<PAGE>
As filed with the Securities and Exchange Registration No. 33-91846*
COMMISSION ON APRIL 15, 1996 REGISTRATION NO. 811-2513
- ---------------------------- -------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
POST-EFFECTIVE AMENDMENT NO. 3 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment To
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Variable Annuity Account 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 a prospectus relating
to the securities covered by the following earlier Registration Statement:
33-75976.
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form N-4
Item No. Part A (Prospectus) Location
- -------- ------------------- --------
<S> <C> <C>
1 Cover Page Cover Page
2 Definitions Definitions
3 Synopsis 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>
<TABLE>
<CAPTION>
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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Prospectus describes group deferred variable annuity contracts
("Contracts") issued by Aetna Life Insurance and Annuity Company (the
"Company"). The Contracts are designed to fund plans that provide retirement
income for employees of state or municipal institutions of higher education. The
Contracts are available through participation in retirement programs which
receive favorable tax deferred treatment under Federal income tax law. (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 Overseas Portfolio
- - Aetna Income Shares - Franklin Government Securities Trust
- - Aetna Variable Encore Fund - Janus Aspen Aggressive Growth
- - Aetna Investment Advisers Fund, Inc. Portfolio
- - Aetna Ascent Variable Portfolio - Janus Aspen Balanced Portfolio
- - Aetna Crossroads Variable Portfolio - Janus Aspen Flexible Income
- - Aetna Legacy Variable Portfolio Portfolio
- - Alger American Growth Portfolio - Janus Aspen Growth Portfolio
- - Alger American Small Cap Portfolio - Janus Aspen Short-Term Bond
- - Calvert Responsibly Invested Balanced Portfolio
Portfolio - Janus Aspen Worldwide Growth
- - Fidelity VIP II Contrafund Portfolio Portfolio
- - Fidelity VIP Equity-Income Portfolio - Lexington Natural Resources Trust
- - Fidelity VIP Growth Portfolio - Neuberger & Berman Growth 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 Accumulation Account and the Fixed Plus Account. 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. 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, under all Contracts, or under all Plans.
Please check with your employer to determine option availability. (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 15 of this Prospectus. An
SAI may be obtained by indicating the request on the enrollment form or on the
prospectus receipt contained in this Prospectus, 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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.................................... 4
PURCHASE......................................................... 4
Contract Availability........................................ 4
Purchasing Interests in the Contract......................... 4
Rights Under the Contract.................................... 4
Right to Cancel.............................................. 4
CHARGES AND DEDUCTIONS........................................... 5
Daily Deductions from the Separate Account................... 5
Mortality and Expense Risk Charge............................ 5
Asset-Based Sales Charge..................................... 5
Administrative Expense Charge................................ 5
Fund Expenses................................................ 5
Premium and Other Taxes...................................... 5
CONTRACT VALUATION............................................... 6
Account Value................................................ 6
Accumulation Units........................................... 6
Net Investment Factor........................................ 6
TRANSFERS........................................................ 6
Dollar Cost Averaging Program................................ 6
WITHDRAWALS...................................................... 7
Reinvestment Privilege....................................... 7
CONTRACT LOANS................................................... 7
ADDITIONAL WITHDRAWAL OPTIONS.................................... 8
DEATH BENEFIT DURING ACCUMULATION PERIOD......................... 8
ANNUITY PERIOD................................................... 9
Annuity Period Elections..................................... 9
Annuity Options.............................................. 9
Duration of 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...................................... 11
Contracts Used with Certain Retirement Plans................. 11
</TABLE>
<PAGE>
<TABLE>
<S> <C>
MISCELLANEOUS.................................................... 14
Distribution................................................. 14
Delay or Suspension of Payments.............................. 14
Performance Reporting........................................ 14
Voting Rights................................................ 15
Changes in Beneficiary Designations.......................... 15
Modification of the Contract................................. 15
Legal Matters and Proceedings................................ 15
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.............. 15
APPENDIX I--GUARANTEED ACCUMULATION ACCOUNT...................... 16
APPENDIX II--FIXED PLUS ACCOUNT.................................. 17
</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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following terms are defined as they are used in this Prospectus:
ACCOUNT: A record which identifies contract values accumulated on behalf of each
Participant during the Accumulation Period. One or more Employee Accounts and
Employer Accounts may be established for each Participant.
ACCOUNT VALUE: The total dollar value of amounts held in an Account as of each
Valuation Date during the Accumulation Period.
ACCOUNT YEAR: A period of twelve months measured from the date on which an
Account is established (the effective date) or from an anniversary of such
effective date.
ACCUMULATION PERIOD: The period during which Purchase Payment(s) credited to an
Account are invested to fund future annuity payments.
ACCUMULATION UNIT: A measure of the value of each Subaccount before annuity
payments begin.
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(s) entitled to receive any death benefit upon the
death of the Participant.
CODE: Internal Revenue Code of 1986, as amended.
COMPANY (WE, US): Aetna Life Insurance and Annuity Company.
CONTRACT: The group deferred variable annuity contracts offered by this
Prospectus.
CONTRACT HOLDER: The entity to whom the Contract is issued. The Contract Holder
is usually the employer.
CREDITED INTEREST OPTIONS: The fixed interest options under the Contract. The
Credited Interest Options currently consist of the Guaranteed Accumulation
Account and the Fixed Plus Account, each of which is described in an Appendix to
this Prospectus. Amounts allocated to the Credited Interest Options are included
in the Account Value.
EMPLOYEE ACCOUNT: An account that is credited with payments derived from
employee salary reduction or salary deduction contributions (as provided for by
the Plan) and remitted to the Company by the employer on behalf of each
Participant.
EMPLOYER ACCOUNT: An account that is credited with net Purchase Payments made by
the Contract Holder.
SECTION 403(B) CONTRACT: A contract that accepts Purchase Payments made pursuant
to Code Section 403(b) and transferred funds attributable to Code Section
403(b).
SECTION 401(A) CONTRACT: A Contract that accepts Purchase Payments made pursuant
to Code Section 401(a) and transferred funds attributable to Section 401(a)
contributions. Section 401(a) Contracts issued to some Plans may also accept
Purchase Payments made pursuant to Code Section 414(h) and transferred funds
attributable to Section 414(h).
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.
- --------------------------------------------------------------------------------
DEFINITIONS - 1
<PAGE>
LOAN ACCOUNT: An account established for record keeping purposes and credited
with the amount of any loan.
PARTICIPANT (YOU): A person participating in a Plan maintained by an eligible
organization.
PLAN(S): Tax-deferred retirement plans adopted by public higher education
systems for their employees under Section 401(a) or Section 403(b) of the Code.
PURCHASE PAYMENT(S): The gross payment(s) submitted 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.
- --------------------------------------------------------------------------------
DEFINITIONS - 2
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTRACTS OFFERED
The Contracts described in this Prospectus are group deferred variable
annuity contracts issued by Aetna Life Insurance and Annuity Company (the
"Company"). The purpose of the Contract is to accumulate values and to provide
benefits upon retirement. The Contracts are available for state or municipal
institutions of higher education to fund (1) tax-deferred annuity programs under
Section 403(b) of the Code, and/or qualified defined contribution plans under
Section 401(a) of the Code. Section 401 Contracts issued to some Plans may also
accept payments and transferred funds made pursuant to Section 414(h) of the
Code.
CONTRACT PURCHASE
The Contract may be purchased by state or municipal institutions of higher
education on behalf of a group made up of their employees. One or more Contracts
are issued to the Contract Holder once we receive a completed master application
form(s). Eligible employees may participate in the Contract by completing the
enrollment form (and any other required forms) and submitting them to the
Company. Purchase Payments can be applied to the Contract either through a
lump-sum transfer from a pre-existing plan, through periodic salary reduction or
salary deduction (as provided for by the Plan) or through employer
contributions. For each Contract, one or more Employee Accounts will be
established for contributions made by an employee, and an Employer Account may
be established for contributions made by the employer on the employee's behalf.
(See "Purchase.")
FREE LOOK PERIOD
You or the Contract Holder may cancel participation in the Contract within
10 days after you receive the Contract or other document evidencing your
interest in the Contract (or longer if required by state law) by returning it to
the Company along with a written notice of cancellation. Unless state law
requires otherwise, the amount that will be received upon cancellation will
reflect the investment performance of the Subaccounts into which Purchase
Payments were deposited. In some cases this may be more or less than the amount
of Purchase Payments. (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. 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. The fixed options available under the
Contract are the Guaranteed Accumulation Account ("GAA") and the Fixed Plus
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, an asset-based sales charge and an administrative charge), as well as
premium and other taxes. The Funds also incur certain fees and expenses which
are deducted directly from the Funds. (See the Fee Table and "Charges and
Deductions.")
TRANSFERS
Prior to the Annuity Date, and subject to certain limitations, Account
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 the Appendices for a
full description of the restrictions applicable to transfers made from the
Credited Interest Options.) (See "Transfers.")
- --------------------------------------------------------------------------------
SUMMARY - 1
<PAGE>
WITHDRAWALS
All or a part of the Account Value may be withdrawn prior to the Annuity
Date, subject to Plan provisions, by properly completing a disbursement form and
sending it to the Company. Limitations apply to withdrawals from the Fixed Plus
Account. A distribution can be made from the Employer Account and certain
Employee Accounts (as provided by the Plan) only if the Contract Holder
certifies in writing that you are eligible, both as to timing and form of
distribution. The withdrawal will generally be subject to income tax and may be
subject to a federal tax penalty. The Code restricts full and partial
withdrawals in some circumstances. (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.")
LOANS
If allowed by the Plan, Participants may request a loan from their Account
Value during the Accumulation Period. (See "Contract Loans.")
DEATH BENEFIT
A death benefit is payable if the Participant dies before the Annuity Date.
Death benefit proceeds will be paid to the Beneficiary. Until the election of a
method of payment, the Account 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 the 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. For
the Employer Account and certain Employee Accounts, the Contract Holder must
provide written certification that the distribution is in accordance with the
terms of the Plan. (See "Rights Under the Contract.") Annuity Payments can be
made on either a fixed, variable or combination fixed and variable basis. If you
choose a variable payout, 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 and a 20% withholding for income tax 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 06156-1277
Attention: Customer Service
- Call Customer Service: 1-800-525-4225 (for automated transfers or changes
in the allocation of Account Values, call:
1-800-262-3862)
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY - 2
<PAGE>
FEE TABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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." The charges and
expenses shown below do not include premium taxes that may be applicable. For
more information regarding the expenses paid out of the assets of a particular
Fund, see the Fund's prospectus.
CHARGES AGAINST THE SEPARATE ACCOUNT. Each Subaccount pays these expenses out of
its assets. The charges are reflected in the Subaccount's daily Accumulation
Unit Value and are not charged directly to an Account. They include:
<TABLE>
<S> <C>
MORTALITY AND EXPENSE RISK CHARGE..................................... 1.25%
ASSET-BASED SALES CHARGE. We will monitor the deductions applicable to
each Account.......................................................... 0.15%
for the total sales charges to ensure they will never exceed 8.5% of
the total Purchase
Payments actually made to the Account. The sales charges apply during
the
Accumulation Period only.
ADMINISTRATIVE EXPENSE CHARGE. We currently do not impose an
Administrative Expense................................................ 0.00%
Charge. However, we reserve the right to deduct a daily charge of not
more than
0.25% per year from the Subaccounts.
TOTAL SEPARATE ACCOUNT CHARGES...................................... 1.40%
---------
---------
</TABLE>
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 the Account Value under the Contract. (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
ADVISORY
FEES(1) OTHER EXPENSES TOTAL FUND
(AFTER EXPENSE (AFTER EXPENSE ANNUAL
REIMBURSEMENT) REIMBURSEMENT) EXPENSES
-------------- -------------- -----------
Aetna Variable Fund(2) 0.25% 0.06% 0.31%
<S> <C> <C> <C>
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%
Calvert Responsibly Invested Balanced Portfolio(3) 0.70% 0.13% 0.83%
Fidelity VIP II Contrafund Portfolio(4) 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%
Franklin Government Securities Trust(5) 0.63% 0.13% 0.76%
Janus Aspen Aggressive Growth Portfolio(6) 0.75% 0.11% 0.86%
Janus Aspen Balanced Portfolio(6) 0.82% 0.55% 1.37%
Janus Aspen Flexible Income Portfolio 0.65% 0.42% 1.07%
Janus Aspen Growth Portfolio(6) 0.65% 0.13% 0.78%
Janus Aspen Short-Term Bond Portfolio(6) 0.00% 0.70% 0.70%
</TABLE>
- --------------------------------------------------------------------------------
FEE TABLE - 1
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY
FEES(1) OTHER EXPENSES TOTAL FUND
(AFTER EXPENSE (AFTER EXPENSE ANNUAL
REIMBURSEMENT) REIMBURSEMENT) EXPENSES
-------------- -------------- -----------
<S> <C> <C> <C>
Janus Aspen Worldwide Growth Portfolio(6) 0.68% 0.22% 0.90%
Lexington Natural Resources Trust 1.00% 0.47% 1.47%
Neuberger & Berman Growth Portfolio(7) 0.84% 0.10% 0.94%
Scudder International Portfolio Class A Shares 0.88% 0.20% 1.08%
TCI Growth(8) 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)The Management and Advisory Fees are subject to a performance adjustment,
after July 1, 1996, which could cause the fee to be as high as 0.85% or as
low as 0.55%, depending on performance. "Other Expenses" reflect an indirect
fee of 0.02%. Net fund operating expenses after reduction for fees paid
indirectly would be 0.81%.
(4) 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.
(5)An expense reimbursement arrangement was in effect until February 1, 1996;
however, it is no longer in effect. The Advisory Fee and Total Annual
Expenses shown above reflect the actual expenses of the Fund before
reimbursement, as if such arrangement had not been in effect during 1995.
(6)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
Portfolio Operating 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.
(7)Neuberger and Berman Advisers Management Trust (the "Trust") is divided into
portfolios ("Portfolios"), each of which invests all of its net investment
assets in a corresponding series ("Series") of Advisers Management Trust.
Expenses in the table reflect expenses of the Portfolio and include the
Portfolio's pro rata portion of the operating expenses of the Portfolio's
corresponding Series. The Portfolio pays Neuberger & Berman Management Inc.
("NBMI") an administration fee based on the Portfolio's net asset value. The
corresponding Series of the Portfolio pays NBMI a management fee based on the
Series' average daily net assets. Accordingly, this table combines management
fees at the Series level and administration fees at the Portfolio level in a
unified fee rate. (See "Expenses" in the Trust's prospectus.)
(8) 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.
- --------------------------------------------------------------------------------
FEE TABLE - 2
<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.
Whether or not you withdraw or if you annuitize your Account, assuming a 5%
annual return on assets, you would have paid the following expenses on a $1,000
investment at the end of the applicable time period:
<TABLE>
<CAPTION>
3
1 YEAR YEARS 5 YEARS 10 YEARS
------ ------ ------- --------
<S> <C> <C> <C> <C>
Aetna Variable Fund $17 $54 $ 93 $202
Aetna Income Shares $18 $54 $ 94 $204
Aetna Variable Encore Fund $18 $55 $ 95 $206
Aetna Investment Advisers Fund, Inc. $18 $54 $ 94 $204
Aetna Ascent Variable Portfolio $21 $64 $110 $238
Aetna Crossroads Variable Portfolio $21 $64 $110 $238
Aetna Legacy Variable Portfolio $21 $64 $110 $238
Alger American Growth Portfolio $23 $70 $120 $258
Alger American Small Cap Portfolio $24 $72 $124 $266
Calvert Responsibly Invested Balanced Portfolio $23 $70 $119 $256
Fidelity VIP II Contrafund Portfolio $22 $66 $114 $245
Fidelity VIP Equity-Income Portfolio $20 $63 $108 $234
Fidelity VIP Growth Portfolio $21 $66 $113 $243
Fidelity VIP Overseas Portfolio $23 $72 $124 $265
Franklin Government Securities Trust $22 $68 $116 $249
Janus Aspen Aggressive Growth Portfolio $23 $71 $121 $260
Janus Aspen Balanced Portfolio $28 $86 $146 $310
Janus Aspen Flexible Income Portfolio $25 $77 $132 $281
Janus Aspen Growth Portfolio $22 $68 $117 $251
Janus Aspen Short-Term Bond Portfolio $21 $66 $113 $243
Janus Aspen Worldwide Growth Portfolio $23 $72 $123 $264
Lexington Natural Resources Trust $29 $89 $151 $320
Neuberger & Berman Growth Portfolio $24 $73 $125 $268
Scudder International Portfolio Class A Shares $25 $77 $132 $282
TCI Growth $24 $75 $128 $274
</TABLE>
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FEE TABLE - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE YEARS IN THE
FOUR-YEAR PERIOD 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 1993 1992
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $10.823 $11.083 $10.531 $10.000(2)
Value at end of period $14.113 $10.823 $11.083 $10.531
Increase (decrease) in value of accumulation unit(1) 30.40% (2.35)% 5.24% 5.31%
Number of accumulation units outstanding at end of period 121,691 77,511 37,807 3,948
AETNA INCOME SHARES
Value at beginning of period $10.536 $11.107 $10.271 $10.000(2)
Value at end of period $12.283 $10.536 $11.107 $10.271
Increase (decrease) in value of accumulation unit(1) 16.59% (5.14)% 8.14% 2.71%
Number of accumulation units outstanding at end of period 20,427 14,482 4,936 416
AETNA VARIABLE ENCORE FUND
Value at beginning of period $10.523 $10.252 $10.076 $10.000(2)
Value at end of period $11.003 $10.523 $10.252 $10.076
Increase (decrease) in value of accumulation unit(1) 4.57% 2.64% 1.75% 0.76%
Number of accumulation units outstanding at end of period 19,202 12,934 3,066 547
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $10.900 $11.109 $10.253 $10.000(2)
Value at end of period $13.693 $10.900 $11.109 $10.253
Increase (decrease) in value of accumulation unit(1) 25.62% (1.88)% 8.35% 2.53%
Number of accumulation units outstanding at end of period 19,038 11,773 6,540 221
AETNA ASCENT VARIABLE PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $10.666
Increase (decrease) in value of accumulation unit(1) 6.66%
Number of accumulation units outstanding at end of period 202
AETNA CROSSROADS VARIABLE PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $10.605
Increase (decrease) in value of accumulation unit(1) 6.05%
Number of accumulation units outstanding at end of period 243
AETNA LEGACY VARIABLE PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $10.573
Increase (decrease) in value of accumulation unit(1) 5.73%
Number of accumulation units outstanding at end of period 0
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $10.365
Increase (decrease) in value of accumulation unit(1) 3.65%
Number of accumulation units outstanding at end of period 7,966
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 1
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993 1992
--------- --------- --------- ---------
ALGER AMERICAN SMALL CAP PORTFOLIO
<S> <C> <C> <C> <C>
Value at beginning of period $ 9.461 $10.000 $10.000(3)
Value at end of period $13.463 $ 9.461 $10.000
Increase (decrease) in value of accumulation unit(1) 42.29% (5.39)% 0.00%
Number of accumulation units outstanding at end of period 31,528 4,575 2
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
Value at beginning of period $10.839 $11.352 $10.589 $10.000(2)
Value at end of period $13.870 $10.839 $11.352 $10.589
Increase (decrease) in value of accumulation unit(1) 27.96% (4.52)% 7.21% 5.89%
Number of accumulation units outstanding at end of period 14,656 8,469 2,383 125
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $10.461
Increase (decrease) in value of accumulation unit(1) 4.61%
Number of accumulation units outstanding at end of period 6,415
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $11.047
Increase (decrease) in value of accumulation unit(1) 10.47%
Number of accumulation units outstanding at end of period 1,108
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $10.183
Increase (decrease) in value of accumulation unit(1) 1.83%
Number of accumulation units outstanding at end of period 2,541
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $ 9.954
Increase (decrease) in value of accumulation unit(1) (0.46)%
Number of accumulation units outstanding at end of period 191
FRANKLIN GOVERNMENT SECURITIES TRUST
Value at beginning of period $10.294 $10.843 $10.214 $10.000(2)
Value at end of period $11.946 $10.294 $10.843 $10.214
Increase (decrease) in value of accumulation unit(1) 16.06% (5.06)% 6.16% 2.14%
Number of accumulation units outstanding at end of period 16,226 10,738 4,409 470
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $10.577 $10.000(4)
Value at end of period $13.296 $10.577
Increase (decrease) in value of accumulation unit(1) 25.71% 5.77%
Number of accumulation units outstanding at end of period 15,482 820
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $10.843
Increase (decrease) in value of accumulation unit(1) 8.43%
Number of accumulation units outstanding at end of period 160
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $10,000(7) $10.000
Value at end of period $12.054 $10.000
Increase (decrease) in value of accumulation unit(1) 20.54% 0.00%
Number of accumulation units outstanding at end of period 745 0
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 2
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993 1992
--------- --------- --------- ---------
JANUS ASPEN GROWTH PORTFOLIO
<S> <C> <C> <C> <C>
Value at beginning of period $10.000(6)
Value at end of period $10.872
Increase (decrease) in value of accumulation unit(1) 8.72%
Number of accumulation units outstanding at end of period 166
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period $10.000(6)
Value at end of period $10.316
Increase (decrease) in value of accumulation unit(1) 3.16%
Number of accumulation units outstanding at end of period 24
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $10.000(8)
Value at end of period $10.952
Increase (decrease) in value of accumulation unit(1) 9.52%
Number of accumulation units outstanding at end of period 11,128
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $10.496 $11.261 $10.196 $10.000(2)
Value at end of period $12.095 $10.496 $11.261 $10.196
Increase (decrease) in value of accumulation unit(1) 15.24% (6.79)% 10.45% 1.96%
Number of accumulation units outstanding at end of period 8,348 7,350 2,438 165
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period $11.055 $11.796 $10.927 $10.000(2)
Value at end of period $14.359 $11.055 $11.796 $10.927
Increase (decrease) in value of accumulation unit(1) 29.89% (6.28)% 7.95% 9.27%
Number of accumulation units outstanding at end of period 35,941 21,935 7,403 477
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES
Value at beginning of period $12.595 $12.883 $ 9.539 $10.000(2)
Value at end of period $13.799 $12.595 $12.883 $ 9.539
Increase (decrease) in value of accumulation unit(1) 9.56% (2.24)% 35.06% (4.81)%
Number of accumulation units outstanding at end of period 38,067 22,036 4,560 281
TCI GROWTH
Value at beginning of period $11.740 $12.046 $10.000(5)
Value at end of period $15.176 $11.740 $12.046
Increase (decrease) in value of accumulation unit(1) 29.27% (2.54)% 20.46%
Number of accumulation units outstanding at end of period 24,826 15,078 4,104
</TABLE>
(1) The above figures are calculated by subtracting the beginning Accumulation
Unit value from the ending Accumulation Unit value during a calendar year,
and dividing the result by the beginning Accumulation Unit value.
(2) The initial Accumulation Unit value was established at $10.000 on July 20,
1992.
(3) The initial Accumulation Unit value was established at $10.000 on September
17, 1993, the date on which the Portfolio became available under the
Contract.
(4) The initial Accumulation Unit value was established at $10.000 during
October 1994, when funds were first received in this option.
(5) The initial Accumulation Unit value was established at $10.000 on February
1, 1993.
(6) 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.
(7) Reflects less than a full year of performance activity. Funds were first
available in this option during March 1995.
(8) 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.
- --------------------------------------------------------------------------------
AUV HISTORY - 3
<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 arising out 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 our other income, gains or losses. All obligations arising under the
Contracts are our general corporate obligations.
INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUNDS
Purchase Payments may be allocated to one or more of the Subaccounts as
designated on the enrollment form. In turn, the Subaccounts invest in the
corresponding Funds at net asset value.
The Contract Holder may decide to offer only a select number of Funds under
its Plan, or it may decide to substitute shares of one Fund for shares of
another Fund currently held by the Separate Account. 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, or under all Plans.
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)
- --------------------------------------------------------------------------------
1
<PAGE>
- -AETNA INVESTMENT ADVISERS FUND, INC. is a managed fund which seeks to maximize
investment return consistent with reasonable safety of principal by investing
in one or more of the following asset classes: stocks, bonds and cash
equivalents based on the Company's judgment of which of those sectors or mix
thereof offers the best investment prospects.(1)
- -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 such securities, have total market
capitalization within the range of companies included in the Russell 2000
Growth Index, updated quarterly. The Russell 2000 Growth Index is designed to
track the performance of small capitalization companies. At March 31, 1996, the
range of market capitalization of these companies was $20 million to $3.0
billion.(2)
- -CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO is a NONDIVERSIFIED portfolio
that seeks growth of capital through investment in enterprises that make a
significant contribution to society through their products and services and
through the way they do business.(3)
- -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.(4)
- -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.(4)
- -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.(4)
- -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).(4)
- -FRANKLIN GOVERNMENT SECURITIES TRUST seeks income through investments in
obligations of the U.S. Government or its agencies or instrumentalities,
primarily GNMA obligations.(5)
- -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.(6)
- -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%
- --------------------------------------------------------------------------------
2
<PAGE>
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.(6)
- -JANUS ASPEN SERIES--FLEXIBLE INCOME PORTFOLIO seeks to obtain maximum total
return, consistent with preservation of capital. Total return is expected to
result from a combination of current income and capital appreciation. The
Portfolio invests in all types of income producing securities and may have
substantial holdings of debt securities rated below investment grade (e.g.,
junk bonds).(6)
- -JANUS ASPEN SERIES--GROWTH PORTFOLIO seeks long-term growth of capital in a
manner consistent with the preservation of capital. The Portfolio pursues its
investment objective by investing in common stocks of companies of any size.(6)
- -JANUS ASPEN SERIES--SHORT-TERM BOND PORTFOLIO seeks as high a level of current
income as is consistent with preservation of capital. The Portfolio pursues its
investment objective by investing primarily in short-and intermediate-term
fixed income securities.(6)
- -JANUS ASPEN SERIES--WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of
capital in a manner consistent with preservation of capital. The Portfolio
pursues its investment objective primarily through investments in common stocks
of foreign and domestic issuers.(6)
- -LEXINGTON NATURAL RESOURCES TRUST is a NONDIVERSIFIED portfolio that seeks
long-term growth of capital through investment primarily in common stocks of
companies which own or develop natural resources and other basic commodities or
supply goods and services to such companies.(7)
- -NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST-- GROWTH PORTFOLIO seeks capital
appreciation without regard to income. The Portfolio pursues its investment
objective by investing in common stocks, often of companies that may be
temporarily out of favor in the market.(8)
- -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.(9)
- -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.(10)
Investment Advisers for each of the Funds:
(1) Aetna Life Insurance and Annuity Company
(2) Fred Alger Management, Inc.
(3) Calvert Asset Management Company, Inc.
(4) Fidelity Management & Research Company
(5) Franklin Advisers, Inc.
(6) Janus Capital Corporation
(7) Lexington Management Corporation (adviser); Market Systems Research
Advisors, Inc. (subadviser)
(8) Neuberger & Berman Management Incorporated
(9) Scudder, Stevens & Clark, Inc.
(10) 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 or sponsored 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
- --------------------------------------------------------------------------------
3
<PAGE>
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 Contract Holder may
elect not to offer all Credited Interest Options under its Plan.
- - 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 the GAA for the full guaranteed term to receive
the quoted interest rates, or a market value adjustment (which may be positive
or negative) will be applied. (See Appendix I.)
- - The Fixed Plus 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. Withdrawals and transfers
from the Fixed Plus Account are limited. (See Appendix II.)
PURCHASE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTRACT AVAILABILITY
The Contracts are designed to fund Plans adopted by state or municipal
institutions of higher education for their employees. The Plans may be (1)
tax-deferred annuity programs under Section 403(b) of the Code, and/or (2)
qualified defined contribution plans under Section 401(a) and 414(h) of the
Code.
Eligible participants in the Plan seeking to invest and accumulate money for
retirement can purchase individual interests in group Contracts. The group
Contract is generally owned by the employer, and individual accounts are
established for each Participant. For each Contract, one or more Employee
Accounts will be established for contributions derived from employee salary
reduction, and an Employer Account may be established for contributions made by
the employer on the employee's behalf.
PURCHASING INTERESTS IN THE CONTRACT
Eligible organizations may acquire both types (403(b) and 401(a)) of group
Contracts for its Plans(s) by submitting the appropriate master application
form(s) to the Company. Once we approve the application, a group Contract is
generally issued to the employer as the group Contract Holder. Participants may
purchase interests in a group Contract by submitting an enrollment form to the
Company.
The Company must accept or reject the enrollment form within two business
days of receipt. If the enrollment materials are 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
Participant, or under limited circumstances, with the consent of the Contract
Holder pending acceptance of the form. If we agree to hold Purchase Payments for
longer than the five business days based on the consent of the Contract Holder,
the Purchase Payments will be deposited in the Aetna Variable Encore Fund
Subaccount until the forms are completed.
Purchase Payments will initially be allocated to the Subaccounts or Credited
Interest Options as specified by the Participant on the enrollment form. 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.") The Code imposes a maximum limit on annual Purchase Payments which
may be excluded from a Participant's gross income. (See "Tax Status.")
RIGHTS UNDER THE CONTRACT
You have a nonforfeitable right to the value of your Employee Account. You
have a nonforfeitable right to the value of your Employer Account to the extent
of your vested percentage under the Plan as interpreted by the Contract Holder.
You may select the investment options for your Employer Account and your
Employee Account. You may elect an Annuity option for your Account Value;
however, for your Employer and certain Employee Accounts (as provided in the
Plan), the Contract Holder must certify that you are eligible for a distribution
and that the form of Annuity is permitted under the terms of the Plan.
RIGHT TO CANCEL
The Contract or participation under the Contract may be canceled without
penalty by returning it (or other document evidencing your interest) to the
Company with a written notice of intent to cancel. In most states, you have ten
days to exercise this right; some states allow you a
- --------------------------------------------------------------------------------
4
<PAGE>
longer free-look period. When we receive the request for cancellation, we will
return the Account Value, unless the laws of the state in which the Contract was
issued require that we return the initial Purchase Payment (if greater than the
Account Value). In states that do not require a return of Purchase Payments, the
purchaser bears the entire investment risk for amounts allocated among the
Subaccounts during the free look period. Account Values will be determined as of
the Valuation Date on which we receive the request for cancellation at our Home
Office.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAILY DEDUCTIONS FROM THE SEPARATE ACCOUNT
MORTALITY AND EXPENSE RISK CHARGE. The Company makes a daily deduction from
each of the Subaccounts for the mortality and expense risk charge. The charge is
equal, on an annual basis, to 1.25% of the daily net assets of the Subaccounts
and compensates the Company for the assumption of the mortality and expense
risks under the Contract. The mortality risks are those assumed for our promise
to make lifetime payments according to annuity rates specified in the Contract.
The expense risk is the risk that the actual expenses for costs incurred under
the Contract will exceed the maximum costs that can be charged under the
Contract.
If the amount deducted for mortality and expense risks is not sufficient to
cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess may be used to
recover distribution expenses relating to the Contracts and as a source of
profit to the Company. The Company expects to make a profit from the mortality
and expense risk charge.
ASSET-BASED SALES CHARGE. There are no deductions from Purchase Payments
for sales commissions or related expenses. Sales commissions and expenses are
advanced by the Company and recovered out of an asset-based sales charge that is
deducted from the Account in an amount that equals 0.15% on an annual basis. The
deduction is made from amounts held in the Subaccounts during the Accumulation
Period only. We will monitor each Account to ensure that the total sales charges
will never exceed 8.5% of the total Purchase Payments actually made to the
Account.
If the asset-based sales charges are insufficient to recover sales
commissions, such commissions would be recovered out of the Company's profits
from investment activities, including the mortality and expense risk charges
under the Contract. For sales commissions paid in connection with the sale of
the Contracts, see "Distribution."
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
of an amount equal, on an annual basis, to a maximum of 0.25% of the daily net
assets of the Subaccounts. There is currently no administrative 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.
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 Account Values, 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.")
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CONTRACT VALUATION
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ACCOUNT VALUE
Until the Annuity Date, the Account Value is the total dollar value of
amounts held in your Account as of any Valuation Date. The Account Value at any
given time is based on the value of the units held in each Subaccount, plus the
value of amounts held in any of the Credited Interest Options.
ACCUMULATION UNITS
The value of your interests in a Subaccount is expressed as the number of
"Accumulation Units" that you hold multiplied by an "Accumulation Unit Value"
(or "AUV") for each unit. The AUV on any Valuation Date is determined by
multiplying the value on the immediately preceding Valuation Date by the net
investment factor of that Subaccount for the period between the immediately
preceding Valuation Date and the current Valuation Date. (See "Net Investment
Factor" below.) The Accumulation Unit Value will be affected by the investment
performance, expenses and charges of the applicable Fund and is reduced each day
by a percentage that accounts for the daily assessment of mortality and expense
risk charges, the asset-based sales charge and the administrative expense charge
(if any).
Initial Purchase Payments will be credited to your Account as described
under "Purchasing Interests in the Contract." Each subsequent Purchase Payment
(or amount transferred) will be credited to your Account at the AUV computed on
the next Valuation Date following our receipt of your payment or transfer
request. The value of an Accumulation Unit may increase or decrease.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment performance of a
Subaccount from one Valuation Date to the next. The net investment factor for a
Subaccount for any valuation period is equal to the sum of 1.0000 plus the net
investment rate. The net investment rate equals:
(a) the net assets of the Fund held by the Subaccount on the current Valuation
Date, minus
(b) the net assets of the Fund held by the Subaccount on the preceding Valuation
Date, plus or minus
(c) taxes or provisions for taxes, if any, attributable to the operation of the
Subaccount;
(d) divided by the total value of the Subaccount's Accumulation and Annuity
Units on the preceding Valuation Date;
(e) minus a daily charge at the annual effective rate of 1.25% for mortality and
expense risks, 0.15% for asset-based sales charges (during the Accumulation
Period only), and up to 0.25% as an administrative expense charge (currently
0%).
The gross investment rate may be either positive or negative.
TRANSFERS
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At any time prior to the Annuity Date, you can transfer amounts held under
your Account from one Subaccount to another. Transfers between the Credited
Interest Options and the Subaccounts are subject to certain restrictions. (See
Appendices I and II.) 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 and your Plan, as applicable.
The Company currently allows unlimited transfers of accumulated amounts to
available investment options without charge. However, the total number of
investment options that you may select during the Accumulation Period may be
limited, as set forth on your enrollment form. The minimum transfer amount is
$500. 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
You may establish automated transfers of Account Values on a monthly or
quarterly basis through the Company's Dollar Cost Averaging Program. Dollar Cost
Averaging is a system for investing a fixed amount of
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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.
WITHDRAWALS
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All or a portion of the Account Value may be withdrawn at any time during
the Accumulation Period, subject to the withdrawal restrictions under Section
403(b) Contracts described below, and subject to limitations on withdrawals from
the Fixed Plus Account. The Contract may require that the Contract Holder
certify in writing that you are eligible both as to the timing and form of
distribution. 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 AN ACCOUNT: The amount paid for a full withdrawal will be
the Account Value allocated to the Subaccounts and the Guaranteed Accumulation
Account (plus or minus a market value adjustment) (see Appendix I), plus the
amount available for withdrawal from the Fixed Plus Account (see Appendix II).
- -PARTIAL WITHDRAWALS (Percentage or Specified Dollar Amount): The amount paid
will be the percentage of the Account Value or the dollar amount requested;
however, the amount available for withdrawal from the Fixed Plus Account is
limited (see Appendix II).
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
Account Values 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. A 20% federal income tax may be withheld from amounts paid directly
to you. (See "Tax Status-- Contracts Used with Certain Retirement Plans.")
WITHDRAWAL RESTRICTIONS FROM 403(B) PLANS. Under Section 403(b) Contracts, a
withdrawal of salary reduction contributions and earnings on such contributions
is generally prohibited prior to your death, disability, attainment of age
59 1/2, separation from service or financial hardship. (See "Tax Status.")
REINVESTMENT PRIVILEGE
You may elect to reinvest all or a portion of the proceeds received from a
full withdrawal of your Account within 30 days after such withdrawal has been
made. Accumulation Units will be credited to the Account for the amount
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 Account 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. See
Appendix I for a discussion of amounts withdrawn from GAA and then reinvested.
If you are contemplating reinvestment, you should seek competent advice
regarding the tax consequences associated with such a transaction.
CONTRACT LOANS
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If allowed by the Plan, Participants may request a loan from their Account
Value during the Accumulation Period. Loans can only be made from those Account
Values held in the Subaccounts or from those Credited Interest Options that
allow loans. (See Appendices I and II.) A loan may be obtained by reviewing and
reading the terms of your loan agreement, properly completing a loan request
form and submitting it to the Company's Home Office.
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ADDITIONAL WITHDRAWAL OPTIONS
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The Company offers certain withdrawal options under the Contract that are
not considered annuity options ("Additional Withdrawal Options"). To exercise
these options, your Account Value must meet the minimum dollar amounts and age
criteria applicable to that option. In addition, for Employer and certain
Employee Accounts, the Contract Holder must provide written certification that
the distribution is in accordance with the terms of the Plan. 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 Account based on a payment method you select. It is designed for those who
want a periodic income while retaining investment flexibility for amounts
accumulated under a Contract. (This option may not be elected if you have an
outstanding contract loan.)
- -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 or retirement, if later, for
governmental plans, and pays you that amount once a year. (See "Tax Status.")
Other Additional Withdrawal Options may be added from time to time.
Additional information relating to any of the Additional Withdrawal Options may
be obtained from your local representative or from the Company at its Home
Office.
If you select one of the Additional Withdrawal Options, you will retain all
of the rights and flexibility permitted under the Contract during the
Accumulation Period. Your Account Value will continue to be subject to the
charges and deductions described in this Prospectus.
Once you elect an Additional Withdrawal Option, you may revoke it any time
by submitting a written request to our Home Office. Once an option is revoked,
it may not be elected again, 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
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The Contract provides that a death benefit is payable to the
Beneficiary(ies) upon the death of the Participant before the Annuity Date. If a
lump-sum distribution or an Annuity Option is elected within six months of the
Participant's death, a guaranteed death benefit is provided. For each Account,
the death benefit is guaranteed to be the greater of:
(a) the Account Value, plus any positive aggregate Market Value Adjustment (MVA)
that applies to amounts allocated to the Guaranteed Accumulation Account
(GAA), on the day the death notice and request for payment are received in
good order at our Home Office; or
(b) the sum of the net Purchase Payments made to each Account, minus the total
of all withdrawals or annuitizations made from the Account and any amount
allocated to the Loan Account.
If a full or partial withdrawal is made within six months after your death,
the Beneficiary will receive the Account Value, plus any positive MVA that would
apply to any portion of the Account allocated to GAA. If a lump-sum distribution
is elected six months or more after your death, the Beneficiary will receive the
Account Value, plus or minus any MVA that would apply to any portion of the
Account allocated to GAA. The value of the Account is determined as of the
Valuation Date on which proof of death acceptable to us and a request for
payment are received at our Home Office.
Death benefit proceeds may be paid to the Beneficiary:
- - in a lump sum; or
- - in accordance with any of the Annuity Options available under the Contract.
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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 Account Value invested in the Contract; or
- - to leave the Account 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 Account 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 and request for payment.
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 of the Beneficiary or any specified 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 Account
Value must begin by April 1st of the calendar year following the calendar year
in which a Participant attains age 70 1/2 (or retires, if later, for
governmental plans). 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, 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.)
For the Employer and certain Employee Accounts, the Contract Holder must
provide written certification that the distribution is in accordance with the
terms of the Plan. (See "Rights Under the Contract.")
Annuity Payments will not begin until you have selected an Annuity Date and
an Annuity Option. Until a date and option are elected the Account will continue
in the Accumulation Period. If your Plan is subject to ERISA, you must also
submit the appropriate joint and survivor annuity waiver and spousal consent
form(s) to us. Until a date and option are elected, the Account 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:
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LIFETIME ANNUITY OPTIONS:
- -OPTION 1--Life Annuity--An annuity with payments ending on the Participant'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 Lives of Two Annuitants--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 Participant 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. Under some
Contracts, for amounts held in the Fixed Plus Account, the annuity must be paid
on a fixed basis. (See Appendix II-- "Transfers Among Investment Options" to
determine if this applies to your Contract.)
If a nonlifetime 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 a
portion of the remaining variable payments be paid in one sum. 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, the 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.
DURATION OF ANNUITY PAYMENTS
Annuity payments may not extend beyond (a) the life of the Participant, (b)
the joint lives of the Participant and Beneficiary, (c) a specified period
greater than the Participant's life expectancy, or (d) a period certain greater
than the joint life expectancies of the Participant and Beneficiary.
AMOUNT OF EACH ANNUITY PAYMENT. The amount of each payment depends on how
you allocate your Account Value between fixed and variable payouts. No election
may be made that would result in the first Annuity payment of less than $20, or
total yearly Annuity payments of less than $100. If your Account 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.)
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CHARGES DEDUCTED DURING THE ANNUITY PERIOD
We make a daily deduction for mortality and expense risks and 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 a Participant 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 Participant 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
Participant 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 may be paid in a lump-sum
to the Beneficiary (unless otherwise requested).
If the Participant dies after Annuity payments have begun and if there is a
death benefit payable under the Annuity option elected, the remaining value must
be distributed to the Beneficiary at least as rapidly as under the original
method of distribution.
Any lump-sum payment paid under the applicable lifetime or nonlifetime
Annuity options will be made within seven calendar days after acceptable proof
of death, and a request for payment are received at our Home Office. The value
of any death benefit proceeds will be determined as of the next Valuation Date
after we receive acceptable proof of death and a request for payment. Under
Options 2 and 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, Participant or Beneficiary may depend upon the
tax status of the individual concerned. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under the Code. Since the
Separate Account is not an entity separate from the Company, it will not be
taxed separately as a "regulated investment company" under the Code. Investment
income and realized capital gains are automatically applied to increase reserves
under the Contracts. Under existing federal income tax law, the Company believes
that the Separate Account investment income and realized net capital gains will
not be taxed to the extent that such income and gains are applied to increase
the reserves under the Contracts.
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 Section 403(b) plans and
Section 401(a) plans. The tax rules applicable to 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
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the various types of retirement plans. Participants as well as Beneficiaries are
cautioned that the rights of any person to any benefits under the Contracts may
be subject to the terms and conditions of the plans themselves, in addition to
the terms and conditions of the Contracts issued in connection with such 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 relating to the Contracts satisfy applicable laws, and should
consult their legal counsel and tax adviser regarding the suitability of the
Contract.
MINIMUM DISTRIBUTION REQUIREMENTS. The Code has required distribution rules
for Section 403(b) and 401(a) Plans. Under 403(b) Plans, distributions of
amounts held as of December 31, 1986 must generally begin by the end of the
calendar year in which you attain age 75 (or retire, if later, for governmental
or church plans). However, special rules require that some or all of that
balance be distributed earlier if any distributions are taken in excess of the
minimum required amount. Distributions under 401(a) Plans, and distributions
attributable to contributions under Section 403(b) Plans on or after January 1,
1987 (including any earnings on the entire Account Value after that date), must
generally begin by April 1 of the calendar year following the calendar year in
which you attain age 70 1/2. For governmental or church plans, distributions
must begin by April 1 of the calendar year following the year you attain age
70 1/2 or retire, whichever occurs later.
In general, annuity payments must be distributed over your life or the joint
lives of you and your beneficiary, or over a period not greater than your life
expectancy or the joint life expectancies of you and your beneficiary.
If you die after the required minimum distribution has commenced,
distributions to your beneficiary must be made at least as rapidly as under the
method of distribution in effect at the time of your death. However, if the
minimum required distribution is calculated each year based on your single life
expectancy or the joint life expectancies of you and your beneficiary, the
regulations for Code Section 401(a)(9) provide specific rules for calculating
the minimum required distributions at your death. For example, if you have
elected ECO with the calculation based on your single life expectancy, and the
life expectancy is recalculated each year, your recalculated life expectancy
becomes zero in the calendar year following your death and the entire remaining
interest must be distributed to your beneficiary by December 31 of the year
following your death. However, a spousal beneficiary has certain rollover rights
which can only be exercised in the year of your death. The rules are complex and
you should consult your tax adviser before electing the method of calculation to
satisfy the minimum distribution requirements.
If you die before the required minimum distribution has commenced, your
entire interest must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of your death. Alternatively,
payments may be made over the life of the beneficiary or over a period not
extending beyond the life expectancy of the beneficiary provided the
distribution begins by December 31 of the calendar year following the calendar
year of your death, or December 31 of the calendar year in which you would have
attained age 70 1/2.
If you fail to receive the minimum required distribution for any tax year, a
50% excise tax is imposed on the required amount that was not distributed.
TAXATION OF DISTRIBUTIONS. All distributions will be taxed as they are
received unless you made a rollover contribution of the distribution to another
plan of the same type or to an individual retirement annuity/account ("IRA") in
accordance with the Code, or unless you have made after-tax contributions to the
plan, which are not taxed upon distribution. The Code has specific rules that
apply, depending on the type of distribution received, if after-tax
contributions were made.
In general, payments received by your beneficiaries after your death are
taxed in the same manner as if you had received those payments, except that a
limited death benefit exclusion may apply.
Pension and annuity distributions generally are subject to withholding for
the recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients may be provided
the opportunity to elect not to have tax withheld from distributions; however,
certain distributions from annuities are subject to mandatory federal income tax
withholding. We will report to the IRS the taxable portion of all distributions.
The Code imposes a 10% penalty tax on the taxable portion of any
distribution unless made when (a) you have attained age 59 1/2, (b) you have
become disabled, (c) you have died, (d) you have separated from service with the
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plan sponsor at or after age 55, (e) the distribution amount is rolled over into
another plan of the same type or to an IRA in accordance with the terms of the
Code, or (f) the distribution amount is made in substantially equal periodic
payments (at least annually) over your life or life expectancy or the joint
lives or joint life expectancies of you and your plan beneficiary, provided you
have separated from service with the plan sponsor. In addition, the penalty tax
does not apply for the amount of a distribution equal to unreimbursed medical
expenses incurred by you that qualify for deduction as specified in the Code.
The Code may impose other penalty taxes in other circumstances.
SECTION 403(B) PLANS. Under Section 403(b), contributions made by public
school systems and Section 501(c)(3) tax exempt organizations to purchase
annuity contracts for their employees are generally excludable from the gross
income of the employee.
In order to be excludable from taxable income, total annual contributions
made by you and your employer cannot exceed either of two limits set by the
Code. The first limit, under Section 415, is generally the lesser of 25% of your
includable compensation or $30,000. The second limit, which is the exclusion
allowance under Section 403(b), is usually calculated according to a formula
that takes into account your length of employment and any pretax contributions
to certain other retirement plans. These two limits apply to your contributions
as well as to any contributions made by your employer on your behalf. There is
an additional limit that specifically limits your salary reduction contributions
to generally no more than $9,500 annually (subject to indexing); your own limit
may be higher or lower, depending on certain conditions.
Section 403(b)(11) restricts the distribution under Section 403(b) contracts
of: (1) salary reduction contributions made after December 31, 1988; (2)
earnings on those contributions; and (3) earnings during such period on amounts
held as of December 31, 1988. Distribution of those amounts may only occur upon
death of the employee, attainment of age 59 1/2, separation from service,
disability, or financial hardship. In addition, income attributable to salary
reduction contributions may not be distributed in the case of hardship.
If, pursuant to Revenue Ruling 90-24, the Company agrees to accept, under
any of the Contracts covered by this Prospectus, amounts transferred from a Code
Section 403(b)(7) custodial account, such amounts will be subject to the
withdrawal restrictions set forth in Code Section 403(b)(7)(A)(ii).
Generally, no amounts accumulated under the Contract will be taxable prior
to the time of actual distribution. However, the IRS has stated in published
rulings that a variable contract owner, including participants under Section
403(b) plans, will be considered the owner of separate account assets if the
owner possesses incidents of investment control over the assets. In these
circumstances, income and gains from the separate account assets would be
currently includable in the variable contract owner's gross income. The Treasury
announced that guidance would be issued in the future regarding the extent to
which owners could direct their investments among Subaccounts without being
treated as owners of the underlying assets of the Separate Account. It is
possible that the Treasury's position, when announced, may adversely affect the
tax treatment of existing contracts. The Company therefore reserves the right to
modify the Contract as necessary to attempt to prevent the owner from being
considered the federal tax owner of the assets of the Separate Account.
SECTION 401(A) PLANS. Section 401(a) permits certain employers to establish
various types of retirement plans for employees, and permits self-employed
individuals to establish various types of retirement plans for themselves and
for their employees. These retirement plans may permit the purchase of the
Contracts to accumulate retirement savings under the plans. Adverse tax
consequences to the Plan, to the Participant or to both may result if this
Contract is assigned or transferred to any individual except to a Participant as
a means to provide benefit payments.
The Code imposes a maximum limit on annual Purchase Payments that may be
excluded from a Participant's gross income. Such limit must be calculated under
the Plan by the employer in accordance with Section 415 of the Code. This limit
is generally the lesser of 25% of your compensation or $30,000. In addition,
Purchase Payments will be excluded from a Participant's gross income only if the
401(a) Plan meets certain nondiscrimination requirements.
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13
<PAGE>
MISCELLANEOUS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DISTRIBUTION
The Company will serve as the Principal Underwriter for the securities sold
by this Prospectus. The Company is registered as a broker-dealer with the
Securities and Exchange Commission 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
Participants in connection with establishing their Accounts under the 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 an Account. The percentage amount will range from 1%
to 4% of those Purchase Payments. The Company may also pay renewal commissions
on Purchase Payments made after the first year and asset-based 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 Account are
set forth in your enrollment materials. Commissions and sales related expenses
are paid by the Company and are not deducted from Purchase Payments. (See
"Charges and Deductions.")
THIRD PARTY COMPENSATION ARRANGEMENTS. Occasionally, we may pay commissions
and fees to Distributors which are affiliated or associated with the Contract
Holder or the Participants. We may also enter into agreements with some entities
associated with the Contract Holder or Participants in which we would agree to
pay the entity for certain services in connection with administering the
Contracts. In both these circumstances there may be an understanding that the
Distributor or entity would endorse the Company as a provider of the Contract.
You will be notified if you are purchasing a Contract that is subject to these
arrangements.
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, asset-based sales charge
and any administrative expense charge). The non-standardized figures are
computed in the same manner but 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.
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14
<PAGE>
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. Participants may
instruct the Contract Holder how to direct the Company to cast the votes for the
portion of the Account Value or valuation reserve attributable to their
Accounts. 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 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 to which each person may give direction
will be determined as of the record date set by the Fund.
The number of votes each Contract Holder or Participant, or Beneficiary as
applicable, may cast during the Accumulation Period is equal to the portion of
the Account Value 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.
CHANGES IN BENEFICIARY DESIGNATIONS
The designated Beneficiary may be changed at any time prior to the Annuity
Date, subject to limitations contained in the Code and other applicable laws.
Such change will not become effective until written notice of the change is
received by the Company.
MODIFICATION OF THE CONTRACT
The Company may change the Contract as required by federal or state law. In
addition, the Company may, upon 30 days written notice to the Contract Holder,
make other changes to the Contracts that would apply only to individuals who
become Participants under that Contract after the effective date of such
changes. If the Contract Holder does not agree to a change, no new Participants
will be covered under the Contract. 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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:
<TABLE>
<S> <C>
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 the Company
</TABLE>
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15
<PAGE>
APPENDIX I
GUARANTEED ACCUMULATION ACCOUNT
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THE GUARANTEED ACCUMULATION ACCOUNT ("GAA") IS A CREDITED INTEREST OPTION
AVAILABLE DURING THE ACCUMULATION PERIOD UNDER THE CONTRACTS DESCRIBED IN THIS
PROSPECTUS. 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. 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. This option guarantees the minimum interest
rate specified in the Contract.
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 from three to ten years.
Purchase Payments must remain in GAA for the full Guaranteed Term to receive
the quoted interest rates. 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 the Participant 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
federal tax penalties or mandatory income tax withholding.
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.
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
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.
CONTRACT LOANS
Loans may not be made against amounts held in GAA, although such value is
included in determining the Account Value against which a loan may be made.
REINVESTMENT PRIVILEGE
If amounts are withdrawn for GAA and are 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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16
<PAGE>
APPENDIX II (A)
FIXED PLUS ACCOUNT
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THE FOLLOWING SUMMARIZES MATERIAL INFORMATION CONCERNING THE FIXED PLUS ACCOUNT.
AMOUNTS ALLOCATED TO THE FIXED PLUS ACCOUNT ARE HELD IN THE COMPANY'S GENERAL
ACCOUNT THAT SUPPORTS GENERAL INSURANCE AND ANNUITY OBLIGATIONS. INTERESTS IN
THE FIXED PLUS 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 PLUS 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 PLUS ACCOUNT HAS NOT BEEN REVIEWED BY THE SEC.
The Fixed Plus Account guarantees the minimum Fixed Plus interest rate
specified in the Contract. The Company may credit a higher interest rate from
time to time. The current rate is subject to change at any time, but will never
fall below the guaranteed minimum. 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. Under
the Fixed Plus Account, the Company assumes the risk of investment gain or loss
by guaranteeing Account Values and promising a minimum interest rate and Annuity
Payment.
The Fixed Plus Account will reflect a compound interest rate credited by us.
The interest rate quoted is an annual effective yield. Amounts applied to the
Fixed Plus Account will earn the Fixed Plus interest rate in effect when
actually applied to the Fixed Plus Account. We make no deductions from the
credited interest rate for mortality and expense risks; these risks are
considered in determining the credited rate.
Beginning on the tenth Account Year, we will credit amounts held in the
Fixed Plus Account with an interest rate that is at least 0.25% higher than the
then declared interest rate for the Fixed Plus Account for Accounts that have
not reached their tenth anniversary.
Under certain emergency conditions, we may defer payment of a Fixed Account
withdrawal value (a) for a period of up to 6 months; or (b) as provided by
federal law.
The Company reserves the right to limit Purchase Payment(s) and/or transfers
to the Fixed Plus Account.
FIXED PLUS ACCOUNT WITHDRAWALS
The amount eligible for partial withdrawal is 20% of the amount held in the
Fixed Plus Account on the day our Home Office receives a written request,
reduced by any Fixed Plus Account withdrawals, transfers, loans or
annuitizations made in the prior 12 months. In calculating the 20% limit, we
reserve the right to include payments made due to the election of any Additional
Withdrawal Options.
The 20% limit is waived if the partial withdrawal is due to annuitization or
death. The waiver upon death will only be exercised once and must occur within
six months after the Participant's date of death. Any such surrender or
annuitization must also be made pro rata from all Subaccounts and Credited
Interest Options available under the Contract.
If a full withdrawal is requested, we will pay any amounts held in the Fixed
Plus Account, with interest, in five annual payments equal to:
1. One-fifth of the Fixed Plus Account Value on the day the request is
received, reduced by any Fixed Plus Account withdrawals, transfers, loans
or annuitizations made during the prior 12 months;
2. One-fourth of the remaining Fixed Plus Account Value 12 months later;
3. One-third of the remaining Fixed Plus Account Value 12 months later;
4. One-half of the remaining Fixed Plus Account Value 12 months later; and
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17
<PAGE>
5. The balance of the Fixed Plus Account Value 12 months later.
Once we receive a request for a full withdrawal, no further withdrawals,
loans or transfers will be permitted from the Fixed Plus Account. A full
withdrawal from the Fixed Plus Account may be cancelled at any time before the
end of the five-payment period. We will waive the Fixed Plus Account full
withdrawal provision if a full withdrawal is made due to (a) the Participant's
death within 6 months after the Participant's date of death before Annuity
payments begin and request for payment is received; (b) the election of an
Annuity option; or (c) if the Fixed Plus Account value is $3,500 or less and no
withdrawals, transfers, loans or annuitizations have been made from the Account
within the prior 12 months; or (d) the Participant's separation from service
with the employer (if the separation from service is certified by the employer
and the withdrawal request is received within 60 days of the date of
termination), subject to a 3% charge based on the entire Fixed Plus Account
value. If the Participant who separates from service chooses to have the five
annual payments of the Fixed Plus Account withdrawal as described above, then no
charge will be assessed.
TRANSFERS AMONG INVESTMENT OPTIONS
The amount eligible for transfer from the Fixed Plus Account is 20% of the
amount held in the Fixed Plus Account on the day we receive a written request,
reduced by any Fixed Plus Account withdrawals, transfers, loans or
annuitizations made during the prior 12 months. In calculating the 20% limit, we
reserve the right to include payments made due to the election of one of the
Additional Withdrawal Options. The 20% limit on transfers will be waived when
the value in the Fixed Plus Account is $1,000 or less.
By notifying us at our Home Office at least 30 days before the Annuity Date,
you may elect to have amounts which have been accumulating under the Fixed Plus
Account transferred to one or more of the Subaccounts available during the
Annuity Period to provide lifetime variable Annuity Payments. For amounts which
have been accumulating under the Fixed Plus Account, a nonlifetime annuity
option may only be elected on a fixed basis.
SWO
The Systematic Withdrawal Option may not be elected if you have requested a
Fixed Plus Account transfer or withdrawal within the prior 12 month period.
CONTRACT LOANS
If permitted under the Plan, loans may be made from Account Values held in
the Fixed Plus Account. See the loan agreement for a description of the amount
available and the consequences upon loan default if more than 20% of the Fixed
Plus Account Value is used for a loan.
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18
<PAGE>
APPENDIX II(B)
FIXED PLUS ACCOUNT
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THE FOLLOWING SUMMARIZES MATERIAL INFORMATION CONCERNING THE FIXED PLUS ACCOUNT.
AMOUNTS ALLOCATED TO THE FIXED PLUS ACCOUNT ARE HELD IN THE COMPANY'S GENERAL
ACCOUNT THAT SUPPORTS GENERAL INSURANCE AND ANNUITY OBLIGATIONS. INTERESTS IN
THE FIXED PLUS 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 PLUS 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 PLUS ACCOUNT HAS NOT BEEN REVIEWED BY THE SEC.
The Fixed Plus Account guarantees that amounts allocated to this option will
earn the minimum interest rate specified in the Contract. We may credit a higher
interest rate from time to time. 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. Under
this option, we assume the risk of investment gain or loss by guaranteeing Net
Purchase Payment values and promising a minimum interest rate and Annuity
payment.
Under certain emergency conditions, we may defer payment of a Fixed Plus
Account withdrawal value (a) for a period of up to 6 months or (b) as provided
by federal law.
During any calendar year, any withdrawals requested from an Account's Fixed
Plus Account value may not exceed 20% of the Account's Fixed Plus Account Value
as of the date the withdrawal request is received in good order at our Home
Office. The withdrawal value will be reduced by any Fixed Plus Account
withdrawal(s), transfer(s) or annuitizations previously made during the calendar
year.
The 20% limit is waived if the partial withdrawal is due to annuitization or
death. The waiver upon death will only be exercised once and must occur within 6
months after the Participant's date of death.
In the event of an complete Account withdrawal, we will pay any Fixed Plus
Account withdrawal value from the Account with interest, in five annual payments
of:
1. One-fifth of the Fixed Plus Account withdrawal value minus any Fixed Plus
Account withdrawal(s), transfer(s) or annuitizations made during the
calendar year;
2. One-fourth of the remaining Fixed Plus Account withdrawal value 12 months
later;
3. One third of the remaining Fixed Plus Account withdrawal value 12 months
later;
4. One-half of the remaining Fixed Plus Account withdrawal value 12 months
later; and
5. The balance of the Fixed Plus Account withdrawal value as the fifth and
final payment 12 months later.
Once we receive notification of an Account termination, no further
withdrawal(s) or transfer(s) will be permitted from the Fixed Plus Account.
We will waive the Fixed Plus Account full surrender provision if a full
withdrawal is made due to:
(a) the Participant's death within 6 months after the Participant's date of
death before Annuity payments begin and request for payment is received;
(b) the election of an Annuity option;
(c) if the Fixed Plus Account value is $3,500 or less (and no withdrawals,
transfers or annuitizations have been made from the Account during the
calendar year), the entire Fixed Plus Account value will be paid in one
sum.
Amounts applied to the Fixed Plus Account will earn the interest rate in
effect when actually applied to the Fixed Plus Account.
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19
<PAGE>
MORTALITY AND EXPENSE RISK CHARGES
The Fixed Plus Account will reflect a compound interest rate credited by us.
The interest rate quoted is an annual effective yield. 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 Plus Account to any other available investment
option(s) are allowed once in each calendar year during the Accumulation Period.
The amount that may be transferred will be up to 20% of the amount held in the
Fixed Plus Account. We will waive the 20% transfer limit when the value in the
Fixed Plus Account is $1,000 or less.
By notifying us at our Home Office at least 30 days before annuity payments
begin, the Contract Holder, on your behalf, may elect to have amounts which have
been accumulating under the Fixed Plus Account transferred to one or more of the
Subaccounts available during the Annuity Period to provide variable annuity
payments under any of the lifetime or nonlifetime Annuity Options.
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20
<PAGE>
FOR MASTER APPLICATIONS ONLY
I HEREBY ACKNOWLEDGE RECEIPT OF AN ACCOUNT C GROUP DEFERRED VARIABLE ANNUITY
PROSPECTUS DATED MAY 1, 1996 FOR OPTIONAL RETIREMENT PROGRAMS, 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.
91846(S)-2) DATED MAY 1, 1996.
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CONTRACT HOLDER'S SIGNATURE
- --------------------------------------------------------------------------------
DATE
91846-2 (5/96)
- --------------------------------------------------------------------------------
<PAGE>
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996
Group Variable Annuity Contracts
for Optional Retirement Programs and Retirement Programs for Higher Education
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
1-800-525-4225
Read the prospectus before you invest. Unless otherwise indicated, terms used
in this Statement of Additional Information shall have the same meaning as in
the prospectus.
TABLE OF CONTENTS
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 . . . . . . . . . . . . . . . . . . . . . . 5
Sales Material and Advertising . . . . . . . . . . . . . . . 6
Independent Auditors . . . . . . . . . . . . . . . . . . . . 7
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, asset-based sales charge
and administrative expense charge, if any, described in the prospectus, all
expenses incurred in the operations of the Separate Account are borne by the
Company. (See "Charges and Deductions" in the prospectus.) The Company
receives reimbursement for certain administrative costs from some
unaffiliated sponsors of the Funds used as funding options under the
Contract. These fees generally range up to 0.25%.
The assets of the Separate Account are held by the Company. The Separate
Account has no custodian. However, the Funds in whose shares the assets of
the Separate Account are invested each have custodians, as discussed in their
respective prospectuses.
VARIABLE ANNUITY ACCOUNT 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, under all
Contracts, or under all Plans. The Funds currently available under the
Contract are as follows:
2
<PAGE>
<TABLE>
<S> <C>
Aetna Variable Fund Fidelity VIP Overseas Portfolio
Aetna Income Shares Franklin Government Securities Trust
Aetna Variable Encore Fund Janus Aspen Aggressive Growth Portfolio
Aetna Investment Advisers Fund, Inc. Janus Aspen Balanced Portfolio
Aetna Ascent Variable Portfolio Janus Aspen Flexible Income Portfolio
Aetna Crossroads Variable Portfolio Janus Aspen Growth Portfolio
Aetna Legacy Variable Portfolio Janus Aspen Short-Term Bond Portfolio
Alger American Growth Portfolio Janus Aspen Worldwide Growth Portfolio
Alger American Small Cap Portfolio Lexington Natural Resources Trust
Calvert Responsibly Invested Balanced Portfolio Neuberger & Berman Growth Portfolio
Fidelity VIP II Contrafund Portfolio Scudder International Portfolio Class A Shares
Fidelity VIP Equity-Income Portfolio TCI Growth
Fidelity VIP Growth Portfolio
</TABLE>
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, is 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 sections titled "Purchase" and "Contract
Valuation."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account available under the
Contracts issued by the Company in connection with Plans described in the
Prospectus. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as "non-standardized
returns", calculated in an identical manner but including additional periods.
The 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,
asset-based sales charges, and administrative expense charges). These
charges will be deducted on a pro rata basis in the case of fractional
periods.
The non-standardized figures use the same formula, but may be computed to
include monthly, quarterly, year-to-date and three-year periods.
3
<PAGE>
If a Fund was in existence prior to the date it became available under the
Contract, standardized and non-standardized total returns may include periods
prior to such date. These figures are calculated by adjusting the actual
returns of the Fund to reflect the charges that would have been assessed
under the Contract had that Fund been available under the Contract during
that period.
Investment results of the Subaccounts will fluctuate over time, and any
presentation of the Subaccounts' total return quotations for any prior period
should not be considered as a representation of how the Subaccounts will
perform in any future period. Additionally, your Account Value upon
redemption may be more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - STANDARDIZED AND NON-STANDARDIZED
The table below reflects the average annual standardized and non-standardized
total return quotation figures for the period ended December 31, 1995 for
each of the Subaccounts available 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>
<CAPTION>
STANDARDIZED NON-STANDARDIZED FUND
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 30.40% 11.83% 12.07% 30.40% 10.25% 11.83% 12.07% 04/30/75
Aetna Income
Shares 16.59% 8.32% 8.35% 16.59% 6.15% 8.32% 8.35% 06/01/78
Aetna Variable
Encore Fund 4.57% 3.24% 4.75% 4.57% 2.98% 3.24% 4.75% 09/01/75
Aetna Investment
Advisers
Fund, Inc. 25.45% 10.29% 9.18%* 25.45% 10.12% 10.29% 9.18%* 06/23/89
Aetna Ascent
Variable
Portfolio 9.73%* n/a n/a 9.73%* n/a n/a n/a 07/03/95
Aetna Crossroads
Variable
Portfolio 8.57%* n/a n/a 8.57%* n/a n/a n/a 07/03/95
Aetna Legacy
Variable
Portfolio 7.61%* n/a n/a 7.61%* n/a n/a n/a 07/03/95
Alger American
Growth Portfolio 34.51% 20.03% 17.77%* 34.51% 17.56% 20.03% 17.77%* 01/08/89
Alger American
Small Cap
Portfolio 42.29% 19.14% 21.06%* 42.29% 14.82% 19.14% 21.06%* 09/21/88
Calvert
Responsibly
Invested
Balanced
Portfolio 27.96% 9.66% 8.53%* 27.96% 9.41% 9.66% 8.53%* 09/30/86
Fidelity VIP
II Contrafund
Portfolio 37.82%* n/a n/a 37.82%* n/a n/a n/a 01/03/95
Fidelity VIP
Equity-Income
Portfolio 33.21% 19.63% 11.81%* 33.21% 17.93% 19.63% 11.81%* 10/22/86
Fidelity VIP
Growth
Portfolio 33.48% 19.09% 13.06%* 33.48% 15.70% 19.09% 13.06%* 11/07/86
Fidelity VIP
Overseas
Portfolio 8.15% 6.61% 5.85%* 8.15% 13.68% 6.61% 5.85%* 02/13/87
Franklin
Government
Securities Trust 16.06% 7.23% 7.72%* 16.06% 5.36% 7.23% 7.72%* 05/30/89
Janus Aspen
Aggressive Growth
Portfolio 25.71% 25.82%* n/a 25.71% 25.82%* n/a n/a 9/13/93
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
STANDARDIZED NON-STANDARDIZED FUND
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>
Janus Aspen
Balanced
Portfolio 23.05% 12.32%* n/a 23.05% 12.32%* n/a n/a 09/13/93
Janus Aspen
Flexible
Income
Portfolio 22.13% 8.13%* n/a 22.13% 8.13%* n/a n/a 09/13/93
Janus Aspen
Growth
Portfolio 28.36% 13.59%* n/a 28.36% 13.59%* n/a n/a 09/13/93
Janus Aspen
Short-Term
Bond Portfolio 8.01% 3.13%* n/a 8.01% 3.13%* n/a n/a 09/13/93
Janus Aspen
Worldwide Growth
Portfolio 25.70% 19.03%* n/a 25.70% 19.03%* n/a n/a 09/13/93
Lexington
Natural
Resources Trust 15.24% 5.20%* n/a 15.24% 5.86% 5.20%* n/a 10/14/91
Neuberger &
Berman Growth
Portfolio 29.89% 12.23% 10.49% 29.89% 9.53% 12.23% 10.49% 12/31/85
Scudder
International
Portfolio Class
A Shares 9.56% 8.52% 7.66%* 9.56% 13.10% 8.52% 7.66%* 04/30/87
TCI Growth 29.27% 14.12% 11.77%* 29.27% 12.44% 14.12% 11.77%* 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.
ANNUITY PAYMENTS
When Annuity payments are to begin, the value of the Account is determined
using Accumulation Unit values as of the tenth Valuation Date before the
first Annuity payment is due. Such value (less any applicable premium tax) is
applied to provide an Annuity in accordance with the Annuity and investment
options elected.
The Annuity option tables found in the Contract show, for each form of
Annuity, the amount of the first Annuity payment for each $1,000 of value
applied. Thereafter, variable Annuity payments fluctuate as the Annuity Unit
value(s) fluctuates with the investment experience of the selected investment
option(s). The first payment and subsequent payments also vary depending on
the assumed net investment rate selected (3.5% or 5% per annum). Selection
of a 5% rate causes a higher first payment, but Annuity payments will
increase thereafter only to the extent that the net investment rate increases
by more than 5% on an annual basis. Annuity payments would decline if the
rate failed to increase by 5%. Use of the 3.5% assumed rate causes a lower
first payment, but subsequent payments would increase more rapidly or decline
more slowly as changes occur in the net investment rate.
When the Annuity Period begins, the Annuitant is credited with a fixed number
of Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where
(a) is the amount of the first Annuity payment based on a particular
investment option, and (b) is the then current Annuity Unit value for that
investment option. As noted, Annuity Unit values fluctuate from one Valuation
Date to the next; such fluctuations reflect changes in the net investment
factor for the appropriate Subaccount(s) (with a ten Valuation Date lag which
gives the Company time to process Annuity payments) and a mathematical
adjustment which offsets the assumed net investment rate of 3.5% or 5% per
annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
5
<PAGE>
EXAMPLE:
Assume that, at the date Annuity payments are to begin, there are 3,000
Accumulation Units credited under a particular Contract or Account and that
the value of an Accumulation Unit for the tenth Valuation 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 in which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be
20.414. The value of this number of Annuity Units will be paid in each
subsequent month.
If the net investment factor with respect to the appropriate 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 in 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.
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
6
<PAGE>
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 or Participants. 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.
7
<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
<TABLE>
<CAPTION>
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
--------- ----- -----
--------- ----- -----
<CAPTION>
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>
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY ACCOUNT C
VARIABLE ANNUITY CONTRACTS
ISSUED BY
AETNA LIFE INSURANCE AND ANNUITY COMPANY
FORM NO. 91846(S)-2 ALIAC ED. MAY 1996
<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 Wholesale Agreement and Related Selling
Agreement(1)
(4.1) Form of Variable Annuity Contract
(4.2) Form of Variable Annuity Contract and Certificate
(G-CDA-95(TORP) and GTCC-95(TORP))
(4.3) Form of Variable Annuity Contract (G-CDA-IB(AORP))
(4.4) Form of Variable Annuity Contract and Certificate
(G-CDA-95(ORP) and GTCC-95(ORP))
(5) Form of Variable Annuity Contract Application (300-MOP-IB)(2)
(6) Certification of Incorporation and By-Laws of Depositor(3)
(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
<PAGE>
Company and Calvert Asset Management Company (Calvert
Responsibly Invested Balanced Portfolio formerly Calvert
Socially Responsible Series) dated March 13, 1989 and amended
December 27, 1993(1)
(8.3) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation (Variable
Insurance Products Fund) dated February 1, 1994 amended March
1, 1996(1)
(8.4) 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)
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Franklin Advisers, Inc. dated January 31,
1989(1)
(8.6) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994 and
amended March 1, 1996(1)
(8.7) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Lexington Management Corporation regarding
Natural Resources Trust dated December 1, 1988 and amended
February 11, 1991(1)
(8.8) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Advisers Management Trust (now Neuberger &
Berman Advisers Management Trust) dated April 14, 1989 and as
assigned and modified on May 1, 1995(1)
(8.9) 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)
(8.10) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and amended December 27,
1992 and June 1, 1994(1)
(9) Opinion of Counsel(4)
(10.1) Consent of Independent Auditors
(10.2) Consent of Counsel
(11) Not applicable
(12) Not applicable
(13) Computation of Performance Data(5)
(14) Not applicable
(15.1) Powers of Attorney(6)
(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 Registration Statement on Form N-4 (File No.
33-91846), as
<PAGE>
filed on May 1, 1995.
3. Incorporated by reference to Post-Effective Amendment No. 58 to
Registration Statement on Form N-4 (File No. 2-52449), as filed
electronically on February 28, 1994.
4. Incorporated by reference to Registrant's 24f-2 Notice for fiscal year
ended December 31, 1995, as filed electronically on February 29, 1996.
5. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-91846), as filed on August 16, 1995.
6. 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 Vice President
Creed R. Terry Director 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.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Incorporated herein by reference to Item 26 of Post-Effective Amendment No.
5 to Registration Statement on Form N-4 (File No. 33-75986) filed on April 12,
1996.
<PAGE>
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 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.
<PAGE>
(b) See Item 25 regarding the Depositor.
(c) Compensation as of December 31, 1995:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commissions Compensation*
- ----------- ---------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Aetna Life $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 as is necessary to ensure that the audited
financial statements in the registration statement are never more than
sixteen months old for as long as payments under the variable annuity
contracts may be accepted;
(b) to include as part of any application to purchase a contract offered
by a prospectus which is part of this registration statement on Form
N-4, a space that an applicant can check to request a Statement of
Additional Information; and
<PAGE>
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
(d) The Company hereby represents that it is relying upon and complies
with the provisions of Paragraphs (1) through (4) of the SEC Staff's
No-Action Letter dated November 22, 1988 with respect to language
concerning withdrawal restrictions applicable to plans established
pursuant to Section 403(b) of the Internal Revenue Code. See American
Counsel of Life Insurance; SEC No-Action Letter, [1989 Transfer
Binder] Fed. SEC. L. Rep. (CCH) PARA 78,904 at 78,523 (November 22,
1988).
(e) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<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. 3 to its Registration Statement on Form N-4 (File No. 33-91846) and has duly
caused this Post-Effective Amendment No. 3 to its Registration Statement on Form
N-4 (File No. 33-91846) 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. 3 to the Registration Statement on Form N-4 (File No. 33-91846)
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Daniel P. Kearney* Director and President )
- --------------------- (principal executive officer) )
Daniel P. Kearney )
)
Timothy A. Holt* Director, Senior Vice President and Chief Financial )
- --------------------- Officer )
Timothy A. Holt )
)
Eugene M. Trovato* Vice President and Treasurer, Corporate Controller ) April
- --------------------- ) 12, 1996
Eugene M. Trovato )
)
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
By: /s/ Julie E. Rockmore
-------------------------------
Julie E. Rockmore
*Attorney-in-Fact
</TABLE>
<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 Form of Broker-Dealer Agreement *
99-B.4.1 Form of Variable Annuity Contract (G-CDA-IB(ATORP))
99-B.4.2 Form of Variable Annuity Contract and Certificate
(G-CDA-95(TORP)) and (GTCC-95(TORP))
99-B.4.3 Form of Variable Annuity Contract (G-CDA-1B (AORP))
99-B.4.4 Form of Variable Annuity Contract and Certificate
(G-CDA-95(ORP) and GTCC-95(ORP))
99-B.5 Form of Variable Annuity Contract Application (300- *
MOP-IB)
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.
dated March 31, 1995
99-B.8.2 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Calvert Asset
Management Company (Calvert Responsibly Invested
Balanced Portfolio formerly Calvert Socially
Responsible Series) dated March 13, 1989 and amended
December 27, 1993
99-B.8.3 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Franklin Advisers,
Inc. dated January 31, 1989
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.8.4 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.8.5 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.8.6 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Janus Aspen Series
dated April 19, 1994 and amended March 1, 1996
99-B.8.7 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Lexington Management
Corporation regarding Natural Resources Trust dated
December 1, 1988 and amended February 11, 1991
99-B.8.8 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Advisers Management
Trust (now Neuberger & Berman Advisers Management
Trust) dated April 14, 1989 and as assigned and
modified on May 1, 1995
99-B.8.9 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.8.10 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company, Investors Research
Corporation and TCI Portfolios, Inc. dated July 29,
1992 and amended December 27, 1992 and June 1, 1994
99-B.9 Opinion of Counsel *
99-B.10.1 Consent of Independent Auditors
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.10.2 Consent of Counsel ____
99-B.13 Computation of Performance Data *
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule ____
*Incorporated by reference
<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
OPTIONAL RETIREMENT PROGRAM (ORP)
- --------------------------------------------------------------------------------
Type of Plan
ORP subject to IRC Section 403(b)
- --------------------------------------------------------------------------------
Contract Holder
STATE UNIVERSITY SYSTEM
- --------------------------------------------------------------------------------
Contract No.
SPECIMEN
- --------------------------------------------------------------------------------
Effective Date
JANUARY 4, 1993
- --------------------------------------------------------------------------------
This Contract is Delivered in YOUR STATE and is Subject to
the Laws of that Jurisdiction
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN PARTS III AND IV.
RIGHT TO CANCEL
- --------------------------------------------------------------------------------
The Contract Holder may cancel this Contract within 10 days of receiving it by
returning this Contract along with a written notice to Aetna at the above
address or to the agent from whom it was purchased. Within 7 days after it
receives the notice of cancellation and this Contract at its Home Office, Aetna
will return the entire consideration paid 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/ Thomas L. West /s/ George N. Gingold
Thomas L. West George N. Gingold
Senior Vice President, Annuity Secretary
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
FORM NO. G-CDA-IB (ATORP)
<PAGE>
SPECIFICATIONS
- --------------------------------------------------------------------------------
GUARANTEED There is a guaranteed interest rate for Purchase Payments(s)
INTEREST RATE held in the Fixed Account. (See 3.05) and the GA Account.
(See 3.04(d)).
- --------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense risks and
THE SEPARATE administrative fees. (See 3.08 and 4.06.)
ACCOUNT
- --------------------------------------------------------------------------------
DEDUCTION 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.
2
<PAGE>
TABLE OF CONTENTS
I. GENERAL DEFINITIONS
- ---------------------------------------------------------------------------
PAGE
1.01 Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.02 Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.03 Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.04 Fixed Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.05 Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.06 General Account . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.07 Guaranteed Accumulation Account (GA Account). . . . . . . . . . . . . .5
1.08 Matured Term Value. . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.09 Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.10 Nonunitized Separate Account. . . . . . . . . . . . . . . . . . . . . .5
1.11 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.12 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.13 Purchase Payment(s) . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.14 Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.15 Valuation Period (Period) . . . . . . . . . . . . . . . . . . . . . . .6
1.16 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. . . . . . . . . . . . . . . . . . . . . . .8
2.08 Misstatements and Adjustments . . . . . . . . . . . . . . . . . . . . .8
2.09 Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
2.10 Grace Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
2.11 Individual Certificates . . . . . . . . . . . . . . . . . . . . . . . .8
3
<PAGE>
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
- --------------------------------------------------------------------------
PAGE
3.01 Net Purchase Payment(s) . . . . . . . . . . . . . . . . . . . . . . . .8
3.02 Individual Account(s) . . . . . . . . . . . . . . . . . . . . . . . . .8
3.03 Limitation on Contributions . . . . . . . . . . . . . . . . . . . . . .9
3.04 Guaranteed Accumulation Account (GA Account). . . . . . . . . . . . . .9
3.05 Guaranteed Interest Rate -- Fixed Account . . . . . . . . . . . . . . 13
3.06 Experience Credits. . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.07 Fund Record Units -- Separate Account . . . . . . . . . . . . . . . . 13
3.08 Net Return Factor(s) -- Separate Account. . . . . . . . . . . . . . . 14
3.09 Fund Record Unit Value -- Separate Account. . . . . . . . . . . . . . 14
3.10 Current Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Transfer of Current Value from the Funds or GA Account. . . . . . . . 15
3.12 Transfer of Current Value from the Fixed Account. . . . . . . . . . . 15
3.13 Notice to the Contract Holder . . . . . . . . . . . . . . . . . . . . 15
3.14 Distribution Options. . . . . . . . . . . . . . . . . . . . . . . . . 16
3.15 Sum Payable at Death (Before Annuity Payments Start). . . . . . . . . 19
3.16 Surrender Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.17 Surrender Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 20
3.18 Timing of Distributions . . . . . . . . . . . . . . . . . . . . . . . 21
3.19 Payment of Surrender Value. . . . . . . . . . . . . . . . . . . . . . 21
3.20 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
IV. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
4.01 Choices to be Made. . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.02 Annuity Payments to Annuitant . . . . . . . . . . . . . . . . . . . . 23
4.03 Death of Annuitant. . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.04 Fund(s) Annuity Units -- Separate Account . . . . . . . . . . . . . . 24
4.05 Fund(s) Annuity Unit Value - Separate Account . . . . . . . . . . . . 24
4.06 Annuity Net Return Factor(s) -- Separate Account. . . . . . . . . . . 25
4.07 Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4
<PAGE>
I. GENERAL DEFINITIONS
- --------------------------------------------------------------------------------
1.01 ANNUITANT: A person on whose life an Annuity has
been effected under this Contract.
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 FIXED ACCOUNT: An accumulation option with a guaranteed
minimum interest rate. Aetna may credit
a higher rate which is not guaranteed.
1.04 FIXED ANNUITY: An Annuity with payments which do not
vary in amount.
1.05 FUND(S): The open-end registered management
investment companies (mutual funds) made
available by Aetna under this Contract.
1.06 GENERAL ACCOUNT: The Account holding the assets of Aetna,
other than those assets held in the
Separate Account or the Nonunitized
Separate Account.
1.07 GUARANTEED ACCUMULATION An accumulation option which guarantees
ACCOUNT (GA ACCOUNT): a stipulated rate of interest for a
specified period of time.
1.08 MATURED TERM VALUE: The amount payable on a GA Account
Term's Maturity Date.
1.09 MATURITY DATE: The last day of a GA Account Term.
1.10 NONUNITIZED SEPARATE An Account set up by Aetna under Title
ACCOUNT: 38a, Section 38a-433, of the Connecticut
General Statutes which is used to hold
assets for GA 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.
1.11 PARTICIPANT: A person who participates in the Plan
named on the cover of this Contract.
1.12 PLAN: The Plan named on the Contract cover
page. The Plan is not a part of the
Contract. Aetna is not bound by the
terms of the Plan.
1.13 PURCHASE PAYMENT(S): Payments made to Aetna.
1.14 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.
5
<PAGE>
1.15 VALUATION PERIOD (PERIOD): The period as of 4:00 p.m. Eastern time
on each day the New York Stock Exchange
is open for business to 4:00 p.m.
Eastern time of the next such business
day, or such other day that one or more
of the Funds determines its net asset
value.
1.16 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 by notifying
the Contract Holder, in writing, at
least 30 days before the effective date
of the change. Any change will not
affect the amount or terms of any
Annuity which begins before the change.
Aetna may make a change that affects the
GA Account Market Value Adjustment (see
3.04(g)) with at least 30 days advance
written notice to the Contract Holder.
Any such change shall become effective
for any present or future Participant.
Any change that affects the following
provisions of the Contract will not
apply to existing Individual Accounts:
(a) Net Purchase Payment(s)
(b) Guaranteed GA Account 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.
Any change that affects the Annuity
Options and the tables for the Options
cannot be made:
(1) Until at least 12 months after the
Effective Date of this Contract;
and
(2) Until at least 12 months after the
effective date of any such prior
change.
New Participants covered under this
Contract on or after the effective date
of any change will be subject to the
change. If the Contract Holder does not
agree to any change under this
provision, no new Participants will be
covered under this Contract. Aetna will
continue to accept Purchase Payments for
the Participants covered under this
Contract before the change. 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).
6
<PAGE>
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, Participants or
CONTRACT: beneficiaries 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 3.19.
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 Holder may make any choices
allowed by this Contract for the
Employer Account and the Employee
Account. Choices made under this
Contract must be in writing or in a form
satisfactory to Aetna. Until receipt of
such choices in its Home Office, Aetna
may rely on any previous choices made.
The Plan, however, may allow
Participants to select the investment
option(s) of the Employer Account and/or
the Employee Account. No distributions
will be made from the Employer Account
or the Employee Account without the
Contract Holder's written direction to
Aetna. The Contract Holder may direct
Aetna to make an in-service transfer
pursuant to IRS Revenue Ruling 90-24.
Checks for in-service transfers will be
made payable only to the acquiring
investment provider.
(a) Nontransferable and Nonassignable:
This Contract and any Individual
Accounts are nontransferable and
nonassignable, except to Aetna
pursuant of a "qualified domestic
relations order" as set forth under
the Internal Revenue Code of 1986
(Code), as it may be amended from
time to time.
(b) Distributions: With respect to any
distribution made from an Employee
or Employer Account, the Contract
Holder must certify in writing that
the distribution is in accordance
with the terms of the Plan.
(c) Participant Rights/Employee
Account: The Participant has a
nonforfeitable right to the value
of his or her Employee Account
pursuant to the Code Section 403(b)
and the terms of the Plan as
interpreted by the Contract Holder
(see 1.12).
7
<PAGE>
2.06 CONTROL OF CONTRACT (d) Participant Rights/Employer
(CONT'D): Account: The Participant has a
nonforfeitable right to the value
of his or her Employer Account
pursuant to the terms of, and to
the extent of his or her vested
percentage under, the Plan as
interpreted by the Contract Holder.
It is the Contract Holder's
responsibility to maintain records
of the Participant's vesting
percentages. Aetna will not
maintain nor keep such records.
2.07 DESIGNATION OF Each Participant shall name the
BENEFICIARY: beneficiary of the Employer and
Employee Account. Aetna will pay any
portion of the Individual Account(s)
Current Value to the beneficiary as
directed by the Contract Holder.
2.08 MISSTATEMENTS AND If Aetna finds the age of any payee to
ADJUSTMENTS: be misstated, the correct facts will be
used to adjust payments.
2.09 INCONTESTABILITY: Aetna cannot cancel this Contract
because of any error of fact on the
application.
2.10 GRACE PERIOD: This Contract will remain in effect even
if Purchase Payments are not continued.
2.11 INDIVIDUAL CERTIFICATES: Aetna shall issue certificates to the
Contract Holder or Participants as
required by the state in which this
Contract is delivered. The certificate
will summarize certain provisions of the
Contract. Certificates are for
information only and are not a part of
the Contract.
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
- --------------------------------------------------------------------------------
3.01 NET PURCHASE PAYMENT(S): The actual Purchase Payment less any
premium tax. 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 Payments are
received or at any other time, it will
deduct the tax at that time.
The Net Purchase Payment(s) may be
credited among:
(a) The Fixed Account; and
(b) The Guaranteed Accumulation
Account; 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.
During any calendar year, the Contract
Holder or, if allowed by the Plan, the
Participant may tell Aetna 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 INDIVIDUAL ACCOUNT(S): This Contract is issued to the Contract
Holder. However, Participant's
Individual Accounts are explained below:
8
<PAGE>
3.02 INDIVIDUAL ACCOUNT(S) Aetna may maintain two Individual
(CONT'D): Accounts for each Participant.
These will be:
(a) Employer Account: This Individual
Account will be credited with
employer Net Purchase Payment(s);
and
(b) Employee Account: This Individual
Account will be credited with
employee Net Purchase Payment(s),
specifically employee salary
reduction contributions.
In addition to any Purchase Payment(s)
stated to be made to this Contract, a
lump-sum Purchase Payment(s), of not
less than a minimum amount stated by
Aetna, may be made on behalf of one or
more Participants. Aetna may maintain
an Individual Account for each lump sum
payment. Such Individual Account(s)
will be designated as an Employer
Account(s) or an Employee Account(s) as
instructed by the Contract Holder.
3.03 LIMITATION ON The Purchase Payment(s) made to a
CONTRIBUTIONS: Participant's Individual Account(s) in
any year cannot exceed the lesser of the
amount determined under the exclusion
allowance of Code Section 403(b)(2) or
the annual additions limitation of Code
Section 415(c)(1). In addition, in no
event may the Purchase Payment(s)
attributable to elective deferrals as
defined in Code Section 402(g) exceed
$9,500 (or, such larger amount as
adjusted by the Secretary of the
Treasury) during any calendar year,
unless the alternate limitation of Code
Section 402(g)(8) applies.
3.04 GUARANTEED ACCUMULATION The GA Account guarantees stipulated
ACCOUNT (GA ACCOUNT): rates of interest for stated periods of
time (see (a), (b), (c) and (d) below).
Amounts withdrawn before the end of a
Guaranteed Term may be subject to a
Market Value Adjustment (MVA) (see (g)
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 GA Account for
one or more Guaranteed Terms.
(b) Guaranteed Term (Term) -- The
period of time for which interest
rates are guaranteed on Net
Purchase Payment(s) and on
transfers made into the Deposit
Period of the GA 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.
9
<PAGE>
3.04 GUARANTEED ACCUMULATION During a Deposit Period, Aetna may
ACCOUNT (GA ACCOUNT) make available one or more Terms
(CONT'D): within a Classification. The
Contract Holder or, if allowed by
the Plan, the Participant 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. At least one Term in the
Short-Term Classification will be
available each Deposit Period.
(d) Guaranteed GA Account Interest
Rates (Guaranteed Rates) --Aetna
will declare all interest rate(s)
applicable to a specific Term at
the start of the Deposit Period for
that Term. These rate(s) are
guaranteed by Aetna for that
Deposit Period and the ensuing Term
and are not based on the actual
investment experience of the
underlying assets in the GA
Account. The Guaranteed Rates are
annual effective yields. The
interest is credited daily at a
rate that will produce the
guaranteed annual effective yield
over the period of a year. No
annual rate will ever be less than
3%.
For Terms of one year or less, one
Guaranteed Interest Rate is set and
announced for that full Term. For
other Terms, there may be two or
more rates.
The rate(s) will be set and
announced prior to the Deposit
Period for that Term and will not
be subject to change.
(e) Withdrawals from GA Account -- Full
or partial surrenders may be
requested at any time from the GA
Account. However, amounts
withdrawn prior to the Maturity
Date of a Term to satisfy a
surrender request may be subject to
an MVA (see (g) below).
Full and partial surrenders are
satisfied by withdrawing amounts
from each of the investment options
in which the Individual Account is
invested (the Fund(s), the Fixed
Account, the GA Account Short-Term
Classification and the GA 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 GA Account Short-Term
and Long-Term Classifications are
considered as two separate
investment options. Amounts will
be removed within a GA Account
Classification starting with the
Term still in effect with the
oldest Deposit Period.
Amounts may be transferred at any
time subject to Contract
specifications (see 3.11 or 3.12
below). Amounts transferred prior
to the Maturity Date of a Term are
subject to an MVA (see (g) below).
Fund(s) will be removed within the
elected Classification starting
with the Term still in effect with
the oldest Deposit Period.
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<PAGE>
3.04 GUARANTEED ACCUMULATION During the Deposit Period and the
ACCOUNT (GA ACCOUNT) 90 days following the close of
(CONT'D): the Deposit Period, any amounts applied
to the GA Account during that Deposit
Period may not be withdrawn unless due
to:
(1) A full or partial surrender;
(2) A payment of a premium for an
Annuity Option; or
(3) The Sum Payable at Death
provision.
(f) Maturity Date/Reinvestment -- The
Contract Holder or Participant, as
applicable, 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 Guaranteed Rate(s),
Term(s) and projected Matured Term
Value.
The Matured Term Value may be
surrendered or transferred on the
Term's Maturity Date without an
MVA. If no specific direction is
given by the Contract Holder or
Participant, as applicable, 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, the Contract
Holder or Participant, as
applicable, will be mailed a
confirmation statement. This
statement will state the Term and
Guaranteed Rate(s) which will apply
to the reinvested Matured Term
Value.
During the calendar month following
the Term's Maturity Date, one
exception is allowed to the 90 day
transfer restriction and MVA under
(e) and (g). This exception is
applicable to each Matured Term
Value plus any interest accrued
thereon, provided no part of the
Matured Term Value was transferred
on the Maturity Date.
During this calendar month period,
the Contract Holder or Participant,
as applicable, 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
GA Account without an MVA. This
provision only applies to the first
such request received from the
Contract Holder during this period
for any Matured Term Value. The
Matured Value plus any interest
accrued thereon may be transferred
upon such request without an MVA:
(1) To any other Terms of the GA
Account available in the
current Deposit Period; or
(2) 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.
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<PAGE>
3.04 GUARANTEED ACCUMULATION (g) Market Value Adjustment (MVA) --
ACCOUNT (GA ACCOUNT) There will be an MVA for a
(CONT'D): withdrawal from the GA Account
before the end of a Term when the
withdrawal is due to:
(1) A transfer;
(2) A full or partial surrender;
or
(3) A payment of a premium for
Annuity Option 2.
The amount of the withdrawal will
be adjusted to a market value
amount as described below.
The market value adjusted amount
will be equal to the amount
withdrawn multiplied by the
following ratio:
x
(1 + i) TO THE POWER OF ---
365
-------------------------------
x
(1 + j) TO THE POWER OF ---
365
Where:
i is the Deposit Yield
j is the Current Yield
x is the number of days
remaining, (computed from
Wednesday of the week of
withdrawal) in the
Guaranteed Term.
The Deposit Period Yield will be
determined as follows:
- At the close of the last
business day of each week of
the Deposit Period, a yield
will be computed as the
average of the yields on that
day of U.S. Treasury Notes
which mature in the last three
months of the Guaranteed Term.
- The Deposit Period Yield is
the average of those yields
for the Deposit Period. If
withdrawal is made prior to
the close of the Deposit
Period, it is the average of
those yields on each week
preceding withdrawal.
The Current Yield is the average of
the yields on the last business day
of the week preceding withdrawal on
the same U.S. Treasury Notes
included in the Deposit Period
Yield.
In the event that no U.S. Treasury
Notes which mature in the last
three months of the Guaranteed Term
exist, Aetna reserves the right to
use the U.S. Treasury Notes that
mature in a following quarter.
Full and partial surrenders as well
as transfers made within six months
of the Participant's date of death
under the Sum Payable at Death
provision will be the greater of:
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<PAGE>
3.04 GUARANTEED ACCUMULATION - The aggregate MVA amount which is
ACCOUNT (GA ACCOUNT) the sum of all market value
(CONT'D): adjusted amounts calculated due to
a withdrawal of amounts (for
surrender or transfer) from Terms
prior to the end of those Terms.
The aggregate MVA may be either
positive or negative; or
- The applicable portion of the
Current Value in the GA Account.
After the six month period, the
surrender or transfer will be the
aggregate MVA amount (i.e.,
including all MVAs).
The greater of the aggregate MVA
amount or the applicable portion of
the Current Value in the GA Account
is applied to amounts withdrawn
from the GA Account for payment of
a premium under Annuity Options 3
or 4.
Aetna may make any change to the
MVA with 30 days advance written
notice to the Contract Holder. Any
such change shall become effective
for Purchase Payment(s), transfers
or reinvestments made to any new
Term by any present or future
Participant.
(h) Deposits to the GA Account -- All
amounts in the GA Account under the
Short-Term Classification are made
to the General Account.
All amounts in the GA Account under
the Long-Term Classifications are
made to a Nonunitized Separate
Account. There are no discrete
units for this Nonunitized Separate
Account. The Contract Holder or
Participant, as applicable, 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
interest rates to be credited to
the GA Account. All assets of
Aetna including amounts made to the
GA Account are available to meet
the guarantees under the GA
Account.
3.05 GUARANTEED INTEREST On any Purchase Payment(s) made to the
RATE -- FIXED ACCOUNT: Fixed Account, Aetna will add interest
daily at any annual rate no less than
3%. Aetna may add interest daily at any
higher rate determined by its Board of
Directors.
3.06 EXPERIENCE CREDITS: Aetna may apply Experience Credits under
this Contract. Any such Credits will be
computed as decided by Aetna.
3.07 FUND RECORD UNITS -- The portion of the Net Purchase
SEPARATE ACCOUNT: Payment(s) applied to the Separate
Account will determine the number of
each Fund's Record Units. This number
is equal to the Net Purchase Payment
13
<PAGE>
3.07 FUND RECORD UNITS -- applied to the Fund divided by the Fund
SEPARATE ACCOUNT Record Unit Value (see 3.09) for the
(CONT'D): Valuation Period in which the Purchase
Payment is received in good order.
3.08 NET RETURN FACTOR(S) -- The Net Return Factors are used to
SEPARATE ACCOUNT: compute all Separate Account Values and
payments for any Fund.
The Net Return Factor for each Fund is
equal to 1.0000000 plus the Net Return
Rate.
The Net Return Rate is equal to:
(a) The value of the shares of the Fund
held by the Separate Account at the
end of a Valuation Period; minus
(b) The value of the shares of the Fund
held by the Separate Account at the
start of the Valuation Period; plus
or minus
(c) Taxes (or reserves for taxes) on
the Separate Account (if any);
divided by
(d) The total value of the Fund Record
Units and Fund Annuity Units of the
Separate Account at the start of
the Valuation Period; minus
(e) A daily actuarial charge at an
annual effective rate of 1.40% for
Annuity mortality and expense risks
and asset based sales charge and
profit and a daily administrative
charge which will not exceed 0.25%
on an annual effective basis. The
administrative charge may be
changed annually except for amounts
which have been used to purchase an
Annuity.
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.
3.09 FUND RECORD UNIT VALUE -- Each Fund's Record Unit Value is
SEPARATE ACCOUNT: computed by multiplying the Net
Return Factor for the current 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.
3.10 CURRENT VALUE: The Current Value is equal to:
(a) Any amounts in the Fixed Account,
including Fixed Account interest
added by Aetna; plus
(b) Any amounts in the GA Account,
including GA Account interest added
by Aetna; plus
(c) The sum of any Separate Account
Record Unit Value(s);
(d) Any amount due to Experience
Credits.
Current Value does not include amounts
used to elect an Annuity.
14
<PAGE>
3.11 TRANSFER OF CURRENT VALUE Before an Annuity Option is elected, all
FROM THE FUNDS OR GA or any portion of the Current Value may
ACCOUNT: be transferred from any Fund or the GA
Account to:
(a) Any other Fund;
(b) The Fixed Account; or
(c) The GA Account's current Deposit
Period.
Amounts in a specific GA Account Term
cannot be transferred to the Deposit
Period of another Term within the same
Classification except at the Term's
Maturity.
Amounts applied to Classifications of
the GA Account may not be transferred to
the Fund(s) or the Fixed Account during
the Deposit Period or for 90 days after
the close of the Deposit Period.
Transfers from the GA Account are
subject to the Withdrawal and Market
Value Adjustment provisions. (See 3.04
(e) and (g).)
For each Individual Account, twelve
transfers of Current Value (excluding
transfers from the GA 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.
3.12 TRANSFER OF CURRENT VALUE Before an Annuity Option is elected, up
FROM THE FIXED ACCOUNT: to 20% of the Current Value held in the
Fixed Account may be transferred to any
Fund(s) or the GA Account's current
Deposit Period(s). Such transfer will
be:
(a) Without charge; and
(b) Allowed once per calendar year.
The Current Value of the Fixed Account,
as used above, is the value when the
request is received at the Home Office
of Aetna.
3.13 NOTICE TO THE CONTRACT Aetna will notify the Contract Holder or
HOLDER: Participant, as applicable, each year
of:
(a) The value of any amounts held in:
(1) The Fixed Account;
(2) The GA Account;
(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).
Such number or values will be as of a
date no more than 60 days before the
date of the notice.
15
<PAGE>
3.14 DISTRIBUTION OPTIONS: The following distribution options may
be elected by the Contract Holder on
behalf of the Participant.
(a) Estate Conservation Option (ECO):
A distribution option under which a
portion of the Individual
Account(s) Current Value will
automatically be surrendered and
distributed each year.
(1) An ECO payment will be
determined in the following
manner:
(a) Payments will commence no
earlier than the year in
which the Participant
attains age 70 1/2 and
will be calculated on the
full Current Value of the
Individual Account(s),
except as provided in
"b".
(b) If Aetna maintains
separate records of the
value of the Account as
of December 31, 1986,
(see below) and the
Participant has retired,
payments made in or after
the year age 70 1/2 was
attained (or retirement,
if later) but before the
year age 75 is attained
will only be calculated
on amounts contributed
after December 31, 1986,
plus all earnings on all
amounts after that date.
The method under this
rule is elected by the
Contract Holder and will
no longer be effective if
the Contract Holder
submits a withdrawal
request in addition to a
scheduled ECO payment
from the Individual
Account(s), at which time
ECO payments will then be
determined under "a".
Aetna will maintain
separate records if the
Contract Holder has not
requested any withdrawals
from the Participant's
Individual Account(s)
since December 31, 1986.
(2) 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
Individual Account(s) Current
Value, as of December 31 of
the year prior to the year for
which the payment is to be
made, 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
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.
The 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,
16
<PAGE>
3.14 DISTRIBUTION OPTIONS and such spouse must be named
(CONT'D): as the beneficiary of any
death benefits under the
Contract while ECO is in
effect.
(3) 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
balance of the Individual
Account(s).
(4) Date of Distribution: The
Contract Holder shall specify
the initial distribution date.
The earliest date is the first
day of the calendar year in
which the Participant attains
age 70 1/2. Subsequent
distributions will be made
annually on the 15th of the
month the initial payment was
made or such other date Aetna
may designate or allow.
(5) Elections and Revocation: ECO
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 Contract Holder must also
certify in writing that the
distribution is in accordance
with the terms of the Plan.
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 per Participant.
(6) 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 Individual
Account(s) Current Value
attributable to a particular
Participant will automatically be
surrendered and distributed each
year.
(1) Amount of Distribution: The
Contract Holder may elect one
of the two payment methods
described below.
(a) Specified Amount:
Payments of a designated
dollar amount which must
be no greater than 10% of
the initial Current Value
and shall remain constant
unless a higher amount is
required under 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.
17
<PAGE>
3.14 DISTRIBUTION OPTIONS The life expectancy
(CONT'D): 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 Individual Account(s)
Current Value as of
December 31 of the year
prior to the year for
which the payment is to
be made, by a life
expectancy factor. At
its discretion, Aetna may
require a minimum initial
payment amount; or
(b) Specified Period:
Payments which are made
over a period of time
which must be at least 10
years, unless otherwise
required by 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 Individual Account(s)
Current Value as of
December 31 of the prior
year, by the number of
payment years remaining.
The life expectancy
factor is either the
single life or joint life
expectancy, as elected by
the Contract Holder,
based on tables in
Section 401(a)(9) of the
Code or related
regulations. If the
joint life expectancy is
elected, upon the death
of either the Participant
or the spouse, the
minimum required
distribution for the
Specified Amount payment
method will continue to
be calculated in the same
manner as described in
(b)(1). Payments upon
the Participant's death
will continue to be
calculated in the same
manner described above,
unless the Contract
Holder on behalf of the
Participant's 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, and
such spouse must be named
as the Plan beneficiary
of any death benefits
under the Contract while
SWO is in effect.
(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 balance of the
Individual Account.
18
<PAGE>
3.14 DISTRIBUTION OPTIONS (3) Date of Distribution: The
(CONT'D): Contract Holder shall specify
the initial date. The
earliest date is the first day
of the calendar year in which
the Participant attains age 70
1/2. Subsequent distributions
will be made annually on the
15th of the month the initial
payment was made or such other
date Aetna may designate or
allow.
(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.
The Contract Holder must
certify in writing that the
distribution is in accordance
with the terms of the Plan.
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.
(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.
3.15 SUM PAYABLE AT DEATH Aetna will pay any portion of the
(BEFORE ANNUITY PAYMENTS Individual Account(s) Current
START): Value to the beneficiary and in the
manner directed in writing by
the Contract Holder when:
(a) The Participant dies before Annuity
payments start; and
(b) The notice of death is received in
good order by Aetna.
For each Individual Account, the death
benefit is guaranteed to be the greater
of:
(a) The Current Value of the Individual
Account plus aggregate positive
MVA, as applicable, on the date the
notice of death and the request for
payment are received in good order
at Aetna's Home Office; or
(b) The total of Net Purchase
Payment(s) made to each Individual
Account minus the total of all
partial surrenders or
annuitizations made from each
Account.
This guaranteed death benefit is
available only to beneficiaries who
request either a lump sum payment or an
Annuity Option within the first six
months after the date of the
Participant's death.
If the payee of the death proceeds is
the Participant's surviving spouse (as
the Participant's designated
beneficiary), 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
19
<PAGE>
3.15 SUM PAYABLE AT DEATH Current Value must either be applied to
(BEFORE ANNUITY PAYMENTS an Annuity Option within one year of the
START) (CONT'D): Participant's death or be paid to the
payee within 5 years of the
Participant's death (see Part IV).
In no event may any payments to the
beneficiary under an Annuity Option
extend beyond:
(a) The life of the payee determined as
of the date payments are to
commence; or
(b) Any certain period greater than the
payee's life expectancy as
determined by regulations under
Code Section 401(a)(9) as of the
date payments are to begin.
3.16 SURRENDER VALUE: The amount payable by Aetna upon the
surrender of any portion on an
Individual Account will be the value of
the Individual Account at the end of the
Valuation Period in which the surrender
request is received at Aetna's Home
Office. Partial surrenders of an
Individual Account's Fixed Account value
may not exceed 20% of the Fixed Account
Value during any calendar year. Any
portion of a full surrender of an
Individual Account which is in the Fixed
Account will be paid in five annual
installments in accordance with Section
3.19.
For a partial or full surrender from any
Individual Account, Aetna must receive
written direction from the Contract
Holder on a form acceptable to Aetna.
Aetna may defer payment of the surrender
value until appropriate Contract Holder
direction is received.
3.17 SURRENDER RESTRICTIONS: Limitations apply to full and partial
surrenders of any Restricted Amount
under this Contract, as required by Code
Section 403(b)(11). The Restricted
Amount is the sum of:
(a) Net Purchase Payments attributable
to Participant salary reduction
contributions made on and after
January 1, 1989, if any; plus
(b) The net increase, if any, in the
Current Value of the Employee
Account after December 31, 1988
attributable to investment gains
and losses and credited interest.
The Restricted Amount may be fully or
partially surrendered only if one or
more of the following conditions are
met:
(a) The Participant has reached age 59
1/2;
(b) The Participant has separated from
service;
(c) The Participant has died;
(d) The Participant has become
disabled, within the meaning of
Code Section 72(m)(7); or
(e) The withdrawal is otherwise allowed
by federal law, regulations or
rulings.
A full or partial surrender is also
allowed if the Participant incurs a
"hardship" as that term is defined in
the Code or regulations under Code
Section 403(b).
20
<PAGE>
3.17 SURRENDER RESTRICTIONS However, the amount available for
(CONT'D): hardship is limited to the lesser
of the amount necessary to satisfy the
need, or the Net Purchase Payments
attributable to Participant salary
reduction contributions made on and
after January 1, 1989.
The Contract Holder must certify that
one of these conditions has been met
before a surrender request will be
considered to be in good order. The
Contract Holder must notify Aetna in
writing when a lump sum payment is to be
made or Annuity payments are to
commence.
If, pursuant to Revenue Ruling 90-24,
amounts are transferred to this Contract
from a Code Section 403(b)(7) custodial
account, the December 31, 1988 value
from such transferred amount may be
distributed upon the Contract Holder's
request. The Contract Holder must
certify that one of the conditions
mentioned above has been met or that the
Participant has incurred a hardship.
The remaining transferred value from the
Employee Account will be considered a
Restricted Amount subject to the
Surrender Restrictions of this
subsection.
3.18 TIMING OF DISTRIBUTIONS: The distribution of benefits accrued
after December 31, 1986, must be made in
a lump sum or must begin not later than
the April 1 of the calendar year
following the calendar year in which the
Participant attains age 70 1/2 or
retires, whichever occurs later.
The required distribution described in
either of the above rules must be made
over the life of the Participant (or the
joint lives of the Participant and the
beneficiary) or over a period not
exceeding the life expectancy of the
Participant (or the joint life
expectancies of the Participant and the
beneficiary).
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.
3.19 PAYMENT OF SURRENDER Under certain emergency conditions,
VALUE: Aetna may defer payments:
(a) For a period of up to 6 months
(unless not allowed by state law);
and
(b) As provided by federal law.
Any surrenders requested from an
Individual Account's Fixed Account value
may not exceed 20% of the Individual
Account's Fixed Account Current Value as
of the date the withdrawal request is
received in good order at Aetna's Home
Office during any calendar year. The
surrender value will be reduced by any
Fixed Account surrender(s), transfer(s)
or annuitizations previously made during
the calendar year.
21
<PAGE>
3.19 PAYMENT OF SURRENDER In the event of Individual Account
VALUE (CONT'D): termination, Aetna will pay any
Fixed Account surrender value from the
Individual Account with interest, in
five annual payments of:
- One-fifth of the Fixed Account
surrender value minus any Fixed
Account surrender(s), transfer(s)
or annuitizations made during the
calendar year;
- One-fourth of the Fixed Account
surrender value;
- One-third of the Fixed Account
surrender value;
- One-half of the Fixed Account
surrender value; and
- The remaining balance of the Fixed
Account surrender value as the
fifth and final payment.
Once Aetna receives notification of an
Individual Account termination, no
further surrender(s) or transfer(s) will
be permitted from the Fixed Account.
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 3%.
3.20 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 Market
Value Adjustment deducted from GA
Account surrenders will not be included
in the reinstatement. Amounts will be
reinstated among the Fixed Account, GA
Account, and the Fund(s) in the same
proportion as they were at the time of
surrender. Any amount reinstated to the
GA Account will be credited to the
current Deposit Period. 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.
Reinstatement is permitted only once.
IV. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
4.01 CHOICES TO BE MADE: The Contract Holder may elect an Annuity
Option on behalf of a Participant by
telling Aetna to pay all or any portion
of the Current Value (minus any premium
tax) as a premium for an Annuity under
Option 2, 3, or 4 (see 4.07). The
present value of the expected payments
to the Annuitant when payments start
shall be determined in accordance with
the tables under Code Section 401(a)(9)
regulations in order to comply with the
incidental death benefit test. This
restriction does not apply if Option 4
(e) is chosen and the second Annuitant
is the spouse of the Annuitant.
22
<PAGE>
4.01 CHOICES TO BE MADE Generally, the first Annuity payment
(CONT'D): must be made no later than the April 1
of the calendar year following the year
in which the Participant turns age 70
1/2 or retires, whichever occurs later,
or such later date as may be allowed
under federal law or regulations (see
3.18). For distributions taken in a
lump sum, see Surrender Value (3.16 and
3.19).
For any election of an Annuity Option,
the Contract Holder must provide
certification that the Code Section
403(b)(11) withdrawal restrictions have
been satisfied.
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 3.0%. 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%.
With the exception of Option 2 on a
variable basis, once elected, an Annuity
Option may not be revoked.
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 commence;
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 DEATH OF ANNUITANT: When an Annuitant dies under Options 2
and 3, the present value of any
remaining guaranteed payments will be
paid in one sum to the beneficiary as
directed in writing by the Contract
Holder; or upon election by the
Annuitant's beneficiary, any remaining
payments will continue to the
beneficiary. If no beneficiary exists,
the present value of any remaining
guaranteed payments will be paid in one
lump sum to the Contract Holder.
23
<PAGE>
4.03 DEATH OF ANNUITANT However, if a beneficiary dies while
under Option 1 or while (CONT'D):
receiving Annuity payments,
the present value of any remaining
payments will be paid in one lump sum to
the estate of the beneficiary. The
interest rate used to determine the
first payment will be used to calculate
the present value.
4.04. FUND(S) ANNUITY UNITS -- The number of Fund(s) Annuity Units is
SEPARATE ACCOUNT: based on the amount of the first
Variable Annuity payment which is equal
to:
(a) The portion of the Current Value
(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 4.05) on the tenth Valuation Period
before the due date of the first payment
to determine the number of each Fund
Annuity Units. The number of each Fund
Annuity Units remains fixed. Each
future payment is equal to the sum of
the products of each Fund Annuity Unit
Value multiplied by the appropriate
number of Units. The Fund Annuity Unit
Value on the tenth Valuation Period
prior to the due date of the payment is
used.
4.05 FUND(S) ANNUITY UNIT For any Valuation Period, a Fund(s)
VALUE -- SEPARATE ACCOUNT: Annuity Unit Value is equal to:
(a) The Value for the previous Period;
multiplied by
(b) The Annuity Net Return Factor(s)
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:
- 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.
24
<PAGE>
4.06 ANNUITY NET RETURN The Annuity Net Return Factor(s) are
FACTOR(S) -- SEPARATE used to compute all Separate Account
ACCOUNT: Annuity and payments for any Fund.
The Annuity Net Return Factor(s) for
each Fund is equal to 1.0000000 plus the
Net Return Rate.
The Net Return Rate is equal to:
(1) The value of the shares of the Fund
held by the Separate Account at the
end of a Valuation Period; minus
(2) The value of the shares of the Fund
held by the Separate Account at the
start of the Valuation Period; plus
or minus
(3) Taxes (or reserves for taxes) on
the Separate Account (if any);
divided by
(4) The total value of the Fund(s)
Record Units and Fund(s) Annuity
Units of the Separate Account at
the start of the Valuation Period;
minus
(5) A daily actuarial charge at an
annual 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 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.
4.07 ANNUITY OPTIONS: Option 1 -- Payment of Interest on Sum
Left with Aetna -- This Option may be
used only by the beneficiary when the
Participant 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 Contract
Holder, on behalf of 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 the beneficiary is the Participant's
surviving spouse, payment may be
deferred to a date not later than when
the Participant would have attained age
70 1/2.
If the beneficiary is not a spouse, the
Contract Holder must tell Aetna to pay
the full sum within 5 years after the
Participant's death.
Option 2 -- Payments for a Stated Period
of Time -- An Annuity will be paid for
the number of years chosen. The number
of years must be at least 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.
25
<PAGE>
4.07 ANNUITY OPTIONS Option 3 -- Life Income -- An Annuity
(CONT'D): 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;
(c) 50% 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.
26
<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%
- --------------------------------------------------------------------------------
GAURANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
3 3.00% $28.99 $86.76 $172.88 $343.23
4 3.00% 22.06 66.02 131.56 261.19
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- --------------------------------------------------------------------------------
27
<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
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT NONE 60 120 180 240
- --------------------------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93
51 4.12 4.11 4.09 4.05 3.99
52 4.19 4.19 4.16 4.11 4.04
53 4.27 4.26 4.23 4.18 4.10
54 4.35 4.34 4.31 4.25 4.16
55 4.44 4.42 4.39 4.32 4.22
56 4.53 4.51 4.47 4.40 4.29
57 4.62 4.61 4.56 4.48 4.35
58 4.72 4.71 4.65 4.56 4.42
59 4.83 4.81 4.75 4.64 4.49
60 4.95 4.93 4.86 4.73 4.55
61 5.07 5.05 4.97 4.83 4.62
62 5.20 5.17 5.08 4.92 4.69
63 5.34 5.31 5.20 5.02 4.76
64 5.49 5.45 5.33 5.12 4.83
65 5.65 5.61 5.47 5.22 4.89
66 5.82 5.77 5.61 5.33 4.96
67 6.01 5.94 5.75 5.44 5.02
68 6.20 6.13 5.91 5.54 5.08
69 6.41 6.33 6.07 5.65 5.14
70 6.64 6.54 6.23 5.76 5.19
71 6.88 6.76 6.41 5.86 5.24
72 7.14 7.00 6.59 5.97 5.28
73 7.43 7.26 6.77 6.06 5.32
74 7.73 7.53 6.96 6.16 5.35
75 8.06 7.82 7.14 6.25 5.38
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
28
<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%
- --------------------------------------------------------------------------------
AGES OF
- ---------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
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 4.06 4.47 4.71 4.06 4.20
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 4.49 5.01 5.32 4.48 4.64
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 5.07 5.75 6.17 5.05 5.26
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 5.89 6.82 7.40 5.81 6.12
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 7.07 8.34 9.16 6.78 7.36
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
29
<PAGE>
OPTION 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%
- --------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
3 3.50% $29.19 $87.33 $173.91 $344.86
4 3.50% 22.27 66.61 132.65 263.04
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.85 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
- --------------------------------------------------------------------------------
30
<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%
- --------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
3 5.00% $29.80 $89.04 $176.99 $349.72
4 5.00% 22.89 68.38 135.93 268.58
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
- --------------------------------------------------------------------------------
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 3.5%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT NONE 60 120 180 240
- --------------------------------------------------------------------------------
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
32
<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
- --------------------------------------------------------------------------------
AGE OF
ANNUITANT NONE 60 120 180 240
- --------------------------------------------------------------------------------
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 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
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
33
<PAGE>
OPTION 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%
- --------------------------------------------------------------------------------
AGES OF
- ---------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
34
<PAGE>
OPTION 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%
- --------------------------------------------------------------------------------
AGES OF
- ---------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
35
<PAGE>
- --------------------------------------------------------------------------------
[AETNA LOGO]
AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
Group Variable, Fixed or Combination Contract
Nonparticipating
- --------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
ENDORSEMENT
The Contract and the Certificate are hereby endorsed as follows:
Under Section 3.14 entitled DISTRIBUTION OPTIONS, delete the first sentence
under subparagraph (b) (1) (a) and replace with the following:
Specified Amount: Payments of a designated dollar amount which must be no
greater than 20% of the initial Current Value and shall remain constant unless a
higher amount is required under Code minimum distribution rules.
Under Section 3.14 entitled DISTRIBUTION OPTIONS, delete the first sentence
under subparagraph (b) (1) (b) and replace with the following:
Specified Period: Payments which are made over a period of time which must
be at least 5 years, unless otherwise required by the Code minimum
distribution rules.
Under Section 3.14 entitled DISTRIBUTION OPTIONS, add the following as
subparagraph (b) (1) (c):
Specified Percentage: Payments of a designated percentage which
cannot be greater than 20% of the amount being designated for SWO. The
Participant may change the specified percentage elected every six months. Each
annual distribution is determined by multiplying the Individual Account Current
Value by the percentage chosen. The value to be used in this calculation is the
value on the December 31st prior to the year for which the payment is being
made. For payments made more often than annually, the annual payment result
(calculated above) is divided by the number of payments due each year. Payments
will be made each year until the year the Participant attains age 70 1/2.
Endorsed and made a part of the Contract and the Certificate on the date
approved by the State Insurance Department.
/s/ Dan Kearney
---------------
President
Aetna Life Insurance and Annuity Company
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This contract is hereby endorsed as follows:
GENERAL DEFINITIONS is ammended to include the following defined 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 ot 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 dicretion, Aetna may allow additional amoutns 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 Allaction
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 cancelled 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 cancelled 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 Vet 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
fo GET Fund. If no GET Fund Series is available, 50% of the Current Value from
that Get Fund Series will be transferred to Aetna Varaiable Fund, a groth and
income fund. The remianing 50% fof the Current
<PAGE>
Value will be transferred to Aetna Income Shares, a bond fund. The Transfers
will be made durung 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 Allcation Period for that series begins.
GUARANTEE: Aetna guarantees that on a series' of 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. The Guarantee does not apply to GET Fund Record Unit Values withdrawn or
transferred before the GET Fund Maturity Date.
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 the 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
ammeded 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
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract and the Certificate, (as applicable), is hereby endorsed.
The term VALUATION PERIOD under General Definitions is amended to read ad
follows:
The period of time for which a Fund determines its net asset value, usually
from 4:15 p.m. Eastern time each day the New York Stock Exchange is open until
4:15 p.m. the next such day, or such other day that one or more of the Funds
determines its net asset value.
Endorsed and made a part of the Contact and the Certificate, (as applicable).
/s/ Gary Benanav
----------------
President
Aetna Life Insurance and Annuity Company
EVP-IC
<PAGE>
------------------------------------------------------------
[LOGO] AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
You may call the toll-free number shown above to get answers
to your questions or help to resolve a complaint.
Aetna Life Insurance and Annuity Company, herein called
Aetna, agrees to pay the benefits stated in the Contract.
- --------------------------------------------------------------------------------
CERTIFICATE OF To the Certificate Holder:
GROUP ANNUITY
COVERAGE Aetna certifies that coverage is in force for you under the
stated Group Annuity Contract and Certificate numbers. All
data shown here is taken from Aetna records and is based
upon information furnished by you.
This Certificate is a summary of the Group Annuity Contract
provisions. It replaces any and all prior certificates,
riders, or amendments issued to you under the stated
Contract and Certificate numbers. This Certificate is for
information only and is not a part of the Contract.
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN
PARTS III AND V.
- --------------------------------------------------------------------------------
RIGHT TO You may cancel this Certificate within 10 days of receiving
CANCEL it by returning this Certificate along with a written notice
to Aetna at the above address or to the agent from whom it
was purchased. Within 7 days after it receives the notice
of cancellation and this Certificate at its Home Office,
Aetna will return the entire consideration paid plus any
increase or minus any decrease in the current value of any
funds allocated to the Separate Account.
/s/ Dan Kearney /s/ Patrice Maloney-Knauff
President Secretary
- --------------------------------------------------------------------------------
Contract Holder Group Annuity Contract No.
ORP TDA NJ VF0305
- --------------------------------------------------------------------------------
Your Name Certificate No.
AROUND TURN 2659841150305ER
- --------------------------------------------------------------------------------
Type of Plan
OPTIONAL RETIREMENT PRODUCT
- --------------------------------------------------------------------------------
The underlying group combination annuity contract NEW JERSEY
is delivered in and is subject
to the laws of that jurisdiction.
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP ANNUITY CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT. THIS CERTIFICATE CONTAINS A MARKET VALUE ADJUSTMENT
FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN
INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA
DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
FORM NO. GTCC-95 (TORP)
<PAGE>
SPECIFICATIONS
- --------------------------------------------------------------------------------
GUARANTEED There are guaranteed interest rates for amounts held in the
INTEREST RATE Fixed Plus Account and the GA Account. (See Certificate
Schedule I).
- --------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense risks and
THE SEPARATE asset based sales charge and administrative fees. (See 3.05
ACCOUNT and 5.06).
- --------------------------------------------------------------------------------
DEDUCTION FROM Contribution(s) are subject to a deduction for
CONTRIBUTION(S) premium taxes, if any. (See 3.02.)
2
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT: Variable Annuity Account C
CHARGES TO
SEPARATE A daily charge is deducted from any portion of
ACCOUNT: the Current Value allocated to the Separate Account.
The daily charge is at an annual effective rate of
1.40% for Annuity mortality and expense risks, asset
based sales charge and profit and a daily
administrative charge which will not exceed 0.25% on an
annual basis.
FIXED PLUS ACCOUNT
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
Beginning on the tenth anniversary of the effective
date of an Individual Account, Aetna will credit
amounts with an interest rate that is 0.25% higher than
the then-declared interest rate for Individual Accounts
before the tenth anniversary.
PARTIAL WITHDRAWAL: The 20% limit applicable to partial withdrawal from the
Fixed Plus Account will be waived when the withdrawal
is:
(a) due to the Participant's death, (within six (6)
months of the Participant's date of death), before
Annuity payments begin. This partial withdrawal
may only be exercised once; or
(b) used to purchase Annuity benefits.
GUARANTEED ACCUMULATION ACCOUNT (GA ACCOUNT)
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
i
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD (CONT'D)
SEPARATE ACCOUNT, FIXED PLUS ACCOUNT AND GA ACCOUNT
- --------------------------------------------------------------------------------
TRANSFERS: An unlimited number of Transfers may be made during the
Accumulation Period. Aetna allows 12 free Transfers in
any calendar year. Thereafter, Aetna reserves the
right to charge $10 for each subsequent Transfer.
SYSTEMATIC WITHDRAWAL The Specified Payment may not be greater than 20% of
OPTION (SWO): the Individual Account's Current Value at the time of
election.
The Specified Period may not be less than five years.
The Specified Percentage may not be greater than 20%.
See Section 1. - DEFINITIONS for explanations.
ii
<PAGE>
CONTRACT SCHEDULE II
ANNUITY PERIOD
SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
CHARGES TO SEPARATE A daily charge at an annual effective rate of 1.25% for
ACCOUNT: Annuity mortality and expense risks. The
administrative charge is established upon election of
an Annuity option. This charge will not exceed 0.25%.
VARIABLE ANNUITY ASSUMED If a Variable Annuity is chosen, an assumed annual net
ANNUAL NET RETURN RATE: return rate of 5.0% may be elected. If 5.0% is not
elected, Aetna will use an assumed annual net return
rate of 3.5%.
The assumed annual net return rate factor for 3.5% per
year is 0.9999058.
The assumed annual net return rate factor for 5.0% per
year is 0.9998663.
If the portion of a Variable Annuity payment for any
Fund is not to decrease, the Annuity return factor
under the Separate Account for that Fund must be:
(a) 4.75% on an annual basis plus an annual return of
up to 0.25% to offset the administrative charge
set at the time Annuity payments commence if an
assumed annual net return rate of 3.5% is chosen;
or
(b) 6.25% on an annual basis plus an annual return of
up to 0.25% to offset the administrative charge
set at the time Annuity payments commence, if an
assumed annual net return rate of 5% is chosen.
ANNUITY OPTION: Under the option "Payments for a Stated Period of
Time":
For amounts invested in the GA Account or one or more
of the Fund(s), the number of years must be at least
five (5) and not more than thirty (30) and the Annuity
may be a Fixed or Variable Annuity.
For amounts invested in the Fixed Plus Account, the
number of years must be at least five (5) and not more
than thirty (30) and the Annuity must be a Fixed
Annuity.
FIXED ANNUITY
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE
See Section 1. - DEFINITIONS for explanations.
iii
<PAGE>
TABLE OF CONTENTS
I. DEFINITIONS
- --------------------------------------------------------------------------
PAGE
1.01 Accumulation Period. . . . . . . . . . . . . . . . . . . . . . . . . 6
1.02 Adjusted Current Value . . . . . . . . . . . . . . . . . . . . . . . 6
1.03 Annuitant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.04 Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.05 Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.06 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.07 Contract Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.08 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.09 Current Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.10 Deposit Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.11 Fixed Plus Account . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.12 Fixed Plus Account Guaranteed Interest Rate. . . . . . . . . . . . . 7
1.13 Fixed Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.14 Fund(s). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.15 General Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.16 Guaranteed Accumulation Account (GA Account) . . . . . . . . . . . . 7
1.17 GA Account Guaranteed Interest Rate. . . . . . . . . . . . . . . . . 7
1.18 Guaranteed Term. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.19 Individual Account . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.20 Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.21 Market Value Adjustment (MVA). . . . . . . . . . . . . . . . . . . . 8
1.22 Matured Term Value . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.23 Matured Term Value Transfer. . . . . . . . . . . . . . . . . . . . . 8
1.24 Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.25 Net Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.26 Nonunitized Separate Account . . . . . . . . . . . . . . . . . . . . 8
1.27 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.28 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.29 Reinvestment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.30 Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3
<PAGE>
PAGE
1.31 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.32 Valuation Period . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.33 Variable Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . 9
II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 Change of Contract . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.02 Change of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.03 Nonparticipating Contract. . . . . . . . . . . . . . . . . . . . . . 11
2.04 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.05 State Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.06 Control of Contract. . . . . . . . . . . . . . . . . . . . . . . . . 11
2.07 Misstatements and Adjustments. . . . . . . . . . . . . . . . . . . . 12
2.08 Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.09 Grace Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Individual Certificates. . . . . . . . . . . . . . . . . . . . . . . 12
III. CONTRIBUTIONS, CURRENT VALUE, and WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
3.01 Limitations on Contributions . . . . . . . . . . . . . . . . . . . . 12
3.02 Net Contribution(s). . . . . . . . . . . . . . . . . . . . . . . . . 13
3.03 Experience Credits . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.04 Fund Record Units. . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.05 Fund Record Unit Value . . . . . . . . . . . . . . . . . . . . . . . 13
3.06 Fund Net Return Factors. . . . . . . . . . . . . . . . . . . . . . . 13
3.07 Market Value Adjustment. . . . . . . . . . . . . . . . . . . . . . . 14
3.08 Transfer(s). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.09 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.10 Notice to the Participant. . . . . . . . . . . . . . . . . . . . . . 19
3.11 Withdrawal Restrictions. . . . . . . . . . . . . . . . . . . . . . . 19
3.12 Manner and Timing of Distributions . . . . . . . . . . . . . . . . . 20
3.13 Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.14 Partial Withdrawal from the Fixed Plus Account . . . . . . . . . . . 21
4
<PAGE>
PAGE
3.15 Payment of Fixed Plus Account Full Withdrawal. . . . . . . . . . . . 21
3.16 Alternative Payment of Fixed Plus Account Full Withdrawal. . . . . . 21
3.17 Payment of Minimum Current Value . . . . . . . . . . . . . . . . . . 22
3.18 Amount Payable at Death (Before Annuity Payments Start). . . . . . . 22
3.19 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
IV. NON-ANNUITY DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
4.01 Distribution Options . . . . . . . . . . . . . . . . . . . . . . . . 23
4.02 Estate Conservation Option . . . . . . . . . . . . . . . . . . . . . 23
4.03 Systematic Withdrawal Option . . . . . . . . . . . . . . . . . . . . 25
IV. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
5.01 Choices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.02 Terms of Annuity Options . . . . . . . . . . . . . . . . . . . . . . 28
5.03 Death Provision. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.04 Fund Annuity Units . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.05 Fund Annuity Unit Value. . . . . . . . . . . . . . . . . . . . . . . 29
5.06 Fund Annuity Net Return Factor . . . . . . . . . . . . . . . . . . . 29
5.07 Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5
<PAGE>
I. DEFINITIONS
- --------------------------------------------------------------------------------
1.01 ACCUMULATION PERIOD: The period during which Net Contribution(s)
are applied to an Individual Account.
1.02 ADJUSTED CURRENT The Current Value (See 1.09) of an Individual
VALUE: Account (See 1.19) plus or minus any
applicable aggregate GA Account Market Value
Adjustment, if applicable (See 3.07).
1.03 ANNUITANT: If an Annuity provides lifetime benefits, the
person whose life expectancy determines the
amount and/or duration of Annuity benefit
payments.
1.04 ANNUITY: Payment of an income under the Annuity
Provisions of Section V:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.05 BENEFICIARY: Each Participant shall name the beneficiary
of the Employer and Employee Account. Aetna
will pay any portion of the Individual
Account(s) Current Value to the beneficiary
in accordance with the provisions of Section
3.18.
1.06 CODE: The Internal Revenue Code of 1986, as
amended.
1.07 CONTRACT HOLDER: The entity, named on the cover of this
Contract, to which the Contract is issued.
1.08 CONTRIBUTION: A payment received at Aetna's Home Office and
allocated to the Contract.
1.09 CURRENT VALUE: For an Individual Account (See 1.19), the
Current Value is the total of:
(a) The amount, if any, in the Fixed Plus
Account, with interest earned to date;
(b) The amount, if any, in the GA Account,
with interest earned to date; and
(c) The value of all Fund record units (See
3.05), if any, as of the most recent
Valuation Period.
1.10 DEPOSIT PERIOD: A calendar month, a calendar quarter, or any
other period of time specified by Aetna
during which Net Contribution(s), Transfers
and Reinvestments are accepted into the GA
Account for one or more Guaranteed Terms.
1.11 FIXED PLUS ACCOUNT: An accumulation option with a guaranteed
minimum interest rate. Aetna may credit a
higher rate which is not guaranteed. The
portion that may be withdrawn or transferred
in a 12 month period is restricted (See 3.08,
3.14 and 3.15).
6
<PAGE>
1.12 FIXED PLUS ACCOUNT Aetna will add interest daily at an annual
GUARANTEED INTEREST rate no less than that shown on Contract
RATE: Schedule I on any Net Contribution(s) to the
Fixed Plus Account. Aetna may add interest
daily at a higher rate determined by its
Board of Directors.
1.13 FIXED ANNUITY: An Annuity with payments that do not vary in
amount.
1.14 FUND(S): The open-end registered management investment
companies (mutual funds) in which the
Separate Account invests.
1.15 GENERAL ACCOUNT: The account holding the assets of Aetna,
other than those assets held in Aetna's
Separate Account(s) and Nonunitized Separate
Account(s).
1.16 GUARANTEED ACCUMULATION An accumulation option where Aetna guarantees
ACCOUNT (GA ACCOUNT): stipulated rate(s) of interest for a
specified period of time. All assets of
Aetna, including amounts in the Nonunitized
Separate Account, are available to meet the
guarantees for the GA Account.
1.17 GA ACCOUNT GUARANTEED Aetna will declare the interest rate(s)
INTEREST RATE: applicable to a specific Guaranteed Term at
the start of the Deposit Period for that
Guaranteed Term. The rate(s) are guaranteed
by Aetna for that Deposit Period and the
ensuing Guaranteed Term. The Guaranteed
Interest Rates are annual effective yields.
That is, interest is credited daily at a rate
that will produce the Guaranteed Interest
Rate over the period of a year. No
Guaranteed Interest Rate will ever be less
than the Minimum Guaranteed Interest Rate
shown on Contract Schedule I.
For Guaranteed Terms of one year or less, one
Guaranteed Interest Rate is credited for the
full Guaranteed Term. For longer Guaranteed
Terms, an initial Guaranteed Interest Rate is
credited from the date of deposit to the end
of a specified period within the Guaranteed
Term. There may be different Guaranteed
Interest Rate(s) declared for subsequent
specified time intervals throughout the
Guaranteed Term.
1.18 GUARANTEED TERM: The period of time for which GA Account
Guaranteed Interest Rates are guaranteed on
Net Contributions, Transfers and
Reinvestments made into a current Deposit
Period for the GA Account. Such period
begins on the day following the close of the
Deposit Period and ends on the designated
Maturity Date. Guaranteed Terms are offered
at Aetna's discretion for various lengths of
time ranging up to and including ten years
and are classified as follows:
SHORT-TERM. Three (3) or fewer years.
Amounts allocated to a short-term Term are
held in the General Account.
LONG-TERM. More than three (3) years, but
not more than ten (10). Amounts allocated to
a long-term Term are held in the Nonunitized
Separate Account.
During a Deposit Period, Aetna may make
available any number of Guaranteed Terms.
The Participant may allocate Net
Contributions and Transfers into any or all
of the available Guaranteed Terms.
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1.19 INDIVIDUAL ACCOUNT: This Contract is issued to the Contract
Holder. However, Aetna will maintain at
least two Individual Accounts for each
Participant. These are:
(a) An Employer Account: This Individual
Account will be credited with employer
Net Contribution(s) and transferred
amounts of 403(b) funds, attributable
to employer contributions; and
(b) An Employee Account: This Individual
Account will be credited with employee
Net Contribution(s) and transferred
amounts of 403(b) funds, attributable
to employee contributions.
1.20 LOAN ACCOUNT: An account established for record keeping
purposes and credited with the amount on any
loan.
1.21 MARKET VALUE ADJUSTMENT An adjustment to the amount withdrawn or
(MVA): Transferred from an GA Account Guaranteed
Term prior to the end of that Guaranteed
Term. The adjustment reflects the change in
the value of the investment due to changes in
interest rates since the date of deposit and
is computed using the formula given in 3.07.
The adjustment is expressed as a percentage
of each dollar being withdrawn.
1.22 MATURED TERM VALUE: The amount payable on a GA Account Guaranteed
Term's Maturity Date.
1.23 MATURED TERM VALUE During the calendar month following a GA
TRANSFER: Account Maturity Date, the Participant may
notify Aetna's Home Office in writing to
Transfer or withdraw all or part of the
Matured Term Value, plus interest at the new
Guaranteed Rate accrued thereon, from the GA
Account without an MVA. This provision only
applies to the first such written request
received from the Participant during this
period for any Matured Term Value.
1.24 MATURITY DATE: The last day of a GA Account Guaranteed Term.
1.25 NET CONTRIBUTION: A Contribution less any applicable premium
taxes.
1.26 NONUNITIZED SEPARATE An account established by Aetna under Section
ACCOUNT: 38a-433 of the Connecticut General Statutes
that holds assets for GA Account Terms (See
1.18) greater than three years. The Contract
Holder or Participant does not participate in
the investment gain or loss from the assets
held in the Nonunitized Separate Account.
Such gain or loss is borne entirely by Aetna.
Assets in this account may be charged with
liabilities arising out of any other Aetna
business.
1.27 PARTICIPANT: A person who participates in the Plan named
on the cover of the Contract.
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1.28 PLAN: The Plan intended to qualify under Section
403(b) of the Code and named on the cover of
the Contract. The Plan is not a part of the
Contract and Aetna is not bound by its terms.
1.29 REINVESTMENT: Aetna will mail a notice to the Participant
at least 18 calendar days before a Guaranteed
Term's Maturity Date. This notice will
contain the Terms available during the
current Deposit Periods with their Guaranteed
Interest Rate(s) and projected Matured Term
Value. If no specific direction is given by
the Participant prior to the Maturity Date,
each Matured Term Value will be reinvested in
the current Deposit Period for a Guaranteed
Term of the same duration. If a Guaranteed
Term of the same duration is unavailable,
each Matured Term Value will automatically be
reinvested in the current Deposit Period for
the next shortest Guaranteed Term available
in the same classification. If no shorter
Guaranteed Term is available, the next longer
Guaranteed Term will be used. Aetna will
mail a confirmation statement to the
Participant, the next business day after the
Maturity Date. This notice will state the
Guaranteed Term and Guaranteed Interest
Rate(s) which will apply to the reinvested
Matured Term Value.
1.30 SEPARATE ACCOUNT: An account, established by Aetna under
Section 38a-433 of the Connecticut General
Statutes, that buys and holds shares of the
Fund(s) available under this Contract.
Income, gains or losses, realized or
unrealized are credited or charged to the
Separate Account without regard to other
income, gains or losses of Aetna. Aetna owns
the assets held in the Separate Account and
is not a trustee of such amounts. Amounts in
the Separate Account are not generally
guaranteed and are held at market value. The
assets of the Separate Account, to the extent
of reserves and other contract liabilities of
the Account, cannot be charged with other
Aetna liabilities.
1.31 TRANSFER: The movement of invested amounts among the
available Fund(s); the Fixed Plus Account and
the GA Account during the Accumulation
Period.
1.32 VALUATION PERIOD: The period as of 4:15 p.m. Eastern time on
each day the New York Stock Exchange is open
for business to 4:15 p.m. Eastern time of the
next such business day, or such other day
that one or more of the Fund(s) determines
its net asset value.
1.33 VARIABLE ANNUITY: An Annuity with payments that vary with the
net investment results of the Funds available
during the Annuity period.
II. GENERAL PROVISIONS
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2.01 CHANGE OF CONTRACT: (a) Only an authorized Aetna officer can
change the provisions of the Contract and
the change must be in writing.
(b) Aetna cannot change the amount or terms
of Annuity benefit payments after payment
has commenced.
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2.01 CHANGE OF CONTRACT (c) Aetna may change the following provisions
(CONT'D): without Contract Holder consent.
(1) Any provision that must be changed to
comply with state or federal law
(2) Calculation of the Market Value
Adjustment
(3) Estate Conservation Option
(4) Systematic Withdrawal Option
(5) Allocation of Contributions or
Transfers to the Fixed Plus Account
(6) New Annuity Options
Aetna will notify the Contract Holder, in
writing, at least thirty (30) days before
the effective date of the change. Such a
change will apply to all current and
future Individual Accounts.
(d) Aetna may change the Tables for
determining the amount of Annuity benefit
payments without Contract Holder consent.
Such a change will not become effective
earlier than twelve months after (1) the
effective date of the Contract, or (2)
the effective date of a previous change.
Aetna will notify the Contract Holder, in
writing, at least thirty (30) days before
the effective date of the change. The
change will apply to all current and
future Individual Accounts.
(e) The Contract Holder must agree to any
change in provisions concerning the
following:
(1) A reduction in the GA Account Minimum
Guaranteed Interest Rate
(2) A reduction in the Fixed Plus Account
Minimum Guaranteed Interest Rate
(3) Fund Accumulation Period Net Return
Factor
(4) Current Value
(5) Annuity Unit Value
(6) Existing Annuity Options
(7) Fixed Annuity Minimum Guaranteed
Interest Rates
Aetna will notify the Contract Holder, in
writing, at least thirty (30) days before
the effective date of the proposed
change. Such a change will apply to
future Individual Accounts.
If the Contract Holder does not agree to
a proposed change, Aetna reserves the
right to: (1) discontinue establishing
new Individual Accounts; and (2)
discontinue accepting Contributions to
existing Individual Accounts.
2.02 CHANGE OF FUND: Aetna, or the Separate Account, may:
(a) Change the Fund(s) in which the
Separate Account invests; and/or
(b) Replace the shares of any Fund(s)
held in the Separate Account with
shares of any other Fund(s).
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2.02 CHANGE OF FUND Changes must be:
(CONT'D):
(a) Approved by a majority vote in the
Separate Account with respect to the
Fund(s) whose shares are to be replaced;
(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
such change.
2.03 NONPARTICIPATING The Contract Holder, Participants, or
CONTRACT: Beneficiaries will not have a right to share
in the earnings of Aetna.
2.04 PAYMENTS: (a) Aetna will make distributions as directed
by the Contract Holder. Aetna will
determine the amount of payments based on
the Individual Account's Current Value as
of the date on which a request is
received in good order at Aetna's Home
Office. Payments will be made within
seven (7) calendar days of receipt of a
written request in good order at Aetna's
Home Office.
(b) Aetna may defer payments: (1) for a
period of up to six (6) months (unless
not allowed by state law); and (2) as
allowed by federal law.
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 designed to fund a
governmental plan which provides for
retirement income that is not subject to
Title I of the Employee Retirement Income
Security Act of 1974 (ERISA), as amended by
subsequent law including REA.
The Participant may select the investment
option(s) for the Employer Account and the
Employee Account. Choices made under the
Contract must be in writing or in a form
satisfactory to Aetna. Until receipt of such
choices in its Home Office, Aetna may rely on
any previous choices made. No distributions
will be made from the Employer Account or the
Employee Account without the Contract
Holder's written direction to Aetna.
(a) Nontransferable and Nonassignable: The
Contract and any Individual Accounts are
nontransferable and nonassignable, except
to Aetna in the event of a loan, or
pursuant to a "qualified domestic
relations order" as set forth under the
Internal Revenue Code of 1986, as it may
be amended from time to time.
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2.06 CONTROL OF CONTRACT (b) Distributions: A Participant may apply
(CONT'D): for a distribution from his or her
Employee Account or Employer Account.
However, the Contract Holder must certify
in writing that the distribution is in
accordance with the terms of the Plan.
(c) Participant Rights/Employee Account: The
Participant has a nonforfeitable right to
the value of his or her Employee Account
pursuant to the terms of the Plan as
interpreted by the Contract Holder.
(d) Participant Rights/Employer Account: The
Participant has a nonforfeitable right to
the value of his or her Employer Account
pursuant to the terms of, and to the
extent of his or her vested percentage
under, the Plan as interpreted by the
Contract Holder. It is the Contract
Holder's responsibility to maintain
records of the Participant's vesting
percentages. Aetna will not maintain nor
keep such records.
2.07 MISSTATEMENTS AND If Aetna finds the age of any payee to be
ADJUSTMENTS: misstated, the correct facts will be used to
adjust payments.
2.08 INCONTESTABILITY: Aetna cannot cancel this Contract because of
any error of fact on the application.
2.09 GRACE PERIOD: This Contract will remain in effect even if
Contributions are not continued except as
provided in 3.17.
2.10 INDIVIDUAL CERTIFICATES: Aetna shall issue certificates to
Participants as required by the state in
which the Contract is delivered. The
certificate will summarize certain provisions
of the Contract. Certificates are for
information only and are not a part of the
Contract.
III. CONTRIBUTIONS, CURRENT VALUE, AND WITHDRAWAL PROVISIONS
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3.01 LIMITATIONS ON The Contribution(s) made to the Employee and
CONTRIBUTIONS: Employer Account in any year cannot exceed
the lesser of the amount determined under the
exclusion allowance of Code Section 403(b)(2)
or the annual additions limitation of Code
Section 415(c)(1). In addition, in no event
may the Contribution(s) attributable to
elective deferrals as defined in Code Section
402(g) exceed $9,500 (or, such larger amount
as adjusted by the Secretary of the Treasury)
during any calendar year, unless the
alternate limitation of Code Section
402(g)(8) applies.
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<PAGE>
3.02 NET CONTRIBUTION(S): The Net Contribution equals the actual
Contribution less any applicable premium tax.
Generally, Aetna will deduct the premium tax
when Annuity benefits are purchased (See
Section V). If Aetna determines that under
applicable state law, it must pay a premium
tax when the Contribution is received, or at
any other time, it will deduct the tax at
that time. The Net Contribution(s) may be
allocated among the following investment
options:
(a) The Fixed Plus Account; and
(b) The current Deposit Period(s) for
Guaranteed Terms under the GA Account;
and
(c) The Fund(s) in which the Separate Account
invests.
Aetna must be told the percentage of all Net
Contributions to allocate to one or more of
the investment options. Aetna reserves the
right to require a minimum Contribution
amount per Individual Account.
3.03 EXPERIENCE CREDITS: Aetna may apply experience credits under this
Contract. Any such credits will be computed
as decided by Aetna.
3.04 FUND RECORD UNITS: The portion of the Net Contribution(s)
applied to each Fund under the Separate
Account will determine the number of Fund
record units credited to the Individual
Account for that Fund. This number is equal
to the Net Contribution applied to the Fund
divided by the Fund record unit value (see
3.05) for the Valuation Period in which the
Contribution is received in good order.
3.05 FUND RECORD A Fund record unit value is computed by
UNIT VALUE: multiplying the net return Factor (See 3.06)
for the current Valuation Period by the Fund
record unit value for the previous Period.
The dollar value of a Fund record unit,
Separate Account assets, and Variable Annuity
payments may go up or down due to investment
gain or loss.
3.06 FUND NET The net return factor(s) are used to compute
RETURN FACTORS: all Separate Account record units for any
Fund. The net return factor for each Fund is
equal to 1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held
by the Separate Account at the end of a
Valuation Period; minus
(b) The value of the shares of the Fund held
by the Separate Account at the start of
the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the
Separate Account (if any); divided by
(d) The total value of the Fund record units
and Fund annuity units of the Separate
Account at the start of the Valuation
Period; minus
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<PAGE>
3.06 FUND NET (e) A Separate Account charge at an annual
RETURN FACTORS effective rate as shown on Contract
(CONT'D): Schedule I for Annuity mortality and
expense risks, asset based sales charge
and profit and a daily administrative
charge which will not exceed the amount
shown on Contract Schedule I on an annual
basis. The administrative charge may be
changed annually except for amounts which
have been used to purchase an Annuity.
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 MARKET VALUE (a) An MVA will be applied to any withdrawal
ADJUSTMENT: from the GA Account Term before the
Maturity Date due to:
(1) A Transfer;
(2) A full or partial withdrawal; or
(3) A payment of a premium for Annuity
Option 2.
The amount of the withdrawal will be adjusted
to a market value amount as described in (b).
(b) Market value adjusted amounts will be
equal to the amount withdrawn multiplied
by the following ratio
X
---
365
(1 + i)
-------------------------
X
---
365
(1 + j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days
remaining, (computed from
Wednesday of the week of
withdrawal) in the Term.
(c) The Deposit Period Yield will be
determined as follows:
(1) At the close of the last business day
of each week of the Deposit Period, a
yield will be computed as the average
of the yields on that day of U.S.
Treasury Notes which mature in the
last three months of the Term.
(2) The Deposit Period Yield is the
average of those yields for the
Deposit Period. If withdrawal is
made prior to the close of the
Deposit Period, it is the average of
those yields on each week preceding
withdrawal.
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<PAGE>
3.07 MARKET VALUE (3) The Current Yield is the average of
ADJUSTMENT the yields on the last business day
(CONT'D): of the week preceding withdrawal on
the same U.S. Treasury Notes included
in the Deposit Period Yield.
(4) In the event that no U.S. Treasury
Notes which mature in the last three
months of the Term exist, Aetna
reserves the right to use the U.S.
Treasury Notes that mature in a
following quarter.
(d) Full and partial withdrawals as well as
Transfers made within six (6) months
after the Participant's date of death
under the Amount Payable at Death
provision (See 3.18) will be the greater
of:
(1) The aggregate MVA amount which is the
sum of all market value adjusted
amounts calculated due to a
withdrawal of amounts (for withdrawal
or Transfer) from Terms prior to the
end of those Terms. The aggregate
MVA may be either positive or
negative; or
(2) The applicable portion of the Current
Value in the GA Account.
(e) After the six month period, the
withdrawal or Transfer will be the
aggregate MVA amount (i.e., including all
MVAs).
(f) The greater of the aggregate MVA amount
or the applicable portion of the Current
Value in the GA Account is applied to
amounts withdrawn from the GA Account for
payment of a premium under Annuity
options 3 or 4.
3.08 TRANSFER(S): Before an Annuity option is elected, all or
any portion of the Adjusted Current Value of
the Individual Account (subject to the
limitations described below) may be
transferred from any Fund, the Fixed Plus
Account or the GA Account:
(a) To any Fund; or
(b) To the Fixed Plus Account; or
(c) To any Guaranteed Term of the GA Account
with a different classification available
in the Current Deposit Period.
Transfer requests can be submitted as a
percentage or as a dollar amount. Aetna may
establish a minimum transfer amount. Within
a Guaranteed Term classification, the amount
transferred will be withdrawn from the oldest
Deposit Period, then from the next oldest,
and so on until the amount requested is
satisfied.
Amounts applied to Guaranteed Terms of the GA
Account may not be transferred to the Funds,
the Fixed Plus Account or to another
Guaranteed Term during the Deposit Period or
90 days after the close of the Deposit Period
except for Matured Term Value(s) during the
calendar month following the Term's Maturity
Date.
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<PAGE>
3.08 TRANSFER(S) (CONT'D): Transfers from Guaranteed Terms of the GA
Account are subject to the MVA provisions of
3.07.
During each rolling twelve (12) month
period, up to 20% of the Fixed Plus Account
value may be transferred to one or more of
the Fund(s), and/or the GA Account's then-
current Deposit Period. The 20% limit is
reduced by any partial withdrawals, Transfers
or amounts taken as a loan or used to
purchase an Annuity during the twelve (12)
month period. Aetna reserves the right to
include amounts paid under ECO and SWO
provisions for purposes of applying this 20%
limit. This limit is waived when the balance
in the Fixed Plus Account is $1,000 or less
on the date the Transfer request is received
in good order at Aetna's Home Office.
The Participant may make an unlimited number
of Transfers during the Accumulation Period.
The number of free Transfers allowed by Aetna
is shown on Contract Schedule I. Additional
Transfers may be subject to a Transfer fee as
shown on Contract Schedule I. Transfers from
the GA Account of a Matured Term Value on or
within one calendar month of a Term's
Maturity Date do not count against the annual
Transfer limit.
3.09 LOANS: During the Accumulation Period, the
Participant may request a loan from his or
her Individual Account by submitting a loan
request form. The loan effective date is the
date Aetna receives a loan request form in
good order at its Home Office.
A loan will not be allowed within 12 months
of the effective date of any prior loan. The
Employee and Employer Accounts Current Value
must be at least $2,000 and the minimum loan
amount is $1,000.
A loan that meets provisions set forth in
Code Section 72(p) is not considered a
taxable distribution.
(a) The amount available for a loan is
calculated based on the Current Value of
the Employer and Employee Accounts. The
loan amount is limited to the lesser of:
(1) 50% of the Employee and Employer
Accounts vested Current Value on the
date the loan is made; or
(2) $50,000 reduced by the amount of the
highest outstanding loan balance
during the preceding 12 month period
that ends the day before the current
loan is made.
Loans may only be made from the Employee
Account and the vested portion of the
Employer Account.
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<PAGE>
3.09 LOANS (b) When the loan is made, only amounts in
(CONT'D): the Funds and Fixed Plus Account may be
withdrawn and transferred to the Loan
Account. The amounts will be withdrawn
in the same proportion as the Employee
Account and the Employer Account's vested
Current Value are divided between the
Fixed Plus Account and/or Funds on the
loan's effective date.
If the amount of the loan requested would
require the proportionate amount
transferred from the Fixed Plus Account
to exceed the amount that would be
allowed under the 20% limit described in
Section 3.08, the Participant may
transfer an additional amount from the
Fixed Plus Account.
The additional amount will be limited and
will never exceed 50% of the Fixed Plus
Account value on the effective date of
the loan, minus any previous partial
withdrawal or Transfer during the 12-
month period the loan becomes effective.
Aetna reserves the right to change the
maximum percentage a Participant can
transfer from the Fixed Plus Account for
the purpose of taking a loan.
If the amount needed to make the loan
exceeds the Fixed Plus Account Transfer
limit, the additional amount will be
withdrawn proportionately from the Funds.
(c) Aetna will record the percentage by which
any amount withdrawn from the Fixed Plus
Account exceeds the 20% Transfer limit
covered in Section 3.08. The percentage
will equal the amount transferred from
the Fixed Plus Account that exceeds the
20% withdrawal limit divided by the total
amount of the loan. In the event of a
loan payment default, this percentage
will be used to calculate the penalty
that would be applied as described in (h)
below.
(d) The loan interest rate will be 5%.
(e) Interest on the Loan Account balance will
be calculated daily at a rate to yield an
effective annual rate of 3%. Interest
will be credited quarterly based on the
loan's effective date and credited to the
Funds and/or Fixed Plus Account in the
same proportion in which the loan amount
was withdrawn.
(f) Principal and interest on loans is
amortized in quarterly payments over a
one to five year term. The Participant
chooses the number of years. An
exception applies to loans taken for the
acquisition of the Participant's
principal residence. Loans for this
purpose can be amortized quarterly over a
one to 20 year term, as elected by the
Participant. The Participant must
certify in writing that a loan is for the
purchase of a principal residence.
The term of the loan, elected by the
Participant, must result in full
repayment no later than December 31 of
the calendar year prior to the calendar
year in which the Participant reaches age
70 1/2.
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<PAGE>
3.09 LOANS The entire Loan Account balance may be
(CONT'D): paid in full at any time. Aetna will
bill the Participant for any loan
interest accrued to the date the payment
is received. Aetna will consider the
loan paid when the interest amount is
received.
(g) A bill in the amount of the quarterly
payment due will be mailed to the
Participant in advance of the due date.
The first due date is three months from
the loan's effective date and quarterly
thereafter. A loan payment will be in
default if it is not received by Aetna at
its Home Office by the due date.
The principal portion of each loan
payment will be credited to the
Participant's Fixed Plus Account and/or
the Funds in the same proportion in which
the loan amount was withdrawn. The Loan
Account will then be reduced by the
principal portion of the payment.
(h) If a payment is in default, a partial
withdrawal in an amount equal to the
payment due will be deducted from the
Individual Account at the close of
business on the due date. Payments that
are less than the amount due will be
returned and if the full payment is not
received by the due date, the payment
will be in default.
The required amount will be withdrawn
from the Fixed Plus Account and/or the
Funds in the same proportion in which the
loan amount was withdrawn. This amount
will be applied as a loan payment as set
forth in (g) above. Aetna will report to
the IRS the amount withdrawn to pay the
default.
In addition, if the amount withdrawn from
the Fixed Plus Account to make the loan
exceeded the 20% annual withdrawal
limitation described in Section 3.14, a
5% charge will be assessed on the same
percentage of the defaulted payment. For
example, if 60% of the amount withdrawn
was in excess of the limit, then 60% of
the amount withdrawn for the defaulted
payment will be subject to the additional
5% charge.
(i) If a Participant makes a payment that is
more than the billed amount, the excess
will be credited to the Fixed Plus
Account and/or the Funds in the same
proportion in which the loan amount was
withdrawn. The Loan Account will be
reduced by the additional amount. On the
following loan anniversary date, future
payments will be recalculated to reflect
the additional principal payment so that
the outstanding balance is amortized in
equal quarterly payments over the
remaining loan term.
(j) Upon the election of an Annuity option or
at the Participant's death, any Loan
Account will be cancelled. This will
result in a taxable distribution of an
amount equal to the Loan Account balance.
Interest earned but not yet credited will
be credited to, and loan interest accrued
but not paid will be deducted from, the
Current Value in the same proportion in
which the loan amount was withdrawn.
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<PAGE>
3.09 LOANS (k) If there is an outstanding Loan Account
(CONT'D): balance when a Participant makes a full
withdrawal of the Current Value of his or
her Individual Account (1) interest
earned but not credited will be credited
to, and (2) uncollected accrued loan
interest will be deducted from the
Current Value. The Loan Account will be
cancelled resulting in a taxable
distribution of an amount equal to the
Loan Account balance.
3.10 NOTICE TO THE Each year, Aetna will notify the
PARTICIPANT: Participant of:
(a) The value of any amounts held in:
(i) The Fixed Plus Account,
(ii) The GA Account,
(iii)The Fund(s) for the Separate
Account;
(b) The number of any Fund(s) record units;
(c) The Fund(s) record unit value(s);
(d) The amount available for withdrawal; and
(e) The Loan Account value.
This information will be as of a date no more
than sixty (60) days before the date of the
notice.
3.11 WITHDRAWAL RESTRICTIONS: Limitations apply to full and partial
withdrawals of any Restricted Amount from
this Contract, as required by Code Section
403(b)(11). The Restricted Amount is the sum
of:
(a) Net Contributions attributable to
Participant salary reduction
contributions made on and after January
1, 1989 if any; plus
(b) The net increase, if any, in the Current
Value of the Employee Account after
December 31, 1988 attributable to
investment gains and losses and credited
interest.
The Restricted Amount may be fully or
partially surrendered only if one or more of
the following conditions are met:
(a) The Participant has reached age 59 1/2;
(b) The Participant has separated from
service;
(c) The Participant has died;
(d) The Participant has become disabled,
within the meaning of Code Section
72 (m)(7); or
(e) The withdrawal is otherwise allowed by
federal law, regulations or rulings.
A full or partial withdrawal is also allowed
if the Participant incurs a "hardship" as
that term is defined in the Code or
regulations under Code Section 403(b).
However, the amount available for hardship is
limited to the lesser of the amount necessary
to satisfy the need, or the Net Contributions
attributable to Participant salary reduction
contributions made on and after January 1,
1989.
19
<PAGE>
3.11 WITHDRAWAL RESTRICTIONS The Contract Holder must certify that one of
(CONT'D): these conditions has been met before a
withdrawal request will be considered to be
in good order. The Contract Holder must
notify Aetna in writing when a lump sum
payment is to be made or Annuity payments are
to commence.
If, pursuant to Revenue Ruling 90-24, amounts
are transferred to this Contract from a Code
Section 403(b)(7) custodial account, the
December 31, 1988 value from such transferred
amount may be distributed upon the Contract
Holder's request. The Contract Holder must
certify that one of the conditions mentioned
above has been met or that the Participant
has incurred a hardship. The remaining
transferred value from the Employee Account
will be considered a Restricted Amount
subject to the Surrender Restrictions of this
subsection.
3.12 MANNER AND TIMING (a) A distribution to a Participant may be
OF DISTRIBUTIONS: made in a lump sum, as one of the
Distribution Options described in Section
IV, or as one of the Annuity options in
Section V. The Participant may elect the
form of distribution subject to
certification in writing by the Contract
Holder that the Participant is eligible
both as to the timing and form of
distribution.
(b) The distribution of benefits from the
Employee and Employer Account must begin
by April 1 of the calendar year following
the calendar year in which the
Participant attains age 70 1/2 or
retires, whichever occurs later.
(c) If the Participant does not request
commencement of benefits from the
Employee and Employer Account as
described above, Aetna will not be
responsible for compliance with the Code
Section 401(a)(9) minimum distribution
requirements or for any adverse tax or
other consequences that may result.
3.13 WITHDRAWAL: (a) The Participant may withdraw any portion
or all of an Individual Account Adjusted
Current Value and transfer such amount to
another investment provider under the
Plan. The withdrawal and transfer
request must be submitted in writing to
Aetna.
(b) Except as described in Section 3.14,
unless the Participant specifies
otherwise, partial withdrawals are
satisfied by withdrawing amounts on a pro
rata basis from each of the investment
options in which the Individual Account
is invested.
(c) When amounts are withdrawn from the GA
Account, amounts in Short-Term and Long-
Term Classifications are treated as
separate investment options and amounts
are taken on a pro rata basis. Within a
Classification, amounts will be withdrawn
starting with the Term still in effect
with the oldest Deposit Period.
(d) Any amount withdrawn from the Fixed Plus
Account will be subject to the
limitations in 3.14, 3.15 and 3.16.
20
<PAGE>
3.14 PARTIAL WITHDRAWAL The amount eligible for partial withdrawal is
FROM THE FIXED PLUS 20% of the Current Value of the amount held
ACCOUNT: in the Fixed Plus Account on the day Aetna's
Home Office receives a written request,
reduced by any previous Transfer, partial
withdrawal or amounts taken as a loan or used
to purchase Annuity benefits during the prior
12 months. Aetna reserves the right to
include amounts paid under ECO and SWO for
purposes of applying this 20% limit.
However, SWO is unavailable if a Fixed Plus
Account Transfer or withdrawal is requested
within the current 12 month period.
The 20% limit applicable to partial
withdrawals from the Fixed Plus Account will
be waived under certain conditions and will
apply when the partial withdrawal is made on
a pro rata basis from all options used under
the Participant's Individual Account. (See
Contract Schedule I).
3.15 PAYMENT OF FIXED When Aetna receives a full withdrawal
PLUS ACCOUNT FULL request, no additional partial withdrawals or
WITHDRAWAL: Transfers from the Fixed Plus Account are
permitted during the payout period. If a
full withdrawal is requested, Aetna will pay
any Current Value from the Fixed Plus
Account in five payments as follows:
(a) One-fifth of the Current Value on the day
the request is received in good order at
Aetna's Home Office, reduced by any
amount from the Fixed Plus Account that
was transferred, withdrawn or used for a
loan or to purchase Annuity benefits
during the prior 12 months;
(b) One-fourth of the remaining Current Value
12 months later;
(c) One-third of the remaining Current Value
12 months later;
(d) One-half of the remaining Current Value
12 months later; and
(e) The balance of the Current Value 12
months later.
The Fixed Plus Account full withdrawal
payment provision will be waived when a
withdrawal is:
(a) Due to the Participant's death before
Annuity benefit payments begin;
(b) Used to purchase Annuity benefits; or
(c) When the amount in the Fixed Plus Account
is $3,500 or less and no amount has been
withdrawn, transferred, taken as a loan
or used to purchase Annuity benefits
during the previous 12 months.
Any full withdrawal from the Fixed Plus
Account may be cancelled at any time before
the end of the payment period.
3.16 ALTERNATIVE PAYMENT As an alternative to 3.15, the Participant
OF FIXED PLUS ACCOUNT may elect a lump sum payment. The lump-sum
FULL WITHDRAWAL: payment will be the Individual Account's
Current Value invested in the Fixed Plus
Account less a 3% charge provided:
(i) the withdrawal is due to the
Participant's separation from service
with the employer;
21
<PAGE>
3.16 ALTERNATIVE PAYMENT (ii) the withdrawal request is received at
OF FIXED PLUS ACCOUNT Aetna's Home Office within 60 days of
FULL WITHDRAWAL the date the Participant separates
(CONT'D): from service with the employer; and
(iii) the Contract Holder certifies that
the Participant has separated from
service and is eligible to receive a
lump sum distribution.
3.17 PAYMENT OF MINIMUM If the Individual Accounts Current Value is
CURRENT VALUE: less than $3,500, and no Contributions have
been received for three (3) years, Aetna may
close the Account and pay the Current Value
to the Contract Holder in one lump sum.
3.18 AMOUNT PAYABLE AT Aetna will pay any portion of the Individual
DEATH (BEFORE ANNUITY Account(s) Current Value, to the Beneficiary
PAYMENTS START): when:
(a) The Participant dies before Annuity
payments start; and
(b) The certified copy of the death
certificate is received by Aetna.
A guaranteed death benefit is available if
the Beneficiary requests either a lump-sum
payment or an Annuity option within the first
6 months after the Participant's death.
For each Individual Account, the death
benefit is guaranteed to be the greater of:
(a) The Current Value of the Individual
Account plus aggregate positive MVA, as
applicable, on the date the notice of
death and the request for payment are
received in good order at Aetna's Home
Office; or
(b) The total of Net Contribution(s) made to
the Individual Account minus the total of
all partial withdrawals, annuitizations
made from the Individual Account and any
amount allocated from the Individual
Account to the Loan Account.
If the payee of the death proceeds is the
Participant's 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 (1) year of
the Participant's death or be paid to the
payee within five (5) years of the
Participant's death (see Part V).
In no event may any payments to the
Beneficiary under an Annuity option extend
beyond:
(a) The life of the payee determined as of
the date payments are to commence; or
(b) Any certain period greater than the
payee's life expectancy as determined by
regulations under Code Section 401 (a)(9)
as of the date payments are to begin.
Amounts in the GA Account will be payable as
described in Section 3.07(d).
22
<PAGE>
3.19 REINSTATEMENT: All or a portion of the proceeds of a full
withdrawal of an Individual Account may be
reinvested within 30 days after the surrender
if allowed by law. Any Market Value
Adjustment deducted from GA Account
withdrawals will not be included in the
reinstatement. Amounts will be reinstated
among the Fixed Plus Account, GA Account, and
the Fund(s) in the same proportion as they
were at the time of withdrawal. Any amount
reinstated to the GA Account will be credited
to the current Deposit Period. 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.
Any Individual Account(s) closed because the
Current Value was less than $3,500 may not be
reinstated (see 3.17).
Reinstatement is permitted only once per
Individual Account.
IV. NON-ANNUITY DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
4.01 DISTRIBUTION OPTIONS: The Participant or a surviving spouse may
elect one of the two following distribution
options. A surviving spouse is eligible to
elect one of these options provided the
spouse is the designated Beneficiary under
the Plan and the Participant had died before
electing an Annuity option and before the
date for required minimum distributions.
4.02 ESTATE CONSERVATION (a) With the Estate Conservation Option (ECO)
OPTION: a portion of the Individual Account
Current Value is automatically
surrendered and distributed each year.
Each payment will be withdrawn from
the Individual Account in the same
proportion as assets are held in the
Funds, the GA Account, and the Fixed
Plus Account on the date the payment
is made.
(b) Payments under ECO will comply with the
incidental death benefit test set forth
in Code Section 401(a)(9).
(c) Distribution Amount: 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 Individual
Account Current Value as of December 31
of the year prior to the payment year, by
a single or joint life expectancy factor.
If joint life expectancy is elected, the
Beneficiary under ECO must be the same as
the beneficiary of any death benefits
under the Plan.
(d) Life Expectancy Factor: For the
Participant, the life expectancy factor
is either single life or joint life
expectancy as elected by the Participant,
based on tables in IRS regulations. For
a spouse Beneficiary, only a single life
expectancy is available. Life expectancy
factors will be recalculated each year,
unless prohibited by the Code or
regulations.
23
<PAGE>
4.02 ESTATE CONSERVATION If joint life expectancy is elected and
OPTION (CONT'D): the Participant or spouse dies, payments
will be based on the survivor's life
expectancy. If the Beneficiary is not
the spouse and the Beneficiary dies
first, the joint life expectancy
continues to be used to determine
payments.
If a single life expectancy is elected,
at the death of the Participant (or the
spouse who is the designated Beneficiary
electing ECO after the Participant's
death), the entire value must be
distributed no later than the December 31
of the year following the year of the
Participant's (or spouse's) death. If a
joint life expectancy is elected, and
both the Participant and spouse have
died, any remaining Current Value must be
distributed no later than the December 31
of the year following the year of the
second death. If a joint life expectancy
is elected and both the Participant and
non-spouse Beneficiary have died, any
remaining Current Value will be
distributed to a successor Beneficiary
or, if none has been named, then to the
estate of the last to die.
(e) 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 balance of the
Individual Account.
(f) Distribution Date: The Participant shall
specify an annual distribution date. The
earliest date is the first day of the
calendar year in which he or she attains
age 70 1/2, or retirement if later. For
a spouse Beneficiary electing ECO after
the Participant's death, the earliest
date is the date of the Participant's
death. The first distribution date may
be the 15th of any month, or such other
date Aetna may designate or allow.
Subsequent distributions will be made on
the anniversary of that date.
(g) Election and Revocation: The Participant
may elect ECO by submitting a completed
and signed election form to Aetna's Home
Office. The Contract Holder must certify
that the Participant is eligible both as
to the timing and form of distribution.
Once ECO is elected, the Participant may
revoke it 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
per Individual Account.
24
<PAGE>
4.03 SYSTEMATIC WITHDRAWAL (a) With the Systematic Withdrawal Option
OPTION: (SWO) a portion of the individual Account
Current Value is automatically
distributed each year. A SWO payment
will be calculated on the Individual
Account's Current Value. Each payment
will be withdrawn from the Individual
Account in the same proportion as assets
are held in the Funds, the GA Account,
and the Fixed Plus Account on the date
the payment is made.
(b) Payments under SWO will comply with the
incidental death benefit test set forth
in Code Section 401(a)(9).
(c) Distribution Amounts: The Participant
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. If joint life
expectancy is elected, the Beneficiary
under SWO must be the same as the
beneficiary of any death benefits under
the Plan.
(1) Specified Payment: Payments of a
designated annual dollar amount. The
annual amount may not be greater than
the percentage of the Current Value
at time of election as shown on
Contract Schedule I. This amount
will remain constant unless a higher
amount is required under Code minimum
distribution rules.
Each year that the Specified Payment
is in effect, Aetna will calculate
the minimum required distribution by
dividing the Individual Account
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
larger than the Specified Payment.
(2) Specified Period: Payments are made
over a period of time. The number of
years selected may not be less than
the number of years shown on Contract
Schedule I, unless otherwise required
by Code minimum distribution rules.
The maximum specified period will be
limited by the life expectancy
factor. The amount paid each year is
calculated by dividing the Individual
Account Current Value as of December
31 of the prior year by the number of
payment years remaining.
(3) Specified Percentage: The specified
percentage chosen cannot be greater
than the percentage shown on Contract
Schedule I. The Participant may
change the specified percentage
elected every six months. Each
annual distribution is determined by
multiplying the Individual Account
Current Value by the percentage
chosen. The value to be used in this
calculation is the value on the
December 31st prior to the year for
which the payment is being made. For
payments made more often than
annually, the annual payment result
(calculated above) is divided by the
number of payments due each year.
Payments will be made each year until
the year the Participant attains age
70 1/2.
25
<PAGE>
4.03 SYSTEMATIC WITHDRAWAL (d) Life Expectancy Factor: The life
OPTION (CONT'D): expectancy factor for the initial
distribution year is either single life
or joint life expectancy as elected by
the Participant, based on tables in IRS
regulations. For a spouse Beneficiary,
only a single life expectancy is
available. With each subsequent year,
the life expectancy factor will be the
life expectancy factor for the initial
distribution year, reduced by one.
If the joint life expectancy is elected
and the Participant or the Beneficiary
dies on or after the required beginning
date for minimum distributions to the
Participant, the joint life expectancy
factor will continue to be reduced by one
for each distribution year. Payments
will continue unless the Contract Holder
elects an alternate payment mode on
behalf of the survivor. Any payment mode
elected on behalf of the Beneficiary must
provide payments to be made at least as
rapidly as those made prior to the
Participant's death.
If the Participant dies before the
required beginning date for minimum
distributions, SWO payments will cease
and the Beneficiary may claim the death
benefit in accordance with the terms of
the Contract. If the Beneficiary is not
the Participant's spouse, the entire
death benefit must be either applied to
an Annuity option within one (1) year of
the Participant's death, or be paid
within five (5) years of the
Participant's death. If the Beneficiary
is the Participant's spouse, the
distribution is not required to begin
earlier than when the Participant would
have attained age 70 1/2.
If joint life expectancy is elected and
the Beneficiary dies before the required
beginning date for minimum distributions
to the Participant, payments to the
Participant will continue to be based on
joint life expectancy reduced by one for
each distribution year.
(e) 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 balance of the
Individual Account.
(f) Distribution Date: The Participant or
spouse Beneficiary shall specify the
distribution date. The earliest date is
the first day of the calendar year in
which the Participant attains age 59 1/2
or age 55, if separated from service with
the employer at or after age 55. 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.
26
<PAGE>
4.03 SYSTEMATIC WITHDRAWAL (g) Election and Revocation: The Participant
OPTION (CONT'D): may elect SWO by submitting a completed
and signed election form to Aetna's Home
Office. Once SWO is elected, the
Participant may revoke it by submitting a
written request to Aetna's Home Office.
Any revocation will apply only to amounts
not yet paid. Generally, SWO may be
elected only once, however, if SWO is
elected on and then revoked before the
date distributions were required to begin
under Code Section 401(a)(9), SWO may be
elected on behalf of a spouse Beneficiary
after the death of the Participant.
V. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
5.01 CHOICES: (a) The Participant may elect an Annuity
option by telling Aetna to pay all or any
portion of the Individual Account(s)
Current Value (minus any applicable
premium tax if not previously deducted)
as a premium for an Annuity under option
2, 3, or 4 (see 5.07). A completed and
signed election form must be submitted to
the Home Office. The form must include
Contract Holder certification that the
Participant is eligible for a
distribution under the terms of the Plan
and that the Annuity option chosen is
permitted under the terms of the Plan.
Any election of an Annuity option must
comply with the minimum distribution
requirements of Code Section 401(a)(9),
including the incidental death benefit
rule, and the regulations thereunder.
This restriction does not apply if option
4 is chosen and the second Annuitant is
the spouse of the Participant.
(b) Generally, the first Annuity payment must
be made by April 1 of the calendar year
following the year in which the
Participant turns age 70 1/2 or retires,
if later.
(c) When an Annuity option is chosen the
Participant must designate whether the
Annuity will be Fixed or Variable and
whether the underlying investment will
be:
(1) The General Account;
(2) One or more of the available Fund(s);
or
(3) A combination of (1) and (2).
If a Fixed Annuity is chosen, the Annuity
purchase rate for the option chosen
reflects at least the Minimum Guaranteed
Interest Rate (See Contract Schedule II),
but may reflect a higher interest rate.
If a Variable Annuity is chosen, the
initial Annuity payment for the option
chosen reflects the assumed annual return
rate elected (See Contract Schedule II).
(d) Payments will be made on a monthly basis
unless the Participant requests
otherwise.
(e) Once elected, an Annuity option may not
be revoked, except for option 2 when
elected on a variable basis.
27
<PAGE>
5.02 TERMS OF ANNUITY (a) No choice of any Annuity option may be
OPTIONS: made if the first payment would be less
than $20 or if the total payments in a
year would be less than $100.
(b) If a Fixed Annuity under option 2, 3 or 4
is elected and a larger Annuity payment
would result from applying the Adjusted
Current Value to a current Aetna single
premium immediate Annuity, Aetna will
make the larger payment.
(c) 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,
1992 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 rates for options 3 and 4 are
based on mortality from 1983 Table a.
(d) 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 risks charges
(which may include profit) and
administrative charges if future Variable
Annuity Payments are to remain level.
5.03 DEATH PROVISION: When an Annuitant dies under options 2 or 3,
the present value of any remaining guaranteed
payments will be paid in one sum to the
Beneficiary or, upon the election of the
Beneficiary, any remaining payments will
continue to the Beneficiary. If a
Beneficiary dies while under option 1 or
while receiving Annuity payments, the present
value of any remaining payments will be paid
in one lump sum to the Beneficiary's estate.
The rate used to determine the present value
for a lump sum payment will be the rate used
to determine the first Annuity payment.
5.04 FUND ANNUITY The number of Fund(s) annuity units is based
UNITS: on 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.
28
<PAGE>
5.04 FUND ANNUITY Such amount, or portion, of the variable
UNITS (CONT'D): payment will be divided by the appropriate
Fund(s) annuity unit value (see 5.05) on the
tenth Valuation Period before the due date of
the first payment to determine the number of
each Fund annuity units. The number of each
Fund annuity units remains fixed. Each
future payment is equal to the sum of the
products of each Fund annuity unit value
multiplied by the appropriate number of
Units. The Fund annuity unit value on the
tenth Valuation Period prior to the due date
of the payment is used.
5.05 FUND ANNUITY For any Valuation Period, a Fund(s) annuity
UNIT VALUE: unit value is equal to:
(a) The value for the previous Period;
multiplied by
(b) The Annuity net return factor(s) (See
5.06) for the Period; multiplied by
(c) A factor to reflect the assumed annual
net return rate. (See Contract Schedule
II).
The dollar value of a Fund annuity unit
values and Annuity payments may go up or down
due to investment gain or loss.
Payments shall not be changed due to changes
in the mortality or expense results or
administrative charges.
5.06 FUND ANNUITY NET The Annuity net return factor(s) are used to
RETURN FACTOR: compute all Separate Account Annuity payments
for any Fund.
The Annuity net return factor(s) for each
Fund is equal to 1.0000000 plus the net
return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held
by the Separate Account at the end of a
Valuation Period; minus
(b) The value of the shares of the Fund held
by the Separate Account at the start of
the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the
Separate Account (if any); divided by
(d) The total value of the Fund(s) record
units and Fund(s) annuity units of the
Separate Account at the start of the
Valuation Period; minus
(e) A daily charge for Annuity mortality and
expense risks, which may include profit,
(at the annual rate as shown on Contract
Schedule II) 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.
29
<PAGE>
5.07 ANNUITY OPTIONS: Option 1 -- Payments of Interest on Sum Left
with Aetna -- This option may be used only by
the Beneficiary when the Participant 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 5.01). 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 the Beneficiary is the Participant's
surviving spouse, 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 a spouse, the
entire sum must either be applied to an
Annuity option within one year of the
Participant's death or be paid within five
years of the Participant's death.
Option 2 -- Payments for a Stated Period of
Time -- An Annuity will be paid for the
number of years chosen (See Contract
Schedule II).
If payments for this option are made under a
Variable Annuity, the present value of any
remaining payments may be withdrawn at any
time.
Option 3 -- Life Income -- An Annuity will be
paid for the life of the Annuitant. Aetna
may also guarantee payments for 60, 120, 180,
or 240 months if so directed by the
Participant.
Option 4 -- Life Income based upon the lives
of two Annuitants -- An Annuity will be paid
during the lives of the Annuitant and a
second Annuitant. Payments will continue
until both Annuitants have died. When this
option is chosen, a choice of the following
must be made:
(a) 100% of the payment to continue after the
first death;
(b) 66 2/3% of the payment to continue after
the first death;
(c) 50% of the payment to continue after the
first death;
(d) Payments for a minimum of 120 months,
with 50% of the payment to continue after
the first death; or
(e) 100% of the payment to continue at the
death of the second Annuitant and 50% of
the payment to continue at the death of
the Annuitant.
30
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3 3.00% $28.99 $86.76 $172.88 $343.23
4 3.00% 22.06 66.02 131.56 261.19
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
</TABLE>
31
<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>
- --------------------------------------------------------------------------------
MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3 $29.19 $87.33 $173.91 $344.86
4 22.27 66.61 132.65 263.04
5 18.12 54.19 107.92 213.99
6 15.35 45.92 91.44 181.32
7 13.38 40.01 79.69 158.01
8 11.90 35.59 70.88 140.56
9 10.75 32.16 64.05 127.00
10 9.83 29.42 58.59 116.18
11 9.09 27.18 54.13 107.34
12 8.46 25.32 50.42 99.98
13 7.94 23.75 47.29 93.78
14 7.49 22.40 44.62 88.47
15 7.10 21.24 42.31 83.89
16 6.76 20.23 40.29 79.89
17 6.47 19.34 38.51 76.37
18 6.20 18.55 36.94 73.25
19 5.97 17.85 35.54 70.47
20 5.75 17.22 34.28 67.98
21 5.56 16.65 33.15 65.74
22 5.39 16.13 32.13 63.70
23 5.24 15.66 31.19 61.85
24 5.09 15.24 30.34 60.17
25 4.96 14.85 29.56 58.62
26 4.84 14.49 28.85 57.20
27 4.73 14.15 28.19 55.90
28 4.63 13.85 27.58 54.69
29 4.53 13.57 27.02 53.57
30 4.45 13.30 26.49 52.53
- --------------------------------------------------------------------------------
</TABLE>
32
<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>
- --------------------------------------------------------------------------------
MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3 $29.80 $89.04 $176.99 $349.72
4 22.89 68.38 135.93 268.58
5 18.74 56.00 111.33 219.98
6 15.99 47.77 94.96 187.64
7 14.02 41.90 83.30 164.59
8 12.56 37.52 74.58 147.35
9 11.42 34.11 67.81 133.99
10 10.51 31.40 62.42 123.34
11 9.77 29.19 58.03 114.66
12 9.16 27.36 54.38 107.45
13 8.64 25.81 51.31 101.39
14 8.20 24.50 48.69 96.21
15 7.82 23.36 46.44 91.75
16 7.49 22.37 44.47 87.88
17 7.20 21.51 42.75 84.48
18 6.94 20.74 41.23 81.47
19 6.71 20.06 39.88 78.80
20 6.51 19.46 38.68 76.42
21 6.33 18.91 37.59 74.28
22 6.17 18.42 36.62 72.35
23 6.02 17.98 35.73 70.61
24 5.88 17.57 34.93 69.02
25 5.76 17.20 34.20 67.57
26 5.65 16.87 33.53 66.25
27 5.54 16.56 32.92 65.04
28 5.45 16.28 32.35 63.93
29 5.36 16.01 31.83 62.90
30 5.28 15.77 31.35 61.95
- --------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADJUSTED
AGE OF
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.
34
<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
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.
35
<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
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>
Rates are based on mortality from 1983 Table a.
The rates do not differ by sex.
Rates for ages not shown will be provided on request
and will be computed on a basis consistent with
the rates in the above tables.
36
<PAGE>
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%
<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 $4.03
55 55 3.88 4.25 4.47 3.87 4.14
55 60 4.06 4.47 4.71 4.06 4.20
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 4.49 5.01 5.32 4.48 4.64
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 5.07 5.75 6.17 5.05 5.26
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 5.89 6.82 7.40 5.81 6.12
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 7.07 8.34 9.16 6.78 7.36
- ------------------------------------------------------------------------------------------------------
</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.
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
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>
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.
38
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
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>
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.
39
<PAGE>
-------------------------------------------------------
AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
[Logo] 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
- --------------------------------------------------------------------------------
Contract Holder
- --------------------------------------------------------------------------------
Contract No.
- --------------------------------------------------------------------------------
Effective Date
- --------------------------------------------------------------------------------
This Contract is Delivered in and is Subject to the Laws of that
Jurisdiction
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN PARTS III AND V.
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/Dan Kearney /s/Patrice Maloney-Knauff
President Secretary
Group Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
FORM NO. G-CDA-95 (TORP)
<PAGE>
SPECIFICATIONS
- --------------------------------------------------------------------------------
GUARANTEED There is a guaranteed interest rate for Contribution(s)
INTEREST RATE held in the Fixed Plus Account and the GA Account.
(See Contract Schedule I.)
- --------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense
THE SEPARATE risks and asset based sales charge and administrative
ACCOUNT fees. (See 3.06 and 5.06.)
- --------------------------------------------------------------------------------
DEDUCTION FROM Contribution(s) are subject to a deduction for premium
CONTRIBUTION(S) taxes, if any. (See 3.02.)
This Contract is a legal contract and constitutes the entire legal relationship
between Aetna and the Contract Holder.
READ THIS CONTRACT CAREFULLY. This Contract sets forth, in detail, all of the
rights and obligations of both you and Aetna. IT IS, THEREFORE, IMPORTANT THAT
YOU READ THIS CONTRACT CAREFULLY.
2
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT: Variable Annuity Account C
CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account. The
daily charge is at an annual effective rate of 1.40%
for Annuity mortality and expense risks, asset based
sales charge and profit and a daily administrative
charge which will not exceed 0.25% on an annual basis.
FIXED PLUS ACCOUNT
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
Beginning on the tenth anniversary of the effective
date of an Individual Account, Aetna will credit
amounts with an interest rate that is 0.25% higher than
the then-declared interest rate for Individual Accounts
before the tenth anniversary.
PARTIAL WITHDRAWAL: The 20% limit applicable to partial withdrawal from the
Fixed Plus Account will be waived when the withdrawal
is:
(a) due to the Participant's death, (within six (6)
months of the Participant's date of death), before
Annuity payments begin. This partial withdrawal
may only be exercised once; or
(b) used to purchase Annuity benefits.
GUARANTEED ACCUMULATION ACCOUNT (GA ACCOUNT)
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
i
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD (CONT'D)
SEPARATE ACCOUNT, FIXED PLUS ACCOUNT AND GA ACCOUNT
- --------------------------------------------------------------------------------
TRANSFERS: An unlimited number of Transfers may be made during the
Accumulation Period. Aetna allows 12 free Transfers in
any calendar year. Thereafter, Aetna reserves the
right to charge $10 for each subsequent Transfer.
SYSTEMATIC WITHDRAWAL The Specified Payment may not be greater than 20% of
OPTION (SWO): the Individual Account's Current Value at the time of
election.
The Specified Period may not be less than five years.
The Specified Percentage may not be greater than 20%.
See Section 1. - DEFINITIONS for explanations.
ii
<PAGE>
CONTRACT SCHEDULE II
ANNUITY PERIOD
SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
CHARGES TO SEPARATE A daily charge at an annual effective rate of 1.25% for
ACCOUNT: Annuity mortality and expense risks. The
administrative charge is established upon election of
an Annuity option. This charge will not exceed 0.25%.
VARIABLE ANNUITY ASSUMED If a Variable Annuity is chosen, an assumed annual net
ANNUAL NET RETURN RATE: return rate of 5.0% may be elected. If 5.0% is not
elected, Aetna will use an assumed annual net return
rate of 3.5%.
The assumed annual net return rate factor for 3.5% per
year is 0.9999058.
The assumed annual net return rate factor for 5.0% per
year is 0.9998663.
If the portion of a Variable Annuity payment for any
Fund is not to decrease, the Annuity return factor
under the Separate Account for that Fund must be:
(a) 4.75% on an annual basis plus an annual return of
up to 0.25% to offset the administrative charge
set at the time Annuity payments commence if an
assumed annual net return rate of 3.5% is chosen;
or
(b) 6.25% on an annual basis plus an annual return of
up to 0.25% to offset the administrative charge
set at the time Annuity payments commence, if an
assumed annual net return rate of 5% is chosen.
ANNUITY OPTION: Under the option "Payments for a Stated Period of
Time":
For amounts invested in the GA Account or one or more
of the Fund(s), the number of years must be at least
five (5) and not more than thirty (30) and the Annuity
may be a Fixed or Variable Annuity.
For amounts invested in the Fixed Plus Account, the
number of years must be at least five (5) and not more
than thirty (30) and the Annuity must be a Fixed
Annuity.
FIXED ANNUITY
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
See Section 1. - DEFINITIONS for explanations.
iii
<PAGE>
TABLE OF CONTENTS
I. DEFINITIONS
- --------------------------------------------------------------------------------
PAGE
1.01 Accumulation Period . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.02 Adjusted Current Value. . . . . . . . . . . . . . . . . . . . . . . . .6
1.03 Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.04 Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.05 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.06 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.07 Contract Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.08 Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.09 Current Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.10 Deposit Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.11 Fixed Plus Account. . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.12 Fixed Plus Account Guaranteed Interest Rate . . . . . . . . . . . . . .7
1.13 Fixed Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.14 Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.15 General Account . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.16 Guaranteed Accumulation Account (GA Account). . . . . . . . . . . . . .7
1.17 GA Account Guaranteed Interest Rate . . . . . . . . . . . . . . . . . .7
1.18 Guaranteed Term . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.19 Individual Account. . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.20 Loan Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.21 Market Value Adjustment (MVA) . . . . . . . . . . . . . . . . . . . . .8
1.22 Matured Term Value. . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.23 Matured Term Value Transfer . . . . . . . . . . . . . . . . . . . . . .8
1.24 Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.25 Net Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.26 Nonunitized Separate Account. . . . . . . . . . . . . . . . . . . . . .8
1.27 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.28 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.29 Reinvestment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.30 Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.31 Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3
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PAGE
1.32 Valuation Period. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.33 Variable Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 Change of Contract. . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.02 Change of Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.03 Nonparticipating Contract . . . . . . . . . . . . . . . . . . . . . . 11
2.04 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.05 State Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.06 Control of Contract . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.07 Misstatements and Adjustments . . . . . . . . . . . . . . . . . . . . 12
2.08 Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.09 Grace Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Individual Certificates . . . . . . . . . . . . . . . . . . . . . . . 12
III. CONTRIBUTIONS, CURRENT VALUE, AND WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
3.01 Limitations on Contributions. . . . . . . . . . . . . . . . . . . . . 12
3.02 Net Contribution(s) . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.03 Experience Credits. . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.04 Fund Record Units . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.05 Fund Record Unit Value. . . . . . . . . . . . . . . . . . . . . . . . 13
3.06 Fund Net Return Factors . . . . . . . . . . . . . . . . . . . . . . . 13
3.07 Market Value Adjustment . . . . . . . . . . . . . . . . . . . . . . . 14
3.08 Transfer(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.09 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.10 Notice to the Participant . . . . . . . . . . . . . . . . . . . . . . 19
3.11 Withdrawal Restrictions . . . . . . . . . . . . . . . . . . . . . . . 19
3.12 Manner and Timing of Distributions. . . . . . . . . . . . . . . . . . 20
3.13 Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.14 Partial Withdrawal from the Fixed Plus Account. . . . . . . . . . . . 21
3.15 Payment of Fixed Plus Account Full Withdrawal . . . . . . . . . . . . 21
3.16 Alternative Payment of Fixed Plus Account Full Withdrawal . . . . . . 21
3.17 Payment of Minimum Current Value. . . . . . . . . . . . . . . . . . . 22
3.18 Amount Payable at Death (Before Annuity Payments Start) . . . . . . . 22
3.19 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4
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IV. NON-ANNUITY DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
PAGE
4.01 Distribution Options. . . . . . . . . . . . . . . . . . . . . . . . . 23
4.02 Estate Conservation Option. . . . . . . . . . . . . . . . . . . . . . 23
4.03 Systematic Withdrawal Option. . . . . . . . . . . . . . . . . . . . . 25
IV. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
5.01 Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.02 Terms of Annuity Options. . . . . . . . . . . . . . . . . . . . . . . 28
5.03 Death Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.04 Fund Annuity Units. . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.05 Fund Annuity Unit Value . . . . . . . . . . . . . . . . . . . . . . . 29
5.06 Fund Annuity Net Return Factor. . . . . . . . . . . . . . . . . . . . 29
5.07 Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5
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I. DEFINITIONS
- --------------------------------------------------------------------------------
1.01 ACCUMULATION PERIOD: The period during which Net Contribution(s)
are applied to an Individual Account.
1.02 ADJUSTED CURRENT VALUE: The Current Value (See 1.09) of an Individual
Account (See 1.19) plus or minus any
applicable aggregate GA Account Market Value
Adjustment, if applicable. (See 3.07).
1.03 ANNUITANT: If an Annuity provides lifetime benefits, the
person whose life expectancy determines the
amount and/or duration of Annuity benefit
payments.
1.04 ANNUITY: Payment of an income under the Annuity
Provisions of Section V:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.05 BENEFICIARY: Each Participant shall name the beneficiary
of the Employer and Employee Account. Aetna
will pay any portion of the Individual
Account(s) Current Value to the beneficiary
in accordance with the provisions of Section
3.18.
1.06 CODE: The Internal Revenue Code of 1986, as
amended.
1.07 CONTRACT HOLDER: The entity, named on the cover of this
Contract, to which the Contract is issued.
1.08 CONTRIBUTION: A payment received at Aetna's Home Office and
allocated to this Contract.
1.09 CURRENT VALUE: For an Individual Account (See 1.19), the
Current Value is the total of:
(a) The amount, if any, in the Fixed Plus
Account, with interest earned to date;
(b) The amount, if any, in the GA Account,
with interest earned to date; and
(c) The value of all Fund record units (See
3.05), if any, as of the most recent
Valuation Period.
1.10 DEPOSIT PERIOD: A calendar month, a calendar quarter, or any
other period of time specified by Aetna
during which Net Contribution(s), Transfers
and Reinvestments are accepted into the GA
Account for one or more Guaranteed Terms.
1.11 FIXED PLUS ACCOUNT: An accumulation option with a guaranteed
minimum interest rate. Aetna may credit a
higher rate which is not guaranteed. The
portion that may be withdrawn or transferred
in a 12 month period is restricted (See 3.08,
3.14 and 3.15).
6
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1.12 FIXED PLUS ACCOUNT Aetna will add interest daily at an annual
GUARANTEED INTEREST rate no less than that shown on Contract
RATE: Schedule I on any Net Contribution(s) to the
Fixed Plus Account. Aetna may add interest
daily at a higher rate determined by its
Board of Directors.
1.13 FIXED ANNUITY: An Annuity with payments that do not vary in
amount.
1.14 FUND(S): The open-end registered management investment
companies (mutual funds) in which the
Separate Account invests.
1.15 GENERAL ACCOUNT: The account holding the assets of Aetna,
other than those assets held in Aetna's
Separate Account(s) and Nonunitized Separate
Account(s).
1.16 GUARANTEED ACCUMULATION An accumulation option where Aetna guarantees
ACCOUNT (GA ACCOUNT): stipulated rate(s) of interest for a
specified period of time. All assets of
Aetna, including amounts in the Nonunitized
Separate Account, are available to meet the
guarantees for the GA Account.
1.17 GA ACCOUNT GUARANTEED Aetna will declare the interest rate(s)
INTEREST RATE: applicable to a specific Guaranteed Term at
the start of the Deposit Period for that
Guaranteed Term. The rate(s) are guaranteed
by Aetna for that Deposit Period and the
ensuing Guaranteed Term. The Guaranteed
Interest Rates are annual effective yields.
That is, interest is credited daily at a rate
that will produce the Guaranteed Interest
Rate over the period of a year. No
Guaranteed Interest Rate will ever be less
than the Minimum Guaranteed Interest Rate
shown on Contract Schedule I.
For Guaranteed Terms of one year or less, one
Guaranteed Interest Rate is credited for the
full Guaranteed Term. For longer Guaranteed
Terms, an initial Guaranteed Interest Rate is
credited from the date of deposit to the end
of a specified period within the Guaranteed
Term. There may be different Guaranteed
Interest Rate(s) declared for subsequent
specified time intervals throughout the
Guaranteed Term.
1.18 GUARANTEED TERM: The period of time for which GA Account
Guaranteed Interest Rates are guaranteed on
Net Contributions, Transfers and
Reinvestments made into a current Deposit
Period for the GA Account. Such period
begins on the day following the close of the
Deposit Period and ends on the designated
Maturity Date. Guaranteed Terms are offered
at Aetna's discretion for various lengths of
time ranging up to and including ten years
and are classified as follows:
SHORT-TERM. Three (3) or fewer years.
Amounts allocated to a short-term Term are
held in the General Account.
LONG-TERM. More than three (3) years, but
not more than ten (10). Amounts allocated to
a long-term Term are held in the Nonunitized
Separate Account.
During a Deposit Period, Aetna may make
available any number of Guaranteed Terms.
The Participant may allocate Net
Contributions and Transfers into any or all
of the available Guaranteed Terms.
7
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1.19 INDIVIDUAL ACCOUNT: This Contract is issued to the Contract
Holder. However, Aetna will maintain at
least two Individual Accounts for each
Participant. These are:
(a) An Employer Account: This Individual
Account will be credited with employer
Net Contribution(s) and transferred
amounts of 403(b) funds, attributable to
employer contributions; and
(b) An Employee Account: This Individual
Account will be credited with employee
Net Contribution(s) and transferred
amounts of 403(b) funds, attributable to
employee contributions.
1.20 LOAN ACCOUNT: An account established for record keeping
purposes and credited with the amount on any
loan.
1.21 MARKET VALUE ADJUSTMENT An adjustment to the amount withdrawn or
(MVA): Transferred from an GA Account Guaranteed
Term prior to the end of that Guaranteed
Term. The adjustment reflects the change in
the value of the investment due to changes in
interest rates since the date of deposit and
is computed using the formula given in 3.07.
The adjustment is expressed as a percentage
of each dollar being withdrawn.
1.22 MATURED TERM VALUE: The amount payable on a GA Account Guaranteed
Term's Maturity Date.
1.23 MATURED TERM VALUE During the calendar month following a GA
TRANSFER: Account Maturity Date, the Participant may
notify Aetna's Home Office in writing to
Transfer or withdraw all or part of the
Matured Term Value, plus interest at the new
Guaranteed Rate accrued thereon, from the GA
Account without an MVA. This provision only
applies to the first such written request
received from the Participant during this
period for any Matured Term Value.
1.24 MATURITY DATE: The last day of a GA Account Guaranteed Term.
1.25 NET CONTRIBUTION: A Contribution less any applicable premium
taxes.
1.26 NONUNITIZED SEPARATE An account established by Aetna under Section
ACCOUNT: 38a-433 of the Connecticut General Statutes
that holds assets for GA Account Terms (See
1.18) greater than three years. The Contract
Holder or Participant does not participate in
the investment gain or loss from the assets
held in the Nonunitized Separate Account.
Such gain or loss is borne entirely by Aetna.
Assets in this account may be charged with
liabilities arising out of any other Aetna
business.
1.27 PARTICIPANT: A person who participates in the Plan named
on the cover of this Contract.
1.28 PLAN: The Plan intended to qualify under Section
403(b) of the Code and named on the cover of
this Contract. The Plan is not a part of the
Contract and Aetna is not bound by its terms.
8
<PAGE>
1.29 REINVESTMENT: Aetna will mail a notice to the Participant
at least 18 calendar days before a Guaranteed
Term's Maturity Date. This notice will
contain the Terms available during the
current Deposit Periods with their Guaranteed
Interest Rate(s) and projected Matured Term
Value. If no specific direction is given by
the Participant prior to the Maturity Date,
each Matured Term Value will be reinvested in
the current Deposit Period for a Guaranteed
Term of the same duration. If a Guaranteed
Term of the same duration is unavailable,
each Matured Term Value will automatically be
reinvested in the current Deposit Period for
the next shortest Guaranteed Term available
in the same classification. If no shorter
Guaranteed Term is available, the next longer
Guaranteed Term will be used. Aetna will
mail a confirmation statement to the
Participant, the next business day after the
Maturity Date. This notice will state the
Guaranteed Term and Guaranteed Interest
Rate(s) which will apply to the reinvested
Matured Term Value.
1.30 SEPARATE ACCOUNT: An account, established by Aetna under
Section 38a-433 of the Connecticut General
Statutes, that buys and holds shares of the
Fund(s) available under this Contract.
Income, gains or losses, realized or
unrealized are credited or charged to the
Separate Account without regard to other
income, gains or losses of Aetna. Aetna owns
the assets held in the Separate Account and
is not a trustee of such amounts. Amounts in
the Separate Account are not generally
guaranteed and are held at market value. The
assets of the Separate Account, to the extent
of reserves and other contract liabilities of
the Account, cannot be charged with other
Aetna liabilities.
1.31 TRANSFER: The movement of invested amounts among the
available Fund(s); the Fixed Plus Account and
the GA Account during the Accumulation
Period.
1.32 VALUATION PERIOD: The period as of 4:15 p.m. Eastern time on
each day the New York Stock Exchange is open
for business to 4:15 p.m. Eastern time of the
next such business day, or such other day
that one or more of the Fund(s) determines
its net asset value.
1.33 VARIABLE ANNUITY: An Annuity with payments that vary with the
net investment results of the Funds available
during the Annuity period.
II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 CHANGE OF CONTRACT: (a) Only an authorized Aetna officer can
change the provisions of this Contract
and the change must be in writing.
(b) Aetna cannot change the amount or terms
of Annuity benefit payments after
payment has commenced.
(c) Aetna may change the following
provisions without Contract Holder
consent.
(1) Any provision that must be changed
to comply with state or federal law
(2) Calculation of the Market Value
Adjustment
9
<PAGE>
2.01 CHANGE OF CONTRACT: (3) Estate Conservation Option
(CONT'D): (4) Systematic Withdrawal Option
(5) Allocation of Contributions or
Transfers to the Fixed Plus Account
(6) New Annuity Options
Aetna will notify the Contract Holder,
in writing, at least thirty (30) days
before the effective date of the
change. Such a change will apply to
all current and future Individual
Accounts.
(d) Aetna may change the Tables for
determining the amount of Annuity
benefit payments without Contract Holder
consent. Such a change will not become
effective earlier than twelve months
after (1) the effective date of the
Contract, or (2) the effective date of a
previous change. Aetna will notify the
Contract Holder, in writing, at least
thirty (30) days before the effective
date of the change. The change will
apply to all current and future
Individual Accounts.
(e) The Contract Holder must agree to any
change in provisions concerning the
following:
(1) A reduction in the GA Account
Minimum Guaranteed Interest Rate
(2) A reduction in the Fixed Plus
Account Minimum Guaranteed Interest
Rate
(3) Fund Accumulation Period Net Return
Factor
(4) Current Value
(5) Annuity Unit Value
(6) Existing Annuity Options
(7) Fixed Annuity Minimum Guaranteed
Interest Rates
Aetna will notify the Contract Holder,
in writing, at least thirty (30) days
before the effective date of the
proposed change. Such a change will
apply to future Individual Accounts.
If the Contract Holder does not agree
to a proposed change, Aetna reserves
the right to: (1) discontinue
establishing new Individual Accounts;
and (2) discontinue accepting
Contributions to existing Individual
Accounts.
2.02 CHANGE OF FUND: Aetna, or the Separate Account, may:
(a) Change the Fund(s) in which the Separate
Account invests; and/or
(b) Replace the shares of any Fund(s) held
in the Separate Account with shares of
any other Fund(s).
10
<PAGE>
2.02 CHANGE OF FUND Changes must be:
(CONT'D):
(a) Approved by a majority vote in the
Separate Account with respect to the
Fund(s) whose shares are to be replaced;
(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
such change.
2.03 NONPARTICIPATING The Contract Holder, Participants, or
CONTRACT: Beneficiaries will not have a right to share
in the earnings of Aetna.
2.04 PAYMENTS: (a) Aetna will make distributions as
directed by the Contract Holder. Aetna
will determine the amount of payments
based on the Individual Account's
Current Value as of the date on which a
request is received in good order at
Aetna's Home Office. Payments will be
made within seven (7) calendar days of
receipt of a written request in good
order at Aetna's Home Office.
(b) Aetna may defer payments: (1) for a
period of up to six (6) months (unless
not allowed by state law); and (2) as
allowed by federal law.
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: This Contract is designed to fund a
governmental plan which provides for
retirement income that is not subject to
Title I of the Employee Retirement Income
Security Act of 1974 (ERISA), as amended by
subsequent law including REA.
The Participant may select the investment
option(s) for the Employer Account and the
Employee Account. Choices made under this
Contract must be in writing or in a form
satisfactory to Aetna. Until receipt of such
choices in its Home Office, Aetna may rely on
any previous choices made. No distributions
will be made from the Employer Account or the
Employee Account without the Contract
Holder's written direction to Aetna.
(a) Nontransferable and Nonassignable: This
Contract and any Individual Accounts are
nontransferable and nonassignable,
except to Aetna in the event of a loan,
or pursuant to a "qualified domestic
relations order" as set forth under the
Internal Revenue Code of 1986, as it may
be amended from time to time.
11
<PAGE>
2.06 CONTROL OF CONTRACT (b) Distributions: A Participant may apply
(CONT'D): for a distribution from his or her
Employee Account or Employer Account.
However, the Contract Holder must
certify in writing that the distribution
is in accordance with the terms of the
Plan.
(c) Participant Rights/Employee Account:
The Participant has a nonforfeitable
right to the value of his or her
Employee Account pursuant to the terms
of the Plan as interpreted by the
Contract Holder.
(d) Participant Rights/Employer Account:
The Participant has a nonforfeitable
right to the value of his or her
Employer Account pursuant to the terms
of, and to the extent of his or her
vested percentage under, the Plan as
interpreted by the Contract Holder. It
is the Contract Holder's responsibility
to maintain records of the Participant's
vesting percentages. Aetna will not
maintain nor keep such records.
2.07 MISSTATEMENTS AND If Aetna finds the age of any payee to be
ADJUSTMENTS: misstated, the correct facts will be used to
adjust payments.
2.08 INCONTESTABILITY: Aetna cannot cancel this Contract because of
any error of fact on the application.
2.09 GRACE PERIOD: This Contract will remain in effect even if
Contributions are not continued except as
provided in 3.17.
2.10 INDIVIDUAL CERTIFICATES: Aetna shall issue certificates to
Participants as required by the state in
which this Contract is delivered. The
certificate will summarize certain provisions
of the Contract. Certificates are for
information only and are not a part of the
Contract.
III. CONTRIBUTIONS, CURRENT VALUE, AND WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
3.01 LIMITATION ON The Contribution(s) made to the Employee and
CONTRIBUTIONS: Employer Account in any year cannot exceed
the lesser of the amount determined under the
exclusion allowance of Code Section 403(b)(2)
or the annual additions limitation of Code
Section 415(c)(1). In addition, in no event
may the Contribution(s) attributable to
elective deferrals as defined in Code Section
402(g) exceed $9,500 (or, such larger amount
as adjusted by the Secretary of the Treasury)
during any calendar year, unless the
alternate limitation of Code Section
402(g)(8) applies.
12
<PAGE>
3.02 NET CONTRIBUTION(S): The Net Contribution equals the actual
Contribution less any applicable premium tax.
Generally, Aetna will deduct the premium tax
when Annuity benefits are purchased (See
Section V). If Aetna determines that under
applicable state law, it must pay a premium
tax when the Contribution is received, or at
any other time, it will deduct the tax at
that time. The Net Contribution(s) may be
allocated among the following investment
options:
(a) The Fixed Plus Account; and
(b) The current Deposit Period(s) for
Guaranteed Terms under the GA Account;
and
(c) The Fund(s) in which the Separate
Account invests.
Aetna must be told the percentage of all Net
Contributions to allocate to one or more of
the investment options. Aetna reserves the
right to require a minimum Contribution
amount per Individual Account.
3.03 EXPERIENCE CREDITS: Aetna may apply experience credits under this
Contract. Any such credits will be computed
as decided by Aetna.
3.04 FUND RECORD UNITS: The portion of the Net Contribution(s)
applied to each Fund under the Separate
Account will determine the number of Fund
record units credited to the Individual
Account for that Fund. This number is equal
to the Net Contribution applied to the Fund
divided by the Fund record unit value (see
3.05) for the Valuation Period in which the
Contribution is received in good order.
3.05 FUND RECORD A Fund record unit value is computed by
UNIT VALUE: multiplying the net return Factor (See 3.06)
for the current Valuation Period by the Fund
record unit value for the previous Period.
The dollar value of a Fund record unit,
Separate Account assets, and Variable Annuity
payments may go up or down due to investment
gain or loss.
3.06 FUND NET The net return factor(s) are used to compute
RETURN FACTORS: all Separate Account record units for any
Fund. The net return factor for each Fund is
equal to 1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held
by the Separate Account at the end of a
Valuation Period; minus
(b) The value of the shares of the Fund held
by the Separate Account at the start of
the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the
Separate Account (if any); divided by
(d) The total value of the Fund record units
and Fund annuity units of the Separate
Account at the start of the Valuation
Period; minus
13
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3.06 FUND NET (e) A Separate Account charge at an annual
RETURN FACTORS effective rate as hown on Contract
(CONT'D): Schedule I for Annuity mortality and
expense risks, asset based sales charge
and profit and a daily administrative
charge which will not exceed the amount
shown on Contract Schedule I on an
annual basis. The administrative charge
may be changed annually except for
amounts which have been used to purchase
an Annuity.
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 MARKET VALUE (a) An MVA will be applied to any withdrawal
ADJUSTMENT: from the GA Account Term before the
Maturity Date due to:
(1) A Transfer;
(2) A full or partial withdrawal; or
(3) A payment of a premium for Annuity
Option 2.
The amount of the withdrawal will be adjusted
to a market value amount as described in (b).
(b) Market value adjusted amounts will be
equal to the amount withdrawn multiplied
by the following ratio:
x
(1 + i) to the power of ---
365
----------------------------
x
(1 + j) to the power of ---
365
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days remaining,
(computed from Wednesday of the
week of withdrawal) in the Term.
(c) The Deposit Period Yield will be
determined as follows:
(1) At the close of the last business
day of each week of the Deposit
Period, a yield will be computed as
the average of the yields on that
day of U.S. Treasury Notes which
mature in the last three months of
the Term.
(2) The Deposit Period Yield is the
average of those yields for the
Deposit Period. If withdrawal is
made prior to the close of the
Deposit Period, it is the average
of those yields on each week
preceding withdrawal.
14
<PAGE>
3.07 MARKET VALUE (3) The Current Yield is the average
ADJUSTMENT (CONT'D): of the yields on the last business
day of the week preceding
withdrawal on the same U.S.
Treasury Notes included in the
Deposit Period Yield.
(4) In the event that no U.S. Treasury
Notes which mature in the last
three months of the Term exist,
Aetna reserves the right to use the
U.S. Treasury Notes that mature in
a following quarter.
(d) Full and partial withdrawals as well as
Transfers made within six (6) months
after the Participant's date of death
under the Amount Payable at Death
provision (See 3.18) will be the greater
of:
(1) The aggregate MVA amount which is
the sum of all market value
adjusted amounts calculated due to
a withdrawal of amounts (for
withdrawal or Transfer) from Terms
prior to the end of those Terms.
The aggregate MVA may be either
positive or negative; or
(2) The applicable portion of the
Current Value in the GA Account.
(e) After the six month period, the
withdrawal or Transfer will be the
aggregate MVA amount (i.e., including
all MVAs).
(f) The greater of the aggregate MVA amount
or the applicable portion of the Current
Value in the GA Account is applied to
amounts withdrawn from the GA Account
for payment of a premium under Annuity
options 3 or 4.
3.08 TRANSFER(S): Before an Annuity option is elected, all or
any portion of the Adjusted Current Value of
the Individual Account (subject to the
limitations described below) may be
transferred from any Fund, the Fixed Plus
Account or the GA Account:
(a) To any Fund; or
(b) To the Fixed Plus Account; or
(c) To any Guaranteed Term of the GA Account
with a different classification
available in the Current Deposit Period.
Transfer requests can be submitted as a
percentage or as a dollar amount. Aetna may
establish a minimum Transfer amount. Within
a Guaranteed Term classification, the amount
transferred will be withdrawn from the oldest
Deposit Period, then from the next oldest,
and so on until the amount requested is
satisfied.
Amounts applied to Guaranteed Terms of the GA
Account may not be transferred to the Funds,
the Fixed Plus Account or to another
Guaranteed Term during the Deposit Period or
90 days after the close of the Deposit Period
except for Matured Term Value(s) during the
calendar month following the Term's Maturity
Date.
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3.08 TRANSFER(S) (CONT'D): Transfers from Guaranteed Terms of the GA
Account are subject to the MVA provisions of
3.07.
During each rolling twelve (12) month period,
up to 20% of the Fixed Plus Account value may
be transferred to one or more of the Fund(s),
and/or the GA Account's then-current Deposit
Period. The 20% limit is reduced by any
partial withdrawals, Transfers or amounts
taken as a loan or used to purchase an
Annuity during the twelve (12) month period.
Aetna reserves the right to include amounts
paid under ECO and SWO provisions for
purposes of applying this 20% limit. This
limit is waived when the balance in the Fixed
Plus Account is $1,000 or less on the date
the Transfer request is received in good
order at Aetna's Home Office.
The Participant may make an unlimited number
of Transfers during the Accumulation Period.
The number of free Transfers allowed by Aetna
is shown on Contract Schedule I. Additional
Transfers may be subject to a Transfer fee as
shown on Contract Schedule I. Transfers from
the GA Account of a Matured Term Value on or
within one calendar month of a Term's
Maturity Date do not count against the annual
Transfer limit.
3.09 LOANS: During the Accumulation Period, the
Participant may request a loan from his or
her Individual Account by submitting a loan
request form. The loan effective date is the
date Aetna receives a loan request form in
good order at its Home Office.
A loan will not be allowed within 12 months
of the effective date of any prior loan. The
Employee and Employer Accounts Current Value
must be at least $2,000 and the minimum loan
amount is $1,000.
A loan that meets provisions set forth in
Code Section 72(p) is not considered a
taxable distribution.
(a) The amount available for a loan is
calculated based on the Current Value of
the Employer and Employee Accounts. The
loan amount is limited to the lesser of:
(1) 50% of the Employee and Employer
Accounts vested Current Value on
the date the loan is made; or
(2) $50,000 reduced by the amount of
the highest outstanding loan
balance during the preceding 12
month period that ends the day
before the current loan is made.
Loans may only be made from the Employee
Account and the vested portion of the
Employer Account.
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3.09 LOANS (b) When the loan is made, only amounts in
(CONT'D): the Funds and Fixed Plus Account may be
withdrawn and transferred to the Loan
Account. The amounts will be withdrawn
in the same proportion as the Employee
Account and the Employer Account's
vested Current Value are divided between
the Fixed Plus Account and/or Funds on
the loan's effective date.
If the amount of the loan requested
would require the proportionate amount
transferred from the Fixed Plus Account
to exceed the amount that would be
allowed under the 20% limit described in
Section 3.08, the Participant may
transfer an additional amount from the
Fixed Plus Account.
The additional amount will be limited
and will never exceed 50% of the Fixed
Plus Account value on the effective date
of the loan, minus any previous partial
withdrawal or Transfer during the 12-
month period the loan becomes effective.
Aetna reserves the right to change the
maximum percentage a Participant can
transfer from the Fixed Plus Account for
the purpose of taking a loan.
If the amount needed to make the loan
exceeds the Fixed Plus Account Transfer
limit, the additional amount will be
withdrawn proportionately from the
Funds.
(c) Aetna will record the percentage by
which any amount withdrawn from the
Fixed Plus Account exceeds the 20%
Transfer limit covered in Section 3.08.
The percentage will equal the amount
transferred from the Fixed Plus Account
that exceeds the 20% withdrawal limit
divided by the total amount of the loan.
In the event of a loan payment default,
this percentage will be used to
calculate the penalty that would be
applied as described in (h) below.
(d) The loan interest rate will be 5%.
(e) Interest on the Loan Account balance
will be calculated daily at a rate to
yield an effective annual rate of 3%.
Interest will be credited quarterly
based on the loan's effective date and
credited to the Funds and/or Fixed Plus
Account in the same proportion in which
the loan amount was withdrawn.
(f) Principal and interest on loans is
amortized in quarterly payments over a
one to five year term. The Participant
chooses the number of years. An
exception applies to loans taken for the
acquisition of the Participant's
principal residence. Loans for this
purpose can be amortized quarterly over
a one to 20 year term, as elected by the
Participant. The Participant must
certify in writing that a loan is for
the purchase of a principal residence.
The term of the loan, elected by the
Participant, must result in full
repayment no later than December 31 of
the calendar year prior to the calendar
year in which the Participant reaches
age 70 1/2.
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3.09 LOANS The entire Loan Account balance may be
(CONT'D): paid in full at any time. Aetna will
bill the Participant for any loan
interest accrued to the date the payment
is received. Aetna will consider the
loan paid when the interest amount is
received.
(g) A bill in the amount of the quarterly
payment due will be mailed to the
Participant in advance of the due date.
The first due date is three months from
the loan's effective date and quarterly
thereafter. A loan payment will be in
default if it is not received by Aetna
at its Home Office by the due date.
The principal portion of each loan
payment will be credited to the
Participant's Fixed Plus Account and/or
the Funds in the same proportion in
which the loan amount was withdrawn.
The Loan Account will then be reduced by
the principal portion of the payment.
(h) If a payment is in default, a partial
withdrawal in an amount equal to the
payment due will be deducted from the
Individual Account at the close of
business on the due date. Payments that
are less than the amount due will be
returned and if the full payment is not
received by the due date, the payment
will be in default.
The required amount will be withdrawn
from the Fixed Plus Account and/or the
Funds in the same proportion in which
the loan amount was withdrawn. This
amount will be applied as a loan payment
as set forth in (g) above. Aetna will
report to the IRS the amount withdrawn
to pay the default.
In addition, if the amount withdrawn
from the Fixed Plus Account to make the
loan exceeded the 20% annual withdrawal
limitation described in Section 3.14, a
5% charge will be assessed on the same
percentage of the defaulted payment.
For example, if 60% of the amount
withdrawn was in excess of the limit,
then 60% of the amount withdrawn for the
defaulted payment will be subject to the
additional 5% charge.
(i) If a Participant makes a payment that is
more than the billed amount, the excess
will be credited to the Fixed Plus
Account and/or the Funds in the same
proportion in which the loan amount was
withdrawn. The Loan Account will be
reduced by the additional amount. On
the following loan anniversary date,
future payments will be recalculated to
reflect the additional principal payment
so that the outstanding balance is
amortized in equal quarterly payments
over the remaining loan term.
(j) Upon the election of an Annuity option
or at the Participant's death, any Loan
Account will be cancelled. This will
result in a taxable distribution of an
amount equal to the Loan Account
balance. Interest earned but not yet
credited will be credited to, and loan
interest accrued but not paid will be
deducted from, the Current Value in the
same proportion in which the loan amount
was withdrawn.
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<PAGE>
3.09 LOANS (k) If there is an outstanding Loan Account
(CONT'D): balance when a Participant makes a full
withdrawal of the Current Value of his
or her Individual Account (1) interest
earned but not credited will be credited
to, and (2) uncollected accrued loan
interest will be deducted from the
Current Value. The Loan Account will be
cancelled resulting in a taxable
distribution of an amount equal to the
Loan Account balance.
3.10 NOTICE TO THE Each year, Aetna will notify the Participant
PARTICIPANT: of:
(a) The value of any amounts held in:
(i) The Fixed Plus Account,
(ii) The GA Account,
(iii) The Fund(s) for the Separate
Account;
(b) The number of any fund(s) record units;
(c) The fund(s) record unit value(s);
(d) The amount available for withdrawal; and
(e) The Loan Account value.
This information will be as of a date no more
than sixty (60) days before the date of the
notice.
3.11 WITHDRAWAL RESTRICTIONS: Limitations apply to full and partial
withdrawals of any Restricted Amount from
this Contract, as required by Code Section
403(b)(11). The Restricted Amount is the sum
of:
(a) Net Contributions attributable to
Participant salary reduction
contributions made on and after January
1, 1989 if any; plus
(b) The net increase, if any, in the Current
Value of the Employee Account after
December 31, 1988 attributable to
investment gains and losses and credited
interest.
The Restricted Amount may be fully or
partially surrendered only if one or more of
the following conditions are met:
(a) The Participant has reached age 59 1/2;
(b) The Participant has separated from
service;
(c) The Participant has died;
(d) The Participant has become disabled,
within the meaning of Code Section 72
(m)(7); or
(e) The withdrawal is otherwise allowed by
federal law, regulations or rulings.
A full or partial withdrawal is also allowed
if the Participant incurs a "hardship" as
that term is defined in the Code or
regulations under Code Section 403(b).
However, the amount available for hardship is
limited to the lesser of the amount necessary
to satisfy the need, or the Net Contributions
attributable to Participant salary reduction
contributions made on and after January 1,
1989.
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<PAGE>
3.11 WITHDRAWAL RESTRICTIONS The Contract Holder must certify that one of
(CONT'D): these conditions has been met before a
withdrawal request will be considered to be
in good order. The Contract Holder must
notify Aetna in writing when a lump sum
payment is to be made or Annuity payments are
to commence.
If, pursuant to Revenue Ruling 90-24, amounts
are transferred to this Contract from a Code
Section 403(b)(7) custodial account, the
December 31, 1988 value from such transferred
amount may be distributed upon the Contract
Holder's request. The Contract Holder must
certify that one of the conditions mentioned
above has been met or that the Participant
has incurred a hardship. The remaining
transferred value from the Employee Account
will be considered a Restricted Amount
subject to the Surrender Restrictions of this
subsection.
3.12 MANNER AND TIMING (a) A distribution to a Participant may be
OF DISTRIBUTIONS: made in a lump sum, as one of the
Distribution Options described in
Section IV, or as one of the Annuity
options in Section V. The Participant
may elect the form of distribution
subject to certification in writing by
the Contract Holder that the Participant
is eligible both as to the timing
and form of distribution.
(b) The distribution of benefits from the
Employee and Employer Accounts must
begin by April 1 of the calendar year
following the calendar year in which the
Participant attains age 70 1/2 or
retires, whichever occurs later.
(c) If the Participant does not request
commencement of benefits from the
Employee and Employer Accounts as
described above, Aetna will not be
responsible for compliance with the Code
Section 401(a)(9) minimum distribution
requirements or for any adverse tax or
other consequences that may result.
3.13 WITHDRAWAL: (a) The Participant may withdraw any portion
or all of an Individual Account Adjusted
Current Value and transfer such amount
to another investment provider under the
Plan. The withdrawal and transfer
request must be submitted in writing to
Aetna.
(b) Except as described in Section 3.14,
unless the Participant specifies
otherwise, partial withdrawals are
satisfied by withdrawing amounts on a
pro rata basis from each of the
investment options in which the
Individual Account is invested.
(c) When amounts are withdrawn from the GA
Account, amounts in Short-Term and Long-
Term Classifications are treated as
separate investment options and amounts
are taken on a pro rata basis. Within a
Classification, amounts will be
withdrawn starting with the Term still
in effect with the oldest Deposit
Period.
(d) Any amount withdrawn from the Fixed Plus
Account will be subject to the
limitations in 3.14, 3.15 and 3.16.
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<PAGE>
3.14 PARTIAL WITHDRAWAL The amount eligible for partial withdrawal is
FROM THE FIXED PLUS 20% of the Current Value of the amount held
ACCOUNT: in the Fixed Plus Account on the day Aetna's
Home Office receives a written request,
reduced by any previous Transfer, partial
withdrawal or amounts taken as a loan or used
to purchase Annuity benefits during the prior
12 months. Aetna reserves the right to
include amounts paid under ECO and SWO for
purposes of applying this 20% limit.
However, SWO is unavailable if a Fixed Plus
Account Transfer or withdrawal is requested
within the current 12 month period.
The 20% limit applicable to partial
withdrawals from the Fixed Plus Account will
be waived under certain conditions and will
apply when the partial withdrawal is made on
a pro rata basis from all options used under
the Participant's Individual Account. (See
Contract Schedule I).
3.15 PAYMENT OF FIXED When Aetna receives a full withdrawal
PLUS ACCOUNT FULL request, no additional partial withdrawals or
WITHDRAWAL: Transfers from the Fixed Plus Account are
permitted during the payout period. If a
full withdrawal is requested, Aetna will pay
any Current Value from the Fixed Plus Account
in five payments as follows:
(a) One-fifth of the Current Value on the
day the request is received in good
order at Aetna's Home Office, reduced by
any amount from the Fixed Plus Account
that was transferred, withdrawn or used
for a loan or to purchase Annuity
benefits during the prior 12 months;
(b) One-fourth of the remaining Current
Value 12 months later;
(c) One-third of the remaining Current Value
12 months later;
(d) One-half of the remaining Current Value
12 months later; and
(e) The balance of the Current Value 12
months later.
The Fixed Plus Account full withdrawal
payment provision will be waived when a
withdrawal is:
(a) Due to the Participant's death before
Annuity benefit payments begin;
(b) Used to purchase Annuity benefits; or
(c) When the amount in the Fixed Plus
Account is $3,500 or less and no amount
has been withdrawn, transferred, taken
as a loan or used to purchase Annuity
benefits during the previous 12 months.
Any full withdrawal from the Fixed Plus
Account may be cancelled at any time before
the end of the payment period.
3.16 ALTERNATIVE PAYMENT As an alternative to 3.15, the Participant
OF FIXED PLUS ACCOUNT may elect a lump sum payment. The lump-sum
FULL WITHDRAWAL: payment will be the Individual Account's
Current Value invested in the Fixed Plus
Account less a 3% charge provided:
(i) the withdrawal is due to the
Participant's separation from service
with the employer;
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3.16 ALTERNATIVE PAYMENT (ii) the withdrawal request is received at
OF FIXED PLUS ACCOUNT Aetna's Home Office within 60 days of
FULL WITHDRAWAL: the date the Participant separates from
(CONT'D): service with the employer; and
(iii) the Contract Holder certifies that the
Participant has separated from service
and is eligible to receive a lump sum
distribution.
3.17 PAYMENT OF MINIMUM If the Individual Accounts Current Value is
CURRENT VALUE: less than $3,500, and no Contributions have
been received for three (3) years, Aetna may
close the Account and pay the Current Value
to the Contract Holder in one lump sum.
3.18 AMOUNT PAYABLE AT Aetna will pay any portion of the Individual
DEATH (BEFORE ANNUITY Account(s) Current Value, to the Beneficiary
PAYMENTS START): when:
(a) The Participant dies before Annuity
payments start; and
(b) The certified copy of the death
certificate is received by Aetna.
A guaranteed death benefit is available if
the Beneficiary requests either a lump-sum
payment or an Annuity option within the first
6 months after the Participant's death.
For each Individual Account, the death
benefit is guaranteed to be the greater of:
(a) The Current Value of the Individual
Account plus aggregate positive MVA, as
applicable, on the date the notice of
death and the request for payment are
received in good order at Aetna's Home
Office; or
(b) The total of Net Contribution(s) made
to the Individual Account minus the
total of all partial withdrawals,
annuitizations made from the Individual
Account and any amount allocated from
the Individual Account to the Loan
Account.
If the payee of the death proceeds is the
Participant's 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 (1) year of
the Participant's death or be paid to the
payee within five (5) years of the
Participant's death (see Part V).
In no event may any payments to the
Beneficiary under an Annuity option extend
beyond:
(a) The life of the payee determined as of
the date payments are to commence; or
(b) Any certain period greater than the
payee's life expectancy as determined
by regulations under Code Section 401
(a)(9) as of the date payments are to
begin.
Amounts in the GA Account will be payable as
described in Section 3.07(d).
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<PAGE>
3.19 REINSTATEMENT: All or a portion of the proceeds of a full
withdrawal of an Individual Account may be
reinvested within 30 days after the surrender
if allowed by law. Any Market Value
Adjustment deducted from GA Account
withdrawals will not be included in the
reinstatement. Amounts will be reinstated
among the Fixed Plus Account, GA Account and
the Fund(s) in the same proportion as they
were at the time of withdrawal. Any amount
reinstated to the GA Account will be credited
to the current Deposit Period. 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.
Any Individual Account(s) closed because of
the Current Value was less than $3,500 may
not be reinstated (see 3.17).
Reinstatement is permitted only once per
Individual Account.
IV. NON-ANNUITY DISTRIBUTION OPTIONS
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4.01 DISTRIBUTION OPTIONS: The Participant or a surviving spouse may
elect one of the two following distribution
options. A surviving spouse is eligible to
elect one of these options provided the
spouse is the designated Beneficiary under
the Plan and the Participant had died before
electing an Annuity option and before the
date for required minimum distributions.
4.02 ESTATE CONSERVATION (a) With the Estate Conservation Option
OPTION: (ECO) a portion of the Individual
Account Current Value is
automatically surrendered and
distributed each year. Each payment
will be withdrawn from the Individual
Account in the same proportion as
assets are held in the Funds, the GA
Account, and the Fixed Plus Account
on the date the payment is made.
(b) Payments under ECO will comply with the
incidental death benefit test set forth
in Code Section 401(a)(9).
(c) Distribution Amount: 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 Individual
Account Current Value as of December 31
of the year prior to the payment year,
by a single or joint life expectancy
factor. If joint life expectancy is
elected, the Beneficiary under ECO must
be the same as the beneficiary of any
death benefits under the Plan.
(d) Life Expectancy Factor: For the
Participant, the life expectancy factor
is either single life or joint life
expectancy as elected by the
Participant, based on tables in IRS
regulations. For a spouse Beneficiary,
only a single life expectancy is
available. Life expectancy factors will
be recalculated each year, unless
prohibited by the Code or regulations.
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<PAGE>
4.02 ESTATE CONSERVATION If joint life expectancy is elected and
OPTION (CONT'D): the Participant or spouse dies, payments
will be based on the survivor's life
expectancy. If the Beneficiary is not
the spouse and the Beneficiary dies
first, the joint life expectancy
continues to be used to determine
payments.
If a single life expectancy is elected,
at the death of the Participant (or the
spouse who is the designated Beneficiary
electing ECO after the Participant's
death), the entire value must be
distributed no later than the December
31 of the year following the year of the
Participant's (or spouse's) death. If a
joint life expectancy is elected, and
both the Participant and spouse have
died, any remaining Current Value must
be distributed no later than the
December 31 of the year following the
year of the second death. If a joint
life expectancy is elected and both the
Participant and non-spouse Beneficiary
have died, any remaining Current Value
will be distributed to a successor
Beneficiary or, if none has been named,
then to the estate of the last to die.
(e) 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 balance of
the Individual Account.
(f) Distribution Date: The Participant shall
specify an annual distribution date.
The earliest date is the first day of
the calendar year in which he or she
attains age 70 1/2, or retirement if
later. For a spouse Beneficiary
electing ECO after the Participant's
death, the earliest date is the date of
the Participant's death. The first
distribution date may be the 15th of any
month, or such other date Aetna may
designate or allow. Subsequent
distributions will be made on the
anniversary of that date.
(g) Election and Revocation: The
Participant may elect ECO by submitting
a completed and signed election form to
Aetna's Home Office. The Contract
Holder must certify that the Participant
is eligible both as to the timing and
form of distribution. Once ECO is
elected, the Participant may revoke it
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 per Individual
Account.
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<PAGE>
4.03 SYSTEMATIC WITHDRAWAL (a) With the Systematic Withdrawal Option
OPTION: (SWO) a portion of the Individual
Account Current Value is automatically
distributed each year. A SWO payment
will be calculated on the Individual
Account's Current Value. Each payment
will be withdrawn from the Individual
Account in the same proportion as assets
are held in the Funds, the GA Account,
and the Fixed Plus Account on the date
the payment is made.
(b) Payments under SWO will comply with the
incidental death benefit test set forth
in Code Section 401(a)(9).
(c) Distribution Amounts: The Participant
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. If joint life
expectancy is elected, the Beneficiary
under SWO must be the same as the
beneficiary of any death benefits under
the Plan.
(1) Specified Payment: Payments of a
designated annual dollar amount.
The annual amount may not be
greater than the percentage of the
Current Value at time of election
as shown on Contract Schedule I.
This amount will remain constant
unless a higher amount is required
under Code minimum distribution
rules.
Each year that the Specified
Payment is in effect, Aetna will
calculate the minimum required
distribution by dividing the
Individual Account 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 larger than
the Specified Payment.
(2) Specified Period: Payments are
made over a period of time. The
number of years selected may not be
less than the number of years shown
on Contract Schedule I, unless
otherwise required by Code minimum
distribution rules. The maximum
specified period will be limited by
the life expectancy factor. The
amount paid each year is calculated
by dividing the Individual Account
Current Value as of December 31 of
the prior year by the number of
payment years remaining.
(3) Specified Percentage: The specified
percentage chosen cannot be greater
than the percentage shown on
Contract Schedule I. The
Participant may change the
specified percentage elected every
six months. Each annual
distribution is determined by
multiplying the Individual Account
Current Value by the percentage
chosen. The value to be used in
this calculation is the value on
the December 31st prior to the year
for which the payment is being
made. For payments made more often
than annually, the annual payment
result (calculated above) is
divided by the number of payments
due each year. Payments will be
made each year until the year the
Participant attains age 70 1/2.
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<PAGE>
4.03 SYSTEMATIC WITHDRAWAL (d) Life Expectancy Factor: The life
OPTION (CONT'D): expectancy factor for the initial
distribution year is either single life
or joint life expectancy as elected by
the Participant, based on tables in IRS
regulations. For a spouse Beneficiary,
only a single life expectancy is
available. With each subsequent year,
the life expectancy factor will be the
life expectancy factor for the initial
distribution year, reduced by one.
If the joint life expectancy is elected
and the Participant or the Beneficiary
dies on or after the required beginning
date for minimum distributions to the
Participant, the joint life expectancy
factor will continue to be reduced by
one for each distribution year.
Payments will continue unless the
Contract Holder elects an alternate
payment mode on behalf of the survivor.
Any payment mode elected on behalf of
the Beneficiary must provide payments to
be made at least as rapidly as those
made prior to the Participant's death.
If the Participant dies before the
required beginning date for minimum
distributions, SWO payments will cease
and the Beneficiary may claim the death
benefit in accordance with the terms of
this Contract. If the Beneficiary is
not the Participant's spouse, the entire
death benefit must be either applied to
an Annuity option within one (1) year of
the Participant's death, or be paid
within five (5) years of the
Participant's death. If the Beneficiary
is the Participant's spouse, the
distribution is not required to begin
earlier than when the Participant would
have attained age 70 1/2.
If joint life expectancy is elected and
the Beneficiary dies before the required
beginning date for minimum distributions
to the Participant, payments to the
Participant will continue to be based on
joint life expectancy reduced by one for
each distribution year.
(e) 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 balance of
the Individual Account.
(f) Distribution Date: The Participant or
spouse Beneficiary shall specify the
distribution date. The earliest date is
the first day of the calendar year in
which the Participant attains age 59 1/2
or age 55, if separated from service
with the employer at or after age 55.
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.
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<PAGE>
4.03 SYSTEMATIC WITHDRAWAL (g) Election and Revocation: The
OPTION (CONT'D): Participant may elect SWO by submitting
a completed and signed election form to
Aetna's Home Office. Once SWO is
elected, the Participant may revoke it
by submitting a written request to
Aetna's Home Office. Any revocation
will apply only to amounts not yet paid.
Generally, SWO may be elected only once,
however, if SWO is elected on and then
revoked before the date distributions
were required to begin under Code
Section 401(a)(9), SWO may be elected on
behalf of a spouse Beneficiary after the
death of the Participant.
V. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
5.01 CHOICES: (a) The Participant may elect an Annuity
option by telling Aetna to pay all or
any portion of the Individual Account(s)
Current Value (minus any applicable
premium tax if not previously deducted)
as a premium for an Annuity under option
2, 3, or 4 (see 5.07). A completed and
signed election form must be submitted
to the Home Office. The form must
include Contract Holder certification
that the Participant is eligible for a
distribution under the terms of the Plan
and that the Annuity option chosen is
permitted under the terms of the Plan.
Any election of an Annuity option must
comply with the minimum distribution
requirements of Code Section 401(a)(9),
including the incidental death benefit
rule, and the regulations thereunder.
This restriction does not apply if
option 4 is chosen and the second
Annuitant is the spouse of the
Participant.
(b) Generally, the first Annuity payment
must be made by April 1 of the calendar
year following the year in which the
Participant turns age 70 1/2 or retires,
if later.
(c) When an Annuity option is chosen the
Participant must designate whether the
Annuity will be Fixed or Variable and
whether the underlying investment will
be:
(1) The General Account;
(2) One or more of the available
Fund(s); or
(3) A combination of (1) and (2).
If a Fixed Annuity is chosen, the
Annuity purchase rate for the option
chosen reflects at least the Minimum
Guaranteed Interest Rate (See Contract
Schedule II), but may reflect a higher
interest rate.
If a Variable Annuity is chosen, the
initial Annuity payment for the option
chosen reflects the assumed annual
return rate elected (See Contract
Schedule II).
(d) Payments will be made on a monthly basis
unless the Participant requests
otherwise.
(e) Once elected, an Annuity option may not
be revoked, except for option 2 when
elected on a variable basis.
27
<PAGE>
5.02 TERMS OF ANNUITY (a) No choice of any Annuity option may be
OPTIONS: made if the first payment would be less
than $20 or if the total payments in a
year would be less than $100.
(b) If a Fixed Annuity under option 2, 3 or
4 is elected and a larger Annuity
payment would result from applying the
Adjusted Current Value to a current
Aetna single premium immediate Annuity,
Aetna will make the larger payment.
(c) 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,
1992 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 rates for options 3 and 4
are based on mortality from 1983
Table a.
(d) 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 risks
charges (which may include profit) and
administrative charges if future
Variable Annuity Payments are to remain
level.
5.03 DEATH PROVISION: When an Annuitant dies under options 2 or 3,
the present value of any remaining guaranteed
payments will be paid in one sum to the
Beneficiary or, upon the election of the
Beneficiary, any remaining payments will
continue to the Beneficiary. If a
Beneficiary dies while under option 1 or
while receiving Annuity payments, the present
value of any remaining payments will be paid
in one lump sum to the Beneficiary's estate.
The rate used to determine the present value
for a lump sum payment will be the rate used
to determine the first Annuity payment.
5.04 FUND ANNUITY The number of Fund(s) annuity units is based
UNITS: on 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.
28
<PAGE>
5.04 FUND ANNUITY Such amount, or portion, of the variable
UNITS (CONT'D): payment will be divided by the appropriate
Fund(s) annuity unit value (see 5.05) on the
tenth Valuation Period before the due date of
the first payment to determine the number of
each Fund annuity units. The number of each
Fund annuity units remains fixed. Each
future payment is equal to the sum of the
products of each Fund annuity unit value
multiplied by the appropriate number of
Units. The Fund annuity unit value on the
tenth Valuation Period prior to the due date
of the payment is used.
5.05 FUND ANNUITY For any Valuation Period, a Fund(s) annuity
UNIT VALUE: unit value is equal to:
(a) The value for the previous Period;
multiplied by
(b) The Annuity net return factor(s) (See
5.06) for the Period; multiplied by
(c) A factor to reflect the assumed annual
net return rate. (See Contract
Schedule II).
The dollar value of a Fund annuity unit
values and Annuity payments may go up or down
due to investment gain or loss.
Payments shall not be changed due to changes
in the mortality or expense results or
administrative charges.
5.06 FUND ANNUITY NET The Annuity net return factor(s) are used to
RETURN FACTOR: compute all Separate Account Annuity payments
for any Fund.
The Annuity net return factor(s) for each
Fund is equal to 1.0000000 plus the net
return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held
by the Separate Account at the end of a
Valuation Period; minus
(b) The value of the shares of the Fund held
by the Separate Account at the start of
the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the
Separate Account (if any); divided by
(d) The total value of the Fund(s) record
units and Fund(s) annuity units of the
Separate Account at the start of the
Valuation Period; minus
(e) A daily charge for Annuity mortality and
expense risks, which may include profit,
(at the annual rate as shown on Contract
Schedule II) 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.
29
<PAGE>
5.07 ANNUITY OPTIONS: Option 1 -- Payments of Interest on Sum Left
with Aetna -- This option may be used only by
the Beneficiary when the Participant 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 5.01). 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 the Beneficiary is the Participant's
surviving spouse, 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 a spouse, the
entire sum must either be applied to an
Annuity option within one year of the
Participant's death or be paid within five
years of the Participant's death.
Option 2 -- Payments for a Stated Period of
Time -- An Annuity will be paid for the
number of years chosen (See Contract
Schedule II).
If payments for this option are made under a
Variable Annuity, the present value of any
remaining payments may be withdrawn at any
time.
Option 3 -- Life Income -- An Annuity will be
paid for the life of the Annuitant. Aetna
may also guarantee payments for 60, 120, 180,
or 240 months if so directed by the
Participant.
Option 4 -- Life Income based upon the lives
of two Annuitants -- An Annuity will be paid
during the lives of the Annuitant and a
second Annuitant. Payments will continue
until both Annuitants have died. When this
option is chosen, a choice of the following
must be made:
(a) 100% of the payment to continue after
the first death;
(b) 66 2/3% of the payment to continue after
the first death;
(c) 50% of the payment to continue after the
first death;
(d) Payments for a minimum of 120 months,
with 50% of the payment to continue
after the first death; or
(e) 100% of the payment to continue at the
death of the second Annuitant and 50% of
the payment to continue at the death of
the Annuitant.
30
<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
- --------------------------------------------------------------------------------
3 3.00% $28.99 $86.76 $172.88 $343.23
4 3.00% 22.06 66.02 131.56 261.19
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- --------------------------------------------------------------------------------
31
<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%
- --------------------------------------------------------------------------------
MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
3 $29.19 $87.33 $173.91 $344.86
4 22.27 66.61 132.65 263.04
5 18.12 54.19 107.92 213.99
6 15.35 45.92 91.44 181.32
7 13.38 40.01 79.69 158.01
8 11.90 35.59 70.88 140.56
9 10.75 32.16 64.05 127.00
10 9.83 29.42 58.59 116.18
11 9.09 27.18 54.13 107.34
12 8.46 25.32 50.42 99.98
13 7.94 23.75 47.29 93.78
14 7.49 22.40 44.62 88.47
15 7.10 21.24 42.31 83.89
16 6.76 20.23 40.29 79.89
17 6.47 19.34 38.51 76.37
18 6.20 18.55 36.94 73.25
19 5.97 17.85 35.54 70.47
20 5.75 17.22 34.28 67.98
21 5.56 16.65 33.15 65.74
22 5.39 16.13 32.13 63.70
23 5.24 15.66 31.19 61.85
24 5.09 15.24 30.34 60.17
25 4.96 14.85 29.56 58.62
26 4.84 14.49 28.85 57.20
27 4.73 14.15 28.19 55.90
28 4.63 13.85 27.58 54.69
29 4.53 13.57 27.02 53.57
30 4.45 13.30 26.49 52.53
- --------------------------------------------------------------------------------
32
<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%
- --------------------------------------------------------------------------------
MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
3 $29.80 $89.04 $176.99 $349.72
4 22.89 68.38 135.93 268.58
5 18.74 56.00 111.33 219.98
6 15.99 47.77 94.96 187.64
7 14.02 41.90 83.30 164.59
8 12.56 37.52 74.58 147.35
9 11.42 34.11 67.81 133.99
10 10.51 31.40 62.42 123.34
11 9.77 29.19 58.03 114.66
12 9.16 27.36 54.38 107.45
13 8.64 25.81 51.31 101.39
14 8.20 24.50 48.69 96.21
15 7.82 23.36 46.44 91.75
16 7.49 22.37 44.47 87.88
17 7.20 21.51 42.75 84.48
18 6.94 20.74 41.23 81.47
19 6.71 20.06 39.88 78.80
20 6.51 19.46 38.68 76.42
21 6.33 18.91 37.59 74.28
22 6.17 18.42 36.62 72.35
23 6.02 17.98 35.73 70.61
24 5.88 17.57 34.93 69.02
25 5.76 17.20 34.20 67.57
26 5.65 16.87 33.53 66.25
27 5.54 16.56 32.92 65.04
28 5.45 16.28 32.35 63.93
29 5.36 16.01 31.83 62.90
30 5.28 15.77 31.35 61.95
- --------------------------------------------------------------------------------
33
<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 NONE 60 120 180 240
ANNUITANT
- --------------------------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93
51 4.12 4.11 4.09 4.05 3.99
52 4.19 4.19 4.16 4.11 4.04
53 4.27 4.26 4.23 4.18 4.10
54 4.35 4.34 4.31 4.25 4.16
55 4.44 4.42 4.39 4.32 4.22
56 4.53 4.51 4.47 4.40 4.29
57 4.62 4.61 4.56 4.48 4.35
58 4.72 4.71 4.65 4.56 4.42
59 4.83 4.81 4.75 4.64 4.49
60 4.95 4.93 4.86 4.73 4.55
61 5.07 5.05 4.97 4.83 4.62
62 5.20 5.17 5.08 4.92 4.69
63 5.34 5.31 5.20 5.02 4.76
64 5.49 5.45 5.33 5.12 4.83
65 5.65 5.61 5.47 5.22 4.89
66 5.82 5.77 5.61 5.33 4.96
67 6.01 5.94 5.75 5.44 5.02
68 6.20 6.13 5.91 5.54 5.08
69 6.41 6.33 6.07 5.65 5.14
70 6.64 6.54 6.23 5.76 5.19
71 6.88 6.76 6.41 5.86 5.24
72 7.14 7.00 6.59 5.97 5.28
73 7.43 7.26 6.77 6.06 5.32
74 7.73 7.53 6.96 6.16 5.35
75 8.06 7.82 7.14 6.25 5.38
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
34
<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
- --------------------------------------------------------------------------------
ADJUSTED
AGE OF NONE 60 120 180 240
ANNUITANT
- --------------------------------------------------------------------------------
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
35
<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
- --------------------------------------------------------------------------------
ADJUSTED
AGE OF NONE 60 120 180 240
ANNUITANT
- --------------------------------------------------------------------------------
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 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
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
36
<PAGE>
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
- --------------------------------------------------------------------------------
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 4.06 4.47 4.71 4.06 4.20
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 4.49 5.01 5.32 4.48 4.64
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 5.07 5.75 6.17 5.05 5.26
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 5.89 6.82 7.40 5.81 6.12
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 7.07 8.34 9.16 6.78 7.36
- --------------------------------------------------------------------------------
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.
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
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ---------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.
38
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ---------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.
39
<PAGE>
[Logo]
AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
Group Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP ANNUITY CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT
FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN
INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA
DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
<PAGE>
------------------------------------------------------------
[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
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Plan
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Type of Plan
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Contract Holder
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Contract No.
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Effective Date
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This Contract is Delivered in and is Subject to the Laws of that
Jurisdiction
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN PARTS III AND IV.
RIGHT TO CANCEL
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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/ Dan Kearney /S/ Lucille M. Nickerson
President Secretary
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
FORM NO. G-CDA-IB (AORP)
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SPECIFICATIONS
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GUARANTEED There is a guaranteed interest rate for Purchse Payment(s)
INTEREST RATE held in the Fixed Account (See 3.04) and the GA Account
(See 3.03(d))
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DEDUCTIONS FROM There will be deductions for mortality and expense risks and
THE SEPARATE administrative fees. (See 3.07 and 4.06.)
ACCOUNT
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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.
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TABLE OF CONTENTS
I. GENERAL DEFINITIONS
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PAGE
1.01 Annuitant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.02 Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.03 Fixed Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.04 Fixed Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.05 Fund(s). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.06 General Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.07 Guaranteed Accumulation Account (GA Account) . . . . . . . . . . . . . 5
1.08 Matured Term Value . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.09 Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 Nonunitized Separate Account . . . . . . . . . . . . . . . . . . . . . 5
1.11 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.12 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.13 Purchase Payment(s). . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.14 Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.15 Valuation Period (Period). . . . . . . . . . . . . . . . . . . . . . . 6
1.16 Variable Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
II. GENERAL PR0VISIONS
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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 . . . . . . . . . . . . . . . . . . . . . . 8
2.08 Misstatements and Adjustments. . . . . . . . . . . . . . . . . . . . . 8
2.09 Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.10 Grace Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.11 Individual Certificates. . . . . . . . . . . . . . . . . . . . . . . . 8
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III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
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3.01 Net Purchase Payment(s). . . . . . . . . . . . . . . . . . . . . . . . 8
3.02 Individual Account(s). . . . . . . . . . . . . . . . . . . . . . . . . 8
3.03 Guaranteed Accumulation Account (GA Account) . . . . . . . . . . . . . 9
3.04 Guaranteed Interest Rate -- Fixed Account. . . . . . . . . . . . . . . 13
3.05 Experience Credits . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.06 Fund Record Units -- Separate Account. . . . . . . . . . . . . . . . . 13
3.07 Net Return Factor(s) -- Separate Account . . . . . . . . . . . . . . . 13
3.08 Fund Record Unit Value -- Separate Account . . . . . . . . . . . . . . 14
3.09 Current Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.10 Transfer of Current Value from the Funds or GA Account . . . . . . . . 14
3.11 Transfer of Current Value from the Fixed Account . . . . . . . . . . . 15
3.12 Notice to the Contract Holder. . . . . . . . . . . . . . . . . . . . . 15
3.13 Distribution Options . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.14 Sum Payable at Death (Before Annuity Payments Start) . . . . . . . . . 18
3.15 Surrender Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.16 Timing of Distributions. . . . . . . . . . . . . . . . . . . . . . . . 20
3.17 Payment of Surrender Value . . . . . . . . . . . . . . . . . . . . . . 20
3.18 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
IV. ANNUITY PROVISIONS
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PAGE
4.01 Choices to be Made . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.02 Annuity Payments to Annuitant. . . . . . . . . . . . . . . . . . . . . 22
4.03 Death of Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.04 Fund(s) Annuity Units -- Separate Account. . . . . . . . . . . . . . . 22
4.05 Fund(s) Annuity Unit Value -- Separate Account . . . . . . . . . . . . 22
4.06 Annuity Net Return Factor(s) -- Separate Account . . . . . . . . . . . 23
4.07 Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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I. GENERAL DEFINITIONS
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1.01 ANNUITANT: A person on whose life an Annuity has been
effected under this Contract.
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 FIXED ACCOUNT: An accumulation option with a guaranteed
minimum interest rate. Aetna may credit a
higher rate which is not guaranteed.
1.04 FIXED ANNUITY: An annuity with payments that do not vary in
amount.
1.05 FUND(S): The open-end registered management investment
companies (mutual funds) made available by
Aetna under this Contract.
1.06 GENERAL ACCOUNT: The Account holding the assets of Aetna, other
than those assets held in the Separate Account
or the Nonunitized Separate Account.
1.07 GUARANTEED ACCUMULATION An accumulation option which guarantees
ACCOUNT (GA ACCOUNT): A stipulated rate of interest for a specified
period of time.
1.08 MATURED TERM VALUE: The amount payable on a GA Account Term's
Maturity Date.
1.09 MATURITY DATE: The last day of a GA Account Term.
1.10 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 GA 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.
1.11 PARTICIPANT: A person who participates in the Plan named on
the cover of this Contract.
1.12 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.
1.13 PURCHASE PAYMENT(S): Payments made to Aetna.
1.14 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.
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1.15 VALUATION PERIOD (PERIOD): The period as of 4:00 p.m. Eastern time on each
day the New York Stock Exchange is open for
business to 4:00 p.m. Eastern time of the next
such business day, or such other day that one
or more of the Funds determines its net asset
value.
1.16 VARIABLE ANNUITY: An Annuity with payments that vary with the net
investment results of a Separate Account.
II. GENERAL PROVISIONS
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2.01 CHANGE OF CONTRACT: Except as provided below, only an authorized
officer of Aetna may change the terms of this
Contract by notifying the Contract Holder, in
writing at least 30 days before the effective
date of any change. Any change will not affect
the amount or terms of any Annuity which begins
before the change.
Aetna may make a change that affects the GA
Account Market Value Adjustment (see 3.03 (g))
with at least 30 days advance written notice to
the Contract Holder. Any such change shall
become effective for any present or future
Participant.
Any change that affects the following
provisions of this Contract will not apply to
existing Individual Accounts:
(a) Net Purchase Payments
(b) Guaranteed GA Account 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.
Any change that affects the Annuity Options and
the tables for the Options cannot be made:
(1) Until at least 12 months after the
Effective date of this Contract; and
(2) Until at least 12 months after the
effective date of any such prior change.
New Participants covered under this Contract on
or after the effective date of any change will
be subject to the change. If the Contract
Holder does not agree to any change under this
provision, no new Participants will be covered
under this Contract. Aetna will continue to
accept Purchase Payments for the Participants
covered under this Contract before the change.
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).
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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, Participants or
CONTRACT: beneficiaries 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.
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 Holder may make any choices
allowed by this Contract for the Employer
Account and the Employee Account. Choices made
under this Contract must be in writing or in a
form satisfactory to Aetna. Until receipt of
such choices in its Home Office, Aetna may rely
on any previous choices made. The Plan,
however, may allow Participants to select the
investment option(s) of the Employer Account
and/or the Employee Account. No distributions
will be made from the Employer Account or the
Employee Account without the Contract Holder's
written direction to Aetna.
(a) Nontransferable and Nonassignable: This
Contract and any Individual Accounts
are nontransferable and nonassignable,
except to Aetna pursuant of a "qualified
domestic relations order" as set forth
under the Internal Revenue Code.
(b) Distributions: With respect to any
distribution made from an Employee or
Employer Account, the Contract Holder
must certify in writing that the
distribution is in accordance with the
terms of the Plan.
(c) Participant Rights/Employee Account: The
Participant has a nonforfeitable right to
the value of his or her Employee Account
pursuant to the terms of the Plan as
interpreted by the Contract Holder
(see 1.12).
(d) Participant Rights/Employer Account: The
Participant has a nonforfeitable right to
the value of his or her Employer Account
pursuant to the terms of, and to the
extent of his or her vested percentage
under, the Plan as interpreted by the
Contract Holder.
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2.06 CONTROL OF CONTRACT It is the Contract Holder's responsibility to
(Cont'd) maintain records of the Participant's vesting
percentages. Aetna will not maintain nor keep
such records.
2.07 DESIGNATION OF Each Participant shall name the beneficiary of
BENEFICIARY the Employer and Employee Account. Aetna will
pay any portion of the Individual Account(s)
Current Value to the beneficiary as directed
by the Contract Holder.
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.
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 INDIVIDUAL CERTIFICATES: Aetna shall issue certificates to the
Certificate Holder or Participants as required
by the state in which this Contract is
delivered. The certificate will summarize
certain provisions of the Contract.
Certificates are for information only and are
not a part of the Contract.
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
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3.01 NET PURCHASE PAYMENT: The actual Purchase Payment less any premium
tax. 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 Payments are received
or at any other time, it will deduct the tax at
that time.
The Net Purchase Payments may be credited among:
(a) The Fixed Account; and
(b) The Guaranteed Accumulation Account; 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.
During any calendar year, the Contract Holder
or, if allowed by the Plan, the Participant may
tell Aetna 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 INDIVIDUAL ACCOUNT(S): This Contract is issued to the Contract Holder.
However, Participant's Individual Accounts are
explained below:
Aetna may maintain two Individual Accounts for
each Participant. These will be:
(a) Employer Account: This Individual Account
will be credited with employer Net Purchase
Payment(s); and
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3.02 INDIVIDUAL ACCOUNT(S): (b) Employee Account: This Individual Account
(Con't) will be credited with employee Net Purchase
Payment(s), specifically employee salary
reduction contributions.
In addition to any Purchase Payment(s) stated
to be made to this Contract, a lump-sum
Purchase Payment(s), of not less than a minimum
amount stated by Aetna, may be made on behalf
of one or more Participants. Aetna may
maintain an Individual Account for each lump
sum payment. Such Individual Account(s) will
be designated as an Employer Account(s) or an
Employee Account(s) as instructed by the
Contract Holder.
3.03 GUARANTEED ACCUMULATION The GA Account guarantees stipulated rates of
ACCOUNT (GA ACCOUNT): interest for stated periods of time (see (a),
(b), (c) and (d) below). Amounts withdrawn
before the end of a Guaranteed Term may be
subject to a Market Value Adjustment
(MVA)(see(g) 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 GA Account for one or
more Guaranteed Terms.
(b) Guaranteed Term (Term) -- The period of
time for which interest rates are
guaranteed on Net Purchase Payment(s) and
on transfers made into the Deposit Period of
the GA 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 or, if
allowed by the Plan, the Participant 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. At least one Term in
the Short-Term Classification will be
available each Deposit Period.
(d) Guaranteed GA Account Interest Rates
(Guaranteed Rates) --Aetna will declare all
interest rate(s) applicable to a specific
Term at the start of the Deposit Period for
that Term. These rate(s) are guaranteed by
Aetna for that Deposit Period and the
ensuing Term and are not based on the actual
investment experience of the underlying
assets in the GA Account. The Guaranteed
Rates are annual effective yields. The
interest is
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3.03 GUARANTEED ACCUMULATION credited daily at a rate that will produce the
ACCOUNT (GA ACCOUNT): guaranteed annual effective yield over the
(CONT'D) period of a year. No annual rate will ever be
less than 3%.
For Terms of one year or less, one Guaranteed
Interest Rate is set and announced for that
full Term. For other Terms, there may be two
or more rates.
The rate(s) will be set and announced prior to
the Deposit Period for that Term and will not
be subject to change.
(e) Withdrawals from GA Account -- Full or
partial surrenders may be requested at any time
from the GA Account. However, amounts
withdrawn prior to the Maturity Date of a Term
to satisfy a surrender request may be subject
to an MVA (see (g) below).
Full and partial surrenders are satisfied by
withdrawing amounts from each of the investment
options in which the Individual Account is
invested (the Fund(s), the Fixed Account, the
GA Account Short-Term Classification and the GA
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
GA Account Short-Term and Long-Term
Classifications are considered as two separate
investment options. Amounts will be removed
within a GA Account Classification starting
with the Term still in effect with the oldest
Deposit Period.
Amounts may be transferred at any time subject
to Contract specifications (see 3.10 or 3.11
below). Amounts transferred prior to the
Maturity Date of a Term are subject to an MVA
(see (g) below). Fund(s) will be removed
within the elected Classification starting with
the Term still in effect with the oldest
Deposit Period.
During the Deposit Period and the 90 days
following the close of the Deposit Period, any
amounts applied to the GA Account during that
Deposit Period may not be withdrawn unless due
to:
(1) A full or partial surrender;
(2) A payment of a premium for an Annuity
Option; or
(3) The Sum Payable at Death provision.
(f) Maturity Date/Reinvestment -- The Contract
Holder or Participant, as applicable,
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 Guaranteed Rate(s), Term(s) and
projected Matured Term Value.
The Matured Term Value may be surrendered or
transferred on the Term's Maturity Date
without an MVA. If no specific direction is
given by the Contract Holder or Participant,
as applicable, prior to the Maturity Date,
each Matured Term
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3.03 GUARANTEED ACCUMULATION Value will be reinvested in a Term of the same
ACCOUNT (GA ACCOUNT) duration. In the event that a Term of the same
(CONT'D): 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, the Contract Holder or Participant,
as applicable, will be mailed a confirmation
statement. This statement will state the Term
and Guaranteed Rate(s) which will apply to the
reinvested Matured Term Value.
During the calendar month following the Term's
Maturity Date, one exception is allowed to the
90 day transfer restriction and MVA under (e)
and (g). This exception is applicable to each
Matured Term Value plus any interest accrued
thereon, provided no part of the Matured Term
Value was transferred on the Maturity Date.
During this calendar month period, the Contract
Holder or Participant, as applicable, 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 GA
Account without an MVA. This provision only
applies to the first such request received from
the Contract Holder during this period for any
Matured Term Value. The Matured Value plus any
interest accrued thereon may be transferred
upon such request without an MVA:
(1) To any other Terms of the GA Account
available in the current Deposit Period; or
(2) 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) Market Value Adjustment (MVA) -- There will
be an MVA for a withdrawal from the GA Account
before the end of a Term when the withdrawal is
due to:
(1) A transfer;
(2) A full or partial surrender; or
(3) A payment of a premium for Annuity Option 2.
The amount of the withdrawal will be adjusted
to a market value amount as described below.
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3.03 GUARANTEED ACCUMULATION The market value adjusted amount will be equal
ACCOUNT (GA ACCOUNT) to the amount withdrawn multiplied by the
(CONT'D): following ratio:
x
---
365
(1 + i)
----------------------
x
---
365
(1 + j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days
remaining,(computed from
Wednesday of the week of
withdrawal) in the Guaranteed
Term.
The Deposit Period Yield will be determined as
follows:
- At the close of the last business day of each
week of the Deposit Period, a yield will be
computed as the average of the yields on that
day of U.S. Treasury Notes which mature in the
last three months of the Guaranteed Term.
- The Deposit Period Yield is the average of
those yields for the Deposit Period. If
withdrawal is made prior to the close of the
Deposit Period, it is the average of those
yields on each week preceding withdrawal.
The Current Yield is the average of the yields
on the last business day of the week preceding
withdrawal on the same U.S. Treasury Notes
included in the Deposit Period Yield.
In the event that no U.S. Treasury Notes which
mature in the last three months of the
Guaranteed Term exist, Aetna reserves the right
to use the U.S. Treasury Notes that mature in
the following quarter.
- The aggregate MVA amount which is the sum of
all market value adjusted amounts calculated
due to a withdrawal of amounts (for surrender
or transfer) from Terms prior to the end of
those Terms. The aggregate MVA may be either
positive or negative; or
- The applicable portion of the Current Value in
the GA Account.
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3.03 GUARANTEED ACCUMULATION After the six month period, the surrender or
ACCOUNT (GA ACCOUNT) transfer will be the aggregate MVA amount
(CONT'D): (i.e., including all MVAs).
The greater of the aggregate MVA amount or the
applicable portion of the current Value in the
GA Account is applied to amounts withdrawn from
the GA Account for payment of a premium under
Annuity Options 3 or 4.
Aetna may make any change to the MVA with 30
days advance written notice to the Contract
Holder. Any such change shall become effective
for Purchase Payment(s), transfers or
reinvestments made to any new Term by any
present or future Participant.
(h) Deposits to the GA Account -- All amounts
in the GA Account under the Short-Term
Classification are made to the General
Account.
All amounts in the GA Account under the
Long-Term Classifications are made to a
Nonunitized Separate Account. There are no
discrete units for this Nonunitized
Separate Account. The Contract Holder or
Participant, as applicable, 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 interest rates to be credited to
the GA Account. All assets of Aetna
including amounts made to the GA Account
are available to meet the guarantees under
the GA Account.
3.04 GUARANTEED INTEREST On any Purchase Payment(s) made to the Fixed
RATE -- FIXED ACCOUNT: Account, Aetna will add interest daily at any
annual rate no less than 3%. Aetna may add
interest daily at any higher rate determined by
its Board of Directors.
3.05 EXPERIENCE CREDITS: Aetna may apply Experience Credits under this
Contract. Any such Credits will be computed as
decided by Aetna.
3.06 FUND RECORD UNITS -- The portion of the Net Purchase Payment(s)
SEPARATE ACCOUNT: applied 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 3.08) for the Valuation Period
in which the Purchase Payment is received in
good order.
3.07 NET RETURN FACTOR(S) -- The Net Return Factor(s) are used to compute
SEPARATE ACCOUNT: all Separate Account record units for any Fund.
The Net Return Factor(s) for each Fund is equal
to 1.0000000 plus the Net Return Rate.
13
<PAGE>
3.07 NET RETURN FACTOR(S) -- The net return rate is equal to:
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
(c) Taxes (or reserves for taxes) on the
Separate Account (if any); divided by
(d) The total value of the Fund Record Units
and Fund Annuity Units of the Separate
Account at the start of the Valuation
Period; minus
(e) A daily actuarial charge at an annual rate
effective rate of 1.40% for Annuity
mortality and expense risks and asset based
sales charge and profit and a daily
administrative charge which will not exceed
0.25% on an annual effective basis. The
administrative charge may be changed
annually except for amounts which have been
used to purchase an Annuity.
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.
3.08 FUND RECORD UNIT VALUE -- Each Fund's Record Unit value is computed by
SEPARATE ACCOUNT: multiplying the Net Return Factor for the
current 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.
3.09 CURRENT VALUE: The Current Value is equal to:
(a) Any amounts in the Fixed Account, including
Fixed Account interest added by Aetna; plus
(b) Any amounts in the GA Account, including GA
Account interest added by Aetna; plus
(c) The sum of any Separate Account Record Unit
Value(s); plus
(d) Any amount due to Experience Credits.
Current Value does not include amounts used to
elect an Annuity.
3.10 TRANSFER OF CURRENT VALUE Before an Annuity Option is elected, all or any
FROM THE FUNDS OR GA Current Value may be transferred from any Fund
ACCOUNT: or the GA Account to:
(a) Any other Fund;
(b) The Fixed Account; or
(c) The GA Account's current Deposit Period.
14
<PAGE>
3.10 TRANSFER OF CURRENT VALUE Amounts in a specific GA Account Term cannot be
FROM THE FUNDS OR GA transferred to the Deposit Period of another
ACCOUNT (CONT'D): term within the same Classification Except at
the Term's Maturity.
Amounts applied to Classifications of the GA
Account may not be transferred to the Fund(s)
or the Fixed Account during the Deposit Period
or for 90 days after the close of the Deposit
Period.
Transfers from the GA Account are subject to
the withdrawal and Market Value Adjustment
provisions. (See 3.03 (e) and (g).) For each
Individual Account, twelve transfers of Current
Value (excluding transfers from the GA 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.
3.11 TRANSFER OF CURRENT VALUE Before an Annuity Option is elected, up to 20%
FROM THE FIXED ACCOUNT: of the Current Value held in the Fixed Account
may be transferred to any Fund(s) or the GA
Account's current Deposit Period(s). Such
transfer will be:
(a) Without charge; and
(b) Allowed once per calendar year.
The Current Value of the Fixed Account, as used
above, is the value when the request is
received in good order at the Home Office of
Aetna.
3.12 NOTICE TO THE CONTRACT Aetna will notify the Contract Holder or
HOLDER: Participant, as applicable, each year of:
(a) The value of any amounts held in:
(1) The Fixed Account;
(2) The GA Account;
(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), and
(d)The Surrender Values of these amounts.
Such number or values will be as of a date no
more than 60 days before the date of the
notice.
3.13 DISTRIBUTION OPTIONS: The following distribution options may be
elected by the Contract Holder on behalf of the
Participant.
(a) Estate Conservation Option (ECO): A
distribution option under which a portion
of the Individual Account(s) Current Value
will automatically be surrendered and
distributed each year.
(1) An ECO payment will be determined in
the following manner:
15
<PAGE>
3.13 DISTRIBUTION OPTIONS: Payments will commence no earlier than the
(CONT'D) year in which Participant attains age 70 1/2
and will be calculated on the full Current
Value of the Individual Account(s).
(2) 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 Internal
Revenue Code of 1986, (Code), as it may be
amended from time to time. The annual
distribution will be determined by dividing
the Individual Account(s) Current Value, as
of December 31 of the year prior to the
year for which the payment is to be made,
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 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.
The 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, and such
spouse must be named as the beneficiary of
any death benefits under the Contract while
ECO is in effect.
(3) 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 balance of the
Individual Account(s).
(4) Date of Distribution: The Contract
Holder shall specify the initial
distribution date. The earliest date is
the first day of the calendar year in which
the Participant attains age 70 1/2.
Subsequent distributions will be made
annually on the 15th of the month the
initial payment was made or such other date
Aetna may designate or allow.
(5) Elections and Revocation: ECO 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 Contract Holder
must also certify in writing that the
distribution is in accordance with the
terms of the Plan.
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 per
Participant.
16
<PAGE>
3.13 DISTRIBUTION OPTIONS (6) Reservation of Rights: Aetna reserves
(CONT'D): 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 Individual Account(s) Current Value
attributable to a particular Participant
will automatically be surrendered and
distributed each year.
(1) Amount of Distribution: The Contract
Holder may elect one of the two payment
methods described below.
(a) Specified Amount: Payments of a
designated dollar amount which must
be no greater than 10% of the
initial Current Value and shall
remain constant unless a higher
amount is required under 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 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
Individual Account Current Value as
of December 31 of the year prior to
the year for which the payment is
to be made, by a life expectancy
factor. At its discretion, Aetna
may require a minimum initial
payment amount; or
(b) Specified Period: Payments which
are made over a period of time
which must be at least 10 years,
unless otherwise required by 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 Individual
Account(s) Current Value as of
December 31 of the prior year, by
the number of payment years
remaining.
The life expectancy factor is
either the single life or joint
life expectancy, as elected by the
Contract Holder, based on tables in
Section 401(a)(9) of the Code or
related regulations. If the joint
life expectancy is elected, upon
the death of either the Participant
or the spouse, the minimum required
distribution for the Specified
Amount payment method will continue
to be calculated in the same manner
as described in (b)(1).
17
<PAGE>
3.13 DISTRIBUTION OPTIONS Payments upon the Participant's
(CONT'D): death will continue to be
calculated in the same manner
described above, unless the
Contract Holder on behalf of 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,
and such spouse must be named as
the beneficiary of any death
benefits under the Contract while
SWO is in effect.
(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 balance of the Individual
Account.
(3) Date of Distribution: The Certificate
Holder shall specify the initial
distribution date. The earliest date
is the first day of the calendar year
in which the Participant attains age 70
1/2. Subsequent distributions will be
made annually on the 15th of the month
the initial payment was made or such
other date Aetna may designate or
allow.
(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.
The Contract Holder must certify in
writing that the distribution is in
accordance with the terms of the Plan.
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.
(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.
3.14 SUM PAYABLE AT DEATH Aetna will pay any portion of the Individual
(BEFORE ANNUITY PAYMENTS Account(s) Current Value to the beneficiary and
START): in the manner directed in writing by the
Contract Holder when:
(a) The Participant dies before Annuity
payments start; and
18
<PAGE>
3.14 SUM PAYABLE AT DEATH (b) The notice of death is received in good
(BEFORE ANNUITY PAYMENTS order by Aetna.
START)(CONT'D):
For each Individual Account, the death benefit
is guaranteed to be the greater of:
(a) The Current Value of the Individual Account
plus aggregate positive MVA, as applicable,
on the date the notice of death and the
request for payment are received in good
order at Aetna's Home Office; or
(b) The total of Net Purchase Payment(s) made
to each Individual Account minus the total
of all partial surrenders or annuitizations
made from each Account.
This guaranteed death benefit is available only
to beneficiaries who request either a lump sum
payment or an Annuity Option within the first
six months after the date of the Participant's
death.
If the payee of the death proceeds is the
Participant's surviving spouse (as the
Participant's designated beneficiary), 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 payee within 5 years of
the Participant's death (see Part IV).
In no event may any payments to the beneficiary
under an Annuity Option extend beyond:
(a) The life of the payee determined as of the
date payments are to commence; or
(b) Any certain period greater than the payee's
life expectancy as determined by
regulations under Code Section 401(a)(9) as
of the date payments are to begin.
3.15 SURRENDER VALUE: The amount payable by Aetna upon the surrender
of any portion on an Individual Account will be
the value of the Individual Account at the end
of the Valuation Period in which the surrender
request is received at its Home Office.
Partial surrenders of an Individual Account's
Fixed Account value may not exceed 20% of the
Fixed Account Value during any calendar year.
Any portion of a full surrender of an
Individual Account which is in the Fixed
Account will be paid in five annual
installments in accordance with Section 3.17.
For a partial or full surrender from any
Individual Account, Aetna must receive
written direction from the Contract Holder
on a form acceptable to Aetna. Aetna may
defer payment of the surrender value until
appropriate Contract Holder direction is
received.
19
<PAGE>
3.16 TIMING OF DISTRIBUTIONS: The distribution of benefits accrued
after December 31, 1986, must be made in a lump
sum or must begin not later than the April 1 of
the calendar year following the calendar year
in which the Participant attains age 70 1/2 or
retires, whichever occurs later.
The required distribution described in either
of the above rules must be made over the life
of the Participant (or the joint lives of the
Participant and the beneficiary) or over a
period not exceeding the life expectancy of the
Participant (or the joint life expectancies of
the Participant and the beneficiary).
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.
3.17 PAYMENT OF SURRENDER Under certain emergency conditions, Aetna may
defer payments:
(a) For a period of up to 6 months (unless not
allowed by state law); and
(b) As provided by federal law.
Any surrenders requested from an Individual
Account's Fixed Account value may not exceed
20% of the Individual Account's Fixed Account
Current Value as of the date the withdrawal
request is received in good order at Aetna's
Home Office during any calendar year. The
surrender value will be reduced by any Fixed
Account surrender(s), transfer(s) or
annuitizations previously made during the
calendar year.
In the even of Individual Account termination,
Aetna will pay any Fixed Account surrender
value from the Individual Account with
interest, in five annual payments of:
- One-fifth of the Fixed Account surrender
value minus any Fixed Account surrender(s),
transfer(s) or annuitizations made during
the calendar year;
- One-fourth of the Fixed Account surrender
value;
- One-third of the Fixed Account surrender
value; and
- One-half of the Fixed Account surrender
value; and
- The remaining balance of the fixed Account
surrender value as the fifth and final
payment.
Once Aetna receives notification of an
Individual Account termination, no further
surrender(s) or transfer(s) will be permitted
from the Fixed Account.
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 3%.
20
<PAGE>
3.18 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 Market Value Adjustment deducted
from GA Account surrenders will not be included
in the reinstatement. Amounts will be
reinstated among the Fixed Account, GA Account,
and the Fund(s) in the same proportion as they
were at the time of surrender. Any amount
reinstated to the GA Account will be credited
to the current Deposit Period. 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.
Reinstatement is permitted only once.
IV. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
4.01 CHOICES TO BE MADE: The Contract Holder may elect an Annuity Option
on behalf of a Participant by telling Aetna to
pay all or any portion of the Current Value
(minus any premium tax) as a premium for an
Annuity under Option 2, 3, or 4 (see 4.07).
The present value of the expected payments to
the Annuitant when payments start shall be
determined in accordance with the tables under
Code Section 401(a)(9) regulations in order to
comply with the incidental death benefit test.
This restriction does not apply if Option 4 (e)
is chosen and the second Annuitant is the
spouse of the Annuitant.
Generally, the first Annuity payment must be
made no later than the April 1 of the calendar
year following the year in which the
Participant turns age 70 1/2 or retires,
whichever occurs later, or such later date as
may be allowed under federal law or regulations
(see 3.16). For distributions taken in a lump
sum, see Surrender Value (3.15 and 3.17).
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
3.0%. 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%.
With the exception of Option 2 on a variable
basis, once elected, an Annuity Option may not
be revoked.
21
<PAGE>
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
commence; 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 DEATH OF ANNUITANT: When an Annuitant dies under Options 2 and 3,
the present value of any remaining guaranteed
payments will be paid in once sum to the
beneficiary as directed in writing by the
Contract Holder; or upon election by the
Annuitant's beneficiary, any remaining payments
will continue to the beneficiary. If no
beneficiary exists, the present value of any
remaining guaranteed payments will be paid in
one lump sum to the Contract Holder.
However, if a beneficiary dies while under
Option 1 or while receiving Annuity Payments,
the present value of any remaining payments
will be paid in one lump sum to the estate of
the beneficiary. The interest rate used to
determine the first payment will be used to
calculate the present value.
4.04. FUND(S) ANNUITY UNITS -- The number of 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 4.05) on the
tenth Valuation Period before the due date of
the first payment to determine the number of
each Fund Annuity Units. The number of each
Fund Annuity Units remains fixed. Each future
payment is equal to the sum of the products of
each Fund Annuity Unit Value multiplied by the
appropriate number of Units. The Fund Annuity
Unit Value on the tenth Valuation Period prior
to the due date of the payment is used.
4.05 FUND(S) ANNUITY UNIT For any Valuation Period, a Fund(s) Annuity
VALUE -- SEPARATE Unit Value is equal to:
ACCOUNT:
(a) The Value for the previous Period;
multiplied by
(b) The Annuity Net Return Factor(s) for the
Period; multiplied by
(c) A factor to reflect the Assumed Annual Net
Return Rate.
22
<PAGE>
4.05 FUND(S) ANNUITY UNIT The factor for 3.5% per year is .9999058; for
VALUE -- SEPARATE ACCOUNT 5% per year it is: .9998663.
(CONT'D):
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:
- 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.
4.06 ANNUITY NET RETURN The Annuity Net Return Factor(s) are used to
FACTOR(S) -- SEPARATE compute all Separate Account Annuity and
ACCOUNT: payments for any Fund.
The Annuity Net Return Factor(s) for each Fund
is equal to 1.0000000 plus the Net Return Rate.
The Net Return Rate is equal to:
(1) The value of the shares of the Fund held by
the Separate Account at the end of a
Valuation Period; minus
(2) The value of the shares of the Fund held by
the Separate Account at the start of the
Valuation Period; plus or minus
(3) Taxes (or reserves for taxes) on the
Separate Account (if any); divided by
(4) The total value of the Fund(s) Record Units
and Fund(s) Annuity Units of the Separate
Account at the start of the Valuation
Period; minus
(5) A daily actuarial charge at an annual 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 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.
4.07 ANNUITY OPTIONS: Option 1 -- Payment of Interest on Sum Left
with Aetna -- This Option may be used only by
the beneficiary when the Participant 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 Contract Holder, on behalf of the
beneficiary, may later tell Aetna to:
23
<PAGE>
4.07 ANNUITY OPTIONS (a) Pay a portion or all of the sum held by
(CONT'D): Aetna; or
(b) Apply a portion or all of the sum held by
Aetna to any Annuity Option below.
If the beneficiary is the Participant's
surviving spouse, payment may be deferred to a
date not later than when the Participant would
have attained age 70 1/2.
If the beneficiary is not a spouse, the
Contract Holder must tell Aetna to pay the full
sum within 5 years after the Participant's
death.
Option 2 -- Payments for a Stated Period of
Time -- An Annuity will be paid for the number
of years chosen. The number of years must be
at least 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.
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;
(c) 50% of the payment to continue to the
survivor; or
(D) payments for a minimum of 120 months with
100% of the payment to continue to the
survivor.
(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.
24
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3 3.00% $28.99 $86.76 $172.88 $343.23
4 3.00% 22.06 66.02 131.56 261.19
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- -------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
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.
26
<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%
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
AGES OF
- ----------------------------
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 4.06 4.47 4.71 4.06 4.20
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 4.49 5.01 5.32 4.48 4.64
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 5.07 5.75 6.17 5.05 5.26
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 5.89 6.82 7.40 5.81 6.12
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 7.07 8.34 9.16 6.78 7.36
- ----------------------------------------------------------------------------------------------------------------------------
</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.
27
<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>
3 3.50% $29.19 $87.33 $173.91 $344.86
4 3.50% 22.27 66.61 132.65 263.04
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.85 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
- ------------------------------------------------------------------------------------------------------
</TABLE>
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 5.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3 5.00% $29.80 $89.04 $176.99 $349.72
4 5.00% 22.89 68.38 135.93 268.58
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
- ------------------------------------------------------------------------------------------------------
</TABLE>
29
<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>
- -------------------------------------------------------------------------------------------------------
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.
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 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 6.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
- -------------------------------------------------------------------------------------------------------
</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.
31
<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>
- ----------------------------------------------------------------------------------------------------------------------------
AGES OF
- ----------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- ----------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.31
55 55 4.16 4.54 4.76 4.15 4.42
55 60 4.27 4.73 5.00 4.26 4.48
60 55 4.27 4.73 5.00 4.26 4.70
60 60 4.51 4.99 5.27 4.50 4.84
60 65 4.66 5.25 5.61 4.65 4.93
65 60 4.66 5.25 5.61 4.65 5.22
65 65 4.99 5.61 5.99 4.98 5.42
65 70 5.19 5.97 6.44 5.17 5.54
70 65 5.19 5.97 6.44 5.17 5.93
70 70 5.67 6.49 6.99 5.62 6.23
70 75 5.95 6.96 7.61 5.87 6.40
75 70 5.95 6.96 7.61 5.87 6.95
75 75 6.64 7.73 8.43 6.48 7.40
75 80 7.04 8.39 9.29 6.79 7.64
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
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 5.0%
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
AGES OF
- ----------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- ----------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.23
55 55 5.04 5.44 5.66 5.04 5.32
55 60 5.15 5.63 5.91 5.14 5.38
60 55 5.15 5.63 5.91 5.14 5.59
60 60 5.37 5.87 6.16 5.37 5.72
60 65 5.52 6.14 6.51 5.51 5.80
65 60 5.52 6.14 6.51 5.51 6.10
65 65 5.83 6.49 6.87 5.82 6.29
65 70 6.04 6.84 7.34 6.00 6.41
70 65 6.04 6.84 7.34 6.00 6.81
70 70 6.49 7.35 7.87 6.44 7.08
70 75 6.77 7.84 8.51 6.68 7.25
75 70 6.77 7.84 8.51 6.68 7.81
75 75 7.45 8.60 9.33 7.27 8.25
75 80 7.86 9.28 10.20 7.57 8.49
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
33
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
ENDORSEMENT
The Contract and the Certificate are hereby endorsed as follows:
Under Section 3.14 entitled DISTRIBUTION OPTIONS, delete the first sentence
under subparagraph (b) (1) (a) and replace with the following:
Specified Amount: Payments of a designated dollar amount which must be
no greater than 20% of the initial Current Value and shall remain constant
unless a higher amount is required under Code minimum distribution rules.
Under Section 3.14 entitled DISTRIBUTION OPTIONS, delete the first sentence
under subparagraph (b)(1)(b) and replace with the following:
Specified Period: Payments which are made over a period of time which
must be at least 5 years, unless otherwise required by the Code minimum
distribution rules.
Under Section 3.14 entitled DISTRIBUTION OPTIONS, add the following as
subparagraph (b) (1) (c):
Specified Percentage: Payments of a designated percentage which cannot
be greater than 20% of the amount being designated for SWO. The Participant
may change the specified percentage elected every six months. Each annual
distribution is determined by multiplying the Individual Account Current
Value by the percentage chosen. The value to be used in this calculation is
the value on the December 31st prior to the year for which the payment is
being made. For payments made more often than annually, the annual payment
result (calculated above) is divided by the number of payments due each
year. Payments will be made each year until the year the Participant attains
age 70 1/2.
Endorsed and made a part of the Contract and the Certificate on the date
approved by the State Insurance Department.
/s/ Dan Kearney
---------------
President
Aetna Life Insurance and Annuity Company
EAORP-95 (SWO)
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This contract is hereby endorsed as follows:
GENERAL DEFINITIONS is ammended to include the following defined 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 ot 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 dicretion, Aetna may allow additional amoutns 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 Allaction
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 cancelled 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 cancelled 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 Vet 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
fo GET Fund. If no GET Fund Series is available, 50% of the Current Value from
that Get Fund Series will be transferred to Aetna Varaiable Fund, a groth and
income fund. The remianing 50% fof the Current Value will be transferred to
Aetna Income Shares, a bond fund. The Transfers will be made during the next
Valuation Period. Such
<PAGE>
Transfers will not be counted as one of the free Transfers. The GET Fund
Maturity Date will be specified before the Allcation Period for that series
begins.
GUARANTEE: Aetna guarantees that on a series' of 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. The Guarantee does not apply to GET Fund Record Unit Values withdrawn or
transferred before the GET Fund Maturity Date.
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 the 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
ammeded 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
EGETICR
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract and the Certificate, (as applicable), is hereby endorsed.
The term VALUATION PERIOD under General Definitions is amended to read ad
follows:
The period of time for which a Fund determines its net asset value,
usually from 4:15 p.m. Eastern time each day the New York Stock Exchange is open
until 4:15 p.m. the next such day, or such other day that one or more of the
Funds determines its net asset value.
Endorsed and made a part of the Contact and the Certificate, (as applicable).
/s/ Gary Benanav
----------------
President
Aetna Life Insurance and Annuity Company
EVP-IC
<PAGE>
[LOGO]
- -------------------------------------------------------------------------------
AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06158
(800) 525-4225
- -------------------------------------------------------------------------------
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE
ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN
EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE
ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS
MATURITY.
<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
- --------------------------------------------------------------------------------
Contract Holder
- --------------------------------------------------------------------------------
Contract No.
- --------------------------------------------------------------------------------
Effective Date
- --------------------------------------------------------------------------------
This Contract is Delivered in and is Subject to the Laws of that
Jurisdiction
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN PARTS III AND V.
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/ Dan Kearney /s/ Patrice Maloney-Knauff
President Secretary
Group Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP ANNUITY CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT
FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN
INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA
DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
FORM NO. G-CDA-95 (ORP)
<PAGE>
SPECIFICATIONS
- --------------------------------------------------------------------------------
GUARANTEED There is a guaranteed interest rate for Contribution(s) held
INTEREST RATE in the Fixed Plus Account and the GA Account. (See Contract
Schedule I.)
- --------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense risks and
THE SEPARATE asset based sales charge and administrative fees. (See 3.05
ACCOUNT and 5.06.)
- --------------------------------------------------------------------------------
DEDUCTION FROM Contribution(s) are subject to a deduction for premium
CONTRIBUTION(S) taxes, if any. (See 3.01.)
This Contract is a legal contract and constitutes the entire legal relationship
between Aetna and the Contract Holder.
READ THIS CONTRACT CAREFULLY. This Contract sets forth, in detail, all of the
rights and obligations of both you and Aetna. IT IS, THEREFORE, IMPORTANT THAT
YOU READ THIS CONTRACT CAREFULLY.
2
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CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT: Variable Annuity Account C
CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account. The
daily charge is at an annual effective rate of 1.40%
for Annuity mortality and expense risks, asset based
sales charge and profit and a daily administrative
charge which will not exceed 0.25% on an annual basis.
FIXED PLUS ACCOUNT
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
Beginning on the tenth anniversary of the effective
date of an Individual Account, Aetna will credit
amounts with an interest rate that is 0.25% higher than
the then-declared interest rate for Individual Accounts
before the tenth anniversary.
PARTIAL WITHDRAWAL: The 20% limit applicable to partial withdrawal from the
Fixed Plus Account will be waived when the withdrawal
is:
(a) due to the Participant's death, (within six (6)
months of the Participant's date of death), before
Annuity payments begin. This partial withdrawal
may only be exercised once; or
(b) used to purchase Annuity benefits.
GUARANTEED ACCUMULATION ACCOUNT (GA ACCOUNT)
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
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CONTRACT SCHEDULE I
ACCUMULATION PERIOD (CONT'D)
SEPARATE ACCOUNT, FIXED PLUS ACCOUNT AND GA ACCOUNT
- --------------------------------------------------------------------------------
TRANSFERS: An unlimited number of Transfers may be made during the
Accumulation Period. Aetna allows 12 free Transfers in
any calendar year. Thereafter, Aetna reserves the right
to charge $10 for each subsequent Transfer.
SYSTEMATIC WITHDRAWAL The Specified Payment may not be greater than 20% of
OPTION (SWO): the Individual Account's Current Value at the time of
election.
The Specified Period may not be less than five years.
The Specified Percentage may not be greater than 20%.
See Section 1. - DEFINITIONS for explanations.
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CONTRACT SCHEDULE II
ANNUITY PERIOD
SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
CHARGES TO SEPARATE A daily charge at an annual effective rate of 1.25% for
ACCOUNT: Annuity mortality and expense risks. The administrative
charge is established upon election of an Annuity
option. This charge will not exceed 0.25%.
VARIABLE ANNUITY ASSUMED If a Variable Annuity is chosen, an assumed annual net
ANNUAL NET RETURN RATE: return rate of 5.0% may be elected. If 5.0% is not
elected, Aetna will use an assumed annual net return
rate of 3.5%.
The assumed annual net return rate factor for 3.5% per
year is 0.9999058.
The assumed annual net return rate factor for 5.0% per
year is 0.9998663.
If the portion of a Variable Annuity payment for any
Fund is not to decrease, the Annuity return factor
under the Separate Account for that Fund must be:
(a) 4.75% on an annual basis plus an annual return of
up to 0.25% to offset the administrative charge
set at the time Annuity payments commence if an
assumed annual net return rate of 3.5% is chosen;
or
(b) 6.25% on an annual basis plus an annual return of
up to 0.25% to offset the administrative charge
set at the time Annuity payments commence, if an
assumed annual net return rate of 5% is chosen.
ANNUITY OPTION: Under the option "Payments for a Stated Period of
Time":
For amounts invested in the GA Account or one or more
of the Fund(s), the number of years must be at least
five (5) and not more than thirty (30) and the Annuity
may be a Fixed or Variable Annuity.
For amounts invested in the Fixed Plus Account, the
number of years must be at least five (5) and not more
than thirty (30) and the Annuity must be a Fixed
Annuity.
FIXED ANNUITY
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
See Section 1. - DEFINITIONS for explanations.
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TABLE OF CONTENTS
I. DEFINITIONS
- --------------------------------------------------------------------------------
PAGE
1.01 Accumulation Period . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.02 Adjusted Current Value. . . . . . . . . . . . . . . . . . . . . . . . . .6
1.03 Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.04 Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.05 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.06 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.07 Contract Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.08 Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.09 Current Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.10 Deposit Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.11 Fixed Plus Account. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.12 Fixed Plus Account Guaranteed Interest Rate . . . . . . . . . . . . . . .7
1.13 Fixed Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.14 Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.15 General Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.16 Guaranteed Accumulation Account (GA Account). . . . . . . . . . . . . . .7
1.17 GA Account Guaranteed Interest Rate . . . . . . . . . . . . . . . . . . .7
1.18 Guaranteed Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.19 Individual Account. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.20 Loan Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.21 Market Value Adjustment (MVA) . . . . . . . . . . . . . . . . . . . . . .8
1.22 Matured Term Value. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.23 Matured Term Value Transfer . . . . . . . . . . . . . . . . . . . . . . .8
1.24 Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.25 Net Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.26 Nonunitized Separate Account. . . . . . . . . . . . . . . . . . . . . . .8
1.27 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.28 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.29 Reinvestment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.30 Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3
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PAGE
1.31 Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.32 Valuation Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.33 Variable Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 Change of Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.02 Change of Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.03 Nonparticipating Contract . . . . . . . . . . . . . . . . . . . . . . . 11
2.04 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.05 State Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.06 Control of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.07 Misstatements and Adjustments . . . . . . . . . . . . . . . . . . . . . 12
2.08 Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.09 Grace Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Individual Certificates . . . . . . . . . . . . . . . . . . . . . . . . 12
III. CONTRIBUTIONS, CURRENT VALUE, AND WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
3.01 Net Contribution(s) . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.02 Experience Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.03 Fund Record Units . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.04 Fund Record Unit Value. . . . . . . . . . . . . . . . . . . . . . . . . 13
3.05 Fund Net Return Factors . . . . . . . . . . . . . . . . . . . . . . . . 13
3.06 Market Value Adjustment . . . . . . . . . . . . . . . . . . . . . . . . 13
3.07 Transfer(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.08 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.09 Notice to the Participant . . . . . . . . . . . . . . . . . . . . . . . 18
3.10 Manner and Timing of Distributions. . . . . . . . . . . . . . . . . . . 19
3.11 Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.12 Partial Withdrawal from the Fixed Plus Account. . . . . . . . . . . . . 20
3.13 Payment of Fixed Plus Account Full Withdrawal . . . . . . . . . . . . . 20
3.14 Alternative Payment of Fixed Plus Account Full Withdrawal . . . . . . . 20
4
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PAGE
3.15 Payment of Minimum Current Value. . . . . . . . . . . . . . . . . . . . 21
3.16 Amount Payable at Death (Before Annuity Payments Start) . . . . . . . . 21
3.17 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
IV. NON-ANNUITY DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
4.01 Distribution Options. . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.02 Estate Conservation Option. . . . . . . . . . . . . . . . . . . . . . . 22
4.03 Systematic Withdrawal Option. . . . . . . . . . . . . . . . . . . . . . 23
V. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
5.01 Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.02 Terms of Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . 26
5.03 Death Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.04 Fund Annuity Units. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.05 Fund Annuity Unit Value . . . . . . . . . . . . . . . . . . . . . . . . 28
5.06 Fund Annuity Net Return Factor. . . . . . . . . . . . . . . . . . . . . 28
5.07 Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5
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I. DEFINITIONS
- --------------------------------------------------------------------------------
1.01 ACCUMULATION PERIOD: The period during which Net Contribution(s) are
applied to an Individual Account.
1.02 ADJUSTED CURRENT The Current Value (See 1.09) of an Individual
VALUE Account (See 1.19) plus or minus any applicable
aggregate GA Account Market Value Adjustment, if
applicable (See 3.06).
1.03 ANNUITANT: If an Annuity provides lifetime benefits, the
person whose life expectancy determines the amount
and/or duration of Annuity benefit payments.
1.04 ANNUITY: Payment of an income under the Annuity Provisions
of Section V:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.05 BENEFICIARY: Each Participant shall name the beneficiary of the
Employer and Employee Account. Aetna will pay any
portion of the Individual Account(s) Current Value
to the beneficiary in accordance with the
provisions of Section 3.16.
1.06 CODE: The Internal Revenue Code of 1986, as amended.
1.07 CONTRACT HOLDER: The entity, named on the cover of this Contract,
to which the Contract is issued.
1.08 CONTRIBUTION: A payment received at Aetna's Home Office and
allocated to this Contract.
1.09 CURRENT VALUE: For an Individual Account (See 1.19), the Current
Value is the total of:
(a) The amount, if any, in the Fixed Plus
Account, with interest earned to date;
(b) The amount, if any, in the GA Account, with
interest earned to date; and
(c) The value of all Fund record units (See
3.04), if any, as of the most recent
Valuation Period.
1.10 DEPOSIT PERIOD: A calendar month, a calendar quarter, or any other
period of time specified by Aetna during which Net
Contribution(s), Transfers and Reinvestments are
accepted into the GA Account for one or more
Guaranteed Terms.
1.11 FIXED PLUS ACCOUNT: An accumulation option with a guaranteed minimum
interest rate. Aetna may credit a higher rate
which is not guaranteed. The portion that may be
withdrawn or transferred in a 12 month period is
restricted (See 3.07, 3.12 and 3.13).
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1.12 FIXED PLUS ACCOUNT Aetna will add interest daily at an annual rate no
GUARANTEED INTEREST less than that shown on Contract Schedule I on any
RATE: Net Contribution(s) to the Fixed Plus Account.
Aetna may add interest daily at a higher rate
determined by its Board of Directors.
1.13 FIXED ANNUITY: An Annuity with payments that do not vary in
amount.
1.14 FUND(S): The open-end registered management investment
companies (mutual funds) in which the Separate
Account invests.
1.15 GENERAL ACCOUNT: The account holding the assets of Aetna, other
than those assets held in Aetna's Separate
Account(s) and Nonunitized Separate Account(s).
1.16 GUARANTEED ACCUMULATION An accumulation option where Aetna guarantees
ACCOUNT (GA ACCOUNT): stipulated rate(s) of interest for a specified
period of time. All assets of Aetna, including
amounts in the Nonunitized Separate Account, are
available to meet the guarantees for the GA
Account.
1.17 GA ACCOUNT GUARANTEED Aetna will declare the interest rate(s) applicable
INTEREST RATE: to a specific Guaranteed Term at the start of the
Deposit Period for that Guaranteed Term. The
rate(s) are guaranteed by Aetna for that Deposit
Period and the ensuing Guaranteed Term. The
Guaranteed Interest Rates are annual effective
yields. That is, interest is credited daily at a
rate that will produce the Guaranteed Interest
Rate over the period of a year. No Guaranteed
Interest Rate will ever be less than the Minimum
Guaranteed Interest Rate shown on Contract
Schedule I.
For Guaranteed Terms of one year or less, one
Guaranteed Interest Rate is credited for the full
Guaranteed Term. For longer Guaranteed Terms, an
initial Guaranteed Interest Rate is credited from
the date of deposit to the end of a specified
period within the Guaranteed Term. There may be
different Guaranteed Interest Rate(s) declared for
subsequent specified time intervals throughout the
Guaranteed Term.
1.18 GUARANTEED TERM: The period of time for which GA Account Guaranteed
Interest Rates are guaranteed on Net
Contributions, Transfers and Reinvestments made
into a current Deposit Period for the GA Account.
Such period begins on the day following the close
of the Deposit Period and ends on the designated
Maturity Date. Guaranteed Terms are offered at
Aetna's discretion for various lengths of time
ranging up to and including ten years and are
classified as follows:
SHORT-TERM. Three (3) or fewer years. Amounts
allocated to a short-term Term are held in the
General Account.
LONG-TERM. More than three (3) years, but not more
than ten (10). Amounts allocated to a long-term
Term are held in the Nonunitized Separate Account.
During a Deposit Period, Aetna may make available
any number of Guaranteed Terms. The Participant
may allocate Net Contributions and Transfers into
any or all of the available Guaranteed Terms.
7
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1.19 INDIVIDUAL ACCOUNT: This Contract is issued to the Contract Holder.
However, Aetna will maintain two Individual
Accounts for each Participant. These are:
(a) An Employer Account: This Individual Account
will be credited with employer Net
Contribution(s) and transferred amounts of
401(a) funds, attributable to employer
contributions; and
(b) An Employee Account: This Individual Account
will be credited with employee Net
Contribution(s), specifically amounts subject
to Code Section 414(h) and transferred
amounts of 401(a) funds, attributable to
414(h) contributions.
1.20 LOAN ACCOUNT: An account established for record keeping purposes
and credited with the amount on any loan.
1.21 MARKET VALUE ADJUSTMENT An adjustment to the amount withdrawn or
(MVA): Transferred from a GA Account Guaranteed Term
prior to the end of that Guaranteed Term. The
adjustment reflects the change in the value of the
investment due to changes in interest rates since
the date of deposit and is computed using the
formula given in 3.06. The adjustment is expressed
as a percentage of each dollar being withdrawn.
1.22 MATURED TERM VALUE: The amount payable on a GA Account Guaranteed
Term's Maturity Date.
1.23 MATURED TERM VALUE During the calendar month following a GA Account
TRANSFER: Maturity Date, the Participant may notify Aetna's
Home Office in writing to Transfer or withdraw all
or part of the Matured Term Value, plus interest
at the new Guaranteed Rate accrued thereon, from
the GA Account without an MVA. This provision only
applies to the first such written request received
from the Participant during this period for any
Matured Term Value.
1.24 MATURITY DATE: The last day of a GA Account Guaranteed Term.
1.25 NET CONTRIBUTION: A Contribution less any applicable premium taxes.
1.26 NONUNITIZED SEPARATE An account established by Aetna under Section
ACCOUNT: 38a-433 of the Connecticut General Statutes that
holds assets for GA Account Terms (See 1.18)
greater than three years. The Contract Holder or
Participant does not participate in the investment
gain or loss from the assets held in the
Nonunitized Separate Account. Such gain or loss is
borne entirely by Aetna. Assets in this account
may be charged with liabilities arising out of any
other Aetna business.
1.27 PARTICIPANT: A person who participates in the Plan named on the
cover of this Contract.
1.28 PLAN: The Plan intended to qualify under Section 401(a)
of the Code and named on the cover of this
Contract. The Plan is not a part of the Contract
and Aetna is not bound by its terms.
8
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1.29 REINVESTMENT: Aetna will mail a notice to the Participant at
least 18 calendar days before a Guaranteed Term's
Maturity Date. This notice will contain the Terms
available during the current Deposit Periods with
their Guaranteed Interest Rate(s) and projected
Matured Term Value. If no specific direction is
given by the Participant prior to the Maturity
Date, each Matured Term Value will be reinvested
in the current Deposit Period for a Guaranteed
Term of the same duration. If a Guaranteed Term
of the same duration is unavailable, each Matured
Term Value will automatically be reinvested in the
current Deposit Period for the next shortest
Guaranteed Term available in the same
classification. If no shorter Guaranteed Term is
available, the next longer Guaranteed Term will be
used. Aetna will mail a confirmation statement to
the Participant, the next business day after the
Maturity Date. This notice will state the
Guaranteed Term and Guaranteed Interest Rate(s)
which will apply to the reinvested Matured Term
Value.
1.30 SEPARATE ACCOUNT: An account, established by Aetna under Section
38a-433 of the Connecticut General Statutes, that
buys and holds shares of the Fund(s) available
under this Contract. Income, gains or losses,
realized or unrealized are credited or charged to
the Separate Account without regard to other
income, gains or losses of Aetna. Aetna owns the
assets held in the Separate Account and is not a
trustee of such amounts. Amounts in the Separate
Account are not generally guaranteed and are held
at market value. The assets of the Separate
Account, to the extent of reserves and other
contract liabilities of the Account, cannot be
charged with other Aetna liabilities.
1.31 TRANSFER: The movement of invested amounts among the
available Fund(s); the Fixed Plus Account and the
GA Account during the Accumulation Period.
1.32 VALUATION PERIOD: The period as of 4:15 p.m. Eastern time on each
day the New York Stock Exchange is open for
business to 4:15 p.m. Eastern time of the next
such business day, or such other day that one or
more of the Fund(s) determines its net asset
value.
1.33 VARIABLE ANNUITY: An Annuity with payments that vary with the net
investment results of the Funds available during
the Annuity period.
II. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.01 CHANGE OF CONTRACT: (a) Only an authorized Aetna officer can change
the provisions of this Contract and the
change must be in writing.
(b) Aetna cannot change the amount or terms of
Annuity benefit payments after payment has
commenced.
(c) Aetna may change the following provisions
without Contract Holder consent.
(1) Any provision that must be changed to
comply with state or federal law
9
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2.01 CHANGE OF CONTRACT (2) Calculation of the Market Value
(CONT'D): Adjustment
(3) Estate Conservation Option
(4) Systematic Withdrawal Option
(5) Allocation of Contributions or Transfers
to the Fixed Plus Account
(6) New Annuity Options
Aetna will notify the Contract Holder, in
writing, at least thirty (30) days before the
effective date of the change. Such a change
will apply to all current and future
Individual Accounts.
(d) Aetna may change the Tables for determining
the amount of Annuity benefit payments
without Contract Holder consent. Such a
change will not become effective earlier than
twelve months after (1) the effective date of
the Contract, or (2) the effective date of a
previous change. Aetna will notify the
Contract Holder, in writing, at least thirty
(30) days before the effective date of the
change. The change will apply to all current
and future Individual Accounts.
(e) The Contract Holder must agree to any change
in provisions concerning the following:
(1) A reduction in the GA Account Minimum
Guaranteed Interest Rate
(2) A reduction in the Fixed Plus Account
Minimum Guaranteed Interest Rate
(3) Fund Accumulation Period Net Return
Factor
(4) Current Value
(5) Annuity Unit Value
(6) Existing Annuity Options
(7) Fixed Annuity Minimum Guaranteed
Interest Rates
Aetna will notify the Contract Holder, in
writing, at least thirty (30) days before the
effective date of the proposed change. Such a
change will apply to future Individual
Accounts.
If the Contract Holder does not agree to a
proposed change, Aetna reserves the right to:
(1) discontinue establishing new Individual
Accounts; and (2) discontinue accepting
Contributions to existing Individual
Accounts.
2.02 CHANGE OF FUND: Aetna, or the Separate Account may:
(a) Change the Fund(s) in which the Separate
Account invests; and/or
(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 in the Separate
Account with respect to the Fund(s) whose
shares are to be replaced;
10
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2.02 CHANGE OF FUND (b) Deemed necessary by Aetna under the
(CONT'D): 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 such
change.
2.03 NONPARTICIPATING The Contract Holder, Participants, or
CONTRACT: Beneficiaries will not have a right to share in
the earnings of Aetna.
2.04 PAYMENTS: (a) Aetna will make distributions as directed by
the Contract Holder. Aetna will determine the
amount of payments based on the Individual
Account's Current Value as of the date on
which a request is received in good order at
Aetna's Home Office. Payments will be made
within seven (7) calendar days of receipt of
a written request in good order at Aetna's
Home Office.
(b) Aetna may defer payments: (1) for a period of
up to six (6) months (unless not allowed by
state law); and (2) as allowed by federal
law.
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: This Contract is designed to fund a governmental
plan which provides for retirement income that is
not subject to Title I of the Employee Retirement
Income Security Act of 1974 (ERISA), as amended by
subsequent law including REA.
The Participant may select the investment
option(s) for the Employer Account and the
Employee Account. Choices made under this Contract
must be in writing or in a form satisfactory to
Aetna. Until receipt of such choices in its Home
Office, Aetna may rely on any previous choices
made. No distributions will be made from the
Employer Account or the Employee Account without
the Contract Holder's written direction to Aetna.
(a) Nontransferable and Nonassignable: This
Contract and any Individual Accounts are
nontransferable and nonassignable, except to
Aetna in the event of a loan, or pursuant to
a "qualified domestic relations order" as set
forth under the Internal Revenue Code of
1986, as it may be amended from time to time.
(b) Distributions: A Participant may apply for a
distribution from his or her Employee or
Employer Account. However, the Contract
Holder must certify in writing that the
distribution is in accordance with the terms
of the Plan.
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2.06 CONTROL OF CONTRACT (c) Participant Rights/Employee Account: The
(CONT'D): Participant has a nonforfeitable right to the
value of his or her Employee Account pursuant
to the terms of the Plan as interpreted by
the Contract Holder.
(d) Participant Rights/Employer Account: The
Participant has a nonforfeitable right to the
value of his or her Employer Account pursuant
to the terms of, and to the extent of his or
her vested percentage under, the Plan as
interpreted by the Contract Holder. It is the
Contract Holder's responsibility to maintain
records of the Participant's vesting
percentages. Aetna will not maintain nor keep
such records.
2.07 MISSTATEMENTS AND If Aetna finds the age of any payee to be
ADJUSTMENTS misstated, the correct facts will be used to
adjust payments.
2.08 INCONTESTABILITY: Aetna cannot cancel this Contract because of any
error of fact on the application.
2.09 GRACE PERIOD: This Contract will remain in effect even if
Contributions are not continued except as provided
in 3.15.
2.10 INDIVIDUAL CERTIFICATES: Aetna shall issue certificates to Participants as
required by the state in which this Contract is
delivered. The certificate will summarize certain
provisions of the Contract. Certificates are for
information only and are not a part of the
Contract.
III. CONTRIBUTIONS, CURRENT VALUE, AND WITHDRAWAL PROVISIONS
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3.01 NET CONTRIBUTION(S): The Net Contribution equals the actual
Contribution less any applicable premium tax.
Generally, Aetna will deduct the premium tax when
Annuity benefits are purchased (See Section V). If
Aetna determines that under applicable state law,
it must pay a premium tax when the Contribution is
received, or at any other time, it will deduct the
tax at that time. The Net Contribution(s) may be
allocated among the following investment options:
(a) The Fixed Plus Account; and
(b) The current Deposit Period(s) for Guaranteed
Terms under the GA Account; and
(c) The Fund(s) in which the Separate Account
invests.
Aetna must be told the percentage of all Net
Contributions to allocate to one or more of the
investment options. Aetna reserves the right to
require a minimum Contribution amount per
Individual Account.
3.02 EXPERIENCE CREDITS: Aetna may apply experience credits under this
Contract. Any such credits will be computed as
decided by Aetna.
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3.03 FUND RECORD UNITS: The portion of the Net Contribution(s) applied to
each Fund under the Separate Account will
determine the number of Fund record units credited
to the Individual Account for that Fund. This
number is equal to the Net Contribution applied to
the Fund divided by the Fund record unit value
(see 3.04) for the Valuation Period in which the
Contribution is received in good order.
3.04 FUND RECORD A Fund record unit value is computed by
UNIT VALUE: multiplying the net return Factor (See 3.05) for
the current Valuation Period by the Fund record
unit value for the previous Period. The dollar
value of a Fund record unit, Separate Account
assets, and Variable Annuity payments may go up or
down due to investment gain or loss.
3.05 FUND NET The net return factor(s) are used to compute all
RETURN FACTORS: Separate Account record units for any Fund. The
net return factor for each Fund is equal to
1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by
the Separate Account at the end of a
Valuation Period; minus
(b) The value of the shares of the Fund held by
the Separate Account at the start of the
Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate
Account (if any); divided by
(d) The total value of the Fund record units and
Fund annuity units of the Separate Account at
the start of the Valuation Period; minus
(e) A Separate Account charge at an annual
effective rate as shown on Contract Schedule
I for Annuity mortality and expense risks,
asset based sales charge and profit and a
daily administrative charge which will not
exceed the amount shown on Contract Schedule
I on an annual basis. The administrative
charge may be changed annually except for
amounts which have been used to purchase an
Annuity.
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.
3.06 MARKET VALUE (a) An MVA will be applied to any withdrawal from
ADJUSTMENT: the GA Account Term before the Maturity Date
due to:
(1) A Transfer;
(2) A full or partial withdrawal; or
(3) A payment of a premium for Annuity
Option 2.
The amount of the withdrawal will be adjusted to a
market value amount as described in (b).
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3.06 MARKET VALUE (b) Market value adjusted amounts will be equal
ADJUSTMENT to the amount withdrawn multiplied by the
(CONT'D): following ratio:
x
(1 + i)to the power of ---
------------------ 365
x
(1 + j)to the power of ---
365
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days
remaining, (computed from
Wednesday of the week of
withdrawal) in the Term.
(c) The Deposit Period Yield will be determined
as follows:
(1) At the close of the last business day of
each week of the Deposit Period, a yield
will be computed as the average of the
yields on that day of U.S. Treasury
Notes which mature in the last three
months of the Term.
(2) The Deposit Period Yield is the average
of those yields for the Deposit Period.
If withdrawal is made prior to the close
of the Deposit Period, it is the average
of those yields on each week preceding
withdrawal.
(3) The Current Yield is the average of the
yields on the last business day of the
week preceding withdrawal on the same
U.S. Treasury Notes included in the
Deposit Period Yield.
(4) In the event that no U.S. Treasury Notes
which mature in the last three months of
the Term exist, Aetna reserves the right
to use the U.S. Treasury Notes that
mature in a following quarter.
(d) Full and partial withdrawals as well as
Transfers made within six (6) months after
the Participant's date of death under the
Amount Payable at Death provision (See 3.16)
will be the greater of:
(1) The aggregate MVA amount which is the
sum of all market value adjusted amounts
calculated due to a withdrawal of
amounts (for withdrawal or Transfer)
from Terms prior to the end of those
Terms. The aggregate MVA may be either
positive or negative; or
(2) The applicable portion of the Current
Value in the GA Account.
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3.06 MARKET VALUE (e) After the six month period, the withdrawal or
ADJUSTMENT Transfer will be the aggregate MVA amount
(CONT'D): (i.e., including all MVAs).
(f) The greater of the aggregate MVA amount or
the applicable portion of the Current Value
in the GA Account is applied to amounts
withdrawn from the GA Account for payment of
a premium under Annuity options 3 or 4.
3.07 TRANSFER(S): Before an Annuity option is elected, all or any
portion of the Adjusted Current Value of the
Individual Account (subject to the limitations
described below) may be transferred from any Fund,
the Fixed Plus Account or the GA Account:
(a) To any Fund; or
(b) To the Fixed Plus Account; or
(c) To any Guaranteed Term of the GA Account with
a different classification available in the
Current Deposit Period.
Transfer requests can be submitted as a percentage
or as a dollar amount. Aetna may establish a
minimum Transfer amount. Within a Guaranteed Term
classification, the amount transferred will be
withdrawn from the oldest Deposit Period, then
from the next oldest, and so on until the amount
requested is satisfied.
Amounts applied to Guaranteed Terms of the GA
Account may not be transferred to the Funds, the
Fixed Plus Account or to another Guaranteed Term
during the Deposit Period or 90 days after the
close of the Deposit Period except for Matured
Term Value(s) during the calendar month following
the Term's Maturity Date.
Transfers from Guaranteed Terms of the GA Account
are subject to the MVA provisions of 3.06.
During each rolling twelve (12) month period, up
to 20% of the Fixed Plus Account value may be
transferred to one or more of the Fund(s), and/or
the GA Account's then-current Deposit Period. The
20% limit is reduced by any partial withdrawals,
Transfers or amounts taken as a loan or used to
purchase an Annuity during the twelve (12) month
period. Aetna reserves the right to include
amounts paid under ECO and SWO provisions for
purposes of applying this 20% limit. This limit is
waived when the balance in the Fixed Plus Account
is $1,000 or less on the date the Transfer request
is received in good order at Aetna's Home Office.
The Participant may make an unlimited number of
Transfers during the Accumulation Period. The
number of free Transfers allowed by Aetna is shown
on Contract Schedule I. Additional Transfers may
be subject to a Transfer fee as shown on Contract
Schedule I. Transfers from the GA Account of a
Matured Term Value on or within one calendar month
of a Term's Maturity Date do not count against the
annual Transfer limit.
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<PAGE>
3.08 LOANS: During the Accumulation Period, the Participant
may request a loan from his or her Individual
Account by submitting a loan request form. The
loan effective date is the date Aetna receives a
loan request form in good order at its Home
Office.
A loan will not be allowed within 12 months of the
effective date of any prior loan. The Employee and
Employer Accounts Current Value must be at least
$2,000 and the minimum loan amount is $1,000.
A loan that meets provisions set forth in Code
Section 72(p) is not considered a taxable
distribution.
(a) The amount available for a loan is calculated
based on the Current Value of the Employer
and Employee Accounts. The loan amount is
limited to the lesser of:
(1) 50% of the Employee and Employer
Accounts vested Current Value on the
date the loan is made; or
(2) $50,000 reduced by the amount of the
highest outstanding loan balance during
the preceding 12 month period that ends
the day before the current loan is made.
Loans may only be made from the Employee
Account and the vested portion of the
Employer Account.
(b) When the loan is made, only amounts in the
Funds and Fixed Plus Account may be withdrawn
and transferred to the Loan Account. The
amounts will be withdrawn in the same
proportion as the Employee and the Employer
Account's vested Current Value are divided
between the Fixed Plus Account and/or Funds
on the loan's effective date.
If the amount of the loan requested would
require the proportionate amount transferred
from the Fixed Plus Account to exceed the
amount that would be allowed under the 20%
limit described in Section 3.07, the
Participant may transfer an additional amount
from the Fixed Plus Account.
The additional amount will be limited and
will never exceed 50% of the Fixed Plus
Account value on the effective date of the
loan, minus any previous partial withdrawal
or Transfer during the 12-month period the
loan becomes effective. Aetna reserves the
right to change the maximum percentage a
Participant can transfer from the Fixed Plus
Account for the purpose of taking a loan.
If the amount needed to make the loan exceeds
the Fixed Plus Account Transfer limit, the
additional amount will be withdrawn
proportionately from the Funds.
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<PAGE>
3.08 LOANS (c) Aetna will record the percentage by which any
(CONT'D): amount withdrawn from the Fixed Plus Account
exceeds the 20% Transfer limit covered in
Section 3.07. The percentage will equal the
amount transferred from the Fixed Plus
Account that exceeds the 20% withdrawal limit
divided by the total amount of the loan. In
the event of a loan payment default, this
percentage will be used to calculate the
penalty that would be applied as described in
(h) below.
(d) The loan interest rate will be 5%.
(e) Interest on the Loan Account balance will be
calculated daily at a rate to yield an
effective annual rate of 3%. Interest will be
credited quarterly based on the loan's
effective date and credited to the Funds
and/or Fixed Plus Account in the same
proportion in which the loan amount was
withdrawn.
(f) Principal and interest on loans is amortized
in quarterly payments over a one to five year
term. The Participant chooses the number of
years. An exception applies to loans taken
for the acquisition of the Participant's
principal residence. Loans for this purpose
can be amortized quarterly over a one to 20
year term, as elected by the Participant. The
Participant must certify in writing that a
loan is for the purchase of a principal
residence.
The term of the loan, elected by the
Participant, must result in full repayment no
later than December 31 of the calendar year
prior to the calendar year in which the
Participant reaches age 70 1/2.
The entire Loan Account balance may be paid
in full at any time. Aetna will bill the
Participant for any loan interest accrued to
the date the payment is received. Aetna will
consider the loan paid when the interest
amount is received.
(g) A bill in the amount of the quarterly payment
due will be mailed to the Participant in
advance of the due date. The first due date
is three months from the loan's effective
date and quarterly thereafter. A loan payment
will be in default if it is not received by
Aetna at its Home Office by the due date.
The principal portion of each loan payment
will be credited to the Participant's Fixed
Plus Account and/or the Funds in the same
proportion in which the loan amount was
withdrawn. The Loan Account will then be
reduced by the principal portion of the
payment.
(h) If a payment is in default, a partial
withdrawal in an amount equal to the payment
due will be deducted from the Individual
Account at the close of business on the due
date. Payments that are less than the amount
due will be returned and if the full payment
is not received by the due date, the payment
will be in default.
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<PAGE>
3.08 LOANS The required amount will be withdrawn from
(CONT'D): the Fixed Plus Account and/or the Funds in
the same proportion in which the loan amount
was withdrawn. This amount will be applied as
a loan payment as set forth in (g) above.
Aetna will report to the IRS the amount
withdrawn to pay the default.
In addition, if the amount withdrawn from the
Fixed Plus Account to make the loan exceeded
the 20% annual withdrawal limitation
described in Section 3.12, a 5% charge will
be assessed on the same percentage of the
defaulted payment. For example, if 60% of the
amount withdrawn was in excess of the limit,
then 60% of the amount withdrawn for the
defaulted payment will be subject to the
additional 5% charge.
(i) If a Participant makes a payment that is more
than the billed amount, the excess will be
credited to the Fixed Plus Account and/or the
Funds in the same proportion in which the
loan amount was withdrawn. The Loan Account
will be reduced by the additional amount. On
the following loan anniversary date, future
payments will be recalculated to reflect the
additional principal payment so that the
outstanding balance is amortized in equal
quarterly payments over the remaining loan
term.
(j) Upon the election of an Annuity option or at
the Participant's death, any Loan Account
will be cancelled. This will result in a
taxable distribution of an amount equal to
the Loan Account balance. Interest earned but
not yet credited will be credited to, and
loan interest accrued but not paid will be
deducted from, the Current Value in the same
proportion in which the loan amount was
withdrawn.
(k) If there is an outstanding Loan Account
balance when a Participant makes a full
withdrawal of the Current Value of his or her
Individual Account (1) interest earned but
not credited will be credited to, and (2)
uncollected accrued loan interest will be
deducted from the Current Value. The Loan
Account will be cancelled resulting in a
taxable distribution of an amount equal to
the Loan Account balance.
3.09 NOTICE TO THE Each year, Aetna will notify the Participant of:
PARTICIPANT:
(a) The value of any amounts held in:
(i) The Fixed Plus Account,
(ii) The GA Account,
(iii) The Fund(s) for the Separate Account;
(b) The number of any Fund(s) record units;
(c) The Fund(s) record unit value(s);
(d) The amount available for withdrawal; and
(e) The Loan Account value.
This information will be as of a date no more than
sixty (60) days before the date of the notice.
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<PAGE>
3.10 MANNER AND TIMING (a) A distribution to a Participant may be made
OF DISTRIBUTIONS: in a lump sum, as one of the Distribution
Options described in Section IV, or as one of
the Annuity options in Section V. The
Participant may elect the form of
distribution subject to certification in
writing by the Contract Holder that the
Participant is eligible both as to the timing
and form of distribution.
(b) The distribution of benefits must begin by
April 1 of the calendar year following the
calendar year in which the Participant
attains age 70 1/2 or retires, whichever
occurs later.
(c) If 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 or for any adverse
tax or other consequences that may result.
3.11 WITHDRAWAL: (a) The Participant may withdraw any portion or
all of an Individual Account Adjusted Current
Value and transfer such amount to another
investment provider under the Plan. The
withdrawal and transfer request must be
submitted in writing to Aetna.
(b) Except as described in Section 3.12, unless
the Participant specifies otherwise, partial
withdrawals are satisfied by withdrawing
amounts on a pro rata basis from each of the
investment options in which the Individual
Account is invested.
(c) When amounts are withdrawn from the GA
Account, amounts in Short-Term and Long-Term
Classifications are treated as separate
investment options and amounts are taken on a
pro rata basis. Within a Classification,
amounts will be withdrawn starting with the
Term still in effect with the oldest Deposit
Period.
(d) Any amount withdrawn from the Fixed Plus
Account will be subject to the limitations in
3.12, 3.13 and 3.14.
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<PAGE>
3.12 PARTIAL WITHDRAWAL The amount eligible for partial withdrawal is 20%
FROM THE FIXED PLUS of the Current Value of the amount held in the
ACCOUNT: Fixed Plus Account on the day Aetna's Home Office
receives a written request, reduced by any
previous Transfer, partial withdrawal or amounts
taken as a loan or used to purchase Annuity
benefits during the prior 12 months. Aetna
reserves the right to include amounts paid under
ECO and SWO for purposes of applying this 20%
limit. However, SWO is unavailable if a Fixed Plus
Account Transfer or withdrawal is requested within
the current 12 month period.
The 20% limit applicable to partial withdrawals
from the Fixed Plus Account will be waived under
certain conditions and will apply when the partial
withdrawal is made on a pro rata basis from all
options used under the Participant's Individual
Account. (See Contract Schedule I).
3.13 PAYMENT OF FIXED When Aetna receives a full withdrawal request, no
PLUS ACCOUNT FULL additional partial withdrawals or Transfers from
WITHDRAWAL: the Fixed Plus Account are permitted during the
payout period. If a full withdrawal is requested,
Aetna will pay any Current Value from the Fixed
Plus Account in five payments as follows:
(a) One-fifth of the Current Value on the day the
request is received in good order at Aetna's
Home Office, reduced by any amount from the
Fixed Plus Account that was transferred,
withdrawn or used for a loan or to purchase
Annuity benefits during the prior 12 months;
(b) One-fourth of the remaining Current Value 12
months later;
(c) One-third of the remaining Current Value 12
months later;
(d) One-half of the remaining Current Value 12
months later; and
(e) The balance of the Current Value 12 months
later.
The Fixed Plus Account full withdrawal payment
provision will be waived when a withdrawal is:
(a) Due to the Participant's death before Annuity
benefit payments begin;
(b) Used to purchase Annuity benefits; or
(c) When the amount in the Fixed Plus Account is
$3,500 or less and no amount has been
withdrawn, transferred, taken as a loan or
used to purchase Annuity benefits during the
previous 12 months.
Any full withdrawal from the Fixed Plus Account
may be cancelled at any time before the end of the
payment period.
3.14 ALTERNATIVE PAYMENT As an alternative to 3.13, and as permitted under
OF FIXED PLUS ACCOUNT the terms of the Plan, the Participant may elect a
FULL WITHDRAWAL: lump sum payment. The lump-sum payment will be the
Individual Account's Current Value invested in the
Fixed Plus Account less a 3% charge provided:
(i) the withdrawal is due to the Participant's
separation from service with the employer;
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3.14 ALTERNATIVE PAYMENT (ii) the withdrawal request is received at
OF FIXED PLUS ACCOUNT Aetna's Home Office within 60 days of the
FULL WITHDRAWAL date the Participant separates from service
(CONT'D): with the employer; and
(iii) the Contract Holder certifies that the
Participant has separated from service and
is eligible to receive a lump sum
distribution.
3.15 PAYMENT OF MINIMUM If the Individual Accounts Current Value is less
CURRENT VALUE: than $3,500, and no Contributions have been
received for three (3) years, Aetna may close the
Account and pay the Current Value to the Contract
Holder in one lump sum.
3.16 AMOUNT PAYABLE AT Aetna will pay any portion of the Individual
DEATH (BEFORE ANNUITY Account(s) Current Value, to the Beneficiary when:
PAYMENTS START):
(a) The Participant dies before Annuity payments
start; and
(b) The certified copy of the death certificate
is received by Aetna.
A guaranteed death benefit is available if the
Beneficiary requests either a lump-sum payment or
an Annuity option within the first 6 months after
the Participant's death.
For each Individual Account, the death benefit is
guaranteed to be the greater of:
(a) The Current Value of the Individual Account
plus aggregate positive MVA, as applicable,
on the date the notice of death and the
request for payment are received in good
order at Aetna's Home Office; or
(b) The total of Net Contribution(s) made to the
Individual Account minus the total of all
partial withdrawals, annuitizations made from
the Individual Account and any amount
allocated from the Individual Account to the
Loan Account.
If the payee of the death proceeds is the
Participant's 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 (1) year of the
Participant's death or be paid to the payee within
five (5) years of the Participant's death (see
Part V).
In no event may any payments to the Beneficiary
under an Annuity option extend beyond:
(a) The life of the payee determined as of the
date payments are to commence; or
(b) Any certain period greater than the payee's
life expectancy as determined by regulations
under Code Section 401 (a)(9) as of the date
payments are to begin.
Amounts in the GA Account will be payable as
described in Section 3.06(d).
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3.17 REINSTATEMENT: All or a portion of the proceeds of a full
withdrawal of an Individual Account may be
reinvested within 30 days after the surrender if
allowed by law. Any Market Value Adjustment
deducted from GA Account withdrawals will not be
included in the reinstatement. Amounts will be
reinstated among the Fixed Plus Account, GA
Account, and the Fund(s) in the same proportion as
they were at the time of withdrawal. Any amount
reinstated to the GA Account will be credited to
the current Deposit Period. 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.
Any Individual Account(s) closed because the
Current Value was less than $3,500 may not be
reinstated (see 3.15).
Reinstatement is permitted only once per
Individual Account.
IV. NON-ANNUITY DISTRIBUTION OPTIONS
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4.01 DISTRIBUTION OPTIONS: The Participant or a surviving spouse may elect
one of the two following distribution options. A
surviving spouse is eligible to elect one of these
options provided the spouse is the designated
Beneficiary under the Plan and the Participant had
died before electing an Annuity option and before
the date for required minimum distributions.
4.02 ESTATE CONSERVATION (a) With the Estate Conservation Option (ECO) a
OPTION: portion of the Individual Account Current
Value is automatically surrendered and
distributed each year. Each payment will be
withdrawn from the Individual Account in the
same proportion as assets are held in the
Funds, the GA Account, and the Fixed Plus
Account on the date the payment is made.
(b) Payments under ECO will comply with the
incidental death benefit test set forth in
Code Section 401(a)(9).
(c) Distribution Amount: 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 Individual Account Current Value as of
December 31 of the year prior to the payment
year, by a single or joint life expectancy
factor. If joint life expectancy is elected,
the Beneficiary under ECO must be the same as
the beneficiary of any death benefits under
the Plan.
(d) Life Expectancy Factor: For the Participant,
the life expectancy factor is either single
life or joint life expectancy as elected by
the Participant, based on tables in IRS
regulations. For a spouse Beneficiary, only a
single life expectancy is available. Life
expectancy factors will be recalculated each
year, unless prohibited by the Code or
regulations.
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4.02 ESTATE CONSERVATION If joint life expectancy is elected and the
OPTION (CONT'D): Participant or spouse dies, payments will be
based on the survivor's life expectancy. If
the Beneficiary is not the spouse and the
Beneficiary dies first, the joint life
expectancy continues to be used to determine
payments.
If a single life expectancy is elected, at
the death of the Participant (or the spouse
who is the designated Beneficiary electing
ECO after the Participant's death), the
entire value must be distributed no later
than the December 31 of the year following
the year of the Participant's (or spouse's)
death. If a joint life expectancy is elected,
and both the Participant and spouse have
died, any remaining Current Value must be
distributed no later than the December 31 of
the year following the year of the second
death. If a joint life expectancy is elected
and both the Participant and non-spouse
Beneficiary have died, any remaining Current
Value will be distributed to a successor
Beneficiary or, if none has been named, then
to the estate of the last to die.
(e) 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 balance of
the Individual Account.
(f) Distribution Date: The Participant shall
specify an annual distribution date. The
earliest date is the first day of the
calendar year in which he or she attains age
70 1/2, or retirement if later. For a spouse
Beneficiary electing ECO after the
Participant's death, the earliest date is the
date of the Participant's death. The first
distribution date may be the 15th of any
month, or such other date Aetna may designate
or allow. Subsequent distributions will be
made on the anniversary of that date.
(g) Election and Revocation: The Participant may
elect ECO by submitting a completed and
signed election form to Aetna's Home Office.
The Contract Holder must certify that the
Participant is eligible both as to the timing
and form of distribution. Once ECO is
elected, the Participant may revoke it 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 per Individual Account.
4.03 SYSTEMATIC WITHDRAWAL (a) With the Systematic Withdrawal Option (SWO) a
OPTION: portion of the Individual Account Current
Value is automatically distributed each year.
A SWO payment will be calculated on the
Individual Account's Current Value. Each
payment will be withdrawn from the Individual
Account in the same proportion as assets are
held in the Funds, the GA Account, and the
Fixed Plus Account on the date the payment is
made.
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4.03 SYSTEMATIC WITHDRAWAL (b) Payments under SWO will comply with the
OPTION (CONT'D): incidental death benefit test set forth in
Code Section 401(a)(9).
(c) Distribution Amounts: The Participant 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. If joint life
expectancy is elected, the Beneficiary under
SWO must be the same as the beneficiary of
any death benefits under the Plan.
(1) Specified Payment: Payments of a
designated annual dollar amount. The
annual amount may not be greater than
the percentage of the Current Value at
time of election as shown on Contract
Schedule I. This amount will remain
constant unless a higher amount is
required under Code minimum distribution
rules.
Each year that the Specified Payment is
in effect, Aetna will calculate the
minimum required distribution by
dividing the Individual Account 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 larger than the
Specified Payment.
(2) Specified Period: Payments are made over
a period of time. The number of years
selected may not be less than the number
of years shown on Contract Schedule I,
unless otherwise required by Code
minimum distribution rules. The maximum
specified period will be limited by the
life expectancy factor. The amount paid
each year is calculated by dividing the
Individual Account Current Value as of
December 31 of the prior year by the
number of payment years remaining.
(3) Specified Percentage: The specified
percentage chosen cannot be greater than
the percentage shown on Contract
Schedule I. The Participant may change
the specified percentage elected every
six months. Each annual distribution is
determined by multiplying the Individual
Account Current Value by the percentage
chosen. The value to be used in this
calculation is the value on the December
31st prior to the year for which the
payment is being made. For payments made
more often than annually, the annual
payment result (calculated above) is
divided by the number of payments due
each year. Payments will be made each
year until the year the Participant
attains age 70 1/2.
(d) Life Expectancy Factor: The life expectancy
factor for the initial distribution year is
either single life or joint life expectancy
as elected by the Participant, based on
tables in IRS regulations. For a spouse
Beneficiary, only a single life expectancy is
available. With each subsequent year, the
life expectancy factor will be the life
expectancy factor for the initial
distribution year, reduced by one.
24
<PAGE>
4.03 SYSTEMATIC WITHDRAWAL If the joint life expectancy is elected and
OPTION (CONT'D): the Participant or the Beneficiary dies on or
after the required beginning date for minimum
distributions to the Participant, the joint
life expectancy factor will continue to be
reduced by one for each distribution year.
Payments will continue unless the Contract
Holder elects an alternate payment mode on
behalf of the survivor. Any payment mode
elected on behalf of the Beneficiary must
provide payments to be made at least as
rapidly as those made prior to the
Participant's death.
If the Participant dies before the required
beginning date for minimum distributions, SWO
payments will cease and the Beneficiary may
claim the death benefit in accordance with
the terms of this Contract. If the
Beneficiary is not the Participant's spouse,
the entire death benefit must be either
applied to an Annuity option within one (1)
year of the Participant's death, or be paid
within five (5) years of the Participant's
death. If the Beneficiary is the
Participant's spouse, the distribution is not
required to begin earlier than when the
Participant would have attained age 70 1/2.
If joint life expectancy is elected and the
Beneficiary dies before the required
beginning date for minimum distributions to
the Participant, payments to the Participant
will continue to be based on joint life
expectancy reduced by one for each
distribution year.
(e) 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 balance of
the Individual Account.
(f) Distribution Date: The Participant or spouse
Beneficiary shall specify the distribution
date. The earliest date is the first day of
the calendar year in which the Participant
attains age 59 1/2 or age 55, if separated
from service with the employer at or after
age 55. 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.
(g) Election and Revocation: The Participant may
elect SWO by submitting a completed and
signed election form to Aetna's Home Office.
Once SWO is elected, the Participant may
revoke it by submitting a written request to
Aetna's Home Office. Any revocation will
apply only to amounts not yet paid.
Generally, SWO may be elected only once,
however, if SWO is elected and then revoked
before the date distributions were required
to begin under Code Section 401(a)(9), SWO
may be elected on behalf of a spouse
Beneficiary after the death of the
Participant.
25
<PAGE>
V. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
5.01 CHOICES: (a) The Participant may elect an Annuity option
by telling Aetna to pay all or any portion of
the Individual Account(s) Current Value
(minus any applicable premium tax if not
previously deducted) as a premium for an
Annuity under option 2, 3, or 4 (see 5.07). A
completed and signed election form must be
submitted to the Home Office. The form must
include Contract Holder certification that
the Participant is eligible for a
distribution under the terms of the Plan and
that the Annuity option chosen is permitted
under the terms of the Plan. Any election of
an Annuity option must comply with the
minimum distribution requirements of Code
Section 401(a)(9), including the incidental
death benefit rule, and the regulations
thereunder. This restriction does not apply
if option 4 is chosen and the second
Annuitant is the spouse of the Participant.
(b) Generally, the first Annuity payment must be
made by April 1 of the calendar year
following the year in which the Participant
turns age 70 1/2 or retires, if later.
(c) When an Annuity option is chosen the
Participant must designate whether the
Annuity will be Fixed or Variable and whether
the underlying investment will be:
(1) The General Account;
(2) One or more of the available Fund(s); or
(3) A combination of (1) and (2).
If a Fixed Annuity is chosen, the Annuity
purchase rate for the option chosen reflects
at least the Minimum Guaranteed Interest Rate
(See Contract Schedule II), but may reflect a
higher interest rate.
If a Variable Annuity is chosen, the initial
Annuity payment for the option chosen
reflects the assumed annual return rate
elected (See Contract Schedule II).
(d) Payments will be made on a monthly basis
unless the Participant requests otherwise.
(e) Once elected, an Annuity option may not be
revoked, except for option 2 when elected on
a variable basis.
5.02 TERMS OF ANNUITY (a) No choice of any Annuity option may be made
OPTIONS: if the first payment would be less than $20
or if the total payments in a year would be
less than $100.
(b) If a Fixed Annuity under option 2, 3 or 4 is
elected and a larger Annuity payment would
result from applying the Adjusted Current
Value to a current Aetna single premium
immediate Annuity, Aetna will make the larger
payment.
26
<PAGE>
5.02 TERMS OF ANNUITY (c) For purposes of calculating the guaranteed
OPTIONS (CONT'D): 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, 1992 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 rates for options 3 and 4 are
based on mortality from 1983 Table a.
(d) 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 risks charges (which may include
profit) and administrative charges if future
Variable Annuity Payments are to remain
level.
5.03 DEATH PROVISION: When an Annuitant dies under options 2 or 3, the
present value of any remaining guaranteed payments
will be paid in one sum to the Beneficiary or,
upon the election of the Beneficiary, any
remaining payments will continue to the
Beneficiary. If a Beneficiary dies while under
option 1 or while receiving Annuity payments, the
present value of any remaining payments will be
paid in one lump sum to the Beneficiary's estate.
The rate used to determine the present value for a
lump sum payment will be the rate used to
determine the first Annuity payment.
5.04 FUND ANNUITY The number of Fund(s) annuity units is based on
UNITS 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 5.05) on the tenth Valuation
Period before the due date of the first payment to
determine the number of each Fund annuity units.
The number of each Fund annuity units remains
fixed. Each future payment is equal to the sum of
the products of each Fund annuity unit value
multiplied by the appropriate number of Units. The
Fund annuity unit value on the tenth Valuation
Period prior to the due date of the payment is
used.
27
<PAGE>
5.05 FUND ANNUITY For any Valuation Period, a Fund(s) annuity unit
UNIT VALUE: value is equal to:
(a) The value for the previous Period; multiplied
by
(b) The Annuity net return factor(s) (See 5.06)
for the Period; multiplied by
(c) A factor to reflect the assumed annual net
return rate. (See Contract Schedule II).
The dollar value of a Fund annuity unit values and
Annuity payments may go up or down due to
investment gain or loss.
Payments shall not be changed due to changes in
the mortality or expense results or administrative
charges.
5.06 FUND ANNUITY NET The Annuity net return factor(s) are used to
RETURN FACTOR: compute all Separate Account Annuity payments for
any Fund.
The Annuity net return factor(s) for each Fund is
equal to 1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by
the Separate Account at the end of a
Valuation Period; minus
(b) The value of the shares of the Fund held by
the Separate Account at the start of the
Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate
Account (if any); divided by
(d) The total value of the Fund(s) record units
and Fund(s) annuity units of the Separate
Account at the start of the Valuation Period;
minus
(e) A daily charge for Annuity mortality and
expense risks, which may include profit, (at
the annual rate as shown on Contract Schedule
II) 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.
5.07 ANNUITY OPTIONS: Option 1 -- Payments of Interest on Sum Left with
Aetna -- This option may be used only by the
Beneficiary when the Participant 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 5.01). 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.
28
<PAGE>
5.07 ANNUITY OPTIONS If the Beneficiary is the Participant's surviving
(CONT'D): spouse, payment may be deferred to a date not
later than when the Participant would have
attained age 70 1/2.
If the Beneficiary is not a spouse, the entire sum
must either be applied to an Annuity option within
one year of the Participant's death or be paid
within five years of the Participant's death.
Option 2 -- Payments for a Stated Period of Time -
- An Annuity will be paid for the number of years
chosen (See Contract Schedule II).
If payments for this option are made under a
Variable Annuity, the present value of any
remaining payments may be withdrawn at any time.
Option 3 -- Life Income -- An Annuity will be paid
for the life of the Annuitant. Aetna may also
guarantee payments for 60, 120, 180, or 240 months
if so directed by the Participant.
Option 4 -- Life Income based upon the lives of
two Annuitants -- An Annuity will be paid during
the lives of the Annuitant and a second Annuitant.
Payments will continue until both Annuitants have
died. When this option is chosen, a choice of the
following must be made:
(a) 100% of the payment to continue after the
first death;
(b) 66 2/3% of the payment to continue after the
first death;
(c) 50% of the payment to continue after the
first death;
(d) Payments for a minimum of 120 months, with
50% of the payment to continue after the
first death; or
(e) 100% of the payment to continue at the death
of the second Annuitant and 50% of the
payment to continue at the death of the
Annuitant.
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 Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3 3.00% $28.99 $86.76 $172.88 $343.23
4 3.00% 22.06 66.02 131.56 261.19
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- ----------------------------------------------------------------
</TABLE>
30
<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>
- ----------------------------------------------------
MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS PAYMENT PAYMENT PAYMENT PAYMENT
- ----------------------------------------------------
<S> <C> <C> <C> <C>
3 $29.19 $87.33 $173.91 $344.86
4 22.27 66.61 132.65 263.04
5 18.12 54.19 107.92 213.99
6 15.35 45.92 91.44 181.32
7 13.38 40.01 79.69 158.01
8 11.90 35.59 70.88 140.56
9 10.75 32.16 64.05 127.00
10 9.83 29.42 58.59 116.18
11 9.09 27.18 54.13 107.34
12 8.46 25.32 50.42 99.98
13 7.94 23.75 47.29 93.78
14 7.49 22.40 44.62 88.47
15 7.10 21.24 42.31 83.89
16 6.76 20.23 40.29 79.89
17 6.47 19.34 38.51 76.37
18 6.20 18.55 36.94 73.25
19 5.97 17.85 35.54 70.47
20 5.75 17.22 34.28 67.98
21 5.56 16.65 33.15 65.74
22 5.39 16.13 32.13 63.70
23 5.24 15.66 31.19 61.85
24 5.09 15.24 30.34 60.17
25 4.96 14.85 29.56 58.62
26 4.84 14.49 28.85 57.20
27 4.73 14.15 28.19 55.90
28 4.63 13.85 27.58 54.69
29 4.53 13.57 27.02 53.57
30 4.45 13.30 26.49 52.53
- ----------------------------------------------------
</TABLE>
31
<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>
- --------------------------------------------------------------------------------
MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3 $29.80 $89.04 $176.99 $349.72
4 22.89 68.38 135.93 268.58
5 18.74 56.00 111.33 219.98
6 15.99 47.77 94.96 187.64
7 14.02 41.90 83.30 164.59
8 12.56 37.52 74.58 147.35
9 11.42 34.11 67.81 133.99
10 10.51 31.40 62.42 123.34
11 9.77 29.19 58.03 114.66
12 9.16 27.36 54.38 107.45
13 8.64 25.81 51.31 101.39
14 8.20 24.50 48.69 96.21
15 7.82 23.36 46.44 91.75
16 7.49 22.37 44.47 87.88
17 7.20 21.51 42.75 84.48
18 6.94 20.74 41.23 81.47
19 6.71 20.06 39.88 78.80
20 6.51 19.46 38.68 76.42
21 6.33 18.91 37.59 74.28
22 6.17 18.42 36.62 72.35
23 6.02 17.98 35.73 70.61
24 5.88 17.57 34.93 69.02
25 5.76 17.20 34.20 67.57
26 5.65 16.87 33.53 66.25
27 5.54 16.56 32.92 65.04
28 5.45 16.28 32.35 63.93
29 5.36 16.01 31.83 62.90
30 5.28 15.77 31.35 61.95
- --------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
ADJUSTED
AGE OF NONE 60 120 180 240
ANNUITANT
- ---------------------------------------------------------------------
<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.
33
<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>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
34
<PAGE>
OPTION 3
Life Income
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>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
35
<PAGE>
OPTION 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%
<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 $4.03
55 55 3.88 4.25 4.47 3.87 4.14
55 60 4.06 4.47 4.71 4.06 4.20
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 4.49 5.01 5.32 4.48 4.64
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 5.07 5.75 6.17 5.05 5.26
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 5.89 6.82 7.40 5.81 6.12
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 7.07 8.34 9.16 6.78 7.36
- -------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
36
<PAGE>
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 3.5%
<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>
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.
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
Rates for a Fixed Annuity with Guaranteed Interest 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>
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.
38
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
Group Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP ANNUITY CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE
ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN
EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE
ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS
MATURITY.
<PAGE>
------------------------------------------------------------
[LOGO] AETNA LIFE INSURANCE AND ANNUITY COMPANY
HOME OFFICE: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
You may call the toll-free number shown above to get answers
to your questions or help to resolve a complaint.
Aetna Life Insurance and Annuity Company, herein called
Aetna, agrees to pay the benefits stated in the Contract.
- --------------------------------------------------------------------------------
CERTIFICATE OF To the Certificate Holder:
GROUP ANNUITY
COVERAGE Aetna certifies that coverage is in force for you under the
stated Group Annuity Contract and Certificate numbers. All
data shown here is taken from Aetna records and is based
upon information furnished by you.
This Certificate is a summary of the Group Annuity Contract
provisions. It replaces any and all prior certificates,
riders, or amendments issued to you under the stated
Contract and Certificate numbers. This Certificate is for
information only and is not a part of the Contract.
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN
PARTS III AND V.
- --------------------------------------------------------------------------------
RIGHT TO You may cancel this Certificate within 10 days of receiving
CANCEL it by returning this Certificate along with a written notice
to Aetna at the above address or to the agent from whom it
was purchased. Within 7 days after it receives the notice
of cancellation and this Certificate at its Home Office,
Aetna will return the entire consideration paid plus any
increase or minus any decrease in the current value of any
funds allocated to the Separate Account.
/s/ Dan Kearney /s/ Lucille M. Nickerson
President Secretary
- ------------------------------------------------------------------------------
Contract Holder Group Annuity Contract No.
ORP PENSION NJ VF0705
- -------------------------------------------------------------------------------
Your Name Certificate No.
MORTIMER SNERD 9810351100705ER
- -------------------------------------------------------------------------------
Type of Plan
OPTIONAL RETIREMENT PRODUCT
- -------------------------------------------------------------------------------
The underlying group combination annuity contract is delivered in NEW JERSEY
and is subject to the laws of that jurisdiction.
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP ANNUITY CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT. THIS CERTIFICATE CONTAINS A MARKET VALUE ADJUSTMENT
FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN
INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA
DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OFITS MATURITY.
FORM NO. GTCC-95 (ORP)
<PAGE>
SPECIFICATIONS
- --------------------------------------------------------------------------------
GUARANTEED There are guaranteed interest rates for amounts held in
INTEREST RATE the Fixed Plus Account and the GA Account. (See
Certificate Schedule I).
- -------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense
THE SEPARATE risks and asset based sales charge and administrative
ACCOUNT fees. (See 3.05 and 5.08)
- -------------------------------------------------------------------------------
DEDUCTION FROM Contribution(s) are subject to a deduction for premium
CONTRIBUTION(S) taxes, if any. (See 3.01.)
2
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT: Variable Annuity Account C
CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account.
The daily charge is at an annual effective rate of
1.40% for Annuity mortality and expense risks,
asset based sales charge and profit and a daily
administrative charge which will not exceed 0.25%
on an annual basis.
FIXED PLUS ACCOUNT
- -------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
Beginning on the tenth anniversary of the
effective date of an Individual Account, Aetna
will credit amounts with an interest rate that is
0.25% higher than the then-declared interest rate
for Individual Accounts before the tenth
anniversary.
PARTIAL WITHDRAWAL: The 20% limit applicable to partial withdrawal
from the Fixed Plus Account will be waived when
the withdrawal is:
(a) due to the Participant's death, (within six
(6) months of the Participant's date of
death), before Annuity payments begin. This
partial withdrawal may only be exercised
once; or
(b) used to purchase Annuity benefits.
GUARANTEED ACCUMULATION (GA ACCOUNT)
- --------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
i
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD (CONT'D)
SEPARATE ACCOUNT, FIXED PLUS ACCOUNT AND GA ACCOUNT
- ------------------------------------------------------------------------------
TRANSFERS: An unlimited number of Transfers may be made
during the Accumulation Period. Aetna allows 12
free Transfers in any calendar year. Thereafter,
Aetna reserves the right to charge $10 for each
subsequent Transfer.
SYSTEMATIC WITHDRAWAL The Specified Payment may not be greater than 20%
OPTION (SWO): of the Individual Account's Current Value at the
time of election.
The Specified Period may not be less than five
years.
The Specified Percentage may not be greater than
20%.
See Section 1. - DEFINITIONS for explanations.
ii
<PAGE>
CONTRACT SCHEDULE II
ANNUITY PERIOD
SEPARATE ACCOUNT
- -------------------------------------------------------------------------------
CHARGES TO SEPARATE A daily charge at an annual effective rate of
ACCOUNT: 1.25% for Annuity mortality and expense risks.
The administrative charge is established upon
election of an Annuity option. This charge will
not exceed 0.25%.
VARIABLE ANNUITY ASSUMED If a Variable Annuity is chosen, an assumed annual
ANNUAL NET RETURN RATE: net return rate of 5.0% may be elected. If 5.0%
is not elected, Aetna will use an assumed annual
net return rate of 3.5%.
The assumed annual net return rate factor for 3.5%
per year is 0.9999058.
The assumed annual net return rate factor for 5.0%
per year is 0.9998663.
If the portion of a Variable Annuity payment for
any Fund is not to decrease, the Annuity return
factor under the Separate Account for that Fund
must be:
(a) 4.75% on an annual basis plus an annual
return of up to 0.25% to offset the
administrative charge set at the time Annuity
payments commence if an assumed annual net
return rate of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual
return of up to 0.25% to offset the
administrative charge set at the time Annuity
payments commence, if an assumed annual net
return rate of 5% is chosen.
ANNUITY OPTION: Under the option "Payments for a Stated Period of
Time":
For amounts invested in the GA Account or one or
more of the Fund(s), the number of years must be
at least five (5) and not more than thirty (30)
and the Annuity may be a Fixed or Variable
Annuity.
For amounts invested in the Fixed Plus Account,
the number of years must be at least five (5) and
not more than thirty (30) and the Annuity must be
a Fixed Annuity.
FIXED ANNUITY
- -------------------------------------------------------------------------------
MINIMUM GUARANTEED 3% (effective annual rate of return).
INTEREST RATE:
See Section 1. - DEFINITIONS for explanations.
iii
<PAGE>
TABLE OF CONTENT
I. DEFINITIONS
- --------------------------------------------------------------------------
PAGE
1.01 Accumulation Period . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.02 Adjusted Current Value. . . . . . . . . . . . . . . . . . . . . . . . 6
1.03 Annuitant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.04 Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.05 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.06 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.07 Contract Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.08 Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.09 Current Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.10 Deposit Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.11 Fixed Plus Account. . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.12 Fixed Plus Account Guaranteed Interest Rate . . . . . . . . . . . . . 7
1.13 Fixed Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.14 Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.15 General Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.16 Guaranteed Accumulation Account (GA Account). . . . . . . . . . . . . 7
1.17 GA Account Guaranteed Interest Rate . . . . . . . . . . . . . . . . . 7
1.18 Guaranteed Term . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.19 Individual Account. . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.20 Loan Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.21 Market Value Adjustment (MVA) . . . . . . . . . . . . . . . . . . . . 8
1.22 Matured Term Value. . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.23 Matured Term Value Transfer . . . . . . . . . . . . . . . . . . . . . 8
1.24 Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.25 Net Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.26 Nonunitized Separate Account. . . . . . . . . . . . . . . . . . . . . 8
1.27 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.28 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.29 Reinvestment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.30 Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3
<PAGE>
PAGE
1.31 Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.32 Valuation Period. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.33 Variable Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
II. GENERAL PROVISIONS
- -------------------------------------------------------------------------------
2.01 Change of Contract. . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.02 Change of Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.03 Nonparticipating Contract . . . . . . . . . . . . . . . . . . . . . . 11
2.04 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.05 State Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.06 Control of Contract . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.07 Misstatements and Adjustments . . . . . . . . . . . . . . . . . . . . 12
2.08 Incontestability. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.09 Grace Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Individual Certificates . . . . . . . . . . . . . . . . . . . . . . . 12
III. CONTRIBUTIONS, CURRENT VALUE, AND WIITHDRAWAL PROVISIONS
- -------------------------------------------------------------------------------
3.01 Net Contribution(s) . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.02 Experience Credits. . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.03 Fund Record Units . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.04 Fund Record Unit Value. . . . . . . . . . . . . . . . . . . . . . . . 13
3.05 Fund Net Return Factors . . . . . . . . . . . . . . . . . . . . . . . 13
3.06 Market Value Adjustment . . . . . . . . . . . . . . . . . . . . . . . 13
3.07 Transfer(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.08 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.09 Notice to the Participant . . . . . . . . . . . . . . . . . . . . . . 18
3.10 Manner and Timing of Distributions. . . . . . . . . . . . . . . . . . 19
3.11 Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.12 Partial Withdrawal from the Fixed Plus Account. . . . . . . . . . . . 20
3.13 Payment of Fixed Plus Account Full Withdrawal . . . . . . . . . . . . 20
3.14 Alternative Payment of Fixed Plus Account Full Withdrawal . . . . . . 20
4
<PAGE>
PAGE
3.15 Payment of Minimum Current Value. . . . . . . . . . . . . . . . . . . 21
3.16 Amount Payable at Death (Before Annuity Payments Start) . . . . . . . 21
3.17 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
IV. NON-ANNUITY DISTRIBUTION OPTIONS
- -------------------------------------------------------------------------------
4.01 Distribution Options. . . . . . . . . . . . . . . . . . . . . . . . .22
4.02 Estate Conservation Option. . . . . . . . . . . . . . . . . . . . . .22
4.03 Systematic Withdrawal Option. . . . . . . . . . . . . . . . . . . . .23
V. ANNUITY PROVISIONS
- -------------------------------------------------------------------------------
5.01 Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.02 Terms of Annuity Options. . . . . . . . . . . . . . . . . . . . . . .26
5.03 Death Provision . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.04 Fund Annuity Units. . . . . . . . . . . . . . . . . . . . . . . . . .27
5.05 Fund Annuity Unit Value . . . . . . . . . . . . . . . . . . . . . . .28
5.06 Fund Annuity Net Return Factor. . . . . . . . . . . . . . . . . . . .28
5.07 Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . .28
5
<PAGE>
I. DEFINITIONS
- -------------------------------------------------------------------------------
1.01 ACCUMULATION PERIOD: The period during which Net Contribution(s) are
applied to an Individual Account.
1.02 ADJUSTED CURRENT The Current Value (See 1.09) of an Individual
Account (See 1.19) plus or minus any applicable
aggregate GA Account Market Value Adjustment, if
applicable (See 3.06).
1.03 ANNUITANT: If an Annuity provides lifetime benefits, the
person whose life expectancy determines the amount
and/or duration of Annuity benefit payments.
1.04 ANNUITY: Payment of an income under the Annuity Provisions
of Section V:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.05 BENEFICIARY: Each Participant shall name the beneficiary of the
Employer and Employee Account. Aetna will pay any
portion of the Individual Account(s) Current Value
to the beneficiary in accordance with the
provisions of Section 3.16.
1.06 CODE: The Internal Revenue Code of 1986, as amended.
1.07 CONTRACT HOLDER: The entity, named on the cover of the Contract, to
which the Contract is issued.
1.08 CONTRIBUTION: A payment received at Aetna's Home Office and
allocated to the Contract.
1.09 CURRENT VALUE: For an Individual Account (See 1.19), the Current
Value is the total of:
(a) The amount, if any, in the Fixed Plus
Account, with interest earned to date;
(b) The amount, if any, in the GA Account, with
interest earned to date; and
(c) The value of all Fund record units (See
3.04), if any, as of the most recent
Valuation Period.
1.10 DEPOSIT PERIOD: A calendar month, a calendar quarter, or any other
period of time specified by Aetna during which Net
Contribution(s), Transfers and Reinvestments are
accepted into the GA Account for one or more
Guaranteed Terms.
1.11 FIXED PLUS ACCOUNT: An accumulation option with a guaranteed minimum
interest rate. Aetna may credit a higher rate
which is not guaranteed. The portion that may be
withdrawn or transferred in a 12 month period is
restricted (See 3.07, 3.12 and 3.13).
6
<PAGE>
1.12 FIXED PLUS ACCOUNT Aetna will add interest daily at an annual rate no
GUARANTEED INTEREST less than that shown on Contract Schedule I on any
RATE: Net Contribution(s) to the Fixed Plus Account.
Aetna may add interest daily at a higher rate
determined by its Board of Directors.
1.13 FIXED ANNUITY: An Annuity with payments that do not vary in
amount.
1.14 FUND(S): The open-end registered management investment
companies (mutual funds) in which the Separate
Account invests.
1.15 GENERAL ACCOUNT: The account holding the assets of Aetna, other
than those assets held in Aetna's Separate
Account(s) and Nonunitized Separate Account(s).
1.16 GUARANTEED ACCUMULATION An accumulation option where Aetna guarantees
ACCOUNT (GA ACCOUNT): stipulated rate(s) of interest for a specified
period of time. All assets of Aetna, including
amounts in the Nonunitized Separate Account, are
available to meet the guarantees for the GA
Account.
1.17 GA ACCOUNT GUARANTEED Aetna will declare the interest rate(s) applicable
INTEREST RATE: to a specific Guaranteed Term at the start of the
Deposit Period for that Guaranteed Term. The
rate(s) are guaranteed by Aetna for that Deposit
Period and the ensuing Guaranteed Term. The
Guaranteed Interest Rates are annual effective
yields. That is, interest is credited daily at a
rate that will produce the Guaranteed Interest
Rate over the period of a year. No Guaranteed
Interest Rate will ever be less than the Minimum
Guaranteed Interest Rate shown on Contract
Schedule I.
For Guaranteed Terms of one year or less, one
Guaranteed Interest Rate is credited for the full
Guaranteed Term. For longer Guaranteed Terms, an
initial Guaranteed Interest Rate is credited from
the date of deposit to the end of a specified
period within the Guaranteed Term. There may be
different Guaranteed Interest Rate(s) declared for
subsequent specified time intervals throughout the
Guaranteed Term.
1.18 GUARANTEED TERM: The period of time for which GA Account Guaranteed
Interest Rates are guaranteed on Net
Contributions, Transfers and Reinvestments made
into a current Deposit Period for the GA Account.
Such period begins on the day following the close
of the Deposit Period and ends on the designated
Maturity Date. Guaranteed Terms are offered at
Aetna's discretion for various lengths of time
ranging up to and including ten years and are
classified as follows:
SHORT-TERM. Three (3) or fewer years. Amounts
allocated to a short-term Term are held in the
General Account.
LONG-TERM. More than three (3) years, but not
more than ten (10). Amounts allocated to a long-
term Term are held in the Nonunitized Separate
Account.
During a Deposit Period, Aetna may make available
any number of Guaranteed Terms. The Participant
may allocate Net Contributions and Transfers into
any or all of the available Guaranteed Terms.
7
<PAGE>
1.19 INDIVIDUAL ACCOUNT: This Contract is issued to the Contract Holder.
However, Aetna will maintain two Individual
Accounts for each Participant. These are:
(a) An Employer Account: This Individual Account
will be credited with employer Net
Contribution(s) and transferred amounts of
401(a) funds, attributable to employer
contributions; and
(b) An Employee Account: This Individual Account
will be credited with employee Net
Contribution(s), specifically amounts subject
to Code Section 414(h) and transferred
amounts of 401(a) funds, attributable to
414(h) contributions.
1.20 LOAN ACCOUNT: An account established for record keeping purposes
and credited with the amount on any loan.
1.21 MARKET VALUE ADJUSTMENT An adjustment to the amount withdrawn or
(MVA): Transferred from a GA Account Guaranteed Term
prior to the end of that Guaranteed Term. The
adjustment reflects the change in the value of the
investment due to changes in interest rates since
the date of deposit and is computed using the
formula given in 3.06. The adjustment is
expressed as a percentage of each dollar being
withdrawn.
1.22 MATURED TERM VALUE: The amount payable on a GA Account Guaranteed
Term's Maturity Date.
1.23 MATURED TERM VALUE During the calendar month following a GA Account
TRANSFER: Maturity Date, the Participant may notify Aetna's
Home Office in writing to Transfer or withdraw all
or part of the Matured Term Value, plus interest
at the new Guaranteed Rate accrued thereon, from
the GA Account without an MVA. This provision
only applies to the first such written request
received from the Participant during this period
for any Matured Term Value.
1.24 MATURITY DATE: The last day of a GA Account Guaranteed Term.
1.25 NET CONTRIBUTION: A Contribution less any applicable premium taxes.
1.26 NONUNITIZED SEPARATE An account established by Aetna under Section
ACCOUNT: 38a-433 of the Connecticut General Statutes that
holds assets for GA Account Terms (See 1.18)
greater than three years. The Contract Holder or
Participant does not participate in the investment
gain or loss from the assets held in the
Nonunitized Separate Account. Such gain or loss
is borne entirely by Aetna. Assets in this
account may be charged with liabilities arising
out of any other Aetna business.
1.27 PARTICIPANT: A person who participates in the Plan named on the
cover of the Contract.
1.28 PLAN: The Plan intended to qualify under Section 401(a)
of the Code and named on the cover of the
Contract. The Plan is not a part of the Contract
and Aetna is not bound by its terms.
8
<PAGE>
1.29 REINVESTMENT: Aetna will mail a notice to the Participant at
least 18 calendar days before a Guaranteed Term's
Maturity Date. This notice will contain the Terms
available during the current Deposit Periods with
their Guaranteed Interest Rate(s) and projected
Matured Term Value. If no specific direction is
given by the Participant prior to the Maturity
Date, each Matured Term Value will be reinvested
in the current Deposit Period for a Guaranteed
Term of the same duration. If a Guaranteed Term
of the same duration is unavailable, each Matured
Term Value will automatically be reinvested in the
current Deposit Period for the next shortest
Guaranteed Term available in the same
classification. If no shorter Guaranteed Term is
available, the next longer Guaranteed Term will be
used. Aetna will mail a confirmation statement to
the Participant, the next business day after the
Maturity Date. This notice will state the
Guaranteed Term and Guaranteed Interest Rate(s)
which will apply to the reinvested Matured Term
Value.
1.30 SEPARATE ACCOUNT: An account, established by Aetna under Section
38a-433 of the Connecticut General Statutes, that
buys and holds shares of the Fund(s) available
under the Contract. Income, gains or losses,
realized or unrealized are credited or charged to
the Separate Account without regard to other
income, gains or losses of Aetna. Aetna owns the
assets held in the Separate Account and is not a
trustee of such amounts. Amounts in the Separate
Account are not generally guaranteed and are held
at market value. The assets of the Separate
Account, to the extent of reserves and other
contract liabilities of the Account, cannot be
charged with other Aetna liabilities.
1.31 TRANSFER: The movement of invested amounts among the
available Fund(s); the Fixed Plus Account and the
GA Account during the Accumulation Period.
1.32 VALUATION PERIOD: The period as of 4:15 p.m. Eastern time on each
day the New York Stock Exchange is open for
business to 4:15 p.m. Eastern time of the next
such business day, or such other day that one or
more of the Fund(s) determines its net asset
value.
1.33 VARIABLE ANNUITY: An Annuity with payments that vary with the net
investment results of the Funds available during
the Annuity period.
II. GENERAL PROVISIONS
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2.01 CHANGE OF CONTRACT: (a) Only an authorized Aetna officer can change
the provisions of the Contract and the change
must be in writing.
(b) Aetna cannot change the amount or terms of
Annuity benefit payments after payment has
commenced.
(c) Aetna may change the following provisions
without Contract Holder consent.
(1) Any provision that must be changed to
comply with state or federal law
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2.01 CHANGE OF CONTRACT (2) Calculation of the Market Value
(CONT'D): Adjustment
(3) Estate Conservation Option
(4) Systematic Withdrawal Option
(5) Allocation of Contributions or Transfers
to the Fixed Plus Account
(6) New Annuity Options
Aetna will notify the Contract Holder, in
writing, at least thirty (30) days before the
effective date of the change. Such a change
will apply to all current and future
Individual Accounts.
(d) Aetna may change the Tables for determining
the amount of Annuity benefit payments
without Contract Holder consent. Such a
change will not become effective earlier than
twelve months after (1) the effective date of
the Contract, or (2) the effective date of a
previous change. Aetna will notify the
Contract Holder, in writing, at least thirty
(30) days before the effective date of the
change. The change will apply to all current
and future Individual Accounts.
(e) The Contract Holder must agree to any change
in provisions concerning the following:
(1) A reduction in the GA Account Minimum
Guaranteed Interest Rate
(2) A reduction in the Fixed Plus Account
Minimum Guaranteed Interest Rate
(3) Fund Accumulation Period Net Return
Factor
(4) Current Value
(5) Annuity Unit Value
(6) Existing Annuity Options
(7) Fixed Annuity Minimum Guaranteed
Interest Rates
Aetna will notify the Contract Holder, in
writing, at least thirty (30) days before the
effective date of the proposed change. Such
a change will apply to future Individual
Accounts.
If the Contract Holder does not agree to a
proposed change, Aetna reserves the right to:
(1) discontinue establishing new Individual
Accounts; and (2) discontinue accepting
Contributions to existing Individual
Accounts.
2.02 CHANGE OF FUND: Aetna, or the Separate Account, may:
(a) Change the Fund(s) in which the Separate
Account invests; and/or
(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 in the Separate
Account with respect to the Fund(s) whose
shares are to be replaced;
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2.02 CHANGE OF FUND (b) Deemed necessary by Aetna under the
(CONT'D): Investment Company of 1940; or
(c) Deemed necessary by Aetna to accomplish the
purpose of the Separate Account.
Aetna will notify the Contract Holder of any such
change.
2.03 NONPARTICIPATING The Contract Holder, Participants, or
CONTRACT: Beneficiaries will not have a right to share in
the earnings of Aetna.
2.04 PAYMENTS: (a) Aetna will make distributions as directed by
the Contract Holder. Aetna will determine
the amount of payments based on the
Individual Account's Current Value as of the
date on which a request is received in good
order at Aetna's Home Office. Payments will
be made within seven (7) calendar days of
receipt of a written request in good order at
Aetna's Home Office.
(b) Aetna may defer payments: (1) for a period of
up to six (6) months (unless not allowed by
state law); and (2) as allowed by federal
law.
2.05 STATE LAWS: The 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 designed to fund a governmental
plan which provides for retirement income that is
not subject to Title I of the Employee Retirement
Income Security Act of 1974 (ERISA), as amended by
subsequent law including REA.
The Participant may select the investment
option(s) for the Employer Account and the
Employee Account. Choices made under the Contract
must be in writing or in a form satisfactory to
Aetna. Until receipt of such choices in its Home
Office, Aetna may rely on any previous choices
made. No distributions will be made from the
Employer Account or the Employee Account without
the Contract Holder's written direction to Aetna.
(a) Nontransferable and Nonassignable: The
Contract and any Individual Accounts are
nontransferable and nonassignable, except to
Aetna in the event of a loan, or pursuant to
a "qualified domestic relations order" as set
forth under the Internal Revenue Code of
1986, as it may be amended from time to time.
(b) Distributions: A Participant may apply for a
distribution from his or her Employee or
Employer Account. However, the Contract
Holder must certify in writing that the
distribution is in accordance with the terms
of the Plan.
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<PAGE>
2.06 CONTROL OF CONTRACT (c) Participant Rights/Employee Account: The
(CONT'D) Participant has a nonforfeitable right to the
value of his or her Employee Account pursuant
to the terms of the Plan as interpreted by
the Contract Holder.
(d) Participant Rights/Employer Account: The
Participant has a nonforfeitable right to the
value of his or her Employer Account pursuant
to the terms of, and to the extent of his or
her vested percentage under, the Plan as
interpreted by the Contract Holder. It is
the Contract Holder's responsibility to
maintain records of the Participant's vesting
percentages. Aetna will not maintain nor
keep such records.
2.07 MISSTATEMENTS AND If Aetna finds the age of any payee to be
ADJUSTMENTS: misstated, the correct facts will be used to
adjust payments.
2.08 INCONTESTABILITY: Aetna cannot cancel the Contract because of any
error of fact on the application.
2.09 GRACE PERIOD: This Contract will remain in effect even if
Contributions are not continued except as provided
in 3.15.
2.10 INDIVIDUAL CERTIFICATES: Aetna shall issue certificates to Participants as
required by the state in which the Contract is
delivered. The certificate will summarize certain
provisions of the Contract. Certificates are for
information only and are not a part of the
Contract.
III. CONTRIBUTIONS, CURRENT VALUE, AND WITHDRAWAL PROVISIONS
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3.01 NET CONTRIBUTION(S): The Net Contribution equals the actual
Contribution less any applicable premium tax.
Generally, Aetna will deduct the premium tax when
Annuity benefits are purchased (See Section V).
If Aetna determines that under applicable state
law, it must pay a premium tax when the
Contribution is received, or at any other time, it
will deduct the tax at that time. The Net
Contribution(s) may be allocated among the
following investment options:
(a) The Fixed Plus Account; and
(b) The current Deposit Period(s) for Guaranteed
Terms under the GA Account; and
(c) The Fund(s) in which the Separate Account
invests.
Aetna must be told the percentage of all Net
Contributions to allocate to one or more of the
investment options. Aetna reserves the right to
require a minimum Contribution amount per
Individual Account.
3.02 EXPERIENCE CREDITS: Aetna may apply experience credits under this
Contract. Any such credits will be computed as
decided by Aetna.
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<PAGE>
3.03 FUND RECORD UNITS: The portion of the Net Contribution(s) applied to
each Fund under the Separate Account will
determine the number of Fund record units credited
to the Individual Account for that Fund. This
number is equal to the Net Contribution applied to
the Fund divided by the Fund record unit value
(See 3.04) for the Valuation Period in which the
Contribution is received in good order.
3.04 FUND RECORD A Fund record unit value is computed by
UNIT VALUE: multiplying the net return Factor (See 3.05) for
the current Valuation Period by the Fund record
unit value for the previous Period. The dollar
value of a Fund record unit, Separate Account
assets, and Variable Annuity payments may go up or
down due to investment gain or loss.
3.05 FUND NET The net return factor(s) are used to compute all
RETURN FACTORS: Separate Account record units for any Fund. The
net return factor for each Fund is equal to
1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by
the Separate Account at the end of a
Valuation Period; minus
(b) The value of the shares of the Fund held by
the Separate Account at the start of the
Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate
Account (if any); divided by
(d) The total value of the Fund record units and
Fund annuity units of the Separate Account at
the start of the Valuation Period; minus
(e) A Separate Account charge at an annual
effective rate as shown on Contract Schedule
I for Annuity mortality and expense risks,
asset based sales charge and profit and a
daily administrative charge which will not
exceed the amount shown on Contract Schedule
I on an annual basis. The administrative
charge may be changed annually except for
amounts which have been used to purchase an
Annuity.
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.
3.06 MARKET VALUE (a) An MVA will be applied to any withdrawal from
ADJUSTMENT: a GA Account Term before the Maturity Date
due to:
(1) A Transfer;
(2) A full or partial withdrawal; or
(3) A payment of a premium for Annuity
Option 2.
The amount of the withdrawal will be adjusted to a
market value amount as described in (b).
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<PAGE>
3.06 MARKET VALUE (b) Market value adjusted amounts will be equal
ADJUSTMENT to the amount withdrawn multiplied by the
(CONT'D): following ratio:
x
(1 + i) TO THE POWER OF ---
365
----------------------------------------
x
(1 + j) TO THE POWER OF ---
365
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days
remaining, (computed from
Wednesday of the week of
withdrawal) in the Term.
(c) The Deposit Period Yield will be determined
as follows:
(1) At the close of the last business day of
each week of the Deposit Period, a yield
will be computed as the average of the
yields on that day of U.S. Treasury
Notes which mature in the last three
months of the Term.
(2) The Deposit Period Yield is the average
of those yields for the Deposit Period.
If withdrawal is made prior to the close
of the Deposit Period, it is the average
of those yields on each week preceding
withdrawal.
(3) The Current Yield is the average of the
yields on the last business day of the
week preceding withdrawal on the same
U.S. Treasury Notes included in the
Deposit Period Yield.
(4) In the event that no U.S. Treasury Notes
which mature in the last three months of
the Term exist, Aetna reserves the right
to use the U.S. Treasury Notes that
mature in a following quarter.
(d) Full and partial withdrawals as well as
Transfers made within six (6) months after
the Participant's date of death under the
Amount Payable at Death provision (See 3.16)
will be the greater of:
(1) The aggregate MVA amount which is the
sum of all market value adjusted amounts
calculated due to a withdrawal of
amounts (for withdrawal or Transfer)
from Terms prior to the end of those
Terms. The aggregate MVA may be either
positive or negative; or
(2) The applicable portion of the Current
Value in the GA Account.
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<PAGE>
3.06 MARKET VALUE (e) After the six month period, the withdrawal or
ADJUSTMENT Transfer will be the aggregate MVA amount
(CONT'D): (i.e.,including all MVAs).
(f) The greater of the aggregate MVA amount or
the applicable portion of the Current Value
in the GA Account is applied to amounts
withdrawn from the GA Account for payment of
a premium under Annuity options 3 or 4.
3.07 TRANSFERS: Before an Annuity option is elected, all or
any portion of the Adjusted Current Value of the
Individual Account (subject to the limitations
described below) may be transferred from any Fund,
the Fixed Plus Account or the GA Account:
(a) To any Fund; or
(b) To the Fixed Plus Account; or
(c) To any Guaranteed Term of the GA Account with
a different classification available in the
Current Deposit Period.
Transfer requests can be submitted as a percentage
or as a dollar amount. Aetna may establish a
minimum Transfer amount. Within a Guaranteed Term
classification, the amount transferred will be
withdrawn from the oldest Deposit Period, then
from the next oldest, and so on until the amount
requested is satisfied.
Amounts applied to Guaranteed Terms of the GA
Account may not be transferred to the Funds, the
Fixed Plus Account or to another Guaranteed Term
during the Deposit Period or 90 days after the
close of the Deposit Period except for Matured
Term Value(s) during the calendar month following
the Term's Maturity Date.
Transfers from Guaranteed Terms of the GA Account
are subject to the MVA provisions of 3.06.
During each rolling twelve (12) month period, up
to 20% of the Fixed Plus Account value may be
transferred to one or more of the Fund(s), and/or
the GA Account's then-current Deposit Period. The
20% limit is reduced by any partial withdrawals,
Transfers or amounts taken as a loan or used to
purchase an Annuity during the twelve (12) month
period. Aetna reserves the right to include
amounts paid under ECO and SWO provisions for
purposes of applying this 20% limit. This limit
is waived when the balance in the Fixed Plus
Account is $1,000 or less on the date the Transfer
request is received in good order at Aetna's Home
Office.
The Participant may make an unlimited number of
Transfers during the Accumulation Period. The
number of free Transfers allowed by Aetna is shown
on Contract Schedule I. Additional Transfers may
be subject to a Transfer fee as shown on Contract
Schedule I. Transfers from the GA Account of a
Matured Term Value on or within one calendar month
of a Term's Maturity Date do not count against the
annual Transfer limit.
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<PAGE>
3.08 LOANS: During the Accumulation Period, the Participant
may request a loan from his or her Individual
Account by submitting a loan request form. The
loan effective date is the date Aetna receives a
loan request form in good order at its Home
Office.
A loan will not be allowed within 12 months of the
effective date of any prior loan. The Employee
and Employer Accounts Current Value must be at
least $2,000 and the minimum loan amount is
$1,000.
A loan that meets provisions set forth in Code
Section 72(p) is not considered a taxable
distribution.
(a) The amount available for a loan is
calculated based on the Current Value of the
Employer and Employee Accounts. The loan
amount is limited to the lesser of:
(1) 50% of the Employee and Employer
Accounts vested Current Value on the
date the loan is made; or
(2) $50,000 reduced by the amount of the
highest outstanding loan balance during
the preceding 12 month period that ends
the day before the current loan is made.
Loans may only be made from the Employee
Account and the vested portion of the
Employer Account.
(b) When the loan is made, only amounts in
the Funds and Fixed Plus Account may be
withdrawn and transferred to the Loan
Account. The amounts will be withdrawn in
the same proportion as the Employee Account
and the Employer Account's vested Current
Value are divided between the Fixed Plus
Account and/or Funds on the loan's effective
date.
If the amount of the loan requested would
require the proportionate amount transferred
from the Fixed Plus Account to exceed the
amount that would be allowed under the 20%
limit described in Section 3.07, the
Participant may transfer an additional amount
from the Fixed Plus Account.
The additional amount will be limited and
will never exceed 50% of the Fixed Plus
Account value on the effective date of the
loan, minus any previous partial withdrawal
or Transfer during the 12-month period the
loan becomes effective. Aetna reserves the
right to change the maximum percentage a
Participant can transfer from the Fixed Plus
Account for the purpose of taking a loan.
If the amount needed to make the loan exceeds
the Fixed Plus Account Transfer limit, the
additional amount will be withdrawn
proportionately from the Funds.
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<PAGE>
3.08 LOANS (c) Aetna will record the percentage by
(CONT'D): which any amount withdrawn from the Fixed
Plus Account exceeds the 20% Transfer limit
covered in Section 3.07. The percentage will
equal the amount transferred from the Fixed
Plus Account that exceeds the 20% withdrawal
limit divided by the total amount of the
loan. In the event of a loan payment
default, this percentage will be used to
calculate the penalty that would be applied
as described in (h) below.
(d) The loan interest rate will be 5%.
(e) Interest on the Loan Account balance will be
calculated daily at a rate to yield an
effective annual rate of 3%. Interest will
be credited quarterly based on the loan's
effective date and credited to the Funds
and/or Fixed Plus Account in the same
proportion in which the loan amount was
withdrawn.
(f) Principal and interest on loans is amortized
in quarterly payments over a one to five year
term. The Participant chooses the number of
years. An exception applies to loans taken
for the acquisition of the Participant's
principal residence. Loans for this purpose
can be amortized quarterly over a one to 20
year term, as elected by the Participant.
The Participant must certify in writing that
a loan is for the purchase of a principal
residence.
The term of the loan, elected by the
Participant, must result in full repayment no
later than December 31 of the calendar year
prior to the calendar year in which the
Participant reaches age 70 1/2.
The entire Loan Account balance may be paid
in full at any time. Aetna will bill the
Participant for any loan interest accrued to
the date the payment is received. Aetna will
consider the loan paid when the interest
amount is received.
(g) A bill in the amount of the quarterly payment
due will be mailed to the Participant in
advance of the due date. The first due date
is three months from the loan's effective
date and quarterly thereafter. A loan
payment will be in default if it is not
received by Aetna at its Home Office by the
due date.
The principal portion of each loan payment
will be credited to the Participant's Fixed
Plus Account and/or the Funds in the same
proportion in which the loan amount was
withdrawn. The Loan Account will then be
reduced by the principal portion of the
payment.
(h) If a payment is in default, a partial
withdrawal in an amount equal to the payment
due will be deducted from the Individual
Account at the close of business on the due
date. Payments that are less than the amount
due will be returned and if the full payment
is not received by the due date, the payment
will be in default.
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<PAGE>
3.08 LOANS The required amount will be withdrawn from
(Cont'd): the Fixed Plus Account and/or the Funds in
the same proportion in which the loan amount
was withdrawn. This amount will be applied
as a loan payment as set forth in (g) above.
Aetna will report to the IRS the amount
withdrawn to pay the default.
In addition, if the amount withdrawn from the
Fixed Plus Account to make the loan exceeded
the 20% annual withdrawal limitation
described in Section 3.12, a 5% charge will
be assessed on the same percentage of the
defaulted payment. For example, if 60% of
the amount withdrawn was in excess of the
limit, then 60% of the amount withdrawn for
the defaulted payment will be subject to the
additional 5% charge.
(i) If a Participant makes a payment that is
more than the billed amount, the excess will
be credited to the Fixed Plus Account and/or
the Funds in the same proportion in which the
loan amount was withdrawn. The Loan Account
will be reduced by the additional amount. On
the following loan anniversary date, future
payments will be recalculated to reflect the
additional principal payment so that the
outstanding balance is amortized in equal
quarterly payments over the remaining loan
term.
(j) Upon the election of an Annuity option or at
the Participant's death, any Loan Account
will be cancelled. This will result in a
taxable distribution of an amount equal to
the Loan Account balance. Interest earned
but not yet credited will be credited to, and
loan interest accrued but not paid will be
deducted from, the Current Value in the same
proportion in which the loan amount was
withdrawn.
(k) If there is an outstanding Loan Account
balance when a Participant makes a full
withdrawal of the Current Value of his or her
Individual Account (1) interest earned but
not credited will be credited to, and (2)
uncollected accrued loan interest will be
deducted from the Current Value. The Loan
Account will be cancelled resulting in a
taxable distribution of an amount equal to
the Loan Account balance.
3.09 NOTICE TO THE Each year, Aetna will notify the Participant
PARTICIPANT: of:
(a) The value of any amounts held in:
(i) The Fixed Plus Account,
(ii) The GA Account,
(iii) The Fund(s) for the Separate Account;
(b) The number of any Fund(s) record units;
(c) The Fund(s) record unit value(s);
(d) The amount available for withdrawal; and
(e) The Loan Account value.
This information will be as of a date no more than
sixty (60) days before the date of the notice.
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<PAGE>
3.10 MANNER AND TIMING (a) A distribution to a Participant may be made
OF DISTRIBUTIONS: in a lump sum, as one of the Distribution
Options described in Section IV, or as one of
the Annuity options in Section V. The
Participant may elect the form of
distribution subject to certification in
writing by the Contract Holder that the
Participant is eligible both as to the timing
and form of distribution.
(b) The distribution of benefits must begin by
April 1 of the calendar year following the
calendar year in which the Participant
attains age 70 1/2 or retires, whichever
occurs later.
(c) If 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 or for any adverse
tax or other consequences that may result.
3.11 WITHDRAWAL: (a) The Participant may withdraw any portion or
all of an Individual Account Adjusted
Current Value and transfer such amount
to another investment provider under the
Plan. The withdrawal and transfer
request must be submitted in writing to
Aetna.
(b) Except as described in Section 3.12, unless
the Participant specifies otherwise, partial
withdrawals are satisfied by withdrawing
amounts on a pro rata basis from each of the
investment options in which the Individual
Account is invested.
(c) When amounts are withdrawn from the GA
Account, amounts in Short-Term and Long-Term
Classifications are treated as separate
investment options and amounts are taken on a
pro rata basis. Within a Classification,
amounts will be withdrawn starting with the
Term still in effect with the oldest Deposit
Period.
(d) Any amount withdrawn from the Fixed Plus
Account will be subject to the limitations in
3.12, 3.13 and 3.14.
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<PAGE>
3.12 PARTIAL WITHDRAWAL The amount eligible for partial withdrawal is
FROM THE FIXED PLUS 20% of the Current Value of the amount
ACCOUNT: held in the Fixed Plus Account on the day
Aetna's Home Office receives a written
request, reduced by any previous Transfer,
partial withdrawal or amounts taken as a
loan or used to purchase Annuity benefits
during the prior 12 months. Aetna reserves
the right to include amounts paid under ECO
and SWO for purposes of applying this 20%
limit. However, SWO is unavailable if a
Fixed Plus Account Transfer or withdrawal
is requested within the current 12 month
period.
The 20% limit applicable to partial
withdrawals from the Fixed Plus Account will
be waived under certain conditions and will
apply when the partial withdrawal is made on
a pro rata basis from all options used under
the Participant's Individual Account. (See
Contract Schedule I).
3.13 PAYMENT OF FIXED When Aetna receives a full withdrawal
PLUS ACCOUNT FULL request, no additional partial
WITHDRAWAL: withdrawals or Transfers from the Fixed Plus
Account are permitted during the payout
period. If a full withdrawal is requested,
Aetna will pay any Current Value from the
Fixed Plus Account in five payments as
follows:
(a) One-fifth of the Current Value on the
day the request is received in good
order at Aetna's Home Office, reduced by
any amount from the Fixed Plus Account
that was transferred, withdrawn or used
for a loan or to purchase Annuity
benefits during the prior 12 months;
(b) One-fourth of the remaining Current
Value 12 monthslater;
(c) One-third of the remaining Current Value
12 months later;
(d) One-half of the remaining Current Value
12 months later; and
(e) The balance of the Current Value 12
months later.
The Fixed Plus Account full withdrawal
payment provision will be waived when a
withdrawal is:
(a) Due to the Participant's death before
Annuity benefit payments begin;
(b) Used to purchase Annuity benefits; or
(c) When the amount in the Fixed Plus
Account is $3,500 or less and no amount
has been withdrawn, transferred, taken
as a loan or used to purchase Annuity
benefits during the previous 12 months.
Any full withdrawal from the Fixed Plus
Account may be cancelled at any time before
the end of the payment period.
3.14 ALTERNATIVE PAYMENT As an alternative to 3.13, and as
OF FIXED PLUS ACCOUNT permitted under the terms of the Plan, the
FULL WITHDRAWAL: Participant may elect a lump sum payment.
The lump sum payment will be the Individual
Account's Current Value invested in the
Fixed Plus Account less a 3% charge
provided:
(i) the withdrawal is due to the
Participant's separation from service
with the employer;
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3.14 ALTERNATIVE PAYMENT (ii) the withdrawal request is received
FIXED PLUS OF ACCOUNT at Aetna's Home Office within 60
FULL WITHDRAWAL days of the date the Participant
(CONT'D): separates from service with the
employer; and
(iii) the Contract Holder certifies that
the Participant has separated from
service and is eligible to receive a
lump sum distribution.
3.15 PAYMENT OF MINIMUM If the Individual Accounts Current Value
CURRENT VALUE: is less than $3,500, and no Contributions
have been received for three (3) years,
Aetna may close the Account and pay the
Current Value to the Contract Holder in one
lump sum.
3.16 AMOUNT PAYABLE AT Aetna will pay any portion of the
DEATH (BEFORE ANNUITY Individual Account(s) Current Value,
PAYMENTS START): to the Beneficiary when:
(a) The Participant dies before Annuity
payments start; and
(b) The certified copy of the death
certificate is received by Aetna.
A guaranteed death benefit is available if
the Beneficiary requests either a lump sum
payment or an Annuity option within the first
6 months after the Participant's death.
For each Individual Account, the death
benefit is guaranteed to be the greater of:
(a) The Current Value of the Individual
Account plus aggregate positive MVA, as
applicable, on the date the notice of
death and the request for payment are
received in good order at Aetna's Home
Office; or
(b) The total of Net Contribution(s)
made to the Individual Account minus the
total of all partial withdrawals,
annuitizations made from the Individual
Account and any amount allocated from
the Individual Account to the Loan
Account.
If the payee of the death proceeds is the
Participant's 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 (1) year of
the Participant's death or be paid to the
payee within five (5) years of the
Participant's death (see Part V).
In no event may any payments to the
Beneficiary under an Annuity option extend
beyond:
(a) The life of the payee determined as
of the date payments are to commence; or
(b) Any certain period greater than the
payee's life expectancy as determined by
regulations under Code Section 401
(a)(9) as of the date payments are to
begin.
Amounts in the GA Account will be payable as
described in Section 3.06(d).
21
<PAGE>
3.17 REINSTATEMENT: All or a portion of the proceeds of a full
withdrawal of an Individual Account may be
reinvested within 30 days after the surrender
if allowed by law. Any Market Value
Adjustment deducted from GA Account
withdrawals will not be included in the
reinstatement. Amounts will be reinstated
among the Fixed Plus Account, GA Account, and
the Fund(s) in the same proportion as they
were at the time of withdrawal. Any amount
reinstated to the GA Account will be credited
to the current Deposit Period. 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.
Any Individual Account(s) closed because the
Current Value was less than $3,500 may not be
reinstated (see 3.15).
Reinstatement is permitted only once per
Individual Account.
IV. NON-ANNUITY DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
4.01 DISTRIBUTION OPTIONS: The Participant or a surviving spouse may
elect one of the two following distribution
options. A surviving spouse is eligible to
elect one of these options provided the
spouse is the designated Beneficiary under
the Plan and the Participant had died before
electing an Annuity option and before the
date for required minimum distributions.
4.02 ESTATE CONSERVATION (a) With the Estate Conservation Option
OPTION: (ECO) a portion of the Individual
Account Current Value is automatically
surrendered and distributed each year.
Each payment will be withdrawn from the
Individual Account in the same
proportion as assets are held in the
Funds, the GA Account, and the Fixed
Plus Account on the date the payment
is made.
(b) Payments under ECO will comply with the
incidental death benefit test set forth
in Code Section 401(a)(9).
(c) Distribution Amount: 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 Individual
Account Current Value as of December 31
of the year prior to the payment year,
by a single or joint life expectancy
factor. If joint life expectancy is
elected, the Beneficiary under ECO must
be the same as the beneficiary of any
death benefits under the Plan.
(d) Life Expectancy Factor: For the
Participant, the life expectancy factor
is either single life or joint life
expectancy as elected by the
Participant, based on tables in IRS
regulations. For a spouse Beneficiary,
only a single life expectancy is
available. Life expectancy factors will
be recalculated each year, unless
prohibited by the Code or regulations.
22
<PAGE>
4.02 ESTATE CONSERVATION If joint life expectancy is elected
OPTION (CONT'D): and the Participant or spouse
dies, payments will be based on the
survivor's life expectancy. If the
Beneficiary is not the spouse and the
Beneficiary dies first, the joint life
expectancy continues to be used to
determine payments.
If a single life expectancy is elected,
at the death of the Participant (or the
spousewho is the designated Beneficiary
electing ECO after the Participant's
death), the entire value must be
distributed no later than the December
31 of the year following the year of the
Participant's (or spouse's) death. If a
joint life expectancy is elected, and
both the Participant and spouse have
died, any remaining Current Value must
be distributed no later than the
December 31 of the year following the
year of the second death. If a joint
life expectancy is elected and both the
Participant and non-spouse Beneficiary
have died, any remaining Current Value
will be distributed to a successor
Beneficiary or, if none has been named,
then to the estate of the last to die.
(e) 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 balance of the Individual
Account.
(f) Distribution Date: The Participant shall
specify an annual distribution date.
The earliest date is the first day of
the calendar year in which he or she
attains age 70 1/2, or retirement if
later. For a spouse Beneficiary
electing ECO after the Participant's
death, the earliest date is the date of
the Participant's death. The first
distribution date may be the 15th of any
month, or such other date Aetna may
designate or allow. Subsequent
distributions will be made on the
anniversary of that date.
(g) Election and Revocation: The
Participant may elect ECO by submitting
a completed and signed election form to
Aetna's Home Office. The Contract
Holder must certify that the Participant
is eligible both as to the timing and
form of distribution. Once ECO is
elected, the Participant may revoke it
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 per Individual
Account.
4.03 SYSTEMATIC WITHDRAWAL (a) With the Systematic Withdrawal
OPTION: Option (SWO) a portion of the
Individual Account Current Value is
automatically distributed each year. A
SWO payment will be calculated on the
Individual Account's Current Value.
Each payment will be withdrawn from the
Individual Account in the same
proportion as assets are held in the
Funds, the GA Account, and the Fixed
Plus Account on the date the payment is
made.
23
<PAGE>
4.03 SYSTEMATIC WITHDRAWAL (b) Payments under SWO will comply with
OPTION (CONT'D): the incidental death benefit test set
forth in Code Section 401(a)(9).
(c) Distribution Amounts: The Participant
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. If joint life
expectancy is elected, the Beneficiary
under SWO must be the same as the
beneficiary of any death benefits under
the Plan.
(1) Specified Payment: Payments of a
designated annual dollar amount. The
annual amount may not be greater than
the percentage of the Current Value at
time of election as shown on Contract
Schedule I. This amount will remain
constant unless a higher amount is
required under Code minimum distribution
rules.
Each year that the Specified Payment is
in effect, Aetna will calculate the
minimum required distribution by
dividing the Individual Account 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 larger than the
Specified Payment.
(2) Specified Period: Payments are made
over a period of time. The number of
years selected may not be less than the
number of years shown on Contract
Schedule I, unless otherwise required by
Code minimum distribution rules. The
maximum specified period will be limited
by the life expectancy factor. The
amount paid each year is calculated by
dividing the Individual Account Current
Value as of December 31 of the prior
year by the number of payment years
remaining.
(3) Specified Percentage: The specified
percentage chosen cannot be greater than
the percentage shown on Contract
Schedule I. The Participant may change
the specified percentage elected every
six months. Each annual distribution is
determined by multiplying the Individual
Account Current Value by the percentage
chosen. The value to be used in this
calculation is the value on the December
31st prior to the year for which the
payment is being made. For payments
made more often than annually, the
annual payment result (calculated above)
is divided by the number of payments due
each year. Payments will be made each
year until the year the Participant
attains age 70 1/2.
(d) Life Expectancy Factor: The life expectancy
factor for the initial distribution year is
either single life or joint life expectancy
as elected by the Participant, based on
tables in IRS regulations. For a spouse
Beneficiary, only a single life expectancy is
available. With each subsequent year, the
life expectancy factor will be the life
expectancy factor for the initial
distribution year, reduced by one.
24
<PAGE>
4.03 SYSTEMATIC WITHDRAWAL If the joint life expectancy is elected
OPTION (CONT'D): and the Participant or the
Beneficiary dies on or after the required
beginning date for minimum distributions to
the Participant, the joint life expectancy
factor will continue to be reduced by one for
each distribution year. Payments will
continue unless the Contract Holder elects an
alternate payment mode on behalf of the
survivor. Any payment mode elected on behalf
of the Beneficiary must provide payments to
be made at least as rapidly as those made
prior to the Participant's death.
If the Participant dies before the required
beginning date for minimum distributions, SWO
payments will cease and the Beneficiary may
claim the death benefit in accordance with
the terms of the Contract. If the
Beneficiary is not the Participant's spouse,
the entire death benefit must be either
applied to an Annuity option within one (1)
year of the Participant's death, or be paid
within five (5) years of the Participant's
death. If the Beneficiary is the
Participant's spouse, the distribution is not
required to begin earlier than when the
Participant would have attained age 70 1/2.
If joint life expectancy is elected and the
Beneficiary dies before the required
beginning date for minimum distributions to
the Participant, payments to the Participant
will continue to be based on joint life
expectancy reduced by one for each
distribution year.
(e) 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 balance of
the Individual Account.
(f) Distribution Date: The Participant or spouse
Beneficiary shall specify the distribution
date. The earliest date is the first day of
the calendar year in which the Participant
attains age 59 1/2 or age 55, if separated
from service with the employer at or after
age 55. 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.
(g) Election and Revocation: The Participant may
elect SWO by submitting a completed and
signed election form to Aetna's Home Office.
Once SWO is elected, the Participant may
revoke it by submitting a written request to
Aetna's Home Office. Any revocation will
apply only to amounts not yet paid.
Generally, SWO may be elected only once,
however, if SWO is elected and then revoked
before the date distributions were required
to begin under Code Section 401(a)(9), SWO
may be elected on behalf of a spouse
Beneficiary after the death of the
Participant.
25
<PAGE>
V. ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
5.01 CHOICES: (a) The Participant may elect an Annuity option
by telling Aetna to pay all or any portion of
the Individual Account(s) Current Value
(minus any applicable premium tax if not
previously deducted) as a premium for an
Annuity under option 2, 3, or 4 (see 5.07).
A completed and signed election form must be
submitted to the Home Office. The form must
include Contract Holder certification that
the Participant is eligible for a
distribution under the terms of the Plan and
that the Annuity option chosen is permitted
under the terms of the Plan. Any election of
an Annuity option must comply with the
minimum distribution requirements of Code
Section 401(a)(9), including the incidental
death benefit rule, and the regulations
thereunder. This restriction does not apply
if option 4 is chosen and the second
Annuitant is the spouse of the Participant.
(b) Generally, the first Annuity payment must be
made by April 1 of the calendar year
following the year in which the Participant
turns age 70 1/2 or retires, if later.
(c) When an Annuity option is chosen the
Participant must designate whether the
Annuity will be Fixed or Variable and whether
the underlying investment will be:
(1) The General Account;
(2) One or more of the available Fund(s); or
(3) A combination of (1) and (2).
If a Fixed Annuity is chosen, the Annuity
purchase rate for the option chosen reflects
at least the Minimum Guaranteed Interest Rate
(See Contract Schedule II), but may reflect a
higher interest rate.
If a Variable Annuity is chosen, the initial
Annuity payment for the option chosen
reflects the assumed annual return rate
elected (See Contract Schedule II).
(d) Payments will be made on a monthly basis
unless the Participant requests otherwise.
(e) Once elected, an Annuity option may not be
revoked, except for option 2 when elected on
a variable basis.
5.02 TERMS OF ANNUITY (a) No choice of any Annuity option may
OPTIONS: be made if the first payment would be less
than $20 or if the total payments in a year
would be less than $100.
(b) If a Fixed Annuity under option 2, 3 or 4 is
elected and a larger Annuity payment would
result from applying the Adjusted Current
Value to a current Aetna single premium
immediate Annuity, Aetna will make the larger
payment.
26
<PAGE>
5.02 TERMS OF ANNUITY (c) For purposes of calculating the
OPTIONS (CONT'D): 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, 1992 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 rates for options 3 and 4 are
based on mortality from 1983 Table a.
(d) 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 risks charges (which may include
profit) and administrative charges if future
Variable Annuity Payments are to remain
level.
5.03 DEATH PROVISION: When an Annuitant dies under options 2 or 3, the
present value of any remaining guaranteed payments
will be paid in one sum to the Beneficiary or,
upon the election of the Beneficiary, any
remaining payments will continue to the
Beneficiary. If a Beneficiary dies while under
option 1 or while receiving Annuity payments, the
present value of any remaining payments will be
paid in one lump sum to the Beneficiary's estate.
The rate used to determine the present value for a
lump sum payment will be the rate used to
determine the first Annuity payment.
5.04 FUND ANNUITY The number of Fund(s) annuity units is based
UNITS: on 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 5.05) on the tenth Valuation
Period before the due date of the first payment to
determine the number of each Fund annuity units.
The number of each Fund annuity units remains
fixed. Each future payment is equal to the sum of
the products of each Fund annuity unit value
multiplied by the appropriate number of Units.
The Fund annuity unit value on the tenth Valuation
Period prior to the due date of the payment is
used.
27
<PAGE>
5.05 FUND ANNUITY For any Valuation Period, a Fund(s) annuity
UNIT VALUE: unit value is equal to:
(a) The value for the previous Period; multiplied
by
(b) The Annuity net return factor(s) (See 5.06)
for the Period; multiplied by
(c) A factor to reflect the assumed annual net
return rate. (See Contract Schedule II).
The dollar value of a Fund annuity unit values and
Annuity payments may go up or down due to
investment gain or loss.
Payments shall not be changed due to changes in
the mortality or expense results or administrative
charges.
5.06 FUND ANNUITY NET The Annuity net return factor(s) are
RETURN FACTOR: used to compute all Separate Account Annuity
payments for any Fund.
The Annuity net return factor(s) for each Fund is
equal to 1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund
held by the Separate Account at the end of a
Valuation Period; minus
(b) The value of the shares of the Fund held by
the Separate Account at the start of the
Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate
Account (if any); divided by
(d) The total value of the Fund(s) record units
and Fund(s) annuity units of the Separate
Account at the start of the Valuation Period;
minus
(e) A daily charge for Annuity mortality and
expense risks, which may include profit, (at
the annual rate as shown on Contract Schedule
II) 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.
5.07 ANNUITY OPTIONS: Option 1 -- Payments of Interest on Sum Left with
Aetna -- This Option may be used only by the
Beneficiary when the Participant 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 5.01). 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.
28
<PAGE>
5.07 ANNUITY OPTIONS If the Beneficiary is the Participant's surviving
(CONT'D): spouse, payment may be deferred to a date not
later than when the Participant would have
attained age 70 1/2.
If the Beneficiary is not a spouse, the entire sum
must either be applied to an Annuity option within
one year of the Participant's death or be paid
within five years of the Participant's death.
Option 2 -- Payments for a Stated Period of Time
-- An Annuity will be paid for the number of years
chosen (See Contract Schedule II).
If payments for this option are made under a
Variable Annuity, the present value of any
remaining payments may be withdrawn at any time.
Option 3 -- Life Income -- An Annuity will be paid
for the life of the Annuitant. Aetna may also
guarantee payments for 60, 120, 180, or 240 months
if so directed by the Participant.
Option 4 -- Life Income based upon the lives of
two Annuitants -- An Annuity will be paid during
the lives of the Annuitant and a second Annuitant.
Payments will continue until both Annuitants have
died. When this option is chosen, a choice of the
following must be made:
(a) 100% of the payment to continue after the
first death;
(b) 66 2/3% of the payment to continue after the
first death;
(c) 50% of the payment to continue after the
first death;
(d) Payments for a minimum of 120 months, with
50% of the payment to continue after the
first death; or
(e) 100% of the payment to continue at the death
of the second Annuitant and 50% of the
payment to continue at the death of the
Annuitant.
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 Fixed Annuity with Guaranteed Interest Rate of 3.0%
- --------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
3 3.00% $28.99 $86.76 $172.88 $343.23
4 3.00% 22.06 66.02 131.56 261.19
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- --------------------------------------------------------------------------------
30
<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%
- --------------------------------------------------------------------------------
MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
3 $29.19 $87.33 $173.91 $344.86
4 22.27 66.61 132.65 263.04
5 18.12 54.19 107.92 213.99
6 15.35 45.92 91.44 181.32
7 13.38 40.01 79.69 158.01
8 11.90 35.59 70.88 140.56
9 10.75 32.16 64.05 127.00
10 9.83 29.42 58.59 116.18
11 9.09 27.18 54.13 107.34
12 8.46 25.32 50.42 99.98
13 7.94 23.75 47.29 93.78
14 7.49 22.40 44.62 88.47
15 7.10 21.24 42.31 83.89
16 6.76 20.23 40.29 79.89
17 6.47 19.34 38.51 76.37
18 6.20 18.55 36.94 73.25
19 5.97 17.85 35.54 70.47
20 5.75 17.22 34.28 67.98
21 5.56 16.65 33.15 65.74
22 5.39 16.13 32.13 63.70
23 5.24 15.66 31.19 61.85
24 5.09 15.24 30.34 60.17
25 4.96 14.85 29.56 58.62
26 4.84 14.49 28.85 57.20
27 4.73 14.15 28.19 55.90
28 4.63 13.85 27.58 54.69
29 4.53 13.57 27.02 53.57
30 4.45 13.30 26.49 52.53
- --------------------------------------------------------------------------------
31
<PAGE>
OPTION 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%
- --------------------------------------------------------------------------------
MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS PAYMENT PAYMENT PAYMENT PAYMENT
- --------------------------------------------------------------------------------
3 $29.80 $89.04 $176.99 $349.72
4 22.89 68.38 135.93 268.58
5 18.74 56.00 111.33 219.98
6 15.99 47.77 94.96 187.64
7 14.02 41.90 83.30 164.59
8 12.56 37.52 74.58 147.35
9 11.42 34.11 67.81 133.99
10 10.51 31.40 62.42 123.34
11 9.77 29.19 58.03 114.66
12 9.16 27.36 54.38 107.45
13 8.64 25.81 51.31 101.39
14 8.20 24.50 48.69 96.21
15 7.82 23.36 46.44 91.75
16 7.49 22.37 44.47 87.88
17 7.20 21.51 42.75 84.48
18 6.94 20.74 41.23 81.47
19 6.71 20.06 39.88 78.80
20 6.51 19.46 38.68 76.42
21 6.33 18.91 37.59 74.28
22 6.17 18.42 36.62 72.35
23 6.02 17.98 35.73 70.61
24 5.88 17.57 34.93 69.02
25 5.76 17.20 34.20 67.57
26 5.65 16.87 33.53 66.25
27 5.54 16.56 32.92 65.04
28 5.45 16.28 32.35 63.93
29 5.36 16.01 31.83 62.90
30 5.28 15.77 31.35 61.95
- --------------------------------------------------------------------------------
32
<PAGE>
OPTION 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
- --------------------------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93
51 4.12 4.11 4.09 4.05 3.99
52 4.19 4.19 4.16 4.11 4.04
53 4.27 4.26 4.23 4.18 4.10
54 4.35 4.34 4.31 4.25 4.16
55 4.44 4.42 4.39 4.32 4.22
56 4.53 4.51 4.47 4.40 4.29
57 4.62 4.61 4.56 4.48 4.35
58 4.72 4.71 4.65 4.56 4.42
59 4.83 4.81 4.75 4.64 4.49
60 4.95 4.93 4.86 4.73 4.55
61 5.07 5.05 4.97 4.83 4.62
62 5.20 5.17 5.08 4.92 4.69
63 5.34 5.31 5.20 5.02 4.76
64 5.49 5.45 5.33 5.12 4.83
65 5.65 5.61 5.47 5.22 4.89
66 5.82 5.77 5.61 5.33 4.96
67 6.01 5.94 5.75 5.44 5.02
68 6.20 6.13 5.91 5.54 5.08
69 6.41 6.33 6.07 5.65 5.14
70 6.64 6.54 6.23 5.76 5.19
71 6.88 6.76 6.41 5.86 5.24
72 7.14 7.00 6.59 5.97 5.28
73 7.43 7.26 6.77 6.06 5.32
74 7.73 7.53 6.96 6.16 5.35
75 8.06 7.82 7.14 6.25 5.38
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
33
<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
- --------------------------------------------------------------------------------
ADJUSTED
AGE OF
ANNUITANT NONE 60 120 180 240
- --------------------------------------------------------------------------------
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
34
<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
- --------------------------------------------------------------------------------
ADJUSTED
AGE OF
ANNUITANT NONE 60 120 180 240
- --------------------------------------------------------------------------------
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 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
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
35
<PAGE>
OPTION 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
- --------------------------------------------------------------------------------
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 4.06 4.47 4.71 4.06 4.20
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 4.49 5.01 5.32 4.48 4.64
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 5.07 5.75 6.17 5.05 5.26
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 5.89 6.82 7.40 5.81 6.12
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 7.07 8.34 9.16 6.78 7.36
- --------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
36
<PAGE>
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%
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.
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
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- --------------------------------------------------------------------------------
ADJUSTED AGES
- ------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4a OPTION 4b OPTION 4c OPTION 4d OPTION 4e
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.
38
<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. 3 to the Registration
Statement on Form N-4
File Nos. 33-91846 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. 3 to the Registration Statement on Form N-4
(File No. 33-91846) 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
<TABLE> <S> <C>
<PAGE>
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<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
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