As filed with the Securities and Exchange Registration No. 333-01107
Commission on February 26, 1997 Registration No. 811-2513
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
Post-Effective Amendment No. 4 To
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Variable Annuity Account C of Aetna Life Insurance and Annuity Company
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code: (860) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] 60 days after filing pursuant to paragraph (a)(2) of Rule 485
[X] on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Registrant expects to file a Rule 24f-2 Notice for the fiscal year ended
December 31, 1996 on or before February 28, 1997.
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CROSS REFERENCE SHEET
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION
1 Cover Page....................... Cover Page
2 Definitions...................... Definitions
3 Synopsis......................... Prospectus Summary; Fee Table
4 Condensed Financial
Information...................... Condensed Financial Information;
Appendix VII - 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 Fees During
the Accumulation Period
7 General Description
of Variable Annuity
Contracts........................ Purchase; Miscellaneous
8 Annuity Period................... Annuity Period
9 Death Benefit.................... Death Benefit
10 Purchases and Contract Value..... Purchase; Determining Individual
Account Current Value
11 Redemptions...................... Contract Rights; Additional
Withdrawal Options
12 Taxes............................ Tax Status
13 Legal Proceedings................ Miscellaneous - Legal Proceedings
and Legal Matters
14 Table of Contents of the
Statement of Additional
Information...................... Statement of Additional
Information - Table of Contents
<PAGE>
FORM N-4 PART B (STATEMENT OF
ITEM NO. ADDITIONAL INFORMATION) LOCATION
15 Cover Page....................... Cover page
16 Table of Contents................ Table of Contents
17 General Information
and History...................... General Information and History
18 Services......................... General Information and History;
Independent Auditors
19 Purchase of Securities
Being Offered.................... Offering and Purchase of Contracts
20 Underwriters..................... Offering and Purchase of Contracts
21 Calculation of
Performance Data................. Performance Data; General; Average
Annual Total Return Quotations
22 Annuity Payments................. Annuity Payments
23 Financial Statements............. Financial Statements of the
Separate Account; Financial
Statements of Aetna Life Insurance
and Annuity Company
Part C (Other Information)
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
The Contracts offered in connection with this Prospectus are the Retirement Plus
and Voluntary Contracts, which are group deferred variable annuity contracts
(the "Contracts") issued by Aetna Life Insurance and Annuity Company
("Company"). See "Purchase." The Contracts are designed to fund plans that
provide for retirement income and are established under the Internal Revenue
Code of 1986, as amended ("Code"). Amounts held under a Contract may be entitled
to tax-deferred treatment under certain sections of the Code.
Each Contract allows values to accumulate under variable investment options or
credited interest options, or a combination of these investment options. They
also provide for the payment of annuity benefits on a variable or fixed basis,
or a combination thereof.
The variable investment options ("Funds") currently available through Variable
Annuity Account C (the "Separate Account") under the Contracts described in this
Prospectus are as follows:
(bullet) Aetna Variable Fund
(bullet) Aetna Income Shares
(bullet) Aetna Variable Encore Fund
(bullet) Aetna Investment Advisers Fund, Inc.
(bullet) Aetna Ascent Variable Portfolio
(bullet) Aetna Crossroads Variable Portfolio
(bullet) Aetna Legacy Variable Portfolio
(bullet) Aetna Variable Capital Appreciation Portfolio
(bullet) Aetna Variable Growth Portfolio
(bullet) Aetna Variable Index Plus Portfolio
(bullet) Aetna Variable Small Company Portfolio
(bullet) Alger American Growth Portfolio
(bullet) Alger American Small Cap Portfolio
(bullet) American Century VP Capital Appreciation
(formerly known as TCI Growth)
(bullet) Calvert Responsibly Invested Balanced Portfolio
(bullet) Fidelity VIP II Contrafund Portfolio
(bullet) Fidelity VIP Equity-Income Portfolio
(bullet) Fidelity VIP Growth Portfolio
(bullet) Fidelity VIP Overseas Portfolio
(bullet) Franklin Government Securities Trust
(bullet) Janus Aspen Aggressive Growth Portfolio
(bullet) Janus Aspen Balanced Portfolio
(bullet) Janus Aspen Flexible Income Portfolio
(bullet) Janus Aspen Growth Portfolio
(bullet) Janus Aspen Short-Term Bond Portfolio
(bullet) Janus Aspen Worldwide Growth Portfolio
(bullet) Lexington Natural Resources Trust
(bullet) Neuberger & Berman Growth Portfolio
(bullet) Scudder International Portfolio Class A Shares
The credited interest options available for the accumulation of values are
the Guaranteed Accumulation Account, the Fixed Plus Account and the Fixed
Account. The Guaranteed Accumulation Account and the Fixed Plus Account are
offered only in those jurisdictions in which they are approved. (See
Appendices I, II and III.) The Fixed Account is available for accumulation
only in limited circumstances. (See Appendix IV.) Except as specifically
mentioned, this Prospectus describes only the variable investment options of
the Contracts. Additional information about the Guaranteed Accumulation
Account is also contained in an accompanying prospectus.
The availability of the above Funds and credited interest options is subject
to applicable regulatory authorization. Not all Funds or credited interest
options are available in all jurisdictions, under all Plans or under a
particular Contract. Please check with your employer to determine option
availability.
This Prospectus sets forth concisely the information about the Separate
Account that a prospective investor should know before investing. Additional
information about the Separate Account is contained in a Statement of
Additional Information ("SAI") dated May 1, 1997, which has been filed with
the Securities and Exchange Commission and is incorporated herein by
reference. The Table of Contents for the SAI is printed in this Prospectus.
An SAI may be obtained without charge by indicating the request on the
enrollment form or on the enclosed prospectus receipt for this Prospectus or
by calling 1-800-525-4225.
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.
NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERS CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
===========================================================================================
<S> <C>
DEFINITIONS .......................................................... DEFINITIONS - 1
PROSPECTUS SUMMARY ................................................... SUMMARY - 1
FEE TABLE ............................................................ FEE TABLE - 1
CONDENSED FINANCIAL INFORMATION ..................................................... 1
PERFORMANCE DATA .................................................................... 1
THE COMPANY ......................................................................... 2
VARIABLE ANNUITY ACCOUNT C .......................................................... 2
THE FUNDS ........................................................................... 2
Fund Investment Advisers .......................................................... 4
Mixed and Shared Funding .......................................................... 5
Fund Changes ...................................................................... 5
Fund Limitations .................................................................. 5
PURCHASE ............................................................................ 5
The Contracts ..................................................................... 5
Eligible Contract Holders ......................................................... 5
Purchase By Exchange .............................................................. 5
Contract Charges and Fees Options ................................................. 5
Responsibilities of Contract Holders .............................................. 5
Enrollment of Participants ........................................................ 6
Contributions ..................................................................... 6
Contribution Limits For Contracts Used with 403(b) Plans ........................ 6
Contribution Limits for Contracts Used with 401(a)/401(k) Plans ................. 6
Distribution ...................................................................... 6
DETERMINING INDIVIDUAL ACCOUNT CURRENT VALUE ........................................ 7
Fund Record Units ................................................................. 7
Net Return Factor ................................................................. 7
Transfer Credits .................................................................. 8
CONTRACT RIGHTS ..................................................................... 8
Right to Cancel ................................................................... 8
Rights Under the Contracts ........................................................ 8
Rights Under the Retirement Plus Contract ....................................... 8
Rights Under the Voluntary Contract ............................................. 8
Rights to your Individual Account ............................................... 8
TRANSFERS AND ALLOCATION CHANGES .................................................... 9
WITHDRAWALS ......................................................................... 9
Withdrawal Restrictions for Contracts Used with 403(b) Plans ...................... 10
Reinvestment Privilege ............................................................ 10
CONTRACT LOANS ...................................................................... 10
CHARGES AND FEES DURING THE ACCUMULATION PERIOD ..................................... 11
Annual Maintenance Fee ............................................................ 13
Withdrawal Fee .................................................................... 13
Mortality and Expense Risk Charges ................................................ 14
<PAGE>
Administrative Expense Charge ..................................................... 14
Fund Expenses ..................................................................... 14
Premium and Other Taxes ........................................................... 14
CHARGES AND FEES DURING THE ANNUITY PERIOD .......................................... 14
Mortality and Expense Risk Charges ................................................ 14
Administrative Expense Charge ..................................................... 14
Withdrawal Fee .................................................................... 14
ADDITIONAL WITHDRAWAL OPTIONS ....................................................... 15
ANNUITY PERIOD ...................................................................... 15
Annuity Period Elections .......................................................... 15
Annuity Options ................................................................... 16
DEATH BENEFIT ....................................................................... 17
Accumulation Period ............................................................... 17
Annuity Period .................................................................... 18
TAX STATUS .......................................................................... 18
Introduction ...................................................................... 18
Taxation of the Company ........................................................... 19
Tax Status of the Contracts ....................................................... 19
Contracts Used with 403(b) Plans .................................................. 19
Contracts Used With "Qualified" Plans ............................................. 20
Penalty Tax on Certain Distributions .............................................. 21
Other Tax Consequences ............................................................ 21
MISCELLANEOUS ....................................................................... 21
Voting Rights ..................................................................... 21
Modification of the Contracts ..................................................... 22
Contract Holder Inquiries ......................................................... 22
Telephone Transfers ............................................................... 22
Payments .......................................................................... 22
Transfer of Ownership; Assignment ................................................. 22
Legal Proceedings ................................................................. 22
Legal Matters ..................................................................... 22
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ................................. 23
APPENDIX I--GUARANTEED ACCUMULATION ACCOUNT ......................................... 24
APPENDIX II--FIXED PLUS ACCOUNT ..................................................... 25
APPENDIX III--FIXED PLUS ACCOUNT (Applicable Only In Limited Circumstances) ......... 28
APPENDIX IV--FIXED ACCOUNT (Applicable Only In Limited Circumstances) ............... 30
APPENDIX V--EMPLOYEE APPOINTMENT OF EMPLOYER AS AGENT UNDER AN
ANNUITY CONTRACT .................................................................. 30
APPENDIX VI--CONTRACTS ACQUIRED BY EXCHANGE ......................................... 31
APPENDIX VII--CONDENSED FINANCIAL INFORMATION ....................................... 35
</TABLE>
<PAGE>
DEFINITIONS
As used in this Prospectus, the following terms have the meanings shown:
Accumulation Period: The period during which Net Contribution(s) are applied
to an Individual Account.
Adjusted Current Value: The Current Value of an Individual Account plus or
minus any applicable aggregate GA Account Market Value Adjustment, if
applicable.
Aggregate Current Value: Current Value of Individual Accounts under a
Contract and other contracts of the same class as the Contract covering
employees of the employer maintaining the Plan. Where such other contract
becomes effective after the date a Contract became effective, the aggregation
will commence in accordance with the Company's existing administrative
practice, but in no event later than the first day of the next succeeding
anniversary date. Where such other contract is in existence prior to, or on
the date a Contract became effective, the aggregation will commence on the
date the Contract becomes effective.
Annuitant: A person on whose life an Annuity payment is based under a
Contract.
Annuity: Payments of income:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
Annuity Period: The period during which Annuity payments are made.
Annuity Unit: A measure of the value attributable to each Fund selected
during the Annuity Period.
Beneficiary: The person named to receive any benefits which remain under a
Contract after a Participant's death. Participants designate a Plan
beneficiary for their Individual Accounts.
Code: Internal Revenue Code of 1986, as amended.
Company: Aetna Life Insurance and Annuity Company, sometimes referred to as
"we" or "us."
Contract(s): Either the Retirement Plus Contract or the Voluntary Contract
offered by this Prospectus or both.
Contract Holder: The entity to which a Contract is issued. The Contract
Holder is usually the employer.
Contribution: A payment received at the Company's Home Office and allocated
to a Contract.
Current Value: For an Individual Account during the Accumulation Period, the
Current Value is the total of:
(a) The amount, if any, in the Fixed Plus Account, with interest earned to
date; plus
(b) The amount, if any, in the GA Account with interest earned to date;
plus
(c) The amount, if any, in the Fixed Account with interest earned to date;
plus
(d) The value of all Fund Record Units, if any, as of the most recent
Valuation Period; less
(e) Any Maintenance Fee(s) due.
Distributor(s): The registered broker-dealer(s) which have entered into
selling agreements with the Company to offer and sell the Contracts. The
Company may also serve as a Distributor.
Employee Account: An Individual Account that will be credited with
Participant Contributions, specifically employee salary reduction
contributions.
Employer Account: An Individual Account that will be credited with the
employer Contributions.
ERISA: Employee Retirement Income Security Act of 1974.
- -------------------------------------------------------------------------------
DEFINITIONS - 1
<PAGE>
Fixed Account: An accumulation option with a guaranteed minimum interest rate
which is available for accumulation only in limited circumstances. See Appendix
IV.
Fixed Plus Account: An accumulation option with a guaranteed minimum interest
rate. The Company may credit a higher rate which is not guaranteed. See
Appendices II and III.
Fund Record Units: Units representing the portion of the Net Contribution(s)
applied to each Fund under the Separate Account.
Funds: The open-end registered management investment companies or separate
investment portfolio thereof, in which the Separate Account invests.
General Account: The account holding the assets of the Company, other than
those assets held in the Company's separate account(s).
Guaranteed Accumulation Account (GA Account or the GAA): An accumulation
option where the Company guarantees stipulated rate(s) of interest for a
specified period of time. See Appendix I. All General Account assets of the
Company are available to meet the guarantees for the GA Account.
Home Office: The Company's principal executive offices located at 151
Farmington Avenue, Hartford, Connecticut 06156.
Individual Account(s): Account(s) established for each Participant under each
Contract in which he or she may be participating to keep a record of Current
Values and transactions.
Maintenance Fee: A maintenance fee will be charged for each Participant under
each Contract and will be deducted during the Accumulation Period from the
sum under each Contract of the Current Value of Participant's Individual
Accounts and upon full surrender of the Participant's Individual Accounts.
Market Value Adjustment: An adjustment to the amount withdrawn or transferred
from the Guaranteed Accumulation Account 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. See Appendix I and
the prospectus for the Guaranteed Accumulation Account for a discussion of
how the market value adjustment is actually calculated.
Net Contributions: A Contribution less applicable premium taxes.
Participant: An eligible person participating in the Plan maintained by the
Contract Holder, for whom an Individual Account has been established by the
Contract Holder, referred to as "you."
Plan(s): The Plan named on the cover of a Contract established under Code
Section 403(b) or Sections 401(a)/401(k).
Retirement Plus Contract: The group deferred variable annuity contract
offered in connection with this Prospectus which allows for employer
Contributions and employee Contributions.
SEC: Securities and Exchange Commission.
Separate Account: Variable Annuity Account C, an account established by the
Company under Section 38a-433 of the Connecticut General Statutes, that buys
and holds shares of the Fund(s) available under a Contract.
Underwriter: The registered broker-dealer which contracts with other
registered broker-dealers on behalf of the Separate Account to offer and sell
the Contracts.
Valuation Period: The period of time from when the Company determines the
Accumulation Unit Value and Annuity Unit Value of a variable investment
option until the next time it determines such unit value. Currently, the
calculation occurs after the close of business of the New York Stock Exchange
on any normal business day, Monday through Friday, that the New York Stock
Exchange is open.
Valuation Reserve: A reserve established pursuant to the insurance laws of
Connecticut to measure voting rights during the Annuity Period and the value
of a commutation right available under the "Payments for a Specified Period"
nonlifetime Annuity option when elected on a variable basis under a Contract.
- -------------------------------------------------------------------------------
DEFINITIONS - 2
<PAGE>
Variable Annuity: An Annuity providing for the accumulation of
values and/or for Annuity payments which vary in dollar amount with
investment results.
Voluntary Contract: The group deferred variable annuity contract offered in
connection with this Prospectus which allows only for employee Contributions.
Withdrawal Fee: If all or any portion of an Individual Account's Current
Value is withdrawn during the Accumulation Period, a percentage of the amount
withdrawn may be deducted so that the Company may recover sales and
administrative related expenses.
- -------------------------------------------------------------------------------
DEFINITIONS - 3
<PAGE>
PROSPECTUS SUMMARY
Contracts Offered
The Contracts offered in connection with this Prospectus are group deferred,
variable annuity contracts. Under the Retirement Plus Contract, Contributions
may be made by the Contract Holder (generally, the employer) and the
Participants. Under the Voluntary Contract, Contributions may be made only by
Participants. See "The Contracts," "Contract Rights" and "Miscellaneous."
The Contracts are being offered in certain markets to fund Plans that are
adopted under Sections 401(a), 401(k) or 403(b) of the Code. Amounts held
under the Plans may be entitled to tax-deferred treatment under the Code.
Under the Plans, Contributions made under the Plan are forwarded by the
Contract Holder to the Company.
Purchase
Each Contract may be purchased by eligible organizations on behalf of a
group made up of their employees. Eligible employees may participate in a
Contract by completing an enrollment form (and any other required forms) and
submitting it to the Company with an initial Contribution. See "Purchase."
Withdrawals
Each Contract allows withdrawals of all or a portion of your Individual
Account Current Value during the Accumulation Period. Certain charges and fees
may be assessed upon withdrawal from either Contract. See "Charges and Fees
During the Accumulation Period." Limitations apply to withdrawals from the Fixed
Plus Account. See Appendices II and III. The Code restricts full and partial
withdrawals in certain circumstances. See "Withdrawal Restrictions For Contracts
Used with 403(b) Plans." Amounts withdrawn from the GAA may be subject to a
Market Value Adjustment. See Appendix I.
Withdrawal Fee
Amounts withdrawn from either Contract may be subject to a Withdrawal Fee.
The maximum Withdrawal Fee that could be assessed on a full or partial
withdrawal is 8.5% of the total Contributions made to the Individual Account of
a Contract. See "Charges and Fees During the Accumulation Period--Withdrawal
Fee."
Taxes and Withholding
A 10% federal tax penalty and a 20% withholding for income tax may be
imposed on certain withdrawals. See "Tax Status."
Contract Charges
Certain charges are associated with each Contract; for example, mortality
and expense risk charges, administrative expense charges and Maintenance Fees.
The Funds are also subject to certain fees and expenses. Contributions may also
be subject to premium taxes. See "Charges and Fees During the Accumulation
Period" for a complete explanation of these charges.
Free Look Period
Contract Holders have the right to cancel their Contract and Participants
have the right to cancel their participation in a Contract within 10 days (or
longer if required by state law). Unless state law requires otherwise, the
Company will return the full amount of Contributions increased or decreased by
the investment performance of the variable funding options to which
Contributions were deposited.
- -------------------------------------------------------------------------------
SUMMARY - 1
<PAGE>
FEE TABLE
The purpose of the Fee Table is to assist Contract Holders in understanding
the various costs and expenses that may be borne, directly or indirectly,
under each Contract. The costs and expenses will be based upon the charges
and fees option the Contract Holder selects. The information listed reflects
the charges due under each Contract, as well as the fees and expenses
deducted from the Funds. Additional information regarding the charges and
fees assessed under each Contract can be found under "Contract Charges and
Fees Options" and "Charges and Fees During the Accumulation Period" in this
Prospectus. Charges and expenses shown do not take into account premium taxes
that may be applicable. For more information regarding expenses paid out of
the assets of a particular Fund, see the Fund's Prospectus.
CONTRACT HOLDER TRANSACTION EXPENSES
WITHDRAWAL FEE for withdrawals under each Contract (as a percentage of
amount withdrawn)(1):
<TABLE>
<CAPTION>
Number of Years
Individual Account Has
Been Established Fee
- -------------------------------- -------
<S> <C>
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
10 or more 0%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ANNUAL MAINTENANCE FEE(2)
Per Participant, Per Contract ................................. $20.00
SEPARATE ACCOUNT ANNUAL EXPENSES
(Daily deductions, equal to the percentage shown on an annual
basis, made from amounts allocated to the variable options
under each Contract)
Mortality and Expense Risk Charge(3) ......................... 1.25%
Administrative Expense Charge(4) ............................. 0.25%
-------
Total Separate Account Annual Expenses ....................... 1.50%
========
</TABLE>
- ---------------
(1) This sets forth the Withdrawal Fee schedule for 10 years, the maximum
duration of the Withdrawal Fee. The total amount deducted for the
Withdrawal Fee will not exceed 8.5% of the Contributions made to an
Individual Account. See "Contract Charges and Fees Options" and "Charges
and Fees During the Accumulation Period--Withdrawal Fee" for instances in
which the Withdrawal Fee will only be charged for 5 years or not at all
and for a description of this charge.
(2) This represents the maximum annual Maintenance Fee that will be deducted
under a Contract. See "Contract Charges and Fees Options" and "Charges
and Fees During the Accumulation Period--Annual Maintenance Fee" for
instances in which this fee may be reduced and for a description of this
charge. A Maintenance Fee, to the extent permitted by state law, is also
deducted upon termination of an Individual Account.
(3) This represents the maximum mortality and expense risk charge that may be
deducted under a Contract. See "Contract Charges and Fees Options" and
"Charges and Fees During the Accumulation Period--Mortality and Expense
Risk Charges" for instances in which this fee may be reduced and for a
description of this charge.
(4) This represents the maximum annual administrative expense charge that
will be deducted under a Contract. See "Contract Charges and Fees
Options" and "Charges and Fees During the Accumulation
Period--Administrative Expense Charge" for instances in which this fee
may be reduced and for a description of this charge.
- -------------------------------------------------------------------------------
FEE TABLE - 1
<PAGE>
Fund Annual Expenses
(Except as noted, the following figures are a percentage of average net
assets and, except where otherwise indicated, are based on figures for the
year ended December 31, 1996.) A Fund's "Other Expenses" include operating
costs of the Fund. These expenses shown below are reflected in the Fund's net
asset value and are not deducted from the Individual Account Current Value
under the Contract.
<TABLE>
<CAPTION>
Investment
Advisory
Fees(1) Other Expenses
(after expense (after expense Total Fund
reimbursement) reimbursement) Annual Expenses
-------------- -------------- ----------------
<S> <C> <C> <C>
Aetna Variable Fund(2) 0.50% 0.06% 0.56%
Aetna Income Shares(2) 0.40% 0.08% 0.48%
Aetna Variable Encore Fund(2) 0.25% 0.10% 0.35%
Aetna Investment Advisers Fund, Inc(2) 0.50% 0.08% 0.58%
Aetna Ascent Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Crossroads Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Legacy Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Capital Appreciation Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Growth Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Index Plus Portfolio(2) 0.35% 0.15% 0.50%
Aetna Variable Small Company Portfolio(2) 0.75% 0.15% 0.90%
Alger American Growth Portfolio 0.75%
Alger American Small Cap Portfolio 0.85%
American Century VP Capital Appreciation(3) 1.00%
Calvert Responsibly Invested Balanced Portfolio(4) 0.70%
Fidelity VIP II Contrafund Portfolio(5) 0.61%
Fidelity VIP Equity-Income Portfolio 0.51%
Fidelity VIP Growth Portfolio 0.61%
Fidelity VIP Overseas Portfolio 0.76%
Franklin Government Securities Trust(6) 0.63%
Janus Aspen Aggressive Growth Portfolio(7) 0.75%
Janus Aspen Balanced Portfolio(7) 0.82%
Janus Aspen Flexible Income Portfolio 0.65%
Janus Aspen Growth Portfolio(7) 0.65%
Janus Aspen Short-Term Bond Portfolio(7) 0.00%
Janus Aspen Worldwide Growth Portfolio(2) 0.68%
Lexington Natural Resources Trust 1.00%
Neuberger & Berman Growth Portfolio(2) 0.84%
Scudder International Portfolio Class A Shares 0.88%
</TABLE>
(1) Certain of the unaffiliated Fund advisers reimburse the Company for
administrative costs incurred in connection with administering the
Funds as variable funding options under the Contract. These
reimbursements are paid out of the investment advisory fees and are
not charged to investors.
(2) The Company provides administrative services to the Fund and assumes
the Fund's ordinary recurring direct costs under an Administrative
Services Agreement. The "Other Expenses" shown reflect the fee payable
under that Agreement.
(3) The 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.
(4) The management and Advisory Fees are subject to a performance
adjustment, which could cause the advisory fee to be as high as 0.85%
or as low as 0.55%, depending on performance. Total Fund Annual
Expenses after reductions for fees paid indirectly (relating to an
expense offset arrangement with the Portfolio's custodian) would be %.
(5) A portion of the brokerage commissions the Fund paid was used to
reduce its expenses. Without this reduction, total operating expenses
would have been % for the Contrafund Portfolio.
(6) 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 at
any time during 1996.
(7) The information for each Portfolio is net of fee waivers or reductions
from Janus Capital. Fee reductions for the Aggressive Growth,
Balanced, Growth, and Worldwide Growth Portfolios reduce the
management fee to the level of the corresponding Janus retail fund.
Other waivers, if applicable, are first applied against the management
fee and then against other expenses. Without such waivers or
reductions, the Management Fee, Other Expenses and Total Fund Annual
Expenses would have been %, %, and % for Aggressive Growth
Portfolio; %, %, % for Balanced Portfolio; %, % and %
for Growth Portfolio; %, % and % for Short-Term Bond Portfolio
and %, % and % for Worldwide Growth Portfolios; 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.
(8) Neuberger & Berman Advisers Management Trust (the "Trust") is divided
into portfolios ("Portfolios"), each of which invests all of its net
investable assets in a corresponding series ("Series") of Advisers
Managers Trust. Expenses in the table reflect expenses of the
Portfolio and include the Portfolio's pro rata portion of the
operating expenses of the Portfolios 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.)
- -------------------------------------------------------------------------------
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.
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B*
--------------------------------------- --------------------------------------
If you withdraw your entire Account If you do not withdraw your Account
Value at end of the periods shown, you Value, or if you annuitize at the end
would pay the following expenses, of the periods shown, you would pay
including any applicable deferred sales the following expenses (no deferred
charge: sale scharge is reflected):**
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
-------- -------- -------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund $ $ $ $ $ $ $ $
Aetna Income Shares $ $ $ $ $ $ $ $
Aetna Variable Encore
Fund $ $ $ $ $ $ $ $
Aetna Investment
Advisers Fund, Inc. $ $ $ $ $ $ $ $
Aetna Ascent Variable
Portfolio $ $ $ $ $ $ $ $
Aetna Crossroads
Variable Portfolio $ $ $ $ $ $ $ $
Aetna Legacy Variable
Portfolio $ $ $ $ $ $ $ $
Aetna Variable Capital
Appreciation Portfolio $ $ $ $ $ $ $ $
Aetna Variable Growth
Portfolio $ $ $ $ $ $ $ $
Aetna Variable Index
Plus Portfolio $ $ $ $ $ $ $ $
Aetna Variable Small
Company Portfolio $ $ $ $ $ $ $ $
Alger American Growth
Portfolio $ $ $ $ $ $ $ $
Alger American Small Cap
Portfolio $ $ $ $ $ $ $ $
American Century VP
Capital Appreciation $ $ $ $ $ $ $ $
Calvert Responsibly
Invested Balanced
Portfolio $ $ $ $ $ $ $ $
Fidelity VIP II
Contrafund Portfolio $ $ $ $ $ $ $ $
Fidelity VIP
Equity-Income
Portfolio $ $ $ $ $ $ $ $
Fidelity VIP Growth
Portfolio $ $ $ $ $ $ $ $
Fidelity VIP Overseas
Portfolio $ $ $ $ $ $ $ $
Franklin Government
Securities Trust $ $ $ $ $ $ $ $
Janus Aspen Aggressive
Growth Portfolio $ $ $ $ $ $ $ $
Janus Aspen Balanced
Portfolio $ $ $ $ $ $ $ $
Janus Aspen Flexible
Income Portfolio $ $ $ $ $ $ $ $
Janus Aspen Growth
Portfolio $ $ $ $ $ $ $ $
Janus Aspen Short-Term
Bond Portfolio $ $ $ $ $ $ $ $
Janus Aspen Worldwide
Growth Portfolio $ $ $ $ $ $ $ $
Lexington Natural
Resources Trust $ $ $ $ $ $ $ $
Neuberger & Berman
Growth Portfolio $ $ $ $ $ $ $ $
Scudder International
Portfolio Class A
Shares $ $ $ $ $ $ $ $
</TABLE>
* This hypothetical illustration assumes that (i) a withdrawal charge will be
applicable for a 10-year period, (ii) a transfer credit will apply, and (iii)
less than $500,000 in assets will be held by the Company. Accordingly, the
Individual Account is subject to a mortality and expense risk charge of
1.25%, an administrative expense charge of 0.25%, $15.00 annual Maintenance
Fee, as an annual charge of % of the estimated assets held in the
Separate Account under the Contracts, and a Withdrawal Fee for 10 years. See
"Charges and Fees During the Accumulation Period."
** This Example would not apply if the Annuity Option of Payments for a
Specified Period of Time is selected, and a lump sum settlement is requested
before five years of payments have been made, since the lump sum payment will
be treated as a withdrawal during the Accumulation Period and will be subject
to any deferred sales charge that would apply. (Refer to Example A.)
- -------------------------------------------------------------------------------
FEE TABLE - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION
Condensed Financial Information for the Separate Account is shown in
Appendix VII.
PERFORMANCE DATA
From time to time, the Company may advertise different types of historical
performance for the variable funding options of the Separate Account
available under the Contracts described in this Prospectus. The Company may
advertise the "standardized average annual total returns" of the variable
funding options, calculated in a manner prescribed by the SEC, as well as the
"non-standardized return." Both methods are described below. Further
information is contained in the SAI.
"Standardized average annual total returns" are computed according to a
formula in which a hypothetical investment of $1,000 is applied to the
variable investment options under the Contracts and then related to the
ending redeemable values over the most recent one, five and ten-year periods
(or since inception if less than 10 years). Standardized returns will reflect
the deduction of all recurring charges during each period based either on the
fee schedule under the Contract that generates the lowest return, or based on
an actual fee schedule applicable to a particular Contract Holder, if
different.
"Non-standardized returns" will be calculated in a similar manner, except
that non-standardized figures will not reflect the deduction of any
applicable Withdrawal Fee (which would decrease the level of performance
shown if reflected in these calculations). The non-standardized figures may
also include monthly, quarterly, year-to-date and three-year periods.
The Company may also advertise certain ratings, rankings or other
information related to the Company, the variable investment options or the
Funds. Further details regarding performance reporting and advertising are
described in the Statement of Additional Information.
- -------------------------------------------------------------------------------
1
<PAGE>
THE COMPANY
Aetna Life Insurance and Annuity Company (the "Company") is the issuer of
the Contract, and as such, it is responsible for providing the insurance and
annuity benefits under the Contract. The Company is a stock life insurance
company organized under the insurance laws of the State of Connecticut in
1976. Through a merger, it succeeded to the business of Aetna Variable
Annuity Life Insurance Company (formerly Participating Annuity Life Insurance
Company, an Arkansas life insurance company organized in 1954). The Company
is engaged in the business of issuing life insurance policies and variable
annuity contracts in all states of the United States. The Company's principal
executive offices are located at 151 Farmington Avenue, Hartford, Connecticut
06156.
The Company is a wholly owned subsidiary of Aetna Retirement Holdings,
Inc. which is in turn a wholly owned subsidiary of Aetna Retirement Services,
Inc. and an indirect wholly owned subsidiary of Aetna Inc.
VARIABLE ANNUITY ACCOUNT C
Variable Annuity Account C is a separate account established by the
Company in 1976 pursuant to the insurance laws of the State of Connecticut.
The Separate Account was formed for the purpose of segregating assets
attributable to the variable portions of the Contracts from other assets of
the Company. The Separate Account is registered as a unit investment trust
under the Investment Company Act of 1940, and meets the definition of
"separate account" under federal securities laws.
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 the Company may conduct. Income, gains or losses of the Separate
Account are credited to or charged against the assets of the Separate Account
without regard to other income, gains or losses of the Company. All
obligations arising under the Contracts are general corporate obligations of
the Company.
THE FUNDS
The Contract Holder will designate some or all of the mutual funds
described below as variable funding options under the Contracts. Except where
noted, all of the Funds are diversified as defined in the Investment Company
Act of 1940.
The Contract Holder may decide to offer only a select number of Funds
under its Plan. The availability of Funds may also be subject to applicable
regulatory authorization. Not all Funds may be available in all
jurisdictions, under all Contracts or in all Plans.
(bullet) Aetna Variable Fund seeks to maximize total return through
investments in a diversified portfolio of common stocks and
securities convertible into common stock.(1)
(bullet) Aetna Income Shares seeks to maximize total return, consistent with
reasonable risk, through investments in a diversified portfolio
consisting primarily of debt securities.(1)
(bullet) Aetna Variable Encore Fund seeks to provide high current return,
consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments. An investment
in the Fund is neither insured nor guaranteed by the U.S.
Government.(1)
(bullet) Aetna Investment Advisers Fund, Inc., is a managed fund which seeks
to maximize investment return consistent with reasonable safety of
principal by investing in one or more of the following asset
classes: stocks, bonds and cash equivalents based on the Company's
judgment of which of those sectors or mix thereof offers the best
investment prospects.(1)
(bullet) Aetna Generation Portfolios, Inc.--Aetna Ascent Variable Portfolio
seeks to provide capital appreciation by allocating its investments
among equities and fixed income securities. The Portfolio is managed
for investors who generally have an investment horizon exceeding 15
years, and who have a high level of risk tolerance. See the Fund's
prospectus for a description of the risks involved.(1)
(bullet) Aetna Generation Portfolios, Inc.--Aetna Crossroads Variable
Portfolio seeks to provide total return (i.e., income and capital
appreciation, both realized and unrealized) by allocating its
investments among equities
- -------------------------------------------------------------------------------
2
<PAGE>
and fixed income securities. The Portfolio is managed for investors
who generally have an investment horizon exceeding 10 years and who
have a moderate level of risk tolerance.(1)
(bullet) Aetna Generation Portfolios, Inc.--Aetna Legacy Variable Portfolio
seeks to provide total return consistent with preservation of
capital by allocating its investments among equities and fixed
income securities. The Portfolio is managed for investors who
generally have an investment horizon exceeding five years and who
have a low level of risk tolerance.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Capital Appreciation
Portfolio seeks growth of capital primarily through investment in a
diversified portfolio of common stocks and securities convertible
into common stock. The Portfolio will use a value-oriented approach
in an attempt to outperform the total return performance of publicly
traded common stocks represented by the S&P 500 Composite Stock
Price Index ("S&P 500"), a broad based stock market index composed
of 500 common stocks selected by the Standard & Poor's Corporation.
The Portfolio uses the S&P 500 as a comparative benchmark because it
represents approximately two-thirds of the total market value of all
U.S. common stocks, and is well known to investors.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Growth Portfolio
seeks growth and capital through investment in a diversified
portfolio of common stocks and securities convertible into common
stocks believed to offer growth potential.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Index Plus Portfolio
seeks to outperform the total return performance of publicly traded
common stocks represented by the S&P 500.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Small Company
Portfolio seeks growth of capital primarily through investment in a
diversified portfolio of common stocks and securities convertible
into common stocks of companies with smaller market capitalizations.
Companies with smaller market capitalizations generally will have
market capitalization at the time of purchase of $1 billion or
less.(1)
(bullet) Alger American Fund--Alger American Growth Portfolio seeks long-term
capital appreciation by investing in a diversified, actively managed
portfolio of equity securities. The Portfolio primarily invests in
equity securities of companies which have a market capitalization of
$1 billion or greater.(2)
(bullet) Alger American Fund--Alger American Small Capitalization Portfolio
seeks long-term capital appreciation. Except during temporary
defensive periods, the Portfolio invests at least 65% of its total
assets in equity securities of companies that, at the time of
purchase of the securities, have total market capitalization within
the range of companies included in the Russell 2000 Growth Index,
updated quarterly. The Russell 2000 Growth Index is designed to
track the performance of small capitalization companies. At _______
, ____ the range of market capitalization of these companies was $__
million to $___ billion.(2)
(bullet) American Century Variable Portfolios, Inc.--American Century VP
Capital Appreciation (formerly known as TCI Growth) seeks capital
growth. The Fund seeks to achieve its objective by investing in
common stocks (including securities convertible into common stocks)
and other securities that meet certain fundamental and technical
standards of selection and, in the opinion of the Fund's investment
manager, have better than average potential for appreciation.(3)
(bullet) 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.(4)
(bullet) Fidelity Investments' Variable Insurance Products Fund
II--Contrafund Portfolio seeks maximum total return over the long
term by investing mainly in equity securities of companies that are
undervalued or out-of-favor.(5)
(bullet) Fidelity Investments' Variable Insurance Products
Fund--Equity-Income Portfolio seeks reasonable income by investing
primarily in income-producing equity securities. In selecting
investments, the Fund also considers the potential for capital
appreciation.(5)
(bullet) Fidelity Investments' Variable Insurance Products Fund--Growth
Portfolio seeks capital appreciation by investing mainly in common
stocks, although its investments are not restricted to any one type
of security.(5)
(bullet) Fidelity Investments' Variable Insurance Products Fund--Overseas
Portfolio seeks long-term growth by investing in foreign securities
(at least 65% of the Fund's total assets in securities of issuers
from at least three countries outside of North America).(5)
- -------------------------------------------------------------------------------
3
<PAGE>
(bullet) Franklin Government Securities Trust seeks income through
investments in obligations of the U.S. Government or its agencies or
instrumentalities, primarily GNMA obligations.(6)
(bullet) 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 _______________ included companies with capitalizations between
approximately $ million and $ billion, but which is expected
to change on a
regular basis.(7)
(bullet) Janus Aspen Series--Balanced Portfolio seeks long-term capital
growth consistent with the preservation of capital and balanced by
current income. The Portfolio pursues its investment objective by
investing 40%-60% of its assets in equity securities selected
primarily for their growth potential and 40%-60% of its assets in
fixed-income securities selected primarily for their income
potential.(7)
(bullet) Janus Aspen Series--Flexible Income Portfolio seeks to obtain
maximum total return, consistent with preservation of capital. Total
return is expected to result from a combination of current income
and capital appreciation. The Portfolio invests in all types of
income producing securities and may have substantial holdings of
debt securities rated below investment grade (e.g. junk bonds). High
yield, high risks securities involve certain risks. See the Fund's
prospectus for a discussion of these risks.(7)
(bullet) Janus Aspen Series--Growth Portfolio seeks long-term growth of
capital consistent with the preservation of capital. The Portfolio
pursues its investment objective by investing primarily in companies
of any size.(7)
(bullet) Janus Aspen Series--Short-Term Bond Portfolio seeks as high a level
of current income as is consistent with preservation of capital. The
Portfolio pursues its investment objective by investing primarily in
short- and intermediate-term fixed income securities.(7)
(bullet) Janus Aspen Series--Worldwide Growth Portfolio seeks long-term
growth of capital in a manner consistent with the preservation of
capital, primarily through investments in common stocks of foreign
and domestic issuers.(7)
(bullet) Lexington Natural Resources Trust is a nondiversified portfolio that
seeks long-term growth of capital through investment primarily in
common stocks of companies which own or develop natural resources
and other basic commodities, or supply goods and services to such
companies.(8)
(bullet) Neuberger & Berman Advisers Management Trust--Growth Portfolio
seeks capital appreciation without regard to income. The Portfolio
generally invests in securities believed to have the maximum
potential for long-term capital appreciation. The Portfolio expects
to be almost fully invested in common stocks, often of companies
that may be temporarily out of favor in the market.(9)
(bullet) 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.(10)
Investment Advisers for each of the Funds:
(1) Aetna Life Insurance and Annuity Company (adviser); Aeltus
Investment Management, Inc. (sub-adviser)
(2) Fred Alger Management, Inc.
(3) American Century Investment Management, Inc.
(4) Calvert Asset Management Company, Inc.
(5) Fidelity Management & Research Company
(6) Franklin Advisers, Inc.
(7) Janus Capital Corporation
(8) Lexington Management Corporation (adviser); Market
Systems Research Advisors, Inc. (subadviser)
(9) Neuberger & Berman Management Inc. (Investment
Manager); Neuberger & Berman, L.P. (Sub-Adviser)
(10) Scudder, Stevens & Clark, Inc.
There is no assurance that the Funds will achieve their investment
objectives. Participants bear the full investment risk of investments in the
Funds selected.
Some of the Funds may invest in instruments known as derivatives as part
of their investment strategies, as described in their respective
prospectuses. The use of certain derivatives such as inverse floaters and
principal only debt instruments may involve higher risk of volatility to a
Fund. The use of leverage in connection with derivatives can also increase
risk of losses. See the prospectus for the Funds for a discussion of the
risks associated with an investment in those funds.
More comprehensive information, including a discussion of potential risks,
is found in the current prospectus for each Fund which is distributed with
and must accompany this Prospectus. Contract Holders and
- -------------------------------------------------------------------------------
4
<PAGE>
Participants should read the accompanying prospectuses carefully before
investing. Additional prospectuses and the Statements of Additional
Information for this Prospectus and each of the Funds can be obtained from
the Company's Home Office at the address and telephone number listed on the
cover of this Prospectus.
Mixed and Shared Funding
Shares of the Funds are available to insurance company separate accounts
which fund variable annuity contracts and variable life insurance policies,
including the Contracts described in this Prospectus. Because Fund shares are
offered to separate accounts of both affiliated and unaffiliated insurance
companies, it is conceivable that, in the future, it may not be advantageous for
variable life insurance separate accounts and variable annuity separate accounts
to invest in these Funds simultaneously, since the interests of such
policyowners or contractholders may differ. Although neither the Company nor the
Funds currently foresee any such disadvantages either to variable life insurance
or to variable annuity policyowners, each Fund's Board of Trustees/Directors has
agreed to monitor events in order to identify any material irreconcilable
conflicts which may possibly arise and to determine what action, if any, should
be taken in response thereto. If such a conflict were to occur, one of the
separate accounts might withdraw its investment in a Fund. This might force that
Fund to sell portfolio securities at disadvantageous prices.
Fund Changes
The Company reserves the right, subject to compliance with appropriate state
and federal laws, to change the Fund(s) in which the Separate Account invests,
and/or replace the shares of any Fund(s) held in the Separate Account with
shares of any other Fund(s).
Fund Limitations
The Contract Holder may decide to offer only a select number of Funds as
funding options under its Plan, or may decide to change which Funds it offers.
Under some Contracts, no more than 18 different choices of investment options
may be made during the Accumulation Period. Each Fund, the Fixed Account, each
version of the Fixed Plus Account (See Appendices II and III), and each
guaranteed term of GAA counts as one option, even if amounts are no longer
allocated to that option. Please check with your local representative or contact
the Company at the toll-free number on the cover of this Prospectus to determine
if this limitation applies to you.
The Company reserves the right to limit the funding options available
during the Annuity Period.
PURCHASE
The Contracts
The Contracts are group deferred, variable annuity contracts. Under the
Retirement Plus Contract, Contributions may be made by the Contract Holder
(generally, the employer) and the Participants. The Contract Holder, or any
person designated by the Contract Holder, may exercise the rights under the
Retirement Plus Contract. The Contract Holder may, by written direction, allow
Participants to select the investment options for the Contract Holder
Contributions and Participant Contributions. Under the Voluntary Contract,
Contributions may be made only by Participants. Each Participant may exercise
the rights under the Voluntary Contract with respect to the Participant's
Individual Accounts. See "Contract Rights" and "Miscellaneous."
Eligible Contract Holders
An organization eligible to establish tax-deferred annuity plans under
Section 403(b) or Sections 401(a)/ 401(k) of the Code may acquire either or both
of the Contracts for its Plan by filling out the appropriate master application
forms and returning them to the Company or to a Distributor for delivery to the
Company. Once we approve the application, a group Contract is issued to the
organization as Contract Holder.
Purchase By Exchange
Certain organizations which own contracts issued by the Company may exchange
their existing contract(s) for either or both of the Contracts. See Appendix VI.
Contract Charges And Fees Options
Your Contract's charges and fees will depend in part upon the Aggregate
Current Value and in part upon choices made by your Contract Holder. Each
Contract offers a Contract Holder the flexibility to choose a charges and fees
structure during the Accumulation Period that will best suit the needs of its
Participants. For a description of the Contracts' charges and fees, see "Charges
and Fees During the Accumulation Period."
Responsibilities of Contract Holders
The Contract Holder is responsible for maintaining all Participant vesting
percentages and records, ensuring that the Plan meets certain nondiscrimination
requirements imposed by the Code, and ensuring employee
- -------------------------------------------------------------------------------
5
<PAGE>
Contributions do not exceed the maximum limits imposed by the Code.
If a Contract is used to fund an ERISA Plan, the Contract Holder must:
(a) provide written certification to the Company of the satisfaction of
applicable requirements for ERISA tax-deferred annuity plans, and
(b) certify that all distributions are made in accordance with the terms
of the Plan, and, if applicable, the requirements of the Code.
Enrollment of Participants
Eligible organizations may acquire the Contract by submitting an application
to the Company. Once we approve the application, a group Contract is issued to
the employer or association 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 application or 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 pending
acceptance of the forms only with the consent of the Participant, or under
limited circumstances, with the consent of the Contract Holder. If we agree
to hold Purchase Payments for longer than 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.
After accepting your application, we will establish one or more Individual
Accounts to track Contributions and transactions. If you and your employer
make Contributions under a Retirement Plus Contract, we may establish an
Employee Account and an Employer Account. For any lump sum Contribution under
either Contract, we may establish a separate Individual Account for that
Contribution.
Contributions
Under a Contract, Contributions may be made on an installment basis or one
or more lump sum Contribution(s) may be made. The Company reserves the right not
to accept any Contribution. Each Contribution is forwarded to the Company
through a Distributor.
Net Contribution(s) may accumulate (a) on a variable basis by allocation to
one or more of the available Funds; (b) on a fixed basis under the GA Account;
(c) on a fixed basis under the Fixed Plus Account; and (d) in a combination of
any of the available investment options. See Appendices I, II and III. Not all
Funds or credited interest options are available in all jurisdictions or under a
particular Contract. The Fixed Account is available only for Net Contribution(s)
previously allocated to a fixed account under a contract exchanged for a
Contract. See Appendix IV. The Net Contribution(s) must be allocated to the
respective options in increments of whole percentage amounts.
Contribution Limits for Contracts Used with 403(b) Plans
The Code imposes a maximum limit on annual Contributions which may be
excluded from your gross income. That limit must be calculated in accordance
with Sections 403(b), 415 and 402(g) of the Code. In addition, Contributions
will be excluded from your gross income only if the 403(b) Plan meets certain
Code nondiscrimination requirements. It is the Contract Holder's responsibility
to determine compliance with these requirements and other provisions of the
Plan. See "Rights Under the Contracts."
Contribution Limits for Contracts Used with 401(a)/401(k) Plans
The Code imposes a maximum limit on annual Contributions that may be excluded
from a Participant's gross income. Such limit must be calculated under the
Plan by the Contract Holder in accordance with Sections 402(g) and 415 of the
Code. In addition, Contributions will be excluded from a Participant's gross
income only if the 401(a)/401(k) Plan meets certain nondiscrimination
requirements.
Distribution
The Company will serve as Underwriter for the securities sold by this
Prospectus. The Company is registered as a broker-dealer with the SEC 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 Individual Accounts under a Contract.
Persons offering and selling the Contracts may receive commissions in
connection with the sale of a Contract. The
- -------------------------------------------------------------------------------
6
<PAGE>
sales commission will range from 1% to 4% of the first year Contributions.
The Company may also pay renewal commissions on Contributions 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 Contributions
made over the life of an average Contract. In addition, some sales personnel
may receive various types of non-cash compensation as special sales
incentives, including trips and educational and/or business seminars.
Supervisory and other management personnel of the Company may receive
compensation that will vary based on the relative profitability to the
Company of the funding options you select. Funding options that invest in
Funds advised by the Company or its affiliates are generally more profitable
to the Company. The Company may also reimburse the Distributor for certain
expenses. The name of the Distributor and the registered representative
responsible for your Individual Account are set forth on your enrollment
form. Commissions and sales related expenses are paid by the Company and are
not deducted from Contributions. See "Charges and Fees During the
Accumulation Period--Withdrawal Fee."
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 association for
certain services in connection with administering the Contracts. In both
these circumstances there may be an understanding that the Distributor or
association would endorse the Company as a provider of the Contracts. You
will be notified if a Contract is subject to these arrangements.
DETERMINING INDIVIDUAL ACCOUNT CURRENT VALUE
The Current Value of your Individual Account as of the most recent
Valuation Period, is determined by adding the value of any Fund Record Units
attributed to the Fund(s) you have selected to the value, with interest
earned to date, of any amounts invested in the Fixed Plus Account, the GAA
and/or the Fixed Account, less any Maintenance Fee(s) due.
Fund Record Units
A Contribution that is directed to one or more of the Funds is deposited in
the Separate Account and credited to your Individual Account in the form of Fund
Record Units for each Fund selected. The number of Fund Record Units credited is
determined by dividing the applicable portion of the Contribution by that
Contract's Fund Record Unit value of the appropriate Fund. The value of Fund
Record Units attributable to the Funds will be affected by the investment
performance, expenses and charges of those Funds. Generally, if the net asset
value of the Fund increases, so does the Fund Record Unit value; however,
performance of the Separate Account is reduced by charges and fees under a
Contract.
The Fund Record Unit value used is that next computed following the date
on which a Contribution is received, provided the Contribution is received by
us by the close of business of the New York Stock Exchange, unless the
application has not been accepted. In that event, Contributions will be
credited at the Fund Record Unit Value next determined after acceptance of
the application. Shares of the Funds are purchased by the Separate Account at
the net asset value next determined by the Fund following receipt of
Contributions by the Separate Account.
Fund Record Units are valued separately for each Fund. Therefore, if you
elect to have a Contribution invested in a combination of Funds, you will
have Fund Record Units credited from more than one source.
Net Return Factor
The value of a Fund Record Unit for any Valuation Period is calculated by
multiplying the Fund Record Unit value for the immediately preceding Valuation
Period by the net return factor of the appropriate investment option for the
Current Valuation Period.
The net return factor is calculated separately for each Fund in which
assets of the Separate Account are invested. It is determined by adding
1.0000000 to 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);
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7
<PAGE>
(d) Divided by the total value of the Fund Record Units and Fund Annuity
Units of the Separate Account at the start of the Valuation Period;
(e) Minus a Separate Account charge at an annual effective rate as shown
in a Contract for mortality and expense risks and profit and a daily
administrative expense charge which will not exceed the amount shown
on Contract Schedule I on an annual basis.
The net return rate may be more or less than zero.
Transfer Credits
If a Contract Holder is transferring to the Company assets held by another
provider of funding for a Plan, a transfer credit is applied to the Individual
Accounts, subject to certain conditions (and state approval). This benefit is
provided on a nondiscriminatory basis if your Contract is eligible. In certain
circumstances, a Contract Holder may elect to forego the transfer credit and the
Contract will be subject to lower charges and fees. See "Charges and Fees During
the Accumulation Period--Option B." The transfer credit will be credited to the
Fixed Plus Account. See Appendices II and III.
Once transfer credit amounts are applied to the Individual Accounts, all
provisions of the Contract apply. If a transfer credit is due under a
Contract, you will be provided with additional information specific to the
Contract.
CONTRACT RIGHTS
Right to Cancel
The Contract Holder may cancel a Contract and you may cancel your interest
in a Contract, no later than ten days after receiving it (or as otherwise
allowed by state law) by returning it, along with a written notice of
cancellation, to us. Within seven days after we receive the Contract and the
written notice at our Home Office, we will return your Current Value, unless the
laws of the state in which the Contract was issued require that we return
Contributions (if greater than your Current Value). In states that do not
require a return of Contributions, you bear the entire investment risk for
amounts allocated among the variable funding options during the free look
period.
Rights Under The Contracts
Your rights and the Contract Holder's rights are set forth in each Contract
purchased by the Contract Holder. You should consult with your employer to
determine which Contract your employer has purchased and you should refer to
that Contract to determine your rights. Benefits payable to you are governed
exclusively by the Plan. The Company is not a party to the Plan.
Rights Under the Retirement Plus Contract. Under the Retirement Plus
Contract, the rights rest with the Contract Holder (generally the employer).
The Contract Holder may, by written direction, allow Participants to select
the investment options for the Employer Account and Employee Account. The
exercise of other rights under the Retirement Plus Contract must be made by
the Contract Holder on your behalf. You have no rights to direct the Company
as to payments under the Contract unless countersigned by the Contract
Holder.
For the Retirement Plus Contract, the Contract Holder and each Participant
must agree in writing to the terms and conditions of the Contract, to have
the Contract Holder make choices under the Contract, and to be bound by the
Contract Holder's direction to the Company. See Appendix V.
Rights Under the Voluntary Contract. You may make any choices, subject to
the terms of your Plan, under the Voluntary Contract with respect to your
Individual Accounts.
Rights to your Individual Account. For Contracts used with a 403(b) Plan,
you have a nonforfeitable right to the value of your Contributions pursuant
to Code Section 403(b) and the terms of the Plan as interpreted by the
Contract Holder. You have a nonforfeitable right to the value of your
Individual Account to which your employer's Contributions are credited
pursuant to the terms of, and to the extent of your vested percentage under,
the Plan as interpreted by the Contract Holder.
For Contracts used with a 401(a)/401(k) Plan, your right to Contributions
derived from your Contributions and, with respect to the Retirement Plus
Contract, from your employer's Contributions, must be nonforfeitable in order
for the Plan to qualify for favorable tax treatment afforded to 401(a)/401(k)
Plans under the Code.
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8
<PAGE>
TRANSFERS AND ALLOCATION CHANGES
Before the Annuity Period, the allocation of future Net Contributions
among the allowable investment options under a Contract may be changed. There
is no limit on the number of these changes. Each Contract also allows any
number of transfers of not less than $500 among funding options during the
calendar year, without charge. The total number of funding options that may
be invested in during the Accumulation Period may be limited. (See "The Funds--
Fund Limitations.")
Subject to state regulatory approval, transfers during the Annuity Period
are permitted, however, we reserve the right to limit such transfers to four
per year.
Any transfer involving a Fund where the request is received by us by the
close of business of the New York Stock Exchange will be based on the Fund
Record Unit value next determined after we receive a valid request at our
Home Office.
Transfers from the Fixed Plus Account are limited. See Appendices I, II,
III and IV for more information on transfers from the GAA, the Fixed Plus
Account and the Fixed Account.
WITHDRAWALS
Each Contract allows the withdrawal of all or a portion of an Individual
Account Adjusted Current Value during the Accumulation Period. To do so, we
must receive a properly completed disbursement form in our Home Office.
Disbursement forms are available from us and our representatives.
Withdrawals may be requested in one of the following four ways:
(bullet) Full Withdrawal from a Contract: The amount paid will be the sum of
the Individual Accounts allocated to the Funds, the GAA (plus or
minus the Market Value Adjustment), and the Fixed Account, minus any
applicable Withdrawal Fee and Maintenance Fee due plus one-fifth of
the sum of the Individual Accounts allocated to the Fixed Plus
Account*, minus any Fixed Plus Account withdrawals, transfers or
annuitizations made in the prior 12 months.
(bullet) Full Withdrawal from an Individual Account: The amount paid will be
the Individual Account allocated to the Funds, the GAA (plus or
minus the Market Value Adjustment), and the Fixed Account, minus any
applicable Withdrawal Fee and Maintenance Fee due plus one-fifth of
the Individual Account allocated to the Fixed Plus Account*, minus
any Fixed Plus Account withdrawals, transfers, loan or
annuitizations made in the prior 12 months.**
(bullet) Partial Withdrawal (Percentage): The amount paid will be the
percentage of the Individual Account Current Value requested minus
any applicable Withdrawal Fee.** However, amounts withdrawn from the
Fixed Plus Account may not exceed 20% minus any Fixed Plus
Account*** withdrawals, transfers or annuitizations in the prior 12
months.
(bullet) Partial Withdrawal (Specific Dollar Amount): The amount paid will be
the dollar amount requested. However, the amount withdrawn from the
Individual Account will equal the dollar amount requested plus any
applicable Withdrawal Fee.** The amount withdrawn from the Fixed
Plus Account may not exceed 20% minus any Fixed Plus Account***
withdrawals, transfers or annuitizations in the prior 12 months.
* The balance of the amount held in the Fixed Plus Account will be paid in
four annual installments. Under certain circumstances, the entire amount
held in the Fixed Plus Account will be paid in one lump sum (or used to
provide Annuity payments) rather than in annual installments. See
Appendices II and III for more information.
** A 20% income tax may be withheld from amounts paid directly to you. See
"Tax Status--Contracts Used with Qualified Plans."
*** The 20% limit is waived under certain circumstances. See Appendices II
and III for more information.
All amounts paid will be based on Individual Account Current Values as of
the end of the Valuation Period in which the request is received, in good
order in our Home Office. For any partial withdrawal, unless otherwise
requested, partial withdrawals are satisfied by withdrawing amounts on a pro
rata basis from each investment option in which the Individual Account is
invested.
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9
<PAGE>
Withdrawal Restrictions For Contracts Used With 403(b) Plans
Code Section 403(b) imposes restrictions on full or partial withdrawals from
Individual Accounts attributable to: (a) Contributions made on or after January
1, 1989, under a salary reduction agreement, and (b) any earnings on the entire
403(b) Employee Account credited on and after January 1, 1989. Withdrawals of
these amounts are allowed only if: (a) you have died, (b) you have become
disabled, as defined in the Code, (c) you have attained age 59-1/2, (d) you have
separated from service, or (e) it is otherwise allowed by federal law,
regulations or rulings. Withdrawals are also allowed if you can prove financial
hardship as defined by the IRS, but the withdrawal is limited to the lesser of
Contributions attributable to Participant salary reduction contributions made on
or after January 1, 1989, or the amount necessary to relieve the hardship. Even
if a withdrawal is permitted under these provisions, a 10% federal penalty tax
may be assessed on the amount paid to you if it does not otherwise meet the
exceptions to the penalty tax provisions. See "Tax Status--Contracts Used with
Qualified Plans." We must receive certification in writing that one of these
conditions has been met before a payment will be made.
The Code permits a full or partial withdrawal of an amount equal to the
Employee Account Value as of December 31, 1988 (the "grandfathered" amount),
subject to the terms of the 403(b) Plan. Although the Code withdrawal
restrictions do not apply to this amount, a 10% federal penalty tax may be
assessed on the amount paid to you if it does not otherwise meet the
exceptions to the penalty tax provisions. See "Tax Status--Contracts Used
with 403(b) Plans" and "Tax Status--Contracts used with Qualified Plans."
We believe that the Code withdrawal restrictions do not apply to tax-free
transfers pursuant to Revenue Ruling 90-24. We further believe that the
withdrawal restrictions will not apply to any "grandfathered" amount which is
transferred pursuant to Revenue Ruling 90-24 into another 403(b) Contract.
Revenue Ruling 90-24 provides that a direct transfer from one 403(b)
investment to another 403(b) investment is not a distribution and is not
taxable if, after the transfer, the transferred amounts continue to be
subject to the same or more stringent distribution requirements.
Reinvestment Privilege
All or a portion of the proceeds received for the full withdrawal of an
Individual Account may be reinvested within 30 days after the withdrawal if
allowed by law. Any Maintenance Fee and Withdrawal Fee charged at the time of
the withdrawal on the amount being reinvested will be included in the
reinstatement. Any Maintenance Fee which falls due after the withdrawal and
before the reinstatement will be deducted from the amount reinstated. 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, the
GA Account, and/or the Fund(s) for the Separate Account in the same proportion
as they were at the time of withdrawal. Any amounts reinstated to the GA Account
will be credited to terms available during the then-current Deposit Period. The
number of Fund Record Units reinstated will be based on the Fund Record Unit
Value(s) next computed after receipt in good order at the Company's Home Office
of the reinstatement request and the amount to be reinvested.
CONTRACT LOANS
During the Accumulation Period, loans from the Individual Account are
available from Contracts used with 403(b) plans, and from Contracts used with
401(a) plans to the extent provided in the Contract. Under the Retirement
Plus Contract, a loan may be restricted to your Employee Account unless the
Contract Holder has authorized loans from the value of the Employer Account
(check with the Contract Holder to see if this is available). Loans can only
be made from the Current Value held in the Funds, the Fixed Plus Account
and/or the Fixed Account. See Appendices II, III and IV. A loan may be
obtained by reviewing and reading the terms of your loan application,
properly completing a loan request form and submitting it to the Company's
Home Office.
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10
<PAGE>
CHARGES AND FEES DURING THE ACCUMULATION PERIOD
The amount of the charges and fees that will be assessed under a Contract
will be based upon the charges and fees option selected by the Contract
Holder. See "Contract Charges and Fees Options." You should consult your
employer to determine which charges and fees option applies to your
Individual Accounts.
Based upon its prior experience with similar annuity contracts, the
Company has determined that its costs of administering a Contract will
fluctuate with the amount of the Aggregate Current Value, the average
Contributions per Participant transferred under a Contract, and whether a
Withdrawal Fee is charged. The charges and fees for the initial Contract year
will be based on the estimated year-end Aggregate Current Value, as
determined by the Company. If your charges and fees change on your Contract
Anniversary (because of an increase or decrease in the Aggregate Current
Value), a new Fund Record Unit value might apply and the Fund Record Units
might have to be adjusted so that the Current Value of your Individual
Account would stay the same. If you invest in one of the series of the Aetna
GET Fund, the GET Fund guarantee will be recalculated so that the new
guarantee would be equivalent to the original guarantee.
A Contract Holder may elect whether a Withdrawal Fee will be applicable
under a Contract, and if so, whether the Withdrawal Fee will be applicable
for a 5-year period or a 10-year period. When a Withdrawal Fee is not
charged, the Company has determined that more Individual Account transactions
occur, and as a result, in some circumstances the Company imposes a greater
administrative expense charge and Maintenance Fee charge. The 5-year period
and 10-year period Withdrawal Fees are as follows:
Five-Year Withdrawal Period:
<TABLE>
<CAPTION>
Number of Years
Individual Account
Has Been Established Fee
- ------------------------------- -------
<S> <C>
Less than 1 5%
1 or more but less than 2 4%
2 or more but less than 3 3%
3 or more but less than 4 2%
4 or more but less than 5 1%
5 or more 0%
</TABLE>
Ten-Year Withdrawal Period:
<TABLE>
<CAPTION>
Number of Years
Individual Account
Has Been Established Fee
- -------------------------------- -------
<S> <C>
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
10 or more 0%
</TABLE>
For Contracts issued in the State of New York only the Ten-Year Withdrawal
Period Fee Schedule will be available. Additionally, for those New York
Contracts under which the GAA is selected as a funding option, the withdrawal
fee imposed under the Ten-Year Withdrawal Period (as set forth in the
schedule above), will never be greater than (a) 7% of amounts withdrawn from
investment options other than the GAA, plus (b) 7% of amounts withdrawn from
the GAA, reduced (but not below zero) by one percent for each year the
contract has been in force.
The following schedule illustrates the withdrawal fee imposed if the
Ten-Year Withdrawal Period is selected for Contracts issued in the States of
Oregon and Texas:
<TABLE>
<CAPTION>
Number of Years
Individual Account
Has Been Established Fee
- ------------------------------- -------
<S> <C>
Less than 5 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more but less than 8 2%
8 or more but less than 9 1%
9 or more 0%
</TABLE>
In selecting a charges and fees option, a Contract Holder should consider
the composition and needs of its Participants to determine which option is
most appropriate.
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11
<PAGE>
OPTION A
A Contract Holder may select any of the charges and fees elections under
Option A below. Under Option A, a transfer credit may apply to transfers to
the Company of assets not previously held by the Company. See "Determining
Individual Account Current Value--Transfer Credits" and Appendices II and
III. If a Contract is purchased by exchange, then for existing participants
of the exchanged contract, the Option A charges and fees schedule set forth
below with a Withdrawal Fee for 10 years will apply. See Appendix VI. New
participants of a Contract purchased by exchange will be subject to the
charges and fees schedule selected by the Contract Holder.
<TABLE>
<CAPTION>
Less $500,000 $1,000,001 $5,000,001 Greater
OPTION "A" CHARGES than to to to than
$500,000 $1,000,000 $5,000,000 $15,000,000 $15,000,000
<S> <C> <C> <C> <C> <C>
WITHDRAWAL FEE FOR 10 YEARS
Mortality and Expense Charge 1.25% 1.15% 1.05% 1.00% 0.95%
Administrative Expense Charge 0.25% 0.15% 0.10% 0.05% 0.00%
Maintenance Fee $ 15 $ 15 $ 0 $ 0 $ 0
WITHDRAWAL FEE FOR 5 YEARS
Mortality and Expense Charge 1.25% 1.25% 1.15% 1.10% 1.05%
Administrative Charge 0.25% 0.15% 0.10% 0.05% 0.00%
Maintenance Fee $ 15 $ 15 $ 0 $ 0 $ 0
NO WITHDRAWAL FEE
Mortality and Expense Charge 1.25% 1.25% 1.15% 1.10% 1.05%
Administrative Charge 0.25% 0.20% 0.15% 0.10% 0.05%
Maintenance Fee $ 20 $ 20 $ 10 $ 10 $ 10
</TABLE>
OPTION B
Charges and fees elections under Option B are available only if the Company
will hold all assets of the Plans of the Contract Holder and if the Contract
Holder is transferring assets to the Company in an amount which satisfies the
then current rules of the Company. This option is provided on a
nondiscriminatory basis if your contract is eligible. If a Contract Holder
selects a charges and fees election under Option B, no transfer credit will
apply.
<TABLE>
<CAPTION>
Less $500,000 $1,000,001 $5,000,001 Greater
OPTION "B" CHARGES than to to to than
$500,000 $1,000,000 $5,000,000 $15,000,000 $15,000,000
<S> <C> <C> <C> <C> <C>
WITHDRAWAL FEE FOR 10 YEARS
Mortality and Expense Charge 1.15% 1.05% 0.95% 0.90% 0.85%
Administrative Expense Charge 0.25% 0.15% 0.10% 0.05% 0.00%
Maintenance Fee $ 15 $ 15 $ 0 $ 0 $ 0
WITHDRAWAL FEE FOR 5 YEARS
Mortality and Expense Charge 1.15% 1.15% 1.05% 1.00% 0.95%
Administrative Charge 0.25% 0.15% 0.10% 0.05% 0.00%
Maintenance Fee $ 15 $ 15 $ 0 $ 0 $ 0
NO WITHDRAWAL FEE
Mortality and Expense Charge 1.15% 1.15% 1.05% 1.00% 0.95%
Administrative Charge 0.25% 0.20% 0.15% 0.10% 0.05%
Maintenance Fee $ 20 $ 20 $ 10 $ 10 $ 10
</TABLE>
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12
<PAGE>
The following describes the charges and fees that we may deduct during the
Accumulation Period from the Individual Accounts under each Contract.
Annual Maintenance Fee
An annual Maintenance Fee is charged for each Participant and is deducted
from the sum of the Current Value of your Individual Accounts under a Contract.
This fee is to reimburse the Company for some of its administrative expenses
relating to the establishment and maintenance of the Individual Account. Because
the annual Maintenance Fee is based, in part, on the amount of the Aggregate
Current Value, the annual Maintenance Fee may change on each contract
anniversary.
The Maintenance Fee is deducted from your Individual Accounts on the Contract
anniversary date (or, if not a valuation date, on the next valuation date).
Under the Retirement Plus Contract, the Contract Holder may elect that the
entire Maintenance Fee be deducted from only one Individual Account--either the
Employee Account or the Employer Account. Alternatively, the Maintenance Fee may
be billed to the employer at or prior to such deduction under the Retirement
Plus Contract. A Maintenance Fee, to the extent permitted by state law, is also
deducted upon the full withdrawal of a Participant's Individual Accounts. We
deduct this fee from each investment option in the same proportion that the
values held under each option have to the total value under the Individual
Account. No Maintenance Fee is deducted from a separate Individual Account
established for the purpose of a lump sum contribution.
Withdrawal Fee
There are no deductions from Contributions for sales commissions or related
expenses. Sales commissions and expenses are advanced by the Company and
recovered out of any Withdrawal Fees or, if Withdrawal Fees are insufficient,
out of its profits from investment activities, including the mortality and
expense risk charges under a Contract. The total amount deducted for the
Withdrawal Fee will not exceed 8.5% of the Contributions made to an Individual
Account. For sales commissions paid in connection with the sale of a Contract,
see "Contract Purchase--Distribution." If applicable, the Withdrawal Fee will
apply to withdrawals from the Funds, the GA Account or the Fixed Account. No
Withdrawal Fee will be deducted from the Fixed Plus Account. There are
additional restrictions and deductions on withdrawals. See "Contract
Rights--Withdrawals."
A Withdrawal Fee is not deducted from any portion of the Individual
Account Current Value under a Contract which is:
(a) withdrawn due to the Participant's separation from service with the
Contract Holder (the Contract Holder must submit documentation
satisfactory to the Company confirming the Participant is no longer
providing services to the employer);
(b) applied to provide Annuity benefits under a Contract;
(c) withdrawn on or after the tenth anniversary of the effective date of
the Individual Account if a ten-year duration for Withdrawal Fees has
been elected on or after the fifth anniversary if a five-year duration
has been elected;
(d) paid due to the death of the Participant before Annuity payments under a
Contract begin;
(e) withdrawn due to the election of any additional withdrawal option under
a Contract (see "Additional Withdrawal Options");
(f) withdrawn due to financial hardship, as specified in the Code;
(g) paid where the Individual Account Current Value is $3,500 or less and
no amount has been withdrawn, taken as a loan or used to purchase
Annuity benefits during the prior 12 months; or
(h) paid in an amount of up to 10% of the Individual Account Current Value.
This applies only to the first partial withdrawal in each calendar year.
The 10% amount will be calculated using the Individual Account Current
Value on the date the request is received, in good order, in the Home
Office. This provision is available to Participants who are between the
ages of 59-1/2 and 70-1/2. Any loans outstanding on an Individual
Account are excluded from the Individual Account Current Value when
calculating the 10% amount. This provision is not applicable to a full
withdrawal of the Individual Account, or to partial withdrawals due to
loan defaults. See "Contract Rights--Contract Loans." This provision
may not be exercised if SWO is elected. See "Additional Withdrawal
Options."
Although no Withdrawal Fee is deducted in the above instances, the amount
withdrawn may, however, be subject to the 10% federal penalty tax. See "Tax
Status--Contracts Used with 403(b) Plans" and "Tax Status--Contracts Used
with Qualified Plans."
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13
<PAGE>
Mortality and Expense Risk Charges
We make a daily deduction from any portion of an Individual Account Current
Value allocated to the Funds under a Contract for mortality and expense risks.
The mortality risk charge is to compensate us for the risk we assume when we
promise to continue making payments for the lives of individual Annuitants
according to Annuity rates specified in the tables at the time Annuity payments
begin. The expense risk charge is to compensate us for the risk that actual
expenses for costs incurred under a Contract will exceed the maximum costs that
can be charged under the Contract. Because it is based, in part, on the amount
of the Aggregate Current Value, the charge for mortality and expense risks may
change on each contract anniversary.
Based on our actuarial determination, we do not anticipate that the
Withdrawal Fee will cover all sales and administrative expenses which we will
incur in connection with a Contract. Also, we do not intend to profit from
either the annual Maintenance Fee or the administrative expense charge, if
imposed. We do hope to profit from the daily deduction for mortality and
expense risks. Any such profit, as well as any other profit realized by us
and held in the general account (which supports insurance and annuity
obligations), would be available for any proper corporate purpose, including,
but not limited to, payment of sales and distribution expenses.
Administrative Expense Charge
We deduct a daily charge for administrative expenses from any portion of an
Individual Account Current Value allocated to the Funds to reimburse the Company
for some of the expenses we incur for administering a Contract. Because it is
based, in part, on the amount of the Aggregate Current Value, the administrative
expense charge may change on each contract anniversary.
Fund Expenses
Each Fund has an investment adviser. An investment advisory fee, based on the
Fund's average net assets, is deducted from the assets of each Fund and paid to
the investment adviser.
Most expenses incurred in the operations of the Funds are borne by that
Fund. Fund advisers may reimburse the Funds they advise for some or all of
these expenses. For further details of each Fund's expenses, you and the
Contract Holder should read the accompanying prospectus for each Fund and
refer to the Fee Table in this Prospectus.
Premium and Other Taxes
Several states and municipalities impose a premium tax on Annuities.
Currently such taxes range from 0% to 4%. The Company reserves the right to
deduct premium tax against Contributions or Current Values at any time, but no
earlier than when due 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 premium tax, the Company reserves the right to assess a charge for
any state or federal taxes due against a Contract or the Separate Account
assets.
CHARGES AND FEES DURING THE ANNUITY PERIOD
This section describes the charges and fees that we may deduct during the
Annuity Period.
Mortality and Expense Risk Charges
During the Annuity Period a daily charge for mortality and expense risks
equal to an annual effective rate of 1.25% may be deducted from any portion of
an Individual Account allocated to the Funds.
Administrative Expense Charge
During the Annuity Period, a daily charge for administrative expenses equal
to an annual effective rate of up to 0.25% may be deducted from any portion of
an Individual Account under a Contract allocated to the Funds.
Withdrawal Fee
A Withdrawal Fee will apply during the Annuity Period if a non-lifetime
Annuity Option is elected on a variable basis and the remaining value is
withdrawn prior to the minimum number of years specified in the Contract. See
"Annuity Period--Annuity Options."
- -------------------------------------------------------------------------------
14
<PAGE>
ADDITIONAL WITHDRAWAL OPTIONS
The Company offers certain withdrawal options under each Contract that are
not considered annuity options ("Additional Withdrawal Options"). To exercise
these options, the Current Value must meet the minimum dollar amounts and you
must satisfy the age criteria applicable to that option.
The Additional Withdrawal Options currently available under the Contract
include the following:
(bullet) SWO--Systematic Withdrawal Option. SWO is a series of partial
withdrawals from your Individual 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.)
(bullet) ECO--Estate Conservation Option. ECO offers the same investment
flexibility as SWO but is designed for those who want to receive
only the minimum distribution that the Code requires each year.
Under ECO, the company calculates the minimum distribution amount
required by law at the later of age 70-1/2 or retirement, or for 5%
owners at age 70-1/2 and pays you that amount once a year. (See "Tax
Status.")
Other Additional Withdrawal Options may be added from time to time.
Additional information relating to any of the Additional Withdrawal Options
may be obtained from your local representative or from the Company at its
Home Office. For Contracts issued in the state of New York, no Market Value
Adjustment will be imposed on withdrawals from the GA Account for ECO.
If one of the Additional Withdrawal Options is selected, your Account will
retain all of the rights and flexibility permitted under the Contract during
the Accumulation Period. Your Current Account Value will continue to be
subject to the charges and deductions described in this Prospectus. Taking a
withdrawal under one of these Additional Withdrawal Options may have tax
consequences. Any person concerned about tax implications should consult a
competent tax advisor prior to electing an option.
Once elected, an Additional Withdrawal Option, may be revoked at 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
Options be elected unless permitted by the Code. The Company reserves the
right to discontinue the availability of one or all of those Additional
Withdrawal Options at any time, and/or to change the terms of future
elections.
ANNUITY PERIOD
Annuity Period Elections
We must receive in writing the Annuity start date and Annuity option you have
elected (for details, see the Statement of Additional Information). Until a date
and option are elected, your Individual Accounts will continue in the
Accumulation Period.
We must receive written notice at least 30 days before Annuity payments
begin electing or changing (a) the date on which Annuity payments are to
begin, (b) the Annuity option, (c) whether the payments are to be made
monthly, quarterly, semiannually or annually, and (d) the investment
option(s) used to provide Annuity payments (i.e., a fixed annuity using the
general account, or a variable annuity using any of the funds available at
the time of annuitization. Once Annuity Payments begin, the Annuity Option
may not be changed. Subject to state regulatory approval, transfers during
the Annuity Period are allowed; however, we reserve the right to limit such
transfers to four per year.
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
(3-1/2% per annum, unless a 5% annual rate is elected). Selection of a 5%
rate causes a higher first payment, but Annuity payments will increase
thereafter only to the extent 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
details regarding the selection of a net investment rate.)
No election may be made that would result in a first Annuity payment or
total yearly Annuity payments of less than the minimum amounts specified in the
Contract. If the combined value of the Employer and Employee Accounts
- --------------------------------------------------------------------------------
15
<PAGE>
is insufficient to elect an option for the minimum amount specified, a lump
sum payment must be elected.
When payments start, the age of the Annuitant plus the number of years for
which payments are guaranteed must not exceed 95.
Annuity payments may not extend beyond (a) your life, (b) the joint lives
of you and your Plan beneficiary, (c) a period certain greater than your life
expectancy, or (d) a period certain greater than the joint life expectancies
of you and your Plan beneficiary.
Minimum Distribution Requirements. The Code has required distribution
rules for Section 403(b), 401(a) and 401(k) 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.
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. For all Participants, other than 5% owners, distributions
under 401(a) and 401(k) 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 or retire, if later. For 5% owners, such
distributions must begin by April 1st of the calendar year following the
calendar year in which you attain age 70-1/2. In addition, distributions must
be in a form and amount sufficient to satisfy the Code requirements.
In determining the amount of benefit payments, the minimum distribution
incidental death benefit rule described in IRS regulations* must be
satisfied. This distribution rule does not apply to certain 403(b) Plans if
Annuity Option 3 is elected and your spouse is the second Annuitant. See
"Annuity Period--Annuity Options."
You will be subject to a 50% federal penalty tax on the amount of
distribution required each year that is not distributed under the Code's
minimum distribution rules.
* This rule assures that any death benefits payable under the Plan are
incidental to the primary purpose of the Plan which is to provide
retirement benefits to the Participant. The amount to be distributed under
this rule is determined based on the Participant's age and tables contained
in the IRS regulations.
If you elect a Variable Annuity Option, your Individual Account will be
allocated to the Separate Account and the Company will make a daily deduction
for mortality and expense risks. See "Charges and Fees During the
Accumulation Period--Mortality and Expense Risk Charges." Therefore, electing
the nonlifetime option on a variable basis will result in a deduction being
made even though the Company assumes no mortality risk. During the
Accumulation Period, the Company will also deduct daily a charge for
administrative expenses. See "Charges and Fees During the Annuity
Period--Administrative Expense Charge."
Annuity Options
(bullet) Option 1--Payments for a Stated Period of Time--An Annuity will be
paid for 5 to 30 years.
For amounts held in the Fixed Plus Account the Annuity must be paid on a
fixed basis. If payments for this option are made under a Variable Annuity,
the present value of any remaining payments may be withdrawn at any time. If
a withdrawal is requested before five years of payments have been made, it
will be subject to any Withdrawal Fee, if applicable. (See "Charges and Fees
During the Accumulation Period.")
(bullet) Option 2--Life Income Based on the Life of the Annuitant--Payments
will be made until the death of the Annuitant. When this option is
chosen, a choice from the following must be made:
(a) payments cease at the death of the Annuitant;
(b) payments may be guaranteed for 5-30 years; or
(c) cash refund: if the Annuitant dies, the beneficiary will receive a
lump sum payment equal to the amount applied to the Annuity option
(less any premium tax) less the total amount of Fixed Annuity payments
paid prior to such death. This cash refund feature is only available
if the total amount applied to the Annuity option is allocated to a
Fixed Annuity.
(bullet) Option 3--Life Income Based Upon the Lives of Two Annuitants--An
Annuity will be paid during the lives of the Annuitant and a joint
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) 100% of the payment to continue after the first death with a guarantee
of 5-30 years;
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(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; or
(f) 100% of the payment to continue after the first death with a cash
refund feature. If the Annuitant and joint Annuitant die, the
beneficiary will receive a lump sum payment equal to the amount
applied to the Annuity option (less any premium tax) less the total
amount of Fixed Annuity payments paid prior to such death. This cash
refund feature is only available if the total amount applied to the
Annuity option is allocated to a Fixed Annuity.
(bullet) Option 4--Payments of Interest on Sum Left with the Company (if
available under the Contract)--This Option may be used only by the
Plan beneficiary when the Participant dies before the Company 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 the Company at interest. The Contract Holder, on behalf
of the Plan beneficiary, may later tell the Company to:
Pay a portion or all of the sum held by the Company; or
Apply a portion or all of the sum held by the Company to any Annuity
Option above.
If the Plan beneficiary is the Participant's surviving spouse, the
lump-sum payment may be deferred to a date not later than when the
Participant would have attained age 70-1/2.
If the Plan beneficiary is not a spouse, the Contract Holder must tell the
Company to pay the full sum within 5 years after the death of the
Participant.
If a Fixed Annuity is chosen under option 1, option 2 a) or b) or option 3
a) or d), the Participant may elect an annual increase of one, two or three
percent compounded annually.
We may also offer additional Annuity Options under your Contract from time
to time.
Payments under any lifetime Annuity option will be determined without
regard to the sex of the Annuitant(s). Such Annuity payments will be based
solely on the age of the Annuitant(s).
If a lifetime option is elected without a guaranteed minimum payment
period, it is possible that only one Annuity payment will be made if the
Annuitant under Option 2, or the surviving Annuitant under Option 3, should
die prior to the due date of the second Annuity payment.
Once lifetime Annuity payments begin, neither the Contract Holder nor the
Annuitant can elect to receive a lump sum settlement.
DEATH BENEFIT
Accumulation Period
A portion or all of any death proceeds may be (a) paid to the Plan
beneficiary in a lump sum; (b) applied to any of the Annuity Options; (c)
subject to applicable provisions of the Code, left in the variable investment
options; (d) if the beneficiary is your spouse, paid under an Additional
Withdrawal Option; or (e) subject to applicable provisions of the Code, left on
deposit in the Company's general account and the beneficiary may receive
monthly, quarterly, semiannual or annual interest payments at the interest rate
then currently being credited on such deposits. The balance on deposit can be
withdrawn at any time or applied under any Annuity Option. See "Annuity
Period--Annuity Options." Any lump sum payment paid during the Accumulation
Period or under the applicable lifetime or nonlifetime Annuity options will
normally be made within seven calendar days after proof of death acceptable to
the Company and a request for payment on a form acceptable to the Company is
received at our Home Office in good order.
Until the election of method of payment, amounts will remain invested as
they were before the death, and the beneficiary will assume all
nonforfeitable rights under a Contract. The Code requires that distributions
begin within a certain time period. If the Plan beneficiary is your surviving
spouse and the Plan allows, the Plan beneficiary has until you would have
attained age 70-1/2 to begin Annuity payments, to receive a lump sum
distribution, or to begin receiving distributions under an Additional
Withdrawal Option. If your Plan beneficiary is not your surviving spouse,
either Annuity payments must begin by December 31 of the year following the
year of your death, or the entire value must be distributed by December 31 of
the fifth year following the year of your death. In no event may payments to
any Plan beneficiary extend beyond the life of the Plan beneficiary or any
period certain greater than the Plan beneficiary's life expectancy. Failure
to commence distribution within the above time periods can result in tax
penalties.
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If a lump sum distribution is elected, the Plan beneficiary will receive
the value of the Individual Account determined as of the Valuation Period in
which proof of death acceptable to us and a request for payment on a form
acceptable to the Company is received at our Home Office in good order. The
distribution is taxed in the same manner as a full surrender. If an Annuity
Option is elected, the value applied to the Annuity Option is determined in
the same manner, and the proceeds are taxed in the same manner as the annuity
payments. If amounts are left in the variable investment options, the
Individual Account Current Value will continue to be affected by the
investment performance of the investment option(s) selected. If amounts are
left on deposit in the general account, the principal amount is guaranteed,
but interest payments may vary. In general, regardless of the method of
payment, payments received by your beneficiaries after your death are taxed
in the same manner as if you had received those payments. (See "Tax Status.")
Annuity Period
If an Annuitant dies after Annuity payments have begun, any death benefit
payable will depend upon the terms of a Contract and the Annuity option
selected.
If Annuity Option 2 or 3 was elected without a guaranteed minimum payment
period under a Contract, Annuity payments will cease upon the death of the
Annuitant under a Life Annuity or the death of the surviving Annuitant under
Option 3.
Under a Contract, if Annuity Option 2 or 3 was elected with a guaranteed
minimum payment period and the death of the Annuitant under Annuity Option 2
or the surviving Annuitant under Option 3 occurs prior to the end of that
period, we will pay to the person designated by the Contract Holder in a lump
sum (unless otherwise requested) the present value of the guaranteed Annuity
payments remaining. Such value will be determined as of the Valuation Period
in which proof of death acceptable to us and a request for payment are
received at our Home Office. The value will be reduced by any payments made
after the date of death.
If Annuity Option 2 was elected with a guaranteed minimum payment period
under a Contract and the Annuitant dies before all guaranteed payments are
made, the value of any remaining payments may be paid in a lump sum to your
Plan beneficiary and no Withdrawal Fee will be imposed. Such value will be
determined as of the Valuation Period in which proof of death acceptable to
us and a request for payment on a form acceptable to the Company are received
at our Home Office in good order.
If the Annuitant dies after Annuity payments have begun and if there is a
death benefit payable under the Annuity option elected, the remaining values
must be distributed to your designated Plan 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 normally be made within seven calendar days after proof
of death, acceptable to us, and a request for payment are received at our
Home Office.
TAX STATUS
Introduction
The following discussion is a general discussion of federal income tax
considerations relating to a Contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all
of the situations in which a person may be entitled to or may receive a
distribution under the Contracts. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction.
This discussion is based upon the Company's understanding of the present
federal income tax laws as they are currently interpreted by the Internal
Revenue Service ("IRS"). The tax treatment of annuities may change by
legislation or other means (such as IRS regulations, revenue rulings,
judicial decisions, etc.). Moreover, it is also possible that any change
could be retroactive (that is, effective prior to the date of the change). No
representation is made as to the likelihood of the continuation of the
present federal income tax laws or of the current interpretation by the IRS.
Moreover, no attempt has been made to consider any applicable state or other
tax laws.
The Contracts may be purchased and used in connection with certain
retirement arrangements entitled to special income tax treatment under
Sections 403(b) or 401(a) of the Code. The ultimate effect of federal income
taxes on the amounts held under a Contract, or Annuity Payments, and on the
economic benefit to the Contract Holder, the Annuitant, or the Beneficiary
may depend on the tax status of the individual concerned.
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The Company makes no attempt to provide more than general information
about use of either Contract with the various types of retirement plans.
Contract Holders and participants under retirement plans as well as
annuitants and beneficiaries are cautioned that the rights of any person to
any benefits under a Contract may be subject to the terms and conditions of
the plans themselves, regardless of the terms and conditions of the Contract
issued in connection with such a plan. Some retirement plans are subject to
distribution and other requirements that are not incorporated in the
administration of a Contract. Contract Holders are responsible for
determining that contributions, distributions and other transactions with
respect to a Contract satisfy applicable law. Purchasers of a Contract for
use with any retirement plan should consult their legal counsel and tax
adviser regarding the suitability of the Contract.
Taxation of the Company
The Company is taxed as a life insurance company under Part I of Subchapter L
of the Code. Since the Separate Account is not an entity separate from the
Company, and its operation forms a part of the Company, it will not be taxed
separately as a "regulated investment company" under Subchapter M of 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.
Accordingly, the Company does not anticipate that it will incur any
federal income tax liability attributable to the Separate Account and,
therefore, the Company does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretations thereof result
in the Company being taxed on income or gains attributable to the Separate
Account, then the Company may impose a charge against the Separate Account
(with respect to some or all Contracts) in order to set aside provisions to
pay such taxes.
Tax Status of the Contracts
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. One of the circumstances that has
raised this issue is the number of funding options available under the
Contracts. The Company reserves the right to modify the Contracts as
necessary to attempt to prevent a Contract Holder from being considered the
owner of a pro rata share of the assets of the Separate Account.
Contracts Used with 403(b) Plans
The Contracts are designed for use with Section 403(b) plans. The tax rules
applicable to participants and beneficiaries in retirement plans vary
according to the type of plan and the terms and conditions of the plan.
Special favorable tax treatment may be available for certain types of
contributions and distributions. Adverse tax consequences may result from
contributions in excess of specified limits; distributions prior to age
59-1/2 (subject to certain exceptions); distributions that do not conform to
specified commencement and minimum distribution rules; aggregate
distributions in excess of a specified annual amount; and in other specified
circumstances.
Under Code Section 403(b), payments made by public school systems and
certain tax exempt organizations to purchase annuity contracts for their
employees are excludable from the gross income of the employee, subject to
certain limitations. However, these payments may be subject to FICA (Social
Security) taxes. A Contract issued as a tax-deferred annuity under Section
403(b) will be amended as necessary to conform to the requirements of the
Code.
In order to be excludable from your taxable income, your total annual
contributions to Section 403(b) plans cannot exceed either of two limits set
by the Code. The first limit, under Section 415, is generally the lesser of
25 percent of your compensation or $30,000. This limit applies to all your
own contributions, your employer's contributions under the Plan on your
behalf, and, if you are in control of the employer as defined in the Code,
contributions under certain other retirement plans. The second limit, which
is the exclusion allowance under Section 403(b) of the Code, is usually
calculated according to a formula that takes account of your length of
employment, any pretax contributions you and your employer have already made
under the Plan, and pretax contributions to certain other retirement plans.
There is also a third limit that specifically limits your salary reduction
contributions to the Plan to no more than $ annually (subject to
indexing); your own limit may be lower.
Code Section 403(b)(11) restricts the distribution under Code Section
403(b) annuity contracts of: (1) elective contributions made in years
beginning after December 31, 1988; (2) earnings on those contributions; and
(3) earnings in such years on amounts held as of the last year beginning
before January 1, 1989. Distribution of
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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 elective contributions may not be
distributed in the case of hardship.
The Code also has required distribution rules for Section 403(b) plans.
Distributions of amounts as of December 31, 1986, generally must begin by age
75. Distributions attributable to contributions made on or after January 1,
1987, and any earnings on the entire Individual Account on or after that
date, 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, or for 5% owners, by April 1 of the calendar year following the
calendar year in which the participant attains age 70-1/2. To comply with
these provisions, distributions must be in a form and amount sufficient to
satisfy the minimum distribution rules and the minimum distribution
incidental death benefit rules specified in IRS regulations. In general,
annuity payments may not extend beyond your life, the joint lives of you and
your beneficiary, a period certain greater than your life expectancy, or a
period certain greater than the joint life expectancies of you and your
beneficiary. If you die after the required minimum distributions have
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.
If you die before the required minimum distributions have commenced,
distribution to your beneficiary generally must either commence as an annuity
within one year or be completed within five years, subject to certain special
rules. If distributions are taken in excess of the minimum required
distribution, the Company will no longer maintain the grandfathered amount.
See "Contract Rights--Withdrawals."
All distributions will be taxed as they are received unless you made a
rollover contribution of the distribution to another Section 403(b) plan or
an individual retirement 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 to payments made for deaths
occurring on or before August 20, 1996.
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 generally
are provided the opportunity to elect not to have tax withheld from
distributions. Certain distributions from Section 403(b) tax-sheltered
annuities are subject to mandatory federal income tax withholding. We will
report to the IRS the taxable portion of all distributions.
Contracts Used With "Qualified" Plans
The Contracts are designed for use with certain types of retirement plans
that qualify for favorable tax treatment under Section 401(a) of the Code
("Qualified Plans"). Code section 401(a) permits employers to establish
various types of retirement plans for employees, and permits self- employed
individuals to establish retirement plans for themselves and 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 as a means to provide benefit payments.
The tax rules applicable to participants and beneficiaries in retirement
plans vary according to the type of plan and the terms and conditions of the
plan. Adverse tax consequences may result from contributions in excess of
specified limits; distributions prior to age 59-1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; aggregate distributions in excess of a specified
annual amount; and in other specified circumstances.
In the case of a withdrawal under a Contract paid to a plan participant or
beneficiary, including withdrawals under the Systematic Withdrawal Option or
the Estate Conservation Option, a ratable portion of the amount received is
taxable, generally based on the ratio of the "investment in the contract" to
the individual's total accrued benefit under the retirement plan. The
"investment in the contract" generally equals the amount of any
non-deductible contributions paid by or on behalf of any individual's total
accrued benefit under the retirement plan. The "investment in the contract"
generally equals the amount of any non-deductible contributions paid by or on
behalf of any individual. For a Contract issued in connection with qualified
plans, the "investment in the contract" can be zero. Special tax rules may be
available for certain distributions from a qualified plan.
In general, only the portion of the Annuity payment that represents the
amount by which the Account Value
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exceeds the "investment in the contract" will be taxed; after the "investment
in the contract" is recovered, the full amount of any additional Annuity
payments is taxable. For Variable Annuity payments, the taxable portion is
generally determined by an equation that establishes a specific dollar amount
of each payment that is not taxed. The dollar amount is determined by
dividing the "investment in the contract" by the total number of expected
periodic payments. However, the entire distribution will be taxable once the
recipient has recovered the dollar amount of his or her "investment in the
contract." For Fixed Annuity payments, in general there is no tax on the
portion of each payment which represents the same ratio that the "investment
in the contract" bears to the total expected value of the Annuity payments
for the term of the payments; however, the remainder of each Annuity payment
is taxable. Once the "investment in the contract" has been fully recovered,
the full amount of any additional Annuity payments is taxable.
Pension 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 generally are
provided the opportunity to elect not to have tax withheld from
distributions. However, certain distributions are subject to mandatory
federal income tax withholding.
Penalty Tax on Certain Distributions
The Code generally imposes a 10% penalty tax on the taxable portion of any
distribution from a 403(b) plan or a Qualified Plan unless (a) made when you
have attained age 59-1/2, (b) attributable to your disability, (c) made to a
beneficiary or your estate on or after your death, (d) made when you have
attained age 55 and have separated from service with the plan sponsor, (e)
the distribution amount is rolled over into another Section 403(b) plan or an
IRA in accordance with the terms of the Code, or (f) the distribution amount
is annuitized over your life or life expectancy or the joint lives or life
expectancies of you and your plan beneficiary, provided you have separated
from service with the plan sponsor. In addition, the penalty tax is abated
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.
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax consequences not discussed in this Prospectus. A competent tax
advisor should be consulted for further information.
MISCELLANEOUS
Voting Rights
Each Contract Holder may direct us in the voting of shares at meetings of
shareholders of the appropriate Fund(s). The number of votes to which each
Contract Holder may give direction will be determined as of the record date.
The number of votes each Contract Holder is entitled to direct with
respect to a particular Fund during the Accumulation Period is equal to the
portion of the sum of all Current Values of a Contract attributable to that
Fund divided by the net asset value of one share of that Fund. During the
Annuity Period, the number of votes is equal to the Valuation Reserve
applicable to the portion of a Contract attributable to that Fund, divided by
the net asset value of one share of that Fund. In determining the number of
votes, fractional votes will be recognized. Where the value of a Contract or
Valuation Reserve relates to more than one Fund, the calculation of votes
will be performed separately for each Fund.
Participants and Annuitants have a fully vested (100%) interest in the
value of the Individual Accounts which are credited with Participant
Contributions. Participants and Annuitants also have a nonforfeitable
(vested) right to the value of the Employer Account pursuant to the terms of,
and to the extent of their vested percentage under the Plan. Therefore, such
Participants and Annuitants may instruct the Contract Holder how to direct us
to cast the votes for the portion of the Current Value or Valuation Reserve
attributable to their Individual Accounts. Votes attributable to those
Participants and Annuitants who do not instruct the Contract Holder will be
cast by us in the same proportion as votes for which instructions have been
received by the Contract Holder. Votes attributable to Contract Holders who
do not direct us will be cast by us in the same proportion as the votes for
which we have received directions.
Contract Holders, or Participants and Annuitants entitled to instruct the
casting of votes, will receive a notice of each meeting of shareholders,
together with any proxy
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solicitation materials, and a statement of the number of votes attributable
to their participation under a Contract and stating the right to instruct the
Contract Holder how such votes shall be cast.
Modification of the Contracts
Only an authorized officer of the Company may change the terms of this
Contract. The Company reserves the right to modify this Contract to meet the
requirements of applicable state and federal laws or regulations. The Company
will notify the Contract Holder and Participants in writing of any changes.
The Company may change the tables for determining the amount of Annuity
benefit payments attributable only to Contributions accepted after the
effective date of change, 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. The Company
will notify the Contract Holder in writing at least thirty (30) days before
the effective date of the change. The Company may not make changes which
adversely affect the Annuity benefits attributable to Contributions already
made to the Contract.
Contract Holder Inquiries
A Contract Holder or a Participant may direct inquiries to a local
representative of the Distributor or may write directly to us at the address
shown on the cover page of this prospectus.
Telephone Transfers
Subject to the Contract Holder's approval, the Participant automatically has
the right to make transfers among Funds by telephone. We have enacted
procedures to prevent abuses of Individual Account transactions by telephone.
The procedures include requiring the use of a personal identification number
(PIN) to execute transactions. The Participant is responsible for
safeguarding his or her PIN, and for keeping Individual Account information
confidential. If the Company fails to follow its procedures, it would be
liable for any losses to the Participant's Individual Account resulting from
the failure. To ensure authenticity, we record all calls requesting transfers
on the 800 line. Note: all Individual Account information and transactions
permitted are subject to the terms of the Plan(s).
Payments
Payments for withdrawal requests (subject to the limitations on withdrawals
from the Fixed Plus Account described in Appendices II and III) will be made
in accordance with SEC requirements, but normally not later than seven
calendar days after a properly completed disbursement form is received at our
Home Office or within seven calendar days of the date the withdrawal form may
specify. Payments may be delayed for: (a) any period in which the New York
Stock Exchange ("Exchange") is closed (other than customary weekend and
holiday closings) or in which trading on the Exchange is restricted; (b) any
period in which an emergency exists where disposal of securities held by the
Funds is not reasonably practicable or is not reasonably practicable for the
value of the assets of the Funds to be fairly determined; or (c) such other
periods as the SEC may by order permit for the protection of Contract Holders
and Participants. The conditions under which restricted trading or an
emergency exists shall be determined by the rules and regulations of the SEC.
Transfer of Ownership; Assignment
Unless contrary to applicable law, assignment of a Contract or an Individual
Account is prohibited.
Legal Proceedings
We know of no material legal proceedings pending to which the Separate
Account is a party, nor which would materially affect the Separate Account.
Legal Matters
The validity of the securities offered by this Prospectus has been passed
upon by Counsel to the Company.
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CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following items are the contents of the Statement of Additional
Information:
General Information and History
Variable Annuity Account C
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Annuity Payments
Sales Material
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of Aetna Life Insurance and Annuity Company
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APPENDIX I
GUARANTEED ACCUMULATION ACCOUNT
The GAA is a credited interest option available during the Accumulation
Period under the Contracts. 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.
The GAA is a credited interest option in which we guarantee stipulated
rates of interest for stated periods of time on amounts directed to the 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 over the period of 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 more than three and
up to ten years.
Purchase Payments must remain in the 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"). For Contracts issued in New York, no MVA applies upon the
election of the Estate Conservation Option or the Systemic Withdrawal Option.
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 that is less than the amount paid into the GAA.
As a Guaranteed Term matures assets accumulating under the GAA may be (a)
transferred to a new Guaranteed Term, if available under the Contract, (b)
transferred to other available investment options, or (c) withdrawn. Amounts
withdrawn may be subject to a Withdrawal Fee, federal tax penalties or
mandatory income tax withholding and a Maintenance Fee.
By notifying us at least 30 days prior to the Annuity Date, you may elect
a variable annuity and have amounts which have been accumulating under the
GAA transferred to one or more of the Funds available during the Annuity
Period. GAA cannot be used as an investment option during the Annuity Period.
Mortality and Expense Risk Charges
The Company makes 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
the 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 during 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 the GAA, although such value is
included in determining the value of the Individual Account against which a loan
may be made.
Reinvestment Privilege
If amounts are withdrawn from the GAA and reinvested they will be applied to
the current deposit period. Amounts are proportionately reinvested to the
Classifications in the same manner as they were allocated before the
withdrawal. Any negative MVA amount applied to a withdrawal is not included
in the reinvestment.
- -------------------------------------------------------------------------------
24
<PAGE>
APPENDIX II
FIXED PLUS ACCOUNT
After receipt of any required regulatory approval in a given state, all
Contracts issued in that state will provide for the availability of this
Fixed Plus Account investment option.
The following summarizes material information concerning the Fixed Plus
Account that is offered as an option under the Contracts. Additional
information may by found in your certificate or contract. Amounts allocated
to the Fixed Plus Accounts are held in the Company's general account that
supports 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 this prospectus
regarding the Fixed Plus Account, however, may be subject to certain
generally applicable provisions of the federal securities laws relating to
the accuracy and completeness of the statements. Disclosure in this Appendix
regarding the Fixed Plus Account has not been reviewed by the SEC.
The Fixed Plus Account guarantees that amounts allocated to this option
will earn the minimum Fixed Plus interest rate specified in a 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 Contribution 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.
The Company reserves the right to limit Net Contribution(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, loan 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 an
Additional Withdrawal Option. The 20% limit is waived if the partial
withdrawal is taken pro rata from each investment option the Individual
Account invests and 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. Any such surrender or annuitization must be made
pro rata from all funding options.
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:
(bullet) One-fifth of the Fixed Plus Account Value on the day the request
is received, reduced by any Fixed Plus Account withdrawals, loan,
transfers or annuitizations made in the prior 12 months;
(bullet) One-fourth of the then remaining Fixed Plus Account Value 12
months later;
(bullet) One-third of the then remaining Fixed Plus Account Value 12
months later;
(bullet) One-half of the then remaining Fixed Plus Account Value 12 months
later; and
(bullet) The balance of the Fixed Plus Account Value 12 months later.
- -------------------------------------------------------------------------------
25
<PAGE>
We will waive this payout provision for a Fixed Plus Account full
surrender if a full withdrawal is made due to:
(a) the Participant's death, before Annuity payments begin and request for
payment is received within 6 months after the Participant's date of
death;
(b) the election of an Annuity option;
(c) if the Fixed Plus Account Value is $3,500 or less and no withdrawals,
transfers, loan or annuitizations have been made from the Account
within the prior 12 months.
(d) Subject to state regulatory approval, due to hardship from an
unforeseeable emergency, as defined by the Code, if the following
conditions are met:
(1) the hardship is certified by the employer;
(2) the amount is paid directly to you; and
(3) The amount paid for all withdrawals due to hardship during the
previous 12-month period does not exceed 10% of the average value of
all Accounts during that same period; or
(e) Subject to state regulatory approval, due to your separation from
service with the employer, provided that:
(1) the employer certifies that you have separated from service;
(2) the amount is withdrawn within one year from separation from service
or, if withdrawn after one year from separation from service, the
amount withdrawn is paid directly to you; and
(3) the amount paid for all withdrawals due to separation from service
during the previous 12-month period does not exceed 20% of the
average value of all Accounts under the Contract during that same
period.
Once we receive a request for a full withdrawal from an Account, no
further withdrawals or transfers will be permitted from the Fixed Plus
Account. A full withdrawal from the Fixed Plus Account may be canceled at any
time before the end of the five-payment period.
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 our Home Office receives a
written request, reduced by any Fixed Plus Account withdrawals, transfers,
loan 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
an Additional Withdrawal Option. 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 Annuity
payments begin, you may elect to have amounts which have been accumulating
under the Fixed Plus Account transferred to one or more of the Funds
available during the Annuity Period to provide lifetime Variable Annuity
payments.
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.
Loans
Loans may be made from those Individual Account Current Values held in the
Fixed Plus Account. A 5% default charge may be assessed on amounts loaned
from, but not repaid to the Fixed Plus Account. The default charge will apply
to borrowed amounts that exceed the amount eligible for withdrawal at the
time the loan is made.
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26
<PAGE>
Transfer Credits
The Company provides a transfer credit in certain circumstances. See
"Transfer Credits." The amount of the transfer credit may be changed in the
discretion of the Company, but is currently equal to 2% of the assets
transferred to the Company under a Contract that remain in the Individual
Accounts as of the one year anniversary of a participant's first Net
Contributions under the Contract, plus the interest that would have been
credited had that amount been deposited in the Fixed Plus Account on the
first business day of the calendar month following its calculation. The
transfer credit is applied to the Current Value held in the Fixed Plus
Account.
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27
<PAGE>
APPENDIX III
FIXED PLUS ACCOUNT
(Applicable only in limited circumstances)
The Fixed Plus Account described below will be available as an investment
option for all contributions under Contracts issued in a given state until
the Company obtains any required state regulatory approval to offer the Fixed
Plus Account investment option described in Appendix II. Subject to state
regulatory approval, certain Contracts under which the Fixed Plus Account
described below is an investment option may be endorsed to (i) make available
the Fixed Plus Account investment option described in Appendix II and (ii)
provide that no new contributions or transfers may be made to the Fixed Plus
Account described below.
The following summarizes material information concerning the Fixed Plus
Account that is offered as an option under the Contracts. Additional
information may be found in your certificate or contract. Amounts allocated
to the Fixed Plus Accounts are held in the Company's general account that
supports 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 this prospectus
regarding the Fixed Plus Account, however, may be subject to certain
generally applicable provisions of the federal securities laws relating to
the accuracy and completeness of the statements. Disclosure in this Appendix
regarding the Fixed Plus Account has not been reviewed by the SEC.
The Fixed Plus Account guarantees that amounts allocated to this option
will earn the minimum Fixed Plus interest rate specified in a 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 Contribution 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 Individual 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 Accounts for
Individual Accounts that have not reached their tenth anniversary.
The Company reserves the right to limit Net Contribution(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, loan 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 an
Additional Withdrawal Option. The 20% limit is waived if the partial
withdrawal is taken pro rata from each investment option the Individual
Account invests and 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. Any such surrender or annuitization must be made
pro rata from all funding options.
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:
(bullet) One-fifth of the Fixed Plus Account Value on the day the request
is received, reduced by any Fixed Plus Account withdrawals, loan,
transfers or annuitizations made in the prior 12 months;
(bullet) One-fourth of the then remaining Fixed Plus Account Value 12
months later;
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28
<PAGE>
(bullet) One-third of the then remaining Fixed Plus Account Value 12
months later;
(bullet) One-half of the then remaining Fixed Plus Account Value 12 months
later; and
(bullet) The balance of the Fixed Plus Account Value 12 months later.
We will waive this payout provision for a Fixed Plus Account full
surrender if a full withdrawal is made due to:
(a) the Participant's death, before Annuity payments begin and request for
payment is received within 6 months after the Participant's date of
death;
(b) the election of an Annuity option; or
(c) if the Fixed Plus Account Value is $3,500 or less and no withdrawals,
transfers, loan or annuitizations have been made from the Account
within the prior 12 months.
Once we receive a request for a full withdrawal from an Account, no
further withdrawals or transfers will be permitted from the Fixed Plus
Account. A full withdrawal from the Fixed Plus Account may be canceled at any
time before the end of the five-payment period.
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 our Home Office receives a
written request, reduced by any Fixed Plus Account withdrawals, transfers,
loan 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
an Additional Withdrawal Option. 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 Annuity
payments begin, you may elect to have amounts which have been accumulating
under the Fixed Plus Account transferred to one or more of the Funds
available during the Annuity Period to provide lifetime Variable Annuity
payments.
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.
Loans
Loans may be made from those Individual Account Current Values held in the
Fixed Plus Account. A 5% default charge may be assessed on amounts loaned
from, but not repaid to the Fixed Plus Account. The default charge will apply
to borrowed amounts that exceed the amount eligible for withdrawal at the
time the loan is made.
Transfer Credits
The Company provides a transfer credit in certain circumstances. See
"Transfer Credits." The amount of the transfer credit may be changed in the
discretion of the Company, but is currently equal to 2% of the assets
transferred to the Company under a Contract that remain in the Individual
Accounts as of the one year anniversary of a participant's first Net
Contributions under the Contract, plus the interest that would have been
credited had that amount been deposited in the Fixed Plus Account on the
first business day of the calendar month following its calculation. The
transfer credit is applied to the Current Value held in the Fixed Plus
Account.
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29
<PAGE>
APPENDIX IV
FIXED ACCOUNT
The Fixed Account is an investment option available only for amounts
previously allocated to a fixed account under contracts that are exchanged
into one or more of the contracts. See Appendix VI. No new contributions or
transfers to the Fixed Account will be allowed.
The following summarizes material information concerning the fixed account.
Additional information may be found in your certificate or contract. Amounts
allocated to the Fixed Account are held in the Company's general account.
Interests in the Fixed Account have not been registered with the SEC in
reliance on exemptions under the Securities Act of 1933, as amended.
Disclosure in this prospectus regarding the Fixed Account, however, may be
subject to certain generally applicable provisions of the Federal Securities
Laws relating to the accuracy and completeness of the statements. Disclosure
in this Appendix regarding the Fixed Account has not been reviewed by the
SEC.
The Fixed Account guarantees that amounts allocated to this option will
earn the minimum interest rate specified in the Contract. (This minimum
interest rate cannot be changed by the Company.) 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
Account withdrawal value (a) for a period of up to 6 months or (b) as
provided by federal law.
In addition, if allowed by state law, we may pay any Fixed Account
withdrawal value in equal payments, with interest, over a period not to
exceed 60 months, when:
(a) the Fixed Account withdrawal value for the Contract or for the total
of the Accounts under the Contract exceeds $250,000 on the day prior
to the withdrawal; and
(b) the sum of the current Fixed Account withdrawal and the total of all
Fixed Account withdrawals from the Contract or any Account under the
Contract within the past 12 calendar months exceeds 20% of the amount
in the Fixed Account on the day prior to the current withdrawal.
Interest, as used above, will not be more than two percentage points below
any rate determined prospectively by the Board of Directors for this class of
Contract. In no event will the interest rate be less than the minimum stated
in the Contract.
Amounts applied to the Fixed Account will earn the interest rate in effect
when actually applied to the Fixed Account.
Mortality and Expense Risk Charges
The Fixed 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 Account to any other available investment option(s)
are allowed in each calendar year during the Accumulation Period. The amount
that may be transferred may vary at our discretion; however, it will never be
less than 10% of the amount held under the Fixed Account. Transfers to the
Fixed Plus Account will be permitted without regard to this limitation.
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30
<PAGE>
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 Account transferred to
one or more of the Funds available during the Annuity Period to provide
Variable Annuity payments.
Contract Loans
Loans may be made from those Individual Account Current Values held in the
Fixed Account.
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31
<PAGE>
APPENDIX V
EMPLOYEE APPOINTMENT OF EMPLOYER
AS AGENT UNDER AN ANNUITY CONTRACT
My employer has adopted a plan under Internal Revenue Code Section 403(b)
("Plan") and has purchased an Aetna Life Insurance and Annuity Company
("Company") group variable annuity contract ("Contract") as the funding
vehicle. Contributions under this Plan will be made by me through salary
reduction to an Employee Account, and by my employer to an Employer Account.
By electing to participate in my employer's Plan, I voluntarily appoint my
employer, who is the Contract Holder, as my agent for the purposes of all
transactions under the Contract in accordance with the terms of the Plan. The
Company is not a party to the Plan and does not interpret the Plan
provisions.
As a Participant in the Plan, I understand and agree to the following
terms and conditions:
(bullet) I own the value of my Employee Account subject to the
restrictions of Section 403(b) and the terms of the Plan. Subject
to the terms of the vesting schedule in the Plan and the
restrictions of Section 403(b), I have ownership in the value of
my Employer Account.
(bullet) I understand that the Company will process transactions only with
my employer's written direction to the Company. I agree to be
bound by my employer's interpretation of the Plan provisions and
its written direction to the Company.
(bullet) My employer may permit me to make investment selections under the
Employee Account and/or the Employer Account directly with the
Company under the terms of the Contract. Without my employer's
written permission, I will be unable to make any investment
selections under the Contract.
(bullet) On my behalf, my employer may request a loan in accordance with
the terms of the Contract and the provisions of the Plan. The
Company will make payment of the loan amount directly to me. I
will be responsible for making repayments directly to the Company
in a timely manner.
(bullet) In the event of my death, my employer is the named beneficiary
under the terms of the Contract. I have the right to name a
personal beneficiary as determined under the terms of the Plan
and file that beneficiary election with my employer. It is my
employer's responsibility to direct the Company to properly pay
any death benefits.
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32
<PAGE>
APPENDIX VI
CONTRACTS ACQUIRED BY EXCHANGE
Certain holders of contracts issued by the Company may exchange their
contract(s) (the "Exchanged Contracts") for either or both of the Contracts
(the "Acquired Contract(s)"). The contracts eligible for exchange are
existing group tax-deferred annuity contracts issued by the Company of the
same class as the Contracts. The Company will not assess any charges or
deductions in connection with an exchange. See "Deferred Sales Charges"
below. Upon an exchange, the rights of the Exchanged Contract holder and
participants under the Exchanged Contract will be governed by the Acquired
Contract(s).
Differences Between Exchanged Contracts and Acquired Contracts
The terms of the Acquired Contracts vary from the Exchanged Contracts and it
may or may not be advantageous to make an exchange. Contract Holders and
Participants should review the Acquired Contract and an Exchanged Contract to
determine all the differences. Some differences relate to the minimum
guaranteed interest rates for the GAA, Fixed Plus Account and the Fixed
Account, the availability of the Fixed Account (see Appendix IV), the
operation of the Fixed Plus Account as to Net Contributions allocated or
transferred to the Fixed Plus Account under the Acquired Contract (see
Appendix III), the annuity options, and the tables on which Annuity payments
are based.
Special Acquired Contracts Provisions
Except as follows, terms of the Acquired Contracts are identical to the
Contracts described in the Prospectus:
Transfer Credit
If a new participant under an Acquired Contract transfers to the Company
assets not previously held by the Company, the new participant may receive a
transfer credit. Participants of an Exchanged Contract in effect for less
than one year who transferred assets not previously held by the Company may
also receive a transfer credit. See "Transfer Credit."
Deferred Sales Charge
Under the Acquired Contract, new participants of the Acquired Contract will
be subject to the Withdrawal Fee elected by the Contract Holder. See "Charges
and Fees During the Annuity Period." The Withdrawal Fee for existing
participants of an Exchanged Contract, however, will be subject to the
deferred sales charges outlined below and as previously set forth in their
Exchanged Contract. In general, deferred sales charges may be deducted from
amounts withdrawn during the first 10 Purchase Payment Periods completed (if
the Exchanged Contract is an Installment Purchase Payment Contract) or 9
Account Years (if the Exchanged Contract is a Single Purchase Payment
Contract), as set forth in the table below. In some cases, the deferred sales
charge will be based on Account Years for both Installment Purchase Payment
Contracts and for Single Purchase Payment Contracts. Please refer to the
Contract endorsement relating to the exchange to obtain more specific
information. Consult the Exchanged Contract to determine whether it is an
Installment Payment Contract or Single Purchase Payment Contract. For
purposes of determining if a deferred sales charge applies under an Acquired
Contract, amounts received under an Exchanged Contract will be credited for
the period of time during which the amount was held under an Exchanged
Contract.
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33
<PAGE>
The following tables reflect the deferred sales charge deduction as a
percentage of the amount withdrawn from the Funds, GAA and the Fixed Account:
Installment Purchase Payment Account:
<TABLE>
<CAPTION>
Purchase Payment Deferred Sales
Periods Completed* Charge Deduction
- ------------------------------- ---------------------
<S> <C>
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or 10 2%
More than 10 0%
</TABLE>
Single Purchase Payment Account:
<TABLE>
<CAPTION>
Account Years Deferred Sales
Completed Charge Deduction
- ------------------------------- ---------------------
<S> <C>
Less than 5 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more but less than 8 2%
8 or more but less than 9 1%
9 or more 0%
</TABLE>
*For some contracts, the deferred sales charge for Installment Purchase
Payment Accounts will be based on Account Years. Please refer to the
Contract endorsement relating to the exchange.
The deduction for the deferred sales charge will not exceed 8.5% of the
total Purchase Payments actually made to an Individual Account.
The deferred sales charge will apply to withdrawals during the
Accumulation Period. It will apply during the Annuity Period if a
non-lifetime Annuity option is elected on a variable basis and the remaining
value is withdrawn before five years of Annuity payments have been completed.
Fixed Plus Account
All amounts transferred or allocated to the Fixed Plus Account on or after
the Contract effective date will be subject to the Fixed Plus Account rules
applicable to amounts attributable to Net Contributions made to the Contract on
or after that date.
One-time election for Individual Accounts established with Net
Contributions from exchanged Company Contracts.
1) During a specified period beginning on the Contract effective date,
Participants will have a one-time opportunity to elect, by giving
notice to the Company, to have all amounts held in the Fixed Plus
Account be subject to the Fixed Plus Account rules applicable to
amounts attributable to Net Contributions made to the Contract on or
after the Contract effective date (See Appendix II). Participants who
make the election described in the preceding sentence will not be
entitled to be credited, beginning on the tenth anniversary of the
effective date of their Individual Account, with an interest rate that
is higher than the then declared rate for Individual Accounts before
the tenth anniversary on any amounts held in the Fixed Plus Account
(See Appendix III). An election made pursuant to this provision may not
be revoked.
2) For Participants who do not make the election allowed under 1) above,
amounts attributable to their balances in the Fixed Plus Account on the
Contract effective date will remain subject to the rules described in
Appendix III until such time as they are transferred to another
investment option or withdrawn.
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34
<PAGE>
APPENDIX VII
CONDENSED FINANCIAL INFORMATION
(Selected data for accumulation units outstanding throughout each period)
The condensed financial information presented below for the year ended
December 31, 1996 (as applicable), is derived from the financial statements
of the Account, which financial statements have been audited by KPMG Peat
Marwick LLP, independent auditors. The financial statements as of and for the
year ended December 31, 1996 and the independent auditors' report thereon,
are included in the Statement of Additional Information.
<TABLE>
<CAPTION>
1996
<S> <C>
AETNA VARIABLE FUND
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
AETNA INCOME SHARES
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
AETNA VARIABLE ENCORE FUND
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
AETNA ASCENT VARIABLE PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
AETNA CROSSROADS VARIABLE PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
AETNA LEGACY VARIABLE PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
AETNA VARIABLE INDEX PLUS PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
AMERICAN CENTURY VP CAPITAL APPRECIATION
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
</TABLE>
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35
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
1996
<S> <C>
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
FRANKLIN GOVERNMENT SECURITIES TRUST
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
</TABLE>
(1) The above figures are calculated by subtracting the beginning
Accumulation Unit value from the ending Accumulation Unit value during a
calendar year or period, and dividing the result by the beginning
Accumulation Unit value.
- -------------------------------------------------------------------------------
36
<PAGE>
For Master Applications Only
I hereby acknowledge receipt of an Account C prospectus for Retirement Plus
and Voluntary Tax-Deferred Annuity Plans dated May 1, 1997, 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.
SAI.01107-97) dated May 1, 1997.
- --------------------------------------------------------------------------------
CONTRACT HOLDER'S SIGNATURE
- --------------------------------------------------------------------------------
DATE
PROS.01107-97
<PAGE>
- -------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- -------------------------------------------------------------------------------
Statement of Additional Information dated May 1, 1997
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus dated May 1, 1997. The Contracts
offered in connection with the prospectus are the Retirement Plus Contract and
Voluntary Contract funded through Variable Annuity Account C (the "Separate
Account"). 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...................................... 1
Variable Annuity Account C........................................... 1
Offering and Purchase of Contracts................................... 2
Performance Data..................................................... 2
General........................................................ 2
Average Annual Total Return Quotations......................... 3
Annuity Payments..................................................... 4
Sales Material and Advertising....................................... 5
Independent Auditors................................................. 6
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 is a stock life insurance company which
was organized under the insurance laws of the State of Connecticut in 1976.
Through a merger, it succeeded to the business of Aetna Variable Annuity Life
Insurance Company (formerly Participating Annuity Life Insurance Company
organized in 1954). As of December 31, 1996, the Company had assets of $___
billion (subject to $____ billion of customer and other liabilities and $___
billion of shareholder equity) which includes $___ billion in assets held in the
Company's separate accounts. The Company had $____ billion in assets under
management, including $__ billion in its mutual funds. As of ______________, it
ranked among the top ___% of all U.S. life insurance companies by size. The
Company is a wholly owned subsidiary of Aetna Retirement Holdings, Inc., which
is in turn a wholly owned subsidiary of Aetna Retirement Services, Inc., and an
indirect wholly owned subsidiary of Aetna Inc. The Company is engaged in the
business of issuing life insurance policies and annuity contracts in all states
of the United States and in the District of Columbia. 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 a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. The Company provides investment advice to
several of the registered management investment companies offered as variable
investment options under the Contracts funded by the Separate Account (see
"Variable Annuity Account C" below).
Other than the mortality and expense risk charges and administrative expense
charge, 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. Please refer to the
prospectuses of the individual Funds in whose shares the assets of the Separate
Account are invested regarding the custodians for those Funds.
VARIABLE ANNUITY ACCOUNT C
Variable Annuity Account C 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 the Separate Account will be invested exclusively in shares of the
mutual funds described in the prospectus ("Funds"). Purchase Payments made under
the Contract may be allocated to one or more of the Funds. The Company may make
additions to, deletions from or substitution of available variable investment
options as permitted by law and subject to the conditions of the Contract. The
availability of the Funds is subject to applicable regulatory authorization. Not
all Funds are available in all jurisdictions or under all Contracts.
1
<PAGE>
The Funds currently available under the Contract are as follows:
<TABLE>
<S> <C>
Aetna Variable Fund Calvert Responsibly Invested Balanced Portfolio
Aetna Income Shares Fidelity VIP II Contrafund Portfolio
Aetna Variable Encore Fund Fidelity VIP Equity-Income Portfolio
Aetna Investment Advisers Fund, Inc. Fidelity VIP Growth Portfolio
Aetna Ascent Variable Portfolio Fidelity VIP Overseas Portfolio
Aetna Crossroads Variable Portfolio Franklin Government Securities Trust
Aetna Legacy Variable Portfolio Janus Aspen Aggressive Growth Portfolio
Aetna Variable Capital Appreciation Portfolio Janus Aspen Balanced Portfolio
Aetna Variable Growth Portfolio Janus Aspen Flexible Income Portfolio
Aetna Variable Index Plus Portfolio Janus Aspen Growth Portfolio
Aetna Variable Small Company 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
American Century VP Capital Appreciation Neuberger & Berman Growth Portfolio
(formerly TCI Growth) Scudder International Portfolio Class A Shares
</TABLE>
A complete description of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, is contained in the
prospectus and statement 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 - Contract Purchase" and
"Determining Contract Value."
PERFORMANCE DATA
General
From time to time, the Company may advertise different types of historical
performance for the variable options 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 and for the periods prescribed by the
Securities and Exchange Commission (the "standardized total return"), as well as
the "non-standardized total return," both of which are described below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the variable options under the Contract, and then related
to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. Such figures reflect the deduction of all recurring charges during each
period (e.g., mortality and expense risk charges, any applicable
administrative expense charge, the maintenance fee and the withdrawal fee).
These charges
2
<PAGE>
will be deducted on a pro rata basis in the case of fractional
periods. The maintenance fee is converted to a percentage of assets based on the
average account size under the Contracts described in the prospectus.
The non-standardized total return figures will be calculated in a similar
manner, except that they will not reflect any applicable withdrawal Fee ( which
would decrease the level of performance shown if reflected in these
calculations.) The non-standardized figures may also include monthly, quarterly,
year-to-date and three year periods.
For variable options of the Separate Account that were in existence prior to the
date the Fund became available under the Contract, the standardized and
non-standardized total returns may include periods prior to the date on which
such Fund became available under the Contract. 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.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. Investment results of the
Funds will fluctuate over time, and any presentation of the Funds' total return
quotations for any prior period should not be considered as a representation of
how the Funds will perform in any future period. Additionally, your Current
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 periods ended December 31, 1996 for the
variable investment options under the Contracts issued by the Company. The
standardized returns assume a mortality and expense risk charge of 1.25%, a $15
annual maintenance fee and a withdrawal fee for ten years. The non-standardized
returns assume the same charges but do not include the withdrawal fee. The
Company may also advertise returns based on other fee schedules that apply to a
particular Contract Holder. These fee schedules may result in higher returns
than those shown.
3
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
FUND
STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
- ----------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund 04/30/75
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares 06/01/78
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund 09/01/75
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc. 06/23/89
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio 07/03/95
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio 07/03/95
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio 07/03/95
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio 09/12/96
- ----------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 01/08/89
- ----------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap Portfolio 09/21/88
- ----------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital
Appreciation 11/20/87
- ----------------------------------------------------------------------------------------------------------------------------------
Calvert Responsibly Invested Balanced
Portfolio 09/30/86
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 01/03/95
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 10/22/86
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 11/07/86
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 02/13/87
- ----------------------------------------------------------------------------------------------------------------------------------
Franklin Government Securities Trust 05/30/89
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth 9/13/93
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 09/13/93
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 09/13/93
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 09/13/93
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio 09/13/93
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 09/13/93
- ----------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 10/14/91
- ----------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Growth Portfolio 12/31/85
- ----------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio
Class A Shares 04/30/87
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the table 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.
4
<PAGE>
ANNUITY PAYMENTS
When Variable Annuity payments are to begin, the value of the Individual Account
is determined using Fund Annuity Unit values as of the tenth Valuation Period
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 Variable Annuity payment for each $1,000 of value
applied. Thereafter, Variable Annuity payments fluctuate as the Fund 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
Fund 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 Fund Annuity Unit value for that investment
option. As noted, Fund Annuity Unit values fluctuate from one Valuation Period
to the next; such fluctuations reflect changes in the net investment factor for
the appropriate Fund(s) (with a ten Valuation Period lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
EXAMPLE:
Assume that, at the date Annuity payments are to begin, there are 3,000 Fund
Annuity Units credited under a particular Contract or Account and that the value
of a Fund Annuity Unit for the tenth Valuation Period 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 a Fund Annuity Unit for the Valuation Period in
which the first payment was due was $13.400000. When this value is divided into
the first monthly payment, the number of Fund Annuity Units is determined to be
20.414. The value of this number of Fund Annuity Units will be paid in each
subsequent month.
If the net investment factor with respect to the appropriate Fund is 1.0015000
as of the tenth Valuation Period 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 Fund Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Fund Annuity Unit value for the prior Valuation Period (assume such value to be
$13.504376) to produce a Fund Annuity Unit value of $13.523359 for the Valuation
Period in which the second payment is due.
5
<PAGE>
The second monthly payment is then determined by multiplying the number of Fund
Annuity Units by the current Fund 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 variable investment options to
established market indices such as the Standard & Poor's 500 Stock Index and the
Dow Jones Industrial Average or to the percentage change in values of other
management investment companies that have investment objectives similar to the
Subaccount being compared.
We may publish in advertisements and reports, the ratings and other information
assigned to us by one or more independent rating organizations such as A.M. Best
Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors
Services, Inc. The purpose of the ratings is to reflect our financial strength
and/or claims-paying ability. We may also quote ranking services such as
Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable
Insurance Products Performance Analysis Service (VIPPAS), which rank variable
annuity or life subaccounts or their underlying funds by performance and/or
investment objective. We may illustrate in advertisements the performance of the
underlying funds, if accompanied by performance which also shows the performance
of such funds reduced by applicable charges under the Separate Account. We may
also show in advertisements the portfolio holdings of the underlying funds,
updated at various intervals. From time to time, we will quote articles from
newspapers and magazines or other publications or reports, including, but not
limited to The Wall Street Journal, Money magazine, USA Today and The VARDS
Report.
The Company may provide in advertising, sales literature, periodic publications
or other materials information on various topics of interest to current and
prospective 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.
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT C
Index
Independent Auditors' Report......................... S-__
Statement of Assets and Liabilities.................. S-__
Statement of Operations.............................. S-__
Statements of Changes in Net Assets.................. S-__
Notes to Financial Statements ....................... S-__
Condensed Financial Information...................... S-__
FINANCIAL STATEMENTS OF VARIABLE ANNUITY ACCOUNT C AND AETNA LIFE
INSURANCE AND ANNUITY COMPANY TO BE FILED BY AMENDMENT
S-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY ACCOUNT C
VARIABLE ANNUITY CONTRACTS
issued by
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Form No. SAI.01107-97 ALIAC Ed. May 1997
<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, 1996
- Statement of Operations for the year ended December 31,
1996
- Statements of Changes in Net Assets for the years ended
December 31, 1996 and 1995
- Notes to Financial Statements
Financial Statements of the Depositor:
- Independent Auditors' Report
- Consolidated Balance Sheets as of December 31, 1996 and
1995
- Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994
- Consolidated Statements of Changes in Shareholder's Equity
for the years ended December 31, 1996, 1995 and 1994
- Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
- Notes to Consolidated Financial Statements
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance
and Annuity Company establishing Variable Annuity Account C(1)
(2) Not applicable
(3.1) Form of Broker-Dealer Agreement((2))
(3.2) Alternative Form of Wholesaling Agreement and Related Selling
Agreement((2))
(4.1) Form of Group Combination Annuity Contract (Nonparticipating)
(A001RP95)((3))
(4.2) Form of Group Combination Annuity Certificate
(Nonparticipating) (A007RC95)((3))
(4.3) Form of Group Combination Annuity Contract (Nonparticipating)
(A020RV95)((3))
(4.4) Form of Group Combination Annuity Certificate
(Nonparticipating) (A027RV95)((3))
(4.5) Form of Endorsement for Exchanged Contracts (EINRP95)((3))
(4.6) Form of Endorsement for Exchanged Contracts (EINRV95)((3))
(4.7) Form of Endorsement for 401(a) Plans((3))
(4.8) Form of Endorsement (GET 9/96) for Contracts A001RP95 and
A020RV95((4))
(4.9) Form of Endorsement (E1OMNI97) to Contract A001RP95
(4.10) Form of Endorsement (E2OMNI97) to Contract A001RP95
<PAGE>
(4.11) Form of Endorsement (E3OMNI97) to Contract A001RP95
(4.12) Form of Endorsement (E1FXPL97) to Contract A001RP95
(4.13) Form of Endorsement (E2FXPL97) to Contract A020RV95
(4.14) Form of Endorsement (E3FXPL97) to Contract A001RP95
(4.15) Form of Endorsement (EINRP97) to Contract A001RP95
(4.16) Form of Endorsement (E4OMNI97) to Contract A001RP95
(4.17) Form of Endorsement (EINRV97) to Contract A020RV95
(4.18) Form of Endorsement (E1PAY97) to Contracts A001RP95 and
A020RV95
(4.19) Form of Endorsement (E2PAY97) to Contracts A001RP95 and
A020RV95
(5) Form of Variable Annuity Contract Application (300-MOP-IB)(5)
(6.1) Certification of Incorporation and By-Laws of Aetna Life
Insurance and Annuity Company((6))
(6.2) Amendment of Certificate of Incorporation of Aetna Life
Insurance and Annuity Company((7))
(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((2))
(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((2))
(8.3) Second Amendment dated January 1, 1996 to 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((8))
(8.4) Third Amendment dated February 11, 1997 to 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 and
January 1, 1996
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996 and March 1, 1996((7))
(8.6) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1. 1995, May 1, 1995,
January 1, 1996 and March 1,1996((7))
<PAGE>
(8.7) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations
Company dated as of November 1, 1995((8))
(8.8) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Franklin Advisers, Inc. dated January 31,
1989((2))
(8.9) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994
and amended March 1, 1996((2))
(8.10) 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((2))
(8.11) 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((2))
(8.12) 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((2))
(8.13) Amendment dated as of February 20, 1996 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company and
Scudder Variable Life Investment Fund dated April 27, 1992 as
amended February 19, 1993 and August 13, 1993((8))
(8.14) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and amended December 22,
1992 and June 1, 1994((2))
(9) Opinion of Counsel*
(10.1) Consent of Independent Auditors*
(10.2) Consent of Counsel*
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data*
(14) Not applicable
(15.1) Powers of Attorney((7))
(15.2) Authorization for Signatures((2))
(27) Financial Data Schedule*
*To be filed by amendment
1. Incorporated by reference to Post-Effective Amendment No. 6 to
Registration Statement on Form N-4 (File No. 33-75986), as filed
electronically on April 22, 1996.
2. Incorporated by reference to Post-Effective Amendment No. 5 to
Registration Statement on Form N-4 (File No. 33-75986), as filed
electronically on April 12, 1996.
3. Incorporated by reference to Registration Statement on Form N-4
(File No. 333-01107), as filed electronically on February 21, 1996.
<PAGE>
4. Incorporated by reference to Post-Effective Amendment No. 6 to
Registration Statement on Form N-4 (File No. 33-91846), as filed
electronically on August 6, 1996.
5. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-91846), as filed on May 1, 1995.
6. Incorporated by reference to Post-Effective Amendment No. 1 to
Registration Statement on Form S-1 (File No. 33-60477), as filed
electronically on April 15, 1996.
7. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 11, 1997.
8. Incorporated by reference to Post -Effective Amendment No. 3 to
Registration Statement on form N-4 (File No. 33-88720), as filed
electronically on June 28, 1996.
<PAGE>
Item 25. Directors and Officers of the Depositor
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
Daniel P. Kearney Director and President
Timothy A. Holt Director, Senior Vice President and Chief
Financial Officer
Christopher J. Burns Director and Senior Vice President
Laura R. Estes Director and Senior Vice President
Gail P. Johnson Director and Vice President
John Y. Kim Director and Senior Vice President
Shaun P. Mathews Director and Vice President
Glen Salow Director and Vice President
Creed R. Terry Director and Vice President
Deborah Koltenuk Vice President and Treasurer, Corporate Controller
Frederick D. Kelsven Vice President and Chief Compliance Officer
Kirk P. Wickman Vice President, General Counsel and Secretary
* The principal business address of all directors and officers listed is
151 Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
Incorporated herein by reference to Item 26 of Post-Effective Amendment
No. 12 to the Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 11, 1997.
Item 27. Number of Contract Owners
As of December 31,1996, there were 600,951 individuals holding interests in
variable annuity contracts funded through Variable Annuity Account C.
<PAGE>
Item 28. Indemnification
Reference is hereby made to Section 33-771(f) of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and Section 33-776(4)
regarding indemnification of officers, employees and agents of Connecticut
corporations. These statutes provide in general that Connecticut corporations
incorporated prior to January 1, 1997 shall indemnify their officers, directors,
employees and agents against "liability" (defined as the obligation to pay a
judgment, settlement, penalty, fine, excise tax in the case of an employee
benefit plan or reasonable expenses incurred with respect to a proceeding). In
the case of a proceeding by or in the right of the corporation, indemnification
is limited to reasonable expenses incurred in connection with the proceeding
against the corporation to which the individual was named a party. The
corporation's obligation to provide such indemnification does not apply unless
(1) the individual has met the standard of conduct set forth in Section 33-771;
and (2) a determination is made (by majority vote of a quorum of the board of
directors who were not parties to the proceeding, or if a quorum cannot be
obtained, by a committee of the board selected as described in Section
33-775(b)(2); by special legal counsel selected by the board of directors or
members thereof as described in Section 33-775(b)(3); by shareholders) that the
individual met the standard set forth in Section 33-771; or (3) the court, upon
application by the individual, determines in view of all the circumstances that
such person is reasonably entitled to be indemnified. Also, unless limited by
its Certificate of Incorporation, a corporation must indemnify an individual who
was wholly successful on the merits or otherwise against reasonable expenses
incurred by him in connection with a proceeding to which he was a party because
of his relationship as director, officer, employee or agent of the corporation.
The statute does specifically authorize a corporation to procure indemnification
insurance on behalf of an individual who is or was a director, officer, employer
or agent of the corporation. Consistent with the statute, Aetna Inc. has
procured insurance from Lloyd's of London and several major United States excess
insurers for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor.
Item 29. Principal Underwriter
(a) In addition to serving as the principal underwriter and depositor for
the Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also
acts as the principal underwriter and investment adviser for Aetna
Variable Encore Fund, Aetna Variable Fund, Aetna Series Fund, Inc.,
Aetna Generation Portfolios, Inc., Aetna Income Shares, Aetna
Investment Advisers Fund, Inc., Aetna GET Fund, and Aetna Variable
Portfolios, Inc. (all registered management investment companies under
the 1940 Act). Additionally, ALIAC acts as the principal underwriter
and depositor for Variable Life Account B and Variable Annuity Accounts
B and G (separate accounts of ALIAC registered as unit investment
trusts under the 1940 Act). ALIAC is also the principal underwriter for
Variable Annuity Account I (a separate account of Aetna Insurance
Company of America registered as a unit investment trust under the 1940
Act).
(b) See Item 25 regarding the Depositor.
<PAGE>
(c) Compensation as of December 31, 1996:
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter Commissions or Annuitization Commissions Compensation*
- ----------- ----------- ---------------- ----------- -------------
Aetna Life
Insurance
and
Annuity
Company $1,325,661 $96,924,599
* 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 accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules under it relating to the securities
described in and issued under this Registration Statement are located at the
home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
Item 31. Management Services
Not applicable
Item 32. Undertakings
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement on
Form N-4 as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than
sixteen months old for as long as payments under the variable annuity
contracts may be accepted;
(b) to include as part of any application to purchase a contract offered by
a prospectus which is part of this registration statement on Form N-4,
a space that an applicant can check to request a Statement of
Additional Information; and
<PAGE>
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
(d) The Company hereby represents that it is relying upon and 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) P. 78,904 at 78,523 (November 22, 1988).
(e) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(f) Aetna Life Insurance and Annuity Company represents that the fees and
charges deducted under the contracts covered by this registration
statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Variable Annuity Account C of Aetna Life Insurance and
Annuity Company, has duly caused this Post-Effective Amendment No. 4 to its
Registration Statement on Form N-4 (File No. 333-01107) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut, on the 26th day of February, 1997.
VARIABLE ANNUITY ACCOUNT C OF
AETNA LIFE INSURANCE AND ANNUITY
COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY COMPANY
(Depositor)
By: /s/ Daniel P. Kearney*
----------------------------------
Daniel P. Kearney
President
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 4 to the Registration Statement on Form N-4 (File No. 333-01107) has been
signed by the following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Daniel P. Kearney* Director and President )
- -------------------------- (principal executive officer) )
Daniel P. Kearney )
)
/s/ Timothy A. Holt* Director, Senior Vice ) February
- -------------------------- President and ) 26, 1997
Timothy A. Holt Chief Financial Officer )
)
/s/ Christopher J. Burns* Director )
- -------------------------- )
Christopher J. Burns )
)
/s/ Laura R. Estes* Director )
- -------------------------- )
Laura R. Estes )
)
/s/ Gail P. Johnson* Director )
- -------------------------- )
Gail P. Johnson )
)
/s/ John Y. Kim* Director )
- -------------------------- )
John Y. Kim )
)
<PAGE>
/s/ Shaun P. Mathews* Director )
- -------------------------- )
Shaun P. Mathews )
)
/s/ Glen Salow* Director )
- -------------------------- )
Glen Salow )
)
/s/ Creed R. Terry* Director )
- -------------------------- )
Creed R. Terry )
)
/s/ Deborah Koltenuk* Vice President and Treasurer, )
- -------------------------- Corporate Controller )
Deborah Koltenuk )
By: /s/ Julie E. Rockmore
----------------------
*Julie E. Rockmore
Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT C
EXHIBIT INDEX
Exhibit No. Exhibit Page
99-B.1 Resolution of the Board of Directors of Aetna *
Life Insurance and Annuity Company establishing
Variable Annuity Account C
99-B.3.1 Form of Broker-Dealer Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement and *
Related Selling Agreement
99-B.4.1 Form of Group Combination Annuity Contract *
(Nonparticipating) (A001RP95)
99-B.4.2 Form of Group Combination Annuity Certificate *
(Nonparticipating) (A007RC95)
99-B.4.3 Form of Group Combination Annuity Contract *
(Nonparticipating) (A020RV95)
99-B.4.4 Form of Group Combination Annuity Certificate *
(Nonparticipating) (A027RV95)
99-B.4.5 Form of Endorsement for Exchanged Contracts *
(EINRP95)
99-B.4.6 Form of Endorsement for Exchanged Contracts *
(EINRV95)
99-B.4.7 Form of Endorsement for 401(a) Plans *
99-B.4.8 Form of Endorsement (GET 9/96) for Contracts *
A001RP95 and A020RV95
99-B.4.9 Form of Endorsement (E1OMNI97) to Contract ------------
A001RP95
99-B.4.10 Form of Endorsement (E2OMNI97) to Contract ------------
A001RP95
99-B.4.11 Form of Endorsement (E3OMNI97) to Contract ------------
A001RP95
99-B.4.12 Form of Endorsement (E1FXPL97) to Contract ------------
A001RP95
99-B.4.13 Form of Endorsement (E2FXPL97) to Contract ------------
A020RV95
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
99-B.4.14 Form of Endorsement (E3FXPL97) to Contract ------------
A001RP95
99-B.4.15 Form of Endorsement (EINRP97) to Contract ------------
A001RP95
99-B.4.16 Form of Endorsement (E4OMNI97) to Contract ------------
A001RP95
99-B.4.17 Form of Endorsement (EINRV97) to Contract ------------
A020RV95
99-B.4.18 Form of Endorsement (E1PAY97) to Contracts ------------
A001RP95 and A020RV95
99-B.4.19 Form of Endorsement (E2PAY97) to Contracts ------------
A001RP95 and A020RV95
99-B.5 Form of Variable Annuity Contract Application *
(300-GTD-IA)
99-B.6.1 Certification of Incorporation and By-Laws of *
Depositor
99-B.6.2 Amendment of Certificate of Incorporation of *
Depositor
99-B.8.1 Fund Participation Agreement (Amended and *
Restated) between Aetna Life Insurance and
Annuity Company, Alger American Fund and Fred
Alger Management, Inc. dated March 31, 1995
99-B.8.2 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 12, 1993
99-B.8.3 Second Amendment dated January 1, 1996 to 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
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
99-B.8.4 Third Amendment dated February 11, 1997 to 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 and January 1, 1997
99-B.8.5 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company, Variable
Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994
and amended on December 15, 1994, February 1,
1995, May 1, 1995, January 1, 1996 and March 1,
1996
99-B.8.6 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company, Variable
Insurance Products Fund II and Fidelity
Distributors Corporation dated February 1, 1994
and amended on December 15, 1994, February 1.
1995, May 1, 1995, January 1, 1996 and March
1,1996
99-B.8.7 Service Agreement between Aetna Life Insurance *
and Annuity Company and Fidelity Investments
Institutional Operations Company dated as of
November 1, 1995
99-B.8.8 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Franklin
Advisers, Inc. dated January 31, 1989
99-B.8.9 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.8.10 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
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
99-B.8.11 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.8.12 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.8.13 Amendment dated as of February 20, 1996 to Fund *
Participation Agreement between Aetna Life
Insurance and Annuity Company and Scudder
Variable Life Investment Fund dated April 27,
1992 as amended February 19, 1993 and August 13,
1993.
99-B.8.14 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company, Investors
Research Corporation and TCI Portfolios, Inc.
dated July 29, 1992 and amended December 22,
1992 and June 1, 1994
99-B.9 Opinion of Counsel **
99-B.10.1 Consent of Independent Auditors **
99-B.10.2 Consent of Counsel **
99-B.13 Schedule for Computation of Performance Data **
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule **
*Incorporated by reference
**To be filed by amendment
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
I. Elimination of the Guaranteed Accumulation Account Investment Option
Any reference in the Contract and Certificate to the Guaranteed
Accumulation Account, GA Account or GAA not otherwise eliminated by this
endorsement shall be of no effect.
In Contract Schedule I:
Delete the section entitled Guaranteed Accumulation Account (GA Account).
Move the section entitled Withdrawal Fee under Separate Account and GA
Account to the section entitled Separate Account. Delete the heading Separate
Account and GA Account.
Replace the section heading Separate Account, GA Account and Fixed Plus
Account with the heading Separate Account and Fixed Plus Account.
Definitions:
The following sections are deleted: paragraph b) under Current Value;
Deposit Period; Guaranteed Accumulation Account (GA Account); GA Account
Guaranteed Interest Rate; Guaranteed Term (Term); Market Value Adjustment (MVA);
Matured Term Value; Matured Term Value Transfer; Maturity Date; Nonunitized
Separate Account; and Reinvestment.
Contributions, Current Value and Withdrawal Provisions:
The following sections are deleted: paragraph b) under Net Contribution(s);
Market Value Adjustment (MVA); subparagraph 2) in paragraph a) under Notice to
the Contract Holder; paragraph c) under Withdrawals; and Withdrawals From the
GA Account.
II. Loan Provision Revisions
In the section entitled Loans:
Replace the Earned interest paragraph with the following:
c) Earned interest: The Loan Account, unless the loan is in
default, is credited with interest at a rate which is not less
than the Loan Interest Rate, less 3%, on an annual basis.
Unless the Loan is in default, interest credited to the Loan
Account will never be less than 3%.
Replace the Loan payment default section with the following:
i) Loan default: If Aetna does not receive a loan payment when
due, the defaulted payment is treated as follows:
1) If the amount of the vested Individual Account Current
Value available for distribution is sufficient to repay
(a) the defaulted payment, plus (b) any applicable Fixed
Plus Account default charge, plus (c) any surrender fee
due on the defaulted payment, that amount is deducted from
the vested Individual Account Current Value.
2) If the amount of the vested Individual Account Current
Value available for distribution is not sufficient to
repay (a) the outstanding loan balance, plus (b) any
applicable Fixed Plus Account default charge, plus (c) any
surrender fee due on the outstanding loan balance, then,
to the extent that any vested Individual Account Current
Value is available for distribution, it will be
surrendered and used to reduce the amounts in (a), (b) and
(c), respectively. After default, the Loan Account will
continue to be maintained but will not earn interest and
interest will not be charged on the outstanding loan
balance. At such time that all outstanding amounts have
been surrendered from the vested Individual Account
Current Value the loan will be canceled.
E1OMNI97
<PAGE>
Endorsed and made a part of the Contract and Certificate on the effective date
of the Contract.
/s/Daniel Kearney
---------------------------------
President
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
1. Replace "Code Section 403(b)" in Section 1.32 with "Code Section 401(a)."
2. Add the following to Section 2.04:
c) Any payment(s) made under this Contract to other than the
Contract Holder must be in compliance with the provisions of
the waiver and spousal consent requirements of Code Section
417, if applicable. At the time payment is requested by the
Contract Holder, Aetna will require the Contract Holder to
certify that the payment option is elected in compliance
with such requirements or that such requirements do not
apply, and that the distribution is in accordance with the
terms of the Plan. In the absence of such certification,
payment will be made to the Contract Holder.
3. Replace the third paragraph of Section 2.06 with the following:
The Contract Holder may, by written direction to Aetna, allow
Participants to select the investment options 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 and Participant's written direction to Aetna,
unless otherwise directed by the Plan. Participants have no rights
to direct Aetna as to payments under the Contract unless
countersigned by the Contract Holder.
4. Replace b) under Section 2.06 with the following:
Waiver/Consent Requirements:
With respect to any distribution made from an Employee or Employer
Account, the Contract Holder must certify in writing that all the
appropriate waiver and spousal consent requirements of Code
Section 417 have been met and that the distribution is in
accordance with the terms of the Plan.
5. Replace the first sentence of c) under Section 2.06 with the following:
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.
6. Replace Section 3.03 with the following:
E2OMNI97
<PAGE>
The Plan or the Contract Holder shall have responsibility for
determining and ensuring compliance with the applicable
limitations under Code Sections 401(a)(17), 401(k), 401(m),
402(g), 415, 416 and any other relevant Code provisions and Aetna
shall be entitled to rely on such determination.
7. Replace b) under Section 3.11 with the following:
b) Generally, the distribution of benefits must commence by April 1
of the calendar year following the calendar year in which the
Participant attains age 70-1/2 or retires, whichever is later, for
all but 5% owners. The distribution of benefits to a Participant
who is a 5% owner must commence by the April 1 following the
calendar year the Participant attains age 70-1/2.
8. Replace the last paragraph of Section 3.13 with the following:
For a partial or full withdrawal from any Individual Account,
Aetna must receive written direction from the Contract Holder on a
form acceptable to Aetna. This direction must include
certification that all of the waiver and spousal consent
requirements of Code Section 417 have been satisfied or that such
requirements do not apply, and that the withdrawal is in
accordance with the terms of the Plan. In the absence of such
certification, payment will be made to the Contract Holder.
9. Delete Section 3.14 in its entirety and renumber Sections 3.15 - 3.20 as
3.14 - 3.19 respectively.
10. Delete the last three (3) paragraphs in c) under Section 4.02.
11. Replace g) under Section 4.02 with the following:
g) Election and Revocation: The Contract Holder may elect ECO by
submitting a completed and signed election form to Aetna's Home
Office. The Contract Holder must certify in writing that the
distribution complies with the waiver and spousal consent
requirements of Code Section 417 or that such requirements do not
apply, and that the distribution is in accordance with the terms
of the Plan. Once ECO is elected, the Contract Holder 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 Participant.
12. Replace g) under Section 4.03 with the following:
g) Election and Revocation: The Contract Holder may elect SWO by
submitting a completed and signed election form to Aetna's Home
Office. The Contract Holder must certify in writing that the
distribution complies with the waiver
2
<PAGE>
and spousal consent requirements of Code Section 417 or that such
requirements do not apply, and that the distribution is in
accordance with the terms of the Plan. Once SWO is elected, the
Contract Holder 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 behalf of a Participant 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 a Participant.
13. Replace the second paragraph of b) under Section 5.01 with the following:
For any election of an Annuity option, the Contract Holder must
provide certification that the waiver and spousal consent
requirements of Code Section 417 have been satisfied or that such
requirements do not apply, and that the election is in accordance
with the terms of the Plan.
/s/Daniel Kearney
--------------------------------
3
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
1. This endorsement applies only to Individual Accounts established with Net
Contributions from exchanged Aetna Contracts.
2. The Guaranteed Interest Rate section of the Specifications is replaced with
the following:
There is a guaranteed interest rate for Contributions(s) held in the Fixed
Plus Account and the Fixed Account (see Contract Schedule I).
3. Where Aetna is the exclusive Plan provider, the Contract Holder does not have
a choice of a Transfer Credit or reduced charges to the Separate Account, as
stated in the Transfer Credit Endorsement made a part of this Contract. Only the
Transfer Credit option applies for exchanged Aetna Contracts.
Transfer Credit will be applied to Transferred Assets deposited into an
exchanged Contract which are transferred into an acquired Contract, as well as
to Transferred Assets deposited into an acquired Contract up until the one year
anniversary of the first Net Contribution to the exchanged Contract.
4. Add the following section to Contract Schedule I:
Fixed Account
- -------------------------------------------------------------------------------
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
5. Replace the section entitled Separate Account and GA Account under Contract
Schedule I with the following:
Separate Account, Fixed Account and GA Account
Withdrawal Fee:
For each withdrawal from an Individual Account, the Withdrawal Fee
will vary according to the length of time in years from the
Individual Account(s) effective date for the Individual Account
being surrendered. The number of years completed equals the total
number completed under this Contract and under other Aetna
Contracts from which Net Contributions to this Contract have been
transferred (exchanged Contracts). For each withdrawal, the fee
will be as follows:
Length of Time from Individual Withdrawal Fee
Account(s) Effective Date (Years)
Fewer than 5 5%
5 or more, but fewer than 7 4%
7 or more, but fewer than 9 3%
9 or more, but fewer than 10 2%
10 or more 0%
1
E3OMNI97
<PAGE>
For each withdrawal from an Individual Account maintained pursuant
to a lump-sum payment, the Withdrawal Fee will vary according to
the length of time in years from the Individual Account(s)
effective date for the Individual Account being surrendered. The
number of years completed equals the total number completed under
this Contract and under other Aetna Contracts from which Net
Contributions to this Contract have been transferred (exchanged
Contracts). For each withdrawal, the fee will be as follows:
Length of Time from Individual
Account(s) Effective Date (Years) Withdrawal Fee
Fewer than 5 years 5%
5 or more, but fewer than 6 years 4%
6 or more, but fewer than 7 years 3%
7 or more, but fewer than 8 years 2%
8 or more, but fewer than 9 years 1%
9 or more years 0%
The Withdrawal Fee will not be deducted from any portion of the
Individual Account Current Value which is paid:
[bullet] Due to the Participant's death before Annuity payments begin;
[bullet] Used to purchase Annuity benefits;
[bullet] Due to the election of the Estate Conservation Option (ECO) or
the Systematic Withdrawal Option (SWO) (see Section IV);
[bullet] In an amount equal to or less than 10% of the Individual
Account Current Value, as part of the first partial withdrawal
request in a calendar year to a Participant who is at least
age 59-1/2 and less than 70-1/2. The Individual Account
Current Value is calculated as of the date the partial
withdrawal request is received in good order at Aetna's Home
Office. Any outstanding loans from the Individual Account are
excluded when calculating the Individual Account Current
Value. This provision does not apply to partial withdrawal due
to loan defaults made from the Individual Account and does not
apply to full withdrawal requests. This provision may not be
exercised if SWO is elected;
[bullet] When the Individual Account(s) Current Value is $3,500 or less
and no amount has been withdrawn, taken as a loan or used to
purchase Annuity benefits during the prior 12 months;
[bullet] To relieve a Participant's "financial hardship," as may be
allowed for Annuity Contracts under Section 403(b) of the Code
or other applicable Internal Revenue Service rules or
regulations; or
[bullet] On account of a Participant's separation from service. The
Contract Holder must submit documentation satisfactory to
Aetna to confirm that the Participant is no longer providing
services to the employer.
The Withdrawal Fee will never exceed 8-1/2% of the total
Contributions made to the Individual Account.
6. Replace the section entitled Separate Account, GA Account, and the Fixed Plus
Account under Contract Schedule I with the following:
Separate Account, GA Account, Fixed Account and Fixed Plus Account
- -------------------------------------------------------------------------------
Transfers:
An unlimited number of Transfers may be made during the
Accumulation Period.
2
<PAGE>
Maintenance Fee:
An annual Maintenance Fee may be charged, as determined by the
value of total assets held by Aetna under this Contract and other
Aetna Contracts of the same class issued to the Contract Holder,
on each anniversary date of this Contract. The Maintenance Fee may
go up or down each year. Where applicable, the Maintenance Fee
will be charged for each Participant in the Contract.
Total Assets Maintenance Fee
----------------------------------- ---------------------------
Less than $500,000 $15.00
500,000 - 1,000,000 $15.00
1,000,001 - 5,000,000 $0.00
5,000,001 - 15,000,000 $0.00
Greater than 15,000,000 $0.00
Initial charges will be based on Aetna's estimated year end asset
level for the Contract Holder.
Systematic Withdrawal Option (SWO):
The Specified Payment or Specified Percentage may not be greater
than 20% of the Individual Account's Current Value at the time of
election. The Specified Period may not be less than 5 years.
Loan Interest Rate:
a) Plans subject to ERISA: a Loan Interest Rate is set on the
first business day of each month. For each loan, the initial
Loan Interest Rate is equal to the Monthly Average Corporates
for the calendar month beginning two months before the
calendar month in which the Loan Effective Date occurs. The
initial Loan Interest Rate is effective for a period of not
less than three months and not more than one year. The period
is specified in the loan agreement. For each period, the Loan
Interest Rate is adjusted if the new rate is at least 0.5%
higher or lower than the previous rate. The Participant will
receive reasonable notification of any change to the Loan
Interest Rate.
b) Plans not subject to ERISA: 6% on an annual basis.
See Section I. - DEFINITIONS for explanations.
7. Replace the section entitled Annuity Option 2 under Contract Schedule II
with the following:
Annuity Option 2:
For amounts invested in the Fixed Account, 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.
8. Add the following Definition:
Fixed Account:
An accumulation option with a guaranteed minimum interest rate
shown on the Contract Schedule I. Aetna may credit a higher rate
which is not guaranteed.
9. Replace the definition entitled Current Value with the following:
Current Value:
For an Individual Account, the Current Value is the total of:
a) The amount, if any, in the Fixed Plus Account, with interest
earned to date;
3
<PAGE>
b) The amount, if any, in the GA Account, with interest earned to
date;
c) The amount, if any in the Fixed Account, with interest earned
to date;
d) The value of all Fund Record Units, if any, as of the most
recent Valuation Period; plus
e) Any amount due to experience credits; less
f) Any Maintenance Fee(s) due.
10. Replace the definition entitled Transfer with the following:
Transfer:
The movement of invested amounts among the available Fund(s), the
Fixed Plus Account the Fixed Account and the GA Account during the
Accumulation Period.
11. Replace the section entitled Net Contributions with the following:
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
may 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 Fund(s) in which the Separate Account invests.
The Fixed Account is an investment option available only for Net
Contributions previously allocated to the Fixed Account under
Aetna Contracts that are exchanged into this Contract.
The GA Account is an investment option available only for Net
Contributions previously allocated to the GA Account under Aetna
Contracts that are exchanged into this Contract.
The Contract Holder must tell Aetna the percentage of all Net
Contributions to allocate to one or more of the investment
options. The Contract Holder or, if permitted by the Contract
Holder, the Participant may change the allocation of future Net
Contributions at any time, without charge. Aetna reserves the
right to require a minimum Contribution amount per Individual
Account.
12. Replace the section entitled Transfer(s) with the following:
Transfer(s):
Before an Annuity option is elected, all or any portion of the
Adjusted Current Value of the Individual Account may be
transferred from any Fund, or the GA Account:
a) To any other allowable Fund; or
b) To the Fixed Plus Account.
No Transfers will be allowed into the Fixed Account or GA Account.
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 3.08.
4
<PAGE>
Each Calendar year, 10% of the Current Value held in the Fixed
Account may be transferred to any Fund(s). Such transfer will be
without charge and will not be allowed under an Annuity Option.
Transfers will be permitted to the Fixed Plus Account without
regard to these limitations. At its discretion, Aetna may allow
Contract Holders to transfer a larger percentage and/or take
multiple transfers in a calendar year. If Aetna so allows, Aetna
reserves the right to reinstate the transfer limitations without
notice.
During each rolling twelve (12) month period, up to 20% of the
Current Value held in the Fixed Plus Account may be transferred to
one or more of the Fund(s). The 20% limit is reduced by any
partial withdrawals, loans or amounts 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 Contract Holder, or Participant if authorized in writing by
the Contract Holder, may make an unlimited number of Transfers
during the Accumulation Period.
13. Replace the section entitled Notice to the Contract Holder with the
following:
Notice to the Contract Holder:
Each year, Aetna will notify the Contract Holder of:
a) The value of any amounts held in:
1) The Fixed Plus Account,
2) The GA Account,
3) The Fixed Account, and
4) The Fund(s) for the Separate Account;
b) The number of any Fund record units;
c) The Fund record unit Value(s);
d) The Loan Account balance; and
e) The amount available for withdrawal.
This information will be as of a date no more than sixty (60) days
before the date of the notice.
14. Replace the section entitled Withdrawal Value with the following:
Withdrawal Value:
After deduction of the Maintenance Fee (if any), the amount
payable by Aetna upon the withdrawal of any portion of an
Individual Account from the Fund(s), the Fixed Account or the GA
Account shall be reduced by a Withdrawal Fee, if applicable. The
Withdrawal Fee will be in accordance with the Withdrawal Fee table
in Contract Schedule I.
No Withdrawal Fee is deducted from any portion of the Current
Value which is paid from the Fixed Plus Account.
For a partial or full withdrawal from any Individual Account,
Aetna must receive written direction from the Contract Holder on a
form acceptable to Aetna. If the Contract is subject to ERISA,
this direction must include certification that all of the REA
waiver and spousal consent requirements have been satisfied. Aetna
may defer payment of the withdrawal value until appropriate
Contract Holder certification is received.
15. Replace the section entitled Withdrawal Fee Applicable to Funds and GA
Account with the following:
Withdrawal Fee Applicable to Funds, the Fixed Account and GA Account:
A Withdrawal Fee (Deferred Sales Charge) may apply to withdrawals
from the GA Account, the Fixed Account and/or Funds. For each
withdrawal, the withdrawal fee will be determined as shown on
Contract Schedule I.
5
<PAGE>
During each rolling 12-month period, up to 20% of the Current
Value in the Fixed Plus Account may be withdrawn as a partial
surrender. This 20% limit is reduced by any amount(s) transferred,
taken as a loan or used to purchase an Annuity during the 12 month
period. The 20% limit applicable to partial surrenders from the
Fixed Plus Account will be waived when the partial surrender is
due to one of the conditions set forth in Contract Schedule I. The
waiver will apply provided the partial surrender is taken pro-rata
from the Fixed Plus Account, the GA Account, and the Fund(s).
Aetna reserves the right to include amounts paid under the ECO and
SWO provisions for purposes of applying the 20% limit. However,
the SWO provision is not available if the Contract Holder on
behalf of the Participant requested a Fixed Plus Account Transfer
or surrender within the current 12 month period.
16. Replace the fourth sentence of the section entitled Reinstatement with
the following:
Amounts will be reinstated among the Fixed Plus Account, the GA
Account, the Fixed Account and/or the Fund(s) for the Separate
Account in the same proportion as they were at the time of
withdrawal.
17. Replace a) under the section entitled Estate Conservation Option with the
following:
a) With the Estate Conservation Option (ECO) a portion of the
Individual Account Current Value is automatically surrendered
and distributed each year without incurring a Withdrawal Fee.
Each payment will be withdrawn from the Individual Account in
the same proportion as assets are held in the Funds, the GA
Account, the Fixed Account and the Fixed Plus Account on the
date the payment is made.
18. Replace a) under the section entitled Systematic Withdrawal Option with
the following:
a) With the Systematic Withdrawal Option (SWO) a portion of the
Individual Account Current Value is automatically distributed
each year without incurring a Withdrawal Fee. 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, the Fixed Account and the Fixed Plus Account on the
date the payment is made. SWO payments may not be elected if a
loan is outstanding under an Individual Account.
19. All amounts held in an exchanged Contract's GA Account on the effective date
of an acquired Contract will remain in effect and be subject to the same terms
and conditions as under the exchanged Contract until the Maturity Date of all
Guaranteed Terms. On or after the Maturity Date of any Guaranteed Term, the
Matured Term Value may not be reinvested in the GA Account but may be
transferred or allocated to any other available investment option under the
Contract. If no specific allocation direction is given by the Contract Holder
prior to the Maturity Date of a particular Guaranteed Term, the Matured Term
Value will be transferred to a Fund available under the acquired Contract that
has a money market investment objective.
/s/Daniel Kearney
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
In the section entitled Fixed Plus Account in Contract Schedule I:
Replace the Minimum Guaranteed Interest Rate provision with the following:
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
Replace the Full Withdrawal provision with the following:
Full Withdrawal:
The Payment of Fixed Plus Account Full Withdrawal provision will
be waived when the withdrawal is:
a) Due to the Participant's death before Annuity payments begin
and request for payment is received within six (6) months
after the Participant's date of death;
b) Used to purchase Annuity benefits;
c) When the amount in the Fixed Plus Account is $3,500 or less
and no amount has been surrendered, transferred, taken as a
loan or used to purchase Annuity benefits during the prior 12
months;
d) Due to hardship from an unforeseeable emergency, as defined by
the Code, if the following conditions are met:
1) the hardship is certified by the employer;
2) the amount is paid directly to you; and
3) the amount paid for all withdrawals due to hardship
during the previous 12 month period does not exceed 10%
of the average value of all Accounts under the Contract
during that same period; or
e) Due to separation from service with the employer, provided
that:
1) the employer certifies that you have separated from
service;
2) the amount is withdrawn within one year from separation
from service or, if withdrawn after one year from
separation from service, the amount withdrawn is paid
directly to you; and
3) the amount paid for all partial and full withdrawals due
to separation from service during the previous 12 month
period does not exceed 20% of the average value of all
Accounts under the Contract during that same period.
In the Annuity Provisions section of the contract:
Add the following to the Choices provision:
c) At the request of the Owner, all or any portion of the amount
allocated to a Fund may be transferred from any Fund to any
other allowable Fund. During the Annuity period, the maximum
number of allowable transfers in a calendar year is four.
Aetna reserves the right to change the number of allowable
transfers.
Transfer requests must be expressed as a percentage of the
allocation among the Funds of the amount upon which the
Variable Annuity will be based. Aetna may establish a minimum
transfer amount. Transfers will be processed as of the
Valuation Date next following the date when a transfer request
is received in good order at Aetna's Home Office.
Revise paragraph e) under the Choices provision as follows:
E1FXPL97
<PAGE>
e) Once elected, an Annuity option may not be revoked, except for
option 1 when elected on a variable basis.
Replace paragraph a) under Terms of Annuity Options with the following:
a) No choice of any Annuity option may be made if the first
payment would be less than $50 or if the total payments in a
year would be less than $250.
Replace the last sentence in paragraph b) under Terms of Annuity Options
with the following:
The Annuity rates for options 2 and 3 are based on mortality
from 1983 Table a.
Replace the first sentence in the Death Provision with the following:
When an Annuitant dies under options 2 and 3, the present value of
any remaining guaranteed payments will be paid in one sum or
payments will continue at the direction of the Contract Holder, in
accordance with the Plan.
Delete the last paragraph in the Death Provision.
Replace the Annuity Options provision with the following:
Annuity Options:
The Contract Holder may direct Aetna to make payments
according to one of the following options.
Option 1 -- Payments for a Stated Period of Time -- An Annuity
will be paid for 5 to 30 years.
If payments for this option are made under a Variable Annuity,
the present value of any remaining payments may be withdrawn
at any time. If a withdrawal is requested prior to the minumum
number of years specified on Contract Schedule II, it will be
subject to any withdrawal fee, if applicable (see Contract
Schedule I).
Option 2 -- Life Income Based on the Life of the Annuitant -
Payments will be made until the death of the Annuitant. When
this option is chosen, a choice from the following must be
made:
a) payments cease at the death of the Annuitant;
b) payments may be guaranteed for 5 - 30 years; or
c) cash refund: if the Annuitant dies, the beneficiary will
receive a lump sum payment equal to the amount applied to the
Annuity option (less any premium tax) less the total amount of
Fixed Annuity payments paid prior to such death. This cash
refund feature is only available if the total amount applied
to the Annuity option is allocated to a Fixed Annuity.
Option 3 - Life Income Based Upon the Lives of Two Annuitants
- An Annuity will be paid during the lives of the Annuitant
and a joint 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) 100% of the payment to continue after the first death with
a guarantee of 5 - 30 years;
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; or
f) 100% of the payment to continue after the first death with
a cash refund feature. If the Annuitant and joint Annuitant
die, the beneficiary will receive a lump sum payment equal to
the amount applied to the Annuity option (less any premium
tax) less the total amount of Fixed Annuity payments paid
prior to such death. This cash refund feature is only
available if the total amount applied to the Annuity option is
allocated to a Fixed Annuity.
If a Fixed Annuity is chosen under option 1, option 2 a) or b) or
option 3 a) or d), the Participant may elect an annual increase of
one, two or three percent compounded annually.
<PAGE>
Other Options -- Aetna may make other options available as allowed
by the laws of the state in which this Contract is delivered.
Replace the tables at the end of the Annuity Provisions section of
the contract and certificate with the following tables:
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of 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%
- -------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
- -------------------------------------------------------
5 17.91 18 5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
- -------------------------------------------------------
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
- -------------------------------------------
Monthly Monthly
Years Payment Years Payment
- -------------------------------------------
5 18.12 18 6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
- -------------------------------------------
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- ---------------------------------------
Monthly Monthly
Years Payment Years Payment
- ---------------------------------------
5 18.74 18 6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
- --------------------------------------
<PAGE>
OPTION 2
Life Income
Amount of 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 Years
- ---------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20 Cash
Annuitant Refund
- ---------------------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
- ---------------------------------------------------------------------------
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.
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
- -----------------------------------------------------------------
Adjusted
Age of Annuitant None 5 10 15 20
- -----------------------------------------------------------------
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.
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
- --------------------------------------------------------------------------------
Adjusted
Age of Annuitant None 5 10 15 20
- --------------------------------------------------------------------------------
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.
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of 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
- ------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e Option 3f
Annuitant Guaranteed
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.69
55 55 3.88 4.25 4.47 3.87 4.14 3.87
55 60 3.99 4.44 4.71 3.98 4.20 3.98
60 55 3.99 4.44 4.71 3.98 4.42 3.98
60 60 4.24 4.71 4.99 4.23 4.57 4.23
60 65 4.38 4.97 5.32 4.38 4.65 4.38
65 60 4.38 4.97 5.32 4.38 4.93 4.38
65 65 4.72 5.33 5.70 4.71 5.14 4.72
65 70 4.93 5.68 6.15 4.91 5.27 4.91
70 65 4.93 5.68 6.15 4.91 5.66 4.91
70 70 5.40 6.21 6.70 5.36 5.96 5.38
70 75 5.69 6.68 7.32 5.62 6.13 5.66
75 70 5.69 6.68 7.32 5.62 6.67 5.66
75 75 6.37 7.45 8.15 6.23 7.12 6.33
75 80 6.78 8.11 8.99 6.54 7.36 6.71
- ---------------------------------------------------------------------------------------
</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.
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- --------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- --------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
<PAGE>
Endorsed and made a part of the Contract and Certificate on the latest of: May
1, 1997; the date of state approval; or the effective date of the Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
FORM OF ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
I. The following provisions apply to Individual Accounts established on or after
the effective date of this endorsement.
1. In the section entitled Fixed Plus Account in Contract Schedule I:
Replace the Minimum Guaranteed Interest Rate provision with
the following:
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
2. Replace the Full Withdrawal provision with the following:
Full Withdrawal:
The Payment of Fixed Plus Account Full Withdrawal provision will
be waived when the withdrawal is:
a) Due to the Participant's death before Annuity payments begin
and request for payment is received within [six (6)] months
after the Participant's date of death;
b) Used to purchase Annuity benefits;
c) When the amount in the Fixed Plus Account is $3,500 or less
and no amount has been surrendered, transferred, taken as a
loan or used to purchase Annuity benefits during the prior 12
months;
d) Due to hardship from an unforeseeable emergency, as defined by
the Code, if the following conditions are met:
1) the hardship is certified by the employer;
2) the amount is paid directly to you; and
3) the amount paid for all withdrawals due to hardship during
the previous 12 month period does not exceed 10% of the
average value of all Accounts under the Contract during
that same period; or
e) Due to separation from service with the employer, provided
that:
1) the employer certifies that you have separated from
service;
2) the amount is withdrawn within one year from separation
from service or, if withdrawn after one year from
separation from service, the amount withdrawn is paid
directly to you; and
3) the amount paid for all partial and full withdrawals due
to separation from service during the previous 12 month
period does not exceed 20% of the average value of all
Accounts under the Contract during that same period.
II. During the [three] month period beginning on the effective date of this
endorsement, Participants for whom Individual Accounts were established prior to
the effective date of this endorsement will have a one-time opportunity to
elect, by giving notice to Aetna, to have all amounts held in the Fixed Plus
Account be subject to the Fixed Plus Account rules applicable to Individual
Accounts established on or after the effective date of this endorsement.
Participants who make the election described in the preceding sentence will not
be entitled to be credited, beginning on the tenth anniversary of the effective
date of their Individual Account, with an interest rate that is higher than the
then declared rate for Individual Accounts before the tenth anniversary on any
amounts held in the Fixed Plus Account. An election made pursuant to this
provision may not be revoked.
E2FXPL97
<PAGE>
Endorsed and made a part of the Contract and Certificate effective on the date,
after any required state approval, as of which it is issued by Aetna.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
FORM OF ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
I. The following provisions apply to amounts attributable to Net Contributions
made to the Contract on or after the effective date of this endorsement.
1. In the section entitled Fixed Plus Account in Contract Schedule I:
Replace the Minimum Guaranteed Interest Rate provision with the
following:
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
2. Replace the Full Withdrawal provision with the following:
Full Withdrawal:
The Payment of Fixed Plus Account Full Withdrawal provision will
be waived when the withdrawal is:
a) Due to the Participant's death before Annuity payments begin
and request for payment is received within [six (6)] months
after the Participant's date of death;
b) Used to purchase Annuity benefits;
c) When the amount in the Fixed Plus Account is $3,500 or less
and no amount has been surrendered, transferred, taken as a
loan or used to purchase Annuity benefits during the prior 12
months;
d) Due to hardship from an unforeseeable emergency, as defined by
the Code, if the following conditions are met:
1) the hardship is certified by the employer;
2) the amount is paid directly to you; and
3) the amount paid for all withdrawals due to hardship during
the previous 12 month period does not exceed 10% of the
average value of all Accounts under the Contract during
that same period; or
e) Due to separation from service with the employer, provided
that:
1) the employer certifies that you have separated from
service;
2) the amount is withdrawn within one year from separation
from service or, if withdrawn after one year from
separation from service, the amount withdrawn is paid
directly to you; and
3) the amount paid for all partial and full withdrawals due
to separation from service during the previous 12 month
period does not exceed 20% of the average value of all
Accounts under the Contract during that same period.
II. All amounts transferred or allocated to the Fixed Plus Account on or after
the effective date of this endorsement will be subject to the Fixed Plus Account
rules applicable to amounts attributable to Net Contributions made to the
Contract on or after that date.
III. One time election with respect to existing Fixed Plus Account values:
E3FXPL97
<PAGE>
a. During the [three] month period beginning on the effective date
of this endorsement, Participants will have a one-time opportunity
to elect, by giving notice to Aetna, to have all amounts held in
the Fixed Plus Account be subject to the Fixed Plus Account rules
applicable to amounts attributable to Net Contributions made to
the Contract on or after the effective date of this endorsement.
Participants who make the election described in the preceding
sentence will not be entitled to be credited, beginning on the
tenth anniversary of their Individual Account, with an interest
rate that is higher than the then declared rate for Individual
Accounts before the tenth anniversary on any amounts held in the
Fixed Plus Account. An election made pursuant to this provision
may not be revoked.
b. For Participants who do not make the election allowed under
paragraph III (a) above, amounts attributable to their balances in
the Fixed Plus Account on the effective date of this endorsement
will remain subject to the rules described in the Contract
(without giving effect to paragraph (I) of this endorsement) until
such time as they are transferred to another investment option or
withdrawn.
Endorsed and made a part of the Contract and Certificate effective on the date,
after any required state approval, as of which it is issued by Aetna.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
FORM OF ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
I. The following provisions apply only to Individual Accounts established with
Net Contributions from exchanged Aetna contracts.
1. The Guaranteed Interest Rate section of the Specifications is replaced
with the following:
There is a guaranteed interest rate for Contributions(s) held in the
Fixed Plus Account, the Fixed Account and the GA Account (see Contract
Schedule I).
2. Where Aetna is the exclusive Plan provider, the Contract Holder does not
have a choice of a Transfer Credit or reduced charges to the Separate
Account, as stated in the Transfer Credit Endorsement made a part of
this contract. Only the Transfer Credit option applies for exchanged
Aetna contracts.
Transfer Credit will be applied to Transferred Assets deposited into an
exchanged contract which are transferred into an acquired contract, as
well as to Transferred Assets deposited into an acquired contract up
until the one year anniversary of the first Net Contribution to the
exchanged contract.
3. Add the following section to Contract Schedule I:
Fixed Account
-----------------------------------------------------------------------
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
4. Replace the section entitled Separate Account and GA Account under
Contract Schedule I with the following:
Separate Account, Fixed Account and GA Account
-----------------------------------------------------------------------
Withdrawal Fee:
For each withdrawal from an Individual Account, the Withdrawal Fee
will vary according to the number of purchase payment cycles
completed for the Individual Account being surrendered. The number
and amount of purchase payments to be made in a cycle is chosen by
the Participant. A purchase payment cycle is completed when this
chosen number and amount of purchase payments have been made. The
number of purchase payment cycles completed may not be greater
than the number of whole years since the Individual Account was
established under this or any other exchanged Aetna contract. The
number of purchase payment cycles completed equals the total
number completed under this contract and under other Aetna
contracts from which Net Contributions to this Contract have been
transferred from (exchanged contracts). For each withdrawal, the
fee will be as follows:
Number of Purchase Payment Cycles Completed Withdrawal Fee
Fewer than 5 5%
5 or more, but fewer than 7 4%
7 or more, but fewer than 9 3%
9 or more, but fewer than 10 2%
10 or more 0%
2
EINRP97
<PAGE>
For each withdrawal from an Individual Account maintained pursuant
to a lump-sum payment, the Withdrawal Fee will vary according to
the period of time between the Effective Date of the Individual
Account under your previous exchanged Aetna contract and the date
of withdrawal as follows:
If Period of Time is Withdrawal Fee
Fewer than 5 years 5%
5 or more, but fewer than 6 years 4%
6 or more, but fewer than 7 years 3%
7 or more, but fewer than 8 years 2%
8 or more, but fewer than 9 years 1%
9 or more years 0%
The withdrawal fee will not be deducted from any portion of the
Individual Account Current Value which is paid:
[bullet] Due to the Participant's death before Annuity payments
begin;
[bullet] Used to purchase Annuity benefits;
[bullet] Due to the election of the Estate Conservation Option
(ECO) or the Systematic Withdrawal Option (SWO) (see
Section IV);
[bullet] In an amount equal to or less than 10% of the Individual
Account Current Value, as part of the first partial
withdrawal request in a calendar year to a Participant
who is at least age 59-1/2 and less than 70-1/2. The
Individual Account Current Value is calculated as of the
date the partial withdrawal request is received in good
order at Aetna's Home Office. Any outstanding loans from
the Individual Account are excluded when calculating the
Individual Account Current Value. This provision does not
apply to partial withdrawal due to loan defaults made
from the Individual Account and does not apply to full
withdrawal requests. This provision may not be exercised
if SWO is elected;
[bullet] When the Individual Account(s) Current Value is $3,500 or
less and no amount has been withdrawn, taken as a loan or
used to purchase Annuity benefits during the prior 12
months;
[bullet] To relieve a Participant's "financial hardship," as may
be allowed for Annuity contracts under Section 403(b) of
the Code or other applicable Internal Revenue Service
rules or regulations; or
[bullet] On account of a Participant's separation from service.
The Contract Holder must submit documentation
satisfactory to Aetna to confirm that the Participant is
no longer providing services to the employer.
[bullet] The Withdrawal Fee will never exceed 8-1/2% of the total
Contributions made to the Individual Account.
5. Replace the section entitled Separate Account, GA Account, and the Fixed
Plus Account with the following:
Separate Account, GA Account, Fixed Account and Fixed Plus Account
-----------------------------------------------------------------------
Transfers:
An unlimited number of Transfers may be made during the
Accumulation Period.
Maintenance Fee:
An annual Maintenance Fee may be charged, as determined by the
value of total assets held by Aetna under this Contract and other
Aetna contracts of the same class, on each anniversary date of
this Contract. The Maintenance Fee may go up or down each year.
Where applicable, the Maintenance Fee will be charged for each
Participant in the Contract.
Total Assets Maintenance Fee
--------------------------------- -------------------------------
Less than $500,000 $15.00
3
<PAGE>
500,000 - 1,000,000 $15.00
1,000,001 - 5,000,000 $0.00
5,000,001 - 15,000,000 $0.00
Greater than 15,000,000 $0.00
Initial charges will be based on Aetna's estimated year end asset
level for the Contract Holder.
Systematic Withdrawal Option (SWO):
The Specified Payment or Specified Percentage may not be greater
than 20% of the Individual Account's Current Value at the time of
election. The Specified Period may not be less than 5 years.
Loan Interest Rate:
a) Plans subject to ERISA: a Loan Interest Rate is set on the
first business day of each month. For each loan, the initial
Loan Interest Rate is equal to the Monthly Average Corporates
for the calendar month beginning two months before the
calendar month in which the Loan Effective Date occurs. The
initial Loan Interest Rate is effective for a period of not
less than three months and not more than one year. The period
is specified in the loan agreement. For each period, the Loan
Interest Rate is adjusted if the new rate is at least 0.5%
higher or lower than the previous rate. The Participant will
receive reasonable notification of any change to the Loan
Interest Rate.
b) Plans not subject to ERISA: 6% on an annual basis.
See Section I. - DEFINITIONS for explanations.
6. Replace the section entitled Annuity Option 2 under Contract Schedule II
with the following:
Annuity Option 1:
For amounts invested in the Fixed Account, 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.
7. Add the following Definition:
Fixed Account:
An accumulation option with a guaranteed minimum interest rate
shown on the Contract Schedule I. Aetna may credit a higher rate
which is not guaranteed.
8. Replace the definition entitled Current Value with the following:
Current Value:
For an Individual Account, 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;
c) The amount, if any in the Fixed Account, with interest earned
to date; and
d) The value of all Fund Record Units, if any, as of the most
recent Valuation Period; plus
e) Any amount due to experience credits; less f) Any Maintenance
Fee(s) due.
9. Replace the definition entitled Transfer with the following:
Transfer:
The movement of invested amounts among the available Fund(s), the
Fixed Plus Account, the Fixed Account and the GA Account during
the Accumulation Period.
10. Replace the section entitled Net Contributions with the following:
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
may 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.
The Fixed Account is an investment option available only for Net
Contributions previously allocated to the Fixed Account under
Aetna contracts that are exchanged into this Contract.
The Contract Holder must tell Aetna the percentage of all Net
Contributions to allocate to one or more of the investment
options. The Contract Holder or, if permitted by the Contract
Holder, the Participant may change the allocation of future Net
Contributions at any time, without charge. Aetna reserves the
right to require a minimum Contribution amount per Individual
Account.
11. Replace the section entitled Transfer(s) with the following:
Transfer(s):
Before an Annuity option is elected, all or any portion of the
Adjusted Current Value of the Individual Account may be
transferred from any Fund, or the GA Account:
a) To any other allowable 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.
No Transfers will be allowed into the Fixed Account.
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 3.08.
4
<PAGE>
Each Calendar year, 10% of the Current Value held in the Fixed
Account may be transferred to any Fund(s) and/or to the GA
Account's then-current Deposit Period. Such transfer will be
without charge and will not be allowed under an Annuity Option.
Transfers will be permitted to the Fixed Plus Account without
regard to these limitations. At its discretion, Aetna may allow
Contract Holders to transfer a larger percentage and/or take
multiple transfers in a calendar year. If Aetna so allows, Aetna
reserves the right to reinstate the transfer limitations without
notice.
During each rolling twelve (12) month period, up to 20% of the
Current Value held in the Fixed Plus Account 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, loans or amounts 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 Contract Holder, or Participant if authorized in writing by
the Contract Holder, may make an unlimited number of Transfers
during the Accumulation Period.
12. Replace the section entitled Notice to the Contract Holder with the
following:
Notice to the Contract Holder:
Each year, Aetna will notify the Contract Holder of:
a) The value of any amounts held in:
1) The Fixed Plus Account,
2) The GA Account,
3) The Fixed Account,
4) The Fund(s) for the Separate Account;
b) The number of any Fund record units;
c) The Fund record unit Value(s);
d) The Loan Account balance; and
e) The amount available for withdrawal.
This information will be as of a date no more than sixty (60) days
before the date of the notice.
13. Replace the section entitled Withdrawal Value with the following:
Withdrawal Value:
After deduction of the Maintenance Fee (if any), the amount
payable by Aetna upon the withdrawal of any portion of an
Individual Account from the Fund(s), the Fixed Account or the GA
Account shall be reduced by a Withdrawal Fee, if applicable. The
Withdrawal Fee will be in accordance with the Withdrawal Fee table
in Contract Schedule I.
No Withdrawal Fee is deducted from any portion of the Current
Value which is paid from the Fixed Plus Account.
For a partial or full withdrawal from any Individual Account,
Aetna must receive written direction from the Contract Holder on a
form acceptable to Aetna. If the Contract is subject to ERISA,
this direction must include certification that all of the REA
waiver and spousal consent requirements have been satisfied. Aetna
may defer payment of the withdrawal value until appropriate
Contract Holder certification is received.
14. Replace the section entitled Withdrawal Fee Applicable to Funds and GA
Account with the following:
Withdrawal Fee Applicable to Funds, the Fixed Account and GA Account:
A Withdrawal Fee (Deferred Sales Charge) may apply to withdrawals
from the GA Account, the Fixed Account and/or Funds. For each
withdrawal, the withdrawal fee will be determined as shown on
Contract Schedule I.
5
<PAGE>
During each rolling 12-month period, up to 20% of the Current
Value in the Fixed Plus Account may be withdrawn as a partial
surrender. This 20% limit is reduced by any amount(s) transferred,
taken as a loan or used to purchase an Annuity during the 12 month
period. The 20% limit applicable to partial surrenders from the
Fixed Plus Account will be waived when the partial surrender is
due to one of the conditions set forth in Contract Schedule I. The
waiver will apply provided the partial surrender is taken pro-rata
from the Fixed Plus Account, the GA Account, and the Fund(s).
Aetna reserves the right to include amounts paid under the ECO and
SWO provisions for purposes of applying the 20% limit. However,
the SWO provision is not available if the Contract Holder on
behalf of the Participant requested a Fixed Plus Account Transfer
or surrender within the current 12 month period.
15. Replace the fourth sentence of the section entitled Reinstatement with
the following:
Amounts will be reinstated among the Fixed Plus Account, the GA
Account, the Fixed Account and/or the Fund(s) for the Separate
Account in the same proportion as they were at the time of
withdrawal.
16. Replace a) under the section entitled Estate Conservation Option with
the following:
a) With the Estate Conservation Option (ECO) a portion of the
Individual Account Current Value is automatically surrendered
and distributed each year without incurring a Withdrawal Fee.
Each payment will be withdrawn from the Individual Account in
the same proportion as assets are held in the Funds, the GA
Account, the Fixed Account and the Fixed Plus Account on the
date the payment is made.
17. Replace a) under the section entitled Systematic Withdrawal Option with
the following:
a) With the Systematic Withdrawal Option (SWO) a portion of the
Individual Account Current Value is automatically distributed
each year without incurring a Withdrawal Fee. 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, the Fixed Account and the Fixed Plus Account on the
date the payment is made. SWO payments may not be elected if a
loan is outstanding under an Individual Account.
II. The following provisions apply to amounts attributable to Net Contributions
made to the Contract on or after the Contract effective date:
1. In the section entitled Fixed Plus Account in Contract Schedule I:
Replace the Minimum Guaranteed Interest Rate provision with the
following:
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
2. Replace the Full Withdrawal provision with the following:
Full Withdrawal:
The Payment of Fixed Plus Account Full Withdrawal provision will
be waived when the withdrawal is:
a) Due to the Participant's death before Annuity payments begin
and request for payment is received within six (6) months
after the Participant's date of death;
b) Used to purchase Annuity benefits;
c) When the amount in the Fixed Plus Account is $3,500 or less
and no amount has been surrendered, transferred, taken as a
loan or used to purchase Annuity benefits during the prior 12
months;
d) Due to hardship from an unforeseeable emergency, as defined by
the Code, if the following conditions are met:
1) the hardship is certified by the employer;
6
<PAGE>
2) the amount is paid directly to you; and
3) the amount paid for all withdrawals due to hardship during
the previous 12 month period does not exceed 10% of the
average value of all Accounts under the Contract during
that same period; or
e) Due to separation from service with the employer, provided
that:
1) the employer certifies that you have separated from
service;
2) the amount is withdrawn within one year from separation
from service or, if withdrawn after one year from
separation from service, the amount withdrawn is paid
directly to you; and
3) the amount paid for all partial and full withdrawals due
to separation from service during the previous 12 month
period does not exceed 20% of the average value of all
Accounts under the Contract during that same period.
III. All amounts transferred or allocated to the Fixed Plus Account on or after
the Contract effective date will be subject to the Fixed Plus Account rules
applicable to amounts attributable to Net Contributions made to the Contract on
or after that date.
IV. One-time election for Individual Accounts established with Net
Contributions from exchanged Aetna Contracts.
a) During the [three] month period beginning on the Contract
effective date, Participants will have a one-time opportunity
to elect, by giving notice to Aetna, to have all amounts held
in the Fixed Plus Account be subject to the Fixed Plus Account
rules applicable to amounts attributable to Net Contributions
made to the Contract on or after the Contract effective date.
Participants who make the election described in the preceding
sentence will not be entitled to be credited, beginning on the
tenth anniversary of the effective date of their Individual
Account, with an interest rate that is higher than the then
declared rate for Individual Accounts before the tenth
anniversary on any amounts held in the Fixed Plus Account. An
election made pursuant to this provision may not be revoked.
b) For Participants who do not make the election allowed under
IV(a) above, amounts attributable to their balances in the
Fixed Plus Account on the Contract effective date will remain
subject to the rules described in the Contract (without giving
effect to Part II of this endorsement) until such time as they
are transferred to another investment option or withdrawn.
V. In the Annuity Provisions section:
Add the following to the Choices provision:
c) At the request of the Owner, all or any portion of the amount
allocated to a Fund may be transferred from any Fund to any
other allowable Fund. During the Annuity period, the maximum
number of allowable transfers in a calendar year is four.
Aetna reserves the right to change the number of allowable
transfers.
Transfer requests must be expressed as a percentage of the
allocation among the Funds of the amount upon which the
Variable Annuity will be based. Aetna may establish a minimum
transfer amount. Transfers will be processed as of the
Valuation Date next following the date when a transfer request
is received in good order at Aetna's Home Office.
Revise paragraph e) under the Choices provision as follows:
a) Once elected, an Annuity option may not be revoked, except for
option 1 when elected on a variable basis.
Replace paragraph a) under Terms of Annuity Options with the following:
No choice of any Annuity option may be made if the first
payment would be less than $50 or if the total payments in a
year would be less than $250.
Replace the last sentence in paragraph b) under Terms of Annuity Options
with the following:
7
<PAGE>
The Annuity rates for options 2 and 3 are based on mortality
from 1983 Table a.
Replace the first sentence in the Death Provision with the following:
When an Annuitant dies under options 2 and 3, the present value of
any remaining guaranteed payments will be paid in one sum or
payments will continue at the direction of the Contract Holder, in
accordance with the Plan.
Delete the last paragraph in the Death Provision.
Replace the Annuity Options provision with the following:
Annuity Options:
The Contract Holder may direct Aetna to make payments according to
one of the following options.
Option 1 -- Payments for a Stated Period of Time -- An Annuity
will be paid for 5 to 30 years.
If payments for this option are made under a Variable Annuity,
the present value of any remaining payments may be withdrawn
at any time. If a withdrawal is requested prior to the minimum
number of years specified on Contract Schedule II, it will be
subject to any withdrawal fee, if applicable (see Contract
Schedule I).
Option 2 -- Life Income Based on the Life of the Annuitant -
Payments will be made until the death of the Annuitant. When
this option is chosen, a choice from the following must be
made:
a) payments cease at the death of the Annuitant;
b) payments may be guaranteed for 5 - 30 years; or
c) cash refund: if the Annuitant dies, the beneficiary will
receive a lump sum payment equal to the amount applied to the
Annuity option (less any premium tax) less the total amount of
Fixed Annuity payments paid prior to such death. This cash
refund feature is only available if the total amount applied
to the Annuity option is allocated to a Fixed Annuity.
Option 3 - Life Income Based Upon the Lives of Two Annuitants
- An Annuity will be paid during the lives of the Annuitant
and a joint 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) 100% of the payment to continue after the first death with
a guarantee of 5 - 30 years;
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; or
f) 100% of the payment to continue after the first death with
a cash refund feature. If the Annuitant and joint Annuitant
die, the beneficiary will receive a lump sum payment equal
to the amount applied to the Annuity option (less any
premium tax) less the total amount of Fixed Annuity
payments paid prior to such death. This cash refund feature
is only available if the total amount applied to the
Annuity option is allocated to a Fixed Annuity.
If a Fixed Annuity is chosen under option 1, option 2 a) or b) or
option 3 a) or d), the Participant may elect an annual increase of
one, two or three percent compounded annually.
Other Options -- Aetna may make other options available as allowed
by the laws of the state in which this Contract is delivered.
Replace the tables at the end of the Annuity Provisions section of
the contract and certificate with the following tables:
8
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of 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%
-------------------------------------------
Monthly Monthly
Years Payment Years Payment
-------------------------------------------
5 17.91 18 5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
-------------------------------------------
9
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
-------------------------------------------
Monthly Monthly
Years Payment Years Payment
-------------------------------------------
5 18.12 18 6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
-------------------------------------------
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
-------------------------------------------
Monthly Monthly
Years Payment Years Payment
-------------------------------------------
5 18.74 18 6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
-------------------------------------------
10
<PAGE>
OPTION 2
Life Income
Amount of 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 Years
----------------------------------------------------------------
Adjusted Age of Cash
Annuitant None 5 10 15 20 Refund
----------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
-----------------------------------------------------------------
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.
11
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------
Adjusted
Age of Annuitant None 5 10 15 20
------------------------------------------------------------
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.
12
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
--------------------------------------------------------------
Adjusted
Age of Annuitant None 5 10 15 20
--------------------------------------------------------------
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.
13
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of 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
- --------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e Option 3f
Annuitant Guaranteed
- ------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.69
55 55 3.88 4.25 4.47 3.87 4.14 3.87
55 60 3.99 4.44 4.71 3.98 4.20 3.98
60 55 3.99 4.44 4.71 3.98 4.42 3.98
60 60 4.24 4.71 4.99 4.23 4.57 4.23
60 65 4.38 4.97 5.32 4.38 4.65 4.38
65 60 4.38 4.97 5.32 4.38 4.93 4.38
65 65 4.72 5.33 5.70 4.71 5.14 4.72
65 70 4.93 5.68 6.15 4.91 5.27 4.91
70 65 4.93 5.68 6.15 4.91 5.66 4.91
70 70 5.40 6.21 6.70 5.36 5.96 5.38
70 75 5.69 6.68 7.32 5.62 6.13 5.66
75 70 5.69 6.68 7.32 5.62 6.67 5.66
75 75 6.37 7.45 8.15 6.23 7.12 6.33
75 80 6.78 8.11 8.99 6.54 7.36 6.71
- ------------------------------------------------------------------------------------------
</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.
14
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- -------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
15
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- --------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
16
<PAGE>
Endorsed and made a part of the Contract and Certificate on the effective date
of the Contract.
/s/ Dan Kearney
President
17
Aetna Life Insurance and Annuity Company
FORM OF ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
I. The following provisions apply only to Individual Accounts established with
Net Contributions from exchanged Aetna contracts.
1. The Guaranteed Interest Rate section of the Specifications is replaced
with the following:
There is a guaranteed interest rate for Contributions(s) held in the Fixed
Plus Account and the Fixed Account (see Contract Schedule I).
2. Where Aetna is the exclusive Plan provider, the Contract Holder does not
have a choice of a Transfer Credit or reduced charges to the Separate Account,
as stated in the Transfer Credit Endorsement made a part of this Contract. Only
the Transfer Credit option applies for exchanged Aetna Contracts.
Transfer Credit will be applied to Transferred Assets deposited into an
exchanged Contract which are transferred into an acquired Contract, as well as
to Transferred Assets deposited into an acquired Contract up until the one year
anniversary of the first Net Contribution to the exchanged Contract.
3. Add the following section to Contract Schedule I:
Fixed Account
--------------------------------------------------------------------------
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
4. Replace the section entitled Separate Account and GA Account under
Contract Schedule I with the following:
Separate Account, Fixed Account and GA Account
--------------------------------------------------------------------------
Withdrawal Fee:
For each withdrawal from an Individual Account, the Withdrawal Fee
will vary according to the length of time in years from the
Individual Account(s) effective date for the Individual Account
being surrendered. The number of years completed equals the total
number completed under this Contract and under other Aetna
Contracts from which Net Contributions to this Contract have been
transferred (exchanged Contracts). For each withdrawal, the fee
will be as follows:
Length of Time from Individual Withdrawal Fee
Account(s) Effective Date (Years)
Fewer than 5 5%
5 or more, but fewer than 7 4%
7 or more, but fewer than 9 3%
9 or more, but fewer than 10 2%
10 or more 0%
1
E4OMNI97
<PAGE>
For each withdrawal from an Individual Account maintained pursuant
to a lump-sum payment, the Withdrawal Fee will vary according to
the length of time in years from the Individual Account(s)
effective date for the Individual Account being surrendered. The
number of years completed equals the total number completed under
this Contract and under other Aetna Contracts from which Net
Contributions to this Contract have been transferred (exchanged
Contracts). For each withdrawal, the fee will be as follows:
Length of Time from Individual
Account(s) Effective Date (Years) Withdrawal Fee
Fewer than 5 years 5%
5 or more, but fewer than 6 years 4%
6 or more, but fewer than 7 years 3%
7 or more, but fewer than 8 years 2%
8 or more, but fewer than 9 years 1%
9 or more years 0%
The Withdrawal Fee will not be deducted from any portion of the
Individual Account Current Value which is paid:
[bullet] Due to the Participant's death before Annuity payments
begin;
[bullet] Used to purchase Annuity benefits;
[bullet] Due to the election of the Estate Conservation Option
(ECO) or the Systematic Withdrawal Option (SWO) (see
Section IV);
[bullet] In an amount equal to or less than 10% of the Individual
Account Current Value, as part of the first partial
withdrawal request in a calendar year to a Participant
who is at least age 59-1/2 and less than 70-1/2. The
Individual Account Current Value is calculated as of the
date the partial withdrawal request is received in good
order at Aetna's Home Office. Any outstanding loans from
the Individual Account are excluded when calculating the
Individual Account Current Value. This provision does
not apply to partial withdrawal due to loan defaults
made from the Individual Account and does not apply to
full withdrawal requests. This provision may not be
exercised if SWO is elected;
[bullet] When the Individual Account(s) Current Value is $3,500
or less and no amount has been withdrawn, taken as a
loan or used to purchase Annuity benefits during the
prior 12 months;
[bullet] To relieve a Participant's "financial hardship," as may
be allowed for Annuity Contracts under Section 403(b) of
the Code or other applicable Internal Revenue Service
rules or regulations; or
[bullet] On account of a Participant's separation from service.
The Contract Holder must submit documentation
satisfactory to Aetna to confirm that the Participant is
no longer providing services to the employer.
The Withdrawal Fee will never exceed 8-1/2% of the total
Contributions made to the Individual Account.
5. Replace the section entitled Separate Account, GA Account, and the Fixed
Plus Account under Contract Schedule I with the following:
Separate Account, GA Account, Fixed Account and Fixed Plus Account
--------------------------------------------------------------------------
Transfers:
An unlimited number of Transfers may be made during the
Accumulation Period.
2
<PAGE>
Maintenance Fee:
An annual Maintenance Fee may be charged, as determined by the
value of total assets held by Aetna under this Contract and other
Aetna Contracts of the same class issued to the Contract Holder,
on each anniversary date of this Contract. The Maintenance Fee may
go up or down each year. Where applicable, the Maintenance Fee
will be charged for each Participant in the Contract.
Total Assets Maintenance Fee
---------------------------------------------------------------
Less than $500,000 $15.00
500,000 - 1,000,000 $15.00
1,000,001 - 5,000,000 $0.00
5,000,001 - 15,000,000 $0.00
Greater than 15,000,000 $0.00
Initial charges will be based on Aetna's estimated year end asset
level for the Contract Holder.
Systematic Withdrawal Option (SWO):
The Specified Payment or Specified Percentage may not be greater
than 20% of the Individual Account's Current Value at the time of
election. The Specified Period may not be less than 5 years.
Loan Interest Rate:
a) Plans subject to ERISA: a Loan Interest Rate is set on the
first business day of each month. For each loan, the initial
Loan Interest Rate is equal to the Monthly Average Corporates
for the calendar month beginning two months before the
calendar month in which the Loan Effective Date occurs. The
initial Loan Interest Rate is effective for a period of not
less than three months and not more than one year. The period
is specified in the loan agreement. For each period, the Loan
Interest Rate is adjusted if the new rate is at least 0.5%
higher or lower than the previous rate. The Participant will
receive reasonable notification of any change to the Loan
Interest Rate.
b) Plans not subject to ERISA: 6% on an annual basis.
See Section I. - DEFINITIONS for explanations.
6. Replace the section entitled Annuity Option 2 under Contract Schedule II
with the following:
Annuity Option 1:
For amounts invested in the Fixed Account, 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.
7. Add the following Definition:
Fixed Account:
An accumulation option with a guaranteed minimum interest rate
shown on the Contract Schedule I. Aetna may credit a higher rate
which is not guaranteed.
8. Replace the definition entitled Current Value with the following:
Current Value:
For an Individual Account, the Current Value is the total of:
a) The amount, if any, in the Fixed Plus Account, with interest
earned to date;
3
<PAGE>
b) The amount, if any, in the GA Account, with interest earned to
date;
c) The amount, if any in the Fixed Account, with interest earned
to date;
d) The value of all Fund Record Units, if any, as of the most
recent Valuation Period; plus
e) Any amount due to experience credits; less
f) Any Maintenance Fee(s) due.
9. Replace the definition entitled Transfer with the following:
Transfer:
The movement of invested amounts among the available Fund(s), the
Fixed Plus Account the Fixed Account and the GA Account during the
Accumulation Period.
10. Replace the section entitled Net Contributions with the following:
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
may 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 Fund(s) in which the Separate Account invests.
The Fixed Account is an investment option available only for Net
Contributions previously allocated to the Fixed Account under
Aetna Contracts that are exchanged into this Contract.
The GA Account is an investment option available only for Net
Contributions previously allocated to the GA Account under Aetna
Contracts that are exchanged into this Contract.
The Contract Holder must tell Aetna the percentage of all Net
Contributions to allocate to one or more of the investment
options. The Contract Holder or, if permitted by the Contract
Holder, the Participant may change the allocation of future Net
Contributions at any time, without charge. Aetna reserves the
right to require a minimum Contribution amount per Individual
Account.
11. Replace the section entitled Transfer(s) with the following:
Transfer(s):
Before an Annuity option is elected, all or any portion of the
Adjusted Current Value of the Individual Account may be
transferred from any Fund, or the GA Account:
a) To any other allowable Fund; or
b) To the Fixed Plus Account.
No Transfers will be allowed into the Fixed Account or GA Account.
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 3.08.
4
<PAGE>
Each Calendar year, 10% of the Current Value held in the Fixed
Account may be transferred to any Fund(s). Such transfer will be
without charge and will not be allowed under an Annuity Option.
Transfers will be permitted to the Fixed Plus Account without
regard to these limitations. At its discretion, Aetna may allow
Contract Holders to transfer a larger percentage and/or take
multiple transfers in a calendar year. If Aetna so allows, Aetna
reserves the right to reinstate the transfer limitations without
notice.
During each rolling twelve (12) month period, up to 20% of the
Current Value held in the Fixed Plus Account may be transferred to
one or more of the Fund(s). The 20% limit is reduced by any
partial withdrawals, loans or amounts 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 Contract Holder, or Participant if authorized in writing by
the Contract Holder, may make an unlimited number of Transfers
during the Accumulation Period.
12. Replace the section entitled Notice to the Contract Holder with the
following:
Notice to the Contract Holder:
Each year, Aetna will notify the Contract Holder of:
a) The value of any amounts held in:
1) The Fixed Plus Account,
2) The GA Account,
3) The Fixed Account, and
4) The Fund(s) for the Separate Account;
b) The number of any Fund record units;
c) The Fund record unit Value(s);
d) The Loan Account balance; and
e) The amount available for withdrawal.
This information will be as of a date no more than sixty (60) days
before the date of the notice.
13. Replace the section entitled Withdrawal Value with the following:
Withdrawal Value:
After deduction of the Maintenance Fee (if any), the amount
payable by Aetna upon the withdrawal of any portion of an
Individual Account from the Fund(s), the Fixed Account or the GA
Account shall be reduced by a Withdrawal Fee, if applicable. The
Withdrawal Fee will be in accordance with the Withdrawal Fee table
in Contract Schedule I.
No Withdrawal Fee is deducted from any portion of the Current
Value which is paid from the Fixed Plus Account.
For a partial or full withdrawal from any Individual Account,
Aetna must receive written direction from the Contract Holder on a
form acceptable to Aetna. If the Contract is subject to ERISA,
this direction must include certification that all of the REA
waiver and spousal consent requirements have been satisfied. Aetna
may defer payment of the withdrawal value until appropriate
Contract Holder certification is received.
14. Replace the section entitled Withdrawal Fee Applicable to Funds and GA
Account with the following:
5
<PAGE>
Withdrawal Fee Applicable to Funds, the Fixed Account and GA Account:
A Withdrawal Fee (Deferred Sales Charge) may apply to withdrawals
from the GA Account, the Fixed Account and/or Funds. For each
withdrawal, the withdrawal fee will be determined as shown on
Contract Schedule I.
During each rolling 12-month period, up to 20% of the Current
Value in the Fixed Plus Account may be withdrawn as a partial
surrender. This 20% limit is reduced by any amount(s) transferred,
taken as a loan or used to purchase an Annuity during the 12 month
period. The 20% limit applicable to partial surrenders from the
Fixed Plus Account will be waived when the partial surrender is
due to one of the conditions set forth in Contract Schedule I. The
waiver will apply provided the partial surrender is taken pro-rata
from the Fixed Plus Account, the GA Account, and the Fund(s).
Aetna reserves the right to include amounts paid under the ECO and
SWO provisions for purposes of applying the 20% limit. However,
the SWO provision is not available if the Contract Holder on
behalf of the Participant requested a Fixed Plus Account Transfer
or surrender within the current 12 month period.
15. Replace the fourth sentence of the section entitled Reinstatement with
the following:
Amounts will be reinstated among the Fixed Plus Account, the GA
Account, the Fixed Account and/or the Fund(s) for the Separate
Account in the same proportion as they were at the time of
withdrawal.
16. Replace a) under the section entitled Estate Conservation Option with
the following:
a) With the Estate Conservation Option (ECO) a portion of the
Individual Account Current Value is automatically surrendered
and distributed each year without incurring a Withdrawal Fee.
Each payment will be withdrawn from the Individual Account in
the same proportion as assets are held in the Funds, the GA
Account, the Fixed Account and the Fixed Plus Account on the
date the payment is made.
17. Replace a) under the section entitled Systematic Withdrawal Option with
the following:
a) With the Systematic Withdrawal Option (SWO) a portion of the
Individual Account Current Value is automatically distributed
each year without incurring a Withdrawal Fee. 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, the Fixed Account and the Fixed Plus Account on the
date the payment is made. SWO payments may not be elected if a
loan is outstanding under an Individual Account.
II. The following provisions apply to amounts attributable to Net Contributions
made to the Contract on or after the Contract effective date.
1. In the section entitled Fixed Plus Account in Contract Schedule I:
Replace the Minimum Guaranteed Interest Rate provision with the
following:
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
2. Replace the Full Withdrawal provision with the following:
Full Withdrawal:
The Payment of Fixed Plus Account Full Withdrawal provision will
be waived when the withdrawal is:
a) Due to the Participant's death before Annuity payments begin
and request for payment is received within six (6) months
after the Participant's date of death;
b) Used to purchase Annuity benefits;
c) When the amount in the Fixed Plus Account is $3,500 or less
and no amount has been surrendered, transferred, taken as a
loan or used to purchase Annuity benefits during the prior 12
months;
d) Due to hardship from an unforeseeable emergency, as defined by
the Code, if the following conditions are met:
6
<PAGE>
1) the hardship is certified by the employer;
2) the amount is paid directly to you; and
3) the amount paid for all withdrawals due to hardship during
the previous 12 month period does not exceed 10% of the
average value of all Accounts under the Contract during
that same period; or
e) Due to separation from service with the employer, provided
that:
1) the employer certifies that you have separated from
service;
2) the amount is withdrawn within one year from separation
from service or, if withdrawn after one year from
separation from service, the amount withdrawn is paid
directly to you; and
3) the amount paid for all partial and full withdrawals due
to separation from service during the previous 12 month
period does not exceed 20% of the average value of all
Accounts under the Contract during that same period.
III. All amounts transferred or allocated to the Fixed Plus Account on or after
the Contract effective date will be subject to the Fixed Plus Account rules
applicable to amounts attributable to Net Contributions made to the Contract on
or after that date.
IV. One-time election for Individual Accounts established with Net Contributions
from exchanged Aetna Contracts.
a) During the [three] month period beginning on the Contract
effective date, Participants will have a one-time opportunity
to elect, by giving notice to Aetna, to have all amounts held
in the Fixed Plus Account be subject to the Fixed Plus Account
rules applicable to amounts attributable to Net Contributions
made to the Contract on or after the Contract effective date.
Participants who make the election described in the preceding
sentence will not be entitled to be credited, beginning on the
tenth anniversary of the effective date of their Individual
Account, with an interest rate that is higher than the then
declared rate for Individual Accounts before the tenth
anniversary on any amounts held in the Fixed Plus Account. An
election made pursuant to this provision may not be revoked.
b) For Participants who do not make the election allowed under
IV(a) above, amounts attributable to their balances in the
Fixed Plus Account on the Contract effective date will remain
subject to the rules described in the Contract (without giving
effect to Part II of this endorsement) until such time as they
are transferred to another investment option or withdrawn.
V. In the Annuity Provisions section:
Add the following to the Choices provision:
c) At the request of the Owner, all or any portion of the amount
allocated to a Fund may be transferred from any Fund to any
other allowable Fund. During the Annuity period, the maximum
number of allowable transfers in a calendar year is four.
Aetna reserves the right to change the number of allowable
transfers.
Transfer requests must be expressed as a percentage of the
allocation among the Funds of the amount upon which the
Variable Annuity will be based. Aetna may establish a minimum
transfer amount. Transfers will be processed as of the
Valuation Date next following the date when a transfer request
is received in good order at Aetna's Home Office.
Revise paragraph e) under the Choices provision as follows:
a) Once elected, an Annuity option may not be revoked, except for
option 1 when elected on a variable basis.
Replace paragraph a) under Terms of Annuity Options with the following:
7
<PAGE>
No choice of any Annuity option may be made if the first
payment would be less than $50 or if the total payments in a
year would be less than $250.
Replace the last sentence in paragraph b) under Terms of Annuity Options with
the following:
The Annuity rates for options 2 and 3 are based on mortality
from 1983 Table a.
Replace the first sentence in the Death Provision with the following:
When an Annuitant dies under options 2 and 3, the present value of
any remaining guaranteed payments will be paid in one sum or
payments will continue at the direction of the Contract Holder, in
accordance with the Plan.
Delete the last paragraph in the Death Provision.
Replace the Annuity Options provision with the following:
Annuity Options:
The Contract Holder may direct Aetna to make payments according
to one of the following options.
Option 1 -- Payments for a Stated Period of Time -- An Annuity
will be paid for 5 to 30 years.
If payments for this option are made under a Variable Annuity,
the present value of any remaining payments may be withdrawn
at any time. If a withdrawal is requested prior to the minimum
number of years specified on Contract Schedule II, it will be
subject to any withdrawal fee, if applicable (see Contract
Schedule I).
Option 2 -- Life Income Based on the Life of the Annuitant -
Payments will be made until the death of the Annuitant. When
this option is chosen, a choice from the following must be
made:
a) payments cease at the death of the Annuitant;
b) payments may be guaranteed for 5 - 30 years; or
c) cash refund: if the Annuitant dies, the beneficiary will
receive a lump sum payment equal to the amount applied to
the Annuity option (less any premium tax) less the total
amount of Fixed Annuity payments paid prior to such death.
This cash refund feature is only available if the total
amount applied to the Annuity option is allocated to a
Fixed Annuity.
Option 3 - Life Income Based Upon the Lives of Two Annuitants
- An Annuity will be paid during the lives of the Annuitant
and a joint 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) 100% of the payment to continue after the first death with
a guarantee of 5 - 30 years;
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; or
f) 100% of the payment to continue after the first death with
a cash refund feature. If the Annuitant and joint
Annuitant die, the beneficiary will receive a lump sum
payment equal to the amount applied to the Annuity option
(less any premium tax) less the total amount of Fixed
Annuity payments paid prior to such death. This cash
refund feature is only available if the total amount
applied to the Annuity option is allocated to a Fixed
Annuity.
If a Fixed Annuity is chosen under option 1, option 2 a) or b) or
option 3 a) or d), the Participant may elect an annual increase of
one, two or three percent compounded annually.
Other Options -- Aetna may make other options available as allowed
by the laws of the state in which this Contract is delivered.
8
<PAGE>
Replace the tables at the end of the Annuity Provisions section of
the contract and certificate with the following tables:
9
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of 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%
--------------------------------------
Monthly Monthly
Years Payment Years Payment
--------------------------------------
5 17.91 18 5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
--------------------------------------
10
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
--------------------------------------
Monthly Monthly
Years Payment Years Payment
--------------------------------------
5 18.12 18 6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
--------------------------------------
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
--------------------------------------
Monthly Monthly
Years Payment Years Payment
--------------------------------------
5 18.74 18 6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
--------------------------------------
11
<PAGE>
OPTION 2
Life Income
Amount of 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 Years
---------------------------------------------------------------
Adjusted Age of Cash
Annuitant None 5 10 15 20 Refund
---------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
---------------------------------------------------------------
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.
12
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------
Adjusted
Age of Annuitant None 5 10 15 20
------------------------------------------------------------
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.
13
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------
Adjusted
Age of Annuitant None 5 10 15 20
------------------------------------------------------------
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.
14
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of 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
- -------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e Option 3f
Annuitant Guaranteed
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.69
55 55 3.88 4.25 4.47 3.87 4.14 3.87
55 60 3.99 4.44 4.71 3.98 4.20 3.98
60 55 3.99 4.44 4.71 3.98 4.42 3.98
60 60 4.24 4.71 4.99 4.23 4.57 4.23
60 65 4.38 4.97 5.32 4.38 4.65 4.38
65 60 4.38 4.97 5.32 4.38 4.93 4.38
65 65 4.72 5.33 5.70 4.71 5.14 4.72
65 70 4.93 5.68 6.15 4.91 5.27 4.91
70 65 4.93 5.68 6.15 4.91 5.66 4.91
70 70 5.40 6.21 6.70 5.36 5.96 5.38
70 75 5.69 6.68 7.32 5.62 6.13 5.66
75 70 5.69 6.68 7.32 5.62 6.67 5.66
75 75 6.37 7.45 8.15 6.23 7.12 6.33
75 80 6.78 8.11 8.99 6.54 7.36 6.71
- -----------------------------------------------------------------------------------------
</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.
15
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- ------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
16
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- ------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
17
<PAGE>
Endorsed and made a part of the Contract and Certificate on the effective date
of the Contract.
/s/ Dan Kearney
President
18
Aetna Life Insurance and Annuity Company
FORM OF ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
I. The following provisions apply only to Individual Accounts established with
Net Contributions from exchanged Aetna contracts.
1. The Guaranteed Interest Rate section of the Specifications is replaced
with the following:
There is a guaranteed interest rate for Contributions(s) held in the Fixed
Plus Account, the Fixed Account and the GA Account (see Contract Schedule I).
2. Where Aetna is the exclusive Plan provider, the Contract Holder does not
have a choice of a Transfer Credit or reduced charges to the Separate Account,
as stated in the Transfer Credit Endorsement made a part of this contract. Only
the Transfer Credit option applies for exchanged Aetna contracts.
Transfer Credit will be applied to Transferred Assets deposited into an
exchanged contract which are transferred into an acquired contract, as well as
to Transferred Assets deposited into an acquired contract up until the one year
anniversary of the first Net Contribution to the exchanged contract.
3. Add the following section to Contract Schedule I:
Fixed Account
---------------------------------------------------------------------------
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
4. Replace the section entitled Separate Account and GA Account under
Contract Schedule I with the following:
Separate Account, Fixed Account and GA Account
---------------------------------------------------------------------------
Withdrawal Fee:
For each withdrawal from an Individual Account, the Withdrawal Fee
will vary according to the number of purchase payment cycles
completed for the Individual Account being surrendered. The number
and amount of purchase payments to be made in a cycle is chosen by
the Participant. A purchase payment cycle is completed when this
chosen number and amount of purchase payments have been made. The
number of purchase payment cycles completed may not be greater
than the number of whole years since the Individual Account was
established under this or any other exchanged Aetna contract. The
number of purchase payment cycles completed equals the total
number completed under this contract and under other Aetna
contracts from which Net Contributions to this Contract have been
transferred from (exchanged contracts). For each withdrawal, the
fee will be as follows:
Number of Purchase Payment Cycles Completed Withdrawal Fee
Fewer than 5 5%
5 or more, but fewer than 7 4%
7 or more, but fewer than 9 3%
9 or more, but fewer than 10 2%
10 or more 0%
1
EINRV97
<PAGE>
For each withdrawal from an Individual Account maintained pursuant
to a lump-sum payment, the Withdrawal Fee will vary according to
the period of time between the Effective Date of the Individual
Account under your previous exchanged Aetna contract and the date
of withdrawal as follows:
If Period of Time is Withdrawal Fee
Fewer than 5 years 5%
5 or more, but fewer than 6 years 4%
6 or more, but fewer than 7 years 3%
7 or more, but fewer than 8 years 2%
8 or more, but fewer than 9 years 1%
9 or more years 0%
The withdrawal fee will not be deducted from any portion of the
Individual Account Current Value which is paid:
[bullet] Due to the Participant's death before Annuity payments
begin;
[bullet] Used to purchase Annuity benefits;
[bullet] Due to the election of the Estate Conservation Option
(ECO) or the Systematic Withdrawal Option (SWO) (see
Section IV);
[bullet] In an amount equal to or less than 10% of the Individual
Account Current Value, as part of the first partial
withdrawal request in a calendar year to a Participant
who is at least age 59-1/2 and less than 70-1/2. The
Individual Account Current Value is calculated as of the
date the partial withdrawal request is received in good
order at Aetna's Home Office. Any outstanding loans from
the Individual Account are excluded when calculating the
Individual Account Current Value. This provision does not
apply to partial withdrawal due to loan defaults made
from the Individual Account and does not apply to full
withdrawal requests. This provision may not be exercised
if SWO is elected;
[bullet] When the Individual Account(s) Current Value is $3,500 or
less and no amount has been withdrawn, taken as a loan or
used to purchase Annuity benefits during the prior 12
months;
[bullet] To relieve a Participant's "financial hardship," as may
be allowed for Annuity contracts under Section 403(b) of
the Code or other applicable Internal Revenue Service
rules or regulations; or
[bullet] On account of a Participant's separation from service.
The Contract Holder must submit documentation
satisfactory to Aetna to confirm that the Participant is
no longer providing services to the employer.
[bullet] The Withdrawal Fee will never exceed 8-1/2% of the total
Contributions made to the Individual Account.
5. Replace the section entitled Separate Account, GA Account, and the Fixed
Plus Account with the following:
Separate Account, GA Account, Fixed Account and Fixed Plus Account
--------------------------------------------------------------------------
Transfers:
An unlimited number of Transfers may be made during the
Accumulation Period.
Maintenance Fee:
An annual Maintenance Fee may be charged, as determined by the
value of total assets held by Aetna under this Contract and other
Aetna contracts of the same class, on each anniversary date of
this Contract. The Maintenance Fee may go up or down each year.
Where applicable, the Maintenance Fee will be charged for each
Participant in the Contract.
Total Assets Maintenance Fee
------------------------------------------------------------
Less than $500,000 $15.00
2
<PAGE>
500,000 - 1,000,000 $15.00
1,000,001 - 5,000,000 $0.00
5,000,001 - 15,000,000 $0.00
Greater than 15,000,000 $0.00
Initial charges will be based on Aetna's estimated year end asset
level for the Contract Holder.
Systematic Withdrawal Option (SWO):
The Specified Payment or Specified Percentage may not be greater
than 20% of the Individual Account's Current Value at the time of
election. The Specified Period may not be less than 5 years.
Loan Interest Rate:
a) Plans subject to ERISA: a Loan Interest Rate is set on the
first business day of each month. For each loan, the initial
Loan Interest Rate is equal to the Monthly Average Corporates
for the calendar month beginning two months before the
calendar month in which the Loan Effective Date occurs. The
initial Loan Interest Rate is effective for a period of not
less than three months and not more than one year. The period
is specified in the loan agreement. For each period, the Loan
Interest Rate is adjusted if the new rate is at least 0.5%
higher or lower than the previous rate. The Participant will
receive reasonable notification of any change to the Loan
Interest Rate.
b) Plans not subject to ERISA: 6% on an annual basis.
See Section I. - DEFINITIONS for explanations.
6. Replace the section entitled Annuity Option 2 under Contract Schedule II
with the following:
Annuity Option 1:
For amounts invested in the Fixed Account, 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.
7. Add the following Definition:
Fixed Account:
An accumulation option with a guaranteed minimum interest rate
shown on the Contract Schedule I. Aetna may credit a higher rate
which is not guaranteed.
8. Replace the definition entitled Current Value with the following:
Current Value:
For an Individual Account, 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;
c) The amount, if any in the Fixed Account, with interest earned
to date; and
d) The value of all Fund Record Units, if any, as of the most
recent Valuation Period; plus
e) Any amount due to experience credits; less
3
<PAGE>
f) Any Maintenance Fee(s) due.
9. Replace the definition entitled Transfer with the following:
Transfer:
The movement of invested amounts among the available Fund(s), the
Fixed Plus Account, the Fixed Account and the GA Account during
the Accumulation Period.
10. Replace the section entitled Net Contributions with the following:
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
may 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.
The Fixed Account is an investment option available only for Net
Contributions previously allocated to the Fixed Account under
Aetna contracts that are exchanged into this Contract.
The Participant must tell Aetna the percentage of all Net
Contributions to allocate to one or more of the investment
options. The Participant may change the allocation of future Net
Contributions at any time, without charge. Aetna reserves the
right to require a minimum Contribution amount per Individual
Account.
11. Replace the section entitled Transfer(s) with the following:
Transfer(s):
Before an Annuity option is elected, all or any portion of the
Adjusted Current Value of the Individual Account may be
transferred from any Fund, or the GA Account:
a) To any other allowable 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.
No Transfers will be allowed into the Fixed Account.
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 3.08.
Each Calendar year, 10% of the Current Value held in the Fixed
Account may be transferred to any Fund(s) and/or to the GA
Account's then-current Deposit Period. Such transfer will be
without charge and will not be allowed under an Annuity Option.
Transfers will be permitted to the Fixed Plus Account without
regard to these limitations. At its discretion, Aetna may allow
Contract Holders to transfer a larger percentage and/or take
multiple transfers in a calendar year. If Aetna so allows, Aetna
reserves the right to reinstate the transfer limitations without
notice.
4
<PAGE>
During each rolling twelve (12) month period, up to 20% of the
Current Value held in the Fixed Plus Account 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, loans or amounts 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.
12. Replace the section entitled Notice to the Participant with the
following:
Notice to the Participant:
Each year, Aetna will notify the Participant of:
a) The value of any amounts held in:
1) The Fixed Plus Account,
2) The GA Account,
3) The Fixed Account,
4) The Fund(s) for the Separate Account;
b) The number of any Fund record units;
c) The Fund record unit Value(s);
d) The Loan Account balance; and
e) The amount available for withdrawal.
This information will be as of a date no more than sixty (60) days
before the date of the notice.
13. Replace the section entitled Withdrawal Value with the following:
Withdrawal Value:
After deduction of the Maintenance Fee (if any), the amount
payable by Aetna upon the withdrawal of any portion of an
Individual Account from the Fund(s), the Fixed Account or the GA
Account shall be reduced by a Withdrawal Fee, if applicable. The
Withdrawal Fee will be in accordance with the Withdrawal Fee table
in Contract Schedule I.
No Withdrawal Fee is deducted from any portion of the Current
Value which is paid from the Fixed Plus Account.
For a partial or full withdrawal from any Individual Account,
Aetna must receive written direction from the Participant on a
form acceptable to Aetna. Aetna may defer payment of the
withdrawal value until appropriate certification is received.
14. Replace the section entitled Withdrawal Fee Applicable to Funds and GA
Account with the following:
Withdrawal Fee Applicable to Funds, the Fixed Account and GA Account:
A Withdrawal Fee (Deferred Sales Charge) may apply to withdrawals
from the GA Account, the Fixed Account and/or Funds. For each
withdrawal, the withdrawal fee will be determined as shown on
Contract Schedule I.
5
<PAGE>
During each rolling 12-month period, up to 20% of the Current
Value in the Fixed Plus Account may be withdrawn as a partial
surrender. This 20% limit is reduced by any amount(s) transferred,
taken as a loan or used to purchase an Annuity during the 12 month
period. The 20% limit applicable to partial surrenders from the
Fixed Plus Account will be waived when the partial surrender is
due to one of the conditions set forth in Contract Schedule I. The
waiver will apply provided the partial surrender is taken pro-rata
from the Fixed Plus Account, the GA Account, and the Fund(s).
Aetna reserves the right to include amounts paid under the ECO and
SWO provisions for purposes of applying the 20% limit. However,
the SWO provision is not available if the Participant requested a
Fixed Plus Account Transfer or surrender within the current 12
month period.
15. Replace the fourth sentence of the section entitled Reinstatement with
the following:
Amounts will be reinstated among the Fixed Plus Account, the GA
Account, the Fixed Account and/or the Fund(s) for the Separate
Account in the same proportion as they were at the time of
withdrawal.
16. Replace a) under the section entitled Estate Conservation Option with
the following:
a) With the Estate Conservation Option (ECO) a portion of the
Individual Account Current Value is automatically surrendered
and distributed each year without incurring a Withdrawal Fee.
Each payment will be withdrawn from the Individual Account in
the same proportion as assets are held in the Funds, the GA
Account, the Fixed Account and the Fixed Plus Account on the
date the payment is made.
17. Replace a) under the section entitled Systematic Withdrawal Option with
the following:
a) With the Systematic Withdrawal Option (SWO) a portion of the
Individual Account Current Value is automatically distributed
each year without incurring a Withdrawal Fee. 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, the Fixed Account and the Fixed Plus Account on the
date the payment is made. SWO payments may not be elected if a
loan is outstanding under an Individual Account.
II. The following provisions apply to amounts attributable to Net Contributions
made to the Contract on or after the Contract effective date:
1. In the section entitled Fixed Plus Account in Contract Schedule I:
Replace the Minimum Guaranteed Interest Rate provision with the
following:
Minimum Guaranteed Interest Rate:
3% (effective annual rate of return).
2. Replace the Full Withdrawal provision with the following:
Full Withdrawal:
The Payment of Fixed Plus Account Full Withdrawal provision will
be waived when the withdrawal is:
a) Due to the Participant's death before Annuity payments begin
and request for payment is received within six (6) months
after the Participant's date of death;
b) Used to purchase Annuity benefits;
c) When the amount in the Fixed Plus Account is $3,500 or less
and no amount has been surrendered, transferred, taken as a
loan or used to purchase Annuity benefits during the prior 12
months;
d) Due to hardship from an unforeseeable emergency, as defined by
the Code, if the following conditions are met:
1) the hardship is certified by the employer;
2) the amount is paid directly to you; and
6
<PAGE>
3) the amount paid for all withdrawals due to hardship during
the previous 12 month period does not exceed 10% of the
average value of all Accounts under the Contract during
that same period; or
e) Due to separation from service with the employer, provided
that:
1) the employer certifies that you have separated from
service;
2) the amount is withdrawn within one year from separation
from service or, if withdrawn after one year from
separation from service, the amount withdrawn is paid
directly to you; and
3) the amount paid for all partial and full withdrawals due
to separation from service during the previous 12 month
period does not exceed 20% of the average value of all
Accounts under the Contract during that same period.
III. All amounts transferred or allocated to the Fixed Plus Account on or after
the Contract effective date will be subject to the Fixed Plus Account rules
applicable to amounts attributable to Net Contributions made to the Contract on
or after that date.
IV. One-time election for Individual Accounts established with Net Contributions
from exchanged Aetna Contracts.
a) During the [three] month period beginning on the Contract
effective date, Participants will have a one-time opportunity
to elect, by giving notice to Aetna, to have all amounts held
in the Fixed Plus Account be subject to the Fixed Plus Account
rules applicable to amounts attributable to Net Contributions
made to the Contract on or after the Contract effective date.
Participants who make the election described in the preceding
sentence will not be entitled to be credited, beginning on the
tenth anniversary of the effective date of their Individual
Account, with an interest rate that is higher than the then
declared rate for Individual Accounts before the tenth
anniversary on any amounts held in the Fixed Plus Account. An
election made pursuant to this provision may not be revoked.
For Participants who do not make the election allowed under
IV(a) above, amounts attributable to their balances in the
Fixed Plus Account on the Contract effective date will remain
subject to the rules described in the Contract (without giving
effect to Part II of this endorsement) until such time as they
are transferred to another investment option or withdrawn.
V. In the Annuity Provisions section:
Add the following to the Choices provision:
c) At the request of the Owner, all or any portion of the amount
allocated to a Fund may be transferred from any Fund to any
other allowable Fund. During the Annuity period, the maximum
number of allowable transfers in a calendar year is four.
Aetna reserves the right to change the number of allowable
transfers.
Transfer requests must be expressed as a percentage of the
allocation among the Funds of the amount upon which the
Variable Annuity will be based. Aetna may establish a minimum
transfer amount. Transfers will be processed as of the
Valuation Date next following the date when a transfer request
is received in good order at Aetna's Home Office.
Revise paragraph e) under the Choices provision as follows:
a) Once elected, an Annuity option may not be revoked, except for
option 1 when elected on a variable basis.
Replace paragraph a) under Terms of Annuity Options with the following:
No choice of any Annuity option may be made if the first
payment would be less than $50 or if the total payments in a
year would be less than $250.
Replace the last sentence in paragraph b) under Terms of Annuity Options
with the following:
The Annuity rates for options 2 and 3 are based on mortality
from 1983 Table a.
Replace the first sentence in the Death Provision with the following:
7
<PAGE>
When an Annuitant dies under options 2 and 3, the present value of
any remaining guaranteed payments will be paid in one sum or
payments will continue at the direction of the Contract Holder, in
accordance with the Plan.
Delete the last paragraph in the Death Provision.
Replace the Annuity Options provision with the following:
Annuity Options:
The Contract Holder may direct Aetna to make payments according to
one of the following options.
Option 1 -- Payments for a Stated Period of Time -- An Annuity
will be paid for 5 to 30 years.
If payments for this option are made under a Variable Annuity,
the present value of any remaining payments may be withdrawn
at any time. If a withdrawal is requested prior to the minimum
number of years specified on Contract Schedule II, it will be
subject to any withdrawal fee, if applicable (see Contract
Schedule I).
Option 2 -- Life Income Based on the Life of the Annuitant -
Payments will be made until the death of the Annuitant. When
this option is chosen, a choice from the following must be
made:
a) payments cease at the death of the Annuitant;
b) payments may be guaranteed for 5 - 30 years; or
c) cash refund: if the Annuitant dies, the beneficiary will
receive a lump sum payment equal to the amount applied to
the Annuity option (less any premium tax) less the total
amount of Fixed Annuity payments paid prior to such death.
This cash refund feature is only available if the total
amount applied to the Annuity option is allocated to a
Fixed Annuity.
Option 3 - Life Income Based Upon the Lives of Two Annuitants
- An Annuity will be paid during the lives of the Annuitant
and a joint 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) 100% of the payment to continue after the first death with
a guarantee of 5 - 30 years;
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; or
f) 100% of the payment to continue after the first death with
a cash refund feature. If the Annuitant and joint
Annuitant die, the beneficiary will receive a lump sum
payment equal to the amount applied to the Annuity option
(less any premium tax) less the total amount of Fixed
Annuity payments paid prior to such death. This cash
refund feature is only available if the total amount
applied to the Annuity option is allocated to a Fixed
Annuity.
If a Fixed Annuity is chosen under option 1, option 2 a) or b) or
option 3 a) or d), the Participant may elect an annual increase of
one, two or three percent compounded annually.
Other Options -- Aetna may make other options available as allowed
by the laws of the state in which this Contract is delivered.
Replace the tables at the end of the Annuity Provisions section of
the contract and certificate with the following tables:
8
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of 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%
--------------------------------------
Monthly Monthly
Years Payment Years Payment
-------------------------------------
5 17.91 18 5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
--------------------------------------
9
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
--------------------------------------
Monthly Monthly
Years Payment Years Payment
-------------------------------------
5 18.12 18 6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
--------------------------------------
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
--------------------------------------
Monthly Monthly
Years Payment Years Payment
-------------------------------------
5 18.74 18 6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
--------------------------------------
10
<PAGE>
OPTION 2
Life Income
Amount of 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 Years
--------------------------------------------------------------------
Adjusted Age of Cash
Annuitant None 5 10 15 20 Refund
--------------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
--------------------------------------------------------------------
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.
11
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------
Adjusted Age of
Annuitant None 5 10 15 20
------------------------------------------------------------
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.
12
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------
Adjusted Age of
Annuitant None 5 10 15 20
------------------------------------------------------------
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.
13
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of 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
- ---------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e Option 3f
Annuitant Guaranteed
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.69
55 55 3.88 4.25 4.47 3.87 4.14 3.87
55 60 3.99 4.44 4.71 3.98 4.20 3.98
60 55 3.99 4.44 4.71 3.98 4.42 3.98
60 60 4.24 4.71 4.99 4.23 4.57 4.23
60 65 4.38 4.97 5.32 4.38 4.65 4.38
65 60 4.38 4.97 5.32 4.38 4.93 4.38
65 65 4.72 5.33 5.70 4.71 5.14 4.72
65 70 4.93 5.68 6.15 4.91 5.27 4.91
70 65 4.93 5.68 6.15 4.91 5.66 4.91
70 70 5.40 6.21 6.70 5.36 5.96 5.38
70 75 5.69 6.68 7.32 5.62 6.13 5.66
75 70 5.69 6.68 7.32 5.62 6.67 5.66
75 75 6.37 7.45 8.15 6.23 7.12 6.33
75 80 6.78 8.11 8.99 6.54 7.36 6.71
- --------------------------------------------------------------------------------------------
</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.
14
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- --------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
15
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- ---------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
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.
16
<PAGE>
Endorsed and made a part of the Contract and Certificate on the effective date
of the Contract.
/s/ Dan Kearney
President
17
Aetna Life Insurance and Annuity Company
FORM OF ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
In the Annuity Provisions section:
Add the following to the Choices provision:
c) At the request of the Owner, all or any portion of the amount
allocated to a Fund may be transferred from any Fund to any
other allowable Fund. During the Annuity period, the maximum
number of allowable transfers in a calendar year is four.
Aetna reserves the right to change the number of allowable
transfers.
Transfer requests must be expressed as a percentage of the
allocation among the Funds of the amount upon which the
Variable Annuity will be based. Aetna may establish a minimum
transfer amount. Transfers will be processed as of the
Valuation Date next following the date when a transfer request
is received in good order at Aetna's Home Office.
Revise paragraph e) under the Choices provision as follows:
a) Once elected, an Annuity option may not be revoked, except for
option 1 when elected on a variable basis.
Replace paragraph a) under Terms of Annuity Options with the following:
No choice of any Annuity option may be made if the first
payment would be less than $50 or if the total payments in a
year would be less than $250.
Replace the last sentence in paragraph b) under Terms of Annuity Options
with the following:
The Annuity rates for options 2 and 3 are based on mortality
from 1983 Table a.
Replace the first sentence in the Death Provision with the following:
When an Annuitant dies under options 2 and 3, the present value of
any remaining guaranteed payments will be paid in one sum or
payments will continue at the direction of the Contract Holder, in
accordance with the Plan.
Delete the last paragraph in the Death Provision.
Replace the Annuity Options provision with the following:
Annuity Options:
The Contract Holder may direct Aetna to make payments according to
one of the following options.
Option 1 -- Payments for a Stated Period of Time -- An Annuity
will be paid for 5 to 30 years.
If payments for this option are made under a Variable Annuity,
the present value of any remaining payments may be withdrawn
at any time. If a withdrawal is requested prior to the minimum
number of years specified on Contract Schedule II, it will be
subject to any withdrawal fee, if applicable (see Contract
Schedule I).
Option 2 -- Life Income Based on the Life of the Annuitant -
Payments will be made until the death of the Annuitant. When
this option is chosen, a choice from the following must be
made:
a) payments cease at the death of the Annuitant;
b) payments may be guaranteed for 5 - 30 years; or
c) cash refund: if the Annuitant dies, the beneficiary will
receive a lump sum payment equal to the amount applied to the
Annuity option (less any premium tax) less the total amount of
Fixed Annuity payments paid prior to such death. This cash
refund feature is only available if the total amount applied
to the Annuity option is allocated to a Fixed Annuity.
E1PAY97
<PAGE>
Option 3 - Life Income Based Upon the Lives of Two Annuitants
- An Annuity will be paid during the lives of the Annuitant
and a joint 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) 6-2/3% of the payment to continue after the first death;
c) 50% of the payment to continue after the first death;
d) 100% of the payment to continue after the first death with
a guarantee of 5 - 30 years;
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; or
f) 100% of the payment to continue after the first death with
a cash refund feature. If the Annuitant and joint
Annuitant die, the beneficiary will receive a lump sum
payment equal to the amount applied to the Annuity option
(less any premium tax) less the total amount of Fixed
Annuity payments paid prior to such death. This cash
refund feature is only available if the total amount
applied to the Annuity option is allocated to a Fixed
Annuity.
If a Fixed Annuity is chosen under option 1, option 2 a) or b) or
option 3 a) or d), the Participant may elect an annual increase of
one, two or three percent compounded annually.
Other Options -- Aetna may make other options available as allowed
by the laws of the state in which this Contract is delivered.
Replace the tables at the end of the Annuity Provisions section of
the contract and certificate with the following tables:
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of 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%
------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------
5 17.91 18 5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
------------------------------------------
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------
5 18.12 18 6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
------------------------------------------
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------
5 18.74 18 6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
------------------------------------------
<PAGE>
OPTION 2
Life Income
Amount of 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 Years
---------------------------------------------------------------
Adjusted Age of Cash
Annuitant None 5 10 15 20 Refund
---------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
---------------------------------------------------------------
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.
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
----------------------------------------------------------
Adjusted
Age of Annuitant None 5 10 15 20
----------------------------------------------------------
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.
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
----------------------------------------------------------
Adjusted
Age of Annuitant None 5 10 15 20
----------------------------------------------------------
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.
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of 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
- -------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e Option 3f
Annuitant Guaranteed
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.69
55 55 3.88 4.25 4.47 3.87 4.14 3.87
55 60 3.99 4.44 4.71 3.98 4.20 3.98
60 55 3.99 4.44 4.71 3.98 4.42 3.98
60 60 4.24 4.71 4.99 4.23 4.57 4.23
60 65 4.38 4.97 5.32 4.38 4.65 4.38
65 60 4.38 4.97 5.32 4.38 4.93 4.38
65 65 4.72 5.33 5.70 4.71 5.14 4.72
65 70 4.93 5.68 6.15 4.91 5.27 4.91
70 65 4.93 5.68 6.15 4.91 5.66 4.91
70 70 5.40 6.21 6.70 5.36 5.96 5.38
70 75 5.69 6.68 7.32 5.62 6.13 5.66
75 70 5.69 6.68 7.32 5.62 6.67 5.66
75 75 6.37 7.45 8.15 6.23 7.12 6.33
75 80 6.78 8.11 8.99 6.54 7.36 6.71
- ------------------------------------------------------------------------------------------
</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.
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- -------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- -------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
<PAGE>
Endorsed and made a part of the Contract and Certificate on the date, after
state approval, as of which it is issued by Aetna.
/s/ Dan Kearney
President
E2PAY97
Aetna Life Insurance and Annuity Company
FORM OF ENDORSEMENT
The Contract and Certificate are hereby endorsed as follows:
In the Annuity Provisions section:
Add the following to the Choices provision:
c) At the request of the Owner, all or any portion of the amount
allocated to a Fund may be transferred from any Fund to any
other allowable Fund. During the Annuity period, the maximum
number of allowable transfers in a calendar year is four.
Aetna reserves the right to change the number of allowable
transfers.
Transfer requests must be expressed as a percentage of the
allocation among the Funds of the amount upon which the
Variable Annuity will be based. Aetna may establish a minimum
transfer amount. Transfers will be processed as of the
Valuation Date next following the date when a transfer request
is received in good order at Aetna's Home Office.
Revise paragraph e) under the Choices provision as follows:
a) Once elected, an Annuity option may not be revoked, except for
option 1 when elected on a variable basis.
Replace the last sentence in paragraph b) under Terms of Annuity Options
with the following:
The Annuity rates for options 2 and 3 are based on mortality from
1983 Table a.
Replace the first sentence in the Death Provision with the following:
When an Annuitant dies under options 2 and 3, the present value of
any remaining guaranteed payments will be paid in one sum or
payments will continue at the direction of the Contract Holder, in
accordance with the Plan.
Delete the last paragraph in the Death Provision.
Replace the Annuity Options provision with the following:
Annuity Options:
The Contract Holder may direct Aetna to make payments according to
one of the following options.
Option 1 -- Payments for a Stated Period of Time -- An Annuity
will be paid for 5 to 30 years.
If payments for this option are made under a Variable Annuity,
the present value of any remaining payments may be withdrawn
at any time. If a withdrawal is requested prior to the minimum
number of years specified on Contract Schedule II, it will be
subject to any withdrawal fee, if applicable (see Contract
Schedule I).
Option 2 -- Life Income Based on the Life of the Annuitant -
Payments will be made until the death of the Annuitant. When
this option is chosen, a choice from the following must be
made:
a) payments cease at the death of the Annuitant;
b) payments may be guaranteed for 5 - 30 years; or
c) cash refund: if the Annuitant dies, the beneficiary will
receive a lump sum payment equal to the amount applied to
the Annuity option (less any premium tax) less the total
amount of Fixed Annuity payments paid prior to such death.
This cash refund feature is only available if the total
amount applied to the Annuity option is allocated to a
Fixed Annuity.
Option 3 - Life Income Based Upon the Lives of Two Annuitants
- An Annuity will be paid during the lives of the Annuitant
and a joint 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;
E2PAY97
<PAGE>
b) 66-2/3% of the payment to continue after the first death;
c) 50% of the payment to continue after the first death;
d) 100% of the payment to continue after the first death with
a guarantee of 5 - 30 years;
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; or
f) 100% of the payment to continue after the first death with
a cash refund feature. If the Annuitant and joint
Annuitant die, the beneficiary will receive a lump sum
payment equal to the amount applied to the Annuity option
(less any premium tax) less the total amount of Fixed
Annuity payments paid prior to such death. This cash
refund feature is only available if the total amount
applied to the Annuity option is allocated to a Fixed
Annuity.
Option 4 -- Payments of Interest on Sum Left with Aetna --
This Option may be used only by the Plan 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. The Contract Holder, on behalf of the Plan
beneficiary, may later tell Aetna to:
Pay a portion or all of the sum held by Aetna; or
Apply a portion or all of the sum held by Aetna to any Annuity
Option above.
If the Plan beneficiary is the Participant's surviving spouse,
the lump-sum payment may be deferred to a date not later than
when the Participant would have attained age 70-1/2.
If the Plan beneficiary is not a spouse, the Contract Holder
must tell Aetna to pay the full sum within 5 years after the
death of the Participant.
If a Fixed Annuity is chosen under option 1, option 2 a) or b) or
option 3 a) or d), the Participant may elect an annual increase of
one, two or three percent compounded annually.
Other Options -- Aetna may make other options available as allowed
by the laws of the state in which this Contract is delivered.
Replace the tables at the end of the Annuity Provisions section of
the contract and certificate with the following tables:
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of 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%
----------------------------------
Monthly Monthly
Years Payment Years Payment
----------------------------------
5 17.91 18 5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
----------------------------------
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
----------------------------------
Monthly Monthly
Years Payment Years Payment
----------------------------------
5 18.12 18 6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
----------------------------------
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
----------------------------------
Monthly Monthly
Years Payment Years Payment
----------------------------------
5 18.74 18 6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
----------------------------------
<PAGE>
OPTION 2
Life Income
Amount of 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 Years
---------------------------------------------------------------
Adjusted Age of Cash
Annuitant None 5 10 15 20 Refund
---------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
---------------------------------------------------------------
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.
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
--------------------------------------------------------
Adjusted Age of
Annuitant None 5 10 15 20
--------------------------------------------------------
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.
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
--------------------------------------------------------------
Adjusted
Age of Annuitant None 5 10 15 20
--------------------------------------------------------------
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.
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of 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
- ---------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e Option 3f
Annuitant Guaranteed
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.69
55 55 3.88 4.25 4.47 3.87 4.14 3.87
55 60 3.99 4.44 4.71 3.98 4.20 3.98
60 55 3.99 4.44 4.71 3.98 4.42 3.98
60 60 4.24 4.71 4.99 4.23 4.57 4.23
60 65 4.38 4.97 5.32 4.38 4.65 4.38
65 60 4.38 4.97 5.32 4.38 4.93 4.38
65 65 4.72 5.33 5.70 4.71 5.14 4.72
65 70 4.93 5.68 6.15 4.91 5.27 4.91
70 65 4.93 5.68 6.15 4.91 5.66 4.91
70 70 5.40 6.21 6.70 5.36 5.96 5.38
70 75 5.69 6.68 7.32 5.62 6.13 5.66
75 70 5.69 6.68 7.32 5.62 6.67 5.66
75 75 6.37 7.45 8.15 6.23 7.12 6.33
75 80 6.78 8.11 8.99 6.54 7.36 6.71
- -------------------------------------------------------------------------------------------
</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.
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- ---------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
<PAGE>
OPTION 3
Life Income for Two Annuitants
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
- ---------------------- Option 3d
Annuitant Second Option 3a Option 3b Option 3c 10 Years Option 3e
Annuitant Guaranteed
- --------------------------------------------------------------------------------
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.
<PAGE>
Endorsed and made a part of the Contract and Certificate on the date, after
state approval, as of which it is issued by Aetna.
/s/ Dan Kearney
President
Third Amendment to Agreement
This Third Amendment, executed as of the 11th day of February, 1997 is made by
and between Aetna Life Insurance and Annuity Company ("AETNA") and Calvert Asset
Management Company ("CALVERT").
WHEREAS, AETNA and CALVERT are parties to an Agreement dated March 13, 1989 and
amended as of December 27, 1993 and January 1, 1996 (the "Agreement"); and
WHEREAS, AETNA and CALVERT now desire to modify the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
provisions expressed herein, the parties agree as follows:
1. Shares of Calvert Responsibly Invested Balanced Series of Acacia
Capital Corporation's Calvert Responsibly Invested (CRI) Portfolios
shall be made available to serve as underlying investment media within
Variable Annuity Contracts offered by AETNA in Internal Revenue Code
(IRC) Section 403(b), 457, 401(a) and 401(k) plans.
2. All references in the Agreement to Internal Revenue Code (IRC) 403(b)
and/or 457 plans shall be deemed to also include IRC Section 401(a)
and 401(k) plans.
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of
the date first written above.
CALVERT ASSET MANAGEMENT
COMPANY, INC.
Attest: /s/ Susan Walker Bender By: /s/William M. Tartihoff
AETNA LIFE INSURANCE AND
ANNUITY COMPANY
Attest: /s/ Mary K. Johnson By: /s/ Laura R. Estes
