fund
and reinvesting such assets in a different investment medium
or submitting the question of whether such segregation should
be implemented to a vote of all affected contractholders and
as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more
Participating Companies) that votes in favor of such
segregation, or offering to the affected contractholders the
option of making such a change; and/or
(ii) establishing a new registered management investment company or
managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contractholder voting
instructions and said decision represents a minority position or
would preclude a majority vote by all of its contractholders
having an interest in the Fund, the Company at its sole cost, may
be required, at the Board's election, to withdraw an Account's
investment in the Fund and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to
the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members
of the Board.
(e) For the purpose of this Section 11, a majority of the
disinterested Board members shall determine whether or not any
proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a
new funding medium for any Contract. The Company shall not be
required by this Section 11 to establish a new funding medium for
any Contract if an offer to do so has been declined by vote of a
majority of the Contract owners or participants materially
adversely affected by the irreconcilable material conflict.
11. Miscellaneous.
(a) Amendment and Waiver. Neither this Agreement, nor any provision
hereof, may be amended, waived, discharged or terminated orally,
but only by an instrument in writing signed by all parties hereto.
<PAGE>
(b) Notices. All notices and other communications hereunder shall be
given or made in writing and shall be delivered personally, or
sent by telex, telecopier or registered or certified mail, postage
prepaid, return receipt requested, to the party or parties to whom
they are directed at the following addresses, or at such other
addresses as may be designated by notice from such party to all
other parties.
To the Company:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
Attention: Julie E. Rockmore, Counsel
To the Fund:
Oppenheimer Variable Account Fund
c/o OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attn: Legal Department
To the Adviser:
OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attn: Andrew J. Donohue, Executive VP and
General Counsel
Any notice, demand or other communication given in a manner prescribed in
this subsection (b) shall be deemed to have been delivered on receipt.
(c) Successors and Assigns. This agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any party hereto may execute this Agreement by
signing any such counterpart.
(e) Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby.
(f) Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties hereto and supersedes all
prior agreement and understandings relating to the subject matter
hereof.
<PAGE>
(g) Governing Law. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Connecticut.
(h) It is understood by the parties that this Agreement is not an
exclusive arrangement in any respect.
12. Limitation on Liability of Trustees, etc.
This agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his capacity as an officer of the Fund. The Company and
the Adviser each understand and agree that the obligations of the Fund under
this Agreement are not binding upon any shareholder of the Fund personally, but
bind only the Fund and the Fund's property; the Company and the Adviser each
represent that it has notice of the provisions of the Declaration of Trust of
the Fund disclaiming shareholder and Trustee liability for acts or obligations
of the Fund.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
duly authorized officers effective as of the ____ day of _________, 1997.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By:________________________________
Name:
Title:
OPPENHEIMER VARIABLE ACCOUNT FUNDS
By:________________________________
Name:
Title:
OPPENHEIMERFUNDS, INC.
By:________________________________
Name:
Title:
SERVICE AGREEMENT
AGREEMENT, effective as of _____________ 1997, between
OppenheimerFunds, Inc. (the "Adviser"), a Colorado corporation, and Aetna Life
Insurance and Annuity Company (the "Company"), a Connecticut corporation, for
the provision of described administrative services by the Company in connection
with the sale of shares of the Oppenheimer Variable Account Funds (the "Fund")
as described in the Fund Participation Agreement dated February ___, 1997
between the Company, the Fund and the Adviser (the "Fund Participation
Agreement").
In consideration of their mutual promises, the Adviser and the Company agree as
follows:
1. The Company agrees to provide the following services to the Adviser:
a. responding to inquiries from owners of the Company variable
annuity contracts and variable life insurance policies using
the Funds as an investment vehicle ("Contractholders")
regarding the services performed by the Company that relate to
the Funds;
b. providing information to Adviser and Contractholders with
respect to Fund shares attributable to Contractholder
accounts;
c. communicating directly with Contractholders concerning the
Funds' operations;
d. providing such other similar services as Adviser may
reasonably request pursuant to Adviser's agreement with the
Funds to the extent permitted under applicable federal and
state requirements.
2. (a) Administrative services to Contractholders owners and
participants shall be the responsibility of the Company and
shall not be the responsibility of the Fund or the Adviser.
The Adviser recognizes the Company as the sole shareholder of
Fund shares issued under the Fund Participation Agreement, and
that substantial savings will be derived in administrative
expenses, such as significant reductions in postage expense
and shareholder communications, by virtue of having a sole
shareholder for each of the Accounts rather than multiple
shareholders. In consideration of the savings resulting from
such arrangement, and to compensate the Company for its costs,
the Adviser agrees to pay to the Company and the Company
agrees to accept as full compensation for all services
rendered hereunder an amount equal to 20 basis points (.20%)
per annum on the first $100 million (excluding assets
attributable to the CLIAC acquisition) of the average
aggregate amount invested by the Company in the Fund under the
Fund Participation Agreement, and 25 basis points (.25%) per
annum on the total average aggregate amount invested by the
Company in the Fund under the Fund Participation Agreement, in
excess of $100 million (excluding assets attributable to the
CLIAC acquisition).
<PAGE>
(b) The parties agree that the Adviser's payments to the Company
are for administrative services only and do not constitute
payment in any manner for investment advisory services or for
costs of distribution.
(c) For the purposes of computing the administrative fee
reimbursement contemplated by this Section 2, the average
aggregate amount invested by the Company over a one month
period shall be computed by totaling the Company's aggregate
investment (share net asset value multiplied by total number
of shares held by the Company) on each business day during the
month and dividing by the total number of business days during
each month.
(d) The Fund will calculate the reimbursement of administrative
expenses at the end of each month and will make such
reimbursement to the Company within 30 days thereafter. The
reimbursement payment will be accompanied by a statement
showing the calculation of the monthly amounts payable by the
Adviser and such other supporting data as may be reasonably
requested by the Company. Payment will be wired by the Adviser
to an account designated by the Company.
3. The Company agrees to indemnify and hold harmless the Adviser and its
directors, officers, and employees from any and all loss, liability and
expense resulting from any gross negligence or willful wrongful act of
the Company under this Agreement or a breach of a material provision of
this Agreement, except to the extent such loss, liability or expense is
the result of the Adviser's own willful misfeasance, bad faith or gross
negligence in the performance of its duties.
4. The Adviser agrees to indemnify and hold harmless the Company and its
directors, officers, and employees from any and all loss, liability and
expense resulting from any gross negligence or willful wrongful act of
the Adviser under this Agreement or a breach of a material provision
under this Agreement, except to the extent such loss, liability or
expense is the result of the Company's own willful misfeasance, bad
faith or gross negligence in the performance of its duties.
5. Either party may terminate this Agreement, without penalty, (i) on
sixty (60) days written notice to the other party, for any cause or
without cause, or (ii) on reasonable notice to the other party, if it
is not permissible to continue the arrangement described herein under
laws, rules or regulations applicable to either party or the Fund, or
if the Participation Agreement is terminated.
6. The terms of this arrangement will be held confidential by each party
except to the extent that either party or its counsel may deem it
necessary to disclose this arrangement.
7. This Agreement represents the entire Agreement of the parties on the
subject matter hereof and it cannot be amended or modified except in
writing, signed by the parties.
<PAGE>
This Agreement may be executed in one or more separate counterparts,
all of which, when taken together, shall constitute one and the same
Agreement.
8. All notices and other communications hereunder shall be given or made
in writing and shall be delivered personally, or sent by telex,
telecopier or registered or certified mail, postage prepaid, return
receipt requested, to the party to whom they are directed at the
following addresses, or at such other addresses as may be designated by
notice from such party to the other party.
To Aetna:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
Attention: Julie E. Rockmore, Counsel
To OFI:
OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attention: Andrew J. Donohue, Executive Vice President
& General Counsel
Any notice, demand or other communication given in a manner prescribed in this
Section 8 shall be deemed to have been delivered on receipt.
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to
be executed by their authorized officers as of the day and year first above
written.
OPPENHEIMERFUNDS, INC.
By:________________________________________________
Date:______________________________________________
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By:________________________________________________
Date:______________________________________________
