As filed with the Securities and Exchange Registration No. 33-75982*
Commission on February 20, 1997 Registration No. 811-2513
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
Post-Effective Amendment No. 12 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.
*Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has
included a combined prospectus under this Registration Statement which includes
all the information which would currently be required in prospectuses relating
to the securities covered by Registration Statement Nos.: 33-75968, 33-75966,
33-75990 and the individual deferred compensation contracts covered by
Registration Statement No. 33-75992.
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION
<S> <C> <C>
1 Cover Page.................................... Cover Page
2 Definitions................................... Definitions
3 Synopsis...................................... Prospectus Summary; Fee Table
4 Condensed Financial Information............... Condensed Financial Information
5 General Description of Registrant, Depositor,
and Portfolio Companies....................... The Company; Variable Annuity Account C; The
Funds
6 Deductions and Expenses....................... Charges and Deductions; Distribution
7 General Description of Variable Annuity
Contracts..................................... Purchase; Miscellaneous
8 Annuity Period................................ Annuity Period
9 Death Benefit................................. Death Benefit During Accumulation Period;
Death Benefit Payable During the Annuity
Period
10 Purchases and Contract Value.................. Purchase; Contract Valuation
11 Redemptions................................... Right to Cancel; Withdrawals
12 Taxes......................................... Tax Status
13 Legal Proceedings............................. Miscellaneous - Legal Matters and Proceedings
14 Table of Contents of the Statement of
Additional Information........................ Contents of the Statement of Additional
Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM N-4 PART B (STATEMENT OF ADDITIONAL
ITEM NO. INFORMATION LOCATION
<S> <C> <C>
15 Cover Page................................... Cover page
16 Table of Contents............................ Table of Contents
17 General Information and History.............. General Information and History
18 Services..................................... General Information and History;
Independent Auditors
19 Purchase of Securities Being Offered......... Offering and Purchase of Contracts
20 Underwriters................................. Offering and Purchase of Contracts
21 Calculation of Performance Data.............. Performance Data; Average Annual
Total Return Quotations
22 Annuity Payments............................. Annuity Payments
23 Financial Statements......................... Financial Statements
</TABLE>
PART C (OTHER INFORMATION)
--------------------------
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
===============================================================================
The Contracts offered in connection with this Prospectus are group deferred
variable annuity contracts ("Contracts") issued by Aetna Life Insurance and
Annuity Company (the "Company"). The Contracts are available through
participation in deferred compensation plans ("Plans") adopted by state and
local governments for their employees or independent contractors, or both,
under Section 457 of the Internal Revenue Code of 1986, as amended, and under
qualified defined contribution plans under Section 401(a) of the Code. Only
group contracts are currently offered for sale; however, "Contracts" shall
also refer to employer-owned individual Contracts issued in connection with
Plans in the past.
The Contracts provide that contributions may be allocated to one or more of
the Credited Interest Options or to one or more of the Subaccounts of
Variable Annuity Account C, a separate account of the Company. The
Subaccounts invest directly in shares of the following Funds:
(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 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 currently available under the Contract are the
Guaranteed Accumulation Account, the Fixed Account and the Fixed Plus
Account. Except as specifically mentioned, this Prospectus describes only
investments through the Separate Account. A brief description of each of the
Credited Interest Options is contained in Appendices to this Prospectus.
Additional information concerning the Guaranteed Accumulation Account is
contained in a separate prospectus.
The availability of the Funds and the Credited Interest Options is subject to
applicable regulatory authorization. Not all Funds or Credited Interest
Options may be available in all jurisdictions, under all Contracts, or in all
Plans. Please check with your employer to determine option availability. (See
"Investment Options.")
This Prospectus provides investors with the information that they should know
about the Separate Account before investing in the Contract. Additional
information about the Separate Account is contained in a Statement of
Additional Information ("SAI") which is available at no charge. The SAI has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Table of Contents for the SAI is printed on page
of this Prospectus. An SAI may be obtained by indicating the request on the
enrollment form or on the prospectus receipt contained in this Prospectus, or
by calling the number listed under the "Inquiries" section of the Prospectus
Summary.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE FUNDS AND GUARANTEED ACCUMULATION ACCOUNT. ALL PROSPECTUSES SHOULD BE
READ AND RETAINED FOR FUTURE REFERENCE.
THE SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus and the Statement of Additional Information are Dated May 1,
1997
<PAGE>
TABLE OF CONTENTS
===============================================================================
<TABLE>
<CAPTION>
<S> <C>
DEFINITIONS........................................................ DEFINITIONS - 1
PROSPECTUS SUMMARY ................................................ SUMMARY - 1
FEE TABLE ......................................................... FEE TABLE - 1
CONDENSED FINANCIAL INFORMATION ................................... AUV HISTORY - 1
THE COMPANY .................................................................... 1
VARIABLE ANNUITY ACCOUNT C ..................................................... 1
INVESTMENT OPTIONS ............................................................. 1
The Funds .................................................................... 1
Credited Interest Options .................................................... 4
PURCHASE ....................................................................... 4
Contract Availability ........................................................ 4
Contract Purchase ............................................................ 5
Purchase Payments ............................................................ 5
Right to Cancel .............................................................. 5
Transfer Credits ............................................................. 5
CHARGES AND DEDUCTIONS ......................................................... 5
Daily Deductions from the Separate Account ................................... 5
Maintenance Fee ............................................................. 6
Deferred Sales Charge ........................................................ 6
Fund Expenses ............................................................... 8
Premium and Other Taxes ...................................................... 8
CONTRACT VALUATION ............................................................. 8
TRANSFERS ...................................................................... 9
Dollar Cost Averaging Program ............................................... 9
WITHDRAWALS .................................................................... 9
ADDITIONAL WITHDRAWAL OPTIONS .................................................. 10
DEATH BENEFIT DURING ACCUMULATION PERIOD ....................................... 10
ANNUITY PERIOD ................................................................. 11
Annuity Period Elections ..................................................... 11
Annuity Options .............................................................. 11
Annuity Payments ............................................................. 12
Charges Deducted During the Annuity Period ................................... 12
Death Benefit Payable During the Annuity Period .............................. 12
TAX STATUS ..................................................................... 13
Introduction ................................................................. 13
Taxation of the Company ...................................................... 13
Contracts Used with Certain Retirement Plans ................................. 13
Section 457 Plans ............................................................ 14
Section 401(a) Plans ......................................................... 14
MISCELLANEOUS .................................................................. 15
Voting Rights ................................................................ 15
Modification of the Contract ................................................. 15
<PAGE>
Distribution ................................................................. 15
Performance Reporting ........................................................ 16
Transfer of Ownership; Assignment ............................................ 16
Delay or Suspension of Payments .............................................. 16
Legal Matters and Proceedings ................................................ 16
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ............................ 17
APPENDIX I--GUARANTEED ACCUMULATION ACCOUNT .................................... 18
APPENDIX II--FIXED ACCOUNT ..................................................... 19
APPENDIX III--FIXED PLUS ACCOUNT ............................................... 20
</TABLE>
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>
DEFINITIONS
================================================================================
As used in this Prospectus, the following terms have the meanings shown:
Account: A record established for each Participant, as directed by the
Contract Holder, to identify contract values during the Accumulation Period.
Account Value: The total dollar value of amounts held in an Account as of any
Valuation Date during the Accumulation Period.
Account Year: A period of twelve months measured from the date on which an
Account is established (the effective date) or from an anniversary of such
effective date.
Accumulation Period: The period during which Purchase Payment(s) credited to
an Account are invested to fund future annuity payments.
Accumulation Unit: A measure of the value of each Subaccount before annuity
payments begin.
Annuitant: The person on whose life or life expectancy the annuity payments
are based.
Annuity: A series of payments for life, for a definite period or a
combination of the two.
Annuity Period: The period during which annuity payments are made.
Annuity Unit: A measure of the value of each Subaccount selected during the
Annuity Period.
Code: The Internal Revenue Code of 1986, as amended.
Company (We, Us): Aetna Life Insurance and Annuity Company.
Contracts: The group and individual deferred, variable annuity contracts
described in this Prospectus.
Contract Beneficiary: The Contract Holder is the Contract Beneficiary.
Contract Holder: The entity which owns the Contract and to which the Contract
is issued.
Credited Interest Options: The fixed interest options under the Contract. The
Credited Interest Options currently consist of the Guaranteed Accumulation
Account, the Fixed Account and the Fixed Plus Account, each of which is
described in an Appendix to this Prospectus. Amounts allocated to the
Credited Interest Options are included in the Account Value.
Fund(s): An open-end management investment company whose shares are purchased
by the Separate Account to fund the benefits provided by the Contracts.
Home Office: The Company's principal executive offices located at 151
Farmington Avenue, Hartford, Connecticut 06156.
Participant (You): A person participating in a Plan maintained by an eligible
organization. The terms of the Plan govern participant benefits.
Plan Beneficiary: The person entitled to receive benefits under the Plan in
the event of the Participant's death.
Plans: Section 457 Plans or Section 401 Plans.
Purchase Payment(s): The gross payment(s) made to the Company under a
Contract.
Purchase Payment Periods: For "Installment Purchase Payment Accounts" the
period of time for completion of the agreed upon annual number and amount of
Purchase Payments. For example, if it is determined that the Purchase Payment
Period will consist of 12 payments per year and only 11 payments are made,
the Purchase Payment Period is not completed until the twelfth Purchase
Payment is made.
Section 457 Plan: Deferred compensation plans adopted by state
and local governments for their employees or independent contractors (or
both) under Section 457 of the Code.
- --------------------------------------------------------------------------------
DEFINITIONS - 1
<PAGE>
Section 401 Plan: Defined contribution plans adopted by state and local
governments under Section 401 of the Code.
Separate Account: Variable Annuity Account C, a separate account established
by the Company for the purpose of funding variable annuity contracts issued
by the Company.
Subaccount(s): The portion of the assets of the Separate Account that is
allocated to a particular Fund. Each Subaccount invests in the shares of only
one corresponding Fund.
Valuation Date. The date and time at which the Accumulation Unit Value and
Annity Unit Value of a Subaccount is calculated. Currently, this calculation
occurs after the close of business of the New York Stock Exchange on any
normal business day, Monday through Friday, that the New York Stock Exchange
is open.
- --------------------------------------------------------------------------------
DEFINITIONS - 2
<PAGE>
PROSPECTUS SUMMARY
================================================================================
CONTRACTS OFFERED
The Contracts offered in connection with this Prospectus are group
deferred variable annuity contracts issued by Aetna Life Insurance and
Annuity Company (the "Company"). The purpose of the Contract is to accumulate
values and to provide benefits upon retirement. The Contracts are available
in connection with deferred compensation plans of state and local governments
for their employees or independent contractors, or both, under Section 457 of
the Code, and for qualified defined contribution plans under Section 401(a)
of the Code (collectively referred to as "Plans").
CONTRACT PURCHASE
The Contract may be purchased by eligible organizations on behalf of a
group made up of their employees. An Account is established for eligible
employees by completing the enrollment form (and any other required forms)
and submitting them to the Company. Purchase Payments can be applied to the
Contract either through a lump-sum transfer from a pre- existing plan,
through periodic salary reductions or through periodic employer
contributions. (See "Purchase.")
FREE LOOK PERIOD
Contract Holders have the right to cancel their Contract within 10 days
after receiving it (or as otherwise allowed by state law) by returning it to
us along with a written notice of cancellation. Unless state law requires
otherwise, the amount received upon cancellation under this provision will
reflect the investment performance of the Purchase Payments deposited in the
Separate Account while invested. In certain cases, this may be less than the
amount of the Purchase Payments. (See "Purchase Right to Cancel.")
INVESTMENT OPTIONS
The Company has established Variable Annuity Account C, a registered unit
investment trust, for the purpose of funding the variable portion of the
Contracts. The Separate Account is divided into subaccounts which invest
directly in shares of the Funds described herein. The Contract allows
investment in any or all of the Subaccounts, as well as in the Credited
Interest Options described below. The total number of investment options that
may be selected during the Accumulation Period is limited. For a complete
list of the Funds available under the Contracts, a description of the
investment objectives of each of the Funds and their investment advisers, and
a description of the limitations on the number of investment options, see
"Investment Options The Funds" in this Prospectus, as well as the
prospectuses for each of the Funds.
The Contract also provides for investment in Credited Interest Options,
which earn fixed rates of interest. The fixed options available under the
Contract are the Guaranteed Accumulation Account ("GAA"), the Fixed Account,
and the Fixed Plus Account. (See the Appendices to this Prospectus.)
CHARGES AND DEDUCTIONS
Certain charges are associated with these Contracts. These charges include
daily deductions from the Separate Account (the mortality and expense risk
charge and an administrative charge), any annual maintenance fee and premium
and other taxes. The Funds also incur certain fees and expenses which are
deducted directly from the Funds. A deferred sales charge may apply upon a
full or partial withdrawal of the Account Value. (See the Fee Table and
"Charges and Deductions.")
TRANSFERS
Prior to the Annuity Date, and subject to certain limitations, Account
Values may be transferred among the Subaccounts and the Credited Interest
Options without charge. Transfers can be requested in writing or by telephone
in accordance with the Company's transfer procedures. (See the Appendices for
a full description of the restrictions applicable to transfers made from the
Credited Interest Options.) (See "Transfers.")
WITHDRAWALS
The Contract Holder may withdraw all or a part of the Account Value prior
to the Annuity Date by properly completing a disbursement form and sending it
to the Company. Limitations apply to withdrawals from the Fixed Plus Account.
Certain charges may be assessed upon withdrawal. The withdrawals may also be
subject to income tax. (See "Withdrawals.")
- --------------------------------------------------------------------------------
SUMMARY - 1
<PAGE>
The Contract also offers certain Additional Withdrawal Options
during the Accumulation Period to persons meeting certain criteria.
Additional Withdrawal Options are not available in all states and may not be
suitable in every situation. (See "Additional Withdrawal Options.")
DEATH BENEFIT
The Contract provides that a death benefit is payable to the Contract
Beneficiary upon the death of the Participant before the Annuity Date. The
Contract Holder may direct that we make such payment to the Plan Beneficiary.
The amount of the death benefit will be equal to the Account Value. Until the
election of a method of payment, the Account Value will remain invested under
the Contract. The Contract Holder, on behalf of a Plan Beneficiary, may elect
to receive the proceeds in a lump sum or under any of the payment options
available under the Contract. However, the Code requires that distributions
begin within a certain time period. (See "Death Benefit During Accumulation
Period.")
After Annuity Payments have commenced, a death benefit may be payable to
the Contract Beneficiary depending upon the terms of the Contract and the
Annuity Option selected. (See "Annuity Period Death Benefit Payable During
the Annuity Period.")
THE ANNUITY PERIOD
On the Annuity Date, the Contract Holder, on your behalf, may elect to
begin receiving Annuity Payments on either a fixed, variable or combination
of fixed and variable basis. If a variable payout is selected, the payments
will vary with the investment performance of the Subaccount(s) selected. The
Company reserves the right to limit the number of Subaccounts that may be
available during the Annuity Period. (See "Annuity Period.")
TAXES
For Section 457 Plans, contributions and earnings are not generally taxed
until paid or made available under the employer's Plan. Withholding for
income tax may be imposed on certain withdrawals. For Section 401 Plans,
contributions and earnings are generally taxed when they are distributed, and
a 10% federal penalty tax and a 20% withholding for income tax may be imposed
on certain withdrawals. (See "Tax Status.")
INQUIRIES
Questions, inquiries or requests for additional information can be
directed to your agent or local representative, or you may contact the
Company as follows:
(bullet) Write to: Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156-1277
Attention: Customer Service
For AetnaPlus Contracts
(bullet) Call Customer Service: 1-800-525-4225 (for automated transfers
or changes in the allocation of Account
Values, call 1-800-262-3862)
For Multiple Option Contracts
(which applies to Contracts issued
to the following Plans)
San Bernadino County
Macomb County
City of San Jose
(bullet) Call Customer Service 1-800-677-4636 (for automated transfers
or changes in the allocation of Account
Values, call 1-800-262-3862)
- -------------------------------------------------------------------------------
SUMMARY - 2
<PAGE>
FEE TABLE
This Fee Table describes the various charges and expenses associated with the
Contract during the Accumulation Period. For amounts deducted during the
Annuity Period, see "Annuity Period--Charges Deducted During the Annuity
Period." No sales charge is paid when the Contract is purchased. Some
expenses may vary as explained under "Charges and Deductions." The charges
and expenses shown below do not include premium taxes that may be applicable.
For more information regarding expenses paid out of assets of a particular
Fund, see the Fund's prospectus.
DIRECT CHARGES. These charges are deducted daily from the Account Value. They
include:
Deferred Sales Charge. The deferred sales charge is deducted as a percentage
of the amount withdrawn. The total amount deducted for the deferred sales
charge will not exceed 8.5% of the total Purchase Payments applied to the
Account. The amount of the deferred sales charge is calculated as follows:
INSTALLMENT PURCHASE PAYMENT ACCOUNTS
Purchase Payment
Periods Completed Deduction
- -------------------------------- -------------
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%
more than 10 0%
SINGLE PURCHASE PAYMENT ACCOUNTS
Account Years Completed Deduction
- ------------------------------- -------------
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%
Annual Contract Maintenance Fee Installment Purchase Payment Accounts $20.00
Single Purchase Payment Accounts $ 0.00
The maintenance fee will generally be deducted annually from each
Installment Purchase Payment Account during the Accumulation Period. The
amount of the maintenance fee may be reduced or eliminated. See "Charges
and Deductions Maintenance Fee." The amount shown is the maximum
maintenance fee that can be deducted under the Contract.
INDIRECT CHARGES. Each Subaccount pays these expenses out of its assets. The
charges are reflected in the Subaccount's daily Accumulation Unit Value and are
not charged directly to an Account. For all Contracts except those for which
an Administrative Expense Charge is imposed (See "Charges and Deductions"),
Indirect Charges are:
Mortality and Expense Risk Charge 1.25%
Administrative Expense Charge 0.00%
-------
Total Separate Account Charges 1.25%
=======
For Contracts for which an Administrative Expense Charge is imposed (see
Charges and Deductions), Indirect charges are:
Mortality and Expense Risk Charge 1.25%
Administrative Expense Charge 0.25%
-------
Total Separate Account Charges 1.50%
=======
- --------------------------------------------------------------------------------
FEE TABLE - 1
<PAGE>
ANNUAL EXPENSES OF THE FUNDS
The following table illustrates the advisory fees and other expenses
applicable to the Funds. Except as noted, the following figures are a
percentage of average net assets and, except where otherwise indicated, are
based on figures for the year ended December 31, 1995. A Fund's "Other
Expenses" include operating costs of the Fund. These expenses are reflected
in the Fund's net asset value and are not deducted from the Account Value
under the Contract.
<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(2) 0.75%
Alger American Small Cap Portfolio 0.85%
American Century VP Capital Appreciation(3) 1.00% 0.00% 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(7) 0.68%
Lexington Natural Resources Trust 1.00%
Neuberger & Berman Growth Portfolio(8) 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 Funds and assumes the
Fund's ordinary recurring direct costs under an Administrative Services
Agreement. The "Other Expenses" shown reflect the fee payable under this
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,
after July 1, 1996, which could cause the fee to be as high as % or
as low as %, depending on performance. "Other Expenses" reflect an
indirect fee of %. Net fund operating expenses after reduction for
fees paid indirectly would be %.
(5) A portion of the brokerage commission 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.
- --------------------------------------------------------------------------------
FEE TABLE - 2
<PAGE>
(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 management fee and then against
other expenses. Without such waivers, the Investment Advisory Fees, Other
Expenses and Total Fund Annual Expenses for the Portfolios for the fiscal
year ended December 31, 1995 would have been: %, % and %,
respectively, for Janus Aspen Aggressive Growth Portfolio; %, %
and %, respectively, for Janus Aspen Balanced Portfolio; %, %
and %, respectively, for Janus Aspen Growth Portfolio; %, %
and %, respectively, for Janus Aspen Short-Term Bond Portfolio; and
%, % and %, respectively, for Janus Aspen Worldwide Growth
Portfolio. 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 Portfolio's corresponding Series. The Portfolio pays Neuberger &
Berman Management Inc. ("NBMI") an administration fee based on the
Portfolio's net asset value. The corresponding Series of the Portfolio
pays NBMI a management fee based on the Series' average daily net assets.
Accordingly, this table combines management fees at the Series level and
administration fees at the Portfolio level in a unified fee rate. (See
"Expenses" in the Trust's prospectus.)
- -------------------------------------------------------------------------------
FEE TABLE - 3
<PAGE>
HYPOTHETICAL ILLUSTRATION (EXAMPLE)
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
WITHOUT ADMINISTRATIVE EXPENSE CHARGE:
The following Examples illustrate the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. This
example assumes that no Administrative Expense Charge is imposed. For the
purposes of these Examples, the maximum maintenance fee of $20.00 that can be
deducted under the Contract has been converted to a percentage of assets
equal to %.
<TABLE>
<CAPTION>
EXAMPLE A
---------------------------------------------
If you withdraw your entire Account
Value at the end of the periods shown,
you would pay the following expenses,
including any applicable deferred
sales charge:
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <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>
<TABLE>
<CAPTION>
EXAMPLE B
---------------------------------------------
If you do not withdraw your Account
Value, or if you annuitize at the end of
the periods shown, you would pay the
following expenses (no deferred sales
charge is reflected):*
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <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 Example would not apply if a nonlifetime variable annuity option is
selected, and a lump-sum settlement is requested within three years after
annuity payments start since the lump-sum payment will be treated as a
withdrawal during the Accumulation Period and will be subject to any
deferred sales charge that would then apply. (Refer to Example A.)
- --------------------------------------------------------------------------------
FEE TABLE - 4
<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.
WITH ADMINISTRATIVE EXPENSE CHARGE:
The following Examples illustrate the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. This
example assumes that an Administrative Expense Charge of 0.25% annually is
imposed. For the purposes of these Examples, the maximum maintenance fee of
$20.00 that can be deducted under the Contract has been converted to a
percentage of assets equal to %.
<TABLE>
<CAPTION>
EXAMPLE A
---------------------------------------------
If you withdraw your entire Account
Value at the end of the periods shown,
you would pay the following expenses,
including any applicable deferred
sales charge:
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <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>
<TABLE>
<CAPTION>
EXAMPLE B
----------------------------------------------
If you do not withdraw your Account
Value, or if you annuitize at the end of
the periods shown, you would pay the
following expenses (no deferred sales
charge is reflected):*
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <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 Example would not apply if a nonlifetime variable annuity option is
selected, and a lump-sum settlement is requested within three years after
annuity payments start since the lump-sum payment will be treated as a
withdrawal during the Accumulation Period and will be subject to any
deferred sales charge that would then apply. (Refer to Example A.)
- --------------------------------------------------------------------------------
FEE TABLE - 5
<PAGE>
CONDENSED FINANCIAL INFORMATION
AETNA PLUS CONTRACTS
(Selected data for accumulation units outstanding throughout each period)
Applies to all Contracts except those issued to San Bernadino County, Macomb
County, and City of San Jose. For information on those Contracts, see
"Condensed Financial Information--Multiple Option Contracts"
The condensed financial information presented below for each of the years in
the ten-year period ended December 31, 1996 (as applicable), is derived from
the financial statements of the Separate Account, which financial statements
have been audited by KPMG Peat Marwick LLP, independent auditors. The
financial statements as of and for the year ended December 31, 1996 and the
independent auditors' report thereon, are included in the SAI.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----------- ------------ ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $ $10.778 $11.020 $10.454 $97.165
Value at end of period $14.077 $10.778 $11.020 $10.454(2)
Increase (decrease) in value of
accumulation unit(1) 30.61% (2.20)% 5.41% (2)
Number of accumulation units
outstanding at end of period 188,964,022 114,733,035 44,166,470 21,250
AETNA INCOME SHARES
Value at beginning of period $10.360 $10.905 $10.068 $36.789
Value at end of period $12.098 $10.360 $10.905 $10.068(3)
Increase (decrease) in value of
accumulation unit(1) 16.78% (5.00)% 8.31% (3)
Number of accumulation units
outstanding at end of period 21,379,976 11,713,354 4,084,142 3,870
AETNA VARIABLE ENCORE FUND
Value at beginning of period $10.528 $10.241 $10.048 $33.812
Value at end of period $11.026 $10.528 $10.241 $10.048(4)
Increase (decrease) in value of
accumulation unit(1) 4.73% 2.80% 1.92% (4)
Number of accumulation units
outstanding at end of period 12,999,680 7,673,528 2,766,044 825
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $10.868 $11.057 $10.189 $12.736
Value at end of period $13.673 $10.868 $11.057 $10.189(6)
Increase (decrease) in value of
accumulation unit(1) 25.81% (1.71)% 8.52% (6)
Number of accumulation units
outstanding at end of period 38,152,395 23,139,604 11,368,365 11,508
AETNA ASCENT VARIABLE PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $10.673
Increase (decrease) in value of
accumulation unit(1) 6.73%
Number of accumulation units
outstanding at end of period 393,053
AETNA CROSSROADS VARIABLE PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $10.612
Increase (decrease) in value of
accumulation unit(1) 6.12%
Number of accumulation units
outstanding at end of period 294,673
AETNA LEGACY VARIABLE PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $10.580
Increase (decrease) in value of
accumulation unit(1) 5.80%
Number of accumulation units
outstanding at end of period 143,637
AETNA VARIABLE INDEX PLUS PORTFOLIO
Value at beginning of period $ (11)
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $77.845 $76.311 $59.871 $52.885 $50.760
Value at end of period $97.165 $77.845 $76.311 $59.871 $52.885
Increase (decrease) in value of
accumulation unit(1) 24.82% 2.01% 27.46% 13.21% 4.19%
Number of accumulation units
outstanding at end of period 20,948,226 18,362,906 17,142,820 16,455,396 16,497,406
AETNA INCOME SHARES
Value at beginning of period $31.192 $28.943 $25.574 $24.061 $23.308
Value at end of period $36.789 $31.192 $28.943 $25.574 $24.061
Increase (decrease) in value of
accumulation unit(1) 17.94% 7.77% 13.17% 6.29% 3.23%
Number of accumulation units
outstanding at end of period 7,844,412 6,984,793 6,202,834 5,955,293 5,372,271
AETNA VARIABLE ENCORE FUND
Value at beginning of period $32.138 $30.012 $27.783 $26.171 $24.812
Value at end of period $33.812 $32.138 $30.012 $27.783 $26.171
Increase (decrease) in value of
accumulation unit(1) 5.21% 7.08% 8.02% 6.16% 5.48%
Number of accumulation units
outstanding at end of period 8,430,082 10,220,110 8,286,033 8,154,644 7,326,151
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $10.896 $10.437 $10.000(5)
Value at end of period $12.736 $10.896 $10.437
Increase (decrease) in value of
accumulation unit(1) 16.89% 4.40% 4.37%
Number of accumulation units
outstanding at end of period 22,898,099 17,078,985 9,535,986
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
</TABLE>
- -------------------------------------------------------------------------------
AUV HISTORY - 1
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $10.157
Increase (decrease) in value of
accumulation unit(1) 1.57%
Number of accumulation units
outstanding at end of period 2,832,440
ALGER AMERICAN SMALL CAP
PORTFOLIO
Value at beginning of period $9.437 $9.959 $10.000(8)
Value at end of period $13.450 $9.437 $9.959
Increase (decrease) in value of
accumulation unit(1) 42.52% (5.24)% (0.41)%
Number of accumulation units
outstanding at end of period 15,036,765 6,339,407 781,836
AMERICAN CENTURY VP CAPITAL
APPRECIATION*
Value at beginning of period $11.781 $12.069 $10.692 $10.000(9)
Value at end of period $15.253 $11.781 $12.069 $10.692
Increase (decrease) in value of
accumulation unit(1) 29.47% (2.39)% 12.88% 6.92%
Number of accumulation units
outstanding at end of period 21,986,645 12,853,828 3,667,821 2,25
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO**
Value at beginning of period $10.554 $11.036 $10.278 $10.000(9)
Value at end of period $13.527 $10.554 $11.036 $10.278
Increase (decrease) in value of
accumulation unit(1) 28.17% (4.37)% 7.37% 2.78%
Number of accumulation units
outstanding at end of period 966,098 521,141 144,168 2,556
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $10.397
Increase (decrease) in value of
accumulation unit(1) 3.97%
Number of accumulation units
outstanding at end of period 2,116,732
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $11.092
Increase (decrease) in value of
accumulation unit(1) 10.92%
Number of accumulation units
outstanding at end of period 1,660,304
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $10.066
Increase (decrease) in value of
accumulation unit(1) 0.66%
Number of accumulation units
outstanding at end of period 1,833,794
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $9.961
Increase (decrease) in value of
accumulation unit(1) (0.39)%
Number of accumulation units
outstanding at end of period 196,090
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 2
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----- ---------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
FRANKLIN GOVERNMENT SECURITIES
TRUST
Value at beginning of period $10.119 $10.642 $10.008 $10.000(9)
Value at end of period $11.762 $10.119 $10.642 $10.008
Increase (decrease) in value of
accumulation unit(1) 16.24% (4.91)% 6.33% 0.08%
Number of accumulation units
outstanding at end of period 717,760 325,365 167,137 5,559
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $10.581 $10.000(10)
Value at end of period $13.322 $10.581
Increase (decrease) in value of
accumulation unit(1) 25.91% 5.81%
Number of accumulation units
outstanding at end of period 4,887,060 753,862
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.850
Increase (decrease) in value of
accumulation unit(1) 8.50%
Number of accumulation units
outstanding at end of period 93,304
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $9.873 $10.000(10)
Value at end of period $12.077 $9.873
Increase (decrease) in value of
accumulation unit(1) 22.33% (1.27)%
Number of accumulation units
outstanding at end of period 315,361 28,543
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.870
Increase (decrease) in value of
accumulation unit(1) 8.70%
Number of accumulation units
outstanding at end of period 259,196
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.323
Increase (decrease) in value of
accumulation unit(1) 3.23%
Number of accumulation units
outstanding at end of period 32,696
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.877
Increase (decrease) in value of
accumulation unit(1) 8.77%
Number of accumulation units
outstanding at end of period 1,036,040
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $10.154 $10.877 $9.832 $10.000(9)
Value at end of period $11.720 $10.154 $10.877 $9.832
Increase (decrease) in value of
accumulation unit(1) 15.42% (6.65)% 10.63% (1.68)%
Number of accumulation units
outstanding at end of period 711,892 703,676 135,614 561
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period $11.026 $11.747 $10.864 $10.000(9)
Value at end of period $14.345 $11.026 $11.747 $10.864
Increase (decrease) in value of
accumulation unit(1) 30.10% (6.14)% 8.13% 8.64%
Number of accumulation units
outstanding at end of period 3,331,218 1,865,104 546,559 10,645
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES
Value at beginning of period $12.687 $12.957 $9.578 $10.000(9)
Value at end of period $13.923 $12.687 $12.957 $9.578
Increase (decrease) in value of
accumulation unit(1) 9.74% (2.08)% 35.28% (4.22)%
Number of accumulation units
outstanding at end of period 7,323,208 6,558,946 1,020,233 5,232
</TABLE>
(1) The above figures are calculated by subtracting the beginning
Accumulation Unit value from the ending Accumulation Unit value
during a calendar year, and dividing the result by the beginning
Accumulation Unit value. These figures do not reflect the deferred
sales charges or the fixed dollar annual maintenance fee, if any.
Inclusion of these charges would reduce the investment results shown.
(2) The Accumulation Unit value was converted to $10.000 on August 21,
1992 upon the commencement of a new administrative system. Immediately
prior to that date, the Accumulation Unit value of the Fund was
$97.817. On the date of conversion, additional units were issued so
that account values were not changed as a result of the conversion.
The percentage change in the Accumulation Unit value from the
beginning of the year to the date of conversion was 0.67%; the
percentage change in the Accumulation Unit value from the date of
conversion to the end of the year was 4.54%.
(3) The Accumulation Unit value was converted to $10.000 on August 21,
1992 upon the commencement of a new administrative system.
Immediately prior to that date, the Accumulation Unit value of the
Fund was $38.521. On the date of conversion, additional units were
issued so that account values were not changed as a result of the
conversion. The percentage change in the Accumulation Unit value from
the beginning of the year to the date of conversion was 4.70%; the
percentage change in the Accumulation Unit value from the date of
conversion to the end of the year was 0.68%.
(4) The Accumulation Unit value was converted to $10.000 on August 21,
1992 upon the commencement of a new administrative system.
Immediately prior to that date, the Accumulation Unit value of the
Fund was $34.397. On the date of conversion, additional units were
issued so that account values were not changed as a result of the
conversion. The percentage change in the Accumulation Unit value from
the beginning of the year to the date of conversion was 1.73%; the
percentage change in the Accumulation Unit value from the date of
conversion to the end of the year was 0.48%.
(5) The initial Accumulation Unit value was established at $10.000 on
June 23, 1989, the date on which the Fund commenced operations.
(6) The Accumulation Unit value was converted to $10.000 on August 21,
1992 upon the commencement of a new administrative system.
Immediately prior to that date, the Accumulation Unit value of the
Fund was $13.118. On the date of conversion, additional units were
issued so that account values were not changed as a result of the
conversion. The percentage change in the Accumulation Unit value from
the beginning of the year to the date of conversion was 2.99%; the
percentage change in the Accumulation Unit value from the date of
conversion to the end of the year was 1.89%.
(7) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during August
1995, when the Fund became available under the Contract.
(8) The initial Accumulation Unit value was established at $10.000 on
September 17, 1993, the date on which the Portfolio became available
under the Contract.
(9) The initial Accumulation Unit value was established at $10.000 on
August 21, 1992, the date on which the Fund/Portfolio became
available under the Contract.
(10) The initial Accumulation Unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(11) The initial Accumulation Unit value was established at $__________ on
_____________, the date on which the Portfolio became available under
the Contract.
* Formerly TCI Growth
** Formerly Calvert Socially Responsible Series.
- --------------------------------------------------------------------------------
AUV HISTORY - 4
<PAGE>
CONDENSED FINANCIAL INFORMATION
MULTIPLE OPTION CONTRACTS
(Selected data for accumulation units outstanding throughout each period)
Applies to Contracts issued to San Bernadino County, Macomb County, and City
of San Jose. For all other contracts, see
"Condensed Financial Information--Aetna Plus Contracts."
The condensed financial information presented below for each of the years in
the ten-year period ended December 31, 1996 (as applicable), is derived from
the financial statements of the Separate Account, which financial statements
have been audited by KPMG Peat Marwick LLP, independent auditors. The
financial statements as of and for the year ended December 31, 1996 and the
independent auditors' report thereon, are included in the SAI.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------ ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $ $105.558 $107.925 $102.383 $97.165
Value at end of period $137.869 $105.558 $107.925 $102.383
Increase (decrease) in value of
accumulation unit(1) 30.61% (2.19)% 5.41% 5.37%
Number of accumulation units
outstanding at end of period 6,364,000 13,966,072 21,148,863 24,201,565
AETNA INCOME SHARES
Value at beginning of period $40.173 $42.283 $39.038 $36.789
Value at end of period $46.913 $40.173 $42.283 $39.038
Increase (decrease) in value of
accumulation unit(1) 16.78% (4.99)% 8.31% 6.11%
Number of accumulation units
outstanding at end of period 2,377,622 5,108,720 8,210,666 8,507,292
AETNA VARIABLE ENCORE FUND
Value at beginning of period $36.271 $35.282 $34.619 $33.812
Value at end of period $37.988 $36.271 $35.282 $34.619
Increase (decrease) in value of
accumulation unit(1) 4.73% 2.80% 1.92% 2.39%
Number of accumulation units
outstanding at end of period 1,836,260 3,679,802 5,086,515 7,534,662
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $14.270 $14.519 $13.379 $12.736
Value at end of period $17.954 $14.270 $14.519 $13.379
Increase (decrease) in value of
accumulation unit(1) 25.82% (1.71)% 8.52% 5.05%
Number of accumulation units
outstanding at end of period 9,193,181 21,990,186 30,784,750 34,820,433
AETNA ASCENT VARIABLE PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $10.673
Increase (decrease) in value of
accumulation unit(1) 6.73%
Number of accumulation units
outstanding at end of period 8
AETNA CROSSROADS VARIABLE PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $10.612
Increase (decrease) in value of
accumulation unit(1) 6.12%
Number of accumulation units
outstanding at end of period 0
AETNA LEGACY VARIABLE PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $10.580
Increase (decrease) in value of
accumulation unit(1) 5.80%
Number of accumulation units
outstanding at end of period 0
AETNA VARIABLE INDEX PLUS PORTFOLIO
Value at beginning of period $ (11)
Value at end of period
Incease (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $77.845 $76.311 $59.871 $52.885 $50.760
Value at end of period $97.165 $77.845 $76.311 $59.871 $52.885
Increase (decrease) in value of
accumulation unit(1) 24.82% 2.01% 27.46% 13.21% 4.19%
Number of accumulation units
outstanding at end of period 20,948,226 18,362,906 17,142,820 16,455,396 16,497,406
AETNA INCOME SHARES
Value at beginning of period $31.192 $28.943 $25.574 $24.061 $23.308
Value at end of period $36.789 $31.192 $28.943 $25.574 $24.061
Increase (decrease) in value of
accumulation unit(1) 17.94% 7.77% 13.17% 6.29% 3.23%
Number of accumulation units
outstanding at end of period 7,844,412 6,984,793 6,202,834 5,955,293 5,372,271
AETNA VARIABLE ENCORE FUND
Value at beginning of period $32.138 $30.012 $27.783 $26.171 $24.812
Value at end of period $33.812 $32.138 $30.012 $27.783 $26.171
Increase (decrease) in value of
accumulation unit(1) 5.21% 7.08% 8.02% 6.16% 5.48%
Number of accumulation units
outstanding at end of period 8,430,082 10,220,110 8,286,033 8,154,644 7,326,151
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $10.896 $10.437 $10.000(2)
Value at end of period $12.736 $10.896 $10.437
Increase (decrease) in value of
accumulation unit(1) 16.89% 4.40% 4.37%
Number of accumulation units
outstanding at end of period 22,898,099 17,078,985 9,535,986
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
Incease (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 5
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
1996 1995 1994 1993
----- ------------ ---------- ------------
<S> <C> <C> <C> <C>
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $11.715
Increase (decrease) in value of
accumulation unit(1) 17.15%
Number of accumulation units
outstanding at end of period 530,263
ALGER AMERICAN SMALL CAP
PORTFOLIO
Value at beginning of period $9.513 $10.072 $10.000(3)
Value at end of period $13.558 $9.513 $10.072
Increase (decrease) in value of
accumulation unit(1) 42.52% (5.55)% 0.72%
Number of accumulation units
outstanding at end of period 1,714,187 665,518 51,327
AMERICAN CENTURY VP CAPITAL
APPRECIATION*
Value at beginning of period $11.172 $11.443 $10.495
Value at end of period $14.464 $11.172 $11.443
Increase (decrease) in value of
accumulation unit(1) 29.47% (2.37)% 9.03%
Number of accumulation units
outstanding at end of period 1,784,552 1,608,362 1,016,894
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO**
Value at beginning of period $13.990 $14.640 $13.726
Value at end of period $17.951 $13.990 $14.640
Increase (decrease) in value of
accumulation unit(1) 28.31% (4.44)% 6.66%
Number of accumulation units
outstanding at end of period 856,361 743,464 705,415
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $10.000(11)
Value at end of period $11.763
Increase (decrease) in value of
accumulation unit(1) 17.63%
Number of accumulation units
outstanding at end of period 525,476
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.000(11)
Value at end of period $11.617
Increase (decrease) in value of
accumulation unit(1) 16.17%
Number of accumulation units
outstanding at end of period 628,582
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $10.198
Increase (decrease) in value of
accumulation unit(1) 1.98%
Number of accumulation units
outstanding at end of period 762
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $10.197
Increase (decrease) in value of
accumulation unit(1) 1.97%
Number of accumulation units
outstanding at end of period 1,302
</TABLE>
<TABLE>
<CAPTION>
1992 1991 1990 1989
----------- -------- -------- -----------
<S> <C> <C> <C> <C>
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 $10.000(9)
Value at end of period $10.495
Increase (decrease) in value of
accumulation unit(1) 4.95%
Number of accumulation units
outstanding at end of period 232,832
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO**
Value at beginning of period $12.913 $11.233 $10.568 $10.000(4)
Value at end of period $13.726 $12.913 $11.233 $10.568
Increase (decrease) in value of
accumulation unit(1) 6.30% 14.96% 6.29% 5.68%
Number of accumulation units
outstanding at end of period 503,006 355,851 148,576 20,710
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
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 6
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
1996 1995 1994 1993
----- ------------ ----------- -----------
<S> <C> <C> <C> <C>
FRANKLIN GOVERNMENT SECURITIES
TRUST
Value at beginning of period $14.190 $14.929 $14.050
Value at end of period $16.495 $14.190 $14.929
Increase (decrease) in value of
accumulation unit(1) 16.24% (4.95)% 6.26%
Number of accumulation units
outstanding at end of period 809,414 804,457 960,629
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $12.169 $10.000(6)
Value at end of period $15.323 $12.169
Increase (decrease) in value of
accumulation unit(1) 25.91% 21.69%
Number of accumulation units
outstanding at end of period 1,280,953 393,553
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $10.853
Increase (decrease) in value of
accumulation unit(1) 8.53%
Number of accumulation units
outstanding at end of period 161
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $9.911 $10.000(7)
Value at end of period $12.124 $9.911
Increase (decrease) in value of
accumulation unit(1) 22.33% (0.89)%
Number of accumulation units
outstanding at end of period 3,345 1,555
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $11.859
Increase (decrease) in value of
accumulation unit(1) 18.59%
Number of accumulation units
outstanding at end of period 109,717
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $10.393
Increase (decrease) in value of
accumulation unit(1) 3.93%
Number of accumulation units
outstanding at end of period 18.473
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $12.158
Increase (decrease) in value of
accumulation unit(1) 21.58%
Number of accumulation units
outstanding at end of period 314,653
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $9.412 $10.071 $9.193
Value at end of period $10.862 $9.412 $10.071
Increase (decrease) in value of
accumulation unit(1) 15.41% (6.54)% 9.55%
Number of accumulation units
outstanding at end of period 530,562 533,016 341,771
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period $13.398 $14.278 $13.536
Value at end of period $17.430 $13.398 $14.278
Increase (decrease) in value of
accumulation unit(1) 30.09% (6.16)% 5.48%
Number of accumulation units
outstanding at end of period 2,359,090 2,107,525 1,927,674
</TABLE>
<TABLE>
<CAPTION>
1992 1991 1990 1989
---------- -------- --------- -----------
<S> <C> <C> <C> <C>
FRANKLIN GOVERNMENT SECURITIES
TRUST
Value at beginning of period $13.219 $11.545 $10.581 $10.000(5)
Value at end of period $14.050 $13.219 $11.545 $10.581
Increase (decrease) in value of
accumulation unit(1) 6.29% 14.50% 9.11% 5.81%
Number of accumulation units
outstanding at end of period 810,155 627,552 178,761 25,258
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 $9.018 $9.608 $11.441 $10.000(4)
Value at end of period $9.193 $9.018 $ 9.608 $11.441
Increase (decrease) in value of
accumulation unit(1) 1.94% (6.14)% (16.02)% 14.41%
Number of accumulation units
outstanding at end of period 198,338 144,139 75,052 11,481
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period $12.511 $9.769 $10.772 $10.000(4)
Value at end of period $13.536 $12.511 $9.769 $10.772
Increase (decrease) in value of
accumulation unit(1) 8.19% 28.07% (9.31)% 7.72%
Number of accumulation units
outstanding at end of period 1,346,898 971,985 482,220 68,885
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 7
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES***
Value at beginning of period $13.227 $13.508 $9.922 $10.239**
Value at end of period $14.515 $13.227 $13.508 $9.922
Increase (decrease) in value of
accumulation unit 9.74% (2.08)% 36.14% (3.10)%
Number of accumulation units
outstanding at end of period 3,823,292 4,240,412 2,371,037 1,161,007
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989
-------- --------- -----------
<S> <C> <C> <C>
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES***
Value at beginning of period $9.256 $10.306 $10.000(8)
Value at end of period $10.239 $9.256 $10.306
Increase (decrease) in value of
accumulation unit 10.62% (10.19)% 3.06%
Number of accumulation units
outstanding at end of period 779,667 317,829 32,906
</TABLE>
(1) The above figures are calculated by subtracting the beginning
Accumulation Unit value from the ending Accumulation Unit value
during a calendar year, and dividing the result by the beginning
Accumulation Unit value. These figures do not reflect the deferred
sales charges or the fixed dollar annual maintenance fee, if any.
Inclusion of these charges would reduce the investment results shown.
(2) The initial Accumulation Unit value was established at $10.000 on June
23, 1989, the date on which the Fund commenced operations.
(3) The initial Accumulation Unit value was established at $10.000 on
September 17, 1993, the date on which the Portfolio became available
under the Contract.
(4) The initial Accumulation Unit value was established at $10.000 on May
31, 1989, the date on which the Fund/Portfolio became available under
the Contract.
(5) The initial Accumulation Unit value was established at $10.000 on
June 7, 1989, the date on which the Fund became available under the
Contract.
(6) The initial Accumulation Unit value was established at $10.000 during
June 1994, when funds were first received in this option.
(7) The initial Accumulation Unit value was established at $10.000 during
November 1994, when funds were first received in this option.
(8) The initial Accumulation Unit value was established at $10.000 on
July 5, 1989, the date on which the Portfolio became available under
the Contract.
(9) The initial Accumulation Unit value was established at $10.000 on
September 21, 1992, the date on which the Portfolio became available
under the Contract.
(10) The initial Accumulation Unit value was established at $10.000 during
July 1995, when the Fund became available under the Contract.
(11) The initial Accumulation Unit value was established at $10.000 during
May 1995, when the Fund became available under the Contract.
* Formerly TCI Growth
** Formerly Calvert Socially Responsible Series.
*** Formerly T. Rowe Price International Equity Fund. On April 27, 1992,
the Fund's assets were liquidated and merged into Scudder Variable Life
Investment Fund--Managed International Portfolio. The Accumulation Unit
Value following the merger was $10.051.
- --------------------------------------------------------------------------------
AUV HISTORY - 8
<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
================================================================================
The Company established Variable Annuity Account C (the "Separate
Account") in 1976 as a segregated asset account for the purpose of funding
its variable annuity contracts. The Separate Account is registered as a unit
investment trust under the Investment Company Act of 1940 (the "1940 Act")
and meets the definition of "separate account" under federal securities laws.
The Separate Account is divided into "subaccounts" which do not invest
directly in stocks, bonds or other investments. Instead, each Subaccount buys
and sells shares of a corresponding Fund.
Although the Company holds title to the assets of the Separate Account,
such assets are not chargeable with liabilities arising out of any other
business conducted by the Company. Income, gains or losses of the Separate
Account are credited to or charged against the assets of the Separate Account
without regard to other income, gains or losses of the Company. All
obligations arising under the Contracts are general corporate obligations of
the Company.
INVESTMENT OPTIONS
================================================================================
THE FUNDS
The Contract Holder (or you, if allowed by the Contract Holder) may
allocate Purchase Payments to one or more of the Subaccounts as designated on
the enrollment form. In turn, the Subaccounts invest in the corresponding
Funds at net asset value. The total number of investment options that you may
select during the Accumulation Period is limited to 18. Each Subaccount
selected, the Fixed Account, Fixed Plus Account and each guaranteed term of
the Guaranteed Accumulation Account counts as one option, even if you no
longer have amounts allocated to that option.
The Contract Holder may decide to offer only a select number of Funds
under its Plan. In addition, the Company may add, withdraw or substitute
Funds, subject to the conditions in the Contract and to compliance with
regulatory requirements. The availability of the 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.
The investment results of the Funds described below are likely to differ
significantly and there is no assurance that any of the Funds will achieve
their respective investment objectives. Except where otherwise noted, all of
the Funds are diversified, as defined in the 1940 Act.
(bullet) Aetna Variable Fund seeks to maximize total return through
investments in a diversified portfolio of common stocks and
securities convertible into common stock.(1)
(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)
- --------------------------------------------------------------------------------
1
<PAGE>
(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.(1)
(bullet) Aetna Generation Portfolios, Inc.--Aetna Crossroads Variable
Portfolio seeks to provide total return (i.e., income and capital
appreciation, both realized and unrealized) by allocating its
investments among equities and fixed income securities. The
Portfolio is managed for investors who generally have an investment
horizon exceeding 10 years and who have a moderate level of risk
tolerance.(1)
(bullet) Aetna Generation Portfolios, Inc.--Aetna Legacy Variable Portfolio
seeks to provide total return consistent with preservation of
capital by allocating its investments among equities and fixed
income securities. The Portfolio is managed for investors who
generally have an investment horizon exceeding five years and who
have a low level of risk tolerance.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable 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 of capital through investment in a diversified
portfolio of common stocks and securities convertible into common
stocks believed to offer growth potential.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Index Plus Portfolio
seeks to outperform the total return performance of publicly traded
common stocks represented by the S&P 500.(1)
(bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Small Company
Portfolio seeks growth of capital primarily through investment in a
diversified portfolio of common stocks and securities convertible
into common stocks of companies with smaller market capitalizations.
Companies with smaller market capitalizations generally will have
market capitalization at the 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 such securities, have total market capitalization within
the range of companies included in the Russell 2000 Growth Index,
updated quarterly. The Russell 2000 Growth Index is designed to
track the performance of small capitalization companies. At ,
1996 the range of market capitalization of these companies was $
million to $ billion.(2)
(bullet) American Century VP Capital Appreciation (formerly 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.
(bullet) Calvert Responsibly Invested Balanced Portfolio is a non-
diversified 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)
- --------------------------------------------------------------------------------
2
<PAGE>
(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 mainly in foreign
securities (at least 65% of the Fund's total assets in securities of
issuers from at least three countries outside of North America).(5)
(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 non-diversified
portfolio that seeks long-term growth 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 , 199 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 preservation of capital and balanced by
current income. The Portfolio pursues its investment objective by
investing 40%-60% of its assets in securities selected primarily for
their growth potential and 40%-60% of its assets in securities
selected primarily for their income potential.(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 (commonly known as
"junk bonds.")(7)
(bullet) Janus Aspen Series--Growth Portfolio seeks long-term growth of
capital in a manner consistent with the preservation of capital. The
Portfolio pursues its investment objective by investing in common
stocks of companies of any size.(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 preservation of
capital. The Portfolio pursues its investment objective primarily
through investments in common stocks of foreign and domestic
issuers.(7)
(bullet) Lexington Natural Resources Trust is a non-diversified 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 seek
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.
Risks Associated with Investment in the Funds. Some of the Funds may use
instruments known as derivatives as part of their investment strategies. The
use of certain
- --------------------------------------------------------------------------------
3
<PAGE>
derivatives may involve high risk of volatility to a Fund, and the use of
leverage in connection with such derivatives can also increase risk of
losses. Some of the Funds may also invest in foreign or international
securities which involve greater risks than U.S. investments.
More comprehensive information, including a discussion of potential risks,
is found in the respective Fund prospectuses which accompany this Prospectus.
You should read the Fund prospectuses and consider carefully, and on a
continuing basis, which Fund or combination of Funds is best suited to your
long-term investment objectives.
Conflicts of Interest (Mixed and Shared Funding). Shares of the Funds are
sold to each of the Subaccounts for funding the variable annuity contracts
issued by the Company. Shares of the Funds may also be sold to other
insurance companies for the same purpose. This is referred to as "shared
funding." Shares of the Funds may also be used for funding variable life
insurance contracts issued by the Company or by third parties. This is
referred to as "mixed funding."
Because the Funds available under the Contract are sold to fund variable
annuity contracts and variable life insurance policies issued by us or by
other companies, certain conflicts of interest could arise. If a conflict of
interest were to occur, one of the separate accounts might withdraw its
investment in a Fund, which might force that Fund to sell portfolio
securities at disadvantageous prices, causing its per share value to
decrease. Each Fund's Board of Directors or Trustees has agreed to monitor
events in order to identify any material irreconcilable conflicts which might
arise and to determine what action, if any, should be taken to address such
conflict.
CREDITED INTEREST OPTIONS
Purchase Payments may be allocated to one or more of the Credited Interest
Options available under the Contract as described below. (The Contract Holder
may elect not to offer all Credited Interest Options under its Plan.)*
(bullet) The Guaranteed Accumulation Account (GAA) is a credited interest
option through which we guarantee stipulated rates of interest for
stated periods of time. Amounts must remain in the GAA for the full
guaranteed term to received the quoted interest rates, or a market
value adjustment (which may be positive or negative) will be
applied. (See Appendix I.)
(bullet) The Fixed Account is a part of the Company's general account. The
Fixed Account guarantees a minimum interest rate, as specified in
the Contract. The Company may credit higher interest rates from time
to time. Transfers from the Fixed Account are limited. (See Appendix
II.)
(bullet) The Fixed Plus Account is also a part of the Company's general
account and guarantees a minimum interest rate, as specified in the
Contract. The Company may credit higher interest rates in its
discretion. Withdrawals and transfers from the Fixed Plus Account
are limited. (See Appendix III.)
* GAA is no longer available under the Contract issued to the Erie County
Public Employee Deferred Compensation Plan. If Participants currently have
funds in GAA, as a Guaranteed Term matures, unless the Participant
instructs us otherwise, amounts will automatically be transferred to the
Fixed Account.
PURCHASE
================================================================================
CONTRACT AVAILABILITY
The Contracts are designed for Plans established by organizations for
their deferred compensation plans under Section 457 of the Code, and for
qualified defined contribution plans under Section 401(a) of the Code. The
Contract is generally owned by the employer, and an Account is established
for each Participant, as directed by the Contract Holder, to identify
contract values during the Accumulation Period. A Participant's record under
the Contract is known as his or her "Account."
Prior to the August 20, 1996 enactment of the Small Business Job
Protection Act of 1996 (the "Small Business Act"), all amounts of
compensation deferred under Plans, all property and rights purchased with
such amounts, and all income attributable to such amounts, property or
rights remained solely the property and rights of the employer (without
being restricted to the provision of benefits under the Plan), subject only
to the claims of the employer's general creditors. Under the Small Business
Act, Plans are required to hold all assets and income in trust (or a
custodial account or annuity contract) for the exclusive benefit of
participants and their beneficiaries. Plans that were in existence on
August 20, 1996 are allowed until January 1, 1999 to meet this requirement.
Until such time as a Plan meets the Small Business Act's trust requirement
the Contract will be part of the employer's general assets,
- --------------------------------------------------------------------------------
4
subject to the claims of its general creditors, and benefits available to
you will be backed only by the general assets of the employer. Some of the
options and elections available under the Contract may not be available to
you under the provisions of your Plan. Contact your employer for
information regarding your Plan.
CONTRACT PURCHASE
Eligible organizations may acquire a Contract by submitting an application
to the Company. Once we approve the application, a group Contract is issued
to the employer as the Contract Holder. The Company will establish an Account
for a Participant upon receipt of an enrollment form.
The Company must accept or reject an application or enrollment form within
two business days of receipt. If a form is 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 group Contract Holder. If we agree to hold Purchase Payments for
longer than the five business days based on the consent of the group Contract
Holder, they will be deposited in the Aetna Variable Encore Fund Subaccount
until the forms are completed.
PURCHASE PAYMENTS
Generally, two types of Purchase Payments may be made under the Contract,
and depending upon which type of payment is made, different Accounts may be
established for each payment type. Continuing, periodic payments will be
placed in "Installment Purchase Payment Accounts." Installment Purchase
Payments must be at least $50 per month ($600 annually) per Participant. No
payment may be less than $25. Lump-sum transfers of amounts accumulated under
a pre-existing plan may be placed in "Single Purchase Payment Accounts" in
accordance with the Company's procedures and minimums in effect at the time
of purchase. The Code imposes a maximum limit on annual Purchase Payments
which may be excluded from a Participant's gross income. (See "Tax Status.")
Allocation of Purchase Payments. Purchase Payments will initially be
allocated to the Subaccounts or Credited Interest Options as specified by the
Contract Holder (or you, if authorized by the Contract Holder) on the
enrollment form. Changes in such allocation may be made in writing or by
telephone transfer. Allocations must be in whole percentages, and there may
be limitations on the number of investment options that can be selected
during the Accumulation Period. (See "Investment Options--The Funds.")
RIGHT TO CANCEL
The Contract Holder may cancel participation under the Contract without
penalty by returning it to the Company with a written notice of cancellation.
In most states, Contract Holders have ten days to exercise this right; some
states allow a longer free-look period. When we receive the request for
cancellation, we will return the Account Value, unless the laws of the state
in which the Contract was issued require that we return the initial Purchase
Payment (if greater than the Account Value). In states that do not require a
return of Purchase Payments, the purchaser bears the entire investment risk
for amounts allocated among the Subaccounts during the free look period.
Account Values will be determined as of the Valuation Date on which we
receive the request for cancellation at our Home Office.
TRANSFER CREDITS
The Company may provide a transfer credit on "transferred assets," subject
to certain conditions and state approvals. Transferred assets are the value
of contributions made on your behalf under this Plan or a prior plan before
such amounts are applied to this Contract. The transfer credit will equal a
percentage of the transferred assets applied to the Contract that remain in
the Contract after a specified period of time. Once a transfer credit is
applied to the Contract, all provisions of the Contract apply. This benefit
is provided on a nondiscriminatory basis. If a transfer credit is due under
the Contract, you will be provided with additional information specific to
the Contract.
CHARGES AND DEDUCTIONS
================================================================================
DAILY DEDUCTIONS FROM THE SEPARATE ACCOUNT
Mortality and Expense Risk Charge. The Company makes a daily deduction
from each of the Subaccounts for the mortality and expense risk charge. The
charge is equal, on an annual basis, to 1.25% of the daily net assets of the
Subaccounts and compensates the Company for the assumption of mortality and
expense risks under the Contract. The mortality risks are those assumed for
our promise to make lifetime payments according to annuity
- --------------------------------------------------------------------------------
5
<PAGE>
rates specified in the Contract. The expense risk is the risk that the actual
expenses for costs incurred under the Contract will exceed the maximum costs
that can be charged under the Contract.
If the amount deducted for mortality and expense risks is not sufficient
to cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess may be used to
recover distribution expense relating to the Contracts and as a source of
profit for the Company. The Company expects to make a profit from the
mortality and expense risk charge.
Administrative Expense Charge. The Company reserves the right to make a
deduction from each of the Subaccounts for an administrative expense charge.
The administrative expense charge compensates the Company for administrative
expenses that exceed revenues from the maintenance fee described below. The
charge is set at a level which does not exceed the average expected cost of
the administrative services to be provided while the Contract is in force.
The Company does not expect to make a profit from this charge.
Effective April 4, 1997, the administrative expense charge during the
Accumulation Period equals, on an annual basis, 0.25% for Contracts effective
prior to October 31, 1996 where the number of Participants with assets in the
Contract is less than 30 as of November 30, 1996 and the Contract Holder has
chosen not to elect one of the Company's electronic standards for cash
collection and application of participant contribution data. There is
currently no administrative expense charge assessed during the Accumulation
Period for any other Contracts.
In addition, the administrative expense charge will not be imposed for
Participants who enrolled in a group contract prior to May 1, 1984, for any
Participants in individual Contracts issued prior to May 1, 1984, or for
Contracts issued to public school systems.
There is currently no administrative expense charge during the Annuity
Period. Once an Annuity Option is elected, the charge will be established and
will be effective during the entire Annuity Period.
MAINTENANCE FEE
During the Accumulation Period, the Company will deduct an annual
maintenance fee from each Installment Purchase Payment Account on its
anniversary date. The maintenance fee is to reimburse the Company for some of
its administrative expenses relating to the establishment and maintenance of
the Accounts.
The maximum maintenance fee that can be deducted under the Contract is
$20. However, the maintenance fee may be reduced or eliminated depending upon
certain criteria described below. The maintenance fee will be deducted on a
pro rata basis from each Subaccount and Credited Interest Option in which the
Account is invested. If the Account Value is withdrawn, the full maintenance
fee will be deducted at the time of withdrawal.
Reduction or Elimination of the Maintenance Fee. The annual maintenance
fee may be reduced or eliminated under various conditions as agreed to by us
and the Contract Holder in writing. Any reduction or elimination of the
annual maintenance fee will reflect differences in administrative costs and
services after taking into consideration factors such as the following:
(bullet) the size, characteristics, and nature of the group to which a
Contract is issued;
(bullet) the level of our anticipated expenses in administering the
Contract, such as billing for Purchase Payments, producing
periodic reports, providing for the direct payment of Contract
charges rather than having them deducted from Account Values, and
any other factors pertaining to the level and expense of
administrative services which will be provided under the
Contract.
Any reduction or elimination of maintenance fees will not be unfairly
discriminatory against any person. We will make any reduction in annual
maintenance fees according to our own rules in effect at the time an
application for a Contract is approved. We reserve the right to change these
rules from time to time.
DEFERRED SALES CHARGE
Withdrawals of all or a portion of the Account Value may be subject to a
deferred sales charge. The deferred sales charge is a percentage of the
amount withdrawn from the Subaccounts, the Fixed Account or the Guaranteed
Accumulation Account. No deferred sales charge is deducted from amounts
withdrawn from the Fixed Plus Account.
For Installment Purchase Payment Accounts, the deferred sales charge is
based on the number of completed Purchase Payment Periods. For Single
Purchase Payment Accounts, it is based on the number of Account Years that
have elapsed since the Purchase Payments were made. The amount of the
deferred sales charge is determined in accordance with the schedule set forth
in the following tables:
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6
<PAGE>
INSTALLMENT PURCHASE PAYMENT ACCOUNTS:
Purchase Payment Deferred Sales
Periods Completed Charge Deduction
- -------------------------------- ---------------------
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%
More than 10 0%
SINGLE PURCHASE PAYMENT ACCOUNTS:
Account Years Deferred Sales
Completed Charge Deduction
- ------------------------------- ---------------------
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%
If you transfer the total account value under another deferred
compensation annuity contract issued by the Company to an Account under this
Contract, the effective date of the new Account will be the same effective
date as the former contract for purposes of calculating the applicable
deferred sales charge under this Contract.
A deferred sales charge will not be deducted from any portion of the
Account Value which is:
(bullet) applied to provide Annuity benefits;
(bullet) withdrawn on or after the tenth anniversary of the effective date of
the Account;
(bullet) withdrawn due to a hardship resulting from an unforeseeable
emergency, as specified in the Code;
(bullet) paid due to your death before Annuity payments begin;
(bullet) withdrawn due to the election of an Additional Withdrawal Option
(see "Additional Withdrawal Options");
(bullet) paid where the Account Value is $3,500 or less and no amount has
been withdrawn or used to purchase Annuity benefits during the prior
12 months;
(bullet) withdrawn due to the Participant's separation from service with the
employer (the Contract Holder must submit documentation satisfactory
to the Company confirming that the Participant is no longer
providing services to the employer); or
(bullet) withdrawn from an Installment Purchase Payment Account by a
Participant who is at least age 59-1/2 and who has completed nine
Purchase Payment Periods.
The deduction for the deferred sales charge will not exceed 8.5% of the
total Purchase Payments actually made to the Account. The Company does not
anticipate that the deferred sales charge will cover all sales and
administrative expenses which it incurs in connection with the Contract; the
difference will be covered by the general assets of the Company which are
attributable, in part, to the mortality and expense risk charge described
above.
Reduction or Elimination of the Deferred Sales Charge. For a particular
Plan, we may reduce, waive or eliminate the deferred sales charge. Any
reduction, waiver or elimination of such charges will reflect differences or
expected differences in the amounts of unrecovered distribution costs or
services of the types that the charge is intended to defray. When considering
whether to reduce or eliminate such charges or to grant such a waiver, we
will take into account factors which may include the following:
(bullet) the number of participants under the Plan;
(bullet) the expected level of assets or cash flow under the Plan;
(bullet) the level of agent involvement in sales activities;
(bullet) the level of our sales-related expenses;
(bullet) the specific distribution provisions under the Plan;
(bullet) the Plan's purchase of one or more other variable annuity contracts
from us and the features of those contracts;
(bullet) the level of employer involvement in determining eligibility for
distributions under the Contract; and
(bullet) our assessment of financial risk to the Company relating to
surrenders.
Any reduction, waiver or elimination of deferred sales charges will not be
unfairly discriminatory against any person.
We may also negotiate provisions regarding the deferred sales charge with
respect to Contracts issued to certain employer groups or associations which
have negotiated on behalf of its employees. All variations in, or elimination
of, provisions regarding the deferred sales charge resulting from such
negotiations will be offered uniformly to all employees within the group. For
specific information on fees applicable to your Account, please call the
number listed under the "Inquiries" section.
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7
<PAGE>
We will make any reduction in deferred sales charge according to our own
rules in effect at the time an application for a Contract is approved. We
reserve the right to change these rules from time to time.
FUND EXPENSES
Each Fund incurs certain expenses which are paid out of its net assets.
These expenses include, among other things, the investment advisory or
"management" fee. The expenses of the Funds are illustrated in the Fee Table
in this Prospectus and described more fully in the accompanying Fund
prospectuses.
PREMIUM AND OTHER TAXES
Several states and municipalities impose a premium tax on Annuities. These
taxes currently range from 0% to 4%. The Company reserves the right to deduct
premium tax against Purchase Payments or Account Values at any time, but no
earlier than when we have a tax liability under state law. The Company's
current practice is to deduct for premium taxes at the time of complete
withdrawal or annuitization. In addition to the premium tax, the Company
reserves the right to assess a charge for any state or federal taxes due
against the Contract or the Separate Account assets.
CONTRACT VALUATION
================================================================================
ACCOUNT VALUE
Until the Annuity Date, the Account Value is the total dollar value of
amounts held in the Account as of any Valuation Date. The Account Value at
any given time is based on the value of the units held in each Subaccount,
plus the value of amounts held in any of the Credited Interest Options.
ACCUMULATION UNITS
The value of your interests in a Subaccount is expressed as the number of
"Accumulation Units" that you hold multiplied by an "Accumulation Unit Value"
(or "AUV") for each unit. The AUV on any Valuation Date is determined by
multiplying the value on the immediately preceding Valuation Date by the net
investment factor of that Subaccount for the period between the immediately
preceding Valuation Date and the current Valuation Date. (See "Net Investment
Factor" below.) The Accumulation Unit Value will be affected by the
investment performance, expenses and charges of the applicable Fund and is
reduced each day by a percentage that accounts for the daily assessment of
mortality and expense risk charges and the administrative charge (if any).
Initial Purchase Payments will be credited to your Contract at the AUV
computed on the next Valuation Date following our acceptance of the
application or enrollment form, as described under "Purchase--Contract
Purchase." Each subsequent Purchase Payment (or amount transferred)
received by the Company by the close of business of the New York Stock
Exchange will be credited to your Account at the AUV computed on the next
Valuation Date following our receipt of your payment or transfer request.
The value of an Accumulation Unit may increase or decrease.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment performance of
a Subaccount from one Valuation Date to the next. The net investment factor
for a Subaccount for any valuation period is equal to the sum of 1.0000 plus
the net investment rate. The net investment rate equals:
(a) the net assets of the Fund held by the Subaccount on the current
Valuation Date, minus
(b) the net assets of the Fund held by the Subaccount on the preceding
Valuation Date, plus or minus
(c) taxes or provisions for taxes, if any, attributable to the operation
of the Subaccount;
(d) divided by the total value of the Subaccount's Accumulation and
Annuity Units on the preceding Valuation Date;
(e) minus a daily charge at the annual effective rate of 1.25% for
mortality and expense risks and up to 0.25% (currently) as an
administrative expense charge.
The net investment rate may be either positive or negative.
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8
<PAGE>
TRANSFERS
================================================================================
At any time prior to the Annuity Date, the Contract Holder, or you (if
permitted by the Contract Holder), can transfer amounts held under the
Contract from one Subaccount to another. Transfers between the Credited
Interest Options and the Subaccounts are subject to certain restrictions.
(See Appendices I, II and III.) A request for transfer can be made either in
writing or by telephone. The telephone transfer privilege is available
automatically; no special election is necessary. All transfers must be in
accordance with the terms of the Contract and your Plan, as applicable.
The Company currently allows unlimited transfers of accumulated amounts to
available investment options without charge. The transfer amount may not be
less than $500. The total number of investment options in which you may
invest during the Accumulation Period is limited. (See "Investment
Options--The Funds.") Any transfer will be based on the Accumulation Unit
Value next determined after the Company receives a valid transfer request at
its Home Office. Transfers are not available during the Annuity Period.
DOLLAR COST AVERAGING PROGRAM
You may establish automated transfers of Account Values on a monthly or
quarterly basis through the Company's Dollar Cost Averaging Program, if
available under your Plan. Dollar Cost Averaging is a system for investing a
fixed amount of money at regular intervals over a period of time. Dollar Cost
Averaging does not ensure a profit nor guarantee against loss in a declining
market. You should consider your financial ability to continue purchases
through periods of low price levels. For additional information, please refer
to the Inquiries Section of the Prospectus Summary, which describes how you
can obtain further information.
WITHDRAWALS
================================================================================
Subject to the limitations on withdrawals from the Fixed Plus Account, the
Contract Holder may withdraw all or a portion of the Account Value at any
time during the Accumulation Period. To request a withdrawal, the Contract
Holder, on your behalf, must properly complete a disbursement form and send
it to our Home Office. Payments for withdrawal requests will be made in
accordance with SEC requirements, but normally not later than seven calendar
days following our receipt of a disbursement form. Under a Section 457 Plan,
pay-out elections may not be changed once payments have commenced.
Withdrawals may be requested in one of the following forms:
(bullet) Full Withdrawal of the Contract or an Account: The amount paid upon
a full withdrawal will be the Account Value(s) allocated to the
Subaccounts, the Guaranteed Accumulation Account (plus or minus a
market value adjustment) (see Appendix I), and the Fixed Account,
minus any applicable deferred sales charge and maintenance fee due,
plus the amount available for withdrawal from the Fixed Plus Account
(see Appendix III).
(bullet) Partial Withdrawals (Percentage): The amount paid will be the
percentage of the Account Value(s) requested minus any applicable
deferred sales charge; however, amounts available for withdrawal
from the Fixed Plus Account is limited (see Appendix III).
(bullet) Partial Withdrawal (Specified Dollar Amount): The amount paid will
be the dollar amount requested. However, the amount withdrawn from
the Account will equal the amount requested plus any applicable
deferred sales charge. The amount available for withdrawal from the
Fixed Plus Account is limited (see Appendix III).
For any partial withdrawal, amounts will be withdrawn proportionately from
each Subaccount or Credited Interest Option in which the Account is invested,
unless otherwise requested in writing. All amounts paid will be based on
Account Values as of the next Valuation Date after we receive a request for
withdrawal at our Home Office, or on such later date as the disbursement form
may specify.
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9
<PAGE>
ADDITIONAL WITHDRAWAL OPTIONS
================================================================================
The Company offers certain withdrawal options under the Contract that are
not considered annuity options ("Additional Withdrawal Options"). To exercise
these options, the Account Value must meet the minimum dollar amounts and age
criteria applicable to that option.
The Additional Withdrawal Options currently available under the Contract
include the following:
(bullet) SWO--Systematic Withdrawal Option. SWO is a series of partial
withdrawals from the 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.
(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 age 70-1/2 or retirement, if later, and pays you
that amount once a year. (See "Tax Status.")
Other Additional Withdrawal Options may be added from time to time.
Additional information relating to any of the Additional Withdrawal Options
may be obtained from your local representative or from the Company at its
Home Office.
If you select one of the Additional Withdrawal Options, your Account will
retain all of the rights and flexibility permitted under the Contract during
the Accumulation Period. The 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 by the
Contract Holder at any time by submitting a written request to our Home
Office. Any revocation will apply only to the amount not yet paid. Once an
option is revoked, it may not be elected again, nor may any other Additional
Withdrawal Options be elected. To determine whether the Additional Withdrawal
Options are available under your Plan, and to assess the terms and conditions
that may apply, you should check with your employer. The Company reserves the
right to discontinue the availability of one or all of these Additional
Withdrawal Options at any time, and/or to change the terms of future
elections.
DEATH BENEFIT DURING ACCUMULATION PERIOD
================================================================================
The Contract provides that a death benefit is payable to the Contract
Beneficiary upon the death of the Participant before the Annuity Date. The
Contract Holder may direct that we make such payment to the Plan Beneficiary.
The amount of the death benefit will be equal to the Account Value. Death
benefit proceeds may be paid to the Contract Beneficiary:
(bullet) in a lump sum;
(bullet) in accordance with any of the Annuity Options available under the
Contract; or
(bullet) under any Additional Withdrawal Options available under the Contract
(if the Plan Beneficiary is your spouse).
The Contract Holder, on behalf of a Plan Beneficiary may instead elect one
of the following two options; however, the Code limits how long the death
benefit proceeds may be left in these options (see below):
(bullet) to leave the Account Value invested in the Contract; or
(bullet) to leave the Account Value on deposit in the Company's general
account, and to receive monthly, quarterly, semi- annual or annual
interest payments at the interest rate then being credited on such
deposits. The balance on deposit can be withdrawn at any time or
applied to an Annuity Option.
When paying the Contract Beneficiary, we will determine the Account Value
on the Valuation Date following the date on which we receive proof of death
acceptable to the Company. Interest, if any, will be paid from the date of
death at a rate no less than required by law. We will mail payment to the
Contract Holder, or to the Plan Beneficiary, if requested by the Contract
Holder, within seven days after we receive proof of death.
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10
<PAGE>
The Code requires that distribution of death proceeds begin within a
certain period of time. Generally, if your Plan Beneficiary is not your
spouse, either payments must begin by December 31 of the year following the
year of your death, or the entire value of your benefits must be distributed
by December 31 of the fifth year following the year of your death. If your
Plan Beneficiary is your spouse, he or she is not required to begin
distributions until the year you would have attained age 70-1/2. In no event
may payments extend beyond the life expectancy (not to exceed 15 years for a
non-spousal 457 Plan Beneficiary) of the Plan Beneficiary or any period
certain greater than the Plan Beneficiary's life expectancy.
If no elections are made, no distributions will be made. Failure to
commence distributions within the above time periods can result in tax
penalties.
Regardless of the method of payment, death benefit proceeds will generally
be taxed to the Plan Beneficiary in the same manner as if you had received
those payments. (See "Tax Status.") Also, for 457 Plans, any distribution
payable over a period of more than one year must be made in substantially
non-increasing amounts.
ANNUITY PERIOD
================================================================================
ANNUITY PERIOD ELECTIONS
For the types of Contracts described in this prospectus the Code requires
that minimum annual distributions of the Account Value must begin by April
1st of the calendar year following the calendar year in which a Participant
attains age 70-1/2 or retires, if later. In addition, distributions must be
in a form and amount sufficient to satisfy the Code requirements. These
requirements may be satisfied by the election of certain Annuity Options or
Additional Withdrawal Options. (See "Tax Status.")
At least 30 days prior to the Annuity Date, the Contract Holder must
notify us in writing of the following:
(bullet) the date on which you would like to start receiving annuity
payments;
(bullet) the Annuity Option under which you want your payments to be
calculated and paid;
(bullet) whether the payments are to be made monthly, quarterly,
semi-annually or annually; and
(bullet) the investment option(s) used to provide annuity payments (i.e., a
fixed annuity using the general account or any of the Subaccounts
available at the time of annuitization). As of the date of this
Prospectus, Aetna Variable Fund, Aetna Income Shares and Aetna
Investment Advisers Fund, Inc. are the only Subaccounts available.
Annuity payments will not begin until an Annuity Option has been selected.
Until a date and option are elected, the Account will continue in the
Accumulation Period. Once annuity payments begin, the Annuity Option may not
be changed, nor may transfers be made among the investment options(s)
selected.
Under Contracts issued to the Erie County Public Employee Deferred
Compensation Plan, the Lifetime Annuity Options listed below may not be
elected and the "Payment for a Specified Period" nonlifetime option, if
selected, must be elected for a period of at least three years and not more
than the lesser of fifteen years or the life expectancy of the Participant.
ANNUITY OPTIONS
The Contract Holder may choose one of the following Annuity Options:
Lifetime Annuity Options:
(bullet) Option 1--Life Annuity--An annuity with payments ending on the
Annuitant's death.
(bullet) Option 2--Life Annuity with Guaranteed Payments--An annuity with
payments guaranteed for 5, 10, 15 or 20 years, or such other periods
as the Company may make available at the time of annuitization.
(bullet) Option 3--Life Income based Upon the Lives of Two Payees--An annuity
will be paid during the lives of the Annuitant and a second
Annuitant, with 100%, 66-2/3% or 50% of the payment to continue
after the first death, or 100% of the payment to continue at the
death of the second Annuitant and 50% of the payment to continue at
the death of the Annuitant.
(bullet) Option 4--Life Income based Upon the Lives of Two Payees--An annuity
with payments for a minimum of 120 months, with 100% of the payment
to continue after the first death.
If Option 1 or 3 is elected, it is possible that only one Annuity Payment
will be made if the Annuitant under
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Option 1, or the surviving Annuitant under Option 3, should die prior to the
due date of the second Annuity Payment. Once lifetime Annuity payments begin,
the Annuitant cannot elect to receive a lump-sum settlement.
Nonlifetime Annuity Options:
(bullet) Option 1--Payments for a Specified Period--payments will continue
for a specified period of time, as provided for under your Contract.
Under the nonlifetime option, the number of years that may be selected are
determined by the investment options used prior to annuitization. For amounts
held in the Fixed Plus Account, the annuity may be paid on a fixed or
variable basis and payments may be made for 5-30 years. For amounts held in
the Subaccounts, the Guaranteed Accumulation Account or the Fixed Account, an
annuity may be selected on a fixed or variable basis and payments may be made
for 3-30 years. If a nonlifetime option is elected on a variable basis, the
Annuitant may request at any time during the payment period that the present
value of all or any portion of the remaining variable payments be paid in one
sum. However, any lump-sum elected before three years of payments have been
completed will be treated as a withdrawal during the Accumulation Period and
any applicable deferred sales charge will be assessed. (See "Charges and
Deductions-- Deferred Sales Charge.") The nonlifetime option is not available
on a variable basis under a Contract which provides for immediate Annuity
benefits.
We may also offer additional Annuity Options under the Contract from time
to time.
ANNUITY PAYMENTS
Date Payouts Start. When payments start, the age of the Annuitant plus the
number of years for which payments are guaranteed must not exceed 95. Annuity
payments may not extend beyond (a) the life of the Annuitant, (b) the joint
lives of the Annuitant and beneficiary, (c) a period certain greater than the
Annuitant's life expectancy, or (d) a period certain greater than the joint
life expectancies of the Annuitant and beneficiary.
Amount of Each Annuity Payment. The amount of each payment depends on the
Account Value, how it is allocated between fixed and variable payouts and the
annuity option chosen. No election may be made that would result in the first
Annuity payment of less than $20, or total yearly Annuity Payments of less
than $100. If the Account Value on the Annuity Date is insufficient to elect
an option for the minimum amount specified, a lump-sum payment must be
elected.
If Annuity Payments are to be made on a variable basis, the first and
subsequent payments will vary depending on the assumed net investment rate
selected (3-1/2% or 5% per annum). Selection of a 5% rate causes a higher
first payment, but Annuity Payments will increase thereafter only to the
extent that the net investment rate exceeds 5% on an annualized basis.
Annuity Payments would decline if the rate were below 5%. Use of the 3-1/2%
assumed rate causes a lower first payment, but subsequent payments would
increase more rapidly or decline more slowly as changes occur in the net
investment rate. (See the Statement of Additional Information for further
discussion on the impact of selecting an assumed net investment rate.)
CHARGES DEDUCTED DURING THE ANNUITY PERIOD
We make a daily deduction for mortality and expense risks from any amounts
held on a variable basis. Therefore, electing the nonlifetime option on a
variable basis will result in a deduction being made even though we assume no
mortality risk. We may also deduct a daily administrative charge from amounts
held under the variable options. (See "Charges and Deductions.")
DEATH BENEFIT PAYABLE DURING THE ANNUITY PERIOD
If a Participant dies after Annuity Payments have begun, any death benefit
payable will depend on the terms of the Contract and the Annuity Option
selected. If Option 1 or Option 3 was elected, Annuity Payments will cease on
the death of the Annuitant under Option 1 or the death of the surviving
Annuitant under Option 3.
If Lifetime Option 2 or Option 4 was elected and the death of the
Annuitant under Option 2, or the surviving Annuitant under Option 4, occurs
prior to the end of the guaranteed minimum payment period, we will pay to the
Contract Beneficiary in a lump sum, unless otherwise requested, the present
value of the guaranteed annuity payments remaining.
If the nonlifetime option was elected, and the Annuitant dies before all
payments are made, the value of any remaining payments may be paid in a
lump-sum to the Contract Beneficiary (unless otherwise requested), and no
deferred sales charge will be imposed.
If the Participant dies after Annuity payments have begun and if there is
a death benefit payable under the Annuity option elected, the remaining value
must be distributed to the Plan Beneficiary at least as rapidly as under the
original method of distribution and, for 457 Plans, in substantially
nonincreasing amounts.
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Any lump-sum payment paid under the applicable lifetime or nonlifetime
Annuity options will be made within seven calendar days after proof of death
acceptable to us, and a request for payment are received at our Home Office.
The value of any death benefit proceeds will be determined as of the next
Valuation Date after we receive acceptable proof of death and a request for
payment. Under Options 2 and 4, such value will be reduced by any payments
made after the date of death.
TAX STATUS
================================================================================
INTRODUCTION
The following provides a general discussion and is not intended as tax
advice. This discussion reflects the Company's understanding of current
federal income tax law. Such laws may change in the future, and it is
possible that any change could be retroactive (i.e., effective prior to the
date of the change). The Company makes no guarantee regarding the tax
treatment of any Contract or transaction involving a Contract. The ultimate
effect of federal income taxes on the amounts held under a Contract, on
Annuity Payments, and on the economic benefit to the Contract Holder,
Participant or beneficiary may depend upon the tax status of the individual
concerned. Any person concerned about these tax implications should consult a
competent tax adviser before initiating any transaction.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under the Code. Since the
Separate Account is not an entity separate from the Company, it will not be
taxed separately as a "regulated investment company" under the Code.
Investment income and realized capital gains are automatically applied to
increase reserves under the Contracts. Under existing federal income tax law,
the Company believes that the Separate Account's investment income and
realized net capital gains will not be taxed to the extent that such income
and gains are applied to increase the reserves under the Contracts.
The Company does not anticipate that it will incur any federal income tax
liability attributable to the Separate Account and, therefore, the Company
does not intend to make provisions for any such taxes. However, if changes in
the federal tax laws or 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.
CONTRACTS USED WITH CERTAIN RETIREMENT PLANS
In General: The Contract is designed for use with Section 457 plans and
Section 401 Plans. The tax rules applicable to retirement plans vary
according to the terms and conditions of the plan.
The Company makes no attempt to provide more than general information
about use of the Contracts with the various types of retirement plans.
Participants as well as beneficiaries are cautioned that the rights of any
person to any benefits under the Contracts may be subject to the terms and
conditions of the plans themselves, in addition to the terms and conditions
of the Contract issued in connection with such plans. Some retirement plans
are subject to distribution and other requirements that are not incorporated
in the provisions of the Contracts. Purchasers are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts satisfy applicable laws and should consult their
legal counsel and tax adviser regarding the suitability of the Contract.
Minimum Distribution Requirements: The Code has required distribution
rules for Section 457 and 401(a) Plans. Distributions under Section 457 and
401(a) Plans must generally begin by April 1 of the calendar year following
the calendar year in which you attain age 70-1/2 or retire, whichever occurs
later.
In general, annuity payments must be distributed over your life or the
joint lives of you and your Plan Beneficiary, or over a period not greater
than your life expectancy or the joint life expectancies of you and your
beneficiary. Also, any distribution under a Section 457 Plan payable over a
period of more than one year must be made in substantially non-increasing
amounts.
If you die after the required minimum distribution has commenced,
distributions to your Plan Beneficiary must be made at least as rapidly as
under the method of distribution in effect at the time of your death.
However, if the minimum required distribution is calculated each year based
on your single life expectancy or the joint life expectancies of you and your
Plan Beneficiary, the
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regulations for Code Section 401(a)(9) provide specific rules for calculating
the minimum required distributions at your death. For example, if you have
elected ECO with the calculation based on your single life expectancy, and
the life expectancy is recalculated each year, your recalculated life
expectancy becomes zero in the calendar year following your death and the
entire remaining interest must be distributed to your beneficiary by December
31 of the year following your death. However, under Section 401 Plans, a
spousal beneficiary has certain rollover rights which can only be exercised
in the year of your death. The rules are complex and you should consult your
tax adviser before electing the method of calculation to satisfy the minimum
distribution requirements.
If you die before the required minimum distribution has commenced, your
entire interest must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of your death. Alternatively,
payments may be made over the life of the Plan Beneficiary or over a period
not extending beyond the life expectancy of the Plan Beneficiary (for Section
457 Plans, not to exceed 15 years for a non-spousal beneficiary), provided
the distribution begins by December 31 of the calendar year following the
calendar year of your death, or December 31 of the calendar year in which you
would have attained age 70-1/2.
If you fail to receive the minimum required distribution for any tax year,
a 50% excise tax is imposed on the required amount that was not distributed.
SECTION 457 PLANS
Section 457 provides for certain deferred compensation plans. These plans
may be offered with respect to service for state governments, local
governments, political subdivisions, agencies, instrumentalities and certain
affiliates of such entities, and tax exempt organizations. These plans are
subject to various restrictions on contributions and distributions. The plans
may permit participants to specify the form of investment for their deferred
compensation account. Prior to the August 20, 1996 enactment of the Small
Business Job Protection Act of 1996 (the "Small Business Act"), all
compensation deferred under the plans, all property and rights purchased with
such amounts, and all income attributable to such amounts, property or rights
remained solely the property and rights of the employer (without being
restricted to the provision of benefits) subject only to the claims of the
employer's general creditors. For that reason, depending on the terms of the
particular plan, the employer may have been entitled to draw on deferred
amounts for purposes unrelated to its Section 457 plan obligations.
Under the Small Business Act, plans maintained by State or local
governments, their political subdivisions, agencies, instrumentalities and
certain affiliates will be required to hold all assets and income of the Plan
in trust for the exclusive benefit of plan participants and their
beneficiaries. For purposes of meeting the new requirement, custodial
accounts and annuity contracts are treated as trusts. State and local
government plans that were in existence on August 20, 1996 are allowed a
transition period that ends January 1, 1999 to comply with the new
requirement. In general, all amounts received under a Section 457 plan are
taxable and reportable to the IRS as taxable income. This includes payments
for death benefits, periodic and nonperiodic distributions. Also, all
amounts, except death benefit proceeds, are subject to federal income tax
withholding as wages. If we make payments directly to a Participant on behalf
of the employer as Contract Holder, we will withhold federal taxes (and state
taxes, if applicable).
The Code imposes a maximum limit on annual Purchase Payments which may be
excluded from your gross income. For Section 457 Plan Participants, such
limit is generally the lesser of $7,500, as adjusted to reflect changes in
the cost of living, or 33-1/3% of your includible compensation (25% of gross
compensation).
SECTION 401(A) PLANS
Section 401(a) permits certain employers to establish various types of
retirement plans for employees, and permits self-employed individuals to
establish various types of retirement plans for themselves and for their
employees. These retirement plans may permit the purchase of the Contracts to
accumulate retirement savings under the plans. Adverse tax consequences to
the plan, to the Participant or to both may result if this Contract is
assigned or transferred to an individual except to a Participant as a means
to provide benefit payments.
The Code imposes a maximum limit on annual Purchase Payments that may be
excluded from a Participant's gross income. Such limit must be calculated
under the Plan by the employer in accordance with Section 415 of the Code.
This limit is generally the lesser of 25% of your compensation or $30,000. In
addition, Purchase Payments will be excluded from a Participant's gross
income only if the Section 401(a) Plan meets the applicable nondiscrimination
requirements.
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All distributions will be taxed as they are distributed unless you made a
rollover contribution of the distribution to another plan of the same type or
to an individual retirement annuity/account ("IRA") in accordance with the
Code, or unless you have made after-tax contributions to the plan, which are
not taxed upon distribution. The Code has specific rules that apply,
depending on the type of distribution received, if after-tax contributions
were made.
In general, payments received by your beneficiaries after your death are
taxed in the same manner as if you had received those payments, except that a
limited death benefit exclusion may apply to payments made for deaths
occuring 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 may be
provided the opportunity to elect not to have tax withheld from
distributions; however, certain distributions from annuities are subject to
mandatory federal income tax withholding. We will report to the IRS the
taxable portion of all distributions.
The Code imposes a 10% penalty tax on the taxable portion of any
distribution unless made when (a) you have attained age 59-1/2, (b) you have
become disabled, (c) you have died, (d) you have separated from service with
the plan sponsor at or after age 55, (e) the distribution amount is rolled
over into another plan of the same type in accordance with the terms of the
Code, or (f) the distribution amount is made in substantially equal periodic
payments (at least annually) over your life or life expectancy or the joint
lives or joint life expectancies of you and your Plan Beneficiary, provided
you have separated from service with the plan sponsor. In addition, the
penalty tax does not apply for the amount of a distribution equal to
unreimbursed medical expenses incurred by you that qualify for deduction as
specified in the Code. The Code may impose other penalty taxes in other
circumstances.
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 current value of the 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 the Contract attributable to that Fund, divided by the net
asset value of one share of that Fund. In determining the number of votes,
fractional votes will be recognized. Where the value of the Contract or
valuation reserve relates to more than one Fund, the calculation of votes
will be performed separately for each Fund.
Each Contract Holder will receive a notice of each meeting of shareholders
of that Fund, together with any proxy solicitation materials, and a statement
of the number of votes attributable to the Contract. 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.
MODIFICATION OF THE CONTRACT
The Company may change the Contract as required by federal or state law.
In addition, the Company may, upon 30 days written notice to the Contract
Holder, make other changes to the Contracts that would apply only to
individuals who become Participants under that Contract after the effective
date of such changes. If the Contract Holder does not agree to a change, no
new Participants will be covered under the Contract. Certain changes will
require the approval of appropriate state or federal regulatory authorities.
DISTRIBUTION
The Company will serve as Underwriter for the securities sold by this
Prospectus. The Company is registered as a broker-dealer with the Securities
and Exchange Commission and is a member of the National Association of
Securities Dealers, Inc. (NASD). As Underwriter, the Company will contract
with one or more registered broker-dealers ("Distributors"), including at
least one affiliate of the Company, to offer and sell the Contracts. All
persons offering and selling the Contracts must be registered representatives
of the Distributors and must also be licensed as insurance agents to sell
variable
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annuity contracts. These registered representatives may also provide services
to Participants in connection with establishing their Accounts under the
Contract.
Persons offering and selling the Contracts may receive commissions in
connection with the sale of the Contracts. The maximum percentage amount that
the Company will ever pay as commission with respect to any given Purchase
Payment is with respect to those made during the first year of Purchase
Payments under an Account. That percentage amount will range from 1% to 6% of
those Purchase Payments. The Company may also pay renewal commissions on
Purchase Payments made after the first year and, under group contracts,
asset-based service fees. The average of all payments made by the Company is
estimated to equal approximately 3% of the total Purchase Payments made over
the life of an average Contract. 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 actual expenses. The
name of the Distributor and the registered representative responsible for
your Account are set forth on your enrollment form. Commissions and sales
related expenses are paid by the Company and are not deducted from Purchase
Payments. (See "Charges and Deductions--Deferred Sales Charge.")
Occasionally, we may pay commissions and fees to Distributors which are
affiliated or associated with the Contract Holder or the Participants. We may
also enter into agreements with some entities associated with the Contract
Holder or Participants in which we would agree to pay the entity for certain
services in connection with administering the Contracts. In both these
circumstances there may be an understanding that the Distributor or entity
would endorse the Company as a provider of the Contract. You will be notified
if you are purchasing a Contract that is subject to these arrangements.
PERFORMANCE REPORTING
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account. The Company may
advertise the "standardized average annual total returns" of the Subaccounts,
calculated in a manner prescribed by the SEC, as well as the
"non-standardized returns." "Standardized average annual total returns" are
computed according to a formula in which a hypothetical investment of $1,000
is applied to the Subaccount and then related to the ending redeemable values
over the most recent one, five and ten-year periods (or since inception, if
less than ten years). Standardized returns will reflect the reduction of all
recurring charges during each period (e.g., mortality and expense risk
charges, annual maintenance fees, administrative expense charge (if any) and
any applicable deferred sales charge). "Non-standardized returns" will be
calculated in a similar manner, except that non- standardized figures will
not reflect the deduction of any applicable deferred sales charge (which
would decrease the level of performance shown if reflected in these
calculations). The non-standardized figures may also include a monthly,
quarterly, year-to-date and three-year periods.
The Company may also advertise certain ratings, rankings or other
information related to the Company, the Subaccounts or the Funds. Further
details regarding performance reporting and advertising are described in the
SAI.
TRANSFER OF OWNERSHIP; ASSIGNMENT
Unless contrary to applicable law, assignment of the Contract or Account
is prohibited.
DELAY OR SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of payment
for any benefit or values (a) on any Valuation Date on which the New York
Stock Exchange ("Exchange") is closed (other than customary weekend and
holiday closings) or when trading on the Exchange is restricted; (b) when an
emergency exists, as determined by the SEC, so that disposal of securities
held in the Subaccounts is not reasonably practicable or it is not reasonably
practicable for the Company fairly to determine the value of the Subaccount's
assets; or (c) during such other periods as the SEC may by order permit for
the protection of investors. The conditions under which restricted trading or
an emergency exists shall be determined by the rules and regulations of the
SEC.
Legal Matters and Proceedings
The Company knows of no material legal proceedings pending to which the
Separate Account or the Company is a party or which would materially affect
the Separate Account. The validity of the securities offered by this
Prospectus has been passed upon by Counsel to the Company.
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CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
================================================================================
The Statement of Additional Information contains more specific information
on the Separate Account and the Contract, as well as the financial statements
of the Separate Account and the Company. A list of the contents of the SAI is
set forth below:
General Information and History
Variable Annuity Account C
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Annuity Payments
Dollar Cost Averaging
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of the Company
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APPENDIX I
GUARANTEED ACCUMULATION ACCOUNT
================================================================================
The Guaranteed Accumulation Account ("GAA") is a credited interest option
available during the Accumulation Period under the Contract offered by this
Prospectus. Amounts allocated to the Long-Term Classifications of GAA are
held in a noninsulated, nonunitized separate account. Amounts allocated to
the Short-Term Classifications of GAA are held in the Company's general
account. This Appendix is a summary of GAA and is not intended to replace the
GAA prospectus. You should read the accompanying GAA prospectus carefully
before investing.
GAA is a credited interest option in which we guarantee stipulated rates
of interest for stated periods of time on amounts directed to GAA. The
interest rate stipulated is an annual effective yield; that is, it reflects a
full year's interest. Interest is credited daily at a rate that will provide
the guaranteed annual effective yield 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 three to ten years.
Purchase Payments must remain in GAA for the full Guaranteed Term to
receive the quoted interest rates. Withdrawals or transfers from a Guaranteed
Term before the end of that Guaranteed Term may be subject to a market value
adjustment ("MVA"). An MVA reflects the change in the value of the investment
due to changes in interest rates since the date of deposit. When interest
rates increase after the date of deposit, the value of the investment
decreases, and the MVA is negative. Conversely, when interest rates decrease
after the date of deposit, the value of the investment increases, and the MVA
is positive. It is possible that a negative MVA could result in you receiving
an amount that is less than the amount paid into GAA.
As a Guaranteed Term matures, assets accumulating under GAA may be (a)
transferred to a new Guaranteed Term, (b) transferred to the other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge and/or federal tax liability, and a maintenance fee.
By notifying us at our Home Office at least 30 days prior to the Annuity
Date, you may elect a variable annuity and have amounts that have been
accumulating under GAA transferred to one or more of the Subaccounts
available during the Annuity Period. GAA cannot be used as an investment
option during the Annuity Period.
MORTALITY AND EXPENSE RISK CHARGES
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited rate.
TRANSFERS
We will apply an MVA to GAA transfers made before the end of a Guaranteed
Term. Transfers of GAA values due to a maturity are not subject to an MVA.
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APPENDIX II
FIXED ACCOUNT
================================================================================
The following summarizes material information concerning the Fixed
Account. Amounts allocated to the Fixed Account are held in the Company's
general account that supports general insurance and annuity obligations.
Interests in the Fixed Account have not been registered with the SEC in
reliance on exemptions under the Securities Act of 1933, as amended.
Disclosure in the Prospectus regarding the Fixed Account, may, however, be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of such statements. Disclosure
in this Appendix regarding the Fixed Account has not been reviewed by the
SEC.
The Fixed Account guarantees the minimum interest rate specified in the
Contract. The Company may credit a higher interest rate from time to time.
The current rate is subject to change at any time, but will never fall below
the guaranteed minimum. The Company's determination of interest rates
reflects the investment income earned on invested assets and the amortization
of any capital gains and/or losses realized on the sale of invested assets.
Under the Fixed Account, the Company assumes the risk of investment gain or
loss by guaranteeing Account 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 six months, or (b) as
provided by federal law.
Amounts applied to the Fixed Account will earn the interest rate in effect
when actually applied to the Fixed Account.
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.
If a withdrawal is made from the Fixed Account, a deferred sales charge
may apply. (See "Charges and Deductions--Deferred Sales Charge.")
Transfers Among Investment Options
Transfers from the Fixed Account to any other available investment
option(s) are allowed in each calendar year during the Accumulation Period.
The amount which may be transferred may vary at our discretion; however, it
will never be less than 10% of the amount held under the Fixed Account.
Transfers to the Fixed Plus Account (if available under the Contract) will be
permitted without regard to this limitation.
By notifying us at our Home Office at least 30 days before Annuity
payments begin, you may elect to have amounts which have been accumulating
under the Fixed Account transferred to one or more of the Subaccounts
available during the Annuity Period to provide variable Annuity Payments.
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APPENDIX III
FIXED PLUS ACCOUNT
================================================================================
The following summarizes material information concerning the Fixed Plus
Account. Amounts allocated to the Fixed Plus Account are held in the
Company's general account that supports 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 may, however,
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.
FIXED PLUS ACCOUNT
The Fixed Plus Account guarantees that amounts allocated to this option
will earn the minimum Fixed Plus interest rate specified in the Contract. We
may credit a higher interest rate from time to time. Our 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.
The Fixed Plus Account will reflect a compound interest rate credited by
us. The interest rate quoted is an annual effective yield. Amounts applied to
the Fixed Plus Account will earn the Fixed Plus interest rate in effect when
actually applied to the Fixed Plus Account. We make no deductions from the
credited interest rate for mortality and expense risks; these risks are
considered in determining the credited rate.
Beginning on the tenth Account Year, we will credit amounts held in the
Fixed Plus Account with an interest rate that is at least 0.25% higher than
the then-declared interest rate for the Fixed Plus Accounts for Accounts that
have not reached their tenth anniversary.
We reserve the right to limit Net Purchase Payment(s) and/or transfers to
the Fixed Plus Account.
FIXED PLUS ACCOUNT WITHDRAWALS
The amount eligible for partial withdrawal is 20% of the amount held in
the Fixed Plus Account on the day we receive a written request in our Home
Office, reduced by any Fixed Plus Account withdrawals, transfers or
annuitizations made in the prior 12 months. In calculating the 20% limit, we
reserve the right to include payments made due to the election of any
Additional Withdrawal Option.
The 20% limit is waived if the partial withdrawal is due to annuitization,
death, unforeseeable emergency (when the conditions specified under (d) below
are met), or separation from service (when the conditions specified under (e)
below are met). For this waiver to apply, any such partial withdrawal must
also be made pro rata from all funding options used under the Account.
If a full withdrawal is requested, we will pay any amounts held in the
Fixed Plus Account in five annual payments that will be equal to:
1. One-fifth of the Fixed Plus Account value on the day the request is
received, reduced by any Fixed Plus Account withdrawals, transfers or
annuitizations made in the prior 12 months;
2. One-fourth of the remaining Fixed Plus Account value twelve months later;
3. One-third of the remaining Fixed Plus Account value twelve months later;
4. One-half of the remaining Fixed Plus Account value twelve months later;
and
5. The balance of the Fixed Plus Account value twelve months later.
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.
- --------------------------------------------------------------------------------
20
<PAGE>
A full withdrawal from the Fixed Plus Account may be cancelled at any time
before the end of the five-payment period.
We will waive the Fixed Plus Account full withdrawal provision, if the
withdrawal is made:
(a) due to your death, before Annuity payments begin and request for payment
is received within 6 months after the Participant's date of death;
(b) due to the election of an Annuity option;
(c) when the Fixed Plus Account value is $3,500 or less (and no withdrawals,
transfers or annuitizations have been made from the Account within 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 during that same period or,
(e) due to your separation from service with the employer provided that:
(1) the employer certifies that you have separated from service;
(2) 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.
TRANSFERS AMONG INVESTMENT OPTIONS
The amount eligible for transfer from the Fixed Plus Account is 20% of the
amount held in the Fixed Plus Account on the day we receive a written request
in our Home Office, reduced by any Fixed Plus Account withdrawals, transfers
or annuitizations made in the prior 12 months. In calculating the 20% limit,
we reserve the right to include payments made due to the election of any of
the Additional Withdrawal Options. We will waive the 20% transfer limit when
the value in the Fixed Plus Account is $1,000 or less.
By notifying us at our Home Office at least 30 days before Annuity
payments begin, the Contract Holder may elect to have amounts which have been
accumulating under the Fixed Plus Account transferred to one or more of the
Subaccounts available during the Annuity Period, to provide variable Annuity
payments.
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.
- --------------------------------------------------------------------------------
21
<PAGE>
For Master Applications Only
I hereby acknowledge receipt of an Account C Group Deferred Variable Annuity
prospectus dated May 1, 1997 for Section 457 Public Employer Deferred
Compensation Plans, as well as all current prospectuses pertaining to the
variable investment options available under the Contracts.
_____ Please send an Account C Statement of Additional Information (Form No.
PROS. 75982-97) dated May 1, 1997.
- --------------------------------------------------------------------------------
CONTRACT HOLDER'S SIGNATURE
DATE
- --------------------------------------------------------------------------------
PROS. 75982-97
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------
Statement of Additional Information dated May 1, 1997
AetnaPlus Contracts and Multiple Option Contracts
Group and Individual Variable Annuity Contracts
Available under Section 457 and 401(a)
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account C (the
"Separate Account") dated May 1, 1997.
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. 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........................................................ 9
Sales Material and Advertising.......................................... 10
Independent Auditors.................................................... 10
Financial Statements of the Separate Account............................ S-1
Financial Statements of Aetna Life Insurance and Annuity Company........ F-1
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company") is a stock life
insurance company which was organized under the insurance laws of the State of
Connecticut in 1976. Through a merger, it succeeded to the business of Aetna
Variable Annuity Life Insurance Company (formerly Participating Annuity Life
Insurance Company organized in 1954). As of December 31, 1996, the Company had
assets of $___ billion (subject to $___ billion of customer and other
liabilities, $___ 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. The Company's Home Office
is located at 151 Farmington Avenue, Hartford, Connecticut 06156.
In addition to serving as the principal underwriter and the depositor for the
Separate Account, the Company is also a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. The Company provides investment advice to
several of the registered management investment companies offered as variable
investment options under the Contracts funded by the Separate Account (see
"Variable Annuity Account C" below).
Other than the mortality and expense risk charges and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the Separate Account are borne by the Company. See "Charges and Deductions" in
the prospectus. The Company receives reimbursement for certain administrative
costs from some unaffiliated sponsors of the Funds used as funding options under
the Contract. These fees generally range up to 0.25%.
The assets of the Separate Account are held by the Company. The Separate Account
has no custodian. However, the Funds in whose shares the assets of the Separate
Account are invested each have custodians, as discussed in their respective
prospectuses.
VARIABLE ANNUITY ACCOUNT C
Variable Annuity Account C (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of each of the Subaccounts of the Separate
Account will be invested exclusively in shares of the mutual funds described in
the prospectus. Purchase Payments made under the Contract may be allocated to
one or more of the Subaccounts. The Company may make additions to, deletions
from or substitutions of available investment options as permitted by law and
subject to the conditions in the Contract. The availability of the Funds is
subject to applicable regulatory authorization. Not all Funds are available in
all jurisdictions, under all Contracts, or under all Plans.
2
<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>
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the Funds.
OFFERING AND PURCHASE OF CONTRACTS
The Company is both the depositor and the principal underwriter for the
securities sold by the prospectus. The Company offers the Contracts through life
insurance agents licensed to sell variable annuities who are registered
representatives of the Company or of other registered broker-dealers who have
sales agreements with the Company. The offering of the Contracts is continuous.
A description of the manner in which Contracts are purchased may be found in the
prospectus under the sections titled "Purchase" and "Contract Valuation."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account available under the
Contracts issued by the Company in connection with Plans described in the
prospectus. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as "non-standardized returns,"
both of which are described below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the various Subaccounts under the Contract, and then
related to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. The standardized figures reflect the deduction of all recurring charges
during each period (e.g., mortality and expense risk charges, maintenance fees,
administrative expense charges, and deferred sales
3
<PAGE>
charges). These charges will be deducted on a pro rata basis in the case of
fractional periods. The maintenance fee is converted to a percentage of assets
based on the average account size under the Contracts described in the
prospectus.
The non-standardized figures will be calculated in a similar manner, except that
they will not reflect the deduction of any applicable deferred sales charge
(which would decrease the level of performance shown if reflected in these
calculations). The non-standardized figures may also include monthly, quarterly,
year-to-date and three-year periods.
If a Fund was in existence prior to the date it became available under the
Contract, standardized and non-standardized total returns may include periods
prior to such date. These figures are calculated by adjusting the actual returns
of the Fund to reflect the charges that would have been assessed under the
Contract had that Fund been available under the Contract during that period.
Investment results of the Subaccounts will fluctuate over time, and any
presentation of the Subaccounts' total return quotations for any prior period
should not be considered as a representation of how the Subaccounts will perform
in any future period. Additionally, the Account Value upon redemption may be
more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
There are two sets of total return quotations shown below: one for AetnaPlus
Contracts and one for Multiple Option Contracts. Multiple Option Contracts were
issued only to the following Plans: San Bernadino County, Macomb County, and the
City of San Jose. The contract features and charges under these types of
contracts are identical; however, they are administered on two different
administrative systems. Due to differences in the way the two systems
administered payments prior to mid-1994, performance for the Subaccounts under
the two systems for those periods differs.
Additionally, each set of tables shown below represents the variations in
contract payment type and in the maintenance fees assessed under different
plans. Table A reflects the average annual standardized and non-standardized
total return quotation figures for the periods ended December 31, 1996 for the
Subaccounts under Single Payment Accounts issued by the Company. Table B
reflects the average annual standardized and non-standardized total return
quotation figures for the periods ended December 31, 1996 for the Subaccounts
under Installment Payment Accounts with a $20 annual maintenance fee. The
Company may also advertise returns based on a $15 annual maintenance fee. In
both sets of tables, for those Subaccounts where results are not available for
the full calendar period indicated, the percentage shown is an average annual
return since inception (denoted with an *).
4
<PAGE>
<TABLE>
<CAPTION>
AETNA PLUS CONTRACTS
TABLE A
-------
-------------------------------------------------------------------------------------------
SINGLE PAYMENT ACCOUNT FUND
($0 MAINTENANCE FEE) 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 09/13/96
- ------------------------------------------------------------------------------------------------------------------------------------
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 05/31/89
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Growth Portfolio 12/31/85
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio
Class A Shares 04/30/87
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
5
<PAGE>
<TABLE>
<CAPTION>
AETNA PLUS CONTRACTS
TABLE B
-------
-------------------------------------------------------------------------------------------
INSTALLMENT PAYMENT ACCOUNT Fund
($20 ANNUAL MAINTENANCE FEE) 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 09/13/96
- ------------------------------------------------------------------------------------------------------------------------------------
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 09/04/86
- ------------------------------------------------------------------------------------------------------------------------------------
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 05/01/87
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
6
<PAGE>
<TABLE>
<CAPTION>
MULTIPLE OPTION CONTRACTS
TABLE A
-------
-------------------------------------------------------------------------------------------
SINGLE PAYMENT ACCOUNT Fund
($0 MAINTENANCE FEE) 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 09/13/96
- ------------------------------------------------------------------------------------------------------------------------------------
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 09/04/86
- ------------------------------------------------------------------------------------------------------------------------------------
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 05/01/87
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
7
<PAGE>
<TABLE>
<CAPTION>
MULTIPLE OPTION CONTRACTS
TABLE B
-------
-------------------------------------------------------------------------------------------
INSTALLMENT PAYMENT ACCOUNT Fund
($20 ANNUAL MAINTENANCE FEE) 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 09/13/96
- ------------------------------------------------------------------------------------------------------------------------------------
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 09/04/86
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 01/03/95
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 10/22/86
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 11/07/86
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity 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 05/01/87
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
8
<PAGE>
ANNUITY PAYMENTS
When Annuity payments are to begin, the value of the Account is determined using
Accumulation Unit values as of the tenth Valuation Date before the first Annuity
payment is due. Such value (less any applicable premium tax) is applied to
provide an Annuity in accordance with the Annuity and investment options
elected.
The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first Annuity payment for each $1,000 of value applied.
Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a
higher first payment, but Annuity payments will increase thereafter only to the
extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.
When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first Annuity payment based on a particular investment
option, and (b) is the then current Annuity Unit value for that investment
option. As noted, Annuity Unit values fluctuate from one Valuation Date to the
next; such fluctuations reflect changes in the net investment factor for the
appropriate Subaccount(s) (with a ten Valuation Date lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
EXAMPLE:
- --------
Assume that, at the date Annuity payments are to begin, there are 3,000
Accumulation Units credited under a particular Account and that the value of an
Accumulation Unit for the tenth Valuation Date prior to retirement was
$13.650000. This produces a total value of $40,950.
Assume also that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.
Assume then that the value of an Annuity Unit for the Valuation Date on which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.
If the net investment factor with respect to the appropriate Subaccount is
1.0015000 as of the tenth Valuation Date preceding the due date of the second
monthly payment, multiplying this factor by .9999058* (to neutralize the assumed
net investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for the prior Valuation Date (assume such value to be
$13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation
Date on which the second payment is due.
9
<PAGE>
The second monthly payment is then determined by multiplying the number of
Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359,
which produces a payment of $276.07.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.
SALES MATERIAL AND ADVERTISING
The Company may include hypothetical illustrations in its sales literature that
explain the mathematical principles of dollar cost averaging, compounded
interest, tax deferred accumulation, and the mechanics of variable annuity
contracts. The Company may also discuss the difference between variable annuity
contracts and other types of savings or investment products, including, but not
limited to, personal savings accounts and certificates of deposit.
We may distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Subaccounts to established market
indices such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average or to the percentage change in values of other management
investment companies that have investment objectives similar to the Subaccount
being compared.
We may publish in advertisements and reports, the ratings and other information
assigned to us by one or more independent rating organizations such as A.M. Best
Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors
Services, Inc. The purpose of the ratings is to reflect our financial strength
and/or claims-paying ability. We may also quote ranking services such as
Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable
Insurance Products Performance Analysis Service (VIPPAS), which rank variable
annuity or life Subaccounts or their underlying funds by performance and/or
investment objective. 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.
10
<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.75982-97 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 Statements of Income for the years ended
December 31, 1996, 1995 and 1994
- Consolidated Balance Sheets as of December 31, 1996 and
1995
- Consolidated Statements of Changes in Shareholder's Equity
for the years ended December 31, 1996, 1995 and 1994
- Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
- Notes to Consolidated Financial Statements
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance
and Annuity Company establishing Variable Annuity Account 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 Variable Annuity Contract (G-CDA-HF)(3)
(4.2) Form of Variable Annuity Contract (G-CDA-HD)(4)
(4.3) Form of Variable Annuity Contract (GID-CDA-HO)
(4.4) Form of Variable Annuity Contract (GLID-CDA-HO)
(4.5) Form of Variable Annuity Contract (GSD-CDA-HO)
(4.6) Form of Variable Annuity Contract (GST-CDA-HO)(5)
(4.7) Endorsement (EGET-IC(R)) to Contracts G-CDA-HD and G-CDA-HF(2)
(5) Form of Variable Annuity Contract Application (300-GTD-IA)(6)
(6.1) Certification of Incorporation and By-Laws of Aetna Life
Insurance and Annuity Company(7)
<PAGE>
(6.2) Amendment of Certificate of Incorporation of Aetna Life
Insurance and Annuity Company(5)
(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) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996 and March 1, 1996(5)
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996 and March 1,1996(5)
(8.6) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations
Company dated as of November 1, 1995(8)
(8.7) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Franklin Advisers, Inc. dated January 31,
1989(2)
(8.8) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994
and amended March 1, 1996(2)
(8.9) 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)
(8.10) 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)
(8.11) 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)
(8.12) Amendment dated as of February 20, 1996 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company and
Scudder Variable Life
<PAGE>
Investment Fund dated April 27, 1992 as amended February 19,
1993 and August 13, 1993(8)
(8.13) 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(9)
(14) Not applicable
(15.1) Powers of Attorney(5)
(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 Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on February 24, 1995.
4. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75982), as filed electronically on April
22, 1996.
5. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 11, 1997.
6. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-75982), as filed on February 24, 1995.
7. 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.
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.
9. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on April 28, 1995.
<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:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commissions Compensation*
- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Aetna Life Insurance $1,325,661 $96,924,599
and Annuity Company
</TABLE>
* Compensation shown in column 5 includes deductions for mortality and
expense risk guarantees and contract charges assessed to cover costs
incurred in the sales and administration of the contracts issued under
Variable Annuity Account C.
Item 30. Location of Accounts and Records
- ----------------------------------------------
All 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) 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.
(e) 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 caused this Post-Effective Amendment No. 12 to its
Registration Statement on Form N-4 (File No. 33-75982) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut, on the 20th 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: Daniel P. Kearney*
----------------------------------------
Daniel P. Kearney
President
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 12 to the Registration Statement on Form N-4 (File No. 33-75982) has been
signed by the following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Daniel P. Kearney* Director and President )
- -------------------------- (principal executive officer) )
Daniel P. Kearney
)
Timothy A. Holt* Director, Senior Vice President ) February
- -------------------------- and Chief Financial Officer ) 20, 1997
Timothy A. Holt
)
Christopher J. Burns* Director )
- --------------------------
Christopher J. Burns )
)
Laura R. Estes* Director )
- --------------------------
Laura R. Estes )
)
Gail P. Johnson* Director )
- --------------------------
Gail P. Johnson )
)
<PAGE>
John Y. Kim* Director )
- --------------------------
John Y. Kim )
)
Shaun P. Mathews* Director )
- --------------------------
Shaun P. Mathews )
)
Glen Salow* Director )
- --------------------------
Glen Salow )
)
Creed R. Terry* Director )
- --------------------------
Creed R. Terry )
)
Deborah Koltenuk* Vice President and Treasurer, )
- -------------------------- Corporate Controller )
Deborah Koltenuk
By: /s/
------------------------------------------------------------
*Julie E. Rockmore
Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT C
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ----------- ------- ----
<S> <C> <C>
99-B.1 Resolution of the Board of Directors of Aetna Life Insurance and Annuity *
Company establishing Variable Annuity Account C
99-B.3.1 Form of Broker-Dealer Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement and Related Selling Agreement *
99-B.4.1 Form of Variable Annuity Contract (G-CDA-HF) *
99-B.4.2 Form of Variable Annuity Contract (G-CDA-HD) *
99-B.4.3 Form of Variable Annuity Contract (GID-CDA-HO)
---
99-B.4.4 Form of Variable Annuity Contract (GLID-CDA-HO)
---
99-B.4.5 Form of Variable Annuity Contract (GSD-CDA-HO)
---
99-B.4.6 Form of Variable Annuity Contract (GST-CDA-HO) *
99-B.4.7 Endorsement (EGET-IC(R)) to Contracts G-CDA-HD and *
G-CDA-HF
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 27, 1993
</TABLE>
*Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ----------- ------- ----
<S> <C> <C>
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
99-B.8.4 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.8.5 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.8.6 Service Agreement between Aetna Life Insurance and Annuity Company and *
Fidelity Investments Institutional Operations Company dated as of November
1, 1995
99-B.8.7 Fund Participation Agreement between Aetna Life Insurance and Annuity *
Company and Franklin Advisers, Inc. dated January 31, 1989
99-B.8.8 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.8.9 Fund Participation Agreement between Aetna Life Insurance and Annuity *
Company and Lexington Management Corporation regarding Natural Resources
Trust dated December 1, 1988 and amended February 11, 1991
99-B.8.10 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
</TABLE>
*Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ----------- ------- ----
<S> <C> <C>
99-B.8.11 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.8.12 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.8.13 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 **
</TABLE>
*Incorporated by reference
**To be filed by amendment
Aetna Life Insurance and Annuity Company
Home Office: 151 FARMINGTON AVE.
HARTFORD, CONNECTICUT 06156
(203) 273-0123
Herein called Aetna
Agrees to pay benefits as stated in this Contract.
SPECIFICATIONS
PLAN
OWNER
GROUP CONTRACT NO.
EFFECTIVE DATE
THIS CONTRACT IS DELIVERED IN
AND IS SUBJECT TO THE LAWS OF THAT JURISDICTION
DETAILS OF VARIABLE FEATURES OF THIS CONTRACT ARE IN THE DEPOSIT, RESERVE,
AND SURRENDER PROVISIONS, AND ANNUITY PROVISIONS.
RIGHT TO CANCEL
The Owner may cancel this Contract within 10 days of receiving it, by sending a
written notice to Aetna at the above address or to the agent from whom it was
purchased. Aetna will return all payments made for this Contract within 7 days
after it receives the notice of cancellation and this Contract.
This page, and the following pages, and the application, make up the entire
Contract.
Signed at Hartford, Connecticut on the Effective Date.
/s/ Stephen B. Middlebrook /s/ William O. Bailey
Secretary President
GROUP VARIABLE OR FIXED ANNUITY OR COMBINATION CONTRACT
NON-PARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,
WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
GID-CDA-HO 39168
<PAGE>
SPECIFICATIONS
PLAN
OWNER
GROUP CONTRACT NO.
EFFECTIVE DATE
THIS CONTRACT IS DELIVERED IN
AND IS SUBJECT TO THE LAWS OF THAT JURISDICTION
Deduction from Deposit(s) -- The amount of the Net Deposit(s) applied will be
the deposit(s) received minus a deduction for premium taxes, if any then
deducted (see Deposit, Reserve, and Surrender Provisions of this Contract).
Deductions From The Separate Account And The Funds -- Total deductions equal
1.5% on an annual basis. Once Annuity payments begin, Aetna must earn a gross
return on the assets of the Separate Account of: (a) 5% on an annual basis if an
assumed net return rate of 3.5% is chosen; or (b) 6.5% on an annual basis if an
assumed net return rate of 5% is chosen; in order that the dollar amount of the
Variable Annuity payments will not decrease.
GID-CDA-HO 2
<PAGE>
COVER SHEET
This Contract is a legal contract between the Owner and Aetna.
READ THIS CONTRACT CAREFULLY. This cover sheet is only a brief outline of some
of the important features of this Contract. This cover sheet is not the
insurance contract. Only the actual terms of this Contract will control. This
Contract sets forth, in detail, all of the rights and obligations of both you
and Aetna. IT IS THEREFORE IMPORTANT THAT YOU READ THIS CONTRACT CAREFULLY.
TABLE OF CONTENTS
Page
GENERAL DEFINITIONS
1. Participant...........................................................5
2. Annuitant.............................................................5
3. Annuity...............................................................5
4. Fixed Annuity.........................................................5
5. Variable Annuity......................................................5
6. General Account.......................................................5
7. Separate Accounts.....................................................5
8. Fund(s)...............................................................5
9. Valuation Period......................................................5
GENERAL PROVISIONS
1. Contract..............................................................6
2. Incontestability......................................................6
3. Control of Contract and Individual Accounts...........................6
4. Change of Contract by Aetna...........................................6
5. Individual Certificates...............................................6
6. Designation of Beneficiary............................................6
7. Misstatements and Adjustments.........................................7
8. State Laws............................................................7
9. Grace Period..........................................................7
10. Non-Participating Contract...........................................7
DEPOSIT, RESERVE, AND SURRENDER PROVISIONS
1. Net Deposit...........................................................7
2. Individual Accounts...................................................7
3. Guaranteed Interest Rate -- General Account...........................7
4. Record Units -- Separate Account......................................8
5. Investment Increment Factors -- Separate Account......................8
6. Record Unit Value -- Separate Account.................................9
7. Individual Account Reserve............................................9
8. Active Life Fund......................................................9
9. Experience Credits....................................................9
10. Transfer of Individual Account Reserves..............................9
11. Notice to the Owner..................................................9
GID-CDA-HO 3
<PAGE>
12. Sum Payable at Death (Before Annuity Payments Start)................10
13. Surrender Value.....................................................10
ANNUITY PROVISIONS
1. Choices to be Made...................................................11
2. Fund(s) Annuity Units -- Separate Account............................11
3. Fund(s) Annuity Unit Value -- Separate Account.......................11
4. Annuity Options......................................................12
5. Other Terms of Annuity Options.......................................21
6. Death of Annuitant/Beneficiary.......................................21
GID-CDA-HO 4
<PAGE>
GENERAL DEFINITIONS
1. PARTICIPANT -- A person who participates in the Plan and for whom benefits
are being accrued under this Contract.
2. ANNUITANT -- A Participant or beneficiary on whose life an Annuity has been
effected under this Contract.
3. ANNUITY -- Payment of an income:
(a) for the life of one or two people;
(b) for a stated period;
(c) for some mix of (a) and (b); or
(d) until there are no funds left.
4. FIXED ANNUITY -- An Annuity of a fixed dollar amount paid from the General
Account.
5. VARIABLE ANNUITY -- An Annuity of a varying dollar amount paid from the
Separate Account.
6. GENERAL ACCOUNT -- The Account which holds the assets of Aetna, other than
those assets of Aetna in the Separate Accounts. Reserves for a Fixed
Annuity are held in the General Account.
7. SEPARATE ACCOUNTS -- Accounts set up by Aetna under the Connecticut
Insurance Laws. Assets for this class of variable contracts are set apart
from other assets of Aetna. Reserves for a Variable Annuity are held in a
Separate Account and invested in shares of Fund(s).
8. FUND(S) -- The open-end management investment companies (mutual funds)
registered under the Investment Company Act of 1940. They are:
(a) Aetna Variable Fund, Inc. (Variable Fund);
(b) Aetna Variable Encore Fund, Inc. (Encore Fund);
(c) Aetna Income Shares, Inc. (Income Fund); and
(d) Other funds (if any) which Aetna may allow.
9. VALUATION PERIOD -- The period of time from the end of one business day to
the end of the next business day.
GID-CDA-HO 5
<PAGE>
GENERAL PROVISIONS
1. Contract
This Contract may be changed only by an officer of Aetna. Any change must
be made in writing. Any choices under this Contract by the Owner, Annuitant
or beneficiary must be in writing. Until receipt of such choices in the
Home Office of Aetna, Aetna may rely on any previous choices made.
Aetna will make Annuity payments as and when due. Any other payments will
be made by Aetna within 7 days of receipt of the written claim for payment,
except as otherwise provided in the Surrender Value provision.
2. Incontestability
Aetna cannot cancel this Contract because of any error of fact on the
application.
3. Control of Contract and Individual Accounts
All of the benefits and rights granted by this Contract, or allowed by
Aetna, belong to the Owner.
4. Change of Contract by Aetna
Aetna may change any of the terms of this Contract. Aetna will notify the
Owner in writing 30 days before the effective date of any such change. Any
such change will not affect the amount or terms of any Annuity which began
prior to such change. Changes that affect the following provisions of this
Contract: (a) Annuity Options; (b) Net Deposit; (c) Guaranteed Interest
Rate; (d) Individual Account Reserve; and (e) Surrender Value; will only
apply to deposits made on behalf of Participants who become covered under
this Contract on or after the effective date of such change. If the Owner
fails to agree to any such change, no new Participants may be covered under
this Contract. Aetna will continue to accept contributions for the
Participants covered under this Contract prior to the change. This Contract
is subject to change as required by federal or state law.
5. Individual Certificates
Aetna shall issue certificates for each Participant as required by the
state in which this Contract is delivered. The certificate will contain a
summary of the benefits provided by this Contract. Certificates are not a
part of this Contract.
6. Designation of Beneficiary
The beneficiary for each Participant shall be as named, or later changed,
by the Owner. If no beneficiary is living at the death of the Participant,
payment of any amount due will be made to the Owner.
GID-CDA-HO 6
<PAGE>
7. Misstatements and Adjustments
If the age or sex of any payee is found to be misstated, the correct facts
will be used to adjust payments.
8. State Laws
This Contract follows the laws of the state in which it is delivered. Any
cash, death or Annuity payments are equal to or greater than the minimum
required by such laws.
9. Grace Period
This Contract will remain in effect even if deposits are not continued.
10. Non-Participating Contract
The Owner will have no right to share in the earnings of Aetna.
DEPOSIT, RESERVE, AND SURRENDER PROVISIONS
1. Net Deposit
The Net Deposit is the actual deposit minus a charge to pay premium taxes,
if any. As a rule, Aetna will take this charge out of an Individual Account
Reserve (see below) when annuity payments are to start. But, if Aetna
determines that it must pay any imposed premium tax at any other time, it
may take out the charge at any time.
2. Individual Accounts
Aetna will maintain Individual Accounts for each Participant. On the basis
of information supplied by the Owner, Aetna will credit the Net Deposit(s)
to such Accounts in either:
(a) the General Account;
(b) the Separate Account where they are invested in Fund(s) as directed by
the Owner; or
(c) a mix of (a) and (b).
3. Guaranteed Interest Rate -- General Account
On the Net Deposit(s) made to the General Account, Aetna will add interest
daily at an annual rate no less than:
(a) 4% except under the Annuity Provisions; and
GID-CDA-HO 7
<PAGE>
(b) 3.5% under the Annuity Provisions.
Aetna may add interest daily at any higher rate.
4. Record Units -- Separate Account
The portion of the Net Deposit applied to the Separate Account Fund(s) will
determine the number of Record Units. This number is equal to the Net
Deposit(s) divided by the Record Unit Value (see below) for the Valuation
Period when the Net Deposit is received.
5. Investment Increment Factors -- Separate Account
Investment Increment Factors are those items used to determine a Fund's net
return factor for each Valuation Period. The net return factor(s) are then
used to compute all Separate Account values and payments.
The gross return is equal to:
(a) investment income; plus
(b) realized and unrealized capital gains; minus
(c) realized and unrealized capital losses; minus
(d) certain investment expenses; and minus
(e) a daily charge at an annual rate of .25% for investment management
expense and profit.
The gross return is divided by the net assets of the Fund at the start of
the Valuation Period to compute the gross return rate. A gross return rate
may be more or less than 0. The net return rate is equal to:
(a) the gross return rate; plus or minus
(b) taxes (or charges to a tax reserve) on the Separate Account; and minus
(c) a daily charge at an annual rate of 1.25% for annuity mortality and
expense risks and profit.
A net return rate may be more or less than 0.
The net return factor for each Fund is equal to the net return rate plus
1.000000.
6. Record Unit Value -- Separate Account
The Record Unit Value for each Separate Account Fund is computed by
multiplying the net return factor for the current Valuation Period by the
Record Unit Value for the previous
GID-CDA-HO 8
<PAGE>
Period. The dollar value of Record Units, Separate Account Reserves, and
Variable Annuity payments may go up or down due to investment gain or loss.
7. Individual Account Reserve
The Individual Account Reserve for each Participant is equal to:
(a) Net Deposit(s) credited to the General Account (if any); plus
(b) General Account interest added by Aetna; plus
(c) the value of Separate Account Record Units (if any); plus
(d) any amount due to Experience Credits (see below); minus
(e) a charge of $20 on each anniversary of each Individual Account
effective date; and minus
(f) any amounts previously surrendered.
8. Active Life Fund
The Active Life Fund is equal to the combined Reserves of all Individual
Accounts, except those Accounts applied to the payment of Annuities.
9. Experience Credits
Aetna may apply Experience Credits to Individual Accounts in the Active
Life Fund under this Contract. Any such credit will be computed as decided
by Aetna.
10. Transfer of Individual Account Reserves
The Owner may transfer any portion of the Individual Account Reserves from
any Fund to any other Fund or to the General Account. Reserves cannot be
transferred from the General Account to any of the Funds. A transfer of
Reserves cannot be made within 90 days of a previous transfer.
11. Notice to the Owner
Aetna will notify the Owner each year of:
(a) the investments held in the Fund(s) for the Separate Account; and
(b) the number of record units; or
(c) the number of annuity units; and
(d) the value of a unit.
GID-CDA-HO 9
<PAGE>
Such number or values will be as of a date no more than 60 days before the
date of the notice.
12. Sum Payable at Death (Before Annuity Payments Start)
Aetna will pay to the beneficiary the Individual Account Reserve if:
(a) the participant dies before Annuity payments start; and
(b) the notice of death is received by Aetna.
The sum paid will be the Reserve on the date when the notice is received.
The beneficiary may choose to apply any sum under Annuity Options (see
Annuity Provisions).
13. Surrender Value
The amount paid by Aetna upon the surrender of all or any portion of the
Active Life Fund or Individual Account(s) shall be reduced by a surrender
fee. The surrender fee will be a percentage of the amount surrendered and
will vary according to the number of Deposit Cycles completed for the
Individual Account(s) being surrendered. The number of deposits to be made
in a year is chosen by the Owner. A Deposit Cycle is completed when this
number of deposits has been made. For each surrender from an Individual
Account, the fee will be as follows:
Number of Deposit Cycles Completed Fee
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more 2%
In no event, however, will the Fee on a total surrender of an Individual
Account exceed 9% of the actual deposits made to that Account.
If the Active Life Fund invested in the General Account exceeds $500,000,
Aetna reserves the right to pay out any surrender in equal installments
over a period not to exceed 60 months.
Under certain emergency conditions, Aetna has the right to defer payment
of any surrender value as provided by federal or state law.
ANNUITY PROVISIONS
1. Choices to be Made
The Owner may tell Aetna to pay the Individual Account Reserve (minus any
charges for premium taxes) as a premium for an Annuity under Options 2, 3,
4, and 5 (see below). The first Annuity payment must generally be made no
later than the first day of the month
GID-CDA-HO 10
<PAGE>
following the Annuitant's 75th birthday. The Owner may tell Aetna to make
the first Annuity payment on the first day of any prior month.
When any option is chosen, the Owner or beneficiary choosing the option
must tell Aetna if payments are to be made other than monthly. They must
also tell Aetna to pay:
(a) a Fixed Annuity;
(b) a Variable Annuity using Variable Fund;
(c) a Variable Annuity using Income Fund; or
(d) any mix of these.
When choosing a Variable Annuity, an assumed net return rate of 5% per year
may be chosen. If not chosen, Aetna will use an assumed net return rate of
3.5% per year.
2. Fund(s) Annuity Units -- Separate Account
The amount of the first Variable Annuity payment will be equal to:
(a) the portion of the Individual Account Reserve (minus any charges for
premium taxes) to be used to pay a Variable Annuity using the Fund(s);
times
(b) the rate for each $1,000 for the Option chosen.
Such amount, or portion, of the payment using a Fund will be divided by the
Fund(s) Annuity Unit Value (see below) on the due date of the first payment
to determine the number of the Fund(s) Annuity Units.
Such number of the Fund(s) Annuity Units remains fixed. Each future payment
is equal to such number times the Fund(s) Annuity Unit Value on the due
date of each payment.
3. Fund(s) Annuity Unit Value -- Separate Account
For any Valuation Period the Fund(s) Annuity Unit Value is equal to:
(a) the Value for the next previous Period; times
(b) the net return factor(s) (see Investment Increment Factors -- Separate
Account provisions) for the tenth previous Period; times
(c) a factor to reflect the assumed net return rate.
The factor for 3.5% per year is .9999058; for 5% per year it is .9998663.
The dollar amount of Annuity Units, values, and payments may go up or down
due to investment gain or loss.
GID-CDA-HO 11
<PAGE>
Payments shall not be changed due to mortality or expense results.
4. Annuity Options
Option 1 -- Payment of Interest on Sum Left With Aetna -- This option may
be used only by the beneficiary when the death of the Participant is before
Aetna has started paying an Annuity. A portion or all of the sum due may be
held in the General Account of Aetna at interest (see Guaranteed Interest
Rate -- General Account provision). The beneficiary may later tell Aetna
to:
(a) pay a portion, or all, of the sum held by Aetna; or
(b) apply a portion, or all, of the sum held by Aetna under any of the
Annuity Options below.
Option 2 -- Payments of a Stated Dollar Amount -- An Annuity of a chosen
amount will be paid until there are no funds left. The payments to be made
in a year must be no less than $60 for each $1,000 applied to this Option,
but cannot exceed an amount which would deplete the funds in less than 3
years.
Where there is a right under Federal Securities Law to forgo future
payments and receive the present value of the Annuity under this Option in
a lump sum, the exercise of that right within a 3 year period after the
start of payments shall be treated as a surrender (see Surrender Value
under Deposit, Reserve and Surrender Provisions).
Option 3 -- Payments for a Stated Period of Time -- An Annuity will be paid
for the number of years chosen. The number of years must be no less than 3
and no more than 30.
Where there is a right under Federal Securities Law to forgo future
payments and receive the present value of the Annuity under this Option in
a lump sum, the exercise of that right within a 3 year period after the
start of payments shall be treated as a surrender (see Surrender Value
under Deposit, Reserve and Surrender Provisions).
GID-CDA-HO 12
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
PAYMENTS FOR A STATED PERIOD
<TABLE>
<CAPTION>
Years Years Years
of Pay- Amount of of Pay- Amount of of Pay- Amount of
ments Payments ments Payments ments Payments
----- -------- ----- -------- ----- ---------
<S> <C> <C> <C> <C> <C>
3 $29.19 13 $7.94 22 $5.39
4 22.27 14 7.49 23 5.24
5 18.12 15 7.10 24 5.09
6 15.35 16 6.76 25 4.96
7 13.38 17 6.47 26 4.84
8 11.90 18 6.20 27 4.73
9 10.75 19 5.97 28 4.63
10 9.83 20 5.75 29 4.53
11 9.09 21 5.56 30 4.45
12 8.46
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
PAYMENTS FOR A STATED PERIOD
<TABLE>
<CAPTION>
Years Years Years
of Pay- Amount of of Pay- Amount of of Pay- Amount of
ments Payments ments Payments ments Payments
----- -------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C>
3 $29.80 13 $8.64 22 $6.17
4 22.89 14 8.20 23 6.02
5 18.74 15 7.82 24 5.88
6 15.99 16 7.49 25 5.76
7 14.02 17 7.20 26 5.65
8 12.56 18 6.94 27 5.54
9 11.42 19 6.71 28 5.45
10 10.51 20 6.51 29 5.36
11 9.77 21 6.33 30 5.28
12 9.16
</TABLE>
GID-CDA-HO 13
<PAGE>
Option 4 -- Life Income -- An Annuity will be paid for life. Payments may
be made for a minimum stated period, if chosen, of 60, 120, 180 or 240
months. If the Annuitant dies before the end of such stated period,
payments will be made to the beneficiary for the rest of the stated
period.
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
LIFE INCOME WITH
Age of Payments Guaranteed for a Stated Period of Months
Annuitant None 60 120 180 240
Male Female
---- ------ ---- -- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
50 55 $4.98 $4.96 $4.89 $4.77 $4.62
51 56 5.08 5.05 4.98 4.85 4.68
52 57 5.18 5.16 5.07 4.93 4.74
53 58 5.30 5.26 5.17 5.01 4.80
54 59 5.41 5.38 5.27 5.09 4.86
55 60 5.54 5.49 5.37 5.17 4.92
56 61 5.67 5.62 5.48 5.26 4.98
57 62 5.80 5.75 5.59 5.35 5.04
58 63 5.95 5.89 5.71 5.44 5.10
59 64 6.10 6.03 5.83 5.53 5.16
60 65 6.27 6.19 5.96 5.62 5.22
61 66 6.44 6.35 6.09 5.72 5.27
62 67 6.63 6.52 6.23 5.81 5.33
63 68 6.82 6.71 6.38 5.91 5.38
64 69 7.04 6.90 6.53 6.00 5.43
65 70 7.26 7.11 6.68 6.10 5.47
66 71 7.50 7.33 6.84 6.19 5.52
67 72 7.76 7.56 7.01 6.28 5.55
68 73 8.04 7.80 7.18 6.37 5.59
69 74 8.34 8.07 7.35 6.46 5.62
70 75 8.67 8.34 7.52 6.54 5.65
71 9.01 8.63 7.70 6.62 5.67
72 9.39 8.94 7.88 6.69 5.69
73 9.79 9.26 8.05 6.76 5.71
74 10.22 9.61 8.22 6.81 5.72
75 10.69 9.96 8.39 6.87 5.73
</TABLE>
Rate for ages not shown will be provided on request and will
be computed on a basis consistent with the rates in the above
tables.
GID-CDA-HO 14
<PAGE>
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%
<TABLE>
<CAPTION>
LIFE INCOME WITH
Age of Payments Guaranteed for a Stated Period of Months
Annuitant None 60 120 180 240
Male Female
---- ------ ---- -- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
50 55 $5.89 $5.86 $5.78 $5.65 $5.48
51 56 5.99 5.96 5.86 5.71 5.53
52 57 6.09 6.06 5.95 5.79 5.59
53 58 6.20 6.16 6.04 5.86 5.64
54 59 6.32 6.27 6.14 5.94 5.70
55 60 6.44 6.39 6.24 6.02 5.75
56 61 6.57 6.51 6.34 6.10 5.80
57 62 6.71 6.64 6.45 6.18 5.86
58 63 6.85 6.77 6.56 6.26 5.91
59 64 7.00 6.92 6.68 6.35 5.97
60 65 7.16 7.07 6.80 6.43 6.02
61 66 7.34 7.23 6.93 6.52 6.07
62 67 7.52 7.40 7.06 6.61 6.12
63 68 7.72 7.58 7.20 6.70 6.17
64 69 7.93 7.77 7.35 6.79 6.21
65 70 8.16 7.97 7.50 6.88 6.25
66 71 8.40 8.19 7.65 6.97 6.29
67 72 8.66 8.42 7.81 7.05 6.33
68 73 8.94 8.66 7.97 7.14 6.36
69 74 9.24 8.92 8.13 7.22 6.39
70 75 9.56 9.19 8.30 7.29 6.41
71 9.91 9.48 8.47 7.36 6.43
72 10.29 9.78 8.64 7.43 6.45
73 10.69 10.10 8.80 7.49 6.47
74 11.13 10.43 8.97 7.55 6.48
75 11.60 10.79 9.13 7.60 6.49
</TABLE>
Rate for ages not shown will be provided on request and will
be computed on a basis consistent with the rates in the above
tables.
GID-CDA-HO 15
<PAGE>
Option 5 -- Life Income for Two Payees -- An Annuity will be paid during
the lives of the Annuitant and a second annuitant. At the death of either,
payments will continue to the survivor. When this option is chosen, a
choice must be made of:
(a) 100% of the payment to continue to the survivor;
(b) 66 2/3% of the payment to continue to the survivor;
(c) 50% of the payment to continue to the survivor; or
(d) payments for a minimum of 120 months, with 100% of the payment to
continue to the survivor.
GID-CDA-HO 16
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.10 $4.27 $4.43 $4.57 $4.69 $4.79 $4.86
55 60 4.21 4.43 4.65 4.86 5.04 5.20 5.32
60 65 4.30 4.57 4.86 5.15 5.43 5.68 5.88
65 70 4.38 4.69 5.04 5.43 5.83 6.21 6.56
70 75 4.44 4.79 5.20 5.68 6.21 6.78 7.33
75 80 4.48 4.86 5.32 5.88 6.56 7.33 8.16
80 85 -- 4.91 5.41 6.03 6.82 7.80 8.95
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.00 $5.16 $5.31 $5.44 $5.57 $5.67 $5.75
55 60 5.11 5.31 5.51 5.71 5.90 6.06 6.19
60 65 5.20 5.44 5.71 5.99 6.26 6.52 6.73
65 70 5.28 5.57 5.90 6.26 6.65 7.04 7.38
70 75 5.34 5.67 6.06 6.52 7.04 7.59 8.14
75 80 5.38 5.75 6.19 6.73 7.38 8.14 8.96
80 85 -- 5.81 6.29 6.90 7.66 8.62 9.76
</TABLE>
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.
GID-CDA-HO 17
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
66 2/3% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.51 $4.72 $4.94 $5.18 $5.44 $5.71 $6.00
55 60 4.70 4.94 5.20 5.49 5.81 6.14 6.49
60 65 4.90 5.18 5.49 5.84 6.23 6.65 7.09
65 70 5.11 5.44 5.81 6.23 6.71 7.25 7.82
70 75 5.34 5.71 6.14 6.65 7.25 7.93 8.69
75 80 5.58 6.00 6.49 7.09 7.82 8.69 9.69
80 85 -- 6.28 6.84 7.53 8.39 9.47 10.77
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
66 2/3% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.43 $5.62 $5.84 $6.08 $6.36 $6.65 $6.98
55 60 5.62 5.84 6.10 6.38 6.70 7.06 7.44
60 65 5.82 6.08 6.38 6.72 7.11 7.54 8.01
65 70 6.06 6.36 6.70 7.11 7.58 8.12 8.71
70 75 6.31 6.65 7.06 7.54 8.12 8.80 9.56
75 80 6.59 6.98 7.44 8.01 8.71 9.56 10.56
80 85 -- 7.31 7.84 8.49 9.33 10.38 11.66
</TABLE>
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.
GID-CDA-HO 18
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.75 $4.98 $5.24 $5.55 $5.91 $6.32 $6.79
55 60 4.99 5.24 5.54 5.88 6.28 6.76 7.30
60 65 5.26 5.55 5.88 6.27 6.73 7.27 7.90
65 70 5.59 5.91 6.28 6.73 7.26 7.90 8.65
70 75 5.96 6.32 6.76 7.27 7.90 8.67 9.57
75 80 6.37 6.79 7.30 7.90 8.65 9.57 10.69
80 85 -- 7.30 7.88 8.59 9.49 10.61 12.00
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.67 $5.89 $6.15 $6.47 $6.84 $7.29 $7.81
55 60 5.91 6.15 6.44 6.78 7.20 7.70 8.28
60 65 6.20 6.47 6.78 7.16 7.63 8.19 8.86
65 70 6.54 6.84 7.20 7.63 8.16 8.80 9.58
70 75 6.95 7.29 7.70 8.19 8.80 9.56 10.48
75 80 7.42 7.81 8.28 8.86 9.58 10.48 11.60
80 85 -- 8.39 8.94 9.61 10.46 11.56 12.92
</TABLE>
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.
GID-CDA-HO 19
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
120 MONTHS MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.10 $4.27 $4.42 $4.56 $4.68 $4.77 $4.83
55 60 4.21 4.42 4.64 4.84 5.02 5.16 5.26
60 65 4.30 4.56 4.84 5.12 5.38 5.61 5.78
65 70 4.37 4.68 5.02 5.38 5.76 6.10 6.37
70 75 4.42 4.77 5.16 5.61 6.10 6.58 7.00
75 80 4.46 4.83 5.26 5.78 6.37 7.00 7.58
80 85 -- 4.86 5.33 5.88 6.55 7.29 8.02
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
120 MONTHS MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.00 $5.15 $5.30 $5.43 $5.55 $5.64 $5.71
55 60 5.10 5.30 5.50 5.69 5.87 6.01 6.12
60 65 5.19 5.43 5.69 5.96 6.21 6.44 6.61
65 70 5.27 5.55 5.87 6.21 6.57 6.90 7.17
70 75 5.32 5.64 6.01 6.44 6.90 7.37 7.78
75 80 5.36 5.71 6.12 6.61 7.17 7.78 8.34
80 85 -- 5.75 6.19 6.72 7.35 8.06 8.76
</TABLE>
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.
GID-CDA-HO 20
<PAGE>
5. Other Terms of Annuity Optionss
No choice of any Annuity Option may be made if the first payment would be
less than $20 or if the total payments in a year would be less than $100.
Age, where used in the above tables, means age nearest birthday on the date
of the first payment. The tables for Options 4 and 5 use the Annuity table
for 1949 with:
(a) a 1 year age reduction for males; and
(b) a .6 year age reduction for females.
If Fixed Annuity Options 3, 4, or 5 are chosen and Aetna's current
applicable rates at that time are larger than the rates above, the larger
payment will be made.
6. Death of Annuitant/Beneficiaryy
When an Annuitant dies while payments are being made under an Annuity
Option, payments will be continued to the beneficiary as provided by the
option. If no beneficiary is living, the present value of any remaining
payments will be paid in one sum to the Owner. The present value will
assume the same interest rate that was used when the first payment was
made.
When a beneficiary dies while a sum is held at interest, the amount held
will be paid in one sum to the estate of the beneficiary. When a
beneficiary dies while payments are being made under an Annuity Option, the
present value of any remaining payments will be paid in one sum to the
estate of the beneficiary. The present value will assume the same interest
rate that was used when the first payment was made.
GID-CDA-HO 21
<PAGE>
Aetna Life Insurance and Annuity Company
Home Office: 151 FARMINGTON AVE.
HARTFORD, CONNECTICUT 06156
(203) 273-0123
GROUP VARIABLE OR FIXED ANNUITY OR COMBINATION CONTRACT
NON-PARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,
WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
-----------
This Contract or Certificate is endorsed to add at the end of the Surrender
Value provision the following:
The surrender fee of 2% is not deducted for a surrender from the Reserve, or
from a Participant's Individual Account, when:
(a) no less than 9 deposit cycles have been completed for the Annuitant, or the
said Participant; and
(b) the Annuitant or the said Participant is no less than age 59 1/2.
Endorsed and made a part of this Contract or Certificate on:
(a) the Date of Issue (Effective Date) of the Contract; or
(b) the effective date of coverage under the Group Contract of the Participant
named in the Certificate.
/s/ William O. Bailey
President
ESVB-HB
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
-----------
This Contract or Certificate is hereby endorsed as follows:
Payments under any life Annuity Option in this Contract or Certificate; which is
elected on or after the effective date of this endorsement, will be determined
without regard to the sex of the Annuitant(s). Any such payments will be based
solely on the age of the Annuitant(s) (as determined by the Contract or
Certificate); using the most favorable rate for that age under the benefit
elected.
If a larger payment would result by a female Annuitant using the rates shown in
the Contract or Certificate for a male, the larger payment will be made.
Endorsed and made a part of the Contract or Certificate effective August 1,
1983.
/s/ William O. Bailey
President
EUSR-HC
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
Aetna hereby endorses this Contract to allow the transfer of Reserves out of the
General Account. Such transfers will be:
(1) a minimum of 10% of the General Account funds held in the Participant's
Individual Account;
(2) without deduction of any charge; and
(3) to any of the Fund(s) or the Guaranteed Accumulation Account;
(4) allowed once during each calendar year;
(5) prior to the election of an Annuity Option;
(6) without affecting the rights of transfer now in the contract.
Aetna may, for temporary periods of time, allow any larger percentage to be
transferred.
The value of the Reserves held in the General Account, as used above, is the
value when the request is received at the Home Office of Aetna. References to
the General Account above shall not apply to the Guaranteed Accumulation
Account.
Endorsed and made a part of this Contract on the later of September 1, 1983 or
the Effective Date of this Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EGAWGA-HC
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
1. The following sections a), b), and c) will apply to all Participants under
this Contract.
a) Add to the Deposit, Reserve, and Surrender Provisions the following:
Reinstatement: All or a portion of the proceeds of a full surrender of
this Contract may be reinvested within 30 days after the surrender if
allowed by law. Any annual maintenance charge and Surrender Fee imposed
at the time of surrender on the amount being reinvested will be
included in the reinstatement. Any Market Value Adjustment deducted
from GA Account surrenders will not be included in the reinstatement.
Amounts will be reinstated among the Fixed Account, GA Account, and
Separate Account in the same proportion as they were at the time of
surrender. Any amounts reinstated to the GA Account will be credited to
the current Deposit Period. The number of Record Units reinstated will
be based on the Record Unit Value(s) next computed after receipt at
Aetna's Home Office of the reinstatement request and the amount to be
reinvested.
Any annual maintenance charge which falls due after the surrender and
before the reinstatement will be deducted from the amount reinstated.
Reinstatement is permitted only once.
b) Delete the paragraph under the section titled Individual Accounts and
add the following:
Aetna will maintain Individual Accounts for each Participant. Aetna
will credit the Net Deposit(s) among:
a) the General Account;
b) the Guaranteed Accumulation Account;
c) the Fund(s) in which the Separate Account invests.
The percentage of the Net Deposit(s) to be applied to each investment
above must be chosen by the Owner.
EAMAR-HD 1
<PAGE>
During any calendar year, Aetna may be told to change the investment
mix four times. If additional changes are allowed, each may be subject
to a fee of up to $10.
c) Delete the paragraph under the section titled Transfer of Individual
Account Reserves and add the following:
Before an annuity option is elected, the Owner may transfer any portion
of the Individual Account Reserves from any Fund to any other Fund, to
the General Account, or to the GA Account's current Deposit Period. Any
portion of the Individual Account Reserve in the GA Account may be
transferred to any Fund or to the General Account. Transfers from the
GA Account are subject to the Withdrawal and Market Value Adjustment
provisions.
Four transfers of Individual Account Reserves (excluding transfers from
the GA Account at the end of a Guaranteed Term) can be made during a
calendar year period. If additional transfers are allowed, each may be
subject to a fee of up to $10.
2. The following changes will not apply to Participants covered under the
Contract before the effective date of this endorsement.
a) Delete the paragraph titled Deductions From The Separate Account And
The Funds on the Specifications page and add the following:
Deductions from the Separate Account - There will be deductions for
mortality and expense risks and administrative fees. If the dollar
amount of Variable Annuity payments are not to decrease, Aetna must
earn a gross return on the assets of the Separate Account of:
o 4.75% on an annual basis, plus an annual return of up to .25%
needed to offset the administrative charge set at the time
annuity payments commenced, if an Assumed Annual Net Return Rate
of 3.5% is chosen; or,
o 6.25% on an annual basis, plus an annual return of up to .25%
needed to offset the administrative charge set at the time
annuity payments commended, if an Assumed Annual Net Return Rate
of 5% is chosen.
b) Delete the paragraph under the section titled Investment Increment
Factors - Separate Account and insert the following:
Investment Increment Factors are those items used to determine a
Fund's Net Return Factor for each valuation period. The Net Return
Factors are used to compute all Separate Account values and payments
for any Fund.
EAMAR-HD 2
<PAGE>
The Net Return Factor for each Fund is equal to 1.0000000 plus the
Net Return Rate.
The Net Return Rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account
at the end of a Valuation Period; minus
(b) the value of the shares of the Fund held by the Separate Account
at the start of the Valuation Period; plus or minus
(c) taxes (or reserves for taxes on the Separate Account (if any);
divided by
(d) the total value of the Fund Record Units and Fund Annuity Units
of the Separate Account at the start of the Valuation Period;
minus
(e) a daily actuarial charge at an annual rate of 1.25% for annuity
mortality and expense risks and profit; and a daily
administrative charge which will not exceed .25% on an annual
basis.
A Net Return Rate may be more or less than 0.
The value of a share of the Fund is equal to the net assets of the
Fund divided by the number of shares outstanding.
The administrative charge may be changed annually except for amounts
which have been used to purchase an annuity. This charge will not
exceed .25%.
c) Under the section titled Fund(s) Annuity Unit Value - Separate Account,
delete the last paragraph and add the following:
Payments shall not be changed due to changes in the mortality or expense
results or administrative charges.
d) Under the section titled Individual Account Reserve, add the following final
paragraph:
Any charge specified in (e) above will also be charged upon surrender of the
entire Individual Account Reserve if such surrender takes place on a date
other than an anniversary of the Individual Account effective date.
e) Under the section titled Annuity Options, add the following sentence to
Option 2:
EAMAR-HD 3
<PAGE>
This option may only be elected as a Fixed Annuity.
f) Add as a final paragraph to the section titled Annuity Options, the
following:
Other Options - Aetna may make other options available as allowed by the
laws of the state in which this Contract is delivered.
Endorsed and made a part of this Contract effective May 1, 1984.
/s/ William O. Bailey
President
EAMAR-HD 4
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
ENDORSEMENT
This Contract is hereby endorsed to add the following new provision under
Surrender Value:
No surrender fee is deducted:
o On and after the tenth anniversary of the Effective Date of the
Individual Account; or
o From any portion of the Active Life Fund which is paid when the
Individual Account Cash Value is $2,500 or less and no surrenders have
.been taken from the Individual Account within the prior 12 months. If
there is more than one Individual Account under the Contract for a
Participant, then this provision will only apply when the total in all
of the Participant's Individual Accounts is $2,500 or less.
Endorsed and made a part of this Contract on May 1, 1989 or the Effective Date
of the Contract whichever is later.
/s/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EEGSV-HI
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to add the following provision to the section
Surrender Value under DEPOSIT, RESERVE, AND SURRENDER VALUE PROVISIONS:
On the tenth anniversary of the Effective Date of an Individual Account,
the surrender fee shall reduce to 0%.
Endorsed and made a part of this Contract effective September 1, 1984.
/s/ William O. Bailey
President
ESF-GTD-HD
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is endorsed as follows:
In addition to any Purchase Payments stated to be made to this Contract, a
lump-sum Purchase Payment(s), of not less than a minimum amount stated by Aetna,
may be made on behalf of one or more Participants, as appropriate. Aetna will
maintain an Individual Account for each lump-sum payment. The terms of this
Contract shall apply to any lump-sum payment except that:
1. A Maintenance Fee will not be deducted from an Individual Account
maintained pursuant to a lump-sum payment; and
2. For each surrender from an Individual Account maintained pursuant
to a lump-sum payment, the Surrender Fee will vary according to
the period of time between the effective date of the Individual
Account and the date of surrender as follows:
If the Period of Time is Surrender Fee
5 years or less 5%
More than 5 years but not more than 6 years 4%
More than 6 years but not more than 7 years 3%
More than 7 years but not more than 8 years 2%
More than 8 years but not more than 9 years 1%
More than 9 years 0%
Endorsed and made a part of this Contract on the effective date of the Contract.
/s/ William O. Bailey
President
EGI-SP-HE
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to include the following new provisions:
During any calendar year, Aetna may be told to change the investment mix
twelve times. Should Aetna allow additional changes, each may be subject
to a fee of up to $10.
Twelve transfers of Current Value (excluding transfers from the GA
Account at the end of a Guaranteed Term) can be made during a calendar
year period. Should Aetna allow additional transfers, each may be subject
to a fee of up to $10.
Endorsed and made a part of this Contract effective May 1, 1989.
/s/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EGECVT-HI
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to delete the previous Guaranteed Accumulation
Account (GA Account) Endorsement and replace it with the following:
Add to the GENERAL DEFINITIONS Section of the Contract the following paragraphs:
Maturity Date: The last day of a GA Account Term.
Matured Term Value: The amount payable on a GA Account Term's Maturity
Date.
Nonunitized Separate Account: An account set up by Aetna under Tile 38,
Sec. 38-154a, of the Connecticut General Statutes, which is used to hold
assets for GA Account Terms greater than three years. The Owner or
Participant, as applicable, does not participate in the investment gain
or loss from the assets held in the GA Account.
The Guaranteed Accumulation Account (GA Account) is amended and restated as
follows:
The GA Account guarantees stipulated rates of interest for stated periods
of time (see (1) and (3) below). Amounts withdrawn before the end of a
Guaranteed Term may be subject to a Market Value Adjustment (MVA) (see
(7) below).
(1) Deposit Period - A calendar month, a calendar quarter, or any other
period of time specified by Aetna during which Net Purchase Payment(s)
and transfers are accepted into the GA Account for one or more Guaranteed
Terms.
(2) Guaranteed Term (Term) - The period of time for which interest rates are
guaranteed on Net Purchase Payment(s) and on transfers made into a
Deposit Period of the GA Account. Terms are offered at Aetna's discretion
for various lengths of time ranging up to and including ten years.
(3) Guaranteed Term Classifications - The grouping of Terms according to
their time to maturity. The following are the Classifications:
(a) Short Term: Terms of up to and including 3 years; or
(b) Long Term: Terms of greater than 3 years and up to and including
10 years.
During a Deposit Period, Aetna may make available one or more Terms
within a Classification. The Owner has the option to allocate Net
Purchase Payment(s) and
EGAAE-IO 1
<PAGE>
transfers into any or all of the available Deposit Period Terms. If no
specific direction is given, Net Purchase Payment(s) and transfers will
go into available Terms on a pro rata basis within the Classification(s)
previously chosen by the Owner. At least one Term in the Short Term
Classification will be available each Deposit Period.
(4) Guaranteed GA Account Interest Rates (Guaranteed Rates) - Aetna will
declare all interest rate(s) applicable to a specific Term at the start
of the Deposit Period for that Term. These rate(s) are guaranteed by
Aetna for that Deposit Period and the ensuing Term and are not based on
the actual investment experience of the underlying assets in the GA
Account. The Guaranteed Rates are annual effective yields. The interest
is credited daily at a rate that will produce the guaranteed annual
effective yield over the period of a year. No annual rate will ever be
less than 4%.
For Terms of one year or less, one Guaranteed Interest Rate is set and
announced for that full Term. For other Terms, there may be two or more
rates. The rate(s) will be set and announced prior to the Deposit Period
for that Term and will not be subject to change.
(5) Withdrawals from GA Account - Full or partial surrenders may be requested
at any time from the GA Account. However, amounts withdrawn prior to the
Maturity Date of a Term to satisfy a surrender request may be subject to
an MVA (see (7) below).
Full and partial surrenders are satisfied by withdrawing amounts from
each of the Fund(s), the Fixed Account, the GA Account Short Term
Classification and the GA Account Long Term Classification on a pro rata
basis. However, the Owner or Participant, as applicable, may specify a
particular order in which investment options will be liquidated in order
to satisfy a partial surrender request.
For purposes of withdrawals, Terms within the GA Account Short Term and
Long Term Classifications are considered as two separate investment
options. Any withdrawal which is a surrender will be subject to the
Maintenance Fee and Surrender Fee as appropriate. Also, amounts will be
removed within a GA Account Classification starting with the Term still
in effect with the oldest Deposit Period.
Amounts may be transferred at any time subject to Contract specifications
(see (9) below). Amounts transferred prior to the Maturity Date of a Term
are subject to an MVA (see (7) below). Fund(s) will be removed within the
elected Classification starting with the Term still in effect with the
oldest Deposit Period.
During the Deposit Period and the 90 days following the close of the
Deposit Period, any amounts applied to the GA Account during that Deposit
Period may not be withdrawn unless due to:
EGAAE-IO 2
<PAGE>
(a) A full or partial surrender;
(b) A payment of a premium for an Annuity Option; or
(c) The Sum Payable at Death provision.
(6) Maturity Date/Reinvestment - For all GA Account Term(s) existing as of
the effective date of this endorsement in addition to GA Account Term(s)
announced subsequent to that date, the Owner or Participant, as
applicable, will be mailed a notice at least 18 calendar days before a
Term's Maturity Date. This notice will contain the current Deposit
Period's Guaranteed Rate(s), Term(s) and a projected Matured Term Value.
The Matured Term Value may be surrendered or transferred on the Term's
Maturity Date without an MVA. If no specific direction is given by the
Owner or Participant, as applicable, prior to the Maturity Date, each
Matured Term Value will be reinvested in a Term of the same duration. In
the event that a Term of the same duration is unavailable, each Matured
Term Value will automatically be reinvested in the next shortest Term
available in the same Classification during the then current Deposit
Period. If however, only one Term is available within the Classification,
then the Matured Term Value will automatically be reinvested in that
Term. Within two business days after the Maturity Date, the Owner or
Participant, as applicable, will be mailed a confirmation statement. This
statement will state the Terms and Guaranteed Rates which will apply to
the reinvested Matured Term Value.
During the calendar month following the Term's Maturity Date, one
exception is allowed to the 90 day transfer restriction and MVA under (5)
and (7). This exception is applicable to each Matured Term Value plus any
interest accrued thereon, provided no part of the Matured Term Value was
transferred on the Maturity Date.
During this calendar month period, the Owner or Participant, as
applicable, may notify Aetna's Home Office to transfer or surrender all
or part of the Matured Term Value plus any interest accrued thereon from
the GA Account without an MVA. This provision only applies to the first
such request received from the Owner or Participant, as applicable,
during this period for any Matured Term Value. The Matured Term Value
plus any interest accrued thereon may be transferred upon such request
without an MVA:
(a) To any other Terms of the GA Account available in the current
Deposit Period; or
(b) To any other allowable Fund(s).
EGAAE-IO 3
<PAGE>
If no such notification is given, the Matured Term Value will remain
subject to the terms and conditions of the new Term. All surrender and
transfer requests will be processed as of the date they are received in
good order at Aetna's Home Office.
If this Contract is issued under a Tax Deferred Annuity Plan (see
Specifications page) the above notice will be sent to the Participant(s).
(7) Market Value Adjustment (MVA) - There will be an MVA for a withdrawal
from the GA Account before the end of a Term when the withdrawal is due
to:
(a) A transfer;
(b) A full or partial surrender; or
(c) A payment of a premium for Annuity Option 2.
The amount of the withdrawal will be adjusted to a market value amount as
described below.
The market value adjusted amount will be equal to the amount withdrawn
multiplied by the following ratio:
x
---
365
(1+i)
--------
x
---
365
(1+j)
Where: i is the Deposit Yield
j is the Current Yield
x is the number of days remaining, (computed from Wednesday of the
week of withdrawal) in the Guaranteed Term.
The Deposit Period Yield will be determined as follows:
o At the close of the last business day of each week of the Deposit Period,
a yield will be computed as the average of the yields on that day of U.S.
Treasury Notes which mature in the last three months of the Guaranteed
Term.
o The Deposit Period Yield is the average of those yields for the Deposit
Period. If withdrawal is made prior to the close of the Deposit Period,
it is the average of those yields on each week preceding withdrawal.
EGAAE-IO 4
<PAGE>
The Current yield is the average of the yields on the last business day of the
week preceding withdrawal on the same U.S. Treasury Notes included in the
Deposit Period Yield.
In the event that no U.S. Treasury Notes which mature in the last three months
of the Guaranteed Term exist, Aetna reserves the right to use the U.S. Treasury
Notes that mature in a following quarter.
Full and partial surrenders as well as transfers made within six months of the
date of death of the Participant under the Sum Payable at Death provision will
be the greater of:
o The aggregate MVA amount which is the sum of all market value adjusted
amounts calculated due to a withdrawal of amounts (for surrender or
transfer) from Terms prior to the end of those Terms.
The aggregate MVA may be either positive or negative; or
o The applicable portion of the Current Value in the GA Account.
After the six month period, the surrender or transfer will be the aggregate MVA
amount (i.e. including all MVAs).
The greater of the aggregate MVA amount or the applicable portion of the Current
Value in the GA Account is applied to amounts withdrawn from the GA Account for
payment of a premium under Annuity Options 3 or 4.
Aetna may make any change to this provision with 30 days advance written notice
to the Owner or Participant, as applicable. Any such change shall become
effective for Purchase Payment(s), transfers or reinvestments made to any new
Term by any present or future Participant.
(8) Deposits to the GA Account - All amounts in the GA Account under the
Short Term Classification are made to the General Account.
All amounts in the GA Account under the Long Term Classifications are
made to a Nonunitized Separate Account. There are no discrete units for
this Nonunitized Separate Account. The Owner or Participant, as
applicable, does not participate in the gain or loss from the assets held
in the Nonunitized Separate Account. Such gain or loss is borne entirely
by Aetna. These assets may be chargeable with liabilities arising out of
any other business of Aetna.
For Terms under both the Short Term and Long Term Classifications, Aetna
guarantees stipulated interest rates to be credited to the GA Account.
All assets of Aetna including amounts made to the GA Account are
available to meet the guarantees under the GA Account.
EGAAE-IO 5
<PAGE>
(9) Before an Annuity Option is elected, all or any portion of the Current
Value may be transferred from any Fund or GA Account:
(a) To any other allowable Fund;
(b) To the Fixed Account; or
(c) To Terms of the GA Account available in the current Deposit
Period.
Amounts in a specific GA Account Term cannot be transferred to the
Deposit Period of another Term within the same Classification except at
the Term's maturity (see (6)).
Amounts applied to Classifications of the GA Account may not be
transferred to the Fund(s) or to the Fixed Account during the Deposit
Period or for 90 days after the close of the Deposit Period.
Transfers from Terms of the GA Account are subject to the Withdrawal and
MVA provisions (see (5) and (7)).
Twelve transfers of Current Value can be made during a calendar year
period. The Transfer of any portion of the GA Account value at the
Maturity Date of a Term is not counted for this purpose. Aetna may allow
additional transfers, but each may be subject to a fee of up to $10.
Endorsed and made a part of this Contract on May 1, 1991 or the effective date
of the Contract whichever is later.
/s/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EGAAE-IO
6
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
The definition of Separate Account under the Definition of Certain Terms or
General Definitions section of the contract is hereby amended to read as
follows:
Separate Account: An account which buys and holds shares of the Fund(s).
Income, gains or losses, realized or unrealized are credited or charged
to this account without regard to other income, gains or losses of Aetna.
Aetna owns the assets held in a separate account and is not a trustee as
to such amounts. These accounts generally are not guaranteed and are held
at market value. The assets of such accounts, to the extent of reserves
and other contract liabilities of the account, shall not be charged with
other Aetna liabilities.
Endorsed and made a part of the Contract.
/s/ Edmund F. Kelly
President
Aetna Life Insurance and Annuity
EGISA-IA
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follow:
Add the following condition under the Contract entitled Deposit, Reserve and
Surrender Provisions as follows:
Distribution Options: The following distribution options may be elected by
the Owner on the Participant's behalf.
(a) Estate Conservation Option (ECO): A distribution option under which a
portion of the Individual Account Current Value will automatically be
surrendered and distributed each year. An ECO payment will be
calculated on the Individual Account's full Current Value. The value of
the Fixed Account and/or the Fund Record Units cancelled by the amounts
paid will be withdrawn pro rata from each investment option used under
the Contract.
(1) Distribution Amount: Each year that ECO is in effect, Aetna will
calculate and distribute an amount equal to the minimum
distribution required under the Internal Revenue Code (Code). The
annual distribution will be determined by dividing the Individual
Account Current Value as of December 31 of the year prior to the
payment year, by a life expectancy factor. These calculations may
be changed as necessary to comply with the Code minimum
distribution rules.
(2) Life Expectancy Factor: The factor is either the single life or
joint life expectancy, as elected by the Owner on the
Participant's behalf, based on tables in Code Section 401 (a) (9)
or related regulations.
The joint life expectancy factor can only be elected based on the
joint life expectancy of the Participant and his or her spouse,
and such spouse must be named as the beneficiary of any death
benefits under the Plan while ECO is in effect. If joint life
expectancy is elected and the Participant or spouse dies, payments
will be based on the survivor's life expectancy. If single life
expectancy is elected and the Participant dies, or if joint life
expectancy is elected and the survivor dies, the life expectancy
is reduced to zero in the year following the year of death. The
full Current Value must be distributed not later than December 31
following the year of death, or as may be otherwise required by
Internal Revenue Service (IRS) regulations.
If joint life expectancy is elected, any changes in the
beneficiary designation under the Plan must be immediately
communicated to Aetna so that subsequent distributions can be
calculated as required by IRS regulations.
EDCESWE-1B 1
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(3) Minimum Current Value: At its discretion, Aetna may require a
minimum initial Current Value for election of this option. If
after election of this option the Current Value is insufficient to
make a scheduled ECO payment, Aetna will distribute the entire
balance of the Individual Account.
(4) Distribution Date: The Owner shall specify an annual distribution
date on the Participant's behalf. The distribution date may be the
15th of any month, or such other date Aetna may designate or
allow, but not earlier than the year the Participant attains age
701/2 or retires, whichever occurs later. Subsequent distributions
will be made on the anniversary of that date.
(5) Elections and Revocation: ECO may be elected by the Owner on the
Participant's behalf by submitting a completed and signed election
form to Aetna's Home Office.
Once elected, this option may be revoked by the Owner on the
Participant's behalf 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.
(6) Reservation of Rights: Aetna reserves the right to change the
terms of ECO for future elections and discontinue the availability
of this option after proper notification. Aetna also reserves the
right to allow payments to be made more frequently than annually.
(b) Systematic Withdrawal Option (SWO): A distribution option under
which a portion of the Individual Account Current Value will
automatically be surrendered and distributed each year. A SWO
payment will be calculated on the Individual Account's full
Current Value. The value of the Fixed Account and/or the Fund
Record Units cancelled by the amounts paid will be withdrawn pro
rata from each investment option used under the Contract.
(1) Distribution Amount: The Owner may elect one of the two
payment methods described below on the Participant's behalf.
At its discretion, Aetna may require a minimum initial payment
amount. These calculations may be changed as necessary to
comply with the Code minimum distribution rules.
o Specified Payment: Payments of a designated annual dollar
amount which must be no greater than 30% of the initial
Current Value. This amount will remain constant unless a
higher amount is required under Code minimum distribution
rules.
EDCESWE-1B 2
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o Each year that the Specified Payment is in effect, Aetna
will calculate the minimum required distribution by
dividing the Individual Account Current Value as of
December 31 of the year prior to the payment year, by a
life expectancy factor, and distribute this amount if it
is larger than the amount elected by the Owner on the
Participant's behalf; or
o Specified Period: Payments are made over a period of time
which must be at least 3 years, unless otherwise required
by Code minimum distribution rules. The maximum specified
period will be limited by the Participant's life
expectancy factor. The amount paid each year is calculated
by dividing the Individual Account Current Value as of
December 31 of the prior year by the number of payment
years remaining.
(2) Life Expectancy Factor: The factor for the initial
distribution year is either the single life or joint life
expectancy, as elected by the Owner on the Participant's
behalf, based on tables in Code Section 401 (a)(9) or related
regulations. With each subsequent year, the life expectancy
will be the Participant's life expectancy factor (single or
joint) for the initial distribution year, reduced by one.
The joint life expectancy factor can only be elected based on
the joint life expectancy of the Participant and his or her
spouse, and such spouse must be named as the beneficiary of
any death benefits under the Plan while SWO is in effect. If
the joint life expectancy factor is elected and the
Participant or spouse dies, the joint life expectancy factor
will continue to be reduced by one for each distribution year.
Payments upon the Participant's death will continue in the
manner previously elected under (1), unless the Owner elects
an alternate payment mode on behalf of the Plan beneficiary.
Any mode elected must provide payments to be made at least as
rapidly as those made prior to the Participant's death.
If joint life expectancy is elected, any changes in the
beneficiary designation under the Plan must be immediately
communicated to Aetna so that subsequent distributions can be
calculated as required by IRS regulations.
(3) Minimum Initial Current Value: At its discretion, Aetna may
require a minimum initial Current Value for election of this
option. If after election of this option the Current Value is
insufficient to make a scheduled SWO payment, Aetna will
distribute the entire balance of the Individual Account.
(4) Distribution Date: SWO must be elected when the Participant is
eligible to begin receiving payments under the Plan. The Owner
shall specify the distribution date Participant's behalf. SWO
payments will be made quarterly, semi-annually or annually on the
15th of any month, or such other date Aetna
EDCESWE-1B 3
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may designate or allow. If payments are made more frequently than
annually, the annual amount payable each year is divided by the
number of payments due per year.
(5) Elections and Revocation: SWO may be elected by the Owner on the
Participant's behalf by submitting a completed and signed election
form to Aetna's Home Office.
Once elected, this option may be revoked by the Owner by
submitting a written request to Aetna at its Home Office. Any
revocation will apply only to amounts not yet paid. SWO may be
elected only once.
(6) Reservation of Rights: Aetna reserves the right to change the
terms of SWO for future elections and discontinue the availability
of this option after proper notification. Aetna also reserves the
right to allow payments to be made more frequently than quarterly.
Endorsed and made a part of the Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EDCESWE-1B 4
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed.
The term Valuation Period under Definitions is amended to read as follows:
The period of time for which a Fund determines its net asset value,
usually from 4:15 p.m. Eastern time each day the New York Stock Exchange
is open until 4:15 p.m. the next such day, or such other day that one or
more of the Funds determines its net asset value.
Endorsed and made a part of the Contract.
/s/ G. G. Benanav
President
Aetna Life Insurance and Annuity Company
EVPE-IC
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
The Contract section entitled Definitions is amended to include the following
defined terms:
Aetna GET Fund (GET Fund): An open-end registered management investment
company organized as a series fund. Each series of GET Fund constitutes a
separate Fund under this Contract. Unless specifically indicated
otherwise in this Contract, all references to Fund(s) in this Contract
shall include each series of GET Fund.
Allocation Period: The period of time, usually from one to three months,
during which amounts may be allocated to a series of GET Fund, whether by
transfer or by Net Stipulated Payment(s). Each series of GET Fund will
have a specific Allocation Period.
At its discretion, Aetna may allow additional amounts to be allocated to
a series of GET Fund during the Guarantee Period. The Guarantee
established at the close of the Allocation Period will apply to these
amounts.
At its discretion, Aetna may specify a minimum amount per transfer and
per Net Stipulated Payment amount for each series prior to the beginning
of the Allocation Period for that series.
Aetna will specify a minimum amount of assets that a series of the GET
Fund must contain at the close of the Allocation Period; and reserves the
right to terminate a series if it does not meet this minimum standard. If
Aetna elects to terminate the GET Fund and not to start the Guarantee
Period, Aetna will mail each Owner with amount(s) in the series a notice
that the series is being canceled. The cancellation notice will be mailed
no later than 15 calendar days after the Allocation Period ends. The
Owner will have 45 calendar days from the end of the Allocation Period to
transfer the Current Value of the canceled series of GET Fund to another
accumulation option(s). If no transfer is made prior to the end of the 45
calendar day period, the Current Value in the canceled series of GET Fund
will be transferred to Aetna Variable Encore Fund, a money market fund
during the next Valuation Period.
Aetna will also specify the maximum amount of assets that will be
accepted into a series of the GET Fund; and reserves the right to not
allow additional allocation to a series if it exceeds this maximum
standard. If Aetna elects not to allow additional allocation to the
series of GET Fund, Aetna will stop accepting Net Stipulated
EGETE-IC (R) 1
<PAGE>
Payments and transfers into the series 10 calendar days after such
election. The Allocation Period will continue until the date the
Guarantee Period begins.
GET Fund Maturity Date: The date at which the Guaranteed Period for a
series will end and the GET Fund Record Units for that series will be
liquidated. Another accumulation option must then be elected. If no such
election is made by the GET Fund Maturity Date, the portion of the
Current Value based on that GET Fund series will be transferred to the
Allocation Period for another series of GET Fund. If no GET Fund Series
is available, 50% of the Current Value from that GET Fund series will be
transferred to Aetna Variable Fund, a growth and income fund. The
remaining 50% of the Current Value will be transferred to Aetna Income
Shares, a bond fund. The transfers will be made during the next Valuation
Period. Such transfers will not be counted as one of the free transfers.
The GET Fund Maturity Date will be specified before the Allocation Period
for that series begins.
Guarantee: Aetna guarantees that on a series' GET Fund Maturity Date, the
value of each GET Fund Record Unit then outstanding in that series will
not be less than the value of the Record Unit on the last day of the
Allocation Period. Aetna will transfer any amount necessary from its
general account to the Separate Account in order to bring that Record
Unit Value to the guaranteed level. This Guarantee does not apply to GET
Fund Record Unit Values withdrawn or transferred before the GET Fund
Maturity Date.
Guaranteed Period: The length of time to which the Guarantee applies for
a series, ending on the GET Fund Maturity Date. This period will be
specified before the Allocation Period for a series begins.
The Contract section entitled Net Investment Factor or Investment Increment
Factors - Separate Account is amended to add the following:
The Net Return Factor for GET Fund is equal to 1.0000000 plus the Net
Return Rate. The Net Return Rate for each series of GET Fund,
notwithstanding any other provision of this Contract, is equal to:
(i) The value of the shares of that series of GET Fund held by the
Separate Account at the end of a Valuation Period; minus
(ii) The value of the shares of that series of GET Fund held by the
Separate Account at the start of the Valuation Period; plus or
minus
(iii) The proportional share of taxes (or reserves for taxes) on the
Separate Account (if any); divided by
(iv) The total value of the GET Fund Record Units of the Separate
Account for that series at the start of the Valuation Period;
minus
EGETE-IC (R) 2
<PAGE>
(v) A daily actuarial deduction at an annual rate of 1.25% for annuity
mortality and expense risks and profit; minus
(vi) A daily deduction at an annual rate of 0.25% during the Guaranteed
Period for Aetna's guarantee of GET Fund Record Unit Values. This
deduction will be determined prior to the start of any series of
GET Fund's Allocation Period; and
(vii) A daily administrative deduction which will not exceed 0.25% on an
annual basis.
The Net Return Rate may be more or less than 0%.
The value of a share of a GET Fund series is equal to the net assets of
that series divided by the number of outstanding shares of that series.
The Contract section entitled Transfer is amended to include the following
paragraph at the end of this provision:
Withdrawals or transfers from a GET Fund series before the Maturity Date
will be at the then applicable GET Fund Record Unit Value, which may be
more or less than the Record Unit Value guaranteed at the GET Fund
Maturity Date.
The Contract section entitled Termination Benefit or Reinstatement is amended to
include the following paragraph at the end of this Provision:
Amounts attributable to GET will be reinstated to the Allocation Period
of a GET series, if available. If a GET series Allocation Period is
unavailable, amounts will be reallocated among other Fund(s), the General
Account and the GA Account, (if applicable), on a prorata basis.
The Contract section entitled Options Available to Beneficiary/Annuitant or
Choices to be Made is amended to include the following paragraph at the end of
this provision:
Contract values based on any GET Fund series must be transferred to
another accumulation option prior to election of an Annuity Option.
Endorsed and made a part of this Contract on the effective date of the Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EGETE-IC (R) 3
Aetna Life Insurance and Annuity Company
Home Office: 151 FARMINGTON AVE.
HARTFORD, CONNECTICUT 06156
1-800-525-4225
Herein called Aetna
Agrees to pay benefits as stated in this Contract.
DETAILS OF VARIABLE FEATURES OF THIS CONTRACT ARE IN THE DEPOSIT, RESERVE, AND
SURRENDER PROVISIONS, AND ANNUITY PROVISIONS.
RIGHT TO CANCEL
The Owner may cancel this Contract within 10 days of receiving it, by sending a
written notice to Aetna at the above address or to the agent from whom it was
purchased. Aetna will return all payments made for this Contract within 7 days
after it receives the notice of cancellation and this Contract.
This page, and the following pages, and the application, make up the entire
Contract.
Signed at Hartford, Connecticut on the Effective Date.
/s/ Lucille M. Nickerson /s/ Dan Kearney
Secretary President
GROUP VARIABLE OR FIXED ANNUITY OR COMBINATION CONTRACT
NON-PARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,
WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
GLID-CDA-HO 39169
<PAGE>
SPECIFICATIONS
PLAN
OWNER
GROUP CONTRACT NO.
EFFECTIVE DATE
THIS CONTRACT IS DELIVERED IN
AND IS SUBJECT TO THE LAWS OF THAT JURISDICTION
Deduction From Deposit(s) - The amount of the Net Deposit(s) applied will be the
deposit(s) received minus a deduction for premium taxes, if any then deducted
(see Deposit, Reserve, and Surrender Provisions of this Contract).
Deductions From The Separate Account And The Funds - Total deductions equal 1.5%
on an annual basis. Once Annuity payments begin, Aetna must earn a gross return
on the assets of the Separate Account of: (a) 5% on an annual basis if an
assumed net return rate of 3.5% is chosen; or (b) 6.5% on an annual basis if an
assumed net return rate of 5% is chosen; in order that the dollar amount of the
Variable Annuity payments will not decrease.
GLID-CDA-HO
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COVER SHEET
This Contract is a legal contract between the Owner and Aetna.
READ THIS CONTRACT CAREFULLY. This cover sheet is only a brief outline of some
of the important features of this Contract. This cover sheet is not the
insurance contract. Only the actual terms of this Contract will control. This
Contract sets forth, in detail, all of the rights and obligations of both you
and Aetna. IT IS THEREFORE IMPORTANT THAT YOU READ THIS CONTRACT CAREFULLY.
TABLE OF CONTENTS
Page
GENERAL DEFINITIONS
1. Participant..........................................................5
2. Annuitant............................................................5
3. Annuity..............................................................5
4. Fixed Annuity........................................................5
5. Variable Annuity.....................................................5
6. General Account......................................................5
7. Separate Accounts....................................................5
8. Fund(s)..............................................................5
9. Valuation Period.....................................................6
GENERAL PROVISIONS
1. Contract.............................................................7
2. Incontestability.....................................................7
3. Control of Contract and Individual Accounts..........................7
4. Change of Contract by Aetna..........................................7
5. Individual Certificates..............................................7
6. Designation of Beneficiary...........................................8
7. Misstatements and Adjustments........................................8
8. State Laws...........................................................8
9. Grace Period.........................................................8
10. Non-Participating Contract...........................................8
DEPOSIT, RESERVE, AND SURRENDER PROVISIONS
1. Net Deposit..........................................................8
2. Individual Accounts..................................................8
3. Guaranteed Interest Rate -- General Account..........................9
4. Record Units - Separate Account......................................9
5. Investment Increment Factors - Separate Account......................9
6. Record Unit Value - Separate Account................................10
7. Individual Account Reserve..........................................10
8. Active Life Fund....................................................10
9. Experience Credits..................................................10
GLID-CDA-HO
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10. Transfer of Individual Account Reserves.............................11
11. Notice to the Owner.................................................11
12. Sum Payable at Death (Before Annuity Payments Start)................11
13. Surrender Value.....................................................11
ANNUITY PROVISIONS
1. Choices to be Made..................................................12
2. Fund(s) Annuity Units - Separate Account............................12
3. Fund(s) Annuity Unit Value - Separate Account.......................13
4. Annuity Options.....................................................13
5. Other Terms of Annuity Options......................................23
6. Death of Annuitant/Beneficiary......................................23
GLID-CDA-HO
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GENERAL DEFINITIONS
1. PARTICIPANT - A person who participates in the Plan and for whom benefits
are being accrued under this Contract.
2. ANNUITANT - A Participant or beneficiary on whose life an Annuity has
been effected under this Contract.
3. ANNUITY - Payment of an income:
. (a) for the life of one or two people;
(b) for a stated period;
(c) for some mix of (a) and (b); or
(d) until there are no funds left.
4. FIXED ANNUITY - An Annuity of a fixed dollar amount paid from the General
Account.
5. VARIABLE ANNUITY - An Annuity of a varying dollar amount paid from the
Separate Account.
6. GENERAL ACCOUNT - The Account which holds the assets of Aetna, other than
those assets of Aetna in the Separate Accounts. Reserves for a Fixed
Annuity are held in the General Account.
7. SEPARATE ACCOUNTS - Accounts set up by Aetna under the Connecticut
Insurance Laws. Assets for this class of variable contracts are set apart
from other assets of Aetna. Reserves for a Variable Annuity are held in a
Separate Account and invested in shares of Fund(s).
8. FUND(S) - The open-end management investment companies (mutual funds)
registered under the Investment Company Act of 1940. They are:
(a) Aetna Variable Fund Inc. (Variable Fund);
(b) Aetna Variable Encore Fund, Inc. (Encore Fund);
(c) Aetna Income Shares, Inc. (Income Fund); and
(d) Other funds (if any) which Aetna may allow.
9. VALUATION PERIOD - The period of time from the end of one business day to
the end of the next business day.
GLID-CDA-HO
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GENERAL PROVISIONS
1. Contract
This Contract may be changed only by an officer of Aetna. Any change must
be made in writing. Any choices under this Contract by the Owner,
Annuitant or beneficiary must be in writing. Until receipt of such
choices in the Home Office of Aetna, Aetna may rely on the previous
choices made.
Aetna will make Annuity payments as and when due. Any other payments will
be made by Aetna within 7 days of receipt of the written claim for
payment, except as otherwise provided in the Surrender Value provision.
2. Incontestability
Aetna cannot cancel this Contract because of any error of fact on the
application.
3. Control of Contract and Individual Accounts
All of the benefits and rights granted by this Contract, or allowed by
Aetna, belong to the Owner.
4. Change of Contract by Aetna
Aetna may change any of the terms of this Contract. Aetna will notify the
Owner in writing 30 days before the effective date of any such change.
Any such change will not affect the amount or terms of any Annuity which
began prior to such change. Changes that affect the following provisions
of this Contract: (a) Annuity Options; (b) Net Deposit; (c) Guaranteed
Interest Rate; (d) Individual Account Reserve; and (e) Surrender Value;
will only apply to deposits made on behalf of Participants who become
covered under this Contract on or after the effective date of such
change. If the Owner fails to agree to any such change, no new
Participants may be covered under this Contract. Aetna will continue to
accept contributions for the Participants covered under this Contract
prior to the change. This Contract is subject to change as required by
federal or state law.
5. Individual Certificates
Aetna shall issue certificates for each Participant as required by the
state in which this Contract is delivered. The certificate will contain a
summary of the benefits provided by this Contract.
Certificates are not a part of this Contract.
GLID-CDA-HO
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6. Designation of Beneficiary
The beneficiary for each Participant shall be as named, or later changed,
by the Owner. If no beneficiary is living at the death of the
Participant, payment of any amount due will be made to the Owner.
7. Misstatements and Adjustments
If the age or sex of any payee is found to be misstated, the correct
facts will be used to adjust payments.
8. State Laws
This Contract follows the laws of the state in which it is delivered. Any
cash, death or Annuity payments are equal to or greater than the minimum
required by such laws.
9. Grace Period
This Contract will remain in effect even if deposits are not continued.
10. Non-Participating Contract
The Owner will have no right to share in the earnings of Aetna.
DEPOSIT, RESERVE, AND SURRENDER PROVISIONS
1. Net Deposit
The Net Deposit is the actual deposit minus a charge to pay premium
taxes, if any. As a rule, Aetna will take this charge out of an
Individual Account Reserve (see below) when annuity payments are to
start. But, if Aetna determines that it must pay any imposed premium tax
at any other time, it may take out the charge at any time.
2. Individual Accounts
Aetna will maintain Individual Accounts for each Participant. On the
basis of information supplied by the Owner, Aetna will credit the Net
Deposit(s) to such Accounts in either:
(a) the General Account;
(b) the Separate Account where they are invested in Fund(s) as
directed by the Owner; or
(c) a mix of (a) and (b).
3. Guaranteed Interest Rate -- General Account
GLID-CDA-HO
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On Net Deposit(s) made to the General Account, Aetna will add interest
daily at an annual rate no less than:
(a) 4% except under the Annuity Provisions; and
(b) 3.5% under the Annuity Provisions.
Aetna may add interest daily at any higher rate.
4. Record Units - Separate Account
The portion of the Net Deposit applied to the Separate Account Fund(s)
will determine the number of Record Units. This number is equal to the
Net Deposit(s) divided by the Record Unit Value (see below) for the
Valuation Period when the Net Deposit is received.
5. Investment Increment Factors - Separate Account
Investment Increment Factors are those items used to determine a Fund's
net return factor for each Valuation Period. The net return factor(s) are
then used to compute all Separate Account values and payments.
The gross return is equal to:
(a) investment income; plus
(b) realized and unrealized capital gains; minus
(c) realized and unrealized capital losses; minus
(d) certain investment expenses; and minus
(e) a daily charge at an annual rate of .25% for investment management
expense and profit.
The gross return is divided by the net assets of the Fund at the start of
the Valuation Period to compute the gross return rate. A gross return
rate may be more or less than 0. The net return rate is equal to:
(a) the gross return rate; plus or minus
(b) taxes (or charges to a tax reserve) on the Separate Account; and
minus
(c) a daily charge at an annual rate of 1.25% for annuity mortality
and expense risks and profit.
GLID-CDA-HO
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A net return rate may be more or less than 0.
The net return factor for each Fund is equal to the net return rate plus
1.000000.
6. Record Unit Value - Separate Account
The Record Unit Value for each Separate Account Fund is computed by
multiplying the net return factor for the current Valuation Period by the
Record Unit Value for the previous Period. The dollar value of Record
Units, Separate Account Reserves, and Variable Annuity payments may go up
or down due to investment gain or loss.
7. Individual Account Reserve
The Individual Account Reserve for each Participant is equal to:
(a) Net Deposit(s) credited to the General Account (if any); plus
(b) General Account interest added by Aetna; plus
(c) the value of Separate Account Record Units (if any); plus
(d) any amount due to Experience Credits (see below); minus
(e) a charge of $15 on each anniversary of each Individual Account
effective date; and minus
(f) any amounts previously surrendered.
8. Active Life Fund
The Active Life Fund is equal to the combined Reserves of all Individual
Accounts, except those Accounts applied to the payment of Annuities.
9. Experience Credits
Aetna may apply Experience Credits to Individual Accounts in the Active
Life Fund under this Contract. Any such credit will be computed as
decided by Aetna.
10. Transfer of Individual Account Reserves
The Owner may transfer any portion of the Individual Account Reserves
from any Fund to any other Fund or to the General Account. Reserves
cannot be transferred from the General Account to any of the Funds. A
transfer of Reserves cannot be made within 90 days of a previous
transfer.
GLID-CDA-HO
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11. Notice to the Owner
Aetna will notify the Owner each year of:
(a) the investments held in the Fund(s) for the Separate Account; and
(b) the number of record units; or
(c) the number of annuity units; and
(d) the value of a unit.
Such number or values will be as of a date no more than 60 days before
the date of the notice.
12. Sum Payable at Death (Before Annuity Payments Start)
Aetna will pay to the beneficiary the Individual Account Reserve if:
(a) the participant dies before Annuity payments start; and
(b) the notice of death is received by Aetna.
The sum paid will be the Reserve on the date when the notice is received.
The beneficiary may choose to apply any sum under Annuity Options (see
Annuity Provisions).
13. Surrender Value
The amount paid by Aetna upon the surrender of all or any portion of the
Active Life Fund or Individual Account(s) shall be reduced by a surrender
fee. The surrender fee will be a percentage of the amount surrendered and
will vary according to the number of Deposit Cycles completed for the
Individual Account(s) being surrendered. The number of deposits to be
made in a year is chosen by the Owner. A Deposit Cycle is completed when
this number of deposits has been made. For each surrender from an
Individual Account, the fee will be as follows:
Number of Deposit Cycles Completed Fee
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 19 2%
19 or more 0%
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In no event, however, will the Fee on a total surrender of an Individual
Account exceed 9% of the actual deposit made to that Account.
If the Active Life Fund invested in the General Account exceeds $500,000,
Aetna reserves the right to pay out any surrender in equal installments
over a period not to exceed 60 months.
Under certain emergency conditions, Aetna has the right to defer payment
of any surrender value as provided by federal or state law.
ANNUITY PROVISIONS
1. Choices to be Made
The Owner may tell Aetna to pay the Individual Account Reserve (minus any
charges for premium taxes) as a premium for an Annuity under Options 2,
3, 4, and 5 (see below). The first Annuity payment must generally be made
no later than the first day of the month following the Annuitant's 75th
birthday. The Owner may tell Aetna to make the first Annuity payment on
the first day of any prior month.
When any option is chosen, the Owner or beneficiary choosing the option
must tell Aetna if payments are to be made other than monthly. They must
also tell Aetna to pay:
(a) a Fixed Annuity;
(b) a Variable Annuity using Variable Fund;
(c) a Variable Annuity using Income Fund; or
(d) any mix of these.
When choosing a Variable Annuity, an assumed net return rate of 5% per
year may be chosen. If not chosen, Aetna will use an assumed net return
rate of 3.5% per year.
2. Fund(s) Annuity Units - Separate Account
The amount of the first Variable Annuity payment will be equal to:
(a) the portion of the Individual Account Reserve (minus any charges
for premium taxes) to be used to pay a Variable Annuity using the
Fund(s); times
(b) the rate for each $1,000 for the Option chosen.
GLID-CDA-HO
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<PAGE>
Such amount, or portion, of the payment using a Fund will be divided by
the Fund(s) Annuity Unit Value (see below) on the due date of the first
payment to determine the number of the Fund(s) Annuity Units.
Such number of the Fund(s) Annuity Units remains fixed. Each future
payment is equal to such number times the Fund(s) Annuity Unit Value on
the due date of each payment.
3. Fund(s) Annuity Unit Value - Separate Account
For any Valuation Period the Fund(s) Annuity Unit Value is equal to:
(a) the Value for the next previous Period; times
(b) the net return factor(s) (see Investment Increment Factors -
Separate Account provisions) for the tenth previous Period; times
(c) a factor to reflect the assumed net return rate.
The factor for 3.5% per year is .9999058; for 5% per year it is .9998663.
The dollar amount of Annuity Units, values, and payments may go up or
down due to investment gain or loss.
Payments shall not be changed due to mortality or expense results.
4. Annuity Options
Option 1 - Payment of Interest on Sum Left With Aetna - This option may
be used only by the beneficiary when the death of the Participant is
before Aetna has started paying an Annuity. A portion or all of the sum
due may be held in the General Account of Aetna at interest (see
Guaranteed Interest Rate - General Account provision). The beneficiary
may later tell Aetna to:
(a) pay a portion, or all, of the sum held by Aetna; or
(b) apply a portion, or all, of the sum held by Aetna under any of the
Annuity Options below.
Option 2 - Payments of a Stated Dollar Amount - An Annuity of a chosen
amount will be paid until there are no funds left. The payments to be
made in a year must be no less than $60 for each $1,000 applied to this
Option, but cannot exceed an amount which would deplete the funds in less
than 3 years.
Where there is a right under Federal Securities Law to forgo future
payments and receive the present value of the Annuity under this Option
in a lump sum, the exercise of that right
GLID-CDA-HO
12
<PAGE>
within a 3 year period after the start of payments shall be treated as a
surrender (see Surrender Value under Deposit, Reserve and Surrender
Provisions).
Option 3 - Payments for a Stated Period of Time - An Annuity will be paid
for the number of years chosen. The number of years must be no less than
3 and no more than 30.
Where there is a right under Federal Securities Law to forgo future
payments and receive the present value of the Annuity under this Option
in a lump sum, the exercise of that right within a 3 year period after
the start of payments shall be treated as a surrender (see Surrender
Value under Deposit, Reserve and Surrender Provisions).
GLID-CDA-HO
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<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
PAYMENTS FOR A STATED PERIOD
<TABLE>
<CAPTION>
Years Years Years
of Pay- Amount of of Pay- Amount of of Pay- Amount of
ments Payments ments Payments ments Payments
----- -------- ----- -------- ----- ---------
<S> <C> <C> <C> <C> <C>
3 $29.19 13 $7.94 22 $5.39
4 22.27 14 7.49 23 5.24
5 18.12 15 7.10 24 5.09
6 15.35 16 6.76 25 4.96
7 13.38 17 6.47 26 4.84
8 11.90 18 6.20 27 4.73
9 10.75 19 5.97 28 4.63
10 9.83 20 5.75 29 4.53
11 9.09 21 5.56 30 4.45
12 8.46
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
PAYMENTS FOR A STATED PERIOD
<TABLE>
<CAPTION>
Years Years Years
of Pay- Amount of of Pay- Amount of of Pay- Amount of
ments Payments ments Payments ments Payments
----- -------- ----- -------- ----- ---------
<S> <C> <C> <C> <C> <C>
3 $29.80 13 $8.64 22 $6.17
4 22.89 14 8.20 23 6.02
5 18.74 15 7.82 24 5.88
6 15.99 16 7.49 25 5.76
7 14.02 17 7.20 26 5.65
8 12.56 18 6.94 27 5.54
9 11.42 19 6.71 28 5.45
10 10.51 20 6.51 29 5.36
11 9.77 21 6.33 30 5.28
12 9.16
</TABLE>
GLID-CDA-HO
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<PAGE>
Option 4 - Life Income - An Annuity will be paid for life. Payments may be made
for a minimum stated period, if chosen, of 60, 120, 180 or 240 months. If the
Annuitant dies before the end of such stated period, payments will be made to
the beneficiary for the rest of the stated period.
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
LIFE INCOME WITH
Age of Payments Guaranteed for a Stated Period of Months:
Annuitant None 60 120 180 240
Male Female
---- ------ ---- -- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
50 55 $4.98 $4.96 $4.89 $4.77 $4.62
51 56 5.08 5.05 4.98 4.85 4.68
52 57 5.18 5.16 5.07 4.93 4.74
53 58 5.30 5.26 5.17 5.01 4.80
54 59 5.41 5.38 5.27 5.09 4.86
55 60 5.54 5.49 5.37 5.17 4.92
56 61 5.67 5.62 5.48 5.26 4.98
57 62 5.80 5.75 5.59 5.35 5.04
58 63 5.95 5.89 5.71 5.44 5.10
59 64 6.10 6.03 5.83 5.53 5.16
60 65 6.27 6.19 5.96 5.62 5.22
61 66 6.44 6.35 6.09 5.72 5.27
62 67 6.63 6.52 6.23 5.81 5.33
63 68 6.82 6.71 6.38 5.91 5.38
64 69 7.04 6.90 6.53 6.00 5.43
65 70 7.26 7.11 6.68 6.10 5.47
66 71 7.50 7.33 6.84 6.19 5.52
67 72 7.76 7.56 7.01 6.28 5.55
68 73 8.04 7.80 7.18 6.37 5.59
69 74 8.34 8.07 7.35 6.46 5.62
70 75 8.67 8.34 7.52 6.54 5.65
71 9.01 8.63 7.70 6.62 5.67
72 9.39 8.94 7.88 6.69 5.69
73 9.79 9.26 8.05 6.76 5.71
74 10.22 9.61 8.22 6.81 5.72
75 10.69 9.96 8.39 6.87 5.73
</TABLE>
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.
GLID-CDA-HO
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<PAGE>
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%
<TABLE>
<CAPTION>
LIFE INCOME WITH
Age of Payments Guaranteed for a Stated Period of Months:
Annuitant None 60 120 180 240
Male Female
---- ------ ---- -- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
50 55 5.89 5.86 5.78 5.65 5.48
51 56 5.99 5.96 5.86 5.71 5.53
52 57 6.09 6.06 5.95 5.79 5.59
53 58 6.20 6.16 6.04 5.86 5.64
54 59 6.32 6.27 6.14 5.94 5.70
55 60 6.44 6.39 6.24 6.02 5.75
56 61 6.57 6.51 6.34 6.10 5.80
57 62 6.71 6.64 6.45 6.18 5.86
58 63 6.85 6.77 6.56 6.26 5.91
59 64 7.00 6.92 6.68 6.35 5.97
60 65 7.16 7.07 6.80 6.43 6.02
61 66 7.34 7.23 6.93 6.52 6.07
62 67 7.52 7.40 7.06 6.61 6.12
63 68 7.72 7.58 7.20 6.70 6.17
64 69 7.93 7.77 7.35 6.79 6.21
65 70 8.16 7.97 7.50 6.88 6.25
66 71 8.40 8.19 7.65 6.97 6.29
67 72 8.66 8.42 7.81 7.05 6.33
68 73 8.94 8.66 7.97 7.14 6.36
69 74 9.24 8.92 8.13 7.22 6.39
70 75 9.56 9.19 8.30 7.29 6.41
71 9.91 9.48 8.47 7.36 6.43
72 10.29 9.78 8.64 7.43 6.45
73 10.69 10.10 8.80 7.49 6.47
74 11.13 10.43 8.97 7.55 6.48
75 11.60 10.79 9.13 7.60 6.49
</TABLE>
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.
GLID-CDA-HO
16
<PAGE>
Option 5 - Life Income for Two Payees - An Annuity will be paid during the lives
of the Annuitant and a second annuitant. At the death of either, payments will
continue to the survivor. When this option is chosen, a choice must be made of:
(a) 100% of the payment to continue to the survivor;
(b) 66 2/3% of the payment to continue to the survivor;
(c) 50% of the payment to continue to the survivor; or
(d) payments for a minimum of 120 months, with 100% of the payment to
continue to the survivor.
GLID-CDA-HO
17
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.10 $4.27 $4.43 $4.57 $4.69 $4.79 $4.86
55 60 4.21 4.43 4.65 4.86 5.04 5.20 5.32
60 65 4.30 4.57 4.86 5.15 5.43 5.68 5.88
65 70 4.38 4.69 5.04 5.43 5.83 6.21 6.56
70 75 4.44 4.79 5.20 5.68 6.21 6.78 7.33
75 80 4.48 4.86 5.32 5.88 6.56 7.33 8.16
80 85 -- 4.91 5.41 6.03 6.82 7.80 8.95
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.00 $5.16 $5.31 $5.44 $5.57 $5.67 $5.75
55 60 5.11 5.31 5.51 5.71 5.90 6.06 6.19
60 65 5.20 5.44 5.71 5.99 6.26 6.52 6.73
65 70 5.28 5.57 5.90 6.26 6.65 7.04 7.38
70 75 5.34 5.67 6.06 6.52 7.04 7.59 8.14
75 80 5.38 5.75 6.19 6.73 7.38 8.14 8.96
80 85 -- 5.81 6.29 6.90 7.66 8.62 9.76
</TABLE>
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.
GLID-CDA-HO
18
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
66 2/3% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.51 $4.72 $4.94 $5.18 $5.44 $5.71 $6.00
55 60 4.70 4.94 5.20 5.49 5.81 6.14 6.49
60 65 4.90 5.18 5.49 5.84 6.23 6.65 7.09
65 70 5.11 5.44 5.81 6.23 6.71 7.25 7.82
70 75 5.34 5.71 6.14 6.65 7.25 7.93 8.69
75 80 5.58 6.00 6.49 7.09 7.82 8.69 9.69
80 85 -- 6.28 6.84 7.53 8.39 9.47 10.77
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
66 2/3% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.43 $5.62 $5.84 $6.08 $6.36 $6.65 $6.98
55 60 5.62 5.84 6.10 6.38 6.70 7.06 7.44
60 65 5.82 6.08 6.38 6.72 7.11 7.54 8.01
65 70 6.06 6.36 6.70 7.11 7.58 8.12 8.71
70 75 6.31 6.65 7.06 7.54 8.12 8.80 9.56
75 80 6.59 6.98 7.44 8.01 8.71 9.56 10.56
80 85 -- 7.31 7.84 8.49 9.33 10.38 11.66
</TABLE>
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.
GLID-CDA-HO
19
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.75 $4.98 $5.24 $5.55 $5.91 $ 6.32 $ 6.79
55 60 4.99 5.24 5.54 5.88 6.28 6.76 7.30
60 65 5.26 5.55 5.88 6.27 6.73 7.27 7.90
65 70 5.59 5.91 6.28 6.73 7.26 7.90 8.65
70 75 5.96 6.32 6.76 7.27 7.90 8.67 9.57
75 80 6.37 6.79 7.30 7.90 8.65 9.57 10.69
80 85 -- 7.30 7.88 8.59 9.49 10.61 12.00
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.67 $5.89 $6.15 $6.47 $6.84 $7.29 $7.81
55 60 5.91 6.15 6.44 6.78 7.20 7.70 8.28
60 65 6.20 6.47 6.78 7.16 7.63 8.19 8.86
65 70 6.54 6.84 7.20 7.63 8.16 8.80 9.58
70 75 6.95 7.29 7.70 8.19 8.80 9.56 10.48
75 80 7.42 7.81 8.28 8.86 9.58 10.48 11.60
80 85 -- 8.39 8.94 9.61 10.46 11.56 12.92
</TABLE>
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.
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
GLID-CDA-HO
20
<PAGE>
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
120 MONTHS MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.10 $4.27 $4.42 $4.56 $4.68 $4.77 $4.83
55 60 4.21 4.42 4.64 4.84 5.02 5.16 5.26
60 65 4.30 4.56 4.84 5.12 5.38 5.61 5.78
65 70 4.37 4.68 5.02 5.38 5.76 6.10 6.37
70 75 4.42 4.77 5.16 5.61 6.10 6.58 7.00
75 80 4.46 4.83 5.26 5.78 6.37 7.00 7.58
80 85 -- 4.86 5.33 5.88 6.55 7.29 8.02
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
120 MONTHS MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.00 $5.15 $5.30 $5.43 $5.55 $5.64 $5.71
55 60 5.10 5.30 5.50 5.69 5.87 6.01 6.12
60 65 5.19 5.43 5.69 5.96 6.21 6.44 6.61
65 70 5.27 5.55 5.87 6.21 6.57 6.90 7.17
70 75 5.32 5.64 6.01 6.44 6.90 7.37 7.78
75 80 5.36 5.71 6.12 6.61 7.17 7.78 8.34
80 85 -- 5.75 6.19 6.72 7.35 8.06 8.76
</TABLE>
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.
GLID-CDA-HO
21
<PAGE>
5. Other Terms of Annuity Options
No choice of any Annuity Option may be made if the first payment would be
less than $20 or if the total payments in a year would be less than $100.
Age, where used in the above tables, means age nearest birthday on the
date of the first payment. The tables for Options 4 and 5 use the Annuity
table for 1949 with:
(a) a 1 year age reduction for males; and
(b) a 6 year age reduction for females.
If Fixed Annuity Options 3, 4, or 5 are chosen and Aetna's current
applicable rates at that time are larger than the rates above, the larger
payment will be made.
6. Death of Annuitant/Beneficiary
When an Annuitant dies while payments are being made under an Annuity
Option, payments will be continued to the beneficiary as provided by the
option. If no beneficiary is living, the present value of any remaining
payments will be paid in one sum to the owner. The present value will
assume the same interest rate that was used when the first payment was
made.
When a beneficiary dies while a sum is held at interest, the amount held
will be paid in one sum to the estate of the beneficiary. When a
beneficiary dies while payments are being made under an Annuity Option,
the present value of any remaining payments will be paid in one sum to
the estate of the beneficiary. The present value will assume the same
interest rate that was used when the first payment was made.
GLID-CDA-HO
22
<PAGE>
Aetna Life Insurance and Annuity Company
Home Office: 151 FARMINGTON AVE.
HARTFORD, CONNECTICUT 06156
(203) 273-0123
GROUP VARIABLE OR FIXED ANNUITY OR COMBINATION CONTRACT
NON-PARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,
WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT
GLID-CDA-HO
23
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
-----------
This Contract or Certificate is endorsed to add at the end of the Surrender
Value provision the following:
The surrender fee of 2% is not deducted for a surrender from the Reserve, or
from a Participant's Individual Account, when:
(a) no less than 9 deposit cycles have been completed for the Annuitant, or
the said Participant; and
(b) the Annuitant or the said Participant is no less than age 59 1/2.
Endorsed and made a part of this Contract or Certificate on:
(a) the Date of Issue (Effective Date) of the Contract; or
(b) the effective date of coverage under the Group Contract of the
Participant named in the Certificate.
/s/ William O. Bailey
President
ESVB-HB
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
-----------
This Contract or Certificate is hereby endorsed as follows:
Payments under any life Annuity Option in this Contract or Certificate; which is
elected on or after the effective date of this endorsement, will be determined
without regard to the sex of the Annuitant(s). Any such payments will be based
solely on the age of the Annuitant(s) (as determined by the Contract or
Certificate); using the most favorable rate for that age under the benefit
elected.
If a larger payment would result by a female Annuitant using the rates shown in
the Contract or Certificate for a male, the larger payment will be made.
Endorsed and made a part of the Contract or Certificate effective August 1,
1983.
/s/ William O. Bailey
President
EUSR-HC
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
Aetna hereby endorses this Contract to allow the transfer of Reserves out of the
General Account. Such transfers will be:
(1) a minimum of 10% of the General Account funds held in the Participant's
Individual Account;
(2) without deduction of any charge; and
(3) to any of the Fund(s) or the Guaranteed Accumulation Account;
(4) allowed once during each calendar year;
(5) prior to the election of an Annuity Option;
(6) without affecting the rights of transfer now in the contract.
Aetna may, for temporary periods of time, allow any larger percentage to be
transferred.
The value of the Reserves held in the General Account, as used above, is the
value when the request is received at the Home Office of Aetna. References to
the General Account above shall not apply to the Guaranteed Accumulation
Account.
Endorsed and made a part of this Contract on the later of September 1, 1983 or
the Effective Date of this Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EGAWGA-HC
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
1. The following sections a), b), and c) will apply to all Participants
under this Contract.
a) Add to the Deposit, Reserve, and Surrender Provisions the
following:
Reinstatement: All or a portion of the proceeds of a full
surrender of this Contract may be reinvested within 30 days after
the surrender if allowed by law. Any annual maintenance charge and
Surrender Fee imposed at the time of surrender on the amount being
reinvested will be included in the reinstatement. Any Market Value
Adjustment deducted from GA Account surrenders will not be
included in the reinstatement. Amounts will be reinstated among
the Fixed Account, GA Account, and Separate Account in the same
proportion as they were at the time of surrender. Any amounts
reinstated to the GA Account will be credited to the current
Deposit Period. The number of Record Units reinstated will be
based on the Record Unit Value(s) next computed after receipt at
Aetna's Home Office of the reinstatement request and the amount to
be reinvested.
Any annual maintenance charge which falls due after the surrender
and before the reinstatement will be deducted from the amount
reinstated.
Reinstatement is permitted only once.
b) Delete the paragraph under the section titled Individual Accounts
and add the following:
Aetna will maintain Individual Accounts for each Participant.
Aetna will credit the Net Deposit(s) among:
a) the General Account;
b) the Guaranteed Accumulation Account;
c) the Fund(s) in which the Separate Account invests.
The percentage of the Net Deposit(s) to be applied to each
investment above must be chosen by the Owner.
EAMAR-HD 1
<PAGE>
During any calendar year, Aetna may be told to change the
investment mix four times. If additional changes are allowed, each
may be subject to a fee of up to $10.
c) Delete the paragraph under the section titled Transfer of
Individual Account Reserves and add the following:
Before an annuity option is elected, the Owner may transfer any
portion of the Individual Account Reserves from any Fund to any
other Fund, to the General Account, or to the GA Account's current
Deposit Period. Any portion of the Individual Account Reserve in
the GA Account may be transferred to any Fund or to the General
Account. Transfers from the GA Account are subject to the
Withdrawal and Market Value Adjustment provisions.
Four transfers of Individual Account Reserves (excluding transfers
from the GA Account at the end of a Guaranteed Term) can be made
during a calendar year period. If additional transfers are
allowed, each may be subject to a fee of up to $10.
2. The following changes will not apply to Participants covered under the
Contract before the effective date of this endorsement.
a) Delete the paragraph titled Deductions From The Separate Account
And The Funds on the Specifications page and add the following:
Deductions from the Separate Account - There will be deductions
for mortality and expense risks and administrative fees. If the
dollar amount of Variable Annuity payments are not to decrease,
Aetna must earn a gross return on the assets of the Separate
Account of:
o 4.75% on an annual basis, plus an annual return of up
to .25% needed to offset the administrative charge set
at the time annuity payments commenced, if an Assumed
Annual Net Return Rate of 3.5% is chosen; or,
o 6.25% on an annual basis, plus an annual return of up
to .25% needed to offset the administrative charge set
at the time annuity payments commended, if an Assumed
Annual Net Return Rate of 5% is chosen.
b) Delete the paragraph under the section titled Investment Increment
Factors - Separate Account and insert the following:
Investment Increment Factors are those items used to determine
a Fund's Net Return Factor for each valuation period. The Net
Return Factors are used to compute all Separate Account values
and payments for any Fund.
EAMAR-HD 2
<PAGE>
The Net Return Factor for each Fund is equal to 1.0000000 plus the
Net Return Rate.
The Net Return Rate is equal to:
(a) The value of the shares of the Fund held by the
Separate Account at the end of a Valuation Period;
minus
(b) the value of the shares of the Fund held by the
Separate Account at the start of the Valuation
Period; plus or minus
(c) taxes (or reserves for taxes on the Separate Account
(if any); divided by
(d) the total value of the Fund Record Units and Fund
Annuity Units of the Separate Account at the start of
the Valuation Period; minus
(e) a daily actuarial charge at an annual rate of 1.25%
for annuity mortality and expense risks and profit;
and a daily administrative charge which will not
exceed .25% on an annual basis.
A Net Return Rate may be more or less than 0.
The value of a share of the Fund is equal to the net assets
of the Fund divided by the number of shares outstanding.
The administrative charge may be changed annually except for
amounts which have been used to purchase an annuity. This
charge will not exceed .25%.
c) Under the section titled Fund(s) Annuity Unit Value - Separate Account,
delete the last paragraph and add the following:
Payments shall not be changed due to changes in the mortality or expense
results or administrative charges.
d) Under the section titled Individual Account Reserve, add the following
final paragraph:
Any charge specified in (e) above will also be charged upon surrender of
the entire Individual Account Reserve if such surrender takes place on a
date other than an anniversary of the Individual Account effective date.
e) Under the section titled Annuity Options, add the following sentence to
Option 2:
EAMAR-HD 3
<PAGE>
This option may only be elected as a Fixed Annuity.
f) Add as a final paragraph to the section titled Annuity Options, the
following:
Other Options - Aetna may make other options available as allowed by the
laws of the state in which this Contract is delivered.
Endorsed and made a part of this Contract effective May 1, 1984.
/s/ William O. Bailey
President
EAMAR-HD 4
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is endorsed as follows:
In addition to any Purchase Payments stated to be made to this Contract, a
lump-sum Purchase Payment(s), of not less than a minimum amount stated by Aetna,
may be made on behalf of one or more Participants, as appropriate. Aetna will
maintain an Individual Account for each lump-sum payment. The terms of this
Contract shall apply to any lump-sum payment except that:
1. A Maintenance Fee will not be deducted from an Individual Account
maintained pursuant to a lump-sum payment; and
2. For each surrender from an Individual Account maintained pursuant
to a lump-sum payment, the Surrender Fee will vary according to
the period of time between the effective date of the Individual
Account and the date of surrender as follows:
If the Period of Time is Surrender Fee
5 years or less 5%
More than 5 years but not more than 6 years 4%
More than 6 years but not more than 7 years 3%
More than 7 years but not more than 8 years 2%
More than 8 years but not more than 9 years 1%
More than 9 years 0%
Endorsed and made a part of this Contract on the effective date of the Contract.
/s/ William O. Bailey
President
EGI-SP-HE
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is endorsed to provide an additional accumulation option. This
option does not replace or limit the use of any other option(s) available under
this Contract for such purpose. This option is known as Aetna Guaranteed Equity
Trust (GET Fund). The use of this option is described and limited as follows:
1. Aetna Guaranteed Equity Trust (GET Fund) - An open-end registered
management investment company organized as a series fund. Each series of
GET Fund constitutes a separate Fund under this Contract.
2. Allocation Period - The period of time, usually from one to three months,
during which amounts may be allocated to a series of GET Fund, whether by
transferring values from the other accumulation options, or by Purchase
Payments. The Allocation Period is the only time during which amounts may
be allocated to a series. At its discretion, prior to the beginning of an
Allocation Period, Aetna may specify a minimum amount per transfer and
per Purchase Payment amount for each series. A new series will be
established for each Allocation Period.
3. Guaranteed Period - The length of time to which the Guarantee applies for
a series. This period will be specified for a series before its
Allocation Period begins.
4. Maturity Date - The date at which the Guaranteed Period for that series
will end and the GET Fund Record Units for that series will be
liquidated. Another accumulation option must then be elected. If no such
election is made by the Maturity Date, Contract Values based on that GET
Fund series will be transferred to Aetna Variable Encore Fund. Transfers
made for this reason will not be counted as one of the four free
transfers. The Maturity Date will be specified before the Allocation
Period for that series begins.
5. Guarantee - Aetna guarantees that on a series' Maturity Date if the
value of each GET Fund Record Unit then outstanding in that series is
less than the value of that Record Unit at a date specified before the
Allocation Period began, such date being the beginning of the Guaranteed
Period, it will transfer to the Separate Account, from its General
Account, any amount necessary to bring that Record Unit value to the
guaranteed level. This Guarantee does not apply to GET Fund Record Unit
values withdrawn or transferred before the Maturity Date.
6. Net Return Factor - Separate Account: The Net Return Factor for GET Fund
is equal to 1.0000000 plus the Net Return Rate.
EGET-HG 1
<PAGE>
The Net Return Rate for each series of GET Fund, notwithstanding any
other provision of this Contract is equal to:
a. The value of the shares of that series of GET Fund held by the
Separate Account at the end of a Valuation Period; minus
b. The value of the shares of that series of GET Fund held by the
Separate Account at the start of the Valuation Period; plus or
minus
c. The proportional share of taxes (or reserves for taxes) on the
Separate Account (if any); divided by
d. The total value of the GET Fund Record Units of the Separate
Account for that series at the start of the Valuation Period;
minus
e. A daily actuarial charge at an annual rate of 1.25% for annuity
mortality and expense risks and profit;
f. A daily fee at an annual rate of .25% during the Guaranteed Period
for Aetna's guarantee of Record Unit values and profit; and
g. A daily administrative charge which will not exceed .25% on an
annual basis.
The Net Return Rate may be more or less than 0.
The value of a share of a GET Fund series is equal to the net assets of
that series divided by the number of outstanding shares of that series.
7. Withdrawals and Transfers - Withdrawals or transfers from a GET Fund
series before the Maturity Date will be at the then applicable GET Fund
Record Unit value, which may be more or less than the value guaranteed at
the Maturity Date .
8. Election of an Annuity Option - Contract values based on any GET Fund
series must be transferred to another accumulation option prior to
election of an Annuity Option.
9. Current Value shall include the sum of any GET Fund Record Units.
10. Unless specifically indicated otherwise in this endorsement, all
references to Fund(s) in this Contract shall include each GET Fund
series.
EGET-HG 2
<PAGE>
Endorsed and made a part of this Contract on July 1, 1987 or the effective date
of the Contract whichever is later.
/s/ Dean E. Wolcott
President
EGET-HG 3
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to include the following new provisions:
During any calendar year, Aetna may be told to change the investment mix
twelve times. Should Aetna allow additional changes, each may be subject
to a fee of up to $10.
Twelve transfers of Current Value (excluding transfers from the GA
Account at the end of a Guaranteed Term) can be made during a calendar
year period. Should Aetna allow additional transfers, each may be subject
to a fee of up to $10.
Endorsed and made a part of this Contract effective May 1, 1989.
/s/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EGECVT-HI
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to delete the previous Guaranteed Accumulation
Account (GA Account) Endorsement and replace it with the following:
Add to the GENERAL DEFINITIONS Section of the Contract the following paragraphs:
Maturity Date: The last day of a GA Account Term.
Matured Term Value: The amount payable on a GA Account Term's Maturity
Date.
Nonunitized Separate Account: An account set up by Aetna under Tile 38,
Sec. 38-154a, of the Connecticut General Statutes, which is used to hold
assets for GA Account Terms greater than three years. The Owner or
Participant, as applicable, does not participate in the investment gain
or loss from the assets held in the GA Account.
The Guaranteed Accumulation Account (GA Account) is amended and restated as
follows:
The GA Account guarantees stipulated rates of interest for stated periods
of time (see (1) and (3) below). Amounts withdrawn before the end of a
Guaranteed Term may be subject to a Market Value Adjustment (MVA) (see
(7) below).
(1) Deposit Period - A calendar month, a calendar quarter, or any other
period of time specified by Aetna during which Net Purchase Payment(s)
and transfers are accepted into the GA Account for one or more Guaranteed
Terms.
(2) Guaranteed Term (Term) - The period of time for which interest rates are
guaranteed on Net Purchase Payment(s) and on transfers made into a
Deposit Period of the GA Account. Terms are offered at Aetna's discretion
for various lengths of time ranging up to and including ten years.
(3) Guaranteed Term Classifications - The grouping of Terms according to
their time to maturity. The following are the Classifications:
(a) Short Term: Terms of up to and including 3 years; or
(b) Long Term: Terms of greater than 3 years and up to and including
10 years.
During a Deposit Period, Aetna may make available one or more Terms
within a Classification. The Owner has the option to allocate Net
Purchase Payment(s) and
EGAAE-IO 1
<PAGE>
transfers into any or all of the available Deposit Period Terms. If no
specific direction is given, Net Purchase Payment(s) and transfers will
go into available Terms on a pro rata basis within the Classification(s)
previously chosen by the Owner. At least one Term in the Short Term
Classification will be available each Deposit Period.
(4) Guaranteed GA Account Interest Rates (Guaranteed Rates) - Aetna will
declare all interest rate(s) applicable to a specific Term at the start
of the Deposit Period for that Term. These rate(s) are guaranteed by
Aetna for that Deposit Period and the ensuing Term and are not based on
the actual investment experience of the underlying assets in the GA
Account. The Guaranteed Rates are annual effective yields. The interest
is credited daily at a rate that will produce the guaranteed annual
effective yield over the period of a year. No annual rate will ever be
less than 4%.
For Terms of one year or less, one Guaranteed Interest Rate is set and
announced for that full Term. For other Terms, there may be two or more
rates. The rate(s) will be set and announced prior to the Deposit Period
for that Term and will not be subject to change.
(5) Withdrawals from GA Account - Full or partial surrenders may be requested
at any time from the GA Account. However, amounts withdrawn prior to the
Maturity Date of a Term to satisfy a surrender request may be subject to
an MVA (see (7) below).
Full and partial surrenders are satisfied by withdrawing amounts from
each of the Fund(s), the Fixed Account, the GA Account Short Term
Classification and the GA Account Long Term Classification on a pro rata
basis. However, the Owner or Participant, as applicable, may specify a
particular order in which investment options will be liquidated in order
to satisfy a partial surrender request.
For purposes of withdrawals, Terms within the GA Account Short Term and
Long Term Classifications are considered as two separate investment
options. Any withdrawal which is a surrender will be subject to the
Maintenance Fee and Surrender Fee as appropriate. Also, amounts will be
removed within a GA Account Classification starting with the Term still
in effect with the oldest Deposit Period.
Amounts may be transferred at any time subject to Contract specifications
(see (9) below). Amounts transferred prior to the Maturity Date of a Term
are subject to an MVA (see (7) below). Fund(s) will be removed within the
elected Classification starting with the Term still in effect with the
oldest Deposit Period.
During the Deposit Period and the 90 days following the close of the
Deposit Period, any amounts applied to the GA Account during that Deposit
Period may not be withdrawn unless due to:
EGAAE-IO 2
<PAGE>
(a) A full or partial surrender;
(b) A payment of a premium for an Annuity Option; or
(c) The Sum Payable at Death provision.
(6) Maturity Date/Reinvestment - For all GA Account Term(s) existing as of
the effective date of this endorsement in addition to GA Account Term(s)
announced subsequent to that date, the Owner or Participant, as
applicable, will be mailed a notice at least 18 calendar days before a
Term's Maturity Date. This notice will contain the current Deposit
Period's Guaranteed Rate(s), Term(s) and a projected Matured Term Value.
The Matured Term Value may be surrendered or transferred on the Term's
Maturity Date without an MVA. If no specific direction is given by the
Owner or Participant, as applicable, prior to the Maturity Date, each
Matured Term Value will be reinvested in a Term of the same duration. In
the event that a Term of the same duration is unavailable, each Matured
Term Value will automatically be reinvested in the next shortest Term
available in the same Classification during the then current Deposit
Period. If however, only one Term is available within the Classification,
then the Matured Term Value will automatically be reinvested in that
Term. Within two business days after the Maturity Date, the Owner or
Participant, as applicable, will be mailed a confirmation statement. This
statement will state the Terms and Guaranteed Rates which will apply to
the reinvested Matured Term Value.
During the calendar month following the Term's Maturity Date, one
exception is allowed to the 90 day transfer restriction and MVA under (5)
and (7). This exception is applicable to each Matured Term Value plus any
interest accrued thereon, provided no part of the Matured Term Value was
transferred on the Maturity Date.
During this calendar month period, the Owner or Participant, as
applicable, may notify Aetna's Home Office to transfer or surrender all
or part of the Matured Term Value plus any interest accrued thereon from
the GA Account without an MVA. This provision only applies to the first
such request received from the Owner or Participant, as applicable,
during this period for any Matured Term Value. The Matured Term Value
plus any interest accrued thereon may be transferred upon such request
without an MVA:
(a) To any other Terms of the GA Account available in the current
Deposit Period; or
(b) To any other allowable Fund(s).
EGAAE-IO 3
<PAGE>
If no such notification is given, the Matured Term Value will remain
subject to the terms and conditions of the new Term. All surrender and
transfer requests will be processed as of the date they are received in
good order at Aetna's Home Office.
If this Contract is issued under a Tax Deferred Annuity Plan (see
Specifications page) the above notice will be sent to the Participant(s).
(7) Market Value Adjustment (MVA) - There will be an MVA for a withdrawal
from the GA Account before the end of a Term when the withdrawal is due
to:
(a) A transfer;
(b) A full or partial surrender; or
(c) A payment of a premium for Annuity Option 2.
The amount of the withdrawal will be adjusted to a market value amount as
described below.
The market value adjusted amount will be equal to the amount withdrawn
multiplied by the following ratio:
x
---
365
(1+i)
--------
x
---
365
(1+j)
Where: i is the Deposit Yield
j is the Current Yield
x is the number of days remaining, (computed from Wednesday of the
week of withdrawal) in the Guaranteed Term.
The Deposit Period Yield will be determined as follows:
o At the close of the last business day of each week of the Deposit Period,
a yield will be computed as the average of the yields on that day of U.S.
Treasury Notes which mature in the last three months of the Guaranteed
Term.
o The Deposit Period Yield is the average of those yields for the Deposit
Period. If withdrawal is made prior to the close of the Deposit Period,
it is the average of those yields on each week preceding withdrawal.
EGAAE-IO 4
<PAGE>
The Current yield is the average of the yields on the last business day of the
week preceding withdrawal on the same U.S. Treasury Notes included in the
Deposit Period Yield.
In the event that no U.S. Treasury Notes which mature in the last three months
of the Guaranteed Term exist, Aetna reserves the right to use the U.S. Treasury
Notes that mature in a following quarter.
Full and partial surrenders as well as transfers made within six months of the
date of death of the Participant under the Sum Payable at Death provision will
be the greater of:
o The aggregate MVA amount which is the sum of all market value adjusted
amounts calculated due to a withdrawal of amounts (for surrender or
transfer) from Terms prior to the end of those Terms.
The aggregate MVA may be either positive or negative; or
o The applicable portion of the Current Value in the GA Account.
After the six month period, the surrender or transfer will be the aggregate MVA
amount (i.e. including all MVAs).
The greater of the aggregate MVA amount or the applicable portion of the Current
Value in the GA Account is applied to amounts withdrawn from the GA Account for
payment of a premium under Annuity Options 3 or 4.
Aetna may make any change to this provision with 30 days advance written notice
to the Owner or Participant, as applicable. Any such change shall become
effective for Purchase Payment(s), transfers or reinvestments made to any new
Term by any present or future Participant.
(8) Deposits to the GA Account - All amounts in the GA Account under the
Short Term Classification are made to the General Account.
All amounts in the GA Account under the Long Term Classifications are
made to a Nonunitized Separate Account. There are no discrete units for
this Nonunitized Separate Account. The Owner or Participant, as
applicable, does not participate in the gain or loss from the assets held
in the Nonunitized Separate Account. Such gain or loss is borne entirely
by Aetna. These assets may be chargeable with liabilities arising out of
any other business of Aetna.
For Terms under both the Short Term and Long Term Classifications, Aetna
guarantees stipulated interest rates to be credited to the GA Account.
All assets of Aetna including amounts made to the GA Account are
available to meet the guarantees under the GA Account.
EGAAE-IO 5
<PAGE>
(9) Before an Annuity Option is elected, all or any portion of the Current
Value may be transferred from any Fund or GA Account:
(a) To any other allowable Fund;
(b) To the Fixed Account; or
(c) To Terms of the GA Account available in the current Deposit
Period.
Amounts in a specific GA Account Term cannot be transferred to the
Deposit Period of another Term within the same Classification except at
the Term's maturity (see (6)).
Amounts applied to Classifications of the GA Account may not be
transferred to the Fund(s) or to the Fixed Account during the Deposit
Period or for 90 days after the close of the Deposit Period.
Transfers from Terms of the GA Account are subject to the Withdrawal and
MVA provisions (see (5) and (7)).
Twelve transfers of Current Value can be made during a calendar year
period. The Transfer of any portion of the GA Account value at the
Maturity Date of a Term is not counted for this purpose. Aetna may allow
additional transfers, but each may be subject to a fee of up to $10.
Endorsed and made a part of this Contract on May 1, 1991 or the effective date
of the Contract whichever is later.
/s/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EGAAE-IO 6
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follow:
Add the following condition under the Contract entitled Deposit, Reserve and
Surrender Provisions as follows:
Distribution Options: The following distribution options may be elected by
the Owner on the Participant's behalf.
(a) Estate Conservation Option (ECO): A distribution option under which a
portion of the Individual Account Current Value will automatically be
surrendered and distributed each year. An ECO payment will be
calculated on the Individual Account's full Current Value. The value of
the Fixed Account and/or the Fund Record Units cancelled by the amounts
paid will be withdrawn pro rata from each investment option used under
the Contract.
(1) Distribution Amount: Each year that ECO is in effect, Aetna will
calculate and distribute an amount equal to the minimum
distribution required under the Internal Revenue Code (Code). The
annual distribution will be determined by dividing the Individual
Account Current Value as of December 31 of the year prior to the
payment year, by a life expectancy factor. These calculations may
be changed as necessary to comply with the Code minimum
distribution rules.
(2) Life Expectancy Factor: The factor is either the single life or
joint life expectancy, as elected by the Owner on the
Participant's behalf, based on tables in Code Section 401 (a) (9)
or related regulations.
The joint life expectancy factor can only be elected based on the
joint life expectancy of the Participant and his or her spouse,
and such spouse must be named as the beneficiary of any death
benefits under the Plan while ECO is in effect. If joint life
expectancy is elected and the Participant or spouse dies, payments
will be based on the survivor's life expectancy. If single life
expectancy is elected and the Participant dies, or if joint life
expectancy is elected and the survivor dies, the life expectancy
is reduced to zero in the year following the year of death. The
full Current Value must be distributed not later than December 31
following the year of death, or as may be otherwise required by
Internal Revenue Service (IRS) regulations.
If joint life expectancy is elected, any changes in the
beneficiary designation under the Plan must be immediately
communicated to Aetna so that subsequent distributions can be
calculated as required by IRS regulations.
EDCESWE-1B 1
<PAGE>
(3) Minimum Current Value: At its discretion, Aetna may require a
minimum initial Current Value for election of this option. If
after election of this option the Current Value is insufficient to
make a scheduled ECO payment, Aetna will distribute the entire
balance of the Individual Account.
(4) Distribution Date: The Owner shall specify an annual distribution
date on the Participant's behalf. The distribution date may be the
15th of any month, or such other date Aetna may designate or
allow, but not earlier than the year the Participant attains age
70 1/2 or retires, whichever occurs later. Subsequent
distributions will be made on the anniversary of that date.
(5) Elections and Revocation: ECO may be elected by the Owner on the
Participant's behalf by submitting a completed and signed election
form to Aetna's Home Office.
Once elected, this option may be revoked by the Owner on the
Participant's behalf 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.
(6) Reservation of Rights: Aetna reserves the right to change the
terms of ECO for future elections and discontinue the availability
of this option after proper notification. Aetna also reserves the
right to allow payments to be made more frequently than annually.
(b) Systematic Withdrawal Option (SWO): A distribution option under
which a portion of the Individual Account Current Value will
automatically be surrendered and distributed each year. A SWO
payment will be calculated on the Individual Account's full
Current Value. The value of the Fixed Account and/or the Fund
Record Units cancelled by the amounts paid will be withdrawn pro
rata from each investment option used under the Contract.
(1) Distribution Amount: The Owner may elect one of the two
payment methods described below on the Participant's behalf.
At its discretion, Aetna may require a minimum initial payment
amount. These calculations may be changed as necessary to
comply with the Code minimum distribution rules.
o Specified Payment: Payments of a designated annual dollar
amount which must be no greater than 30% of the initial
Current Value. This amount will remain constant unless a
higher amount is required under Code minimum distribution
rules.
EDCESWE-1B 2
<PAGE>
o Each year that the Specified Payment is in effect, Aetna
will calculate the minimum required distribution by
dividing the Individual Account Current Value as of
December 31 of the year prior to the payment year, by a
life expectancy factor, and distribute this amount if it
is larger than the amount elected by the Owner on the
Participant's behalf; or
o Specified Period: Payments are made over a period of time
which must be at least 3 years, unless otherwise required
by Code minimum distribution rules. The maximum specified
period will be limited by the Participant's life
expectancy factor. The amount paid each year is calculated
by dividing the Individual Account Current Value as of
December 31 of the prior year by the number of payment
years remaining.
(2) Life Expectancy Factor: The factor for the initial
distribution year is either the single life or joint life
expectancy, as elected by the Owner on the Participant's
behalf, based on tables in Code Section 401 (a)(9) or related
regulations. With each subsequent year, the life expectancy
will be the Participant's life expectancy factor (single or
joint) for the initial distribution year, reduced by one.
The joint life expectancy factor can only be elected based on
the joint life expectancy of the Participant and his or her
spouse, and such spouse must be named as the beneficiary of
any death benefits under the Plan while SWO is in effect. If
the joint life expectancy factor is elected and the
Participant or spouse dies, the joint life expectancy factor
will continue to be reduced by one for each distribution year.
Payments upon the Participant's death will continue in the
manner previously elected under (1), unless the Owner elects
an alternate payment mode on behalf of the Plan beneficiary.
Any mode elected must provide payments to be made at least as
rapidly as those made prior to the Participant's death.
If joint life expectancy is elected, any changes in the
beneficiary designation under the Plan must be immediately
communicated to Aetna so that subsequent distributions can be
calculated as required by IRS regulations.
(3) Minimum Initial Current Value: At its discretion, Aetna may
require a minimum initial Current Value for election of this
option. If after election of this option the Current Value is
insufficient to make a scheduled SWO payment, Aetna will
distribute the entire balance of the Individual Account.
(4) Distribution Date: SWO must be elected when the Participant is
eligible to begin receiving payments under the Plan. The Owner
shall specify the distribution date Participant's behalf. SWO
payments will be made quarterly, semi-annually or annually on the
15th of any month, or such other date Aetna
EDCESWE-1B 3
<PAGE>
may designate or allow. If payments are made more frequently than
annually, the annual amount payable each year is divided by the
number of payments due per year.
(5) Elections and Revocation: SWO may be elected by the Owner on the
Participant's behalf by submitting a completed and signed election
form to Aetna's Home Office.
Once elected, this option may be revoked by the Owner by
submitting a written request to Aetna at its Home Office. Any
revocation will apply only to amounts not yet paid. SWO may be
elected only once.
(6) Reservation of Rights: Aetna reserves the right to change the
terms of SWO for future elections and discontinue the availability
of this option after proper notification. Aetna also reserves the
right to allow payments to be made more frequently than quarterly.
Endorsed and made a part of the Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EDCESWE-1B 4
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed.
The term Valuation Period under Definitions is amended to read as follows:
The period of time for which a Fund determines its net asset value,
usually from 4:15 p.m. Eastern time each day the New York Stock Exchange
is open until 4:15 p.m. the next such day, or such other day that one or
more of the Funds determines its net asset value.
Endorsed and made a part of the Contract.
/s/ G. G. Benanav
President
Aetna Life Insurance and Annuity Company
EVPE-IC
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows.
Add the following to the General Definitions section of the Contract.
Fixed Account -- An accumulation option with a guaranteed minimum interest
rate. Aetna may credit a higher rate which is not guaranteed. A surrender
fee may be applied on a full or partial surrender.
Fixed Plus Account -- An accumulation option with a guaranteed minimum
interest rate. Aetna may credit a higher rate which is not guaranteed. No
surrender fee applies. However, the portion that may be surrendered or
transferred in a 12 month period is restricted.
Delete and replace the fourth sentence in section 4 entitled Change of Contract
by Aetna under General Provisions as follows.
Changes that affect the following provisions of this Contract: (a) Annuity
Options; (b) Net Deposit; (c) Guaranteed Interest Rate -- Fixed Account;
(d) Guaranteed Interest Rate -- Fixed Plus Account; (e) Individual Account
Reserve; (f) maximum transfer fees; and (g) Surrender Value; will only
apply to deposits made on behalf of Participants who become covered under
this Contract on or after the effective date of such change.
Delete and replace the last two sentences in section 4 entitled Change of
Contract by Aetna under General Provisions as follows.
Aetna also reserves the right to discontinue accepting additional
contributions for Participants covered under this Contract prior to the
change. Aetna reserves the right to change the provisions regarding the
allocation of contributions or transfers to the Fixed Plus Account without
Owner consent. This Contract may also be changed as deemed necessary by
Aetna to comply with federal or state law without Owner consent.
Delete and replace section 2 entitled Individual Accounts under Deposit,
Reserve, and Surrender Provisions as follows.
Aetna will maintain Individual Accounts for each Participant. On the basis
of information supplied by the Owner, Aetna will credit the Net Deposit(s)
among:
(a) the Fixed Account;
EFFP-ID(G) 1
<PAGE>
(b) the GA Account;
(c) the Fixed Plus Account; or
(d) the Fund(s) in which the Separate Account invests.
The percentage of the Net Deposit(s) to be applied to each investment above
must be chosen by the Owner.
The allocation of future Net Deposit(s) may be changed at any time, without
charge.
Delete and replace Section 3 entitled Guaranteed Interest Rate -- General
Account under Deposit, Reserve, and Surrender Provisions as follows.
(a) Guaranteed Interest Rate -- Fixed Account: On any Net Deposit(s)
made to the Fixed Account, Aetna will add interest daily at an
annual rate that is no less than 4%. Aetna may add interest daily
at any higher rate determined by its Board of Directors.
(b) Guaranteed Interest Rate -- Fixed Plus Account: On any Net
Deposit(s) made to the Fixed Plus Account, Aetna will add interest
daily at an annual rate that is no less than 3%. Aetna may add
interest daily at a higher rate as determined by its Board of
Directors. Beginning on the tenth anniversary of the effective
date of an Individual Account, on and after February 1, 1994,
Aetna will credit amounts held in the Fixed Plus Account with an
interest rate that is .25% higher than the then-declared interest
rate for the Fixed Plus Account for Individual Accounts before the
tenth anniversary.
(c) Guaranteed Interest Rate -- Fixed Annuity: The assumed interest
rate for a Fixed Annuity and the interest rate under Annuity
Option 1 will be no less than 3.5%. Aetna may add interest daily
under Annuity Option 1 at any higher rate as determined by its
Board of Directors.
Delete and replace section 7 entitled Individual Account Reserve under Deposit,
Reserve, and Surrender Provisions as follows.
(a) Net Deposit(s) credited to the Fixed Account and/or the Fixed Plus
Account (if any); plus
(b) interest added by Aetna to the Fixed Account and/or the Fixed Plus
Account; plus
(c) the value of Separate Account Record Units (if any); plus
(d) any amount due to Experience Credits (see below); minus
(e) any amounts previously surrendered.
There is no charge ($0) on each anniversary of each Individual Account
effective date.
EFFP-ID(G) 2
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Delete endorsement EGECVT-HI and section 10 entitled Transfer of Individual
Account Reserves under Deposit, Reserve, and Surrender Provisions and replace as
follows.
Before an Annuity option is elected, the Owner may transfer all or any
portion of the Individual Account Reserves from any Fund or the GA Account:
(a) to any other allowable Fund; or
(b) to the Fixed Account; or
(c) to the Fixed Plus Account; or
(d) to Terms of the GA Account available in the current Deposit
Period.
Any transfer relating to the GA Account is subject to the transfer
restrictions referenced in endorsement EGAAE-IO.
There is no limit on the number of transfers of the Individual Account
Reserves from the Fund(s) or the GA Account. Aetna guarantees a minimum of
12 free transfers each year, but reserves the right to charge not more than
$10 for additional transfers. Transfers from the Fund(s) are based on
values determined as of the Valuation Period following receipt of a
transfer request in good order at Aetna's Home Office. This provision does
not include transfers from the GA Account at the Maturity Date. At any
other time before the Maturity Date, amounts in the GA Account may be
subject to the Market Value Adjustment provision if they are transferred.
Each calendar year, 10% of the Fixed Account value held in the
Participant's Individual Account may be transferred to any Fund(s) and/or
to the GA Account's current Deposit Period. Such transfer will be without
charge and will not be allowed under an Annuity option. Aetna may, on a
temporary basis, allow any larger percent to be transferred.
When a transfer is requested from the Fixed Account to the Fixed Plus
Account, up to 100% of the Fixed Account value held in the Participant's
Individual Account may be moved to the Fixed Plus Account. Any such
transfer will be without charge and will not be allowed under an Annuity
option.
The value of the Reserves held in the Fixed Account, as used above, is the
value when the request is received in good order at Aetna's Home Office.
During each rolling 12-month period, up to 20% of the Fixed Plus Account
value may be transferred to one or more of the Fund(s), the Fixed Account,
and/or to the GA Account's then-current Deposit Period. The 20% limit is
reduced by any partial surrender(s) or amount(s) used to purchase an
Annuity during the 12 month period. Aetna reserves the right to include
amounts paid under the 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.
EFFP-ID(G) 3
<PAGE>
Delete and replace section 11 entitled Notice of the Owner under Deposit,
Reserve, and Surrender Provisions as follows.
Aetna will notify the Owner each year of:
(a) the value of any amounts held in:
(1) the Fixed Account; and
(2) the Fixed Plus Account; and
(3) the GA Account: and
(4) the Fund(s) for the Separate Account; and
(b) the number of any Fund(s) record units; and
(c) the number of Annuity units; and
(d) the value of a unit.
Such number or values will be as of a date no more than 60 days before the
date of the notice.
The reinstatement provision added by Contract endorsement EAMAR-HD does not
apply to this Contract.
Delete and replace the second paragraph in section 13 entitled Surrender Value
under Deposit, Reserve, and Surrender Provisions as follows.
The fee on a total surrender of an Individual Account will not exceed 8.5%
of the actual deposits made to that Account.
Delete endorsement EEGSV-HI and add the following to section 1 3 entitled
Surrender Value under Deposit, Reserve, and Surrender Provisions as follows.
No surrender fee is deducted from any portion of an Individual Account
which is paid from the Fixed Account, the GA Account or the Fund(s):
(a) due to the Participant's death before Annuity payments begin;
(b) used to purchase Annuity benefits;
(c) after a Participant has reached age 591/2 and 9 or more Deposit
Cycles have been completed for the Individual Account being
surrendered, except in the case of lump-sum Net Deposit(s), after
9 years:
(d) on and after the tenth anniversary of the Effective Date of the
Individual Account;
(e) due to the election of the Estate Conservation Option (ECO) or the
Systematic Withdrawal Option (SWO);
(f) due to a full or partial surrender request when the Participant
separates from service. The Owner must submit verification
satisfactory to Aetna of the
EFFP-ID(G) 4
<PAGE>
Participant's separation from service before a surrender request
will be considered to be "in good order" for purposes of this
provision;
(g) due to an employer certified hardship resulting from an unforeseen
emergency as defined for 457 plans; or
(h) when the amount in an Individual Account is $3,500 or less and no
amount has been surrendered or used to purchase Annuity benefits
during the prior 12 months.
No surrender fee is deducted from any portion of the Individual Account
Reserve which is paid from the Fixed Plus Account. When Aetna receives a
request for a full surrender, no additional partial surrenders or transfers
from the Fixed Plus Account are permitted during the payout period. If a
full surrender is requested, Aetna will pay any value, including accrued
interest, from the Fixed Plus Account in five payments as follows:
(a) one-fifth of the value on the day the request is received at
Aetna's Home Office, reduced by any amount from the Fixed Plus
Account transferred, surrendered or used to purchase Annuity
benefits during the prior 12 months;
(b) one-fourth of the remaining value 12 months later;
(c) one-third of the remaining value 12 months later;
(d) one-half of the remaining value 12 months later; and
(e) the balance of the value 12 months later.
The Fixed Plus Account full surrender payment provision will be waived when
a surrender is:
(1) due to the Participant's death before Annuity payments begin;
(2) used to purchase Annuity benefits;
(3) when the amount in the Fixed Plus Account for an Individual
Account is $3,500 or less and no amount has been surrendered,
transferred or used to purchase Annuity benefits during the prior
12 months;
(4) due to hardship when the following conditions are met;
(i) the surrender is due to an employer certified hardship
resulting from an unforeseen emergency as defined for 457
plans;
(ii) the amount surrendered is paid directly to a Participant;
and
(iii) the amount paid for all partial or full surrenders due to
hardship during the previous 12 month period does not
exceed 10% of the average value for all Individual
Accounts during that same period of time.
(5) due to separation from service provided that:
(i) the surrender is due to the Participant's separation from
service with the employer;
(ii) the Owner certifies that the Participant has separated
from service;
(iii) the amount surrendered is paid directly to a Participant;
and
EFFP-ID(G) 5
<PAGE>
(iv) the amount paid for all partial or full surrenders due to
separation from service during the previous 12 month
period does not exceed 20% of the average value of all
Individual Accounts during that same period of time.
A full surrender of an Individual Account may be reinvested if the
surrendered amounts have remained in the plan and are not paid directly to
the Participant. In addition, any full surrender from the Fixed Plus
Account may be canceled at any time before the end of the payment period.
During each rolling 12-month period, up to 20% of the Fixed Plus Account
value may be withdrawn as a partial surrender. This 20% limit is reduced by
any amount(s) transferred 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 (1); (2); (4) or (5) of the full surrender
provision above. The waiver will apply provided the partial surrender is
made on a pro rata basis from all options used under the Participant's
Individual Account. Aetna reserves the right to include amounts paid under
the ECO and SWO provisions for purposes of applying this 20% limit.
However, the SWO provision is not available if a Fixed Plus Account
transfer or surrender is requested within the current 12 month period.
Delete any reference to Option 2 in endorsement EAMAR-HD and in section 4
entitled Annuity Options under Annuity Provisions of the Contract.
Delete and replace Option 3 under Annuity Provisions as follows.
Option 3 -- Payments for a Stated Period of Time -- An Annuity will be paid
for a stated number of years. The number of years that may be chosen will
be determined in part by the investment options in which the Individual
Account Reserves were held prior to the election of the Annuity Options as
follows:
For any amount held in the GA Account, one or more of the Fund(s) or the
Fixed Account, the number of years chosen must be at least three and not
more than 30 and the Annuity may be a Fixed or Variable Annuity.
For any amount held in the Fixed Plus Account, the number of years chosen
must be at least five and not more than 30 and the Annuity may be a Fixed
or Variable Annuity.
Add the following to section 5 entitled Other Terms of Annuity Options under the
Annuity Provisions of the Contract.
When Annuity payments start, the age of the Annuitant plus the number of
years for payments are guaranteed must not exceed 95.
EFFP-ID(G) 6
<PAGE>
Assumed annual net return rate is the interest rate used to determine the
amount of the first Annuity payment under a Variable Annuity. The Separate
Account must earn this rate plus enough to-cover the mortality and expense
risk charges and administrative charges if future Variable Annuity payments
are to remain level.
The Systematic Withdrawal Option (SWO) added by endorsement EDCESWE-IB is
amended to delete and replace the first sentence under Specified Payment as
follows:
Payments of a designated annual dollar amount which must be no greater than
20% of the initial Individual Account Reserve applied to SWO.
The Systematic Withdrawal Option (SWO) added by endorsement EDCESWE-IB is
amended to delete and replace the first sentence under Specified Period as
follows:
Payments are made over a period of time which must be at least five years,
but not greater than the Participant's life expectancy factor.
Endorsed and made a part of this Contract on the date this endorsement is
approved by the State Insurance Department and accepted by the Owner.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EFFP-ID(G) 7
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
ENDORSEMENT
This Contract is hereby endorsed to add the following new provision under
Surrender Value:
No surrender fee is deducted:
o On and after the tenth anniversary of the Effective Date of the
Individual Account; or
o From any portion of the Active Life Fund which is paid when the
Individual Account Cash Value is $2,500 or less and no surrenders have
.been taken from the Individual Account within the prior 12 months. If
there is more than one Individual Account under the Contract for a
Participant, then this provision will only apply when the total in all
of the Participant's Individual Accounts is $2,500 or less.
Endorsed and made a part of this Contract on May 1, 1989 or the Effective Date
of the Contract whichever is later.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EEGSV-HI
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
The definition of Separate Account under the Definition of Certain Terms or
General Definitions section of the contract is hereby amended to read as
follows:
Separate Account: An account which buys and holds shares of the Fund(s).
Income, gains or losses, realized or unrealized are credited or charged
to this account without regard to other income, gains or losses of Aetna.
Aetna owns the assets held in a separate account and is not a trustee as
to such amounts. These accounts generally are not guaranteed and are held
at market value. The assets of such accounts, to the extent of reserves
and other contract liabilities of the account, shall not be charged with
other Aetna liabilities.
Endorsed and made a part of the Contract.
/s/ Edmund F. Kelly
President
Aetna Life Insurance and Annuity
EGISA-IA
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to add the following provision to the section
Surrender Value under DEPOSIT, RESERVE, AND SURRENDER VALUE PROVISIONS:
On the tenth anniversary of the Effective Date of an Individual Account,
the surrender fee shall reduce to 0%.
Endorsed and made a part of this Contract effective September 1, 1984.
/s/ William O. Bailey
President
ESF-GTD-HD
Aetna Life Insurance and Annuity Company
Home Office: 151 FARMINGTON AVE.
HARTFORD, CONNECTICUT 06156
(203) 273-0123
Herein called Aetna
Agrees to pay benefits as stated in this Contract.
SPECIFICATIONS
THIS CONTRACT IS DELIVERED IN
AND IS SUBJECT TO THE LAWS OF THAT JURISDICTION
DETAILS OF VARIABLE FEATURES OF THIS CONTRACT ARE IN THE DEPOSIT, RESERVE, AND
SURRENDER PROVISIONS, AND ANNUITY PROVISIONS.
RIGHT TO CANCEL
The Owner may cancel this Contract within 10 days of receiving it, by sending a
written notice to Aetna at the above address or to the agent from whom it was
purchased. Aetna will return all payments made for this Contract within 7 days
after it receives the notice of cancellation and this Contract.
This page, and the following pages, and the application, make up the entire
Contract.
Signed at Hartford, Connecticut on the Effective Date.
/s/ Stephen B. Middlebrook /s/ William O. Bailey
Secretary President
GROUP VARIABLE OR FIXED ANNUITY OR COMBINATION CONTRACT
NON-PARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,
WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
GSD-CDA-HO 39170
<PAGE>
SPECIFICATIONS
PLAN
OWNER
GROUP CONTRACT NO.
EFFECTIVE DATE
THIS CONTRACT IS DELIVERED IN
AND IS SUBJECT TO THE LAWS OF THAT JURISDICTION
Deduction From Deposit(s) - The amount of the Net Deposit(s) applied will be the
deposit(s) received minus a deduction for premium taxes, if any then deducted
(see Deposit, Reserve, and Surrender Provisions of this Contract).
Deductions From The Separate Account And The Funds - Total deductions equal 1.5%
on an annual basis. Once Annuity payments begin, Aetna must earn a gross return
on the assets of the Separate Account of: (a) 5% on an annual basis if an
assumed net return rate of 3.5% is chosen; or (b) 6.5% on an annual basis if an
assumed net return rate of 5% is chosen; in order that the dollar amount of the
Variable Annuity payments will not decrease.
GSD-CDA-HO
2
<PAGE>
COVER SHEET
This Contract is a legal contract betwee the Owner and Aetna.
READ THIS CONTRACT CAREFULLY. This cover sheet is only a brief outline of some
of the important features of this Contract. This cover sheet is not the
insurance contract. Only the actual terms of this Contract will control. This
Contract sets forth, in detail, all of the rights and obligations of both you
and Aetna. IT IS THEREFORE IMPORTANT THAT YOU READ THIS CONTRACT CAREFULLY.
TABLE OF CONTENTS
Page
GENERAL DEFINITIONS
1. Participant.............................................................5
2. Annuitant...............................................................5
3. Annuity.................................................................5
4. Fixed Annuity...........................................................5
5. Variable Annuity........................................................5
6. General Account.........................................................5
7. Separate Accounts.......................................................5
8. Fund(s).................................................................5
9. Valuation Period........................................................5
GENERAL PROVISIONS
1. Contract................................................................6
2. Incontestability........................................................6
3. Control of Contract and Individual Accounts.............................6
4. Change of Contract by Aetna.............................................6
5. Individual Certificates.................................................6
6. Designation of Beneficiary..............................................6
7. Misstatements and Adjustments...........................................7
8. State Laws..............................................................7
9. Non-Participating Contract..............................................7
DEPOSIT, RESERVE, AND SURRENDER PROVISIONS
1. Net Deposit.............................................................7
2. Individual Accounts.....................................................7
3. Guaranteed Interest Rate -- General Account.............................7
4. Record Units - Separate Account.........................................8
5. Investment Increment Factors - Separate Account.........................8
6. Record Unit Value - Separate Account....................................8
7. Individual Account Reserve..............................................9
8. Active Life Fund........................................................9
9. Experience Credits......................................................9
10. Transfer of Individual Account Reserves................................9
GSD-CDA-HO 3
<PAGE>
11. Notice to the Owner....................................................9
12. Sum Payable at Death (Before Annuity Payments Start)..................10
13. Surrender Value.......................................................10
ANNUITY PROVISIONS
1. Choices to be Made.....................................................11
2. Fund(s) Annuity Units - Separate Account...............................11
3. Fund(s) Annuity Unit Value - Separate Account..........................11
4. Annuity Options........................................................12
5. Other Terms of Annuity Options.........................................21
7. Death of Annuitant/Beneficiary.........................................21
GSD-CDA-HO 4
<PAGE>
GENERAL DEFINITIONS
1. PARTICIPANT - A person who participates in the Plan and for whom benefits
are being accrued under this Contract.
2. ANNUITANT - A Participant or beneficiary on whose life an Annuity has
been effected under this Contract.
3. ANNUITY - Payment of an income:
. (a) for the life of one or two people;
(b) for a stated period;
(c) for some mix of (a) and (b); or
(d) until there are no funds left.
4. FIXED ANNUITY - An Annuity of a fixed dollar amount paid from the General
Account.
5. VARIABLE ANNUITY - An Annuity of a varying dollar amount paid from the
Separate Account.
6. GENERAL ACCOUNT - The Account which holds the assets of Aetna, other than
those assets of Aetna in the Separate Accounts. Reserves for a Fixed
Annuity are held in the General Account.
7. SEPARATE ACCOUNTS - Accounts set up by Aetna under the Connecticut
Insurance Laws. Assets for this class of variable contracts are set apart
from other assets of Aetna. Reserves for a Variable Annuity are held in a
Separate Account and invested in shares of Fund(s).
8. FUND(S) - The open-end management investment companies (mutual funds)
registered under the Investment Company Act of 1940. They are:
(a) Aetna Variable Fund (Variable Fund);
(b) Aetna Variable Encore Fund, Inc. (Encore Fund);
(c) Aetna Income Shares, Inc. (Income Fund); and
(d) Other funds (if any) which Aetna may allow.
9. VALUATION PERIOD - The period of time from the end of one business day to
the end of the next business day.
GSD-CDA-HO 5
<PAGE>
GENERAL PROVISIONS
1. Contract
This Contract may be changed only by an officer of Aetna. Any change must
be made in writing. Any choices under this Contract by the Owner,
Annuitant or beneficiary must be in writing. Until receipt of such
choices in the Home Office of Aetna, Aetna may rely on any previous
choices made.
Aetna will make Annuity payments as and when due. Any other payments will
be made by Aetna within 7 days of receipt of the written claim for
payment, except as otherwise provided in the Surrender Value provision.
2. Incontestability
Aetna cannot cancel this Contract because of any error of fact on the
application.
3. Control of Contract and Individual Accounts
All of the benefits and rights granted by this Contract, or allowed by
Aetna, belong to the Owner.
4. Change of Contract by Aetna
Aetna may change any of the terms of this Contract. Aetna will notify the
Owner in writing 30 days before the effective date of any such change.
Any such change will not affect the amount or terms of any Annuity which
began prior to such change. Changes that affect the following provisions
of this Contract: (a) Annuity Options; (b) Net Deposit; (c) Guaranteed
Interest Rate; (d) Individual Account Reserve; and (e) Surrender Value;
will only apply to deposits made on behalf of Participants who become
covered under this Contract on or after the effective date of such
change. If the Owner fails to agree to any such change, no new
Participants may be covered under this Contract. Aetna will continue to
accept contributions for the Participants covered under this Contract
prior to change. This Contract is subject to change as required by
federal or state law.
5. Individual Certificates
Aetna shall issue certificates for each Participant as required by the
state in which this Contract is delivered. The certificate will contain a
summary of the benefits provided by this Contract.
Certificates are not a part of this Contract.
6. Designation of Beneficiary
GSD-CDA-HO 6
<PAGE>
The beneficiary for each Participant shall be as named, or later changed,
by the Owner. If no beneficiary is living at the death of the
Participant, payment of any amount due will be made to the Owner.
7. Misstatements and Adjustments
If the age or sex of any payee is found to be misstated, the correct
facts will be used to adjust payments.
8. State Laws
This Contract follows the laws of the state in which it is delivered. Any
cash, death or Annuity payments are equal to or greater than the minimum
required by such laws.
10. Non-Participating Contract
The Owner will have no right to share in the earnings of Aetna.
DEPOSIT, RESERVE, AND SURRENDER PROVISIONS
1. Net Deposit
The Net Deposit is the actual deposit minus a charge to pay premium
taxes, if any. As a rule, Aetna will take this charge out of an
Individual Account Reserve (see below) when annuity payments are to
start. But, if Aetna determines that it must pay any imposed premium tax
at any other time, it may take out the charge at any time.
2. Individual Accounts
Aetna will maintain Individual Accounts for each Participant. On the
basis of information supplied by the Owner, Aetna will credit the Net
Deposit(s) to such Accounts in either:
(a) the General Account;
(b) the Separate Account where they are invested in Fund(s) as
directed by the Owner; or
(c) a mix of (a) and (b).
3. Guaranteed Interest Rate -- General Account
On Net Deposit(s) made to the General Account, Aetna will add interest
daily at an annual rate no less than:
(a) 4% except under the Annuity Provisions; and
GSD-CDA-HO 7
<PAGE>
(b) 3.5% under the Annuity Provisions.
Aetna may add interest daily at any higher rate.
4. Record Units - Separate Account
The portion of the Net Deposit applied to the Separate Account Fund(s)
will determine the number of Record Units. This number is equal to the
Net Deposit(s) divided by the Record Unit Value (see below) for the
Valuation Period when the Net Deposit is received.
5. Investment Increment Factors - Separate Account
Investment Increment Factors are those items used to determine a Fund's
net return factor for each Valuation Period. The net return factor(s) are
then used to compute all Separate Account values and payments.
The gross return is equal to:
(a) investment income; plus
(b) realized and unrealized capital gains; minus
(c) realized and unrealized capital losses; minus
(d) certain investment expenses; and minus
(e) a daily charge at an annual rate of .25% for investment management
expense and profit.
The gross return is divided by the net assets of the Fund at the start of
the Valuation Period to compute the gross return rate. A gross return
rate may be more or less than 0. The net return rate is equal to:
(a) the gross return rate; plus or minus
(b) taxes (or charges to a tax reserve) on the Separate Account; and
minus
(c) a daily charge at an annual rate of 1.25% for annuity mortality
and expense risks and profit.
A net return rate may be more or less than 0.
The net return factor for each Fund is equal to the net return rate plus
1.000000.
6. Record Unit Value - Separate Account
GSD-CDA-HO 8
<PAGE>
The Record Unit Value for each Separate Account Fund is computed by
multiplying the net return factor for the current Valuation Period by the
Record Unit Value for the previous Period. The dollar value of Record
Units, Separate Account Reserves, and Variable Annuity payments may go up
or down due to investment gain or loss.
7. Individual Account Reserve
The Individual Account Reserve for each Participant is equal to:
(a) Net Deposits credited to the General Account (if any); plus
(b) General Account interest added by Aetna; plus
(c) the value of Separate Account Record Units (if any); plus
(d) any amount due to Experience Credits (see below); minus
(e) any amounts previously surrendered.
8. Active Life Fund
The Active Life Fund is equal to the combined Reserves of all Individual
Accounts, except those Accounts applied to the payment of Annuities.
9. Experience Credits
Aetna may apply Experience Credits to Individual Accounts in the Active
Life Fund under this Contract. Any such credit will be computed as
decided by Aetna.
10. Transfer of Individual Account Reserves
The Owner may transfer any portion of the Individual Account Reserves
from any Fund to any other Fund or to the General Account. Reserves
cannot be transferred from the General Account to any of the Funds. A
transfer of Reserves cannot be made within 90 days of a previous
transfer.
11. Notice to the Owner
Aetna will notify the Owner each year of:
(a) the investments held in the Fund(s) for the Separate Account; and
(b) the number of record units; or
GSD-CDA-HO 9
<PAGE>
(c) the number of annuity units; and
(d) the value of a unit.
Such number or values will be as of a date no more than 60 days before
the date of the notice.
12. Sum Payable at Death (Before Annuity Payments Start)
Aetna will pay to the beneficiary the Individual Account Reserve if:
(a) the participant dies before Annuity payments start; and
(b) the notice of death is received by Aetna.
The sum paid will be the Reserve on the date when the notice is received.
The beneficiary may choose to apply any sum under Annuity Options (see
Annuity Provisions).
13. Surrender Value
The amount paid by Aetna upon the surrender of all or any portion of the
Active Life Fund or Individual Account(s) shall be reduced by a surrender
fee. The surrender fee will be a percentage of the amount surrendered and
will vary according to the period of time between the effective date and
the date of surrender for the Individual Account(s) being surrendered.
For each surrender from an Individual Account, the fee will be as
follows:
If period of time is Fee
Less than 5 5%
From 5 to 6 years 4%
From 6 to 7 3%
From 7 to 8 2%
From 8 to 9 1%
9 or more years None
In no event, however, will the Fee on a total surrender of an Individual
Account exceed 9% of the actual deposit made to that Account.
If the Active Life Fund invested in the General Account exceeds $500,000,
Aetna reserves the right to pay out any surrender in equal installments
over a period not to exceed 60 months.
Under certain emergency conditions, Aetna has the right to defer payment
of any surrender value as provided by federal or state law.
GSD-CDA-HO 10
<PAGE>
ANNUITY PROVISIONS
1. Choices to be Made
The Owner may tell Aetna to pay the Individual Account Reserve (minus any
charges for premium taxes) as a premium for an Annuity under Options 2,
3, 4, and 5 (see below). The first Annuity payment must generally be made
no later than the first day of the month following the Annuitant's 75th
birthday. The Owner may tell Aetna to make the first Annuity payment on
the first day of any prior month.
When any option is chosen, the Owner or beneficiary choosing the option
must tell Aetna if payments are to be made other than monthly. They must
also tell Aetna to pay:
(a) a Fixed Annuity;
(b) a Variable Annuity using Variable Fund;
(c) a Variable Annuity using Income Fund; or
(d) any mix of these.
When choosing a Variable Annuity, an assumed net return rate of 5% per
year may be chosen. If not chosen, Aetna will use an assumed net return
rate of 3.5% per year.
2. Fund(s) Annuity Units - Separate Account
The amount of the first Variable Annuity payment will be equal to:
(a) the portion of the Individual Account Reserve (minus any charges
for premium taxes) to be used to pay a Variable Annuity using the
Fund(s); times
(b) the rate for each $1,000 for the Option chosen.
Such amount, or portion, of the payment using a Fund will be divided by
the Fund(s) Annuity Unit Value (see below) on the due date of the first
payment to determine the number of the Fund(s) Annuity Units.
Such number of the Fund(s) Annuity Units remains fixed. Each future
payment is equal to such number times the Fund(s) Annuity Unit Value on
the due date of each payment.
3. Fund(s) Annuity Unit Value - Separate Account
For any Valuation Period the Fund(s) Annuity Unit Value is equal to:
(a) the Value for the next previous Period; times
GSD-CDA-HO 11
<PAGE>
(b) the net return factor(s) (see Investment Increment Factors -
Separate Account provisions) for the tenth previous Period; times
(c) a factor to reflect the assumed net return rate.
The factor for 3.5% per year is .9999058; for 5% per year it is .9998663.
The dollar amount of Annuity Units, values, and payments may go up or
down due to investment gain or loss.
Payments shall not be changed due to mortality or expense results.
4. Annuity Options
Option 1 - Payment of Interest on Sum Left With Aetna - This option may
be used only by the beneficiary when the death of the Participant is
before Aetna has started paying an Annuity. A portion or all of the sum
due may be held in the General Account of Aetna at interest (see
Guaranteed Interest Rate - General Account provision). The beneficiary
may later tell Aetna to:
(a) pay a portion, or all, of the sum held by Aetna; or
(b) apply a portion, or all, of the sum held by Aetna under any of the
Annuity Options below.
Option 2 - Payments of a Stated Dollar Amount - An Annuity of a chosen
amount will be paid until there are no funds left. The payments to be
made in a year must be no less than $60 for each $1,000 applied to this
Option, but cannot exceed an amount which would deplete the funds in less
than 3 years.
Where there is a right under Federal Securities Law to forgo future
payments and receive the present value of the Annuity under this Option
in a lump sum, the exercise of that right within a 3 year period after
the start of payments shall be treated as a surrender (see Surrender
Value under Deposit, Reserve and Surrender Provisions).
Option 3 - Payments for a Stated Period of Time - An Annuity will be paid
for the number of years chosen. The number of years must be no less than
3 and no more than 30.
Where there is a right under Federal Securities Law to forgo future
payments and receive the present value of the Annuity under this Option
in a lump sum, the exercise of that right within a 3 year period after
the start of payments shall be treated as a surrender (see Surrender
Value under Deposit, Reserve and Surrender Provisions).
GSD-CDA-HO 12
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
PAYMENTS FOR A STATED PERIOD
<TABLE>
<CAPTION>
Years Years Years
of Pay- Amount of of Pay- Amount of of Pay- Amount of
ments Payments ments Payments ments Payments
----- -------- ----- -------- ----- ---------
<S> <C> <C> <C> <C> <C>
3 $29.19 13 $7.94 22 $5.39
4 22.27 14 7.49 23 5.24
5 18.12 15 7.10 24 5.09
6 15.35 16 6.76 25 4.96
7 13.38 17 6.47 26 4.84
8 11.90 18 6.20 27 4.73
9 10.75 19 5.97 28 4.63
10 9.83 20 5.75 29 4.53
11 9.09 21 5.56 30 4.45
12 8.46
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
PAYMENTS FOR A STATED PERIOD
<TABLE>
<CAPTION>
Years Years Years
of Pay- Amount of of Pay- Amount of of Pay- Amount of
ments Payments ments Payments ments Payments
----- -------- ----- -------- ----- ---------
<S> <C> <C> <C> <C> <C>
3 $29.80 13 $8.64 22 $6.17
4 22.89 14 8.20 23 6.02
5 18.74 15 7.82 24 5.88
6 15.99 16 7.49 25 5.76
7 14.02 17 7.20 26 5.65
8 12.56 18 6.94 27 5.54
9 11.42 19 6.71 28 5.45
10 10.51 20 6.51 29 5.36
11 9.77 21 6.33 30 5.28
12 9.16
</TABLE>
GSD-CDA-HO 13
<PAGE>
Option 4 - Life Income - An Annuity will be paid for life. Payments may be made
for a minimum stated period, if chosen, of 60, 120, 180 or 240 months. If the
Annuitant dies before the end of such stated period, payments will be made to
the beneficiary for the rest of the stated period.
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
LIFE INCOME WITH
Age of Payments Guaranteed for a Stated Period of Months:
Annuitant None 60 120 180 240
Male Female
---- ------ ---- -- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
50 55 $4.98 $4.96 $4.89 $4.77 $4.62
51 56 5.08 5.05 4.98 4.85 4.68
52 57 5.18 5.16 5.07 4.93 4.74
53 58 5.30 5.26 5.17 5.01 4.80
54 59 5.41 5.38 5.27 5.09 4.86
55 60 5.54 5.49 5.37 5.17 4.92
56 61 5.67 5.62 5.48 5.26 4.98
57 62 5.80 5.75 5.59 5.35 5.04
58 63 5.95 5.89 5.71 5.44 5.10
59 64 6.10 6.03 5.83 5.53 5.16
60 65 6.27 6.19 5.96 5.62 5.22
61 66 6.44 6.35 6.09 5.72 5.27
62 67 6.63 6.52 6.23 5.81 5.33
63 68 6.82 6.71 6.38 5.91 5.38
64 69 7.04 6.90 6.53 6.00 5.43
65 70 7.26 7.11 6.68 6.10 5.47
66 71 7.50 7.33 6.84 6.19 5.52
67 72 7.76 7.56 7.01 6.28 5.55
68 73 8.04 7.80 7.18 6.37 5.59
69 74 8.34 8.07 7.35 6.46 5.62
70 75 8.67 8.34 7.52 6.54 5.65
71 9.01 8.63 7.70 6.62 5.67
72 9.39 8.94 7.88 6.69 5.69
73 9.79 9.26 8.05 6.76 5.71
74 10.22 9.61 8.22 6.81 5.72
75 10.69 9.96 8.39 6.87 5.73
</TABLE>
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.
GSD-CDA-HO 14
<PAGE>
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%
<TABLE>
<CAPTION>
LIFE INCOME WITH
Age of Payments Guaranteed for a Stated Period of Months:
Annuitant None 60 120 180 240
Male Female
---- ------ ---- -- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
50 55 $5.89 $5.86 $5.78 $5.65 $5.48
51 56 5.99 5.96 5.86 5.71 5.53
52 57 6.09 6.06 5.95 5.79 5.59
53 58 6.20 6.16 6.04 5.86 5.64
54 59 6.32 6.27 6.14 5.94 5.70
55 60 6.44 6.39 6.24 6.02 5.75
56 61 6.57 6.51 6.34 6.10 5.80
57 62 6.71 6.64 6.45 6.18 5.86
58 63 6.85 6.77 6.56 6.26 5.91
59 64 7.00 6.92 6.68 6.35 5.97
60 65 7.16 7.07 6.80 6.43 6.02
61 66 7.34 7.23 6.93 6.52 6.07
62 67 7.52 7.40 7.06 6.61 6.12
63 68 7.72 7.58 7.20 6.70 6.17
64 69 7.93 7.77 7.35 6.79 6.21
65 70 8.16 7.97 7.50 6.88 6.25
66 71 8.40 8.19 7.65 6.97 6.29
67 72 8.66 8.42 7.81 7.05 6.33
68 73 8.94 8.66 7.97 7.14 6.36
69 74 9.24 8.92 8.13 7.22 6.39
70 75 9.56 9.19 8.30 7.29 6.41
71 9.91 9.48 8.47 7.36 6.43
72 10.29 9.78 8.64 7.43 6.45
73 10.69 10.10 8.80 7.49 6.47
74 11.13 10.43 8.97 7.55 6.48
75 11.60 10.79 9.13 7.60 6.49
</TABLE>
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.
GSD-CDA-HO 15
<PAGE>
Option 5 - Life Income for Two Payees - An Annuity will be paid during the lives
of the Annuitant and a second annuitant. At the death of either, payments will
continue to the survivor. When this option is chosen, a choice must be made of:
(a) 100% of the payment to continue to the survivor;
(b) 66 2/3% of the payment to continue to the survivor;
(c) 50% of the payment to continue to the survivor; or
(d) payments for a minimum of 120 months, with 100% of the payment to
continue to the survivor.
GSD-CDA-HO 16
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.10 $4.27 $4.43 $4.57 $4.69 $4.79 $4.86
55 60 4.21 4.43 4.65 4.86 5.04 5.20 5.32
60 65 4.30 4.57 4.86 5.15 5.43 5.68 5.88
65 70 4.38 4.69 5.04 5.43 5.83 6.21 6.56
70 75 4.44 4.79 5.20 5.68 6.21 6.78 7.33
75 80 4.48 4.86 5.32 5.88 6.56 7.33 8.16
80 85 -- 4.91 5.41 6.03 6.82 7.80 8.95
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.00 $5.16 $5.31 $5.44 $5.57 $5.67 $5.75
55 60 5.11 5.31 5.51 5.71 5.90 6.06 6.19
60 65 5.20 5.44 5.71 5.99 6.26 6.52 6.73
65 70 5.28 5.57 5.90 6.26 6.65 7.04 7.38
70 75 5.34 5.67 6.06 6.52 7.04 7.59 8.14
75 80 5.38 5.75 6.19 6.73 7.38 8.14 8.96
80 85 -- 5.81 6.29 6.90 7.66 8.62 9.76
</TABLE>
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.
GSD-CDA-HO 17
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
66 2/3% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.51 $4.72 $4.94 $5.18 $5.44 $5.71 $6.00
55 60 4.70 4.94 5.20 5.49 5.81 6.14 6.49
60 65 4.90 5.18 5.49 5.84 6.23 6.65 7.09
65 70 5.11 5.44 5.81 6.23 6.71 7.25 7.82
70 75 5.34 5.71 6.14 6.65 7.25 7.93 8.69
75 80 5.58 6.00 6.49 7.09 7.82 8.69 9.69
80 85 -- 6.28 6.84 7.53 8.39 9.47 10.77
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
66 2/3% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.43 $5.62 $5.84 $6.08 $6.36 $6.65 $6.98
55 60 5.62 5.84 6.10 6.38 6.70 7.06 7.44
60 65 5.82 6.08 6.38 6.72 7.11 7.54 8.01
65 70 6.06 6.36 6.70 7.11 7.58 8.12 8.71
70 75 6.31 6.65 7.06 7.54 8.12 8.80 9.56
75 80 6.59 6.98 7.44 8.01 8.71 9.56 10.56
80 85 -- 7.31 7.84 8.49 9.33 10.38 11.66
</TABLE>
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.
GSD-CDA-HO 18
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.75 $4.98 $5.24 $5.55 $5.91 $ 6.32 $ 6.79
55 60 4.99 5.24 5.54 5.88 6.28 6.76 7.30
60 65 5.26 5.55 5.88 6.27 6.73 7.27 7.90
65 70 5.59 5.91 6.28 6.73 7.26 7.90 8.65
70 75 5.96 6.32 6.76 7.27 7.90 8.67 9.57
75 80 6.37 6.79 7.30 7.90 8.65 9.57 10.69
80 85 -- 7.30 7.88 8.59 9.49 10.61 12.00
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.67 $5.89 $6.15 $6.47 $6.84 $7.29 $7.81
55 60 5.91 6.15 6.44 6.78 7.20 7.70 8.28
60 65 6.20 6.47 6.78 7.16 7.63 8.19 8.86
65 70 6.54 6.84 7.20 7.63 8.16 8.80 9.58
70 75 6.95 7.29 7.70 8.19 8.80 9.56 10.48
75 80 7.42 7.81 8.28 8.86 9.58 10.48 11.60
80 85 -- 8.39 8.94 9.61 10.46 11.56 12.92
</TABLE>
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.
GSD-CDA-HO 19
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
120 MONTHS MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $4.10 $4.27 $4.42 $4.56 $4.68 $4.77 $4.83
55 60 4.21 4.42 4.64 4.84 5.02 5.16 5.26
60 65 4.30 4.56 4.84 5.12 5.38 5.61 5.78
65 70 4.37 4.68 5.02 5.38 5.76 6.10 6.37
70 75 4.42 4.77 5.16 5.61 6.10 6.58 7.00
75 80 4.46 4.83 5.26 5.78 6.37 7.00 7.58
80 85 -- 4.86 5.33 5.88 6.55 7.29 8.02
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
120 MONTHS MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of Age of Annuitant
Second
Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75
Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75
---- ------ --------- --------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 $5.00 $5.15 $5.30 $5.43 $5.55 $5.64 $5.71
55 60 5.10 5.30 5.50 5.69 5.87 6.01 6.12
60 65 5.19 5.43 5.69 5.96 6.21 6.44 6.61
65 70 5.27 5.55 5.87 6.21 6.57 6.90 7.17
70 75 5.32 5.64 6.01 6.44 6.90 7.37 7.78
75 80 5.36 5.71 6.12 6.61 7.17 7.78 8.34
80 85 -- 5.75 6.19 6.72 7.35 8.06 8.76
</TABLE>
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.
GSD-CDA-HO 20
<PAGE>
5. Special Terms Under Annuity Options
No choice of any Annuity Option may be made if the first payment would be
less than $20 or if the total payments in a year would be less than $100.
Age, where used in the above tables, means age nearest birthday on the
date of the first payment. The tables for Options 4 and 5 use the Annuity
table for 1949 with:
(a) a 1 year age reduction for males; and
(b) a 6 year age reduction for females.
If Fixed Annuity Options 3, 4, or 5 are chosen and Aetna's current
applicable rates at that time are larger than the rates above, the larger
payment will be made.
6. Death of Annuitant/Beneficiary
When an Annuitant dies while payments are being made under an Annuity
Option, payments will be continued to the beneficiary as provided by the
option. If no beneficiary is living, the present value of any remaining
payments will be paid in one sum to the Owner. The present value will
assume the same interest rate that was used when the first payment was
made.
When a beneficiary dies while a sum is held at interest, the amount held
will be paid in one sum to the estate of the beneficiary. When a
beneficiary dies while payments are being made under an Annuity Option,
the present value of any remaining payments will be paid in one sum to
the estate of the beneficiary. The present value will assume the same
interest rate that was used when the first payment was made.
GSD-CDA-HO 21
<PAGE>
Aetna Life Insurance and Annuity Company
Home Office: 151 FARMINGTON AVE.
HARTFORD, CONNECTICUT 06156
(203) 273-0123
GROUP VARIABLE OR FIXED ANNUITY OR COMBINATION CONTRACT
NON-PARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,
WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT
GSD-CDA-HO 22
<PAGE>
VI. FEE SCHEDULE
DEFERRED COMPENSATION PLAN
6.01. Maintenance Fee: The Maintenance Fee will be $0.
6.02. Surrender Fee:
For each surrender from an Individual Account, the Surrender Fee will
vary according to the period of time between the effective date of the
Individual Account and the date of surrender. The Surrender Fee will be
determined as follows:
If Period of Time is Surrender Fee
Less than 5 years 5%
From 5 to 6 years 4%
From 6 to 7 years 3%
From 7 to 8 years 2%
From 8 to 9 years 1%
9 or more years 0%
No Surrender Fee is deducted from any portion of the Individual Account
which is paid:
(1) At the death of a Participant before Annuity payments start;
or
(2) As a premium for an Annuity for a Participant under this
Contract; or
(3) Under a Section 457 Plan which meets the following criteria:
(a) The Contract Holder and Aetna agree in writing to
have this section apply when the Contract is
purchased; and
(b) The Contract Holder certifies to Aetna that the
surrender is due to either a permanent disability, or
unforeseen emergency as specified under Section
457(b)(5) of the Internal Revenue Code.
GSD-HD
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to add the following new provisions to the end
of Section 6.02 - Surrender Fee:
No Surrender Fee is deducted from any portion of the Individual Account
which is paid:
On and after the tenth anniversary of the Effective Date of the
Individual Account;
When the Individual Account Cash Value is $2,500 or less and no
surrenders have been taken from the Individual Account within the prior
12 months. If there is more than one Individual Account under the
Contract for a Participant, then this provision will only apply when
the total in all of the Participant's Individual Accounts is $2,500 or
less; or
In an amount equal to or less than 10% of the current Individual
Account Cash Value, as part of the first partial surrender request in a
calendar year to a 403(b) Participant who is at least age 59 1/2 and
less than age 70 1/2. The Individual Account Cash Value is calculated
as of the date the partial surrender request is received in good order
at Aetna's Home Office. Any outstanding loans from the Participant's
Individual Account are excluded when calculating the Individual Account
Cash Value. This provision does not apply to partial surrenders due to
loan defaults made from Individual Account Values and does not apply to
full surrender requests.
Endorsed and made a part of this Contract on May 1, 1989 or the
Effective Date of the Contract whichever is later.
/s/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EGSF-HI
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follow:
Add the following condition under the Contract entitled Deposit, Reserve and
Surrender Provisions as follows:
Distribution Options: The following distribution options may be elected by
the Owner on the Participant's behalf.
(a) Estate Conservation Option (ECO): A distribution option under which a
portion of the Individual Account Current Value will automatically be
surrendered and distributed each year. An ECO payment will be
calculated on the Individual Account's full Current Value. The value of
the Fixed Account and/or the Fund Record Units cancelled by the amounts
paid will be withdrawn pro rata from each investment option used under
the Contract.
(1) Distribution Amount: Each year that ECO is in effect, Aetna will
calculate and distribute an amount equal to the minimum
distribution required under the Internal Revenue Code (Code). The
annual distribution will be determined by dividing the Individual
Account Current Value as of December 31 of the year prior to the
payment year, by a life expectancy factor. These calculations may
be changed as necessary to comply with the Code minimum
distribution rules.
(2) Life Expectancy Factor: The factor is either the single life or
joint life expectancy, as elected by the Owner on the
Participant's behalf, based on tables in Code Section 401 (a) (9)
or related regulations.
The joint life expectancy factor can only be elected based on the
joint life expectancy of the Participant and his or her spouse,
and such spouse must be named as the beneficiary of any death
benefits under the Plan while ECO is in effect. If joint life
expectancy is elected and the Participant or spouse dies, payments
will be based on the survivor's life expectancy. If single life
expectancy is elected and the Participant dies, or if joint life
expectancy is elected and the survivor dies, the life expectancy
is reduced to zero in the year following the year of death. The
full Current Value must be distributed not later than December 31
following the year of death, or as may be otherwise required by
Internal Revenue Service (IRS) regulations.
If joint life expectancy is elected, any changes in the
beneficiary designation under the Plan must be immediately
communicated to Aetna so that subsequent distributions can be
calculated as required by IRS regulations.
EDCESWE-1B 1
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(3) Minimum Current Value: At its discretion, Aetna may require a
minimum initial Current Value for election of this option. If
after election of this option the Current Value is insufficient to
make a scheduled ECO payment, Aetna will distribute the entire
balance of the Individual Account.
(4) Distribution Date: The Owner shall specify an annual distribution
date on the Participant's behalf. The distribution date may be the
15th of any month, or such other date Aetna may designate or
allow, but not earlier than the year the Participant attains age
701/2 or retires, whichever occurs later. Subsequent distributions
will be made on the anniversary of that date.
(5) Elections and Revocation: ECO may be elected by the Owner on the
Participant's behalf by submitting a completed and signed election
form to Aetna's Home Office.
Once elected, this option may be revoked by the Owner on the
Participant's behalf 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.
(6) Reservation of Rights: Aetna reserves the right to change the
terms of ECO for future elections and discontinue the availability
of this option after proper notification. Aetna also reserves the
right to allow payments to be made more frequently than annually.
(b) Systematic Withdrawal Option (SWO): A distribution option under
which a portion of the Individual Account Current Value will
automatically be surrendered and distributed each year. A SWO
payment will be calculated on the Individual Account's full
Current Value. The value of the Fixed Account and/or the Fund
Record Units cancelled by the amounts paid will be withdrawn pro
rata from each investment option used under the Contract.
(1) Distribution Amount: The Owner may elect one of the two
payment methods described below on the Participant's behalf.
At its discretion, Aetna may require a minimum initial payment
amount. These calculations may be changed as necessary to
comply with the Code minimum distribution rules.
o Specified Payment: Payments of a designated annual dollar
amount which must be no greater than 30% of the initial
Current Value. This amount will remain constant unless a
higher amount is required under Code minimum distribution
rules.
o Each year that the Specified Payment is in effect, Aetna
will calculate the minimum required distribution by
dividing the Individual Account Current Value as of
December 31 of the year prior to the payment year, by a
life
EDCESWE-1B 2
<PAGE>
expectancy factor, and distribute this amount if it is
larger than the amount elected by the Owner on the
Participant's behalf; or
o Specified Period: Payments are made over a period of time
which must be at least 3 years, unless otherwise required
by Code minimum distribution rules. The maximum specified
period will be limited by the Participant's life
expectancy factor. The amount paid each year is calculated
by dividing the Individual Account Current Value as of
December 31 of the prior year by the number of payment
years remaining.
(2) Life Expectancy Factor: The factor for the initial
distribution year is either the single life or joint life
expectancy, as elected by the Owner on the Participant's
behalf, based on tables in Code Section 401 (a)(9) or related
regulations. With each subsequent year, the life expectancy
will be the Participant's life expectancy factor (single or
joint) for the initial distribution year, reduced by one.
The joint life expectancy factor can only be elected based on
the joint life expectancy of the Participant and his or her
spouse, and such spouse must be named as the beneficiary of
any death benefits under the Plan while SWO is in effect. If
the joint life expectancy factor is elected and the
Participant or spouse dies, the joint life expectancy factor
will continue to be reduced by one for each distribution year.
Payments upon the Participant's death will continue in the
manner previously elected under (1), unless the Owner elects
an alternate payment mode on behalf of the Plan beneficiary.
Any mode elected must provide payments to be made at least as
rapidly as those made prior to the Participant's death.
If joint life expectancy is elected, any changes in the
beneficiary designation under the Plan must be immediately
communicated to Aetna so that subsequent distributions can be
calculated as required by IRS regulations.
(3) Minimum Initial Current Value: At its discretion, Aetna may
require a minimum initial Current Value for election of this
option. If after election of this option the Current Value is
insufficient to make a scheduled SWO payment, Aetna will
distribute the entire balance of the Individual Account.
(4) Distribution Date: SWO must be elected when the Participant is
eligible to begin receiving payments under the Plan. The Owner
shall specify the distribution date Participant's behalf. SWO
payments will be made quarterly, semi-annually or annually on the
15th of any month, or such other date Aetna may designate or
allow. If payments are made more frequently than annually, the
annual amount payable each year is divided by the number of
payments due per year.
EDCESWE-1B 3
<PAGE>
(5) Elections and Revocation: SWO may be elected by the Owner on the
Participant's behalf by submitting a completed and signed election
form to Aetna's Home Office.
Once elected, this option may be revoked by the Owner by
submitting a written request to Aetna at its Home Office. Any
revocation will apply only to amounts not yet paid. SWO may be
elected only once.
(6) Reservation of Rights: Aetna reserves the right to change the
terms of SWO for future elections and discontinue the availability
of this option after proper notification. Aetna also reserves the
right to allow payments to be made more frequently than quarterly.
Endorsed and made a part of the Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EDCESWE-1B 4
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to amend and restate the following:
Section 3.01. Net Purchase Payment(s) - Delete the last paragraph and replace it
with the following:
During any calendar year, Aetna may be told to change the investment mix
twelve times. Should Aetna allow additional changes, each may be subject to
a fee of up to $10.
Section 3.08, 3.11 or 3.12. Transfer of Current Value from the Funds or GA
Account - Delete the last paragraph and replace it with the following:
Twelve transfers of Current Value (excluding transfers from the GA Account
at the end of a Guaranteed Term) can be made during a calendar year period.
Should Aetna allow additional transfers, each may be subject to a fee of up
to $10.
Endorsed and made a part of this Contract effective May 1, 1989.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EGMCVT-HI
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
Add to Section 1. GENERAL DEFINITIONS the following paragraph:
Maturity Date: The last day of a GA Account Term.
Matured Term Value: The amount payable on a GA Account Term's Maturity
Date.
Nonunitized Separate Account: An account set up by Aetna under Title 38,
Sec. 38-154a, of the Connecticut General Statutes, which is used to hold
assets for GA Account Terms greater than three years. The Contract Holder
or Participant, as applicable, does not participate in the investment gain
or loss from the assets held in the GA Account.
Section 3.02 or 3.03 - Guaranteed Accumulation Account (GA Account) is amended
and restated as follows:
The GA Account guarantees stipulated rates of interest for stated periods of
time (see (a) and (c) below). Amounts withdrawn before the end of a Guaranteed
Term may be subject to a Market Value Adjustment (MVA) (see (g) below).
(a) Deposit Period - A calendar month, a calendar quarter, or any other period
of time specified by Aetna during which Net Purchase Payment(s) and
transfers are accepted into the GA Account for one or more Guaranteed
Terms.
(b) Guaranteed Term (Term) - The period of time for which interest rates are
guaranteed on Net Purchase Payment(s) and on transfers made into a Deposit
Period of the GA Account. Terms are offered at Aetna's discretion for
various lengths of time ranging up to and including ten years.
(c) Guaranteed Term Classifications - The grouping of Terms according to their
time to maturity. The following are the Classifications:
(1) Short-Term: Terms of up to and including 3 years; or
(2) Long-Term: Terms of greater than 3 years and up to and including 10
years.
EGAA-IO 1
<PAGE>
During a Deposit Period, Aetna may make available one or more Terms within
a Classification. The Contract Holder has the option to allocate Net
Purchase Payment(s) and transfers into any or all of the available Deposit
Period Terms. If no specific direction is given, Net Purchase Payment(s)
and transfers will go into available Terms on a pro rata basis within the
Classification(s) previously chosen by the Contract Holder. At least one
Term in the Short-Term Classification will be available each Deposit
Period.
(d) Guaranteed GA Account Interest Rates (Guaranteed Rates) - Aetna will
declare all interest rate(s) applicable to a specific Term at the start of
the Deposit Period for that Term. These rate(s) are guaranteed by Aetna for
that Deposit Period and the ensuing Term and are not based on the actual
investment experience of the underlying assets in the GA Account. The
Guaranteed Rates are annual effective yields. The interest is credited
daily at a rate that will produce the guaranteed annual effective yield
over the period of a year. No annual rate will ever be less than 4%.
For Terms of one year or less, one Guaranteed Interest Rate is set and
announced for that full Term. For other Terms, there may be two or more
rates. The rate(s) will be set and announced prior to the Deposit Period
for that Term and will not be subject to change.
(e) Withdrawals from GA Account - Full or partial surrenders may be requested
at any time from the GA Account. However, amounts withdrawn prior to the
Maturity Date of a Term to satisfy a surrender request may be subject to an
MVA (see (g) below).
Full and partial surrenders are satisfied by withdrawing amounts from each
of the Fund(s), the Fixed Account, the GA Account Short-Term Classification
and the GA Account Long-Term Classification on a pro rata basis. However,
the Contract Holder or Participant, as applicable, may specify a particular
order in which investment options will be liquidated in order to satisfy a
partial surrender request.
For purposes of withdrawals, Terms within the GA Account Short-Term and
Long-Term Classifications are considered as two separate investment
options. Any withdrawal which is a surrender will be subject to the
Maintenance Fee and Surrender Fee as appropriate. Also, amounts will be
removed within a GA Account Classification starting with the Term still in
effect with the oldest Deposit Period.
Amounts may be transferred at any time subject to Contract specifications
(see 3.10, 3.1 1, or 3.12 below). Amounts transferred prior to the Maturity
Date of a Term are subject to an MVA (see (g) below). Fund(s) will be
removed within the elected Classification starting with the Term still in
effect with the oldest Deposit Period.
During the Deposit Period and the 90 days following the close of the
Deposit Period, any amounts applied to the GA Account during that Deposit
Period may not be withdrawn unless due to:
EGAA-IO 2
<PAGE>
(1) A full or partial surrender;
(2) A payment of a premium for an Annuity Option; or
(3) The Sum Payable at Death provision.
(f) Maturity Date/Reinvestment - For all GA Account Term(s) existing as of the
effective date- of this endorsement in addition to GA Account Term(s)
announced subsequent to that date, the Contract Holder or Participant, as
applicable, will be mailed a notice at least 18 calendar days before a
Term's Maturity Date. This notice will contain the current Deposit Period's
Guaranteed Rate(s), Term(s) and a projected Matured Term Value.
The Matured Term Value may be surrendered or transferred on the Term's
Maturity Date without an MVA. If no specific direction is given by the
Contract Holder or Participant, as applicable, prior to the Maturity Date,
each Matured Term Value will be reinvested in a Term of the same duration.
In the event that a Term of the same duration is unavailable, each Matured
Term Value will automatically be reinvested in the next shortest Term
available in the same Classification during the then current Deposit
Period. If however, only one Term is available within the Classification,
then the Matured Term Value will automatically be reinvested in that Term.
Within two business days after the Maturity Date, the Contract Holder or
Participant, as applicable, will be mailed a confirmation statement. This
statement will state the Terms and Guaranteed Rates which will apply to the
reinvested Matured Term Value.
During the calendar month following the Term's Maturity Date, one exception
is allowed to the 90 day transfer restriction and MVA under (e) and (g).
This exception is applicable to each Matured Term Value plus any interest
accrued thereon, provided no part of the Matured Term Value was transferred
on the Maturity Date.
During this calendar month period, the Contract Holder or Participant, as
applicable, may notify Aetna's Home Office to transfer or surrender all or
part of the Matured Term Value plus any interest accrued thereon from the
GA Account without an MVA. This provision only applies to the first such
request received from the Contract Holder or Participant, as applicable,
during this period for any Matured Term Value. The Matured Term Value plus
any interest accrued thereon may be transferred upon such request without
an MVA:
(1) To any other Terms of the GA Account available in the current Deposit
Period; or
(2) To any other allowable Fund(s).
EGAA-IO 3
<PAGE>
If no such notification is given, the Matured Term Value will remain
subject to the terms and conditions of the new Term. All surrender and
transfer requests will be processed as of the date they are received in
good order at Aetna's Home Office.
If this Contract is issued under a Tax Deferred Annuity Plan (see
Specifications page) the above notice will be sent to the Participant(s).
(g) Market Value Adjustment (MVA) - There will be an MVA for a withdrawal from
the GA Account before the end of a Term when the withdrawal is due to:
(1) A transfer;
(2) A full or partial surrender; or
(3) A payment of a premium for Annuity Option 2.
The amount of the withdrawal will be adjusted to a market value amount as
described below.
The market value adjusted amount will be equal to the amount withdrawn
multiplied by the following ratio:
x
---
365
(1 + i)
-------
x
---
365
(1 +j)
Where: i is the Deposit Yield
j is the Current Yield
x is the number of days remaining, (computed from Wednesday of
the week of withdrawal) in the Guaranteed Term.
The Deposit Period Yield will be determined as follows:
o At the close of the last business day of each week of the Deposit
Period, a yield will be computed as the average of the yields on that
day of U.S. Treasury Notes which mature in the last three months of the
Guaranteed Term.
o The Deposit Period Yield is the average of those yields for the Deposit
Period. If withdrawal is made prior to the close of the Deposit Period,
it is the average of those yields on each week preceding withdrawal.
EGAA-IO 4
<PAGE>
The Current yield is the average of the yields on the last business day of
the week preceding withdrawal on the same U.S. Treasury Notes included in
the Deposit Period Yield.
In the event that no U.S. Treasury Notes which mature in the last three
months of the Guaranteed Term exist, Aetna reserves the right to use the
U.S. Treasury Notes that mature in a following quarter.
Full and partial surrenders as well as transfers made within six months of
the date of death of the Participant under the Sum Payable at Death
provision will be the greater of:
o The aggregate MVA amount which is the sum of all market value adjusted
amounts calculated due to a withdrawal of amounts (for surrender or
transfer) from Terms prior to the end of those Terms. The aggregate MVA
may be either positive or negative; or
o The applicable portion of the Current Value in the GA Account.
After the six month period, the surrender or transfer will be the aggregate
MVA amount (i.e. including all MVAs).
The greater of the aggregate MVA amount or the applicable portion of the
Current Value in the GA Account is applied to amounts withdrawn from the GA
Account for payment of a premium under Annuity Options 3 or 4.
Aetna may make any change to Section 3.02 or 3.03 with 30 days advance
written notice to the Contract Holder or Participant, as applicable. Any
such change shall become effective for Purchase Payment(s), transfers or
reinvestments made to any new Term by any present or future Participant.
(h) Deposits to the GA Account - All amounts in the GA Account under the
Short-Term Classifications are made to the General Account.
All amounts in the GA Account under the Long-Term Classifications are made
to a Nonunitized Separate Account. There are no discrete units for this
Nonunitized Separate Account. The Contract Holder or Participant, as
applicable, does not participate in the gain or loss from the assets held
in the Nonunitized Separate Account. Such gain or loss is borne entirely by
Aetna. These assets may be chargeable with liabilities arising out of any
other business of Aetna.
For Terms under both the Short-Term and Long-Term Classifications, Aetna
guarantees stipulated interest rates to be credited to the GA Account. All
assets of Aetna including amounts made to the GA Account are available to
meet the guarantees under the GA Account.
EGAA-IO 5
<PAGE>
Section 3.10, 3.11 or 3.12 - Transfer of Current Value from the Fund(s) or GA
Account is deleted and replaced by the following:
Before an Annuity Option is elected, all or any portion of the Current
Value may be transferred from any Fund or GA Account:
(a) To any other allowable Fund;
(b) To the Fixed Account; or
(c) To Terms of the GA Account available in the current Deposit Period.
Amounts in a specific GA Account Term cannot be transferred to the Deposit
Period of another Term within the same Classification except at the Term's
maturity (see 3.02(f) or 3.03(f)).
Amounts applied to Classifications of the GA Account may not be transferred
to the Fund(s) or to the Fixed Account during the Deposit Period or for 90
days after the close of the Deposit Period.
Transfers from Terms of the GA Account are subject to the Withdrawal and
MVA provisions (see 3.02(e) and (g) or 3.03(e) and (g)).
Twelve transfers of Current Value can be made during a calendar year
period. The Transfer of any portion of the GA Account value at the Maturity
Date of a Term is not counted for this purpose. Aetna may allow additional
transfers, but each may be subject to a fee of up to $10.
Endorsed and made a part of this Contract on May 1, 1991 or the effective date
of the Contract whichever is later.
/s/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EGAA-IO 6
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
Aetna hereby endorses this Contract to allow the transfer of Reserves out of the
General Account. Such transfers will be:
(1) a minimum of 10% of the General Account funds held in the Participant's
Individual Account;
(2) without deduction of any charge; and
(3) to any of the Fund(s) or the Guaranteed Accumulation Account;
(4) allowed once during each calendar year;
(5) prior to the election of an Annuity Option;
(6) without affecting the rights of transfer now in the contract.
Aetna may, for temporary periods of time, allow any larger percentage to be
transferred.
The value of the Reserves held in the General Account, as used above, is the
value when the request is received at the Home Office of Aetna. References to
the General Account above shall not apply to the Guaranteed Accumulation
Account.
Endorsed and made a part of this Contract on the later of September 1, 1983 or
the Effective Date of this Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EGAWGA-HC
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
The definition of Separate Account under the Definition of Certain Terms or
General Definitions section of the contract is hereby amended to read as
follows:
Separate Account: An account which buys and holds shares of the Fund(s).
Income, gains or losses, realized or unrealized are credited or charged
to this account without regard to other income, gains or losses of Aetna.
Aetna owns the assets held in a separate account and is not a trustee as
to such amounts. These accounts generally are not guaranteed and are held
at market value. The assets of such accounts, to the extent of reserves
and other contract liabilities of the account, shall not be charged with
other Aetna liabilities.
Endorsed and made a part of the Contract.
/s/ Edmund F. Kelly
President
Aetna Life Insurance and Annuity
EGISA-IA
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed.
The term Valuation Period under Definitions is amended to read as follows:
The period of time for which a Fund determines its net asset value,
usually from 4:15 p.m. Eastern time each day the New York Stock Exchange
is open until 4:15 p.m. the next such day, or such other day that one or
more of the Funds determines its net asset value.
Endorsed and made a part of the Contract.
/s/ G. G. Benanav
President
Aetna Life Insurance and Annuity Company
EVPE-IC
