VARIABLE ANNUITY ACCT C OF AETNA LIFE INSURANCE & ANNUITY CO, 485BPOS, 1996-04-15

VARIABLE ANNUITY ACCT C OF AETNA LIFE INSURANCE & ANNUITY CO
485BPOS, 1996-04-15

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<PAGE>

As filed with the Securities and Exchange Registration No. 33-75988*
Commission April 15, 1996 Registration No. 811-2513
- ---------------------------- -------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

POST-EFFECTIVE AMENDMENT NO. 4 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

AND AMENDMENT TO

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Variable Annuity Account C of Aetna Life Insurance and Annuity Company
(EXACT NAME OF REGISTRANT)

Aetna Life Insurance and Annuity Company
(NAME OF DEPOSITOR)

151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

Depositor's Telephone Number, including Area Code: (860) 273-7834

Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(NAME AND ADDRESS OF AGENT FOR SERVICE)

It is proposed that this filing will become effective (CHECK APPROPRIATE SPACE):

immediately upon filing pursuant to paragraph (b) of Rule 485
---
X on May 1, 1996 pursuant to paragraph (b) of Rule 485
---

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Registrant filed a Rule 24f-2 Notice for the fiscal year ended December 31, 1995
on February 29, 1996.

*Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has
included a combined prospectus under this Registration Statement which includes
all the information which would currently be required in prospectuses relating
to the securities covered by the following earlier Registration Statements:
33-75972; 33-76024; and 33-89858.

<PAGE>

VARIABLE ANNUITY ACCOUNT C
CROSS REFERENCE SHEET

FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION
- -------- ------------------- --------
<S> <C> <C>
1 Cover Page Cover Page

2 Definitions Definitions

3 Synopsis or Highlights Prospectus Summary; Fee Table

4 Condensed Financial Information Condensed Financial Information

5 General Description of Registrant, Depositor,
and Portfolio Companies The Company; Variable Annuity
Account C; The Funds

6 Deductions and Expenses Charges and Deductions; Distribution

7 General Description of Variable Annuity
Contracts Purchase; Miscellaneous

8 Annuity Period Annuity Period

9 Death Benefit Death Benefit During
Accumulation Period; Death
Benefit Payable During the
Annuity Period

10 Purchases and Contract Value Purchase; Contract Valuation

11 Redemptions Right to Cancel; Withdrawals

12 Taxes Tax Status

13 Legal Proceedings Miscellaneous - Legal Matters
and Proceedings
14 Table of Contents of the Statement of
Additional Information Contents of the Statement of
Additional Information
</TABLE>

<PAGE>

FORM N-4
ITEM NO. PART B (STATEMENT OF ADDITIONAL INFORMATION) LOCATION
- -------- -------------------------------------------- --------
<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 Annuity Payments

23 Financial Statements Financial Statements
</TABLE>

PART C (OTHER INFORMATION)

Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.

<PAGE>
PROSPECTUS
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- --------------------------------------------------------------------------------

This Prospectus describes individual deferred variable annuity contracts
("Contracts") issued by Aetna Life Insurance and Annuity Company (the
"Company"). The Contracts are intended to qualify as Individual Retirement
Annuities established under Section 408 of the Internal Revenue Code of 1986, as
amended (the "Code"). (See "Purchase.")

The Contracts provide that contributions may be allocated to one or more of the
Credited Interest Options or to one or more of the Subaccounts of Variable
Annuity Account C, a separate account of the Company. The Subaccounts invest
directly in shares of the following Funds:

- Aetna Variable Fund - Fidelity VIP Equity-Income
- Aetna Income Shares Portfolio
- Aetna Variable Encore Fund - Fidelity VIP Growth Portfolio
- Aetna Investment Advisers Fund, - Fidelity VIP Overseas Portfolio
Inc. - Janus Aspen Aggressive Growth
- Aetna Ascent Variable Portfolio Portfolio
- Aetna Crossroads Variable Portfolio - Janus Aspen Balanced Portfolio
- Aetna Legacy Variable Portfolio - Janus Aspen Growth Portfolio
- Alger American Growth Portfolio - Janus Aspen Short-Term Bond
- Alger American Small Cap Portfolio Portfolio
- Fidelity VIP II Contrafund - Janus Aspen Worldwide Growth
Portfolio Portfolio
- Scudder International Portfolio
Class A Shares
- TCI Growth (a Twentieth Century
fund)

The Credited Interest Options currently available under the Contract are the
Guaranteed Interest Account, the Fixed Account and the Guaranteed Accumulation
Account (available in New York only). Except as specifically mentioned, this
Prospectus describes only investments through the Separate Account. A brief
description of each of the Credited Interest Options is contained in Appendices
to this Prospectus and additional information concerning the Guaranteed
Accumulation Account is contained in a separate prospectus. The availability of
the Funds and the Credited Interest Options is subject to applicable regulatory
authorization. Not all Funds or Credited Interest Options may be available in
all jurisdictions or under all Contracts. (See "Investment Options.")

This Prospectus provides investors with the information that they should know
about the Separate Account before investing in the Contract. Additional
information about the Separate Account is contained in a Statement of Additional
Information ("SAI") which is available at no charge. The SAI has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
The Table of Contents for the SAI is printed on page 14 of this Prospectus. An
SAI may be obtained by indicating the request on the Application, or by calling
the number listed under the "Inquiries" section of the Prospectus Summary.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE FUNDS AND THE GUARANTEED ACCUMULATION ACCOUNT. ALL PROSPECTUSES SHOULD BE
READ AND RETAINED FOR FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION ARE DATED MAY 1,
1996.
<PAGE>
TABLE OF CONTENTS
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- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
DEFINITIONS.......................................................................... DEFINITIONS - 1
PROSPECTUS SUMMARY................................................................... SUMMARY - 1
FEE TABLE............................................................................ FEE TABLE - 1
CONDENSED FINANCIAL INFORMATION...................................................... AUV HISTORY - 1
THE COMPANY.......................................................................... 1
VARIABLE ANNUITY ACCOUNT C........................................................... 1
INVESTMENT OPTIONS................................................................... 1
The Funds........................................................................ 1
Credited Interest Options........................................................ 3
PURCHASE............................................................................. 4
Contract Availability............................................................ 4
Contract Purchase................................................................ 4
Purchase Payments................................................................ 4
Right to Cancel.................................................................. 4
CHARGES AND DEDUCTIONS............................................................... 4
Daily Deductions from the Separate Account....................................... 4
Maintenance Fee.................................................................. 5
Deferred Sales Charge............................................................ 5
Fund Expenses.................................................................... 6
Premium and Other Taxes.......................................................... 6
CONTRACT VALUATION................................................................... 6
Contract Value................................................................... 6
Accumulation Units............................................................... 7
Net Investment Factor............................................................ 7
TRANSFERS............................................................................ 7
Dollar Cost Averaging Program.................................................... 7
WITHDRAWALS.......................................................................... 8
Reinvestment Privilege........................................................... 8
ADDITIONAL WITHDRAWAL OPTIONS........................................................ 8
DEATH BENEFIT DURING ACCUMULATION PERIOD............................................. 9
ANNUITY PERIOD....................................................................... 9
Annuity Period Elections......................................................... 9
Annuity Options.................................................................. 10
Annuity Payments................................................................. 10
Charges Deducted During the Annuity Period....................................... 11
Death Benefit Payable During the Annuity Period.................................. 11
TAX STATUS........................................................................... 11
Introduction..................................................................... 11
Taxation of the Company.......................................................... 12
Contracts Used with Certain Retirement Plans..................................... 12
Individual Retirement Annuities and Simplified Employee Pension Plans............ 12
</TABLE>

<PAGE>

<TABLE>
<S> <C>
MISCELLANEOUS........................................................................ 13
Distribution..................................................................... 13
Delay or Suspension of Payments.................................................. 13
Performance Reporting............................................................ 13
Voting Rights.................................................................... 13
Modification of the Contract..................................................... 14
Legal Matters and Proceedings.................................................... 14
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.................................. 14
APPENDIX I--GUARANTEED INTEREST ACCOUNT.............................................. 15
APPENDIX II--FIXED ACCOUNT........................................................... 16
APPENDIX III--GUARANTEED ACCUMULATION ACCOUNT........................................ 18
APPENDIX IV--FEDERAL INCOME TAX SUMMARY FOR IRAS..................................... 19
</TABLE>

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY
PERSON TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE
OFFERING CONTAINED IN THIS PROSPECTUS EXCEPT AS OTHERWISE CONTAINED HEREIN.
<PAGE>
DEFINITIONS
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- --------------------------------------------------------------------------------

The following terms are defined as they are used in this Prospectus:

ACCUMULATION PERIOD: The period during which Purchase Payment(s) credited to the
Contract are invested to fund future annuity payments.

ACCUMULATION UNIT: A measure of the value of each Subaccount before annuity
payments begin.

ANNUITANT: The person on whose life or life expectancy the annuity payments are
based.

ANNUITY: A series of payments for life, a definite period or a combination of
the two.

ANNUITY DATE: The date on which annuity payments begin.

ANNUITY PERIOD: The period during which annuity payments are made.

ANNUITY UNIT: A measure of the value of each Subaccount selected during the
Annuity Period.

BENEFICIARY(IES): The person or persons identified on the application who are to
receive any death benefit proceeds payable under the Contract.

CODE: Internal Revenue Code of 1986, as amended.

COMPANY (WE, US): Aetna Life Insurance and Annuity Company.

CONTRACT: The individual deferred, variable annuity contracts offered by this
Prospectus.

CONTRACT HOLDER (YOU): The person to whom the Contract is issued.

CONTRACT VALUE: The dollar value of amounts held under the Contract as of any
Valuation Date during the Accumulation Period.

CONTRACT YEAR: The period of 12 months measured from the date the first Purchase
Payment is applied to the Contract or from any anniversary of such date.

CREDITED INTEREST OPTIONS: The fixed interest options available under the
Contract. The Credited Interest Options currently consist of the Guaranteed
Interest Account, the Fixed Account and the Guaranteed Accumulation Account,
each of which is described in an Appendix to this Prospectus. Amounts allocated
to the Credited Interest Options are included in the Contract Value.

FUND(S): An open-end registered management investment company whose shares are
purchased by the Separate Account to fund the benefits provided by the Contract.

HOME OFFICE: The Company's principal executive offices located at 151 Farmington
Avenue, Hartford, Connecticut 06156.

PURCHASE PAYMENT(S): The gross payment(s) made to the Company under a Contract.

SEPARATE ACCOUNT: Variable Annuity Account C, a separate account established by
the Company for the purpose of funding variable annuity contracts issued by the
Company.

SUBACCOUNT(S): The portion of the assets of the Separate Account that is
allocated to a particular Fund. Each Subaccount invests in the shares of only
one corresponding Fund.

VALUATION DATE: The date and time at which the value of the Subaccount is
calculated. Currently, this calculation occurs at 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.

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DEFINITIONS - 1
<PAGE>
PROSPECTUS SUMMARY
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- --------------------------------------------------------------------------------

CONTRACTS OFFERED

The Contracts described in this Prospectus are individual deferred variable
annuity contracts issued by Aetna Life Insurance and Annuity Company (the
"Company"). There are two types of Contracts currently offered through this
Prospectus for new sales: (1) 1994 Contracts that are not connected with an
internal transfer (if you are a new customer), and (2) 1994 Internal Rollover
Contracts (if you have an existing Contract or retirement account established
with the Company or one of our affiliates) (collectively referred to as "1994
Contracts"). In New York, subject to regulatory approval, this Contract is
available only to individuals who have retirement accounts established with the
Company under the Company's Multiple Asset Portfolio contracts, as a 1994
Internal Rollover Contract. Additionally, this Prospectus also describes 1992
Contracts (Internal Rollover and those that are not connected with an internal
transfer) that were discontinued for new sales during 1994 ("1992 Contracts").
The Contracts are intended to qualify as Individual Retirement Annuities under
Section 408(b) of the Code. The Contracts will accept annual contributions to an
Individual Retirement Annuity or a Simplified Employee Pension Plan (SEP). The
Contracts can also accept transfers or rollovers from another Individual
Retirement Annuity, an Individual Retirement Account under Section 408(a) of the
Code, a tax-deferred annuity under Section 403(b) of the Code or a qualified
pension or profit sharing plan under 401(a) of the Code.

These Contracts may be purchased by completing the proper application form
and submitting it to the Distributor. (See "Contract Purchase.")

FREE LOOK PERIOD

You may cancel the Contract no later than 10 days after you receive it (or
as otherwise allowed by state law) by returning it to the Company with a written
notice of cancellation. We will produce a refund not later than seven days after
we receive the Contract and the written notice at our Home Office. Cancellations
requested after a customer receives the Contract will consist of a refund of the
Purchase Payment. (See "Purchase--Right to Cancel.")

INVESTMENT OPTIONS

The Company has established Variable Annuity Account C, a registered unit
investment trust, for the purpose of funding the variable portion of the
Contracts. The Separate Account is divided into Subaccounts which invest
directly in shares of the Funds described herein, as you designate. The Contract
allows investment in any or all of the Subaccounts, as well as in the Credited
Interest Options described below. For a complete list of the Funds available
under the Contracts, and a description of the investment objectives of each of
the Funds and their investment advisers, see "Investment Options--The Funds" in
this Prospectus, as well as the prospectuses for each of the Funds.

The Contract also provides for investment in Credited Interest Options which
allow you to earn fixed rates of interest that may vary periodically in the
Company's discretion. The fixed options available under the Contract are the
Guaranteed Interest Account, the Fixed Account and the Guaranteed Accumulation
Account. (See the Appendices to this Prospectus.)

CHARGES AND DEDUCTIONS

Certain charges are associated with these Contracts. These charges include
daily deductions from the Separate Account (the mortality and expense risk
charges and an administrative expense charge), as well as any annual maintenance
fee, transfer fees, and premium and other taxes. The Funds also incur certain
fees and expenses which are deducted directly from the Funds. A deferred sales
charge may apply upon a full or partial withdrawal of the Contract Value. (See
the Fee Table and "Charges and Deductions.")

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SUMMARY - 1
<PAGE>
TRANSFERS

Prior to the Annuity Date, and subject to certain limitations, Contract
Values may be transferred among the Subaccounts and the Credited Interest
Options without charge. Transfers can be requested in writing or by telephone in
accordance with the Company's transfer procedures. (See Appendices I, II and III
for a full description of the restrictions applicable to transfers from the
Credited Interest Options.) (See "Transfers.")

WITHDRAWALS

All or a part of the Contract Value may be withdrawn prior to the Annuity
Date by properly completing a disbursement form and sending it to the Company.
Certain charges may be assessed upon withdrawal. The withdrawal may also be
subject to income tax and a federal tax penalty. (See "Withdrawals.")

The Contract also offers certain Additional Withdrawal Options during the
Accumulation Period to persons meeting certain criteria. Additional Withdrawal
Options are not available in all states and may not be suitable in every
situation. (See "Additional Withdrawal Options.")

DEATH BENEFIT

A death benefit is payable if you die before the Annuity Date. Death benefit
proceeds will be paid to the Beneficiary in an amount equal to the Contract
Value. Until the election of a method of payment, the Contract Value will remain
invested under the Contract. The Beneficiary may elect to receive the proceeds
in a lump sum or under any of the payment options available under the Contract.
However, the Code requires that distributions begin within a certain time
period. (See "Death Benefit During Accumulation Period.")

After Annuity Payments have commenced, a death benefit may be payable to the
Beneficiary depending upon the terms of the Contract and the Annuity Option
selected. (See "Death Benefit Payable During the Annuity Period.")

THE ANNUITY PERIOD

On the Annuity Date, you may elect to begin receiving Annuity Payments.
Annuity Payments can be made on either a fixed, variable or combination fixed
and variable basis. If a variable payout is selected, the payments will vary
with the investment performance of the Subaccount(s) selected. The Company
reserves the right to limit the number of Subaccounts that may be available
during the Annuity Period. (See "Annuity Period.")

TAXES

Contributions and earnings are not generally taxed until you or your
beneficiary(ies) actually receive a distribution from the Contract. A 10%
federal tax penalty may be imposed on certain withdrawals. (See "Tax Status.")

INQUIRIES

Questions, inquiries or requests for additional information can be directed
to your agent or local representative, or you may contact the Company as
follows:

<TABLE>
<S> <C>
- Write to: Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156-1258
Attention: Customer Service

- Call Customer Service: 1-800-531-4547 (for Contract Values, automated
transfers or changes in allocation call:
1-800-262-3862)
</TABLE>

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SUMMARY - 2
<PAGE>
FEE TABLE
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This Fee Table describes the various charges and expenses associated with the
Contract during the Accumulation Period. For amounts deducted during the Annuity
Period, see "Charges Deducted During the Annuity Period." No sales charge is
paid upon purchase of the Contract. Some expenses may vary as explained under
"Charges and Deductions." The charges and expenses shown below do not include
premium taxes that may be applicable. For more information regarding expenses
paid out of the assets of a particular Fund, see the Fund's prospectus.

DIRECT CHARGES. These charges are deducted directly from the Contract Value.
They include a Deferred Sales Charge, an Annual Maintenance Fee and an
Allocation and Transfer Fee, each of which is described below:

DEFERRED SALES CHARGE. The deferred sales charge is deducted as a
percentage of the amount withdrawn and varies depending on the type of
Contract you own and whether the Purchase Payments were transferred from an
existing contract issued by us or one of our affiliates.

- SCHEDULE A illustrates deferred sales charges for 1994 and 1992
Internal Rollover Contracts for internal transfers from
contracts issued by the Company under pension or profit sharing
retirement plans or tax-deferred annuity plans. (For 1992
Contracts, this schedule applies only if you have not been
subject to a deferred sales charge under the prior contract.) It
also applies to all internal transfers from contracts issued by
Aetna Life Insurance Company. The deferred sales charge is based
on the number of completed Contract Years since the date of
initial payment to the new Contract. This Schedule also applies
to all sales of the Contract in New York.

- SCHEDULE B illustrates deferred sales charges for 1992 Internal
Rollover Contracts for internal transfers from contracts issued
by the Company where you have been, or still are, subject to a
deferred sales charge. The deferred sales charge is based on the
number of completed Contract Years since the initial payment to
the predecessor Contract.

- SCHEDULE C illustrates deferred sales charges for 1994 Internal
Rollover Contracts for internal transfers from IRA or SEP
Contracts issued by the Company where you have been, or still
are, subject to a deferred sales charge. The Contract Holder
enters the deferred sales charge schedule at the percentage
point corresponding to the deferred sales charge applicable
under the predecessor Contract at the time of the exchange, and
continues from that point in the schedule. Schedule C also
applies to all new purchases that are not connected with an
internal transfer (i.e., external rollovers or Contracts
established with at least a $1,000 annual Purchase Payment).

Your Contract Schedule page shows the Deferred Sales Charge Schedule that
applies to you. The total amount deducted for the deferred sales charge
will not exceed 8.5% of the total Purchase Payments applied to the
Contract. The Deferred Sales Charge is calculated as follows:

<TABLE>
<CAPTION>
SCHEDULE A
COMPLETED CONTRACT DEFERRED SALES
YEARS CHARGE DEDUCTION
- ------------------- ----------------
<S> <C>
Less than 1 1%
1 or more 0%
</TABLE>

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FEE TABLE - 1
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE B
COMPLETED CONTRACT DEFERRED SALES
YEARS CHARGE DEDUCTION
- ---------------------------------------- ----------------
<S> <C>
Less than 5 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more but less than 8 2%
8 or more but less than 9 1%
9 or more 0%

SCHEDULE C
COMPLETED CONTRACT DEFERRED SALES
YEARS CHARGE DEDUCTION
- ---------------------------------------- ----------------
<S> <C>
Less than 2 6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more 0%
</TABLE>

<TABLE>
<S> <C> <C>
ANNUAL CONTRACT MAINTENANCE FEE. The maintenance fee will generally be..................... $ 25.00
deducted annually from each Contract. For 1994 Contracts, if the Contract
Value is $10,000 or greater, and for 1992 Contracts, if the initial
Purchase Payment is $10,000 or greater, the maintenance fee will be $0.
ALLOCATION AND TRANSFER FEES. The Company currently allows an unlimited.................... $ 0.00
number of transfers or allocation changes without charge. However, we
reserve the right to assess a fee of $10.00 for each transfer in excess of
12 made during each Contract Year. (See "Transfers and Allocation
Changes.")
</TABLE>

INDIRECT CHARGES. Each Subaccount pays these expenses out of its assets. The
charges are reflected in the Subaccount's daily Accumulation Unit Value and are
not charged directly to your Contract Value. They include:

<TABLE>
<S> <C> <C>
MORTALITY AND EXPENSE RISK CHARGE. This illustrates the maximum mortality.................. 1.25%
and expense risk charge that can be deducted under the Contract. For the
1994 Contracts, the charge may be reduced to 1.15% under certain
circumstances. (See "Charges and Deductions.")

ADMINISTRATIVE EXPENSE CHARGE. We currently do not impose an administrative................ 0.00%
expense charge. However, we reserve the right to deduct a daily charge
from the Subaccounts, equivalent on an annual basis to not more than
0.25%.
---------
TOTAL SEPARATE ACCOUNT EXPENSES 1.25%
---------
---------
</TABLE>

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FEE TABLE - 2
<PAGE>
ANNUAL EXPENSES OF THE FUNDS

The following table illustrates the advisory fees and other expenses applicable
to the Funds. A Fund's "Other Expenses" include operating costs of the Fund.
These expenses are reflected in the Fund's net asset value and are not deducted
from your Contract Value. (Except as noted, the following figures are a
percentage of average net assets and, except where otherwise indicated, are
based on figures for the year ended December 31, 1995.)

<TABLE>
<CAPTION>
INVESTMENT OTHER
ADVISORY EXPENSES
FEES(1) (AFTER TOTAL FUND
(AFTER EXPENSE EXPENSE ANNUAL
REIMBURSEMENT) REIMBURSEMENT) EXPENSES
-------------- ----------- -----------
<S> <C> <C> <C>
Aetna Variable Fund(2) 0.25% 0.06% 0.31%
Aetna Income Shares(2) 0.25% 0.08% 0.33%
Aetna Variable Encore Fund(2) 0.25% 0.10% 0.35%
Aetna Investment Advisers Fund,
Inc.(2) 0.25% 0.08% 0.33%
Aetna Ascent Variable Portfolio(2) 0.50% 0.15% 0.65%
Aetna Crossroads Variable Portfolio(2) 0.50% 0.15% 0.65%
Aetna Legacy Variable Portfolio(2) 0.50% 0.15% 0.65%
Alger American Growth Portfolio 0.75% 0.10% 0.85%
Alger American Small Cap Portfolio 0.85% 0.07% 0.92%
Fidelity VIP II Contrafund
Portfolio(3) 0.61% 0.11% 0.72%
Fidelity VIP Equity-Income Portfolio 0.51% 0.10% 0.61%
Fidelity VIP Growth Portfolio 0.61% 0.09% 0.70%
Fidelity VIP Overseas Portfolio 0.76% 0.15% 0.91%
Janus Aspen Aggressive Growth
Portfolio(4) 0.75% 0.11% 0.86%
Janus Aspen Balanced Portfolio(4) 0.82% 0.55% 1.37%
Janus Aspen Growth Portfolio(4) 0.65% 0.13% 0.78%
Janus Aspen Short-Term Bond
Portfolio(4) 0.00% 0.70% 0.70%
Janus Aspen Worldwide Growth
Portfolio(4) 0.68% 0.22% 0.90%
Scudder International Portfolio Class
A Shares 0.88% 0.20% 1.08%
TCI Growth(5) 1.00% 0.00% 1.00%
</TABLE>

- ------------------------
(1) Certain of the unaffiliated Fund advisers reimburse the Company for
administrative costs incurred in connection with administering the Funds as
variable funding options under the Contract. These reimbursements are paid
out of the investment advisory fees and are not charged to investors.

(2) As of May 1, 1996, the Company will provide administrative services to the
Fund and will assume the Fund's ordinary recurring direct costs under an
Administrative Services Agreement. The "Other Expenses" shown are not based
on figures for the year ended December 31, 1995, but reflect the fee payable
under this Agreement.

(3) A portion of the brokerage commissions the Fund paid was used to reduce its
expenses. Without this reduction, total operating expenses would have been
0.73% for the Contrafund Portfolio.

(4) The information for each Portfolio is net of fee waivers or reductions from
Janus Capital. Fee reductions for the Aggressive Growth, Balanced, Growth,
and Worldwide Growth Portfolios reduce the management fee to the level of
the corresponding Janus retail fund. Other waivers, if applicable, are first
applied against the management fee and then against other expenses. Without
such waivers or reductions, the Management Fee, Other Expenses and Total
Fund Annual Expenses would have been 0.82%, 0.11%, and 0.93% for Aggressive
Growth Portfolio; 1.00%, 0.55%, 1.55% for Balanced Portfolio; 0.85% 0.13%
and 0.98% for Growth Portfolio; 0.65%, 0.72% and 1.37% for Short-Term Bond
Portfolio; and 0.87%, 0.22% and 1.09% for Worldwide Growth Portfolio;
respectively. Janus Capital may modify or terminate the waivers or
reductions at any time upon 90 days' notice to the Portfolio's Board of
Trustees.

(5) The Portfolio's investment adviser pays all expenses of the Portfolio except
brokerage commissions, taxes, interest, fees, expenses of the non-interested
person directors (including counsel fees) and extraordinary expenses. These
expenses have historically represented a very small percentage (less than
0.01%) of total net assets in a fiscal year.

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FEE TABLE - 3
<PAGE>
HYPOTHETICAL ILLUSTRATION (EXAMPLE)

THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.

The following Examples illustrate the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. For the
purposes of these Examples, the maximum maintenance fee of $25.00 that can be
deducted under the Contract has been converted to a percentage of assets equal
to 0.107%.

<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
------------------------------------- -------------------------------------

IF YOU WITHDRAW YOUR ENTIRE CONTRACT IF YOU WITHDRAW YOUR ENTIRE CONTRACT
VALUE AT THE END OF THE PERIODS VALUE AT THE END OF THE PERIODS
SHOWN, YOU WOULD PAY THE FOLLOWING SHOWN, YOU WOULD PAY THE FOLLOWING
EXPENSES, INCLUDING ANY APPLICABLE EXPENSES, INCLUDING ANY APPLICABLE
DEFERRED SALES CHARGE ASSESSED UNDER DEFERRED SALES CHARGE ASSESSED UNDER
SCHEDULE A: SCHEDULE B:

1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund $27 $53 $ 91 $197 $69 $108 $138 $197
Aetna Income Shares $27 $53 $ 92 $199 $69 $108 $139 $199
Aetna Variable Encore Fund $28 $54 $ 93 $202 $69 $109 $140 $202
Aetna Investment Advisers Fund, Inc. $27 $53 $ 92 $199 $69 $108 $139 $199
Aetna Ascent Variable Portfolio $31 $63 $108 $233 $72 $118 $154 $233
Aetna Crossroads Variable Portfolio $31 $63 $108 $233 $72 $118 $154 $233
Aetna Legacy Variable Portfolio $31 $63 $108 $233 $72 $118 $154 $233
Alger American Growth Portfolio $33 $69 $118 $254 $74 $123 $164 $254
Alger American Small Cap Portfolio $33 $71 $122 $261 $74 $125 $168 $261
Fidelity VIP II Contrafund Portfolio $31 $65 $112 $241 $73 $120 $158 $241
Fidelity VIP Equity-Income Portfolio $30 $62 $106 $229 $71 $116 $153 $229
Fidelity VIP Growth Portfolio $31 $64 $111 $239 $72 $119 $157 $239
Fidelity VIP Overseas Portfolio $33 $71 $121 $260 $74 $125 $167 $260
Janus Aspen Aggressive Growth Portfolio $33 $69 $119 $255 $74 $124 $165 $255
Janus Aspen Balanced Portfolio $38 $85 $144 $306 $79 $138 $189 $306
Janus Aspen Growth Portfolio $32 $67 $115 $247 $73 $121 $161 $247
Janus Aspen Short-Term Bond Portfolio $31 $64 $111 $239 $72 $119 $157 $239
Janus Aspen Worldwide Growth Portfolio $33 $71 $121 $259 $74 $125 $167 $259
Scudder International Portfolio Class A
Shares $35 $76 $130 $277 $76 $130 $175 $277
TCI Growth $34 $74 $126 $269 $75 $128 $171 $269
</TABLE>

- --------------------------------------------------------------------------------
FEE TABLE - 4
<PAGE>

<TABLE>
<CAPTION>
EXAMPLE C EXAMPLE D
------------------------------------- -------------------------------------

IF YOU WITHDRAW YOUR ENTIRE CONTRACT
VALUE AT THE END OF THE PERIODS IF YOU DO NOT WITHDRAW YOUR CONTRACT
SHOWN, YOU WOULD PAY THE FOLLOWING VALUE, OR IF YOU ANNUITIZE DURING THE
EXPENSES, INCLUDING ANY APPLICABLE PERIODS SHOWN, YOU WOULD PAY THE
DEFERRED SALES CHARGE ASSESSED UNDER FOLLOWING EXPENSES (NO DEFERRED SALES
SCHEDULE C: CHARGE IS REFLECTED):*

1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund $79 $ 97 $114 $197 $17 $53 $ 91 $197
Aetna Income Shares $79 $ 97 $115 $199 $17 $53 $ 92 $199
Aetna Variable Encore Fund $79 $ 98 $116 $202 $17 $54 $ 93 $202
Aetna Investment Advisers Fund, Inc. $79 $ 97 $115 $199 $17 $53 $ 92 $199
Aetna Ascent Variable Portfolio $82 $107 $131 $233 $20 $63 $108 $233
Aetna Crossroads Variable Portfolio $82 $107 $131 $233 $20 $63 $108 $233
Aetna Legacy Variable Portfolio $82 $107 $131 $233 $20 $63 $108 $233
Alger American Growth Portfolio $84 $112 $141 $254 $22 $69 $118 $254
Alger American Small Cap Portfolio $23 $ 71 $122 $261 $23 $71 $122 $261
Fidelity VIP II Contrafund Portfolio $83 $109 $135 $241 $21 $65 $112 $241
Fidelity VIP Equity-Income Portfolio $82 $105 $129 $229 $20 $62 $106 $229
Fidelity VIP Growth Portfolio $83 $108 $134 $239 $21 $64 $111 $239
Fidelity VIP Overseas Portfolio $85 $114 $144 $260 $23 $71 $121 $260
Janus Aspen Aggressive Growth Portfolio $84 $113 $142 $255 $22 $69 $119 $255
Janus Aspen Balanced Portfolio $89 $127 $167 $306 $28 $85 $144 $306
Janus Aspen Growth Portfolio $83 $110 $138 $247 $22 $67 $115 $247
Janus Aspen Short-Term Bond Portfolio $83 $108 $134 $239 $21 $64 $111 $239
Janus Aspen Worldwide Growth Portfolio $85 $114 $144 $259 $23 $71 $121 $259
Scudder International Portfolio Class A
Shares $86 $119 $153 $277 $25 $76 $130 $277
TCI Growth $85 $117 $149 $269 $24 $74 $126 $269
</TABLE>

- --------------------------
* This Example would not apply if a nonlifetime variable annuity option is
selected and a lump sum settlement is requested within three years (for 1992
Contracts) or 5 years (for 1994 Contracts) after annuity payments start since
the lump sum payment will be treated as a withdrawal during the Accumulation
Period and will be subject to any deferred sales charge that would then apply.
(See Example A, B or C, as applicable.)

- --------------------------------------------------------------------------------
FEE TABLE - 5
<PAGE>
CONDENSED FINANCIAL INFORMATION
(FOR CONTRACTS ISSUED AFTER MARCH 1994 WITH TOTAL SEPARATE ACCOUNT
ANNUAL EXPENSES OF 1.25%)*
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR THE TWO YEARS ENDED
DECEMBER 31, 1995 IS DERIVED FROM THE FINANCIAL STATEMENTS OF THE SEPARATE
ACCOUNT, WHICH FINANCIAL STATEMENTS HAVE BEEN AUDITED BY KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS. THE FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1995 AND THE INDEPENDENT AUDITORS' REPORT THEREON, ARE INCLUDED IN
THE STATEMENT OF ADDITIONAL INFORMATION.

<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
<S> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $10.778 $11.020
Value at end of period $14.077 $10.778
Increase (decrease) in value of accumulation unit(1) 30.61% (2.20)%(2)
Number of accumulation units outstanding at end of period 2,370,234 602,838
AETNA INCOME SHARES
Value at beginning of period $10.360 $10.905
Value at end of period $12.098 $10.360
Increase (decrease) in value of accumulation unit(1) 16.78% (5.00)%(2)
Number of accumulation units outstanding at end of period 354,993 148,193
AETNA VARIABLE ENCORE FUND
Value at beginning of period $10.528 $10.241
Value at end of period $11.026 $10.528
Increase (decrease) in value of accumulation unit(1) 4.73% 2.80)
Number of accumulation units outstanding at end of period 544,383 334,746
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $10.868 $11.057
Value at end of period $13.673 $10.868
Increase (decrease) in value of accumulation unit(1) 25.81% (1.71)%(2)
Number of accumulation units outstanding at end of period 940,933 261,895
AETNA ASCENT VARIABLE PORTFOLIO
Value at beginning of period $10.000 (5)
Value at end of period $10.976
Increase (decrease) in value of accumulation unit(1) 9.76%
Number of accumulation units outstanding at end of period 49,748
AETNA CROSSROADS VARIABLE PORTFOLIO
Value at beginning of period $10.000 (5)
Value at end of period $10.862
Increase (decrease) in value of accumulation unit(1) 8.62%
Number of accumulation units outstanding at end of period 47,204
AETNA LEGACY VARIABLE PORTFOLIO
Value at beginning of period $10.000 (6)
Value at end of period $10.626
Increase (decrease) in value of accumulation unit(1) 6.26%
Number of accumulation units outstanding at end of period 20,531
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $10.000 (5)
Value at end of period $11.379
Increase (decrease) in value of accumulation unit(1) 13.79%
Number of accumulation units outstanding at end of period 284,978
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period $ 9.437 $ 9.959
Value at end of period $13.450 $ 9.437
Increase (decrease) in value of accumulation unit(1) 42.52% (5.24)%(2)
Number of accumulation units outstanding at end of period 1,081,375 208,784
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $10.000 (4)
Value at end of period $11.681
Increase (decrease) in value of accumulation unit(1) 16.81%
Number of accumulation units outstanding at end of period 174,259
FIDELITY EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.403 $10.000
Value at end of period $13.880 $10.403
Increase (decrease) in value of accumulation unit(1) 33.42% 4.03)
Number of accumulation units outstanding at end of period 766,360 100,574
</TABLE>

- --------------------------------------------------------------------------------
AUV HISTORY - 1
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
FIDELITY GROWTH PORTFOLIO
<S> <C> <C>
Value at beginning of period $10.472 $10.000
Value at end of period $14.000 $10.472
Increase (decrease) in value of accumulation unit(1) 33.69% 4.72)
Number of accumulation units outstanding at end of period 612,992 121,070
FIDELITY OVERSEAS PORTFOLIO
Value at beginning of period $ 9.474 $10.000
Value at end of period $10.262 $ 9.474
Increase (decrease) in value of accumulation unit(1) 8.32% (5.26)%(3)
Number of accumulation units outstanding at end of period 166,303 54,387
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $10.000 (4)
Value at end of period $12.861
Increase (decrease) in value of accumulation unit(1) 28.61%
Number of accumulation units outstanding at end of period 167,920
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.000 (5)
Value at end of period $11.259
Increase (decrease) in value of accumulation unit(1) 12.59%
Number of accumulation units outstanding at end of period 34,072
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.000 (5)
Value at end of period $11.626
Increase (decrease) in value of accumulation unit(1) 16.26%
Number of accumulation units outstanding at end of period 78,126
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period $10.000 (6)
Value at end of period $10.285
Increase (decrease) in value of accumulation unit(1) 2.85%
Number of accumulation units outstanding at end of period 1,405
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $10.000 (4)
Value at end of period $12.216
Increase (decrease) in value of accumulation unit(1) 22.16%
Number of accumulation units outstanding at end of period 65,384
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES
Value at beginning of period $12.687 $12.957
Value at end of period $13.923 $12.687
Increase (decrease) in value of accumulation unit(1) 9.74% (2.08)%(2)
Number of accumulation units outstanding at end of period 432,183 187,169
TCI GROWTH
Value at beginning of period $11.781 $12.069
Value at end of period $15.253 $11.781
Increase (decrease) in value of accumulation unit(1) 29.47% (2.39)%(2)
Number of accumulation units outstanding at end of period 474,744 139,235
</TABLE>

* This Table applies to all 1994 and 1992 Internal Rollover Contracts issued on
or after March 23, 1994 and all Contracts not connected with an internal
transfer (i.e., external rollovers or Contracts established with at least a
$1,000 annual Purchase Payment) issued on or after March 29, 1994.

(1) The above figures are calculated by subtracting the beginning Accumulation
Unit value from the ending Accumulation Unit value during a calendar year,
and dividing the result by the beginning Accumulation Unit value. These
figures do not reflect the deferred sales charge or the fixed dollar annual
maintenance fee, if any. Inclusion of these charges would reduce the
investment results shown.

(2) Reflects less than a full year of performance activity. Funds were first
received in this option during April 1994.

(3) Reflects less than a full year of performance activity. Funds were first
received in this option during May 1994.

(4) Reflects less than a full year of performance activity. Funds were first
available in this option during May 1995.

(5) Reflects less than a full year of performance activity. Funds were first
available in this option during June 1995.

(6) Reflects less than a full year of performance activity. Funds were first
available in this option during July 1995.

- --------------------------------------------------------------------------------
AUV HISTORY - 2
<PAGE>
CONDENSED FINANCIAL INFORMATION
(FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES OF 1.15%)
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
<S> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $10.791 $10.875
Value at end of period $14.108 $10.791
Increase (decrease) in value of accumulation unit(1) 30.74% (0.77)%(3)
Number of accumulation units outstanding at end of period 273,578 110,420
AETNA INCOME SHARES
Value at beginning of period $10.373 $10.367
Value at end of period $12.125 $10.373
Increase (decrease) in value of accumulation unit(1) 16.89% 0.06 %(3)
Number of accumulation units outstanding at end of period 50,261 16,110
AETNA VARIABLE ENCORE FUND
Value at beginning of period $10.541 $10.484
Value at end of period $11.051 $10.541
Increase (decrease) in value of accumulation unit(1) 4.84% 0.54 %(4)
Number of accumulation units outstanding at end of period 145,629 9,736
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $10.880 $10.951
Value at end of period $13.703 $10.880
Increase (decrease) in value of accumulation unit(1) 25.95% (0.65)%(4)
Number of accumulation units outstanding at end of period 138,271 49,333
AETNA ASCENT VARIABLE PORTFOLIO
Value at beginning of period $10.000 (6)
Value at end of period $10.982
Increase (decrease) in value of accumulation unit(1) 9.82%
Number of accumulation units outstanding at end of period 15,055
AETNA CROSSROADS VARIABLE PORTFOLIO
Value at beginning of period $10.000 (6)
Value at end of period $10.868
Increase (decrease) in value of accumulation unit(1) 8.68%
Number of accumulation units outstanding at end of period 2,394
AETNA LEGACY VARIABLE PORTFOLIO
Value at beginning of period $10.000 (7)
Value at end of period $10.631
Increase (decrease) in value of accumulation unit(1) 6.31%
Number of accumulation units outstanding at end of period 17,106
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $10.000 (6)
Value at end of period $11.385
Increase (decrease) in value of accumulation unit(1) 13.85%
Number of accumulation units outstanding at end of period 12,859
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period $ 9.450 $ 9.202
Value at end of period $13.481 $ 9.450
Increase (decrease) in value of accumulation unit(1) 42.66% 2.70 %(2)
Number of accumulation units outstanding at end of period 54,684 22,052
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $10.000 (5)
Value at end of period $11.689
Increase (decrease) in value of accumulation unit(1) 16.89%
Number of accumulation units outstanding at end of period 5,453
FIDELITY EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.409 $10.000
Value at end of period $13.902 $10.409
Increase (decrease) in value of accumulation unit(1) 33.55% 4.09 %(2)
Number of accumulation units outstanding at end of period 118,679 43,852
</TABLE>

- --------------------------------------------------------------------------------
AUV HISTORY - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
FIDELITY GROWTH PORTFOLIO
<S> <C> <C>
Value at beginning of period $10.479 $10.000
Value at end of period $14.023 $10.479
Increase (decrease) in value of accumulation unit(1) 33.82% 4.79 %(4)
Number of accumulation units outstanding at end of period 45,765 32,592
FIDELITY OVERSEAS PORTFOLIO
Value at beginning of period $ 9.480 $10.000
Value at end of period $10.278 $ 9.480
Increase (decrease) in value of accumulation unit(1) 8.43% (5.20)%(4)
Number of accumulation units outstanding at end of period 4,284 5,098
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $10.000 (5)
Value at end of period $12.869
Increase (decrease) in value of accumulation unit(1) 28.69%
Number of accumulation units outstanding at end of period 22,050
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.000 (6)
Value at end of period $11.265
Increase (decrease) in value of accumulation unit(1) 12.65%
Number of accumulation units outstanding at end of period 9,383
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.000 (6)
Value at end of period $11.633
Increase (decrease) in value of accumulation unit(1) 16.33%
Number of accumulation units outstanding at end of period 3,238
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period $10.000 (7)
Value at end of period $10.290
Increase (decrease) in value of accumulation unit(1) 2.90%
Number of accumulation units outstanding at end of period 0
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $10.000 (5)
Value at end of period $12.223
Increase (decrease) in value of accumulation unit(1) 22.23%
Number of accumulation units outstanding at end of period 2,617
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES
Value at beginning of period $12.701 $13.433
Value at end of period $13.952 $12.701
Increase (decrease) in value of accumulation unit(1) 9.85% (5.45)%(2)
Number of accumulation units outstanding at end of period 41,921 23,840
TCI GROWTH
Value at beginning of period $11.794 $11.910
Value at end of period $15.285 $11.794
Increase (decrease) in value of accumulation unit(1) 29.60% (0.97)%(3)
Number of accumulation units outstanding at end of period 13,307 4,486
</TABLE>

(2) Reflects less than a full year of performance activity. Funds were first
received in this option during September 1994.

(3) Reflects less than a full year of performance activity. Funds were first
received in this option during October 1994.

(4) Reflects less than a full year of performance activity. Funds were first
received in this option during November 1994.

(5) Reflects less than a full year of performance activity. Funds were first
available in this option during May 1995.

(6) Reflects less than a full year of performance activity. Funds were first
available in this option during June 1995.

(7) Reflects less than a full year of performance activity. Funds were first
available in this option during July 1995.

- --------------------------------------------------------------------------------
AUV HISTORY - 4
<PAGE>
CONDENSED FINANCIAL INFORMATION
(1992 CONTRACTS ISSUED PRIOR TO MARCH 1994)*
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE YEARS IN THE
TEN-YEAR PERIOD ENDED DECEMBER 31, 1995 (AS APPLICABLE), IS DERIVED FROM THE
FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT, WHICH FINANCIAL STATEMENTS HAVE
BEEN AUDITED BY KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS. THE FINANCIAL
STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE INDEPENDENT
AUDITORS' REPORT THEREON, ARE INCLUDED IN THE STATEMENT OF ADDITIONAL
INFORMATION.

<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------

<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $105.558 $107.925 $102.383 $ 97.165 $77.845
Value at end of period $137.869 $105.558 $107.925 $102.383 $97.165
Increase (decrease) in value of
accumulation unit(1) 30.61% (2.19)% 5.41% 5.37% 24.82%
Number of accumulation units outstanding
at end of period 6,364,000 13,966,072 21,148,863 24,201,565 20,948,226

AETNA INCOME SHARES
Value at beginning of period $40.173 $42.283 $39.038 $36.789 $31.192
Value at end of period $46.913 $40.173 $42.283 $39.038 $36.789
Increase (decrease) in value of
accumulation unit(1) 16.78% (4.99)% 8.31% 6.11% 17.94%
Number of accumulation units outstanding
at end of period 2,377,622 5,108,720 8,210,666 8,507,292 7,844,412

AETNA VARIABLE ENCORE FUND
Value at beginning of period $36.271 $35.282 $34.619 $33.812 $32.138
Value at end of period $37.988 $36.271 $35.282 $34.619 $33.812
Increase (decrease) in value of
accumulation unit(1) 4.73% 2.80% 1.92% 2.39% 5.21%
Number of accumulation units outstanding
at end of period 1,836,260 3,679,802 5,086,515 7,534,662 8,430,082

AETNA INVESTMENT
ADVISERS FUND, INC.
Value at beginning of period $14.270 $14.519 $13.379 $12.736 $10.896
Value at end of period $17.954 $14.270 $14.519 $13.379 $12.736
Increase (decrease) in value of
accumulation unit(1) 25.82% (1.71)% 8.52% 5.05% 16.89%
Number of accumulation units outstanding
at end of period 9,193,181 21,990,186 30,784,750 34,802,433 22,898,099

TCI GROWTH
Value at beginning of period $10.213 $10.463 $10.000(3)
Value at end of period $13.224 $10.213 $10.463
Increase (decrease) in value of
accumulation unit(1) 29.47% (2.39)% 4.63%
Number of accumulation units outstanding
at end of period 4,184,701 12,096,731 12,272,152

<CAPTION>
1990 1989 1988 1987 1986
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $76,311 $59.871 $52.885 $50.760 $43.205
Value at end of period $77.845 $76.311 $59.871 $52.885 $50.760
Increase (decrease) in value of
accumulation unit(1) 2.01% 27.46% 13.21% 4.19% 17.49%
Number of accumulation units outstanding
at end of period 18,362,906 17,142,820 16,455,396 16,497,406 16,578,251
AETNA INCOME SHARES
Value at beginning of period $28.943 $25.574 $24.061 $23.308 $20.703
Value at end of period $31.192 $28.943 $25.574 $24.061 $23.308
Increase (decrease) in value of
accumulation unit(1) 7.77% 13.17% 6.29% 3.23% 12.58%
Number of accumulation units outstanding
at end of period 6,984,793 6,202,834 5,955,293 5,372,271 6,188,470
AETNA VARIABLE ENCORE FUND
Value at beginning of period $30.012 $27.783 $26.171 $24.812 $23.504
Value at end of period $32.138 $30.012 $27.783 $26.171 $24.812
Increase (decrease) in value of
accumulation unit(1) 7.08% 8.02% 6.16% 5.48% 5.57%
Number of accumulation units outstanding
at end of period 10,220,110 8,286,033 8,154,644 7,326,151 6,692,947
AETNA INVESTMENT
ADVISERS FUND, INC.
Value at beginning of period $10.437 $10.000(2)
Value at end of period $10.896 $10.437
Increase (decrease) in value of
accumulation unit(1) 4.40% 4.37%
Number of accumulation units outstanding
at end of period 17,078,985 9,535,986
TCI GROWTH
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units outstanding
at end of period
</TABLE>

* This Table applies to 1992 Internal Rollover Contracts issued prior to March
23, 1994 and 1992 Contracts not connected with an internal transfer (i.e.,
external rollovers or Contracts established with at least a $1,000 annual
Purchase Payment) issued prior to March 29, 1994.

(2) The initial Accumulation Unit value was established at $10.000 on June 23,
1989, the date on which the Fund commenced operations.

(3) The initial Accumulation Unit value was established at $10.000 on February
1, 1993, the date on which the Portfolio became available under the
Contract.

- --------------------------------------------------------------------------------
AUV HISTORY - 5
<PAGE>
THE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Aetna Life Insurance and Annuity Company (the "Company") is the issuer of
the Contract, and as such, it is responsible for providing the insurance and
annuity benefits under the Contract. The Company is a stock life insurance
company organized under the insurance laws of the State of Connecticut in 1976.
Through a merger, it succeeded to the business of Aetna Variable Annuity Life
Insurance Company (formerly Participating Annuity Life Insurance Company, an
Arkansas life insurance company organized in 1954). The Company is engaged in
the business of issuing life insurance policies and variable annuity contracts
in all states of the United States. The Company's principal executive offices
are located at 151 Farmington Avenue, Hartford, Connecticut 06156.

The Company is a wholly owned subsidiary of Aetna Retirement Holdings, Inc.,
which is in turn a wholly owned subsidiary of Aetna Retirement Services, Inc.
and an indirect wholly owned subsidiary of Aetna Life and Casualty Company.

VARIABLE ANNUITY ACCOUNT C
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

The Company established Variable Annuity Account C (the "Separate Account")
in 1976 as a segregated asset account for the purpose of funding its variable
annuity contracts. The Separate Account is registered as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"), and meets the
definition of "separate account" under the federal securities laws. The Separate
Account is divided into "subaccounts" which do not invest directly in stocks,
bonds or other investments. Instead, each Subaccount buys and sells shares of a
corresponding Fund.

Although the Company holds title to the assets of the Separate Account, such
assets are not chargeable with liabilities of any other business conducted by
the Company. Income, gains or losses of the Separate Account are credited to or
charged against the assets of the Separate Account without regard to other
income, gains or losses of the Company. All obligations arising under the
Contracts are general corporate obligations of the Company.

INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

THE FUNDS

Purchase Payments may be allocated to one or more of the Subaccounts as
designated on the application. In turn, the Subaccounts invest in the
corresponding Funds at net asset value.

The availability of Funds may be subject to regulatory authorization. In
addition, the Company may add or withdraw Funds, as permitted by applicable law.
Not all Funds may be available in all jurisdictions or under all Contracts.

The investment results of the Funds described below are likely to differ
significantly and there is no assurance that any of the Funds will achieve their
respective investment objectives. Except where otherwise noted, all of the Funds
are diversified, as defined in the 1940 Act.

- -AETNA VARIABLE FUND seeks to maximize total return through investments in a
diversified portfolio of common stocks and securities convertible into common
stock.(1)

- -AETNA INCOME SHARES seeks to maximize total return, consistent with reasonable
risk, through investments in a diversified portfolio consisting primarily of
debt securities.(1)

- -AETNA VARIABLE ENCORE FUND seeks to provide high current return, consistent
with preservation of capital and liquidity, through investment in high-quality
money market instruments. An investment in the Fund is neither insured nor
guaranteed by the U.S. Government.(1)

- -AETNA INVESTMENT ADVISERS FUND, INC. is a managed fund which seeks to maximize
investment return consistent with reasonable safety of principal by

- --------------------------------------------------------------------------------
1
<PAGE>
investing in one or more of the following asset classes: stocks, bonds and cash
equivalents based on the Company's judgment of which of those sectors or mix
thereof offers the best investment prospects.(1)

- -AETNA GENERATION PORTFOLIOS, INC.--AETNA ASCENT VARIABLE PORTFOLIO seeks to
provide capital appreciation by allocating its investments among equities and
fixed income securities. The Portfolio is managed for investors who generally
have an investment horizon exceeding 15 years, and who have a high level of
risk tolerance.(1)

- -AETNA GENERATION PORTFOLIOS, INC.--AETNA CROSSROADS VARIABLE PORTFOLIO seeks to
provide total return (i.e., income and capital appreciation, both realized and
unrealized) by allocating its investments among equities and fixed income
securities. The Portfolio is managed for investors who generally have an
investment horizon exceeding 10 years and who have a moderate level of risk
tolerance.(1)

- -AETNA GENERATION PORTFOLIOS, INC.--AETNA LEGACY VARIABLE PORTFOLIO seeks to
provide total return consistent with preservation of capital by allocating its
investments among equities and fixed income securities. The Portfolio is
managed for investors who generally have an investment horizon exceeding five
years and who have a low level of risk tolerance.(1)

- -ALGER AMERICAN FUND--ALGER AMERICAN GROWTH PORTFOLIO seeks long-term capital
appreciation by investing in a diversified, actively managed portfolio of
equity securities. The Portfolio primarily invests in equity securities of
companies which have a market capitalization of $1 billion or greater.(2)

- -ALGER AMERICAN FUND--ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO seeks
long-term capital appreciation. Except during temporary defensive periods, the
Portfolio invests at least 65% of its total assets in equity securities of
companies that, at the time of purchase of the securities, have total market
capitalization within the range of companies included in the Russell 2000
Growth Index, updated quarterly. The Russell 2000 Growth Index is designed to
track the performance of small capitalization companies. At March 31, 1996, the
range of market capitalization of these companies was $20 million to $3.0
billion.(2)

- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II--CONTRAFUND PORTFOLIO
seeks maximum total return over the long term by investing mainly in equity
securities of companies that are undervalued or out-of-favor.(3)

- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND--EQUITY-INCOME PORTFOLIO
seeks reasonable income by investing primarily in income-producing equity
securities. In selecting investments, the Fund also considers the potential for
capital appreciation.(3)

- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND--GROWTH PORTFOLIO seeks
capital appreciation by investing mainly in common stocks, although its
investments are not restricted to any one type of security.(3)

- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND--OVERSEAS PORTFOLIO
seeks long-term growth by investing mainly in foreign securities (at least 65%
of the Fund's total assets in securities of issuers from at least three
countries outside of North America).(3)

- -JANUS ASPEN SERIES--AGGRESSIVE GROWTH PORTFOLIO is a NONDIVERSIFIED portfolio
that seeks long-term growth of capital in a manner consistent with the
preservation of capital. The Portfolio pursues its investment objective by
normally investing at least 50% of its equity assets in securities issued by
medium-sized companies. Medium-sized companies are those whose market
capitalizations fall within the range of companies in the S&P MidCap 400 Index,
which as of December 29, 1995 included companies with capitalizations between
approximately $118 million and $7.5 billion, but which is expected to change on
a regular basis.(4)

- -JANUS ASPEN SERIES--BALANCED PORTFOLIO seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. The
Portfolio pursues its investment objective by investing 40%-60% of its assets
in equity securities selected primarily for their growth potential and 40%-60%
of its assets in fixed-income securities selected primarily for their income
potential.(4)

- -JANUS ASPEN SERIES--GROWTH PORTFOLIO seeks long-term growth of capital in a
manner consistent with the preservation of capital. The Portfolio pursues its
investment objective by investing in common stocks of companies of any size.(4)

- --------------------------------------------------------------------------------
2
<PAGE>
- -JANUS ASPEN SERIES--SHORT-TERM BOND PORTFOLIO seeks as high a level of current
income as is consistent with preservation of capital by investing primarily in
short-and intermediate-term fixed income securities.(4)

- -JANUS ASPEN SERIES--WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of
capital in a manner consistent with preservation of capital. The Portfolio
pursues its investment objective primarily through investments in common stocks
of foreign and domestic issuers.(4)

- -SCUDDER VARIABLE LIFE INVESTMENT FUND-- INTERNATIONAL PORTFOLIO CLASS A SHARES
seeks long-term growth of capital primarily through diversified holdings of
marketable foreign equity investments.(5)

- -TCI PORTFOLIOS, INC.--TCI GROWTH (A TWENTIETH CENTURY FUND) seeks capital
growth. The Fund seeks to achieve its objective by investing in common stocks
(including securities convertible into common stocks) and other securities that
meet certain fundamental and technical standards of selection and, in the
opinion of the Fund's investment manager, have better than average potential
for appreciation.(6)

Investment Advisers for each of the Funds:
(1) Aetna Life Insurance and Annuity Company
(2) Fred Alger Management, Inc.
(3) Fidelity Management & Research Company
(4) Janus Capital Corporation
(5) Scudder, Stevens & Clark, Inc.
(6) Investors Research Corporation

RISKS ASSOCIATED WITH INVESTMENT IN THE FUNDS. Some of the Funds may use
instruments known as derivatives as part of their investment strategies. The use
of certain derivatives may involve high risk of volatility to a Fund, and the
use of leverage in connection with such derivatives can also increase risk of
losses. Some of the Funds may also invest in foreign or international securities
which involve greater risks than U.S. investments.

More comprehensive information, including a discussion of potential risks,
is found in the respective Fund prospectuses which accompany this Prospectus.
You should read the Fund prospectuses and consider carefully, and on a
continuing basis, which Fund or combination of Funds is best suited to your
long-term investment objectives.

CONFLICTS OF INTEREST (MIXED AND SHARED FUNDING). Shares of the Funds are
sold to each of the Subaccounts for funding the variable annuity contracts
issued by the Company. Shares of the Funds may also be sold to other insurance
companies for the same purpose. This is referred to as "shared funding." Shares
of the Funds may also be used for funding variable life insurance contracts
issued by the Company or by third parties. This is referred to as "mixed
funding."

Because the Funds available under the Contract are sold to fund variable
annuity contracts and variable life insurance policies issued by us or by other
companies, certain conflicts of interest could arise. If a conflict of interest
were to occur, one of the separate accounts might withdraw its investment in a
Fund, which might force that Fund to sell portfolio securities at
disadvantageous prices, causing its per share value to decrease. Each Fund's
Board of Directors or Trustees has agreed to monitor events in order to identify
any material irreconcilable conflicts which might arise and to determine what
action, if any, should be taken to address such conflict.

CREDITED INTEREST OPTIONS

Purchase Payments may be allocated to one or more of the Credited Interest
Options available under the Contract as described below.

- - The Guaranteed Interest Account is a part of the Company's general account and
guarantees a minimum interest rate, as specified in the Contract. The Company
may credit higher interest rates in its discretion. (See Appendix I.)

- - The Fixed Account is also a part of the Company's general account. The Fixed
Account guarantees a minimum interest rate, as specified in the Contract. The
Company may credit higher interest rates from time to time. Transfers from the
Fixed Account are limited. (See Appendix II.)

- - The Guaranteed Accumulation Account (GAA) is a Credited Interest Option
through which we guarantee stipulated rates of interest for stated periods of
time. Amounts must remain in GAA for the full guaranteed term to received the
quoted interest rates, or a market value adjustment (which may be positive or
negative) will be applied. (See Appendix III.)

- --------------------------------------------------------------------------------
3
<PAGE>
PURCHASE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

CONTRACT AVAILABILITY

The Contracts described in this Prospectus are intended to be used as
Individual Retirement Annuities. The Contracts will accept annual contributions
to an IRA including contributions pursuant to the provisions of a Simplified
Employee Pension Plan ("SEP"). The Contracts can also accept transfers and
rollovers from other Individual Retirement Annuities/Individual Retirement
Accounts, as well as tax deferred annuities and qualified pension/profit sharing
plans under Section 401(a) of the Code.

CONTRACT PURCHASE

These Contracts may be purchased by completing the proper application form
and submitting it to the Company. The Company must accept or reject the
application within two business days of receipt. If the application is
incomplete, the Company may hold any forms and accompanying Purchase Payments
for five days. Purchase Payments may be held for longer periods only with the
consent of the Contract Holder, pending acceptance of the application.

PURCHASE PAYMENTS

The initial Purchase Payment is credited at the Accumulation Unit Value for
the Valuation Period in which the Purchase Payment and an application, in good
order, are received at the Company's Home Office. Subsequent Purchase Payments
(if any) are credited to the Contract at the Accumulation Unit value(s)
determined on the next Valuation Date following our receipt of such Purchase
Payment.

The minimum initial rollover amount required to establish a Contract is
$1,500. The Contract may accept additional rollovers and/or Purchase Payments as
long as they meet the minimum amount established from time to time by us.
Installment Purchase Payments must be at least $85 per month or $1,000 annually.
(Monthly installments must be made via Automatic Bank Check Plan.)

The Code imposes a maximum limit on annual Purchase Payments which may be
excluded from your gross income. (See Appendix IV.)

ALLOCATION OF PURCHASE PAYMENTS. Purchase Payments will initially be
allocated to the Subaccounts or Credited Interest Options as specified by the
Contract Holder on the application. Changes in such allocation may be made in
writing or by telephone transfer. Allocations must be in whole percentages, and
there may be limitations on the number of investment options that can be
selected during the Accumulation Period. (See "Transfers.")

RIGHT TO CANCEL

CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

DAILY DEDUCTIONS FROM THE SEPARATE ACCOUNT

MORTALITY AND EXPENSE RISK CHARGE. The Company makes a daily deduction from
each of the Subaccounts for the mortality and expense risk charge. The Charge is
equal, on an annual basis, to 1.25% of the daily net assets of the Subaccounts
and compensates the Company for the assumption of the mortality and expense
risks under the Contract. Under the 1994 Contracts, the Company will reduce the
charge to 1.15% provided one of the following conditions are met: (1) the
Contract has remained in the Accumulation Period for 10 years following the
initial Purchase Payment; or (2) if $250,000 or more is applied as the initial
Purchase Payment; or (3) if the Contract's Value at the Contract Year
anniversary is at least $250,000. The mortality risks are those assumed for our
promise to make lifetime payments according to annuity rates specified in the
Contract. The expense risk is the risk that the actual expenses for costs
incurred under the Contract will exceed the maximum costs that can be charged
under the Contract.

- --------------------------------------------------------------------------------
4
<PAGE>
If the amount deducted for mortality and expense risks is not sufficient to
cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess may be used to
recover distribution expenses relating to the Contracts and as a source of
profit to the Company. The Company expects to make a profit from the mortality
and expense risk charge.

ADMINISTRATIVE EXPENSE CHARGE. The Company reserves the right to make a
deduction from each of the Subaccounts for an administrative expense charge. The
administrative expense charge compensates the Company for administrative
expenses that exceed revenues from the maintenance fee described below. The
charge is set at a level which does not exceed the average expected cost of the
administrative services to be provided while the Contract is in force. The
Company does not expect to make a profit from this charge.
Under the Contract, the amount of the administrative expense charge may be
an amount equal, on an annual basis, to a maximum of 0.25% of the daily net
assets of the Subaccounts. There is currently no administrative expense charge
during the Accumulation Period or Annuity Period. Once an Annuity option is
elected, the charge will be established and will be effective during the entire
Annuity Period.

MAINTENANCE FEE

During the Accumulation Period, the Company will deduct an annual
maintenance fee from the Contract Value. The maintenance fee is to reimburse the
Company for some of its administrative expenses relating to the establishment
and maintenance of the Contracts.

The maintenance fee under the Contract is $25. The maintenance fee is
determined annually based on the Contract Value on the last day of the Contract
Year. For 1994 Contracts, if the Contract Value is $10,000 or greater, and for
1992 Contracts, if the initial Purchase Payment is $10,000 or greater, the
annual maintenance fee is zero. The maintenance fee will be deducted on a pro
rata basis from each Subaccount in which you have an interest.

DEFERRED SALES CHARGE

Withdrawals of all or a portion of the Contract Value may be subject to a
deferred sales charge. The deferred sales charge is a percentage of the amount
withdrawn from the Subaccounts and the Credited Interest Options in which you
have an interest. As set forth in the tables below, the length of the deferred
sales charge schedule will vary depending on the type of Contract.

SCHEDULE A applies to 1994 Internal Rollover Contracts established with
amounts that were transferred or rolled over from an existing Contract issued by
the Company where you have participated under a pension or profit sharing
retirement plan or a tax-deferred annuity plan, and to 1992 Internal Rollover
Contracts established with amounts transferred from such contracts only where
you have not been subject to a deferred sales charge under the prior contract.
It also applies to all Contracts established with amounts that were transferred
from an existing contract issued by Aetna Life Insurance Company (one of our
affiliates) and all sales of the Contract in New York. The deferred sales charge
is based on the number of completed Contract Years since the date of initial
payment to the new Contract.

<TABLE>
<CAPTION>
SCHEDULE A
COMPLETED CONTRACT DEFERRED SALES
YEARS CHARGE DEDUCTION
------------------- ----------------
<C> <C>
Less than 1 1%
1 or more 0%
</TABLE>

SCHEDULE B applies to 1992 Internal Rollover Contracts established with
amounts that were transferred from an existing Contract issued by the Company
where the Contract Holder has been, or still is, subject to a deferred sales
charge. The beginning deferred sales charge is based on the number of completed
Contract Years since the initial payment to the predecessor Contract.

<TABLE>
<CAPTION>
SCHEDULE B
COMPLETED CONTRACT DEFERRED SALES
YEARS CHARGE DEDUCTION
---------------------------------------- ----------------
<C> <C>
Less than 5 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more but less than 8 2%
8 or more but less than 9 1%
9 or more 0%
</TABLE>

SCHEDULE C applies to 1994 Internal Rollover Contracts established with
amounts that were transferred from an IRA or SEP Contract issued by us where you
have been, or still are, subject to a deferred sales charge. The Contract Holder
enters the deferred sales charge

- --------------------------------------------------------------------------------
5
<PAGE>

schedule at the percentage point corresponding to the deferred sales charge
applicable under the predecessor contract at the time of the exchange, and
continues from that point in the Schedule. Schedule C also applies to all new
purchases that are not connected with an internal transfer (i.e., external
rollovers or Contracts established with at least a $1,000 annual Purchase
Payment).

<TABLE>
<CAPTION>
SCHEDULE C
COMPLETED CONTRACT DEFERRED SALES
YEARS CHARGE DEDUCTION
---------------------------------------- ----------------
<C> <C>
Less than 2 6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more 0%
</TABLE>

A deferred sales charge will not be deducted from any portion of the
Contract Value if the withdrawal is:

- - applied to provide Annuity benefits;

- - paid due to your death;

- - withdrawn due to the election of an Additional Withdrawal Option (see
"Additional Withdrawal Options");

- - paid where the Contract Value is $2,500 or less and no amount has been
withdrawn from that Contract, within the prior 12 months;

- - paid in an amount of 10% or less of the current Contract Value. This applies
only to the first partial withdrawal in each calendar year and does not apply
to full withdrawals, except for Contracts issued in the states of Washington,
Florida and New Jersey. The 10% amount will be calculated using the Contract
Value on the date the request is received in good order at our Home Office.
When an Additional Withdrawal Option is elected, this provision includes any
amounts paid under that election. This provision is available only if you are
at least age 59 1/2.

The deduction for the deferred sales charge will not exceed 8.5% of the
total Purchase Payments actually made to the Contract. The Company does not
anticipate that the deferred sales charge will cover all sales and
administrative expenses which it incurs in connection with the Contract. The
difference will be covered by the general assets of the Company, which are
attributable, in part, to mortality and expense risk charges under the Contract
described above.

FUND EXPENSES

Each Fund incurs certain expenses which are paid out of its net assets.
These expenses include, among other things, the investment advisory or
"management" fee. The expenses of the Funds are set forth in the Fee Table in
this Prospectus and described more fully in the accompanying Fund prospectuses.

PREMIUM AND OTHER TAXES

Several states and municipalities impose a premium tax on annuities. These
taxes currently range from 0% to 4%. The Company reserves the right to deduct
premium tax against Purchase Payments or Contract Values at any time, but no
earlier than when we have a tax liability under state law. The Company's current
practice is to deduct for premium taxes at the time of complete withdrawal or
annuitization. In addition to the premium tax, the Company reserves the right to
assess a charge for any state or federal taxes due against the Contract or the
Separate Account assets. (See "Tax Status.")

Any municipal premium tax assessed at a rate in excess of 1% will be
deducted from the Purchase Payment(s) or from the amount applied to an Annuity
Option based upon our determination of when such tax is due. We will absorb any
municipal premium tax that is assessed at 1% or less. We reserve the right,
however, to reflect this added expense in our annuity purchase rates for
residents of such municipalities.

CONTRACT VALUATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

CONTRACT VALUE

Until the Annuity Date, the Contract Value is the total dollar value of
amounts held in your Account as of any Valuation Date. The Contract Value at any
given time is based on the value of the units held in each Subaccount, plus the
value of amounts held in any of the Credited Interest Options.

- --------------------------------------------------------------------------------
6
<PAGE>
ACCUMULATION UNITS

The value of your interest in a Subaccount is expressed as the number of
"Accumulation Units" that you hold multiplied by an "Accumulation Unit Value"
(or "AUV") for each unit. The AUV on any Valuation Date is determined by
multiplying the value on the immediately preceding Valuation Date by the net
investment factor of that Subaccount for the period between the immediately
preceding Valuation Date and the current Valuation Date. (See "Net Investment
Factor" below.) The Accumulation Unit Value will be affected by the investment
performance, expenses and charges of the applicable Fund and is reduced each day
by a percentage that accounts for the daily assessment of mortality and expense
risk charges and the administrative charge (if any).

Initial Purchase Payments will be credited to your Contract as described
under "Purchase Payments." Each subsequent Purchase Payment (or amount
transferred) will be credited to your Contract at the AUV computed on the next
Valuation Date following our receipt of your payment or transfer request. The
value of an Accumulation Unit may increase or decrease.

NET INVESTMENT FACTOR

The net investment factor is used to measure the investment performance of a
Subaccount from one Valuation Date to the next. The net investment factor for a
Subaccount for any valuation period is equal to the sum of 1.0000 plus the net
investment rate. The net investment rate equals:

(a) the net assets of the Fund held by the Subaccount on the current Valuation
Date, minus

(b) the net assets of the Fund held by the Subaccount on the preceding
Valuation Date, plus or minus

(d) divided by the total value of the Subaccount's Accumulation and Annuity
Units on the preceding Valuation Date;

(e) minus a daily charge at the annual effective rate of 1.25% (or 1.15%, as
applicable) for mortality and expense risks and up to 0.25% as an administrative
expense charge (currently 0%).

The net investment rate may be either positive or negative.

TRANSFERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

At any time prior to the Annuity Date, you can transfer amounts held under
your Contract from one Subaccount to another. Transfers between the Credited
Interest Options and the Subaccounts are subject to certain restrictions. (See
Appendices I, II and III.) A request for transfer can be made either in writing
or by telephone. The telephone transfer privilege is available automatically; no
special election is necessary. All transfers must be in accordance with the
terms of the Contract.

The Company currently allows unlimited transfers of accumulated amounts to
available investment options without charge. However, the Company reserves the
right to impose an additional fee if more than 12 such changes are made in any
calendar year. The total number of investment options that you may select during
the Accumulation Period may be limited, as set forth on your application.
Additionally, 1994 Contracts provide that no more than ten investment choices
may be selected at any given time. Any transfer will be based on the
Accumulation Unit Value next determined after the Company receives a valid
transfer request at its Home Office. Transfers are currently not available
during the Annuity Period; however, they may be available under some Annuity
Options beginning later in 1996. (See "Annuity Period--Annuity Options.")

DOLLAR COST AVERAGING PROGRAM

For 1994 Contracts, you may establish automated transfers of Funds from one
Subaccount to another Subaccount on a monthly basis through the Company's Dollar
Cost Averaging Program. Dollar Cost Averaging is a system for investing a fixed
amount of money at regular intervals over a period of time. Dollar Cost
Averaging does not ensure a profit nor guarantee against loss in a declining
market. You should consider your financial ability to continue purchases through
periods of low price levels. Please refer to the "Inquiries" section of the
prospectus summary which describes how you can obtain further information.

- --------------------------------------------------------------------------------
7
<PAGE>
WITHDRAWALS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

All or a portion of the Contract Value may be withdrawn at any time during
the Accumulation Period. To request a withdrawal, you must properly complete a
disbursement form and send it to our Home Office. Payments for withdrawal
requests will be made in accordance with SEC requirements, but normally not
later than seven calendar days following our receipt of a disbursement form.

Withdrawals may be requested in one of the following forms:

- -FULL WITHDRAWAL OF THE CONTRACT: The amount paid for a full withdrawal will be
the Contract Value allocated to the Subaccounts, the Guaranteed Interest
Account, the Guaranteed Accumulation Account (plus or minus a market value
adjustment) (see Appendix III), and the Fixed Account, minus any applicable
deferred sales charge.

- -PARTIAL WITHDRAWALS (Percentage): The amount paid will be the percentage of the
Contract Value requested minus any applicable deferred sales charge.

- -PARTIAL WITHDRAWAL (Specified Dollar Amount): The amount paid will be the
dollar amount requested. However, the amount withdrawn from the Contract will
equal the amount requested plus any applicable deferred sales charge.

For any partial withdrawal, amounts will be withdrawn proportionately from
each Subaccount or Credited Interest Option in which the Account is invested,
unless you request otherwise in writing. All amounts paid will be based on the
Contract Value as of the next Valuation Date after we receive a request for
withdrawal at our Home Office, or on such later date as the disbursement form
may specify.

REINVESTMENT PRIVILEGE

You may elect to reinvest all or a portion of the proceeds received from a
full withdrawal of your Contract within 30 days after such withdrawal has been
made. Accumulation Units will be credited to the Contract for the amount
reinvested, as well as any applicable maintenance fee and any deferred sales
charge imposed at the time of withdrawal. Any maintenance fee which falls due
after the withdrawal and before the reinvestment will be deducted from the
amounts reinvested. Reinvested amounts will be reallocated to the applicable
investment options in the same proportion as they were allocated at the time of
withdrawal. Accumulation Units will be credited to your Contract based on the
Accumulation Unit Value next computed following our receipt of your request
along with the amount to be reinvested. The reinvestment privilege may be used
only once. For a discussion of amounts withdrawn from GIA and GAA and then
reinvested see Appendices I and III, respectively. If you are contemplating
reinvestment, you should seek competent advice regarding the tax consequences
associated with such a transaction.

ADDITIONAL WITHDRAWAL OPTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

The Company offers certain withdrawal options under the Contract that are
not considered Annuity Options ("Additional Withdrawal Options"). To exercise
these options, your Contract Value must meet the minimum dollar amounts and age
criteria applicable to that option.

The Additional Withdrawal Options currently available under the Contract
include the following:

- -SWO--SYSTEMATIC WITHDRAWAL OPTION. SWO is a series of partial withdrawals from
your Contract based on a payment method you select. It is designed for those
who want a periodic income while retaining investment flexibility for amounts
accumulated under a Contract. The first distribution may not be made before you
attain age 59 1/2.

- -ECO--ESTATE CONSERVATION OPTION. ECO offers the same investment flexibility as
SWO but is designed for those who want to receive only the minimum distribution
that the Code requires each year. Under ECO, the Company calculates the minimum
distribution amount required by law at age 70 1/2, and pays you that amount
once a year. (See "Tax Status.")

Other Additional Withdrawal Options may be added from time to time.
Additional information relating to any of the Additional Withdrawal Options may
be obtained from your local representative or from the Company at its Home
Office.

If you select one of the Additional Withdrawal Options, you will retain all
of the rights and flexibility

- --------------------------------------------------------------------------------
8
<PAGE>
permitted under the Contract during the Accumulation Period. Your Contract Value
will continue to be subject to the charges and deductions described in this
Prospectus.

Once you elect an Additional Withdrawal Option, you may revoke it any time
by submitting a written request to our Home Office. Once an option is revoked,
it may not be elected again, nor may any other Additional Withdrawal Option be
elected unless permitted by the Code. The Company reserves the right to
discontinue the availability of one or all of these Additional Withdrawal
Options at any time, and/or to change the terms of future elections.

DEATH BENEFIT DURING ACCUMULATION PERIOD
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

The Contract provides that a death benefit is payable to the
Beneficiary(ies) upon your death before the Annuity Date. The amount of the
death benefit will be equal to the Contract Value. Death benefit proceeds may be
paid to the Beneficiary:

- - in a lump sum;

- - in accordance with any of the Annuity Options available under the Contract; or

- - under any Additional Withdrawal Options available under the Contract (if the
Beneficiary is your spouse).

The Beneficiary may instead elect one of the following two options; however,
the Code limits how long the death benefit proceeds may be left in these options
(see below):

- - to leave the Contract Value invested in the Contract; or

- - to leave the Contract Value on deposit in the Company's general account, and
to receive monthly, quarterly, semi-annual or annual interest payments at the
interest rate then being credited on such deposits. The balance on deposit can
be withdrawn at any time or applied to an Annuity Option.

When paying the Beneficiary, we will determine the Contract Value on the
Valuation Date following the date on which we receive proof of death acceptable
to the Company. Interest, if any, will be paid from the date of death at a rate
no less than required by law. We will mail payment to the Beneficiary within
seven days after we receive proof of death.

The Code requires that distribution of death proceeds begin within a certain
period of time. Generally, either payments must begin by December 31 of the year
following the year of your death, or the entire value of your benefits must be
distributed by December 31 of the fifth year following the year of your death.
If your Beneficiary is your spouse, he or she is not required to begin
distributions until the year you would have attained age 70 1/2. In no event may
payments extend beyond the life expectancy of the Beneficiary or any period
greater than the Beneficiary's life expectancy. If no elections are made, no
distributions will be made. Failure to commence distributions within the above
time periods can result in tax penalties. Regardless of the method of payment,
death benefit proceeds will generally be taxed to the Beneficiary in the same
manner as if you had received those payments. (See "Tax Status.")

ANNUITY PERIOD
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ANNUITY PERIOD ELECTIONS

The Code generally requires that minimum annual distributions of the
Contract Value must begin by April 1st of the calendar year following the
calendar year in which you attain age 70 1/2. In addition, distributions must be
in a form and amount sufficient to satisfy the Code requirements. These
requirements may be satisfied by the election of certain Annuity Options or
Additional Withdrawal Options. (See "Tax Status.")

At least 30 days prior to the Annuity Date, you must notify us in writing of
the following:

- - the date on which you would like to start receiving Annuity payments;

- - the Annuity Option under which you want your payments to be calculated and
paid;

- - whether the payments are to be made monthly, quarterly, semi-annually or
annually; and

- - the investment option(s) used to provide Annuity payments (i.e., a fixed
annuity using the general account or any of the Subaccounts available at the
time of annuitization). As of the date of this Prospectus,

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Aetna Variable Fund, Aetna Income Shares and Aetna Investment Advisers Fund,
Inc. are the only Subaccounts available; however, additional Subaccounts may
be available under some Annuity Options in the future. (See "Annuity Options"
below.)

Annuity Payments will not begin until you have selected an Annuity Option.
Until a date and option are elected, the Contract will continue in the
Accumulation Period. Once Annuity Payments begin, the Annuity Option may not be
changed, nor may transfers currently be made among the investment option(s)
selected. (See "Annuity Options" below for more information about transfers
during the Annuity Period.)

ANNUITY OPTIONS

You may choose one of the following Annuity Options:

LIFETIME ANNUITY OPTIONS:

- -OPTION 1--Life Annuity.--An Annuity with payments ending on the Annuitant's
death.

- -OPTION 2--Life Annuity with Guaranteed Payments-- An Annuity with payments
guaranteed for 5, 10, 15 or 20 years, or such other periods as the Company may
offer at the time of annuitization.

- -OPTION 3--Life Income based Upon the Lives of Two Payees--An Annuity will be
paid during the lives of the Annuitant and a second Annuitant, with 100%,
66 2/3% or 50% of the payment to continue after the first death, or 100% of the
payment to continue at the death of the second Annuitant and 50% of the payment
to continue at the death of the Annuitant.

- -OPTION 4--Life Income based Upon the Lives of Two Payees--An annuity with
payments for a minimum of 120 months, with 100% of the payment to continue
after the first death.

If Option 1 or 3 is elected, it is possible that only one Annuity payment
will be made if the Annuitant under Option 1, or the surviving Annuitant under
Option 3, should die prior to the due date of the second Annuity payment. Once
lifetime Annuity payments begin, the Annuitant cannot elect to receive a
lump-sum settlement.

NONLIFETIME ANNUITY OPTIONS:

- -OPTION 1--Payments for a Specified Period--payments will continue for a
specified period of time, as provided for under your Contract.

An Annuity may be selected on a fixed or variable basis and payments may be
made for the number of years specified in your Contract: 3-30 years for 1992
Contracts, 5-30 years for 1994 Contracts. If this option is elected on a
variable basis, the Annuitant may request at any time during the payment period
that the present value of all or any portion of the remaining variable payments
be paid in one sum. However, any lump-sum elected before five years of payments
for 1994 Contracts, or 3 years of payments for 1992 Contracts, have been
completed will be treated as a withdrawal during the Accumulation Period and any
applicable deferred sales charge will be assessed. (See "Charges and
Deductions--Deferred Sales Charge.") The nonlifetime option is not available on
a variable basis under a Contract which provides for immediate Annuity benefits.

We may also offer additional Annuity Options under your Contract from time
to time. The Company expects to offer additional Annuity Options and enhanced
versions of the Annuity Options listed above at some time during 1996. These
additional Annuity Options and enhanced versions of the existing options will
have additional Subaccounts available and will allow transfers between
Subaccounts during the Annuity Period. (Additional Subaccounts and transfer
capability are expected during the second half of 1996.) Such additional or
enhanced options will be made available by an endorsement to the Contract, which
will include the guaranteed annuity payout rates and other terms applicable to
such options. (Depending on which guaranteed payout rates apply to the existing
options, guaranteed payout rates for the new and enhanced options will be the
same or lower.) Please refer to the Contract, or call the number listed in the
"Inquiries" section of the Prospectus Summary, to determine which options are
available and the terms of such options. It is not expected that these
additional or enhanced options will be made available to those who have already
commenced receiving Annuity Payments.

ANNUITY PAYMENTS

DATE PAYOUTS START. When payments start, the age of the Annuitant plus the
number of years for which payments are guaranteed must not exceed 95. Annuity
payments may not extend beyond (a) the life of the Annuitant, (b) the joint
lives of the Annuitant and Beneficiary, (c) a period certain greater than the
Annuitant's life expectancy, or (d) a period greater than the joint life
expectancies of the Annuitant and Beneficiary.

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AMOUNT OF EACH ANNUITY PAYMENT. The amount of each payment depends on how
you allocate your Contract Value between fixed and variable payouts. No election
may be made that would result in a first Annuity payment of less than $50 or
total yearly Annuity payments of less than $250 for 1994 Contracts, and a first
Annuity payment of less than $20 or total yearly Annuity payments of less than
$100 for 1992 Contracts. If your Contract Value on the Annuity Date is
insufficient to elect an option for the minimum amount specified, a lump-sum
payment must be elected.

If Annuity payments are to be made on a variable basis, the first and
subsequent payments will vary depending on the assumed net investment rate
selected (3 1/2% or 5% per annum). Selection of a 5% rate causes a higher first
payment, but Annuity payments will increase thereafter only to the extent that
the net investment rate exceeds 5% on an annualized basis. Annuity payments
would decline if the rate were below 5%. Use of the 3 1/2% assumed rate causes a
lower first payment, but subsequent payments would increase more rapidly or
decline more slowly as changes occur in the net investment rate. (See the
Statement of Additional Information for further discussion on the impact of
selecting an assumed net investment rate.)

CHARGES DEDUCTED DURING THE ANNUITY PERIOD

We make a daily deduction for mortality and expense risks from any amounts
held on a variable basis. Therefore, electing the nonlifetime option on a
variable basis will result in a deduction being made even though we assume no
mortality risk. We may also deduct a daily administrative charge from amounts
held under the variable options. (See "Charges and Deductions.")

DEATH BENEFIT PAYABLE DURING THE ANNUITY PERIOD

If an Annuitant dies after Annuity payments have begun, any death benefit
payable will depend on the terms of the Contract and the Annuity Option
selected. If Option 1 or Option 3 was elected, Annuity payments will cease on
the death of the Annuitant under Option 1 or the death of the surviving
Annuitant under Option 3.

If Lifetime Option 2 or Option 4 was elected and the death of the Annuitant
under Option 2, or the surviving Annuitant under Option 4, occurs prior to the
end of the guaranteed minimum payment period, we will pay to the Beneficiary in
a lump sum, unless otherwise requested, the present value of the guaranteed
annuity payments remaining.

If the nonlifetime option was elected, and the Annuitant dies before all
payments are made, the value of any remaining payments will be paid in a
lump-sum to the Beneficiary (unless otherwise requested), and no deferred sales
charge will be imposed.

If the Annuitant dies after Annuity payments have begun and if there is a
death benefit payable under the Annuity Option elected, the remaining value must
be distributed to the Beneficiary at least as rapidly as under the original
method of distribution.

Any lump-sum payment paid under the applicable lifetime or nonlifetime
Annuity Options will be made within seven calendar days after proof of death
acceptable to us, and a request for payment are received at our Home Office. The
value of any death benefit proceeds will be determined as of the next Valuation
Date after we receive acceptable proof of death and a request for payment. Under
Options 2 and 4, such value will be reduced by any payments made after the date
of death.

TAX STATUS
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INTRODUCTION

The following provides a general discussion and is not intended as tax
advice. This discussion reflects the Company's understanding of current federal
income tax law. Such laws may change in the future, and it is possible that any
change could be retroactive (i.e., effective prior to the date of the change).
The Company makes no guarantee regarding the tax treatment of any Contract or
transaction involving a Contract. The ultimate effect of federal income taxes on
the amounts held under a Contract, on Annuity payments, and on the economic
benefit to the Contract Holder, Annuitant or Beneficiary may depend upon the tax
status of the individual concerned. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction.

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11
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TAXATION OF THE COMPANY

The Company is taxed as a life insurance company under the Code. Since the
Separate Account is not an entity separate from the Company, it will not be
taxed separately as a "regulated investment company" under the Code. Investment
income and realized capital gains are automatically applied to increase reserves
under the Contracts. Under existing federal income tax law, the Company believes
that the Separate Account's investment income and realized net capital gains
will not be taxed to the extent that such income and gains are applied to
increase the reserves under the Contracts.

The Company does not anticipate that it will incur any federal income tax
liability attributable to the Separate Account and, therefore, the Company does
not intend to make provisions for any such taxes. However, if changes in the
federal tax laws or interpretation thereof result in the Company being taxed on
income or gains attributable to the Separate Account, then the Company may
impose a charge against the Separate Account (with respect to some or all
Contracts) in order to set aside provisions to pay such taxes.

CONTRACTS USED WITH CERTAIN RETIREMENT PLANS

IN GENERAL. The Contract is designed for use with retirement plans
qualified under Sections 408(b) or 408(k) of the Code. The tax rules applicable
to participants and beneficiaries in retirement plans vary according to the type
of plan and the terms and conditions of the plan.

The Company makes no attempt to provide more than general information about
use of the Contracts with the various types of retirement plans. Some retirement
plans are subject to limitations on distribution and other requirements that are
not incorporated in the Contracts. Purchasers are responsible for determining
that contributions, distributions and other transactions with respect to the
Contracts satisfy applicable laws, and should consult their legal counsel and
tax advisor regarding the suitability of the Contract.

INDIVIDUAL RETIREMENT ANNUITIES AND SIMPLIFIED EMPLOYEE PENSION PLANS

Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity" or
"Individual Retirement Account" (each hereinafter referred to as an "IRA").
Also, distributions from certain other types of qualified plans may be "rolled
over" on a tax-deferred basis into an IRA. Employers may establish Simplified
Employee Pension (SEP) Plans and make contributions to an IRA on behalf of their
employees. The sale of a Contract for use with an IRA requires special
disclosure mandated by the Internal Revenue Code, and purchasers of an IRA
Contract will be provided with supplemental information as required by the Code.
(See Appendix IV.) Such purchasers will have the right to revoke their purchase
within seven days of the earlier of the establishment of the IRA or their
purchase. A Contract issued as an IRA will be amended as necessary to conform to
the requirements of the Code. Purchasers should seek competent advice as to the
suitability of the Contract as an IRA.

TAXATION OF DISTRIBUTIONS. All distributions will be taxed as ordinary
income unless nondeductible contributions were made to the IRA or the
distribution is "rolled over" to another retirement plan in accordance with the
terms of the Code. If amounts are withdrawn before age 59 1/2, the payment is
subject to a 10% penalty unless the payment is due to disability, is rolled over
to another IRA or is part of a series of payments over your (or your
Beneficiary's) life or life expectancy. Distributions are generally subject to
withholding for the recipient's federal income tax liability at rates that vary
according to the type of distribution and the recipient's tax status. Recipients
generally are provided the opportunity to elect not have tax withheld from
distributions.

In general, payments received by your Beneficiaries after your death are
taxed in the same manner as if you have received those payments, except that a
limited death benefit exclusion may apply.

The Code imposes a 10% penalty tax on the taxable portion of any
distribution from an IRA unless made when (a) you have attained age 59 1/2, (b)
you have become disabled as defined by the Code, (c) the distribution amount is
rolled over in accordance with the terms of the Code, or (d) paid in a series of
substantially equal periodic payments. The Code may impose other penalty taxes
in other circumstances.

This Contract has been approved by the IRS as a prototype IRA. The IRS
approval, however, only pertains to whether the Contract meets the Code
requirements for IRAs and is not a determination of the merits of the Contract.

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12
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MISCELLANEOUS
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DISTRIBUTION

The Company will serve as the principal underwriter for the securities sold
by this Prospectus. The Company is registered as a broker-dealer with the
Securities and Exchange Commission and is a member of the National Association
of Securities Dealers, Inc. (NASD). As underwriter, the Company will contract
with one or more registered broker-dealers ("Distributors"), including at least
one affiliate of the Company, to offer and sell the Contracts. All persons
offering and selling the Contracts must be registered representatives of the
Distributors and must also be licensed as insurance agents to sell variable
annuity contracts. These registered representatives may also provide services to
Contract Holders in connection with their Contract.

PAYMENT OF COMMISSIONS. Persons offering and selling the Contracts may
receive commissions in connection with the sale of the Contracts. The maximum
percentage amount that the Company will ever pay as commission with respect to
any given Purchase Payment is with respect to those made during the first year
of Purchase Payments under a Contract. The percentage amount will range from 2%
to 4% of those Purchase Payments. The Company may also pay renewal commissions
on Purchase Payments made after the first year and service fees. The average of
all payments made by the Company is estimated to equal approximately 3% of the
total Purchase Payments made over the life of an average Contract. The Company
may also reimburse the Distributor for certain expenses. The name of the
Distributor and the registered representative responsible for your Contract are
set forth in your application. Commissions and sales related expenses are paid
by the Company and are not deducted from Purchase Payments. (See "Charges and
Deductions--Deferred Sales Charge.")

DELAY OR SUSPENSION OF PAYMENTS

The Company reserves the right to suspend or postpone the date of payment
for any benefit or values (a) on any Valuation Date on which the New York Stock
Exchange ("Exchange") is closed (other than customary weekend and holiday
closings) or when trading on the Exchange is restricted; (b) when an emergency
exists, as determined by the SEC, so that disposal of securities held in the
Subaccounts is not reasonably practicable or is not reasonably practicable for
the value of the Subaccount's assets; or (c) during such other periods as the
SEC may by order permit for the protection of investors. The conditions under
which restricted trading or an emergency exists shall be determined by the rules
and regulations of the SEC.

PERFORMANCE REPORTING

From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account. The Company may
advertise the "standardized average annual total returns" of the Subaccounts,
calculated in a manner prescribed by the SEC, as well as the "non-standardized
returns." "Standardized average annual total returns" are computed according to
a formula in which a hypothetical investment of $1,000 is applied to the
Subaccount and then related to the ending redeemable values over the most recent
one, five and ten-year periods (or since inception, if less than ten years).
Standardized returns will reflect the reduction of all recurring charges during
each period (e.g., mortality and expense risk charges, annual maintenance fees,
administrative expense charge (if any) and any applicable deferred sales
charge.) "Non-standardized returns" will be calculated in a similar manner,
except that non-standardized figures will not reflect the deduction of any
applicable deferred sales charge (which would decrease the level of performance
shown if reflected in these calculations). The non-standardized figures may also
include monthly, quarterly, year-to-date and three-year periods.

The Company may also advertise certain ratings, rankings or other
information related to the Company, the Subaccounts or the Funds. Further
details regarding performance reporting and advertising are described in the
Statement of Additional Information.

VOTING RIGHTS

In accordance with the Company's view of present applicable law, it will
vote the shares of each of the Funds held by the Separate Account at regular and
special meetings of Fund shareholders in accordance with instructions received
from persons having a voting interest in the Separate Account. The Company will
vote shares for which it has not received instructions in the same proportion as
it votes shares for which it has received instructions.

Each person having a voting interest in the Separate Account will receive
periodic reports relating to the

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13
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Fund(s) 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 written communication at least 14 days before such meeting. The number of
votes for which each person may give direction will be determined as of the
record date set by the Fund.

The number of votes that you may cast during the Accumulation Period is
equal to the portion of the Contract Value allocated to that Fund, divided by
the net asset value of one share of that Fund. During the Annuity Period, the
number of votes is equal to the valuation reserve applicable to the portion of
the Contract attributable to that Fund, divided by the net asset value of one
share of that Fund. In determining the number of votes, fractional votes will be
recognized.

MODIFICATION OF THE CONTRACT

The Company may modify the Contract when it deems an amendment appropriate,
by providing you written notice 30 days before the effective date of the change.
The most likely reason for a change to the Contract would be to ensure
compliance with applicable law. Certain changes will require the approval of
appropriate state or federal regulatory authorities.

LEGAL MATTERS AND PROCEEDINGS

The Company knows of no material legal proceedings pending to which the
Separate Account or the Company is a party or which would materially affect the
Separate Account. The validity of the securities offered by this Prospectus has
been passed upon by Susan E. Bryant, Esq., Counsel to the Company.

CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
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The Statement of Additional Information contains more specific information
on the Separate Account and the Contract, as well as the financial statements of
the Separate Account and the Company. A list of the contents of the SAI is set
forth below.

General Information and History
Variable Annuity Account C
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Annuity Payments
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of Aetna Life Insurance and Annuity Company

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APPENDIX I
GUARANTEED INTEREST ACCOUNT
(AVAILABLE IN ALL STATES EXCEPT WASHINGTON, NEW YORK AND NEW JERSEY)
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THE GUARANTEED INTEREST ACCOUNT ("GIA") IS AN INVESTMENT OPTION AVAILABLE DURING
THE ACCUMULATION PERIOD. AMOUNTS ALLOCATED TO SHORT-TERM CLASSIFICATIONS OF GIA
ARE HELD IN THE COMPANY'S GENERAL ACCOUNT THAT SUPPORTS INSURANCE AND ANNUITY
OBLIGATIONS. AMOUNTS ALLOCATED TO LONG-TERM CLASSIFICATIONS OF GIA ARE HELD IN A
NONINSULATED, NONUNITIZED SEPARATE ACCOUNT. INTERESTS IN GIA HAVE NOT BEEN
REGISTERED WITH THE SEC IN RELIANCE ON EXEMPTIONS UNDER THE SECURITIES ACT OF
1933, AS AMENDED. DISCLOSURE IN THIS PROSPECTUS REGARDING GIA, MAY, HOWEVER, BE
SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES
LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF SUCH STATEMENTS. DISCLOSURE IN
THIS APPENDIX REGARDING THE GUARANTEED INTEREST ACCOUNT HAS NOT BEEN REVIEWED BY
THE SEC.

GIA is a Credited Interest Option under which we guarantee stipulated rates
of interest for stated periods of time. Interest is credited daily at a rate
that will provide the guaranteed effective yield by the end of the stated period
of time.

During a stated period of time, amounts may be applied to any or all
available Guaranteed Terms within the Short-Term and Long-Term Classifications.
The Short-Term Classification consists of all Guaranteed Terms of 3 years or
less and the Long-Term Classification consists of all Guaranteed Terms of 10
years or less, but greater than 3 years.

As long as amounts are not withdrawn before the end of a stated term, we
will pay the guaranteed rate of interest. If amounts are withdrawn or
transferred before the end of a stated period of time, we will pay a reduced
rate of interest, but never less than the minimum stated in the Contract.

As a Guaranteed Term matures, assets accumulating under GIA may be (a)
transferred to a new Guaranteed Term, (b) transferred to the other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge and/or tax liabilities.

MORTALITY AND EXPENSE RISK CHARGES

We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited interest
rate.

TRANSFERS AMONG INVESTMENT OPTIONS

Transfers are permitted from Guaranteed Terms of one Classification to
available Guaranteed Terms of another Classification. We will apply a reduced
rate of interest to amounts transferred prior to the end of a Guaranteed Term.
Transfers of GIA values due to a maturity are not subject to a reduced rate of
interest.

By notifying us at our Home Office at least 30 days before Annuity payments
begin, you may elect to have amounts that have been accumulating under GIA
transferred to one or more of the Subaccounts currently available during the
Annuity Period to provide variable Annuity payments. GIA cannot be used as an
investment option during the Annuity Period.

REINVESTMENT PRIVILEGE

Any amounts reinvested in GIA will be applied to the current deposit period.
Amounts are proportionately reinvested to the classifications in the same manner
as they were allocated before the withdrawal.

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APPENDIX II
FIXED ACCOUNT
(AVAILABLE IN ALL STATES EXCEPT NEW YORK)

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THE FOLLOWING SUMMARIZES MATERIAL INFORMATION CONCERNING THE FIXED ACCOUNT.
AMOUNTS ALLOCATED TO THE FIXED ACCOUNT ARE HELD IN THE COMPANY'S GENERAL ACCOUNT
THAT SUPPORTS GENERAL 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 THE PROSPECTUS REGARDING
THE FIXED ACCOUNT, MAY, HOWEVER, BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND
COMPLETENESS OF SUCH STATEMENTS. DISCLOSURE IN THIS APPENDIX REGARDING THE FIXED
ACCOUNT HAS NOT BEEN REVIEWED BY THE SEC.

The Fixed Account guarantees the minimum interest rate specified in the
Contract. These minimum interest rates cannot be changed by the Company;
however, the Company may credit a higher interest rate from time to time.
Amounts applied to the Fixed Account will earn the interest rate in effect when
actually applied to the Fixed Account.

Under the Fixed Account, the Company assumes the risk of investment gain or
loss by guaranteeing Contract Values and promising a minimum interest rate and
Annuity Payment. The Company's determination of interest rates reflects the
investment income earned on invested assets and the amortization of any capital
gains and/or losses realized on the sale of invested assets. The Fixed Account
will reflect a compound interest rate credited by us. The interest rate quoted
is an annual effective yield.

Under certain emergency conditions, we may defer payment of a Fixed Account
withdrawal value for a period of up to six months, or as provided by federal
law. The Fixed Account withdrawal value may be paid in equal payments, with
interest, over a period not to exceed 60 months when:

(a) the amount held in the Fixed Account under this Contract exceeds $100,000
($250,000 on 1992 Contracts) on the day prior to the current withdrawal; and

(b) the sum of the current Fixed Account withdrawal and the total of all Fixed
Account withdrawals from the Contract within the past 12 calendar months
exceeds 20% of the amount in the Fixed Account on the day prior to the
current withdrawal.

Interest rates, as used above, will not be more than two percentage points
below any rate determined prospectively by the Board of Directors for this class
of Contract. In no event will the interest rate be less than the minimum stated
in the Contract.

MORTALITY AND EXPENSE RISK CHARGES

We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited rate.

TRANSFERS AMONG INVESTMENT OPTIONS

Transfers from the Fixed Account to any other available investment option(s)
are allowed in each calendar year during the Accumulation Period. The amount
which may be transferred may vary at our discretion; however, it will never be
less than 10% of the amount held under the Fixed Account. Additionally, any
remaining balance in the Fixed Account under the Contract may be transferred by
you in its entirety to any other investment option(s) if:

(a) the Current Value in the Fixed Account is $2,000 or less; or
(b) the maximum percentage allowed was transferred from the Fixed Account in
each of the four consecutive calendar years and no additional Net Purchase
Payment(s) have been allocated to the Fixed Account during that same time
period.

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By notifying us at our Home Office at least 30 days before Annuity Payments
begin, you may elect to have amounts which have been accumulating under the
Fixed Account transferred to one or more of the Subaccounts available during the
Annuity Period to provide variable Annuity Payments.

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APPENDIX III
GUARANTEED ACCUMULATION ACCOUNT
(OFFERED IN NEW YORK ONLY)
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THE GUARANTEED ACCUMULATION ACCOUNT ("GAA") IS A CREDITED INTEREST OPTION
AVAILABLE DURING THE ACCUMULATION PERIOD. AMOUNTS ALLOCATED TO LONG-TERM
CLASSIFICATIONS OF GAA ARE HELD IN A NONINSULATED, NONUNITIZED SEPARATE ACCOUNT.
AMOUNTS ALLOCATED TO SHORT-TERM CLASSIFICATIONS OF GAA ARE HELD IN THE COMPANY'S
GENERAL ACCOUNT. THIS APPENDIX IS A SUMMARY OF GAA AND IS NOT INTENDED TO
REPLACE THE GAA PROSPECTUS. YOU SHOULD READ THE ACCOMPANYING GAA PROSPECTUS
CAREFULLY BEFORE INVESTING.

GAA is a Credited Interest Option in which we guarantee stipulated rates of
interest for stated periods of time on amounts directed to GAA. This option
guarantees the minimum interest rate specified in the Contract. The interest
rate stipulated is an annual effective yield; that is, it reflects a full year's
interest. Interest is credited daily at a rate that will provide the guaranteed
annual effective yield for one year.

During a specified period of time (the "deposit period"), amounts may be
applied to any or all available Guaranteed Terms within the Short-Term and
Long-Term classifications. Short-Term GAA has Guaranteed Terms from one to three
years, and Long-Term GAA has Guaranteed Terms greater than three years but no
more than ten years.

Withdrawals or transfers from a Guaranteed Term before the end of that
Guaranteed Term may be subject to a market value adjustment ("MVA"). An MVA
reflects the change in the value of the investments due to changes in interest
rates since the date of deposit. When interest rates increase after the date of
deposit, the value of the investment decreases and the MVA is negative.
Conversely, when interest rates decrease after the date of deposit, the value of
the investment increases, and the MVA is positive. It is possible that a
negative MVA could result in you receiving an amount which is less than the
amount paid into GAA.

As a Guaranteed Term matures, assets accumulating under GAA may be (a)
transferred to a new Guaranteed Term, (b) transferred to other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge and/or federal tax penalties.

MORTALITY AND EXPENSE RISK CHARGES

We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited interest
rate.

TRANSFERS AMONG INVESTMENT OPTIONS

Transfers are permitted among Guaranteed Terms. However, amounts applied to
GAA may not be transferred to another Guaranteed Term of GAA, or to any other
Subaccount or Credited Interest Option available under the Contract, during the
deposit period or the 90 days after the close of the deposit period. We will
apply an MVA to transfers made before the end of a Guaranteed Term, unless such
transfer is due to the maturity of the Guaranteed Term.

By notifying us at least 30 days prior to the Annuity Date, you may elect a
Variable Annuity and have amounts that have been accumulating under GAA
transferred to one or more of the Subaccounts available during the Annuity
Period. GAA cannot be used as an investment option during the Annuity Period.

REINVESTMENT PRIVILEGE

If amounts are withdrawn from GAA and reinvested, they will be applied to
the current deposit period. Amounts are proportionately reinvested in the same
manner as they were allocated before the withdrawal. Any negative MVA amount
applied to a withdrawal is not included in the reinvestment.

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18
<PAGE>

APPENDIX IV
FEDERAL INCOME TAX SUMMARY FOR IRAS

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

This notice summarizes the federal income tax rules that apply to individual
retirement annuity (IRA) contracts. Please remember that this information is
subject to change at any time, special rules apply to many of the items
summarized here and Aetna Life Insurance and Annuity Company (ALIAC) is not
allowed to give you tax advice.

For more information about federal income taxes and how they affect your IRA
we suggest that you call the IRS (at the IRS Tax Forms number in your phone
book) and ask for Publication 590 each year. This free publication will give you
current information about the federal income tax aspects of payments to and from
your IRA. You can also call your local IRS district office for general
information.

For specific advice about your income and estate taxes you should contact a
qualified tax specialist.

REVOCATION

Federal tax regulations allow you to revoke the Contract within 7 days from
when you receive it and have your contributions returned to you. If you want to
revoke your contract within this time period, you may call ALIAC at
1-800-531-4547 or write to Aetna Life Insurance and Annuity Company, 151
Farmington Avenue, Hartford, Connecticut 06156-1258, Attention: IRA Customer
Service.

STATUTORY REQUIREMENTS

The Contract is an individual retirement annuity contract as described in
section 408(b) of the Internal Revenue Code. The Contract can be used for tax
deduction purposes as an IRA and to accept contributions made under a simplified
employee pension (SEP) plan. The money in your IRA is always fully vested, the
Contract may not be transferred to anyone, you may not borrow money from it and
you have full flexibility in making contributions. The Contract has been
approved by the Internal Revenue Service as a prototype IRA. However, IRS
approval only means that the Contract meets the federal tax requirements for an
IRA and is not a determination of the merits of the Contract.

CONTRIBUTION AND FEDERAL INCOME TAX DEDUCTION LIMITS

As long as you have compensation for the year and will not be 70 1/2 years
old or later during any part of the year, you may contribute up to the lesser of
$2,000 or your taxable compensation to this or any other IRA each year. (You can
set up another IRA for your non-working spouse and contribute as much as $2,250
in total, but no more than $2,000 to either IRA.) Contributions must be in the
form of money (check or money order). You can't contribute stock or other
property to the Contract.

Contributions for a year can be made up to the due date for filing your
federal tax return for that year, not including extensions. If you contribute an
amount between January 1 and April 15 of any year, you must tell ALIAC which
year the contribution is for. If you do not say otherwise, ALIAC must report the
contribution to the IRS on behalf of the year in which it is received.

Generally, you may take a deduction for the contributions you make to your
IRA. However, if you or your spouse is covered by an employer retirement plan,
you ability to deduct IRA contributions will depend on your income and filing
status. IRS Publication 590 includes worksheets to help you figure the amount of
your deductible contributions.

If you cannot deduct any part of your contribution, you can still make the
contributions on a nondeductible basis. But you will have to keep separate
records if you make any nondeductible IRA contributions. ALIAC does not keep
such records on your behalf.

If you contribute more than the allowable limit for the year or make any
contribution for the year in which you reach age 70 1/2 or any later year, you
are subject to a penalty tax of 6% on the over-contributions for the year
contributed and each following year that the excess contributions remain in the
IRA. To avoid the penalty tax, you must withdraw the excess contributions and
their earnings by the due date of your tax return for that year (including
extensions). You can also withdraw any deductible or nondeductible contributions
and earnings by such date.

- --------------------------------------------------------------------------------
19
<PAGE>
Special contribution and deduction rules apply if your IRA is used as part
of a SEP. Since a SEP is an employer-sponsored retirement arrangement, the
maximum deductible contribution is the lesser of $30,000 or 15% of your
compensation for the year.

TAX STATUS OF CONTRACT EARNINGS

Unless you engage in a prohibited transaction, the earnings in your IRA are
not taxable until you receive them. But if you use the IRA to secure a loan or
engage in any other prohibited transaction, the value of the IRA will lose its
tax privileges and become taxable income for that year. In that case, you will
owe regular taxes plus penalties on the amount involved in the prohibited
transaction.

DISTRIBUTIONS FROM YOUR IRA

You can withdraw funds from your IRA any time subject to the terms of the
Contract. Unless you have any nondeductible contributions in your IRA and
records to back them up, all payments are subject to regular income tax in the
year received. If you withdraw funds before age 59 1/2, the payment is also
subject to a 10% penalty tax unless the payment is due to your disability as
defined in the Code, rolled-over to another IRA or is part of a series of
payments over your (or you and your Beneficiary's) life or life expectancy.
There is no "averaging" or other special tax treatment available for payments
from your IRA. And if the total retirement-type payments made to you in a given
year exceed certain levels set by the Internal Revenue Code, you may owe an
excise tax as well.

You must start receiving "minimum distributions" once you reach age 70 1/2.
These payments must start no later than the April 1st of the year after you
reach age 70 1/2. Special rules are used to calculate the minimum distribution
but such payment is roughly equivalent to the amount determined by dividing your
IRA account balance by factors for your estimated life expectancy as set forth
by the Code. If you do not take the minimum distribution once you reach age
70 1/2, you are subject to an excise tax of 50% of the funds you should have
received but did not.

ROLLOVERS

You can roll-over funds from another IRA to this IRA or from this IRA to
another IRA and defer paying federal income taxes on such distributions.
However, rollovers must be completed within 60 days of receipt of funds and
funds rolled over may not be rolled again to another IRA for 12 months.

SPECIAL FORMS TO FILE

If you make any nondeductible contributions to the IRA, you will have to
file IRS Form 8606 for such year and in the year in which you receive payments
from the IRA (to calculate the amount of such previously taxed funds being
withdrawn as part of the distribution).

If any excess contributions are made, you engage in a prohibited
transaction, have an "excess distribution" or do not receive any minimum
required distributions, you must file IRS Form 5329 to pay the applicable excise
and penalty taxes. ALIAC does not prepare or file these forms on your behalf.

- --------------------------------------------------------------------------------
20
<PAGE>
PLEASE ATTACH TO YOUR APPLICATION
- --------------------------------------------------------------------------------

I HEREBY ACKNOWLEDGE RECEIPT OF AN ACCOUNT C INDIVIDUAL VARIABLE ANNUITY
CONTRACT PROSPECTUS DATED MAY 1, 1996 FOR INDIVIDUAL RETIREMENT ANNUITIES AND
SIMPLIFIED EMPLOYEE PENSION PLANS, AS WELL AS ALL CURRENT PROSPECTUSES
PERTAINING TO THE VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACTS.

- ------- PLEASE SEND AN ACCOUNT C STATEMENT OF ADDITIONAL INFORMATION (FORM NO.
75988(S)-2) DATED MAY 1, 1996.

- --------------------------------------------------------------------------------

CONTRACT HOLDER'S SIGNATURE

- --------------------------------------------------------------------------------

DATE
75988-2 (5/96)
<PAGE>

- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996

Individual Variable Annuity Contracts for Individual Retirement Annuities
under Section 408(b) and Simplified Employee Pension Plans under Section 408(k)

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account C (the
"Separate Account") dated May 1, 1996.

A free prospectus is available upon request from the local Aetna Life Insurance
and Annuity Company office or by writing to or calling:

Aetna Life Insurance and Annuity Company
Customer Service
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-531-4547

Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the prospectus.

TABLE OF CONTENTS

Page
----
General Information and History. . . . . . . . . . . . . . . . . . . . . . 2
Variable Annuity Account C . . . . . . . . . . . . . . . . . . . . . . . . 2
Offering and Purchase of Contracts . . . . . . . . . . . . . . . . . . . . 3
Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Average Annual Total Return Quotations . . . . . . . . . . . . . . . . . . 4
Annuity 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 . . . . . F-1

<PAGE>

GENERAL INFORMATION AND HISTORY

Aetna Life Insurance and Annuity Company (the "Company") is a stock life
insurance company which was organized under the insurance laws of the State of
Connecticut in 1976. Through a merger, it succeeded to the business of Aetna
Variable Annuity Life Insurance Company (formerly Participating Annuity Life
Insurance Company organized in 1954). As of December 31, 1995, the Company had
assets of $27.1 billion (subject to $25.5 billion of customer and other
liabilities, $1.6 billion of shareholder equity) which includes $11 billion in
assets held in the Company's separate accounts. The Company had $22 billion in
assets under management, including $8 billion in its mutual funds. As of
December 31, 1994, it ranked among the top 2% of all U.S. life insurance
companies by size. The Company is a wholly owned subsidiary of Aetna Retirement
Holdings, Inc., which is in turn a wholly owned subsidiary of Aetna Retirement
Services, Inc. and an indirect wholly owned subsidiary of Aetna Life and
Casualty Company. The Company is engaged in the business of issuing life
insurance policies and annuity contracts in all states of the United States.
The Company's Home Office is located at 151 Farmington Avenue, Hartford,
Connecticut 06156.

In addition to serving as the principal underwriter and the depositor for the
Separate Account, the Company is also a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. The Company provides investment advice to
several of the registered management investment companies offered as variable
investment options under the Contracts funded by the Separate Account (see
"Variable Annuity Account C" below).

Other than the mortality and expense risk charges and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the Separate Account are borne by the Company. See "Charges and Deductions" in
the prospectus. The Company receives reimbursement for certain administrative
costs from some unaffiliated sponsors of the Funds used as funding options under
the Contract. These fees generally range up to 0.25%.

The assets of Separate Account are held by the Company. The Separate Account
has no custodian. However, the Funds in whose shares the assets of the Separate
Account are invested each have custodians, as discussed in their respective
prospectuses.

VARIABLE ANNUITY ACCOUNT C

Variable Annuity Account C (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of each of the Subaccounts of the Separate
Account will be invested exclusively in shares of the Funds described in the
Prospectus. Purchase Payments made under the Contract may be allocated to one
or more of the Subaccounts. The Company may make additions to or deletions from
available investment options as permitted by law. The availability of the Funds
is subject to applicable regulatory authorization. Not all Funds are available
in all jurisdictions or under all Contracts. The Funds currently available
under the Contract are as follows:

<PAGE>

Aetna Variable Fund Fidelity VIP Growth Portfolio
Aetna Income Shares Fidelity VIP Overseas Portfolio
Aetna Variable Encore Fund Janus Aspen Aggressive Growth Portfolio
Aetna Investment Advisers Fund, Inc. Janus Aspen Balanced Portfolio
Aetna Ascent Variable Portfolio Janus Aspen Growth Portfolio
Aetna Crossroads Variable Portfolio Janus Aspen Short-Term Bond Portfolio
Aetna Legacy Variable Portfolio Janus Aspen Worldwide Growth Portfolio
Alger American Growth Portfolio Scudder International Portfolio Class A
Shares
Alger American Small Cap Portfolio TCI Growth
Fidelity VIP II Contrafund Portfolio
Fidelity VIP Equity-Income Portfolio

Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the Funds.

OFFERING AND PURCHASE OF CONTRACTS

The Company is both the depositor and the principal underwriter for the
securities sold by the prospectus. The Company offers the Contracts through
life insurance agents licensed to sell variable annuities who are registered
representatives 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 Contracts are purchased may be found in
the prospectus under the section titled "Purchase" and "Contract Valuation."

PERFORMANCE DATA

GENERAL

From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account available under the
Contracts. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as "non-standardized returns,"
both of which are described below.

The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the various Subaccounts under the Contract, and then
related to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The standardized figures reflect the deduction of
all recurring charges during each period (e.g., mortality and expense risk
charges, maintenance fees, administrative expense charges, and deferred sales
charges). For the standardized figures, Table One reflects the deferred sales
charge schedules shown in Schedule A of the Prospectus, Table Two reflects the
schedule shown in Schedule B of the Prospectus and Table Three reflects the
schedule shown in Schedule C of the Prospectus. These charges will be deducted
on a pro rata basis in the case of fractional periods. The maintenance fee is
converted to a percentage of assets based on the average account size under the
Contracts described in the Prospectus.

<PAGE>

The non-standardized figures will be calculated in a similar manner, except that
they will not reflect the deduction of any applicable deferred sales charge
(which would decrease the level of performance shown if reflected in these
calculations). The non-standardized figures may also include monthly,
quarterly, year-to-date and three-year periods.

If a Fund was in existence prior to the date it became available under the
Contract, standardized and non-standardized total returns may include periods
prior to such date. These figures are calculated by adjusting the actual
returns of the Fund to reflect the charges that would have been assessed under
the Contract had that Fund been available under the Contract during that period.

Investment results of the 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 Contract 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, 1995 for the
Subaccounts under the Contract. For those Subaccounts where results are not
available for the full calendar period indicated, the percentage shown is an
average annual return since inception (denoted with an *).

TABLE ONE
CORRESPONDING WITH DEFERRED SALES CHARGE SCHEDULE A

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
FUND
STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
- -------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund 29.16% 11.99% 12.18% 30.47% 10.31% 11.99% 12.18% 04/30/75

Aetna Income Shares 15.49% 8.39% 8.41% 16.65% 6.20% 8.39% 8.41% 06/01/78

Aetna Variable Encore Fund 3.58% 3.29% 4.81% 4.62% 3.03% 3.29% 4.81% 09/01/75

Aetna Investment Advisers Fund, Inc. 24.26% 10.39% 9.26% * 25.52% 10.18% 10.39% 9.26% * 06/23/89

Aetna Ascent Variable Portfolio 8.56% * n/a n/a 9.66% * n/a n/a n/a 07/03/95

Aetna Crossroads Variable Portfolio 7.43% * n/a n/a 8.52% * n/a n/a n/a 07/03/95

Aetna Legacy Variable Portfolio 5.09% * n/a n/a 6.15% * n/a n/a n/a 07/03/95

Alger American Growth Portfolio 33.19% 20.10% 17.85% * 34.54% 17.62% 20.10% 17.85% * 01/09/89

Alger American Small Cap Portfolio 40.94% 18.79% 20.82% * 42.37% 14.21% 18.79% 20.82% * 09/21/88

Fidelity VIP II Contrafund Portfolio 36.39% * n/a n/a 37.77% * n/a n/a n/a 01/03/95
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
FUND
STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
- -------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity VIP Equity-Income Portfolio 31.95% 19.65% 11.79% * 33.28% 17.93% 19.65% 11.79% * 10/09/86

Fidelity VIP Growth Portfolio 32.21% 19.13% 13.27% * 33.55% 15.73% 19.13% 13.27% * 10/09/86

Fidelity VIP Overseas Portfolio 7.12% 6.56% 5.81% * 8.20% 13.55% 6.56% 5.81% * 01/28/87

Janus Aspen Aggressive Growth Portfolio 24.53% 25.83% * n/a 25.78% 25.83% * n/a n/a 09/13/93

Janus Aspen Balanced Portfolio 21.90% 12.34% * n/a 23.13% 12.34% * n/a n/a 09/13/93

Janus Aspen Growth Portfolio 27.13% 13.62% * n/a 28.41% 13.62% * n/a n/a 09/13/93

Janus Aspen Short-Term Bond Portfolio 6.99% 3.15% * n/a 8.07% 3.15% * n/a n/a 09/13/93

Janus Aspen Worldwide Growth Portfolio 24.41% 19.00% * n/a 25.66% 19.00% * n/a n/a 09/13/93

Scudder International Portfolio
Class A Shares 8.52% 8.82% 7.85% * 9.62% 13.16% 8.82% 7.85% * 05/01/87

TCI Growth 28.04% 13.43% 11.36% * 29.34% 11.30% 13.43% 11.36% * 11/20/87
</TABLE>

Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These
figures represent historical performance and should not be considered a
projection of future performance.

TABLE TWO
CORRESPONDING WITH DEFERRED SALES CHARGE SCHEDULE B

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
FUND
STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
- -------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund 23.95% 11.08% 12.18% 30.47% 10.31% 11.99% 12.18% 04/30/75

Aetna Income Shares 10.82% 7.51% 8.41% 16.65% 6.20% 8.39% 8.41% 06/01/78

Aetna Variable Encore Fund -0.61% 2.45% 4.81% 4.62% 3.03% 3.29% 4.81% 09/01/75

Aetna Investment Advisers Fund, Inc. 19.24% 9.49% 8.75% * 25.52% 10.18% 10.39% 9.26% * 06/23/89

Aetna Ascent Variable Portfolio 4.18% * n/a n/a 9.66% * n/a n/a n/a 07/03/95

Aetna Crossroads Variable Portfolio 3.09% * n/a n/a 8.52% * n/a n/a n/a 07/03/95

Aetna Legacy Variable Portfolio 0.84% * n/a n/a 6.15% * n/a n/a n/a 07/03/95

Alger American Growth Portfolio 27.81% 19.12% 17.33% * 34.54% 17.62% 20.10% 17.85% * 01/09/89
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
FUND
STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
- -------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alger American Small Cap Portfolio 35.25% 17.82% 20.48% * 42.37% 14.21% 18.79% 20.82% * 09/21/88

Fidelity VIP II Contrafund Portfolio 30.88% * n/a n/a 37.77% * n/a n/a n/a 01/03/95

Fidelity VIP Equity-Income Portfolio 26.61% 18.68% 11.79% * 33.28% 17.93% 19.65% 11.79% * 10/09/86

Fidelity VIP Growth Portfolio 26.87% 18.16% 13.27% * 33.55% 15.73% 19.13% 13.27% * 10/09/86

Fidelity VIP Overseas Portfolio 2.79% 5.69% 5.69% * 8.20% 13.55% 6.56% 5.81% * 01/28/87

Janus Aspen Aggressive Growth Portfolio 9.50% 23.05% * n/a 25.78% 25.83% n/a n/a 09/13/93

Janus Aspen Balanced Portfolio 16.97% 9.86% * n/a 23.13% 12.34% * n/a n/a 09/13/93

Janus Aspen Growth Portfolio 21.99% 11.11% * n/a 28.41% 13.62% * n/a n/a 09/13/93

Janus Aspen Short-Term Bond Portfolio 2.66% 0.88% * n/a 8.07% 3.15% n/a n/a 09/13/93

Janus Aspen Worldwide Growth Portfolio 19.38% 16.38% * n/a 25.66% 19.00% n/a n/a 09/13/93

Scudder International Portfolio
Class A Shares 4.14% 7.93% 7.73% * 9.62% 13.16% 8.82% 7.85% * 05/01/87

TCI Growth 22.87% 12.51% * 11.23% * 29.34% 11.30% 13.43% 11.36% * 11/20/87
</TABLE>

TABLE THREE
CORRESPONDING WITH DEFERRED SALES CHARGE SCHEDULE C

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
FUND
STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
- -------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund 22.64% 11.54% 12.18% 30.47% 10.31% 11.99% 12.18% 04/30/75

Aetna Income Shares 9.65% 7.95% 8.41% 16.65% 6.20% 8.39% 8.41% 06/01/78

Aetna Variable Encore Fund -1.66% 2.87% 4.81% 4.62% 3.03% 3.29% 4.81% 09/01/75

Aetna Investment Advisers Fund, Inc. 17.99% 9.94% 9.09% * 25.52% 10.18% 10.39% 9.26% * 06/23/89

Aetna Ascent Variable Portfolio 3.08% n/a n/a 9.66% * n/a n/a n/a 07/03/95

Aetna Crossroads Variable Portfolio 2.01% * n/a n/a 8.52% * n/a n/a n/a 07/03/95

Aetna Legacy Variable Portfolio -0.22% * n/a n/a 6.15% * n/a n/a n/a 07/03/95

Alger American Growth Portfolio 26.46% 19.61% 17.68% * 34.54% 17.62% 20.10% 17.85% * 01/09/89
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
FUND
STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
- -------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alger American Small Cap Portfolio 33.83% 18.31% 20.82% * 42.37% 14.21% 18.79% 20.82% * 09/21/88

Fidelity VIP II Contrafund Portfolio 29.50% * n/a n/a 37.77% * n/a n/a n/a 01/03/93

Fidelity VIP Equity-Income Portfolio 25.28% 19.17% 11.79% * 33.28% 17.93% 19.65% 11.79% * 10/09/86

Fidelity VIP Growth Portfolio 25.53% 18.65% 13.27% * 33.55% 15.73% 19.13% 13.27% * 10/09/86

Fidelity VIP Overseas Portfolio 1.71% 6.13% 5.81% * 8.20% 13.55% 6.56% 5.81% * 01/28/87

Janus Aspen Aggressive Growth Portfolio 18.24% 23.05% * n/a 25.78% 25.83% * n/a n/a 09/13/93

Janus Aspen Balanced Portfolio 15.74% 9.86% * n/a 23.13% 12.34% * n/a n/a 09/13/93

Janus Aspen Growth Portfolio 20.71% 11.11% * n/a 28.41% 13.62% * n/a n/a 09/13/93

Janus Aspen Short-Term Bond Portfolio 1.58% 0.88% * n/a 8.07% 3.15% * n/a n/a 09/13/93

Janus Aspen Worldwide Growth Portfolio 18.12% 16.38% * n/a 25.66% 19.00% * n/a n/a 09/13/93

Scudder International Portfolio
Class A Shares 3.04% 8.38% 7.85% * 9.62% 13.16% 8.82% 7.85% * 05/01/87

TCI Growth 21.58% 12.97% 11.36% * 29.34% 11.30% 13.43% 11.36% * 11/20/87
</TABLE>

ANNUITY PAYMENTS

When Annuity payments are to begin, the value of the Contract is determined
using Accumulation Unit values as of the tenth Valuation Date before the first
Annuity payment is due. Such value (less any applicable premium tax) is applied
to provide an Annuity in accordance with the Annuity and investment options
elected.

The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first Annuity payment for each $1,000 of value applied.
Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a
higher first payment, but Annuity payments will increase thereafter only to the
extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.

When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first Annuity payment based on a particular investment
option, and (b) is the then current Annuity Unit value for that investment
option.

<PAGE>

As noted, Annuity Unit values fluctuate from one Valuation Date to the next;
such fluctuations reflect changes in the net investment factor for the
appropriate Subaccount(s) (with a ten Valuation Date lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.

The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.

EXAMPLE:

Assume that, at the date Annuity payments are to commence, there are 3,000
Accumulation Units credited under a particular Contract and that the value of an
Accumulation Unit for the tenth Valuation Date prior to retirement was
$13.650000. This produces a total value of $40,950.

Assume also that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.

Assume then that the value of an Annuity Unit for the Valuation Date on which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.

If the net investment factor with respect to the appropriate Subaccount is
1.0015000 as of the tenth Valuation Date preceding the due date of the second
monthly payment, multiplying this factor by .9999058* (to neutralize the assumed
net investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for the prior Valuation Date (assume such value to be
$13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation
Date on which the second payment is due.

The second monthly payment is then determined by multiplying the number of
Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359,
which produces a payment of $276.07.

*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.

SALES MATERIAL AND ADVERTISING

The Company may include hypothetical illustrations in its sales literature that
explain the mathematical principles of dollar cost averaging, compounded
interest, tax deferred accumulation, and the mechanics of variable annuity
contracts. The Company may also discuss the difference between variable annuity
contracts and other types of savings or investment products, including, but not
limited to, personal savings accounts and certificates of deposit.

We may distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Subaccounts to established market
indices such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average or to the percentage change in values of other management
investment companies that have investment objectives similar to the Subaccount
being compared.

<PAGE>

We may publish in advertisements and reports, the ratings and other information
assigned to us by one or more independent rating organizations such as A.M. Best
Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors
Services, Inc. The purpose of the ratings is to reflect our financial strength
and/or claims-paying ability. We may also quote ranking services such as
Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable
Insurance Products Performance Analysis Service (VIPPAS), which rank variable
annuity or life Subaccounts or their underlying funds by performance and/or
investment objective. From time to time, we will quote articles from newspapers
and magazines or other publications or reports, including, but not limited to
The Wall Street Journal, Money magazine, USA Today and The VARDS Report.

The Company may provide in advertising, sales literature, periodic publications
or other materials information on various topics of interest to current and
prospective 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 Contracts and the
characteristics of and market for such financial instruments.

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the
independent auditors for the Separate Account and for the Company. The services
provided to the Separate Account include primarily the examination of the
Separate Account's financial statements and the review of filings made with the
SEC.

<PAGE>

FINANCIAL STATEMENTS

VARIABLE ANNUITY ACCOUNT C

INDEX

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . S-2
Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . . . S-3
Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Statements of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . S-9
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . S-10
Condensed Financial Information. . . . . . . . . . . . . . . . . . . . . . S-12

S-1

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors of Aetna Life Insurance and Annuity Company and
Contract Owners of Variable Annuity Account C:

We have audited the accompanying statement of assets and liabilities of Aetna
Life Insurance and Annuity Company Variable Annuity Account C (the "Account")
as of December 31, 1995, and the related statement of operations for the year
then ended, statements of changes in net assets for each of the years in the
two-year period then ended and condensed financial information for the year
ended December 31, 1995. These financial statements and condensed financial
information are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements and
condensed financial information based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
condensed financial information are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and condensed financial information
referred to above present fairly, in all material respects, the financial
position of the Aetna Life Insurance and Annuity Company Variable Annuity
Account C as of December 31, 1995, the results of its operations for the year
then ended, changes in its net assets for each of the years in the two-year
period then ended and condensed financial information for the year ended
December 31, 1995 in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Hartford, Connecticut
February 16, 1996

S-2

<PAGE>

VARIABLE ANNUITY ACCOUNT C

STATEMENT OF ASSETS AND LIABILITIES - December 31, 1995
<TABLE>
<CAPTION>

ASSETS:
<S> <C>
Investments, at net asset value: (Note 1)
Aetna Variable Fund; 135,944,293 shares at $29.06 per share (cost $3,682,373,523).................... $3,949,941,096
Aetna Income Shares; 29,688,857 shares at $13.00 per share (cost $382,776,733)....................... 386,007,595
Aetna Variable Encore Fund; 17,318,377 shares at $13.30 per share (cost $221,087,268) ............... 230,291,686
Aetna Investment Advisers Fund, Inc.; 49,855,715 shares at $14.50 per share
(cost $600,395,092) ............................................................................... 723,017,695
Aetna GET Fund, Series B; 5,897,397 shares at $12.40 per share (cost $59,712,454).................... 73,136,258
Aetna Ascent Variable Portfolio; 454,714 shares at $10.80 per share (cost $4,803,331)................ 4,908,736
Aetna Crossroads Variable Portfolio; 341,591 shares at $10.74 per share (cost $3,599,790)............ 3,668,757
Aetna Legacy Variable Portfolio; 180,468 shares at $10.64 per share (cost $1,883,466)................ 1,919,680
Alger American Funds:
Alger American Growth Portfolio; 1,234,082 shares at $31.16 per share (cost
$38,739,937)....................................................................................... 38,454,000
Alger American Small Capitalization Portfolio; 6,121,453 shares at $39.41 per share
(cost $203,207,523)................................................................................ 241,246,447
Calvert Responsibly Invested Balanced Portfolio; 16,846,014 shares at $1.70 per share
(cost $26,512,853)................................................................................ 28,688,761
Fidelity Investments Variable Insurance Products Funds:
Equity-Income Portfolio; 1,973,219 shares at $19.27 per share (cost $35,264,252)................... 38,023,939
Growth Portfolio; 949,237 shares at $29.20 per share (cost $27,212,340)............................ 27,717,728
Overseas Portfolio; 218,122 shares at $17.05 per share (cost $3,555,791)........................... 3,718,987
Fidelity Investments Variable Insurance Products Funds II -
Asset Manager Portfolio; 910,080 shares at $15.79 per share (cost $12,839,173)..................... 14,370,158
Contrafund Portfolio; 2,202,984 shares at $13.78 per share (cost $30,071,951) ..................... 30,357,117
Index 500 Portfolio; 45,055 shares at $75.71 per share (cost $3,187,279) .......................... 3,411,144
Franklin Government Securities Trust; 1,651,095 shares at $13.35 per share
(cost $21,210,874) .............................................................................. 22,042,115
Janus Aspen Series -
Aggressive Growth Portfolio; 5,116,845 shares at $17.08 per share (cost $74,304,318)............... 87,395,716
Balanced Portfolio; 115,516 shares at $13.03 per share (cost $1,444,640)........................... 1,505,170
Flexible Income Portfolio; 347,266 shares at $11.11 per share (cost $3,690,542).................... 3,858,123
Growth Portfolio; 376,690 shares at $13.45 per share (cost $4,920,509)............................. 5,066,487
Short-Term Bond Portfolio; 54,258 shares at $10.03 per share (cost $544,564)....................... 544,210
Worldwide Growth Portfolio; 1,048,130 shares at $15.31 per share (cost $15,260,366)................ 16,046,863
Lexington Emerging Markets Fund, Inc.; 329,323 shares at $9.38 per share (cost $3,135,164) .......... 3,089,046
Lexington Natural Resources Trust; 1,257,565 shares at $11.30 per share (cost $12,932,744) .......... 14,210,484
Neuberger & Berman Advisers Management Trust - Growth Portfolio; 3,460,773 shares
at $25.86 per share (cost $77,838,858)............................................................ 89,495,579
Scudder Variable Life Investment Fund - International Portfolio; 13,936,090 shares
at $11.82 per share (cost $151,941,144).................................. ........................ 164,724,583
TCI Portfolios, Inc. - TCI Growth; 35,261,982 shares at $12.06 per share (cost $333,587,996) ........ 425,259,499
NET ASSETS ............................................................................................ 6,632,117,659
--------------
--------------
</TABLE>
S-3
<PAGE>

Net assets represented by:

<TABLE>
<CAPTION>
Accumulation
Unit
Units Value
<S> <C> <C> <C>
Reserves for annuity contracts in accumulation and payment period:
AETNA VARIABLE FUND:
Qualified I ..................................................... 549,055.7 $180.879 $99,312,649
Qualified III ................................................... 6,364,000.3 137.869 877,395,210
Qualified IV .................................................... 269.0 83.646 22,498
Qualified V ..................................................... 121,691.2 14.113 1,717,411
Qualified VI .................................................... 188,964,022.4 14.077 2,660,123,261
Qualified VII ................................................... 9,779,134.6 13.247 129,544,460
Qualified VIII .................................................. 20,835.7 13.074 272,413
Qualified IX .................................................... 21,417.9 12.935 277,043
Qualified X (1.15)............................................... 273,578.4 14.108 3,859,670
Qualified X (1.25)............................................... 2,370,233.5 14.077 33,366,740
Reserves for annuity contracts in payment period (Note 1)........ 144,049,741
AETNA INCOME SHARES:
Qualified I ..................................................... 72,902.0 47.405 3,455,895
Qualified III ................................................... 2,377,621.8 46.913 111,541,104
Qualified V ..................................................... 20,427.2 12.283 250,918
Qualified VI .................................................... 21,379,975.5 12.098 258,665,226
Qualified VII ................................................... 185,030.5 11.176 2,067,926
Qualified VIII .................................................. 1,090.6 11.143 12,153
Qualified IX .................................................... 3,580.8 11.203 40,116
Qualified X (1.15)............................................... 50,261.1 12.125 609,409
Qualified X (1.25)............................................... 354,993.3 12.098 4,294,879
Reserves for annuity contracts in payment period (Note 1) ....... 5,069,969
AETNA VARIABLE ENCORE FUND:
Qualified I ..................................................... 150,480.4 38.485 5,791,253
Qualified III ................................................... 1,836,260.4 37.988 69,756,054
Qualified V ..................................................... 19,202.4 11.003 211,293
Qualified VI .................................................... 12,999,680.2 11.026 143,337,034
Qualified VII ................................................... 324,091.0 10.936 3,544,190
Qualified VIII .................................................. 656.2 10.620 6,969
Qualified IX .................................................... 3,050.3 10.857 33,118
Qualified X (1.15)............................................... 145,629.4 11.051 1,609,306
Qualified X (1.25)............................................... 544,382.5 11.026 6,002,469
AETNA INVESTMENT ADVISERS FUND, INC.:
Qualified I ..................................................... 393,612.5 18.024 7,094,461
Qualified III ................................................... 9,193,181.4 17.954 165,052,015
Qualified V ..................................................... 19,038.2 13.693 260,683
Qualified VI .................................................... 38,152,394.6 13.673 521,663,491
Qualified VII ................................................... 335,791.4 13.135 4,410,596
Qualified VIII .................................................. 1,055.3 12.695 13,397
Qualified IX .................................................... 3,961.7 12.613 49,969
Qualified X (1.15)............................................... 138,270.8 13.703 1,894,705
Qualified X (1.25)............................................... 940,932.7 13.673 12,865,516
Reserves for annuity contracts in payment period (Note 1) ....... 9,712,862
AETNA GET FUND, SERIES B:
Qualified III .................................................. 63,245.0 12.850 812,688

S-4
<PAGE>
<CAPTION>
Accumulation
Unit
Units Value
<S> <C> <C> <C>

Qualified VI..................................................... 5,279,157.0 12.850 67,836,249
Qualified X (1.25)............................................... 349,212.6 12.850 4,487,321
AETNA ASCENT VARIABLE PORTFOLIO:
Qualified III.................................................... 8.4 10.673 90
Qualified V...................................................... 202.1 10.666 2,156
Qualified VI..................................................... 393,052.6 10.673 4,195,040
Qualified VIII................................................... 7.7 10.673 82
Qualified X (1.15)............................................... 15,054.8 10.982 165,326
Qualified X (1.25)............................................... 49,748.1 10.976 546,042
AETNA CROSSROADS VARIABLE PORTFOLIO:
Qualified V...................................................... 243.2 10.605 2,579
Qualified VI..................................................... 294,673.3 10.612 3,126,954
Qualified VIII................................................... 43.8 10.611 464
Qualified X (1.15)............................................... 2,393.5 10.868 26,012
Qualified X (1.25)............................................... 47,204.4 10.862 512,748
AETNA LEGACY VARIABLE PORTFOLIO:
Qualified VI..................................................... 143,636.5 10.580 1,519,662
Qualified X (1.15)............................................... 17,106.0 10.631 181,853
Qualified X (1.25)............................................... 20,531.2 10.626 218,165
ALGER AMERICAN FUNDS:
ALGER AMERICAN GROWTH PORTFOLIO:
Qualified III ................................................... 530,262.6 11.715 6,211,911
Qualified V...................................................... 7,965.7 10.365 82,564
Qualified VI..................................................... 2,832,439.7 10.157 28,770,111
Qualified VIII................................................... 38.3 10.371 397
Qualified X (1.15)............................................... 12,858.7 11.385 146,392
Qualified X (1.25)............................................... 284,978.1 11.379 3,242,625
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO:
Qualified III ................................................... 1,714,187.0 13.558 23,241,019
Qualified V ..................................................... 31,527.5 13.463 424,453
Qualified VI .................................................... 15,036,764.7 13.450 202,245,073
Qualified VIII .................................................. 3,845.1 14.093 54,189
Qualified X (1.15)............................................... 54,683.5 13.481 737,179
Qualified X (1.25)............................................... 1,081,374.8 13.450 14,544,534
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO:
Qualified III ................................................... 856,360.5 17.951 15,372,772
Qualified V ..................................................... 14,656.3 13.870 203,278
Qualified VI .................................................... 966,097.9 13.527 13,068,322
Qualified VIII .................................................. 3,611.6 12.291 44,389
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS:
EQUITY-INCOME PORTFOLIO:
Qualified III ................................................... 628,581.6 11.617 7,301,978
Qualified V ..................................................... 1,107.9 11.047 12,239
Qualified VI .................................................... 1,660,304.1 11.092 18,415,763
Qualified VIII .................................................. 638.7 11.054 7,060
Qualified X (1.15)............................................... 118,679.1 13.902 1,649,878
Qualified X (1.25)............................................... 766,359.8 13.880 10,637,021
GROWTH PORTFOLIO:
Qualified III ................................................... 762.1 10.198 7,772
Qualified V ..................................................... 2,540.5 10.183 25,871
Qualified VI .................................................... 1,833,793.9 10.066 18,458,844

S-5
<PAGE>
<CAPTION>
Accumulation
Unit
Units Value
<S> <C> <C> <C>

Qualified VIII .................................................. 158.7 10.190 1,617
Qualified X (1.15)............................................... 45,764.6 14.023 641,737
Qualified X (1.25)............................................... 612,991.7 14.000 8,581,887
OVERSEAS PORTFOLIO:
Qualified III ................................................... 1,301.8 10.197 13,274
Qualified V ..................................................... 190.8 9.954 1,899
Qualified VI .................................................... 196,089.8 9.961 1,953,206
Qualified X (1.15)............................................... 4,284.4 10.278 44,037
Qualified X (1.25)............................................... 166,303.2 10.262 1,706,571
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS II:
ASSET MANAGER PORTFOLIO:
Qualified III.................................................... 1,316,915.5 10.912 14,370,158
CONTRAFUND PORTFOLIO:
Qualified III ................................................... 525,476.0 11.763 6,181,326
Qualified V ..................................................... 6,415.4 10.461 67,111
Qualified VI .................................................... 2,116,732.0 10.397 22,007,519
Qualified VIII .................................................. 173.7 10.467 1,818
Qualified X (1.15)............................................... 5,452.8 10.689 63,737
Qualified X (1.25)............................................... 174,259.3 10.681 2,035,606
INDEX 500 PORTFOLIO:
Qualified III ................................................... 290,546.8 11.740 3,411,144
FRANKLIN GOVERNMENT SECURITIES TRUST:
Qualified III ................................................... 809,413.7 16.495 13,351,329
Qualified V ..................................................... 16,226.2 11.946 193,844
Qualified VI .................................................... 717,760.0 11.762 8,442,415
Qualified VIII .................................................. 4,916.9 11.090 54,527
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO:
Qualified III ................................................... 1,280,952.5 15.323 19,627,517
Qualified V.. ................................................... 15,482.4 13.296 205,852
Qualified VI. ................................................... 4,887,059.8 13.322 65,105,449
Qualified VIII .................................................. 1,021.7 13.321 13,610
Qualified X (1.15)............................................... 22,049.9 12.869 283,760
Qualified X (1.25)............................................... 167,919.9 12.861 2,159,528
BALANCED PORTFOLIO:
Qualified III ................................................... 161.4 10.853 1,751
Qualified V ..................................................... 160.2 10.843 1,737
Qualified VI .................................................... 93,303.8 10.850 1,012,385
Qualified X (1.15)............................................... 9,382.9 11.265 105,697
Qualified X (1.25)............................................... 34,071.6 11.259 383,600
FLEXIBLE INCOME PORTFOLIO:
Qualified III ................................................... 3,344.5 12.124 40,550
Qualified V ..................................................... 745.1 12.054 8,981
Qualified VI .................................................... 315,361.3 12.077 3,808,592
GROWTH PORTFOLIO:
Qualified III ................................................... 109,716.5 11.859 1,301,115
Qualified V. .................................................... 166.2 10.872 1,807
Qualified VI. ................................................... 259,195.5 10.870 2,817,612
Qualified X (1.15)............................................... 3,238.4 11.633 37,671
Qualified X (1.25)............................................... 78,126.0 11.626 908,282

S-6
<PAGE>
<CAPTION>
Accumulation
Unit
Units Value
<S> <C> <C> <C>

SHORT-TERM BOND PORTFOLIO:
Qualified III ................................................... 18,472.9 10.393 191,983
Qualified V ..................................................... 23.8 10.316 245
Qualified VI .................................................... 32,695.8 10.323 337,528
Qualified X (1.25)............................................... 1,405.3 10.285 14,454
WORLDWIDE GROWTH PORTFOLIO:
Qualified III ................................................... 314,652.7 12.158 3,825,607
Qualified V ..................................................... 11,127.9 10.952 121,875
Qualified VI .................................................... 1,036,039.6 10.877 11,268,519
Qualified VIII .................................................. 13.7 10.846 149
Qualified X (1.15)............................................... 2,616.9 12.223 31,987
Qualified X (1.25)............................................... 65,384.2 12.216 798,726
LEXINGTON EMERGING MARKETS FUND:
Qualified III ................................................... 371,155.8 8.323 3,089,046
LEXINGTON NATURAL RESOURCES TRUST:
Qualified III ................................................... 530,562.2 10.862 5,763,092
Qualified V ..................................................... 8,347.9 12.095 100,969
Qualified VI .................................................... 711,891.9 11.720 8,346,423
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
GROWTH PORTFOLIO:
Qualified III ................................................... 2,359,089.9 17.430 41,119,982
Qualified V ..................................................... 35,940.7 14.359 516,068
Qualified VI .................................................... 3,331,217.5 14.345 47,786,169
Qualified VIII .................................................. 5,947.6 12.334 73,360
SCUDDER VARIABLE LIFE INVESTMENT FUND:
INTERNATIONAL PORTFOLIO:
Qualified III ................................................... 3,823,292.2 14.515 55,495,694
Qualified V ..................................................... 38,067.4 13.799 525,305
Qualified VI .................................................... 7,323,208.0 13.923 101,958,550
Qualified VIII .................................................. 12,189.3 11.733 143,011
Qualified X (1.15)............................................... 41,921.0 13.952 584,886
Qualified X (1.25)............................................... 432,183.0 13.923 6,017,137
TCI PORTFOLIOS, INC.:
TCI GROWTH:
Qualified III *.................................................. 1,784,551.6 14.464 25,811,741
Qualified III .................................................. 4,184,701.2 13.224 55,336,455
Qualified V ..................................................... 24,825.6 15.176 376,753
Qualified VI .................................................... 21,986,645.3 15.253 335,360,124
Qualified VII ................................................... 63,035.5 12.840 809,380
Qualified VIII .................................................. 8,144.3 12.868 104,799
Qualified IX .................................................... 1,241.8 12.581 15,623
Qualified X (1.15)............................................... 13,306.7 15.285 203,397
Qualified X (1.25)............................................... 474,744.3 15.253 7,241,227
$6,632,117,659
--------------
--------------
</TABLE>

*Applies only to participants of the Opportunity Plus program and Multiple
Options Contracts.
See Notes to Financial Statements.

S-7
<PAGE>
VARIABLE ANNUITY ACCOUNT C

STATEMENT OF OPERATIONS - Year Ended December 31, 1995
<TABLE>
<CAPTION>

INVESTMENT INCOME:
<S> <C> <C>
Dividends: (Notes 1 and 3)
Aetna Variable Fund............................................................ $648,150,765
Aetna Income Shares............................................................ 23,872,308
Aetna Variable Encore Fund .................................................... 172,751
Aetna Investment Advisers Fund, Inc............................................ 47,274,300
Aetna GET Fund, Series B ...................................................... 1,878,972
Aetna Ascent Variable Portfolio ............................................... 110,626
Aetna Crossroads Variable Portfolio ........................................... 61,834
Aetna Legacy Variable Portfolio ............................................... 33,640
Calvert Responsibly Invested Balanced Portfolio .............................. 2,556,825
Fidelity Investments Variable Insurance Products Fund - Equity Income Portfolio 423,626
Fidelity Investments Variable Insurance Products Fund - Growth Portfolio ...... 10,256
Fidelity Investments Variable Insurance Products Fund - Overseas Portfolio .... 5,145
Fidelity Investments Variable Insurance Products Fund II - Asset Manager Portfolio 259,914
Fidelity Investments Variable Insurance Products Fund II - Contrafund Portfolio 379,043
Franklin Government Securities Trust .......................................... 1,061,449
Janus Aspen Series - Aggressive Growth Portfolio............................... 982,586
Janus Aspen Series - Balanced Portfolio........................................ 11,553
Janus Aspen Series - Flexible Income Portfolio................................. 151,761
Janus Aspen Series - Growth Portfolio.......................................... 91,472
Janus Aspen Series - Short-Term Bond Portfolio................................. 11,707
Janus Aspen Series - Worldwide Growth Portfolio................................ 50,858
Lexington Emerging Markets Fund................................................ 29,990
Lexington Natural Resources Trust.............................................. 59,767
Neuberger & Berman Advisers Management Trust - Growth Portfolio ............... 1,779,523
Scudder Variable Life Investment Fund - International Portfolio............... 670,720
TCI Portfolios, Inc. - TCI Growth.............................................. 339,221
--------------
Total investment income ..................................................... 730,430,612
Valuation period deductions (Note 2)............................................. (71,090,542)
--------------
Net investment income............................................................ 659,340,070
--------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1 and 4)
Proceeds from sales ........................................................... $570,154,582
Cost of investments sold ...................................................... 409,480,615
------------
Net realized gain ........................................................... 160,673,967
Net unrealized gain on investments:
Beginning of year ............................................................. 73,479,233
End of year ................................................................... 594,083,184
------------
Net unrealized gain ......................................................... 520,603,951
--------------
Net realized and unrealized gain on investments ................................. 681,277,918
--------------
Net increase in net assets resulting from operations ............................ $1,340,617,988
--------------
--------------
</TABLE>

See Notes to Financial Statements.

S-8
<PAGE>
VARIABLE ANNUITY ACCOUNT C

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,
1995 1994
---- ----
<S> <C> <C>
FROM OPERATIONS:
Net investment income .......................................... $ 659,340,070 $ 476,196,420
Net realized and unrealized gain (loss) on investments .......... 681,277,918 (581,812,453)
Net increase (decrease) in net assets resulting from operations 1,340,617,988 (105,616,033)
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ..................... 771,594,245 711,565,372
Sales and administrative charges deducted by the Company ........ (98,694) (137,737)
Net variable annuity contract purchase payments ............... 771,495,551 711,427,635
Transfers from the Company for mortality guarantee adjustments .. 3,678,430 1,880,350
Transfers to the Company's fixed account options ................ (44,377,350) (56,920,532)
Transfers to other variable annuity accounts ........... 0 (23,284,415)
Redemptions by contract holders ................................. (287,945,984) (269,542,942)
Annuity payments ................................................ (14,807,537) (11,189,149)
Other ........................................................... 1,144,770 1,452,959
Net increase in net assets from unit transactions ............. 429,187,880 353,823,906
Change in net assets ............................................ 1,769,805,868 248,207,873
NET ASSETS:
Beginning of year ............................................... 4,862,311,791 4,614,103,918
End of year...................................................... $6,632,117,659 $4,862,311,791
-------------- --------------
-------------- --------------
</TABLE>

See Notes to Financial Statements.

S-9
<PAGE>
VARIABLE ANNUITY ACCOUNT C

NOTES TO FINANCIAL STATEMENTS - December 31, 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Variable Annuity Account C ("Account") is registered under the Investment
Company Act of 1940 as a unit investment trust. The Account is sold
exclusively for use with annuity contracts that are qualified under the
Internal Revenue Code of 1986, as amended.

The accompanying financial statements of the Account have been prepared in
accordance with generally accepted accounting principles.

a. VALUATION OF INVESTMENTS

Investments in the following Funds are stated at the closing net asset
value per share as determined by each Fund on December 31, 1995:

Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna GET Fund, Series B
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Alger American Fund:
- Alger American Growth Portfolio
- Alger American Small Capitalization Portfolio
Calvert Responsibly Invested Balanced Portfolio
Fidelity Investments Variable Insurance Products Fund:
- Equity-Income Portfolio
- Growth Portfolio
- Overseas Portfolio
Fidelity Investments Variable Insurance Products Fund II:
- Asset Manager Portfolio
- Contrafund Portfolio
- Index 500 Portfolio

Franklin Government Securities Trust
Janus Aspen Series:
- Aggressive Growth Portfolio
- Balanced Portfolio
- Flexible Income Portfolio
- Growth Portfolio
- Short-Term Bond Portfolio
- Worldwide Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
Neuberger & Berman Advisers Management Trust:
- Growth Portfolio
Scudder Variable Life Investment Fund:
- International Portfolio
TCI Portfolios, Inc.:
- TCI Growth

b. OTHER
Investment transactions are accounted for on a trade date basis and
dividend income is recorded on the ex-dividend date. The cost of
investments sold is determined by specific identification.

c. FEDERAL INCOME TAXES
The operations of Variable Annuity Account C form a part of, and are taxed
with, the total operations of Aetna Life Insurance and Annuity Company
("Company") which is taxed as a life insurance company under the Internal
Revenue Code of 1986, as amended.

d. ANNUITY RESERVES
Annuity reserves are computed for currently payable contracts according
to the Progressive Annuity, Individual Annuity Mortality, and Group
Annuity Mortality tables using various assumed interest rates not to
exceed seven percent. Mortality experience is monitored by the Company.

S-10

<PAGE>

VARIABLE ANNUITY ACCOUNT C

NOTES TO FINANCIAL STATEMENTS - December 31, 1995 (continued)

Charges to annuity reserves for mortality and expense risk experience are
reimbursed to the Company if the reserves required are less than originally
estimated. If additional reserves are required, the Company reimburses the
Account.

2. VALUATION PERIOD DEDUCTIONS
Deductions by the Account for mortality and expense risk charges are made
in accordance with the terms of the contracts and are paid to the Company.

3. DIVIDEND INCOME
On an annual basis the Funds distribute substantially all of their taxable
income and realized capital gains to their shareholders. Distributions to
the Account are automatically reinvested in shares of the Funds. The
Account's proportionate share of each Fund's undistributed net investment
income and accumulated net realized gain on investments is included in net
unrealized gain in the Statement of Operations.

4. PURCHASES AND SALES OF INVESTMENTS

The cost of purchases and proceeds from sales of investments other than
short-term investments for the year ended December 31, 1995 aggregated
$1,658,682,532 and $570,154,582, respectively.

5. ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported therein. Although actual results
could differ from these estimates, any such differences are expected to be
immaterial to the net assets of the Account.

S-11

<PAGE>

VARIABLE ANNUITY ACCOUNT C

CONDENSED FINANCIAL INFORMATION

CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Increase
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AETNA VARIABLE FUND:
Qualified I ............................................................. $138.406 $180.879 30.69%
Qualified III ........................................................... 105.558 137.869 30.61%
Qualified IV ............................................................ 63.884 83.646 30.93%
Qualified V ............................................................. 10.823 14.113 30.40%
Qualified VI ............................................................ 10.778 14.077 30.61%
Qualified VII ........................................................... 10.136 13.247 30.69%
Qualified VIII .......................................................... 10.011 13.074 30.60%
Qualified IX ............................................................ 9.879 12.935 30.93%
Qualified X (1.15) ...................................................... 10.791 14.108 30.74%
Qualified X (1.25) ...................................................... 10.778 14.077 30.61%
- -------------------------------------------------------------------------------------------------------------------------
AETNA INCOME SHARES:
Qualified I ............................................................. $ 40.570 $ 47.405 16.85%
Qualified III ........................................................... 40.173 46.913 16.78%
Qualified V ............................................................. 10.536 12.283 16.59%
Qualified VI ............................................................ 10.360 12.098 16.78%
Qualified VII ........................................................... 9.565 11.176 16.85%
Qualified VIII .......................................................... 9.543 11.143 16.77%
Qualified IX ............................................................ 9.570 11.203 17.07%
Qualified X (1.15) ...................................................... 10.373 12.125 16.89%
Qualified X (1.25) ...................................................... 10.360 12.098 16.78%
- -------------------------------------------------------------------------------------------------------------------------
AETNA VARIABLE ENCORE FUND:
Qualified I ............................................................. $ 36.723 $ 38.485 4.80%
Qualified III ........................................................... 36.271 37.988 4.73%
Qualified V ............................................................. 10.523 11.003 4.57%
Qualified VI ............................................................ 10.528 11.026 4.73%
Qualified VII ........................................................... 10.435 10.936 4.80%
Qualified VIII .......................................................... 10.141 10.620 4.73%
Qualified IX ............................................................ 10.341 10.857 5.00%
Qualified X (1.15) ...................................................... 10.541 11.051 4.84%
Qualified X (1.25) ...................................................... 10.528 11.026 4.73%
- -------------------------------------------------------------------------------------------------------------------------
AETNA INVESTMENT ADVISERS FUND, INC.:
Qualified I ............................................................. $ 14.317 $ 18.024 25.89%
Qualified III ........................................................... 14.270 17.954 25.82%
Qualified V ............................................................. 10.900 13.693 25.62%
Qualified VI ............................................................ 10.868 13.673 25.81%
Qualified VII ........................................................... 10.434 13.135 25.89%
Qualified VIII .......................................................... 10.091 12.695 25.81%
Qualified IX ............................................................ 10.000 12.613 26.13%
Qualified X (1.15) ...................................................... 10.880 13.703 25.95%
Qualified X (1.25) ...................................................... 10.868 13.673 25.81%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

S-12
<PAGE>

VARIABLE ANNUITY ACCOUNT C

CONDENSED FINANCIAL INFORMATION

CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------

Increase
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AETNA GET FUND, SERIES B:
Qualified III ........................................................... $ 10.160 $ 12.850 26.48%
Qualified VI ............................................................ 10.160 12.850 26.48%
Qualified X (1.25) ...................................................... 10.160 12.850 26.48%
- -------------------------------------------------------------------------------------------------------------------------
AETNA ASCENT VARIABLE PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.673 6.73% (4)
Qualified V ............................................................. 10.000 10.666 6.66% (5)
Qualified VI ............................................................ 10.000 10.673 6.73% (5)
Qualified VIII .......................................................... 10.000 10.673 6.73% (5)
Qualified X (1.15) ...................................................... 10.000 10.982 9.82% (3)
Qualified X (1.25) ...................................................... 10.000 10.976 9.76% (3)
- -------------------------------------------------------------------------------------------------------------------------
AETNA CROSSROADS VARIABLE PORTFOLIO:
Qualified V ............................................................. $ 10.000 $ 10.605 6.05% (5)
Qualified VI ............................................................ 10.000 10.612 6.12% (5)
Qualified VIII .......................................................... 10.000 10.611 6.11% (5)
Qualified X (1.15) ...................................................... 10.000 10.868 8.68% (3)
Qualified X (1.25) ...................................................... 10.000 10.862 8.62% (3)
- -------------------------------------------------------------------------------------------------------------------------
AETNA LEGACY VARIABLE PORTFOLIO:
Qualified VI ............................................................ $ 10.000 $ 10.580 5.80% (5)
Qualified X (1.15) ...................................................... 10.000 10.631 6.31% (4)
Qualified X (1.25) ...................................................... 10.000 10.626 6.26% (4)
- -------------------------------------------------------------------------------------------------------------------------
ALGER AMERICAN FUNDS:
ALGER AMERICAN GROWTH PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.715 17.15% (4)
Qualified V ............................................................. 10.000 10.365 3.65% (5)
Qualified VI ............................................................ 10.000 10.157 1.57% (5)
Qualified VIII .......................................................... 10.000 10.371 3.71% (5)
Qualified X (1.15) ...................................................... 10.000 11.385 13.85% (3)
Qualified X (1.25) ...................................................... 10.000 11.379 13.79% (3)
- -------------------------------------------------------------------------------------------------------------------------
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO:
Qualified III ........................................................... $ 9.513 $ 13.558 42.52%
Qualified V ............................................................. 9.461 13.463 42.29%
Qualified VI ............................................................ 9.437 13.450 42.52%
Qualified VIII .......................................................... 9.889 14.093 42.51%
Qualified X (1.15) ...................................................... 9.450 13.481 42.66%
Qualified X (1.25) ...................................................... 9.437 13.450 42.52%
- -------------------------------------------------------------------------------------------------------------------------
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO:
Qualified III ........................................................... $ 13.990 $ 17.951 28.31%
Qualified V ............................................................. 10.839 13.870 27.96%
Qualified VI ............................................................ 10.554 13.527 28.17%
Qualified VIII .......................................................... 9.590 12.291 28.16%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

S-13
<PAGE>

VARIABLE ANNUITY ACCOUNT C

CONDENSED FINANCIAL INFORMATION

CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Increase
(Decrease)
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS:
EQUITY - INCOME PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.617 16.17% (2)
Qualified V ............................................................. 10.000 11.047 10.47% (5)
Qualified VI ............................................................ 10.000 11.092 10.92% (5)
Qualified VIII .......................................................... 10.000 11.054 10.54% (5)
Qualified X (1.15) ...................................................... 10.409 13.902 33.55%
Qualified X (1.25) ...................................................... 10.403 13.880 33.42%
- -------------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.198 1.98% (4)
Qualified V ............................................................. 10.000 10.183 1.83% (5)
Qualified VI ............................................................ 10.000 10.066 0.66% (5)
Qualified VIII .......................................................... 10.000 10.190 1.90% (5)
Qualified X (1.15) ...................................................... 10.479 14.023 33.82%
Qualified X (1.25) ...................................................... 10.472 14.000 33.69%
- -------------------------------------------------------------------------------------------------------------------------
OVERSEAS PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.197 1.97% (4)
Qualified V ............................................................. 10.000 9.954 (0.46%) (5)
Qualified VI ............................................................ 10.000 9.961 (0.39%) (5)
Qualified X (1.15) ...................................................... 9.480 10.278 8.43%
Qualified X (1.25) ...................................................... 9.474 10.262 8.32%
- -------------------------------------------------------------------------------------------------------------------------
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS II:
ASSET MANAGER PORTFOLIO:
Qualified III ........................................................... $ 9.447 $ 10.912 15.51%
- -------------------------------------------------------------------------------------------------------------------------
CONTRAFUND PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.763 17.63% (2)
Qualified V ............................................................. 10.000 10.461 4.61% (5)
Qualified VI ............................................................ 10.000 10.397 3.97% (5)
Qualified VIII .......................................................... 10.000 10.467 4.67% (5)
Qualified X (1.15) ...................................................... 10.000 10.689 6.89% (2)
Qualified X (1.25) ...................................................... 10.000 10.681 6.81% (2)
- -------------------------------------------------------------------------------------------------------------------------
INDEX 500 PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.740 17.40% (2)
- -------------------------------------------------------------------------------------------------------------------------
FRANKLIN GOVERNMENT SECURITIES TRUST:
Qualified III ........................................................... $ 14.190 $ 16.495 16.24%
Qualified V ............................................................. 10.294 11.946 16.06%
Qualified VI ............................................................ 10.119 11.762 16.24%
Qualified VIII .......................................................... 9.541 11.090 16.23%
- -------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO:
Qualified III ........................................................... $ 12.169 $ 15.323 25.91%
Qualified V ............................................................. 10.577 13.296 25.71%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

S-14
<PAGE>

VARIABLE ANNUITY ACCOUNT C

CONDENSED FINANCIAL INFORMATION

CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Increase
(Decrease)
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO (continued):
Qualified VI ............................................................ $ 10.581 $ 13.322 25.91%
Qualified VIII .......................................................... 10.581 13.321 25.90%
Qualified X (1.15) ...................................................... 10.000 12.869 28.69% (2)
Qualified X (1.25) ...................................................... 10.000 12.861 28.61% (2)
- -------------------------------------------------------------------------------------------------------------------------
BALANCED PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.853 8.53% (4)
Qualified V ............................................................. 10.000 10.843 8.43% (5)
Qualified VI ............................................................ 10.000 10.850 8.50% (5)
Qualified X (1.15) ...................................................... 10.000 11.265 12.65% (3)
Qualified X (1.25) ...................................................... 10.000 11.259 12.59% (3)
- -------------------------------------------------------------------------------------------------------------------------
FLEXIBLE INCOME PORTFOLIO:
Qualified III ........................................................... $ 9.911 $ 12.124 22.33%
Qualified V ............................................................. 10.000 12.054 20.54% (1)
Qualified VI ............................................................ 9.873 12.077 22.33%
- -------------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 11.859 18.59% (4)
Qualified V ............................................................. 10.000 10.872 8.72% (5)
Qualified VI ............................................................ 10.000 10.870 8.70% (5)
Qualified X (1.15) ...................................................... 10.000 11.633 16.33% (3)
Qualified X (1.25) ...................................................... 10.000 11.626 16.26% (3)
- -------------------------------------------------------------------------------------------------------------------------
SHORT TERM BOND PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 10.393 3.93% (4)
Qualified V ............................................................. 10.000 10.316 3.16% (5)
Qualified VI ............................................................ 10.000 10.323 3.23% (5)
Qualified X (1.25) ...................................................... 10.000 10.285 2.85% (4)
- -------------------------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH PORTFOLIO:
Qualified III ........................................................... $ 10.000 $ 12.158 21.58% (4)
Qualified V ............................................................. 10.000 10.952 9.52% (4)
Qualified VI ............................................................ 10.000 10.877 8.77% (5)
Qualified VIII .......................................................... 10.000 10.846 8.46% (5)
Qualified X (1.15) ...................................................... 10.000 12.223 22.23% (2)
Qualified X (1.25) ...................................................... 10.000 12.216 22.16% (2)
- -------------------------------------------------------------------------------------------------------------------------
LEXINGTON EMERGING MARKETS FUND:
Qualified III ........................................................... $ 8.772 $ 8.323 (5.12%)
- -------------------------------------------------------------------------------------------------------------------------
LEXINGTON NATURAL RESOURCES TRUST:
Qualified III ........................................................... $ 9.412 $ 10.862 15.41%
Qualified V ............................................................. 10.496 12.095 15.24%
Qualified VI ............................................................ 10.154 11.720 15.42%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

S-15
<PAGE>

VARIABLE ANNUITY ACCOUNT C

CONDENSED FINANCIAL INFORMATION

CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Increase
Value at Value at in Value of
Beginning End of Accumulation
of Year Year Unit
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST - GROWTH PORTFOLIO:
Qualified III ........................................................... $ 13.398 $ 17.430 30.09%
Qualified V ............................................................. 11.055 14.359 29.89%
Qualified VI ............................................................ 11.026 14.345 30.10%
Qualified VIII .......................................................... 9.482 12.334 30.09%
- --------------------------------------------------------------------------------------------------------------------------
SCUDDER VARIABLE LIFE INVESTMENT FUND - INTERNATIONAL
PORTFOLIO:
Qualified III ........................................................... $ 13.227 $ 14.515 9.74%
Qualified V ............................................................. 12.595 13.799 9.56%
Qualified VI ............................................................ 12.687 13.923 9.74%
Qualified VIII .......................................................... 10.692 11.733 9.73%
Qualified X (1.15) ...................................................... 12.701 13.952 9.85%
Qualified X (1.25) ...................................................... 12.687 13.923 9.74%
- --------------------------------------------------------------------------------------------------------------------------
TCI PORTFOLIOS, INC.:
TCI GROWTH:
Qualified III* .......................................................... $ 11.172 $ 14.464 29.47%
Qualified III ........................................................... 10.213 13.224 29.47%
Qualified V ............................................................. 11.740 15.176 29.27%
Qualified VI ............................................................ 11.781 15.253 29.47%
Qualified VII ........................................................... 9.911 12.840 29.55%
Qualified VIII .......................................................... 9.939 12.868 29.46%
Qualified IX ............................................................ 9.693 12.581 29.80%
Qualified X (1.15) ...................................................... 11.794 15.285 29.60%
Qualified X (1.25) ...................................................... 11.781 15.253 29.47%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

*Applies only to participants of the Opportunity Plus program and Multiple
Options Contracts.

QUALIFIED I Individual contracts issued prior to May 1, 1975
in connection with "Qualified Corporate Retirement
Plans" established pursuant to Section 401 of the
Internal Revenue Code ("Code"); "Tax-Deferred
Annuity Plans" established by the public school
systems and tax-exempt organizations pursuant to
Section 403(b) of the Code, and certain Individual
Retirement Annuity Plans established by or on
behalf of individuals pursuant to section 408(b)
of the Code; Individual contracts issued prior to
November 1, 1975 in connection with "H.R. 10
Plans" established by persons entitled to the
benefits of the Self-Employed Individuals Tax
Retirement Act of 1962, as amended; allocated
group contracts issued prior to May 1, 1975 in
connection with Qualified Corporate Retirement
Plans; and group contracts issued prior to
October 1, 1978 in connection with Tax-Deferred
Annuity Plans.

QUALIFIED III Individual contracts issued in connection with
Tax-Deferred Annuity Plans and Individual
Retirement Annuity Plans since May 1, 1975, H.R.
10 Plans since November 1, 1975; group contracts
issued since October 1, 1978 in connection with
Tax-Deferred Annuity

S-16
<PAGE>

VARIABLE ANNUITY ACCOUNT C

CONDENSED FINANCIAL INFORMATION

CHANGE IN VALUE OF ACCUMULATION UNIT - JANUARY 1, 1995 TO DECEMBER 31, 1995
(continued)

- --------------------------------------------------------------------------------

QUALIFIED III (continued): Plans and group contracts issued since May 1, 1979
in connection with "Deferred Compensation Plans"
adopted by state and local governments and H.R. 10
Plans.

QUALIFIED IV Certain large group contracts (Jumbo) issued in
connection with Tax-Deferred Annuity Plans and
Deferred Compensation Plans issued since
January 1, 1979.

QUALIFIED V Group AetnaPlus contracts issued since August 28,
1992 in connection with "Optional Retirement
Plans" established pursuant to Section 403(b) or
401(a) of the Internal Revenue Code.

QUALIFIED VI Group AetnaPlus contracts issued in connection
with Tax-Deferred Annuity Plans and Retirement
Plus Plans since August 28, 1992.

QUALIFIED VII Certain existing contracts that were converted to
ACES, the new administrative system (Previously
valued under Qualified I).

QUALIFIED VIII "Group Aetna Plus" contracts issued in connection
with Tax-Deferred Annuity Plans and "Deferred
Compensation Plans" adopted by state and local
governments since June 30, 1993.

QUALIFIED IX Certain large group contracts (Jumbo) that were
converted to ACES, the new administrative system
(previously valued under Qualified VI).

QUALIFIED X Individual Retirement Annuity and Simplified
Employee Pension Plans issued or converted to
ACES, the new administrative system.

1 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during March 1995 when
the fund became available under the contract or the applicable daily asset
charge was first utilized.
2 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during May 1995 when the
fund became available under the contract or the applicable daily asset
charge was first utilized.
3 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during June 1995 when
the fund became available under the contract or the applicable daily asset
charge was first utilized.
4 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during July 1995 when
the fund became available under the contract or the applicable daily asset
charge was first utilized.
5 - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during August 1995 when
the fund became available under the contract or the applicable daily asset
charge was first utilized.

S-17
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
Index

<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Independent Auditors' Report..................................... F-2
Consolidated Financial Statements:
Consolidated Statements of Income for the Years Ended
December 31, 1995, 1994 and 1993.............................. F-3
Consolidated Balance Sheets as of December 31, 1995 and 1994... F-4
Consolidated Statements of Changes in Shareholder's Equity for
the Years Ended
December 31, 1995, 1994 and 1993.............................. F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993.............................. F-6
Notes to Consolidated Financial Statements....................... F-7
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Shareholder and Board of Directors
Aetna Life Insurance and Annuity Company:

We have audited the accompanying consolidated balance sheets of Aetna Life
Insurance and Annuity Company and Subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income, changes in shareholder's
equity and cash flows for each of the years in the three-year period ended
December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Aetna Life Insurance
and Annuity Company and Subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.

As discussed in Note 1 to the consolidated financial statements, in 1993 the
Company changed its methods of accounting for certain investments in debt and
equity securities.

KPMG Peat Marwick LLP

Hartford, Connecticut
February 6, 1996

F-2
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Consolidated Statements of Income
(millions)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Premiums............................................. $ 130.8 $ 124.2 $ 82.1
Charges assessed against policyholders............... 318.9 279.0 251.5
Net investment income................................ 1,004.3 917.2 911.9
Net realized capital gains........................... 41.3 1.5 9.5
Other income......................................... 42.0 10.3 9.5
-------- -------- --------
Total revenue...................................... 1,537.3 1,332.2 1,264.5
-------- -------- --------
Benefits and expenses:
Current and future benefits.......................... 915.3 854.1 818.4
Operating expenses................................... 318.7 235.2 207.2
Amortization of deferred policy acquisition costs.... 43.3 26.4 19.8
-------- -------- --------
Total benefits and expenses........................ 1,277.3 1,115.7 1,045.4
-------- -------- --------
Income before federal income taxes..................... 260.0 216.5 219.1
Federal income taxes................................. 84.1 71.2 76.2
-------- -------- --------
Net income............................................. $ 175.9 $ 145.3 $ 142.9
-------- -------- --------
-------- -------- --------
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-3
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Consolidated Balance Sheets
(millions)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
- -------------------------------------------------------
Investments:
Debt securities, available for sale:
(amortized cost: $11,923.7 and $10,577.8)........... $12,720.8 $10,191.4
Equity securities, available for sale:
Non-redeemable preferred stock (cost: $51.3 and
$43.3)............................................ 57.6 47.2
Investment in affiliated mutual funds (cost: $173.4
and $187.1)....................................... 191.8 181.9
Common stock (cost: $6.9 at December 31, 1995)..... 8.2 --
Short-term investments............................... 15.1 98.0
Mortgage loans....................................... 21.2 9.9
Policy loans......................................... 338.6 248.7
Limited partnership.................................. -- 24.4
--------- ---------
Total investments................................ 13,353.3 10,801.5

Cash and cash equivalents.............................. 568.8 623.3
Accrued investment income.............................. 175.5 142.2
Premiums due and other receivables..................... 37.3 75.8
Deferred policy acquisition costs...................... 1,341.3 1,164.3
Reinsurance loan to affiliate.......................... 655.5 690.3
Other assets........................................... 26.2 15.9
Separate Accounts assets............................... 10,987.0 7,420.8
--------- ---------
Total assets..................................... $27,144.9 $20,934.1
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDER'S EQUITY
- -------------------------------------------------------
Liabilities:
Future policy benefits............................... $ 3,594.6 $ 2,912.7
Unpaid claims and claim expenses..................... 27.2 23.8
Policyholders' funds left with the Company........... 10,500.1 8,949.3
--------- ---------
Total insurance reserve liabilities.............. 14,121.9 11,885.8
Other liabilities.................................... 259.2 302.1
Federal income taxes:
Current............................................ 24.2 3.4
Deferred........................................... 169.6 233.5
Separate Accounts liabilities........................ 10,987.0 7,420.8
--------- ---------
Total liabilities................................ 25,561.9 19,845.6
--------- ---------
--------- ---------
Shareholder's equity:
Common stock, par value $50 (100,000 shares
authorized;
55,000 shares issued and outstanding)............... 2.8 2.8
Paid-in capital...................................... 407.6 407.6
Net unrealized capital gains (losses)................ 132.5 (189.0)
Retained earnings.................................... 1,040.1 867.1
--------- ---------
Total shareholder's equity....................... 1,583.0 1,088.5
--------- ---------
Total liabilities and shareholder's equity..... $27,144.9 $20,934.1
--------- ---------
--------- ---------
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-4
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Consolidated Statements of Changes in Shareholder's Equity
(millions)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Shareholder's equity, beginning of year................ $ 1,088.5 $ 1,246.7 $ 990.1
Net change in unrealized capital gains (losses)........ 321.5 (303.5) 113.7
Net income............................................. 175.9 145.3 142.9
Common stock dividends declared........................ (2.9) -- --
--------- --------- ---------
Shareholder's equity, end of year...................... $ 1,583.0 $ 1,088.5 $ 1,246.7
--------- --------- ---------
--------- --------- ---------
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-5
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Consolidated Statements of Cash Flows
(millions)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income........................................... $ 175.9 $ 145.3 $ 142.9
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accrued investment income.............. (33.3) (17.5) (11.1)
Decrease (increase) in premiums due and other
receivables....................................... 25.4 1.3 (5.6)
Increase in policy loans........................... (89.9) (46.0) (36.4)
Increase in deferred policy acquisition costs...... (177.0) (105.9) (60.5)
Decrease in reinsurance loan to affiliate.......... 34.8 27.8 31.8
Net increase in universal life account balances.... 393.4 164.7 126.4
Increase in other insurance reserve liabilities.... 79.0 75.1 86.1
Net increase in other liabilities and other
assets............................................ 15.0 53.9 7.0
Decrease in federal income taxes................... (6.5) (11.7) (3.7)
Net accretion of discount on bonds................. (66.4) (77.9) (88.1)
Net realized capital gains......................... (41.3) (1.5) (9.5)
Other, net......................................... -- (1.0) 0.2
---------- ---------- ----------
Net cash provided by operating activities........ 309.1 206.6 179.5
---------- ---------- ----------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale................. 4,207.2 3,593.8 473.9
Equity securities.................................. 180.8 93.1 89.6
Mortgage loans..................................... 10.7 -- --
Limited partnership................................ 26.6 -- --
Investment maturities and collections of:
Debt securities available for sale................. 583.9 1,289.2 2,133.3
Short-term investments............................. 106.1 30.4 19.7
Cost of investment purchases in:
Debt securities.................................... (6,034.0) (5,621.4) (3,669.2)
Equity securities.................................. (170.9) (162.5) (157.5)
Short-term investments............................. (24.7) (106.1) (41.3)
Mortgage loans..................................... (21.3) -- --
Limited partnership................................ -- (25.0) --
---------- ---------- ----------
Net cash used for investing activities........... (1,135.6) (908.5) (1,151.5)
---------- ---------- ----------
Cash Flows from Financing Activities:
Deposits and interest credited for investment
contracts........................................... 1,884.5 1,737.8 2,117.8
Withdrawals of investment contracts.................. (1,109.6) (948.7) (1,000.3)
Dividends paid to shareholder........................ (2.9) -- --
---------- ---------- ----------
Net cash provided by financing activities........ 772.0 789.1 1,117.5
---------- ---------- ----------

Net (decrease) increase in cash and cash equivalents... (54.5) 87.2 145.5
Cash and cash equivalents, beginning of year........... 623.3 536.1 390.6
---------- ---------- ----------
Cash and cash equivalents, end of year................. $ 568.8 $ 623.3 $ 536.1
---------- ---------- ----------
---------- ---------- ----------
Supplemental cash flow information:
Income taxes paid, net............................... $ 90.2 $ 82.6 $ 79.9
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-6
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1995, 1994, and 1993

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Aetna Life Insurance and Annuity Company and its wholly owned subsidiaries
(collectively, the "Company") is a provider of financial services and life
insurance products in the United States. The Company has two business segments,
financial services and life insurance.

The financial services products include individual and group annuity contracts
which offer a variety of funding and distribution options for personal and
employer-sponsored retirement plans that qualify under Internal Revenue Code
Sections 401, 403, 408 and 457, and individual and group non-qualified annuity
contracts. These contracts may be immediate or deferred and are offered
primarily to individuals, pension plans, small businesses and employer-sponsored
groups in the health care, government, education (collectively "not-for-profit"
organizations) and corporate markets. Financial services also include pension
plan administrative services.

The life insurance products include universal life, variable universal life,
interest sensitive whole life and term insurance. These products are offered
primarily to individuals, small businesses, employer sponsored groups and
executives of Fortune 2000 companies.

BASIS OF PRESENTATION

The consolidated financial statements include Aetna Life Insurance and Annuity
Company and its wholly owned subsidiaries, Aetna Insurance Company of America
and Aetna Private Capital, Inc. Aetna Life Insurance and Annuity Company is a
wholly owned subsidiary of Aetna Retirement Services, Inc. ("ARSI"). ARSI is a
wholly owned subsidiary of Aetna Life and Casualty Company ("Aetna"). Two
subsidiaries, Systematized Benefits Administrators, Inc. ("SBA"), and Aetna
Investment Services, Inc. ("AISI"), which were previously reported in the
consolidated financial statements were distributed in the form of dividends to
ARSI in December of 1995. The impact to the Company's financial statements of
distributing these dividends was immaterial.

The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. Intercompany transactions have been
eliminated. Certain reclassifications have been made to 1994 and 1993 financial
information to conform to the 1995 presentation.

ACCOUNTING CHANGES

Accounting for Certain Investments in Debt and Equity Securities

On December 31, 1993, the Company adopted Financial Accounting Standard ("FAS")
No. 115, Accounting for Certain Investments in Debt and Equity Securities, which
requires the classification of debt securities into three categories: "held to
maturity", which are carried at amortized cost; "available for sale", which are
carried at fair value with changes in fair value recognized as a component of
shareholder's equity; and "trading", which are carried at fair value with
immediate recognition in income of changes in fair value.

Initial adoption of this standard resulted in a net increase of $106.8 million,
net of taxes of $57.5 million, to net unrealized gains in shareholder's equity.
These amounts exclude gains and losses allocable to experience-rated (including
universal life) contractholders. Adoption of FAS No. 115 did not have a material
effect on deferred policy acquisition costs.

F-7
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from reported results using those estimates.

CASH AND CASH EQUIVALENT

Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with a maturity of ninety days or less when purchased.

INVESTMENTS

Debt Securities

At December 31, 1995 and 1994, all of the Company's debt securities are
classified as available for sale and carried at fair value. These securities are
written down (as realized losses) for other than temporary decline in value.
Unrealized gains and losses related to these securities, after deducting amounts
allocable to experience-rated contractholders and related taxes, are reflected
in shareholder's equity.

Fair values for debt securities are based on quoted market prices or dealer
quotations. Where quoted market prices or dealer quotations are not available,
fair values are measured utilizing quoted market prices for similar securities
or by using discounted cash flow methods. Cost for mortgage-backed securities is
adjusted for unamortized premiums and discounts, which are amortized using the
interest method over the estimated remaining term of the securities, adjusted
for anticipated prepayments.

Purchases and sales of debt securities are recorded on the trade date.

Equity Securities

Equity securities are classified as available for sale and carried at fair value
based on quoted market prices or dealer quotations. Equity securities are
written down (as realized losses) for other than temporary declines in value.
Unrealized gains and losses related to such securities are reflected in
shareholder's equity. Purchases and sales are recorded on the trade date.

The investment in affiliated mutual funds represents an investment in the Aetna
Series Fund, Inc., a retail mutual fund which has been seeded by the Company,
and is carried at fair value.

Mortgage Loans and Policy Loans

Mortgage loans and policy loans are carried at unpaid principal balances net of
valuation reserves, which approximates fair value, and are generally secured.
Purchases and sales of mortgage loans are recorded on the closing date.

F-8
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Limited Partnership

The Company's limited partnership investment was carried at the amount invested
plus the Company's share of undistributed operating results and unrealized gains
(losses), which approximates fair value. The Company disposed of the limited
partnership during 1995.

Short-Term Investments

Short-term investments, consisting primarily of money market instruments and
other debt issues purchased with an original maturity of over ninety days and
less than one year, are considered available for sale and are carried at fair
value, which approximates amortized cost.

DEFERRED POLICY ACQUISITION COSTS

Certain costs of acquiring insurance business have been deferred. These costs,
all of which vary with and are primarily related to the production of new
business, consist principally of commissions, certain expenses of underwriting
and issuing contracts and certain agency expenses. For fixed ordinary life
contracts, such costs are amortized over expected premium-paying periods. For
universal life and certain annuity contracts, such costs are amortized in
proportion to estimated gross profits and adjusted to reflect actual gross
profits. These costs are amortized over twenty years for annuity pension
contracts, and over the contract period for universal life contracts.

Deferred policy acquisition costs are written off to the extent that it is
determined that future policy premiums and investment income or gross profits
would not be adequate to cover related losses and expenses.

INSURANCE RESERVE LIABILITIES

The Company's liabilities include reserves related to fixed ordinary life, fixed
universal life and fixed annuity contracts. Reserves for future policy benefits
for fixed ordinary life contracts are computed on the basis of assumed
investment yield, assumed mortality, withdrawals and expenses, including a
margin for adverse deviation, which generally vary by plan, year of issue and
policy duration. Reserve interest rates range from 2.25% to 10.00%. Assumed
investment yield is based on the Company's experience. Mortality and withdrawal
rate assumptions are based on relevant Aetna experience and are periodically
reviewed against both industry standards and experience.

Reserves for fixed universal life (included in Future Policy Benefits) and fixed
deferred annuity contracts (included in Policyholders' Funds Left With the
Company) are equal to the fund value. The fund value is equal to cumulative
deposits less charges plus credited interest thereon, without reduction for
possible future penalties assessed on premature withdrawal. For guaranteed
interest options, the interest credited ranged from 4.00% to 6.38% in 1995 and
4.00% to 5.85% in 1994. For all other fixed options, the interest credited
ranged from 5.00% to 7.00% in 1995 and 5.00% to 7.50% in 1994.

Reserves for fixed annuity contracts in the annuity period and for future
amounts due under settlement options are computed actuarially using the 1971
Individual Annuity Mortality Table, the 1983 Individual Annuity Mortality Table,
the

F-9
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
1983 Group Annuity Mortality Table and, in some cases, mortality improvement
according to scales G and H, at assumed interest rates ranging from 3.5% to
9.5%. Reserves relating to contracts with life contingencies are included in
Future Policy Benefits. For other contracts, the reserves are reflected in
Policyholders' Funds Left With the Company.

Unpaid claims for all lines of insurance include benefits for reported losses
and estimates of benefits for losses incurred but not reported.

PREMIUMS, CHARGES ASSESSED AGAINST POLICYHOLDERS, BENEFITS AND EXPENSES

Premiums are recorded as revenue when due for fixed ordinary life contracts.
Charges assessed against policyholders' funds for cost of insurance, surrender
charges, actuarial margin and other fees are recorded as revenue for universal
life and certain annuity contracts. Policy benefits and expenses are recorded in
relation to the associated premiums or gross profit so as to result in
recognition of profits over the expected lives of the contracts.

SEPARATE ACCOUNTS

Assets held under variable universal life, variable life and variable annuity
contracts are segregated in Separate Accounts and are invested, as designated by
the contractholder or participant under a contract, in shares of Aetna Variable
Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna Investment Advisers
Fund, Inc., Aetna GET Fund, or The Aetna Series Fund Inc., which are managed by
the Company or other selected mutual funds not managed by the Company. Separate
Accounts assets and liabilities are carried at fair value except for those
relating to a guaranteed interest option which is offered through a Separate
Account. The assets of the Separate Account supporting the guaranteed interest
option are carried at an amortized cost of $322.2 million for 1995 (fair value
$343.9 million) and $149.7 million for 1994 (fair value $146.3 million), since
the Company bears the investment risk where the contract is held to maturity.
Reserves relating to the guaranteed interest option are maintained at fund value
and reflect interest credited at rates ranging from 4.5% to 8.38% in both 1995
and 1994. Separate Accounts assets and liabilities are shown as separate
captions in the Consolidated Balance Sheets. Deposits, investment income and net
realized and unrealized capital gains (losses) of the Separate Accounts are not
reflected in the Consolidated Statements of Income (with the exception of
realized capital gains (losses) on the sale of assets supporting the guaranteed
interest option). The Consolidated Statements of Cash Flows do not reflect
investment activity of the Separate Accounts.

FEDERAL INCOME TAXES

The Company is included in the consolidated federal income tax return of Aetna.
The Company is taxed at regular corporate rates after adjusting income reported
for financial statement purposes for certain items. Deferred income tax benefits
result from changes during the year in cumulative temporary differences between
the tax basis and book basis of assets and liabilities.

F-10
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

2. INVESTMENTS
Investments in debt securities available for sale as of December 31, 1995 were
as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(MILLIONS)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of
U.S. government agencies and corporations... $ 539.5 $ 47.5 $ -- $ 587.0
Obligations of states and political
subdivisions................................ 41.4 12.4 -- 53.8
U.S. Corporate securities:
Financial.................................. 2,764.4 110.3 2.1 2,872.6
Utilities.................................. 454.4 27.8 1.0 481.2
Other...................................... 2,177.7 159.5 1.2 2,336.0
--------- ---------- ----- ---------
Total U.S. Corporate securities............ 5,396.5 297.6 4.3 5,689.8
Foreign securities:
Government................................. 316.4 26.1 2.0 340.5
Financial.................................. 534.2 45.4 3.5 576.1
Utilities.................................. 236.3 32.9 -- 269.2
Other...................................... 215.7 15.1 -- 230.8
--------- ---------- ----- ---------
Total Foreign securities................... 1,302.6 119.5 5.5 1,416.6
Residential mortgage-backed securities:
Residential pass-throughs.................. 556.7 99.2 1.8 654.1
Residential CMOs........................... 2,383.9 167.6 2.2 2,549.3
--------- ---------- ----- ---------
Total Residential mortgage-backed
securities................................ 2,940.6 266.8 4.0 3,203.4
Commercial/Multifamily mortgage-backed
securities.................................. 741.9 32.3 0.2 774.0
--------- ---------- ----- ---------
Total Mortgage-backed securities........... 3,682.5 299.1 4.2 3,977.4
Other asset-backed securities................ 961.2 35.5 0.5 996.2
--------- ---------- ----- ---------
Total debt securities available for sale..... $11,923.7 $811.6 $14.5 $12,720.8
--------- ---------- ----- ---------
--------- ---------- ----- ---------
</TABLE>

F-11
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

2. INVESTMENTS (CONTINUED)
Investments in debt securities available for sale as of December 31, 1994 were
as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(MILLIONS)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of
U.S. government agencies and corporations... $ 1,396.1 $ 2.0 $ 84.2 $ 1,313.9
Obligations of states and political
subdivisions................................ 37.9 1.2 -- 39.1
U.S. Corporate securities:
Financial.................................. 2,216.9 3.8 109.4 2,111.3
Utilities.................................. 100.1 -- 7.9 92.2
Other...................................... 1,344.3 6.0 67.9 1,282.4
--------- ---------- ---------- ---------
Total U.S. Corporate securities............ 3,661.3 9.8 185.2 3,485.9
Foreign securities:
Government................................. 434.4 1.2 33.9 401.7
Financial.................................. 368.2 1.1 23.0 346.3
Utilities.................................. 204.4 2.5 9.5 197.4
Other...................................... 46.3 0.8 1.5 45.6
--------- ---------- ---------- ---------
Total Foreign securities................... 1,053.3 5.6 67.9 991.0
Residential mortgage-backed securities:
Residential pass-throughs.................. 627.1 81.5 5.0 703.6
Residential CMOs........................... 2,671.0 32.9 139.4 2,564.5
--------- ---------- ---------- ---------
Total Residential mortgage-backed
securities.................................. 3,298.1 114.4 144.4 3,268.1
Commercial/Multifamily mortgage-backed
securities.................................. 435.0 0.2 21.3 413.9
--------- ---------- ---------- ---------
Total Mortgage-backed securities............. 3,733.1 114.6 165.7 3,682.0
Other asset-backed securities................ 696.1 0.2 16.8 679.5
--------- ---------- ---------- ---------
Total debt securities available for sale..... $10,577.8 $133.4 $519.8 $10,191.4
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
</TABLE>

At December 31, 1995 and 1994, net unrealized appreciation (depreciation) of
$797.1 million and $(386.4) million, respectively, on available for sale debt
securities included $619.1 million and $(308.6) million, respectively, related
to experience-rated contractholders, which were not included in shareholder's
equity.

F-12
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

2. INVESTMENTS (CONTINUED)
The amortized cost and fair value of debt securities for the year ended December
31, 1995 are shown below by contractual maturity. Actual maturities may differ
from contractual maturities because securities may be restructured, called, or
prepaid.

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- ---------
(MILLIONS)
<S> <C> <C>
Due to mature:
One year or less..................................... $ 348.8 $ 351.1
After one year through five years.................... 2,100.2 2,159.5
After five years through ten years................... 2,516.0 2,663.4
After ten years...................................... 2,315.0 2,573.2
Mortgage-backed securities........................... 3,682.5 3,977.4
Other asset-backed securities........................ 961.2 996.2
--------- ---------
Total................................................ $11,923.7 $12,720.8
--------- ---------
--------- ---------
</TABLE>

The Company engages in securities lending whereby certain securities from its
portfolio are loaned to other institutions for short periods of time. Cash
collateral, which is in excess of the market value of the loaned securities, is
deposited by the borrower with a lending agent, and retained and invested by the
lending agent to generate additional income for the Company. The market value of
the loaned securities is monitored on a daily basis with additional collateral
obtained or refunded as the market value fluctuates. At December 31, 1995, the
Company had loaned securities (which are reflected as invested assets on the
Consolidated Balance Sheets) with a market value of approximately $264.5
million.

At December 31, 1995 and 1994, debt securities carried at $7.4 million and $7.0
million, respectively, were on deposit as required by regulatory authorities.

The valuation reserve for mortgage loans was $3.1 million at December 31, 1994.
There was no valuation reserve for mortgage loans at December 31, 1995. The
carrying value of non-income producing investments was $0.1 million and $0.2
million at December 31, 1995 and 1994, respectively.

F-13
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

2. INVESTMENTS (CONTINUED)
Investments in a single issuer, other than obligations of the U.S. government,
with a carrying value in excess of 10% of the Company's shareholder's equity at
December 31, 1995 are as follows:

<TABLE>
<CAPTION>
AMORTIZED
DEBT SECURITIES COST FAIR VALUE
---------- ----------
(MILLIONS)
<S> <C> <C>
General Electric Corporation........................... $ 314.9 $ 329.3
General Motors Corporation............................. 273.9 284.5
Associates Corporation of North America................ 230.2 239.1
Society National Bank.................................. 203.5 222.3
Ciesco, L.P............................................ 194.9 194.9
Countrywide Funding.................................... 171.2 172.7
Baxter International................................... 168.9 168.9
Time Warner............................................ 158.6 166.1
Ford Motor Company..................................... 156.7 162.6
</TABLE>

The portfolio of debt securities at December 31, 1995 and 1994 included $662.5
million and $318.3 million, respectively, (5% and 3%, respectively, of the debt
securities) of investments that are considered "below investment grade". "Below
investment grade" securities are defined to be securities that carry a rating
below BBB-/Baa3, by Standard & Poors/ Moody's Investor Services, respectively.
The increase in below investment grade securities is the result of a change in
investment strategy, which has reduced the Company's holdings in residential
mortgage-back securities and increased the Company's holdings in corporate
securities. Residential mortgage-back securities are subject to higher
prepayment risk and lower credit risk, while corporate securities earning a
comparable yield are subject to higher credit risk and lower prepayment risk. We
expect the percentage of below investment grade securities will increase in
1996, but we expect that the overall average quality of the portfolio of debt
securities will remain at AA-. Of these below investment grade assets, $14.5
million and $31.8 million, at December 31, 1995 and 1994, respectively, were
investments that were purchased at investment grade, but whose ratings have
since been downgraded.

Included in residential mortgage-back securities are collateralized mortgage
obligations ("CMOs") with carrying values of $2.5 billion and $2.6 billion at
December 31, 1995 and 1994, respectively. The principal risks inherent in
holding CMOs are prepayment and extension risks related to dramatic decreases
and increases in interest rates whereby the CMOs would be subject to repayments
of principal earlier or later than originally anticipated. At December 31, 1995
and 1994, approximately 79% and 85%, respectively, of the Company's CMO holdings
consisted of sequential and planned amortization class debt securities which are
subject to less prepayment and extension risk than other CMO instruments. At
December 31, 1995 and 1994, approximately 81% and 82%, respectively, of the
Company's CMO holdings were collateralized by residential mortgage loans, on
which the timely payment of principal and interest was backed by specified
government agencies (e.g., GNMA, FNMA, FHLMC).

If due to declining interest rates, principal was to be repaid earlier than
originally anticipated, the Company could be affected by a decrease in
investment income due to the reinvestment of these funds at a lower interest
rate. Such prepayments may result in a duration mismatch between assets and
liabilities which could be corrected as cash from prepayments could be
reinvested at an appropriate duration to adjust the mismatch.

F-14
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

2. INVESTMENTS (CONTINUED)
Conversely, if due to increasing interest rates, principal was to be repaid
slower than originally anticipated, the Company could be affected by a decrease
in cash flow which reduces the ability to reinvest expected principal repayments
at higher interest rates. Such slower payments may result in a duration mismatch
between assets and liabilities which could be corrected as available cash flow
could be reinvested at an appropriate duration to adjust the mismatch.

At December 31, 1995 and 1994, approximately 3% and 4%, respectively, of the
Company's CMO holdings consisted of interest-only strips ("IOs") or
principal-only strips ("POs"). IOs receive payments of interest and POs receive
payments of principal on the underlying pool of mortgages. The risk inherent in
holding POs is extension risk related to dramatic increases in interest rates
whereby the future payments due on POs could be repaid much slower than
originally anticipated. The extension risks inherent in holding POs was
mitigated somewhat by offsetting positions in IOs. During dramatic increases in
interest rates, IOs would generate more future payments than originally
anticipated.

The risk inherent in holding IOs is prepayment risk related to dramatic
decreases in interest rates whereby future IO cash flows could be much less than
originally anticipated and in some cases could be less than the original cost of
the IO. The risks inherent in IOs are mitigated somewhat by holding offsetting
positions in POs. During dramatic decreases in interest rates POs would generate
future cash flows much quicker than originally anticipated.

Investments in available for sale equity securities were as follows:

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------ ---------- ---------- ----------
(MILLIONS)
<S> <C> <C> <C> <C>
1995
Equity Securities................ $231.6 $ 27.2 $ 1.2 $ 257.6
------ ----- --- ----------
1994
Equity Securities................ $230.5 $ 6.5 $ 7.9 $ 229.1
------ ----- --- ----------
</TABLE>

3. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS
Realized capital gains or losses are the difference between proceeds received
from investments sold or prepaid, and amortized cost. Net realized capital gains
as reflected in the Consolidated Statements of Income are after deductions for
net realized capital gains (losses) allocated to experience-rated contracts of
$61.1 million, $(29.1) million and $(54.8) million for the years ended December
31, 1995, 1994, and 1993, respectively. Net realized capital gains (losses)
allocated to experience-rated contracts are deferred and subsequently reflected
in credited rates on an amortized basis. Net unamortized gains (losses),
reflected as a component of Policyholders' Funds Left With the Company, were
$7.3 million and $(50.7) million at the end of December 31, 1995 and 1994,
respectively.

Changes to the mortgage loan valuation reserve and writedowns on debt securities
are included in net realized capital gains (losses) and amounted to $3.1
million, $1.1 million and $(98.5) million, of which $2.2 million, $0.8 million
and $(91.5) million were allocable to experience-rated contractholders, for the
years ended December 31, 1995, 1994 and 1993, respectively. The 1993 losses were
primarily related to writedowns of interest-only mortgage-backed securities to
their fair value.

F-15
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

3. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS (CONTINUED)
Net realized capital gains (losses) on investments, net of amounts allocated to
experience-rated contracts, were as follows:

<TABLE>
<CAPTION>
1995 1994 1993
----- ----- ------
(MILLIONS)
<S> <C> <C> <C>
Debt securities........................................ $32.8 $ 1.0 $ 9.6
Equity securities...................................... 8.3 0.2 0.1
Mortgage loans......................................... 0.2 0.3 (0.2)
----- ----- ------
Pretax realized capital gains.......................... $41.3 $ 1.5 $ 9.5
----- ----- ------
After-tax realized capital gains....................... $25.8 $ 1.0 $ 6.2
----- ----- ------
</TABLE>

Gross gains of $44.6 million, $26.6 million and $33.3 million and gross losses
of $11.8 million, $25.6 million and $23.7 million were realized from the sales
of investments in debt securities in 1995, 1994 and 1993, respectively.

Changes in unrealized capital gains (losses), excluding changes in unrealized
capital gains (losses) related to experience-rated contracts, for the years
ended December 31, were as follows:

<TABLE>
<CAPTION>
1995 1994 1993
------ -------- ------
(MILLIONS)
<S> <C> <C> <C>
Debt securities........................................ $255.9 $ (242.1) $164.3
Equity securities...................................... 27.3 (13.3) 10.6
Limited partnership.................................... 1.8 (1.8) --
------ -------- ------
285.0 (257.2) 174.9
Deferred federal income taxes (See Note 6)............. (36.5) 46.3 61.2
------ -------- ------
Net change in unrealized capital gains (losses)........ $321.5 $ (303.5) $113.7
------ -------- ------
------ -------- ------
</TABLE>

Net unrealized capital gains (losses) allocable to experience-rated contracts of
$515.0 million and $104.1 million at December 31, 1995 and $(260.9) million and
$(47.7) million at December 31, 1994 are reflected on the Consolidated Balance
Sheet in Policyholders' Funds Left With the Company and Future Policy Benefits,
respectively, and are not included in shareholder's equity.

F-16
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

3. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS (CONTINUED)
Shareholder's equity included the following unrealized capital gains (losses),
which are net of amounts allocable to experience-rated contractholders, at
December 31:

<TABLE>
<CAPTION>
1995 1994 1993
------ ------- -------
(MILLIONS)
<S> <C> <C> <C>
Debt securities
Gross unrealized capital gains....................... $179.3 $ 27.4 $ 164.3
Gross unrealized capital losses...................... (1.3) (105.2) --
------ ------- -------
178.0 (77.8) 164.3
Equity securities
Gross unrealized capital gains....................... 27.2 6.5 12.0
Gross unrealized capital losses...................... (1.2) (7.9) (0.1)
------ ------- -------
26.0 (1.4) 11.9
Limited Partnership
Gross unrealized capital gains....................... -- -- --
Gross unrealized capital losses...................... -- (1.8) --
------ ------- -------
Deferred federal income taxes (See Note 6)............. 71.5 108.0 61.7
------ ------- -------
Net unrealized capital gains (losses).................. $132.5 $(189.0) $ 114.5
------ ------- -------
------ ------- -------
</TABLE>

4. NET INVESTMENT INCOME
Sources of net investment income were as follows:

<TABLE>
<CAPTION>
1995 1994 1993
-------- ------ ------
(MILLIONS)
<S> <C> <C> <C>
Debt securities........................................ $ 891.5 $823.9 $828.0
Preferred stock........................................ 4.2 3.9 2.3
Investment in affiliated mutual funds.................. 14.9 5.2 2.9
Mortgage loans......................................... 1.4 1.4 1.5
Policy loans........................................... 13.7 11.5 10.8
Reinsurance loan to affiliate.......................... 46.5 51.5 53.3
Cash equivalents....................................... 38.9 29.5 16.8
Other.................................................. 8.4 6.7 7.7
-------- ------ ------
Gross investment income................................ 1,019.5 933.6 923.3
Less investment expenses............................... (15.2) (16.4) (11.4)
-------- ------ ------
Net investment income.................................. $1,004.3 $917.2 $911.9
-------- ------ ------
-------- ------ ------
</TABLE>

Net investment income includes amounts allocable to experience-rated
contractholders of $744.2 million, $677.1 million and $661.3 million for the
years ended December 31, 1995, 1994 and 1993, respectively. Interest credited to
contractholders is included in Current and Future Benefits.

F-17
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY
The Company distributed $2.9 million in the form of dividends of two of its
subsidiaries, SBA and AISI, to Aetna Retirement Services, Inc. in 1995.

The amount of dividends that may be paid to the shareholder in 1996 without
prior approval by the Insurance Commissioner of the State of Connecticut is
$70.0 million.

The Insurance Department of the State of Connecticut (the "Department")
recognizes as net income and shareholder's equity those amounts determined in
conformity with statutory accounting practices prescribed or permitted by the
Department, which differ in certain respects from generally accepted accounting
principles. Statutory net income was $70.0 million, $64.9 million and $77.6
million for the years ended December 31, 1995, 1994 and 1993, respectively.
Statutory shareholder's equity was $670.7 million and $615.0 million as of
December 31, 1995 and 1994, respectively.

At December 31, 1995 and December 31, 1994, the Company does not utilize any
statutory accounting practices which are not prescribed by insurance regulators
that, individually or in the aggregate, materially affect statutory
shareholder's equity.

6. FEDERAL INCOME TAXES
The Company is included in the consolidated federal income tax return of Aetna.
Aetna allocates to each member an amount approximating the tax it would have
incurred were it not a member of the consolidated group, and credits the member
for the use of its tax saving attributes in the consolidated return.

In August 1993, the Omnibus Budget Reconciliation Act of 1993 (OBRA) was enacted
which resulted in an increase in the federal corporate tax rate from 34% to 35%
retroactive to January 1, 1993. The enactment of OBRA resulted in an increase in
the deferred tax liability of $3.4 million at date of enactment, which is
included in the 1993 deferred tax expense.

Components of income tax expense (benefits) were as follows:

<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -------
(MILLIONS)
<S> <C> <C> <C>
Current taxes (benefits):
Income from operations............................... $82.9 $78.7 $ 87.1
Net realized capital gains........................... 28.5 (33.2) 18.1
----- ----- -------
111.4 45.5 105.2
----- ----- -------
Deferred taxes (benefits):
Income from operations............................... (14.4) (8.0) (14.2)
Net realized capital gains........................... (12.9) 33.7 (14.8)
----- ----- -------
(27.3) 25.7 (29.0)
----- ----- -------
Total................................................ $84.1 $71.2 $ 76.2
----- ----- -------
----- ----- -------
</TABLE>

F-18
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

6. FEDERAL INCOME TAXES (CONTINUED)
Income tax expense was different from the amount computed by applying the
federal income tax rate to income before federal income taxes for the following
reasons:

<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(MILLIONS)
<S> <C> <C> <C>
Income before federal income taxes..................... $260.0 $216.5 $219.1
Tax rate............................................... 35% 35% 35%
------ ------ ------
Application of the tax rate............................ 91.0 75.8 76.7
------ ------ ------
Tax effect of:
Excludable dividends................................. (9.3) (8.6) (8.7)
Tax reserve adjustments.............................. 3.9 2.9 4.7
Reinsurance transaction.............................. (0.5) 1.9 (0.2)
Tax rate change on deferred liabilities.............. -- -- 3.7
Other, net........................................... (1.0) (0.8) --
------ ------ ------
Income tax expense................................... $ 84.1 $ 71.2 $ 76.2
------ ------ ------
------ ------ ------
</TABLE>

The tax effects of temporary differences that give rise to deferred tax assets
and deferred tax liabilities at December 31 are presented below:

<TABLE>
<CAPTION>
1995 1994
------ ------
(MILLIONS)
<S> <C> <C>
Deferred tax assets:
Insurance reserves................................... $290.4 $211.5
Net unrealized capital losses........................ -- 136.3
Unrealized gains allocable to experience-rated
contracts........................................... 216.7 --
Investment losses not currently deductible........... 7.3 15.5
Postretirement benefits other than pensions.......... 7.7 8.4
Other................................................ 32.0 28.3
------ ------
Total gross assets..................................... 554.1 400.0
Less valuation allowance............................... -- 136.3
------ ------
Deferred tax assets, net of valuation.................. 554.1 263.7
Deferred tax liabilities:
Deferred policy acquisition costs.................... 433.0 385.2
Unrealized losses allocable to experience-rated
contracts........................................... -- 108.0
Market discount...................................... 4.4 3.6
Net unrealized capital gains......................... 288.2 --
Other................................................ (1.9) 0.4
------ ------
Total gross liabilities................................ 723.7 497.2
------ ------
Net deferred tax liability............................. $169.6 $233.5
------ ------
------ ------
</TABLE>

F-19
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

6. FEDERAL INCOME TAXES (CONTINUED)
Net unrealized capital gains and losses are presented in shareholder's equity
net of deferred taxes. At December 31, 1994, $81.0 million of net unrealized
capital losses were reflected in shareholder's equity without deferred tax
benefits. As of December 31, 1995, no valuation allowance was required for
unrealized capital gains and losses. The reversal of the valuation allowance had
no impact on net income in 1995.

The "Policyholders' Surplus Account," which arose under prior tax law, is
generally that portion of a life insurance company's statutory income that has
not been subject to taxation. As of December 31, 1983, no further additions
could be made to the Policyholders' Surplus Account for tax return purposes
under the Deficit Reduction Act of 1984. The balance in such account was
approximately $17.2 million at December 31, 1995. This amount would be taxed
only under certain conditions. No income taxes have been provided on this amount
since management believes the conditions under which such taxes would become
payable are remote.

The Internal Revenue Service ("Service") has completed examinations of the
consolidated federal income tax returns of Aetna through 1986. Discussions are
being held with the Service with respect to proposed adjustments. However,
management believes there are adequate defenses against, or sufficient reserves
to provide for, such challenges. The Service has commenced its examinations for
the years 1987 through 1990.

7. BENEFIT PLANS
Employee Pension Plans--The Company, in conjunction with Aetna, has
non-contributory defined benefit pension plans covering substantially all
employees. The plans provide pension benefits based on years of service and
average annual compensation (measured over sixty consecutive months of highest
earnings in a 120 month period). Contributions are determined using the
Projected Unit Credit Method and, for qualified plans subject to ERISA
requirements, are limited to the amounts that are currently deductible for tax
reporting purposes. The accumulated benefit obligation and plan assets are
recorded by Aetna. The accumulated plan assets exceed accumulated plan benefits.
There has been no funding to the plan for the years 1993 through 1995, and
therefore, no expense has been recorded by the Company.

Agent Pension Plans--The Company, in conjunction with Aetna, has a non-qualified
pension plan covering certain agents. The plan provides pension benefits based
on annual commission earnings. The accumulated plan assets exceed accumulated
plan benefits. There has been no funding to the plan for the years 1993 through
1995, and therefore, no expense has been recorded by the Company.

Employee Postretirement Benefits--In addition to providing pension benefits,
Aetna also provides certain postretirement health care and life insurance
benefits, subject to certain caps, for retired employees. Medical and dental
benefits are offered to all full-time employees retiring at age 50 with at least
15 years of service or at age 65 with at least 10 years of service. Retirees are
required to contribute to the plans based on their years of service with Aetna.

The cost to the Company associated with the Aetna postretirement plans for 1995,
1994 and 1993 were $1.4 million, $1.0 million and $0.8 million, respectively.

Agent Postretirement Benefits--The Company, in conjunction with Aetna, also
provides certain postemployment health care and life insurance benefits for
certain agents.

F-20
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

7. BENEFIT PLANS (CONTINUED)

The cost to the Company associated to the agents' postretirement plans for 1995,
1994 and 1993 were $0.8 million, $0.7 million and $0.6 million, respectively.

Incentive Savings Plan--Substantially all employees are eligible to participate
in a savings plan under which designated contributions, which may be invested in
common stock of Aetna or certain other investments, are matched, up to 5% of
compensation, by Aetna. Pretax charges to operations for the incentive savings
plan were $4.9 million, $3.3 million and $3.1 million in 1995, 1994 and 1993,
respectively.

Stock Plans--Aetna has a stock incentive plan that provides for stock options
and deferred contingent common stock or cash awards to certain key employees.
Aetna also has a stock option plan under which executive and middle management
employees of Aetna may be granted options to purchase common stock of Aetna at
the market price on the date of grant or, in connection with certain business
combinations, may be granted options to purchase common stock on different
terms. The cost to the Company associated with the Aetna stock plans for 1995,
1994 and 1993, was $6.3 million, $1.7 million and $0.4 million, respectively.

8. RELATED PARTY TRANSACTIONS
The Company is compensated by the Separate Accounts for bearing mortality and
expense risks pertaining to variable life and annuity contracts. Under the
insurance contracts, the Separate Accounts pay the Company a daily fee which, on
an annual basis, ranges, depending on the product, from .25% to 1.80% of their
average daily net assets. The Company also receives fees from the variable life
and annuity mutual funds and The Aetna Series Fund for serving as investment
adviser. Under the advisory agreements, the Funds pay the Company a daily fee
which, on an annual basis, ranges, depending on the fund, from .25% to 1.00% of
their average daily net assets. The advisory agreements also call for the
variable funds to pay their own administrative expenses and for The Aetna Series
Fund to pay certain administrative expenses. The Company also receives fees
(expressed as a percentage of the average daily net assets) from The Aetna
Series Fund for providing administration, shareholder services and promoting
sales. The amount of compensation and fees received from the Separate Accounts
and Funds, included in Charges Assessed Against Policyholders, amounted to
$128.1 million, $104.6 million and $93.6 million in 1995, 1994 and 1993,
respectively. The Company may waive advisory fees at its discretion.

The Company may, from time to time, make reimbursements to a Fund for some or
all of its operating expenses. Reimbursement arrangements may be terminated at
any time without notice.

Since 1981, all domestic individual non-participating life insurance of Aetna
and its subsidiaries has been issued by the Company. Effective December 31,
1988, the Company entered into a reinsurance agreement with Aetna Life Insurance
Company ("Aetna Life") in which substantially all of the non-participating
individual life and annuity business written by Aetna Life prior to 1981 was
assumed by the Company. A $108.0 million commission, paid by the Company to
Aetna Life in 1988, was capitalized as deferred policy acquisition costs. The
Company maintained insurance reserves of $655.5 million and $690.3 million as of
December 31, 1995 and 1994, respectively, relating to the business assumed. In
consideration for the assumption of this business, a loan was established
relating to the assets held by Aetna Life which support the insurance reserves.
The loan is being reduced in accordance with the decrease in the reserves. The
fair value of this loan was $663.5 million and $630.3 million as of December 31,
1995 and 1994, respectively, and is based upon the fair value of the underlying
assets. Premiums of $28.0 million, $32.8 million and $33.3 million and current
and future benefits of $43.0 million, $43.8 million and $55.4 million were
assumed in 1995, 1994 and 1993, respectively.

F-21
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

8. RELATED PARTY TRANSACTIONS (CONTINUED)
Investment income of $46.5 million, $51.5 million and $53.3 million was
generated from the reinsurance loan to affiliate in 1995, 1994 and 1993,
respectively. Net income of approximately $18.4 million, $25.1 million and $13.6
million resulted from this agreement in 1995, 1994 and 1993, respectively.

On December 16, 1988, the Company assumed $25.0 million of premium revenue from
Aetna Life for the purchase and administration of a life contingent single
premium variable payout annuity contract. In addition, the Company also is
responsible for administering fixed annuity payments that are made to annuitants
receiving variable payments. Reserves of $28.0 million and $24.2 million were
maintained for this contract as of December 31, 1995 and 1994, respectively.

Effective February 1, 1992, the Company increased its retention limit per
individual life to $2.0 million and entered into a reinsurance agreement with
Aetna Life to reinsure amounts in excess of this limit, up to a maximum of $8.0
million on any new individual life business, on a yearly renewable term basis.
Premium amounts related to this agreement were $3.2 million, $1.3 million and
$0.6 million for 1995, 1994 and 1993, respectively.

The Company received no capital contributions in 1995, 1994 or 1993.

The Company distributed $2.9 million in the form of dividends of two of its
subsidiaries, SBA and AISI, to Aetna Retirement Services, Inc. in 1995.

Premiums due and other receivables include $5.7 million and $27.6 million due
from affiliates in 1995 and 1994, respectively. Other liabilities include $12.4
million and $27.9 million due to affiliates for 1995 and 1994, respectively.

Substantially all of the administrative and support functions of the Company are
provided by Aetna and its affiliates. The financial statements reflect allocated
charges for these services based upon measures appropriate for the type and
nature of service provided.

9. REINSURANCE
The Company utilizes indemnity reinsurance agreements to reduce its exposure to
large losses in all aspects of its insurance business. Such reinsurance permits
recovery of a portion of losses from reinsurers, although it does not discharge
the primary liability of the Company as direct insurer of the risks reinsured.
The Company evaluates the financial strength of potential reinsurers and
continually monitors the financial condition of reinsurers. Only those
reinsurance recoverables deemed probable of recovery are reflected as assets on
the Company's Consolidated Balance Sheets.

F-22
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

9. REINSURANCE (CONTINUED)
The following table includes premium amounts ceded/assumed to/from affiliated
companies as discussed in Note 8 above.
<TABLE>
<CAPTION>
CEDED TO ASSUMED
DIRECT OTHER FROM OTHER
AMOUNT COMPANIES COMPANIES
--------- ------------- -------------
(MILLIONS)
<S> <C> <C> <C>
1995
Premiums:
Life Insurance.................................................................. $ 28.8 $ 8.6 $ 28.0
Accident and Health Insurance................................................... 7.5 7.5 --
Annuities....................................................................... 82.1 -- 0.5
--------- ----- -----
Total earned premiums........................................................... $ 118.4 $ 16.1 $ 28.5
--------- ----- -----
--------- ----- -----

1994
Premiums:
Life Insurance.................................................................. $ 27.3 $ 6.0 $ 32.8
Accident and Health Insurance................................................... 9.3 9.3 --
Annuities....................................................................... 69.9 -- 0.2
--------- ----- -----
Total earned premiums........................................................... $ 106.5 $ 15.3 $ 33.0
--------- ----- -----
--------- ----- -----
1993
Premiums:
Life Insurance.................................................................. $ 22.4 $ 5.6 $ 33.3
Accident and Health Insurance................................................... 12.9 12.9 --
Annuities....................................................................... 31.3 -- 0.7
--------- ----- -----
Total earned premiums........................................................... $ 66.6 $ 18.5 $ 34.0
--------- ----- -----
--------- ----- -----

NET
AMOUNT
---------

<S> <C>
1995
Premiums:
Life Insurance.................................................................. $ 48.2
Accident and Health Insurance................................................... --
Annuities....................................................................... 82.6
---------
Total earned premiums........................................................... $ 130.8
---------
---------
1994
Premiums:
Life Insurance.................................................................. $ 54.1
Accident and Health Insurance................................................... --
Annuities....................................................................... 70.1
---------
Total earned premiums........................................................... $ 124.2
---------
---------
1993
Premiums:
Life Insurance.................................................................. $ 50.1
Accident and Health Insurance................................................... --
Annuities....................................................................... 32.0
---------
Total earned premiums........................................................... $ 82.1
---------
---------
</TABLE>

F-23
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

10. FINANCIAL INSTRUMENTS

ESTIMATED FAIR VALUE

The carrying values and estimated fair values of the Company's financial
instruments at December 31, 1995 and 1994 were as follows:

<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
--------- --------- --------- ---------
(MILLIONS)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents................................. $ 568.8 $ 568.8 $ 623.3 $ 623.3
Short-term investments.................................... 15.1 15.1 98.0 98.0
Debt securities........................................... 12,720.8 12,720.8 10,191.4 10,191.4
Equity securities......................................... 257.6 257.6 229.1 229.1
Limited partnership....................................... -- -- 24.4 24.4
Mortgage loans............................................ 21.2 21.9 9.9 9.9

Liabilities:
Investment contract liabilities:
With a fixed maturity................................... 989.1 1,001.2 826.7 833.5
Without a fixed maturity................................ 9,511.0 9,298.4 8,122.6 7,918.2
</TABLE>

Fair value estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument, such as
estimates of timing and amount of expected future cash flows. Such estimates do
not reflect any premium or discount that could result from offering for sale at
one time the Company's entire holdings of a particular financial instrument, nor
do they consider the tax impact of the realization of unrealized gains or
losses. In many cases, the fair value estimates cannot be substantiated by
comparison to independent markets, nor can the disclosed value be realized in
immediate settlement of the instrument. In evaluating the Company's management
of interest rate and liquidity risk, the fair values of all assets and
liabilities should be taken into consideration, not only those above.

The following valuation methods and assumptions were used by the Company in
estimating the fair value of the above financial instruments:

SHORT-TERM INSTRUMENTS: Fair values are based on quoted market prices or dealer
quotations. Where quoted market prices are not available, the carrying amounts
reported in the Consolidated Balance Sheets approximates fair value. Short-term
instruments have a maturity date of one year or less and include cash and cash
equivalents, and short-term investments.

DEBT AND EQUITY SECURITIES: Fair values are based on quoted market prices or
dealer quotations. Where quoted market prices or dealer quotations are not
available, fair value is estimated by using quoted market prices for similar
securities or discounted cash flow methods.

F-24
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

10. FINANCIAL INSTRUMENTS (CONTINUED)
MORTGAGE LOANS: Fair value is estimated by discounting expected mortgage loan
cash flows at market rates which reflect the rates at which similar loans would
be made to similar borrowers. The rates reflect management's assessment of the
credit quality and the remaining duration of the loans. The fair value estimate
of mortgage loans of lower quality, including problem and restructured loans, is
based on the estimated fair value of the underlying collateral.

INVESTMENT CONTRACT LIABILITIES (INCLUDED IN POLICYHOLDERS' FUNDS LEFT WITH THE
COMPANY):

WITH A FIXED MATURITY: Fair value is estimated by discounting cash flows at
interest rates currently being offered by, or available to, the Company for
similar contracts.

WITHOUT A FIXED MATURITY: Fair value is estimated as the amount payable to the
contractholder upon demand. However, the Company has the right under such
contracts to delay payment of withdrawals which may ultimately result in paying
an amount different than that determined to be payable on demand.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS (INCLUDING DERIVATIVE FINANCIAL
INSTRUMENTS)

During 1995, the Company received $0.4 million for writing call options on
underlying securities. As of December 31, 1995 there were no option contracts
outstanding.

At December 31, 1995, the Company had a forward swap agreement with a notional
amount of $100.0 million and a fair value of $0.1 million.

The Company did not have transactions in derivative instruments in 1994.

The Company also holds investments in certain debt and equity securities with
derivative characteristics (i.e., including the fact that their market value is
at least partially determined by, among other things, levels of or changes in
interest rates, prepayment rates, equity markets or credit ratings/spreads). The
amortized cost and fair value of these securities, included in the $13.4 billion
investment portfolio, as of December 31, 1995 was as follows:

<TABLE>
<CAPTION>
AMORTIZED FAIR
(MILLIONS) COST VALUE
----------- -----------
<S> <C> <C>
Collateralized mortgage obligations..................................................................... $ 2,383.9 $ 2,549.3
Principal-only strips (included above).................................................................. 38.7 50.0
Interest-only strips (included above)................................................................... 10.7 20.7
Structured Notes (1).................................................................................... 95.0 100.3
</TABLE>

(1) Represents non-leveraged instruments whose fair values and credit risk are
based on underlying securities, including fixed income securities and
interest rate swap agreements.

11. COMMITMENTS AND CONTINGENT LIABILITIES

COMMITMENTS

Through the normal course of investment operations, the Company commits to
either purchase or sell securities or money market instruments at a specified
future date and at a specified price or yield. The inability of counterparties
to honor these commitments may result in either higher or lower replacement
cost. Also, there is likely to be a change in

F-25
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Services, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1995, 1994, and 1993

11. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
the value of the securities underlying the commitments. At December 31, 1995,
the Company had commitments to purchase investments of $31.4 million. The fair
value of the investments at December 31, 1995 approximated $31.5 million. There
were no outstanding forward commitments at December 31, 1994.

LITIGATION

There were no material legal proceedings pending against the Company as of
December 31, 1995 or December 31, 1994 which were beyond the ordinary course of
business. The Company is involved in lawsuits arising, for the most part, in the
ordinary course of its business operations as an insurer.

12. SEGMENT INFORMATION
The Company's operations are reported through two major business segments: Life
Insurance and Financial Services.

Summarized financial information for the Company's principal operations was as
follows:

<TABLE>
<CAPTION>
(MILLIONS) 1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Financial services..................................................................... $ 1,129.4 $ 946.1 $ 892.8
Life insurance......................................................................... 407.9 386.1 371.7
----------- ----------- -----------
Total revenue.......................................................................... $ 1,537.3 $ 1,332.2 $ 1,264.5
----------- ----------- -----------
Income before federal income taxes:
Financial services..................................................................... $ 158.0 $ 119.7 $ 121.1
Life insurance......................................................................... 102.0 96.8 98.0
----------- ----------- -----------
Total income before federal income taxes............................................... $ 260.0 $ 216.5 $ 219.1
----------- ----------- -----------
Net income:
Financial services..................................................................... $ 113.8 $ 85.5 $ 86.8
Life insurance......................................................................... 62.1 59.8 56.1
----------- ----------- -----------
Net income............................................................................... $ 175.9 $ 145.3 $ 142.9
----------- ----------- -----------
Assets under management, at fair value:
Financial services..................................................................... $ 23,224.3 $ 17,785.2 $ 16,600.5
Life insurance......................................................................... 2,698.1 2,171.7 2,175.5
----------- ----------- -----------
Total assets under management.......................................................... $ 25,922.4 $ 19,956.9 $ 18,776.0
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

F-26
<PAGE>

VARIABLE ANNUITY ACCOUNT C
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 C:
- Independent Auditors' Report
- Statement of Assets and Liabilities as of December 31,
1995
- Statement of Operations for the year ended December 31,
1995
- Statements of Changes in Net Assets for the years ended
December 31, 1995 and 1994
- Notes to Financial Statements
Financial Statements of the Depositor:
- Independent Auditors' Report
- Consolidated Statements of Income for the years ended
December 31, 1995, 1994 and 1993
- Consolidated Balance Sheets as of December 31, 1995 and
1994
- Consolidated Statements of Changes in Shareholder's Equity
for the years ended December 31, 1995, 1994 and 1993
- Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993
- Notes to Consolidated Financial Statements

(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance
and Annuity Company establishing Variable Annuity Account C(1)
(2) Not applicable
(3.1) Form of Broker-Dealer Agreement(1)
(3.2) Alternative Form of Wholesaling Agreement and related Selling
Agreement(1)
(4.1) Form of Variable Annuity Contracts (IRA-CDA-IC) and (IP-CDA-IB)
(5.1) Form of Variable Annuity Contract Application (304.00.1A)(2)
(5.2) Form of Variable Annuity Contract Application (703.00.1A)(3)
(6) Certification of Incorporation and By-Laws of Depositor(4)
(7) Not applicable
(8.1) Fund Participation Agreement (Amended and Restated) between
Aetna Life Insurance and Annuity Company, Alger American Fund
and Fred Alger Management, Inc. dated March 31, 1995(1)
(8.2) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation (Variable
Insurance Products Fund) dated February 1, 1994 and amended
March 1, 1996(1)
<PAGE>

(8.3) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation (Variable
Insurance Products Fund II) dated February 1, 1994 and amended
March 1, 1996(1)
(8.4) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994 and
amended March 1, 1996(1)
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Scudder Variable Life Investment Fund dated
April 27, 1992 and amended February 19, 1993 and August 13,
1993(1)
(8.6) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and amended December 22,
1992 and June 1, 1994(1)
(9) Opinion of Counsel(5)
(10.1) Consent of Independent Auditors
(10.2) Consent of Counsel
(11) Not applicable
(12) Not applicable
(13) Computation of Performance Data(6)
(14) Not applicable

(15.1) Powers of Attorney(7)

(15.2) Authorization for Signatures(1)
(27) Financial Data Schedule

1. Incorporated by reference to Post-Effective Amendment No. 5 to Registration
Statement on Form N-4 (File No. 33-75986), as filed electronically on April
12, 1996.
2. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75988), as filed on February 27, 1995.
3. Incorporated by reference to Post-Effective Amendment No. 2 to
Registration Statement on Form N-4 (File No. 33-75972), as filed
on April 28, 1995.
4. Incorporated by reference to Post-Effective Amendment No. 58 to
Registration Statement on Form N-4 (File No. 2-52449), as filed
on February 28, 1994.
5. Incorporated by reference to Registrant's 24f-2 Notice for fiscal year
ended December 31, 1995, as filed electronically on February 29, 1996.
6. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on April 28, 1995.

7. Incorporated by reference to Post-Effective Amendment No. 3 to
Registration Statement on Form N-4 (File No. 33-75974), as filed
electronically on April 9, 1996.

<PAGE>

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

Name and Principal
Business Address* Positions and Offices with Depositor
- ------------------ ------------------------------------
Daniel P. Kearney Director and President

Timothy A. Holt Director, Senior Vice President and
Chief Financial Officer

Christopher J. Burns Director and Senior Vice President

Laura R. Estes Director and Senior Vice President

Gail P. Johnson Director and Vice President

John Y. Kim Director and Senior Vice President

Shaun P. Mathews Director and Vice President

Glen Salow Director and Vice President

Creed R. Terry Director and Vice President

Eugene M. Trovato Vice President and Treasurer,
Corporate Controller

Zoe Baird Senior Vice President and General
Counsel

Diane Horn Vice President and Chief Compliance
Officer

Susan E. Schechter Corporate Secretary and Counsel

* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.

<PAGE>

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT

Incorporated herein by references to Item 26 of Post-Effective Amendment
No. 5 to Registration Statement on Form N-4 (File No. 33-75986), as filed
electronically on April 12, 1996.

ITEM 27. NUMBER OF CONTRACT OWNERS

As of February 29, 1996, there were 527,607 individuals holding interests
in variable annuity contracts funded through Variable Annuity Account C.

ITEM 28. INDEMNIFICATION

Reference is hereby made to Section 33-320a of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and officers of
Connecticut corporations. The statute provides in general that Connecticut
corporations shall indemnify their officers, directors, employees, agents, and
certain other defined individuals against judgments, fines, penalties, amounts
paid in settlement and reasonable expenses actually incurred in connection with
proceedings against the corporation. The corporation's obligation to provide
such indemnification does not apply unless (1) the individual is successful on
the merits in the defense of any such proceeding; or (2) a determination is made
(by a majority of the board of directors not a party to the proceeding by
written consent; by independent legal counsel selected by a majority of the
directors not involved in the proceeding; or by a majority of the shareholders
not involved in the proceeding) that the individual acted in good faith and in
the best interests of the corporation; or (3) the court, upon application by the
individual, determines in view of all the circumstances that such person is
reasonably entitled to be indemnified.

C.G.S. Section 33-320a provides an exclusive remedy: a Connecticut
corporation cannot indemnify a director or officer to an extent either greater
or less than that authorized by the statute, e.g., pursuant to its certificate
of incorporation, bylaws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.

Consistent with the statute, Aetna Life and Casualty Company has procured
insurance from Lloyd's of London and several major United States excess insurers
for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor, which supplements the indemnification
rights provided by C.G.S. Section 33-320a to the extent such coverage does not
violate public policy.

ITEM 29. PRINCIPAL UNDERWRITER

(a) In addition to serving as the principal underwriter for the
Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also acts
as the principal underwriter for Variable Life Account B and Variable
Annuity Accounts B and G (separate accounts of ALIAC

<PAGE>

registered as unit investment trusts), and Variable Annuity Account I
(a separate account of Aetna Insurance Company of America registered
as a unit investment trust). Additionally, ALIAC is the investment
adviser for Aetna Variable Fund, Aetna Income Shares, Aetna Variable
Encore Fund, Aetna Investment Advisers Fund, Inc., Aetna GET Fund,
Aetna Series Fund, Inc. and Aetna Generation Portfolios, Inc. ALIAC
is also the depositor of Variable Life Account B and Variable Annuity
Accounts B and G.

(b) See Item 25 regarding the Depositor.

(1) (2) (3) (4) (5)

Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commissions Compensation*
----------- ---------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Aetna Life $1,830,629 $74,341,006
Insurance
and Annuity
Company
</TABLE>

* Compensation shown in column 5 includes deductions for mortality and
expense risk guarantees and contract charges assessed to cover costs
incurred in the sales and administration of the contracts issued under
Variable Annuity Account C.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All records concerning contract owners of Variable Annuity Account C 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

<PAGE>

as is necessary to ensure that the audited financial statements in the
registration statement are never more than sixteen months old for as
long as payments under the variable annuity contracts may be accepted;

(b) to include as part of any application to purchase a contract offered
by a prospectus which is part of this registration statement on Form
N-4, a space that an applicant can check to request a Statement of
Additional Information; and

(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.

(d) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

<PAGE>

SIGNATURES

As required by the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, the Registrant, Variable Annuity Account C of Aetna Life
Insurance and Annuity Company, certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment
No. 4 to its Registration Statement on Form N-4 (File No. 33-75988) and has
caused this Post-Effective Amendment No. 4 to its Registration Statement on Form
N-4 (File No. 33-75988) to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hartford, State of Connecticut, on the 12th day
of April, 1996.

VARIABLE ANNUITY ACCOUNT C OF AETNA
LIFE INSURANCE AND ANNUITY COMPANY
(REGISTRANT)

By: AETNA LIFE INSURANCE AND ANNUITY
COMPANY
(DEPOSITOR)

By: Daniel P. Kearney*
----------------------------------
Daniel P. Kearney
President

As required by the Securities Act of 1933, as amended, this Post-Effective
Amendment No. 4 to the Registration Statement on Form N-4 (File No. 33-75988)
has been signed by the following persons in the capacities and on the dates
indicated.

Signature Title Date
- --------- ----- ----

Daniel P. Kearney* Director and President )
- --------------------- (principal executive officer) )
Daniel P. Kearney )
)
Timothy A. Holt* Director, Senior Vice President and ) April
- --------------------- Chief Financial Officer ) 12, 1996
Timothy A. Holt )
)
Christopher J. Burns* Director )
- --------------------- )
Christopher J. Burns )

<PAGE>

Laura R. Estes* Director )
- --------------------- )
Laura R. Estes )
)
Gail P. Johnson* Director )
- --------------------- )
Gail P. Johnson )
)
John Y. Kim* Director )
- --------------------- )
John Y. Kim )
)
Shaun P. Mathews* Director )
- --------------------- )
Shaun P. Mathews )
)
Glen Salow* Director )
- --------------------- )
Glen Salow )
)
Creed R. Terry* Director )
- --------------------- )
Creed R. Terry )
)
Eugene M. Trovato* Vice President and Treasurer, )
- --------------------- Corporate Controller )
Eugene M. Trovato )

By: /s/ Julie E. Rockmore
-------------------------------
Julie E. Rockmore
*Attorney-in-Fact

<PAGE>

VARIABLE ANNUITY ACCOUNT C
EXHIBIT INDEX

Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.1 Resolution of the Board of Directors of Aetna Life *
Insurance and Annuity Company establishing Variable
Annuity Account C

99-B.3.1 Form of Broker-Dealer Agreement *

99-B.3.2 Alternative Form of Wholesaling Agreement and related *
Selling Agreement

99-B.4.1 Form of Variable Annuity Contracts (IRA-CDA-IC) and
(IP-CDA-IB) ____

99-B.5.1 Form of Variable Annuity Contract Application (304.00.1A) *

99-B.5.2 Form of Variable Annuity Contract Application (703.00.1A) *

99-B.6 Certification of Incorporation and By-Laws of *
Depositor

99-B.8.1 Fund Participation Agreement (Amended and Restated) *
between Aetna Life Insurance and Annuity Company,
Alger American Fund and Fred Alger Management, Inc. as
dated March 31, 1995

99-B.8.2 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Fidelity Distributors
Corporation (Variable Insurance Products Fund) dated
February 1, 1994 and amended March 1, 1996

99-B.8.3 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Fidelity Distributors
Corporation (Variable Insurance Products Fund II) dated
February 1, 1994 and amended March 1, 1996

99-B.8.4 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Janus Aspen Series
dated April 19, 1994 and amended March 1, 1996

*Incorporated by reference

<PAGE>

Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.8.5 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Scudder Variable
Life Investment Fund dated April 27, 1992 and amended
February 19, 1993 and August 13, 1993

99-B.8.6 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company, Investors Research
Corporation and TCI Portfolios, Inc. dated July 29,
1992 and amended December 22, 1992 and June 1, 1994

99-B.9 Opinion of Counsel *

99-B.10.1 Consent of Independent Auditors ____

99-B.10.2 Consent of Counsel ____

99-B.13 Computation of Performance Data *

27 Financial Data Schedule ____

*Incorporated by reference

<PAGE>

[LOGO]
------------------------------------------------------------------------
AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547

Aetna Life Insurance and Annuity Company, herein called
Aetna, agrees to pay the benefits stated in this Contract.

SPECIFICATIONS
- --------------------------------------------------------------------------------
Plan

- --------------------------------------------------------------------------------
Type of Plan
INDIVIDUAL RETIREMENT ANNUITY (IRA)
- --------------------------------------------------------------------------------
Annuitant
MARY SMITH
- --------------------------------------------------------------------------------
Contract Holder
MARY SMITH
- --------------------------------------------------------------------------------
Contract No.
SPECIMEN
- --------------------------------------------------------------------------------
Effective Date
MAY 1, 1994
- --------------------------------------------------------------------------------
This Contract is Delivered in YOUR STATE and is Subject to the Laws of that
Jurisdiction

THE VARIABLE FEATURES OF THE CONTRACT ARE DESCRIBED IN PARTS III AND IV.

RIGHT TO CANCEL
- --------------------------------------------------------------------------------
The Contract Holder may cancel this Contract within 10 days of receiving it, by
sending a written notice to Aetna at the above address or to the agent from whom
it was purchased. Aetna will return all payments made for this Contract within
7 days after it receives the notice of cancellation and this Contract.

This page, the following pages, and the application make up the entire Contract.

Signed at the Home Office on the Effective Date.

Gary G. Benanav Lucille M. Nickerson
President Secretary

Individual Variable, Fixed, or Combination Annuity Contract
Nonparticipating

ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT.

IRA-CDA-IC

<PAGE>

SPECIFICATIONS
(CONTINUED)

- --------------------------------------------------------------------------------
GUARANTEED There are guaranteed interest rates for amounts
INTEREST RATE held in the Fixed Account (See 3.02) and the
Guaranteed Interest Account. (See 3.03(d).)

- --------------------------------------------------------------------------------
MAINTENANCE FEE This Contract may be subject to an annual
Maintenance Fee. (See Contract Schedule and
3.04.)

- --------------------------------------------------------------------------------
SURRENDER FEE There will be a charge deducted for early
surrender. (See Contract Schedule and 3.14.)

- --------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense
THE SEPARATE and administrative fees. (See Contract Schedule
ACCOUNT and 3.06.)

- --------------------------------------------------------------------------------
DEDUCTION FROM Purchase Payment(s) are subject to a deduction for
PURCHASE premium taxes, if any. (See 3.01.)
PAYMENT(S)

This Contract is a legal contract and constitutes the entire legal relationship
between Aetna and the Contract Holder.

READ THIS CONTRACT CAREFULLY. This contract sets forth, in detail, all of the
rights and obligations of both you and Aetna. IT IS, THEREFORE, IMPORTANT THAT
YOU READ THIS CONTRACT CAREFULLY.

IRA-CDA-IC

<PAGE>

CONTRACT SCHEDULE

INDIVIDUAL RETIREMENT ANNUITY (IRA) AND SIMPLIFIED EMPLOYEE PENSION PLAN
- -------------------------------------------------------------------------------

MAINTENANCE FEE: The annual Maintenance Fee is $25. If the
Contract's Current Value is $10,000 or greater on
the date the Maintenance Fee is to be deducted,
the Maintenance Fee is $0.

SURRENDER FEE: For each surrender within the first Contract Year,
the Surrender Fee will be 1% (one percent) of the
Current Value. For all subsequent years, the
Surrender Fee will be 0% (zero percent).

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months;

(d) Due to an election of a Distribution Option;
or
(e) In an amount equal to or less than 10% of the
Current Value, as part of the first partial
surrender request in a calendar year to a
Contract Holder who is at least age 59 1/2.
The Current Value is calculated as of the
date the partial surrender request is
received in Good Order at Aetna's Home
Office. When a Distribution Option is
elected, this provision includes any amounts
paid under that election. This provision
does not apply to full surrender requests.

CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account.
The deduction is the daily equivalent of the
annual percentage that will not exceed 1.50%
Current Separate Account charges are 1.25% for the
Annuity mortality risk, the expense risk and the
administrative charge. Charges are subject to
change annually, except for amounts which have
been used to purchase an Annuity. The daily
charge does not include investment advisory fees
and other expenses charged by a Fund investment
manager. These fees are disclosed in the
applicable Fund Prospectus.

Aetna will notify the Contract Holder of any
change on Separate Account charges.

IRA-CDA-IC

<PAGE>

CHARGES TO SEPARATE Aetna will reduce the Separate Account charge by:
ACCOUNT:
(CONT'D): (a)0.10% if ten years have elapsed since the
initial Purchase Payment has been made to this
Contract and an Annuity Option has not been
elected; or

(b)0.10% if the Current Value in the Contract is
greater than $250,000 on the day of the initial
Purchase Payment or on each subsequent
anniversary.

TABLE OF MINIMUM The values in the below Table only apply to
VALUES -- FIXED ACCOUNT: annual Purchase Payments of exactly $1,000
credited to the Fixed Account. Values would be
different for othe Purchase Payment amounts, if
partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed
Interest Rate -- Fixed Account (see 3.02).

The Surrender Value assumes that a Purchase
Payment of exactly $1,000 is credited to the
Fixed Account at the 3% Guaranteed Interest
Rate at the beginning of each Contract Year.
The Maintenance Fee and applicable first year
Surrender Fee are deducted.

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

<TABLE>
<CAPTION>
END MINIMUM MINIMUM END MINIMUM MINIMUM
OF YEAR CURRENT VALUE SURRENDER VALUE OF YEAR CURRENT VALUE SURRENDER VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $1,005 $ 995 16 $ 20,480 $ 20,480
2 2,040 2,040 17 22,124 22,124
3 3,106 3,106 18 23,818 23,818
4 4,205 4,205 19 25,563 25,563
5 5,336 5,336 20 27,360 27,360
6 6,501 6,501 25 37,186 37,186
7 7,701 7,701
8 8,937 8,937 30 48,577 48,577
9 10,235 10,235
10 11,572 11,572 35 61,782 61,782
11 12,949 12,949 40 77,091 77,091
12 14,368 14,368
13 15,829 15,829 45 94,838 94,838
14 17,333 17,333
15 18,883 18,883 50 115,411 115,411

</TABLE>

IRA-CDA-IC

<PAGE>

CONTRACT SCHEDULE

INDIVIDUAL RETIREMENT ANNUITY (IRA) AND SIMPLIFIED EMPLOYEE PENSION PLAN
- --------------------------------------------------------------------------------

MAINTENANCE FEE: The annual Maintenance Fee is $25. If the
Contract's Current Value is $10,000 or greater on
the date the Maintenance Fee is to be deducted,
the Maintenance Fee is $0.

SURRENDER FEE: For each surrender, the Surrender Fee will be
determined according to the number of completed
Contract Years between the date the first Net
Purchase Payment is applied to the Contract and
the date of the surrender. The Surrender Fee
Schedule under this Contract will commence at the
percentage point in the Schedule below that
corresponds with the percentage most recently
applicable under the Aetna predecessor contract:

COMPLETED CONTRACT YEARS SURRENDER FEE

Less than 2 years6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more years 0%

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months;

(d) Due to an election of a Distribution Option;
or

(e) In an amount equal to or less than 10% of the
Current Value, as part of the first partial
surrender request in a calendar year to a
Contract Holder who is at least age 59 1/2.
The Current Value is calculated as of the
date the partial surrender request is
received in Good Order at Aetna's Home
Office. When a Distribution Option is
elected, this provision includes any amounts
paid under that election. This provision
does not apply to full surrender requests.

CHARGES TO SEPARATE A daily charge is deducted from any portion
ACCOUNT: of the Current Value allocated to the
Separate Account. The deduction is the daily
equivalent of the annual percentage that will
not exceed 1.50% Current Separate Account
charges are 1.25% for the Annuity mortality
risk, the expense risk

IRA-CDA-IC

<PAGE>

CHARGES TO SEPARATE and the administrative charge. Charges are
ACCOUNT (CONT'D) subject to change annually, except for
amounts which have been used to purchase an
Annuity. The daily charge does not include
investment advisory fees and other expenses
charged by a Fund investment manager. These
fees are disclosed in the applicable Fund
Prospectus.

Aetna will notify the Contract Holder of any
change on Separate Account charges.

Aetna will reduce the Separate Account charge
by:

(a) 0.10% if ten years have elapsed since
the initial Purchase Payment has been
made to this Contract and an Annuity
Option has not been elected; or

(b) 0.10% if the Current Value in the
Contract is greater than $250,000 on the
day of the initial Purchase Payment or
on each subsequent anniversary.

TABLE OF MINIMUM The values in the below Table only apply to
VALUES -- FIXED ACCOUNT: annual Purchase Paymentsof exactly $1,000
credited to the Fixed Account. Values would
be different for other Purchase Payment
amounts, if partial surrenders are made, or
if Aetna adds interest at a rate greater than
the Guaranteed Interest Rate -- Fixed Account
(see 3.02).

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

</TABLE>

IRA-CDA-IC

<PAGE>

TABLE OF CONTENTS

I. GENERAL DEFINITIONS
- --------------------------------------------------------------------------------
PAGE
1.01 Annuitant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.02 Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.03 Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.04 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.05 Contract Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.06 Contract Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.07 Fixed Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.08 Fixed Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.09 Fund(s). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 General Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Good Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Guaranteed Interest Account (GIA). . . . . . . . . . . . . . . . . . . 4
1.13 Matured Term Value . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15 Nonunitized Separate Account . . . . . . . . . . . . . . . . . . . . . 4
1.16 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.17 Purchase Payment(s). . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.19 Valuation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.20 Variable Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 Change of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.02 Change of Fund(s). . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 Nonparticipating Contract. . . . . . . . . . . . . . . . . . . . . . . 6
2.04 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.05 State Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.06 Control of Contract. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.07 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . 7
2.08 Misstatements and Adjustments. . . . . . . . . . . . . . . . . . . . . 7
2.09 Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Grace Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.11 Nonwaiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

<PAGE>

III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
- --------------------------------------------------------------------------------
PAGE
3.01 Net Purchase Payment(s). . . . . . . . . . . . . . . . . . . . . . . . 7
3.02 Guaranteed Interest Rate -- Fixed Account. . . . . . . . . . . . . . . 7
3.03 Guaranteed Interest Account (GIA). . . . . . . . . . . . . . . . . . . 8
3.04 Maintenance Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.05 Fund(s) Record Units -- Separate Account . . . . . . . . . . . . . . .11
3.06 Net Return Factor(s) -- Separate Account . . . . . . . . . . . . . . .11
3.07 Fund(s) Record Unit Value -- Separate Account. . . . . . . . . . . . .11
3.08 Current Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.09 Transfer of Current Value from the Funds or GIA. . . . . . . . . . . .12
3.10 Transfer of Current Value from the Fixed Account . . . . . . . . . . .12
3.11 Systematic Allocation. . . . . . . . . . . . . . . . . . . . . . . . .13
3.12 Notice to the Contract Holder. . . . . . . . . . . . . . . . . . . . .13
3.13 Sum Payable at Death (Before Annuity Payments Start) . . . . . . . . .13
3.14 Surrender Value. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.15 Payment of Surrender Value . . . . . . . . . . . . . . . . . . . . . .14
3.16 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.17 Required Distribution to Contract Holder . . . . . . . . . . . . . . .15
3.18 Distribution Options . . . . . . . . . . . . . . . . . . . . . . . . .17

IV. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
4.01 Choices to be Made . . . . . . . . . . . . . . . . . . . . . . . . . .21
4.02 Annuity Payments to Annuitant. . . . . . . . . . . . . . . . . . . . .21
4.03 Annuity Payments to Annuitant's Beneficiary. . . . . . . . . . . . . .22
4.04 Terms of Annuity Options . . . . . . . . . . . . . . . . . . . . . . .22
4.05 Death of Annuitant/Beneficiary . . . . . . . . . . . . . . . . . . . .23
4.06 Fund(s) Annuity Units -- Separate Account. . . . . . . . . . . . . . .23
4.07 Fund(s) Annuity Unit Value -- Separate Account . . . . . . . . . . . .24
4.08 Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . .24

IRA-CDA-IC 3

<PAGE>

I. GENERAL DEFINITIONS
- --------------------------------------------------------------------------------
1.01 ANNUITANT: The person who receives a series of payments for
life or a definite period under this Contract.
This term may also apply to the Contract Holder's
Beneficiary who elected an Annuity Option after
the Contract Holder's death before payments begin.
The Annuitant cannot be changed.

1.02 ANNUITY: Payment of an income:

(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).

1.03 BENEFICIARY: The individual or estate entitled to receive any
payment upon the death of the Contract Holder or
Annuitant.

1.04 CODE: The Internal Revenue Code of 1986, as it may be
amended from time to time.

1.05 CONTRACT HOLDER: The person to whom this Contract is issued.

1.06 CONTRACT YEAR: The period of 12 months measured from the date the
first Net Purchase Payment is applied to the
Contract or from any anniversary of such date.

1.07 FIXED ACCOUNT: An accumulation option with a guaranteed minimum
interest rate. Aetna may credit a higher rate
which is not guaranteed.

1.08 FIXED ANNUITY: An Annuity with payments which do not vary in
amount.

1.09 FUND(S): The open-end registered management investment
companies (mutual funds) made available by Aetna
under this Contract.

1.10 GENERAL ACCOUNT: The account holding the assets of Aetna, other
than those assets held in a Separate Account or
the Nonunitized Separate Account.

1.11 GOOD ORDER: A Contract Holder instruction to Aetna is in Good
Order when given with such clarity and
completeness that Aetna is not required to
exercise any discretion, utilizing such forms as
Aetna may require.

1.12 GUARANTEED INTEREST An accumulation option which guarantees a
ACCOUNT (GIA): stipulated rate of interest for a specified period
of time.

1.13 MATURED TERM VALUE: The amount payable on a GIA Term's Maturity Date.

1.14 MATURITY DATE: The last day of a GIA Term.

1.15 NONUNITIZED SEPARATE An account set up by Aetna under Title 38a,
ACCOUNT: Section 38a-433 of the Connecticut General
Statutes which is used to hold assets for GIA
Terms greater than three years. The Contract
Holder does not participate in the investment gain
or loss from the assets held in this account.

IRA-CDA-IC 4

<PAGE>

1.16 PLAN: The Simplified Employee Pension Plan named on the
Contract cover, if applicable. The Plan is not a
part of the Contract. Aetna is not bound by the
terms of the Plan.

1.17 PURCHASE PAYMENT(S): Payment(s) made to Aetna. Purchase Payment(s)
must be in cash and the total of such
contributions cannot exceed $2,000 for an
individual for any taxable year. Aetna will
maintain an asset account for crediting IRA
contributions as described in Code Section 408(b).

Exceptions to the dollar maximum are:

(a) Rollover contribution as permitted by Code
Sections 402(c), 403(a)(4), 403(b)(8), or
408(d)(3) allocated to a Rollover asset
account; and

(b) An employer contribution made according to
the terms of a Simplified Employee Pension
Plan as described in Code Section 408(k)
allocated to a Plan asset account.

Contributions that exceed limitations may either
be refunded to the Contract Holder or applied to
the following calendar year's contribution, as
permitted by the Code. Aetna assumes no
responsibility for tax consequences that may
result from excess contributions that are not
refunded to the Contract Holder.

1.18 SEPARATE ACCOUNT: An account which buys and holds shares of the
Fund(s). Income, gains or losses, realized or
unrealized are credited or charged to this account
without regard to other income, gains or losses of
Aetna. Aetna owns the assets held in a separate
account and is not a trustee as to such amounts.
These accounts generally are not guaranteed and
are held at market value. The assets of such
accounts, to the extent of reserves and other
contract liabilities of the Account, shall not be
charged with other Aetna liabilities.

1.19 VALUATION PERIOD: The period of time for which a Fund determines its
(PERIOD) net asset value, usually from 4:15 p.m. Eastern
time each day the New York Stock Exchange is open
until 4:15 p.m. the next such day, or such other
day that one or more of the Funds determines its
net asset value.

1.20 VARIABLE ANNUITY: An Annuity with payments that vary with the net
investment results of one or more Funds under the
Separate Account.

II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 CHANGE OF CONTRACT: Except as provided below, only an authorized
officer of Aetna may change the terms of this
Contract. Aetna will notify the Contract Holder
in writing at least 30 days before the effective
date of any change. Any change will not affect
the amount or terms of any Annuity which begins
before the change. The following provisions of
this Contract will not be changed:

IRA-CDA-IC 5

<PAGE>

2.01 CHANGE OF CONTRACT: (a) Net Purchase Payment(s)
(CONT'D) (b) Guaranteed Interest Account (GIA) Interest
Rate
(c) Guaranteed Interest Rate -- Fixed Account
(d) Net Return Factor(s) -- Separate Account
(e) Current Value
(f) Surrender Value
(g) Fund(s) Annuity Unit Value -- Separate
Account
(h) Annuity Options
(i) Fixed Annuity minimum interest rate
(j) Maximum transfer, maintenance, or surrender
fees.

This Contract may also be changed as required by
federal or state law.

2.02 CHANGE OF FUND(S): Aetna, or the Separate Account may:

(a) Change the Fund(s) which may be invested in
by the Separate Account; and
(b) Replace the shares of any Fund(s) held in the
Separate Account with shares of any other
Fund(s).

Changes must be:

(a) Approved by a majority vote of persons having
an interest in the Separate Account and the
Fund(s);
(b) Deemed necessary by Aetna under the
Investment Company Act of 1940; or
(c) Deemed necessary by Aetna to accomplish the
purpose of the Separate Account.

Aetna will notify the Contract Holder of any
change.

2.03 NONPARTICIPATING: The Contract Holder, Annuitant, or Beneficiaries
CONTRACT: will not have a right to share in the earnings of
Aetna.

2.04 PAYMENTS: Aetna will make Annuity payments as and when due.
Aetna will make other payments within 7 days of
receipt at its Home Office of a written claim for
payment which is in Good Order, except as provided
in Section 3.15.

2.05 STATE LAWS: This Contract complies with the laws of the state
in which it is delivered. Any cash, death or
Annuity payments are equal to or greater than the
minimum required by such laws. Annuity tables for
legal reserve valuation shall be as required by
state law. Such tables may be different from
Annuity tables used to determine Annuity payments.

2.06 CONTROL OF CONTRACT: The Contract is established for the exclusive
benefit of the individual Contract Holder or his
or her Beneficiaries. All nonforfeitable rights
in this Contract rest with the Contract Holder,
who is entitled to all amounts held under this
Contract. The Contract Holder may make any
choices allowed by this Contract.

IRA-CDA-IC 6

<PAGE>

2.06 CONTROL OF CONTRACT: Choices made under this Contract must be in
(CONT'D): writing. Until receipt of such choices at its
Home Office, Aetna may rely on any previous
choices made. This Contract is nontransferable
and nonassignable, except to Aetna, or pursuant to
a valid court order provided Aetna is notified and
served with respect to such order pursuant to
applicable law.

2.07 DESIGNATION OF The Contract Holder shall name the Beneficiary.
BENEFICIARY: The Beneficiary may be changed at any time. Until
receipt of a written request to change the
Beneficiary, Aetna may rely upon the last named
Beneficiary.

2.08 MISSTATEMENTS AND If Aetna finds the age of any payee to be
ADJUSTMENTS: misstated, the correct facts will be used to
adjust payments. Aetna reserves the right to
correct any informational or administrative
errors.

2.09 INCONTESTABILITY: Aetna cannot cancel this Contract because of any
error of fact on the application.

2.10 GRACE PERIOD: This Contract will remain in effect even if
Purchase Payments are not continued.

2.11 NONWAIVER: Aetna may, in its sole discretion, elect not to
exercise a right or reservation specified in this
Contract. Such election shall not constitute a
waiver of the right to exercise such right or
reservation at any subsequent time.

III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
- --------------------------------------------------------------------------------
3.01 NET PURCHASE This actual Purchase Payment(s) less any premium
PAYMENT(S): tax. Generally, Aetna will deduct the premium tax
when Annuity benefits are purchased (see 4.01).
If Aetna determines that a premium tax is due when
Purchase Payment(s) are received, or at any other
time, it will deduct the tax at that time.

The Net Purchase Payment(s) may be credited among
no more than 10 of the following:

(a) The Fixed Account;
(b) The GIA; and
(c) The Fund(s) in which the Separate Account
invests.

Aetna must be told the percentage of the Net
Purchase Payment(s) to be applied to each
investment above. Allocations to more than 10
such investment options are not permitted under
this Contract.

The investment allocation may be changed up to 12
times during any calendar year. More than 12 such
changes in any calendar year, if permitted by
Aetna, may be subject to an additional fee of up
to $10 for each subsequent occurrence.

3.02 GUARANTEED INTEREST On any Net Purchase Payment(s) and transfers made
RATE -- FIXED to the Fixed Account, Aetna will add interest
ACCOUNT: daily at an annual rate no less than 3%. Aetna
may add interest daily at any higher rate Aetna
will periodically advise the Contract Holder of
the rate being currently credited to the Fixed
Account.

IRA-CDA-IC 7

<PAGE>

3.03 GUARANTEED INTEREST The Guaranteed Interest Account (GIA) provides a
ACCOUNT guaranteed effective annual yield for Net Purchase
Payments and transfers held in the GIA for
stipulated periods of time (see (a) and (b)
below).

(a) Deposit Period - A calendar month, a calendar
quarter, or any other period of time specified
by Aetna during which Net Purchase Payment(s)
and transfers are accepted into the GIA for
one or more Guaranteed Terms.

(b) Guaranteed Term (Term) -- The period of time
for which Annual Effective Yields are earned
on Net Purchase Payment(s) and on transfers
made into a Deposit Period of the GIA. Terms
are offered at Aetna's discretion for various
lengths of time ranging up to and including
ten years.

(c) Guaranteed Term Classifications -- The
grouping of Terms according to their time to
maturity. The following are the
Classifications:

(1) Short Term: Terms of at least one month up
to and including 3 years; or

(2) Long Term: Terms of greater than 3 years
and up to and including 10 years.

During a Deposit Period, Aetna may make
available one or more Terms within a
Classification. The Contract Holder has the
option to allocate Net Purchase Payment(s) and
transfers into any or all of the available
Deposit Period Terms. If no specific direction
is given, Net Purchase Payment(s) and transfers
will go into available Terms on a pro rata
basis within the Classification(s) previously
chosen by the Contract Holder.

(d) Guaranteed Effective Yields (Yields) -- The
effective annual yield(s) are guaranteed by
Aetna for Net Purchase Payment(s) and
transfers accepted into a Deposit Period for
available Terms in the GIA. Yield(s) will
gradually increase to the end of a Term and
will never be less than 3%.

The ending Term Guaranteed Effective Yield is
the rate which Aetna will declare prior to
each Deposit Period. Aetna will also
calculate the interim Yield(s). Aetna will
add interest daily for each applicable
quarter.

(e) Withdrawals -- Transfers may be requested at
any time from the GIA prior to the end of a
Term, subject to Contract transfer terms and
conditions (see 3.09). Full or partial
surrenders may be requested at any time from
the GIA prior to the end of a Term. The
amount withdrawn before the Maturity Date of a
Term will receive a Yield which is reduced
from the ending Guaranteed Term Effective
Yield. The reduced Yield will never be less
than 3%.

IRA-CDA-IC 8

<PAGE>

3.03 GUARANTEED INTEREST Full and partial surrenders are satisfied by
ACCOUNT (GIA) withdrawing amounts from each of the Funds,
(CONT'D) the Fixed Account, the GIA Short Term
Classification and the GIA Long Term
Classification on a pro rata basis. However,
the Contract Holder may specify a particular
order in which investment options will be
liquidated in order to satisfy a partial
surrender request.

For purposes of withdrawals, Terms within the
GIA Short Term and Long Term Classifications
are considered as two separate investment
options. Amounts will be removed within a GIA
Classification starting with the Term still in
effect with the oldest Deposit Period.

Amounts withdrawn from the GIA under the Sum
Payable at Death Provision (see 3.13) prior to
the end of a Term will earn the Yield stated
for the Net Purchase Payment(s) and transfers
remaining in the Classification of the GIA to
the end of the Term.

(f) Maturity Date/Reinvestment -- The Contract
Holder will be mailed a notice at least 18
calendar days before a Term's Maturity Date.
This notice will contain the current Deposit
Period's Yield(s), Term(s) and a projected
Matured Term Value.

The Matured Term Value may be surrendered or
transferred on the Term's Maturity Date. If
no specific direction is given by the Contract
Holder prior to the Maturity Date, each
Matured Term Value will be reinvested in a
Term of the same duration. In the event that
a Term of the same duration is unavailable,
each Matured Term Value will automatically be
reinvested in the next shortest Term available
in the same Classification during the then
current Deposit Period. If however, only one
Term is available within the Classification,
then the Matured Term Value will automatically
be reinvested in that Term. If there are no
Terms available in the Long Term Classification
previously chosen, the Matured Term Value will
be allocated to the Term within the Short Term
Classification with the longest period. Within
two business days after the Maturity Date, the
Contract Holder will be mailed a confirmation
statement. This statement will state the Terms
and Yields which will apply to the reinvested
Matured Term Value.

During the calendar month following the Term's
Maturity Date, the Contract Holder may notify
Aetna's Home Office to transfer or surrender
all or part of the Matured Term Value plus any
interest accrued thereon from the GIA. This
provision only applies to the first such
request received from the Contract Holder
during this period for any Matured Term Value.
All or part of the Matured Term Value plus any
interest accrued thereon may be transferred
upon such request:

(1) To any other Terms of the GIA available in
the Current Deposit Period;
(2) To the Fixed Account; or
(3) To any other allowable Fund(s).

IRA-CDA-IC 9

<PAGE>

3.03 GUARANTEED INTEREST If no such notification is given, the Matured
ACCOUNT (GIA) Term Value will remain subject to the terms and
(CONT'D) conditions of the new Term. All surrender and
transfer requests will be processed as of the
date they are received in good order at Aetna's
Home Office.

(g) Net Purchase Payments to the GIA -- All
amounts in the GIA under the Short Term
Classification are normally maintained in the
General Account. At its option, Aetna may
hold Short Term Classifications of a given
class in a Nonunitized Separate Account.

Amounts in the GIA under the Long Term
Classification are normally maintained in a
Nonunitized Separate Account. There are no
discrete units for this Nonunitized Separate
Account. The Contract Holder does not
participant in the gain or loss from the
assets held in the Nonunitized Separate
Account. Such gain or loss is borne entirely
by Aetna. At its option, Aetna may hold Long
Term Classifications of a given class in its
General Account.

For Terms under both the Short Term and Long
Term Classifications, Aetna guarantees
stipulated Yields to be credited to the GIA.
All assets of Aetna including amounts
maintained in the GIA are available to meet
the guarantees under the GIA.

(h) Changes -- Aetna may change this Section 3.03,
including eliminating the GIA entirely, with
30 days advance written notice to the Contract
Holder. Any such change shall become
effective for Purchase Payments, transfers or
reinvestments applied to any new Term.

(i) Table of Representative Yields -- A table of
representative Yields illustrated on a
quarterly basis for Net Purchase Payment(s)
accepted in the GIA during a Deposit Period
and held to the end of a specified quarter
will be provided upon request.

The GIA cannot be used for an Annuity Option (see
4.08) under this contract.

3.04 MAINTENANCE FEE: The annual Maintenance Fee, if any (see Contract
Schedule), will be deducted from the Current Value
on the "due date" which is the last day of each
Contract Year. If Aetna maintains more than one
asset account under the Contract, only one annual
Maintenance Fee will be deducted on the due date
from the asset account first established, unless
otherwise instructed by the Contract Holder.

The annual Maintenance Fee may be paid to Aetna
separately by the Contract Holder. If this option
is requested in writing, a notice will be mailed
to the Contract Holder on or before the due date.
If the Fee is not received by Aetna by the 30th
calendar day following the due date, it will be
deducted from the Current Value. Unless the
Contract Holder requests a reinstatement of the
annual notice, Maintenance Fees will continue to
be deducted for all subsequent Contract Years,
where applicable.

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3.05 FUND(S) RECORD UNITS --The portion of the Net Purchase Payment(s) applied
SEPARATE ACCOUNT: to a Separate Account will determine the number of
Fund(s) Record Units. This number is equal to the
Net Purchase Payment(s) applied to the Fund
divided by the Fund(s) Record Unit Value (see
3.07) for the Valuation Period in which the
Purchase Payment is received in Good Order.

3.06 NET RETURN FACTOR(S) --The Net Return Factor(s) are used to compute all
SEPARATE ACCOUNT: Separate Account Record Units for any Fund(s).

The Net Return Factor for each Fund is equal to
1.0000000 plus the Net Return Rate.

The Net Return Rate is equal to:

(a) The value of the shares of the Fund held by
the Separate Account at the end of the
Valuation Period; minus

(b) The value of the shares of the Fund held by
the Separate Account at the start of the
Valuation Period; plus or minus

(d) The total value of the Fund's Record Units and
such Fund's Annuity Units of the Separate
Account (see 3.07 and 4.07) at the start of
the Valuation Period; minus

(e) A daily Separate Account charge at an annual
rate as shown on the Contract Schedule for
Annuity mortality and expense risks, which may
include profit; and a daily administrative
charge.

A Net Return Rate may be more or less than 0. The
value of a share of the Fund is equal to the net
assets of the Fund divided by the number of shares
outstanding.

3.07 FUND RECORD UNIT A Fund(s) Record Unit Value is computed by
VALUE -- SEPARATE multiplying the Net Return Factors for the current
ACCOUNT Valuation Period by the Fund(s) Record Unit Value
for the previous Period. The dollar value of a
Fund(s) Record Unit, Separate Account assets, and
Variable Annuity payments may go up or down due to
investment gain or loss.

3.08 CURRENT VALUE: The Current Value of this Contract is equal to:

(a) Any amounts in the Fixed Account, including
Fixed Account interest added by Aetna; plus

(b) Any amounts in the GIA, including GIA interest
added by Aetna, plus

Current Value does not include amounts used to
purchase an Annuity.

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3.09 TRANSFER OF CURRENT Before an Annuity option is elected, all or any
VALUE FROM THE FUNDS portion of the Current Value held in a Fund or the
OR GIA GIA may be transferred:

(a) To any other allowable Fund;
(b) To the Fixed Account; or
(c) To Terms of the GIA available in the current
Deposit Period.

Amounts in a specific GIA Term cannot be
transferred to the Deposit Period of another Term
within the same classification except at the
Term's Maturity (see 3.03(f)).

Transfers from the GIA are subject to the
Withdrawal provision for amounts withdrawn before
the Maturity Date of a Term. (See 3.03(e)).

Twelve transfers of Current Value (excluding
transfers from the GIA at the end of a Guaranteed
Term) can be made during a calendar year period.
More than 12 such transfers in any calendar year,
if permitted by Aetna, may be subject to an
additional fee of up to $10 for each subsequent
occurrence.

3.10 TRANSFER OF CURRENT 10% of the Current Value held in the Fixed Account
VALUE FROM THE FIXED as of January 1 of a calendar year may be
ACCOUNT transferred to any of the Fund(s), or to the GIA
Term(s) available during the current Deposit
Period. Such transfer will be:

(a) Without charge;

(b) Allowed once per calendar year; and

Aetna may, on a temporary basis, allow any larger
percent to be transferred.

Any remaining balance in the Fixed Account under
the Contract may be transferred by the Contract
Holder in its entirety to any of the other
Fund(s), or to the GIA Term(s) available during
the current Deposit Period if:

(a) The Current Value in the Fixed Account under
the Contract is $2,000 or less; or

(b) The maximum percentage allowed was transferred
from the Fixed Account in each of the four
consecutive prior calendar years and no
additional Net Purchase Payment(s) to the
Contract have been allocated to the Fixed
Account during the same four consecutive prior
calendar year periods.

The Current Value of the Fixed Account, as used
above, is the value when the request is received
at Aetna's Home Office in Good Order.

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3.11 SYSTEMATIC ALLOCATION: A Systematic Allocation involves placing a lump
sum in one Fund (mutual fund) and having it
reallocated to another Fund in substantially equal
monthly installments. The purpose of a Systematic
Allocation is to permit shares of the second Fund
to be purchased using the "dollar-cost-averaging"
method. The amount applied to a Systematic
Allocation must be no less than $100 per month
over a period of at least 12 months. Systematic
Allocations for periods longer than 24 months must
be consented to by Aetna.

Systematic Allocations may not be made from, or
to, the Fixed Account or the GIA. Aetna reserves
the right to limit the Funds that can be used to
pay out or receive Systematic Allocations.

Transfers made by reason of a Systematic
Allocation will not reduce the number of
investment transfers that can be made pursuant to
Section 3.09. The Contract Holder may revoke a
Systematic Allocation at any time.

3.12 NOTICE TO THE Before an Annuity Option is elected, Aetna will
CONTRACT HOLDER notify the Contract Holder each year of:

(a) The value of any amounts held in:

(1) The Fixed Account;
(2) The GIA; and
(2) The Fund(s) for the Separate Account.

(b) The number of any Fund(s) Record Units; and
(c) The Fund(s) Record Unit Value.

Such number or values will be as of a specific
date no more than 60 days before the date of the
notice.

Aetna, as issuer of this Simplified Employee
Pension or Individual Retirement Annuity Contract,
will make any reports required by federal law.

3.13 SUM PAYABLE AT DEATH Aetna will pay the Current Value to the
(BEFORE ANNUITY Beneficiary when:
PAYMENTS START):
(a) The Contract Holder dies before Annuity
payments start; and

(b) The notice of death is received in Good Order
by Aetna.

The sum payable will be the Current Value on the
date when the notice is received in Good Order at
Aetna's Home Office. The amount paid from the
Fixed Account will not be less than the Net
Purchase Payment(s) allocated to the Fixed Account
plus interest (less an prior transfers, (see
3.10), surrenders, Maintenance Fees, or amounts
used to purchase Annuity Options). The
Beneficiary may choose to apply any sum under an
Annuity Option (see 4.08), subject to any other
terms and conditions of this Contract, or to
receive a lump sum payment.

Prior to any election, or until amounts must
otherwise be distributed, the Beneficiary assumes
all nonforfeitable rights under this Contract.

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3.13 SUM PAYABLE AT DEATH If the Beneficiary is the Contract Holder's
(BEFORE ANNUITY PAY- surviving spouse, the first Annuity payment or the
MENTS START (CONT'D): lump sum payment may be deferred to a date not
later than December 31 of the year in which the
Contract Holder would have attained age 70 1/2 or
such later date as may be allowed under federal
law or regulations. The spouse may choose to
treat this Contract as his or her own.

If the Beneficiary is not the Contract Holder's
surviving spouse, all of the Current Value must
either be applied to an Annuity Option by December
31st of the year following the year of the
Contract Holder's death or be paid to the
Beneficiary by December 31st of the year
containing the fifth anniversary of the Contract
Holder's date of death.

In no event may payments to any Beneficiary under
an Annuity Option extend beyond the life of the
Beneficiary or any period certain greater than the
Beneficiary's life expectancy. If no Beneficiary
exists, the payment will be made to the estate of
the Contract Holder.

3.14 SURRENDER VALUE: Aetna will reduce the amount payable upon
surrender of any portion of the Current Value by a
Surrender Fee. The Surrender Fee will be in
accordance with the Surrender Fee table in the
Contract Schedule.

The Fee on a total surrender of the Contract will
not exceed 8.5% of the actual Purchase Payment(s)
made to the Contract.

Aetna is required by law to report any surrender
to the Internal Revenue Service. Amounts are
reported as fully taxable to the Contract Holder.
Determination of cost basis from nondeductible IRA
contributions as permitted by the Code shall be
the responsibility of the Contract Holder.

If a lump sum payment is elected in lieu of an
Annuity Option, it must be paid no later than the
April 1 of the calendar year following the year in
which the Contract Holder turns age 70 1/2 or such
later date as may be allowed under federal law or
regulations.

The Contract Holder or Beneficiary must notify
Aetna in writing when a lump sum payment or
Annuity payments are to commence.

If the Contract Holder does not request
commencement of benefits as described above, Aetna
will not be responsible for compliance with the
Code Section 401(a)(9) minimum distribution
requirements and for any adverse tax consequences
that may result.

3.15 PAYMENT OF SURRENDER Under certain emergency conditions, Aetna may
VALUE defer payment from the General Account:

(a) For a period of up to 6 months (unless not
allowed by state law); or
(b) As provided by federal law.

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3.15 PAYMENT OF SURRENDER Aetna may pay any Fixed Account surrender in equal
payments, with interest, over a period not to
exceed 60 months when the amount held in the Fixed
Account under this Contract exceeds $100,000 on
the day prior to the current surrender request.
This will apply only if the amounts surrendered
within the past 12 months, added to the amount of
the current surrender, exceed 20% of such Fixed
Account amount.

Interest, as used above, will not be more than two
percentage points below any rate determined
prospectively by Aetna for this class of Contract.
In no event will the interest rate be less than
3%.

3.16 REINSTATEMENT: All or a portion of the proceeds of a full
surrender of this Contract may be reinvested
within 30 days after the surrender if allowed by
law. Any Surrender Fee charged at the time of
surrender on the amount being reinvested will be
included in the reinstatement. Amounts will be
reinstated among the Fixed Account, the Separate
Account Fund(s) and the GIA in the same proportion
as they were at the time of surrender. The number
of Record Units reinstated will be based on the
Record Unit Value(s) next computed after receipt
at Aetna's Home Office of the reinstatement
request and the amount to be reinvested. Amounts
will be reinstated to the GIA current Deposit
Period, as applicable.

Any Maintenance Fee which falls due after the
surrender and before the reinstatement will be
deducted from the amount reinstated.
Reinstatement of an Account is permitted only
once.

3.17 REQUIRED DISTRIBUTION (a) General Requirement: Notwithstanding any
TO CONTRACT HOLDER: provision of this Contract to the contrary,
the distribution of the Contract Holder's
Current Value shall be made in accordance
with the minimum distribution requirements of
Section 408(a)(6) or Section 408(b)(3) of the
Code and the regulations thereunder,
including the incidental death benefit
provisions of Section 1.401(a)(9)-2 of the
proposed regulations, all of which are herein
incorporated by reference.

(b) Minimum Payments to Contract Holder: The
Contract Holder's entire Current Value in the
Contract must be distributed, or begin to be
distributed, by the Contract Holder's
required beginning date, which is the April 1
following the calendar year in which the
Contract Holder turns age 70 1/2. For each
succeeding year, a distribution must be made
on or before December 31. By the required
beginning date, the Contract Holder may elect
to have the balance under the Contract
distributed in one of the following forms
according to the terms of the Contract.

(1) a lump sum payment;

(2) equal or substantially equal payments
over the life of the Contract Holder;

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3.17 REQUIRED DISTRIBUTION (3) equal or substantially equal payments
TO CONTRACT HOLDER over the lives of the Contract Holder
(CONT'D): and his or her designated Beneficiary;

(4) equal or substantially equal payments
over a specified period that may not be
longer than the Contract Holder's life
expectancy;

(5) equal or substantially equal payments
over a specified period that may not be
longer than the joint life and last
survivor expectancy of the Contract
Holder and his or her designated
Beneficiary.

(c) Minimum Death Benefits: If the Contract
Holder dies before his or her entire Current
Value is distributed, the entire remaining
balance will be distributed as follows:

(1) If the Contract Holder dies on or after
the date distributions have begun under
paragraph (b) above, the entire
remaining balance must be distributed at
least as rapidly as provided under
Paragraph (b).

(2) If the Contract Holder dies before
distributions have begun under paragraph
(b) above, the entire remaining balance
must be distributed as elected by the
Contract Holder or, if the Contract
Holder has not so elected, as elected by
the Beneficiary or Beneficiaries, as
follows:

(i) by December 31st of the year
containing the fifth anniversary of
the Contract Holder's death; or

(ii) in equal or substantially equal
payments over the life or life
expectancy of the designated
Beneficiary or Beneficiaries
starting by December 31st of the
year following the year of the
Contract Holder's death. If,
however, the Beneficiary is the
Contract Holder's surviving spouse,
then this distribution is not
required to begin before December
31st of the year in which the
Contract Holder would have turned
70 1/2.

(d) Life Expectancies: Unless an Annuity Option
has been elected by the Contract Holder prior
to the commencement of distributions in
accordance with paragraph (b) above (or, if
applicable), by the surviving spouse where
the Contract Holder dies before distributions
have commenced), or unless a Systematic
Withdrawal Option has been elected by the
Contract Holder (see 3.18(b)), life
expectancies of the Contract Holder or spouse
Beneficiary shall be recalculated annually
for purposes of distributions under
paragraphs (b) and (c) above. An election
not to recalculate shall be irrevocable and
shall apply to all subsequent years. The
life expectancy of a non-spouse Beneficiary
shall not be recalculated.

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3.17 REQUIRED DISTRIBUTION Life expectancy is computed by use of the
TO CONTRACT HOLDER expected return multiplies in Tables V and VI
(CONT'D): of Section 1.72-9 of the Income Tax
Regulations.

(e) Multiple IRAs: An individual may satisfy the
minimum distribution requirements under
Section 408(a)(6) and 408(b)(3) of the Code
by receiving a distribution from one IRA that
is equal to the amount required to satisfy
the minimum distribution requirements for two
or more IRAs. For this purpose, the Contract
Holder of two or more IRAs may use the
"alternative method" described in Notice 88-
38, 1988-1 C.B. 524, to satisfy the minimum
distribution requirements described above.

3.14 DISTRIBUTION OPTIONS: The following distribution options may be elected
by the Contract Holder.

(a) ESTATE CONSERVATION OPTION (ECO): A
Distribution Option under which a portion of
the Contract's Current Value will
automatically be surrendered and distributed
each year. An ECO payment will be calculated
on the full Contract Current Value and will
be withdrawn pro rata from each investment
option and asset account used for
distribution. Except as stated in sub-
paragraph (5) below, all rights, provisions
and charges described in the Contract
continue to apply to the remaining Current
Value in the Contract.

(1) Amount of Distribution: Each year that
ECO is in effect, Aetna will calculate
and distribute an amount equal to the
minimum distribution required under the
Code. The annual distribution will be
determined by dividing the Current Value
as of December 31 of the year prior to
the payment year, by a life expectancy
factor.

As elected by the Contract Holder, the
factor is either the single life or
joint life expectancy based on tables in
Code Section 401(a)(9) or related
regulations. Life expectancy factors
will be recalculated each year. If the
joint life expectancy is elected and the
spouse is not the Beneficiary, the
Beneficiary's life expectancy will not
be recalculated.

These calculations may be changed as
necessary to comply with the Code
minimum distribution rules. The joint
life expectancy will be based on the
joint life of the Contract Holder and
his or her Beneficiary. If joint life
expectancy is elected and the Contract
Holder or Beneficiary dies, payments
will be based on the survivor's life
expectancy. If the Beneficiary is not
the Contract Holder's spouse and the
non-spousal Beneficiary dies first, the
joint life expectancy continues. If a
single life expectancy is elected and
the Contract Holder dies, or if a joint
life expectancy is elected and the
survivor dies, the sum payable at death
(see 3.13) will be paid in a lump sum.

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3.18 DISTRIBUTION OPTIONS Aetna assumes no responsibility for tax
(CONT'D): consequences resulting from failure to
receive required minimum distributions
on additional Purchase Payments made
after each year's annual distribution.

(2) Minimum Current Value: At its
discretion, Aetna may require a minimum
initial Current Value for election of
this option. If after election of this
option, the Current Value is
insufficient to make a scheduled ECO
payment, Aetna will distribute the
entire Contract balance.

(3) Date of Distribution: The Contract
Holder shall specify an annual
distribution date. The distribution
date may be the 15th of any month or
such other date Aetna may designate or
allow. Distributions may not start
earlier than the year the Contract
Holder attains age 70 1/2, or such later
time when distributions must commence as
specified under the Code, whichever is
appropriate. Subsequent distributions
will be made on the anniversary of that
date.

Aetna will allow a later annual
distribution date to be designated;
however, Aetna will not be responsible
for compliance with the Code minimum
distribution requirements of any prior
time periods. In addition, Aetna will
not be responsible for compliance with
the Code requirements for any Contracts
for which this election is not made.

(4) Elections and Revocation: ECO may be
elected by the Contract Holder by
submitting a completed and signed
election form to Aetna's Home Office.

Once elected, this option may be revoked
by the Contract Holder by submitting a
written request to Aetna at its Home
Office. Any revocation will apply only
to amounts not yet paid. ECO may be
elected only once.

(5) Reservation of Rights: Aetna reserves
the right to change the terms of ECO for
future elections and discontinue the
availability of this option after proper
notification. Aetna also reserves the
right to allow payments to be made more
frequently than annually.

(b) SYSTEMATIC WITHDRAWAL OPTION (SWO): A
Distribution Option under which a portion of
the Contract's Current Value will
automatically be surrendered and distributed
each year. A SWO payment will be calculated
on the full Contract Current Value and will
be withdrawn pro rata from each investment
option and asset account used for
distribution. Except as stated in sub-
paragraph (5) below, all rights, provisions
and charges described in the Contract continue
to apply to the remaining Current Value in
the Contract.

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3.18 DISTRIBUTION OPTIONS (1) Amount of Distribution: The Contract
(CONT'D): Holder may elect one of the three
payment methods described below. These
calculations may be changed as necessary
to comply with the Code minimum
distribution rules.

- Specified Amount: Payments of a
designated dollar amount which must
be no greater than 10% of the
initial Current Value and shall
remain constant. Beginning with
the year the Contract Holder
attains age 70 1/2 or such time
distributions must commence under
the Code. Aetna will calculate the
minimum required distribution by
dividing the Current Value as of
December 31 of the year prior to
the payment year by a life
expectancy factor, and distribute
this amount if it is greater than
the elected Specified Payment; or

- Specified Period: Payments which
are made over a period of time
which must be at least 10 years.
The maximum specified period will
be limited by the life expectancy
factor. The amount paid each year
is calculated by dividing the
Current Value as of December 31 of
the year prior to the payment year
by the number of payment years
remaining; or

- Specified Percentage: Payments of
a designated percentage of the
Current Value. The percentage
specified cannot be greater than
10% of the initial Current Value.
By written request this percentage
may be changed; however, Aetna
reserves the right to limit the
number of changes. The amount paid
each year is calculated by
multiplying the Current Value as of
December 31 of the year prior to
the payment year by the chosen
percentage. Payments will be made
until the year the Contract Holder
attains age 70 1/2, or such later
time when distributions must
commence as specified under the
Code.

As elected by the Contract Holder, if
Specified Payment or Specified Period is
elected, the factor is either the single
life or joint life expectancy based on
tables in Code Section 401(a)(9) or
related regulations. With each
subsequent year, the life expectancy
will be the life expectancy factor for
the initial distribution year reduced by
one.

The joint life expectancy will be based
on the joint life of the Contract Holder
and his or her Beneficiary. If joint
life expectancy is elected and the
Contract Holder or Beneficiary dies on
or after the required beginning date for
minimum distributions to the Contract
Holder the joint life expectancy factor
will continue to be reduced by one for
each distribution year. Payments will
continue, unless

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3.18 DISTRIBUTION OPTIONS the survivor elects an alternate payment
(CONT'D): method. Any method elected must provide
payments to be made at least as rapidly
as those made prior to the Contract
Holder's death.

If the Contract Holder dies before the
required beginning date for minimum
distributions, SWO payments will cease
and the Current Value will be paid (see
3.13). If joint life expectancy is
elected and the Beneficiary dies before
the required beginning date for minimum
distributions to the Contract Holder,
payments to the Contract Holder will
continue under the elected payment
method.

Aetna assumes no responsibility for tax
consequences resulting from failure to
receive required minimum distributions
on additional Purchase Payments made
after December 31 of the prior year.

(2) Minimum Current Value: At its
discretion, Aetna may require a minimum
initial Current Value for election of
this option. If after election of this
option the Current Value is insufficient
to make a scheduled SWO payment, Aetna
will distribute the entire Contract
balance.

(3) Date of Distribution: The Contract
Holder shall specify the initial
distribution date, but not before the
Contract Holder attains age 59 1/2 and
not later than the required beginning
date for distributions under the Code.

SWO payments will be made monthly,
quarterly, semi-annually, or annually on
the 15th of any month, or such other
date Aetna may designate or allow. If
payments are made more frequently than
annually, the annual amount payable each
year is divided by the number of
payments due per year. At its
discretion, Aetna may require a minimum
initial payment amount.

Aetna will not be responsible for
compliance with the Code minimum
distribution requirements for any prior
time periods or for any Contracts for
which election is not made.

(4) Election and Revocation: SWO may be
elected by the Contract Holder by
submitting a completed and signed
election form to Aetna's Home Office.

Once elected, this option may be revoked
by the Contract Holder by submitting a
written request to Aetna at its Home
Office. Any revocation will apply only
to amounts not yet paid. SWO may be
elected only once.

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3.18 DISTRIBUTION OPTIONS (5) Reservation of Rights: Aetna reserves
(CONT'D): the right to change the terms of SWO for
future elections and discontinue the
availability of this option after proper
notification.

(c) OTHER DISTRIBUTION OPTIONS: Other
distribution options may be made available by
Aetna to the class of business to which this
Contract belongs in accordance with Aetna's
administrative practice.

IV. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------

4.01 CHOICES TO BE MADE: The Contract Holder may tell Aetna to apply any
portion of the Current Value (minus any premium
tax) for an Annuity under Option 2, 3, or 4 (see
4.08). This election must be made in a form
acceptable to Aetna within the 90 day period
ending on the date payments are to begin. A
Contract Holder may revoke an election at any time
prior to the date the payments start. In lieu of
the election of an Annuity, the Contract Holder
may tell Aetna to make a lump sum payment.

When an Annuity Option is chosen, Aetna must also
be told if payments are to be made other than
monthly and whether to pay:

(a) A Fixed Annuity using the General Account;

(b) A Variable Annuity using any of the Fund(s)
made available by Aetna for Annuity purposes;
or

If a Fixed Annuity is chosen, Aetna will add
interest daily at an annual rate no less than 3%.
Aetna may add interest daily at any higher rate.

If a Variable Annuity is chosen, an Assumed Annual
Net Return Rate of 5% may be elected. If not
elected, Aetna will use an Assumed Annual Net
Return Rate of 3.5%.

4.02 ANNUITY PAYMENTS TO In no event may any payments to the Annuitant
ANNUITANT: under any Annuity Option extend beyond:

(a) The life of the Annuitant;

(b) The lives of the Annuitant and the
Beneficiary;

(c) Any certain period greater than the
Annuitant's life expectancy as determined
according to regulations under Code Section
401(a)(9); or

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4.02 ANNUITY PAYMENTS TO (d) Any certain period greater than the life
ANNUITANT (CONT'D): expectancy of the Annuitant and the
Beneficiary as determined according to
regulations under Code Section 401(a)(9).

4.03 ANNUITY PAYMENTS TO In no event may payments to the Beneficiary
ANNUITANT'S BENEFICIARY:under any Annuity Option extend beyond:

(a) The life of the Beneficiary; or

(b) Any certain period greater than the
Beneficiary's life expectancy as determined
by regulations under Code Section 401(a)(9).

4.04 TERMS OF ANNUITY (a) When payments start, the age of the
OPTIONS: Annuitant plus the number of years, if any,
for which payments are guaranteed must not
exceed 95.

(b) An Annuity option may not be elected if the
first payment would be less than $50 or if
the total payments in a year would be less
than $250 (less if required by state law).
Aetna reserves the right to increase the
minimum first Annuity payment amount and the
annual minimum Annuity payment amount based
upon increases reflected in the Consumer
Price Index-Urban, (CPI-U) since July 1,
1993.

(c) If a Fixed Annuity under Option 2, 3 or 4 is
chosen and a larger payment would result from
applying the Surrender Value to a current
Aetna single premium immediate Annuity, Aetna
will make the larger payment.

(d) For purposes of calculating the guaranteed
first payment of a Variable Annuity or the
payments for a Fixed Annuity, the Annuitant's
and second Annuitant's adjusted age will be
used. The Annuitant's and second Annuitant's
adjusted age is his or her age as of the
birthday closest to the Annuity commencement
date reduced by one year for Annuity
commencement dates occurring during the
period of time from July 1, 1993 through
December 31, 1999. The Annuitant's and
second Annuitant's age will be reduced by two
years for Annuity commencement dates
occurring during the period of time from
January 1, 2000 through December 31, 2009.
The Annuitant's and second Annuitant's age
will be reduced by one additional year for
Annuity commencement dates occurring in each
succeeding decade.

The Annuity purchase rates for Options 3 and
4 are based on mortality from 1983 Table a.

(e) Assumed Annual Net Return Rate is the
interest rate used to determine the amount of
the first Annuity payment under a Variable
Annuity. The Separate Account must earn this
rate plus enough to cover the mortality and
expense risk charges and, if applicable, any
administrative charges if future Variable
Annuity Payments are to remain level.

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4.04 TERMS OF ANNUITY (f) Once elected, Annuity payments cannot be
OPTIONS (CONT'D): commuted to a lump sum except for Variable
Annuity payments under Option 2 (see 4.08).
The life expectancy of the Annuitant or the
Annuitant and second Annuitant shall be
irrevocable upon the election of an Annuity
Option.

4.05 DEATH OF ANNUITANT/ (a) When the Annuitant dies under Options 2 or 3,
BENEFICIARY: or both the Annuitant and second Annuitant
die under Option 4(d), the present value of
any remaining guaranteed payments will be
paid in one sum to the Beneficiary, or upon
election by the Beneficiary, any remaining
payments will continue to the Beneficiary.

If Option 4 has been elected and the
Annuitant dies, the remaining payments will
continue to the second Annuitant as successor
payee. The second Annuitant does not have the
right to change the Beneficiary upon the
Contract Holder's death.

(b) If there is no Beneficiary under Option 2, 3
or 4, the present value of any remaining
payments will be paid in one sum to the
estate of the Annuitant.

(c) If the Beneficiary designated under Option 1
dies, the amount held plus accrued interest
will be paid in one sum to a successor
Beneficiary, if any, named by the designated
Beneficiary. If there is no successor
Beneficiary, the lump sum will be paid to the
designated Beneficiary's estate.

(d) If the Beneficiary dies while receiving
Annuity payments, the present value of any
remaining guaranteed payments will be paid in
one sum to the successor Beneficiary, or upon
election by the successor Beneficiary, any
remaining payments will continue to the
successor Beneficiary. If no successor
Beneficiary has been designated, the present
value of any remaining guaranteed payments
will be paid in one sum to the Beneficiary's
estate.

(e) The present value will be determined as of
the Valuation Period in which proof of death
acceptable to Aetna and a request for payment
is received at Aetna's Home Office. The
interest rate used to determine the first
payment will be used to calculate the present
value.

4.06 FUND(S) ANNUITY UNITS --The number of each Fund's Annuity Units is based
SEPARATE ACCOUNT: on the amount of the first Variable Annuity
payment which is equal to:

(a) The portion of the Current Value applied to
pay a Variable Annuity (minus any premium
tax); divided by

(b) 1,000; multiplied by

IRA-CDA-IC 23

<PAGE>

4.06 FUND(S) ANNUITY Such amount, or portion, of the variable payment
UNITS -- will be divided by the appropriate Fund Annuity
SEPARATE ACCOUNT Unit Value (see 4.07) on the tenth Valuation
(CONT'D): Period before the due date of the first payment to
determine the number of each Fund Annuity Units.
The number of each Fund Annuity Units remains
fixed. Each future payment is equal to the sum of
the products of each Fund Annuity Unit Value
multiplied by the appropriate number of Units.
The Fund Annuity Unit Value on the tenth Valuation
Period prior to the due date of the payment is
used.

4.07 FUND(S) ANNUITY UNIT For any Valuation Period, a Fund Annuity Unit
VALUE -- SEPARATE Value is equal to:
ACCOUNT:
(a) The Value for the previous Period; multiplied
by

(b) The Net Return Factor(s) (see 3.06 below) for
the Period; multiplied by

The factor for 3.5% per year is .9999058; for 5%
per year it is .9998663.

The dollar value of a Fund's Annuity Unit Values
and payments may go up or down due to investment
gain or loss.

If the portion of a Variable Annuity payment for
any Fund is not to decrease, the Annuity return
factor under the Separate Account for that Fund
must be:

- 4.75% on an annual basis plus an annual
return of up to 0.25% needed to offset the
administrative charge set at the time Annuity
payments commence if an Assumed Annual Net
Return Rate of 3.5% is chosen; or

- 6.25% on an annual basis plus an annual
return of up to 0.25% needed to offset the
administrative charge set at the time Annuity
payments commence if an Assumed Annual Net
Return Rate of 5% is chosen.

Payments shall not be changed due to changes in
the mortality or expense results or administrative
charges.

4.08 ANNUITY OPTIONS: Option 1 -- Payment of Interest on Sum Left with
Aetna -- This Option may be used only by the
Beneficiary when the Annuitant dies before Aetna
has started paying an Annuity. A portion or all
of the sum paid upon death may be held under this
Option and will be held in the General Account of
Aetna at interest (see 4.01). The Beneficiary may
later tell Aetna to:

(a) Pay a portion or all of the sum held by
Aetna; or
(b) Apply a portion or all of the sum held by
Aetna to any Annuity Option below.

If a nonspouse Beneficiary elects that some or all
of the full sum paid upon death is to be held
under this Option, the Beneficiary must tell Aetna
to pay the full sum held under this Option by
December 31st of the year containing the fifth
anniversary of the Contract Holder's death.

IRA-CDA-IC 24

<PAGE>

4.08 ANNUITY OPTIONS Option 2 -- Payments for a Stated Period of Time
(CONT'D): -- An Annuity will be paid for the number of years
chosen. The number of years must be at least 5
and not more than 30. If payments for this Option
are made under a Variable Annuity, the present
value of any remaining payments may be withdrawn
at any time. If a withdrawal is requested within
5 years after the start of payments, it will be
treated as a surrender (see 3.14).

Option 3 -- Life Income -- An Annuity will be paid
for the life of the Annuitant. If also chosen,
Aetna will guarantee payments for 60, 120, 180, or
240 months.

Option 4 -- Life Income for Two Payees -- An
Annuity will be paid during the lives of the
Annuitant and a second Annuitant. Payments will
continue until both Annuitants have died. When
this Option is chosen, a choice must be made of:

(a) 100% of the payment to continue to the
survivor;

(b) 66 2/3% of the payment to continue to the
survivor;

(d) Payments for a minimum of 120 months with
100% of the payment to continue to the
survivor; or

(e) 100% of the payment to continue to the
survivor if the survivor is the Annuitant and
50% of the payment to continue to the
survivor if the survivor is the second
Annuitant.

Other Options -- Aetna may make other options
available as allowed by the laws of the state in
which this Contract is delivered.

IRA-CDA-IC 25

<PAGE>

OPTION 2

PAYMENTS FOR A STATED PERIOD OF TIME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%

GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53

</TABLE>

IRA-CDA-IC 26

<PAGE>

OPTION 3

LIFE INCOME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%

PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS

ADJUSTED
AGE OF
ANNUITANT NONE 60 120 180 240
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 $4.05 $4.05 $4.03 $3.99 $3.93
51 4.12 4.11 4.09 4.05 3.99
52 4.19 4.19 4.16 4.11 4.04
53 4.27 4.26 4.23 4.18 4.10
54 4.35 4.34 4.31 4.25 4.16
55 4.44 4.42 4.39 4.32 4.22
56 4.53 4.51 4.47 4.40 4.29
57 4.62 4.61 4.56 4.48 4.35
58 4.72 4.71 4.65 4.56 4.42
59 4.83 4.81 4.75 4.64 4.49
60 4.95 4.93 4.86 4.73 4.55
61 5.07 5.05 4.97 4.83 4.62
62 5.20 5.17 5.08 4.92 4.69
63 5.34 5.31 5.20 5.02 4.76
64 5.49 5.45 5.33 5.12 4.83
65 5.65 5.61 5.47 5.22 4.89
66 5.82 5.77 5.61 5.33 4.96
67 6.01 5.94 5.75 5.44 5.02
68 6.20 6.13 5.91 5.54 5.08
69 6.41 6.33 6.07 5.65 5.14
70 6.64 6.54 6.23 5.76 5.19
71 6.88 6.76 6.41 5.86 5.24
72 7.14 7.00 6.59 5.97 5.28
73 7.43 7.26 6.77 6.06 5.32
74 7.73 7.53 6.96 6.16 5.35
75 8.06 7.82 7.14 6.25 5.38

</TABLE>

Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.

IRA-CDA-IC 27

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%

ADJUSTED AGES
- ---------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03
55 55 3.88 4.25 4.47 3.87 4.14
55 60 3.99 4.44 4.71 3.98 4.42
60 55 3.99 4.44 4.71 3.98 4.42
60 60 4.24 4.71 4.99 4.23 4.57
60 65 4.38 4.97 5.32 4.38 4.93
65 60 4.38 4.97 5.32 4.38 4.93
65 65 4.72 5.33 5.70 4.71 5.14
65 70 4.93 5.68 6.15 4.91 5.66
70 65 4.93 5.68 6.15 4.91 5.66
70 70 5.40 6.21 6.70 5.36 5.96
70 75 5.69 6.68 7.32 5.62 6.67
75 70 5.69 6.68 7.32 5.62 6.67
75 75 6.37 7.45 8.15 6.23 7.12
75 80 6.78 8.11 8.99 6.54 8.13

</TABLE>

IRA-CDA-IC 28

<PAGE>

OPTION 2

PAYMENTS FOR A STATED PERIOD OF TIME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.95 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
- -----------------------------------------------------------------
</TABLE>

IRA-CDA-IC 29

<PAGE>

OPTION 2

PAYMENTS FOR A STATED PERIOD OF TIME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
- -----------------------------------------------------------------
</TABLE>

IRA-CDA-IC 30

<PAGE>

OPTION 3

LIFE INCOME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS

<TABLE>
<CAPTION>
- ------------------------------------------------------------------
ADJUSTED
AGE OF NONE 60 120 180 240
ANNUITANT
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44

55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75

60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08

65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38

70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59

75 8.35 8.08 7.38 6.48 5.62
- ------------------------------------------------------------------
</TABLE>

IRA-CDA-IC 31

<PAGE>

OPTION 3

LIFE INCOME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%

PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS

<TABLE>
<CAPTION>
- ------------------------------------------------------------------
ADJUSTED
AGE OF NONE 60 120 180 240
ANNUITANT
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31

55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59

60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 5.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89

65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17

70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36

75 9.23 8.93 8.16 7.23 6.38
- ------------------------------------------------------------------
</TABLE>

IRA-CDA-IC 32

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.31
55 55 4.16 4.54 4.76 4.15 4.42
55 60 4.27 4.73 5.00 4.26 4.48

60 55 4.27 4.73 5.00 4.26 4.70
60 60 4.51 4.99 5.27 4.50 4.84
60 65 4.66 5.25 5.61 4.65 4.93

65 60 4.66 5.25 5.61 4.65 5.22
65 65 4.99 5.61 5.99 4.98 5.42
65 70 5.19 5.97 6.44 5.17 5.54

70 65 5.19 5.97 6.44 5.17 5.93
70 70 5.67 6.49 6.99 5.62 6.23
70 75 5.95 6.96 7.61 5.87 6.40

75 70 5.95 6.96 7.61 5.87 6.95
75 75 6.64 7.73 8.43 6.48 7.40
75 80 7.04 8.39 9.29 6.79 7.64
- --------------------------------------------------------------------------------
</TABLE>

IRA-CDA-IC 33

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.23
55 55 5.04 5.44 5.66 5.04 5.32
55 60 5.15 5.63 5.91 5.14 5.38

60 55 5.15 5.63 5.91 5.14 5.59
60 60 5.37 5.87 6.16 5.37 5.72
60 65 5.52 6.14 6.51 5.51 5.80

65 60 5.52 6.14 6.51 5.51 6.10
65 65 5.83 6.49 6.87 5.82 6.29
65 70 6.04 6.84 7.34 6.00 6.41

70 65 6.04 6.84 7.34 6.00 6.81
70 70 6.49 7.35 7.87 6.44 7.08
70 75 6.77 7.84 8.51 6.68 7.25

75 70 6.77 7.84 8.51 6.68 7.81
75 75 7.45 8.60 9.33 7.27 8.25
75 80 7.86 9.28 10.20 7.57 8.49
- --------------------------------------------------------------------------------
</TABLE>

IRA-CDA-IC 34

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)

Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64

60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13

65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81

70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77

75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
- --------------------------------------------------------------------------------
</TABLE>

Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.

IRA-CDA-IC 35

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)

Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.03 $4.36 $4.55 $4.03 $4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83

60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39

65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14

70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20

75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
- --------------------------------------------------------------------------------
</TABLE>

Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.

IRA-CDA-IC 36

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)

Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53

60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01

65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67

70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62

75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
- --------------------------------------------------------------------------------
</TABLE>

IRA-CDA-IC 37

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)

Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.93 $5.27 $5.46 $4.93 $5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73

60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28

65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03

70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08

75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
- --------------------------------------------------------------------------------

</TABLE>

IRA-CDA-IC 38

<PAGE>

OPTION 2

PAYMENTS FOR A STATED PERIOD OF TIME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
- -----------------------------------------------------------------
</TABLE>

IRA-CDA-IC 39

<PAGE>

OPTION 2

PAYMENTS FOR A STATED PERIOD OF TIME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.318 3.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.95 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
- -----------------------------------------------------------------
</TABLE>

IRA-CDA-IC 40

<PAGE>

OPTION 3

LIFE INCOME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%

PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ----------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20

55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48

60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.07 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80

65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10

70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33

75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
- --------------------------------------------------------------------------------
</TABLE>

Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.

IRA-CDA-IC 41

<PAGE>

OPTION 3

LIFE INCOME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ----------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32

55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63

60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98

65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31

70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55

75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
- --------------------------------------------------------------------------------
</TABLE>

Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.

IRA-CDA-IC 42

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.75 $4.07 $4.26 $3.75 $3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12

60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54

65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14

70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96

75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
- --------------------------------------------------------------------------------
</TABLE>

IRA-CDA-IC 43

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36

60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85

65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54

70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49

75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
- --------------------------------------------------------------------------------
</TABLE>

IRA-CDA-IC 44

<PAGE>

Aetna Life Insurance and Annuity Company

ENDORSEMENT

This Contract is hereby endorsed as follows:

The Contract section entitled GENERAL DEFINITIONS is amended to include the
following terms:

AETNA GET FUND (GET FUND): An open-end registered management investment
company organized as a series fund. Each series of GET Fund constitutes a
separate Fund under this Contract.

ALLOCATION PERIOD: The period of time, usually from one to three months,
during which amounts may be allocated to a series of GET Fund, whether by
Transfer or by Net Purchase Payment(s). Each series of GET Fund will have
a specific Allocation Period.

At its discretion, Aetna may allow additional amounts to be allocated to a
series of GET Fund during the Guarantee Period. The Guarantee established
at the close of the Allocation Period will apply to these amounts.

At its discretion, Aetna may specify a minimum amount per Transfer and per
Net Purchase Payment amount for each series prior to the beginning of the
Allocation Period for that series.

Aetna will specify a minimum amount of assets that a series of the GET Fund
must contain at the close of the Allocation Period; and reserves the right
to terminate a series if it does not meet this minimum standard. If Aetna
elects to terminate the GET Fund and not to start the Guarantee Period,
Aetna will mail each Contract Holder with amount(s) in the series a notice
that the series is being canceled. The cancellation notice will be mailed
no later than 15 calendar days after the Allocation Period ends. The
Contract Holder will have 45 calendar days from the end of the Allocation
Period to Transfer the Current Value of the canceled series of GET Fund to
another accumulation option(s). If no Transfer is made prior to the end of
the 45 calendar day period, the Current Value in the canceled series of GET
Fund will be transferred to Aetna Variable Encore Fund, a money market fund
during the next Valuation Period.

Aetna will also specify the maximum amount of assets that will be accepted
into a series of the GET Fund; and reserves the right to not allow
additional allocation to a series if it exceeds this maximum standard. If
Aetna elects not to allow additional allocation to the series of GET Fund,
Aetna will stop accepting Net Purchase Payments and Transfers into the
series 10 calendar days after such election. The Allocation Period will
continue until the date the Guarantee Period begins.

GET FUND MATURITY DATE: The date at which the Guaranteed Period for a
series will end and the GET Fund Record Units for that series will be
liquidated. Another accumulation option must then be elected. If no such
election is made by the GET Fund Maturity Date, the portion of the Current
Value based on that GET Fund series will be transferred to the Allocation
Period for another series of GET Fund. If no GET Fund Series is available,
50% of the Current Value from that GET Fund series will be transferred to
Aetna Variable Fund, a growth and income fund. The remaining 50% of the
Current Value will be transferred to Aetna Income Shares, a bond fund. The
Transfers will be made during the next Valuation Period. Such Transfers
will not be counted as one of the free Transfers. The GET Fund Maturity
Date will be specified before the Allocation Period for that series begins.

GUARANTEE: Aetna guarantees that on a series' GET Fund Maturity Date, the
value of each Get Fund Record Unit then outstanding in that series will not
be less than the value of the Record Unit on the last day of the Allocation
Period. Aetna will transfer any amount necessary from its general account
to the Separate Account in order to bring that Record Unit Value to the
guaranteed level. This Guarantee does not apply to GET Fund Record Unit
Values withdrawn or transferred before the GET Fund Maturity Date.

EIGET-IC(R)

<PAGE>

GUARANTEED PERIOD: The length of time to which the Guarantee applies for a
series, ending on the GET Fund Maturity Date. This period will be
specified before the Allocation Period for a series begins.

The Contract section entitled FUND(S) is amended to add the following
sentence:

Unless specifically indicated otherwise in this Contract, all
references to Fund(s) in this Contract shall include each series of
GET Fund.

The Contract section entitled NET RETURN FACTOR(S) - SEPARATE ACCOUNT is
hereby endorsed to add the following as subsection (f):

Minus a daily fee at an annual rate of 0.25% during the Guaranteed
Period for Aetna's guarantee of GET Fund Record Unit Values. This fee
will be determined prior to the start of any series of GET Fund's
Allocation Period.

The Contract section entitled TRANSFER OF CURRENT VALUE FROM THE FUNDS is
amended to include the following paragraph at the end of this provision:

Withdrawals or Transfers from a GET Fund series before the Maturity
Date will be at the then applicable GET Fund Record Unit Value, which
may be more or less than the Record Unit Value guaranteed at the GET
Fund Maturity Date.

This Contract section entitled REINSTATEMENT is amended to include the
following paragraph at the end of this provision:

Amounts attributable to GET will be reinstated to the Allocation
Period of a GET series, if available. If a GET series Allocation
Period is unavailable, amounts will be reallocated among other
Fund(s), the Fixed Account and the GI Account, (if applicable), on a
pro rata basis.

The Contract section entitled CHOICES TO BE MADE is amended to include the
following paragraph at the end of this provision:

Contract values based on any GET Fund series must be transferred to
another accumulation option prior to election of an Annuity Option.

Endorsed and made part of this Contract on the effective date of the
Contract.

/s/ Daniel P. Kearney

President
Aetna Life Insurance and Annuity Company

EIGET-IC(R)

<PAGE>

- --------------------------------------------------------------------------------

[LOGO]

AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547

Individual Variable, Fixed, or Combination Contract
Nonparticipating

- --------------------------------------------------------------------------------

ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT.

IRA-CDA-IC

<PAGE>

[LOGO] AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225

Aetna Life Insurance and Annuity Company, herein called
Aetna, agrees to pay the benefits stated in this Contract.

SPECIFICATIONS
- --------------------------------------------------------------------------------
Plan

- --------------------------------------------------------------------------------
Type of Plan
INDIVIDUAL RETIREMENT ANNUITY (IRA) 5.02
- --------------------------------------------------------------------------------
Annuitant
MARY SMITH
- --------------------------------------------------------------------------------
Contract Holder
MARY SMITH
- --------------------------------------------------------------------------------
Contract No.
SPECIMEN
- --------------------------------------------------------------------------------
Effective Date
NOVEMBER 1, 1992
- --------------------------------------------------------------------------------
This Contract is Delivered in YOUR STATE and is Subject to the Laws of
that Jurisdiction

THE VARIABLE FEATURES OF THIS GROUP CONTRACT ARE DESCRIBED IN PARTS III AND IV.

RIGHT TO CANCEL
- --------------------------------------------------------------------------------
The Contract Holder may cancel this Contract within 10 days of receiving it by
returning this Contract along with a written notice to Aetna at the above
address or to the agent from whom it was purchased. Within 7 days after it
receives the notice of cancellation and this Contract at its Home Office, Aetna
will return the entire consideration paid plus any increase or minus any
decrease in the current value of any funds allocated to the Separate Account.

This page, the following pages, and the application make up the entire Contract.

Signed at the Home Office on the Effective Date.

/S/ Laura R. Estes /S/ George N. Gingold

Laura R. Estes George N. Gingold
Senior Vice President, ALIAC Pensions Secretary

Individual 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.

IP-CDA-IB

<PAGE>

SPECIFICATIONS

- --------------------------------------------------------------------------------
GUARANTEED There is a guaranteed interest rate for Purchase Payment(s)
INTEREST RATE Fixed Account (See 3.02) and the GI Account. (See 3.03 (d))

- --------------------------------------------------------------------------------
SURRENDER FEE There will be a charge deducted for early surrender. (See
Part V.)

- --------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense risks and
THE SEPARATE administrative fees. (See 3.06.)
ACCOUNT

- --------------------------------------------------------------------------------
DEDUCTIONS FROM Purchase Payment(s) are subject to a deduction for premium
PURCHASE taxes, if any. (See 3.01.)
PAYMENT(s)

This Contract is a legal contract and constitutes the entire legal relationship
between Aetna and the Contract Holder.

READ THIS CONTRACT CAREFULLY. This Contract sets forth, in detail, all of the
rights and obligations of both you and Aetna. IT IS THEREFORE IMPORTANT THAT
YOU READ THIS CONTRACT CAREFULLY.

IP-CDA-IB 2

<PAGE>

I. GENERAL DEFINITIONS
- --------------------------------------------------------------------------
PAGE
1.01 Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.02 Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.03 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.04 Contract Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.05 Contract Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.06 Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.07 Fixed Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.08 Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.09 General Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 Good Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.11 Guaranteed Interest Account (GI Account). . . . . . . . . . . . . . . . 5
1.12 Matured Term Value. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.13 Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.14 Nonunitized Separate Account. . . . . . . . . . . . . . . . . . . . . . 5
1.15 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.17 Purchase Payment(s) . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.18 Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.19 Valuation Period (Period) . . . . . . . . . . . . . . . . . . . . . . . 6
1.20 Variable Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------

2.01 Change of Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.02 Change of Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 Nonparticipating Contract . . . . . . . . . . . . . . . . . . . . . . . 7
2.04 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.05 State Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.06 Control of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.07 Designation of Beneficiary. . . . . . . . . . . . . . . . . . . . . . . 7
2.08 Misstatements and Adjustments . . . . . . . . . . . . . . . . . . . . . 7
2.09 Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Grace Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

IP-CDA-IB 3

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III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
- --------------------------------------------------------------------------
PAGE

3.01 Net Purchase Payment(s) . . . . . . . . . . . . . . . . . . . . . . . . 7
3.02 Guaranteed Interest Rate -- Fixed Account . . . . . . . . . . . . . . . 8
3.03 Guaranteed Interest Account (GI Account). . . . . . . . . . . . . . . . 8
3.04 Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.05 Fund Record Units -- Separate Account . . . . . . . . . . . . . . . . . 10
3.06 Net Return Factor(s) -- Separate Account. . . . . . . . . . . . . . . . 10
3.07 Fund Record Unit Value -- Separate Account. . . . . . . . . . . . . . . 11
3.08 Current Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.09 Transfer of Current Value from the Funds or GI Account. . . . . . . . . 11
3.10 Transfer of Current Value from the Fixed Account. . . . . . . . . . . . 12
3.11 Notice to the Contract Holder . . . . . . . . . . . . . . . . . . . . . 12
3.12 Sum Payable at Death (Before Annuity Payments Start). . . . . . . . . . 13
3.13 Surrender Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14 Payment of Surrender Value. . . . . . . . . . . . . . . . . . . . . . . 13
3.15 Distribution Options (Estate Conservation Option (ECO)
Systematic Withdrawal Option (SWO). . . . . . . . . . . . . . . . . . . 13
3.16 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

IV. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
4.01 Choices to be Made. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.02 Annuity Payments to Annuitant . . . . . . . . . . . . . . . . . . . . . 14
4.03 Annuity Payments to Annuitant's Beneficiary . . . . . . . . . . . . . . 14
4.04 Terms of Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . 15
4.05 Death of Annuitant/Beneficiary. . . . . . . . . . . . . . . . . . . . . 15
4.06 Fund(s) Annuity Units -- Separate Account . . . . . . . . . . . . . . . 16
4.07 Fund(s) Annuity Unit Value -- Separate Account. . . . . . . . . . . . . 16
4.08 Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

V. SPECIAL PROVISIONS
- --------------------------------------------------------------------------------
5.01 Pension or Profit Sharing Plan; Qualified Individual Deferred Annuity . 26
5.02 Individual Retirement Annuity (IRA); Simplified Employee Pension Plan . 33

VI. FEE SCHEDULE
- --------------------------------------------------------------------------------
6.01 Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.02 Surrender Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.03 Table of Minimum Values -- Fixed Account. . . . . . . . . . . . . . . . 41

IP-CDA-IB 4

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I. GENERAL DEFINITIONS
- --------------------------------------------------------------------------------

1.01 ANNUITANT: A person who receives a series of payments for
life or a definite period under this Contract.
This term may also apply to the Contract Holder's
or Participant's beneficiary who elected an
Annuity Option after the Contract
Holder/Participant's death before payments begin.
The Annuitant cannot be changed.

1.02 ANNUITY: Payment of an income:

(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).

1.03 CODE: The Internal Revenue Code of 1986, as it may be
amended from time to time.

1.04 CONTRACT HOLDER: The entity to which, or person to whom this
Contract is issued.

1.05 CONTRACT YEAR: The period of 12 months measured from the date the
first Net Purchase Payment is applied to the
Contract or from any anniversary of such date.

1.06 FIXED ACCOUNT: An accumulation option with a guaranteed minimum
interest rate. Aetna may credit a higher rate
which is not guaranteed.

1.07 FIXED ANNUITY: An Annuity with payments which do not vary in
amount.

1.08 FUND(S): The open-end registered management investment
companies (mutual funds) made available by Aetna
under this Contract.

1.09 GENERAL ACCOUNT: The Account holding the assets of Aetna, other
than those assets held in the Separate Account or
the Nonunitized Separate Account.

1.10 GOOD ORDER: A Contract Holder instruction to Aetna is in Good
Order when given with such clarity and
completeness that Aetna is not required to
exercise any discretion, utilizing such forms as
Aetna may require.

1.11 GUARANTEED INTEREST An accumulation option which guarantees a
ACCOUNT (GI ACCOUNT): stipulated rate of interest for a specified period
of time.

1.12 MATURED TERM VALUE: The amount payable on a GI Account Term's Maturity
Date.

1.13 MATURITY DATE: The last day of a GI Account Term.

1.14 NONUNITIZED SEPARATE An Account set up by Aetna under Title 38a,
ACCOUNT Section 38a-433, of the Connecticut General
Statutes which is used to hold assets for GI
Account Terms greater than three years. The
Contract Holder does not participate in the
investment gain or loss from the assets held in
this Account.

1.15 PARTICIPANT: A person who participates in the Plan named on the
cover of this Contract, if applicable.

IP-CDA-IB 5

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1.16 PLAN: The Plan named on the Contract cover. The Plan is
not a part of the Contract. Aetna is not bound by
the terms of the Plan.

1.17 PURCHASE PAYMENT(S): Payments made to Aetna.

1.18 SEPARATE ACCOUNT: An account which buys and holds shares of the
Fund(s). Income, gains or losses, realized or
unrealized are credited or charged to this account
without regard to other income, gains or losses of
Aetna. Aetna owns the assets held in a separate
account and is not a trustee as to such amounts.
These accounts generally are not guaranteed and
are held at market value. The assets of such
accounts, to the extent of reserves and other
contract liabilities of the account, shall not be
charged with other Aetna liabilities.

1.19 VALUATION PERIOD: The period as of 4:00 p.m. Eastern time on each
(PERIOD) day the New York Stock Exchange is open for
business to 4:00 p.m. Eastern time of the next
such business day.

1.20 VARIABLE ANNUITY: An Annuity with payments that vary with the net
investment results of a Separate Account.

II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------

2.01 CHANGE OF CONTRACT: Except as provided below, only an authorized
officer of Aetna may change the terms of the
Contract. Aetna will notify the Contract Holder
in writing at least 30 days before the effective
date of any change. Any change will not affect
the amount or terms of any Annuity which begins
before the change. The following provisions of
this Contract will not be changed:

(a) Net Purchase Payment(s)
(b) Guaranteed Interest Account (GI Account)
Interest Rate, if available.
(c) Guaranteed Interest Rate -- Fixed Account
(d) Net Return Factor(s) -- Separate Account
(e) Current Value
(f) Surrender Value
(g) Fund(s) Annuity Unit Value -- Separate
Account.
(h) Annuity Options
(I) Fixed Annuity minimum interest rate
(j) Maximum transfer, maintenance, or surrender
fees.

This Contract may also be changed as required by
federal or state law.

2.02 CHANGE OF FUND(S): Aetna, or the Separate Account may:

(a) Change the Fund(s) which may be invested in by
the Separate Account; and
(b) Replace the shares of any Fund(s) held in the
Separate Account with shares of any other
Fund(s).

IP-CDA-IB 6

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2.02 CHANGE OF FUND(S) Changes must be:
(CONT'D):

(a) Approved by a majority vote of persons having
an interest in the Separate Account and the
Fund(s);
(b) Deemed necessary by Aetna under the Investment
Company Act of 1940; or
(c) Deemed necessary by Aetna to accomplish the
purpose of the Separate Account.

Aetna will notify the Contract Holder of any
change.

2.03 NONPARTICIPATING The Contract Holder, Annuitant, or beneficiaries
CONTRACT: will not have a right to share in the earnings of
Aetna.

2.06 CONTROL OF CONTRACT: See Part V.

2.07 DESIGNATION OF See Part V.
BENEFICIARY

2.08 MISSTATEMENTS AND If Aetna finds the age of any payee to be
ADJUSTMENTS misstated, the correct facts will be used to
adjust payments. Aetna reserves the right to
correct any informational or administrative
errors.

2.09 INCONTESTABILITY: Aetna cannot cancel this Contract because of any
error of fact on the application.

2.10 GRACE PERIOD: This Contract will remain in effect even if
Purchase Payments are not continued.

III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
- --------------------------------------------------------------------------------

3.01 NET PURCHASE The actual Purchase Payment less any premium tax.
PAYMENT(S): Generally, Aetna will deduct the premium tax when
Annuity benefits are purchased (see Part IV). If
Aetna determines that a premium tax is due when
Purchase Payment(s) are received, or at any other
time, it will deduct the tax at that time.

The Net Purchase Payment(s) may be credited to:

(a) The Fixed Account;
(b) The Fund(s) in which the Separate Account
invests; and
(c) The GI Account, if available.

IP-CDA-IB 7

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3.01 NET PURCHASE Aetna must be told the percentage of the Net
PAYMENT(S) Purchase Payment(s) to be applied to each
(CONT'D) investment above.

During any calendar year, Aetna may be told to
change the investment mix twelve times. Should
Aetna allow additional changes, each may be
subject to a fee of up to $10.
3.02 GUARANTEED INTEREST On any Purchase Payment(s) made to the Fixed
RATE -- FIXED ACCOUNT: Account, Aetna will add interest daily at an
annual rate no less than 4%. Aetna may add
interest daily at any higher rate determined by
its Board of Directors.

3.03 GUARANTEED INTEREST The GI Account provides a guaranteed effective
ACCOUNT (GI ACCOUNT): annual yield for (GI ACCOUNT): Net Purchase
Payments and transfers held in the GI Account for
stipulated periods of time (see (a) and (b)
below).

(a) Deposit Period -- A calendar month, a calendar
quarter, or any other period of time specified
by Aetna during which Net Purchase Payment(s)
and transfers are accepted into the GI Account
for one or more Guaranteed Terms.

(b) Guaranteed Term (Term) -- The period of time
for which Annual Effective Yields are earned
on Net Purchase Payment(s) and on transfers
made into the Deposit Period of the GI
Account. Terms are offered at Aetna's
discretion for various lengths of time ranging
up to and including ten years.

(c) Guaranteed Term Classifications -- The
grouping of Terms according to their time to
maturity. The following are the
Classifications:

(1) Short-Term: Terms of up to and including
3 years; or

(2) Long-Term: Terms of greater than 3 years
and up to and including 10 years.

During a Deposit Period, Aetna may make
available one or more Terms within a
Classification. The Contract Holder has the
option to allocate Net Purchase Payment(s) and
transfers into any or all of the available
Deposit Period Terms. If no specific
direction is given, Net Purchase Payment(s)
and transfers will go into available Terms on
a pro rata basis within the Classification(s)
previously chosen by the Contract Holder.

(d) Guaranteed Effective Yields (Yields) -- The
effective annual yield(s) are guaranteed by
Aetna for Net Purchase Payment(s) and
transfers accepted into a Deposit Period for
available Terms in the GI Account. Yield(s)
will gradually increase to the end of a Term
and will never be less than 4%.

IP-CDA-IB 8

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3.03 GUARANTEED INTEREST (e) Withdrawals from GI Account -- Transfers may
ACCOUNT (GI ACCOUNT) be requested at any time from the GI account
(CONT'D) prior to the end of a Term, subject to
Contract specifications (see 3.09). Full or
partial surrenders may be requested at any
time from the GI Account prior to the end of a
Term. The amount withdrawn before the
Maturity date of a Term will receive a Yield
which is reduced from the ending Guaranteed
Term Effective Yield. The reduced Yield will
never be less than 4%.

Full and partial surrenders are satisfied by
withdrawing amounts from each of the Funds,
the Fixed Account, the GI Account Short-Term
Classification and the GI Account Long-Term
Classification) on a pro rata basis. However,
the Contract Holder may specify a particular
order in which investment options will be
liquidated in order to satisfy a partial
surrender request.

For purposes of withdrawals, Terms within the
GI Account Short-Term and Long-Term
Classifications are considered as two separate
investment options. Amounts will be removed
within a GI Account Classification starting
with the Term still in effect with the oldest
Deposit Period.

Net Purchase Payment(s) withdrawn from the GI
Account under the Sum Payable at Death
provision prior to the end of a Term will earn
the Yield stated for the Net Purchase
Payment(s) remaining in the Classification of
the GI Account to the end of the Term.

The Matured Term Value may be surrendered or
transferred on the Term's Maturity Date. If
no specific direction is given by the Contract
Holder prior to the Maturity Date, each
Matured Term Value will be reinvested in a
Term of the same duration. In the event that
a Term of the same duration is unavailable,
each Matured Term Value will automatically be
reinvested in the next shortest Term available
in the same Classification during the then
current Deposit Period. If however, only one
Term is available within the Classification,
then the Matured Term Value will automatically
be reinvested in that Term. Within two
business days after the Maturity Date, the
Contract Holder will be mailed a confirmation
statement. This statement will state the
Terms and Yields which will apply to the
reinvested Matured Term Value.

During the calendar month following the Term's
Maturity Date, the Contract Holder may notify
Aetna's Home Office to transfer or surrender
all or part of the Matured Term Value plus any
interest accrued thereon from the GI Account.
This provision only applies to the first such
request received from the Contract Holder
during this period for any Matured Term

IP-CDA-IB 9

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3.03 GUARANTEED INTEREST Value. All or part of the Matured Term Value
ACCOUNT (GI ACCOUNT) plus any interest accrued thereon may be
(CONT'D) transferred upon such request:

(1) To any other Terms of the GI Account
available in the current Deposit Period;
(2) To the Fixed Account; or
(3) To any other allowable Fund(s).

If no such notification is given, the Matured
Term Value will remain subject to the terms
and conditions of the new Term. All surrender
and transfer requests will be processed as of
the date they are received in Good Order at
Aetna's Home Office.

(g) Deposits to the GI Account -- All amounts in
the GI Account under the Short-Term
Classification are made to the General
Account.

All amounts in the GI Account under the Long-
Term Classification are made to a Nonunitized
Separate Account. There are no discrete units
for this Nonunitized Separate Account. The
Contract Holder does not participate in the
gain or loss from the assets held in the
Nonunitized Separate Account. Such gain or
loss is borne entirely by Aetna. These assets
may be chargeable with liabilities arising out
of any other business of Aetna.

For Terms under both the Short-Term and Long-
Term Classifications, Aetna guarantees
stipulated Yields to be credited to the GI
Account. All assets of Aetna including
amounts made to the GI Account are available
to meet the guarantees under the GI Account.

(h) Table of Representative Yields -- A table of
representative Yields illustrated on a
quarterly basis for Net Purchase Payment(s)
accepted in the GI Account during a Deposit
Period and held to the end of a specified
quarter will be provided upon request.

The GI Account is available only under a
Contract subject to the Special Provisions of
section 5.02. The GI Account cannot be used
as a pay-out option under the ANNUITY
PROVISIONS of the Contract.

3.04 MAINTENANCE FEE: See Part V.

3.05 FUND RECORD UNITS -- The portion of the Net Purchase Payment(s) applied
SEPARATE ACCOUNT: to the Separate Account will determine the number
of each Fund's Record Units. This number is equal
to the Net Purchase Payment applied to the Fund
divided by the Fund Record Unit Value (see 3.07)
for the Valuation Period in which the Purchase
Payment is received in good order.

3.06 NET RETURN The Net Return Factors are used to compute all
FACTOR(S) -- Separate Account Values and payments for any Fund.
SEPARATE ACCOUNT:
The Net Return Factor for each Fund is equal to
1.0000000 plus the Net Return Rate.

IP-CDA-IB 10

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3.06 NET RETURN The Net Return Rate is equal to:
FACTOR(S) -- SEPARATE
ACCOUNT (CONT'D):
(a) The value of the shares of the Fund held by
the Separate Account at the end of a Valuation
Period; minus

(b) The value of the shares of the Fund held by
the Separate Account at the start of the
Valuation Period; plus or minus

(d) The total value of the Fund Record Units and
Fund Annuity Units of the Separate Account
(see 3.07 and 4.07) at the start of the
Valuation Period; minus
(e) A daily actuarial charge at an annual
effective rate of 1.25% for Annuity mortality
and expense risks and profit and a daily
administrative charge which will not exceed
0.25% on an annual effective basis.

A Net Return Rate may be more or less than 0.

The value of a share of the Fund is equal to the
net assets of the Fund divided by the number of
shares outstanding.

The administrative charge may be changed annually
except for amounts which have been used to
purchase an Annuity. This charge will not exceed
0.25%.

3.07 FUND RECORD UNIT Each Fund's Record Unit Value is computed by
VALUE -- SEPARATE multiplying the Net Return Factor for the current
ACCOUNT (CONT'D) Valuation Period by the Fund's Record Unit Value
for the previous Period. The dollar value of a
Fund's Record Unit, Separate Account assets, and
Variable Annuity payments may go up or down due to
investment gain or loss.

3.08 CURRENT VALUE: The Current Value of this Contract is equal to:

(a) Any amounts in the Fixed Account, including
Fixed Account interest added by Aetna; plus

(b) Any amounts in the GI Account, including GI
Account interest added by Aetna; plus

(d) Any Maintenance Fee(s) due.

Current Value does not include amounts used to
purchase an Annuity.

3.09 TRANSFER OF CURRENT Before an Annuity Option is elected, all or any
VALUE FROM THE FUNDS portion of the Current Value may be transferred
OR GI ACCOUNT: from any Fund or the GI Account, if available, to:

(a) Any other Fund;
(b) The Fixed Account; or

IP-CDA-IB 11

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3.09 TRANSFER OF CURRENT (c) The GI Account's current Deposit Period.
VALUE FROM THE FUNDS
OR GI ACCOUNT Amounts in a specific GI Account Term cannot be
(CONT'D): transferred to the Deposit Period of another Term
within the same Classification except at the
Term's Maturity.

Transfers from the GI Account are subject to the
Withdrawal provision for amounts withdrawn before
the Maturity Date of a Term. (See 3.03 (e).)

Twelve transfers of Current Value (excluding
transfers from the GI Account at the end of a
Guaranteed Term) can be made during a calendar
year period. Should Aetna allow additional
transfers, each may be subject to a fee of up to
$10.

3.10 TRANSFER OF CURRENT 10% of the Current Value held in the Fixed Account
VALUE FROM THE FIXED may be transferred to any Fund(s) or the GI
ACCOUNT: Account's current Deposit Period, if available.
Such transfer will be:

(a) Without charge; and
(b) Allowed once per calendar year; and
(c) Not allowed under an Annuity Option.

Aetna may, on a temporary basis, allow any larger
percent to be transferred.

Any remaining balance in the Fixed Account under
the Contract may be transferred by the Contract
Holder in its entirety to any of the Fund(s)
and/or if available to the GI Account's current
Deposit Period, (as applicable), if:

(a) The Current Value of the Fixed Account under
the Contract is $2,000 or less; or

The Current Value of the Fixed Account, as used
above, is the value when the request is received
at Aetna's Home Office in Good Order.

3.11 NOTICE TO THE Before an Annuity Option is elected, Aetna will
CONTRACT GOLDER notify the Contract Holder each year of:

(a) The value of any amounts held in:

(1) The Fixed Account;
(2) The GI Account; if available;
(3) The Fund(s) for the Separate Account;

(b) The number of any Fund(s) Record Units; and
(c) The Fund(s) Record Unit Value(s).

IP-CDA-IB 12

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3.11 NOTICE TO THE Such number or values will be as of a date no more
CONTRACT HOLDER than 60 days before the date of the notice.
(CONT'D):

3.12 SUM PAYABLE AT DEATH See Part V.
(BEFORE ANNUITY
PAYMENTS
START):

3.13 SURRENDER VALUE: See Part V:

3.14 PAYMENT OF SURRENDER Under certain emergency conditions, Aetna may
VALUE defer payment:

(a) For a period of up to 6 months (unless not
allowed by state law); and

(b) As provided by federal law.

Aetna may pay any Fixed Account surrender value
with interest in equal payments over a period not
to exceed 60 months when the amount held in the
Fixed Account under this Contract exceeds $250,000
on the day prior to the current surrender request.
This will apply only if the sum of the amounts
surrendered within the past 12 months and the
amount of the current surrender exceeds 20% of
such Fixed Account amount.

Interest, as used above, will not be more than two
percentage points below any rate determined
prospectively by the Board of Directors for this
class of Contract. In no event will the interest
rate be less than 4%.

3.15 DISTRIBUTION OPTIONS See Part V.
(ESTATE CONSERVATION
OPTION (ECO)/
SYSTEMATIC WITHDRAWAL
OPTION (SWO)):

3.16 REINSTATEMENT: All or a portion of the proceeds of a full
surrender of this Contract may be reinvested
within 30 days after the surrender if allowed by
law. Any Maintenance Fee and Surrender Fee
charged at the time of surrender on the amount
being reinvested will be included in the
reinvestment. Amounts will be reinstated among
the Fixed Account, the Separate Account Fund(s)
and the GI Account (as applicable) in the same
proportion as they were at the time of surrender.
The number of Record Units reinstated will be
based on the Record Unit Value(s) next computed
after receipt at Aetna's Home Office of the
reinstatement request and the amount to be
reinvested. Amounts will be reinstated to the GI
Account's current Deposit Period, as applicable.

Any Maintenance Fee which falls due after the
surrender and before the reinstatement will be
deducted from the amount reinstated.

Reinstatement is permitted only once.

IP-CDA-IB 13
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IV. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------

4.01 CHOICES TO BE MADE: The Contract Holder may tell Aetna to pay any
portion of the Current Value (minus any premium
tax) as a premium for an Annuity under Option 2,
3, or 4 (see 4.08). This election must be made in
a form acceptable to Aetna within the 90 period
ending on the date payments are to begin. A
Contract Holder may revoke an election at any time
prior to the date the payments start. However the
spouse of a married Contract Holder/Participant,
under a Contract subject to the Special Provisions
of section 5.01, must consent to the first
election and any new choice other than Option 4(e)
(see 4.08).

When an Annuity Option is chosen, Aetna must also
be told if payments are to be made other than
monthly and to pay:

(a) A Fixed Annuity using the General Account;
(b) A Variable Annuity using any of the Fund(s)
made available by Aetna for Annuity purposes;
or
(c) A combination of (a) and (b).

If a Fixed Annuity is chosen, Aetna will add
interest daily at an annual rate no less than
3.5%. Aetna may add interest daily at any higher
rate.

If a Variable Annuity is chosen, an Assumed Annual
Net Return Rate of 5% may be chosen. If not
chosen, Aetna will use an Assumed Annual Net
Return Rate of 3.5%.

4.02 ANNUITY PAYMENTS TO In no event may any payments to the Annuitant
ANNUITANT: under any Annuity Option extend beyond:

(a) The life of the Annuitant;

(b) The lives of the Annuitant and the
beneficiary;

(c) A period certain greater than the Annuitant's
life expectancy according to regulations
under Code Section 401(a)(9), determined as
of the date payments are to begin; or

(d) A period certain greater than the life
expectancies of the Annuitant and the
beneficiary according to regulations under
Code Section 401(a)(9), determined as of the
date payments are to begin.

4.03 ANNUITY PAYMENTS TO In no event may payments to the Beneficiary under
ANNUITANT'S BENEFICIARY:an Annuity Option extend beyond:

(a) The life of the Beneficiary; or
(b) A period certain greater than the
beneficiary's life expectancy as determined
by regulations under Code Section 401(a)(9).

The present value of any remaining payments due
after the death of both Annuitants under a joint
and survivor Annuity

IP-CDA-IB 14 (U)

<PAGE>

4.03 ANNUITY PAYMENTS TO Option, (see 4.08), will be made to the
ANNUITANT'S BENEFICIARY beneficiary designated by the Contract Holder or
(CONT'D): to the Contract Holder's estate. The second
Annuitant does not have the right to change the
beneficiary upon the Contract Holder's death.

4.04 TERMS OF ANNUITY (a) When payments start, the age of the Annuitant
OPTIONS: plus the number of years for which payments
are guaranteed must not exceed 95.

(b) The present value of the expected payments to
the Annuitant when payments start shell be
determined according to the Tables under IRS
regulations to comply with the minimum
distribution incidental death benefit rule.
This restriction does not apply if Option 4
is chosen and the second Annuitant is the
spouse of the Annuitant.

(c) No choice of any Annuity Option may be made
if the first payment would be less than $20
or if the total payments in a year would be
less than $100.

(d) If a Fixed Annuity under option 2, 3 or 4 is
chosen and a larger payment would result from
applying the surrender value to a current
Aetna single premium immediate Annuity, Aetna
will make the larger payment.

(e) The Annuitant's age will be reduced by two
years for Annuity commencement dates
occurring during the 1990's, reduced by two
years for Annuity commencement dates
occurring during the decade 2000-2009, and so
on. The Annuitant's adjusted age is
determined based on the age as of the
birthday closest to the date of the first
Annuity payment. The Annuity rates for
Options 3 and 4 are based on mortality from
1983 Table a.

(f) Assumed Annual Net Return Rate is the
interest rate used to determine the amount of
the first Annuity payment under a Variable
Annuity. The Separate Account must earn this
rate plus enough to cover the mortality and
expense risk charges, and, if applicable, any
administrative charge if future Variable
Annuity Payments are to remain level.

4.05 DEATH OF When an Annuitant dies under option 2 or 3, or
ANNUITANT/BENEFICIARY: both the Annuitant and survivor die under Option
4(d), the present value of any remaining
guaranteed payments will be paid in one sum to the
beneficiary, or upon election by the beneficiary,
any remaining payments will continue to the
beneficiary. If there is no beneficiary under
Option 2 and 3, the present value of any remaining
payments will be paid in one sum to the estate of
the Annuitant. If there is no beneficiary under
Option 4(d), the present value of any remaining
payments will be paid in one lump sum to the last
survivor's estate.

If the Annuitant dies under Option 1, the amount
held plus accrued interest will be paid in one sum
to the beneficiary. If there is no beneficiary,
the lump sum will be paid to the Annuitant's
estate.

IP-CDA-IB 15 (U)

<PAGE>

4.05 DEATH OF If the Beneficiary dies while receiving annuity
ANNUITANT/BENEFICIARY payments elected by the Annuitant, the present
CONT'D): value of any remaining payments will be paid in
one sum to the successor beneficiary's estate
unless otherwise elected. The interest rate used
to determine the first payment will be used to
calculate the present value.

4.06 FUND(S) ANNUITY UNITS --The number of Fund(s) Annuity Units is based on
SEPARATE ACCOUNT: the amount of the first Variable Annuity payment
which is equal to:

(a) The portion of the Current Value (minus any
premium tax) applied to pay a Variable
Annuity; divided by
(b) 1,000; multiplied by
(c) The payment rate for the Option chosen.

Such amount, or portion, of the Variable Payment
will be divided by the appropriate Fund(s) Annuity
Unit Value (see 4.07) on the tenth Valuation
Period before the due date of the first payment to
determine the number of each Fund(s) Annuity
Units. The number of each Fund(s) Annuity Units
remains fixed. Each future payment is equal to
the sum of the products of each Fund(s) Annuity
Unit Value multiplied by the appropriate number of
Units. The Fund(s) Annuity Unit Value on the
tenth Valuation Period prior to the due date of
the payment is used.

4.07 FUND(S) ANNUITY UNIT For any Valuation Period, a Fund(s) Annuity Unit
VALUE -- SEPARATE Value is equal to:
ACCOUNT:

(a) The Value for the previous Period; multiplied
by
(b) The Net Return Factor(s) (see 3.06) for the
Period; multiplied by
(c) A factor to reflect the Assumed Annual Net
Return Rate.

The factor for 3.5% per year is .9999058; for 5%
per year it is .9998663.

The dollar value of a Fund(s) Annuity Unit Values
and payments may go up or down due to investment
gain or loss.

If Variable Annuity payments are not to decrease,
Aetna must earn a gross return on the assets of
the Separate Account of:

Payments shall not be changed due to changes in
the mortality or expense results or administrative
charges.

4.08 ANNUITY OPTIONS: Option 1 -- Payment of Interest on Sum Left with
Aetna -- This Option may be used only by the
beneficiary when the Annuity dies before Aetna has
started paying an Annuity. A portion or all of
the

IP-CDA-IB 16 (U)

<PAGE>

4.08 ANNUITY OPTIONS sum paid upon death may be held under this Option
(CONT'D): and will be held in the General Account of Aetna
at interest (see 4.01). The beneficiary may later
tell Aetna to:

(a) Pay a portion or all of the sum held by
Aetna; or
(b) Apply a portion or all of the sum held by
Aetna to any Annuity Option below.

If this Contract is subject to Code Section
401(a)(9), and the beneficiary elects that the
full sum paid upon death is to be held under this
Option, the beneficiary, if a spouse, must elect
(a) or (b) above within 5 years after the death of
the Annuitant. If the beneficiary is not a
spouse, the beneficiary must tell Aetna to pay the
full sum within 5 years after the death of the
Annuitant.

Option 2 -- Payments for a Stated Period of Time
-- An Annuity will be paid for the number of years
chosen. The number of years must be at least 3
and not more than 30. If payments for this Option
are made under a Variable Annuity, the present
value of any remaining payments may be withdrawn
at any time. If a withdrawal is requested within
3 years after the start of payments, it will be
treated as a surrender (see Part V).

Option 3 -- Life Income -- An Annuity will be paid
for the life of the Annuitant. If also chosen,
Aetna will guarantee payments for 60, 120, 180, or
240 months.

Option 4 -- Life Income for Two Payees -- An
Annuity will be paid during the lives of the
Annuitant and a second Annuitant. At the death of
either, payments will continue to the survivor.
When this Option is chosen, a choice must be made
of:

(a) 100% of the payment to continue to the
survivor;

(b) 66 2/3% of the payment to continue to the
survivor;

(d) Payments for a minimum of 120 months, with
100% of the payment to continue to the
survivor; or

(e) 100% of the payment to continue to the
survivor if the survivor is the Annuitant and
50% of the payment to continue to the
survivor if the survivor is the second
Annuitant.

Other Options -- Aetna may make other options
available as allowed by the laws of the state in
which this Contract is delivered.

IP-CDA-IB 17 (U)

<PAGE>

OPTION 2

PAYMENTS FOR A STATED PERIOD OF TIME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEARS AMOUNT OF YEARS AMOUNT OF YEARS AMOUNT OF
OF PAYMENTS PAYMENTS OF PAYMENTS PAYMENTS OF PAYMENTS PAYMENTS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3 $29.19 13 $7.94 22 $5.39
4 22.27 14 7.49 23 5.24
5 18.12 15 7.10 24 5.09
6 15.35 16 6.76 25 4.96
7 13.38 17 6.47 26 4.84
8 11.90 18 6.20 27 4.73
9 10.75 19 5.97 28 4.63
10 9.83 20 5.75 29 4.53
11 9.09 21 5.56 30 4.45
12 8.46
- --------------------------------------------------------------------------------
</TABLE>

Rates for a Variable Annuity with Assumed Net Return Rate of 5%

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEARS AMOUNT OF YEARS AMOUNT OF YEARS AMOUNT OF
OF PAYMENTS PAYMENTS OF PAYMENTS PAYMENTS OF PAYMENTS PAYMENTS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3 $29.80 13 $8.64 22 $6.17
4 22.89 14 8.20 23 6.02
5 18.74 15 7.82 24 5.88
6 15.99 16 7.49 25 5.76
7 14.02 17 7.20 26 5.65
8 12.56 18 6.94 27 5.54
9 11.42 19 6.71 28 5.45
10 10.51 20 6.51 29 5.36
11 9.77 21 6.33 30 5.28
12 9.16
- --------------------------------------------------------------------------------

</TABLE>

IP-CDA-IB 18 (U)

<PAGE>

OPTION 3

LIFE INCOME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT NONE 60 120 180 240
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44

55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75

60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08

65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38

70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59

75 8.35 8.08 7.38 6.48 5.62
- --------------------------------------------------------------------------------
</TABLE>

Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed on a
basis consistent with the rates in the above tables.

IP-CDA-IB 19 (U)

<PAGE>

OPTION 3

LIFE INCOME

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%

PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT NONE 60 120 180 240
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31

55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59

60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 5.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89

65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17

70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36

75 9.23 8.93 8.16 7.23 6.38
- --------------------------------------------------------------------------------
</TABLE>

IP-CDA-IB 20 (U)

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR - NO MINIMUM PERIOD

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.69 $3.80 $3.81 $3.84 $3.87 $3.90 $3.91 $3.92 $3.92
50 3.75 3.89 3.97 4.04 4.09 4.13 4.15 4.17 4.18
55 3.81 3.97 4.16 4.27 4.35 4.42 4.47 4.50 4.51
60 3.84 4.04 4.27 4.51 4.66 4.78 4.86 4.92 4.95
65 3.87 4.09 4.35 4.66 4.99 5.19 5.35 5.46 5.53
70 3.90 4.13 4.42 4.78 5.19 5.67 5.95 6.17 6.31
75 3.91 4.15 4.47 4.86 5.35 5.95 6.64 7.04 7.34
80 3.92 4.17 4.50 4.92 5.46 6.17 7.04 8.04 8.63
85 3.92 4.18 4.51 4.95 5.53 6.31 7.34 8.63 10.05
- --------------------------------------------------------------------------------
</TABLE>

Rates for a Variable Annuity with Assumed Net Return Rate of 5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.63 $4.68 $4.73 $4.77 $4.80 $4.82 $4.84 $4.85 $4.86
50 4.68 4.80 4.88 4.95 5.00 5.04 5.06 5.08 5.10
55 4.73 4.88 5.04 5.15 5.24 5.30 5.35 5.39 5.41
60 4.77 4.95 5.15 5.37 5.52 5.63 5.72 5.79 5.83
65 4.80 5.00 5.24 5.52 5.83 6.04 6.20 6.31 6.39
70 4.82 5.04 5.30 5.63 6.04 6.49 6.77 6.99 7.15
75 4.84 5.06 5.35 5.72 6.20 6.77 7.45 7.86 8.16
80 4.85 5.08 5.39 5.79 6.31 6.99 7.86 8.84 9.43
85 4.86 5.10 5.41 5.83 6.39 7.15 8.16 9.43 10.86
- --------------------------------------------------------------------------------
</TABLE>

IP-CDA-IB 21 (U)

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

JOINT AND LAST SURVIVOR ANNUITY
66 2/3% TO THE SURVIVOR - NO MINIMUM PERIOD

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85

Rates for a Variable Annuity Net Return Rate of 5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85

IP-CDA-IB 22 (U)

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR - NO MINIMUM PERIOD

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85

Rates for a Variable Annuity Net Return Rate of 5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85

IP-CDA-IB 23 (U)

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR - 120 MONTHS MINIMUM PERIOD

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85

Rates for a Variable Annuity with Assumed Net Return Rate of 5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85

IP-CDA-IB 24 (U)

<PAGE>

OPTION 4

LIFE INCOME FOR TWO PAYEES

JOINT AND 1/2 CONTINGENT LIFE INCOME ANNUITY
NO MINIMUM PERIOD

AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES

Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85

Rates for a Variable Annuity Net Return Rate of 5%

AGE OF SECOND ANNUITANT

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT 45 50 55 60 65 70 75 80 85

IP-CDA-IB 25 (U)

<PAGE>

The Special Provisions section which applies to this Contract is shown on the
Contract cover under Type of Plan. The other section under Special Provisions
does not apply.

5.01 PENSION OR PROFIT (a) Control of Contract: All rights in this
SHARING PLAN; Contract rest with the Contract Holder, who
QUALIFIED is entitled to all amounts held under this
INDIVIDUAL DEFERRED Contract. The Contract Holder or authorized
ANNUITY: designee of the Contract holder (as allowed
by law), may make any choices allowed by this
Contract. Choices made under this Contract
must be in writing. Until receipt of such
choices at its Home Office, Aetna may rely on
any previous choices made. This Contract is
not subject to the claims of any creditors
except to the extent permitted by law.

Any payment(s) made under this Contract to
the Participant, or to the Contract Holder
for a Qualified Individual Deferred Annuity,
must be in compliance with the provisions of
the Retirement Equity Act of 1984 (Act).
Under a Qualified Individual Deferred Annuity
Aetna will be responsible for ensuring the
payment option is elected in compliance with
the Act.

The Participant may be the Contract Holder
under a Pension or Profit Sharing Plan
established solely for one individual. Under
a Qualified Individual Deferred Annuity the
Contract Holder may be a Participant who is
separated from service under the Plan. The
trustees of the Plan qualified under Code
Section 401(a), are the applicant on behalf
of the Contract Holder. This Contract is
nontransferable and nonassignable except to
Aetna, or pursuant to a "qualified domestic
relations order" as set forth under the Act.

(b) Designation of Beneficiary: The Contract
Holder shall name the beneficiary on behalf
of a Participant. However, if the
Participant is married, on the date of death
Aetna shall disregard the named beneficiary
and shall treat the current spouse as sole
beneficiary, if:

(1) The Participant had not reached age 35;
or

(2) The Participant had reached age 35, and
the appropriate preretirement survivor
benefit waiver and spousal consent
form(s) has not been submitted to Aetna.

Any existing or future beneficiary
designations not in conformance with this
provision are null and void.

(c) Maintenance Fee: The maintenance Fee, if
any, (see 6.01) will be deducted from the
Current Value on each Contract Year
anniversary. Upon surrender of the entire
Contract, the

IP-CDA-IB 26

<PAGE>

5.01 PENSION OR PROFIT annual Maintenance fee will be deducted. If
SHARING PLAN; the surrender ofthe Contract occurs less than
QUALIFIED DEFERRED 90 calendar days after the last Contract Year
ANNUITY anniversary, Aetna will waive the Maintenance
(CONT'D): Fee.

(d) Estate Conservation Option (ECO) Distribution
Option: ECO is a distribution option under
which a portion of the Contract's Current
Value will automatically be surrendered and
distributed each year. An ECO payment will
be calculated on the full Contract Value and
will commence no earlier than the year the
Participant attains age 70 1/2. All rights,
provisions and charges described in the
Contract continue to apply to the remaining
Current Value in the Contract.

(1) Amount of Distribution: Each year that
ECO is in effect, Aetna will calculate
and distribute an amount equal to the
minimum required distribution under the
Code. The annual distribution will be
determined by dividing the Current
Value, as of December 31 of the year
prior to the payment year, by a life
expectancy factor.

As elected by the Contract Holder on
behalf of the Participant, the factor is
either the single life or joint life
expectancy based on tables in Section
401(a)(9) of the Code or related
regulations. If joint life expectancy
is elected and the Participant or spouse
dies, payments will be calculated based
on the survivor's life expectancy.

These calculations may be changed as
necessary to comply with the Code
minimum distribution rules. The joint
life expectancy factor can only be
elected based on the joint life
expectancy of the Participant and his or
her spouse. The spouse must be named as
the beneficiary of any death benefits
under the Contract while ECO is in
effect. Also, Aetna assumes no
responsibility for tax consequences
resulting from failure to receive
required minimum distributions on
additional deposits made after each
year's determination date, as described
above.

(2) Minimum Initial Current Value: At its
discretion, Aetna may require a Minimum
Initial Current Value for election of
this option. If after election of this
option, the Current Value is
insufficient to make a scheduled ECO
payment, Aetna will distribute the
entire Contract balance.

(3) Date of Distribution: Distribution will
be made annually on the 15th of any
month or such other date Aetna may
designate or allow. The Contract Holder
on behalf of the Participant, shall
specify an initial distribution month,
in a year that is not earlier than the
calendar year in which the Participant
attains age 70 1/2.

IP-CDA-IB 27

<PAGE>

5.01 PENSION OR PROFIT (4) Elections and Revocation: ECO may be
SHARING PLAN; elected by the Contract Holder on behalf
QUALIFIED INDIVIDUAL of the Participant, by submitting a
DEFERRED ANNUITY completed and signed election form to
(CONT'D) Aetna's Home Office. The Participant
also must submit the appropriate joint
and survivor annuity waiver and spousal
consent form(s) to Aetna at its Home
Office.

(e) Systematic Withdrawal Option (SWO): A
distribution option under which a portion of
the Contract's Current Value will
automatically be surrendered and distributed
each year. A SWO payment will be calculated
on the full Contract Current Value and will
commence no earlier than the year the
Participant attains age 70 1/2. All rights,
provisions and charges described in the
Contract continue to apply to the remaining
Current Value in the Contract.

(1) Amount of Distribution: The Contract
Holder may elect one of the two payment
methods described below on behalf of a
Participant.

- Specified Amount: Payments of a
designated dollar amount which must
be no greater than 10% of the
initial Current Value. This amount
will remain constant unless a
higher amount is required under the
Code minimum distribution rules.
Each year that the Specified Amount
is in effect, Aetna will calculate
the minimum required distribution
under the Code and distribute this
amount if it is larger than the
amount elected by the Participant.
The life expectancy factor for this
purpose will be the Participant's
life expectancy at the time of the
election of this option, and with
each subsequent calendar year the
factor will be reduced by one. The
minimum required distribution will
be determined by dividing the
Current Value as of December 31 of
the year prior to the payment year,
by a life expectancy factor.
- Specified Period: Payments which
are made over a period of time.
The Period must be at least 10
years, unless otherwise required by
the Code minimum distribution
rules. The maximum specified
period will be limited by the Code
minimum distribution rules.

IP-CDA-IB 28

<PAGE>

5.01 PENSION OR PROFIT SHARING The annual amount paid each year is
PLAN; QUALIFIED INDIVIDUAL calculated by dividing the Current
DEFERRED ANNUITY Value as of December 31 of the
(CONT'D): prior year, by the number of
payment years remaining. However,
if the Code minimum distribution
rules require payment of a greater
amount, such higher amount will be
paid.

The life expectancy factor is either the
single life or joint life expectancy, as
elected by the Contract Holder on behalf
of a Participant, based on tables in
Section 401(a)(9) of the Code or related
regulations. If the joint life
expectancy is elected, upon either the
Participant's or the spouse's death the
minimum required distribution for the
Specified Amount payment method will
continue to be calculated in the same
manner as described under Specified
Amount. Payments upon the Participant's
death will continue in the manner
described above, unless the spouse
elects an alternate payment mode.

Any mode elected must provide payments
to be made at least as rapidly as those
made prior to the Participant's death.
These calculations may be changed as
necessary to comply with the Code
minimum distribution rules. The joint
life expectancy factor can only be
elected based on the joint life
expectancy of the Participant and his or
her spouse. The spouse must be named as
the beneficiary of any death benefits
under the Contract while SWO is in
effect.

Aetna assumes no responsibility for tax
consequences resulting from failure to
receive required minimum distributions
on additional deposits made after
December 31 of the prior year.

(2) Minimum Initial Current Value: At its
discretion, Aetna may require a Minimum
Initial Current Value for election of
this option. If after election of this
option the Current Value is insufficient
to make a scheduled SWO payment, Aetna
will distribute the entire Contract
balance.

(3) Date of Distribution: Distribution will
be made annually on the 15th of any
month or such other date Aetna may
designate or allow. The Contract Holder
on behalf of the Participant, shall
specify an initial distribution month,
not earlier than the calendar year in
which the Participant attains age 70
1/2.

(4) Election and Revocation: SWO may be
elected by the Contract Holder on behalf
of the Participant by submitting a
completed and signed election form to
Aetna's Home Office. The Participant
must also submit the appropriate joint
and survivor annuity waiver and spousal
consent form(s) to Aetna' at its Home
Office.

IP-CDA-IB 29

<PAGE>
5.01 PENSION OR PROFIT SHARING Once elected, this option may be revoked
PLAN; QUALIFIED INDIVIDUAL by the Contract Holder by submitting a
DEFERRED ANNUITY written request to Aetna at its Home
(CONT'D): Office. Any revocation will apply only
to amounts not yet paid. SWO may be
elected only once.

(5) Reservation of Rights: Aetna reserves
the right to change the terms of SWO for
future elections and discontinue the
availability of this option after proper
notification. Aetna also reserves the
right to allow payments to be made more
frequently than annually.

(f) Sum Payable at Death (Before Annuity Payments
Start): Aetna will pay the Current Value to
the beneficiary when:

(1) The Participant dies before Annuity
payments start; and
(2) The notice of death is received in Good
Order by Aetna.

The sum payable will be the Current Value on
the date when the notice is received in Good
Order at Aetna's Home Office. The amount
paid from the Fixed Account will not be less
than the Net Purchase Payment(s) allocated to
the Fixed Account plus interest (less any
prior transfers (see 3.10), surrenders,
Maintenance Fees or amounts used to purchase
Annuity Options). The beneficiary may choose
to apply any sum under an Annuity Option (see
Part IV), subject to any other terms and
conditions of this Contract, or to receive a
lump sum.

If the beneficiary is the surviving spouse,
the first Annuity payment or the lump sum
payment may be deferred to a date not later
than when the Participant would have attained
age 70 1/2 or such later date as may be
allowed under federal law or regulations.

If the beneficiary is not the surviving
spouse, all of the Current Value must either
be applied to an Annuity Option within one
year of the Participant's death or be paid to
the beneficiary within 5 years of the
Participant's death (see Part IV).

In no event may payments to any beneficiary
under an Annuity option extend beyond the
life of the beneficiary or any period certain
greater than the beneficiary's life
expectancy. If no beneficiary exists, the
payment will be made to the Participant's
estate.

(g) Surrender Value: After deduction of the
Maintenance Fee, if any, Aetna will reduce
the amount payable upon surrender of any
portion of the Current Value by a Surrender
Fee. The Surrender Fee will be in accordance
with the Surrender Fee table in 6.02.

Aetna is required by law to report any
surrender to the Internal Revenue Service.
Amounts are reported as fully taxable to the
Participant, unless notified in writing by
the Contract Holder of the cost basis from
after tax contributions allowed by the Plan.

IP-CDA-IB 30

<PAGE>

5.01 PENSION OR PROFIT SHARING If the Participant is married, his or her
PLAN; QUALIFIED INDIVIDUAL spouse must consent in writing to any
DEFERRED ANNUITY request for a partial surrender. This
(CONT'D): consent must be given the 90-day period
before the partial surrender is to be made.

A full surrender will be paid to a married
Participant only as an Option 4(e) Life
Income for Two Payees (see 4.08) unless the
Participant's spouse consents in writing to
one of the other Annuity Options or a lump
sum payment. This consent must be given
within the 90-day period ending on the date
payment is to be made.

At Aetna's discretion, a full surrender may
be allowed without spousal consent if the
Current Value is $3,500 or less.

If a lump sum payment is elected in lieu of
an Annuity Option, it must be paid no later
than the April 1 of the calendar year
following the year in which the Participant
turns age 70 1/2 or such later date as may be
allowed under federal law or regulations.

The Contract Holder/Participant or
beneficiary must notify Aetna in writing when
a lump sum payment or Annuity payments are to
commence.

If the Contract Holder on behalf of the
Participant does not request commencement of
benefits as described above, Aetna will not
be responsible for compliance with the Code
Section 401 (a)(9) minimum distribution
requirements and for any adverse tax
consequences that may result.

(h) Limitation on Contributions: The Purchase
Payment(s) made to the Contract in any year
for a Pension or Profit Sharing Plan cannot
exceed the annual additions limitation of
Code Section 415. In no event may the
Purchase Payment(s) attributable to elective
deferrals as defined in Code Section 401(k)
exceed the annual limit in effect under
Section 402(g) of the Code. Exception to the
dollar maximum is a Rollover contribution as
permitted by Code Section 402(a)(5) or
408(d)(3).

Aetna will not be responsible for compliance
with the above contribution limits. Aetna
shall rely on the Contract Holder's fiduciary
responsibility under the Employee Retirement
Income Security Act of 1974 (ERISA) to ensure
the proper administration of the Plan.

(i) Minimum Distribution Requirements

(1) General Requirement: Notwithstanding
any provision of this Contract to the
contrary, if this Contract is for a
Qualified Individual Deferred Annuity,
the distribution of the Contract
Holder's Current Value shall be made in
accordance with the minimum distribution
requirements of section 401 (a)(9) of
the Code and the regulations thereunder,
including the incidental death benefit

IP-CDA-IB 31

<PAGE>

5.01 PENSION OR PROFIT SHARING provisions of section 1.401 (a)(9)-2 of
PLAN; QUALIFIED INDIVIDUAL the proposed regulations, all of which
DEFERRED ANNUITY are herein incorporated by reference.
(CONT'D):
(2) Minimum Payments to Contract Holder:
The Contract Holder's entire Current
Value in the Contract must be
distributed, or begin to be distributed,
by the Contract Holder's required
beginning date, which is the April 1
following the calendar year in which the
Contract Holder turns age 70 1/2. For
each succeeding year, a distribution
must be made on or before December 31.
By the required beginning date, the
Contract Holder may elect to have the
balance under the Contract distributed
in one of the following forms according
to the terms of the Contract:

(a) a lump sum payment;

(b) equal or substantially equal
payments over the life of the
Contract Holder;

(d) equal or substantially equal
payments over a specified period
that may not be longer than the
Contract Holder's life expectancy;

(e) equal or substantially equal
payments over a specified period
that may not be longer than the
joint life and last survivor
expectancy of the Contract Holder
and his or her designated
beneficiary.

(3) Minimum Death Benefits: If the Contract
Holder dies before his or her entire
Current Value is distributed, the entire
remaining balance will be distributed as
follows:

(a) If the Contract Holder dies on or
after the date distributions have
begun under paragraph 2 above, the
entire remaining balance must be
distributed at least as rapidly as
provided under paragraph 2.

(b) If the Contract Holder dies before
distributions have begun under
paragraph 2 above, the entire
remaining balance must be
distributed as elected by the
Contract Holder or, if the Contract
Holder has not so elected, as
elected by the beneficiary or
beneficiaries, as follows:

(i) by December 31st of the year
containing the fifth
anniversary of the Contract
Holder's death; or

IP-CDA-IB 32

<PAGE>

5.01 PENSION OR PROFIT SHARING (ii) in equal or substantially
PLAN; QUALIFIED INDIVIDUAL equal payments over the life
DEFERRED ANNUITY or life expectancy of the
(CONT'D): designated beneficiary or
beneficiaries starting by
December 31st of the year
following the year of the
Contract Holder's death. If,
however, the beneficiary is
the Contract Holder's
surviving spouse, then this
distribution is not required
to begin before December 31st
of the year in which the
Contract Holder would have
turned 70 1/2.

(4) Life Expectancies: Unless an Annuity
Option has been elected by the Contract
Holder prior to the commencement of
distributions in accordance with
paragraph 2 above (or, if applicable, by
the surviving spouse where the Contract
Holder dies before distributions have
commenced), or unless a Systematic
Withdrawal Option has been elected by
the Contract Holder, life expectancies
of the Contract Holder or spouse
beneficiary shall be recalculated
annually for purposes of distributions
under paragraphs 2 and 3 above. An
election not to recalculate shall be
irrevocable and shall apply to all
subsequent years. The life expectancy
of a non-spouse beneficiary shall not be
recalculated.

(j) THE FOLLOWING SECTION 5.02 OF THE SPECIAL
PROVISIONS DOES NOT APPLY TO THIS CONTRACT.

5.02 INDIVIDUAL RETIREMENT (a) The preceding Section 5.01 of the Special
ANNUITY (IRA): Provisions does not apply to this Contract.
SIMPLIFIED EMPLOYEE
PENSION PLAN: (b) Control of Contract: All nonforfeitable
rights in this Contract rest with the
Contract Holder, who is entitled to all
amounts held under this Contract. The
Contract Holder may make any choices allowed
by this Contract. Choices made under this
Contract must be in writing. Until receipt
of such choices at its Home Office, Aetna may
rely on any previous choices made. This
Contract is nontransferable and
nonassignable, except to Aetna, or pursuant
to valid court order, provided Aetna is
notified and served with respect to such
order pursuant to applicable law.

(c) Designation of Beneficiary: The Contract
Holder shall name the beneficiary. The
beneficiary may be changed at any time.
Until receipt of a written request to change
the beneficiary, Aetna may rely upon the last
named beneficiary.

(d) Maintenance Fee: The Maintenance Fee, if
any, (see 6.01) will be deducted from the
Current Value on each Contract Year
anniversary. Upon surrender of the entire
Contract, the annual Maintenance Fee will be
deducted. If the surrender of the Contract
occurs less than 90 calendar days after the
last Contract Year anniversary, Aetna will
waive the Maintenance Fee.

IP-CDA-IB 33

<PAGE>

5.02 INDIVIDUAL RETIREMENT (e) Estate Conservation Option (ECO) Distribution
ANNUITY (IRA); Option: ECO is a distribution option under
SIMPLIFIED EMPLOYEE which a portion of the Contract's Current
PENSION PLAN Value will automatically be surrendered and
(CONT'D): distributed each year. An ECO payment will
be calculated on the Full Contract Value and
will commence no earlier than the year the
Participant attains age 70 1/2. All rights,
provisions and charges described in the
Contract continue to apply to the remaining
Current Value in the Contract.

As elected by the Contract Holder, the
factor is either the single life or
joint life expectancy based on tables in
Section 401(a)(9) of the Code or related
regulations. If joint life expectancy
is elected, the payments upon death will
be calculated based on the survivor's
life expectancy. If there is no
survivor, the Current Value will be paid
in a lump sum to the survivor's estate.

These calculations may be changed as
necessary to comply with the Code
minimum distribution rules. The joint
life expectancy factor can only be
elected based on the joint life
expectancy of the Contract Holder and
his or her spouse. The spouse must be
named as the beneficiary of any death
benefits while ECO is in effect. Also,
Aetna assumes no responsibility for tax
consequences resulting from failure to
receive required minimum distributions
on additional deposits made after each
year's determination date, as described
above.

(3) Date of Distribution: Distribution will
be made annually on the 15th of any
month or such other date Aetna may
designate or allow. The Contract Holder
shall specify an initial distribution
month, in a year that is not earlier
than the calendar year in which the
Contract Holder attains age 70 1/2.

(4) Elections and Revocation: ECO may be
elected by the Contract Holder by
submitting a completed and signed
election form to Aetna's Home Office.

IP-CDA-IB 34

<PAGE>

5.02 INDIVIDUAL RETIREMENT Once elected, this option may be revoked
ANNUITY (IRA); by the Contract Holder by submitting a
SIMPLIFIED EMPLOYEE written request to Aetna at its Home
PENSION PLAN Office. Any revocation will apply only
(CONT'D): to amounts not yet paid. ECO may be
elected only once.

(f) Systematic Withdrawal Option (SWO): A
distribution option under which a portion of
the Contract's Current Value will
automatically be surrendered and distributed
each year. A SWO payment will be calculated
on the Full Contract Current Value and will
commence no earlier than the year the
Contract Holder attains age 70 1/2. All
rights, provisions and charges described in
the Contract continue to apply to the
remaining Current Value in the Contract.

(1) Amount of Distribution: The Contract
Holder may elect one of the two payment
methods described below.

- Specified Amount: Payments of a
designated dollar amount which must
be no greater than 10% of the
initial Current Value. This amount
will remain constant unless a
higher amount is required under the
Code minimum distribution rules.
Each year that the Specified Amount
is in effect, Aetna will calculate
the minimum required distribution
under the Code and distribute this
amount if it is larger than the
amount elected by the Contract
Holder. The life expectancy factor
for this purpose will be the
Contract Holder's life expectancy
for the initial distribution year
and with each subsequent calendar
year, the factor will be reduced by
one. The minimum required
distribution will be determined by
dividing the Current Value as of
December 31 of the year prior to
the payment year, by a life
expectancy factor.

Specified Period: Payments which
are made over a period of time.
The Period must be at least 10
years unless otherwise required by
the Code minimum distribution
rules. The maximum specified
period will be limited by the Code
minimum distribution rules. The
annual amount paid each year is
calculated by dividing the Current
Value as of December 31 of the
prior year, by the number of
payment years remaining. However,
if the Code minimum distribution
rules require payment of a greater
amount, such higher amount will be
paid.

IP-CDA-IB 35

<PAGE>

5.02 INDIVIDUAL RETIREMENT The life expectancy factor is
ANNUITY (IRA); either the single life or joint
SIMPLIFIED EMPLOYEE life expectancy, as elected by the
PENSION PLAN Contract Holder based on tables in
(CONT'D): the Code or related regulations.
If the joint life expectancy is
elected, upon either the Contract
Holder's or the spouse's death, the
minimum required distribution for
the Specified Amount payment method
will continue to be calculated in
the same manner as described under
Specified Amount.

Upon death, payments will continue
in the manner described above under
Specified Amount and Specified
Period, unless otherwise elected by
the beneficiary. Any mode elected
by the beneficiary, must provide
payments to be made at least as
rapidly as those made prior to the
Contract Holder's death.

Aetna assumes no responsibility for
tax consequences resulting from
failure to receive required minimum
distributions on additional
deposits made after December 31 of
the prior year.

(3) Date of Distribution: Distribution will
be made annually on the 15th of any
month or such other date Aetna may
designate or allow. The Contract Holder
shall specify an initial distribution
month, not earlier than the calendar
year in which the Contract Holder
attains age 70 1/2.

(4) Election and Revocation: SWO may be
elected by the Contract Holder by
submitting a completed and signed
election form to Aetna's Home Office.
Once elected, this option may be revoked
by the Contract Holder by submitting a
written request to Aetna at its Home
Office. Any revocation will apply only
to amounts not yet paid. SWO may be
elected only once.

IP-CDA-IB 36

<PAGE>

5.02 INDIVIDUAL RETIREMENT (5) Reservation of Rights: Aetna reserves
ANNUITY (IRA); the right to change the terms of SWO for
SIMPLIFIED EMPLOYEE future elections and discontinue the
PENSION PLAN availability of this option after proper
(CONT'D): notification. Aetna also reserves the
right to allow payments to be made more
frequently than annually.

(g) Sum Payable at Death (Before Annuity Payments
Start): Aetna will pay the Current Value to
the beneficiary when:

(1) The Contract Holder dies before Annuity
payments start; and

(2) The notice of death is received in Good
Order by Aetna.

The sum payable will be the Current Value on
the date when the notice is received in Good
Order at Aetna's Home Office. The amount
paid from the Fixed Account will not be less
than the Net Purchase Payment(s) allocated to
the Fixed Account plus interest (less any
prior transfers (see 3.10), surrenders,
Maintenance Fees, or amounts used to purchase
Annuity Options). The beneficiary may choose
to apply any sum under an Annuity Option (see
Part IV), subject to any other terms and
conditions of this Contract, or to receive a
lump sum.

If the beneficiary is the surviving spouse,
the first Annuity payment or the lump sum
payment may be deferred to a date not later
than December 31 of the year in which the
Contract Holder would have attained age 70
1/2 or such later date as may be allowed
under federal law or regulations.
Alternatively, the spouse may choose to treat
this Contract as his or her own.

If the beneficiary is not the surviving
spouse, all of the Current Value must either
be applied to an Annuity Option within one
calendar year of the Contract Holder's death
or be paid to the beneficiary within 5
calendar years of the Contract Holder's death
(see Part IV).

In no event may payments to any beneficiary
under an Annuity Option extend beyond the
life of the beneficiary or any period certain
greater than the beneficiary's life
expectancy. If no beneficiary exists, the
payment will be made to the estate of the
Contract Holder.

(h) Surrender Value: After deduction of the
Maintenance Fee, if any, Aetna will reduce
the amount payable upon surrender of any
portion of the Current Value by a Surrender
Fee. The Surrender Fee will be in accordance
with the Surrender Fee table in 6.02.
The Fee on a total surrender of the Contract
will not exceed 8.5% of the actual Purchase
Payment(s) made to the Contract.
Aetna is required by law to report any
surrender to the Internal Revenue Service.
Amounts are reported as fully taxable to the
Contract Holder. Determination of cost basis
from

IP-CDA-IB 37

<PAGE>

5.02 INDIVIDUAL RETIREMENT nondeductible contributions as permitted by
ANNUITY (IRA); the Code shall be the responsibility of the
PENSION PLAN Contract Holder.
(CONT'D):
If a lump sum payment is elected in lieu of an
Annuity Option, it must be paid no later than
the April 1 of the calendar year following
the year in which the Contract Holder turns
age 70 1/2 or such later date as may be
allowed under federal law or regulations.

The Contract Holder or beneficiary must
notify Aetna in writing when a lump sum
payment or Annuity payments are to commence.

If the Contract Holder does not request
commencement of benefits as described above,
Aetna will not be responsible for compliance
with the Code Section 401 (a)(9) minimum
distribution requirements and for any adverse
tax consequences that may result.

(i) Limitation on Contributions: The Purchase
Payment(s) must be in cash and the total of
such contributions cannot exceed $2,000 for
any individual for any taxable year.

Exceptions to the dollar maximum are:

(1) Rollover contribution as permitted by
Code Sections 402(a)(5), 402(a)(7),
403(a)(4); and

(2) An employer contribution made according
to the terms of a Simplified Employee
Pension Plan as described in Code
Section 408(k).

Contributions that exceed limitations may
either be refunded to the Contract Holder or
applied to the following calendar year's
contribution, as permitted by the Code.
Aetna assumes no responsibility for tax
consequences that may result from excess
contributions that are not refunded to the
Contract Holder.

(j) Reports: Aetna, as issuer of this Simplified
Employee Pension or Individual Retirement
Annuity Contract, will make any reports
required by federal law.

(k) Minimum Distribution Requirements

(1) General Requirement: Notwithstanding
any provision of this Contract to the
contrary, the distribution of the
Contract Holder's Current Value shall be
made in accordance with the minimum
distribution requirements of section 408
(a)(6) or section 408 (b)(3) of the Code
and the regulations thereunder,
including the incidental death benefit
provisions of section 1.401 (a)(9)-2 of
the proposed regulations, all of which
are herein incorporated by reference.

(2) Minimum Payments to Contract Holder:
The Contract Holder's entire Current
Value in the Contract must be
distributed, or begin to be distributed,
by the Contract Holder's required
beginning date, which is the April 1

IP-CDA-IB 38

<PAGE>

5.02 INDIVIDUAL RETIREMENT following the calendar year in which the
ANNUITY (IRA); Contract Holder turns age 70 1/2. For
SIMPLIFIED EMPLOYEE each succeeding year, a distribution
PENSION PLAN must be made on or before December 31.
(CONT'D): By the required beginning date, the
Contract Holder may elect to have the
balance under the Contract distributed
in one of the following forms according
to the terms of the Contract:

(a) a lump sum payment;

(b) equal or substantially equal
payments over the life of the
Contract Holder;

(d) equal or substantially equal
payments over a specified period
that may not be longer than the
Contract Holder's life expectancy;

(e) equal or substantially equal
payments over a specified period
that may not be longer than the
joint life and last survivor
expectancy of the Contract Holder
and his or her designated
beneficiary.

(3) Minimum Death Benefits: If the Contract
Holder dies before his or her entire
Current Value is distributed, the entire
remaining balance will be distributed as
follows:

(i) by December 31st of the year
containing the fifth
anniversary of the Contract
Holder's death; or

(ii) in equal or substantially
equal payments over the life
or life expectancy of the
designated beneficiary or
beneficiaries starting by
December 31st of the year
following the year of the
Contract Holder's death. If,
however, the beneficiary is
the Contract Holder's
surviving spouse, then this
distribution is not required
to begin before December 31st
of the year in which the
Contract Holder would have
turned 70 1/2.

IP-CDA-IB 39

<PAGE>

5.02 INDIVIDUAL RETIREMENT (4) Life Expectancies: Unless an Annuity
ANNUITY (IRA); Option has been elected by the Contract
SIMPLIFIED EMPLOYEE Holder prior to the commencement of
PENSION PLAN distributions in accordance with
(CONT'D): paragraph 2 above (or, if applicable, by
the surviving spouse where the Contract
Holder dies before distributions have
commenced), or unless a Systematic
Withdrawal Option has been elected by
the Contract Holder, life expectancies
of the Contract Holder or spouse
beneficiary shall be recalculated
annually for purposes of distributions
under paragraphs 2 and 3 above. An
election not to recalculate shall be
irrevocable and shall apply to all
subsequent years. The life expectancy
of a non-spouse beneficiary shall not be
recalculated.

(5) Multiple IRAs: An individual may
satisfy the minimum distribution
requirements under sections 408 (a)(6)
and 408 (b)(3) of the Code by receiving
a distribution from one IRA that is
equal to the amount required to satisfy
the minimum distribution requirements
for two or more IRAs. For this purpose,
the Contract Holder of two or more IRAs
may use the "alternative method"
described in Notice 88-38, 1988-1 C.B.
524, to satisfy the minimum distribution
requirements described above.

IP-CDA-IB 40

<PAGE>

VI. FEE SCHEDULE
PENSION OR PROFIT SHARING PLAN
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $30.

COMPLETED CONTRACT YEARS SURRENDER FEE
Less than 5 years 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
10 or more years 0%

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(d) As a transfer to another Pension/Profit
Sharing or Individual Retirement Annuity
Contract offered by Aetna Life Insurance and
Annuity Company.

6.03 TABLE OF MINIMUM The values in the following Table only apply to
VALUES -- FIXED Annual Purchase Payments of exactly $1,000
ACCOUNT: credited to the Fixed Account. Values would
be different for other Purchase Payment amounts,
if partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed
Interest Rate -- Fixed Account (see 3.02).

The Surrender Value assumes that a Purchase
Payment of exactly $1,000 is credited to the Fixed
Account at the Guaranteed Interest Rate at the
beginning of each Contract Year. The Maintenance
Fee and applicable Surrender Fee are deducted.

IMPDP-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,010 $ 960 16 $ 22,043 $ 22,043
2 2,060 1,957 17 23,934 23,934
3 3,153 2,995 18 25,902 25,902
4 4,289 4,074 19 27,948 27,948
5 5,470 5,252 20 30,076 30,076
6 6,699 6,431 25 42,062 42,062
7 7,977 7,738
8 9,306 9,027 30 56,646 56,646
9 10,689 10,475
10 12,126 12,126 35 74,389 74,389
11 13,621 13,621 40 95,976 95,976
12 15,176 15,176
13 16,793 16,793 45 122,240 122,240
14 18,475 18,475
15 20,224 20,224 50 154,194 154,194
- -------------------------------------------------------------------------------------------------------------
</TABLE>

IMPDP-IB 42

<PAGE>

VI. FEE SCHEDULE
PENSION OR PROFIT SHARING PLAN
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $30.

6.02 SURRENDER FEE: For each surrender, the Surrender Fee will be
determined according to the number of completed
Contract Years between the date the first Net
Purchase Payment(s) is applied to the Contract and
the date of surrender. The Fee on a total
surrender of the Contract will not exceed 8.5% of
the actual Purchase Payment(s) made to the
Contract. The Surrender Fee will be determined as
follows:

COMPLETED CONTRACT YEARS SURRENDER FEE

Less than 5 years 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
10 or more years 0%

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months.

(d) Due to an election of a Distribution Option;
or

(e) As a transfer to another Pension/Profit
Sharing or Individual Retirement Annuity
Contract offered by Aetna Life Insurance and
Annuity Company.

6.03 TABLE OF MINIMUM The values in the following Table only apply to
VALUES -- FIXED Annual Purchase Payments of exactly $1,000
ACCOUNT: credited to the Fixed Account. Values would be
different for other Purchase Payment amounts, if
partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed
Interest Rate -- Fixed Account (see 3.02).

IMPDP-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT
<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,010 $ 960 16 $ 22,043 $ 22,043
2 2,060 1,957 17 23,934 23,934
3 3,153 2,995 18 25,902 25,902
4 4,289 4,074 19 27,948 27,948
5 5,470 5,252 20 30,076 30,076
6 6,699 6,431 25 42,062 42,062
7 7,977 7,738
8 9,306 9,027 30 56,646 56,646
9 10,689 10,475
10 12,126 12,126 35 74,389 74,389
11 13,621 13,621 40 95,976 95,976
12 15,176 15,176
13 16,793 16,793 45 122,240 122,240
14 18,475 18,475
15 20,224 20,224 50 154,194 154,194
- -------------------------------------------------------------------------------------------------------------
</TABLE>

IMPDP-IB 42

<PAGE>

VI. FEE SCHEDULE
QUALIFIED INDIVIDUAL DEFERRED ANNUITY
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $0 if the initial
Purchase Payment is $10,000 or greater. The
Maintenance Fee will be $25 if the initial
Purchase Payment is less than $10,000.

6.02 SURRENDER FEE: For each surrender, within the first Contract Year
the Surrender Fee will be 1% (one percent) of the
Current Value. For all subsequent years, the
Surrender Fee will be 0% (zero percent).

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months.

(d) Due to an election of a Distribution Option;
or

6.03 TABLE OF MINIMUM The values in the following Table only apply to
VALUES -- FIXED one Purchase Payment of exactly $1,500 credited
ACCOUNT: to the Fixed Account. Values would be different
for other Purchase Payment amounts, if partial
surrenders are made, or if Aetna adds interest at
a rate greater than the Guaranteed Interest Rate
-- Fixed Account (see 3.02).

The Surrender Value assumes that a Purchase
Payment of exactly $1,500 is credited to the Fixed
Account at the Guaranteed Interest Rate at the
beginning of the first Contract Year. The
Maintenance Fee and applicable first year
Surrender Fee are deducted.

ISQIDA-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,500 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,535 $ 1,520 16 $ 2,264 $ 2,264
2 1,571 1,571 17 2,329 2,329
3 1,609 1,609 18 2,398 2,398
4 1,649 1,649 19 2,468 2,468
5 1,690 1,690 20 2,542 2,542
6 1,732 1,732 25 2,958 2,958
7 1,776 1,776
8 1,822 1,822 30 3,463 3,463
9 1,870 1,870
10 1,920 1,920 35 4,078 4,078
11 1,972 1,972 40 4,826 4,826
12 2,026 2,026
13 2,082 2,082 45 5,736 5,736
14 2,140 2,140
15 2,201 2,201 50 6,843 6,843
- -------------------------------------------------------------------------------------------------------------

</TABLE>

ISQIDA-IB 42

<PAGE>

VI. FEE SCHEDULE
PENSION OR PROFIT SHARING PLAN AND QUALIFIED INDIVIDUAL DEFERRED ANNUITY
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $0 if the initial
Purchase Payment is $10,000 or greater. The
Maintenance Fee will be $25 if the initial
Purchase Payment is less than $10,000.

6.02 SURRENDER FEE: For each surrender, the Surrender Fee will be
determined according to the number of completed
Contract Years between the date the first Net
Purchase Payment(s) is applied to the Contract or
if applicable to any Aetna Predecessor Contract,
and the date of surrender. The Surrender Fee will
be determined as follows:

COMPLETED CONTRACT YEARS SURRENDER FEE
Less than 5 years 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more but less than 8 2%
8 or more but less than 9 1%
9 or more years 0%

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months.

(d) Due to an election of a Distribution Option;
or

ISPDQIDA-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,500 OF NET PURCHASE PAYMENT
ALLOCATED TO THE FIXED ACCOUNT

- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,535 $ 1,458 16 $ 2,264 $ 2,264
2 1,571 1,493 17 2,329 2,329
3 1,609 1,529 18 2,398 2,398
4 1,649 1,566 19 2,468 2,468
5 1,690 1,622 20 2,542 2,542
6 1,732 1,680 25 2,958 2,958
7 1,776 1,741
8 1,822 1,804 30 3,463 3,463
9 1,870 1,870
10 1,920 1,920 35 4,078 4,078
11 1,972 1,972 40 4,826 4,826
12 2,026 2,026
13 2,082 2,082 45 5,736 5,736
14 2,140 2,140
15 2,201 2,201 50 6,843 6,843
- -------------------------------------------------------------------------------------------------------------
</TABLE>

ISPDQIDA-IB 42

<PAGE>

VI. FEE SCHEDULE
INDIVIDUAL RETIREMENT ANNUITY (IRA) AND SIMPLIFIED EMPLOYEE PENSION PLAN
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $20.

COMPLETED CONTRACT YEARS SURRENDER FEE

Less than 5 years 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
10 or more years 0%

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months.

(d) Due to an election of a Distribution Option;
or

6.03 TABLE OF MINIMUM The values in the following Table only apply to
VALUES -- FIXED Annual Purchase Payments of exactly $1,000
ACCOUNT: credited to the Fixed Account. Values would be
different for other Purchase Payment amounts, if
partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed
Interest Rate -- Fixed Account (see 3.02).

IMPDSEP-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,020 $ 969 16 $ 22,261 $ 22,261
2 2,081 1,977 17 24,171 24,171
3 3,184 3,025 18 26,158 26,158
4 4,331 4,115 19 28,224 28,224
5 5,524 5,304 20 30,373 30,373
6 6,765 6,495 25 42,478 42,478
7 8,056 7,815
8 9,398 9,117 30 57,206 57,206
9 10,794 10,579
10 12,246 12,246 35 75,124 75,124
11 13,756 13,756 40 96,925 96,925
12 15,326 15,326
13 16,959 16,959 45 123,448 123,448
14 18,658 18,658
15 20,424 20,424 50 155,719 155,719
- -------------------------------------------------------------------------------------------------------------

</TABLE>

IMPDSEP-IB 42

<PAGE>

VI. FEE SCHEDULE
INDIVIDUAL RETIREMENT ANNUITY (IRA) AND SIMPLIFIED EMPLOYEE PENSION PLAN
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $0 if the initial
Purchase Payment is $10,000 or greater. The
Maintenance Fee will be $25 if the initial
Purchase Payment is less than $10,000.

COMPLETED CONTRACT YEARS SURRENDER FEE
Less than 2 years 6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more years 0%

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months.

(d) Due to an election of a Distribution Option;
or

6.03 TABLE OF MINIMUM The values in the following Table only apply to
VALUES -- FIXED Annual Purchase Payments of exactly $1,000
ACCOUNT: credited to the Fixed Account. Values would be
different for other Purchase Payment amounts, if
partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed
Interest Rate -- Fixed Account (see 3.02).

IMSIRA-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,015 $ 954 16 $ 22,152 $ 22,152
2 2,071 1,967 17 24,053 24,053
3 3,168 3,042 18 26,030 26,030
4 4,310 4,181 19 28,086 28,086
5 5,498 5,388 20 30,225 30,225
6 6,732 6,665 25 42,271 42,271
7 8,017 8,017
8 9,352 9,352 30 56,926 56,926
9 10,742 10,742
10 12,186 12,186 35 74,757 74,757
11 13,689 13,689 40 96,451 96,451
12 15,251 15,251
13 16,876 16,876 45 122,845 122,845
14 18,566 18,566
15 20,324 20,324 50 154,957 154,957
- -------------------------------------------------------------------------------------------------------------
</TABLE>

IMSIRA-IB 42

<PAGE>

VI. FEE SCHEDULE
INDIVIDUAL RETIREMENT ANNUITY (IRA)
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $0.

COMPLETED CONTRACT YEARS SURRENDER FEE

Less than 2 years 6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more years 0%

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months.

(d) Due to an election of a Distribution Option;
or

6.03 TABLE OF MINIMUM The values in the following Table only apply to
VALUES -- FIXED Annual Purchase Payments of exactly $1,000
ACCOUNT: credited to the Fixed Account. Values would be
different for other Purchase Payment amounts, if
partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed
Interest Rate -- Fixed Account (see 3.02).

The Surrender Value assumes that a Purchase
Payment of exactly $1,000 is credited to the Fixed
Account at the Guaranteed Interest Rate at the
beginning of each Contract Year. The applicable
Surrender Fee is deducted.

IMSEIRA-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,040 $ 978 16 $ 22,698 $ 22,698
2 2,122 2,016 17 24,645 24,645
3 3,246 3,117 18 26,671 26,671
4 4,416 4,284 19 28,778 28,778
5 5,633 5,520 20 30,969 30,969
6 6,898 6,829 25 43,312 43,312
7 8,214 8,214
8 9,583 9,583 30 58,328 58,328
9 11,006 11,006
10 12,486 12,486 35 76,598 76,598
11 14,026 14,026 40 98,827 98,827
12 15,627 15,627
13 17,292 17,292 45 125,871 125,871
14 19,024 19,024
15 20,825 20,825 50 158,774 158,774
- -------------------------------------------------------------------------------------------------------------
</TABLE>

IMSEIRA-IB 42

<PAGE>

VI. FEE SCHEDULE
INDIVIDUAL RETIREMENT ANNUITY (IRA)
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $0 if the initial
Purchase Payment is $10,000 or greater. The
Maintenance Fee will be $25 if the initial
Purchase Payment is less than $10,000.

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months;

(d) Due to an election of a Distribution Option;
or

6.03 TABLE OF MINIMUM The values in the following Table only apply to
VALUES -- FIXED Annual Purchase Payments of exactly $1,000
ACCOUNT: credited to the Fixed Account. Values would be
different for other Purchase Payment amounts, if
partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed
Interest Rate -- Fixed Account (see 3.02).

IROIRA-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,015 $ 1,005 16 $ 22,152 $ 22,152
2 2,071 2,071 17 24,053 24,053
3 3,168 3,168 18 26,030 26,030
4 4,310 4,310 19 28,086 28,086
5 5,498 5,498 20 30,225 30,225
6 6,732 6,732 25 42,271 42,271
7 8,017 8,017
8 9,352 9,352 30 56,926 56,926
9 10,742 10,742
10 12,186 12,186 35 74,757 74,757
11 13,689 13,689 40 96,451 96,451
12 15,251 15,251
13 16,876 16,876 45 122,845 122,845
14 18,566 18,566
15 20,324 20,324 50 154,957 154,957
- -------------------------------------------------------------------------------------------------------------

</TABLE>

IROIRA-IB 42

<PAGE>

VI. FEE SCHEDULE
INDIVIDUAL RETIREMENT ANNUITY (IRA)
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $0.

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months;

(d) Due to an election of a Distribution Option;
or

6.03 TABLE OF MINIMUM The values in the following Table only apply to
VALUES -- FIXED Annual Purchase Payments of exactly $1,000
ACCOUNT: credited to the Fixed Account. Values would be
different for other Purchase Payment amounts, if
partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed
Interest Rate -- Fixed Account (see 3.02).

IROEIRA-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,040 $ 1,030 16 $ 22,698 $ 22,698
2 2,122 2,122 17 24,645 24,645
3 3,246 3,246 18 26,671 26,671
4 4,416 4,416 19 28,778 28,778
5 5,633 5,633 20 30,969 30,969
6 6,898 6,898 25 43,312 43,312
7 8,214 8,214
8 9,583 9,583 30 58,328 58,328
9 11,006 11,006
10 12,486 12,486 35 76,598 76,598
11 14,026 14,026 40 98,827 98,827
12 15,627 15,627
13 17,292 17,292 45 125,871 125,871
14 19,024 19,024
15 20,825 20,825 50 158,774 158,774
- -------------------------------------------------------------------------------------------------------------
</TABLE>

IROEIRA-IB 42

<PAGE>

VI. FEE SCHEDULE
INDIVIDUAL RETIREMENT ANNUITY (IRA) AND SIMPLIFIED EMPLOYEE PENSION PLAN
- --------------------------------------------------------------------------------

6.01 MAINTENANCE FEE: The Maintenance Fee will be $0 if the initial
Purchase Payment is $10,000 or greater. The
Maintenance Fee will be $25 if the initial
Purchase Payment is less than $10,000.

6.02 SURRENDER FEE: For each surrender, the Surrender Fee will be
determined according to the number of completed
Contract Years between the date the first Net
Purchase Payment(s) is applied to any predecessor
Contract and the date of surrender. The Surrender
Fee will be determined as follows:

COMPLETED CONTRACT YEARS SURRENDER FEE
Less than 5 years 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more but less than 8 2%
8 or more but less than 9 1%
9 or more years 0%

No Surrender Fee is deducted from any portion of
the Current Value which is paid:

(a) At the death of the Annuitant before Annuity
payments start;

(b) As a premium for an Annuity under this
Contract;

(c) For a full surrender where the Current Value
is equal to $2,500 or less and no surrenders
have been taken from the Contract within the
prior 12 months.

(d) Due to an election of a Distribution Option;
or

6.03 TABLE OF MINIMUM The values in the following Table only apply to
VALUES -- FIXED Annual Purchase Payments of exactly $1,000
ACCOUNT: credited to the Fixed Account. Values would be
different for other Purchase Payment amounts, if
partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed
Interest Rate -- Fixed Account (see 3.02).

IROPIRA-IB 41

<PAGE>

TABLE OF MINIMUM FIXED ACCOUNT VALUES
PER $1,000 OF NET PURCHASE PAYMENTS
ALLOCATED TO THE FIXED ACCOUNT

- -------------------------------------------------------------------------------------------------------------
END OF MINIMUM MINIMUM END OF MINIMUM MINIMUM
YEAR CURRENT VALUE SURRENDER VALUE YEAR CURRENT VALUE SURRENDER VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,015 $ 954 16 $ 22,152 $ 22,152
2 2,071 1,967 17 24,053 24,053
3 3,168 3,010 18 26,030 26,030
4 4,310 4,095 19 28,086 28,086
5 5,498 5,278 20 30,225 30,225
6 6,732 6,530 25 42,271 42,271
7 8,017 7,856
8 9,352 9,259 30 56,926 56,926
9 10,742 10,742
10 12,186 12,186 35 74,757 74,757
11 13,689 13,689 40 96,451 96,451
12 15,251 15,251
13 16,876 16,876 45 122,845 122,845
14 18,566 18,566
15 20,324 20,324 50 154,957 154,957
- -------------------------------------------------------------------------------------------------------------
</TABLE>

IROPIRA-IB 42

<PAGE>

[LOGO]

AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06158
(800)531-4547

Individual Variable, Fixed or Combination Contract
Nonparticipating

ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT.

IP-CDA-IB

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors of Aetna Life Insurance and Annuity Company
and Contract Owners of Aetna Variable Annuity Account C:

We consent to the use of our reports dated February 6, 1996 and February 16,
1996 included herein and to the references to our Firm under the captions
"Condensed Financial Information" in the Prospectus and "Independent Auditors"
in the Statement of Additional Information.

Our report dated February 6, 1996 refers to a change in 1993 in the Company's
method of accounting for certain investments in debt and equity securities.

KPMG Peat Marwick LLP

Hartford, Connecticut
April 12, 1996

<PAGE>
Exhibit 10.2

Susan E. Bryant
Counsel
Law & Regulatory Affairs, RE4C
151 Farmington Avenue
Hartford, CT 06156
(860) 273-7834
Fax: (860) 273-8340

April 12, 1996

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Attention: Filing Desk

Re: Variable Annuity Account C of Aetna Life Insurance and Annuity
Company Post-Effective Amendment No. 4 to the Registration
Statement on Form N-4
File Nos. 33-75988 and 811-2513
-------------------------------

Gentlemen:

As Counsel of Aetna Life Insurance and Annuity Company (the "Company"), I
hereby consent to the use of my opinion dated February 28, 1996 (incorporated
herein by reference to the 24f-2 Notice for the fiscal year ended December
31, 1995 filed on behalf of Variable Annuity Account C of Aetna Life
Insurance and Annuity Company on February 29, 1996) as an exhibit to this
Post-Effective Amendment No. 4 to the Registration Statement on Form N-4
(File No. 33-75988) and to my being named under the caption "Legal Matters"
therein.

Very truly yours,

/s/ Susan E. Bryant

Susan E. Bryant
Counsel
Aetna Life Insurance and Annuity Company

<PAGE>
<ARTICLE> 6

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 6,038,034,475
<INVESTMENTS-AT-VALUE> 6,632,117,659
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,632,117,659
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 6,632,117,659
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6,632,117,659
<DIVIDEND-INCOME> 730,430,612
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (71,090,542)
<NET-INVESTMENT-INCOME> 659,340,070
<REALIZED-GAINS-CURRENT> 160,673,967
<APPREC-INCREASE-CURRENT> 520,603,951
<NET-CHANGE-FROM-OPS> 1,340,617,988
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,769,805,868
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>