<PAGE>
As filed with the Securities and Exchange Commission on October 1, 1998
File No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.____ [ ]
Post-Effective Amendment No.___ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No.____ [ ]
ROYAL LIFE INSURANCE COMPANY OF AMERICA
SEPARATE ACCOUNT ONE
(Exact Name of Registrant)
ROYAL LIFE INSURANCE COMPANY OF AMERICA
(Name of Depositor)
P. O. BOX 2999
HARTFORD, CT 06104-2999
(Address of Depositor's Principal Offices)
(860) 843-6320
(Depositor's Telephone Number, Including Area Code)
MARIANNE O'DOHERTY, ESQ
ROYAL LIFE INSURANCE COMPANY OF AMERICA
P. O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may determine.
<PAGE>
2
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
N-4 Item No. Prospectus Heading
------------ ------------------
1. Cover Page Royal Life Insurance Company of
America - Separate Account One
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Performance Information
Information
5. General Description of Royal Life Insurance Company of
Registrant America, Separate Account, The
Fixed Account, and The Funds
6. Deductions Charges
7. General Description of Your Annuity
Annuity Contracts
8. Annuity Period Settlement Provisions
9. Death Benefit Death Benefits
10. Purchases and Contract The Contract, Contracts Offered,
Premium Payments and Initial
Allocations and Contract Value
11. Redemptions Withdrawals
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Matters & Experts
14. Table of Contents of the Table of Contents to
Statement of Additional Statement of Additional
Information Information
15. Cover Page Part B; Statement of Additional
Information
<PAGE>
3
16. Table of Contents Table of Contents
17. General Information and History Introduction
18. Services None
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments Settlement Provisions
23. Financial Statements Financial Statements
24. Financial Statements and Financial Statements and
Exhibits Exhibits
25. Directors and Officers of the Directors and Officers of the
Depositor Depositor
26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Common Control with the Depositor
Depositor or Registrant or Registrant
27. Number of Contract Number of Contract Owners
Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Location of Accounts and Records
Records
31. Management Services Management Services
32. Undertakings Undertakings
<PAGE>
Part A
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
[PRODUCT NAME]
ROYAL LIFE INSURANCE COMPANY OF AMERICA SEPARATE ACCOUNT ONE
P. O. Box 5085
Hartford, Connecticut 06102-5085
Telephone: 1-800 [ ]
This Prospectus describes information you should know before you purchase The
[Product Name] variable annuity. Please read it carefully.
The [PRODUCT NAME] variable annuity is a contract between you and Royal Life
Insurance Company of America where you agree to make payments to us and we agree
to make a series of payments to you at a later date. The [PRODUCT NAME] is a
flexible premium, tax-deferred, variable annuity offered to both individuals and
groups. It is:
- Flexible, because you may add payments at any time.
- Tax-deferred, which means you don't pay taxes until you take payments
out or until we start to make payments to you.
- Variable, because the value of your annuity will fluctuate with the
performance of the stock market.
After purchase, you allocate your payments to "sub-accounts" or subdivisions of
our separate account, an account that keeps your annuity assets separate from
our company assets. These sub-accounts then purchase shares of mutual funds set
up exclusively for variable annuity or variable life insurance products. These
funds are not the same mutual funds that you buy through your stockbroker or
through a retail mutual fund, but they may have similar investment strategies
and the same portfolio managers as retail mutual funds. This annuity offers you
funds with investment strategies ranging from conservative to aggressive and you
may pick those funds that meet your investment style. The sub-accounts and the
funds are listed below:
- - Advisers Sub-Account which purchases shares of Class IA of Hartford
Advisers HLS Fund, Inc.
- - Bond Sub-Account which purchases shares of Class IA of Hartford Bond HLS
Fund, Inc.
- - Capital Appreciation Sub-Account which purchases shares of Class IA of
Hartford Capital Appreciation HLS Fund, Inc.
- - Dividend and Growth Sub-Account which purchase shares of Class IA of
Hartford Dividend and Growth HLS Fund, Inc.
- - Growth and Income Sub-Account which purchases shares of Class IA of
Hartford Growth and Income HLS Fund, Inc.
- - Index Sub-Account which purchases shares of Class IA of Hartford Index HLS
Fund, Inc.
- - International Advisers Sub-Account which purchases shares of Class IA of
Hartford International Advisers HLS Fund, Inc.
- - International Opportunities Sub-Account which purchases shares of Class IA
of Hartford International Opportunities HLS Fund, Inc.
- - MidCap Sub-Account which purchases shares of Class IA of Hartford MidCap
HLS Fund, Inc.
- - Money Market Sub-Account which purchases shares of Class IA of Hartford
Money Market HLS Fund, Inc.
<PAGE>
2
- - Mortgage Securities Sub-Account which purchases shares of Class IA of
Hartford Mortgage Securities HLS Fund, Inc.
- - Small Company Sub-Account which purchases shares of Class IA of Hartford
Small Company HLS Fund, Inc.
- - Stock Sub-Account which purchases of Class IA of Hartford Stock HLS Fund,
Inc.
You may also allocate some or all of your payments to the "fixed account", which
pays an interest rate guaranteed for at least one year from the time the payment
is made. Payments put in the fixed account are not segregated from our assets
like the assets of separate account.
If you decide to buy this annuity, you should keep this prospectus for your
records. You can also call us at 1-800-xxx-xxxx to get a Statement of
Additional Information, free of charge. The Statement of Additional Information
contains more information about this annuity and, like this prospectus, is filed
with the Securities and Exchange Commission. You should read the Statement of
Additional information because you are bound by the terms contained in it. We
have included the Table of Contents for the Statement of Additional Information
on page __. Although we file the Prospectus and the Statement of Additional
information with the Securities and Exchange Commission, the Commission doesn't
approve or disapprove these securities or determine if the information is
truthful or complete. Anyone who represents that the Securities and Exchange
Commission does these things may be guilty of a criminal offense.
This Prospectus and the Statement of Additional Information can also be obtained
from the Securities and Exchange Commissions' website (HTTP://WWW.SEC.GOV).
This annuity IS NOT:
- - a bank deposit or obligation
- - federally insured
- - endorsed by any bank or governmental agency
- - available for sale in all states
Prospectus Dated: [ ], 1998
Statement of Additional Information Dated: [ ], 1998
<PAGE>
3
Table Of Contents
PAGE
----
Glossary of Special Terms. . . . . . . . . . . . . . . . . . . . . . . . . .
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
About Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royal Life Insurance Company of America . . . . . . . . . . . . . . . .
Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance of the Funds
Your Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Product Name]. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Death Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement Provisions . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of Royal and the Separate Account. . . . . . . . . . . . . . .
Taxation of Annuities - General Provisions Affecting Purchasers other than
Qualified Retirement Plans . . . . . . . . . . . . . . . . . . . . .
Federal Income Tax Withholding. . . . . . . . . . . . . . . . . . . . .
General Provisions Affecting Qualified Retirement Plans . . . . . . . .
Annuity Purchases by Nonresident Aliens and Foreign Corporations. . . .
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How we Sell our Annuity . . . . . . . . . . . . . . . . . . . . . . . .
Legal Matters and Experts . . . . . . . . . . . . . . . . . . . . . . .
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . .
Appendix I Information Regarding Tax-Qualified Plans . . . . . . . . . . . .
Table of Contents to Statement of Additional Information . . . . . . . . . .
<PAGE>
4
Glossary of Special Terms
Accumulation Unit: A unit of measure we use to calculate values before we begin
to make payments to you.
Administrative Office of Royal: Located at 200 Hopmeadow Street, Simsbury, CT
06089.
Annual Maintenance Fee: An annual $30 charge for annuities having a value of
less than $50,000 on the most recent Contract Anniversary or when the annuity is
surrendered in full. The charge is deducted proportionately from the investment
options in use at the time.
Annual Withdrawal Amount: The amount that can be withdrawn in any Contract Year
before we charge you a surrender charge.
Annuitant: The person on whose life the Contract is issued. The Annuitant may
not be changed.
Annuity: A Contract issued by an insurance company that provides, in exchange
for premium payments, a series of income payments. This Prospectus describes a
deferred annuity where premium payments accumulate tax-deferred until a partial
or full surrender is taken or until we begin to make payments to you.
Annuity Commencement Date: The date we start to make payments to you.
Annuity Unit: A unit of measure we use to calculate the value of the payments we
make to you.
Beneficiary: The person entitled to receive the payment of the death benefit
upon the death of you or the Annuitant.
Code: The Internal Revenue Code of 1986, as amended.
Commission: The Securities and Exchange Commission.
Contingent Annuitant: The person you may designate who becomes the Annuitant if
the original Annuitant dies before we start making payments to you.
Contract: The contract is the individual Annuity and any endorsements or
riders. If you are enrolled under a group annuity, you receive a certificate
rather than a contract.
Contract Anniversary: The anniversary of the Contract Date.
Contract Owner or You: The owner of the annuity.
Contract Value: The total value of your Sub-Accounts plus any amounts you have
in the Fixed Account.
Contract Year: A period of 12 months commencing with the Contract Date the first
year and the Contract Anniversary after the first year.
Death Benefit: The amount we pay when you or the Annuitant dies.
<PAGE>
5
Due Proof of Death: A certified copy of a death certificate, an order of a court
of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to Royal.
Fixed Account: This is an account which is part of our General Account and you
may allocate all or a portion of your payments or Contract Value to this
account.
Funds: The Funds described commencing on page __ of this Prospectus.
General Account: Our General Account that is all our assets other than the
assets in our separate accounts.
Maximum Anniversary Value: One of the values we use to determine your Death
Benefit. It is determined annually on your anniversary date and is equal to the
highest value your annuity reached on any annuity anniversary date. The maximum
anniversary value is calculated only up to age 80, and we use that value each
year after age 80 as your maximum anniversary value.
Premium Tax: A tax charged by a state or municipality on premium payments.
Royal (or us): Royal Life Insurance Company of America.
Separate Account: For this annuity, the separate account is the Royal Life
Insurance Company of America Separate Account One.
Sub-Account: Divisions established within the Separate Account.
Termination Value: What we pay you if you terminate your annuity before we begin
to make payments to you.
Valuation Day: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined as of the close of the New York
Stock Exchange (generally 4:00 p.m. Eastern Time).
Valuation Period: The period between the close of business on successive
Valuation Days.
<PAGE>
6
Fee Table
Summary
Your Transaction Expenses
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium payments) . . . . . . . . . None
Deferred Sales Load (as a percentage of amounts withdrawn)
First Year (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Second Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Third Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fourth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fifth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Sixth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
Seventh Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
Eighth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Annual Maintenance Fee (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30
Annual Expenses-Separate Account (as percentage of average account value)
Mortality and Expense Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.250%
</TABLE>
- ----------
(1) Length of time from premium payment.
(2) The Annual Maintenance Fee is an annual $30 charge for annuities with a
contract value less than $50,000 on your Anniversary Date or when you
surrender your annuity.
Annual Fund Operating Expenses
(As a percentage of net assets)
<TABLE>
<CAPTION>
Total Fund
Management Other Operating
Fees Expenses Expenses
---- -------- --------
<S> <C> <C> <C>
Hartford Bond HLS Fund. . . . . . . . . . . . . . . . . . . . . . . 0.490% 0.020% 0.510%
Hartford Stock HLS Fund . . . . . . . . . . . . . . . . . . . . . . 0.430% 0.020% 0.450%
Hartford Money Market HLS Fund. . . . . . . . . . . . . . . . . . . 0.425% 0.015% 0.440%
Hartford Advisers HLS Fund. . . . . . . . . . . . . . . . . . . . . 0.610% 0.020% 0.630%
Hartford Capital Appreciation HLS Fund. . . . . . . . . . . . . . . 0.620% 0.020% 0.640%
Hartford Mortgage Securities HLS Fund . . . . . . . . . . . . . . . 0.425% 0.025% 0.450%
Hartford Index HLS Fund . . . . . . . . . . . . . . . . . . . . . . 0.375% 0.015% 0.390%
Hartford International Opportunities HLS Fund . . . . . . . . . . . 0.680% 0.090% 0.770%
Hartford Dividend & Growth HLS Fund . . . . . . . . . . . . . . . . 0.660% 0.020% 0.680%
Hartford International Advisers HLS Fund. . . . . . . . . . . . . . 0.750% 0.120% 0.870%
Hartford MidCap HLS Fund (1). . . . . . . . . . . . . . . . . . . . 0.750% 0.040% 0.790%
Hartford Small Company HLS Fund . . . . . . . . . . . . . . . . . . 0.750% 0.020% 0.770%
Hartford Growth and Income HLS Fund (1) . . . . . . . . . . . . . . 0.520% 0.150% 0.670%
</TABLE>
- ----------
(1) Hartford Growth and Income HLS Fund is a new Fund. "Total Fund Operating
Expenses" are based on annualized estimates of such expenses to be incurred in
the current fiscal year. HL Investment Advisors, Inc. has agreed to waive its
fees for the Hartford Growth and Income HLS Fund until the assets of the Funds
(excluding assets contributed by companies affiliated with HL Investment
Advisors, Inc.) reach $20 million. Absent this waiver, the management fee would
be 0.750% annually and Total Fund Operating Expenses ratio would be 0.900%
(annualized).
<PAGE>
8
EXAMPLE
- -------
<TABLE>
<CAPTION>
If you surrender your If you annuitize your If you do not surrender your
Contract at the end of the Contract at the end of the Contract, you would pay the
applicable time period you applicable time period you following expenses on a
would pay the following would pay the following $1,000 investment,
expenses on a $1,000 expenses on a $1,000 assuming a 5% annual
investment, assuming a 5% investment, assuming a 5% return on assets:
annual return on assets: annual return on assets:
Sub-Account 1 year 3 years 5 years 10 years 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> <C> <C> <C> <C>
Bond Fund. . . . $73 $106 $139 $215 $18 $57 $99 $214 $19 $58 $99 $215
Stock Fund . . . 72 104 136 209 17 55 96 208 18 56 96 209
Money Market 72 104 136 208 17 55 95 207 18 56 96 208
Fund . . . . .
Advisers Fund. . 74 109 146 228 19 61 105 227 20 61 106 228
Capital 74 110 146 229 19 61 105 228 20 62 106 229
Appreciation
Fund . . . . .
Mortgage 72 104 136 209 17 55 95 208 18 56 96 209
Securities
Fund . . . . .
Index Fund . . . 71 102 133 202 17 53 92 201 17 54 93 202
International 75 114 153 243 21 65 112 242 21 66 113 243
Opportunities
Fund . . . . .
Dividend & 74 111 148 233 20 62 108 233 20 63 108 233
Growth Fund. .
International 76 117 158 253 22 68 117 253 22 69 118 253
Advisers
Fund . . . . .
MidCap Fund. . . 76 114 N/A N/A 21 66 N/A N/A 22 66 N/A N/A
Small Company 75 114 153 243 21 65 112 242 21 66 113 243
Fund . . . . .
Growth and 74 111 N/A N/A 20 62 N/A N/A 20 63 N/A N/A
Income Fund. .
</TABLE>
The purpose of this table is to assist you in understanding various costs
and expenses that you will bear directly or indirectly. The table reflects
expenses of the Separate Account and underlying Funds. Premium taxes may also be
applicable.
This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
The Annual Maintenance Fee has been reflected in the Example using a method
intended to show the "average" impact of the Annual Maintenance Fee. In the
Example, the Annual Maintenance Fee is approximately a 0.08% annual charge.
<PAGE>
9
SUMMARY
How do I purchase the annuity?
You must complete our enrollment form and submit it to us for approval with your
first payment. Your first payment must be at least $1,000 and subsequent
payments must be at least $500. If you wish to make automatic monthly payments
into your annuity, you may enroll in our pre-authorized checking program. Under
this program, your subsequent monthly payments can be as low as $50.
For a limited time, usually ten days after you receive your annuity, you may
cancel your annuity without paying a sales charge.
What type of sales charge will I pay?
You don't pay a sales charge when you purchase your annuity. We may charge you
deferred sales charge when you terminate or withdraw amounts invested in your
annuity. We assess a sales charge on amounts withdrawn that exceed 10% of the
total amounts you have paid into your annuity if these amounts have been in your
annuity for less than seven years. The sales charge is applied to amounts
withdrawn that exceed 10% of the total amounts paid in and will depend on the
length of time the payment you made has been in your annuity. If the amount you
paid has been in your annuity:
- - For less than two years, the charge is 6%.
- - For more than two years and less than four years, the charge is 5%.
- - For more than four years and less than five years, the charge is 4%.
- - For more than five years and less than six years, the charge is 3%
- - For more than six years and less than seven years, the charge is 2%.
You won't be charged a sales charge on:
- - Payments that have been in your annuity for more than seven years.
- - distributions made due to death
- - most payments we make to you as part of your annuity payments
See page _ for a complete description of how sales charges are assessed.
Is there an Annual Maintenance Fee?
Yes. We deduct a $30.00 fee each year on the anniversary of your purchase or
when you terminate your annuity, if the value of your annuity is less than
$50,000.
What charges will I pay on an annual basis?
You pay two different types of charges each year. The first type of charge is
the fee you pay for insurance. This charge is:
- - A mortality and expense risk charge that is subtracted daily and is equal
to an annual payment of
<PAGE>
10
1.25% of your money invested in the funds.
The second type of charge is the fee you pay for the funds.
- - Currently, the total fund charges range from 0.39% to 0.87% of the average
daily value of the amount you have invested in the funds.
The annual insurance charges and the total fund charges as of December 31, 1997
are set forth in the table below:
<TABLE>
<CAPTION>
ANNUAL ANNUAL ANNUAL TOTAL TOTAL
THE SUB-ACCOUNTS INSURANCE MAINTENANCE FUND CHARGES CHARGES YOU
<S> <C> <C> <C> <C>
Advisers 1.25% .08% 0.63% %
Bond 1.25% .08% 0.51% %
Capital Appreciation 1.25% .08% 0.64% %
Dividend and Growth 1.25% .08% 0.68% %
Growth and Income 1.25% .08% 0.65% %
Index 1.25% .08% 0.39% %
International 1.25% .08% 0.79% %
Advisers
International 1.25% .08% 0.77% %
Opportunities
Mid-Cap 1.25% .08% 0.79% %
Money Market 1.25% .08% 0.44% %
Mortgage Securities 1.25% .08%. 0.45% %
Small Company 1.25% .08% 0.77% %
Stock 1.25% .08% 0.45% %
</TABLE>
* These charges reflect any fees that may have been waived by the funds'
investment advisers.
The figure that appears in the "Annual Total Fund Charges" column illustrates
the sum of the management fees and other expenses that the funds charge. For a
complete description of these fees, see the funds' prospectuses in the back of
this book.
Can I take out any of my money?
/ / You may withdraw all or part of the amounts you have invested at any time
before we start making payments to you.
<PAGE>
11
/ / Each year you may withdraw up to 10% of your payments without having to pay
a sales charge.
You may have to pay tax on the money you take out and, if you take money out
before you are 59 2 you may have to pay a tax penalty.
Will we pay a death benefit?
There is a death benefit if you, your joint owner or your annuitant (the person
on whose life this annuity is based), dies before we begin to make payments to
you. The death benefit will be determined as of the date we receive acceptable
proof of death and will be the greater of:
- - The total payments you have made to us minus any amounts you have taken
out, or
- - The total value of your annuity, or
- - Your maximum anniversary value, which is the highest value your annuity
reached on any annuity anniversary date up to age 80, reduced by any
subsequent withdrawals and increased by any subsequent payments.
What payment options are available?
When it comes time for us to pay you, you may choose on of the following annuity
payment options, or receive a lump sum:
- Life Annuity where we make scheduled payments to you for the rest of
your life.
Payments under this option stop upon the death of the annuitant, even if the
annuitant dies after one payment.
- Life Annuity with 120, 180 or 240 Monthly Payments Certain where we
make payments to you for your life but you are at least guaranteed
payments for 120, 180 or 240 months, which ever you select. If the
annuitant dies before the end of the period selected, we will continue
to make payments to your beneficiary until the end of the period
selected.
- Joint and Last Survivor Annuity where we make payments during the
lifetime of you and another designated individual and then throughout
the remaining lifetime of the survivor.
- Payments for a Designated Period where we make payments for a
specified time between 5 and 30 years. If the annuitant dies before
the end of the specified time, we pay the beneficiary the present
value of the annuity in one lump sum or continue making the payments
to the beneficiary. You may terminate this option after payments have
started.
You must begin to take payments before the annuitiant's 90th birthday or earlier
in some states. If you do not tell us what payment option you want before that
time, we will pay you under the Payment of a Designated Period option for 5
years from the annuitiant's 90th birthday.
<PAGE>
12
Royal, Separate Account,
The Funds and
The Fixed Account
Royal Life Insurance Company of America
Royal Life Insurance Company of America ("Royal") is a stock life insurance
company engaged in the business of writing life insurance in all states of the
United States and the District of Columbia. Royal was originally incorporated
under the laws of Connecticut on September 16, 1963. Its offices are located
in Simsbury, Connecticut; however, its mailing address is P.O. Box 5085,
Hartford, CT 06104-5085. Royal is ultimately controlled by Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
Separate Account
The Separate Account was established on September 1, 1998. It is the
Separate Account in which Royal sets aside and invests the assets attributable
to variable annuity Contracts, including the Contracts sold under this
Prospectus. Separate Account assets are held by Royal under a safekeeping
arrangement. Although the Separate Account is an integral part of Royal, it is
registered as a unit investment trust under the Investment Company Act of 1940.
This registration does not, however, involve Commission supervision of the
management or the investment practices or policies of the Separate Account or
Royal. The Separate Account meets the definition of "separate account" under
federal securities law.
Under Connecticut law, the assets of the Separate Account attributable to
the Contracts offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Contracts. Income,
gains, and losses, whether or not realized, from assets allocated to the
Separate Account, are, in accordance with the Contracts, credited to or charged
against the Separate Account. Also, the assets in the Separate Account are not
chargeable with liabilities arising out of any other business Royal may conduct.
Contract Values allocated to the Separate Account is not affected by the rate of
return of Royal's General Account, nor by the investment performance of any of
Royal's other separate accounts. The Separate Account may be subject to
liabilities arising from a Sub-Account of the Separate Account whose assets are
attributable to other variable annuity Contracts or variable life insurance
policies offered by the Separate Account which are not described in this
Prospectus. However, all obligations arising under the Contracts are general
corporate obligations of Royal.
Royal does not guarantee the investment results of the Separate Accounts or
any of the underlying investment options. There is no assurance that the value
of a Contract during the years prior to retirement or the aggregate amount of
the Variable Annuity payments will equal the total of Premium Payments made
under the Contract. Since each underlying Fund has different investment
objectives, each is subject to different risks. These risks are more fully
described in the accompanying Funds' prospectus.
The Funds
All of the Funds are incorporated under the laws of the State of Maryland.
HL Investment Advisors, Inc. ("HL Advisors") serves as the investment adviser to
each of the Funds.
<PAGE>
13
Wellington Management Company, LLP serves as sub-investment adviser for
Hartford Advisers Fund, Hartford Capital Appreciation Fund, Hartford Dividend
and Growth Fund, Hartford International Advisers Fund, Hartford International
Opportunities Fund, Hartford MidCap Fund, Hartford Small Company Fund, Hartford
Stock Fund and Hartford Growth and Income Fund.
In addition, HL Advisors has entered an investment services agreement with
The Hartford Investment Management Company ("HIMCO"), pursuant to which HIMCO
will provide certain investment services to Hartford Bond Fund, Hartford Index
Fund, Hartford Mortgage Securities Fund and Hartford Money Market Fund.
A full description of the Funds, their investment policies and
restrictions, risks, charges and expenses and all other aspects of their
operation is contained in the accompanying Funds' prospectus which should be
read in conjunction with this Prospectus before investing and in the Funds'
Statement of Additional Information which may be ordered from Royal.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
Hartford Advisers HLS Fund
Seeks maximum long-term total rate of return by investing in common stocks
and other equity securities, bonds and other debt securities, and money market
instruments.
Hartford Bond HLS Fund
Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets of
this Fund may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's Investor Services, Inc. or "BB" by Standard &
Poor's) or, if unrated, are determined to be of comparable quality by the Fund's
investment adviser. Securities rated below investment grade are commonly
referred to as "high yield-high risk securities" or "junk bonds." For more
information concerning the risks associated with investing in such securities,
please refer to the section in the accompanying prospectus for the Funds
entitled "Hartford Bond HLS Fund, Inc. - Investment Policies."
Hartford Capital Appreciation HLS Fund
Seeks growth of capital by investing in equity securities selected solely
on the basis of potential for capital appreciation.
Hartford Dividend and Growth HLS Fund
Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
Hartford Index HLS Fund
<PAGE>
14
Seeks to provide investment results which approximate the price and yield
performance of publicly-traded common stocks in the aggregate, as represented by
the Standard & Poor's 500 Composite Stock Price Index.*
Hartford International Advisers HLS Fund
Seeks maximum long-term total return consistent with prudent investment
risk by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets.
Hartford International Opportunities HLS Fund
Seeks growth of capital by investing primarily in equity securities issued
by non-U.S. companies.
Hartford MidCap HLS Fund
Seeks to achieve long-term capital growth through capital appreciation by
investing primarily in equity securities.
Hartford Mortgage Securities HLS Fund
Seeks maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related securities,
including securities issued by the Government National Mortgage Association.
Hartford Small Company HLS Fund
Seeks growth of capital by investing primarily in equity securities
selected on the basis of potential for capital appreciation.
Hartford Stock HLS Fund
Seeks long-term growth by investing primarily in equity securities.
Hartford Money Market HLS Fund
Seeks maximum current income consistent with liquidity and preservation of
capital.
- - Hartford Growth and Income HLS Fund
Seeks growth of capital and current income by investing primarily in equity
securities with earnings growth potential and steady or rising dividends.
* Standard & Poor's-Registered Trademark-," "S&P-Registered Trademark-," "S&P
500-Registered Trademark-," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for
use by Hartford. The Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in the Index Fund.
<PAGE>
15
Voting Rights - We are the legal owners of all Fund shares held in the Separate
Account and we have the right to vote at the Fund's shareholder meetings. To
the extent required by federal securities laws or regulations, we will:
- - Notify you of any Fund shareholders' meeting if the shares held for your
Contract may be voted.
- - Send proxy materials and a form of instructions that you can use tell us
how to vote the Fund shares held for your Contract.
- - arrange for the handling and tallying of proxies received from Contract
Owners
- - Vote all Fund shares attributable to your Contract according to
instructions received from you, and
- - Vote all Fund shares for which no voting instructions are received in the
same proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any Shareholder Meeting at which shares held for your Contract may be
voted. After we begin to make payments to you, the number of votes you have
will decrease,
Substitutions, Additions, or Deletions of Investments - We reserve the right,
subject to any applicable law, to make certain changes to the investment options
offered under Your Contract. We may, in our sole discretion, establish new
Funds. New Funds will be will be made available to existing Contract Owners as
we determined appropriate. We may also close one or more Funds to additional
Payments or transfers from existing Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any reason
and to substitute shares of another registered investment company for the shares
of any Fund already purchased or to be purchased in the future by the Separate
Account. To the extent required by the 1940 Act, substitutions of shares
attributable to your interest in a Fund will not be made until we have the
approval of the Commission and we have notified you of the change.
In the event of any substitution or change, We may, by appropriate endorsement,
make such changes in the Contract as may be necessary or appropriate to reflect
such substitution or change. If we decide that it is in the best interest
Contracts Owners, the Separate Account may be operated as a management company
under the 1940 Act or any other form permitted by law, may be de-registered
under the 1940 Act in the event such registration is no longer required, or may
be combined with one or more other separate accounts.
The Fixed Account
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT
IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE
1940 ACT, AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED
BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE
ABOUT THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND
COMPLETENESS OF DISCLOSURE.
<PAGE>
16
Premium Payments and Contract Values allocated to the Fixed Account become
a part of the general assets of Royal. Royal invests the assets of the General
Account in accordance with applicable law governing the investments of Insurance
Company General Accounts.
Currently, Royal guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the Fixed
Account under the Contracts. However, Royal reserves the right to change the
rate according to state insurance law. Royal may credit interest at a rate in
excess of 3% per year. There is no specific formula for the determination of
excess interest credits. Some of the factors that Royal may consider in
determining whether to credit excess interest to amounts allocated to the Fixed
Account and the amount thereof, are general economic trends, rates of return
currently available and anticipated on Royal 's investments, regulatory and tax
requirements and competitive factors. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED
TO THE FIXED ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE DETERMINED IN THE SOLE
DISCRETION OF ROYAL. THE OWNER ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED
ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN
YEAR.
From time to time, Royal may credit increased interest rates to you under
certain programs established at the discretion of Royal.
Performance Related Information
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
All of the Sub-Accounts may include total return in advertisements or other
sales material.
When a Sub-Account advertises its standardized total return, it will be
calculated to a date not earlier than the effective date of the Separate
Account. This figure will usually be calculated for one year, five years, and
ten years or some other relevant period if the Separate Account has not been in
existence for one, five or ten years. Total return is measured by comparing the
value of an investment in the Sub-Account at the beginning of the relevant
period to the value of the investment at the end of the period.
In addition to the standardized total return, the Sub-Account may advertise
non-standardized total returns. This figure will usually be calculated for one
year, five years, and ten years or other relevant period if the Separate Account
has not been in existence for one, five or ten years. This non-standardized
total return is measured in the same manner as the standardized total return
described above, except that the Annual Maintenance Fee is not deducted.
Therefore, this non-standardized total return for a Sub-Account is higher than
standardized total return for a Sub-Account.
The Separate Account may also advertise non-standard total returns that pre-date
the inception date of the Separate Account. These non-standardized total
returns are calculated by assuming that the Sub-Accounts have been in existence
for the same periods as the underlying Funds and by taking deductions for
charges equal to those currently assessed against the Sub-Accounts. These
non-standardized returns must be accompanied by standardized total returns.
<PAGE>
17
Certain Sub-Accounts, if applicable, may advertise yield in addition to total
return. The yield will be computed in the following manner: The net investment
income per unit earned during a recent one month period is divided by the unit
value on the last day of the period. This figure reflects the recurring charges
at the Separate Account level including the Annual Maintenance Fee.
The Money Market Fund Sub-Account may advertise yield and effective yield. The
yield of the Money Market Fund Sub-Account is based upon the income earned by
the Sub-Account over a 7-day period and then annualized, i.e. the income earned
in the period is assumed to be earned every 7 days over a 52-week period and
stated as a percentage of the investment. Effective yield is calculated
similarly but when annualized, the income earned by the investment is assumed to
be reinvested in Sub-Account units and thus compounded in the course of a
52-week period. Yield and effective yield reflect the recurring charges at the
Separate Account level including the Annual Maintenance Fee.
The Separate Account may also disclose yield, standard total return, and
non-standard total return. For periods prior to the date the Separate Account
commenced operations, performance information for the Sub-Accounts will be
calculated based on the performance of the underlying Funds and the assumption
that the Sub-Accounts were in existence for the same periods as those of the
underlying Funds, with a level of charges equal to those currently assessed
against the Sub-Accounts.
Royal may provide information on various topics to Contract Owners and
prospective Contract Owners in advertising, sales literature or other materials.
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, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in
tax-advantaged and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
other investment alternatives, including comparisons between the Contracts and
the characteristics of and market for such alternatives.
YOUR ANNUITY
[Product Name]
The Contracts are individual tax-deferred Variable Annuity Contracts
designed for retirement planning purposes and may be purchased by any
individual, including any trustee or custodian for a retirement plan qualified
under Sections 401(a) or 403(a) of the Code; annuity purchase plans adopted by
public school systems and certain tax-exempt organizations according to Section
403(b) of the Code; Individual Retirement Annuities adopted according to Section
408 of the Code; employee pension plans established for employees by a state, a
political subdivision of a state, or an agency or instrumentality of either a
state or a political subdivision of a state, and certain eligible deferred
compensation plans as defined in Section 457 of the Code ("Qualified
Contracts"). The maximum issue age for the Contract is 85 years old.
Payments
<PAGE>
18
Generally, the minimum initial Premium Payment is $1,000; the minimum
subsequent payment is $500, if you are in the InvestEase program the minimum
subsequent payment is $50. Certain plans may make smaller periodic payments.
Each Premium Payment may be split among the various Sub-Accounts and/or the
Fixed Account subject to minimum amounts then in effect.
Refund Rights - If you are not satisfied with your purchase you may cancel
the Contract by returning it within ten days (or longer in some states) after
you receive it. A written request for cancellation must accompany the Contract.
In such event, Royal will, without deduction for any charges normally assessed
thereunder, pay you an amount equal to the Contract Value on the date of receipt
of the request for cancellation. You bear the investment risk during the period
prior to Royal's receipt of request for cancellation Royal will refund the
premium paid only for individual retirement annuities (if returned within seven
days of receipt) and in those states where required by law.
Crediting and Valuation - The balance of the initial Premium Payment
remaining after the deduction of any applicable Premium Tax is credited to your
Contract within two business days of receipt of a properly completed application
or an order to purchase a Contract and the initial Premium Payment by Royal at
its Administrative Office. It will be credited to the Sub-Account(s) and/or the
Fixed Account in accordance with your election. If the application or other
information is incomplete when received, the balance of the initial Premium
Payment, after deduction of any applicable Premium Tax, will be credited to the
Sub-Account(s) or the Fixed Account within five business days of receipt. If the
initial Premium Payment is not credited within five business days, the Premium
Payment will be immediately returned unless you have been informed of the delay
and request that the Premium Payment not be returned.
The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment being
credited to each Sub-Account by the value of an Accumulation Unit in that
Sub-Account on that date.
Subsequent Premium Payments are priced on the Valuation Day received by
Royal in its Administrative Office.
Contract Value
The value of the Sub-Account investments under your Contract at any time
prior to the commencement of Annuity payments can be determined by multiplying
the total number of Accumulation Units credited to your Contract in each
Sub-Account by the then current Accumulation Unit values for the applicable
Sub-Account. The value of the Fixed Account under your Contract will be the
amount allocated to the Fixed Account plus interest credited.
You will be advised at least semiannually of the number of Accumulation
Units credited to each Sub-Account, the current Accumulation Unit values, the
Fixed Account value, and the total value of your Contract.
Accumulation Unit Values - The Accumulation Unit value for each Sub-Account
will vary to reflect the investment experience of the applicable Fund and will
be determined on each Valuation Day by multiplying the Accumulation Unit value
of the particular Sub-Account on the preceding Valuation Day by a "Net
Investment Factor" for that Sub-Account for the Valuation Period then ended. The
"Net Investment Factor" for each of the Sub-Accounts is equal to (a) the net
asset value per share of the
<PAGE>
19
corresponding Fund at the end of the Valuation Period (plus the per share amount
of any dividends or capital gains distributed by that Fund if the ex-dividend
date occurs in the Valuation Period then ended) divided by the net asset value
per share of the corresponding Fund at the beginning of the Valuation Period,
(b) minus the mortality and expense risk charge and the administration charge
described below. You should refer to the prospectus for each of the Funds which
accompanies this Prospectus for a description of how the assets of each Fund are
valued since each determination has a direct bearing on the Accumulation Unit
value of the Sub-Account and therefore the value of a Contract. The Accumulation
Unit Value is affected by the performance of the underlying Fund(s), expenses
and deduction of the charges described in this Prospectus.
Valuation of Fund Shares - The shares of the Fund are valued at net asset
value on each Valuation Day. A complete description of the valuation method used
in valuing Fund shares may be found in the accompanying Funds' prospectus.
Valuation of the Fixed Account - Royal will determine the value of the
Fixed Account by crediting interest to amounts allocated to the Fixed Account.
Transfers
You may transfer the values of your Sub-Account allocations from one or
more Sub-Accounts to another free of charge. However, Royal reserves the right
to limit the number of transfers to twelve (12) per Contract Year, with no two
(2) transfers occurring on consecutive Valuation Days. Transfers by telephone
may be made by You or by the attorney-in-fact pursuant to a power of attorney.
Telephone transfers may not be permitted by some states.
The policy of Royal and its agents and affiliates is that they will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be genuine. Royal will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. The procedures Royal follows
for transactions initiated by telephone include requirements that callers
provide certain information for identification purposes. All transfer
instructions by telephone are tape recorded.
Royal may permit the Contract Owner to pre-authorize transfers among
Sub-Accounts and between Sub-Accounts and the Fixed Account under certain
circumstances. Transfers between the Sub-Accounts may be made both before and
after Annuity payments commence (limited to once a quarter) provided that the
minimum allocation to any Sub-Account may not be less than $500. No minimum
balance is required in any Sub-Account.
It is the responsibility of the Contract Owner to verify the accuracy of
all confirmations of transfers and to promptly advise Royal of any inaccuracies
within 30 days of receipt of the confirmation. Royal will send the Contract
Owner a confirmation of the transfer within five days from the date of any
instruction.
Transfers from the Fixed Account into a Sub-Account may be made at any time
during the Contract Year. The maximum amount which may be transferred from the
Fixed Account during any Contract Year is the greater of 30% of the Fixed
Account balance as of the last Contract Anniversary or the greatest amount of
any prior transfer from the Fixed Account. If Royal permits pre-authorized
transfers from the Fixed Account to the Sub-Accounts, this restriction is
inapplicable. Also, if any
<PAGE>
20
interest rate is renewed at a rate of at least one percentage point less than
the previous rate, the Contract Owner may elect to transfer up to 100% of the
funds receiving the reduced rate within 60 days of notification of the interest
rate decrease. Generally, transfers may not be made from any Sub-Account into
the Fixed Account for the six-month period following any transfer from the Fixed
Account into one or more of the Sub-Accounts. Royal reserves the right to modify
the limitations on transfers from the Fixed Account and to defer transfers from
the Fixed Account for up to six months from the date of request.
Subject to the exceptions set forth in the following two paragraphs, the
right to reallocate Contract Values is subject to modification if Royal
determines, in its sole opinion, that the exercise of that right by one or more
Contract Owners is, or would be, to the disadvantage of other Contract Owners.
Any modification could be applied to transfers to or from some or all of the
Sub-Accounts and the Fixed Account and could include, but not be limited to, the
requirement of a minimum time period between each transfer, not accepting
transfer requests of an agent acting under a power of attorney on behalf of more
than one Contract Owner, or limiting the dollar amount that may be transferred
between the Sub-Accounts and the Fixed Account by Contract Owners at any one
time. Such restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which is considered by Royal to be to the
disadvantage of other Contract Owners.
For Contracts issued in the State of New York, the reservation of rights
set forth in the preceding paragraph is limited to (i) requiring up to a maximum
of 10 Valuation Days between each transfer: (ii) limiting the amount to be
transferred on any one Valuation Day to no more than $2 million; and (iii) upon
30 days prior written notice, to only accepting transfer instructions from You
and not from Your representative, agent or person acting under a power of
attorney for You.
Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that Royal will not accept instructions from agents
acting under a power of attorney of multiple Contract Owners whose accounts
aggregate more than $2 million, unless the agent has entered into a third party
transfer services agreement with Royal.
Charges
Contingent Deferred Sales Charges ("Sales Charges")
Purpose of Sales Charges - Sales Charges cover expenses relating to the
sale and distribution of the Contracts, including commissions paid to
distributing organizations and its sales personnel, the cost of preparing sales
literature and other promotional activities. If these charges are not sufficient
to cover sales and distribution expenses, Royal will pay them from its general
assets, including surplus. Surplus might include profits resulting from unused
mortality and expense risk charges.
Assessment of Sales Charges - There is no deduction for sales expenses from
Premium Payments when made, however, a Sales Charge may be assessed against
Premium Payments when surrendered. The length of time from receipt of a Premium
Payment to the time of surrender determines the percentage of the Sales Charge.
Premium payments are deemed to be surrendered in the order in which they were
received.
During the first seven years from each Premium Payment, a Sales Charge will
be assessed against the surrender of Premium Payments. During this time, all
surrenders in excess of the Annual
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21
Withdrawal Amount will be first from Premium Payments and then from earnings.
The Annual Withdrawal Amount is first from earnings and then from Premium
Payments. After the seventh Contract Year, all surrenders will first be taken
from earnings and then from Premium Payments and a Sales Charge will not be
assessed against the surrender of earnings. If an amount equal to all earnings
has been surrendered, a Sales Charge will not be assessed against Premium
Payments received more than seven years prior to surrender, but will be assessed
against Premium Payments received less than seven years prior to surrender. For
additional information, see Federal Tax Considerations, page _.
Upon receipt of a request for a full surrender, Royal will assess any
applicable Sales Charge against the surrender proceeds representing the lesser
of: (1) aggregate Premium Payments not previously withdrawn or (2) the Contract
Value, less the Annual Withdrawal Amount available at the time of the full
surrender, less the Annual Maintenance Fee, if applicable. Taking the Annual
Withdrawal Amount prior to the full surrender may, depending upon the amount of
investment gain experienced, reduce the amount of any Sales Charge paid.
The Sales Charge is a percentage of the amount surrendered (not to exceed
the aggregate amount of the Premium Payments made) and equals:
<TABLE>
<CAPTION>
Charge Length of time from
Premium Payment
(Number of Years)
<S> <C>
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
</TABLE>
Payments Not Subject to Sales Charges
Annual Withdrawal Amount - During the first seven years from each Premium
Payment, on a non-cumulative basis, You may make a partial surrender of Contract
Values of up to 10% of the aggregate Premium Payments, as determined on the date
of the requested surrender, without the application of the Sales Charge. After
the seventh year from each Premium Payment, also on a non-cumulative basis, You
may make a partial surrender of 10% of Premium Payments made during the seven
years prior to the surrender and 100% of the Contract Value less the Premium
Payments made during the seven years prior to the surrender.
Extended Withdrawal Privilege - This privilege allows Annuitants who attain
age 70 1/2 with a Contract held under an Individual Retirement Account or 403(b)
plan to surrender an amount equal to the required minimum distribution for the
stated Contract without incurring a Sales Charge or not subject to a Sales
Charge.
Waivers of Sales Charges
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22
Death of the Annuitant or Contract Owner or Payments Under an Annuity
Option - No Sales Charge otherwise applicable will be assessed in the event of
death of the Annuitant, death of the Contract Owner or if payments are made
under an Annuity option (other than a surrender out of Annuity Option 4)
provided for under the Contract.
Other Plans or Programs - Certain plans or programs established by Royal
from time to time may have different surrender privileges.
Mortality and Expense Risk Charge
For assuming these risks under the Contracts, Royal will make a daily
charge at the rate of 1.25% per annum against all Contract Values held in the
Sub-Accounts during the life of the Contract (estimated at .90% for mortality
and .35% for expense). Although Variable Annuity payments made under the
Contracts will vary in accordance with the investment performance of the
underlying Fund shares held in the Sub-Account(s), the payments will not be
affected by (a) Royal's actual mortality experience among Annuitants before or
after the Annuity Commencement Date or (b) Royal's actual expenses, if greater
than the deductions provided for in the Contracts because of the expense and
mortality undertakings by Royal.
There are two types of mortality undertakings: those made during the
accumulation or deferral phase and those made during the annuity payout phase.
The mortality undertaking made by Royal in the accumulation phase is that Royal
may experience a loss resulting from the assumption of the mortality risk
relative to the guaranteed death benefit in event of the death of an Annuitant
or Contract Owner before commencement of Annuity payments, in periods of
declining value or in periods where the contingent deferred sales charges would
have been applicable. The mortality undertakings provided by Royal during the
annuity payout phase are to make monthly Annuity payments (determined in
accordance with the 1983a Individual Annuity Mortality Table and other
provisions contained in the Contract) to Annuitants regardless of how long an
Annuitant may live, and regardless of how long all Annuitants as a group may
live. Royal also assumes the liability for payment of a minimum death benefit
under the Contract. These mortality undertakings are based on Royal's
determination of expected mortality rates among all Annuitants. If actual
experience among Annuitants during the Annuity payment period deviates from
Royal's actuarial determination of expected mortality rates among Annuitants
because, as a group, their longevity is longer than anticipated, Royal must
provide amounts from its general funds to fulfill its contractual obligations.
Royal will bear the loss in such a situation.
During the accumulation phase, Royal also provides an expense undertaking.
Royal assumes the risk that the contingent deferred sales charges and the Annual
Maintenance Fee for maintaining the Contracts prior to the Annuity Commencement
Date may be insufficient to cover the actual cost of providing such items.
Annual Maintenance Fee
Each year, on each Contract Anniversary on or before the Annuity
Commencement Date, Royal will deduct an Annual Maintenance Fee, if applicable,
from Contract Values to reimburse it for expenses relating to the maintenance of
the Contract, the Fixed Account, and the Sub-Account(s) thereunder. If during a
Contract Year the Contract is surrendered for its full value, Royal will deduct
the Annual
<PAGE>
23
Maintenance Fee at the time of such surrender. The fee is a flat fee that will
be due in the full amount regardless of the time of the Contract Year that
Contract Values are surrendered. The Annual Maintenance Fee is $30.00 per
Contract Year for Contracts with less than $50,000 Contract Value on the
Contract Anniversary. Fees will be deducted on a pro rata basis according to
the value in each Sub-Account and the Fixed Account under a Contract.
Premium Taxes
Charges are also deducted for premium tax, if applicable, imposed by state
or other governmental entity. Certain states impose a premium tax, currently
ranging up to 3.5%. Some states assess the tax at the time purchase payments are
made; others assess the tax at the time of annuitization. Royal will pay Premium
Taxes at the time imposed under applicable law. At its sole discretion, Royal
may deduct Premium Taxes at the time Royal pays such taxes to the applicable
taxing authorities, at the time the Contract is surrendered, at the time a death
benefit is paid, or at the time the Contract annuitizes.
Exceptions to Charges Under the Contract
Royal may offer, at its discretion, reduced fees and charges including, but not
limited to, the contingent deferred sales charges, the mortality and expense
risk charge and the maintenance fee for certain sales (including employer
sponsored savings plans) under circumstances which may result in savings of
certain costs and expenses. Reductions in these fees and charges will not be
unfairly discriminatory against any Contract Owner.
Death Benefits
The Contract provides that, in the event the Annuitant dies before the
selected Annuity Commencement Date, the Contingent Annuitant will become the
Annuitant. If (1) the Annuitant dies before the Annuity Commencement Date and
either (a) there is no designated Contingent Annuitant or (b) the Contingent
Annuitant predeceases the Annuitant, or (2) if any Contract Owner dies before
the Annuity Commencement Date, the Beneficiary as determined under the Contract
Control Provisions, will receive the Death Benefit as determined on the date of
receipt of Due Proof of Death by Royal in its Administrative Office. With regard
to Joint Contract Owners, at the first death of a joint Contract Owner prior to
the Annuity Commencement Date, the Beneficiary will be the surviving Contract
Owner notwithstanding that the beneficiary designation may be different.
Guaranteed Death Benefit - If the Annuitant dies before the Annuity
Commencement Date and there is no designated Contingent Annuitant surviving, or
if the Contract Owner dies before the Annuity Commencement Date, the Beneficiary
will receive the greatest of (a) the Contract Value determined as of the day
written proof of death of such person is received by Royal, or (b) 100% of the
total Premium Payments made to such Contract, reduced by the dollar amount of
any partial surrenders since the issue date, or (c) the Maximum Anniversary
Value immediately preceding the date of death. The Maximum Anniversary Value is
equal to the greatest Anniversary Value attained from the following:
As of the date of receipt of Due Proof of Death, Royal will calculate an
Anniversary Value for each Contract Anniversary prior to the deceased's attained
age 81. The Anniversary Value is equal to the Contract Value on a Contract
Anniversary, increased by the dollar amount of any premium payments made since
that anniversary and reduced by the dollar amount of any partial surrenders
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24
since that anniversary.
If the Annuitant or You, as applicable, die after the Annuity Commencement Date,
then the Death Benefit will equal the present value of any remaining payments
under the elected Annuity Option. In computing such present value for the
portion of such remaining payments attributable to the Separate Account, Royal
will assume a net investment rate of 5.0% per year.
Payment of Death Benefit - The calculated Death Benefit will remain
invested in the Separate Account in accordance with the allocation instructions
given by the Contract Owner until the proceeds are paid or Royal receives new
instructions from the Beneficiary. During the time period between Royal's
receipt of written notification of Due Proof of Death and Royal's receipt of the
completed settlement instructions, the calculated Death Benefit will remain
invested in the Sub-Account(s) previously elected by the Contract Owner and will
be subject to market fluctuations. The Death Benefit may be taken in one sum,
payable within seven days after the date Due Proof of Death is received, or
under any of the settlement options then being offered by Royal provided,
however, that: (a) in the event of the death of any Contract Owner prior to the
Annuity Commencement Date, the entire interest in the Contract will be
distributed within five years after the death of the Contract Owner and (b) in
the event of the death of any Contract Owner or Annuitant which occurs on or
after the Annuity Commencement Date, any remaining interest in the Contract will
be paid at least as rapidly as under the method of distribution in effect at the
time of death, or, if the benefit is payable over a period not extending beyond
the life expectancy of the Beneficiary or over the life of the Beneficiary, such
distribution must commence within one year of the date of death. The proceeds
due on the death may be applied to provide variable payments, fixed payments, or
a combination of variable and fixed payments. However, in the event of the
Contract Owner's death where the sole Beneficiary is the spouse of the Contract
Owner and the Annuitant or Contingent Annuitant is living, such spouse may
elect, in lieu of receiving the death benefit, to be treated as the Contract
Owner. The Contract Value and the Maximum Anniversary Value of the Contract will
be unaffected by treating the spouse as the Contract Owner.
If the Contract is owned by a corporation or other non-individual, the
Death Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same settlement
options and in the same manner as if an individual Contract Owner died on the
date of the Annuitant's death.
There may be postponement in the payment of Death Benefits whenever (a) the
New York Stock Exchange is closed, except for holidays or weekends, or trading
on the New York Stock Exchange is restricted as determined by the Commission;
(b) the Commission permits postponement and so orders; or (c) the Commission
determines that an emergency exists making valuation of the amounts or disposal
of securities not reasonably practicable.
Withdrawals
Full Surrenders - At any time prior to the Annuity Commencement Date (and
after the Annuity Commencement Date with respect to values applied to Annuity
Option 4 or the Annuity Proceeds Settlement Option), the Contract Owner has the
right to terminate the Contract. In such event, the Termination Value of the
Contract may be taken in the form of a lump sum cash settlement.
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25
Under any of the Annuity options excluding Annuity Option 4 and the Annuity
Proceeds Settlement Option, no surrenders are permitted after Annuity payments
commence. Only full surrenders are allowed out of Annuity Option 4 and any such
surrender will be subject to contingent deferred sales charges, if applicable.
Full or partial withdrawals may be made from the Annuity Proceeds Settlement
Option at any time and contingent deferred sales charges will not be applied.
The Termination Value of the Contract is equal to the Contract Value less
any applicable Premium Taxes, the Annual Maintenance Fee if applicable and any
applicable contingent deferred sales charges. The Termination Value may be more
or less than the amount of the Premium Payments made to a Contract.
Partial Surrenders - You may make a partial surrender of Contract Values
at any time prior to the Annuity Commencement Date so long as the amount
surrendered is at least equal to the minimum amount rules then in effect.
Additionally, if the remaining Contract Value following a surrender is less than
$500 ($1,000 in New York), Royal will terminate the Contract and pay the
Termination Value. For Contracts issued in Texas, there is an additional
requirement that the Contract will not be terminated when the remaining Contract
Value after a surrender is less than $500 unless there were no Premium Payments
made during the previous two Contract Years.
In requesting a partial withdrawal you should specify the Sub-Account(s)
and/or the Fixed Account from which the partial withdrawal is to be taken.
Otherwise, such withdrawal and any applicable contingent deferred sales charges
will be effected on a pro rata basis according to the value in the Fixed Account
and each Sub-Account under a Contract.
Royal may permit You to pre-authorize partial surrenders subject to certain
limitations then in effect.
Payment of Surrender Benefits - Payment on any request for a full or
partial surrender from the Sub-Accounts will be made as soon as possible and in
any event no later than seven days after the written request is received by
Royal at its Administrative Office. Royal may defer payment of any amounts from
the Fixed Account for up to six months from the date of the request for
surrender. If Royal defers payment for more than 30 days (10 working days in New
York), Royal will pay interest of at least 3% per annum on the amount deferred.
There may be postponement in the payment of Surrender Benefits whenever (a)
the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation of the amounts
or disposal of securities not reasonably practicable.
CERTAIN QUALIFIED CONTRACT SURRENDERS - THERE ARE CERTAIN RESTRICTIONS ON
SECTION 403(b) TAX SHELTERED ANNUITIES. AS OF DECEMBER 31, 1988, ALL SECTION
403(b) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO
THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY INCREASES IN CASH VALUE AFTER
DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS THE CONTRACT OWNER/EMPLOYEE HAS
A) ATTAINED AGE 59 1/2, B) SEPARATED FROM SERVICE, C) DIED, D) BECOME DISABLED
OR E) EXPERIENCED FINANCIAL HARDSHIP. (CASH VALUE INCREASES MAY NOT BE
DISTRIBUTED PRIOR TO AGE 59 1/2 FOR HARDSHIPS.)
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26
DISTRIBUTIONS PRIOR TO AGE 59 1/2 DUE TO FINANCIAL HARDSHIP OR SEPARATION
FROM SERVICE MAY STILL BE SUBJECT TO A PENALTY TAX OF 10%.
ROYAL WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A
WITHDRAWAL IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR
SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY 1,
1989 ACCOUNT VALUES.
ANY SUCH FULL OR PARTIAL SURRENDER DESCRIBED ABOVE MAY AFFECT THE
CONTINUING TAX QUALIFIED STATUS OF SOME CONTRACTS OR PLANS AND MAY RESULT IN
ADVERSE TAX CONSEQUENCES TO THE CONTRACT OWNER. THE CONTRAACT OWNER, THEREFORE,
SHOULD CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE
"FEDERAL TAX CONSIDERATIONS" COMMENCING ON PAGE __.)
Settlement Provisions
You select an Annuity Commencement Date and an Annuity option which may be
on a fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be deferred beyond the Annuitant's 90th birthday. The Annuity
Commencement Date and/or the Annuity option may be changed from time to time,
but any change must be at least 30 days prior to the date on which Annuity
payments are scheduled to begin. The Contract allows You to change the
Sub-Accounts on which variable payments are based after payments have commenced
once every three months. Any Fixed Annuity allocation may not be changed.
The Contract contains the four Annuity payment options and the Annuity
Proceeds Settlement Option. Annuity Options 2, 4, and the Annuity Proceeds
Settlement Option are available to Qualified Contracts only if the guaranteed
payment period is less than the life expectancy of the Annuitant at the time the
option becomes effective. Such life expectancy shall be computed on the basis of
the mortality table prescribed by the IRS, or if none is prescribed, the
mortality table then in use by Royal. With respect to Non-Qualified Contracts,
if you do not elect otherwise, payments in most states will automatically begin
at the Annuitant's age 90 (with the exception of states that do not allow
deferral past age 85) under Annuity Option 2 with 120 monthly payments certain.
For Qualified Contracts and Contracts issued in Texas, if you do not elect
otherwise, payments will begin automatically at the Annuitant's age 90 under
Annuity Option 1 to provide a life Annuity. After the Annuity Commencement Date,
the Annuity option elected may not be changed.
Under any of the Annuity options excluding Annuity Option 4 and the Annuity
Proceeds Settlement Option, no surrenders are permitted after Annuity payments
commence. Only full surrenders are allowed out of Annuity Option 4 and any such
surrender will be subject to contingent deferred sales charges, if applicable.
Full or partial withdrawals may be made from the Annuity Proceeds Settlement
Option at any time and contingent deferred sales charges will not be applied.
Option 1 - Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last payment due preceding the death of the Annuitant.
This option offers the largest payment amount of any of the life Annuity options
since there is no guarantee of a minimum number of payments nor a
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27
provision for a Death Benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the date of the third Annuity payment, etc.
Option 2 - Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments have
been made for less than the minimum elected number of months, then the present
value as of the date of the Annuitant's death, of any remaining guaranteed
payments will be paid in one sum to the Beneficiary or Beneficiaries designated
unless other provisions have been made and approved by Royal.
Option 3 - Joint and Last Survivor Annuity
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Royal, the Annuitant may elect that
the payment to the survivor be less than the payment made during the joint
lifetime of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated
second person to receive only one payment in the event of the common or
simultaneous death of the parties prior to the due date for the second payment
and so on.
Option 4 - Payments for a Designated Period
An amount payable monthly for the number of years selected which may be
from 5 to 30 years. Under this option, you may, at any time, surrender the
Contract and receive, within seven days, the Termination Value of the Contract
as determined by Royal.
In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and approved by
Royal.
Annuity Option 4 is an option that does not involve life contingencies and
thus no mortality guarantee. Charges made for the mortality undertaking under
the Contracts thus provide no real benefit to You.
Annuity Proceeds Settlement Option
Proceeds from the Death Benefit may be left with Royal for a period not to
exceed five years from the date of the Contract Owner's death prior to the
Annuity Commencement Date. These proceeds will remain in the Sub-Account(s) to
which they were allocated at the time of death unless the Beneficiary elects to
reallocate them. Full or partial withdrawals may be made at any time. In the
event
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28
of withdrawals, the remaining value will equal the Contract Value of the
proceeds left with Royal, minus any withdrawals.
Royal may offer other annuity or settlement options from time to time.
Variable and Fixed Annuity Payments - When an Annuity is effected under a
Contract, unless otherwise specified, Contract Values (less applicable Premium
Taxes) held in the Sub-Accounts will be applied to provide a Variable Annuity
based on the pro rata amount in the various Sub-Accounts. Fixed Account Contract
Values will be applied to provide a Fixed Annuity. YOU SHOULD CONSIDER THE
QUESTION OF ALLOCATION OF CONTRACT VALUES (LESS APPLICABLE PREMIUM TAXES) AMONG
SUB-ACCOUNTS OF THE SEPARATE ACCOUNT AND THE GENERAL ACCOUNT OF ROYAL TO MAKE
CERTAIN THAT ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT ALTERNATIVE BEST
SUITED TO YOUR NEEDS FOR RETIREMENT.
The minimum monthly Annuity payment is $50.00. No election may be made
which results in a first payment of less than $50.00. If at any time Annuity
payments are or become less than $50.00, Royal has the right to change the
frequency of payment to intervals that will result in payments of at least
$50.00. For New York Contracts, the minimum monthly Annuity payment is $20.00.
When Annuity payments are to commence, the value of the Contract is
determined as the sum of (1) the value of the Fixed Account no earlier than the
close of business on the fifth Valuation Day preceding the date the first
Annuity payment is due plus (2) the product of (a) the value of the Accumulation
Unit of each Sub-Account on that same day and (b) the number of Accumulation
Units credited to each Sub-Account as of the date the Annuity is to commence.
All annuity payments under any option will occur the same day of the month
as the Annuity Commencement Date, based on the payment frequency selected by
You. Available payment frequencies include monthly, quarterly, semi-annual and
annual. The payment frequency may not be changed after payout has begun.
Variable Annuity - The Contract contains tables indicating the minimum
dollar amount of the first monthly payment under the optional variable forms of
Annuity for each $1,000 of value of a Sub-Account under a Contract. The first
monthly payment varies according to the form and type of Variable Payment
Annuity selected. The Contract contains Variable Payment Annuity tables derived
from the 1983a Individual Annuity Mortality Table with ages set back one year
and with an assumed investment rate ("A.I.R.") of 5% per annum. The total first
monthly Variable Annuity payment is determined by multiplying the value
(expressed in thousands of dollars) of a Sub-Account (less any applicable
Premium Taxes) by the amount of the first monthly payment per $1,000 of value
obtained from the tables in the Contracts.
The amount of the first monthly Variable Annuity payment is divided by the
value of an Annuity Unit for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due in order to determine the number of Annuity Units represented by
the first payment. This number of Annuity Units remains fixed during the Annuity
payment period, and in each subsequent month the dollar amount of the Variable
Annuity payment is determined by multiplying this fixed number of Annuity Units
by the then current Annuity Unit value.
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is
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29
determined by multiplying the value for the preceding day by the product of
(1) the net investment factor for the day for which the Annuity Unit value is
being calculated, and (2) a factor to neutralize the assumed investment rate of
5% per annum. The Annuity Unit value used in calculating the amount of the
Variable Annuity payments will be based on an Annuity Unit value determined as
of the close of business on a day no earlier than the fifth Valuation Day
preceding the date of the Annuity payment.
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP OR DOWN
AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
Fixed Annuity - Fixed Annuity payments are determined at annuitization by
multiplying the Contract Value (less applicable Premium Taxes) by a rate to be
determined by Royal which is no less than the rate specified in the Fixed
Payment Annuity tables in the Contract. The Annuity payment will remain level
for the duration of the Annuity.
Other Information
Assignment - Ownership of a Contract described herein is generally
assignable. However, if the Contracts are issued pursuant to some form of
Qualified Plan, it is possible that the ownership of the Contracts may not be
transferred or assigned depending on the type of tax-qualified retirement plan
involved. An assignment of a Non-Qualified Contract may subject the Contract
values or assignment proceeds to income taxes and certain penalty taxes.
Contract Modification - The Annuitant may not be changed; however, the
Contingent Annuitant may be changed at any time prior to the Annuity
Commencement Date by written notice to Royal.
Royal reserves the right to modify the Contract, but only if such
modification: (i) is necessary to make the Contract or the Separate Account
comply with any law or regulation issued by a governmental agency to which Royal
is subject; or (ii) is necessary to assure continued qualification of the
Contract under the Code or other federal or state laws relating to retirement
annuities or annuity Contracts; or (iii) is necessary to reflect a change in the
operation of the Separate Account or the Sub-Account(s) or (iv) provides
additional Separate Account options or (v) withdraws Separate Account options.
In the event of any such modification Royal will provide notice to You or to the
payee(s) during the Annuity period. Royal may also make appropriate endorsement
in the Contract to reflect such modification.
Federal Tax Considerations
What are some of the federal tax consequences which affect these Contracts?
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING TO
THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT DESCRIBED
HEREIN.
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30
It should be understood that any detailed description of the federal income tax
consequences regarding the purchase of these Contracts cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. The discussion here and in
Appendix I, commencing on page , is based on Royal's understanding of
existing federal income tax laws as they are currently interpreted.
B. TAXATION OF ROYAL AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Royal that is taxed as a life insurance
company in accordance with the Internal Revenue Code of 1986, as amended (the
"Code"). Accordingly, the Separate Account will not be taxed as a "regulated
Investment Company" under subchapter M of Chapter 1 of the Code. Investment
income and any realized capital gains on the assets of the Separate Account are
reinvested and are taken into account in determining the value of the
Accumulation and Annuity Units (See "Accumulation Unit Values" commencing on
page ). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Contracts.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER THAN
QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. Non-Natural Persons, Corporations, Etc. Section 72 contains provisions
for Contract Owners that are non-natural persons. Non-natural persons
include corporations, trusts, limited liability companies and
partnerships. The annual net increase in the value of the Contract is
currently includable in the gross income of a non-natural person,
unless the non-natural person holds the Contract as an agent for a
natural person. There are additional exceptions from current
inclusion for (i) certain annuities held by structured settlement
companies, (ii) certain annuities held by an employer with respect to
a terminated qualified retirement plan and (iii) certain immediate
annuities. A non-natural person who is a tax-exempt entity for
federal tax purposes will not be subject to income tax as a result of
this provision.
If the Contract Owner is not an individual, the primary Annuitant
shall be treated as the Contract Owner for purposes of making
distributions which are required to be made upon the death of the
Contract Owner. If there is a change in the primary Annuitant, such
change shall be treated as the death of the Contract Owner.
2. Other Contract Owners (Natural Persons). A Contract Owner is not
taxed on increases in the value of the Contract until an amount is
received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
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31
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other
annuity contracts or life insurance contracts which were purchased
prior to August 14, 1982.
a. Distributions Prior to the Annuity Commencement Date.
i. Total premium payments less amounts received which were not
includable in gross income equal the "investment in the
contract" under Section 72 of the Code.
ii. To the extent that the value of the Contract (ignoring any
surrender charges except on a full surrender) exceeds the
"investment in the contract," such excess constitutes the
"income on the contract."
iii. Any amount received or deemed received prior to the Annuity
Commencement Date (e.g., upon a partial surrender) is deemed
to come first from any such "income on the contract" and
then from "investment in the contract," and for these
purposes such "income on the contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c.
below. As a result, any such amount received or deemed
received (1) shall be includable in gross income to the
extent that such amount does not exceed any such "income on
the contract," and (2) shall not be includable in gross
income to the extent that such amount does exceed any such
"income on the contract." If at the time that any amount is
received or deemed received there is no "income on the
contract" (e.g., because the gross value of the Contract
does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or
deemed received will not be includable in gross income, and
will simply reduce the "investment in the contract."
iv. The receipt of any amount as a loan under the Contract or
the assignment or pledge of any portion of the value of the
Contract shall be treated as an amount received for purposes
of this subparagraph a. and the next subparagraph b.
v. In general, the transfer of the Contract, without full and
adequate consideration, will be treated as an amount
received for purposes of this subparagraph a. and the next
subparagraph b. This transfer rule does not apply, however,
to certain transfers of property between spouses or incident
to divorce.
b. Distributions After Annuity Commencement Date. Annuity payments
made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the
amount determined by the application of the ratio of the
"investment in the contract" to the total amount of the payments
to be made after the Annuity Commencement Date (the "exclusion
ratio").
i. When the total of amounts excluded from income by
application of the exclusion ratio is equal to the
investment in the contract as of the Annuity Commencement
Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the
Annuitant and, as of the
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32
date of death, the amount of annuity payments excluded from
gross income by the exclusion ratio does not exceed the
investment in the contract as of the Annuity Commencement
Date, then the remaining portion of unrecovered investment
shall be allowed as a deduction for the last taxable year of
the Annuitant.
iii. Generally, non-periodic amounts received or deemed received
after the Annuity Commencement Date are not entitled to any
exclusion ratio and shall be fully includable in gross
income. However, upon a full surrender after such date,
only the excess of the amount received (after any surrender
charge) over the remaining "investment in the contract"
shall be includable in gross income (except to the extent
that the aggregation rule referred to in the next
subparagraph c. may apply).
c. Aggregation of Two or More Annuity Contracts. Contracts issued
after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year
(other than certain contracts held in connection with a
tax-qualified retirement arrangement) will be treated as one
annuity Contract for the purpose of determining the taxation of
distributions prior to the Annuity Commencement Date. An annuity
contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new
Contract for this purpose. Royal believes that for any annuity
subject to such aggregation, the values under the Contracts and
the investment in the contracts will be added together to
determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement
Date. Withdrawals will first be treated as withdrawals of income
until all of the income from all such Contracts is withdrawn. As
of the date of this Prospectus, there are no regulations
interpreting this provision.
d. 10% Penalty Tax -- Applicable to Certain Withdrawals and Annuity
Payments.
i. If any amount is received or deemed received on the Contract
(before or after the Annuity Commencement Date), the Code
applies a penalty tax equal to ten percent of the portion of
the amount includable in gross income, unless an exception
applies.
ii. The 10% penalty tax will not apply to the following
distributions (exceptions vary based upon the precise plan
involved):
1. Distributions made on or after the date the recipient
has attained the age of 592.
2. Distributions made on or after the death of the holder
or where the holder is not an individual, the death of
the primary annuitant.
3. Distributions attributable to a recipient's becoming
disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments for the life (or
life expectancy) of the recipient (or the joint lives
or life expectancies of the recipient and the
recipient's Beneficiary).
5. Distributions of amounts that are allocable to the
"investment in the contract" prior to August 14,
1982 (see next subparagraph e.).
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33
e. Special Provisions Affecting Contracts Obtained through a
Tax-Free Exchange of Other Annuity or Life Insurance Contracts
Purchased Prior to August 14, 1982. If the Contract was obtained
by a tax-free exchange of a life insurance or annuity Contract
purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be
deemed to come (1) first from the amount of the "investment in
the contract" prior to August 14, 1982 ("pre-8/14/82 investment")
carried over from the prior Contract, (2) then from the portion
of the "income on the contract" (carried over to, as well as
accumulating in, the successor Contract) that is attributable to
such pre-8/14/82 investment, (3) then from the remaining "income
on the contract" and (4) last from the remaining "investment in
the contract." As a result, to the extent that such amount
received or deemed received does not exceed such pre-8/14/82
investment, such amount is not includable in gross income., In
addition, to the extent that such amount received or deemed
received does not exceed the sum of (a) such pre-8/14/82
investment and (b) the "income on the contract" attributable
thereto, such amount is not subject to the 10% penalty tax. In
all other respects, amounts received or deemed received from such
post-exchange Contracts are generally subject to the rules
described in this subparagraph 3.
f. Required Distributions
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary
provisions in ii or iii below:
1. If any Contract Owner dies on or after the Annuity
Commencement Date and before the entire interest in the
Contract has been distributed, the remaining portion of
such interest shall be distributed at least as rapidly
as under the method of distribution being used as of
the date of such death;
2. If any Contract Owner dies before the Annuity
Commencement Date, the entire interest in the Contract
will be distributed within 5 years after such death;
and
3. If the Contract Owner is not an individual, then for
purposes of 1. or 2. above, the primary annuitant under
the Contract shall be treated as the Contract Owner,
and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The
primary annuitant is the individual, the events in the
life of whom are of primary importance in affecting the
timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of You described in i.
above is payable to or for the benefit of a designated
beneficiary, such beneficiary may elect to have the
portion distributed over a period that does not extend
beyond the life or life expectancy of the beneficiary.
The election and payments must begin within a year of
the death.
iii. Spouse Beneficiary
<PAGE>
34
If any portion of the interest of the Contract Owner is
payable to or for the benefit of his or her spouse, and the
Annuitant or Contingent Annuitant is living, such spouse
shall be treated as the Contract Owner of such portion for
purposes of section i. above.
3. Diversification Requirements. Section 817 of the Code provides that a
variable annuity contract will not be treated as an annuity contract
for any period during which the investments made by the separate
account or underlying fund are not adequately diversified in
accordance with regulations prescribed by the Treasury Department. If
a Contract is not treated as an annuity contract, the Contract Owner
will be subject to income tax on the annual increases in cash value.
The Treasury Department has issued diversification regulations
which generally require, among other things, that no more than
55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one
investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three
investments, and no more than 90% is represented by any four
investments. In determining whether the diversification
standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in
the same commodity are each treated as a single investment. In
addition, in the case of government securities, each government
agency or instrumentality shall be treated as a separate issuer.
A separate account must be in compliance with the diversification
standards on the last day of each calendar quarter or within 30
days after the quarter ends. If an insurance company
inadvertently fails to meet the diversification requirements, the
company may comply within a reasonable period and avoid the
taxation of contract income on an ongoing basis. However, either
the company or the Contract Owner must agree to pay the tax due
for the period during which the diversification requirements were
not met.
Royal monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code.
Royal intends to administer all contracts subject to the
diversification requirements in a manner that will maintain
adequate diversification.
4. Ownership of the Assets in the Separate Account. In order for a
variable annuity contract to qualify for tax deferral, assets in the
segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the
variable contract owner. The Internal Revenue Service ("IRS") has
issued several rulings that discuss investor control. The IRS has
ruled that certain incidents of ownership by the Contract Owner, such
as the ability to select and control investments in a separate
account, will cause the Contract Owner to be treated as the owner of
the assets for tax purposes.
Further, in the explanation to the temporary Section 817
diversification regulations, the Treasury Department noted that
the temporary regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a
segregated asset account may cause the investor, rather than the
insurance company, to be treated as the owner of the assets in
the account." The explanation further indicates that "the
temporary regulations provide that in appropriate cases a
segregated asset account may include
<PAGE>
35
multiple sub-accounts, but do not specify the extent to which policyholders
may direct their investments to particular sub-accounts without being
treated as the owners of the underlying assets. Guidance on this and other
issues will be provided in regulations or revenue rulings under Section
817(d), relating to the definition of variable contract." The final
regulations issued under Section 817 did not provide guidance regarding
investor control, and as of the date of this prospectus, no other such
guidance has been issued. Further, Royal does not know if or in what form
such guidance will be issued. In addition, although regulations are
generally issued with prospective effect, it is possible that regulations
may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Contract Owner could be considered the
owner of the assets for tax purposes. Royal reserves the right to modify
the contracts, as necessary, to prevent Contract Owners from being
considered the owners of the assets in the separate accounts.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will be
subject to federal income tax withholding, pursuant to Section 3405 of the Code.
The application of this provision is summarized below:
1. Non-Periodic Distributions. The portion of a non-periodic
distribution which constitutes taxable income will be subject to
federal income tax withholding unless the recipient elects not to have
taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal
income tax. Election forms will be provided at the time distributions
are requested. If the necessary election forms are not submitted to
Royal, Royal will automatically withhold 10% of the taxable
distribution.
2. Periodic Distributions (distributions payable over a period greater
than one year). The portion of a periodic distribution which
constitutes taxable income will be subject to federal income tax
withholding as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld
or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If the
Contract is being purchased with respect to some form of qualified retirement
plan, please refer to Appendix I commencing on page FOR information relative to
the types of plans for which it may be used and the general explanation of the
tax features of such plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to annuity purchasers that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies. In addition, purchasers may be subject to
state premium tax, other state and/or municipal taxes, and taxes that may be
imposed
<PAGE>
36
by the purchaser's country of citizenship or residence. Prospective purchasers
are advised to consult with a qualified tax adviser regarding U.S., state, and
foreign taxation with respect to an annuity purchase.
MISCELLANEOUS
How We Sell Our Annuity
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is a wholly owned subsidiary of Hartford Financial Services Group Inc. The
principal business address of HSD is the same as that of the Hartford.
The securities will be sold by salesperson of HSD who represent Royal as
insurance and variable annuity agents and who are registered representatives.
HSD is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
Commissions will be paid by Royal and will not be more than 6% of Premium
Payments. From time to time, Royal may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments
made by policyholders or contract owners. This compensation is usually paid
from the sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Royal may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Royal out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.
The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Royal will credit the Contract with an
additional 5.0% of the premium payment. This additional percentage of premium
payment in no way affects present or future charges, rights, benefits or current
values of other Contract Owners. The following class of individuals are eligible
for this feature: (1) current or retired officers, directors, trustees and
employees (and their families) of the ultimate parent and affiliates of Royal;
and (2) employees and registered representatives (and their families) of
registered broker-dealers (or financial institutions affiliated therewith) that
have a sales agreement with Royal and its principal underwriter to sell the
Contracts.
Legal Matters and Experts
<PAGE>
37
There are no material legal proceedings pending to which the Separate
Account is a party.
Counsel with respect to federal laws and regulations applicable to the
issue and sale of the Contracts and with respect to Connecticut law is Lynda
Godkin, Senior Vice President, General Counsel and Corporate Secretary, Royal
Life Insurance Company of America, P.O. Box 2999, Hartford, Connecticut
06104-2999.
The audited financial statements and financial statement schedules included
in this registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
Year 2000 Compliance
Many existing computer programs were originally designed without considering the
impact of the year 2000 and currently use only two digits to identify the year
in the date field. Therefore, on January 1, 2000, unless the software is
corrected or replaced, most computers with time-sensitive software programs will
read the "00" to be the year "1900." This issue affects nearly all companies
and organizations and could cause computer applications and systems to fail or
create erroneous results for any transaction with a date of January 1, 2000 or
later.
As a result, many companies must undertake major projects to address the year
2000 issue and each company's costs and uncertainties will depend on a number of
factors, including its software and hardware and the nature of the industry.
Companies must also coordinate with other entities with which they
electronically interact, including investment advisers, brokers, transfer
agents, customers, creditors and other financial services institutions.
In 1988, Royal's ultimate parent company, Hartford Financial Services Group,
Inc. ("Hartford"), recognized the importance of the year 2000 problem and the
potential material adverse consequences it could have on its business and
clients. By 1990, Hartford was addressing this problem with the aim of making
its computer systems Year 2000 compliant by December 31, 1998. Hartford has
replaced many of its older systems with new, state-of-the-art systems that are
Year 2000 compliant. Currently, many of its legacy systems are already
processing "2000" dates. Costs associated with these changes have been expensed
by the company annually as they are incurred to avoid a significant financial
impact to the company in any one year or in the future. Such amounts have not
been and are not expected to be material to the company's business, operations
or financial condition.
Royal (through Hartford) is monitoring how other companies with which it does
business are responding to the year 2000 problem through surveys, regular
mailings. In addition, it is in the process of developing a comprehensive
contingency plan. This plan will be fundamental if Hartford or a company with
which it conducts business experiences year 2000 difficulties after December 31,
1999. The failure by Hartford or one its suppliers of financial services to
achieve timely and complete compliance could have a material adverse effect on
Hartford's ability to conduct its business, including its ability to accurately
and timely respond to customers' surrender and annuitization
<PAGE>
38
requests.
Additional Information
Inquiries will be answered by calling your representative or by writing:
Royal Life Insurance Company of America
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
Telephone: (800) [ ]
<PAGE>
39
APPENDIX I
INFORMATION REGARDING TAX-QUALIFIED PLANS
The tax rules applicable to tax-qualified contract owners, including
restrictions on contributions and distributions, taxation of distributions and
tax penalties, vary according to the type of plan as well as the terms and
conditions of the plan itself. Various tax penalties may apply to contributions
in excess of applicable limits, distributions prior to age 592 (subject to
certain exceptions), distributions which do not conform to applicable
commencement and minimum distribution rules, and certain other transactions with
respect to tax-qualified plans. Therefore, this summary does not attempt to
provide more than general information about the tax rules associated with use of
a Contract by a tax-qualified retirement plan. Contract Owners, plan
participants and beneficiaries are cautioned that the rights and benefits of any
person to benefits may be controlled by the terms and conditions of the
tax-qualified retirement plan itself, regardless of the terms and conditions of
a Contract, but that Royal is not bound by the terms and conditions of such
plans to the extent such terms conflict with a Contract, unless Royal
specifically consents to be bound. Additionally, some tax-qualified retirement
plans are subject to distribution and other requirements that are not
incorporated into Royal's administrative procedures. Contract Owners,
participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions comply with applicable law.
Because of the complexity of these rules, owners, participants and beneficiaries
are encouraged to consult their own tax advisors as to specific tax
consequences.
A. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS Provisions of the Code
permit eligible employers to establish tax-qualified pension or profit
sharing plans (described in Section 401(a) and 401(k), if applicable, and
exempt from taxation under Section 501(a) of the Code), and Simplified
Employee Pension Plans (described in Section 408(k)). Such plans are
subject to limitations on the amount that may be contributed, the persons
who may be eligible to participate and the time when distributions must
commence. Employers intending to use these contracts in connection with
tax-qualified pension or profit-sharing plans should seek competent tax and
other legal advice.
B. TAX SHELTERED ANNUITIES UNDER SECTION 403(b) Section 403(b) of the Code
permits public school employees and employees of certain types of
charitable, educational and scientific organizations, as specified in
Section 501(c)(3) of the Code, to purchase annuity contracts, and, subject
to certain limitations, to exclude such contributions from gross income.
Generally, such contributions may not exceed the lesser of $10,000
(indexed) or 20% of an employee's "includable compensation" for such
employee's most recent full year of employment, subject to other
adjustments. Special provisions under the Code may allow some employees to
elect a different overall limitation.
Tax-sheltered annuity programs under Section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such
distribution is made:
(1) After the participating employee attains age 59 1/2;
(2) Upon separation from service;
(3) Upon death or disability; or
<PAGE>
40
(4) In the case of hardship (and in the case of hardship, any income
attributable to such contributions may not be distributed).
Generally, the above restrictions do not apply to distributions
attributable to cash values or other amounts held under a Section 403(b)
contract as of December 31, 1988.
C. DEFERRED COMPENSATION PLANS UNDER SECTION 457 Employees and independent
contractors performing services for eligible employers may have
contributions made to an Eligible Deferred Compensation Plan of their
employer in accordance with the employer's plan and Section 457 of the
Code. Section 457 places limitations on contributions to Eligible Deferred
Compensation Plans maintained by a State or other tax-exempt organization.
For these purposes, the term "State" means a State, a political
sub-division of a State, and an agency or instrumentality of a State or
political sub-division of a State. Generally, the limitation is 33 1/3% of
includable compensation (typically 25% of gross compensation) or, for 1998,
$8,000 (indexed), whichever is less. Such a plan may also provide for
additional "catch-up" deferrals during the three taxable years ending
before a Participant attains normal retirement age.
An employee electing to participate in an Eligible Deferred
Compensation Plan should understand that his or her rights and
benefits are governed strictly by the terms of the plan and that the
employer is the legal owner of any contract issued with respect to the
plan. The employer, as owner of the contract(s), retains all voting
and redemption rights that may accrue to the contract(s) issued with
respect to the plan. The participating employee should look to the
terms of his or her plan for any charges in regard to participating
therein other than those disclosed in this Prospectus. Participants
should also be aware that effective August 20, 1996, the Small
Business Job Protection Act of 1996 requires that all assets and
income of an Eligible Deferred Compensation Plan established by a
governmental employer which is a State, a political subdivision of a
State, or any agency or instrumentality of a State or political
subdivision of a State, must be held in trust (or under certain
specified annuity contracts or custodial accounts) for the exclusive
benefit of participants and their beneficiaries. Special transition
rules apply to such Eligible governmental Deferred Compensation Plans
already in existence on August 20, 1996, and provide that such plans
need not establish a trust before January 1, 1999. However, this
requirement of a trust does not apply to amounts under an Eligible
Deferred Compensation Plan of a tax-exempt (non-governmental)
organization, and such amounts will be subject to the claims of such
tax-exempt employer's general creditors.
In general, distributions from an Eligible Deferred Compensation Plan
are prohibited under Section 457 of the Code unless made after the
participating employee attains age 70, separates from service, dies,
or suffers an unforeseeable financial emergency. Present federal tax
law does not allow tax-free transfers or rollovers for amounts
accumulated in a Section 457 plan except for transfers to other
Section 457 plans in limited cases.
D. INDIVIDUAL RETIREMENT ANNUITIES UNDER SECTION 408 Section 408 of the Code
permits eligible individuals to establish individual retirement programs
through the purchase of Individual Retirement Annuities ("IRAs"). IRAs are
subject to limitations on the amount that may be contributed, the
contributions that may be deducted from taxable income, the persons who may
be eligible and the time when distributions may commence. Also,
distributions from certain qualified plans may be "rolled-over" on a
tax-deferred basis into an IRA.
<PAGE>
41
The Contracts may be offered as SIMPLE IRAs in connection with a SIMPLE IRA
plan of an employer. Special rollover rules apply to SIMPLE IRAs. Amounts
can be rolled over from one SIMPLE IRA to another SIMPLE IRA. However,
amounts can be rolled over from a SIMPLE IRA to a regular IRA only after
two years have expired since the participant first commenced participation
in your employer's SIMPLE IRA plan. Amounts cannot be rolled over to a
SIMPLE IRA from a qualified plan or a regular IRA. Royal is a
non-designated financial institution.
Beginning in 1998, the Contracts may be offered as ROTH IRAs under Section
408A of the Code. Contributions to a ROTH IRA are not deductible. Subject
to special limitations, a regular IRA may be converted into a ROTH IRA or a
distribution from a regular IRA may be rolled over to a ROTH IRA. However,
a conversion or a rollover from a regular IRA to a ROTH IRA is not
excludable from gross income. If certain conditions are met, qualified
distributions from a ROTH IRA are tax-free.
E. FEDERAL TAX PENALTIES AND WITHHOLDING Distributions from retirement plans
are generally taxed under Section 72 of the Code. Under these rules, a
portion of each distribution may be excludable from income. The excludable
amount is the portion of the distribution that bears the same ratio as the
after-tax contributions bear to the expected return.
1. PREMATURE DISTRIBUTION Distributions from a tax-qualified plan before
the Participant attains age 59 are generally subject to an additional
penalty tax equal to 10% of the taxable portion of the distribution.
The 10% penalty does not apply to distributions made after the
employee's death, on account of disability, for eligible medical
expenses and distributions in the form of a life annuity and, except
in the case of an IRA, certain distributions after separation from
service after age 55. For these purposes, a life annuity means a
scheduled series of substantially equal periodic payments for the life
or life expectancy of the Participant (or the joint lives or life
expectancies of the Participant and Beneficiary).
In addition, effective for distributions made from an IRA after
December 31, 1997, there is no such penalty tax on distributions that
do not exceed the amount of certain qualifying higher education
expenses, as defined by Section 72(t)(7) of the Code, or which are
qualified first-time home buyer distributions meeting the requirements
of Section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware
that the 10% penalty tax discussed above is increased to 25% with
respect to non-exempt premature distributions made from your SIMPLE
IRA during the first two years following the date you first commenced
participation in any SIMPLE IRA plan of your employer.
2. MINIMUM DISTRIBUTION TAX If the amount distributed is less than the
minimum required distribution for the year, the Participant is subject
to a 50% tax on the amount that was not properly distributed.
An individual's interest in a tax-qualified retirement plan generally
must be distributed, or begin to be distributed, not later than April
1 of the calendar year following the later of (i) the calendar year in
which the individual attains age 70 1/2 or (ii) the calendar year in
which the individual retires from service with the employer sponsoring
the plan ("required beginning date"). However, the required beginning
date for an individual who is a five (5) percent owner (as defined in
the Code), or who is the owner of an IRA, is April 1 of the calendar
year
<PAGE>
42
following the calendar year in which the individual attains age 70
1/2. The entire interest of the Participant must be distributed
beginning no later than the required beginning date over a period that
may not extend beyond a maximum of the life expectancy of the
Participant and a designated Beneficiary. Each annual distribution
must equal or exceed a "minimum distribution amount" which is
determined by dividing the account balance by the applicable life
expectancy. This account balance is generally based upon the account
value as of the close of business on the last day of the previous
calendar year. In addition, minimum distribution incidental benefit
rules may require a larger annual distribution.
If an individual dies before reaching his or her required beginning
date, the individual's entire interest must generally be distributed
within five years of the individual's death. However, this rule will
be deemed satisfied, if distributions begin before the close of the
calendar year following the individual's death to a designated
Beneficiary (or over a period not extending beyond the life expectancy
of the beneficiary). If the Beneficiary is the individual's surviving
spouse, distributions may be delayed until the individual would have
attained age 70 1/2.
If an individual dies after reaching his or her required beginning
date or after distributions have commenced, the individual's interest
must generally be distributed at least as rapidly as under the method
of distribution in effect at the time of the individual's death.
3. WITHHOLDING In general, distributions from IRAs and plans described
in Section 457 of the Code are subject to regular wage withholding
rules. Periodic distributions from other tax-qualified retirement
plans that are made for a specified period of 10 or more years or for
the life or life expectancy of the participant (or the joint lives or
life expectancies of the participant and beneficiary) are generally
subject to federal income tax withholding as if the recipient were
married claiming three exemptions. The recipient of periodic
distributions may generally elect not to have withholding apply or to
have income taxes withheld at a different rate by providing a
completed election form.
Other distributions from such other tax-qualified retirement plans are
generally subject to mandatory income tax withholding at the flat rate
of 20% unless such distributions are:
a) The non-taxable portion of the distribution;
b) Required minimum distributions; or
c) Direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to
another eligible retirement plan under Code section 401(a)(31).
<PAGE>
43
Table of Contents
To
Statement of Additional Information
Section Page
- ------- ----
Description of Royal Life Insurance Company of America
Safekeeping of Assets
Independent Public Accountants
Distribution of Contracts
Calculation of Yield and Return
Performance Comparisons
Financial Statements
<PAGE>
44
This form must be completed for all tax-sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The Royal Variable Annuity Contract that you have recently purchased is subject
to certain restrictions imposed by the Tax Reform Act of 1986. Contributions to
the Contract after December 31, 1988 and any increases in cash value after
December 31, 1988 may not be distributed to you unless you have:
a. Attained age 59 1/2,
b. Separated from service,
c. Died, or
d. Become disabled.
Distributions of post December 31, 1988 contributions (excluding any income
thereon) may also be made if you have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made prior to age 59 1/2
because of financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Royal Variable Annuity. Please refer to your Plan.
Please complete the following and return to:
Royal Life Insurance Company
Individual Annuity Services
P.O. Box 5085
Royal, CT 06102-5085
- - - - - - - - - - - - - - - - - - - - - - - -
Name of You/Participant
Address
City or Plan/School District
Date:
Contract No:
Signature:
<PAGE>
45
- - - - - - - - - - - - - - - - - - - - - - - -
To Obtain a Statement of Additional Information, please complete the form below
and mail to:
Royal Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for (Marketing Name) to me at
the following address:
- ----------------------------------
Name
- ----------------------------------
Address
- ----------------------------------
City/State Zip Code
- - - - - - - - - - - - - - - - - - - - - - - -
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ROYAL LIFE INSURANCE COMPANY OF AMERICA
SEPARATE ACCOUNT ONE
[PRODUCT NAME]
This Statement of Additional Information is not a prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to Royal Life Insurance Company
of America Attn: Individual Annuity Services, P.O. Box 5085, Hartford, CT
06102-5085.
Date of Prospectus: [ ], 1998
Date of Statement of Additional Information: [ ], 1998
<PAGE>
-2-
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
DESCRIPTION OF ROYAL LIFE INSURANCE COMPANY OF AMERICA . . . . . . . . . . .
SAFEKEEPING OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . .
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
-3-
DESCRIPTION OF ROYAL LIFE INSURANCE COMPANY OF AMERICA
Royal Life Insurance Company of America ("Royal") is a stock life insurance
company engaged in the business of writing life insurance in all states of the
United States and the District of Columbia. Royal was originally incorporated
under the laws of Connecticut on September 16, 1963. Its offices are located
in Simsbury, Connecticut; however, its mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. Royal is ultimately controlled by Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Royal. The assets are
kept physically segregated and are held separate and apart from Royal's general
corporate assets. Records are maintained of all purchases and redemptions of
Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements and financial statement schedules included in
this prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.
DISTRIBUTION OF CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as principal
underwriter for the securities issued with respect to the Separate Account and
will offer the Contracts on a continuous basis.
HSD is a wholly-owned subsidiary of Hartford Financial Services Group Inc. The
principal business address of HSD is the same as Royal.
The securities will be sold by salespersons of HSD, who represent Royal as
insurance and Variable Annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Securities and Exchange Commission under the
Securities and Exchange Act of 1934 as a Broker-Dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD").
<PAGE>
-4-
CALCULATION OF YIELD AND RETURN
YIELD AND EFFECTIVE YIELD OF THE MONEY MARKET FUND SUB-ACCOUNT. As summarized
in the Prospectus under the heading "Performance Related Information," the yield
of the Money Market Fund Sub-Account for a seven day period (the "base period")
will be computed by determining the "net change in value" (calculated as set
forth below) of a hypothetical account having a balance of one accumulation unit
of the Sub-Account at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from Contract Owner accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then multiplying the base period return by
365/7 with the resulting yield figure carried to the nearest hundredth of one
percent. Net changes in value of a hypothetical account will include net
investment income of the account (accrued daily dividends as declared by the
underlying funds, less daily expense charges of the account) for the period, but
will not include realized gains or losses or unrealized appreciation or
depreciation on the underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from the
result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
THE MONEY MARKET FUND SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY IN
RESPONSE TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE
SUB-ACCOUNT. THE CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON
THE SEPARATE ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.
As the Money Market Fund Sub-Account has not been in existence for more than one
year, no performance data is shown here.
CALCULATION OF YIELD. As summarized in the Prospectus under the heading
"Performance Related Information," certain Sub-Accounts may advertise yield in
addition to total return. Yield will be computed by annualizing a recent
month's net investment income, divided by a Fund share's net asset value on the
last trading day of that month. Net changes in the value of a hypothetical
account will assume the change in the underlying mutual fund's "net asset value
per share" for the same period in addition to the daily expense charge assessed,
at the sub-account level for the respective period. The Sub-Accounts' yields
will vary from time to time depending upon market conditions and, the
composition of the underlying funds' portfolios. Yield should also be considered
relative to changes in the value of the Sub-Accounts' shares and to the relative
risks associated with the investment objectives and policies of the underlying
Fund.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.
<PAGE>
-5-
Yield calculations of the Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset charges assessed
against a Contract Owner's account over the base period. Yield quotations based
on a 30 day period were computed by dividing the dividends and interests earned
during the period by the maximum offering price per unit on the last day of the
period, according to the following formula:
Example:
6
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period
that were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
As the Sub-Accounts have not been in existence for more than one year, no
performance data is shown here.
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information," total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula
for total return used herein includes three steps: (1) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period; (2) assuming redemption at
the end of the period and deducting any applicable contingent deferred sales
charge and (3) dividing this account value for the hypothetical investor by the
initial $1,000 investment and annualizing the result for periods of less than
one year. Total return will be calculated for one year, five years and ten
years or some other relevant periods if a Sub-Account has not been in existence
for at least ten years.
As the Sub-Accounts have not been in existence for more than one year, no
standardized returns are shown here.
In addition to the standardized total return, the Sub-Accounts may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the contingent deferred sales charge and the Annual Maintenance Fee
are not deducted. Therefore, non-standardized total return for a Sub-Account is
<PAGE>
-6-
higher than standardized total return for a Sub-Account.
As the Sub-Accounts have not been in existence for more than one year, no
non-standardized returns are shown here.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time to time include its
total return in advertisements or in information furnished to present or
prospective shareholders. Each Sub-Account may from time to time include its
yield and total return in advertisements or information furnished to present or
prospective shareholders. Each Sub-Account may from time to time include in
advertisements its total return (and yield in the case of certain Sub-Accounts)
the ranking of those performance figures relative to such figures for groups of
other annuities analyzed by Lipper Analytical Services and Morningstar, Inc. as
having the same investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index of
500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks
of companies listed on the New York Stock Exchange, although the common stocks
of a few companies listed on the American Stock Exchange or traded
over-the-counter are included. The 500 companies represented include 400
industrial, 60 transportation and 40 financial services concerns. The S&P 500
represents about 80% of the market value of all issues traded on the New York
Stock Exchange.
The NASDAQ-OTC Composite Price Index (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks relative to the base measure of 100.00 on
February 5, 1971. The NASDAQ Index is composed entirely of common stocks of
companies traded over-the-counter and often through the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system. Only those
over-the-counter stocks having only one market maker or traded on exchanges are
excluded.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index is
weighted by market capitalization, and therefore, it has a heavy representation
in countries with large stock markets, such as Japan.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all
<PAGE>
-7-
agencies of the U.S. Government and all quasi-federal corporations; and all
corporate debt guaranteed by the U.S. Government. Mortgage-backed securities,
flower bonds and foreign targeted issues are not included in the SL Government
Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
The Composite Index for Hartford Advisers Fund is comprised of the S&P 500
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned above,
and 90 Day U.S. Treasury Bills (10%).
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements will be included in Part A and Part B of
the Registration Statement, and will be filed by amendment.
(b) (1) Resolution of the Board of Directors of Royal Life Insurance
Company of America ("Royal") authorizing the establishment of
the Separate Account.
(2) Not applicable.
(3) (a) Principal Underwriter Agreement.(1)
(3) (b) Form of Dealer Agreement.(1)
(4) Form of Individual Flexible Premium Variable Annuity Contract.
(5) Form of Application.
(6) (a) Certificate of Incorporation of Royal.
(6) (b) Bylaws of Royal.
(7) Not applicable.
(8) Fund Participation Agreement.(1)
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel, and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public
Accountants.(1)
(11) No financial statements are omitted.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
- -------------------------
(1) To be filed by amendment.
<PAGE>
(15) Copy of Power of Attorney.
(16) Organizational Chart.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME POSITION WITH ROYAL
<S> <C>
- --------------------------------------------------------------------------------
Gregory A. Boyko Senior Vice President and Treasurer, Director*
- --------------------------------------------------------------------------------
Mary Jane Fortin Chief Accounting Officer
- --------------------------------------------------------------------------------
John P. Ginnetti Director*
- --------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary, Director*
- --------------------------------------------------------------------------------
Thomas M. Marra Director*
- --------------------------------------------------------------------------------
Criag R. Raymond Senior Vice President and Chief Actuary
- --------------------------------------------------------------------------------
Charles F. Shabunia Vice President and Controller
- --------------------------------------------------------------------------------
Lowndes A. Smith President, Director*
- --------------------------------------------------------------------------------
Raymond P. Welnicki Director*
- --------------------------------------------------------------------------------
Lizabeth H. Zlatkus Senior Vice President, Director*
- --------------------------------------------------------------------------------
</TABLE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes Board of Directors.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 16.
Item 27. Number of Contract Owners
<PAGE>
Not Applicable
Item 28. Indemnification
The Company shall indemnify to the full extent authorized or permitted
by law any person made, or threatened to be made a party to an action,
suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that he, his testator or
intestate is or was a Director, Officer or employee of the company or
serves or served any other enterprise at the request of the
corporation. The foregoing right of indemnification shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any By-Laws, agreement, vote of
Shareholders or disinterested Directors or otherwise, and shall
continue as to a person who has ceased to be a Director, Officer,
employee or agent shall inure to the benefit or the heirs, executors
and administrators of such a person.
Item 29. Principal Underwriters
(a) HSD acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC
Variable Account I)
Hartford Life Insurance Company - Separate Account Two (DC
Variable Account II)
Hartford Life Insurance Company - Separate Account Two (QP
Variable Account)
Hartford Life Insurance Company - Separate Account Two (Variable
Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ
Variable Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account
One
Hartford Life and Annuity Insurance Company - Putnam Capital
Manager Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account
Three
Hartford Life and Annuity Insurance Company - Separate Account
Five
Hartford Life and Annuity Insurance Company - Separate Account
Six
American Maturity Life Insurance Company - Separate Account AMLVA
(b) Directors and Officers of HSD
Name and Principal Positions and Offices
<PAGE>
Business Address With Underwriter
----------------- ----------------
Lowndes A. Smith President and Chief Executive Officer,
Director
John P. Ginnetti Executive Vice President, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Unless otherwise indicated, the principal business address of
each the above individuals is P.O. Box 2999, Hartford, CT
06104-2999.
Item 30. Location of Accounts and Records
All of the accounts, books, records or other documents required to be
kept by Section 31(a) of the Investment Company Act of 1940 and rules
thereunder, are maintained by Hartford at 200 Hopmeadow Street,
Simsbury, Connecticut 06089.
Item 31. Management Services
All management contracts are discussed in Part A and Part B of this
Registration Statement.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective
amendment to this Registration Statement as frequently as is
necessary to ensure that the audited financial statements in the
Registration Statement are never more than 16 months old so long
as payments under the variable annuity Contracts may be accepted.
(b) The Registrant hereby undertakes to include either (1) as part of
any application to purchase a Contract offered by the Prospectus,
a space that an applicant can check to request a Statement of
Additional Information, or (2) a post card or similar written
communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional
Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to
be made available under this Form promptly upon written or oral
request.
(d) Royal hereby represents that the aggregate fees and charges under
the Contract are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by
Royal.
<PAGE>
The Registrant is relying on the no-action letter issued by the
Division of Investment Management to American Counsel of Life
Insurance, Ref. No. IP-6-88, November 28, 1988. The Registrant
has complied with conditions one through four of the no-action
letter.
<PAGE>
SIGNATURES
----------
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Hartford, and State of Connecticut on this 28th day of
September, 1998.
ROYAL LIFE INSURANCE COMPANY OF AMERICA-
SEPARATE ACCOUNT ONE
(Registrant)
*By: /s/ Lynda Godkin *By: /s/ Marianne O'Doherty
------------------------------------------- ----------------------
Lynda Godkin, Vice President, Marianne O'Doherty
General Counsel & Corporate Secretary Attorney-in-Fact
ROYAL LIFE INSURANCE COMPANY OF AMERICA
(Depositor)
*By: /s/ Lynda Godkin
---------------------------------------------------
Lynda Godkin, Vice President,
General Counsel & Corporate Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in the
capacity and on the date indicated.
Gregory A. Boyko, Senior Vice President,
& Treasurer, Director *
John P. Ginnetti, Director *
Lynda Godkin, Senior Vice President,
General Counsel & Corporate Secretary, Director*
Thomas M. Marra, Director* *By: /s/ Marianne O'Doherty
Lowndes A. Smith, President, Director -----------------------
Raymond P. Welnicki, Director* Marianne O'Doherty
Lizabeth H. Zlatkus, Senior Vice President, Attorney-In-Fact
Director *
Dated: September 28, 1998
<PAGE>
EXHIBIT INDEX
(b)(1) Resolution of the Board of Directors of Royal Life Insurance Company
of America ("Royal") authorizing the establishment of the Separate
Account.
(4) Form of Individual Flexible Premium Variable Annuity
Contract.
(5) Form of Application.
(6)(a) Certificate of Incorporation of Royal.
(6)(b) Bylaws of Royal.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
CONSENT OF DIRECTORS
The undersigned, being all of the Directors of Royal Life Insurance Company of
America (the "Company"), hereby consent to and ratify the following action, such
action to have the same force and effect as if taken at a meeting of the Board
of Directors duly called and held for such purpose.
ESTABLISHMENT OF SEPARATE ACCOUNT ONE - VARIABLE ANNUITY
WHEREAS, Section 38a-433 of Connecticut General Statutes permits a domestic life
insurance company to establish one or more separate accounts; and
WHEREAS, the Company desires to establish a separate account pursuant to the
aforementioned Section 38a-433 in connection with the offer and sale of certain
flexible premium variable life insurance contracts (the "Contracts").
NOW, THEREFORE, BE IT
RESOLVED, that the Company hereby establishes a separate account, to be
initially designated "Separate Account One - Variable Annuity" (hereinafter, the
"Separate Account"), to which the Company will allocate such amounts as may be
required in connection with the Contracts in accordance with Section 38a-433 and
such other law and regulations as may be applicable; and be it further
RESOLVED, that consistent with the provisions of Section 38a-433, the income,
gains and losses, realized or unrealized, from assets allocated to the Separate
Account shall be credited to or charged against the Separate Account, without
regard to income, gains or losses of the Company; and be it further
RESOLVED, that each Contract issued by the Company shall provide, in effect,
that the portion of the assets of the Separate Account equal to the reserves and
other Contract liabilities with respect to such account shall not be chargeable
with liabilities arising out of any other business the Company may conduct; and
be it further
RESOLVED, that the appropriate officers of the Company, and each of them, with
full power to act without the others, be and hereby are severally authorized and
directed to take all actions that, in their sole discretion, may be necessary or
desirable from time to time (i) to establish and designate one or more
investment divisions of the Separate Account, (ii) to redesignate or eliminate
any such investment division, (iii) to change or modify the designation of the
Separate Account to any other desirable and appropriate designation, (iv) to
establish, amend, modify or change in accordance with applicable law and
regulation the terms and conditions pursuant to which interests in the Separate
Account will be sold to contract owners, (v) to establish, amend, modify or
change such procedures, standards and other arrangements as may be necessary or
appropriate for the operation of the Separate Account, and (vi) with advice of
counsel, to comply with the requirements of such laws and regulations as may be
applicable to the establishment and operation of the Separate Account; and be it
further
RESOLVED, that the appropriate officers of the Company, and each of them, with
full power to act without the others, be and hereby are severally authorized and
directed to execute and deliver such papers,
1
<PAGE>
documents and instruments and to take such further action as they may deem
necessary or desirable to carry out the purposes and intent of the foregoing
resolutions.
/s/ Gregory A. Boyko /s/ John P. Ginnetti
- ------------------------------- -----------------------------
Gregory A. Boyko John P. Ginnetti
/s/ Lynda Godkin /s/ Thomas M. Marra
- ------------------------------- -----------------------------
Lynda Godkin Thomas M. Marra
/s/ Lowndes A. Smith /s/ Raymond P. Welnicki
- ------------------------------- -----------------------------
Lowndes A. Smith Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus
- -------------------------------
Lizabeth H. Zlatkus
Dated as of: September 1, 1998
2
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
ROYAL LIFE INSURANCE COMPANY
Hartford, Connecticut 06104-2999
(a stock life insurance company, herein called the "Company")
Unless otherwise directed by the Contract Owner, the Company agrees to pay the
named Annuitant, on the Annuity Commencement Date, if the Annuitant and Contract
Owner are then living, the first of a series of annuity payments the frequency,
period and dollar amounts of which shall be determined on the basis as set forth
herein, in accordance with the Annuity Option selected.
This contract is issued in consideration of the payment of the initial premium
payment.
This contract is subject to the laws of the jurisdiction where it is delivered.
The Contract Specifications on Page 3 and the conditions and provisions on this
and the following pages are part of the contract.
RIGHT TO EXAMINE CONTRACT
We want you to be satisfied with the contract you have purchased. We urge you
to closely examine its provisions. If for any reason you are not satisfied with
your purchase you may surrender the contract by returning the contract within
ten days after you receive it. A written request for cancellation must
accompany the contract. In such event, we will pay to the Contract Owner an
amount equal to the sum of (i) the difference between the premiums paid and the
amounts allocated to any Account under the contract and (ii) the Contract Value
on the date of surrender. The Contract Owner bears only the investment risk
during the period prior to the Company's receipt of request for cancellation.
Signed for the Company
/s/ Lynda Godkin /s/ Lowndes A. Smith
----------------------- --------------------------
Lynda Godkin, SECRETARY Lowndes A. Smith, PRESIDENT
PREMIUM PAYMENTS ARE FLEXIBLE AS DESCRIBED HEREIN.
NONPARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SUB-ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED
DOLLAR AMOUNT. DETAILS OF THE VARIABLE PROVISIONS ARE DESCRIBED UNDER VALUATION
PROVISIONS, PAGES 9 AND 1O.
VA-ROYAL SAMPLE Printed in U.S.A.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Contract Specifications 3
Definition of Certain Terms 4
Premium Payments Provision 5
Contract Control Provisions 6
General Provisions 7
Valuation Provisions 9
Termination Provisions 10
Settlement Provisions 12
Annuity Tables 15
</TABLE>
<PAGE>
CONTRACT SPECIFICATIONS
<TABLE>
<S> <C> <C> <C>
CONTRACT NUMBER [SPECIMEN] CONTRACT DATE [FEBRUARY 8, 1994]
NAME OF ANNUITANT [JAMES SCOTT] DATE OF ISSUE [FEBRUARY 8, 1994]
AGE OF ANNUITANT [35] ANNUITY COMMENCEMENT DATE [JANUARY 1, 2024]
SEX OF ANNUITANT [MALE] INITIAL PREMIUM PAYMENT [$20,000]
CONTINGENT ANNUITANT [PAUL SCOTT] MINIMUM SUBSEQUENT PAYMENT $500
DESIGNATED BENEFICIARY [ANN SCOTT] MINIMUM FIXED ACCOUNT
INTEREST RATE 3%
CONTRACT OWNER [SAME]
(IF OTHER THAN ANNUITANT)
</TABLE>
DESCRIPTION OF BENEFITS
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACT
ANNUAL WITHDRAWAL AMOUNT: CONTRACT YEARS 1-7
10% OF PREMIUM PAYMENTS.
AFTER CONTRACT YEAR 7
THE GREATER OF:
100% OF THE CONTRACT VALUE REDUCED BY THE
TOTAL OF ANY PREMIUM PAYMENTS MADE DURING THE
7 YEARS PRIOR TO WITHDRAWAL; AND
10% OF PREMIUM PAYMENTS MADE DURING THE 7
YEARS PRIOR TO WITHDRAWAL.
ANNUAL CONTRACT MAINTENANCE FEE: $0 IF THE CONTRACT VALUE IS $50,000 OR MORE
ON THE CONTRACT ANNIVERSARY.
$30 IF THE CONTRACT VALUE IS LESS THAN
$50,000 ON THE CONTRACT ANNIVERSARY.
MORTALITY AND EXPENSE RISK CHARGE: 1.25% PER ANNUM OF THE AVERAGE DAILY CONTRACT
VALUE.
ADMINISTRATION CHARGE: 0% PER ANNUM OF THE AVERAGE DAILY CONTRACT
VALUE.
Page 3
<PAGE>
FUND OPTIONS:
THE INITIAL PREMIUM PAYMENT WILL BE ALLOCATED AS SPECIFIED IN YOUR APPLICATION.
THE SAME ALLOCATIONS WILL BE MADE FOR SUBSEQUENT PREMIUM PAYMENTS UNLESS YOU
CHANGE THE ALLOCATION OR, AT THE TIME OF A PREMIUM PAYMENT, YOU INSTRUCT US TO
ALLOCATE THAT PAYMENT DIFFERENTLY.
SEPARATE ACCOUNT: ROYAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT ONE
SUB-ACCOUNT BASED ON
ADVISERS FUND HARTFORD ADVISERS HLS FUND (IA), INC.
BOND FUND HARTFORD BOND HLS FUND (IA), INC.
CAPITAL APPRECIATION FUND HARTFORD CAPITAL APPRECIATION HLS FUND (IA),
INC.
DIVIDEND AND GROWTH FUND HARTFORD DIVIDEND AND GROWTH HLS FUND (IA),
INC.
GROWTH AND INCOME FUND HARTFORD GROWTH AND INCOME HLS FUND (IA),
INC.
INDEX FUND HARTFORD INDEX HLS FUND (IA), INC.
INTERNATIONAL ADVISERS FUND HARTFORD INTERNATIONAL ADVISERS HLS FUND
(IA), INC.
INTERNATIONAL OPPORTUNITIES FUND HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
(IA), INC.
MIDCAP FUND HARTFORD MIDCAP HLS FUND (IA), INC.
MONEY MARKET FUND HARTFORD MONEY MARKET HLS FUND (IA), INC.
MORTGAGE SECURITIES FUND HARTFORD MORTGAGE SECURITIES HLS FUND (IA),
INC.
SMALL COMPANY FUND HARTFORD SMALL COMPANY HLS FUND (IA), INC.
STOCK FUND HARTFORD STOCK HLS FUND (IA), INC.
OR OTHER FUNDS AS MAY BE MADE AVAILABLE FROM TIME TO TIME.
Page 3 (Continued)
<PAGE>
CONTINGENT DEFERRED SALES CHARGES:
SUBJECT TO THE ANNUAL WITHDRAWAL AMOUNT, SURRENDERS OF CONTRACT VALUES
ATTRIBUTABLE TO PREMIUM PAYMENTS MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE ("CHARGE"). THE LENGTH OF TIME FROM RECEIPT OF THE PREMIUM PAYMENT TO
THE TIME OF SURRENDER DETERMINES THE CHARGE.
DURING THE FIRST SEVEN CONTRACT YEARS, ALL SURRENDERS WILL BE FIRST FROM PREMIUM
PAYMENTS AND THEN FROM EARNINGS. IF AN AMOUNT EQUAL TO ALL PREMIUM PAYMENTS HAS
BEEN SURRENDERED, A CHARGE WILL NOT BE ASSESSED AGAINST THE SURRENDER OF THE
REMAINING CONTRACT VALUE.
AFTER THE SEVENTH CONTRACT YEAR, ALL SURRENDERS WILL BE FIRST FROM EARNINGS AND
THEN FROM PREMIUM PAYMENTS. A CHARGE WILL NOT BE ASSESSED AGAINST THE SURRENDER
OF EARNINGS. IF AN AMOUNT EQUAL TO ALL EARNINGS HAS BEEN SURRENDERED, A CHARGE
WILL NOT BE ASSESSED AGAINST PREMIUM PAYMENTS RECEIVED MORE THAN SEVEN YEARS
PRIOR TO SURRENDER, BUT WILL BE ASSESSED AGAINST PREMIUM PAYMENTS RECEIVED LESS
THAN SEVEN YEARS PRIOR TO SURRENDER. FOR THIS PURPOSE, PREMIUM PAYMENTS WILL BE
DEEMED TO BE SURRENDERED IN THE ORDER IN WHICH THEY WERE RECEIVED.
THE CHARGE IS A PERCENTAGE OF THE AMOUNT SURRENDERED (NOT TO EXCEED THE
AGGREGATE AMOUNT OF THE PREMIUM PAYMENTS MADE) AND EQUALS:
<TABLE>
<CAPTION>
LENGTH OF TIME FROM PREMIUM PAYMENT
CHARGE (NUMBER OF YEARS)
<S> <C>
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 AND THEREAFTER
</TABLE>
NO CONTINGENT DEFERRED SALES CHARGES WILL BE ASSESSED IN THE EVENT THE CONTRACT
TERMINATES DUE TO THE DEATH OF THE ANNUITANT OR CONTRACT OWNER (AS APPLICABLE),
OR IF CONTRACT VALUES ARE APPLIED TO AN ANNUITY OPTION PROVIDED FOR UNDER THIS
CONTRACT (PROVIDED HOWEVER, ANY SURRENDER OUT OF OPTION 4 WILL BE SUBJECT TO
CONTINGENT DEFERRED SALES CHARGES, IF APPLICABLE), OR IF THE CONTRACT IS
SURRENDERED ON OR AFTER THE ANNUITANT'S 90TH BIRTHDAY, OR UPON THE EXERCISE OF
THE ANNUAL WITHDRAWAL AMOUNT.
Page 3 (Continued)
<PAGE>
DEFINITION OF ACCOUNT - Any of the Sub-Accounts or the Fixed Account.
CERTAIN TERMS
ACCUMULATION UNIT - An accounting unit of measure used to
calculate the value of a Sub-Account of this contract before
annuity payments begin.
ANNUAL WITHDRAWAL AMOUNT - The amount that can be withdrawn
in any Contract Year prior to incurring surrender charges.
ANNUITANT - The person on whose life this contract is
issued.
ANNUITY COMMENCEMENT DATE - The date on which annuity
payments are to begin as described under Settlement
Provisions in this contract.
ANNUITY UNIT - An accounting unit of measure used to
calculate the amount of annuity payments under the variable
annuity option.
BENEFICIARY - The person entitled to receive benefits as per
the terms of the contract in case of the death of the
Contract Owner or Annuitant, as applicable.
COMPANY - The Company referred to on the first pages of the
Contract.
CONTINGENT ANNUITANT - The person so designated by the
Contract Owner who, upon the Annuitant's death, prior to the
Annuity Commencement Date, becomes the Annuitant.
CONTRACT ANNIVERSARY - An anniversary of the Contract Date.
Similarly, Contract Years are measured from the Contract
Date. The Contract Date is shown on Page 3.
CONTRACT MAINTENANCE FEE - An amount which is deducted from
the value of the contract at the end of the Contract Year or
on the date of surrender of this contract, if earlier.
CONTRACT OWNER - The owner(s) of the contract.
CONTRACT VALUE - The value of the Sub-Accounts plus the
value of the Fixed Account on any day.
DATE OF ISSUE - The date on which an Account is established
for the Contract Owner by the Company.
DOLLAR COST AVERAGING - Contract Owner initiated systematic
transfers from one or more Accounts to any other available
Sub-Accounts.
DUE PROOF OF DEATH - A certified copy of the death
certificate, an order of a court of competent jurisdiction,
a statement from a physician who attended the deceased, or
any other proof acceptable to the Company.
FIXED ACCOUNT - Part of the Company's General Account to
which all or a portion of the Contract Value may be
allocated.
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DEFINITION OF FUND(s) - Currently the Funds specified on Page 3 or any
CERTAIN TERMS other Fund(s) that may be added by the Company.
(CONTINUED)
GENERAL ACCOUNT - All assets of the Company other than those
allocated to the Separate Accounts of the Company.
MAXIMUM ANNIVERSARY VALUE - A value used in determining the
death benefit. It is based on a series of calculations of
Account Values on Contract Anniversaries, premium payments
and partial surrenders.
As of the date of death, the Company will calculate an
Anniversary Value for each Contract Anniversary prior to the
deceased's attained age 81. The Anniversary Value is equal
to the Account Value on a Contract Anniversary, increased by
the dollar amount of any premium payments made since that
anniversary and reduced by the dollar amount of any partial
surrenders since that anniversary. The Maximum Anniversary
Value is equal to the greatest Anniversary Value attained
from this series of calculations.
PREMIUM TAX - The amount of tax, if any, charged by a
federal, state or municipal entity on premium payments or
Contract Values.
SEPARATE ACCOUNT - An Account established by the Company
to separate the assets funding the variable benefits for
the class of contracts to which this contract belongs
from the other assets of the Company. The assets in the
Separate Account are not chargeable with liabilities
arising out of any other business the Company may
conduct. The Separate Account and the Funds, which are
the underlying securities of the Separate Account, are
listed on the Contract Specifications on Page 3 of this
contract.
SUB-ACCOUNT - The subdivisions of the Separate Account
which are used to determine how the Contract Owner's
Account is allocated between the Funds.
TERMINATION VALUE - The value of the contract upon
termination, as described in the section of the contract
captioned "Termination Provisions."
VALUATION DAY - Every day the New York Stock Exchange is
open for trading.
PREMIUM PREMIUM PAYMENTS
PAYMENTS
Premium payments are payable to the Company. Payments may
be made by check payable to Us or by any other method which
the Company deems acceptable.
The Initial Premium Payment is shown on Page 3. This is a
flexible premium annuity. Additional payments may be
accepted by the Company. The additional payments must be at
least equal to the minimum subsequent premium payment shown
on Page 3.
ALLOCATION OF PREMIUM PAYMENTS
The Contract Owner shall specify that portion of any premium
payment to be allocated to each Account, provided, however,
that the minimum allocation to any Account may not be less
than the Company's minimum amount then in effect.
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PREMIUM The Contract Owner may transfer Contract Values held in the
PAYMENTS Accounts into other Accounts; however, the Company reserves
(CONTINUED) the right to limit the number of transfers to no more
frequently than 12 per Contract Year with no two transfers
being made on consecutive Valuation Days. Subject to the
following two paragraphs, any such limitations will apply to
all Contract Owners.
The right to reallocate Contract Values between the Accounts
is subject to modification if the Company determines, in its
sole opinion, that the exercise of that right by one or more
Contract Owners is, or would be, to the disadvantage of
other Contract Owners. Any modification could be applied to
transfers to or from some or all of the Accounts and could
include, but not be limited to, the requirement of a minimum
time period between each transfer, not accepting transfer
requests of an agent acting under a power of attorney on
behalf of more than one Contract Owner, or limiting the
dollar amount that may be transferred between the Accounts
by a Contract Owner at any one time. Such restrictions may
be applied in any manner reasonably designed to prevent any
use of the transfer right which is considered by the Company
to be to the disadvantage of other Contract Owners.
The maximum amount transferable from the Fixed Account
during any Contract Year is the greater of 30% of the Fixed
Account balance as of the last Contract Anniversary or the
greatest of any prior transfer from the Fixed Account. This
limitation does not apply to Dollar Cost Averaging.
However, if any interest rate is renewed at a rate at least
one percentage point less than the previous rate, the
Contract Owner may elect to transfer up to 100% of the Funds
receiving that reduced rate within 60 days of notification
of the interest rate decrease. Transfers may not be made
from the Sub-Accounts into the Fixed Account for the
six-month period following any transfer from the Fixed
Account into the other Sub-Accounts. The Company reserves
the right to defer transfers from the Fixed Account for up
to six months from the date of request.
CONTRACT ANNUITANT, CONTINGENT ANNUITANT, CONTRACT OWNER
CONTROL
PROVISIONS The Annuitant may not be changed.
The designations of Contract Owner and Contingent Annuitant
will remain in effect until changed by the Contract Owner.
Changes in the designation of the Contract Owner may be made
during the lifetime of the Annuitant by written notice to
the Company. Changes in the designation of Contingent
Annuitant may be made at any time prior to the Annuity
Commencement Date by written notice to the Company.
Notwithstanding the foregoing, if no Contingent Annuitant
has been named and the Contract Owner/Annuitant's spouse is
the Beneficiary, it will be assumed that the Contract
Owner/Annuitant's spouse is the Contingent Annuitant.
The Contract Owner has the sole power to exercise all the
rights, options and privileges granted by this contract or
permitted by the Company and to agree with the Company to
any change in or amendment to the contract. The rights of
the Contract Owner shall be subject to the rights of any
assignee of record with the Company and of any irrevocably
designated Beneficiary. In the case of joint Contract
Owners, each Contract Owner alone may exercise all rights,
options and privileges, except with respect to the
Termination and Partial Surrender/Annual Withdrawal Amount
Provisions and change of ownership.
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CONTRACT BENEFICIARY
CONTROL
PROVISIONS The Designated Beneficiary will remain in effect until
(CONTINUED) changed by the Contract Owner. Changes in the Designated
Beneficiary may be made during the lifetime of the Annuitant
by written notice to the Company. If the Designated
Beneficiary has been designated irrevocably, however, such
designation cannot be changed or revoked without such
Beneficiary's written consent. Upon receipt of such notice
and written consent, if required, the new designation will
take effect as of the date the notice is signed, whether or
not the Annuitant or Contract Owner is alive at the time of
receipt of such notice. The change will be subject to any
payments made or other action taken by the Company before
the receipt of the notice.
In the event of the death of the Annuitant when there is no
surviving Contingent Annuitant, the Beneficiary will be as
follows. If the death of the Annuitant occurs prior to the
Annuity Commencement Date, the Beneficiary shall be the
surviving Contract Owner, or joint Contract Owners, if
applicable, notwithstanding that the Designated Beneficiary
may be different. Otherwise, the Beneficiary will be the
Designated Beneficiary then in effect. If the Annuitant is
the sole Contract Owner and there is no Designated
Beneficiary in effect, the Annuitant's estate will be the
Beneficiary.
In the event of the death of a Contract Owner prior to the
Annuity Commencement Date, the Beneficiary will be as
follows. If the owner was the sole Contract Owner, the
Beneficiary shall be the Designated Beneficiary then in
effect. If no Beneficiary designation is in effect or if
the Designated Beneficiary has predeceased the Contract
Owner, the Contract Owner's estate shall be the Beneficiary.
At the first death of a joint Contract Owner prior to the
Annuity Commencement Date, the Beneficiary shall be the
surviving Contract Owner notwithstanding that the Designated
Beneficiary may be different.
GENERAL THE CONTRACT
PROVISIONS
This contract constitutes the entire contract.
MODIFICATION
No modification of this contract shall be made except over
the signature of the President, a Vice President, a
Secretary or an Assistant Secretary of the Company.
The Company reserves the right to modify the contract, but
only if such modification: (i) is necessary to make the
contract or the Separate Account comply with any law or
regulation issued by a governmental agency to which the
Company is subject; (ii) is necessary to assure continued
qualification of the contract under the Internal Revenue
Code or other federal or state laws relating to retirement
annuities or annuity contracts; (iii) is necessary to
reflect a change in the operation of the Separate Account or
the Sub-Account(s); (iv) provides additional Account
options; or (v) withdraws Account options. In the event of
any such modification, the Company will provide notice to
the Contract Owner, or to the payee(s) during the annuity
period. The Company may also make appropriate endorsement
in the Contract to reflect such modification.
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GENERAL MINIMUM VALUE STATEMENT
PROVISIONS
(CONTINUED) Any Termination Values, death benefits or settlement
provisions available under this contract equal or exceed
those required by the state in which the contract is
delivered.
NON-PARTICIPATION
This contract does not share in the surplus earnings of the
Company. That portion of the assets of the Separate Account
equal to the reserves and other contract liabilities of the
Separate Account shall not be chargeable with liabilities
arising out of any other business the Company may conduct.
MISSTATEMENT OF AGE AND SEX
If the age or sex of the Annuitant has been misstated, the
amount of the annuity payable by the Company shall be that
provided by that portion of the amounts allocated to effect
such annuity on the basis of the corrected information
without changing the date of the first payment of such
annuity. Any underpayments by the Company shall be made up
immediately and any overpayments shall be charged against
future amounts becoming payable.
If the age of the Annuitant or Contract Owner has been
misstated, the amount of any death benefit payable shall be
determined based upon the correct age of the Annuitant or
Contract Owner.
INCONTESTABILITY
We cannot contest this Contract.
REPORTS TO THE CONTRACT OWNER
There shall be furnished to each Contract Owner copies of
any shareholder reports of the Funds and of any other
notices, reports or documents required by law to be
delivered to Contract Owners. Annually, a statement of the
Contract Value is sent to the Contract Owner.
VOTING RIGHTS
The Company shall notify the Contract Owner of any Fund
shareholder's meetings at which the shares held for the
Contract Owner's Account may be voted and shall also send
proxy materials and a form of instruction by means of which
the Contract Owner can instruct the Company with respect to
the voting of the shares held for the Contract Owner's
Account. In connection with the voting of Fund shares held
by it, the Company shall arrange for the handling and
tallying of proxies received from Contract Owners. The
Company will vote the Fund shares held by it in accordance
with the instructions received from the Contract Owners
having the right to give voting instructions. If a Contract
Owner desires to attend any meeting which shares held for
the Contract Owner's benefit may be voted, the Contract
Owner may request the Company to furnish a proxy or
otherwise arrange for the exercise of voting rights with
respect to the Fund shares held for such Contract Owner's
Account.
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<PAGE>
GENERAL In the event that the Contract Owner gives no instructions
PROVISIONS or leaves the manner of voting discretionary, the Company
(CONTINUED) will vote such shares of the appropriate Fund in the same
proportion as shares of that Fund for which instructions
have been received. Also, the Company will vote the Fund
Shares in this proportionate manner which are held by the
Company for its own Account. During the annuity period
under a contract the number of votes will decrease as the
assets held to fund annuity benefits decrease.
SUBSTITUTION
The Company reserves the right to substitute the shares of
any other registered investment company for the shares of
any Fund already purchased or to be purchased in the future
by the Separate Account provided that the substitution has
been approved by the Securities and Exchange Commission.
CHANGE IN THE OPERATION OF THE SEPARATE ACCOUNT
At the Company's election and subject to any necessary vote
by persons having the right to give instructions with
respect to the voting of the Fund shares held by the
Sub-Accounts, the Variable Account may be operated as a
management company under the Investment Company Act of 1940
or it may be deregistered under the Investment Company Act
of 1940 in the event registration is no longer required.
Deregistration of the Variable Account requires an order by
the Securities and Exchange Commission.
PROOF OF SURVIVAL
The payment of any annuity benefit will be subject to
evidence that the Annuitant is alive on the date such
payment is otherwise due.
VALUATION
PROVISIONS NET PREMIUM PAYMENTS
The net premium payment is equal to the premium payment
minus any applicable Premium Taxes. The net premium payment
is applied to provide Fixed Account values or Sub-Account
Accumulation Units with respect to the Sub-Account(s)
selected by the Contract Owner.
The number of Accumulation Units credited to each
Sub-Account is determined by dividing the net premium
payment allocated to a Sub-Account by the dollar value of
one Accumulation Unit for such Sub-Account, next computed
after the receipt of a premium payment by the Company. The
number of Accumulation Units so determined will not be
affected by any subsequent change in the value of such
Accumulation Units. The Accumulation Unit value in any
Sub-Account may increase or decrease from day to day as
described below.
The Company will determine the value of the Fixed Account by
crediting interest to amounts allocated to the Fixed
Account. The minimum Fixed Account interest rate is the
rate shown on Page 3, compounded annually. The Company, at
its discretion, may credit interest rates greater than the
minimum Fixed Account interest rate.
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<PAGE>
VALUATION NET INVESTMENT FACTOR
PROVISIONS
(CONTINUED) The net investment factor for each of the Sub-Accounts is
equal to the net asset value per share of the corresponding
Fund at the end of the valuation period (plus the per share
amount of any unpaid dividends or capital gains by that
Fund) divided by the net asset value per share of the
corresponding Fund at the beginning of the valuation period
and subtracting from that amount the mortality and expense
risk charge and the administration charge shown on Page 3.
The General Account net investment factor is guaranteed to
be equal to the Minimum Fixed Account Interest Rate shown on
Page 3.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Sub-Account will vary
to reflect the investment experience of the applicable Fund
and will be determined on each Valuation Day by multiplying
the Accumulation Unit Value of the particular Sub-Account on
the preceding Valuation Day by the net investment factor for
that Sub-Account for the valuation period then ended. The
value of the Sub-Account on each Valuation Day is then
determined by multiplying the number of Accumulation Units
in that Sub-Account by the Accumulation Unit Value on that
Valuation Day.
ANNUITY UNIT VALUE
The value of an Annuity Unit for each Sub-Account of the
Separate Account will vary to reflect the investment
experience of the applicable Funds and will be determined by
multiplying the value of the Annuity Unit for that
Sub-Account on the preceding day by the product of (a) the
net investment factor for that Sub-Account for the day for
which the Annuity Unit value is being calculated, and (b)
0.999866, which is a factor that neutralizes an assumed
interest rate of 5%.
CONTRACT MAINTENANCE FEE
During each year that this contract is in force prior to the
Annuity Commencement Date, a fee will be deducted from the
contract at the end of the Contract Year or on the date of
surrender of this contract, if earlier. The fee will be
charged against the Contract Value by reducing the Fixed
Account value and, with respect to the Sub-Accounts, the
number of Accumulation Units held on that date on a pro-rata
basis with respect to each active Account.
The number of Accumulation Units deducted from the
Sub-Account is determined by dividing the pro-rata portion
of the Contract Maintenance Fee applicable to that
Sub-Account, by the value of an Accumulation Unit for the
Sub-Account at the end of the Contract Year, or on the date
of surrender, as applicable.
TERMINATION TERMINATION PRIOR TO THE ANNUITY COMMENCEMENT DATE
PROVISIONS
FULL SURRENDER
At any time prior to the Annuity Commencement Date, the
Contract Owner has the right to terminate the contract by
submitting a written request to the Administrative Office of
the Company. In such event, the Termination Value of the
contract may be taken in the form of a cash settlement.
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<PAGE>
TERMINATIONS The Termination Value of the contract is equal to the
PROVISIONS Contract Value less:
(CONTINUED) (a) any applicable Premium Taxes not previously deducted;
(b) the Contract Maintenance Fee as specified on Page 3; and
(c) any applicable contingent deferred sales charges as
specified on Page 3.
The Termination Value provided by the contract is not less
than the minimum values required by the insurance laws of
the state in which this contract is issued.
PARTIAL SURRENDERS/ANNUAL WITHDRAWAL AMOUNT
The Contract Owner may request, in writing, a partial
surrender of Contract Values at any time prior to the
Annuity Commencement Date provided the Contract Value
remaining after the surrender is at least equal to the
Company's minimum amount rules then in effect. If the
remaining Contract Value following such surrender is less
than the Company's minimum amount rules, the Company will
terminate the contract and pay the Termination Value.
The contingent deferred sales charge will be assessed
against any Contract Values surrendered as described on Page
3. However, on a noncumulative basis, the Contract Owner
may make partial surrenders during any Contract Year, up to
the Annual Withdrawal Amount shown on Page 3 and the
contingent deferred sales charge will not be assessed
against such amounts. Surrender of Contract Values in
excess of the Withdrawal Amount and additional surrenders
made in any Contract Year will be subject to the contingent
deferred sales charge, as described on Page 3, if
applicable.
For Federal tax purposes, any surrenders will be deemed to
be first from earnings, to the extent that they exist, and
then from the premium payments.
TERMINATION AFTER THE ANNUITY COMMENCEMENT DATE
This contract may not be surrendered for its Termination
Value after the commencement of annuity payments, except
with respect to Options Four and Five.
PAYMENT ON SURRENDER - DEFERRAL OF PAYMENT
Payment on any request for surrender will be made as soon as
possible and, with respect to the Contract Values in the
Sub-Accounts, no later than seven days after the written
request is received by the Company. However, such payment
may be subject to postponement:
(a) for any period during which the New York Stock Exchange
is closed or during which trading on the New York Stock
Exchange is restricted;
(b) for any period during which an emergency exists as a
result of which (i) disposal of the securities held in the
Sub-Accounts is not reasonably practicable, or (ii) it is
not reasonably practicable for the value of the net assets
of the Separate Account to be fairly determined; and
(c) for such other periods as the Securities and Exchange
Commission may, by order, permit for the protection of the
Contract Owners. The conditions under which trading shall
be deemed to be restricted or any emergency shall be deemed
to exist shall be determined by rules and regulations of the
Securities and Exchange Commission.
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TERMINATION The Company may defer payment of any amounts from the Fixed
PROVISIONS Account for up to six months from the date of the request to
(CONTINUED) surrender. If the Company defers payment for more than 30
days, the Company will pay interest of at least 3% per annum
on the amount deferred.
DEATH BENEFIT
If the Annuitant dies before the Annuity Commencement Date
and there is no designated Contingent Annuitant surviving,
or if the Contract Owner dies before the Annuity
Commencement Date, the Death Benefit will be payable as
determined under the Contract Control Provisions. The Death
Benefit is calculated as of the date the Company receives
written notification of Due Proof of Death at the
Administrative Office of the Company.
The Death Benefit will be the greatest of:
(a) The Contract Value on the date of receipt by the Company
of Due Proof of Death; or
(b) The Maximum Anniversary Value as described on Page 5 of
this Contract; or
(c) 100% of all premium payments made under the Contract,
reduced by the dollar amount of any partial surrenders since
the Date of Issue.
The Death Benefit may be taken in one sum or under any of
the settlement options then being offered by the Company
provided, however, that, in the event of a Contract Owner's
death, any settlement option must provide that any amount
payable as a death benefit will commence upon notification
of Due Proof of Death and be completed within five years of
the date of death or, if the benefit is payable over a
period not extending beyond the life expectancy of the
Beneficiary or over the life of the Beneficiary, such
distribution must commence within one year of the date of
death. Notwithstanding the foregoing, in the event of the
Contract Owner's death where the sole Beneficiary is the
spouse of the Contract Owner and the Annuitant or Contingent
Annuitant is living, such spouse may elect, in lieu of
receiving the death benefit, to be treated as the Contract
Owner.
When payment is taken in one sum, payment will be made
within 7 days after the date Due Proof of Death is received,
except when the Company is permitted to defer such payment
under the Investment Company Act of 1940.
ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date is shown on Page 3. This date
may be changed by the Contract Owner with 30 days advance
written notification, and may be the fifteenth day of any
month before or including the month of the Annuitant's 90th
birthday. In the event the Contingent Annuitant becomes the
Annuitant and in the absence of a written election to the
contrary, the Annuity Commencement Date will be the
fifteenth day of the month coincident with or next following
the Annuitant's 90th birthday.
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SETTLEMENT ELECTION OF ANNUITY OPTION
PROVISIONS
(CONTINUED) The Contract Owner may elect to have the Termination Value,
without deduction for any contingent deferred sales charge,
applied on the Annuity Commencement Date under any one of
the annuity options described below except the fifth option
or under any of the settlement options then being offered by
the Company. The Termination Value is determined on the
basis of the Accumulation Unit value of each Sub-Account and
the value of the Fixed Account no later than the fifth
Valuation Day preceding the date annuity payments are to
commence.
DATE OF PAYMENT
The first payment under any option shall be made on the
fifteenth day of the month immediately following approval of
claim for settlement. Subsequent payments shall be made on
the fifteenth day of each subsequent month in accordance
with the manner of payment selected.
DEATH OF THE ANNUITANT
In the event of the death of the Annuitant while receiving
annuity payments, the present value of any remaining
payments will be paid in one sum to the Beneficiary unless
other provisions shall have been made and approved by the
Company. If the Annuitant was also the Contract Owner, any
method of distribution must provide that any amount payable
as a death benefit will be distributed at least as rapidly
as under the method of distribution in effect at the
Contract Owner's death. In the case of the Separate Account
calculations, for such present value of the remaining
payments the Company will assume a net investment rate of 5%
per annum. The Annuity Unit value on the date of receipt of
Due Proof of Death shall be used for the purpose of
determining such present value. In the case of the General
Account the net investment rate assumed will be the rate
used by the Company to determine the amount of each certain
payment.
ALLOCATION OF ANNUITY
The person electing an annuity option may further elect to
have the value of the contract applied to provide a variable
annuity, a fixed dollar annuity or a combination of both.
Once every 3 months, following the commencement of annuity
payments, the Contract Owner may elect, in writing, to
transfer among any Sub-Account(s) on which variable annuity
payments are based. No transfers may be made between the
Sub-Accounts and the General Account.
If no election is made to the contrary, the value of each
Sub-Account shall be applied to provide a variable annuity
based thereon, and the value of the Fixed Account shall be
applied to provide a fixed dollar annuity.
VARIABLE ANNUITY AND FIXED DOLLAR ANNUITY
Variable Annuity - A variable annuity is an annuity with
payments increasing or decreasing in amount in accordance
with the net investment results of the Sub-Account(s) of the
Separate Account (as described in the Valuation Provisions).
After the first monthly payment for a variable annuity has
been determined in accordance with the provisions of this
contract, a number of Sub-Account Annuity Units is
determined by dividing that first monthly payment by the
appropriate Sub-Account Annuity Unit value on the effective
date of the annuity payments.
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<PAGE>
SETTLEMENT Once variable annuity payments have begun, the number of
PROVISIONS Annuity Units remains fixed with respect to a particular
(CONTINUED) Sub-Account. If the Contract Owner elects that continuing
annuity payments be based on a different Sub-Account, the
number will change effective with that election but will
remain fixed in number following such election. The method
of calculating the unit value is described under Valuation
Provisions.
The dollar amount of the second and subsequent variable
annuity payments is not predetermined and may increase or
decrease from month to month. The actual amount of each
variable annuity payment after the first is determined by
multiplying the number of Sub-Account Annuity Units by the
Sub-Account Annuity Unit value as described in the Valuation
Provisions. The Sub-Account Annuity Unit value will be
determined no earlier than the fifth Valuation Day preceding
the date the annuity payment is due.
The Company guarantees that the dollar amount of variable
annuity payments will not be adversely affected by
variations in the expense results and in the actual
mortality experience of payees from the mortality
assumptions, including any age adjustment, used in
determining the first monthly payment.
Fixed Dollar Annuity - A fixed dollar annuity is an annuity
with payments which remain fixed as to dollar amount
throughout the payment period.
ANNUITY OPTIONS
FIRST OPTION - Life Annuity - An annuity payable monthly
during the lifetime of the payee, ceasing with the last
payment due prior to the death of the payee.
SECOND OPTION - Life Annuity with 120, 180 or 240 Monthly
Payments Certain - An annuity providing monthly income to
the payee for a fixed period of 120 months, 180 months, or
240 months (as selected), and for as long thereafter as the
payee shall live.
THIRD OPTION - Joint and Last Survivor Life Annuity - An
annuity payable monthly during the joint lifetime of the
payee and a secondary payee, and thereafter during the
remaining lifetime of the survivor, ceasing with the last
payment prior to the death of the survivor.
FOURTH OPTION - Payment for a Designated Period - An amount
payable monthly for the number of years selected which may
be from 5 to 30 years. The remaining balance of proceeds in
the General Account or the Separate Account for any day is
equal to the balance on the previous day decreased by the
amount of any installment paid on that day and the remainder
multiplied by the applicable net investment factor for the
day as described in the valuation provisions. Any surrender
out of this option will be subject to contingent deferred
sales charges, as described on Page 3.
If this contract is issued to qualify under Section 401,
403, or 408 of the Internal Revenue Code of 1954 as amended,
the fourth option shall be available only if the guaranteed
payment period is less than the life expectancy of the
Annuitant at the time the option becomes effective. Such
life expectancy will be computed under the mortality table
then in use by the Company.
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SETTLEMENT FIFTH OPTION - Death Benefit Remaining with the Company -
PROVISIONS Proceeds from the Death Benefit left with the Company for a
(CONTINUED) period not to exceed five years from the date of the
Contract Owner's death prior to the Annuity Commencement
Date. The proceeds will remain in the Sub-Account(s) to
which they were allocated at the time of death unless the
Beneficiary elects to reallocate them. Full or partial
withdrawals may be made at any time. In the event of
withdrawals, the remaining value will equal the Contract
Value of the proceeds left with the Company, minus any
withdrawals.
In the absence of an election by the Contract Owner, the
Termination Value, without deduction for any contingent
deferred sales charge, will be applied on the Annuity
Commencement Date under the second option to provide a life
annuity with 120 monthly payments certain.
ANNUITY TABLES DESCRIPTION OF TABLES
The attached tables show the minimum dollar amount of the
first monthly payments for each $1,000 applied under the
options. Under the First or Second Options, the amount of
each payment will depend upon the age and sex of the payee
at the time the first payment is due. Under the Third
Option, the amount of each payment will depend upon the sex
of both payees and their ages at the time the first payment
is due.
The variable payment annuity tables for the First, Second
and Third Options are based on the 1983a Individual Annuity
Mortality Table with ages set back one year and an interest
rate of 5% per annum. The table for the Fourth Option is
based on an interest rate of 5% per annum.
The fixed annuity payment tables for the First, Second and
Third Options are based on the 1983a Individual Annuity
Mortality Table with ages set back one year and an interest
rate of 3% per annum. The table for the Fourth Option is
based on an interest rate of 3% per annum.
Once the Contract Owner has elected an annuity option, that
election may not be changed with respect to any Annuitant
following the commencement of annuity payments.
MINIMUM PAYMENT
No election of any options or combination of options may be
made under this contract unless the first payment for each
affected Account would be at least equal to the minimum
payment amount according to Company rules then in effect.
If at any time, payments to be made to any payee from each
Account are or become less than the minimum payment amount,
the Company shall have the right to change the frequency of
payment to such intervals as will result in a payment at
least equal to the minimum. If any amount due would be less
than the minimum payment amount per annum, the Company may
make such other settlement as may be equitable to the payee.
Page 15
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
ROYAL LIFE INSURANCE COMPANY
HARTFORD, CONNECTICUT 06104-2999
<PAGE>
COUNTRYWIDE VERSION Royal Life Insurance Company of America
Request For Mailing Address:
[PRODUCT NAME] Variable Annuity 200 Hopmeadow Street
Simsbury, CT 06089
<TABLE>
<CAPTION>
<S><C>
- --------------------------------------------------------------------------------------------------------------------------------
1. CONTRACT OWNER (If different than Annuitant) Social Security Number/TIN
/ / Mr. / /Mrs. / / Ms. Sex: / / M / / F U.S. Citizen / / Yes / / No / /
-------- -------- --------
Last Name MI First Name
- ------------------------------------------ ---- -------------------------------------------
Street Address City
- ------------------------------------------------------ -------------------------------------------
State Zip Code Date of Birth Daytime Telephone Number
- - -
- ----- -------- ----------- ---- --- ---- -------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
2. JOINT CONTRACT OWNER (IF ANY) Social Security Number/TIN
/ / Mr. / /Mrs. / / Ms. Sex: / / M / / F U.S. Citizen / / Yes / / No / /
-------- -------- --------
Last Name MI First Name
- ------------------------------------------ ---- -------------------------------------------
Date of Birth Relationship to Contract Owner
- -
- ---- --- ---- -------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
3. ANNUITANT (If different from Contract Owner) Social Security Number/TIN
/ / Mr. / / Mrs. / / Ms. Sex: / / M / / F / / Any Trustee or Successor / /
(for Unallocated Qualified -------- -------- --------
Plans only)
Last Name MI First Name
- ------------------------------------------ ---- -------------------------------------------
Street Address City
- ------------------------------------------------------ -------------------------------------------
State Zip Code Date of Birth Daytime Telephone Number
- - -
- ----- -------- ----------- ---- --- ---- -------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
4. CONTINGENT ANNUITANT (If applicable) Social Security Number/TIN
/ /
------- -------- --------
Last Name MI First Name
- ------------------------------------------ ---- -------------------------------------------
Date of Birth Relationship to Contract Owner
- -
- ---- --- ---- -------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
5. BENEFICIARY(IES) (Unless indicated otherwise, proceeds will be divided equally. Please attach a separate sheet
to add additional beneficiaries)
/ / Primary Relationship to Contract Owner Date of Birth Social Security Number/TIN
% - - / /
- -------------- ------------------------------ ---- --- ---- -------- -------- --------
Last Name MI First Name
- ------------------------------------------ ---- -------------------------------------------
/ / Primary / / Contingent Relationship to Contract Owner Date of Birth Social Security Number/TIN
% - - / /
- -------------- ------------------------------ ---- --- ---- -------- -------- --------
Last Name MI First Name
- ------------------------------------------ ---- -------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
6. PURCHASE PAYMENT (Make Check payable to ROYAL LIFE INSURANCE COMPANY OF AMERICA) $ ___,___,___,___,___
Monies remitted via: / / Check / / 1035(a) Exchange / / Transfer / Rollover
<CAPTION>
<PAGE>
<S><C>
7. PLAN PAYMENT TYPE (Complete Section A or B)
A. NON QUALIFIED / / Initial Purchase / / 1035(a)Tax-Free Exchange Cost Basis $ ___,___,___,___,___
- --------------------------------------------------------------------------------------------------------------------------------
B. QUALIFIED / / New Contribution / / Transfer / / Rollover Contribution for tax year 199____
- --------------------------------------------------------------------------------------------------------------------------------
INDIVIDUALLY OWNED EMPLOYER PLAN- / / Allocated / / Unallocated
- --------------------------------------------------------------------------------------------------------------------------------
/ / Traditional IRA / / 403(b) / / SEPIRA / / 401(k) / / 401(a) / / Keogh/HR-10
/ / Custodial IRA / / ROTH / / SIMPLE IRA / / Other:
--------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
8. RATE LOCK - 90 DAY FIXED ACCOUNT 1035 EXCHANGE/TRANSFER RATE LOCK / / YES ____-____%
If Rate Lock Is not selected, the rate will be determined when Hartford Life receives the funds.
- --------------------------------------------------------------------------------------------------------------------------------
9. FUND SELECTION (The invested amount will be allocated as selected here. If choosing the Custom Designed
Allocation Program or Dollar Cost Averaging Program, complete the appropriate enrollment form.)
PLEASE NOTE: WHOLE PERCENTAGES ONLY.
- ------------------------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund / / Hartford Index HLS Fund / / Hartford Mortgage Securities HLS Fund / /
- ------------------------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS Fund / / Hartford Dividend and Growth HLS Fund / / Hartford Money Market HLS Fund / /
- ------------------------------------------------------------------------------------------------------------------------------------
Hartford Midcap HLS Fund / / Hartford International Advisers HLS Fund / / Fixed Account* / /
- ------------------------------------------------------------------------------------------------------------------------------------
Hartford International Opportunities / / Hartford Advisers HLS Fund / / DCA Bonus Program* / /6-Mo. Or / /12-Mo. / /
HLS Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund / / Hartford Bond HLS Fund / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS Fund / / Total /100%/
- ------------------------------------------------------------------------------------------------------------------------------------
10. SPECIAL REMARKS
------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
11. OWNERS(S) ACKNOWLEDGMENTS
Will the annuity applied for replace one or more existing annuity or life insurance contracts? / / No / / Yes-If Yes,
Please explain in "Special Remarks," section 10.
Have you purchased another deferred annuity issued by Royal Life Insurance Company of America during the current calendar year?
/ / No / / Yes
I/we hereby represent my/our answer to the above question to be true and correct to the best of my/our knowledge and
belief. I/WE UNDERSTAND THAT ANNUITY PAYMENTS OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE OR A
SEPARATE ACCOUNT, ARE VARIABLE AND GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
/ / RECEIPT OF A VARIABLE ANNUITY AND FUND PROSPECTUS IS HEREBY ACKNOWLEDGED. If not checked, the appropriate
prospectus will be mailed to you. Signed at: * .
------------------------------
/ /
- ---------- -- -- -- ----------------------------------- ----------------------------------------------
State Date Contract Owner Signature Joint Contract Owner Signature (if Applicable)
(Trustee/Custodian, if Applicable)
* IF THE STATE ABOVE IS DIFFERENT THAN RESIDENCE STATE, PLEASE INDICATE THE REASON WHY IN THE "SPECIAL REMARKS" SECTION.
- --------------------------------------------------------------------------------------------------------------------------------
12. REGISTERED REPRESENTATIVE ACKNOWLEDGMENTS
Do you, as agent, have reason to believe the contract requested --------------------------------------------
For will replace existing annuities or insurance? / / Yes / / No Licensed Agent Signature
Last Name MI First Name
- ------------------------------------------ ---- -------------------------------------------
Broker/Dealer
- --------------------------------------------------------------------------------------------------------------------
City State Zip Code
-
- ------------------------------------ ------------- ---------- --------
Area Code Business Telephone Number Area Code Fax Number Licensed Agent's SSN
( ) - ( ) - - -
--- --- ----------------------- --- --- ----------- ---- --- ----
Broker/Dealer Client Account Number License I.D. (Florida Agents Only)
----------------------------------- ----------------------------------
Select Program: / / A / / B / / C / / D
</TABLE>
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
CERTIFICATE AMENDING AND RESTATING
CERTIFICATE OF INCORPORATION
BY ACTION OF THE BOARD OF DIRECTORS AND SOLE SHAREHOLDER
1. The name of the corporation is Royal Life Insurance Company of America.
2. The Certificate of Incorporation is amended and restated by the following
resolution of each of the Board of Directors and the Sole Shareholder of
the corporation:
RESOLVED, that the Certificate of Incorporation is hereby amended and
restated to read as follows:
Section 1. The name of the corporation is Royal Life Insurance
Company of America.
Section 2. The duration of the corporation shall be perpetual.
Section 3. The corporation shall have the purposes and powers to
write any and all forms of insurance which any other corporation now
or hereafter chartered by Connecticut and empowered to do an insurance
business may now or hereafter may lawfully do; to accept and to cede
reinsurance; to issue policies and contracts for any kind or
combinations of kinds of insurance; to issue policies or contract
either with or without participation in profits; to acquire and hold
any or all of the shares or other securities of any insurance
corporation; to and engage in any lawful act or activity for which
corporations may be formed under the Stock Corporation Act. The
corporation is authorized to exercise the powers herein granted in any
state, territory or jurisdiction of the United States or in any
foreign country.
Section 4. The authorized capital stock shall be two million, five
hundred thousand dollars ($2,500,000) divided into twenty-five
thousand (25,000) shares of common capital stock with a par value of
one hundred dollars ($100) each and said corporation is authorized to
increase the same from time to time to any amount or amounts not
exceeding five million dollars (5,000,000). Said corporation may
change the par value and number of shares of its issued and
outstanding capital stock provided the par value shall not be less
than ten dollars ($10) per share and the aggregate par value shall not
be altered by such change. No such change shall be valid unless
approved by a vote of at least two-thirds of the stock represented at
a meeting of the stockholders duly warned and held for that purpose
nor
<PAGE>
unless a majority of the directors shall make, sign and swear to and
file in the office of the secretary of the state a certificate stating
that such change has been duly approved by said stockholders and
setting forth a copy of a vote of the stockholders, which vote shall
show the details of such change.
Section 5. The street address of the corporation's registered office
in the State of Connecticut is 200 Hopmeadow Street, Simsbury,
Connecticut 06089. The corporation's registered agent is Lynda
Godkin. The registered agent's business address is 200 Hopmeadow
Street, Simsbury, Connecticut 06089 and her residence address is 11
Duncaster Wood Road, Granby, Connecticut 06035.
3. The above resolution was consented to by the Board of Directors and the
sole Shareholder of the Corporation. The number of shares of the
Corporation's common capital stock entitled to vote thereon was 25,000 and
the vote required for adoption was 16,666 shares. The vote favoring
adoption was 25,000 shares, which is the greatest vote required to pass the
resolution.
Dated at Simsbury, Connecticut this 18th day of September, 1998
We hereby declare, under penalty of false statement, that the statements made in
the foregoing Certificate are true.
ROYAL LIFE INSURANCE COMPANY OF AMERICA
By: /s/ Lynda Godkin
----------------------------------------
Lynda Godkin, Senior Vice President
and Corporate Secretary
<PAGE>
BY-LAWS
ROYAL LIFE INSURANCE COMPANY OF AMERICA
<PAGE>
ARTICLE I
OFFICES
The executive office of the Company shall be maintained at 150 William
Street, New York, New York. The Company may have and maintain such other
offices, both within and without New York, as the Board of Directors may, from
time to time, determine or the business of the Company may require.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meeting.
The Annual Meeting of the Shareholders shall be held at the executive
office of the Company or at such other places either within or outside the State
of New York as may be designated in the Notice of Meeting, on the third
Wednesday in March in each year at an hour fixed by the Chairman, unless such
day shall be a legal holiday, in which event it shall be held on the next
succeeding day, not a holiday.
Section 2. Special Meeting.
Special Meeting of the Shareholders for the consideration of such matters
as may be named in the call for such meetings shall be held at such time and
place within or without the State of New York as shall be stated in the Notice
of Meeting or in a duly executed Waiver of Notice thereof. The business
transacted at any Special Meeting of Shareholders shall be limited to the
purposes stated in the Notice.
<PAGE>
ARTICLE IV
COMMITTEES
The Board of Directors, by resolution adopted by a majority of the entire
Board, may designate from among its members an Executive Committee, an
Investment Committee and other committees, each consisting of three or more
Directors, and each of which to the extent permitted by law and in the
resolution shall have all the authority of the Board in the management of the
business affairs of the Company and shall have power to authorize the seal of
the Company to be affixed to all papers which may require it.
ARTICLE V
MEETING NOTICE AND PROCEDURE
Section 1. Notice.
Notice of all meetings of Shareholders shall be given at least ten days and
not more than forty days prior to the date of such meeting. Notice for all
other meetings shall be given at least one day before the meeting. Notice
addressed to the last known address of the person entitled thereto shall be
deemed given when deposited, postpaid, with the postal service.
Section 2. Waiver of Notice.
Notice of meetings may be waived either specifically or generally.
Attendance, without objection, at a meeting shall waive notice of such meeting.
Section 3. Quorum.
Unless otherwise established by law or these By-Laws, a quorum shall
consist of one-third (1/3). If a quorum fails to attend any meeting, the
majority present may adjourn the meeting until a quorum shall attend.
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
Section 1. Board of Directors.*
The Board of Directors shall consist of five to thirteen members as elected
by the Shareholders, and shall elect one of its members Chairman.
Section 2. Term.
The Directors shall be elected at the Annual Meeting of the Shareholders,
and each Director elected shall serve until the next succeeding Annual Meeting
and until his successor shall have been elected and qualified.
Section 3. Vacancies.
Vacancies and newly created directorship resulting from any increase in the
number of Directors may be filled by election at an Annual Meeting or at a
Special Meeting of Shareholders or Directors called for that purpose. A
Director elected to fill a vacancy, or a newly created directorship, shall hold
office until the next succeeding Annual Meeting of Shareholders and until his
successor shall have bee elected and qualified.
Section 4. Compensation.
Directors as such shall not receive any stated salaries for their services,
but by resolution of the Board of Directors a fixed sum and expensed of
attendance, if any, may be allowed provided that nothing herein contained shall
be construed to preclude any Director from serving the Company in any other
capacity and receiving compensation therefor.
*Amended 31 March 1990
<PAGE>
Section 4. Action by Consent.
Any action may be taken without a meeting if all entitled to vote thereon
consent in writing to the adoption of a resolution authorizing the action.
Section 5. Attendance at Meetings.
Shareholders may attend meetings in person or by proxy. Members of the
Board of Directors, or any committee thereof, may participate in a meeting of
such Board or committed by means of a conference telephone or similar equipment
which allows all persons participating in the meeting to hear each other at the
same time. Participation by such means shall constitute presence in person at
such meeting.
Section 6. Call for Meeting.
The Chairman, President or any officer may call a meeting. Upon demand by
one-tenth (1/10) of those entitled to notice, the Corporate Secretary shall cal
a meeting.
ARTICLE VI
CUSTODIAN*
All Company funds available for investment shall be deposited with a duly
appointed Custodian which shall retain such funds and all Company investments
and collect all interest and dividends thereon. It shall act under the
direction of the Investment Committee as communicated to it by the Investment
Officer provided, however, that if investments or cash funds are to be delivered
without receipt of equivalent value, the Custodian shall also require a copy of
a resolution from the Investment Committed certified by the Investment Officer;
and further provided that the Investment Officer may confer authority for the
transfer of funds and/or securities to the order of the Company or to any other
member Company of Royal Insurance or to any Royal Insurance pool account and
further provided that the Investment Officer may confer authority for the
transfer of funds and/or securities to be deposited with regulatory commissions
or departments, as may be required by law.
*Amended July 31, 1980
<PAGE>
ARTICLE VII
OFFICERS
Section 1. Election.
The officers of the Company shall be elected by the Board of Directors at
its first meeting after each Annual Meeting of Shareholders and there shall be a
President, one or more Vice Presidents, an Investment Officer, an Assistant
Investment Officer and a Corporate Secretary. The Board of Directors may
appoint such other officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board. Any number of
offices may be held by the same person except that the same person cannot serve
as President and Corporate Secretary.
Section 2. Term.
The officers of the Company shall hold office until their successors are
elected and qualify. Any officer elected by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the Board of
Directors. The Chairman between meetings of the Board of Directors may appoint
such other officers as he shall deem necessary and may fill any vacancy
occurring in any office of the Company.
Section 3. President.
The President shall be responsible for the general management of the
affairs of the Company and shall perform any and all duties incidental to his
office. He shall have a special supervision and care over the property of the
Company. He shall have power to sigh conveyances of real estate, satisfaction
pieces for mortgages paid off, and all other papers and acts to which the seal
of the Company is affixed.
<PAGE>
Section 4. Vice President.
The Vice President shall, in the absence or incapacity of the President,
perform all the duties of that office. The Vice President shall perform such
other duties as the Board of Directors may from time to time prescribe and in
addition shall have the power, subject to such limitations as may be imposed by
the Board of Directors or the President, to enter into such contracts and
undertakings on behalf of the Company as may be required to carry on its
ordinary course of business.
Section 5. Investment Officer.
The Investment Officer shall act as Secretary of the Investment
committee on all actions pertaining to investment and cash finds. The
Assistant Investment Officer shall perform such duties as may be assigned by
the Investment Officer. In the absence or incapacity of the Investment
Officer, an Assistant Investment Officer shall have and may exercise the
power of the Investment Officer.
Section 6. Corporate Secretary.
The corporate Secretary shall give and serve all notices and shall attend
and keep Minutes of all meeting s of the Shareholders and the Board of
Directors. When required, he shall also issue notices, attend and keep minutes
of meetings or any committee of the Board of Directors. He shall have the power
to certify the incumbency of officers of the Company and the minutes of the
Board of Directors, its committees, and of Shareholders meetings, and he shall
attest the seal of the Company when required. In the absence or incapacity of
the Corporate Secretary or any other officer shall have and may exercise the
powers of the Corporate Secretary.
<PAGE>
ARTICLE VIII
POLICIES AND UNDERWRITING UNDERTAKINGS
All policies and underwriting undertakings shall be valid when signed by
the President, a Vice President, an attorney-in-fact or any other authorized
official or agent of the Company, and, where required by law, such policies
and undertakings may be attested and sealed with the seal of the Company.
The President or a Vice President or any person designated by either of
them may appoint and authorize attorneys-in-fact, officials and agents of the
Company to accomplish the purposes set forth in this Article.
ARTICLE IX
AMENDMENTS
These By-Laws may be altered, amended or repealed or new By-Laws may be
adopted at any regular or special meeting of the Shareholders or of the Board of
Directors, by the affirmative vote of a majority of the Shareholders or the
Directors.
ARTICLE X
INDEMNIFICATION
The Company shall indemnify to the full extent authorized or permitted by
law any person made, or threatened to be made a party to an action, suit or
proceeding (whether civil, criminal, administrative or investigative) by reason
of the fact that he, his testator or intestate is or was a director, officer or
employee of the company or serves or served any other enterprise at the request
of the corporation. The foregoing right or indemnification shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any By-Laws, agreement, vote of Shareholders or disinterested
Directors or otherwise, and shall continue as to a person who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
<PAGE>
ARTICLE XI
SEAL
A facsimile of the corporate seal is given below.
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK)
I, THORNTON R. LAND, Corporate Secretary of ROYAL LIFE INSURANCE
COMPANY OF AMERICA, do hereby certify that the foregoing is a full, true and
correct copy of the By-Laws of said Company now in full force and effect, as
they appear on the minutes of the Company.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and
affixed the seal of the Company this 3rd day of Sept. 1980.
/s/ Thornton R. Land
------------------------
Corporate Secretary
Subscribed and sworn to before
me this 3rd day of Sept. 1980.
/s/ Dennis T. Haver
- ---------------------------
<PAGE>
September 29, 1998 Lynda Godkin
Senior Vice President, General Counsel
Corporate Secretary
Board of Directors
Royal Life Insurance Company of America
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT ONE ("Separate Account")
ROYAL LIFE INSURANCE COMPANY OF AMERICA ("Company")
Dear Sir/Madam:
In my capacity as General Counsel of the Company, I have supervised the
establishment of the Separate Account by the Board of Directors of the Company
as a separate account for assets applicable to Contracts offered by the Company
pursuant to Connecticut Law. I have participated in the preparation of the
registration statement for the Separate Account on Form N-4 under the Securities
Act of 1933 and the Investment Company Act of 1940 with respect to the
Contracts.
I am of the following opinion:
1. The Separate Account is a duly authorized and existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
2. To the extent so provided under the Contracts, that portion of the assets
of the Separate Account equal to the reserves and other contract
liabilities with respect to the Separate Account will not be chargeable
with liabilities arising out of any other business that the Company may
conduct.
3. The Contracts, when issued as contemplated by the Form N-4 Registration
Statement, will constitute legal, validly issued and binding obligations of
the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form N-4
registration statement for the Contracts and the Separate Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
ROYAL LIFE INSURANCE COMPANY OF AMERICA
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
John P. Ginnetti
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty, and
Thomas S. Clark to sign as their agent, any Registration Statement,
pre-effective amendment, post-effective amendment and any application for
exemptive relief of the Royal Life Insurance Company of America under the
Securities Act of 1933 and/or the Investment Company Act of 1940.
/s/ Gregory A. Boyko Dated as of September 15, 1998
- ------------------------------
Gregory A. Boyko
/s/ John P. Ginnnetti Dated as of September 15, 1998
- ------------------------------
John P. Ginnnetti
/s/ Lynda Godkin Dated as of September 15, 1998
- ------------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of September 15, 1998
- ------------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of September 15, 1998
- ------------------------------
Lowndes A. Smith
/s/ Raymond P. Welnicki Dated as of September 15, 1998
- ------------------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated as of September 15, 1998
- ------------------------------
Lizabeth H. Zlatkus
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD
The Hartford Financial Services Group, Inc.
(Delaware)
|
- -------------------------------------------------------------------------------------------------------------
Nutmeg Insurance Company The Hartford Investment
(Connecticut) Management Company
| (Delaware)
Hartford Fire Insurance Company |
(Connecticut) Hartford Investment
| Services, Inc.
Hartford Accident and Indemnity Company (Connecticut)
(Connecticut)
|
Hartford Life, Inc.
(Delaware)
|
Hartford Life and Accident Insurance Company
(Connecticut)
|
|
|
- -------------------------------------------------------------------------------------------------------------
Alpine Life Hartford Financial Hartford Life American Maturity ITT Hartford Canada
Insurance Services Life Insurance Company Life Insurance Holdings, Inc.
Company Insurance Co. (Connecticut) Company (Canada)
(New Jersey) (Connecticut) | (Connecticut) |
| | |
| AML Financial, Inc. |
| (Connecticut) Hartford Life
| Insurance Company
| of Canada
| (Canada)
|
|
- -------------------------------------------------------------------------------------------------------------
Hartford Life and Annuity ITT Hartford International Hartford Financial Services Royal Life
Insurance Company Life Reassurance Corporation Corporation Insurance
(Connecticut) (Connecticut) (Delaware) Company of
| | America
| | (Connecticut)
| |
ITT Hartford Life, Ltd. |
(Bermuda) |
|
|
- -------------------------------------------------------------------------------------------------------------
MS Fund HL Funding HL Investment Hartford Hartford Securities Hartford-Comp. Emp.
America Company, Inc. Advisors, Inc. Equity Sales Distribution Benefit Service
1993-K, Inc. (Connecticut) (Connecticut) Company, Inc. Company, Inc. Company
(Delaware) | (Connecticut) (Connecticut) (Connecticut)
|
Hartford Investment
Financial Services
Company
(Delaware)
</TABLE>
