<PAGE> 1
T-MARK
PROSPECTUS
T-Mark Contracts are group or individual modified guaranteed annuities
("Contracts") which provide a guaranteed fixed rate of return for your
investment if you do not surrender your Contract before the Guarantee Period
ends. Generally, if you do surrender your Contract before the Guarantee Period
ends, your Contract Value paid to you will be subject to a market value
adjustment and surrender charges.
This prospectus explains:
- the Contract (single purchase payment)
- the Travelers Insurance Company and Separate Account MGA
- the Guarantee Periods and Interest Rates
- Surrenders
- Surrender Charges
- Market Value Adjustment
- Death Benefit
- Annuity Payments
- other aspects of the Contract
The Travelers Insurance Company, One Tower Square, Hartford, Connecticut 06183,
is the issuer of the Contracts; CFBDS, Inc., 22 Milk St., Boston, MA, is the
principal underwriter and distributor of the Contracts.
THIS PROSPECTUS IS ACCOMPANIED BY A COPY OF THE COMPANY'S LATEST ANNUAL REPORT
ON FORM 10-K FOR THE PERIOD ENDED DECEMBER 31, 1999, WHICH CONTAINS ADDITIONAL
INFORMATION ABOUT THE COMPANY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MUTUAL FUNDS, ANNUITIES AND INSURANCE PRODUCTS ARE NOT DEPOSITS OF ANY BANK, AND
ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY.
PROSPECTUS DATED MAY 1, 2000.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Special Terms............................................... Special Terms-1
Prospectus Summary.......................................... Summary-1
The Insurance Company....................................... 1
IMSA........................................................ 1
The Contracts............................................... 1
Application and Purchase Payment.......................... 1
Right to Cancel........................................... 1
Guarantee Periods........................................... 1
Establishment of Guaranteed Interest Rates.................. 2
Surrenders.................................................. 3
General................................................... 3
Surrender Charge.......................................... 3
Market Value Adjustment................................... 3
Waiver of Surrender Charge................................ 4
Premium Taxes............................................. 5
Death Benefit............................................... 5
Annuity Period.............................................. 5
Election of Annuity Commencement Date and Form of
Annuity................................................ 5
Change of Annuity Commencement Date or Annuity Option..... 5
Annuity Options........................................... 5
Annuity Payment........................................... 6
Death of Annuitant After Annuity Commencement Date........ 6
Income Options............................................ 6
Investments by the Company.................................. 7
Amendment of the Contracts.................................. 7
Assignment of the Contracts................................. 7
Distribution of the Contracts............................... 7
Federal Tax Considerations.................................. 8
General................................................... 8
Section 403(b) Plans and Arrangements..................... 8
Qualified Pension and Profit-Sharing Plans................ 8
Individual Retirement Annuities........................... 9
Roth IRAs................................................. 9
Section 457 Plans......................................... 9
Nonqualified Annuities.................................... 10
The Employee Retirement Income Security Act of 1974....... 11
Federal Income Tax Withholding............................ 11
Tax Advice................................................ 12
Available Information....................................... 12
Incorporation of Certain Documents by Reference............. 13
Legal Opinion............................................... 13
Experts..................................................... 13
Appendix A.................................................. A-1
Financial Statements........................................ F-1
</TABLE>
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SPECIAL TERMS
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In this Prospectus the following terms have the indicated meanings:
ACCOUNT -- An Account is the Cash Value or Cash Surrender Value credited to a
Participant or Owner.
ACCUMULATED VALUE -- The Purchase Payment plus all interest earned, minus all
surrenders, surrender charges and applicable premium tax previously deducted.
ANNUITANT -- The person upon whose life the Contract is issued.
ANNUITY COMMENCEMENT DATE -- The date on which annuity payments are to start.
The date may be designated in the Contract or elected by the Owner.
BENEFICIARY -- The person entitled to receive benefits under the Contract in
case of the death of the Annuitant or the Owner, or joint Owner, as applicable.
CASH SURRENDER VALUE -- The Cash Value less surrender charges and any applicable
premium tax.
CASH VALUE -- The Maturity Value of a Deposit on the Maturity Date or the Market
Adjusted Value before the Maturity Date of that Deposit.
CERTIFICATE -- Evidence of a participating interest under a Group Contract. Any
reference in this Prospectus to Certificate includes the underlying Group
Contract.
COMPANY (WE, US, OUR) -- The Travelers Insurance Company.
CONTRACT -- For a group Contract, the certificate evidencing a participating
interest in the group annuity Contract. Any reference in this Prospectus to
Contract includes the underlying group annuity Contract. For an individual
Contract, the individual annuity Contract.
CONTRACT DATE -- The effective date of participation under the group annuity
Contract as designated in the certificate, or the date of issue of an individual
annuity Contract.
CONTRACT YEAR -- A continuous twelve-month period beginning on the Contract Date
and each anniversary thereof.
DEPOSIT -- The premium payment applied to the Contract less premium taxes if
applicable.
GUARANTEE PERIOD -- The period for which either an initial or subsequent
Guaranteed Interest Rate is credited.
GUARANTEED INTEREST RATE -- The annual effective interest rate credited during
the Guarantee Period.
HOME OFFICE -- The principal executive offices of The Travelers Insurance
Company located at One Tower Square, Hartford, Connecticut 06183 (Attention:
Annuity Services).
MARKET VALUE ADJUSTMENT -- The Market Value Adjustment reflects the
relationship, at the time of surrender, between the then-current Guaranteed
Interest Rate for a Guarantee Period equal to the duration left in your
Guarantee Period, and the Guaranteed Interest Rate that applies to your
Contract.
MATURITY VALUE -- The accumulated value of a Purchase Payment at the Guaranteed
Interest Rate at the end of the Guarantee Period selected, minus all surrenders,
surrender charges and premium taxes previously deducted.
OWNER (YOU, YOURS) -- For an individual Contract, the person or entity to whom
the individual Contract is issued. For a group Contract, the person or entity to
whom the certificate under a group annuity Contract is issued.
Special Terms-1
<PAGE> 4
PROSPECTUS SUMMARY
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The Travelers Insurance Company (the "Company", "We", "Us"), an indirect wholly
owned subsidiary of Citigroup Inc., is offering group and individual modified
guaranteed annuity contracts to eligible individuals. If a group contract is
purchased, we issue certificates to the individual participants. Where we refer
to "you", we are referring to the individual contract owner or to the group
participant, as applicable. For convenience, this prospectus refers to Contracts
and Certificates as "Contracts". Modified Guaranteed Annuities offer a
guaranteed fixed rate of return on your principal investment if you do not
surrender your Contract before the Guarantee Period ends. If you do surrender
your Contract before the end of the Guarantee Period, generally your Cash Value
is subject to a Market Value Adjustment and Surrender Charge (if applicable).
You may select an initial Guarantee Period from those available from the
Company. Currently, we offer Guarantee Periods up to ten years. Interest on the
Purchase Payment is credited on a daily basis and so compounded in the
Guaranteed Interest Rate. (See "Accumulation Period -- Guarantee Periods" and
"Establishment of Guaranteed Interest Rates".)
At the end of each Guarantee Period, a subsequent Guarantee Period of seven days
will automatically begin unless you elect another duration within thirty days
before the Guarantee Period ends.
You may surrender your Contract, but the Cash Value may be subject to a
Surrender Charge and/or a Market Value Adjustment. A full or partial surrender
made prior to the end of a Guarantee Period will be subject to a Market Value
Adjustment. The surrender charge will be deducted from any surrender made before
the end of the fifth Contract Year. The surrender charge is 7% of the Account
Value in Contract Year 1, 6% in Contract Year 2, 5% in Contract Year 3, 4% in
Contract Year 4, and 3% in Contract Year 5.
The surrender charges listed above apply to full or partial surrenders,
regardless of the length of the Guarantee Period selected. 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.
There is no Market Value Adjustment if you surrender at the end of a guarantee
period. Any such surrender request must be in writing and received by us within
30 days before the Guarantee Period ends. You may request any interest that has
been credited during the prior Contract Year. No surrender charge or Market
Value Adjustment will be imposed on such interest payments; however, all
applicable premium taxes will be deducted. Any such surrender may also be
subject to federal and state taxes. (See "Surrenders" and "Federal Tax
Considerations".)
The Market Value Adjustment reflects the relationship between the current
Guaranteed Interest Rate for the time left in the Guarantee Period at surrender
and the Guaranteed Interest Rate that applies to your Contract. The Market Value
Adjustment amount primarily depends on the interest rates the Company receives
on its investments when the current Guaranteed Interest Rates are established.
The Market Value Adjustment is sensitive, therefore, to changes in interest
rates. It is possible that the amount you receive upon surrender may be less
than your original Purchase Payment if interest rates increase. It is also
possible that if interest rates decrease, the amount you receive upon surrender
may be more than your original Purchase Payment plus accrued interest.
On the Annuity Commencement Date specified by you, the Company will make either
a lump-sum payment or start to pay a series of payments based on the annuity
options you select. (See "Annuity Period".)
If a Participant under a group contract or an annuitant under an individual
Contract dies before the Annuity Commencement Date, we will pay a death benefit
to the beneficiary. This death benefit equals (a) the greater of the Cash Value
or the Accumulated Value of the Contract if death occurs
Summary-1
<PAGE> 5
before age 65 or (b) the Cash Value of the Contract if death occurs on or after
age 65, less any applicable premium tax.
We will deduct any applicable premium taxes from the Cash Value either upon
death, surrender, annuitization, or at the time the Purchase Payment is made to
the Contract. (See "Surrenders -- Premium Taxes".)
Summary-2
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THE INSURANCE COMPANY
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The Travelers Insurance 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 is
an indirect wholly owned subsidiary of Citigroup Inc. The Company's home office
is located at One Tower Square, Hartford, Connecticut 06183.
IMSA
--------------------------------------------------------------------------------
The Company is a member of the Insurance Marketplace Standards Association
("IMSA"), and as such may use the IMSA logo and IMSA membership in its
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuities. IMSA members have adopted policies and
procedures that demonstrate a commitment to honesty, fairness and integrity in
all customer contacts involving the sale and service of individual life
insurance and annuity products.
THE CONTRACTS
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APPLICATION AND PURCHASE PAYMENT
For the Company to issue a Contract to you, you must:
- Complete an application or an order to purchase,
- Include your minimum Purchase Payment of at least $5,000 and
- Submit both to our Home Office for approval.
The Company may:
- Accept Purchase Payments up to $1 million within a 12 month period
without prior approval.
- Contact you or your agent if the application or order form is not
properly completed.
- Return your entire application or order form and Purchase Payment if
not properly completed.
RIGHT TO CANCEL
You may return your Contract to us at our Home Office within 10 days of your
original Purchase Payment in most states. Refer to your Contract for any
state-specific information.
GUARANTEE PERIODS
--------------------------------------------------------------------------------
You will select the duration of the Guarantee Period and corresponding
Guaranteed Interest Rate. Your Purchase Payment will earn interest at the
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.
EXAMPLE OF COMPOUNDING AT THE GUARANTEED INTEREST RATE
Beginning Account Value: $50,000
Guarantee Period: 5 years
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Guaranteed Interest Rate: 5.50% Annual Effective Rate
<TABLE>
<CAPTION>
END OF CONTRACT YEAR
--------------------------------------------------------------
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Beginning Account Value $50,000.00
X (1 + Guaranteed Interest Rate) 1.055
----------
$52,750.00
==========
Account Value at end of Contract Year 1 $52,750.00
X (1 + Guaranteed Interest Rate) 1.055
----------
$55,651.25
==========
Account Value at end of Contract Year 2 $55,651.25
X (1 + Guaranteed Interest Rate) 1.055
----------
$58,712.07
==========
Account Value at end of Contract Year 3 $58,712.07
X (1 + Guaranteed Interest Rate) 1.055
----------
$61,941.23
==========
Account Value at end of Contract Year 4 $61,941.23
X (1 + Guaranteed Interest Rate) 1.055
----------
$65,348.00
==========
Account Value at end of Guarantee Period (i.e. Maturity Value) $65,348.00
==========
</TABLE>
Total Interest Credited in Guarantee Period -- $65,348.00 - 50,000.00 =
$15,348.00
Account Value at end of Guarantee Period -- $50,000.00 + 15,348.00 = $65,348.00
THE ABOVE EXAMPLE ASSUMES NO SURRENDERS, DEDUCTIONS FOR PREMIUM TAXES, OR
PRE-AUTHORIZED PAYMENT OF INTEREST DURING THE ENTIRE FIVE-YEAR PERIOD. A MARKET
VALUE ADJUSTMENT OR SURRENDER CHARGE MAY APPLY TO ANY SUCH INTERIM SURRENDER
(SEE "SURRENDERS" BELOW). THE HYPOTHETICAL GUARANTEED INTEREST RATES ARE
ILLUSTRATIVE ONLY AND ARE NOT INTENDED TO PREDICT FUTURE GUARANTEED INTEREST
RATES TO BE DECLARED UNDER THE CONTRACT. ACTUAL GUARANTEED INTEREST RATES
DECLARED FOR ANY GIVEN TIME MAY BE MORE OR LESS THAN THOSE SHOWN.
We will notify you about subsequent Guarantee Periods near the end of your
current Guarantee Period. At the end of a Guarantee Period:
- You may elect a subsequent Guarantee Period by telephone or in
writing.
- Your Account Value will be transferred to the new Guarantee Period at
the Guaranteed Interest Rate offered at that time.
- If you do not make any election, we will automatically transfer the
Account Values into a 7 day Guarantee Period, which you may transfer
out of into a new Guarantee Period with no transfer, surrender or
Market Value Adjustment charge.
In no event may subsequent Guarantee Periods extend beyond the Annuity
Commencement Date then in effect.
ESTABLISHMENT OF GUARANTEED INTEREST RATES
--------------------------------------------------------------------------------
When you purchase your Contract, you will know the Guaranteed Interest Rate for
the Guarantee Period you choose. We will send you a confirmation showing the
amount of your Purchase Payment and the applicable Guaranteed Interest Rate.
After the end of each calendar year, we will send you a statement that will
show:
- your Account Value as of the end of the preceding year;
- all transactions regarding your Contract during the year;
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- your Account Value at the end of the current year;
- the Guaranteed Interest Rate being credited to your Contract.
The Company has no specific formula for determining 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".) 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, administrative expenses, general economic trends and
competitive factors.
THE COMPANY WILL MAKE THE FINAL DETERMINATION AS TO GUARANTEED INTEREST RATES TO
BE DECLARED. WE CANNOT PREDICT NOR CAN WE GUARANTEE FUTURE GUARANTEED INTEREST
RATES.
SURRENDERS
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GENERAL
You may make a full or partial surrender at any time, subject to certain tax law
and retirement plan restrictions, and surrender charges described below. In the
case of all surrenders, the Cash Value and Maturity Value will be reduced.
Upon request, we will inform you of the amount payable upon a full or partial
surrender. Any full, partial or special surrender may be subject to tax. (See
"Federal Tax Considerations".)
Participants in Section 403(b) tax-deferred annuity plans may not make
surrenders from certain amounts before the earliest of age 59 1/2, separation
from service, death, disability or hardship. (See "Federal Tax
Considerations -- Section 403(b) Plans and Arrangements".)
SURRENDER CHARGE
There are no front end sales charges. A surrender charge may be assessed on
surrenders made before the end of the fifth Contract Year. The surrender charge
is computed as a percentage of the Cash Value being surrendered.
<TABLE>
<CAPTION>
YEARS SINCE CHARGE AS A PERCENTAGE OF
DEPOSIT WAS MADE CASH VALUE
<S> <C>
-----------------------------------------------------
<CAPTION>
<S> <C>
1 or less 7%
2 6%
3 5%
4 4%
5 3%
Thereafter 0%
</TABLE>
The surrender charges listed above will apply to full or partial surrenders,
regardless of the length of the Guarantee Period selected. For example, assume a
Guarantee Period of four years. In this 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 full or partial surrender made before the end of any
Guarantee Period may be adjusted up or down by the Market Value Adjustment.
The Market Value Adjustment is the relationship between the then-current
Guaranteed Interest Rate for a Guarantee Period equal to the time left in your
Guarantee Period, and the Guaranteed Interest Rate that applies to your
Contract.
Generally, if your Guaranteed Interest Rate is lower than the applicable current
Guaranteed Interest Rate, then the Market Value Adjustment will result in a
lower payment upon surrender. Conversely, if your Guaranteed Interest Rate is
higher than the applicable current Guaranteed Interest Rate, the Market Value
Adjustment will result in a higher payment upon surrender.
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<PAGE> 9
The Market Value Adjustment amount primarily depends on the level of interest
rates on the Company's investments when the current Guaranteed Interest Rates
are established. The Market Adjusted Value is sensitive, therefore, to changes
in current interest rates. It is possible that the amount you receive upon
surrender would be less than the original Purchase Payment if interest rates
increase. It is also possible that if interest rates decrease, the amount you
receive upon surrender may be more than the original Purchase Payment plus
accrued interest.
The formula for calculating the Market Value Adjustment shown in Appendix A
which also contains an additional illustration of the application of the Market
Value Adjustment.
WAIVER OF SURRENDER CHARGE
The surrender charge may be waived if:
-- an annuity payout is begun;
-- a level 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, partial and full surrenders may be subject to restrictions.
(See "Section 403(b) Plans and Arrangements.")
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PREMIUM TAXES
Certain state and local governments impose premium taxes. These taxes currently
range from 0% to 5.0%, depending upon jurisdiction. The Company is responsible
for paying these taxes and 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 the
Purchase Payment is 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, if death occurs before age 65; or (b) the
Cash Value of the Contract, if death occurs on or after age 65 less any
applicable premium tax.
ANNUITY PERIOD
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ELECTION OF ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
You can select an Annuity Commencement Date at the time you apply for a
Contract. If no date is elected, for nonqualified Contracts, the automatic
default age is 75 (or ten years after the date of purchase, if later). For
qualified Contracts, the automatic default age is 70. Within 30 days before your
Annuity Commencement Date, you may elect to have all or a portion of your Cash
Surrender Value paid in a lump sum on your Annuity Commencement Date. Or, at
least 30 days before the Annuity Commencement Date, you may elect to have your
Cash Value or a portion thereof (less applicable premium taxes, if any)
distributed under any of the Annuity Options described below.
If no option is elected for nonqualified Contracts, the Cash Value will be
applied on the Annuity Commencement Date under the Second Option to provide a
life annuity with 120 monthly payments certain. For qualified Contracts, the
Cash Value will be applied to Option 4, to provide a Joint and Last Survivor
Life Annuity.
CHANGE OF ANNUITY COMMENCEMENT DATE OR ANNUITY OPTION
You may change the Annuity Commencement Date at any time as long as such change
is made in writing and is received by us at least 30 days prior to the scheduled
Annuity Commencement Date. Once an Annuity Option has begun, it may not be
changed.
ANNUITY OPTIONS
Any one of the following Annuity Options may be elected. Annuity payments may be
available on a monthly, quarterly, semiannual or annual basis. The minimum
amount that may be applied to Annuity Options is $5,000 unless we consent to a
smaller amount.
OPTION 1 -- LIFE ANNUITY -- NO REFUND: The Company will make annuity payments
during the lifetime of the annuitant ending with the last payment before death.
This option offers the maximum periodic payment, since there is no assurance of
a minimum number of payments or provision for a death benefit for beneficiaries.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED: The
Company will make monthly annuity payments during the lifetime of the annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months as elected, we will continue making
payments to the beneficiary during the remainder of the period.
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<PAGE> 11
OPTION 3 -- CASH REFUND LIFE ANNUITY: The Company will make monthly annuity
payments during the lifetime of the Annuitant. Upon the death of the Annuitant,
the Beneficiary will receive a payment equal to the Cash Value applied to this
option on the Annuity Commencement Date minus the dollar amount of annuity
payments already paid.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: The Company will
make regular annuity payments during the lifetime of the annuitant and a second
person. When either person dies, we will continue making payments to the
survivor. No further payments will be made following the death of the survivor.
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 in the Contract reflect guaranteed dollar amounts of monthly payments
for each $1,000 applied under the first five Annuity Options listed above. Under
Option 1,2 or 3, the amount of each payment will depend upon the age (and, for
nonqualified Contracts, sex) of the Annuitant at the time the first payment is
due. Under Option 4, the amount of each payment will depend upon the payees'
ages at the time the first payment is due (and, for nonqualified Contracts, the
sex of both payees).
The Tables for Options 1, 2, 3 and 4 are based on the Progressive Annuitant
Table (assuming births in the year 1900) and a net investment rate of 3.5% per
annum. If mortality appears more favorable and interest rates so justify, at our
discretion, we may apply other tables which will result in higher payments for
each $1,000 applied under one or more of the first four Annuity Options.
ANNUITY PAYMENT
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
in accordance with the manner of payment selected and are based on the first
payment date.
The option elected must result in a payment at least equal to the minimum
payment amount according to Company rules then in effect. If at any time
payments are less than the minimum payment amount, the Company has the right to
change the frequency to an interval resulting in a payment at least equal to the
minimum. If any amount due is less than the minimum per year, the Company may
make other arrangements that are equitable to the Annuitant.
Once annuity payments have begun, no surrender of the annuity benefit can be
made for the purpose of receiving a lump-sum settlement.
DEATH OF ANNUITANT AFTER ANNUITY COMMENCEMENT DATE
If the Annuitant dies after the Annuity Commencement Date, any amount payable as
a death benefit will be distributed at least as rapidly as under the method of
distribution in effect.
INCOME OPTIONS
Instead of one of the Annuity Options described above, and subject to the
conditions described under "Election of Options," all or part of the Cash
Surrender Value of the Contract may be paid under one or more of the following
Income Options, provided that they are consistent with federal tax law
qualification requirements. Payments under the Income Options may be elected on
a monthly, quarterly, semiannual or annual basis:
OPTION 1 -- PAYMENTS OF A FIXED AMOUNT. The Company will make equal payments of
the amount elected until the Cash Value applied under this option has been
exhausted. The final payment will include any amount insufficient to make
another full payment.
OPTION 2 -- PAYMENTS FOR A FIXED PERIOD. The Company will make payments for the
period selected. The payment will be based on a minimum net investment rate of
3.5% per annum.
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OPTION 3 -- OTHER INCOME OPTIONS. The Company will make any other arrangements
for Income Payments as may be mutually agreed upon.
The amount applied to effect an Income Option will be the Cash Value as of the
date Income Payments commence, less any applicable premium taxes not previously
deducted and any applicable surrender charge. The Income Options differ from
Annuity Options in that the amount of the payments made under Income Options are
unrelated to the length of life of any person. Thus, the Annuitant may outlive
the payment period.
INVESTMENTS BY THE COMPANY
--------------------------------------------------------------------------------
We must invest our assets according to applicable state laws regarding the
nature, quality and diversification of investments that may be made by life
insurance companies. 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. Purchase Payments made to
the Contracts are invested in Separate Account MGA, a non-unitized separate
account and are not chargeable with liabilities arising out of any other
business which the Company may conduct. Owners do not share in the investment
performance of assets allocated to Separate Account MGA. The obligations under
the Contract are independent of the investment performance of Separate Account
MGA and are the obligations of the Company.
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 at the time that the Guaranteed Interest Rates are
established. (See "Establishment of Guaranteed Interest Rates".) 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 may
be zero coupon securities. While this generally describes our investment
strategy, we are not obligated to follow any particular strategy except as may
be required by federal and state laws.
AMENDMENT OF THE CONTRACTS
--------------------------------------------------------------------------------
We reserve the right to amend the Contracts to comply with applicable federal or
state laws or regulations. We will notify you in writing of any such amendments.
ASSIGNMENT OF THE CONTRACTS
--------------------------------------------------------------------------------
Our rights as evidenced by a Contract may be assigned as permitted by applicable
law. An assignment will not be binding upon us until we receive notice from you
in writing. Ownership of Contracts issued in connection with Section 401(a),
401(k), 403(c), 403(b), 408, 414(d) or 457 plans may not generally be assigned.
We assume no responsibility for the validity or effect of any assignment. You
should consult your tax adviser regarding the tax consequences of an assignment.
DISTRIBUTION OF THE CONTRACTS
--------------------------------------------------------------------------------
CFBDS is the principal underwriter of the Contracts. CFBDS is registered with
the Securities and Exchange Commission under the 1934 Act as a broker-dealer,
and is a member of the National Association of Securities Dealers, Inc. It is
currently anticipated that Travelers Distribution LLC, an affiliate of the
Company, will become principal underwriter some time in 2000.
The principal underwriter enters into selling agreements with certain
broker-dealers registered under the 1934 Act. Under the selling agreements such
broker-dealers may offer Contracts to persons who have established an account
with the broker-dealer. In addition, the Company may offer certificates to
members of certain other eligible groups. The Company will pay a maximum
commission of 5% of the Purchase Payment for the sale of a Contract.
7
<PAGE> 13
From time to time, the Company may offer customers of certain broker-dealers
special Guaranteed Interest Rates and negotiated commissions. In addition, the
Company may offer Contracts 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 Code.
Generally, amounts credited to a contract are not taxable until received by the
Contract 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.
SECTION 403(B) PLANS AND ARRANGEMENTS
Purchase Payments for a tax deferred annuity contract 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, such 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.
Distributions must begin by the later of April 1st of the calendar year
following the calendar year in which the participant attains the age of 70 1/2
or April 1st of the calendar year in which the Participant retires. Certain
other mandatory distribution rules apply at the death of the participant.
Certain 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, a Purchase
Payment made by an employer is 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 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 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
after age 59 1/2. 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.
8
<PAGE> 14
Distributions must begin by the later of April 1st of the calendar year
following the calendar year in which you attain age 65 or April 1st of the
calendar year in which you retire, except that if you are a 5% owner as defined
in Code Section 416(i)(1)(B), distributions must begin by April 1st of the
calendar year following the calendar year in which you attain age 70 1/2.
Certain other mandatory distribution rules apply on the death of the
participant.
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). (Note: The minimum Purchase Payment allowed for this
Contract is $5,000.) There are certain limits on the deductible amount based on
the adjusted gross income of the individual and spouse 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 annual into IRAs for both spouses in
the maximum amount of 100% of earned income up to a combined limit of $4,000.
Partial or full distributions made prior to 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. Certain other mandatory distribution rules
apply on the death of the individual. 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.
ROTH IRAS
Effective January 1, 1998, Section 408A of the Code permits certain individuals
to contribute to a Roth IRA. Eligibility to make contributions is based upon
income, and the applicable limits vary based on marital status and/or whether
the contribution is a rollover contribution from another IRA or an annual
contribution. Contributions to a Roth IRA, which are subject to certain
limitations, ($2,000 per year for annual contributions), are not deductible and
must be made in cash or as a rollover or transfer from another Roth IRA or other
IRA. A conversion of "traditional" IRA to a Roth IRA may be subject to tax and
other special rules apply. You should consult a tax adviser before combining any
converted amounts with other Roth IRA contributions, including any other
conversion amounts from other tax years.
Qualified distributions from a Roth IRA are tax-free. A qualified distribution
requires that the Roth IRA has been held for at least 5 years, and the
distribution is made after age 59 1/2, on death or disability of the owner, or
for a limited amount ($10,000) for a qualified first time home purchase for the
owner or certain relatives. Income tax and a 10% penalty tax may apply to
distributions made (1) before age 59 1/2 (subject to certain exceptions) or
(2) during five taxable years starting with the year in which the first
contribution is made to the Roth IRA.
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.
9
<PAGE> 15
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 Payment receives no tax benefit, deduction or deferral, but taxes
on the increases in the value of the Contract are generally deferred 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 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 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 considerations.
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 Contract Owner. Failure to meet these requirements will cause the
succeeding Contract 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 a Contract
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 Contract Owner because of the
withdrawal. The additional tax will not be imposed if the amount is received on
or after the Contract Owner reaches the age of 59 1/2, of 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 Contract
Owner.
10
<PAGE> 16
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.
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.
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<PAGE> 17
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, 2000, a recipient receiving periodic payments (e.g.,
monthly or annual payments under an Annuity Option) which total $14,850
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.
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.
AVAILABLE INFORMATION
--------------------------------------------------------------------------------
The Company files reports and other information with the Securities and Exchange
Commission ("Commission"), as required by law. You may read and copy this
information and other information at the following locations:
- public reference facilities of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C.
- the Commission's Regional Offices located at Seven World Trade Center,
New York, New York 10048,
- the Commission's Regional Offices located at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Under the Securities Act of 1933, the Company has filed with the Commission a
registration statement (the "Registration Statement") relating to the Contracts
offered by this Prospectus. This Prospectus has been filed as a part of the
Registration Statement and does not contain all of the information set forth in
the Registration Statement and the exhibits, and reference is hereby made to
such Registration Statement and exhibits for further information relating to the
Company and the Contracts. The Registration Statement and the exhibits may be
inspected and copied as described above. Although the Company does furnish the
Annual Report on Form 10-K for the year ended December 31, 1999 to owners of
contracts or certificates, the Company does not plan to furnish subsequent
annual reports containing financial information to the owners of contracts or
certificates described in this Prospectus.
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<PAGE> 18
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
--------------------------------------------------------------------------------
The Company's latest Annual Report on Form 10-K has been filed with the
Commission. It is incorporated by reference into this Prospectus and a copy must
accompany this Prospectus.
The Form 10-K for the fiscal year ended December 31, 1999 contains additional
information about the Company, including audited financial statements for the
Company's latest fiscal year. It was filed on March 21, 2000 via Edgar; File No.
33-33691.
If requested, the Company will furnish, without charge, a copy of any and all of
the documents incorporated by reference, other than exhibits to those documents
(unless such exhibits are specifically incorporated by reference in those
documents). You may direct your requests to The Travelers Insurance Company, One
Tower Square, Hartford, Connecticut 06183-5030, Attention: Annuity Services. The
telephone number is (860) 422-3985. You may also obtain copies of any documents,
incorporated by reference into this prospectus by accessing the SEC's website
(http://www.sec.gov).
LEGAL OPINION
--------------------------------------------------------------------------------
Legal matters in connection with federal laws and regulations affecting the
issue and sale of the 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 of the Contracts under Connecticut
law have been passed on by the General Counsel of the Company.
EXPERTS
--------------------------------------------------------------------------------
The consolidated financial statements and schedules of The Travelers Insurance
Company and subsidiaries as of December 31, 1999 and 1998, and for each of the
years in the three-year period ended December 31, 1999, have been incorporated
by reference herein and in the registration statement in reliance upon the
reports of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
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<PAGE> 19
APPENDIX A
--------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT
Payment on a partial or full surrender may be adjusted up or down by the
application of the Market Value Adjustment. The Market Value Adjustment formula
is:
<TABLE>
<S> <C> <C> <C> <C>
1 ()t/365
Market Adjusted Value = (Maturity Value) X -------------
F 1 + iC + .005 G
</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
adjusting for leap years.
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 with the same
maturity date as the Purchase Payment to which the formula is being applied.
ILLUSTRATION OF A MARKET VALUE ADJUSTMENT
Purchase Payment: $50,000.00
Guarantee Period: 5 Years
Guaranteed Interest Rate: 5.50% 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 Purchase Payment of $50,000 was made to the Contract. The Maturity Value of
this Purchase Payment would be $65,348.00 at the end of the five-year Guarantee
Period. However, after one year, when the surrenders occur in these examples,
the Account Value (i.e., the Purchase Payment plus accumulated interest) would
be $52,750.
The Market Value Adjustment is the rate the Company is crediting at the time of
surrender on new Purchase Payments of the same term-to-maturity as the time
remaining in your Guarantee Period. One year after the Purchase Payment was
made, 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 the Purchase Payment was made.
Assume interest rates have increased one year after the Purchase Payment and the
Company is crediting 7% for a four-year Guarantee Period.
If you surrender the full Account Value, the Market Adjusted Value would be:
<TABLE>
<S> <C> <C> <C> <C>
1 (4)
$49,853.68 = $65,348.00 X --------------
F 1 + .07 + .005 G
</TABLE>
A-1
<PAGE> 20
The Market Value Adjustment is a reduction of $2,896.32 from the Account Value:
$49,853.68 = $52,750.00 - $2,896.32
If instead of a full surrender, 50% of the Account Value was surrendered, the
Market Adjusted Value of the surrendered portion would be 50% of the full
surrender:
<TABLE>
<S> <C> <C> <C> <C>
1 (4)
$24,926.84 = $32,674.00 X --------------
F 1 + .07 + .005 G
</TABLE>
The Maturity Value after the partial surrender would be 50% of the Maturity
Value prior to surrender, or $32,647.00.
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 a Purchase Payment was made. 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 Account Value, the Market Adjusted Value would be:
<TABLE>
<S> <C> <C> <C> <C>
1 (4)
$56,947.01 = $65,348.00 X ---------------
F 1 + .035 + .005 G
</TABLE>
The Market Value Adjustment is an increase of $4,197.01 over Account Value:
$56,947.01 = $52,750.00 + $4,197.01
If instead of a full surrender, 50% of the Account Value 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)
$28,473.50 = $32,674.00 X ---------------
F 1 + .035 + .005 G
</TABLE>
The Maturity Value after the partial surrender would be 50% of the Maturity
Value prior to the surrender, or $32,674.00.
These examples illustrate what may happen when interest rates increase or
decrease from the beginning of a Guarantee Period. 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 beginning
of a Guarantee Period and the amount of time remaining to maturity. In addition,
a surrender charge may be assessed on surrenders made before the Purchase
Payment has been under the Contract for five years.
A-2
<PAGE> 21
T-MARK
MODIFIED GUARANTEED ANNUITY CONTRACTS
ISSUED BY
THE TRAVELERS LIFE INSURANCE COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
L-11167 TIC Ed 5-2000
Printed in U.S.A.
