<PAGE>
ICMG SECULAR TRUST SEPARATE ACCOUNT
[LOGO] HARTFORD LIFE INSURANCE COMPANY
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This Prospectus describes Omniflex-TM-, a group flexible premium deferred
variable annuity contract with individually allocated certificates
("Certificates") issued by Hartford Life Insurance Company ("Hartford"). The
Certificates are offered to employee-participants of nonqualified deferred
compensation and supplemental executive retirement plans. Premium Payments for
each Certificate will be allocated to Divisions of Hartford Life Insurance
Company -- ICMG Secular Trust Separate Account (the "Separate Account").
There are currently twenty-one (21) Divisions available under the Certificate.
The underlying investment portfolios ("Portfolios") for the Divisions are the
HVA Money Market Fund, Inc., Hartford Bond Fund, Inc. and Hartford Capital
Appreciation Fund, Inc., sponsored by Hartford; Neuberger & Berman Advisers
Management Trust ("AMT") Partners Portfolio, Balanced Portfolio and Limited
Maturity Bond Portfolio; the VIP Equity-Income Portfolio and the VIP High Income
Portfolio of Fidelity Variable Insurance Products Fund; the VIP II Asset Manager
Portfolio of Fidelity Variable Insurance Products Fund II; the Alger American
Small Capitalization Portfolio and Alger American Growth Portfolio of The Alger
American Fund; the JPM Bond Portfolio, the JPM Equity Portfolio, the JPM Small
Company Portfolio, the JPM International Equity Portfolio of the JPM Series
Trust II; and the Fixed Income Portfolio, the High Yield Portfolio, the Equity
Growth Portfolio, the Value Portfolio, the Global Equity Portfolio and the
Emerging Markets Equity Portfolio of the Morgan Stanley Universal Funds, Inc.
This Prospectus sets forth the information concerning the Separate Account that
prospective investors should know before investing and should be kept for future
reference. Additional information about the Separate Account has been filed with
the Securities and Exchange Commission and is available without charge upon
request. To obtain the Statement of Additional Information send a written
request to International Corporate Marketing Group ("ICMG"), Attn: Group Annuity
Operations, 100 Campus Drive, Suite 250, Florham Park, NJ 07932. The Table of
Contents for the Statement of Additional Information may be found on page 21 of
this Prospectus. The Statement of Additional Information is incorporated by
reference into this Prospectus.
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THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES FOR THE
PORTFOLIOS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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PROSPECTUS DATED: SEPTEMBER 2, 1997
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2 HARTFORD LIFE INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................. 3
FEE TABLE............................................................. 4
SUMMARY............................................................... 6
PERFORMANCE RELATED INFORMATION....................................... 7
INTRODUCTION.......................................................... 7
THE CERTIFICATE....................................................... 7
THE SEPARATE ACCOUNT.................................................. 8
THE COMPANY........................................................... 8
THE PORTFOLIOS........................................................ 9
Investment Advisers................................................. 10
Other Information about the Portfolios.............................. 11
OPERATION OF THE CERTIFICATE.......................................... 12
Premium Payments.................................................... 12
Refund Rights....................................................... 12
Value of Accumulation Units......................................... 12
Investment Value.................................................... 13
Reallocations Among Divisions....................................... 13
Surrender of a Certificate/Partial Withdrawals...................... 13
DEATH BENEFIT......................................................... 14
CHARGES UNDER THE CERTIFICATE......................................... 14
Sales Expenses...................................................... 14
Mortality and Expense Risk Charge................................... 15
Administrative Expense Charge....................................... 15
Premium Tax Charge.................................................. 15
Federal Tax Charge.................................................. 15
ANNUITY BENEFITS...................................................... 15
Annuity Options..................................................... 16
The Annuity Unit and Valuation...................................... 16
Determination of Payment Amount..................................... 16
FEDERAL TAX CONSIDERATIONS............................................ 17
A. General......................................................... 17
B. Taxation of Hartford and the Separate Account................... 17
C. Taxation of Annuities -- General Provisions Affecting Purchasers
Other than Qualified Retirement Plans............................. 17
D. Federal Income Tax Withholding................................... 20
E. Annuity Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 20
GENERAL MATTERS....................................................... 21
Assignment.......................................................... 21
Modification........................................................ 21
Misstatement of Age................................................. 21
Delay of Payments................................................... 21
Voting Rights....................................................... 21
Experience Credit................................................... 21
Distribution of the Certificates.................................... 21
Custodian of Separate Account Assets................................ 22
Legal Proceedings................................................... 22
Legal Counsel....................................................... 22
Experts............................................................. 22
Additional Information.............................................. 22
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION.............. 23
</TABLE>
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HARTFORD LIFE INSURANCE COMPANY 3
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate the
Investment Value during the Accumulation Period.
ALLOCATION DATES: The dates we receive and accept Premium Payments. Premium
Payments are applied to the Separate Account Divisions on these Allocation
Dates.
ANNUITY COMMENCEMENT DATE: The date payment of an annuity is to begin under each
Certificate.
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
annuity payments under a variable annuity option.
ANNUITANT(S): The person(s) upon whose life the Certificate is issued.
BENEFICIARY: The person(s) entitled to receive benefits under the Certificate on
death of the Annuitant or Certificate Owner.
CERTIFICATE ANNIVERSARY: The anniversary of the Certificate Date.
CERTIFICATE DATE: The date shown in the Certificate specifications.
CERTIFICATE OWNER: The entity or person who is the owner of the Certificate, as
named in the Certificate specifications, sometimes herein referred to as "You."
CERTIFICATE YEAR: A period of 12 months following the Certificate Date and each
anniversary thereof.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTINGENT ANNUITANT: The person (as designated by the Certificate Owner) who
becomes the Annuitant upon the Annuitant's death prior to the Annuity
Commencement Date.
CUSTOMER SERVICE CENTER: Currently located at ICMG, Group Annuity Operations,
100 Campus Drive, Suite 250, Florham Park, NJ 07932.
DEATH BENEFIT: The amount payable upon the death of an Annuitant or Certificate
Owner before annuity payments have started.
DIVISIONS: The sub-accounts of the Separate Account.
HARTFORD: Hartford Life Insurance Company.
INVESTMENT VALUE: The sum of the values of each Division's Accumulation Units
held under the Certificate.
PORTFOLIOS: The underlying securities allocable under the Certificate.
PREMIUM PAYMENT: A payment made to Hartford pursuant to the terms of the
Certificate.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments or
Investment Value.
SEPARATE ACCOUNT: The Hartford separate account entitled "Hartford Life
Insurance Company -- ICMG Secular Trust Separate Account."
SURRENDER VALUE: Upon surrender of the Certificate, an amount equal to the
Investment Value less any Premium Taxes not previously deducted and any due and
unpaid charges.
VALUATION DAY: Each day the New York Stock Exchange is open for trading, which
is Monday through Friday, except for normal business holidays. 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.
VARIABLE ANNUITY: An annuity providing for payments varying in amount in
accordance with the investment experience of the Divisions of the Separate
Account.
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4 HARTFORD LIFE INSURANCE COMPANY
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FEE TABLE
ICMG SECULAR TRUST SEPARATE ACCOUNT
Certificate Owner Transaction Expenses
<TABLE>
<S> <C>
As a Percentage of Premium Payments
Maximum Sales Load Imposed on Purchases......................... 4.6%(1)
Federal Tax Charge.............................................. 0.43%
Deferred Sales Load............................................. None
Other Charges
Reallocation Fee................................................ $0
Administrative Expense Charge................................... $2.50/month
</TABLE>
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(1) The sales load will vary depending on plan characteristics.
<TABLE>
<S> <C>
Annual Expenses-Separate Account (As Percentage of Average
Investment Value)
Mortality and Expense Risk...................................... 0.65%
</TABLE>
Annual Fund Operating Expenses
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
HVA Money Market Fund........................... 0.423% 0.021% 0.444%
Hartford Bond Fund.............................. 0.490% 0.030% 0.520%
Hartford Capital Appreciation Fund.............. 0.629% 0.017% 0.646%
Neuberger & Berman AMT Partners Portfolio (1)... 0.840% 0.110% 0.950%
Neuberger & Berman AMT Balanced Portfolio (1)... 0.850% 0.240% 1.090%
Neuberger & Berman AMT Limited Maturity Bond
Portfolio (1)................................ 0.650% 0.130% 0.780%
Fidelity VIP Equity-Income Portfolio (2)........ 0.510% 0.070% 0.580%
Fidelity VIP High Income Portfolio.............. 0.590% 0.120% 0.710%
Fidelity VIP II Asset Manager Portfolio (2)..... 0.640% 0.100% 0.740%
Alger American Small Capitalization Portfolio... 0.850% 0.030% 0.880%
Alger American Growth Portfolio................. 0.750% 0.040% 0.790%
JPM Bond Portfolio (3).......................... 0.300% 0.450% 0.750%
JPM Equity Portfolio (3)........................ 0.400% 0.500% 0.900%
JPM Small Company Portfolio (3)................. 0.600% 0.550% 1.150%
JPM International Equity Portfolio (3).......... 0.600% 0.600% 1.200%
Morgan Stanley Fixed Income Portfolio (4)....... 0.400% 0.300% 0.700%
Morgan Stanley High Yield Portfolio (4)......... 0.500% 0.300% 0.800%
Morgan Stanley Equity Growth Portfolio (4)...... 0.550% 0.300% 0.850%
Morgan Stanley Value Portfolio (4).............. 0.550% 0.300% 0.850%
Morgan Stanley Global Equity Portfolio (4)...... 0.800% 0.350% 1.150%
Morgan Stanley Emerging Markets Equity Portfolio
(4).......................................... 1.250% 0.500% 1.750%
</TABLE>
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(1) Neuberger & Berman Advisers Management Trust is divided into Portfolios,
each of which invests all of its net investable assets in a corresponding
series of Advisers Managers Trust. The figures reported under "Management
Fees" include the aggregate of the administration fees paid by the Portfolio
and the management fees paid by its corresponding series of Advisers
Managers Trust. Similarly, "Other Expenses" includes all other expenses of
the Portfolio and its corresponding series of Advisers Managers Trust.
(2) A portion of the brokerage commissions that certain funds pay was used to
reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest earned
on uninvested cash balances was used to reduce custodian and transfer agent
expenses. Including these reductions, the total operating expenses presented
in the table would have been .56% for Equity-Income Portfolio and .73% for
Asset Manager Portfolio.
(3) Pursuant to a voluntary agreement, fees and expenses were reimbursed to the
extent certain expenses exceeded .75%, .90%, 1.15% and 1.20% of the average
daily net assets of JPM Bond Portfolio, JPM Equity Portfolio, JPM Small
Company Portfolio and JPM International Equity Portfolio, respectively.
Without such reimbursement, total expenses would have been 2.18%, 2.13%,
2.69% and 3.18% for JPM Bond Portfolio, JPM Equity Portfolio, JPM Small
Company Portfolio and JPM International Equity Portfolio, respectively.
(4) Computed for the period January 1, 1997, to March 31, 1997, annualized.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
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EXAMPLE
<TABLE>
<CAPTION>
If you surrender your
Certificate or annuitize at the
end of the applicable time
period: You would pay the
following expenses on a $1,000
Investment, assuming a 5%
annual return on assets:
<S> <C> <C> <C> <C>
DIVISION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
HVA Money Market Fund........ $ 62 $ 86 $ 112 $ 185
Hartford Bond Fund........... 62 89 116 193
Hartford Capital Appreciation
Fund....................... 64 93 123 208
Neuberger & Berman AMT
Partners Portfolio......... 67 102 140 244
Neuberger & Berman AMT
Balanced Portfolio......... 68 107 147 260
Neuberger & Berman AMT
Limited Maturity Bond
Portfolio.................. 65 97 130 224
Fidelity VIP Equity-Income
Portfolio.................. 63 96 120 200
Fidelity VIP High Income
Portfolio.................. 64 95 127 216
Fidelity VIP II Asset
Manager.................... 65 96 128 219
Alger American Small
Capitalization Portfolio... 65 97 131 225
Alger American Growth
Portfolio.................. 66 100 136 235
JPM Bond Portfolio........... 65 96 129 220
JPM Equity Portfolio......... 66 101 137 238
JPM Small Company
Portfolio.................. 69 108 150 267
JPM International Equity
Portfolio.................. 69 110 153 273
Morgan Stanley Fixed Income
Portfolio.................. 64 94 126 214
Morgan Stanley High Yield
Portfolio.................. 65 97 131 226
Morgan Stanley Equity Growth
Portfolio.................. 66 99 134 232
Morgan Stanley Value
Portfolio.................. 66 99 134 232
Morgan Stanley Global Equity
Portfolio.................. 69 108 150 267
Morgan Stanley Emerging
Markets Equity Portfolio... 75 127 183 337
</TABLE>
The purpose of this table is to assist the Certificate Owner in
understanding various costs and expenses that a Certificate Owner will bear
directly or indirectly. The table reflects expenses of the Separate Account and
underlying Portfolios. Premium taxes may also be applicable.
This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown. Assumes
maximum charges.
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6 HARTFORD LIFE INSURANCE COMPANY
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SUMMARY
WHAT IS THE CERTIFICATE AND HOW MAY I PURCHASE ONE?
The Certificate is offered under an individually allocated, group flexible
premium variable annuity contract (see "Taxation of Annuities -- General
Provisions Affecting Purchasers Other than Qualified Retirement Plans," page
17). Generally, the Certificate is purchased by completing an enrollment form to
purchase a Certificate and submitting it, along with the initial Premium
Payment, to Hartford for its approval. The minimum initial Premium Payment is
$1,000 per Certificate with a minimum allocation to any Portfolio of $500 per
Certificate. Certain plans may make smaller initial and subsequent periodic
Premium Payments. Subsequent Premium Payments, if made, must be a minimum of
$1,000 or the minimum amount then in effect.
WHO MAY PURCHASE THE CERTIFICATE?
The Certificates are offered to employee-participants of nonqualified
deferred compensation and supplemental executive retirement plans.
WHAT TYPES OF INVESTMENTS ARE AVAILABLE UNDER THE CERTIFICATE?
The underlying investments for the Certificate are shares of the HVA Money
Market Fund, Inc., Hartford Bond Fund, Inc. and Hartford Capital Appreciation
Fund, Inc. sponsored by Hartford; the Partners Portfolio, Balanced Portfolio and
Limited Maturity Bond Portfolio of Neuberger & Berman Advisers Management Trust;
the VIP Equity-Income Portfolio and VIP High Income Portfolio of Fidelity
Variable Insurance Products Fund; the VIP II Asset Manager Portfolio of Fidelity
Variable Insurance Products Fund II; the Alger American Small Capitalization
Portfolio and Alger American Growth Portfolio of The Alger American Fund; the
JPM Bond Portfolio, JPM Equity Portfolio, JPM Small Company Portfolio and JPM
International Equity Portfolio of the JPM Series Trust II; the Fixed Income
Portfolio, High Yield Portfolio, Equity Growth Portfolio, Value Portfolio,
Global Equity Portfolio and Emerging Markets Equity Portfolio of the Morgan
Stanley Universal Funds, Inc.; and such other Portfolios as shall be offered
from time to time. (See "The Portfolios" commencing on page 9.)
WHAT ARE THE CHARGES UNDER THE CERTIFICATES?
SALES EXPENSES
A sales load of not more than 4.6% of Premium Payments will be deducted for
sales expenses. The sales load may vary depending on the characteristics of the
group, including such factors as group size, expected number of participants and
the anticipated Premium Payment from participants.
MORTALITY AND EXPENSE RISK CHARGE
For assuming the mortality and expense risks under the Certificate, Hartford
will impose a 0.65% per annum charge against all Investment Value held in the
Divisions (see "Mortality and Expense Risk Charge," page 15).
ADMINISTRATIVE EXPENSE CHARGE
The Certificate provides for an administrative expense charge of $2.50 per
month to be deducted from the Investment Value to cover Hartford's
administrative expenses.
PREMIUM TAX AND FEDERAL TAX CHARGES
A deduction will be made for Premium Taxes for Certificates sold in certain
states. (See "Premium Tax Charge," page 15.) In addition, a deduction will be
made for the federal tax cost resulting from Section 848 of the Code. (See
"Federal Tax Charge," page 15.)
CHARGES BY THE PORTFOLIOS
The Portfolios are subject to certain fees, charges and expenses. (See the
Prospectuses for the Portfolio attached hereto.)
CAN I GET MY MONEY IF I NEED IT?
Subject to any applicable charges, the Certificate may be surrendered or
portions of its Investment Value may be withdrawn at any time prior to the
Annuity Commencement Date. The number of partial withdrawals in any Certificate
Year is limited to 12. If less than Hartford's minimum amount rules then in
effect remains in a Certificate as a result of a withdrawal, Hartford may
terminate the Certificate in its entirety. (See "Surrender of a
Certificate/Partial Withdrawals," page 13; see also "Federal Tax
Considerations," page 17, for a discussion of federal tax consequences,
including a 10% penalty tax that may apply upon surrender or withdrawal.)
DOES THE CERTIFICATE PAY ANY DEATH BENEFITS?
A Death Benefit is provided on the death of the Annuitant or Certificate
Owner before the Annuity Commencement Date and prior to attained age 85. (See
"Death Benefit," page 14.)
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CERTIFICATE?
There are four annuity options available under the Certificate which are
described on page 16. The Annuity Commencement Date may not be deferred beyond
the Annuitant's 90th birthday in most states. (In Pennsylvania, the Annuity
Commencement Date may not be deferred beyond the Annuitant's 85th birthday.) If
a Certificate Owner does not elect otherwise, the Investment Value less
applicable premium taxes will be applied on the Annuity Commencement Date under
the third option to provide a joint and last survivor life annuity.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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DOES THE CERTIFICATE OWNER HAVE ANY VOTING RIGHTS UNDER THE CERTIFICATE?
Certificate Owners will have the right to vote on matters affecting an
underlying Portfolio to the extent that proxies are solicited by such Portfolio.
If a Certificate Owner does not vote, Hartford shall vote such interests in the
same proportion as shares of the Portfolio for which instructions have been
received by Hartford. (See "Voting Rights," page 21.)
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PERFORMANCE RELATED
INFORMATION
The Separate Account may advertise certain performance related information
concerning its Divisions. Performance information about a Division is based on
the Division's past performance only and is no indication of future performance.
Each Division may include total return in advertisements or other sales
material. When a Division advertises its total return, it will usually be
calculated for one year, five years, and ten years or some other relevant
periods if the Division has not been in existence for at least ten years. Total
return is measured by comparing the value of an investment in the Division at
the beginning of the relevant period to the value of the investment at the end
of the period.
The Divisions for the Hartford Bond Fund, Inc. and Limited Maturity Bond
Portfolio may advertise yield in addition to total return. The yield will be
computed in the following manner: The net investment income per unit earned
during a recent one month period is divided by the unit value on the last day of
the period. This figure reflects the Certificate charges described below.
The Division for the HVA Money Market Fund, Inc. may advertise yield and
effective yield. The yield of a Division is based upon the income earned by the
Division over a seven-day period and then annualized, i.e. the income earned in
the period is assumed to be earned every seven days over a 52-week period and
stated as a percentage of the investment. Effective yield is calculated
similarly, but when annualized, the income earned by the investment is assumed
to be reinvested in Division units and thus compounded in the course of a
52-week period. Yield reflects the Certificate charges described below.
Total return for a Division of the Separate Account includes all Certificate
charges: sales charges, mortality and expense risk charges, and the
administrative expense charge, and is therefore lower than total return at the
Portfolio level, with no comparable charges. Yield for a Division of the
Separate Account includes all recurring charges (except sales charges), and is
therefore lower than yield at the Portfolio level, with no comparable charges.
Hartford may provide information on various topics to current and
prospective Certificate Owners in advertising, sales literature or other
materials. These topics may include the relationship between sectors of the
economy and the economy as a whole and its effect on various securities markets,
investment strategies and techniques (such as value investing, dollar cost
averaging and asset allocation), plan and trust arrangements, the advantages and
disadvantages of investing in tax-advantaged and taxable instruments, current
and prospective Certificate Owner profiles and hypothetical purchase scenarios,
financial management and tax and retirement planning, and investment
alternatives, including comparisons between the Certificates and the
characteristics of and market for such alternatives.
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INTRODUCTION
This Prospectus has been designed to provide you with the necessary
information to make a decision on purchasing the Certificate offered by Hartford
and funded by the Divisions of the Separate Account. Please read the Glossary of
Special Terms on page 3 prior to reading this Prospectus to familiarize yourself
with the terms being used.
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THE CERTIFICATE
The Certificate is offered under an individually allocated, group flexible
premium variable annuity contract. Payments for the Certificate will be held in
the Divisions of the Separate Account. Each Division invests in a different
underlying Portfolio with its own distinct investment objectives. You choose the
Division(s) with the investment objectives that meet your needs. You may select
one or more Divisions and determine the percentage of your Premium Payment that
is put into a Division. Subject to certain limits, you may also reallocate
assets among the Divisions so that your investment program meets your specific
needs over time. There are minimum requirements for investing in each Division
which are described later in this Prospectus. In addition, there are certain
other limitations on withdrawals and reallocations of amounts in the Divisions
as described in this Prospectus. See "Charges Under the Certificate" for a
description of the charges for redeeming a Certificate and other charges made
under the Certificate.
The Certificate Owner may select an Annuity Commencement Date and an annuity
option which may be on a fixed or variable basis, or a combination thereof.
Generally, the Certificate contains the four optional forms of annuity described
later in this Prospectus. The Annuity
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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Commencement Date may not be deferred beyond the Annuitant's 90th birthday in
most states. (In Pennsylvania, the Annuity Commencement Date may not be deferred
beyond the Annuitant's 85th birthday.)
The Annuity Commencement Date may be changed from time to time, but any such
change must be made at least 30 days prior to the date on which payments are
scheduled to begin. If you do not elect otherwise, payments will begin at the
Annuitant's age 90 under Option 3 (joint and last survivor life annuity).
When an annuity is effected under a Certificate, unless otherwise specified,
Investment Value held in the Divisions will be applied to provide a variable
annuity based on the pro rata amount in the various Divisions. Variable annuity
payments will vary in accordance with the investment performance of the Division
you have selected. The Certificate allows the Certificate Owner to change the
Divisions on which variable payments are based after payments have commenced
once every quarter. Any fixed annuity allocation may not be changed.
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THE SEPARATE ACCOUNT
The Separate Account was established on October 28, 1994, in accordance with
authorization by the Board of Directors of Hartford. It is the Separate Account
in which Hartford sets aside and invests the assets attributable to the
Certificates. Although the Separate Account is an integral part of Hartford, it
is registered as a unit investment trust under the Investment Company Act of
1940. This registration does not, however, involve supervision by the Commission
of the management or the investment practices or policies of the Separate
Account or Hartford. The Separate Account meets the definition of "separate
account" under federal securities laws.
Under Connecticut law, the assets of the Separate Account attributable to
the Certificates offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Certificates.
Income, gains, and losses, whether or not realized, from assets allocated to the
Separate Account, are, in accordance with the Certificates, credited to or
charged against the Separate Account. Also, the assets in the Separate Account
are not chargeable with liabilities arising out of any other business Hartford
may conduct. Investment Value allocated to the Divisions will not be affected by
the rate of return of Hartford's general account, nor by the investment
performance of any of Hartford's other separate accounts. However, the
obligations arising under the Certificates are general obligations of Hartford.
Currently, the Certificate Owner has the choice of allocating Investment
Value among up to five of the twenty-one Divisions. (Hartford reserves the right
to increase the number of allocable investment options to more than five.) Each
Division is invested exclusively in the shares of one underlying Portfolio. Net
Premium Payments and proceeds of reallocations between Portfolios are applied to
purchase shares in the appropriate Portfolio at net asset value determined as of
the end of the Valuation Period during which the payments were received or the
reallocation made. All distributions from the Portfolios are reinvested at net
asset value. The value of your investment will therefore vary in accordance with
the net income and the market value of the underlying Portfolio. During the
variable annuity payout period, both your annuity payments and reserve values
will vary in accordance with these factors.
HARTFORD DOES NOT GUARANTEE THE INVESTMENT RESULTS OF THE PORTFOLIOS OR ANY
OF THE UNDERLYING INVESTMENTS. THERE IS NO ASSURANCE THAT INVESTMENT VALUE
DURING THE YEARS PRIOR TO RETIREMENT OR THE AGGREGATE AMOUNT OF THE VARIABLE
ANNUITY PAYMENTS WILL EQUAL THE TOTAL OF PREMIUM PAYMENTS MADE UNDER THE
CERTIFICATE. SINCE EACH UNDERLYING PORTFOLIO HAS DIFFERENT INVESTMENT OBJECTIVES
AND POLICIES, EACH IS SUBJECT TO DIFFERENT RISKS. THESE RISKS ARE MORE FULLY
DESCRIBED IN THE ACCOMPANYING PORTFOLIO PROSPECTUSES.
Hartford reserves the right, subject to compliance with the law, to
substitute the shares of any other registered investment company for the shares
of any Portfolio held by the Separate Account. Substitution may occur only if
shares of the Portfolio(s) become unavailable or if there are changes in
applicable law or interpretations of law. Current law requires notification to
you of any such substitution and approval of the Commission.
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THE COMPANY
Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing health and life insurance, both
individual and group, in all states of the United States and the District of
Columbia. Hartford was originally incorporated under the laws of Massachusetts
on June 5, 1902, and was subsequently redomiciled to Connecticut. Its offices
are located in Simsbury, Connecticut; however, its mailing address is P.O. Box
2999, Hartford, CT 06104-2999. Hartford is a subsidiary of Hartford Fire
Insurance Company, one of the largest multiple lines insurance carriers in the
United States. Hartford is majority owned by The Hartford Financial Services
Group, Inc., a Delaware corporation.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps, on the basis of its claims paying
ability. These ratings do not apply to the
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
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investment performance of the Sub-Accounts of the Separate Account. The ratings
apply to Hartford's ability to meet its insurance obligations, including those
described in this Prospectus.
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THE PORTFOLIOS
The underlying investment for the Certificates are shares of the Portfolios.
The underlying Portfolio corresponding to each Division and its investment
objective are described below. Hartford reserves the right, subject to
compliance with the law, to offer additional Portfolios with differing
investment objectives. Certificate Owners should review the following brief
descriptions of the investment objectives of the Portfolios. There is no
assurance that any of the Portfolios will achieve their stated objectives.
Certificate Owners are also advised to read the prospectuses for the Portfolios
accompanying this Prospectus for more detailed information.
HVA MONEY MARKET FUND, INC.
Seeks maximum current income consistent with liquidity and preservation of
capital.
HARTFORD BOND FUND, INC.
Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets of
this Fund may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's Investor Services, Inc. or "BB" by Standard &
Poor's) or, if unrated, are determined to be of comparable quality by the Fund's
investment adviser. Securities rated below investment grade are commonly
referred to as "high yield-high risk securities" or "junk bonds." For more
information concerning the risks associated with investing in such securities,
please refer to the section in the accompanying prospectus for the Hartford
Funds entitled "Hartford Bond Fund, Inc. -- Investment Policies."
HARTFORD CAPITAL APPRECIATION FUND, INC.
Seeks growth of capital by investing in securities selected solely on
potential for capital appreciation; income, if any, is an incidental
consideration.
NEUBERGER & BERMAN AMT PARTNERS PORTFOLIO
Seeks to achieve capital growth by investing primarily in common stocks of
medium to large capitalization established companies, using the value-oriented
investment approach.
NEUBERGER & BERMAN AMT BALANCED PORTFOLIO
Seeks to achieve long-term capital growth and reasonable current income
without undue risk to principal by investing a portion of its assets in common
stocks and a portion of its assets in investment grade debt securities.
NEUBERGER & BERMAN AMT LIMITED MATURITY BOND PORTFOLIO
Seeks primarily to achieve the highest current income consistent with low
risk to principal and liquidity; and secondarily, total return. The Portfolio
pursues its investment objectives by investing in a diversified portfolio
primarily consisting of U.S. government and agency securities and investment
grade debt securities.
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Seeks 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 500 Composite Stock Price Index.
FIDELITY VIP HIGH INCOME PORTFOLIO
Seeks to obtain a high level of current income by investing primarily in
high-yielding, lower-rated, fixed income securities (commonly referred to as
junk bonds), while also considering growth of capital. High yielding,
lower-rated debt securities present higher risks of untimely interest and
principal payments, default, and price volatility than higher-rated securities,
and may present problems of liquidity and valuation.
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Seeks high total return with reduced risk over the long-term by allocating
its assets among domestic and foreign stocks, bonds and short-term fixed-income
instruments.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
Seeks long-term capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, primarily of companies with total market
capitalization within the range of companies included in the Russell 2000 Growth
Index or the Standard & Poor's Small Cap 600 Index, updated quarterly.
ALGER AMERICAN GROWTH PORTFOLIO
Seeks long-term capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, primarily of companies with total market
capitalization of $1 billion or greater.
JPM BOND PORTFOLIO
Seeks high total return consistent with moderate risk of capital and
maintenance of liquidity. Although the net asset value of the Portfolio will
fluctuate, the Portfolio attempts to preserve the value of its investments to
the extent consistent with its objective. Under normal market conditions, 65% of
the Portfolio's, assets will be invested in bonds, debentures and other debt
instruments. The Portfolio may invest up to 20% of its assets in securities
denominated in foreign
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
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currencies and may invest without limitation in U.S. dollar-denominated
securities of foreign issuers.
JPM EQUITY PORTFOLIO
Seeks high total return from a portfolio comprised of selected equity
securities. The Portfolio invests primarily in the common stock of U.S.
corporations with market capitalizations above $1.5 billion.
JPM SMALL COMPANY PORTFOLIO
Seeks high total return from a portfolio of equity securities of small
companies. The Portfolio invests at least 65% of the value of its total assets
in the common stock of small U.S. companies primarily with market
capitalizations less than $1 billion.
JPM INTERNATIONAL EQUITY PORTFOLIO
Seeks high total return from a portfolio of equity securities of foreign
corporations. Under normal market conditions, the Portfolio will invest in a
minimum of three different foreign countries.
MORGAN STANLEY FIXED INCOME PORTFOLIO
Seeks above average total return over a market cycle of three to five years
by investing in a diversified portfolio of U.S. government and agency
securities, corporate bonds, foreign bonds, mortgage-backed securities of
domestic issuers, and other fixed income securities and derivatives. Under
normal circumstances, the Portfolio will invest at least 65% of its total assets
in fixed income securities, not more than 20% of which will be below investment
grade, i.e., high yield securities (commonly referred to as junk bonds).
MORGAN STANLEY HIGH YIELD PORTFOLIO
Seeks above average total return over a market cycle of three to five years
by investing at least 65% of its total assets in high yield securities of U.S.
and foreign issuers including corporate bonds and other fixed income securities.
The Portfolio expects to achieve its objective through maximizing current
income, although it may seek capital growth opportunities when consistent with
its objective.
MORGAN STANLEY EQUITY GROWTH PORTFOLIO
Seeks long-term capital appreciation by investing primarily in
growth-oriented common and preferred stocks, convertible securities, rights and
warrants to purchase common stocks, depositary receipts and other equity
securities. Under normal circumstances, the Portfolio will invest at least 65%
of its total assets in equity securities.
MORGAN STANLEY VALUE PORTFOLIO
Seeks above average total return over a market cycle of three to five years
by investing primarily in common and preferred stocks, convertible securities,
rights and warrants to purchase common stocks, ADRs and other equity securities
of companies with equity capitalizations greater than $300 million. Under normal
circumstances, the Portfolio will invest at least 65% of its total assets in
equity securities. The Portfolio may invest up to 5% of its total assets in
foreign equity securities.
MORGAN STANLEY GLOBAL EQUITY PORTFOLIO
Seeks long-term capital appreciation by investing primarily in common and
preferred stocks, convertible securities, and rights and warrants to purchase
common stocks, depositary receipts and other equity securities of issuers
throughout the world, including issuers in the United States and emerging market
countries. Under normal circumstances, at least 65% of the total assets of the
Portfolio will be invested in equity securities. At least 20% of the Portfolio's
total assets will be invested in common stocks of U.S. issuers and the remaining
equity position will be invested in at least three countries other than the
United States.
MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO
Seeks long-term capital appreciation by investing primarily in common and
preferred stocks, convertible securities, rights and warrants to purchase common
stocks, sponsored and unsponsored ADRs and other equity securities of emerging
market country issuers. Under normal circumstances, at least 65% of the
Portfolio's total assets will be invested in emerging market country equity
securities.
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INVESTMENT ADVISERS
The investment adviser for the HVA Money Market Fund, Inc., Hartford Bond
Fund, Inc. and Hartford Capital Appreciation Fund, Inc. is HL Investment
Advisors, Inc. ("HL Advisors"). In addition, HL Advisors has entered an
investment services agreement with Hartford Investment Management Company, Inc.
("HIMCO"), pursuant to which HIMCO will provide certain investment services to
Hartford Bond Fund, Inc. and HVA Money Market Fund, Inc.
Wellington Management Company, L.L.P. serves as sub-investment adviser for
Hartford Capital Appreciation Fund, Inc.
The investment adviser for Neuberger & Berman Advisers Management Trust is
Neuberger & Berman Management Incorporated, 605 Third Avenue, 2nd Floor, New
York, New York. Neuberger & Berman Management Incorporated, with the assistance
of Neuberger & Berman, L.L.C. as sub-adviser, selects investments for Neuberger
& Berman AMT Partners Portfolio, Neuberger & Berman AMT Balanced Portfolio and
Neuberger & Berman AMT Limited Maturity Bond Portfolio.
The investment manager for the VIP Equity-Income Portfolio and VIP High
Income Portfolio of Fidelity Variable Insurance Products Fund and the VIP II
Asset Manager Portfolio of Fidelity Variable Insurance Products Fund II is
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
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Fidelity Management & Research Company ("FMR"). FMR, a registered investment
adviser under the Investment Advisers Act of 1940, is one of America's largest
investment management organizations and has its principal business address at 82
Devonshire Street, Boston, Massachusetts. It is composed of a number of
different companies, which provide a variety of financial services and products.
FMR 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.
Fred Alger Management, Inc. ("Alger Management"), 75 Maiden Lane, New York,
New York 10038, serves as investment manager to the Alger American Small
Capitalization Portfolio and the Alger American Growth Portfolio. Alger
Management is a wholly-owned subsidiary of Fred Alger & Company, Incorporated,
which is a wholly-owned subsidiary of Alger Associates, Inc., a financial
services holding company.
The investment adviser for JPM Series Trust II is J.P. Morgan Investment
Management Inc. ("J.P. Morgan") which maintains its principal office at 522
Fifth Avenue, New York, New York. It is a wholly-owned subsidiary of J.P. Morgan
& Co. Incorporated, a bank holding company which, through its subsidiaries,
offers a wide range of services to governmental, institutional, corporate and
individual customers and acts as investment adviser to individual and
institutional clients.
The investment adviser for the Equity Growth Portfolio, Global Equity
Portfolio and Emerging Markets Equity Portfolio of the Morgan Stanley Universal
Funds, Inc. is Morgan Stanley Asset Management Inc. ("MSAM"). MSAM, with
principal offices at 1221 Avenue of the Americas, New York, New York, conducts a
worldwide investment management business, providing a broad range of portfolio
management services to customers in the United States and abroad, and serves as
investment adviser to numerous open-end and closed-end investment companies.
MSAM is a wholly-owned subsidiary of Morgan Stanley Group Inc., which is a
publicly owned financial services corporation.
The investment adviser for the Fixed Income Portfolio, High Yield Portfolio
and Value Portfolio of the Morgan Stanley Universal Funds, Inc. is Miller
Anderson & Sherrerd, LLP ("MAS"). Founded in 1969, MAS has its principal offices
at One Tower Bridge, West Conshohocken, Pennsylvania, and is indirectly
wholly-owned by Morgan Stanley Group Inc. MAS provides investment advisory
services to employee benefit plans, endowment funds, foundations and other
institutional investors and has served as investment adviser to several open-end
investment companies since 1984.
See the accompanying prospectuses for the Portfolios for a more complete
description of the investment advisers and any sub-adviser and their respective
fees.
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OTHER INFORMATION ABOUT THE PORTFOLIOS
All of the Portfolios are registered as diversified open-end management
companies under the Investment Company Act of 1940. Each Portfolio continually
issues an unlimited number of full and fractional shares of beneficial interest
in the Portfolio. Such shares are offered to separate accounts, including the
Separate Account, established by Hartford or one of its affiliated companies
specifically to fund the Certificates and other contracts issued by Hartford or
its affiliates as permitted by the Investment Company Act of 1940.
The Portfolios are available only to serve as the underlying investment for
variable annuity and variable life policies and certificates. A full description
of the Portfolios, their investment objectives, policies and restrictions,
risks, charges and expenses and other aspects of their operation is contained in
the accompanying Portfolio Prospectuses which should be read in conjunction with
this Prospectus before investing, and in the Portfolio Statements of Additional
Information which may be ordered without charge from the Portfolios.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Portfolios simultaneously. (Although Hartford and the Portfolios
do not currently foresee any such disadvantages either to variable annuity
contract owners or to variable life insurance policyowners, the Portfolio's
Board of Trustees will monitor events in order to identify any material
conflicts between such variable annuity contract and variable life insurance
policyowners and will determine what action, if any, should be taken if a
material conflict arises). If the Board of Trustees of the Portfolio were to
conclude that separate Portfolios should be established for variable life and
variable annuity separate accounts, the variable annuity policy and certificate
owners would not bear any expenses attendant upon establishment of such separate
funds.
All investment income of and other distributions to each Division of the
Separate Account arising from the applicable Portfolio are reinvested in shares
of that Portfolio at net asset value. The income and both realized gains or
losses on the assets of each Division of the Separate Account are therefore
separate and are credited to or charged against the Division without regard to
income, gains or losses from any other Division or from any other business of
Hartford. Hartford will purchase shares in the Portfolios in connection with
premiums allocated to the applicable Division in accordance with Certificate
Owners directions and will redeem shares in the Portfolios to meet Certificate
obligations or make adjustments in reserves, if any. The Portfolios are required
to redeem Portfolio shares at net asset value and to make payment within seven
days.
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Hartford reserves the right, subject to compliance with the law as then in
effect, to make additions to, deletions from, or substitutions for the Separate
Account and its Divisions which fund the Certificates. If shares of any of the
Portfolios should no longer be available for investment, or if, in the judgment
of Hartford's management, further investment in shares of any Portfolio should
become inappropriate in view of the purposes of the Certificates, Hartford may
substitute shares of another Portfolio for shares already purchased, or to be
purchased in the future, under the Certificates. No substitution of securities
will take place without notice to and consent of Certificate Owners and without
prior approval of the Securities and Exchange Commission to the extent required
by the Investment Company Act of 1940. Subject to Certificate Owner approval,
Hartford also reserves the right to end the registration under the Investment
Company Act of 1940 of the Separate Account or any other separate accounts of
which it is the depositor which may fund the Certificates.
Each Portfolio is subject to investment restrictions which may not be
changed without the approval of a majority of the shareholders of the Portfolio.
See the accompanying prospectuses for the Portfolios.
- ---------------------------------------------------
OPERATION OF THE CERTIFICATE
- --------------------------------PREMIUM PAYMENTS
The balance of each initial Premium Payment remaining after the deduction of
the sales load, any applicable Premium Tax and the federal tax charge, is
credited to your Certificate within two business days of receipt of a properly
completed enrollment form or an order to purchase a Certificate and the initial
Premium Payment by Hartford at its Customer Service Center. It will be credited
to the Division(s) in accordance with your allocation instructions. If the
enrollment form is incomplete when received, the initial Purchase Payment will
be returned within five business days, unless you consent to Hartford's
retention of the Purchase Payment until the enrollment form is made complete.
Subsequent Premium Payments are priced on the Valuation Day received by
Hartford in its Customer Service Center or other designated administrative
office.
The number of Accumulation Units in each Division to be credited to a
Certificate will be determined by dividing the portion of the Premium Payment
being credited to each Division by the value of an Accumulation Unit in that
Division on that date.
The minimum initial Premium Payment is $1,000 per Certificate. Subsequent
Premium Payments, if made, must be a minimum of $1,000 or the minimum amount
then in effect. Certain plans may make smaller initial and subsequent periodic
payments. Each Premium Payment may be split among the various Divisions subject
to minimum amounts then in effect.
- ---------------------------------------------------
REFUND RIGHTS
If you are not satisfied with your purchase you may surrender the
Certificate by returning it within ten days after you receive it (or within such
period as required in your state). A written request for cancellation must
accompany the Certificate. In such event, Hartford will pay you an amount equal
to the Investment Value on the date of receipt of the request for cancellation,
plus any charges taken. You bear the investment risk during the period prior to
Hartford's receipt of request for cancellation. In certain states, Hartford must
return to the applicant the greater of the Premium Payments made or the sum of
(1) the Investment Value on the date the returned Certificate is received by
Hartford or its agent and (2) any deductions under Certificate or by the
Portfolios for taxes, charges or fees. In these states, the initial Premium
Payments are allocated to the HVA Money Market Fund, Inc. during the refund
right period.
- ---------------------------------------------------
VALUE OF ACCUMULATION UNITS
The Accumulation Unit value for each Division will vary to reflect the
investment experience of the applicable Portfolio and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Division on the preceding Valuation Day by an "Experience Factor" for that
Division for the Valuation Period then ended. The Experience Factor for each of
the Divisions is equal to the net asset value per share of the corresponding
Portfolio at the end of the Valuation Period (plus the per share amount of any
dividends or capital gains distributed by that Portfolio during the current
Valuation Period), divided by the net asset value per share of the corresponding
Portfolio at the beginning of the Valuation Period. You should refer to the
Portfolio Prospectuses which accompanies this Prospectus for a description of
how the assets of each Portfolio are valued since each determination has a
direct bearing on the Accumulation Unit value of the Division and therefore the
Investment Value. The Accumulation Unit value is affected by the performance of
the underlying Portfolio(s), expenses and deduction of the charges described in
this Prospectus.
The shares of the Portfolio are valued at net asset value on each Valuation
Day. A description of the valuation methods used in valuing Portfolio shares may
be found in the accompanying Prospectuses of the Portfolios.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
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INVESTMENT VALUE
The Investment Value under your Certificate at any time prior to the
commencement of annuity payments can be determined by multiplying the total
number of Accumulation Units credited to your Certificate in each Division by
the then current Accumulation Unit values for the applicable Division. You will
be advised at least annually of the number of Accumulation Units credited to
each Division, the current Accumulation Unit values, and the Investment Value.
- ---------------------------------------------------
REALLOCATIONS AMONG DIVISIONS
You may reallocate the values of your Division allocations from one or more
Divisions to another free of charge. Prior to the Annuity Commencement Date, the
number of reallocations permitted in a Certificate Year is twelve. Hartford may
permit the Certificate Owner to preauthorize reallocations between the Divisions
under certain circumstances. Reallocations by telephone may be made by the
Certificate Owner or by the agent of record or the attorney-in-fact pursuant to
a power of attorney by calling (800) 861-1408. Telephone reallocations may not
be permitted by some states for their residents who purchase variable annuities.
The policy of 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. Hartford will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine; otherwise, Hartford may
be liable for any losses due to unauthorized or fraudulent instructions. The
procedures Hartford follows for transactions initiated by telephone include
requirements that callers on behalf of a Certificate Owner provide certain
identifying information. All transfer instructions by telephone are tape
recorded.
The right to reallocate Investment Value between the Divisions is subject to
modification if Hartford determines, in its sole discretion, that the exercise
of that right by one or more Certificate Owners is, or would be, to the
disadvantage of other Certificate Owners. Any modification could be applied to
reallocations to or from some or all of the Divisions and could include, but not
be limited to, the requirement of a minimum time period between each
reallocation, not accepting reallocation requests of an agent acting under a
power of attorney on behalf of more than one Certificate Owner, or limiting the
dollar amount that may be reallocated between the Divisions by a Certificate
Owner at any one time. Such restrictions may be applied in any manner reasonably
designed to prevent any use of the reallocation right which is considered by
Hartford to be to the disadvantage of other Certificate Owners.
The minimum reallocation to any Division is $500. No minimum balance is
presently required in any Division following reallocation.
Reallocations between the Divisions may be made after annuity payments
commence, but are limited to once a quarter and may not be made to or from the
General Account.
- ---------------------------------------------------
SURRENDER OF A CERTIFICATE/
PARTIAL WITHDRAWALS
At any time prior to the Annuity Commencement Date, you have the right,
subject to the limitations set forth below, to surrender the Certificate or to
make partial withdrawals. Surrenders and partial withdrawals are not permitted
after annuity payments commence EXCEPT that a full surrender is allowed when
payments for a designated period (Option 4) are selected as the annuity option.
FULL SURRENDERS. At any time prior to the Annuity Commencement Date (and
after the Annuity Commencement Date with respect to values applied to Option 4),
the Certificate Owner has the right to terminate the Certificate. In such event,
the Surrender Value of the Certificate may be taken in the form of a lump sum
cash settlement. The Surrender Value of the Certificate is equal to the
Investment Value less any Premium Taxes not previously deducted and any due and
unpaid charges. The Surrender Value may be more or less than the amount of the
Premium Payments made to a Certificate.
PARTIAL WITHDRAWALS. The Certificate Owner may make partial withdrawals of
Investment Value prior to the Annuity Commencement Date. The number of partial
withdrawals in any Certificate Year is limited to 12. The minimum amount
withdrawn must be at least equal to the minimum amount rules then in effect. The
maximum partial withdrawal is equal to the Investment Value less $1,000.
Additionally, if the remaining Investment Value following a surrender is less
than $1,000 or Hartford's minimum amount rules then in effect, Hartford may
terminate the Certificate and pay the Surrender Value.
Certain plans may have different withdrawal privileges. Hartford may permit
the Certificate Owner to preauthorize partial withdrawals subject to certain
limitations then in effect.
ANY SUCH FULL SURRENDER OR PARTIAL WITHDRAWAL DESCRIBED ABOVE MAY RESULT IN
ADVERSE TAX CONSEQUENCES TO THE CERTIFICATE OWNER. THE CERTIFICATE OWNER,
THEREFORE, SHOULD CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH
SURRENDER. (SEE "FEDERAL TAX CONSIDERATIONS" COMMENCING ON PAGE 17.)
Payment on any request for a full or partial withdrawal from the Divisions
will be made as soon as possible and in any event no later than seven days after
the written request is received by Hartford at its Customer Service Center.
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
In requesting a partial withdrawal you should specify the Division(s) from
which the partial withdrawal is to be taken. Otherwise, such withdrawal will be
effected on a pro rata basis according to the value in each Division under a
Certificate. For federal tax purposes, any partial withdrawal will be deemed to
be first from earnings, to the extent that they exist, and then from Premium
Payments.
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DEATH BENEFIT
The Certificates provide that in the event the Annuitant dies before the
Annuity Commencement Date, the Contingent Annuitant will become the Annuitant.
If the Annuitant dies before the Annuity Commencement Date and there is no
designated Contingent Annuitant, or the Contingent Annuitant predeceases the
Annuitant, or if the Certificate Owner dies before the Annuity Commencement
Date, the Beneficiary will receive the Death Benefit. If the Certificate Owner
is a non-natural person, however, a Death Benefit will be payable in the event
the Annuitant dies prior to the Annuity Commencement Date.
If the death of the Annuitant or Certificate Owner occurs prior to the
Annuitant or Certificate Owner attaining age 85, the Death Benefit will be the
greater of:
(a) The Investment Value as determined on the date of receipt of due proof
of death acceptable to Hartford and received in its Customer Service
Center, or
(b) 100% of all Premium Payments made by the Certificate Owner under the
Certificate, reduced by the amount of any partial withdrawals since the
Certificate Date.
If the Annuitant or Certificate Owner had attained age 85 prior to death,
the Death Benefit will be equal to the Investment Value.
PAYMENT OF DEATH BENEFIT -- The Death Benefit may be taken in a lump sum or
under any of the settlement options then being offered by Hartford, provided,
however, that: (a) in the event of the death of any Certificate Owner prior to
the Annuity Commencement Date, the entire interest in the Certificate will be
distributed within 5 years after the death of the Certificate Owner and (b) in
the event of the death of any Certificate Owner or Annuitant occurring on or
after the Annuity Commencement Date, any remaining interest in the Certificate
will be paid at least as rapidly as under the method of distribution in effect
at the time of death, except that, if the benefit is payable over a period not
extending beyond the life expectancy of the Beneficiary or over the life of the
Beneficiary, such distribution must commence within one year of the date of
death. Notwithstanding the foregoing, in the event of the Certificate Owner's
death where the sole Beneficiary is the spouse of the Certificate Owner and the
Annuitant or Contingent Annuitant is living, such spouse may elect, in lieu of
receiving the Death Benefit, to be treated as the Certificate Owner. Only one
such spousal election is permitted with respect to any Certificate.
Notwithstanding any provisions to the contrary, if the Certificate is owned
by a corporation or other non-individual, a Death Benefit will be paid upon the
death of the Annuitant prior to the Annuity Commencement Date. Such benefit will
be payable only as one sum or under the same settlement options and in the same
manner as if an individual Certificate Owner died on the date of the Annuitant's
death.
When payment is taken in one sum, payment will be made within 7 days after
the date Due Proof of Death is received, except that there may be a postponement
in the payment of Death Benefits whenever (a) the New York Stock Exchange is
closed, except for holidays or weekends, or trading on the New York Stock
Exchange is restricted as determined by the Securities and Exchange Commission;
(b) the Securities and Exchange Commission permits postponement and so orders;
or (c) the Securities and Exchange Commission determines that an emergency
exists making valuation of the amounts or disposal of securities not reasonably
practicable.
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CHARGES UNDER THE CERTIFICATE
Certain charges and deductions described below may be reduced for
Certificates issued in connection with a specific plan in accordance with
Hartford's rules in effect as of the date an enrollment form for a Certificate
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 Certificate vary based on
such factors as the size of the plan, the purposes for which Certificates are
purchased and certain characteristics for the plan's members. The amount of
reduction and the criteria for qualification are related to the reduced sales
effort and administrative costs resulting from, and the different mortality
experience expected as a result of, sales to qualifying plans. Hartford 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 Certificate Owners
funded by the Separate Account.
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SALES EXPENSES
A sales load of not more than 4.6% of Premium Payments, depending on the
plan to which the Certificate
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
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was issued, will be deducted for expenses related to the sales and distribution
of the Certificate.
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MORTALITY AND EXPENSE RISK CHARGE
Although variable annuity payments made under the Certificates will vary in
accordance with the investment performance of the underlying Portfolio shares
held in the Division(s), the payments will not be affected by (a) Hartford's
actual mortality experience among Annuitants before or after the Annuity
Commencement Date or (b) Hartford's actual expenses, if greater than the
deductions provided for in the Certificates because of the expense and mortality
undertakings by Hartford.
For assuming these risks under the Certificates, Hartford will make a daily
charge at the rate of 0.65% per annum against all Investment Values held in the
Divisions during the life of the Certificate, including the payout period
(estimated at up to 45% for mortality and up to 20% for expense).
The mortality undertaking provided by Hartford under the Certificates,
assuming the selection of one of the forms of life Annuities, is to make monthly
annuity payments (determined in accordance with the 1983a Individual Annuity
Mortality Table and other provisions contained in the Certificate) to Annuitants
regardless of how long an Annuitant may live, and regardless of how long all
Annuitants as a group may live. Hartford also assumes the liability for payment
of the Death Benefit under the Certificate.
The mortality undertakings are based on Hartford's determination of expected
mortality rates among all Annuitants. If actual experience among Annuitants
during the annuity payment period deviates from Hartford's actuarial
determination of expected mortality rates among Annuitants because, as a group,
their longevity is longer than anticipated, Hartford must provide amounts from
its general Portfolios to fulfill its Certificate obligations. In that event, a
loss will fall on Hartford. Also, in the event of the death of an Annuitant or
Certificate Owner prior to the commencement of annuity payments Hartford can, in
periods of declining value, experience a loss resulting from the assumption of
the mortality risk relative to the Death Benefit.
In providing an expense undertaking, Hartford assumes the risk that the
sales loads and the administrative expense charges for maintaining the
Certificates prior to the Annuity Commencement Date may be insufficient to cover
the actual cost of providing such items.
- ---------------------------------------------------
ADMINISTRATIVE EXPENSE CHARGE
Hartford will deduct certain fees from Investment Value to reimburse it for
expenses relating to the administration and maintenance of the Certificate and
for administration of the Separate Account. The Certificate provides for an
administrative expense charge of $2.50 to be deducted from Investment Value on
the Certificate Date and monthly on the same calendar day as the Certificate
Date, or on the last day of any month which has no such calendar day.
The deduction will be made pro rata according to the value in each Division
under a Certificate. There is not necessarily a relationship between the amount
of administrative charge imposed on a given Certificate and the amount of
expenses that may be attributable to that Certificate; expenses may be more or
less than the charge.
The types of expenses incurred by the Separate Account include, but are not
limited to, expenses of issuing the Certificate and expenses for confirmations,
Certificate quarterly statements, processing of reallocations and surrenders,
responding to Certificate Owner inquiries, reconciling and depositing cash
receipts, calculation and monitoring daily Division unit values, Separate
Account reporting, including semiannual and annual reports and mailing and
tabulation of shareholder proxy solicitations.
You should refer to the Portfolio Prospectuses for a description of
deductions and expenses paid out of the assets of the Portfolios.
- ---------------------------------------------------
PREMIUM TAX CHARGE
A deduction is also made for Premium Tax, if applicable, imposed by a state
or other governmental entity. Certain states and municipalities impose a Premium
Tax. The range of premium taxes is currently 0% to 3.5%. Some states assess the
tax at the time purchase payments are made; others assess the tax at the time of
annuitization. Hartford will pay Premium Taxes to the applicable governmental
entity at the time imposed under applicable law and will deduct Premium Taxes at
such time.
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FEDERAL TAX CHARGE
We deduct a current charge of 0.43% of each Premium Payment to cover the
estimated cost of the federal income tax treatment of the Certificates deferred
acquisition costs under Section 848 of the Code. This charge may be increased or
decreased to reflect changes in federal tax laws. Hartford includes the federal
tax charge as a factor when computing the maximum sales load chargeable under
Commission rules.
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ANNUITY BENEFITS
You select an Annuity Commencement Date and an annuity option which may be
on a fixed or variable basis, or a combination thereof. The Annuity Commencement
Date
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16 HARTFORD LIFE INSURANCE COMPANY
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will not be deferred beyond the Annuitant's 90th birthday except for certain
states where deferral past age 85 is not permitted. The Annuity Commencement
Date may be changed from time to time, but any change must be at least 30 days
prior to the date on which annuity payments are scheduled to begin. The
Certificate allows the Certificate Owner to change the Divisions on which
variable payments are based after payments have commenced once every quarter.
Any fixed annuity allocation may not be changed, nor may a variable allocation
be reallocated to the General Account.
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ANNUITY OPTIONS
The Certificate contains the four optional annuity forms described below. If
you do not elect otherwise, payments in most states will automatically begin at
the Annuitant's age 90 (with the exception of states that do not allow deferral
past age 85) under Option 3 (Joint Last Survivor Annuity).
Under any of the annuity options excluding Options 4 and 5, no surrenders
are permitted after annuity payments commence. Only full surrenders are allowed
out of Option 4.
OPTION 1 -- Life Annuity
An annuity payable monthly during the lifetime of the Annuitant and
terminating with the last payment preceding the death of the Annuitant. This
option offers the largest payment amount of any of the life annuity options
since there is no guarantee of a minimum number of payments nor a provision for
a Death Benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
annuity payment if he died prior to the due date of the second annuity payment,
two if he died before the date of the third annuity payment, etc.
OPTION 2 -- Life annuity with 120, 180 or 240 Monthly Payments Certain
An annuity payable monthly during the lifetime of an Annuitant with the
provision that payments will be made for a minimum of 120, 180 or 240 months, as
elected. If, at the death of the Annuitant, payments have been made for less
than the minimum elected number of months, then the present value as of the date
of the Annuitant's death, of any remaining guaranteed payments will be paid in
one sum to the Beneficiary or Beneficiaries designated unless other provisions
have been made and approved by Hartford.
OPTION 3 -- Joint and Last Survivor Annuity
An annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford, the Annuitant may elect that
the payment to the survivor be less than the payment made during the joint
lifetime of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated
second person to receive only one payment in the event of the common or
simultaneous death of the parties prior to the due date for the second payment
and so on.
OPTION 4 -- Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from
5 to 30 years. Under this option, you may, at any time, surrender the
Certificate and receive, within seven days, the Surrender Value of the
Certificate as determined by Hartford.
In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and approved by
Hartford.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Certificates thus provide no real benefit to a Certificate Owner.
Hartford may offer other annuity options from time to time.
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THE ANNUITY UNIT AND VALUATION
The value of the Annuity Unit for each Division in the Separate Account for
any day is determined by multiplying the value for the preceding day by the
product of (1) the Experience Factor (See "Value of Accumulation Units,"
commencing on page 12) for the day for which the Annuity Unit value is being
calculated and (2) a factor to neutralize the assumed investment rate of 5.00%
per annum discussed below.
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DETERMINATION OF PAYMENT AMOUNT
When annuity payments are to commence, the Investment Value is determined as
the product of the value of the Accumulation Unit of each Division on that same
day, and the number of Accumulation Units credited to each Division as of the
date the annuity is to commence.
The Certificate contains tables indicating the minimum dollar amount of the
first monthly payment under the optional forms of annuity for each $1,000 of
value of a Division under a Certificate. The first monthly payment varies
according to the form and type of annuity selected. The Certificate contains
annuity tables derived from the 1983a Individual Annuity Mortality Table with
ages set back
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HARTFORD LIFE INSURANCE COMPANY 17
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one year and with an assumed investment rate ("A.I.R.") of 3% per annum for the
fixed annuity and 5% per annum for the variable annuity.
The total first monthly variable annuity payment is determined by
multiplying the value (expressed in thousands of dollars) of a Division (less
any applicable Premium Taxes) by the amount of the first monthly payment per
$1,000 of value obtained from the tables in the Certificates.
Fixed annuity payments are determined at annuitization by multiplying the
values allocated (less applicable Premium Taxes) by a rate to be determined by
Hartford which is no less than the rate specified in the annuity tables in the
Certificate. The annuity payment will remain level for the duration of the
annuity.
The amount of the first monthly variable annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the appropriate
Division no earlier than the close of business on the fifth Valuation Day
preceding the day on which the payment is due in order to determine the number
of Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the annuity payment period, and in each subsequent month
the dollar amount of the variable annuity payment is determined by multiplying
this fixed number of Annuity Units by the then current Annuity Unit value.
THE A.I.R. ASSUMED IN THE MORTALITY TABLES WOULD PRODUCE LEVEL VARIABLE
ANNUITY PAYMENTS IF THE INVESTMENT RATE REMAINED CONSTANT. IN FACT, PAYMENTS
WILL VARY UP OR DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
The Annuity Unit value used in calculating the amount of the variable
annuity payments will be based on an Annuity Unit value determined as of the
close of business on a day no earlier than the fifth Valuation Day preceding the
date of the annuity payment.
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FEDERAL TAX CONSIDERATIONS
What are some of the federal tax consequences which affect these
Certificates?
- ---------------------------------------------------
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CERTIFICATE OWNER INVOLVED, LEGAL AND TAX ADVICE MAY
BE NEEDED BY A PERSON, TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A
CERTIFICATE DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Certificates 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
is based on Hartford Life's understanding of existing federal income tax laws as
they are currently interpreted.
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B. TAXATION OF HARTFORD
AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford Life which is taxed as a
life insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units (See "Value of Accumulation Units" commencing
on page ). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Certificate.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to the Certificates.
- ---------------------------------------------------
C. TAXATION OF ANNUITIES -- GENERAL
PROVISIONS AFFECTING PURCHASERS OTHER
THAN QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Section 72 contains provisions for Certificate Owners which are non-natural
persons. Non-natural persons include corporations, trusts, and partnerships. The
annual net increase in the value of the Certificate is currently includable in
the gross income of a non-natural person unless the non-natural person holds the
Certificate as an agent for a natural person. There is an exception from current
inclusion for certain annuities held by structured settlement companies, certain
annuities held by an employer with respect to a terminated qualified retirement
plan and certain immediate annuities. A non-natural person which is a tax-exempt
entity for federal tax purposes will not be subject to income tax as a result of
this provision.
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
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If the Certificate Owner is not an individual, the primary Annuitant shall
be treated as the Certificate Owner for purposes of making distributions which
are required to be made upon the death of the Certificate Owner. If there is a
change in the primary Annuitant, such change shall be treated as the death of
the Certificate Owner.
2. OTHER CERTIFICATE OWNERS (NATURAL PERSONS).
A Certificate Owner is not taxed on increases in the value of the
Certificate until an amount is received or deemed received, e.g., in the form of
a lump sum payment (full or partial value of a Certificate) or as Annuity
payments under the settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Certificates obtained in a tax-free exchange for other
annuity contract or life insurance contract which were purchased prior to August
14, 1982.
A. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which
were not includable in gross income equal the "investment in the contract"
under Section 72 of the Code.
ii. To the extent that the value of the Certificate (ignoring
any surrender charges except on a full surrender) exceeds the "investment in
the contract," such excess constitutes the "income on the contract."
iii.Any amount received or deemed received prior to the
Annuity Commencement Date (e.g., upon a partial surrender) is deemed to come
first from any such "income on the contract" and then from "investment in
the contract," and for these purposes such "income on the contract" shall be
computed by reference to any aggregation rule in subparagraph 2.c. below. As
a result, any such amount received or deemed received (1) shall be
includable in gross income to the extent that such amount does not exceed
any such "income on the contract," and (2) shall not be includable in gross
income to the extent that such amount does exceed any such "income on the
contract." If at the time that any amount is received or deemed received
there is no "income on the contract" (e.g., because the gross value of the
Certificate does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed received will
not be includable in gross income, and will simply reduce the "investment in
the contract."
iv. The receipt of any amount as a loan under the
Certificate or the assignment or pledge of any portion of the value of the
Certificate shall be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b.
v. In general, the transfer of the Certificate, without full
and adequate consideration, will be treated as an amount received for
purposes of this subparagraph a. and the next subparagraph b. This transfer
rule does not apply, however, to certain transfers of property between
spouses or incident to divorce.
B. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by
application of the exclusion ratio is equal to the investment in the
contract as of the Annuity Commencement Date, any additional payments
(including surrenders) will be entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of
the Annuitant and, as of the date of death, the amount of annuity payments
excluded from gross income by the exclusion ratio does not exceed the
investment in the contract as of the Annuity Commencement Date, then the
remaining portion of unrecovered investment shall be allowed as a deduction
for the last taxable year of the Annuitant.
iii.Generally, nonperiodic amounts received or deemed
received after the Annuity Commencement Date are not entitled to any
exclusion ratio and shall be fully includable in gross income. However, upon
a full surrender after such date, only the excess of the amount received
(after any surrender charge) over the remaining "investment in the contract"
shall be includable in gross income (except to the extent that the
aggregation rule referred to in the next subparagraph c. may apply).
C. AGGREGATION OF TWO OR MORE ANNUITY CERTIFICATES.
Certificates issued after October 21, 1988 by the same insurer (or
affiliated insurer) to the same Certificate Owner within the same calendar year
(other than certain contract held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new contract for this
purpose. Hartford Life believes that for any annuity subject to such
aggregation, the values under the contract and the investment in the contract
will be added together to determine the taxation under subparagraph 2.a., above,
of amounts received or deemed received prior to the Annuity Commencement Date.
Withdrawals will first be treated as withdrawals of income until all of the
income from all such
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
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contract is withdrawn. As of the date of this Prospectus, there are no
regulations interpreting this provision.
D. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY PAYMENTS.
i. If any amount is received or deemed received on the
Certificate (before or after the Annuity Commencement Date), the Code
applies a penalty tax equal to ten percent of the portion of the amount
includable in gross income, unless an exception applies.
ii. The 10% penalty tax will not apply to the following
distributions (exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the
recipient has attained the age of 59 1/2.
2. Distributions made on or after the death of the
holder or where the holder is not an individual, the death of the
primary annuitant.
3. Distributions attributable to a recipient's
becoming disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments for the life (or life expectancy)
of the recipient (or the joint lives or life expectancies of the
recipient and the recipient's Beneficiary).
5. Distributions of amounts which are allocable to
the "investment in the contract" prior to August 14, 1982 (see next
subparagraph e.).
E. SPECIAL PROVISIONS AFFECTING CERTIFICATES OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CERTIFICATES PURCHASED PRIOR
TO AUGUST 14, 1982.
If the Certificate was obtained by a tax-free exchange of a life insurance
or annuity contract purchased prior to August 14, 1982, then any amount received
or deemed received prior to the Annuity Commencement Date shall be deemed to
come (1) first from the amount of the "investment in the contract" prior to
August 14, 1982 ("pre-8/14/82 investment") carried over from the prior contract,
(2) then from the portion of the "income on the contract" (carried over to, as
well as accumulating in, the successor Certificate) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income., In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange contracts are generally subject to the rules described in this
subparagraph 3.
F. REQUIRED DISTRIBUTIONS
i. Death of Certificate Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii
or iii below:
1. If any Certificate Owner dies on or after the
Annuity Commencement Date and before the entire interest in the
Certificate has been distributed, the remaining portion of such interest
shall be distributed at least as rapidly as under the method of
distribution being used as of the date of such death;
2. If any Certificate Owner dies before the Annuity
Commencement Date, the entire interest in the Certificate will be
distributed within 5 years after such death; and
3. If the Certificate Owner is not an individual, then
for purposes of 1. or 2. above, the primary annuitant under the
Certificate shall be treated as the Certificate Owner, and any change in
the primary annuitant shall be treated as the death of the Certificate
Owner. The primary annuitant is the individual, the events in the life
of whom are of primary importance in affecting the timing or amount of
the payout under the Certificate.
ii. Alternative Election to Satisfy Distribution
Requirements
If any portion of the interest of a Certificate Owner described in i. above
is payable to or for the benefit of a designated beneficiary, such
beneficiary may elect to have the portion distributed over a period that
does not extend beyond the life or life expectancy of the beneficiary. The
election and payments must begin within a year of the death.
iii.Spouse Beneficiary
If any portion of the interest of a Certificate Owner is payable to or for
the benefit of his or her spouse, and the Annuitant or Contingent Annuitant
is living, such spouse shall be treated as the Certificate Owner of such
portion for purposes of section i. above.
3. DIVERSIFICATION REQUIREMENTS.
Section 817 of the Code provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified
in accordance with regulations prescribed by the Treasury Department. If a
Certificate is not treated as an annuity contract, the Certificate Owner will be
subject to income tax on the annual increases in cash value.
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
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The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of contract income on an ongoing basis. However, either the company or
the Certificate Owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
Hartford Life monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford Life
intends to administer all contracts subject to the diversification requirements
in a manner that will maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable annuity contract to qualify for tax deferral, assets
in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable contract
owner. The Internal Revenue Service ("IRS") has issued several rulings which
discuss investor control. The IRS has ruled that incidents of ownership by the
Certificate Owner, such as the ability to select and control investments in a
separate account, will cause the Certificate Owner to be treated as the owner of
the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
prospectus, no other such guidance has been issued. Further, Hartford Life 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 Certificate Owner could be considered the owner
of the assets for tax purposes. Hartford Life reserves the right to modify the
Certificates, as necessary, to prevent Certificate Owners from being considered
the owners of the assets in the separate accounts.
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D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of the
Code. The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS.
The portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding unless the recipient elects
not to have taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal income
tax. Election forms will be provided at the time distributions are requested. If
the necessary election forms are not submitted to Hartford Life, Hartford Life
will automatically withhold 10% of the taxable distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR).
The portion of a periodic distribution which constitutes taxable income will
be subject to federal income tax withholding as if the recipient were married
claiming three exemptions. A recipient may elect not to have income taxes
withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
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E. ANNUITY PURCHASES BY NONRESIDENT
ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to annuity purchasers that are U.S. citizens or
residents. Purchasers not U.S. citizens or residents will generally be subject
to U.S. federal income tax and withholding on annuity distributions at a 30%
rate, unless a lower treaty rate applies. In addition, purchasers may be subject
to state premium tax, other state and/or municipal taxes, and taxes that may be
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax adviser regarding U.S.,
state, and foreign taxation with respect to an annuity purchase.
- ---------------------------------------------------
GENERAL MATTERS
- -------------------------------- ASSIGNMENT
Benefits under a Certificate described herein are assignable by the
Certificate Owner only if Hartford agrees. An assignment of a Certificate may
subject the assignment proceeds to income taxes and certain penalty taxes. (See
"Taxation of Annuities -- General Provisions Affecting Purchasers," page 17.)
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MODIFICATION
Hartford reserves the right to modify the Certificate, but only if such
modification (i) is necessary to make the Certificate or the Separate Account
comply with any law or regulation issued by a governmental agency to which
Hartford is subject; or (ii) is necessary to assure continued tax advantages for
the Certificate under the Code or other federal or state laws; or (iii) is
necessary to reflect a change in the operation of the Separate Account or the
Division(s) or (iv) provides additional Separate Account options or (v)
withdraws Separate Account options. In the event of any such modification,
Hartford will provide notice to the Certificate Owner or to the payee(s) during
the annuity period. Hartford may also make appropriate endorsement in the
Certificate to reflect such modification.
- ---------------------------------------------------
MISSTATEMENT OF AGE
If the age of the Annuitant has been misstated, the amount of the annuity
payable by Hartford will be that provided by that portion of the amounts
allocated to effect such annuity on the basis of the corrected information
without changing the date of the first payment of such annuity. Any
underpayments by Hartford shall be made up immediately and any overpayments
shall be charged against future amounts becoming payable.
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DELAY OF PAYMENTS
There may be postponement of a surrender payment or Death Benefit whenever
(a) the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation or disposal of
securities not reasonably practicable.
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VOTING RIGHTS
Hartford will notify you of any Portfolio shareholders' meeting if the
shares held for your account may be voted at such meetings. Hartford will also
send proxy materials and a form of instruction by means of which you can
instruct Hartford with respect to the voting of the Portfolio shares held for
your account.
In connection with the voting of Portfolio shares held by it, Hartford will
arrange for the handling and tallying of voting instructions received from
Certificate Owners. Hartford as such, shall have no right, except as hereinafter
provided, to vote any Portfolio shares held by it hereunder which may be
registered in its name or the names of its nominees. Hartford will, however,
vote the Portfolio shares held by it in accordance with the instructions
received from the Certificate Owners for whose accounts the Portfolio shares are
held. If a Certificate Owner desires to attend any meeting at which shares held
for the Certificate Owner's benefit may be voted, the Certificate Owner may
request Hartford to furnish a proxy or otherwise arrange for the exercise of
voting rights with respect to the Portfolio shares held for such Certificate
Owner's account. In the event that the Certificate Owner gives no instructions
or leaves the manner of voting discretionary, Hartford will vote such shares of
the appropriate Portfolio in the same proportion as shares of that Portfolio for
which instructions have been received. During the annuity period under a
Certificate the number of votes will decrease as the assets held to fund annuity
benefits decrease.
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EXPERIENCE CREDIT
The Certificates issued under a corporate-sponsored plan may be eligible for
experience credits due to administrative savings. The amount of any experience
credit maybe paid in cash or applied to and used to increase Investment Value.
- ---------------------------------------------------
DISTRIBUTION OF THE CERTIFICATES
The securities will be sold by insurance and variable annuity agents of
Hartford who are either registered representatives of Hartford Equity Sales
Company, Inc., a wholly-owned broker-dealer subsidiary of Hartford, or of
independent broker-dealers. These broker-dealers are registered with the
Commission under the Securities Exchange Act of 1934 as a broker-dealer and are
members of the National Association of Securities Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 4.6% of
Premium Payments.
From time to time, Hartford may pay or permit other promotional incentives,
in cash or credit or other compensation.
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
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CUSTODIAN OF SEPARATE ACCOUNT ASSETS
The assets of the Separate Account are held by Hartford under a safekeeping
arrangement.
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LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate
Account is a party.
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LEGAL COUNSEL
Counsel with respect to Federal laws and regulations applicable to the issue
and sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
General Counsel and Secretary, Hartford Life Insurance Companies, P.O. Box 2999,
Hartford, Connecticut 06104-2999.
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EXPERTS
The audited consolidated financial statements and financial statement
schedules included in this Prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report. Reference is made to said report on the consolidated financial
statements of Hartford Life Insurance Company (the Depositor), which includes an
explanatory paragraph with respect to the change in method of accounting for
debt and equity securities as of January 1, 1994, as discussed in Note 2 of
Notes to Consolidated Financial Statements. The principal business address of
Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
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ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
ICMG
Attn: Group Annuity Operations
100 Campus Drive, Suite 250
Florham Park, NJ 07932.
Telephone: 800-861-1408
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HARTFORD LIFE INSURANCE COMPANY 23
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TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
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SECTION PAGE
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<S> <C>
INTRODUCTION............................................................
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY..........................
SAFEKEEPING OF ASSETS...................................................
INDEPENDENT PUBLIC ACCOUNTANTS..........................................
DISTRIBUTION OF CERTIFICATES............................................
ANNUITY/PAYOUT PERIOD...................................................
Annuity Payments......................................................
The Annuity Unit and Valuation........................................
CALCULATION OF YIELD AND RETURN.........................................
PERFORMANCE COMPARISONS.................................................
FINANCIAL STATEMENTS....................................................
</TABLE>
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The following prospectus contains information relating to all of the funds
offered by the Hartford Mutual Funds. Not all of the funds in the Hartford
Mutual Funds are available to OmniFlex Certificate Owners. Please review the
OmniFlex product prospectus for details regarding available funds (see "The
Portfolios").
<PAGE>
To Obtain a Statement of
Additional Information, please
complete the form below and mail to:
ICMG
Attn: Group Annuity Operations
100 Campus Drive, Suite 250
Florham Park, NJ 07932
Please send a Statement of
Additional Information for ICMG
Secular Trust Separate Account to me
at the following address:
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Name
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Street
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City/State Zip
Code
