As filed with the Securities and Exchange Registration No. 33-75992
Commission on February 13, 1997 Registration No. 811-2513
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- --------------------------------------------------------------------------------
Post-Effective Amendment No. 7 To
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
- --------------------------------------------------------------------------------
Variable Annuity Account C of Aetna Life Insurance and Annuity Company
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code: (860) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
60 days after filing pursuant to paragraph (a)(2) of Rule 485
--------
X on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485
--------
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Registrant expects to file a Rule 24f-2 Notice for the fiscal year ended
December 31, 1996 on or before February 28, 1997.
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CROSS REFERENCE SHEET
<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
<PAGE>
FORM N-4 PART B (STATEMENT OF ADDITIONAL INFORMATION)
ITEM NO. LOCATION
15 Cover Page........................................... Cover page
16 Table of Contents.................................... Table of Contents
17 General Information and History...................... General Information and History
18 Services............................................. General Information and History;
Independent Auditors
19 Purchase of Securities Being Offered................. Offering and Purchase of Contracts
20 Underwriters......................................... Offering and Purchase of Contracts
21 Calculation of Performance Data...................... Performance Data; 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 individual
Installment and Single Purchase Payment deferred variable annuity contracts
("Contracts") issued by Aetna Life Insurance and Annuity Company (the
"Company"). The Contracts are designed to provide for retirement income for
Contracts established under Section 408 of the Internal Revenue Code. (See
"Purchase.") Currently, the IRA is not available as a "Simple IRA" as defined
in Section 408(p) of the Internal Revenue Code.
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:
<TABLE>
<CAPTION>
<S> <C>
(bullet) Aetna Variable Fund (bullet) Alger American Small Cap Portfolio
(bullet) Aetna Income Shares (bullet) American Century VP Capital Appreciation
(bullet) Aetna Variable Encore Fund (formerly known as TCI Growth)
(bullet) Aetna Investment Advisers Fund, Inc. (bullet) Fidelity VIP II Contrafund Portfolio
(bullet) Aetna Ascent Variable Portfolio (bullet) Fidelity VIP Equity-Income Portfolio
(bullet) Aetna Crossroads Variable Portfolio (bullet) Fidelity VIP Growth Portfolio
(bullet) Aetna Legacy Variable Portfolio (bullet) Fidelity VIP Overseas Portfolio
(bullet) Aetna Variable Capital Appreciation Portfolio (bullet) Janus Aspen Aggressive Growth Portfolio
(bullet) Aetna Variable Growth Portfolio (bullet) Janus Aspen Balanced Portfolio
(bullet) Aetna Variable Index Plus Portfolio (bullet) Janus Aspen Growth Portfolio
(bullet) Aetna Variable Small Company Portfolio (bullet) Janus Aspen Short-Term Bond Portfolio
(bullet) Alger American Growth Portfolio (bullet) Janus Aspen Worldwide Growth Portfolio
(bullet) Scudder International Portfolio Class A
Shares
</TABLE>
The Credited Interest Options currently available under the Contracts are
the Guaranteed Interest Account, the Fixed Account and the Guaranteed
Accumulation 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 and additional information concerning the Guaranteed Accumulation
Account is contained in a separate prospectus.
The availability of the Funds and the Credited Interest Options is subject
to applicable regulatory authorization. Not all Funds or Credited Interest
Options may be available in all jurisdictions or under all Contracts. (See
"Investment Options.")
This Prospectus provides investors with the information that they should
know about the Separate Account before investing in the Contract. Additional
information about the Separate Account is contained in a Statement of
Additional Information ("SAI") which 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 from the Company without charge by calling the number listed under
the "Inquiries" section of the Prospectus Summary.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES
OF THE FUNDS AND THE GUARANTEED ACCUMULATION ACCOUNT. ALL PROSPECTUSES SHOULD
BE READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus and the Statement of Additional Information
are dated May 1, 1997.
<PAGE>
TABLE OF CONTENTS
=============================================================================
DEFINITIONS DEFINITIONS - 1
PROSPECTUS SUMMARY SUMMARY - 1
FEE TABLE FEE TABLE - 1
CONDENSED FINANCIAL INFORMATION AUV HISTORY - 1
THE COMPANY 1
VARIABLE ANNUITY ACCOUNT C 1
INVESTMENT OPTIONS 1
The Funds 1
Credited Interest Options 3
PURCHASE 4
Contract Purchase and Availability 4
Purchase Payments 4
Right to Cancel 4
CHARGES AND DEDUCTIONS 4
Daily Deductions from the Separate Account 4
Mortality and Expense Risk Charge 4
Administrative Expense Charge 5
Maintenance Fee 5
Deferred Sales Charge 5
Fund Expenses 6
Premium and Other Taxes 6
CONTRACT VALUATION 6
Contract Value 6
Accumulation Units 6
Net Investment Factor 7
TRANSFERS 7
WITHDRAWALS 7
Reinvestment Privilege 8
ADDITIONAL WITHDRAWAL OPTIONS 8
DEATH BENEFIT DURING ACCUMULATION PERIOD 9
ANNUITY PERIOD 9
Annuity Period Elections 9
Annuity Options 10
Annuity Payments 10
Charges Deducted During the Annuity Period 10
Death Benefit Payable During the Annuity Period 10
TAX STATUS 11
Introduction 11
Taxation of the Company 11
Contracts Used with Certain Retirement Plans 11
<PAGE>
MISCELLANEOUS 12
Distribution 12
Delay or Suspension of Payments 12
Performance Reporting 12
Voting Rights 13
Modification of the Contract 13
Involuntary Terminations 13
Legal Matters and Proceedings 13
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION 14
APPENDIX I--GUARANTEED INTEREST ACCOUNT 15
APPENDIX II--FIXED ACCOUNT 16
APPENDIX III--GUARANTEED ACCUMULATION ACCOUNT 18
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY
PERSON TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THE OFFERING CONTAINED IN THIS PROSPECTUS EXCEPT AS OTHERWISE CONTAINED
HEREIN.
<PAGE>
DEFINITIONS
=============================================================================
The following terms are defined as they are used in this Prospectus:
Accumulation Period: The period during which Purchase Payment(s) credited to
a Contract are invested to fund future annuity payments.
Accumulation Unit: A measure of the value of each Subaccount before annuity
payments begin.
Annuitant: The person on whose life or life expectancy the annuity payments
are based.
Annuity: A series of payments for life, a definite period or a combination of
the two.
Annuity Date: The date on which annuity payments begin.
Annuity Period: The period during which annuity payments are made.
Annuity Unit: A measure of the value of each Subaccount selected during the
Annuity Period.
Beneficiary(ies): The person or persons identified on the Application who are
to receive any death benefit proceeds payable under the Contract.
Code: Internal Revenue Code of 1986, as amended.
Company (We, Us): Aetna Life Insurance and Annuity Company.
Contract: The individual deferred, variable annuity contracts offered by this
Prospectus.
Contract Holder (You): The person to whom the Contract is issued.
Contract Value: The dollar value of amounts held under the Contract as of
each Valuation Date during the Accumulation Period.
Contract Year: The period of 12 months measured from the Contract's effective
date or from any anniversary of such effective date.
Credited Interest Options: The fixed interest options under the Contract. The
Credited Interest Options currently consist of the Guaranteed Interest
Account, the Fixed Account and the Guaranteed Accumulation Account, each of
which is described in an Appendix to this Prospectus. Amounts allocated to
the Credited Interest Options are included in the Contract Value.
Fund(s): An open-end registered management investment company whose shares
are purchased by the Separate Account to fund the benefits provided by the
Contract.
Home Office: The Company's principal executive offices located at 151
Farmington Avenue, Hartford, Connecticut 06156.
Purchase Payment(s): The gross payment(s) submitted to the Company under a
Contract.
Purchase Payment Period: For "Installment Purchase Payment Contracts," 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.
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 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
Annuity 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 - 1
<PAGE>
PROSPECTUS SUMMARY
=============================================================================
Contracts Offered
The Contracts offered in connection with this Prospectus are individual
deferred variable annuity contracts issued by Aetna Life Insurance and
Annuity Company (the "Company"). One allows single payments and the other
allows installment payments. The Plans are adopted by or on behalf of
individuals entitled to tax-deferred treatment under Section 408(b) of the
Code ("IRA"), and established for employees whose employer contributes to
their IRA plan pursuant to the Simplified Employee Pension Plan provisions of
Section 408(k) ("SEP") of the Code. These Contracts may be purchased by
completing the proper application form and submitting it to the Distributor.
(See "Contract Purchase.")
This Contract has been approved by the Internal Revenue Service ("IRS") as
a prototype IRA. It can therefore be used in an IRS model SEP. The IRS
approval, however, only pertains to whether the Contract meets the Code
requirements for IRAs and is not a determination of the merits of the Annuity
Contract. Currently, the IRA is not available as a "Simple IRA" as defined in
Section 408(p) of the Internal Revenue Code.
Free Look Period
You may cancel the Contract no later than 10 days after you receive it (or
as otherwise allowed by state law) by returning it to the Company with a
written notice of cancellation. We will produce a refund not later than seven
days after we receive the Contract and the written notice at our Home Office.
Cancellations requested after you receive the Contract will consist of a
refund of the Purchase Payment. (See "Purchase--Right to Cancel.")
Investment Options
The Company has established Variable Annuity Account C, a registered unit
investment trust, for the purpose of funding the variable portion of the
Contracts. The Separate Account is divided into Subaccounts which invest
directly in shares of the Funds described herein, as you designate. The
Contract allows investment in any or all of the Subaccounts, as well as in
the Credited Interest Options described below. The total number of investment
options that you may select 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 allow you to earn fixed rates of interest. The fixed options available
under the Contract are the Guaranteed Interest Account ("GIA"), the Fixed
Account, and the Guaranteed Accumulation Account ("GAA"). (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 expense charge), as well as any annual
maintenance fee, allocation and transfer fees, and premium and other taxes.
The Funds also incur certain fees and expenses which are deducted directly
from the Funds. A deferred sales charge may apply upon a full or partial
withdrawal of the Contract Value. (See the Fee Table and "Charges and
Deductions.")
Transfers
Prior to the Annuity Date, and subject to certain limitations, Contract
Values may be transferred among the Subaccounts and the Credited Interest
Options without charge. Transfers can be requested in writing or by telephone
in accordance with the Company's transfer procedures. (See the Appendices for
a full description of the restrictions applicable to transfers made from the
Credited Interest Options.) (See "Transfers.")
Withdrawals
All or a part of the Contract Value may be withdrawn prior to the Annuity
Date by properly completing a disbursement form and sending it to the
Company. Certain charges may be assessed upon withdrawal. (See
"Withdrawals.")
-----------------------------------------------------------------------------
SUMMARY - 1
<PAGE>
The Contract offers certain Additional Withdrawal Options during the
Accumulation Period to persons meeting certain criteria. Additional
Withdrawal Options are not available in all states and may not be suitable in
every situation. (See "Additional Withdrawal Options.")
Death Benefit
A death benefit is payable if you die before the Annuity Date. Death
benefit proceeds will be paid to the Beneficiary in an amount equal to the
Contract Value. Until the election of a method of payment, the Contract Value
will remain invested under the Contract. The Beneficiary may elect to receive
the proceeds in a lump sum or under any of the payment options available
under the Contract. However, the Code requires that distributions begin
within a certain time period. (See "Death Benefit During Accumulation
Period.")
After Annuity Payments have commenced, a death benefit may be payable to
the Beneficiary depending upon the terms of the Contract and the Annuity
Option selected. (See "Death Benefit Payable During the Annuity Period.")
The Annuity Period
You may elect to begin receiving Annuity Payments on the Annuity Date.
Annuity Payments can be made on either a fixed, variable or combination fixed
and variable basis. If you choose a variable payout, the payments will vary
with the investment performance of the Subaccount(s) selected. The Company
reserves the right to limit the number of Subaccounts that may be available
during the Annuity Period. (See "Annuity Period.")
Taxes
Contributions and earnings are not generally taxed until you or your
beneficiary(ies) actually receive a distribution from the Contract. A 10%
federal tax penalty 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 06156-1258
Attention: Customer Service
(bullet) Call Customer Service: 1-800-531-4547 (for automated transfers
or changes in the allocation of
Contract 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 "Charges Deducted During the Annuity Period." No sales
charge is paid upon purchase of the Contract. Some expenses may vary as
explained under "Annuity Period--Charges and Deductions." The charges and
expenses shown below do not include premium taxes that may be applicable. For
more information regarding expenses paid out of the assets of a particular
Fund, see the Fund's prospectus.
DIRECT CHARGES. These charges are deducted directly from the Contract Value.
They include:
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
Contract. The amount of the deferred sales charge varies depending on the
type of Contract you own and is calculated as follows:
Installment Purchase Payment Contract
-----------------------------------------------------
Complete Purchase Deferred Sales
Payment Periods 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%
10 or more 0%
-----------------------------------------------------
Single Purchase Payment Contract
-----------------------------------------------------
Completed Contract Deferred Sales
Years 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%
-----------------------------------------------------
Annual Contract Maintenance Fee $20.00
The maintenance fee will generally be deducted annually from each
Installment Purchase Payment Contract. There is no maintenance
fee under Single Purchase Payment Contracts.
Allocation and Transfer Fees $ 0.00
The Company currently allows an unlimited number of transfers or
allocation changes without charge. However we reserve the right to
assess a fee of $10.00 for each transfer or allocation change in
excess
of 12 made during each calendar year.
INDIRECT CHARGES. Each Subaccount pays these expenses out of its assets. The
charges are reflected in the Subaccount's daily Accumulation Unit Value and
are not charged directly to your Contract Value. They include:
Mortality and Expense Risk Charge. 1.25%
Administrative Expense Charge. 0.00%*
--------
Total Separate Account Annual Expenses 1.25%
========
* We currently do not impose an Administrative Expense Charge.
However, we reserve the right to deduct a daily charge of not
more than 0.25% per year from the Subaccounts.
-----------------------------------------------------------------------------
FEE TABLE - 1
<PAGE>
Annual Expenses of the Funds
The following table illustrates the advisory fees and other expenses
applicable to the Funds. A Fund's "Other Expenses" include operating costs of
the Fund. These expenses are reflected in the Fund's net asset value and are
not deducted from your Contract Value. (Except as noted, the following
figures are a percentage of average net assets and, except where otherwise
indicated, are based on figures for the year ended December 31, 1996.)
<TABLE>
<CAPTION>
Investment
Advisory
Fees(1) Other Expenses Total
(after expense (after expense Fund Annual
reimbursement) reimbursement) Expenses
-------------- -------------- ------------
<S> <C> <C> <C>
Aetna Variable Fund(2) 0.50% 0.06% 0.56%
Aetna Income Shares(2) 0.40% 0.08% 0.48%
Aetna Variable Encore Fund(2) 0.25% 0.10% 0.35%
Aetna Investment Advisers Fund, Inc.(2) 0.50% 0.08% 0.58%
Aetna Ascent Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Crossroads Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Legacy Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Capital Appreciation Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Growth Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Index Plus Portfolio(2) 0.35% 0.15% 0.50%
Aetna Variable Small Company Portfolio(2) 0.75% 0.15% 0.90%
Alger American Growth Portfolio 0.75%
Alger American Small Cap Portfolio 0.85%
American Century VP Capital Appreciation(3) 1.00%
Fidelity VIP II Contrafund Portfolio(4) 0.61%
Fidelity VIP Equity-Income Portfolio 0.51%
Fidelity VIP Growth Portfolio 0.61%
Fidelity VIP Overseas Portfolio 0.76%
Janus Aspen Aggressive Growth Portfolio(5) 0.75%
Janus Aspen Balanced Portfolio(5) 0.82%
Janus Aspen Growth Portfolio(5) 0.65%
Janus Aspen Short-Term Bond Portfolio(5) 0.00%
Janus Aspen Worldwide Growth Portfolio(5) 0.68%
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 that
Agreement.
(3) The Portfolio's investment adviser pays all expenses of the Portfolio
except brokerage commissions, taxes, interest, fees, expenses of the
non-interested person directors (including counsel fees) and
extraordinary expenses. These expenses have historically represented a
very small percentage (less than 0.01%) of total net assets in a fiscal
year.
(4) A portion of the brokerage commissions the Fund paid was used to reduce
its expenses. Without this reduction, total operating expenses would have
been % for the Contrafund Portfolio.
(5) The information for each Portfolio is net of fee waivers or reductions
from Janus Capital. Fee reductions for the Aggressive Growth, Balanced,
Growth, and Worldwide Growth Portfolios reduce the management fee to the
level of the corresponding Janus retail fund. Other waivers, if
applicable, are first applied against the management fee and then against
other expenses. Without such waivers or reductions, the Management Fee,
Other Expenses and Total Fund Annual Expenses would have been %,
%, and % for Aggressive Growth Portfolio; %, %, % for
Balanced Portfolio; %, % and % for Growth Portfolio; %,
% and % for Short-Term Bond Portfolio; and %, % and %
for Worldwide Growth Portfolio; respectively. Janus Capital may modify or
terminate the waivers or reductions at any time upon 90 days notice to
the Portfolio's Board of Trustees.
-----------------------------------------------------------------------------
FEE TABLE - 2
<PAGE>
Hypothetical Illustration (Example)
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
The following Examples illustrate the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. For
the purposes of these Examples, the $20 maintenance fee has been converted to
a percentage of assets equal to %.
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
-------------------------------------- ---------------------------------------
If you withdraw your entire Contract If you do not withdraw your Contract
Value at the end of the periods shown, Value, or if you annuitize at the end
you would pay the following expenses, of the periods shown, you would pay the
including any applicable deferred following expenses (no deferred sales
sales charge: charge is reflected):*
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------- ------- ------- ---------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund
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
Fidelity VIP II Contrafund
Portfolio
Fidelity VIP Equity-Income
Portfolio
Fidelity VIP Growth
Portfolio
Fidelity VIP Overseas
Portfolio
Janus Aspen Aggressive
Growth Portfolio
Janus Aspen Balanced
Portfolio
Janus Aspen Growth
Portfolio
Janus Aspen Short-Term
Bond Portfolio
Janus Aspen Worldwide
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. (See Example A.)
-----------------------------------------------------------------------------
FEE TABLE - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION
(Selected data for accumulation units outstanding throughout each period)
=============================================================================
The condensed financial information presented below for each of the years in
the 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 Statement of
Additional Information.
<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 1,826,260 3,679,802 5,086,515 7,534,662
AETNA INVESTMENT ADVISERS FUND,
INC.
Value at beginning of period $14.288 $14.519 $13.379 $12.736
Value at end of period $17.954 $14.288 $14.519 $13.379
Increase (decrease) in value of
accumulation unit(1) 25.65% (1.59)% 8.52% 5.05%
Number of accumulation units
outstanding at end of period 9,193,181 21,990,186 30,784,750 34,802,433
AETNA ASCENT VARIABLE
PORTFOLIO
Value at beginning of period $10.000(4)
Value at end of period $10.976
Increase (decrease) in value of
accumulation unit(1) 9.76%
Number of accumulation units
outstanding at end of period 49,748
AETNA CROSSROADS
VARIABLE PORTFOLIO
Value at beginning of period $10.000(4)
Value at end of period $10.862
Increase (decrease) in value of
accumulation unit(1) 8.62%
Number of accumulation units
outstanding at end of period 47,204
AETNA LEGACY VARIABLE
PORTFOLIO
Value at beginning of period $10.000(4)
Value at end of period $10.626
Increase (decrease) in value of
accumulation unit(1) 6.26%
Number of accumulation units
outstanding at end of period 20,531
</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
Number of accumulation units
outstanding at end of period
AETNA ASCENT VARIABLE
PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
AETNA CROSSROADS
VARIABLE PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
AETNA LEGACY VARIABLE
PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
</TABLE>
-----------------------------------------------------------------------------
AUV HISTORY - 1
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
=============================================================================
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----- ---------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE INDEX PLUS PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $10.000(4)
Value at end of period $11.379
Increase (decrease) in value of accumulation unit(1) 13.79%
Number of accumulation units outstanding at end of period 284,978
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period $9.437 $9.959
Value at end of period $13.450 $9.437
Increase (decrease) in value of accumulation unit(1) 42.52% (5.24)%(6)
Number of accumulation units outstanding at end of period 1,081,375 208,874
AMERICAN CENTURY VP CAPITAL APPRECIATION*
Value at beginning of period $10.213 $10.463 $10.000(3)
Value at end of period $13.224 $10.213 $10.463
Increase (decrease) in value of accumulation unit(1) 29.47% (2.39)% 4.63%
Number of accumulation units outstanding at end of period 4,184,701 12,096,731 12,272,152
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $11.681
Increase (decrease) in value of accumulation unit(1) 16.81%
Number of accumulation units outstanding at end of period 174,259
FIDELITY EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.403 $10.000
Value at end of period $13.880 $10.403
Increase (decrease) in value of accumulation unit(1) 33.42% 4.03%(8)
Number of accumulation units outstanding at end of period 766,360 100,574
FIDELITY GROWTH PORTFOLIO
Value at beginning of period $10.472 $10.000
Value at end of period $14.000 $10.472
Increase (decrease) in value of accumulation unit(1) 33.69% 4.72%(8)
Number of accumulation units outstanding at end of period 612,992 121,070
FIDELITY OVERSEAS PORTFOLIO
Value at beginning of period $9.474 $10.000
Value at end of period $10.262 $9.474
Increase (decrease) in value of accumulation unit(1) 8.32% (5.26)%(8)
Number of accumulation units outstanding at end of period 166,303 54,387
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987
----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE INDEX PLUS PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
AMERICAN CENTURY VP CAPITAL APPRECIATION*
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
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 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 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 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 - 2
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
=============================================================================
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----- ---------- ---------- ----- ------
<S> <C> <C> <C> <C> <C>
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $12.681
Increase (decrease) in value of accumulation unit(1) 28.61%
Number of accumulation units outstanding at end of period 167,920
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.000(4)
Value at end of period $11.259
Increase (decrease) in value of accumulation unit(1) 12.59%
Number of accumulation units outstanding at end of period 34,072
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.000(4)
Value at end of period $11.626
Increase (decrease) in value of accumulation unit(1) 16.26%
Number of accumulation units outstanding at end of period 78,126
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period $10.000(5)
Value at end of period $10.285
Increase (decrease) in value of accumulation unit(1) 2.85%
Number of accumulation units outstanding at end of period 1,405
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $10.000(7)
Value at end of period $12.216
Increase (decrease) in value of accumulation unit(1) 22.16%
Number of accumulation units outstanding at end of period 65,384
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES
Value at beginning of period $12.687 $12.957
Value at end of period $13.923 $12.687
Increase (decrease) in value of accumulation unit(1) 9.74% (2.08)%(6)
Number of accumulation units outstanding at end of period 432,183 187,169
</TABLE>
<TABLE>
<CAPTION>
1990 1989 1988 1987
----- ----- ----- -----
<S> <C> <C> <C> <C>
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 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
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES
Value at beginning of period
Value at end of period
Increase (decrease) in value of accumulation unit(1)
Number of accumulation units outstanding at end of period
</TABLE>
(1) The above figures are calculated by subtracting the beginning
Accumulation Unit value from the ending Accumulation Unit value during a
calendar year, and dividing the result by the beginning Accumulation Unit
value. These figures do not reflect the deferred sales charge or the
fixed dollar annual maintenance fee, if any. Inclusion of these charges
would reduce the investment results shown.
(2) The initial Accumulation Unit value was established at $10.000 on June
23, 1989, the date on which the Fund commenced operations.
(3) The initial Accumulation Unit value was established at $10.000 on
February 1, 1993, the date on which the Portfolio became available under
the Contract.
(4) Reflects less than a full year of performance activity. Funds were first
available in this option during June 1995.
(5) Reflects less than a full year of performance activity. Funds were first
available in this option during July 1995.
(6) Reflects less than a full year of performance activity. Funds were first
received in this option during April 1994.
(7) Reflects less than a full year of performance activity. Funds were first
available in this option during May 1995.
(8) Reflects less than a full year of performance activity. Funds were first
received in this option during May 1994.
(9) Reflects less than a full year of performance activity. Funds were first
received in this option during September 1996.
* Formerly TCI Portfolios, Inc.--TCI Growth.
-----------------------------------------------------------------------------
AUV HISTORY - 3
<PAGE>
THE COMPANY
=============================================================================
Aetna Life Insurance and Annuity Company (the "Company") is the issuer of
the Contract, and as such, it is responsible for providing the insurance and
annuity benefits under the Contract. The Company is a stock life insurance
company organized under the insurance laws of the State of Connecticut in
1976. Through a merger, it succeeded to the business of Aetna Variable
Annuity Life Insurance Company (formerly Participating Annuity Life Insurance
Company, an Arkansas life insurance company organized in 1954). The Company
is engaged in the business of issuing life insurance policies and variable
annuity contracts in all states of the United States. The Company's principal
executive offices are located at 151 Farmington Avenue, Hartford, Connecticut
06156.
The Company is a wholly owned subsidiary of Aetna Retirement Holdings,
Inc., which is in turn a wholly owned subsidiary of Aetna Retirement
Services, Inc. and an indirect wholly owned subsidiary of Aetna 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 of any other business
conducted by the Company. Income, gains or losses of the Separate Account are
credited to or charged against the assets of the Separate Account without
regard to other income, gains or losses of the Company. All obligations
arising under the Contracts are general corporate obligations of the Company.
INVESTMENT OPTIONS
=============================================================================
The Funds
Purchase Payments may be allocated to one or more of the Subaccounts as
designated on the application. In turn, the Subaccounts invest in the
corresponding Funds at net asset value. The total number of investment
options that you may select during the Accumulation Period is limited to 18.
Each Subaccount, the Fixed Account, and each classification of GIA/GAA count
as one option once you have made an allocation to it, even if you no longer
have amounts allocated to that option.
The availability of Funds may be subject to applicable regulatory
authorization. In addition, the Company may add, withdraw or substitute
Funds, subject to the conditions in the Contract and in compliance with
regulatory requirements. Not all Funds may be available in all jurisdictions
or under all Contracts.
The investment results of the Funds described below are likely to differ
significantly and there is no assurance that any of the Funds will achieve
their respective investment objectives. Except where otherwise noted, all of
the Funds are diversified, as defined in the 1940 Act.
(bullet) Aetna Variable Fund seeks to maximize total return through
investments in a diversified portfolio of common stocks and
securities convertible into common stock.(1)
(bullet) Aetna Income Shares seeks to maximize total return, consistent with
reasonable risk, through investments in a diversified portfolio
consisting primarily of debt securities.(1)
(bullet) Aetna Variable Encore Fund seeks to provide high current return,
consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments. An investment
in the Fund is neither insured nor guaranteed by the U.S.
Government.(1)
(bullet) Aetna Investment Advisers Fund, Inc. is a managed fund which seeks
to maximize investment return consistent with reasonable safety of
principal by investing in one or more of the following asset
classes: stocks, bonds and cash
-----------------------------------------------------------------------------
1
<PAGE>
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 ,
the range of market capitalization of these companies was $ million
to $ billion.(2)
(bullet) American Century Variable Portfolios, Inc.--American Century VP
Capital Appreciation seeks capital growth. The Fund seeks to achieve
its objective by investing in common stocks (including securities
convertible into common stocks) and other securities that meet
certain fundamental and technical standards of selection and, in the
opinion of the Fund's investment manager, have better than average
potential for appreciation.(3)
(bullet) Fidelity Investments' Variable Insurance Products Fund
II--Contrafund Portfolio seeks maximum total return over the long
term by investing mainly in equity securities of companies that are
undervalued or out-of-favor.(4)
(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.(4)
(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.(4)
-----------------------------------------------------------------------------
2
<PAGE>
(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).(4)
(bullet) Janus Aspen Series--Aggressive Growth Portfolio is a nondiversified
portfolio that seeks long-term growth of capital in a manner
consistent with the preservation of capital. The Portfolio pursues
its investment objective by normally investing at least 50% of its
equity assets in securities issued by medium-sized companies.
Medium- sized companies are those whose market capitalizations fall
within the range of companies in the S&P MidCap 400 Index, which as
of included companies with capitalizations between approximately
$ million and $ billion, but which is expected to change on a
regular basis.(5)
(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 equity securities selected
primarily for their growth potential and 40%-60% of its assets in
fixed-income securities selected primarily for their income
potential.(5)
(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.(5)
(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.(5)
(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.(5)
(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.(6)
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) Fidelity Management & Research Company
(5) Janus Capital Corporation
(6) 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 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.
(bullet) The Guaranteed Interest Account (GIA) is a part of the Company's
general account and guarantees a minimum interest rate, as specified
in the Contract. The Company may credit higher interest rates in its
discretion. This
-----------------------------------------------------------------------------
3
<PAGE>
Credited Interest Option is available in all states except
Washington and New York. (See Appendix I.)
(bullet) The Fixed Account is also a part of the Company's general account.
The Fixed Account guarantees a minimum interest rate, as specified
in the Contract. The Company may credit higher interest rates from
time to time. Transfers from the Fixed Account are limited. (See
Appendix II.)
(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 GAA for the full
guaranteed term to receive the quoted interest rates, or a market
value adjustment (which may be positive or negative) will be
applied. This credited interest option is offered in New York only.
(See Appendix III.)
PURCHASE
=============================================================================
Contract Purchase and Availability
The Contracts described in this Prospectus are individual deferred
variable annuity contracts designed to fund plans adopted by or on behalf of
individuals entitled to tax-deferred treatment under Section 408(b) of the
Code ("IRA"), and plans established for employees whose employer contributes
to their IRA plan pursuant to the Simplified Employee Pension ("SEP") Plan
provisions of Section 408(k) of the Code. Currently, the IRA is not available
as a "Simple IRA" as defined in Section 408(p) of the Code.
These Contracts may be purchased by completing the proper application form
and submitting it to the Distributor. The Company must accept or reject the
application within two business days of receipt. If the application is
incomplete, the Company may hold any forms and accompanying Purchase Payments
for five days. Purchase Payments may be held for longer periods only with the
consent of the Contract Holder, pending the acceptance of the application. If
the application is rejected, the application and any Purchase Payments will
be returned to the Contract Holder.
Purchase Payments
Two types of Contracts are available. Continuing periodic payments will be
placed in "Installment Purchase Payments Contracts," and lump sum transfers
of amounts accumulated under a pre-existing plan may be placed in "Single
Purchase Payment Contracts" in accordance with the Company's procedures and
minimums in effect at the time of purchase.
The minimum Purchase Payment for a Single Payment Contract is $5,000.
Installment Purchase Payments must be at least $85 per month or $1,000
annually for IRA and SEP Plans. (Monthly installments must be made via
Automatic Bank Check Plan.)
Allocation of Purchase Payments. Purchase Payments will initially be
allocated to the Subaccounts or Credited Interest Options as specified on the
application. Changes in such allocation may be made in writing or by
telephone transfer. Allocations must be in whole percentages, and there may
be limitations on the number of investment options that can be selected
during the Accumulation Period. (See "Investment Options--the Funds.")
Right to Cancel
You may cancel the Contract no later than 10 days after you receive it (or
as otherwise allowed by state law) by returning it to the Company with a
written notice of cancellation. We will produce a refund not later than seven
days after we receive the Contract and the written notice at our Home Office.
Cancellations requested after you receive the Contract will consist of a
refund of the Purchase Payment.
CHARGES AND DEDUCTIONS
=============================================================================
Daily Deductions from the Separate Account
Mortality and Expense Risk Charge. The Company makes a daily deduction
from each of the Subaccounts for the mortality and expense risk charge. The
charge is equal, on an annual basis, to 1.25% of the daily net assets of the
Subaccounts and compensates the Company for the assumption of the mortality
and expense risks under the Contract. The mortality risks are those assumed
for our promise to make lifetime payments according to annuity rates
specified in the Contract. The expense risk is the risk that the actual
expenses for costs incurred under the Contract will exceed the maximum costs
that can be charged under the Contract.
-----------------------------------------------------------------------------
4
<PAGE>
If the amount deducted for mortality and expense risks is not sufficient
to cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess may be used to
recover distribution expenses relating to the Contracts and as a source of
profit to the Company. The Company expects to make a profit from the
mortality and expense risk charge.
Administrative Expense Charge. The Company reserves the right to make a
deduction from each of the Subaccounts for an administrative expense charge.
The administrative expense charge compensates the Company for administrative
expenses that exceed revenues from the maintenance fee described below. The
charge is set at a level which does not exceed the average expected cost of
the administrative services to be provided while the Contract is in force.
The Company does not expect to make a profit from this charge.
Under the Contract, the amount of the administrative expense charge may be
of an amount up to, on an annual basis, 0.25% of the daily net assets of the
Subaccounts. There is currently no administrative expense charge during the
Accumulation Period or Annuity Period. The charge in effect at time of
election of an Annuity Option will be applicable during the entire Annuity
Period.
Maintenance Fee
During the Accumulation Period, the Company will deduct an annual
maintenance fee of $20 from the Installment Purchase Payment Contract Value.
The maintenance fee is to reimburse the Company for some of its
administrative expenses relating to the establishment and maintenance of the
Contract. There is no maintenance fee under Single Purchase Payment
Contracts.
Reduction or Elimination of Administrative
Charge and Maintenance Fee
The administrative charge and maintenance fee may be reduced or eliminated
when sales of the Contracts are made to individuals or to a group of
individuals in such a manner that results in savings of administrative
expenses. The entitlement to such a reduction will be based on:
(1) the size and type of group of individuals to whom the Contract is
offered; and
(2) the amount of expected Purchase Payments.
Any reduction or elimination of the administrative charge or maintenance
fees will not be unfairly discriminatory against any person. We will make any
reduction in the administrative charge or 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.
The maintenance fee is determined annually based on the Contract Value on
the last day of the Contract Year. The maintenance fee will be deducted on a
pro rata basis from each Subaccount or Credited Interest Option in which you
have an interest.
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, the Guaranteed
Accumulation Account and the Guaranteed Interest Account.
For Installment Purchase Payment Contracts, the deferred sales charge is
based on the number of completed Purchase Payment Periods. For Single
Purchase Payment Contracts, it is based on the number of Contract 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:
Installment Purchase Payment Contracts:
- -------------------------------------------------------
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%
10 or more 0%
- -------------------------------------------------------
Single Purchase Payment Contracts:
Contract 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%
- -------------------------------------------------------
A deferred sales charge will not be deducted from any portion of the Contract
Value if the withdrawal is:
(bullet) applied to provide Annuity benefits;
(bullet) paid due to your death;
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5
<PAGE>
(bullet) withdrawn on or after the tenth anniversary of the effective date of
the Installment Purchase Payment Contract;
(bullet) withdrawn due to the election of an Additional Withdrawal Option
(see "Additional Withdrawal Options");
(bullet) paid where the Contract Value is $2,500 or less and no amount has
been withdrawn from that Contract within the prior 12 months; or
(bullet) in the case of any Installment Purchase Payment Contract, withdrawn
in part or in full provided the Participant is at least age 59-1/2
and nine Purchase Payment Periods have been completed for the
benefit of the Participant.
Reduction or Elimination of the Deferred Sales Charge
We may reduce or eliminate the deferred sales charge when sales of the
Contracts are made to individuals or a group of individuals in such a manner
that results in savings of sales expenses. The entitlement to such a
reduction in the deferred sales charge will be based on the following:
(1) the size and type of group of individuals to whom the Contract is
offered;
(2) the amount of expected Purchase Payments; and
(3) whether there is a prior or existing relationship with the Company such
as being an employee of the Company or an affiliate, receiving
distributions or making internal transfers from other Contracts issued by
the Company, or making transfers of amounts held under qualified plans
sponsored by the Company or an affiliate.
Any reduction or elimination of the deferred sales charge will not be
unfairly discriminatory against any person.
Free Withdrawal. Up to 10% of the current Contract Value may be withdrawn
annually without a deferred sales charge. This applies only to the first
partial withdrawal in each calendar year. The 10% amount will be calculated
using the Contract Value on the date of withdrawal. This provision is only
available if you are between the ages of 59-1/2 and 70-1/2.
The deduction for the deferred sales charge will not exceed 8.5% of the
total Purchase Payments actually made to the Contract. The Company does not
anticipate that the deferred sales charge will cover all sales and
administrative expenses which it incurs in connection with the Contract. The
difference will be covered by the general assets of the Company which are
attributable, in part, to mortality and expense risk charges under the
Contract described above.
Fund Expenses
Each Fund incurs certain expenses which are paid out of its net assets.
These expenses include, among other things, the investment advisory or
"management" fee. The expenses of the Funds are set forth in the Fee Table in
this Prospectus and described more fully in the accompanying Fund
prospectuses.
Premium and Other Taxes
Several states and municipalities impose a premium tax on Annuities. These
taxes currently range from 0% to 4%. The Company reserves the right to deduct
premium tax against Purchase Payments or Contract Values at any time, but no
earlier than when we have a tax liability under state law. The Company's
current practice is to deduct for premium taxes at the time of complete
withdrawal or annuitization. In addition to the premium tax, the Company
reserves the right to assess a charge for any state or federal taxes due
against the Contract or the Separate Account assets. (See "Tax Status.")
Any municipal premium tax assessed at a rate in excess of 1% will be
deducted from the Purchase Payment(s) or from the amount applied to an
Annuity Option based upon our determination of when such tax is due. We will
absorb any municipal premium tax that is assessed at 1% or less. We reserve
the right, however, to reflect this added expense in our annuity purchase
rates for residents of such municipalities.
CONTRACT VALUATION
=============================================================================
Contract Value
Until the Annuity Date, the Contract Value is the total dollar value of
amounts held in the Account as of any Valuation Date. The Contract Value at
any given time is based on the value of the units held in each Subaccount,
plus the value of amounts held in any of the Credited Interest Options.
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
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6
<PAGE>
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 expense 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, as described under "Purchase--Contract Purchase and Availability."
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 Contract at the AUV computed on the next Valuation Date
following our receipt of your payment or transfer request. The value of an
Accumulation Unit may increase or decrease.
Net Investment Factor
The net investment factor is used to measure the investment performance of
a Subaccount from one Valuation Date to the next. The net investment factor
for a Subaccount for any valuation period is equal to the sum of 1.0000 plus
the net investment rate. The net investment rate equals:
(a) the net assets of the Fund held by the Subaccount on the current
Valuation Date, minus
(b) the net assets of the Fund held by the Subaccount on the preceding
Valuation Date, plus or minus
(c) taxes or provisions for taxes, if any, attributable to the operation
of the Subaccount;
(d) divided by the total value of the Subaccounts 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 0%) as an
administrative expense charge.
The net investment rate may be either positive or negative.
TRANSFERS
=============================================================================
At any time prior to the Annuity Date, you can transfer amounts held under
your Contract from one Subaccount to another. Transfers between the Credited
Interest Options and the Subaccounts are subject to certain restrictions.
(See Appendices I, II and III.) A request for transfer can be made either in
writing or by telephone. The telephone transfer privilege is available
automatically; no special election is necessary. All transfers must be in
accordance with the terms of the Contract.
The Company currently allows unlimited transfers of accumulated amounts to
available investment options without charge. However, the total number of
investment options that you may select during the Accumulation Period is
limited. (See "Investment Options--The Funds.") In addition, we reserve the
right to assess a fee of $10.00 for each transfer or allocation change in
excess of 12 made during each calendar year. 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.
WITHDRAWALS
=============================================================================
All or a portion of the Contract Value may be withdrawn at any time during
the Accumulation Period. To request a withdrawal, you must properly complete
a disbursement form and send it to our Home Office. Payments for withdrawal
requests will be made in accordance with SEC requirements, but normally not
later than seven calendar days following our receipt of a disbursement form.
Withdrawals may be requested in one of the following forms:
(bullet) Full Withdrawal of the Contract: The amount paid for a full
withdrawal will be the Contract Value minus any applicable deferred
sales charge and maintenance fee.
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7
<PAGE>
(bullet) Partial Withdrawals (Percentage): The amount paid will be the
percentage of the Contract Value requested minus any applicable
deferred sales charge.
(bullet) Partial Withdrawal (Specified Dollar Amount): The amount paid will
be the dollar amount requested. However, the amount withdrawn from
the Contract will equal the amount requested plus any applicable
deferred sales charge.
For any partial withdrawal, amounts will be withdrawn proportionately from
each Subaccount or Credited Interest Option in which the Account is invested,
unless you request otherwise in writing. All amounts paid will be based on
Contract 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.
Reinvestment Privilege
You may elect to reinvest all or a portion of the proceeds received from a
full withdrawal of your Contract within 30 days after such withdrawal has
been made. Accumulation Units will be credited to the Contract for the amount
reinvested, as well as any maintenance fee and deferred sales charge imposed
at the time of withdrawal. Any maintenance fee which falls due after the
withdrawal and before the reinvestment will be deducted from the amounts
reinvested. Reinvested amounts will be reallocated to the applicable
investment options in the same proportion as they were allocated at the time
of withdrawal. Accumulation Units will be credited to your Contract based on
the Accumulation Unit Value next computed following our receipt of your
request along with the amount to be reinvested. The reinvestment privilege
may be used only once. See Appendix I and III for a discussion of amounts
withdrawn from GIA or GAA and then reinvested. If you are contemplating
reinvestment, you should seek competent advice regarding the tax consequences
associated with such a transaction.
ADDITIONAL WITHDRAWAL OPTIONS
=============================================================================
The Company offers certain withdrawal options under the Contract that are
not considered annuity options ("Additional Withdrawal Options"). To exercise
these options, your Contract Value must meet the minimum dollar amounts and
age criteria applicable to that option.
The Additional Withdrawal Options currently available under the Contract
include the following:
(bullet) SWO--Systematic Withdrawal Option. SWO is a series of partial
withdrawals from your Contract based on a payment method you select.
It is designed for those who want a periodic income while retaining
investment flexibility for amounts accumulated under a Contract.
(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, and pays you that amount once a year.
(See "Tax Status.")
Other Additional Withdrawal Options may be added from time to time.
Additional information relating to any of the Additional Withdrawal Options
may be obtained from your local representative or from the Company at its
Home Office.
If you select one of the Additional Withdrawal Options, you will retain
all of the rights and flexibility permitted under the Contract during the
Accumulation Period. Your Contract 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 you elect an Additional Withdrawal Option, you may revoke it any time
by submitting a written request to our Home Office. Once an option is
revoked, it may not be elected again, nor may any other Additional Withdrawal
Option be elected unless permitted by the Code. The Company reserves the
right to discontinue the availability of one or all of these Additional
Withdrawal Options at any time, and/or to change the terms of future
elections.
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8
<PAGE>
DEATH BENEFIT DURING ACCUMULATION PERIOD
=============================================================================
The Contract provides that a death benefit is payable to the
Beneficiary(ies) if you die before the Annuity Date. The amount of the death
benefit will be equal to the Contract Value. Death benefit proceeds may be
paid to the Beneficiary:
(bullet) in a lump sum; or
(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 beneficiary is your spouse).
The Beneficiary may instead elect one of the following two options;
however, the Code limits how long the death benefit proceeds may be left in
these options (see below):
(bullet) to leave the Contract Value invested in the Contract; or
(bullet) to leave the Contract Value on deposit in the Company's general
account, and to receive monthly, quarterly, semi- annual or annual
interest payments at the interest rate then being credited on such
deposits. The balance on deposit can be withdrawn at any time or
applied to an Annuity Option.
When paying the Beneficiary, we will determine the Contract Value on the
Valuation Date following the date on which we receive proof of death
acceptable to the Company. Interest, if any, will be paid from the date of
death at a rate no less than required by law. We will mail payment to the
Beneficiary within seven days after we receive proof of death.
The Code requires that distribution of death proceeds begin within a
certain period of time. Generally, either payments must begin by December 31
of the year following the year of your death, or the entire value of your
benefits must be distributed by December 31 of the fifth year following the
year of your death. If your Beneficiary is your spouse, he or she is not
required to begin distributions until the year you would have attained age
70-1/2. In no event may payments extend beyond the life expectancy of the
Beneficiary or any period certain greater than the Beneficiary's life
expectancy. If no elections are made, no distributions will be made. Failure
to commence distributions within the above time periods can result in tax
penalties. Regardless of the method of payment, death benefit proceeds will
generally be taxed to the Beneficiary in the same manner as if you had
received those payments. (See "Tax Status.")
ANNUITY PERIOD
=============================================================================
Annuity Period Elections
For the types of Contracts described in this Prospectus, the Code requires
that minimum annual distributions of the Contract Value begin by April 1st of
the calendar year following the calendar year in which you attain age 70-1/2.
In addition, distributions must be in a form and amount sufficient to satisfy
the Code requirements. These requirements may be satisfied by the election of
certain Annuity Options or Additional Withdrawal Options. (See "Tax Status.")
At least 30 days prior to the Annuity Date, you must notify us in writing
of the following:
(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 Contract 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 option(s)
selected.
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<PAGE>
Annuity Options
You may choose one of the following Annuity Options. You may make or
change your selection at any time prior to 30 days before the Annuity Date.
We may also offer additional Annuity Options under your Contract from time to
time.
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 offer 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 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.
An Annuity may be selected on a fixed or variable basis and payments be
made for 3 to 30 years, as selected. If this option is elected on a variable
basis, the Annuitant may request at any time during the payment period that
the present value of all or any portion of the remaining variable payments be
paid in one sum. However, any lump-sum elected before 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 your 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 how
you allocate your Contract Value between fixed and variable payouts. No
election may be made that would result in the first Annuity payment of less
than $20, or total yearly Annuity payments of less than $100. If your
Contract Value on the Annuity Date is insufficient to elect an option for the
minimum amount specified, a lump-sum payment must be elected.
If Annuity Payments are to be made on a variable basis, the first and
subsequent payments will vary depending on the assumed net investment rate
selected (3-1/2% or 5% per annum). Selection of a 5% rate causes a higher
first payment, but Annuity Payments will increase thereafter only to the
extent that the net investment rate exceeds 5% on an annualized basis.
Annuity Payments would decline if the rate were below 5%. Use of the 3-1/2%
assumed rate causes a lower first payment, but subsequent payments would
increase more rapidly or decline more slowly as changes occur in the net
investment rate. (See the Statement of Additional Information for further
discussion on the impact of selecting an assumed net investment rate).
Charges Deducted During the Annuity Period
We make a daily deduction for mortality and expense risks from any amounts
held on a variable basis. Therefore, electing the nonlifetime option on a
variable basis will result in a deduction being made even though we assume no
mortality risk. We may also deduct a daily administrative expense charge from
amounts held under the variable options. (See "Charges and Deductions.")
Death Benefit Payable During the Annuity Period
If an Annuitant dies after Annuity Payments have begun, any death benefit
payable will depend on the terms of the Contract and the Annuity Option
selected. If Option 1 or
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<PAGE>
Option 3 was elected, Annuity Payments will cease on the death of the
Annuitant under Option 1 or the death of the surviving Annuitant under Option
3.
If Lifetime Option 2 or Option 4 was elected and the death of the
Annuitant under Option 2, or the surviving Annuitant under Option 4, occurs
prior to the end of the guaranteed minimum payment period, we will pay to the
Beneficiary in a lump sum, unless otherwise requested, the present value of
the guaranteed annuity payments remaining.
If the nonlifetime option was elected, and the Annuitant dies before all
payments are made, the value of any remaining payments may be paid in a
lump-sum to the Beneficiary (unless otherwise requested), and no deferred
sales charge will be imposed.
If the Annuitant dies after Annuity payments have begun and if there is a
death benefit payable under the Annuity option elected, the remaining value
must be distributed to the Beneficiary at least as rapidly as under the
original method of distribution.
Any lump-sum payment paid under the applicable lifetime or nonlifetime
Annuity options will be made within seven calendar days after proof of death
acceptable to us, and a request for payment are received at our Home Office.
The value of any death benefit proceeds will be determined as of the next
Valuation Date after we receive acceptable proof of death and a request for
payment. Under Options 2 and 4, such value will be reduced by any payments
made after the date of death.
TAX STATUS
=============================================================================
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 or
Beneficiary may depend upon the tax status of the individual concerned. Any
person concerned about these tax implications should consult a competent tax
adviser before initiating any transaction.
Taxation of the Company
The Company is taxed as a life insurance company under the Code. Since the
Separate Account is not an entity separate from the Company, it will not be
taxed separately as a "regulated investment company" under the Code.
Investment income and realized capital gains are automatically applied to
increase reserves under the Contracts. Under existing federal income tax law,
the Company believes that the Separate Account investment income and realized
net capital gains will not be taxed to the extent that such income and gains
are applied to increase the reserves under the Contracts.
The Company does not anticipate that it will incur any federal income tax
liability attributable to the Separate Account and, therefore, the Company
does not intend to make provisions for any such taxes. However, if changes in
the federal tax laws or interpretation thereof result in the Company being
taxed on income or gains attributable to the Separate Account, then the
Company may impose a charge against the Separate Account (with respect to
some or all Contracts) in order to set aside provisions to pay such taxes.
Contracts Used with Certain Retirement Plans
In General. The Contract is designed for use with retirement plans
qualified under Sections 408(b) or 408(k) of the Code. The tax rules
applicable to participants and beneficiaries in retirement plans vary
according to the type of plan and the terms and conditions of the plan.
The Company makes no attempt to provide more than general information
about use of the Contracts with the various types of retirement plans.
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.
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity or
Individual Retirement Account, each hereinafter referred to as an "IRA".
Also, distributions from certain other types of qualified plans may be
"rolled over" on a tax-deferred basis into an IRA. Employers may establish
Simplified Employee Pension (SEP) Plans and make contributions to an IRA on
behalf of their employees. The sale of a Contract for use with an IRA
requires special disclosure as mandated by the Internal Revenue Code.
Purchasers of an IRA Contract will be provided with supplemental information
as required by the Internal
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<PAGE>
Revenue Code. Such purchasers will have the right to revoke their purchase
within seven days of the earlier of the establishment of the IRA or their
purchase. A Contract issued as an IRA will be amended as necessary to conform
to the requirements of the Code.
Taxation of Distributions. All distributions will be taxed as they are
received unless you made a rollover contribution of the distribution to
another retirement plan or to another 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 have received those payments, a limited
death benefit exclusion may apply for payments due to deaths occurring on or
before August 20, 1996. This exclusion no longer applies to payments due to
deaths occurring after August 20, 1996.
The Code imposes a 10% penalty tax on the taxable portion of any
distribution from and IRA unless made when (a) you have attained age 59-1/2,
(b) you have become disabled as defined by the Code, (c) the distribution
amount is rolled over in accordance with the terms of the Code, (d) it is
paid in a series of substantially equal periodic payments, or (e) you have
been unemployed and receiving unemployment benefits as further described in
the Code. 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
=============================================================================
Distribution
The Company will serve as the principal underwriter for the securities
sold by this Prospectus. The Company is registered as a broker-dealer with
the Securities and Exchange Commission ("SEC") and is a member of the
National Association of Securities Dealers, Inc. (NASD). As underwriter, the
Company will contract with one or more registered broker-dealers
("Distributors"), including at least one affiliate of the Company, to offer
and sell the Contracts. All persons offering and selling the Contracts must
be registered representatives of the Distributors and must also be licensed
as insurance agents to sell variable annuity contracts. These registered
representatives may also provide services in connection with establishing the
Contract.
Payment of Commissions. Persons offering and selling the Contracts may
receive commissions in connection with the sale of the Contracts. The maximum
percentage amount that the Company will ever pay as commission with respect to
any given Purchase Payment is with respect to those made during the first year
of Purchase Payments under a Contract. The percentage amount will range from 2%
to 4% of those Purchase Payments. The Company may also pay renewal commissions
on Purchase Payments made after the first year and service fees. The average
of all payments made by the Company is estimated to equal approximately 3% of
the total Purchase Payments made over the life of an average Contract. In
addition, some sales personnel may receive various types of non-cash
compensation as special sales incentives, including trips and educational
and/or business seminars. Supervisory and other management personnel of the
Company may receive compensation that will vary based on the relative
profitability to the Company of the funding options you select. Funding options
that invest in Funds advised by the Company or its affiliates are generally
more profitable to the Company. The Company may also reimburse the Distributor
for certain expenses. The name of the Distributor and the registered
representative responsible for your Contract are set forth on your application.
Commissions and sales related expenses are paid by the Company and are not
deducted from Purchase Payments. (See "Charges and Deductions--Deferred Sales
Charge.")
Delay or Suspension of Payments
The Company reserves the right to suspend or postpone the date of payment
for any benefit or values (a) on any Valuation Date on which the New York
Stock Exchange ("Exchange") is closed (other than customary weekend and
holiday closings) or when trading on the Exchange is restricted; (b) when an
emergency exists, as determined by the SEC, so that disposal of securities
held in the Subaccounts is not reasonably practicable or 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.
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
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<PAGE>
advertise the "standardized average annual total returns" of the Subaccounts,
calculated in a manner prescribed by the SEC, as well as the
"non-standardized returns." "Standardized average annual total returns" are
computed according to a formula in which a hypothetical investment of $1,000
is applied to the Subaccount and then related to the ending redeemable values
over the most recent one, five and ten-year periods (or since inception, if
less than ten years). Standardized returns will reflect the reduction of all
recurring charges during each period (e.g., mortality and expense risk
charges, annual maintenance fees, administrative expense charge (if any) and
any applicable deferred sales charge). "Non-standardized returns" will be
calculated in a similar manner, except that non- standardized figures will
not reflect the deduction of any applicable deferred sales charge (which
would decrease the level of performance shown if reflected in these
calculations). The non-standardized figures may also include monthly,
quarterly, year-to-date and three-year periods.
The Company may also advertise certain ratings, rankings or other
information related to the Company, the Subaccounts or the Funds. Further
details regarding performance reporting and advertising are described in the
Statement of Additional Information.
Voting Rights
In accordance with the Company's view of present applicable law, it will
vote the shares of each of the Funds held by the Separate Account at regular
and special meetings of Fund shareholders in accordance with instructions
received from persons having a voting interest in the Separate Account. The
Company will vote shares for which it has not received instructions in the
same proportion as it votes shares for which it has received instructions.
Each person having a voting interest in the Separate Account will receive
periodic reports relating to the Fund(s) in which he or she has an interest,
as well as any proxy materials and a form on which to give voting
instructions. Voting instructions will be solicited by written communication
at least 14 days before such meeting. The number of votes to which each
person may give direction will be determined as of the record date set by the
Fund.
The number of votes that you may cast during the Accumulation Period is
equal to the portion of the Contract Value 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.
Modification of the Contract
The Company may modify the Contract when it deems an amendment
appropriate, by giving written notice to you 30 days before the effective
date of the change. The most likely reason for a change to the Contract would
be to ensure compliance with applicable law. Certain changes will require the
approval of appropriate state or federal regulatory authorities.
Involuntary Terminations
Subject to state regulatory approval, following the completion of two
Contract Years in which no Purchase Payments have been made, the Company
reserves the right to pay the full Contract Value to the Contract Holder if
the Contract Value is less than $1,500, provided the Company gives the
Contract Holder 90 days written notice. Such Contract Value paid may not be
reinstated. The full Contract Value payable to the Contract Holder will not
be reduced by any deferred sales charge, and amounts withdrawn from GIA, if
applicable, will not receive a reduced rate of interest. Amounts withdrawn
from GIA will receive a guaranteed effective annual yield to the date of
Contract termination as if the amounts had remained in GIA until the end of a
Guaranteed Term. (See Appendix I.)
Amounts surrendered from GAA will receive the greater of:
(a) The aggregate MVA amount from all Guaranteed Terms prior to the end of
those terms; or
(b) The applicable portion of the Contract Value in GAA.
This provision does not apply for any Contract that has elected an Annuity
Option.
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.
-----------------------------------------------------------------------------
13
<PAGE>
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
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of the Company
-----------------------------------------------------------------------------
14
<PAGE>
APPENDIX I
GUARANTEED INTEREST ACCOUNT
(Available in all states except Washington and New York)
=============================================================================
The Guaranteed Interest Account ("GIA") is a Credited Interest Option
available during the Accumulation Period. Amounts allocated to Short-Term
Classifications of GIA are held in the Company's general account that
supports insurance and annuity obligations. Amounts allocated to Long-Term
Classifications of GIA are held in a noninsulated, nonunitized separate
account. Interests in GIA have not been registered with the SEC in reliance
on exemptions under the Securities Act of 1933, as amended. Disclosure in
this Prospectus regarding GIA may, however, be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of such statements. Disclosure in this Appendix regarding
the Guaranteed Interest Account has not been reviewed by the SEC.
GIA is a Credited Interest Option under which we guarantee stipulated rates
of interest for stated periods of time. Interest is credited daily at a rate
that will provide the guaranteed effective yield by the end of the stated
period.
During a stated period of time, amounts may be applied to any or all
available Guaranteed Terms within the Short-Term and Long-Term
Classifications. The Short-Term Classification consists of all Guaranteed
Terms of 3 years or less and the Long-Term Classification consists of all
Guaranteed Terms of 10 years or less, but greater than 3 years.
As long as amounts are not withdrawn before the end of a stated term, we
will pay the guaranteed rate of interest. If amounts are withdrawn or
transferred before the end of a stated period of time, except if pursuant to
the Company's termination of the Contract (see "Miscellaneous--Involuntary
Termination of the Contract,") we will pay a reduced rate of interest, but
never less than the minimum stated in the Contract.
As a Guaranteed Term matures, assets accumulating under GIA may be (a)
transferred to a new Guaranteed Term, (b) transferred to the other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge and/or tax liabilities.
Mortality and Expense Risk Charges
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited
interest rate.
Transfers
Transfers are permitted from Guaranteed Terms of one Classification to
available Guaranteed Terms of another Classification. We will apply a reduced
rate of interest to amounts transferred prior to the end of a Guaranteed
Term. Transfers of GIA values due to a maturity are not subject to a reduced
rate of interest.
By notifying us at our Home Office at least 30 days before Annuity
payments begin, you may elect to have amounts that have been accumulating
under GIA transferred to one or more of the funds currently available during
the Annuity Period, to provide variable Annuity payments. GIA cannot be used
as an investment option during the Annuity Period.
Reinvestment Privilege
Any amounts reinvested in GIA will be applied to the current deposit
period. Amounts are proportionately reinvested to the Classifications in the
same manner as they were allocated before the withdrawal.
-----------------------------------------------------------------------------
15
<PAGE>
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. These minimum interest rates cannot be changed by the Company;
however, the Company may credit a higher interest rate from time to time. The
Company's determination of interest rates reflects the investment income
earned on invested assets and the amortization of any capital gains and/or
losses realized on the sale of invested assets. Under the Fixed Account, the
Company assumes the risk of investment gain or loss by guaranteeing Contract
Values and promising a minimum interest rate and Annuity Payment.
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.
In addition, if allowed by state law, the Company may pay any Fixed Account
withdrawal value in equal payments, with interest, over a period not to
exceed 60 months, when:
(a) the amount held in the Fixed Account under this Contract exceeds $250,000
on the day prior to the current withdrawal; and
(b) the sum of the current Fixed Account withdrawal and the total of all
Fixed Account withdrawals from the Contract within the past 12 calendar
months exceeds 20% of the amount in the Fixed Account on the day prior to
the current withdrawal.
Interest, as used above, will not be more than two percentage points below
any rate determined prospectively by the Board of Directors for this class of
Contract. In no event will the interest rate be less than the minimum stated
in the Contract.
Amounts applied to the Fixed Account will earn the interest rate in effect
when actually applied to the Fixed Account.
The Fixed Account will reflect a compound interest rate credited by us.
The interest rate quoted is an annual effective yield. We make no deductions
from the credited interest rate for mortality and expense risks; these risks
are considered in determining the credited rate.
Transfers Among Investment Options
Transfers from the Fixed Account to any other available investment
options(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.
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.
Additionally, any remaining balance in the Fixed Account under the Contract
may be transferred by you in its entirety to any other investment option(s)
if:
(a) the Current Value in the Fixed Account is $2,000 or less; or
-----------------------------------------------------------------------------
16
<PAGE>
(b) the maximum percentage allowed was transferred from the Fixed Account
in each of the four consecutive calendar years and no additional Net
Purchase Payment(s) have been allocated to the Fixed Account during
that same time period.
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.
-----------------------------------------------------------------------------
17
<PAGE>
APPENDIX III
GUARANTEED ACCUMULATION ACCOUNT
(Offered in New York only)
=============================================================================
The Guaranteed Accumulation Account ("GAA") is a Credited Interest Option
available during the Accumulation Period under the Contracts discussed in
this Prospectus. Amounts allocated to Long-Term Classifications of GAA are
held in a noninsulated, nonunitized separate account. Amounts allocated to
Short-Term Classifications of GAA are held in the Company's general account.
This Appendix is a summary of GAA and is not intended to replace the GAA
prospectus. You should read the accompanying GAA prospectus carefully before
investing.
GAA is a Credited Interest Option in which we guarantee stipulated rates of
interest for stated periods of time on amounts directed to GAA. The interest
rate stipulated is an annual effective yield; that is, it reflects a full
year's interest. Interest is credited daily at a rate that will provide the
guaranteed annual effective yield for one year. This option guarantees the
minimum interest rate specified in the Contract.
During a specified period of time (the "deposit period"), amounts may be
applied to any or all available Guaranteed Terms within the Short-Term and
Long-Term classifications. Short-Term GAA has Guaranteed Terms from one to
three years, and Long-Term GAA has Guaranteed Terms from three to ten years.
Purchase Payments must remain in GAA for the full Guaranteed Term to
receive the quoted interest rates. Withdrawals or transfers from a Guaranteed
Term before the end of that Guaranteed Term may be subject to a market value
adjustment ("MVA"). An MVA reflects the change in the value of the
investments due to changes in interest rates since the date of deposit. When
interest rates increase after the date of deposit, the value of the
investment decreases and the MVA is negative. Conversely, when interest rates
decrease after the date of deposit, the value of the investment increases,
and the MVA is positive. It is possible that a negative MVA could result in
your receipt of an amount which is less than the amount paid into GAA.
As a Guaranteed Term matures, assets accumulating under GAA may be (a)
transferred to a new Guaranteed Term, (b) transferred to other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge and/or federal tax penalties or mandatory income tax
withholding.
By notifying us at least 30 days prior to the Annuity Date, you may elect a
variable annuity and have amounts that have been accumulating under GAA
transferred to one or more of the Subaccounts available during the Annuity
Period. GAA cannot be used as an investment option during the Annuity Period.
Mortality and Expense Risk Charges
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited rate.
Transfers
Transfers are permitted among Guaranteed Terms. However, amounts applied
to GAA may not be transferred to another Guaranteed Term of GAA, or to any
other Subaccount or Credited Interest Option available under the Contract,
during the deposit period or the 90 days after the close of the deposit
period. We will apply an MVA to transfers made before the end of a Guaranteed
Term, unless such transfer is due to the maturity of the Guaranteed Term.
Reinvestment Privilege
If amounts are withdrawn from GAA and reinvested, they will be applied to
the current deposit period. Amounts are proportionately reinvested in the
same manner as they were allocated before the withdrawal. Any negative MVA
amount applied to a withdrawal is not included in the reinvestment.
-----------------------------------------------------------------------------
18
<PAGE>
Please attach to your Application
I hereby acknowledge receipt of an Account C Individual Variable Annuity
Contract Prospectus dated May 1, 1997 for Individual Retirement Annuities and
Simplified Employee Pension Plans, as well as all current prospectuses
pertaining to the variable investment options available under the Contracts.
Please send an Account C Statement of Additional Information (Form No.
SAI.75992-97) dated May 1, 1997.
-----------------------------------------------------------------------------
CONTRACT HOLDER'S SIGNATURE
-----------------------------------------------------------------------------
DATE
PROS.75992-97
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------
Statement of Additional Information dated May 1, 1997
Variable Annuity Contracts for Individual Retirement Annuities under
Section 408(b) and Simplified Employee Pension Plans under Section 408(k)
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account C (the
"Separate Account") dated May 1, 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
1-800-531-4547
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the prospectus.
TABLE OF CONTENTS
Page
General Information and History............................................ 2
Variable Annuity Account C................................................. 2
Offering and Purchase of Contracts......................................... 3
Performance Data........................................................... 3
General............................................................... 3
Average Annual Total Return Quotations................................ 4
Annuity Payments........................................................... 7
Sales Material and Advertising............................................. 8
Independent Auditors....................................................... 8
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 Separate Account are held by the Company. The Separate Account has
no custodian. However, the Funds in whose shares the assets of the Separate
Account are invested each have custodians, as discussed in their respective
prospectuses.
VARIABLE ANNUITY ACCOUNT C
Variable Annuity Account C (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of each of the Subaccounts of the Separate
Account will be invested exclusively in shares of the Funds described in the
Prospectus. Purchase Payments made under the Contract may be allocated to one or
more of the Subaccounts. The Company may make additions to, 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 or under all Contracts.
2
<PAGE>
The Funds currently available under the Contract are as follows:
<TABLE>
<S> <C>
Aetna Variable Fund American Century VP Capital Appreciation
Aetna Income Shares (formerly TCI Growth)
Aetna Variable Encore Fund Fidelity VIP II Contrafund Portfolio
Aetna Investment Advisers Fund, Inc. Fidelity VIP Equity-Income Portfolio
Aetna Ascent Variable Portfolio Fidelity VIP Growth Portfolio
Aetna Crossroads Variable Portfolio Fidelity VIP Overseas Portfolio
Aetna Legacy Variable Portfolio Janus Aspen Aggressive Growth Portfolio
Aetna Variable Capital Appreciation Portfolio Janus Aspen Balanced Portfolio
Aetna Variable Growth Portfolio Janus Aspen Growth Portfolio
Aetna Variable Index Plus Portfolio Janus Aspen Short-Term Bond Portfolio
Aetna Variable Small Company Portfolio Janus Aspen Worldwide Growth Portfolio
Alger American Growth Portfolio Scudder International Portfolio Class A Shares
Alger American Small Cap Portfolio
</TABLE>
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the Funds.
OFFERING AND PURCHASE OF CONTRACTS
The Company is both the depositor and the principal underwriter for the
securities sold by the prospectus. The Company offers the Contracts through life
insurance agents licensed to sell variable annuities who are registered
representatives of the Company or of other registered broker-dealers who have
sales agreements with the Company. The offering of the Contracts is continuous.
A description of the manner in which Contracts are purchased may be found in the
prospectus under the section titled "Purchase" and "Contract Valuation."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account available under the
Contracts. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as "non-standardized returns,"
both of which are described below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the various Subaccounts under the Contract, and then
related to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The 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 charges).
3
<PAGE>
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 Funds will fluctuate over time, and any presentation
of the Subaccounts' total return quotations for any prior period should not be
considered as a representation of how the Subaccounts will perform in any future
period. Additionally, the Contract Value upon redemption may be more or less
than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables below reflect the average annual standardized and non-standardized
total return quotation figures for the periods ended December 31, 1996 for the
Subaccounts under the Contract. Tables A and B reflect the average annual
standardized and non-standardized total return quotation figures for the periods
ended December 31, 1996 for the Subaccounts under a Single Payment Account with
a $0 maintenance fee and an Installment Payment Account with a $20 annual
maintenance fee, respectively. 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>
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 09/12/96
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 01/09/89
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap Portfolio 09/21/88
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital
Appreciation 11/20/87
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP ll Contrafund Portfolio 01/03/95
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 10/09/86
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 10/09/86
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 01/28/87
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth 09/13/93
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 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
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio
Class A Shares 05/1/87
- ------------------------------------------------------------------------------------------------------------------------------------
</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>
TABLE B
-------------------------------------------------------------------------------------------
Installment Payment Account: Fund
($20 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 09/12/96
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 01/09/89
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap Portfolio 09/21/88
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital
Appreciation 11/20/87
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP ll Contrafund Portfolio 01/03/95
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 10/09/86
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 10/09/86
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 01/28/87
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth 09/13/93
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 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
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio
Class A Shares 05/1/87
- ------------------------------------------------------------------------------------------------------------------------------------
</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>
ANNUITY PAYMENTS
When Annuity payments are to begin, the value of the Contract is determined
using Accumulation Unit values as of the tenth Valuation Date before the first
Annuity payment is due. Such value (less any applicable premium tax) is applied
to provide an Annuity in accordance with the Annuity and investment options
elected.
The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first Annuity payment for each $1,000 of value applied.
Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a
higher first payment, but Annuity payments will increase thereafter only to the
extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.
When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first Annuity payment based on a particular investment
option, and (b) is the then current Annuity Unit value for that investment
option. As noted, Annuity Unit values fluctuate from one Valuation Date to the
next; such fluctuations reflect changes in the net investment factor for the
appropriate Subaccount(s) (with a ten Valuation Date lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
EXAMPLE:
Assume that, at the date Annuity payments are to commence, there are 3,000
Accumulation Units credited under a particular Contract and that the value of an
Accumulation Unit for the tenth Valuation Date prior to retirement was
$13.650000. This produces a total value of $40,950.
Assume also that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.
Assume then that the value of an Annuity Unit for the Valuation Date on which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.
If the net investment factor with respect to the appropriate Subaccount is
1.0015000 as of the tenth Valuation Date preceding the due date of the second
monthly payment, multiplying this factor by .9999058* (to neutralize the assumed
net investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for the prior Valuation Date (assume such value to be
$13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation
Date on which the second payment is due.
7
<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. 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.
8
<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.75992-97 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 (I-CDA-HD)(3)
(4.2) Form of Variable Annuity Contract (GIH-CDA-HB) and
(IMT-CDA-HO)(4)
(4.3) Form of Variable Annuity Contract (IST-CDA-HO)
(4.4) Form of Variable Annuity Contract (I-CDA-HD(XC))
(4.5) Form of Endorsement (EIP-SDOTHD-97) to Contract I-CDA-HD
(4.6) Form of Endorsement (EIP-SDOTHD-97(NY)) to Contract
I-CDA-HD(XC)
(4.7) Form of Endorsement (EIP-SDOTPM-97(NY)) to Contracts
IMT-CDA-HO and IST-CDA-HO
(4.8) Form of Endorsement (EIP-SDOTPM-97) to Contracts IMT-CDA-HO
and IST-CDA-HO
<PAGE>
(5) Form of Variable Annuity Contract Application (710.00.16H)(3)
(6.1) Certification of Incorporation and By-Laws of Aetna Life
Insurance and Annuity Company(5)
(6.2) Amendment of Certificate of Incorporation of Aetna Life
Insurance and Annuity Company(3)
(7) Not applicable
(8.1) Fund Participation Agreement (Amended and Restated) between
Aetna Life Insurance and Annuity Company, Alger American Fund
and Fred Alger Management, Inc. dated March 31, 1995(2)
(8.2) 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(3)
(8.3) 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(3)
(8.4) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations
Company dated as of November 1, 1995(6)
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994
and amended March 1, 1996(2)
(8.6) 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)
(8.7) 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(6)
(8.8) 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(7)
(14) Not applicable
(15.1) Powers of Attorney(3)
(15.2) Authorization for Signatures(2)
<PAGE>
(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 electronically on
February 11, 1997.
4. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75980), as filed electronically on
February 12, 1997.
5. 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.
6. 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.
7. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-75964) filed on April 28, 1995.
<PAGE>
Item 25. Directors and Officers of the Depositor
- -----------------------------------------------------
<TABLE>
<CAPTION>
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
<S> <C>
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
</TABLE>
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
- --------------------------------------------------------------------
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.
(c) Compensation as of December 31, 1996:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation on
Principal Underwriter Discounts and Redemption or Brokerage
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;
<PAGE>
(b) to include as part of any application to purchase a contract offered by
a prospectus which is part of this registration statement on Form N-4,
a space that an applicant can check to request a Statement of
Additional Information; and
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
(d) 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. 7 to its
Registration Statement on Form N-4 (File No. 33-75992) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut, on the 13th 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. 7 to the Registration Statement on Form N-4 (File No. 33-75992) has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Daniel P. Kearney* Director and President )
- ------------------------------------ (principal executive officer) )
Daniel P. Kearney
)
Timothy A. Holt* Director, Senior Vice President and ) February
- ----------------------------------- Chief Financial Officer ) 13, 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 )
</TABLE>
By: /s/ Julie E. Rockmore
------------------------------------------------------------
*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 (I-CDA-HD) *
99-B.4.2 Form of Variable Annuity Contract (GIH-CDA-HB) and (IMT-CDA-HO) *
99-B.4.3 Form of Variable Annuity Contract (IST-CDA-HO)
----
99-B.4.4 Form of Variable Annuity Contract (I-CDA-HD(XC))
----
99-B.4.5 Form of Endorsement (EIP-SDOTHD-97) to Contract
IA-CDA-HD
----
99-B.4.6 Form of Endorsement (EIP-SDOTHD-97(NY)) to Contract
I-CDA-HD(XC)
----
99-B.4.7 Form of Endorsement (EIP-SDOTPM-97(NY)) to Contracts
IMT-CDA-HO and IST-CDA-HO
----
99-B.4.8 Form of Endorsement (EIP-SDOTPM-97) to Contracts
IMT-CDA-HO and IST-CDA-HO
----
99-B.5 Form of Variable Annuity Contract Application (710.00.16H) *
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
*Incorporated by reference
**To be filed by amendment
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.8.2 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.8.3 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.8.4 Service Agreement between Aetna Life Insurance and Annuity Company and *
Fidelity Investments Institutional Operations Company dated as of November
1, 1995
99-B.8.5 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.8.6 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.8.7 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.8.8 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 **
*Incorporated by reference
**To be filed by amendment
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- ----
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 the benefits 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, the following pages, and the application, make up the entire
Contract.
Signed at the Hartford, Connecticut on the Date of Issue.
/s/ Stephen B. Middlebrook /s/ William O. Bailey
Secretary President
INDIVIDUAL SINGLE DEPOSIT CONTRACT
VARIABLE OR FIXED ANNUITY OR COMBINATION
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.
IST-CDA-HO 39176
<PAGE>
SPECIFICATIONS
Annuitant Contract No.
Date of Issue
Deduction from Deposit - The amount of the Net Deposit applied will be the
deposit 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.
IST-CDA-HO 2
<PAGE>
COVER SHEET
This Contract is a legal contract between 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. Annuity..................................................................5
2. Fixed Annuity............................................................5
3. Variable Annuity.........................................................5
4. General Account..........................................................5
5. Separate Accounts........................................................5
6. Fund(s)..................................................................5
7. Valuation Period.........................................................5
GENERAL PROVISIONS
1. Contract.................................................................6
2. Incontestability.........................................................6
3. Ownership; Claims of Creditors...........................................6
4. Beneficiary..............................................................6
5. Misstatements and Adjustments............................................6
6. State Laws...............................................................6
7. Non-Participating Contract...............................................7
DEPOSIT, RESERVE, AND SURRENDER PROVISIONS
1. Net Deposit(s)...........................................................7
2. Credit of Net Deposit(s).................................................7
3. Guaranteed Interest Rate - General Account...............................7
4. Record Units - Separate Account..........................................7
5. Investment Increment Factors - Separate Account..........................8
6. Record Unit Value - Separate Account.....................................8
7. Reserve..................................................................9
8. Transfer of Reserve......................................................9
9. Notice to the Owner......................................................9
10. Sum Payable at Death (Before Annuity Payments Start).....................9
11. Surrender Value.........................................................10
12. Table of Minimum Values - General Account...............................10
IST-CDA-HO 3
<PAGE>
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. Special Terms Under Annuity Options.....................................24
6. Other Terms of Annuity Options..........................................24
7. Death of Annuitant/Beneficiary..........................................24
IST-CDA-HO 4
<PAGE>
GENERAL DEFINITIONS
1. 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.
2. FIXED ANNUITY - An Annuity of a fixed dollar amount paid from the General
Account.
3. VARIABLE ANNUITY - An Annuity of a varying dollar amount paid from the
Separate Account.
4. 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.
5. 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).
6. 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.
7. VALUATION PERIOD - The period of time from the end of one business day to
the end of the next business day.
IST-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.
2. Incontestability
Aetna cannot cancel this Contract because of any error of fact on the
application.
3. Ownership; Claims of Creditors
The Owner shall be as stated on the application, or as later changed by the
Owner. During the lifetime of the Annuitant, all of the benefits and rights
granted by this Contract, or allowed by Aetna, belong to the Owner.
The Owner may be changed only to the Annuitant on a non-transferrable
basis. This Contract may not be:
(a) subject to the claims of any creditors; and
(b) sold, assigned, or pledged to other than Aetna.
4. Beneficiary
The beneficiary shall be as stated on the application, or as later changed
by the Owner. If no beneficiary is living at the death of the Annuitant,
payment of any amount due will be made to the Owner or to the estate of the
Owner.
5. 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.
6. 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.
IST-CDA-HO 6
<PAGE>
7. 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 single deposit minus a charge to pay premium taxes,
if any. As a rule, Aetna will take this charge out of the 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. Credit of Net Deposit(s)
On the basis of information supplied by the Owner, Aetna will credit the
Net Deposit in either:
(a) the General Account;
(b) the Separate Account where it is invested in Fund(s) as directed by the
Owner; or
(c) a mix of (a) and (b).
3. Guaranteed Interest Rate - General Account
On a Net Deposit 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 divided by the Record Unit Value (see below) for the Valuation
Period when the Net Deposit is received.
IST-CDA-HO 7
<PAGE>
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 of 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.
IST-CDA-HO 8
<PAGE>
7. Reserve
The Reserve is equal to:
(a) the Net Deposit credited to the General Account (if any); plus
(b) General Account interest added by Aetna; plus
(c) the value of the Separate Account Record Units (if any); and minus
(d) any amounts previously surrendered.
8. Transfer of Reserve
The Owner may transfer any portion of the Reserve from any Fund to any
other Fund or to the General Account. The Reserve cannot be transferred
from the General Account to any of the Funds. A transfer of the Reserve
cannot be made within 90 days of a previous transfer.
9. 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.
10. Sum Payable at Death (Before Annuity Payments Start)
Aetna will pay to the beneficiary the 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).
IST-CDA-HO 9
<PAGE>
11. Surrender Value
The owner, before Annuity payments start, may choose to surrender all or a
portion of the Reserve. The amount paid by Aetna on any surrender will be
the Reserve surrendered less a percentage charge. The charge will vary
according to the period of time between the Date of Issue and the date of
surrender, as follows:
If period of time is Charge
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 None
In no event, however, will the charge on a total surrender exceed 9% of the
actual deposit made to that Account.
Under certain emergency conditions, Aetna has the right to defer payment of
any surrender value as provided by federal or state law.
12. Table of Minimum Values - General Account
The Table below shows minimum (Fixed) General Account values at the end of
contract years. These values assume:
(a) the deposit to the General Account was made on the Date of Issue;
(b) there have been no partial surrenders; and
(c) interest has been added at the guaranteed interest rate (see Guaranteed
Interest Rate).
If interest is added at a higher rate at any time, actual values will be
more than those shown below.
IST-CDA-HO 10
<PAGE>
TABLE OF MINIMUM (FIXED) GENERAL ACCOUNT VALUES
PER $1,000 OF NET DEPOSIT TO THE GENERAL ACCOUNT
<TABLE>
<CAPTION>
Minimum Minimum
End of Minimum Surrender End of Minimum Surrender
Year Reserve Value Year Reserve Value
<S> <C> <C> <C> <C> <C>
1 $ 1,040 $ 988 16 $ 1,872 $ 1,872
2 1,082 1,028 17 1,947 1,947
3 1,125 1,069 18 2,025 2,025
4 1,170 1,111 19 2,106 2,106
5 1,217 1,156 20 2,191 2,191
6 1,265 1,215 25 2,665 2,665
7 1,316 1,276
8 1,369 1,341 30 3,243 3,243
9 1,423 1,409
10 1,480 1,480 35 3,946 3,946
11 1,539 1,539 40 4,801 4,801
12 1,601 1,601
13 1,665 1,665 45 5,841 5,841
14 1,731 1,731
15 1,800 1,800 50 7,106 7,106
</TABLE>
IST-CDA-HO 11
<PAGE>
ANNUITY PROVISIONS
1. Choices to be Made
The Owner may tell Aetna to pay the Reserve (minus any charge 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 any 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.
IST-CDA-HO 12
<PAGE>
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 Annuitant 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 forego 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.
IST-CDA-HO 13
<PAGE>
Where there is a right under Federal Securities Law to forego 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).
IST-CDA-HO 14
<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 of Amount of Years of Amount of Years of Amount of
Payments Payments Payments Payments Payments Payments
- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
3 $29.19 13 $7.94 22 $5.39
4 22.27 14 7.49 23 5.24
5 18.12 15 7.10 24 5.09
6 15.35 16 6.76 25 4.96
7 13.38 17 6.47 26 4.84
8 11.90 18 6.20 27 4.73
9 10.75 19 5.97 28 4.63
10 9.83 20 5.75 29 4.53
11 9.09 21 5.56 30 4.45
12 8.46
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
PAYMENTS FOR A STATED PERIOD
<TABLE>
<CAPTION>
Years of Amount of Years of Amount of Years of Amount of
Payments Payments Payments Payments Payments Payments
- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
3 $29.80 13 $8.64 22 $6.17
4 22.89 14 8.20 23 6.02
5 18.74 15 7.82 24 5.88
6 15.99 16 7.49 25 5.76
7 14.02 17 7.20 26 5.65
8 12.56 18 6.94 27 5.54
9 11.42 19 6.71 28 5.45
10 10.51 20 6.51 29 5.36
11 9.77 21 6.33 30 5.28
12 9.16
</TABLE>
IST-CDA-HO 15
<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.
IST-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%
<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.
IST-CDA-HO 17
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for 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.
IST-CDA-HO 18
<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) 662/3% 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.
IST-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
NO MINIMUM PERIOD
<TABLE>
<CAPTION>
Age of
Second Annuitant Age of 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
Second Annuitant Age of 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 6.38 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.
IST-CDA-HO 20
<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
Second Annuitant Age of 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
Second Annuitant Age of 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.
IST-CDA-HO 21
<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
Second Annuitant Age of 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
Second Annuitant Age of 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.
IST-CDA-HO 22
<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
Second Annuitant Age of 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
Second Annuitant Age of 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.
IST-CDA-HO 23
<PAGE>
5. Special Terms Under Annuity Options5. Special Terms Under Annuity Options
(a) when payments start, the age of the Annuitant plus the number of years
for which payments are guaranteed must not exceed 95.
(b) the present value of the payments to the Annuitant when payments start
shall be more than 50% of the present value of the payments to be made
to all payees; this restriction does not apply if Option 5 is chosen
and the second Annuitant is the spouse of the Annuitant.
6. 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.
7. 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 estate of the Annuitant. 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.
IST-CDA-HO 24
<PAGE>
Aetna Life Insurance and Annuity Company
Home Office: 151 FARMINGTON AVE.
HARTFORD, CONNECTICUT 06156
(203) 273-0123
GROUP DEPOSIT ADMINISTRATION CONTRACT
ACTIVE LIFE FUND IN SEPARATE ACCOUNT
AND GENERAL ACCOUNT
ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE
NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
IST-CDA-HO 25
<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 Reserves held in the General Account;
(2) without deduction of any charge;
(3) to any of the Fund(s);
(4) allowed once during each calendar year;
(5) prior to the election of an Annuity Option; and
(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.
Endorsed and made a part of this Contract on the later of September 1, 1983 or
the Date of Issue of this Contract.
/s/ William O. Bailey
President
EGAWI-HC
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is endorsed to allow for the election of a loan subject to the
following conditions:
A. Add to the DEPOSIT, RESERVE, AND SURRENDER PROVISIONS the following
provision:
13. Loan Value: The Owner, before an annuity option is elected, may borrow from
the Reserve according to the terms specified below:
(a) Requesting a Loan: The request must be in writing in a form acceptable
to Aetna and must assign to Aetna that portion of the Reserve necessary
to cover the loan amount plus interest. A loan may not be requested
within 12 months of any prior loan request.
(b) Loan Amount: The amount of the loan requested must be greater than
$5,000 and, when added to the total of any prior loans outstanding, may
not exceed the Reserve remaining in the Contract. The total amount of
any outstanding loan(s) may not exceed $50,000. Loans can only be made
from those amounts held in the Fund(s) and the Fixed Account. Loans may
not be made against amounts held in the Guaranteed Interest Account. If
the Owner intends to request a loan against any portion of the
Guaranteed Interest Account, that portion of the Guaranteed Interest
Account must be transferred to any Fund(s) or to the Fixed Account. The
transferred amount will be subject to the Withdrawals provision.
When a loan is made, an amount equal to the loan amount will be
withdrawn from the Reserve. Unless instructed otherwise, the amount
withdrawn will be allocated on a pro-rata basis among the Fixed Account
and the Fund(s).
(c) Loan Interest: Loan interest will accrue on a daily basis at an annual
rate to 3%. Loan interest must be paid in full at least annually. The
interest must be paid directly to Aetna by the Owner. If interest is
not paid when due, the entire loan amount plus interest will be treated
as a surrender under the terms of Contract.
E-LNIE-HG 1
<PAGE>
(d) Loan Repayment: The repayment of any portion of a loan will be
allocated on a current basis among the Fund(s) and Fixed Account in the
same proportion as when the loan was initially made. Repayment may be
made at any time during the 5 years from the date the loan was first
made. Any unpaid portion of a loan must be repaid at the end of the 5
years, upon election of an annuity option under this Contract, or upon
full surrender of the Contract; whichever occurs first. Aetna may
require all outstanding loans be paid if the Reserve falls below an
amount equal to 25% of the total loans outstanding. Any loan and
accrued interest not repaid will be treated as a surrender.
B. Add to the end of Section 7 - Reserve, the following:
and less any amount withdrawn for a loan, if applicable.
C. Add to Section 10 - Sum payable at Death (Before Annuity Payments Start),
the following:
The Reserve payable under the terms of this section will be reduced by the
amount of the accrued interest on any outstanding loan.
Endorsed and made a part of this Contract on the effective date of the Contract.
/s/ William O. Bailey
President
E-LNIE-HG 2
<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
EIECVT-HI
<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 this Contract which is paid when the
Reserve is $2,500 or less and no surrenders have been taken
within the prior 12 months. If there is more than one Contract
for the Annuitant, then this provision will only apply when
the total in all of the Annuitant's Contracts 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
EEISV-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 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. This option is know as TCI Growth. The use of this option is
described and limited as follows:
1. TCI Growth is one of three portfolios of TCI Portfolios, Inc., a
registered open-end management investment company.
2. All references to Fund(s) in this Contract shall include TCI Growth
unless specifically indicated otherwise.
3. Net Return Factor - Separate Account: The Net Return Factor for TCI
Growth is equal to 1.0000000 plus the Net Return Rate.
The Net Return Rate for TCI Growth notwithstanding any other provisions
of this Contract, is equal to:
a. The value of shares of TCI Growth held by the Separate Account at
the end of a Valuation Period; minus
b. The value of shares of TCI Growth 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 TCI Growth Record Units 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 profits; and
f. A daily administrative charge 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 TCI Growth is equal to the net assets of TCI
Growth divided by the number of outstanding shares of TCI Growth.
The daily administrative charge may be changed annually except for
amounts which have been used to purchase an Annuity. This charge will
not exceed 0.25% on an annual basis.
ETCI-IB 1
<PAGE>
Endorsed and made a part of this Contract on February 1, 1993 or the effective
date of the Contract, whichever is later.
/s/ G. G. Benanav
President
Aetna Life Insurance and Annuity Company
<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
Add the following conditions to the Contributions, Valuation and Discontinuance
Contributions or the Deposit, Reserve and Surrender Provision portion of the
Contract:
The following distribution options may be elected by the Owner.
(a) Estate Conservation Option (ECO): A distribution option under
which a portion of the Individual Account Reserve Value will
automatically be surrendered and distributed each year.
(1) An ECO payment will be determined in the following manner:
a. Payments will commence no earlier than the year in
which the Owner attains age 70 1/2, and will be
calculated on the full Reserve Value of the
Individual Account, except as provided in b.
b. If Aetna maintains separate records of the value of
the account as of December 31, 1986, (see below),
payments made on or after the year in which the Owner
attains age 75 will only be calculated on amounts
contributed after December 31, 1986, plus all
interest credited after that date. The method under
this rule is only used upon election of the Owner and
will no longer be effective if the Owner submits a
withdrawal request in addition to a scheduled ECO
payment from the Individual Account, at which time
ECO payments will then be determined under a.
Aetna will maintain separate records if the Owner has
not requested any withdrawals from his or her
Individual Account since December 31, 1986. If a
Owner attained age 70 1/2 prior to 1988 or is a Owner
in a governmental or church Tax Deferred Annuity
(TDA) plan, the Owner must be retired in order to
qualify under b.
(2) Amount of Distribution: Each year that ECO is in effect,
Aetna will calculate and distribute an amount equal to the
minimum required distribution under the Code. The annual
distribution will be determined by dividing the Individual
Account Reserve Value, including any current loan(s)
outstanding, as of December 31 of the year prior to the year
for which the payment is to be made, by a life expectancy
factor.
As elected by the Owner, the factor is either the single
life or joint life expectancy based on tables in Section
401(a)(9) of the Code or related
EITECSWE-IO 1
<PAGE>
regulations. If joint life expectancy is elected and the
Owner or spouse dies, payments will be calculated based on
the survivor's life expectancy.
These calculations may be changed as necessary to comply
with the Code minimum distribution rules. The joint life
expectancy factor can only be elected based on the joint
life expectancy of the Owner and his or her spouse, and such
spouse must be named as the beneficiary of any death
benefits under the Contract while ECO is in effect.
(3) Minimum Reserve Value: At its discretion, Aetna may require
a minimum initial Reserve Value for election of this option.
If after election of this option the Reserve Value is
insufficient to make a scheduled ECO payment, Aetna will
distribute the entire balance of the Individual Account.
(4) Date of Distribution: The Owner shall specify the initial
distribution date. The earliest date is the first day of the
calendar year in which the Owner attains age 70 1/2.
Subsequent distributions will be made annually on June 15 or
such other date Aetna may designate or allow.
(5) Elections and Revocation: ECO may be elected by the Owner by
submitting a completed and signed election form to Aetna's
Home Office. If the Contract Owner has notified Aetna that
the TDA Plan is subject to Title I of the Employee
Retirement Income Security Act of 1974 as amended, the Owner
must also submit the appropriate joint and survivor annuity
waiver and spousal consent form(s) to Aetna at its 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. 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 Reserve Value will
automatically be surrendered and distributed each year.
(1) Amount of Distribution: The Owner may elect one of the two
payment methods described below.
o Specified Amount: Payments of a designated dollar
amount which must be no greater than 10% of the
initial Reserve Value and shall
EITECSWE-IO 2
<PAGE>
remain constant unless a higher amount is required
under Code minimum distribution rules. Each year that
the Specified Amount is in effect, Aetna will
calculate the minimum required distribution under the
Code and distribute this amount if it is larger than
the amount elected by the Owner. The life expectancy
factor for this purpose will be the Owner's life
expectancy at the time of the election of this
option, and with each subsequent calendar year the
factor will be reduced by one. The minimum required
distribution will be determined by dividing the
Individual Account Reserve Value, including any
current loan(s) outstanding, as of December 31 of the
year prior to the year for which the payment is to be
made, by a life expectancy factor. At its discretion,
Aetna may require a minimum initial payment amount;
or
o Specified Period: Payments which are made over a
period of time which must be at least 10 years,
unless otherwise required by Code minimum
distribution rules. The maximum specified period will
be limited by the Code minimum distribution rules.
The annual amount paid each year is calculated by
dividing the Individual Account Reserve Value as of
December 31 of the prior year, including any
outstanding loan(s), by the number of payment years
remaining.
The life expectancy factor is either the single life or
joint life expectancy, as elected by the Owner, based on
tables in Section 401(a)(9) of the Code or related
regulations. If the joint life expectancy is elected, upon
the death of either the Owner or the spouse, the minimum
required distribution for the Specified Amount payment
method will continue to be calculated in the same manner as
described in (b)(1). Payments upon the Owner's death will
continue in the manner described above, unless the spouse
elects an alternate payment mode. Any mode elected must
provide payments to be made at least as rapidly as those
made prior to the Owner's death.
These calculations may be changed as necessary to comply
with the Code minimum distribution rules. The joint life
expectancy factor can only be elected based on the joint
life expectancy of the Owner and his or her spouse, and such
spouse must be named as the beneficiary of any death
benefits under the Contract while SWO is in effect.
(2) Minimum Initial Reserve Value: At its discretion, Aetna may
require a minimum initial Reserve Value for election of this
option. If after election of this option the Reserve Value
is insufficient to make a scheduled SWO payment, Aetna will
distribute the entire balance of the Individual Account.
EITECSWE-IO 3
<PAGE>
(3) Date of Distribution: The Owner shall specify the initial
distribution date. The earliest date is the first day of the
calendar year in which the Owner attains age 70 1/2.
SWO payments will be made annually. Subsequent distributions
will be made annually on June 15 or such other date Aetna
may designate or allow.
(5) Elections and Revocation: SWO may be elected by the Owner by
submitting a completed and signed election form to Aetna's
Home Office. If the Contract Owner has notified Aetna that
the TDA Plan is subject to Title I of the Employee
Retirement Income Security Act of 1974 as amended, the Owner
must also submit the appropriate joint and survivor annuity
waiver and spousal consent form(s) to Aetna at its 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 annually.
Endorsed and made a part of the Contract on October 15, 1990 or the effective
date of the Contract whichever is later.
/s/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EITECSWE-IO 4
Aetna Life Insurance and Annuity Company
Home Office: 151 FARMINGTON AVE.
HARTFORD, CONNECTICUT 06156
1-800-525-4225
Herein called Aetna
Agrees to pay the benefits stated in this Contract.
THE VARIABLE FEATURES OF THIS CONTRACT ARE DESCRIBED IN PARTS III AND IV.
RIGHT TO CANCEL
The Contract Holder may cancel this Contract within 10 days of receiving it, by
returning this Contract along with a written notice to Aetna at the above
address or to the agent from whom it was purchased. Within 7 days after it
receives the notice of cancellation and this Contract at its Home Office, Aetna
will return the entire consideration paid; plus any increase or minus any
decrease in the cash value of any funds allocated to the Separate Accounts.
This page, the following pages, and the application make up the entire Contract.
Signed at the Home Office on the Effective Date.
/s/ Susan E. Schechter /s/ Dan Kearney
Secretary President
INDIVIDUAL VARIABLE, FIXED, OR COMBINATION ANNUITY 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.
I-CDA-HD (XC) 39324
<PAGE>
SPECIFICATIONS
TYPE OF PLAN
ANNUITANT
CONTRACT HOLDER
CONTRACT NO.
EFFECTIVE DATE
THIS CONTRACT IS DELIVERED IN
AND IS SUBJECT TO THE LAWS OF THAT JURISDICTION
THIS CONTRACT MAY NOT BE SUITABLE IF ONLY ONE(1) LARGE PURCHASE PAYMENT IS MADE.
Guaranteed Interest Rate - There is a guaranteed interest rate for Purchase
Payment(s) held in the General Account. (See 3.02.)
Surrender Fee - There will be a charge deducted for early surrender. (See Part
V.)
Deductions from the Separate Account - There will be deductions for mortality
and expense risks and administrative fees. (See 3.05).
This Contract is a legal contract and constitutes the entire legal relationship
between Aetna and the Contract Holder.
READ THIS CONTRACT CAREFULLY. This Contract sets forth, in detail, all of the
rights and obligations of both you and Aetna. IT IS THEREFORE IMPORTANT THAT YOU
READ THIS CONTRACT CAREFULLY.
I-CDA-HD (XC) 2
<PAGE>
TABLE OF CONTENTS
I. GENERAL DEFINITIONS
Page
1.01. Annuitant............................................................5
1.02. Annuity..............................................................5
1.03. Fixed Account........................................................5
1.04. Fixed Annuity........................................................5
1.05. Fund(s)..............................................................5
1.06. General Account......................................................5
1.07. Purchase Payments....................................................5
1.08. Separate Accounts....................................................5
1.09. Valuation Period.....................................................5
1.10. Variable Annuity.....................................................5
II. GENERAL PROVISIONS
2.01. Change of Contract...................................................6
2.02. Change of Fund(s)....................................................6
2.03. Non-Participating Contract...........................................6
2.04. Payments.............................................................6
2.05. State Laws...........................................................6
2.06. Control of Contract..................................................6
2.07. Designation of Beneficiary...........................................7
2.08. Misstatements and Adjustments........................................7
2.09. Incontestability.....................................................7
2.10. Grace Period.........................................................7
III. PURCHASE PAYMENT, CURRENT VALUE AND SURRENDER PROVISIONS
3.01. Net Purchase Payment(s):.............................................8
3.02. Guaranteed Interest Rate - Fixed Account.............................8
3.03. Maintenance Fee......................................................8
3.04. Fund(s) Record Units - Separate Account..............................8
3.05. Net Return Factor(s) - Separate Account..............................8
3.06. Fund(s) Record Unit Value - Separate Account.........................9
3.07 Current Value........................................................9
3.08. Transfer of Current Value from the Funds.............................9
3.09. Transfer of Current Value from the Fixed Account.....................9
3.10. Notice to the Contract Holder........................................9
3.11 Sum Payable at Death (Before Annuity Payments Start):................9
3.12. Surrender Value.....................................................10
3.13. Payment of Surrender Value..........................................10
3.14. Reinstatement.......................................................10
3.15. Payment of Current Value............................................10
I-CDA-HD (XC) 3
<PAGE>
IV. ANNUITY PROVISIONS
4.01. Choices to be Made..................................................11
4.02. Terms of Annuity Options............................................11
4.03. Death of Annuitant/Beneficiary......................................12
4.04. Fund(s) Annuity Units - Separate Account............................12
4.05. Fund(s) Annuity Unit Value - Separate Account.......................12
4.06. Annuity Options.....................................................12
V. SPECIAL PROVISIONS
5.01 Deferred Compensation Plan..........................................21
5.02. Pension or Profit Sharing Plan......................................21
5.03. Individual Retirement Annuity Plan (IRA)............................22
5.04. Tax Deferred Annuity Plan...........................................24
5.05. Individual Annuity Plan.............................................25
VI. FEE SCHEDULE
6.01. Maintenance Fee.....................................................26
6.02. Surrender Fee.......................................................26
6.03. Table of Values - Fixed Account.....................................26
I-CDA-HD (XC) 4
<PAGE>
I. GENERAL DEFINITIONS
1.01. Annuitant - A person on whose life an Annuity has been effected under
this Contract.
1.02. Annuity - Payment of an income:
(a) for the life of one or two persons;
(b) for a stated period, or amount; or,
(c) for some mix of (a) and (b).
1.03. Fixed Account - An accumulation option with a guaranteed minimum
interest rate. Aetna may credit a higher rate which is not guaranteed.
1.04. Fixed Annuity - An Annuity with payments which do not vary in amount.
1.05. Fund(s) - The open-end registered management investment companies,
(mutual funds) made available by Aetna under this Contract.
1.06. General Account - The Account holding the assets of Aetna, other than
those assets held in the Separate Accounts.
1.07. Purchase Payments - Payments made to Aetna.
1.08. Separate Accounts - Accounts set up by Aetna under the Connecticut
Insurance Laws which purchase shares of the Fund(s).
1.09. Valuation Period (Period) - The period of time from the end of one
business day on the New York Stock Exchange to the end of the next
business day.
1.10. Variable Annuity - An Annuity with payments which vary with the net
investment results of a Separate Account.
I-CDA-HD (XC) 5
<PAGE>
II. GENERAL PROVISIONS
2.01. Change of Contract: Only an authorized officer of Aetna may change the
terms of this Contract. Aetna will notify the Contract Holder in
writing at least 30 days before the effective date of any change. Any
change will not affect the amount or terms of any Annuity which begins
before the change.
The following provisions of this Contract will not be changed:
(a) Net Purchase Payment(s);
(b) Guaranteed Interest Rate - Fixed Account;
(c) Net Return Factor(s) - Separate Account;
(d) Current Value;
(e) Surrender Value;
(f) Fund(s) Annuity Unit Value - Separate Account;
(g) Annuity Options;
(h) Fixed Annuity minimum interest rate;
(i) Maximum transfer, maintenance or surrender fees.
This Contract may also be changed as required by federal or state law.
2.02. Change of Fund(s): Aetna, or the Separate Account and the Fund(s), may:
(a) change the Fund(s) which may be invested in by the Separate
Account; and
(b) replace the shares of any Fund(s) held in the Separate Account
with shares of any other Fund(s).
Changes must be:
(1) approved by a majority vote of persons having an interest in
the Separate Account and the Fund(s); or
(2) deemed necessary by Aetna under the Investment Company Act of
1940; or
(3) deemed necessary by Aetna to accomplish the purpose of the
Separate Account.
Aetna will notify the Contract Holder of any change.
2.03. Non-Participating Contract: The Contract Holder, Annuitant, or
beneficiaries will not have a right to share in the earnings of Aetna.
2.04. Payments: Aetna will make Annuity payments as and when due. Aetna will
make other payments within 7 days of receipt at its Home Office of a
written claim for payment which is in good order, except as provided in
3.13.
2.05. State Laws: This Contract complies with the laws of the state in which
it is delivered. Any cash, death or Annuity payments are equal to or
greater than the minimum required by such laws. Annuity tables for
legal reserve valuation shall be as required by state law. Such tables
may be different from annuity tables used to determine Annuity
payments.
2.06. Control of Contract: See Part V.
I-CDA-HD (XC) 6
<PAGE>
2.07. Designation of Beneficiary: See Part V. The beneficiary may be changed
at any time.
2.08. Misstatements and Adjustments: If Aetna finds the age, or any other
relevant facts to be misstated, the correct facts will be used to
adjust payments.
2.09. Incontestability: Aetna cannot cancel this Contract because of any
error of fact on the application.
2.10. Grace Period This Contract will remain in effect even if Purchase
Payments are not continued.
I-CDA-HD (XC) 7
<PAGE>
III. PURCHASE PAYMENT, CURRENT VALUE AND SURRENDER PROVISIONS
3.01. Net Purchase Payment(s): The actual Purchase Payment less any premium
tax. As a rule, Aetna will deduct the premium tax when Annuity benefits
are purchased (see Part IV). If Aetna determines that it must pay a
premium tax when Purchase Payments are received or at any other time,
it will deduct the tax at that time.
The Net Purchase Payment(s) will be credited to:
(a) the Fixed Account;
(b) the Fund(s) in which the Separate Account invests.
Aetna must be told the percentage of the Net Purchase Payment(s) to be
applied to each investment above.
During any calendar year, Aetna may be told to change the investment
mix four times if more than one Purchase Payment is made. If additional
changes are allowed, each may be subject to a fee of up to $10.
3.02. Guaranteed Interest Rate - Fixed Account: On any Purchase Payment(s)
made to the Fixed Account, Aetna will add interest daily at any annual
rate no less than 4%. Aetna may add interest daily at any higher rate
determined by its Board of Directors.
3.03. Maintenance Fee: See Part V.
3.04. Fund(s) Record Units - Separate Account: The portion of the Net
Purchase Payment(s) applied to the Separate Account will determine the
number of Fund(s) Record Units. This number is equal to a Net Purchase
Payment divided by the Fund(s) Record Unit Value (see 3.06) for the
Valuation Period in which the Purchase Payment is received in good
order.
3.05. Net Return Factor(s) - Separate Account:
The Net Return Factors are used to compute all Separate Account values
and payments for any Fund.
The Net Return Factor for each Fund is equal to 1.0000000 plus the Net
Return Rate.
The Net Return Rate is equal to:
(a) The value of the shares of the Fund held by the Separate
Account at the end of a Valuation Period; minus
(b) the value of the shares of the Fund held by the Separate
Account at the start of the Valuation Period; plus or minus
(c) taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) the total value of the Fund Record Units and Fund Annuity Units
of the Separate Account (see 3.06 and 4.05) 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.
I-CDA-HD (XC) 8
<PAGE>
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%.
3.06. Fund(s) Record Unit Value - Separate Account: The Fund(s) Record Unit
Value is computed by multiplying the Net Return Factor for the current
Valuation Period by the Fund(s) Record Unit Value for the previous
Period. The dollar value of the Fund(s) Record Units, Separate Account
assets, and Variable Annuity payments may go up or down due to
investment gain or loss.
3 07. Current Value: The Current Value (of this Contract) is equal to:
(a) Any amounts in the Fixed Account, including Fixed Account
interest added by Aetna; plus
(b) The sum of any Separate Account Record Unit value(s); less
(c) Any Maintenance Fee(s) due.
Current Value does not include amounts used to purchase an Annuity.
3.08. Transfer of Current Value from the Funds: Before an annuity option is
elected, all or any portion of the Current Value may be transferred
from any Fund to any other Fund or to the Fixed Account.
Four transfers of Current Value can be made during a calendar year
period. If additional transfers are allowed, each may be subject to a
fee of up to $10.
3.09. Transfer of Current Value from the Fixed Account: 10% of the Current
Value held in the Fixed Account may be transferred to any Fund(s). Such
transfer will be:
(a) without charge;
(b) allowed once per calendar year;
(c) not allowed under an annuity option.
Aetna may, on a temporary basis, allow any larger percent to be
transferred.
The Current Value of the Fixed Account, as used above, is the value
when the request is received at the Home Office of Aetna.
3.10. Notice to the Contract Holder: Aetna will notify the Contract Holder
each year of:
(a) The value of any amounts held in:
(1) the Fixed Account; and
(2) the Fund(s) for the Separate Account; and
(b) the number of any Fund(s) Record Units; and
(c) the Fund(s) Record Unit Value(s); and
(d) the Surrender Value of the amounts.
Such number or values will be as of a date no more than 60 days before
the date of the notice.
3.11. Sum Payable at Death (Before Annuity Payments Start): See Part V.
I-CDA-HD (XC) 9
<PAGE>
3.12. Surrender Value: See Part V.
3.13. Payment of Surrender Value: Under certain emergency conditions, Aetna
may defer payment:
(a) for a period of up to 6 months (unless not allowed by state
law); and
(b) as provided by federal law.
3.14. Reinstatement: All or a portion of the proceeds of a full surrender of
this Contract may be reinvested within 30 days after the surrender if
allowed by law. Any Maintenance Fee and Surrender Fee charged at the
time of surrender on the amount being reinvested will be included in
the reinstatement. Amounts will be reinstated among the Fixed Account
and Separate Account in the same proportion as they were at the time of
surrender. The number of Record Units reinstated will be based on the
Record Unit Value(s) next computed after receipt at Aetna's Home Office
of the reinstatement request and the amount to be reinvested.
Any Maintenance Fee which falls due after the surrender and before the
reinstatement will be deducted from the amount reinstated.
Reinstatement is permitted only once.
3.15. Payment of Current Value: Aetna may pay in a lump sum any Current Value
if Purchase Payment(s) have not been received for three full years and
the Current Value is less than $2,000. Such Current Value paid may not
be reinstated.
I-CDA-HD (XC) 10
<PAGE>
IV. ANNUITY PROVISIONS
4.01. Choices to be Made: Aetna will pay the Current Value (minus any premium
tax) as a premium for an annuity under Option 4 with no guaranteed
period. Any other Annuity Option may be elected by telling Aetna to pay
all or any portion of the Current Value (minus any premium tax) as a
premium for an Annuity under Option 2, 3, 4 or 5 (see 4.06). The first
Annuity payment must generally be made no later than the first day of
the month following the Annuitant's 75th birthday. If this Contract is
issued under an IRA (see Specifications page), the first Annuity
payment must be made not later than December 31 of the year the
Annuitant attains age 70 1/2. Aetna may be told to make the first
Annuity payment during any prior month.
When an Option is chosen, Aetna must also be told whether payments are
to be made other than monthly and (except for Option 2) to pay:
(a) a Fixed Annuity using the General Account; or
(b) a Variable Annuity using any of the Fund(s) made available by
Aetna for Annuity purposes; or
(c) a mix of (a) and (b).
If a Fixed Annuity is chosen, Aetna will add interest daily at an
annual rate no less than 3.5%. Aetna may add interest daily at any
higher rate.
If a Variable Annuity is chosen, an Assumed Annual Net Return Rate of
5% may be chosen. If not chosen, Aetna will use an Assumed Annual Net
Return Rate of 3.5%.
4.02. Terms of Annuity Options:
(a) When payments start, the age of the Annuitant plus the number
of years for which payments are guaranteed must not exceed 95.
(b) The present value of the expected payments to the Annuitant
when payments start shall be more than 50% of the present value
of the total expected payments to be made; this restriction
does not apply if Option 5 is chosen and the second Annuitant
is the spouse of the Annuitant.
(c) No choice of any Annuity Option may be made if the first
payment would be less than $20 or if the total payments in a
year would be less than $100.
(d) If a Fixed Annuity under Option 3, 4 or 5 is chosen and a
larger payment would result from applying the surrender value
to a single premium immediate annuity currently offered by
Aetna to the same class of annuitants, Aetna will make the
larger payment.
(e) Age, where used in the following tables, means age on the
birthday closest to the date of the first payment.
(f) Assumed Annual Net Return Rate is the interest rate used to
determine the amount of the first annuity payment under a
Variable Annuity. The Separate Account must earn this rate plus
enough to cover the mortality and expense risk and
administrative fee charges if future Variable Annuity payments
are to remain level.
I-CDA-HD (XC) 11
<PAGE>
4.03. Death of Annuitant/Beneficiary: When an Annuitant dies any remaining
payments will be continued to the beneficiary. If the beneficiary is
not a person or persons, the present value of any remaining payments
will be paid in one sum. If no beneficiary exists, the present value of
any remaining payments will be paid in one sum to the estate of the
Annuitant.
If a beneficiary dies while under Option 1; or while receiving Annuity
payments, the present value of any remaining payments will be paid in
one sum to the estate of the beneficiary. The interest rate used to
determine the first payment will be used to calculate the present
value.
4.04. Fund(s) Annuity Units - Separate Account: The number of Fund(s) Annuity
Units is based on the amount of the first Variable Annuity payment
which is equal to:
(a) the portion of the Current Value (minus any premium tax)
applied to pay a Variable Annuity; divided by
(b) 1,000; times
(c) the payment rate for the Option chosen.
Such amount, or portion, of the variable payment will be divided by the
Fund(s) Annuity Unit Value (see 4.05) on the tenth Valuation Period
before the due date of the first payment to determine the number of
Fund(s) Annuity Units. The number of Fund(s) Annuity Units remains
fixed. Each future payment is equal to this number times the Fund(s)
Annuity Unit Value on the tenth Valuation Period prior to the due date
of the payment.
4.05. 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 previous Period; times
(b) the Net Return Factor(s) (see 3.05) for the Period; times
(c) a factor to reflect the Assumed Annual Net Return Rate.
The factor for 3.5% per year is .9999058; for 5% per year it is
.9998663.
The dollar value of the Fund(s) Annuity Unit Values and payments may go
up or down due to investment gain or loss.
If Variable Annuity payments are not to decrease, Aetna must earn a
gross return on the assets of the Separate Account of:
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 commence, if an Assumed Annual Net Return Rate
of 5% is chosen.
Payments shall not be changed due to changes in the mortality or
expense results or administrative charges.
4.06. Annuity Options:
Option 1 - Payment of Interest on Sum Left with Aetna. This Option may
be used only by the beneficiary when the Annuitant dies before Aetna
has started paying an Annuity. A portion or all of the sum paid upon
death may be held under this Option and will be held in the General
I-CDA-HD (XC) 12
<PAGE>
Account of Aetna at interest (see 4.01). The beneficiary may later tell
Aetna to:
(a) pay a portion, or all, of the sum held by Aetna; or
(b) apply a portion, or all, of the sum held by Aetna to any
Annuity Option below.
If this Contract is issued under an IRA and the beneficiary elects that
the full sum paid upon death is to be held under this Option, the
beneficiary, if a spouse, must elect (a) or (b) above within 5 years
after the death of the Annuitant. If the beneficiary is not a spouse,
the beneficiary must tell Aetna to pay the full sum within 5 years
after the death of the Annuitant.
Option 2 - Payments of a Stated Dollar Amount - This Option may only be
elected as a Fixed Annuity. An Annuity of a chosen amount will be paid
until no funds are left. The payments to be made in a year must be
greater than $65 for each $1,000 applied to this Option, but cannot
exceed an amount which would deplete the funds in less than 3 years.
During any year, Aetna reserves the right to make as a minimum payment
an amount equal to 105% of the interest for that year.
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 at
least 3 and not more than 30.
If payments for this Option are made under a Variable Annuity, the
present value of any remaining payments may be withdrawn at any time.
If a withdrawal is requested within 3 years after the start of
payments, it will be treated as a surrender (see Part V).
Option 4 - Life Income - An Annuity will be paid for the life of the
Annuitant. If also chosen, Aetna will guarantee payments for 60, 120,
180, or 240 months.
Option 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) 662/3% 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.
Other Options - Aetna may make other options available as allowed by
the laws of the state in which this Contract is delivered.
I-CDA-HD (XC) 13
<PAGE>
OPTION 3
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
Years of Amount of Years of Amount of Years of Amount of
Payments Payments Payments Payments Payments Payments
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
3 $29.19 13 $7.94 22 $5.39
4 22.27 14 7.49 23 5.24
5 18.12 15 7.10 24 5.09
6 15.35 16 6.76 25 4.96
7 13.38 17 6.47 26 4.84
8 11.90 18 6.20 27 4.73
9 10.75 19 5.97 28 4.63
10 9.83 20 5.75 29 4.53
11 9.09 21 5.56 30 4.45
12 8.46
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
Years of Amount of Years of Amount of Years of Amount of
Payments Payments Payments Payments Payments Payments
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
3 $29.80 13 $8.64 22 $6.17
4 22.89 14 8.20 23 6.02
5 18.74 15 7.82 24 5.88
6 15.99 16 7.49 25 5.76
7 14.02 17 7.20 26 5.65
8 12.56 18 6.94 27 5.54
9 11.42 19 6.71 28 5.45
10 10.51 20 6.51 29 5.36
11 9.77 21 6.33 30 5.28
12 9.16
</TABLE>
I-CDA-HD (XC) 13
<PAGE>
OPTION 4
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
Payments Guaranteed for a Stated Period of Months
Age of None 60 120 180 240
Annuitant Male Female Male Female Male Female Male Female Male Female
--------- ---- ------ ---- ------ ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
</TABLE>
Rates are based on mortality from 1983 Table a.
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.
I-CDA-HD (XC) 15
<PAGE>
OPTION 4
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
Payments Guaranteed for a Stated Period of Months
Age of None 60 120 180 240
Annuitant Male Female Male Female Male Female Male Female Male Female
--------- ---- ------ ---- ------ ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 5.97 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 6.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
</TABLE>
Rates are based on mortality from 1983 Table a.
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.
I-CDA-HD (XC) 16
<PAGE>
OPTION 5
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
Age of Male Age of Female Annuitant
Annuitant 45 50 55 60 65 70 75 80 85
--------- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.69 $3.80 $3.90 $3.98 $4.05 $4.11 $4.15 $4.18 $4.20
50 3.75 3.89 4.03 4.16 4.27 4.36 4.43 4.48 4.52
55 3.81 3.97 4.16 4.34 4.51 4.66 4.78 4.86 4.92
60 3.84 4.04 4.27 4.51 4.76 4.99 5.18 5.33 5.43
65 3.87 4.09 4.35 4.66 4.99 5.34 5.66 5.92 6.11
70 3.90 4.13 4.42 4.78 5.19 5.67 6.16 6.61 6.95
75 3.91 4.15 4.47 4.86 5.35 5.95 6.64 7.33 7.95
80 3.92 4.17 4.50 4.92 5.46 6.17 7.04 8.04 9.03
85 3.92 4.18 4.51 4.95 5.53 6.31 7.34 8.63 10.05
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
Age of Male Age of Female Annuitant
Annuitant 45 50 55 60 65 70 75 80 85
--------- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.63 $4.72 $4.81 $4.89 $4.96 $5.02 $5.07 $5.10 $5.12
50 4.68 4.80 4.93 5.05 5.16 5.25 5.33 5.38 5.42
55 4.73 4.88 5.04 5.21 5.38 5.52 5.65 5.74 5.80
60 4.77 4.95 5.15 5.37 5.61 5.83 6.04 6.19 6.30
65 4.80 5.00 5.24 5.52 5.83 6.17 6.49 6.76 6.96
70 4.82 5.04 5.30 5.63 6.04 6.49 6.97 7.42 7.79
75 4.84 5.06 5.35 5.72 6.20 6.77 7.45 8.14 8.76
80 4.85 5.08 5.39 5.79 6.31 6.99 7.86 8.84 9.83
85 4.86 5.10 5.41 5.83 6.39 7.15 8.16 9.43 10.86
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed on a
basis consistent with the rates in the above tables.
I-CDA-HD (XC) 17
<PAGE>
OPTION 5
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
662/3% TO THE SURVIVOR
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
Age of Male Age of Female Annuitant
Annuitant 45 50 55 60 65 70 75 80 85
--------- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.94 $4.06 $4.20 $4.36 $4.54 $4.74 $4.96 $5.19 $5.42
50 4.05 4.20 4.36 4.55 4.76 4.99 5.24 5.51 5.78
55 4.18 4.35 4.54 4.76 5.00 5.28 5.58 5.90 6.22
60 4.32 4.51 4.73 4.99 5.29 5.63 6.00 6.40 6.79
65 4.48 4.69 4.95 5.25 5.61 6.03 6.51 7.02 7.52
70 4.66 4.89 5.18 5.53 5.97 6.49 7.10 7.77 8.45
75 4.84 5.09 5.42 5.82 6.33 6.96 7.73 8.62 9.56
80 5.02 5.30 5.65 6.11 6.69 7.43 8.39 9.54 10.82
85 5.19 5.49 5.87 6.37 7.02 7.88 9.02 10.46 12.15
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
Age of Male Age of Female Annuitant
Annuitant 45 50 55 60 65 70 75 80 85
--------- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.87 $4.99 $5.12 $5.28 $5.46 $5.68 $5.93 $6.21 $6.49
50 4.99 5.12 5.27 5.45 5.66 5.90 6.18 6.50 6.82
55 5.12 5.26 5.44 5.65 5.89 6.17 6.50 6.86 7.23
60 5.27 5.43 5.63 5.87 6.16 6.50 6.89 7.32 7.76
65 5.44 5.63 5.85 6.14 6.49 6.90 7.38 7.92 8.47
70 5.64 5.85 6.11 6.44 6.84 7.35 7.96 8.64 9.36
75 5.86 6.09 6.38 6.75 7.23 7.84 8.60 9.49 10.46
80 6.09 6.33 6.65 7.07 7.62 8.34 9.28 10.42 11.71
85 6.30 6.57 6.92 7.38 8.00 8.83 9.93 11.35 13.04
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed on a
basis consistent with the rates in the above tables.
I-CDA-HD (XC) 18
<PAGE>
OPTION 5
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
50% TO THE SURVIVOR
NO MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
Age of Male Age of Female Annuitant
Annuitant 45 50 55 60 65 70 75 80 85
--------- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.07 $4.21 $4.38 $4.58 $4.83 $5.13 $5.49 $5.91 $6.35
50 4.22 4.37 4.55 4.77 5.04 5.37 5.77 6.23 6.72
55 4.40 4.56 4.76 5.00 5.29 5.66 6.10 6.62 7.18
60 4.61 4.79 5.00 5.27 5.60 6.01 6.51 7.11 7.76
65 4.87 5.06 5.31 5.61 5.99 6.46 7.04 7.74 8.52
70 5.17 5.39 5.66 6.01 6.44 6.99 7.68 8.52 9.47
75 5.49 5.75 6.06 6.46 6.96 7.61 8.43 9.45 10.64
80 5.84 6.13 6.49 6.95 7.54 8.29 9.29 10.54 12.03
85 6.18 6.51 6.91 7.43 8.11 9.00 10.17 11.71 13.57
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
Age of Male Age of Female Annuitant
Annuitant 45 50 55 60 65 70 75 80 85
--------- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $5.01 $5.14 $5.30 $5.50 $5.75 $6.08 $6.48 $6.96 $7.49
50 5.15 5.29 5.46 5.68 5.95 6.29 6.73 7.25 7.82
55 5.33 5.48 5.66 5.89 6.18 6.56 7.03 7.60 8.24
60 5.56 5.71 5.91 6.16 6.49 6.90 7.42 8.06 8.78
65 5.83 6.01 6.23 6.51 6.87 7.33 7.93 8.67 9.50
70 6.17 6.36 6.61 6.93 7.34 7.87 8.56 9.43 10.43
75 6.55 6.78 7.05 7.42 7.89 8.51 9.33 10.35 11.57
80 6.98 7.23 7.54 7.96 8.51 9.23 10.20 11.44 12.95
85 7.40 7.68 8.05 8.53 9.16 10.00 11.14 12.64 14.51
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed on a
basis consistent with the rates in the above tables.
I-CDA-HD (XC) 19
<PAGE>
OPTION 5
LIFE INCOME FOR TWO PAYEES
JOINT AND LAST SURVIVOR ANNUITY
100% TO THE SURVIVOR
120 MONTHS MINIMUM PERIOD
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
Age of Male Age of Female Annuitant
Annuitant 45 50 55 60 65 70 75 80 85
--------- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.69 $3.79 $3.89 $3.98 $4.05 $4.11 $4.15 $4.17 $4.19
50 3.75 3.89 4.03 4.16 4.27 4.36 4.42 4.47 4.49
55 3.80 3.97 4.15 4.34 4.51 4.65 4.76 4.83 4.88
60 3.84 4.04 4.26 4.50 4.75 4.97 5.16 5.29 5.36
65 3.87 4.09 4.35 4.65 4.98 5.31 5.61 5.83 5.97
70 3.89 4.13 4.41 4.76 5.17 5.62 6.07 6.43 6.67
75 3.91 4.15 4.46 4.84 5.31 5.87 6.48 7.02 7.40
80 3.91 4.16 4.48 4.89 5.41 6.05 6.79 7.50 8.04
85 3.92 4.17 4.49 4.91 5.46 6.15 6.98 7.83 8.50
</TABLE>
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
<TABLE>
<CAPTION>
Age of Male Age of Female Annuitant
Annuitant 45 50 55 60 65 70 75 80 85
--------- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $4.63 $4.72 $4.81 $4.89 $4.96 $5.02 $5.06 $5.09 $5.11
50 4.68 4.80 4.93 5.05 5.15 5.25 5.32 5.36 5.39
55 4.73 4.88 5.04 5.21 5.37 5.51 5.63 5.71 5.75
60 4.77 4.94 5.14 5.37 5.60 5.82 6.00 6.14 6.22
65 4.80 4.99 5.23 5.51 5.82 6.13 6.43 6.66 6.80
70 4.82 5.03 5.29 5.62 6.00 6.44 6.87 7.23 7.47
75 4.84 5.06 5.34 5.70 6.15 6.68 7.27 7.80 8.17
80 4.85 5.07 5.37 5.75 6.24 6.86 7.57 8.26 8.79
85 4.85 5.08 5.38 5.78 6.30 6.96 7.76 8.58 9.23
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed on a
basis consistent with the rates in the above tables.
I-CDA-HD (XC) 20
<PAGE>
V. SPECIAL PROVISIONS
The Special Provisions section which applies to this Contract is shown on the
Specifications page under Type of Plan. The other sections under Special
Provisions do not apply.
5.01 Deferred Compensation Plan
(a) Control of Contract: All rights in this Contract rest with the
Contract Holder, who is entitled to all amounts held under this
Contract. The Contract Holder, or authorized designee of the
Contract Holder (as allowed by law), may make any choices
allowed by this Contract. Any choices made under this Contract
must be in writing. Until receipt of such choices in its Home
Office, Aetna may rely on any prior choices made. This Contract
is not subject to the claims of any creditors of the Annuitant
except to the extent permitted by law.
(b) Designation of Beneficiary: The beneficiary shall be the
Contract Holder.
(c) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will
be deducted from the Current Value on the anniversary of the
Contract effective date and on surrender of the entire
Contract.
Any portion of any Maintenance Fee deducted from the Fixed
Account will not exceed the interest in excess of 4% and any
Net Purchase Payment credited to the Fixed Account during the
12 months prior to the deduction.
(d) Sum Payable at Death (Before Annuity Payments Start): Aetna
will pay to the Beneficiary the Current Value if:
(1) The Annuitant dies before Annuity payments start; and (2)
The notice of death is received in good order by Aetna.
The sum paid will be the Current Value on the date the notice
is received at Aetna's Home Office. The amount paid from the
Fixed Account will not be less than the Net Purchase Payment(s)
allocated to the Fixed Account for the Annuitant (less any
prior transfers (see 3.09) or surrenders). The beneficiary may
choose to apply all or any part of the proceeds to an Annuity
Option (see Part IV).
(e) Surrender Value: After deduction of the Maintenance Fee, if
any, Aetna will reduce the amount payable upon surrender of any
portion of the Current Value by a Surrender Fee. The Surrender
Fee will be in accordance with the Surrender Fee table in 6.02.
The total deductions made on surrender of the entire Contract
will not exceed 7% of the Current Value as of the date of
surrender and the Surrender Fee will not exceed 8.5% of the
Purchase Payment(s) made to the Contract.
(f) The following sections 5.02, 5.03, 5.04 and 5.05 of the Special
Provisions do not apply to this Contract.
5.02. Pension or Profit Sharing Plan
I-CDA-HD (XC) 21
<PAGE>
(a) The preceding section 5.01 of the Special Provisions does not
apply to this Contract.
(b) Control of Contract: All rights in this Contract rest with the
Contract Holder. The Contract Holder owns all amounts held
under this Contract. The Contract Holder (or authorized
designee,) may make any choices allowed by this Contract. Any
choices under this Contract must be in writing. Until receipt
of such choices in its Home Office, Aetna may rely on any prior
choices made. This Contract is not subject to the claims of any
creditors except to the extent permitted by law.
(c) Designation of Beneficiary: The Contract Holder shall name the
beneficiary.
(d) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will
be deducted from the Current Value on each anniversary of the
Contract effective date and upon surrender of the entire
Contract.
Any portion of any Maintenance Fee deducted from the Fixed
Account will not exceed the interest in excess of 4% and any
Net Purchase Pyament credited to the Fixed Account during the
12 months prior to the deduction.
(e) Sum Payable at Death (Before Annuity Payments Start): Aetna
will pay the Current Value to the beneficiary if:
(1) the Annuitant dies before Annuity payments start; and
(2) the notice of death is received in good order by Aetna.
The sum paid will be the Current Value on the date when the
notice is received at Aetna's Home Office. The amount paid from
the Fixed Account will not be less than the Net Purchase
Payment(s) allocated to the Fixed Account (less any prior
transfers (see 3.09) or surrenders). The Contract Holder will
determine if any additional amounts are payable to the
beneficiary. The beneficiary may choose to apply all or part of
the payment to an Annuity Option (see Part IV). If no
beneficiary exists, the payment will be made to the estate of
the Annuitant.
(f) Surrender Value: After deduction of the Maintenance Fee, if
any, Aetna will reduce the amount payable upon surrender of any
portion of the Current Value by a Surrender Fee. The Surrender
Fee will be in accordance with the Surrender Fee table in 6.02.
The total deductions made on surrender of an entire Contract
will not exceed 7% of the Current Value as of the date of
surrender.
(g) The following Sections 5.03, 5.04 and 5.05 of the Special
Provisions do not apply to this Contract.
5.03. Individual Retirement Annuity Plan (IRA)
(a) The preceding Sections 5.01 and 5.02 of the Special Provisions
do not apply to this Contract.
(b) Control of Contract: All rights in this Contract rest with the
Contract Holder. The Contract Holder owns all amounts held
under this Contract. The Contract Holder
I-CDA-HD (XC) 22
<PAGE>
may make any choices allowed by this Contract. Any choices
under this Contract must be in writing. Until receipt of such
choices in its Home Office, Aetna may rely on any prior choices
made. The Contract may not be transferred. The Contract may not
be assigned except to the Company.
(c) Designation of Beneficiary: The Contract Holder shall name the
beneficiary.
(d) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will
be deducted from the Current Value on each anniversary of the
Contract effective date and upon surrender of the entire
Contract.
Any portion of any Maintenance Fee deducted from the Fixed
Account will not exceed the interest in excess of 4% and any
Net Purchase Payment credited to the Fixed Account during the
12 months prior to the deduction.
(e) Purchase Payments: The total deductible annual Purchase
Payments made on behalf of any individual under this Contract
cannot exceed $2,000.
(f) Sum Payable at Death (Before Annuity Payments Start): Aetna
will pay the current value to the beneficiary if:
(1) The Annuitant dies before Annuity payments start; and
(2) The notice of death is received in good order by Aetna.
The sum paid will be the Current Value on the date the notice
is received at Aetna's Home Office. The amount paid from the
Fixed Account will not be less than the Net Purchase Payment(s)
allocated to the Fixed Account (less any prior transfers (see
3.09) or surrenders). The beneficiary, if a spouse, may choose
to apply all or any portion of the payment to any Annuity
Option. If the beneficiary is not a spouse, all or a portion of
the payment may be applied only to Annuity Options 1, 2 or 3,
providing the full sum is paid to the beneficiary within 5
years of the death of the Annuitant. (See Part IV) If no
beneficiary exists, the payment will be made to the estate of
the Annuitant.
(g) Annuity Payments: In no event may any payments to the Annuitant
or beneficiary under any Annuity Option extend beyond:
(1) The life of the Annuitant; or
(2) The lives of the Annuitant and spouse; or
(3) Any certain period greater than the Annuitant's life
expectancy; or
(4) Any certain period greater than the life expectancies
of the Annuitant and spouse.
(h) Surrender Value: After deduction of the Maintenance Fee (if
any), the amount paid by Aetna upon the surrender of any
portion of the Current Value shall be reduced by a Surrender
Fee. The Surrender Fee will be in accordance with the Surrender
Fee table in 6.02.
I-CDA-HD (XC) 23
<PAGE>
The total deductions made on surrender of an entire Contract
will not exceed 7% of the Current Value as of the date of
surrender and the Surrender Fee will not exceed 8.5% of the
actual Purchase Payment(s) made to the Contract.
(i) The following Sections 5.04 and 5.05 of the Special Provisions
do not apply to this Contract.
5.04. Tax Deferred Annuity Plan
(a) The preceding Sections 5.01, 5.02 and 5.03 of the Special
Provisions do not apply to this Contract.
(b) Control of Contract: The Contract Holder shall own all amounts
held under this Contract and may make any choices allowed by
this Contract. Choices made under this Contract must be in
writing. Until receipt of such choices in its Home Office,
Aetna may rely on any previous choices made. This Contract
shall not be subject to the claims of any creditors. This
Contract is non-assignable and nontransferable.
(c) Designation of Beneficiary: The Contract Holder shall name the
beneficiary.
(d) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will
be deducted from the Current Value on each anniversary of the
Contract effective date and upon surrender of the entire
Contract.
Any portion of any Maintenance Fee deducted from the Fixed
Account will not exceed the interest in excess of 4% and any
Net Purchase Payment credited to the Fixed Account during the
12 months prior to the deduction.
(e) Sum Payable at Death (Before Annuity Payments Start): Aetna
will pay the Current Value to the beneficiary if:
(1) The Contract Holder dies before Annuity payments start;
and
(2) The notice of death is received in good order by Aetna.
The sum paid will be the Current Value on the date the notice
is received at Aetna's Home Office. The amount paid from the
Fixed Account will not be less than the Net Purchase Payment(s)
allocated to the Fixed Account (less any prior transfers (see
3.09) or surrenders). The beneficiary may choose to apply all
or any portion of the payment to an Annuity Option (see Part
IV). If no beneficiary exists, the payment will be made to the
estate of the Contract Holder.
(f) Surrender Value: After deduction of the Maintenance Fee (if
any), Aetna will reduce the amount payable upon surrender of
any portion of the Current Value by a Surrender Fee. The
Surrender Fee will be in accordance with the Surrender Fee
table in 6.02.
The total deductions made on surrender of an entire Contract
will not exceed 7% of the Current Value as of the date of
surrender and the Surrender Fee will not exceed 8.5% of the
actual Purchase Payment(s) made to the Contract.
I-CDA-HD (XC) 24
<PAGE>
(g) The following Section 5.05 of the Special Provisions does not
apply to this Contract.
5.05. Individual Annuity Plan
(a) The preceding Sections 5.01, 5.02, 5.03 and 5.04 of the Special
Provisions do not apply to this Contract.
(b) Control of Contract: All rights in this Contract rest with the
Contract Holder. The Contract Holder owns all amounts held
under this Contract. The Contract Holder may make any choices
allowed by this Contract. Choices made under this Contract must
be in writing. Until receipt of such choices at its Home
Office, Aetna may rely on any previous choices made.
(c) Designation of Beneficiary: The Contract Holder shall name the
beneficiary.
(d) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will
be deducted from the Current Value on the anniversary of the
Contract effective date and on surrender of the entire
Contract.
Any portion of any Maintenance Fee deducted from the Fixed
Account will not exceed the interest in excess of 4% and any
Net Purchase Payment credited to the Fixed Account during the
12 months prior to the deduction.
(e) Sum Payable at Death (Before Annuity Payments Start): Aetna
will pay the Current Value to the beneficiary if:
(1) The Contract Holder dies before Annuity payments start;
and
(2) The notice of death is received in good order by Aetna.
The sum paid will be the Current Value on the date the notice
is received at Aetna's Home Office. The amount paid from the
Fixed Account will not be less than the Net Purchase Payment(s)
allocated to the Fixed Account (less any prior transfers (see
3.09) or surrenders). The beneficiary may choose to apply all
or any portion of the payment to an Annuity Option (see Part
IV). If no beneficiary exists, the payment will be made to the
estate of the Contract Holder.
(f) Surrender Value: After deduction of the Maintenance Fee, if
any, Aetna will reduce the amount payable upon surrender of any
portion of the Current Value by a Surrender Fee. The Surrender
Fee will be in accordance with the Surrender Fee table in 6.02.
The total deductions made on surrender of an entire Contract
will not exceed 7% of the Current Value as of the date of
surrender and the Surrender Fee will not exceed 8.5% of the
actual Purchase Payment(s) made to the Contract.
I-CDA-HD (XC) 25
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Home Office: 151 FARMINGTON AVE.
HARTFORD, CONNECTICUT 06156
1-800-525-4225
INDIVIDUAL VARIABLE, FIXED, 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
I-CDA-HD (XC) (NU)
<PAGE>
VI. FEE SCHEDULE
INDIVIDUAL RETIREMENT ANNUITY PLAN (IRA)
6.01. Maintenance Fee: The Maintenance Fee will be $20.
6.02. Surrender Fee:
For each surrender, the Surrender Fee will vary according to the number
of Purchase Payment Cycles completed. The number and amount of Purchase
Payments to be made in a year is chosen by the Contract Holder. A
Purchase Payment Cycle is completed when this number and amount of
Purchase Payments have been made. The number of Purchase Payment Cycles
completed may not be greater than the number of whole years since the
Contract was issued. For each surrender, the Fee will be as follows:
Number of Purchase Payment Cycles Completed Surrender 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%
No Surrender Fee is deducted from any portion of the Current Value
which is paid:
(a) At the death of the Annuitant before Annuity payments start;
or
(b) As a premium for an Annuity under this Contract; or
(c) After the Annuitant has reached age 59 1/2and 9 or more
Purchase Payment Cycles have been completed.
6.03. Table of Values - Fixed Account:
The values in the following table only apply to annual Purchase
Payments of $1,000.
The Paid-Up Annuity Benefit assumes the Current Value has accumulated
in the Fixed Account at the Guaranteed Interest Rate until age 65 and
is applied to Option 4 with a stated period of 120 months.
The Surrender Value assumes the Purchase Payments are credited to the
Fixed Account at the Guaranteed Interest Rate at the beginning of each
Contract year. The Maintenance Fee and applicable Surrender Fee are
deducted.
The values would be different for other Purchase Payment amounts, if
Purchase Payments are not made when due, if partial surrenders are
made, or if Aetna adds interest at a rate greater than the Guaranteed
Interest Rate-Fixed Account.
IMIRA-HD (XC) 26
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VI. FEE SCHEDULE
INDIVIDUAL RETIREMENT ANNUITY PLAN (IRA)
6.01. Maintenance Fee: The Maintenance Fee will be $0.
6.02. Surrender Fee:
For each surrender, the Surrender Fee will vary according to the
period of time between the effective date of the Contract and the date
of surrender. The Surrender Fee will be determined as follows:
If 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%
No Surrender Fee is deducted from any portion of the Current Value
which is paid:
(a) At the death of the Annuitant before Annuity payments start; or
(b) As a premium for an Annuity under this Contract.
6.03. Table of Values - Fixed Account:
The values in the following table only apply to a single Purchase
Payment of $10,000.
The Paid-Up Annuity Benefit assumes the Current Value has accumulated
in the Fixed Account at the Guaranteed Interest Rate until age 65 and
is applied to Option 4 with a state period of 120 months.
The Surrender Value assumes the Purchase Payment is credited to the
Fixed Account at the Guaranteed Interest Rate at the beginning of the
first Contract Year. The applicable Surrender Fees are deducted.
Values would be different for other Purchase Payment amounts, if made
at another time, if partial surrenders are made, or if Aetna adds
interest at a rate greater than the Guaranteed Interest Rate-Fixed
Account.
26
ISIRA-HD (XC)
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Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
Add to Section I. 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.
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.
EGAA-IO (XC) 1
<PAGE>
(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. All of these rate(s) may 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, 3.11, or 3.12 below). Amounts transferred prior to the
Maturity Date of a Term are subject to an MVA (see (g) below). Fund(s)
will be removed within the elected Classification starting with the Term
still in effect with the oldest Deposit Period.
During the Deposit Period and the 90 days following the close of the
Deposit Period, any amounts applied to the GA Account during that Deposit
Period may not be withdrawn unless due to:
(1) A full or partial surrender;
(2) A payment of a premium for an Annuity Option; or
(3) The Sum Payable at Death provision.
(f) Maturity Date Reinvestment - 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.
EGAA-IO (XC) 2
<PAGE>
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 their 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).
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:
EGAA-IO (XC) 3
<PAGE>
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.
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 (or
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 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
EGAA-IO (XC) 4
<PAGE>
Purchase Payment(s), transfers or reinvestments made to any new Term by
any present or future Participant.
A detailed description of the Market Value Adjustment has been filed with
the New York Insurance Department Superintendent in compliance with
Section 4223(a)(1)(C) of the New York Insurance Law.
(h) Deposits to the GA Account - All amounts in the GA Account under the
Short-Term Classification are made to the General Account.
All amounts in the GA Account under the Long-Term Classifications are
made to a Nonunitized Separate Account. There are no discrete units for
this Nonunitized Separate Account. The Contract Holder or Participant, as
applicable, does not participate in the gain or loss from the assets held
in the Nonunitized Separate Account. Such gain or loss is borne entirely
by Aetna. These assets may be chargeable with liabilities arising out of
any other business of Aetna.
For Terms under both the Short-Term and Long-Term Classifications. Aetna
guarantees stipulated interest rates to be credited to the GA Account.
All assets of Aetna including amounts made to the GA Account are
available to meet the guarantees under the GA Account.
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.
Add the following statement to Section 3.14 or 3.15 entitled Surrender Value as
follows:
EGAA-IO (XC) 5
<PAGE>
To comply with Section 4223 of New York Insurance Laws, the surrender
charge will never be greater than (a) plus (b) below:
(a) 10% of amounts surrendered from options other than the GA Account;
plus
(b) 10% reduced (but not below zero) by one percent for each year the
Contract has been inforce, of amounts surrendered from the GA
Account. Aetna reserves the right to compute the surrender charge
for amounts transferred into the GA Account within 90 days prior
to surrender as if such amounts had not been transferred.
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 (XC) 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 follows:
Section 3.09 Transfer of Current Value from the Fixed Account is amended and
restated as follows:
10% of the Current Value held in the Fixed Account may be transferred
to any Fund(s) and/or to the GA Account's current Deposit Period if
available. Such transfer will be:
(a) Without charge;
(b) Allowed once per calendar year, and
(c) Not allowed under an Annuity Option.
Aetna may, on a temporary basis, allow any larger percent to be transferred.
The following applies to Contracts subject to Special Provisions Sections 5.02,
5.03, and 5.04.
Any remaining balance in the Fixed Account under the Contract may be transferred
by the Contract Holder in its entirety to any of the Fund(s) and/or to the GA
Account's current Deposit Period if:
(a) The Current Value in the Fixed Account under the Contract is $2,000.00
or less; or
(b) The maximum percentage allowed was transferred from the Fixed Account
in each of the four consecutive prior calendar years and no additional
Net Purchase Payment(s) to the Contract have been allocated to the
Fixed Account during the same four consecutive calendar year periods.
The Current Value of the Fixed Account, as used above, is the value when the
request is received at Aetna's Home Office in good order.
Endorsed and made part of this Contract.
/s/ Edmund F. Kelly
President
Aetna Life Insurance and Annuity Company
EIFA-IO(XC)
<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. Transfer of Current Value from the Funds - 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/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EIMCVT-HI(XC)
<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 entitled Surrender Fee as follows:
No Surrender Fee is deducted from any portion of the Current Value which is
paid:
(d) When the Current Value is $2,500 or less and no surrenders have
been taken from the Contract within the prior 12 months. If there
is more than one Contract, then this provision will only apply
when the total in all of the Contracts is $2,500 or less; or
(e) In an amount equal to or less than 10% if the Current Value, as
part of the first partial surrender request in a calendar year to
a Contract Holder who is at least age 59 1/2 and less than 70 1/2.
The Current Value is calculated as of the date the partial
surrender request is received in good order at Aetna's Home
Office. This provision does not apply to full surrender requests.
Endorsed and made a part of this Contract.
/s/ Edmund F. Kelly
President
Aetna Life Insurance and Annuity Company
EIMIS-IA(XC)
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
Section 1.05 entitled Fund(s) is amended and restated as follows:
The open-end and registered management investment companies (mutual
funds) made available by Aetna under this Contract. These Funds
currently are:
o Aetna Variable Fund - a growth and income fund;
o Aetna Income Shares - a bond fund;
o Aetna Variable Encore Fund - a money market fund;
o Aetna Investment Advisers Fund, Inc. - a managed fund;
o TCI Portfolios, Inc., (TCI Growth) - a growth fund.
Additional information regarding these Funds is available in each Fund
prospectus.
Endorsed and made a part of this Contract on February 1, 1993 or the effective
date of the Contract, whichever is later.
/s/ G. G. Benanav
President
Aetna Life Insurance and Annuity Company
EIPMF-IB(XC)
<PAGE>
Aetna Life Insurance Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
(1) The Annuity Provisions of the Contract are endorsed to change the first
paragraph of Section 4.01. "Choices to be Made" to read:
An Annuity Option may be elected by telling Aetna to pay all or
any portion of the Current Value (minus any premium tax) as a
premium for an Annuity under Option 2, 3, 4 or 5 (see 4.06). The
first Annuity payment must generally be made no later than the
first day of the month following the Annuitant's 75th birthday. If
this Contract is issued under an IRA or SEP (see Specifications
page), the first Annuity payment must be made not later than the
April 1 following the calendar year in which the Annuitant attains
age 70 1/2. Aetna may be told to make the first Annuity payment
during any prior month.
(2) The Annuity Provisions of the Contract are endorsed to change the
second paragraph of Section 4.06. "Annuity Options" to read:
If this Contract is issued under an IRA or SEP and the beneficiary
elects that the full sum paid upon death is to be held under this
Option, the beneficiary, if a spouse, must elect (a) or (b) above
not later than the date the Annuitant would have attained age 70
1/2. If the beneficiary is not a spouse, the beneficiary must tell
Aetna to pay the full sum within 5 years after the death of the
Annuitant.
(3) Section 5.03. "Individual Retirement Annuity Plan (IRA)" is deleted and
the following section added:
(a) The preceding Sections 5.01 and 5.02 of the Special Provisions
do not apply to this Contract.
(b) Control of Contract: All rights in this Contract rest with the
Contract Holder. The Contract Holder owns all amounts held
under this Contract. The Contract Holder may make any choices
allowed by this Contract. Any choices under this Contract must
be in writing. Until receipt of such choices in its Home
Office, Aetna may rely on any prior choices made. The Contract
may not be transferred. The Contract may not be assigned
except to the Company.
(c) Designation of Beneficiary: The Contract Holder shall name the
beneficiary.
(d) Maintenance Fee: Maintenance Fee, if any, (see 6.01) will be
deducted from the Current Value on each anniversary of the
Contract effective date and upon surrender of the entire
Contract.
(e) Purchase Payments: Purchase Payments must be in cash and the
total of such payments cannot exceed $2,000 for any individual
for any taxable year.
EIRAC-HH (XC) 1
<PAGE>
Exceptions to the dollar maximum are:
(1) Rollover contributions as permitted by Internal
Revenue Code Sections 402(a)(5), 402(a)(7),
403(a)(4); and
(2) Employer contributions made according to the terms of
a Simplified Employee Pension Plan as described in
Internal Revenue Code Section 408(k).
(f) Required Distribution to Annuitant: Distribution to the
Annuitant must begin in the form of Annuity Payments no later
than the April 1 following the calendar year in which the
Annuitant attains age 70 1/2, or be made in a lump sum by the
same date.
(g) Annuity Payments to Annuitant: In no event may any payments to
the Annuitant under any Annuity Option extend beyond:
(1) The life of the Annuitant:
(2) The lives of the Annuitant and beneficiary;
(3) Any certain period greater than the Annuitant's life
expectancy as determined according to regulations
under Internal Revenue Code Section 401(a)(9); or
(4) Any certain period greater than the life expectancies
of the Annuitant and beneficiary as determined
according to regulations under Internal Revenue Code
Section 401(a)(9).
In addition, the present value of the expected payments to the
Annuitant when payments start must be more than 50% of the
present value of the total expected payments to be made to the
Annuitant and beneficiary under 5.03(g) (2) or (4).
(h) Sum Payable at Death (Before Annuity Payments Start): Aetna
will pay the current value to the beneficiary if:
(1) The Annuitant dies before Annuity payments start; and
(2) The notice of death is received in good order by
Aetna.
The sum paid will be the Current Value on the date the notice
is received at Aetna's Home Office. The amount paid from the
Fixed Account will not be less than the Net Purchase
Payment(s) allocated to the Fixed Account (less any prior
transfers (see 3.09) or surrenders). The beneficiary, if a
spouse, may choose to apply all or part of the payment to any
Annuity Option or may elect to defer payments to a date not
later than when the Annuitant would have attained age 70 1/2.
Alternatively, the spouse may choose to treat this Contract as
his or her own. If the beneficiary is not the spouse, all of
the payments must either be applied only to Annuity Option 2,
3 or 4 within one year of the Annuitant's death, or be paid to
the beneficiary within 5 years of the death of the
EIRAC-HH (XC) 2
<PAGE>
Annuitant. (See Part IV.) If no beneficiary exists, the
payment will be made to the estate of the Annuitant.
(i) Annuity Payments to Beneficiary: In no event may any payments
to the beneficiary under an Annuity Option extend beyond:
(1) The life of the beneficiary; or
(2) Any certain period greater than the beneficiary's
life expectancy as determined by regulations under
Internal Revenue Code Section 401(a)(9).
(j) Surrender Value: After deduction of the Maintenance Fee (if
any), the amount paid by Aetna upon the surrender of any
portion of the Current Value shall be reduced by a Surrender
Fee. The Surrender Fee will be in accordance with the
Surrender Fee table in section 6.02.
The total deductions made on surrender of an entire Contract
will not exceed 7% of the Current Value as of the date of
surrender and the Surrender Fee will not exceed 8.5% of the
actual Purchase Payment(s) made to the Contract.
(k) Application of Refund of Premium: Any refund of premiums
(other than those from excess contributions) will be applied
before the close of the calendar year following the year of
the refund, toward future payments or the purchase of
additional benefits.
(l) Reports: Aetna, as issuer of this Individual Retirement
Annuity contract, will make any reports required by federal
law.
(m) The following Sections 5.04 and 5.05 of the Special Provisions
do not apply to this Contract.
Endorsed and made a part of this Contract on the effective date of the Contract.
/s/ Dean E. Wolcott
President
EIRAC-HH (XC) 3
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to add to Section 5.03, Individual Retirement
Annuity (IRA); Simplified Employee Pension Plan, the following:
5.03 (b) Control of Contract:
The Contract is established for the exclusive benefit of the
individual Contract Holder or his or her beneficiaries.
Section 5.03 (m) is restated as 5.03(n) and the following is added:
5.03 (m) Minimum Distribution Requirements
(1) General Requirement: Notwithstanding any provision of this
Contract to the contrary, the distribution of the Contract
Holder's Current Value shall be made in accordance with the
minimum distribution requirements of section 408(a)(6) or section
408(b)(3) of the Code and the regulations thereunder, including
the incidental death benefit provisions of section 1.401(a)(9)-2
of the proposed regulations, all of which are herein incorporated
by reference.
(2) Minimum Payments to Contract Holder: The Contract Holder's entire
Current Value in the Contract must be distributed, or begin to be
distributed, by the Contract Holder's required beginning date,
which is the April 1 following the calendar year in which the
Contract holder turns age 70 1/2. For each succeeding year, a
distribution must be made on or before December 31. By the
required beginning date, the Contract Holder may elect to have the
balance under the Contract distributed in one of the following
forms according to the terms of the Contract:
(a) a lump sum payment;
(b) equal or substantially equal payments over the life of the
Contract Holder;
(c) equal or substantially equal payments over the lives of the
Contract Holder and his or her designated beneficiary;
(d) equal or substantially equal payments over a specified
period that may not be longer than the Contract Holder's
life expectancy;
(e) equal or substantially equal payments over a specified
period that may not be longer than the joint life and last
survivor expectancy of the Contract Holder and his or her
designated beneficiary.
(3) Minimum Death Benefits: If the Contract Holder dies before his or
her entire Current Value is distributed, the entire remaining
balance will be distributed as follows:
EIRACF-IC 1
<PAGE>
(a) If the Contract Holder dies on or after the date distributions
have begun under paragraph 2 above, the entire remaining balance
must be distributed at least as rapidly as provided under such
paragraph 2.
(b) If the Contract Holder dies before distributions have begun under
paragraph 2 above, the entire remaining balance must be
distributed as elected by the Contract Holder or, if the Contract
Holder has not so elected, as elected by the beneficiary or
beneficiaries, as follows:
(i) by December 31st of the year containing the fifth
anniversary of the Contract Holder's death; or
(ii) in equal or substantially equal payments over the life or
life expectancy of the designated beneficiary or
beneficiaries starting by December 31st of the year
following the year of the Contract Holder's death. If,
however, the beneficiary is the Contract Holder's surviving
spouse, then this distribution is not required to begin
before December 31st of the year in which the Contract
Holder would have turned 70 1/2.
(4) Life Expectancies: Unless an Annuity Option has been elected by
the Contract Holder prior to the commencement of distributions in
accordance with paragraph 2 above (or, if applicable, by the
surviving spouse where the Contract Holder dies before
distributions have commenced), life expectancies of the Contract
Holder or spouse beneficiary shall be recalculated annually for
purposes of distributions under paragraphs 2 and 3 above. An
election not to recalculate shall be irrevocable and shall apply
to all subsequent years. The life expectancy of a non-spouse
beneficiary shall not be recalculated. Life expectancy is computed
by use of the expected return multiples in Tables V and VI of
section 1.72-9 of the Income Tax Regulations.
(5) Multiple IRAs: An individual may satisfy the minimum distribution
requirements under sections 408(a)(6) and 408(b)(3) of the Code by
receiving a distribution from one IRA that is equal to the amount
required to satisfy the minimum distribution requirements of two
or more IRAs. For this purpose, the Contract Holder of two or more
IRAs may use the "alternative method" described in Notice 88-38,
1988-1 C.B. 524, to satisfy the minimum distribution requirements
described above.
Endorsed and made part of this Contract on the effective date of this Contract.
/s/ G. G. Benanav
President
Aetna Life Insurance and Annuity Company
EIRACF-IC 1
<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 entitled Surrender Fee as follows:
No Surrender Fee is deducted from any portion of the Current Value which is
paid:
(c) When the Current Value is $2,500 or less and no surrenders have
been taken from the Contract within the prior 12 months. If there
is more than one Contract, then this provision will only apply
when the total in all of the Contracts is $2,500 or less; or
(d) In an amount equal to or less than 10% if the Current Value, as
part of the first partial surrender request in a calendar year to
a Contract Holder who is at least age 59 1/2 and less than 70 1/2.
The Current Value is calculated as of the date the partial
surrender request is received in good order at Aetna's Home
Office.
This provision does not apply to full surrender requests.
Endorsed and made a part of this Contract.
/s/ Edmund F. Kelly
President
Aetna Life Insurance and Annuity Company
EISIS-IA(XC)
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
The following language amends and restates the last paragraph of the cover page
of the Contract:
INDIVIDUAL VARIABLE, FIXED OR COMBINATION ANNUITY CONTRACT
NONPARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET-VALUE ADJUSTMENT
FORMULA. APPLICATION OF A MARKET-VALUE ADJUSTMENT MAY RESULT IN EITHER AN
INCREASE OR DECREASE IN THE CASH VALUE. THE MARKET-VALUE ADJUSTMENT FORMULA
DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
Endorsed and made a part of the Contract effective May 1, 1991.
/s/ John J. Martin
President
Aetna Life Insurance and Annuity Company
EMVA-IO(NY)
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed to add the following new provision to the end
of the section on page 26 titled Surrender Fee:
On the tenth anniversary of the Effective Date of this Contract, the
Surrender Fee shall reduce to 0%.
Endorsed and made a part of this Contract effective September 1, 1984.
/s/ William O. Bailey
President
ESFPPS-HO
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
This Contract is hereby endorsed as follows:
Section 5.01(e), Section 5.02(f), Section 5.03(h) Section 5.04(f) and Section
5.05(f) entitled Surrender Value, is deleted and replaced by the following:
After deduction of the Maintenance fee (if any), Aetna will reduce the
amount payable upon surrender of any portion of the Individual Account(s)
by a Surrender Fee. The Surrender Fee will be in accordance with the
Surrender Fee table in 6.02. The Surrender Fee will not exceed 9% of the
Purchase Payments made to that Account.
Endorsed and made a part of this Contract on March 1, 1989 or the effective date
of the Contract whichever is later.
/s/ John J. Martin
President
ESVI-HH(XC)
<PAGE>
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract and the Certificate, (as applicable), is hereby endorsed.
The term Valuation Period under General Definitions is amended to read 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
EVP-IC
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
Part III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS of this
Contract is endorsed to add the following new Sections:
Section 3.16 Systematic Distribution Options:
Without further amendment of this Contract, Aetna may, from time to time,
establish and make available for election by the Contract Holder, one or more
Systematic Distribution Options (SDO). When an SDO election is in effect,
installment payments will be made from the Contract without reducing any portion
of the Current Value by a Surrender Fee.
Any SDO offered by Aetna will be subject to the following criteria:
(a) Any SDO established by Aetna will be made available among
similarly situated contracts uniformly and on the basis of
objective criteria consistently applied;
(b) The availability of any SDO may be limited by minimum terms and
conditions applicable to the election of such SDO; and
(c) Aetna may discontinue the availability of an SDO at any time.
Except to the extent required in order to comply with applicable
law, any such discontinuance shall not apply to any contracts as
to which an election under such SDO is in effect at the time of
such SDO's discontinuance.
Section 3.17 Termination of Contract:
Following the completion of two Contract Years in which no Purchase Payments
have been made, Aetna reserves the right to pay the full Surrender Value to the
Contract Holder if the Current Value is less than $1,500, provided Aetna gives
the Contract Holder 90 days written notice. Such Surrender Value paid may not be
reinstated.
The full Surrender Value payable to the Contract Holder will not be reduced by
any Surrender Fee and amounts withdrawn from the Guaranteed Interest Account
(GIA), if applicable, (see Section 3.15 added by endorsement) will not receive
any reduced rate of interest. Surrenders from GIA will receive the same
guaranteed effective annual yield to the date of contract termination as if
amounts had remained in GIA until the end of a Guaranteed Term.
This provision does not apply for any Contract that has elected an Annuity
Option.
Endorsed and made a part of this Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EIP-SDOTHD-97
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
Part III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS of this
Contract is endorsed to add the following new Section:
3.16 Systematic Distribution Options:
Without further amendment of this Contract, Aetna may, from time to time,
establish and make available for election by the Contract Holder, one or more
Systematic Distribution Options (SDO). When an SDO election is in effect,
installment payments will be made from the Contract without reducing any portion
of the Current Value by a Surrender Fee or a Market Value Adjustment (MVA).
Any SDO offered by Aetna will be subject to the following criteria:
(a) Any SDO established by Aetna will be made available among
similarly situated contracts uniformly and on the basis of
objective criteria consistently applied;
(b) The availability of any SDO may be limited by minimum terms and
conditions applicable to the election of such SDO; and
(c) Aetna may discontinue the availability of an SDO at any time.
Except to the extent required in order to comply with applicable
law, any such discontinuance shall not apply to any contracts as
to which an election under such SDO is in effect at the time of
such SDO's discontinuance.
3.15 Payment of Current Value is amended and restated as follows:
Following the completion of two Contract Years in which no Purchase Payments
have been made, Aetna reserves the right to pay the full Surrender Value to the
Contract Holder if the Current Value is less than $1,500, provided Aetna gives
the Contract Holder 90 days written notice. Such Surrender Value paid may not be
reinstated.
The full Surrender Value payable to the Contract Holder will not be reduced by
any Surrender Fee and amounts from the Guaranteed Accumulation Account (GAA), if
applicable, (see Section 3.02 added by endorsement) will receive the greater of:
(a) The aggregate MVA amount from all Guaranteed Terms prior to the
end of those Terms; or
(b) The applicable portion of the Current Value in GAA.
This provision does not apply for any Contract that has elected an Annuity
Option.
Endorsed and made a part of this Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EIP-SDOTHD-97(NY)
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
The DISCONTINUANCE, NON-FORFEITURE or SURRENDER PROVISIONS as applicable in this
contract are endorsed to add the following new Sections:
Systematic Distribution Options:
Without further amendment of this Contract, Aetna may, from time to time,
establish and make available for election by the Contract Owner, one or more
Systematic Distribution Options (SDO). When an SDO election is in effect,
installment payments will be made from the Contract without reducing any portion
of the value by a Surrender Fee or a Market Value Adjustment (MVA).
Any SDO offered by Aetna will be subject to the following criteria:
(a) Any SDO established by Aetna will be made available among
similarly situated contracts uniformly and on the basis of
objective criteria consistently applied;
(b) The availability of any SDO may be limited by minimum terms and
conditions applicable to the election of such SDO; and
(c) Aetna may discontinue the availability of an SDO at any time.
Except to the extent required in order to comply with applicable
law, any such discontinuance shall not apply to any contracts as
to which an election under such SDO is in effect at the time of
such SDO's discontinuance.
Termination of Contract:
Following the completion of two contract years, or premium years if applicable,
in which no stipulated payments have been made, Aetna reserves the right to pay
the full Surrender Value to the Contract Owner if the contract value is less
than $1,500, provided Aetna gives the Contract Owner 90 days written notice.
Such Surrender Value paid may not be reinstated.
The full Surrender Value payable to the Contract Owner will not be reduced by
any Surrender Fee and amounts from the Guaranteed Accumulation Account (GAA),
(added by endorsement to the contract, if applicable) will receive the greater
of:
(a) The aggregate MVA amount from all Guaranteed Terms prior to the
end of those Terms; or
(b) The applicable portion of the contract value in GAA.
This provision does not apply for any Contract that has elected an Annuity
Option.
Endorsed and made a part of this Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EIP-SDOTPM-97(NY)
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
The DISCONTINUANCE, NON-FORFEITURE or SURRENDER PROVISIONS as applicable in this
Contract are endorsed to add the following new Sections:
Systematic Distribution Options:
Without further amendment of this Contract, Aetna may, from time to time,
establish and make available for election by the Contract Owner, one or more
Systematic Distribution Options (SDO). When an SDO election is in effect,
installment payments will be made from the Contract without reducing any portion
of the value by a Surrender Fee.
Any SDO offered by Aetna will be subject to the following criteria:
(a) Any SDO established by Aetna will be made available among
similarly situated contracts uniformly and on the basis of
objective criteria consistently applied;
(b) The availability of any SDO may be limited by minimum terms and
conditions applicable to the election of such SDO; and
(c) Aetna may discontinue the availability of an SDO at any time.
Except to the extent required in order to comply with applicable
law, any such discontinuance shall not apply to any contracts as
to which an election under such SDO is in effect at the time of
such SDO's discontinuance.
Termination of Contract:
Following the completion of two contract years, or premium years if applicable,
in which no stipulated payments have been made, Aetna reserves the right to pay
the full Surrender Value to the Contract Owner if the contract value is less
than $1,500, provided Aetna gives the Contract Owner 90 days written notice.
Such Surrender Value paid may not be reinstated.
The full Surrender Value payable to the Contract Owner will not be reduced by
any Surrender Fee and amounts withdrawn from the Guaranteed Interest Account
(GIA), (added by endorsement to the contract, if applicable) will not receive
any reduced rate of interest. Surrenders from GIA will receive the same
guaranteed effective annual yield to the date of contract termination as if
amounts had remained in GIA until the end of a Guaranteed Term.
This provision does not apply for any Contract that has elected an Annuity
Option.
Endorsed and made a part of this Contract.
/s/ Dan Kearney
President
Aetna Life Insurance and Annuity Company
EIP-SDOTPM-97
