As filed with the Securities and Exchange Registration No. 333-09515
Commission on October 30, 1997 Registration No. 811-2512
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- --------------------------------------------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 3 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, RE4A, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code: (860) 273-4686
Julie E. Rockmore, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4A, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on November 28, 1997 pursuant to paragraph (b) of Rule 485
<PAGE>
VARIABLE ANNUITY ACCOUNT B
CROSS REFERENCE SHEET
FORM N-4 LOCATION - PROSPECTUS DATED
ITEM NO. PART A (PROSPECTUS) NOVEMBER 28, 1997
1 Cover Page.......................... Cover Page
2 Definitions......................... Definitions
3 Synopsis............................ Prospectus Summary; Fee Table
4 Condensed Financial Information..... Not applicable
5 General Description of Registrant,
Depositor, and Portfolio Companies.. The Company; The Separate
Account; Investment Options
6 Deductions and Expenses............. Charges and Deductions;
Distribution
7 General Description of Variable
Annuity Contracts................... The Variable Annuity Contract;
Annuity Payments; Death
Benefit; Investment Options;
Miscellaneous
8 Annuity Period...................... Annuity Payments
9 Death Benefit....................... Death Benefit
10 Purchases and Contract Value........ Purchase; Annuity
Payments-Valuation of Annuity
Unit Values
11 Redemptions......................... Withdrawals-Access to Your
Money; Purchase-Free Look
Period
12 Taxes............................... Taxes
13 Legal Proceedings................... Other Information - Legal
Matters and Proceedings
14 Table of Contents of the Statement
of Additional Information........... Contents of the Statement of
Additional Information
<PAGE>
LOCATION - STATEMENT OF
ADDITIONAL INFORMATION
DATED MAY 1, 1997 AND AS
AMENDED BY SUPPLEMENT
FORM N-4 PART B (STATEMENT OF ADDITIONAL DATED
ITEM NO. INFORMATION) NOVEMBER 28, 1997
15 Cover Page.......................... Cover Page
16 Table of Contents................... Table of Contents
17 General Information and History..... General Information and
History; Independent
Auditors
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.................... Not Applicable
23 Financial Statements................ Financial Statements
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>
PARTS A AND B
The Prospectus is included in Part A of in this Post-Effective Amendment No.
3. The Statement of Additional Information is incorporated into Part B of
this Post-Effective Amendment No. 3, by reference to Post-Effective Amendment
No. 1 to the Registration Statement on Form N-4 (File No. 333-09515), as
filed electronically on April 15, 1997 (Accession No. 0000950146-97-000598)
and by reference to a Supplement to the Statement of Additional Information
dated November 28, 1997, which is included in Part B of this Post-Effective
Amendment No. 3.
<PAGE>
A FIXED AND VARIABLE SINGLE PREMIUM IMMEDIATE ANNUITY
ISSUED BY AETNA LIFE INSURANCE AND ANNUITY COMPANY
PROSPECTUS
================================================================================
The Contract offered in connection with this Prospectus is a combination fixed
and/or variable single premium immediate annuity contract (the "Contract")
issued by Aetna Life Insurance and Annuity Company (the "Company"). The
Contract is designed to provide regular income payments for a certain period or
for life (with or without a guaranteed period) commencing immediately after
purchase under the payment method that you select.
The Contract provides that your Purchase Payment may be allocated to a fixed
dollar option and/or 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 Crossroads Variable Portfolio
[bullet] Aetna Legacy Variable Portfolio
[bullet] Aetna Variable Growth Portfolio
[bullet] Aetna Variable Index Plus Portfolio
[bullet] Aetna Variable Small Company Portfolio
[bullet] Fidelity VIP High Income Portfolio
[bullet] Janus Aspen Growth Portfolio
[bullet] Janus Aspen Worldwide Growth Portfolio
[bullet] Oppenheimer Strategic Bond Fund
[bullet] Portfolio Partners MFS Emerging Equities Portfolio
[bullet] Portfolio Partners MFS Value Equity Portfolio
[bullet] Portfolio Partners Scudder International Growth Portfolio
The availability of the Funds is subject to applicable regulatory
authorization. Not all Funds may be available in all jurisdictions or under all
Contracts.
This Prospectus provides information that you should know before purchasing the
Contract. Additional information about the Contract and the Separate Account is
contained in a Statement of Additional Information ("SAI") dated May 1, 1997.
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 12 of this Prospectus. For a free copy of the SAI, call us at (800)
238-6273 or write us at: 151 Farmington Avenue, Hartford, Connecticut 06156,
Attention: ARS Settlements. You may also obtain an SAI for any of the Funds by
calling that phone number.
PLEASE KEEP THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS IS VALID ONLY
WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE FUNDS.
THIS PROSPECTUS, THE STATEMENT OF ADDITIONAL INFORMATION AND OTHER INFORMATION
ABOUT THE SEPARATE ACCOUNT REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (SEC) CAN BE FOUND IN THE SEC'S WEB SITE AT
http://www.sec.gov.
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.
THIS PROSPECTUS IS DATED NOVEMBER 28, 1997.
<PAGE>
TABLE OF CONTENTS
================================================================================
DEFINITIONS ............................................ DEFINITIONS - 1
PROSPECTUS SUMMARY ....................................... SUMMARY - 1
FEE TABLE .............................................. FEE TABLE - 1
THE VARIABLE ANNUITY CONTRACT ................................... 1
ANNUITY PAYMENTS .................................................. 1
Annuity Elections ............................................... 1
Annuity Options ............................................... 1
Annuity Payments ............................................... 2
Valuation of Annuity Unit Values ................................ 2
PURCHASE ........................................................ 3
Purchase Payments ............................................... 3
How to Purchase ............................................... 3
Allocation of Purchase Payment ................................ 3
Free Look Period ............................................... 3
INVESTMENT OPTIONS ............................................... 3
Fund Availability and Substitution ............................. 5
Transfers Among Subaccounts ................................... 5
CHARGES AND DEDUCTIONS ............................................ 5
Mortality and Expense Risk Charge ............................. 5
Administrative Charge ......................................... 5
Withdrawal Charge ............................................... 6
Fund Expenses .................................................. 6
Premium and Other Taxes ......................................... 6
TAXES ........................................................... 6
Introduction .................................................. 6
Taxation of Annuity Payments ................................... 6
Taxation of Withdrawals ......................................... 7
Distributions--Tax-Deferred Annuities .......................... 7
Tax Penalty ..................................................... 7
Nonnatural Owners ............................................... 8
WITHDRAWALS--ACCESS TO YOUR MONEY ................................ 9
Commutation ..................................................... 9
Commuted Value .................................................. 9
PERFORMANCE ..................................................... 9
DEATH BENEFIT ..................................................... 9
Death Benefit Commutation ...................................... 10
OTHER INFORMATION ............................................... 10
The Company ..................................................... 10
The Separate Account ............................................ 10
Distribution .................................................. 10
Ownership ..................................................... 10
Beneficiary ..................................................... 11
<PAGE>
Delay or Suspension of Payments ................................. 11
Voting Rights ................................................... 11
Modification of the Contract .................................... 11
Legal Matters and Proceedings .................................... 11
Financial Statements ............................................. 11
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ............... 12
APPENDIX A--THE FIXED DOLLAR OPTION .............................. 13
<PAGE>
DEFINITIONS
================================================================================
The following terms are defined as they are used in this Prospectus:
Annuitant/Joint Annuitant: An individual named in the contract (1) whose life
determines the amount or continuation of life-contingent payments, and/or (2)
whose death results in the payment of death benefits.
Annuity Payment(s): A series of payments for life, a certain period or a
combination of the two.
Beneficiary(ies): The person or persons who are designated by the Contract
Holder to receive any death benefit proceeds payable under the Contract.
Commutation: The right to receive in a lump sum the present value of all or a
portion of future Guaranteed Payments under a Period Certain Annuity. This
right may be subject to a withdrawal charge.
Commuted Value: The present value of any future Guaranteed Payments which have
not yet been paid under the Contract.
Company (We, Us): Aetna Life Insurance and Annuity Company.
Contract: The individual single premium immediate annuity contract offered in
connection with this Prospectus.
Contract Effective Date: The date that the money is applied to the Contract and
all paperwork is received in good order at the Company's Home Office.
Contract Holder (You): The person to whom the Contract is issued. The Company
reserves the right to limit ownership to natural persons.
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.
Guaranteed Payment: A payment that is due whether or not the Annuitant, or
Joint Annuitant (if applicable), is alive on the Payment Due Date.
Home Office: The Company's principal executive offices located at 151
Farmington Avenue, Hartford, Connecticut 06156.
Life Annuity: An annuity with payments that are based solely on whether or not
the Annuitant, or Joint Annuitant (if applicable), is alive on the Payment Due
Date.
Payee: A person who receives Annuity Payments. The Contract Holder shall be the
Payee unless the Contract Holder designates otherwise in writing.
Payment Due Date: The date on which each Annuity Payment is scheduled to be
paid. Such date can be either monthly, quarterly, semi-annually or annually, at
the election of the Contract Holder.
Period Certain Annuity: An annuity with a specified number of Guaranteed
Payments that are payable whether or not the Annuitant, or Joint Annuitant (if
applicable), is alive on the Payment Due Date.
Separate Account: Variable Annuity Account B, a separate account established by
the Company 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.
Valuation Date: The date and time at which the 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 - 1
<PAGE>
PROSPECTUS SUMMARY
================================================================================
THE VARIABLE ANNUITY CONTRACT
The fixed and variable single premium immediate annuity contract offered
by the Company represents a contract between you and Aetna Life Insurance and
Annuity Company. The purpose of the Contract is to provide regular income
payments for a certain period or for life (with or without a guaranteed period)
commencing immediately after purchase under the payment method that you select.
PURCHASE
You may purchase the Contract with a single Purchase Payment of $5,000 or
more. Your registered representative can help you fill out the proper forms.
The Contract is available to persons who wish to receive annuity income
payments. Contracts may be issued on a nonqualified basis. Contracts may also
be issued in connection with employer sponsored Section 401(a), Section 403(b)
and Section 457 plans, or as an Individual Retirement Annuity (IRA). (Contracts
sold in New York are not available for Section 457 plans.)
The maximum issue age is 75. The Company reserves the right to modify the
maximum issue age. (See "Purchase".)
FREE LOOK PERIOD
If you cancel the Contract within 10 days after receiving it (or whatever
period is required in your state), we will return your money without assessing
a withdrawal charge. You will receive whatever your Contract is worth on the
day we receive your request, less any Annuity Payments already made. This
amount may be more or less than your original Purchase Payment. (See
"Purchase--Free Look Period.")
ANNUITY PAYMENTS
Annuity Payments may be made on either a fixed, variable or combination
fixed and variable basis. If a variable payout is selected, the payments will
vary with the investment performance of the Subaccount(s) selected. You have
the right to select the payment plan, or "Annuity Option," under which Annuity
Payments are to be made. These Options can provide payments for life or for the
joint lives of two Annuitants, with or without a Guaranteed Period, or for a
certain period or number of payments. (See "Annuity Payments.")
INVESTMENT OPTIONS
You can put all or some of your money in up to four Subaccounts. These
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 Crossroads Variable Portfolio
[bullet] Aetna Legacy Variable Portfolio
[bullet] Aetna Variable Growth Portfolio
[bullet] Aetna Variable Index Plus Portfolio
[bullet] Aetna Variable Small Company Portfolio
[bullet] Fidelity VIP High Income Portfolio
[bullet] Janus Aspen Growth Portfolio
[bullet] Janus Aspen Worldwide Growth Portfolio
[bullet] Oppenheimer Strategic Bond Fund
[bullet] Portfolio Partners MFS Emerging Equities Portfolio
[bullet] Portfolio Partners MFS Value Equity Portfolio
[bullet] Portfolio Partners Scudder International Growth Portfolio
- --------------------------------------------------------------------------------
SUMMARY - 1
<PAGE>
Each of the Funds is fully described in a separate Fund prospectus.
Depending on market conditions, you can make or lose money in any of these
Funds.
You can also put all or some of your money into a fixed dollar option
which guarantees a fixed payment, as specified in the Contract. The fixed
dollar option is described in Appendix A to the Prospectus. Transfers are
currently not permitted into or out of the fixed dollar option. (See
"Investment Options" in this Prospectus, as well as the prospectuses for each
of the Funds.)
TRANSFERS
You may make transfers among the Subaccounts at any time. The Company
reserves the right to limit such transfers to four (4) in any calendar year.
Aetna may establish a minimum transfer amount. See "Investment
Options--Transfers.")
CHARGES AND DEDUCTIONS
The Contract has insurance features and investment features, and there are
costs related to each. These charges include daily deductions from the Separate
Account (the mortality and expense risk charge and an administrative charge),
as well as fees and expenses which are deducted directly from the Funds. (See
the Fee Table and "Charges and Deductions.")
WITHDRAWALS
Under a variable Period Certain Annuity, you may elect to receive the
Commuted Value of all or a portion of future Guaranteed Payments, less any
applicable withdrawal charge. The Commuted Value will be determined as of the
Valuation Date next following the Company's receipt of your written request for
Commutation. Withdrawals during the free look period will not incur a
withdrawal charge. Withdrawals may also be subject to income tax and a federal
tax penalty. (See "Withdrawals--Access to Your Money.")
DEATH BENEFIT
A death benefit may be payable if your Contract is issued under certain
Annuity Options. The death benefit is the right to receive any remaining
Guaranteed Payments. The death benefit is payable upon the death of the
Annuitant, or the survivor if there is a Joint Annuitant. Under Lifetime
Annuity Options with Guaranteed Payments, the Beneficiary may elect, within six
months of such death, to receive the Commuted Value of any remaining Guaranteed
Payments. However, under a Period Certain Annuity, the Beneficiary may make
such election at any time. No withdrawal charge will apply to the Commuted
Value of the death benefit. (See "Death Benefit.")
TAXES
All or a portion of each Annuity Payment will generally be includable in
gross income and subject to federal income tax. A 10% federal tax penalty may
be imposed on certain Annuity Payments or withdrawals. (See "Taxes.")
INQUIRIES
Questions or requests for additional information may 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
Attention: ARS Settlements
[bullet] Telephone: 1-800-238-6273
- --------------------------------------------------------------------------------
SUMMARY - 2
<PAGE>
FEE TABLE
================================================================================
This information is intended to help you understand the various costs and
expenses incurred under your Contract. The table reflects expenses of the
Subaccounts as well as of the Funds. Some expenses may vary as explained under
"Charges and Deductions." Charges shown do not include premium taxes that may
be applicable. For more information regarding fees and expenses paid out of the
assets of a particular Fund, see the Fund's prospectus.
CONTRACT HOLDER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
Under a variable Period Certain Annuity, Commutations are subject to the
following charges:
- --------------------------------------------------------------------------------
Number of years from Withdrawal Charge
Contract Effective Date % of Commuted Value(1)
----------------------------- -----------------------
Fewer than 1 5%
1 or more but fewer than 2 5%
2 or more but fewer than 3 4%
3 or more but fewer than 4 4%
4 or more, but fewer than 5 3%
5 or more, but fewer than 6 2%
6 or more, but fewer than 7 1%
7 or more 0%
- --------------------------------------------------------------------------------
- ------------------
(1) The Company will monitor the applicable deductions for the Withdrawal
Charge to ensure it will never exceed 8.5% of the Purchase Payment.
SEPARATE ACCOUNT ANNUAL EXPENSES
Each Subaccount pays these expenses out of its assets. The charges are
reflected in the Subaccount's daily Unit Value and are not charged directly to
you. The Separate Account charges include:
Mortality and Expense Risk Charge ............ 1.25%
Administrative Charge(2) ..................... 0.00%
=====
Total Separate Account Annual Expenses ...... 1.25%
- ------------------
(2) We currently do not impose an administrative charge. However, we reserve
the right to deduct a daily charge from the Subaccounts, equivalent on an
annual basis to not more than 0.25%.
- --------------------------------------------------------------------------------
FEE TABLE - 1
<PAGE>
ANNUAL EXPENSES OF THE FUNDS
The following table illustrates the advisory fees and other expenses applicable
to the Funds. These figures are a percentage of each Fund's average net assets
and, except as noted, are based on figures for the year ended December 31,
1996. A Fund's "Other Expenses" include operating costs of the Fund. Advisory
fees and other expenses are deducted from each Fund's net asset value and are
not deducted from the value of your Contract.
<TABLE>
<CAPTION>
Investment
Advisory Fees(1) Other Expenses
(after expense (after expense Total Fund
reimbursement) reimbursement) Annual 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 Crossroads Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Legacy Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Growth Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Index Plus Portfolio(2) 0.35% 0.15% 0.50%
Aetna Variable Small Company Portfolio(2) 0.75% 0.15% 0.90%
Fidelity VIP High Income Portfolio 0.59% 0.12% 0.71%
Janus Aspen Growth Portfolio(3) 0.65% 0.04% 0.69%
Janus Aspen Worldwide Growth Portfolio(3) 0.66% 0.14% 0.80%
Oppenheimer Strategic Bond Fund 0.75% 0.10% 0.85%
Portfolio Partners MFS Emerging Equities Portfolio 0.70%(4) 0.13% 0.83%(5)
Portfolio Partners MFS Value Equity Portfolio 0.65% 0.25% 0.90%(5)
Portfolio Partners Scudder International Growth Portfolio 0.80% 0.20% 1.00%(5)
</TABLE>
- ------------------
(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 provides administrative services to the Fund and will assume
the Fund's ordinary recurring direct costs under an Administrative Services
Agreement. The new Administrative Services Agreement became effective on
May 1, 1996 for Aetna Variable Fund, Aetna Income Shares, Aetna Variable
Encore Fund, Aetna Investment Advisers Fund, Inc., Aetna Crossroads
Variable Portfolio, and Aetna Legacy Variable Portfolio. Therefore, for
these Funds the "Other Expenses" are not based on actual figures for the
year ended December 31, 1996, but reflect the fee payable under that
Agreement. The Administrative Services Agreement was in effect for Aetna
Variable Growth Portfolio, Aetna Variable Index Plus Portfolio and Aetna
Variable Small Company Portfolio since their inception. Effective August 1,
1996, Investment Advisory Fees were increased for Aetna Variable Fund,
Aetna Income Shares, Aetna Investment Advisers Fund, Inc., Aetna Crossroads
Variable Portfolio, and Aetna Legacy Variable Portfolio. The Advisory Fees
shown above are not based on actual figures for the year ended December 31,
1996, but reflect the increased Advisory Fees.
(3) The fees and expenses shown above are based on gross expenses of the Shares
before expense offset arrangements for the fiscal year ended December 31,
1996. The information for each Portfolio is net of fee waivers or
reductions from Janus Capital. Fee reductions for the 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 0.79%, 0.04% and 0.83% for Growth
Portfolio; and 0.77%, 0.14% and 0.91% for Worldwide Growth Portfolio,
respectively. Janus Capital may modify or terminate the waivers or
reductions at any time upon at least 90 days' notice to the Portfolio's
Board of Trustees.
(4) The advisory fee is .70% of the first $500 million in assets and .65% on
the excess.
(5) The Company has agreed to reimburse the Fund for expenses and/or waive its
fees so that the aggregate expenses will not exceed this amount through
April 30, 1999. Without such reimbursements or waivers, Total Fund Annual
Expenses are estimated to be as follows: .87% for the MFS Emerging Equities
Portfolio; .90% for the MFS Value Equity Portfolio; and 1.00% for the
Scudder International Growth Portfolio.
- --------------------------------------------------------------------------------
FEE TABLE - 2
<PAGE>
HYPOTHETICAL ILLUSTRATION
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 Single Premium Immediate Annuity Contract
and 5% return on assets. For the purposes of these Examples, the calculations
assume that Annuity Payments are made based on a 15 year Period Certain Annuity
with a 3.5% Assumed Annual Net Return Rate.
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
--------------------------------------- --------------------------------------
If you withdraw your entire
Commuted Value at the end of the If you do not withdraw your
periods shown, you would pay the Commuted Value you would pay the
following expenses, including any following expenses (no withdrawal
applicable withdrawal 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 $65 $83 $ 92 $127 $18 $50 $78 $127
Aetna Income Shares $64 $81 $ 89 $122 $17 $48 $74 $122
Aetna Variable Encore Fund $63 $78 $ 83 $114 $16 $44 $69 $114
Aetna Investment Advisers Fund, Inc. $65 $84 $ 93 $129 $18 $50 $79 $129
Aetna Crossroads Variable Portfolio $67 $88 $100 $140 $19 $55 $86 $140
Aetna Legacy Variable Portfolio $67 $88 $100 $140 $19 $55 $86 $140
Aetna Variable Growth Portfolio $67 $88 $100 $140 $19 $55 $86 $140
Aetna Variable Index Plus Portfolio $64 $81 $ 90 $124 $17 $48 $75 $124
Aetna Variable Small Company Portfolio $68 $92 $106 $149 $21 $59 $92 $149
Fidelity VIP High Income Portfolio $66 $87 $ 98 $137 $19 $54 $84 $137
Janus Aspen Growth Portfolio $66 $86 $ 97 $136 $19 $53 $83 $136
Janus Aspen Worldwide Growth Portfolio $67 $89 $109 $143 $20 $56 $88 $143
Oppenheimer Strategic Bond Fund $68 $91 $104 $146 $20 $58 $90 $146
Portfolio Partners MFS Emerging Equities
Portfolio $67 $90 $103 $145 $20 $57 $89 $145
Portfolio Partners MFS Value Equity Portfolio $68 $92 $106 $149 $21 $59 $92 $149
Portfolio Partners Scudder International
Growth Portfolio $69 $94 $110 $156 $22 $62 $96 $156
</TABLE>
- --------------------------------------------------------------------------------
FEE TABLE - 3
<PAGE>
THE VARIABLE ANNUITY CONTRACT
================================================================================
The fixed and variable single premium immediate annuity contract offered
by the Company represents a contract between you and Aetna Life Insurance and
Annuity Company, an insurance company. The purpose of the Contract is to
provide regular income payments for a certain period or for life (with or
without a guaranteed period) commencing immediately after purchase under the
payment method that you select.
You must select one of the annuity income options described under
"Annuity Payments" below. Additionally, you may allocate your Purchase Payment
to up to four of the eleven different Subaccounts listed under "Investment
Options," or to the fixed dollar option described in Appendix A to the
Prospectus.
Specific information on how to purchase a Contract and to whom the
Contract is available is discussed under "Purchase."
ANNUITY PAYMENTS
================================================================================
ANNUITY ELECTIONS
Under the Contract, the Company will make regular income payments to you
or to a Payee you designate in writing. You can choose to have payments made on
a monthly, quarterly, semi-annual or annual basis. The first payment will
generally be due on the last day of the payment period you select. If an annual
frequency is elected, the payment will be due one day before one year after the
Contract Effective Date. An alternate first payment date may be elected subject
to the Company's approval and compliance with IRS regulations.
If you choose to have any portion of your Annuity Payments come from the
Subaccounts, the dollar amount of your payment will depend upon three things:
(1) the value of that portion of your Contract that is allocated to the
Subaccounts on the Annuity Date; (2) the Assumed Annual Net Return Rate that
you select; and (3) the performance of the Subaccounts that you select. If the
net return rate of the Subaccounts exceeds the Assumed Annual Net Return Rate
stated in your Contract, your Annuity Payments will increase. Conversely, if
the net return rate of the Subaccounts is less than the Assumed Annual Net
Return Rate, your Annuity Payments will decrease.
ANNUITY OPTIONS
You must choose one of the following Annuity Options. The option may not
be changed after the Contract is issued.
The options are listed in two groups: Lifetime and Nonlifetime. A
Lifetime Annuity Option means that Annuity Payments are based on the life of
one or two Annuitants and will continue for as long as such Annuitant(s) is
alive. A Nonlifetime Annuity Option means that Annuity Payments are guaranteed
to continue for a certain period; the continuation of payments under such
option is not based on the continued life of the Annuitant(s).
LIFETIME ANNUITY OPTIONS:
[bullet] Option 1--Single Life Annuity--A stream of Annuity Payments that is
payable for the life of the Annuitant. Payments cease upon the death
of the Annuitant.
[bullet] Option 2--Single Life Annuity with Guaranteed Payments--A stream of
Annuity Payments that is payable for the life of the Annuitant. If the
Annuitant dies prior to the payment of all of the Guaranteed Payments,
any remaining payments will be made to the Beneficiary.
[bullet] Option 3--Joint and Survivor Annuity--A stream of Annuity Payments
that is payable for the lives of the Annuitant and Joint Annuitant.
Upon the death of either Annuitant, payments continue for the life of
the survivor at the full or reduced amount depending upon the option
elected. Payments cease upon the death of the survivor.
[bullet] Option 4--Joint and Full Survivor Annuity with Guaranteed Payments--A
stream of Annuity Payments that is payable for the lives of the
Annuitant and the Joint Annuitant. Upon the death of either Annuitant,
the full payment continues for the life of the survivor. If the
survivor dies prior to the payment of all of the Guaranteed Payments,
any remaining Guaranteed Payments will be paid to the Beneficiary.
- --------------------------------------------------------------------------------
1
<PAGE>
[bullet] Option 5--Joint and Contingent Annuity--A stream of Annuity Payments
that is payable for the lives of the Annuitant and the Joint
Annuitant. If the Annuitant is the first to die, payments continue for
the life of the Joint Annuitant at a reduced amount. If the Joint
Annuitant is the first to die, the full payment continues for the life
of the Annuitant. Payments cease upon the death of the survivor.
If you elect Lifetime Option 1, 3 or 5, it is possible that no Annuity
Payments would be made if the Annuitant under Option 1, or the survivor
under Option 3 or 5, dies prior to the first Annuity Payment Date.
Lifetime Annuity Options do not provide for any withdrawal rights.
NONLIFETIME ANNUITY OPTIONS:
[bullet] Option 6-Period Certain-A stream of Annuity Payments that continues
for a certain period of time, as provided under your Contract.
Payments are guaranteed for the number of Guaranteed Payments
selected, and cease after the selected number of Guaranteed Payments
have been made.
If Option 6 is elected on a variable basis, you may request to receive
the Commuted Value at any time. Any such withdrawal may be subject to a
withdrawal charge. (See "Charges and Deductions--Withdrawal Charge.")
ANNUITY PAYMENTS
Duration of Payments. Guaranteed Payments under a qualified annuity
contract may not extend beyond (a) the life expectancy of the Annuitant, or (b)
the joint life expectancies of the Annuitant and Beneficiary. In any event,
qualified contract Annuity Payments must comply with the minimum distribution
requirements of Code Section 401(a)(9).
Amount of Each Annuity Payment. The amount of each payment depends on (1)
the amount of your Purchase Payment, (2) how you allocate the Purchase Payment
between the fixed dollar option and the Subaccounts, and (3) the Annuity Option
and any features chosen. The initial Annuity Payment must be at least $50 per
month, or aggregate to $250 per year for payments of any other frequency.
For any portion of your Annuity Payments that is made on a variable
basis, the first and subsequent payments will vary depending on the Assumed
Annual Net Return Rate (31/2% 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 return rate on the Subaccounts in which you have invested
exceeds 5% on an annualized basis. Annuity Payments would decline if the net
return rate was below 5%. Use of the 31/2% Assumed Annual Net Return Rate
causes a lower first payment, but subsequent payments would increase more
rapidly or decline more slowly as changes occur in the net return rate. (See
the Statement of Additional Information for further discussion on the impact of
selecting an Assumed Annual Net Return Rate.)
VALUATION OF ANNUITY UNIT VALUES
The amount of any Annuity Payment from a Subaccount is determined by
multiplying the number of "Annuity Units" that you hold, by an Annuity Unit
Value ("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
return factor of that Subaccount for the period between the immediately
preceding Valuation Date and the current Valuation Date (see "Net Return
Factor" below), and by a factor to reflect the Assumed Annual Net Return Rate.
The AUV 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 (if any).
Net Return Factor. The net return factor is used to measure the
investment performance of a Subaccount from one Valuation Date to the next. The
net return factor for a Subaccount for any valuation period is equal to the sum
of 1.000000 plus the net return rate. The net return rate equals:
(a) the value of the shares of the Fund held by the Subaccount on the current
Valuation Date, minus
(b) the value of the shares of the Fund held by the Subaccount on the preceding
Valuation Date, plus or minus
(c) taxes (or reserves for taxes) attributable to the operation of the
Subaccount (if any);
(d) divided by the total value of the Subaccount's 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 up to 0.25% for administrative expenses (currently
0%).
A net return rate may be more or less than 0%.
- --------------------------------------------------------------------------------
2
<PAGE>
PURCHASE
================================================================================
PURCHASE PAYMENTS
A "Purchase Payment" is the money that you give us to buy the Contract.
The minimum amount that we will accept is $5,000. The Contract is designed to
be a single premium contract, which means that no additional payments may be
made under the Contract. The Company reserves the right to establish a maximum
Purchase Payment amount and to reject any Purchase Payment exceeding the
maximum.
The Contract is available to persons who wish to receive annuity income
payments. Contracts may be issued on a nonqualified basis. Contracts may also
be issued in connection with employer sponsored Section 401(a), Section 403(b)
and Section 457 plans, or as an Individual Retirement Annuity (IRA). (Contracts
sold in New York are not available for Section 457 plans.)
The maximum issue age is (75). The Company reserves the right to modify
the maximum issue age.
HOW TO PURCHASE
You may purchase a Contract by submitting an application to the Company.
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 Payment for five days. A Purchase Payment may be held for
longer periods only with your consent, pending acceptance of the forms. Any
Purchase Payment accompanying the application, or received prior to the
acceptance of the application, will be invested as of the date of acceptance.
If the application is rejected, the application and any Purchase Payment will
be returned.
ALLOCATION OF PURCHASE PAYMENT
Your Purchase Payment less applicable premium taxes ("Net Purchase
Payment") will be allocated among the investment options that you designate on
your application. You may select up to four Subaccounts from the available fund
choices. You may also select a fixed dollar option and allocate all or a
portion of your Purchase Payment to the Company's general account. Allocations
must be in whole percentages. You may change your fund choices after the
Contract is issued by calling or writing to the Company at its Home Office. The
Company reserves the right to restrict fund transfers to no more than four in
any calendar year and to establish a minimum transfer amount.
FREE LOOK PERIOD
If you change your mind about owning this Contract, you have the right to
cancel it within 10 days of receiving it (or such longer period of time as may
be required by your state). To exercise your right to cancel, both the Contract
and a written notice of cancellation should be sent to the Company at its Home
Office. (For Contracts issued in the state of New York, your exercise of this
right is deemed to occur on the earlier of the date we receive the Contract or
the notice of cancellation.) If you cancel the Contract during this time
period, you will not be assessed with a withdrawal charge. Following
cancellation, you will receive back whatever your Contract is worth on the day
we receive your request for cancellation, less any Annuity Payments already
made. In certain states (or if you have purchased the Contract as an IRA), we
may be required to give you back your entire Purchase Payment.
INVESTMENT OPTIONS
================================================================================
The Contract offers sixteen different variable investment options through
the Separate Account. 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. Your Purchase Payment
may be allocated to up to four of the Subaccounts as designated on the
application. You may also allocate all or a portion of your Purchase Payment to
the fixed dollar option.
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)
- --------------------------------------------------------------------------------
3
<PAGE>
[bullet] Aetna Income Shares seeks to maximize total return, consistent with
reasonable risk, through investments in a 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. Governement.(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 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 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 times of purchase of $1 billion or
less.(1)
[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).(2)
[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.(3)
[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.(3)
[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.(4)
[bullet] Portfolio Partners MFS Emerging Equities Portfolio seeks long term
growth of capital by investing primarily in common stocks issued by
companies that its subadviser believes are early in their life cycle
but which have the potential to become major enterprises (emerging
growth companies).(5)(a)
[bullet] Portfolio Partners MFS Value Equity Portfolio seeks capital
appreciation by investing primarily in common stocks.(5)(a)
- --------------------------------------------------------------------------------
4
<PAGE>
[bullet] Portfolio Partners Scudder International Growth Portfolio seeks long
term growth of capital primarily through a diversified portfolio of
marketable foreign equity securities.(5)(b)
Investment Advisers for each of the Funds:
(1) Aetna Life Insurance and Annuity Company (investment adviser); Aeltus
Investment Management, Inc. (sub-adviser)
(2) Fidelity Management & Research Company
(3) Janus Capital Corporation
(4) OppenheimerFunds, Inc.
(5) Aetna Life Insurance and Annuity Company (adviser);
(a) Massachusetts Financial Services Company (sub-adviser)
(b) Scudder, Stevens & Clark, Inc. (sub-adviser)
More comprehensive information, including a discussion of potential
risks, is found in the current prospectus for each Fund which is distributed
with and accompanies 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. Additional
prospectuses and Statements of Additional Information for this Prospectus and
for each of the Funds can be obtained from the Company's Home Office at the
address and telephone number listed on the cover of this Prospectus.
FUND AVAILABILITY AND SUBSTITUTION
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.
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
investments in such shares should become inappropriate under this type of
Contract, we may cease to make such Fund shares available for investment under
the Contract on a prospective basis. In addition, the Company may 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 or federal securities laws.
TRANSFERS AMONG SUBACCOUNTS
Generally, you may make transfers among the Subaccounts at any time. The
Company reserves the right to limit such transfers to four (4) in any calendar
year. Transfers are currently not permitted into or out of the fixed dollar
option.
CHARGES AND DEDUCTIONS
================================================================================
There are charges and other expenses associated with the Contract that
reduce the amount of your Annuity Payments. These charges and expenses are as
follows:
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 mortality and/or expense risks under the Contract. The
mortality risks are those assumed for any promise to make lifetime payments.
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 may also be used
as a source of profit to the Company. The Company expects to make a profit from
the mortality and expense risk charge.
ADMINISTRATIVE CHARGE
The Company reserves the right to make a deduction from each of the
Subaccounts for an administrative charge. Under the Contract, the
administrative charge may be an amount equal, on an annual basis, to not more
than 0.25% of the daily net assets of the Subaccounts. There is currently no
administrative charge assessed under the Contract. Once an administrative
charge is established for your Contract, it may not be increased.
- --------------------------------------------------------------------------------
5
<PAGE>
If an administrative charge is assessed, it will be 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.
WITHDRAWAL CHARGE
The withdrawal charge is, in effect, a deferred sales charge. It is
imposed upon the surrender (Commutation) or withdrawal (partial Commutation) of
the remaining Guaranteed Payments under a Period Certain Annuity at any time
before the last Guaranteed Payment is made and while the Annuitant is living.
The amount paid is equal to the Commuted Value minus the applicable withdrawal
charge. The withdrawal charge is imposed to reimburse the Company for
unrecovered acquisition and distribution costs.
The schedule for the calculation of the withdrawal charge is:
- --------------------------------------------------------------------------------
Withdrawal Charge
Number of Years from Percentage of
Contract Effective Date Commuted Value
------------------------------- ------------------
Fewer than 1 5%
1 or more, but fewer than 2 5%
2 or more, but fewer than 3 4%
3 or more, but fewer than 4 4%
4 or more, but fewer than 5 3%
5 or more, but fewer than 6 2%
6 or more, but fewer than 7 1%
7 or more 0%
- --------------------------------------------------------------------------------
Reduction or Elimination of the Withdrawal Charge. We may reduce or
eliminate the withdrawal charge when sales of the Contract 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 withdrawal charge
will be based on the following criteria:
(a) the size and type of group of individuals to whom the Contract is offered;
or
(b) whether there is a prior or existing relationship with the Company such as
being an employee of the Company or one of its affiliates, receiving
distributions or making internal transfers from other Contracts issued by
the Company or one of its affiliates, or making transfers of amounts held
under qualified plans sponsored by the Company or an affiliate.
Any reduction or elimination of the withdrawal 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 impose a premium tax based on the
amount of your Purchase Payment. These taxes currently range from 0% to 3.5%.
The Company will deduct premium taxes from your Purchase Payment at the
Contract Effective Date. Under certain circumstances, the Company reserves the
right not to deduct premium taxes where the Purchase Payment is provided
through an internal transfer from an annuity or other contract issued by the
Company (or one of its affiliates) under which the Company previously deducted
premium tax.
TAXES
================================================================================
INTRODUCTION
The Company has prepared the following as a general discussion on federal
taxes. This discussion is not intended as tax advice to any individual. Any
person concerned about tax implications should consult a tax adviser before
investing and before electing any Commutation feature permitted under the
Contract.
TAXATION OF ANNUITY PAYMENTS
Nonqualified Contracts. Section 72 of the Internal Revenue Code ("Code")
governs taxation of annuities. In general, under a nonqualified contract, only
the portion of the Annuity Payment that represents the amount by which the
expected return 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.
- --------------------------------------------------------------------------------
6
<PAGE>
For variable Annuity Payments, the non-taxable portion of each payment is
generally determined by dividing the "investment in the contract" (generally,
your Purchase Payment) by the total number of expected Annuity Payments. For
fixed Annuity Payments, the non-taxable portion is determined by a ratio your
"investment in the contract" bears to the total dollar amount of expected
Annuity Payments. Under either a variable or a fixed annuity, once the
"investment in the contract" has been fully recovered, the full amount of each
additional Annuity Payment is taxable. If Annuity Payments cease as a result of
an Annuitant's death before full recovery of the "investment in the contract,"
you should consult a competent tax adviser regarding deductibility of the
unrecovered amount.
Qualified Contracts. The taxation of Annuity Payments under a
nonqualified contract described above does not apply to "qualified" contracts.
Qualified contracts are contracts issued in conjunction with an Individual
Retirement Annuity (IRA), a Code Section 403(b) Tax Deferred Annuity, a Code
Section 457 deferred compensation plan or a Code Section 401(a) or 401(k)
pension or profit sharing plan. Generally, the entire Annuity Payment received
is taxable. Any portion of the Annuity Payment attributable to after-tax
employee contributions to the plan is not taxable. Any portion of an Annuity
Payment that is an "eligible rollover distribution" and that is properly rolled
over to another plan of the same type or to an IRA also is not taxable. An
Annuity Payment made in connection with a Section 403(b) Tax Deferred Annuity
or a Section 401(a) or 401(k) pension or profit-sharing plan can be an
"eligible rollover distribution" only if made under a Period Certain Annuity
having a period of less than ten years and only to the extent that the Annuity
Payment (1) is not attributable to after-tax contributions or (2) is not a
required minimum distribution under Code Section 401(a)(9). If any portion of
an eligible roll-over distribution is paid to the employee, the Company is
required to withhold 20% of that amount as federal income tax withholding.
TAXATION OF WITHDRAWALS
If the Commuted Value of all or any portion of the Guaranteed Payments is
withdrawn or distributed as a death benefit, the amount received will be taxed
as "an amount not received as an annuity."
Nonqualified Contracts. If received under a nonqualified contract, the
Commuted Value is generally includable in gross income to the extent that there
is income on the contract. Income on the contract means the excess of the
Commuted Value of the contract (determined without regard to any withdrawal
charge) immediately before the amount is received over the investment in the
contract at such time.
Qualified Contracts. Generally, any distribution under a qualified
contract is fully taxable upon receipt. If the distribution is made in
connection with a Section 403(b) Tax Deferred Annuity or a Section 401(a)
pension or profit sharing plan, it may not be taxable if attributable to
after-tax contributions or if the distribution is an "eligible rollover
distribution" (as defined above) that is properly rolled over to another
contract or plan of the same type or to an IRA.
DISTRIBUTIONS--TAX-DEFERRED ANNUITIES
The Code limits the distribution of amounts contributed on or after
January 1, 1989 under a salary reduction agreement to a Section 403(b) Tax
Deferred Annuity. In general, such distributions can only be made if the
participant has attained age 59-1/2, separates from service, dies or becomes
disabled (as defined in the Code).
TAX PENALTY
The Code provides that any amount received under a qualified or
nonqualified annuity contract may be subject to a premature distribution
penalty equal to 10% of the amount that is includable in income.
Because some of the exceptions to the 10% penalty discussed below require
that the payment or distribution be part of a series of "substantially equal
periodic payments," your selection of an increasing annuity or receipt of the
Commuted Value may be subject to the 10% penalty unless one of the other
exceptions applies. You should consult with a tax adviser to determine how this
will affect your tax liability.
Nonqualified Contracts. There is an exception to the tax penalty for
nonqualified contracts if the payment is made under an immediate annuity
contract. An immediate annuity is defined as a contract that (1) is purchased
with a single premium, (2) has an annuity starting date no later than one year
from the date of purchase, and (3) provides for a series of substantially equal
periodic payments to be made no less frequently than annually over the annuity
period. However, the IRS has ruled that where an immediate annuity contract is
received in exchange for a deferred annuity contract
- --------------------------------------------------------------------------------
7
<PAGE>
pursuant to a Section 1035 exchange, the immediate annuity contract does not
qualify for this exception to the 10% penalty.
In addition to the immediate annuity exception, the 10% penalty also does
not apply to (1) payments made on or after the date the taxpayer becomes age
59-1/2, (2) any payment attributable to the taxpayer becoming disabled (as
defined by the Code), (3) any payment made on or after the death of the
Contract Holder, or (4) any payment which is part of a series of substantially
equal periodic payments made at least annually for the life or life expectancy
of the taxpayer or the joint lives or joint life expectancies of the taxpayer
and his designated Beneficiary. (Modification of the series of payments prior
to the later of age 59-1/2 or 5 years may result in an additional tax in the
year of modification equal to the penalty which would have been imposed, plus
interest, if the exception had not applied.)
Qualified Contracts. The 10% penalty may apply to amounts received under
a qualified contract, other than a contract issued in conjunction with a
Section 457 deferred compensation plan. The 10% penalty does not apply to
distributions that are (1) made on or after the date the employee attains age
59-1/2, (2) made to a Beneficiary on or after the death of the employee, (3)
attributable to the employee's disability (as defined by the Code), (4) made to
an employee after separation from service after age 55 (not applicable to an
IRA), or (5) part of a series of substantially equal periodic payments made at
least annually for the life or life expectancy of the employee or the joint
lives or joint life expectancies of the employee and a designated Beneficiary.
(Modification of the series of payments prior to the later of age 59-1/2 or 5
years may result in an additional tax in the year of modification equal to the
penalty which would have been imposed, plus interest, if the exception had not
applied.)
NONNATURAL OWNERS
If a nonqualified contract is owned by a person who is not a natural
person, the contract is not treated as an annuity contract for income tax
purposes and the "income on the contract" for the taxable year is currently
taxable as ordinary income. This rule does not apply to an immediate annuity,
which is defined in the same way as for 10% penalty purposes. (See "Tax
Penalty" above.) Therefore, if you elect an increasing annuity or elect to
receive the Commuted Value, you should consult with a tax adviser to determine
how this will affect your tax liability.
This rule also does not apply to a trust or other entity which holds the
contract solely as an agent for a natural person (other than an employer which
holds for the benefit of employees). The rule also does not apply to qualified
contracts (other than a contract held in connection with a Section 457 deferred
compensation plan).
A tax-exempt organization should consult with its tax adviser regarding
treatment of "income on the contract" for purposes of the unrelated business
income tax.
- --------------------------------------------------------------------------------
8
<PAGE>
WITHDRAWALS--ACCESS TO YOUR MONEY
================================================================================
COMMUTATION
If you elect a Period Certain Annuity, you may elect to receive the
Commuted Value of all or a portion of the Guaranteed Payments, less any
applicable withdrawal charge. Commuted Value means the present value of any
remaining Guaranteed Payments which have not yet been paid under the Contract.
If a portion of the Guaranteed Payments under a variable Period Certain Annuity
is commuted, the remaining Annuity Payments will be reduced pro rata from all
of the Subaccounts unless you designate otherwise. Commutations may be subject
to a withdrawal charge as described in "Charges and Deductions."
COMMUTED VALUE
Under the Period Certain Annuity, the Commuted Value is equal to the
present value of the remaining Guaranteed Payments calculated using the Assumed
Annual Net Return Rate stated in the Contract. All Commuted Values will be
determined as of the Valuation Date next following the date on which a written
request for Commutation is received in good order by the Company at its Home
Office.
PERFORMANCE
================================================================================
The Company may illustrate the hypothetical values of Annuity Payments
made from each of the Subaccounts over certain time periods based on the
historical net asset values of the Funds. These numbers reflect the mortality
and expense risk charge, the administrative expense charge (if any), as well as
the advisory fees and other expenses of the Funds. The Company may also
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,
administrative expense charge (if any) and any applicable withdrawal charge).
"Non-standardized returns" will be calculated in a similar manner, except that
non-standardized figures will not reflect the deduction of any applicable
withdrawal 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 or three-year periods.
The Company may advertise certain ratings, rankings or other information
related to the Company, the Subaccounts or the Funds. Further details regarding
performance reporting are described in the Separate Account's Statement of
Additional Information.
DEATH BENEFIT
================================================================================
The following describes the death benefit provision applicable to
variable Annuity Payments under the Contract. For information on the death
benefit provision applicable to the fixed dollar option under the Contract,
please refer to Appendix A.
A death benefit may be payable if your Contract is issued under (i) a
Single Life Annuity with Guaranteed Payments (Option 2), (ii) a Joint and Full
Survivor Annuity with Guaranteed Payments (Option 4), or (iii) a Period Certain
Annuity (Option 6). The death benefit is payable upon the death of the
Annuitant, or the death of the survivor if there is a Joint Annuitant.
If the Annuitant dies, or if the survivor under a Joint Annuity Option
dies, any remaining Guaranteed Payments will be paid to the Beneficiary in the
form specified in the Contract. Such payments will be paid at least as rapidly
as under the method of distribution then in effect. Under Options 2 and 4, the
Beneficiary may elect, within six months of such death, to receive the Commuted
Value of any remaining Guaranteed Payments. Under Option 6, the Beneficiary may
make such election at any time. No withdrawal charge will apply to the Commuted
Value of the death benefit.
- --------------------------------------------------------------------------------
9
<PAGE>
If the Contract Holder who is not the Annuitant dies, Annuity Payments
will continue to be paid to the Payee in the form specified in the Contract. If
no Payee survives the death of the Contract Holder, Annuity Payments will be
made to the Annuitant. Such payments will be paid at least as rapidly as under
the method of distribution then in effect.
DEATH BENEFIT COMMUTATION
The Commuted Value under this death benefit provision will be determined
on the next Valuation Date after the Company receives acceptable proof of death
and a request for payment in good order at its Home Office. The Commuted Value
is equal to the present value of any remaining Guaranteed Payments calculated
using the Assumed Annual Net Return Rate stated in the Contract.
OTHER INFORMATION
================================================================================
THE COMPANY
Aetna Life Insurance and Annuity Company (the "Company") is a stock life
insurance company organized in 1976 under the insurance laws of the State of
Connecticut. 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
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 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 SEPARATE ACCOUNT
The Company has established a separate account,
Variable Annuity Account B, for the purpose of funding its variable annuity
contracts. The Board of Directors of the Company adopted a resolution in 1976
to establish the Separate Account under Connecticut insurance law. The Separate
Account is registered as a unit investment trust under the Investment Company
Act of 1940, and meets the definition of "separate account" under the federal
securities laws.
Although the Company holds title to the assets of the Separate Account,
such assets are not chargeable with liabilities 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.
DISTRIBUTION
The Company acts as the Principal Underwriter for the securities sold by
this Prospectus, and as the distributor of the Contracts.
Compensation will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions of up to 3.5% of the Purchase Payment.
Under certain circumstances, such broker-dealers may also be paid additional
compensation of up to 0.5%. 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 profitability 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.
The names of the broker-dealer and the registered representative
responsible for your Contract are set forth on your application. Commissions
and sales related expenses are paid by the Company and are not deducted from
your Purchase Payment. To the extent that the withdrawal charge is insufficient
to cover the actual costs of distribution, the Company may use any of its
corporate assets, including any profit from the mortality and expense risk
charge, to make up any difference.
OWNERSHIP
The Contract is owned by the Contract Holder (You). You have all title to
the Contract, as well as all rights to amounts held in the Contract during the
lifetime of the Annuitant, and the Joint Annuitant (if
- --------------------------------------------------------------------------------
10
<PAGE>
applicable). Any choices selected under the Contract must be made by you in
writing, unless otherwise allowed by the Company. Until we receive amendments
to any such choices, we will rely on any previous choices made.
Ownership of the Contract may be changed to the extent permitted by law.
You should immediately notify the Company, in writing, of any change in
ownership. No such ownership change will be binding until such notification is
received and recorded by the Company at its Home Office.
BENEFICIARY
If the Contract provides for any Guaranteed Payments following the death
of the Annuitant and the Joint Annuitant (if applicable), you have the right to
name a Beneficiary. The Beneficiary is the person entitled to receive any death
benefit proceeds. The Company will pay any death benefit proceeds based on the
last written Beneficiary designation on file at its Home Office as of the date
of death.
Changes in Beneficiary Designations. The designated Beneficiary may be
changed at any time during the lifetime of the Annuitant and the Joint
Annuitant (if applicable). Such change must be submitted to the Company in
writing, and except for Contracts issued in New York, will become effective as
of the date written notice of the change is received and recorded by the
Company. For Contracts issued in New York, the change will become effective as
of the date the notice is signed. However, the Company's obligation to pay
death benefits shall be fully discharged upon payment to the Beneficiary named
in the written notice of Beneficiary designation last received by the Company
as of the date of such payment. Some restrictions may apply to Beneficiary
changes under qualified 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 it 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.
VOTING RIGHTS
The Company is the legal owner of the shares of the Funds. However, we
believe that when a Fund solicits proxies in conjunction with a vote of
shareholders, we are required to obtain from you and other owners instructions
as to how to vote those shares. When we receive those instructions, we will
vote all of the shares we own in proportion to those instructions. This will
also include any shares that the Company owns on its own behalf. Should we
determine that we are no longer required to comply with the above, we will vote
the shares in our own right.
MODIFICATION OF THE CONTRACT
The Company reserves the right to modify the Contract to meet the
requirements of state or federal laws or regulations. The Company will notify
you in writing of any changes.
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.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company and the financial
statements of the Separate Account have been included in the Statement of
Additional Information.
- --------------------------------------------------------------------------------
11
<PAGE>
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
================================================================================
The following items are the contents of the Statement of Additional
Information:
General Information and History
Variable Annuity Account B
Offering and Purchase of Contract
Performance Data
Annuity Payments
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of the Company
- --------------------------------------------------------------------------------
12
<PAGE>
APPENDIX A
THE FIXED DOLLAR OPTION
================================================================================
The following summarizes material information concerning the fixed dollar
option. Amounts allocated to the fixed dollar option are held in the Company's
general account that supports general insurance and annuity obligations.
Interests in the fixed dollar option have not been registered with the SEC in
reliance upon exemptions under the Securities Act of 1933, as amended.
Disclosure in the Prospectus regarding the fixed dollar option may, however, be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of such statements. Disclosure
in this Appendix regarding the fixed dollar option has not been reviewed by the
SEC.
THE FIXED DOLLAR OPTION
In addition to allocating your Purchase Payment to the Subaccounts
described in the Prospectus, you may choose to allocate all or a portion of
your Purchase Payment to the fixed dollar option. If you choose the fixed
dollar option, your Annuity Payments will remain fixed as specified in your
Contract over the term of the Contract unless you elect an Increasing Annuity.
There is no right of Commutation for Annuity Payments supported by the
fixed dollar option under any Lifetime Annuity Option. You may purchase a right
of Commutation for Annuity Payments supported by the fixed dollar option under
a Period Certain Annuity. The right of Commutation is described under
"Withdrawals--Access to Your Money."
ANNUITY OPTIONS
All of the Annuity Options described under "Investment Options" in the
Prospectus are available for the fixed dollar option. If you allocate all or a
portion of your Purchase Payment to a fixed dollar option, you may also elect
one of the following features in connection with the portion of your Annuity
Payments that are derived from the fixed dollar option:
(a) a Cash Refund feature that offers a death benefit in connection with
certain Lifetime Annuity Options. If the Annuitant dies, or the survivor
dies if there is a Joint Annuitant, the Beneficiary will receive a lump sum
payment equal to the Net Purchase Payment allocated to the fixed dollar
option less the total amount of fixed annuity payments paid prior to such
death. The Cash Refund feature may be elected only with a Single Life
Annuity (Option 1) or a Joint and Full Survivor Annuity (Option 3) that has
no reduction in payment to the survivor.
(b) an Increasing Annuity under which the Annuity Payments supported by the
fixed dollar option will increase by a stated percentage compounded
annually. You must elect 1, 2 or 3% as the stated percentage. The feature
is not available under Contracts purchased in conjunction with Section 457
deferred compensation plans.
Annuity Payments. The amount of each Annuity Payment depends on (1) the
Net Purchase Payment you allocate to the fixed dollar option, and (2) the
Annuity Option and features chosen.
CHARGES AND DEDUCTIONS
If you have elected a Period Certain Annuity and have purchased a right of
Commutation, a withdrawal charge may apply to any Commuted Value you receive.
This charge is, in effect, a deferred sales charge. It is imposed upon any
Commutation of a Period Certain Annuity before the last Guaranteed Payment is
made, and while the Annuitant is living. The amount paid upon Commutation is
equal to the Commuted Value minus the applicable withdrawal charge. This charge
is imposed to reimburse the Company for unrecovered acquisition and
distribution costs.
- --------------------------------------------------------------------------------
13
<PAGE>
The following sets forth the schedule for the calculation of the
withdrawal charge.
- --------------------------------------------------------------------------------
Withdrawal Charge
Number of Years from Percentage of
Contract Effective Date Commuted Value
--------------------------------- ------------------
1 or more, but fewer than 2 5%
2 or more, but fewer than 3 4%
3 or more, but fewer than 4 4%
4 or more, but fewer than 5 3%
5 or more, but fewer than 6 2%
6 or more, but fewer than 7 1%
7 or more 0%
- --------------------------------------------------------------------------------
Reduction or Elimination of the Withdrawal Charge. We may reduce or
eliminate the withdrawal charge when sales of the Contract 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 withdrawal charge
will be based on the following criteria:
(a) the size and type of group of individuals to whom the Contract is offered;
or
(b) whether there is a prior or existing relationship with the Company such as
being an employee of the Company or one of its affiliates, receiving
distributions or making internal transfers from other Contracts issued by
the Company or one of its affiliates, or making transfers of amounts held
under qualified plans sponsored by the Company or an affiliate.
Any reduction or elimination of the withdrawal charge will not be unfairly
discriminatory against any person.
WITHDRAWALS--ACCESS TO YOUR MONEY
Commutation. If you elect a fixed Period Certain Annuity with a right of
Commutation, you may elect to receive the Commuted Value of all or a portion of
the remaining Guaranteed Payments, less any applicable withdrawal charge. Such
Commutations may be elected once each calendar year. No Commutations are
allowed from a fixed dollar option in the first Contract year. In subsequent
contract years, full or partial Commutations are allowed, provided that under a
partial Commutation the remaining Annuity Payments would equal $50 or more. If
a portion of the Guaranteed Payments is commuted, the remaining Annuity
Payments will be reduced proportionately. Commutations are subject to a
withdrawal charge.
Commuted Value. Under a fixed Period Certain Annuity, the Commuted Value
is equal to the present value of the remaining Guaranteed Payments calculated
using the adjusted contract rate.
The adjusted contract rate equals:
(Rate of Return) + CY - IY
where:
[bullet] Rate of Return is the Fixed Annuity Present Value Interest Rate shown
in the Contract;
[bullet] CY is the Commutation Yield; and
[bullet] IY is the Issue Yield.
CY is determined as follows:
(1) CY is the average of the yields, as published in the Wall Street Journal on
the Friday before the date of Commutation, of the three (or more if the
Company deems necessary) noncallable, noninflation adjusted Treasury Notes
or Bonds maturing on or closest to the Commutation Duration Date.
(2) The Commutation Duration Date is the date (month and year) obtained when
the Commutation Duration is added to the date of Commutation.
(3) Commutation Duration equals 1 plus the number of whole years from the date
of Commutation until the final Guaranteed Payment is due, divided by 2. Any
resulting fraction will be rounded up to the next whole number.
IY is determined as follows:
(1) IY is the average of the yields, as published in the Wall Street Journal on
the Friday before the Contract Effective Date, of the three (or more if the
Company deems necessary) noncallable, noninflation adjusted Treasury Notes
or Bonds maturing on or closest to the Issue Duration Date.
(2) The Issue Duration Date (month and year) is obtained when the Issue
Duration is added to the Contract Effective Date.
(3) Issue Duration equals 1 plus the number of whole years from issue until the
final payment is due, divided by 2. Any resulting fraction will be rounded
up to the next whole number.
- --------------------------------------------------------------------------------
14
<PAGE>
DEATH BENEFIT
The death benefit is payable upon the death of the Annuitant, or the
death of the survivor if there is a Joint Annuitant, and if there are remaining
Guaranteed Payments. Any remaining Guaranteed Payments will be paid to the
Beneficiary in the form specified in the Contract. Such payments will be paid
at least as rapidly as under the method of distribution then in effect. Within
six months of such death, the Beneficiary may elect to receive the Commuted
Value of any remaining Guaranteed Payments. However, under a Period Certain
Annuity where you have purchased a right of Commutation, the Beneficiary may
make such election at any time. No withdrawal charge will apply to the Commuted
Value of the death benefit.
If a Cash Refund feature is elected, the death benefit is payable in one
sum to the Beneficiary.
If the Contract Holder who is not the Annuitant dies, Annuity Payments
will continue to be paid to the Payee in the form specified in the Contract. If
no Payee survives the death of the Contract Holder, Annuity Payments will be
made to the Annuitant. Such payments will be paid at least as rapidly as under
the method of distribution then in effect.
Death Benefit Commutation. The Commuted Value of the death benefit will
be determined as of the Valuation Date next following the Company's receipt at
its Home Office of proof of death acceptable to the Company and a request for
payment in good order. If the Contract is issued as a Period Certain Annuity
with a right of Commutation, the Commuted Value will be determined as described
under "Withdrawal--Access to Your Money" in this Appendix. If the Contract is
issued as a Life Annuity with Guaranteed Payments or a Period Certain where you
have not purchased a right of Commutation, the rate used to determined the
Commuted Value of the remaining Guaranteed Payments will be the Fixed Annuity
Present Value Interest Rate shown in the Contract.
- --------------------------------------------------------------------------------
15
<PAGE>
For Master Applications Only
I hereby acknowledge receipt of an Account B Fixed and Variable Single Premium
Immediate Annuity prospectus dated November 28, 1997, as well as all current
prospectuses pertaining to the variable investment options available under the
Contracts.
____ Please send an Account B Statement of Additional Information
(Form No. SAI.09515-97) dated May 1, 1997.
- --------------------------------------------------------------------------------
CONTRACT HOLDER'S SIGNATURE
- --------------------------------------------------------------------------------
DATE
PROS.09515-97A
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT B
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------
SUPPLEMENT FOR FIXED AND VARIABLE SINGLE PREMIUM IMMEDIATE ANNUITY CONTRACT
DATED NOVEMBER 28, 1997 to the Statement of Additional Information dated May 1,
1997
The information in this supplement updates and amends the information contained
in the Statement of Additional Information dated May 1, 1997 for Aetna Fixed and
Variable Single Premium Immediate Annuity (the "Statement") and should be read
with that Statement. Capitalized terms are defined in the Statement or the
Prospectus.
The following Funds are currently available under the Single Premium
Immediate Annuity contract:
Aetna Variable Fund Aetna Variable Small Company Portfolio
Aetna Income Shares Fidelity VIP High Income Portfolio
Aetna Variable Encore Fund Janus Aspen Growth Portfolio
Aetna Investment Advisers Fund, Inc. Janus Aspen Worldwide Growth Portfolio
Aetna Crossroads Variable Portfolio Oppenheimer Strategic Bond Fund
Aetna Legacy Variable Portfolio Portfolio Partners, Inc. Scudder
Aetna Variable Growth Portfolio International Growth Portfolio
Aetna Variable Index Plus Portfolio Portfolio Partners, Inc.
MFS Emerging Equities Portfolio
Portfolio Partners, Inc.
MFS Value Equity Portfolio
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.
The table shown below reflects the average annual standardized and
non-standardized total return quotation figures for the periods ended December
31, 1996 for the Subaccounts. 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 *).
The following is in addition to the chart found on page 5 of the Statement:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
FUND
STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
- ---------------------------------------------------------------------------------------
SUBACCOUNT 1 5 10 1 3 5 10
Year Years Years Year Years Years Years
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable
Encore Fund (1.16%) 2.74% 4.76% 4.04% 3.83% 3.16% 4.76% 08/01/75
- ---------------------------------------------------------------------------------------
Aetna Crossroads
Variable
Portfolio 11.45% 13.66%* n/a 17.31% 17.63%* n/a n/a 07/05/95
- ---------------------------------------------------------------------------------------
Fidelity VIP
High Income
Portfolio 6.97% 13.06% 9.73% 12.60% 9.25% 13.52% 9.73% 09/19/85
- ---------------------------------------------------------------------------------------
Oppenheimer
Strategic
Bond Fund 5.13% 4.83%* n/a 10.66% 6.20% 6.01%* n/a 05/03/93
- ---------------------------------------------------------------------------------------
</TABLE>
<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:
- Statement of Assets and Liabilities as of December 31, 1996
- Statements of Operations and Changes in Net Assets for the years
ended December 31, 1996 and 1995
- Notes to Financial Statements
- Independent Auditors' Report
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) Broker-Dealer Agreement(2)
(3.2) Alternative Form of Wholesaling Agreement and Related Selling
Agreement(2)
(4) Variable Annuity Contract (A050SP96)(3)
(5.1) Variable Annuity Contract Application (82926(7/96))(3)
(5.2) Variable Annuity Contract Application (82941-1(4/97))
(6.1) Certificate of Incorporation of Aetna Life Insurance and Annuity
Company(4)
(6.2) Amendment to Certificate of Incorporation of Aetna Life Insurance
and Annuity Company(5)
(6.3) By-Laws, as amended September 17, 1997, of Aetna Life Insurance and
Annuity Company(6)
(7) Not applicable
<PAGE>
(8.1) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994 and
amended June 15, 1994, July 31, 1995 and March 1, 1996(7)
(8.2) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Oppenheimer Variable Annuity Account Funds and
Oppenheimer Funds, Inc. dated March 11, 1997(8)
(8.3) Service Agreement between Oppenheimer Funds, Inc., and Aetna Life
Insurance and Annuity Company dated March 11, 1997(8)
(9) Opinion and Consent of Counsel
(10) Consent of Independent Auditors
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data(9)
(14) Not applicable
(15.1) Powers of Attorney(7)
(15.2) Authorization for Signatures(2)
(27) Financial Data Schedule
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 (Accession No. 0000950146-96-000563).
2. 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 (Accession No. 0000912057-96-006383).
3. Incorporated by reference to Registration Statement on Form N-4 (File No.
333-09515), as filed electronically on August 2, 1996 (Accession No.
0000950146-96-001270).
4. 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 (Accession No. 0000950146-96-000534).
5. 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 (Accession No. 0000950146-97-000159).
6. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-91846), as filed
electronically on October 30, 1997 (Accession No. 0000950146-97-001589).
7. Incorporated by reference to Post-Effective Amendment No. 30 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on September 29, 1997 (Accession No. 0000950146-97-001485).
8. Incorporated by reference to Post-Effective Amendment No. 27 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on April 16, 1997 (Accession No. 0000950146-97-000617).
<PAGE>
9. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 333-09515), as filed electronically on
December 23, 1996 (Accession No. 0000950146-96-002313).
Item 25. Directors and Officers of the Depositor
Name and Principal
Business Address* Positions and Offices with Depositor
Thomas J. McInerney Director and President
Timothy A. Holt Director, Senior Vice President and
Chief Financial Officer
Christopher J. Burns Director and Senior Vice President
J. Scott Fox Director and Senior Vice President
John Y. Kim Director and Senior Vice President
Shaun P. Mathews Director and Senior Vice President
Glen Salow 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
Corporate 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. 33-91846), as
filed electronically on October 30, 1997 (Accession No. 0000950146-97-001589).
Item 27. Number of Contract Owners
As of September 30, 1997, there were 57,688 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 (Aetna) also acts as
the investment adviser, only, for Aetna Series Fund, Inc. and the principal
underwriter and investment adviser for Portfolio Partners, Inc., Aetna
Variable Encore Fund, Aetna Variable Fund, Aetna Generation Portfolios,
Inc., Aetna Income Shares, Aetna Investment Advisers Fund, Inc., Aetna GET
Fund, and Aetna Variable Portfolios, Inc. (all management investment
companies registered under the Investment Company Act of 1940 (1940 Act)).
Additionally, Aetna acts as the principal underwriter and depositor for
Variable Life Account B of Aetna, Variable Annuity Account C of Aetna and
Variable Annuity Account G of Aetna (separate accounts of Aetna registered
as unit investment trusts under the 1940 Act). Aetna is also the principal
underwriter for Variable Annuity Account I of Aetna Insurance Company of
America (AICA) (a separate account of AICA registered as a unit investment
trust under the 1940 Act).
<PAGE>
(b) See Item 25 regarding the Depositor.
(c) Compensation as of December 31, 1996:
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter Commissions or Annuitization Commissions Compensation*
- ----------- ----------- ---------------- ----------- -------------
Aetna Life $288,029 $17,661,810
Insurance and
Annuity Company
* 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;
<PAGE>
(b) to include as part of any application to purchase a contract offered by a
prospectus which is part of this registration statement on Form N-4, a
space that an applicant can check to request a Statement of Additional
Information; and
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly upon
written or oral request.
(d) 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, certifies that it meets the requirements of Securities Act Rule
485(b) for effectiveness of this Post-Effective Amendment No. 3 to its
Registration Statement on Form N-4 (File No. 333-09515 ) and has duly caused
this Post-Effective Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hartford, State of Connecticut, on the
30 day of October, 1997.
VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE
INSURANCE AND ANNUITY COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY COMPANY
(Depositor)
By: Thomas J. McInerney*
-------------------------------------------
Thomas J. McInerney
President
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 3 to the Registration Statement on Form N-4 (File No. 333-09515 ) has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
Thomas J. McInerney* Director and President )
- ------------------------- (principal executive officer) )
Thomas J. McInerney )
)
)
Timothy A. Holt* Director, Senior Vice President )
- ------------------------- and Chief Financial Officer )
Timothy A. Holt )
)
)
Christopher J. Burns* Director ) October
- ------------------------- )
Christopher J. Burns ) 30, 1997
)
)
J. Scott Fox* Director )
- ------------------------- )
J. Scott Fox )
)
)
John Y. Kim* Director )
- ------------------------- )
John Y. Kim )
<PAGE>
Shaun P. Mathews* Director )
- ------------------------- )
Shaun P. Mathews )
)
)
Glen Salow* Director )
- ------------------------- )
Glen Salow )
)
)
Deborah Koltenuk* Vice President and Treasurer, )
- ------------------------- Corporate Controller )
Deborah Koltenuk )
)
By:
/s/ Julie E. Rockmore
-----------------------------------------
Julie E. Rockmore
*Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT B
EXHIBIT INDEX
Exhibit No. Exhibit Page
99-B.1 Resolution of the Board of Directors of Aetna Life *
Insurance and Annuity Company establishing Variable
Annuity Account B
99-B.3.1 Broker-Dealer Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement and *
Related Selling Agreement
99-B.4 Variable Annuity Contract (A050SP96) *
99-B.5.1 Variable Annuity Contract Application (82826(7/96)) *
99-B.5.2 Variable Annuity Contract Application (82941-1(4/97)) ____
99-B.6.1 Certificate of Incorporation and of Aetna Life *
Insurance and Annuity Company
99-B.6.2 Amendment to Certificate of Incorporation of Aetna *
Life Insurance and Annuity Company
99-B.6.3 By-Laws, as amended September 17, 1997, of Aetna *
Life Insurance and Annuity Company
99-B.8.1 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Janus Aspen Series
dated April 19, 1994 and amended June 15, 1994,
July 31, 1995 and March 1, 1996
99-B.8.2 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Oppenheimer
Variable Annuity Account Funds and Oppenheimer
Funds, Inc. dated March 11, 1997
99-B.8.3 Service Agreement between Oppenheimer Funds, Inc., *
and Aetna Life Insurance and Annuity Company dated
March 11, 1997
99-B.9 Opinion and Consent of Counsel ____
99-B.10 Consent of Independent Auditors ____
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
99-B.13 Schedule for Computation of Performance Data *
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule ____
*Incorporated by reference
<TABLE>
<S> <C>
[Aetna Logo] Individual Variable Phone/ FAX: Mailing / Overnight:
Single Premium Immediate 1-800-238-6254 Aetna Life Insurance and Annuity Company
Annuity (SPIA) Application 1-860-273-6903 New Business Unit
(FAX) 151 Farmington Avenue
Hartford, CT 06156-0005
[ ] Internal [ ] External
- -------------------------------------------------------------------------------------------------------------------------
Type of Contract | Type of Contract [ ] Nonqualified [ ] 403(b) Rollover
| Annuity-1035 Exchange -
| [ ] Nonqualified (attach assignment form) [ ] Nonqualified or
| Annuity-Regular 457 Deferred Comp.
|
| [ ] 408(b) IRA [ ] 401(a) Qualified Plan
| Transfer/Rollover
| ----------------------------------------------------------------------------------------------------
| Subject to ERISA (Must be completed if 401(a) Qualified Plan or 403(b) Rollover is indicated.)
| [ ] Yes [ ] No
- --------------------------------------------------------------------------------------------------------------------------
Contractholder | Name (Last, First, Middle Initial) | Social Security Number
Information | |
| ----------------------------------------------------------------------------------------------------
The contractholder | Address (Street/P.O. Box) | Telephone Number
will be the payee | | [ ] Home [ ] Work
unless otherwise | |
requested. | ----------------------------------------------------------------------------------------------------
This information | City, State, ZIP Code | [ ] Male [ ]Female | Date of Birth
will be used for | | |
tax reporting. | | |
| ----------------------------------------------------------------------------------------------------
Changes to SS# | Are you associated with a National Association of Securities Dealer Firm? [ ]Yes [ ]No
or Date of Birth | If yes, please specify:
must be |
initialed. |
- --------------------------------------------------------------------------------------------------------------------------
Annuitant | Name (Last, First, Middle Initial) | Social Security Number
If different | |
from | ----------------------------------------------------------------------------------------------------
Contractholder. | Address (Street/P.O. Box) | Telephone Number
| | [ ] Home [ ] Work
If an IRA or | |
403(b), the | ----------------------------------------------------------------------------------------------------
Annuitant and | City, State, ZIP Code | [ ] Male [ ]Female | Date of Birth
Contractholder | | |
must be the same | | |
person. |
- --------------------------------------------------------------------------------------------------------------------------
Joint Annuitant | Name (Last, First, Middle Initial) Relationship | Social Security # | [ ]Male | Date of Birth
| | | [ ]Female |
Joint lifetime | | | |
option only. | | | |
- --------------------------------------------------------------------------------------------------------------------------
Annuity Options | [ ]Fixed Only [ ]Variable Only [ ]Combination Variable/Fixed (Only one box may be checked)
| ----------------------------------------------------------------------------------------------------
Complete the | (Only one option may be elected) Purchase Payment Amount
type of Annuity | Non-Lifetime Option
and select an | [ ]A. Period Certain of ______ (5 - 30 years) $ ____________________
Annuity Option. |
|
For an IRA, 401, | Single Lifetime Options
403(b) or 457 | [ ] B. Single Life Only
contract, the | [ ] C. Single Life with Guarantee of ______ (5 -30 years)
Annuity Option |
election must | Joint Lifetime Options
comply with IRC | [ ] D. Joint & 100% Survivor
401(a)(9). | [ ] E. Joint & 100% Survivor with Guarantee of ______ (5 - 30 years)
| [ ] F. Joint & 66-2/3% Survivor
If subject to | [ ] G. Joint & 50% Survivor
ERISA, Joint | [ ] H. Joint & 50% Contingent Survivor
Lifetime Option |
H must be |
elected, unless |
spousal consent |
is provided. |
- --------------------------------------------------------------------------------------------------------------------------
Additional | [ ] Cash Refund (Only available with Lifetime Options B and D above.)
Features | [ ] Increasing Annuity (Only available with Non-Lifetime Option A and Lifetime Options B, C, D or E.)
Cash Refund & | _____% 1, 2 or 3% Annual Increase (Complete desired percentage. NOT available to 457 contracts.)
Annuity may only |
be elected if |
the Fixed Only |
option is | [ ] Commutability of Fixed Non-Lifetime Option A. (Available with Fixed only or Combination
indicated | Variable/Fixed.)
above. |
- --------------------------------------------------------------------------------------------------------------------------
Investment | Variable: (Select up to four) | Assumed Annual Net
Options | Aggressive Growth ____% [041] Aetna Variable Small Company Portfolio | Return Rate
| ____% [106] PPI MFS Emerging Equities Portfolio | [ ]3 1/2%
Complete | International/Global ____% [123] Janus Aspen Worldwide Growth Portfolio | [ ]5%
Investment | Growth ____% [104] PPI Scudder Internat'l Growth Portfolio | (3 1/2% will be
Options if | ____% [040] Aetna Variable Growth Portfolio | assumed if no
Variable Only or | ____% [117] Janus Aspen Series Growth Portfolio | election is made.)
a Combination | ____% [100] PPI MFS Value Equity Portfolio |
Variable/Fixed | Growth & Income ____% [008] Aetna Investment Advisers Fund |
option is | ____% [001] Aetna Variable Fund |
indicated above. | ____% [035] Aetna Variable Index Plus Portfolio |
| Income ____% [004] Aetna Income Shares |
Up to four | ____% [098] Oppenheimer Strategic Bond Fund |
variable options | ____% [132] Fidelity VIP High Income |
may be selected. | Asset Allocation ____% [033] Aetna Legacy Variable Portfolio |
| ____% [032] Aetna Crossroads Variable Portfolio |
| Cash ____% [003] Aetna Variable Encore |
| Fixed Dollar Option ____% ALIAC Fixed Dollar |
| 100 % Total |
- ---------------------------------------------------------------------------------------------------------------------------
Replacement | Will this contract change or replace any existing life insurance or annuity contracts?
Information | [ ] Yes [ ] No
|
| (If yes, provide carrier name and account number:) [ ]Aetna
| [ ] Other Carrier_______________ Account #_______
|
| For an Aetna Annuity replacement only, I have received annuity option proposals for both the original
| and new contracts and understand the differences: [ ] Yes [ ] No
|
|
82941-1 (4-97) (Website Address - Producers: http://www.aetna.com/producer FO/HO: http://ars.aetna.com/producer)
CAT. 2000841601
<PAGE>
- --------------------------------------------------------------------------------------------------------------------------
Beneficiary(ies) | Primary | Contingent | Complete Legal Name / Date of Birth | Relationship | % | Social
| | | | | | Security #
Unless directed | [ ] | [ ] | ___________________________________ | ____________ | __ | ___________________
otherwise, we | | | | | |
will pay any | | | ___________________________________ | ____________ | __ | ___________________
death benefit in | [ ] | [ ] | | | |
equal shares to | | | | | |
the primary | | | | | |
beneficiary(ies) | | | | | |
named or to all |
living members of |
a class (e.g., |
children). If no |
primary beneficiary |
is living, payment |
will be made in |
equal shares to |
the contingent |
beneficiary(ies). |
If more than two |
(2) beneficiaries, |
please attach a | If subject to ERISA, a spouse must be the primary beneficiary for at least 50%,
separate sheet. | unless spousal consent is provided.
- --------------------------------------------------------------------------------------------------------------------------
Payment | Payment Frequency - [ ] monthly(default) [ ] quarterly [ ] semi - annually | First Payment Date
Information | [ ] annually |
| ----------------------------------------------------------------------------------------------------
Check box for | [ ] EFT (Electronic Funds Transfer. Complete information for EFT below.) [ ] Check (default)
type of payment. | ----------------------------------------------------------------------------------------------------
| Bank Name and Address (Street, City, State, ZIP)
The first payment(s)|
will be mailed to | ----------------------------------------------------------------------------------------------------
your resident | Bank Routing Number | Bank Account Number | Type of Account:
address until EFT | | | (Please attach voided check or deposit slip)
becomes effective | | | [ ] Checking [ ] Savings
(normally 3 - 6 | | |
weeks). | | |
- --------------------------------------------------------------------------------------------------------------------------
Form W-4P | Periodic payments from a settlement option are generally subject to Federal Income Tax withholding
OMB NO. 1545-0415 | unless you elect not to have withholding apply. TDA and Pension: For stated period of less than 10
| years, 20% may apply (you cannot elect out). See Special Tax Notice. Tax will be withheld only on
Withholding | the portion that is subject to Federal Income Tax. There will be no withholding on dollars that
Notice and | have already been taxed.
Election. |
| Elect withholding or no withholding by checking the appropriate box below. To change or revoke your
Complete for | election, send a new Form W-4P (available at IRS offices) to Aetna. This change will be effective
payments from a | no later than the January 1, May 1, July 1, or October 1 after it is received provided we receive
401(a), 403(b) | it 30 days prior to that date. Otherwise, the change or revocation will be effective on the next
408(b) or | scheduled date. Whether or not you have tax withheld, by January 31 of each year, you will receive
nonqualified | a statement from Aetna showing the total taxable amount of your distribution and the total income
annuity contract. | tax withheld, if any. CAUTION: There are penalties for not paying enough tax during the year,
| either through withholding or estimated tax payments, or both. For more information see IRS
Please use a | Publication 505, Tax Withholding and Estimated Tax.
separate Form W-4 |
for W-2 income | COMPLETE THE FOLLOWING APPLICABLE LINES:
paid from any |
Deferred Comp | [ ] 1. I elect to have no income tax withheld from my annuity. (Do not complete lines 2 or 3.)
plan. |
| [ ] 2. I elect to have taxes withheld from each periodic annuity payment to be figured using the number
| of allowances and marital status shown:__________________ (allowances). (You may also designate
| an additional amount on line 3.)
| [ ] SINGLE [ ] MARRIED [ ] MARRIED, BUT WITHHOLD AT HIGHER SINGLE RATE
|
| [ ] 3. I want the following additional amount withheld from each pension or annuity payment. Note: For
| periodic payments, you cannot enter an amount here without entering the number (including zero)
| of allowances on line 2: $ _______________
- --------------------------------------------------------------------------------------------------------------------------
Anti-Fraud | Any person who knowingly and with intent to injure, defraud, or deceive any insurer files a statement
Statement | of claim or an application containing any false, incomplete, or misleading information is guilty of
| a felony.
- --------------------------------------------------------------------------------------------------------------------------
Internal Rollovers | Reason for Disbursement from Accumulation Contract:
|
| [ ] Age 59-1/2 [ ] Separation from Service [ ] Death [ ] Other _________________________
- --------------------------------------------------------------------------------------------------------------------------
Your | For Internal Rollovers only: I authorize Aetna to transfer to this contract, the balance of my
Acknowledgment | account(s) noted in the Replacement Information Section.
|
Distribution | For Rollovers for TDA and Pension Participants: I, the payee, have received the Special Tax Notice
Channel: | and waive the 30 day notice requirement.
|
Workplace | I certify that this information is correct and complete and, under penalty of perjury, the Social
[ ] Career | Security number(s) shown on this form is/are correct.
[ ] Independent |
[ ] Other | I understand that when based on the investment experience of a Separate Account, all payments and
| contract values are variable and are not guaranteed as to fixed dollar amount, and I have received a
Financial | current prospectus.
Institution |
[ ] Broker/Dealer | If I have elected EFT, I authorize Aetna to deposit my payments by EFT to my bank account. If
[ ] Bank | payments are directed to a bank account, I authorize and direct the bank to refund to Aetna and
[ ] Other | charge to my account the amount of any payments made to the bank for any due date after my death.
|
Life | I understand the following individual(s)/organization(s) will receive compensation as the result of
[ ] MGA | my purchase (completed by agent):
[ ] Life Brokerage |
Manager | _____________________________/________________________________/________________________
[ ] Other |
| [ ] Please send me a Statement of Additional Information.
[ ] AFSI Rep |
| [ ] The Company (Aetna Life Insurance and Annuity Company) may hold my application and Purchase
| Payment if it cannot accept my application within five business days after receiving it at
| its home office.
| ----------------------------------------------------------------------------------------------------
| Signature of Contractholder City , State Where Signed Date
|
| ----------------------------------------------------------------------------------------------------
| Signature of Payee Date
|
- --------------------------------------------------------------------------------------------------------------------------
Registered | Do you have any reason to believe any existing insurance and/or annuity contracts will be modified
Representative | or replaced if this contract is issued? [ ] Yes [ ] No
| ----------------------------------------------------------------------------------------------------
| Broker/Dealer Firm (Print)
|
| ----------------------------------------------------------------------------------------------------
| Representative's Name (Print) | Agent Code | Social Security Number | State License Number
| | | |
| ----------------------------------------------------------------------------------------------------
| Signature of Registered Representative | Date
| |
</TABLE>
[Aetna Letterhead]
[Aetna logo]
151 Farmington Avenue
Hartford, CT 06156
October 30, 1997 Julie E. Rockmore
Counsel
Law Division, RE4A
Investments & Financial Services
(860) 273-4686
Fax: (860) 273-8340
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Aetna Life Insurance and Annuity Company and its
Variable Annuity Account B
Post-Effective Amendment No. 3 to Registration
Statement on Form N-4
Prospectus Title: A Fixed and Variable Single Premium
Immediate Annuity
File Nos. 333-09515 and 811-2512
Dear Sir or Madam:
The undersigned serves as counsel to Aetna Life Insurance and Annuity Company, a
Connecticut life insurance company (the "Company"). It is my understanding that
the Company, as depositor, has registered an indefinite amount of securities
(the "Securities") under the Securities Act of 1933 (the "Securities Act") as
provided in Rule 24f-2 under the Investment Company Act of 1940 (the "Investment
Company Act").
In connection with this opinion, I have reviewed the N-4 Registration Statement,
as amended to the date hereof, and this Post-Effective Amendment No. 3. I have
also examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, trust records and other instruments I have
deemed necessary or appropriate for the purpose of rendering this opinion. For
purposes of such examination, I have assumed the genuineness of all signatures
on original documents and the conformity to the original of all copies.
I am admitted to practice law in Connecticut and do not purport to be an expert
on the laws of any other state. My opinion herein as to any other law is based
upon a limited inquiry thereof which I have deemed appropriate under the
circumstances.
<PAGE>
Based upon the foregoing, I am of the opinion that the Securities have been duly
and validly authorized and, assuming the Securities will be issued and sold in
accordance with the provisions of the prospectus, will constitute legal and
binding obligations of the Company.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Julie E. Rockmore
- ---------------------
Julie E. Rockmore
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors of Aetna Life Insurance and Annuity Company and
Contractholders of Aetna Variable Annuity Account B:
We consent to the use of our reports dated February 4, 1997 and February 14,
1997 incorporated herein by reference in registration statement
(No. 333-09515) on Form N-4.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
October 30, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000103005
<NAME> Aetna Variable Annuity Acct. B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,726,620,671
<INVESTMENTS-AT-VALUE> 1,848,811,724
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,848,811,724
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,848,811,724
<DIVIDEND-INCOME> 120,367,178
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 17,483,870
<NET-INVESTMENT-INCOME> 102,883,308
<REALIZED-GAINS-CURRENT> 17,427,408
<APPREC-INCREASE-CURRENT> 93,444,109
<NET-CHANGE-FROM-OPS> 213,754,825
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
