As filed with the Securities and Exchange Registration No.
Commission on May 19, 2000 Registration No. 811-2512
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- --------------------------------------------------------------------------------
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, TS31, 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, TS31, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
Approximate date of Proposed Public Offering: As soon as practicable after the
effectiveness of this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION - PROSPECTUS
<S> <C> <C>
1 Cover Page........................................... Cover Page
2 Definitions.......................................... Not Applicable
3 Synopsis............................................. Contract Overview; Fee Table
4 Condensed Financial Information...................... Condensed Financial Information; Appendix IV --
Condensed Financial Information
5 General Description of Registrant, Depositor, and
Portfolio Companies.................................. Other Topics - The Company; Variable Annuity
Account B; Appendix III - Description of
Underlying Funds
6 Deductions and Expenses.............................. Fees
7 General Description of Variable Annuity Contracts.... Contract Overview
8 Annuity Period....................................... The Income Phase
9 Death Benefit........................................ Death Benefit
10 Purchases and Contract Value......................... Purchase and Rights; Your Account Value
11 Redemptions.......................................... Your Right to Cancel; Systematic Distribution
Options
12 Taxes................................................ Taxation
13 Legal Proceedings.................................... Other Topics - Legal Matters and Proceedings
14 Table of Contents of the Statement of Additional
Information.......................................... Contents of the Statement of Additional
Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM N-4 PART B (STATEMENT OF LOCATION - STATEMENT OF
ITEM NO. ADDITIONAL INFORMATION) ADDITIONAL INFORMATION
<S> <C> <C>
15 Cover Page........................................... Cover page
16 Table of Contents.................................... Table of Contents
17 General Information and History...................... General Information and History
18 Services............................................. General Information and History; Independent
Auditors
19 Purchase of Securities Being Offered................. Offering and Purchase of Contracts
20 Underwriters......................................... Offering and Purchase of Contracts
21 Calculation of Performance Data...................... Performance Data; Average Annual Total Return
Quotations
22 Annuity Payments..................................... Income Phase Payments
23 Financial Statements................................. Financial Statements
</TABLE>
Part C (Other Information)
--------------------------
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
Aetna Life Insurance and Annuity Company
Supplement Dated _________, 2000
to _________, 2000 Prospectus
GENERAL DESCRIPTION OF GET J
Series J of the Aetna GET Fund (GET J) is an investment option that may be
available during the accumulation phase of the contract. Aetna Life Insurance
and Annuity Company (the Company, we, our) makes a guarantee, as described
below, when you direct money into GET J. Aeltus Investment Management, Inc.
serves as investment adviser to GET J.
We will offer GET J shares only during its offering period, which is scheduled
to run from June 15, 2000 through the close of business on September 13, 2000.
GET J may not be available under your contract, your plan or in your state.
Please read the GET J prospectus for a more complete description of GET J,
including its charges and expenses.
INVESTMENT OBJECTIVE OF GET J
GET J seeks to achieve maximum total return, without compromising a minimum
targeted return, by participating in favorable equity market performance during
the guarantee period.
GET J's guarantee period runs from September 14, 2000 through September 13,
2005. During the offering period, all GET J assets will be invested in
short-term instruments, and during the guarantee period will be invested in a
combination of fixed income and equity securities.
THE GET FUND GUARANTEE
The guarantee period for GET J will end on September 13, 2005 which is GET J's
maturity date. The Company guarantees that the value of an accumulation unit of
the GET J subaccount under the contract on the maturity date (as valued after
the close of business on September 13, 2005) will not be less than its value as
determined after the close of business on the last day of the offering period.
If the value on the maturity date is lower than it was on the last day of the
offering period, we will transfer funds from our general account to the GET J
subaccount to make up the difference. This means that if you remain invested in
GET J until the maturity date, at the maturity date you will receive no less
than the value of your separate account investment directed to GET J as of the
last day of the offering period, less any maintenance fees or any amounts you
transfer or withdraw from the GET J subaccount. The value of dividends and
distributions made by GET J throughout the guarantee period is taken into
account in determining whether, for purposes of the guarantee, the value of
your GET J investment on the maturity date is no less than its value as of the
last day of the offering period. The guarantee does not promise that you will
earn the fund's minimum targeted return referred to in the investment
objective.
If you withdraw or transfer funds from GET J before the maturity date, we will
process the transactions at the actual unit value next determined after we
receive your order. The guarantee will not apply to these amounts or to amounts
deducted as a maintenance fee, if applicable.
MATURITY DATE
Before the maturity date, we will send a notice to each contract holder who has
amounts in GET J. This notice will remind you that the maturity date is
approaching and that you must choose other investment options for your GET J
amounts. If you do not make a choice, on the maturity date we will transfer
your GET J amounts to another available series of the GET Fund that is
accepting deposits. If no GET Fund series is available, we will transfer your
GET J amounts to the fund or funds designated by the Company.
X.GETJXXXXX-00 _____ 2000
<PAGE>
The following information supplements the "Fee Table" contained in the
prospectus:
MAXIMUM FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT
In addition to the amounts currently listed under the heading "Fee Table" in
the prospectus, we will make a daily deduction of a GET J Guarantee Charge,
equal on an annual basis to the percentage shown below, from the amounts
allocated to the GET J investment option:
<TABLE>
<S> <C>
GET J Guarantee Charge (deducted daily during the Guarantee Period) ..... 0.50%
Maximum Total Separate Account Expenses .................................. 2.20%(1)
</TABLE>
(1) The total separate account expenses that apply to your contract may be
lower. Please refer to the "Fee Table" section of your prospectus.
The following information supplements the "Fund Expense Table" contained in the
prospectus:
Aetna GET Fund Series J Annual Expenses
(As a percentage of the average net assets)
<TABLE>
<CAPTION>
Investment Total Fund Annual Expenses
Advisory Fees(2) Other Expenses(3) (after expense reimbursement)(4)
---------------- ----------------- --------------------------------
<S> <C> <C> <C>
Aetna GET Fund Series J 0.60% 0.15% 0.75%
</TABLE>
For more information regarding expenses paid out of assets of the fund, see the
GET J prospectus.
- -----------------------
(2) The Investment Advisory Fee will be 0.25% during the offering period and
0.60% during the guarantee period.
(3) "Other Expenses" include an annual fund administrative fee of 0.075% of the
average daily net assets of GET J and any additional direct fund expenses.
(4) The investment adviser is contractually obligated through GET J's maturity
date to waive all or a portion of its investment advisory fee and/or its
administrative fee and/or to reimburse a portion of the fund's other
expenses in order to ensure that GET J's Total Fund Annual Expenses do not
exceed 0.75% of the fund's average daily net assets. It is not expected that
GET J's actual expenses without this waiver or reimbursement will exceed
this amount.
<PAGE>
The following information supplements the "Hypothetical Examples" contained in
the prospectus.
HYPOTHETICAL EXAMPLE--AETNA GET FUND SERIES J
Account Fees You May Incur Over Time. The following hypothetical example shows
the fees and expenses paid over time if you invest $1,000 in the GET J
investment option under the contract (until GET J's maturity date) and assume a
5% annual return on the investment.(5)
> THIS EXAMPLE IS PURELY
HYPOTHETICAL.
> IT SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR EXPECTED
RETURNS.
> ACTUAL EXPENSES AND/OR
RETURNS MAY BE MORE OR LESS
THAN THOSE SHOWN BELOW.
<TABLE>
<CAPTION>
At the end of the periods shown you would have paid the
following expenses.
1 Year 2 Years 5 Years
-------- --------- ---------
<S> <C> <C> <C>
Aetna GET Fund Series J
</TABLE>
- -----------------------
(5) The example shown above reflects an annual mortality and expense risk charge
of 1.55%, an annual contract administrative expense charge of 0.15%, an
annual GET J guarantee charge of 0.50% and all charges and expenses of the
GET J Fund. (The expenses that you would pay under your contract may be
lower. Please refer to the "Fee Table" section of your prospectus.)
<PAGE>
The following information supplements "Appendix III--Description of Underlying
Funds" contained in the prospectus:
Aetna GET Fund (Series J)
INVESTMENT OBJECTIVE
Seeks to achieve maximum total return without compromising a minimum targeted
return (Targeted Return) by participating in favorable equity market
performance during the guarantee period, from September 14, 2000 through
September 13, 2005, the maturity date.
POLICIES
Prior to September 14, 2000, assets are invested entirely in short-term
instruments. After that date, assets are allocated between equities and fixed
income securities. Equities consist primarily of common stocks. Fixed income
securities consist primarily of short- to intermediate-duration U.S. Government
securities and may also consist of mortgage backed securities and corporate
obligations. The investment adviser uses a proprietary computer model to
determine the percentage of assets to allocate between the fixed and the equity
components. As the value of the equity component declines, more assets are
allocated to the fixed component.
RISKS
The principal risks of investing in Series J are those generally attributable
to stock and bond investing. The success of Series J's strategy depends on the
investment adviser's skill in allocating assets between the equity and fixed
components and in selecting investments within each component. Because Series J
invests in both stocks and bonds, it may underperform stock funds when stocks
are in favor and underperform bond funds when bonds are in favor. The risks
associated with investing in stocks include sudden and unpredictable drops in
the value of the market as a whole and periods of lackluster or negative
performance. The principal risk associated with investing in bonds is that
interest rates may rise, which generally causes bond prices to fall. If at the
inception of, or any time during, the guarantee period interest rates are low,
Series J assets may be largely invested in the fixed component in order to
increase the likelihood of achieving the Targeted Return at the maturity date.
The effect of low interest rates on Series J would likely be more pronounced at
the beginning of the guarantee period as the initial allocation of assets would
include more fixed income securities. In addition, if during the guarantee
period the equity markets experienced a major decline, Series J assets may
become largely invested in the fixed component in order to increase the
likelihood of achieving the Targeted Return at the maturity date. Use of the
fixed component reduces Series J's ability to participate as fully in upward
equity market movements, and therefore represents some loss of opportunity, or
opportunity cost, compared to a portfolio that is fully invested in equities.
Investment Adviser: Aeltus Investment Management, Inc.
X.GETJXXXXX-00 _____ 2000
<PAGE>
VARIABLE ANNUITY ACCOUNT B
Aetna Life Insurance and Annuity Company
Supplement Dated _________, 2000
to _________, 2000 Prospectus
GENERAL DESCRIPTION OF GET K
Series K of the Aetna GET Fund (GET K) is an investment option that may be
available during the accumulation phase of the contract. Aetna Life Insurance
and Annuity Company (the Company, we, our) makes a guarantee, as described
below, when you direct money into GET K. Aeltus Investment Management, Inc.
serves as investment adviser to GET K.
We will offer GET K shares only during its offering period, which is scheduled
to run from September 14, 2000 through the close of business on December 13,
2000. GET K may not be available under your contract, your plan or in your
state. Please read the GET K prospectus for a more complete description of GET
K, including its charges and expenses.
INVESTMENT OBJECTIVE OF GET K
GET K seeks to achieve maximum total return, without compromising a minimum
targeted return, by participating in favorable equity market performance during
the guarantee period.
GET K's guarantee period runs from December 14, 2000 through December 13, 2005.
During the offering period, all GET K assets will be invested in short-term
instruments, and during the guarantee period will be invested in a combination
of fixed income and equity securities.
THE GET FUND GUARANTEE
The guarantee period for GET K will end on December 13, 2005 which is GET K's
maturity date. The Company guarantees that the value of an accumulation unit of
the GET K subaccount under the contract on the maturity date (as valued after
the close of business on December 13, 2005) will not be less than its value as
determined after the close of business on the last day of the offering period.
If the value on the maturity date is lower than it was on the last day of the
offering period, we will transfer funds from our general account to the GET K
subaccount to make up the difference. This means that if you remain invested in
GET K until the maturity date, at the maturity date you will receive no less
than the value of your separate account investment directed to GET K as of the
last day of the offering period, less any maintenance fees or any amounts you
transfer or withdraw from the GET K subaccount. The value of dividends and
distributions made by GET K throughout the guarantee period is taken into
account in determining whether, for purposes of the guarantee, the value of your
GET K investment on the maturity date is no less than its value as of the last
day of the offering period. The guarantee does not promise that you will earn
the fund's minimum targeted return referred to in the investment objective.
If you withdraw or transfer funds from GET K before the maturity date, we will
process the transactions at the actual unit value next determined after we
receive your order. The guarantee will not apply to these amounts or to amounts
deducted as a maintenance fee, if applicable.
MATURITY DATE
Before the maturity date, we will send a notice to each contract holder who has
amounts in GET K. This notice will remind you that the maturity date is
approaching and that you must choose other investment options for your GET K
amounts. If you do not make a choice, on the maturity date we will transfer your
GET K amounts to another available series of the GET Fund that is accepting
deposits. If no GET Fund series is available, we will transfer your GET K
amounts to the fund or funds designated by the Company.
X.GETKXXXXX-00 _____ 2000
<PAGE>
The following information supplements the "Fee Table" contained in the
prospectus:
MAXIMUM FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT
In addition to the amounts currently listed under the heading "Fee Table" in
the prospectus, we will make a daily deduction of a GET K Guarantee Charge,
equal on an annual basis to the percentage shown below, from the amounts
allocated to the GET K investment option:
<TABLE>
<S> <C>
GET K Guarantee Charge (deducted daily during the Guarantee Period) ..... 0.50%
Maximum Total Separate Account Expenses .................................. 2.20%(1)
</TABLE>
(1) The total separate account expenses that apply to your contract may be
lower. Please refer to the "Fee Table" section of your prospectus.
The following information supplements the "Fund Expense Table" contained in the
prospectus:
Aetna GET Fund Series K Annual Expenses
(As a percentage of the average net assets)
<TABLE>
<CAPTION>
Investment Total Fund Annual Expenses
Advisory Fees(2) Other Expenses(3) (after expense reimbursement)(4)
---------------- ----------------- --------------------------------
<S> <C> <C> <C>
Aetna GET Fund Series K 0.60% 0.15% 0.75%
</TABLE>
For more information regarding expenses paid out of assets of the fund, see the
GET K prospectus.
- -----------------------
(2) The Investment Advisory Fee will be 0.25% during the offering period and
0.60% during the guarantee period.
(3) "Other Expenses" include an annual fund administrative fee of 0.075% of
the average daily net assets of GET K and any additional direct fund
expenses.
(4) The investment adviser is contractually obligated through GET K's maturity
date to waive all or a portion of its investment advisory fee and/or its
administrative fee and/or to reimburse a portion of the fund's other
expenses in order to ensure that GET K's Total Fund Annual Expenses do not
exceed 0.75% of the fund's average daily net assets. It is not expected that
GET K's actual expenses without this waiver or reimbursement will exceed
this amount.
<PAGE>
The following information supplements the "Hypothetical Examples" contained in
the prospectus.
HYPOTHETICAL EXAMPLE--AETNA GET FUND SERIES K
Account Fees You May Incur Over Time. The following hypothetical example shows
the fees and expenses paid over time if you invest $1,000 in the GET K
investment option under the contract (until GET K's maturity date) and assume a
5% annual return on the investment.(5)
> THIS EXAMPLE IS PURELY
HYPOTHETICAL.
> IT SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR EXPECTED
RETURNS.
> ACTUAL EXPENSES AND/OR
RETURNS MAY BE MORE OR LESS
THAN THOSE SHOWN BELOW.
<TABLE>
<CAPTION>
At the end of the periods shown you would have paid
the following expenses.
1 Year 2 Years 5 Years
-------- --------- --------
<S> <C> <C> <C>
Aetna GET Fund Series K
</TABLE>
- -----------------------
(5) The example shown above reflects an annual mortality and expense risk
charge of 1.55%, an annual contract administrative expense charge of 0.15%,
an annual GET K guarantee charge of 0.50% and all charges and expenses of
the GET K Fund. (The expenses that you would pay under your contract may be
lower. Please refer to the "Fee Table" section of your prospectus.)
<PAGE>
The following information supplements "Appendix III--Description of Underlying
Funds" contained in the prospectus:
Aetna GET Fund (Series K)
INVESTMENT OBJECTIVE
Seeks to achieve maximum total return without compromising a minimum targeted
return (Targeted Return) by participating in favorable equity market performance
during the guarantee period, from December 14, 2000 through December 13, 2005,
the maturity date.
POLICIES
Prior to December 14, 2000, assets are invested entirely in short-term
instruments. After that date, assets are allocated between equities and fixed
income securities. Equities consist primarily of common stocks. Fixed income
securities consist primarily of short- to intermediate-duration U.S. Government
securities and may also consist of mortgage backed securities and corporate
obligations. The investment adviser uses a proprietary computer model to
determine the percentage of assets to allocate between the fixed and the equity
components. As the value of the equity component declines, more assets are
allocated to the fixed component.
RISKS
The principal risks of investing in Series K are those generally attributable to
stock and bond investing. The success of Series K's strategy depends on the
investment adviser's skill in allocating assets between the equity and fixed
components and in selecting investments within each component. Because Series K
invests in both stocks and bonds, it may underperform stock funds when stocks
are in favor and underperform bond funds when bonds are in favor. The risks
associated with investing in stocks include sudden and unpredictable drops in
the value of the market as a whole and periods of lackluster or negative
performance. The principal risk associated with investing in bonds is that
interest rates may rise, which generally causes bond prices to fall. If at the
inception of, or any time during, the guarantee period interest rates are low,
Series K assets may be largely invested in the fixed component in order to
increase the likelihood of achieving the Targeted Return at the maturity date.
The effect of low interest rates on Series K would likely be more pronounced at
the beginning of the guarantee period as the initial allocation of assets would
include more fixed income securities. In addition, if during the guarantee
period the equity markets experienced a major decline, Series K assets may
become largely invested in the fixed component in order to increase the
likelihood of achieving the Targeted Return at the maturity date. Use of the
fixed component reduces Series K's ability to participate as fully in upward
equity market movements, and therefore represents some loss of opportunity, or
opportunity cost, compared to a portfolio that is fully invested in equities.
Investment Adviser: Aeltus Investment Management, Inc.
X.GETKXXXXX-00 _____ 2000
<PAGE>
Contract Prospectus _______________, 2000
- --------------------------------------------------------------------------------
The Funds
o Aetna Balanced VP, Inc.
o Aetna Income Shares d/b/a Aetna Bond VP
o Aetna Growth VP
o Aetna Variable Fund d/b/a Aetna Growth and Income VP
o Aetna Index Plus Large Cap VP
o Aetna International VP
o Aetna Variable Encore Fund d/b/a Aetna Money Market VP
o Aetna Small Company VP
o Aetna Technology VP
o AIM V.I. Capital Appreciation Fund
o AIM V.I. Government Securities Fund
o AIM V.I. Growth Fund
o AIM V.I. Growth and Income Fund
o AIM V.I. Value Fund
o Alliance Variable Products--Growth and Income Portfolio
o Alliance Variable Products--Premier Growth Portfolio
o Fidelity Variable Insurance Products Fund (VIP) Equity-Income Portfolio
o Fidelity Variable Insurance Products Fund (VIP) Growth Portfolio
o Fidelity Variable Insurance Products Fund (VIP) High Income Portfolio
o Fidelity Variable Insurance Products Fund II (VIP II) Contrafund[RegTM]
Portfolio
o Janus Aspen Aggressive Growth Portfolio
o Janus Aspen Balanced Portfolio
o Janus Aspen Growth Portfolio
o Janus Aspen Worldwide Growth Portfolio
o MFS Total Return Series
o [Mitchell Hutchins Series Trust Growth and Income Portfolio]
o [Mitchell Hutchins Series Trust Small Cap Portfolio]
o [Mitchell Hutchins Series Trust Tactical Allocation Portfolio]
o Oppenheimer Aggressive Growth Fund/VA
o Oppenheimer Main Street Growth & Income Fund/VA
o Oppenheimer Strategic Bond Fund/VA
o Portfolio Partners, Inc. (PPI) MFS Capital Opportunities Portfolio
(formerly PPI MFS Value Equity Portfolio)
o Portfolio Partners, Inc. (PPI) MFS Emerging Equities Portfolio
o Portfolio Partners, Inc. (PPI) MFS Research Growth Portfolio
o Portfolio Partners, Inc. (PPI) Scudder International Growth Portfolio
The Contract. The contract described in this prospectus is a group or individual
deferred variable annuity contract issued by Aetna Life Insurance and Annuity
Company (the Company, we, us). It is issued to you, the contract holder, as
either a qualified Individual Retirement Annuity (IRA), a qualified Roth IRA, a
qualified contract under certain employer sponsored retirement plans or as a
nonqualified deferred annuity contract.
- --------------------------------------------------------------------------------
Why Reading this Prospectus Is Important. This prospectus contains facts about
the contract and its investment options you should know before purchasing. This
information will help you decide if the contract is right for you. Please read
this prospectus carefully.
Table of Contents . . . page 3
- --------------------------------------------------------------------------------
Investment Options. The contract offers variable investment options and fixed
interest options. When we establish your account you instruct us to direct
account dollars to any of the available options.
Variable Investment Options. These options are called subaccounts. The
subaccounts are within Variable Annuity Account B (the separate account), a
separate account of the Company. Each subaccount invests in one of the mutual
funds listed on this page. Earnings on amounts invested in a subaccount will
vary depending upon the performance of its underlying fund. You do not invest
directly in or hold shares of the funds.
Risks Associated with Investing in the Funds. The funds in which the subaccounts
invest have various risks. Information about the risks of investing in the funds
is located in the "Investment Options" section on page 11, in Appendix III--
Description of Underlying Funds and in each fund prospectus. Read this
prospectus in conjunction with the fund prospectuses, and retain the
prospectuses for future reference.
Getting Additional Information. You may obtain the , 2000, Statement of
Additional Information (SAI) about the separate account by indicating your
request on your application or calling us at 1-800-238-6219. You may also obtain
an SAI for any of the funds by calling that number. The SEC also makes available
to the public reports and information about the separate account and the funds.
Certain reports and information, including this prospectus and SAI, are
available on the EDGAR Database on the Securities and Exchange Commission (SEC)
web site, www.sec.gov, or at the SEC Public Reference Room in Washington, D.C.
You may call 1-202-942-8090 to get information about the operations of the
Public Reference Room. You may obtain copies of reports and other information
about the separate account and the funds, after paying a duplicating fee, by
sending an e-mail request to [email protected] or by writing to the SEC Public
Reference Section, Washington, D.C. 20549-0102. The SAI table of contents is
listed on page 48 of this prospectus. The SAI is incorporated into this
prospectus by reference.
Additional Disclosure Information. Neither the SEC nor any state securities
commission has approved or disapproved the securities offered through this
prospectus or passed on the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense. We do not intend for this
prospectus to be an offer to sell or a solicitation of an offer to buy these
securities in any state that does not permit their sale. We have not authorized
anyone to provide you with information that is different than that contained in
this prospectus.
<PAGE>
Prospectus __________________, 2000 (continued)
- --------------------------------------------------------------------------------
Fixed Interest Options.
> ALIAC Guaranteed Account (the Guaranteed Account)
> Fixed Account
Except as specifically mentioned, this prospectus describes only the investment
options offered through the separate account. However, we describe the fixed
interest options in appendices to this prospectus. There is also a separate
Guaranteed Account prospectus.
Availability of Options. Some variable investment options or fixed interest
options may be unavailable through your contract or in your state.
The contract is not a deposit with, obligation of or guaranteed or endorsed by
any bank, nor is it insured by the FDIC. The contract is subject to investment
risk, including the possible loss of the principal amount of your investment.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Contract Overview ........................................................... 4
Contract Design
Contract Facts
Questions: Contacting the Company
Sending Forms and Written Requests in Good Order
Sending Additional Purchase Payments
Contract Phases: The Accumulation Phase, The Income Phase
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Fee Table ................................................................... 7
Condensed Financial Information ............................................. 11
Investment Options .......................................................... 11
Transfers Among Investment Options .......................................... 13
Purchase and Rights ......................................................... 15
Right to Cancel ............................................................. 17
Transfers Between Death Benefit Options ..................................... 18
Fees ........................................................................ 19
Your Account Value .......................................................... 21
Withdrawals ................................................................. 24
Systematic Distribution Options ............................................. 26
Death Benefit ............................................................... 27
The Income Phase ............................................................ 31
Taxation .................................................................... 35
Other Topics ................................................................ 43
</TABLE>
The Company -- Variable Annuity Account B -- Contract Distribution -- Payment of
Commissions -- Payment Delay or Suspension -- Performance Reporting -- Voting
Rights -- Contract Modifications -- Transfer of Ownership: Assignment --
Involuntary Terminations -- Legal Matters and Proceedings
<TABLE>
<S> <C>
Contents of the Statement of Additional Information ......................... 48
Appendix I -- ALIAC Guaranteed Account ...................................... 49
Appendix II -- Fixed Account ................................................ 52
Appendix III -- Description of Underlying Funds ............................. 53
</TABLE>
3
<PAGE>
Questions: Contacting the Company. To answer your questions, contact your sales
representative or write or call our Home Office at:
Aetna Financial Services
Annuity Services
151 Farmington Avenue
Hartford, CT 06156-1258
1-800-238-6219
Sending Forms and Written Requests in Good Order.
If you are writing to change your beneficiary, request a withdrawal or for any
other purpose, contact us or your sales representative to learn what information
is required for the request to be in "good order." We can only act upon requests
that are received in good order.
Sending Additional Purchase Payments.
Use one of the following addresses when sending additional purchase payments.
If using the U.S. Postal Service:
ALIAC
Attn: New Business Unit
P.O. Box 30670
Hartford, CT 06150-0670
If using express mail:
Fleet Bank/ALIAC #30670
Lockbox CT/EH F03E
99 Founders Plaza, 3rd Floor East
Hartford, CT 06108
Express mail packages should not be sent to the P.O. Box address.
Contract Overview
- --------------------------------------------------------------------------------
The following is intended as a summary. Please read each section of this
prospectus for additional detail.
Contract Design
The contract described in this prospectus is a group or individual deferred
variable annuity contract. It is intended to be a retirement savings vehicle
that offers a variety of investment options to help meet long-term financial
goals. The term "contract" in this prospectus refers to individual contracts and
to certificates issued under group contracts.
Contract Facts
Death Benefit Options. There are two death benefit options available under the
contract. You select an option at the time of application. Each death benefit
option is distinct. The differences are summarized as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Death Benefit Option I Death Benefit Option II(1)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Mortality and
Expense Risk 1.35% 1.55%
Charge(2):
- ---------------------------------------------------------------------------------------
Death Benefit(3) The greater of: The greater of:
on Death of the (1) The sum of all purchase (1) The sum of all purchase
Annuitant(4): payments, adjusted for payments, adjusted for
amounts withdrawn or amounts withdrawn or
applied to an income phase applied to an income phase
payment option as of the payment option as of the
claim date; or claim date; or
(2) The account value on the (2) The account value on the
claim date. claim date.
(3) The "step-up value" on the
claim date.
- ---------------------------------------------------------------------------------------
Minimum Initial $25,000 $25,000
Purchase
Payment(5):
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Death Benefit Option II may not be available under all contracts. See
"Death Benefit."
(2) See "Fee Table" and "Fees."
(3) See "Death Benefit."
(4) When a contract holder who is not the annuitant dies, the amount of the
death benefit is not the same as shown above. See "Death Benefit."
(5) See "Purchase and Rights."
Transferability. You may transfer from one death benefit option to another.
> Transfers must occur on an account anniversary.
> A written request for the transfer must be received by us within 60 days
before an account anniversary.
See "Transfers Between Death Benefit Options."
4
<PAGE>
Free Look/Right to Cancel. You may cancel your contract within ten days (some
states require more than ten days) of receipt. See "Right to Cancel."
Death Benefit. Your beneficiary may receive a financial benefit in the event of
your death prior to the income phase. The amount of the death benefit will
depend upon the death benefit option selected. Each death benefit option has a
different mortality and expense risk charge. See "Fees" and "Death Benefit."
Any death benefit during the income phase will depend upon the income phase
payment option selected. See "The Income Phase."
Withdrawals. During the accumulation phase, you may withdraw all or part of
your account value. Certain fees and taxes may apply. In addition, the Internal
Revenue Code of 1986, as amended (Tax Code), restricts full and partial
withdrawals in some circumstances. See "Withdrawals." Amounts withdrawn from
the Guaranteed Account may be subject to a market value adjustment. See
Appendix I.
Systematic Distribution Options. These are made available for you to receive
periodic withdrawals from your account, while retaining the account in the
accumulation phase. See "Systematic Distribution Options."
Fees and Expenses. Certain fees and expenses are deducted from the value of
your contract. See "Fee Table" and "Fees."
Taxation. You will generally not pay taxes on any earnings from the annuity
contract described in this prospectus until they are withdrawn. Tax-qualified
retirement arrangements (e.g. IRAs or 403(b) plans) also defer payment of taxes
on earnings until they are withdrawn. If you are considering funding a
tax-qualified retirement arrangement with an annuity contract, you should know
that the annuity contract does not provide any additional tax deferral of
earnings beyond the tax deferral provided by the tax-qualified retirement
arrangement. However, annuities do provide other features and benefits which may
be valuable to you. You should discuss your decision with your financial
representative.
Taxes will generally be due when you receive a distribution. Tax penalties may
apply in some circumstances. See "Taxation."
5
<PAGE>
[begin graphic]
Payments to Your Account
Step 1 (down arrow)
Aetna Life Insurance and Annuity Company
(a) (down arrow) Step 2 (b) (down arrow)
Variable Annuity
Fixed Account B
Interest
Opitons Variable Investment Options
The Subaccounts
A B Etc.
(down arrow) Step 3 (down arrow)
Mutual Mutual
Fund A Fund B
[end graphic]
- --------------------------------------------------------------------------------
Contract Phases
- --------------------------------------------------------------------------------
I. The Accumulation Phase (accumulating dollars under your contract)
STEP 1: You provide us with your completed application and initial purchase
payment. We establish an account for you and credit that account with your
initial purchase payment.
STEP 2: You direct us to invest your purchase payment in one
or more of the following investment options:
(a) Fixed Interest Options; or
(b) Variable Investment Options. (The variable investment
options are the subaccounts of Variable Annuity Account B.
Each one invests in a specific mutual fund.)
STEP 3: Each subaccount you select purchases shares of its
assigned fund.
II. The Income Phase (receiving income phase payments from
your contract)
When you want to begin receiving payments from your contract,
you may select from the options available. The contract offers
several income phase payment options (see "The Income Phase").
In general, you may:
> Receive income phase payments for a specified period of time
or for life;
> Receive income phase payments monthly, quarterly, semi-
annually or annually;
> Select an income phase payment option that provides for
payments to your beneficiary; or
> Select income phase payments that are fixed or vary
depending upon the performance of the variable investment
options you select.
6
<PAGE>
In this Section:
> Maximum Transaction Fee
> Maximum Fees Deducted from Investments in the Separate Account
> Fees Deducted by the Funds
> Hypothetical Example
Also see the "Fees" section for:
> How, When and Why Fees are Deducted
> Reduction, Waiver and/or Elimination of Certain Fees
> Premium and Other Taxes
- --------------------------------------------------------------------------------
Fee Table
- --------------------------------------------------------------------------------
The tables and examples in this section show the fees that may affect your
account value during the accumulation phase. See "The Income Phase" for fees
that may apply after you begin receiving income phase payments under the
contract. The fees shown do not reflect any premium tax that may apply.
Maximum Transaction Fee
Transfer Charge........................................................$0.00(1)
Maximum Fees Deducted from Investments in the Separate Account(2)
(Daily deductions, equal to the following percentages on an annual basis, from
amounts invested in the subaccounts.)
> Death Benefit Option I--
<TABLE>
<S> <C>
Mortality and Expense Risk Charge 1.35%
Administrative Expense Charge 0.15%
----
Total Separate Account Expenses 1.50%
</TABLE>
> Death Benefit Option II--
<TABLE>
<S> <C>
Mortality and Expense Risk Charge 1.55%
Administrative Expense Charge 0.15%
----
Total Separate Account Expenses 1.70%
</TABLE>
(1) During the accumulation phase, we currently allow you 12 free transfers
each account year. We reserve the right to charge $10 for each additional
transfer. We currently do not impose this charge. See "Transfers" for
additional information.
(2) These fees may be reduced or eliminated in certain circumstances.
See "Fees--Reduction or Elimination of Certain Fees."
7
<PAGE>
Fees Deducted by the Funds
Using this information. The following table shows the investment advisory fees
and other expenses charged annually by each fund. Fund fees are one factor that
impacts the value of a fund share. To learn about additional factors impacting
the share value, refer to the fund prospectus.
How fees are deducted. The fund fees are not deducted from account values.
Instead, they are deducted from the value of the fund shares on a daily basis,
which in turn affects the value of each subaccount that purchases fund shares.
Except as noted below, the following figures are a percentage of the average net
assets of each fund and are based on figures for the year ended December 31,
1999.
Fund Expense Table
<TABLE>
<CAPTION>
Total Fund Net Fund
Annual Annual
Expenses Total Expenses
Investment Without Waivers After
Advisory Other Waivers or and Waivers or
Fund Name Fees(1) Expenses Reductions Reductions Reductions
- ----------------------------------------------------- ------------ ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Aetna Balanced VP, Inc. 0.50% 0.09% 0.59% -- 0.59%
Aetna Bond VP 0.40% 0.09% 0.49% -- 0.49%
Aetna Growth VP(2) 0.60% 0.11% 0.71% 0.00% 0.71%
Aetna Growth and Income VP 0.50% 0.08% 0.58% -- 0.58%
Aetna Index Plus Large Cap VP(2) 0.35% 0.10% 0.45% 0.00% 0.45%
Aetna International VP(2) 0.85% 0.77% 1.62% 0.47% 1.15%
Aetna Money Market VP 0.25% 0.09% 0.34% -- 0.34%
Aetna Small Company VP(2) 0.75% 0.13% 0.88% 0.00% 0.88%
Aetna Technology VP(2)(3) 0.95% 0.25% 1.20% 0.05% 1.15%
AIM V.I. Capital Appreciation Fund 0.62% 0.11% 0.73% -- 0.73%
AIM V.I. Government Securities Fund 0.50% 0.40% 0.90% -- 0.90%
AIM V.I. Growth Fund 0.63% 0.10% 0.73% -- 0.73%
AIM V.I. Growth and Income Fund 0.61% 0.16% 0.77% -- 0.77%
AIM V.I. Value Fund 0.61% 0.15% 0.76% -- 0.76%
Alliance Growth and Income Portfolio 0.63% 0.08% 0.71% -- 0.71%
Alliance Premier Growth Portfolio 1.00% 0.05% 1.05% -- 1.05%
Fidelity VIP Equity-Income Portfolio(4) 0.48% 0.09% 0.57% -- 0.57%
Fidelity VIP Growth Portfolio(4) 0.58% 0.08% 0.66% -- 0.66%
Fidelity VIP High Income Portfolio(4) 0.58% 0.11% 0.69% -- 0.69%
Fidelity VIP II Contrafund[RegTM] Portfolio(4) 0.58% 0.09% 0.67% -- 0.67%
Janus Aspen Aggressive Growth Portfolio(5) 0.65% 0.02% 0.67% 0.00% 0.67%
Janus Aspen Balanced Portfolio(5) 0.65% 0.02% 0.67% 0.00% 0.67%
Janus Aspen Growth Portfolio(5) 0.65% 0.02% 0.67% 0.00% 0.67%
Janus Aspen Worldwide Growth Portfolio(5) 0.65% 0.05% 0.70% 0.00% 0.70%
MFS Total Return Series(6) 0.75% 0.15% 0.90% 0.00% 0.90%
[Mitchell Hutchins Growth and Income Portfolio(8) 0.70% 0.78% 1.48% -- 1.48%]
[Mitchell Hutchins Small Cap Portfolio(8) 1.00% 3.05% 4.05% -- 4.05%]
[Mitchell Hutchins Tactical Allocation Portfolio(8) 0.50% 0.49% 0.99% -- 0.99%]
Oppenheimer Aggressive Growth Fund/VA 0.66% 0.01% 0.67% -- 0.67%
Oppenheimer Main Street Growth & Income Fund/VA 0.73% 0.05% 0.78% -- 0.78%
Oppenheimer Strategic Bond Fund/VA 0.74% 0.04% 0.78% -- 0.78%
PPI MFS Capital Opportunities Portfolio(7) 0.65% 0.25% 0.90% 0.00% 0.90%
PPI MFS Emerging Equities Portfolio(7) 0.67% 0.13% 0.80% 0.00% 0.80%
PPI MFS Research Growth Portfolio(7) 0.70% 0.15% 0.85% 0.00% 0.85%
PPI Scudder International Growth Portfolio(7) 0.80% 0.20% 1.00% 0.00% 1.00%
</TABLE>
Footnotes to the "Fund Expense Table"
(1) Certain of the 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 generally paid out of
the Investment Advisory Fees and are not charged to investors. For the AIM
Funds, the reimbursements may be paid out of fund assets in an amount up to
0.25% annually. Any such reimbursements paid from the AIM Funds' assets are
included in the "Other Expenses" column.
8
<PAGE>
(2) The investment adviser is contractually obligated through December 31, 2000
to waive all or a portion of its investment advisory fee and/or its
administrative services fee and/or to reimburse a portion of other expenses
in order to ensure that the fund's "Total Fund Annual Expenses Without
Waivers or Reductions" do not exceed the percentage reflected under "Net
Fund Annual Expenses After Waivers or Reductions."
(3) Aetna Technology VP commenced operations on May 1, 2000. Amounts reflected
in "Other Expenses" and "Total Fund Annual Expenses Without Waivers or
Reductions" are estimated amounts for the current fiscal year based on
expenses for comparable funds. Actual expenses may vary from those shown.
(4) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain
funds', or the investment adviser on behalf of certain funds', custodian,
credits realized as a result of uninvested cash balances were used to
reduce a portion of each applicable fund's expenses. These credits are not
included under Total Waivers and Reductions. If these credits had been
included, the amounts shown under Net Fund Annual Expenses After Waivers or
Reductions presented in the table would have been 0.56% for Fidelity VIP
Equity-Income Portfolio; 0.65% for Fidelity VIP Growth Portfolio; and 0.65%
for Fidelity VIP II Contrafund[RegTM] Portfolio.
(5) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Aggressive
Growth, Balanced, Growth and Worldwide Growth Portfolios. All expenses are
shown without the effect of expense offset arrangements.
(6) The series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series with
its custodian and dividend disbursing agent. The series may enter into
other such arrangements and directed brokerage arrangements, which would
also have the effect of reducing the series' expenses. The "Other Expenses"
shown above do not take into account these expense reductions, and are
therefore higher than the actual expenses of the series. Had these fee
reductions been taken into account, Net Fund Annual Expenses After Waivers
or Reductions would be lower and would equal 0.89% for the series.
(7) The investment adviser has agreed to reimburse the portfolios for expenses
and/or waive its fees, so that, through at least April 30, 2001, the
aggregate of each portfolio's expenses will not exceed the combined
investment advisory fees and other expenses shown under the Net Fund Annual
Expenses After Waivers or Reductions column above.
(8) [The "Other Expenses" include an annual 0.25% fee imposed under a
distribution plan pursuant to Rule 12b-1 under the Investment Company Act
of 1940. This plan provides that each portfolio pays to the distributor of
the portfolios a distribution fee at an annual rate of 0.25% of its average
daily net assets attributable to its Class I shares. The distributor of the
portfolios uses the distribution fee to pay insurance companies whose
separate accounts purchase Class I shares for distribution-related services
that the insurance companies provide with respect to the Class I shares.]
9
<PAGE>
Hypothetical Example
Account Fees You May Incur Over Time. The following hypothetical example shows
the fees and expenses paid over time if you invest $1,000 in the contract and
assume a 5% annual return on the investment. For the purpose of this example, we
deducted total annual fund expenses and the maximum charges under the contract
(i.e., a mortality and expense risk charge of 1.55% annually for Death Benefit
Option II and an administrative expense charge of 0.15% annually. The total
annual fund expenses used are those shown in the column "Total Fund Annual
Expenses Without Waivers or Reductions" in the Fund Expense Table.
- -----------------------------------------
> This example is purely hypothetical.
> It should not be considered a
representation of past or future
expenses or expected returns.
> Actual expenses and/or returns may
be more or less than those shown in
this example.
- -----------------------------------------
<TABLE>
<CAPTION>
At the end of the periods shown you
would have paid the following expenses:
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Aetna Balanced VP, Inc. $ $ $ $
Aetna Bond VP $ $ $ $
Aetna Growth VP $ $ $ $
Aetna Growth and Income VP $ $ $ $
Aetna Index Plus Large Cap VP $ $ $ $
Aetna International VP $ $ $ $
Aetna Money Market VP $ $ $ $
Aetna Small Company VP $ $ $ $
Aetna Technology VP $ $ $ $
AIM V.I. Capital Appreciation Fund $ $ $ $
AIM V.I. Government Securities Fund $ $ $ $
AIM V.I. Growth Fund $ $ $ $
AIM V.I. Growth & Income Fund $ $ $ $
AIM V.I. Value Fund $ $ $ $
Alliance Growth and Income Portfolio $ $ $ $
Alliance Premier Growth Portfolio $ $ $ $
Fidelity VIP Equity-Income Portfolio $ $ $ $
Fidelity VIP Growth Portfolio $ $ $ $
Fidelity VIP High Income Portfolio $ $ $ $
Fidelity VIP II Contrafund[RegTM] Portfolio $ $ $ $
Janus Aspen Aggressive Growth Portfolio $ $ $ $
Janus Aspen Balanced Portfolio $ $ $ $
Janus Aspen Growth Portfolio $ $ $ $
Janus Aspen Worldwide Growth Portfolio $ $ $ $
MFS Total Return Series $ $ $ $
[Mitchell Hutchins Growth and Income Portfolio $ $ $ $ ]
[Mitchell Hutchins Small Cap Portfolio $ $ $ $ ]
[Mitchell Hutchins Tactical Allocation Portfolio $ $ $ $ ]
Oppenheimer Aggressive Growth Fund/VA $ $ $ $
Oppenheimer Main Street Growth & Income Fund/VA $ $ $ $
Oppenheimer Strategic Bond Fund/VA $ $ $ $
PPI MFS Capital Opportunities Portfolio $ $ $ $
PPI MFS Emerging Equities Portfolio $ $ $ $
PPI MFS Research Growth Portfolio $ $ $ $
PPI Scudder International Growth Portfolio $ $ $ $
</TABLE>
10
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
As of the date of this prospectus, we had not begun selling the contract and the
subaccounts did not have any assets attributable to the contract. Therefore, no
condensed financial information is presented herein.
Investment Options
- --------------------------------------------------------------------------------
The contract offers variable investment options and fixed interest options.
Variable Investment Options. These options are called subaccounts. The
subaccounts are within Variable Annuity Account B (the separate account), a
separate account of the Company. Each subaccount invests in a specific mutual
fund. You do not invest directly in or hold shares of the funds.
> Mutual Fund (fund) Descriptions. We provide brief descriptions of the funds
in Appendix III. Investment results of the funds are likely to differ
significantly and there is no assurance that any of the funds will achieve
their respective investment objectives. Shares of the funds will rise and
fall in value and you could lose money by investing in the funds. Shares of
the funds are not bank deposits and are not guaranteed, endorsed or insured
by any financial institution, the Federal Deposit Insurance Corporation or
any other government agency. Unless otherwise noted, all funds are
diversified as defined under the Investment Company Act of 1940. Refer to
the fund prospectuses for additional information. Fund prospectuses may be
obtained, free of charge, from our Home Office at the address and phone
number listed in "Contract Overview--Questions: Contacting the Company" or
by contacting the SEC Public Reference Room.
Fixed Interest Options. If available in your state, the ALIAC Guaranteed Account
(the Guaranteed Account) or the Fixed Account. The Guaranteed Account offers
certain guaranteed minimum interest rates for a stated period of time. Amounts
must remain in the Guaranteed Account for specific periods to receive the quoted
interest rates, or a market value adjustment will be applied. The market value
adjustment may be positive or negative. The Fixed Account guarantees payment of
the minimum interest rate specified in the contract. The Fixed Account is only
available in certain states. For a description of these options, see Appendices
I and II and the Guaranteed Account prospectus.
11
<PAGE>
- --------------------------------------------------------------------------------
Selecting Investment Options
o Choose options appropriate for you. Your sales representative can help you
evaluate which investment options may be appropriate for your financial
goals.
o Understand the risks associated with the options you choose. Some
subaccounts invest in funds that are considered riskier than others. Funds
with additional risks are expected to have values that rise and fall more
rapidly and to a greater degree than other funds. For example, funds
investing in foreign or international securities are subject to risks not
associated with domestic investments, and their investment performance may
vary accordingly. Also, funds using derivatives in their investment
strategy may be subject to additional risks.
o Be informed. Read this prospectus, the fund prospectuses, the Guaranteed
Account and Fixed Account appendices and the Guaranteed Account prospectus.
- --------------------------------------------------------------------------------
Limits on Availability of Options. Some funds or fixed interest options may be
unavailable through your contract or in your state. We may add, withdraw or
substitute funds, subject to the conditions in your contract and compliance with
regulatory requirements.
Limits on How Many Investment Options You May Select. Although there is
currently no limit, we reserve the right to limit the number of investment
options you may select at any one time or during the life of the contract. For
purposes of determining any limit, each subaccount and each guaranteed term of
the Guaranteed Account, or an investment in the Fixed Account in certain
contracts, will be considered an investment option.
Limits Imposed by the Underlying Fund. Orders for the purchase of fund shares
may be subject to acceptance by the fund. We reserve the right to reject,
without prior notice, any allocation of a purchase payment to a subaccount if
the subaccount's investment in the corresponding fund is not accepted by the
fund for any reason.
Additional Risks of Investing in the Funds (Mixed and Shared Funding).
"Shared funding" occurs when shares of a fund, which the subaccounts buy for
variable annuity contracts, are also bought by other insurance companies for
their variable annuity contracts.
"Mixed funding" occurs when shares of a fund, which the subaccounts buy for
variable annuity contracts, are bought for variable life insurance contracts
issued by us or other insurance companies.
> Shared--bought by more than one company.
> Mixed--bought for annuities and life insurance.
It is possible that a conflict of interest may arise due to mixed and/or shared
funding, which could adversely impact the value of a fund. For example, if a
conflict of interest occurred and one of the subaccounts withdrew its investment
in a fund, the fund may be forced to sell its securities at disadvantageous
prices, causing its share value to decrease. Each fund's Board of Directors or
Trustees will monitor events to identify any conflicts which may arise and to
determine what action, if any, should be taken to address such conflicts.
12
<PAGE>
Transfers Among Investment Options
- --------------------------------------------------------------------------------
You may transfer amounts among the available subaccounts. During the
accumulation phase, we allow you 12 free transfers each account year. We reserve
the right to charge $10 for each additional transfer. We currently do not impose
this charge. During the income phase, if approved in your state, transfers are
limited to 12 each account year and allowed only if you select variable income
phase payments. We reserve the right to allow more than 12 transfers each
account year.
Transfers from the Guaranteed Account are subject to certain restrictions and
may be subject to a market value adjustment. Transfers from the Fixed Account
are subject to certain restrictions and transfers into the Fixed Account from
any of the other investment options are not allowed. Transfers must be made in
accordance with the terms of your contract.
Transfer Requests. Requests may be made in writing, by telephone or, where
applicable, electronically.
Limits on Frequent Transfers. The contract is not designed to serve as a vehicle
for frequent trading in response to short-term fluctuations in the market. Such
frequent trading can disrupt management of a fund and raise its expenses. This
in turn can have an adverse effect on fund performance. Accordingly,
organizations or individuals that use market-timing investment strategies and
make frequent transfers should not purchase the contract.
We reserve the right to restrict, in our sole discretion and without prior
notice, transfers initiated by a market-timing organization or an individual or
other party authorized to give transfer instructions on behalf of multiple
contract holders. Such restrictions could include: (1) not accepting transfer
instructions from an agent acting on behalf of more than one contract holder;
and (2) not accepting preauthorized transfer forms from market timers or other
entities acting on behalf of more than one contract holder at a time.
We further reserve the right to impose, without prior notice, restrictions on
transfers that we determine, in our sole discretion, will disadvantage or
potentially hurt the rights or interests of other contract holders.
Additionally, orders for the purchase of fund shares may be subject to
acceptance by the fund. We reserve the right to reject, without prior notice,
any transfer request to a subaccount if the subaccount's investment in the
corresponding fund is not accepted for any reason.
Value of Your Transferred Dollars. The value of amounts transferred into or out
of subaccounts will be based on the subaccount unit values next determined after
we receive your transfer request in good order at our Home Office or, if you are
participating in the dollar cost averaging or account rebalancing programs,
after your scheduled transfer or reallocation.
Telephone and Electronic Transactions: Security Measures. To prevent fraudulent
use of telephone and electronic transactions (including, but not limited to,
internet transactions), we have established security procedures. These include
recording calls on our toll-free telephone lines and requiring use of a personal
identification number (PIN) to execute transactions. You are responsible for
keeping your PIN and account information confidential. If we fail to follow
reasonable security procedures, we may be liable for losses due to unauthorized
or fraudulent telephone or other electronic transactions. We are
13
<PAGE>
not liable for losses resulting from telephone or electronic instructions we
believe to be genuine. If a loss occurs when we rely on such instructions, you
will bear the loss.
The Dollar Cost Averaging Program. Dollar cost averaging is an investment
strategy whereby you purchase fixed dollar amounts of an investment at regular
intervals, regardless of price. Under this program a fixed dollar amount is
automatically transferred from certain subaccounts, the Guaranteed Account or
Fixed Account to any of the other subaccounts. A market value adjustment will
not be applied to dollar cost averaging transfers from a guaranteed term of the
Guaranteed Account during participation in the dollar cost averaging program. If
such participation is discontinued, we will automatically transfer the remaining
balance in that guaranteed term to another guaranteed term of the same duration,
unless you initiate a transfer into another investment option. In either case a
market value adjustment will apply. See Appendix I for more information about
dollar cost averaging from the Guaranteed Account. If dollar cost averaging is
stopped with respect to amounts invested in the Fixed Account, the remaining
balance will be transferred to the money market subaccount.
Dollar cost averaging neither ensures a profit nor guarantees against loss in a
declining market. You should consider your financial ability to continue
purchases through periods of low price levels. There is no additional charge for
this program and transfers made under this program do not count as transfers
when determining the number of free transfers that may be made each calendar
year. For additional information about this program, contact your sales
representative or call us at the number listed in "Contract Overview--Questions:
Contacting the Company."
In certain states purchase payments allocated to the Fixed Account may require
participation in the dollar cost averaging program.
Dollar cost averaging is not available if you elect to participate in the
account rebalancing program.
The Account Rebalancing Program. Account rebalancing allows you to reallocate
your account value to match the investment allocations you originally selected.
Only account values invested in the subaccounts may be rebalanced. We
automatically reallocate your account value annually (or more frequently as we
allow). Account rebalancing neither ensures a profit nor guarantees against loss
in a declining market. There is no additional charge for this program and
transfers made under this program do not count as transfers when determining the
number of free transfers that may be made each calendar year. You may
participate in this program by completing the account rebalancing section of
your application or by contacting us at the address and/or number listed in
"Contract Overview--Questions: Contacting the Company."
Account rebalancing is not available if you elect to participate in the dollar
cost averaging program.
14
<PAGE>
Purchase and Rights
- --------------------------------------------------------------------------------
How to Purchase.
> Individual Contracts. In some states, where group contracts are not
available, you may purchase the contract directly from us by completing an
application and delivering it and your initial purchase payment to us. Upon
our approval we will issue you a contract and set up an account for you
under the contract.
> Group Contracts. In most states we have distributors, usually
broker-dealers or banks, who hold the contract as a group contract (see
"Distribution"). You may purchase an interest (or, in other words,
participate) in the group contract by contacting a distributor and
completing an application and delivering it with your initial purchase
payment to that distributor. Upon our approval, we will set up an account
for you under the group contract and issue you a certificate showing your
rights under the contract.
> Joint Contracts (generally spouses). For a nonqualified contract, you may
participate in a group contract as a joint contract holder. References to
"contract holder" in this prospectus mean both contract holders under joint
contracts. Tax law prohibits the purchase of qualified contracts by joint
contract holders.
Maximum Issue Age. Unless otherwise restricted by state law, the maximum age
for you and the annuitant (if you are not the annuitant) on the date we
establish your account is 90.
Your Rights Under the Contract.
> Individual Contracts. You have all contract rights.
> Group Contracts. The holder of the group contract has title to the contract
and, generally, only the right to accept or reject any modifications to the
contract. You have all other rights to your account under the contract.
> Joint Contracts. Joint contract holders have equal rights under the
contract with respect to their account. All rights under the contract must
be exercised by both joint contract holders with the exception of transfers
among investment options. See the "Death Benefit" section for the rights of
the surviving joint contract holder upon the death of a joint contract
holder prior to the income phase start date.
Purchase Payment Methods. The following purchase payment methods are allowed:
> One lump sum;
> Periodic payments; or
> Transfer or rollover from a pre-existing retirement plan or account.
We reserve the right to reject any purchase payments to a prospective or
existing account without advance notice.
15
<PAGE>
Purchase Payment Amounts.
The minimum initial purchase payment amount is $25,000.
The Tax Code imposes a maximum limit on annual purchase payments to qualified
contracts which may be excluded from your gross income.
Additional purchase payments must be at least $50 (we may change this amount
from time to time). A purchase payment of more than $1,000,000 will be allowed
only with our consent.
Reduction of Purchase Payment Amounts. In certain circumstances we may reduce
the minimum initial or additional purchase payment amount we will accept under a
contract. Whether such a reduction is available will be based on consideration
of one or more of the following factors:
> The size and type of the prospective group, if any, to which the reduction
would apply;
> The method and frequency of purchase payments to be made under the
contract; and
> The amount of compensation to be paid to distributors and their registered
representative on each purchase payment.
Any reduction of the minimum initial or additional purchase payment amount will
not be unfairly discriminatory against any person. We will make any such
reduction according to our own rules in effect at the time the purchase payment
is received. We reserve the right to change these rules from time to time.
Acceptance or Rejection of Your Application. We must accept or reject your
application within two business days of receipt. If the application is
incomplete, we may hold any forms and accompanying purchase payment(s) for five
business days. We may hold purchase payments for longer periods, pending
acceptance of the application, only with your permission. If the application is
rejected, the application and any purchase payments will be returned to you.
Allocating Purchase Payments to the Investment Options. We will allocate your
purchase payments among the investment options you select. Allocations must be
in whole percentages and there may be limits on the number of investment options
you may select. When selecting investment options you may find it helpful to
review the "Investment Options" section.
16
<PAGE>
Right to Cancel
- --------------------------------------------------------------------------------
When and How to Cancel. You may cancel your contract within ten days of receipt
(some states require more than ten days) by returning it to our Home Office
along with a written notice of cancellation.
Refunds. We will issue you a refund within seven days of our receipt of your
contract and written notice of cancellation. Unless your state requires
otherwise or unless you purchased an IRA, your refund will equal the purchase
payments made plus any earnings or minus any losses attributable to those
purchase payments allocated among the subaccounts. In other words, you will bear
the entire investment risk for amounts allocated among the subaccounts during
this period and the amount refunded could be less than the amount paid. If your
state requires or if you purchased an IRA, we will refund all purchase payments
made.
If the purchase payments for your canceled contract came from a rollover from
another contract issued by us or one of our affiliates where an early withdrawal
charge was reduced or eliminated, the purchase payments will be restored to your
prior contract.
17
<PAGE>
Transfers Between Death Benefit Options
- --------------------------------------------------------------------------------
You may transfer from one death benefit option to another.
> Transfers must occur on an account anniversary.
> A written request for the transfer must be received by us within 60 days
before an account anniversary.
> You will receive a new contract schedule page upon transfer.
> Only one death benefit option may be in effect at any time.
<TABLE>
<CAPTION>
Transfers to Transfers to
Death Benefit Option I Death Benefit Option II
- ----------------------------------------- --------------------------------------
<S> <C>
If transferring to Death Benefit If transferring to Death Benefit
Option I(1): Option II(1):
o The sum of all purchase payments o The sum of all purchase payments
made, adjusted for amounts made, adjusted for amounts
withdrawn or applied to an income withdrawn or applied to an income
phase payment option as of the phase payment option as of the
claim date, will continue to be claim date, will continue to be
calculated from the account effective calculated from the account effective
date. date.
o The "step-up value" under Death o The "step-up value" will be
Benefit Option II will terminate on calculated beginning on the new
the new schedule effective date. schedule effective date.
</TABLE>
(1)See "Death Benefit."
18
<PAGE>
Types of Fees
There are four types of fees or deductions that may affect your account.
TRANSACTION FEE
o Transfer Charge
FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT
o Mortality and Expense Risk Charge
o Administrative Expense Charge
FEES DEDUCTED BY THE FUNDS
o Investment Advisory Fees
o Other Expenses
PREMIUM AND OTHER TAXES
Fees
- --------------------------------------------------------------------------------
The following repeats and adds to information provided in the "Fee Table"
section. Please review both sections for information on fees.
TRANSACTION FEE
Transfer Charge
Amount. During the accumulation phase we currently allow you 12 free transfers
each account year. We reserve the right to charge $10 for each additional
transfer. We currently do not impose this charge.
Purpose. This charge reimburses us for administrative expenses associated with
transferring your dollars among investment options.
FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT
Mortality and Expense Risk Charge
Maximum Amount. During the accumulation phase the amount of this charge depends
upon which death benefit option you select. The maximum amount of this charge,
on an annual basis, is equal to the following percentages of your account value
invested in the subaccounts:
<TABLE>
<CAPTION>
Death Benefit Option I Death Benefit Option II
- ------------------------ ------------------------
<S> <C>
1.35% 1.55%
</TABLE>
During the income phase this charge, on an annual basis, is equal to 1.25% of
amounts held in the subaccounts.
When/How. We deduct this charge daily from the subaccounts corresponding to the
funds you select. We do not deduct this charge from any fixed interest option.
Purpose. This charge compensates us for the mortality and expense risks we
assume under the contract.
> The mortality risks are those risks associated with our promises to pay the
death benefit available under the contract and to make lifetime income
phase payments based on annuity rates specified in the contract.
> The expense risk is the risk that the actual expenses we incur under the
contract will exceed the maximum costs that we can charge.
If the amount we deduct for this charge is not enough to cover our mortality and
expense risk costs under the contract, we will bear the loss. We may use any
excess to recover distribution costs relating to the contract and as a source of
profit. We expect to make a profit from this fee.
Administrative Expense Charge
Maximum Amount. During the accumulation phase the maximum amount of this charge,
on an annual basis, is equal to the following percentages of your account value
invested in the subaccounts:
<TABLE>
<CAPTION>
Death Benefit Option I Death Benefit Option II
- ------------------------ ------------------------
<S> <C>
0.15% 0.15%
</TABLE>
19
<PAGE>
There is currently no administrative expense charge during the income phase. We
reserve the right, however, to assess an annual administrative expense charge of
up to 0.25% during the income phase.
When/How. If imposed, we deduct this charge daily from the subaccounts
corresponding to the funds you select. We do not deduct this charge from the
fixed interest options. This charge may be assessed during the accumulation
phase or the income phase. If we are imposing this charge when you enter the
income phase, the fee will apply to you during the entire income phase.
Purpose. This charge helps defray our administrative expenses that cannot be
covered by the mortality and expense risk charge described above. This charge is
not intended to exceed the average expected cost of administering the contract.
We do not expect to make a profit from this charge.
REDUCTION OR ELIMINATION OF CERTAIN FEES
When sales of the contract are made to individuals or a group of individuals in
a manner that results in savings of sales or administrative expenses, we may
reduce or eliminate the mortality and expense risk charge or administrative
expense charge. Our decision to reduce or eliminate any of these fees will be
based on one or more of the following:
> The size and type of group to whom the contract is issued;
> The amount of expected purchase payments;
> A prior or existing relationship with the Company, such as being an
employee or former employee of the Company or one of our affiliates,
receiving distributions or making transfers from other contracts issued by
us or one of our affiliates or transferring amounts held under qualified
retirement plans sponsored by us or one of our affiliates;
> The type and frequency of administrative and sales services provided; or
> The sale of the contract through a distributor with which you have an asset
based fee arrangement and to which we pay an asset based distribution
allowance rather than a commission (see
"Other Topics--Contract Distribution" and "Payment of Commissions").
The reduction or elimination of any of these fees will not be unfairly
discriminatory against any person and will be done according to our rules in
effect at the time the contract is issued. We reserve the right to change these
rules from time to time. The right to reduce or eliminate any of these fees may
be subject to state approval.
FEES DEDUCTED BY THE FUNDS
Maximum Amount. Each fund's advisory fee and expenses are different. They are
set forth in "Fee Table--Fees Deducted by the Funds" and described in more
detail in each fund prospectus.
When/How. A fund's fees and expenses are not deducted from your account value.
Instead, they are reflected in the daily value of fund shares, which in turn
will affect the daily value of the subaccounts.
Purpose. These fees and expenses help to pay the fund's investment adviser and
operating expenses.
20
<PAGE>
PREMIUM AND OTHER TAXES
Maximum Amount. Some states and municipalities charge a premium tax on
annuities. These taxes currently range from 0% to 4%, depending upon the
jurisdiction.
When/How. We reserve the right to deduct premium taxes from your account value
or from purchase payments to the account at any time, but not before there is a
tax liability under state law. Our current practice is to deduct premium taxes
at the time of a complete withdrawal or, at the commencement of income phase
payments, to reflect the cost of premium taxes in our income phase payment
rates.
In addition, we reserve the right to assess a charge for any federal taxes due
against the separate account. See "Taxation."
Your Account Value
- --------------------------------------------------------------------------------
During the accumulation phase your account value at any given time equals:
> The current dollar value of amounts invested in the subaccounts; plus
> The current dollar values of amounts invested in the fixed interest
options, including interest earnings to date.
Subaccount Accumulation Units. When you select a fund as an investment option
your account dollars invest in "accumulation units" of the Variable Annuity
Account B subaccount corresponding to that fund. The subaccount invests directly
in the fund shares. The value of your interests in a subaccount is expressed as
the number of accumulation units you hold multiplied by an "accumulation unit
value", as described below, for each unit.
Accumulation Unit Value (AUV). The value of each accumulation unit in a
subaccount is called the accumulation unit value or AUV. The AUV varies daily in
relation to the underlying fund's investment performance. The value also
reflects deductions for fund fees and expenses, the mortality and expense risk
charge and the administrative expense charge (if any). We discuss these
deductions in more detail in "Fee Table" and "Fees."
Valuation. We determine the AUV every normal business day after the close of the
New York Stock Exchange. At that time we calculate the current AUV by
multiplying the AUV last calculated by the "net investment factor" of the
subaccount. The net investment factor measures the investment performance of the
subaccount from one valuation to the next.
Current AUV = Prior AUV x Net Investment Factor
Net Investment Factor. The net investment factor for a subaccount between two
consecutive valuations equals the sum of 1.0000 plus the net investment rate.
21
<PAGE>
Net Investment Rate. The net investment rate is computed according to a formula
that is equivalent to the following:
> The net assets of the fund held by the subaccount as of the current
valuation; minus
> The net assets of the fund held by the subaccount at the preceding
valuation; plus or minus
> Taxes or provisions for taxes, if any, due to subaccount operations (with
any federal income tax liability offset by foreign tax credits to the
extent allowed); divided by
> The total value of the subaccount's units at the preceding valuation; minus
> A daily deduction for the mortality and expense risk charge, the
administrative expense charge (if any) and any other fees deducted from
investments in the separate account. See "Fees."
The net investment rate may be either positive or negative.
22
<PAGE>
Hypothetical Illustration. As a hypothetical illustration assume that your
initial purchase payment to a qualified contract is $5,000 and you direct us to
invest $3,000 in Fund A and $2,000 in Fund B. Also assume that on the day we
receive the purchase payment the applicable AUVs after the next close of
business of the New York Stock Exchange are $10 for Subaccount A and $20 for
Subaccount B. Your account is credited with 300 accumulation units of Subaccount
A and 100 accumulation units of Subaccount B.
[begin graphic]
$5,000 Purchase Payment
Step 1 (down arrow)
Aetna Life Insurance and Annuity Company
Step 2 (down arrow)
Variable Annuity B
Subaccount A Subaccount B Etc.
300 100
accumulation accumulation
units units
(down arrow) Step 3 (down arrow)
Mutual Mutual
Fund A Fund B
[end graphic]
Step 1: You make an initial purchase payment of $5000.
Step 2:
A. You direct us to invest $3,000 in Fund A. The purchase payment purchases
300 accumulation units of Subaccount A ($3,000 divided by the $10 AUV).
B. You direct us to invest $2,000 in Fund B. The purchase payment purchases
100 accumulation units of Subaccount B ($2,000 divided by the $20 AUV).
Step 3: The separate account purchases shares of the applicable funds at the
then current market value (net asset value or NAV).
Each fund's subsequent investment performance, expenses and charges and the
daily charges deducted from the subaccount will cause the AUV to move up or down
on a daily basis.
Purchase Payments to Your Account. If all or a portion of your initial purchase
payment is directed to the subaccounts, it will purchase subaccount accumulation
units at the AUV next computed after our acceptance of your application as
described in "Purchase and Rights." Subsequent purchase payments or transfers
directed to the subaccounts will purchase subaccount accumulation units at the
AUV next computed following our receipt of the purchase payment or transfer
request in good order. The value of subaccounts may vary day to day.
23
<PAGE>
Taxes, Fees and Deductions
Amounts withdrawn may be subject to one or more of the following:
> Market Value Adjustment for amounts held in the Guaranteed Account (see
Appendix I and the Guaranteed Account prospectus)
> Tax Penalty (see "Taxation")
> Tax Withholding (see "Taxation")
To determine which may apply to you, refer to the appropriate sections of this
prospectus, contact your sales representative or call us at the number listed in
"Contract Overview--Questions: Contacting the Company."
Withdrawals
- --------------------------------------------------------------------------------
You may withdraw all or a portion of your account value at any time during the
accumulation phase. If you participate in the contract through a 403(b) plan,
certain restrictions apply. See "Restrictions on Withdrawals From 403(b) Plan
Accounts."
Steps for Making a Withdrawal
> Select the withdrawal amount.
(1) Full Withdrawal: You will receive, reduced by any required withholding tax,
your account value allocated to the subaccounts, the Guaranteed Account
(plus or minus any applicable market value adjustment) and the Fixed
Account.
(2) Partial Withdrawal (Percentage or Specified Dollar Amount): You will
receive, reduced by any required withholding tax, the amount you specify,
subject to the value available in your account. However, the amount
actually withdrawn from your account will be adjusted by any positive or
negative market value adjustment for amounts withdrawn from the Guaranteed
Account. See Appendices I and II and the Guaranteed Account prospectus for
more information about withdrawals from the Guaranteed Account and the
Fixed Account.
> Select investment options. If you do not specify this, we will withdraw
dollars proportionally from each of your investment options.
> Properly complete a disbursement form and deliver it to our Home Office.
Restrictions on Withdrawals From 403(b) Plan Accounts Under Section 403(b)
contracts, the withdrawal of salary reduction contributions and earnings on such
contributions is generally prohibited prior to the participant's death,
disability, attainment of age 59 1/2, separation from service or financial
hardship. See "Taxation."
Calculation of Your Withdrawal. We determine your account value every normal
business day after the close of the New York Stock Exchange. We pay withdrawal
amounts based on your account value as of the next valuation after we receive a
request for withdrawal in good order at our Home Office.
Delivery of Payment. Payments for withdrawal requests will be made in accordance
with SEC requirements. Normally, your withdrawal amount will be sent no later
than seven calendar days following our receipt of a properly-completed
disbursement form in good order.
Reinstating a Full Withdrawal. Within 30 days after a full withdrawal, if
allowed by law and the contract, you may elect to reinstate all or a portion of
your withdrawal. We must receive any reinstated amounts within 60 days of the
withdrawal. We reserve the right, however, to accept a reinstatement election
received more than 30 days after the withdrawal and accept proceeds received
more than 60 days after the withdrawal. We will credit your account for the
amount reinstated based on the subaccount values next computed following our
receipt of your request and the amount to be reinstated. We will reinstate in
the same investment options and proportions in place at the time of withdrawal.
If you withdraw amounts from a series of the Aetna GET Fund and
24
<PAGE>
then elect to reinstate them, we will reinstate them in a GET Fund series then
accepting deposits, if one is available. If one is not available, we will
reallocate your GET amounts among the other investment options in which you
invested, on a pro rata basis. The reinstatement privilege may be used only
once. Special rules apply to reinstatement of amounts withdrawn from the
Guaranteed Account (see Appendix I and the Guaranteed Account prospectus). We
will not credit your account for market value adjustments that we deducted at
the time of your withdrawal. Seek competent advice regarding the tax
consequences associated with reinstatement.
25
<PAGE>
Features of a Systematic Distribution Option
A systematic distribution option allows you to receive regular payments from
your contract without moving into the income phase. By remaining in the
accumulation phase, you retain certain rights and investment flexibility not
available during the income phase.
Systematic Distribution Options
- --------------------------------------------------------------------------------
The following systematic distribution options may be available:
> SWO--Systematic Withdrawal Option. SWO is a series of automatic partial
withdrawals from your account based on a payment method you select.
Consider this option if you would like a periodic income while retaining
investment flexibility for amounts accumulated in the account.
> ECO--Estate Conservation Option. ECO offers the same investment
flexibility as SWO, but is designed for those who want to receive only the
minimum distribution that the Tax Code requires each year. Under ECO we
calculate the minimum distribution amount required by law, generally at age
70 1/2 and pay you that amount once a year. ECO is not available under
nonqualified contracts. A market value adjustment will not be applied to
any part of your account value paid under an ECO.
> LEO--Life Expectancy Option. LEO provides for annual payments for a number
of years equal to your life expectancy or the life expectancy of you and a
designated beneficiary. It is designed to meet the substantially equal
periodic payment exception to the 10% premature distribution penalty under
Tax Code section 72. See "Taxation."
Other Systematic Distribution Options. We may add additional systematic
distribution options from time to time. You may obtain additional information
relating to any of the systematic distribution options from your sales
representative or by calling us at the number listed in "Contract Overview--
Contract Questions: Contacting the Company."
Systematic Distribution Option Availability. If allowed by applicable law, we
may discontinue the availability of one or more of the systematic distribution
options for new elections at any time and/or to change the terms of future
elections.
Eligibility for a Systematic Distribution Option. To determine if you meet the
age and account value criteria and to assess terms and conditions that may
apply, contact your sales representative or the Company at the number listed in
"Contract Overview--Questions: Contacting the Company."
Terminating a Systematic Distribution Option. You may revoke a systematic
distribution option at any time by submitting a written request to our Home
Office. ECO, once revoked, may not, unless allowed under the Tax Code, be
elected again.
Charges and Taxation. When you elect a systematic distribution option your
account value remains in the accumulation phase and subject to the charges and
deductions described in the "Fees" and "Fee Table" sections. Taking a withdrawal
under a systematic distribution option may have tax consequences. If you are
concerned about tax implications, consult a qualified tax adviser before
electing an option.
26
<PAGE>
This section provides information about the death benefit during the
accumulation phase. For death benefit information applicable to the income
phase, see "The Income Phase."
Terms to Understand:
Account Year/Account Anniversary: A period of 12 months measured from the date
we established your account and each anniversary of this date. Account
anniversaries are measured from this date.
Annuitant(s): The person(s) on whose life or life expectancy(ies) the income
phase payments are based.
Beneficiary(ies): The person(s) or entity(ies) entitled to receive a death
benefit under the contract.
Claim Date: The date proof of death and the beneficiary's right to receive the
death benefit are received in good order at our Home Office.
Contract Holder (You/Your): The contract holder of an individually owned
contract or the certificate holder of a group contract. The contract holder and
annuitant may be the same person.
Death Benefit
- --------------------------------------------------------------------------------
During the Accumulation Phase
Who Receives the Death Benefit? If you would like certain individuals or
entities to receive the death benefit when it becomes payable, you may name them
as your beneficiaries. However, if you are a joint contract holder and you die,
the beneficiary will automatically be the surviving joint contract holder. In
this circumstance any other beneficiary you named will be treated as the primary
or contingent beneficiary, as originally named, of the surviving joint contract
holder. The surviving joint contract holder may change the beneficiary
designation. If you die and no beneficiary exists, the death benefit will be
paid in a lump sum to your estate.
Designating Your Beneficiary. You may designate a beneficiary on your
application or by contacting your sales representative or us as indicated in
"Contract Overview--Questions: Contacting the Company."
When is a Death Benefit Payable? During the accumulation phase a death benefit
is payable when the contract holder or the annuitant dies. If there are joint
contract holders, the death benefit is payable when either one dies.
Death Benefit Amount. The amount of the death benefit will depend upon which
death benefit option is in effect on the date the annuitant dies.
<TABLE>
<CAPTION>
Death Benefit Death Benefit
Option I Option II
------------------------------ -----------------------------
<S> <C> <C>
Death Benefit The greater of: The greatest of:
on Death of the (1) The sum of all purchase (1) The sum of all purchase
Annuitant payments, adjusted for payments made, adjusted
amounts withdrawn or for amounts withdrawn or
applied to an income applied to an income
phase payment option as phase payment option as
of the claim date; or of the claim date; or
(2) The account value on the (2) The account value on the
claim date. claim date; or
(3) The "step-up value" (as
described below) on the
claim date.
</TABLE>
Death Benefit Option II may not be available under all contracts. Ask your sales
representative about the availability of Death Benefit Option II.
Step-up Value. The step-up value is equal to the highest account value on the
effective date of your Death Benefit Option II contract schedule page or any
anniversary of that date prior to the annuitant's 85th birthday or death,
whichever is earlier, adjusted for purchase payments made and amounts withdrawn
or applied to an income phase payment option since the date of the highest
account value.
On each anniversary of the schedule effective date after the annuitant's 85th
birthday, the step-up value shall equal the step-up value on the anniversary
immediately preceding the annuitant's 85th birthday, adjusted for purchase
payments made and amounts withdrawn or applied to an income phase payment option
since that anniversary.
27
<PAGE>
On the claim date, the step-up value shall equal the step-up value on the
anniversary of the schedule effective date immediately preceding the date of
death, adjusted for purchase payments made and amounts withdrawn or applied to
an income phase payment option since that anniversary.
Adjustment. For purposes of determining the death benefit, the adjustment for
purchase payments made will be dollar for dollar. The adjustment for amounts
withdrawn or applied to an income phase payment option will be proportionate,
reducing the sum of all purchase payments made and the step-up value in the same
proportion that the account value was reduced on the date of the withdrawal or
application to an income phase payment option.
Death Benefit Greater than the Account Value. Notwithstanding which death
benefit option is selected, on the claim date, if the amount of the death
benefit is greater than the account value, the amount by which the death benefit
exceeds the account value will be deposited and allocated to the money market
subaccount available under the contract, thereby increasing the account value
available to the beneficiary to an amount equal to the death benefit.
Prior to the election of a method of payment of the death benefit by the
beneficiary, the account value will remain in the account and continue to be
affected by the investment performance of the investment option(s) selected. The
beneficiary has the right to allocate or transfer any amount to any available
investment option (subject to a market value adjustment, as applicable). The
amount paid to the beneficiary will equal the adjusted account value on the day
the payment is processed.
Death Benefit Amounts in Certain Cases
If the Contract Holder is the Annuitant and a Spousal Beneficiary Continues the
Account. If the spousal beneficiary continues the account at the death of a
contract holder who was also the annuitant, the spousal beneficiary becomes the
annuitant. The death benefit option in effect at the death of the contract
holder will also apply to the spousal beneficiary, and the death benefit payable
at the spousal beneficiary's death shall be determined under that death benefit
option, except that:
(1) In calculating the sum of all purchase payments, adjusted for amounts
withdrawn or applied to an income phase payment option, the account value
on the claim date following the original contract holder's/annuitant's
death shall be treated as the spousal beneficiary's initial purchase
payment; and
(2) In calculating the step-up value, the step-up value on the claim date
following the original contract holder's/annuitant's death shall be treated
as the spousal beneficiary's initial step-up value.
If the Contract Holder is not the Annuitant. Under nonqualified contracts only,
the death benefit described under the death benefit options above will not apply
if a contract holder (including a spousal beneficiary who continues the account)
who is not the annuitant dies. In these circumstances the amount paid will be
equal to the account value on the date the payment is processed, plus or minus
any market value adjustment.
Because the death benefit in these circumstances equals the account value plus
or minus any market value adjustment, a contract holder who is not also the
28
<PAGE>
annuitant should seriously consider whether Death Benefit Option II is suitable
for their situation.
If the spousal beneficiary who is the annuitant continues the account at the
death of the contract holder who was not the annuitant, the annuitant will not
change. The death benefit option in effect at the death of the contract holder
will also apply to the spousal beneficiary, and the death benefit payable at the
spousal beneficiary's death shall be determined under that death benefit option.
Guaranteed Account. For amounts held in the Guaranteed Account, see Appendix I
for a discussion of the calculation of the death benefit.
Death Benefit--Methods of Payment
For Qualified Contracts. Under a qualified contract, if the annuitant dies the
beneficiary may choose one of the following three methods of payment:
> Apply some or all of the account value, plus or minus any market value
adjustment, to any of the income phase payment options (subject to the Tax
Code distribution rules (see "Taxation--Minimum Distribution
Requirements")).
In this circumstance the Tax Code requires any portion of the account
value, plus or minus any market value adjustment, not distributed in
installments over the beneficiary's life or life expectancy, beginning
within one year of your death, must be paid within five years of your
death. See "Taxation."
> Receive, at any time, a lump-sum payment equal to all or a portion of
the account value, plus or minus any market value adjustment.
> Elect SWO, ECO or LEO (described in "Systematic Distribution Options"),
provided the election would satisfy the Tax Code minimum distribution
rules.
Payments from a Systematic Distribution Option. If the annuitant was receiving
payments under a systematic distribution option and died before the Tax Code's
required beginning date for minimum distributions, payments under the systematic
distribution option will stop. The beneficiary, or contract holder on behalf of
the beneficiary, may elect a systematic distribution option provided the
election is permitted under the Tax Code minimum distribution rules. If the
annuitant dies after the required beginning date for minimum distributions,
payments will continue as permitted under the Tax Code minimum distribution
rules, unless the option is revoked.
Distribution Requirements. Subject to Tax Code limitations, a beneficiary may
be able to defer distribution of the death benefit. Death benefit payments must
satisfy the distribution rules in Tax Code Section 401(a)(9). See "Taxation."
For Nonqualified Contracts.
(1) If you die and the beneficiary is your surviving spouse, or if you are a
non-natural person and the annuitant dies and the beneficiary is the
annuitant's surviving spouse, then the beneficiary becomes the successor
contract holder. In this circumstance the Tax Code does not require
distributions under the contract until the successor contract holder's
death.
As the successor contract holder, the beneficiary may exercise all rights
under the account and has the following options:
29
<PAGE>
(a) Continue the contract in the accumulation phase; (
(b) Elect to apply some or all of the account value, plus or minus any
market value adjustment, to any of the income phase payment options;
or
(c) Receive at any time a lump-sum payment equal to all or a portion of
the account value, plus or minus any market value adjustment.
(2) If you die and the beneficiary is not your surviving spouse, he or she may
elect option 1(b) or option 1(c) above (subject to the Tax Code
distribution rules). See "Taxation -- Minimum Distribution Requirements."
(3) If you are a natural person but not the annuitant and the annuitant dies,
the beneficiary may elect option 1(b) or 1(c) above. If the beneficiary
does not elect option 1(b) within 60 days from the date of death, the gain,
if any, will be included in the beneficiary's income in the year the
annuitant dies.
Payments from a Systematic Distribution Option. If the contract holder or
annuitant dies and payments were being made under a SWO, payments will stop. A
beneficiary, however, may elect to continue the SWO.
Taxation. In general, payments received by your beneficiary after your death
are taxed to the beneficiary in the same manner as if you had received those
payments. Additionally, your beneficiary may be subject to tax penalties if he
or she does not begin receiving death benefit payments within the time-frame
required by the Tax Code. See "Taxation."
30
<PAGE>
We may have used the following terms in prior prospectuses:
Annuity Phase--Income Phase
Annuity Option--Income Phase Payment Option
Annuity Payment--Income Phase Payment
The Income Phase
- --------------------------------------------------------------------------------
During the income phase you stop contributing dollars to your account and start
receiving payments from your accumulated account value.
Initiating Income Phase Payments. At least 30 days prior to the date you want to
start receiving income phase payments, you must notify us in writing of all of
the following:
> Payment start date;
> Income phase payment option (see the income phase payment options table in
this section);
> Payment frequency (i.e., monthly, quarterly, semi-annually or annually);
> Choice of fixed, variable or a combination of both fixed and variable
payments; and
> Selection of an assumed net investment rate (only if variable payments are
elected).
Your account will continue in the accumulation phase until you properly initiate
income phase payments. Once an income phase payment option is selected it may
not be changed.
What Affects Payment Amounts? Some of the factors that may affect the amount of
your income phase payments include your age, gender, account value, the income
phase payment option selected, the number of guaranteed payments (if any)
selected and whether you select fixed, variable or a combination of both fixed
and variable payments and, for variable payments, the assumed net investment
rate selected.
Fixed Payments. Amounts funding fixed income phase payments will be held in the
Company's general account. The amount of fixed payments does not vary with
investment performance over time.
Variable Payments. Amounts funding your variable income phase payments will be
held in the subaccount(s) you select. Not all subaccounts available during the
accumulation phase may be available during the income phase. Payment amounts
will vary depending upon the performance of the subaccounts you select. For
variable income phase payments, you must select an assumed net investment rate.
Assumed Net Investment Rate. If you select variable income phase payments, you
must also select an assumed net investment rate of either 5% or 3 1/2%. If you
select a 5% rate, your first income phase payment will be higher, but subsequent
payments will increase only if the investment performance of the subaccounts you
selected is greater than 5% annually, after deduction of fees. Payment amounts
will decline if the investment performance is less than 5%, after deduction of
fees.
If you select a 3 1/2% rate, your first income phase payment will be lower and
subsequent payments will increase more rapidly or decline more slowly depending
upon changes in the net investment performance of the subaccounts you selected.
For more information about selecting an assumed net investment rate, call us for
a copy of the SAI. See "Contract Overview-- Questions: Contacting the Company."
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Minimum Payment Amounts. The income phase payment option you select must result
in:
> A first income phase payment of at least $50; and
> Total yearly income phase payments of at least $250.
If your account value is too low to meet these minimum payment amounts, you will
receive one lump-sum payment. Unless prohibited by law, we reserve the right to
increase the minimum payment amount based on increases reflected in the Consumer
Price Index-Urban (CPI-U) since July 1, 1993.
Restrictions on Start Dates and the Duration of Payments. Income phase payments
may not begin during the first account year, or, unless we consent, later than
the later of:
(a) The first day of the month following the annuitant's 85th birthday; or
(b) The tenth anniversary of the last purchase payment made to your account.
Income phase payments will not begin until you have selected an income phase
payment option. Failure to select an income phase payment option by the later of
the annuitant's 85th birthday or the tenth anniversary of your last purchase
payment may have adverse tax consequences. You should consult with a qualified
tax adviser if you are considering delaying the selection of an income phase
option beyond the later of these dates.
For qualified contracts only, income phase payments may not extend beyond:
(a) The life of the annuitant;
(b) The joint lives of the annuitant and beneficiary;
(c) A guaranteed period greater than the annuitant's life expectancy; or
(d) A guaranteed period greater than the joint life expectancies of the
annuitant and beneficiary.
When income phase payments start the age of the annuitant plus the number of
years for which payments are guaranteed may not exceed 95.
See "Taxation" for further discussion of rules relating to income phase
payments.
Charges Deducted.
> If variable income phase payments are selected, we make a daily deduction
for mortality and expense risks from amounts held in the subaccounts.
Therefore, if you choose variable income phase payments and a nonlifetime
income phase payment option, we still make this deduction from the
subaccounts you select, even though we no longer assume any mortality
risks. The amount of this charge, on an annual basis, is equal to 1.25% of
amounts invested in the subaccounts. See "Fees--Mortality and Expense Risk
Charge."
> There is currently no administrative expense charge during the income
phase. We reserve the right, however, to charge an administrative expense
charge of up to 0.25% during the income phase. If imposed, we deduct this
charge daily from the subaccounts corresponding to the funds you select. If
we are imposing this charge when you enter the income phase, the charge
will apply to you during the entire income phase. See "Fees--Administrative
Expense Charge."
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Death Benefit during the Income Phase. The death benefits that may be available
to a beneficiary are outlined in the income phase payment options table below.
If a lump-sum payment is due as a death benefit, we will make payment within
seven calendar days after we receive proof of death acceptable to us and the
request for the payment in good order at our Home Office. If continuing income
phase payments are elected, the beneficiary may not elect to receive a lump sum
at a future date unless the income phase payment option specifically allows a
withdrawal right. We will calculate the value of any death benefit at the next
valuation after we receive proof of death and a request for payment. Such value
will be reduced by any payments made after the date of death.
Beneficiary Rights. A beneficiary's right to elect an income phase payment
option or receive a lump-sum payment may have been restricted by the contract
holder. If so, such rights or options will not be available to the beneficiary.
Taxation. To avoid certain tax penalties, you or your beneficiary must meet the
distribution rules imposed by the Tax Code. Additionally, when selecting an
income phase payment option, the Tax Code requires that your expected payments
will not exceed certain durations. See "Taxation" for additional information.
Income Phase Payment Options
The following table lists the income phase payment options and accompanying
death benefits available during the income phase. We may offer additional income
phase payment options under the contract from time to time.
Once income phase payments begin the income phase payment option selected may
not be changed.
Terms to understand:
Annuitant(s): The person(s) on whose life expectancy(ies) the income phase
payments are based.
Beneficiary(ies): The person(s) or entity(ies) entitled to receive a death
benefit under the contract.
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<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Lifetime Income Phase Payment Options
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Life Income Length of Payments: For as long as the annuitant lives. It is possible that only one payment will be
made if the annuitant dies prior to the second payment's due date.
Death Benefit--None: All payments end upon the annuitant's death.
- ------------------------------------------------------------------------------------------------------------------------------------
Life Income -- Length of Payments: For as long as the annuitant lives, with payments guaranteed for your choice of
Guranteed 5 to 30 years or as otherwise specified in the contract.
Payments Death Benefit--Payment to the Beneficiary: If the annuitant dies before we have made all the guaranteed
payments, we will continue to pay the beneficiary the remaining payments, unless the beneficiary elects
to receive a lump-sum payment equal to the present value of the remaining guaranteed payments.
- ------------------------------------------------------------------------------------------------------------------------------------
Life Income -- Length of Payments: For as long as either annuitant lives. It is possible that only one payment will
Two Lives be made if both annuitants die before the second payment's due date.
Continuing Payments: When you select this option you choose for:
(a) 100%, 66 2/3% or 50% of the payment to continue to the surviving annuitant after the first death; or
(b) 100% of the payment to continue to the annuitant on the second annuitant's death, and 50% of the
payment to continue to the second annuitant on the annuitant's death.
Death Benefit--None: All payments end upon the death of both annuitants.
- ------------------------------------------------------------------------------------------------------------------------------------
Life Income -- Length of Payments: For as long as either annuitant lives, with payments guaranteed from 5 to 30 years or
Two Lives -- as otherwise specified in the contract.
Guaranteed Continuing Payments: 100% of the payment to continue to the surviving annuitant after the first death.
Payments Death Benefit--Payment to the Beneficiary: If both annuitants die before we have made all the guaranteed
payments, we will continue to pay the beneficiary the remaining payments, unless the beneficiary elects
to receive a lump-sum payment equal to the present value of the remaining guaranteed payments.
- ------------------------------------------------------------------------------------------------------------------------------------
Life Income -- Length of Payments: For as long as the annuitant lives.
Cash Refund Death Benefit--Payment to the Beneficiary: Following the annuitant's death, we will pay a Option (limited
Option (limited lump-sum payment equal to the amount originally applied to the income phase payment option (less any
availability -- fixed applicable premium tax) and less the total amount of income payments paid.
payments only)
- ------------------------------------------------------------------------------------------------------------------------------------
Life Income -- Length of Payments: For as long as either annuitant lives.
Two Lives -- Cash Continuing Payments: 100% of the payment to continue after the first death.
Refund Option Death Benefit--Payment to the Beneficiary: When both annuitants die we will pay a lump
(limited sum payment equal to the amount applied to the income phase payment option (less any
availability -- fixed applicable premium tax) and less the total amount of income payments paid.
payments only)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Nonlifetime Income Phase Payment Options
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Nonlifetime -- Length of Payments: You may select payments for 5 to 30 years. In certain cases a lump-sum payment may be
Guaranteed requested at any time (see below).
Payments Death Benefit--Payment to the Beneficiary: If the annuitant dies before we make all the guaranteed
payments, we will continue to pay the beneficiary the remaining payments, unless the beneficiary elects
to receive a lump-sum payment equal to the present value of the remaining guaranteed payments.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Lump-Sum Payment: If the "Nonlifetime--Guaranteed Payments" option is elected with variable payments, you may request at any time
that all or a portion of the present value of the remaining payments be paid in one lump sum. Lump-sum payments will be sent within
seven calendar days after we receive the request for payment in good order at the Home Office.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Calculation of Lump-Sum Payments: If a lump-sum payment is available under the
income phase payment options above, the rate used to calculate the present value
of the remaining guaranteed payments is the same rate we used to calculate the
income phase payments (i.e., the actual fixed rate used for fixed payments or
the 3 1/2% or 5% assumed net investment rate used for variable payments).
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<PAGE>
In this Section
INTRODUCTION
CONTRACT TYPE
WITHDRAWALS AND OTHER DISTRIBUTIONS
o Taxation of Distributions
o 10% Penalty Tax
o Withholding for Federal Income Tax Liability
MINIMUM DISTRIBUTION REQUIREMENTS
o 50% Excise Tax
o Minimum Distribution of Death Benefit Proceeds (403(b) Plans and 408A
IRAs)
o Minimum Distribution of Death Benefit Proceeds (Nonqualified
Contracts)
RULES SPECIFIC TO CERTAIN PLANS
o 403(b) Plans
o 408(b) and 408A IRAs
TAXATION OF NONQUALIFIED CONTRACTS
TAXATION OF THE COMPANY
When consulting a tax adviser, be certain that he or she has expertise in the
Tax Code sections applicable to your tax concerns.
Taxation
- --------------------------------------------------------------------------------
INTRODUCTION
This section discusses our understanding of current federal income tax laws
affecting the contract. You should keep the following in mind when reading it:
> Your tax position (or the tax position of the beneficiary, as applicable)
determines federal taxation of amounts held or paid out under the contract;
> Tax laws change. It is possible that a change in the future could affect
contracts issued in the past;
> This section addresses federal income tax rules and does not discuss
federal estate and gift tax implications, state and local taxes or any
other tax provisions;
> We do not make any guarantee about the tax treatment of the contract or any
transaction involving the contract; and
> Contract holder means the contract holder of an individually owned contract
or the certificate holder of a group contract.
- --------------------------------------------------------------------------------
We do not intend this information to be tax advice. For advice about the effect
of federal income taxes or any other taxes on amounts held or paid out under
the contract, consult a tax adviser. For more comprehensive information contact
the Internal Revenue Service (IRS).
- --------------------------------------------------------------------------------
Taxation of Gains Prior to Distribution. You will generally not pay taxes on any
earnings from the annuity contract described in this prospectus until they are
withdrawn. Tax-qualified retirement arrangements under Tax Code sections 408(a),
408(b), 408A and 403(b) also generally defer payment of taxes on earnings until
they are withdrawn. (See "Taxation of Distributions" later in this "Taxation"
section for a discussion of how distributions under the various types of
arrangements are taxed.) If you are considering funding one of these
tax-qualified retirement arrangements with an annuity contract, you should know
that the annuity contract does not provide any additional tax deferral of
earnings beyond the tax deferral provided by the tax-qualified retirement
arrangement. However, annuities do provide other features and benefits which may
be valuable to you. You should discuss your decision with your financial
representative.
Additionally, although earnings under the contract are generally not taxed until
withdrawn, the IRS has stated in published rulings that a variable contract
owner will be considered the owner of separate account assets if the owner
possesses incidents of investment control over the assets. In these
circumstances income and gains from the separate account assets would be
includible in the variable contract owner's gross income. The Treasury announced
that it will issue guidance regarding the extent to which owners could direct
their investments among subaccounts without being treated as owners of the
underlying assets of the separate account. It is possible that the Treasury's
position, when announced, may adversely affect the tax treatment of existing
contracts. The Company therefore reserves the right to modify the contract as
necessary to attempt to prevent a contract holder from being considered the
federal tax owner of a pro rata share of the assets of the separate account.
Diversification. Tax Code section 817(h) requires that in a nonqualified
contract the investments of the funds be "adequately diversified" in accordance
with Treasury Regulations in order for the contract to qualify as an annuity
35
<PAGE>
contract under federal tax law. The separate account, through the funds,
intends to comply with the diversification requirements prescribed by the
Treasury in Reg. Sec. 1.817-5, which affects how the funds' assets may be
invested.
CONTRACT TYPE
The contract is designed to be used as a nonqualified deferred annuity,
including contracts offered to a custodian for an Individual Retirement Account
as described in Tax Code section 408(a), and with certain qualified retirement
arrangements under Tax Code sections 403(b), 408(b) or 408A. The contract is not
available as a SIMPLE IRA under Tax Code Section 408(p).
Tax Rules. The tax rules vary according to whether the contract is a
nonqualified contract or used with a qualified retirement arrangement. If used
with a qualified retirement arrangement, you need to know the Tax Code section
under which your arrangement qualifies. Contact your plan sponsor, sales
representative or us to learn which Tax Code section applies to your
arrangement.
The Contract. Contract holders are responsible for determining that
contributions, distributions and other transactions satisfy applicable laws.
Legal counsel and a tax adviser should be consulted regarding the suitability of
the contract. If the contract is purchased in conjunction with a retirement
plan, the plan is not a part of the contract and we are not bound by the plan's
terms or conditions.
WITHDRAWALS AND OTHER DISTRIBUTIONS
Certain tax rules apply to distributions from the contract. A distribution is
any amount taken from the contract including withdrawals, income phase payments,
rollovers, exchanges and death benefit proceeds.
We report the taxable portion of all distributions to the IRS.
Taxation of Distributions
Nonqualified Contracts. A full withdrawal of a nonqualified contract is taxable
to the extent that the amount received exceeds the investment in the contract. A
partial withdrawal is taxable to the extent that the account value immediately
before the withdrawal exceeds the investment in the contract. In other words, a
partial withdrawal is treated first as a withdrawal of taxable earnings.
For income phase payments, a portion of each payment which represents the
investment in the contract is not taxable. An exclusion ratio is calculated to
determine the nontaxable portion.
For fixed income phase payments, in general, there is no tax on the portion of
each payment which represents the same ratio that the investment in the contract
bears to the total dollar amount of the expected payments as defined in Tax Code
section 72(c). The entire income phase payment will be taxable once the
recipient has recovered the investment in the contract.
For variable income phase payments, an equation is used to establish a specific
dollar amount of each payment that is not taxed. The dollar amount is determined
by dividing the investment in the contract by the total number of expected
periodic payments. The entire income phase payment will be taxable once the
recipient has recovered the investment in the contract.
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<PAGE>
All deferred nonqualified annuity contracts that are issued by the Company (or
its affiliates) to the same contract holder during any calendar year are treated
as one annuity contract for purposes of determining the amount includible in
gross income under Tax Code section 72(e). In addition, the Treasury Department
has specific authority to issue regulations that prevent the avoidance of Tax
Code section 72(e) through the serial purchase of annuity contracts or
otherwise.
403(b) Plans. All distributions from these plans are taxed as received unless
either of the following is true:
> The distribution is rolled over to another plan of the same type or to a
traditional IRA in accordance with the Tax Code; or
> You made after-tax contributions to the plan. In this case, depending upon
the type of distribution, the amount will be taxed according to the rules
detailed in the Tax Code.
408(b) IRAs. All distributions from a traditional IRA are taxed as received
unless either one of the following is true:
> The distribution is rolled over to another traditional IRA or, if the IRA
contains only amounts previously rolled over from a 401(a), 401(k) or
403(b) plan, the distribution is transferred to another plan of the same
type; or
> You made after-tax contributions to the plan. In this case the distribution
will be taxed according to rules detailed in the Tax Code.
408A Roth IRAs. A qualified distribution from a Roth IRA is not taxed when it is
received. A qualified distribution is a distribution:
> Made after the five-taxable year period beginning with the first taxable
year for which a contribution was made; and
> Made after you attain age 59 1/2, die, become disabled as defined in the
Tax Code or for a qualified first-time home purchase.
If a distribution is not qualified, it will be taxable to the extent of the
accumulated earnings. A partial distribution will first be treated as a return
of contributions which is not taxable and then as taxable accumulated earnings.
Taxation of Death Benefit Proceeds. In general, payments received by your
beneficiary after your death are taxed in the same manner as if you had received
those payments.
10% Penalty Tax
Under certain circumstances the Tax Code may impose a 10% penalty tax on the
taxable portion of any distribution from a nonqualified contract or from a
contract used with a 403(b), 408(b) or 408A arrangement.
An exception to the 10% penalty tax discussed below requires that the payment or
distribution be part of a series of substantially equal periodic payments. If
you select an increasing annuity or an early withdrawal of the value of
remaining income payments, the payment or distribution may be subject to the 10%
penalty tax unless one of the other exceptions applies. You should consult with
a tax adviser to determine how this will affect your tax liability.
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<PAGE>
Nonqualified Contracts. The 10% penalty tax does not apply to the taxable
portion of distributions made under certain exceptions, including one or more
of the following:
(a) You have attained age 59 1/2;
(b) You have become disabled as defined in the Tax Code;
(c) You have died;
(d) The distribution is made in substantially equal periodic payments (at least
annually) over your life or life expectancy or the joint lives or joint
life expectancies of you and your beneficiary; or
(e) The distribution is allocable to investment in the contract before August
14, 1982.
403(b) Plans. The 10% penalty tax applies to the taxable portion of a
distribution from a 403(b) plan, unless certain exceptions apply, including one
or more of the following:
(a) You have attained age 59 1/2;
(b) You have become disabled as defined in the Tax Code;
(c) You have died;
(d) You have separated from service with the plan sponsor at or after age 55;
(e) The distribution is rolled over into another plan of the same type or to an
IRA in accordance with the Tax Code;
(f) You have separated from service with the plan sponsor and the distribution
is made in substantially equal periodic payments (at least annually) over
your life or life expectancy or the joint lives or joint life expectancies
of you and your beneficiary; or
(g) The distribution is equal to unreimbursed medical expenses that qualify for
deduction as specified in the Tax Code.
408(b) and 408A IRAs. In general, except for (d), the exceptions for 403(b)
plans also apply to distributions from an IRA, including a distribution from a
Roth IRA that is not a qualified distribution or a rollover to a Roth IRA that
is not a qualified rollover contribution. The penalty tax is also waived on a
distribution made from an IRA to pay for health insurance premiums for certain
unemployed individuals or used for a qualified first-time home purchase or for
higher education expenses.
Withholding for Federal Income Tax Liability
Any distributions under the contract are generally subject to withholding.
Federal income tax liability rates vary according to the type of distribution
and the recipient's tax status.
Nonqualified Contracts. Generally, you or a beneficiary may elect not to have
tax withheld from distributions.
403(b) Plans. Generally, distributions from these plans are subject to a
mandatory 20% federal income tax withholding. However, withholding will not be
required if you elect a direct rollover of the distributions or in the case of
certain distributions described in the Tax Code.
408(b) and 408A IRAs. Generally, you or a beneficiary may elect not to have tax
withheld from distributions.
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<PAGE>
Non-resident Aliens. If you or your beneficiary are non-resident aliens, then
any withholding is governed by Tax Code section 1441 based on the individual's
citizenship, the country of domicile and treaty status.
MINIMUM DISTRIBUTION REQUIREMENTS
To avoid certain tax penalties, you and any beneficiary must meet the minimum
distribution requirements imposed by the Tax Code. The requirements do not apply
to either nonqualified contracts or Roth IRA contracts, except with regard to
death benefits. These rules may dictate one or more of the following:
> Start date for distributions;
> The time period in which all amounts in your account(s) must be
distributed; or
> Distribution amounts.
Start Date. Generally, you must begin receiving distributions by April 1 of the
calendar year following the calendar year in which you attain age 70 1/2 or
retire, whichever occurs later, unless:
> You are a 5% owner or the contract is an IRA, in which case such
distributions must begin by April 1 of the calendar year following the
calendar year in which you attain age 70 1/2; or
> Under 403(b) plans, if the Company maintains separate records of amounts
held as of December 31, 1986. In this case distribution of these amounts
generally must begin by the end of the calendar year in which you attain
age 75 or retire, if later. However, if you take any distributions in
excess of the minimum required amount, then special rules require that some
or all of the December 31, 1986 balance be distributed earlier.
Time Period. We must pay out distributions from the contract over one of the
following time periods:
> Over your life or the joint lives of you and your beneficiary; or
> Over a period not greater than your life expectancy or the joint life
expectancies of you and your beneficiary.
50% Excise Tax
If you fail to receive the minimum required distribution for any tax year, a 50%
excise tax is imposed on the required amount that was not distributed.
Minimum Distribution of Death Benefit Proceeds
(403(b) Plans and 408(b) and 408A IRAs)
The following applies to 403(b), 408(b) and 408A arrangements. Different
distribution requirements apply if your death occurs:
> After you begin receiving minimum distributions under the contract; or
> Before you begin receiving such distributions.
If your death occurs after you begin receiving minimum distributions under the
contract, distributions must be made at least as rapidly as under the method in
effect at the time of your death. Tax Code section 401(a)(9) provides specific
rules for calculating the minimum required distributions at your death. The
rules differ, depending upon:
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<PAGE>
> Whether your minimum required distribution was calculated each year based
on your single life expectancy or the joint life expectancies of you and
your beneficiary; or
> Whether life expectancy was recalculated.
The rules are complex and any beneficiary should consult with a tax adviser
before electing the method of calculation to satisfy the minimum distribution
requirements.
If your death occurs before you begin receiving minimum distributions under the
contract, your entire balance must be distributed by December 31 of the calendar
year containing the fifth anniversary of the date of your death. For example, if
you die on September 1, 2000, your entire balance must be distributed to the
beneficiary by December 31, 2005. However, if distributions begin by December 31
of the calendar year following the calendar year of your death, then payments
may be made over either of the following time-frames:
> Over the life of the beneficiary; or
> Over a period not extending beyond the life expectancy of the beneficiary.
Start Dates for Spousal Beneficiaries. If the beneficiary is your spouse,
distributions must begin on or before the later of the following:
> December 31 of the calendar year following the calendar year of your death;
or
> December 31 of the calendar year in which you would have attained age
70 1/2.
Special Rule for IRA Spousal Beneficiaries. In lieu of taking a distribution
under these rules, a spousal beneficiary may elect to treat the account as his
or her own IRA and defer taking a distribution until his or her age 70 1/2. The
surviving spouse is deemed to have made such an election if the surviving spouse
makes a rollover to or from the account or fails to take a distribution within
the required time period.
Minimum Distribution of Death Benefit Proceeds
(Nonqualified Contracts)
Death of the Contract Holder. The following requirements apply to nonqualified
contracts at your death. Different distribution requirements apply if your death
occurs:
> After you begin receiving income phase payments under the contract; or
> Before you begin receiving such distributions.
If your death occurs after you begin receiving income phase payments,
distributions must be made at least as rapidly as under the method in effect at
the time of your death.
If your death occurs before you begin receiving income phase payments, your
entire balance must be distributed within five years after the date of your
death. For example, if you die on September 1, 2000, your entire balance must be
distributed by August 31, 2005. However, if distributions begin within one year
of your death, then payments may be made over one of the following time-frames:
> Over the life of the beneficiary; or
> Over a period not extending beyond the life expectancy of the beneficiary.
Spousal Beneficiaries. If the beneficiary is your spouse, the account may be
continued with the surviving spouse as the new contract holder.
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<PAGE>
Death of Annuitant. If the contract holder is a non-natural person and the
annuitant dies, the same rules apply as outlined above for death of a contract
holder. If the contract holder is a natural person but not the annuitant and the
annuitant dies, the beneficiary must elect an income phase payment option within
60 days of the date of death, or any gain under the contract will be includible
in the beneficiary's income in the year the annuitant dies.
RULES SPECIFIC TO CERTAIN PLANS
403(b) Plans
Under Tax Code section 403(b), contributions made by public school systems or
nonprofit healthcare organizations and other Tax Code section 501(c)(3) tax
exempt organizations to purchase annuity contracts for their employees are
generally excludable from the gross income of the employee.
Assignment or Transfer of Contracts. Adverse tax consequences to the plan and/or
to you may result if your beneficial interest in the contract is assigned or
transferred to any person except to an alternate payee under a qualified
domestic relations order in accordance with Tax Code section 414(p) or to the
Company as collateral for a loan.
Exclusions from Gross Income. In order to be excludable from gross income, total
annual contributions made by you and your employer to a 403(b) plan cannot
exceed the lesser of the following limits set by the Tax Code:
> The first limit, under Tax Code section 415, is generally the lesser of 25%
of your compensation or $30,000. Compensation means your compensation from
the employer sponsoring the plan and, for years beginning after December
31, 1997, includes any elective deferrals under Tax Code section 402(g) and
any amounts not includible in gross income under Tax Code sections 125 or
457;
> The second limit, which is the exclusion allowance under Tax Code section
403(b), is usually calculated according to a formula that takes into
account your length of employment, any pretax contributions you and your
employer have already made under the plan and any pretax contributions to
certain other retirement plans; or
> An additional limit specifically limits your salary reduction contributions
to generally no more than $10,000 annually (subject to indexing). Your own
limit may be higher or lower, depending upon certain conditions.
The first two limits apply to your contributions as well as to any contributions
made by your employer on your behalf.
Purchase payments to your account(s) will be excluded from your gross income
only if the plan meets certain nondiscrimination requirements.
Restrictions on Distributions. Tax Code section 403(b)(11) restricts the
distribution under Tax Code section 403(b) contracts of:
(1) Salary reduction contributions made after December 31, 1988;
(2) Earnings on those contributions; and
(3) Earnings during such period on amounts held as of December 31, 1988.
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Distribution of those amounts may only occur upon your death, attainment of age
59 1/2, separation from service, disability or financial hardship. Income
attributable to salary reduction contributions and credited on or after January
1, 1989, may not be distributed in the case of hardship.
408(b) and 408A IRAs
Tax Code section 408(b) permits eligible individuals to contribute to a
traditional IRA on a pre-tax (deductible) basis. Employers may establish
Simplified Employee Pension (SEP) plans and contribute to a traditional IRA
owned by the employee. Tax Code section 408A permits eligible individuals to
contribute to a Roth IRA on an after-tax (nondeductible) basis.
Assignment or Transfer of Contracts. Adverse tax consequences may result if you
assign or transfer your interest in the contract to persons other than your
spouse incident to a divorce.
Eligibility. Eligibility to contribute to a traditional IRA on a pre-tax basis
or to establish a Roth IRA or to roll over or transfer from a traditional IRA to
a Roth IRA depends upon your adjusted gross income.
Rollovers and Transfers. Rollovers and direct transfers are permitted from a
401, 403(a) or a 403(b) arrangement to a traditional IRA. Distributions from
these arrangements are not permitted to be transferred or rolled over to a Roth
IRA. A Roth IRA can accept transfers/rollovers only from a traditional IRA,
subject to ordinary income tax, or from another Roth IRA.
TAXATION OF NONQUALIFIED CONTRACTS
In General. Tax Code section 72 governs taxation of annuities in general. Under
a nonqualified contract, if you are a natural person, you generally are not
taxed on increases in the account value until distribution occurs by withdrawing
all or part of such account value. The taxable portion of a distribution is
taxable as ordinary income.
Non-Natural Holders of a Nonqualified Contract. If you are not a natural person,
a nonqualified contract generally is not treated as an annuity for income tax
purposes and the income on the contract for the taxable year is currently
taxable as ordinary income. Income on the contract is any increase over the year
in the surrender value, adjusted for purchase payments made during the year,
amounts previously distributed and amounts previously included in income. There
are some exceptions to this rule and a non-natural person should consult with
its tax adviser prior to purchasing the contract. A non-natural person exempt
from federal income taxes should consult with its tax adviser regarding
treatment of income on the contract for purposes of the unrelated business
income tax. When the contract holder is not a natural person, a change in
annuitant is treated as the death of the contract holder.
Transfers, Assignments or Exchanges of a Nonqualified Contract. A transfer of
ownership of a nonqualified contract, the designation of an annuitant, payee or
other beneficiary who is not also the contract holder, the selection of certain
annuity dates or the exchange of a contract may result in certain tax
consequences. The assignment, pledge or agreement to assign or pledge any
portion of the account value generally will be treated as a distribution. Anyone
contemplating any such designation, transfer, assignment, selection or
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exchange should contact a tax adviser regarding the potential tax effects of
such a transaction.
TAXATION OF THE COMPANY
We are taxed as a life insurance company under the Tax Code. Variable Annuity
Account B is not a separate entity from us. Therefore, it is not taxed
separately as a "regulated investment company" but is taxed as part of the
Company.
We automatically apply investment income and capital gains attributable to the
separate account to increase reserves under the contract. Because of this, under
existing federal tax law we believe that any such income and gains will not be
taxed to the extent that such income and gains are applied to increase reserves
under the contract. In addition, any foreign tax credits attributable to the
separate account will be first used to reduce any income taxes imposed on the
separate account before being used by the Company.
In summary, we do not expect that we will incur any federal income tax liability
attributable to the separate account and we do not intend to make any provision
for such taxes. However, changes in federal tax laws and/or their interpretation
may result in our being taxed on income or gains attributable to the separate
account. In this case we may impose a charge against the separate account (with
respect to some or all of the contracts) to set aside provisions to pay such
taxes. We may deduct this amount from the separate account, including from your
account value invested in the subaccounts.
Other Topics
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The Company
We issue the contract described in this prospectus and are responsible for
providing each contract's insurance and annuity benefits.
We are a stock life insurance company organized under the insurance laws of the
State of Connecticut in 1976 and an indirect wholly-owned subsidiary of Aetna
Inc. Through a merger our operations include the business of Aetna Variable
Annuity Life Insurance Company (formerly known as Participating Annuity Life
Insurance Company, an Arkansas life insurance company organized in 1954).
We are engaged in the business of issuing life insurance and annuities. Our
principal executive offices are located at:
151 Farmington Avenue
Hartford, Connecticut 06156
Variable Annuity Account B
We established Variable Annuity Account B (the separate account) in 1976 as a
segregated asset account to fund our variable annuity contracts. The separate
account is registered as a unit investment trust under the Investment Company
Act of 1940 (the "40 Act"). It also meets the definition of "separate account"
under the federal securities laws.
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The separate account is divided into subaccounts. The subaccounts invest
directly in shares of a pre-assigned fund.
Although we hold title to the assets of the separate account, such assets are
not chargeable with the liabilities of any other business that we conduct.
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 contract are
obligations of the Company.
Contract Distribution
We serve as the principal underwriter for the securities sold by this
prospectus. We are registered as a broker-dealer with the SEC and a member of
the National Association of Securities Dealers, Inc. (NASD).
As principal underwriter we will enter into arrangements with one or more
registered broker-dealers, including at least one affiliate of the Company, to
offer and sell the contract described in this prospectus.
We may also enter into these arrangements with banks that may be acting as
broker-dealers without separate registration under the Securities Exchange Act
of 1934 pursuant to legal and regulatory exceptions. In this prospectus we refer
to the registered broker-dealers and the banks described above as
"distributors." We and one or more of our affiliates may also sell the contract
directly. All individuals offering and selling the contract must be registered
representatives of a broker-dealer, or employees of a bank exempt from
registration under the Securities Exchange Act of 1934, and must be licensed as
insurance agents to sell variable annuity contracts.
Occasionally we may enter into arrangements with independent entities to help
find broker-dealers or banks interested in distributing the contract or to
provide training, marketing and other sales-related functions or administrative
services. We will reimburse such entities for expenses related to and may pay
fees to such entities in return for these services.
We may offer customers of certain broker-dealers special guaranteed rates in
connection with the Guaranteed Account offered through the contract and may
negotiate different commissions for these broker-dealers.
We may also contract with independent third party broker-dealers who will act as
wholesalers by assisting us in selecting broker-dealers or banks interested in
acting as distributors. These wholesalers may also provide training, marketing
and other sales related functions for the Company and the distributors and may
provide certain administrative services in connection with the contract. We may
pay such wholesalers compensation based on purchase payments to contracts
purchased through distributors that they select.
We may also designate third parties to provide services in connection with the
contracts such as reviewing applications for completeness and compliance with
insurance requirements and providing the distributors with approved marketing
material, prospectuses or other supplies. These parties will also receive
payments for their services based on purchase payments, to the extent such
payments are allowed by applicable securities laws. We will pay all costs and
expenses related to these services.
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Payment of Commissions
We pay distributors and their registered representatives who sell the contract
commissions and service fees. Distributors will be paid commissions up to an
amount currently equal to 2% of purchase payments or as a combination of a
certain percentage of purchase payments at time of sale and a trail commission
as a percentage of assets. Under the latter arrangement, commission payments may
exceed 2% of purchase payments over the life of the contract. Those distributors
who sell the contract in relation to asset based fee accounts will receive an
asset based distribution allowance. Some sales personnel may receive various
types of non-cash compensation as special sales incentives, including trips and
educational and/or business seminars. However, any such compensation will be
paid in accordance with NASD rules. In addition, we may provide additional
compensation to the Company's supervisory and other management personnel if the
overall amount of investments in funds advised by the Company or its affiliates
increases over time.
We pay these commissions, fees and related distribution expenses out of our
general assets, including investment income and any profit from investment
advisory fees and mortality and expense risk charges. No additional deductions
or charges are imposed for commissions and related expenses.
Payment Delay or Suspension
We reserve the right to suspend or postpone the date of any payment of benefits
or values under any one of the following circumstances:
> On any valuation date when the New York Stock Exchange is closed (except
customary weekend and holiday closings) or when trading on the New York
Stock Exchange is restricted;
> When an emergency exists as determined by the SEC so that disposal of the
securities held in the subaccounts is not reasonably practicable or it is
not reasonably practicable to fairly determine the value of the
subaccount's assets; or
> During any other periods the SEC may by order permit for the protection of
investors.
The conditions under which restricted trading or an emergency exists shall be
determined by the rules and regulations of the SEC.
Performance Reporting
We may advertise different types of historical performance for the subaccounts
including:
> Standardized average annual total returns; and
> Non-standardized average annual total returns.
Standardized Average Annual Total Returns. We calculate standardized average
annual total returns according to a formula prescribed by the SEC. This shows
the percentage return applicable to $1,000 invested in the subaccounts over the
most recent one, five and ten-year periods. If the investment option was not
available for the full period, we give a history from the date money was first
received in that option under the separate account. Standardized average annual
total returns reflect deduction of all recurring charges during each period
(i.e., mortality and expense risk charges and administrative expense charges, if
any).
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Non-Standardized Average Annual Total Returns. We calculate non-standardized
average annual total returns in a similar manner as that stated above, except
non-standardized returns may also include performance from the fund's inception
date, if that date is earlier than the one we use for standardized returns.
We may also advertise certain ratings, rankings or other information related to
the Company, the subaccounts or the funds. For further details regarding
performance reporting and advertising, you may request a Statement of Additional
Information (SAI) by calling us at the number listed in "Contract
Overview--Questions: Contacting the Company."
Voting Rights
Each of the subaccounts holds shares in a fund and each is entitled to vote at
regular and special meetings of that fund. Under our current view of applicable
law, we will vote the shares for each subaccount as instructed by persons having
a voting interest in the subaccount. If you are a contract holder under a group
contract, you have a fully vested interest in the contract and may instruct the
group contract holder how to direct the Company to cast a certain number of
votes. We will vote shares for which instructions have not been received in the
same proportion as those for which we received instructions. Each person who has
a voting interest in the separate account will receive periodic reports relating
to the funds in which he or she has an interest, as well as any proxy materials
and a form on which to give voting instructions. Voting instructions will be
solicited by a written communication at least 14 days before the meeting.
The number of votes (including fractional votes) you are entitled to direct will
be determined as of the record date set by any fund you invest in through the
subaccounts.
> During the accumulation phase the number of votes is equal to the portion
of your account value invested in the fund, divided by the net asset value
of one share of that fund.
> During the income phase the number of votes is equal to the portion of
reserves set aside for the contract's share of the fund, divided by the net
asset value of one share of that fund.
Contract Modifications
We may change the contract as required by federal or state law or as otherwise
permitted in the contract. In addition, we may, upon 30 days' written notice to
the group contract holder, make other changes to a group contract that would
apply only to individuals who become participants under that contract after the
effective date of such changes. If a group contract holder does not agree to a
change, we reserve the right to refuse to establish new accounts under the
contract. Certain changes will require the approval of appropriate state or
federal regulatory authorities.
Transfer of Ownership: Assignment
We will accept assignments or transfers of ownership of a nonqualified contract
or a qualified contract where such assignments or transfers are not prohibited,
with proper notification. The date of any assignment or transfer of ownership
will be the date we receive the notification at our Home Office. An assignment
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or transfer of ownership may have tax consequences and you should consult with a
tax adviser before assigning or transferring ownership of the contract.
An assignment of a contract will only be binding on the Company if it is made in
writing and sent to the Company at our Home Office. We will use reasonable
procedures to confirm that the assignment is authentic, including verification
of signature. If we fail to follow our own procedures, we will be liable for any
losses to you directly resulting from such failure. Otherwise, we are not
responsible for the validity of any assignment. The rights of the contract
holder and the interest of the annuitant and any beneficiary will be subject to
the rights of any assignee we have on our records.
Involuntary Terminations
We reserve the right to terminate any account with a value of $2,500 or less
immediately following a partial withdrawal. However, an IRA may only be closed
out when purchase payments to the contract have not been received for a 24-month
period and the paid-up annuity benefit at maturity would be less than $20 per
month. If such right is exercised, you will be given 90 days' advance written
notice. We do not intend to exercise this right in cases where the account value
is reduced to $2,500 or less solely due to investment performance.
Legal Matters and Proceedings
We are aware of no material legal proceedings pending which involve the separate
account as 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.
In recent years, several life insurance and annuity companies have been named as
defendants in lawsuits, including class action lawsuits, relating to life
insurance and annuity pricing and sales practices. A purported class action
complaint was filed in the Circuit Court of Lauderdale County, Alabama on March
28, 2000, by Loretta Shaner against the Company (the "Shaner Complaint"). The
Shaner Complaint seeks unspecified compensatory damages from the Company and
unnamed affiliates of the Company. The Shaner Complaint claims that the
Company's sale of deferred annuity products for use as investments in
tax-deferred contributory retirement plans (e.g., IRAs) is improper. This
litigation is in the preliminary stages. The Company intends to defend the
action vigorously.
The Company also is a party to other litigation and arbitration proceedings in
the ordinary course of its business, none of which is expected to have a
material adverse effect on the Company.
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Contents of the Statement of Additional Information
- --------------------------------------------------------------------------------
The Statement of Additional Information (SAI) contains more specific information
on the separate account and the contract, as well as the financial statements of
the separate account and the Company. The following is a list of the contents of
the SAI.
<TABLE>
<S> <C>
General Information and History .................................... 2
Variable Annuity Account B ......................................... 2
Offering and Purchase of Contracts ................................. 3
Performance Data ................................................... 3
General .......................................................... 3
Average Annual Total Return Quotations ........................... 4
Income Phase Payments .............................................. 7
Sales Material and Advertising ..................................... 8
Independent Auditors ............................................... 9
Financial Statements of the Separate Account ....................... S-1
Financial Statements of Aetna Life Insurance and Annuity Company and
Subsidiaries ....................................................... F-1
</TABLE>
You may request an SAI by calling the Company at the number listed in "Contract
Overview--Questions: Contacting the Company."
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Appendix I
ALIAC Guaranteed Account
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The ALIAC Guaranteed Account (the Guaranteed Account) is a fixed interest option
available during the accumulation phase under the contract. This appendix is
only a summary of certain facts about the Guaranteed Account. Please read the
Guaranteed Account prospectus carefully before investing in this option.
In General. Amounts invested in the Guaranteed Account earn specified interest
rates if left in the Guaranteed Account for specified periods of time. If you
withdraw or transfer those amounts before the specified periods elapse, we may
apply a market value adjustment (described below) which may be positive or
negative.
When deciding to invest in the Guaranteed Account, contact your sales
representative or the Company to learn:
> The interest rate(s) we will apply to amounts invested in the Guaranteed
Account. We change the rate(s) periodically. Be certain you know the rate
we guarantee on the day your account dollars are invested in the Guaranteed
Account. Guaranteed interest rates will never be less than an annual
effective rate of 3%.
> The period of time your account dollars need to remain in the Guaranteed
Account in order to earn the rate(s). You are required to leave your
account dollars in the Guaranteed Account for a specified period of time in
order to earn the guaranteed interest rate(s).
Deposit Period. During a deposit period, we offer a specific interest rate for
dollars invested for a certain guaranteed term. For a specific interest rate and
guaranteed term to apply, account dollars must be invested in the Guaranteed
Account during the deposit period for which that rate and term are offered.
Interest Rates. We guarantee different interest rates, depending upon when
account dollars are invested in the Guaranteed Account. For guaranteed terms one
year or longer, we may apply more than one specified interest rate. The interest
rate we guarantee is an annual effective yield. That means the rate reflects a
full year's interest. We credit interest daily at a rate that will provide the
guaranteed annual effective yield over one year. Guaranteed interest rates will
never be less than an annual effective rate of 3%. The interest rate guarantees
are based on the Company's claim-paying ability.
Guaranteed Terms. The guaranteed term is the period of time account dollars must
be left in the Guaranteed Account in order to earn the guaranteed interest rate.
For guaranteed terms one year or longer, we may offer different rates for
specified time periods within a guaranteed term. We offer different guaranteed
terms at different times. We also may offer more than one guaranteed term of the
same duration with different interest rates. Check with your sales
representative or the Company to learn what terms are being offered. The Company
also reserves the right to limit the number of guaranteed terms or the
availability of certain guaranteed terms.
Fees and Other Deductions. If all or a portion of your account value in the
Guaranteed Account is withdrawn or transferred, you may incur one or more of
the following:
> Market Value Adjustment (MVA)--as described in this appendix and in the
Guaranteed Account prospectus; or
> Tax penalties and/or tax withholding--see "Taxation".
We do not make deductions from amounts in the Guaranteed Account to cover
mortality and expense risks. Rather, we consider these risks when determining
the interest rate to be credited.
Market Value Adjustment (MVA). If your account value is withdrawn or transferred
from the Guaranteed Account before the guaranteed term is completed, an MVA may
apply. The MVA reflects investment value changes caused by changes in interest
rates occurring since the date of deposit. The MVA may be positive or negative.
If interest rates at the time of withdrawal or transfer have increased since the
date of deposit, the value of the investment decreases and the MVA will be
negative. This could result in your receiving less than the amount you paid into
the Guaranteed Account. If interest rates at the time of withdrawal or transfer
have decreased since the date of deposit, the value of the investment increases
and the MVA will be positive.
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MVA Waiver. For withdrawals or transfers from a guaranteed term before the
guaranteed term matures, the MVA may be waived for:
> Transfers due to participation in the dollar cost averaging program;
> Withdrawals taken due to your election of SWO or ECO (described in
"Systematic Distribution Options"), if available;
> Withdrawals for minimum distributions required by the Tax Code; and
> Withdrawals due to your exercise of the right to cancel your contract
(described in "Right to Cancel").
Death Benefit. When a death benefit is paid under the contract within six months
of the date of death, only a positive aggregate MVA amount, if any, is applied
to the account value attributable to amounts withdrawn from the Guaranteed
Account. This provision does not apply upon the death of a spousal beneficiary
or joint contract holder who continued the account after the first death. If a
death benefit is paid more than six months from the date of death, a positive or
negative aggregate MVA amount, as applicable, will be applied.
Partial Withdrawals. For partial withdrawals during the accumulation phase,
amounts to be withdrawn from the Guaranteed Account will be withdrawn
proportionally from each group of deposits having the same length of time until
the maturity date ("Guaranteed Term Group"). Within a guaranteed term group, the
amount will be withdrawn first from the oldest deposit period then from the next
oldest and so on until the amount requested is satisfied.
Guaranteed Terms Maturity. As a guaranteed term matures, assets accumulating
under the Guaranteed Account may be (a) transferred to a new guaranteed term,
(b) transferred to other available investment options, or (c) withdrawn. Amounts
withdrawn may be subject to taxation and, if you are under age 59 1/2, tax
penalties may apply.
If no direction is received from you at our Home Office by the maturity date of
a guaranteed term, the amount from the maturing guaranteed term will be
transferred to a new guaranteed term of a similar length. If the same guaranteed
term is no longer available, the next shortest guaranteed term available in the
current deposit period will be used. If no shorter guaranteed term is available,
the next longer guaranteed term will be used.
If you do not provide instructions concerning the maturity value of a maturing
guaranteed term, the maturity value transfer provision applies. This provision
allows transfers or withdrawals without an MVA if the transfer or withdrawal
occurs during the calendar month immediately following a guaranteed term
maturity date. This waiver of the MVA only applies to the first transaction
regardless of the amount involved in the transaction.
Under the Guaranteed Account each guaranteed term is counted as one funding
option. If a guaranteed term matures and is renewed for the same term, it will
not count as an additional investment option for purposes of any limitation on
the number of investment options.
Subsequent Purchase Payments. Purchase payments received after your initial
purchase payment to the Guaranteed Account will be allocated in the same
proportions as the last allocation, unless you properly instruct us to do
otherwise. If the same guaranteed term(s) are not available, the next shortest
term will be used. If no shorter guaranteed term is available, the next longer
guaranteed term will be used.
Dollar Cost Averaging. The Company may offer more than one guaranteed term of
the same duration and credit one with a higher rate contingent upon use only
with the dollar cost averaging program. If amounts are applied to a guaranteed
term which is credited with a higher rate using dollar cost averaging and the
dollar cost averaging is discontinued, the amounts will be transferred to
another guaranteed term of the same duration and an MVA will apply.
Transfer of Account Dollars. Generally, account dollars invested in the
Guaranteed Account may be transferred among guaranteed terms offered through the
Guaranteed Account and/or to other investment options offered through the
contract. However, transfers may not be made during the deposit period in which
your account dollars are invested in the Guaranteed Account or for 90 days after
the close of that deposit period. We will apply an MVA to transfers made before
the end of a guaranteed term. The 90-day wait does not apply to (1) amounts
transferred on the maturity date or under the maturity value transfer provision;
(2) amounts transferred from the
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Guaranteed Account before the maturity date due to the election of an income
phase payment option; (3) amounts distributed under the ECO or SWO (See
"Systematic Distribution Options"); and (4) amounts transferred from an
available guaranteed term in connection with the dollar cost averaging program.
Transfers after the 90-day period are permitted from guaranteed term(s) to other
guaranteed term(s) available during a deposit period or to other available
investment options. Transfers of the Guaranteed Account values on or within one
calendar month of a term's maturity date are not counted as one of the 12 free
transfers of accumulated values in the account.
Reinvesting Amounts Withdrawn from the Guaranteed Account. If amounts are
withdrawn and then reinvested in the Guaranteed Account, we apply the reinvested
amount to the current deposit period. This means the guaranteed annual interest
rate and guaranteed terms available on the date of reinvestment will apply. We
reinvest amounts proportionately in the same way as they were allocated before
withdrawal. Your account value will not be credited for any negative MVA that
was deducted at the time of withdrawal.
The Income Phase. The Guaranteed Account cannot be used as an investment option
during the income phase. However, you may notify us at least 30 days in advance
to elect a fixed or variable income phase payment option and to transfer your
Guaranteed Account dollars to the general account or any of the subaccounts
available during the income phase. Transfers made due to the election of a
lifetime income phase payment option will be subject to only a positive
aggregate MVA.
Distribution. The Company is the principal underwriter of the contract. The
Company is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. From time to time the Company
may offer customers of certain broker-dealers special guaranteed rates in
connection with the Guaranteed Account offered through the contract and may
negotiate different commissions for these broker-dealers.
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Appendix II
Fixed Account
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General Disclosure.
The Fixed Account is an investment option available during the accumulation
phase under the contract.
> Amounts allocated to the Fixed Account are held in the Company's general
account which supports insurance and annuity obligations.
> Interests in the Fixed Account have not been registered with the SEC in
reliance on exemptions under the Securities Act of 1933, as amended.
> Disclosure in this prospectus regarding the Fixed Account may be subject to
certain generally applicable provisions of the federal securities laws
relating to the accuracy and completeness of the statements.
> Disclosure in this appendix regarding the Fixed Account has not been
reviewed by the SEC.
> Additional information about this option may be found in the contract.
Interest Rates.
> The Fixed Account guarantees that amounts allocated to this option will
earn the minimum interest rate specified in the contract. We may credit a
higher interest rate from time to time, but the rate we credit will never
fall below the guaranteed minimum specified in the contract. Amounts
applied to the Fixed Account will earn the interest rate in effect at the
time money is applied. Amounts in the Fixed Account will reflect a compound
interest rate as credited by us. The rate we quote is an annual effective
yield. Interest rate guarantees are based on the Company's claim-paying
ability.
> Our determination of credited interest rates reflects a number of factors,
including mortality and expense risks, interest rate guarantees, the
investment income earned on invested assets and the amortization of any
capital gains and/or losses realized on the sale of invested assets. Under
this option we assume the risk of investment gain or loss by guaranteeing
the amounts you allocate to this option and promising a minimum interest
rate and income phase payment.
Dollar Cost Averaging. Amounts you invest in the Fixed Account must be
transferred into the other investment options available under the contract over
a period not to exceed 12 months. If you discontinue dollar cost averaging, the
remaining balance amounts in the Fixed Account will be transferred into the
money market subaccount available under the contract, unless you direct us to
transfer the balance into other available options.
Withdrawals. Under certain emergency conditions we may defer payment of any
withdrawal for a period of up to 6 months or as provided by federal law.
Charges. We do not make deductions from amounts in the Fixed Account to cover
mortality and expense risks. We consider these risks when determining the
credited rate.
Transfers. During the accumulation phase, you may transfer account dollars from
the Fixed Account to any other available investment option. We may vary the
dollar amount that you are allowed to transfer, but it will never be less than
10% of your account value held in the Fixed Account.
By notifying the Home Office at least 30 days before income phase payments
begin, you may elect to have amounts transferred to one or more of the
subaccounts available during the income phase to provide variable payments.
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Appendix III
Description of Underlying Funds
- --------------------------------------------------------------------------------
The investment results of the mutual funds (funds) are likely to differ
significantly and there is no assurance that any of the funds will achieve their
respective investment objectives. Shares of the funds will rise and fall in
value and you could lose money by investing in the funds. Investments in the
funds are not bank deposits and are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Except as noted,
all funds are diversified, as defined under the Investment Company Act of 1940.
Aetna Balanced VP, Inc.
Investment Objective
Seeks to maximize investment return, consistent with reasonable safety of
principal by investing in a diversified portfolio of one or more of the
following asset classes: stocks, bonds, and cash equivalents, based on the
investment adviser's judgment of which of those sectors or mix thereof offers
the best investment prospects.
Policies
Under normal market conditions, allocates assets among the following asset
classes: equities such as common and preferred stocks; and debt, such as bonds,
mortgage-related and other asset-backed securities, U.S. Government securities,
and money market instruments. Typically maintains approximately 60% of total
assets in equities and 40% of total assets in debt (including money market
instruments), although those percentages may vary from time to time.
Risks
Principal risks are those generally attributable to stock and bond investing.
The success of the fund's strategy depends on the investment adviser's skill in
allocating fund assets between equities and debt and in choosing investments
within those categories. Risks attributable to stock investing include sudden
and unpredictable drops in the value of the market as a whole and periods of
lackluster or negative performance. Stocks of smaller companies tend to be less
liquid and more volatile than stocks of larger companies and can be particularly
sensitive to expected changes in interest rates, borrowing costs and earnings.
Fixed-income investments are subject to the risk that interest rates will rise,
which generally causes bond prices to fall. Also, economic and market conditions
may cause issuers to default or go bankrupt. Values of high-yield bonds are even
more sensitive to economic and market conditions than other bonds. Prices of
mortgage-related securities, in addition to being sensitive to changes in
interest rates, also are sensitive to changes in the prepayment patterns on the
underlying instruments.
Investment Adviser: Aeltus Investment Management, Inc.
Aetna Income Shares d/b/a Aetna Bond VP
Investment Objective
Seeks to maximize total return, consistent with reasonable risk, through
investments in a diversified portfolio consisting primarily of debt securities.
It is anticipated that capital appreciation and investment income will both be
major factors in achieving total return.
Policies
Under normal market conditions, invests at least 65% of total assets in
high-grade corporate bonds, mortgage-related and other asset-backed securities,
and securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. High-grade securities are rated at least A by Standard &
Poor's Corporation (S&P) or Moody's Investors Service, Inc. (Moody's), or if
unrated, considered by the investment adviser to be of comparable quality. May
also invest up to 15% of total assets in high-yield bonds, and up to 25% of
total assets in foreign debt securities.
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Risks
Principal risks are those generally attributable to debt investing, including
increases in interest rates and loss of principal. Generally, when interest
rates rise, bond prices fall. Bonds with longer maturities tend to be more
sensitive to changes in interest rates. For all bonds there is a risk that the
issuer will default. High-yield bonds generally are more susceptible to the risk
of default than higher rated bonds. Prices of mortgage-related securities, in
addition to being sensitive to changes in interest rates, also are sensitive to
changes in the prepayment patterns on the underlying instruments. Foreign
securities have additional risks. Some foreign securities tend to be less liquid
and more volatile than their U.S. counterparts. In addition, accounting
standards and market regulations tend to be less standardized in certain foreign
countries. These risks are usually higher for securities of companies in
emerging markets. Securities of foreign companies may be denominated in foreign
currency. Exchange rate fluctuations may reduce or eliminate gains or create
losses.
Investment Adviser: Aeltus Investment Management, Inc.
Aetna Variable Fund d/b/a Aetna Growth and Income VP
Investment Objective
Seeks to maximize total return through investments in a diversified portfolio of
common stocks and securities convertible into common stock. It is anticipated
that capital appreciation and investment income will both be major factors in
achieving total return.
Policies
Under normal market conditions, invests at least 65% of total assets in common
stocks that the investment adviser believes have significant potential for
capital appreciation or income growth. Tends to emphasize stocks of larger
companies. Also invests assets across other asset classes (including stocks of
small and medium-sized companies, international stock, real estate securities
and fixed income securities). May invest principally in common stocks having
significant potential for capital appreciation, or may purchase common stocks
principally for their income potential through dividends and option writing, or
may acquire securities having a mix of these characteristics.
Risks
Principal risks are those generally attributable to stock investing. These risks
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Although the investment adviser
emphasizes large cap stocks, to the extent the Fund is diversified across asset
classes, it may not perform as well as less diversified funds when large cap
stocks are in favor. Additionally, stocks of medium-sized and smaller companies
tend to be more volatile and less liquid than stocks of larger companies.
Investment Adviser: Aeltus Investment Management, Inc.
Aetna Variable Encore Fund d/b/a Aetna Money Market VP
Investment Objective
Seeks to provide high current return, consistent with preservation of capital
and liquidity, through investment in high-quality money market instruments.
Policies
Invests only in a diversified portfolio of high-quality fixed income securities
denominated in U.S. dollars, with short remaining maturities. These securities
include U.S. Government securities, such as U.S. Treasury bills and securities
issued or sponsored by U.S. government agencies. They also may include corporate
debt securities, commercial paper, asset-backed securities and certain
obligations of U.S. and foreign banks, each of which must be highly rated by
independent rating agencies or, if unrated, considered by the investment adviser
to be of comparable quality. Maintains a dollar-weighted average portfolio
maturity of 90 days or less.
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Risks
It is possible to lose money by investing in the fund. There is no guaranty the
fund will achieve its investment objective. An investment in the fund is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
A weak economy, strong equity markets and changes by the Federal Reserve in its
monetary policies all could affect short-term interest rates and therefore the
value and yield of the fund's shares.
Investment Adviser: Aeltus Investment Management, Inc.
Aetna Variable Portfolios, Inc.--Aetna Growth VP
Investment Objective
Seeks growth of capital through investment in a diversified portfolio consisting
primarily of common stocks and securities convertible into common stocks
believed to offer growth potential.
Policies
Under normal market conditions, invests at least 65% of total assets in common
stocks and securities convertible into common stock. Tends to emphasize stocks
of larger companies, although may invest in companies of any size. Uses
internally developed quantitative computer models to evaluate the financial
characteristics of approximately 1,000 companies. The investment adviser
analyzes these characteristics in an attempt to identify companies it believes
have strong growth characteristics or demonstrate a positive trend in earnings
estimates, but whose full value is not reflected in the stock price. Focuses on
companies that the investment adviser believes have strong, sustainable and
improving earnings growth, and established market positions in a particular
industry.
Risks
Principal risks are those generally attributable to stock investing. They
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Growth-oriented stocks typically
sell at relatively high valuations as compared to other types of stocks. If a
growth stock does not exhibit the consistent level of growth expected, its price
may drop sharply. Historically, growth-oriented stocks have been more volatile
than value-oriented stocks.
Investment Adviser: Aeltus Investment Management, Inc.
Aetna Variable Portfolios, Inc.--Aetna Index Plus Large Cap VP
Investment Objective
Seeks to outperform the total return performance of the Standard & Poor's 500
Composite Index (S&P 500), while maintaining a market level of risk.
Policies
Invests at least 80% of net assets in stocks included in the S&P 500 (other than
Aetna Inc. common stock). The investment adviser attempts to achieve the
objective by overweighting those stocks in the S&P 500 that the investment
adviser believes will outperform the index, and underweighting (or avoiding
altogether) those stocks that the investment adviser believes will underperform
the index. In determining stock weightings, uses internally developed
quantitative computer models to evaluate various criteria, such as the financial
strength of each company and its potential for strong, sustained earnings
growth. At any one time, the fund's portfolio generally includes approximately
400 of the stocks included in the S&P 500. Although the fund will not hold all
the stocks in the S&P 500, the investment adviser expects that there will be a
close correlation between the performance of the fund and that of the S&P 500 in
both rising and falling markets.
Risks
Principal risks are those generally attributable to stock investing. These risks
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. The success of the
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fund's strategy depends significantly on the investment adviser's skill in
determining which securities to overweight, underweight or avoid altogether.
Investment Adviser: Aeltus Investment Management, Inc.
Aetna Variable Portfolios, Inc.--Aetna International VP
Investment Objective
Seeks long-term capital growth primarily though investment in a diversified
portfolio of common stocks principally traded in countries outside of the United
States. The fund will not target any given level of current income.
Policies
Under normal market conditions, invests at least 65% of total assets in
securities principally traded in three or more countries outside of the United
States. These securities may include common stocks as well as securities
convertible into common stock. Diversifies the fund by investing in a mix of
stocks that the investment adviser believes have the potential for long-term
growth, as well as stocks that appear to be trading below their perceived value.
Allocates assets among several geographic regions and individual countries,
investing primarily in those areas that the investment adviser believes have the
greatest potential for growth as well as stable exchange rates. Invests
primarily in established foreign securities markets, although may invest in
emerging markets as well. Uses internally developed quantitative computer models
to evaluate the financial characteristics of over 2,000 companies in an attempt
to select companies with long-term sustainable growth characteristics. Employs
currency hedging strategies to protect from adverse effects on the U.S. dollar.
Risks
Principal risks are those generally attributable to stock investing which
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Stocks of foreign companies tend
to be less liquid and more volatile than their U.S. counterparts. Accounting
standards and market regulations tend to be less standardized in certain foreign
countries, and economic and political climates tend to be less stable. Stocks of
foreign companies may be denominated in foreign currency. Exchange rate
fluctuations may reduce or eliminate gains or create losses. Hedging strategies
intended to reduce this risk may not perform as expected. Investments in
emerging markets are subject to the same risks applicable to foreign investments
generally, although those risks may be increased due to conditions in such
countries.
Investment Adviser: Aeltus Investment Management, Inc.
Aetna Variable Portfolios, Inc.--Aetna Small Company VP
Investment Objective
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.
Policies
Under normal market conditions, invests at least 65% of total assets in common
stocks and securities convertible into common stock of small-capitalization
companies, defined as: the 2,000 smallest of the 3,000 largest U.S. companies
(as measured by market capitalization); all companies not included above that
are included in the Standard & Poor's SmallCap 600 Index or the Russell 2000
Index; and companies with market capitalizations lower than any companies
included in the first two categories. For purposes of the 65% policy, the
largest company in this group in which the fund intends to invest currently has
a market capitalization of approximately $1.5 billion. Invests in stocks that
the investment adviser believes have the potential for long-term growth, as well
as those that appear to be trading below their perceived value. Uses internally
developed quantitative computer models to evaluate financial characteristics of
over 2,000 companies in an attempt to identify companies whose perceived value
is not reflected in the stock price. Considers the potential of each company to
create or take advantage of unique product opportunities, its potential to
achieve long-term sustainable growth and the quality of its management.
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Risks
Principal risks are those generally attributable to stock investing which
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Stocks of smaller companies carry
higher risks than stocks of larger companies. This is because smaller companies
may lack the management experience, financial resources, product
diversification, and competitive strengths of larger companies. In many
instances, the frequency and volume of trading in small cap stocks are
substantially less than of stocks of larger companies. As a result, the stocks
of smaller companies may be subject to wider price fluctuations and/or may be
less liquid. When selling a large quantity of a particular stock, the fund may
have to sell at a discount from quoted prices or may have to make a series of
small sales over an extended period of time due to the more limited trading
volume of smaller company stocks. Stocks of smaller companies can be
particularly sensitive to expected changes in interest rates, borrowing costs
and earnings.
Investment Adviser: Aeltus Investment Management, Inc.
Aetna Variable Portfolios, Inc.--Aetna Technology VP
Investment Objective
Seeks long-term capital appreciation.
Policies
Primarily invests in common stocks and securities convertible into common stock
of companies in the information technology industry sector. These companies
include companies that the subadviser considers to be principally engaged in the
development, production, or distribution of products or services related to the
processing, storage, transmission, or presentation of information or data. A
particular company will be considered to be principally engaged in the
information technology industries if, at the time of investment, the investment
adviser determines that at least 50% of the company's assets, gross income, or
net profits are committed to, or derived from, those industries. A company will
also be considered to be principally engaged if the subadviser considers that
the company has the potential for capital appreciation primarily as a result of
particular products, technology, patents, or other market advantages in those
industries. In selecting stocks, the subadviser looks at a company's valuation
relative to its potential long-term growth rate. May look to see whether a
company offers a new or improved product, service or business operation; whether
it has experienced a positive change in its financial or business condition;
whether the market for its goods or services has expanded or experienced a
positive change; and whether there is a potential catalyst for positive change
in the company's business or stock price. May sell a security if the subadviser
determines that the company has become overvalued due to price appreciation or
has experienced a change in its business fundamentals, if the company's growth
rate slows substantially, or if the subadviser believes that another investment
offers a better opportunity.
Risks
Principal risks are those generally attributable to stock investing which
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Stocks of smaller companies tend
to be less liquid and more volatile than stocks of larger companies. Further,
stocks of smaller companies also can be particularly sensitive to expected
changes in interest rates, borrowing costs and earnings. Because the fund's
investments are concentrated in the information technology industries, the Fund
may be subject to more abrupt swings in value than a fund which invests in a
broader range of industries. Investments in information technology companies may
be highly volatile. The fund may experience difficulty in establishing or
closing out positions in these securities at prevailing market prices. Also,
there may be less publicly available information about small companies or less
market interest in their securities as compared to larger companies, and it may
take longer for the prices of the securities to reflect the full value of their
issuers' earnings potential or assets.
Investment Adviser: Aeltus Investment Management, Inc.
Subadviser: Elijah Asset Management, LLC
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AIM V.I. Capital Appreciation Fund
Investment Objective
Seeks growth of capital through investment in common stocks, with emphasis on
medium- and small-sized growth companies.
Policies
The portfolio managers focus on companies they believe are likely to benefit
from new or innovative products, services or processes as well as those that
have experienced above-average, long-term growth in earnings and have excellent
prospects for future growth. The portfolio managers consider whether to sell a
particular security when any of those factors materially changes. The fund may
also invest up to 20% of its total assets in foreign securities.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
Risks
The prices of equity securities change in response to many factors, including
the historical and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. This is especially true with respect to common stocks of smaller
companies, whose prices may go up and down more than common stocks of larger,
more-established companies. Also, since common stocks of smaller companies may
not be traded as often as common stocks of larger, more-established companies,
it may be difficult or impossible for the fund to sell securities at a desirable
price.
Investment Adviser: A I M Advisors, Inc.
AIM V.I. Government Securities Fund
Investment Objective
Seeks to achieve a high level of current income consistent with reasonable
concern for safety of principal by investing in debt securities issued,
guaranteed or otherwise backed by the United States Government.
Policies
The portfolio managers focus on securities that they believe have favorable
prospects for current income, consistent with their concern for safety of
principal. The portfolio managers consider whether to sell a particular security
when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective. The prices of foreign securities
may be affected by other factors, including, currency exchange rate, political
and economic conditions, regulations and foreign markets. These factors may
affect the prices of securities issued by foreign companies located in
developing countries more than those in countries with mature economies.
Risks
The prices of debt securities change in response to many factors. Debt
securities are particularly vulnerable to credit risk and interest rate
fluctuations. Interest rate increases can cause the price of a debt security to
decrease. The longer a debt security's duration, the more sensitive it is to
this risk. The prices of high-coupon U.S. Government agency mortgage-backed
securities fall more slowly when interest rates rise than do prices of other
fixed-rate securities. Some of the securities purchased by the fund are not
guaranteed by the U.S. Government. The agency or instrumentality issuing such
security may default or otherwise be unable to honor a financial obligation.
Investment Adviser: A I M Advisors, Inc.
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AIM V.I. Growth Fund
Investment Objective
Seeks growth of capital primarily by investing in seasoned and better
capitalized companies considered to have strong earnings momentum.
Policies
The portfolio managers focus on companies that have experienced above-average
growth in earnings and have excellent prospects for future growth. The portfolio
managers consider whether to sell a particular security when any of those
factors materially changes. The fund may also invest up to 20% of its total
assets in foreign securities.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
Risks
The prices of equity securities change in response to many factors, including
the historical and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. The fund may participate in the initial public offering (IPO) market.
Because of the fund's small asset base any investment the fund may make in IPOs
may significantly increase the fund's total returns. As the fund's assets grow,
the impact of IPO investments will decline, which may reduce the fund's total
returns.
Investment Adviser: A I M Advisors, Inc.
AIM V.I. Growth and Income Fund
Investment Objective
Seeks growth of capital with a secondary objective of current income.
Policies
The fund seeks to meet these objectives by investing at least 65% of its net
assets in income-producing securities, including dividend-paying common stocks
and convertible securities. The portfolio managers purchase securities of
established companies that have long-term above-average growth in earnings and
dividends, and growth companies that they believe have the potential for
above-average growth in earnings and dividends. The portfolio managers consider
whether to sell a particular security when they believe the security no longer
has that potential or the capacity to generate income. The fund may also invest
up to 20% of its total assets in foreign securities.
The fund may engage in active and frequent trading of portfolio securities to
achieve its investment objectives. If the fund does trade in this way, it may
incur increased transaction costs and brokerage commissions, both of which can
lower the actual return on your investment.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
Risks
The prices of equity securities change in response to many factors, including
the historical and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. The values of the convertible securities in which the fund may invest
also will be affected by market interest rates, the risk that the issuer may
default on interest or principal payments and the value of the underlying common
stock into which these securities may be converted. Specifically, since these
types of convertible securities pay fixed interest and dividends, their values
may fall if market interest rates rise and rise if market interest rates fall.
Additionally, an issuer may have the right to buy back certain of the
convertible securities at a time and at a price that is unfavorable to the fund.
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Investment Adviser: A I M Advisors, Inc.
AIM V.I. Value Fund
Investment Objective
Seeks to achieve long-term growth of capital by investing primarily in equity
securities judged by the fund's investment adviser to be undervalued relative to
the investment adviser's appraisal of the current or projected earnings of the
companies issuing the securities, or relative to current market values of assets
owned by the companies issuing the securities or relative to the equity market
generally. Income is a secondary objective.
Policies
The fund also may invest in preferred stocks and debt instruments that have
prospects for growth of capital. The fund may also invest up to 25% of its total
assets in foreign securities.
The portfolio managers focus on undervalued equity securities of (1)
out-of-favor cyclical growth companies; (2) established growth companies that
are undervalued compared to historical relative valuation parameters; (3)
companies where there is early but tangible evidence of improving prospects that
are not yet reflected in the price of the company's equity securities; and (4)
companies whose equity securities are selling at prices that do not reflect the
current market value of their assets and where there is reason to expect
realization of this potential in the form of increased equity values. The
portfolio managers consider whether to sell a particular security when they
believe the company no longer fits into any of the above categories.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
Risks
The prices of equity securities change in response to many factors, including
the historical and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. If the seller of a repurchase agreement in which the fund invests
defaults on its obligation or declares bankruptcy, the fund may experience
delays in selling the securities underlying the repurchase agreement. As a
result, the fund may incur losses arising from decline in the value of those
securities, reduced levels of income and expenses of enforcing its rights.
Investment Adviser: A I M Advisors, Inc.
Alliance Variable Products--Growth and Income Portfolio
Investment Objective
Seeks reasonable current income and reasonable opportunity for appreciation
through investments primarily in dividend-paying common stocks of good quality.
Policies
Invests primarily in dividend-paying common stocks of large, well-established
"blue-chip" companies. May invest in fixed-income and convertible securities and
in securities of foreign issuers. Restricts its investments in foreign
securities to issues of high quality.
Risks
Principal risks include market risk, interest rate risk, and credit risk. Market
risk is the risk that the value of the Portfolio's investments will fluctuate as
the stock or bond markets fluctuate and that prices overall will decline over
shorter or longer-term periods. Interest rate risk is the risk that changes in
interest rates will affect the value of the Portfolio's investments in debt
securities, such as bonds, notes, and asset-backed securities, or other
income-producing securities. Increases in interest rates may cause the value of
a Portfolio's investments to decline. Credit risk is the risk that the issuer or
the guarantor of a debt security, or the counterparty to a derivatives
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contract, will be unable or unwilling to make timely payments of interest or
principal, or to otherwise honor its obligations. Investment in foreign
securities are subject to increased credit risk because of the difficulties of
requiring foreign entities to honor their contractual commitments, and because a
number of foreign governments and other issuers are already in default.
Investments in foreign securities have foreign risk and currency risk. Foreign
risk includes the risk that investments in foreign securities may experience
more rapid and extreme changes in value than if they invested solely in
securities of U.S. companies; foreign companies usually are not subject to the
same degree of regulation as U.S. companies; differing reporting, accounting,
and auditing standards; and the risk that political changes or diplomatic
developments could adversely affect the Portfolio's investments in a foreign
country. Currency risk is the risk that fluctuations in the exchange rates
between the U.S. dollar and foreign currencies may negatively affect the value
of the Portfolio's investments.
Investment Adviser: Alliance Capital Management L.P.
Alliance Variable Products--Premier Growth Portfolio
Investment Objective
Seeks growth of capital by pursuing aggressive investment policies.
Policies
Invests primarily in equity securities of U.S. companies. Focuses on a
relatively small number of intensively researched companies selected from a
research universe of more than 600 companies that have strong management,
superior industry positions, excellent balance sheets, and superior earnings
growth prospects. Normally, invests in about 40-50 companies, with the 25 most
highly regarded of these companies usually constituting approximately 70% of the
Portfolio's net assets. During market declines, while adding to positions in
favored stocks, the Portfolio becomes somewhat more aggressive, gradually
reducing the number of companies represented in its portfolio. Conversely, in
rising markets, while reducing or eliminating fully-valued positions, the
Portfolio becomes somewhat more conservative, gradually increasing the number of
companies represented in its portfolio. Through this approach, the investment
adviser seeks to gain positive returns in good markets while providing some
measure of protection in poor markets. May also invest up to 20% of its net
assets in convertible securities.
Risks
Among the principal risks is market risk. This is the risk that the value of the
Portfolio's investments will fluctuate as the stock or bond markets fluctuate
and that prices overall will decline over shorter or longer-term periods.
Because the Portfolio invests in a smaller number of securities than many other
equity funds, you investment has the risk that changes in the value of a single
security may have a more significant effect, either negative or positive, on the
Portfolio's net asset value.
Investment Adviser: Alliance Capital Management L.P.
Fidelity Variable Insurance Products Fund--Equity Income Portfolio
Investment Objective
Seeks reasonable income. Also considers the potential for capital appreciation.
Seeks a yield which exceeds the composite yield on the securities comprising the
S&P 500.
Policies
Normally invests at least 65% of total assets in income-producing equity
securities. May also invest in other types of equity securities and debt
securities, including lower-quality debt securities. May invest in securities of
both foreign and domestic issuers. Emphasis on above-average income-producing
equity securities tends to lead to investments in large cap "value" stocks. In
making investment decisions, the investment adviser relies on fundamental
analysis of each issuer and its potential for success in light of its current
financial condition, its industry position, and economic and market conditions.
May use various techniques, such as buying and selling futures contracts, to
increase or decrease exposure to changing security prices, or other factors that
affect security values.
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Risks
The value of equity securities fluctuates in response to issuer, political,
market and economic developments. In the short term, equity prices can fluctuate
dramatically in response to these developments. Debt securities have varying
levels of sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise. Securities with longer
maturities and mortgage securities can be more sensitive to interest rate
changes. Foreign investments, especially those in emerging markets, can be more
volatile and potentially less liquid than U.S. investments due to increased
risks of adverse issuer, political, regulatory, market or economic developments.
Lower-quality debt securities (those of less than investment-grade quality) can
be more volatile due to increased sensitivity to adverse issuer, political,
regulatory, market or economic developments. Lower-quality debt securities
involve greater risk of default or price changes due to changes in the credit
quality of the issuer. "Value" stocks can react differently to issuer,
political, market and economic developments than the market as a whole and other
types of stocks. "Value" stocks may not ever realize their full value.
Investment Adviser: Fidelity Management & Research Company
Fidelity Variable Insurance Products Fund--Growth Portfolio
Investment Objective
Seeks capital appreciation.
Policies
Normally invests primarily in common stocks of companies the investment adviser
believes have above-average growth potential. Companies with high growth
potential tend to be companies with higher than average price/earning (P/E)
ratios and are often called "growth" stocks. May invest in securities of both
foreign and domestic issuers. In making investment decisions, the investment
adviser relies on fundamental analysis of each issuer and its potential for
success in light of its current financial condition, its industry position, and
economic and market conditions. May use various techniques, such as buying and
selling futures contracts, to increase or decrease exposure to changing security
prices, or other factors that affect security values.
Risks
The value of equity securities fluctuates in response to issuer, political,
market and economic developments. In the short term, equity prices can fluctuate
dramatically in response to these developments. Foreign investments, especially
those in emerging markets, can be more volatile and potentially less liquid than
U.S. investments due to increased risks of adverse issuer, political,
regulatory, market or economic developments. "Growth" stocks tend to be
sensitive to changes in their earnings and more volatile than other types of
stocks.
Investment Adviser: Fidelity Management & Research Company
Fidelity Variable Insurance Products Fund--High Income Portfolio
Investment Objective
Seeks a high level of current income while also considering growth of capital.
Policies
Normally invests at least 65% of total assets in income-producing debt
securities, preferred stocks and convertible securities, with an emphasis on
lower-quality debt securities. May also invest in non-income producing
securities, including defaulted securities and common stocks. Currently intends
to limit common stocks to 10% of total assets. May invest in securities of both
foreign and domestic issuers. In making investment decisions, the investment
adviser relies on fundamental analysis of each issuer and its potential for
success in light of its current financial condition, its industry position, and
economic and market conditions. May use various techniques, such as buying and
selling futures contracts, to increase or decrease exposure to changing security
prices, interest rates or other factors that affect security values.
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Risks
Debt securities have varying levels of sensitivity to changes in interest rates.
In general, the price of a debt security can fall when interest rates rise.
Securities with longer maturities and mortgage securities can be more sensitive
to interest rate changes. The value of equity securities fluctuates in response
to issuer, political, market and economic developments. In the short term,
equity prices can fluctuate dramatically in response to these developments.
Foreign investments, especially those in emerging markets, can be more volatile
and potentially less liquid than U.S. investments due to increased risks of
adverse issuer, political, regulatory, market or economic developments.
Lower-quality debt securities (those of less than investment-grade quality) can
be more volatile due to increased sensitivity to adverse issuer, political,
regulatory, market or economic developments. Lower-quality debt securities
involve greater risk of default or price changes due to changes in the credit
quality of the issuer.
Investment Adviser: Fidelity Management & Research Company
Subadvisers: Fidelity Management & Research (U.K.) Inc.; Fidelity Management &
Research Far East Inc.; Fidelity Investments Japan Limited
Fidelity Variable Insurance Products Fund II--Contrafund[RegTM] Portfolio
Investment Objective
Seeks long-term capital appreciation.
Policies
Normally invests primarily in common stocks of companies whose value the
investment adviser believes is not fully recognized by the public. May invest in
securities of both foreign and domestic issuers. May tend to buy "growth" stocks
or "value" stocks, or a combination of both types. In making investment
decisions, the investment adviser relies on fundamental analysis of each issuer
and its potential for success in light of its current financial condition, its
industry position, and economic and market conditions. May use various
techniques, such as buying and selling futures contracts, to increase or
decrease exposure to changing security prices, interest rates or other factors
that affect security values.
Risks
The value of equity securities fluctuates in response to issuer, political,
market and economic developments. In the short term, equity prices can fluctuate
dramatically in response to these developments. Debt securities have varying
levels of sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise. Securities with longer
maturities and mortgage securities can be more sensitive to interest rate
changes. Foreign investments, especially those in emerging markets, can be more
volatile and potentially less liquid than U.S. investments due to increased
risks of adverse issuer, political, regulatory, market or economic developments.
"Growth" stocks tend to be sensitive to changes in their earnings and more
volatile than other types of stocks. "Value" stocks can react differently to
issuer, political, market and economic developments than the market as a whole
and other types of stocks. "Value" stocks may not ever realize their full value.
Investment Adviser: Fidelity Management & Research Company
Subadvisers: Fidelity Management & Research (U.K.) Inc.; Fidelity Management &
Research Far East Inc.; Fidelity Investments Japan Limited
Janus Aspen Series--Aggressive Growth Portfolio
Investment Objective
Seeks long-term growth of capital.
Policies
A nondiversified portfolio that invests primarily in common stocks selected for
their growth potential and normally invests at least 50% of its equity assets in
medium-sized companies. Medium-sized companies are those whose market
capitalizations at the time of investment fall within the range of companies in
the Standard and Poor's (S&P) MidCap 400 Index. The market capitalizations
within the Index will vary, but as of December 31, 1999,
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they ranged from approximately $170 million to $37 billion. May at times hold
substantial positions in cash or similar investments.
Risks
Because the Portfolio may invest substantially all of its assets in common
stocks, the main risk is that the value of the stocks it holds might decrease in
response to the activities of an individual company or in response to general
market and/or economic conditions. In addition, a nondiversified portfolio has
the ability to take larger positions in a smaller number of issuers. Because the
appreciation or depreciation of a single stock may have a greater impact on the
net asset value of a nondiversified portfolio, its share price can be expected
to fluctuate more than a diversified portfolio. Performance may also be affected
by risks specific to certain types of investments, such as foreign securities,
derivative investments, non-investment grade debt securities
(high-yield/high-risk securities or "junk" bonds) or companies with relatively
small market capitalizations. Smaller or newer companies may suffer more
significant losses as well as realize more substantial growth than larger or
more established issuers. Investments in such companies tend to be more volatile
and somewhat more speculative. Issues associated with investing in foreign
securities include currency risk, political and economic risk, regulatory risk,
market risk and transaction costs. High-yield/high-risk securities are generally
more dependent on the ability of the issuer to meet interest and principal
payments (i.e., credit risk). They are more vulnerable to real or perceived
economic changes, political changes or other adverse developments specific to
the issuer.
Investment Adviser: Janus Capital Corporation
Janus Aspen Series--Balanced Portfolio
Investment Objective
Seeks long-term capital growth, consistent with preservation of capital and
balanced by current income.
Policies
Normally invests 40-60% of its assets in securities selected primarily for their
growth potential and 40-60% of its assets in securities selected primarily for
their income potential. Will normally invest at least 25% of its assets in
fixed-income securities. Assets may shift between the growth and income
components of the Portfolio based on the portfolio manager's analysis of
relevant market, financial and economic conditions. May at times hold
substantial positions in cash or similar investments.
Risks
Because the Portfolio may invest a significant portion of its assets in common
stocks, the main risk is that the value of the stocks it holds might decrease in
response to the activities of an individual company or in response to general
market and/or economic conditions. The income component of the Portfolio's
holdings includes fixed-income securities which generally will decrease in value
when interest rates rise. Another risk associated with fixed-income securities
is the risk that an issuer of a bond will be unable to make principal and
interest payments when due (i.e. credit risk). Performance may also be affected
by risks specific to certain types of investments, such as foreign securities,
derivative investments, non-investment grade debt securities
(high-yield/high-risk securities or "junk" bonds) or companies with relatively
small market capitalizations. Smaller or newer companies may suffer more
significant losses as well as realize more substantial growth than larger or
more established issuers. Investments in such companies tend to be more volatile
and somewhat more speculative. Issues associated with investing in foreign
securities include currency risk, political and economic risk, regulatory risk,
market risk and transaction costs. High-yield/high-risk securities are generally
more susceptible to credit risk. They are more vulnerable to real or perceived
economic changes, political changes or other adverse developments specific to
the issuer.
Investment Adviser: Janus Capital Corporation
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Janus Aspen Series--Growth Portfolio
Investment Objective
Seeks long-term growth of capital in a manner consistent with the preservation
of capital.
Policies
Generally invests primarily in common stocks of larger, more established
companies selected for their growth potential, although it can invest in
companies of any size. May at times hold substantial positions in cash or
similar investments.
Risks
Because the Portfolio may invest substantially all of its assets in common
stocks, the main risk is that the value of the stocks it holds might decrease in
response to the activities of an individual company or in response to general
market and/or economic conditions. Performance may also be affected by risks
specific to certain types of investments, such as foreign securities, derivative
investments, non-investment grade debt securities (high-yield/high-risk
securities or "junk" bonds) or companies with relatively small market
capitalizations. Smaller or newer companies may suffer more significant losses
as well as realize more substantial growth than larger or more established
issuers. Investments in such companies tend to be more volatile and somewhat
more speculative. Issues associated with investing in foreign securities include
currency risk, political and economic risk, regulatory risk, market risk and
transaction costs. High-yield/high-risk securities are generally more dependent
on the ability of the issuer to meet interest and principal payments (i.e.,
credit risk). They are more vulnerable to real or perceived economic changes,
political changes or other adverse developments specific to the issuer.
Investment Adviser: Janus Capital Corporation
Janus Aspen Series--Worldwide Growth Portfolio
Investment Objective
Seeks long-term growth of capital in a manner consistent with the preservation
of capital.
Policies
Invests primarily in common stocks of companies of any size throughout the
world. Normally invests in issuers from at least five different countries,
including the United States. May at times invest in fewer than five countries or
even in a single country. May hold substantial positions in cash or similar
investments.
Risks
Because the Portfolio may invest substantially all of its assets in common
stocks, the main risk is that the value of the stocks it holds might decrease in
response to the activities of an individual company or in response to general
market and/or economic conditions. Performance may also be affected by risks
specific to certain types of investments, such as foreign securities, derivative
investments, non- investment grade debt securities (high-yield/high-risk
securities or "junk" bonds) or companies with relatively small market
capitalizations. Smaller or newer companies may suffer more significant losses
as well as realize more substantial growth than larger or more established
issuers. Investments in such companies tend to be more volatile and somewhat
more speculative. Issues associated with investing in foreign securities include
currency risk, political and economic risk, regulatory risk, market risk and
transaction costs. High-yield/high-risk securities are generally more dependent
on the ability of the issuer to meet interest and principal payments (i.e.,
credit risk). They are more vulnerable to real or perceived economic changes,
political changes or other adverse developments specific to the issuer.
Investment Adviser: Janus Capital Corporation
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MFS Total Return Series
Investment Objective
Seeks primarily to provide above-average income (compared to a portfolio
invested entirely in equity securities) consistent with the prudent employment
of capital. Its secondary objective is to provide a reasonable opportunity for
growth of capital and income.
Policies
Under normal market conditions, invests at least 40%, but no more than 75%, of
net assets in common stocks and related securities (referred to as equity
securities); bonds, warrants or rights convertible into stock; and depositary
receipts for those securities. Invests at least 25% of net assets in
non-convertible fixed income securities. May vary the percentage of assets
invested in any one type of security (within the limits described above). May
invest in foreign securities and may have exposure to foreign currencies through
its investment in these securities. Generally, seeks to purchase equity
securities that the investment adviser believes are undervalued in the market
relative to their long-term potential focusing on companies with relatively
large market capitalization (i.e., market capitalizations of $5 billion or
more). Fixed income securities include U.S. government securities,
mortgage-backed and asset-backed securities, and corporate bonds. The series has
engaged and may engage in active and frequent trading to achieve its principal
investment strategies.
Risks
In allocating investments, the series could miss attractive investment
opportunities by underweighting markets where there are significant returns, and
could lose value by overweighting markets where there are significant declines.
The value of securities held by the series may decline due to changing economic,
political or market conditions, or disappointing earnings results. If
anticipated events do not occur or are delayed, or if investor perceptions about
undervalued securities do not improve, the market price of these securities may
not rise or may fall. Fixed income securities are subject to interest rate risk
(the risk that when interest rates rise, the prices of fixed income securities
will generally fall) and credit risk (the risk that the issuer of a fixed income
security will not be able to pay principal and interest when due). Securities
with longer maturities are affected more by interest rate risk. Investing in
foreign securities involves risks relating to political social and economic
developments abroad, as well as risks resulting from the differences between the
regulations to which U.S. and foreign issuers are subject. Fixed income
securities traded in the over-the-counter market may be harder to purchase or
sell at a fair price. The inability to purchase or sell these fixed income
securities at a fair price could have a negative impact on the series'
performance. Frequent trading may result in the realization and distribution to
shareholders of higher capital gains as compared to a series with less active
trading policies. Frequent trading also increases transaction costs, which could
detract from the series' performance.
Investment Adviser: Massachusetts Financial Services Company
[Mitchell Hutchins Series Trust Growth and Income Portfolio (Class I shares)
Investment Objective
Has an investment objective of current income and capital growth.
Policies
Invests primarily in dividend-paying stocks of companies that its investment
adviser believes have potential for rapid earnings growth. Also invests, to a
lesser extent, in bonds when the investment adviser believes those investments
offer opportunities for capital appreciation because interest rates may fall or
credit factors or ratings affecting particular issuers may improve. May invest
in securities of foreign issuers that are denominated in U.S. dollars and traded
in U.S. markets. In selecting stocks for the fund, the adviser uses its own
Factor Valuation Model to identify companies that appear undervalued. The model
ranks companies based on "value" factors such as dividends, cash flows, earnings
and book values, as well as on "growth" factors, such as earnings momentum and
industry performance forecasts. The adviser then applies fundamental analysis to
select specific stocks from among those in the top 20% identified by the model.
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Risks
The prices of common stocks and other equity securities generally fluctuate more
than those of other investments. They reflect changes in the issuing company's
financial condition and changes in the overall market. The fund could lose all
of its investment in a company's stock. The Fund is subject, to a lesser extent,
to interest rate risk, which means that the value of the fund's bond investments
generally will fall when interest rates rise. Because interest rate risk is the
primary risk presented by U.S. government and other very high quality bonds,
changes in interest rates may actually have a greater effect on the value of
those bonds than on lower quality bonds. An investment in the fund also presents
credit risk. Credit risk is the risk that the issuer of a bond will not make
principal or interest payments when they are due. Even if an issuer does not
default on a payment, a bond's value may decline if the market believes that the
issuer has become less able, or less willing, to make payments on time. Foreign
securities involve risks that normally are not associated with securities of
U.S. issuers. These include risks relating to political, social and economic
developments abroad and differences between U.S. and foreign regulatory
requirements and market practices. When securities are denominated in foreign
currencies, they also are subject to currency risk. (i.e., the risk that the
value of a foreign currency in which one or more of a fund's investments are
denominated will fall in relation to the U.S. dollar).
Investment Adviser: Mitchell Hutchins Asset Management Inc.]
[Mitchell Hutchins Series Trust Small Cap Portfolio (Class I shares)
Investment Objective
Has an investment objective of long-term capital appreciation.
Policies
Invests primarily in stocks of small capitalization ("small cap") companies,
which are defined as companies that have market capitalizations of up to $1
billion at the time of purchase. May invest, to a lesser extent, in stocks of
larger companies, preferred stocks, and bonds, including convertible securities.
Invests in bonds when its investment adviser believes those investments offer
opportunities for capital appreciation because interest rates may fall or credit
factors or ratings affecting particular issuers may improve. May invest in
securities of foreign issuers that are denominated in U.S. dollars and traded in
U.S. markets. In selecting stocks for the fund, the adviser uses its own Factor
Valuation Model to identify companies that appear undervalued. The model ranks
companies based on "value" factors such as dividends, cash flows, earnings and
book values, as well as on "growth" factors, such as earnings momentum and
industry performance forecasts. The adviser then applies fundamental analysis to
select specific stocks from among those of small cap companies identified by the
model.
Risks
The prices of common stocks and other equity securities generally fluctuate more
than those of other investments. They reflect changes in the issuing company's
financial condition and changes in the overall market. The fund may lose a
substantial part, or even all, of its investment in a company's stock.
Securities of small cap companies generally involve greater risk than securities
of larger companies because small cap companies may be more vulnerable to
adverse business or economic developments. Small cap companies also may have
limited product lines, markets or financial resources, and may be dependent on a
relatively small management group. Securities of small cap companies may be less
liquid and more volatile than securities of larger companies or the market
averages in general. In addition, small cap companies may not be well-known to
the investing public, may not have institutional ownership and may have only
cyclical, static or moderate growth prospects. The value of bonds can be
expected to fall when interest rates rise and to rise when interest rates fall.
Interest rate risk is the risk that interest rates will rise, so that the value
of the fund's investments in bonds will fall. Because interest rate risk is the
primary risk presented by U.S. government and other very high quality bonds,
changes in interest rates may actually have a greater effect on the value of
those bonds than on lower quality bonds. An investment in the fund also presents
credit risk. Credit risk is the risk that the issuer of a bond will not make
principal or interest payments when they are due. Even if an issuer does not
default on a payment, a bond's value may decline if the market believes that the
issuer has become less able, or less willing, to make payments on time. Foreign
securities involve risks that normally are not associated with securities of
U.S. issuers. These include risks relating to political, social and economic
developments abroad and differences between U.S. and foreign regulatory
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requirements and market practices. When securities are denominated in foreign
currencies, they also are subject to currency risk. (i.e., the risk that the
value of a foreign currency in which one or more of a fund's investments are
denominated will fall in relation to the U.S. dollar).
Investment Adviser: Mitchell Hutchins Asset Management Inc.]
[Mitchell Hutchins Series Trust Tactical Allocation Portfolio (Class I shares)
Investment Objective
Has an investment objective of total return, consisting of long-term capital
appreciation and current income.
Policies
Allocates its assets between a stock portion that is designed to track the
performance of the S&P 500 Composite Stock Price Index and a fixed income
portion that consists of either five-year U.S. Treasury notes or U.S. Treasury
bills with remaining maturities of 30 days. The investment adviser reallocates
assets in accordance with the recommendations of its own Tactical Allocation
Model on the first business day of each month. The Model attempts to track the
performance of the S&P 500 Index in periods of strong market performance. The
Model attempts to take a more defensive posture by reallocating assets to bonds
or cash when the Model signals a potential bear market, prolonged downturn in
stock prices or significant loss in value. The Model can recommend stock
allocations of 100%, 75%, 50%, 25% or 0%. If the Model recommends a stock
allocation of less than 100%, it also recommends a fixed income allocation for
the remainder of the fund's assets. The Model uses a bond risk premium
determination to decide whether to recommend five-year U.S. Treasury notes or
30-day U.S. Treasury bills. When the Model recommends a more than 50% fixed
income allocation, the fund must invest in other high quality bonds or money
market instruments to the extent needed to limit the fund's investments in U.S.
Treasury obligations to no more than 55% of its assets. This limit is imposed by
Internal Revenue Code diversification requirements for segregated asset accounts
used to fund variable annuity or variable life contracts.
Risks
The prices of common stocks and other equity securities generally fluctuate more
than those of other investments. They reflect changes in the issuing company's
financial condition and changes in the overall market. The fund may lose a
substantial part, or even all, of its investment in a company's stock. The value
of bonds can be expected to fall when interest rates rise and to rise when
interest rates fall. Interest rate risk is the risk that interest rates will
rise, so that the value of the fund's investments in bonds will fall. Because
interest rate risk is the primary risk presented by U.S. government and other
very high quality bonds, changes in interest rates may actually have a greater
effect on the value of those bonds than on lower quality bonds. In addition, the
adviser may not be successful in choosing the best allocation among market
sectors. A fund that allocates its assets among market sectors is more dependent
on the adviser's ability to successfully assess the relative values in each
sector than are funds that do not do so. The adviser's Tactical Allocation Model
may not correctly predict the times to shift the fund's assets from one type of
investment to another.
Investment Adviser: Mitchell Hutchins Asset Management Inc.]
Oppenheimer Aggressive Growth Fund/VA
Investment Objective
Seeks to achieve long-term capital appreciation by investing in "growth-type"
companies.
Policies
The Fund invests mainly in equity securities, such as common stocks, and can
invest in other securities, such as preferred stocks and convertible securities.
The Fund emphasizes investments in companies that the Manager believes have
significant growth potential. Growth companies can include established companies
entering a growth cycle in their business, as well as newer companies. The Fund
can invest in securities of issuers of all market capitalizations, but currently
focuses on companies with market capitalizations of "mid-cap" issuers (currently
those issuers between $2.5 and $11.5 billion). The Fund can invest in domestic
and foreign companies, although most of its investments are in stocks of U.S.
companies.
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Risks
The fund's investments in stocks are subject to changes in their value from a
number of factors. They include stock market movements and events affecting
particular industries. Stocks of growth companies may provide greater
opportunities for capital appreciation, but may be more volatile than other
stocks. The Fund invests mainly in small and medium-size companies, which tend
to have more volatile stock prices than large companies.
Investment Adviser: OppenheimerFunds, Inc.
Oppenheimer Main Street Growth & Income Fund/VA
Investment Objective
Seeks a high total return (which includes growth in the value of its shares as
well as current income) from equity and debt securities.
Policies
Invests mainly in common stocks of U.S. companies, and can also invest in other
equity securities such as preferred stocks and convertible securities. Although
the fund can invest in securities of issuers of all market capitalization
ranges, it currently focuses on companies with large capitalizations. While the
fund can buy foreign securities and debt securities such as bonds and notes,
currently it does not emphasize those investments. The fund can also use hedging
instruments and certain derivative investments to try to manage investment
risks.
Risks
The fund's investments in stocks and bonds are subject to changes in their value
from a number of factors. They include changes in general stock and bond market
movements, or the change in value of particular stocks or bonds because of an
event affecting the issuer. Changes in interest rates can also affect stock and
bond prices. Because the Fund currently focuses its investments in stocks of
U.S. issuers, it will be affected primarily by changes in the U.S. Stock Market.
Investment Adviser: OppenheimerFunds, Inc.
Oppenheimer Strategic Bond Fund/VA
Investment Objective
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.
Policies
Invests mainly in debt securities of issuers in three market sectors: foreign
governments and companies, U.S. government securities, and lower-rated
high-yield securities of U.S. and foreign companies. Under normal market
conditions, the fund invests in each of those three market sectors. However, the
fund is not obligated to do so, and the amount of its assets in each of the
three sectors will vary over time. The fund can invest up to 100% of its assets
in any one sector at any time, if the manager believes that in doing so the fund
can achieve its objective without undue risk. The fund can invest in securities
having short, medium or long-term maturities and may invest without limit in
lower-grade high-yield debt obligations also called "junk bonds. "The fund's
foreign investments can include debt securities of issuers in developed markets
as well as emerging markets, which have special risks. The fund can also use
hedging instruments and certain derivative investments to try to enhance income
or try to manage investment risks.
Risks
The fund's investments in debt securities are subject to changes in their value
from a number of factors. They include changes in general bond market movements
in the U.S. and abroad, or the change in value of particular bonds because of an
event affecting the issuer. The fund can focus significant amounts of its
investments in foreign debt securities. Therefore, it will be subject to the
risks that economic, political or other events can have
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on the values of securities of issuers in particular foreign countries. These
risks are heightened in the case of emerging market debt securities. Changes in
interest rates can also affect securities prices.
Investment Adviser: OppenheimerFunds, Inc.
Portfolio Partners, Inc. (PPI) MFS Capital Opportunities Portfolio (formerly
known as PPI MFS Value Equity Portfolio)
Investment Objective
Seeks capital appreciation.
Policies
Invests primarily (at least 65% of total assets) in common stocks and related
securities, such as preferred stock, convertible securities and depositary
receipts. Focuses on companies believed to have favorable growth prospects and
attractive valuations based on current and expected earnings or cash flow.
Investments may include securities listed on a securities exchange or traded in
the over-the-counter markets.
May invest in foreign securities (including emerging market securities) and may
have exposure to foreign currencies through its investment in these securities,
its direct holdings of foreign currencies or through its use of foreign currency
exchange contracts for the purchase or sale of a fixed quantity of a foreign
currency at a future date.
May engage in active and frequent trading to achieve its principal investment
strategies.
Risks
Investment in the portfolio is subject to the following risks:
o Market and Company Risk: The value of the securities in which the portfolio
invests may decline due to changing economic, political or market
conditions, or due to the financial condition of the company which issued
the security. In addition, securities of growth companies may be more
volatile because such companies usually invest a high portion of their
earnings in their businesses and may lack the dividends of value companies,
which can cushion the security prices in a declining market.
o Over the Counter Risk: Equity securities that are traded over the counter
may be more volatile than exchange listed securities, and the portfolio may
experience difficulty in purchasing or selling these securities at a fair
price.
o Foreign Markets Risk: Investment in foreign securities involves additional
risks relating to political, social and economic developments abroad. Other
risks from these investments result from the differences between the
regulations to which U.S. and foreign issuers and markets are subject.
o Emerging Markets Risk: Emerging markets are generally defined as countries
in the initial stages of their industrialization cycles with low per capita
income. Investments in emerging markets securities involve all of the risks
of investment in foreign securities, and also have additional risks.
o Currency Risk: Exposure to foreign currencies may cause the value of the
portfolio to decline in the event that the U.S. dollar strengthens against
these currencies, or in the event that foreign governments intervene in the
currency markets.
o Active or Frequent Trading Risk: The portfolio may engage in active and
frequent trading. This may result in higher capital gains as compared to
portfolios with less active trading policies. Frequent trading also
increases transaction costs, which can detract from fund performance.
Investment Adviser: Aetna Life Insurance and Annuity Company
Subadviser: Massachusetts Financial Services Company
Portfolio Partners, Inc. (PPI) MFS Emerging Equities Portfolio
Investment Objective Seeks long-term growth of capital.
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Policies
Invests primarily (at least 65% of total assets) in common stocks and related
securities, such as preferred stock, convertible securities and depositary
receipts, of emerging growth companies. Emerging growth companies are companies
believed to be early in their life cycle and that have the potential to become
major enterprises, or major enterprises whose rates of earnings growth are
expected to accelerate. Investments may include securities listed on a
securities exchange or traded in the over-the-counter markets.
May also invest in foreign securities (including emerging market securities) and
may have exposure to foreign currencies through its investment in these
securities, its direct holdings of foreign currencies or through its use of
foreign currency exchange contracts for the purchase or sale of a fixed quantity
of foreign currency at a future date.
May engage in active and frequent trading to achieve its principal investment
strategies.
Risks
Investment in the portfolio is subject to the following risks:
o Market and Company Risk: The value of the securities in which the portfolio
invests may decline due to changing economic, political or market
conditions, or due to the financial condition of the company which issued
the security.
o Emerging Growth Risk: The portfolio's performance is particularly sensitive
to changes in the value of emerging growth companies. Investments in
emerging growth companies may be subject to more abrupt or erratic market
movements and may involve greater risks than investments in other
companies.
o Over the Counter Risk: Equity securities that are traded over the counter
may be more volatile than exchange listed securities, and the portfolio may
experience difficulty in purchasing or selling these securities at a fair
price.
o Foreign Markets Risk: Investment in foreign securities involves risks
related to political, social and economic developments abroad. These risks
result from differences between the regulations to which U.S. and foreign
issuers and Markets are subject.
o Currency Risk: Exposure to foreign currencies may cause the value of the
portfolio to decline if the U.S. dollar strengthens against these
currencies or if foreign governments intervene in the currency markets.
o Emerging Markets Risk: Investments in emerging market securities involve
all the risks of investment in foreign markets. Additionally, markets of
emerging market countries have been more volatile, and involve greater
risks, than the markets of developed countries with more mature economies.
o Active or Frequent Trading Risk: The portfolio may engage in active and
frequent trading. This may result in higher capital gains as compared to
portfolios with less active trading policies. Frequent trading also
increases transaction costs, which can detract from fund performance.
Investment Adviser: Aetna Life Insurance and Annuity Company
Subadviser: Massachusetts Financial Services Company
Portfolio Partners, Inc. (PPI) MFS Research Growth Portfolio
Investment Objective
Seeks long-term growth of capital and future income.
Policies
Invests primarily (at least 80% of total assets) in common stocks and related
securities, such as preferred stock, convertible securities and depositary
receipts. Focuses on companies believed to have favorable prospects for
long-term growth, attractive valuations based on current and expected earnings
or cash flow, dominant or growing market share and superior management. May
invest in companies of any size. Investments may also include securities traded
on securities exchanges or in the over-the-counter markets.
May invest in foreign securities (including emerging market securities) and may
have exposure to foreign currencies through its investment in these securities,
its direct holdings of foreign currencies or through its use
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of foreign currency exchange contracts for the purchase or sale of a fixed
quantity of foreign currency at a future date.
Risks
Investment in the portfolio is subject to the following risks:
o Market and Company Risk: The value of the securities in which the portfolio
invests may decline due to changing economic, political or market
conditions, or due to the financial condition of the company which issued
the security. In addition, securities of growth companies may be more
volatile because such companies usually invest a high portion of their
earnings in their businesses and may lack the dividends of value companies,
which can cushion the security prices in a declining market.
o Over-the-Counter Risk: Equity securities that are traded over-the-counter
may be more volatile than exchange-listed securities, and the portfolio may
experience difficulty in purchasing or selling these securities at a fair
price.
o Foreign Markets Risk: Investment in foreign securities involves additional
risks relating to political, social and economic developments abroad. Other
risks from these investments result from the differences between the
regulations to which U.S. and foreign issuers and markets are subject.
o Currency Risk: Exposure to foreign currencies may cause the value of the
portfolio to decline if the U.S. dollar strengthens against these
currencies or if foreign governments intervene in the currency markets.
Investment Adviser: Aetna Life Insurance and Annuity Company
Subadviser: Massachusetts Financial Services Company
Portfolio Partners, Inc. (PPI) Scudder International Growth Portfolio
Investment Objective
Seeks long-term growth of capital.
Policies
Invests primarily (at least 65% of total assets) in the equity securities of
foreign companies believed to have high growth potential. Normally invests in
securities of at least three different countries other than the U.S. Will invest
in securities in both developed and developing markets. Seeks to invest in those
companies believed to be best able to capitalize on the growth and changes
taking place within and between various regions of the world. Typically, these
are companies with leading or rapidly developing business franchises, strong
financial positions, and high quality management capable of defining and
implementing strategies to take advantage of local, regional or global markets.
Also may invest in debt securities issued by both U.S. and foreign companies,
including non-investment grade debt securities.
Risks
Investment in the portfolio is subject to the following risks:
o Market and Company Risk: The value of the securities in which the portfolio
invests may decline due to changing economic, political or market
conditions, or due to the financial condition of the company which issued
the security.
o Foreign Markets Risk: Investment in foreign securities involves additional
risks relating to political, social and economic developments abroad. Other
risks from these investments result from the differences between the
regulations to which U.S. and foreign issuers and markets are subject.
o Currency Risk: Exposure to foreign currencies may cause the value of the
portfolio to decline in the event that the U.S. dollar strengthens against
these currencies, or in the event that foreign governments intervene in the
currency markets.
o Emerging Growth Risk: The portfolio's performance is particularly sensitive
to changes in the value of emerging growth companies. Investments in
emerging growth companies may be subject to more abrupt or erratic market
movements and may involve greater risks than investments in other
companies.
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o Interest Rate Risk: Investment in debt securities involves risks relating
to interest rate movement. If interest rates go up, the value of debt
securities held by the portfolio will decline.
o Credit Risk: Investment in non-investment grade debt securities involves
credit risk because issuers of non-investment grade securities are more
likely to have difficulty making timely payments of interest or principal.
Investment Adviser: Aetna Life Insurance and Annuity Company
Subadviser: Scudder Kemper Investments, Inc.
73
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT B
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------
Statement of Additional Information dated , 2000
AETNA ADVISER VARIABLE ANNUITY
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account B (the
"separate account") dated , 2000.
A free prospectus is available upon request from the local Aetna Life Insurance
and Annuity Company office or by writing to or calling:
Aetna Financial Services
Annuity Services
151 Farmington Avenue
Hartford, Connecticut 06156-1258
1-800-238-6219
Read the prospectus before you invest. Unless otherwise indicated, terms used in
this Statement of Additional Information shall have the same meaning as in the
prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
General Information and History ...................................................... 2
Variable Annuity Account B ........................................................... 2
Offering and Purchase of Contracts ................................................... 3
Performance Data ..................................................................... 3
General ......................................................................... 3
Average Annual Total Return Quotations .......................................... 4
Income Phase Payments ................................................................ 7
Sales Material and Advertising ....................................................... 8
Independent Auditors ................................................................. 9
Financial Statements of the Separate Account ......................................... S-1
Financial Statements of Aetna Life Insurance and Annuity Company and Subsidiaries .... F-1
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the Company, we, us, our) issues the
contract described in the prospectus and is responsible for providing each
contract's insurance and annuity benefits. We are a stock life insurance company
which was organized under the insurance laws of the State of Connecticut in 1976
and an indirect wholly-owned subsidiary of Aetna Inc. Through a merger, our
assets include the business of Aetna Variable Annuity Life Insurance Company
(formerly Participating Annuity Life Insurance Company organized in 1954). Our
Home Office is located at 151 Farmington Avenue, Hartford, Connecticut 06156.
As of December 31, 1999, the Company and its subsidiary life company had $53
billion invested through its products, including $39 billion in its separate
accounts (of which the Company, or its subsidiary Aeltus Management, Inc.,
oversees the management of $24 billion). The Company is ranked among the top 2%
of all U.S. life insurance companies rated by A.M. Best Company based on assets
as of December 31, 1998.
In addition to serving as the principal underwriter and the depositor for the
separate account, the Company is a registered investment adviser under the
Investment Advisers Act of 1940 and a registered broker-dealer under the
Securities Exchange Act of 1934. We provide investment advice to several of the
registered management investment companies offered as variable investment
options under the contracts funded by the separate account (see "Variable
Annuity Account B" below).
Other than the mortality and expense risk charge and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the separate account are borne by the Company. See "Fees" in the prospectus. We
receive reimbursement for certain administrative costs from some advisers of the
funds used as funding options under the contract. These fees generally range up
to 0.425%.
The assets of the separate account are held by the Company. The separate account
has no custodian. However, the funds in whose shares the assets of the separate
account are invested each have custodians, as discussed in their respective
prospectuses.
From this point forward, the term "contract(s)" refers only to those offered
through the prospectus.
VARIABLE ANNUITY ACCOUNT B
Variable Annuity Account B is a separate account established by the Company for
the purpose of funding variable annuity contracts issued by the Company. The
separate account is registered with the Securities and Exchange Commission as a
unit investment trust under the Investment Company Act of 1940, as amended.
Purchase payments to accounts under the contract may be allocated to one or more
of the subaccounts. Each subaccount invests in the shares of only one of the
funds listed below. We may make additions to, deletions from or substitutions of
available investment options as permitted by law and subject to the conditions
of the contract. The availability of the funds is subject to applicable
regulatory authorization. Not all funds are available in all jurisdictions.
2
<PAGE>
The funds currently available under the contract are as follows:
<TABLE>
<S> <C>
Aetna Balanced VP, Inc. Fidelity Variable Insurance Products Fund (VIP) High Income
Aetna Income Shares d/b/a Aetna Bond VP Portfolio
Aetna Growth VP Fidelity Variable Insurance Products Fund II (VIP II)
Aetna Variable Fund d/b/a Aetna Growth and Income VP Contrafund[RegTM] Portfolio
Aetna Index Plus Large Cap VP Janus Aspen Aggressive Growth Portfolio
Aetna International VP Janus Aspen Balanced Portfolio
Aetna Variable Encore Fund d/b/a Aetna Money Market VP Janus Aspen Growth Portfolio
Aetna Small Company VP Janus Aspen Worldwide Growth Portfolio
Aetna Technology VP MFS Total Return Series
AIM V.I. Capital Appreciation Fund Mitchell Hutchins Series Trust Growth and Income Portfolio
AIM V.I. Government Securities Fund Mitchell Hutchins Series Trust Small Cap Portfolio
AIM V.I. Growth Fund Mitchell Hutchins Series Trust Tactical Allocation Portfolio
AIM V.I. Growth and Income Fund Oppenheimer Aggressive Growth Fund/VA
AIM V.I. Value Fund Oppenheimer Main Street Growth & Income Fund/VA
Alliance Variable Products - Growth and Income Portfolio Oppenheimer Strategic Bond Fund/VA
Alliance Variable Products - Premier Growth Portfolio Portfolio Partners, Inc. (PPI) MFS Capital Opportunities Portfolio
Fidelity Variable Insurance Products Fund (VIP) Equity-Income (formerly PPI MFS Value Equity Portfolio)
Portfolio Portfolio Partners, Inc. (PPI) MFS Emerging Equities Portfolio
Fidelity Variable Insurance Products Fund (VIP) Growth Portfolio Partners, Inc. (PPI) MFS Research Growth Portfolio
Portfolio Portfolio Partners (PPI) Scudder International Growth Portfolio
</TABLE>
Complete descriptions of each of the funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the funds.
OFFERING AND PURCHASE OF CONTRACT
The Company is both the depositor and the principal underwriter for the
securities sold under the prospectus. We offer the contracts through life
insurance agents licensed to sell variable annuities who are registered
representatives of the Company or of other registered broker-dealers who have
sales agreements with the Company. The offering of the contracts is continuous.
A description of the manner in which the contracts are purchased can be found in
the prospectus under the sections entitled "Purchase and Rights" and "Your
Account Value."
PERFORMANCE DATA
GENERAL
From time to time, we may advertise different types of historical performance
for the subaccounts of the separate account available under the contract. We may
advertise the "standardized average annual total returns," calculated in a
manner prescribed by the Securities and Exchange Commission (the "standardized
return"), as well as "non-standardized returns," both of which are described
below.
3
<PAGE>
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial purchase payment of
$1,000 is applied to the various subaccounts under the contract, and then
related to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. The standardized figures use the actual returns of the fund since the
date contributions were first received in the fund under the separate account,
adjusted to reflect the deduction of the maximum recurring charges under the
contract during the accumulation phase for each period (i.e., a 1.55% mortality
and expense risk charge for Death Benefit Option II and a 0.15% administrative
expense charge). These charges will be deducted on a pro rata basis in the case
of fractional periods.
The non-standardized figures will be calculated in a similar manner, except that
they may also include monthly, quarterly, year-to-date and three-year periods,
and may include returns calculated from the fund's inception date and/or the
date contributions were first received in the fund under the separate account.
The non-standardized returns shown in the tables below also reflect the
deduction of the maximum recurring charges under the contract.
Investment results of the funds will fluctuate over time, and any presentation
of the subaccounts' total return quotations for any prior period should not be
considered as a representation of how the subaccounts will perform in any future
period. Additionally, the account value upon redemption may be more or less than
your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables below reflect the average annual standardized and non-standardized
total return quotation figures for the periods ended December 31, 1999, for the
subaccounts under the contract. The standardized and non-standardized returns
assume the maximum accumulation phase charges under the contract as described
under "GENERAL" above. We may also advertise returns based on lower charges that
apply to contracts under Death Benefit Option I.
For the subaccounts funded by the Portfolio Partners portfolios, two sets of
performance returns are shown for each subaccount: one showing performance based
solely on the performance of the Portfolio Partners portfolio from November 28,
1997 the date the Portfolio commenced operations; and one quotation based on
(a) performance through November 26, 1997 of the fund it replaced under many
contracts and (b) after November 26, 1997 based on the performance of the
Portfolio Partners portfolio.
For those subaccounts where results are not available for the full calendar
period indicated, performance for such partial periods is shown in the column
labeled "Since Inception". For standardized performance, the "Since Inception"
column shows the average annual return since the date contributions were first
received in the fund under the separate account. For non-standardized
performance, the "Since Inception" column shows the average annual total return
since the fund's inception date.
4
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------
Date Contributions
First Received
STANDARDIZED Under the Separate
Account
- -----------------------------------------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 5 Year 10 Year Inception*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Aetna Balanced VP, Inc.(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 05/30/1997
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 10/31/1996
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna International VP 05/05/1998
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 05/30/1997
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Technology VP 05/30/1997
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 10/02/1998
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 10/02/1998
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 10/02/1998
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 10/02/1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 12/30/1994
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 12/30/1994
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 06/30/1995
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund[RegTM] Portfolio 06/30/1995
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 10/31/1994
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 01/31/1995
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 07/29/1994
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 04/28/1995
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series 05/31/1996
- -----------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Growth & Income Portfolio 05/05/1999
- -----------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Small Cap Portfolio 07/02/1999
- -----------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Tactical Allocation Portfolio 05/17/1999
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Aggressive Growth Fund/VA 05/30/1997
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth & Income Fund/VA 05/30/1997
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA 05/30/1997
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Capital Opportunities Portfolio 11/28/1997
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Growth/PPI MFS Capital Opportunities(3) 11/30/1992
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Emerging Equities Portfolio 11/28/1997
- -----------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/PPI MFS Emerging Equities(3) 09/30/1993
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio 11/28/1997
- -----------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/PPI MFS Research Growth 08/31/1992
- -----------------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio 11/28/1997
- -----------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A/PPI Scudder International 08/31/1992
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in calculating the standardized and
non-standardized figures. These figures represent historical performance and
should not be considered a projection of future performance.
*Reflects performance from the date contributions were first received in the
fund under the separate account.
(1) These funds have been available through the separate account for more than
ten years.
(2) The current yield for the subaccount for the seven-day period ended
December 31, 1999 (on an annualized basis) was ____%. Current yield more
closely reflects current earnings than does total return. The current yield
reflects the deduction of all charges under the contract that are deducted
from the total return quotations shown above.
(3) The fund first listed was replaced with the applicable Portfolio Partners
portfolio after the close of business on November 26, 1997. The performance
shown is based on the performance of the replaced fund until November 26,
1997 and the performance of the applicable Portfolio Partners portfolio
after that date. The replaced fund may not have been available under all
contracts. The "Date Contributions First Received Under the Separate
Account" refers to the applicable date for the replaced fund. If no date is
shown, contributions were first received in the replaced fund under the
separate account more than ten years ago.
5
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
Fund
NON-STANDARDIZED Inception
Date
- -----------------------------------------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 3 Years 5 Years 10 Years Inception**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Balanced VP, Inc.(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 12/13/1996
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 09/16/1996
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna International VP 12/22/1997
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2)
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 12/27/1996
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Technology VP 05/30/1997
- -----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 05/05/1993
- ----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Government Securities Fund
- ----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 05/02/1994
- ----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 05/05/1993
- ----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 05/05/1993
- ----------------------------------------------------------------------------------------------------------------------------------
Alliance Growth and Income Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Alliance Premier Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund[RegTM] Portfolio 01/03/1995
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 09/13/1993
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 09/13/1993
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 09/13/1993
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 09/13/1993
- ----------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series 01/03/1995
- ----------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Growth & Income Portfolio 01/04/1999
- ----------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Small Cap Portfolio 05/03/1999
- ----------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Tactical Allocation Portfolio 01/04/1999
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Aggressive Growth Fund/VA(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth & Income Fund/VA 07/05/1995
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA 05/03/1993
- ----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Capital Opportunities Portfolio 11/28/1997
- ----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Growth/PPI MFS Capital
- ----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Emerging Equities Portfolio 11/28/1997
- ----------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/PPI MFS Emerging Equities(3)
- ----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio 11/28/1997
- ----------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/PPI MFS Research
- ----------------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio 11/28/1997
- ----------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A/PPI Scudder International
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in calculating the standardized and
non-standardized figures. These figures represent historical performance and
should not be considered a projection of future performance.
**Reflects performance from the fund's inception date.
(1) These funds have been in operation for more than ten years.
(2) The current yield for the subaccount for the seven-day period ended
December 31, 1999 (on an annualized basis) was ____%. Current yield more
closely reflects current earnings than does total return. The current yield
reflects the deduction of all charges under the contract that are deducted
from the total return quotations shown above.
(3) The fund first listed was replaced with the applicable Portfolio Partners
portfolio after the close of business on November 26, 1997. The performance
shown is based on the performance of the replaced fund until November 26,
1997 and the performance of the applicable Portfolio Partners portfolio
after that date. The replaced fund may not have been available under all
contracts. The "Fund Inception Date" refers to the applicable date for the
replaced fund. If no date is shown, the replaced fund has been in operation
for more than ten years.
6
<PAGE>
INCOME PHASE PAYMENTS
When you begin receiving payments under the contract during the income phase
(see "Income Phase" in the prospectus), the value of your account is determined
using accumulation unit values as of the tenth valuation before the first income
phase payment is due. Such value (less any applicable premium tax) is applied to
provide income phase payments to you in accordance with the income phase payment
option and investment options elected.
The annuity option tables found in the contract show, for each option, the
amount of the first income phase payment for each $1,000 of value applied.
Thereafter, variable income phase payments fluctuate as the annuity unit
value(s) fluctuates with the investment experience of the selected investment
option(s). The first income phase payment and subsequent income phase payments
also vary depending upon the assumed net investment rate selected (3.5% or 5%
per annum). Selection of a 5% rate causes a higher first income phase payment,
but payments will increase thereafter only to the extent that the investment
performance of the subaccounts you selected is greater than 5% annually, after
deduction of fees. Income phase payments would decline if the performance was
less than 5%. Use of the 3.5% assumed rate causes a lower first income phase
payment, but subsequent income phase payments would increase more rapidly or
decline more slowly as changes occur in the performance of the subaccounts
selected.
When the income phase begins, the annuitant is credited with a fixed number of
annuity units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first income phase payment based on a particular investment
option, and (b) is the then current annuity unit value for that investment
option. As noted, annuity unit values fluctuate from one valuation to the next
(see "Your Account Value" in the prospectus); such fluctuations reflect changes
in the net investment factor for the appropriate subaccount(s) (with a ten
valuation lag which gives the Company time to process income phase payments) and
a mathematical adjustment which offsets the assumed net investment rate of 3.5%
or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the income phase.
EXAMPLE:
Assume that, at the date income phase payments are to begin, there are 3,000
accumulation units credited under a particular contract and that the value of an
accumulation unit for the tenth valuation prior to retirement was $13.650000.
This produces a total value of $40,950.
Assume also that no premium tax is payable and that the annuity table in the
contract provides, for the income phase payment option elected, a first monthly
variable income phase payment of $6.68 per $1000 of value applied; the
annuitant's first monthly income phase payment would thus be $40.950 multiplied
by $6.68, or $273.55.
Assume then that the value of an annuity unit upon the valuation on which the
first income phase payment was due was $13.400000. When this value is divided
into the first monthly income phase payment, the number of annuity units is
determined to be 20.414. The value of this number of annuity units will be paid
in each subsequent month.
7
<PAGE>
If the net investment factor with respect to the appropriate subaccount is
1.0015000 as of the tenth valuation preceding the due date of the second monthly
income phase payment, multiplying this factor by .9999058* (to take into account
the assumed net investment rate of 3.5% per annum built into the number of
annuity units determined above) produces a result of 1.0014057. This is then
multiplied by the annuity unit value for the prior valuation (assume such value
to be $13.504376) to produce an annuity unit value of $13.523359 for the
valuation occurring when the second income phase payment is due. The second
monthly income phase payment is then determined by multiplying the number of
annuity units by the current annuity unit value, or 20.414 times $13.523359,
which produces an income phase payment of $276.07.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
take into account such assumed rate would be .9998663.
SALES MATERIAL AND ADVERTISING
We may include hypothetical illustrations in our sales literature that explain
the mathematical principles of dollar cost averaging, compounded interest, tax
deferred accumulation, and the mechanics of variable annuity contracts. We may
also discuss the difference between variable annuity contracts and other types
of savings or investment products such as personal savings accounts and
certificates of deposit.
We may distribute sales literature that compares the percentage change in
accumulation unit values for any of the subaccounts to established market
indices such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average or to the percentage change in values of other management
investment companies that have investment objectives similar to the subaccount
being compared.
We may publish in advertisements and reports the ratings and other information
assigned to us by one or more independent rating organizations such as A.M. Best
Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors
Service, Inc. The purpose of the ratings is to reflect our financial strength
and/or claims-paying ability. We may also quote ranking services such as
Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable
Insurance Products Performance Analysis Service (VIPPAS), which rank variable
annuity or life subaccounts or their underlying funds by performance and/or
investment objective. We may categorize the underlying funds in terms of the
asset classes they represent and use such categories in marketing materials for
the contract. We may illustrate in advertisements the performance of the
underlying funds, if accompanied by performance which also shows the performance
of such funds reduced by applicable charges under the separate account. We may
also show in advertisements the portfolio holdings of the underlying funds,
updated at various intervals. From time to time, we will quote articles from
newspapers and magazines or other publications or reports such as The Wall
Street Journal, Money magazine, USA Today and The VARDS Report.
We may provide in advertising, sales literature, periodic publications or other
materials information on various topics of interest to current and prospective
contract holders. These topics may include the relationship between sectors of
the economy and the economy as a whole and its effect on various securities
markets, investment strategies and techniques (such as value investing, market
timing, dollar cost averaging, asset allocation, constant ratio transfer and
account rebalancing), the advantages and disadvantages of investing in
tax-deferred and taxable investments, customer profiles and hypothetical
purchase and investment scenarios, financial management and tax and retirement
planning, and investment alternatives to certificates of deposit and other
financial instruments, including comparison between the contract and the
characteristics of and market for such financial instruments.
8
<PAGE>
INDEPENDENT AUDITORS
__________, CityPlace II, Hartford, Connecticut 06103-4103, are the independent
auditors for the separate account and for the Company. The services provided to
the separate account include primarily the examination of the separate account's
financial statements and the review of filings made with the SEC.
9
<PAGE>
FINANCIAL STATEMENTS
(To be filed by amendment.)
S-1
<PAGE>
Form No. SAI. XXXXX-00 ALIAC Ed. 2000
<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, 1999
- Statement of Operations for the year ended December 31,
1999
- Statements of Changes in Net Assets for the years ended
December 31, 1999 and 1998
- Condensed Financial Information for the year ended
December 31, 1999
- 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, 1999, 1998 and 1997
- Consolidated Balance Sheets as of December 31, 1999 and
1998
- Consolidated Statements of Changes in Shareholder's Equity
for the years ended December 31, 1999, 1998 and 1997
- Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997
- Notes to Consolidated Financial Statements
*To be filed by amendment
(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(3)
(4.1) Form of Variable Annuity Contract (G-CVA-00)
(4.2) Form of Variable Annuity Contract Certificate (GC-CVA-00)
(5) Not applicable
(6.1) Certificate of Incorporation of Aetna Life Insurance and
Annuity Company(4)
(6.2) Amendment of 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)
<PAGE>
(7) Not applicable
(8.1) Fund Participation Agreement by and among Aetna Life Insurance
and Annuity Company and Aetna Variable Fund, Aetna Variable
Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc.,
Aetna GET Fund on behalf of each of its series, Aetna
Generation Portfolios, Inc. on behalf of each of its series,
Aetna Variable Portfolios, Inc. on behalf of each of its
series, and Aeltus Investment Management, Inc. dated as of
May 1, 1998(2)
(8.2) Amendment dated November 9, 1998 to Fund Participation
Agreement by and among Aetna Life Insurance and Annuity
Company and Aetna Variable Fund, Aetna Variable Encore Fund,
Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund
on behalf of each of its series, Aetna Generation Portfolios,
Inc. on behalf of each of its series, Aetna Variable
Portfolios, Inc. on behalf of each of its series, and Aeltus
Investment Management, Inc. dated as of May 1, 1998(7).
(8.3) Second Amendment dated December 31, 1999 to Fund Participation
Agreement by and among Aetna Life Insurance and Annuity
Company and Aetna Variable Fund, Aetna Variable Encore Fund,
Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund
on behalf of each of its series, Aetna Generation Portfolios,
Inc. on behalf of each of its series, Aetna Variable
Portfolios, Inc. on behalf of each of its series, and Aeltus
Investment Management, Inc. dated as of May 1, 1998 and
amended on November 9, 1998(8)
(8.4) Third Amendment dated February 11, 2000 to Fund Participation
Agreement by and among Aetna Life Insurance and Annuity
Company and Aetna Variable Fund, Aetna Variable Encore Fund,
Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund
on behalf of each of its series, Aetna Generation Portfolios,
Inc. on behalf of each of its series, Aetna Variable
Portfolios, Inc. on behalf of each of its series, and Aeltus
Investment Management, Inc. dated as of May 1, 1998 and
amended on November 9, 1998 and December 31, 1999(9)
(8.5) Fourth Amendment dated May 1, 2000 to Fund Participation
Agreement by and among Aetna Life Insurance and Annuity
Company and Aetna Variable Fund, Aetna Variable Encore Fund,
Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund
on behalf of each of its series, Aetna Generation Portfolios,
Inc. on behalf of each of its series, Aetna Variable
Portfolios, Inc. on behalf of each of its series, and Aeltus
Investment Management, Inc. dated as of May 1, 1998 and
amended on November 9, 1998, December 31, 1999 and February
11, 2000(9)
(8.6) Service Agreement between Aeltus Investment Management, Inc.
and Aetna Life Insurance and Annuity Company in connection
with the sale of shares of Aetna Variable Fund, Aetna Variable
Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc.,
Aetna GET Fund on behalf of each of its series, Aetna
Generation Portfolios, Inc. on behalf of each of its series,
and Aetna Variable Portfolios, Inc. on behalf of each of its
series dated as of May 1, 1998(2)
(8.7) Amendment dated November 4, 1998 to Service Agreement between
Aeltus Investment Management, Inc. and Aetna Life Insurance
and Annuity Company in connection with the sale of shares of
Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income
Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of
each of its series, Aetna Generation Portfolios, Inc. on
behalf of each of its series and Aetna Variable Portfolios,
Inc. on behalf of each of its series dated as of May 1,
1998(7)
(8.8) Second Amendment dated February 11, 2000 to Service
Agreement between Aeltus Investment Management, Inc. and
Aetna Life Insurance and Annuity Company in connection with
the sale of shares of Aetna Variable Fund, Aetna Variable
Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc.,
Aetna GET Fund on behalf of each of its series, Aetna
Generation Portfolios, Inc. on behalf of each of its series
and Aetna Variable Portfolios, Inc. on behalf of each of its
series dated as of May 1, 1998 and November 14, 1998(9)
(8.9) Third Amendment dated May 1, 2000 to Service Agreement
between Aeltus Investment Management, Inc. and Aetna Life
Insurance and Annuity Company in connection with the sale of
shares of Aetna Variable Fund, Aetna Variable Encore Fund,
Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund
on behalf of each of its series, Aetna Generation
Portfolios, Inc. on behalf of each of its series and Aetna
Variable Portfolios, Inc. on behalf of each of its series
dated as of May 1, 1998, November 14, 1998 and February 11,
2000(9)
(8.10) Fund Participation Agreement between Aetna Life
Insurance and Annuity Company and AIM dated June 30, 1998(10)
(8.11) Service Agreement between Aetna Life Insurance and Annuity
Company and AIM effective June 30, 1998(10)
(8.12) Fund Participation Agreement between Aetna Life Insurance
and Annuity Company and Alliance Capital dated
March 1, 2000(11)
(8.13) Service Agreement between Alliance Capital and Aetna Life
Insurance and Annuity Company dated March 1, 2000(11)
(8.14) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996 and March 1, 1996(5)
(8.15) Fifth Amendment dated as of May 1, 1997 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
<PAGE>
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996 and March 1, 1996(12)
(8.16) Sixth Amendment dated November 6, 1997 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996, March 1, 1996 and May 1, 1997(13)
(8.17) Seventh Amendment dated as of May 1, 1998 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996, March 1, 1996, May 1, 1997 and November 6, 1997(2)
(8.18) Eighth Amendment dated December 1, 1999 to Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996, March 1, 1996, May 1, 1997, November 6,
1997 and May 1, 1998(9)
(8.19) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996 and March 1, 1996(5)
(8.20) Fifth Amendment, dated as of May 1, 1997, to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996 and March 1, 1996(12)
(8.21) Sixth Amendment dated as of January 20, 1998 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996, March 1, 1996 and May 1, 1997(14)
(8.22) Seventh Amendment dated as of May 1, 1998 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996, March 1, 1996, May 1, 1997 and January 20,
1998(2)
(8.23) Eighth Amendment dated December 1, 1999 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company,
Variable Insurance Products Fund II and Fidelity Distributors
Corporation dated February 1, 1994 and amended on December 15,
1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1,
1996, May 1, 1997, January 20, 1998 and May 1, 1998(9)
(8.24) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations
Company dated as of November 1, 1995(15)
(8.25) Amendment dated January 1, 1997 to Service Agreement between
Aetna Life Insurance and Annuity Company and Fidelity
Investments Institutional Operations Company dated as of
November 1, 1995(12)
(8.26) Service Contract between Fidelity Distributors Corporation and
Aetna Life Insurance and Annuity Company dated May 2, 1997(8)
(8.27) Fund Participation Agreement among Janus Aspen Series and
Aetna Life Insurance and Annuity Company and Janus Capital
Corporation dated December 8, 1997(16)
<PAGE>
(8.28) Amendment dated October 12, 1998 to Fund Participation
Agreement among Janus Aspen Series and Aetna Life Insurance
and Annuity Company and Janus Capital Corporation dated
December 8, 1997(7)
(8.29) Second Amendment dated December 1, 1999 to Fund Participation
Agreement among Janus Aspen Series and Aetna Life Insurance
and Annuity Company and Janus Capital Corporation dated
December 8, 1997 and amended on October 12, 1998(9)
(8.30) Service Agreement between Janus Capital Corporation and Aetna
Life Insurance and Annuity Company dated December 8, 1997(16)
(8.31) Fund Participation Agreement among MFS Variable Insurance
Trust, Aetna Life Insurance and Annuity Company and
Massachusetts Financial Services Company dated April 30, 1996,
and amended on September 3, 1996, March 14, 1997 and November
28, 1997(2)
(8.32) Fourth Amendment dated May 1, 1998 to the Fund Participation
Agreement by and among MFS Variable Insurance Trust, Aetna
Life Insurance and Annuity Company and Massachusetts Financial
Services Company dated April 30, 1996, and amended on
September 3, 1996, March 14, 1997 and November 28, 1997(10)
(8.33) Fifth Amendment dated May 1, 1998 to Fund Participation
Agreement by and among MFS Variable Insurance Trust, Aetna
Life Insurance and Annuity Company and Massachusetts Financial
Services Company dated April 30, 1996, and amended on
September 3, 1996, March 14, 1997 and November 28, 1997(17)
(8.34) Fifth Amendment dated July 1, 1999 to Fund Participation
Agreement by and among MFS Variable Insurance Trust, Aetna
Life Insurance and Annuity Company and Massachusetts Financial
Services Company dated April 30, 1996, and amended on
September 3, 1996, March 14, 1997, November 28, 1997 and May
1, 1998(18)
(8.35) Fund Participation Agreement dated May 1, 1999 between Aetna
Life Insurance and Annuity Company, Mitchell Hutchins Series
Trust, and Mitchell Hutchins Asset Management, Inc.(19)
(8.36) Service Agreement dated May 1, 1999 between Mitchell Hutchins
Asset Management, Inc. and Aetna Life Insurance and Annuity
Company(19)
(8.37) Fund Participation Agreement dated March 11, 1997 between
Aetna Life Insurance and Annuity Company and Oppenheimer
Variable Annuity Account Funds and Oppenheimer Funds, Inc.(20)
(8.38) First Amendment dated December 1, 1999 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company
and Oppenheimer Variable Annuity Account Funds and
Oppenheimer Funds, Inc. dated March 11, 1997(9)
(8.39) Service Agreement effective as of March 11, 1997 between
Oppenheimer Funds, Inc. and Aetna Life Insurance and Annuity
Company(20)
(9) Opinion and Consent of Counsel*
(10) Consent of Independent Auditors*
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data*
(14.1) Powers of Attorney (included on signature page)
(14.2) Authorization for Signatures(3)
*To be filed by amendment
1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75986), as filed on April 22, 1996.
<PAGE>
2. Incorporated by reference to Registration Statement on Form N-4 (File No.
333-56297), as filed on June 8, 1998.
3. Incorporated by reference to Post-Effective Amendment No. 5 to Registration
Statement on Form N-4 (File No. 33-75986), as filed on April 12, 1996.
4. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form S-1 (File No. 33-60477), as filed on April 15, 1996.
5. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-75964), as filed on
February 11, 1997.
6. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-91846), as filed on
October 30, 1997.
7. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on December 14, 1998.
8. Incorporated by reference to Post-Effective Amendment No. 19 to
Registration Statement on Form N-4 (File No. 333-56297), as filed on
February 16, 2000.
9. Incorporated by reference to Post-Effective Amendment No. 20 to
Registration Statement on Form N-4 (File No. 333-01107), as filed on
April 4, 2000.
10. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on August 4, 1998.
11. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 333-87305), as filed on April 26, 2000.
12. Incorporated by reference to Post-Effective Amendment No. 30 to
Registration Statement on Form N-4 (File No. 33-34370), as filed on
September 29, 1997.
13. Incorporated by reference to Post-Effective Amendment No. 16 to
Registration Statement on Form N-4 (File No. 33-75964), as filed on
February 9, 1998.
14. Incorporated by Reference to Post-Effective Amendment No. 7 to Registration
Statement on Form S-6 (File No. 33-75248), as filed on February 24, 1998.
15. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-88720), as filed on June 28, 1996.
16. Incorporated by reference to Post-Effective Amendment No. 10 to
Registration Statement on Form N-4 (File No. 33-75992), as filed on
December 31, 1997.
17. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on February 16, 1999.
18. Incorporated by reference to Post-Effective Amendment No. 11 to
Registration Statement on Form N-4 (File No. 333-56297), as filed on
November 23, 1999.
19. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on June 25, 1999.
20. Incorporated by reference to Post-Effective Amendment No. 27 to
Registration Statement on Form N-4 (File No. 33-34370), as filed on
April 16, 1997.
<PAGE>
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
<S> <C>
Thomas J. McInerney Director and President
Catherine H. Smith Director, Chief Financial Officer and Senior Vice
President
Shaun P. Mathews Director and Senior Vice President
Deborah Koltenuk Vice President, Corporate Controller, and Assistant
Treasurer
Therese M. Squillacote Vice President and Chief Compliance Officer
Kirk P. Wickman Senior Vice President, General Counsel and Corporate
Secretary
</TABLE>
* 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
Attached is a listing of all persons directly or indirectly controlled by
or under common control with the registrant. The listing indicates (1) the state
or other sovereign power under the laws of which the entity is organized, (2)
the percentage of voting securities owned or other basis of control by the
person, if any, immediately controlling it (percentages are rounded to the
nearest whole percentage and are based on ownership of voting rights), and (3)
its principal business.
March 31, 2000
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Inc. CT (1) Publicly Held Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Services, Inc. CT (1) (*) Aetna Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Inc. PA (1) (*) Aetna Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Risk Indemnity Company Limited Bermuda (1) (*) Aetna Inc. 100% Insurance
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Company CT (1) (*) Aetna Services, Inc. 100% Life and Health Insurance
and Related Services
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Retirement Services, Inc. CT (1) (*) Aetna Services, Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna International, Inc. CT (1) (*) Aetna Services, Inc. 100% Holding Company for
International Subsidiaries
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Health and Life Insurance CT (1) (*) Aetna Services, Inc. 100% Life and Health Insurance
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Trust I DE (4) (*) Aetna Services, Inc. 100% Business Trust
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Trust II DE (4) (*) Aetna Services, Inc. 100% Business Trust
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Trust III DE (4) (*) Aetna Services, Inc. 100% Business Trust
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Trust IV DE (4) (*) Aetna Services, Inc. 100% Business Trust
- ---------------------------------------------------------------------------------------------------------------------------------
AUSHC Holdings, Inc. CT (1) (*) Aetna Services, Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
<TABLE>
<S> <C>
(1) Corporation (*) Fully Consolidated
(2) Partnership (**) One Line Consolidation
(3) Joint Venture (***) Not Consolidated
(4) Trust
(5) Limited Liability Company
(6) Federal Savings Association
</TABLE>
+ Percentages are rounded to the nearest whole percent and are based on
ownership of voting rights.
1
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Foundation, Inc. CT (1) (***) Aetna Services, Inc. 100%a Supports Charitable Scientific,
Literary and Educational
Activities
- ---------------------------------------------------------------------------------------------------------------------------------
Imperial Fire & Marine U.K. (1) (***) Aetna Services, Inc. 10%
Reinsurance Company
Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Business Resources, Inc. CT (1) (*) Aetna Services, Inc. 100% Provides Business Services to
External Clients
- ---------------------------------------------------------------------------------------------------------------------------------
AE Fifteen, Incorporated CT (1) (*) Aetna Services, Inc. 100% Shell Corp. for Interest in
Cogeneration
- ---------------------------------------------------------------------------------------------------------------------------------
PHPSNE Parent Corporation DE (1) (*) AUSHC Holdings, Inc. 55% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Luettgens Limited CT (1) (*) Aetna Services, Inc. 100% Retail Specialty Store
- ---------------------------------------------------------------------------------------------------------------------------------
AE Housing Corp. CT (1) (*) Aetna Services, Inc. 100% Real Estate
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Capital L.L.C. DE (5) (*) Aetna Services, Inc. 95%(b) Finance - Limited Liability
Company
- ---------------------------------------------------------------------------------------------------------------------------------
A.S.I. Wings, L.L.C. DE (5)(*) Aetna Services, Inc. 100% General Business Corporation
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Realty Investments I, Inc. CT (1) (*) Aetna Services, Inc. 100% Real Estate Investment
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Health Plans of Southern New CT (1) (*) PHPSNE Parent 100% Health Care
England, Inc. Corporation
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Properties I Limited CT (2) (***) Aetna Realty 84%(c) Real Estate Investment
Partnership Investments I, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(a) Nonstock Corporation
(b) Aetna Capital Holdings, Inc. owns 5% of this Limited Liability Company.
(c) Aetna Realty Investments I, Inc. is a 1% general partner and an 83%
limited partner.
2
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AHP Holdings, Inc. CT (1) (*) Aetna Life Insurance 100% Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
CMBS Holdings, Inc. TX (1) (*) Aetna Life Insurance 100% Real Estate Investment
Company and Management
- ---------------------------------------------------------------------------------------------------------------------------------
CMBS Holdings, Inc. - II CT (1) (*) Aetna Life Insurance 100% Real Estate
Company
- ---------------------------------------------------------------------------------------------------------------------------------
CMBS Holdings, L.L.C. CT (5) (*) Aetna Life Insurance 99%(d) Real Estate
Company
- ---------------------------------------------------------------------------------------------------------------------------------
ALEC Coinvestment Fund 1, L.L.C. DE (5) (**) Aetna Life Insurance 100 Private Equity Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Bay Area Mall, Inc. DE (1) (*) Aetna Life Insurance 100% Real Estate
Company
- ---------------------------------------------------------------------------------------------------------------------------------
AE Fourteen, Inc. CT (1) (*) Aetna Life Insurance 100% Cogeneration
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Company of CT (1) (*) AHP Holdings, Inc. 100% Insurance
Connecticut
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Life Assignment Company CT (1) (*) Aetna Life Insurance 100% Assignment Company for
Company Structured Settlements
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Properties, Inc. CT (1) (*) Aetna Life Insurance 100% Acquire, Develop and Lease
Company Real Estate
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna/Area Corporation CT (1) (*) Aetna Life Insurance 100% Real Estate Investment
Company and Management
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Institutional Investors I CT (2) (**) Aetna Life Insurance 13%(e) Real Estate
Limited Partnership Investment
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(d) CMBS Holdings, Inc. II owns 1% of this Limited Liability Company.
(e) Aetna Real Estate Properties, Inc. is a 1% general partner.
3
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shadow Ridge At Oak Park CA (2) (**) Aetna Life Insurance 80% Real Estate
Condominium Associates Company
- -------------------------------------------------------------------------------------------------------------------------------
Capitol District Energy Center CT (2) (**) AE Fourteen, Inc. 50% Cogeneration of Electrical Power
Cogeneration Associates
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Affordable Housing, Inc. CT (1) (*) Aetna Life Insurance 100% Real Estate Investment
Company
- -------------------------------------------------------------------------------------------------------------------------------
BPC Equity, Inc. DE (1) (*) Aetna Life Insurance 100% General Business Corporation
Company
- -------------------------------------------------------------------------------------------------------------------------------
BPC Equity, L.L.C. DE (5) (**) Aetna Life Insurance 99%(f) General Business Corporation
Company
- -------------------------------------------------------------------------------------------------------------------------------
Eighty-Five L.L.C. DE (5) (**) Aetna Life Insurance 100% Private Equity Investment
Company
- -------------------------------------------------------------------------------------------------------------------------------
Lincoln 455 Market Street CA (2) (**) Aetna Life Insurance 90%(g) Real Estate
Company
- -------------------------------------------------------------------------------------------------------------------------------
Circulation L.L.C. CT (5) (**) Aetna Life Insurance 100% General Business Corporation
Company
- -------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport A CA (2) (**) Aetna Life Insurance 50%(h) Real Estate Investment
Company
- -------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport Number 8 CA (2) (**) Aetna Life Insurance 50%(i) Real Estate Investment
Company
- -------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport Number 9 CA (2) (**) Aetna Life Insurance 50%(j) Real Estate Investment
Company
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(f) BPC Equity, Inc. owns 1% of this Limited Liability Company.
(g) 89% general partner and 1% limited partner.
(h) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
(i) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
(j) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
4
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Koll Center Newport Number 10 CA (2) (**) Aetna Life Insurance 50%(k) Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport Number 11 CA (2) (**) Aetna Life Insurance 50%(l) Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Koll Center Newport Number 14 CA (3) (**) Aetna Life Insurance 60% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Pinnacle McDowell Investors, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
1111 Pasquinelli Dr. L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
1400 Busch Parkway, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Hayward Industrial Park Associates CT (2) (**) Aetna Life Insurance 99% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Hamilton Partnership IL (2) (**) Aetna Life Insurance 62% Real Estate
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Mall Owners LLC DE (5) (**) Aetna Life Insurance 50% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Baltimore East Hotel Investors LLC MD (5) (***) Aetna Life Insurance 100% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Carlyle Club Apartments Investors, DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Citation Club Investors, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Birtcher Aetna-Laguna Hills CA (2) (**) Aetna Life Insurance 68% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(k) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
(l) Aetna Life Insurance Company is a 49% general partner and a 1% limited
partner.
5
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Business Park CA (2) (**) Aetna Life Insurance 99% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Ensenada De Las Colinas I Associates TX (2) (**) Aetna Life Insurance 99%(m) Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Trevose Hospitality, Inc. CT (1) (**) Aetna Life Insurance 100% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Oaks at Valley Ranch I TX (2) (**) Aetna Life Insurance 99%(n) Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Oaks at Valley Ranch II TX (2) (**) Aetna Life Insurance 99%(o) Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
KBC-Eastside Limited Partnership AZ (2) (**) Aetna Life Insurance 80% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Sturbridge Square Apartments DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Investors LLC Company
- ---------------------------------------------------------------------------------------------------------------------------------
900 North Stuart Street Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Trumbull One, Inc. CT (1) (*) Aetna Life Insurance 100% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Trumbull Three, Inc. CT (1) (*) Aetna Life Insurance 100% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Trumbull Four, Inc. CT (1) (*) Aetna Life Insurance 100% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Southfield Partners MD (2) (**) Aetna Life Insurance 99%(p) Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(m) Aetna Life Insurance Company is a 99% general partner and Trumbull One,
Inc. is a 1% general partner.
(n) Aetna Life Insurance Company is a 99% general partner and Trumbull One,
Inc. is a 1% general partner.
(o) Aetna Life Insurance Company is a 99% general partner and Trumbull One,
Inc. is a 1% general partner.
(p) Aetna Life Insurance Company is a 99% general partner and Trumbull Four,
Inc. is a 1% general partner.
6
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lincoln Rancho Cucamonga Associates CA (2) (**) Aetna Life Insurance 60% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Metroplace Office Investors L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Stuart Park Associates, L.L.C. VA (5) (***) 900 North Stuart Street 50% Real Estate Holding Company
Investors L.L.C.
- ---------------------------------------------------------------------------------------------------------------------------------
1010 Executive Court, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Becknell Properties IL (2) (**) Aetna Life Insurance 75% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
3365 Enterprise Avenue Investors, DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Cherry Hill Investors L.L.C. CT (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Evergreen Industrial Park DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Investors, L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
1135 Arbor Drive Investors L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Centrum Associates CA (2) (**) Aetna Life Insurance 65% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Southwest Financial Associates AZ (2) (**) Aetna Life Insurance 60% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
B&H Ventures IV Limited Partnership CT (2) (**) Aetna Life Insurance 75% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Champions Richland Northcourte TX (2) (*) Aetna Life Insurance 99%(q) Real Estate Investment
Partnership Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(q) Aetna Life Insurance Company is a 99% general partner and Trumbull One,
Inc. is a 1% general partner.
7
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Chris-Town Village Associates AZ (2) (**) Aetna Life Insurance 50% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Maxxim Coinvestment Fund IV, LLC DE (5)(*) Aetna Life Insurance 100% Private Equity Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Assembly Square Mall LLC DE (5) (**) Aetna Life Insurance 99%(r) Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Arshaw Partners II TX (2) (**) Aetna Life Insurance 50% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Spectrum Fashion Center AZ (2) (**) Aetna Life Insurance 50% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Canyon Springs Investment Partners TX (2) (**) Aetna Life Insurance 100%(s) Real Estate Holding Company
L.P. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Cambridgeside Galleria MA (2) (**) Aetna Life Insurance 50% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Circon Coinvestment Fund IV, LLC DE (5) (*) Aetna Life Insurance 100% Private Equity Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
EBF Group L.L.C. DE (5) (*) Aetna Life Insurance 22% Private Equity Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
8550 Freeport Parkway South LP TX (2) (***) Aetna Life Insurance 99%(t) Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Summit-Plano Investors LP TX (2) (***) Aetna Life Insurance 99%(u) Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Stamford Town Center Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(r) Aetna Life Insurance Company is a 99% general partner and Bay Area Mall,
Inc., is a 1% general partner.
(s) Aetna Life Insurance Company is a 99% general partner and Trumbull One,
Inc. is a 1% general partner.
(t) Aetna Life Insurance Company is a 99% general partner and Trumbull One, Inc
is a 1% general partner.
(u) Aetna Life Insurance Company is a 99% limited partner and Trumbull Four,
Inc. is a 1% general partner.
8
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADBI Partnership FL (2) (**) Aetna Life Insurance 30% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Pratt Street Hotel Limited MD (2) (*) Aetna Life Insurance 99%(v) Real Estate Investment
Partnership Company
- ---------------------------------------------------------------------------------------------------------------------------------
737 North Michigan Avenue Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Meridian Business Campus Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
I L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
1501 Fourth Ave. Limited WA (2) (**) Aetna Life Insurance 91%(w) Real Estate Investment
Partnership Company
- ---------------------------------------------------------------------------------------------------------------------------------
Thace Associates MI (2) (**) Aetna Life Insurance 25% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Rich-Taubman Associates MA (2) (***) Stamford Town Center 50% Real Estate Holding Company
Investors L.L.C.
- ---------------------------------------------------------------------------------------------------------------------------------
Eastmeadow Distribution Center GA (2) (**) Aetna Life Insurance 99%(x) Real Estate Investment
Limited Partnership Company
- ---------------------------------------------------------------------------------------------------------------------------------
Eastmeadow Distribution Center GA (2) (**) Aetna Life Insurance 99%(y) Real Estate Investment
Phase II Limited Partnership Company
- ---------------------------------------------------------------------------------------------------------------------------------
777 Oak Lane, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Azalea Mall, L.L.C. DE (5) (**) Aetna Life Insurance 100% Private Equity Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(v) Aetna Life Insurance Company is a 99% general partner and Trumbull One,
Inc. is a 1% general partner.
(w) Aetna Life Insurance Company is a 90% general partner and a 1% limited
partner.
(x) Aetna Life Insurance Company is a 98% general partner and a 1% limited
partner.
(y) Aetna Life Insurance Company is a 98% general partner and a 1% limited
partner.
9
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Southeast Second Avenue, Inc. DE (1) (*) Aetna Life Insurance 100% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
1401 West 22nd Street Investors, DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Towns of Chapel Hill Apartments, DE (2) (***) Aetna Life Insurance 99%(z) Real Estate Holding Company
L.P. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Freeport Office Center, L.P DE (2) (***) Aetna Life Insurance 99%(aa) Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
The Vinings at Delray Beach DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Apartments Investors L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Central Trust Center Associates OH (2) (**) Aetna Life Insurance 15% Real Estate Investment
Company
- ---------------------------------------------------------------------------------------------------------------------------------
South Center I & II Investors L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
South Center III & IV Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Quail Ridge Drive Investors, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
3360 Enterprise Avenue Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Westlake Greens Apartments DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Investors, LLC Company
- ---------------------------------------------------------------------------------------------------------------------------------
Corporate Center II Investors L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(z) Aetna Life Insurance Company is a 99% limited partner and Trumbull One,
Inc. is a 1% general partner.
(aa) Aetna Life Insurance Company is a 99% limited partner and Trumbull One,
Inc. is a 1% general partner.
10
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dakota McDowell Investors L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Meridian Business Campus Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
II L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Meridian Business Campus DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Investors III L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Mountain View Crossing Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Parcel 6 Meridian Parkway Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
The Vintage at Hyland Hills DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Investors L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Airport Square Holdings I, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Airport Square Holdings III, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Airport Square Holdings VI and VII DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
9709 Third Avenue Investors LLC DE (5) (*) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Sawgrass Office Campus Investors LLC DE (5) (*) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Fresca Drive Investors LLC DE (5) (*) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Airport Square Holdings VIII, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Airport Square Holdings IX, L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Meridian at Carlyle Apartments DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Investors L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
2155 Louisiana Avenue Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Village Green of Rochester DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Apartments Investors L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Novi Town Center Investors L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Village Park of Mayfield Investors DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
8909 Purdue Road Investors L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Brookdale Apartments L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Chevy Chase Pavilion L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Concourse Office Plaza L.L.C. DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Village Green of Ann Arbor DE (5) (***) Aetna Life Insurance 100% Real Estate Holding Company
Investors L.L.C. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Retirement Holdings, Inc. CT (1) (*) Aetna Retirement 100% Holding Company
Services, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance and Annuity CT (1) (*) Aetna Retirement 100% Life Insurance, Pensions And
Company Services, Inc. Annuities
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Services Holding Company, Inc. CT (1) (*) Aetna Retirement 100% Holding Company for Service
Services, Inc. Contract Companies
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Retail Holding Company, Inc. CT (1) (*) Aetna Retirement 100% Holding Company for Retail
Holdings, Inc. Distribution Companies
- ---------------------------------------------------------------------------------------------------------------------------------
Bentana Technologies, Inc. CT (1) (*) Aetna Retirement 50%(bb) Information Technology Company
Holdings, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Trust Company, FSB Federal (6) (*) Aetna Retirement 100% Federal Savings Bank
Holdings, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Systematized Benefits CT (1) (*) Aetna Services 100% Third Party Administrator
Administrators, Inc. Company, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Services, Inc. CT (1) (*) Aetna Retail Holding 100% Distribute Securities Products
Compny, Inc. - ALIAC and Outside Funds
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Financial Services, Inc. CT (1) (*) Aetna Retirement 100% Broker-Dealer and Investment
Holdings, Inc. Advisor
- ---------------------------------------------------------------------------------------------------------------------------------
FNI International, Inc. CA (1) (*) Aetna Retail Holding 100% Holding Company
Company, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency Holding CT (1) (*) Aetna Retail Holding 100% Holding Company
Company, Inc. Company, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Adviser Holding CT (1) (*) Aetna Life Insurance and 100% Holding Company for Investment
Company, Inc. Annuity Company. Adviser Companies
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Company of America FL (1) (*) Aetna Life Insurance and 100% Write/Reinsure Life and
Annuity Company Annuity Business
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna New Series Fund, Inc. MD (1) (**) Aetna Life Insurance and 100% Regulated Investment Company
Annuity Company (Mutual Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares MA (4) (**) Aetna Life Insurance and 97% Regulated Investment Company
Annuity Company (Mutual Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund MA (4) (**) Aetna Life Insurance and 97% Regulated Investment Company
Annuity Company (Mutual Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(bb) U.S. Healthcare Financial Services, Inc. owns 50% of Bentana Technologies,
Inc.
13
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aeltus Investment Management, Inc. CT (1) (*) Aetna Investment Adviser 100% Investment Advisor
Holding Company, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Portfolios, Inc. MD (1) (**) Aetna Life Insurance and 99% Regulated Investment Company
Annuity Company (Mutual Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Fund MA (4) (**) Aetna Life Insurance and 98% Regulated Investment Company
Annuity Company (Mutual Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc. MD (1) (**) Aetna Life Insurance and 99% Regulated Investment Company
Annuity Company (Mutual Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Series Fund, Inc. MD (1) (**) Aetna Life Insurance and 25%(cc) Regulated Investment Company
Annuity Company (Mutual Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund MA (4) (**) Aetna Life Insurance and 100% Regulated Investment Company
Annuity Company (Mutual Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Generation Portfolios, Inc. MD (1) (**) Aetna Life Insurance and 99% Regulated Investment Company
Annuity Company (Mutual Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. MD (1) (**) Aetna Life Insurance and 97%(dd) Regulated Investment Company
Annuity Company (MutualFund)
- ---------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment CA (1) (*) FNI International, Inc. 100% Broker/Dealer
Corporation
- ---------------------------------------------------------------------------------------------------------------------------------
FN Insurance Agency of MA (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Massachusetts, Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------------
FN Insurance Services, Inc. CA (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Business
- ---------------------------------------------------------------------------------------------------------------------------------
FN Insurance Services of Alabama, AL (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(cc) Aetna Life Insurance Company owns 1% of Aetna Series Fund, Inc.
(dd) Aetna Insurance Company of America owns 3% of Portfolio Partners, Inc.
14
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FN Insurance Services of Nevada, NV (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment HI (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Corporation of Kauai, Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment HI (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Corporation of Hawaii Business
- ---------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment HI (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Corporation of Hilo, Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------------
FN Insurance Agency, Kansas, Inc. KS (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Business
- ---------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment HI (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Corporation, Honolulu, Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------------
Financial Network Investment PR (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Corporation, Puerto Rico, Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------------
FN Insurance Agency, New Jersey, NJ (1) (*) FNI International, Inc. 100% Solicitation of Insurance
Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Management Bermuda (1) (*) Aeltus Investment 100% Holding Company
(Bermuda) Holdings Limited Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aeltus Trust Company CT (1) (*) Aeltus Investment 100% Fiduciary Powers re Banking
Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aeltus Capital, Inc. CT (1) (*) Aeltus Investment 100% Broker-Dealer Related Functions
Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Elijah Asset Management, Limited DE (5) (**) Aeltus Investment 25% Investment Adviser
Liability Company Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
China Dynamic Investment Management Hong Kong (1) (**) Aetna Investment 50% Establish and Manage Collective
(Hong Kong) Limited Management(Bermuda) Investment Scheme
Holdings Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency, Inc. CT (1) (*) Aetna Insurance Agency 100% Insurance Agency for the
Holding Company, Inc. Marketing of Registered and
Nonregistered Insurance
Products
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency of MA (1) (*) Aetna Insurance Agency 100% Insurance Agency for the
Massachusetts, Inc. Holding Company, Inc. Marketing of Registered and
Nonregistered Insurance
Products
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency of Alabama, AL (1) (*) Aetna Insurance Agency 100% Insurance Agency for the
Inc. Holding Company, Inc. Marketing of Registered and
Nonregistered Insurance
Products
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Insurance Agency of Ohio, Ohio (1) (*) Aetna Insurance Agency 90%(ee) Insurance Agency for the
Inc. Holding Company, Inc. Marketing of Registered and
Nonregistered Insurance
Products
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna International Holdings (Hong Hong Kong (1) (*) Aetna International, Inc. 100% Holding Company for Insurance
Kong) I Limited and Financial Services
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Company Bermuda (1) (**) Aetna International, Inc. 61%(ff) Life Disability and Employee
(Bermuda) Limited Benefits Ins. in H.K.
- ---------------------------------------------------------------------------------------------------------------------------------
Strategic Investors Asia Ltd. Bermuda (1) (**) Aetna International, Inc. 49% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna International Fund Management CT (1) (*) Aetna International, Inc. 100% Investment Management Services
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(ee) Non-voting interest
(ff) Strategic Investors Asia Ltd. Owns 39% of Aetna Life Insurance Company
(Bermuda) Ltd.
16
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Information Technology PRC (1) (*) Aetna International, Inc. 100% Information Services Company
(Guanghzou) Limited
- ---------------------------------------------------------------------------------------------------------------------------------
AII 1, L.L.C. CT (1) (**) Aetna International, Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
AII 2, L.L.C. CT (1) (**) Aetna International, Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
AII 3, L.L.C. CT (1) (**) Aetna International, Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
AII 4, L.L.C. CT (1) (**) Aetna International, Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Holdings (Cayman) Ltd. Cayman (1) (**) Aetna International, Inc. 100% Insurance Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Argentina S.A. Argentina (1) (*) Aetna International, Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
ALICA Holdings, Inc. CT (1) (*) Aetna International, Inc. 80% Dedicated Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Company of CT (1) (*) Aetna International, Inc. 100% Life Insurance
America
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna International Holdings (Hong Hong Kong (1) (*) Aetna International, Inc. 100% Holding Company
Kong) II Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Internacional y Compania, S. Mexico (1) (*) Aetna International, Inc. 64%(gg) Holding Company
de R.L. de C.V.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna S.A. Chile (1) (*) Aetna International, Inc. 100% Holding Co.
- ---------------------------------------------------------------------------------------------------------------------------------
Arcella Limited Hong Kong (1) (*) Aetna International, Inc. 100% Investment & Holding Co. for
Aetna's Asia Pacific Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Life & Casualty Bermuda Bermuda (1) (*) Aetna International, Inc. 100% Insurance, Guaranteed and
Limited Indemnity Business
- ---------------------------------------------------------------------------------------------------------------------------------
Inversiones Mercantil Aetna, C.A. Venezuela (1) (*) Aetna International, Inc. 50% Insurance Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(gg) AE Five, Inc. owns 36% of Aetna Internacional y Compania, S. de R.L.
de C.V.
17
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Heart Investment Holdings Taiwan (1) (*) Aetna Life Insurance 80% Holding Company
Limited Company of America
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Life and Casualty Netherlands Aetna International, Inc. 100% Finance Investment Company
International Finance N.V. Antilles (1) (*)
- ---------------------------------------------------------------------------------------------------------------------------------
Sul America Aetna Seguros de Brazil(1) (**) Aetna International, Inc. 49% Insurance
Previdencia S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Capital Holdings, Inc. CT (1) (*) Aetna International, Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Securities Investment Taiwan (1) (*) Aetna International, Inc. 80% Securities Investment Advisor
Management (Taiwan) Ltd.
- ---------------------------------------------------------------------------------------------------------------------------------
AE Five Incorporated CT (1) (*) Aetna International, Inc. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Powszechne Towarzystwo Emerytalne Poland (1) (*) Aetna International, Inc. 40% Pension Fund Corporation
PBK
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific-Aetna Life Insurance Co., PRC (3) (**) Aetna International, Inc. 50%(hh) Life Insurance
Ltd.
- ---------------------------------------------------------------------------------------------------------------------------------
The Heiwa Life Insurance Company Japan (1) (**) Aetna International, Inc. 99% Life Insurance Company
Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna MPF Limited Hong Kong (1) (*) Aetna International, Inc. 50%(ii) Investment Management &
Advisory Services for
Individual Clients and
Investment Funds
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(hh) Aetna Life Insurance Company owns 1% of Pacific - Aetna Life Insurance Co.
Ltd.
(ii) The remaining 50% interest in this entity is held by AII 1-4, L.L.C.
18
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Health Investments Inc. Canada (1) (*) Aetna International, Inc. 100% Health Investment Company
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Management Taiwan (1) (*) Aetna International, Inc. 77% Provide Non-Security Business
(Taiwan) Limited and Investment Advice
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna International (N.Z.) Limited New Zealand (1) (*) Aetna International, Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Management (F.E.) Hong Kong (1) (*) Aetna International, Inc. 100% Investment Holding Company
Holdings Limited
- -----------------------------------------------------------------------------------------------------------------------------------
Osatspa Insurance Co. Ltd. Thailand (1) (**) Aetna International, Inc. 20% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Osatspa Life Insurance Co., Ltd. Thailand (1) (**) Aetna International, Inc. 80% Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Phillippine Ventures, Inc. Phillippine (1) (*) Aetna International, Inc. 100% Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
First Canadian Health Management Canada (1) (**) Aetna Health 49% Managed Health Services
Corporation, Inc. Investments, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Inc. Philippines (1) (*) Aetna Philippine 100% Life Insurance
Ventures, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Healthcare, Inc. Philippines (1) (*) Aetna Philippine 100% Insurance
Ventures, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
East Asia Aetna Services Company Hong Kong (1) (**) Aetna Life Insurance 100% Management Services to
Limited Company (Bermuda) Associate Companies
Limited
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Heart Investments Holdings Taiwan (1) (*) Aetna Life Insurance 30% Trading Co. - Marketing of
Limited Company of America Gifts and Souveniers
- -----------------------------------------------------------------------------------------------------------------------------------
PT Aetna Life Insurance Indonesia Indonesia (1) (**) Aetna Life Insurance 80% Limited Liability Life
Company of America Insurance Company
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daya Aetna (Malaysia) SDN. BHD. Malaysia (1) (*) Aetna International 91% Holding Company
Holdings (Hong Kong) II
Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Genesis Healthcare SDN, BHD Malaysia (1) (*) Daya Aetna (Malaysia) 100% Health Insurance Company
SDN, BHD
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Trust Limited Hong Kong (1) (*) Aetna International, Inc. 100% Financial Services Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Universal Insurance Berhad Malaysia (1) (*) Daya Aetna (Malaysia) 100% Individual Life, Home Service,
SDN. BHD. Group and General Insurance
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Heart Co., Ltd. Taiwan (1) (**) Aetna Heart Investment 100% Trading Company - Marketing of
Holdings Limited Gifts and Souvenirs
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna South Life Agency Co., Ltd. Taiwan (1) (**) Aetna Heart Investment 100% Administrative Support
Holdings Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Agency Co. Taiwan (1) (*) Aetna Heart Investments 50% Life Insurance Company
Holdings Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Huei Hong Securities Co., Ltd. Taiwan (1) (*) Aetna Heart Investment 20% Securities Trading
Holdings Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Heart Publishing Company Ltd. Taiwan (1) (*) Aetna Heart Investment 100% Trading Company
Holdings Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Seguros Mercantil, C.A. Venezuela (1) (*) Inveriones Mercantil 100% Insurance Company
Aetna, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Inversiones Veninversa, C.A. Venezuela (1) (*) Seguros Mercantil, C.A. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Estacionamiento Vence, C.A. Venezuela (1) (*) Seguros Mercantil, C.A. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Administradora de Fondos de Retiro Venezuela (1) (*) Seguros Mercantil, C.A. 100% Pension Company
Mercantil
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna (Netherlands) Holdings B.V. Netherlands(1) (*) Aetna Life and Casualty 100% Finance Company
International Finance
N.V.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Seguros Bancomer, S.A. de C.V. Mexico (1) (**) Aetna Internacional y 49% Insurance and Reinsurance
Compania S de R.L. de Company
C.V.
- ---------------------------------------------------------------------------------------------------------------------------------
Inverval de Mexico S.A. de C.V. Mexico (1) (*) Aetna Internacional y 98% Holding Company
Compania S de R.L. de
C.V.
- ---------------------------------------------------------------------------------------------------------------------------------
AE Five y Compania S. de R.L. de Mexico (1) (*) Aetna Internacional y 100% Limited Limitability Company
C.V. Compania S de R.L. de Formed Under Mex. Law for The
C.V. Purpose of Issuing Cpos in
Mexico.
- ---------------------------------------------------------------------------------------------------------------------------------
Administradora de Fondos Para el Mexico (1) (**) Aetna Internacional y 33%(jj) Retirement Funds Management
Retiro Bancomer, S.A. de C.V. Compania S de R.L. de Company
C.V.
- ---------------------------------------------------------------------------------------------------------------------------------
Grupo Vamsa, S.A. de C.V. Mexico (1) (**) Aetna Internacional y 49% Legal Administration and
Compania S de R.L. de Financial Services
C.V.
- ---------------------------------------------------------------------------------------------------------------------------------
Pensiones Bancomer S.A. de C.V. Mexico (1) (**) Aetna Internacional y 49% Insurance Company
Compania S de R.L. de
C.V.
- ---------------------------------------------------------------------------------------------------------------------------------
Asesores en Promociones Segunomina Mexico (1) (**) Seguros Bancomer, S.A. 67%(kk) Marketing of Seguros
S.A. de C.V. de C.V. Products/Payroll Discounts
- ---------------------------------------------------------------------------------------------------------------------------------
Multiasistencia, S.A. de C.V. Mexico (1) (**) Seguros Bancomer, S.A. 100% Administrative Services in
de C.V. Connection with Insurance
Claims
- ---------------------------------------------------------------------------------------------------------------------------------
Meximed, S.A. de C.V. Mexico (1) (**) Seguros Bancomer, S.A. Services for Insureds for
de C.V. 100% Hospitals Admissions and
Claims Processing
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(jj) Santa Maria Internacional S.A. owns 16% of Administradora de Fondos para
el Retiro Bancomer, S.A. de C.V.
(kk) Pensiones Bancomer, S.A. de C.V. owns 33% of Aserores en Promociones
Segunomina, S.A. de C.V.
21
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Servicios Corporativos Bancomer S.A. Mexico (1) (**) Administradora de Fondos 99% Pension Administration
para el Retiro Bancomer,
S.A. de C.V.
- ---------------------------------------------------------------------------------------------------------------------------------
Futuro Familiar S.A. de C.V. Mexico (1) (**) Pensiones Bancomer, 100% Marketing of Financial
S.A. de C.V. Services & Products
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Salud S.A. Argentina (1) (*) Aetna Argentina, S.A. 100% Managing of Health Services
- ---------------------------------------------------------------------------------------------------------------------------------
Assistencia Medica Social Argentina Argentina (1) (*) Aetna Argentina, S.A. 100% Healthcare Management
S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Vida S.A. Argentina (1) (*) Aetna Argentina, Inc.. 100% Health and Life Insurance
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Chile Seguros Generales S.A. Chile (1) (*) Aetna S.A. 98% Casualty Insurance Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Administradora de Fondos de Chile (1) (*) Aetna S.A. 100% Real Estate Investment Trust
Inversion S.A. Management Co.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Chile Seguros de Vida S.A. Chile (1) (*) Aetna S.A. 100% Life Insurance Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Pensiones S.A. Chile (1) (*) Aetna S.A. 100% Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Credito Hipotecario S.A. Chile (1) (*) Aetna S.A. 100% Mortgage Company
- ---------------------------------------------------------------------------------------------------------------------------------
Cruz-Blanca Isapre, S.A. Chile (1) (*) Aetna S.A. 81% Insurance Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna International Peru S.A. Peru (1) (*) Aetna S.A. 86%(ll) Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Salud S.A. Chile (1) (*) Aetna S.A. 90% Health Indemnity - Chile
- ---------------------------------------------------------------------------------------------------------------------------------
Administradora de Fondos de Chile (1) (*) Aetna Pensiones S.A. 97% Pension Funds Management
Pensiones Santa Maria S.A. Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(ll) Aetna Chile Seguros de Vida S.A. and Aetna Chile Seguros Generales S.A.
have combined ownership of 14%
22
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Santa Maria Internacional S.A. Chile (1) (*) Administradora de Fondos 100% Pension Administration
de Pensiones Santa Maria
S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Inmobiliaria Inmarangatn S.A. Chile (1) (*) Inmobiliaria Padre 15% Service Company
Mariano S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Asesories Previdencia Chile (1) (*) Cruz Blanca Entidad 99% Service Company
Promotora de Salud S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Pensiones Peru S.A. Peru (1) (**) Santa Maria 66%(mm) Investment
Internacional S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Administradora de Fondos de Peru (1) (**) Aetna Pensiones Peru S.A. 40%(nn) Pension Funds Management
Pensiones Integra S.A. Company
- ---------------------------------------------------------------------------------------------------------------------------------
Wiese Aetna Compania de Seguros Peru (1) (**) Aetna International Peru 34% Insurance and Reinsurance
S.A. S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Novasalud Peru S.A. Entidad Peru (1) (**) Wiese Aetna Compania de 50% Insurance subsidiary
Prestadora de Salud Seguros S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Immobilaria Padre Mariano S.A. Chile (1) (*) Aetna Credito 99%(oo) Real Estate Development
Hipotecario S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Cruz Blanca Entidad Protomotra de Columbia (1) (*) Cruz Blanca Isapre, S.A. 50% Pension Insurance Company
Salud S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Sul America Aetna Companhia Brazil (1) (*) Sul America Aetna 100% Pension
Nacional de Seguros e Previdencia Seguros de Previdencia
Privada S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(mm) Aetna S.A. owns 34% of this company
(nn) Aetna Pensiones Peru S.A. owns 40% of this company
(oo) Aetna S.A. owns 1% of this company
23
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sul America Servicos Medicos S.A. Brazil (1) (*) Sul America Aetna 100% Health Administrator
Seguros de Previdencia
S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Clube Dos Executivos, S.A. Brazil (1) (*) Sul American Aetna 100% Life insurance sponsor
Seguros de
Previdencia S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Executivos S/A Administracao e Brazil (1) (*) Clube Dos Executivos 99% Administrative Services
Promocao de Seguros S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Executivos Corretorae Brazil (1) (*) Clube Dos Executivos 99% Administrative Services
Administradora de Seguros S/C LTDA S.A.
- ---------------------------------------------------------------------------------------------------------------------------------
Sulalet Servisos Medicos Brazil (1) (*) Sul America Aetna 100% Healthcare Services
Companhia Nacional de
Seguros e Previdencia
Privada
- ---------------------------------------------------------------------------------------------------------------------------------
Brasilsaude Companhia de Segoros Brazil (1) (*) Sul America Aetna 51% Insurance
Companhia Nacional de
Seguros e Previdencia
Privada.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Health (N.Z.) Limited New Zealand (1) (** Aetna International 100% Health Insurance Underwriting
(N.Z) Limited
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance (N.Z.) Limited New Zealand (1) (*) Aetna Health (N.Z.) 100% Group Benefits/Pension
Limited Management
- ---------------------------------------------------------------------------------------------------------------------------------
Human Affairs Limited (N.Z.) New Zealand (1) (*) Aetna Health (N.Z.) 100% Indemnity Health Insurance
Limited
- ---------------------------------------------------------------------------------------------------------------------------------
First Health (New Zealand Limited) New Zealand (1) (*) Aetna Health (N.Z.) 100% Super Annuitization/Long Term
Limited Care
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- --------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prime Health Limited New Zealand (1) (*) First Health (New 50% Buying and Managing Risk for
Zealand)Limited Publicly Funded Health
Services and Providing
Management Services and
Infrastructure to its Network
of Doctors
- --------------------------------------------------------------------------------------------------------------------------------
Managed Care New Zealand Limited New Zealand (1) (*) Human Affairs (NZ) 100% Long Term Care Provider
Limited
- --------------------------------------------------------------------------------------------------------------------------------
PLJ Holdings Limited Hong Kong (1) (*) Aetna Investment 100% Investment Management &
Management (F.E.) Securities Trading
Holdings Limited
- --------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Management (F.E.) Hong Kong (1) (*) Aetna Investment 100% Nominee Services Holding
Limited Management(F.E.) Assets of AIM F.E.'s Customers
Holdings Limited in Street Name
- --------------------------------------------------------------------------------------------------------------------------------
Kwang HUA Securities Investment & Taiwan (1) (***) Aetna Investment 20% Securities Investment & Trust
Trust Co. Ltd. Management (F.E.)
Holdings Limited
- --------------------------------------------------------------------------------------------------------------------------------
Kwang Hua Investment & Trust (H.K.) Hong Kong (1) (***) Kwang HUA Securities 100% Investment Company
Co. Ltd Investment & Trust
Co. Ltd.
- --------------------------------------------------------------------------------------------------------------------------------
Kwang HUA Securities Investment Taiwan (1) (***) PLJ Holdings Limited 20% Investment Consulting Company
Consultant Co. Ltd.
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare Financial Services, DE (1) (*) Aetna U.S. Healthcare 100% Holding Company
Inc. Inc.(PA)
- --------------------------------------------------------------------------------------------------------------------------------
Primary Holdings, Inc. DE (1) (*) Aetna U.S. Healthcare 100% Holding Company
Inc. (PA)
- --------------------------------------------------------------------------------------------------------------------------------
Aetna Health Management, Inc. DE (1) (*) Aetna U.S. Healthcare 100% HMO Management Company
Inc. (PA)
- --------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans, Inc. DE (1) (*) Aetna U.S. Healthcare 100% Holding Company
Inc. (PA)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna U.S. Healthcare Dental Plan, PA (1) (*) Aetna U.S. Healthcare 100% Dental
Inc. Inc.(PA)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Dental Plan, NJ (1) (*) Aetna U.S. Healthcare 100% Dental
Inc. Inc.(PA)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare Dental Plan, Inc. DE (1) (*) Aetna U.S. Healthcare 100% Dental
Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Health Insurance Company NY (1) (*) Aetna U.S. Healthcare 100% Accident and Health Insurance
Inc. (PA) Company
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate Health Insurance Company PA (1) (*) Aetna U.S. Healthcare 100% Accident and Health Insurance
Inc. (PA) Company
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Managed Care, Inc. MD (1) (*) Aetna U.S. Healthcare 100% Utilization Review
Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. NJ (1) (*) Aetna U.S. Healthcare 100% HMO
Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc. NY (1) (*) Aetna U.S. Healthcare 100% HMO
Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. CT (1) (*) Aetna U.S. Healthcare 100% HMO
Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. MA (1) (*) Aetna U.S. Healthcare 100% HMO
Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. (DE) DE (1) (*) Aetna U.S. Healthcare 100% HMO
Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of New NH (1) (*) Aetna U.S. Healthcare 100% HMO
Hampshire, Inc. Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
Prudential Health Care Plan, Inc. TX (1) (*) Aetna U.S. Healthcare 100% HMO
Inc. (PA)-
- -----------------------------------------------------------------------------------------------------------------------------------
Prudential Health Care Plan of New NY (1) (*) Aetna U.S. Healthcare 100% HMO
York, Inc. Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
Prudential Health Care Plan of CT (1) (*) Aetna U.S. Healthcare 100% HMO
Connecticut, Inc. Inc. (PA)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advent Investments, Inc. DE (1) (*) U.S. Healthcare 100% DE Holding Company
Financial Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Independent Investments, Inc. DE (1) (*) U.S. Healthcare 100% DE Holding Company
Financial Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
United States Physicians Care PA (1) (*) U.S. Healthcare 100% Financial Services to
Systems, Inc. Financial Services, Inc. Physicians
- ----------------------------------------------------------------------------------------------------------------------------------
United States Home Health Care PA (1) (*) U.S. Healthcare 100% Inactive - other Medical
Systems, Inc. Financial Services, Inc. Services
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Health Aviation Corp. PA (1) (*) U.S. Healthcare 100% Ownership and Operation of
Financial Services, Inc. Airplanes
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare Properties, Inc. PA (1) (*) U.S. Healthcare 100% Holding Company for Real
Financial Services, Inc. Estate
- ----------------------------------------------------------------------------------------------------------------------------------
Intelihealth, Inc. DE (1) (*) U.S. Healthcare 100% Software Development
Financial Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
USHC Management Services DE (1) (*) U.S. Healthcare 100% Management and Financial
Corporation Financial Services, Inc. Services to Network Providers
- ----------------------------------------------------------------------------------------------------------------------------------
Integrated Pharmacy Solutions, Inc. FL (1) (*) U.S. Healthcare 100% Pharmaceutical
Financial Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Bentana Technologies, Inc. CT (1) (*) U.S. Healthcare 50%(pp) Information Technology Company
Financial Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare Advantage, Inc. DE (1) (*) Advent Investments, Inc. 100% Holding Company
- ----------------------------------------------------------------------------------------------------------------------------------
Wissahickon Payment Administrators, DE (1) (*) Advent Investments, Inc. 100% Third Party Administrator
Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Interactive DE (1) (*) Aetna U.S. Healthcare 80%(qq) Shell corp. set up to handle
Inc. Financial Services, Inc. health's internet portal
operations
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(pp) Aetna Retirement Holdings, Inc. owns 50% of Bentana Technologies, Inc.
(qq) Aetna Health Management, Inc. owns 20% of Aetna U.S. Healthcare
Interactive Inc.
27
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advent Financial Services, Inc. DE (1) (*) U.S. Healthcare 100% Holding Company
Advantage, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate Health Administrators, PA (1) (*) Advent Financial 100% Third Party Administrator for
Inc. Services, Inc. Self-Insured Plans
- -----------------------------------------------------------------------------------------------------------------------------------
Managed Care Coordinators, Inc. DE (1) (*) Advent Financial 100% Evaluation and Administration
Services, Inc. of Multiple Health Plans
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Phoenix Corporation PA (1) (*) Advent Financial 100% Shell
Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Quality Algorithms, Inc. PA (1) (*) Advent Financial 100% Services to Analyze the
Services, Inc. Quality and Effectiveness of
Medical Care
- -----------------------------------------------------------------------------------------------------------------------------------
Workers Comp Advantage, Inc. PA (1) (*) Advent Financial 100% Case Management and other
Services,Inc. Medical Management Services
for Employers on Costs Related
to Workers' Compensation
Claims
- -----------------------------------------------------------------------------------------------------------------------------------
Primary Investments, Inc. DE (1) (*) Primary Holdings, 100% Holding Company
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
United States Health Care Systems PA (1) (*) Primary Investments, 100% HMO
of Pennsylvania, Inc. Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Inc. MD (1) (*) Primary Investments, 15%(rr) MO
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of the NC (1) (*) Primary Investments, 100% HMO
Carolinas, Inc. Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Chickering Claims Administrators, MA (1) (**) Primary Investments, 47% Third Party Claims
Inc. Inc. Administration Business
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of Georgia, GA (1) (*) Primary Investments, 63%(ss) HMO
Inc. Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(rr) NYLCare Health Plans, Inc. owns 44% and Aetna Health Management, Inc. owns
41% of Aetna U.S. Healthcare, Inc. (MD)
(ss) Aetna Health Management, Inc. owns 37% of Aetna U.S. Healthcare of
Georgia, Inc.
28
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> C>
Prudential Health Care Plan of GA (1) (*) Primary Investments, 100% HMO
Georgia, Inc. Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of Alabama, AL (1) (*) Primary Investments, 100% HMO
Inc. Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Health Insurance Company CT (1) (*) Primary Investments, 100% Accident and Health Insurance
Inc. Company
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. MI (1) (*) Primary Investments, 100% HMO
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. OK (1) (*) Primary Investments, 100% HMO
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc. MO (1) (*) Primary Investments, 100% HMO
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Holdings, Inc. DE (1) (*) Primary Investments, 100% Holding Company
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Inc. WA (1) (*) Primary Investments, 100% HMO
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. CO (1) (*) Aetna U.S. Healthcare 100% HMO
Holdings, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Prudential Health Care Plan of CA (1) (*) Aetna Health Management, 100% HMO
California, Inc. Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Prudential Dental Maintenance TX (1) (*) Aetna Health Management 100% HMO Offering Single Health
Organization, Inc. Inc. Service Plan (Dental)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Dental Plan CA (1) (*) Aetna Health Management, 100% Provide Pre-Paid Dental
of California Inc. Inc. Services
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna U.S. Healthcare, Inc. OH (1) (*) Aetna Health Management, 100% HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. MD (1) (*) Aetna Health Management, 41%(tt) HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. FL (1) (*) Aetna Health Management, 100% HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Informed Health, Inc. DE (1) (*) Aetna Health Management, 100% Sponsors Health Information
Inc. Service
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. TN (1) (*) Aetna Health Management, 100% HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of Georgia, GA (1) (*) Aetna Health Management, 37%(uu) HMO
Inc. Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Dental Care of New Jersey, NJ (1) (*) Aetna Health Management, 100% Dental Care
Inc. Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
AUSHC Holdings, Inc. DE (1) (*) Aetna Health Management, 100% Holding Company
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. AZ (1) (*) Aetna Health Management, 100% HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Dental Plan TX (1) (*) Aetna Health Management, 100% HMO Offering Single Health
Inc. Inc. Service Plan - Dental
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of Illinois, IL (1) (*) Aetna Health Management, 100% HMO
Inc. Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Dental Care of Kentucky, Inc. KY (1) (*) Aetna Health Management, 100% Dental Plan Organization
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Interactive DE (1) (*) Aetna Health Management, 20%(vv) Shell corp. set up to handle
Inc. Inc. health's internet portal
operations
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(tt) NYLCare Health Plans, Inc. owns 44% and Primary Investments, Inc. owns 15%
of Aetna U.S. Healthcare, Inc. (MD)
(uu) Primary Investments, Inc. owns 63% of Aetna U.S. Healthcare of Georgia,
Inc.
30
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Health Plans of Central and PA (1) (*) Aetna Health Management 100% HMO
Eastern Pennsylvania, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. TX (1) (*) Aetna Health Management 100% HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare, Inc. LA (1) (*) Aetna Health Management 100% HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
MED Southwest, Inc. TX (1) (*) Aetna Health Management 55% Holding Company
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Government Health Plans, Inc. CA (1) (*) Aetna Health Management 100% Sponsors Champus Business
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of CA (1) (*) Aetna Health Management 100% HMO
California, Inc. Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Health Plans of New Jersey, NJ (1) (*) AUSHC Holdings, Inc. 100% HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Southwest Physicians Life Insurance TX (1) (*) MED Southwest, Inc. 100% Life and Health Insurer
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of North TX (1) (*) MED Southwest, Inc. 100% HMO
Texas Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Lonestar Holding Co. DE (1) (*) NYLCare Health Plans, 100% Holding Company
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
NYLCare of Texas, Inc. TX (1) (*) NYLCare Health Plans, 100% Management Company for PPO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of PA (1) (*) NYLCare Health Plans, 100% HMO
Pennsylvania, Inc. Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(vv) U.S. Healthcare Financial Services, Inc. owns 80% of Aetna U.S. Healthcare
Interactive Inc.
31
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- --------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One Liberty Plaza Holdings, Inc. DE (1) (*) NYLCare Health Plans, 100% Special Purpose Funding Entity
Inc. for Industrial Development
Agency Transaction
- --------------------------------------------------------------------------------------------------------------------------------
Benefit Panel Services, Inc. CA (1) (*) NYLCare Health Plans, 100% Manages HMOs
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
NYLCare Dental Plans of the TX (1) (*) NYLCare Health Plans, 100% Dental HMO
Southwest, Inc. Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Sanus Preferred Providers West, Inc. CA (1) (*) NYLCare Health Plans, 100% PPO
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
NYLCare of New England, Inc. DE (1) (*) NYLCare Health Plans, 100% Management Company
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of New York, NY (1) (*) NYLCare Health Plans, 100% HMO
Inc. Inc.
- --------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of New Jersey, NJ (1) (*) NYLCare Health Plans, 100% HMO
Inc. Inc.
- --------------------------------------------------------------------------------------------------------------------------------
NYLCare Health Plans of CT (1) (*) NYLCare Health Plans, 100% HMO
Connecticut, Inc. Inc.
- --------------------------------------------------------------------------------------------------------------------------------
NYLCare Preferred Services, Inc. MD (1) (*) NYLCare Health Plans, 100% PPO
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Sanus of New York and New Jersey, NY (1) (*) NYLCare Health Plans, 100% PPO
Inc. Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Sanus Dental Plan of N.J., Inc. NJ (1) (*) NYLCare Health Plans, 100% Dental HMO
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
The Ethix Corporation DE (1) (*) NYLCare Health Plans, 100% Holding Company of PPO Network
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Aetna US Healthcare, Inc. ME (1) (*) NYLCare Health Plans, 100% HMO
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
New York Life and Health Insurance DE (1) (*) NYLCare Health Plans, 100% Reinsurance
Company Inc.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
COMPANY ORGANIZATION LIST
- ---------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE IMMEDIATE OWNER OWNERSHIP PRINCIPAL BUSINESS
PERCENTAGE+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna U.S. Healthcare, Inc. MD (1) (*) NYLCare Health Plans, 44%(ww) HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Lone star Health Plan, Inc. TX (1) (*) Lonestar Holding Co. 90%(xx) Holding Company
- ---------------------------------------------------------------------------------------------------------------------------------
NYLCare Passport PPO of the TX (1) (*) NYLCare of Texas, Inc. 100% PPO
Southwest, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
BPS Health Plan Administrators CA (1) (*) Benefit Panel Services, 100% Third Party Administrator
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
VivaHealth, Incorporated CA (1) (*) Benefit Panel Services, 100% HMO
Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Ethix Northwest, Inc. WA (1) (*) The Ethix Corporation 100% PPO
- ---------------------------------------------------------------------------------------------------------------------------------
Ethix Northwest Public Services, WA (1) (*) The Ethix Corporation 100% Managed Care Services to
Inc. Medicaid Recipients
- ---------------------------------------------------------------------------------------------------------------------------------
Ethix Midlands, Inc. DE (1) (*) The Ethix Corporation 100% PPO
- ---------------------------------------------------------------------------------------------------------------------------------
Ethix Southwest, Inc. TX (1) (*) The Ethix Corporation 100% PPO
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare of WA (1) (*) Ethix Northwest, Inc. 100% HMO
Washington, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(ww) Aetna Health Management, Inc. owns 41% and Primary Investments, Inc. owns
15% of Aetna U.S. Healthcare, Inc. (MD)
(xx) NYLCare Health Plans, Inc. owns 10% of this company.
33
<PAGE>
Item 27. Number of Contract Owners
As of April 30, 2000, there were 102,312 individual holders of interests
in variable annuity contracts funded through Variable Annuity Account B.
Item 28. Indemnification
Section 21 of Public Act No. 97-246 of the Connecticut General Assembly (the
"Act") provides that a corporation may provide indemnification of or advance
expenses to a director, officer, employee or agent only as permitted by Sections
33-770 to 33-778, inclusive, of the Connecticut General Statutes, as amended by
Sections 12 to 20, inclusive, of this Act. Reference is hereby made to Section
33-771(e) of the Connecticut General Statutes ("CGS") regarding indemnification
of directors and Section 33-776(d) of CGS 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, except to the extent that their certificate of incorporation expressly
provides otherwise, indemnify their directors, officers, employees and agents
against "liability" (defined as the obligation to pay a judgment, settlement,
<PAGE>
penalty, fine, including an excise tax assessed with respect to an employee
benefit plan, or reasonable expenses incurred with respect to a proceeding) when
(1) a determination is made pursuant to Section 33-775 that the party seeking
indemnification has met the standard of conduct set forth in Section 33-771 or
(2) a court has determined that indemnification is appropriate pursuant to
Section 33-774. Under Section 33-775, the determination of and the authorization
for indemnification are made (a) by the disinterested directors, as defined in
Section 33-770(3); (b) by special counsel; (c) by the shareholders; or (d) in
the case of indemnification of an officer, agent or employee of the corporation,
by the general counsel of the corporation or such other officer(s) as the board
of directors may specify. Also, Section 33-772 provides that a corporation shall
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 he was a director of the corporation. Pursuant to
Section 33-771(d), in the case of a proceeding by or in the right of the
corporation or with respect to conduct for which the director, officer, agent or
employee was adjudged liable on the basis that he received a financial benefit
to which he was not entitled, indemnification is limited to reasonable expenses
incurred in connection with the proceeding against the corporation to which the
individual was named a party.
The statute does specifically authorize a corporation to procure indemnification
insurance on behalf of an individual who 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 and
international 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 principal underwriter, only, for Aetna Variable Encore
Fund, Aetna Variable Fund, Aetna Generation Portfolios, Inc., Aetna
Income Shares, Aetna Balanced VP, Inc. (formerly Aetna Investment
Advisers Fund, Inc.), Aetna GET Fund, and Aetna Variable Portfolios,
Inc. and as the principal underwriter and investment adviser for
Portfolio Partners, 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 Life Account C 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).
(b) See Item 25 regarding the Depositor.
<PAGE>
(c) Compensation as of December 31, 1999:*
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Compensation on
Name of Net Underwriting Redemption or Brokerage
Principal Underwriter Discounts and Commissions Annuitization Commissions Compensation**
- --------------------- ------------------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Aetna Life Insurance $1,170,405 $60,339,195
and Annuity Company
</TABLE>
*To be filed by amendment.
**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 complies with
the provisions of Paragraphs (1) through (4) of the SEC Staff's
No-Action Letter dated November 7, 1988 (publicly available on November
28, 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 [1988 WL 235221, *13 (S.E.C.)].
(e) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(f) Aetna Life Insurance and Annuity Company represents that the fees and
charges deducted under the contracts covered by this registration
statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant, Variable Annuity Account B of Aetna Life Insurance
and Annuity Company, has duly caused this Registration Statement to be signed on
its behalf in the City of Hartford, State of Connecticut, on the 19th day of
May, 2000.
VARIABLE ANNUITY ACCOUNT B OF AETNA
LIFE INSURANCE AND ANNUITY COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY
COMPANY
(Depositor)
By: /s/ Thomas J. McInerney
-----------------------------------
Thomas J. McInerney
President
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated. Each person whose signature appears below hereby constitutes and
appoints Megan Dunphy, J. Neil McMurdie, Michael Pignatella, Julie E. Rockmore
and Kirk P. Wickman and each of them individually, such person's true and lawful
attorneys, and agents with full power of substitution and resubstitution, for
him or her and in his or her name, place and stead, in any and all capacities,
to sign for such person and in such person's name and capacity indicated below,
any and all amendments to this Registration Statement, hereby ratifying and
confirming such person's signatures as it may be signed by said attorneys to any
and all amendments (pre-effective and post-effective amendments).
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Thomas J. McInerney Director and President )
- ---------------------------------- (principal executive officer) )
Thomas J. McInerney )
)
)
)
/s/ Catherine H. Smith Director and Chief Financial Officer )
- ---------------------------------- )
Catherine H. Smith ) May 19, 2000
)
)
)
/s/ Shaun P. Mathews Director )
- ---------------------------------- )
Shaun P. Mathews )
)
)
)
/s/ Deborah Koltenuk Vice President, Corporate Controller, and )
- ---------------------------------- Assistant Treasurer )
Deborah Koltenuk )
)
</TABLE>
<PAGE>
VARIABLE ANNUITY ACCOUNT B
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C> <C>
99-B.4.1 Form of Variable Annuity Contract (G-CVA-00)
------------
99-B.4.2 Form of Variable Annuity Certificate (GC-CVA-00)
------------
99-B.9 Opinion and Consent of Counsel *
99-B.10 Consent of Independent Auditors *
99-B.13 Schedule for Computation of Performance Data *
</TABLE>
*To be filed by amendment
[Aetna Logo] -----------------------------------------------------------------
Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 238-6219
You may call the toll free number shown above to request
information about this Contract.
Aetna Life Insurance and Annuity Company, a stock company, herein called Aetna,
agrees to pay the benefits stated in this Contract.
Specifications
- -------------------------------------------------------------------------------
Plan
SPECIMEN
- -------------------------------------------------------------------------------
Type of Plan
SPECIMEN
- -------------------------------------------------------------------------------
Contract Holder
SPECIMEN
- -------------------------------------------------------------------------------
Contract No.
SPECIMEN
- -------------------------------------------------------------------------------
Contract Effective Date
SPECIMEN
- -------------------------------------------------------------------------------
This Contract is delivered in [STATE] and is subject to the laws of that
jurisdiction. This page and the pages that follow constitute the entire
Contract.
The variable features of the Group Contract are described in parts III, IV and
V.
Right to Cancel
- -------------------------------------------------------------------------------
The Contract Holder may cancel this Contract within 10 days by returning it to
the agent from whom it was purchased, or to Aetna at the address shown above.
Within seven days of receiving the Contract at its home office, Aetna will
return the amount of Certificate Holder Purchase Payment(s) received, plus any
increase, or minus any decrease, on the amount, if any, of Purchase Payment(s)
allocated to the Separate Account Subaccount(s).
Signed at the home office on the Contract Effective Date.
Thomas J. McInerney Kirk P. Wickman
President Secretary
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. AMOUNTS ALLOCATED TO THE GUARANTEED ACCOUNT, IF WITHDRAWN
BEFORE THE GUARANTEED TERM MATURITY DATE, MAY BE SUBJECT TO A MARKET VALUE
ADJUSTMENT. THE MARKET VALUE ADJUSTMENT MAY RESULT IN AN INCREASE OR A DECREASE
IN THE ACCOUNT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A
GUARANTEED TERM AT THE TIME OF ITS MATURITY.
G-CVA-00
<PAGE>
<TABLE>
<CAPTION>
Specifications
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Guaranteed There is a minimum guaranteed rate for Purchase Payment(s) held in the Guaranteed Account.
Rate (See Schedule - Accumulation Period.)
- -----------------------------------------------------------------------------------------------------------------------------
Deductions from There will be deductions for mortality and expense risk, administrative and if applicable other fees.
the Separate
Account
- -----------------------------------------------------------------------------------------------------------------------------
Deduction from Purchase Payment(s) may be subject to a deduction for premium taxes. (See Section III -
Purchase Purchase Payment.)
Payment(s)
</TABLE>
The Contract is a legal contract and constitutes the entire legal relationship
between Aetna and the Contract Holder.
READ THIS CONTRACT CAREFULLY. IT SETS FORTH, IN DETAIL, ALL OF THE RIGHTS AND
OBLIGATIONS OF BOTH THE CONTRACT HOLDER AND AETNA UNDER THIS CONTRACT.
THEREFORE, IT IS IMPORTANT THAT THIS CONTRACT BE READ CAREFULLY.
G-CVA-00 Page 2
<PAGE>
Schedule - Accumulation Period
Death Benefit Option
- --------------------------------------------------------------------------------
Death Benefit Option I selected. (See Section IV - Death Benefit Options.)
Separate Account
- --------------------------------------------------------------------------------
Separate Account
Variable Annuity Account B
Charges to Separate Account
A daily charge is deducted from any portion of the Account Value
allocated to the Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown in the
following chart:
<TABLE>
<S> <C>
Administrative Charge 0.15%
Mortality and Expense Risk Charge 1.35%
-----
Total Separate Account Charges 1.50%
</TABLE>
Guaranteed Account
- --------------------------------------------------------------------------------
Minimum Guaranteed Rate
3.0% (effective annual rate of return)
Separate Account and Guaranteed Account
- --------------------------------------------------------------------------------
Transfers
An unlimited number of Transfers are allowed during the
Accumulation Period. Aetna allows 12 free Transfers in any Account
Year. Aetna reserves the right to charge $10 for each subsequent
Transfer.
Maintenance Fee
Currently there is no Maintenance Fee.
Initial Purchase Payment Required
$25,000. Aetna reserves the right to lower that amount.
Maximum Issue Age of Owner and Annuitant
90
See Section I - DEFINITIONS for explanations.
G-CVA-00 Page 3
<PAGE>
Schedule - Annuity Period
Separate Account - Variable Annuity Payments
- --------------------------------------------------------------------------------
Charges to Separate Account
A daily charge is deducted at an annual effective rate of 1.25%
for mortality and expense risks. The administrative charge is
established upon election of an Annuity Payout Option. This charge
will not exceed 0.25%.
Assumed Interest Rate (AIR)
If variable Annuity Payments are chosen, an AIR of 5.0% may be
elected. If 5.0% is not elected, Aetna will use an AIR of 3.5%.
The AIR factor for 3.5% per year is 0.9999058.
The AIR factor for 5.0% per year is 0.9998663.
If the portion of a variable Annuity Payment for any Subaccount is
not to decrease, the annuity return factor under the Separate
Account for that Subaccount must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence if an AIR of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence, if an AIR of 5% is chosen.
Transfers
When variable Annuity Payments have been elected, 12 Transfers are
allowed each Account Year among the Subaccounts available during
the Annuity Period. Aetna reserves the right to allow more than 12
Transfers in an Account Year.
General Account - Fixed Annuity Payments
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate
3.0% (effective annual rate of return)
See Section I - DEFINITIONS for explanations.
G-CVA-00 Page 4
<PAGE>
Schedule - Accumulation Period
Death Benefit Option
- --------------------------------------------------------------------------------
Death Benefit Option II selected. (See Section IV - Death Benefit
Options.)
Separate Account
- --------------------------------------------------------------------------------
Separate Account
Variable Annuity Account B
Charges to Separate Account
A daily charge is deducted from any portion of the Account Value
allocated to the Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown in the
following chart:
<TABLE>
<S> <C>
Administrative Charge 0.15%
Mortality and Expense Risk Charge 1.55%
-----
Total Separate Account Charges 1.70%
</TABLE>
Guaranteed Account
- --------------------------------------------------------------------------------
Minimum Guaranteed Rate
3.0% (effective annual rate of return)
Separate Account and Guaranteed Account
- --------------------------------------------------------------------------------
Transfers
An unlimited number of Transfers are allowed during the
Accumulation Period. Aetna allows 12 free Transfers in any Account
Year. Aetna reserves the right to charge $10 for each subsequent
Transfer.
Maintenance Fee
Currently there is no Maintenance Fee.
Initial Purchase Payment Required
$25,000. Aetna reserves the right to lower that amount.
Maximum Issue Age of Owner and Annuitant
90
See Section I - DEFINITIONS for explanations.
G-CVA-00 Page 3
<PAGE>
Schedule - Annuity Period
Separate Account - Variable Annuity Payments
- --------------------------------------------------------------------------------
Charges to Separate Account
A daily charge is deducted at an annual effective rate of 1.25%
for mortality and expense risks. The administrative charge is
established upon election of an Annuity Payout Option. This charge
will not exceed 0.25%.
Assumed Interest Rate (AIR)
If variable Annuity Payments are chosen, an AIR of 5.0% may be
elected. If 5.0% is not elected, Aetna will use an AIR of 3.5%.
The AIR factor for 3.5% per year is 0.9999058.
The AIR factor for 5.0% per year is 0.9998663.
If the portion of a variable Annuity Payment for any Subaccount is
not to decrease, the annuity return factor under the Separate
Account for that Subaccount must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence if an AIR of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence, if an AIR of 5% is chosen.
Transfers
When variable Annuity Payments have been elected, 12 Transfers are
allowed each Account Year among the Subaccounts available during
the Annuity Period. Aetna reserves the right to allow more than 12
Transfers in an Account Year.
General Account - Fixed Annuity Payments
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate
3.0% (effective annual rate of return)
See Section I - DEFINITIONS for explanations.
G-CVA-00 Page 4
<PAGE>
Schedule - Accumulation Period
Death Benefit Option
- --------------------------------------------------------------------------------
Death Benefit Option I selected. (See Section IV - Death Benefit Options.)
Separate Account
- --------------------------------------------------------------------------------
Separate Account
Variable Annuity Account B
Charges to Separate Account
A daily charge is deducted from any portion of the Account Value
allocated to the Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown in the
following chart:
<TABLE>
<S> <C>
Administrative Charge 0.15%
Mortality and Expense Risk Charge 0.35%
-----
Total Separate Account Charges 0.50%
</TABLE>
Guaranteed Account
- --------------------------------------------------------------------------------
Minimum Guaranteed Rate
3.0% (effective annual rate of return)
Separate Account and Guaranteed Account
- --------------------------------------------------------------------------------
Transfers
An unlimited number of Transfers are allowed during the
Accumulation Period. Aetna allows 12 free Transfers in any Account
Year. Aetna reserves the right to charge $10 for each subsequent
Transfer.
Maintenance Fee
Currently there is no Maintenance Fee.
Initial Purchase Payment Required
$25,000. Aetna reserves the right to lower that amount.
Maximum Issue Age of Owner and Annuitant
90
See Section I - DEFINITIONS for explanations.
G-CVA-00 Page 3
<PAGE>
Schedule - Annuity Period
Separate Account - Variable Annuity Payments
- --------------------------------------------------------------------------------
Charges to Separate Account
A daily charge is deducted at an annual effective rate of 1.25%
for mortality and expense risks. The administrative charge is
established upon election of an Annuity Payout Option. This charge
will not exceed 0.25%.
Assumed Interest Rate (AIR)
If variable Annuity Payments are chosen, an AIR of 5.0% may be
elected. If 5.0% is not elected, Aetna will use an AIR of 3.5%.
The AIR factor for 3.5% per year is 0.9999058.
The AIR factor for 5.0% per year is 0.9998663.
If the portion of a variable Annuity Payment for any Subaccount is
not to decrease, the annuity return factor under the Separate
Account for that Subaccount must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence if an AIR of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence, if an AIR of 5% is chosen.
Transfers
When variable Annuity Payments have been elected, 12 Transfers are
allowed each Account Year among the Subaccounts available during
the Annuity Period. Aetna reserves the right to allow more than 12
Transfers in an Account Year.
General Account - Fixed Annuity Payments
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate
3.0% (effective annual rate of return)
See Section I - DEFINITIONS for explanations.
G-CVA-00 Page 4
<PAGE>
Schedule - Accumulation Period
Death Benefit Option
- --------------------------------------------------------------------------------
Death Benefit Option II selected. (See Section IV - Death Benefit Options.)
Separate Account
- --------------------------------------------------------------------------------
Separate Account
Variable Annuity Account B
Charges to Separate Account
A daily charge is deducted from any portion of the Account Value
allocated to the Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown in the
following chart:
<TABLE>
<S> <C>
Administrative Charge 0.15%
Mortality and Expense Risk Charge 0.55%
-----
Total Separate Account Charges 0.70%
</TABLE>
Guaranteed Account
- --------------------------------------------------------------------------------
Minimum Guaranteed Rate
3.0% (effective annual rate of return)
Separate Account and Guaranteed Account
- --------------------------------------------------------------------------------
Transfers
An unlimited number of Transfers are allowed during the
Accumulation Period. Aetna allows 12 free Transfers in any Account
Year. Aetna reserves the right to charge $10 for each subsequent
Transfer.
Maintenance Fee
Currently there is no Maintenance Fee.
Initial Purchase Payment Required
$25,000. Aetna reserves the right to lower that amount.
Maximum Issue Age of Owner and Annuitant
90
See Section I - DEFINITIONS for explanations.
G-CVA-00 Page 3
<PAGE>
Schedule - Annuity Period
Separate Account - Variable Annuity Payments
- --------------------------------------------------------------------------------
Charges to Separate Account
A daily charge is deducted at an annual effective rate of 1.25%
for mortality and expense risks. The administrative charge is
established upon election of an Annuity Payout Option. This charge
will not exceed 0.25%.
Assumed Interest Rate (AIR)
If variable Annuity Payments are chosen, an AIR of 5.0% may be
elected. If 5.0% is not elected, Aetna will use an AIR of 3.5%.
The AIR factor for 3.5% per year is 0.9999058.
The AIR factor for 5.0% per year is 0.9998663.
If the portion of a variable Annuity Payment for any Subaccount is
not to decrease, the annuity return factor under the Separate
Account for that Subaccount must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence if an AIR of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence, if an AIR of 5% is chosen.
Transfers
When variable Annuity Payments have been elected, 12 Transfers are
allowed each Account Year among the Subaccounts available during
the Annuity Period. Aetna reserves the right to allow more than 12
Transfers in an Account Year.
General Account - Fixed Annuity Payments
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate
3.0% (effective annual rate of return)
See Section I - DEFINITIONS for explanations.
G-CVA-00 Page 4
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
I. DEFINITIONS PAGE
<S> <C> <C> <C>
1.01 Account ............................................................................................. 7
1.02 Account Effective Date .............................................................................. 7
1.03 Account Value ....................................................................................... 7
1.04 Account Year ........................................................................................ 7
1.05 Accumulation Period ................................................................................. 7
1.06 Adjusted Account Value .............................................................................. 7
1.07 Annuitant ........................................................................................... 7
1.08 Annuity Payments .................................................................................... 7
1.09 Annuity Payout Options .............................................................................. 7
1.10 Annuity Period ...................................................................................... 7
1.11 Beneficiary ......................................................................................... 8
1.12 Certificate Holder .................................................................................. 8
1.13 Claim Date .......................................................................................... 8
1.14 Code ................................................................................................ 8
1.15 Contract ............................................................................................ 8
1.16 Contract Holder ..................................................................................... 8
1.17 Deposit Period ...................................................................................... 8
1.18 Dollar Cost Averaging ............................................................................... 8
1.19 Fund(s) ............................................................................................. 9
1.20 General Account ..................................................................................... 9
1.21 Guaranteed Account .................................................................................. 9
1.22 Guaranteed Rates - Guaranteed Account ............................................................... 9
1.23 Guaranteed Term ..................................................................................... 9
1.24 Guaranteed Term(s) Groups ........................................................................... 9
1.25 Maintenance Fee ..................................................................................... 9
1.26 Market Value Adjustment (MVA) ....................................................................... 10
1.27 Matured Term Value .................................................................................. 10
1.28 Maturity Date ....................................................................................... 10
1.29 Maturity Value Transfer ............................................................................. 10
1.30 Purchase Payment(s) ................................................................................. 10
1.31 Reinvestment ........................................................................................ 10
1.32 Separate Account .................................................................................... 10
1.33 Subaccount(s) ....................................................................................... 10
1.34 Systematic Distribution Option ...................................................................... 11
1.35 Transfers ........................................................................................... 11
1.36 Withdrawal Value .................................................................................... 11
1.37 Valuation Date ...................................................................................... 11
II. GENERAL PROVISIONS
2.01 Change of Contract .................................................................................. 11
2.02 Change of Fund(s) ................................................................................... 12
2.03 Nonparticipating Contract ........................................................................... 12
2.04 Payments and Elections .............................................................................. 12
2.05 State Laws .......................................................................................... 12
2.06 Control of Contract ................................................................................. 12
2.07 Designation of Beneficiary .......................................................................... 12
2.08 Misstatements and Adjustments ....................................................................... 13
2.09 Incontestability .................................................................................... 13
2.10 Grace Period ........................................................................................ 13
2.11 Individual Certificates ............................................................................. 13
</TABLE>
G-CVA-00 Page 5
<PAGE>
<TABLE>
<CAPTION>
III. PURCHASE PAYMENT, ACCOUNT VALUE, AND WITHDRAWAL PROVISIONS PAGE
<S> <C> <C> <C>
3.01 Purchase Payment .................................................................................... 13
3.02 Certificate Holder's Account ........................................................................ 13
3.03 Accumulation Units - Separate Account ............................................................... 13
3.04 Accumulation Unit Value - Separate Account .......................................................... 13
3.05 Net Investment Factor(s) - Separate Account ......................................................... 14
3.06 Market Value Adjustment (MVA) ....................................................................... 14
3.07 Transfer of Account Value from the Subaccount(s) or Guaranteed Account During the Accumulation Period 15
3.08 Notice to the Certificate Holder .................................................................... 15
3.09 Loans ............................................................................................... 15
3.10 Systematic Distribution Options ..................................................................... 16
3.11 Liquidation of Withdrawal Value ..................................................................... 16
3.12 Payment of Withdrawal Value ......................................................................... 16
3.13 Payment of Adjusted Account Value ................................................................... 16
3.14 Reinstatement ....................................................................................... 16
IV DEATH BENEFIT
4.01 Election of Death Benefit Options .................................................................. 17
4.02 Death Benefit Options .............................................................................. 17
4.03 Death Benefit Option I ............................................................................. 17
4.04 Death Benefit Option II ............................................................................ 18
4.05 Options Available to Beneficiary ................................................................... 19
V. ANNUITY PAYOUT PROVISIONS
5.01 Annuity Payout Options ............................................................................. 20
5.02 Annuity Payment Choices ............................................................................ 20
5.03 Terms of Annuity Payout Options .................................................................... 21
5.04 Death of Annuitant/Beneficiary ..................................................................... 22
5.05 Annuity Units - Separate Account ................................................................... 22
5.06 Annuity Unit Value - Separate Account .............................................................. 23
5.07 Annuity Net Return Factor(s) - Separate Account .................................................... 23
</TABLE>
G-CVA-00 Page 6
<PAGE>
I. DEFINITIONS
- --------------------------------------------------------------------------------
1.01 Account:
A record that identifies contract values accumulated on each
Certificate Holder's behalf.
1.02 Account Effective Date:
The date on which an Account is established on a Certificate
Holder's behalf.
1.03 Account Value:
As of the most recent Valuation Date, the Account Value is equal
to the total of the Purchase Payment(s) made to the Account;
(a) Plus or minus the investment experience for the amount, if
any, allocated to one or more of the Subaccounts;
(b) Plus interest added to the amount, if any, allocated to the
Guaranteed Account;
(c) Plus any additional amount deposited to the Account (see
Section IV - Death Benefit);
(d) Less the amount of any Maintenance Fee deducted;
(e) Less any additional fee(s), charges, or taxes, if applicable,
deducted;
(f) Less any amount(s) withdrawn; and
(g) Less amount(s) applied to an Annuity Payout Option.
1.04 Account Year:
A period of twelve months measured from the Account Effective Date
or an anniversary of the Account Effective Date.
1.05 Accumulation Period:
The period during which the Purchase Payment(s) are applied to an
Account to provide future Annuity Payment(s).
1.06 Adjusted Account Value:
The Account Value plus or minus the aggregate Market Value
Adjustment (MVA), if applicable, for the amount(s) allocated to
the Guaranteed Account (see Section III - Market Value
Adjustment).
1.07 Annuitant:
The person on whose death, during the Accumulation Period, a death
benefit becomes payable and on whose life or life expectancy the
Annuity Payments are based under the Contract.
1.08 Annuity Payment(s):
A series of payments for life, a definite period or a combination
of the two. The Annuity Payments may be variable or fixed in
amount or a combination of both.
1.09 Annuity Payout Options:
The Certificate Holder may choose to receive Annuity Payments
under one of the following options:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.10 Annuity Period:
The period during which Annuity Payments are made.
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1.11 Beneficiary:
The individual(s) or entity(ies) entitled to receive any death
benefit due under the Contract. Any designated Beneficiary has the
right to name another Beneficiary. If the Account is owned by
joint Certificate Holders, the survivor will be deemed the
designated Beneficiary and any other Beneficiary on record will
then be treated as the primary or contingent Beneficiary, as
originally designated, unless and until changed by the new
designated Beneficiary.
1.12 Certificate Holder:
A person who purchases an interest in the Contract as evidenced by
a certificate. Aetna reserves the right to limit ownership to
natural persons. If more than one Certificate Holder owns an
Account, each Certificate Holder will be a joint Certificate
Holder. Joint Certificate Holders have joint ownership rights and
both must authorize exercising any ownership rights unless Aetna
allows otherwise.
1.13 Claim Date:
The date when proof of death and the Beneficiary's entitlement to
the death benefit are received in good order at Aetna's home
office. This is also the date that the excess of the death benefit
over the Account Value, if any, is allocated to the money market
fund available through the Separate Account.
1.14 Code:
The Internal Revenue Code of 1986, as amended from time to time.
1.15 Contract:
The agreement between Aetna and the Contract Holder.
1.16 Contract Holder:
The entity to which the Contract is issued.
1. 17 Deposit Period:
A day, a calendar week, a calendar month, a calendar quarter, or
any other period of time specified by Aetna during which a
Purchase Payment(s), Transfer(s) and/or Reinvestment(s) may be
allocated to one or more Guaranteed Account Guaranteed Terms.
Aetna reserves the right to shorten or to extend the Deposit
Period.
During a Deposit Period, Aetna may offer any number of Guaranteed
Terms and more than one Guaranteed Term of the same duration may
be offered.
1.18 Dollar Cost Averaging:
A program that permits the Certificate Holder, during the
Accumulation Period, to systematically transfer amounts from one
of the available Subaccounts, or an available Guaranteed Account
Guaranteed Term, to one or more of the Subaccounts. If the
Certificate Holder elects a Guaranteed Account Guaranteed Term
available for Dollar Cost Averaging, no MVA applies to amounts
transferred under Dollar Cost Averaging. If Dollar Cost Averaging
from a Guaranteed Account Guaranteed Term is discontinued before
the end of the Dollar Cost Averaging period elected, Aetna will
automatically transfer the balance to a Guaranteed Term of the
same duration and an MVA will apply. The Certificate Holder may
initiate a Transfer to another investment option and an MVA will
apply. If a Guaranteed Term of the same duration is not available,
Aetna will transfer the amount to the Guaranteed Term with the
next shortest duration. If no shorter Guaranteed Term is
available, the next longer Guaranteed Term will be used. Aetna
reserves the right to establish and change terms and conditions
governing Dollar Cost Averaging.
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1.19 Fund(s):
The open-end registered management investment companies whose
shares are purchased by the Separate Account to fund the benefits
provided by the Contract.
The Funds, and the number of Funds, available during the
Accumulation Period may be different from those available during
the Annuity Period. Aetna reserves the right to limit the number
of Funds available at any one time and to limit the number of
investment options the Certificate Holder may select during the
Accumulation Period and/or during the Annuity Period.
1.20 General Account:
The account holding the assets of Aetna, other than those assets
held in Aetna's separate accounts.
1.21 Guaranteed Account:
A nonunitized separate account, established by Aetna under
Connecticut Law that holds assets for Guaranteed Terms. There are
no discrete units for this account. The Certificate Holder does
not participate in any gain or loss resulting from the performance
of the investments held in the account. Income, gains or losses
realized or unrealized, are gains or losses of Aetna. Aetna
liabilities, except for liabilities under the Contract and
reserves required by federal and state law, may not be charged
against the nonunitized separate account.
1.22 Guaranteed Rates - Guaranteed Account:
Aetna will declare the interest rate(s) applicable to a specific
Guaranteed Term at the start of the Deposit Period for that
Guaranteed Term. The rate(s) are guaranteed by Aetna for the
period beginning with the first day of the Deposit Period and
ending on the Maturity Date. Guaranteed Rates are credited
beginning with the date of allocation. The Guaranteed Rates are
annual effective yields. That is, interest is credited daily at a
rate that will produce the Guaranteed Rate over the period of a
year. No Guaranteed Rate will ever be less than the minimum
Guaranteed Rate shown on the Schedule - Accumulation Period.
For Guaranteed Terms of one year or less, one Guaranteed Rate is
credited for the full Guaranteed Term. For longer Guaranteed
Terms, an initial Guaranteed Rate is credited from the date of
deposit to the end of a specified period within the Guaranteed
Term. There may be different Guaranteed Rate(s) declared for
subsequent specified time intervals throughout the Guaranteed
Term.
Aetna may offer more than one Guaranteed Term of the same duration
and credit one with a higher rate contingent upon use only with
Dollar Cost Averaging.
1.23 Guaranteed Term:
The period of time specified by Aetna for which a specific
Guaranteed Rate(s) is offered on amounts invested during a
specific Deposit Period. Guaranteed Terms are made available
subject to Aetna's terms and conditions, including, but not
limited to, Aetna's right to restrict allocations to new Purchase
Payments (such as by prohibiting Transfers into a particular
Guaranteed Term from any other Guaranteed Term or from any of the
Subaccounts, or by prohibiting Reinvestment of a Matured Term
Value to a particular Guaranteed Term). More than one Guaranteed
Term of the same duration may be offered within the Contract.
1.24 Guaranteed Term(s) Groups:
All Guaranteed Account Guaranteed Term(s) of the same duration
(from the close of the Deposit Period until the designated
Maturity Date).
1.25 Maintenance Fee:
The Maintenance Fee, if any, (see Schedule - Accumulation Period)
will be deducted during the Accumulation Period from the Account
Value on each anniversary of the Account Effective Date and upon
withdrawal of the entire Account Value.
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1.26 Market Value Adjustment (MVA):
An adjustment that may apply to an amount withdrawn or transferred
from a Guaranteed Account Guaranteed Term prior to the end of that
Guaranteed Term. The adjustment reflects the change in the value
of the investment due to changes in interest rates since the date
of deposit and is computed using the formula given. The adjustment
is expressed as a percentage of each dollar being withdrawn (see
Section III- Market Value Adjustment).
1.27 Matured Term Value:
The amount due on a Guaranteed Account Guaranteed Term's Maturity
Date.
1.28 Maturity Date:
The last day of a Guaranteed Account Guaranteed Term.
1.29 Maturity Value Transfer:
During the calendar month following a Guaranteed Account Maturity
Date, the Certificate Holder may notify Aetna's home office in
writing to Transfer or withdraw all or part of the Matured Term
Value, plus accrued interest at the new Guaranteed Rate, from the
Guaranteed Account without an MVA. This provision only applies to
the first request received from the Certificate Holder in good
order during this period for any Matured Term Value.
1.30 Purchase Payment(s):
The Purchase Payment(s) less premium taxes, if applicable,
accepted by Aetna at its home office. Aetna reserves the right to
refuse to accept any Purchase Payment at any time for any reason.
No advance notice will be given to the Contract Holder or
Certificate Holder.
1.31 Reinvestment:
Aetna will mail a notice to the Certificate Holder at least 18
calendar days before a Guaranteed Term's Maturity Date. This
notice will contain the Terms available during current Deposit
Periods with their Guaranteed Rate(s), and projected Matured Term
Value. If no specific direction is given by the Certificate Holder
prior to the Maturity Date, each Matured Term Value will be
reinvested in the current Deposit Period for a Guaranteed Term of
the same duration. If a Guaranteed Term of the same duration is
unavailable, each Matured Term Value will automatically be
reinvested in the current Deposit Period for the next shortest
Guaranteed Term available. If no shorter Guaranteed Term is
available, the next longer Guaranteed Term will be used. Aetna
will mail a confirmation statement to the Certificate Holder the
next business day after the Maturity Date. This notice will state
the Guaranteed Term and Guaranteed Rate(s) which will apply to the
reinvested Matured Term Value.
1.32 Separate Account:
A separate account that buys and holds shares of the Fund(s).
Income, gains or losses, realized or unrealized, are credited or
charged to the Separate Account without regard to other income,
gains or losses of Aetna. Aetna owns the assets held in the
Separate Account and is not a trustee as to such amounts. The
Separate Account generally is not guaranteed and is held at market
value. The assets of the Separate Account, to the extent of
reserves and other contract liabilities of the Separate Account,
shall not be charged with other Aetna liabilities.
1.33 Subaccount(s):
The investment options available through the Separate Account..
Each Subaccount invests in the shares of only one corresponding Fund.
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1.34 Systematic Distribution Option:
An option elected by the Certificate Holder during the
Accumulation Period which establishes a schedule of withdrawals to
be made automatically from the Certificate Holder's Account.
1.35 Transfers:
The movement of invested amounts among the available Subaccount(s)
and/or any available Guaranteed Account Guaranteed Term. Transfers
are, subject to terms and conditions established by Aetna, during
the Accumulation Period or the Annuity Period.
1.36 Withdrawal Value:
The amount payable by Aetna upon the withdrawal of any portion of
the Account Value.
1.37 Valuation Date:
The date on which the accumulation unit value and annuity unit
value of a Subaccount is calculated. Currently this 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.
II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 Change of Contract:
Only an authorized officer of Aetna may change the terms of the
Contract. Aetna will notify the Contract Holder in writing at
least 30 days before the effective date of any change. Any change
will not affect the amount or terms of any Annuity Payout Option
which begins before the change.
Aetna may make any change that affects the Market Value Adjustment
(see Section III- Market Value Adjustment) with at least 30 days
advance written notice to the Contract Holder and the Certificate
Holder. Any such change shall become effective for any new
Guaranteed Term and will apply to all present and future Accounts.
Any change that affects any of the following under the Contract
will not apply to Accounts in existence before the effective date
of the change:
(a) Account Value
(b) Guaranteed Rates - Guaranteed Account
(c) Purchase Payment
(d) Withdrawal Value
(e) Transfers
(f) Net Investment Factor(s) - Separate Account (see Section III)
(g) Minimum Guaranteed Interest Rates
(h) Annuity Unit Value - Separate Account (see Section V)
(i) Annuity Payout Options (see Section V).
Any change that affects the Annuity Payout Options and the tables
for the Annuity Payout Options may be made:
(a) No earlier than 12 months after the Account Effective Date;
and
(b) No earlier than 12 months after the effective date of any
prior change.
Any Account established on or after the effective date of any change will be
subject to the change. If the Contract Holder does not agree to any change under
this provision, no new Accounts may be established under the Contract. The
Contract may also be changed as deemed necessary by Aetna to comply with federal
or state law.
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2.02 Change of Fund(s):
The assets of the Separate Account are segregated by Fund. If the
shares of any Fund are no longer available for investment by the
Separate Account or if, in our judgment, further investment in
such shares should become inappropriate in view of the purpose of
the Contract, Aetna may cease to make such Fund shares available
for investment under the Contract prospectively, and/or Aetna may
substitute shares of another Fund for shares already acquired.
Aetna may also, from time to time, add additional Funds. Any
elimination, substitution or addition of Funds will be done in
accordance with applicable state and federal securities laws.
Aetna reserves the right to substitute shares of another Fund for
shares already acquired without a proxy vote.
2.03 Nonparticipating Contract:
The Contract Holder, Certificate Holders or Beneficiaries will not
have a right to share in the earnings of Aetna.
2.04 Payments and Elections:
While the Certificate Holder is living, Aetna will pay the
Certificate Holder any Annuity Payments as and when due. After the
Certificate Holder's death, or at the death of the first
Certificate Holder if the Account is owned jointly, any Annuity
Payments required to be made will be paid in accordance with
Section III - Death of Annuitant/Beneficiary. Aetna will determine
other payments and/or elections as of the end of the Valuation
Date in which the request is received at its home office. Such
payments will be made within seven calendar days of receipt at its
home office of a written claim for payment which is in good order,
except as provided in Section III - Payment of Withdrawal Value.
2.05 State Laws:
The Contract and Certificate comply with the laws of the state in
which they are delivered. Any withdrawal, death benefit amount, or
Annuity Payments are equal to or greater than the minimum required
by such laws. Annuity tables for legal reserve valuation shall be
as required by state law. Such tables may be different from
annuity tables used to determine Annuity Payments.
2.06 Control of Contract:
The Contract is between the Contract Holder and Aetna. The
Contract Holder has title to the Contract. Contract Holder rights
are limited to accepting or rejecting Contract modifications. The
Certificate Holder has all other rights to amounts held in his or
her Account.
Each Certificate Holder shall own all amounts held in his or her
Account. Each Certificate Holder may make any choices allowed by
the Contract for his or her Account. Choices made under the
Contract must be received in good order. Until receipt of such
choices by Aetna, We may rely on any previous choices made.
The Contract is not subject to the claims of any creditors of the
Contract Holder or the Certificate Holder, except to the extent
permitted by law.
The Certificate Holder may assign or transfer his or her rights
under the Contract. If the Account is owned jointly, both joint
Certificate Holders must authorize any Certificate Holder change.
Any assignment or transfer made under the Contract must be
submitted to Aetna's home office in writing and will not be
effective until accepted by Aetna. Aetna reserves the right not to
accept assignment or transfer to a nonnatural person.
2.07 Designation of Beneficiary:
Each Certificate Holder shall name his or her Beneficiary and when
designating the Beneficiary may elect to specify in writing the
form of payment to the Beneficiary. Aetna will honor the specified
form of payment to the extent permitted under section 72(s) of the
Code. If the Account is owned jointly, both joint Certificate
Holders must agree in writing to the Beneficiary designated. The
Beneficiary may be changed at any time unless an irrevocable
Beneficiary is designated. Changes to a Beneficiary must be
submitted to Aetna's home office in writing and will not be
effective until accepted by Aetna. We will accept a change of
Beneficiary designation after the date of death and treat such
Beneficiary designation as in effect as of the date of death
provided no portion of the death benefit has been paid. If the
Account is owned jointly, at the death of one joint Certificate
Holder, the survivor will be deemed the designated Beneficiary;
any other Beneficiary on record will then be treated as a primary
or a contingent Beneficiary, as originally designated unless and
until changed by the new designated Beneficiary. If a designated
Beneficiary defers taking payment of a death benefit, the
designated Beneficiary has the right to name another Beneficiary.
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2.08 Misstatements and Adjustments:
If Aetna finds the age, gender or any relevant fact concerning any
Annuitant to be misstated, the correct facts will be used to
adjust payments.
2.09 Incontestability:
Aetna will not contest this Contract from its effective date.
2.10 Grace Period:
The Contract will remain in effect even if Purchase Payments are
not continued except as provided in the Payment of Adjusted
Account Value provision (see Section III - Payment of Adjusted
Account Value).
2.11 Individual Certificates:
Aetna shall issue a certificate to each Certificate Holder. The
certificate will summarize certain provisions of the Contract.
Certificates are for information only and are not a part of the
Contract.
III. ACCUMULATION PERIOD - PURCHASE PAYMENT, ACCOUNT VALUE, AND WITHDRAWAL
PROVISIONS
- --------------------------------------------------------------------------------
3.01 Purchase Payment:
This amount is the actual Purchase Payment, less any premium
taxes. Aetna reserves the right to pay premium taxes when due and
deduct the amount from the Account Value when we pay the tax or at
a later date.
Each Purchase Payment will be allocated, as directed by the
Certificate Holder, among:
(a) The available Guaranteed Account Guaranteed Terms, subject to
terms and conditions established by Aetna; and/or
(b) The Subaccount(s) offered through the Separate Account.
The Certificate Holder shall tell Aetna the percentage of each
Purchase Payment to allocate to any available Guaranteed Account
Guaranteed Term and/or each Subaccount. If allocation instructions
are not received for any additional Purchase Payment, the
allocation will be made according to the instructions most
recently received. If the same Guaranteed Term is no longer
available, the Purchase Payment will be allocated to the next
shortest Guaranteed Term available in the current Deposit Period.
If no shorter Guaranteed Term is available, the next longer
Guaranteed Term will be used.
3.02 Certificate Holder's Account:
Aetna will maintain an Account for each Certificate Holder.
Aetna will declare from time to time the acceptability and the
minimum amount for initial and additional Purchase Payments.
3.03 Accumulation Units - Separate Account:
The portion of the Purchase Payment(s) applied to each Subaccount
under the Separate Account will determine the number of
accumulation units for that Subaccount. This number is equal to
the portion of the Purchase Payment(s) applied to each Subaccount
divided by the accumulation unit value (see Section III -
Accumulation Unit Value - Separate Account) for the Valuation Date
in which the Purchase Payment is received in good order at Aetna's
home office.
3.04 Accumulation Unit Value - Separate Account:
An accumulation unit value is computed by multiplying the net
investment factor for the current Valuation Date by the
accumulation unit value for the previous Valuation Date. The
dollar value of accumulation units, Separate Account assets, and
variable Annuity Payments may go up or down due to investment gain
or loss.
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3.05 Net Investment Factor(s) - Separate Account:
The net investment factor is used to measure the investment
performance of a Subaccount from one Valuation Date to the next.
The net investment factor for a Subaccount for any Valuation Date
is equal to the sum of 1.0000 plus the net investment rate. The
net investment rate equals:
(a) The net assets of the Subaccount on the current Valuation
Date; minus
(b) The net assets of the Subaccount on the preceding Valuation
Date; plus or minus
(c) Taxes or provisions for taxes, if any, attributable to the
operation of the Subaccount; divided by
(d) The total value of the Subaccount's accumulation and annuity
units on the preceding Valuation Date; minus
(e) A daily charge for mortality and expense risks,
administrative charges and any other fees deducted from
investments in the Separate Account.
The net investment rate may be either positive or negative.
3.06 Market Value Adjustment (MVA):
An MVA will apply to any withdrawal from the Guaranteed Account
before the end of a Guaranteed Term when the withdrawal is:
(a) A Transfer (including a Transfer from a Guaranteed Account
Guaranteed Term if Dollar Cost Averaging is discontinued);
except for Transfers under Dollar Cost Averaging, or as
specified in Section I - Maturity Value Transfer;
(b) A full or partial withdrawal except for a payment made:
(1) Under a Systematic Distribution Option; or
(2) Under a qualified Contract, when the amount withdrawn is
equal to the required minimum distribution for the
Account calculated using a method permitted under the
Code and agreed to by Aetna; or
(c) Due to an election of Annuity Payout Option 1. Only a
positive MVA will apply upon election of Annuity Payout
Option 2 or 3 (see Section V - Annuity Payout Options).
Full and partial withdrawals and Transfers made within six months
after the date of the Annuitant's death will be the greater of:
(a) The aggregate MVA amount which is the sum of all market value
adjusted amounts resulting from a withdrawal(s). This total
may be greater or less than the Account Value of those
amounts; or
(b) The applicable portion of the Account Value in the Guaranteed
Account.
After the six-month period, the withdrawal or Transfer will be the
aggregate MVA amount, which may be greater or less than the
Account Value of those amounts. Market value adjusted amounts will
be equal to the amount withdrawn multiplied by the following
ratio:
(1 + i) x/365
--------
(1 + j) x/365
Where:
i is the Deposit Period yield
j is the current yield
x is the number of days remaining in the Guaranteed
Term, computed from Wednesday of the week of
withdrawal.
The Deposit Period yield will be determined as follows:
(a) At the close of the last business day of each week of the
Deposit Period, a yield will be computed as the average of
the yields on that day of U.S. Treasury Notes which mature in
the last three months of the Guaranteed Term.
G-CVA-00 Page 14
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(b) The Deposit Period yield is the average of those yields for
the Deposit Period. If withdrawal is made before the close of
the Deposit Period, it is the average of those yields on each
week preceding withdrawal.
The current yield is the average of the yields on the last
business day of the week preceding withdrawal on the same U.S.
Treasury Notes included in the Deposit Period yield.
In the event that no U.S. Treasury Notes which mature in the last
three months of the Guaranteed Term exist, Aetna reserves the
right to use the U.S. Treasury Notes that mature in the following
quarter.
3.07 Transfer of Account Value from the Subaccount(s) or Guaranteed
Account During the Accumulation Period:
Before an Annuity Payout Option is elected, all or any portion of
the Adjusted Account Value of the Certificate Holder's Account may
be transferred from any Subaccount or Guaranteed Term of the
Guaranteed Account:
(a) To any other Subaccount; or
(b) To any Guaranteed Term of the Guaranteed Account made
available in the current Deposit Period, subject to terms
and conditions specified by Aetna.
Transfer requests can be submitted as a percentage or as a dollar
amount. Aetna may establish a minimum transfer amount. Within a
Guaranteed Term Group, the amount to be withdrawn or transferred
will be withdrawn first from the oldest Deposit Period, then from
the next oldest, and so on until the amount requested is
satisfied.
The Certificate Holder may make an unlimited number of Transfers
during the Accumulation Period. The number of free Transfers
allowed by Aetna is shown on the Schedule - Accumulation Period.
Additional Transfers may be subject to a Transfer fee as shown on
the Schedule - Accumulation Period.
Amounts transferred from the Guaranteed Account under the Dollar
Cost Averaging program, or amounts transferred as a Matured Term
Value on or within one calendar month of a Maturity Date are not
subject to any Transfer fee and do not count against the annual
number of free Transfers.
Amounts allocated to Guaranteed Account Guaranteed Terms may not
be transferred to the Subaccounts or to another Guaranteed Term
during a Deposit Period or for 90 days after the close of a
Deposit Period except for:
(a) Matured Term Value(s) during the calendar month following the
Maturity Date; (b) Amounts applied to an Annuity Payout
Option; (c) Amounts transferred under the Dollar Cost
Averaging program; (d) Amounts distributed under a Systematic
Distribution Option; and (e) Amounts transferred by Aetna if
Dollar Cost Averaging is discontinued.
3.08 Notice to the Certificate Holder:
During the Accumulation Period the Certificate Holder will receive
quarterly statements from Aetna of:
(a) The value of any amounts held in:
(1) The Guaranteed Account; and
(2) The Subaccount(s) under the Separate Account;
(b) The number of any accumulation units; and
(c) The accumulation unit value.
Such number or values will be as of a specific date no more than
60 days before the date of the notice.
3.09 Loans:
Loans are not available under the Contract.
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3.10 Systematic Distribution Options:
Aetna may, from time to time, make one or more Systematic
Distribution Options available during the Accumulation Period.
When a Systematic Distribution Option is elected, Aetna will make
automatic payments from the Certificate Holder's Account.
Any Systematic Distribution Option will be subject to the
following criteria:
(a) Any Systematic Distribution Option will be made available on
the basis of objective criteria consistently applied;
(b) The availability of any Systematic Distribution Option may be
limited by terms and conditions applicable to the election of
such Systematic Distribution Option; and
(c) Aetna may discontinue the availability of a Systematic
Distribution Option at any time. Except to the extent
required to comply with applicable law, discontinuance of a
Systematic Distribution Option will apply only to future
elections and will not affect Systematic Distribution Options
in effect at the time an option is discontinued.
3.11 Liquidation of Withdrawal Value:
All or any portion of the Account Value may be withdrawn at any
time. Withdrawal requests may be submitted as a percentage of the
Account Value or as a specific dollar amount. Partial withdrawal
amounts are withdrawn on a pro rata basis from the Subaccount(s)
and/or the Guaranteed Term(s) Groups of the Guaranteed Account in
which the Account Value is invested. Within a Guaranteed Term
Group, the amount to be withdrawn or transferred will be withdrawn
first from the oldest Deposit Period, then from the next oldest,
and so on until the amount requested is satisfied.
After deduction of the Maintenance Fee, if any, an MVA may apply
to amounts withdrawn from the Guaranteed Account.
3.12 Payment of Withdrawal Value:
Under certain emergency conditions, Aetna may defer payment:
(a) For a period of up to six months (unless not allowed by state
law); or
(b) As provided by federal law.
3.13 Payment of Adjusted Account Value:
Upon 90 days written notice to the Certificate Holder, Aetna will
terminate any Account if the Account Value becomes less than
$2,500 immediately following any partial withdrawal. Aetna does
not intend to exercise this right in cases where an Account is
reduced to $2,500 or less solely due to investment performance.
3.14 Reinstatement:
The Certificate Holder may reinstate the proceeds of a full
withdrawal, subject to terms and conditions established by Aetna.
IV. DEATH BENEFIT
- --------------------------------------------------------------------------------
The Contract offers two Death Benefits Options, each with its own Mortality and
Expense Risk Charge. The Death Benefit Option selected and its corresponding
Mortality and Expense Risk Charge are reflected in the Schedule - Accumulation
Period. A different Schedule - Accumulation Period will apply to each
Certificate Holder depending on the Death Benefit Option selected.
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4.01 Changing Death Benefit Options:
Any Certificate Holder may elect to replace the Death Benefit
Option in effect with the other available Death Benefit Option.
The eligible Certificate Holder may make the election during the
sixty-day period prior to and including any anniversary of the
Account Effective Date. Such election must be made in writing and
received in good order at Aetna's home office during the election
period.
The effective date of the newly elected Death Benefit Option is
the anniversary of the Account Effective Date at the end of the
sixty-day election period. Aetna will issue another Schedule
reflecting the new Death Benefit Option chosen. The new Schedule
will reflect the revisions to the Certificate Holder's benefits
during the Accumulation Period, namely:
The new Schedule Effective Date, The revised Charges to
Separate Account, and The applicable Death Benefit
Option.
All other Contract features remain in effect from the Account
Effective Date.
4.02 Death Benefit Options:
If the Certificate Holder or Annuitant dies before an Annuity
Payout Option starts, the Beneficiary is entitled to a death
benefit. If the Account is owned jointly, the death benefit
applies at the death of the first joint Certificate Holder to die
(see Section IV - Options Available to Beneficiary).
4.03 Death Benefit Option I:
The amount of the death benefit is determined as follows:
(a) Death of the Annuitant.
-----------------------
The death benefit calculated as of the Claim Date is the greater
of:
(1) The sum of all Purchase Payment(s) made, adjusted for
amount(s) withdrawn or applied to an Annuity Payout
Option; or
(2) The Account Value on the Claim Date.
On the Claim Date, if the amount of the death benefit is
greater than the Account Value, the amount by which the
death benefit exceeds the Account Value will be
deposited and allocated to the money market fund
available through the Separate Account. This increases
the Account Value available to the Beneficiary to an
amount equal to the death benefit.
The amount paid to the Beneficiary will equal the
Adjusted Account Value on the date the payment request
is processed. This amount may be greater or less than
the amount of the death benefit on the Claim Date. The
Beneficiary may elect a death benefit payment option as
permitted in Section IV - Options Available to
Beneficiary.
(b) Death of the Certificate Holder if the Certificate Holder is
not the Annuitant.
------------------------------------------------------------
On the Claim Date, the amount of the death benefit equals
the Account Value.
The amount paid to the Beneficiary will equal the Adjusted
Account Value on the date the payment request is processed.
The Beneficiary may elect a death benefit payment option as
permitted in Section IV - Options Available to Beneficiary.
(c) Death of a spouse who becomes a successor Certificate
Holder/Annuitant.
------------------------------------------------------------
The amount of the death benefit paid to the Beneficiary at
the death of a successor Certificate Holder/Annuitant is the
greater of the values as described in (a) above except that
in calculating (a)(1), the Account Value on the Claim Date
for the prior Certificate Holder's death is treated as the
initial Purchase Payment.
G-CVA-00 Page 17
<PAGE>
4.04 Death Benefit Option II:
The amount of the death benefit is determined as follows:
(a) Death of the Annuitant.
The death benefit calculated as of the Claim Date is the
greatest of:
(1) The sum of all Purchase Payment(s) made, adjusted for
amount(s) withdrawn or applied to an Annuity Payout
Option; or
(2) The Account Value on the Claim Date; or
(3) The "Step-up Value" on the Claim Date.
The Step-up Value is equal to the highest account value
on the effective date of your Death Benefit Option II
Schedule - Accumulation Period or any anniversary of
that date prior to the annuitant's 85th birthday or date
of death, whichever is earlier, adjusted for Purchase
Payments made and amounts withdrawn or applied to an
Annuity Payout Option since the date of the highest
account value.
On each anniversary of the Schedule Effective Date after
the Annuitant's 85th birthday, the Step-up Value shall
equal the Step-up Value on the anniversary immediately
preceding the Annuitant's 85th birthday, adjusted for
Purchase Payment(s) made, and amounts withdrawn or
applied to an Annuity Payout Option since that
anniversary.
On the Claim Date, the Step-up Value shall equal the
Step-up Value on the anniversary of the Schedule
Effective Date immediately preceding the date of death,
adjusted for Purchase Payment(s) made and amount(s)
withdrawn or applied to an Annuity Payout Option since
that anniversary.
On the Claim Date, if the amount of the death benefit is greater
than the Account Value, the amount by which the death benefit
exceeds the Account Value will be deposited and allocated to the
money market fund available through the Separate Account. This
increases the Account Value available to the Beneficiary to an
amount equal to the death benefit.
The amount paid to the Beneficiary will equal the Adjusted Account
Value on the date the payment request is processed. This amount
may be greater or less than the amount of the death benefit on the
Claim Date. The Beneficiary may elect a death benefit payment
option as permitted in Section IV - Options Available to the
Beneficiary.
(b) Death of the Certificate Holder if the Certificate Holder is
not the Annuitant.
-------------------------------------------------------------
On the Claim Date, the amount of the death benefit equals
the Account Value.
The amount paid to the Beneficiary will equal the Adjusted
Account Value on the date the payment request is processed.
The Beneficiary may elect a death benefit payment option as
permitted in Section IV - Options Available to the
Beneficiary.
(c) Death of a spouse who becomes a successor Certificate Holder/
Annuitant.
-------------------------------------------------------------
The amount of the death benefit paid to the Beneficiary at
the death of a successor Certificate Holder/Annuitant is the
greater of the values as described in (a) above except that
in calculating (a)(1), the Account Value on the Claim Date
for the prior Certificate Holder's death is treated as the
initial Purchase Payment.
G-CVA-00 Page 18
<PAGE>
4.05 Options Available to Beneficiary:
Prior to any election, or until amounts must be otherwise
distributed under this section, the Account Value will be retained
in the Account. The Beneficiary has the right to allocate or
reallocate any amount to any of the available investment options
(subject to an MVA, if applicable). If the Certificate Holder has
specified the form of payment to the Beneficiary, the death
benefit will be paid as elected by the Certificate Holder in the
Beneficiary designation, to the extent permitted by section 72(s)
of the Code. If the Certificate Holder has not specified a form of
payment, the Beneficiary may elect one of the following options.
(a) When the Certificate Holder is the Annuitant or when the
Certificate Holder is a nonnatural person, and the Annuitant
dies:
(1) If the Beneficiary is the surviving spouse, the spousal
Beneficiary will be the successor Certificate Holder and
may exercise all Certificate Holder rights under the
Contract and continue in the Accumulation Period, or may
elect (i) or (ii) below. Under the Code, distributions
from the Account are not required until the spousal
Beneficiary's death. The spousal Beneficiary may elect
to:
(i) Apply some or all of the Adjusted Account Value
to an Annuity Payout Option (see Section V); or
(ii) Receive, at any time, a lump sum payment equal
to the Adjusted Account Value.
(2) If the Beneficiary is other than the surviving spouse,
then options (i) or (ii) above apply. Any portion of the
Adjusted Account Value not applied to an Annuity Payout
Option within one year of the death must be distributed
within five years of the date of death.
(3) If no Beneficiary exists, a lump sum payment equal to
the Adjusted Account Value must be made to the
Annuitant's estate within five years of the date of
death.
(4) If the Beneficiary is an entity, a lump sum payment
equal to the Adjusted Account Value must be made within
five years of the date of death, unless otherwise
permitted by IRS regulation or ruling.
(b) When the Certificate Holder is not the Annuitant and the
Certificate Holder dies:
(1) If the Beneficiary is the Certificate Holder's surviving
spouse, the spousal Beneficiary will be the successor
Certificate Holder and may exercise all Certificate
Holder rights under the Contract and continue in the
Accumulation Period, or may elect (i) or (ii) below.
Under the Code, distributions from the Account are not
required until the spousal Beneficiary's death. The
spousal Beneficiary may elect to:
(i) Apply some or all of the Adjusted Account Value
to an Annuity Payout Option (see Section V); or
(ii) Receive, at any time, a lump sum payment equal
to the Withdrawal Value.
(2) If the Beneficiary is other than the Certificate
Holder's surviving spouse, then options (i) or (ii)
under (1) above apply. Any portion of the death benefit
not applied to an Annuity Payout Option within one year
of the Certificate Holder's death must be distributed
within five years of the date of death.
(3) If no Beneficiary exists, a lump sum payment equal to
the Withdrawal Value must be made to the Certificate
Holder's estate within five years of the date of death.
(4) If the Beneficiary is an entity, a lump sum payment
equal to the Withdrawal Value must be made within five
years of the date of death, unless otherwise permitted
by IRS regulation or ruling.
(c) When the Certificate Holder is a natural person and not the
Annuitant and the Annuitant dies, the Beneficiary (or the
Certificate Holder if no Beneficiary exists) may elect to:
(1) Apply all or some of the Adjusted Account Value to an
Annuity Payout Option within 60 days of the date of
death; or
(2) Receive a lump sum payment equal to the Adjusted Account
Value.
G-CVA-00 Page 19
<PAGE>
V. Annuity Payout Provisions
- --------------------------------------------------------------------------------
5.01 Annuity Payout Options:
Annuity Payout Option 1 - Payments for a specified period:
----------------------------------------------------------
Payments are made for the number of years specified by the
Certificate Holder. The number of years must be at least five and not more than
30.
Annuity Payout Option 2 - Life income based on the life of one
Annuitant:
---------------------------------------------------------------------
When this option is elected, the Certificate Holder must choose
one of the following:
(a) Payments cease at the death of the Annuitant;
(b) Payments are guaranteed for a specified period from five to
30 years;
(c) Cash refund: when the Annuitant dies, the Beneficiary will
receive a lump sum payment equal to the amount applied to the
Annuity Payout Option (less any premium tax, if applicable)
less the total amount of Annuity Payments made prior to such
death. This cash refund feature is only available if the
total amount applied to the Annuity Payout Option is
allocated to a fixed Annuity Payments.
Annuity Payout Option 3 - Life income based on the lives of two
Annuitants:
Payments are made for the lives of two Annuitants, one of whom is
designated the primary Annuitant and the other the secondary
Annuitant, and cease when both Annuitants have died. When this
option is elected, the Certificate Holder must also choose one of
the following:
(a) 100% of the payment to continue after the first death;
(b) 66-2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) 100% of the payment to continue after the first death and
payments are guaranteed for a period of five to 30 years;
(e) 100% of the payment to continue at the death of the secondary
Annuitant and 50% of the payment to continue at the death of
the primary Annuitant; or
(f) 100% of the payment continues after the first death with a
cash refund feature. When the primary Annuitant and secondary
Annuitant die, the Beneficiary will receive a lump sum
payment equal to the amount applied to the Annuity Payout
Option (less any premium tax) less the total amount of
Annuity Payments paid prior to such death. This cash refund
feature is only available if the total amount applied to the
Annuity Payout Option is allocated to fixed Annuity Payments.
If fixed Annuity Payments are chosen under Annuity Payout Option
1, 2 (a) or (b), or 3 (a) or (d), the Certificate Holder may
elect, at the time the Annuity Payout Option is selected, an
annual increase of one, two or three percent compounded annually.
As allowed under applicable state law, Aetna reserves the right to
offer additional Annuity Payout Options.
5.02 Annuity Payment Choices:
The Certificate Holder may tell Aetna to apply any portion of the
Adjusted Account Value (minus any premium tax, if applicable,) to
any Annuity Payout Option. The first Annuity Payment may not be
earlier than one calendar year after the initial Purchase Payment
nor later than the later of:
(a) The first day of the month following the Annuitant's 85th
birthday; or
(b) The tenth anniversary of the last Purchase Payment. In lieu
of the election of an Annuity Payout Option, the Certificate
Holder may tell Aetna to make a lump sum payment.
G-CVA-00 Page 20
<PAGE>
When an Annuity Payout Option is chosen, Aetna must also be told
if payments are to be made other than monthly and whether to pay:
(a) Fixed Annuity Payments using the General Account;
(b) Variable Annuity Payments using any of the Subaccount(s)
available under the contract for the Annuity Period; or
(c) A combination of (a) and (b).
If fixed Annuity Payments are chosen, the payment rate for the
option chosen, shown on the tables immediately following, reflects
at least the minimum guaranteed interest rate (see Schedule -
Annuity Period), but may reflect a higher interest rate.
If variable Annuity Payments are chosen, the initial Annuity
Payment for the option elected reflects the Assumed Interest Rate
(AIR) elected (see Schedule - Annuity Period). The Certificate
Holder must allocate specified amounts among the Subaccounts
available during the Annuity Period. Aetna reserves the right to
limit the number of Subaccounts available at one time and to limit
the number of Subaccounts the Certificate Holder may select during
the Annuity Period. Subject to terms and conditions established by
Aetna, the Certificate Holder may transfer all or any portion of
the amount allocated to a Subaccount to another Subaccount. The
number of Transfers allowed each year is shown on Schedule -
Annuity Period.
Transfer requests must be submitted as a percentage of the
allocation among the Subaccounts. Aetna reserves the right to
establish a minimum transfer amount. Transfers will be effective
as of the Valuation Date in which Aetna receives a transfer
request in good order at its home office.
5.03 Terms of Annuity Payout Options:
(a) When payments start, the age of the Annuitant plus the number
of years for which payments are guaranteed must not exceed
95.
(b) An Annuity Payout Option may not be elected if the first
payment would be less than $50 or if the total payments in a
year would be less than $250 (less if required by state law).
Aetna reserves the right to increase the minimum first
Annuity Payment amount and the minimum annual Annuity Payment
amount based upon increases reflected in the Consumer Price
Index-Urban, (CPI-U) since July 1, 1993.
(c) If fixed Annuity Payments are chosen Aetna will use the
applicable current rate, based upon actual ages if it will
provide higher fixed Annuity Payments.
(d) For purposes of calculating the first payment of variable or
guaranteed fixed Annuity Payments based on guaranteed rates,
the primary Annuitant's and secondary Annuitant's adjusted
age will be used. The primary Annuitant's and secondary
Annuitant's adjusted age is his or her age as of the birthday
closest to the Annuity Payments commencement date reduced by
one year for commencement dates occurring during the period
of time from July 1, 1993 through December 31, 1999. The
primary Annuitant's and secondary Annuitant's age will be
reduced by two years for commencement dates occurring during
the period of time from January 1, 2000 through December 31,
2009. The primary Annuitant's and secondary Annuitant's age
will be reduced by one additional year for Annuity
commencement dates occurring in each succeeding decade.
The attached payment rates for Annuity Payout Options 2 and 3
are based on mortality from 1983 Table a.
(e) Assumed Interest Rate (AIR) is the interest rate used to
determine the amount of the first payment under variable
Annuity Payments as shown on Schedule - Annuity Period. The
Separate Account must earn this rate plus enough to cover the
mortality and expense risks charges (which may include
profit), administrative charges and any other Separate
Account fees if future variable Annuity Payments are to
remain level, (see Schedule - Annuity Period).
(f) Once elected, Annuity Payments cannot be withdrawn except as
provided in Section VI.
G-CVA-00 Page 21
<PAGE>
5.04 Death of Annuitant/Beneficiary:
(a) Certificate Holder is the Annuitant: When the Certificate
Holder is the Annuitant and the Annuitant dies under Annuity
Payout Option 1 or 2(b), or both the primary Annuitant and
the secondary Annuitant die under Annuity Payout Option 3(d),
any remaining payments will continue to the Beneficiary, or
if elected by the Beneficiary and not prohibited by the
Certificate Holder in the Beneficiary designation, the
present value of any remaining payments will be paid in one
sum to the Beneficiary. If Annuity Payout Option 3 has been
elected and the Certificate Holder dies, the remaining
payments will continue to the successor payee. If no
successor payee has been designated, the Beneficiary will be
treated as the successor payee. If the Account has joint
Certificate Holders, the surviving joint Certificate Holder
will be deemed the successor payee.
(b) Certificate Holder is not the Annuitant: When the Certificate
Holder is not the Annuitant and the Certificate Holder dies,
any remaining payments will continue to the successor payee.
If no successor payee has been designated, the Beneficiary
will be treated as the successor payee. If the Account has
joint Certificate Holders, the surviving joint Certificate
Holder will be deemed the successor payee.
If the Annuitant dies under Annuity Payout Option 1 or 2(b),
or both the primary Annuitant and secondary Annuitant die
under Annuity Payout Option 3(d), any remaining payments will
continue to the Beneficiary, or if elected by the Beneficiary
and not prohibited by the Certificate Holder in the
Beneficiary designation, the present value of any remaining
payments will be paid in one sum to the Beneficiary. If
Annuity Payout Option 3 has been elected and the Annuitant
dies, the remaining payments will continue to the Certificate
Holder.
(c) No Beneficiary Named/Surviving: If there is no Beneficiary,
the present value of any remaining payments will be paid in
one sum to the Certificate Holder, or if the Certificate
Holder is not living, then to the Certificate Holder's
estate.
(d) If the Beneficiary or the successor payee dies while
receiving Annuity Payments, any remaining payments will
continue to the successor Beneficiary/payee or upon election
by the successor Beneficiary/payee, the present value of any
remaining payments will be paid in one sum to the successor
Beneficiary/payee. If no successor Beneficiary/payee has been
designated, the present value of any remaining payments will
be paid in one sum to the Beneficiary's/payee's estate.
(e) The present value will be determined as of the Valuation Date
in which proof of death acceptable to Aetna and a request for
payment is received at Aetna's home office.
5.05 Annuity Units - Separate Account:
The number of annuity units is based on the amount of the first of
the variable Annuity Payments which is equal to:
(a) The portion of the Account Value applied to purchase variable
Annuity Payments (minus any applicable premium tax); divided
by
(b) 1,000; multiplied by
(c) The payment rate on the tables immediately following, for the
option chosen.
Such amount, or portion, of the variable Annuity Payments will be
divided by the appropriate annuity unit value (see Section V -
Annuity Unit Value - Separate Account) on the tenth Valuation Date
before the due date of the first payment to determine the number
of annuity units. The number of annuity units remains fixed. Each
future payment is equal to the sum of the products of each annuity
unit value multiplied by the appropriate number of annuity units.
The annuity unit value on the tenth Valuation Date prior to the
due date of the payment is used.
G-CVA-00 Page 22
<PAGE>
5.06 Annuity Unit Value - Separate Account:
For any Valuation Date, an annuity unit value is equal to:
(a) The value for the previous Valuation Date; multiplied by
(b) The annuity net return factor(s) (see Section V - Net Return
Factor(s) - Separate Account) for the Valuation Date;
multiplied by
(c) A factor to reflect the AIR (see Schedule - Annuity Period).
The annuity unit value and the amount of Annuity Payments may go
up or down due to investment gain or loss.
5.07 Net Return Factor(s) - Separate Account:
The net return factor(s) are used to compute all variable Annuity
Payments for any Subaccount.
The net return factor for each Subaccount is equal to 1.0000000
plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Subaccount at the end of a
Valuation Date; minus
(b) The value of the shares of the Subaccount at the start of the
Valuation Date; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the annuity units at the start of the
Valuation Date; minus
(e) A daily charge for mortality and expense risks, which may
include profit, a daily administrative charge and any other
fees deducted from investments in the Separate Account.
A net return rate may be more or less than 0%.
The value of a share of the Subaccount is equal to the net assets
of the Subaccount divided by the number of shares outstanding.
Annuity Payments shall not be changed due to changes in the
mortality or expense results or administrative charges.
G-CVA-00 Page 23
<PAGE>
OPTION 1: Payments for a Specified Period
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Monthly Amount for Each $1,000*
Rates for a Fixed Annuity with a 3% Guaranteed Interest Rate
- ---------------------------------------------------------------------------------------
Years Payment Years Payment
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
5 $17.91 18 $5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
- ---------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------
First Monthly Amount for Each $1,000*
Rates for a Variable Annuity with a 3.5% AIR
- ---------------------------------------------------------------------------------------
Years Payment Years Payment
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
5 $18.12 18 $6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
- ---------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------
First Monthly Amount for Each $1,000*
Rates for a Variable Annuity with a 5% AIR
- ---------------------------------------------------------------------------------------
Years Payment Years Payment
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
5 $18.74 18 $6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
- ---------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 24
<PAGE>
Option 2: Life Income Based on the Life of One Annuitant
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Payment Amount for Each $1,000*
Rates for a Fixed Annuity with 3% Guaranteed Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Option 2(c):
Adjusted payments for payments payments payments payments Cash Refund
Age of life guaranteed guaranteed guaranteed guaranteed
Annuitant 5 years 10 years 15 years 20 years
----------------------------------------------------------------------------------------------------------------------
Male Female Male Female Male Female Male Female Male Female Male Female
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.27 $3.90 $4.26 $3.90 $4.22 $3.89 $4.17 $3.86 $4.08 $3.82 $4.04 $3.78
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88 4.10 3.84
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93 4.16 3.89
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99 4.23 3.95
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04 4.29 4.01
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11 4.37 4.07
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17 4.44 4.13
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23 4.52 4.20
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30 4.61 4.28
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37 4.69 4.35
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44 4.78 4.43
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51 4.88 4.52
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58 4.98 4.60
63 5.74 5.08 5.69 5.05 5.53 4.98 5.26 4.85 4.90 4.65 5.09 4.70
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72 5.20 4.80
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79 5.31 4.90
66 6.30 5.51 6.21 5.47 5.96 5.36 5.56 5.16 5.08 4.86 5.44 5.01
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93 5.56 5.12
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00 5.70 5.24
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06 5.84 5.37
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12 5.98 5.51
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18 6.14 5.65
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23 6.30 5.80
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28 6.47 5.96
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32 6.65 6.13
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35 6.83 6.31
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 25
<PAGE>
Option 2: Life Income Based on the Life of One Annuitant
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 3.5% AIR
- ------------------------------------------------------------------------------------------------------------------
Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b):
Adjusted payments for payments payments payments payments
Age of life guaranteed guaranteed guaranteed guaranteed
Annuitant 5 years 10 years 15 years 20 years
------------------------------------------------------------------------------------------------------
Male Female Male Female Male Female Male Female Male Female
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 26
<PAGE>
<TABLE>
<CAPTION>
Option 2: Life Income Based on the Life of One Annuitant
- ------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 5% AIR
- ------------------------------------------------------------------------------------------------------------------
Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b):
Adjusted payments for payments payments payments payments
Age of life guaranteed guaranteed guaranteed guaranteed
Annuitant 5 years 10 years 15 years 20 years
---------------------------------------------------------------------------------------------------
Male Female Male Female Male Female Male Female Male Female
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 5.97 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 27
<PAGE>
<TABLE>
<CAPTION>
Option 3: Life Income Based on the Lives of Two Annuitants
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Payment Amount for Each $1,000*
Rates for a Fixed Annuity with 3% Guaranteed Interest Rate
Primary Annuitant is Female and Secondary Annuitant is Male
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) Option 3(f)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.75 $4.07 $4.26 $3.75 $3.98 $3.72
55 55 3.88 4.25 4.47 3.87 4.06 3.85
55 60 3.99 4.44 4.71 3.98 4.12 3.94
60 55 4.06 4.47 4.71 4.06 4.37 4.02
60 60 4.24 4.71 4.99 4.23 4.47 4.17
60 65 4.38 4.97 5.32 4.38 4.54 4.29
65 60 4.49 5.01 5.32 4.48 4.89 4.39
65 65 4.72 5.33 5.70 4.71 5.02 4.59
65 70 4.93 5.68 6.15 4.91 5.14 4.74
70 65 5.07 5.75 6.17 5.05 5.60 4.87
70 70 5.40 6.21 6.70 5.36 5.79 5.13
70 75 5.69 6.68 7.32 5.62 5.96 5.29
75 70 5.89 6.82 7.40 5.81 6.63 5.48
75 75 6.37 7.45 8.15 6.23 6.92 5.78
75 80 6.78 8.11 8.99 6.54 7.15 5.93
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 28
<PAGE>
<TABLE>
<CAPTION>
Option 3: Life Income Based on the Lives of Two Annuitants
- --------------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 3.5% AIR
Primary Annuitant Is Female and Secondary Annuitant Is Male
- --------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.03 $4.36 $4.55 $4.03 $4.27
55 55 4.16 4.54 4.76 4.15 4.34
55 60 4.27 4.73 5.00 4.26 4.40
60 55 4.34 4.76 5.00 4.34 4.65
60 60 4.51 4.99 5.27 4.50 4.74
60 65 4.66 5.25 5.61 4.65 4.82
65 60 4.76 5.29 5.60 4.75 5.16
65 65 4.99 5.61 5.99 4.98 5.30
65 70 5.19 5.97 6.44 5.17 5.41
70 65 5.34 6.03 6.46 5.31 5.88
70 70 5.67 6.49 6.99 5.62 6.07
70 75 5.95 6.96 7.61 5.87 6.23
75 70 6.16 7.10 7.68 6.07 6.90
75 75 6.64 7.73 8.43 6.48 7.19
75 80 7.04 8.39 9.29 6.79 7.42
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 29
<PAGE>
<TABLE>
<CAPTION>
Option 3: Life Income Based on the Lives of Two Annuitants
--------------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 5% AIR
Primary Annuitant is Female and Secondary Annuitant is Male
--------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
----------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.93 $5.27 $5.46 $4.93 $5.17
55 55 5.04 5.44 5.66 5.04 5.23
55 60 5.15 5.63 5.91 5.14 5.29
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.62
60 65 5.52 6.14 6.51 5.51 5.70
65 60 5.61 6.16 6.49 5.60 6.03
65 65 5.83 6.49 6.87 5.82 6.15
65 70 6.04 6.84 7.34 6.00 6.27
70 65 6.17 6.90 7.33 6.13 6.73
70 70 6.49 7.35 7.87 6.44 6.91
70 75 6.77 7.84 8.51 6.68 7.07
75 70 6.97 7.96 8.56 6.87 7.75
75 75 7.45 8.60 9.33 7.27 8.04
75 80 7.86 9.28 10.20 7.57 8.27
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 30
<PAGE>
<TABLE>
<CAPTION>
Option 3: Life Income Based on the Lives of Two Annuitants
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Payment Amount for Each $1,000*
Rates for a Fixed Annuity with 3% Guaranteed Interest Rate
Primary Annuitant is Male and Secondary Annuitant is Female
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) Option 3(f)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.13 $3.67
55 55 3.88 4.25 4.47 3.87 4.25 3.85
55 60 4.06 4.47 4.71 4.06 4.36 4.02
60 55 3.99 4.44 4.71 3.98 4.55 3.94
60 60 4.24 4.71 4.99 4.23 4.70 4.17
60 65 4.49 5.01 5.32 4.48 4.85 4.39
65 60 4.38 4.97 5.32 4.38 5.10 4.29
65 65 4.72 5.33 5.70 4.71 5.32 4.59
65 70 5.07 5.75 6.17 5.05 5.54 4.87
70 65 4.93 5.68 6.15 4.91 5.86 4.74
70 70 5.40 6.21 6.70 5.36 6.18 5.13
70 75 5.89 6.82 7.40 5.81 6.49 5.48
75 70 5.69 6.68 7.32 5.62 6.92 5.29
75 75 6.37 7.45 8.15 6.23 7.40 5.78
75 80 7.07 8.34 9.16 6.78 7.85 6.17
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 31
<PAGE>
<TABLE>
<CAPTION>
Option 3: Life Income Based on the Lives of Two Annuitants
--------------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 3.5% AIR
Primary Annuitant is Male and Secondary Annuitant is Female
--------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
----------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 32
<PAGE>
<TABLE>
<CAPTION>
Option 3: Life Income Based on the Lives of Two Annuitants
- -------------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 5% AIR
Primary Annuitant Is Male and Secondary Annuitant is Female
- -------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ---------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
G-CVA-00 Page 33
<PAGE>
- --------------------------------------------------------------------------------
Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 238-6219
Group Variable, Fixed, or Combination Annuity Certificate
Nonparticipating
- -------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. AMOUNTS ALLOCATED TO THE GUARANTEED ACCOUNT, IF WITHDRAWN
BEFORE THE GUARANTEED TERM MATURITY DATE, MAY BE SUBJECT TO A MARKET VALUE
ADJUSTMENT. THE MARKET VALUE ADJUSTMENT MAY RESULT IN AN INCREASE OR A DECREASE
IN THE ACCOUNT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A
GUARANTEED TERM AT THE TIME OF ITS MATURITY.
G-CVA-00
---------------------------------------------------
[Aetna Logo] Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 238-6219
You may call the toll free number shown above to
request information about this Certificate.
Aetna Life Insurance and Annuity Company, a stock
company, herein called Aetna, agrees to pay the
benefits stated in this Certificate.
- --------------------------------------------------------------------------------
Certificate of Group To the Certificate Holder:
Annuity Coverage
Aetna certifies that coverage is in force for you
under the stated Group Annuity Contract and Account
numbers. All data shown here is taken from Aetna
records and is based upon information furnished by
you.
This Certificate is a summary of the Group Annuity
Contract provisions. It replaces any and all prior
certificates or endorsements issued to you under
the stated Contract and Account numbers. This
Certificate is for information only and is not part
of the Contract.
The variable features of the Group Contract are
described in parts III, IV and V.
- --------------------------------------------------------------------------------
Right to Cancel You may cancel your Account within 10
days by returning the Certificate to the agent from
whom it was purchased or to Aetna at the address
shown above. Within seven days of receiving this
Certificate at its home office, Aetna will return
the amount of Purchase Payment(s) received, plus
any increase, or minus any decrease, on the amount,
if any, of Purchase Payment(s) allocated to the
Separate Account Subaccount(s).
Thomas J. McInerney Kirk P. Wickman
President Secretary
- --------------------------------------------------------------------------------
Contract Holder Group Annuity Contract No.
SPECIMEN SPECIMEN
- --------------------------------------------------------------------------------
Certificate Holder Account No.
SPECIMEN SPECIMEN
SPECIMEN Account Effective Date
SPECIMEN
- --------------------------------------------------------------------------------
Annuitant Name Type of Plan
SPECIMEN SPECIMEN
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. AMOUNTS ALLOCATED TO THE GUARANTEED ACCOUNT, IF WITHDRAWN
BEFORE THE GUARANTEED TERM MATURITY DATE, MAY BE SUBJECT TO A MARKET VALUE
ADJUSTMENT. THE MARKET VALUE ADJUSTMENT MAY RESULT IN AN INCREASE OR A DECREASE
IN THE ACCOUNT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A
GUARANTEED TERM AT THE TIME OF ITS MATURITY.
GC-CVA-00
<PAGE>
Specifications
- --------------------------------------------------------------------------------
Guaranteed There is a minimum guaranteed rate for Purchase
Rate Payment(s) held in the Guaranteed Account. (See
Schedule - Accumulation Period.)
- --------------------------------------------------------------------------------
Deductions from There will be deductions for mortality and expense
the Separate risk, administrative and if applicable other fees.
Account
- --------------------------------------------------------------------------------
Deduction from Purchase Payment(s) may be subject to a deduction
Payment(s) for premium taxes. (See Section III - Purchase
Payment.)
- --------------------------------------------------------------------------------
The Contract is a legal contract and constitutes the entire legal relationship
between Aetna and the Contract Holder.
READ THIS CONTRACT CAREFULLY. IT SETS FORTH, IN DETAIL, ALL OF THE RIGHTS AND
OBLIGATIONS OF BOTH THE CONTRACT HOLDER AND AETNA UNDER THIS CONTRACT.
THEREFORE, IT IS IMPORTANT THAT THIS CONTRACT BE READ CAREFULLY.
Page 2
<PAGE>
Schedule - Accumulation Period
Death Benefit Option
- --------------------------------------------------------------------------------
Death Benefit Option I selected. (See Section IV - Death Benefit Options.)
Schedule Effective Date
June 1, 20XX
Separate Account
- --------------------------------------------------------------------------------
Separate Account
Variable Annuity Account B
Charges to Separate Account
A daily charge is deducted from any portion of the Account Value
allocated to the Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown in the
following chart:
<TABLE>
<S> <C>
Administrative Charge 0.15%
Mortality and Expense Risk Charge 1.35%
-----
Total Separate Account Charges 1.50%
</TABLE>
Guaranteed Account
- --------------------------------------------------------------------------------
Minimum Guaranteed Rate
3.0% (effective annual rate of return)
Separate Account and Guaranteed Account
- --------------------------------------------------------------------------------
Transfers
An unlimited number of Transfers are allowed during the
Accumulation Period. Aetna allows 12 free Transfers in any Account
Year. Aetna reserves the right to charge $10 for each subsequent
Transfer.
Maintenance Fee
Currently there is no Maintenance Fee.
See Section I - DEFINITIONS for explanations.
Page 3
<PAGE>
Schedule - Annuity Period
Separate Account - Variable Annuity Payments
- --------------------------------------------------------------------------------
Charges to Separate Account
A daily charge is deducted at an annual effective rate of 1.25%
for mortality and expense risks. The administrative charge is
established upon election of an Annuity Payout Option. This charge
will not exceed 0.25%.
Assumed Interest Rate (AIR)
If variable Annuity Payments are chosen, an AIR of 5.0% may be
elected. If 5.0% is not elected, Aetna will use an AIR of 3.5%.
The AIR factor for 3.5% per year is 0.9999058.
The AIR factor for 5.0% per year is 0.9998663.
If the portion of a variable Annuity Payment for any Subaccount is
not to decrease, the annuity return factor under the Separate
Account for that Subaccount must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence if an AIR of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence, if an AIR of 5% is chosen.
Transfers
When variable Annuity Payments have been elected, 12 Transfers are
allowed each Account Year among the Subaccounts available during
the Annuity Period. Aetna reserves the right to allow more than 12
Transfers in an Account Year.
General Account - Fixed Annuity Payments
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate
3.0% (effective annual rate of return)
See Section I - DEFINITIONS for explanations.
Page 4
<PAGE>
Schedule - Accumulation Period
Death Benefit Option
- --------------------------------------------------------------------------------
Death Benefit Option II selected. (See Section IV - Death Benefit Options.)
Schedule Effective Date
June 1, 20XX
Separate Account
- --------------------------------------------------------------------------------
Separate Account
Variable Annuity Account B
Charges to Separate Account
A daily charge is deducted from any portion of the Account Value
allocated to the Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown in the
following chart:
<TABLE>
<S> <C>
Administrative Charge 0.15%
Mortality and Expense Risk Charge 1.55%
-----
Total Separate Account Charges 1.70%
</TABLE>
Guaranteed Account
- --------------------------------------------------------------------------------
Minimum Guaranteed Rate
3.0% (effective annual rate of return)
Separate Account and Guaranteed Account
- --------------------------------------------------------------------------------
Transfers
An unlimited number of Transfers are allowed during the
Accumulation Period. Aetna allows 12 free Transfers in any Account
Year. Aetna reserves the right to charge $10 for each subsequent
Transfer.
Maintenance Fee
Currently there is no Maintenance Fee.
See Section I - DEFINITIONS for explanations.
Page 3
<PAGE>
Schedule - Annuity Period
Separate Account - Variable Annuity Payments
- --------------------------------------------------------------------------------
Charges to Separate Account
A daily charge is deducted at an annual effective rate of 1.25%
for mortality and expense risks. The administrative charge is
established upon election of an Annuity Payout Option. This charge
will not exceed 0.25%.
Assumed Interest Rate (AIR)
If variable Annuity Payments are chosen, an AIR of 5.0% may be
elected. If 5.0% is not elected, Aetna will use an AIR of 3.5%.
The AIR factor for 3.5% per year is 0.9999058.
The AIR factor for 5.0% per year is 0.9998663.
If the portion of a variable Annuity Payment for any Subaccount is
not to decrease, the annuity return factor under the Separate
Account for that Subaccount must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence if an AIR of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence, if an AIR of 5% is chosen.
Transfers
When variable Annuity Payments have been elected, 12 Transfers are
allowed each Account Year among the Subaccounts available during
the Annuity Period. Aetna reserves the right to allow more than 12
Transfers in an Account Year.
General Account - Fixed Annuity Payments
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate
3.0% (effective annual rate of return)
See Section I - DEFINITIONS for explanations.
Page 4
<PAGE>
Schedule - Accumulation Period
Death Benefit Option
- --------------------------------------------------------------------------------
Death Benefit Option I selected. (See Section IV - Death Benefit Options.)
Schedule Effective Date
June 1, 20XX
Separate Account
- --------------------------------------------------------------------------------
Separate Account
Variable Annuity Account B
Charges to Separate Account
A daily charge is deducted from any portion of the Account Value
allocated to the Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown in the
following chart:
<TABLE>
<S> <C>
Administrative Charge 0.15%
Mortality and Expense Risk Charge 0.35%
-----
Total Separate Account Charges 0.50%
</TABLE>
Guaranteed Account
- --------------------------------------------------------------------------------
Minimum Guaranteed Rate
3.0% (effective annual rate of return)
Separate Account and Guaranteed Account
- --------------------------------------------------------------------------------
Transfers
An unlimited number of Transfers are allowed during the
Accumulation Period. Aetna allows 12 free Transfers in any Account
Year. Aetna reserves the right to charge $10 for each subsequent
Transfer.
Maintenance Fee
Currently there is no Maintenance Fee.
See Section I - DEFINITIONS for explanations.
Page 3
<PAGE>
Schedule - Annuity Period
Separate Account - Variable Annuity Payments
- --------------------------------------------------------------------------------
Charges to Separate Account
A daily charge is deducted at an annual effective rate of 1.25%
for mortality and expense risks. The administrative charge is
established upon election of an Annuity Payout Option. This charge
will not exceed 0.25%.
Assumed Interest Rate (AIR)
If variable Annuity Payments are chosen, an AIR of 5.0% may be
elected. If 5.0% is not elected, Aetna will use an AIR of 3.5%.
The AIR factor for 3.5% per year is 0.9999058.
The AIR factor for 5.0% per year is 0.9998663.
If the portion of a variable Annuity Payment for any Subaccount is
not to decrease, the annuity return factor under the Separate
Account for that Subaccount must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence if an AIR of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence, if an AIR of 5% is chosen.
Transfers
When variable Annuity Payments have been elected, 12 Transfers are
allowed each Account Year among the Subaccounts available during
the Annuity Period. Aetna reserves the right to allow more than 12
Transfers in an Account Year.
General Account - Fixed Annuity Payments
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate
3.0% (effective annual rate of return)
See Section I - DEFINITIONS for explanations.
Page 4
<PAGE>
Schedule - Accumulation Period
Death Benefit Option
- --------------------------------------------------------------------------------
Death Benefit Option II selected. (See Section IV - Death Benefit
Options.)
Schedule Effective Date
June 1, 20XX
Separate Account
- --------------------------------------------------------------------------------
Separate Account
Variable Annuity Account B
Charges to Separate Account
A daily charge is deducted from any portion of the Account Value
allocated to the Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown in the
following chart:
<TABLE>
<S> <C>
Administrative Charge 0.15%
Mortality and Expense Risk Charge 0.55%
-----
Total Separate Account Charges 0.70%
</TABLE>
Guaranteed Account
- --------------------------------------------------------------------------------
Minimum Guaranteed Rate
3.0% (effective annual rate of return)
Separate Account and Guaranteed Account
- --------------------------------------------------------------------------------
Transfers
An unlimited number of Transfers are allowed during the
Accumulation Period. Aetna allows 12 free Transfers in any Account
Year. Aetna reserves the right to charge $10 for each subsequent
Transfer.
Maintenance Fee
Currently there is no Maintenance Fee.
See Section I - DEFINITIONS for explanations.
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<PAGE>
Schedule - Annuity Period
Separate Account - Variable Annuity Payments
- --------------------------------------------------------------------------------
Charges to Separate Account
A daily charge is deducted at an annual effective rate of 1.25%
for mortality and expense risks. The administrative charge is
established upon election of an Annuity Payout Option. This charge
will not exceed 0.25%.
Assumed Interest Rate (AIR)
If variable Annuity Payments are chosen, an AIR of 5.0% may be
elected. If 5.0% is not elected, Aetna will use an AIR of 3.5%.
The AIR factor for 3.5% per year is 0.9999058.
The AIR factor for 5.0% per year is 0.9998663.
If the portion of a variable Annuity Payment for any Subaccount is
not to decrease, the annuity return factor under the Separate
Account for that Subaccount must be:
(a) 4.75% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence if an AIR of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to
0.25% to offset the administrative charge set at the time
Annuity Payments commence, if an AIR of 5% is chosen.
Transfers
When variable Annuity Payments have been elected, 12 Transfers are
allowed each Account Year among the Subaccounts available during
the Annuity Period. Aetna reserves the right to allow more than 12
Transfers in an Account Year.
General Account - Fixed Annuity Payments
- --------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate
3.0% (effective annual rate of return)
See Section I - DEFINITIONS for explanations.
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<PAGE>
Table of Contents
<TABLE>
<S> <C> <C>
I. DEFINITIONS PAGE
1.01 Account ................................................................................... 7
1.02 Account Effective Date .................................................................... 7
1.03 Account Value ............................................................................. 7
1.04 Account Year .............................................................................. 7
1.05 Accumulation Period ....................................................................... 7
1.06 Adjusted Account Value .................................................................... 7
1.07 Annuitant ................................................................................. 7
1.08 Annuity Payments .......................................................................... 7
1.09 Annuity Payout Options .................................................................... 7
1.10 Annuity Period ............................................................................ 7
1.11 Beneficiary ............................................................................... 8
1.12 Certificate Holder ........................................................................ 8
1.13 Claim Date ................................................................................ 8
1.14 Code ...................................................................................... 8
1.15 Contract .................................................................................. 8
1.16 Contract Holder ........................................................................... 8
1.17 Deposit Period ............................................................................ 8
1.18 Dollar Cost Averaging ..................................................................... 8
1.19 Fund(s) ................................................................................... 9
1.20 General Account ........................................................................... 9
1.21 Guaranteed Account ........................................................................ 9
1.22 Guaranteed Rates - Guaranteed Account ..................................................... 9
1.23 Guaranteed Term ........................................................................... 9
1.24 Guaranteed Term(s) Groups ................................................................. 9
1.25 Maintenance Fee ........................................................................... 9
1.26 Market Value Adjustment (MVA) ............................................................. 10
1.27 Matured Term Value ........................................................................ 10
1.28 Maturity Date ............................................................................. 10
1.29 Maturity Value Transfer ................................................................... 10
1.30 Purchase Payment(s) ....................................................................... 10
1.31 Reinvestment .............................................................................. 10
1.32 Separate Account .......................................................................... 10
1.33 Subaccount(s) ............................................................................. 10
1.34 Systematic Distribution Option ............................................................ 11
1.35 Transfers ................................................................................. 11
1.36 Withdrawal Value .......................................................................... 11
1.37 Valuation Date ............................................................................ 11
II. GENERAL PROVISIONS
2.01 Change of Contract ........................................................................ 11
2.02 Change of Fund(s) ......................................................................... 12
2.03 Nonparticipating Contract ................................................................. 12
2.04 Payments and Elections .................................................................... 12
2.05 State Laws ................................................................................ 12
2.06 Control of Contract ....................................................................... 12
2.07 Designation of Beneficiary ................................................................ 12
2.08 Misstatements and Adjustments ............................................................. 13
2.09 Incontestability .......................................................................... 13
2.10 Grace Period .............................................................................. 13
2.11 Individual Certificates ................................................................... 13
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
III. PURCHASE PAYMENT, ACCOUNT VALUE, AND WITHDRAWAL PROVISIONS PAGE
3.01 Purchase Payment .......................................................................... 13
3.02 Certificate Holder's Account .............................................................. 13
3.03 Accumulation Units - Separate Account ..................................................... 13
3.04 Accumulation Unit Value - Separate Account ................................................ 13
3.05 Net Investment Factor(s) - Separate Account ............................................... 14
3.06 Market Value Adjustment (MVA) ............................................................. 14
3.07 Transfer of Account Value from the Subaccount(s) or Guaranteed Account During
the Accumulation Period ................................................................... 15
3.08 Notice to the Certificate Holder .......................................................... 15
3.09 Loans ..................................................................................... 15
3.10 Systematic Distribution Options ........................................................... 16
3.11 Liquidation of Withdrawal Value ........................................................... 16
3.12 Payment of Withdrawal Value ............................................................... 16
3.13 Payment of Adjusted Account Value ......................................................... 16
3.14 Reinstatement ............................................................................. 16
IV. DEATH BENEFIT
4.01 Election of Death Benefit Options ......................................................... 17
4.02 Death Benefit Options ..................................................................... 17
4.03 Death Benefit Option I .................................................................... 17
4.04 Death Benefit Option II ................................................................... 18
4.05 Options Available to Beneficiary .......................................................... 19
V. ANNUITY PAYOUT PROVISIONS
5.01 Annuity Payout Options .................................................................... 20
5.02 Annuity Payment Choices ................................................................... 20
5.03 Terms of Annuity Payout Options ........................................................... 21
5.04 Death of Annuitant/Beneficiary ............................................................ 22
5.05 Annuity Units - Separate Account .......................................................... 22
5.06 Annuity Unit Value - Separate Account ..................................................... 23
5.07 Annuity Net Return Factor(s) - Separate Account ........................................... 23
</TABLE>
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<PAGE>
I. DEFINITIONS
- --------------------------------------------------------------------------------
1.01 Account:
A record that identifies contract values accumulated on each
Certificate Holder's behalf.
1.02 Account Effective Date:
The date on which an Account is established on a Certificate
Holder's behalf.
1.03 Account Value:
As of the most recent Valuation Date, the Account Value is equal
to the total of the Purchase Payment(s) made to the Account;
(a) Plus or minus the investment experience for the amount, if
any, allocated to one or more of the Subaccounts;
(b) Plus interest added to the amount, if any, allocated to the
Guaranteed Account;
(c) Plus any additional amount deposited to the Account (see
Section IV - Death Benefit);
(d) Less the amount of any Maintenance Fee deducted;
(e) Less any additional fee(s), charges, or taxes, if applicable,
deducted;
(f) Less any amount(s) withdrawn; and
(g) Less amount(s) applied to an Annuity Payout Option.
1.04 Account Year:
A period of twelve months measured from the Account Effective
Date or an anniversary of the Account Effective Date.
1.05 Accumulation Period:
The period during which the Purchase Payment(s) are applied to an
Account to provide future Annuity Payment(s).
1.06 Adjusted Account Value:
The Account Value plus or minus the aggregate Market Value
Adjustment (MVA), if applicable, for the amount(s) allocated to
the Guaranteed Account (see Section III - Market Value
Adjustment).
1.07 Annuitant:
The person on whose death, during the Accumulation Period, a
death benefit becomes payable and on whose life or life
expectancy the Annuity Payments are based under the Contract.
1.08 Annuity Payment(s):
A series of payments for life, a definite period or a combination
of the two. The Annuity Payments may be variable or fixed in
amount or a combination of both.
1.09 Annuity Payout Options:
The Certificate Holder may choose to receive Annuity Payments
under one of the following options:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.10 Annuity Period:
The period during which Annuity Payments are made.
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<PAGE>
1.11 Beneficiary:
The individual(s) or entity(ies) entitled to receive any death
benefit due under the Contract. Any designated Beneficiary has
the right to name another Beneficiary. If the Account is owned by
joint Certificate Holders, the survivor will be deemed the
designated Beneficiary and any other Beneficiary on record will
then be treated as the primary or contingent Beneficiary, as
originally designated, unless and until changed by the new
designated Beneficiary.
1.12 Certificate Holder:
A person who purchases an interest in the Contract as evidenced
by a certificate. Aetna reserves the right to limit ownership to
natural persons. If more than one Certificate Holder owns an
Account, each Certificate Holder will be a joint Certificate
Holder. Joint Certificate Holders have joint ownership rights and
both must authorize exercising any ownership rights unless Aetna
allows otherwise.
1.13 Claim Date:
The date when proof of death and the Beneficiary's entitlement to
the death benefit are received in good order at Aetna's home
office. This is also the date that the excess of the death
benefit over the Account Value, if any, is allocated to the money
market fund available through the Separate Account.
1.14 Code:
The Internal Revenue Code of 1986, as amended from time to time.
1.15 Contract:
The agreement between Aetna and the Contract Holder.
1.16 Contract Holder:
The entity to which the Contract is issued.
1. 17 Deposit Period:
A day, a calendar week, a calendar month, a calendar quarter, or
any other period of time specified by Aetna during which a
Purchase Payment(s), Transfer(s) and/or Reinvestment(s) may be
allocated to one or more Guaranteed Account Guaranteed Terms.
Aetna reserves the right to shorten or to extend the Deposit
Period.
During a Deposit Period, Aetna may offer any number of Guaranteed
Terms and more than one Guaranteed Term of the same duration may
be offered.
1.18 Dollar Cost Averaging:
A program that permits the Certificate Holder, during the
Accumulation Period, to systematically transfer amounts from one
of the available Subaccounts, or an available Guaranteed Account
Guaranteed Term, to one or more of the Subaccounts. If the
Certificate Holder elects a Guaranteed Account Guaranteed Term
available for Dollar Cost Averaging, no MVA applies to amounts
transferred under Dollar Cost Averaging. If Dollar Cost Averaging
from a Guaranteed Account Guaranteed Term is discontinued before
the end of the Dollar Cost Averaging period elected, Aetna will
automatically transfer the balance to a Guaranteed Term of the
same duration and an MVA will apply. The Certificate Holder may
initiate a Transfer to another investment option and an MVA will
apply. If a Guaranteed Term of the same duration is not
available, Aetna will transfer the amount to the Guaranteed Term
with the next shortest duration. If no shorter Guaranteed Term is
available, the next longer Guaranteed Term will be used. Aetna
reserves the right to establish and change terms and conditions
governing Dollar Cost Averaging.
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<PAGE>
1.19 Fund(s):
The open-end registered management investment companies whose
shares are purchased by the Separate Account to fund the benefits
provided by the Contract.
The Funds, and the number of Funds, available during the
Accumulation Period may be different from those available during
the Annuity Period. Aetna reserves the right to limit the number
of Funds available at any one time and to limit the number of
investment options the Certificate Holder may select during the
Accumulation Period and/or during the Annuity Period.
1.20 General Account:
The account holding the assets of Aetna, other than those assets
held in Aetna's separate accounts.
1.21 Guaranteed Account:
A nonunitized separate account, established by Aetna under
Connecticut Law that holds assets for Guaranteed Terms. There are
no discrete units for this account. The Certificate Holder does
not participate in any gain or loss resulting from the
performance of the investments held in the account. Income, gains
or losses realized or unrealized, are gains or losses of Aetna.
Aetna liabilities, except for liabilities under the Contract and
reserves required by federal and state law, may not be charged
against the nonunitized separate account.
1.22 Guaranteed Rates - Guaranteed Account:
Aetna will declare the interest rate(s) applicable to a specific
Guaranteed Term at the start of the Deposit Period for that
Guaranteed Term. The rate(s) are guaranteed by Aetna for the
period beginning with the first day of the Deposit Period and
ending on the Maturity Date. Guaranteed Rates are credited
beginning with the date of allocation. The Guaranteed Rates are
annual effective yields. That is, interest is credited daily at a
rate that will produce the Guaranteed Rate over the period of a
year. No Guaranteed Rate will ever be less than the minimum
Guaranteed Rate shown on the Schedule - Accumulation Period.
For Guaranteed Terms of one year or less, one Guaranteed Rate is
credited for the full Guaranteed Term. For longer Guaranteed
Terms, an initial Guaranteed Rate is credited from the date of
deposit to the end of a specified period within the Guaranteed
Term. There may be different Guaranteed Rate(s) declared for
subsequent specified time intervals throughout the Guaranteed
Term.
Aetna may offer more than one Guaranteed Term of the same
duration and credit one with a higher rate contingent upon use
only with Dollar Cost Averaging.
1.23 Guaranteed Term:
The period of time specified by Aetna for which a specific
Guaranteed Rate(s) is offered on amounts invested during a
specific Deposit Period. Guaranteed Terms are made available
subject to Aetna's terms and conditions, including, but not
limited to, Aetna's right to restrict allocations to new Purchase
Payments (such as by prohibiting Transfers into a particular
Guaranteed Term from any other Guaranteed Term or from any of the
Subaccounts, or by prohibiting Reinvestment of a Matured Term
Value to a particular Guaranteed Term). More than one Guaranteed
Term of the same duration may be offered within the Contract.
1.24 Guaranteed Term(s) Groups:
All Guaranteed Account Guaranteed Term(s) of the same duration
(from the close of the Deposit Period until the designated
Maturity Date).
1.25 Maintenance Fee:
The Maintenance Fee, if any, (see Schedule - Accumulation Period)
will be deducted during the Accumulation Period from the Account
Value on each anniversary of the Account Effective Date and upon
withdrawal of the entire Account Value.
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1.26 Market Value Adjustment (MVA):
An adjustment that may apply to an amount withdrawn or
transferred from a Guaranteed Account Guaranteed Term prior to
the end of that Guaranteed Term. The adjustment reflects the
change in the value of the investment due to changes in interest
rates since the date of deposit and is computed using the formula
given. The adjustment is expressed as a percentage of each dollar
being withdrawn (see Section III- Market Value Adjustment).
1.27 Matured Term Value:
The amount due on a Guaranteed Account Guaranteed Term's Maturity
Date.
1.28 Maturity Date:
The last day of a Guaranteed Account Guaranteed Term.
1.29 Maturity Value Transfer:
During the calendar month following a Guaranteed Account Maturity
Date, the Certificate Holder may notify Aetna's home office in
writing to Transfer or withdraw all or part of the Matured Term
Value, plus accrued interest at the new Guaranteed Rate, from the
Guaranteed Account without an MVA. This provision only applies to
the first request received from the Certificate Holder in good
order during this period for any Matured Term Value.
1.30 Purchase Payment(s):
The Purchase Payment(s) less premium taxes, if applicable,
accepted by Aetna at its home office. Aetna reserves the right to
refuse to accept any Purchase Payment at any time for any reason.
No advance notice will be given to the Contract Holder or
Certificate Holder.
1.31 Reinvestment:
Aetna will mail a notice to the Certificate Holder at least 18
calendar days before a Guaranteed Term's Maturity Date. This
notice will contain the Terms available during current Deposit
Periods with their Guaranteed Rate(s), and projected Matured Term
Value. If no specific direction is given by the Certificate
Holder prior to the Maturity Date, each Matured Term Value will
be reinvested in the current Deposit Period for a Guaranteed Term
of the same duration. If a Guaranteed Term of the same duration
is unavailable, each Matured Term Value will automatically be
reinvested in the current Deposit Period for the next shortest
Guaranteed Term available. If no shorter Guaranteed Term is
available, the next longer Guaranteed Term will be used. Aetna
will mail a confirmation statement to the Certificate Holder the
next business day after the Maturity Date. This notice will state
the Guaranteed Term and Guaranteed Rate(s) which will apply to
the reinvested Matured Term Value.
1.32 Separate Account:
A separate account that buys and holds shares of the Fund(s).
Income, gains or losses, realized or unrealized, are credited or
charged to the Separate Account without regard to other income,
gains or losses of Aetna. Aetna owns the assets held in the
Separate Account and is not a trustee as to such amounts. The
Separate Account generally is not guaranteed and is held at
market value. The assets of the Separate Account, to the extent
of reserves and other contract liabilities of the Separate
Account, shall not be charged with other Aetna liabilities.
1.33 Subaccount(s):
The investment options available through the Separate Account.
Each Subaccount invests in the shares of only one corresponding
Fund.
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<PAGE>
1.34 Systematic Distribution Option:
An option elected by the Certificate Holder during the
Accumulation Period which establishes a schedule of withdrawals
to be made automatically from the Certificate Holder's Account.
1.35 Transfers:
The movement of invested amounts among the available
Subaccount(s) and/or any available Guaranteed Account Guaranteed
Term. Transfers are, subject to terms and conditions established
by Aetna, during the Accumulation Period or the Annuity Period.
1.36 Withdrawal Value:
The amount payable by Aetna upon the withdrawal of any portion of
the Account Value.
1.37 Valuation Date:
The date on which the accumulation unit value and annuity unit
value of a Subaccount is calculated. Currently this 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.
II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 Change of Contract:
Only an authorized officer of Aetna may change the terms of the
Contract. Aetna will notify the Contract Holder in writing at
least 30 days before the effective date of any change. Any change
will not affect the amount or terms of any Annuity Payout Option
which begins before the change.
Aetna may make any change that affects the Market Value
Adjustment (see Section III- Market Value Adjustment) with at
least 30 days advance written notice to the Contract Holder and
the Certificate Holder. Any such change shall become effective
for any new Guaranteed Term and will apply to all present and
future Accounts.
Any change that affects any of the following under the Contract
will not apply to Accounts in existence before the effective date
of the change:
(a) Account Value
(b) Guaranteed Rates - Guaranteed Account
(c) Purchase Payment
(d) Withdrawal Value
(e) Transfers
(f) Net Investment Factor(s) - Separate Account (see Section
III)
(g) Minimum Guaranteed Interest Rates
(h) Annuity Unit Value - Separate Account (see Section V)
(i) Annuity Payout Options (see Section V).
Any change that affects the Annuity Payout Options and the tables
for the Annuity Payout Options may be made:
(a) No earlier than 12 months after the Account Effective Date;
and (b) No earlier than 12 months after the effective date of
any prior change.
Any Account established on or after the effective date of any change will be
subject to the change. If the Contract Holder does not agree to any change under
this provision, no new Accounts may be established under the Contract. The
Contract may also be changed as deemed necessary by Aetna to comply with federal
or state law.
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<PAGE>
2.02 Change of Fund(s):
The assets of the Separate Account are segregated by Fund. If the
shares of any Fund are no longer available for investment by the
Separate Account or if, in our judgment, further investment in
such shares should become inappropriate in view of the purpose of
the Contract, Aetna may cease to make such Fund shares available
for investment under the Contract prospectively, and/or Aetna may
substitute shares of another Fund for shares already acquired.
Aetna may also, from time to time, add additional Funds. Any
elimination, substitution or addition of Funds will be done in
accordance with applicable state and federal securities laws.
Aetna reserves the right to substitute shares of another Fund for
shares already acquired without a proxy vote.
2.03 Nonparticipating Contract:
The Contract Holder, Certificate Holders or Beneficiaries will
not have a right to share in the earnings of Aetna.
2.04 Payments and Elections:
While the Certificate Holder is living, Aetna will pay the
Certificate Holder any Annuity Payments as and when due. After
the Certificate Holder's death, or at the death of the first
Certificate Holder if the Account is owned jointly, any Annuity
Payments required to be made will be paid in accordance with
Section III - Death of Annuitant/Beneficiary. Aetna will
determine other payments and/or elections as of the end of the
Valuation Date in which the request is received at its home
office. Such payments will be made within seven calendar days of
receipt at its home office of a written claim for payment which
is in good order, except as provided in Section III - Payment of
Withdrawal Value.
2.05 State Laws:
The Contract and Certificate comply with the laws of the state in
which they are delivered. Any withdrawal, death benefit amount,
or Annuity Payments are equal to or greater than the minimum
required by such laws. Annuity tables for legal reserve valuation
shall be as required by state law. Such tables may be different
from annuity tables used to determine Annuity Payments.
2.06 Control of Contract:
The Contract is between the Contract Holder and Aetna. The
Contract Holder has title to the Contract. Contract Holder rights
are limited to accepting or rejecting Contract modifications. The
Certificate Holder has all other rights to amounts held in his or
her Account.
Each Certificate Holder shall own all amounts held in his or her
Account. Each Certificate Holder may make any choices allowed by
the Contract for his or her Account. Choices made under the
Contract must be received in good order. Until receipt of such
choices by Aetna, We may rely on any previous choices made.
The Contract is not subject to the claims of any creditors of the
Contract Holder or the Certificate Holder, except to the extent
permitted by law.
The Certificate Holder may assign or transfer his or her rights
under the Contract. If the Account is owned jointly, both joint
Certificate Holders must authorize any Certificate Holder change.
Any assignment or transfer made under the Contract must be
submitted to Aetna's home office in writing and will not be
effective until accepted by Aetna. Aetna reserves the right not
to accept assignment or transfer to a nonnatural person.
2.07 Designation of Beneficiary:
Each Certificate Holder shall name his or her Beneficiary and
when designating the Beneficiary may elect to specify in writing
the form of payment to the Beneficiary. Aetna will honor the
specified form of payment to the extent permitted under section
72(s) of the Code. If the Account is owned jointly, both joint
Certificate Holders must agree in writing to the Beneficiary
designated. The Beneficiary may be changed at any time unless an
irrevocable Beneficiary is designated. Changes to a Beneficiary
must be submitted to Aetna's home office in writing and will not
be effective until accepted by Aetna. We will accept a change of
Beneficiary designation after the date of death and treat such
Beneficiary designation as in effect as of the date of death
provided no portion of the death benefit has been paid. If the
Account is owned jointly, at the death of one joint Certificate
Holder, the survivor will be deemed the designated Beneficiary;
any other Beneficiary on record will then be treated as a primary
or a contingent Beneficiary, as originally designated unless and
until changed by the new designated Beneficiary. If a designated
Beneficiary defers taking payment of a death benefit, the
designated Beneficiary has the right to name another Beneficiary.
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2.08 Misstatements and Adjustments:
If Aetna finds the age, gender or any relevant fact concerning
any Annuitant to be misstated, the correct facts will be used to
adjust payments.
2.09 Incontestability:
Aetna will not contest this Contract from its effective date.
2.10 Grace Period:
The Contract will remain in effect even if Purchase Payments are
not continued except as provided in the Payment of Adjusted
Account Value provision (see Section III - Payment of Adjusted
Account Value).
2.11 Individual Certificates:
Aetna shall issue a certificate to each Certificate Holder. The
certificate will summarize certain provisions of the Contract.
Certificates are for information only and are not a part of the
Contract.
III. ACCUMULATION PERIOD - PURCHASE PAYMENT, ACCOUNT VALUE, AND
WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
3.01 Purchase Payment:
This amount is the actual Purchase Payment, less any premium
taxes. Aetna reserves the right to pay premium taxes when due and
deduct the amount from the Account Value when we pay the tax or
at a later date.
Each Purchase Payment will be allocated, as directed by the
Certificate Holder, among:
(a) The available Guaranteed Account Guaranteed Terms, subject to
terms and conditions established by Aetna; and/or
(b) The Subaccount(s) offered through the Separate Account.
The Certificate Holder shall tell Aetna the percentage of each
Purchase Payment to allocate to any available Guaranteed Account
Guaranteed Term and/or each Subaccount. If allocation
instructions are not received for any additional Purchase
Payment, the allocation will be made according to the
instructions most recently received. If the same Guaranteed Term
is no longer available, the Purchase Payment will be allocated to
the next shortest Guaranteed Term available in the current
Deposit Period. If no shorter Guaranteed Term is available, the
next longer Guaranteed Term will be used.
3.02 Certificate Holder's Account:
Aetna will maintain an Account for each Certificate Holder.
Aetna will declare from time to time the acceptability and the
minimum amount for initial and additional Purchase Payments.
3.03 Accumulation Units - Separate Account:
The portion of the Purchase Payment(s) applied to each Subaccount
under the Separate Account will determine the number of
accumulation units for that Subaccount. This number is equal to
the portion of the Purchase Payment(s) applied to each Subaccount
divided by the accumulation unit value (see Section III -
Accumulation Unit Value - Separate Account) for the Valuation
Date in which the Purchase Payment is received in good order at
Aetna's home office.
3.04 Accumulation Unit Value - Separate Account:
An accumulation unit value is computed by multiplying the net
investment factor for the current Valuation Date by the
accumulation unit value for the previous Valuation Date. The
dollar value of accumulation units, Separate Account assets, and
variable Annuity Payments may go up or down due to investment
gain or loss.
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3.05 Net Investment Factor(s) - Separate Account:
The net investment factor is used to measure the investment
performance of a Subaccount from one Valuation Date to the next.
The net investment factor for a Subaccount for any Valuation Date
is equal to the sum of 1.0000 plus the net investment rate. The
net investment rate equals:
(a) The net assets of the Subaccount on the current Valuation
Date; minus
(b) The net assets of the Subaccount on the preceding Valuation
Date; plus or minus
(c) Taxes or provisions for taxes, if any, attributable to the
operation of the Subaccount; divided by
(d) The total value of the Subaccount's accumulation and annuity
units on the preceding Valuation Date; minus
(e) A daily charge for mortality and expense risks,
administrative charges and any other fees deducted from
investments in the Separate Account.
The net investment rate may be either positive or negative.
3.06 Market Value Adjustment (MVA):
An MVA will apply to any withdrawal from the Guaranteed Account
before the end of a Guaranteed Term when the withdrawal is:
(a) A Transfer (including a Transfer from a Guaranteed Account
Guaranteed Term if Dollar Cost Averaging is discontinued);
except for Transfers under Dollar Cost Averaging, or as
specified in Section I - Maturity Value Transfer;
(b) A full or partial withdrawal except for a payment made:
(1) Under a Systematic Distribution Option; or
(2) Under a qualified Contract, when the amount withdrawn is
equal to the required minimum distribution for the
Account calculated using a method permitted under the
Code and agreed to by Aetna; or
(c) Due to an election of Annuity Payout Option 1. Only a
positive MVA will apply upon election of Annuity Payout
Option 2 or 3 (see Section V - Annuity Payout Options).
Full and partial withdrawals and Transfers made within six months
after the date of the Annuitant's death will be the greater of:
(a) The aggregate MVA amount which is the sum of all market value
adjusted amounts resulting from a withdrawal(s). This total
may be greater or less than the Account Value of those
amounts; or
(b) The applicable portion of the Account Value in the Guaranteed
Account.
After the six-month period, the withdrawal or Transfer will be
the aggregate MVA amount, which may be greater or less than the
Account Value of those amounts. Market value adjusted amounts
will be equal to the amount withdrawn multiplied by the following
ratio:
(1 + i) x / 365
--------
(1 + j) x / 365
Where:
i is the Deposit Period yield
j is the current yield
x is the number of days remaining in the Guaranteed Term,
computed from Wednesday of the week of withdrawal.
The Deposit Period yield will be determined as follows:
(a) At the close of the last business day of each week of the
Deposit Period, a yield will be computed as the average of
the yields on that day of U.S. Treasury Notes which mature
in the last three months of the Guaranteed Term.
Page 14
<PAGE>
(b) The Deposit Period yield is the average of those yields
for the Deposit Period. If withdrawal is made before the
close of the Deposit Period, it is the average of those
yields on each week preceding withdrawal.
The current yield is the average of the yields on the last
business day of the week preceding withdrawal on the same U.S.
Treasury Notes included in the Deposit Period yield.
In the event that no U.S. Treasury Notes which mature in the last
three months of the Guaranteed Term exist, Aetna reserves the
right to use the U.S. Treasury Notes that mature in the following
quarter.
3.07 Transfer of Account Value from the Subaccount(s) or Guaranteed
Account During the Accumulation Period:
Before an Annuity Payout Option is elected, all or any portion of
the Adjusted Account Value of the Certificate Holder's Account
may be transferred from any Subaccount or Guaranteed Term of the
Guaranteed Account:
(a) To any other Subaccount; or
(b) To any Guaranteed Term of the Guaranteed Account made
available in the current Deposit Period, subject to terms
and conditions specified by Aetna.
Transfer requests can be submitted as a percentage or as a dollar
amount. Aetna may establish a minimum transfer amount. Within a
Guaranteed Term Group, the amount to be withdrawn or transferred
will be withdrawn first from the oldest Deposit Period, then from
the next oldest, and so on until the amount requested is
satisfied.
The Certificate Holder may make an unlimited number of Transfers
during the Accumulation Period. The number of free Transfers
allowed by Aetna is shown on the Schedule - Accumulation Period.
Additional Transfers may be subject to a Transfer fee as shown on
the Schedule - Accumulation Period.
Amounts transferred from the Guaranteed Account under the Dollar
Cost Averaging program, or amounts transferred as a Matured Term
Value on or within one calendar month of a Maturity Date are not
subject to any Transfer fee and do not count against the annual
number of free Transfers.
Amounts allocated to Guaranteed Account Guaranteed Terms may not
be transferred to the Subaccounts or to another Guaranteed Term
during a Deposit Period or for 90 days after the close of a
Deposit Period except for:
(a) Matured Term Value(s) during the calendar month following
the Maturity Date;
(b) Amounts applied to an Annuity Payout Option;
(c) Amounts transferred under the Dollar Cost Averaging program;
(d) Amounts distributed under a Systematic Distribution Option;
and
(e) Amounts transferred by Aetna if Dollar Cost Averaging is
discontinued.
3.08 Notice to the Certificate Holder:
During the Accumulation Period the Certificate Holder will
receive quarterly statements from Aetna of:
(a) The value of any amounts held in:
(1) The Guaranteed Account; and
(2) The Subaccount(s) under the Separate Account;
(b) The number of any accumulation units; and
(c) The accumulation unit value.
Such number or values will be as of a specific date no more than
60 days before the date of the notice.
3.09 Loans:
Loans are not available under the Contract.
Page 15
<PAGE>
3.10 Systematic Distribution Options:
Aetna may, from time to time, make one or more Systematic
Distribution Options available during the Accumulation Period.
When a Systematic Distribution Option is elected, Aetna will make
automatic payments from the Certificate Holder's Account.
Any Systematic Distribution Option will be subject to the
following criteria:
(a) Any Systematic Distribution Option will be made available on
the basis of objective criteria consistently applied;
(b) The availability of any Systematic Distribution Option may be
limited by terms and conditions applicable to the election of
such Systematic Distribution Option; and
(c) Aetna may discontinue the availability of a Systematic
Distribution Option at any time. Except to the extent
required to comply with applicable law, discontinuance of a
Systematic Distribution Option will apply only to future
elections and will not affect Systematic Distribution Options
in effect at the time an option is discontinued.
3.11 Liquidation of Withdrawal Value:
All or any portion of the Account Value may be withdrawn at any
time. Withdrawal requests may be submitted as a percentage of the
Account Value or as a specific dollar amount. Partial withdrawal
amounts are withdrawn on a pro rata basis from the Subaccount(s)
and/or the Guaranteed Term(s) Groups of the Guaranteed Account in
which the Account Value is invested. Within a Guaranteed Term
Group, the amount to be withdrawn or transferred will be
withdrawn first from the oldest Deposit Period, then from the
next oldest, and so on until the amount requested is satisfied.
After deduction of the Maintenance Fee, if any, an MVA may apply
to amounts withdrawn from the Guaranteed Account.
3.12 Payment of Withdrawal Value:
Under certain emergency conditions, Aetna may defer payment:
(a) For a period of up to six months (unless not allowed by
state law); or
(b) As provided by federal law.
3.13 Payment of Adjusted Account Value:
Upon 90 days written notice to the Certificate Holder, Aetna will
terminate any Account if the Account Value becomes less than
$2,500 immediately following any partial withdrawal. Aetna does
not intend to exercise this right in cases where an Account is
reduced to $2,500 or less solely due to investment performance.
3.14 Reinstatement:
The Certificate Holder may reinstate the proceeds of a full
withdrawal, subject to terms and conditions established by Aetna.
IV. DEATH BENEFIT
- --------------------------------------------------------------------------------
The Contract offers two Death Benefits Options, each with its own Mortality and
Expense Risk Charge. The Death Benefit Option selected and its corresponding
Mortality and Expense Risk Charge are reflected in the Schedule - Accumulation
Period. A different Schedule - Accumulation Period will apply to each
Certificate Holder depending on the Death Benefit Option selected.
Page 16
<PAGE>
4.01 Changing Death Benefit Options:
Any Certificate Holder may elect to replace the Death Benefit
Option in effect with the other available Death Benefit Option.
The eligible Certificate Holder may make the election during the
sixty-day period prior to and including any anniversary of the
Account Effective Date. Such election must be made in writing and
received in good order at Aetna's home office during the election
period.
The effective date of the newly elected Death Benefit Option is
the anniversary of the Account Effective Date at the end of the
sixty-day election period. Aetna will issue another Schedule
reflecting the new Death Benefit Option chosen. The new Schedule
will reflect the revisions to the Certificate Holder's benefits
during the Accumulation Period, namely:
The new Schedule Effective Date,
The revised Charges to Separate Account,
and The applicable Death Benefit Option.
All other Contract features remain in effect from the Account
Effective Date.
4.02 Death Benefit Options:
If the Certificate Holder or Annuitant dies before an Annuity
Payout Option starts, the Beneficiary is entitled to a death
benefit. If the Account is owned jointly, the death benefit
applies at the death of the first joint Certificate Holder to die
(see Section IV - Options Available to Beneficiary).
4.03 Death Benefit Option I:
The amount of the death benefit is determined as follows:
(a) Death of the Annuitant.
The death benefit calculated as of the Claim Date is the
greater of:
(1) The sum of all Purchase Payment(s) made, adjusted for
amount(s) withdrawn or applied to an Annuity Payout
Option; or
(2) The Account Value on the Claim Date.
On the Claim Date, if the amount of the death
benefit is greater than the Account Value, the
amount by which the death benefit exceeds the
Account Value will be deposited and allocated to
the money market fund available through the
Separate Account. This increases the Account Value
available to the Beneficiary to an amount equal to
the death benefit.
The amount paid to the Beneficiary will equal the
Adjusted Account Value on the date the payment
request is processed. This amount may be greater or
less than the amount of the death benefit on the
Claim Date. The Beneficiary may elect a death
benefit payment option as permitted in Section IV -
Options Available to Beneficiary.
(b) Death of the Certificate Holder if the Certificate Holder
is not the Annuitant.
------------------------------------------------------------
On the Claim Date, the amount of the death benefit equals
the Account Value.
The amount paid to the Beneficiary will equal the Adjusted
Account Value on the date the payment request is
processed. The Beneficiary may elect a death benefit
payment option as permitted in Section IV - Options
Available to Beneficiary.
(c) Death of a spouse who becomes a successor Certificate
Holder/Annuitant.
------------------------------------------------------------
The amount of the death benefit paid to the Beneficiary at
the death of a successor Certificate Holder/Annuitant is
the greater of the values as described in (a) above except
that in calculating (a)(1), the Account Value on the Claim
Date for the prior Certificate Holder's death is treated
as the initial Purchase Payment.
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<PAGE>
4.04 Death Benefit Option II:
The amount of the death benefit is determined as follows:
(a) Death of the Annuitant.
The death benefit calculated as of the Claim Date is the
greatest of:
(1) The sum of all Purchase Payment(s) made, adjusted for
amount(s) withdrawn or applied to an Annuity Payout
Option; or
(2) The Account Value on the Claim Date; or
(3) The "Step-up Value" on the Claim Date.
The Step-up Value is equal to the highest account value
on the effective date of your Death Benefit Option II
Schedule - Accumulation Period or any anniversary of
that date prior to the annuitant's 85th birthday or date
of death, whichever is earlier, adjusted for Purchase
Payments made and amounts withdrawn or applied to an
Annuity Payout Option since the date of the highest
account value.
On each anniversary of the Schedule Effective Date
after the Annuitant's 85th birthday, the Step-up Value
shall equal the Step-up Value on the anniversary
immediately preceding the Annuitant's 85th birthday,
adjusted for Purchase Payment(s) made, and amounts
withdrawn or applied to an Annuity Payout Option since
that anniversary.
On the Claim Date, the Step-up Value shall equal the
Step-up Value on the anniversary of the Schedule
Effective Date immediately preceding the date of death,
adjusted for Purchase Payment(s) made and amount(s)
withdrawn or applied to an Annuity Payout Option since
that anniversary.
On the Claim Date, if the amount of the death benefit is
greater than the Account Value, the amount by which the
death benefit exceeds the Account Value will be deposited
and allocated to the money market fund available through the
Separate Account. This increases the Account Value available
to the Beneficiary to an amount equal to the death benefit.
The amount paid to the Beneficiary will equal the Adjusted
Account Value on the date the payment request is processed.
This amount may be greater or less than the amount of the
death benefit on the Claim Date. The Beneficiary may elect a
death benefit payment option as permitted in Section IV -
Options Available to the Beneficiary.
(b) Death of the Certificate Holder if the Certificate
Holder is not the Annuitant.
------------------------------------------------------------
On the Claim Date, the amount of the death benefit
equals the Account Value.
The amount paid to the Beneficiary will equal the
Adjusted Account Value on the date the payment request
is processed. The Beneficiary may elect a death benefit
payment option as permitted in Section IV - Options
Available to the Beneficiary.
(c) Death of a spouse who becomes a successor Certificate
Holder/Annuitant.
------------------------------------------------------------
The amount of the death benefit paid to the Beneficiary at
the death of a successor Certificate Holder/Annuitant is
the greater of the values as described in (a) above except
that in calculating (a)(1), the Account Value on the Claim
Date for the prior Certificate Holder's death is treated
as the initial Purchase Payment.
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<PAGE>
4.05 Options Available to Beneficiary:
Prior to any election, or until amounts must be otherwise
distributed under this section, the Account Value will be
retained in the Account. The Beneficiary has the right to
allocate or reallocate any amount to any of the available
investment options (subject to an MVA, if applicable). If the
Certificate Holder has specified the form of payment to the
Beneficiary, the death benefit will be paid as elected by the
Certificate Holder in the Beneficiary designation, to the extent
permitted by section 72(s) of the Code. If the Certificate Holder
has not specified a form of payment, the Beneficiary may elect
one of the following options.
(a) When the Certificate Holder is the Annuitant or when the
Certificate Holder is a nonnatural person, and the
Annuitant dies:
(1) If the Beneficiary is the surviving spouse, the spousal
Beneficiary will be the successor Certificate Holder
and may exercise all Certificate Holder rights under
the Contract and continue in the Accumulation Period,
or may elect (i) or (ii) below. Under the Code,
distributions from the Account are not required until
the spousal Beneficiary's death. The spousal
Beneficiary may elect to:
(i) Apply some or all of the Adjusted Account Value to
an Annuity Payout Option (see Section V); or
(ii) Receive, at any time, a lump sum payment equal to
the Adjusted Account Value.
(2) If the Beneficiary is other than the surviving spouse,
then options (i) or (ii) above apply. Any portion of
the Adjusted Account Value not applied to an Annuity
Payout Option within one year of the death must be
distributed within five years of the date of death.
(3) If no Beneficiary exists, a lump sum payment equal to
the Adjusted Account Value must be made to the
Annuitant's estate within five years of the date of
death.
(4) If the Beneficiary is an entity, a lump sum payment
equal to the Adjusted Account Value must be made within
five years of the date of death, unless otherwise
permitted by IRS regulation or ruling.
(b) When the Certificate Holder is not the Annuitant and the
Certificate Holder dies:
(1) If the Beneficiary is the Certificate Holder's
surviving spouse, the spousal Beneficiary will be the
successor Certificate Holder and may exercise all
Certificate Holder rights under the Contract and
continue in the Accumulation Period, or may elect (i)
or (ii) below. Under the Code, distributions from the
Account are not required until the spousal
Beneficiary's death. The spousal Beneficiary may elect
to:
(i) Apply some or all of the Adjusted Account Value
to an Annuity Payout Option (see Section V); or
(ii) Receive, at any time, a lump sum payment equal
to the Withdrawal Value.
(2) If the Beneficiary is other than the Certificate
Holder's surviving spouse, then options (i) or (ii)
under (1) above apply. Any portion of the death benefit
not applied to an Annuity Payout Option within one year
of the Certificate Holder's death must be distributed
within five years of the date of death.
(3) If no Beneficiary exists, a lump sum payment equal to
the Withdrawal Value must be made to the Certificate
Holder's estate within five years of the date of death.
(4) If the Beneficiary is an entity, a lump sum payment
equal to the Withdrawal Value must be made within five
years of the date of death, unless otherwise permitted
by IRS regulation or ruling.
(c) When the Certificate Holder is a natural person and not the
Annuitant and the Annuitant dies, the Beneficiary (or the
Certificate Holder if no Beneficiary exists) may elect to:
(1) Apply all or some of the Adjusted Account Value to an
Annuity Payout Option within 60 days of the date of
death; or
(2) Receive a lump sum payment equal to the Adjusted
Account Value.
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<PAGE>
V. Annuity Payout Provisions
- --------------------------------------------------------------------------------
5.01 Annuity Payout Options:
Annuity Payout Option 1 - Payments for a specified period:
Payments are made for the number of years specified by the
Certificate Holder. The number of years must be at least five and
not more than 30.
Annuity Payout Option 2 - Life income based on the life of one
Annuitant:
When this option is elected, the Certificate Holder must choose
one of the following:
(a) Payments cease at the death of the Annuitant;
(b) Payments are guaranteed for a specified period from five to
30 years;
(c) Cash refund: when the Annuitant dies, the Beneficiary will
receive a lump sum payment equal to the amount applied to
the Annuity Payout Option (less any premium tax, if
applicable) less the total amount of Annuity Payments made
prior to such death. This cash refund feature is only
available if the total amount applied to the Annuity Payout
Option is allocated to a fixed Annuity Payments.
Annuity Payout Option 3 - Life income based on the lives of two
Annuitants:
Payments are made for the lives of two Annuitants, one of whom is
designated the primary Annuitant and the other the secondary
Annuitant, and cease when both Annuitants have died. When this
option is elected, the Certificate Holder must also choose one of
the following:
(a) 100% of the payment to continue after the first death;
(b) 66 2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) 100% of the payment to continue after the first death and
payments are guaranteed for a period of five to 30 years;
(e) 100% of the payment to continue at the death of the
secondary Annuitant and 50% of the payment to continue at
the death of the primary Annuitant; or
(f) 100% of the payment continues after the first death with a
cash refund feature. When the primary Annuitant and
secondary Annuitant die, the Beneficiary will receive a lump
sum payment equal to the amount applied to the Annuity
Payout Option (less any premium tax) less the total amount
of Annuity Payments paid prior to such death. This cash
refund feature is only available if the total amount applied
to the Annuity Payout Option is allocated to fixed Annuity
Payments.
If fixed Annuity Payments are chosen under Annuity Payout Option
1, 2 (a) or (b), or 3 (a) or (d), the Certificate Holder may
elect, at the time the Annuity Payout Option is selected, an
annual increase of one, two or three percent compounded annually.
As allowed under applicable state law, Aetna reserves the right
to offer additional Annuity Payout Options.
5.02 Annuity Payment Choices:
The Certificate Holder may tell Aetna to apply any portion of the
Adjusted Account Value (minus any premium tax, if applicable,) to
any Annuity Payout Option. The first Annuity Payment may not be
earlier than one calendar year after the initial Purchase Payment
nor later than the later of:
(a) The first day of the month following the Annuitant's 85th
birthday; or
(b) The tenth anniversary of the last Purchase Payment. In lieu
of the election of an Annuity Payout Option, the Certificate
Holder may tell Aetna to make a lump sum payment.
Page 20
<PAGE>
When an Annuity Payout Option is chosen, Aetna must also be told
if payments are to be made other than monthly and whether to pay:
(a) Fixed Annuity Payments using the General Account;
(b) Variable Annuity Payments using any of the Subaccount(s)
available under the contract for the Annuity Period; or
(c) A combination of (a) and (b).
If fixed Annuity Payments are chosen, the payment rate for the
option chosen, shown on the tables immediately following,
reflects at least the minimum guaranteed interest rate (see
Schedule - Annuity Period), but may reflect a higher interest
rate.
If variable Annuity Payments are chosen, the initial Annuity
Payment for the option elected reflects the Assumed Interest Rate
(AIR) elected (see Schedule - Annuity Period). The Certificate
Holder must allocate specified amounts among the Subaccounts
available during the Annuity Period. Aetna reserves the right to
limit the number of Subaccounts available at one time and to
limit the number of Subaccounts the Certificate Holder may select
during the Annuity Period. Subject to terms and conditions
established by Aetna, the Certificate Holder may transfer all or
any portion of the amount allocated to a Subaccount to another
Subaccount. The number of Transfers allowed each year is shown on
Schedule - Annuity Period.
Transfer requests must be submitted as a percentage of the
allocation among the Subaccounts. Aetna reserves the right to
establish a minimum transfer amount. Transfers will be effective
as of the Valuation Date in which Aetna receives a transfer
request in good order at its home office.
5.03 Terms of Annuity Payout Options:
(a) When payments start, the age of the Annuitant plus the
number of years for which payments are guaranteed must not
exceed 95.
(b) An Annuity Payout Option may not be elected if the first
payment would be less than $50 or if the total payments in a
year would be less than $250 (less if required by state
law). Aetna reserves the right to increase the minimum first
Annuity Payment amount and the minimum annual Annuity
Payment amount based upon increases reflected in the
Consumer Price Index-Urban, (CPI-U) since July 1, 1993.
(c) If fixed Annuity Payments are chosen Aetna will use the
applicable current rate, based upon actual ages if it will
provide higher fixed Annuity Payments.
(d) For purposes of calculating the first payment of variable or
guaranteed fixed Annuity Payments based on guaranteed rates,
the primary Annuitant's and secondary Annuitant's adjusted
age will be used. The primary Annuitant's and secondary
Annuitant's adjusted age is his or her age as of the
birthday closest to the Annuity Payments commencement date
reduced by one year for commencement dates occurring during
the period of time from July 1, 1993 through December 31,
1999. The primary Annuitant's and secondary Annuitant's age
will be reduced by two years for commencement dates
occurring during the period of time from January 1, 2000
through December 31, 2009. The primary Annuitant's and
secondary Annuitant's age will be reduced by one additional
year for Annuity commencement dates occurring in each
succeeding decade.
The attached payment rates for Annuity Payout Options 2 and
3 are based on mortality from 1983 Table a.
(e) Assumed Interest Rate (AIR) is the interest rate used to
determine the amount of the first payment under variable
Annuity Payments as shown on Schedule - Annuity Period. The
Separate Account must earn this rate plus enough to cover
the mortality and expense risks charges (which may include
profit), administrative charges and any other Separate
Account fees if future variable Annuity Payments are to
remain level, (see Schedule - Annuity Period).
(f) Once elected, Annuity Payments cannot be withdrawn except as
provided in Section VI.
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<PAGE>
5.04 Death of Annuitant/Beneficiary:
(a) Certificate Holder is the Annuitant: When the Certificate
Holder is the Annuitant and the Annuitant dies under
Annuity Payout Option 1 or 2(b), or both the primary
Annuitant and the secondary Annuitant die under Annuity
Payout Option 3(d), any remaining payments will continue to
the Beneficiary, or if elected by the Beneficiary and not
prohibited by the Certificate Holder in the Beneficiary
designation, the present value of any remaining payments
will be paid in one sum to the Beneficiary. If Annuity
Payout Option 3 has been elected and the Certificate Holder
dies, the remaining payments will continue to the successor
payee. If no successor payee has been designated, the
Beneficiary will be treated as the successor payee. If the
Account has joint Certificate Holders, the surviving joint
Certificate Holder will be deemed the successor payee.
(b) Certificate Holder is not the Annuitant: When the
Certificate Holder is not the Annuitant and the Certificate
Holder dies, any remaining payments will continue to the
successor payee. If no successor payee has been designated,
the Beneficiary will be treated as the successor payee. If
the Account has joint Certificate Holders, the surviving
joint Certificate Holder will be deemed the successor payee.
If the Annuitant dies under Annuity Payout Option 1 or 2(b),
or both the primary Annuitant and secondary Annuitant die
under Annuity Payout Option 3(d), any remaining payments
will continue to the Beneficiary, or if elected by the
Beneficiary and not prohibited by the Certificate Holder in
the Beneficiary designation, the present value of any
remaining payments will be paid in one sum to the
Beneficiary. If Annuity Payout Option 3 has been elected and
the Annuitant dies, the remaining payments will continue to
the Certificate Holder.
(c) No Beneficiary Named/Surviving: If there is no Beneficiary,
the present value of any remaining payments will be paid in
one sum to the Certificate Holder, or if the Certificate
Holder is not living, then to the Certificate Holder's
estate.
(d) If the Beneficiary or the successor payee dies while
receiving Annuity Payments, any remaining payments will
continue to the successor Beneficiary/payee or upon election
by the successor Beneficiary/payee, the present value of any
remaining payments will be paid in one sum to the successor
Beneficiary/payee. If no successor Beneficiary/payee has
been designated, the present value of any remaining payments
will be paid in one sum to the Beneficiary's/payee's estate.
(e) The present value will be determined as of the Valuation
Date in which proof of death acceptable to Aetna and a
request for payment is received at Aetna's home office.
5.05 Annuity Units - Separate Account:
The number of annuity units is based on the amount of the first
of the variable Annuity Payments which is equal to:
(a) The portion of the Account Value applied to purchase
variable Annuity Payments (minus any applicable premium
tax); divided by
(b) 1,000; multiplied by
(c) The payment rate on the tables immediately following, for
the option chosen.
Such amount, or portion, of the variable Annuity Payments will be
divided by the appropriate annuity unit value (see Section V -
Annuity Unit Value - Separate Account) on the tenth Valuation
Date before the due date of the first payment to determine the
number of annuity units. The number of annuity units remains
fixed. Each future payment is equal to the sum of the products of
each annuity unit value multiplied by the appropriate number of
annuity units. The annuity unit value on the tenth Valuation Date
prior to the due date of the payment is used.
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<PAGE>
5.06 Annuity Unit Value - Separate Account:
For any Valuation Date, an annuity unit value is equal to:
(a) The value for the previous Valuation Date; multiplied by
(b) The annuity net return factor(s) (see Section V - Net Return
Factor(s) - Separate Account) for the Valuation Date;
multiplied by
(c) A factor to reflect the AIR (see Schedule - Annuity Period).
The annuity unit value and the amount of Annuity Payments may go
up or down due to investment gain or loss.
5.07 Net Return Factor(s) - Separate Account:
The net return factor(s) are used to compute all variable Annuity
Payments for any Subaccount.
The net return factor for each Subaccount is equal to 1.0000000
plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Subaccount at the end of a
Valuation Date; minus
(b) The value of the shares of the Subaccount at the start of
the Valuation Date; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the annuity units at the start of the
Valuation Date; minus
(e) A daily charge for mortality and expense risks, which may
include profit, a daily administrative charge and any other
fees deducted from investments in the Separate Account.
A net return rate may be more or less than 0%.
The value of a share of the Subaccount is equal to the net assets
of the Subaccount divided by the number of shares outstanding.
Annuity Payments shall not be changed due to changes in the
mortality or expense results or administrative charges.
Page 23
<PAGE>
OPTION 1: Payments for a Specified Period
<TABLE>
<CAPTION>
Monthly Amount for Each $1,000*
Rates for a Fixed Annuity with a 3% Guaranteed Interest Rate
- ---------------------------------------------------------------------------------------
Years Payment Years Payment
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
5 $17.91 18 $5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
First Monthly Amount for Each $1,000*
Rates for a Variable Annuity with a 3.5% AIR
- ---------------------------------------------------------------------------------------
Years Payment Years Payment
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
5 $18.12 18 $6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
First Monthly Amount for Each $1,000*
Rates for a Variable Annuity with a 5% AIR
- ---------------------------------------------------------------------------------------
Years Payment Years Payment
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
5 $18.74 18 $6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
- ---------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 24
<PAGE>
Option 2: Life Income Based on the Life of One Annuitant
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Payment Amount for Each $1,000*
Rates for a Fixed Annuity with 3% Guaranteed Interest Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Option 2(c):
Adjusted payments for payments payments payments payments Cash Refund
Age of life guaranteed guaranteed guaranteed guaranteed
Annuitant 5 years 10 years 15 years 20 years
------------------ ------------------ ------------------ ------------------ ------------------ ----------------
Male Female Male Female Male Female Male Female Male Female Male Female
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.27 $3.90 $4.26 $3.90 $4.22 $3.89 $4.17 $3.86 $4.08 $3.82 $4.04 $3.78
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88 4.10 3.84
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93 4.16 3.89
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99 4.23 3.95
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04 4.29 4.01
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11 4.37 4.07
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17 4.44 4.13
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23 4.52 4.20
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30 4.61 4.28
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37 4.69 4.35
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44 4.78 4.43
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51 4.88 4.52
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58 4.98 4.60
63 5.74 5.08 5.69 5.05 5.53 4.98 5.26 4.85 4.90 4.65 5.09 4.70
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72 5.20 4.80
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79 5.31 4.90
66 6.30 5.51 6.21 5.47 5.96 5.36 5.56 5.16 5.08 4.86 5.44 5.01
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93 5.56 5.12
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00 5.70 5.24
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06 5.84 5.37
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12 5.98 5.51
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18 6.14 5.65
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23 6.30 5.80
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28 6.47 5.96
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32 6.65 6.13
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35 6.83 6.31
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 25
<PAGE>
Option 2: Life Income Based on the Life of One Annuitant
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 3.5% AIR
- --------------------------------------------------------------------------------------------------------------------
Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b):
Adjusted payments for payments payments payments payments
Age of life guaranteed guaranteed guaranteed guaranteed
Annuitant 5 years 10 years 15 years 20 years
----------------- ------------------- ------------------ ------------------ -------------------
Male Female Male Female Male Female Male Female Male Female
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 26
<PAGE>
Option 2: Life Income Based on the Life of One Annuitant
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 5% AIR
-------------------------------------------------------------------------------------------------------------------
Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b):
Adjusted payments for payments payments payments payments
Age of life guaranteed guaranteed guaranteed guaranteed
Annuitant 5 years 10 years 15 years 20 years
------------------ ----------------- ------------------ ------------------ -------------------
Male Female Male Female Male Female Male Female Male Female
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 5.97 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
-------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 27
<PAGE>
Option 3: Life Income Based on the Lives of Two Annuitants
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Payment Amount for Each $1,000*
Rates for a Fixed Annuity with 3% Guaranteed Interest Rate
Primary Annuitant is Female and Secondary Annuitant is Male
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) Option 3(f)
- --------------- -------------- ---------------- ----------------- ---------------- ----------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.75 $4.07 $4.26 $3.75 $3.98 $3.72
55 55 3.88 4.25 4.47 3.87 4.06 3.85
55 60 3.99 4.44 4.71 3.98 4.12 3.94
60 55 4.06 4.47 4.71 4.06 4.37 4.02
60 60 4.24 4.71 4.99 4.23 4.47 4.17
60 65 4.38 4.97 5.32 4.38 4.54 4.29
65 60 4.49 5.01 5.32 4.48 4.89 4.39
65 65 4.72 5.33 5.70 4.71 5.02 4.59
65 70 4.93 5.68 6.15 4.91 5.14 4.74
70 65 5.07 5.75 6.17 5.05 5.60 4.87
70 70 5.40 6.21 6.70 5.36 5.79 5.13
70 75 5.69 6.68 7.32 5.62 5.96 5.29
75 70 5.89 6.82 7.40 5.81 6.63 5.48
75 75 6.37 7.45 8.15 6.23 6.92 5.78
75 80 6.78 8.11 8.99 6.54 7.15 5.93
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 28
<PAGE>
Option 3: Life Income Based on the Lives of Two Annuitants
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 3.5% AIR
Primary Annuitant Is Female and Secondary Annuitant Is Male
- --------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e)
- ---------------- ----------------- ----------------- ---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.03 $4.36 $4.55 $4.03 $4.27
55 55 4.16 4.54 4.76 4.15 4.34
55 60 4.27 4.73 5.00 4.26 4.40
60 55 4.34 4.76 5.00 4.34 4.65
60 60 4.51 4.99 5.27 4.50 4.74
60 65 4.66 5.25 5.61 4.65 4.82
65 60 4.76 5.29 5.60 4.75 5.16
65 65 4.99 5.61 5.99 4.98 5.30
65 70 5.19 5.97 6.44 5.17 5.41
70 65 5.34 6.03 6.46 5.31 5.88
70 70 5.67 6.49 6.99 5.62 6.07
70 75 5.95 6.96 7.61 5.87 6.23
75 70 6.16 7.10 7.68 6.07 6.90
75 75 6.64 7.73 8.43 6.48 7.19
75 80 7.04 8.39 9.29 6.79 7.42
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 29
<PAGE>
Option 3: Life Income Based on the Lives of Two Annuitants
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 5% AIR
Primary Annuitant is Female and Secondary Annuitant is Male
- ------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- --------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e)
- -------------- ----------------- ----------------- ---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.93 $5.27 $5.46 $4.93 $5.17
55 55 5.04 5.44 5.66 5.04 5.23
55 60 5.15 5.63 5.91 5.14 5.29
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.62
60 65 5.52 6.14 6.51 5.51 5.70
65 60 5.61 6.16 6.49 5.60 6.03
65 65 5.83 6.49 6.87 5.82 6.15
65 70 6.04 6.84 7.34 6.00 6.27
70 65 6.17 6.90 7.33 6.13 6.73
70 70 6.49 7.35 7.87 6.44 6.91
70 75 6.77 7.84 8.51 6.68 7.07
75 70 6.97 7.96 8.56 6.87 7.75
75 75 7.45 8.60 9.33 7.27 8.04
75 80 7.86 9.28 10.20 7.57 8.27
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 30
<PAGE>
Option 3: Life Income Based on the Lives of Two Annuitants
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Payment Amount for Each $1,000*
Rates for a Fixed Annuity with 3% Guaranteed Interest Rate
Primary Annuitant is Male and Secondary Annuitant is Female
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) Option 3(f)
- --------------- -------------- ---------------- ----------------- ---------------- ----------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.13 $3.67
55 55 3.88 4.25 4.47 3.87 4.25 3.85
55 60 4.06 4.47 4.71 4.06 4.36 4.02
60 55 3.99 4.44 4.71 3.98 4.55 3.94
60 60 4.24 4.71 4.99 4.23 4.70 4.17
60 65 4.49 5.01 5.32 4.48 4.85 4.39
65 60 4.38 4.97 5.32 4.38 5.10 4.29
65 65 4.72 5.33 5.70 4.71 5.32 4.59
65 70 5.07 5.75 6.17 5.05 5.54 4.87
70 65 4.93 5.68 6.15 4.91 5.86 4.74
70 70 5.40 6.21 6.70 5.36 6.18 5.13
70 75 5.89 6.82 7.40 5.81 6.49 5.48
75 70 5.69 6.68 7.32 5.62 6.92 5.29
75 75 6.37 7.45 8.15 6.23 7.40 5.78
75 80 7.07 8.34 9.16 6.78 7.85 6.17
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 31
<PAGE>
Option 3: Life Income Based on the Lives of Two Annuitants
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 3.5% AIR
Primary Annuitant is Male and Secondary Annuitant is Female
--------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
----------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e)
---------------- ----------------- ----------------- ---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 32
<PAGE>
Option 3: Life Income Based on the Lives of Two Annuitants
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
First Monthly Payment Amount for Each $1,000*
Rates for a Variable Annuity with 5% AIR
Primary Annuitant Is Male and Secondary Annuitant is Female
- --------------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------------------
payments
guaranteed
Primary Secondary 10 years
Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e)
- ---------------- ----------------- ----------------- ---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of any applicable premium tax deduction
Page 33
<PAGE>
- --------------------------------------------------------------------------------
Aetna Life Insurance and Annuity Company
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 238-6219
Group Variable, Fixed, or Combination Annuity Certificate
Nonparticipating
- --------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. AMOUNTS ALLOCATED TO THE GUARANTEED ACCOUNT, IF WITHDRAWN
BEFORE THE GUARANTEED TERM MATURITY DATE, MAY BE SUBJECT TO A MARKET VALUE
ADJUSTMENT. THE MARKET VALUE ADJUSTMENT MAY RESULT IN AN INCREASE OR A DECREASE
IN THE ACCOUNT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A
GUARANTEED TERM AT THE TIME OF ITS MATURITY.
GC-CVA-00
