<PAGE>
HARTFORD
LIFE INSURANCE COMPANY
HARTFORD LIFE INSURANCE COMPANY
[LOGO]
SEPARATE ACCOUNT TWO (VARIABLE ACCOUNT QP)
The variable annuity contracts (the "Contract" or "Contracts") described in
this Prospectus are designed for purchase for retirement planning purposes
only.
The Contracts are issued by Hartford Life Insurance Company ("Hartford").
Payments for the Contracts will be held in a series of Hartford Life Insurance
Company Separate Account Two ("Variable Account QP" or the "Separate Account")
of Hartford.
The Contracts are designed for use in conjunction with Qualified Pension and
Profit-Sharing Plans, HR-10 Plans, Tax-Deferred Annuity Plans (for public
school teachers and employees and employees of certain other tax-exempt and
qualifying employers), deferred compensation plans for state and local
governments (the Contract reserves for which are afforded qualified plan
reserve treatment) and Individual Retirement Annuities or Accounts ("IRA's").
The following Sub-Accounts are available under the Contracts. Opposite each
Sub-Account is the name of the underlying investment for that Account.
Bond Fund Sub-Account -- shares of Hartford Bond Fund, Inc. ("Bond Fund")
(formerly the Fixed Income Fund)
Stock Fund Sub-Account -- shares of Hartford Stock Fund, Inc. ("Stock
Fund")
Money Market Fund Sub- -- shares of HVA Money Market Fund, Inc. ("Money
Account* Market Fund")
*not available under Contracts issued on or after December 7, 1981
This Prospectus sets forth the information concerning the Separate Account
that investors ought to know before investing. This Prospectus should be kept
for future reference. Additional information about the Separate Account has
been filed with the Securities and Exchange Commission and is available
without charge upon request. To obtain the Statement of Additional Information
send a written request to Hartford Life Insurance Company, Attn: RPVA
Administration, P.O. Box 2999, Hartford, CT 06104-2999. The Table of Contents
for the Statement of Additional Information may be found on page 33 of this
Prospectus. The Statement of Additional Information is incorporated by
reference to this Prospectus.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------------------------------------------------------------
Prospectus Dated: May 1, 1997
Statement of Additional Information Dated: May 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------------------------------------------------------------------------ ----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................... 3
FEE TABLE............................................................... 5
SUMMARY................................................................. 8
ACCUMULATION UNIT VALUES................................................ 9
INTRODUCTION............................................................ 10
THE QP VARIABLE ACCOUNT CONTRACT AND
SEPARATE ACCOUNT TWO (QP VARIABLE ACCOUNT)........................... 10
What is the Variable Account QP Contract?............................. 10
Who can buy these Contracts?.......................................... 10
What is the Separate Account and how does it operate?................. 10
OPERATION OF THE CONTRACT............................................... 11
How is a Contribution credited?....................................... 11
May I make changes in the amounts of my Contributions?................ 12
Are there any limits on Contributions?................................ 12
May I transfer assets between Sub-Accounts?........................... 12
May I obtain a Contract in exchange for another Contract?............. 12
What happens if a Contract Owner fails to make Contributions?......... 13
May I assign or transfer my Contract?................................. 13
How do I know what my account is worth?............................... 13
How is the Accumulation Unit value determined?........................ 13
How are the underlying Fund shares valued?............................ 13
PAYMENT OF BENEFITS..................................................... 14
What would my Beneficiary receive as death proceeds?.................. 14
How can a Contract be redeemed or surrendered?........................ 14
Is a partial termination of a Contract allowed?....................... 15
Can payment of the redemption or surrender value ever be postponed by
Hartford beyond the seven day period?................................ 16
May I surrender once Annuity payments have started?................... 16
May I reinvest after a redemption?.................................... 16
Can a Contract be suspended by a Contract Owner?...................... 16
How do I elect an Annuity Commencement Date and Form of Annuity?...... 16
What is the minimum amount that I may select for an Annuity
payment?............................................................. 17
What are the available Annuity Options under the Contract?............ 17
How are Annuity payments determined?.................................. 18
Can a Contract be modified?........................................... 19
CHARGES UNDER THE CONTRACT.............................................. 20
How are the charges under these Contracts made?....................... 20
Are there any differences in charges made?............................ 21
What is the mortality and expense risk charge?........................ 21
Are there any administrative charges?................................. 22
How much are the deductions for Premium Taxes on these Contracts?..... 22
HARTFORD LIFE INSURANCE COMPANY AND THE FUNDS........................... 22
What is Hartford?..................................................... 22
What are the Funds?................................................... 23
FEDERAL TAX CONSIDERATIONS.............................................. 24
A. General............................................................ 24
B. Taxation of Hartford and the Separate Account...................... 24
C. Information Regarding Tax-Qualified Plans.......................... 24
D. Diversification Requirements....................................... 27
E. Ownership of the Assets in the Separate Account.................... 27
F. Non-Natural Persons, Corporations.................................. 28
G. Annuity Purchases by Nonresident Aliens and Foreign Corporations... 28
MISCELLANEOUS........................................................... 28
What are my voting rights?............................................ 28
Will other Contracts be participating in this Separate Account?....... 28
How are the Contracts sold?........................................... 28
Who is the custodian of the Separate Account's assets?................ 29
Are there any material legal proceedings affecting the Separate
Account?............................................................. 29
Are you relying on any experts as to any portion of this
Prospectus?.......................................................... 29
How may I get additional information?................................. 29
APPENDIX................................................................ 30
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............... 33
</TABLE>
2
<PAGE>
GLOSSARY OF SPECIAL TERMS
ACCUMULATION PERIOD: The period before the commencement of Annuity payments.
ACCUMULATION UNIT: An accounting unit of measure used to calculate values before
Annuity payments begin.
ACTIVE LIFE FUND: A term used to describe the sum of all Participant's
Individual Account value(s) in the Separate Account under a Contract during the
Accumulation Period.
ANNUAL CONTRACT FEE: A fee charged for establishing and maintaining a
Participant's Individual Account under a Contract.
ANNUITANT: A Participant on whose behalf Annuity payments are to be made under a
Contract.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for payments for a designated
period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
ANNUITY PERIOD: The period following the commencement of Annuity payments.
ANNUITY UNIT: An accounting unit of measure in the Separate Account used to
calculate the amount of variable Annuity payments.
BENEFICIARY: The person(s) designated to receive Contract values in the event of
the Participant's or Annuitant's death.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTRACT OWNER: The Employer or entity owning the Contract.
CONTRACT YEAR: A period of 12 months commencing with the effective date of the
Contract or with any anniversary thereof.
CONTRIBUTION(S): The amount(s) paid or transferred to Hartford on behalf of
Participant(s) or purchase payments by individuals pursuant to the terms of the
Contracts.
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
FUNDS: Currently, the Funds described commencing on page 23 of this Prospectus.
GENERAL ACCOUNT: The General Account of Hartford which consists of all assets of
Hartford other than those allocated to the Separate Accounts of Hartford.
HARTFORD: Hartford Life Insurance Company.
MINIMUM DEATH BENEFIT: The minimum amount payable upon the death of Participant
prior to age 65 and before Annuity payments have commenced.
PARTICIPANT: A person for whom an Individual Account has been established.
PARTICIPANT'S CONTRACT YEAR: A period of twelve (12) months commencing with the
Date of Coverage of a Participant and each successive 12 month period
thereafter.
PARTICIPANT'S INDIVIDUAL ACCOUNT: An account to which the Separate Account
Accumulation Units held by the Contract Owner on behalf of Participant under the
Contract are allocated.
PREMIUM TAX: A tax charged by a state or municipality on premiums, purchase
payments or Contract values.
QUALIFIED PLAN: A voluntary plan of an Employer which qualifies for special tax
treatment under Section 401 of the Internal Revenue Code.
SEPARATE ACCOUNT: The Hartford Separate Account entitled "Hartford Life
Insurance Company Separate Account Two".
3
<PAGE>
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between successive Valuation Days.
VARIABLE ACCOUNT QP: A series of Hartford Life Insurance Company Separate
Account Two.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets held in the underlying
securities of the Separate Account.
4
<PAGE>
FEE TABLE
Separate Account Two (QP Variable Account) -- Group Variable Only
Bond Fund Sub-Account 1.00%
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Sales Load (as a percentage of premium payments or amount
surrendered, as applicable)
On the first $2,500........................................... 5.000%
Exchange Fee...................................................... $ 0
Annual Contract Fee............................................... $ 10(1)
Annual Expenses--Separate Account (as a percentage of average
account value)
Mortality and Expense Risk Fees............................... 1.000%
---------
---------
Hartford Bond Fund Annual Expenses
(as a percentage of net assets)
Management Fees................................................... 0.490%
Other Expenses.................................................... 0.030%
Total (Portfolio Company) Annual Expenses......................... 0.520%
---------
---------
</TABLE>
- ------------
(1) The annual maintenance charge is a single $10 charge on a Contract. It is
deducted proportionally from the investment options in use at the time of
the charge. In the Example, the annual maintenance fee is approximated as a
0.04% annual asset charge based on the experience of the Contracts.
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
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>
$66 $ 100 $ 136 $ 237 $ 66 $ 99 $ 135 $ 236 $ 66 $ 100 $ 136 $ 237
</TABLE>
Separate Account Two (QP Variable Account) -- Combination Individual and Group
Allocated Contracts Bond Fund Sub-Account 1.00%
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Sales Load (as a percentage of premium payments or amount
surrendered, as applicable)
On the first $2,500........................................... 7.000%
Exchange Fee...................................................... $ 0
Annual Contract Fee............................................... $ 10(1)
Annual Expenses--Separate Account (as a percentage of average
account value)
Mortality and Expense Risk Fees............................... 1.000%
---------
---------
Hartford Bond Annual Expenses
(as a percentage of net assets)
Management Fees................................................... 0.490%
Other Expenses.................................................... 0.030%
Total (Portfolio Company) Annual Expenses......................... 0.520%
---------
---------
</TABLE>
- ------------
(1) The annual maintenance charge is a single $10 charge on a Contract. It is
deducted proportionally from the investment options in use at the time of
the charge. In the Example, the annual maintenance fee is approximated as a
0.04% annual asset charge based on the experience of the Contracts.
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
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>
$86 $ 120 $ 156 $ 257 $ 86 $ 119 $ 155 $ 256 $ 86 $ 120 $ 156 $ 257
</TABLE>
5
<PAGE>
Separate Account Two (QP Variable Account -- Group Variable Only
Stock Fund Sub-Account 1.00%
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Sales Load (as a percentage of premium payments or amount
surrendered, as applicable)
On the first $2,500........................................... 5.000%
Exchange Fee...................................................... $ 0
Annual Contract Fee............................................... $ 10(1)
Annual Expenses--Separate Account (as a percentage of average
account value)
Mortality and Expense Risk Fees............................... 1.000%
---------
---------
Hartford Stock Annual Expenses
(as a percentage of net assets)
Management Fees................................................... 0.441%
Other Expenses.................................................... 0.016%
Total (Portfolio Company) Annual Expenses......................... 0.457%
---------
---------
</TABLE>
- ------------
(1) The annual maintenance charge is a single $10 charge on a Contract. It is
deducted proportionally from the investment options in use at the time of
the charge. In the Example, the annual maintenance fee is approximated as a
0.04% annual asset charge based on the experience of the Contracts.
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
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>
$65 $ 98 $ 132 $ 230 $ 65 $ 97 $ 132 $ 230 $ 65 $ 97 $ 132 $ 230
</TABLE>
Separate Account Two (QP Variable Account) -- Combination Individual and Group
Allocated Contracts Stock Fund Sub-Account 1.00%
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Sales Load (as a percentage of premium payments or amount
surrendered, as applicable)
On the first $2,500........................................... 7.000%
Exchange Fee...................................................... $ 0
Annual Contract Fee............................................... $ 10(1)
Annual Expenses--Separate Account (as a percentage of average
account value)
Mortality and Expense Risk Fees............................... 1.000%
---------
---------
Hartford Stock Annual Expenses
(as a percentage of net assets)
Management Fees................................................... 0.441%
Other Expenses.................................................... 0.016%
Total (Portfolio Company) Annual Expenses......................... 0.457%
---------
---------
</TABLE>
- ------------
(1) The annual maintenance charge is a single $10 charge on a Contract. It is
deducted proportionally from the investment options in use at the time of
the charge. In the Example, the annual maintenance fee is approximated as a
0.04% annual asset charge based on the experience of the Contracts.
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
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>
$85 $ 118 $ 152 $ 250 $ 85 $ 117 $ 152 $ 249 $ 85 $ 118 $ 152 $ 250
</TABLE>
6
<PAGE>
Separate Account Two (QP Variable Account) -- Group Variable Only Contracts
Money Market Fund Sub-Account 1.00%
Contract Owner Transaction Expenses
(All Sub-Accounts)
<TABLE>
<S> <C>
Sales Load (as a percentage of premium payments or amount
surrendered, as applicable)
On the first $2,500........................................... 0.000%
Exchange Fee...................................................... $ 0
Annual Contract Fee (2)........................................... $ 0
Annual Expenses--Separate Account (as a percentage of average
account value)
Mortality and Expense Risk Fees............................... 1.000%
Hartford Bond Annual Operating Expenses
(as a percentage of net assets)
Management Fees................................................... 0.423%
Other Expenses.................................................... 0.021%
Total (Portfolio Company Annual Expenses.......................... 0.444%
---------
---------
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
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>
$15 $ 46 $ 79 $ 174 $ 15 $ 46 $ 79 $ 174 $ 15 $ 46 $ 79 $ 174
</TABLE>
7
<PAGE>
SUMMARY
A. CONTRACTS OFFERED
The Contracts are designed for use in conjunction with Qualified Pension and
Profit-Sharing Plans, HR-10 Plans, Tax-Deferred Annuity Plans (for public school
teachers and employees and employees of certain other tax-exempt and qualifying
employers), deferred compensation plans for state and local governments (the
Contract reserves for which are afforded qualified plan reserve treatment) and
IRA's.
B. DEDUCTIONS FOR SALES CHARGES
Each periodic payment made under the Contracts will be subject to a sales
charge deduction and a deduction of .75% of each payment for the Minimum Death
Benefit provided by Hartford. (See, "How are the charges in these Contracts
made?" page 20.) A further deduction will be made for any Premium Taxes that may
be due (see "How much are deductions for Premium Taxes on these Contracts?" on
page 22).
C. MINIMUM DEATH BENEFITS
A Minimum Death Benefit is provided in the event of death of the Participant
under a Participant's Individual Account prior to the earlier of the
Participant's 65th birthday or the Annuity Commencement Date (see "What would my
Beneficiary receive as death proceeds?" commencing on page 14).
D. ANNUITY OPTIONS
The Annuity Commencement Date will not be deferred beyond the Participant's
75th birthday or such earlier date may be required by applicable law and/or
regulation. If a Contract Owner does not elect otherwise, Hartford reserves the
right to begin Annuity payments at age 65 under an option providing for a life
Annuity with 120 monthly payments certain (see "What are the available Annuity
options under the Contract?" on page 17). However, Hartford will not assume
responsibility in determining or monitoring minimum distributions beginning at
age 70 1/2.
E. DEDUCTIONS FOR PREMIUM TAXES
Deductions will be made as appropriate, for the payment of any Premium Taxes
that may be levied against the Contract. The range is generally between 0% and
3.50%. (see "Charges Under the Contract" commencing on page 20).
F. ASSET CHARGE IN THE SEPARATE ACCOUNT
For assuming the mortality and expense risks under the Contracts, Hartford
will make a daily charge against the value of the Contract held in the Separate
Account at the rate of 1.00% per annum on the Bond Fund and Stock Fund
Sub-Accounts and .375% per annum on the Money Market Fund Sub-Account. (See
"What is the Mortality and Expense Risk Charge?" on page 21.)
G. ANNUAL CONTRACT FEE
An Annual Contract Fee will be charged against the value of each
Participant's Individual Account under a Contract at the end of each calendar
year and at the time of full surrender of account values. The Annual Contract
Fee is set at $10.00 per year on all Contracts. No Contract fee deduction will
be made during the Annuity payment period. (See "Charges Under the Contract"
commencing on page 20.)
H. MINIMUM PAYMENT
The minimum Contribution that may be made each month on behalf of a
Participant's Individual Account under a Contract is $30.00 unless the Contract
Owner provides otherwise.
I. VOTING RIGHTS OF CONTRACT OWNERS
Contract Owners and/or vested Participants will have the right to vote on
matters affecting the underlying Fund to the extent that proxies are solicited
by such Fund. If a Contract Owner does not vote, Hartford shall vote such
interest in the same proportion as shares of the Fund for which instructions
have been received by Hartford (see "What are my voting rights?" on page 28).
8
<PAGE>
ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information, insofar as it relates to the period ended
December 31, 1996, has been examined by Arthur Andersen LLP, independent public
accountants, whose report thereon is included in the Statement of Additional
information, which is incorporated by reference to this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------- ------- ------- ------ ------ ------ ------ ------ ------ ------
QP VARIABLE ACCOUNT (1.00%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BOND FUND SUB-ACCOUNT
Accumulation unit value at
beginning of period............... $ 4.234 $ 3.609 $ 3.795 $3.478 $3.328 $2.887 $2.690 $2.423 $2.275 $2.298
Accumulation unit value at end of
period............................ $ 4.340 $ 4.234 $ 3.609 $3.795 $3.478 $3.328 $2.887 $2.690 $2.423 $2.275
Number accumulation units
outstanding at
end of period (in thousands)...... 1,157 1,430 1,668 1,854 1,978 2,151 2,316 2,643 3,393 3,948
QP VARIABLE ACCOUNT (1.00%)
STOCK FUND SUB-ACCOUNT
Accumulation unit value at
beginning of period............... $ 9.274 $ 6.986 $ 7.192 $6.353 $5.831 $4.726 $4.966 $3.979 $3.378 $3.237
Accumulation unit value at end of
period............................ $11.420 $ 9.274 $ 6.986 $7.192 $6.353 $5.831 $4.726 $4.966 $3.979 $3.378
Number accumulation units
outstanding at
end of period (in thousands)...... 3,372 3,837 4,284 4,669 4,890 5,296 5,847 6,576 8,528 9,889
QP VARIABLE ACCOUNT (.825%)
STOCK FUND SUB-ACCOUNT
Accumulation unit value at
beginning of period............... $ 7.448 $ 5.601 $ 5.756 $5.076 $4.650 $3.763 $3.947 $3.157 $2.675 $2.559
Accumulation unit value at end of
period............................ $ 9.188 $ 7.448 $ 5.601 $5.756 $5.076 $4.650 $3.763 $3.947 $3.157 $2.675
Number accumulation units
outstanding at
end of period (in thousands)...... 1,237 1,348 1,435 1,506 1,607 1,726 1,979 2,173 2,274
QP VARIABLE ACCOUNT (.375%)
MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at
beginning of period............... $ 2.953 $ 2.803 $ 2.706 $2.639 $2.556 $2.419 $2.246 $2.066 $1.931 $1.820
Accumulation unit value at end of
period............................ $ 3.094 $ 2.953 $ 2.803 $2.706 $2.639 $2.556 $2.419 $2.246 $2.066 $1.931
Number accumulation units
outstanding at
end of period (in thousands)...... 2 2 2 4 9 28 25 52 169 153
</TABLE>
9
<PAGE>
INTRODUCTION
This Prospectus has been designed to provide you with all the necessary
information to make a decision on purchasing Contracts issued in conjunction
with Qualified Pension and Profit-Sharing Plans, HR-10 Plans, Tax-Deferred
Annuity Plans (for public school teachers and employees and employees of certain
other tax-exempt and qualifying employers), deferred compensation plans for
state and local governments (the Contract reserves for which are afforded
qualified plan reserve treatment) and IRA's. This Prospectus describes only the
elements of the Contracts pertaining to the variable portion of the Contract.
The Contracts may contain a General Account Option which is not described in
this Prospectus. Please read the Glossary of Special Terms on pages 3 and 4
prior to reading this Prospectus to familiarize yourself with the terms being
used.
THE QP VARIABLE ACCOUNT CONTRACT AND
SEPARATE ACCOUNT TWO (QP VARIABLE ACCOUNT)
WHAT IS THE VARIABLE ACCOUNT QP CONTRACT?
The Contracts, which may be issued on an individual or group basis, are
designed for use only with plans which qualify for special tax treatment under
a particular section of the Internal Revenue Code, such as tax-deferred
annuity plans for public school teachers and employees and employees of
certain other tax-exempt organizations; pension and profit-sharing plans;
IRA's, plans for self-employed individuals (HR-10's), and deferred
compensation plans for State and local governments.
The group Contracts are issued on an allocated and non-allocated basis.
There are three forms of allocated Contracts. One form is a group Contract
issued on a variable accumulation only basis. The other forms are individual
and group Contracts which permit both fixed and variable accumulations, as
does the non-allocated Contract.
The group allocated Contracts will cover all present and future Participants
under the Contract. A Participant under certain allocated Contracts will
receive a certificate which evidences participation in the Plan. There are no
individual allocations for Participants under the non-allocated Contracts.
The group variable only accumulation Contracts provide that Contributions
made during the accumulation period may only be invested on a variable basis,
although Annuity payments may be selected on a variable basis, a fixed basis
or a combination of both. The terms and conditions of the Contract are
essentially the same as are applicable to other allocated group Contracts
described in this Prospectus.
Contract Owners who have purchased a prior series of Contracts may continue
to make Contributions to such Contracts subject to the terms and conditions of
their Contracts. New Participants may be added to existing Contracts of the
prior series but no new Contracts of that series will be issued. Prior
Contract Owners are referred to the Appendix for a description of such earlier
Contracts.
WHO CAN BUY THESE CONTRACTS?
The Contracts are designed for use in conjunction with Qualified Pension and
Profit Sharing Plans, HR-10 Plans, Tax Deferred Annuity Plans (for public
school teachers and employees and employees of certain other tax exempt and
qualifying employers), deferred compensation plans for state and local
governments (the Contract reserves for which are afforded qualified plan
reserve treatment) and IRA's.
WHAT IS THE SEPARATE ACCOUNT AND HOW DOES IT OPERATE?
The Separate Account was established on June 2, 1986, in accordance with
authorization by the Board of Directors of Hartford. (On March 31, 1988, QP
Variable Account was transferred to Separate Account Two and became a series
thereof.) It is the separate account in which Hartford sets aside and invests
the assets attributable to the Contracts sold under this Prospectus. Although
the Separate Account is an integral part of Hartford, it is registered as a
unit investment trust under the Investment Company Act of 1940. The Separate
Account meets the definition of "separate account" under federal securities
law.
This registration does not, however, involve Securities and Exchange
Commission supervision of the management or the investment practices or
policies of the Separate Account or Hartford.
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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. Also,
in accordance with the Contracts, the assets in the Separate Account
attributable to Contracts participating in the Separate Account are not
chargeable with liabilities arising out of any other business Hartford may
conduct. So, you will not be affected by the rate of return of Hartford's
general account, nor by the investment performance of any of Hartford's other
separate accounts.
Your contribution is allocated to one or more Sub-Accounts of the Separate
Account. Each Sub-Account is invested exclusively in the assets of one
underlying Fund. Contributions and proceeds of transfers between Sub-Accounts
are applied to purchase shares in the appropriate Fund at net asset value
determined as of the end of the Valuation Period during which the payments
were received or the transfer made. All distributions from the Fund are
reinvested at net asset value. The value of your investment during the
Accumulation Period will therefore vary in accordance with the net income and
fluctuation in the individual investments within the underlying Fund portfolio
or portfolios. During the Variable Annuity payout period, both your annuity
payments and reserve values will vary in accordance with these factors.
HARTFORD DOES NOT GUARANTEE THE INVESTMENT RESULTS OF THE SUB-ACCOUNTS OR
ANY OF THE UNDERLYING INVESTMENTS. 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 SUM OF ALL CONTRIBUTIONS 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 FUND PROSPECTUS.
Hartford reserves the right, subject to compliance with the law, to
substitute the shares of any other registered investment company for the
shares of any Fund held by the Separate Account. Substitution may occur if
shares of the Fund(s) become unavailable or due to changes in applicable law
or interpretations of law. Current law requires notification to you of any
such substitution and approval of the Securities and Exchange Commission.
Hartford also reserves the right, subject to compliance with the law to offer
additional Sub-Accounts with differing investment objectives, and to make
existing Sub-Account options unavailable under the contract in the future.
The Separate Account may be subject to liabilities arising from series 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.
Hartford may offer additional Separate Account options from time to time
under these Contracts. Such new options will be subject to the then in effect
charges, fees, and or transfer restrictions for the Contracts for such
additional separate accounts.
OPERATION OF THE CONTRACT
HOW IS A CONTRIBUTION CREDITED?
Contributions are payable to Hartford by the Contract Owners on behalf of
the Participant's Individual Accounts under the Contract for the number of
years and in the intervals selected, all as set forth in the Contract.
The net Contributions to Participant's Individual Accounts under a Contract
are applied to purchase Accumulation Units of the selected Sub-Accounts. The
number of Accumulation Units purchased is determined by dividing the
Contributions amount by the appropriate Accumulation Unit Value on the date
the Contribution is credited to the Participant's Individual Account. Initial
Contributions are credited to a Participant's Individual Account within two
days of receipt of a properly completed application and the initial
Contribution. Subsequent Contributions are credited to a Participant's
Individual Account on the date following receipt of the Contribution by
Hartford at its home office, P.O. Box 2999, Hartford, CT 06104-2999 (or other
address as directed). If an application, or any other information is
incomplete when received, Contributions will be credited to the Participant's
Individual Account within five business days. If an initial Contribution is
not credited within five business days, it will be immediately returned unless
you have been informed of the delay and request that the Contribution not be
returned. Subsequent payments cannot be credited on the same day of receipt
unless they are accompanied by adequate instructions.
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The number of Sub-Account Accumulation Units will not change because of a
subsequent change in the Accumulation Unit's value, but the dollar value of
the Accumulation Unit will vary to reflect the investment experience of the
appropriate Fund shares.
MAY I MAKE CHANGES IN THE AMOUNTS OF MY CONTRIBUTIONS?
The minimum Contribution that may be made at any one time on behalf of a
Participant under a Contract is $30 unless the Contract Owner provides for a
lower amount. The Contract permits the allocation of Contributions in
multiples of 10% of each Contribution among the several Sub-Accounts of
Separate Account Two. The minimum amount that may be allocated to any
Sub-Account in the Separate Account shall not be less than $10. Such changes
must be requested in the form and manner prescribed by Hartford.
ARE THERE ANY LIMITS ON CONTRIBUTIONS?
With respect to all Contracts, Hartford reserves the right to limit any
increase in the Contributions made to a Participant's Individual Account under
a Contract to not more than three times the total Contributions made on behalf
of such account during the initial 12 consecutive months of the Account's
existence under the Contract at the present guaranteed deduction rates.
Increases in excess of those described will be accepted only with the consent
of Hartford and subject to the deductions then being made for sales charges,
the Minimum Death Benefit and for provision of mortality and expense
undertaking.
MAY I TRANSFER ASSETS BETWEEN SUB-ACCOUNTS?
Yes, you may transfer the values of your Sub-Account allocations from one or
more Sub-Accounts to another subject to the terms and conditions of the
Contracts.
The following transfer restrictions apply to Contracts issued or amended on
or after May 1, 1992.
Transfers of assets presently held in the General Account, or which were
held in the General Account at any time during the preceding 3 months, to the
Money Market Fund Sub-Account are prohibited.
Similarly, transfers of assets presently held in the Money Market Fund
Sub-Account, or which were held in either of these two Sub-Accounts or the
General Account during the preceding 3 months, to the General Account are
prohibited.
The right, with respect to both the Contract Owner and a Participant's
Individual Account, to transfer monies between Sub-Accounts is subject to
modification if Hartford determines, in its sole opinion, that the exercise of
that right by the Contract Owner/Participant is, or would be, to the
disadvantage of other Contract Owners/Participants. Any modification could be
applied to transfers to or from the same or all of the Sub-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 Participant or Contract
Owner, or limiting the dollar amount that may be transferred between
Sub-Accounts by a Contract Owner/Participant 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 Hartford to be to
the disadvantage of other Contract Owners/Participants. Such transfers must be
requested in writing and will be effected as of the date the request is
received by Hartford at its home office, P.O. Box 2999, Hartford, CT
06104-2999.
MAY I OBTAIN A CONTRACT IN EXCHANGE FOR ANOTHER CONTRACT?
Owners of policies of life insurance and annuity Contracts issued by
Hartford or any other affiliated company of Hartford issuing such Contracts or
policies, as well as any Beneficiary, annuity Contract Participant or
Annuitant under any such policy or Contract, may apply any and all of any such
policy or Contract proceeds, payable upon the surrender or maturity of any
such policy or Contract, to a group or individual Contract with no deductions
being made for sales expenses or the Minimum Death Benefit guarantee. The
Minimum Death Benefit provision of the Contract will not be applicable to the
proceeds of a policy or Contract invested in such a Contract purchased
pursuant to the provisions of this section. Any sums thus applied will not be
taken into consideration in determining the particular sales charges to be
applied in the case of subsequent Contributions. Subsequent Contributions
will, however, be subject to sales charge and Minimum Death Benefit guarantee
deductions.
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WHAT HAPPENS IF A CONTRACT OWNER FAILS TO MAKE CONTRIBUTIONS?
On Contracts other than flexible funding deferred annuity Contracts, a
Contract will be deemed paid-up within 30 days after any anniversary date of
the Contract if the Contract Owner has not remitted a Contribution to Hartford
during the preceding 12 month period. Effective with a change of the Contract
to paid-up status, no further Contributions will be accepted by Hartford and
each Participant's Individual Account will be considered an inactive account
until the commencement of Annuity payments or until the value of the
Participant's Individual Account is disbursed or applied in accordance with
the termination provisions (see "How can a Contract be redeemed or
surrendered?" on page 14). Once a Contract has been placed on a paid-up status
it may not be reinstated. Persons receiving Annuity payments at the time of
any change to paid-up status will continue to receive their payments.
Individual flexible funding deferred annuity Contracts may be reinstated to
an active status at any time prior to the selected Annuity Commencement Date
by the payment of one Purchase Payment.
MAY I ASSIGN OR TRANSFER MY CONTRACT?
Some forms of Qualified Plans prohibit the assignment of a Contract or any
interest therein. No assignment will be effective until a copy has been filed
at the offices of Hartford at Hartford, Connecticut, prior to settlement for
Hartford's liability under the Contract. Hartford assumes no responsibility
for the validity of any such assignments. Participants may not assign their
individual account interests.
HOW DO I KNOW WHAT MY ACCOUNT IS WORTH?
The value of the Accumulation Units in the Separate Account representing an
interest in the appropriate Fund shares that are held under the Contract were
initially established on the date that Contributions were first contributed to
the appropriate Sub-Account of the Separate Account. The value of the
respective Accumulation Units for any subsequent day is determined by
multiplying the Accumulation Unit value for the preceding day by the net
investment factor of the appropriate investment accounts, as appropriate (see
"How is the Accumulation Unit value determined?" below).
The value of a Participant's Individual Account under a Contract at any time
prior to the commencement of Annuity payments can be determined by multiplying
the total number of Sub-Account Accumulation Units credited to a Participant's
Individual Account by the current Accumulation Unit value for the appropriate
Sub-Account. There is no assurance that the value in any of the Sub-Accounts
will equal or exceed the Contributions made by the Contract Owner to such
Sub-Accounts.
HOW IS THE ACCUMULATION UNIT VALUE DETERMINED?
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 the net asset value per share
of the corresponding Fund at the end of the Valuation Period (plus the per
share amount of any dividends or capital gains 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
and subtracting from that amount the amount of any charges assessed during the
Valuation Period then ending. You should refer to the prospectus for each of
the Funds which accompany 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.
HOW ARE THE UNDERLYING FUND SHARES VALUED?
The shares of the Fund are valued at net asset value on a daily basis. A
complete description of the valuation method used in valuing Fund shares may
be found in the accompanying prospectus for each of the Funds.
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PAYMENT OF BENEFITS
WHAT WOULD MY BENEFICIARY RECEIVE AS DEATH PROCEEDS?
The Contracts provide that in the event the Participant dies before the
selected Annuity Commencement Date or the Participant's age 65 (whichever
occurs first) the Minimum Death Benefit payable on such Contract will be the
greater of (a) the value of the Participant's Account determined as of the day
written proof of death of such person is received by Hartford, or (b) 100% of
the total Contributions made to such Contract, reduced by any prior partial
surrenders.
The Minimum Death Benefit may be taken by the Beneficiary in a single sum,
in which case payment will be made within seven days of receipt of proof of
death by Hartford, unless subject to postponement as explained below. In lieu
of payment in one sum, the Beneficiary may elect that the amount be applied
under any one of the optional Annuity forms provided. (See "What are the
available Annuity options under the Contract?" on page 17.)
An election to receive Death Benefits under a form of Annuity must be made
prior to a lump sum settlement with Hartford and within one year after the
death by written notice to Hartford at its home office, P.O. Box 2999,
Hartford, Connecticut, 06104-2999.
Benefit proceeds due on death may be applied to provide variable payments,
fixed payments, or a combination of variable and fixed payments. No election
to provide Annuity payments will become operative unless the initial Annuity
payment is at least $20.00 on either a variable or fixed basis, or $20.00 on
each basis when a combination benefit is elected. The manner in which the
Annuity payments are determined and in which they may vary from month to month
are the same as applicable to a Participant's Individual Account after
retirement.
HOW CAN A CONTRACT BE REDEEMED OR SURRENDERED?
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) TERMINATED
EMPLOYMENT, (C) DIED, (D) BECOME DISABLED, OR (E) EXPERIENCED FINANCIAL
HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL
BE SUBJECT TO A PENALTY TAX OF 10%.
HARTFORD WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A
WITHDRAWAL IS PERMISSIBLE WITH OR WITHOUT TAX PENALTY, IN ANY PRACTICAL
SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY
1, 1989 ACCOUNT VALUES.
INDIVIDUAL CONTRACTS
At any time prior to the Annuity Commencement Date, the Contract Owner,
subject to any IRS provisions applicable thereto, has the right to surrender
the value of the Contract in whole or in part.
In the event of a complete surrender of the Contract Owner's interest under
an individual Contract, then after deduction of the Annual Contract Fee (see
"Are there any administrative charges?" on page 22), the following options
shall be available:
1.The termination value of the individual Contract may be applied to
provide for fixed or variable Annuity payments or a combination thereof
commencing immediately under the selected Annuity option (see "What are the
available Annuity options under the Contract?" on page 17).
2.The termination value of the individual Contract may be taken in the form
of a lump sum cash settlement. The amount received will be determined by
the value of the Individual Account next computed after receipt by Hartford
at its home office, P. O. Box 2999, Hartford, CT 06104-2999 of a written
request for complete surrender. The value of the Individual Account may be
more or less than the amount of Contributions made to the Contract.
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3.The Contract Owner may partially surrender an Individual Account under an
individual Contract and receive the amount requested as determined by the
value of the account next computed after receipt by Hartford at its home
office, P.O. Box 2999, Hartford, CT 06104-2999 of a written request for a
partial surrender.
Any such full or partial surrender described above may affect the continuing
tax qualified status of some accounts or plans and may result in adverse tax
consequences to the Contract Owner. The Contract Owner, therefore, should
consult with his tax advisor before undertaking any such surrender.
GROUP CONTRACTS
On termination of Contributions to a group Contract by the Contract Owner on
behalf of a Participant's Individual Account prior to the selected Annuity
Commencement Date for such Account, the Contract Owner will have the following
options:
1.To continue a Participant's Individual Account in force under the
Contract. Under this option, when the selected Annuity Commencement Date
arrives, the Participant will begin to receive Annuity payments under the
selected Annuity option under the Contract. (See "What are the available
Annuity options under the Contract?" on page 17). At any time in the
interim, the Contract Owner or the Participant as appropriate, may surrender
the Individual Account for a lump sum cash settlement in accordance with 4.
below.
2.To provide Annuity payments immediately. The Accumulation Unit values in
a Participant's Individual Account may be applied to provide for fixed or
variable Annuity payments, or a combination thereof, commencing immediately,
under the selected Annuity Option (see "What are the available Annuity
options under the Contract?" on page 17).
3.To continue to make Contributions under an individual variable annuity
Contract of the type then being issued by Hartford. In this event, the
value of a Participant's Individual Account will be transferred into an
individual Contract without any deductions being made, but subject to the
deductions applicable to such individual Contract as to any subsequent
payments.
4.To surrender a Participant's Individual Accounts under the Contract for a
lump sum cash settlement. In this event, the Annual Contract Fee will be
deducted as described on page 8. On any variable account the amount received
will be the net termination value determined by the Accumulation Unit values
of the Account next computed after receipt by Hartford at its home office,
P.O. Box 2999, Hartford, CT 06104-2999 of a written request for complete
surrender.
IS A PARTIAL TERMINATION OF A CONTRACT ALLOWED?
If any partial termination request exceeds 90% of the present value of a
Participant's Individual Account or of the Active Life Fund under a Contract
at the time of a request for withdrawal, such request will be considered a
request for complete termination of that Account or Contract, and no further
Contributions may be made for that Participant's Individual Account or
Contract. A request for a partial termination must specify the allocation of
the partial termination between fixed and variable accounts and if from the
variable accounts, the allocation among the Sub-Accounts. If no allocation is
specified, the requested amount is taken out of all applicable Sub-Accounts on
a pro rata basis.
Repayment of any partial termination may be made at any time before one
month prior to the date on which Annuity payments are to begin on the
Participant's Individual Account. While no deduction will be made for sales or
Minimum Death Benefit expenses, Hartford may apply its then current Annuity
rates to any such repayment.
Except as specified above, no partial termination will directly affect
future requirements that the Contract Owner make stipulated payments or
Contributions to the Contract, nor the maturity date of the Contract or of a
Participant's Individual Account. If the Contract Owner has a plan calling for
stipulated periodic payments or Contributions, he may repay amounts received
upon any such partial termination at the same time that he makes stipulated
payments or Contributions, provided that the amount repaid is at least $30.00.
In making any such repayment the Contract Owner shall specify in writing that
such a repayment is being made, as well as how the repayment is to be
reallocated among Sub-Accounts, otherwise appropriate sales and other expenses
shall apply to such amounts.
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Payment on request for any partial termination will be made within seven
days of receipt of the written request by Hartford unless subject to
postponement as explained below.
CAN PAYMENT OF THE REDEMPTION OR SURRENDER VALUE EVER BE POSTPONED BY HARTFORD
BEYOND THE SEVEN DAY PERIOD?
Yes. It may be postponed 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 Securities and Exchange Commission; (b) the
Securities and Exchange Commission permits postponement and so orders; or (c)
the Securities and Exchange Commission determines that an emergency exists
making valuation of the amounts or disposal of securities not reasonably
practicable.
Except for the above situations, payment on any request for surrender will
be made as soon as possible and in any event no later than seven days after
the written request is received by Hartford.
MAY I SURRENDER ONCE ANNUITY PAYMENTS HAVE STARTED?
Except with respect to Option 5 (on a variable payout), once Annuity
payments have commenced for an Annuitant, no surrender of the Annuity benefit
can be made for the purpose of receiving a lump sum settlement in lieu
thereof. Any surrender out of Option 5 will be subject to contingent deferred
sales charges, if applicable.
MAY I REINVEST AFTER A REDEMPTION?
Variable annuity Contract Owners who have redeemed the value of their
variable Contracts in full shall have the right to reinvest the proceeds of
redemption in a new variable annuity Contract without any deduction being made
for sales charges provided that such reinvestment is effected within 30 days
after such redemption. This reinvestment privilege shall not be available to
any Contract Owner who has previously exercised the privilege.
CAN A CONTRACT BE SUSPENDED BY A CONTRACT OWNER?
A group Contract may be suspended by the Contract Owner by giving written
notice of such suspension to Hartford at its home office in Hartford,
Connecticut at least 90 days prior to the effective date of such suspension.
A Contract will be suspended automatically on its anniversary if the
Contract Owner fails to assent to any modification of a Contract, as described
under the caption "Can a Contract be modified?" which modifications would have
become effective on or before that anniversary. Upon suspension, Contributions
will continue to be accepted by Hartford under the Contract, and subject to
the terms thereof, as they are applicable to Participant's Individual Accounts
under the Contracts prior to such suspension, but no Contributions will be
accepted on behalf of any new Participant's Individual Account. Annuitants at
the time of any suspension will continue to receive their Annuity payments.
The suspension of a Contract will not preclude the Contract Owner's applying
existing Participant's Individual Accounts under Separate Account Two, as
appropriate, to the purchase of Fixed or Variable Annuity benefits.
HOW DO I ELECT AN ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY?
The Contract Owner selects an Annuity Commencement Date and an Annuity
option (see below). The Annuity Commencement Date may not be deferred beyond a
Participant's 75th birthday or such earlier date may be required by applicable
law and/or regulation. The Annuity Commencement Date and/or the Annuity option
may be changed from time to time, but any such change must be made at least 30
days prior to the date on which Annuity payments are scheduled to begin.
The Contracts contain five optional Annuity forms, which may be selected on
either a fixed or variable annuity basis, or a combination thereof. If a
Contract Owner does not elect otherwise, Hartford reserves the right to begin
Annuity payments at age 65 under Option 2 with 120 monthly payments certain.
However, Hartford will not assume responsibility in determining or monitoring
minimum distribution beginning at age 70 1/2.
When an Annuity is effected under a Contract, unless otherwise specified,
General Account Accumulation Units will be applied to provide a Fixed Annuity
and Separate Account Sub-Account Accumulation Units will be applied to provide
a Variable Annuity.
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The Contract Owner should consider the question of allocation of Contract
values among the Fixed Income Fund Sub-Account, the Stock Fund Sub-Account and
the General Account to make certain that annuity payments are based on the
investment alternative best suited to the Contract Owner's needs. Annuity
payments may not be based on the Money Market Fund Sub-Account. Unless
otherwise directed by a Contract Owner, such interest shall be transferred to
the Fixed Income Fund Sub-Account and Stock Fund Sub-Account, and allocated to
such Sub-Accounts in the same proportion as such interests are held in the
Participant's Individual Account.
WHAT IS THE MINIMUM AMOUNT THAT I MAY SELECT FOR AN ANNUITY PAYMENT?
The minimum Annuity payment is $20.00. No election may be made which results
in a first payment of less than $20.00. If at any time Annuity payments are or
become less than $20.00, Hartford has the right to change the frequency of
payment to intervals that will result in payments of at least $20.00.
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACT?
OPTION 1: LIFE ANNUITY
A life annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last monthly payment preceding the death of the
Annuitant. This option offers the maximum level of monthly payments of any of
the other life options (Options 2-4) since there is no guarantee of a minimum
number of payments nor a 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 due 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 if, at the death of the Annuitant, payments
have been made for less than 120, 180 or 240 months, as elected, then the
present value as of the date of the Participant's death at the current dollar
amount at the date of death of any remaining guaranteed monthly payments will
be paid in one sum to the Beneficiary or Beneficiaries designated unless other
provisions will have been made and approved by Hartford.
*OPTION 3: UNIT REFUND LIFE ANNUITY
This Annuity option is an Annuity payable monthly during the lifetime of the
Annuitant terminating with the last payment due prior to the death of the
Annuitant except that an additional payment will be made to the Beneficiary or
Beneficiaries if (a) below exceeds (b) below:
total amount applied under the option
(a) = at the Annuity Commencement Date
--------------------------------------------------------------------
Annuity Unit value at the Annuity Commencement Date
number of Annuity Units represented by number of monthly
(b) = each monthly Annuity Payment made X Annuity Payments made
The amount of the additional payments will be determined by multiplying such
excess by the Annuity Unit value as of the date that proof of death is
received by Hartford.
OPTION 4: 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.
At the Annuitant's death, payments will continue to be made to the
contingent annuitant, if living for the remainder of the contingent
annuitant's life. When the Annuity is purchased, the Annuitant elects what
percentage (50%, 66 2/3%, or 100%) of the monthly annuity payment will
continue to be paid to the contingent annuitant.
It would be possible under this Option for an Annuitant and designated
second person in the event of the common or simultaneous death of the parties
to receive only one payment in the event of death prior to the due date for
the second payment and so on.
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*OPTION 5: PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected which may be from
one to thirty years. Under this Option, the Contract Owner or Annuitant may,
at any time, surrender the Annuity and receive, within seven days, the current
value of the account.
In the event of the Annuitant's death prior to the end of the designated
period, any then remaining balance of proceeds will be paid in one sum to the
Beneficiary or Beneficiaries designated unless other provisions will have been
made and approved by Hartford.
* ON QUALIFIED PLANS, OPTIONS 2, 3 AND 5 ARE 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 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 HARTFORD.
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UNDER ANY OF THE ANNUITY OPTIONS ABOVE, EXCEPT OPTION 5 (ON A VARIABLE BASIS),
NO SURRENDERS ARE PERMITTED AFTER ANNUITY PAYMENTS COMMENCE.
- --------------------------------------------------------------------------------
HOW ARE ANNUITY PAYMENTS DETERMINED?
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by
the product of (1) the net investment factor (see "How is the Accumulation
Unit value determined?" commencing on page 13) for the day for which the
Annuity Unit value is being calculated, and (2) a factor to neutralize the
assumed net investment rate discussed below.
When Annuity payments are to commence, the value of the Contract is
determined as the product of the value of the Accumulation Unit credited to
each Sub-Account no earlier than the close of business on the fifth business
day preceding the date the first Annuity payment is due and the number of
Accumulation Units credited to each Sub-Account as of the date the Annuity is
to commence.
The first monthly payment varies according to the form of Annuity selected.
The Contract cites Annuity tables derived from the 1983a Individual Annuity
Mortality Table with an assumed interest rate ("A.I.R.") of 4.00% or 5.00% per
annum. The total first monthly 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 Contract. With respect to
fixed annuities only, the current rate will be applied if it is higher than
the rate under the tables in the Contracts.
The A.I.R. assumed in the mortality tables would produce level Annuity
payments if the net investment rate remained constant. In fact, payments will
vary up or down in the proportion that the net investment rate varies up or
down from the A.I.R. A higher A.I.R. may produce a higher initial payment but
more slowly rising and more rapidly falling subsequent payments than would a
lower interest rate assumption.
The amount of the first monthly Annuity payment, determined as described
above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account as of the close of business on the fifth business 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 Period, and in each subsequent month the
dollar amount of the Annuity payment is determined by multiplying this fixed
number of Annuity Units by the then current Annuity Unit value.
The Annuity payments will be made on the date selected. The Annuity Unit
value used in calculating the amount of the Annuity payments will be based on
an Annuity Unit value determined as of the close of business on a day not more
than the fifth business day preceding the date of the Annuity payment.
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<PAGE>
Here is an example of how the rates work:
ILLUSTRATION OF ANNUITY PAYMENTS:
(UNISEX) AGE 65, LIFE ANNUITY WITH 120 PAYMENTS CERTAIN
<TABLE>
<C> <S> <C>
1. Net amount applied........................................ $ 139,782.50
2. Initial monthly income per $1,000 of payment applied...... 6.13
3. Initial monthly payment (1 X 2 DIVIDED BY 1,000)......... $ 856.87
4. Annuity Unit Value........................................ 3.125
5. Number of monthly annuity units (3 DIVIDED BY 4)......... 274.198
6. Assume annuity unit value for second month equal to....... 2.897
7. Second monthly payment (6 X 5)............................ $ 794.35
8. Assume annuity unit value for third month equal to........ 3.415
9. Third month payment (8 X 5)............................... $ 936.39
</TABLE>
The above figures are simply to illustrate the calculation of a variable
annuity and have no bearing on the actual record of any Separate Account.
CAN A CONTRACT BE MODIFIED?
At any time Hartford reserves the right to modify the Contract, 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
Hartford 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 Hartford will provide
notice to the Contract Owner or to the payee(s) during the Annuity period.
Hartford may also make appropriate endorsement in the Contract to reflect such
modification.
INDIVIDUAL CONTRACTS
The Contracts may, subject to any federal and state regulatory restrictions,
be modified at any time by written agreement between the Contract Owner and
Hartford. No modification will affect the amount or term of any Annuities
begun prior to the effective date of the modification, unless it is required
to conform the Contract to, or give the Contract Owner the benefit of, any
federal or state statutes or any rule or regulation of the U.S. Treasury
Department or Internal Revenue Service.
GROUP CONTRACTS
The Contracts may be modified at any time by written agreement between the
Contract Owner and Hartford. No modification will affect the amount or term of
any Annuities begun prior to the effective date of the modification, unless it
is required to conform the Contract to, or give the Contract Owner the benefit
of, any federal or state statutes or any rule or regulations of the U.S.
Treasury Department or the Internal Revenue Service.
On and after the fifth anniversary of any Contract Hartford may change, from
time to time, any or all of the terms of the group Contract by giving 90 days
advance notice to the Contract Owner, except that the mortality and Minimum
Death Benefit undertakings and the deductions for sales expenses and the
Annual Contract Fee which are applicable at the time a Participant's
Individual Account is established under the Contract will continue to be
applicable except as limited below.
Hartford may also modify the Contract at any time with respect to deductions
and undertakings enumerated in the preceding paragraph on Contributions to a
Participant's Individual Account in any year in excess of three times the
total Contributions actually made to such account during its initial 12
consecutive months of participation under the Contract. The deductions and
undertakings applicable to such excess Contributions when first made will
continue to be applicable to such excess Contributions each and every year
they are made.
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<PAGE>
CHARGES UNDER THE CONTRACT
HOW ARE THE CHARGES UNDER THESE CONTRACTS MADE?
COMBINATION INDIVIDUAL AND GROUP ALLOCATED CONTRACTS
These Contracts are issued on an individual and group basis and provide for
fixed (General Account) and variable (Separate Account) accumulations and
annuity payouts and are generally referred to as "combination Contracts."
Contributions made on behalf of a Participant's Individual Account pursuant to
the terms of the allocated combination Contracts are subject to the following
deductions:
PORTION REPRESENTING
<TABLE>
<CAPTION>
TOTAL
AGGREGATE CONTRIBUTION DEDUCTIONS AS
AMOUNT TO THE FIXED % OF NET
INCOME FUND AND STOCK TOTAL SALES MINIMUM DEATH AMOUNT
FUND SUB-ACCOUNTS ONLY* DEDUCTION EXPENSES BENEFIT INVESTED
- ------------------------------------------------------------ ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
On the first $2,500......................................... 7.00% 6.25% .75% 7.53%
On the next $47,500......................................... 3.50% 2.75% .75% 3.63%
On the next $50,000......................................... 2.00% 1.25% .75% 2.04%
On the excess over $100,000................................. 1.00% .25% .75% 1.01%
</TABLE>
* THIS ILLUSTRATION DOES NOT ASSUME THE PAYMENT OF ANY PREMIUM TAXES. THE MONEY
MARKET FUND SUB-ACCOUNT IS NOT AVAILABLE UNDER THESE CONTRACTS.
Notwithstanding the above, when an employer making application for a group
allocated Contract where the annualized stipulated purchase payments with
respect to all Participants is expected to equal or approximate $250,000 at
the end of the second anniversary of the Contract, the sales and Minimum Death
Benefits deduction on the aggregate Contributions up to and including $2,500
with respect to each Participant shall be at the rate of 5% rather than 7%.
GROUP VARIABLE ONLY CONTRACTS
These Contracts are issued on a group basis only and provide for variable
(Separate Account) accumulations only during the Accumulation Period under the
Contract and for fixed (General Account) and variable (Separate Account)
annuity payouts during the Annuity Period. The Money Market Fund Sub-Account
was available under this type of Contract prior to December 7, 1981 only.
PORTION REPRESENTING
<TABLE>
<CAPTION>
TOTAL
AGGREGATE CONTRIBUTION DEDUCTIONS AS
AMOUNT TO THE FIXED % OF NET
INCOME FUND AND STOCK TOTAL SALES MINIMUM DEATH AMOUNT
FUND SUB-ACCOUNTS ONLY* DEDUCTION EXPENSES BENEFIT INVESTED
- ------------------------------------------------------------ ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
On the first $2,500......................................... 5.00% 4.25% .75% 5.26%
On the next $47,000......................................... 3.50% 2.75% .75% 3.63%
On the next $50,000......................................... 2.00% 1.25% .75% 2.04%
On the excess of $100,000................................... 1.00% .25% .75% 1.01%
</TABLE>
* THIS ILLUSTRATION DOES NOT ASSUME THE PAYMENT OF ANY PREMIUM TAXES. NO
DEDUCTIONS FOR SALES EXPENSES OR THE MINIMUM DEATH BENEFIT ARE MADE AGAINST
CONTRIBUTIONS TO THE MONEY MARKET FUND SUB-ACCOUNT.
Under the schedules shown above, all amounts contributed on behalf of a
Participant's Individual Account are aggregated to determine if a particular
level of deductions has been reached. Thus, if a Contribution has been made on
behalf of a Participant's Account in the amount of $100.00 and total
20
<PAGE>
Contributions of $2,450 have already been made on a Participant's behalf, the
first $50.00 of the Contribution will be subject to a deduction of 7.00% (as
in 1. above) and the remainder to a percentage of 3.50%.
COMBINATION NON-ALLOCATED GROUP CONTRACTS
A non-allocated group annuity Contract is offered which is designed for use
in conjunction with certain qualified pension and profit-sharing plans where
the employer has Contracted out the administration of the Plan. The Contracts
provide for both fixed (General Account) and variable (Separate Account)
accumulations and annuity payouts and are thus another form of combination
Contract.
The Contracts provide for a Contract fee charge of $100 per year and a scale
of sales charges as follows:
<TABLE>
<S> <C>
On the first $5,000.............................................................. 5.00%
On the next $45,000.............................................................. 3.50%
On the next $50,000.............................................................. 2.00%
On the excess over $100,000...................................................... 1.25%
</TABLE>
The Contracts will be issued to an employer or the trustee(s) or custodian
of an employer's pension or profit-sharing plan. All Contributions are held
under the Contract, as directed by the Contract Owner. There are no individual
allocations under the Contracts for individual Participants in an employer's
plan.
With the exception of the Minimum Death Benefit provision, which is not
available on this Contract, and the charges described above, the new group
Contracts have essentially the same terms and provisions as the other
Contracts described in this Prospectus.
Hartford makes the deductions for the Contracts as described above pursuant
to the terms of the various agreements among the custodian, the principal
underwriter, and Hartford. Contract distribution expenses may exceed the
deduction for sales expenses described above. To the extent that they do, they
will be borne by Hartford.
ARE THERE ANY DIFFERENCES IN CHARGES MADE?
The group Contracts provide for experience rating. In order to experience
rate a Contract, actual sales and administrative costs applicable to a
particular Contract are determined. If the costs exceed the amounts deducted
for such expenses, no additional deduction will be made. If, however, the
amounts deducted for such expenses exceed actual costs, Hartford, in its
discretion, may allocate all, a portion, or none of such excess as an
experience rating credit. If such an allocation is made, the experience credit
will be made, as considered appropriate: (1) by reduction in the amount
deducted from subsequent contributions for sales expenses; (2) by the
crediting of a number of additional Accumulation Units or Annuity Units, as
applicable, without deduction of any sales or other expenses therefrom; (3) by
waiver of the Annual Contract Fees; or (4) by a combination of the above.
Experience rating credits have been given on certain cases.
Where use of the Contract is appropriate, variable annuity Contracts issued
by Hartford may be purchased without a charge for sales or Minimum Death
Benefit expenses by members of the board and officers of the Funds, or by any
trust, pension, profit-sharing or other benefit plan for any such person or
persons.
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
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) (note that variable Annuity payments may not be based on
the Money Market Fund Sub-Account), the payments will not be affected by (a)
Hartford's actual mortality experience among Annuitants after retirement or
(b) Hartford's actual expenses, if greater than the deductions provided for in
the Contracts because of the expense and mortality undertakings by Hartford.
For assuming these risks under the Contracts, Hartford will make a daily
charge against all Contract values held in the Separate Account at the rate of
1.00% per annum on the Fixed Income Fund and Stock Fund Sub-Accounts and .375%
per annum on the Money Market Fund Sub-Account. Such charges may not be
changed on existing Contracts.
21
<PAGE>
The mortality undertaking provided by Hartford under the Contracts, assuming
the selection of one of the forms of life Annuities, is to make monthly
Annuity payments (determined in accordance with the annuity table and other
provisions contained in the Contracts) to Contract Owners on Participants'
Individual Accounts regardless of how long a Participant may live, and
regardless of how long all Annuitants as a group may live. This undertaking
assures a Contract Owner that neither the longevity of a Participant nor an
improvement in life expectancy generally will have any adverse effect on the
monthly Annuity payments it will receive under the Contract. It thus relieves
the Contract Owner from the risk that Participants will outlive funds
accumulated.
The mortality undertaking is based on Hartford's actuarial determination of
expected mortality rates among all Annuitants. If actual experience among
Annuitants deviates from Hartford's actuarial determination of expected
mortality rates among Annuitants because, as a group, their longevity is
longer than anticipated, Hartford must provide amounts from its general funds
to fulfill its Contract obligations. In that event, a loss will fall on
Hartford. Conversely, if longevity among Annuitants is lower than anticipated,
a gain will result to Hartford.
ARE THERE ANY ADMINISTRATIVE CHARGES?
There will be an Annual Contract Fee deduction from the value of each
Participant's Individual Account under the Contracts in the amount of $10.00.
The Annual Contract Fee will be deducted from the value of each such Account
on the last business day of each calendar year; provided, however, that if the
value of a Participant's Individual Account is redeemed in full at any time
before the last business day of the year, then the Annual Contract Fee charge
will be deducted from the proceeds of such redemption. No deduction for the
Annual Contract Fee will be made during the Annuity Period under the
Contracts.
In the event that the Contributions made on behalf of a Participant are
allocated partially to the General Account and partially to the Separate
Account, the Annual Contract Fee will be charged against the Separate Account
and General Account on a pro rata basis.
HOW MUCH ARE THE DEDUCTIONS FOR PREMIUM TAXES ON THESE CONTRACTS?
A deduction is also made for Premium Taxes, if applicable, imposed by a
state or other governmental entity. Certain states impose a Premium Tax,
currently ranging up to 3.50%. Some states assess the tax at the time purchase
payments are made; others assess the tax at the time of annuitization.
Hartford will pay Premium Taxes at the time imposed under applicable law. At
its sole discretion, Hartford may deduct Premium Taxes at the time the taxes
are paid, the Contract is surrendered, or the Contract annuitizes.
HARTFORD LIFE INSURANCE COMPANY
AND THE FUNDS
WHAT IS HARTFORD?
Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing health and life insurance, both
individual and group, in all states of the United States and the District of
Columbia. Hartford was originally incorporated under the laws of Massachusetts
on June 5, 1902, and was subsequently redomiciled to Connecticut. Its offices
are located in Simsbury, Connecticut; however, its mailing address is P.O. Box
2999, Hartford, CT 06104-2999. Hartford is a subsidiary of Hartford Fire
Insurance Company, one of the largest multiple lines insurance carriers in the
United States. Hartford is ultimately owned by ITT Hartford Group, Inc., a
Delaware corporation. Subject to shareholder approval on May 2, 1997, the name
of ITT Hartford Group, Inc. will change to The Hartford Financial Services
Group, Inc.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps, on the basis of its claims
paying ability. These ratings do not apply to the investment performance of
the Sub-Accounts of the Separate Account. The ratings apply to Hartford's
ability to meet its insurance obligations, including those described in this
Prospectus.
22
<PAGE>
WHAT ARE THE FUNDS?
Hartford Stock Fund, Inc. was organized on March 11, 1976. Hartford Bond
Fund, Inc. and HVA Money Market Fund, Inc. were organized on December 1, 1982.
All of the Funds were incorporated under the laws of the State of Maryland and
are collectively referred to as the "Funds."
The investment objectives of each of the Funds are as follows:
HARTFORD BOND FUND, INC.
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 Fund, Inc. -- Investment Policies."
HARTFORD STOCK FUND, INC.
Seeks long-term capital growth primarily through capital appreciation, with
income a secondary consideration, by investing primarily in equity securities.
HVA MONEY MARKET FUND, INC.*
Seeks maximum current income consistent with liquidity and preservation of
capital.
* THIS FUND IS NOT AVAILABLE UNDER CONTRACTS ISSUED ON OR AFTER DECEMBER 7,
1981.
ALL FUNDS
The Funds are available only to serve as the underlying investment for the
variable life insurance and variable annuity Contracts issued by Hartford.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although Hartford and the Funds do not
currently foresee any such disadvantages either to variable annuity Contract
Owners or variable life insurance Policyowners, the Funds' Board of Directors
intends to monitor events in order to identify any material conflicts between
such Contract Owners and Policyowners and to determine what action, if any,
should be taken in response thereto. If the Board of Directors of the Funds
were to conclude that separate funds should be established for variable life
and variable annuity separate accounts, the variable annuity Contract Owners
would not bear any expenses attendant to the establishment of such separate
funds, but variable annuity Contract Owners and variable life insurance
Policyowners would no longer have the economies of scale resulting from a
larger combined fund.
Hartford reserves the right, subject to compliance with the law, to
substitute the shares of any other registered investment company for the
shares of any Fund held by the Separate Account. Substitution may occur if
shares of the Fund(s) become unavailable or due to changes in applicable law
or interpretations of law. Current law requires notification to you of any
such substitution and approval of the Securities and Exchange Commission.
Hartford also reserves the right, subject to compliance with the law to offer
additional Funds with differing investment objectives.
All of the Funds are sponsored by Hartford and 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.
Wellington Management Company, L.L.P. serves as sub-investment adviser to
Hartford Stock Fund.
In addition, HL Advisors has entered into an investment services agreement
with Hartford Investment Management Company, Inc. ("HIMCO"), pursuant to which
HIMCO will provide certain investment services to Hartford Bond Fund and HVA
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 Hartford. The Funds may
not be available in all states.
23
<PAGE>
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, EMPLOYER OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT
DESCRIBED HEREIN.
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. For detailed information, a
qualified tax adviser should always be consulted. This discussion is based on
Hartford's understanding of existing federal income tax laws as they are
currently interpreted.
B. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which 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 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 "How is the Accumulation Unit value
determined?" commencing on page 13.) 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. 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 specified limits, to distributions in excess of
specified limits, distributions which do not satisfy certain requirements and
certain other transactions with respect to qualified plans. Accordingly, this
summary provides only general information about the tax rules associated with
use of the Contract by a qualified plan. Contract owners, plan participants
and beneficiaries are cautioned that the rights and benefits of any person to
benefits are controlled by the terms and conditions of the plan regardless of
the terms and conditions of the Contract. Some qualified plans are subject to
distribution and other requirements which are not incorporated into Hartford's
administrative procedures. 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 advisers as to specific tax consequences.
1. QUALIFIED PENSION PLANS
Provisions of the Code permit eligible employers to establish 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 and the time when distributions must commence. Corporate employers
intending to use these contracts in connection with such plans should seek
competent advice.
2. 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
specified in Section 501(c)(3) of the Code to purchase annuity
24
<PAGE>
contracts, and, subject to certain limitations, exclude such contributions
from gross income. Generally, such contributions may not exceed the lesser of
$9,500 or 20% of the employees "includable compensation" for his most recent
full year of employment, subject to other adjustments. Special provisions 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:
(a) after the participating employee attains age 59 1/2;
(b) upon separation from service;
(c) upon death or disability, or
(d) in the case of hardship.
The above restrictions apply to distributions of employee contributions made
after December 31, 1988, earnings on those contributions, and earnings on
amounts attributable to employee contributions held as of December 31, 1988.
They do not apply to distributions of any employer or other after-tax
contributions, employee contributions made on or before December 31, 1988, and
earnings credited to employee contributions before December 31, 1988.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457
Employees and independent contractors performing services for such employers
may contribute on a before tax basis to the 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 Deferred Compensation
Plans maintained by a State ("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) or other tax-exempt organization. Generally, the
limitation is 33 1/3% of includable compensation (typically 25% of gross
compensation) or $7,500 (indexed), whichever is less. The 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 a 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 which 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 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 does not apply to amounts under a
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 a Section 457 Deferred Compensation Plan are
prohibited unless made after the participating employee attains the age
specified in the plan, 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.
4. 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.
25
<PAGE>
5. TAX PENALTIES
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 which
bears the same ratio as the after-tax contributions bear to the expected
return.
A. PREMATURE DISTRIBUTION
Distributions from a qualified plan before the Participant attains age
59 1/2 are generally subject to an additional 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 at
or after age 55. A life annuity is defined as 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).
B. 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 retirement plan must generally 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 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 this required beginning date over a period
which 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.
C. EXCESS DISTRIBUTION TAX
If the aggregate distributions from all IRAs and certain other qualified
plans in a calendar year exceed the greater of (i) $150,000, or (ii) $112,500
as indexed for inflation, a penalty tax of 15% is generally imposed on the
excess portion of the distribution.
D. WITHHOLDING
Periodic distributions from a qualified plan lasting for a period of 10 or
more years are generally subject to voluntary income tax withholding. 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. Otherwise, the amount withheld on such
distributions is determined at the rate applicable to wages as if the
recipient were married claiming three exemptions.
Nonperiodic distributions from an IRA are subject to income tax withholding
at a flat 10% rate. The recipient may elect not to have withholding apply.
Nonperiodic distributions from other qualified plans are generally subject
to mandatory income tax withholding at the flat rate of 20% unless such
distributions are:
1) the non-taxable portion of the distribution;
26
<PAGE>
2) required minimum distributions;
3) eligible rollover distributions.
Eligible rollover distributions are direct payments to an IRA or to another
qualified employer plan.
In general, distributions from plans described in Section 457 of the Code
are subject to regular wage withholding rules.
D. 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 assets account underlying a variable
contract is represented by any one investment, no more than 70% is represented
by any two investment, 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.
Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford
intends to administer all contracts subject to the diversification
requirements in a manner that will maintain adequate diversification.
E. 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 which discuss investor control. The IRS has ruled that 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
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,
Hartford 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. Hartford 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.
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F. NON-NATURAL PERSONS, CORPORATIONS
The annual increase in the value of the Contract is currently includable in
gross income of a non-natural person. There is an exception for annuities held
by structured settlement companies and annuities held by an employer with
respect to a terminated pension plan. A non-natural person which is a
tax-exempt entity for federal tax purposes will not be subject to income tax
as a result of this provision.
G. 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 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
WHAT ARE MY VOTING RIGHTS?
Hartford shall notify the Contract Owner of any Fund shareholders' meeting
if the shares held for the Contract Owner's accounts may be voted at such
meetings. Hartford shall also send proxy materials and a form of instruction
by means of which the Contract Owner can instruct Hartford with respect to the
voting of the Fund shares held for the Contract Owner's account. In connection
with the voting of Fund shares held by it, Hartford shall arrange for the
handling and tallying of proxies received from Contract Owners. Hartford as
such, shall have no right, except as hereinafter provided, to vote any Fund
shares held by it hereunder which may be registered in its name or the names
of its nominees. Hartford will, however, vote the Fund shares held by it in
accordance with the instructions received from the Contract Owners for whose
accounts the Fund shares are held. If a Contract Owner desires to attend any
meeting at which shares held for the Contract Owner's benefit may be voted,
the Contract Owner may request Hartford 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. In the event that the Contract Owner gives
no instructions or leaves the manner of voting discretionary, Hartford will
vote such shares of the appropriate Fund, including any of its own shares, in
the same proportion as shares of that Fund for which instructions have been
received.
Every Participant under a group Contract who has a full (100%) vested
interest under a group Contract, shall receive proxy material and a form of
instruction by means of which Participants may instruct the Contract Owner
with respect to the number of votes attributable to his individual
participation under a group Contract.
A Contract Owner or Participant, as appropriate, is entitled to one full or
fractional vote for each full or fractional Accumulation or Annuity Unit
owned. The Contract Owner has voting rights throughout the life of the
Contract. The vested Participant has voting rights for as long as
participation in the Contract continues. Voting rights attach only to Separate
Account interests.
During the Annuity period under a Contract the number of votes will decrease
as the assets held to fund Annuity benefits decrease.
WILL OTHER CONTRACTS BE PARTICIPATING IN THIS SEPARATE ACCOUNT?
In addition to the Contracts described in this Prospectus, it is
contemplated that other forms of group or individual annuities may be sold
providing benefits which vary in accordance with the investment experience of
the Separate Account.
HOW ARE THE CONTRACTS SOLD?
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
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HSD is a wholly-owned subsidiary of Hartford. The principal business address
of HSD is the same as that of Hartford.
The securities will be sold by salespersons of HSD who represent Hartford 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 Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the NASD.
WHO IS THE CUSTODIAN OF THE SEPARATE ACCOUNT'S ASSETS?
Hartford is the custodian of the Separate Account's assets.
ARE THERE ANY MATERIAL LEGAL PROCEEDINGS AFFECTING THE SEPARATE ACCOUNT?
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, General Counsel and Secretary, Hartford Life
Insurance Companies, P.O. Box 2999, Hartford, CT 06104-2999.
ARE YOU RELYING ON ANY EXPERTS AS TO ANY PORTION OF THIS PROSPECTUS?
The audited consolidated 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. Reference is made to said report on the consolidated
financial statements of Hartford Life Insurance Company (the Depositor), which
includes an explanatory paragraph with respect to the change in method of
accounting for debt and equity securities as of January 1, 1994, as discussed
in Note 2 of Notes to Consolidated Financial Statements. The principal
business address of Arthur Andersen LLP is One Financial Plaza, Hartford,
Connecticut 06103.
HOW MAY I GET ADDITIONAL INFORMATION?
Inquiries will be answered by calling your representative or writing:
Hartford Life Insurance Company,
Attn: RPVA Administration,
P.O. Box 2999,
Hartford, CT 06104-2999
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APPENDIX
PRIOR FRONT END LOAD CONTRACTS
Such Contracts are no longer being issued. Contract Owners may continue to
make contributions to those Contracts. The Contracts differ from those described
previously in this Prospectus as described below.
INDIVIDUAL FRONT END LOAD CONTRACTS
A. DEDUCTIONS FOR SALES EXPENSES, MINIMUM DEATH BENEFIT AND ADMINISTRATIVE
EXPENSES.
Purchase Payments made pursuant to the terms of the individual Contracts are
subject to a deduction of 8.5%. Of the 8.5%, 6% is for sales expense, 1.75% is
for administrative expense and .75% is for the minimum death benefit.
There are no maintenance fees or transfer fees.
Administrative and Sales Expenses -- The charge for administrative and sales
expense is paid to Hartford for providing administrative personnel, services,
equipment, facilities and office space for the proper administration of the
Contracts, and sales activities, including field office expense.
B. OPTIONS AVAILABLE TO ANNUITANT
Unless prohibited by an endorsement to the Contract, the Annuity
Commencement Date may be the first day of any month between the Annuitant's
50th and 75th birthdays, but in the absence of a written election to the
contrary, Hartford reserves the right to begin Annuity payments at age 65.
Unless prohibited by an endorsement to the Contract, the Contract Owner may
elect to have the Termination Value applied on the Annuity Commencement Date
under any one of the six Annuity Options described below, but in the absence
of such election the Termination Value on the Annuity Commencement Date will
be applied under the Second Option to provide a Life Annuity with 120 Monthly
Payments Guaranteed. The Termination Value applied is determined on the basis
of the accumulation unit value on the fifth business day preceding the date
annuity payments commence.
Election of any of these options including any optional Annuity Commencement
Date must be made by notice in writing to Hartford at its Home Office at least
30 days prior to the date such election is to become effective.
Date of Payment -- The first payment under the Deposit Option shall be made
at the end of the period selected, measured from the date of approval of the
claim for settlement. The first payment under any other option shall be made
immediately upon approval of claim for settlement, and subsequent payments
shall be made periodically in accordance with the manner of payment elected.
C. OPTIONS AVAILABLE TO BENEFICIARY
The Contract Owner, or in the case the Contract Owner shall not have done
so, the Beneficiary after the death of the Annuitant, may elect in lieu of
payment in one sum, that any amount or part thereof due by Hartford under the
Contract to the Beneficiary be applied under any of the Options described
below. Such election must be made within one year after the death of the
Annuitant by written notice to Hartford at its Home Office.
D. ANNUITY OPTIONS
FIRST OPTION -- LIFE ANNUITY
An annuity payable monthly during the lifetime of 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
GUARANTEED
An annuity payable monthly during the lifetime of the payee including the
guarantee that if, at the death of the payee, payments have been made for less
than 120 months, 180 months or 240 months (as selected),
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<PAGE>
payments shall be continued to the Beneficiary during the remainder of the
selected period. If the Beneficiary dies while receiving payments under this
option or if no Beneficiary is designated, a lump sum payment shall be made.
THIRD OPTION -- UNIT REFUND 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, provided that, at the death
of the payee, the Beneficiary will receive an additional payment of the then
dollar value of the number of annuity units equal to the excess, if any, of
(a) over (b) where (a) is the total amount applied under the option divided by
the annuity unit value at the effective date of annuity payments and (b) is
the number of annuity units represented by each payment multiplied by the
number of payments made.
FOURTH 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.
FIFTH OPTION -- PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected which may be from
1 to 30 years.
SIXTH OPTION -- PAYMENTS OF A SPECIFIED DOLLAR AMOUNT
The amount due may be paid in equal annual, semi-annual, quarterly or
monthly installments of a designated dollar amount (not less than $75.00 per
annum per $1,000 of the original amount due) until the remaining balance is
less than the amount of one installment. To determine the remaining balance in
either Account at the end of any valuation period such balance at the end of
the previous period is decreased by the amount of any installment paid during
the period and the result multiplied by the net investment factor for the
period. If the remaining balance at any time is less than the amount of one
installment, such balance will be paid and will be the final payment under the
option.
DEPOSIT OPTION -- INVESTMENT INCOME
The amount due may be left on deposit with Hartford in its General Account
and a sum will be paid annually, semi-annually, quarterly or monthly, as
selected, which shall be equal to the net investment rate for the period
multiplied by the amount remaining on deposit.
E. ALLOCATION OF ANNUITY
At the time election of one of the first five Annuity Options is made, the
person electing the option may further elect to have the Termination Value
(amount due) applied to provide a variable annuity, a fixed dollar annuity or
a combination of both. An election of the Sixth Option may specify that the
net investment factor for the Separate Account or the General Account is to
apply or the amount due may be split between the two Accounts. If no election
is made to the contrary, that portion of the amount due from the Separate
Account shall be applied to provide a variable annuity and that portion of the
amount due from the General Account shall be applied to provide a fixed dollar
annuity. Election of the Deposit Option shall constitute election of fixed
income.
F. CONTRIBUTIONS
The minimum contribution under the Contract is $20.00.
GROUP FRONT END LOAD CONTRACTS
A. DEDUCTIONS FOR SALES EXPENSES AND MINIMUM DEATH BENEFIT
Purchase Payments made pursuant to the terms of the group Contracts are
subject to a deduction of 6%. Of the 6%, 5.25% is for sales expense and .75%
is for the minimum death benefit.
Administrative and Sales Expenses -- The charge for administrative and sales
expense is paid to Hartford for providing administrative personnel, services,
equipment, facilities and office space for the proper administration of the
Contracts and sales activities, including field office expense.
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<PAGE>
B. ELECTION OF OPTIONAL ANNUITIES
A Participant may elect to have his payments made under any of the Optional
Annuity Forms provided such election is received in writing by Hartford at its
Home Office at least 30 days prior to his Annuity Commencement Date. If no
such election is given to Hartford, the Annuity will be a Life Annuity with
120 Payments Guaranteed as described in Option 2.
C. OPTIONAL ANNUITY FORMS
OPTION 1 -- LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant and
terminating with the last monthly payment preceding the death of the
Annuitant.
OPTION 2 -- LIFE ANNUITY WITH 120 OR 180 MONTHLY PAYMENTS GUARANTEED
An annuity payable monthly during the lifetime of the Annuitant with the
guarantee that if, at the death of the Annuitant, payments have been made for
less than 120 or 180 months, as elected, annuity payments will be continued
during the remainder of said period to the Beneficiary or Beneficiaries
designated by the Participant. If no Beneficiary is designated, or if a
Beneficiary dies while receiving annuity payments, the present value, computed
as of the date notice of death is received in writing by Hartford at its home
office, of the guaranteed number of annuity payments remaining after receipt
of such notice and to which the deceased would have been entitled had he not
died, computed on the basis of the selected Assumed Interest Rate, compounded
annually, shall be paid in a lump sum in accordance with the provisions of the
Contract. The annuity unit value for the day on which notice of death is
received at Hartford's Home Office shall be used for the purposes of
determining the lump sum payment.
OPTION 3 -- UNIT REFUND LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant, terminating
with the last payment due prior to the death of the Annuitant, provided that
an additional payment will be made in an amount equal to the annuity unit
value, as of the date that notice of death is received in writing by Hartford
at its Home Office, multiplied by a number equal to the excess, if any, of (a)
over (b), where (a) is the total amount applied under the option, divided by
the annuity unit value at the Annuity Commencement Date, and (b) is the
product of the number of annuity units represented by each payment and the
number of payments made.
OPTION 4 -- 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.
All payments under any of these options will be determined in accordance
with the Contracts. The Company reserves the right to require proof
satisfactory to it of the age of an Annuitant and any joint Annuitant prior to
making the first payment under any of these options.
D. CONTRIBUTIONS
The minimum contribution under the Contract is $20.00.
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TABLE OF CONTENTS
FOR
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION PAGE
------------------------------------------------------------------------ ----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY..........................
SAFEKEEPING OF ASSETS...................................................
INDEPENDENT PUBLIC ACCOUNTANTS..........................................
DISTRIBUTION OF CONTRACTS...............................................
CALCULATION OF YIELD AND RETURN.........................................
PERFORMANCE COMPARISONS.................................................
FINANCIAL STATEMENTS....................................................
</TABLE>
33
<PAGE>
This form must be completed for all tax sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The Hartford variable annuity Contract which 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. terminated employment
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions may also be made if you
have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made 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 Hartford variable annuity. Please refer to your
Plan.
Please complete the following and return to:
Hartford Life Insurance Company
Attn: RPVA Administration
P.O. Box 2999
Hartford, CT 06104-2999
Name of Contract Owner/Participant: ____________________________________________
Address: _______________________________________________________________________
City or Plan/School District: __________________________________________________
Date: __________________________________________________________________________
<PAGE>
To Obtain a Statement of Additional
Information, please complete the form below and
mail to:
Hartford Life Insurance Company
Attn: RPVA Administration
P.O. Box 2999
Hartford, CT 06104-2999
Please send a Statement of Additional
Information for the Variable Annuity Contract to
me at the following address:
_________________________________________
Name
_________________________________________
Address
_________________________________________
City/State Zip Code
<PAGE>
PRINCIPAL UNDERWRITER
Hartford Securities Distribution Company, Inc. (HSD)
Hartford Plaza, Hartford, CT 06115
HARTFORD
INDEPENDENT AUDITORS FOR HARTFORD
LIFE INSURANCE COMPANY AND SEPARATE
ACCOUNT TWO (QP VARIAABLE
ACCOUNT)
LIFE INSURANCE
Arthur Andersen LLP
Hartford, Connecticut 06103
COMPANY
INSURER
Hartford Life Insurance Company
SEPARATE ACCOUNT TWO
Executive Offices: P.O. Box 2999
(QP VARIABLE ACCOUNT) PROSPECTUS
Hartford, CT 06104-2999
for Qualified Plans, Including
the Prospectus of the Funds
May 1, 1997
VARIABLE ANNUITY CONTRACTS
[LOGO]
HV-1008-23
HARTFORD LIFE INSURANCE COMPANY
BULK RATE
P.O. BOX 2999, HARTFORD, CT 06104-2999
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HARTFORD, CONN.
