<PAGE> 1
Registration Statement No. 33-89812
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post Effective Amendment No. 7
to
FORM S-2
to
REGISTRATION STATEMENT ON FORM S-1 UNDER THE SECURITIES ACT OF 1933
THE TRAVELERS INSURANCE COMPANY
-------------------------------
(Exact name of registrant as specified in its charter)
CONNECTICUT
-----------
(State or other jurisdiction of incorporation or organization)
I.R.S. Employer Identification Number: 06-0566090
----------
One Tower Square, Hartford, Connecticut 06183 (860) 277-0111
-----------------------------------------------------------------------
(Address, including Zip Code, and Telephone Number, including Area Code,
of Registrant's Principal Executive Offices)
Ernest J. Wright
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(860) 277-4345
--------------
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
Approximate date of commencement of proposed sale to the public: The annuities
covered by this registration statement are to be issued from time to time after
the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. X
---
If the Registrant elects to deliver its latest Annual Report to
security-holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box. ___
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Action registration statement number of the earlier
effective registration statement for the same offering. ___
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering ___.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ___
<PAGE> 2
PART I
INFORMATION REQUIRED IN PROSPECTUS
THE TRAVELERS INSURANCE COMPANY
Cross Reference Sheet Pursuant to Regulation S-K, Item 501(b)
<TABLE>
<CAPTION>
Item
No. Form S-2 Caption Heading in Prospectus
- ----- ---------------- ---------------------
<S> <C> <C>
1. Forepart of the Registration Outside Front Cover Page of Registration
Statement and Outside Front Statement and Prospectus
Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front Cover
Cover Pages of Prospectus
3. Summary Information, Risk Prospectus Summary; Inside Front
Factors and Ratio of Earnings to Cover Page
Fixed Charges
4. Use of Proceeds Investments by the Company
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Distribution of the Contracts and Certificates
9. Description of Securities Description of the Contracts and Certificates
to be Registered
10. Interests of Named Experts Not Applicable
and Counsel
11. Information with Respect to Outside Front Cover Page; The Insurance
the Registrant Company; Incorporation of Certain
Documents by Reference
12. Incorporation of Certain Incorporation of Certain Documents by
Information by Reference Reference
13. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act Liabilities
</TABLE>
<PAGE> 3
T-MARK
GROUP AND INDIVIDUAL MODIFIED GUARANTEED ANNUITY CONTRACTS
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
PROSPECTUS
MAY 1, 1996
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183 * TELEPHONE: (860) 277-0111
<PAGE> 4
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 5
T-MARK
MODIFIED GUARANTEED ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
This Prospectus describes $200 million in interests of group and individual
modified guaranteed annuity contracts and certificates offered by The Travelers
Insurance Company (the "Company"). These contracts and certificates are used in
connection with (1) plans qualified under Section 401(a), 401(k) or 403(a) of
the Internal Revenue Code (the "Code") (pension and profit-sharing plans); (2)
annuity purchase plans adopted pursuant to Section 403(b) by public school
systems and certain organizations tax-exempt under Section 501(c)(3) of the
Code; (3) individual retirement annuities (IRAs) established by persons eligible
under Section 408 of the Code; (4) contracts purchased by the United States
Government, any state government or political subdivision thereof, or any agency
or instrumentality (within the meaning of Section 414(d) of the Code), for use
in satisfying its obligation to provide a benefit under a governmental plan; and
(5) deferred compensation plans under Section 457 of the Code. In addition, this
Prospectus describes annuity contracts and Certificates offered for various non
tax-benefited purposes to the general public (subject to state approval).
Participation in a Group Contract will be separately accounted for by the
issuance of a Certificate evidencing the Participant's interest under a Group
Contract issued to an employer or a group trust.
A minimum purchase payment of at least $5,000 must accompany the application for
a Contract or a Statement of Participant. No additional payment of less than
$5,000 is permitted under a Certificate. (See "Application and Purchase
Payment," page 1.)
The Maturity Value will be guaranteed by the general assets of the Company. The
Company intends generally to invest funds received under the Contracts in fixed
income securities, including public bonds, privately placed bonds, and
mortgages, some of which fixed income securities may be zero coupon securities.
(See "Investments by the Company," page 8.)
These securities may be subject to a substantial market value adjustment if not
held to the Maturity Date of a Deposit which could result in the receipt of less
than your original Purchase Payment. In addition, these securities may be
subject to a surrender charge if a surrender is made before a deposit has been
held for at least five years. See "Market Value Adjustment," page 4, and
"Surrender Charge," page 3.
Upon a subsequent Guarantee Period, the Guaranteed Interest Rate will be
declared by the Company based on various factors. It may be higher or lower than
the previous Guaranteed Interest Rate. See "Guarantee Periods," page 1 and
"Establishment of Guaranteed Interest Rates," page 2.
Except for Contracts and Certificates issued to residents of the state of New
York, there is no minimum guaranteed renewal interest rate.
THIS PROSPECTUS IS ACCOMPANIED BY A COPY OF THE COMPANY'S LATEST ANNUAL REPORT
ON FORM 10-K WHICH CONTAINS ADDITIONAL INFORMATION ABOUT THE COMPANY.
MUTUAL FUNDS, ANNUITIES AND INSURANCE PRODUCTS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED BY ANY BANK, NOR ARE THEY INSURED OR OTHERWISE PROTECTED BY
THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996
<PAGE> 6
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information can be inspected and copied at
the public reference facilities maintained by the Commission at: Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549; Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a Registration Statement under the
Securities Act of 1933, as amended (the "Act") with respect to the securities
offered hereby. For further information with respect to the Company and these
securities, reference is made to the Registration Statement and exhibits
thereto. Statements contained in this Prospectus as to the contents of any
Contract or other document are not necessarily complete, and in each instance,
reference is made to the copy of such Contract or document filed as an exhibit
to the Company's Registration Statement, each such statement being qualified in
all respects by such reference. The Company does not plan to furnish subsequent
annual reports containing financial information to the owners of contracts or
certificates described in this Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's latest Annual Report on Form 10-K has been filed with the
Commission pursuant to Section 15(d) of the Exchange Act. The 10-K is
incorporated by reference into this Prospectus and must accompany this
Prospectus. The Form 10-K contains additional information about the Company,
including certified financial statements for the Company's latest fiscal year.
The Company will provide without charge to each person to whom this Prospectus
is delivered, on the written or oral request of any such person, a copy of any
or all of the documents incorporated by reference in the Registration Statement
of which this Prospectus forms a part other than exhibits to such documents
unless such exhibits are specifically incorporated by reference into such
documents. Requests should be directed to The Travelers Insurance Company,
Annuity Services, One Tower Square, Hartford, Connecticut 06183-5030, telephone
860-422-3985.
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS.............................................................. iv
PROSPECTUS SUMMARY..................................................................... vi
THE INSURANCE COMPANY.................................................................. 1
DESCRIPTION OF THE CONTRACTS AND CERTIFICATES.......................................... 1
General........................................................................... 1
Application and Purchase Payment.................................................. 1
Right to Cancel................................................................... 1
ACCUMULATION PERIOD.................................................................... 1
Guarantee Periods................................................................. 1
Establishment of Guaranteed Interest Rates........................................ 3
SURRENDERS............................................................................. 3
General........................................................................... 3
Surrender Charge.................................................................. 3
Market Value Adjustment........................................................... 4
Waiver, Reduction or Elimination of Surrender Charge.............................. 5
Reduction or Elimination of Surrender Charges..................................... 6
Premium Taxes..................................................................... 6
Death Benefit..................................................................... 6
Payment on Surrender.............................................................. 6
ANNUITY PERIOD......................................................................... 6
Electing the Annuity Commencement Date and Form of Annuity........................ 6
Change of Annuity Commencement Date or Annuity Option............................. 7
Annuity Options................................................................... 7
Annuity Payments.................................................................. 7
Death of Annuitant After Annuity Commencement Date................................ 8
INVESTMENTS BY THE COMPANY............................................................. 8
AMENDMENT.............................................................................. 8
ASSIGNMENT............................................................................. 8
DISTRIBUTION........................................................................... 8
FEDERAL TAX CONSIDERATIONS............................................................. 9
General........................................................................... 9
Section 403(b) Plans and Arrangements............................................. 9
Qualified Pension and Profit-Sharing Plans........................................ 9
Individual Retirement Annuities................................................... 10
Section 457 Plans................................................................. 10
Nonqualified Annuities............................................................ 10
The Employee Retirement Income Security Act of 1974............................... 11
Federal Income Tax Withholding.................................................... 12
Tax Advice........................................................................ 13
LEGAL OPINION.......................................................................... 13
EXPERTS................................................................................ 13
APPENDIX A............................................................................. 14
</TABLE>
<PAGE> 8
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
In this Prospectus "We," "Us," "Our," and the "Company" refer to The Travelers
Insurance Company, and "You," "Yours," and "Participant" refer to a person who
has been issued a Certificate. "You," "Your" and "Owner" refer to a person who
has been issued an Individual Contract.
ACCOUNT -- An Account is the Cash Value or Cash Surrender Value credited to a
Participant or to the Owner.
ACCUMULATED VALUE -- The value of the Deposit which is credited daily at the
Guaranteed Interest Rate.
ANNUITANT -- The person on whose life the Individual Contract has been issued.
ANNUITY COMMENCEMENT DATE -- The date designated in the Certificate or otherwise
by the Participant to receive benefits. Referred to in the Individual Contract
as the Maturity Date.
CASH SURRENDER VALUE -- The Cash Value of all the Deposits credited to that
Account, less the Surrender Charge and any applicable premium tax.
CASH VALUE -- The Maturity Date of a Deposit on the Maturity Date or the Market
Adjusted Value before the Maturity Date of that Deposit. The Cash Value of an
Account on any date is the sum of the Cash Value of all the Deposits credited to
the Account.
CERTIFICATE -- Evidence of a participating interest under a Group Contract. Any
reference in this Prospectus to Certificate includes the underlying Group
Contract.
CERTIFICATE DATE -- The effective date of participation under the Group Contract
as designated in the Certificate.
CERTIFICATE YEAR -- Annual periods computed from the Certificate Date.
COMPANY -- The Travelers Insurance Company.
COMPANY'S HOME OFFICE -- The principal executive offices of The Travelers
Insurance Company located at One Tower Square, Hartford, Connecticut 06183.
CONTRACT DATE -- The effective date of the Individual Contract as designated in
the Contract.
CONTRACT YEAR -- Annual periods computed from the Contract Date.
DEPOSIT -- The net premium payment or renewal amount applied to the credit of an
Account at a Guaranteed Interest Rate.
GROUP CONTRACT -- The group T-Mark modified guaranteed annuity contract as
described in this prospectus, for which the Contract Owner receives a Contract
and each Participant receives a Certificate.
GUARANTEE PERIOD -- The period between the initial Premium Payment or Renewal
Date and the Maturity Date during which a Guaranteed Interest Rate is credited.
GUARANTEED INTEREST RATE -- The annual effective interest rate which is the
applicable interest rate contained in a schedule of rates established by the
Company from time to time for various durations.
INDIVIDUAL ACCOUNT -- The Cash Value or Cash Surrender Value credited to a
Participant or beneficiary.
INDIVIDUAL CONTRACT -- The individual T-Mark modified guaranteed annuity
contract as described in this prospectus. The Contract is issued to the Contract
Owner.
iv
<PAGE> 9
MARKET ADJUSTED VALUE -- The current value of the Deposit on a date before the
Maturity Date. This value is computed using the market value adjustment formula,
as described in this Prospectus.
MATURITY DATE OF A DEPOSIT -- The last day in a Guarantee Period.
MATURITY VALUE -- The guaranteed value of the Deposit which is the net premium
payment or renewal amount plus interest credited thereon during the Guarantee
Period. The Company will declare the annual effective rate of interest when the
net premium is applied, as described in this Prospectus.
OWNER -- The person or entity to whom the annuity contract is issued.
OWNER'S ACCOUNT -- The Cash Value credited to the Owner.
PARTICIPANT -- An eligible person who participates in the Plan and on whose life
a Certificate is issued.
PARTICIPANT'S INTEREST -- The Cash Value or Cash Surrender Value of the
Participant's Individual Account to which the Participant is entitled under the
Certificate. The Participant's Interest will be the value of that Participant's
Individual Accounts unless the owner (under the terms of the Plan, if any)
instructs us otherwise.
STATEMENT OF PARTICIPANT -- An application for participation under a Group
Contract.
v
<PAGE> 10
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
The Travelers Insurance Company ("the Company"), an indirect wholly owned
subsidiary of Travelers Group Inc., offers group and individual modified
guaranteed annuity (subject to state approvals) contracts (the "Contracts"). As
described in this Prospectus, the Contracts have a Guaranteed Interest Rate
which is credited to the Deposit in the Contract when the Deposit is held to its
Maturity Date. Surrenders prior to the Maturity Date of a Deposit are subject to
a Market Value Adjustment and a surrender charge (if applicable).
When a payment is made under the Contract or Certificate, the Owner or
Participant, as applicable selects a Guarantee Period from among those then
offered by the Company. During this Guarantee Period, the purchase payment earns
interest at the applicable Guaranteed Interest Rate as established by the
Company. Interest is credited on a daily basis and this compounding effect is
reflected in the Guaranteed Interest Rate. At the end of each Guarantee Period,
a subsequent Guarantee Period of seven days will begin, unless the individual
elects a different duration. The Participant or Owner, as applicable must elect
the length of a subsequent Guarantee Period during the 30 days before the end of
the previous Guarantee Period. Failure to make an election will result in an
automatic renewal of the Deposit for a period of seven days. As of the first day
of each subsequent Guarantee Period, the funds will earn interest at the then
applicable subsequent Guaranteed Interest Rate. (See "Guarantee Periods," page 1
and "Establishment of Guaranteed Interest Rates," page 3.)
Subject to certain restrictions, total and partial surrenders are permitted.
However, these surrenders may be subject to a surrender charge and/or a Market
Value Adjustment. No Market Value Adjustment will be applied to any surrender
effective as of the end of a Guarantee Period. No surrender charge will be
applied to any payment that has been held under the Contract or Certificate for
at least five years. For Deposits which have not been held under the Contract or
Certificate for at least five years, a graded surrender charge beginning at a
maximum of 7% will be assessed if you surrender. The surrender charge will apply
if a surrender occurs at the expiration date of the Guarantee Period for
Deposits in the contract less than five years. We will waive the surrender
charge in certain instances. (See "Waiver, Reduction or Elimination of Surrender
Charge," page 5.) For 403(b) plan participants, partial and full surrenders may
be subject to restrictions. (See "Section 403(b) Plans and Arrangements," page
9.)
We may defer payment of any surrender for a period of up to six months from the
date we receive notice of surrender or the period permitted by state law, if
less, but such a deferral of payment will not be for a period greater than five
business days except under extraordinary circumstances. We will pay annual
interest of at least 3.5% on any amounts deferred for more than thirty days
during such period if we choose to exercise this deferral right. (See
"Surrenders," page 3.)
A Market Value Adjustment will be applied only when the surrender occurs prior
to the Maturity Date of the Deposit. The Market Adjusted Value will reflect the
relationship, at the time of surrender, between the rate we are then crediting
on new Deposits with the same duration as the time remaining in the Guarantee
Period, and the Guaranteed Interest Rate applicable to that Deposit. Generally,
the primary factor affecting the amount of the Market Value Adjustment is the
level of interest rates on investments to be made by the Company at the time
that the current Guaranteed Interest Rates are established. The Market Adjusted
Value is sensitive, therefore, to changes in current interest rates. The Market
Value Adjustment may increase or decrease the value of your investment prior to
the Maturity Date. It is possible that the amount you receive upon surrender
would be less than your original Deposit if interest rates increase. Also, if
interest rates decrease, the amount you receive upon surrender may be more than
your original Deposit and accrued interest. (See "Surrenders," page 3.)
On the Annuity Commencement Date specified by the Participant of a Group
Contract or the Contract Owner, if an Individual Contract, the Company will pay
the designated individual a lump
vi
<PAGE> 11
sum payment or start to pay a series of payments. A series of payments may be
elected under certain Annuity Options. (See "Annuity Options," page 7.)
The Contracts and Certificates provide for a guaranteed death benefit in the
event of the Participant's or Owner's death prior to the Annuity Commencement
Date. (See "Death Benefit," page 6.)
vii
<PAGE> 12
THE INSURANCE COMPANY
- --------------------------------------------------------------------------------
The Travelers Insurance Company (the "Company") is an indirect wholly owned
subsidiary of Travelers Group Inc. The Company is a stock insurance company
chartered in 1864 in the state of Connecticut and has been continuously engaged
in the insurance business since that time. The Company is licensed to conduct
life insurance business in all states of the United States, the District of
Columbia, Puerto Rico, Guam, the U.S. and British Virgin Islands and the
Bahamas. The Company's principal executive office is located at One Tower
Square, Hartford, Connecticut 06183, telephone number (860) 277-0111.
DESCRIPTION OF THE CONTRACTS AND CERTIFICATES
- --------------------------------------------------------------------------------
GENERAL
The Group and Individual Contracts described in this Prospectus are available
for use in connection with nonqualified purchases (subject to state approval).
The Company also offers the contracts in the following qualified programs: (1)
Section 401(a), 401(k) and 403(a) plans; (2) Section 403(b) plans; (3) IRAs; (4)
governmental plans as described in Section 414(d); and (5) deferred compensation
plans described in Section 457. All Section references are to the Internal
Revenue Code (the "Code"), unless otherwise noted.
As described in this Prospectus, the contracts have a Guaranteed Interest Rate
which is credited to a Deposit in the contract when the Deposit is held to its
Maturity Date. Surrenders prior to the Deposit's Maturity Date are subject to a
Market Value Adjustment and a surrender charge (if applicable).
These contracts may not be available in all states.
APPLICATION AND PURCHASE PAYMENT
To apply, an individual must complete a Statement of Participant for a
Certificate, or an application for a Contract. A minimum purchase payment of
$5,000 is required. Additional purchase payments of at least $5,000 may be made.
Payments under a Certificate or an individual Contract may not exceed $1,000,000
in any one year without our prior approval.
In the event that your application is not properly completed, we will attempt to
contact you by telephone. We will return an improperly completed application,
along with the corresponding purchase payment, ten days after we receive it if
the application has not been properly completed by that time.
The Maturity Value is guaranteed by our general assets. A payment is credited to
an Account which the Company establishes on the date we receive a properly
completed application or Statement of Participant along with the purchase
payment. The Company then issues a Certificate or individual Contract, as
applicable and confirms the purchase payment in writing. Additional payments are
credited and confirmed in the same manner. Interest is earned the next day.
RIGHT TO CANCEL
State law may afford a right to cancel a Certificate or Contract for a certain
period of time after its receipt and may allow a refund of the entire purchase
payment. For revocation to be effective, a written notice of cancellation must
be mailed or delivered to the Company's Home Office.
ACCUMULATION PERIOD
- --------------------------------------------------------------------------------
GUARANTEE PERIODS
The Participant or Owner (as applicable) selects the duration of the Guarantee
Period from among those durations we offer. As of the date of this Prospectus,
we offer Guarantee Periods with
1
<PAGE> 13
durations ranging from seven days to ten years; however, the Guarantee Periods
we offer in the future could be different. The duration selected will determine
the Guaranteed Interest Rate, and the Deposit (less surrenders made and less
applicable premium taxes, if any) will earn interest at this Guaranteed Interest
Rate during the entire Guarantee Period. All interest earned will be credited
daily; this compounding effect is reflected in the Guaranteed Interest Rate.
The following is an illustration of how we will credit interest during the
Guarantee Period. For the purpose of this example, we have made the assumptions
as indicated.
EXAMPLE OF GUARANTEED INTEREST RATE ACCUMULATION
Beginning Account Value: $50,000
Guarantee Period: 5 Years
Guaranteed Interest Rate: 5% Annual Effective Rate
<TABLE>
<CAPTION>
INTEREST
CREDITED
TO THE ACCOUNT
DURING THE CUMULATIVE INTEREST ACCUMULATED
YEAR GUARANTEE PERIOD CREDITED TO THE ACCOUNT VALUE
- -------------------------------------------------------------------------
<S> <C> <C> <C>
6 months $ 1,234.75 $ 1,234.75 $ 51,234.75
1 2,500.00 2,500.00 52,500.00
2 2,625.00 5,125.00 55,125.00
3 2,756.25 7,881.25 57,881.25
4 2,894.06 10,775.31 60,775.31
5 3,038.77 13,814.08 63,814.08
</TABLE>
Guaranteed Value of the Deposit at the end of five years is: $50,000.00 +
$13,814.08 = $63,814.08
NOTE: EXAMPLE ASSUMES NO SURRENDERS OF ANY AMOUNT DURING THE ENTIRE FIVE-YEAR
PERIOD. A MARKET VALUE ADJUSTMENT APPLIES AND A SURRENDER CHARGE MAY APPLY TO
ANY INTERIM SURRENDER. (SEE "SURRENDERS," PAGE 3.) THE HYPOTHETICAL INTEREST
RATES ARE ILLUSTRATIVE ONLY AND ARE NOT INTENDED TO PREDICT FUTURE INTEREST
RATES TO BE DECLARED UNDER THE CERTIFICATE. ACTUAL INTEREST RATES DECLARED FOR
ANY GIVEN TIME MAY BE MORE OR LESS THAN THOSE SHOWN.
At the end of any Guarantee Period, a subsequent Guarantee Period will begin. We
will notify you in writing about a subsequent Guarantee Period before Maturity.
This written notification will not specify the interest rate for renewal
Deposits. You or the Participant (as provided in the Plan, if any) must elect,
during the 30-day period before the end of the previous Guarantee Period, a
Guarantee Period of a different duration from among those we offer at that time.
The election may be made by notifying us in writing or by calling 1-800-TRANSFR
(outside Connecticut) or 1-800-233-3591 (in Connecticut). If no election is
made, we will automatically renew the Deposit for a period of seven days. In no
event may subsequent Guarantee Periods extend beyond the Annuity Commencement
Date then in effect. For example, if the Participant or Annuitant, under an
individual Contract is age 62 at the expiration of a Guarantee Period and his or
her Annuity Commencement Date is age 65, a three-year Guarantee Period is the
maximum Guarantee Period that may be selected. The Deposit will then earn
interest at a Guaranteed Interest Rate which we have declared for such duration.
Interest rates may fluctuate daily.
At the beginning of any subsequent Guarantee Period for a Deposit, the value of
the Deposit will be the Maturity Value of that Deposit at the end of the
Guarantee Period just ending. This amount (less surrenders made since the
beginning of the subsequent Guarantee Period) will earn interest in the
subsequent Guarantee Period at the then applicable Guaranteed Interest Rate,
which may be higher or lower than the previous Guaranteed Interest Rate.
2
<PAGE> 14
At your written request, we will notify you of the subsequent Guaranteed
Interest Rate. You may also call us at 860-422-3985 to inquire about subsequent
Guaranteed Interest Rates.
ESTABLISHMENT OF GUARANTEED INTEREST RATES
The Guaranteed Interest Rate for a chosen Guarantee Period will be known at the
time a Deposit is received or renewed, and we will send a confirmation which
will show the amount and the applicable Guaranteed Interest Rate. There is no
minimum Guaranteed Interest Rate for renewal Deposits. (Certificates and
Contracts issued to residents of the state of New York provide for a minimum
renewal interest rate of 3% per annum.) The rate on renewal Deposits will be
equal to or greater than the rate credited on new Deposits at that time.
Prior to the Annuity Commencement Date, we currently send a quarterly statement
showing a summary of the Account within 30 days after the end of each calendar
quarter. We reserve the right to send statements less frequently but not less
than once in each calendar year.
The Company has no specific formula for determining the rate of interest that it
will declare as Guaranteed Interest Rates in the future. The Guaranteed Interest
Rates will be declared from time to time as market conditions dictate. (See
"Investments by the Company," page 8.) In addition, the Company may also
consider various other factors in determining Guaranteed Interest Rates for a
given period, including regulatory and tax requirements, sales commissions and
administrative expenses we bear, general economic trends, and competitive
factors. THE COMPANY'S MANAGEMENT WILL MAKE THE FINAL DETERMINATION AS TO THE
GUARANTEED INTEREST RATES TO BE DECLARED. WE CANNOT PREDICT NOR CAN WE GUARANTEE
FUTURE GUARANTEED INTEREST RATES.
SURRENDERS
- --------------------------------------------------------------------------------
GENERAL
Subject to certain tax law and retirement plan restrictions (see "Federal Tax
Considerations," page 9), full and partial surrenders may be made at any time.
For participants in Section 403(b) tax deferred annuity plans, a cash surrender
may not be made from certain salary reduction amounts prior to age 59 1/2,
separation from service, death, disability or hardship. (See "Section 403(b)
Plans and Arrangements," page 9.)
In the case of all surrenders, the Cash Value will be reduced by the amount
surrendered on the surrender date and that amount will be payable to the
Participant or the Owner, as applicable. When a surrender is made, the Deposit
and the Maturity Value of that Deposit will be reduced in the same proportion as
the ratio of the gross amount surrendered to the Cash Value. Upon request the
Company will inform you of the amount payable under a full or partial surrender.
Any full or partial surrender may be subject to tax. (See "Federal Tax
Considerations," page 9.)
SURRENDER CHARGE
No deduction for a sales charge is made from the purchase payment when received.
However, a surrender charge may be assessed on surrenders made before the
Deposit has held for five years. The surrender charge is computed as a
percentage of the amount surrendered, which includes the Deposit and the
earnings credited thereon subject to a Market Value Adjustment and increases in
3
<PAGE> 15
dollar amount as the value of the deposit increases. The following chart
indicates the percentage charge applied:
<TABLE>
<CAPTION>
YEARS SINCE DEPOSIT CHARGE AS PERCENTAGE
WAS MADE OF GROSS SURRENDER VALUE
- ------------------------------------------------------
<S> <C>
1 7%
2 6%
3 5%
4 4%
5 3%
Thereafter 0%
</TABLE>
No surrender charge will be made for surrenders of a Deposit which has been held
for at least five years.
The surrender charges listed above will apply to full or partial surrenders,
irrespective of the length of the Guarantee Period selected. For example, assume
a Guarantee Period of four years. Further assume an election not to renew the
Deposit for a second Guarantee Period, but to redeem it on its Maturity Date. In
this hypothetical case, any surrenders made during the fourth year, even on the
Maturity Date, will be subject to a 4% Surrender Charge.
MARKET VALUE ADJUSTMENT
The amount payable on a partial or full surrender may be adjusted up or down by
the application of the Market Value Adjustment formula. The Market Adjusted
Value of a Deposit is the current value of the Deposit on a date before its
Maturity Date. This value is generally computed using Formula A below, except
that contracts issued in the state of New York shall use Formula B in computing
the Market Adjusted Value. Both formulas are as follows:
FORMULA A
<TABLE>
<S> <C> <C> <C> <C>
1 ( t
Market Adjusted Value = (Maturity Value) X -------------- /365)
1 + iC + .005
</TABLE>
FORMULA B (To be used only in connection with contracts issued in the State of
New York.)
<TABLE>
<S> <C> <C> <C> <C>
1 ( t
Market Adjusted Value = (Maturity Value) X --------------- /365)
1 + iC + .0025
</TABLE>
(where "iC" is the current Guaranteed Interest Rate for a Guarantee Period of
"t" days and "t" is the number of days remaining in the Guarantee Period.)
The current Guaranteed Interest Rate is declared periodically by the Company and
is the rate (straight line interpolation between whole years) which the Company
is then paying on premiums paid under this class of contracts if applied to the
same maturity date of the Deposit to which the formula is being applied.
A Market Value Adjustment will only be applied when the surrender occurs prior
to the Maturity Date of the Deposit. The Market Adjusted Value will reflect the
relationship, at the time of surrender, between the rate the Company is then
crediting on new Deposits with the same duration as the time remaining on the
Guarantee Period, and the Guaranteed Interest Rate applicable to the Deposit.
Generally, the primary factor affecting the amount of the Market Value
Adjustment is the level of interest rates on investments to be made by the
Company at the time that the current Guaranteed Interest Rates are established.
The Market Adjusted Value is sensitive, therefore, to changes in current
interest rates. So, the level of the Market Value Adjustment is dependent upon
the current interest rate at the time of surrender. The Market Value Adjustment
may increase or decrease the value of this investment prior to the Maturity
Date. It is possible that the amount you receive upon surrender would be less
than your original purchase payment if
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<PAGE> 16
interest rates increase. Also, if interest rates decrease, the amount you
receive on surrender may be more than your original purchase payment and accrued
interest.
For example, assume the purchase of a Certificate or Contract and the selection
of a Guarantee Period of ten years and a Guaranteed Interest Rate for that
duration of 9% per year. Further assume at the end of seven years a partial
surrender is made. (A partial surrender does not affect the current Guaranteed
Interest Rate as applied to all remaining deposits.) If the market rate we are
then crediting for new Deposits of three years is 7%, then the Market Adjusted
Value will be greater than the Deposit accumulated at the Guaranteed Interest
Rate (disregarding premium taxes, if any). On the other hand, if the current
rate we are crediting on new Deposits of three years is, for example, 11%, the
Market Adjusted Value will be less than the Deposit accumulated at the
Guaranteed Interest Rate. (For an illustration showing an upward and downward
adjustment, see Appendix A.)
WAIVER, REDUCTION OR ELIMINATION OF SURRENDER CHARGE
The surrender charge will be waived if:
-- an annuity payout is begun;
-- an Income Option of at least three years' duration is begun after the
first Certificate Year or Contract Year, as applicable;
-- the Participant of a Group Contract, or Annuitant of an Individual
Contract becomes disabled (as defined by the Internal Revenue Service)
subsequent to purchase of the Certificate or Contract;
-- the Participant of a Group Contract, or Annuitant of an Individual
Contract dies;
-- the Participant of a Group Contract, or Annuitant of an Individual
Contract under a tax deferred annuity plan (403(b) plan) retires after
age 55, provided the Certificate or Contract has been in effect five
years or more;
-- the Participant of a Group Contract, or Annuitant of an Individual
Contract under an IRA plan reaches age 70 1/2, provided the Certificate
or Contract, as applicable, has been in effect five years or more;
-- the Participant of a Group Contract, or Annuitant of an Individual
Contract under a qualified pension or profit-sharing plan, including a
401(k) plan, retires at or after age 59 1/2, provided the Certificate or
Contract, as applicable has been in effect five years or more; or if
refunds are made to satisfy the anti-discrimination test; (for
Participants or Annuitants under contracts issued before May 1, 1992,
the surrender charge will also be waived if he or she retires at normal
retirement age (as defined by the plan), provided the Certificate or
Contract has been in effect one year or more); or
-- the Participant of a Group Contract, or Annuitant of an Individual
Contract under a Section 457 deferred compensation plan retires and the
Certificate or Contract has been in effect five years or more, or if a
financial hardship or disability withdrawal has been allowed by the plan
administrator under applicable IRS rules.
In addition, for individuals under a 403(b) annuity, a pension or profit-sharing
plan, or a Section 457 deferred compensation plan, there is a 10% free
withdrawal allowance for partial surrenders prior to the Annuity Commencement
Date. An individual under an IRA plan who is over age 59 1/2 has a 20% free
withdrawal allowance. This means that, each Certificate or Contract Year after
the first such year, for the first partial surrender made in that year, 10% (20%
for IRA plans) of his or her Cash Value may be withdrawn without a surrender
charge. All Cash Values withdrawn will reflect any applicable Market Value
Adjustment. Full surrenders are not eligible for the free withdrawal allowance.
Failure to use all or part of the free withdrawal allowance in any Certificate
or Contract Year forfeits the balance of the allowance for that year. For 403(b)
plan participants,
5
<PAGE> 17
partial and full surrenders may be subject to restrictions. (See "Section 403(b)
Plans and Arrangements," page 9.)
REDUCTION OR ELIMINATION OF SURRENDER CHARGES
The amount of the surrender charge and the duration for which it may be assessed
may be reduced or eliminated when sales of the Certificates or Contracts are
made to persons in certain purchase arrangements in such a manner that results
in savings or reductions of sales expenses. The entitlement to such a reduction
in the surrender charge will be based on the size and type of group to which
sales are to be made (the sales expenses for a larger group are generally less
than for a smaller group), and any prior or existing relationship with the
Company (sales expenses are likely to be less when there is a prior or existing
relationship because of the likelihood of utilizing existing sales mechanisms).
There may be other circumstances, of which the Company is not presently aware,
which could result in reduced sales expenses. In no event will reductions or
elimination of the surrender charge and its duration be permitted where such
reductions or elimination will be unfairly discriminatory to any person.
PREMIUM TAXES
Certain state and local governments impose premium taxes. These taxes currently
range from 0.5% to 5.0%, depending upon jurisdiction. The Company, in its sole
discretion and in compliance with any applicable state law, will determine the
method used to recover premium tax expenses incurred. The Company will deduct
any applicable premium taxes from the Cash Value either upon death, surrender,
annuitization, or at the time purchase payments are made to the Contract, but no
earlier than when the Company has a tax liability under state law.
DEATH BENEFIT
If a Participant under a group Contract, or an Annuitant under an individual
Contract dies before his or her Annuity Commencement Date, the Death Benefit
payable to the Beneficiary will equal (a) the greater of the Cash Value or the
Accumulated Value of the Contract or of that Participant's Interest under a
group Contract, if death occurs before age 65; or (b) the Cash Value of the
Contract or the Participant's Interest under a group Contract, if death occurs
on or after age 65 less any applicable premium tax.
PAYMENT ON SURRENDER
We may defer payment of any partial or full surrender for a period not exceeding
six months from the date we receive your notice of surrender or the period
permitted by state insurance law, if less. Only under extraordinary
circumstances will we defer a surrender payment more than five business days,
and if we defer payment for more than 30 days, we will pay annual interest of at
least 3.5% on the amount deferred. While all circumstances under which we could
defer payment upon surrender may not be foreseeable at this time, such
circumstances could include, for example, our inability to liquidate assets due
to a general financial crisis. If we intend to withhold payment for more than
thirty days, we will notify you in writing.
ANNUITY PERIOD
- --------------------------------------------------------------------------------
ELECTING THE ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
For each individual Contract, the Annuity Commencement Date for the Contract
must be indicated on the Application. For each Certificate, an Annuity
Commencement Date must be indicated on the Statement of Participant. The value
of an Account (less applicable premium taxes, if any) may be applied on the
Annuity Commencement Date under any of the Annuity Options described below. In
the absence of an election, the value of the Account (the Cash Value, for an
individual Contract), will be applied on the Annuity Commencement Date under
Option 2 to provide a life
6
<PAGE> 18
annuity with 120 monthly payments certain or, if the contract is issued to fund
a qualified pension and profit-sharing plan or a Section 403(b) plan subject to
ERISA, the applicable amount will be applied under Option 4 to provide a joint
and last survivor life annuity.
CHANGE OF ANNUITY COMMENCEMENT DATE OR ANNUITY OPTION
The Annuity Commencement Date and the Annuity Option may be changed, but any
such change must be made in writing and received by us at least 30 days prior to
the scheduled Annuity Commencement Date.
ANNUITY OPTIONS
Any one of the following Annuity Options may be elected subject to certain tax
law qualification limitations on distributions:
OPTION 1 -- LIFE ANNUITY: It would be possible under this Option for an
Annuitant to receive only one payment if he/she died before the due date of the
second annuity payment, two if he/she died before the third payment and so on.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED: An
annuity providing monthly income based on the life of the Annuitant for a fixed
period of 120 months, 180 months or 240 months (as selected). If the Annuitant
dies before the monthly payments are completed, the Company will continue to
make payments for the remainder of the period.
OPTION 3 -- CASH REFUND LIFE ANNUITY: An annuity payable monthly during the
lifetime of the Annuitant on whose life payments are based provided that, at the
death of the Annuitant, the beneficiary will receive an additional payment equal
to the excess, if any, of (a) minus (b) where (a) is the amount applied under
this option and (b) is the sum of all Annuity Payments previously made.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY: An annuity payable monthly
during the joint lifetime of the Annuitant and a secondary payee on whose lives
payments are based, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor. It
would be possible under this Option for the Annuitant or secondary payee to
receive only one payment in the event of death before the due date for the
second payment and so on.
OPTION 5 -- OTHER ANNUITY OPTIONS: An annuity payable as is mutually agreed on
by the Company and the Annuitant or Owner, as provided in the Plan, if any.
The Tables contained in the Certificate provide for guaranteed dollar amounts of
monthly payments for each $1,000 applied under the first five Annuity Options.
For Options 1, 2, 3 and 4, the amount of each payment will depend on the age
(and sex, if applicable) of the payees.
The Tables for Options 1, 2, 3 and 4 are based on the Progressive Annuity Table
(assuming births in the year 1900) and a net investment rate of 3.5% a year. The
Company may, at its 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 five Annuity Options. Income
Options (Payments of a Fixed Amount, Payments for a Fixed Period and Amounts
Held at Interest) are also available where permitted by tax laws.
ANNUITY PAYMENTS
The first payment under any Annuity Option will be made on the first day of the
month following the Annuity Commencement Date. Subsequent payments will be made
on the first day of each month in accordance with the manner of payment
selected.
If at any time payments under an Annuity Option are less than $50 per payment,
we may change the frequency of payment to such intervals as will result in
annuity payments of at least $50.
7
<PAGE> 19
Once annuity payments have commenced, no surrender of the annuity benefit can be
made for the purpose of receiving a lump-sum settlement in lieu of payments.
DEATH OF ANNUITANT AFTER ANNUITY COMMENCEMENT DATE
In the event of the death of the Annuitant after the Annuity Commencement Date,
the present values on the date of death of any remaining guaranteed payments
will be paid in one sum to the beneficiary designated unless other provisions
have been made. Calculations of present values will be based on the interest
rate that we use to determine the amount of each payment.
INVESTMENTS BY THE COMPANY
- --------------------------------------------------------------------------------
Assets of the Company must be invested in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that may be made by life insurance companies and the percentage of
their assets that may be committed to any particular type of investment. In
general, these laws permit investments, within specified limits and subject to
certain qualifications, in federal, state, and municipal obligations, corporate
bonds, preferred and common stocks, real estate mortgages, real estate and
certain other investments. All claims by purchasers of the Contracts and
Certificates, and other general account products, will be funded by the
Company's general account.
In establishing Guaranteed Interest Rates, the Company will consider the yields
on fixed income securities that are part of the Company's current investment
strategy for the Contracts and Certificates at the time that the Guaranteed
Interest Rates are established. (See "Establishment of Guaranteed Interest
Rates," page 3.) The current investment strategy for the Contracts is to invest
in fixed income securities, including public bonds, privately placed bonds, and
mortgages, some of which fixed income securities may be zero coupon securities.
While the foregoing generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Connecticut and other state insurance laws.
AMENDMENT
- --------------------------------------------------------------------------------
We reserve the right to amend the Contracts and Certificates to meet the
requirements of applicable federal or state laws or regulations. We will notify
you in writing of any such amendments.
ASSIGNMENT
- --------------------------------------------------------------------------------
Rights evidenced by a Contract or a Certificate may be assigned as permitted by
applicable law, unless endorsed to the contrary. An assignment will not be
binding on us until we receive notice in writing. We assume no responsibility
for the validity or effect of any assignment. You should consult your tax
advisor regarding the tax consequences of an assignment. Ownership of Contracts
issued in connection with Section 401(a), 401(k), 403(a), 403(b), 408, 414(d) or
457 plans may not generally be assigned.
DISTRIBUTION
- --------------------------------------------------------------------------------
Tower Square Securities, Inc. (Tower Square) is the principal underwriter of the
Contracts and Certificates. Tower Square is registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 as a
broker-dealer, and is a member of the National Association of Securities
Dealers, Inc. It is anticipated that an affiliated broker dealer will become the
principal underwriter in late 1996 or early 1997.
Tower Square may enter into Distribution Agreements with certain broker-dealers
registered under the Securities Exchange Act of 1934. Under the Distribution
Agreements such broker-dealers may offer Contracts and Certificates to persons
who have established an account with the broker-
8
<PAGE> 20
dealer. In addition, the Company may offer Contracts and Certificates to members
of certain other eligible groups. The Company will pay a maximum commission of
4.5%. In the future, the Company may pay a commission on an election of a
subsequent Guarantee Period by a Participant or an Owner.
In addition, the Company may offer Contracts and Certificates to members of
certain other eligible groups through trusts or otherwise.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
GENERAL
The Company is taxed as a life insurance company under Subchapter L of the
Internal Revenue Code (the "Code"). Generally, amounts credited to a Contract
are not taxable until received by the Owner, Participant or beneficiary, either
in the form of Annuity Payments or other distributions. Tax consequences and
limits are described further below for each annuity program. For the following
discussion, the term "participant" generally refers to the individual under a
Certificate and the owner of an individual Contract.
SECTION 403(B) PLANS AND ARRANGEMENTS
Purchase Payments for tax-deferred annuity contracts may be made by an employer
for employees under annuity plans adopted by public educational organizations
and certain organizations which are tax exempt under Section 501(c)(3) of the
Code. Within statutory limits, these payments are not currently includable in
the gross income of the participants. Increases in the value of the Contract
attributable to these purchase payments are similarly not subject to current
taxation. The income in the Contract is taxable as ordinary income whenever
distributed.
An additional tax of 10% will apply to any taxable distribution received by the
Participant before the age of 59 1/2, except when due to death, disability, or
as part of a series of payments for life or life expectancy, or made after the
age of 55 with separation from service. There are other statutory exceptions.
Amounts attributable to salary reductions and income thereon may not be
withdrawn prior to attaining the age of 59 1/2, separation from service, death,
total and permanent disability, or in the case of hardship as defined by federal
tax law and regulations. Hardship withdrawals are available only to the extent
of the salary reduction contributions and not from the income attributable to
such contributions. These restrictions do not apply to assets held generally as
of December 31, 1988.
Distribution must begin by April 1st of the calendar year following the calendar
year in which the Participant attains the age of 70 1/2. Certain other mandatory
distribution rules apply at the death of the participant.
Eligible rollover distributions, including most partial or full redemptions or
"term-for-years" distributions of less than 10 years, are eligible for direct
rollover to another 403(b) contract or to an Individual Retirement Arrangement
(IRA) without federal income tax withholding.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing trust described in Section 401(a) of
the Code and exempt from tax under Section 501(a) of the Code, purchase payments
made by an employer are not currently taxable to the Participant and increases
in the value of a Contract are not subject to taxation until received by a
Participant or beneficiary.
Distributions in the form of Annuity or Income Payments are taxable to the
Participant or beneficiary as ordinary income in the year of receipt. Any
distribution that is considered the Participant's "investment in the Contract"
is treated as a return of capital and is not taxable. Certain lump-sum
distributions described in Section 402 of the Code may be eligible for special
9
<PAGE> 21
ten-year forward averaging treatment for individuals born before January 1,
1936. All individuals may be eligible for favorable five-year forward averaging
of lump-sum distributions. Certain eligible rollover distributions including
most partial and full surrenders or term-for-years distributions of less than 10
years are eligible for direct rollover to an eligible retirement plan or to an
IRA without federal income tax withholding.
An additional tax of 10% will apply to any taxable distribution received by the
Participant before the age of 59 1/2, except by reason of death, disability or
as part of a series of payments for life or life expectancy, or at early
retirement at or after the age of 55. There are other statutory exceptions.
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not exceeding $2,000 per
individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse is not employed, the individual may establish IRAs for the individual and
spouse. Purchase payments may then be made annually into IRAs for both spouses
in the maximum amount of 100% of earned income up to a combined limit of $2,250.
Partial or full distributions made prior to the age of 59 1/2, except in the
case of death, disability or distribution for life or life expectancy, will
incur a penalty tax of 10% plus ordinary income tax treatment of the taxable
amount received. Distributions after the age of 59 1/2 are treated as ordinary
income. Amounts contributed after 1986 on a non-deductible basis are not
includable in income when distributed. Distributions must commence by April 1st
of the calendar year after the close of the calendar year in which the
individual attains the age of 70 1/2. The individual must maintain personal and
tax return records of any non-deductible contributions and distributions.
Section 408(k) of the Code provides for the purchase of a Simplified Employee
Pension (SEP) plan. A SEP is funded through an IRA with an annual employer
contribution limit of 15% of compensation up to $30,000 for each Participant.
SECTION 457 PLANS
Section 457 of the Code allows employees and independent contractors of state
and local governments and tax-exempt organizations to defer a portion of their
salaries or compensation to retirement years without paying current income tax
on either the deferrals or the earnings on the deferrals.
The Owner of Contracts issued under Section 457 plans is the employer or a
contractor of the Participant and amounts may not be made available to
participants (or beneficiaries) until separation from service, retirement or
death or an unforeseeable emergency as determined by Treasury Regulations. The
proceeds of annuity contracts purchased by Section 457 plans are subject to the
claims of general creditors of the employer or contractor.
Distributions must begin generally by April 1st of the calendar year following
the calendar year in which the participant attains the age of 70 1/2. Certain
other mandatory distribution rules apply upon the death of the participant.
All distributions from plans that meet the requirements of Section 457 of the
Code are taxable as ordinary income in the year paid or made available to the
Participant or beneficiary.
NONQUALIFIED ANNUITIES
Individuals may purchase tax-deferred annuities without tax law funding limits.
The purchase payments receive no tax benefit, deduction or deferral, but
increases in the value of the Contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other than an individual,
however, (e.g., by a corporation), the increases in value attributable to
purchase
10
<PAGE> 22
payments made after February 28, 1986 are includable in income annually.
Furthermore, for contracts issued after April 22, 1987, all deferred increases
in value will be includable in the income of an Owner when that Owner transfers
the Contract without adequate consideration.
The federal tax law requires nonqualified annuity contracts issued on or after
January 19, 1985 to meet minimum mandatory distribution requirements upon the
death of the Owner. Failure to meet these requirements will cause the succeeding
Owner or beneficiary to lose the tax benefits associated with annuity contracts,
i.e., primarily the tax deferral prior to distribution. The distribution
required depends upon whether an Annuity Option is elected or whether the
succeeding Owner is the surviving spouse. Contracts will be administered by the
Company in accordance with these rules.
If two or more nonqualified annuity contracts are purchased from the same
insurer within the same calendar year, distributions from any of them will be
taxed based upon the amount of income in all of the same calendar year series of
annuities. This will generally have the effect of causing taxes to be paid
sooner on the deferred gain in the contracts.
Those receiving partial distributions made before annuitization of a Contract
will generally be taxed on an income-first basis to the extent of income in the
Contract. Certain pre-August 14, 1982 deposits into a nonqualified annuity
contract that have been placed in the Contract by means of a tax-deferred
exchange under Section 1035 of the Code may be withdrawn first without income
tax liability. This information on deposits must be provided to the Company by
the other insurance company at the time of the exchange. There is income in the
Contract generally to the extent the Cash Value exceeds the investment in the
Contract. The investment in the Contract is equal to the amount of premiums paid
less any amount received previously which was excludable from gross income. Any
direct or indirect borrowing against the value of the Contract or pledging of
the Contract as security for a loan will be treated as a cash withdrawal under
the tax law.
With certain exceptions, the law will impose an additional tax if an Owner makes
a withdrawal of any amount under the Contract which is allocable to an
investment made after August 13, 1982. The amount of the additional tax will be
10% of the amount includable in income by the Owner because of the withdrawal.
The additional tax will not be imposed if the amount is received on or after the
Owner reaches the age of 59 1/2, or if the amount is one of a series of
substantially equal periodic payments made for life or life expectancy of the
taxpayer. The additional tax will not be imposed if the withdrawal or partial
surrender follows the death or disability of the Owner.
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
Under the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended,
certain special provisions may apply to the Contract if the Owner of a Section
403(b) plan Contract or certain other tax-benefited contracts requests that the
Contract be issued to conform to ERISA or if the Company has notice that the
Contract was issued pursuant to a plan subject to ERISA.
ERISA requires that certain Annuity Options, withdrawals or other payments and
any application for a loan secured by the Contract may not be made until the
Participant has filed a Qualified Election with the plan administrator. Under
certain plans, ERISA also requires that a designation of a beneficiary other
than the participant's spouse be deemed invalid unless the participant has filed
a Qualified Election.
A Qualified Election must include either the written consent of the
Participant's spouse, notarized or witnessed by an authorized plan
representative, or the participant's certification that there is no spouse or
that the spouse cannot be located.
The Company intends to administer all contracts to which ERISA applies in a
manner consistent with the direction of the plan administrator regarding the
provisions of the plan, in accordance with applicable law. Because these
requirements differ according to the plan, a person contemplating the purchase
of an annuity Contract should consider the provisions of the plan.
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<PAGE> 23
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will be
subject to federal income tax withholding, generally pursuant to Section 3405 of
the Code. The application of this provision is summarized below.
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(B) PLANS OR ARRANGEMENTS
OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is an unwaivable 20% tax withholding for plan distributions that
are eligible for rollover to an IRA or to another retirement plan but
that are not directly rolled over. A distribution made directly to a
Participant or beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or
(b) a complete term-for-years settlement distribution is elected for a
period of ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is taken
after the attainment of the age of 70 1/2 or as otherwise required by
law.
A distribution including a rollover that is not a direct rollover will
require the 20% withholding, and a 10% additional tax penalty may apply
to any amount not added back in the rollover. The 20% withholding may be
recovered when the participant or beneficiary files a personal income tax
return for the year if a rollover was completed within 60 days of receipt
of the funds, except to the extent that the participant or spousal
beneficiary is otherwise underwithheld or short on estimated taxes for
that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1 above, the
portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding, to the extent such
aggregate distributions exceed $200 for the year, unless the recipient
elects not to have taxes withheld. If an election out is not provided,
10% of the taxable distribution will be withheld as federal income tax.
Election forms will be provided at the time distributions are requested.
This form of withholding applies to all annuity programs.
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR)
The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding under the wage
withholding tables as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld or
have income taxes withheld at a different rate by providing a completed
election form. Election forms will be provided at the time distributions
are requested. This form of withholding applies to all annuity programs.
As of January 1, 1996, a recipient receiving periodic payments (e.g.,
monthly or annual payments under an Annuity Option) which total $14,350
or less per year, will generally be exempt from the withholding
requirements.
Recipients who elect not to have withholding made are liable for payment of
federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient.
Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, United States citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are not permitted to
elect out of withholding.
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<PAGE> 24
TAX ADVICE
Because of the complexity of the law and the fact that the tax results will vary
according to the factual status of the individual involved, tax advice may be
needed by a person contemplating purchase of an annuity contract and by an
Owner, Participant or beneficiary who may make elections under a contract. It
should be understood that the foregoing description of the federal income tax
consequences under these contracts is not exhaustive and that special rules are
provided with respect to situations not discussed here. It should be understood
that if a tax-benefited plan loses its exempt status, employees could lose some
of the tax benefits described. For further information, a qualified tax adviser
should be consulted.
LEGAL OPINION
- --------------------------------------------------------------------------------
Legal matters in connection with federal laws and regulations affecting the
issue and sale of the Modified Guaranteed Annuity Contracts described in this
Prospectus and the organization of the Company, its authority to issue such
Contracts under Connecticut law, and the validity of the forms such Contracts
under Connecticut law have been passed on by the General Counsel of the Life and
Annuities Division of the Company.
EXPERTS
- --------------------------------------------------------------------------------
The consolidated financial statements and schedules of the Travelers Insurance
Company and Subsidiaries as of December 31, 1995 and 1994, and for the years
then ended, have been incorporated by reference herein and in the registration
statement in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The report of KPMG
Peat Marwick LLP covering the December 31, 1995 consolidated financial
statements of The Travelers Insurance Company and its subsidiaries refers to a
change in the accounting for investments in accordance with provisions of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," in 1994.
The consolidated statements of operations and retained earnings and cash flows
of The Travelers Insurance Company and Subsidiaries for the year ended December
31, 1993, included in The Travelers Insurance Company's Form 10-K for the year
ended December 31, 1995, have been incorporated by reference herein in reliance
upon the report dated January 24, 1994, of Coopers & Lybrand L.L.P., certified
public accountants, and upon the authority of said firm as experts in accounting
and auditing.
13
<PAGE> 25
APPENDIX A
- --------------------------------------------------------------------------------
ILLUSTRATION OF A MARKET VALUE ADJUSTMENT
Deposit: $50,000.00
Guarantee Period: 5 Years
Guaranteed Interest Rate: 5% Effective Annual Rate
The following examples illustrate how the Market Value Adjustment may affect the
values of your Contract. In these examples, the surrender occurs one year after
a Deposit of $50,000 was made to the Contract. The Maturity Value of this
Deposit would be $63,814.08 at the end of the five-year Guarantee Period.
However, after one year, when the surrenders occur in these examples, the value
of the Deposit and accumulated guaranteed interest would be $52,500.00.
The Market Value Adjustment will be based on the rate the Company is crediting
at the time of surrender on new Deposits of the same term-to-maturity as the
time remaining in your Guarantee Period. One year after the Deposit, you would
have four years remaining in the five-year Guarantee Period.
EXAMPLE OF A NEGATIVE MARKET VALUE ADJUSTMENT
A negative Market Value Adjustment results from a surrender that occurs when
interest rates have increased since the date of Deposit. Assume interest rates
have increased one year after the Deposit and the Company is crediting 7% for a
four-year Guarantee Period. If you surrender the full Deposit, the Market
Adjusted Value would be:
<TABLE>
<S> <C> <C> <C> <C>
1 (4)
$47,784.02 = $63,814.08 X ---------------
1 + .07 + .005
</TABLE>
The Market Value Adjustment is a reduction of $4,715.98 from the Deposit plus
accumulated interest:
$47,784.02 = $52,500.00 - $4,715.98
If instead of a full surrender, 50% of the Deposit were surrendered, the Market
Adjusted Value of the surrendered portion would be 50% of the full surrender:
<TABLE>
<S> <C> <C> <C> <C>
1 (4)
$23,892.01 = $31,907.04 X ---------------
1 + .07 + .005
</TABLE>
The Maturity Value after the partial surrender would be 50% of the Maturity
Value prior to surrender, or $31,907.04.
EXAMPLE OF A POSITIVE MARKET VALUE ADJUSTMENT
A positive Market Value Adjustment results from a surrender that occurs when
interest rates have decreased since the date of Deposit. Assume interest rates
have decreased one year later and the Company is then crediting 3.5% for a
four-year Guarantee Period.
If you surrender the full Deposit, the Market Adjusted Value would be:
<TABLE>
<S> <C> <C> <C> <C>
1 (4)
$54,548.54 = $63,814.08 X ----------------
1 + .035 + .005
</TABLE>
14
<PAGE> 26
The Market Value Adjustment is an increase of $2,048.54 over the Deposit plus
accumulated interest:
$54,548.54 = $52,500.00 + $2,048.54
If instead of a full surrender, 50% of the Deposit were surrendered, the Market
Adjusted Value of the surrendered portion would be 50% of the full surrender:
<TABLE>
<S> <C> <C> <C> <C>
1 (4)
$27,274.27 = $31,907.04 X ----------------
1 + .035 + .005
</TABLE>
The Maturity Value after the partial surrender would be 50% of the Maturity
Value prior to the surrender, or $31,907.04.
These examples only illustrate what may happen when interest rates increase or
decrease after a Deposit is made to the Contract. A particular Market Value
Adjustment may have a greater or lesser impact than that shown in these
examples, depending on how much interest rates have changed since the Deposit
and the amount of time remaining to Maturity. In addition, a surrender charge
may be assessed on surrenders made before the Deposit has been under the
Contract for five years.
15
<PAGE> 27
MODIFIED GUARANTEED ANNUITY CONTRACTS
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
L-11167 TIC Ed 5-96
Printed in U.S.A.
<PAGE> 28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Registration Fees: $50,000 for $200,000,000 in interests of Modified
Guaranteed Annuity Contracts
Estimate of Printing Costs: $9,000.00
Cost of Independent Accountants: $8,000.00
Item 15. Indemnification of Directors and Officers
Section 33-320a of the Connecticut General Statutes ("C.G.S.") regarding
indemnification of directors and officers of Connecticut corporations provides
in general that Connecticut corporations shall indemnify their officers,
directors and certain other defined individuals against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses actually incurred
in connection with proceedings against the corporation. The corporation's
obligation to provide such indemnification generally does not apply unless (1)
the individual is successful on the merits in the defense of any such
proceeding; or (2) a determination is made (by persons specified in the
statute) that the individual acted in good faith and in the best interests of
the corporation; or (3) the court, upon application by the individual,
determines in view of all of the circumstances that such person is fairly and
reasonably entitled to be indemnified, and then for such amount as the court
shall determine. With respect to proceedings brought by or in the right of the
corporation, the statute provides that the corporation shall indemnify its
officers, directors and certain other defined individuals, against reasonable
expenses actually incurred by them in connection with such proceedings, subject
to certain limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut corporation
cannot indemnify a director or officer to an extent either greater or less than
that authorized by the statute, e.g., pursuant to its certificate of
incorporation, by-laws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Travelers Group Inc. provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Registrant. This insurance provides for coverage against loss from claims made
against directors and officers in their capacity as such, including, subject to
certain exceptions, liabilities under the federal securities laws.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of their counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 29
Item 16. Exhibits
(a) Exhibits
1. Underwriting Agreement.
2. Agreement and Plan of Merger dated June 25, 1995, by and among
United HealthCare Corporation, Montana Acquisition, Inc., The
MetraHealth Companies, Inc. and Certain Other Persons.
(Incorporated by reference to Exhibit 2 to Pre-Effective
Amendment No. 1 on Form S-2, File No. 33-58677, filed on July
11, 1995.)
4. Instruments Defining the Rights of Security Holders.
5. Opinion Re: Legality, Including Consent.
10. Material Contracts.
a. Master Agreement, dated as of September 1, 1994, between
the Company and Metropolitan Life Insurance Company
("MetLife"), incorporated by reference to Exhibit 10.03 to
The Travelers Insurance Company's Form 10-Q for the quarter
ended September 30, 1994, File No. 33-33691, filed on
November 14, 1994.
b. Group Life Insurance and Related Businesses Acquisition
Agreement, dated as of September 1, 1994, among MetLife,
the Company, The Travelers Indemnity Company of Rhode
Island and The Travelers Insurance Company of Illinois,
incorporated by reference to Exhibit 10.04 to The Travelers
Insurance Company's Form 10-Q for the quarter ended
September 30, 1994, File No. 33-33691, filed on November
14, 1994.
23(a). Consent of Coopers & Lybrand L.L.P., Independent Accountants, to
the inclusion in this Form S-2 of their report on The Travelers
Insurance Company and Subsidiaries consolidated financial
statements contained in Form 10-k (as in incorporated by
reference herein), and to the reference in the Prospectuses to
such firm as "Experts" in accounting and auditing.
23(b). Consent of KPMG Peat Marwick LLP, Independent Auditors, to the
inclusion in this Form S-2 of their reports on The Travelers
Insurance Company and Subsidiaries consolidated financial
statements contained in Form 10-k (as incorporated by reference
herein), and to the reference in the Prospectuses to such firm
as "Experts" in accounting and auditing.
23(c). Consent of Counsel (see Exhibit 5).
24(a). Powers of Attorney authorizing Jay S. Fishman or Ernest J.
Wright as signatory for Michael A. Carpenter, Robert I. Lipp,
Charles O. Prince, III, Marc P. Weill, Irwin R. Ettinger and
Donald T. DeCarlo.
24(b) Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Jay S. Fishman and Ian R. Stuart.
27. Financial Data Schedule. (Incorporated herein by reference to
Exhibit 27 to From 10-K for the year ended December 31, 1995,
File No. 33-33691, filed on March 28, 1996.)
<PAGE> 30
Item 17. Undertakings
The undersigned registrant hereby undertakes as follows, pursuant to Item 512
of Regulation S-K:
(a) Rule 415 offerings:
1. To file, during any period in which offers or sales of the
registered securities are being made, a post-effective amendment
to this registration statement:
a. to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
b. to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
c. to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(h) Requests for Acceleration of Effective Date:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 15 above or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the registrant by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this amendment to this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hartford, State of Connecticut, on April 16,
1996.
THE TRAVELERS INSURANCE COMPANY
(Registrant)
By: *Ian R. Stuart
------------------------------------
Ian R. Stuart
Vice President, Chief Financial Officer
Chief Accounting Officer and Controller
Pursuant to the requirements of the Securities Act of 1933, this amendment to
this registration statement has been signed by the following persons in the
capacities indicated on April 16, 1996.
<TABLE>
<S> <C>
*ROBERT I. LIPP Director and Chairman
- -------------------------------
(Robert I. Lipp)
*MICHAEL A. CARPENTER Director, President and
- ------------------------------- Chief Executive Officer
(Michael A. Carpenter)
*JAY S. FISHMAN Director
- -------------------------------
(Jay S. Fishman)
*CHARLES O. PRINCE, III Director
- -------------------------------
(Charles O. Prince, III)
*MARC P. WEILL Director
- -------------------------------
(Marc P. Weill)
*IRWIN R. ETTINGER Director
- -------------------------------
(Irwin R. Ettinger)
*DONALD T. DeCARLO Director
- -------------------------------
(Donald T. DeCarlo)
*IAN R. STUART Vice President, Chief Financial Officer,
- ------------------------------- Chief Accounting Officer and Controller
(Ian R. Stuart)
*By: /s/Ernest J. Wright
--------------------------------------
Ernest J. Wright, Attorney-in-Fact
</TABLE>
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- -------- -----------
<S> <C> <C>
1 Underwriting Agreement Electronically
2. Agreement and Plan of Merger dated June 25, 1995,
by and among United HealthCare Corporation,
Montana Acquisition, Inc., The MetraHealth
Companies, Inc. and Certain Other Persons.
(Incorporated by reference to Exhibit 2 to
Pre-Effective Amendment No. 1 on Form S-2,
File No. 33-58677, filed on July 11, 1995.)
4 Instruments Defining the Rights of Security Holders Electronically
5 Opinion Re: Legality, Including Consent. Electronically
10 Material Contracts.
a. Master Agreement, dated as of September 1,
1994, between the Company and Metropolitan Life
Insurance Company ("MetLife"), incorporated by
reference to Exhibit 10.03 to The Travelers Insurance
Company's Form 10-Q for the quarter ended
September 30, 1994, File No. 33-33691, filed on
November 14, 1994.
b. Group Life Insurance and Related Businesses
Acquisition Agreement, dated as of September 1,
1994, among MetLife, the Company, The
Travelers Indemnity Company of Rhode Island
and The Travelers Insurance Company of Illinois,
(Incorporated by reference to Exhibit 10.04 to
The Travelers Insurance Company's Form 10-Q
for the quarter ended September 30, 1994,
File No. 33-33691, filed on November 14, 1994.
23(a) Consent of Coopers & Lybrand L.L.P., Independent , Electronically
Accountants, to the inclusion in this Form S-2 of their
report on The Travelers Company and Subsidiaries consolidated
financial statements contained in Form 10-k
(as incorporated by reference herein), and to
the reference in the Prospectuses to such firm as "Experts"
in accounting and auditing.
23(b) Consent of KPMG Peat Marwick, LLP, Independent Electronically
Auditors, to the inclusion in this Form S-2 of their reports
on The Travelers Company and Subsidiaries consolidated
financial statements contained in Form 10-k
(as incorporated by reference herein), and to
the reference in the Prospectuses to such firm as "Experts"
in accounting and auditing.
23(c) Consent of Counsel (see Exhibit 5). Electronically
</TABLE>
<PAGE> 33
<TABLE>
<S> <C> <C>
24(a). Powers of Attorney authorizing Jay S. Fishman or Electronically
Ernest J. Wright as signatory for Robert I. Lipp,
Michael A. Carpenter, Charles O. Prince, III,
Marc P. Weill, Irwin R. Ettinger and Donald T. DeCarlo.
24(b) Power of Attorney authorizing Ernest J. Wright or Electronically
Kathleen A. McGah as signatory for Michael A. Carpenter,
Jay S. Fishman and Ian R. Stuart.
27. Financial Data Schedule. (Incorporated herein by reference
to Exhibit 27 to From 10-K for the year ended December 31,
1995, File No. 33-33691, filed on March 28, 1996.)
</TABLE>
<PAGE> 1
EXHIBIT 1
PRINCIPAL UNDERWRITING AGREEMENT
PRINCIPAL UNDERWRITING AGREEMENT (the "Agreement") made this 17th day
of August, 1995, by and among The Travelers Insurance Company, a Connecticut
stock insurance company (hereinafter the "Company"), Tower Square Securities,
Inc., a Connecticut general business corporation (hereinafter "TSSI"), and The
Travelers Separate Account MGA (hereinafter "Separate Account MGA"), a
separate account of the Company established on March 31, 1986 by its Chairman
of the Board in accordance with a resolution adopted by the Company's Board of
Directors and pursuant to Section 38a-433 of the Connecticut General Statutes.
1. The Company hereby agrees to provide all administrative services
relative to modified guaranteed annuity contracts and revisions thereof
(hereinafter "Contracts") sold by the Company, the net proceeds of which or
reserves for which are maintained in Separate Account MGA.
2. Tower Square hereby agrees to perform all sales functions
relative to the Contracts. The Company agrees to reimburse TSSI for
commissions paid, other sales expenses and properly allocable overhead expenses
incurred in performance thereof.
3. For providing the administrative services referred to in
paragraph 1 above and for reimbursing TSSI for the sales functions referred to
in paragraph 2 above, the Company will receive the deductions for sales and
administrative expenses which are stated in the Contracts.
4. The Company will furnish at its own expense and without cost to
Separate Account MGA the administrative expenses of Separate Account MGA,
including but not limited to:
(a) office space in the offices of the Company or in such other
place as may be agreed upon from time to time, and all necessary
office facilities and equipment;
(b) necessary personnel for managing the affairs of Separate Account
MGA, including clerical, bookkeeping, accounting and other
office personnel;
(c) all information and services, including legal services, required
in connection with registering and qualifying Separate Account
MGA or the Contracts with federal and state regulatory
authorities, preparation of registration statements and
prospectuses, including amendments and revisions thereto, and
any other reports required to be furnished to Contract Owners,
including the costs of printing and mailing such items;
(d) the costs of preparing, printing, and mailing all sales
literature;
(e) all registration, filing and other fees in connection with
compliance requirements of federal and state regulatory
authorities;
(f) the charges and expenses of independent accountants retained by
Separate Account MGA, if applicable.
-1-
<PAGE> 2
5. The services of the Company and TSSI to Separate Account MGA
hereunder are not to be deemed exclusive and the Company or TSSI shall be free
to render similar services to others so long as its services hereunder are not
impaired or interfered with thereby.
6. This Agreement will be effective on the date executed, and will
remain effective until terminated by any party upon sixty (60) days notice;
provided, however, that this Agreement will terminate automatically in the
event of its assignment by any of the parties hereto.
7. Notwithstanding termination of this Agreement, the Company shall
continue to provide administrative services and mortality and expense
guarantees provided for herein with respect to Contracts in effect on the date
of termination, and the Company shall continue to receive the compensation
provided under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officials thereunto duly authorized and, in the
case of the Company and TSSI, seals to be affixed as of the day and year first
above written.
THE TRAVELERS INSURANCE COMPANY
(Seal)
By: /s/Michael A. Carpenter
Title: President
ATTEST:
/s/Ernest J. Wright
Assistant Secretary
THE TRAVELERS SEPARATE ACCOUNT MGA
By: /s/Michael A. Carpenter
WITNESS:
/s/Sandra McGrath
TOWER SQUARE SECURITIES, INC.
By: /s/Russell H. Johnson
Title: Chairman
ATTEST: (SEAL)
/s/Kathleen A. McGah
Corporate Secretary
- 2 -
<PAGE> 1
EXHIBIT 4
TheTRAVELERS
[LOGO]
THE TRAVELERS INSURANCE COMPANY . ONE TOWER SQUARE . HARTFORD, CONNECTICUT .
06183
CONTRACT OWNER SPECIMEN TMARK HR10/CORP MSTR CA
CONTRACT NUMBER 7777777 CONTRACT DATE 02/13/1996
We are pleased to provide you the benefits of this Annuity Contract.
This contract is issued in consideration of the application and the
payment of premium. It is subject to the terms and conditions stated
on the attached pages, all of which are a part of it. It is made
effective as stated in the application.
This contract is delivered in the state where the application for it
was completed by the Applicant and is subject to the laws of that
state.
Executed at Hartford, Connecticut
President
This is a legal contract between you and us. READ YOUR CONTRACT CAREFULLY.
GROUP MODIFIED GUARANTEED ANNUITY CONTRACT
ANNUITY AND INCOME OPTIONS
ELECTIVE OPTIONS WITHOUT DIVIDENDS
CASH VALUE AND CASH SURRENDER VALUE MAY INCREASE OR DECREASE IN ACCORDANCE WITH
THE MARKET VALUE ADJUSTMENT FORMULA ON THE CONTRACT SUMMARY.
<PAGE> 2
DEFINITIONS
(a) "We, us, our" means The Travelers Insurance Company;
(b) "You, your" means the Contract Owner;
(c) "Age" means age last birthday;
(d) "Contract years" means twelve month periods beginning with the Contract
Date;
(e) "Basic contract" means this contract excluding any additional benefit
for which a separate premium is charged;
(f) "Our Office" means the Home Office of The Travelers Insurance Company
or any other office which we may designate for the purpose of
administering this contract;
(g) "Participant" means an eligible person who participates in the Plan;
(h) "Participant's Interest" means the Cash Value or Cash Surrender Value
of the Participant's Individual Account to which the Participant is
entitled under this Contract. The Participant's Interest will be the
value of that Participant's Individual Accounts unless you instruct us
otherwise;
(i) "Plan" means the Plan described in this contract;
(j) "Individual Account" means Cash Value or Cash Surrender Value credited
to a Participant or beneficiary;
(k) "Owner's Account" means Cash Value credited to you;
(1) "Account" means either the Owner's Account or a Participant's
Individual Account. A Participant may have more than one Individual
Account;
(m) "Deposit" means the net premium payment or renewal amount applied to
the credit of an Account at a guaranteed interest rate to a Stated
Maturity Date;
(n) "Annuity Commencement Date" means the date on which a Participants
Annuity payments are to begin; and
(o) "Due Proof of Death" means (i) a copy of a certified death
certificate; (ii) a copy of a certified decree of a court of competent
jurisdiction as to the finding of death; (iii) a written statement by
a medical doctor who attended the deceased; or (iv) any other proof
satisfactory to us.
<PAGE> 3
CONTRACT SUMMARY
CONTRACT OWNER SPECIMEN TMARK HR10/CORP MSTR CA
CERTIFICATE NUMBER 7777777 02/13/1996 CONTRACT DATE
<TABLE>
<CAPTION>
BENEFIT DESCRIPTION
<S> <C>
GROUP MARKET VALUE ADJUSTED ANNUITY CONTRACT WITH ANNUITY AND INCOME OPTIONS
MINIMUM PREMIUM: $5,000
MAXIMUM PREMIUM: $1,000,000 WITHIN
A TWELVE MONTH PERIOD UNLESS WE CONSENT TO A LARGER AMOUNT.
</TABLE>
THE NET PREMIUM UNDER THE BASIC CONTRACT IS EQUAL TO THE GROSS PREMIUM LESS ANY
APPLICABLE PREMIUM TAX.
MARKET VALUE ADJUSTMENT FORMULA:
MARKET
ADJUSTED = (MATURITY VALUE) x 1/ [ (1 + ic + .005 )t/365 ]
VALUE
WHERE ic IS THE CURRENT GUARANTEED INTEREST RATE FOR A GUARANTEE PERIOD OF t
DAYS AND t IS THE NUMBER OF DAYS REMAINING IN THE GUARANTEE PERIOD. THE
CURRENT GUARANTEED INTEREST RATE IS DECLARED BY US PERIODICALLY AND IS THE RATE
(STRAIGHT LINE INTERPOLATION BETWEEN WHOLE YEARS) WHICH WE ARE THEN PAYING ON
PREMIUMS PAID UNDER THIS CLASS OF CONTRACTS IF APPLIED TO THE SAME MATURITY
DATE OF THE DEPOSIT TO WHICH THE FORMULA IS BEING APPLIED
AMOUNTS DEDUCTED ON SURRENDER: DURING THE FIRST FIVE YEARS AFTER A PREMIUM IS
APPLIED UNDER THE CONTRACT, THE FOLLOWING DEDUCTION WILL BE APPLIED UPON
SURRENDER:
<TABLE>
<CAPTION>
YEARS SINCE DEDUCTION AS PERCENT
PREMIUM APPLIED OF SURRENDERED CASH VALUE
--------------- -------------------------
<S> <C>
1 7%
2 6%
3 5%
4 4%
5 3%
THEREAFTER 0%
</TABLE>
NOTE: AMOUNTS DEDUCTED ON SURRENDER APPLY ON MATURITY DATES OCCURRING DURING
THE FIRST FIVE YEARS AFTER THAT PREMIUM PAYMENT IS MADE.
(BENEFITS CONTINUED)
<PAGE> 4
CONTRACT SUMMARY
CONTRACT OWNER SPECIMEN TMARK HR10/CORP MSTR CA
CERTIFICATE NUMBER 7777777 02/13/1996 CONTRACT DATE
BENEFIT DESCRIPTION
WE RESERVE THE RIGHT TO TERMINATE THIS CONTRACT WHEN THE CASH VALUE IS LESS
THAN THE TERMINATION AMOUNT OF $2,000 AND NO PREMIUM PAYMENTS HAVE BEEN MADE
FOR AT LEAST THREE YEARS.
<TABLE>
<S> <C>
TERMINATION AMOUNT: $2,000
ACCOUNT CHARGE: NONE
ACCOUNT DISTRIBUTION CHARGE: NONE
</TABLE>
NO PREMIUM PAYMENTS WILL BE ACCEPTED UNLESS SUCH PAYMENTS ARE MADE UNDER AN
EMPLOYEES' TRUST OR ANNUITY PLAN QUALIFIED UNDER SECTION 401 OF THE INTERNAL
REVENUE CODE OF THE UNITED STATES.
<PAGE> 5
BENEFITS
If a Participant is living on that Participant's Annuity Commencement date:
1. we will apply the Cash Value of the Participant's Interest to
provide an Annuity; and
2. we will pay to you or that Participant, as provided in the Plan,
the first of a series of Annuity payments.
You or the Participant, as provided in the Plan, may elect:
1. another form of Annuity or Income; or
2. an earlier date for Commencement of an Annuity or an Income, or
both;
as provided in this contract. We will determine the dollar amounts of Annuity
or Income payments as described in the Annuity Provisions or Income Provisions.
If a Participant dies:
1. while this contract continues; and
2. before the payment of that Participant's Annuity or Income;
we will, on receipt of proof of that Participant's death, pay to you or that
Participant's beneficiary, as provided in the Plan, either:
(a) the greater of the Cash Value or the Accumulated Value of that
Participant's Interest if death occurs before age 65;
or
(b) Cash Value of that Participant's Interest if death occurs on or after
age 65;
less any applicable premium tax not previously deducted.
We will determine the value of the Participant's Interest as of the day we
receive proof of that Participant's death at our Office.
If:
1. a Participant's Interest is to be applied to effect an Annuity or
Income Option; and
2. that Interest is other than the Cash Value of that Participant's
Individual Accounts;
we must receive your instructions at least 30 days before that Participant's
first Annuity or Income Payment is to be made.
VALUATION PROVISIONS
We will apply the first net premium to the credit of an Account:
1. as directed or as provided in the Plan;
2. as of the day we receive the premium for the basic contract at our
Office; or
3. on the date indicated in the application for:
a. this contract; or
b. the Individual Account;
if later.
We will apply any net premium after the first as of the day we receive it at
our Office. We will apply any renewal amount as of its Maturity Date.
NET PREMIUM -- The net premium is as shown on the CONTRACT SUMMARY.
DISTRIBUTION FROM ONE ACCOUNT TO ANOTHER ACCOUNT -- You may, as provided in the
Plan, distribute Cash Value from the Owner's Account to one or more Individual
Accounts. We will reduce the total Cash Value distributed to an Individual
Account, as necessary, to reflect any Account Distribution Charge, if any,
shown on the CONTRACT SUMMARY. No distribution is allowed between Individual
Accounts. You may, as required and as provided in the Plan, move Cash Value
from any or all Individual Accounts to the Owner's Account without a charge.
<PAGE> 6
CASH VALUE AND BENEFITS IN THE EVENT OF TERMINATION
CASH VALUE -- The Cash Value of an Account on any date is the sum of the Cash
Value of all the Deposits credited to that Account. The Cash Value of a Deposit
on any date equals (a) or (b) where:
(a) is the maturity value on the maturity date; and
(b) is the market adjusted value on any date before the maturity date of
that Deposit.
ACCUMULATED VALUE -- The Value of the Account which is compounded daily at the
Guaranteed Interest Rate(s).
MATURITY VALUE -- The Maturity Value of a Deposit is the guaranteed value of
the Deposit which is the net premium payment or renewal amount plus interest
credited on it during the Guarantee Period. We will declare the annual
effective rate of interest when the net premium is applied under this contract.
GUARANTEE PERIOD -- The Guarantee Period for a Deposit is the time between the
initial premium payment or renewal date and the maturity date for that Deposit.
At the expiration of the Guarantee Period, the Deposit may be surrendered for
its maturity value less any applicable amount deducted on surrender or renewed
for a new Guarantee Period. Interest will be credited during the new Guarantee
Period at the then current rate we are paying on premiums paid under this class
of contract. If you or the Participant, as provided in the Plan, do not give us
instructions, we will automatically renew the Deposit for either one year or
the time period required by the then current federal law to keep this Contract
qualified as an annuity contract if different.
MARKET ADJUSTED VALUE -- The Market Adjusted Value of a Deposit is the current
value of the Deposit on a date before the Maturity Date. This value is computed
using the market value adjustment formula shown on the CONTRACT SUMMARY.
ACCOUNT CHARGE -- We will deduct from the Cash Value the Account Charge, if
any, in the amount and for the period shown on the CONTRACT SUMMARY.
CASH SURRENDER -- We will, unless the Plan provides otherwise:
1. before the due date of a Participant's Annuity payment; and
2. without the consent of any beneficiary unless irrevocably named;
pay you all or any part of the Cash Surrender Value of the Participant's
Interest, less any applicable premium tax not previously deducted, if you or
that Participant, as provided in the Plan, request it in writing. You may
surrender the Owner's Account for cash, as provided in the Plan, without the
consent of any Participant. The deposit amount and the maturity value of the
deposit will be reduced in the same proportion as the ratio of the gross amount
surrendered to the Cash Value. We may delay payment of the Cash Surrender Value
for a period of not more than six months after we receive the request.
CASH SURRENDER VALUE -- The Cash Surrender Value of an Account is equal to (c)
less (d) less (e) where:
(c) is the Cash Value of all the Deposits credited to that Account;
(d) is the amount deducted on surrender as shown on the CONTRACT
SUMMARY; and
(e) is any applicable premium tax not previously deducted.
TERMINATION OF CONTRACT OR ACCOUNT --
TERMINATION BY OWNER -- IF:
1. you terminate an Account, in whole or in part, while the contract remains
in effect; and
<PAGE> 7
2. the value of the terminated Account is to be:
a. paid in cash to you or to a Participant; or
b. transferred to any other funding vehicle;
we will pay or transfer the Cash Surrender Value of the terminated Account.
If:
1. you terminate this contract, whether or not the Plan is terminated;
and
2. you or the Participant, as provided in the Plan, elect that values
are not to be paid out in cash or transferred;
we may, at our discretion, agree to apply a Participant's Interest:
1. as instructed by you or the Participant;
2. under one of the options described under "Options in the Event of
Termination of a Participant."
TERMINATION BY PARTICIPANT -- IF:
1. a Participant terminates an Individual Account, in whole or in
part, while the contract remains in effect; and
2. the value of the terminated Individual Account is to be:
a. paid in cash to the Participant; or
b. transferred to any other funding vehicle;
we will pay or transfer the Cash Surrender Value of the terminated Account.
TERMINATION BY US AND TERMINATION AMOUNT -- If
1. the Cash Value in a Participant's Individual Account is less than
the Termination Amount, if any, shown on the CONTRACT SUMMARY; and
2. no premium has been applied to the Account for at least three
years;
we reserve the right:
1. to terminate that Account; and
2. to move the Cash Value of that Participant's Individual Account to
the Owner's Account.
If the Plan does not allow for this movement to the Owner's Account, we will
pay the Cash Value, less any applicable premium tax not previously deducted, to
that Participant or to you, as provided in the Plan.
We reserve the right to terminate this contract on any Valuation Date if:
1. there is no Cash Value in any Participant's Individual Account; and
2. the Cash Value of the Owner's Account, if any, is less than the
Termination Amount; if any, shown on the CONTRACT SUMMARY; and
3. premium has not been paid for at least three years.
If this contract is terminated, we will pay to you the Cash Value of the Owner's
Account, if any, less any applicable premium tax not previously deducted.
Termination will not occur until 31 days after we have mailed notice of
termination:
1. to you or the Participant, as provided in the Plan, at the last
known address; and
2. to any assignee of record.
<PAGE> 8
OPTIONS IN THE EVENT OF TERMINATION OF A PARTICIPANT -- In the event that,
before the Annuity Commencement Date of a Participant, that Participant
terminates participation in the Plan, you or that Participant, as provided in
the Plan, with respect to that Participant's Interest may elect:
1. If that Participant is at least 50 years of age, to have that
Participant's Interest applied to provide an Annuity or Income as
provided under "Annuity Provisions" or "Income Provisions."
2. If the contract is continued, to have that Participant's Interest
applied to continue as a Paid-up Deferred Annuity for that
Participant, as provided in the "Paid-up Deferred Annuity"
provision.
3. To have you or that Participant, as provided in the Plan, receive
the Cash Surrender Value, as provided in the "Cash Surrender"
provision, that Participant's Interest.
4. If that Participant becomes a Participant under another group
contract of this same type with us, to transfer the Cash Value,
less any applicable premium tax not previously deducted, of that
Participant's Interest to that group contract, with the same
Maturity Date and interest rate as that Deposit under this
Contract.
If this contract is continued, any Cash Value to which a terminating
Participant is not entitled under the Plan, will be moved to the Owner's
Account.
AUTOMATIC BENEFIT -- In the event of termination, unless otherwise provided in
the Plan, a Participant's Interest will be applied:
1. If this contract is continued, to continue as a Paid-up Deferred
Annuity in accordance with option 2. above; or
2. If this contract is terminated, to provide an individual modified
guaranteed annuity contract on the life of that Participant in
accordance with option 4. above.
PAID-UP DEFERRED ANNUITY -- We will determine the amount of any Paid-up
Deferred Annuity Payment as described in the "Valuation Provisions" and
"Annuity Provisions." The Paid-up Deferred Annuity will be payable under the
same terms and conditions as the Annuity that would have otherwise been payable
at the Annuity Commencement Date.
ANNUITY PAYMENTS -- Termination of this contract or the Plan will not affect
payments we are making under any Annuity Option which began before the date of
termination.
MINIMUM VALUES; -- Any:
1. Paid-up Annuity Values;
2. Cash Surrender Values;
3. death benefits;
provided by this contract are not less than the minimum required by the law of
the state in which this contract is delivered.
ANNUITY PROVISIONS
AMOUNT OF PAYMENT -- The ANNUITY TABLES are used to determine the monthly
Annuity payment. They show the dollar amount of the monthly Annuity payment
which can be purchased with each $1,000 applied. The amount applied to effect
an Annuity will be:
1. the Cash Value of an Individual Account as of the date Annuity
payments start,
2. less any applicable premium taxes not previously deducted.
ANNUITY OPTIONS -- We will, subject to the conditions stated in "Election of
Options," and the Plan, pay:
1. all or any part of the Cash Value of the Participant's Interest
otherwise payable to you or that Participant:
a. in one sum on that Participant's Annuity Commencement
Date; or
b. on prior Cash Surrender of an Individual Account; or
2. amounts payable in one sum to the beneficiary on the death of that
Participant;
under one or more of the Annuity Options below.
<PAGE> 9
AUTOMATIC OPTION -- Unless the Plan provides otherwise, if:
1. the Participant is living and has a spouse; and
2. no election has been made;
we will pay:
1. on that Participant's Annuity Commencement Date;
2. a series of Annuity Payments:
a. based on the life of the Participant as the primary payee
and the Participant's spouse;
b. in accordance with Option 5.
Unless the Plan provides otherwise, if:
1. the Participant is living; and
2. has no spouse; and
3. no election has been made;
we will:
1. on that Participant's Annuity Commencement Date;
2. pay to the Participant the first of a series of Annuity payments;
a. based on the life of the Participant;
b. in accordance with Option 2;
c. with 120 monthly payments assured.
OPTION 1. -- LIFE ANNUITY -- NO REFUND -- We will make monthly Annuity
Payments:
1. during the lifetime of the person on whose life the payments are
based;
2. ending with the last monthly payment preceding death.
OPTION 2. -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENT ASSURED -- We
will make monthly Annuity payments:
1. during the lifetime of the person on whose life the payments are
based; and
2. under the conditions stated below.
If at the death of that person, payments have been made for less than 120, 180
or 240 months, as elected, we will continue to make payments:
1. to the designated beneficiary;
2. during the remainder of the period.
OPTION 3. -- CASH REFUND LIFE ANNUITY -- We will make monthly Annuity payments:
1. during the lifetime of the person on whose life the payments are
based;
2. ending with the last payment due before the death of that person
under the conditions stated below.
At death of the person on whose life the payments are based, the beneficiary
will receive in one sum, without interest, an amount equal to (a) minus (b) (if
that difference is positive) where:
(a) is the amount applied under this option; and
(b) is the sum of all Annuity payments previously made.
OPTION 4. -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- We will make monthly
annuity payments:
1. during the joint lifetime of two persons on whose lives payments
are based; and
2. during the lifetime of the survivor.
No more payments will be made after the death of the survivor.
<PAGE> 10
OPTION 5. -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- ANNUITY REDUCED ON DEATH
OF PRIMARY PAYEE -- On the death of the primary payee, if survived by the
secondary payee, we will continue to make monthly Annuity payments:
1. to the secondary payee;
2. in an amount equal to 50% of the payments which would have been
made during the lifetime of the primary payee.
No further payments will be made following the death of the survivor.
OPTION 6. -- OTHER ANNUITY OPTIONS -- We will make any other arrangements for
Annuity payments as may be mutually agreed on.
The amount of monthly payments under Annuity Options 1, 2, 3, 4 and 5 will be
determined from the ANNUITY TABLES. We reserve the right to require
satisfactory proof of the age of any person on whose life Annuity payments are
based before making the first payment under any of these options.
INCOME PROVISIONS
We will, subject to the conditions stated in "Election of Options" and the
Plan, pay:
1. all or any part of a Participant's Interest otherwise payable to
you or that Participant:
a. in one sum on that Participant's Annuity Commencement
Date; or
b. on prior Cash Surrender of an Individual Account; or
2. amounts payable in one sum to the beneficiary on the death of that
Participant;
under one or more of the Income Options below.
Cash Surrender Value used to determine the amount of any Income payment will
be:
1. except under Option 3, determined as of the date the first Income
payment is due; and
2. under Option 3, determined as of the date the Option takes effect.
OPTION 1. -- PAYMENTS OF A FIXED AMOUNT -- We will make equal payments each
month:
1 of the amount elected;
2. until the Cash Surrender Value applied under this option together
with interest at a rate of not less than 3-1/2% per year, is gone.
The final payment will include any amount that is not enough to make another
full payment.
OPTION 2. -- PAYMENTS FOR A FIXED PERIOD -- WE will make equal monthly payments
as shown in Table A for the period selected.
OPTION 3. -- AMOUNTS HELD AT INTEREST -- We will retain any amounts applied
under this option and we will pay a monthly interest on it:
1. during the lifetime of the primary payee; or
2. for any other period agreed on.
We will pay interest at the rates we declare from time to time, but not less
than 3-1/2% per year.
We will not continue interest payments:
1. to a succeeding payee;
2. beyond the 30th anniversary of the date this option first became
effective.
We will pay:
1. any amounts being retained for a succeeding payee;
2. in one sum;
3. on the 30th anniversary.
<PAGE> 11
We will:
1. if the primary payee dies;
2. on or after the 30th anniversary;
pay the amount remaining under this option to the succeeding payee in one sum.
ELECTION OF OPTIONS
We will pay any amount payable under this contract under the terms of any
Option if:
1. the amount is payable in one sum; and
2. the amount placed under an option is at least $5,000 unless we
consent to a lesser amount; and
3. the election is made:
a. in writing; and
b. by you or the Participant, if that Participant is living;
or
c. by the beneficiary, if the Participant has died.
If any periodic payment due any payee is less than $50.00, we reserve the right
to make payments at less frequent intervals.
Any election you or the Participant, as provided in the Plan, makes as to
payments after that Participant dies is not binding on the payee unless
restricted in the election.
You or that Participant as provided in the Plan, may change an election:
1. if the election has not been made irrevocable; and
2. if the change is made:
a. during the lifetime of that Participant; and
b. before that Participant's Annuity Commencement Date or
prior surrender.
On revocation of an election of:
1. any Annuity Option; or
2. any Income Option;
to be paid on the death of a Participant, any death benefit will be paid:
1. in one sum; and
2. to the beneficiary designated.
PAYMENT DATE -- The first payment under an option, except Income Option 3, is
due on the Participant's Annuity Commencement Date or any other date elected
Under Income Option 3 the first payment is due one month after that date.
PAYEE - We will make each payment to the person designated, with the
designation applying at the due date of each payment.
Each payment under any other elected option will be made to you or a
Participant, as provided in the Plan. If the last surviving payee dies while
receiving payments, we will pay in one sum:
1. any unpaid Cash Value in an Individual Account; or
2. the present value of any remaining payments assured;
to the executors or administrators of that payee, unless otherwise provided.
When payments under any annuity Option are made to other than the person on
whose life the Annuity is based, we will require assurance that that person is
living on the due date of each Annuity payment.
<PAGE> 12
RIGHTS OF PAYEE -- Unless otherwise provided in the Plan, and except as
restricted, the payee under any option will not:
1. have the right to assign any payments under that option; and
2. have the right to receive the present value of any remaining
payments; or
3. have the right to withdraw any unpaid Cash Surrender Value in an
Individual Account.
Under Income Option 3 the payee may not:
1. make more than four withdrawals in a calendar year; except
2. if four withdrawals have been made in a calendar year, the payee
will have the right to withdraw:
a. in one sum;
b. the entire amount remaining under the option.
A payee has no right to receive the present value of
future payments under an Annuity Option during the
lifetime of the person on whose life the payments are
based.
Any payee who has a right to withdraw or receive the present value of future
payments can:
1. exercise that right to the exclusion on the rights of any
succeeding payee; and
2. have the right to elect to have all or part of that amount paid
under an Annuity or Income option.
PRESENT VALUE -- The calculation of the present value of future payments under
an Annuity Option will be at an interest rate equivalent to the rate or rates
at which the first monthly payment was computed.
EXEMPTION -- All amounts held and payments made under an option will be exempt
from the claims of all creditors, to the extent allowed by law.
GENERAL PROVISIONS
THE CONTRACT -- The entire contract between us and the Applicant consists of
the contract, all attached pages, and the written application. All statements
made in the application are considered to be to the best knowledge and belief
of the Applicant and not as promises of truth. Unless it is contained in the
written application, we will not use any statement to void this contract or to
deny a claim.
No person other than one of our officers can, for us, alter or waive any terms
or provisions of this contract.
CERTIFICATES -- We will issue to you for delivery to each Participant an
individual Certificate stating in substance the benefits to which each
Participant is entitled under this contract. The word "certificate"' as used
here will include:
1. certificate riders; and
2. certificate supplements;
if any. The certificates will not, unless otherwise stated on the CONTRACT
SUMMARY, constitute a part of this contract.
PREMIUM PAYMENT -- Each premium is payable to us at our office or to one of our
authorized representatives. We will accept each premium payment after the
first, subject to the conditions and provisions shown on the CONTRACT SUMMARY,
and the requirements of the Plan.
No gross premium allocated to an Account may be decreased to an amount which is
less than the minimum premium then required under Group Modified Guaranteed
Annuity contracts issued for the class to which this contract belongs.
SEX AND AGE -- If the Participant's sex or date of birth was misstated in the
Participant's Account Authorization, all benefits of this contract are what the
premium paid would have purchased at the correct sex and age.
<PAGE> 13
Proof of a Participant's age may be filed at any time at our Office.
INCONTESTABILITY -- We will not contest the basic contract from its Date of
Issue.
OWNERSHIP-ASSIGNMENT -- The owner is shown in the application. Unless
otherwise provided in the Plan, no rights or benefits under this contract are
assignable.
BENEFICIARY -- Unless the Plan provides otherwise, a Participant's beneficiary
will be as designated in that Participant's Account Authorization. Without the
consent of any beneficiary unless irrevocably named, you, or the Participant,
as provided in the Plan, may change the designation of beneficiary:
1. during the Participant's lifetime; and
2. while this contract continues.
Any change of designation will be effective from the date you or the
Participant, as provided in the Plan, sign the request for change, whether or
not the Participant is living when we receive the request. We will not be
responsible for any payment we made before we received the request at our
Office. The interest of any beneficiary will be subject to the rights of any
assignee. The interest of any beneficiary who does not survive a Participant
will pass to you, the Participant or the Participant's executors,
administrators or assignees, as provided in the Plan.
CHANGE OF CONTRACT - We may, at any time, make any changes, including
retroactive changes, in this contract to the extent that the change is required
to meet the requirements of any law or regulation issued by any governmental
agency to which we or you are subject.
Except as provided in the paragraph above, no changes may be made in the
provisions of this contract before the 5th anniversary of the Contract Date
and, in no event will changes be made with respect to payments being made by us
under any Annuity Option which began before the date of change. On and after
the 5th anniversary of the Contract Date, unless otherwise shown on the
CONTRACT SUMMARY, we reserve the right to change:
1. the deductions from premium payments;
2. the Account Charge;
3. the Account Distribution Charge;
4. the Termination Amount; and
5. the Annuity Tables.
Any change in the Annuity Tables will be applicable only to premiums we
receive:
1. under this contract;
2. after the change.
Other changes may be applicable:
1. to all Accounts under this contract; or
2. only to Accounts established after the change; or
3. only to premiums received under this contract after the date of the
change; as we declare at the time of change.
We will give notice to you at least 90 days before the date of change is to
take effect.
REQUIRED REPORTS -- We will furnish a report to you:
1. as often as required by law; but
2. at least once in each contract year.
The report will show:
1. the Accumulated Value and the Cash Surrender Value of the contract
as of the date of the report;
2. partial surrender, loan and interest charge; and
3. any other information required.
MORTALITY AND EXPENSE -- Our actual mortality and expense experience will not
affect:
1. the amount of any Annuity or Income payments; or
2. any other values under the basic contract.
NO DIVIDENDS - This contract will not be entitled to share in our surplus
earnings.
<PAGE> 14
ANNUITY TABLES
DOLLAR AMOUNT OF THE MONTHLY ANNUITY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 APPLIED
Options 1,2, and 3-Single Life Annuities
<TABLE>
<CAPTION>
120 180 240
MONTHLY MONTHLY MONTHLY
ADJUSTED NO PAYMENTS PAYMENTS PAYMENTS CASH
AGE REFUND ASSURED ASSURED ASSURED REFUND
<S> <C> <C> <C> <C> <C>
50 $4.74 $4.69 $4.62 $4.52 $4.53
51 4.84 4.78 4.70 4.58 4.60
52 4.94 4.87 4.78 4.65 4.67
53 5.04 4.97 4.87 4.71 4.75
54 5.16 5.07 4.95 4.78 4.84
55 5.28 5.18 5.04 4.85 4.93
56 5.40 5.29 5.13 4.91 5.02
57 5.54 5.41 5.23 4.98 5.12
58 5.69 5.53 5.33 5.05 5.22
59 5.84 5.66 5.43 5.11 5.32
60 6.01 5.79 5.53 5.18 5.44
61 6.18 5.94 5.63 5.24 5.56
62 6.37 6.08 5.74 5.30 5.68
63 6.57 6.24 5.84 5.36 5.82
64 6.79 6.40 5.95 5.41 5.96
65 7.02 6.57 6.05 5.46 6.10
66 7.27 6.74 6.15 5.51 6.26
67 7.54 6.91 6.26 5.55 6.43
68 7.83 7.10 6.35 5.59 6.60
69 8.14 7.28 6.45 5.62 6.78
70 8.48 7.47 6.54 5.65 6.98
71 8.84 7.66 6.62 5.68 7.19
72 9.23 7.85 6.70 5.70 7.41
73 9.65 8.04 6.77 5.71 7.65
74 10.11 8.23 6.83 5.72 7.89
75 10.61 8.41 6.88 5.73 8.16
</TABLE>
OPTION 4 - JOINT AND LAST SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
ADJUSTED AGE OF ADJUSTED AGE OF SECOND LIFE
FIRST LIFE 51 56 58 61 63 66 71
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.21 $4.35 $4.40 $4.47 $4.51 $4.57 $4.64
55 4.37 4.58 4.66 4.78 4.85 4.94 5.07
57 4.43 4.67 4.77 4.90 4.99 5.10 5.26
60 4.51 4.80 4.92 5.09 5.20 5.36 5.59
62 4.55 4.88 5.01 5.22 5.35 5.54 5.82
65 4.62 4.99 5.15 5.39 5.56 5.81 6.19
70 4.70 5.14 5.34 5.65 5.88 6.23 6.83
</TABLE>
<PAGE> 15
OPTION 5 JOINT AND LAST SURVIVOR LIFE ANNUITY
ANNUITY REDUCES ON DEATH OF PRIMARY PAYEE
<TABLE>
<CAPTION>
ADJUSTED AGE OF
PRIMARY PAYEE ADJUSTED AGE OF SECOND PAYEE
46 51 56 61
<S> <C> <C> <C> <C>
50 $4.37 $4.46 $4.54 $4.61
55 4.65 4.78 4.91 5.02
60 4.97 5.15 5.34 5.51
65 5.34 5.57 5.83 6.10
70 5.75 6.05 6.40 6.78
</TABLE>
Dollar amounts of the first monthly payments for ages not shown in these Tables
will be calculated on the same basis as those shown and may be obtained from
us. Amounts shown in these Tables are based on the Progressive Annuity Table,
with a two year set-back, (assuming births in the year 1900) with interest at
the rate of 3-1/2 per annum. The adjusted age of the person on whose life the
Annuity is based is determined from the actual age last birthday on the due
date of the first Annuity payment in the following manner.
<TABLE>
<S> <C> <C> <C> <C>
Calendar Year in which
First Payment is Due . . . 1981-1990 1991-2000 2001-2010 2011 & later
Adjusted Age is Actual Age . . . minus 3 minus 4 minus 5 minus 6
</TABLE>
TABLE A
MONTHLY INSTALLMENTS FOR FIXED PERIOD PER $1,000 OF CASH VALUE -3-1/2%
<TABLE>
<CAPTION>
MONTHLY MONTHLY MONTHLY
YEARS PAYMENT YEARS PAYMENT YEARS PAYMENT
<S> <C> <C> <C> <C> <C>
1 $84.654 11 $9.086 21 $5.565
2 43.055 12 8.464 22 5.393
3 29.194 13 7.939 23 5.236
4 22.268 14 7.490 24 5.093
5 18.115 15 7.101 25 4.963
6 15.350 16 6.763 26 4.842
7 13.376 17 6.465 27 4.732
8 11.899 18 6.201 28 4.630
9 10.751 19 5.966 29 4.535
10 9.835 20 5.755 30 4.447
</TABLE>
<PAGE> 16
ENDORSEMENT
This endorsement is made a part of this Contract at its Date of Issue.
This endorsement deletes any and all reference to "sex'' in the contract to
which it is attached.
THE TRAVELERS INSURANCE COMPANY
President
<PAGE> 17
ENDORSEMENT
ANNUITY PROVISIONS
The "Automatic Option" under the "ANNUITY PROVISIONS" is amended by deleting
the provision and replacing it with the following:
AUTOMATIC OPTION- Unless you (the owner) elect otherwise, if the
Annuitant is living and has a spouse, we (the Company) will, on the
Maturity Date, pay to you the first of a series of Annuity payments
based on the life of the Annuitant as the primary payee and the
Annuitant's spouse in accordance with the Joint and Last Survivor Life
Annuity -- Annuity Reduces on Death of Primary Payee Option. Unless
you elect otherwise, if the Annuitant is living and the Annuitant has
no spouse, we will, on the Maturity Date, pay to you the first of a
series of Annuity payments based on the life of the Annuitant, in
accordance with Option 2 with 120 monthly payments assured.
The "ANNUITY PROVISIONS" are amended by adding an additional Annuity Option as
follows:
JOINT AND LAST SURVIVOR LIFE ANNUITY -- Annuity Reduces on Death of
Primary Payee -- We will make monthly Annuity payments during the
joint lifetime of two persons on whose lives payments are based. One
of the two persons will be designated as the primary payee. The other
will be designated the secondary payee. On the death of the secondary
payee, if survived by the primary payee, we will continue to make
monthly Annuity payments to the primary payee in the same amount that
would have been payable during the joint lifetime of the two persons.
On the death of the primary payee, if survived by the secondary payee,
we will continue to make monthly Annuity payments to the secondary
payee, in an amount equal to 50% of the payments which would have been
made during the lifetime of the primary payee. No further payments
will be made following the death of the survivor.
The "ANNUITY TABLES" are amended by adding the following:
JOINT AND LAST SURVIVOR LIFE ANNUITY
ANNUITY REDUCES ON DEATH OF PRIMARY PAYEE
<TABLE>
<CAPTION>
ADJUSTED AGE OF
PRIMARY PAYEE -- ADJUSTED AGE OF SECOND PAYEE
46 51 56 61
<S> <C> <C> <C> <C>
50 $4.37 $4.46 $4.54 $4.61
55 4.65 4.78 4.91 5.02
60 4.97 5.15 5.34 5.51
65 5.34 5.57 5.83 6.10
70 5.75 6.05 6.40 6.78
</TABLE>
OWNERSHIP -- NON-TRANSFERABLE
In order to conform this contract with Section 401 (g) of the Internal Revenue
Code of 1954, this contract may not be sold, assigned, discounted, or pledged
as collateral for a loan or as security for the performance of an obligation or
for any other purpose, to any person or organization other than The Travelers
Insurance Company; provided, however, the restrictions of this provision will
not apply to the Trustee of any Trust described in Section 401 (a), or the
Administrator of any Annuity Plan described in Section 403 (a) of the Internal
Revenue Code. This provision supersedes any provisions of the contract which
may be inconsistent with it.
<PAGE> 18
LIMITATION ON SETTLEMENT OPTION ELECTION
To conform this contract with:
1. the applicable sections of the Internal Revenue Code of 1954;
and
2. the rulings and regulations under the Code;
the provision of this contract relating to "ELECTION OF OPTIONS," if
applicable, is amended by the addition of the following provision:
A settlement option may not be elected under which the present value of the
payments to be made to the Participant is less than fifty percent (50%) of the
present value of the total payments to be made to the Participant and his or
her beneficiary.
To conform this contract with:
1. the applicable sections of the Internal Revenue Code of 1954;
and
2. the rulings and limitations under the Code;
the provision of this contract relating to "INCOME PROVISIONS" if applicable,
is amended by the deletion of "Option 3. Amounts Held at Interest" when this
contract has been transferred or assigned to the Annuitant/Participant.
THE TRAVELERS INSURANCE COMPANY
President
<PAGE> 19
Group Modified Guaranteed Annuity Contract
Annuity and Income Options
Elective Options Without Dividends
ENDORSEMENTS
<PAGE> 20
EXHIBIT 4
TheTravelers
(LOGO)
THE TRAVELERS INSURANCE COMPANY o ONE TOWER SQUARE o HARTFORD, CONNECTICUT o
06183
<TABLE>
<S> <C> <C>
EFFECTIVE DATE
PARTICIPANT SPECIMEN TMARK CORP/HR10 CERT CA 02/13/1996 OF CERTIFICATE
Certificate Number 8888888 000000 Group Contract Number
Group Contract Owner
(the "Owner")
</TABLE>
Subject to the provisions of the Group Contract issued to the Owner:
If you are living on your Annuity Commencement Date, we will make a
monthly Annuity payment. The amount of monthly Annuity payment will be
determined under the provisions of the Group Contract.
If you die before your Annuity payments begin, your Interest, if any, less
any applicable premium tax not previously deducted, determined as of the
date we receive proof of death, will be paid to the beneficiary of your
Interest. The death benefit may be taken in one sum or as an Annuity or
Income subject to the ANNUITY PROVISIONS and INCOME PROVISIONS of the
Group Contract.
Unless otherwise shown on the CONTRACT SUMMARY of this Certificate, this
Certificate is not a part of and does not modify any of the provisions of
the Group Contract. The Group Contract determines who, either the Owner or
you, may exercise the rights and privileges of, and receive the benefits
from the Group Contract. Some of the provisions of the Group Contract are
described on the following pages for your information.
For information in regard to all other provisions and charges, see the
Group Contract.
Executed at Hartford, Connecticut
President
CERTIFICATE OF PARTICIPATION UNDER A GROUP MODIFIED GUARANTEED ANNUITY CONTRACT
ELECTIVE OPTIONS WITHOUT DIVIDENDS
CASH VALUE AND CASH SURRENDER VALUE MAY INCREASE OR DECREASE IN ACCORDANCE WITH
THE MARKET VALUE ADJUSTMENT FORMULA ON THE CONTRACT SUMMARY.
<PAGE> 21
DEFINITIONS
(a) "We, us, our" means The Travelers Insurance Company;
(b) "You, your" means the Participant;
(c) "Age" means age last birthday;
(d) "Basic contract" means the Group Contract excluding any additional
benefit for which a separate premium is charged;
(e) "Plan" means the Plan described in the Group Contract;
(f) "Participant" means an eligible person who participates in the Plan;
(g) "Your Interest" means the Cash Value or the Cash Surrender Value to
which you are entitled under the terms of the Basic Contract. Your
Interest will be considered the Cash Value or the Cash Surrender Value
of your Individual Account, unless we are otherwise instructed by the
Owner;
(h) "Individual Account" means Cash Value credited to you or your
beneficiary. You may have more than one Individual Account under this
Certificate;
(i) "Annuity Commencement Date" means the date on which your Annuity
payments are to begin under the terms of the Plan.
<PAGE> 22
CONTRACT SUMMARY
<TABLE>
<S> <C> <C> <C>
EFFECTIVE DATE
02/13/1996 OF CERTIFICATE
PARTICIPANT SPECIMEN TMARK CORP/HR10 CERT CA
000000 GROUP CONTRACT NO.
CERTIFICATE NO. 8888888
</TABLE>
BENEFIT DESCRIPTION
MONTHLY LIFE ANNUITY COMMENCING AT MATURITY DATE,
CERTIFICATE OF PARTICIPATION UNDER A GROUP MODIFIED GUARANTEED ANNUITY CONTRACT
WITH ANNUITY AND INCOME OPTIONS.
MARKET VALUE ADJUSTMENT FORMULA:
MARKET
ADJUSTED = (MATURITY VALUE) x 1/ [ (1 + ic + .005)t/365]
VALUE
WHERE ic IS THE CURRENT GUARANTEED INTEREST RATE FOR A GUARANTEE PERIOD OF t
DAYS AND t IS THE NUMBER OF DAYS REMAINING IN THE GUARANTEE PERIOD. THE CURRENT
GUARANTEED INTEREST RATE IS DECLARED BY US PERIODICALLY AND IS THE RATE
(STRAIGHT LINE INTERPOLATION BETWEEN WHOLE YEARS) WHICH WE ARE THEN PAYING ON
PREMIUMS PAID UNDER THIS CLASS OF CONTRACTS IF APPLIED TO THE SAME MATURITY
DATE OF THE DEPOSIT TO WHICH THE FORMULA IS BEING APPLIED.
AMOUNTS DEDUCTED ON SURRENDER: DURING THE FIRST FIVE YEARS AFTER A PREMIUM IS
APPLIED UNDER THE CONTRACT, THE FOLLOWING DEDUCTION WILL BE APPLIED UPON
SURRENDER:
<TABLE>
<CAPTION>
YEARS SINCE DEDUCTION AS PERCENT
PREMIUM APPLIED OF SURRENDERED CASH VALUE
- --------------- -------------------------
<S> <C>
1 7%
2 6%
3 5%
4 4%
5 3%
THEREAFTER 0%
</TABLE>
THE GROUP CONTRACT PROVIDES BENEFITS WHICH MEET THE REQUIREMENTS OF SECTION 401
OF THE INTERNAL REVENUE CODE OF THE UNITED STATES.
<PAGE> 23
ELECTION OF BENEFITS
We must be notified to effect Annuity or Income payments for you if you are
eligible. We will then apply your Interest to provide an Annuity or Income
under one or more of the forms available. Subject to the terms of the Group
Contract, in the absence of written notice given to us at least 30 days before
the date Annuity payments are to begin, we will effect an Annuity under the
Automatic Option provisions of the Group Contract. If:
1. you have a spouse; and
2. no election has been made;
the Annuity under the automatic option will be a monthly life Annuity in
accordance with Annuity Option 5. If:
1. you have no spouse; and
2. no election has been made;
the Annuity under the automatic option will be a monthly life Annuity paid in
accordance with Annuity Option 2. These Annuity options are described below.
We will determine any Annuity payments by applying your Interest, if any, (as
provided in the Plan) according to the ANNUITY PROVISIONS of the Group
Contract. If Income payments are elected, we will determine them as provided
in INCOME PROVISIONS of the Group Contract.
ANNUITY OPTIONS
OPTION 1. -- LIFE ANNUITY -- NO REFUND -- We will make monthly Annuity
Payments:
1. during the lifetime of the person on whose life the payments are
based;
2. ending with the last monthly payment preceding death.
OPTION 2. -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENT ASSURED -- We
will make monthly Annuity payments:
1. during the lifetime of the person on whose life the payments are
based; and
2. under the conditions stated below.
If at the death of that person, payments have been made for less than 120, 180
or 240 months, as elected, we will continue to make payments:
1. to the designated beneficiary;
2. during the remainder of the period.
OPTION 3. -- CASH REFUND LIFE ANNUITY -- We will make monthly Annuity payments:
1. during the lifetime of the person on whose life the payments are
based;
2. ending with the last payment due before the death of that person
under the condition stated below.
At death of the person on whose life the payments are based, the beneficiary
will receive in one sum, without interest, an amount equal to (a) minus (b) (if
that difference is positive) where:
(a) is the amount applied under this option; and
(b) is the sum of all Annuity payments previously made
OPTION 4. -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- We will make monthly
Annuity payments:
1. during the joint lifetime of two persons on whose lives payments
are based; and
2. during the lifetime of the survivor.
No more payments will be made after the death of the survivor.
OPTION 5. -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- ANNUITY REDUCED ON DEATH
OF PRIMARY PAYEE -- We will make monthly Annuity payments during the joint
lifetime of two persons on whose lives payments are based. One of the two
persons will be designated as the primary payee. The other will be designated
the secondary payee. On the death of the secondary payee, if survived by the
primary payee, we will continue to make monthly Annuity payments:
1. to the primary payee;
2. in the same amount that would have been payable during the joint
lifetime of the two persons.
<PAGE> 24
On the death of the primary payee, if survived by the secondary payee, we will
continue to make monthly Annuity payments:
1. to the secondary payee;
2. in an amount equal to 50% of the payments which would have been
made during the lifetime of the primary payee.
No further payments will be made following the death of the survivor.
INCOME OPTIONS
Cash Surrender Value used to determine the amount of any Income payment will
be:
1. except under Option 3, determined as of the date an Income
payment is due; and
2. under Option 3, determined as of the date the option takes
effect.
OPTION 1. -- PAYMENTS OF A FIXED AMOUNT -- We will make equal payments each
month:
1. of the amount elected;
2. until the Value applied under this option together with interest
at a rate of not less than 3-1/2 per year
is gone.
The final payment will include any amount that is not enough to make another
full payment.
OPTION 2. -- PAYMENT FOR A FIXED PERIOD-WE will make monthly payments for the
period selected. The amount of each payment will be equal to:
1. the then remaining Cash Surrender Value applied under this
option;
2. divided by the number of remaining payments.
OPTION 3. -- AMOUNTS HELD AT INTEREST -- We will retain any amounts applied
under this option and we will pay a monthly interest on it:
1. during the lifetime of the primary payee; or
2. for any other period agreed on.
We will pay interest at the rates we declare from time to time, but not less
than 3-1/2 per year.
We will not continue interest payments:
1. to a succeeding payee;
2. beyond the 30th anniversary of the date this option first became
effective.
We will pay:
1. any amounts being retained for a succeeding payee;
2. in one sum;
3. on the 30th anniversary.
We will:
1. if the primary payee dies;
2. on or after the 30th anniversary;
pay the amount remaining under this option to the succeeding payee in one sum.
Page 4
<PAGE> 25
PERSONAL DATA
We require satisfactory proof of:
1. your date of birth; and
2. the date of birth of any person on whose life Annuity payments
are based.
If the sex or date of birth is incorrectly stated, any Annuity payable will be
adjusted to what would have been payable had the sex and date of birth been
correctly stated. We may also require any other information necessary to
administer the Group Contract.
TERMINATION
The Group Contract issued to the Owner provides for benefits and charges, if
any, in the event of termination of the Group Contract, the Plan, or a
Participant's Individual Account. For information in regard to these benefits
and charges, if any, see the Group Contract. Termination of the Group Contract
or the Plan will not affect payments being made by us under any Annuity Option
which began before the date of termination.
Page 5
<PAGE> 26
ENDORSEMENT
This endorsement is made a part of this Contract at its Date of Issue.
This endorsement deletes any and all reference to "sex" in the contract to
which it is attached.
THE TRAVELERS INSURANCE COMPANY
President
<PAGE> 27
ENDORSEMENT
ANNUITY PROVISIONS
The "Automatic Option" under the "ANNUITY PROVISIONS" is amended by deleting
the provision and replacing it with the following:
AUTOMATIC OPTION -- Unless you (the owner) elect otherwise, if the
Annuitant is living and has a spouse, we (the Company) will, on the
Maturity Date, pay to you the first of a series of Annuity payments
based on the life of the Annuitant as the primary payee and the
Annuitant's spouse in accordance with the Joint and Last Survivor Life
Annuity -- Annuity Reduces on Death of Primary Payee Option. Unless
you elect otherwise, if the Annuitant is living and the Annuitant has
no spouse, we will, on the Maturity Date, pay to you the first of a
series of Annuity payments based on the life of the Annuitant, in
accordance with Option 2 with 120 monthly payments assured.
The "ANNUITY PROVISIONS" are amended by adding an additional Annuity Option as
follows:
JOINT AND LAST SURVIVOR LIFE ANNUITY -- Annuity Reduces on Death of
Primary Payee -- We will make monthly Annuity payments during the
joint lifetime of two persons on whose lives payments are based. One
of the two persons will be designated as the primary payee. The other
will be designated the secondary payee. On the death of the secondary
payee, if survived by the primary payee, we will continue to make
monthly Annuity payments to the primary payee in the same amount that
would have been payable during the joint lifetime of the two persons.
On the death of the primary payee, if survived by the secondary payee,
we will continue to make monthly Annuity Payments to the secondary
payee, in an amount equal to 50% of the payments which would have been
made during the lifetime of the primary payee. No further payments
will be made following the death of the survivor.
The "ANNUITY TABLES" are amended by adding the following:
JOINT AND LAST SURVIVOR LIFE ANNUITY
ANNUITY REDUCES ON DEATH OF PRIMARY PAYEE
<TABLE>
<CAPTION>
ADJUSTED AGE OF
PRIMARY PAYEE -- ADJUSTED AGE OF SECOND PAYEE
46 51 56 61
<S> <C> <C> <C> <C>
50 $4.37 $4.46 $4.54 $4.61
55 4.65 4.78 4.91 5.02
60 4.97 5.15 5.34 5.51
65 5.34 5.57 5.83 6.10
70 5.75 6.05 6.40 6.78
</TABLE>
OWNERSHIP -- NON-TRANSFERABLE
In order to conform this contract with Section 401 (g) of the Internal Revenue
Code of 1954, this contract may not be sold, assigned, discounted, or pledged
as collateral for a loan or as security for the performance of an obligation or
for any other purpose, to any person or organization other than The Travelers
Insurance Company; provided, however, the restrictions of this provision will
not apply to the Trustee of any Trust described in Section 401 (a), or the
Administrator of any Annuity Plan described in Section 403 (a) of the Internal
Revenue Code. This provision supersedes any provisions of the contract which
may be inconsistent with it.
<PAGE> 28
LIMITATION ON SETTLEMENT OPTION ELECTION
To conform this contract with:
1. the applicable sections of the Internal Revenue Code of 1954; and
2. the rulings and regulations under the Code;
the provision of this contract relating to "ELECTION OF OPTIONS," if
applicable, is amended by the addition of the following provision:
A settlement option may not be elected under which the present value of the
payments to be made to the Participant is less than fifty percent (50%) of the
present value of the total payments to be made to the Participant and his or
her beneficiary.
To conform this contract with:
1. the applicable sections of the Internal Revenue Code of 1954; and
2. the rulings and limitations under the Code;
the provision of this contract relating to "INCOME PROVISIONS" if applicable,
is amended by the deletion of "Option 3. Amounts Held at Interest" when this
contract has been transferred or assigned to the Annuitant/Participant.
THE TRAVELERS INSURANCE COMPANY
President
<PAGE> 29
Certification of Participation under a Group
Modified Guaranteed Annuity Contract
Elective Options Without Dividends
ENDORSEMENTS
<PAGE> 1
Exhibit 5 and 23(c)
April 17, 1996
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
Gentlemen:
With reference to Post-Effective Amendment No. 7 on Form S-2 to the
Registration Statement on Form S-1 filed by The Travelers Insurance Company
with the Securities and Exchange Commission covering Group and Individual
Modified Guaranteed Annuity Contracts, I have examined such documents and such
law as I have considered necessary and appropriate, and on the basis of such
examination, it is my opinion that:
1. The Travelers Insurance Company is duly organized and existing
under the laws of the Sate of Connecticut and has been duly
authorized to do business and to issue Group and Individual
Modified Guaranteed Annuity Contracts by the Insurance
Commissioner of the State of Connecticut.
2. The Group Modified Guaranteed Annuity Contracts covered by the
above-referenced registration statement have been approved and
authorized by the Insurance Commissioner of the State of
Connecticut, and the Individual Modified Guaranteed Annuity
Contracts, which are issued only in the State of New York, have
been approved and authorized by the Insurance Commissioner of the
State of New York. The Group and Individual Modified Guaranteed
Annuity Contracts, when issued, will be valid, legal and binding
obligations of The Travelers Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to the
above-referenced Post-Effective Amendment and to the reference to such opinion
under the caption "Legal Opinion" in the Prospectuses constituting a part of
Post-Effective Amendment No. 7.
Sincerely,
/s/Ernest J. Wright
Ernest J. Wright
General Counsel
Life and Annuities Division
The Travelers Insurance Company
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 7 of the Registration Statement of The Travelers Insurance Company (the
"Company") on Form S-2 of our report dated January 24, 1994, relating to our
audit of the consolidated statements of operations and retained earnings and
cash flows of The Travelers Insurance Company and Subsidiaries for the year
ended December 31, 1993, which report is included in the Annual Report on Form
10-K of the Company for the year ended December 31, 1995. We also consent to
the reference of our Firm as experts in accounting and auditing under the
caption "EXPERTS".
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
April 15, 1996
<PAGE> 1
Exhibit 23 (b)
Consent of Independent Certified Public Accountants
The Board of Directors
The Travelers Insurance Company:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the Prospectus.
Our reports refer to a change in accounting for investments in accordance with
the provisions of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," in 1994.
KPMG Peat Marwick, LLP
Hartford, Connecticut
April 17, 1996
<PAGE> 1
EXHIBIT 24(a)
MODIFIED GUARANTEED ANNUITY CONTRACTS
T-MARK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MICHAEL A. CARPENTER of Greenwich, Connecticut, Director,
President and Chief Executive Officer, of The Travelers Insurance Company
(hereinafter the "Company"), do hereby make, constitute and appoint JAY S.
FISHMAN, Director and Chief Financial Officer of said Company, and ERNEST J.
WRIGHT, Assistant Secretary of said Company, or either one of them acting
alone, my true and lawful attorney-in-fact, for me, and in my name, place and
stead, to sign registration statements on behalf of said Company on Form S-2 or
other appropriate form under the Securities Act of 1933 for Modified Guaranteed
Annuity Contracts to be offered by the Company and further, to sign any and all
amendments thereto, including post-effective amendments, that may be filed by
the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of June,
1995.
/s/Michael A. Carpenter
Director, President
and Chief Executive Officer
The Travelers Insurance Company
<PAGE> 2
MODIFIED GUARANTEED ANNUITY CONTRACTS
T-MARK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert I. Lipp of Scarsdale, New York, director of The
Travelers Insurance Company (hereafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director and Chief Financial Officer of
said Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form S-2 or other appropriate form under the Securities Act of
1933 for Modified Guaranteed Annuity Contracts to be offered by the Company and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of
April, 1995.
/s/Robert I. Lipp
Director
The Travelers Insurance Company
<PAGE> 3
MODIFIED GUARANTEED ANNUITY CONTRACTS
T-MARK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Charles O. Prince, III of Weston, Connecticut, director of The
Travelers Insurance Company (hereafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director and Chief Financial Officer of
said Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form S-2 or other appropriate form under the Securities Act of
1933 for Modified Guaranteed Annuity Contracts to be offered by the Company and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of
April, 1995.
/s/Charles O. Prince III
Director
The Travelers Insurance Company
<PAGE> 4
MODIFIED GUARANTEED ANNUITY CONTRACTS
T-MARK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Marc P. Weill of New York, New York, director of The Travelers
Insurance Company (hereinafter the "Company"), do hereby make, constitute and
appoint JAY S. FISHMAN, Director and Chief Financial Officer of said Company,
and ERNEST J. WRIGHT, Assistant Secretary of said Company, or either one of
them acting alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead, to sign registration statements on behalf of said Company on
Form S-2 or other appropriate form under the Securities Act of 1933 for
Modified Guaranteed Annuity Contracts to be offered by the Company and further,
to sign any and all amendments thereto, including post-effective amendments,
that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of
November, 1994.
/s/Marc P. Weill
Director
The Travelers Insurance Company
<PAGE> 5
MODIFIED GUARANTEED ANNUITY CONTRACTS
T-MARK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Irwin R. Ettinger of Stamford, Connecticut, director of The
Travelers Insurance Company (hereinafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director and Chief Financial Officer of
said Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form S-2 or other appropriate form under the Securities Act of
1933 for Modified Guaranteed Annuity Contracts to be offered by the Company and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of
April, 1995.
/s/Irwin R. Ettinger
Director
The Travelers Insurance Company
<PAGE> 6
MODIFIED GUARANTEED ANNUITY CONTRACTS
T-MARK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Donald T. DeCarlo of Douglaston, New York, director of The
Travelers Insurance Company (hereinafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director and Chief Financial Officer of
said Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form S-2 or other appropriate form under the Securities Act of
1933 for Modified Guaranteed Annuity Contracts to be offered by the Company and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of
April, 1995.
/s/Donald T. DeCarlo
Director
The Travelers Insurance Company
<PAGE> 1
EXHIBIT 24(b)
MODIFIED GUARANTEED ANNUITY CONTRACTS
T-MARK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Jay S. Fishman of Haworth, New Jersey, director of The
Travelers Insurance Company (hereafter the "Company"), do hereby make,
constitute and appoint ERNEST J. WRIGHT, Assistant Secretary of said Company,
and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of
them acting alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead, to sign registration statements on behalf of said Company on
Form S-2 or other appropriate form under the Securities Act of 1933 for
Modified Guaranteed Annuity Contracts to be offered by the Company and further,
to sign any and all amendments thereto, including post-effective amendments,
that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of April,
1996.
/s/Jay S. Fishman
Director
The Travelers Insurance Company
<PAGE> 2
MODIFIED GUARANTEED ANNUITY CONTRACTS
T-MARK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, IAN R. STUART of East Hampton, Connecticut, Vice
President, Chief Financial Officer, Chief Accounting Officer and Controller, of
The Travelers Insurance Company (hereinafter the "Company"), do hereby make,
constitute and appoint ERNEST J. WRIGHT, Assistant Secretary of said Company,
and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of
them acting alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead, to sign registration statements on behalf of said Company on
Form S-2 or other appropriate form under the Securities Act of 1933 for
Modified Guaranteed Annuity Contracts to be offered by the Company and further,
to sign any and all amendments thereto, including post-effective amendments,
that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day
of April, 1996.
/s/Ian R. Stuart
Vice President, Chief Financial Officer,
Chief Accounting Officer and Controller
The Travelers Insurance Company
