<PAGE>
Registration No. 33-61267
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
PRE-EFFECTIVE AMENDMENT NO.2
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact name of trust: Separate Account VL I
B. Name of depositor: ITT Hartford Life and Annuity Insurance Company
C. Complete address of depositor's principal executive offices:
P.O. Box 2999
Hartford, CT 06104-2999
D. Name and address of agent for service:
Scott K. Richardson
Assistant Counsel
ITT Hartford Life and Annuity Insurance Company
P.O. Box 2999
Hartford, CT 06104-2999
It is proposed that this filing will become effective:
__ immediately upon filing pursuant to paragraph (b) of Rule 485
__ on May 1, 1996 pursuant to paragraph (b) of Rule 485
__ 60 days after filing pursuant to paragraph (a)(1) of rule 485
__ on May 1, 1996 pursuant to paragraph (a)(1) of Rule 485
__ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The registrant hereby represents that it is relying on
Section (b)(13)(i)(A) of Rule 6e-3(T).
E. Title and amount of securities being registered:
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant is registering an indefinite amount of securities. Registrant
will file the Rule 24f-2 Notice upon completion of its first complete
fiscal year.
F. Proposed maximum aggregate offering price to the public of the
securities being registered: Not yet determined.
G. Amount of Filing Fee: Paid
H. Approximate date of proposed public offering:
As soon as practicable after the effective date of this registration
statement.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
1. Cover page
2. Cover page
3. Not applicable
4. The Company; Distribution of the Policies
5. Summary - Separate Account VL I; Separate
Account VL I - General
6. Separate Account VL I - General
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; Separate Account VL I - Funds;
The Policy - Application for a Policy;
Detailed Description of Policy Benefits and
Provisions; Other Matters - Voting Rights,
Dividends
11. Summary; Separate Account VL I - Funds
12. Summary; Separate Account VL I - Funds
13. Deductions and Charges from the Account Value;
Distribution of the Policies; Federal Tax
Considerations
14. Detailed Description of Policy Benefits and
Provisions - Application for a Policy
15. Detailed Description of Policy Benefits and
Provisions - Allocation of Premium Payments
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
16. Separate Account VL I - Funds; Detailed
Description of Policy Benefits and
Provisions - Allocation of Premium Payments
17. Summary; Detailed Description of Policy
Benefits and Provisions - Cash Value
and Amount Payable on Surrender of the Policy,
The Right to Examine or Exchange the Policy
and Surrender/Continuation Options.
18. Separate Account VL I - Funds; Deduction and
Charges from the Account Value; Federal Tax
Considerations
19. Other Matters - Statements to Policy Owners
20. Not applicable
21. Detailed Description of Policy Benefits and
Provisions - Policy Loans
22. Not applicable
23. Safekeeping of the Separate Account Assets
24. Other Matters - Assignment
25. The Company
26. Not applicable
27. The Company
28. The Company - Executive Officers and Directors
29. The Company
30. Not applicable
31. Not applicable
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
32. Not applicable
33. Not applicable
34. Not applicable
35. Distribution of the Policies
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Policies
39. The Company; Distribution of the Policies
40. Not applicable
41. The Company; Distribution of the Policies
42. Not applicable
43. Not applicable
44. Detailed Description of Policy Benefits and
Provisions - Accumulation Unit Values
45. Not applicable
46. Detailed Description of Policy Benefits and
Provision - Cash Value
47. Separate Account VL I - Funds
48. Cover page; The Company
49. Not applicable
50. Separate Account VL I - General
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
51. Summary; The Company; Detailed Description of
Policy Benefits and Provisions; Other
Matters - Beneficiary
52. Separate Account VL I - Funds, Investment
Advisers
53. Federal Tax Considerations
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY
P.O. Box 2999
Hartford, CT 06104-2999
Telephone (800) 243-5433
STAG VARIABLE LIFE
Flexible Premium
Variable Life Insurance Policies
[LOGO]
This Prospectus describes a flexible premium variable life insurance policy
(the "Policies", and each individually a "Policy") offered by ITT Hartford
Life and Annuity Insurance Company ("ITT Hartford") to applicants age 80 and
under. For a given amount of Death Benefit chosen, the Purchaser of the Policy
has considerable flexibility in selecting the timing and amount of premium
payments. In addition, the Purchaser can select a Guarantee Period, of from
one to ten years, during which additional guarantees are provided. Among these
is the guarantee that the Death Benefit will be no less than the Initial Face
Amount and the Policy will not lapse as long as certain Scheduled Premiums are
paid or are provided for by favorable investment experience. Unscheduled
Premium Payments are also allowed.
The Guarantee Period selected by You will affect the benefits provided by
the Policy. In general, the longer the Guarantee Period is, the higher the
Front-End Sales Loads and Surrender Charges are. However, the advantages of a
longer Guarantee Period include lower Cost of Insurance rates and lower
Mortality and Expense Risk Rates. See "Guarantee Period" on page 7 for more
details.
Sales agents can provide prospective purchasers with individualized sales
illustrations which reflect all the fees and charges associated with the
Policy options selected.
The Policies provide for a death benefit payable at the Insured's death. The
Policy Owner may select one of three death benefit options; a fixed amount
equal to the Face Amount, a variable amount equal to the Face Amount plus the
Account Value, or a variable amount equal to the Face Amount plus a return of
Scheduled Premiums.
Under all three options, the Policies have Cash Values which increase with
the payment of each premium and which decrease to reflect fees and charges
made by ITT Hartford. These fees and charges vary depending on the face amount
of the Policy, the age of the Insured, the level of the premiums paid, and the
length of the Guarantee Period.
If a Policy is surrendered during the first two Policy Years, the Policy
Owner may be entitled to a refund of excess loads in addition to the Cash
Surrender Value.
There is no guaranteed minimum cash value for a Policy. The Cash Value of a
Policy will also vary up or down to reflect the investment experience of the
Funds to which the premium payment(s) has been allocated and the Policy Owner
bears the investment risk for all amounts so allocated.
The initial premium will be allocated to Hartford Money Market Sub-Account
and after the Right to Examine Period has expired, to one or more of the
Sub-Accounts or to the Fixed Account as specified in the Policy Owner's
application. The Funds underlying the Sub-Accounts presently are: Hartford
Advisers Fund, Inc., Hartford Capital Appreciation Fund, Inc., Hartford Bond
Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford Index Fund,
Inc., Hartford International Opportunities Fund, Inc., Hartford Mortgage
Securities Fund, Inc., Hartford Stock Fund, Inc., and HVA Money Market Fund,
Inc. managed by Hartford Investment Management Company (the "Hartford Funds"),
PCM Diversified Income Fund, PCM Global Asset Allocation Fund, PCM Global
Growth Fund, PCM Growth and Income Fund, PCM High Yield Fund, PCM Money Market
Fund, PCM New Opportunities Fund, PCM U.S. Government and High Quality Bond
Fund, PCM Utilities Growth and Income Fund, and PCM Voyager Fund managed by
The Putnam Management Company, Inc. (the "Putnam Funds"), and the
Equity-Income Portfolio, Overseas Portfolio and Asset Manager Portfolio
managed by Fidelity Management & Research Company (the "Fidelity Funds").
These Policies are subject to a Front-End Sales Load and Surrender Charge
which are set forth in the sections entitled "Deduction from the Premium" and
"Deductions and Charges from the Account Value" on pages 21-26. In addition,
there are examples on pages 23-25 and to help you in your selection of a
Guarantee Period.
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MAXIMUM FRONT-END SALES LOADS ARE 50% OF THE PREMIUMS PAID IN THE FIRST POLICY
YEAR, 11% IN YEARS 2 THROUGH 10 AND 3% IN YEARS 11 AND LATER. THE MAXIMUM
SURRENDER CHARGE UNDER THE POLICY IS 110% OF THE PREMIUM PAID IN THE FIRST
POLICY YEAR. HOWEVER, ACTUAL CHARGES MAY BE LESS. SEE "FRONT-END SALES LOAD"
ON PAGE 21, "SURRENDER CHARGES" ON PAGE 23, AND "REFUND OF EXCESS LOADS" ON
PAGE 13 FOR MORE DETAILS.
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IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY
OWN A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
------------------------------------------------------------------------------
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE APPLICABLE ELIGIBLE FUNDS WHICH CONTAIN A FULL DESCRIPTION OF THOSE FUNDS.
ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------------------------------------------------------------
The date of this Prospectus is
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................... 4
SUMMARY................................................................. 6
DETAILED DESCRIPTION OF POLICY BENEFITS AND PROVISIONS.................. 11
General............................................................... 11
Premiums.............................................................. 11
Premium Payment Flexibility......................................... 11
Scheduled Premiums.................................................. 11
Unscheduled Premiums................................................ 12
Allocation of Premium Payments...................................... 12
Accumulation Units.................................................. 12
Accumulation Unit Values............................................ 12
Premium Limitation.................................................. 13
Cash Values........................................................... 13
Amount Payable on Surrender of the Policy........................... 13
Load Refund......................................................... 13
Partial Withdrawals................................................. 14
Transfers of Account Value............................................ 14
Amount and Frequency of Transfers................................... 14
Transfers to or from Sub-Accounts................................... 14
Transfers from the Fixed Account.................................... 14
Policy Loans.......................................................... 15
Loan Interest....................................................... 15
Credited Interest................................................... 15
Preferred Loan...................................................... 15
Loan Repayments..................................................... 15
Termination Due to Excessive Indebtedness........................... 15
Effect of Loans on Account Value.................................... 15
Death Benefit......................................................... 16
Death Benefit Option................................................ 16
Option Change....................................................... 16
Death Benefit Guarantee............................................. 16
Minimum Death Benefit............................................... 16
Increases and Decreases in Face Amount.............................. 16
Benefits at Maturity.................................................. 17
Lapse and Reinstatement............................................... 17
Policy Surplus...................................................... 17
Lapse and Grace Period.............................................. 18
Reinstatement....................................................... 18
Automatic Premium Loan Option....................................... 18
The Right to Examine or Exchange the Policy........................... 19
Surrender/Continuation Options........................................ 19
Option Descriptions................................................. 19
Valuation of Payments and Transfers................................... 20
Application for a Policy.............................................. 20
Reduced Charges for Eligible Groups................................... 20
Deductions From the Premium........................................... 21
Front End Sales Load................................................ 21
Premium Related Tax Charge.......................................... 21
Deductions and Charges From the Account Value......................... 21
Monthly Deduction Amounts........................................... 21
Surrender Charges................................................... 23
Examples of Front-End Sales Loads and Surrender Charges............. 23
Charges Against the Funds........................................... 25
Taxes............................................................... 26
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
THE COMPANY............................................................. 26
SEPARATE ACCOUNT VL I................................................... 27
General............................................................... 27
Funds................................................................. 27
Hartford Funds...................................................... 27
Putnam Funds........................................................ 28
Fidelity Funds...................................................... 29
Investment Adviser.................................................... 30
Hartford Funds...................................................... 30
Putnam Funds........................................................ 30
Fidelity Funds...................................................... 31
THE FIXED ACCOUNT....................................................... 31
OTHER MATTERS........................................................... 31
Voting Rights......................................................... 31
Statements to Policy Owners........................................... 32
Limit on Right to Contest............................................. 32
Misstatement as to Age................................................ 32
Payment Options....................................................... 32
Beneficiary........................................................... 33
Assignment............................................................ 33
Dividends............................................................. 33
SUPPLEMENTAL BENEFITS................................................... 33
Deduction Amount Waiver Rider......................................... 33
Accidental Death Benefit Rider........................................ 34
Increase in Coverage Option Rider..................................... 34
Maturity Date Extension Rider......................................... 34
EXECUTIVE OFFICERS AND DIRECTORS........................................ 35
DISTRIBUTION OF THE POLICIES............................................ 37
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS............................ 37
FEDERAL TAX CONSIDERATIONS.............................................. 37
General............................................................... 37
Taxation of ITT Hartford and the Separate Account..................... 37
Income Taxation of Policy Benefits.................................... 38
Modified Endowment Contracts.......................................... 38
Estate and Generation Skipping Taxes.................................. 38
Diversification Requirements.......................................... 39
Ownership of the Assets in the Separate Account....................... 39
Life Insurance Purchased for Use in Split Dollar Arrangements......... 40
Federal Income Tax Withholding........................................ 40
Non-Individual Ownership of Policies.................................. 40
Other................................................................. 40
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporations......................................................... 40
LEGAL PROCEEDINGS....................................................... 40
EXPERTS................................................................. 40
REGISTRATION STATEMENT.................................................. 41
LEGAL MATTERS........................................................... 41
APPENDIX A ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES AND SURRENDER
VALUES............................................................... 42
</TABLE>
THE POLICIES MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
3
<PAGE>
GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: Value used to determine certain policy benefits and charges.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Sub-Account.
ANNUAL SCHEDULED PREMIUM AND/OR SCHEDULED PREMIUMS: The amount of Premiums
selected by you within limits established under the Policy.
ATTAINED AGE: The Issue Age plus the number of fully completed Policy Years.
CASH SURRENDER VALUE: Cash Value less all Indebtedness.
CASH VALUE: The Account Value less all remaining Surrender Charges, if any.
CODE: The Internal Revenue Code of 1986, as amended.
DATE OF ISSUE: The date from which the Suicide and Incontestability provisions
are measured.
DEATH BENEFIT: The Death Benefit Option in effect determines how the Death
Benefit is calculated. The three Death Benefit Options provided are described in
the Death Benefit section of this Prospectus.
DEATH PROCEEDS: The amount which we will pay on the death of the Insured. This
amount equals the Death Benefit less any Indebtedness.
FACE AMOUNT: On the Policy Date, the Face Amount equals the Initial Face Amount.
Thereafter it may change in accordance with the terms of the Policy.
FIXED ACCOUNT: Portion of Account Value invested in the General Account of ITT
Hartford Life and Annuity Insurance Company.
FUNDS: The registered open-end management investment companies in which assets
of the Separate Account may be invested.
GUARANTEE PERIOD: The period, selected by you, from one to ten years, during
which additional Policy guarantees are provided. Among these is the guarantee
that if Scheduled Premiums are paid, the Death Benefit will be no less than the
initial Face Amount regardless of the investment performance of the Sub-
Accounts. See "Guarantee Period" on page 7.
GUIDELINE ANNUAL PREMIUM: The level annual premium payment necessary to provide
the future benefits under the policy through maturity, based on certain
assumptions specified under the Federal Securities laws. These assumptions
include mortality charges based on the 1980 CSO Table, an assumed annual net
rate of return of 5% per year, and deduction of the fees and charges specified
in the Policy. For purposes of the policy, the Guideline Annual Premium is used
only in limiting front-end sales loads and surrender charges.
ITT HARTFORD: ITT Hartford Life and Annuity Insurance Company
IN WRITING: in a written form satisfying to Us.
INDEBTEDNESS: The outstanding loan on the Policy, including any interest due or
accrued.
INSURED: The person on whose life the Policy is issued.
ISSUE AGE: As of the Policy Date, the Insured's age on his/her last birthday.
LOAN ACCOUNT: An account established for any amounts transferred from the Fixed
Account and Sub-Accounts as a result of loans. The account is credited with
interest and is not based on the investment experience of the Separate Account.
MATURITY DATE: The date on which the Policy will mature.
MONTHLY ACTIVITY DATE: The Policy Date and the same date in each succeeding
month as the Policy Date except that whenever the Monthly Activity Date falls on
a date other than a Valuation Day, the Monthly Activity Date will be deemed the
next Valuation Day.
MONTHLY DEDUCTION AMOUNT: The fees and charges deducted from the Account Value
on the Monthly Activity Date.
NATIONAL SERVICE CENTER: Located in Minneapolis, Minnesota.
NET PREMIUM: The amount of premium actually credited to the Account Value.
POLICY: A flexible premium variable life insurance contract issued by ITT
Hartford, as described in this Prospectus.
POLICY ANNIVERSARY: An anniversary of the Policy Date. Similarly, Policy Years
are measured from the Policy Date.
POLICY DATE: The date from which Policy Anniversaries and Policy Years are
determined.
4
<PAGE>
POLICY LOAN RATE: The interest rate charged on policy loans.
POLICY OWNER: The person having rights to benefits under the Policy during the
lifetime of the Insured; the Policy Owner may or may not be the Insured.
POLICY SURPLUS: This is an amount which we calculate for each Policy Year during
the Guarantee Period to determine whether or not payment of a Scheduled Premium
is required and is calculated as described in "Policy Surplus" on page 17.
POLICY YEARS: Annual periods computed from the Policy Date.
PRO RATA BASIS: An allocation method based on the proportion of the Account
Value in the Fixed Account and each Sub-Account.
SCHEDULED PREMIUM: Amount of premium shown on your specifications.
SEPARATE ACCOUNT: An account established by ITT Hartford Life and Annuity
Insurance Company to separate the assets funding the Policies from other assets
of ITT Hartford Life and Annuity Insurance Company; in this case, "Separate
Account VL I".
SUB-ACCOUNT: The subdivisions of the Separate Account.
UNSCHEDULED PREMIUMS: Any premium payment other than a Scheduled Premium
Payment.
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 the close of business on successive
Valuation Days.
YOU, YOUR: The Owner of the policy.
WE, US, OUR, THE COMPANY: ITT Hartford Life and Annuity Insurance Company.
5
<PAGE>
SUMMARY
THE POLICY
The flexible premium variable life insurance policies offered by this
Prospectus are funded by a Fixed Account and Separate Account VL I, a separate
account established by ITT Hartford pursuant to Connecticut insurance law and
organized as a unit investment trust registered under the Investment Company Act
of 1940. Separate Account VL I is presently comprised of 22 sub-accounts (the
"Sub-Accounts" and each individually a "Sub-Account"), each of which invests
exclusively in one of the underlying Funds. If an initial premium is submitted
with an application for a Policy, it will be allocated, to the Hartford Money
Market Sub-Account. At a later date the values in the Hartford Money Market
Sub-Account will be allocated to one or more of the Sub-Accounts or the Fixed
Account as specified in the Policy Owner's application. This later date is the
latest of 45 days after the application is signed, ten days after We receive the
premium and the date We receive the final requirement to put the Policy in
force. The Policies are credited with units ("Accumulation Units") in each
selected Sub-Account, the assets of which are invested in the applicable Fund. A
Policy Owner may transfer the funds among the Sub-Accounts and the Fixed Account
subject to a transfer charge. See "Transfer of Account Value" of Detailed
Description of Policy Benefits and Provisions, page 14.
The Policies are first and foremost life insurance policies with death
benefits, cash values, and other features traditionally associated with life
insurance. The Policies are called "flexible premium" because, once the desired
level and pattern of Death Benefits have been determined, a purchaser has
considerable flexibility in the selection of the timing and amount of premium to
be paid. The Policies are called "variable" because, unlike the fixed benefits
of an ordinary whole life insurance policy, the Cash Value will, and the Death
Benefit may increase or decrease depending on the investment experience of the
Funds to which the premium payment(s) has been allocated. However, as long as
the Policy remains in force, no partial withdrawals occur, and there are no
requests to increase or decrease the Face Amount, the Death Benefit will never
be less than the Initial Face Amount. See "Detailed Description of Policy
Benefits and Provisions -- Death Benefit", page 16.
POLICY DESIGN OPTIONS
The options in the Policy are structured to give a Purchaser and his sales
agent the ability to select a Policy tailor-made for the purchaser's specific
life insurance needs.
The Policy options which give the purchaser such flexibility fall into four
major categories:
1. Death Benefit Options -- These allow the Purchaser to select various
levels and patterns of Death Benefits.
2. Premium Options -- Once the Purchaser has decided on the appropriate
Death Benefit, he then has considerable flexibility in determining the
desired premium schedule.
3. Guarantee Period Options -- The Purchaser also has the ability to choose
a Guarantee Period from one to ten years. During this period, additional
contractual guarantees are provided. Among these is the guarantee that
the Death Benefit will be no less than the Initial Face Amount and the
Policy will not lapse as long as certain Scheduled Premiums selected by
the Purchaser are paid or provided for by favorable investment
experience.
4. Investment Options -- The Purchaser has the choice of allocating the
Policy's Account Value among nine or less of the Policy's 23 investment
options. These include the 22 variable sub-accounts and the fixed
account.
DEATH BENEFIT
The Policies provide for three Death Benefit options. These can be level and
equal to the Face Amount, a Face Amount plus Return of Account Value Death
Benefit or a Face Amount plus Return of Scheduled Premium Death Benefit. At the
death of the Insured, we will pay the Death Proceeds to the Beneficiary. The
Death Proceeds equal the Death Benefit less any Indebtedness under the Policy.
See "Detailed Description of Policy Benefits and Provision -- Death Benefit,"
page 16.
6
<PAGE>
PREMIUM
You have considerable flexibility as to when and in what amounts you pay
premiums.
Prior to issue, you can choose the level of the Scheduled Premiums, within a
range determined by ITT Hartford based on the Face Amount of the policy, the
insured's sex (except where unisex rates apply), age at issue, and the insured's
risk classification.
During the Guarantee Period, ITT Hartford will guarantee that the Policy
will not lapse, regardless of the investment experience of the Funds, if you pay
the Scheduled Premiums when due. In addition, Unscheduled Premium Payments are
allowed during the Guarantee Period.
Even if You do not pay all Scheduled Premiums due during the Guarantee
Period, the Policy will stay in force as long as the Policy Surplus exceeds the
Indebtedness in the Policy.
After the Guarantee Period, You may change your Scheduled Premiums to any
level you desire, and Unscheduled Premium Payments are still allowed. Once the
Guarantee Period has expired, the Policy will not lapse as long as the Cash
Surrender Value is sufficient to cover the Monthly Deduction Amounts.
No premium payment will be accepted which causes the Policy to not meet the
tax qualification guidelines for life insurance under the Internal Revenue Code
of 1986, as amended.
There are circumstances, usually if a Policy Owner wants to refund future
benefits in seven years or less, when the Policy may become a Modified Endowment
Contract under federal tax law. If it does, loans and other pre-death
distributions are includable in gross income on an income-first basis. A 10%
penalty tax may be imposed on income distributed before the insured attains age
59 1/2. Prospective purchasers and Policy Owners are advised to consult a
qualified tax adviser before taking steps that may affect whether the Policy
becomes a Modified Endowment Contract. See "Federal Tax Considerations --
Modified Endowment Contract" for a discussion of the "seven pay test", page 37.
GUARANTEE PERIOD
The Guarantee Period selected by You will affect the benefits provided by
the Policy. In general, the longer the Guarantee Period is, the higher the
front-end sales loads and Surrender Charges are. However, the advantages of a
longer Guarantee Period include:
a.
a longer period during which Your Death Benefit is guaranteed, regardless
of the investment experience of the Sub-Accounts,
b.
a longer period during which your current administrative fees are
guaranteed (as a result, the longer the Guarantee Period is, the lower the
guaranteed administrative fees are),
c.
a longer period during which your current Cost of Insurance rates are
guaranteed (as a result, the longer the Guarantee Period is, the lower the
guaranteed Cost of Insurance rates are),
d.lower current Cost of Insurance rates,
e.lower Mortality and Expense risk rates.
In addition, if you choose a Guarantee Period longer than five years, You
may be given the right to purchase additional coverage, subject to limitations,
without any evidence of Insurability. See "Supplemental Benefits" on page 33.
Due to the way the different charges and fees depend on different factors,
such as the length of the Guarantee Period, it is difficult to anticipate the
net effect of these charges on the Policy values without a sales illustration.
Once a purchaser, in consultation with his sales agent, has decided on a
combination of policy features, (such as face amount, level of Scheduled
Premiums, Guarantee Period, and the age and sex of Insured) the sales agent will
provide that purchaser with an illustration which reflects the charges and
benefits of that particular combination and a summary of Policy charges and
fees. In addition, these illustrations are available for any allowable
combination of benefits which a prospective purchaser may request.
For more information concerning Front-End Sales Loads, see page 21,
Surrender Charges, see page 23, Cost of Insurance Charges, see page 23, and
Mortality and Expense Risk Charges see page 25.
7
<PAGE>
SEPARATE ACCOUNT VL I
Separate Account VL I is a separate account established by ITT Hartford
pursuant to the insurance laws of the State of Connecticut and organized as a
registered unit investment trust under the Investment Company Act of 1940.
Separate Account VL I is presently comprised of 22 Sub-Accounts, each of which
invests exclusively in one of the Funds. Each Hartford Fund is organized as a
corporation under the laws of the State of Maryland and is a an open-end
management investment company registered under the Investment Company Act of
1940. The Putnam Funds are organized as Putnam Capital Manager Trust, a
Massachusetts business trust organized on September 24, 1987, and is an
open-end, series investment company with multiple portfolios or funds registered
under the Investment Company Act of 1940. The Fidelity Funds involve two
diversified open-end management investment companies, each with multiple
portfolios and organized as a Massachusetts business trust. The Equity-Income
Portfolio and Overseas Portfolio are portfolios of the Variable Insurance
Products Fund, organized on November 13, 1981. The Asset Manager Portfolio is a
portfolio of the Variable Insurance Products Fund II, organized on March 21,
1988.
Registration under the Investment Company Act of 1940 does not involve
supervision of the management or investment practices or policies by the
Commission. The shares of the Funds are sold to Separate Account VL I and to
other separate accounts of ITT Hartford or its affiliates which fund similar
annuity or life insurance products.
Currently, the Funds are Hartford Advisers Fund, Inc., Hartford Capital
Appreciation Fund, Inc., Hartford Bond Fund, Inc., Hartford Dividend and Growth
Fund, Inc., Hartford Index Fund, Inc., Hartford International Opportunities
Fund, Inc., Hartford Mortgage Securities Fund, Inc., Hartford Stock Fund, Inc.,
and HVA Money Market Fund, Inc. (hereinafter the "Hartford Funds"), PCM
Diversified Income Fund, PCM Global Asset Allocation Fund, PCM Global Growth
Fund, PCM Growth and Income Fund, PCM High Yield Fund, PCM Money Market Fund,
PCM New Opportunities Fund, PCM U.S. Government and High Quality Bond Fund, PCM
Utilities Growth and Income Fund, and PCM Voyager Fund (hereinafter the "Putnam
Funds"), and the Equity-Income Portfolio, Overseas Portfolio and Asset Manager
Portfolio (hereinafter the "Fidelity Funds"). Applicants should read the
prospectuses for each of the Funds accompanying this Prospectus in connection
with the purchase of a Policy. The investment objectives of each of the Funds
are as set forth in "Separate Account VL I," page 27.
Total fund operating expenses in 1995, including management fees, were .65%
for Hartford Advisers Fund; .68% for Hartford Capital Appreciation Fund; .53%
for Hartford Bond Fund; .77% for Hartford Dividend and Growth Fund; .39% for
Hartford Index Fund; .86% for Hartford International Opportunities Fund; .47%
for Hartford Mortgage Securities Fund; .48% for Hartford Stock Fund; .45% for
HVA Money Market Fund; .85% for PCM Diversified Income Fund; .84% for PCM Global
Asset Allocation Fund; .75% for PCM Global Growth Fund; .57% for PCM Growth and
Income Fund; .79% for PCM High Yield Fund; .57% for PCM Money Market Fund; .84%
for PCM New Opportunities Fund; .70% for PCM U.S. Government and High Quality
Bond Fund; .78% for PCM Utilities Growth and Income Fund; .68% for PCM Voyager
Fund; .61% for Equity-Income Portfolio; .91% for Overseas Portfolio; and .81%
for Asset Manager Portfolio.
The investment adviser for the Hartford Funds is The Hartford Investment
Management Company, a wholly-owned subsidiary of ITT Hartford. The Hartford
Investment Management Company, Inc. retains a sub-investment adviser with
respect to some of the Funds. The Putnam Funds are advised by Putnam Investments
Management Inc, a subsidiary of Putnam Investments, Inc. The Fidelity Funds are
managed by Fidelity Management & Research Company. See "Separate Account VL I,"
page 27.
FIXED ACCOUNT
Premium Payments and Cash Values allocated to the Fixed Account become part
of the general assets of ITT Hartford. ITT Hartford invests the assets of the
General Account in accordance with applicable law governing the investments of
Insurance Company general accounts.
DEDUCTIONS FROM THE PREMIUM
Before the allocation of the premium to the Account Value, a deduction as a
percentage of premium is made for the front-end sales load and premium taxes.
The amount of each premium allocated to the Account Value is your Net Premium.
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FRONT-END SALES LOAD
The front-end sales load of the premium deduction is based on the level of
Scheduled Premiums, the length of the Guarantee Period, and the amount of any
Unscheduled Premiums paid.
The maximum front-end sales load percentages are 50% of the premiums paid in
the first Policy Year, 11% in Policy Years 2 through 10, and 3% in Policy Years
11 and later.
For all Guarantee Periods, the maximum amount of premium paid in any Policy
Year subject to a front-end sales load is the Guideline Annual Premium. In
addition, if Scheduled Premiums are less than the Guideline Annual Premium, the
maximum amount of premium paid in the first Policy Year subject to a front-end
sales load is the Scheduled Premium.
The actual schedule of front-end sales loads for any given Policy is
specified in that Policy.
PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover taxes assessed against ITT
Hartford that are attributable to premiums. This percentage will vary by locale
depending on the tax rates in effect there. The range is generally between 0%
and 4%.
DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE
We will subtract amounts from your Account Value to provide for the Monthly
Deduction Amount. These will be taken on a Pro Rata Basis from the Fixed Account
and Sub-Accounts on each Monthly Activity Date.
The Monthly Deduction Amount equals:
(a)
the Cost of Insurance; plus
(b)
the charges for additional benefits provided by rider, if any; plus
(c)
the charges for "special" insurance class rating, if any; plus
(d)
the Monthly Administrative Fee, plus
(e)
the Mortality and Expense Risk Charge.
ITT Hartford may also set up a provision for income taxes against the assets
of Separate Account VL I. See "Deductions and Charges From the Account Value,"
page 21 and "Federal Tax Considerations," page 37.
The Mortality and Expense Risk Charge ranges from .90% annually for a Policy
with a one-year Guarantee Period and decreases proportionately as the Guarantee
Period gets longer to .60% on a Policy with a ten-year Guarantee Period.
Applicants should review the prospectuses for the Funds which accompany this
Prospectus for a description of the charges assessed against the assets of each
of the Funds.
SURRENDER CHARGES
A contingent deferred sales load ("Surrender Charge") is assessed against
the Account Value of a Policy if the Policy lapses or is surrendered during the
first nine Policy Years. The amount of the Surrender Charge applicable during
the first Policy Year is established by ITT Hartford based on the premiums and
the length of the Guarantee Period chosen by the Policy Owner. Subject to
certain limits imposed by state insurance law, the Surrender Charge decreases by
an equal amount each Policy Year until it reaches zero during the tenth Policy
Year.
The actual schedule of Surrender Charges for any given Policy is set forth
in that Policy. In addition, sales agents will provide, upon request, the
schedule of Surrender Charges which would apply under any given circumstances.
The aggregate front-end sales load and Surrender Charge assessed if a Policy
lapses or is surrendered (i.e., the total sales load) will not exceed the sales
load limitations specified by the Securities and Exchange Commission. Generally,
the total sales load under the Policy will not exceed 180% of the Guideline
Annual
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<PAGE>
Premium, or 9% of the sum of the Guideline Annual Premium that would be paid
over a 20-year period. In cases where the anticipated life expectancy of the
insured(s) named in the Policy is less than 20 years, the total sales load will
not exceed 9% of the sum of the Guideline Annual Premiums for the shorter
period.
LIMITS ON FRONT-END SALES LOADS AND SURRENDER CHARGES
Certain Federal securities and State insurance laws and regulations limit
the front-end sales loads and surrender charges which can be assessed on these
Policies. The front-end sales loads and surrender charges assessed in these
Policies comply with these limitations.
Front-end sales loads and Surrender Charges which cover expenses relating to
the sale and distribution of the contracts may be reduced for certain sales of
the contracts under circumstances which may result in savings of such sales and
distribution expenses.
CASH VALUE
As with many other types of insurance policies, each Policy will have a cash
value ("Cash Value"). The Cash Value of the Policy will increase or decrease to
reflect the interest credited to the Fixed Account and Loan Account, investment
experience of the Sub-Accounts applicable to the Policy and deductions for the
Monthly Deduction Amount. There is no minimum guaranteed Cash Value and the
Policy Owner bears the risk of the investment in the Funds. See "Detailed
Description of the Policy Benefits and Provisions -- Cash Value," page 13.
POLICY LOAN
A Policy Owner may obtain a cash loan from ITT Hartford. The loan is secured
by the Policy. At the time a loan is requested, the Indebtedness (including the
currently applied for loan) may not exceed 90% of the Cash Value. See "Detailed
Description of Policy Benefits and Provisions -- Policy Loans," page 15.
CHARGES AGAINST THE FUNDS
Separate Account VL I purchases shares of the Funds at net asset value. The
net asset value of the Fund shares reflects investment advisory fees and
administrative and other expenses already deducted from the assets of the Funds.
These charges are described herein. See Charges Against the Funds, page 25.
THE RIGHT TO EXAMINE THE POLICY
An applicant has a limited right to return his or her Policy for
cancellation. If the applicant returns the Policy within ten days after delivery
of the Policy, or within 45 days after completion of the application, whichever
is latest (subject to applicable state regulation), ITT Hartford will return to
the applicant, within seven days thereafter, the premium paid.
SURRENDER/CONTINUATION OPTIONS
At any time prior to the Maturity Date, provided the Policy has a Cash
Surrender Value, You may generally choose to have the Cash Surrender Value
applied under one of the following options:
OPTION A -- Surrender for Cash
OPTION B -- Continue as Extended Term Insurance
OPTION C -- Continue as Paid-Up Insurance
See "Detailed Description of Policy Benefits and Provisions," and
"Surrender/Continuation Options", pages 19.
TAX CONSEQUENCES
The current Federal tax law generally excludes all death benefit payments
from the gross income of the Policy Beneficiary. See "Federal Tax
Considerations," page 37.
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DETAILED DESCRIPTION OF POLICY
BENEFITS AND PROVISIONS
GENERAL
This Prospectus describes a flexible premium variable life insurance policy
where the Purchaser of the Policy has considerable flexibility in selecting the
timing and amount of premium payments. In addition, the Purchaser can select a
Guarantee Period, from one to ten years, during which additional guarantees are
provided such as the guarantee that the Death Benefit will be no less than the
Initial Face Amount and the Policy will not lapse as long as certain Scheduled
Premiums are paid or are provided for by favorable investment experience. As
stated below, Unscheduled Premium payments are also allowed.
PREMIUMS
PREMIUM PAYMENT FLEXIBILITY
A significant feature of the Policy is that it gives you the ability to pay
amounts greater or less than the Scheduled Premiums.
Prior to issue, you can choose the level of the Scheduled Premiums, within a
range determined by ITT Hartford, based on the Face Amount of the policy, the
insured's sex (except where unisex rates apply), age at issue, and the insured's
risk classification.
During the Guarantee Period, ITT Hartford will guarantee that the Policy
will not lapse, regardless of the investment experience of the Funds, if you pay
the Scheduled Premiums when due and the Indebtedness never exceeds the Cash
Value. In addition, Unscheduled Premium payments are allowed during the
Guarantee Period.
Even if you do not pay all Scheduled Premiums due during the Guarantee
Period, the Policy will stay in force as long as the Policy Surplus exceeds the
Indebtedness in the Policy.
After the Guarantee Period, you may change your Scheduled Premiums to any
level you desire, and Unscheduled Premium payments are still allowed. Once the
Guarantee Period has expired, the Policy will not lapse as long as the Cash
Surrender Value is sufficient to cover the Monthly Deduction Amounts.
See also "Lapse and Reinstatement" on page 17 for more details.
SCHEDULED PREMIUMS
You have the right to pay Scheduled Premiums annually, semiannually,
quarterly, or monthly. The first Scheduled Premium is due on the Policy Date.
During the Guarantee Period, each Scheduled Premium after the first is due at
the expiration of the period for which the preceding Scheduled Premium was paid.
A Scheduled Premium may be paid at any time prior to its due date, subject to
the premium limitations set forth by the Internal Revenue Code as indicated in
the "Premium Limitation" section. See page 13.
During the Guarantee Period, if all Scheduled Premiums are paid when due and
if Indebtedness does not exceed the Cash Value, the Policy will not terminate
due to insufficient Cash Surrender Value, regardless of the investment
experience of the Funds.
During the Guarantee Period, if you fail to pay a Scheduled Premium when
due, and if, on the premium due date and for the rest of that Policy Year, the
Policy Surplus exceeds the Indebtedness, payment of that Scheduled Premium will
not be required in that year or in any future year. The Policy will not
terminate due to this nonpayment. However, future Scheduled Premiums during the
Guarantee Period will be required unless the Policy Surplus continues to exceed
the Indebtedness in those future Policy Years. In addition, as is true with any
premium, your Account Value and Policy Surplus in future years will be larger if
you make the premium payment than if you do not.
For example, to determine whether or not non-payment of a Scheduled Premium
in the second Policy Year would result in a lapse, You would compare the actual
Account Value on the first Policy Anniversary to the
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<PAGE>
first Target Account Value. If the actual Account Value was equal to or greater
than the Target Account Value and the Indebtedness remained less than this
Policy Surplus, failure to pay any Scheduled Premiums due in the second Policy
Year would not result in a lapse.
After the Guarantee Period, ITT Hartford will send reminder notices for the
Owner to pay Scheduled Premiums during the Insured's lifetime. Payment of the
Scheduled Premium may not be sufficient to keep the policy in force after the
end of the Guarantee Period.
UNSCHEDULED PREMIUMS
Any premium We receive under the Policy in an amount different from the
Scheduled Premium will be considered an Unscheduled Premium. Unscheduled
Premiums of at least $50.00 can be made at any time while the Policy is in
force.
ALLOCATION OF PREMIUM PAYMENTS
The initial Net Premium will be allocated to Hartford Money Market
Sub-Account on the later of the Policy Date or the date We receive the premium.
The value in this Hartford Money Market Sub-Account will then be allocated
to the Fixed Account and Sub-Accounts according to the premium allocation
specified in the application on the latest of 45 days after the application is
signed, ten days after We receive the premium and the date We receive the final
requirement to put the Policy in force.
Any additional Net Premiums received by Us prior to such date will be
allocated to the Hartford Money Market Fund Sub-Account.
Upon written request, You may change the premium allocation. Portions
allocated to the Fixed Account and Sub-Accounts must be whole percentages of 10%
or more. Subsequent Net Premiums will be allocated on the date received, if such
date is a Valuation Day, to the Fixed Account and Sub-Accounts according to Your
most recent instructions, subject to the following. The Account Value may be
allocated to no more than nine of these. If We receive a premium and Your most
recent allocation instructions would violate this requirement, We will allocate
the Net Premium to the Fixed Account and Sub-Accounts according to Your previous
premium allocation.
The owner receives several different types of notification as to what his
current premium allocation is. The initial allocation chosen by the owner is
shown in the contract. And, each transactional confirmation received after a
premium payment will show how that premium has been allocated. In addition, each
quarterly statement summarized the current premium allocation in effect for that
contract.
ACCUMULATION UNITS
Net Premiums allocated to the Sub-Accounts are used to credit Accumulation
Units to those Sub-Accounts. The number of Accumulation Units in each
Sub-Account to be credited to a Policy (including the initial allocation to
Hartford Money Market Sub-Account) and the amount credited to the Fixed Account
will be determined first by multiplying the Net Premium by the appropriate
allocation percentage to determine the portion to be invested in the Fixed
Account or Sub-Account. Each portion to be invested in a Sub-Account is then
divided by the then Accumulation Unit Value of that particular Sub-Account next
computed following receipt of the payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
Valuation Day by multiplying the Accumulation Unit Value of the particular
Sub-Account on the preceding Valuation Day by a Net Investment Factor for that
Sub-Account for the Valuation Period then ended. The Net Investment Factor for
each of the Sub-Accounts is equal to the net asset value per share of the
corresponding Fund at the end of the Valuation Period (plus the per share amount
of any dividend or capital gain distributions paid by that Fund 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.
All valuations in connection with a Policy, e.g., with respect to
determining Cash Value and Account Value and in connection with Policy Loans, or
calculation of Death Benefits, or with respect to determining the number of
Accumulation Units to be credited to a Policy with each premium payment, other
than the initial
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<PAGE>
premium payment, will be made on the date the request or payment is received by
ITT Hartford at the National Service Center if such date is a Valuation Day;
otherwise such determination will be made on the next succeeding date which is a
Valuation Day.
PREMIUM LIMITATION
If premiums are received which would cause the Policy to fail to meet the
definition of a life insurance policy in accordance with the Internal Revenue
Code, We will refund the excess premium payments. We will refund such premium
payments and interest thereon within 60 days after the end of a Policy Year.
Except for Scheduled Premiums that are required, a premium payment that
results in an increase in the Death Benefit greater than the amount of the
premium will be accepted only after We approve evidence of insurability.
CASH VALUES
As with traditional life insurance, each Policy will have a Cash Value. The
Cash Value is equal to the Account Value less any remaining Surrender Charges.
There is no minimum guaranteed Cash Value.
The Account Value of a policy changes on a daily basis and will be computed
on each Valuation Day. The Account Value will vary to reflect the investment
experience of the Sub-Accounts, and the interest credited to the Fixed and Loan
Accounts as well as the Monthly Deduction Amounts. The Account Value of a Policy
changes on a daily basis and will be computed on each Valuation Day. The Account
Value will vary to reflect the investment experience of the Sub-Accounts, and
the interest credited to the Fixed and Loan Accounts as well as the Monthly
Deduction Amounts. The Account Value of a particular Policy is related to the
net asset value of the Funds (as provided daily by each Fund's custodian)
associated with the Sub-Accounts, if any, to which premium payments on the
Policy have been allocated. The Account Value in the Sub-Accounts on any
Valuation Day is calculated by multiplying the number of Accumulation Units in
each Sub-Account as of the Valuation Day by the current Accumulation Unit Value
of that Sub-Account and then summing the result for all the Sub-Accounts. The
Account Value equals the Account Value in the Sub-Accounts plus the value of the
Fixed and Loan Accounts. The Cash Value is the Account Value minus any remaining
Surrender Charge. The Cash Surrender Values which is the net amount available
upon surrender of the Policy, is the Cash Value less any Indebtedness. See
"Detailed Description of Policy Benefits and Provisions -- Accumulation Unit
Values," page 12.
AMOUNT PAYABLE ON SURRENDER OF THE POLICY
As long as the Policy is in effect, a Policy Owner may elect, without the
consent of the Beneficiary (provided the designation of Beneficiary is not
irrevocable), to fully surrender the Policy. Upon surrender, the Policy Owner
will receive the Cash Surrender Value determined as of the day ITT Hartford
receives the Policy Owner's written request or the date requested by the Policy
Owner, whichever is later. The Cash Surrender Value equals the Cash Value less
any Indebtedness. The Policy will terminate on the date of receipt of the
written request, or the date the Policy Owner requests the surrender to be
effective, whichever is later.
LOAD REFUND
If a Policy is surrendered during the first two Policy Years, the Policy
Owner may be entitled to payment of a refund in addition to the Cash Surrender
Value.
The refund will be equal to the excess, if any, of the sum of the actual
front-end sales load charged to-date plus the Surrender Charge assessed upon
Surrender over:
1. the sum of 30% of payments in aggregate amount less than or equal to one
Guideline Annual Premium plus 10% of payments in aggregate amount greater
than one Guideline Annual Premium but not more than two Guideline Annual
Premiums; and
2. 9% of each payment made in excess of two Guideline Annual Premiums.
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PARTIAL WITHDRAWALS
After the Guarantee Period, partial withdrawals are allowed. The minimum
partial withdrawal allowed is $500.00. The maximum partial withdrawal is the
Cash Surrender Value, less $1,000.00. A partial withdrawal charge of up to
$50.00 may be charged. A maximum of twelve partial withdrawals are allowed each
Policy Year; however, only one (1) partial withdrawal is allowed between any
successive Monthly Activity Dates. The Face Amount is reduced by the amount of
the Partial Withdrawal. Unless specified otherwise, the Partial Withdrawal will
be deducted on a Pro Rata Basis from the Fixed Account and the Sub-Accounts.
TRANSFERS OF ACCOUNT VALUE
AMOUNT AND FREQUENCY OF TRANSFERS
Upon request and as long as the Policy is in effect, You may transfer
amounts among the Fixed Account and Sub-Accounts. Transfers may be made by
written request or by calling toll-free 1-800-231-5453. Transfers by telephone
may be made by the agent of record or by the attorney-in-fact pursuant to a
power of attorney. Telephone transfers may not be permitted in some states. The
policy of ITT Hartford and its agents and affiliates is that they will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be genuine. We will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; otherwise, We may be liable
for any losses due to unauthorized or fraudulent instructions. The procedures We
follow for transactions initiated by telephone include requirements that callers
provide certain identifying information for themselves (if not the Policy Owner)
and the Policy Owner. All transfer instructions by telephone are tape recorded.
The amounts which may be transferred and the number of transfers will be
limited by Our rules then in effect.
Currently there are no restrictions on transfers other than those described
below. There is no charge currently for the first four (4) transfers in any
Policy Year. Each subsequent transfer is subject to a $25 Transfer Charge.
We reserve the right at a future date to limit the size of transfers and
remaining balances, and to limit the number and frequency of transfers.
TRANSFERS TO OR FROM SUB-ACCOUNTS
In the event of a transfer from a Sub-Account, the number of Accumulation
Units credited to the Sub-Account from which the transfer is made will be
reduced. The reduction will be determined by dividing:
1. the amount transferred by,
2. the Accumulation Unit Value for that Sub-Account on the Valuation Day We
receive Your request for transfer In Writing.
In the event of a transfer to a Sub-Account, We will increase the number of
Accumulation Units credited to the Sub-Account. The increase will equal:
1. the amount transferred divided by,
2. the Accumulation Unit Value for that Sub-Account determined on the
Valuation Day We receive your request for transfer in writing.
TRANSFERS FROM THE FIXED ACCOUNT
In addition to the conditions above, transfers from the Fixed Account are
subject to the following:
(a)
the transfer must occur during the 30-day period following each Policy
Anniversary; and
(b)
if the Accumulated Value in Your Fixed Account exceeds $1,000, the amount
transferred in any Policy Year may be no larger than 25% of the
Accumulated Value in the Fixed Account on the date of transfer.
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POLICY LOANS
As long as the Policy is in effect, a Policy Owner may obtain, without the
consent of the Beneficiary (provided the designation of Beneficiary is not
irrevocable), a cash loan from ITT Hartford. The total Indebtedness at the time
of the new loan (including the accrued interest on prior loans plus the
currently applied for loan) may not exceed 90% of the Cash Value.
The amount of each loan will be transferred on a Pro Rata Basis from the
Fixed Account and each of the Sub-Accounts (unless the Policy Owner specifies
otherwise) to the Loan Account. The Loan Account is a mechanism used to ensure
that any outstanding Indebtedness remains fully secured by the Account Value.
LOAN INTEREST
Interest will accrue daily on the Indebtedness at the Policy Loan Interest
Rate indicated in the Policy. The difference between the value of the Loan
Account and the Indebtedness will be transferred on a Pro Rata Basis from the
Fixed Account and Sub-Accounts to the Loan Account on each Monthly Activity
Date.
CREDITED INTEREST
During the first ten Policy Years, any amounts in the Loan Account will be
credited with interest at a rate equal to the Policy Loan Rate, minus 2%. For
Policy Years 11 and beyond, except for Preferred Loans described below, the Loan
Account will be credited with interest at a rate equal to the Policy Loan Rate
applicable to that Indebtedness, minus 1%.
PREFERRED LOAN
If, any time after the tenth Policy Anniversary, the Cash Value exceeds the
total of all premiums paid since issue, a Preferred Loan is available. The
amount available for a Preferred Loan is the amount by which the Cash Value
exceeds total premiums paid. The amount of the Loan Account which equals a
Preferred Loan will be credited with interest at a rate equal to the Policy Loan
Rate. The amount of Indebtedness that qualifies as a Preferred Loan is
determined on each Monthly Activity Date.
LOAN REPAYMENTS
You can repay any part of or the entire loan at any time.
The amount of loan repayment will be deducted from the Loan Account and will
be allocated among the Fixed Account and Sub-Accounts in the same percentage as
premiums are allocated.
TERMINATION DUE TO EXCESSIVE INDEBTEDNESS
If total Indebtedness equals or exceeds the Cash Value, the Policy will
terminate 61 days after we have mailed notice to your last known address and
that of any assignees of record. If sufficient loan repayment if not made by the
end of this 61 day period, the Policy will end without value.
EFFECT OF LOANS ON ACCOUNT VALUE
A loan, whether or not repaid, will have a permanent effect on the Account
Value because the investment results of each Sub-Account will apply only to the
amount remaining in such Sub-Accounts. In addition, the rate of interest
credited to the Fixed Account will usually be different than the rate credited
to the Loan Account. The longer a loan is outstanding, the greater the effect is
likely to be. The effect could be favorable or unfavorable. If the Fixed Account
and Sub-Accounts earn more than the annual interest rate for funds held in the
Loan Account, a Policy Owner's Account Value will not increase as rapidly as it
would have had no loan been made. If the Fixed Account and Sub-Accounts earn
less than the Loan Account, the Policy Owners Account Value will be greater than
it would have been had no loan been made. Also, if not repaid, the aggregate
amount of the outstanding loan (i.e., the Indebtedness) will reduce the Death
Proceeds and Cash Surrender Value otherwise payable.
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DEATH BENEFIT
The Policies provide for the payment of the Death Proceeds to the named
Beneficiary when the Insured under the Policy dies. The Death Proceeds payable
to the Beneficiary equal the Death Benefit less any Indebtedness. The Death
Benefit depends on the Death Benefit Option selected by You.
DEATH BENEFIT OPTION
There are three Death Benefit Options: the Level Death Benefit Option, the
Return of Account Value Death Benefit Option and the Return of Premium Death
Benefit Option. Subject to the Minimum Death Benefit described below, the Death
Benefits under each option are:
1. Under the Level Death Benefit Option, the Death Benefit is the Face
Amount.
2. Under the Return of Account Value Death Benefit Option, the Death Benefit
is the Face Amount plus the Account Value.
3. Under the Return of Premium Death Benefit Option, the Death Benefit is
the Face Amount plus the sum of the Scheduled Premiums paid.
OPTION CHANGE
After the Guarantee Period, You may change the Return of Scheduled premium
or Return of Account Value Death Benefit to the Level Death Benefit. If that
option Change is elected, the Face Amount will become that amount available as a
Death Benefit immediately prior to the Option Change.
DEATH BENEFIT GUARANTEE
During the Guarantee Period, if all Scheduled Premiums are paid when due and
if Indebtedness does not exceed the Cash Value, the Policy will not terminate
due to insufficient Cash Surrender Value, regardless of the investment
experience of the Funds.
MINIMUM DEATH BENEFIT
Notwithstanding the above, there is a minimum Death Benefit equal to the
Account Value multiplied by a specified percentage. This percentage varies
according to the Insured's Issue Age, Attained Age, sex (where unisex rates are
not used), and insurance class and are specified in the Policy.
EXAMPLES OF THE MINIMUM DEATH BENEFIT:
<TABLE>
<CAPTION>
A B
----------- -----------
<S> <C> <C>
Face Amount......................................................................... $ 100,000 $ 100,000
Account Value on Date of Death...................................................... 46,500 34,000
Specified Percentage................................................................ 250% 250%
Death Benefit Option................................................................ Level Level
</TABLE>
In Example A, the minimum Death Benefit equals $116,250, i.e., the greater
of $100,000 (the Face Amount) or $116,250 (the Account Value at the Date of
Death of $46,500, multiplied by the specified percentage of 250%). This amount
less any outstanding loans constitutes the Death Proceeds which we would pay to
the Beneficiary.
In Example B, the death benefit is $100,000, i.e., the greater of $100,000
(the Face Amount) or $85,000 (the Account Value of $34,000 multiplied by the
specified percentage of 250%).
All or part of the Death Proceeds may be paid in cash or applied under a
"Payment Option." See "Other Matters -- Payment Options," page 32.
INCREASES AND DECREASES IN FACE AMOUNT
At any time after the Guarantee Period, You may request a change in the Face
Amount by writing to Us.
The minimum Face Amount for an increase or decrease will be based on Our
rules then in effect.
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<PAGE>
All requests to increase the Face Amount must be applied for on a new
application and accompanied by the Policy. All requests will be subject to
evidence of insurability satisfactory to Us. Any increase approved by Us will be
effective on the date shown on the new policy specifications page 42 provided
that the deduction for the Cost of Insurance for the first month is made. The
Monthly Administrative Fee on the first Monthly Activity Date on or after the
effective date of the increase will reflect a charge for the increase.
A decrease in the Face Amount will be effective on the Monthly Activity Date
following the date We receive the request. The remaining Face Amount must not be
less than Our minimum rules then in effect. Decreases will be applied:
(a)
to the most recent increase; then
(b)
successively to each prior increase, and then
(c)
to the Initial Face Amount.
If You ask to decrease Your Face Amount below the Initial Face Amount, We
will deduct a portion of any remaining Surrender Charge from Your Account Value.
This will be done on a Pro Rata Basis. Your Surrender Charge will be reduced by
the same amount.
The amount of the reduction will be equal to:
(a)
the Initial Face Amount minus the requested Face Amount, times
(b)
the Surrender Charge on the date of the request to change the Face Amount,
divided by
(c)
the Initial Face Amount.
We reserve the right to limit the number of increases or decreases made
under the Policy to no more than one in any 12 month period.
BENEFITS AT MATURITY
If the Insured is living on the "Maturity Date" (the anniversary of the
Policy Date on which the Insured is attained age 100), on surrender of the
Policy to ITT Hartford, ITT Hartford will pay to the Policy Owner the Cash
Surrender Value. On the Maturity Date, the Policy will terminate and ITT
Hartford will have no further obligations under the Policy.
LAPSE AND REINSTATEMENT
POLICY SURPLUS
We use the Policy Surplus to determine whether or not a policy will
terminate if Scheduled Premiums are not paid when due. If the Policy Surplus is
greater than zero for a Policy Year, the Scheduled Premiums may not be required.
If, however, the Policy Surplus for a Policy Year during the Guarantee Period is
zero, all Scheduled Premiums due in that year are required. Here is how we
determine the Policy Surplus.
The Policy Surplus for the first Policy Year is zero.
The Policy Surplus for each subsequent Policy Year is (a) minus (b), but
never less than zero where:
(a)
is the Account Value at the end of the previous Policy Year; and
(b)
is the Target Account Value for the previous Policy Year. The Target
Account Values are shown in the Policy.
The Target Account Value on each anniversary is the Account Value,
determined at issue, that would result on each anniversary assuming all Annual
Scheduled Premiums were paid when due (including the one due on that anniversary
for the next Policy Year), a 6% net yield on assets (after fund level charges
but before the mortality and expense risk charge is deducted) and current cost
of insurance and expense charges.
Once determined for a given Policy Year, the Policy Surplus remains constant
for the entire Policy Year.
17
<PAGE>
LAPSE AND GRACE PERIOD
During the Guarantee Period: If, on any given Monthly Activity Date the
Policy Surplus for that Policy Year is zero or less than the Indebtedness, all
Scheduled Premiums due in that Policy Year, on or before that date are required
to keep the Policy in force. For any such required Scheduled Premium not paid on
or before its due date, We will allow a grace period which ends 61 days after
that Monthly Activity Date. During this time the Policy will continue in force.
If any such required Scheduled Premium is not paid by the end of this grace
period, the Policy will terminate except as provided under the Non-Forfeiture
Options or unless You have elected the Automatic Premium Loan Option and there
is sufficient Cash Value to cover the amounts due.
After the Guarantee Period: The Policy may terminate 61 days after a Monthly
Activity Date on which the Cash Surrender Value is less than zero. The 61-day
period is the Grace Period. If sufficient premium is not paid by the end of the
Grace Period, the Policy will terminate without value. ITT Hartford will mail
the Owner and any assignee written notice of the amount of premium that will be
required to continue the Policy in force at least 61 days before the end of the
Grace Period. The premiums required will be no greater then the amount required
to pay three Monthly Deduction Amounts as of the day the Grace Period began. If
that premium is not paid by the end of the Grace Period, the policy will
terminate.
REINSTATEMENT
Prior to the death of the Insured, and unless the Policy has been
surrendered for cash, the Policy may be reinstated prior to the Maturity Date,
provided:
(a)
You make Your request within five years;
(b)
satisfactory evidence of insurability is submitted;
(c)
You pay all overdue required Scheduled Premiums, if any; and
(d)
if, at the time of reinstatement, the Guarantee Period has expired, and,
if the amount paid in
(e)
is insufficient to do so, sufficient premium must be paid to:
(i) cover all Monthly Deduction Amounts that are due and unpaid during
the Grace Period, and
(ii) keep the Policy in force for three months after the date of
reinstatement.
The Face Amount of the reinstated Policy cannot exceed the Face Amount at
the time of lapse. The Account Value on the reinstatement date will reflect:
(a)
The Account Value at the time of termination; plus
(b)
Net Premiums attributable to premiums paid at the time of reinstatement;
minus
(c)
a charge to reflect the benefits, if any, provided under the Extended Term
or Reduced Paid-Up Options.
The Surrender Charges for the reinstated policy will be the same as they
would have been on the original policy had no lapse and subsequent reinstatement
taken place.
Upon reinstatement, any Indebtedness at the time of termination must be
repaid or carried over to the reinstated Policy.
AUTOMATIC PREMIUM LOAN OPTION
If You elect this option, We will automatically process a Policy Loan to pay
any Scheduled Premium which is due and not paid by the end of its grace period
following the due date. You may elect this option in the application or by
requesting it In Writing while no Scheduled Premium is outstanding beyond its
due date.
The Automatic Premium Loan Option will not be available if:
(a)
You have revoked the election In Writing; or
(b)
the loan amount needed to pay any unpaid Scheduled Premium would exceed
the Cash Surrender Value on the most recent Scheduled Premium due date.
In either instance, the Surrender/Continuation Options will apply as of the
end of the Grace Period.
18
<PAGE>
THE RIGHT TO EXAMINE THE POLICY
An Applicant has a limited right to return a Policy for cancellation. If the
Policy is returned, by mail or personal delivery to ITT Hartford or to the agent
who sold the Policy, to be canceled within ten days after delivery of the Policy
to the Policy Owner, within 10 days of Hartford Life's mailing or personal
delivery of a Notice of Right to Withdraw or within 45 days of completion of the
Policy application, (whichever is later, and subject to applicable state
regulation), ITT Hartford will return to the Applicant, within seven days
thereafter, the greater of the premium paid, less any Indebtness, or the sum of
(1) the Account Value, less any Indebtness, on the date the returned policy is
received by ITT Hartford or its agent and (2) any deductions under the policy or
by the Funds for taxes, charges or fees.
Once the Policy is in effect, it may be exchanged during the first 24 months
after its issuance, for a non-variable life insurance policy offered by Us or an
affiliate on the life of the insureds. No evidence of insurability will be
required. The new policy will have an amount at risk which equals or is less
than the amount or risk in effect on the date of exchange. Premiums under the
new policy will be based on the same risk classifications as this Policy. An
exchange of the Policy under those circumstances should be a tax-free
transaction under Section 1035 of the Code.
SURRENDER/CONTINUATION OPTIONS
At any time prior to the Maturity Date, provided the Policy has a Cash
Surrender Value, You may choose to have the Cash Surrender Value applied under
one of the following options:
OPTION A -- Surrender for Cash
OPTION B -- Continue as Extended Term Insurance
OPTION C -- Continue as Paid-Up Insurance
In addition, if during the Guarantee Period:
(a)
a Scheduled Premium which is required is not paid by the end of the Grace
Period; and
(b)
the Automatic Premium Loan Option is not elected or not available due to
insufficient Cash Surrender Value.
You may choose one of the above options. You may notify Us of Your choice In
Writing within 61 days after the due date of the outstanding Scheduled Premium.
In the absence of such notification, We will automatically apply the Cash
Surrender Value to Option B unless the insurance class shown in your Policy is
"special" in which case the automatic Option will be Option C. If the Policy has
no Cash Surrender Value, it will terminate at the end of the Grace Period.
WHEN EFFECTIVE -- The effective date of this benefit will be the earlier of:
(a)
the date We receive Your request; or
(b)
the end of the Grace Period.
When a Surrender/Continuation Option becomes effective, all benefit riders
attached to the Policy will terminate unless otherwise provided in the Rider.
OPTION DESCRIPTIONS
OPTION A -- Surrender for Cash
If You choose this option, You must surrender the policy to Us. We will pay
You the Cash Surrender Value at the time of surrender, and Our liability under
the Policy will cease.
OPTION B -- Continue as Extended Term Insurance.
This option is not available unless the insurance class shown in the Policy
is "Standard" or "Preferred." If you choose this option, the Extended Term
Insurance Death Benefit will be the Death Benefit in effect on the effective
date of the non-forfeiture benefit less any Indebtedness. The term period will
begin on the effective
19
<PAGE>
date of this benefit and will extend for a period of time equal to that which
the Cash Surrender Value will provide as a net single premium at the Insured's
then Attained Age. At the end of that term period, Our liability under the
policy will cease. We will pay You any Cash Surrender Value not used to provide
Extended Term Insurance.
OPTION C -- Continue as Paid-Up Insurance.
If You choose this option, the Policy will continue as Paid-Up Life
Insurance. The amount of Paid-Up Life Insurance will be calculated using the
Cash Surrender Value of the Policy as a net single premium as of the effective
date of this benefit at the then Attained Age of the Insured. ITT Hartford
reserves the right to require evidence of insurability or limit the amount of
the benefit if the Paid-Up amount exceeds the Death Benefit in effect on the
effective date of this benefit. We will pay You any Cash Surrender Value not
used to provide Paid-Up Insurance.
If the Policy is continued under Option B or Option C above, the Cash
Surrender Value available within 30 days after any Policy Anniversary will not
be less than the Cash Value on such Policy Anniversary minus any Indebtedness.
VALUATION OF PAYMENTS AND TRANSFERS
We value the Policy on every Valuation Day.
We will pay Death Proceeds, Cash Surrender Values, Partial Withdrawals, and
loan amounts attributable to the Sub-Accounts within seven (7) days after We
receive all the information needed to process the payment unless the New York
Stock Exchange is closed for other than a regular holiday or weekend, trading is
restricted by the Securities and Exchange Commission (SEC) or that the SEC
declares that an emergency exists.
ITT Hartford may defer payment of any amounts not attributable to the
Sub-Accounts for up to six months from the date on which we receive the request.
APPLICATION FOR A POLICY
Individuals wishing to purchase a Policy must submit an application to ITT
Hartford. Within limits, an applicant may choose the Scheduled Premiums and the
Initial Face Amount and the Guarantee Period. A Policy generally will be issued
only on the lives of insureds age 80 and under who supply evidence of
insurability satisfactory to ITT Hartford. Acceptance is subject to ITT
Hartford's underwriting rules and ITT Hartford reserves the right to reject an
application for any reason. No change in the terms or conditions of a Policy
will be made without the consent of the Policy Owner.
The Policy will be effective on the Policy Date only after ITT Hartford has
received all outstanding delivery requirements and received the initial premium.
The Policy Date is the date used to determine all future cyclical transactions
on the Policy, e.g., Monthly Activity Date, Policy Months and Policy Years.
REDUCED CHARGES FOR ELIGIBLE GROUPS
Certain of the charges and deductions described below may be reduced for
Policies issued in connection with a specific plan in accordance with Our rules
in effect as of the date an application for a Policy is approved. To qualify for
such a reduction, a plan must satisfy certain criteria as to, for example, size
of the plan, expected number of participants and anticipated premium payment
from the plan. Generally, the sales contacts and effort, administrative costs
and mortality cost per Policy vary based on such factors as the size of the
plan, the purposes for which Policies are purchased and certain characteristics
for the plan's members. The amount of reduction and the criteria for
qualification will reflect in the reduced sales effort and administrative costs
resulting from, and the different mortality experience expected as a result of,
sales to qualifying plans. We may modify from time to time on a uniform basis
both the amounts of reductions and the criteria for qualification. Reductions in
these charges will not be unfairly discriminatory against any person, including
the affected Policy Owners funded by Separate Account VL I.
20
<PAGE>
DEDUCTIONS FROM THE PREMIUM
Before the allocation of the premium payment to the Account Value, a
deduction as a percentage of premium is made for the front-end sales load and
premium taxes. The amount of each premium allocated to the Account Value is your
Net Premium.
FRONT-END SALES LOAD
The front-end sales load of the premium deduction is based on the level of
Scheduled Premiums, the length of the Guarantee Period, and the amount of any
Unscheduled Premiums paid.
The maximum front-end sales load percentages for Policies are 50% of the
premiums paid in the first Policy Year, 11% in Policy Years 2 through 10, and 3%
in Policy Years 11 and later.
For all Guarantee Periods, the maximum amount of premium paid in any Policy
Year that is subject to a front-end sales load is the Guideline Annual Premium.
In addition, if Scheduled Premiums are less than the Guideline Annual Premiums,
the maximum amount of premium paid in the first Policy Year subject to a front-
end sales load is the Scheduled Premium.
The actual schedule of front-end sales loads for any given Policy is
specified in that Policy.
Generally, the shorter the Guarantee Period, the lower the front-end sales
loads. The levels range from those for the ten-year Guarantee Period cited above
to 0% on a contract with a One Year Guarantee Period. However, there are other
contractual charges that are lower for longer Guarantee Periods. See "Guarantee
Period" for a further description.
For an example of the effect of Front-End Sales Loads, see "Examples of
Front-End Sales Loads and Surrender Charges," page 23.
PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover taxes assessed against ITT
Hartford that are attributable to premiums. This percentage will vary by locale
depending on the tax rates in effect there.
DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE
MONTHLY DEDUCTION AMOUNTS
On the Policy Date and on each subsequent Monthly Activity Date, ITT
Hartford will deduct an amount (the "Monthly Deduction Amount") from the Account
Value to cover certain charges and expenses incurred in connection with a
Policy. Each Monthly Deduction Amount will be deducted on a Pro Rata Basis from
the Fixed Account and each of the Sub-Accounts. The Monthly Deduction Amount
will vary from month to month.
The Monthly Deduction Amount equals:
(a)
the charge for the Cost of Insurance; plus
(b)
the charges for additional benefits provided by rider, if any; plus
(c)
the charges for "special" insurance class rating, if any; plus
(d)
the Monthly Administrative Fee; plus
(e)
the Mortality and Expense Risk Charge
(a) COST OF INSURANCE CHARGE
The charge for the Cost of Insurance is equal to:
(i) the Cost of Insurance rate per $1,000; multiplied by
(ii) the amount at risk; divided by
(iii) $1,000
The amount at risk equals the Death Benefit less the Account Value on
that date, prior to assessing the Monthly Deduction Amount.
21
<PAGE>
The cost of insurance charge is to cover ITT Hartford's anticipated
mortality costs. For standard risks, the cost of insurance rate will not
exceed those based on the 1980 Commissioners Standard Ordinary Mortality
Table. A table of guaranteed cost of insurance rates per $1,000 will be
included in each Policy; however, ITT Hartford reserves the right to use
rates less than those shown in the table. Substandard risks will be charged
a higher cost of insurance rate that will not exceed rates based on a
multiple of the 1980 Commissioners Standard Ordinary Mortality Table. The
multiple will be based on the insured's risk class. ITT Hartford will
determine the cost of insurance rate at the start of each Policy Year. Any
changes in the cost of insurance rate will be made uniformly for all
insureds in the same risk class.
Because the Account Value and the Death Benefit Amount under a Policy
may vary from month to month, the cost of insurance charge may also vary on
each Monthly Activity Date.
(b) RIDER CHARGE
If the policy includes riders, a charge is made applicable to the riders
from the Account Value on each Monthly Activity Date.
The charge applicable to these riders is to compensate ITT Hartford for
anticipated cost of providing these benefits and are specified on the
applicable rider.
The Riders available are described on page 33 under "Supplemental
Benefits" section.
(c) SPECIAL CLASS CHARGE
A charge for a special insurance class rating of the Insured may be made
against the Account Value, if applicable. This charge is to compensate ITT
Hartford for the additional mortality risk associated with individuals in
these classes.
(d) MONTHLY ADMINISTRATIVE FEE AND OTHER EXPENSE CHARGES AGAINST
SUB-ACCOUNTS
ITT Hartford will assess a monthly administrative charge to compensate
ITT Hartford for administrative costs in connection with the Policies. This
charge will be $8.33 per month initially and is guaranteed never to exceed
that level during the Guarantee Period. After the Guarantee Period, this
charge is guaranteed never to exceed $12.00 per month. This charge covers
the average expected cost for these expenses.
In addition, in the first Policy Year, there is a monthly first year
charge to compensate ITT Hartford for the up-front costs to underwrite and
issue a policy. This additional first year charge, subject to certain
maximums, is equal to $8.33 per month plus an amount that varies by issue
age and the Initial Face Amount (IFA). This additional first year charge and
the maximums are summarized in the chart below for some sample ages.
<TABLE>
<CAPTION>
MAXIMUM MONTHLY
ISSUE AGE ADDITIONAL FIRST YEAR MONTHLY CHARGE AMOUNT
- ---------- ----------------------------------------- -----------------
<C> <S> <C>
25 $8.33 plus $.0333 per $1,000 of IFA $ 50.00
35 $8.33 plus $.0375 per $1,000 of IFA $ 54.17
45 $8.33 plus $.0417 per $1,000 of IFA $ 62.50
55 $8.33 plus $.0625 per $1,000 of IFA $ 62.50
65 $8.33 plus $.0708 per $1,000 of IFA $ 62.50
</TABLE>
(e) MORTALITY AND EXPENSE RISK CHARGE
A charge is made for mortality and expense risks assumed by ITT
Hartford. This charge is allocated to ITT Hartford's general account. ITT
Hartford may profit from this charge. See also, "Policy Benefits and Rights
-- Cash Value," page 13.
The Mortality and Expense Risk Charge for any Monthly Activity Date is
equal to:
(i) the Mortality and Expense Risk Rate; multiplied by
(ii) the portion of the Account Value allocated to the Sub-Account on
the Monthly Activity Date prior to assessing the Monthly Deduction Amount.
The Mortality and Expense Risk Rate on any give Contract will be the
same both during and after the Guarantee Period.
22
<PAGE>
The longer the Guarantee Period, the lower the Mortality and Expense
Risk Rate. The levels range from .90% annually for a Policy with a one-year
Guarantee Period and this level decreases proportionately as the Guarantee
Period gets longer to .60% on a Policy with a ten-year Guarantee Period.
There are other contractual charges that are higher for longer Guarantee
Periods. See "Guarantee Period" for a fuller description.
The mortality risk assumed is that the actual cost of insurance charges
specified in the Policy will be insufficient to meet actual claims. ITT
Hartford also assumes the risk of the Death Benefit Guarantee during the
Guarantee Period. See "Detailed Description of Policy Benefits and
Provisions -- Death Benefit Guarantee", page 16. The expense risk assumed is
that expenses incurred in issuing and administering the Policies will exceed
the Administrative charges set in the Policy.
SURRENDER CHARGES
A contingent deferred sales load ("Surrender Charge") is assessed against
the Account Value of a Policy if the Policy lapses or is surrendered during the
first nine Policy Years. The amount of the Surrender Charge applicable during
the first Policy Year is established by ITT Hartford based on the premiums paid
during the first year and the length of the Guarantee Period chosen by the
Policy Owner. Subject to certain limits imposed by state insurance law, the
Surrender Charge decreases by an equal amount each Policy Year until it reaches
zero during the tenth Policy Year.
Specifically, the maximum first year Surrender Charge under a Policy is
equal to the sum of (i) a specified percentage of the Scheduled Premium up to
the Guideline Annual Premium and (ii) 5% of the excess, of the first year
premium over the Guideline Annual Premium. The longer the Guarantee Period, the
higher the percentage is which is used in the preceding calculation. This
percentage is equal to 110% with respect to Policies with a ten-year Guarantee
Period and decreases as the Guarantee Period chosen decreases to 10% for
Policies with a one-year Guarantee Period. However, there are other contractual
charges that are lower for longer Guarantee Periods. See "Guarantee Period" for
a fuller description.
The actual schedule of Surrender Charges for any given Policy is set forth
in that Policy. In addition, sales agents will provide, upon request, the
schedule of Surrender Charges which would apply under any given circumstances.
The aggregate front-end sales load and Surrender Charge assessed if a Policy
lapses or is surrendered (i.e., the total sales load) will not exceed the sales
load limitations specified by the Securities and Exchange Commission. Generally,
the total sales load under the Policy will not exceed 180% of the Guideline
Annual Premium, or 9% of the sum of the Guideline Annual Premium that would be
paid over a 20-year period. In cases where the anticipated life expectancy of
the insured(s) named in the Policy is less than 20 years, the total sales load
will not exceed 9% of the sum of the Guideline Annual Premiums for the shorter
period.
For an example of the effect of Surrender Charges, see "Examples of
Front-End Sales Loads and Surrender Charges", see below.
EXAMPLES OF FRONT-END SALES LOADS AND SURRENDER CHARGES
An example of the actual Front-End Sales Loads and Surrender Charge schedule
as well as and the impact of the refund of the sales load, if any, (see "Load
Refund" on page 13) for a Policy with a ten-year Guarantee Period is shown
below. This example uses the same specific information (i.e., issue age, face
amount, premium level etc.) as the illustration on page 42 of the prospectus.
<TABLE>
<S> <C>
Death Benefit Option: Level
Face Amount: $250,000
Guarantee Period: 10 years
Charges Assumed: Current
Issue Age/Sex/Class: 45/Male/Preferred
$4,000.00 per
Scheduled Premium: year
Guideline Annual Premium: $4,819.38
Assumed Gross Annual Investment Return: 0%
</TABLE>
The Total Cumulative Sales Load column on the far right represents the sum
of all loads which would have been assessed since the issue of the policy
assuming a surrender of the Policy at the end of the corresponding policy year.
23
<PAGE>
This is:
a)The sum of the Cumulative Front-End Sales Load, plus
b)The actual Surrender Charge for that Policy Year, minus
c)The Sales Load Refund, if any, applicable to that Policy year. (see "Cash
Values -- Load Refund".)
Additional Charges/Credits if Surrendered
<TABLE>
<CAPTION>
SURRENDER CHARGES
- -----------------------------------------------------------------------------------------
CUMULATIVE TOTAL
FRONT-END MAXIMUM YEAR END ACTUAL SALES CUMULATIVE
SALES SURRENDER ACCOUNT SURRENDER LOAD SALES LOAD IF
POLICY YEAR LOAD CHARGE VALUE CHARGE REFUND SURRENDERED**
- ----------- ----------- ----------- --------- ----------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 2,000 $ 4,400 $ 1,232 $ 1,232 $ 2,032 $ 1,200
2 2,440 3,911 4,074 3,911 4,590 1,791
3 2,880 3,422 6,764 3,422 0 6,302
4 3,320 2,933 9,345 2,933 0 6,253
5 3,760 2,444 11,843 2,444 0 6,204
6 4,200 1,956 14,274 1,956 0 6,156
7 4,640 1,467 16,645 1,467 0 6,107
8 5,080 978 18,971 978 0 6,058
9 5,520 489 21,246 489 0 6,009
10 5,960 0 23,456 0 0 5,960
11 6,080 0 25,850 0 0 6,080
</TABLE>
*The Actual Surrender Charge assessed is the smaller of:
a)The contractual maximum surrender charge, or
b)Year-End Account Value
**Assumes a surrender of the Policy at the end of that Policy Year
An example of the actual Front-End Sales Loads and Surrender Charge schedule
as well as the impact of the refund of the sales load, if any, (see "Load
Refund" on page 13) for a Policy with a one-year Guarantee Period is shown
below. This example uses the same specific information (i.e., issue age, face
amount, premium level) as the illustration on page 42 of the prospectus.
<TABLE>
<S> <C>
Death Benefit Option: Level
Face Amount: $250,000
Guarantee Period: 1 Year
Charges Assumed: Current
Issue Age/Sex/Class: 45/Male/Preferred
$4,000.00 per
Scheduled Premium: year
Guideline Annual Premium: $4,819.38
Assumed Hypothetical Gross Annual Investment
Return: 0%
</TABLE>
The Total Cumulative Sales Load column on the far right represents the sum
of all loads which would have been assessed since the issue of the Policy
assuming a surrender of the Policy at the end of the corresponding Policy Year.
This is:
a)The sum of the Cumulative Front-End Sales Load, plus
b)The Actual Surrender Charge for that Policy Year, minus
c)The Sales Load Refund, if any, applicable to that Policy Year. (see "Cash
Values -- Load Refund")
24
<PAGE>
Additional Charges/Credits if Surrendered
<TABLE>
<CAPTION>
SURRENDER CHARGES
- -----------------------------------------------------------------------------------------
CUMULATIVE TOTAL
FRONT-END MAXIMUM YEAR END ACTUAL SALES CUMULATIVE
SALES SURRENDER ACCOUNT SURRENDER LOAD SALES LOAD IF
POLICY YEAR LOAD CHARGE VALUE CHARGE REFUND SURRENDERED**
- ----------- ----------- ----------- --------- ----------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 0 $ 400 $ 3,169 $ 400 $ 0 $ 400
2 0 355 6,361 355 0 355
3 0 311 9,381 311 0 311
4 0 267 12,273 267 0 267
5 0 222 15,067 222 0 222
6 0 178 17,780 178 0 178
7 0 133 20,422 133 0 133
8 0 89 23,008 89 0 89
9 0 44 25,529 44 0 44
10 0 0 27,976 0 0 0
11 0 0 30,273 0 0 0
</TABLE>
*The Actual Surrender Charge assessed is the smaller of:
a)The contractual maximum surrender charge, or
b)Year-End Account Value
**Assumes a surrender of the Policy at the end of that Policy Year
The total Cumulative Sales Load column on the far right represents the sum
of all loads which would have been assessed since the issue of the Policy
assuming a surrender on the Policy at the end of the corresponding Policy Year.
This is:
a)The sum of the Cumulative Front-End Load, plus
b)The actual Surrender Charge for that Policy Year, minus
c)The Sales Load Refund, if any, applicable to that Policy Year. (see "Cash
Values -- Load Refund")
CHARGES AGAINST THE FUNDS
The investment advisers charge the Funds a daily investment management fee
as compensation for services. The following Table shows the fee charged for each
Fund available for investment by Policy Owners.
<TABLE>
<CAPTION>
ANNUAL INVESTMENT MANAGEMENT
AS A PERCENTAGE OF AVERAGE
HARTFORD FUNDS DAILY NET ASSETS
- ---------------------------------------------------------- ------------------------------------------------------------
<S> <C>
Hartford Capital Appreciation Fund, Inc.,
Hartford Advisers Fund, Inc.,
Hartford International Opportunities Fund, Inc.,
Hartford Dividend and Growth Fund, Inc.................. .575% of the first $250 million of average net assets
.525% of the next $250 million of average net assets
.475% of the next $250 million of average net assets
.425% of any amount over $1.0 billion
Hartford Bond Fund, Inc.,
Hartford Stock Fund, Inc................................ .325% of the first $250 million of average net assets
.300% of the next $250 million of average net assets
.275% of the next $250 million of average net assets
.250% of any amount over 1.0 billion
Hartford Index Fund, Inc.................................. .20%
Hartford Mortgage Securities Fund, Inc.,
HVA Money Market Fund, Inc.............................. .25%
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
ANNUAL INVESTMENT MANAGEMENT
AS A PERCENTAGE OF AVERAGE
PUTNAM FUNDS DAILY NET ASSETS
- ---------------------------------------------------------- ------------------------------------------------------------
PCM Diversified Income Fund,
PCM Global Asset Allocation Fund,
PCM High Yield Fund,
PCM New Opportunities Fund and
PCM Voyager Fund........................................ .70% of the first $500 million of average net assets
.60% of the next $500 million of average net assets
.55% of the next $500 million of average net assets
.50% of any amount over $1.5 billion
<S> <C>
PCM Growth and Income Fund................................ .65% of the first $500 million of average net assets
.55% of the next $500 million of average net assets
.50% of the next $500 million of average net assets
.45% of any amount over $1.5 billion
PCM Money Market Fund..................................... .45% of the first $500 million of average net assets
.35% of the next $500 million of average net assets
.30% of the next $500 million of average net assets
.25% of any amount over $1.5 billion
PCM U.S. Government and
High Quality Bond Fund.................................. .65% of the first $500 million of average net assets
.55% of the first $500 million of average net assets
.50% of the next $500 million of average net assets
.45% of the next $5 billion of average net assets
.425% of the first $5 billion of average net assets
.405% of the first $5 billion of average net assets
.39% of the next $5 billion of average net assets
.38% of any excess thereafter
PCM Global Growth Fund and PCM Utilities Growth and Income
Fund.................................................... .60%
<CAPTION>
ANNUAL INVESTMENT MANAGEMENT
AS A PERCENTAGE OF AVERAGE
FIDELITY FUNDS DAILY NET ASSETS
- ---------------------------------------------------------- ------------------------------------------------------------
<S> <C>
Equity-Income Portfolio................................... .52%
Overseas Portfolio........................................ .77%
Asset Manager Portfolio................................... .72%
</TABLE>
TAXES
Currently, no charge is made to Separate Account VL I for federal state, and
local taxes that may be attributable to Separate Account VL I. A change in the
applicable federal, state or local tax laws which impose tax on ITT Hartford
and/or Separate Account VL I may result in a charge against the Policy in the
future. Charges for other taxes, if any, attributable to Separate Account VL I
may also be made.
THE COMPANY
ITT Hartford Life and Annuity Insurance Company ("ITT Hartford"), formerly
ITT Life Insurance Corporation, was originally incorporated under the laws of
Wisconsin on January 9, 1956. ITT Hartford was redomiciled to Connecticut on May
1, 1996. It is a stock life insurance company engaged in the business of writing
both individual and group life insurance and annuities in all states including
the District of Columbia, except New York. The offices of ITT Hartford are
located in Minneapolis, Minnesota; however, its mailing address is P.O. Box
2999, Hartford, Connecticut 06104-2999.
ITT Hartford is a wholly owned subsidiary of Hartford Life Insurance
Company. ITT Hartford is ultimately 100% owned by Hartford Fire Insurance
Company, one of the largest multiple lines insurance carriers in the United
States. On December 20, 1995, Hartford Fire Insurance Company became an
independent, publicly traded corporation.
ITT Hartford is rated A+ (superior) by A.M. Best and Company, Inc. on the
basis of its financial soundness and operating performance. ITT Hartford is
rated AA+ by both Standard & Poor's and Duff and Phelps
26
<PAGE>
on the basis of its claims paying ability. These ratings do not apply to the
performance of the Separate Account. However, the policy obligations under this
variable life insurance policy are the general corporate obligations of ITT
Hartford. These ratings do apply to ITT Hartford's ability to meet its insurance
obligations under the policy.
SEPARATE ACCOUNT VL I
GENERAL
Separate Account VL I is a separate account of ITT Hartford established on
June 8, 1995 pursuant to the insurance laws of the State of Connecticut and
organized as a unit investment trust registered with the Securities and Exchange
Commission under the Investment Company Act of 1940. Under Connecticut law, the
assets of Separate Account VL I are held exclusively for the benefit of Policy
Owners and persons entitled to payments under the Policies. The assets for
Separate Account VL I are not chargeable with liabilities arising out of any
other business which ITT Hartford may conduct. ITT Hartford is the depositor of
separate accounts other than Separate Account VL I.
FUNDS
The assets of each Sub-Account of Separate Account VL I are invested
exclusively in one of the Funds. A Policy Owner may allocate premium payments
among the Sub-Accounts. Policy Owners should review the following brief
descriptions of the investment objectives of each of the Funds in connection
with that allocation. There is no assurance that any of the Funds will achieve
its stated objectives. Policy Owners are also advised to read the prospectuses
for each of the Funds accompanying this prospectus for more detailed
information.
HARTFORD FUNDS
HARTFORD ADVISERS FUND, INC.
To achieve maximum long term total rate of return consistent with prudent
investment risk by investing in common stock and other equity securities, bonds
and other debt securities, and money market instruments. The investment adviser
will vary the investments of the Fund among equity and debt securities and money
market instruments depending upon its analysis of market trends. Total rate of
return consists of current income, including dividends, interest and discount
accruals and capital appreciation.
HARTFORD BOND FUND, INC.
To achieve maximum current income consistent with preservation of capital by
investing primarily in bonds.
HARTFORD CAPITAL APPRECIATION FUND, INC.
To achieve growth of capital by investing in equity securities and
securities convertible into equity securities selected solely on the basis of
potential for capital appreciation; income, if any, is an incidental
consideration.
HARTFORD DIVIDEND AND GROWTH FUND, INC.
To achieve a high level of current income consistent with growth of capital
and reasonable investment risk by investing primarily in equity securities and
securities convertible into equity securities.
HARTFORD INDEX FUND, INC.
To provide investment results which approximate the price and yield
performance of publicly-traded common stocks in the aggregate, as represented by
the Standard & Poor's 500 Composite Stock Price Index.*
* "STANDARD & POOR'S-REGISTERED TRADEMARK-", "S&P-REGISTERED TRADEMARK-", "S&P
500-REGISTERED TRADEMARK-", "STANDARD & POOR'S 500", AND "500" ARE TRADEMARKS
OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD
LIFE INSURANCE COMPANY AND AFFILIATES. THE HARTFORD INDEX FUND, INC. ("INDEX
FUND") IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S
("S&P") AND S&P MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF
INVESTING IN THE INDEX FUND.
27
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
To achieve long-term total return consistent with prudent investment risk
through investment primarily in equity securities issued by foreign companies.
HARTFORD MORTGAGE SECURITIES FUND, INC.
To achieve maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related securities,
including securities issued by the Government National Mortgage Association
("GNMA").
HARTFORD STOCK FUND, INC.
To achieve long-term capital growth primarily through capital appreciation,
with income a secondary consideration, by investing in equity securities and
securities convertible into equity securities.
HVA MONEY MARKET FUND, INC.
To achieve maximum current income consistent with liquidity and preservation
of capital by investing in money market securities.
PUTNAM FUNDS
PCM DIVERSIFIED INCOME FUND
Seeks high current income consistent with capital preservation by investing
in the following three sectors of the fixed income securities markets: U.S.
Government Sector, High Yield Sector (which invests primarily in what are
commonly referred to as "junkbonds"), and International Sector. See the Special
Considerations for investments in high yield securities disclosed in the Fund
prospectus.
PCM GLOBAL ASSET ALLOCATION FUND
Seeks a high level of long-term total return consistent with preservation of
capital by investing in U.S. equities, international equities, U.S. fixed income
securities, and international fixed income securities.
PCM GLOBAL GROWTH FUND
Seeks capital appreciation through a globally diversified common stock
portfolio.
PCM GROWTH AND INCOME FUND
Seeks capital growth and current income by investing primarily in common
stocks that offer potential for capital growth, current income, or both.
PCM HIGH YIELD FUND
Seeks high current income by investing primarily in high-yielding, Putnam
Investment Management, Inc ("Putnam Management") lower-rated fixed income
securities (commonly referred to as junk bonds), constituting a diversified
portfolio which believes does not involve undue risk to income or principal,
capital growth is a secondary objective when consistent with high current
income. See the special considerations for investments in high yield securities
described in the Fund prospectus.
PCM MONEY MARKET FUND
Seeks to achieve as high a level of current income as Putnam Management
believes is consistent with preservation of capital and maintenance of liquidity
by investing in high-quality money market securities.
PCM NEW OPPORTUNITIES FUND
Seeks long-term capital appreciation by investing principally in common
stocks of companies in sectors of the economy which Putnam Management believes
possess above average long-term growth potential.
28
<PAGE>
PCM U.S. GOVERNMENT AND HIGH QUALITY BOND FUND
Seeks current income consistent with preservation of capital by investing
primarily in securities issued or guaranteed as to principal and interest by the
U.S. Government or by its agencies or instrumentalities and in other debt
obligations rated at least A by Standard & Poor's or Moody's or, if not rated,
determined by Putnam Management to be of comparable quality.
PCM UTILITIES GROWTH AND INCOME FUND
Seeks capital growth and current income by concentrating its investments in
securities issued by companies in the public utilities industries.
PCM VOYAGER FUND
Aggressively seeks capital appreciation primarily from a portfolio of common
stocks which Putnam Management believes have potential for capital appreciation
which is significantly greater than that of market averages.
FIDELITY FUNDS
EQUITY-INCOME PORTFOLIO
To seek reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the Portfolio will also consider the
potential for capital appreciation. The Portfolio's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the Standard &
Poor's Daily Stock Price Index of 500 Common Stocks. The Portfolio may invest in
high yielding, lower-rated securities (commonly referred to as "junk bonds")
which are subject to greater risk than investments in higher-rated securities.
For a further discussion of lower-rated securities, please see "Risks of
Lower-Rated Debt Securities" in the Fidelity prospectus for this Portfolio.
OVERSEAS PORTFOLIO
To seek long-term growth of capital by investing primarily in securities of
issuers whose principal activities are outside of the United States. The
Portfolio expects to invest a majority of its assets in equity securities, but
may invest in debt securities of any quality.
ASSET MANAGER PORTFOLIO
To seek high total return with reduced risk over the long-term by allocating
its assets among stocks, bonds and short-term fixed-income instruments.
The Hartford Funds are organized as corporations under the laws of the State
of Maryland and are registered as diversified open-end management companies
under the Investment Company Act of 1940. The Putnam Funds are organized as a
business trust fund or the laws of Massachusetts and are organized as an
open-end series investment company under the Investment Company Act of 1940. The
Fidelity Funds involve two diversified open-end management investment companies,
each with multiple portfolios and organized as a Massachusetts business trust.
The Equity-Income Portfolio and Overseas Portfolio are portfolios of the
Variable Insurance Products Fund. The Asset Manager Portfolio is a portfolio of
the Variable Insurance Products Fund II. Each Fund continually issues an
unlimited number of full and fractional shares of beneficial interest in the
Fund. Such shares are offered to separate accounts, including Separate Account
VL I, established by ITT Hartford or one of its affiliated companies
specifically to fund the Policies and other policies issued by ITT Hartford or
its affiliates as permitted by the Investment Company Act of 1940.
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Funds simultaneously. Although neither ITT Hartford nor the Funds
currently foresee any such disadvantages either to variable life insurance
Policy Owners or to variable annuity Policy Owners, the Board of Directors
intend for the Hartford Funds and the Board of Trustees for the Putnam Funds,
and the Board of Trustees for the Fidelity Funds (collectively the "Board") to
monitor events in order to identify any material conflicts between such Policy
Owners and to determine what action, if
29
<PAGE>
any, should be taken in response thereto. If the Boards were to conclude that
separate funds should be established for variable life and variable life
insurance separate accounts, ITT Hartford will bear the attendant expenses.
All investment income of and other distributions to each Sub-Account of
Separate Account VL I arising from the applicable Fund are reinvested in shares
of that Fund at net asset value. The income and both realized gains or losses on
the assets of each Sub-Account of Separate Account VL I are therefore separate
and are credited to or charged against the Sub-Account without regard to income,
gains or losses from any other Sub-Account or from any other business of ITT
Hartford. ITT Hartford will purchase shares in the Funds in connection with
premium payments allocated to the applicable Sub-Account in accordance with
Policy Owners directions and will redeem shares in the Funds to meet Policy
obligations or make adjustments in reserves, if any. The Funds are required to
redeem Fund shares at net asset value and generally to make payment within seven
days.
ITT Hartford reserves the right, subject to compliance with the law as then
in effect, to make additions to, deletions from, or substitutions for Separate
Account VL I and its Sub-Accounts which fund the Policies. If shares of any of
the Funds should no longer be available for investment, or if, in the judgment
of ITT Hartford's management, further investment in shares of any Fund should
become inappropriate in view of the purposes of the Policies, ITT Hartford may
substitute shares of another Fund for shares already purchased, or to be
purchased in the future, under the Policies. No substitution of securities will
take place without notice to and consent of Policy Owners and without prior
approval of the Securities and Exchange Commission to the extent required by the
Investment Company Act of 1940. Subject to Policy Owner approval, if required,
ITT Hartford also reserves the right to end the registration under the
Investment Company Act of 1940 of Separate Account VL I or any other separate
accounts of which it is the depositor which may fund the Policies.
Each Fund is subject to certain investment restrictions which may not be
changed without the approval of a majority of the shareholders of the Fund. See
the accompanying prospectuses for each of the Funds.
INVESTMENT ADVISER
HARTFORD FUNDS
The investment adviser for each of the Hartford Funds is The Hartford
Investment Management Company ("HIMCO"), a wholly-owned subsidiary of Hartford
Life Insurance Company. HIMCO was organized under the laws of the State of
Connecticut in October of 1981.
HIMCO also serves as investment adviser to several other ITT Hartford
sponsored funds which are also registered with the Securities and Exchange
Commission. HIMCO is registered as an investment adviser under the Investment
Advisers Act of 1940. HIMCO provides investment advice and, in general,
supervises the management and investment program of Hartford Bond Fund, Inc.,
Hartford Index Fund, Inc., Hartford International Opportunities Fund, Inc.,
Hartford Mortgage Securities Fund, Inc., and HVA Money Market Fund, Inc.,
pursuant to an Investment Advisory Agreement entered into with each of these
Funds for which HIMCO receives a fee. HIMCO also supervises the investment
programs of Hartford Advisers Fund, Inc., Hartford Dividend and Growth Fund,
Inc., Hartford Capital Appreciation Fund, Inc. and Hartford Stock Fund, Inc.
pursuant to an Investment Management Agreement for which HIMCO receives a fee.
In addition, with respect to these four Funds, HIMCO has a Sub-Investment
Advisory Agreement with Wellington Management Company ("Wellington Management")
to provide an investment program to HIMCO for utilization by HIMCO in rendering
services to these funds. Wellington Management is a professional investment
counseling firm which provides investment services to investment companies,
other institutions and individuals. Wellington Management organized as a private
Massachusetts partnership and its predecessor organizations have provided
investment advisory services to investment companies since 1933 and to
investment counseling clients since 1960. See the accompanying prospectuses for
each of the Funds for a more complete description of HIMCO and Wellington
Management and their respective fees.
PUTNAM FUNDS
Putnam Management, One Post Office Square, Boston, Massachusetts, 02109,
serves as the investment manager for the Funds. An affiliates, The Putnam
Advisory Company, Inc. manages domestic and foreign
30
<PAGE>
institutional accounts and mutual funds. Another affiliate, Putnam Fiduciary
Trust Company, provides investment advice to institutional clients under its
banking and fiduciary policies. Putnam Management and its affiliate are
wholly-owned subsidiaries of Marsh & McLennan Companies, Inc., a publicly owned
holding company whose principal businesses are international insurance brokerage
and employee benefit consulting.
FIDELITY FUNDS
The Fidelity Funds are managed by Fidelity Management & Research Company
("Fidelity Management"), whose principal business address is 82 Devonshire
Street, Boston, Massachusetts. Fidelity Management is one of America's largest
investment management organizations. It is composed of a number of different
companies, which provide a variety of financial services and products. Fidelity
Management is the original Fidelity company, founded in 1946. It provides a
number of mutual funds and other clients with investment research and portfolio
management services. Various Fidelity companies perform certain activities
required to operate Variable Insurance Products Fund and Variable Insurance
Products Fund II.
THE FIXED ACCOUNT
THAT PORTION OF THE POLICY RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN
ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT,
AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED BY THE
STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE ABOUT
THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF
THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF
DISCLOSURE.
Premium Payments and Cash Values allocated to the Fixed Account become a
part of the general assets of ITT Hartford. ITT Hartford invests the assets of
the General Account in accordance with applicable law governing the investments
of Insurance Company General Accounts.
The Fixed Account Minimum Credited Rate is shown in the Contract. Currently,
ITT Hartford guarantees that it will credit interest at a rate of not less than
4% per year, compounded annually, to amounts allocated to the Fixed Account
under the Policies. ITT Hartford may credit interest at a rate in excess of the
Fixed Account Minimum Credited Rate, however, ITT Hartford is not obligated to
credit any interest in excess of the Fixed Account Minimum Credited Rate. There
is no specific formula for the determination of excess interest credits. Some of
the factors that ITT Hartford may consider in determining whether to credit
excess interest to amounts allocated to the Fixed Account and the amount
thereof, are general economic trends, rates of return currently available and
anticipated on ITT Hartford's investments, regulatory and tax requirements and
competitive factors. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED
ACCOUNT IN EXCESS OF THE FIXED ACCOUNT MINIMUM CREDITED RATE WILL BE DETERMINED
IN THE SOLE DISCRETION OF ITT HARTFORD. THE OWNER ASSUMES THE RISK THAT INTEREST
CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE FIXED ACCOUNT MINIMUM
CREDITED RATE.
OTHER MATTERS
VOTING RIGHTS
In accordance with its view of presently applicable law, ITT Hartford will
vote the shares of the Funds at regular and special meetings of the shareholders
of the Funds in accordance with instructions from Policy Owners (or the assignee
of the Policy, as the case may be) having a voting interest in Separate Account
VL I. The number of shares held in the Separate Account which are attributable
to each Policy Owner is determined by dividing the Policy Owner's interest in
each Sub-Account by the net asset value of the applicable shares of the Funds.
ITT Hartford will vote shares for which no instructions have been given and
shares which are not attributable to Policy Owners (i.e., shares owned by ITT
Hartford) in the same proportion as it votes shares for
31
<PAGE>
which it has received instructions. If the Investment Company Act of 1940 or any
rule promulgated thereunder should be amended, however, or if ITT Hartford's
present interpretation should change and, as a result, ITT Hartford determines
it is permitted to vote the shares of the Funds in its own right, it may elect
to do so.
The voting interests of the Policy Owner (or the assignee) in the Funds will
be determined as follows: Policy Owners may cast one vote for each full or
fractional Accumulation Unit owned under the Policy and allocated to a
Sub-Account the assets of which are invested in the particular Fund on the
record date for the shareholder meeting for that Fund. If, however, a Policy
Owner has taken a loan secured by the Policy, amounts transferred from the
Sub-Account(s) to the Loan Account(s) in connection with the loan (see "Policy
Benefits and Rights -- Policy Loans," page 15) will not be considered in
determining the voting interests of the Policy Owner. Policy Owners should
review the prospectuses for the Funds which accompany this Prospectus to
determine matters on which shareholders may vote.
ITT Hartford may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to cause a change in the sub-classification or investment objective
of one or more of the Funds or to approve or disapprove an investment advisory
policy for the Funds. In addition, ITT Hartford itself may disregard voting
instructions in favor of changes initiated by a Policy Owner in the investment
policy or the investment adviser of the Funds if ITT Hartford reasonably
disapproves of such changes. A change would be disapproved only if the proposed
change is contrary to state law or prohibited by state regulatory authorities.
In the event ITT Hartford does disregard voting instructions, a summary of that
action and the reasons for such action will be included in the next periodic
report to Policy Owners.
STATEMENTS TO POLICY OWNERS
We will send You a statement at least once each Policy Year, showing:
(a)
the current Account Value, Cash Value and Face Amount;
(b)
the premiums paid, Monthly Deduction Amounts and loans since the last
report;
(c)
the amount of any Indebtedness;
(d)
notifications required by the provisions of the Policy; and
(e)
any other information required by the Insurance Department of the State
where the policy was delivered
LIMIT ON RIGHT TO CONTEST
ITT Hartford may not contest the validity of the Policy after it has been in
effect during the Insured's lifetime for two years from the Issue Date. If the
Policy is reinstated, the two-year period is measured from the date of
reinstatement. Any increase in the Face Amount as a result of a premium payment
is contestable for two years from its effective date. In addition, if the
Insured commits suicide in the two-year period, or such period as specified in
state law, the benefit payable will be limited to the premiums paid less any
Indebtedness and partial withdrawals.
MISSTATEMENT AS TO AGE
If the age of the Insured is incorrectly stated, the amount of Death Benefit
will be appropriately adjusted as specified in the Policy.
PAYMENT OPTIONS
Proceeds under the Policies may be paid in a lump sum or may be applied to
one of ITT Hartford's payment options. The minimum amount that may be placed
under a payment option is $5,000 unless ITT Hartford consents to a lesser
amount. Once payments under Options 2, 3 or 4 commence, no surrender of the
Policy may be made for the purpose of receiving a lump sum settlement in lieu of
the life insurance payments. The following options are available under the
Policies.
FIRST OPTION -- Interest Income
Payments of interest at the rate we declare, but not less than 3 1/2% per
year, on the amount applied under this option.
32
<PAGE>
SECOND OPTION -- Income of Fixed Amount
Equal payments of the amount chosen until the amount applied under this
option, with interest of not less than 3 1/2% per year, is exhausted. The final
payment will be for the balance remaining.
THIRD OPTION -- Payments for a Fixed Period
An amount payable monthly for the number of years selected which may be from
1 to 30 years.
FOURTH OPTION -- Life Income
LIFE ANNUITY -- an life insurance payable monthly during the lifetime of
the Annuitant and terminating with the last monthly payment due preceding
the death of the Annuitant.
LIFE ANNUITY WITH 120 MONTHLY PAYMENTS CERTAIN -- an life insurance
providing monthly income to the Annuitant for a fixed period of 120 months
and for as long thereafter as the Annuitant shall live.
The Tables in the Policy provide for guaranteed dollar amounts of monthly
payments for each $1,000 applied under the four Payment Options. Under the
Fourth Option, the amount of each payment will depend upon the age of the
Annuitant at the time the first payment is due. If any periodic payment due any
payee is less than $200, ITT Hartford may make payments less often.
The Table for the Fourth Option is based on the 1983a Individual Annuity
Mortality Table set back one year and a net investment rate of 3.5% per annum.
The Tables for the First, Second and Third Options are based on a net investment
rate of 3.5% per annum. ITT Hartford may, however, from time to time, at our
discretion if mortality appears more favorable and interest rates justify, apply
other tables which will result in higher monthly payments for each $1,000
applied under one or more of the four Payment Options.
ITT Hartford will make any other arrangements for income payments as may be
agreed on.
BENEFICIARY
The applicant names the Beneficiary in the application for the Policy. The
Policy Owner may change the Beneficiary (unless irrevocably named) during the
Insured's lifetime by written request to ITT Hartford. If no Beneficiary is
living when the Insured dies, the Death Proceeds will be paid to the Policy
Owner if living; otherwise to the Policy Owner's estate.
ASSIGNMENT
The Policy may be assigned as collateral for a loan or other obligation. ITT
Hartford is not responsible for any payment made or action taken before receipt
of written notice of such assignment. Proof of interest must be filed with any
claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Policies.
SUPPLEMENTAL BENEFITS
The following supplemental benefits, which are subject to the restrictions
and limitations set forth therein, may be included in a Policy.
DEDUCTION AMOUNT WAIVER RIDER
Subject to certain age and underwriting restrictions, the Policy may include
a Deduction Amount Waiver Rider. This rider provides for the waiver of the
Policy's Monthly Deduction Amounts in the event of total disability prior to the
Insured reaching Attained Age 65 and continuing for at least six months. The
number of Monthly Deduction Amounts waived depends on the Insured's Attained Age
when the disability began. If this rider is added, the Monthly Deduction Amounts
will be increased to include the charges for this rider.
33
<PAGE>
ACCIDENTAL DEATH BENEFIT RIDER
Subject to certain age and underwriting requirements, the Policy may include
an Accidental Death Benefit Rider.
This rider provides for an increase in the amount paid upon the death of the
Insured if the death results from an accident.
If this rider is added, the Monthly Deduction Amounts will be increased to
include the charges for this rider.
INCREASE IN COVERAGE OPTION RIDER
Subject to certain age and underwriting requirements, the Policy may include
an Increase in Coverage Option Rider.
This rider gives the Owner the guaranteed right to purchase a new Flexible
Premium Variable Life Insurance policy on the life of the Insured, without
evidence of insurability, if certain conditions are met. These conditions
include:
1. the original policy has been in force for five years,
2. the Insured's Attained Age is less than 80, and
3. the Account Value of the original policy is sufficient to "pay-up" the
policy under assumptions defined in the rider.
The Face Amount of the new policy will be equal to the Face Amount times a
percentage. This percentage depends on the Insured's age, sex (except where
unisex rates are used), and insurance class. The Scheduled Premium fee for the
new policy is based on the Scheduled Premium for the original policy.
MATURITY DATE EXTENSION RIDER
We will extend the Maturity Date (the date on which the Policy will mature)
to the date of the Insured's death, regardless of the age of the Insured.
Certain Death Benefit and premium restrictions apply. See "Income Taxation of
Policy Benefits."
34
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH ITT HARTFORD, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- -------------------------------- ----------------------------------- ---------------------------------------------
<S> <C> <C>
Andrew, Joan M., 38 Vice President, 1992 Vice President and Director, National Service
Center Operations (1992-Present), ITT
Hartford.
Bossen, Wendell J., 62 Vice President, 1995** Vice President (1992), Hartford Life
Insurance Company; Executive Vice President
(1984), Mutual Benefit.
Boyko, Gregory A., 44 Vice President, 1995 Vice President and Controller (1995-Present),
Hartford Life Insurance Company; Chief
Financial Officer (1994-1995), IMG American
Life; Senior Vice President (1992-1994),
Connecticut Mutual.
Cummins, Peter W., 59 Vice President, 1993 Vice President, Individual Annuity Operations
(1989-Present), Hartford Life Insurance
Company.
deRaismes, Ann M., 45 Vice President, 1994 Vice President (1994-Present), Assistant Vice
President (1992), Director of Human
Resources (1991-Present), Hartford Life
Insurance Company.
Dooley, James R., 59 Vice President, 1977 Vice President, Director Information Services
(1973-Present), ITT Hartford.
Fitch, Timothy M., 43 Vice President, 1995 Vice President (1995-Present); Assistant Vice
President (1993); Director (1991), Hartford
Life.
Frahm, Donald R., 64 Director, 1995* Chairman and Chief Executive Officer
(1988-Present), ITT Hartford Insurance
Group, Inc.
Gardner, Bruce D., 45 Director, 1991* Vice President (1996-Present) General Counsel
and Corporate Secretary (1991), Hartford
Life Insurance Company
Gareau, Joseph H., 49 Executive Vice President, 1993 Executive Vice President and Chief Investment
Chief Investment Officer 1993 Officer (1993-Present), Senior Vice
Director, 1993* President (1989-1993), Hartford Life
Insurance Company
Gillette, Donald J., 50 Vice President, 1993 Vice President, Director of Marketing
(1991-Present), ITT Hartford; MSI Insurance
(1986)
Godkin, Lynda, 42 General Counsel, 1996 Corporate General Counsel (1996-Present), Associate
Secretary, 1995 General Counsel and Corporate Secretary
(1995), Assistant General Counsel and
Secretary (1994), Counsel (1990), Hartford
Life Insurance Company
Grady, Lois W., 51 Vice President, 1993 Vice President (1993-Present), Assistant Vice
President (1988), Hartford Life Insurance
Company
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH ITT HARTFORD, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- -------------------------------- ----------------------------------- ---------------------------------------------
<S> <C> <C>
Hall, David A., 42 Senior Vice President, 1993 Senior Vice President and Actuary
Actuary, 1993 (1993-Present), Vice President and Actuary
(1987-1992), Hartford Life Insurance
Company
Kanarek, Joseph, 48 Vice President, 1994 Director, Vice President (1991-Present), Director
1994* (1992-Present), Hartford Life Insurance
Company
Kerzner, Robert A., 44 Vice President, 1994 Vice President (1994-Present), Regional Vice
President (1991), Life Sales Manager
(1990), Hartford Life Insurance Company
Kohlhof, LaVern L., 66 Vice President, 1980 Secretary, Vice President and Secretary (1980-Present),
1980 ITT Hartford
Malchodi, Jr., William B., 45 Vice President, 1994 Director of Vice President (1994-Present), Director of
Taxes, 1992 Taxes (1992-Present), Assistant General
Counsel and Assistant Director of Taxes
(1986), Hartford Insurance Group
Marra, Thomas M., 37 Executive Vice President, 1995 Senior Vice President (1994), Director of
Director, 1994* Individual Annuities (1991), Vice President
(1989), Hartford Life Insurance Company
Matthiesen, Steven L., 51 Vice President, 1984 Vice President, Director of New Business
(1984-Present), ITT Hartford
Noto, Joseph J., 44 Vice President, 1989 Vice President (1989-Present), Hartford Life
Insurance Company.
Raymond, Craig D., 32 Vice President, 1993 Vice President and Chief Actuary
Chief Actuary, 1994 (1994-Present), Vice President (1993),
Assistant Vice President (1992), Actuary
(1989-1994), Hartford Life Insurance
Company
Schrandt, David T., 48 Vice President, 1987 Treasurer, Vice President, Treasurer and Controller
1987 (1987-Present), ITT Hartford
Smith, Lowndes A., 55 President, 1993 President and Chief Executive Officer
Chief Executive Officer, 1989 (1993-Present), ITT Hartford; President and
Director, 1985* Chief Operating Officer (1989-Present),
Hartford Life Insurance Company
Zlatkus, Lizabeth H., 36 Vice President, 1994 Vice President, Director Business Operations
Director, 1994* (1994), Assistant Vice President, Director
Executive Operations (1992), Executive
Staff Assistant to President (1990),
Hartford Life Insurance Company
<FN>
- ------------------------
* Denotes year of election to Board of Directors
** ITT Hartford Affiliated Company
</TABLE>
36
<PAGE>
DISTRIBUTION OF THE POLICIES
ITT Hartford intends to sell the Policies in all jurisdictions where it is
licensed to do business. The Policies will be sold by life insurance sales
representatives who represent ITT Hartford and who are registered
representatives of Hartford Equity Sales Company, Inc. ("HESCO"), or certain
other registered Broker-Dealers. Any sales representative or employee will have
been qualified to sell variable life insurance policies under applicable Federal
and State laws. Each Broker-Dealer is registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 and all are
members of the National Association of Securities Dealers, Inc. During the first
Policy Year, the maximum sales commission payable to ITT Hartford agents,
independent registered insurance brokers, and other registered Broker-Dealers is
45% of the premiums paid up to a target premium and 5% of any excess. In Policy
Years 2 through 10, agent commissions will not exceed 5.5% of premiums paid. For
Policy Years 11 and later, the agent commissions will not exceed 2% of the
premiums paid. In addition, expense allowances may be paid. The sales
representative may be required to return all or a portion of the commissions
paid if the Policy terminates prior to the second Policy Anniversary.
HESCO, a corporation organized under the laws of the State of Connecticut on
July 3, 1973, is the principal underwriter for the Policies. HESCO is engaged in
the sale and distribution of various other variable insurance products, as well
as acting as principal underwriter for the following group variable annuity and
variable life insurance contracts issued by ITT Hartford and Hartford Life
Insurance Company: Hartford Life Insurance Company Separate Account VLI,
Hartford Life Insurance Company Separate Account VLII, ITT Hartford Life and
Annuity Insurance Company Separate Account VLII and ICMG Separate Account of
Hartford Life Insurance Company.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
The assets of the Separate Account are held by ITT Hartford. The assets of
the Separate Account are kept physically segregated and held separate and apart
from the General Account of ITT Hartford. ITT Hartford maintains records of all
purchases and redemptions of shares of the Fund. Additional protection for the
assets
of the Separate Account is afforded by ITT Hartford's blanket fidelity bond
issued by Aetna Casualty and Surety Company, in the aggregate amount of $50
million, covering all of the officers and employees of ITT Hartford.
FEDERAL TAX CONSIDERATIONS
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE POLICY OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE POLICY IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A POLICY DESCRIBED HEREIN.
It should be understood that any detailed description of the Federal income
tax consequences regarding the purchase of these Policies cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. This discussion of Federal tax
considerations is based upon ITT Hartford's understanding of current Federal
income tax laws as they are currently interpreted.
TAXATION OF ITT HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of ITT Hartford which is taxed as a
life insurance company under Subchapter L of the Internal Revenue Code ("Code").
Accordingly, the Separate Account will not be taxed as a "regulated investment
company" under Subchapter M of the Code. Investment income and realized capital
gains on the assets of the Separate Account (the underlying Funds) are
reinvested and are taken into account in determining the value of the
Accumulation Units As a result, such investment income and realized capital
gains are automatically applied to increase reserves under the Policy. (See
"Detailed Description of Policy Benefits and Provisions -- Accumulation Unit
Values, on page 12).
37
<PAGE>
ITT Hartford does not expect to incur any Federal income tax on the earnings
or realized capital gains attributable to the Separate Account. Based upon this
expectation, no charge is currently being made to the Separate Account for
Federal income taxes. If ITT Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for such taxes against the Separate Account.
INCOME TAXATION OF POLICY BENEFITS
For Federal income tax purposes, the Policies should be treated as life
insurance policies under Section 7702 of the Code. The death benefit under a
life insurance policy is generally excluded from the gross income of the
Beneficiary. Also, a life insurance Policy Owner is generally not taxed on
increments in the policy value until the Policy is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a Policy that is treated as life insurance. ITT Hartford intends to monitor
premium levels to assure compliance with the Section 7702 requirements.
ITT Hartford also believes that any loan received under a Policy will be
treated as Indebtedness of the Policy Owner, and that no part of any loan under
a Policy will constitute income to the Policy Owner. A surrender or assignment
of the Policy may have tax consequences depending upon the circumstances. Policy
Owners should consult a qualified tax adviser concerning the effect of such
changes.
During the first fifteen Policy Years, an "income first" rule generally
applies to distributions of cash required to be made under Code Section 7702
because of a reduction in benefits under the Policy.
The Maturity Date Extension Rider allows a Policy Owner to extend the
Maturity Date to the date of the death of the insured. If the Maturity Date of
the Policy is extended by rider, ITT Hartford believes that the Policy will
continue to be treated as a life insurance contract for Federal income tax
purposes after the scheduled Maturity Date. However, due to the lack of specific
guidance on this issue, the result is not certain. If the Policy is not treated
as a life insurance contract for Federal income tax purposes after the scheduled
Maturity Date, among other things, the Death Proceeds may be taxable to the
recipient. The Policy Owner should consult a qualified tax adviser regarding the
possible adverse tax consequences resulting from an extension of the scheduled
Maturity Date.
MODIFIED ENDOWMENT CONTRACTS
Code Section 7702A applies an additional test, the "seven-pay" test, to life
insurance contracts. A modified endowment contract is a life insurance policy
which satisfies the Section 7702 definition of life insurance but fails the
seven-pay test of Section 7702A. The seven-pay test provides that premiums
cannot be paid at a rate more rapidly than that allowed by the payment of seven
annual premiums using specified computational rules provided in Section
7702A(c).
A policy that is classified as a modified endowment contract is generally
eligible for the beneficial tax treatment accorded to life insurance. That is,
the death benefit is generally excluded from income and increments in value are
not subject to current taxation. However, a loans, distributions or other
amounts received from a modified endowment contract are treated first as income,
then as a recovery of basis. Taxable withdrawals are subject to a 10% additional
tax, with certain exceptions. Generally, only distributions and loans made in
the first year in which a policy becomes a modified endowment contract, and in
subsequent years, are taxable. However, distributions and loans made in the two
years prior to a policy's failing the seven-pay test are deemed to be in
anticipation of failure and are subject to tax.
If the Policy satisfies the seven-pay test for seven years, distributions
and loans made thereafter will not be subject to the modified endowment contract
rules, unless the Policy is changed materially. The seven-pay test will be
applied anew at any time the Policy undergoes a material change, which includes
an increase in the death benefit.
All modified endowment contracts that are issued within any calendar year to
the same Policy Owner by one company or its affiliates shall be treated as one
modified endowment contract for the purpose of determining the taxable portion
of any loan or distribution.
ESTATE AND GENERATION SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includible in
the Policy Owner's estate for purposes of Federal estate tax if the Insured
owned the Policy. If the Policy Owner was not the Insured, the fair
38
<PAGE>
market value of the Policy would be included in the Policy Owner's estate upon
the Policy Owner's death. The Policy would not be includible in the Insured's
estate if the Insured neither retained incidents of ownership at death nor had
given up ownership within three years before death.
Federal estate tax is integrated with Federal gift tax under a unified rate
schedule. In general, estates of less than $600,000 will not incur a Federal
estate tax liability. In addition, an unlimited marital deduction may be
available for Federal estate and gift tax purposes. The unlimited marital
deduction permits the deferral of taxes until the death of the surviving spouse.
If the Policy Owner (whether or not he or she is the Insured) transfers
ownership of the Policy to someone two or more generations younger, the transfer
may be subject to the generation skipping transfer tax, the taxable amount being
the value of the Policy. The generation-skipping transfer tax provisions
generally apply to transfers which would be subject to the gift and estate tax
rules. Individuals are generally allowed an aggregate generation skipping
transfer exemption of $1 million. Because these rules are complex, the Policy
Owner should consult with a qualified tax adviser for specific information if
ownership is passing to younger generations.
DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable life insurance contract
(other than a pension plan policy) will not be treated as a life insurance
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 Policy is not treated as
a life insurance contract, the Policy Owner will be subject to income tax on the
annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either the company or
the Policy Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
ITT Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. ITT Hartford
intends to administer all contracts subject to the diversification requirements
in a manner that will maintain adequate diversification.
OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT
In order for a variable life insurance 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
39
<PAGE>
control, and as of the date of this Prospectus, no other such guidance has been
issued. Further, ITT 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
Policy Owner could be considered the owner of the assets for tax purposes. ITT
Hartford reserves the right to modify the Policies, as necessary, to prevent
Policy Owners from being considered the owners of the assets in the separate
accounts.
LIFE INSURANCE PURCHASED FOR USE IN SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM")
on the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Policy Owner,
such amounts will be subject to Federal income tax withholding and reporting,
pursuant to the Code.
NON-INDIVIDUAL OWNERSHIP OF POLICIES
Legislation has recently been proposed which would limit certain of the tax
advantages now afforded non-individual owners of life insurance contracts.
Prospective Policy Owners which are not individuals should consult a qualified
tax adviser to determine the status of this proposed legislation and its
potential impact on the purchaser.
OTHER
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Policy proceeds depend on the
circumstances of each Policy Owner or beneficiary. A qualified tax adviser
should be consulted to determine the impact of these taxes.
LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to life insurance 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 taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to 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 advisor
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
LEGAL PROCEEDINGS
There are no pending material legal proceedings affecting the Policies,
Separate Account VL I or any of the Funds.
EXPERTS
The financial statements for ITT Hartford Life and Annuity Insurance Company
included in this Prospectus and Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report herein, and are included herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said report. Reference is
made to said report of ITT Hartford Life and Annuity
40
<PAGE>
Insurance Company (the depositor), which includes an explanatory paragraph with
respect to changing the valuation method in determining aggregate reserves for
future benefits. The principal business address of Arthur Andersen LLP is One
Financial Plaza, Hartford, CT 06103.
The hypothetical Policy illustrations included in this Prospectus and
Registration Statement have been approved by Ken A. McCullum, FSA, MAAA,
Director of Individual Life Product Development, are included in reliance upon
his opinion as to their reasonableness.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended. This Prospectus does not
contain all information set forth in the registration statement, its amendments
and exhibits, to all of which reference is made for further information
concerning Separate Account VL I, ITT Hartford, and the Policies.
LEGAL MATTERS
Legal matters in connection with the issue and sale of the flexible premium
variable life insurance policies described in this Prospectus and the
organization of ITT Hartford, its authority to issue the Policies under
Connecticut law and the validity of the forms of the Policies under Connecticut
law and legal matters relating to the federal securities and income tax laws
have been passed on by Lynda Godkin, Associate General Counsel of ITT Hartford.
41
<PAGE>
APPENDIX A
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT
VALUES AND CASH SURRENDER VALUES
The following tables illustrate how the Death Benefits, Account Values and
Cash Surrender Values of a Policy may change with the investment experience of
the Separate Account. The tables show how the Death Benefits, Account Values and
Cash Surrender Values of a Policy issued to an Insured of a given age would vary
over time if the investment return on the assets held in each Fund were a
uniform, gross annual rate of 0%, 6% and 12%. The Death Benefits, Account Values
and Cash Surrender Values would be different from those shown if the gross
annual investment returns averaged 0%, 6% and 12% over a period of years, but
fluctuated above and below those averages for individual Policy Years. The
tables assume that no Policy Loans are made and that no partial withdrawals have
been made. The tables are also based on the assumption that the Owner has not
requested an increase or decrease in the Fact Amount and that no fund transfers
have been made in any Policy Year.
The tables on pages 43 to 60 illustrate a Policy issued to a Male Insured,
Age 45 in the Preferred Premium Class with an Initial Face Amount of $250,000
and a Scheduled Premium that is paid at the beginning of each Policy Year. The
Death Benefits, Account Values and Cash Surrender Values would be lower if the
Insured was a smoker or in a special class since the cost of insurance charges
would increase.
The tables reflect the fact that the net return on the assets held in the
subaccounts is lower than the gross after-tax return of the Funds. This is
because these tables assume an investment management fee and other estimated
Fund expenses totaling 0.70%. The 0.70% figure is based on an average of the
current management fees and expenses of the available fifteen Funds, taking into
account any applicable expense caps or reimbursement arrangements. Actual fees
and expenses of the Funds associated with a Policy may be more or less than
0.70%, will vary from year to year, and will depend on how the Account Value is
allocated.
As their headings indicate, the tables reflect the deductions of current
contractual charges and guaranteed contractual charges for a single gross
interest rate. These charges include the monthly charge to the Account for
assuming mortality and expense risks, the monthly administrative charge, and the
monthly mortality charge. All tables assume a charge of 2.25% for taxes
attributable to premiums and reflect the fact that no charges against the
Account are currently made for federal, state or local taxes attributable to the
Policy.
Each table also shows the amount to which the premiums would accumulate if
an amount equal to those premiums were invested to earn interest, after taxes,
at 5% compounded annually.
Upon request, ITT Hartford will furnish a comparable illustration based on a
proposed Policy's specific circumstances.
42
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 1,232 0*** 250,000 1,232 0*** 250,000
2 8,610 4,074 163*** 250,000 4,074 163*** 250,000
3 13,241 6,764 3,342 250,000 6,764 3,342 250,000
4 18,103 9,345 6,411 250,000 9,345 6,411 250,000
5 23,208 11,843 9,398 250,000 11,843 9,398 250,000
6 28,568 14,274 12,318 250,000 14,274 12,318 250,000
7 34,196 16,645 15,178 250,000 16,645 15,178 250,000
8 40,106 18,971 17,994 250,000 18,971 17,994 250,000
9 46,312 21,246 20,757 250,000 21,246 20,757 250,000
10 52,827 23,456 23,456 250,000 23,456 23,456 250,000
11 59,669 25,850 25,850 250,000 24,932 24,932 250,000
12 66,852 28,102 28,102 250,000 26,215 26,215 250,000
13 74,395 30,190 30,190 250,000 27,297 27,297 250,000
14 82,314 32,117 32,117 250,000 28,157 28,157 250,000
15 90,630 33,884 33,884 250,000 28,773 28,773 250,000
16 99,361 35,385 35,385 250,000 29,115 29,115 250,000
17 108,530 36,726 36,726 250,000 29,156 29,156 250,000
18 118,156 37,906 37,906 250,000 28,850 28,850 250,000
19 128,264 38,913 38,913 250,000 28,147 28,147 250,000
20 138,877 39,7470 39,740 250,000 26,999 26,999 250,000
25 20,0454 39,821 39,821 250,000 12,667 12,667 250,000
35 27,9043 30,239 30,239 250,000 0 0 250,000
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,032 IN YEAR ONE AND $4,753 IN YEAR TWO. THESE VALUES
REFLECT FRONT-END SALES LOADS OF 50% IN YEAR 1, 11% IN YEARS 2 THROUGH 10
AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE
DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
</TABLE>
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
43
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 1,325 0*** 250,000 1,325 0*** 250,000
2 8,610 4,435 523*** 250,000 4,435 523** 250,000
3 13,241 7,570 4,148 250,000 7,570 4,148 250,000
4 18,103 10,778 7,845 250,000 10,778 7,845 250,000
5 23,208 14,087 11,643 250,000 14,087 11,643 250,000
6 28,568 17,519 15,563 250,000 17,519 15,563 250,000
7 34,196 21,085 19,618 250,000 21,085 19,618 250,000
8 40,106 24,808 23,830 250,000 24,808 23,830 250,000
9 46,312 28,688 28,200 250,000 28,688 28,200 250,000
10 52,827 32,722 32,722 250,000 32,722 32,722 250,000
11 59,669 37,186 37,186 250,000 36,279 36,279 250,000
12 66,852 41,760 41,760 250,000 39,852 39,852 250,000
13 74,395 46,430 46,430 250,000 43,436 43,436 250,000
14 82,314 51,207 51,207 250,000 47,017 47,017 250,000
15 90,630 56,101 56,101 250,000 50,580 50,580 250,000
16 99,361 61,026 61,026 250,000 54,103 54,103 250,000
17 108,530 66,085 66,085 250,000 57,565 57,565 250,000
18 118,156 71,290 71,290 250,000 60,934 60,934 250,000
19 128,264 76,646 76,646 250,000 64,173 64,173 250,000
20 138,877 82,162 82,162 250,000 67,247 67,247 250,000
25 200,454 111,781 111,781 250,000 78,904 78,904 250,000
35 279,043 145,617 145,617 250,000 77,492 77,492 250,000
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,125 IN YEAR ONE AND $5,113 IN YEAR TWO. THESE VALUES
REFLECT FRONT-END SALES LOADS OF 50% IN YEAR 1, 11% IN YEARS 2 THROUGH 10
AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE
DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
</TABLE>
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE DIFFERENT
FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
44
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 1,418 0*** 250,000 1,418 0*** 250,000
2 8,610 4,807 895*** 250,000 4,807 895*** 250,000
3 13,241 8,434 5,011 250,000 8,434 5,011 250,000
4 18,103 12,372 9,438 250,000 12,372 9,438 250,000
5 23,208 16,681 14,237 250,000 16,681 14,237 250,000
6 28,568 21,420 19,464 250,000 21,420 19,464 250,000
7 34,196 26,642 25,176 250,000 26,642 25,176 250,000
8 40,106 32,417 31,440 250,000 32,417 31,440 250,000
9 46,312 38,799 38,310 250,000 38,799 38,310 250,000
10 52,827 45,843 45,843 250,000 45,843 45,843 250,000
11 59,669 53,915 53,915 250,000 53,042 53,042 250,000
12 66,852 62,773 62,773 250,000 60,901 60,901 250,000
13 74,395 72,491 72,491 250,000 69,502 69,502 250,000
14 82,314 83,181 83,181 250,000 78,929 78,929 250,000
15 90,630 94,965 94,965 250,000 89,281 89,281 250,000
16 99,361 107,905 107,905 250,000 100,668 100,668 250,000
17 108,530 122,236 122,236 250,000 113,227 113,227 250,000
18 118,156 138,131 138,131 250,000 127,109 127,109 250,000
19 128,264 155,618 155,618 250,000 142,486 142,486 250,000
20 138,877 174,773 174,773 250,000 159,244 159,244 250,000
25 200,454 300,798 300,798 250,000 265,815 265,815 250,000
35 279,043 495,973 495,973 250,000 420,068 420,068 250,000
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,218 IN YEAR ONE AND $5,485 IN YEAR TWO. THESE VALUES
REFLECT FRONT-END SALES LOADS OF 50% IN YEAR 1, 11% IN YEARS 2 THROUGH 10
AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE
DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
</TABLE>
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
45
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,466 0*** 251,466 1,466 0*** 251,466
2 9,686 4,727 327*** 254,727 4,727 327*** 254,727
3 14,896 7,820 3,970 257,820 7,820 3,970 257,820
4 20,365 10,789 7,489 260,789 10,789 7,489 260,789
5 26,109 13,660 10,910 263,660 13,660 10,910 263,660
6 32,139 16,450 14,250 266,450 16,450 14,250 266,450
7 38,471 19,164 17,514 269,164 19,164 17,514 269,164
8 45,120 21,820 20,720 271,820 21,820 20,720 271,820
9 52,101 24,409 23,859 274,409 24,409 23,859 274,409
10 59,431 26,916 26,916 276,916 26,916 26,916 276,916
11 67,127 29,621 29,621 279,621 28,603 28,603 278,603
12 75,208 32,154 32,154 282,154 30,059 30,059 280,059
13 83,694 34,487 34,487 284,487 31,276 31,276 281,276
14 92,604 36,623 36,623 286,623 32,229 32,229 282,229
15 101,959 38,562 38,562 288,562 32,897 32,897 282,897
16 111,782 40,177 40,177 290,177 33,245 33,245 283,245
17 122,096 41,593 41,593 291,593 33,246 33,246 283,246
18 132,926 42,806 42,806 292,806 32,854 32,854 282,854
19 144,297 43,803 43,803 293,803 32,020 32,020 282,020
20 156,237 44,576 44,576 294,576 30,699 30,699 280,699
25 225,511 43,527 43,527 293,527 15,404 15,404 265,404
35 313,924 31,575 31,575 281,575 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,366 IN YEAR ONE AND $4,772 IN YEAR TWO. THESE VALUES
REFLECT FRONT-END SALES LOADS OF 50% IN YEAR 1, 11% IN YEARS 2 THROUGH 10
AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE
DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
</TABLE>
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
46
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,574 0*** 251,574 1,574 0*** 251,574
2 9,686 5,141 741*** 255,141 5,141 741*** 255,141
3 14,896 8,746 4,896 258,746 8,746 4,896 258,746
4 20,365 12,432 9,132 262,432 12,432 9,132 262,432
5 26,109 16,230 13,480 266,230 16,230 13,480 266,230
6 32,139 20,158 17,958 270,158 20,158 17,958 270,158
7 38,471 24,231 22,581 274,231 24,231 22,581 274,231
8 45,120 28,468 27,368 278,468 28,468 27,368 278,468
9 52,101 32,870 32,320 282,870 32,870 32,320 282,870
10 59,431 37,428 37,428 287,428 37,428 37,428 287,428
11 67,127 42,446 42,446 292,446 41,395 41,395 291,395
12 75,208 47,558 47,558 297,558 45,332 45,332 295,332
13 83,694 52,735 52,735 302,735 49,225 49,225 299,225
14 92,604 57,982 57,982 307,982 53,045 53,045 303,045
15 101,959 63,299 63,299 313,299 56,760 56,760 306,760
16 111,782 68,557 68,557 318,557 60,328 60,328 310,328
17 122,096 73,875 73,875 323,875 63,709 63,709 313,709
18 132,926 79,251 79,251 329,251 66,842 66,842 316,842
19 144,297 84,672 84,672 334,672 69,660 69,660 319,660
20 156,237 90,127 90,127 340,127 72,095 72,095 322,095
25 225,511 116,169 116,169 366,169 76,129 76,129 326,129
35 313,924 136,250 136,250 386,250 55,925 55,925 305,925
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,474 IN YEAR ONE AND $5,186 IN YEAR TWO. THESE VALUES
REFLECT FRONT-END SALES LOADS OF 50% IN YEAR 1, 11% IN YEARS 2 THROUGH 10
AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE
DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
</TABLE>
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
47
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,681 0*** 251,681 1,681 0*** 251,681
2 9,686 5,569 1,169*** 255,569 5,569 1,169*** 255,569
3 14,896 9,736 5,886 259,736 9,736 5,886 259,736
4 20,365 14,258 10,958 264,258 14,258 10,958 264,258
5 26,109 19,198 16,448 269,198 19,198 16,448 269,198
6 32,139 24,615 22,415 274,615 24,615 22,415 274,615
7 38,471 30,567 28,917 280,567 30,567 28,917 280,567
8 45,120 37,127 36,027 287,127 37,127 36,027 287,127
9 52,101 44,349 43,799 294,349 44,349 43,799 294,349
10 59,431 52,288 52,288 302,288 52,288 52,288 302,288
11 67,127 61,337 61,337 311,337 60,253 60,253 310,253
12 75,208 71,202 71,202 321,202 68,843 68,843 318,843
13 83,694 81,939 81,939 331,939 78,112 78,112 328,112
14 92,604 93,639 93,639 343,639 88,103 88,103 338,103
15 101,959 106,404 106,404 356,404 98,865 98,865 348,865
16 111,782 120,208 120,208 370,208 110,442 110,442 360,442
17 122,096 135,290 135,290 385,290 122,884 122,884 372,884
18 132,926 151,779 151,779 401,779 136,232 136,232 386,232
19 144,297 169,809 169,809 419,809 150,523 150,523 400,523
20 156,237 189,531 189,531 439,531 165,803 165,803 415,803
25 225,511 318,535 318,535 568,535 259,241 259,241 509,241
35 313,924 517,815 517,815 767,815 385,156 385,156 635,156
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,581 IN YEAR ONE AND $5,614 IN YEAR TWO. THESE VALUES
REFLECT FRONT-END SALES LOADS OF 50% IN YEAR 1, 11% IN YEARS 2 THROUGH 10
AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE
DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
</TABLE>
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
48
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,629 0*** 254,500 1,629 0*** 254,500
2 9,686 4,916 844*** 259,000 4,916 844*** 259,000
3 14,896 8,031 4,468 263,500 8,031 4,468 263,500
4 20,365 11,016 7,962 268,000 11,016 7,962 268,000
5 26,109 13,896 11,351 272,500 13,896 11,351 272,500
6 32,139 16,688 14,652 277,000 16,688 14,652 277,000
7 38,471 19,398 17,871 281,500 19,398 17,871 281,500
8 45,120 22,041 21,023 286,000 22,041 21,023 286,000
9 52,101 24,609 24,100 290,500 24,609 24,100 290,500
10 59,431 27,086 27,086 295,000 27,086 27,086 295,000
11 67,127 29,718 29,718 299,500 28,622 28,622 299,500
12 75,208 32,159 32,159 304,000 29,885 29,885 304,000
13 83,694 34,376 34,376 308,500 30,859 30,859 308,500
14 92,604 36,367 36,367 313,000 31,507 31,507 313,000
15 101,959 38,128 38,128 317,500 31,792 31,792 317,500
16 111,782 39,511 39,511 322,000 31,663 31,663 322,000
17 122,096 40,647 40,647 326,500 31,071 31,071 326,500
18 132,926 41,525 41,525 331,000 29,940 29,940 331,000
19 144,297 42,123 42,123 335,500 28,184 28,184 335,500
20 156,237 42,423 42,423 340,000 25,714 25,714 340,000
25 225,511 37,048 37,048 362,500 - - 0
35 313,924 14,078 14,078 385,000 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,361 IN YEAR ONE AND $5,595 IN YEAR TWO. THESE VALUES
REFLECT FRONT-END SALES LOADS OF 50% IN YEAR 1, 11% IN YEARS 2 THROUGH 10
AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE
DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
</TABLE>
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
49
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,746 0*** 254,500 1,746 0*** 254,500
2 9,686 5,353 1,281*** 259,000 5,353 1,281*** 259,000
3 14,896 8,995 5,432 263,500 8,995 5,432 263,500
4 20,365 12,717 9,663 268,000 12,717 9,663 268,000
5 26,109 16,548 14,003 272,500 16,548 14,003 272,500
6 32,139 20,509 18,473 277,000 20,509 18,473 277,000
7 38,471 24,612 23,085 281,500 24,612 23,085 281,500
8 45,120 28,880 27,862 286,000 28,880 27,862 286,000
9 52,101 33,312 32,803 290,500 33,312 32,803 290,500
10 59,431 37,901 37,901 295,000 37,901 37,901 295,000
11 67,127 42,921 42,921 299,500 41,837 41,837 299,500
12 75,208 48,033 48,033 304,000 45,731 45,731 304,000
13 83,694 53,210 53,210 308,500 49,564 49,564 308,500
14 92,604 58,458 58,458 313,000 53,305 53,305 313,000
15 101,959 63,777 63,777 317,500 56,916 56,916 317,500
16 111,782 69,039 69,039 322,000 60,350 60,350 322,000
17 122,096 74,366 74,366 326,500 63,557 63,557 326,500
18 132,926 79,757 79,757 331,000 66,463 66,463 331,000
19 144,297 85,202 85,202 335,500 68,986 68,986 335,500
20 156,237 90,693 90,693 340,000 71,036 71,036 340,000
25 225,511 117,175 117,175 362,500 70,404 70,404 362,500
35 313,924 138,179 138,179 385,000 31,287 31,287 385,000
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,478 IN YEAR ONE AND $6,032 IN YEAR TWO. THESE VALUES
REFLECT FRONT-END SALES LOADS OF 50% IN YEAR 1, 11% IN YEARS 2 THROUGH 10
AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE
DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
</TABLE>
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
50
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,863 0*** 254,500 1,863 0*** 254,500
2 9,686 5,805 1,733*** 259,000 5,805 1,733*** 259,000
3 14,896 10,029 6,466 263,500 10,029 6,466 263,500
4 20,365 14,611 11,557 268,000 14,611 11,557 268,000
5 26,109 19,618 17,073 272,500 19,618 17,073 272,500
6 32,139 25,111 23,075 277,000 25,111 23,075 277,000
7 38,471 31,152 29,625 281,500 31,152 29,625 281,500
8 45,120 37,815 36,797 286,000 37,815 36,797 286,000
9 52,101 45,162 44,653 290,500 45,162 44,653 290,500
10 59,431 53,252 53,252 295,000 53,252 53,252 295,000
11 67,127 62,461 62,461 299,500 61,416 61,416 299,500
12 75,208 72,536 72,536 304,000 70,272 70,272 304,000
13 83,694 83,549 83,549 308,500 79,898 79,898 308,500
14 92,604 95,617 95,617 313,000 90,367 90,367 313,000
15 101,959 108,867 108,867 317,500 101,766 101,766 317,500
16 111,782 123,335 123,335 322,000 114,191 114,191 322,000
17 122,096 139,283 139,283 326,500 127,759 127,759 326,500
18 132,926 156,899 156,899 331,000 142,593 142,593 331,000
19 144,297 176,385 176,385 335,500 158,844 158,844 335,500
20 156,237 197,974 197,974 348,109 176,698 176,698 340,000
25 225,511 340,685 340,685 531,980 294,635 294,635 460,073
35 313,924 561,701 561,701 791,523 466,175 466,175 656,912
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,596 IN YEAR ONE AND $6,484 IN YEAR TWO. THESE VALUES
REFLECT FRONT-END SALES LOADS OF 50% IN YEAR 1, 11% IN YEARS 2 THROUGH 10
AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE
DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
</TABLE>
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
51
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 3,169 2,769 250,000 3,169 2,769 250,000
2 8,610 6,361 6,006 250,000 5,932 5,576 250,000
3 13,241 9,381 9,070 250,000 8,589 8,278 250,000
4 18,103 12,273 12,003 250,000 11,138 10,872 250,000
5 23,208 15,067 14,844 250,000 13,574 13,351 250,000
6 28,568 17,780 17,603 250,000 15,884 15,706 250,000
7 34,196 20,422 20,289 250,000 18,062 17,929 250,000
8 40,106 23,008 22,919 250,000 20,094 20,006 250,000
9 46,312 25,529 25,485 250,000 21,969 21,924 250,000
10 52,827 27,976 27,976 250,000 23,670 23,670 250,000
11 59,669 30,273 30,273 250,000 25,185 25,185 250,000
12 66,852 32,416 32,416 250,000 26,503 26,503 250,000
13 74,395 34,379 34,379 250,000 27,617 27,617 250,000
14 82,314 36,168 36,168 250,000 28,506 28,506 250,000
15 90,630 37,782 37,782 250,000 29,148 29,148 250,000
16 99,361 39,109 39,109 250,000 29,517 29,517 250,000
17 108,530 40,264 40,264 250,000 29,583 29,583 250,000
18 118,156 41,244 41,244 250,000 29,304 29,304 250,000
19 128,264 42,039 42,039 250,000 28,631 28,631 250,000
20 138,877 42,640 42,640 250,000 27,516 27,516 250,000
25 200,454 41,273 41,273 250,000 13,475 13,475 250,000
35 279,043 29,429 29,429 250,000 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL YEARS. THE SURRENDER
CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER
VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
52
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 3,380 2,980 250,000 3,380 2,769 250,000
2 8,610 6,984 6,628 250,000 6,541 5,576 250,000
3 13,241 10,621 10,310 250,000 9,779 8,278 250,000
4 18,103 14,336 14,070 250,000 13,093 10,872 250,000
5 23,208 18,163 17,941 250,000 16,480 13,351 250,000
6 28,568 22,125 21,947 250,000 19,932 15,706 250,000
7 34,196 26,235 26,102 250,000 23,444 17,929 250,000
8 40,106 30,516 30,427 250,000 27,007 20,006 250,000
9 46,312 34,968 34,924 250,000 30,610 21,924 250,000
10 52,827 39,589 39,589 250,000 34,241 34,241 250,000
11 59,669 44,313 44,313 250,000 37,891 37,891 250,000
12 66,852 49,143 49,143 250,000 41,552 41,552 250,000
13 74,395 54,063 54,063 250,000 45,221 45,221 250,000
14 82,314 59,083 59,083 250,000 48,881 48,881 250,000
15 90,630 64,213 64,213 250,000 52,519 52,519 250,000
16 99,361 69,363 69,363 250,000 56,112 56,112 250,000
17 108,530 74,644 74,644 250,000 59,641 59,641 250,000
18 118,156 80,064 80,064 250,000 63,074 63,074 250,000
19 128,264 85,631 85,631 250,000 66,375 66,375 250,000
20 138,877 91,354 91,354 250,000 69,510 69,510 250,000
25 200,454 121,950 121,950 250,000 81,501 81,501 250,000
35 279,043 156,846 156,846 250,000 80,759 80,759 250,000
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL YEARS. THE SURRENDER
CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER
VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
53
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4200 3,591 3,191 250000 3,591 3,191 250,000
2 8610 7,632 7,277 250000 7,177 6,821 250,000
3 13241 11,964 11,653 250000 11,071 10,760 250,000
4 18103 16,662 16,396 250000 15,303 15,036 250,000
5 23208 21,797 21,575 250000 19,904 19,682 250,000
6 28568 27,434 27,256 250000 24,902 24,725 250,000
7 34196 33,635 33,502 250000 30,335 30,202 250,000
8 40106 40,476 40,387 250000 36,239 36,150 250,000
9 46312 48,019 47,975 250000 42,655 42,610 250,000
10 52827 56,330 56,330 250000 49,631 49,631 250,000
11 59669 65,425 65,425 250000 57,226 57,226 250,000
12 66852 75,392 75,392 250000 65,505 65,505 250,000
13 74395 86,314 86,314 250000 74,553 74,553 250,000
14 82314 98,312 98,312 250000 84,454 84,454 250,000
15 90630 111,522 111,522 250000 95,310 95,310 250,000
16 99361 126,021 126,021 250000 107,234 107,234 250,000
17 108530 141,984 141,984 270,088 120,365 120,365 250,000
18 118156 159,409 159,409 295,216 134,859 134,859 250,000
19 128264 178,423 178,423 321,872 150,716 150,716 250,000
20 138877 199,168 199,168 350,210 167,837 167,837 250,000
25 200454 333,820 333,820 521,260 275,617 275,617 430,376
35 279043 537,823 537,823 757,875 429,094 429,094 604,659
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL YEARS. THE SURRENDER
CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER
VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE DIFFERENT
FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
54
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 3,645 3,195 253,645 3,645 3,195 253,645
2 9,686 7,298 6,898 257,298 6,859 6,459 256,859
3 14,896 10,759 10,409 260,759 9,947 9,597 259,947
4 20,365 14,073 13,773 264,073 12,905 12,605 262,905
5 26,109 17,268 17,018 267,268 15,727 15,477 265,727
6 32,139 20,366 20,166 270,366 18,400 18,200 268,400
7 38,471 23,372 23,222 273,372 20,915 20,765 270,915
8 45,120 26,303 26,203 276,303 23,256 23,156 273,256
9 52,101 29,152 29,102 279,152 25,407 25,357 275,407
10 59,431 31,906 31,906 281,906 27,352 27,352 277,352
11 67,127 34,478 34,478 284,478 29,075 29,075 279,075
12 75,208 36,861 36,861 286,861 30,563 30,563 280,563
13 83,694 39,025 39,025 289,025 31,806 31,806 281,806
14 92,604 40,972 40,972 290,972 32,783 32,783 282,783
15 101,959 42,701 42,701 292,701 33,471 33,471 283,471
16 111,782 44,078 44,078 295,078 33,838 33,838 283,838
17 122,096 45,240 45,240 295,240 33,857 33,857 283,857
18 132,926 46,181 46,181 296,181 33,483 33,483 283,483
19 144,297 46,890 46,890 296,890 32,668 32,668 282,668
20 156,237 47,358 47,358 297,358 31,369 31,369 281,369
25 225,511 44,420 44,420 294,420 16,281 16,281 266,281
35 313,924 29,833 29,833 279,833 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL YEARS . THE
SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH
SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
55
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 3,885 3,435 253,885 3,885 3,435 253,885
2 9,686 8,007 7,607 258,007 7,553 7,153 257,553
3 14,896 12,171 11,821 262,171 11,305 10,955 261,305
4 20,365 16,420 16,120 266,420 15,136 14,836 265,136
5 26,109 20,787 20,537 270,787 19,043 18,793 269,043
6 32,139 25,295 25,095 275,295 23,012 22,812 273,012
7 38,471 29,956 29,806 279,956 27,034 26,884 277,034
8 45,120 34,793 34,693 284,793 31,093 30,993 281,093
9 52,101 39,804 39,754 289,804 35,172 35,122 285,172
10 59,431 44,981 44,981 294,981 39,251 39,251 289,251
11 67,127 50,241 50,241 300,241 43,311 43,311 293,311
12 75,208 55,578 55,578 305,578 47,332 47,332 297,332
13 83,694 60,959 60,959 310,959 51,302 51,302 301,302
14 92,604 66,388 66,388 316,388 55,189 55,189 305,189
15 101,959 71,859 71,859 321,859 58,963 58,963 308,963
16 111,782 77,234 77,234 327,234 62,581 62,581 312,581
17 122,096 82,643 82,643 332,643 66,004 66,004 316,004
18 132,926 88,079 88,079 338,079 69,171 69,171 319,171
19 144,297 93,527 93,527 343,527 72,014 72,014 322,014
20 156,237 98,976 98,976 348,976 74,469 74,469 324,469
25 225,511 124,243 124,243 374,243 78,534 78,534 328,534
35 313,924 141,839 141,839 391,839 58,468 58,468 308,468
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL YEARS. THE SURRENDER
CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER
VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE DIFFERENT
FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
56
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 4,125 3,675 254,125 4,125 3,675 254,125
2 9,686 8,745 8,345 258,745 8,278 7,878 258,278
3 14,896 13,699 13,349 263,699 12,779 12,429 262,779
4 20,365 19,065 18,765 269,065 17,658 17,358 267,658
5 26,109 24,913 24,663 274,913 22,944 22,694 272,944
6 32,139 31,314 31,114 281,314 28,665 28,465 278,665
7 38,471 38,330 38,180 288,330 34,851 34,701 284,851
8 45,120 46,040 45,940 296,040 41,532 41,432 291,532
9 52,101 54,506 54,456 304,506 48,740 48,690 298,740
10 59,431 63,791 63,791 313,791 56,507 56,507 306,507
11 67,127 73,886 73,886 323,886 64,872 64,872 314,872
12 75,208 84,863 84,863 334,863 73,876 73,876 323,876
13 83,694 96,778 96,778 346,778 83,574 83,574 333,574
14 92,604 109,728 109,728 359,728 94,007 94,007 344,007
15 101,959 123,811 123,811 373,811 105,225 105,225 355,225
16 111,782 139,001 139,001 389,001 117,269 117,269 367,269
17 122,096 155,550 155,550 405,550 130,189 130,189 380,189
18 132,926 173,588 173,588 423,588 144,022 144,022 394,022
19 144,297 193,253 193,253 443,253 158,805 158,805 408,805
20 156,237 214,700 214,700 464,700 174,583 174,583 424,583
25 225,511 353,605 353,605 603,605 270,448 270,448 520,448
35 313,924 564,675 564,675 814,675 398,231 398,231 648,231
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL YEARS. THE SURRENDER
CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER
VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE DIFFERENT
FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
57
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,300 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,515 3,452 3,022 254,300 3,452 3,022 254,300
2 9,256 6,912 6,530 258,600 6,470 6,088 258,600
3 14,234 10,181 9,846 262,900 9,360 9,025 262,900
4 19,460 13,301 13,014 267,200 12,116 11,830 267,200
5 24,948 16,301 16,062 271,500 14,730 14,492 271,500
6 30,711 19,200 19,009 275,800 17,187 16,996 275,800
7 36,761 22,005 21,861 280,100 19,475 19,332 280,100
8 43,114 24,732 24,636 284,400 21,574 21,479 284,400
9 49,785 27,372 27,325 288,700 23,466 23,418 288,700
10 56,789 29,911 29,911 293,000 25,127 25,127 293,000
11 64,144 32,258 32,258 297,300 26,536 26,536 297,300
12 71,866 34,399 34,399 301,600 27,671 27,671 301,600
13 79,974 36,299 36,299 305,900 28,515 28,515 305,900
14 88,488 37,957 37,957 310,200 29,035 29,035 310,200
15 97,427 39,366 39,366 314,500 29,193 29,193 314,500
16 106,814 40,370 40,370 318,800 28,941 28,941 318,800
17 116,669 41,111 41,111 323,100 28,231 28,231 323,100
18 127,018 41,576 41,576 327,400 26,987 26,987 327,400
19 137,884 41,742 41,742 331,700 25,128 25,128 331,700
20 149,293 41,590 41,590 336,000 22,567 22,567 336,000
25 215,488 33,464 33,464 357,500 0 0 0
35 299,971 6,350 6,350 379,000 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL YEARS. THE SURRENDER
CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER
VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE DIFFERENT
FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
58
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,300 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,515 3,680 3,250 254,300 3,680 3,250 254,300
2 9,256 7,587 7,205 258,600 7,131 6,749 258,600
3 14,234 11,524 11,190 262,900 10,652 10,317 262,900
4 19,460 15,536 15,249 267,200 14,239 13,952 267,200
5 24,948 19,654 19,415 271,500 17,885 17,647 271,500
6 30,711 23,901 23,710 275,800 21,579 21,388 275,800
7 36,761 28,290 28,147 280,100 25,308 25,165 280,100
8 43,114 32,843 32,747 284,400 29,055 28,960 284,400
9 49,785 37,558 37,511 288,700 32,802 32,755 288,700
10 56,789 42,429 42,429 293,000 36,526 36,526 293,000
11 64,144 47,372 47,372 297,300 40,205 40,205 297,300
12 71,866 52,381 52,381 301,600 43,818 43,818 301,600
13 79,974 57,425 57,425 305,900 47,346 47,346 305,900
14 88,488 62,508 62,508 310,200 50,755 50,755 310,200
15 97,427 67,626 67,626 314,500 54,009 54,009 314,500
16 106,814 72,642 72,642 318,800 57,056 57,056 318,800
17 116,669 77,687 77,687 323,100 59,846 59,846 323,100
18 127,018 82,755 82,755 327,400 62,304 62,304 327,400
19 137,884 87,832 87,832 331,700 64,345 64,345 331,700
20 149,293 92,909 92,909 336,000 65,878 65,878 336,000
25 215,488 116,368 116,368 357,500 62,038 62,038 357,500
35 299,971 131,965 131,965 379,000 18,269 18,269 379,000
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL YEARS. THE SURRENDER
CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER
VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE DIFFERENT
FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
59
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,300 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,515 3,909 3,479 254,300 3,909 3,479 254,300
2 9,256 8,289 7,907 258,600 7,820 7,438 258,600
3 14,234 12,979 12,645 262,900 12,054 11,720 262,900
4 19,460 18,056 17,769 267,200 16,639 16,352 267,200
5 24,948 23,589 23,350 271,500 21,603 21,364 271,500
6 30,711 29,648 29,456 275,800 26,972 26,781 275,800
7 36,761 36,294 36,151 280,100 32,778 32,635 280,100
8 43,114 43,608 43,512 284,400 39,052 38,957 284,400
9 49,785 51,652 51,605 288,700 45,829 45,781 288,700
10 56,789 60,492 60,492 293,000 53,146 53,146 293,000
11 64,144 70,129 70,129 297,300 61,049 61,049 297,300
12 71,866 80,646 80,646 301,600 69,593 69,593 301,600
13 79,974 92,114 92,114 305,900 78,844 78,844 305,900
14 88,488 104,650 104,650 310,200 88,869 88,869 310,200
15 97,427 118,379 118,379 314,500 99,741 99,741 314,500
16 106,814 133,337 133,337 318,800 111,544 111,544 319,800
17 116,669 149,793 149,793 323,100 124,378 124,378 323,100
18 127,018 167,931 167,931 327,400 138,349 138,349 327,400
19 137,884 187,951 187,951 331,700 153,585 153,585 331,700
20 149,293 209,902 209,902 336,000 170,246 170,246 336,000
25 215,488 352,387 352,387 357,500 279,784 279,784 357,500
35 299,971 568,266 568,266 379,000 437,080 437,080 379,000
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL YEARS. THE SURRENDER
CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER
VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE DIFFERENT
FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
60
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1.
FINANCIAL STATEMENTS
The following unaudited financial statements, reflect, in the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, the results of operations
and the cash flows for the periods presented. Certain reclassifications of
prior year results were made to conform to current presentation. Interim
results are not indicative of the results which may be expected for any other
interim period or the full year. For a description of accounting policies, see
Notes to Consolidated Financial Statements in the 1995 Form 10-K.
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Millions)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Premiums and other considerations $ 299 $ 270 $ 943 $ 720
Net investment income 318 336 651 675
Net realized losses on investments (1) (7) (1) (6)
----- ----- ----- -----
616 599 1,593 1,389
----- ----- ----- -----
Benefits, Claims and Expenses:
Benefits, claims and claim adjustment expenses 392 350 788 716
Amortization of deferred policy acquisition costs 63 50 129 92
Dividends to policyholders 61 69 347 297
Other insurance expenses 34 85 198 193
----- ----- ----- -----
550 554 1,462 1,298
----- ----- ----- -----
Income Before Income Tax 66 45 131 91
Income tax expense 23 15 45 30
----- ----- ----- -----
Net Income $ 43 $ 30 $ 86 $ 61
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
(3)
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions)
June 30, December 31,
1996 1995
-------- -----------
(unaudited)
Assets:
Investments:
Fixed maturities, available for sale, at fair value $ 13,683 $ 14,400
Equity securities, at fair value 65 63
Mortgage loans, at outstanding principal balance 57 265
Policy loans, at outstanding balance 3,756 3,381
Other investments 99 156
------ ------
17660 18,265
Cash 46 46
Premiums and amounts receivable 121 165
Reinsurance recoverable 6,696 6,221
Accrued investment income 399 394
Deferred policy acquisition costs 2,488 2,188
Deferred income tax 601 420
Other assets 205 234
Separate account assets 42,569 36,264
------ ------
$ 70,785 $ 64,197
------ ------
------ ------
Liabilities and Stockholder's Equity
Future policy benefits $ 2,677 $ 2,373
Other policyholder funds 22,570 22,598
Other liabilities 1,294 1,233
Separate account liabilities 42,569 36,264
------ ------
69,110 62,468
------ ------
Common stock - authorized 1,000 shares, $5,690 par value,
Issued and outstanding 1,000 shares 6 6
Capital surplus 1,045 1,007
Unrealized loss on investments, net of tax (235) (57)
Retained earnings 859 773
------ ------
1,675 1,729
------ ------
$ 70,785 $ 64,197
------ ------
------ ------
(4)
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
Six Months
Ended June 30,
--------------
1996 1995
---- ----
(unaudited)
Operating Activities:
Net Income $ 86 $ 61
Adjustments to net income:
Net realized investment losses before tax 1 4
Net policyholder investment (gains) losses before tax (4) 2
Net deferred policy acquisition costs (300) (181)
Net amortization of premium on fixed maturities 7 7
Deferred income tax benefits (88) (120)
Decrease in premiums and amounts receivable 20 3
Decrease (increase) in other assets 26 (33)
Increase in reinsurance recoverable (264) (60)
Increase in liability for future policy benefits 304 354
Increase in other liabilities 150 57
(Increase) decrease in accrued investment income (5) 7
---- ----
Cash (Used For) Provided By Operating Activities (67) 101
---- ----
Investing Activities:
Purchases of fixed maturity investments (2,717) (2,150)
Proceeds from sales of fixed maturity investments 1,348 2,835
Maturities and principal paydowns of long-term investments 1,469 574
Net purchases of other investments (116) (1,240)
Net sales (purchases) of short-term investments 232 (894)
---- ----
Cash Provided By (Used For) Investing Activities 216 (875)
---- ----
Financing Activities:
Net (disbursements) receipts for investment and
UL-type contracts (debited)
credited to policyholder account balances (187) 837
Capital contributions 38 --
---- ----
Cash (Used For) Provided By Financing Activities (149) 837
---- ----
Net Increase In Cash -- 63
Cash at beginning of period 46 20
---- ----
Cash At End Of Period $ 46 $ 83
---- ----
---- ----
(5)
<PAGE>
Item 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(In Millions)
Quarter Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY RUNOFF TOTAL
---- --- --------- ------ -----
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $252 $218 $100 $90 $210 $199 $54 $92 $616 $599
Benefits, Claims, Expenses and Taxes 204 186 96 85 204 193 69 105 573 569
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net Income (Loss) $48 $32 $4 $5 $6 $6 $(15) $(13) $43 $30
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>
Individual Life and Annuity Division (ILAD)
The premiums, investment income, management and maintenance fees and
cost of insurance associated with this growing asset base continue to
be the source of ILAD's increased revenues, up 16% from prior year.
New deposits of fixed and variable annuities in the three months ended
June 30, 1996 were approximately $2.7 billion, an increase of over 90%
from prior year sales or $1.4 billion, but are not reported as
revenues. Net income, up 50% from the same period last year,
continues to grow as earnings are generated from an existing asset
base. Revenue, new deposit, and net income increases are all
indicative of exceptionally strong, stable growth.
Asset Management Services (AMS)
Continuing to be an industry leader in deferred compensation products,
revenues in this segment grew by approximately 14% over the same
period last year. Included in 1995 results is a one time benefit of
approximately $2 million. Excluding this benefit, net income rose 33%
over prior year. Asset Management Services is currently engaged in a
restructuring process that is anticipated to result in new product
development as well as expense reductions.
Specialty
Net Income in the Specialty segment held steady in the second
quarter as compared to the same period last year. In August of 1996,
Congress passed COLI legislation which provides for a three year
phase-out of the interest deduction on loans. It is expected that the
President will sign this bill. In anticipation of unfavorable tax
legislation there were no new deposits of leveraged COLI, but new
products, such as variable COLI and other non-qualified deferred
compensation vehicles, and new international ventures are being
developed to mitigate lost earnings due to leveraged COLI.
Runoff
The Runoff segment consists of a closed block of guaranteed rate
contracts (GRC) formerly part of the AMS segment of business. GRC
results have been negatively affected by lower investment earnings on
mortgaged-backed securities due to prepayments experienced in excess
of assumed levels. Hartford Life Insurance Company (HLIC) is
considering portfolio management strategies which may accelerate the
recognition of the closed book GRC loss as disclosed in HLIC's 1995
Form 10K Annual Report.
(6)
<PAGE>
Item 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(In Millions)
Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY RUNOFF TOTAL
---- --- --------- ------ -----
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $524 $407 $200 $196 $753 $593 $116 $193 $1,593 $1,389
Benefits, claims, expenses and taxes 430 340 192 187 739 582 146 219 1,507 1,328
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net income (loss) $ 94 $67 $8 $9 $14 $11 $(30) $(26) $86 $61
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>
Individual Life and Annuity Division (ILAD)
Growth in fixed and variable annuity sales, as well as several
assumption reinsurance transactions in the last several years have
increased the assets under management in this segment to approximately
$39 billion through June 1996. The premiums, investment income,
management and maintenance fees and cost of insurance associated with
this growing asset base continue to be the source of ILAD's increased
revenues. New deposits of fixed and variable annuities in the first
six months of 1996 were approximately $5 billion, but are not reported
as revenues, an increase over prior year sales of $1.5 billion or
42%.
Asset Management Services (AMS)
This segment is one of the top providers of deferred compensation
products in the country. Net income increased by 14% over prior
year, excluding a one time benefit of approximately $2 million in
1995. Asset Management services is currently engaged in a
restructuring process that is anticipated to result in new product
development as well as expense reductions.
Specialty
Increased net income in the Specialty segment is attributable to net
investment income and other revenues on the existing block of
corporate owned life insurance (COLI) business. In August of 1996
Congress passed COLI legislation which provides for a three year
phase-out of the interest deduction on loans. It is anticipated that
the President will sign this bill. Although there were no new
deposits of leveraged COLI in the first half of 1996, new products,
including variable COLI and other non-qualified deferred compensation
vehicles, are being developed. Also, expansion into new international
ventures should further mitigate the earnings lost due to leveraged
COLI.
Runoff
The Runoff segment consists of a closed block of guaranteed rate
contracts (GRC) formerly part of the AMS segment of business. GRC
results have been negatively affected by lower investment earnings on
mortgaged-backed securities due to prepayments experienced in excess
of assumed levels. Hartford Life Insurance Company (HLIC) is
considering portfolio management strategies which may accelerate the
recognition of the closed book GRC loss as disclosed in HLIC's 1995
Form 10K Annual Report.
(7)
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors of ITT
Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of ITT Hartford
Life and Annuity Insurance Company (a Wisconsin corporation and wholly-owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December
31, 1995 and 1994, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these statutory-basis financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes
other than for filing with a regulatory agency, generally accepted auditing
standards require that an auditors' report on them state whether they are
presented in conformity with generally accepted accounting principles. The
accounting practices used by the Company vary from generally accepted
accounting principles as explained and quantified in Note 1. In our opinion,
because the differences in accounting practices as described in Note 1 are
material, the statutory financial statements referred to above do not present
fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995.
<PAGE>
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of December 31, 1995 and 1994, and the results of operations and
its cash flows for each of the three years in the period ended December 31,
1995 in conformity with statutory accounting practices as described in Note 1.
As discussed in Note 1 of notes to statutory financial statements, the
Company changed its valuation method in determining aggregate reserves for
future benefits.
/s/ Arthur Andersen LLP
Hartford, Connecticut
January 24, 1996
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Revenues
Premiums and Annuity Considerations..................................... $ 165,792 $ 442,173 $ 14,281
Annuity and Other Fund Deposits......................................... 1,087,661 608,685 1,986,140
Net Investment Income................................................... 78,787 29,012 7,970
Commissions and Expense Allowances on Reinsurance
Ceded.................................................................. 183,380 154,527 60,700
Reserve Adjustment on Reinsurance Ceded................................. 1,879,785 1,266,926 0
Other Revenues.......................................................... 140,796 41,857 369,598
------------- ------------- -------------
Total Revenues........................................................ 3,536,201 2,543,180 2,438,689
------------- ------------- -------------
Benefits and Expenses
Death and Annuity Benefits.............................................. 53,029 7,948 3,192
Surrenders and Other Benefit Payments................................... 221,392 181,749 4,955
Commissions and Other Expenses.......................................... 236,202 186,303 132,169
Increase in Reserves for Future Benefits................................ 94,253 416,748 5,120
Increase in Liability for Premium and Other Deposit Funds............... 460,124 182,934 281,024
Net Transfers to Separate Accounts...................................... 2,414,669 1,541,419 2,013,183
------------- ------------- -------------
Total Benefits and Expenses........................................... 3,479,669 2,517,101 2,439,643
------------- ------------- -------------
Net Gain (Loss) from Operations before Federal Income Tax Expense......... 56,532 26,079 (954)
Federal Income Tax Expense.............................................. 14,048 24,038 11,270
------------- ------------- -------------
Net Gain (Loss) from Operations........................................... 42,484 2,041 (12,224)
Net Realized Capital Gains (Losses)..................................... 374 (2) 877
------------- ------------- -------------
Net Income (Loss)......................................................... $ 42,858 $ 2,039 $ (11,347)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Assets
Bonds................................................................................... $ 1,226,489 $ 798,501
Common Stocks........................................................................... 39,776 2,275
Policy Loans............................................................................ 22,521 20,145
Cash and Short-Term Investments......................................................... 173,304 84,312
Other Invested Assets................................................................... 13,432 2,519
------------- -------------
Total Cash and Invested Assets........................................................ 1,475,522 907,752
------------- -------------
Investment Income Due and Accrued....................................................... 18,021 12,757
Premium Balances Receivable............................................................. 402 467
Receivables from Affiliates............................................................. 8,182 2,861
Other Assets............................................................................ 25,907 13,749
Separate Account Assets................................................................. 7,324,910 3,588,077
------------- -------------
Total Assets.......................................................................... $ 8,852,944 $ 4,525,663
------------- -------------
------------- -------------
Liabilities
Aggregate Reserves for Future Benefits.................................................. $ 542,082 $ 447,284
Policy and Contract Claims.............................................................. 8,223 9,902
Liability for Premium and Other Deposit Funds........................................... 948,361 479,202
Asset Valuation Reserve................................................................. 8,010 2,422
Payable to Affiliates................................................................... 3,682 7,840
Other Liabilities....................................................................... (220,658) (100,349)
Separate Account Liabilities............................................................ 7,324,910 3,588,077
------------- -------------
Total Liabilities..................................................................... 8,614,610 4,434,378
------------- -------------
Capital and Surplus
Common Stock............................................................................ 2,500 2,500
Gross Paid-In and Contributed Surplus................................................... 226,043 114,109
Unassigned Funds........................................................................ 9,791 (25,324)
------------- -------------
Total Capital and Surplus............................................................. 238,334 91,285
------------- -------------
Total Liabilities and Capital and Surplus................................................. $ 8,852,944 $ 4,525,663
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
----------- --------- ----------
<S> <C> <C> <C>
Capital and Surplus -- Beginning of Year........................................... $ 91,285 $ 88,693 $ 30,027
----------- --------- ----------
Net Income (Loss)................................................................ 42,858 2,039 (11,347)
Net Unrealized Gains (Losses).................................................... 1,709 (133) (1,198)
Change in Asset Valuation Reserve................................................ (5,588) (1,356) 135
Change in Non-Admitted Assets.................................................... (1,944) (8,599) 1,076
Change in Reserve (calculation basis--see Note 1)................................ 0 10,659 0
Aggregate Write-ins for Surplus (see Note 3)..................................... 8,080 (18) 0
Dividends to Shareholder......................................................... (10,000) 0 0
Paid-in Surplus.................................................................. 111,934 0 70,000
----------- --------- ----------
Change in Capital and Surplus.................................................. 147,049 2,592 58,666
----------- --------- ----------
Capital and Surplus -- End of Year................................................. $ 238,334 $ 91,285 $ 88,693
----------- --------- ----------
----------- --------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOW
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Operations
Premiums, Annuity Considerations and Fund Deposits...................... $ 1,253,511 $ 1,050,493 $ 2,000,492
Investment Income....................................................... 78,328 24,519 5,594
Other Income............................................................ 2,253,466 1,515,700 434,851
------------- ------------- -------------
Total Income.......................................................... 3,585,305 2,590,712 2,440,937
------------- ------------- -------------
Benefits Paid........................................................... 277,965 181,205 8,215
Federal Income Taxes Paid on Operations................................. 208,423 20,634 9,666
Other Expenses.......................................................... 2,664,385 1,832,905 2,231,477
------------- ------------- -------------
Total Benefits and Expenses........................................... 3,150,773 2,034,744 2,249,358
------------- ------------- -------------
Net Cash From Operations.............................................. 434,532 555,968 191,579
------------- ------------- -------------
Proceeds from Investments
Bonds................................................................... 287,941 87,747 88,334
Common Stocks........................................................... 52 0 0
Other................................................................... 28 40 23,638
------------- ------------- -------------
Net Investment Proceeds............................................... 288,021 87,787 111,972
------------- ------------- -------------
Tax on Capital Gains.................................................... 226 (96) 376
Paid-in-Surplus......................................................... 111,934 0 70,000
Other Cash Provided..................................................... 28,199 30,554 0
------------- ------------- -------------
Total Proceeds........................................................ 862,460 674,405 373,175
------------- ------------- -------------
Cost of Investments Acquired
Bonds................................................................... 720,521 595,181 314,933
Common Stocks........................................................... 35,794 808 567
Miscellaneous Applications.............................................. 2,146 2,523 0
------------- ------------- -------------
Total Investments Acquired............................................ 758,461 598,512 315,500
------------- ------------- -------------
Other Cash Applied
Dividends Paid to Stockholder........................................... 10,000 0 0
Other................................................................... 5,007 24,813 24,626
------------- ------------- -------------
Total Other Cash Applied.............................................. 15,007 24,813 24,626
------------- ------------- -------------
Total Applications.................................................. 773,468 623,325 340,126
------------- ------------- -------------
Net Change in Cash and Short-Term Investments............................. 88,992 51,080 33,049
Cash and Short-Term Investments, Beginning of Year........................ 84,312 33,232 183
------------- ------------- -------------
Cash and Short-Term Investments, End of Year.............................. $ 173,304 $ 84,312 $ 33,232
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
ITT Hartford Life and Annuity Insurance Company (ILA or the Company),
formerly known as ITT Life Insurance Corporation, is a wholly owned subsidiary
of Hartford Life Insurance Company (HLIC), which is an indirect subsidiary of
ITT Hartford Group, Inc. (ITT Hartford), formerly a wholly owned subsidiary of
ITT Corporation (ITT). On December 19, 1995, ITT Corporation distributed all the
outstanding shares of ITT Hartford Group to ITT shareholders of record in an
action known herein as the "Distribution". As a result of the Distribution, ITT
Hartford became an independent, publicly traded company.
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory basis financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners (NAIC) and the Insurance
Department of the State of Wisconsin.
The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilties and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
Statutory accounting practices and generally accepted accounting principles
(GAAP) differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and
selling expenses, premium taxes, etc.) which are charged to expense when
incurred for statutory purposes rather than on a pro-rata basis over the
expected life of the policy;
(2) recognition of premium revenues, which for statutory purposes are
generally recorded as collected or when due during the premium paying period of
the contract and which for GAAP purposes, generally, for universal life policies
and investment products, are only recorded for policy charges for the cost of
insurance, policy administration and surrender charges assessed to policy
account balances. Also, for GAAP purposes, premiums for traditional life
insurance policies are recognized as revenues when they are due from
policyholders and the retrospective deposit method is used in accounting for
universal life and other types of contracts where the payment pattern is
irregular or surrender charges are a significant source of profit. The
prospective deposit method is used for GAAP purposes where investment margins
are the primary source of profit;
(3) development of liabilities for future policy benefits, which for
statutory purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and mortality
assumptions used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income (tax return)
only for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for financial
reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g.,
past due agent's balances and furniture and equipment) from the balance sheet
for statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health
care benefits on an optional basis, immediate recognition or a twenty year
phase-in approach, whereas GAAP liabilities were established at date of
adoption;
6
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset Valuation
Reserve); as well as the deferral and amortization of realized gains and losses,
motivated by changes in interest rates during the period the asset is held, into
income over the remaining life to maturity of the asset sold (Interest
Maintenance Reserve); whereas on a GAAP basis, no such formula reserve is
required and realized gains and losses are recognized in the period the asset is
sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where
risk transfer has taken place; whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost, where GAAP requires
that fixed maturities be classified as "held-to-maturity", "available-for-sale"
or "trading", based on the Company's intentions with respect to the ultimate
disposition of the security and its ability to affect those intentions. The
Company's fixed maturities were classified on a GAAP basis as
"available-for-sale" and accordingly, these investments were reflected at fair
value with the corresponding impact included as a component of Stockholder's
Equity designated as "Unrealized Gain/Loss on Investments, Net of Tax". For
statutory reporting purposes, Net Unrealized Loss on Investments represents
unrealized gains or losses on common stock and other bonds reported at fair
value; and
(10) separate account liabilties are valued on the Commissioner's Annuity
Reserve Valuation Method (CARVM), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance sheet of
the general account), whereas GAAP liabilities are valued at account value.
As of December 31, 1995, 1994 and 1993, the significant differences between
statutory and GAAP basis net income and capital and surplus for the Company are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
GAAP Net Income:.............................................................. $ 38,821 $ 23,295 $ 6,071
Amortization and deferral of policy acquisition costs....................... (174,341) (117,863) (147,700)
Benefit reserve adjustment.................................................. 31,392 30,912 14,059
Deferred taxes.............................................................. 2,801 (9,267) (7,123)
Separate accounts........................................................... 146,635 75,941 110,547
Coinsurance................................................................. 0 3,472 11,578
Other, net.................................................................. (2,450) (4,451) 1,221
Statutory Net Income (Loss)................................................. $ 42,858 $ 2,039 $ (11,347)
GAAP Capital and Surplus...................................................... $ 455,541 $ 199,785 $ 198,408
Deferred policy acquisition costs........................................... (596,542) (422,201) (304,338)
Benefit reserve adjustment.................................................. 74,782 85,191 43,621
Deferred taxes.............................................................. 1,493 13,257 13,706
Separate accounts........................................................... 333,123 186,488 110,547
Asset valuation reserve..................................................... (8,010) (2,422) (1,066)
Coinsurance................................................................. 0 0 22,642
Unrealized gain (loss) on bonds............................................. (1,696) 21,918 0
Adjustment relating to Lyndon contribution.................................. (41,277) 0 0
Other, net.................................................................. 20,920 9,269 5,173
Statutory Capital and Surplus............................................... $ 238,334 $ 91,285 $ 88,693
</TABLE>
AGGREGATE RESERVES AND LIABILITIES FOR PREMIUM AND OTHER DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with presently accepted actuarial standards.
Reserves for life insurance policies are generally based on the 1958 and 1980
Commissioner's Standard Ordinary Mortality Tables at various rates ranging from
2.5% to 6.0%. Accumulation and on-benefit annuity reserves are based principally
on Individual Annuity tables at various rates ranging from 2.5% to 8.75% and
using the Commissioner's Annuity Reserve Valuation Method (CARVM). Accident and
health reserves are established using a two year preliminary term method and
morbidity tables based on Company experience.
7
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the Statutory Statements of
Income.
During 1994, the Company changed the valuation method on aggregate reserves
for future benefits resulting in a $10.7 million increase in surplus. The new
valuation method is in accordance with presently accepted actuarial standards.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds which are deemed
ineligible to be held at amortized cost by the National Association of Insurance
Commissioners (NAIC) Securities Valuation Office (SVO) are carried at the
appropriate SVO published value. When a permanent reduction in the value of
publicly traded securities occurs, the decrease is reported as a realized loss
and the carrying value is adjusted accordingly. Common stocks are carried at
market value with the difference from cost reflected in surplus. Other invested
assets are generally recorded at fair value.
Changes in unrealized capital gains and losses on common stock are reported
as additions to or reductions of surplus. The Asset Valuation Reserve is
designed to provide a standardized reserve process for realized and unrealized
losses due to the default and equity risks associated with invested assets. The
reserve increased by $5,588, $1,356 and $135 in 1995, 1994 and 1993,
respectively. Additionally, the Interest Maintenance Reserve (IMR) captures net
realized capital gains and losses, net of applicable income taxes, resulting
from changes in interest rates and amortizes these gains or losses into income
over the remaining life of the mortgage loan or bond sold. Realized capital
gains and losses, net of taxes, not included in IMR are reported in the
Statutory Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital gains
reclassified from the IMR was $39 in 1995 and the amount of net capital losses
was $67 and $264 in 1994 and 1993, respectively. The amount of income amortized
was $256, $114 and $178 in 1995, 1994 and 1993, respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $333.1, $186.5 million in 1995 and 1994, respectively. The
balances are classified in accordance with NAIC accounting practices.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Interest income from fixed maturity securities.............................. $ 76,100 $ 28,335 $ 7,541
Interest income from policy loans........................................... 1,504 454 124
Interest and dividends from other investments............................... 2,288 1,069 481
--------- --------- ---------
Gross investment income..................................................... 79,892 29,858 8,146
Less: investment expenses................................................... 1,105 846 176
Net investment income....................................................... $ 78,787 $ 29,012 $ 7,970
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) UNREALIZED GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized gains at end of year............................................. $ 1,724 $ 75 $ 148
Gross unrealized losses at end of year............................................ 0 (60) 0
--------- --------- ---------
Net unrealized gains.............................................................. 1,724 15 148
Balance at beginning of year...................................................... 15 148 93
--------- --------- ---------
Change in net unrealized gains on common stocks................................... $ 1,709 $ (133) $ 55
--------- --------- ---------
--------- --------- ---------
</TABLE>
8
<PAGE>
2. INVESTMENTS: (CONTINUED)
(C) UNREALIZED GAINS (LOSSES) ON BONDS AND SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Gross unrealized gains at end of year..................................... $ 22,251 $ 986 $ 5,916
Gross unrealized losses at end of year.................................... (1,374) (34,718) (684)
---------- ---------- ---------
Net unrealized gains (losses) after tax................................... 20,877 (33,732) 5,232
Balance at beginning of year.............................................. (33,732) 5,232 2,287
---------- ---------- ---------
Change in net unrealized gains (losses) on bonds and short-term
investments.............................................................. $ 54,609 $ (38,964) $ 2,945
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short term investments................................................. $ 156 $ (101) $ (316)
Common stocks.................................................................... 52 0 0
Real estate and other............................................................ 0 34 1,316
--------- --------- ---------
Realized gains (losses).......................................................... 208 (67) 1,000
Capital gains (benefit) taxes.................................................... (205) 2 386
--------- --------- ---------
Net realized capital gains (losses) after tax.................................... 413 (69) 614
Less: IMR capital gains (losses)................................................. 39 (67) (263)
--------- --------- ---------
Net realized capital gains (losses).............................................. $ 374 $ (2) $ 877
--------- --------- ---------
--------- --------- ---------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1995 and 1994.
(F) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company is
not exposed to any significant concentration of credit risk.
9
<PAGE>
2. INVESTMENTS: (CONTINUED)
(G) BONDS, SHORT-TERM AND COMMON STOCK INVESTMENTS
<TABLE>
<CAPTION>
1995
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
-- guaranteed and sponsored......................... $ 44,268 $ 14 $ (248) $ 44,034
-- guaranteed and sponsored -- asset backed......... 176,160 4,644 (682) 180,122
States, municipalities and political subdivisions..... 16,948 38 (6) 16,980
International governments............................. 5,402 441 0 5,843
Public utilities...................................... 108,083 1,652 (90) 109,645
All other corporate................................... 374,058 8,145 (248) 381,955
All other corporate -- asset backed................... 410,197 5,841 (89) 415,949
Short-term investments................................ 139,011 18 0 139,029
Certificates of deposit............................... 91,373 1,458 (11) 92,820
------------- ----------- ----------- -------------
Total............................................. $ 1,365,500 $ 22,251 $ (1,374) $ 1,386,377
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
1995
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Common Stock -- Unaffiliated................................ $ 2,668 $ 555 $ 0 $ 3,223
Common Stock -- Affiliated.................................. 35,384 1,169 0 36,553
----------- ----------- ----------- ---------
Total Common Stock...................................... $ 38,052 $ 1,724 $0 $ 39,776
----------- ----------- ----------- ---------
----------- ----------- ----------- ---------
</TABLE>
<TABLE>
<CAPTION>
1994
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
-- guaranteed and sponsored............................. $ 175,925 $ 0 $ (12,059) $ 163,866
-- guaranteed and sponsored -- asset backed............. 142,318 382 (4,911) 137,789
States, municipalities and political subdivisions......... 10,409 0 (603) 9,806
International governments................................. 2,248 0 (69) 2,179
Public utilities.......................................... 29,509 31 (1,271) 28,269
All other corporate....................................... 257,301 246 (9,452) 248,095
All other corporate -- asset backed....................... 112,390 327 (4,066) 108,651
Short-term investments.................................... 56,365 0 0 56,365
Certificates of deposit................................... 68,401 0 (2,287) 66,114
----------- ----- ----------- -----------
Total................................................. $ 854,866 $ 986 $ (34,718) $ 821,134
----------- ----- ----------- -----------
----------- ----- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
1994
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- --------------- ------------- ---------
<S> <C> <C> <C> <C>
Common Stock -- Unaffiliated................................. $ 2,260 $ 75 $ (60) $ 2,275
</TABLE>
The amortized cost and estimated market value of bonds and short-term
investments at December 31, 1995 by management's anticipated maturity are shown
below. Asset backed securities are distributed to
10
<PAGE>
2. INVESTMENTS: (CONTINUED)
maturity year based on ILA's estimate of the rate of future prepayments of
principal over the remaining life of the securities. Expected maturities differ
from contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- ------------------------------------------------------------------------------------------ ------------- -------------
<S> <C> <C>
Due in one year or less................................................................... $ 439,793 $ 442,327
Due after one year through five years..................................................... 840,088 855,741
Due after five years through ten years.................................................... 80,820 83,432
Due after ten years....................................................................... 4,799 4,877
------------- -------------
Total..................................................................................... $ 1,365,500 $ 1,386,377
------------- -------------
------------- -------------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1995, 1994 and 1993 were $313,961, $117,912 and $333,023, respectively,
resulting in gross realized gains of $1,419, $518 and $937, respectively, and
gross realized losses of $1,263, $624 and $1,255, respectively, before transfers
to IMR. The Company had realized gains of $52 during 1995 from a capital gain
distribution.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
BALANCE SHEET ITEMS:
(IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturites.............................................................. $ 1,366 $ 1,386 $ 855 $ 821
Common stocks................................................................ 40 40 2 2
Policy loans................................................................. 23 23 20 20
Miscellaneous................................................................ 13 13 2 2
LIABILITIES
Liabilities on investment contracts.......................................... $ 1,031 $ 981 $ 534 $ 526
</TABLE>
The carrying amounts for policy loans approximates fair value. The
liabilities are determined by forecasting future cash flows discounted at
current market rates.
3. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within ITT Hartford
relate principally to tax settlements, reinsurance, service fees, capital
contributions and payments of dividends.
On June 30, 1995, the assets of Lyndon Insurance Company were contributed to
ILA. As a result, ILA received approximately $365 million in fixed maturities,
equity securities and cash, $28 million in policy reserves, $187 million of
current tax liability, $26 million in IMR, $8 million in AVR (offset by an
aggregate write-in to surplus), and $4 million of other liabilities. The assets
in excess of liabilities of $112 were recorded as an increase to paid-in
surplus.
For additional information, see Note 5.
4. FEDERAL INCOME TAXES:
The Company is included in the consolidated Federal income tax return of ITT
Hartford and its includable subsidiaries. Allocation of taxes is based primarily
upon separate company tax return calculations with current credit for net losses
used in consolidation except that increases resulting from consolidation are
allocated in proportion to separate return amounts. Intercompany Federal income
tax balances are generally settled quarterly with Hartford Fire Insurance
Company (Hartford Fire), a subsidiary of ITT Hartford. Federal income
11
<PAGE>
4. FEDERAL INCOME TAXES: (CONTINUED)
taxes paid by the Company were $215,921, $20,538, and $10,042 in 1995, 1994 and
1993, respectively. The effective tax rate was 25%, 92%, and 1,181% in 1995,
1994, and 1993 respectively. The following schedule provides a reconciliation of
the effective tax rate (in millions).
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ---
<S> <C> <C> <C>
Tax provision (benefit) at US statutory rate..................... 20 9 (1)
Tax acquisiton deferred costs.................................... 8 8 10
Statutory to tax reserves........................................ 3 5 0
Investments and other............................................ (17) 2 2
Federal income tax expense....................................... 14 24 11
</TABLE>
5. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior approval,
by State of Wisconsin insurance companies to shareholders is subject to
restrictions relating to statutory surplus. Dividends are paid as determined by
the Board of Directors and are not cumulative. ILA paid dividends of $10 million
to its parent, HLIC, in 1995. No dividends were paid in 1994 and 1993. As a
result of the distribution by ITT, the assets of ITT Lyndon Insurance Company
(Lyndon) were contributed to ILA in June 1995. Substantially all the business
was removed from Lyndon prior to the contribution. The amount of assets which
exceeded liabilities at the contribution date ($112 million) was included in
paid-in capital.
6. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
The Company's employees are included in ITT Hartford's non-contributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974 and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of HLIC's group pension contracts. Pension expense was
$1,034, $1,211, and $765 in 1995, 1994 and 1993, respectively. Liabilities for
the plan are held by Hartford Fire.
The Company also participates in ITT Hartford 's Investment and Savings
Plan, which includes a deferred compensation option under IRC section 401(k) and
an ESOP allocation under IRC section 404(k). The liabilities for these plans are
included in the financial statements of Hartford Fire. The cost to ILA was not
material in 1995, 1994 and 1993.
The Company's employees are included in Hartford Fire's contributory defined
health care and life insurance benefit plans. These plans provide health care
and life insurance benefits for retired employees. Substantially all employees
may become eligible for those benefits if they reach normal or early retirement
age while still working for the Company. The Company has prefunded a portion of
the health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Amounts allocated by
Hartford Fire for post-retirement health care and life insurance benefits
expense (not including provisions for accrual of post-retirement benefit
obligations) are immaterial.
The assumed rate of future increases in the per capita cost of health care
(the health care trend rate) was 10.1% for 1995, decreasing ratably to 6% in the
year 2001. Increasing the health care trend rates by one percent per year would
have an immaterial impact on the accumulated post-retirement benefit obligation
and the annual expense. The cost to ILA was not material in 1995, 1994 and 1993.
Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long term disability. Post-employment
benefit expense was not material in 1995, 1994 and 1993.
7. REINSURANCE:
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve ILA of its primary liability. ILA
also assumes insurance from other insurers.
12
<PAGE>
7. REINSURANCE: (CONTINUED)
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------
1995 1994 1993
----------- ------------ -----------
<S> <C> <C> <C>
Direct premiums................................................................. $ 159,918 $ 133,180 $ 131,586
Premiums assumed................................................................ 13,299 960 841
Premiums ceded.................................................................. 7,425 (308,033) 118,146
Premiums and annuity considerations............................................. 165,792 442,173 14,281
</TABLE>
In December 1994 the Company ceded to a third party, on a modified
coinsurance basis, 80% of the variable annuity business written in 1994. The
ceded business includes both general and separate account liabilities. As a
result of the agreement ILA transferred approximately $1,352 million in assets
and liabilities. The financial impact of the cession was an increase of
approximately $15 million to net income and surplus.
In November 1994, the Company ceded, on a modified coinsurance basis, 30% of
the separate account variable annuity business distributed by Paine Webber to
Paine Webber Life Insurance Company (PWLIC). As a result of the agreement, ILA
transferred approximately $24 million in assets and liabilities to PWLIC. The
financial impact of the cession was an increase of approximately $765 to net
income and surplus.
In October 1994, the agreement, effective December 1990, which required ILA
to coinsure 90% of all existing and new business, excluding variable annuity
business, written by the Company to HLIC, was terminated. As a result of the
termination, ILA received approximately $430 million in assets and liabilities
from HLIC. The impact of the transaction was a decrease of approximately $15
million to net income and surplus.
In November 1993, ILA acquired, through an assumption reinsurance
transaction, substantially all of the individual fixed and variable annuity
business of Hartford Life and Accident, an affiliate. As a result of this
transaction, the assets and liabilities of the Company increased approximately
$1 billion, substantially all of which was transferred to the separate accounts
of the Company. The remaining assets and liabilities (approximately $41 million)
were transferred in October 1995. The impact of these transactions on net income
and surplus was not significant.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $7.3
billion and $3.6 billion at December 31, 1995 and 1994, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with the Commissioners Annuity Reserve Valuation Method
(CARVM), which approximates the market value less applicable surrender charges.
Separate account assets are segregated from other investments, the policyholder
assumes the investment risk, and the investment income and gains and losses
accrue directly to the policyholder. Separate account management fees, net of
minimum guarantees, were $72 million, $42 million, and $6 million in 1995, 1994,
and 1993, respectively.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1995, the Company had no material contingent liabilities,
nor had the Company committed any surplus funds for any contingent liabilities
or arrangements. The Company is involved in various legal actions which have
arisen in the course normal of its business. In the opinion of management, the
ultimate liability with respect to such lawsuits as well as other contingencies
is not considered to be material in relation to the results of operations and
financial position of the Company.
Under insurance guaranty laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on ILA under these
laws cannot be reasonably estimated. Most of the laws do provide, however, that
an assessment may be excused or deferred if it would threaten an insurer's own
financial strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the company in certain states. ILA paid guaranty
fund assessments of $1,684, $583, and $495 in 1995, 1994, and 1993,
respectively.
13
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
----------------------------------
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required by
paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of the Company authorizing the
Separate Account is incorporated by reference to Pre-Effective
Amendment No. 1, to the Registration Statement File No. 33-61267,
dated January 23, 1996.
(A2) Not applicable.
(A3a) Principal Underwriting Agreement is incorporate herein.
(A3b) Form of Selling Agreements is incorporate herein.
(A3c) Not applicable.
(A4) Not applicable.
(A5) Form of Flexible Premium Variable Life Insurance Policy is
incorporated by reference as stated above.
(A6a) Charter of ITT Hartford Life and Annuity Insurance Company is
incorporated herein.
(A6b) Bylaws of ITT Hartford Life and Annuity Insurance Company is
incorporated herein.
(A7) Not applicable.
(A8) Not applicable.
<PAGE>
(A9) Not applicable.
(A10) Form of Application for Flexible Premium Variable Life Insurance
Policies is incorporated by reference as stated above.
(A11) Memorandum describing transfer and redemption procedures is
incorporated by reference as stated above.
(2) Opinion and counsel of Lynda Godkin, Associate General Counsel is
incorporated herein.
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
(4) Not applicable.
(5) Opinion and consent of Ken A. McCullum, FSA, MAAA is incorporated herein.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants is
incorporated herein.
(7) Opinion and consent of Counsel is incorporated by reference as
Exhibit 2.
(8) Opinion and consent of Actuary is incorporated by reference as
Exhibit 5.
(9) Power of Attorney is incorporate herein.
<PAGE>
UNDERTAKING TO FILE REPORTS
---------------------------
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKINGS AND REPRESENTATIONS AS REQUIRED BY RULE 6e-3(T)
1. Separate Account VL I meets the definition of ""Separate Account''
under Rule 6e-3(T).
2. The Registrant represents that:
(a) it relies on Rule 6e-3(T)(b)(13)(ii)(F) to offer the Policies;
(b) the level of mortality and expense risk charge is within the range
of industry practice for comparable flexible contracts.
(c) the Company has conducted a survey of similar policies and insurers
and determined that the charge is within the range of industry
practice;
(d) the Company undertakes to keep and make available to the Commission
upon request the documents we used to support the representation
in (b); and
(e) the Company further represents that the account will invest only
in management investment companies which have undertaken to have a
Board of Directors, a majority of whom are not interested persons
of the Company, formulate and approve a plan under Rule 12b-1 to
finance distribution expenses.
(f) The life insurer has concluded that there is a reasonable
likelihood that the distribution financing arrangement of the
separate account benefits the separate account and contractholders
and will keep and make available to the Commission on request a
memorandum setting for the basis for this representation.
UNDERTAKING ON INDEMNIFICATION
------------------------------
Article VIII of the Bylaws of ITT Hartford Life and Annuity Insurance
Company, a Connecticut corporation, provides for indemnification of its
officers, directors and employees as follows:
SECTION 1. No person shall be liable to the Company for any loss or damage
suffered by it on account of any action taken or omitted to be taken by him
as director or officer of the Company, or of any other company, partnership,
joint venture, trust or other enterprise for which he serves as a director,
officer or employee at the request of the Company, in good faith, if such
person (a) exercised and used the same degree of care and skill as a prudent
man would have exercised or used under the circumstances in the conduct of
his own affairs, or (b) took or omitted to take such action in reliance upon
advice of counsel for the Company or upon statements made or information
furnished by officers or employees of the Company which he had reasonable
grounds to believe to be true. The foregoing shall not be exclusive of other
rights and defenses to which he may be entitled as a matter of law.
<PAGE>
SECTION 2. The Company shall indemnify any person who was or is a party or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, (other than one by or in the right of the Company) by
reason of the fact that he is or was a director, officer or employee of the
company , or is or was serving at the request of the Company as a director,
officer or employee of another company, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonable y incurred by
him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonable believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall no, of
itself, create a presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal action or
proceeding had reasonable cause to believe that his conduct was unlawful.
SECTION 3. The Company shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, by or in the right of the Company to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer or employee of the Company, or is or was serving at the request of
the Company as a director, officer or employee of another company,
partnership, joint venture, trust or other enterprise against expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Company, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Company unless and only to the extent that the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability and in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
SECTION 4. Expenses, including attorneys' fees, incurred in defending a
civil or criminal action, suit or proceeding may be paid by the Company in
advance of the final disposition of such action, suit or proceeding, upon
receipt of any undertaking by or on behalf of the director or employee to
repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Company as authorized hereby.
SECTION 5. The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under any statute, bylaw, agreement, vote of shareholders or of disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer or employee and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
The registrant hereby undertakes that insofar as indemnification for
liability arising under the
<PAGE>
Securities Act of 1933 (the ""Act'') may be permitted to directors, officers
and controlling persons of the registrant, pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal to be herewith affixed and attested, all in the city
of Simsbury, and the State of Connecticut on the 26th day of August, 1996.
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT VL I
(Registrant)
By: /s/ Gregory A. Boyko
-------------------------------------
Gregory A. Boyko, Vice President &
Controller
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)
By: /s/ Gregory A. Boyko
-------------------------------------
Gregory A. Boyko, Vice President &
Controller
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and
on the dates indicated.
Donald R. Frahm, Chairman and
Chief Executive Officer, Director *
Bruce D. Gardner, Vice President
Director *
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director *
John P. Ginnetti, Executive Vice
President, Director *
Thomas M. Marra, Executive Vice *By: /s/ Scott K. Richardson
President, Director * ---------------------------
Scott K. Richardson
Leonard E. Odell, Jr., Senior Attorney-In-Fact
Vice President, Director *
Lowndes A. Smith, President,
Chief Operating Officer, Dated: August 26, 1996
Director * ----------------------
Raymond P. Welnicki, Senior Vice
President, Director *
Lizabeth H. Zlatkus, Vice President
Director *
<PAGE>
[Exhibit 1A3a]
PRINCIPAL UNDERWRITER AGREEMENT
-------------------------------
THIS AGREEMENT, dated as of the June 26, 1995, made by and between ITT
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("ILA" or the "Sponsor"), a
corporation organized and existing under the laws of the State of
Connecticut, and HARTFORD EQUITY SALES COMPANY, INC. (""HESCO''), a
corporation organized and existing under the laws of the State of
Connecticut,
WITNESSETH:
WHEREAS, the Board of Directors of ILA has made provision for the
establishment of a separate account within ILA in accordance with the laws
of the State of Connecticut, which separate account was organized and is
established and registered as a unit investment trust type investment company
with the Securities and Exchange Commission under the Investment Company Act
of 1940 (""1940 Act''), as amended, and which is designated Hartford Life
Insurance Company Separate Account VL I (referred to as the ""UIT''); and
WHEREAS, HESCO offers to the public a certain Flexible Premium Variable Life
Insurance Policy (the ""Policy'') issued by ILA with respect to the UIT
units of interest thereunder which are registered under the Securities Act of
1933 (""1933 Act''), as amended; and
WHEREAS, HESCO has previously agreed to act as distributor in connection
with offers and sales of the Policy under the terms and conditions set forth
in this Principal Underwriter Agreement.
NOW THEREFORE, in consideration of the mutual agreements made herein, ILA
and HESCO agree as follows:
I.
HESCO'S DUTIES
--------------
1. HESCO, as principal underwriter for the Policy, will use its best efforts
to effect offers and sales of the Policy through broker-dealers that are
members of the National Association of Securities Dealers, Inc. and whose
registered representatives are duly licensed as insurance agents of ILA.
HESCO is responsible for compliance with all applicable requirements of
the 1933 Act, as amended, the Securities Exchange Act of 1934
(""1934 Act''), as amended, and the 1940 Act, as amended, and the rules
and regulations relating to the sales and distribution of the Policy, the
need for which arises out of its duties as principal underwriter of said
Policy and relating to the creation of the UIT.
<PAGE>
2. HESCO agrees that it will not use any prospectus, sales literature, or any
other printed matter or material or offer for sale or sell the Policy if
any of the foregoing in any way represent the duties, obligations, or
liabilities of ILA as being greater than, or different from, such duties,
obligations and liabilities as are set forth in this Agreement, as it may
be amended from time to time.conclusion provided for in subsection (b) of
this section may be reached by any one of the following: (1) The Board of
Directors of the corporation by a consent in writing signed by a majority
of those directors who were not parties to such proceeding; (2) independent
legal counsel selected by a consent in writing signed by a majority of
those directors who were not parties to such proceeding; (3) in the case of
any employee or agent who is not an officer or director of the corporation,
the corporation's general counsel; or (4) the shareholders of the
corporation by the affirmative vote of at least a majority of the voting
power of shares not owned by parties to such proceeding, represented at an
annual or special meeting of shareholders, duly called with notice of such
purpose stated. Such person shall also be entitled to apply to a court for
such conclusion, upon application as provided in subsection (e), even
though the conclusion reached by any of the foregoing shall have been
adverse to him or to the person whose legal representative he is.
(e) Where an application for indemnification or for a conclusion as provided
in this section is made to a court, it shall be made to the court in which
the proceeding is pending or to the superior court for the judicial district
where the principal office of the corporation is located. The application
shall be made in such manner and form as may be required by the applicable
rules of the court or, in the absence thereof, by direction of the court.
The court may also direct the notice be given in such manner as it may
require at the expense of the corporation to the shareholders of the
corporation and to such other persons as the court may designate. In the
case of an application to a court in which a proceeding is pending in which
the person seeking indemnification is a party by reason of the fact that he,
or the person whose legal representative he is, is or was serving at the
request of the corporation as a director, partner, trustee, officer, employee
or agent of another enterprise, or as a fiduciary of an employee benefit plan
or trust maintained for the benefit of employees of any other enterprise,
timely notice of such application shall be given by such person to the
corporation.
3. HESCO agrees that it will utilize the then currently effective prospectus
relating to the UIT's Policies in connection with its selling efforts.
As to the other types of sales materials, HESCO agrees that it will use
only sales materials which conform to the requirements of federal and state
insurance laws and regulations and which have been filed, where necessary,
with the appropriate regulatory authorities.
4. HESCO agrees that it or its duly designated agent shall maintain records of
the name and address of, and the securities issued by the UIT and held by,
every holder of any security issued pursuant to this Agreement, as required
by the Section 26(a)(4) of the 1940 Act, as amended.
<PAGE>
5. HESCO's services pursuant to this Agreement shall not be deemed to be
exclusive, and it may render similar services and act as an underwriter,
distributor, or dealer for other investment companies in the offering of
their shares.
6. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties hereunder on the part of
HESCO, HESCO shall not be subject to liability under a Policy for any act
or omission in the course, or connected with, rendering services hereunder.
II.
1. The UIT reserves the right at any time to suspend or limit the public
offering of the Policies upon 30 days' written notice to HESCO, except
where the notice period may be shortened because of legal action taken by
any regulatory agency.
2. The UIT agrees to advice HESCO immediately:
(a) Of any request by the Securities and Exchange Commission for
amendment of its 1933 Act registration statement or for additional
information;
(b) Of the issuance by the Securities and Exchange Commission of any
stop order suspending the effectiveness of the 1933 Act registration
statement relating to units of interest issued with respect to the UIT
or of the initiation of any proceedings for that purpose;
(c) Of the happening of any material event, if known, which makes untrue
any statement in said 1933 Act registration statement or which requires
a change therein in order to make any statement therein not misleading.
ILA will furnish to HESCO such information with respect to the UIT and
the Policies in such form and signed by such of its officers and
directors and HESCO may reasonably request and will warrant that the
statements therein contained when so signed will be true and correct.
ILA will also furnish, from time to time, such additional information
regarding the UIT's financial condition as HESCO may reasonably request.
III.
COMPENSATION
------------
In accordance with an Expense Reimbursement Agreement between ILA and HESCO,
HESCO is entitled to receive: (1) compensation equal to a pro rata portion
of $10,000 per year for all services provided on behalf of ILA and the UIT;
plus (2) reimbursement for the actual expenses incurred by HESCO in excess of
$10,000 for all operating costs associated with the services provided on
behalf of ILA and the UIT under this Principal Underwriter Agreement. No
<PAGE>
additional compensation is payable in excess of that required under the
Expense Reimbursement Agreement. The Expense Reimbursement Agreement
provides for an aggregate payment of $10,000 for all services performed by
HESCO on behalf of ILA and its affiliated companies and any unit investment
trusts sponsored by ILA and its affiliated companies.
IV.
RESIGNATION AND REMOVAL OF PRINCIPAL UNDERWRITER
------------------------------------------------
HESCO may resign as a Principal Underwriter hereunder, upon 120 days' prior
written notice to ILA. However, such resignation shall not become effective
until either the UIT has been completely liquidated and the proceeds of the
liquidation distributed through ILA to the Policy owners or a successor
Principal Underwriter has been designated and has accepted its duties.
V.
MISCELLANEOUS
-------------
1. This Agreement may not be assigned by any of the parties hereto without the
written consent of the other party.
2. All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage
prepaid, addressed as follows:
(a) If to ILA - ITT Hartford Life and Annuity Insurance Company, Inc.
P.O. Box 2999, Hartford, Connecticut 06104.
(b) If to HESCO - Hartford Equity Sales Company, Inc., P.O. Box 2999,
Hartford, Connecticut 06104.
or to such other address as HESCO or ILA shall designate by written notice
to the other.
3. This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which shall be deemed one
instrument, and an executed copy of this Agreement and all amendments
hereto shall be kept on file by the Sponsor and shall be open to inspection
any time during the business hours of the Sponsor.
4. This Agreement shall inure to the benefit of and be binding upon the
successor of the parties hereto.
5. This Agreement shall be construed and governed by and according to the laws
of the State of Connecticut.
6. This Agreement may be amended from time to time by the mutual agreement and
consent of the parties hereto.
<PAGE>
7. (a) This Agreement shall become effective June 26, 1995 and shall
continue in effect for a period of two years from that date and, unless
sooner terminated in accordance with 7(b) below, shall continue in
effect from year to year thereafter provided that its continuance is
specifically approved at least annually by a majority of the members of
the Board of Directors of ILA.
(b) This Agreement (1) may be terminated at any time, without the
payment of any penalty, either by a vote of a majority of the
members of the Board of Directors of ILA on 60 days' prior written
notice to HESCO; (2) shall immediately terminate in the event of its
assignment and (3) may be terminated by HESCO on 60 days' prior
written notice to ILA, but such termination will not be effective
until ILA shall have an agreement with one or more persons to act
as successor principal underwriter of the Policies. HESCO hereby
agrees that it will continue to act as successor principal
underwriter until its successor or successors assume such undertaking.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
(Seal) ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
BY: /s/ Thomas M. Marra
------------------------------------------
Thomas M. Marra
Senior Vice President
Attest: HARTFORD EQUITY SALES COMPANY, INC.
/s/ Lynda Godkin BY: /s/ George Jay
- --------------------- -----------------------------------------
Lynda Godkin George Jay
Secretary Controller
<PAGE>
CERTIFICATE AMENDING AND RESTATING
THE CERTIFICATE OF INCORPORATION BY
ACTION OF THE BOARD OF DIRECTORS AND SHAREHOLDERS
1. The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY.
2. The Certificate of Incorporation is amended and restated by the following
resolution of the Board of Directors and Shareholder of the Corporation.
RESOLVED, that the Certificate of Incorporation of the Corporation, as
supplemented and amended to date, is further amended and restated to read
as follows:
Section 1. The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY.
Section 2. The address of the Registered Office of the Corporation is
Hartford Plaza, Hartford, Connecticut 06104-2999.
Section 3. The Corporation is a body politic and corporate and shall
have all the powers granted by the general statutes, as now
enacted or hereinafter amended, to corporations formed under
the Stock Corporation Act.
Section 4. The Corporation shall have the purposes and powers to write
any and all forms of insurance which any other corporation
now or hereafter chartered in Connecticut and empowered to
do an insurance business may now or hereafter lawfully do;
to accept and to cede reinsurance; to issue policies and
contracts for any kind or combination of kinds of insurance;
to issue policies or contracts either with or without
participation in profits; to acquire and hold any or all of
the shares or other securities of any insurance corporation
or any other kind of corporation; and to engage in any
lawful act or activity for which corporations may be formed
under the Stock Corporation Act. The corporation is
authorized to exercise the powers herein granted in any
state, territory or jurisdiction of the United States or in
any foreign country.
Section 5. The Corporation shall obtain a license from the insurance
commissioner prior to the commencement of business and shall
be subject to all general statutes applicable to insurance
companies.
Section 6. The aggregate number of shares which the corporation shall
have authority to issue is 3,000 shares consisting of one
class only, designated as Common Shares, of the par value of
$1,250.
Section 7. No shareholder shall, because of his ownership of shares,
have a preemptive or
<PAGE>
-2-
other right to purchase, subscribe for, or take any part of
any shares or any part of the notes, debentures, bonds, or
other securities convertible into or carrying options or
warrants to purchase shares of this corporation issued,
optioned, or sold by it after its incorporation.
Section 8. The minimum amount of stated capital with which the
corporation shall commence business is One Thousand Dollars
($1,000.00).
Section 9. So much of the charter of said corporation is amended, as is
inconsistent herewith is repealed, provided such repeal
shall not invalidate or otherwise affect any action taken
pursuant to the charter of the corporation, in accordance
with its terms, prior to the effective date of such repeal.
3. The above resolution was passed by the Board of Directors and the
Shareholder of the Corporation. The number of shares entitled to vote
thereon was 3,000 and the vote required for adoption was 2,000 shares. The
vote favoring adoption was 3,000 which was the greatest vote needed to pass
the resolution.
4. The term of existence of the corporation shall be perpetual.
Dated at Simsbury, Connecticut this 30 day of April, 1996.
--
We hereby declare, under the penalties of false statement, that the statements
made in the foregoing Certificate are true.
ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY
/s/ Lowndes A. Smith
-----------------------------
Lowndes A. Smith, President
/s/ Lynda Godkin
- ----------------------------------------
Lynda Godkin, Associate General Counsel
and Corporate Secretary
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
EFFECTIVE MAY 1, 1996
<PAGE>
-2-
ARTICLE I
Name - Home Office
SECTION 1. This company shall be named ITT Hartford and Annuity Life Insurance
Company.
SECTION 2. The Company may have such principal and other business offices,
either within or without the State of Connecticut, as the Board of Directors may
designate or as the business of the Company may require.
SECTION 3. The registered office of the Company is Hartford Plaza, Hartford,
Connecticut 06104-2999.
ARTICLE II
Stockholders' Meetings - Notice-Quorum-Right to Vote
SECTION 1. All meetings of the stockholders shall be held at the principal
business office of the Company unless the Board of Directors shall otherwise
provide and direct.
SECTION 2. The annual meeting of the stockholders shall be held on such day and
at such hour as the Board of Directors may decide. For cause the Board of
Directors may postpone or adjourn such annual meeting to any other time during
the year.
SECTION 3. Special meetings of the stockholders may be called by the Board of
Directors, the Executive Committee, the Chairman or Vice Chairman of the Board,
the President or any Vice President.
SECTION 4. Notice of stockholders' meetings shall be delivered to each
stockholder, either personally or by mail at his address as it appears on the
records of the Company, at least seven days prior to the meeting. The notice
shall state the place, date and time of the meeting and shall specify all
matters proposed to be acted upon at the meeting.
SECTION 5. At each annual meeting, the stockholders shall choose Directors as
hereinafter provided.
SECTION 6. Each stockholder shall be entitled to one vote at all meetings of
the Company for each share of stock held by such stockholder. Proxies may be
authorized by written power of attorney.
<PAGE>
-3-
SECTION 7. A majority of the total number of shares entitled to vote,
represented in person or by proxy, shall constitute a quorum.
SECTION 8. Each stockholder shall be entitled to a certificate of stock which
shall be signed by the President or a Vice President, and either the Treasurer
or an Assistant Treasurer of the Company, and shall bear the seal of the
Company, but such signatures and seal may be facsimile.
ARTICLE III
Directors-Meetings-Quorum
SECTION 1. The property, business and affairs of the Company shall be managed
by a board of not less than three nor more than twenty Directors, who shall be
chosen by the stockholders at each annual meeting. Vacancies occurring between
annual meetings may be filled by the affirmative vote of a majority of the
Directors then in office. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is chosen and qualified.
SECTION 2. Meetings of the Board of Directors may be called by the direction of
the Chairman of the Board, the President, or any three Directors.
SECTION 3. Three days' notice of meetings of the Board of Directors shall be
given to each Director, either personally or by mail or telegraph, at his
residence or usual place of business, but notice may be waived, at any time, in
writing, and attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting except where a Director attends a meeting and objects
thereat to the transaction of any business on grounds that the meeting was not
lawfully called or convened.
SECTION 4. A majority of the number of existing directorships, but not less than
two Directors, shall constitute a quorum.
ARTICLE IV
Election of Officer - Duties of Board of
Directors and Executive Committee
SECTION 1. The Board of Directors shall annually elect a President, a Secretary
and a Treasurer. It may elect a Chairman of the Board, a Vice Chairman of the
Board and such Vice Presidents, other Secretaries, Assistant Secretaries,
Assistant Treasurers and other officers as it may determine. All officer of the
Company shall hold office during the pleasure of the Board of Directors.
<PAGE>
-4-
SECTION 2. The Directors may fill any vacancy among the officers by election
for the unexpired term.
SECTION 3. The Board of Directors may appoint from its own number an
Executive Committee of not less than five Directors. The Executive Committee may
exercise all powers vested in and conferred upon the Board of Directors at any
time when the Board is not in session. A majority of the members of said
Committee shall constitute a quorum. Meetings of the Committee shall be called
whenever the Chairman of the Board, the President or a majority of its members
shall request.
SECTION 4. The Board of Directors may annually appoint from its own number a
Finance Committee of not less than three Directors, whose duties shall be as
hereinafter provided.
SECTION 5. The Board of Directors may, at any time, appoint such other
committees, not necessarily from its own number, as it may deem necessary for
the proper conduct of the business of the Company, which committees shall have
only such powers and duties as are specifically assigned to them by the Board of
Directors or the Executive Committee.
For all meetings, forty-eight hours' notice shall be given but notice may be
waived, at any time, in writing, and attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting except where a Director attends a
meeting and objects thereat to the transaction of any business on grounds that
the meeting was not lawfully called or convened.
SECTION 6. The Board of Directors may authorize corporate contributions, in such
amounts as it determines to be reasonable, for public welfare or for charitable,
scientific or educational purposes, subject to the limits and restrictions
imposed by law and to such rules and regulations consistent with law as it
makes.
ARTICLE V
Officers
Chairman of the Board
and
Vice Chairman of the Board
SECTION 1. The Chairman of the Board shall preside at the meetings of the
Board of Directors and the Executive Committee and, in the absence of the
Chairman of the Finance Committee, at the meetings of the Finance Committee.
In the absence or inability of the Chairman of the Board to so preside, the Vice
Chairman shall preside in his place if there be one, otherwise the President
shall preside.
<PAGE>
-5-
SECTION 2. The Vice Chairman of the Board shall, in the absence of the Chairman
of the Board, exercise the powers and perform the duties of the Chairman of the
Board. He shall perform such other duties and have such other powers as may be
assigned to him by the Board of Directors.
President
SECTION 3. The President, unless the Board of Directors shall otherwise order
pursuant to Section 7 below, shall be the chief executive officer of the Company
and, subject to the control of the Board of Directors, shall in general
supervise and control all the business and affairs of the Company. Unless the
Board of Directors shall provide otherwise, he shall, when present, preside at
all meetings of the shareholders and shall preside at all meetings of the Board
of Directors unless the Board shall have elected a Chairman of the Board of
Directors. He shall have authority, subject to such rules as may be prescribed
by the Board of Directors, to appoint such agents and employees of the Company
as he shall deem necessary, to prescribe their powers, duties and compensation,
and to delegate authority to them. Such agents and employees shall hold office
at the discretion of the President. Except as otherwise provided in these
Bylaws or by resolution of the Board of Directors, the President shall have
authority to sign, execute and acknowledge, on behalf of the Company all
contracts, reports and other documents or instruments necessary or proper to be
executed in the course of the Company's regular business, or which shall be
authorized by resolution of the Board of Directors; and except as otherwise
provided by law or the Board of Directors, he may authorize any Vice President
or other officer or agent of the Company to sign, execute and acknowledge such
documents or instruments in his place and stead. In general, he shall perform
all duties incident to the office of the chief executive officer and such other
duties as may be prescribed by the Board of Directors from time to time.
If the President is not the chief executive officer, he shall have such duties
and authority as prescribed by the Board of Directors or the chief executive
officer.
SECTION 4. In the absence or inability of the President to perform his duties,
the Board or the Chairman thereof may designate a Vice President to exercise the
powers and perform the duties of the President during such absence or inability.
Secretary
SECTION 5. The Secretary shall keep a record of all the meetings of the
Company, of the Board of Directors and of the Executive Committee, and he shall
discharge all other duties specifically required of the Secretary by law.
<PAGE>
-6-
The other Secretaries and the Assistant Secretaries shall perform such duties as
may be assigned to them by the Board of Directors or by their senior officers
and any Secretary or Assistant Secretary may affix the seal of the Company and
attest it and the signature of any officer to any and all instruments.
Treasurer
SECTION 6. The Treasurer shall keep, or cause to be kept, full and accurate
accounts of the Company. He shall see that the funds of the Company are
disbursed as may be ordered by the Board of Directors, the Finance Committee or
a duly authorized individual. He shall have charge of all moneys paid to the
Company and shall deposit such to the credit of the Company or in any other
properly authorized name, in such banks or depositories as may be designated in
a manner provided by these Bylaws. He shall also discharge all other duties
that may be required of him by law.
Other Officers
SECTION 7. The other officers shall perform such duties as may be assigned to
them by the President or the Board of Directors. The Board of Directors may
designate the Chairman of the Board or the Vice Chairman as the chief executive
officer of the Company. In such event that person shall assume all authority,
power, duties and responsibilities otherwise appointed to the President pursuant
to Section 3 above, and all references to the President in these Bylaws shall be
regarded as references to the Chairman of the Board or Vice Chairman, as the
case may be, as such chief executive officer, except where a contrary meaning is
clearly required, and provided that in no case shall that person be empowered in
place of the President to sign the certificates for shares of stock of the
Company.
ARTICLE VI
Finance Committee
SECTION 1. If a Finance Committee is established, it shall be the duty of that
committee to supervise the investment of the funds of the Company in securities
in which insurance companies are permitted by law to invest, and all other
matters connected with the management of investments. If no Finance Committee
is established, this duty shall be performed by the Board of Directors.
SECTION 2. All loans or purchases for the investment and reinvestment of the
funds of the Company shall be submitted for approval to the Finance Committee,
if not specifically approved by the Board of Directors.
<PAGE>
-7-
SECTION 3. Sale or transfer of any stocks or bonds shall be made upon
authorization of the Finance Committee unless specifically authorized by the
Board of Directors.
SECTION 4. Transfers of stock and registered bonds, deeds, leases, releases,
sales, mortgages chattel or real, assignments or partial releases of mortgages
chattel or real, and in general all instruments of defeasance of property and
all agreements or contracts affecting the same, except discharges of mortgages
and entries to foreclose the same as hereinafter provided, shall be authorized
by the Finance Committee or the Board of Directors, and be executed jointly for
the Company by two persons, to wit: the Chairman of the Board, the Vice
Chairman, the President or a Vice President, and a Secretary, the Treasurer or
an Assistant Treasurer, but may be acknowledged and delivered by either one of
those executing the instrument; provided, however, that either a Secretary, the
Treasurer, or an Assistant Treasurer alone, when authorized as aforesaid, or any
person specially authorized by the Finance Committee as attorney for the
Company, may make entry to foreclose any mortgage, and a Secretary, the
Treasurer or an Assistant Treasurer alone is authorized, without the necessity
of further authority, to discharge by deed or otherwise any mortgage on payment
to the Company of the principal, interest and all charges due.
SECTION 5. The Finance Committee may fix times and places for regular
meetings. No notice of regular meetings shall be necessary. Reasonable notice
shall be given of special meetings but the action of a majority of the Finance
Committee at any meeting shall be valid notwithstanding any defect in the notice
of such meeting.
SECTION 6. In the absence of specific authorization from the Board of
Directors or the Finance Committee, the Chairman of the Board, the President, a
Vice President or the Treasurer shall have the power to vote or execute proxies
for voting any shares held by the Company.
ARTICLE VII
Funds
SECTION 1. All monies belonging to the Company shall be deposited to the
credit of the Company, or in such other name as the Finance Committee, the
Chairman of the Finance Committee or such executive officers as are designated
by the Board of Directors shall direct, in such bank or banks as may be
designated from time to time by the Finance Committee, the Chairman of the
Finance Committee or by such executive officers as are designated by the Board
of Directors. Such monies shall be drawn only on checks or drafts signed by any
two executive officers of the Company, provided that the Board of Directors may
authorize the withdrawal of such monies by check or draft signed with the
facsimile signature of any one or more executive officers, and provided further,
that the Finance Committee may authorize such alternative methods of withdrawal
as it deems proper.
<PAGE>
-8-
The Board of Directors, the President, the Chairman of the Finance Committee, a
Vice President, or such executive officers as are designated by the Board of
Directors may authorize withdrawal of funds by checks or drafts drawn at offices
of the Company to be signed by Managers, General Agents, or employees of the
Company, provided that all such checks or drafts shall be signed by two such
authorized persons, except checks or drafts used for the payment of claims or
losses which need to be signed by only one such authorized person, and provided
further that the Board of Directors of the Company or executive officers
designated by the Board of Directors may impose such limitations or restrictions
upon the withdrawal of such funds as it deems proper.
ARTICLE VIII
Liability and Indemnity
SECTION 1. No person shall be liable to the Company for any loss or damage
suffered by it on account of any action taken or omitted to be taken by him as
director or officer of the Company, or of any other company, partnership, joint
venture, trust or other enterprise for which he serves as a director, officer
or employee at the request of the Company, in good faith, if such person (a)
exercised and used the same degree of care and skill as a prudent man would have
exercised or used under the circumstances in the conduct of his own affairs, or
(b) took or omitted to take such action in reliance upon advice of counsel for
the Company or upon statements made or information furnished by officers or
employees of the Company which he had reasonable grounds to believe to be true.
The foregoing shall not be exclusive of other rights and defenses to which he
may be entitled as a matter of law.
SECTION 2. The Company shall indemnify any person who was or is a party or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, (other than one by or in the right of the Company) by reason
of the fact that he is or was a director, officer or employee of the Company, or
is or was serving at the request of the Company as a director, officer or
employee of another company, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding had reasonable
cause to believe that his conduct was unlawful.
SECTION 3. The Company shall indemnify any person who was or is a party or is
threatened to
<PAGE>
-9-
be made a party to any threatened, pending or completed action, suit or
proceeding, by or in the right of the Company to procure a judgment in its
favor by reason of the fact that he is or was a director, officer or
employee of the Company, or is or was serving at the request of the Company as a
director, officer or employee of another company, partnership, joint venture,
trust or other enterprise against expenses, including attorneys' fees, actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability and in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
SECTION 4. Expenses, including attorneys' fees, incurred in defending a civil
or criminal action, suit or proceeding may be paid by the Company in advance of
the final disposition of such action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or employee to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Company as authorized hereby.
SECTION 5. The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any statute, bylaw, agreement, vote of shareholders or of disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer or employee and shall inure to
the benefit of the heirs, executors and administrators of such a person.
ARTICLE IX
Amendment of Bylaws
SECTION 1. The Directors shall have power to adopt, amend and repeal such
bylaws as may be deemed necessary or appropriate for the management of the
property and affairs of the Company.
SECTION 2. The stockholders at any annual or special meeting may amend or
repeal these bylaws or adopt new ones if the notice of such meeting contains a
statement of the proposed alteration, amendment, repeal or adoption of the
substance thereof. Bylaws amended or adopted by the stockholders may be amended
or repealed by the Directors.
<PAGE>
-10-
ARTICLE X
Term of Existence
SECTION 1. The term of existence of the corporation shall be perpetual.
This is to certify that the foregoing is a true copy of the Bylaws of ITT
Hartford Life and Annuity Insurance Company in full force and effect on this
first day of May, 1996.
Attest:
- ---------------------------------
Gregory A. Boyko
Vice President
<PAGE>
BROKER-DEALER SALES AND
SUPERVISION AGREEMENT
This Broker-Dealer Sales and Supervision Agreement ("Agreement")
dated ____________________ is made by and between Hartford Life Insurance
Company and ITT Hartford Life and Annuity Insurance Company (referred to
collectively as "Companies"), Hartford Securities Distribution Company, Inc.
("Distributor"), a broker-dealer registered with the Securities and Exchange
Commission ("SEC") under the Securities and Exchange Act of 1934 ("1934 Act")
and a member of the National Association of Securities Dealers, Inc. ("NASD")
and __________________________________, who is also a broker-dealer registered
with the SEC under the 1934 Act and a member of the NASD ("Broker-Dealer"), and
any and all undersigned insurance agency affiliates ("Affiliates") of Broker-
Dealer.
WHEREAS, Companies offer certain variable life insurance policies and variable
and modified guaranteed annuity contracts which are deemed to be securities
under the Securities Act of 1933 (the "Registered Products"); and
WHEREAS, Companies wish to appoint the Broker-Dealer and Affiliates as agents of
the Companies for the solicitation and procurement of applications for
Registered Products; and
WHEREAS, Distributor is the principal underwriter of the Registered Products;
and
WHEREAS, Distributor anticipates having registered representatives who are
associated with Broker-Dealer ("Registered Representatives"), who are NASD
registered and are duly licensed under applicable state insurance law and
appointed as life insurance agents of Companies solicit and sell the Registered
Products; and
WHEREAS, Distributor acknowledges that the Broker-Dealer will provide certain
supervisory and administrative services to Registered Representatives who are
associated with the Broker-Dealer in connection with the solicitation, service
and sale of the Registered Products; and
WHEREAS, Broker-Dealer agrees to provide the aforementioned supervisory services
to its Registered Representatives who have been appointed by the Companies to
sell the Registered Products.
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties agree to the following:
I. APPOINTMENT OF THE BROKER-DEALER
The Companies hereby appoint Broker-Dealer as an agent of the Companies for
the solicitation and procurement of applications for the Registered
Products offered by the Companies, as outlined in Exhibit A attached
herein, in all states in which the Companies are authorized to do business
and in which Broker-Dealer or any Affiliates are properly licensed.
Distributor hereby authorizes Broker-Dealer under the securities laws to
supervise Registered Representatives in connection with the solicitation,
service and sale of the Registered Products.
II. AUTHORITY OF THE BROKER-DEALER
<PAGE>
Broker-Dealer has the authority to represent Distributor and Companies only
to the extent expressly granted in this Agreement. Broker-Dealer and any
Registered Representatives shall not hold themselves out to be employees of
Companies or Distributor in any dealings with the public. Broker-Dealer
and any Registered Representatives shall be independent contractors as to
Distributor or Companies. Nothing contained herein is intended to create a
relationship of employer and employee between Broker-Dealer and Distributor
or Companies or between Registered Representatives and Distributor or
Companies.
III. BROKER-DEALER REPRESENTATION
Broker-Dealer represents that it is a registered broker-dealer under the
1934 Act, a member in good standing of the NASD, and is registered as a
broker-dealer under state law to the extent necessary to perform the duties
described in this Agreement. Broker-Dealer represents that its Registered
Representatives, who will be soliciting applications for the Registered
Products, will be duly registered representatives associated with Broker-
Dealer and that they will be representatives in good standing with
accreditation as required by the NASD to sell the Registered Products.
Broker-Dealer agrees to abide by all rules and regulations of the NASD,
including its Rules of Fair Practice, and to comply with all applicable
state and federal laws and the rules and regulations of authorized
regulatory agencies affecting the sale of the Registered Products.
IV. BROKER-DEALER OBLIGATIONS
(a) TRAINING AND SUPERVISION
Broker-Dealer has full responsibility for the training and
supervision of all Registered Representatives associated with
Broker-Dealer and any other persons who are engaged directly or
indirectly in the offer or sale of the Registered Products. Broker-
Dealer shall, during the term of this Agreement, establish and
implement reasonable procedures for periodic inspection and
supervision of sales practices of its Registered Representatives.
If a Registered Representative ceases to be a Registered
Representative of Broker-Dealer, is disqualified for continued
registration or has their registration suspended by the NASD or
otherwise fails to meet the rules and standards imposed by Broker-
Dealer, Broker-Dealer shall immediately notify such Registered
Representative that he or she is no longer authorized to solicit
applications, on behalf of the Companies, for the sale of Registered
Products. Broker-Dealer shall immediately notify Distributor of
such termination or suspension.
(b) SOLICITATION
Broker-Dealer agrees to supervise its Registered Representatives so
that they will only solicit applications in states where the
Registered Products are approved for sale in accordance with
applicable state and federal laws. Broker-Dealer shall be notified
by Companies or Distributor of the availability of the Registered
Products in each state.
(c) NO CHURNING
Broker-Dealer and any Registered Representatives shall not make any
misrepresentation or incomplete comparison of products for the
purpose of inducing a policyholder to lapse, forfeit or surrender
its insurance in favor of purchasing a Registered Product.
(d) PROSPECTUS DELIVERY AND SUITABILITY REQUIREMENTS
Broker-Dealer shall ensure that its Registered Representatives
comply with the prospectus delivery requirements under the
Securities Act of 1933. In addition, Broker-Dealer shall ensure
that its Registered Representatives shall not make recommendations
to an applicant to purchase a Registered Product in the absence of
reasonable grounds to believe that the
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<PAGE>
purchase is suitable for such applicant, as outlined in the
suitability requirements of the 1934 Act and the NASD Rules of Fair
Practice. Broker-Dealer shall ensure that each application
obtained by its Registered Representatives shall bear evidence of
approval by one of its principals indicating that the application
has been reviewed for suitability.
(e) PROMOTIONAL MATERIAL
Broker-Dealer and its Registered Representatives are not authorized
to provide any information or make any representation in connection
with this Agreement or the solicitation of the Registered Products
other than those contained in the prospectus or other promotional
material produced or authorized by Companies or Distributor.
Broker-Dealer agrees that if it develops any promotional material
for sales, training, explanatory or other purposes in connection
with the solicitation of applications for Registered Products,
including generic advertising and/or training materials which may be
used in connection with the sale of Registered Products, it will
obtain the prior written consent of Distributor, and where
appropriate, approval of Companies, such approval not to be
unreasonably withheld.
(f) RECORD KEEPING
Broker-Dealer is responsible for maintaining the records of its
Registered Representatives. Broker-Dealer shall maintain such other
records as are required of it by applicable laws and regulations.
The books, accounts and records maintained by Broker-Dealer that
relate to the sale of the Registered Products, or dealings with the
Companies, Distributor and/or Broker-Dealer shall be maintained so
as to clearly and accurately disclose the nature and details of each
transaction.
Broker-Dealer acknowledges that all the records maintained by
Broker-Dealer relating to the solicitation, service or sale of the
Registered Products subject to this Agreement, including but not
limited to applications, authorization cards, complaint files and
suitability reviews, shall be available to Companies and Distributor
upon request during normal business hours. Companies and
Distributor may retain copies of any such records which Companies
and Distributor, in their discretion, deems necessary or desirable
to keep.
(g) REFUND OF COMPENSATION
Broker-Dealer agrees to repay Companies the total amount of any
compensation which may have been paid to it within thirty (30)
business days of notice of the request for such refund should
Companies for any reason return any premium on a Registered Product
which was solicited by a Registered Representative of Broker-Dealer.
(h) PREMIUM COLLECTION
Broker-Dealer only has the authority to collect initial premiums
unless specifically set forth in the applicable commission schedule.
Unless previously authorized by Distributor, neither Broker-Dealer
nor any of its Registered Representatives shall have any right to
withhold or deduct any part of any premium it shall receive for
purposes of payment of commission or otherwise.
V. COMPANIES AND/OR DISTRIBUTOR OBLIGATIONS
(a) PROSPECTUS/PROMOTIONAL MATERIAL
Companies and/or Distributor will provide Broker-Dealer with
reasonable quantities of the currently effective prospectus for the
Registered Products and appropriate sales promotional
3
<PAGE>
material which has been filed with the NASD, and applicable state
insurance departments.
(b) COMPENSATION
Distributor will pay Broker-Dealer as full compensation for all
services rendered by Broker-Dealer under this Agreement, commissions
and/or service fees in the amounts, in the manner and for the period
of time as set forth in the Commission Schedules attached to this
Agreement or subsequently made a part hereof, and which are in
effect at the time such Registered Products are sold. The manner of
commission payments (I.E. fronted or trail) is not subject to change
after the effective date of a contract for which the compensation is
payable.
Distributor or Companies may change the Commission Schedules
attached to this Agreement at any time. Such change shall become
effective only when Distributor or Companies provide the Broker-
Dealer with written notice of the change. No such change shall
affect any contracts issued upon applications received by Companies
at Companies' Home Office prior to the effective date of such
change.
Distributor agrees to identify to Broker-Dealer for each such
payment, the name of the Registered Representative of Broker-Dealer
who solicited each contract covered by the payment. Distributor
will not compensate Broker-Dealer for any Registered Product which
is tendered for redemption after acceptance of the application. Any
chargebacks will be assessed against the Broker-Dealer of record at
the time of the redemption.
Distributor will only compensate Broker-Dealer or Affiliates, as
outlined below, for those applications accepted by Companies, and
only after receipt by Companies at Companies' Home Office or at such
other location as Companies may designate from time to time for its
various lines of business, of the required premium and compliance by
Broker-Dealer with any outstanding contract and prospectus delivery
requirements.
In the event that this Agreement terminates for fraudulent
activities or due to a material breach by the Broker-Dealer,
Distributor will only pay to Broker-Dealer or Affiliate commissions
or other compensation earned prior to discovery of events requiring
termination. No further commissions or other compensation shall
thereafter be payable.
(c) COMPENSATION PAYABLE TO AFFILIATES
If Broker-Dealer is unable to comply with state licensing
requirements because of a legal impediment which prohibits a non-
domiciliary corporation from becoming a licensed insurance agency or
prohibits non-resident ownership of a licensed insurance agency,
Distributor agrees to pay compensation to Broker-Dealer's
contractually affiliated insurance agency, a wholly-owned life
agency affiliate of Broker-Dealer, or a Registered Representative or
principal of Broker-Dealer who is properly state licensed. As
appropriate, any reference in this Agreement to Broker-Dealer shall
apply equally to such Affiliate. Distributor agrees to pay
compensation to an Affiliate subject to Affiliates agreement to
comply with the requirements of Exhibit B, attached hereto.
VI. TERMINATION
(a) This Agreement may be terminated by any party by giving thirty (30)
days' notice in writing to the other party.
(b) Such notice of termination shall be mailed to the last known address
of Broker-Dealer appearing on Companies' records, or in the event of
termination by Broker-Dealer, to the Home Office of Companies at
P.O. Box 2999, Hartford, Connecticut 06104-2999.
4
<PAGE>
(c) Such notice shall be an effective notice of termination of this
Agreement as of the time the notice is deposited in the United
States mail or the time of actual receipt of such notice if
delivered by means other than mail.
(d) This Agreement shall automatically terminate without notice upon the
occurrence of any of the events set forth below:
(1) Upon the bankruptcy or dissolution of Broker-Dealer.
(2) When and if Broker-Dealer commits fraud or gross negligence in the
performance of any duties imposed upon Broker-Dealer by this
Agreement or wrongfully withholds or misappropriates, for Broker-
Dealer's own use, funds of Companies, its policyholders or
applicants.
(3) When and if Broker-Dealer materially breaches this Agreement or
materially violates state insurance or Federal securities laws and
administrative regulations of a state in which Broker-Dealer
transacts business.
(4) When and if Broker-Dealer fails to obtain renewal of a necessary
license in any jurisdiction, but only as to that jurisdiction.
(e) The parties agree that on termination of this Agreement, any
outstanding indebtedness to Companies shall become immediately due
and payable.
VII. GENERAL PROVISIONS
(a) COMPLAINTS AND INVESTIGATIONS
Broker-Dealer shall cooperate with Distributor and Companies in the
investigation and settlement of all complaints or claims against
Broker-Dealer and/or Distributor or Companies relating to the
solicitation or sale of the Registered Products under this
Agreement. Broker-Dealer, Distributor and Companies each shall
promptly forward to the other any complaint, notice of claim or
other relevant information which may come into either one's
possession. Broker-Dealer, Distributor and Companies agree to
cooperate fully in any investigation or proceeding in order to
ascertain whether Broker-Dealer's, Distributor's or Companies'
procedures with respect to solicitation or servicing is consistent
with any applicable law or regulation.
In the event any legal process or notice is served on Broker-Dealer
in a suit or proceeding against Distributor or Companies, Broker-
Dealer shall forward forthwith such process or notice to Companies
at its Home Office in Hartford, Connecticut, by certified mail.
(b) WAIVER
The failure of Distributor or Companies to enforce any provisions of
this Agreement shall not constitute a waiver of any such provision.
The past waiver of a provision by Distributor or Companies shall not
constitute a course of conduct or a waiver in the future of that
same provision.
(c) INDEMNIFICATION
Broker-Dealer shall indemnify and hold Distributor and Companies
harmless from any liability, loss or expense sustained by Companies
or the Distributor (including reasonable attorney fees) on account
of any acts or omissions by Broker-Dealer or persons employed or
appointed by Broker-Dealer, except to the extent Companies' or
Distributor's acts or omissions caused such
5
<PAGE>
liability Indemnification by Broker-Dealer is subject to the
conditions that Distributor or Companies promptly notify Broker-
Dealer of any claim or suit made against Distributor or Companies,
and that Distributor or Companies allow Broker-Dealer to make such
investigation, settlement, or defense thereof as Broker-Dealer deems
prudent. Broker-Dealer expressly authorizes Companies to charge
against all compensation due or to become due to Broker-Dealer under
this Agreement any monies paid or liabilities incurred by Companies
under this Indemnification provision.
Distributor and Companies shall indemnify and hold Broker-Dealer
harmless from any liability, loss or expense sustained by the
Broker-Dealer (including reasonable attorney fees) on account of any
acts or omissions by Distributor or Companies, except to the extent
Broker-Dealer's acts or omissions caused such liability.
Indemnification by Distributor or Companies is subject to the
condition that Broker-Dealer promptly notify Distributor or
Companies of any claim or suit made against Broker-Dealer, and that
Broker-Dealer allow Distributor or Companies to make such
investigation, settlement, or defense thereof as Distributor or
Companies deems prudent.
(d) ASSIGNMENT
No assignment of this Agreement, or commissions payable hereunder,
shall be valid unless authorized in writing by Distributor. Every
assignment shall be subject to any indebtedness and obligation of
Broker-Dealer that may be due or become due to Companies and any
applicable state insurance regulations pertaining to such
assignments.
(e) OFFSET
Companies may at any time deduct, from any monies due under this
Agreement, every indebtedness or obligation of Broker-Dealer to
Companies or to any of its affiliates.
(f) CONFIDENTIALITY
Companies, Distributor and Broker-Dealer agree that all facts or
information received by any party related to a contract owner shall
remain confidential, unless such facts or information is required to
be disclosed by any regulatory authority or court of competent
jurisdiction.
(g) PRIOR AGREEMENTS
This Agreement terminates all previous agreements, if any, between
Companies, Distributor and Broker-Dealer. However, the execution of
this Agreement shall not affect any obligations which have already
accrued under any prior agreement.
(h) CHOICE OF LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut.
By executing this Broker-Dealer Sales and Supervision Agreement Specifications
Page, Broker-Dealer acknowledges that it has read this Agreement in its entirety
and is in agreement with the terms and conditions outlining the rights of
Distributor, Companies and Broker-Dealer and Affiliates under this Agreement.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement to be
effective as set forth above, upon the later of the execution date below or
approval of Distributor's registration by all appropriate state securities
commissions.
6
<PAGE>
BROKER-DEALER HARTFORD SECURITIES DISTRIBUTION
COMPANY INC.
By: By:
Title: Title:
Date: Date:
AFFILIATE (IF APPLICABLE) HARTFORD LIFE INSURANCE COMPANY
By: By:
Title: Title:
Date: Date:
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
By:
Title:
Date:
7
<PAGE>
EXHIBIT B
In accordance with Section V.(c) of the Broker-Dealer-Dealer Sales and
Supervision Agreement, no compensation is payable unless Broker-Dealer and
Registered Representative have first complied with all applicable state
insurance laws, rules and regulations. Distributor must ensure that any Broker-
Dealer with whom Distributor intends to enter into an Agreement and any
Registered Representatives meet the licensing and registration requirements of
the state(s) Broker-Dealer operates in and the NASD.
Companies are required by the Insurance Department in all 50 states to pay
compensation only to individuals and entities that are properly insurance
licensed and appointed. For registered products, Distributor must also comply
with NASD regulations that require Distributor to pay compensation to an NASD
registered Broker-Dealer. Distributor must comply with both state and NASD
requirements.
Distributor requires confirmation that Broker-Dealer holds current state
insurance licenses or markets insurance products through a contractual affiliate
or wholly owned life agency, which is properly insurance licensed. If Broker-
Dealer is properly state licensed then compensation may be paid to Broker-Dealer
in compliance with both state and NASD requirements.
If Broker-Dealer is not state insurance licensed and relies on the licensing of
a contractual affiliate or wholly owned life agency, the SEC has issued a number
of letters indicating that, under specific limited circumstances, it will take
"no action" against insurers (Distributor) paying compensation on registered
products to Broker-Dealer's contractual affiliate or wholly owned life agency.
At the request of Broker-Dealer, Distributor will provide copies of several of
these letters as well as a summary of their requirements.
If Broker-Dealer intends to rely on one of these "no-action" letters, legal
counsel for Broker-Dealer must confirm to Distributor in writing that all of the
circumstances of any one of the SEC no-action letters are applicable. Broker-
Dealer's counsel must summarize each point upon which the no-action relief was
granted and represent that Broker-Dealer's method of operation is identical or
meets the same criteria. Broker-Dealer's counsel must also confirm that, to the
best of counsel's knowledge, the SEC has not rescinded or modified its no-action
position since the letter was released.
The Broker-Dealer Sales and Supervision Agreement will not be finalized and no
new applications for registered products will be accepted or no new compensation
will be payable unless the appropriate proof of state licensing or no-action
relief is confirmed. In addition to a letter from Broker-Dealer's counsel,
copies of the following documentation is required:
-- life insurance licenses for all states in which Broker-Dealer holds
these licenses and intends to operate and/or;
-- life insurance licenses for any contractual affiliate or wholly owned
life agency; and
-- the SEC No-Action Letter that will be relied upon.
If you have any questions regarding these matters, please contact your Life
Licensing and Contracting representative.
8
<PAGE>
[Exhibit 2]
March 15, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Separate Account VL I ("Separate Account")
Hartford Life Insurance Company ("Company")
File No. 33-53692
Dear Sir/Madam:
In my capacity as Associate General Counsel of the Company, I have supervised
the establishment of the Separate Account by the Board of Directors of the
Company as a separate account for assets applicable to Policies offered by
the Company pursuant to Connecticut law. I have participated in the
preparation of the registration statement for the Separate Account on Form
S-6 under the Securities Act of 1933 and the Investment Company Act of 1940
with respect to the Policies.
I am of the following opinion:
1. The Separate Account is a separate account of the Company validly existing
pursuant to Connecticut law and the regulations issued thereunder.
2. The assets held in the Separate Account are not chargeable with
liabilities arising out of any other business the Company may conduct.
3. The Policies are legally issued and represent binding obligations of
the Company.
In arriving at the foregoing opinion, I have made such examination of the law
and examined such records and other documents as in my opinion as are
necessary or appropriate.
I hereby consent to the filing of this opinion as an exhibit to the
registration statement under the Securities Act of 1933.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
Associate General Counsel & Secretary
<PAGE>
[Exhibit 5]
March 1, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs;
This opinion is furnished in connection with the registration statement under
the Securities Act of 1933 as amended ("Securities Act"), of a certain
flexible premium variable life insurance policy (the "Policy") that will be
offered and sold by Hartford Life Insurance Company and certain units of
interest to be issued in connection with the Policy.
The hypothetical illustrations of the Policy used in this Registration
Statement accurately reflect reasonable estimates of projected performance of
the Policy under the stipulated rates of investment return, the contractual
expense deductions and guaranteed cost-of-insurance rates, and utilizing a
reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Securities
Act Registration Statement on Form S-6 and to the reference to my name under
the heading "Experts" in the Prospectus included in the Securities Act
Registration Statement.
Very truly yours,
/s/ Ken A. McCullum
Ken A. McCullum, FSA, MAAA
Director Individual Life
Product Development
<PAGE>
[Exhibit 6]
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 33-61267 for ITT Hartford Life and
Annuity Insurance Company Separate Account VL I on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
August 28, 1996
<PAGE>
HARTFORD LIFE INSURANCE COMPANY, INC.
AND
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, INC.
POWER OF ATTORNEY
Donald R. Frahm
Bruce D. Gardner
Joseph H. Gareau
John P. Ginnetti
Thomas M. Marra
Leonard E. Odell, Jr.
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
do hereby jointly and severally authorize Lynda Godkin and/or Scott K.
Richardson to sign as their agent, any Registration Statement, pre-effective
amendment, post-effective amendment and any application for exemptive relief of
the Hartford Life Insurance Company, Inc. and Hartford Life and Accident
Insurance Company, Inc. under the Securities Act of 1933 and/or the Investment
Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Donald R. Frahm Dated: 10/19/95
- ----------------------------------- ---------------------
Donald R. Frahm
/s/ Bruce D. Gardner Dated: 10/19/95
- ----------------------------------- ---------------------
Bruce D. Gardner
/s/ Joseph H. Gareau Dated: 10/19/95
- ----------------------------------- ---------------------
Joseph H. Gareau
/s/ John P. Ginnetti Dated: 10/26/95
- ----------------------------------- ---------------------
John P. Ginnetti
/s/ Thomas M. Marra Dated: 10/19/95
- ----------------------------------- ---------------------
Thomas M. Marra
/s/ Leonard E. Odell, Jr. Dated: 10/20/95
- ----------------------------------- ---------------------
Leonard E. Odell, Jr.
/s/ Lowndes A. Smith Dated: 10/19/95
- ----------------------------------- ---------------------
Lowndes A. Smith
<PAGE>
/s/ Raymond P. Welnicki Dated: 10/24/95
- ----------------------------------- ---------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated: 10/20/95
- ----------------------------------- ---------------------
Lizabeth H. Zlatkus
