<PAGE>
STAG VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICIES
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
[LOGO] TELEPHONE: 1-800-231-5453
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This Prospectus describes Stag Variable Life, a flexible premium variable life
insurance policy (the "Policy," and collectively the "Policies") offered by
Hartford Life and Annuity Insurance Company ("Hartford") to applicants age 80
and under. For a given amount of Death Benefit chosen, the Policy Owner has
considerable flexibility in selecting the timing and amount of premium payments.
The Policies provide for a Death Benefit payable at the death of the Insured. A
Policy Owner may select one of three Death Benefit Options: a level amount equal
to the Face Amount ("Option A"), a variable amount equal to the Face Amount plus
the Account Value ("Option B"), or a variable amount equal to the Face Amount
plus a return of Premiums ("Option C").
Payments for the Policies will be held in a series of Separate Account VL I or
in the Fixed Account of Hartford. The following Sub-Accounts are available under
the Policies. Opposite each Sub-Account is the name of the underlying investment
for that Sub-Account. The Hartford Funds, Putnam Funds and Fidelity VIP Funds
are collectively referred to in this Prospectus as the "Funds."
<TABLE>
<S> <C> <C>
Hartford Adviser Fund Sub-Account -- shares of Class IA of Hartford Advisers HLS Fund, Inc.
("Hartford Advisers Fund")
Hartford Bond Fund Sub-Account -- shares of Class IA of Hartford Bond HLS Fund, Inc.
("Hartford Bond Fund")
Hartford Capital Appreciation Fund -- shares of Class IA of Hartford Capital Appreciation HLS
Sub-Account Fund, Inc. ("Hartford Capital Appreciation Fund")
Hartford Dividend and Growth Fund -- shares of Class IA of Hartford Dividend and Growth HLS
Sub-Account Fund, Inc. ("Hartford Dividend and Growth Fund")
Hartford Index Fund Sub-Account -- shares of Class IA of Hartford Index HLS Fund, Inc.
("Hartford Index Fund")
Hartford International Opportunities Fund -- shares of Class IA of Hartford International Opportunities
Sub-Account HLS Fund, Inc. ("Hartford International Opportunities
Fund")
Hartford Mortgage Securities Fund -- shares of Class IA of Hartford Mortgage Securities HLS
Sub-Account Fund, Inc. ("Hartford Mortgage Securities Fund")
Hartford Stock Fund Sub-Account -- shares of Class IA of Hartford Stock HLS Fund, Inc.
("Hartford Stock Fund")
Hartford Money Market Fund Sub-Account -- shares of Class IA of Hartford Money Market HLS Fund, Inc.
("Hartford Money Market Fund")
Putnam VT Diversified Income Fund -- shares of Class IA of Putnam VT Diversified Income Fund of
Sub-Account the Putnam Variable Trust ("Putnam VT Diversified Income
Fund")
Putnam VT Global Asset Allocation Fund -- shares of Class IA of Putnam VT Global Asset Allocation
Sub-Account Fund of Putnam Variable Trust ("Putnam VT Global Asset
Allocation Fund")
Putnam VT Global Growth Fund Sub-Account -- shares of Class IA of Putnam VT Global Growth Fund of
Putnam Variable Trust ("Putnam VT Global Growth Fund")
Putnam VT Growth and Income Fund Sub-Account -- shares of Class IA of Putnam VT Growth and Income Fund of
Putnam Variable Trust ("Putnam VT Growth and Income Fund")
Putnam VT High Yield Fund Sub-Account -- shares of Class IA of Putnam Yield Fund of Putnam Variable
Trust ("Putnam VT High Yield Fund")
Putnam VT Money Market Fund Sub-Account -- shares of Class IA of Putnam VT Money Market Fund of
Putnam Variable Trust ("Putnam VT Money Market Fund")
Putnam VT New Opportunities Fund Sub-Account -- shares of Class IA of Putnam New Opportunities Fund of
Putnam Variable Trust ("Putnam VT New Opportunities Fund")
Putnam VT U.S. Government and High Quality -- shares of Class IA of Putnam VT U.S. Government and High
Bond Sub-Account Quality Bond of Putnam Variable Trust ("Putnam VT U.S.
Government and High Quality Bond Fund")
Putnam VT Utilities Growth and Income Fund -- shares of Class IA of Putnam VT Utilities Growth and
Sub-Account Income of Putnam Variable Trust ("Putnam VT Utilities and
Income Fund")
Putnam VT Voyager Fund Sub-Account -- shares of Class IA of Putnam VT Voyager Fund of Putnam
Variable Trust ("Putnam VT Voyager Fund")
Fidelity VIP Equity-Income Portfolio -- shares of Fidelity VIP Equity-Income Portfolio of the
Sub-Account Variable Insurance Products Fund ("Fidelity VIP
Equity-Income Portfolio")
Fidelity VIP Overseas Portfolio Sub-Account -- shares of Fidelity VIP Overseas Portfolio of the Variable
Insurance Products Fund ("Fidelity VIP Overseas
Portfolio")
Fidelity VIP II Asset Manager Portfolio -- shares of Fidelity VIP II Asset Manager Portfolio of the
Sub-Account Variable Insurance Products Fund ("Fidelity VIP II Asset
Manager Portfolio")
</TABLE>
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IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
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THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE
APPLICABLE ELIGIBLE FUNDS WHICH CONTAIN A FULL DESCRIPTION OF THOSE FUNDS. ALL
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
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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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THE DATE OF THIS PROSPECTUS IS MAY 1, 1998.
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2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
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<S> <C>
GLOSSARY OF SPECIAL TERMS............................................. 4
SUMMARY............................................................... 6
DETAILED DESCRIPTION OF POLICY BENEFITS AND PROVISIONS................ 9
General............................................................. 9
Premiums............................................................ 9
Premium Payment Flexibility....................................... 9
Scheduled Premiums................................................ 9
Unscheduled Premiums.............................................. 10
Allocation of Premium Payments.................................... 10
Accumulation Units................................................ 10
Accumulation Unit Values.......................................... 10
Premium Limitation................................................ 11
Guarantee Period.................................................... 11
Cash Values......................................................... 11
Amount Payable on Surrender of Policy............................. 12
Load Refund....................................................... 12
Partial Withdrawals............................................... 12
Transfers of Account Value.......................................... 12
Amount and Frequency of Transfers................................. 12
Transfers to or from Sub-Accounts................................. 12
Transfers from the Fixed Account.................................. 12
Dollar Cost Averaging Option...................................... 13
Policy Loans........................................................ 13
Loan Interest..................................................... 13
Credited Interest................................................. 13
Preferred Loan.................................................... 13
Loan Repayments................................................... 13
Termination Due to Excessive Indebtedness......................... 13
Effect of Loans on Account Value.................................. 13
Death Benefit....................................................... 14
Death Benefit Options............................................. 14
Option Change..................................................... 14
Death Benefit Guarantee........................................... 14
Minimum Death Benefit............................................. 14
Increases and Decreases in Face Amount............................ 14
Benefits at Maturity................................................ 15
Lapse and Reinstatement............................................. 15
Policy Surplus.................................................... 15
Lapse and Grace Period............................................ 15
Reinstatement..................................................... 15
Automatic Premium Loan Option..................................... 16
The Right to Examine or Exchange a Policy........................... 16
Surrender/Continuation Options...................................... 16
Option Descriptions............................................... 17
Valuation of Payments and Transfers................................. 17
Application for a Policy............................................ 17
Reduced Charges for Eligible Groups................................. 17
Deductions from Premiums............................................ 18
Front End Sales Load.............................................. 18
Premium Related Tax Charge........................................ 18
Deductions and Charges from the Account Value....................... 18
Monthly Deduction Amounts......................................... 18
Surrender Charges................................................. 19
Examples of Front-End Sales Loads and Surrender Charges........... 20
Charges Against the Funds......................................... 21
Taxes............................................................. 21
HARTFORD.............................................................. 22
SEPARATE ACCOUNT VL I................................................. 22
</TABLE>
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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<TABLE>
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General............................................................. 22
<S> <C>
Funds............................................................... 22
Hartford Funds.................................................... 22
Putnam Funds...................................................... 23
Fidelity VIP Funds................................................ 23
Investment Adviser.................................................. 24
Hartford Funds.................................................... 24
Putnam Funds...................................................... 25
Fidelity VIP Funds................................................ 25
THE FIXED ACCOUNT..................................................... 25
OTHER MATTERS......................................................... 25
Voting Rights....................................................... 25
Statements to Policy Owners......................................... 26
Limit on Right to Contest........................................... 26
Misstatement as to Age.............................................. 26
Payment Options..................................................... 26
Beneficiary......................................................... 27
Assignment.......................................................... 27
Dividends........................................................... 27
SUPPLEMENTAL BENEFITS................................................. 27
Deduction Amount Waiver Rider....................................... 27
Accidental Death Benefit Rider...................................... 27
Increase in Coverage Option Rider................................... 27
Maturity Date Extension Rider....................................... 27
EXECUTIVE OFFICERS AND DIRECTORS...................................... 28
DISTRIBUTION OF THE POLICIES.......................................... 32
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS.......................... 32
FEDERAL TAX CONSIDERATIONS............................................ 32
General............................................................. 32
Taxation of Hartford and the Separate Account....................... 32
Income Taxation of Policy Benefits.................................. 33
Modified Endowment Contracts........................................ 33
Estate and Generation Skipping Taxes................................ 33
Diversification Requirements........................................ 34
Ownership of the Assets in the Separate Account..................... 34
Life Insurance Purchased for Use in Split Dollar Arrangements....... 35
Federal Income Tax Withholding...................................... 35
Non-Individual Ownership of Policies................................ 35
Other............................................................... 35
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 35
LEGAL PROCEEDINGS..................................................... 35
EXPERTS............................................................... 35
REGISTRATION STATEMENT................................................ 35
LEGAL MATTERS......................................................... 35
APPENDIX A -- ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH
SURRENDER VALUES.................................................... 36
</TABLE>
THE POLICIES MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
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4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The value used to determine certain Policy benefits and charges.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Sub-Account.
ANNUAL SCHEDULED PREMIUM AND/OR SCHEDULED PREMIUMS: The amount of premiums
selected by You within limits established under Your Policy.
ATTAINED AGE: The Issue Age plus the number of fully completed Policy Years.
CASH SURRENDER VALUE: Cash Value less all Indebtedness.
CASH VALUE: The Account Value less all remaining surrender charges, if any.
CODE: The Internal Revenue Code of 1986, as amended.
DATE OF ISSUE: The date from which the Policy's suicide and incontestability
provisions are measured.
DEATH BENEFIT: On the Policy Date, the Death Benefit equals the Face Amount.
Thereafter, it may change in accordance with the terms of the Policy.
DEATH BENEFIT OPTION: The Death Benefit Option in effect determines how the
Death Benefit is calculated. For a description of the three Death Benefit
Options, see "Detailed Description of Policy Benefits and Provisions -- Death
Benefit," page 14.
DEATH PROCEEDS: The amount which We will pay on the death of the Insured. This
amount equals the Death Benefit less any Indebtedness and less any due and
unpaid Monthly Deduction Amount occurring during a grace period.
FACE AMOUNT: On the Policy Date, the Face Amount of a Policy equals the Policy's
initial Face Amount. Thereafter, the Face Amount may change in accordance with
the terms of the Policy.
FIXED ACCOUNT: The portion of the Account Value invested in the General Account.
FIXED ACCOUNT MINIMUM CREDITED RATE: The minimum rate credited to amounts
allocated to the Fixed Account.
FUNDS: The registered open-end management investment companies in which assets
of the Separate Account may be invested.
GENERAL ACCOUNT: All assets of Hartford other than those allocated to its
separate accounts, including the Separate Account.
GUARANTEE PERIOD: The period, selected by You, of one to ten Policy Years,
during which period additional Policy guarantees are provided. Among such
additional guarantees is the guarantee that if Scheduled Premiums are paid, the
Death Benefit will not be less than the initial Face Amount regardless of the
investment performance of the Sub-Accounts. See "Detailed Description of Policy
Benefits and Provisions -- Death Benefit -- Death Benefit Guarantee," page 14.
GUIDELINE ANNUAL PREMIUM: The level annual premium payment necessary to provide
the future benefits under a Policy through maturity, based on certain
assumptions specified under federal securities laws. These assumptions include
mortality charges based on the 1980 Commissioners' Standard Ordinary Mortality
Smoker or Nonsmoker Table, age last birthday, an assumed annual net rate of
return of 5% per year, and deduction of the fees and charges specified in a
Policy. For purposes of the Policies, the Guideline Annual Premium is used only
in limiting front-end sales loads and surrender charges.
HARTFORD (ALSO "WE," "US," "OUR"): Hartford Life and Annuity Insurance Company.
IN WRITING: In a written form satisfactory to Us.
INDEBTEDNESS: The outstanding loan on a Policy, including any interest due or
accrued.
INSURED: The person on whose life a Policy is issued.
ISSUE AGE: As of the Policy Date, the Insured's age on his/ her last birthday.
LOAN ACCOUNT: An account established for any amounts transferred from the Fixed
Account and the Sub-Accounts as a result of Policy loans. Amounts are held as
collateral and are credited with interest at the Fixed Account Minimum Credited
Rate. Amounts held in the Loan Account are not subject to the investment
experience of the Separate Account.
MATURITY DATE: The date on which a Policy matures.
MONTHLY ACTIVITY DATE: The Policy Date and the same date in each succeeding
month as the Policy Date except that whenever the Monthly Activity Date falls on
a date other than a Valuation Day, the Monthly Activity Date will be deemed the
next Valuation Day.
MONTHLY DEDUCTION AMOUNT: The fees and charges deducted from the Account Value
on the Monthly Activity Date.
NATIONAL SERVICE CENTER: Hartford's National Service Center located in
Minneapolis, Minnesota.
NET PREMIUM: The amount of each premium allocated to the Account Value, after a
deduction as a percentage of premium is made for the front-end sales load and
for premium taxes.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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POLICY: The flexible premium variable life insurance contract issued by Hartford
and described in this Prospectus.
POLICY ANNIVERSARY: An anniversary of the Policy Date.
POLICY DATE: The date from which Policy Anniversaries and Policy Years are
determined.
POLICY OWNER (ALSO "YOU," "YOUR"): The person having rights to benefits under a
Policy during the lifetime of the Insured. A Policy Owner may or may not be the
Insured.
POLICY SURPLUS: An amount which We calculate for each Policy Year during the
Guarantee Period to determine whether or not payment of a Scheduled Premium is
required. For a description of how Policy Surplus is calculated, see "Detailed
Description of Policy Benefits and Provisions -- Lapse and Reinstatement --
Policy Surplus," page 15.
POLICY YEAR: An annual period computed from the Policy Date.
PRO RATA BASIS: An allocation method based on the proportion of the Account
Value in the Fixed Account and in each Sub-Account.
SCHEDULED PREMIUM: The amount of premium shown on Your Policy's specifications
page.
SEC: The U.S. Securities and Exchange Commission.
SEPARATE ACCOUNT (ALSO "SEPARATE ACCOUNT VL I"): An account established by
Hartford to separate the assets funding the Policies from other assets of
Hartford.
SUB-ACCOUNT: A subdivision of the Separate Account.
TARGET ACCOUNT VALUE: The Account Value, determined at Policy issue, that would
result on each Policy Anniversary assuming all annual Scheduled Premiums were
paid when due (including the one due on that anniversary for the next Policy
Year), a 6% net yield on assets (after fund level charges are deducted but
before the mortality and expense risk charge is deducted) and current cost of
insurance and expense charges.
UNSCHEDULED PREMIUMS: Any premium payment other than a Scheduled Premium
Payment.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (generally 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VIP: Variable Insurance Products Fund of Fidelity Management & Research Company.
VIP II: Variable Insurance Products Fund II of Fidelity Management & Research
Company.
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6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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SUMMARY
THE POLICY
This Prospectus has been designed to provide You with the necessary
information to make a decision on purchasing a flexible premium variable life
insurance Policy. The Policy is primarily a life insurance policy with death
benefits, cash values, and other features traditionally associated with life
insurance. The Policy is called "flexible premium" because, once the desired
level and pattern of death benefits have been determined, a Policy Owner has
considerable flexibility in choosing the timing and amount of premium to be
paid. The Policy is called "variable" because, unlike the fixed benefits of an
ordinary whole life insurance policy, the Account Value will, and the Death
Benefit may, increase or decrease depending on the investment experience of the
Funds to which the Net Premium(s) has been allocated.
The Policy is funded by a Fixed Account and Separate Account VL I. Separate
Account VL I is presently comprised of 22 Sub-Accounts, each of which invests
exclusively in one of the underlying Funds. If an initial premium is submitted
with an application for a Policy, the Net Premium will be allocated to the
Hartford Money Market Fund Sub-Account. At a later date, the values in the
Hartford Money Market Fund Sub-Account will be allocated to one or more of the
Sub-Accounts or to the Fixed Account, as specified in the Policy Owner's
application. This later date is the latest of: (1) 45 days after the application
is signed; (2) 10 days after We mail or personally deliver a Notice of
Withdrawal Right; (3) 10 days after We receive the initial premium; and (4) the
date on which We receive the final requirement to put the Policy in force. The
Policy is credited with Accumulation Units in each selected Sub-Account, the
assets of which are invested in the applicable Fund. A Policy Owner may transfer
the assets among the Sub-Accounts and the Fixed Account, subject to any
applicable transfer charge. See "Detailed Description of Policy Benefits and
Provisions -- Transfers of Account Value," page 12.
POLICY OPTIONS
Available Policy options are structured to give a prospective Policy Owner
and his or her sales agent the ability to select a Policy tailored to the
prospective Policy Owner's specific life insurance needs.
The Policy options fall into four major categories:
1. Death Benefit Options -- The Policy Owner is able to select various
levels and patterns of Death Benefits. The Policies provide for three Death
Benefit Options: (1) a level Death Benefit equal to the Face Amount ("Option
A"); (2) the Face Amount plus Return of Account Value Death Benefit ("Option
B"); or (3) the Face Amount plus Return of Premium Death Benefit ("Option C").
At the death of the Insured, We will pay the Death Proceeds to the beneficiary.
See "Detailed Description of Policy Benefits and Provisions -- Death Benefit,"
page 14.
2. Investment Options -- Currently, the Policy Owner has the choice of
allocating the Account Value among a maximum of nine of the Policy's 23
investment choices (22 Sub-Accounts and the Fixed Account). Currently, the Funds
are Hartford Advisers Fund, Hartford Bond Fund, Hartford Capital Appreciation
Fund, Hartford Dividend and Growth Fund, Hartford Index Fund, Hartford
International Opportunities Fund, Hartford Mortgage Securities Fund, Hartford
Stock Fund, and Hartford Money Market Fund; Putnam VT Diversified Income Fund,
Putnam VT Global Asset Allocation Fund, Putnam VT Global Growth Fund, Putnam VT
Growth and Income Fund, Putnam VT High Yield Fund, Putnam VT Money Market Fund,
Putnam VT New Opportunities Fund, Putnam VT U.S. Government and High Quality
Bond Fund, Putnam VT Utilities Growth and Income Fund and Putnam VT Voyager
Fund; and Fidelity VIP Equity-Income Portfolio, Fidelity VIP Overseas Portfolio
and Fidelity VIP II Asset Manager Portfolio. Prospective purchasers should read
the prospectuses for the Funds accompanying this Prospectus in connection with
the purchase of a Policy. For a discussion of the investment objectives of each
of the Funds, see "Separate Account VL I," page 22.
3. Premium Options -- The Policy Owner has the flexibility to choose,
within limits, the desired Policy premium schedule and the amount and frequency
of subsequent premiums. Prior to Policy issue, You can choose the level of
Scheduled Premiums within a range determined by Hartford based on the Face
Amount and each Insured's gender (except where unisex rates apply), Issue Age
and risk classification. See "Detailed Description of Policy Benefits and
Provisions -- Premiums -- Premium Payment Flexibility," page 9.
4. Guarantee Period Options -- The Policy Owner has the ability to choose a
Guarantee Period of one to ten years. During the Guarantee Period, additional
contractual guarantees are provided, including the guarantee that the Death
Benefit will be no less than the initial Face Amount and the Policy will not
lapse as long as certain Scheduled Premiums selected by the Policy Owner are
paid or provided for by favorable investment experience. "Detailed Description
of Policy Benefits and Provisions -- Guarantee Period," page 11.
FIXED ACCOUNT
Premium payments and Account Values may be allocated to the Fixed Account.
Amounts allocated to the Fixed Account become part of the general assets of
Hartford. Hartford invests the assets of the General Account in accordance with
applicable laws governing the investments of insurance company general accounts.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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ACCOUNT VALUE
As with many other types of insurance policies, each Policy will have an
Account Value. The Account Value will increase or decrease to reflect the
interest credited to the Fixed Account and the Loan Account, the investment
experience of the Sub-Accounts applicable to the Policy and deductions for the
Monthly Deduction Amount. There is no minimum guaranteed Account Value and the
Policy Owner bears the risk of the investment in the Funds. However, if the
Death Benefit guarantee is in effect, the Policy will not lapse due to poor
investment performance. See "Detailed Description of Policy Benefits and
Provisions -- Premiums," page 9.
DEDUCTIONS FROM THE PREMIUM
Before the premium is allocated to the Account Value, a deduction as a
percentage of premium is made for the premium tax and front-end sales load . The
amount of each premium (after such deductions) allocated to the Account Value is
Your Net Premium.
PREMIUM TAX CHARGE
We deduct, as a percentage of each premium, a premium tax charge to cover
premium-based taxes assessed against Hartford by a state or other governmental
entity. Such percentage will vary by locale, depending on the tax rates in
effect at the time a Policy is issued. The range for such premium taxes
generally is between 0% and 4%.
FRONT-END SALES LOAD
The front-end sales load portion of the deductions from a premium payment is
based on the level of Scheduled Premiums, the length of the Guarantee Period,
and the amount of any Unscheduled Premiums paid.
The maximum front-end sales load percentages are 50% of the premiums paid in
the first Policy Year, 11% in Policy Years 2 through 10, and 3% thereafter.
For all Guarantee Periods, the maximum amount of premiums paid in any Policy
Year that is subject to a front-end sales load is the Guideline Annual Premium.
Additionally, if Scheduled Premiums are less than the Guideline Annual Premium,
the maximum amount of premium paid in the first Policy Year subject to a
front-end sales load is the Scheduled Premium.
The actual schedule of front-end sales loads for a given Policy is specified
in that Policy.
DEDUCTIONS AND CHARGES FROM
THE ACCOUNT VALUE
We will subtract amounts from Your Account Value to provide for the Monthly
Deduction Amount. Such deductions will be taken on a Pro Rata Basis from the
Fixed Account and the Sub-Accounts on each Monthly Activity Date.
The Monthly Deduction Amount equals the sum of:
(a) the cost of insurance;
(b) the charges for additional benefits provided by rider, if any;
(c) the charges for "special" insurance class rating, if any;
(d) the monthly administrative fee; and
(e) the mortality and expense risk charge.
Hartford may also set up a provision for income taxes against the assets of
Separate Account VL I. See "Detailed Description of Policy Benefits and
Provisions -- Deductions and Charges from the Account Value," page 18, and
"Federal Tax Considerations," page 32.
Applicants should review the prospectuses for the Funds which accompany this
Prospectus for a description of the charges assessed against the assets of each
of the Funds.
SURRENDER CHARGES
A contingent deferred sales load ("Surrender Charge") is assessed against
the Account Value of a Policy if the Policy lapses or is surrendered during the
first nine Policy Years. The amount of the Surrender Charge applicable during
Policy Year 1 is established by Hartford based on the premiums and the length of
the Guarantee Period chosen by the Policy Owner. Subject to certain limits
imposed by state insurance laws, the Surrender Charge decreases by an equal
amount each Policy Year until it reaches zero during Policy Year 10.
The actual schedule of Surrender Charges for any given Policy is set forth
in that Policy. In addition, sales agents will provide, upon request, the
schedule of Surrender Charges which would apply under given circumstances.
LIMITS ON FRONT-END SALES LOADS
AND SURRENDER CHARGES
Certain state insurance laws and regulations limit the front-end sales loads
and Surrender Charges which can be assessed on the Policies. The front-end sales
loads and Surrender Charges assessed by Hartford on the Policies comply with
these limitations.
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8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Front-end sales loads and Surrender Charges which cover expenses relating to
the sale and distribution of the Policies may be reduced for sales of the
Policies occurring under circumstances which may result in savings of such sales
and distribution expenses.
CHARGES AGAINST THE FUNDS
Separate Account VL I purchases shares of the Funds at net asset value. The
net asset value of Fund shares reflects investment advisory fees and
administrative and other expenses already deducted from the assets of the Funds.
See "Detailed Description of Policy Benefits and Provisions -- Deductions and
Charges From the Account Value -- Charges Against the Funds," page 21.
The following table shows annual Fund operating expenses for the year ended
December 31, 1997:
Annual Fund Operating Expenses
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER EXPENSES OPERATING EXPENSES
FEES (ABSENT (ABSENT EXPENSE (ABSENT WAIVERS/
FEE WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS) (1)
------------ --------------- -------------------
<S> <C> <C> <C>
Hartford Advisers
Fund............. 0.610% 0.020% 0.630%
Hartford Bond
Fund............. 0.490% 0.020% 0.510%
Hartford Capital
Appreciation
Fund............. 0.620% 0.020% 0.640%
Hartford Dividend
and Growth Fund.. 0.660% 0.020% 0.680%
Hartford Index
Fund............. 0.375% 0.015% 0.390%
Hartford
International
Opportunities
Fund............. 0.680% 0.090% 0.770%
Hartford Mortgage
Securities
Fund............. 0.425% 0.025% 0.450%
Hartford Stock
Fund............. 0.430% 0.020% 0.450%
Hartford Money
Market Fund...... 0.425% 0.015% 0.440%
Putnam VT
Diversified
Income Fund...... 0.690% 0.110% 0.800%
Putnam VT Global
Asset Allocation
Fund............. 0.660% 0.110% 0.770%
Putnam VT Global
Growth Fund...... 0.600% 0.150% 0.750%
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER EXPENSES OPERATING EXPENSES
FEES (ABSENT (ABSENT EXPENSE (ABSENT WAIVERS/
FEE WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS) (1)
------------ --------------- -------------------
<S> <C> <C> <C>
Putnam VT Growth
and Income Fund.. 0.470% 0.040% 0.510%
Putnam VT High
Yield Fund....... 0.660% 0.060% 0.720%
Putnam VT Money
Market Fund...... 0.450% 0.090% 0.540%
Putnam VT New
Opportunities
Fund............. 0.580% 0.050% 0.630%
Putnam VT US
Government and
High Quality Bond
Fund............. 0.610% 0.080% 0.690%
Putnam VT
Utilities Growth
and Income Fund.. 0.670% 0.070% 0.740%
Putnam VT Voyager
Fund............. 0.540% 0.050% 0.590%
Fidelity VIP
Equity-Income
Portfolio (2).... 0.500% 0.080% 0.580%
Fidelity VIP
Overseas
Portfolio (2).... 0.750% 0.170% 0.920%
Fidelity VIP II
Asset Manager
Portfolio (2).... 0.550% 0.100% 0.650%
</TABLE>
- ---------
(1) Management Fees generally represent the fees paid to the investment adviser
or its affiliate for investment and administrative services provided. Other
Expenses are expenses (other than Management Fees) which are deducted from the
fund including legal, accounting and custodian fees. For a complete description
of the services provided in consideration of the operating expenses deducted,
please see the accompanying Funds prospectuses.
(2) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds have entered into arrangements
with their custodian whereby credits realized, as a result of uninvested cash
balances were used to reduce custodian expenses. Including these reductions, the
total operating expenses presented in the table would have been 0.570% for
Fidelity VIP Equity-Income Portfolio, 0.900% for Fidelity VIP Overseas Portfolio
and 0.640% for Fidelity VIP II Asset Manager Portfolio.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
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POLICY LOANS
A Policy Owner may obtain a cash loan from Hartford. The loan is secured by
the Policy. At the time such loan is requested, Indebtedness may not exceed 90%
of the Account Value. See "Detailed Description of Policy Benefits and
Provisions -- Policy Loans," page 13.
THE RIGHT TO EXAMINE OR EXCHANGE THE POLICY
Any person purchasing a Policy has a limited right to return such Policy for
cancellation. If a purchaser returns a Policy (a) within 10 days after receiving
such Policy, (b) 10 days after We mail or personally deliver a Notice of
Withdrawal Right or (c) within 45 days after completion of the application for
the Policy, whichever is latest (subject to applicable state regulation),
Hartford, within 7 business days thereafter, will return to such Policy Owner
the greater of (a) the premium paid minus any Indebtedness, or (b) the sum of
(1) the Account Value, minus any Indebtedness, on the date the returned Policy
is received by Hartford or by its agent, and (2) any deductions under such
Policy or by the Funds for taxes, charges or fees.
SURRENDER/CONTINUATION OPTIONS
Generally, You may choose to have the Cash Surrender Value applied to one of
the following options at any time prior to the Maturity Date, provided Your
Policy has a Cash Surrender Value:
OPTION A -- Surrender of the Policy for Cash
OPTION B -- Continuation of the Policy as Extended Term Insurance
OPTION C -- Continuation of the Policy as Paid-Up Insurance
See "Detailed Description of Policy Benefits and Provisions --
Surrender/Continuation Options," page 16.
DETAILED DESCRIPTION OF POLICY
BENEFITS AND PROVISIONS
GENERAL
This Prospectus describes a flexible premium variable life insurance policy
that offers the Policy Owner considerable flexibility in selecting the timing
and amount of premium payments. Additionally, a Policy Owner can select a
Guarantee Period of one to ten years, during which period additional guarantees
are provided, including the guarantee that the Death Benefit will be no less
than the initial Face Amount and that the Policy will not lapse as long as
certain Scheduled Premiums are paid or are provided for by favorable investment
experience. As stated below, Unscheduled Premiums are also allowed under the
Policies.
PREMIUMS
PREMIUM PAYMENT FLEXIBILITY
A significant Policy feature is that Your Policy gives You the ability to
pay amounts greater or less than Your Scheduled Premiums.
Prior to Policy issue, You can choose the level of the Scheduled Premiums,
within a range determined by Hartford, based on the Face Amount and the
Insured's gender (except where unisex rates apply), Issue Age and risk
classification.
During the Guarantee Period, Hartford will guarantee that Your Policy will
not lapse, regardless of the investment experience of the Funds, provided that
You pay the Scheduled Premiums when due and Indebtedness will never exceed the
Cash Value. In addition, Unscheduled Premiums are allowed during the Guarantee
Period.
Even if You do not pay all Scheduled Premiums due during the Guarantee
Period, Your Policy will stay in force as long as the Policy Surplus exceeds
Indebtedness.
After the Guarantee Period, You may change Your Scheduled Premiums to any
level You desire. Unscheduled Premiums will continue to be allowed.
Additionally, once the Guarantee Period has expired, Your Policy will not lapse
as long as the Cash Surrender Value is sufficient to cover the Monthly Deduction
Amounts.
For more details, see "Detailed Description of the Policy Benefits and
Provisions -- Lapse and Reinstatement," page 15.
SCHEDULED PREMIUMS
You have the right to pay Scheduled Premiums annually, semiannually,
quarterly, or monthly. The first Scheduled Premium is due on the Policy Date.
During the Guarantee Period, each Scheduled Premium after the initial premium
payment is due at the expiration of the period for which the preceding Scheduled
Premium was paid. A Scheduled Premium may be paid at any time prior to its due
date, subject to the premium limitations set forth in the Code (see "-- Premiums
- -- Premium Limitation," page 11).
During the Guarantee Period, Your Policy will not terminate due to
insufficient Cash Value, regardless of the investment experience of the Funds,
provided all Scheduled Premiums are paid when due and if Indebtedness does not
exceed the Cash Value.
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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During the Guarantee Period, if You fail to pay a Scheduled Premium when
due, and if, on the premium due date and for the rest of that Policy Year, the
Policy Surplus exceeds Indebtedness, payment of such Scheduled Premium will not
be required in that year or in any future Policy Year. Your Policy will not
terminate due to such nonpayment. However, future Scheduled Premiums during the
Guarantee Period will be required unless the Policy Surplus continues to exceed
Indebtedness in future Policy Years. In addition, as is true with any premium,
Your Account Value and Policy Surplus in future years will be greater if You
make the premium payment.
For example, to determine whether or not non-payment of a Scheduled Premium
in Policy Year 2 would result in a lapse, You would compare the actual Account
Value on the first Policy Anniversary to the first Target Account Value. If the
actual Account Value equals or is greater than the Target Account Value and
Indebtedness remained less than the Policy Surplus, failure to pay any Scheduled
Premiums due in Policy Year 2 would not result in a lapse.
After the Guarantee Period, Hartford will send reminder notices for the
Policy Owner to pay Scheduled Premiums during the Insured's lifetime. Payment of
the Scheduled Premium may not be sufficient to keep a Policy in force after the
end of the Guarantee Period.
UNSCHEDULED PREMIUMS
Any premium payment We receive under a Policy in an amount different from
the Scheduled Premium will be considered an Unscheduled Premium. Unscheduled
Premiums of at least $50 can be made at any time while a Policy is in force.
ALLOCATION OF PREMIUM PAYMENTS
The initial Net Premium will be allocated to the Hartford Money Market Fund
Sub-Account on the later of the Policy Date or the date on which We receive the
initial premium payment.
The value in the Hartford Money Market Fund Sub-Account will then be
allocated to the Fixed Account and the Sub-Accounts according to the premium
allocation specified in the Policy application on the latest of: (a) 45 days
after the Policy application is signed (b) 10 days after We receive the premium
payment, and (c) the date on which We receive the final requirement to put the
Policy in force.
Any additional Net Premiums received by Us prior to such date will be
allocated to the Hartford Money Market Fund Sub-Account.
Upon request In Writing, You may change Your Net Premium allocation.
Portions of a premium payment allocated to the Fixed Account and the
Sub-Accounts must be whole percentages of 10% or more. Subsequent Net Premiums
will be allocated to the Fixed Account and the Sub-Accounts according to Your
most recent instructions, provided that the Account Value may be allocated to a
maximum of nine of the 23 available investment choices (i.e., the Fixed Account
and the 22 Sub-Accounts). If We receive a premium payment and Your most recent
allocation instructions would violate the foregoing requirement, We will
allocate Your Net Premium to the Fixed Account and/or the Sub-Accounts according
to Your previous premium allocation.
A Policy Owner receives several different types of notification as to the
current premium allocation under a Policy. The initial allocation chosen by a
Policy Owner is shown in the Policy. Each transactional confirmation sent to a
Policy Owner after a premium payment is received by Us will show how the Net
Premium was allocated. Additionally, each quarterly statement summarizes the
current premium allocation in effect for a Policy.
ACCUMULATION UNITS
Net Premiums allocated to the Sub-Accounts are used to credit Accumulation
Units to such Sub-Accounts.
The number of Accumulation Units in each Sub-Account to be credited to a
Policy (including the initial allocation to Hartford Money Market Fund
Sub-Account) and the amount credited to the Fixed Account will be determined,
first, by multiplying the Net Premium by the appropriate allocation percentage
in order to determine the portion of the Net Premium to be invested in the Fixed
Account or the Sub-Account. Each portion to be invested in a Sub-Account is then
divided by the Accumulation Unit value for that particular Sub-Account next
computed following receipt of the premium payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit value for each Sub-Account varies to reflect the
investment experience of the applicable Fund and is determined on each Valuation
Day for each Sub-Account by multiplying such Sub-Account's Accumulation Unit
value on the preceding Valuation Day by the Sub-Account's Net Investment Factor
for the Valuation Period then ended. The Net Investment Factor for each of the
Sub-Accounts is equal to the net asset value per share of the corresponding Fund
at the end of the Valuation Period (plus the per share amount of any dividend or
capital gain distributions paid by such Fund in the Valuation Period then ended)
divided by the net asset value per share of the corresponding Fund at the
beginning of the Valuation Period.
All valuations in connection with a Policy (e.g., with respect to
determining Cash Value and Account Value and in connection with Policy loans, or
calculation of Death Benefits, or with respect to determining the number of
Accumulation Units to be credited to a Policy with each premium payment, other
than the initial premium
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
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payment) will be made on the date on which the request or payment is received by
Hartford at its National Service Center, provided such date is a Valuation Day;
otherwise, such determination will be made on the next succeeding date which is
a Valuation Day.
PREMIUM LIMITATION
Except for required Scheduled Premiums, a premium payment that results in an
increase in the Death Benefit greater than the amount of the premium will be
accepted only after We approve evidence of insurability.
No premium payment will be accepted which results in Your Policy no longer
meeting the tax qualification guidelines for life insurance under the Code. If
premiums are received which would cause a Policy to fail to meet the definition
of a life insurance policy in accordance with the Code, We will refund the
excess premium payments and any interest thereon within 60 days after the end of
a Policy Year.
There are circumstances (usually if a Policy Owner wants to prefund future
benefits in seven years or less) when a Policy may become a Modified Endowment
Contract under federal tax law. If such an event, loans and other predeath
distributions are includable in gross income on an income-first basis. A 10%
penalty tax may be imposed on income distributed before the Policy Owner attains
age 59 1/2. Prospective purchasers and Policy Owners are advised to consult a
qualified tax adviser before taking steps that may affect whether a Policy
becomes a Modified Endowment Contract. See "Federal Tax Considerations --
Modified Endowment Contracts," page 33, for a discussion of the "seven-pay
test."
GUARANTEE PERIOD
The Guarantee Period selected by You will affect the benefits provided by
Your Policy. Generally, the longer the Guarantee Period is, the higher front-end
sales loads and surrender charges are. However, the advantages of a longer
Guarantee Period include:
(a) a longer period during which Your Death Benefit is guaranteed, regardless of
the investment experience of the Sub-Accounts;
(b) a longer period during which Your current administrative fees are
guaranteed. As a result, the longer the Guarantee Period, the lower the
guaranteed administrative fees;
(c) a longer period during which Your current cost of insurance rates are
guaranteed. As a result, the longer the Guarantee Period, the lower the
guaranteed cost of insurance rates;
(d) lower current cost of insurance rates; and
(e) lower mortality and expense risk rates.
In addition, if You choose a Guarantee Period longer than five years, You
may be given the right to purchase without any evidence of insurability,
additional coverage, subject to limitations. See "Supplemental Benefits," page
27.
Because the different charges and fees under the Policies depend on
different factors, such as the length of the Guarantee Period, it is difficult
to anticipate the net effect of such charges on Policy values without a sales
illustration. Once a prospective purchaser, in consultation with his or her
sales agent, has decided on a combination of Policy features, (e.g., Face
Amount, level of Scheduled Premiums, Guarantee Period, and the Insured's Issue
Age and gender) the sales agent will provide the prospective purchaser with an
illustration which reflects the charges and benefits of that particular
combination and includes a summary of Policy charges and fees. In addition, such
illustrations are available for any permissible combination of benefits which a
prospective purchaser may request.
For more information concerning front-end sales loads, surrender charges,
cost of insurance charges, and mortality and expense risk charges, see "Detailed
Description of Policy Benefits and Provisions -- Deductions from Premiums," page
18.
CASH VALUES
As with traditional life insurance, each Policy will have a Cash Value. The
Cash is equal to the Account Value less any remaining Surrender Charges. There
is no minimum guaranteed Cash Value.
A Policy's Account Value changes daily and is computed on each Valuation
Day. The Account Value will vary to reflect the investment experience of the
Sub-Accounts, the interest credited to the Fixed Account and the Loan Account,
and the Monthly Deduction Amounts.
A Policy's Account Value is related to the net asset value of the Funds
invested in by the Sub-Accounts, if any, to which Net Premiums under the Policy
have been allocated. The Account Value of the Sub-Accounts on any Valuation Day
is calculated by, first, multiplying the number of Accumulation Units in each
Sub-Account as of the Valuation Day by the current Accumulation Unit value of
such Sub-Account, and then totaling the result for all of the Sub-Accounts. The
Account Value of a Policy equals the Account Value in the Sub-Accounts plus the
value of the Fixed Account and the Loan Account. A Policy's Cash Value is the
Policy's Account Value, minus any remaining Surrender Charge. The Cash Surrender
Value (i.e., the net amount available upon surrender of a Policy) is the Cash
Value less any Indebtedness. See "-- Premiums -- Accumulation Unit Values," page
10.
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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AMOUNT PAYABLE ON SURRENDER OF THE POLICY
As long as his or her Policy is in effect, a Policy Owner may elect to fully
surrender such Policy without the consent of the beneficiary under the Policy,
provided the designation of such beneficiary is not irrevocable. Upon surrender,
the Policy Owner will receive the Cash Surrender Value determined as of the
later of (a) the date on which Hartford receives the Policy Owner's surrender
request In Writing, or (b) the date requested by the Policy Owner. The Policy
will terminate on the later of (x) the date on which Hartford receives the
written surrender request, or (y) the date on which the Policy Owner requests
the surrender to be effective.
LOAD REFUND
If a Policy is surrendered during the first two Policy Years, the Policy
Owner may be entitled to payment of a refund in addition to the Cash Surrender
Value. Such refund will equal the amount by which the sum of the actual
front-end sales load charged to date, plus the Surrender Charge assessed upon
Surrender exceeds:
(1) 30% of premium payments in aggregate amount less than or equal to one
Guideline Annual Premium plus 10% of premium payments in aggregate amount
greater than one Guideline Annual Premium but not more than two Guideline
Annual Premiums; plus
(2) 9% of each premium payment made which is in excess of two Guideline Annual
Premiums.
PARTIAL WITHDRAWALS
After the Guarantee Period, partial withdrawals are allowed. The minimum
partial withdrawal allowed is $500. The maximum partial withdrawal is the Cash
Surrender Value, minus $1,000. One partial withdrawal is allowed per month
(i.e., between any successive Monthly Activity Dates). The Face Amount is
reduced by the amount of any such partial withdrawal. Unless specified
otherwise, a partial withdrawal will be deducted on a Pro Rata Basis from the
Fixed Account and the Sub-Accounts.
Hartford does not currently impose a partial withdrawal charge. However,
Hartford reserves the right to impose in the future a partial withdrawal charge
of up to $50.
TRANSFERS OF ACCOUNT VALUE
AMOUNT AND FREQUENCY OF TRANSFERS
Upon request and as long as Your Policy is in effect, You may transfer
amounts among the Fixed Account and the Sub-Accounts. Transfers may be made by
request In Writing or by calling our National Service Center at 1-800-231-5453.
Transfers by telephone may be made by the agent of record or by the
attorney-in-fact pursuant to a power of attorney. Telephone transfers may not be
permitted in some states. The policy of Hartford and its agents and affiliates
is that they will not be responsible for losses resulting from acting upon
telephone requests reasonably believed to be genuine. We will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine;
otherwise, We may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures We follow for transactions initiated by telephone
include requiring callers to provide certain identifying information about
themselves ( if the are not the Policy Owners) and the Policy Owner. All
transfer instructions communicated to Us by telephone are tape recorded.
Currently, the Policy Owner may make one transfer per calendar month free of
charge, excluding any transfers made pursuant to Your enrollment in the dollar
cost averaging option. Each subsequent transfer in excess of one per calendar
month will be subject to a transfer charge of up to $25.
We reserve the right to limit at a future date the size of transfers and
remaining balances, and to limit the number and frequency of transfers.
TRANSFERS TO OR FROM SUB-ACCOUNTS
In the event of a transfer from a Sub-Account, the number of Accumulation
Units credited to the Sub-Account from which the transfer is made will be
reduced. The reduction will be determined by dividing:
(1) the amount transferred, by
(2) the Accumulation Unit value for that Sub-Account on the Valuation Day on
which, We receive Your request for transfer In Writing.
In the event of a transfer to a Sub-Account, We will increase the number of
Accumulation Units credited to the Sub-Account to which the transfer is made.
The increase will equal:
(1) the amount transferred, divided by,
(2) the Accumulation Unit value for that Sub-Account determined on the Valuation
Day on which We receive Your request for transfer In Writing.
TRANSFERS FROM THE FIXED ACCOUNT
In addition to the conditions described above, transfers from the Fixed
Account are subject to the following:
(a) the transfer must occur during the 30-day period following each Policy
Anniversary; and
(b) if Your accumulated value in the Fixed Account exceeds $1,000, the amount
You transfer from the Fixed Account in any Policy Year may be no greater
than 25% of the accumulated value in the Fixed Account on the transfer date.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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DOLLAR COST AVERAGING OPTION
You may elect to allocate Your Net Premiums among the Sub-Accounts and the
Fixed Account pursuant to the dollar cost averaging (DCA) option. If You choose
to participate in the DCA option, Your Net Premiums will be deposited into the
Hartford Money Market Fund Sub-Account. Amounts will be withdrawn monthly from
that Sub-Account and allocated to the other available investment options, in
accordance with Your allocation instructions. The transfer date will be the
monthly anniversary of the first transfer under Your initial DCA election. The
first transfer will commence within five business days after Hartford receives
Your initial election, either In Writing or by telephone, subject to the
telephone transfer procedures described above. The dollar amount will be
allocated to the investment options that You specify, in the proportions that
You specify. If, on any transfer date, Your Cash Value allocated to the Hartford
Money Market Fund Sub-Account is less than the amount You have elected to
transfer, Your DCA option participation will terminate.
You may also cancel Your DCA option election by notice In Writing to
Hartford or by calling Our National Service Center at 1-800-231-5453.
The main objective of the DCA option is to minimize the impact of short term
price fluctuations. The DCA option allows Policy Owners to take advantage of
market fluctuations. Since the same dollar amount is transferred to other
investment options at set intervals, the DCA option allows You to purchase more
Accumulation Units when prices are low and fewer Accumulation Units when prices
are high. Therefore, a lower average cost per Accumulation Unit may be achieved
over the long term. However, it is important to understand that the DCA option
does not assure a profit or protect against a loss in a declining market. Policy
Owners who choose to participate in the DCA option should have the financial
ability to continue making investments through periods of low price levels.
POLICY LOANS
A Policy Owner may obtain, a long as the Policy is in effect, a cash loan
from Hartford without the consent of the beneficiary under the Policy, provided
the designation of such beneficiary is not irrevocable. Such loan will be
secured by the Policy. Total Indebtedness at the time the Policy loan is
requested (including the accrued interest on prior Policy loans plus the amount
of the requested Policy loan) may not exceed 90% of the Cash Value.
The amount of each Policy loan will be transferred on a Pro Rata Basis from
the Fixed Account and each of the Sub-Accounts (unless the Policy Owner
specifies otherwise) to the Loan Account. The Loan Account is a mechanism used
to ensure that any outstanding Indebtedness remains fully secured by the Account
Value.
LOAN INTEREST
Interest on Indebtedness will accrue daily at the Policy loan interest rate
indicated in the Policy. On each Monthly Activity date, the difference between
the value of the Loan Account and the Indebtedness will be transferred on a Pro
Rata Basis from the Fixed Account and the Sub-Accounts to the Loan Account.
CREDITED INTEREST
Loan Accounts, other than those attributable to Preferred Loans (as
described below), will be credited with interest in the following manner: During
the first ten Policy Years, any amounts in the Loan Account will be credited
with interest at a rate of 2% (in most states). Thereafter, the Loan Account
will be credited with interest at the rate of 3% (in most states).
PREFERRED LOAN
If, at any time after Policy Anniversary 10, the Cash Value exceeds the
total of all premiums paid since issue, a Preferred Loan will be available. The
amount available for a Preferred Loan is the amount by which the Cash Value
exceeds total premiums paid. For Policy Years 11 and beyond, the amount of the
Loan Account which equals a Preferred Loan will be credited with interest at a
rate of 4% (in most states). The amount of Indebtedness that qualifies as a
Preferred Loan is determined by Hartford on each Monthly Activity Date.
LOAN REPAYMENTS
You can repay all or any part of Your Indebtedness at any time. The amount
of Policy loan repayment will be deducted from the Loan Account and will be
allocated among the Fixed Account and the Sub-Accounts in the same percentage as
premium payments are allocated.
TERMINATION DUE TO EXCESSIVE INDEBTEDNESS
If total Indebtedness equals or exceeds Cash Value under Your Policy, Your
Policy will terminate 61 days after We have mailed notice to Your last known
address and to the last known address of any assignees of record. If sufficient
Policy loan repayment if not made by the end of such 61 day period, Your Policy
will terminate without value.
EFFECT OF POLICY LOANS ON ACCOUNT VALUE
A Policy loan, whether or not repaid, will have a permanent effect on Your
Account Value because the investment results of each Sub-Account will apply only
to the amount remaining in such Sub-Accounts. Additionally, the rate of interest
credited to the Fixed Account will usually be different than the rate credited
to the Loan Account. The longer a loan is outstanding, the greater the effect on
the Account Value is likely to be. Such effect could be favorable or
unfavorable. If the Fixed Account and the Sub-Accounts earn more than the annual
interest rate for funds held in the Loan Account, a Policy Owner's Account Value
will not increase as rapidly as it would have had no Policy loan been
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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made. If the Fixed Account and the Sub-Accounts earn less than the Loan Account,
the Policy Owner's Account Value will be greater than it would have been had no
Policy loan been made. Additionally, the aggregate amount of the outstanding
Indebtedness, if not repaid, will reduce the Death Proceeds and the Cash
Surrender Value otherwise payable.
DEATH BENEFIT
Each Policy provides for the payment of the Death Proceeds to the named
beneficiary upon the death of the Insured. The Death Proceeds payable to the
beneficiary under a Policy equal the Death Benefit less any Indebtedness. The
Death Benefit depends on the Death Benefit Option You select.
DEATH BENEFIT OPTIONS
There are three Death Benefit Options available under the Policies: (Option
A) the Level Death Benefit Option; (Option B) the Return of Account Value Death
Benefit Option; and (Option C) the Return of Premium Death Benefit Option.
Subject to the Minimum Death Benefit described below, the Death Benefit under
each option is as follows:
(Option A) Under the Level Death Benefit Option, the Face Amount.
(Option B) Under the Return of Account Value Death Benefit Option, the Face
Amount plus the Account Value.
(Option C) Under the Return of Premium Death Benefit Option, the Face Amount
plus the sum of the Scheduled Premiums paid.
OPTION CHANGE
After the Guarantee Period, You may change the Return of Premium Death
Benefit Option or Return of Account Value Death Benefit Option to the Level
Death Benefit Option. If You elect to make such option change, the Face Amount
will become the amount available as a Death Benefit immediately prior to the
Death Benefit Option change.
DEATH BENEFIT GUARANTEE
During the Guarantee Period, Your Policy will not terminate due to
insufficient cash Surrender Value, regardless of the investment experience of
the Funds, provided all Scheduled Premiums are paid when due and Indebtedness
does not exceed the Cash Value.
MINIMUM DEATH BENEFIT
Notwithstanding the foregoing, each Policy has a minimum Death Benefit equal
to the Account Value, multiplied by a specified percentage which varies
according to the Insured's Issue Age, Attained Age, gender (where unisex rates
are not used), and insurance class and is specified in the Policy.
EXAMPLES OF THE MINIMUM DEATH BENEFIT:
<TABLE>
<CAPTION>
A B
---------- ----------
<S> <C> <C>
Face Amount............................ $ 100,000 $ 100,000
Account Value on Date of Death......... 46,500 34,000
Specified Percentage................... 250% 250%
Death Benefit Option................... Level Level
</TABLE>
In Example A, the minimum Death Benefit equals $116,250, i.e., the greater
of $100,000 (the Face Amount) or $116,250 (the Account Value at the Date of
Death of $46,500, multiplied by the specified percentage of 250%). Such Death
Benefit, minus any outstanding Indebtedness, constitutes the Death Proceeds
payable to the beneficiary under the Policy.
In Example B, the Death Benefit is $100,000, i.e., the greater of $100,000
(the Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the
specified percentage of 250%).
All or part of the Death Proceeds may be paid in cash or applied under one
of the available payment options. See "Other Matters -- Payment Options," page
26.
INCREASES AND DECREASES IN FACE AMOUNT
At any time after the Guarantee Period, You may change the Face Amount by
request In Writing.
The minimum Face Amount for an increase or decrease will be based on Our
rules then in effect.
All requests to increase the Face Amount must be applied for on a Policy new
application and shall be accompanied by Your existing Policy. All such requests
will be subject to evidence of insurability satisfactory to Us. Any increase
approved by Us will be effective on the date shown on the new Policy
specifications page provided that the cost of insurance deduction for the first
month is made. The monthly administrative fee on the first Monthly Activity Date
on or after the effective date of the increase will reflect a charge for the
increase.
A decrease in the Face Amount will be effective on the Monthly Activity Date
following the date on which We receive Your request In Writing. The remaining
Face Amount must not be less than that specified by Our minimum rules then in
effect. Decreases in Face Amount will be applied as follows:
(a) to the most recent increase in the Face Amount; then
(b) successively to each prior increase in Face Amount; then
(c) to the initial Face Amount.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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If You ask to decrease the Face Amount of Your Policy below the initial Face
Amount, We will deduct, on a Pro Rata Basis, a portion of any remaining
surrender charge from Your Account Value. The amount of the reduction will be
equal to:
(a) the initial Face Amount, minus the requested Face Amount, multiplied by
(b) the surrender charge on the date of the request to change the Face Amount,
divided by
(c) the Initial Face Amount.
Your surrender charge will be reduced by the same amount.
We reserve the right to limit the number of increases and/or decreases in
Face Amount to no more than one in any 12 month period.
BENEFITS AT MATURITY
If the Insured is living on the "Maturity Date" (i.e., the anniversary of
the Policy Date on which the Insured attained age 100), Hartford will pay the
Cash Surrender Value to the Policy Owner upon surrender of the Policy to
Hartford. On the Maturity Date, the Policy will terminate and Hartford will have
no further obligations under such Policy.
LAPSE AND REINSTATEMENT
POLICY SURPLUS
We use the Policy Surplus to determine whether a Policy will terminate if
Scheduled Premiums are not paid when due. If the Policy Surplus is greater than
zero for a Policy Year, the Scheduled Premiums may not be required. However, if
the Policy Surplus for a Policy Year during the Guarantee Period is zero, all
Scheduled Premiums due in that year are required to be paid.
The Policy Surplus is determined as follows:
(a) The Policy Surplus for the first Policy Year is zero.
(b) The Policy Surplus for each subsequent Policy Year is (x) minus (y), but
never less than zero where (x) is the Account Value at the end of the
previous Policy Year; and (y) is the Target Account Value, as shown in the
Policy, for the previous Policy Year.
Once determined for a given Policy Year, the Policy Surplus remains constant
for the entire Policy Year.
LAPSE AND GRACE PERIOD
During the Guarantee Period: If the Policy Surplus for a Policy Year is less
than the Indebtedness or is zero on any given Monthly Activity Date, all
Scheduled Premiums due in that Policy Year, on or before that date the Monthly
Activity Date are required to be paid in order to keep the Policy in force. With
respect to any required Scheduled Premium not paid on or before its due date, We
will allow a grace period which ends 61 days after the applicable Monthly
Activity Date. During the grace period, the Policy will continue in force. If
any such required Scheduled Premium is not paid by the end of the grace period,
the Policy will terminate except as provided under the non-forfeiture options
set forth in the Policy or unless You have elected the Automatic Premium Loan
Option (see "Automatic Premium Loan Option," below) and there is sufficient Cash
Value to cover the Scheduled Premium amounts due.
After the Guarantee Period: A Policy may terminate 61 days after a Monthly
Activity Date on which the Cash Surrender Value is less than zero. The 61-day
period is the grace period. If sufficient premium payments are not made by the
end of the grace period, a Policy will terminate without value. Hartford will
mail the Policy Owner and any assignee under the Policy written notice of the
amount of premium payments required to continue the Policy in force at least 61
days before the end of the grace period. The amount of premiums required to be
paid will be no greater then the amount, as of the date the grace period began,
deducted from Account Value in payment of three Monthly Deduction Amounts. If
such premiums are not paid by the end of the grace period, the Policy will
terminate.
REINSTATEMENT
Prior to the death of the Insured, a Policy may be reinstated prior to the
Maturity Date, provided such Policy has not been surrendered for cash, and
provided further that:
(a) You make Your reinstatement request within five years from the Policy
termination date;
(b) Your submit satisfactory evidence of insurability to Hartford;
(c) You pay all overdue required Scheduled Premiums, if any; and
(d) if the Guarantee Period has expired at the time of Policy reinstatement and
if the amount paid in is insufficient to reinstate the Policy, sufficient
premiums must be paid to:
(i) cover all Monthly Deduction Amounts that are due and unpaid during the
grace period; and
(ii) keep the Policy in force for three months after the date of
reinstatement.
The Face Amount of the reinstated Policy cannot exceed the Face Amount at
the time of lapse. The Account Value on the Policy reinstatement date will
reflect:
(1) the Account Value at the time of termination; plus
(2) Net Premiums attributable to premiums paid at the time of reinstatement;
minus
<PAGE>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
(3) a charge to reflect the benefits, if any, provided under the extended term
or reduced paid-up options.
The Surrender Charges for the reinstated Policy will be the same as they
would have been on the original Policy had no lapse and subsequent reinstatement
of such Policy taken place.
Any Indebtedness at the time of termination must be repaid upon
reinstatement of the Policy or carried over to the reinstated Policy.
AUTOMATIC PREMIUM LOAN OPTION
If You elect the Automatic Premium Loan Option under the Policies, We will
automatically process a Policy loan to pay any Scheduled Premium which is due
and not paid by the end of its grace period following the due date. You may
elect such option in Your Policy application or by request In Writing, provided
no Scheduled Premium is outstanding beyond its due date. In most states,
automatic premium loans will be treated as Preferred Loans. See "-- Policy Loans
- -- Preferred Loan," page 13.
The Automatic Premium Loan Option will not be available if:
(a) You have revoked the election of such option In Writing; or
(b) the loan amount needed to pay any unpaid Scheduled Premium would exceed the
Cash Surrender Value on the most recent Scheduled Premium due date.
In either instance, the surrender/continuation options will apply as of the
end of the grace period.
In most states, if You have outstanding Indebtedness pursuant to the
Automatic Premium Loan Option, Hartford will allow You to restore the Death
Benefit at the end of the Guarantee Period to the amount that it would have
equaled had no Indebtedness been incurred pursuant to such option. In such case,
Hartford will not require You to provide evidence of insurability. To remove any
such outstanding Indebtedness, Hartford will reduce Your Account Value, and the
amount of Indebtedness outstanding at the end of the Guarantee Period by the sum
of the Policy loan incurred pursuant to the Automatic Premium Loan Option, plus
all interest accrued thereon. There will be no reduction in the Face Amount of
Your Policy as a result of this adjustment.
If You have outstanding Indebtedness pursuant to the Automatic Premium Loan
Option at the end of the Guarantee Period and You have not previously elected to
restore the Death Benefit at the end of a Guarantee Period as described above,
Hartford will assume that You have elected to restore the Death Benefit at the
end of the Guarantee Period then in effect. Hartford will notify You that it
will make such adjustment unless You instruct Hartford not to make this
adjustment. Such notification will be made at least 30 days prior to the Policy
Anniversary occurring at the end of such Guarantee Period.
THE RIGHT TO EXAMINE OR EXCHANGE THE POLICY
A Policy Owner has a limited right to return a Policy for cancellation. If a
Policy is returned, by mail or personal delivery to Hartford or to the agent who
sold such Policy, to be canceled within (a) 10 days after delivery of such
Policy to the Policy Owner, (b) within 10 days of Hartford's mailing or
delivering a Notice of Right to Withdraw to the Policy Owner, or (c) within 45
days of completion of the Policy application (whichever is later, and subject to
applicable state regulation), Hartford will return to the canceling Policy
Owner, within 7 days thereafter, the greater of (x) the premium paid, less any
Indebtedness, or (y) the sum of (1) the Account Value, less any Indebtedness, on
the date the returned Policy is received by Hartford or its agent and (2) any
deductions for taxes, charges or fees.
During the first 24 months after its issuance, a Policy may be exchanged for
a non-variable life insurance policy on the life of the insured offered by Us or
an affiliate. No evidence of insurability will be required. The new policy will
have an amount at risk which equals or is less than the amount at risk in effect
on the date of exchange. Premiums under the new policy will be based on the same
risk classifications as the Policy for which the new policy was exchanged. An
exchange of a Policy under such circumstances should be a tax-free transaction
under Section 1035 of the Code.
SURRENDER/CONTINUATION OPTIONS
At any time prior to the Maturity Date, You may choose to have the Cash
Surrender Value applied under one of the following options, provided Your Policy
has a Cash Surrender Value:
OPTION A -- Surrender for Cash
OPTION B -- Continue as Extended Term Insurance
OPTION C -- Continue as Paid-Up Insurance
In addition, if during the Guarantee Period:
(a) a required Scheduled Premium is not paid by the end of the grace period; and
(b) the Automatic Premium Loan Option is not elected or not available due to
insufficient Cash Surrender Value.
You may choose one of the above options. You may notify Us In Writing of
Your choice within 61 days after the due date for the outstanding Scheduled
Premium. In the absence of such notification, We will automatically apply the
Cash Surrender Value to Option B, unless the insurance
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
- --------------------------------------------------------------------------------
class shown in your Policy is "special," in which case the automatic option will
be Option C. If Your Policy has no Cash Surrender Value, it will terminate at
the end of the grace period.
WHEN EFFECTIVE -- The effective date of the surrender/ continuation options will
be the earlier of:
(a) the date We receive Your election request In Writing; or
(b) the end of the grace period.
When a surrender/continuation option becomes effective, all benefit riders
attached to a Policy will terminate, unless otherwise provided in the rider.
OPTION DESCRIPTIONS
OPTION A -- Surrender for Cash
If You choose Option A, You must surrender Your Policy to Us. We will pay
You the Cash Surrender Value at the time of surrender, and Our liability under
the Policy will cease.
OPTION B -- Continue as Extended Term Insurance
Option B is not available unless the insurance class shown in Your Policy is
"standard" or "preferred." If You choose Option B, the extended term insurance
Death Benefit will be the Death Benefit in effect on the effective date of the
non-forfeiture benefit, less any Indebtedness. The term will begin on the
effective date of Option B and will extend for a period of time equal to that
which the Cash Surrender Value will provide as a net single premium at the
Insured's then Attained Age. At the end of such term, We will pay You any Cash
Surrender Value not used to provide extended term insurance, and Our liability
under the Policy will cease.
OPTION C -- Continue as Paid-Up Insurance
If You choose Option C, Your Policy will continue as paid-up life insurance.
The amount of paid-up life insurance will be calculated using the Cash Surrender
Value of Your Policy as a net single premium as of the effective date of this
benefit at the Insured's then-Attained Age. Hartford reserves the right to
require evidence of insurability or limit the amount of Option C if the paid-up
amount exceeds the Death Benefit in effect on the effective date of Option C. We
will pay You any Cash Surrender Value not used to provide paid-up insurance.
If Your Policy is continued under Option B or Option C, as described above,
the Cash Surrender Value available within 30 days after any Policy Anniversary
will not be less than the Cash Value on such Policy Anniversary minus any
Indebtedness.
VALUATION OF PAYMENTS AND TRANSFERS
We value the Policies on every Valuation Day.
We will pay Death Proceeds, Cash Surrender Values, partial withdrawal
proceeds, and Policy loan amounts allocable to the Sub-Accounts within 7 days
after We receive all the information needed to process the payment, unless the
New York Stock Exchange is closed, trading is restricted by the SEC, or the SEC
declares that an emergency exists.
Hartford may defer payment of any amounts not attributable to the
Sub-Accounts for up to six months from the date on which We receive the payment
request.
APPLICATION FOR A POLICY
Individuals wishing to purchase a Policy must submit an application to
Hartford. Within limits, a prospective purchaser may choose the Scheduled
Premiums and the initial Face Amount and the Guarantee Period in the Policy
application. Policies generally will be issued only on the lives of Insureds age
80 and under who supply evidence of insurability satisfactory to Hartford.
Acceptance of a Policy application is subject to Hartford's underwriting rules,
and Hartford reserves the right to reject a Policy application for any reason.
No change in the terms or conditions of a Policy will be made without the
consent of the Policy Owner.
A Policy will be effective on the Policy Date only after Hartford has
received all outstanding delivery requirements and the initial premium payment.
The Policy Date is the date used to determine all future cyclical transactions
on the Policy, e.g., Monthly Activity Dates and Policy Years.
REDUCED CHARGES FOR ELIGIBLE GROUPS
Certain of the charges and deductions described below may be reduced for
Policies issued in connection with a specific plan in accordance with Our rules
in effect as of the date an application for a Policy is approved. To qualify for
such a reduction, a plan must satisfy certain criteria, e.g., as to size of the
plan, expected number of participants and anticipated premium payments from the
plan. Generally, the sales contacts and effort, administrative costs and
mortality cost per Policy vary based on such factors as the size of the plan,
the purposes for which Policies are purchased and certain characteristics of the
plan's members. The amount of reduction and the criteria for qualification will
be reflected in the reduced sales effort and administrative costs resulting
from, and the different mortality experience expected as a result of, sales to
qualifying plans. We may modify, from time to time on a uniform basis, the
amounts of reductions and the criteria for qualification. Reductions in these
charges will not be unfairly discriminatory against any person, including the
affected Policy Owners invested in the Separate Account.
<PAGE>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUMS
Before the allocation of a premium payment to the Account Value, a deduction
as a percentage of premium is made for the front-end sales load and for premium
taxes. The amount of each premium payment allocated to the Account Value after
such deductions is Your Net Premium.
FRONT-END SALES LOAD
The front-end sales load portion of a deduction from premiums is based on
the level of Scheduled Premiums, the length of the Guarantee Period, and the
amount of any Unscheduled Premiums paid.
The maximum front-end sales load percentages for Policies are 50% of the
premiums paid in the first Policy Year, 11% in Policy Years 2 through 10, and 3%
thereafter.
For all Guarantee Periods, the maximum amount of premiums paid in any Policy
Year that is subject to a front-end sales load is the Guideline Annual Premium.
In addition, if Scheduled Premiums are less than the Guideline Annual Premium,
the maximum amount of premiums paid in the first Policy Year subject to a
front-end sales load is the Scheduled Premium.
The actual schedule of front-end sales loads for any given Policy is
specified in that Policy.
Generally, the shorter the Guarantee Period, the lower the front-end sales
load. The levels range from those for the ten-year Guarantee Period described
above to 0% on a Policy with a One Year Guarantee Period. However, there are
other charges under the Policies that are lower for longer Guarantee Periods.
For a further description of such charges, see "-- Guarantee Period," page 11.
For an example of the effect of front-end sales loads, see "-- Deductions
and Charges from the Account Value -- Examples of Front-End Sales Loads and
Surrender Charges," page 20.
PREMIUM RELATED TAX CHARGE
We deduct a percentage from each premium payment to cover premium-based
taxes assessed against Hartford by states and/or other governmental entities.
Such percentage will vary by locale, depending on the tax rates in effect at the
time the Policy is issued. The range is generally between 0% and 4%.
DEDUCTIONS AND CHARGES FROM
THE ACCOUNT VALUE
MONTHLY DEDUCTION AMOUNTS
On the Policy Date and on each subsequent Monthly Activity Date, Hartford
will deduct the Monthly Deduction Amount from the Account Value to cover certain
charges and expenses incurred in connection with a Policy. Each Monthly
Deduction Amount will be deducted on a Pro Rata Basis from the Fixed Account and
each of the Sub-Accounts. The Monthly Deduction Amount will vary from month to
month.
The Monthly Deduction Amount equals the sum of:
(1) the charge for the cost of insurance;
(2) the charges for additional benefits provided by rider, if any;
(3) the charges for "special" insurance class rating, if any;
(4) the monthly administrative fee; and
(5) the mortality and expense risk charge
(1) Cost of Insurance Charge
The charge for the cost of insurance is equal to:
(i) the cost of insurance rate per $1,000; multiplied by
(ii) the amount at risk; divided by
(iii) $1,000
The amount at risk equals the Death Benefit less the Account Value on that
date, prior to assessing the Monthly Deduction Amount.
The cost of insurance charge is to cover Hartford's anticipated mortality
costs. For standard risks, the cost of insurance rate will not exceed those
based on the 1980 Commissioners Standard Ordinary Mortality Table. A table
of guaranteed cost of insurance rates per $1,000 will be included in each
Policy; however, Hartford reserves the right to use rates less than those
shown in such table. Substandard risks will be charged a higher cost of
insurance rate that will not exceed rates based on a multiple of the 1980
Commissioners Standard Ordinary Mortality Table. The multiple will be based
on the Insured's risk class. Hartford will determine the cost of insurance
rate at the start of each Policy Year. Any changes in the cost of insurance
rate will be made uniformly for all Insureds in the same risk class.
Because a Policy's Account Value and Death Benefit Amount may vary from
month to month, the cost of insurance charge may also vary on each Monthly
Activity Date.
(2) Rider Charge
If a Policy includes riders, a charge applicable to such riders is made
from the Account Value on each Monthly Activity Date.
The charge applicable to Policy riders is to compensate Hartford for the
anticipated cost of providing these benefits and is specified on the
applicable rider.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
For a description of available riders, see "Supplemental Benefits," page
27.
(3) Special Class Charge
A charge for a special insurance class rating of an Insured may be made,
if applicable, against the Account Value. Such charge is to compensate
Hartford for the additional mortality risk associated with individuals in
such special classes.
(4) Monthly Administrative Charge and Issue Charge
Hartford will assess a monthly administrative charge to compensate
Hartford for administrative costs in connection with the Policies. This
charge covers the average expected cost for these expenses. The monthly
administrative charge will be $8.33 per month initially and is guaranteed
never to exceed that level during the Guarantee Period. After the Guarantee
Period, the charge is guaranteed never to exceed $12 per month.
Additionally, We assess a monthly charge in the first Policy Year to
compensate Hartford for the up-front costs of underwriting and issuing a
Policy. Subject to certain maximum levels, such charge currently is equal to
$8.33 per month, plus an amount that varies by Issue Age and the Policy's
initial Face Amount. The monthly issue charge and the maximum levels of such
charge for some sample Issue Ages are summarized in the following chart:
<TABLE>
<CAPTION>
MAXIMUM MONTHLY
ISSUE AGE MONTHLY FIRST POLICY YEAR ISSUE CHARGE AMOUNT
- --------- ---------------------------------------- -----------------
<C> <S> <C>
25 $8.33 plus $.0333 per $1,000 of IFA* $ 50.00
35 $8.33 plus $.0375 per $1,000 of IFA* $ 54.17
45 $8.33 plus $.0417 per $1,000 of IFA* $ 62.50
55 $8.33 plus $.0625 per $1,000 of IFA* $ 62.50
65 $8.33 plus $.0708 per $1,000 of IFA* $ 62.50
</TABLE>
* "IFA" refers to initial Face Amount
(5) Mortality and Expense Risk Charge
A charge is made for mortality and expense risks assumed by Hartford under
the Policies. Such charge is allocated to the General Account. Hartford may
profit from the mortality and expense risk charge. For further information,
see "-- Cash Values," page 11.
The mortality and expense risk charge for any Monthly Activity Date is
equal to the product of:
(i) the mortality and expense risk rate; multiplied by
(ii) the portion of the Account Value allocated to the Sub-Account on the
Monthly Activity Date prior to assessing the Monthly Deduction Amount.
During the first 20 Policy Years, the longer the Guarantee Period is, the
lower the mortality and expense risk charge rate will be. For Policy Years 1
through 20, the mortality and expense risk charge rate ranges from 1.40%
annually for a Policy with a one-year Guarantee Period, and decreases as the
length of the Guarantee Period increases, to .60% on a Policy with a
ten-year Guarantee Period. After Policy Year 20, the mortality and expense
risk charge rate for all Policies is expected to equal .60% annually.
However, Hartford reserves the right to continue the mortality and expense
risk charge rate at the level in effect during Policy Years 1 through 20,
except for Policies with a one year Guarantee Period, for which Hartford
reserves the right to charge a mortality and expense risk rate of .90%.
There are other contractual charges that are higher for longer Guarantee
Periods. For a more detailed description of such charges, see "-- Guarantee
Period," page 11.
The mortality risk assumed is that the actual cost of insurance charges
specified in a Policy will be insufficient to meet actual claims. Hartford
also assumes the risk of the Death Benefit Guarantee during the Guarantee
Period. See "-- Death Benefit -- Death Benefit Guarantee," page 14. The
expense risk assumed is that expenses incurred in issuing and administering
the Policies will exceed the administrative charges set in the Policies.
For Policies with a one-year Guarantee Period, Hartford also incurs a risk
that the costs associated with the distribution of the Policies will be
greater than the proceeds from any sales charges deducted under the
Policies.
SURRENDER CHARGES
A surrender charge is assessed against a Policy's Account Value if the
Policy lapses or is surrendered during the first nine Policy Years. The amount
of such surrender charge in the first Policy Year is established by Hartford
based on the premiums paid during the first Policy Year and the length of the
Guarantee Period chosen by the Policy Owner. Subject to certain limits imposed
by state insurance laws, the surrender charge decreases by an equal amount each
Policy Year until it reaches zero during the tenth Policy Year.
Specifically, the maximum first year surrender charge under a Policy is
equal to the sum of (i) a specified percentage of the Scheduled Premium up to
the Guideline Annual Premium and (ii) 5% of the excess of the first year premium
over the Guideline Annual Premium. The longer the Guarantee Period, the higher
the percentage used to calculate the first year surrender charge. Such
percentage equals 110% with respect to Policies with a ten-year Guarantee Period
and decreases as the selected Guarantee Period decreases to 10% for Policies
with a one-year Guarantee Period. There are other lower contractual charges
applicable to longer Guarantee Periods. For a more complete description of such
charges, see "-- Guarantee Period," page 11.
The schedule of Surrender Charges for a Policy is set forth in that Policy.
Additionally, Your sales agents, upon
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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request, will provide a schedule of surrender charges which would apply under
any given circumstances.
Generally, the total sales load under a Policy will not exceed 180% of the
Guideline Annual Premium, or 9% of
the sum of the Guideline Annual Premium that would be paid over a 20-year
period. In cases where the anticipated life expectancy of the Insured named in a
Policy is less than 20 years, the total sales load will not exceed 9% of the sum
of the Guideline Annual Premiums for the shorter period.
For an example of the effect of surrender charges, see "-- Examples of
Front-End Sales Loads and Surrender Charges," below.
EXAMPLES OF FRONT-END SALES LOADS AND SURRENDER CHARGES
An example of the actual front-end sales loads and Surrender Charge schedule
as well as and the impact of the sales load refund, if any (see "-- Cash Values
- -- Load Refund," page 11), for a Policy with a ten year Guarantee Period is
shown below. The example uses the same specific information (i.e., Issue Age,
Face Amount, premium level, etc.) as the illustration on page 37 of this
Prospectus.
<TABLE>
<S> <C>
Death Benefit Option: Level
Face Amount: $250,000
Guarantee Period: 10 years
Charges Assumed: Current
Issue Age/Gender/Class: 45/Male/Preferred
Scheduled Premium: $4,000 per year
Guideline Annual Premium: $4,819.38
Assumed Gross Annual Investment Return: 0%
</TABLE>
The "Total Cumulative Sales Load If Surrendered" column on the far right of
the table below represents the sum of all loads which would have been assessed
since the issuance of the Policy assuming a surrender of the Policy at the end
of the corresponding Policy Year.
This is:
(1) the sum of the cumulative front-end sales load, plus
(2) the actual surrender charge for that Policy Year, minus
(3) the sales load refund, if any, applicable to that Policy Year (see "--
Cash Values -- Load Refund," page 12).
ADDITIONAL CHARGES/CREDITS IF SURRENDERED -- TEN YEAR GUARANTEE PERIOD
<TABLE>
<CAPTION>
SURRENDER CHARGES
- ---------------------------------------------------------------------------------------
CUMULATIVE TOTAL
FRONT-END MAXIMUM YEAR END ACTUAL SALES CUMULATIVE
POLICY SALES SURRENDER ACCOUNT SURRENDER LOAD SALES LOAD IF
YEAR LOAD CHARGE VALUE CHARGE* REFUND SURRENDERED**
- ---------- ----------- ----------- --------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 2,000 $ 4,400 $ 1,232 $ 1,232 $ 2,032 $ 1,200
2 2,440 3,911 4,074 3,911 4,590 1,791
3 2,880 3,422 6,764 3,422 0 6,302
4 3,320 2,933 9,345 2,933 0 6,253
5 3,760 2,444 11,843 2,444 0 6,204
6 4,200 1,956 14,274 1,956 0 6,156
7 4,640 1,467 16,645 1,467 0 6,107
8 5,080 978 18,971 978 0 6,058
9 5,520 489 21,246 489 0 6,009
10 5,960 0 23,456 0 0 5,960
11 6,080 0 25,850 0 0 6,080
</TABLE>
* The Actual Surrender Charge assessed is the lesser of:
(a) The contractual maximum surrender charge, or
(b) Account Value at the end of the Policy Year.
** Assumes a surrender of the Policy at the end of that Policy Year.
An example of the actual front-end sales load and surrender charge schedule
as well as the impact of the sales load refund, if any (see "-- Cash Values --
Load Refund," page 12), for a Policy with a one year Guarantee Period is shown
below.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
- --------------------------------------------------------------------------------
The example uses the same specific information (i.e., Issue Age, Face Amount,
premium level) as the illustration on page 37 of this Prospectus.
<TABLE>
<S> <C>
Death Benefit Option: Level
Face Amount: $250,000
Guarantee Period: 1 Year
Charges Assumed: Current
Issue Age/Sex/Class: 45/Male/Preferred
Scheduled Premium: $4,000.00 per year
Guideline Annual Premium: $4,819.38
Assumed Hypothetical Gross Annual Investment
Return: 0%
</TABLE>
The "Total Cumulative Sales Load If Surrendered" column on the far right of
the table below represents the sum of all loads which would have been assessed
since the issue of the Policy assuming a surrender of the Policy at the end of
the corresponding Policy Year.
This is:
(a) the sum of the cumulative front-end sales load, plus
(b) the actual surrender charge for that Policy Year, minus
(c) the sales load refund, if any, applicable to that Policy Year (see "--
Cash Values -- Load Refund," page 12).
ADDITIONAL CHARGES/CREDITS IF SURRENDERED -- ONE YEAR GUARANTEE PERIOD
<TABLE>
<CAPTION>
SURRENDER CHARGES
- ------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL
FRONT-END MAXIMUM YEAR END ACTUAL SALES CUMULATIVE
POLICY SALES SURRENDER ACCOUNT SURRENDER LOAD SALES LOAD IF
YEAR LOAD CHARGE VALUE CHARGE* REFUND SURRENDERED**
- ---------- --------------- ----------- --------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 0 $ 400 $ 3,169 $ 400 $ 0 $ 400
2 0 355 6,361 355 0 355
3 0 311 9,381 311 0 311
4 0 267 12,273 267 0 267
5 0 222 15,067 222 0 222
6 0 178 17,780 178 0 178
7 0 133 20,422 133 0 133
8 0 89 23,008 89 0 89
9 0 44 25,529 44 0 44
10 0 0 27,976 0 0 0
11 0 0 30,273 0 0 0
</TABLE>
* The Actual Surrender Charge assessed is the lesser of:
(a) The contractual maximum surrender charge, or
(b) Account Value at the end of the Policy Year.
** Assumes a surrender of the Policy at the end of that Policy Year.
CHARGES AGAINST THE FUNDS
The investment performance of each Fund reflects the management fee that the
Fund pays to its investment manager as well as other operating expenses that the
Fund incurs. Investment management fees are generally daily fees computes as a
percentage of a Fund's average daily net assets as an annual rate. Please read
the prospectus for each Fund for complete details.
TAXES
Currently, no charge is made to the Separate Account for federal, state, and
local taxes that may be attributable to the Separate Account. A change in the
applicable federal, state or local tax laws which impose tax on Hartford and/or
the Separate Account may result in a charge against the Policies in the future.
Charges for other taxes, if any, attributable to the Separate Account may also
be made.
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
HARTFORD
Hartford Life and Annuity Insurance Company ("Hartford") is a stock life
insurance company engaged in the business of writing life insurance and
annuities, both individual and group, in all states of the United States and the
District of Columbia, except New York. Effective on January 1, 1998, Hartford's
name changed from ITT Hartford Life and Annuity Insurance Company to Hartford
Life and Annuity Insurance Company. Hartford was originally incorporated under
the laws of Wisconsin on January 9, 1956, and was subsequently redomiciled to
Connecticut. Its offices are located in Simsbury, Connecticut; however, its
mailing address is P.O. Box 2999, Hartford, CT 06104-2999. Hartford is a
subsidiary of Hartford Fire Insurance Company, one of the largest multiple lines
insurance carriers in the United States. Hartford is ultimately controlled 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 investment performance of the
Sub-Accounts. The ratings apply to Hartford's ability to meet its insurance
obligations, including those described in this Prospectus.
SEPARATE ACCOUNT VL I
GENERAL
Separate Account VL I (the "Separate Account") is a separate account of
Hartford, established on June 8, 1995 pursuant to the insurance laws of the
State of Connecticut and organized as a unit investment trust registered with
the SEC under the Investment Company Act of 1940. Under Connecticut law, the
assets of the Separate Account are held exclusively for the benefit of Policy
Owners and persons entitled to payments under the Policies. The assets of the
Separate Account are not chargeable with liabilities arising out of any other
business which Hartford may conduct.
FUNDS
The assets of each Sub-Account are invested exclusively in one of the Funds.
A Policy Owner may allocate Net Premiums among the Sub-Accounts. Policy Owners
should review the following brief descriptions of the investment objectives of
each of the Funds in connection with such
allocation. There is no assurance that any Fund will achieve its stated
objectives. All investment options may not be available in all States. Policy
Owners are also advised to read the prospectuses for the Funds accompanying this
Prospectus for more detailed information.
HARTFORD FUNDS
HARTFORD ADVISERS FUND
Seeks maximum long term total rate of return by investing in common stocks
and other equity securities, bonds and other debt securities, and money market
instruments.
HARTFORD BOND FUND
Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets of
this Fund may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's Investor Services, Inc. or "BB" by Standard &
Poor's) or, if unrated, are determined to be of comparable quality by the Fund's
investment adviser. Securities rated below investment grade are commonly
referred to as "high yield-high risk securities" or "junk bonds." For more
information concerning the risks associated with investing in such securities,
please refer to the section entitled "Hartford Bond Fund, Inc. -- Investment
Policies" in the prospectus for the Hartford Funds accompanying this Prospectus.
HARTFORD CAPITAL APPRECIATION FUND
Seeks growth of capital by investing in equity securities selected solely on
the basis of potential for capital appreciation.
HARTFORD DIVIDEND AND GROWTH FUND
Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
HARTFORD INDEX FUND
Seeks to provide investment results which approximate the price and yield
performance of publicly-traded common stocks in the aggregate, as represented by
the Standard & Poor's 500 Composite Stock Price Index.*
HARTFORD INTERNATIONAL OPPORTUNITIES FUND
Seeks growth of capital by investing primarily in equity securities issued
by non-U.S. companies.
HARTFORD MORTGAGE SECURITIES FUND
Seeks maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related securities,
including securities issued by the Government National Mortgage Association.
* "STANDARD & POOR'S-REGISTERED TRADEMARK-," "S&P-REGISTERED TRADEMARK-," "S&P
500-REGISTERED TRADEMARK-," "STANDARD & POOR'S 500," AND "500" ARE TRADEMARKS OF
THE MCGRAW-HILL COMPANIES,
INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY. THE HARTFORD INDEX FUND, INC. ("INDEX FUND") IS NOT SPONSORED,
ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND STANDARD & POOR'S MAKES NO
REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE INDEX FUND.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
HARTFORD STOCK FUND
Seeks long-term growth of capital by investing primarily in equity
securities.
HARTFORD MONEY MARKET FUND
Seeks maximum current income consistent with liquidity and preservation of
capital.
PUTNAM FUNDS
PUTNAM VT DIVERSIFIED INCOME FUND
Seeks high current income consistent with capital preservation by investing
in the following three sectors of the fixed income securities markets: a U.S.
Government and Investment Grade Sector, a High Yield Sector (which invests
primarily in securities commonly known as "junk bonds"), and an International
Sector. See the special considerations for investments in high yield securities
described in the Fund prospectus.
PUTNAM VT GLOBAL ASSET ALLOCATION FUND
Seeks a high level of long-term total return consistent with preservation of
capital by investing in U.S. equities, international equities, U.S. fixed income
securities, and international fixed income securities.
PUTNAM VT GLOBAL GROWTH FUND
Seeks capital appreciation through a globally diversified portfolio of
common stocks.
PUTNAM VT GROWTH AND INCOME FUND
Seeks capital growth and current income by investing primarily in common
stocks that offer potential for capital growth, current income, or both.
PUTNAM VT HIGH YIELD FUND
Seeks high current income and, when consistent with this objective, a
secondary objective of capital growth, by investing primarily in high-yielding,
lower-rated fixed income securities constituting a portfolio which Putnam
Management believes does not involve undue risk to income or principal. See the
special considerations for investments in high yield securities described in the
Fund prospectus.
PUTNAM VT MONEY MARKET FUND
Seeks as high a rate of current income as Putnam Management believes is
consistent with preservation of capital and maintenance of liquidity by
investing in high-quality money market instruments.
PUTNAM VT NEW OPPORTUNITIES FUND
Seeks long-term capital appreciation by investing principally in common
stocks of companies in sectors of the economy which Putnam Management believes
possess above-average long-term growth potential.
PUTNAM VT U.S. GOVERNMENT AND HIGH QUALITY
BOND FUND
Seeks current income consistent with preservation of capital by investing
primarily in securities issued or guaranteed as to principal and interest by the
U.S. Government or by its agencies or instrumentalities and in other debt
obligations rated at least A by a nationally recognized securities rating agency
such as Standard & Poor's or Moody's Investors Service, Inc. or, if not rated,
determined by Putnam Management to be of comparable quality.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND
Seeks capital growth and current income by concentrating its investments in
debt and equity securities issued by companies in the public utilities
industries.
PUTNAM VT VOYAGER FUND
Seeks capital appreciation by investing primarily in common stocks of
companies that Putnam Management believes have potential for capital
appreciation that is significantly greater than that of market averages.
FIDELITY VIP FUNDS
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Seeks reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the Portfolio Manager 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 Index 500.
In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of lower-rated
securities, see "Risks of Lower-Rated Debt Securities" in the Fidelity
prospectus for this Portfolio.
FIDELITY VIP OVERSEAS PORTFOLIO
Seeks long-term growth of capital primarily through investments in foreign
securities and provides a means for aggressive investors to diversify their own
portfolios by participating in companies and economies outside of the United
States.
In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of lower-rated
securities, see "Risks of Lower-Rated Debt Securities" in the Fidelity
prospectus for this Portfolio. International funds have increased economic and
political risks as they are exposed to events and factors in the various world
markets. These risks may be greater for funds that invest in emerging markets.
<PAGE>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Seeks high total return with reduced risk over the long-term by allocating
its assets among stocks, bonds and short-term money market instruments.
In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of lower-rated
securities, see "Risks of Lower-Rated Debt Securities" in the Fidelity
prospectus for this Portfolio.
The Hartford Funds are organized as corporations under the laws of the State
of Maryland and are registered as diversified open-end management companies
under the Investment Company Act of 1940. The Putnam Funds are portfolios of the
Putnam Variable Trust, which is organized as a business trust under the laws of
Massachusetts and is an open-end series investment company under the Investment
Company Act of 1940. The Fidelity VIP Funds, organized as Massachusetts business
trusts, are diversified open-end management investment companies with multiple
portfolios. The Fidelity VIP Equity-Income Portfolio and the Fidelity VIP
Overseas Portfolio are portfolios of the Variable Insurance Products Fund. The
Fidelity VIP II Asset Manager Portfolio is a portfolio of the Variable Insurance
Products Fund II.
Each Fund continually issues an unlimited number of full and fractional
shares of beneficial interest in such Fund. Such shares are offered to separate
accounts, including the Separate Account, established by Hartford or one of its
affiliated companies specifically to fund insurance policies, including the
Policies, issued by Hartford or its affiliates as permitted by the Investment
Company Act of 1940.
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest simultaneously in the Funds. Although Hartford and the Funds do not
currently foresee any such disadvantages either to variable life insurance
policy owners or to variable annuity policy owners, the Board of Directors for
the Hartford Funds and the Board of Trustees for the Putnam Funds, and the Board
of Trustees for the Fidelity VIP Funds (collectively, the "Boards") intend to
monitor events in order to identify any material conflicts between such Policy
Owners and to determine what action, if any, should be taken in response
thereto. In the event the Boards conclude that separate funds should be
established for variable annuity and variable life insurance separate accounts,
Hartford will bear the attendant expenses.
All investment income of, and other distributions to, each Sub-Account
arising from the applicable Fund are reinvested in shares of that Fund at net
asset value. The income and realized gains and/or losses on the assets of each
Sub-Account therefore are separate and are credited to or charged against the
Sub-Account without regard to income, gains or losses from any other Sub-Account
or from any other business of Hartford. Hartford will purchase shares in the
Funds in connection with premium payments allocated to the applicable
Sub-Account in accordance with Policy Owners' directions and will redeem shares
in the Funds to meet Policy obligations or make adjustments in reserves, if any.
The Funds are required to redeem Fund shares at net asset value and generally to
make payment within seven days of such redemption.
Hartford reserves the right to make additions to, deletions from, or
substitutions for the Separate Account and its Sub-Accounts which fund the
Policies, subject to compliance with the law as then in effect. In the event
that shares of any of the Funds are no longer available for investment, or if,
in the judgment of Hartford's management, further investment in shares of any
Fund should become inappropriate in view of the purposes of the Policies,
Hartford may substitute shares of another Fund for shares already purchased, or
to be purchased in the future, under the Policies. No substitution of securities
will take place without notice to, and the consent of, Policy Owners and without
prior approval of the SEC to the extent required by the Investment Company Act
of 1940. Subject to Policy Owner approval, if required, 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
and which may fund the Policies.
Each Fund is subject to certain investment restrictions which may not be
changed without the approval of a majority of the shareholders of such Fund. See
the prospectuses for the Funds accompanying this Prospectus.
INVESTMENT ADVISER
HARTFORD FUNDS
The investment adviser for the Hartford Funds is HL Investment Advisors,
Inc. ("HL Advisors"), Hartford Plaza, Hartford, Connecticut 06115. Pursuant to
an investment advisory agreement entered into with each of the Hartford Funds,
HL Advisors provides investment advice and, in general, supervises the
management and investment program of the Hartford Funds, for which HL Advisors
receives a fee.
The Hartford Investment Management Company, Inc. ("HIMCO"), an affiliate of
Hartford organized under Connecticut law, serves as investment sub-adviser to
Hartford Bond Fund, Hartford Index Fund, Hartford Mortgage Securities Fund and
Hartford Money Market Fund.
Wellington Management Company, LLP ("Wellington Management") serves as
investment sub-adviser to Hartford Advisers Fund, Hartford Capital Appreciation
Fund, Hartford Dividend and Growth Fund, Hartford International
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
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Opportunities Fund and Hartford Stock Fund. Wellington Management is a
professional investment counseling firm which provides investment services to
investment companies, other institutions and individuals. Wellington Management
is organized as a private Massachusetts partnership and its predecessor
organizations have provided investment advisory services to investment companies
since 1933 and to investment counseling clients since 1960. See the prospectus
for the Hartford Funds accompanying this Prospectus for a more complete
description of HL Advisors, HIMCO and Wellington Management, and their
respective fees.
PUTNAM FUNDS
Putnam Management, One Post Office Square, Boston, Massachusetts, 02109,
serves as the investment manager for the Putnam Funds. An affiliate, Putnam
Advisory Company, Inc., manages domestic and foreign institutional accounts and
mutual funds. Another affiliate, Putnam Fiduciary Trust Company, provides
investment advice to institutional clients under its banking and fiduciary
policies. Putnam Management and its affiliates are wholly-owned subsidiaries of
Marsh & McLennan Companies, Inc., a publicly owned holding company whose
principal businesses are international insurance brokerage and employee benefit
consulting.
FIDELITY VIP FUNDS
The Fidelity VIP Funds are managed by Fidelity Management & Research Company
("FMR"), whose principal business address is 82 Devonshire Street, Boston,
Massachusetts 02109. FMR is one of America's largest investment management
organizations. It is composed of a number of different companies, which provide
a variety of financial services and products. FMR, founded in 1946, is the
original Fidelity company. It provides investment research and portfolio
management services to a number of mutual funds and other clients. Various
Fidelity companies perform certain activities required to operate VIP and VIP
II.
THE FIXED ACCOUNT
THAT PORTION OF THE POLICY RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN
ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT,
AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED BY THE
STAFF OF THE SEC. THE FOLLOWING DISCLOSURE ABOUT THE FIXED ACCOUNT MAY BE
SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES
LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURE.
Premium payments and Cash Values allocated to the Fixed Account become a
part of the general assets of Hartford. Hartford invests the assets of the
General Account in accordance with applicable law governing the investments of
insurance company general accounts.
The Fixed Account Minimum Credited Rate is shown in the Policies. Currently,
Hartford guarantees that it will credit interest at a rate of not less than 4%
per year, compounded annually, to amounts allocated under the Policies to the
Fixed Account. Hartford may credit interest at a rate in excess of the Fixed
Account Minimum Credited Rate; however, Hartford is not obligated to credit any
interest in excess of the Fixed Account Minimum Credited Rate. There is no
specific formula for the determination of excess interest credits. Some of the
factors that Hartford may consider in determining whether to credit excess
interest to amounts allocated to the Fixed Account and the amount thereof are
general economic trends, rates of return currently available and anticipated on
Hartford's investments, regulatory and tax requirements and competitive factors.
ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF THE
FIXED ACCOUNT MINIMUM CREDITED RATE WILL BE DETERMINED IN THE SOLE DISCRETION OF
HARTFORD. EACH POLICY OWNER ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED
ACCOUNT ALLOCATIONS MAY NOT EXCEED THE FIXED ACCOUNT MINIMUM CREDITED RATE.
OTHER MATTERS
VOTING RIGHTS
In accordance with its view of presently applicable law, Hartford will vote
the shares of the Funds at regular and special meetings of the shareholders of
the Funds in accordance with instructions from Policy Owners (or the assignee of
a Policy, as the case may be) having a voting interest in the Separate Account.
The number of shares held in the Separate Account which are attributable to each
Policy Owner is determined by dividing the Policy Owner's interest in each
Sub-Account by the net asset value of the applicable shares of the Funds.
Hartford will vote shares for which no instructions have been given and shares
which are not attributable to Policy Owners (i.e., shares owned by Hartford) in
the same proportion as it votes shares for which it has received instructions.
However, if the Investment Company Act of 1940 or any rule promulgated
thereunder should be amended, or if Hartford's present interpretation of the law
should change and, as a result, Hartford determines it is permitted to vote the
shares of the Funds in its own right, it may elect to do so.
<PAGE>
26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
The voting interests of a Policy Owner (or the assignee of a Policy, as the
case may be) in the Funds will be determined as follows: A Policy Owner may cast
one vote for each full or fractional Accumulation Unit owned under a Policy and
allocated to a Sub-Account the assets of which are invested in the particular
Fund on the record date for the shareholder meeting for that Fund. If, however,
a Policy Owner has taken a loan secured by a Policy, amounts transferred from
the Sub-Account(s) to the Loan Account(s) in connection with the Indebtedness
(see "Detailed Description of Policy Benefits and Provisions -- Policy Loans,"
page 13) will not be considered in determining the voting interests of that
Policy Owner. Policy Owners should review the prospectuses for the Funds which
accompany this Prospectus to determine matters on which shareholders may vote.
Hartford may disregard Policy Owner voting instructions when required by
state insurance regulatory authorities, if the instructions require that the
Fund shares be voted so as to cause a change in the sub-classification or
investment objective of one or more of the Funds or to approve or disapprove an
investment advisory policy for the Funds. In addition, Hartford may disregard
Policy Owner voting instructions in favor of changes in the investment policy or
the investment adviser of the Funds initiated by the Policy Owner if Hartford
reasonably disapproves of such changes. A change would be disapproved only if
the proposed change is contrary to state law or prohibited by state regulatory
authorities. In the event that Hartford disregards Policy Owner voting
instructions, a summary of that action and the reasons therefor will be included
in Hartford's next periodic report to Policy Owners.
STATEMENTS TO POLICY OWNERS
We will send You a statement at least once each Policy Year, showing:
(a) the current Account Value, Cash Value and Face Amount;
(b) the premiums paid, Monthly Deduction Amounts and Policy loans since the last
statement;
(c) the amount of any Indebtedness;
(d) notifications required by the provisions of the Your Policy; and
(e) any other information required by the insurance department of the state
where Your Policy was delivered to You.
LIMIT ON RIGHT TO CONTEST
Hartford may not contest the validity of a Policy after it has been in
effect during the Insured's lifetime for two years from the Issue Date. If a
Policy is reinstated, such two-year period is measured from the date of
reinstatement. Any increase in the Face Amount as a result of a premium payment
is contestable for two years from its effective date. In addition, if the
Insured commits suicide in the two-year period, or such other period as
specified by state law, the benefit payable will be limited to the premiums
paid, minus any Indebtedness and any partial withdrawals.
MISSTATEMENT AS TO AGE
If the age of the Insured is incorrectly stated, the amount of Death Benefit
will be appropriately adjusted as specified in Your Policy.
PAYMENT OPTIONS
Proceeds under the Policies may be paid in a lump sum or may be applied to
one of Hartford's payment options. The minimum amount that may be placed under a
payment option is $5,000, unless Hartford consents to a lesser amount. Once
payments under the Second Option, the Third Option or the Fourth Option
commence, no surrender of a Policy may be made for the purpose of receiving a
lump sum settlement in lieu of the life insurance payments.
The following payment options are available under the Policies.
FIRST OPTION -- Interest Income
Payments of interest at the rate We declare (but not less than 3 1/2% per
year) on the amount applied under this option.
SECOND OPTION -- Income of Fixed Amount
Equal payments of the amount chosen until the amount applied under this
payment option (with interest of not less than 3 1/2% per year) is exhausted.
The final payment will be for the balance remaining.
THIRD OPTION -- Payments for a Fixed Period
An amount payable monthly for the number of years selected which may be from
one to 30 years.
FOURTH OPTION -- Life Income
LIFE ANNUITY -- An annuity payable monthly during the lifetime of
theannuitant and terminating with the last monthly payment due preceding the
death of the annuitant.
LIFE ANNUITY WITH 120 MONTHLY PAYMENTS CERTAIN -- An annuity providing
monthly income to the annuitant for a fixed period of 120 months and for as
long thereafter as the annuitant shall live.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
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The tables in the Policies provide for guaranteed dollar amounts of monthly
payments for each $1,000 applied under the four payment options. Under the
Fourth Option, the amount of each payment will depend upon the age of the
annuitant at the time the first payment is due. If any periodic payment due any
payee is less than $200, Hartford may make payments less often.
The table for the Fourth Option is based on the 1983 Individual Annuity
Mortality Table, set back one year with a net investment rate of 3.5% per annum.
The tables for the First, Second and Third Options are based on a net investment
rate of 3.5% per annum. However, We may, from time to time, at Our discretion if
mortality appears more favorable and interest rates justify, apply other tables
which will result in higher monthly payments for each $1,000 applied under one
or more of the four payment options.
Hartford will make any other arrangements for income payments as Hartford
and the Policy Owner may be agree.
BENEFICIARY
A prospective purchaser of a Policy names the beneficiary in the application
for a Policy. A Policy Owner may change the beneficiary under the Policy (unless
such beneficiary is irrevocably named) during the Insured's lifetime by request
In Writing to Hartford. If no such beneficiary is living when the Insured dies,
the Death Proceeds will be paid to the Policy Owner if living, or, otherwise, to
the Policy Owner's estate.
ASSIGNMENT
A Policy may be assigned as collateral for a loan or other obligation.
Hartford is not responsible for any payment made or action taken before receipt
of notice In Writing of such assignment. Proof of interest must be filed with
any claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Policies.
SUPPLEMENTAL BENEFITS
The following supplemental benefits may be included in a Policy, subject to
the restrictions and limitations set forth therein.
DEDUCTION AMOUNT WAIVER RIDER
Subject to certain age and underwriting restrictions, a Policy may include a
Deduction Amount Waiver Rider. That rider provides for the waiver of the Monthly
Deduction Amounts in the event of the Insured's total disability occurring prior
to the Insured reaching Attained Age 65 and continuing for at least six months.
The number of Monthly Deduction Amounts waived depends on the Insured's Attained
Age when the disability began.
If the Deduction Amount Waiver Rider is added to a Policy, the Monthly
Deduction Amounts under such Policy will be increased to include the charges
applicable to the rider.
ACCIDENTAL DEATH BENEFIT RIDER
Subject to certain age and underwriting requirements, a Policy may include
an Accidental Death Benefit Rider. That rider provides for an increase in the
amount paid upon the death of the Insured if such death results from an
accident.
If the Accidental Death Benefit Rider is added to a Policy, Monthly
Deduction Amounts under such Policy will be increased to include the charges
applicable to the rider.
INCREASE IN COVERAGE OPTION RIDER
Subject to certain age and underwriting requirements, a Policy may include
an Increase in Coverage Option Rider. That rider gives the Policy Owner the
guaranteed right to purchase a new flexible premium variable life insurance
policy on the life of the Insured, without evidence of insurability, if certain
conditions are met. These conditions include:
(a) the original Policy has been in force for five years,
(b) the Insured's Attained Age is less than 80, and
(c) the Account Value of the original Policy is sufficient to "pay up" the new
policy under assumptions defined in the rider.
The face amount of the new policy will be equal to the Face Amount,
multiplied by a percentage which depends on the Insured's age, gender (except
where unisex rates are used) and insurance class. The scheduled premium fee for
the new policy is based on the Scheduled Premium for the original Policy.
MATURITY DATE EXTENSION RIDER
Subject to certain Death Benefit and Premium restrictions (see "Federal Tax
Considerations -- Income Taxation of Policy Benefits," page 33), a Policy may
include a Maturity Date Extension Rider. Under that rider, We will extend the
Maturity Date to the date of the Insured's death, regardless of the age of the
Insured.
<PAGE>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH HARTFORD, OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- -----------------------------------------------------------
<S> <C> <C>
Bossen, Wendell J., 64 Vice President, 1995** Vice President (1992-Present), Hartford Life and Accident
Insurance Company; Vice President (1992-Present),
Hartford Life Insurance Company; President
(1992-Present), International Corporate Marketing Group,
Inc.
Boyko, Gregory A., 46 Senior Vice President, Chief Vice President & Controller (1995-1997), Hartford; Director
Financial Officer & (1997-Present); Senior Vice President, Chief Financial
Treasurer, 1997 Officer & Treasurer (1997-Present); Vice President &
Director, 1997* Controller (1995-1997), Hartford Life and Accident
Insurance Company; Director (1997-Present); Senior Vice
President, Chief Financial Officer & Treasurer
(1997-Present); Vice President and Controller
(1995-1997), Hartford Life Insurance Company; Senior Vice
President, Chief Financial Officer & Treasurer
(1997-Present), Hartford Life, Inc.; Chief Financial
Officer (1994-1995), IMG American Life; Senior Vice
President (1992-1994), Connecticut Mutual Life Insurance
Company.
Cummins, Peter W., 60 Senior Vice President, 1997 Vice President (1993-1997), Hartford; Senior Vice
President, (1997-Present); Vice President (1989-1997),
Hartford Life and Accident Insurance Company; Senior Vice
President (1997-Present); Vice President (1989-1997);
Senior Vice President (1997-Present); Vice President
(1989-1997), Hartford Life Insurance Company.
de Raismes, Ann M., 47 Senior Vice President, 1997 Vice President (1994-1997), Hartford; Senior Vice President
Director of Human Resources, (1997-Present); Vice President (1994-1997); Assistant
1994 Vice President (1992-1994); Director of Human Resources
(1991-Present), Hartford Life and Accident Insurance
Company; Senior Vice President (1997-Present); Vice
President (1994-1997); Assistant Vice President
(1992-1994); Director of Human Resources (1991-Present),
Hartford Life Insurance Company; Vice President, Human
Resources (1997-Present), Hartford Life, Inc.
Dooley, James R., 61 Vice President, 1993 Director, Information Services (1973-1997), Hartford Life
Insurance Company.
Fitch, Timothy M., 45 Vice President, 1995 Vice President (1995-Present); Actuary (1994-Present);
Actuary, 1997 Assistant Vice President (1992-1995), Hartford Life and
Accident Insurance Company; Vice President
(1995-Present); Actuary (1994-Present); Assistant Vice
President (1992-1995), Hartford Life Insurance Company.
Foy, David T., 31 Vice President, 1998 Assistant Vice President (1995-1998), Hartford; Vice
President (1998-Present), Assistant Vice President
(1995-1998), Hartford Life Insurance Company.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
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<TABLE>
<CAPTION>
POSITION WITH HARTFORD, OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- -----------------------------------------------------------
<S> <C> <C>
Garrett, J. Richard, 53 Vice President, 1994 Treasurer (1994-1997), Hartford; Vice President
Assistant Treasurer, 1997 (1993-Present); Assistant Treasurer (1997-Present);
Treasurer (1984-1997), Hartford Life and Accident
Insurance Company; Vice President, (1993-Present);
Assistant Treasurer (1997-Present); Treasurer
(1986-1997), Hartford Life Insurance Company; Vice
President (1997-Present), Hartford Life, Inc.
Gillette, Donald J., 52 Vice President, 1997 Assistant Vice President (1995-1997), Hartford; Assistant
Vice President (1995-1997), Hartford Life and Accident
Insurance Company; Assistant Vice President
(1995-Present), Hartford Life Insurance Company.
Ginnetti, John P., 52 Executive Vice President and Senior Vice President-Individual Life and Annuity Division
Director, Asset Management (1988-1994), Hartford; Director (1988-Present); Director
Services, 1994 (1988-Present); Executive Vice President & Director,
Director, 1988 Asset Management Services (1994-Present); Senior Vice
President-Individual Life and Annuity Division
(1988-1994), Hartford Life and Accident Insurance
Company; Executive Vice President, Asset Management,
Hartford Life, Inc. (1997-Present).
Godfrey, III, William A., 41 Senior Vice President, 1997 Senior Vice President (1997- Present), Hartford; Senior
Vice President (1997-Present), Hartford Life and Accident
Insurance Company; Vice President Information Technology
(1997-Present), Hartford Life, Inc.
Godkin, Lynda, 44 Senior Vice President, 1997 Assistant General Counsel and Secretary (1994-1995),
General Counsel, 1996 Hartford; Director (1997-Present); Senior Vice President
Corporate Secretary, 1996 Director, (1997-Present); General Counsel (1996-Present); Corporate
1997* Secretary (1995-Present); Associate General Counsel
(1995-1996); Assistant General Counsel and Secretary
(1994-1995); Counsel (1990-1994), Hartford Life and
Accident Insurance Company; Senior Vice President
(1997-Present); General Counsel (1996-Present); Corporate
Secretary (1995-Present); Director (1997-Present);
Associate General Counsel (1995-1996); Assistant General
Counsel and Secretary (1994-1995); Counsel (1990-1994),
Hartford Life Insurance Company; Vice President and
General Counsel (1997-Present), Hartford Life, Inc.
Grady, Lois W., 53 Senior Vice President, 1998 Vice President (1994-1998), Hartford; Senior Vice President
Vice President, 1994 (1998-Present); Vice President (1993-1997); Assistant
Vice President (1987-1993), Hartford Life and Accident
Insurance Company; Senior Vice President (1998-Present);
Vice President (1994-1997); Assistant Vice President
(1987-1994), Hartford Life Insurance Company.
Graham, Christopher, 47 Vice President, 1997
Hunt, Mark E., 37 Vice President, 1998 Assistant Vice President (1997-1998), Hartford; Vice
President (1998-Present), Hartford Life and Accident
Insurance Company.
</TABLE>
<PAGE>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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<TABLE>
<CAPTION>
POSITION WITH HARTFORD, OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- -----------------------------------------------------------
<S> <C> <C>
Joyce, Stephen T., 39 Vice President, 1997 Assistant Vice President (1995-1997), Hartford; Assistant
Vice President (1994-1997), Hartford Life and Accident
Insurance Company; Vice President (1997-Present);
Assistant Vice President (1994-1997), Hartford Life
Insurance Company.
Keeler, Michael D., 37 Vice President, 1998 Vice President (1998-Present); Hartford Life and Accident
Insurance Company.
Kerzner, Robert A., 46 Senior Vice President, 1998 Senior Vice President (1998-Present); Vice President
Vice President, 1997 (1994-1998), Hartford; Senior Vice President
(1998-Present); Vice President (1994-1997); Regional Vice
President (1991-1994), Hartford Life Insurance Company.
Levenson, David N., 31 Vice President, 1998 Assistant Vice President (1997-1998), Hartford.
Malchodi, Jr., William B., 50 Vice President, 1994 Vice President (1994-Present); Director of Taxes
(1992-1998), Hartford Life and Accident Insurance
Company; Vice President (1994-Present); Director of Taxes
(1991-1998), Hartford Life Insurance Company.
Marra, Thomas M., 39 Executive Vice President, 1996 Senior Vice President (1993-1996); Director of Individual
Director, Individual Life and Annuities (1991-1993), Hartford; Director (1994-Present);
Annuity Division, 1993 Executive Vice President (1995-Present); Director,
Director, 1994* Individual Life and Annuity Division (1994-Present);
Senior Vice President (1994-1995); Vice President
(1989-1994); Actuary (1987-1997), Hartford Life and
Accident Insurance Company; Director (1994-Present);
Executive Vice President (1995-Present); Director,
Individual Life and Annuity Division (1994-Present);
Senior Vice President (1994-1995); Vice President
(1989-1994); Actuary (1987-1995), Hartford Life Insurance
Company; Executive Vice President, Individual Life and
Annuities (1997-Present), Hartford Life, Inc.
Matthieson, Steven L., 53 Vice President, 1984 Director of New Business (1984-1997), Hartford.
O'Halloran, C. Michael, 51 Vice President, 1997 Vice President (1997-Present), Hartford Life and Accident
Insurance Company; Vice President (1997-Present),
Hartford Life Insurance Company; Corporate Secretary
(1997-Present), Hartford Life, Inc.; Senior Associate
General Counsel (1988-Present), Director of Corporate Law
(1994-Present), The Hartford Financial Services Group.
Raymond, Craig R., 37 Senior Vice President, 1997 Vice President (1993-1997); Assistant Vice President
Chief Actuary, 1994 (1992-1993); Actuary (1989-1994), Hartford; Senior Vice
President (1997-Present); Chief Actuary (1995-Present);
Vice President (1993-1997); Actuary (1990-1995), Hartford
Life and Accident Insurance Company; Senior Vice
President (1997-Present); Chief Actuary (1994-Present);
Vice President (1993-1997); Assistant Vice President
(1992-1993); Actuary (1989-1994), Hartford Life Insurance
Company; Vice President and Chief Actuary (1997-Present),
Hartford Life, Inc.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD, OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- -----------------------------------------------------------
<S> <C> <C>
Schrandt, David T., 50 Vice President, 1987 Treasurer (1987-1997); Controller (1987-1997), Hartford.
Smith, Lowndes A., 58 President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive Officer, 1997 (1981-Present); President (1989-Present); Chief Executive
Director, 1985* Officer (1997-Present); Chief Operating Officer
(1989-1997), Hartford Life and Accident Insurance
Company; Director (1981-Present); President
(1989-Present), Chief Executive Officer (1997-Present);
Chief Operating Officer (1989-1997), Hartford Life
Insurance Company; Chief Executive Officer and President
and Director (1997-Present), Hartford Life, Inc.
Welnicki, Raymond P., 49 Senior Vice President & Vice President (1993-1994), Hartford; Director
Director, Employee (1994-Present); Senior Vice President (1995-Present);
Benefit Division, 1994 Director, Employee Benefit Division (1997-Present); Vice
Director, 1994* President (1993-1995), Hartford Life and Accident
Insurance Company; Senior Vice President, Employee
Benefits (1997-Present), Hartford Life, Inc.; Board of
Directors, Ethix Corp.
Welsh, Walter C., 51 Senior Vice President, 1997 Senior Vice President (1997-Present); Vice President
(1994-1997); Assistant Vice President (1992-1995),
Hartford Life and Accident Insurance Company; Senior Vice
President (1997-Present); Vice President (1995-1997);
Assistant Vice President (1992-1995), Hartford Life
Insurance Company; Vice President, Government Affairs
(1997-Present), Hartford Life, Inc.
Zlatkus, Lizabeth H., 39 Senior Vice President, 1997 Vice President (1994-1997); Assistant Vice President
Director, 1994* (1992-1994), Hartford; Director (1994-Present); Senior
Vice President (1997-Present); Vice President
(1994-1997); Assistant Vice President (1992-1994),
Hartford Life and Accident Insurance Company; Vice
President, Group Life and Disability (1997-Present),
Hartford Life, Inc.
Znamierowski, David M., 38 Senior Vice President, 1997 Director (1998-Present); Senior Vice President
Director, 1998* (1997-Present), Hartford Life and Accident Insurance
Company; Director (1998-Present); Senior Vice President
(1997-Present); Director, Risk Management Strategy
(1996-Present); Vice President (1997), Hartford Life
Insurance Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice President,
Investment Strategy & Policy, Aetna Life and Casualty
Company.
- ---------
* Denotes date of election to Board of Directors of Hartford.
** Affiliated Company of The Hartford Financial Services Group, Inc.
</TABLE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, Connecticut 06104-2999.
<PAGE>
32 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
DISTRIBUTION OF THE POLICIES
Hartford intends to sell the Policies in all jurisdictions where it is
licensed to do business. The Policies will be sold by life insurance sales
representatives who represent Hartford and who are registered representatives of
Hartford Equity Sales Company, Inc. ("HESCO"), 200 Hopmeadow Street, Simsbury,
Connecticut 06089, or certain other registered broker-dealers. HESCO is the
principal underwriter for the Policies. Any sales representative or employee of
Hartford selling the Policies will have been qualified to sell variable life
insurance policies under applicable federal and state laws. Each broker-dealer
selling the Policies is registered with the SEC under the Securities Exchange
Act of 1934 and all are members of the National Association of Securities
Dealers, Inc.
During the first Policy Year, the maximum sales commission payable to
Hartford agents, independent registered insurance brokers, and other registered
broker-dealers will be 45% of the premiums paid up to a target premium and 5% of
any excess. In Policy Years 2 through 10, sales commissions will not exceed 5.5%
of premiums paid. For Policy Years 11 and later, sales commissions will not
exceed 2% of the premiums paid. In addition, expense allowances may be paid. A
sales representative may be required to return all or a portion of the
commissions paid if a Policy sold by such sales representative terminates prior
to such Policy's second Policy Anniversary.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HESCO and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by Policy Owners. This compensation is usually paid from the sales charges
described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HESCO, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be difference for broker-dealers or financial
institutions, will be made by HESCO, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the Policy Owners to purchase,
hold or surrender variable insurance products.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
The assets of the Separate Account are held by Hartford and are kept
physically segregated and held separate and apart from the General Account.
Hartford maintains records of all purchases and redemptions of shares of the
Funds. Additional protection for the assets of the Separate Account is afforded
by Hartford's blanket fidelity bond in the aggregate amount of $50 million
issued by Aetna Casualty and Surety Company and covering all of the officers and
employees of Hartford.
FEDERAL TAX CONSIDERATIONS
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE POLICY OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE POLICY IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A POLICY DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Policies cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. This discussion of federal tax
considerations is based upon Hartford's understanding of existing federal income
tax laws as they are currently interpreted.
TAXATION OF HARTFORD AND
THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Code. Accordingly, the Separate
Account will not be taxed as a "regulated investment company" under Subchapter M
of the Code. Investment income and realized capital gains on the assets of the
Separate Account (the underlying Funds) are reinvested and are taken into
account in determining the value of the Accumulation Units as a result, such
investment income and realized capital gains are automatically applied to
increase reserves under the Policy. (See "Detailed Description of Policy
Benefits and Provisions -- Accumulation Unit Values," on page 10).
Hartford does not expect to incur any federal income tax on the earnings or
realized capital gains attributable to the Separate Account. Based upon this
expectation, no charge is currently being made to the Separate Account for
federal income taxes. If Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for such taxes against the Separate Account.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
INCOME TAXATION OF POLICY BENEFITS
For federal income tax purposes, the Policies should be treated as life
insurance policies under Section 7702 of the Code. The death benefit under a
life insurance Policy is generally excluded from the gross income of the
Beneficiary. Also, a life insurance Policy Owner is generally not taxed on
increments in the Policy value until the Policy is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a Policy that is treated as life insurance. Hartford intends to monitor premium
levels to assure compliance with the Section 7702 requirements.
Hartford also believes that any loan received under a Policy will be treated
as Indebtedness of the Policy Owner, and that no part of any loan under a Policy
will constitute income to the Policy Owner. A surrender or assignment of the
Policy may have tax consequences depending upon the circumstances. Policy Owners
should consult a qualified tax adviser concerning the effect of such changes.
During the first fifteen Policy Years, an "income first" rule generally
applies to distributions of cash required to be made under Code Section 7702
because of a reduction in benefits under the Policy.
The Maturity Date Extension Rider allows a Policy Owner to extend the
Maturity Date to the date of the death of the insured. If the Maturity Date of
the Policy is extended by rider, Hartford believes that the Policy will continue
to be treated as a life insurance contract for federal income tax purposes after
the scheduled Maturity Date. However, due to the lack of specific guidance on
this issue, the result is not certain. If the Policy is not treated as a life
insurance contract for federal income tax purposes after the scheduled Maturity
Date, among other things, the Death Proceeds may be taxable to the recipient.
The Policy Owner should consult a qualified tax adviser regarding the possible
adverse tax consequences resulting from an extension of the scheduled Maturity
Date.
MODIFIED ENDOWMENT CONTRACTS
Code Section 7702A applies an additional test, the "seven-pay" test, to life
insurance Policies. The seven-pay test provides that premiums cannot be paid at
a rate more rapidly than that allowed by the payment of seven annual premiums
using specified computational rules described in Section 7702A(c). A modified
endowment contract ("MEC") is a life insurance Policy that either: (i) satisfies
the Section 7702 definition of life insurance, but fails the seven-pay test of
Section 7702A or (ii) is exchanged for a MEC.
If the Policy satisfies the seven-pay test at issuance, distributions and
loans made thereafter will not be subject to the MEC rules, unless the Policy is
changed materially. The seven-pay test will be applied anew at any time the
Policy undergoes a material change, which includes an increase in the Face
Amount. In addition, if there is a reduction in benefits under the Policy within
the first seven years, the seven-pay test is applied as if the Policy had
initially been issued at the reduced benefit level. Any reduction in benefits
attributable to the nonpayment of premiums will not be taken into account for
purposes of the seven-pay test if the benefits are reinstated within 90 days
after the reduction.
A Policy that is classified as a MEC is eligible for certain aspects of the
beneficial tax treatment accorded to life insurance. That is, the death benefit
is excluded from income and increments in value are not subject to current
taxation. However, if the Policy is classified as a MEC then withdrawals from
the Policy will be considered first as withdrawals of income and then as a
recovery of premium payments. Thus, withdrawals will be includable in income to
the extent the contract value exceeds the investment in the contract. The amount
of any loan (including unpaid interest thereon) under the Policy will be treated
as a withdrawal from the contract for tax purposes. In addition, if the Policy
Owner assigns or pledges any portion of the value of a Policy (or agrees to
assign or pledge any portion), then such portion will be treated as a withdrawal
from the Policy for tax purposes. Taxable withdrawals are subject to an
additional 10% tax, with certain exceptions. The Policy Owner's investment in
the Policy is increased by the amount includable in income with respect to such
assignment, pledge, or loan, though it is not affected by any other aspect of
the assignment, pledge, or loan (including its release or repayment).
Generally, only distributions and loans made in the first year in which a
Policy becomes a MEC, and in subsequent years, are taxable. However,
distributions and loans made in the two years prior to a Policy's failing the
seven-pay test are deemed to be in anticipation of failure and are subject to
tax.
Before assigning, pledging, or requesting a loan under a contract that is a
MEC, a Policy Owner should consult a qualified tax adviser.
All MEC policies that are issued within any calendar year to the same Policy
owner by one company or its affiliates are treated as one MEC Policy for the
purpose of determining the taxable portion of any loan or distribution.
Hartford has instituted procedures to monitor whether a Policy may become
classified as a MEC after issue.
ESTATE AND GENERATION SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includable in
the Policy Owner's estate for purposes of federal estate tax if the Insured
owned the Policy. If the Policy Owner was not the Insured, the fair market value
of the Policy would be included in the Policy Owner's estate upon the Policy
Owner's death. The Policy would not be includable in the Insured's estate if the
Insured neither
<PAGE>
34 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
retained incidents of ownership at death nor had given up ownership within three
years before death.
The federal estate tax is integrated with the federal gift tax under a
unified rate schedule and unified credit which shelters up to $625,000 (for
1998) from the estate and gift tax. The Taxpayer Relief Act of 1997 gradually
raises the credit over the next eight years to $1,000,000. In addition, an
unlimited marital deduction may be available for federal estate and gift tax
purposes. The unlimited marital deduction permits the deferral of taxes until
the death of the surviving spouse.
If the Policy Owner (whether or not he or she is the Insured) transfers
ownership of the Policy to someone two or more generations younger, the transfer
may be subject to the generation skipping transfer tax, the taxable amount being
the value of the Policy. The generation-skipping transfer tax provisions
generally apply to transfers which would be subject to the gift and estate tax
rules. Individuals are generally allowed an aggregate generation skipping
transfer exemption of $1 million. Because these rules are complex, the Policy
Owner should consult with a qualified tax adviser for specific information if
ownership is passing to younger generations.
DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable life insurance contract
(other than a pension plan Policy) will not be treated as a life insurance
contract for any period during which the investments made by the separate
account or underlying fund are not adequately diversified in accordance with
regulations prescribed by the Treasury Department. If a Policy is not treated as
a life insurance contract, the Policy Owner will be subject to income tax on the
annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of Policy income on an ongoing basis. However, either the company or
the Policy Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford intends
to administer all contracts subject to the diversification requirements in a
manner that will maintain adequate diversification.
OWNERSHIP OF THE ASSETS IN
THE SEPARATE ACCOUNT
In order for a variable life insurance Policy to qualify for tax deferral,
assets in the segregated asset accounts supporting the variable Policy must be
considered to be owned by the insurance company and not by the variable Policy
Owner. The Internal Revenue Service ("IRS") has issued several rulings which
discuss investor control. The IRS has ruled that certain incidents of ownership
by the Policy Owner, such as the ability to select and control investments in a
separate account, will cause the Policy Owner to be treated as the owner of the
assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
Prospectus, no other such guidance has been issued. Further, Hartford does not
know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Policy Owner could be considered the owner of
the assets for tax purposes. Hartford reserves the right to modify the Policies,
as necessary, to prevent Policy Owners from being considered the owners of the
assets in the separate accounts.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
LIFE INSURANCE PURCHASED FOR USE IN
SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM")
on the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the Policy over the premiums to be
returned to the employer. Purchasers of life insurance Policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Policy Owner,
such amounts will be subject to federal income tax withholding and reporting,
pursuant to the Code.
NON-INDIVIDUAL OWNERSHIP OF POLICIES
In certain circumstances, the Code limits the application of specific tax
advantages to individual owners of life insurance Policies. Prospective Policy
Owners which are not individuals should consult a qualified tax adviser to
determine the potential impact on the purchaser.
OTHER
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Policy proceeds depend on the
circumstances of each Policy Owner or beneficiary. A qualified tax adviser
should be consulted to determine the impact of these taxes.
LIFE INSURANCE PURCHASES BY NONRESIDENT
ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to life insurance purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on taxable distributions from
life insurance Policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S. state, and foreign taxation with respect to a life insurance
Policy purchase.
LEGAL PROCEEDINGS
There are no pending material legal proceedings to which the Separate
Account is a party.
EXPERTS
The audited financial statements included in this Prospectus and elsewhere
in the registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. Reference is made to the report on the
statutory-basis financial statements of Hartford Life and Annuity Insurance
Company which states the statutory-basis financial statements are presented in
accordance with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners and the State of Connecticut
Insurance Department, and are not presented in accordance with generally
accepted accounting principles. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, CT 06103.
REGISTRATION STATEMENT
A registration statement with respect to the Separate Account and the
Policies has been filed with the SEC under the Securities Act of 1933 as
amended. This Prospectus does not contain all information set forth in such
registration statement, and in its amendments and exhibits, to all of which
reference is made for further information concerning the Separate Account,
Hartford, and the Policies.
LEGAL MATTERS
Legal matters in connection with the issue and sale of the flexible premium
variable life insurance polices described in this Prospectus and the
organization of Hartford, its authority to issue the Policies under Connecticut
law and the validity of the forms of the Policies under Connecticut law and
legal matters relating to the federal securities and income tax laws have been
passed on by Lynda Godkin, General Counsel of Hartford.
<PAGE>
36 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
APPENDIX A
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES
AND CASH SURRENDER VALUES
The following tables illustrate how the Death Benefits, Account Values and
Cash Surrender Values of a Policy may change with the investment experience of
the Separate Account. The illustrations show how the Death Benefit, Account
Value and Cash Surrender Value of a Policy issued to an Insured of a given age
would vary over time if the investment return on the assets held in each Fund
was a uniform, gross annual rate of 0%, 6% and 12%. The Death Benefit, Account
Value and Cash Surrender Value would be different from those shown if the gross
annual investment returns averaged 0%, 6% and 12% over a period of years, but
fluctuated above and below those averages for individual Policy Years. The
illustrations assume that no Policy loans or partial withdrawals have been made.
The illustrations are also based on the assumption that the Policy Owner has not
requested an increase or a decrease in the Face Amount and that no transfers
among the Funds have been made in any Policy Year.
The tables on pages 37 to 54 illustrate a Policy issued to a Male Insured,
Age 45 in the Preferred Premium Class with an Initial Face Amount of $250,000
and a Scheduled Premium that is paid at the beginning of each Policy Year. The
Death Benefits, Account Values and Cash Surrender Values would be lower if the
Insured was a smoker or in a special class since the cost of insurance charges
would increase.
The illustrations reflect the fact that the net return on the assets held in
the Sub-Accounts is lower than the gross after-tax return of the Funds. This is
because the illustrations assume an investment management fee and other
estimated Fund expenses totaling 0.70%. The 0.70% figure is based on an average
of the current management fees and expenses of the 22 available Funds, taking
into account any applicable expense caps or reimbursement arrangements. Actual
fees and expenses of the Funds associated with a Policy may be more or less than
0.70%, will vary from year to year, and will depend on how the Account Value is
allocated.
As the headings indicate, the illustrations reflect the deductions of
current contractual charges and guaranteed contractual charges for a single
gross interest rate. Those charges include the monthly mortality and expense
risk charge, the monthly administrative charge, and the monthly mortality
charge. All illustrations assume a charge of 2.00% for taxes attributable to
premiums and reflect the fact that no charges against the Separate Account are
currently made for federal, state or local taxes attributable to the Policies.
Each illustration also shows the amount to which premiums would accumulate
if an amount equal to such premiums was invested to earn interest, after taxes,
at a rate of 5%, compounded annually.
Upon request, Hartford will furnish a comparable illustration based on a
proposed Policy's specific circumstances.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 37
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FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PEROID: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 1,232 --*** 250,000 1,232 --*** 250,000
2 8,610 4,074 163*** 250,000 4,074 163*** 250,000
3 13,241 6,764 3,342 250,000 6,764 3,342 250,000
4 18,103 9,345 6,411 250,000 9,345 6,411 250,000
5 23,208 11,843 9,398 250,000 11,843 9,398 250,000
6 28,568 14,274 12,318 250,000 14,274 12,318 250,000
7 34,196 16,645 15,178 250,000 16,645 15,178 250,000
8 40,106 18,971 17,994 250,000 18,971 17,994 250,000
9 46,312 21,246 20,757 250,000 21,246 20,757 250,000
10 52,827 23,456 23,456 250,000 23,456 23,456 250,000
11 59,669 25,850 25,850 250,000 24,932 24,932 250,000
12 66,852 28,102 28,102 250,000 26,215 26,215 250,000
13 74,395 30,190 30,190 250,000 27,297 27,297 250,000
14 82,314 32,117 32,117 250,000 28,157 28,157 250,000
15 90,630 33,884 33,884 250,000 28,773 28,773 250,000
16 99,361 35,385 35,385 250,000 29,115 29,115 250,000
17 108,530 36,726 36,726 250,000 29,156 29,156 250,000
18 118,156 37,906 37,906 250,000 28,850 28,850 250,000
19 128,264 38,913 38,913 250,000 28,147 28,147 250,000
20 138,877 39,747 39,740 250,000 26,999 26,999 250,000
25 200,454 39,821 39,821 250,000 12,667 12,667 250,000
30 279,043 30,239 30,239 250,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST 2 POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,032 IN POLICY YEAR 1 AND $4,753 IN POLICY YEAR 2.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 50% IN POLICY YEAR 1, 11% IN
POLICY YEARS 2 THROUGH 10 AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE
IN ANY POLICY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE
FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
38 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 1,325 --*** 250,000 1,325 --*** 250,000
2 8,610 4,435 523*** 250,000 4,435 523*** 250,000
3 13,241 7,570 4,148 250,000 7,570 4,148 250,000
4 18,103 10,778 7,845 250,000 10,778 7,845 250,000
5 23,208 14,087 11,643 250,000 14,087 11,643 250,000
6 28,568 17,519 15,563 250,000 17,519 15,563 250,000
7 34,196 21,085 19,618 250,000 21,085 19,618 250,000
8 40,106 24,808 23,830 250,000 24,808 23,830 250,000
9 46,312 28,688 28,200 250,000 28,688 28,200 250,000
10 52,827 32,722 32,722 250,000 32,722 32,722 250,000
11 59,669 37,186 37,186 250,000 36,279 36,279 250,000
12 66,852 41,760 41,760 250,000 39,852 39,852 250,000
13 74,395 46,430 46,430 250,000 43,436 43,436 250,000
14 82,314 51,207 51,207 250,000 47,017 47,017 250,000
15 90,630 56,101 56,101 250,000 50,580 50,580 250,000
16 99,361 61,026 61,026 250,000 54,103 54,103 250,000
17 108,530 66,085 66,085 250,000 57,565 57,565 250,000
18 118,156 71,290 71,290 250,000 60,934 60,934 250,000
19 128,264 76,646 76,646 250,000 64,173 64,173 250,000
20 138,877 82,162 82,162 250,000 67,247 67,247 250,000
25 200,454 111,781 111,781 250,000 78,904 78,904 250,000
30 279,043 145,617 145,617 250,000 77,492 77,492 250,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST 2 POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,125 IN POLICY YEAR 1 AND $5,113 IN POLICY YEAR 2.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 50% IN POLICY YEAR 1, 11% IN
POLICY YEARS 2 THROUGH 10 AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE
IN ANY POLICY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE
FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 1,418 --*** 250,000 1,418 --*** 250,000
2 8,610 4,807 895*** 250,000 4,807 895*** 250,000
3 13,241 8,434 5,011 250,000 8,434 5,011 250,000
4 18,103 12,372 9,438 250,000 12,372 9,438 250,000
5 23,208 16,681 14,237 250,000 16,681 14,237 250,000
6 28,568 21,420 19,464 250,000 21,420 19,464 250,000
7 34,196 26,642 25,176 250,000 26,642 25,176 250,000
8 40,106 32,417 31,440 250,000 32,417 31,440 250,000
9 46,312 38,799 38,310 250,000 38,799 38,310 250,000
10 52,827 45,843 45,843 250,000 45,843 45,843 250,000
11 59,669 53,915 53,915 250,000 53,042 53,042 250,000
12 66,852 62,773 62,773 250,000 60,901 60,901 250,000
13 74,395 72,491 72,491 250,000 69,502 69,502 250,000
14 82,314 83,181 83,181 250,000 78,929 78,929 250,000
15 90,630 94,965 94,965 250,000 89,281 89,281 250,000
16 99,361 107,905 107,905 250,000 100,668 100,668 250,000
17 108,530 122,236 122,236 250,000 113,227 113,227 250,000
18 118,156 138,131 138,131 255,811 127,109 127,109 250,000
19 128,264 155,618 155,618 280,732 142,486 142,486 257,043
20 138,877 174,773 174,773 307,313 159,244 159,244 280,009
25 200,454 300,798 300,798 469,696 265,815 265,815 415,070
30 279,043 495,973 495,973 698,903 420,068 420,068 591,940
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST 2 POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,218 IN POLICY YEAR 1 AND $5,485 IN POLICY YEAR 2.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 50% IN POLICY YEAR 1, 11% IN
POLICY YEARS 2 THROUGH 10 AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE
IN ANY POLICY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE
FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
40 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- ---------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,466 --*** 251,466 1,466 --*** 251,466
2 9,686 4,727 327*** 254,727 4,727 327*** 254,727
3 14,896 7,820 3,970 257,820 7,820 3,970 257,820
4 20,365 10,789 7,489 260,789 10,789 7,489 260,789
5 26,109 13,660 10,910 263,660 13,660 10,910 263,660
6 32,139 16,450 14,250 266,450 16,450 14,250 266,450
7 38,471 19,164 17,514 269,164 19,164 17,514 269,164
8 45,120 21,820 20,720 271,820 21,820 20,720 271,820
9 52,101 24,409 23,859 274,409 24,409 23,859 274,409
10 59,431 26,916 26,916 276,916 26,916 26,916 276,916
11 67,127 29,621 29,621 279,621 28,603 28,603 278,603
12 75,208 32,154 32,154 282,154 30,059 30,059 280,059
13 83,694 34,487 34,487 284,487 31,276 31,276 281,276
14 92,604 36,623 36,623 286,623 32,229 32,229 282,229
15 101,959 38,562 38,562 288,562 32,897 32,897 282,897
16 111,782 40,177 40,177 290,177 33,245 33,245 283,245
17 122,096 41,593 41,593 291,593 33,246 33,246 283,246
18 132,926 42,806 42,806 292,806 32,854 32,854 282,854
19 144,297 43,803 43,803 293,803 32,020 32,020 282,020
20 156,237 44,576 44,576 294,576 30,699 30,699 280,699
25 225,511 43,527 43,527 293,527 15,404 15,404 265,404
30 313,924 31,575 31,575 281,575 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST 2 POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,366 IN POLICY YEAR 1 AND $4,772 IN POLICY YEAR 2.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 50% IN POLICY YEAR 1, 11% IN
POLICY YEARS 2 THROUGH 10 AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE
IN ANY POLICY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE
FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,574 --*** 251,574 1,574 --*** 251,574
2 9,686 5,141 741*** 255,141 5,141 741*** 255,141
3 14,896 8,746 4,896 258,746 8,746 4,896 258,746
4 20,365 12,432 9,132 262,432 12,432 9,132 262,432
5 26,109 16,230 13,480 266,230 16,230 13,480 266,230
6 32,139 20,158 17,958 270,158 20,158 17,958 270,158
7 38,471 24,231 22,581 274,231 24,231 22,581 274,231
8 45,120 28,468 27,368 278,468 28,468 27,368 278,468
9 52,101 32,870 32,320 282,870 32,870 32,320 282,870
10 59,431 37,428 37,428 287,428 37,428 37,428 287,428
11 67,127 42,446 42,446 292,446 41,395 41,395 291,395
12 75,208 47,558 47,558 297,558 45,332 45,332 295,332
13 83,694 52,735 52,735 302,735 49,225 49,225 299,225
14 92,604 57,982 57,982 307,982 53,045 53,045 303,045
15 101,959 63,299 63,299 313,299 56,760 56,760 306,760
16 111,782 68,557 68,557 318,557 60,328 60,328 310,328
17 122,096 73,875 73,875 323,875 63,709 63,709 313,709
18 132,926 79,251 79,251 329,251 66,842 66,842 316,842
19 144,297 84,672 84,672 334,672 69,660 69,660 319,660
20 156,237 90,127 90,127 340,127 72,095 72,095 322,095
25 225,511 116,169 116,169 366,169 76,129 76,129 326,129
30 313,924 136,250 136,250 386,250 55,925 55,925 305,925
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST 2 POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,474 IN POLICY YEAR 1 AND $5,186 IN POLICY YEAR 2.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 50% IN POLICY YEAR 1, 11% IN
POLICY YEARS 2 THROUGH 10 AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE
IN ANY POLICY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE
FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
42 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,681 --*** 251,681 1,681 --*** 251,681
2 9,686 5,569 1,169*** 255,569 5,569 1,169*** 255,569
3 14,896 9,736 5,886 259,736 9,736 5,886 259,736
4 20,365 14,258 10,958 264,258 14,258 10,958 264,258
5 26,109 19,198 16,448 269,198 19,198 16,448 269,198
6 32,139 24,615 22,415 274,615 24,615 22,415 274,615
7 38,471 30,567 28,917 280,567 30,567 28,917 280,567
8 45,120 37,127 36,027 287,127 37,127 36,027 287,127
9 52,101 44,349 43,799 294,349 44,349 43,799 294,349
10 59,431 52,288 52,288 302,288 52,288 52,288 302,288
11 67,127 61,337 61,337 311,337 60,253 60,253 310,253
12 75,208 71,202 71,202 321,202 68,843 68,843 318,843
13 83,694 81,939 81,939 331,939 78,112 78,112 328,112
14 92,604 93,639 93,639 343,639 88,103 88,103 338,103
15 101,959 106,404 106,404 356,404 98,865 98,865 348,865
16 111,782 120,208 120,208 370,208 110,442 110,442 360,442
17 122,096 135,290 135,290 385,290 122,884 122,884 372,884
18 132,926 151,779 151,779 401,779 136,232 136,232 386,232
19 144,297 169,809 169,809 419,809 150,523 150,523 400,523
20 156,237 189,531 189,531 439,531 165,803 165,803 415,803
25 225,511 318,535 318,535 568,535 259,241 259,241 509,241
30 313,924 517,815 517,815 767,815 385,156 385,156 635,156
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST 2 POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,581 IN POLICY YEAR 1 AND $5,614 IN POLICY YEAR 2.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 50% IN POLICY YEAR 1, 11% IN
POLICY YEARS 2 THROUGH 10 AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE
IN ANY POLICY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE
FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,463 --*** 254,500 1,463 --*** 254,500
2 9,686 4,715 315*** 259,000 4,715 315*** 259,000
3 14,896 7,796 3,946 263,500 7,796 3,946 263,500
4 20,365 10,747 7,747 268,000 10,747 7,747 268,000
5 26,109 13,593 10,843 272,500 13,593 10,843 272,500
6 32,139 16,352 14,152 277,000 16,352 14,152 277,000
7 38,471 19,028 17,378 281,500 19,028 17,378 281,500
8 45,120 21,638 20,538 286,000 21,638 20,538 286,000
9 52,101 24,174 23,624 290,500 24,174 23,624 290,500
10 59,431 26,618 26,618 295,000 26,618 26,618 295,000
11 67,127 29,244 29,244 299,500 28,146 28,146 299,500
12 75,208 31,679 31,679 304,000 29,401 29,401 304,000
13 83,694 33,890 33,890 308,500 30,366 30,366 308,500
14 92,604 35,874 35,874 313,000 31,005 31,005 313,000
15 101,959 37,628 37,628 317,500 31,281 31,281 317,500
16 111,782 39,003 39,003 322,000 31,142 31,142 322,000
17 122,096 40,131 40,131 326,500 30,539 30,539 326,500
18 132,926 41,001 41,001 331,000 29,396 29,396 331,000
19 144,297 41,591 41,591 335,500 27,627 27,627 335,500
20 156,237 41,881 41,881 340,000 25,142 25,142 340,000
25 225,511 36,450 36,450 362,500 -- -- --
30 313,924 13,394 13,394 385,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST 2 POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,363 IN POLICY YEAR 1 AND $5,599 IN POLICY YEAR 2.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 50% IN POLICY YEAR 1, 11% IN
POLICY YEARS 2 THROUGH 10 AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE
IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM
THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
44 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,570 --*** 254,500 1,570 --*** 254,500
2 9,686 5,130 730*** 259,000 5,130 730*** 259,000
3 14,896 8,722 4,872 263,500 8,722 4,872 263,500
4 20,365 12,392 9,092 268,000 12,392 9,092 268,000
5 26,109 16,168 13,418 272,500 16,168 13,418 272,500
6 32,139 20,071 17,871 277,000 20,071 17,871 277,000
7 38,471 24,114 22,464 281,500 24,114 22,464 281,500
8 45,120 28,318 27,218 286,000 28,318 27,218 286,000
9 52,101 32,683 32,133 290,500 32,683 32,133 290,500
10 59,431 37,200 37,200 295,000 37,200 37,200 295,000
11 67,127 42,174 42,174 299,500 41,088 41,088 299,500
12 75,208 47,237 47,237 304,000 44,928 44,928 304,000
13 83,694 52,362 52,362 308,500 48,705 48,705 308,500
14 92,604 57,554 57,554 313,000 52,385 52,385 313,000
15 101,959 62,814 62,814 317,500 55,931 55,931 317,500
16 111,782 68,012 68,012 322,000 59,295 59,295 322,000
17 122,096 73,270 73,270 326,500 62,425 62,425 326,500
18 132,926 78,589 78,589 331,000 65,249 65,249 331,000
19 144,297 83,956 83,956 335,500 67,681 67,681 335,500
20 156,237 89,364 89,364 340,000 69,631 69,631 340,000
25 225,511 115,313 115,313 362,500 68,317 68,317 362,500
30 313,924 135,477 135,477 385,000 27,928 27,928 385,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST 2 POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,470 IN POLICY YEAR 1 AND $6,014 IN POLICY YEAR 2.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 50% IN POLICY YEAR 1, 11% IN
POLICY YEARS 2 THROUGH 10 AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE
IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE FROM
THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 45
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 10 YEARS
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 1,678 --*** 254,500 1,678 --*** 254,500
2 9,686 5,558 1,158*** 259,000 5,558 1,158*** 259,000
3 14,896 9,714 5,864 263,500 9,714 5,864 263,500
4 20,365 14,221 10,921 268,000 14,221 10,921 268,000
5 26,109 19,144 16,394 272,500 19,144 16,394 272,500
6 32,139 24,545 22,345 277,000 24,545 22,345 277,000
7 38,471 30,481 28,831 281,500 30,481 28,831 281,500
8 45,120 37,030 35,930 286,000 37,030 35,930 286,000
9 52,101 44,249 43,699 290,500 44,249 43,699 290,500
10 59,431 52,198 52,198 295,000 52,198 52,198 295,000
11 67,127 61,278 61,278 299,500 60,228 60,228 299,500
12 75,208 71,209 71,209 304,000 68,935 68,935 304,000
13 83,694 82,063 82,063 308,500 78,392 78,392 308,500
14 92,604 93,951 93,951 313,000 88,672 88,672 313,000
15 101,959 107,000 107,000 317,500 99,857 99,857 317,500
16 111,782 121,241 121,241 322,000 112,039 112,039 322,000
17 122,096 136,936 136,936 326,500 125,332 125,332 326,500
18 132,926 154,265 154,265 331,000 139,852 139,852 331,000
19 144,297 173,430 173,430 335,500 155,745 155,745 335,500
20 156,237 194,664 194,664 348,109 173,190 173,190 340,000
25 225,511 335,380 335,380 531,980 288,881 288,881 460,073
30 313,924 553,319 553,319 791,523 457,524 457,524 656,912
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST 2 POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH VALUES SHOWN. THE REFUND PLUS THE
CASH VALUE WOULD BE $2,578 IN POLICY YEAR 1 AND $6,441 IN POLICY YEAR 2.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 50% IN POLICY YEAR 1, 11% IN
POLICY YEARS 2 THROUGH 10 AND 3% THEREAFTER. THE SURRENDER CHARGE EFFECTIVE
IN ANY POLICY YEAR CAN BE DETERMINED BY SUBTRACTING THE CASH SURRENDER VALUE
FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
46 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE: 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 3,151 2,751 250,000 3,151 2,751 250,000
2 8,610 6,310 5,955 250,000 5,882 5,526 250,000
3 13,241 9,282 8,971 250,000 8,494 8,183 250,000
4 18,103 12,112 11,846 250,000 10,986 10,719 250,000
5 23,208 14,831 14,609 250,000 13,352 13,130 250,000
6 28,568 17,457 17,280 250,000 15,583 15,405 250,000
7 34,196 20,000 19,867 250,000 17,671 17,538 250,000
8 40,106 22,475 22,386 250,000 19,605 19,516 250,000
9 46,312 24,875 24,831 250,000 21,371 21,327 250,000
10 52,827 27,190 27,190 250,000 22,957 22,957 250,000
11 59,669 29,346 29,346 250,000 24,350 24,350 250,000
12 66,852 31,337 31,337 250,000 25,539 25,539 250,000
13 74,395 33,140 33,140 250,000 26,518 26,518 250,000
14 82,314 34,761 34,761 250,000 27,268 27,268 250,000
15 90,630 36,200 36,200 250,000 27,768 27,768 250,000
16 99,361 37,345 37,345 250,000 27,990 27,990 250,000
17 108,530 38,313 38,313 250,000 27,908 27,908 250,000
18 118,156 39,100 39,100 250,000 27,479 27,479 250,000
19 128,264 39,698 39,698 250,000 26,656 26,656 250,000
20 138,877 40,098 40,098 250,000 25,392 25,392 250,000
25 200,454 40,788 40,788 250,000 11,227 11,227 250,000
30 279,043 31,885 31,885 250,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL POLICY YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY POLICY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND ACCOUNT VALUES AND CASH SURRENDER VALUES WILL,
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT
RETURNAPPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 47
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE: 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 3,361 2,961 250,000 3,361 2,961 250,000
2 8,610 6,928 6,572 250,000 6,486 6,130 250,000
3 13,241 10,507 10,196 250,000 9,669 9,358 250,000
4 18,103 14,144 13,877 250,000 12,909 12,643 250,000
5 23,208 17,869 17,647 250,000 16,203 15,980 250,000
6 28,568 21,706 21,528 250,000 19,539 19,362 250,000
7 34,196 25,664 25,531 250,000 22,913 22,780 250,000
8 40,106 29,766 29,677 250,000 26,312 26,224 250,000
9 46,312 34,008 33,964 250,000 29,726 29,681 250,000
10 52,827 38,387 38,387 250,000 33,140 33,140 250,000
11 59,669 42,835 42,835 250,000 36,543 36,543 250,000
12 66,852 47,351 47,351 250,000 39,926 39,926 250,000
13 74,395 51,916 51,916 250,000 43,282 43,282 250,000
14 82,314 56,539 56,539 250,000 46,594 46,594 250,000
15 90,630 61,226 61,226 250,000 49,844 49,844 250,000
16 99,361 65,881 65,881 250,000 53,008 53,008 250,000
17 108,530 70,614 70,614 250,000 56,062 56,062 250,000
18 118,156 75,428 75,428 250,000 58,971 58,971 250,000
19 128,264 80,327 80,327 250,000 61,692 61,692 250,000
20 138,877 85,315 85,315 250,000 64,188 64,188 250,000
25 200,454 116,776 116,776 250,000 73,949 73,949 250,000
30 279,043 153,444 153,444 250,000 69,025 69,025 250,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL POLICY YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY POLICY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND ACCOUNT VALUES AND CASH SURRENDER VALUES WILL,
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
48 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE: 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 3,571 3,171 250,000 3,571 3,171 250,000
2 8,610 7,571 7,215 250,000 7,116 6,760 250,000
3 13,241 11,834 11,523 250,000 10,945 10,634 250,000
4 18,103 16,434 16,167 250,000 15,085 14,818 250,000
5 23,208 21,434 21,212 250,000 19,560 19,338 250,000
6 28,568 26,894 26,716 250,000 24,395 24,217 250,000
7 34,196 32,870 32,736 250,000 29,619 29,486 250,000
8 40,106 39,427 39,339 250,000 35,262 35,173 250,000
9 46,312 46,621 46,577 250,000 41,358 41,313 250,000
10 52,827 54,505 54,505 250,000 47,944 47,944 250,000
11 59,669 63,082 63,082 250,000 55,066 55,066 250,000
12 66,852 72,426 72,426 250,000 62,779 62,799 250,000
13 74,395 82,603 82,603 250,000 71,152 71,152 250,000
14 82,314 93,717 93,717 250,000 80,251 80,251 250,000
15 90,630 105,877 105,877 250,000 90,156 90,156 250,000
16 99,361 119,136 119,136 250,000 100,957 100,957 250,000
17 108,530 133,714 133,714 254,356 112,762 112,762 250,000
18 118,156 149,615 149,615 277,077 125,694 125,694 250,000
19 128,264 166,878 166,878 301,046 139,896 139,896 252,371
20 138,877 185,619 185,619 326,385 155,302 155,302 273,077
25 200,454 318,737 318,737 497,708 256,840 256,840 401,056
30 279,043 524,886 524,886 739,645 401,491 401,491 565,763
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL POLICY YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY POLICY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND ACCOUNT VALUES AND CASH SURRENDER VALUES WILL,
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 49
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE: 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 3,625 3,175 253,625 3,625 3,175 253,625
2 9,686 7,241 6,8412 57,241 6,802 6,402 256,802
3 14,896 10,647 10,297 260,647 9,838 9,488 259,838
4 20,365 13,890 13,590 263,890 12,731 12,431 262,731
5 26,109 17,001 16,751 267,001 15,475 15,225 265,475
6 32,139 19,999 19,799 269,999 18,057 17,857 268,057
7 38,471 22,893 22,743 272,893 20,470 20,320 270,470
8 45,120 25,701 25,601 275,701 22,700 22,600 272,700
9 52,101 28,414 28,364 278,414 24,731 24,681 274,731
10 59,431 31,020 31,020 281,020 26,548 26,548 276,548
11 67,127 33,435 33,435 283,435 28,136 18,136 278,136
12 75,208 35,652 35,652 285,652 29,484 29,484 279,484
13 83,694 37,641 37,641 287,641 30,585 30,585 280,585
14 92,604 39,408 39,408 289,408 31,415 31,415 281,415
15 101,959 40,951 40,951 290,951 31,956 31,956 281,956
16 111,782 42,138 42,138 292,138 32,176 32,176 282,176
17 122,096 43,108 43,108 293,108 32,050 32,050 282,050
18 132,926 43,855 43,855 293,855 31,535 31,535 281,535
19 144,297 44,370 44,370 294,370 30,585 30,585 280,585
20 156,237 44,645 44,645 294,645 29,159 29,159 279,159
25 225,511 44,242 44,242 294,242 14,241 14,241 264,241
30 313,924 32,894 32,894 282,894 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL POLICY YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY POLICY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND ACCOUNT VALUES AND CASH SURRENDER VALUES WILL,
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
50 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE: 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- -------- --------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 3,864 3,414 253,864 3,864 3,414 253,864
2 9,686 7,943 7,543 257,943 7,491 7,091 257,491
3 14,896 12,041 11,691 262,041 11,180 10,830 261,180
4 20,365 16,201 15,901 266,201 14,928 14,628 264,928
5 26,109 20,454 20,204 270,454 18,727 18,477 268,727
6 32,139 24,820 24,620 274,820 22,565 22,365 272,565
7 38,471 29,310 29,160 279,310 26,431 26,281 276,431
8 45,120 33,946 33,846 283,946 30,307 30,207 280,307
9 52,101 38,722 38,672 288,722 34,175 34,125 284,175
10 59,431 43,629 43,629 293,629 38,014 38,014 288,014
11 67,127 48,584 48,584 298,584 41,804 41,804 291,804
12 75,208 53,575 53,575 303,575 45,525 45,525 295,525
13 83,694 58,571 58,571 308,571 49,161 49,161 299,161
14 92,604 63,571 63,571 313,571 52,683 52,683 302,683
15 101,959 68,570 68,570 318,570 56,057 56,057 306,057
16 111,782 73,426 73,426 323,426 59,242 59,242 309,242
17 122,096 78,270 78,270 328,270 62,197 62,197 312,197
18 132,926 83,090 83,090 333,090 64,860 64,860 314,860
19 144,297 87,872 87,872 337,872 67,166 67,166 317,166
20 156,237 92,601 92,601 342,601 69,048 69,048 319,048
25 225,511 120,053 120,053 370,053 71,824 71,824 321,824
30 313,924 141,905 141,905 391,905 50,165 50,165 300,165
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL POLICY YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY POLICY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND ACCOUNT VALUES AND CASH SURRENDER VALUES WILL,
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 51
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE: 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 4,103 3,653 254,103 4,103 3,653 254,103
2 9,686 8,675 8,275 258,675 8,208 7,808 258,208
3 14,896 13,551 13,201 263,551 12,636 12,286 262,636
4 20,365 18,805 18,505 268,805 17,409 17,109 267,409
5 26,109 24,501 24,251 274,501 22,553 22,303 272,553
6 32,139 30,702 30,502 280,702 28,088 27,888 278,088
7 38,471 37,464 37,314 287,464 34,040 33,890 284,040
8 45,120 44,857 44,757 294,857 40,430 40,330 290,430
9 52,101 52,932 52,882 302,932 47,282 47,232 297,282
10 59,431 61,741 61,741 311,741 54,618 54,618 304,618
11 67,127 71,264 71,264 321,264 62,468 62,468 312,468
12 75,208 81,558 81,558 331,558 70,862 70,862 320,862
13 83,694 92,663 92,663 342,663 79,841 79,841 329,841
14 92,604 104,657 104,657 354,657 89,433 89,433 339,433
15 101,959 117,623 117,623 367,623 99,670 99,670 349,670
16 111,782 131,508 131,508 381,508 110,576 110,576 360,576
17 122,096 146,542 146,542 396,542 122,182 122,182 372,182
18 132,926 162,826 162,826 412,826 134,504 134,504 384,504
19 144,297 180,469 180,469 430,469 147,552 147,552 397,552
20 156,237 199,588 199,588 449,588 161,345 161,345 411,345
25 225,511 336,127 336,127 586,127 248,835 248,835 498,835
30 313,924 547,896 547,896 797,896 362,941 362,941 612,941
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL POLICY YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY POLICY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND ACCOUNT VALUES AND CASH SURRENDER VALUES WILL,
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
52 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE: 45 MALE PREFERRED
$4,300 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,515 3,433 3,003 254,300 3,433 3,003 254,300
2 9,256 6,857 6,475 258,600 6,416 6,034 258,600
3 14,234 10,074 9,739 262,900 9,257 8,922 262,900
4 19,460 13,127 12,840 267,200 11,951 11,664 267,200
5 24,948 16,045 15,807 271,500 14,490 14,251 271,500
6 30,711 18,850 18,659 275,800 16,861 16,670 275,800
7 36,761 21,548 21,405 280,100 19,052 18,908 280,100
8 43,114 24,157 24,061 284,400 21,044 20,949 284,400
9 49,785 26,667 26,619 288,700 22,821 22,773 288,700
10 56,789 29,065 29,065 293,000 24,359 24,359 293,000
11 64,144 31,259 31,259 297,300 25,638 25,638 297,300
12 71,866 33,240 33,240 301,600 26,637 26,637 301,600
13 79,974 34,971 34,971 305,900 27,342 27,342 305,900
14 88,488 36,453 36,453 310,200 27,719 27,719 310,200
15 97,427 37,678 37,678 314,500 27,733 27,733 314,500
16 106,814 38,493 38,493 318,800 27,336 27,336 318,800
17 116,669 39,042 39,042 323,100 26,482 26,482 323,100
18 127,018 39,312 39,312 327,400 25,097 25,097 327,400
19 137,884 39,281 39,281 331,700 23,103 23,102 331,700
20 149,293 38,932 38,932 336,000 20,411 20,411 336,000
25 215,488 33,515 33,515 357,500 -- -- --
30 299,971 10,674 10,674 379,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL POLICY YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY POLICY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND ACCOUNT VALUES AND CASH SURRENDER VALUES WILL,
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 53
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE: 45 MALE PREFERRED
$4,300 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,515 3,660 3,230 254,300 3,660 3,230 254,300
2 9,256 7,526 7,144 258,600 7,071 6,689 258,600
3 14,234 11,401 11,066 262,900 10,533 10,198 262,900
4 19,460 15,328 15,041 267,200 14,040 13,753 267,200
5 24,948 19,336 19,097 271,500 17,585 17,346 271,500
6 30,711 23,447 23,256 275,800 21,153 20,962 275,800
7 36,761 27,673 27,529 280,100 24,732 24,589 280,100
8 43,114 32,032 31,937 284,400 28,304 28,208 284,400
9 49,785 36,522 36,475 288,700 31,847 31,779 288,700
10 56,789 41,133 41,133 293,000 35,338 35,338 293,000
11 64,144 45,780 45,780 297,300 38,753 38,753 297,300
12 71,866 50,453 50,453 301,600 42,070 42,070 301,600
13 79,974 55,119 55,119 305,900 45,268 45,268 305,900
14 88,488 59,778 59,778 310,200 48,310 48,310 310,200
15 97,427 64,426 64,426 314,500 51,159 51,159 314,500
16 106,814 68,920 68,920 318,800 53,760 53,760 318,800
17 116,669 73,388 73,388 323,100 56,061 56,061 323,100
18 127,018 77,821 77,821 327,400 57,984 57,984 327,400
19 137,884 82,202 82,202 331,700 59,439 59,439 331,700
20 149,293 86,516 86,516 336,000 60,333 60,333 336,000
25 215,488 111,491 111,491 357,500 54,169 54,169 357,500
30 299,971 130,484 130,484 379,000 6,043 6,043 379,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL POLICY YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY POLICY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND ACCOUNT VALUES AND CASH SURRENDER VALUES WILL,
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
54 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE: 45 MALE PREFERRED
$4,300 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,515 3,887 3,457 254,300 3,887 3,457 254,300
2 9,256 8,223 7,840 258,600 7,754 7,372 258,600
3 14,234 12,839 12,504 262,900 11,918 11,583 262,900
4 19,460 17,808 17,521 267,200 16,402 16,115 267,200
5 24,948 23,196 22,957 271,500 21,230 20,991 271,500
6 30,711 29,063 28,872 275,800 26,421 26,230 275,800
7 36,761 35,466 35,323 280,100 32,002 31,858 280,100
8 43,114 42,475 42,379 284,400 37,995 37,899 284,400
9 49,785 50,142 50,094 288,700 44,426 44,378 288,700
10 56,789 58,522 58,522 293,000 51,322 51,322 293,000
11 64,144 67,602 67,602 297,300 58,719 58,719 297,300
12 71,866 77,450 77,450 301,600 66,657 66,657 301,600
13 79,974 88,120 88,120 305,900 75,187 75,187 305,900
14 88,488 99,708 99,708 310,200 84,357 84,357 310,200
15 97,427 112,316 112,316 314,500 94,221 94,221 314,500
16 106,814 125,951 125,951 318,800 104,835 104,835 318,800
17 116,669 140,851 140,851 323,100 116,271 116,271 323,100
18 127,018 157,166 157,166 327,400 128,600 128,600 327,400
19 137,884 175,060 175,060 331,700 141,907 141,907 331,700
20 149,293 194,718 194,718 342,384 156,300 156,300 336,000
25 215,488 335,067 335,067 523,207 256,481 256,481 400,495
30 299,971 552,426 552,426 778,452 402,823 402,823 567,640
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK CHARGES.
THESE VALUES REFLECT FRONT-END SALES LOADS OF 0% IN ALL POLICY YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY POLICY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND ACCOUNT VALUES AND CASH SURRENDER VALUES WILL,
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
The following prospectuses contain information related to all of the funds
offered by the Hartford Mutual Funds, Putnam Variable Trust, and Fidelity's
Variable Insurance Products Fund and Variable Insurance Products Fund II. Not
all of the funds are available to Stag Variable Life Policy Owners. Please
review the Stag Variable Life product Prospectus for details regarding available
funds. See "Separate Account VL I -- Funds."
<PAGE>
55
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ITT Hartford Life and Annuity Insurance Company
Separate Account Variable Life One and to the
Owners of Units of Interest Therein:
We have audited the accompanying statement of assets and liabilities of the Bond
Fund Sub-Account, Stock Fund Sub-Account, Money Market Fund Sub-Account,
Advisers Fund Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage
Securities Fund Sub-Account, Index Fund Sub-Account, International Opportunities
Fund Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity VIP Equity
Income Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and
Fidelity VIP II Asset Manager Portfolio Sub-Account (constituting ITT Hartford
Life and Annuity Insurance Company Separate Account Variable Life One) (the
Accounts) as of December 31, 1997, the related statements of operations for the
year then ended and statements of changes in net assets for the year ended
December 31, 1997 and the period from inception, October 3, 1996, to December
31, 1996. These financial statements are the responsibility of the Accounts'
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Bond Fund Sub-Account,
Stock Fund Sub-Account, Money Market Fund Sub-Account, Advisers Fund
Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage Securities Fund
Sub-Account, Index Fund Sub-Account, International Opportunities Fund
Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity VIP Equity Income
Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and Fidelity
VIP II Asset Manager Portfolio Sub-Account (constituting ITT Hartford Life and
Annuity Insurance Company Separate Account Variable Life One) as of December 31,
1997, the results of its operations for the year then ended, and the changes in
its net assets for the year then ended and the period from inception, October 3,
1996, to December 31, 1996, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 16, 1998
<PAGE>
SEPARATE ACCOUNT VARIABLE LIFE ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 726,781
Cost $ 752,661
Market Value......... $ 762,941 -- -- --
Hartford Stock Fund,
Inc.
Shares 355,432
Cost $1,729,015
Market Value......... -- $1,820,995 -- --
HVA Money Market Fund,
Inc.
Shares 7,024,335
Cost $7,024,335
Market Value......... -- -- $7,024,335 --
Hartford Advisers Fund,
Inc.
Shares 455,334
Cost $1,128,250
Market Value......... -- -- -- $1,150,514
Hartford Capital
Appreciation Fund,
Inc.
Shares 621,102
Cost $2,649,504
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 80,974
Cost $ 89,083
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 617,728
Cost $1,677,079
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 596,106
Cost $ 808,867
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 654,867
Cost $1,213,451
Market Value......... -- -- -- --
Fidelity VIP Equity
Income Fund
Shares 26,642
Cost $ 598,135
Market Value......... -- -- -- --
Fidelity VIP Overseas
Fund
Shares 14,251
Cost $ 272,653
Market Value......... -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 7,420
Cost $ 126,004
Market Value......... -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 23,405 20,347 982,081 17,467
Receivable from fund
shares sold........... -- -- -- --
----------- ----------- ----------- -------------
Total Assets........... 786,346 1,841,342 8,006,416 1,167,981
----------- ----------- ----------- -------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- --
Payable for fund shares
purchased............. 23,436 20,281 981,999 17,448
----------- ----------- ----------- -------------
Total Liabilities...... 23,436 20,281 981,999 17,448
----------- ----------- ----------- -------------
Net Assets (variable
life contract
liabilities).......... $ 762,910 $1,821,061 $7,024,417 $1,150,533
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
Units Owned by
Participants.......... 555,490 774,582 5,671,164 590,898
Unit Values............ $1.373400 $2.351023 $1.238620 $ 1.947093
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND EQUITY-INCOME
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 726,781
Cost $ 752,661
Market Value......... -- -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 355,432
Cost $1,729,015
Market Value......... -- -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 7,024,335
Cost $7,024,335
Market Value......... -- -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 455,334
Cost $1,128,250
Market Value......... -- -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 621,102
Cost $2,649,504
Market Value......... $2,738,886 -- -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 80,974
Cost $ 89,083
Market Value......... -- $ 87,758 -- -- -- --
Hartford Index Fund,
Inc.
Shares 617,728
Cost $1,677,079
Market Value......... -- -- $1,777,642 -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 596,106
Cost $ 808,867
Market Value......... -- -- -- $ 771,633 -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 654,867
Cost $1,213,451
Market Value......... -- -- -- -- $1,278,515 --
Fidelity VIP Equity
Income Fund
Shares 26,642
Cost $ 598,135
Market Value......... -- -- -- -- -- $ 646,875
Fidelity VIP Overseas
Fund
Shares 14,251
Cost $ 272,653
Market Value......... -- -- -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 7,420
Cost $ 126,004
Market Value......... -- -- -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 45,039 -- -- 23,694 20,591 --
Receivable from fund
shares sold........... -- -- 46,923 -- -- 3
----------------- --------------- ----------- ---------- ------------ ----------
Total Assets........... 2,783,925 87,758 1,824,565 795,327 1,299,106 646,878
----------------- --------------- ----------- ---------- ------------ ----------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- 47,271 -- -- 37
Payable for fund shares
purchased............. 44,867 -- -- 23,696 20,654 --
----------------- --------------- ----------- ---------- ------------ ----------
Total Liabilities...... 44,867 -- 47,271 23,696 20,654 37
----------------- --------------- ----------- ---------- ------------ ----------
Net Assets (variable
life contract
liabilities).......... $2,739,058 $ 87,758 $1,777,294 $ 771,631 $1,278,452 $ 646,841
----------------- --------------- ----------- ---------- ------------ ----------
----------------- --------------- ----------- ---------- ------------ ----------
Units Owned by
Participants.......... 1,282,344 65,034 765,093 513,886 639,647 368,530
Unit Values............ $ 2.135978 $ 1.349414 $2.322979 $1.501562 $1.998682 $1.755189
<CAPTION>
FIDELITY VIP FIDELITY VIP II
OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... -- --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... -- --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... -- --
Fidelity VIP Equity
Income Fund
Shares
Cost
Market Value......... -- --
Fidelity VIP Overseas
Fund
Shares
Cost
Market Value......... $ 273,616 --
Fidelity VIP II Asset
Manager Fund
Shares
Cost
Market Value......... -- $ 133,636
Due from ITT Hartford
Life and Annuity
Insurance Company..... 45 --
Receivable from fund
shares sold........... -- --
------------- ----------
Total Assets........... 273,661 133,636
------------- ----------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... 61 3
Payable for fund shares
purchased............. -- --
------------- ----------
Total Liabilities...... 61 3
------------- ----------
Net Assets (variable
life contract
liabilities).......... $ 273,600 $ 133,633
------------- ----------
------------- ----------
Units Owned by
Participants.......... 201,754 87,786
Unit Values............ $1.356104 $1.522265
</TABLE>
<PAGE>
SEPARATE ACCOUNT VARIABLE LIFE ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $26,909 $ 11,815 $105,975 $16,534
----------- ----------- ----------- -------------
Net investment
income.............. 26,909 11,815 105,975 16,534
----------- ----------- ----------- -------------
CAPITAL GAINS INCOME..... -- 558 -- 584
----------- ----------- ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 148 (109) -- (232)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 10,267 91,919 -- 22,216
----------- ----------- ----------- -------------
Net gain (loss) on
investments......... 10,415 91,810 -- 21,984
----------- ----------- ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $37,324 $104,183 $105,975 $39,102
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 9,163 $ 3,444 $ 14,934 $ 6,510 $12,804
-------- ------- ----------- -------- ------------
Net investment
income.............. 9,163 3,444 14,934 6,510 12,804
-------- ------- ----------- -------- ------------
CAPITAL GAINS INCOME..... 10,410 -- 4,291 14,471 815
-------- ------- ----------- -------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 716 28 463 (828) 360
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 89,337 (1,336) 100,497 (37,302) 65,053
-------- ------- ----------- -------- ------------
Net gain (loss) on
investments......... 90,053 (1,308) 100,960 (38,130) 65,413
-------- ------- ----------- -------- ------------
Net increase
(decrease) in net
assets resulting
from operations..... $109,626 $ 2,136 $120,185 $(17,149) $79,032
-------- ------- ----------- -------- ------------
-------- ------- ----------- -------- ------------
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY-INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 374 $ 373 $ 66
------- ------ ------
Net investment
income.............. 374 373 66
------- ------ ------
CAPITAL GAINS INCOME..... 1,882 1,481 165
------- ------ ------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 1,671 (138) 28
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 48,686 919 7,582
------- ------ ------
Net gain (loss) on
investments......... 50,357 781 7,610
------- ------ ------
Net increase
(decrease) in net
assets resulting
from operations..... $52,613 $2,635 $7,841
------- ------ ------
------- ------ ------
</TABLE>
<PAGE>
SEPARATE ACCOUNT VARIABLE LIFE ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 26,909 $ 11,815 $ 105,975 $ 16,534
Capital gains income... -- 558 -- 584
Net realized gain
(loss) on security
transactions.......... 148 (109) -- (232)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 10,267 91,919 -- 22,216
----------- ----------- ------------ -------------
Net increase (decrease)
in net assets
resulting from
operations............ 37,324 104,183 105,975 39,102
----------- ----------- ------------ -------------
UNIT TRANSACTIONS:
Purchases.............. 58,303 110,273 26,348,230 17,300
Net transfers.......... 674,390 1,673,468 (17,219,898) 1,125,736
Surrenders............. (6,137) (12,105) (76,531) (8,960)
Net loan withdrawals... 11,825 (221) (2,085,251) (2,510)
Cost of insurance...... (13,939) (55,771) (460,124) (21,190)
----------- ----------- ------------ -------------
Net increase in net
assets resulting from
unit transactions..... 724,442 1,715,644 6,506,426 1,110,376
----------- ----------- ------------ -------------
Total increase in net
assets................ 761,766 1,819,827 6,612,401 1,149,478
NET ASSETS:
Beginning of period.... 1,144 1,234 412,016 1,055
----------- ----------- ------------ -------------
End of period.......... $762,910 $1,821,061 $ 7,024,417 $1,150,533
----------- ----------- ------------ -------------
----------- ----------- ------------ -------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION,
OCTOBER 3, 1996 TO DECEMBER 31, 1996
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------ -------------
OPERATIONS:
Net investment
income................ $ 17 $ 3 $ 137 $ 7
Net unrealized
appreciation of
investments during the
period................ 12 61 -- 48
----------- ----------- ------------ -------------
Net increase in net
assets resulting from
operations............ 29 64 137 55
----------- ----------- ------------ -------------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 436,756 1,000
Net transfers.......... 115 170 (18,268) --
Surrenders............. -- -- (2,162) --
Cost of insurance...... -- -- (4,447) --
----------- ----------- ------------ -------------
Net increase in net
assets resulting from
unit transactions..... 1,115 1,170 411,879 1,000
----------- ----------- ------------ -------------
Total increase in net
assets................ 1,144 1,234 412,016 1,055
NET ASSETS:
Beginning of period.... -- -- -- --
----------- ----------- ------------ -------------
End of period.......... $ 1,144 $ 1,234 $ 412,016 $ 1,055
----------- ----------- ------------ -------------
----------- ----------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 9,163 $ 3,444 $ 14,934 $ 6,510 $ 12,804
Capital gains income... 10,410 -- 4,291 14,471 815
Net realized gain
(loss) on security
transactions.......... 716 28 463 (828) 360
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 89,337 (1,336) 100,497 (37,302) 65,053
----------------- --------------- ----------- ---------- ------------
Net increase (decrease)
in net assets
resulting from
operations............ 109,626 2,136 120,185 (17,149) 79,032
----------------- --------------- ----------- ---------- ------------
UNIT TRANSACTIONS:
Purchases.............. 308,974 1,853 68,957 176,177 62,971
Net transfers.......... 2,397,785 76,873 1,641,927 650,101 1,157,823
Surrenders............. (23,361) (640) (13,070) (15,973) (7,195)
Net loan withdrawals... 6,968 7,850 (7,681) 88 3,918
Cost of insurance...... (63,644) (1,339) (34,163) (25,871) (22,528)
----------------- --------------- ----------- ---------- ------------
Net increase in net
assets resulting from
unit transactions..... 2,626,722 84,597 1,655,970 784,522 1,194,989
----------------- --------------- ----------- ---------- ------------
Total increase in net
assets................ 2,736,348 86,733 1,776,155 767,373 1,274,021
NET ASSETS:
Beginning of period.... 2,710 1,025 1,139 4,258 4,431
----------------- --------------- ----------- ---------- ------------
End of period.......... $2,739,058 $87,758 $1,777,294 $771,631 $1,278,452
----------------- --------------- ----------- ---------- ------------
----------------- --------------- ----------- ---------- ------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION,
OCTOBER 3, 1996 TO DECEMBER 31, 1996
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
OPERATIONS:
Net investment
income................ $ 3 $ 14 $ 5 $ 8 $ 11
Net unrealized
appreciation of
investments during the
period................ 46 11 65 68 12
----------------- --------------- ----------- ---------- ------------
Net increase in net
assets resulting from
operations............ 49 25 70 76 23
----------------- --------------- ----------- ---------- ------------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 1,000 1,000 1,000
Net transfers.......... 1,661 -- 69 3,182 3,436
Surrenders............. -- -- -- -- (11)
Cost of insurance...... -- -- -- -- (17)
----------------- --------------- ----------- ---------- ------------
Net increase in net
assets resulting from
unit transactions..... 2,661 1,000 1,069 4,182 4,408
----------------- --------------- ----------- ---------- ------------
Total increase in net
assets................ 2,710 1,025 1,139 4,258 4,431
NET ASSETS:
Beginning of period.... -- -- -- -- --
----------------- --------------- ----------- ---------- ------------
End of period.......... $ 2,710 $ 1,025 $ 1,139 $ 4,258 $ 4,431
----------------- --------------- ----------- ---------- ------------
----------------- --------------- ----------- ---------- ------------
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY-INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 374 $ 373 $ 66
Capital gains income... 1,882 1,481 165
Net realized gain
(loss) on security
transactions.......... 1,671 (138) 28
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 48,686 919 7,582
---------- ------------- ----------
Net increase (decrease)
in net assets
resulting from
operations............ 52,613 2,635 7,841
---------- ------------- ----------
UNIT TRANSACTIONS:
Purchases.............. 43,181 22,743 8,385
Net transfers.......... 579,483 257,320 121,381
Surrenders............. (11,517) (3,860) (1,502)
Net loan withdrawals... (3,459) (12) --
Cost of insurance...... (15,244) (6,270) (3,522)
---------- ------------- ----------
Net increase in net
assets resulting from
unit transactions..... 592,444 269,921 124,742
---------- ------------- ----------
Total increase in net
assets................ 645,057 272,556 132,583
NET ASSETS:
Beginning of period.... 1,784 1,044 1,050
---------- ------------- ----------
End of period.......... $646,841 $273,600 $133,633
---------- ------------- ----------
---------- ------------- ----------
STATEMENT OF CHANGES IN N
FOR THE PERIOD FROM INCEP
OCTOBER 3, 1996 TO DECEM
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY-INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
OPERATIONS:
Net investment
income................ $-- $ -- $--
Net unrealized
appreciation of
investments during the
period................ 54 44 50
---------- ------------- ----------
Net increase in net
assets resulting from
operations............ 54 44 50
---------- ------------- ----------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 1,000
Net transfers.......... 760 -- --
Surrenders............. (13) -- --
Cost of insurance...... (17) -- --
---------- ------------- ----------
Net increase in net
assets resulting from
unit transactions..... 1,730 1,000 1,000
---------- ------------- ----------
Total increase in net
assets................ 1,784 1,044 1,050
NET ASSETS:
Beginning of period.... -- -- --
---------- ------------- ----------
End of period.......... $ 1,784 $ 1,044 $ 1,050
---------- ------------- ----------
---------- ------------- ----------
</TABLE>
<PAGE>
62
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION:
Separate Account Variable Life One (the Account) is a separate investment
account within ITT Hartford Life and Annuity Insurance Company (the Company) and
is registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Account consists of twenty two sub-accounts. These financial statements include
twelve sub-accounts which invest solely in the Hartford and Fidelity Mutual
Funds (the Funds). The other ten sub-accounts, which invest in the Putnam VT
Funds, are presented in separate financial statements. Both the Company and the
Account are subject to supervision and regulation by the Department of Insurance
of the State of Connecticut and the SEC. The Account invests deposits by
variable life contractholders of the Company in the Funds as directed by the
contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
a) SECURITY TRANSACTIONS -- Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income
are accrued as of the ex-dividend date. Capital gains income represents
dividends from the Funds which are characterized as capital gains under tax
regulations.
b) SECURITY VALUATION -- The investment in shares of the funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1997.
c) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.
d) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT
AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative fees,
and state premium taxes. These charges are deducted through termination of units
of interest from applicable contract owners' accounts.
<PAGE>
63
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ITT Hartford Life and Annuity Insurance Company
Putnam Capital Manager Trust Separate Account Variable Life One and to
The Owners of Units of Interest therein:
We have audited the accompanying statement of assets and liabilities of
Diversified Income Fund Sub-Account, Global Asset Allocation Fund Sub-Account,
Global Growth Fund Sub-Account, Growth and Income Fund Sub-Account, High Yield
Fund Sub-Account, New Opportunities Fund Sub-Account, Money Market Fund
Sub-Account, U.S. Government and High Quality Bond Fund Sub-Account, Utilities
Growth and Income Fund Sub-Account and Voyager Fund Sub-Account (ITT Hartford
Life and Annuity Insurance Company Putnam Capital Manager Trust Separate Account
Variable Life One) (the Account) as of December 31, 1997, and the related
statements of operations and changes in net assets for the period from
inception, October 3, 1996, to December 31, 1996. These financial statements are
the responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Diversified Income Fund
Sub-Account, Global Asset Allocation Fund Sub-Account, Global Growth Fund
Sub-Account, Growth and Income Fund Sub-Account, High Yield Fund Sub-Account,
New Opportunities Fund Sub-Account, Money Market Fund Sub-Account, U.S.
Government and High Quality Bond Fund Sub-Account, Utilities Growth and Income
Fund Sub-Account and Voyager Fund Sub-Account (constituting ITT Hartford Life
and Annuity Insurance Company Putnam Capital Manager Trust Separate Account
Variable Life One) as of December 31, 1997, the results of its operations and
the changes in its net assets for the year ended December 31, 1997, and the
period from inception, October 3, 1996, to December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 16, 1998
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
GLOBAL
ASSET
DIVERSIFIED ALLOCATION GLOBAL GROWTH AND
INCOME FUND FUND GROWTH FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Diversified
Income Fund
Shares 3,767
Cost $ 40,753
Market Value......... $ 42,610 -- -- --
Putnam VT Global Asset
Allocation Fund
Shares 16,572
Cost $ 301,555
Market Value......... -- $ 310,895 -- --
Putnam VT Global Growth
Fund
Shares 89,160
Cost $1,609,306
Market Value......... -- -- $1,635,197 --
Putnam VT Growth and
Income Fund
Shares 49,384
Cost $1,339,139
Market Value......... -- -- -- $1,398,555
Putnam VT High Yield
Fund
Shares 20,901
Cost $ 264,318
Market Value......... -- -- -- --
Putnam VT Money Market
Fund
Shares 127,226
Cost $ 127,226
Market Value......... -- -- -- --
Putnam VT New
Opportunities Fund
Shares 53,976
Cost $1,017,484
Market Value......... -- -- -- --
Putnam VT U.S.
Government and High
Quality Fund
Shares 88,902
Cost $1,151,531
Market Value......... -- -- -- --
Putnam VT Utilities
Growth & Income Fund
Shares 15,145
Cost $ 215,652
Market Value......... -- -- -- --
Putnam VT Voyager Fund
Shares 36,930
Cost $1,291,283
Market Value......... -- -- -- --
Due From ITT Hartford
Life & Annuity
Insurance Company..... -- 15 48,400 --
Receivable from fund
shares sold........... -- -- -- 672
------------- ----------- ----------- -------------
Total Assets........... 42,610 310,910 1,683,597 1,399,227
------------- ----------- ----------- -------------
LIABILITIES:
Due to ITT Hartford
Life & Annuity
Insurance Company..... -- -- -- 760
Payable for fund shares
purchased............. -- -- 48,377 --
------------- ----------- ----------- -------------
Total Liabilities...... -- -- 48,377 760
------------- ----------- ----------- -------------
Net Assets (variable
life contract
liabilities).......... $ 42,610 $ 310,910 $1,635,220 $1,398,467
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Variable life contracts
Individual Sub-Accounts:
Units Owned by
Participants.......... 3,289 16,976 89,968 63,251
Unit Price............. $12.954542 $18.314650 $18.175599 $22.109731
Contract Liability..... $ 42,610 $ 310,910 $1,635,220 $1,398,467
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT
AND UTILITIES
HIGH MONEY NEW HIGH QUALITY GROWTH AND
YIELD FUND MARKET FUND OPPORTUNITIES FUND BOND FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Diversified
Income Fund
Shares 3,767
Cost $ 40,753
Market Value......... -- -- -- -- --
Putnam VT Global Asset
Allocation Fund
Shares 16,572
Cost $ 301,555
Market Value......... -- -- -- -- --
Putnam VT Global Growth
Fund
Shares 89,160
Cost $1,609,306
Market Value......... -- -- -- -- --
Putnam VT Growth and
Income Fund
Shares 49,384
Cost $1,339,139
Market Value......... -- -- -- -- --
Putnam VT High Yield
Fund
Shares 20,901
Cost $ 264,318
Market Value......... $ 284,667 -- -- -- --
Putnam VT Money Market
Fund
Shares 127,226
Cost $ 127,226
Market Value......... -- $ 127,226 -- -- --
Putnam VT New
Opportunities Fund
Shares 53,976
Cost $1,017,484
Market Value......... -- -- $1,145,919 -- --
Putnam VT U.S.
Government and High
Quality Fund
Shares 88,902
Cost $1,151,531
Market Value......... -- -- -- $1,193,060 --
Putnam VT Utilities
Growth & Income Fund
Shares 15,145
Cost $ 215,652
Market Value......... -- -- -- -- $ 259,593
Putnam VT Voyager Fund
Shares 36,930
Cost $1,291,283
Market Value......... -- -- -- -- --
Due From ITT Hartford
Life & Annuity
Insurance Company..... 6,365 -- 34 41,064 10
Receivable from fund
shares sold........... -- -- 2 -- --
----------------- --------------- ------------------ ------------------ ------------
Total Assets........... 291,032 127,226 1,145,955 1,234,124 259,603
----------------- --------------- ------------------ ------------------ ------------
LIABILITIES:
Due to ITT Hartford
Life & Annuity
Insurance Company..... -- 1 -- -- --
Payable for fund shares
purchased............. 6,363 -- -- 41,060 --
----------------- --------------- ------------------ ------------------ ------------
Total Liabilities...... 6,363 1 -- 41,060 --
----------------- --------------- ------------------ ------------------ ------------
Net Assets (variable
life contract
liabilities).......... $ 284,669 $ 127,225 $1,145,955 $1,193,064 $ 259,603
----------------- --------------- ------------------ ------------------ ------------
----------------- --------------- ------------------ ------------------ ------------
Variable life contracts
Individual Sub-Accounts:
Units Owned by
Participants.......... 17,205 103,320 62,672 87,822 13,788
Unit Price............. $16.545266 $ 1.231375 $18.284859 $13.584990 $18.827631
Contract Liability..... $ 284,669 $ 127,225 $1,145,955 $1,193,064 $ 259,603
<CAPTION>
VOYAGER FUND
SUB-ACCOUNT
------------
<S> <C>
ASSETS:
Investments:
Putnam VT Diversified
Income Fund
Shares
Cost
Market Value......... --
Putnam VT Global Asset
Allocation Fund
Shares
Cost
Market Value......... --
Putnam VT Global Growth
Fund
Shares
Cost
Market Value......... --
Putnam VT Growth and
Income Fund
Shares
Cost
Market Value......... --
Putnam VT High Yield
Fund
Shares
Cost
Market Value......... --
Putnam VT Money Market
Fund
Shares
Cost
Market Value......... --
Putnam VT New
Opportunities Fund
Shares
Cost
Market Value......... --
Putnam VT U.S.
Government and High
Quality Fund
Shares
Cost
Market Value......... --
Putnam VT Utilities
Growth & Income Fund
Shares
Cost
Market Value......... --
Putnam VT Voyager Fund
Shares
Cost
Market Value......... $1,443,206
Due From ITT Hartford
Life & Annuity
Insurance Company..... --
Receivable from fund
shares sold........... 500
------------
Total Assets........... 1,443,706
------------
LIABILITIES:
Due to ITT Hartford
Life & Annuity
Insurance Company..... 287
Payable for fund shares
purchased............. --
------------
Total Liabilities...... 287
------------
Net Assets (variable
life contract
liabilities).......... $1,443,419
------------
------------
Variable life contracts
Individual Sub-Accounts:
Units Owned by
Participants.......... 62,251
Unit Price............. $23.187025
Contract Liability..... $1,443,419
</TABLE>
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GLOBAL
ASSET
DIVERSIFIED ALLOCATION GLOBAL GROWTH AND
INCOME FUND FUND GROWTH FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 99 $ 780 $ 7,355 $ 2,061
------ ----------- ----------- -------------
CAPITAL GAINS INCOME..... 16 1,333 7,911 5,017
------ ----------- ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 273 46 727 47
Net unrealized
appreciation
(depreciation) of
investments
during the period.... 1,827 9,293 25,838 59,382
------ ----------- ----------- -------------
Net gain (loss) on
investments......... 2,100 9,339 26,565 59,429
------ ----------- ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 2,215 $ 11,452 $ 41,831 $ 66,507
------ ----------- ----------- -------------
------ ----------- ----------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT
AND UTILITIES
HIGH MONEY NEW HIGH QUALITY GROWTH AND
YIELD FUND MARKET FUND OPPORTUNITIES FUND BOND FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 1,448 $ 1,772 $-- $ 16,959 $ 165
------- ------ -------- ------- ------------
CAPITAL GAINS INCOME..... 168 -- -- -- 225
------- ------ -------- ------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 208 -- (11,593) 549 65
Net unrealized
appreciation
(depreciation) of
investments
during the period.... 20,324 -- 128,498 41,518 43,867
------- ------ -------- ------- ------------
Net gain (loss) on
investments......... 20,532 -- 116,905 42,067 43,932
------- ------ -------- ------- ------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 22,148 $ 1,772 $116,905 $ 59,026 $ 44,322
------- ------ -------- ------- ------------
------- ------ -------- ------- ------------
<CAPTION>
VOYAGER FUND
SUB-ACCOUNT
------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $ 405
------------
CAPITAL GAINS INCOME..... 8,720
------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 8,423
Net unrealized
appreciation
(depreciation) of
investments
during the period.... 151,950
------------
Net gain (loss) on
investments......... 160,373
------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 169,498
------------
------------
</TABLE>
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GLOBAL
ASSET
DIVERSIFIED ALLOCATION GLOBAL GROWTH AND
INCOME FUND FUND GROWTH FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 99 $ 780 $ 7,355 $ 2,061
Capital gains income... 16 1,333 7,911 5,017
Net realized gain
(loss) on security
transactions.......... 273 46 727 47
Net unrealized
appreciation
(depreciation) of
investments
during the period.... 1,827 9,293 25,838 59,382
------------- ----------- ----------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 2,215 11,452 41,831 66,507
------------- ----------- ----------- -------------
UNIT TRANSACTIONS:
Purchases.............. 1,122 21,636 197,403 58,290
Net transfers.......... 39,712 284,558 1,455,386 1,311,232
Surrenders............. (348) (2,233) (24,833) (8,041)
Net loan activity...... -- (16) 7,540 (2,944)
Cost of insurance...... (1,121) (5,581) (43,722) (31,097)
------------- ----------- ----------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 39,365 298,364 1,591,774 1,327,440
------------- ----------- ----------- -------------
Total increase
(decrease) in net
assets................ 41,580 309,816 1,633,605 1,393,947
NET ASSETS:
Beginning of period.... 1,030 1,094 1,615 4,520
------------- ----------- ----------- -------------
End of period.......... $ 42,610 $ 310,910 $1,635,220 $1,398,467
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION OCTOBER 3, 1996 TO DECEMBER 31, 1996
GLOBAL
ASSET
DIVERSIFIED ALLOCATION GLOBAL GROWTH AND
INCOME FUND FUND GROWTH FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ----------- -------------
OPERATIONS:
Net investment income
(loss)................ $ -- $ -- $ -- $ --
Capital gains income... -- -- -- --
Net realized gain(loss)
on security
transactions.......... -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 30 48 53 34
------------- ----------- ----------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 30 48 53 34
------------- ----------- ----------- -------------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 1,000 1,000
Net transfers.......... -- 46 562 3,515
Surrenders............. -- -- -- (12)
Net loan activity...... -- -- -- --
Cost of insurance...... -- -- -- (17)
------------- ----------- ----------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,000 1,046 1,562 4,486
------------- ----------- ----------- -------------
Total increase
(decrease) in net
assets................ 1,030 1,094 1,615 4,520
NET ASSETS:
Beginning of period.... -- -- -- --
------------- ----------- ----------- -------------
End of Period.......... $ 1,030 $ 1,094 $ 1,615 $ 4,520
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT
AND UTILITIES
HIGH MONEY NEW HIGH QUALITY GROWTH AND
YIELD FUND MARKET FUND OPPORTUNITIES FUND BOND FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 1,448 $ 1,772 $ -- $ 16,959 $ 165
Capital gains income... 168 -- -- -- 225
Net realized gain
(loss) on security
transactions.......... 208 -- (11,593) 549 65
Net unrealized
appreciation
(depreciation) of
investments
during the period.... 20,324 -- 128,498 41,518 43,867
-------- --------------- ------------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 22,148 1,772 116,905 59,026 44,322
-------- --------------- ------------------ ------------------ ------------
UNIT TRANSACTIONS:
Purchases.............. 9,010 -- 90,292 188,414 18,312
Net transfers.......... 261,651 127,202 989,240 981,563 206,398
Surrenders............. (2,778) (810) (15,731) (15,612) (1,613)
Net loan activity...... (27) -- (4,120) 7,877 (43)
Cost of insurance...... (6,360) (1,951) (31,626) (32,535) (8,846)
-------- --------------- ------------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 261,496 124,441 1,028,055 1,129,707 214,208
-------- --------------- ------------------ ------------------ ------------
Total increase
(decrease) in net
assets................ 283,644 126,213 1,144,960 1,188,733 258,530
NET ASSETS:
Beginning of period.... 1,025 1,012 995 4,331 1,073
-------- --------------- ------------------ ------------------ ------------
End of period.......... $ 284,669 $ 127,225 $1,145,955 $1,193,064 $ 259,603
-------- --------------- ------------------ ------------------ ------------
-------- --------------- ------------------ ------------------ ------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION OCTOBER 3, 1996 TO DECEMBER 31, 1996
U.S. GOVERNMENT
AND UTILITIES
HIGH MONEY NEW HIGH QUALITY GROWTH AND
YIELD FUND MARKET FUND OPPORTUNITIES FUND BOND FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------------ ------------------ ------------
OPERATIONS:
Net investment income
(loss)................ $ -- $ 12 $ -- $ -- $ --
Capital gains income... -- -- -- -- --
Net realized gain(loss)
on security
transactions.......... -- -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 25 -- (62) 11 73
-------- --------------- ------------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 25 12 (62) 11 73
-------- --------------- ------------------ ------------------ ------------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 1,000 1,000 1,000
Net transfers.......... -- -- 57 3,320 --
Surrenders............. -- -- -- -- --
Net loan activity...... -- -- -- -- --
Cost of insurance...... -- -- -- -- --
-------- --------------- ------------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,000 1,000 1,057 4,320 1,000
-------- --------------- ------------------ ------------------ ------------
Total increase
(decrease) in net
assets................ 1,025 1,012 995 4,331 1,073
NET ASSETS:
Beginning of period.... -- -- -- -- --
-------- --------------- ------------------ ------------------ ------------
End of Period.......... $ 1,025 $ 1,012 $ 995 $ 4,331 $ 1,073
-------- --------------- ------------------ ------------------ ------------
-------- --------------- ------------------ ------------------ ------------
<CAPTION>
VOYAGER FUND
SUB-ACCOUNT
------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 405
Capital gains income... 8,720
Net realized gain
(loss) on security
transactions.......... 8,423
Net unrealized
appreciation
(depreciation) of
investments
during the period.... 151,950
------------
Net increase (decrease)
in net assets
resulting from
operations............ 169,498
------------
UNIT TRANSACTIONS:
Purchases.............. 111,483
Net transfers.......... 1,206,671
Surrenders............. 2,463
Net loan activity...... (4,450)
Cost of insurance...... (44,593)
------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,271,574
------------
Total increase
(decrease) in net
assets................ 1,441,072
NET ASSETS:
Beginning of period.... 2,347
------------
End of period.......... $1,443,419
------------
------------
STATEMENT OF CHANGES IN N
FOR THE PERIOD FROM INCEP
VOYAGER FUND
SUB-ACCOUNT
------------
OPERATIONS:
Net investment income
(loss)................ $ --
Capital gains income... --
Net realized gain(loss)
on security
transactions.......... --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (28)
------------
Net increase (decrease)
in net assets
resulting from
operations............ (28)
------------
UNIT TRANSACTIONS:
Purchases.............. 1,000
Net transfers.......... 1,375
Surrenders............. --
Net loan activity...... --
Cost of insurance...... --
------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 2,375
------------
Total increase
(decrease) in net
assets................ 2,347
NET ASSETS:
Beginning of period.... --
------------
End of Period.......... $ 2,347
------------
------------
</TABLE>
<PAGE>
70
- --------------------------------------------------------------------------------
PUTNAM CAPITAL MANAGER TRUST
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT VARIABLE LIFE ONE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION:
Separate Account Variable Life One (the Account) is a separate investment
account within ITT Hartford Life and Annuity Insurance Company (the Company) and
is registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Account consists of twenty two sub-accounts. These financial statements include
ten sub-accounts which invest solely in the Putnam VT funds (the Funds). The
other twelve subaccounts, which invest in the Hartford and Fidelity Mutual
Funds, are presented in separate financial statements. Both the Company and the
Account are subject to supervision and regulation by the Department of Insurance
of the State of Connecticut and the SEC. The Account invests deposits by
variable life contractholders of the Company in the Funds as directed by the
contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
A) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income
are accrued as of the ex-dividend date. Capital gains income represents
dividends from the Funds which are characterized as capital gains under tax
regulations.
B) SECURITY VALUATION--The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1997.
C) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.
D) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT
AND CHARGES:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative fees,
and state premium taxes. These charges are deducted through termination of units
of interest from applicable contract owners' accounts, in accordance with the
terms of the contracts.
<PAGE>
71
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of ITT Hartford Life
and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of ITT Hartford Life
and Annuity Insurance Company (a Connecticut Corporation and wholly owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1997 and 1996, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.
In our opinion, because the differences in accounting practices as described in
Note 1 are material, the statutory financial statements referred to above do not
present fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of three years in the
period ended December 31, 1997.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1997 and 1996, and the results of operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with statutory accounting practices as described in Note 1.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 27, 1998
<PAGE>
72
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
($000)
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 296,645 $ 250,244 $ 165,792
Annuity and other fund deposits................. 1,981,246 1,897,347 1,087,661
Net investment income........................... 102,285 98,441 78,787
Commissions and expense allowances on
reinsurance ceded.............................. 396,921 370,637 183,380
Reserve adjustment on reinsurance ceded......... 3,672,076 3,864,395 1,879,785
Other revenues.................................. 288,632 161,906 140,796
---------- ---------- ----------
Total Revenues................................ 6,737,805 6,642,970 3,536,201
---------- ---------- ----------
Benefits and Expenses
Death and annuity benefits...................... 66,013 60,111 53,029
Surrenders and other benefit payments........... 461,733 276,720 221,392
Commissions and other expenses.................. 564,240 491,720 236,202
Increase in aggregate reserves for future
benefits....................................... 33,213 27,351 94,253
Increase in liability for premium and other
deposit funds.................................. 640,006 207,156 460,124
Net transfers to Separate Accounts.............. 4,914,980 5,492,964 2,414,669
---------- ---------- ----------
Total Benefits and Expenses................... 6,680,185 6,556,022 3,479,669
---------- ---------- ----------
Net Gain from Operations Before Federal Income
Taxes............................................ 57,620 86,948 56,532
Federal income tax (benefit) expense............ (14,878) 19,360 14,048
---------- ---------- ----------
Net Gain from Operations.......................... 72,498 67,588 42,484
Net realized capital gains, after tax........... 1,544 407 374
---------- ---------- ----------
Net Income........................................ $ 74,042 $ 67,995 $ 42,858
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
73
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
1997 1996
----------- -----------
($000)
<S> <C> <C>
Assets
Bonds........................................... $ 1,501,311 $ 1,268,480
Common stocks................................... 64,408 44,996
Mortgage loans.................................. 85,103 0
Policy loans.................................... 36,533 28,853
Cash and short-term investments................. 309,432 176,830
Other invested assets........................... 20,942 2,858
----------- -----------
Total cash and invested assets................ 2,017,729 1,522,017
----------- -----------
Investment income due and accrued............... 15,878 14,555
Premium balances receivable..................... 389 373
Receivables from affiliates..................... 1,269 257
Other assets.................................... 22,788 19,099
Separate Account assets......................... 23,208,728 14,619,324
----------- -----------
Total Assets.................................. $25,266,781 $16,175,625
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 605,183 $ 571,970
Policy and contract claims...................... 5,672 6,806
Liability for premium and other deposit funds... 1,795,149 1,155,143
Asset valuation reserve......................... 13,670 7,442
Payable to affiliates........................... 20,972 10,022
Other liabilities............................... (754,393) (498,195)
Separate Account liabilities.................... 23,208,728 14,619,324
----------- -----------
Total liabilities............................. 24,894,981 15,872,512
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 143,257 74,570
----------- -----------
Total capital and surplus..................... 371,800 303,113
----------- -----------
Total liabilities, capital and surplus.......... $25,266,781 $16,175,625
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
74
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
($000)
<S> <C> <C> <C>
Capital and surplus -- beginning of year $ 303,113 $ 238,334 $ 91,285
--------- --------- ---------
Net income...................................... 74,042 67,995 42,858
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 2,186 (5,171) 1,709
Change in asset valuation reserve............... (6,228) 568 (5,588)
Change in non-admitted assets................... (1,313) 1,387 (1,944)
Aggregate write-ins for surplus (See Note 3).... 0 0 8,080
Dividends to shareholder........................ 0 0 (10,000)
Paid-in surplus................................. 0 0 111,934
--------- --------- ---------
Change in capital and surplus................... 68,687 64,779 147,049
--------- --------- ---------
Capital and surplus -- end of year.............. $ 371,800 $ 303,113 $ 238,334
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
75
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
($000)
<S> <C> <C> <C>
Operations
Premiums, annuity considerations and fund
deposits....................................... $ 2,277,874 $ 2,147,627 $ 1,253,511
Investment income............................... 101,991 106,178 78,328
Other income.................................... 4,381,718 4,396,892 2,253,466
----------- ----------- -----------
Total income.................................. 6,761,583 6,650,697 3,585,305
----------- ----------- -----------
Benefits Paid................................... 529,733 338,998 277,965
Federal income taxes (received) paid on
operations..................................... (14,499) 28,857 208,423
Other expenses.................................. 5,754,725 6,254,139 2,664,385
----------- ----------- -----------
Total benefits and expenses..................... 6,269,959 6,621,994 3,150,773
----------- ----------- -----------
Net cash from operations........................ 491,624 28,703 434,532
----------- ----------- -----------
Proceeds from Investments
Bonds........................................... 614,413 871,019 287,941
Common stocks................................... 11,481 72,100 52
Other........................................... 152 10 28
----------- ----------- -----------
Net investment proceeds....................... 626,046 943,129 288,021
----------- ----------- -----------
Taxes Paid on Capital Gains....................... 0 936 226
Paid-In Surplus................................... 0 0 111,934
Other Cash Provided............................. 0 41,998 28,199
----------- ----------- -----------
Total Proceeds................................ 1,117,670 1,012,894 862,460
----------- ----------- -----------
Cost of Investments Acquired
Bonds........................................... 848,267 914,523 720,521
Common stocks................................... 28,302 82,495 35,794
Mortgage loans.................................. 85,103 0 0
Miscellaneous applications...................... 18,548 130 2,146
----------- ----------- -----------
Total Investments Acquired.................... 980,220 997,148 758,461
----------- ----------- -----------
Other Cash Applied
Dividends paid to stockholders.................. 0 0 10,000
Other........................................... 4,848 12,220 5,007
----------- ----------- -----------
Total other cash applied...................... 4,848 12,220 15,007
----------- ----------- -----------
Total applications.......................... 985,068 1,009,368 773,468
----------- ----------- -----------
Net Change in Cash and Short-Term Investments..... 132,602 3,526 88,992
Cash and Short-Term Investments, Beginning of
Year........................................... 176,830 173,304 84,312
----------- ----------- -----------
Cash and Short-Term Investments, End of Year.... $ 309,432 $ 176,830 $ 173,304
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
76
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
ITT Hartford Life and Annuity Insurance Company ("ILA" or "the Company"),
formerly known as ITT Life Insurance Corporation, is a wholly owned subsidiary
of Hartford Life Insurance Company ("HLIC"), which is an indirect subsidiary of
Hartford Life, Inc. ("HLI"), which is majority owned by The Hartford Financial
Services Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, HLI filed a registration statement,
as amended, with the Securities and Exchange Commission relating to the initial
public offering of HLI Class A Common Stock (the "Offering"). Pursuant to the
Offering on May 22, 1997, HLI sold to the public 26 million shares, representing
18.6% of the equity ownership of HLI. On December 19, 1995, ITT Corporation
distributed all the outstanding shares of The Hartford to ITT shareholders of
record in an action known herein as the "Distribution". As a result of the
Distribution, The Hartford became an independent, publicly traded company.
During 1996, ILA re-domesticated from the State of Wisconsin to the State of
Connecticut.
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners ("NAIC") and the State of
Connecticut Department of Insurance.
The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates. The most significant estimates are
for determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.
Statutory accounting practices and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and selling
expenses, premium taxes, etc.) which are charged to expense when incurred
for statutory purposes rather than on a pro-rata basis over the expected
life of the policy;
(2) recognition of premium revenues, which for statutory purposes are generally
recorded as collected or when due during the premium paying period of the
contract and which for GAAP purposes, for universal life policies and
investment products, generally, are only recorded for policy charges for the
cost of insurance, policy administration and surrender charges assessed to
policy account balances. Also, for GAAP purposes, premiums for traditional
life insurance policies are recognized as revenues when they are due from
policyholders and the retrospective deposit method is used in accounting for
universal life and other types of contracts where the payment pattern is
irregular or surrender charges are a significant source of profit. The
prospective deposit method is used for GAAP purposes where investment
margins are the primary source of profit;
(3) development of liabilities for future policy benefits, which for statutory
purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income (tax return) only
for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g., past
due agents' balances and furniture and equipment) from the balance sheet for
statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health care
benefits on an option basis, using a twenty year phase-in approach, whereas
GAAP liabilities are recorded upon adoption of the applicable standard;
<PAGE>
77
- --------------------------------------------------------------------------------
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where risk
transfer has taken place; whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost, whereas GAAP requires
that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
affect those intentions. The Company's bonds were classified on a GAAP basis
as "available-for-sale" and accordingly, those investments and common stocks
were reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
gains (losses) on securities net of tax". For statutory reporting purposes,
Change in Net Unrealized Capital Gains (Losses) on Common Stocks and Other
Invested Assets includes the change in unrealized gains (losses) on common
stock reported at fair value; and
(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance
sheet of the general account), whereas GAAP liabilities are valued at
account value.
As of and for the years ended December 31, 1997, 1996 and 1995, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Net Income............... $ 58,050 $ 41,202 $ 38,821
Amortization and
deferral of policy
acquisition costs............ (345,658) (341,572) (174,341)
Change in unearned revenue
reserve...................... 4,641 55,504 32,300
Deferred taxes................ 47,113 2,090 2,801
Separate accounts............. 282,818 306,978 146,635
Other, net.................... 27,078 3,793 (3,358)
------------ ---------- ----------
Statutory Net Income.......... $ 74,042 $ 67,995 $ 42,858
------------ ---------- ----------
------------ ---------- ----------
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Capital and
Surplus...................... $ 570,469 $ 503,887 $ 455,541
Deferred policy acquisition
costs........................ (1,283,771) (938,114) (596,542)
Unearned revenue reserve...... 134,789 130,148 74,644
Deferred taxes................ 64,522 12,823 1,493
Separate accounts............. 923,040 640,101 333,123
Asset valuation reserve....... (13,670) (7,442) (8,010)
Unrealized gains (losses) on
bonds........................ 13,943 5,112 (1,696)
Adjustment relating to Lyndon
contribution (see Note 3).... (41,277) (41,277) (41,277)
Other, net.................... 3,755 (2,125) 21,058
------------ ---------- ----------
Statutory Capital and
Surplus...................... $ 371,800 $ 303,113 $ 238,334
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY FOR PREMIUM AND OTHER
DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 6%. Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from 2.5% to 8.75% and using
CARVM. Accident and health reserves are established using a two year preliminary
term method and morbidity tables based on Company experience.
ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the Statutory Statements of
Income.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds which are deemed
ineligible to be held at amortized cost by the NAIC Securities Valuation Office
("SVO") are carried at the appropriate SVO published value. When a permanent
reduction in the value of publicly traded securities occurs, the decrease is
reported as a realized loss and the carrying value is adjusted accordingly.
Common stocks are carried at fair value with the current year change in the
difference from cost reflected in surplus. Other invested assets are generally
recorded at fair value.
The Asset Valuation Reserve ("AVR") is designed to provide a standardized
reserving process for realized and unrealized losses due to default and equity
risks associated with invested assets. The reserve increased by $6,228 in 1997,
decreased by $568 in 1996 and increased by $5,588 in 1995. Additionally, the
Interest Maintenance Reserve
<PAGE>
78
- --------------------------------------------------------------------------------
("IMR") captures net realized capital gains and losses, net of applicable income
taxes, resulting from changes in interest rates and amortizes these gains or
losses into income over the remaining life of the mortgage loan or bond sold.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the Statutory Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital losses
reclassified from the IMR was $719 in 1997 and the amount of net capital gains
reclassified was $1,413 and $39 in 1996 and 1995, respectively. The amount of
income amortized was $85, $392 and $256 in 1997, 1996 and 1995, respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $923 million and $640 million as of December 31, 1997 and
1996, respectively. The balances are classified in accordance with NAIC
accounting practices.
MORTGAGE LOANS
Mortgage loans, carried at cost, which approximates fair value, include
investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments....... $100,475 $89,940 $ 76,100
Interest income from policy
loans........................ 1,958 1,846 1,504
Interest and dividends from
other investments............ 1,005 7,864 2,288
-------- ------- --------
Gross investment income....... 103,438 99,650 79,892
Less: investment expenses..... 1,153 1,209 1,105
-------- ------- --------
Net investment income......... $102,285 $98,441 $ 78,787
-------- ------- --------
-------- ------- --------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $ 537 $ 713 $ 1,724
Gross unrealized capital losses at
end of year........................ (1,820) (4,160) 0
-------- ------- --------
Net unrealized capital (losses)
gains.............................. (1,283) (3,447) 1,724
Balance at beginning of year........ (3,447) 1,724 15
-------- ------- --------
Change in net unrealized capital
gains (losses) on common stocks.... $ 2,164 $(5,171) $ 1,709
-------- ------- --------
-------- ------- --------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $23,357 $ 11,821 $ 22,251
Gross unrealized capital losses at
end of year........................ (1,906) (3,842) (1,374)
------- -------- --------
Net unrealized capital gains........ 21,451 7,979 20,877
Balance at beginning of year........ 7,979 20,877 33,732
------- -------- --------
Change in net unrealized capital
gains (losses) on bonds and
short-term investments............. $13,472 $(12,898) $ 54,609
------- -------- --------
------- -------- --------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Bonds and short-term investments......... $ (120) $ 2,756 $ 56
Common stocks............................ 0 0 52
Real estate and other.................... 114 0 0
------- ------- ------
Realized capital (losses) gains.......... (6) 2,756 208
Capital gains (benefit) tax.............. (831) 936 (205)
------- ------- ------
Net realized capital gains, after tax.... 825 1,820 413
Less: IMR capital (losses) gains......... (719) 1,413 39
------- ------- ------
Net realized capital gains............... $ 1,544 $ 407 $ 374
------- ------- ------
------- ------- ------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1997 and 1996.
(F) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company is
not exposed to any significant concentration of credit risk.
<PAGE>
79
- --------------------------------------------------------------------------------
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 11,114 $ 55 $ (51) $ 11,118
Guaranteed and sponsored -- asset-backed... 55,506 1,056 (269) 56,293
States, municipalities and political
subdivisions................................ 26,404 329 0 26,733
International governments.................... 7,609 500 0 8,109
Public utilities............................. 73,024 754 (132) 73,646
All other corporate.......................... 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.......... 630,069 5,005 (739) 634,335
Short-term investments....................... 277,330 33 (8) 277,355
Certificates of deposit...................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates......... 86,100 0 0 86,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,778,641 $23,357 $(1,906) $ 1,800,092
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 30,307 $ 537 $ 0 $ 30,844
Common stock -- affiliated................... 35,384 0 (1,820) 33,564
----------- ---------- ---------- -----------
Total common stocks.......................... $ 65,691 $ 537 $(1,820) $ 64,408
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 58,761 $ 6 $ (195) $ 58,572
Guaranteed and sponsored -- asset-backed... 78,237 1,477 (609) 79,105
States, municipalities and political
subdivisions................................ 25,958 163 (2) 26,119
International governments.................... 7,447 205 0 7,652
Public utilities............................. 70,116 396 (424) 70,088
All other corporate.......................... 410,530 6,357 (1,355) 415,532
All other corporate -- asset-backed.......... 485,953 2,654 (1,081) 487,526
Short-term investments....................... 148,094 0 (66) 148,028
Certificates of deposit...................... 83,378 563 (110) 83,831
Parents, subsidiaries and affiliates......... 48,100 0 0 48,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,416,574 $11,821 $(3,842) $ 1,424,553
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 13,064 $ 713 $ 0 $ 13,777
Common stock -- affiliated................... 35,379 0 (4,160) 31,219
----------- ---------- ---------- -----------
Total common stocks.......................... $ 48,443 $ 713 $(4,160) $ 44,996
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term
investments at December 31, 1997 by management's anticipated maturity are shown
below. Asset-backed securities are distributed to maturity year based on ILA's
estimate of the rate of future prepayments of principal
<PAGE>
80
- --------------------------------------------------------------------------------
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- --------------------------------------------- ---------- -----------
<S> <C> <C>
Due in one year or less...................... $ 424,518 $ 696,203
Due after one year through five years........ 586,980 708,365
Due after five years through ten years....... 451,963 295,896
Due after ten years.......................... 315,180 99,628
---------- -----------
Total...................................... $1,778,641 $ 1,800,092
---------- -----------
---------- -----------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1997, 1996 and 1995 were $367,626, $668,078 and $313,961, respectively,
resulting in gross realized gains of $964, $3,675 and $1,419, respectively, and
gross realized losses of $1,084, $919 and $1,263, respectively, before transfers
to IMR. The Company had realized gains of $52 during 1995 from a capital gain
distribution.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term investments........... $1,778 $ 1,800 $1,417 $ 1,425
Common stocks.............................. 64 64 45 45
Policy loans............................... 37 37 29 29
Mortgage loans............................. 85 85 0 0
Other invested assets...................... 21 21 3 3
LIABILITIES
Liabilities on investment contracts........ $1,911 $ 1,835 $1,245 $ 1,191
</TABLE>
The carrying amounts for policy loans approximates fair value. The fair
value of liabilities on investment contracts are determined by forecasting
future cash flows and discounting the forecasted cash flows at current market
rates.
3. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within The Hartford
relate principally to tax settlements, reinsurance, service fees, capital
contributions and payments of dividends. The Company has also invested in bonds
of its subsidiaries, Hartford Financial Services Corporation and HL Investment
Advisors, Inc., and common stock of its subsidiary, ITT Hartford Life, LTD.
On June 30, 1995, the assets of Lyndon Insurance Company were contributed to
ILA. As a result, ILA received approximately $365 million in bonds and
short-term investments, common stocks and cash, $28 million in policy reserves,
$187 million of current tax liability, $26 million in IMR, $8 million in AVR
(offset by an aggregate write-in to surplus), and $4 million of other
liabilities. The assets in excess of liabilities of $112 million were recorded
as an increase to paid-in surplus.
For additional information, see Note 5.
4. FEDERAL INCOME TAXES:
The Company and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were to file separate Federal, state and local
income tax returns.
As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of HLI, the Company will be included for Federal
income tax purposes in the consolidated group of which The Hartford is the
common parent. It is the current intention of The Hartford and its subsidiaries
to continue to file a single consolidated Federal income tax return. The Company
will continue to remit (receive from) The Hartford a current income tax
provision (benefit) computed in accordance with such tax sharing agreement.
Federal income taxes (received) paid by the Company were $(14,499), $29,792 and
$215,921 in 1997, 1996 and 1995, respectively. The effective tax rate was (26)%,
22% and 25% in 1997, 1996 and 1995, respectively. The following schedule
provides a reconciliation of the tax provision at the U.S. Federal Statutory
rate to Federal income tax (benefit) expense (in millions).
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate........................................ $ 20 $ 30 $ 20
Tax deferred acquisition costs............... 25 27 8
Statutory to tax reserve differences......... 1 0 3
Unrealized gain on separate accounts......... (44) (21) (13)
Investments and other........................ (17) (17) (4)
----- ----- -----
Federal income tax (benefit) expense......... $ (15) $ 19 $ 14
----- ----- -----
----- ----- -----
</TABLE>
5. CAPITAL AND SURPLUS AND SHAREHOLDER
DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior approval,
by State of Connecticut insurance companies to shareholders is subject to
restrictions relating to statutory surplus. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1997 or
1996. ILA paid dividends of $10 million to its parent, HLIC, in 1995. As a
result of the Distribution by ITT, the assets of ITT Lyndon Insurance Company
(Lyndon) were contributed to ILA in June 1995. Substantially all the business
was removed from Lyndon prior to the contribution. The amount of assets which
<PAGE>
81
- --------------------------------------------------------------------------------
exceeded liabilities at the contribution date ($112 million) was included in
paid-in surplus.
6. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
The Company's employees are included in The Hartford's non-contributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974 and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of HLIC's group pension contracts. Pension expense was
$265, $358, and $1,034 in 1997, 1996 and 1995, respectively. Liabilities for the
plan are held by The Hartford.
The Company also participates in The Hartford's Investment and Savings Plan,
which includes a deferred compensation option under IRC section 401(k) and an
ESOP allocation under IRC section 404(k). The liabilities for these plans are
included in the financial statements of The Hartford. The cost to ILA was not
material in 1997, 1996 and 1995.
The Company's employees are included in The Hartford's contributory defined
health care and life insurance benefit plans. These plans provide health care
and life insurance benefits for retired employees. Substantially all employees
may become eligible for those benefits if they reach normal or early retirement
age while still working for the Company. The Company has prefunded a portion of
the health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Amounts allocated by
The Hartford for post-retirement health care and life insurance benefits expense
(not including provisions for accrual of post-retirement benefit obligations)
are immaterial. The assumed rate of future increases in the per capita cost of
health care (the health care trend rate) was 8.5% for 1997, decreasing ratably
to 6% in the year 2001. Increasing the health care trend rates by one percent
per year would have an immaterial impact on the accumulated post-retirement
benefit obligation and the annual expense. The cost to ILA was not material in
1997, 1996 and 1995.
Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long-term disability. Post-employment
benefit expense was not material in 1997, 1996 and 1995.
7. REINSURANCE:
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve ILA of its primary liability. ILA
also assumes insurance from other insurers.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Direct premiums................... $266,427 $226,612 $159,918
Premiums assumed.................. 51,630 33,817 13,299
Premiums ceded.................... (21,412) (10,185) (7,425)
-------- -------- --------
Premiums and annuity
considerations................... $296,645 $250,244 $165,792
-------- -------- --------
-------- -------- --------
</TABLE>
The Company cedes to RGA Reinsurance Company, on a modified coinsurance
basis, 80% of the variable annuity business written since 1994.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $23.2
billion and $14.6 billion at December 31, 1997 and 1996, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with CARVM, which approximates the market value less
applicable surrender charges. Separate account assets are segregated from other
investments, the policyholder assumes the investment risk, and the investment
income and gains and losses accrue directly to the policyholder. Separate
account management fees, net of minimum guarantees, were $252 million, $144
million and $72 million in 1997, 1996 and 1995, respectively, and are recorded
as a component of other revenues on the Statutory Statements of Income.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1997 and 1996, the Company had no material contingent
liabilities, nor had the Company committed any surplus funds for any contingent
liabilities or arrangements. The Company is involved in various legal actions
which have arisen in the normal course of its business. In the opinion of
management, the ultimate liability with respect to such lawsuits as well as
other contingencies is not considered to be material in relation to the results
of operations and financial position of the Company.
Under insurance guaranty laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on ILA under these
laws cannot be reasonably estimated. Most of the laws do provide, however, that
an assessment may be excused or deferred if it would threaten an insurer's own
financial strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the Company in certain states. ILA paid guaranty
fund assessments of $1,544, $1,262 and $1,684 in 1997, 1996 and 1995,
respectively. ILA incurred guaranteed fund expense of $548 in 1997 and 1996 and
$0 in 1995.
