HARTFORD LIFE INSURANCE CO SEPARATE ACCOUNT TWO DC VAR AC II, 485BPOS, 1998-04-14

HARTFORD LIFE INSURANCE CO SEPARATE ACCOUNT TWO DC VAR AC II
485BPOS, 1998-04-14

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<PAGE>

As filed with the Securities and Exchange Commission on April 14, 1998
Washington, D.C. 20549
File No. 33-59541
811-4372

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. ____ / /

Post-Effective Amendment No. 3 /X/
----

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 91 /X/
--------

HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO (DC VARIABLE ACCOUNT-II)
(Exact Name of Registrant)

HARTFORD LIFE INSURANCE COMPANY
(Name of Depositor)

P.O. BOX 2999
HARTFORD, CT 06104-2999
(Address of Depositor's Principal Offices)

(860) 843-6733
(Depositor's Telephone Number, Including Area Code)

MARIANNE O'DOHERTY, ESQ.
HARTFORD LIFE, INC.
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

___ immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1998 pursuant to paragraph (b) of Rule 485
---
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on May 1, 1998 pursuant to paragraph (a)(1) of Rule 485
___ this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.

PURSUANT TO RULE 24F-2(a)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE
REGISTRANT HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES.

<PAGE>

CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)

(PART A)

N-4 ITEM NO. PROSPECTUS HEADING
------------ ------------------
<S> <C>

1. Cover Page Cover Page

2. Definitions Glossary of Special Terms

3. Synopsis or Highlights Summary

4. Condensed Financial Information Accumulation Unit Values

5. General Description of Registrant, The Contracts and Separate Account Two;
Portfolio Companies Hartford Life Insurance Company and
the Funds; Miscellaneous

6. Deductions Charges Under the Contract

7. General Description of Variable Operation of the Contract; Payment of Benefits;
Annuity Contracts The Contracts and Separate Account Two

8. Annuity Period Payment of Benefits

9. Death Benefit Payment of Benefits; Operation of the Contract

10. Purchases and Contract Value Operation of the Contract

11. Redemptions Payment of Benefits

12. Taxes Federal Tax Considerations

13. Legal Proceedings Miscellaneous - Are there any material legal
proceedings affecting the Separate Account?

14. Table of Contents of the Table of Contents of the
Statement of Additional Statement of Additional Information
Information

(PART B)

15. Cover Page Cover Page

16. Table of Contents Tables of Contents
</TABLE>

<PAGE>

17. General Information and Description of Hartford Life Insurance
History Company

18. Services None

19. Purchase of Securities Distribution of Contracts
being Offered

20. Underwriters Distribution of Contracts

21. Calculation of Performance Calculation of Yield and
Data Return

22. Annuity Payments Annuity Period

23. Financial Statements Financial Statements

24. Financial Statements and Financial Statements and
Exhibits Exhibits

(PART C)

25. Directors and Officers of the Directors and Officers of the
Depositor Depositor

26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Depositor Common Control with the Depositor
or Registrant or Registrant

27. Number of Contract Owners Number of Contract Owners

28. Indemnification Indemnification

29. Principal Underwriters Principal Underwriters

30. Location of Accounts and Records Location of Accounts and Records

31. Management Services Management Services

32. Undertakings Undertakings

</TABLE>

<PAGE>

PART A

<PAGE>

HARTFORD
LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO (DC II)
[LOGO]
TAX SHELTERED ANNUITY/INDIVIDUAL RETIREMENT ANNUITY

The group variable annuity contracts (hereinafter the "Contract" or
"Contracts") described in this Prospectus are issued by Hartford Life
Insurance Company ("Hartford"). The Contracts provide for an Accumulation
Period and an Annuity Period. Contributions are held in a division of Hartford
Life Insurance Company Separate Account Two ("DC-II") during both the
Accumulation Period and the Annuity Period. The Contracts may contain a
General Account option which allows Participants to allocate contributions to
the General Account of Hartford. The General Account option, if applicable, is
not described in this Prospectus.

The Contracts are offered for use in (a) annuity purchase plans adopted
according to Section 403(b) of the Internal Revenue Code ("Code") by public
school systems, certain tax-exempt organizations described in Section
501(c)(3) of the Code, (b) employee pension plans established for employees of
a state, a political subdivision of a state, or an agency or instrumentality
of either a state or a political subdivision of a state, and (c) Individual
Retirement Annuity plans adopted according to Section 408 of the Code.

The following Sub-Accounts are available under the Contracts. Opposite each
Sub- Account is the name of the underlying investment ("Fund") for that Sub-
Account.

Advisers Fund -- shares of Class IA of Hartford Advisers HLS
Sub-Account Fund, Inc. ("Hartford Advisers Fund")
Bond Fund Sub-Account -- shares of Class IA of Hartford Bond HLS Fund,
Inc. ("Hartford Bond Fund")
Capital Appreciation -- shares of Class IA of Hartford Capital
Fund Appreciation HLS Fund, Inc. ("Hartford Capital
Sub-Account Appreciation Fund")
Dividend and Growth Fund -- shares of Class IA of Hartford Dividend and
Sub-Account Growth HLS Fund, Inc. ("Hartford Dividend and
Growth Fund")
Index Fund Sub-Account -- shares of Class IA of Hartford Index HLS Fund,
Inc. ("Hartford Index Fund")
International -- shares of Class IA of Hartford International
Opportunities Fund Opportunities HLS Fund, Inc. ("Hartford
Sub-Account International Opportunities Fund")
Money Market Fund -- shares of Class IA of Hartford Money Market HLS
Sub-Account Fund, Inc. ("Hartford Money Market Fund")
Mortgage Securities Fund -- shares of Class IA of Hartford Mortgage
Sub-Account Securities HLS Fund, Inc. ("Hartford Mortgage
Securities Fund")
Stock Fund Sub-Account -- shares of Class IA of Hartford Stock HLS Fund,
Inc. ("Hartford Stock Fund")
Calvert Social Balanced -- shares of Calvert Social Balanced Portfolio
Portfolio Sub-Account Series of Calvert Variable Series, Inc.
("Calvert Social Balanced Portfolio")
AMS/American Century VP -- shares of American Century Variable Portfolios,
Advantage Fund Inc. American Century VP Advantage
Sub-Account ("AMS/American Century VP Advantage Fund")
AMS/American Century VP -- shares of American Century Variable Portfolios,
Capital Appreciation Inc. American Century VP Capital Appreciation
Fund Sub-Account ("AMS/American Century VP Capital Appreciation
Fund")
AMS/Fidelity VIP II -- shares of Fidelity Investments Variable
Asset Manager Fund Insurance Products Fund II Asset Manager
Sub-Account Portfolio ("AMS/Fidelity VIP II Asset Manager
Portfolio")
AMS/Fidelity VIP II -- shares of Fidelity Investments Variable
Contrafund Fund Insurance Products Fund II Contrafund Portfolio
Sub-Account ("AMS/Fidelity VIP II Contrafund Portfolio")
AMS/Fidelity VIP Growth -- shares of Fidelity Investments Variable
Fund Insurance Products Fund Growth Portfolio
Sub-Account ("AMS/Fidelity VIP Growth Portfolio")
AMS/Fidelity VIP -- shares of Fidelity Investments Variable
Overseas Fund Insurance Products Fund Overseas Portfolio
Sub-Account ("AMS/Fidelity VIP Overseas Portfolio")

This Prospectus sets forth the information concerning DC-II that investors
ought to know before investing. This Prospectus should be kept for future
reference. Additional information about DC-II has been filed with the
Securities and Exchange Commission and is available from Hartford without
charge upon request. To obtain the Statement of Additional Information send a
written request to Hartford Life Insurance Company, Attn.: AMS Service Center
Operations, P.O. Box 2999, Hartford, CT 06104-2999. The Table of Contents for
the Statement of Additional Information may be found on page 35 of this
Prospectus. The Statement of Additional Information is incorporated herein by
reference.

------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------------------------------------------------------------

THE CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK. IT IS NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY GOVERNMENT AGENCY. INVESTMENT
IN A CONTRACT INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.

------------------------------------------------------------------------------

THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO THE CURRENT PROSPECTUSES OF
THE APPLICABLE ELIGIBLE FUNDS LISTED ABOVE WHICH CONTAIN A FULL DESCRIPTION OF
THOSE FUNS. INVESTORS ARE ADVISED TO READ AND RETAIN ALL PROSPECTUSES FOR
FUTURE REFERENCE.

------------------------------------------------------------------------------

Prospectus Dated: May 1, 1998
Statement of Additional Information Dated: May 1, 1998

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION PAGE
------------------------------------------------------------------------ ----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................... 3
FEE TABLE............................................................... 5
SUMMARY................................................................. 7
ACCUMULATION UNIT VALUES................................................ 9
PERFORMANCE RELATED INFORMATION......................................... 12
INTRODUCTION............................................................ 13
THE CONTRACTS AND THE SEPARATE ACCOUNT.................................. 13
What are the Contracts?............................................... 13
Who can buy the Contracts?............................................ 13
What is the Separate Account and how does it operate?................. 13
OPERATION OF THE CONTRACTS.............................................. 14
How are Contributions credited?....................................... 14
May I change the amount of my Contributions?.......................... 14
May I make changes in my Sub-Account allocations?..................... 15
May I transfer assets between Sub-Accounts/the General Account?....... 15
How do I transfer assets between Sub-Accounts or change my Sub-Account
allocations?......................................................... 15
May I systematically transfer assets to the Sub-Accounts?............. 15
What happens if the Contractholder fails to make Contributions?....... 16
May I assign or transfer the Contract?................................ 16
May I request a loan from my Individual Account?...................... 16
How do I know what my Individual Account is worth?.................... 17
How is the Accumulation Unit value determined?........................ 17
How are the underlying Fund shares valued?............................ 17
PAYMENT OF BENEFITS..................................................... 17
What would my Beneficiary receive as death proceeds?.................. 17
How can a Contract be redeemed or surrendered?........................ 18
Can payment of the redemption or surrender value ever be postponed
beyond the seven day period?......................................... 19
May I surrender once Annuity payments have started?................... 19
Can a Contract be suspended by a Contractholder?...................... 19
How do I elect an Annuity Commencement Date and form of Annuity?...... 19
What is the minimum amount that I may select as an Annuity payment?... 19
How are Contributions made to establish my Annuity Account?........... 20
What are the available Annuity options under the Contracts?........... 20
Systematic Withdrawal Option.......................................... 21
How are Variable Annuity payments determined?......................... 21
Can a Contract be modified?........................................... 22
CHARGES UNDER THE CONTRACTS............................................. 23
How are the charges under the Contracts made?......................... 23
What do the sales charges cover?...................................... 23
What is the mortality, expense risk and administrative charge?........ 23
Are there any other administrative charges?........................... 24
Is there ever a time when the sales charges or the Annual Maintenance
Fee does not apply?.................................................. 24
Experience Rating of the Contracts.................................... 25
How much are the deductions for Premium Taxes on the Contracts?....... 25
What charges are made by the Funds?................................... 25
Are there any other deductions?....................................... 25
HARTFORD LIFE INSURANCE COMPANY AND THE FUNDS........................... 25
What is Hartford?..................................................... 25
What are the Funds?................................................... 26
Hartford Funds...................................................... 26
Calvert Fund........................................................ 27
American Century VP Funds........................................... 27
Fidelity Funds...................................................... 27
FEDERAL TAX CONSIDERATIONS.............................................. 29
What are some of the federal tax consequences which affect the
Contracts?........................................................... 29
MISCELLANEOUS........................................................... 33
What are my voting rights?............................................ 33
Will other contracts be participating in the Separate Account?........ 33
How are the Contracts sold?........................................... 33
Who is the custodian of the Separate Account's assets?................ 33
Are there any material legal proceedings affecting the Separate
Account?............................................................. 33
Are you relying on any experts as to any portion of this
Prospectus?.......................................................... 33
Experts............................................................... 34
How may I get additional information?................................. 35
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............... 36
</TABLE>

2
<PAGE>
GLOSSARY OF SPECIAL TERMS

ACCUMULATION PERIOD: The period before the commencement of Annuity payments.

ACCUMULATION UNIT: An accounting unit of measure used to calculate values in the
Sub-Accounts before Annuity payments begin.

ADMINISTRATIVE OFFICE OF HARTFORD: Currently located at 200 Hopmeadow Street,
Simsbury, CT. All correspondence concerning this Contract should be sent to P.O.
Box 2999, Hartford, CT 06104-2999 Attn: AMS Service Center Administration,
except for overnight or express mail packages, which should be sent to: 200
Hopmeadow Street, Simsbury, CT.

ANNUAL MAINTENANCE FEE: An annual $25 charge on a Contract having a Contract
value of less than $50,000, as determined on the most recent Contract
Anniversary or upon full surrender of the Contract. The charge is deducted
proportionately from the investment options in use at the time of such
deduction.

ANNUITANT: A Participant on whose behalf Annuity payments are to be made under a
Contract.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for a designated period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
ANNUITY PERIOD: The period following the commencement of Annuity payments.
ANNUITY UNIT: An accounting unit of measure in DC-II used to calculate the
amount of Variable Annuity payments.
BENEFICIARY: The person(s) designated to receive Contract values in the event of
the Participant's or Annuitant's death.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.

CONTRACTHOLDER: The Employer or an entity which owns the Contract.

CONTRACT YEAR: A period of 12 consecutive months commencing on the effective
date of the Contract or on any anniversary thereof.

CONTRIBUTION(S): The amount(s) paid or transferred to Hartford by the
Contractholder on behalf of Participants pursuant to the terms of the Contract.

DATE OF COVERAGE: The date on which the application on behalf of the Participant
is received in good order by Hartford.

DC-II: A division of Hartford Life Insurance Company Separate Account Two.

EMPLOYER: An employer who establishes a Tax Sheltered Annuity plan or an
Individual Retirement Annuity plan for its employees.

FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the Annuity Period and which do not vary with the
investment experience of DC-II.

FUNDS: The Funds described commencing on page 26 of this Prospectus.

GENERAL ACCOUNT: The General Account of Hartford which consists of all assets of
Hartford other than those allocated to the separate accounts of Hartford,
including the Separate Account.

HARTFORD: Hartford Life Insurance Company.

INDIVIDUAL RETIREMENT ANNUITY: An Annuity Contract purchased by an Employer on
behalf of its employees and which provides for special tax treatment under
Section 408 of the Code.

IRS: Internal Revenue Service.
MINIMUM DEATH BENEFIT: The minimum amount payable upon the death of a
Participant prior to age 65 and before Annuity payments have commenced.

3
<PAGE>

PARTICIPANT (ALSO "YOU," "YOUR," "ME," "MY," "I"): Any employee of an
Employer/Contractholder electing to participate in a Contract. The term
"Participant" includes a Participant Owner under an Individual Retirement
Annuity.

PARTICIPANT'S CONTRACT YEAR: A period of 12 consecutive months commencing with
the Date of Coverage of the Participant and each successive 12 month period
thereafter.

PARTICIPANT'S INDIVIDUAL ACCOUNT: An account to which the General Account values
and Accumulation Units are allocated on behalf of a Participant under a
Contract.

PREMIUM TAX: A tax charged by a state or municipality on Contract premiums,
Contract purchase payments or Contract values.

TAX SHELTERED ANNUITY (ALSO, "TAX DEFERRED ANNUITY"): An Annuity Contract
purchased by an Employer on behalf of its employees and which qualifies for
special tax treatment under Section 403(b) of the Code.

SEPARATE ACCOUNT: Hartford Life Insurance Company Separate Account Two.

SUB-ACCOUNT: An account established within DC-II with respect to a Fund.

VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of DC II is determined at the close of the New York Stock Exchange
(generally, 4:00 p.m. Eastern Time) on such days.

VALUATION PERIOD: The period between successive Valuation Days.

VARIABLE ANNUITY: An Annuity providing for payments which vary in amount in
accordance with the investment experience of the assets held in the underlying
Funds of DC-II.

4
<PAGE>

FEE TABLE
SUMMARY
Contract Owner Transaction Expenses
(All Sub-Accounts)

<TABLE>
<S> <C>
Sales Load on Purchases (as a percentage of premium payments)..... None
Transfer Fee...................................................... $ 5
Contingent Deferred Sales Charge (as a percentage of amounts
withdrawn)......................................................
First through Fifth Year........................................ 5%
Sixth Year...................................................... 4%
Seventh Year.................................................... 3%
Eighth Year..................................................... 2%
Ninth Year...................................................... 1%
Tenth Year...................................................... 0%
Annual Contract Fee............................................... $30.00(1)

Annual Expenses -- Separate Account (as a percentage of average
account value)
Mortality and Expense Risk (DC-II)............................ 1.250%
</TABLE>

The Transfer Fee, Contingent Deferred Sales Charge, and Annual Contract Fee
and Mortality and Expense Risk charge may be reduced or eliminated. See
"Experience Rating of Contracts," page 25.

- ---------

(1) The Annual Contract Fee is a single $30.00 charge on a Participant's
Individual Account. It is deducted proportionally from the investment
options in use at the time of the charge. Pursuant to requirements of the
1940 Act, the policy fees have been reflected in the Examples by a method
intended to show the "average" impact on the policy fee on an investment in
the Separate Account. In the Example, the Annual Contract Fee is
approximated as a 0.11% annual asset charge based on the experience of the
Contracts.

Annual Fund Operating Expenses
(as a percentage of net assets)

<TABLE>
<CAPTION>
TOTAL FUND
OPERATING
EXPENSES
OTHER (AFTER ANY
MANAGEMENT EXPENSES FEE
FEES (AFTER WAIVERS
(AFTER ANY ANY AND
FEE EXPENSE EXPENSE
WAIVERS) REIMBURSEMENT) REIMBURSEMENT)
---------- -------- ----------
<S> <C> <C> <C>
Hartford Bond Fund.............................. 0.490% 0.020% 0.510%
Hartford Stock Fund............................. 0.430% 0.020% 0.450%
Hartford Money Market Fund...................... 0.425% 0.015% 0.440%
Hartford Advisers Fund.......................... 0.610% 0.020% 0.630%
Hartford Capital Appreciation Fund.............. 0.620% 0.020% 0.640%
Hartford Mortgage Securities Fund............... 0.425% 0.025% 0.450%
Hartford Index Fund............................. 0.375% 0.015% 0.390%
Hartford International Opportunities Fund....... 0.680% 0.090% 0.770%
Calvert Social Balanced Portfolio (1)........... 0.690% 0.120% 0.810%
Hartford Dividend & Growth Fund................. 0.660% 0.020% 0.680%
American Century VP Advantage Fund.............. 1.000% 0.000% 1.000%
American Century VP Capital Appreciation Fund... 1.000% 0.000% 1.000%
AMS/Fidelity VIP Growth Portfolio (2)........... 0.600% 0.090% 0.690%
AMS/Fidelity VIP Overseas Portfolio (2)......... 0.750% 0.170% 0.920%
AMS/Fidelity VIP II Contrafund Portfolio (2).... 0.600% 0.110% 0.710%
AMS/Fidelity VIP II Asset Manager Portfolio
(2)........................................... 0.550% 0.100% 0.650%
</TABLE>

- ---------

(1) The figures above for the Calvert Social Balanced Portfolio reflect expenses
for fiscal year 1997, and have been restated to reflect an increase in
transfer agency expenses of 0.01% for the Portfolio expected to incurred in
1998. Management and Advisory Expenses includes a performance adjustment,
which depending on performance, could cause the fee to be as high as 0.85%
or as low as 0.55%. "Other Expenses" reflect an indirect fee. Net fund
operating expenses after reductions for fees paid indirectly (again,
restated) would be 0.78%.

(2) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds have entered into
arrangements with their custodian whereby credits realized, as a result of
uninvested cash balances were used to reduce custodian expenses. Including
these reductions, the total operating expenses presented in the table would
have been 0.67% for VIP Growth Portfolio, 0.90% for VIP Overseas Portfolio,
0.76% for VIP II Asset Manager Portfolio, and 0.68% for VIP II Contrafund
VIP Portfolio.

5
<PAGE>

EXAMPLE DC-II (1)

<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on the assets:

SUB-ACCOUNT 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS.
------------------------- ------ ------- ------- -------- ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Fund................ $ 71 $ 114 $ 160 $ 221 $ 18 $ 58 $ 101 $ 219 $ 19 $ 59 $ 102 $ 221
Stock Fund............... 70 112 157 214 17 56 98 213 19 57 99 214
Money Market Fund........ 70 112 157 213 17 56 97 212 18 57 98 213
Advisers Fund............ 72 118 166 233 19 62 107 232 20 63 108 233
Capital Appreciation
Fund................... 72 118 167 234 19 62 107 233 21 63 109 234
Mortgage Securities
Fund................... 70 112 157 214 17 56 98 213 19 57 99 214
Index Fund (1)........... 70 111 154 208 17 54 94 206 18 56 96 208
International
Opportunities Fund..... 73 122 173 248 21 66 114 247 22 67 115 248
Calvert Social Balanced
Portfolio.............. 74 123 175 252 21 67 116 251 22 69 118 252
Dividend & Growth Fund... 72 119 169 239 20 63 110 237 21 65 111 239
American Century VP
Advantage Fund......... 75 128 184 272 23 73 126 271 24 74 127 272
American Century VP
Capital Appreciation
Fund................... 75 128 184 272 23 73 126 271 24 74 127 272
AMS/Fidelity VIP Growth
Fund................... 72 119 169 240 20 64 110 238 21 65 111 240
AMS/Fidelity VIP Overseas
Fund................... 75 126 180 264 22 71 122 262 23 72 123 264
AMS/Fidelity VIP II
Contrafund Fund........ 73 120 170 242 20 64 111 240 21 66 112 242
AMS/Fidelity VIP II Asset
Manager Fund........... 72 118 167 236 19 62 108 234 21 64 109 236
</TABLE>

(1) For this table, the Index Fund combined expenses are limited to 1.25%.

The purpose of this table is to assist the Contract Owner in understanding
various costs and expenses that a Contract Owner will bear directly or
indirectly. This table reflects expenses of the Separate Account and underlying
Funds. Premium taxes may also be applicable.

This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.

6
<PAGE>
SUMMARY
A. CONTRACTS OFFERED
Group variable annuity contracts are offered for issuance to Employers to
allow employee participation and special tax treatment under Section 403(b) and
Section 408 of the Code.

The Contracts are offered only with respect to plans established and
sponsored by Employers for their employees. The Contract is normally issued to
the Employer or to the trustee or custodian of the Employer's plan.

B. ACCUMULATION PERIOD UNDER THE CONTRACTS

During the Accumulation Period, Contributions submitted by the
Contractholder are used to purchase variable account interests. Contributions
allocated to purchase variable account interests may, after the deductions
described hereinafter, be invested in selected Sub-Accounts of DC II. A Contract
may contain a General Account option which allows Participants to allocate
contributions to the General Account. The General Account option, if applicable,
is not described in this Prospectus.

C. CONTINGENT DEFERRED SALES CHARGES

There is no deduction for sales expenses at the time Contributions are
allocated to the Contract. However, a contingent deferred sales charge may be
assessed against a Participant's Individual Account when it is withdrawn. The
number of Participant's Contract Years completed prior to withdrawal will
determine the amount of the contingent deferred sales charge. The amount or term
of the contingent deferred sales charge may be reduced (see "Charges Under the
Contracts -- Experience Rating of the Contracts," page 25). Aggregate deferred
sales charges will not exceed 8.50% of all Contributions to that Participant's
Individual Account.

The contingent deferred sales charge is a percentage of the amount
surrendered and equals:

<TABLE>
<CAPTION>
CONTRACT YEAR MAXIMUM
OF WITHDRAWAL CHARGE
- -------------------------------------------------------------------- -------------
<S> <C>
1 through 5......................................................... 5%
6................................................................... 4%
7................................................................... 3%
8................................................................... 2%
9................................................................... 1%
10 and thereafter................................................... 0%
</TABLE>

No deduction for contingent deferred sales charges will be made in certain
cases (see "Charges Under the Contract -- Experience Rating of the Contracts,"
page 25).
D. TRANSFER BETWEEN ACCOUNTS

During the Accumulation Period, a Participant may allocate moneys held in
DC-II among the available Sub-Accounts. Currently, there is no charge for up to
12 transfers per Participant Contract Year. A fee of $5.00 may be assessed for
each transfer made in excess of 12 per Participant Contract Year. No two
transfers may occur on consecutive Valuation Days. There may be additional
restrictions under certain circumstances. (See "May I transfer assets between
Sub-Accounts/the General Account?" on page 15)

E. ANNUITY PERIOD UNDER THE CONTRACTS

At the end of the Accumulation Period, Contract values held with respect to
a Participant's Individual Account may, at the direction of the Participant, be
allocated to provide Fixed Annuities and/or Variable Annuities under the
Contract. (See "How are Contributions made to establish my Annuity account?" on
page 20.) However, Hartford will not assume responsibility in determining or
monitoring minimum distributions beginning at age 70 1/2.

F. MINIMUM DEATH BENEFITS

A Minimum Death Benefit is provided in the event of death of the Participant
prior to the earlier of the Participant's 65th birthday or the Annuity
Commencement Date (see "What would my Beneficiary receive as death proceeds?" on
page 17).

7
<PAGE>
G. ANNUITY OPTIONS

The Annuity Commencement Date generally will not be deferred beyond the date
the Participant becomes age 70 1/2 or unless an earlier date is required by
applicable law and/or regulation. If a Participant does not elect otherwise,
Hartford reserves the right to begin Annuity payments automatically upon the
Participant's attaining age 65 under an Annuity option providing for a life
Annuity with 120 monthly payments certain (see "What are the available Annuity
options under the Contracts?" on page 20).

H. DEDUCTIONS FOR PREMIUM TAXES

Deductions will be made for the payment of any Premium Taxes that may be
levied against the Contract at the time imposed under applicable law (see
"Charges Under the Contracts," page 23). Currently, the range is 0% to 3.5%.

I. ASSET CHARGE IN THE SEPARATE ACCOUNT

During both the Accumulation Period and the Annuity Period a charge is made
by Hartford for providing the mortality, expense and administrative undertakings
under the Contracts. Such charge is made at an annual rate of 1.25% (estimated
at .85% for mortality, .15% for expense and .25% for administrative
undertakings) of the average daily net assets of DC-II. The rate charged for the
mortality, expense and administrative undertakings under the Contracts may be
reduced (see "Charges Under the Contracts -- Experience Rating of the
Contracts," page 25) and may be periodically increased beyond a rate of 1.25%,
subject to a maximum annual rate of 2.00%. However, no increase will occur
unless the Commission shall have first approved any such increase. (See "Charges
Under the Contracts," page 23.)

J. ANNUAL MAINTENANCE FEE

An Annual Maintenance Fee may be charged against the value of each
Participant's Individual Account under a Contract at the end of a Participant's
Contract Year. The maximum Annual Maintenance Fee is $30 per year on each
Participant's Individual Account. (See "Charges Under the Contracts," page 23.)
Hartford reserves the right to reduce or waive the Annual Maintenance Fee under
certain conditions (see "Charges Under the Contracts -- Experience Rating of the
Contracts," page 25).

K. MINIMUM PAYMENT

There is no minimum amount for initial Contributions or subsequent
Contributions that may be made by the Contractholder on behalf of a
Participant's Individual Account under a Contract.

L. INDIVIDUAL ACCOUNT LOANS

Generally, a Participant may request a loan from his or her Individual
Account under a Tax Sheltered Annuity, subject to a $25 non-refundable loan
processing fee (except as otherwise required by statute). Loans must be at least
$1,000 and may not exceed the lesser of (a) 50% of the Participant's Individual
Account value, or (b) $50,000, reduced by the highest outstanding balance of any
loan to such Participant during the 12-month period ending on the day before the
loan is made. (See "May I request a loan from my Individual Account?" on page
16.) Individual Account loans may not be available in all states or may be
subject to restrictions.

M. FUND FEES AND CHARGES

The Funds are subject to certain fees, charges and expenses. See the
prospectuses for the Funds accompanying this Prospectus.

N. PAYMENT ALLOCATION TO DC-II

The Contracts permit the allocation of Contributions, in multiples of 10% of
each Contribution, among the Sub-Accounts under DC-II. There is no minimum
amount that may be allocated to any Sub-Account.

O. VOTING RIGHTS OF CONTRACTHOLDERS

Contractholders and/or vested Participants will have the right to vote on
matters affecting the Funds underlying the Contracts to the extent that proxies
are solicited by any such Fund. If a Contractholder or vested Participant does
not vote, Hartford shall vote such Contractholder's or Participant's interest in
the same proportion as shares of the Fund for which instructions have been
received by Hartford (see "What are my voting rights?" on page 33).

8
<PAGE>

ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNITS OUTSTANDING THROUGHOUT THE PERIOD)

The following information has been derived from the audited financial
statements of the Separate Account, which have been audited by Arthur Anderson,
LLP, independent public accountants, as indicated in their report thereto, and
should be read in conjunction with those statements which are included in the
Statement of Additional Information, which is incorporated herein by reference
in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- ------- ------- ------- ------- -------
BOND FUND SUB-ACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(Inception Date August 25, 1982)
Accumulation Unit value at beginning of
period................................. $ 4.187 $ 4.095 $ 3.500 $ 3.689 $ 3.389 $ 3.251 $ 2.827 $ 2.641
Accumulation Unit value at end of
period................................. $ 4.604 $ 4.187 $ 4.095 $ 3.500 $ 3.689 $ 3.389 $ 3.251 $ 2.827
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 1,606 1,655 1,368 1,123 992 816 732 724
STOCK FUND SUB-ACCOUNT
(Inception Date June 29, 1982)
Accumulation Unit value at beginning of
period................................. $ 11.017 $ 8.968 $ 6.771 $ 6.988 $ 6.188 $ 5.694 $ 4.627 $ 4.874
Accumulation Unit value at end of period $ 14.295 $ 11.017 $ 8.968 $ 6.771 $ 6.988 $ 6.188 $ 5.694 $ 4.627
Number of Accumulation Units outstanding
at end of period
(in thousands) 5,082 4,885 4,413 3,885 3,181 2,517 1,885 1,467
MONEY MARKET FUND SUB-ACCOUNT
(Inception Date June 29, 1982)
Accumulation Unit value at beginning of
period................................. $ 2.725 $ 2.624 $ 2.512 $ 2.447 $ 2.407 $ 2.351 $ 2.245 $ 2.103
Accumulation Unit value at end of period $ 2.834 $ 2.725 $ 2.624 $ 2.512 $ 2.447 $ 2.407 $ 2.351 $ 2.245
Number of Accumulation Units outstanding
at end of period
(in thousands) 1,473 1,333 989 905 886 884 929 881
ADVISERS FUND SUB-ACCOUNT
(Inception Date May 2, 1983)
Accumulation Unit value at beginning of
period................................. $ 4.201 $ 3.647 $ 2.876 $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123
Accumulation Unit value at end of
period................................. $ 5.168 $ 4.201 $ 3.647 $ 2.876 $ 2.993 $ 2.700 $ 2.524 $ 2.123
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 10,299 10,505 9,212 8,279 7,023 7,323 6,220 5,565
CAPITAL APPRECIATION FUND SUB-ACCOUNT
(Inception Date April 2, 1984)
Accumulation Unit value at beginning of
period................................. $ 6.533 $ 5.478 $ 4.257 $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278
Accumulation Unit value at end of
period................................. $ 7.896 $ 6.533 $ 5.478 $ 4.257 $ 4.204 $ 3.524 $ 3.050 $ 2.004
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 11,032 10,979 9,081 6,923 4,940 3,276 2,113 1,455
MORTGAGE SECURITIES FUND SUB-ACCOUNT
(Inception Date January 15, 1985)
Accumulation Unit value at beginning of
period................................. $ 2.421 $ 2.333 $ 2.034 $ 2.093 $ 1.993 $ 1.929 $ 1.702 $ 1.571
Accumulation Unit value at end of
period................................. $ 2.606 $ 2.421 $ 2.333 $ 2.034 $ 2.093 $ 1.993 $ 1.929 $ 1.702
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 1,035 1,141 1,149 994 942 802 736 582

1989 1988
------- -------
BOND FUND SUB-ACCOUNT
<S> <C> <C>
(Inception Date August 25, 1982)
Accumulation Unit value at beginning of
period................................. $ 2.385 $ 2.244
Accumulation Unit value at end of
period................................. $ 2.641 $ 2.385
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 594 433
STOCK FUND SUB-ACCOUNT
(Inception Date June 29, 1982)
Accumulation Unit value at beginning of
period................................. $ 3.915 $ 3.331
Accumulation Unit value at end of period $ 4.874 $ 3.915
Number of Accumulation Units outstanding
at end of period
(in thousands) 1,156 1,011
MONEY MARKET FUND SUB-ACCOUNT
(Inception Date June 29, 1982)
Accumulation Unit value at beginning of
period................................. $ 1.951 $ 1.840
Accumulation Unit value at end of period $ 2.103 $ 1.951
Number of Accumulation Units outstanding
at end of period
(in thousands) 718 628
ADVISERS FUND SUB-ACCOUNT
(Inception Date May 2, 1983)
Accumulation Unit value at beginning of
period................................. $ 1.766 $ 1.566
Accumulation Unit value at end of
period................................. $ 2.123 $ 1.766
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 5,227 4,631
CAPITAL APPRECIATION FUND SUB-ACCOUNT
(Inception Date April 2, 1984)
Accumulation Unit value at beginning of
period................................. $ 1.858 $ 1.490
Accumulation Unit value at end of
period................................. $ 2.278 $ 1.858
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 1,037 787
MORTGAGE SECURITIES FUND SUB-ACCOUNT
(Inception Date January 15, 1985)
Accumulation Unit value at beginning of
period................................. $ 1.406 $ 1.313
Accumulation Unit value at end of
period................................. $ 1.571 $ 1.406
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 845 764
</TABLE>

9
<PAGE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- ------- ------- ------- ------- -------
INDEX FUND SUB-ACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(Inception Date June 3, 1987)
Accumulation Unit value at beginning of
period................................. $ 2.848 $ 2.353 $ 1.738 $ 1.735 $ 1.605 $ 1.522 $ 1.190 $ 1.255
Accumulation Unit value at end of
period................................. $ 3.745 $ 2.848 $ 2.353 $ 1.738 $ 1.735 $ 1.605 $ 1.522 $ 1.190
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 5,415 4,378 3,153 2,376 1,862 1,437 871 595
CALVERT SOCIAL BALANCED PORTFOLIO
SUB-ACCOUNT
(Inception Date January 25, 1990)
Accumulation Unit value at beginning of
period................................. $ 2.021 $ 1.817 $ 1.417 $ 1.483 $ 1.391 $ 1.308 $ 1.138 $ 1.106
Accumulation Unit value at end of
period................................. $ 2.396 $ 2.021 $ 1.817 $ 1.417 $ 1.483 $ 1.391 $ 1.308 $ 1.138
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 1,291 1,193 923 693 498 317 187 94
INTERNATIONAL OPPORTUNITIES FUND
SUB-ACCOUNT
(Inception Date July 2, 1990)
Accumulation Unit value at beginning of
period................................. $ 1.483 $ 1.329 $ 1.181 $ 1.220 $ 0.924 $ 0.979 $ 0.877 $ 1.000
Accumulation Unit value at end of
period................................. $ 1.469 $ 1.483 $ 1.329 $ 1.181 $ 1.220 $ 0.924 $ 0.979 $ 0.877
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 5,864 5,996 4,520 3,640 1,495 553 220 52
DIVIDEND AND GROWTH FUND SUB-ACCOUNT
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. $ 1.490 $ 1.223 $ 1.000 -- -- -- -- --
Accumulation Unit value at end of
period................................. $ 1.993 $ 1.490 $ 1.223 -- -- -- -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 6,877 3,874 558 -- -- -- -- --
AMS/AMERICAN CENTURY VP ADVANTAGE FUND
SUB-ACCOUNT
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. $ 1.134 $ 1.051 $ 1.000 -- -- -- -- --
Accumulation Unit value at end of
period................................. $ 1.264 $ 1.134 $ 1.051 -- -- -- -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 189 144 36 -- -- -- -- --
AMS/AMERICAN CENTURY VP CAPITAL
APPRECIATION FUND SUB-ACCOUNT
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. $ 1.021 $ 1.081 $ 1.000 -- -- -- -- --
Accumulation Unit value at end of
period................................. $ 0.976 $ 1.021 $ 1.081 -- -- -- -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 1,520 1,108 634 -- -- -- -- --

1989 1988
------- -------
INDEX FUND SUB-ACCOUNT
<S> <C> <C>
(Inception Date June 3, 1987)
Accumulation Unit value at beginning of
period................................. $ 0.975 $ 0.850
Accumulation Unit value at end of
period................................. $ 1.255 $ 0.975
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 275 116
CALVERT SOCIAL BALANCED PORTFOLIO
SUB-ACCOUNT
(Inception Date January 25, 1990)
Accumulation Unit value at beginning of
period................................. $ 1.000 --
Accumulation Unit value at end of
period................................. $ 1.106
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 18 --
INTERNATIONAL OPPORTUNITIES FUND
SUB-ACCOUNT
(Inception Date July 2, 1990)
Accumulation Unit value at beginning of
period................................. -- --
Accumulation Unit value at end of
period................................. -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... -- --
DIVIDEND AND GROWTH FUND SUB-ACCOUNT
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. -- --
Accumulation Unit value at end of
period................................. -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... -- --
AMS/AMERICAN CENTURY VP ADVANTAGE FUND
SUB-ACCOUNT
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. -- --
Accumulation Unit value at end of
period................................. -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... -- --
AMS/AMERICAN CENTURY VP CAPITAL
APPRECIATION FUND SUB-ACCOUNT
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. -- --
Accumulation Unit value at end of
period................................. -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... -- --
</TABLE>

10
<PAGE>

1989 1988
------- -------
AMS/FIDELITY VIP OVERSEAS FUND
SUB-ACCOUNT
<S> <C> <C>
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. -- --
Accumulation Unit value at end of
period................................. -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... -- --
AMS/FIDELITY VIP II ASSET MANAGER FUND
SUB-ACCOUNT
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. -- --
Accumulation Unit value at end of
period................................. -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... -- --
AMS/FIDELITY VIP II CONTRAFUND FUND
SUB-ACCOUNT
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. -- --
Accumulation Unit value at end of
period................................. -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... -- --
AMS/FIDELITY VIP GROWTH FUND SUB-ACCOUNT
(Inception Date May 1, 1995)
Accumulation Unit value at beginning of
period................................. -- --
Accumulation Unit value at end of
period................................. -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... -- --
</TABLE>

11
<PAGE>
PERFORMANCE RELATED INFORMATION

DC-II may advertise certain performance related information concerning its
Sub-Accounts. Performance information about a Sub-Account is based on that
Sub-Account's past performance only and is no indication of future performance.

The Advisers Fund, Bond Fund, Calvert Social Balanced Portfolio, Capital
Appreciation Fund, Dividend and Growth Fund, Index Fund, International
Opportunities Fund, Money Market Fund, Mortgage Securities Fund, Stock Fund,
AMS/American Century VP Advantage Fund, AMS/American Century VP Capital
Appreciation Fund, AMS/Fidelity VIP II Asset Manager Fund, AMS/Fidelity VIP
Growth Fund, AMS/Fidelity VIP II Contrafund Fund, and AMS/Fidelity VIP Overseas
Fund Sub-Accounts may include total investment return in advertisements or other
sales materials.

When a Sub-Account advertises its standardized total return, total return
will usually be calculated for one year, five years, and ten years or some other
relevant periods if the Sub-Account has not been in existence for at least ten
years. Total return is measured by comparing the value of investments in the
Sub-Account at the beginning of the relevant period to the value of the
investments at the end of such period (assuming the deduction of any contingent
deferred sales charge which would be payable if the investment were redeemed at
the end of the period). Total return figures are net of all Fund level
management fees and charges, the mortality, expense risk and administrative
charge and the Annual Maintenance Fee.

The Bond Fund, Mortgage Securities Fund and AMS/American Century VP
Advantage Fund Sub-Accounts may advertise yield in addition to total return. The
yield will be computed in the following manner: The net investment income per
unit earned during a recent one month period is divided by the unit value on the
last day of such period. The resulting figure reflects the recurring charges,
including the Annual Maintenance Fee and the mortality, expense risk and
administrative charge, on the Separate Account level.

The Money Market Fund may advertise yield and effective yield. The yield of
the Sub-Account is based upon the income earned by the Sub-Account over a
seven-day period and then annualized, i.e., the income earned in such period is
assumed to be earned every seven days over a 52-week period and stated as a
percentage of the investment. Effective yield is calculated similarly, but when
annualized, the income earned by the investment is assumed to be reinvested in
Sub-Account units and thus compounded in the course of a 52-week period. Yield
and effective yield reflect the recurring charges on the Separate Account level,
including the Annual Maintenance Fee and the mortality, expense risk and
administrative charge.

Total return at the Separate Account level includes all Contract charges,
i.e., contingent deferred sales charges, mortality, expense risk and
administrative charges, and the Annual Maintenance Fee and, therefore, is lower
than total return at the Fund level, with no comparable charges. Likewise, yield
at the Separate Account level includes all recurring charges (except contingent
deferred sales charges), and, therefore, is lower than yield at the Fund level,
with no comparable charges.

12
<PAGE>
INTRODUCTION

This Prospectus has been designed to provide you with the information
necessary to make a decision on purchasing a Contract offered by Hartford in
DC-II, or an interest therein, which Contract will be issued in conjunction with
a Tax Sheltered Annuity plan or an Individual Retirement Annuity plan
established by an Employer for the benefit of its employees. This Prospectus
describes only the elements of the Contract pertaining to the variable portion
of such Contract. The Contracts may contain a General Account option which is
not described in this Prospectus. Please read the Glossary of Special Terms
(pages 3 and 4) prior to reading this Prospectus to familiarize yourself with
the terms used herein.

THE CONTRACTS AND THE SEPARATE ACCOUNT
WHAT ARE THE CONTRACTS?

The Contracts are group variable annuity contracts under which variable
account Contributions are held in a division of Hartford Life Insurance Company
Separate Account Two ("DC-II") during both the Accumulation Period and the
Annuity Period. A Contract may provide a General Account option. The Contracts
are issued to Employers or to a trustee or custodian of an Employer's plan to
allow the employees of such Employer/Contractholder to participate in a Tax
Sheltered Annuity or an Individual Retirement Annuity.

During the Accumulation Period under a Contract, Contributions submitted by
the Contractholder are used to purchase variable account interests. Subject to
the deductions described hereinafter, Contributions allocated to purchase
variable account interests may be invested in selected Sub-Accounts.

WHO CAN BUY THE CONTRACTS?

The group variable annuity Contracts offered under this Prospectus are
offered for use in connection with Annuity purchase plans adopted in accordance
with Section 403(b) of the Code by public school systems, certain tax-exempt
organizations described in Section 501(c)(3) of the Code and including employee
pension plans established for employees by a state, a political subdivision of a
state, or an agency or instrumentality of either a state or a political
subdivision of a state, as well as in connection with Individual Retirement
Annuity plans. A Contract is issued to an Employer or to a trustee or custodian
of the Employer's plan to provide a Tax Sheltered Annuity or Individual
Retirement Annuity plan for its employees.

WHAT IS THE SEPARATE ACCOUNT AND HOW DOES IT OPERATE?

The Separate Account is organized as a unit investment trust and has been
registered as such with the Commission under the Investment Company Act of 1940,
as amended. Registration of the Separate Account with the Commission does not
involve supervision by the Commission of the management or investment practices
or policies of the Separate Account or of Hartford. However, Hartford and the
Separate Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut. The Separate Account meets the definition
of "separate account" under federal securities law.

Under Connecticut law, the assets of the Separate Account attributable to
the Contracts are held for the benefit of the Contractholders and the persons
entitled to payments under, the Contracts. Also, in accordance with the
Contracts, the assets in the Separate Account attributable to Contracts
participating in the Separate Account are not chargeable with liabilities
arising out of any other business Hartford may conduct. Therefore, you will not
be affected by the rate of return of the General Account, nor by the investment
performance of any of Hartford's other separate accounts.

Contributions under the Contract are allocated to one or more Sub- Accounts
of the Separate Account. Each Sub-Account is invested exclusively in the assets
of one underlying Fund. Contributions and proceeds of transfers between
Sub-Accounts are applied to purchase shares in the appropriate Fund at net asset
value determined as of the end of the Valuation Period during which the
Contributions were received or the transfer made. All distributions from the
Fund are reinvested at net asset value. The value of a Participant's Individual
Account therefore will vary during the Accumulation Period in accordance with
the net income and fluctuation in the individual investments within the
underlying Fund portfolio or portfolios. During the Variable Annuity payout
period, Annuity payments and reserve values will vary in accordance with these
factors.

13
<PAGE>

HARTFORD DOES NOT GUARANTEE THE INVESTMENT RESULTS OF THE SUB-ACCOUNTS OR
ANY UNDERLYING INVESTMENTS. THERE IS NO ASSURANCE THAT THE VALUE OF A CONTRACT
DURING THE YEARS PRIOR TO RETIREMENT OR THE AGGREGATE AMOUNT OF THE VARIABLE
ANNUITY PAYMENTS WILL EQUAL THE SUM OF PARTICIPANT CONTRIBUTIONS MADE UNDER THE
CONTRACT. SINCE EACH UNDERLYING FUND HAS DIFFERENT INVESTMENT OBJECTIVES, EACH
FUND IS SUBJECT TO ITS OWN SET OF RISKS. THESE RISKS ARE MORE FULLY DESCRIBED IN
THE FUND PROSPECTUSES ACCOMPANYING THIS PROSPECTUS.

Hartford reserves the right, subject to compliance with applicable law, to
substitute the shares of any other registered investment company for the shares
of any Fund held by the Separate Account. Substitution may occur if shares of
the Fund(s) become unavailable or in the event of changes in applicable law or
interpretations of law. Current law requires that Participants receive notice of
any such substitution and approval thereof by the Commission. Hartford also
reserves the right, subject to compliance with applicable law, to offer
additional Sub-Accounts with differing investment objectives, and to make
existing Sub-Account options unavailable under the Contracts in the future. The
Separate Account may be subject to liabilities arising from another division of
the Separate Account whose assets are attributable to other variable annuity
contracts or variable life insurance policies offered by the Separate Account
and not described in this Prospectus.

Hartford may offer additional Separate Account options from time to time
under the Contracts. Such new options will be subject to the charges, fees, and
or transfer restrictions for the Contracts then in effect.

OPERATION OF THE CONTRACTS

HOW ARE CONTRIBUTIONS CREDITED?

A group contract is issued to an Employer adopting a Plan and will cover all
present and future Participant's in such Plan. The Contracts provide for
variable (Separate Account) Contributions and allocations to the General Account
during the Accumulation Period.

The number of Accumulation Units in each Sub-Account to be credited to a
Participant's Individual Account is determined by dividing the portion of the
Contributions being credited to each Sub-Account by the value of an Accumulation
Unit in that Sub-Account on the applicable Valuation Day.

Initial contributions are priced for crediting to a Participant's Individual
Account within two business days after receipt by Hartford at its Administrative
Office of a properly completed application and the initial Contribution. If an
application or any other necessary information (collectively, the "application")
is incomplete when received by Hartford, the initial Contribution will be
credited to the Participant's Individual Account not later that two business
days after the application is made complete. However, if an incomplete
application is not made complete within five business days of the date on which
such incomplete application was initially received by Hartford, the initial
Contribution will be returned immediately, unless you have been informed of the
delay and request that the Contribution not be returned.

Subsequent Contributions properly designated for a Participant's Individual
Account are priced for crediting to such Participant's Individual Account on the
Valuation Day that the Contribution is received by Hartford at its
Administrative Office, or at another designated location.

The number of Accumulation Units in a Sub-Account will not change because of
a subsequent change in an Accumulation Unit's value, but the dollar value of an
Accumulation Unit will vary to reflect the investment experience of the
underlying Fund shares.

There is no minimum amount for initial Contributions or subsequent
Contributions that may be made on behalf of a Participant's Individual Account
under a Contract.
MAY I CHANGE THE AMOUNT OF MY CONTRIBUTIONS?

Yes. However, the minimum Contribution that may be made at any one time on
behalf of a Participant during the Accumulation Period under a contract is $30,
unless the Employer's Plan provides otherwise. If the Plan adopted by the
Contract Owner so provides, the Contract permits the allocation of
Contributions, in multiples of 10%, among the Sub-Accounts. The minimum amount
that may be allocated to any Sub-Account shall not be less than $10. Such
changes must be requested in the form and manner prescribed by Hartford.

14
<PAGE>
MAY I MAKE CHANGES IN MY SUB-ACCOUNT ALLOCATIONS?

The Contract permits the allocation of Contributions, in multiples of 10%,
among the 16 Sub-Accounts. There is no minimum amount that may be allocated to
any one Sub-Account. Such changes must be requested in the form and manner
prescribed by Hartford.

MAY I TRANSFER ASSETS BETWEEN SUB-ACCOUNTS/THE GENERAL ACCOUNT?

During the Accumulation Period a Participant may transfer the value of his
or her Individual Account allocations from one or more Sub-Accounts or the
General Account to one or more other Sub-Accounts, the General Account or to any
combination thereof.

Amounts allocated to the General Account, or amounts previously allocated to
the General Account during the three month period immediately preceding the date
such transfer is requested, may not be transferred to any Sub-Account which
Hartford considers to be a competing fixed income Sub-Account. Hartford reserves
the right to limit the maximum amount transferred from the General Account
during a Contract Year to 20% of the Participant's Individual Account in any one
Participant's Contract Year.

Currently there is no transfer charge for the first 12 transfers per
Participant's Contract Year. A fee of $5.00 may be assessed for each transfer in
excess of 12 per Participant's Contract Year. No two transfers may occur on
consecutive Valuation Days.

Additionally, with respect to a Participant's Individual Account, the right
to transfer moneys between Sub-Accounts is subject to modification if Hartford
determines, in its sole opinion, that the exercise of that right by the
Contractholder/Participant is, or would be, to the disadvantage of other
Contractholders/Participants. Any modification could be applied to transfers to
or from the same or all of the Sub-Accounts and could include, but not be
limited to, requiring a minimum time period between each transfer, not accepting
transfer requests of an agent acting under a power of attorney on behalf of more
than one Participant or Contractholder, or limiting the dollar amount that may
be transferred between Sub-Accounts by a Contractholder or Participant at any
one time. Such restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which Hartford considers to be to
disadvantageous to other Contractholders and Participants.

HOW DO I TRANSFER ASSETS BETWEEN SUB-ACCOUNTS OR CHANGE MY SUB-ACCOUNT
ALLOCATIONS?

Transfers between Sub-Accounts and changes in Sub-Account allocations may be
made by written request to Hartford or by calling Hartford at 1-800-771-3051.
Any transfers or changes made in writing will be effected as of the date the
request is received by Hartford at its Administrative Office. Transfers or
changes initiated by telephone may not be permitted in some states. The policy
of Hartford and its agents and affiliates is that they will not be responsible
for losses resulting from acting upon telephone requests reasonably believed to
be genuine. Hartford will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; otherwise, Hartford may be
liable for any losses due to unauthorized or fraudulent instructions. The
procedures Hartford follows for transactions initiated by telephone include
requirements that Participants identify themselves by their group number,
Participant number and social security number. All transfer instructions made by
telephone are recorded.

MAY I SYSTEMATICALLY TRANSFER ASSETS TO THE SUB-ACCOUNTS?

If, during the Accumulation Period, the portion of your Contract values held
under the General Account option is at least $5,000, or the value of your
Accumulation Units held under the Money Market Fund Sub-Account is at least
$5,000, you may choose to have a specified dollar amount transferred from either
the General Account or the Money Market Fund Sub-Account (whichever meets the
applicable minimum value) to other Sub- Accounts at monthly, quarterly,
semi-annual or annual intervals. This is known as Dollar Cost Averaging. The
main objective of a Dollar Cost Averaging program is to minimize the impact of
short term price fluctuations. Since the same dollar amount is transferred to
other Sub-Accounts at set intervals, more Accumulation Units are purchased in a
Sub-Account if the value per Accumulation Unit is low and fewer Accumulation
Units are purchased if the value per Accumulation Unit is high. Therefore, a
lower average cost per Accumulation Unit may be achieved over the long term. A
Dollar Cost Averaging program allows investors to take advantage of market
fluctuations. However, it is important to understand that Dollar Cost Averaging
does not assure a profit or protect against a loss in declining markets.

The minimum amount that may be transferred to any one Sub-Account at a
transfer interval is $100. The transfer date will be the monthly, quarterly,
semi-annual or annual anniversary, as applicable, of your first transfer under
your initial Dollar Cost Averaging election. The first transfer will commence
within five business

15
<PAGE>

days after Hartford receives your initial election, either on an appropriate
election form in good order or by telephone, subject to the telephone transfer
procedures detailed above. The amount transferred will be allocated to the
Sub-Accounts that you specify, in the proportions that you specify on the
appropriate election form provided by Hartford or over our recorded telephone
line. You may allocate amounts to a maximum of five Sub-Accounts. If, on any
transfer date, your General Account value or the value of your Accumulation
Units under the Money Market Fund Sub-Account, as applicable, is less than the
amount you have elected to have transferred under your Dollar Cost Averaging
program, your Dollar Cost Averaging program will end.

You may cancel your Dollar Cost Averaging election by notice in writing to
Hartford or by calling us at 1-800-528-9009 and giving notice to a Hartford
representative on our recorded telephone line.

WHAT HAPPENS IF THE CONTRACTHOLDER FAILS TO MAKE CONTRIBUTIONS?

A Contract will be deemed paid-up within 30 days after any anniversary date
of the Contract if the Contractholder has not remitted a Contribution to
Hartford during the preceding 12 month period. Effective with a change of the
Contract to paid-up status, no further Contributions will be accepted by
Hartford and each Participant's Individual Account will be considered to be
inactive until the commencement of Annuity payments or until the value of the
Participant's Individual Account is disbursed or applied in accordance with the
termination provisions (see "Payment of Benefits -- How can a Contract be
redeemed or surrendered?" on page 18).

MAY I ASSIGN OR TRANSFER THE CONTRACT?

The Contract and a Participant's interest therein may not be assigned,
transferred or pledged.

MAY I REQUEST A LOAN FROM MY INDIVIDUAL ACCOUNT?

During the Accumulation Period, a Participant under a Tax Sheltered Annuity
plan may request a loan from his or her Individual Account, subject to a single
$25 non-refundable loan processing fee (except as otherwise required by
statute). The loan proceeds and the loan processing fee will be deducted from
the General Account on the date that the loan proceeds are disbursed. Loans
against a Participant's Individual Account may not be available in all states or
may be subject to restrictions. Loans are not available to Participants under an
Individual Retirement Annuity plan.

The amount of a loan may not exceed the lesser of (a) 50% of the value of
the Participant's Individual Account, or (b) $50,000, reduced by the highest
outstanding balance of any loan to such Participant during the 12-month period
ending on the day before the loan is made. The minimum loan amount is $1,000.

At the beginning of each calendar quarter, Hartford shall determine the
interest rate to be charged on all loans issued during such quarter. The
interest rate shall reflect current market interest rates and the prevailing
interest rate levels under the Contract. The maximum interest rate shall not
exceed the current guaranteed interest rate for the General Account plus 2%.
Monthly loan payments (except for the initial loan payment) are due and payable
at the Administrative Office of Hartford on the last business day of each month.
The initial monthly loan payment is due and payable during the month in which
the loan proceeds are disbursed from the Participant's Individual Account. The
Participant's Individual Account will be credited with the amount of monthly
loan payments (both principal and interest) minus a monthly loan balance charge
of .166% of the then-outstanding loan balance. The monthly loan balance charge
will be retained by Hartford.

Prepayment of the outstanding loan balance is prohibited during the first 12
months following disbursement of the loan proceeds, except upon termination of
employment. Thereafter, a Participant may prepay all or any portion of the
outstanding principal balance on the loan and any unpaid interest accrued as of
the date of the payment made by the Participant. Participants may select a
repayment term of one to five years (in 12 month increments) from the last
business day of the first month in which the loan amount is distributed. Loan
balances which remain unpaid after a specified period will be treated as a
distribution from the Participant's Individual Account which is subject to
taxation (see "Federal Tax Considerations," page 29).

Loans will have a permanent effect on the Participant's Individual Account
because the investment results of each Sub-Account will apply only to the amount
remaining in such Sub-Account. The longer a loan is outstanding, the greater the
impact on the Participant's Individual Account is likely to be. Also, if not
repaid, the outstanding loan balance will reduce the death benefit otherwise
payable to the Beneficiary.

16
<PAGE>

HOW DO I KNOW WHAT MY INDIVIDUAL ACCOUNT IS WORTH?

The value of a Participant's Individual Account under a Contract at any time
prior to the commencement of Annuity payments can be determined by multiplying
the total number of Accumulation Units credited to the Participant's Individual
Account by the current Accumulation Unit value for the Sub-Account(s). There is
no assurance that the value in the Sub-Accounts will equal or exceed the
Contributions made to such Sub-Accounts.

The value of the Accumulation Units in DC-II which represent an interest in
the appropriate Fund shares that are held under the Contract was initially
established on the date that Contributions were credited to the appropriate
Sub-Account. The value of the respective Accumulation Units for any subsequent
day is determined by multiplying the Accumulation Unit value for the preceding
day by the net investment factor of the appropriate Sub-Accounts (see "How is
the Accumulation Unit value determined?" below).

HOW IS THE ACCUMULATION UNIT VALUE DETERMINED?

The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the Sub-Account on
the preceding Valuation Day by a "Net Investment Factor" for that Sub-Account
for the Valuation Period then ended. The Net Investment Factor for each of the
Sub-Accounts is equal to the net asset value per share of the corresponding Fund
at the end of the Valuation Period (plus the per share amount of any dividends
or capital gains by that Fund if the ex-dividend date occurs in the Valuation
Period then ended), divided by the net asset value per share of the
corresponding Fund at the beginning of the Valuation Period, minus the amount of
any charges assessed during the Valuation Period then ended.

Participants should refer to the prospectuses for the Funds which accompany
this Prospectus for a description of how the assets of each Fund are valued,
since each determination has a direct bearing on the Accumulation Unit value of
the Sub-Account and, therefore, the value of a Participant's Individual Account.
The Accumulation Unit value is affected by the performance of the underlying
Fund(s), expenses and deduction of the charges, as described in this Prospectus.

HOW ARE THE UNDERLYING FUND SHARES VALUED?

The shares of a Fund are valued at net asset value on a daily basis. A
complete description of the valuation method used in valuing Fund shares may be
found in the prospectuses for the Funds accompanying this Prospectus.

PAYMENT OF BENEFITS
WHAT WOULD MY BENEFICIARY RECEIVE AS DEATH PROCEEDS?

Each Contract provides that, in the event the Participant dies before the
selected Annuity Commencement Date or the date the Participant attains age 65
(whichever occurs first), the Minimum Death Benefit payable on such Contract
will be the greater of (a) the value of such Participant's Individual Account,
determined as of the date on which written proof of the death of such
Participant is received by Hartford, or (b) 100% of total Contributions made to
the Participant's Individual Account, reduced by any prior partial withdrawals
or outstanding loan indebtedness.

The death benefit may be taken by the Beneficiary in a single fixed sum, in
which case payment will be made within seven days of receipt of proof of death
by Hartford, unless subject to postponement as explained below. In lieu of
payment in one sum, a Beneficiary may elect that the amount be applied under any
annuity option available with respect to variable annuities then being issued by
Hartford; provided that any such option must provide that a death benefit will
be distributed within five years of the Participant's death; or, if the death
benefit is payable over a period not extending beyond the life expectancy of the
Beneficiary or over the life of the Beneficiary, such benefit must commence
within one year of the date of the Participant's death. Each Contract further
provides that, if the Beneficiary is the spouse of the Participant, such spouse
may elect, in lieu of the death benefit, to be treated as the Participant.

An election to receive death benefits under a form of Annuity must be made
prior to a lump sum settlement with Hartford and within one year after the
Participant's death by written notice to Hartford at its offices in Hartford,
Connecticut. Benefit proceeds due upon a Participant's death may be applied to
provide

17
<PAGE>

variable payments, fixed payments, or a combination of variable and fixed
payments. If a Beneficiary elects to receive variable payments, the amount of
each Annuity payment will vary to reflect fluctuations in the investment results
of the Funds. No election to provide Annuity payments will become operative
unless the initial Annuity payment is at least $20, on either a variable or
fixed basis, or $20 on each basis when a combination benefit is elected. The
manner in which the Annuity payments are determined and in which they may vary
from month to month are the same as applicable to a Participant's Individual
Account after retirement (see "Payment of Benefits -- How are Contributions made
to establish my Annuity account?" on page 20).

HOW CAN A CONTRACT BE REDEEMED OR SURRENDERED?

THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(b) TAX-SHELTERED ANNUITIES. AS
OF DECEMBER 31, 1988, ALL SECTION 403(b) TAX-SHELTERED ANNUITIES HAVE LIMITS ON
FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO A CONTRACT MADE AFTER DECEMBER 31,
1988 AND ANY INCREASES IN THE CASH VALUE THEREOF AFTER DECEMBER 31, 1988 MAY NOT
BE DISTRIBUTED UNLESS THE CONTRACTHOLDER/PARTICIPANT HAS (A) ATTAINED AGE
59 1/2, (B) TERMINATED EMPLOYMENT, (C) DIED, (D) BECOME DISABLED, OR (E)
EXPERIENCED FINANCIAL HARDSHIPS.

DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL
BE SUBJECT TO A PENALTY TAX OF 10%.

HARTFORD WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A
WITHDRAWAL IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR
SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE- OR POST-JANUARY
1, 1989 ACCOUNT VALUES.

Upon termination of Contributions for a Participant prior to the selected
Annuity Commencement Date, the Participant will have the following options,
subject to the restrictions above:

(1) To continue a Participant's Individual Account in force under the
Contract. Under this option, on the selected Annuity Commencement Date, the
Participant will begin to receive Annuity payments under the selected Annuity
option under the Contract. (See "Payment of Benefits -- What are the available
Annuity options under the Contracts?" on page 20.) At any time in the interim
between such termination of Contributions and the Annuity Commencement Date, the
Participant may surrender his or her Individual Account for a lump sum cash
settlement in accordance with item (3), below.

(2) To elect Annuity payments immediately. The values in the Participant's
Individual Account may be applied, subject to Contract provisions, to provide
for Fixed Annuity or Variable Annuity payments, or a combination thereof,
commencing immediately, under the selected Annuity option under the Contract.
(See "Payment of Benefits -- What are the available Annuity options under the
Contracts?" on page 20).

(3) To surrender the Participant's Individual Account for a lump sum cash
settlement, in which event the Annual Maintenance Fee and any applicable
contingent deferred sales charges will be deducted. (See "Charges Under the
Contracts -- How are the charges under the Contracts made?" on page 23 ). The
amount received will be the net termination value next computed after receipt of
a written request for complete withdrawal by Hartford at its Administrative
Office. Payment will normally be made as soon as possible but not later than
seven days after the written request is received by Hartford.

(4) In the case of a partial withdrawal, the amount requested is withdrawn
from the specified Sub-Account(s) or, if no Sub-Account(s) are specified, all
applicable Sub-Account(s) on a pro rata basis. The contingent deferred sales
charge, if any, is deducted as a percentage of the amount withdrawn (see
"Charges Under the Contracts -- How are the charges under the Contracts made?"
on page 23). If the contingent deferred sales charge has been experience rated
(see "Charges Under the Contracts -- Experience Rating of the Contracts," page
25), any amounts not subject to the contingent deferred sales charge will be
deemed to be withdrawn last.

(5) To begin making monthly, quarterly, semi-annual or annual withdrawals
while allowing the Participant's Individual Account to remain in the
Accumulation Period. The Participant's Individual Account remains subject to the
Annual Maintenance Fee and any fluctuations in the investment results of the
Sub-Accounts or any of the underlying investments. A Participant may transfer
the values of his or her Individual Account allocations from one or more
Sub-Accounts or the General Account to any other Sub-Account, the General

18
<PAGE>

Account or to any combination thereof, subject to certain restrictions (see
"Operation of the Contracts," page 14). For a complete description of the
restrictions and limitations of this option (5), see "Payment of Benefits --
Systematic Withdrawal Option," page 21.

CAN PAYMENT OF THE REDEMPTION OR SURRENDER VALUE EVER BE POSTPONED BEYOND THE
SEVEN DAY PERIOD?

Yes. Payment of the redemption or surrender value may be postponed whenever
(a) the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists which makes valuation of the
amounts or disposal of securities not reasonably practicable.

MAY I SURRENDER MY ANNUITY BENEFIT ONCE ANNUITY PAYMENTS HAVE STARTED?

Except with respect to Annuity Option 5 (on a variable payout), once Annuity
payments have commenced, no surrender of a life Annuity benefit can be made for
the purpose of receiving a partial withdrawal or a lump sum settlement in lieu
thereof. Any surrender out of Annuity Option 5 will be subject to contingent
deferred sales charges, if applicable . (See "Charges Under the Contracts -- How
are the charges under the Contracts made?" on page 23.)

CAN A CONTRACT BE SUSPENDED BY A CONTRACTHOLDER?

A Contractholder may suspend a Contract by giving written notice to Hartford
at its Administrative Office at least 90 days prior to the effective date of
such suspension. A Contract will be suspended automatically on its anniversary
if the Contractholder fails to agree to any modification of the Contract (see
"Payment of Benefits -- Can a Contract be modified?" on page 22), which
modifications would have become effective on or before that anniversary. Upon
suspension of the Contract, Contributions to Participant's Individual Accounts
will continue to be accepted by Hartford on behalf of existing Participants,
subject to the Contract terms in effect prior to suspension. Contributions will
not be accepted on behalf of any new Participants.

Annuitants at the time of any suspension will continue to receive their
Annuity payments. The suspension of a Contract will not preclude a Participant
from applying an existing Participant's Individual Accounts under DC-II to the
purchase of Fixed Annuity or Variable Annuity benefits.

HOW DO I ELECT AN ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY?

A Participant selects an Annuity Commencement Date (usually between his or
her 50th birthday and the date on which he attains age 70 1/2) and an Annuity
option. Generally, the Annuity Commencement Date may not be deferred beyond the
date on which the Participant attains age 701/2 (unless the Participant has not
retired from service with the Contractholder/Employer) or such earlier date as
may be required by applicable law and/or regulation. The Annuity Commencement
Date and/or the Annuity option may be changed from time to time, but any such
change must be made at least 30 days prior to the date on which Annuity payments
are scheduled to begin. Annuity payments generally will be made on the first
business day of each month.

The Contract contains five optional Annuity forms, which may be selected on
either a Fixed Annuity or Variable Annuity basis, or a combination thereof. If a
Participant does not elect otherwise, Hartford reserves the right to begin
Annuity payments under Option 2 with 120 monthly payments certain at the time
the Participant attains age 65. However, Hartford is not responsible for
monitoring any required minimum distributions.

When an annuity is purchased, unless otherwise specified, Accumulation Unit
values will be applied to provide a Variable Annuity under DC-II.
WHAT IS THE MINIMUM AMOUNT THAT I MAY SELECT AS AN ANNUITY PAYMENT?

The minimum Annuity payment is $20. No election may be made which results in
a first payment of less than $20. At any time Annuity payments are or become
less than $20, Hartford reserves the right to change the frequency of payment to
intervals that will result in payments of at least $20.

19
<PAGE>

HOW ARE CONTRIBUTIONS MADE TO ESTABLISH MY ANNUITY ACCOUNT?

During the Annuity Period, Contract values are applied to establish a Fixed
Annuity and/or a Variable Annuity.

WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACTS?
OPTION 1: LIFE ANNUITY

Option 1 is an Annuity payable during the lifetime of the Annuitant and
terminating with the last monthly payment preceding the death of the Annuitant.
Option 1 offers the maximum level of monthly payments of any of the other
Annuity options (Options 2-4) under the Contracts, since there is no guarantee
of a minimum number of payments nor a provision for a death benefit payable to a
Beneficiary.

Under Option 1, it would be possible for an Annuitant to receive only one
Annuity payment if the Annuitant dies prior to the due date of the second
Annuity payment, two Annuity payments if the Annuitant dies prior to the due
date of the third Annuity payment, etc.

*OPTION 2: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN

Option 2 is an Annuity payable monthly during the lifetime of an Annuitant.
Payments will be made for a minimum of 120, 180 or 240 months, as elected. If,
at the death of the Annuitant, payments have been made for less than the minimum
elected number of months, then any remaining guaranteed monthly payments will be
paid to the Beneficiary designated, unless other provisions have been made and
approved by Hartford.

*OPTION 3: UNIT REFUND LIFE ANNUITY

Option 3 is an Annuity payable monthly during the lifetime of the Annuitant
and will terminate with the last payment due prior to the death of the
Annuitant, except that an additional Annuity payment will be made to the
Beneficiary if (a) exceeds (b), where:

(i) the total amount applied under Option 3 at the Annuity
(a) = Commencement Date, divided by (ii) the Annuity Unit value at the
Annuity Commencement Date; and
--------------------------------------------------------------------

(i) the number of Annuity Units represented by each monthly Annuity
(b) = payment made, multiplied by (ii) the number of monthly Annuity
payments made

The amount of the additional Annuity payments will be determined by
multiplying such excess by the Annuity Unit value as of the date that proof of
death is received by Hartford.

OPTION 4: JOINT AND LAST SURVIVOR ANNUITY

Option 4 is an Annuity payable monthly during the joint lifetime of the
Annuitant and a designated second person (a "contingent annuitant"), ceasing
with the last Annuity payment prior to the death of the survivor. At the
Annuitant's death, payments will continue to be made to the contingent
annuitant, if living, for the remainder of such contingent annuitant's life. At
the time the Annuity is purchased, the Annuitant elects what percentage (50%,
66 2/3% or 100%) of the monthly Annuity payment will continue to be paid to the
contingent annuitant.

It would be possible under Option 4 for the Annuitant and the contingent
annuitant, in the event of their common or simultaneous death, to receive only
one Annuity payment in the event of death prior to the due date for the second
Annuity payment and so on.

*OPTION 5: DESIGNATED (FIXED) PERIOD ANNUITY

Option 5 is for an Annuity payable monthly for the number of years selected.
Under the Contracts, the minimum number of Annuity payment years is five.

In the event of the Annuitant's death prior to the end of the designated
Annuity payment period, any then-remaining Annuity payments will be paid to the
Beneficiary, unless other provisions have been made and approved by Hartford.
Option 5 does not involve life contingencies and therefore has no mortality
guarantee.

Surrenders are subject to the limitations set forth in the Contracts and any
applicable contingent deferred sales charges (see "Charges Under the Contracts
- -- How are the charges under the Contracts made?" on page 23 ).

Other Annuity options may be made available from time to time with respect
to the Contracts.

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<PAGE>

*OPTIONS 2, 3 AND 5 ARE AVAILABLE ONLY IF THE GUARANTEED ANNUITY PAYMENT PERIOD
IS LESS THAN THE LIFE EXPECTANCY OF THE ANNUITANT AT THE TIME THE OPTION
BECOMES EFFECTIVE. SUCH LIFE EXPECTANCY SHALL BE COMPUTED ON THE BASIS OF THE
MORTALITY TABLE PRESCRIBED BY THE IRS OR, IF NONE IS PRESCRIBED, THE MORTALITY
TABLE THEN IN USE BY HARTFORD.

- --------------------------------------------------------------------------------

UNDER ANY OF THE ANNUITY OPTIONS DESCRIBED ABOVE, EXCEPT OPTION 5 (ON A VARIABLE
BASIS), NO SURRENDERS ARE PERMITTED ONCE ANNUITY PAYMENTS COMMENCE.

- --------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWAL OPTION

If permitted by IRS regulations and the terms of the Employer's plan, a
Participant can make withdrawals while allowing his or her Individual Account to
remain in the Accumulation Period under the Contract. Eligibility under this
provision is limited to Participants who have terminated their employment with
the Employer and who have a minimum Individual Account balance of $10,000 at the
time they elect the Systematic Withdrawal Option ("SWO"). The maximum payment
amount is 1.5% monthly, 4.5% quarterly, 9.0% semi-annually or 18.0% annually of
the value of the Participant's Individual Account at the time the SWO is
elected. Payments are limited to 18.0% of the Participant's Individual Account
annually. The minimum payment amount is $100. SWO payments generally are taxable
as ordinary income and, if made prior to age 59 1/2, an IRS tax penalty may
apply. Any contingent deferred sales charge otherwise applicable is waived on
SWO payments.

Participants elect the specific dollar amount to be withdrawn, the frequency
of payments (monthly, quarterly, semi-annually or annually) and the duration of
payments (either a fixed number of payments or until the Participant's
Individual Account is depleted). The duration of payments may not extend beyond
the Participant's life expectancy as of the beginning date of SWO payments or
the joint and last survivor life expectancy of the Participant and the
Participant's Beneficiary. Participants may not elect the SWO if there is an
outstanding loan amount.

A Participant can change the terms of a SWO as often as four times in each
calendar year, can terminate the SWO at any time, and can elect one of the five
available Annuity options or a partial or full lump sum withdrawal. If a partial
or full lump sum withdrawal is elected within 12 months of a SWO payment, the
contingent deferred sales charge that was previously waived, if any, will be
deducted from the Participant's Individual Account upon withdrawal. SWO payments
will be deducted on a pro rata basis from the General Account and each
Sub-Account to which the Participant's Individual Account is allocated.

Hartford is not responsible for determining a withdrawal amount that
satisfies the Minimum Distribution Requirements under the Code. Participants may
be required to change their SWO payment amount to comply with the Minimum
Distribution Requirements. Participants should consult a tax adviser to
determine whether the amount of their SWO payments meet IRS Minimum Distribution
Requirements. For a discussion of the Minimum Distribution Requirements
applicable to Participants over age 70 1/2 see "Federal Tax Considerations,"
page 29.

The SWO may only be elected pursuant to an election on a form provided by
Hartford. Election of the SWO does not affect Participants' other rights under
the Contracts.

HOW ARE VARIABLE ANNUITY PAYMENTS DETERMINED?

Variable Annuity payments are made monthly on a date selected by the
Annuitant. When Annuity payments are to commence, the value of the Contract is
determined by multiplying (1) the Accumulation Unit value credited to each
Sub-Account in which the Contract is invested no earlier than the close of
business on the fifth business day preceding the date on which the initial
scheduled Annuity payment is to be made, by (2) the number of Accumulation Units
credited to each such Sub-Account as of the date the Annuity Period is to
commence.

The initial monthly Annuity Payment is determined by multiplying (1) the
value (expressed in thousands of dollars) of a Sub-Account, minus any applicable
Premium Taxes, by (2) the amount of the initial monthly Annuity payment per
$1,000 on Contract value as set forth in the Annuity tables contained in the
Contracts. Such tables are derived from the 1983a Individual Annuity Mortality
Table, and have an assumed interest rate ("A.I.R.") of 4.00% or 5.00% per year.
With respect to Fixed Annuities only, the current A.I.R. will be applied if it
is higher than the rate set forth in the Annuity tables contained in the
Contracts.

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<PAGE>

Subsequent Variable Annuity payments will be level if the net investment
rate remains constant and equal to the A.I.R. Variable Annuity payments will
vary up or down in proportion to the variation of the Sub-Accounts' net
investment rate from the A.I.R. A higher A.I.R. may produce a higher initial
Variable Annuity payment but more slowly rising and more rapidly falling
subsequent Variable Annuity payments than would a lower A.I.R.

In order to determine the number of Annuity Units represented by the initial
Annuity payment, the initial monthly Annuity payment, calculated as described
above, is divided by the Annuity Value for the appropriate Sub-Account as of the
close of business on the fifth business day preceding the date on which the
payment is scheduled to be made. The number of Annuity Units remains fixed
during the Annuity Period.

The Annuity Unit value on a given day is determined by multiplying the
Annuity Unit value for the preceding day by the product of (1) the net
investment factor (see "Operation of the Contracts -- How is the Accumulation
Unit value determined?" on page 17) for such given day and (2) a factor to
neutralize the A.I.R. The Annuity Unit value used to calculate the dollar amount
of Annuity payments is based on an Annuity Unit value determined as of the close
of business on a day not more than five business days prior to the Annuity
payment date.

The dollar amount of Annuity payments subsequent to the initial Annuity
payment is determined by multiplying (1) the fixed number of Annuity Units, as
discussed above, by (2) the then-current Annuity Unit value.

The following is an illustration of how variable Annuity payments are
determined:

ILLUSTRATION OF ANNUITY PAYMENTS:
(UNISEX) AGE 65, LIFE ANNUITY WITH 120 PAYMENTS CERTAIN

<TABLE>
<C> <S> <C>
1. Net amount applied........................................ $ 139,782.50
2. Initial monthly income per $1,000 of payment applied...... 6.13
3. Initial monthly Annuity payment (1 x 2 DIVIDED BY
1,000).................................................... $ 856.87
4. Annuity Unit Value........................................ 3.125
5. Number of monthly Annuity Units (3 DIVIDED BY 4)......... 274.198
6. Assumed Annuity Unit value for second month equal to...... 2.897
7. Second monthly Annuity payment (6 x 5).................... $ 794.35
8. Assumed Annuity Unit value for third month equal to....... 3.415
9. Third monthly Annuity payment (8 x 5)..................... $ 936.39
</TABLE>

The above figures illustrate the calculation of Variable Annuity payments
under a hypothetical Contract. They have no bearing on the actual Annuity
payment history under the Contracts funded by DC-II.

CAN A CONTRACT BE MODIFIED?

Subject to any federal and state regulatory restrictions, the Contracts may
be modified at any time by written agreement between the Contractholder and
Hartford. No such modification will affect the amount or term of any Annuities
begun prior to the effective date of the modification, unless it is required to
conform the Contract to, or give the Contractholder the benefit of, any federal
or state statutes or any rule or regulation of the U.S. Treasury Department or
the IRS.

On or after the fifth anniversary of any Contract, Hartford may change, from
time to time, any or all of the terms of the Contracts by giving 90 days advance
written notice to the Contractholder, except that the Annuity tables, guaranteed
interest rates and the contingent deferred sales charges which are applicable at
the time a Participant's Individual Account is established under a Contract,
will continue to be applicable. Additionally, the limitations on the deductions
for the mortality, expense risks and administrative undertakings and the Annual
Maintenance Fee will continue to apply in all Contract Years (see "Charges Under
the Contracts," below).

Hartford reserves the right to modify the Contracts at any time, if such
modification, in Hartford's opinion, (a) is necessary to make the Contract or
DC-II comply with any law or regulation issued by a governmental agency to which
Hartford is subject; or (b) is necessary to assure continued qualification of
the Contract under the Code or other federal or state laws relating to
retirement annuities or annuity Contracts; or (c) is necessary to reflect a
change in the operation of DC-II or the Sub-Account(s); or (d) provides
additional Separate

22
<PAGE>

Account options; or (e) withdraws Separate Account options. In the event of any
such modification Hartford will provide notice to the Contractholder or to the
payee(s) during the Annuity period. Hartford may also make appropriate
endorsement in the Contract to reflect such modification.

CHARGES UNDER THE CONTRACTS

HOW ARE THE CHARGES UNDER THE CONTRACTS MADE?

There is no deduction for sales expenses at the time Contributions are
allocated to a Participant's Individual Account. However, a contingent deferred
sales charge may be assessed against a Participant's Individual Account in the
event of a withdrawal from the Participant's Individual Account. The number of
Participant Contract Years completed prior to withdrawal will determine the
amount of the contingent deferred sales charge. The amount or term of the
contingent deferred sales charge may be reduced (see "-- Experience Rating of
the Contracts," page 25). In no event will such charge ever exceed 8.50% when
applied as a percentage against the sum of all Contributions to a Participant's
Individual Account.

The contingent deferred sales charge is a percentage of the amount
surrendered and equals:

<TABLE>
<CAPTION>
CONTRACT YEAR MAXIMUM
OF WITHDRAWAL CHARGE
- ---------------------------------------------------------- -------------
<S> <C>
1 through 5............................................... 5%
6......................................................... 4%
7......................................................... 3%
8......................................................... 2%
9......................................................... 1%
10 or more................................................ 0%
</TABLE>

If you request a certain dollar amount to be withdrawn from your Individual
Account, the contingent deferred sales charge will be deducted from the amount
withdrawn and the balance will be paid to you.

For example: You request a full surrender of your Individual Account, the
value of your Individual Account is $1,000 and the applicable sales load is 5%.
The amount of $1,000 will be surrendered from the applicable Sub-Accounts and
you will receive $950 (i.e., the $1,000 total withdrawal less the 5% sales
charge).

In the case of a partial withdrawal in which you request to receive a
specified amount, the sales charge will be calculated on the total amount that
must be withdrawn from your Sub-Account(s) in order to provide you with the
amount requested. For example: You request to receive $1,000 and the applicable
sales load is 5%. Your Sub-Account(s) will be reduced by $1,052.63 (i.e., a
total withdrawal of $1,052.63, consisting of a $52.63 sales charge ($1,052.63 x
5%), plus the $1,000 you requested).

WHAT DO THE SALES CHARGES COVER?

The contingent deferred sales charges, when applicable, will be used to
reimburse Hartford for expenses relating to the sale and distribution of the
Contracts, including commissions paid to any distribution organization and its
sales personnel, the cost of preparing sales literature and other promotional
activities. It is anticipated that direct commissions paid on the sale of the
Contracts will not exceed 5.0% of a Contribution. To the extent that these
charges do not cover such distribution expenses, the cost of the excess
distribution expenses will be borne by Hartford from its general assets,
including surplus or possible profit from mortality and expense risk charges.

WHAT IS THE MORTALITY, EXPENSE RISK AND ADMINISTRATIVE CHARGE?

Although Variable Annuity payments made under the Contracts will vary in
accordance with the investment performance of the underlying Funds, the payments
will not be affected by (a) Hartford's actual mortality experience among
Annuitants before or after their retirements or (b) Hartford's actual expenses,
including certain administrative expenses, if greater than the deductions
provided for in the Contracts because of the expense and mortality undertakings
by Hartford.

In providing an expense undertaking, Hartford assumes the risk that the
deductions for contingent deferred sales charges, and the Annual Maintenance Fee
under the Contracts may be insufficient to cover actual future costs.

23
<PAGE>

The mortality undertaking provided by Hartford under the Contracts, assuming
the selection of one of the forms of Annuity options is to make monthly Annuity
payments (determined in accordance with the Annuity tables and other provisions
contained in the Contracts) regardless of how long all Annuitants may live and
regardless of how long all Annuitants as a group may live. This undertaking
assures a Contractholder that neither the longevity of an Annuitant nor an
improvement in life expectancy will have any adverse effect on the monthly
Annuity payments the Annuitant will receive under the Contract. It thus relieves
a Participant from the risk of outliving the funds accumulated for his or her
benefit under a Contract.

The mortality undertaking is based on Hartford's present actuarial
determination of expected mortality rates among all Annuitants. If actual
experience among Annuitants deviates from Hartford's actuarial determination of
expected mortality rates among Annuitants because, as a group, their longevity
is longer than anticipated, Hartford must provide amounts from its general funds
to fulfill its Contract obligations. In that event, a loss will result to
Hartford. Conversely, if longevity among Annuitants is lower than anticipated, a
gain will result to Hartford. Hartford also assumes the liability for payment of
the Minimum Death Benefit provided under a Contract.

The administrative undertaking provided by Hartford assures the
Contractholder that administration of the Contract will be provided throughout
the entire life of the Contract.

For assuming these risks Hartford currently applies a charge equal to 1.25%
(estimated at .85% for mortality, .15% for expense risk and .25% for
administrative undertakings) of the average daily net assets of DC-II. The rate
charged for the mortality, expense risk and administrative undertakings under
the Contracts may be reduced (see "-- Experience Rating of the Contracts," page
25) and may be periodically increased by Hartford beyond a rate of 1.25%,
subject to a maximum annual rate of 2.00%. However, no increase will occur
unless the Commission shall have first approved such increase.

ARE THERE ANY OTHER ADMINISTRATIVE CHARGES?

An Annual Maintenance Fee will be deducted from the value of each
Participant's Individual Account under a Contract. The maximum Annual
Maintenance Fee is $30 per year, but such fee may be reduced or waived (see "--
Experience Rating of the Contracts," page 25).

The Annual Maintenance Fee will be deducted on the last business day of each
Participant's Contract Year; provided, however, that if a full redemption of the
value of a Participant's Individual Account is redeemed is made at any time
prior to the last business day of the applicable Participant's Contract Year,
then the Annual Maintenance Fee will be deducted from the proceeds of such
redemption. No deduction for the Annual Maintenance Fee will be made during the
Annuity Period under a Contract. The Annual Maintenance Fee will be deducted on
a pro rata basis from the value of the Sub-Accounts chosen with respect to a
Participant's Individual Account.

IS THERE EVER A TIME WHEN THE SALES CHARGES OR THE ANNUAL MAINTENANCE FEE DOES
NOT APPLY?

The contingent deferred sales charge and Annual Maintenance Fee will not be
deducted from a Participant's Individual Account under a Contract in the event
of the Participant's: (a) death, (b) disability, within the meaning of Code
section 72(m)(7) (provided that any such disability would entitle the
Participant to receive social security disability benefits), (c) confinement in
a nursing home, provided the Participant is confined immediately following at
least 90 days of continuous confinement in a hospital or long term care
facility, (d) separation from service with the Employer on or after the
Participant Contract Year 5 for Participants age 59 1/2 or older, (e) financial
hardship (e.g., an immediate and heavy financial need of the Participant other
than purchase of a principal residence or payment for post-secondary education),
or in the event that a Participant's Individual Account is paid out under one of
the available Annuity options under the Contracts or under the Systematic
Withdrawal Option (except that a surrender out of Annuity Option 5 is subject to
sales charges, if applicable). Some of the foregoing events may not apply to
Participants under an Individual Retirement Annuity.

In the event a Participant is otherwise eligible to make a withdrawal from
his or her Individual Account under the terms of the Employer's plan, such
Participant may withdraw, on a non-cumulative basis, each Participant Contract
Year after the first Participant Contract Year up to 10% of the value of his or
her Individual Account, without application of a contingent deferred sales
charge. The minimum amount that can be withdrawn under this provision is $250.

24
<PAGE>

EXPERIENCE RATING OF THE CONTRACTS

Hartford may apply experience credits under a Contract based on investment,
administrative, mortality or other factors, including, but not limited to (1)
the total number of Participants, (2) the sum of all Participant's Individual
Account values, (3) the allocation of Contract values between the General
Account and the Separate Account under the Contract, (4) present or anticipated
levels of Contributions, distributions, transfers, administrative expenses or
commissions, and (5) whether Hartford is the exclusive annuity Contract
provider. Experience credits may be applied, either prospectively or
retrospectively, as a reduction in the deduction for mortality, expense risk and
administrative undertakings, a reduction in the term or amount of any applicable
contingent deferred sales charges, an increase in the rate of interest credited
under the Contract, a reduction in the amount of the Annual Maintenance Fee, a
reduction in the amount of the Transfer Fee, or any combination of the
foregoing. Hartford may apply and allocate experience credits in such manner as
Hartford deems appropriate. Any such credit will not be unfairly discriminatory
against any person, including the affected Contract Owners or Participants.
Experience credits may not be available in all states. Participants in Contracts
receiving experience credits will receive notification regarding such credits.
Experience credits may be discontinued at Hartford's sole discretion, in the
even of a change in applicable factors.

HOW MUCH ARE THE DEDUCTIONS FOR PREMIUM TAXES ON THE CONTRACTS?

A deduction is made for Premium Taxes, if applicable, imposed by states or
other governmental entities. Certain states impose a Premium Tax, ranging up to
3.50%. With respect to any Contract subject to a Premium Taxes, Hartford will
pay such taxes when imposed by the applicable taxing authorities. Hartford, in
its sole discretion, will deduct Premium Taxes from Contributions when received,
from proceeds at surrender, or from the amount applied to effect an Annuity at
the time Annuity payments commence.

WHAT CHARGES ARE MADE BY THE FUNDS?

Deductions are made from the assets of the Funds to pay for management fees
and the operating expenses of the Funds. A full description of the Funds, their
investment policies and restrictions, risks charges and expenses and all other
aspects of their operation is contained in the prospectuses for the Funds
accompanying this Prospectus

ARE THERE ANY OTHER DEDUCTIONS?

Participants may transfer Individual Account values between or among
Sub-Accounts up to 12 times per Participant Contract Year. Such transfers may be
subject to a Transfer Fee of $5 for each transfer in excess of 12 made in a
Participant Contract Year.

HARTFORD LIFE INSURANCE COMPANY
AND THE FUNDS

WHAT IS HARTFORD?

Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing life insurance, both individual and
group, in all states of the United States and the District of Columbia. Hartford
was originally incorporated under the laws of Massachusetts on June 5, 1902, and
was subsequently redomiciled to Connecticut. Its offices are located in
Simsbury, Connecticut; however, its mailing address is P.O. Box 2999, Hartford,
CT 06104-2999. Hartford is ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.

HARTFORD RATINGS

<TABLE>
<CAPTION>
EFFECTIVE
DATE OF
RATING AGENCY RATING RATING BASIS OF RATING
-------------------------------------------------- --------- ---------- ----------------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc........................ 9/9/97 A+ Financial soundness and operating
performance.
Standard & Poor's................................. 1/23/98 AA Claims paying ability
Duff & Phelps..................................... 1/23/98 AA+ Claims paying ability
</TABLE>

25
<PAGE>
WHAT ARE THE FUNDS?

The assets of each Sub-Account of the Separate Account are invested
exclusively in one of the Funds. The investment objectives of each of the Funds
are summarized below. There is no guarantee that any Fund will achieve its
stated objectives.

A full description of the Funds, their investment policies and restrictions,
risks, charges and expenses and all other aspects of their operations is
contained in the Statement of Additional Information, which may be ordered from
Hartford, and in the prospectuses for the Funds accompanying this Prospectus.
All such prospectuses should be read in conjunction with this Prospectus before
investing.

THESE FUNDS MAY NOT BE AVAILABLE IN ALL STATES.

HARTFORD FUNDS
HARTFORD ADVISERS FUND

Seeks maximum long-term total rate of return by investing in common stocks
and other equity securities, bonds and other debt securities, and money market
instruments.

HARTFORD BOND FUND

Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets of
this Fund may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's Investor Services, Inc. or "BB" by Standard &
Poor's) or, if unrated, are determined to be of comparable quality by the Fund's
investment adviser. Securities rated below investment grade are commonly
referred to as "high yield-high risk securities" or "junk bonds." For more
information concerning the risks associated with investing in such securities,
please refer to the section in the accompanying prospectus for the Hartford
Funds entitled "Hartford Bond Fund, Inc. -- Investment Policies."

HARTFORD CAPITAL APPRECIATION FUND

Seeks growth of capital by investing in equity securities selected solely on
the basis of potential for capital.

HARTFORD DIVIDEND AND GROWTH FUND
Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
HARTFORD INDEX FUND
Seeks to provide investment results that correspond to the price and yield
performance of publicly-traded common stocks in the aggregate, as represented by
the Standard & Poor's 500 Composite Stock Price Index (the "Index").*
HARTFORD INTERNATIONAL OPPORTUNITIES FUND

Seeks growth of capital by investing primarily in equity securities issued
by non-U.S. companies.

HARTFORD MORTGAGE SECURITIES FUND

Seeks maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related securities,
including securities issued by the Government National Mortgage Association.

* "STANDARD & POOR'S-REGISTERED TRADEMARK-", "S&P-REGISTERED TRADEMARK-", "S&P
500-REGISTERED TRADEMARK-", "STANDARD & POOR'S 500", AND "500" ARE TRADEMARKS
OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD
LIFE INSURANCE COMPANY AND AFFILIATES. THE HARTFORD INDEX FUND, INC. ("INDEX
FUND") IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND
STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF
INVESTING IN THE INDEX FUND.

26
<PAGE>
HARTFORD STOCK FUND
Seeks long-term growth of capital by investing primarily in equity
securities.
HARTFORD MONEY MARKET FUND
Seeks maximum current income consistent with liquidity and preservation of
capital.
CALVERT FUND

CALVERT SOCIAL BALANCED PORTFOLIO

Seeks to achieve a total return above the rate of inflation through an
actively managed, nondiversified portfolio of common and preferred stocks,
bonds, and money market instruments which offer income and capital growth
opportunity and which satisfy the social criteria established for the Portfolio.
AMERICAN CENTURY VP FUNDS
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. AMERICAN CENTURY VP ADVANTAGE

Seeks capital growth over time by investing primarily three types of
securities. The fund's investment manager intends to invest approximately (i)
20% of the fund's assets in securities of the United States government and its
agencies and instrumentalities and repurchase agreements collateralized by such
securities with a weighted average maturity of six months or less, i.e., cash or
cash equivalents, (ii) 40% of the fund's assets in fixed income securities of
the United States government and its agencies and instrumentalities with a
weighted average maturity of three to 10 years and (iii) 40% of the fund's
assets in equity securities that are considered by management to have
better-than- average prospects for appreciation. As described in greater detail
in this Prospectus, assets will be purchased or sold, as the case may be, as is
necessary in response to changes in market value to maintain the asset mix of
the fund's portfolio at approximately 60% cash, cash equivalents and fixed
income securities and 40% equity securities

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. AMERICAN CENTURY VP CAPITAL
APPRECIATION

Seeks capital growth over time by investing properly in common stocks that
are considered by management to have better-than-average prospects for
appreciation.

FIDELITY FUNDS
AMS/FIDELITY INVESTMENTS VIP II ASSET MANAGER PORTFOLIO

Seeks high total return with reduced risk over the long term by allocating
its assets among stocks, bonds, and short-term money market instruments.

AMS/FIDELITY INVESTMENTS VIP GROWTH PORTFOLIO
Seeks capital appreciation primarily through purchase of common stocks,
although its investments are not restricted to any one type of security.
AMS/FIDELITY INVESTMENTS VIP II CONTRAFUND PORTFOLIO

Seeks long term capital appreciation through purchase of equity securities
of domestic or foreign companies whose value FMR believes is not fully
recognized by the public.

AMS/FIDELITY INVESTMENTS VIP OVERSEAS PORTFOLIO

Seeks long term capital appreciation by investing primarily in foreign
securities of issuers whose principal business activities are outside of the
United States.

The Hartford Funds are organized as corporations under the laws of Maryland
and are registered as diversified open-end management companies under the
Investment Company Act of 1940. The Calvert Social Balanced Portfolio is a
series of Calvert Variable Series, Inc., which is an open-end management
investment company. The American Century VP Advantage and American Century VP
Capital Appreciation Funds ("American Century VP Funds") are separate series of
shares issued by American Century Variable Portfolios, Inc. ("ACVP"), a
corporation organized under the laws of the state of Maryland. ACVP is a
registered,

27
<PAGE>

diversified, open-ended management investment company, registered under the
Investment Company Act of 1940. The Fidelity Funds involve two diversified
open-end management investment companies, each with multiple portfolios and
organized as a Massachusetts business trust. The VIP Growth Portfolio and VIP
Overseas Portfolio are portfolios of the Variable Insurance Products Fund. The
VIP II Asset Manager Portfolio and VIP II Contrafund Portfolio are portfolios of
the Variable Insurance Products Fund II. Each Fund continually issues an
unlimited number of full and fractional shares of beneficial interest in the
Fund.

It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although Hartford and the Funds do not
currently foresee any such disadvantages either to variable annuity
Contractholders or to variable life insurance policy owners, the Boards of
Directors of the Funds intend to monitor events in order to identify any
material conflicts between such Contractholders and policy owners and to
determine what action, if any, should be taken in response thereto. If such
Boards of Directors were to conclude that separate funds should be established
for variable life insurance and variable annuity separate accounts, the variable
annuity Contractholders would not bear any expenses attendant to the
establishment of such separate funds, but variable annuity Contractholders and
variable life insurance policy owners would no longer have the economics of
scale resulting from a larger combined fund.

Shares of Calvert Social Balanced Portfolio, a series of Calvert Variable
Series, Inc. which is unaffiliated with Hartford, are offered to other separate
accounts which are not affiliated with the Separate Account. Hartford and the
Board of Trustees of Calvert Variable Series, Inc. intend to monitor events to
identify any material irreconcilable conflicts which may arise and to determine
what action, if any, should be taken in response thereto.

Shares of the American Century VP Funds and the Fidelity Funds are offered
to other separate accounts which are not affiliated with the Separate Account.

Hartford reserves the right, subject to compliance with applicable laws, to
substitute the shares of any other registered investment company for the shares
of any Fund held by the Separate Account. Substitution may occur if shares of
the Fund(s) become unavailable or in the event of any changes in applicable laws
or interpretations of such laws. Current law requires that Hartford notify you
of any such substitution and approval thereof by the Commission. Hartford also
reserves the right, subject to compliance with applicable laws, to offer
additional Funds with differing investment objectives.

The Advisers Fund Sub-Account was not available under Contracts issued prior
to May 2, 1983. The Capital Appreciation Fund Sub-Account was not available
under Contracts issued prior to May 1, 1984. The Mortgage Securities Fund
Sub-Account was not available under Contracts issued prior to January 15, 1985.
The Index Fund Sub-Account was not available under Contracts issued prior to May
1, 1987. A Contractholder may make written request to Hartford that Funds not
available prior to the issue date of a Contract be made available for investment
under the Contract.

INVESTMENT ADVISERS
HARTFORD FUNDS

HL Investment Advisors, Inc. ("HL Advisors") serves as the investment
adviser to each of the Hartford Funds.

Wellington Management Company, LLP serves as investment sub-adviser for
Hartford Advisers Fund, Hartford Capital Appreciation Fund, Hartford Dividend
and Growth Fund, Hartford International Opportunities Fund and Hartford Stock
Fund. Additionally, The Hartford Investment Management Company, Inc., ("HIMCO")
serves as investment sub-adviser for Hartford Bond Fund, Hartford Index Fund,
Hartford Mortgage Securities Fund and Hartford Money Market Fund.

CALVERT SOCIAL BALANCED PORTFOLIO

Calvert Asset Management Company serves as investment adviser and manages
the fixed-income portion of the Calvert Social Balanced Portfolio. The
sub-advisor to the portfolio is NCM Capital Management Group, Inc. ("NCM"). NCM
manages the equity portion of the Portfolio.

28
<PAGE>
AMERICAN CENTURY VP FUNDS

The American Century VP Funds are managed by American Century Investment
Management, Inc., whose principal business address is American Century Tower,
4500 Main Street, Kansas City, MO 64111. ACIM has been providing investment
advisory services to investment companies and institutional investors since it
was founded in 1958.

FIDELITY FUNDS

The Fidelity Funds are managed by Fidelity Management & Research Company
("FMR"), whose principal business address is 82 Devonshire Street, Boston,
Massachusetts. FMR, one of America's largest investment management
organizations, is composed of a number of different companies which provide a
variety of financial services and products. FMR, founded in 1946, is the
original Fidelity company. It provides investment research and portfolio
management services to a number of mutual funds and other clients. Various
Fidelity companies perform certain activities required to operate Variable
Insurance Products Fund and Variable Insurance Products Fund II.

FEDERAL TAX CONSIDERATIONS
WHAT ARE SOME OF THE FEDERAL TAX CONSEQUENCES WHICH AFFECT THESE CONTRACTS?
A. GENERAL

SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
EMPLOYER OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT DESCRIBED
HEREIN.

It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Contracts cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. For detailed information, a
qualified tax adviser should always be consulted. This discussion is based on
Hartford's understanding of existing federal income tax laws as they are
currently interpreted.

B. HARTFORD AND SEPARATE ACCOUNT TWO

Separate Account Two is taxed as part of Hartford which is taxed as a life
insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, Separate Account Two will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment income
and any realized capital gains on the assets of Separate Account Two are
reinvested and are taken into account in determining the value of the
Accumulation and Annuity Units. (See "How is the Accumulation Unit value
determined?" commencing on page 17.) As a result, such investment income and
realized capital gains are automatically applied to increase reserves under the
contract.

No taxes are due on interest, dividends and short-term or long-term capital
gains earned by Separate Account Two with respect to qualified or non-qualified
contracts.

C. INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS

The tax rules applicable to tax-qualified contract owners, including
restrictions on contributions and distributions, taxation of distributions and
tax penalties, vary according to the type of plan as well as the terms and
conditions of the plan itself. Various tax penalties may apply to contributions
in excess of applicable limits, distributions prior to age 59 1/2 (subject to
certain exceptions), distributions which do not conform to applicable
commencement and minimum distribution rules, and certain other transactions with
respect to tax-qualified plans. Therefore, this summary does not attempt to
provide more than general information about the tax rules associated with use of
the Contract by a tax-qualified retirement plan. Contract owners, plan
participants and beneficiaries are cautioned that the rights and benefits of any
person to benefits may be controlled by the terms and conditions of the
tax-qualified retirement plan itself, regardless of the terms and conditions of
a Contract, but that Hartford is not bound by the terms and conditions of such
plans to the extent such terms conflict with a Contract, unless Hartford
specifically consents to be bound. Additionally, some tax-qualified retirement
plans are subject to distribution and other requirements which are not
incorporated into Hartford's administrative procedures. Contract owners,
participants and beneficiaries are responsible for determining

29
<PAGE>

that contributions, distributions and other transactions comply with applicable
law. Because of the complexity of these rules, Contract owners, participants and
beneficiaries are encouraged to consult their own tax advisers as to specific
tax consequences.

1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS

Provisions of the Code permit eligible employers to establish pension or
profit sharing plans (described in Section 401(a) and 401(k), if applicable,
and exempt from taxation under Section 501(a) of the Code), and Simplified
Employee Pension Plans (described in Section 408(k)). Such plans are subject
to limitations on the amount that may be contributed, the persons who may be
eligible to participate and the time when distributions must commence.
Employers intending to use these contracts in connection with tax- qualified
pension or profit-sharing plans should seek competent tax and other legal
advice.

2. TAX SHELTERED ANNUITIES UNDER SECTION 403(b)

Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations, as
specified in Section 501(c)(3) of the Code, to purchase annuity contracts,
and, subject to certain limitations, exclude such contributions from gross
income. Generally, such contributions may not exceed the lesser of $10,000
(indexed) or 20% of an employee's "includable compensation" for such
employee's most recent full year of employment, subject to other adjustments.
Special provisions under the Code may allow some employees to elect a
different overall limitation.

Tax-sheltered annuity programs under Section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such
distribution is made:

a) after the participating employee attains age 59 1/2;

b) upon separation from service;

c) upon death or disability; or

d) in the case of hardship (and in the case of hardship, any income
attributable to such contributions may not be distributed). Generally,
the above restrictions do not apply to distributions attributable to cash
values or other amounts held under a Section 403(b) contract as of
December 31, 1988.

3. DEFERRED COMPENSATION PLANS UNDER SECTION 457

Employees and independent contractors performing services for eligible
employers may have contributions made to an Eligible Deferred Compensation
Plan of their employer in accordance with the employer's plan and Section 457
of the Code. Section 457 places limitations on contributions to Eligible
Deferred Compensation Plans maintained by a State or other tax-exempt
organization. For these purposes, the term "State" means a State, a political
sub-division of a State, and an agency or instrumentality of a State or
political sub-division of a State. Generally, the limitation is 33 1/3% of
includable compensation (typically 25% of gross compensation) or, for 1998,
$8,000 (indexed), whichever is less. Such a plan may also provide for
additional "catch-up" deferrals during the three taxable years ending before a
Participant attains normal retirement age.

An employee electing to participate in an Eligible Deferred Compensation
Plan should understand that his or her rights and benefits are governed
strictly by the terms of the plan and that the employer is the legal owner of
any contract issued with respect to the plan. The employer, as owner of the
contract(s), retains all voting and redemption rights which may accrue to the
contract(s) issued with respect to the plan. The participating employee should
look to the terms of his or her plan for any charges in regard to
participating therein other than those disclosed in this Prospectus.
Participants should also be aware that effective August 20, 1996, the Small
Business Job Protection Act of 1996 requires that all assets and income of an
Eligible Deferred Compensation Plan established by a governmental employer
which is a State, a political subdivision of a State, or any agency or
instrumentality of a State or political subdivision of a State, must be held
in trust (or under certain specified annuity contracts or custodial accounts)
for the exclusive benefit of participants and their beneficiaries. Special
transition rules apply to such Eligible governmental Deferred Compensation
Plans already in existence on August 20, 1996, and provide that such plans
need not establish a trust before January 1, 1999. However, this requirement
of a trust does not apply to amounts under an Eligible Deferred Compensation
Plan of a tax-exempt (non-governmental) organization and such amounts will be
subject to the claims of such tax-exempt employer's general creditors.

30
<PAGE>

In general, distributions from an Eligible Deferred Compensation Plan are
prohibited under Section 457 of the Code unless made after the participating
employee attains age 70 1/2, separates from service, dies, or suffers an
unforeseeable financial emergency. Present federal tax law does not allow
tax-free transfers or rollovers for amounts accumulated in a Section 457 plan
except for transfers to other Section 457 plans in limited cases.

4. INDIVIDUAL RETIREMENT ANNUITIES UNDER SECTION 408

Section 408 of the Code permits eligible individuals to establish individual
retirement programs through the purchase of Individual Retirement Annuities
("IRAs"). IRAs are subject to limitations on the amount that may be
contributed, the contributions that may be deducted from taxable income, the
persons who may be eligible and the time when distributions may commence.
Also, distributions from certain qualified plans may be "rolled-over" on a
tax- deferred basis into an IRA.

5. TAX PENALTIES

Distributions from retirement plans are generally taxed under Section 72 of
the Code. Under these rules, a portion of each distribution may be excludable
from income. The excludable amount is the portion of the distribution which
bears the same ratio as the after-tax contributions bear to the expected
return.

a. PREMATURE DISTRIBUTION.

Distributions from a tax-qualified plan before the Participant attains age
59 1/2 are generally subject to an additional penalty tax equal to 10% of
the taxable portion of the distribution. The 10% penalty does not apply to
distributions made after the employee's death, on account of disability, for
eligible medical expenses and distributions in the form of a life annuity
and, except in the case of an IRA, certain distributions after separation
from service after age 55. For these purposes, a life annuity means a
scheduled series of substantially equal periodic payments for the life or
life expectancy of the Participant (or the joint lives or life expectancies
of the Participant and Beneficiary).

In addition, effective for distributions made from an IRA after December
31, 1997, there is no such penalty tax on distributions that do not exceed
the amount of certain qualifying higher education expenses, as defined by
Section 72(t)(7) of the Code, or which are qualified first-time homebuyer
distributions meeting the requirements of Section 72(t)(8) of the Code.

b. MINIMUM DISTRIBUTION TAX.
If the amount distributed is less than the minimum required distribution
for the year, the Participant is subject to a 50% tax on the amount that was
not properly distributed.

An individual's interest in a tax-qualified retirement plan generally must
be distributed, or begin to be distributed, not later than April 1 of the
calendar year following the later of (i) the calendar year in which the
individual attains age 70 1/2 or (ii) the calendar year in which the
individual retires from service with the employer sponsoring the plan
("required beginning date"). However, the required beginning date for an
individual who is a five (5) percent owner (as defined in the Code), or who
is the owner of an IRA, is April 1 of the calendar year following the
calendar year in which the individual attains age 70 1/2. The entire
interest of the Participant must be distributed beginning no later than the
required beginning date over a period which may not extend beyond a maximum
of the life expectancy of the Participant and a designated Beneficiary. Each
annual distribution must equal or exceed a "minimum distribution amount"
which is determined by dividing the account balance by the applicable life
expectancy. This account balance is generally based upon the account value
as of the close of business on the last day of the previous calendar year.
In addition, minimum distribution incidental benefit rules may require a
larger annual distribution.

If an individual dies before reaching his or her required beginning date,
the individual's entire interest must generally be distributed within five
years of the individual's death. However, this rule will be deemed
satisfied, if distributions begin before the close of the calendar year
following the individual's death to a designated Beneficiary (or over a
period not extending beyond the life expectancy of the beneficiary). If the
Beneficiary is the individual's surviving spouse, distributions may be
delayed until the individual would have attained age 70 1/2.

If an individual dies after reaching his or her required beginning date or
after distributions have commenced, the individual's interest must generally
be distributed at least as rapidly as under the method of distribution in
effect at the time of the individual's death.

31
<PAGE>

c. FEDERAL INCOME TAX WITHHOLDING.

In general, distributions from IRAs and plans described in Section 457 of
the Code are subject to regular wage withholding rules. Periodic
distributions from other tax-qualified retirement plans that are made for a
specified period of 10 or more years or for the life or life expectancy of
the participant (or the joint lives or life expectancies of the participant
and beneficiary) are generally subject to federal income tax withholding as
if the recipient were married claiming three exemptions. The recipient of
periodic distributions may generally elect not to have withholding apply or
to have income taxes withheld at a different rate by providing a completed
election form.

Other distributions from such other tax-qualified retirement plans are
generally subject to mandatory income tax withholding at the flat rate of
20% unless such distributions are:

1) the non-taxable portion of the distribution;

2) required minimum distributions; or

3) direct transfer distributions.

Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Code section 401(a)(31).

D. DIVERSIFICATION REQUIREMENTS

Section 817 of the Code provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified
in accordance with regulations prescribed by the Treasury Department. If a
Contract is not treated as an annuity contract, the Contract Owner will be
subject to income tax on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated assets account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investment, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of contract income on an ongoing basis. However, either the company or
the Contract Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford intends
to administer all contracts subject to the diversification requirements in a
manner that will maintain adequate diversification.
E. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT

In order for a variable annuity contract to qualify for tax deferral, assets
in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable contract
owner. The Internal Revenue Service ("IRS") has issued several rulings which
discuss investor control. The IRS has ruled that certain incidents of ownership
by the contract owner, such as the ability to select and control investments in
a separate account, will cause the contract owner to be treated as the owner of
the assets for tax purposes.

Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of

32
<PAGE>

variable contract." The final regulations issued under Section 817 did not
provide guidance regarding investor control, and as of the date of this
prospectus, no other such guidance has been issued. Further, Hartford does not
know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Contract Owner could be considered the owner of
the assets for tax purposes. Hartford reserves the right to modify the
contracts, as necessary, to prevent Contract Owners from being considered the
owners of the assets in the separate accounts.

F. NON-NATURAL PERSONS, CORPORATIONS

The annual increase in the value of the contract is currently includable in
the gross income of a non-natural person, unless the non-natural person is
holding as an agent for a natural person. There are additional exceptions to
this general rule of inclusion for (i) certain annuities held by a structured
settlement company, (ii) certain annuities held by an employer with respect to a
terminated pension plan and (iii) certain immediate annuities. A non-natural
person, which is a tax-exempt entity for federal tax purposes, will not be
subject to income tax as a result of this provision.

G. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS

The discussion above provides general information regarding U.S. federal
income tax consequences to annuity purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on annuity distributions at a
30% rate, unless a lower treaty rate applies. In addition, purchasers may be
subject to state premium tax, other state and/or municipal taxes, and taxes that
may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S., state, and foreign taxation with respect to an annuity purchase.
MISCELLANEOUS
WHAT ARE MY VOTING RIGHTS?

Hartford shall notify Contractholders of any Fund shareholders' meeting if
the shares held for the Contractholders' accounts through DC-II may be voted at
such meetings. Hartford shall also send proxy materials and a form of
instruction by means of which a Contractholder can instruct Hartford with
respect to the voting of the Fund shares held for the Contractholder's account.
In connection with the voting of Fund shares held by it, Hartford shall arrange
for the handling and tallying of proxies received from Contractholders. Hartford
shall have no right, except as hereinafter provided, to vote any Fund shares
held by it which may be registered in its name or the names of its nominees.
Hartford will, however, vote the Fund shares held by it in accordance with the
instructions received from Contractholders for whose accounts the Fund shares
are held. If a Contractholder desires to attend any meeting at which shares held
for the Contractholder's benefit may be voted, the Contractholder may request
that Hartford furnish a proxy or otherwise arrange for the exercise of voting
rights with respect to the Fund shares held for such Contractholder's account.
In the event that a Contractholder gives no instructions or leaves the manner of
voting discretionary, Hartford will vote such shares of the appropriate Fund,
including any Fund shares it may own, in the same proportion as shares of that
Fund for which instructions have been received.

Every Participant under a Contract issued with respect to DC-II who has a
full (100%) vested interest under a group Contract shall receive proxy material
and a form of instruction by which Participants may instruct the Contractholder
with respect to the number of votes attributable to his or her individual
participation under such Contract.

A Contractholder or Participant, as appropriate, is entitled to one full or
fractional vote for each full or fractional Accumulation Unit or Annuity Unit
owned. The Contractholder has voting rights throughout the life of the Contract.
The vested Participant has voting rights for as long as his or her participation
in the Contract continues. Voting rights attach only to interests under DC-II.

During the Annuity period under a Contract, the number of votes will
decrease as the assets held to fund Annuity benefits decrease.

33
<PAGE>

WILL OTHER CONTRACTS BE PARTICIPATING IN THE SEPARATE ACCOUNT?

In addition to the Contracts described in this Prospectus, other forms of
group Annuities which are funded by, and provide benefits which vary in
accordance with the investment experience of, the Separate Account are sold.

HOW ARE THE CONTRACTS SOLD?

Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is registered with the Commission under the Securities Exchange Act of 1934 as a
Broker-Dealer and is a member of the NASD.

HSD is a wholly-owned subsidiary of Hartford. The principal business address
of HSD is the same as that of Hartford.

The securities will be sold by salespersons of HSD who represent Hartford as
insurance and Variable Annuity agents and who are registered representatives of
broker-dealers which have entered into distribution agreements with HSD.

Compensation up to a maximum of 5% of Contributions and 0.25% annually on
Participants' Individual Account Values will be paid by Hartford to registered
representatives for the sale of Contracts. Sales compensation may be reduced.

Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by policyholders or contract owners. This compensation is usually paid from the
sales charges described in this Prospectus.

In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services proviced. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.

WHO IS THE CUSTODIAN OF THE SEPARATE ACCOUNT'S ASSETS?

Hartford is the custodian of the assets of the Separate Account, including
those assets held in DC II.

ARE THERE ANY MATERIAL LEGAL PROCEEDINGS AFFECTING THE SEPARATE ACCOUNT?

There are no material legal proceedings pending to which the Separate
Account is a party. Counsel with respect to federal laws and regulations
applicable to the issue and sale of the contracts and with respect to
Connecticut law is Lynda Godkin, General Counsel, Hartford Life Insurance
Company, P.O. Box 2999, Hartford, CT 06104-2999.

Hartford may, in its sole discretion, elect not to exercise a right or
reservation specified in the Contract. Such election shall not constitute a
waiver of the right to exercise such right or reservation at any subsequent
time.

ARE YOU RELYING ON ANY EXPERTS AS TO ANY PORTION OF THIS PROSPECTUS?

The audited financial statements and financial statement schedules included
in this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.

EXPERTS

34
<PAGE>
HOW MAY I GET ADDITIONAL INFORMATION?

Your inquiries will be answered by calling your sales representative or by
writing to Hartford at its Administrative Office.

35
<PAGE>

TABLE OF CONTENTS
FOR
STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
SECTION PAGE
- ------------------------------------------------------------ ----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY..............
SAFEKEEPING OF ASSETS.......................................
INDEPENDENT PUBLIC ACCOUNTANTS..............................
DISTRIBUTION OF CONTRACTS...................................
CALCULATION OF YIELD AND RETURN.............................
PERFORMANCE COMPARISONS.....................................
FINANCIAL STATEMENTS........................................
</TABLE>

35
<PAGE>

PART B

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO (DC VARIABLE ACCOUNT II)

Group Variable Annuity Contracts Issued by
Hartford Life Insurance Company
With Respect to DC-II

This Statement of Additional Information is not a Prospectus. The information
contained herein should be read in conjunction with the Prospectus.

To obtain a Prospectus, send a written request to Hartford Life Insurance
Company, Attn: RPVA Administration, P.O. Box 2999, Hartford, CT 06104-2999.

Date of Prospectus: May 1, 1998
Date of Statement of Additional Information: May 1, 1998

33-59541
HV-2025

<PAGE>

TABLE OF CONTENTS

SECTION PAGE
- ------- ----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY........................

SAFEKEEPING OF ASSETS.................................................

INDEPENDENT PUBLIC ACCOUNTANTS........................................

DISTRIBUTION OF CONTRACTS.............................................

CALCULATION OF YIELD AND RETURN.......................................

PERFORMANCE COMPARISONS...............................................

FINANCIAL STATEMENTS..................................................

</TABLE>

<PAGE>

DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY

Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing life insurance, both individual
and group, in all states of the United States and the District of Columbia.
Hartford was originally incorporated under the laws of Massachusetts on June
5, 1902, and was subsequently redomiciled to Connecticut. Its offices are
located in Simsbury, Connecticut; however, its mailing address is P.O. Box
2999, Hartford, CT 06104-2999. Hartford is ultimately controlled by The
Hartford Financial Services Group, Inc., one of the largest financial service
providers in the United States.

HARTFORD RATINGS

- -------------------------------------------------------------------------------------
RATING AGENCY EFFECTIVE RATING BASIS OF RATING
DATE OF RATING
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------
A.M. Best and Company, Inc. 9/9/97 A+ Financial soundness and
operating performance.
- -------------------------------------------------------------------------------------
Standard & Poor's 1/23/98 AA Claims paying ability
- -------------------------------------------------------------------------------------
Duff & Phelps 1/23/98 AA+ Claims paying ability
- -------------------------------------------------------------------------------------
</TABLE>

SAFEKEEPING OF ASSETS

Title to the assets of the Separate Account is held by Hartford. These assets
are kept physically segregated and are held separate and apart from
Hartford's general corporate assets. Records are maintained of all purchases
and redemptions of Fund shares held in each of the Sub-Accounts.

INDEPENDENT PUBLIC ACCOUNTANTS

The audited financial statements and financial statement schedules included in
this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. The principal
business address of Arthur Andersen LLP is One Financial Plaza, Hartford,
Connecticut 06103.

DISTRIBUTION OF CONTRACTS

Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is a wholly-owned subsidiary of Hartford. The principal business address of HSD
is the same as that of Hartford.

The securities will be sold by salespersons of HSD who represent Hartford as
insurance and Variable Annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.

<PAGE>

HSD 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. ("NASD"). Compensation will be
paid by Hartford to registered representatives for the sale of Contracts up to a
maximum of 5.0% on Contributions and .25% annually on Participants' Individual
Account Values. Sales compensation may be reduced.

The offering of the Separate Account contracts is continuous.

CALCULATION OF YIELD AND RETURN

YIELD OF THE MONEY MARKET FUND SUB-ACCOUNT. As summarized in the Prospectus
under the heading "Performance Related Information," the yield of the
Sub-Account for a seven day period (the "base period") will be computed by
determining the "net change in value" of a hypothetical account having a
balance of one unit at the beginning of the period, dividing the net change
in account value by the value of the account at the beginning of the base
period to obtain the base period return, and multiplying the base period
return by 365/7 with the resulting yield figure carried to the nearest
hundredth of one percent. Net changes in value of a hypothetical account will
include net investment income of the account (accrued dividends as declared
by the underlying funds, less expense and Contract charges of the account)
for the period, but will not include realized gains or losses or unrealized
appreciation or depreciation on the underlying fund shares.

The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from the
result, according to the following formula:

Effective Yield = [(Base Period Return + 1) to the power 365/7] - 1

THE MONEY MARKET FUND SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY IN
RESPONSE TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE
SUB-ACCOUNT. THE CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES
ON THE SEPARATE ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.

The yield and effective yield for the seven day period ending December 31, 1997
is as follows:

- ------------------------------------------------------------------
SUB-ACCOUNTS YIELD EFFECTIVE YIELD
- ------------------------------------------------------------------
<S> <C> <C>
Money Market Fund * 4.11% 4.20%
- ------------------------------------------------------------------
</TABLE>

* Yield and effective yield for the seven day period ending December 31, 1997.

<PAGE>

YIELDS OF BOND FUND AND MORTGAGE SECURITIES FUND SUB-ACCOUNTS. As summarized in
the Prospectus under the heading "Performance Related Information," yields of
the above Sub-Accounts will be computed by annualizing a recent month's net
investment income, divided by a Fund share's net asset value on the last trading
day of that month. Net changes in the value of a hypothetical account will
assume the change in the underlying mutual fund's "net asset value per share"
for the same period in addition to the daily expense charge assessed, at the
sub-account level for the respective period. The Sub-Accounts' yields will
vary from time to time depending upon market conditions and, the composition of
the underlying funds' portfolios. Yield should also be considered relative to
changes in the value of the Sub-Accounts' shares and to the relative risks
associated with the investment objectives and policies of the underlying Fund.

THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.

Yield calculations of the Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset charges assessed
against a Contract Owner's account over the base period. Yield quotations
based on a 30 day period were computed by dividing the dividends and interests
earned during the period by the maximum offering price per unit on the last day
of the period, according to the following formula:

Example:

Current Yield Formula for the Sub-Account
2[((A- B)/(CD) + 1) to the power of 6 - 1]

Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period
that were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.

At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.

- ---------------------------------------------------------------------------
SUB-ACCOUNTS YIELD
- ---------------------------------------------------------------------------
<S> <C>
Bond Fund** 5.02%
- ---------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C>
Mortgage Securities Fund** 5.34%
- ---------------------------------------------------------------------------
</TABLE>

** Yield quotation based on a 30 day period ended December 31, 1997.

CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information", total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula
for total return used herein includes three steps: (1) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period; (2) assuming redemption at
the end of the period and deducting any applicable contingent deferred sales
charge and (3) dividing this account value for the hypothetical investor by the
initial $1,000 investment and annualizing the result for periods of less than
one year. Total return will be calculated for one year, five years and ten
years or some other relevant periods if a Sub-Account has not been in existence
for at least ten years.

For the fiscal year ended December 31, 1997, the standardized average annual
total return quotations for the Sub-Accounts listed were as follows:

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
SUB-ACCOUNTS INCEPTION DATE 1 YEAR 5 YEAR 10 YEAR OR SINCE
INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advisers Fund 3/31/83 13.87% 11.19% 10.57%
- -------------------------------------------------------------------------------------------------
Bond Fund 8/31/77 1.47% 3.45% 5.04%
- -------------------------------------------------------------------------------------------------
Capital Appreciation Fund 4/2/84 11.83% 15.09% 16.44%
- -------------------------------------------------------------------------------------------------
Dividend & Growth Fund 3/8/94 20.74% na 19.43%
- -------------------------------------------------------------------------------------------------
Index Fund 5/1/87 21.91% 15.84% 14.03%
- -------------------------------------------------------------------------------------------------
International Opportunities Fund 7/2/90 (8.86%) 7.33% 2.11%
- -------------------------------------------------------------------------------------------------
Mortgage Securities Fund 1/1/85 -.72% 2.58% 4.69%
- -------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Fund 8/31/77 20.27% 15.65% 13.71%
- -------------------------------------------------------------------------------------
Money Market Fund 6/30/80 (4.18%) .31% 1.71%
- -------------------------------------------------------------------------------------
Calvert Social Balanced Fund 12/31/88 9.65% 8.72% 8.84%
- -------------------------------------------------------------------------------------
AMS/American Century Advantage Fund 8/1/91 2.85% 5.01% 4.27%
- -------------------------------------------------------------------------------------
AMS/American Century Growth Fund 11/20/87 (12.24%) 1.69% 5.06%
- -------------------------------------------------------------------------------------
AMS/Fidelity VIP II Asset Manager Fund 9/6/89 10.19% 8.92% 8.83%
- -------------------------------------------------------------------------------------
AMS/Fidelity VIP II Contrafund Fund 1/3/95 13.47% na 22.30%
- -------------------------------------------------------------------------------------
AMS/Fidelity VIP Growth Fund 10/9/86 12.85% 14.07% 13.85%
- -------------------------------------------------------------------------------------
AMS/Fidelity VIP Overseas Fund 1/28/87 1.66% 10.37% 5.85%
- -------------------------------------------------------------------------------------
</TABLE>

*Figures represent performance since inception for Sub-Accounts in existence
for less than 10 years, or performance for 10 years for Sub-Accounts in
existence for more than 10 years.

In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the contingent deferred sales charge and the Annual Maintenance Fee
are not deducted. Therefore, non-standardized total return for a Sub-Account is
higher than standardized total return for a Sub-Account.

For the fiscal year ended December 31, 1997, the non-standardized annualized
total return for the

<PAGE>

Sub-Accounts listed below were as follows:

NON-STANDARDIZED ANNUALIZED TOTAL RETURN FOR YEAR ENDED DECEMBER 31, 1997

- --------------------------------------------------------------------------------------------
SUB-ACCOUNTS INCEPTION DATE 1 YEAR 5 YEAR 10 YEAR OR SINCE
INCEPTION*
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advisers Fund 3/31/83 23.02% 13.87% 12.68%
- --------------------------------------------------------------------------------------------
Bond Fund 8/31/77 9.97% 6.32% 7.45%
- --------------------------------------------------------------------------------------------
Capital Appreciation Fund 4/2/84 20.87% 17.51% 18.14%
- --------------------------------------------------------------------------------------------
Dividend & Growth Fund 3/8/94 30.25% na 22.08%
- --------------------------------------------------------------------------------------------
Index Fund 5/1/87 31.49% 18.46% 15.99%
- --------------------------------------------------------------------------------------------
International Opportunities Fund 7/2/90 -.91% 9.73% 5.26%
- --------------------------------------------------------------------------------------------
Mortgage Securities Fund 1/1/85 7.66% 5.51% 7.09%
- --------------------------------------------------------------------------------------------
Stock Fund 8/31/77 29.76% 18.23% 15.68%
- --------------------------------------------------------------------------------------------
Money Market Fund 6/30/80 4.02% 3.33% 4.42%
- --------------------------------------------------------------------------------------------
Calvert Balanced Balanced Portfolio 12/31/88 18.58% 11.50% 11.12%
- --------------------------------------------------------------------------------------------
AMS/American Century Advantage Fund 8/1/91 11.43% 7.85% 7.29%
- --------------------------------------------------------------------------------------------
AMS/American Century Growth Fund 11/20/87 (4.46%) 4.44% 7.34%
- --------------------------------------------------------------------------------------------
AMS/Fidelity VIP II Asset Manager Fund 9/6/89 19.15% 11.58% 11.32%
- --------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
AMS/Fidelity VIP II Contrafund Fund 1/3/95 22.60% na 26.52%
- --------------------------------------------------------------------------------------------
AMS/Fidelity VIP Growth Fund 10/9/86 21.95% 16.54% 15.73%
- --------------------------------------------------------------------------------------------
AMS/Fidelity VIP Overseas Fund 1/28/87 10.17% 12.70% 8.26%
- --------------------------------------------------------------------------------------------
</TABLE>

*Figures represent performance since inception for Sub-Accounts in
existence for less than 10 years, or performance for 10 years for
Sub-Accounts in existence for more than 10 years.

PERFORMANCE COMPARISONS

YIELD AND TOTAL RETURN. Each Sub-Account may from time to time include its
total return in advertisements or in information furnished to present or
prospective shareholders. Each Sub-Account may from time to time include its
yield and total return in advertisements or information furnished to present
or prospective shareholders. Each Sub-Account may from time to time include
in advertisements its total return (and yield in the case of certain
Sub-Accounts) the ranking of those performance figures relative to such
figures for groups of other annuities analyzed by Lipper Analytical Services
as having the same investment objectives.

The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index
of 500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to
the base period 1941-43. The S&P 500 is composed almost entirely of common
stocks of companies listed on the New York Stock Exchange, although the
common stocks of a few companies listed on the American Stock Exchange or
traded over-the-counter are included. The 500 companies represented include
400 industrial, 60 transportation and 40 financial services concerns. The S&P
500 represents about 80% of the market value of all issues traded on the New
York Stock Exchange.

The NASDAQ-OTC Price Index (the "NASDAQ Index") is a market value-weighted
and unmanaged index showing the changes in the aggregate market value of
approximately 3,500 stocks relative to the base measure of 100.00 on February
5, 1971. The NASDAQ Index is composed entirely of common stocks of companies
traded over-the-counter and often through the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system. Only those
over-the-counter stocks having only one market maker or traded on exchanges
are excluded.

<PAGE>

The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury;
all publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted
issues are not included in the SL Government Index.

The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of
approximately 5,300 bonds with a face value currently in excess of $1.3
trillion. To be included in the SL Government/Corporate Index, an issue must
have amounts outstanding in excess of $1 million, have at least one year to
maturity and be rated "Baa" or higher ("investment grade") by a nationally
recognized rating agency.

<PAGE>

- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Hartford Life Insurance Company
Separate Account Two and to the
Owners of Units of Interest Therein:

We have audited the accompanying statement of assets and liabilities of Hartford
Life Insurance Company Separate Account Two (the Account) as of December 31,
1997, and the related statement of operations for the year then ended and
statements of changes in net assets for each of the two years in the period then
ended. These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hartford Life Insurance Company
Separate Account Two as of December 31, 1997, the results of its operations for
the year then ended and the changes in its net assets for each of the two years
in the period then ended in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
February 16, 1998
<PAGE>
This page intentionally left blank.
<PAGE>

- --------------------------------------------------------------------------------

SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997

<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 13,748,867
Cost $13,871,095
Market Value................... $14,432,928 -- -- --
Hartford Stock Fund, Inc.
Shares 32,365,883
Cost $73,022,218
Market Value................... -- $165,821,003 -- --
HVA Money Market Fund, Inc.
Shares 5,933,485
Cost $ 5,933,485
Market Value................... -- -- $5,933,485 --
Hartford Advisers Fund, Inc.
Shares 26,712,645
Cost $42,864,084
Market Value................... -- -- -- $ 67,496,067
Hartford Capital Appreciation
Fund, Inc.
Shares 22,392,292
Cost $66,180,725
Market Value................... -- -- -- --
Hartford Mortgage Securities
Fund, Inc.
Shares 3,176,077
Cost $ 3,352,946
Market Value................... -- -- -- --
Hartford Index Fund, Inc.
Shares 8,680,791
Cost $16,771,797
Market Value................... -- -- -- --
Hartford International
Opportunities Fund, Inc.
Shares 7,531,794
Cost $ 9,079,949
Market Value................... -- -- -- --
Hartford Dividend and Growth
Fund, Inc.
Shares 7,260,907
Cost $11,296,243
Market Value................... -- -- -- --
Calvert Responsibly Invested
Balanced Fund
Shares 1,696,915
Cost $ 2,797,362
Market Value................... -- -- -- --
Due from Hartford Life Insurance
Company......................... 9,130 108,971 1,579 223,631
Receivable from fund shares
sold............................ 1,746 141,748 -- --
----------- ------------ ----------- -------------
Total Assets..................... 14,443,804 166,071,722 5,935,064 67,719,698
----------- ------------ ----------- -------------
LIABILITIES:
Due to Hartford Life Insurance
Company......................... 1,746 141,744 -- --
Payable for fund shares
purchased....................... 9,127 108,907 1,611 223,410
----------- ------------ ----------- -------------
Total Liabilities................ 10,873 250,651 1,611 223,410
----------- ------------ ----------- -------------
Net Assets (variable annuity
contract liabilities)........... $14,432,931 $165,821,071 $5,933,453 $ 67,496,288
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 13,748,867
Cost $13,871,095
Market Value................... -- -- -- -- --
Hartford Stock Fund, Inc.
Shares 32,365,883
Cost $73,022,218
Market Value................... -- -- -- -- --
HVA Money Market Fund, Inc.
Shares 5,933,485
Cost $ 5,933,485
Market Value................... -- -- -- -- --
Hartford Advisers Fund, Inc.
Shares 26,712,645
Cost $42,864,084
Market Value................... -- -- -- -- --
Hartford Capital Appreciation
Fund, Inc.
Shares 22,392,292
Cost $66,180,725
Market Value................... $ 98,743,668 -- -- -- --
Hartford Mortgage Securities
Fund, Inc.
Shares 3,176,077
Cost $ 3,352,946
Market Value................... -- $ 3,442,171 -- -- --
Hartford Index Fund, Inc.
Shares 8,680,791
Cost $16,771,797
Market Value................... -- -- $24,980,790 -- --
Hartford International
Opportunities Fund, Inc.
Shares 7,531,794
Cost $ 9,079,949
Market Value................... -- -- -- $ 9,749,584 --
Hartford Dividend and Growth
Fund, Inc.
Shares 7,260,907
Cost $11,296,243
Market Value................... -- -- -- -- $14,175,673
Calvert Responsibly Invested
Balanced Fund
Shares 1,696,915
Cost $ 2,797,362
Market Value................... -- -- -- -- --
Due from Hartford Life Insurance
Company......................... 117,836 248 51,061 30,907 33,601
Receivable from fund shares
sold............................ -- -- 21,199 -- --
----------------- --------------- ----------- ------------------ -------------
Total Assets..................... 98,861,504 3,442,419 25,053,050 9,780,491 14,209,274
----------------- --------------- ----------- ------------------ -------------
LIABILITIES:
Due to Hartford Life Insurance
Company......................... -- -- 22,120 -- --
Payable for fund shares
purchased....................... 117,073 275 51,032 30,936 33,568
----------------- --------------- ----------- ------------------ -------------
Total Liabilities................ 117,073 275 73,152 30,936 33,568
----------------- --------------- ----------- ------------------ -------------
Net Assets (variable annuity
contract liabilities)........... $ 98,744,431 $ 3,442,144 $24,979,898 $ 9,749,555 $14,175,706
----------------- --------------- ----------- ------------------ -------------
----------------- --------------- ----------- ------------------ -------------

<CAPTION>
CALVERT
RESPONSIBLY INVESTED
BALANCED PORTFOLIO
SUB-ACCOUNT
--------------------
<S> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 13,748,867
Cost $13,871,095
Market Value................... --
Hartford Stock Fund, Inc.
Shares 32,365,883
Cost $73,022,218
Market Value................... --
HVA Money Market Fund, Inc.
Shares 5,933,485
Cost $ 5,933,485
Market Value................... --
Hartford Advisers Fund, Inc.
Shares 26,712,645
Cost $42,864,084
Market Value................... --
Hartford Capital Appreciation
Fund, Inc.
Shares 22,392,292
Cost $66,180,725
Market Value................... --
Hartford Mortgage Securities
Fund, Inc.
Shares 3,176,077
Cost $ 3,352,946
Market Value................... --
Hartford Index Fund, Inc.
Shares 8,680,791
Cost $16,771,797
Market Value................... --
Hartford International
Opportunities Fund, Inc.
Shares 7,531,794
Cost $ 9,079,949
Market Value................... --
Hartford Dividend and Growth
Fund, Inc.
Shares 7,260,907
Cost $11,296,243
Market Value................... --
Calvert Responsibly Invested
Balanced Fund
Shares 1,696,915
Cost $ 2,797,362
Market Value................... $ 3,363,286
Due from Hartford Life Insurance
Company......................... 2,763
Receivable from fund shares
sold............................ --
-----------
Total Assets..................... 3,366,049
-----------
LIABILITIES:
Due to Hartford Life Insurance
Company......................... --
Payable for fund shares
purchased....................... 2,139
-----------
Total Liabilities................ 2,139
-----------
Net Assets (variable annuity
contract liabilities)........... $ 3,363,910
-----------
-----------
</TABLE>

<PAGE>

- --------------------------------------------------------------------------------

SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1997

<TABLE>
<CAPTION>
AMERICAN CENTURY VP
ADVANTAGE FUND
SUB-ACCOUNT
-------------------
<S> <C>
ASSETS:
Investments:
American Century VP Advantage
Fund, Inc.
Shares 37,657
Cost $ 232,898
Market Value................... $248,536
American Century VP Capital
Appreciation Fund, Inc.
Shares 153,878
Cost $1,711,391
Market Value................... --
Fidelity VIP Overseas Fund, Inc.
Shares 103,298
Cost $1,861,058
Market Value................... --
Fidelity VIP II Asset Manager
Fund
Shares 176,732
Cost $2,826,562
Market Value................... --
Fidelity VIP II Contrafund Fund
Shares 599,344
Cost $9,253,467
Market Value................... --
Fidelity VIP Growth Fund
Shares 295,397
Cost $9,068,124
Market Value................... --
Dividends........................ --
Due from Hartford Life Insurance
Company......................... 283
Receivable from fund shares
sold............................ --
--------
Total Assets..................... 248,819
--------
LIABILITIES:
Due to Hartford Life Insurance
Company......................... --
Payable for fund shares
purchased....................... 283
--------
Total Liabilities................ 283
--------
Net Assets (variable annuity
contract liabilities)........... $248,536
--------
--------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
AMERICAN CENTURY VP FIDELITY VIP FIDELITY VIP II FIDELITY VIP II FIDELITY VIP
CAPITAL APPRECIATION FUND OVERSEAS FUND ASSET MANAGER FUND CONTRAFUND FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------------- --------------- ------------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
American Century VP Advantage
Fund, Inc.
Shares 37,657
Cost $ 232,898
Market Value................... -- -- -- -- --
American Century VP Capital
Appreciation Fund, Inc.
Shares 153,878
Cost $1,711,391
Market Value................... $1,489,538 -- -- -- --
Fidelity VIP Overseas Fund, Inc.
Shares 103,298
Cost $1,861,058
Market Value................... -- $ 1,983,322 -- -- --
Fidelity VIP II Asset Manager
Fund
Shares 176,732
Cost $2,826,562
Market Value................... -- -- $3,182,950 -- --
Fidelity VIP II Contrafund Fund
Shares 599,344
Cost $9,253,467
Market Value................... -- -- -- $11,950,919 --
Fidelity VIP Growth Fund
Shares 295,397
Cost $9,068,124
Market Value................... -- -- -- -- $10,959,230
Dividends........................ -- -- -- -- --
Due from Hartford Life Insurance
Company......................... -- 22,788 7,523 57,573 3,133
Receivable from fund shares
sold............................ 1,383 -- -- -- --
----------- --------------- ------------------ --------------- ------------
Total Assets..................... 1,490,921 2,006,110 3,190,473 12,008,492 10,962,363
----------- --------------- ------------------ --------------- ------------
LIABILITIES:
Due to Hartford Life Insurance
Company......................... 1,366 -- -- -- --
Payable for fund shares
purchased....................... -- 22,827 7,110 57,479 3,071
----------- --------------- ------------------ --------------- ------------
Total Liabilities................ 1,366 22,827 7,110 57,479 3,071
----------- --------------- ------------------ --------------- ------------
Net Assets (variable annuity
contract liabilities)........... $1,489,555 $ 1,983,283 $3,183,363 $11,951,013 $10,959,292
----------- --------------- ------------------ --------------- ------------
----------- --------------- ------------------ --------------- ------------
</TABLE>
<PAGE>

- --------------------------------------------------------------------------------

SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1997

<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ --------- --------------
DEFERRED ANNUITY CONTRACTS IN THE ACCUMULATION
PERIOD:
<S> <C> <C> <C>
GROUP SUB-ACCOUNTS:
Bond Fund Qualified 1.00% QP...................... 847,977 $4.784200 $ 4,056,892
Bond Fund 1.25% DCII.............................. 1,605,816 4.604170 7,393,450
Bond Fund .15% DCII............................... 276,215 4.434356 1,224,836
Stock Fund Qualified 1.00% QP..................... 2,708,229 14.853569 40,226,866
Stock Fund Qualified .825% QP..................... 1,145,365 11.971280 13,711,485
Stock Fund Non-Qualified 1.00% NP................. 87,464 11.654109 1,019,315
Stock Fund Non-Qualified .825% NQ................. 767,810 11.992187 9,207,721
Stock Fund 1.25% DCII............................. 5,081,931 14.295490 72,648,694
Stock Fund .15% DCII.............................. 870,050 11.344329 9,870,133
Money Market Fund Qualified .375% QP.............. 2,682 3.246956 8,708
Money Market Fund 1.25% DCII...................... 1,473,053 2.834423 4,175,255
Money Market Fund .15% DCII....................... 362,821 2.817806 1,022,359
Advisers Fund 1.25% DCII.......................... 10,298,634 5.168279 53,226,214
Advisers Fund .15% DCII........................... 617,065 6.061165 3,740,133
Capital Appreciation Fund 1.25% DCII.............. 11,032,011 7.896085 87,109,697
Capital Appreciation Fund .15% DCII............... 782,485 9.163200 7,170,067
Mortgage Securities Fund 1.25% DCII............... 1,035,472 2.606495 2,698,953
Mortgage Securities Fund .15% DCII................ 114,174 3.005567 343,158
Index Fund 1.25% DCII............................. 5,414,986 3.744823 20,278,164
Index Fund .15% DCII.............................. 453,462 4.128555 1,872,143
International Opportunities Fund 1.25% DCII....... 5,863,904 1.469173 8,615,089
International Opportunities Fund .15% DCII........ 410,998 1.595199 655,624
Dividend and Growth Fund Sub-Account.............. 6,877,177 1.932989 13,293,507
Calvert Responsibly Invested Balanced Fund 1.25%
DCII............................................. 1,290,611 2.396114 3,092,451
American Century VP Advantage Fund Sub-Account.... 189,239 1.263961 239,191
American Century VP Capital Appreciation Fund
Sub-Account...................................... 1,519,844 0.975662 1,482,854
Fidelity VIP Overseas Fund Sub-Account............ 1,562,891 1.268984 1,983,283
Fidelity VIP II Asset Manager Fund Sub-Account.... 2,172,118 1.465557 3,183,363
Fidelity VIP II Contrafund Fund Sub-Account....... 7,406,641 1.613482 11,950,482
Fidelity VIP II Growth Fund Sub-Account........... 7,393,150 1.482007 10,956,700
--------------
TOTAL ACCUMULATION PERIOD......................... 396,456,787
--------------
ANNUITY CONTRACTS IN THE ANNUITY PERIOD:
GROUP SUB-ACCOUNTS:
Bond Fund Qualified 1.00% QP...................... 77,211 4.784200 369,393
Bond Fund 1.25% DCII.............................. 286,987 4.604170 1,321,337
Bond Fund 1.00% DCII.............................. 10,642 4.765312 50,712
Bond Fund .15% DCII............................... 3,678 4.434356 16,311
Stock Fund Qualified 1.00% QP..................... 224,506 14.853569 3,334,715
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ --------- --------------
GROUP SUB-ACCOUNTS -- (CONTINUED)
<S> <C> <C> <C>
Stock Fund Qualified .825% QP..................... 45,882 $11.971280 $ 549,261
Stock Fund Non-Qualified 1.00% NP................. 5,113 11.654109 59,587
Stock Fund Non-Qualified .825% NQ................. 47,752 11.992187 572,651
Stock Fund 1.25% DCII............................. 1,011,885 14.295490 14,465,392
Stock Fund 1.00% DCII............................. 2,520 14.807393 37,315
Stock Fund .15% DCII.............................. 10,396 11.344329 117,936
Money Market Fund 1.25% DCII...................... 256,535 2.834423 727,131
Advisers Fund 1.25% DCII.......................... 2,010,738 5.168279 10,392,055
Advisers Fund .15% DCII........................... 22,749 6.061165 137,886
Capital Appreciation Fund 1.25% DCII.............. 556,519 7.896085 4,394,321
Capital Appreciation Fund .15% DCII............... 7,677 9.163200 70,346
Mortgage Securities Fund 1.25% DCII............... 153,475 2.606495 400,033
Index Fund 1.25% DCII............................. 751,604 3.744823 2,814,612
Index Fund .15% DCII.............................. 3,628 4.128555 14,979
International Opportunities Fund 1.25% DCII....... 309,523 1.469173 454,743
International Opportunities Fund .15% DCII........ 15,107 1.595199 24,099
Dividend and Growth Fund Sub-Account.............. 456,391 1.932989 882,199
Calvert Responsibly Invested Balanced Fund 1.25%
DCII............................................. 113,291 2.396114 271,459
American Century VP Advantage Fund Sub-Account.... 7,393 1.263961 9,345
American Century VP Capital Appreciation Fund
Sub-Account...................................... 6,869 0.975662 6,701
Fidelity VIP II Contrafund Fund Sub-Account....... 329 1.613482 531
Fidelity VIP II Growth Fund Sub-Account........... 1,750 1.482007 2,592
--------------
TOTAL ANNUITY PERIOD.............................. 41,497,642
--------------
GRAND TOTAL....................................... $ 437,954,429
--------------
--------------
</TABLE>

<PAGE>

- --------------------------------------------------------------------------------

SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ $ 821,210 $ 1,572,574 $ 283,695 $ 1,427,145
EXPENSES:
Mortality and expense
undertakings.................... (150,928) (1,618,398) (58,096) (686,694)
----------- ------------ ----------- -------------
Net investment income (loss)... 670,282 (45,824) 225,599 740,451
----------- ------------ ----------- -------------
CAPITAL GAINS INCOME............... -- 7,063,630 18 2,516,544
----------- ------------ ----------- -------------
NET REALIZED AND UNREALIZED (LOSS)
GAIN ON INVESTMENTS:
Net realized (loss) gain on
security transactions........... (17,007) 6,112,590 -- (19,989)
Net unrealized appreciation
(depreciation) of investments
during the period............... 698,032 26,385,702 -- 8,870,417
----------- ------------ ----------- -------------
Net gain (loss) on
investments................... 681,025 32,498,292 -- 8,850,428
----------- ------------ ----------- -------------
Net increase (decrease) in net
assets resulting from
operations.................... $ 1,351,307 $ 39,516,098 $ 225,617 $ 12,107,423
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
MONEY CAPITAL MORTGAGE INTERNATIONAL
MARKET FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ----------------- --------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ $ 30,990 $ 485,988 $ 202,606 $ 281,733 $ 90,257
EXPENSES:
Mortality and expense
undertakings.................... (7,380) (1,010,830) (37,903) (157,504) (119,287)
------- ----------------- --------------- ----------- ----------
Net investment income (loss)... 23,610 (524,842) 164,703 124,229 (29,030)
------- ----------------- --------------- ----------- ----------
CAPITAL GAINS INCOME............... -- 6,234,258 -- 1,272,234 770,963
------- ----------------- --------------- ----------- ----------
NET REALIZED AND UNREALIZED (LOSS)
GAIN ON INVESTMENTS:
Net realized (loss) gain on
security transactions........... -- (406,564) 4,355 (50,915) (9,826)
Net unrealized appreciation
(depreciation) of investments
during the period............... -- 10,345,344 77,114 3,736,267 (815,682)
------- ----------------- --------------- ----------- ----------
Net gain (loss) on
investments................... -- 9,938,780 81,469 3,685,352 (825,508)
------- ----------------- --------------- ----------- ----------
Net increase (decrease) in net
assets resulting from
operations.................... $ 23,610 $15,648,196 $ 246,172 $ 5,081,815 $ (83,575)
------- ----------------- --------------- ----------- ----------
------- ----------------- --------------- ----------- ----------

<CAPTION>
CALVERT
DIVIDEND AND RESPONSIBLY INVESTED
GROWTH FUND BALANCED PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends........................ $ 193,436 $ 73,766
EXPENSES:
Mortality and expense
undertakings.................... (122,434) (37,000)
------------ --------
Net investment income (loss)... 71,002 36,766
------------ --------
CAPITAL GAINS INCOME............... 191,362 160,014
------------ --------
NET REALIZED AND UNREALIZED (LOSS)
GAIN ON INVESTMENTS:
Net realized (loss) gain on
security transactions........... (5,106) (2,131)
Net unrealized appreciation
(depreciation) of investments
during the period............... 2,164,090 296,021
------------ --------
Net gain (loss) on
investments................... 2,158,984 293,890
------------ --------
Net increase (decrease) in net
assets resulting from
operations.................... $ 2,421,348 $ 490,670
------------ --------
------------ --------
</TABLE>

<PAGE>

- --------------------------------------------------------------------------------

SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
AMERICAN CENTURY VP
ADVANTAGE FUND
SUB-ACCOUNT
-------------------
<S> <C>
INVESTMENT INCOME:
Dividends........................ $ 2,818
EXPENSES:
Mortality and expense
undertakings.................... (2,524)
-------
Net investment income (loss)... 294
-------
CAPITAL GAINS INCOME............... 10,139
-------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions........... 86
Net unrealized appreciation
(depreciation) of investments
during the period............... 9,915
-------
Net gain (loss) on
investments................... 10,001
-------
Net increase (decrease) in net
assets resulting from
operations.................... $ 20,434
-------
-------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
AMERICAN CENTURY VP FIDELITY VIP FIDELITY VIP II FIDELITY VIP II FIDELITY VIP
CAPITAL APPRECIATION FUND OVERSEAS FUND ASSET MANAGER FUND CONTRAFUND FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------------- --------------- ------------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ $-- $ 21,186 $ 65,855 $ 60,821 $ 48,646
EXPENSES:
Mortality and expense
undertakings.................... (16,454) (19,993 ) (30,524) (117,285) (110,429)
-------- --------------- -------- --------------- ------------
Net investment income (loss)... (16,454) 1,193 35,331 (56,464) (61,783)
-------- --------------- -------- --------------- ------------
CAPITAL GAINS INCOME............... 22,619 84,101 165,196 160,741 217,749
-------- --------------- -------- --------------- ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions........... (3,879) (12 ) 45 14,539 10,890
Net unrealized appreciation
(depreciation) of investments
during the period............... (72,938) 40,887 211,417 1,769,331 1,505,289
-------- --------------- -------- --------------- ------------
Net gain (loss) on
investments................... (76,817) 40,875 211,462 1,783,870 1,516,179
-------- --------------- -------- --------------- ------------
Net increase (decrease) in net
assets resulting from
operations.................... $ (70,652) $ 126,169 $ 411,989 $1,888,147 $1,672,145
-------- --------------- -------- --------------- ------------
-------- --------------- -------- --------------- ------------
</TABLE>
<PAGE>

- --------------------------------------------------------------------------------

SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 670,282 $ (45,824) $ 225,599 $ 740,451
Capital gains income............. -- 7,063,630 18 2,516,544
Net realized (loss) gain on
security transactions........... (17,007) 6,112,590 -- (19,989)
Net unrealized appreciation
(depreciation) of investments
during the period............... 698,032 26,385,702 -- 8,870,417
----------- ------------ ------------ -------------
Net increase (decrease) in net
assets resulting from
operations...................... 1,351,307 39,516,098 225,617 12,107,423
----------- ------------ ------------ -------------
UNIT TRANSACTIONS:
Purchases........................ 832,400 5,392,017 549,395 4,595,725
Net transfers.................... (417,232) 37,450 851,783 2,974,576
Surrenders....................... (2,101,192) (13,048,670) (896,520) (7,855,498)
Net annuity transactions......... 15,744 (31,189) 270,889 543,432
----------- ------------ ------------ -------------
Net (decrease) increase in net
assets resulting from unit
transactions.................... (1,670,280) (7,650,392) 775,547 258,235
----------- ------------ ------------ -------------
Total (decrease) increase in net
assets.......................... (318,973) 31,865,706 1,001,164 12,365,658
NET ASSETS:
Beginning of period.............. 14,751,904 133,955,365 4,932,289 55,130,630
----------- ------------ ------------ -------------
End of period.................... $14,432,931 $165,821,071 $ 5,933,453 $ 67,496,288
----------- ------------ ------------ -------------
----------- ------------ ------------ -------------

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996

MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -------------
OPERATIONS:
Net investment income (loss)..... $ 766,825 $ 649,296 $ 180,280 $ 856,731
Capital gains income............. -- 4,599,796 -- 964,295
Net realized (loss) gain on
security transactions........... (40,872) 1,939,739 -- 35,540
Net unrealized (depreciation)
appreciation of investments
during the period............... (357,142) 18,075,624 -- 5,165,238
----------- ------------ ------------ -------------
Net increase (decrease) in net
assets resulting from
operations...................... 368,811 25,264,455 180,280 7,021,804
----------- ------------ ------------ -------------
UNIT TRANSACTIONS:
Purchases........................ 1,706,289 6,927,393 618,119 5,334,298
Net transfers.................... (122,846) (602,947) 628,335 1,428,268
Surrenders....................... (1,497,113) (7,342,209) (190,537) (2,001,572)
Net annuity transactions......... (95,669) (91,756) (64,000) 737,366
----------- ------------ ------------ -------------
Net (decrease) increase in net
assets resulting from unit
transactions.................... (9,339) (1,109,519) 991,917 5,498,360
----------- ------------ ------------ -------------
Total increase in net assets..... 359,472 24,154,936 1,172,197 12,520,164
NET ASSETS:
Beginning of period.............. 14,392,432 109,800,429 3,760,092 42,610,466
----------- ------------ ------------ -------------
End of period.................... $14,751,904 $133,955,365 $ 4,932,289 $ 55,130,630
----------- ------------ ------------ -------------
----------- ------------ ------------ -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ----------------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 23,610 $ (524,842) $ 164,703 $ 124,229 $ (29,030)
Capital gains income............. -- 6,234,258 -- 1,272,234 770,963
Net realized (loss) gain on
security transactions........... -- (406,564) 4,355 (50,915) (9,826)
Net unrealized appreciation
(depreciation) of investments
during the period............... -- 10,345,344 77,114 3,736,267 (815,682)
------------------- ----------------- --------------- ------------------ ------------------
Net increase (decrease) in net
assets resulting from
operations...................... 23,610 15,648,196 246,172 5,081,815 (83,575)
------------------- ----------------- --------------- ------------------ ------------------
UNIT TRANSACTIONS:
Purchases........................ 67,057 9,347,535 327,685 2,173,282 1,283,578
Net transfers.................... (1,102,863) 3,016,003 (254,745) 4,030,613 27,688
Surrenders....................... (217,863) (10,608,061) (405,827) (2,241,041) (1,550,593)
Net annuity transactions......... (245,098) 165,718 (17,654) 1,095,438 118,153
------------------- ----------------- --------------- ------------------ ------------------
Net (decrease) increase in net
assets resulting from unit
transactions.................... (1,498,767) 1,921,195 (350,541) 5,058,292 (121,174)
------------------- ----------------- --------------- ------------------ ------------------
Total (decrease) increase in net
assets.......................... (1,475,157) 17,569,391 (104,369) 10,140,107 (204,749)
NET ASSETS:
Beginning of period.............. 1,475,157 81,175,040 3,546,513 14,839,791 9,954,304
------------------- ----------------- --------------- ------------------ ------------------
End of period.................... $ -- $ 98,744,431 $ 3,442,144 $24,979,898 $ 9,749,555
------------------- ----------------- --------------- ------------------ ------------------
------------------- ----------------- --------------- ------------------ ------------------

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996

U.S. GOVERNMENT CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ----------------- --------------- ------------------ ------------------
OPERATIONS:
Net investment income (loss)..... $ 50,583 $ (303,100) $ 175,269 $ 148,270 $ 66,800
Capital gains income............. -- 3,808,440 -- 180,979 198,374
Net realized (loss) gain on
security transactions........... -- (9,432) (420) 4,403 78
Net unrealized (depreciation)
appreciation of investments
during the period............... -- 8,758,734 (42,001) 1,978,751 660,732
------------------- ----------------- --------------- ------------------ ------------------
Net increase (decrease) in net
assets resulting from
operations...................... 50,583 12,254,642 132,848 2,312,403 925,984
------------------- ----------------- --------------- ------------------ ------------------
UNIT TRANSACTIONS:
Purchases........................ 216,658 10,943,734 580,508 1,926,754 1,813,741
Net transfers.................... (114,911) 3,516,516 (284,121) 1,743,671 890,028
Surrenders....................... (72,481) (2,911,982) (140,986) (341,818) (482,530)
Net annuity transactions......... (5,945) 498,302 13,292 106,587 133,144
------------------- ----------------- --------------- ------------------ ------------------
Net (decrease) increase in net
assets resulting from unit
transactions.................... 23,321 12,046,570 168,693 3,435,194 2,354,383
------------------- ----------------- --------------- ------------------ ------------------
Total increase in net assets..... 73,904 24,301,212 301,541 5,747,597 3,280,367
NET ASSETS:
Beginning of period.............. 1,401,253 56,873,828 3,244,972 9,092,194 6,673,937
------------------- ----------------- --------------- ------------------ ------------------
End of period.................... $ 1,475,157 $ 81,175,040 $ 3,546,513 $14,839,791 $ 9,954,304
------------------- ----------------- --------------- ------------------ ------------------
------------------- ----------------- --------------- ------------------ ------------------

<CAPTION>
CALVERT
DIVIDEND AND RESPONSIBLY INVESTED
GROWTH FUND BALANCED PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
-------------------- --------------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 71,002 $ 36,766
Capital gains income............. 191,362 160,014
Net realized (loss) gain on
security transactions........... (5,106) (2,131)
Net unrealized appreciation
(depreciation) of investments
during the period............... 2,164,090 296,021
-------------------- --------------------
Net increase (decrease) in net
assets resulting from
operations...................... 2,421,348 490,670
-------------------- --------------------
UNIT TRANSACTIONS:
Purchases........................ 1,566,382 470,443
Net transfers.................... 4,575,985 39,186
Surrenders....................... (872,615) (273,570)
Net annuity transactions......... 460,142 (24,048)
-------------------- --------------------
Net (decrease) increase in net
assets resulting from unit
transactions.................... 5,729,894 212,011
-------------------- --------------------
Total (decrease) increase in net
assets.......................... 8,151,242 702,681
NET ASSETS:
Beginning of period.............. 6,024,464 2,661,229
-------------------- --------------------
End of period.................... $14,175,706 $ 3,363,910
-------------------- --------------------
-------------------- --------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 199
CALVERT
DIVIDEND AND RESPONSIBLY INVESTED
GROWTH FUND BALANCED PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
-------------------- --------------------
OPERATIONS:
Net investment income (loss)..... $ 45,397 $ 29,407
Capital gains income............. 27,195 140,994
Net realized (loss) gain on
security transactions........... 923 6,518
Net unrealized (depreciation)
appreciation of investments
during the period............... 667,057 78,661
-------------------- --------------------
Net increase (decrease) in net
assets resulting from
operations...................... 740,572 255,580
-------------------- --------------------
UNIT TRANSACTIONS:
Purchases........................ 929,631 501,957
Net transfers.................... 3,564,656 86,346
Surrenders....................... (134,182) (81,242)
Net annuity transactions......... 176,775 135,085
-------------------- --------------------
Net (decrease) increase in net
assets resulting from unit
transactions.................... 4,536,880 642,146
-------------------- --------------------
Total increase in net assets..... 5,277,452 897,726
NET ASSETS:
Beginning of period.............. 747,012 1,763,503
-------------------- --------------------
End of period.................... $ 6,024,464 $ 2,661,229
-------------------- --------------------
-------------------- --------------------
</TABLE>
<PAGE>

- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Hartford Life Insurance Company:

We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company (the "Company") and subsidiaries as of December 31, 1997 and
1996, and the related Consolidated Statements of Income, Stockholder's Equity
and Cash Flows for each of the three years in the period ended December 31,
1997. These consolidated financial statements and the schedules referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedules based on our
audits.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Hartford Life
Insurance Company and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in Index to
Consolidated Financial Statements and Schedules are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
January 27, 1998
<PAGE>

- --------------------------------------------------------------------------------

HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1997 1996 1995
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other considerations............... $1,637 $1,705 $1,487
Net investment income........................... 1,368 1,397 1,328
Net realized capital gains (losses)............. 4 (213) (11)
------ ------ ------
Total revenues................................ 3,009 2,889 2,804
------ ------ ------
Benefits, claims and expenses
Benefits, claims and claim adjustment
expenses....................................... 1,379 1,535 1,422
Amortization of deferred policy acquisition
costs.......................................... 335 234 199
Dividends to policyholders...................... 240 635 675
Other expenses.................................. 586 427 317
------ ------ ------
Total benefits, claims and expenses........... 2,540 2,831 2,613
------ ------ ------
Income before income tax expense................ 469 58 191
Income tax expense.............................. 167 20 62
------ ------ ------
Net income........................................ $ 302 $ 38 $ 129
------ ------ ------
------ ------ ------
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>

- --------------------------------------------------------------------------------

HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1997 1996
------- -------
<S> <C> <C>
(IN MILLIONS,
EXCEPT FOR SHARE
DATA)
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost of $13,885 and
$13,579)....................................... $14,176 $13,624
Equity securities, at fair value................ 180 119
Policy loans, at outstanding balance............ 3,756 3,836
Other investments, at cost...................... 47 56
------- -------
Total investments............................. 18,159 17,635
Cash............................................ 54 43
Premiums receivable and agents' balances........ 18 137
Accrued investment income....................... 330 407
Reinsurance recoverables........................ 6,325 6,259
Deferred policy acquisition costs............... 3,315 2,760
Deferred income tax............................. 348 474
Other assets.................................... 352 357
Separate account assets......................... 69,055 49,690
------- -------
Total assets.................................. $97,956 $77,762
------- -------
------- -------

Liabilities
Future policy benefits.......................... $ 3,270 $ 2,474
Other policyholder funds........................ 21,034 22,134
Other liabilities............................... 2,254 1,572
Separate account liabilities.................... 69,055 49,690
------- -------
Total liabilities............................. 95,613 75,870
------- -------

Stockholder's Equity
Common stock -- 1,000 shares authorized, issued
and outstanding, par value $5,690.............. 6 6
Additional paid in capital...................... 1,045 1,045
Net unrealized capital gains on securities, net
of tax......................................... 179 30
Retained earnings............................... 1,113 811
------- -------
Total stockholder's equity.................... 2,343 1,892
------- -------
Total liabilities and stockholder's equity...... $97,956 $77,762
------- -------
------- -------
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>

- --------------------------------------------------------------------------------

HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
NET UNREALIZED
CAPITAL GAINS
ADDITIONAL (LOSSES) ON TOTAL
COMMON PAID IN SECURITIES, RETAINED STOCKHOLDER'S
STOCK CAPITAL NET OF TAX EARNINGS EQUITY
------ -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
Balance, December 31, 1994.............. $6 $ 826 $(654) $ 644 $ 822
Net income............................ -- -- -- 129 129
Capital contribution.................. -- 181 -- -- 181
Change in net unrealized capital gains
(losses) on securities, net of tax... -- -- 597 -- 597
--
------ ------ ----------- ------
Balance, December 31, 1995.............. 6 1,007 (57) 773 1,729
Net income............................ -- -- -- 38 38
Capital contribution.................. -- 38 -- -- 38
Change in net unrealized capital gains
(losses) on securities, net of tax... -- -- 87 -- 87
--
------ ------ ----------- ------
Balance, December 31, 1996.............. 6 1,045 30 811 1,892
Net income............................ -- -- -- 302 302
Change in net unrealized capital gains
(losses) on securities, net of tax... -- -- 149 -- 149
--
------ ------ ----------- ------
Balance, December 31, 1997.............. $6 $1,045 $179 $1,113 $2,343
--
--
------ ------ ----------- ------
------ ------ ----------- ------
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>

- --------------------------------------------------------------------------------

HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1997 1996 1995
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Operating Activities
Net income............................ $ 302 $ 38 $ 129
Adjustments to reconcile net income to
cash provided by operating activities
Depreciation and amortization......... 8 14 21
Net realized capital (gains) losses... (4) 213 11
Decrease (increase) in deferred income
taxes................................ 40 (102) (172)
Increase in deferred policy
acquisition costs.................... (555) (572) (379)
Decrease (increase) in premiums
receivable and agents' balances...... 119 10 (81)
Decrease (increase) in accrued
investment income.................... 77 (13) (16)
Decrease (increase) in other assets... 52 (132) (177)
(Increase) decrease in reinsurance
recoverables......................... (416) 179 (35)
Increase (decrease) in liabilities for
future policy benefits............... 796 (92) 483
Increase in other liabilities......... 379 477 281
-------- -------- --------
Cash provided by operating
activities......................... 798 20 65
-------- -------- --------
Investing Activities
Purchases of fixed maturity
investments.......................... (6,231) (5,747) (6,228)
Sales of fixed maturity investments... 4,232 3,459 4,845
Maturities and principal paydowns of
fixed maturity investments........... 2,329 2,693 1,741
Net sales (purchases) of other
investments.......................... 24 (107) (871)
Net (purchases) sales of short-term
investments.......................... (638) 84 (24)
-------- -------- --------
Cash (used for) provided by
investing activities............... (284) 382 (537)
-------- -------- --------
Financing Activities
Capital contribution.................. -- 38 --
Net (disbursements for) receipts from
investment and universal life-type
contracts (charged against) credited
to policyholder accounts............. (503) (443) 498
-------- -------- --------
Cash (used for) provided by
financing activities............... (503) (405) 498
-------- -------- --------
Increase (decrease) in cash........... 11 (3) 26
Cash -- beginning of year............. 43 46 20
-------- -------- --------
Cash -- end of year................... $ 54 $ 43 $ 46
-------- -------- --------
-------- -------- --------
Supplemental Disclosure of Cash Flow
Information:
Net Cash Paid During the Year for:
Income taxes.......................... $ 9 $ 189 $ 162

Noncash Financing Activities:
Capital contribution.................. $ -- $ -- $ 181
-------- -------- --------
-------- -------- --------
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>

- --------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA UNLESS OTHERWISE STATED)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

These consolidated financial statements include Hartford Life Insurance
Company and its wholly-owned subsidiaries (the "Company"), ITT Hartford Life and
Annuity Insurance Company ("ILA") and ITT Hartford International Life
Reassurance Corporation ("HLRe"), formerly American Skandia Life Reinsurance
Corporation. The Company is a wholly-owned subsidiary of Hartford Life and
Accident Insurance Company ("HLA"), a wholly-owned subsidiary of Hartford Life,
Inc. ("Hartford Life"). Hartford Life is a direct subsidiary of Hartford
Accident and Indemnity Company ("HA&I"), an indirect subsidiary of The Hartford
Financial Services Group, Inc. ("The Hartford"). On February 10, 1997, Hartford
Life filed a registration statement, as amended, with the Securities and
Exchange Commission relating to an Initial Public Offering ("IPO") of the
Hartford Life's Class A Common Stock. Pursuant to the IPO on May 22, 1997,
Hartford Life sold to the public 26 million shares at $28.25 per share and
received net proceeds of $687. Of the proceeds, $527 was used to retire debt
related to Hartford Life's outstanding promissory notes and line of credit with
the remaining $160 contributed by Hartford Life to HLA to support growth in its
core businesses.

On December 19, 1995, ITT Industries, Inc. (formerly ITT Corporation)
("ITT") distributed all the outstanding shares of capital stock of The Hartford
to ITT stockholders of record on such date. As a result, The Hartford became an
independent, publicly traded company.

Along with its parent, the Company is a leading insurance and financial
services company which provides (a) investment products such as individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services and mutual funds for savings and
retirement needs; (b) life insurance for income protection and estate planning;
and (c) employee benefits products such as group life and group disability
insurance and corporate owned life insurance.

2. SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PRESENTATION

These consolidated financial statements present the financial position,
results of operations and cash flows of the Company. All material intercompany
transactions and balances between the Company, its subsidiaries and affiliates
have been eliminated. The consolidated financial statements are prepared on the
basis of generally accepted accounting principles which differ materially from
the statutory accounting practices prescribed by various insurance regulatory
authorities.

The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The most
significant estimates include those used in determining deferred policy
acquisition costs and the liability for future policy benefits and other
policyholder funds. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.

Certain reclassifications have been made to prior year financial information
to conform to the current year presentation.

(B) CHANGES IN ACCOUNTING PRINCIPLES

In December 1997, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") No. 97-3 "Accounting by Insurance
and Other Enterprises for Insurance Related Assessments". This SOP provides
guidance on accounting by insurance and other enterprises for assessments
related to insurance activities. Specifically, the SOP provides guidance on when
a guaranty fund or other assessment should be recognized, how to measure the
liability, and what information should be disclosed. This SOP will be effective
for fiscal years beginning after December 15, 1998. Adoption of SOP 97-3 is not
expected to have a material impact on the Company's financial condition or
results of operations.

On November 14, 1996, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 96-12, "Recognition of Interest Income and Balance Sheet
Classification of Structured Notes". This EITF issue requires companies to
record income on certain structured securities on a retrospective interest
method. The Company adopted EITF No. 96-12 for structured securities acquired
after November 14, 1996. Adoption of EITF No. 96-12 did not have a material
effect on the Company's financial condition or results of operations.

In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities"
which is effective for transfers and servicing of financial
<PAGE>

- --------------------------------------------------------------------------------

assets and extinguishments of liabilities occurring after December 31, 1996.
This statement established criteria for determining whether transferred assets
should be accounted for as sales or secured borrowings. Subsequently, in
December 1996, the FASB issued SFAS No. 127, "Deferral of Effective Date of
Certain Provisions of FASB Statement No. 125", which defers the effective date
of certain provisions of SFAS No. 125 for one year. Adoption of SFAS No. 125 is
not expected to have a material effect on the Company's financial condition or
results of operations.

Effective January 1, 1996, the Company adopted SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of". This statement establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. Adoption of SFAS No. 121 did not
have a material effect on the Company's financial condition or results of
operations.

The Company's cash flows were not impacted by these changes in accounting
principles.

Revenues for universal life-type policies and investment products consist of
policy charges for the cost of insurance, policy administration and surrender
charges assessed to policy account balances and are recognized in the period in
which services are provided. Premiums for traditional life insurance and
disability policies are recognized as revenues when they are due from
policyholders.

(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS

Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal and
mortality assumptions appropriate at the time the policies were issued. Health
reserves, which are the result of sales of group long-term and short-term
disability, stop loss, Medicare Supplement and individual disability products,
are stated at amounts determined by estimates on individual cases and estimates
of unreported claims based on past experience. Liabilities for universal
life-type and investment contracts are stated at policyholder account values
before surrender charges.

(E) POLICYHOLDER REALIZED CAPITAL GAINS AND LOSSES

Realized capital gains and losses on security transactions associated with
the Company's immediate participation guaranteed contracts are excluded from
revenues and deferred over the expected maturity of the securities, since under
the terms of the contracts the realized gains and losses will be credited to
policyholders in future years as they are entitled to receive them.

(F) INVESTMENTS

The Company's investments in fixed maturities include bonds and commercial
paper which are considered "available for sale" and accordingly are carried at
fair value with the after-tax difference from cost reflected as a component of
Stockholder's Equity designated "Net unrealized capital gains (losses) on
securities, net of tax". Equity securities, which include common and
non-redeemable preferred stocks, are carried at fair values with the after-tax
difference from cost reflected in Stockholder's Equity. Policy loans are carried
at outstanding balance which approximates fair value. Net realized capital gains
and losses, after deducting pension policyholders' share, are reported as a
component of revenue and are determined on a specific identification basis.

The Company's accounting policy for impairment requires recognition of an
other than temporary impairment charge on a security if it is determined that
the Company is unable to recover all amounts due under the contractual
obligations of the security. In addition, for securities expected to be sold, an
other than temporary impairment charge is recognized if the Company does not
expect the fair value of a security to recover to cost or amortized cost prior
to the expected date of sale. Once an impairment charge has been recorded, the
Company then continues to review the other than temporarily impaired securities
for appropriate valuation on an on-going basis.

During 1996, it was determined that certain individual securities within the
investment portfolio supporting the Company's block of guaranteed rate contract
business written prior to 1995 ("Closed Book GRC") could not recover to
amortized cost prior to sale. Therefore, an other than temporary impairment loss
of $88, after-tax, was recorded.

(G) DERIVATIVE INSTRUMENTS

The Company uses a variety of derivative instruments including swaps, caps,
floors, forwards and exchange traded financial futures and options as part of an
overall risk management strategy. These instruments are used as a means of
hedging exposure to price, foreign currency and/ or interest rate risk on
planned investment purchases or existing assets and liabilities. The Company
does not hold or issue derivative instruments for trading purposes. The
Company's accounting for derivative instruments used to manage risk is in
accordance with the concepts established in SFAS No. 80, "Accounting for Futures
Contracts", SFAS No. 52, "Foreign Currency Translation", AICPA SOP 86-2,
"Accounting for Options" and various EITF pronouncements. Written options are
used, in all cases in conjunction with other assets and derivatives, as part of
the Company's asset and liability management strategy. Derivative instruments
are carried at values consistent with the asset or liability being hedged.
Derivative instruments used to hedge fixed maturities or equity securities are
carried at fair value
<PAGE>

- --------------------------------------------------------------------------------

with the after-tax difference from cost reflected in Stockholder's Equity.
Derivative instruments used to hedge other invested assets or liabilities are
carried at cost.

Derivative instruments must be designated at inception as a hedge and
measured for effectiveness both at inception and on an on-going basis. The
Company's minimum correlation threshold for hedge designation is 80%. If
correlation, which is assessed monthly and measured based on a rolling three
month average, falls below 80%, hedge accounting will be terminated. Derivative
instruments used to create a synthetic asset must meet synthetic accounting
criteria including designation at inception and consistency of terms between the
synthetic and the instrument being replicated. Consistent with industry
practice, synthetic instruments are accounted for like the financial instrument
it is intended to replicate. Derivative instruments which fail to meet risk
management criteria, subsequent to acquisition, are marked to market with the
impact reflected in the Consolidated Statements of Income.

Gains or losses on financial futures contracts entered into in anticipation
of the investment of future receipt of product cash flows are deferred and, at
the time of the ultimate investment purchase, reflected as an adjustment to the
cost basis of the purchased asset. Gains or losses on futures used in invested
asset risk management are deferred and adjusted into the cost basis of the
hedged asset when the contract futures are closed, except for futures used in
duration hedging which are deferred and basis adjusted on a quarterly basis. The
basis adjustments are amortized into net investment income over the remaining
asset life.

Open forward commitment contracts are marked to market through Stockholder's
Equity. Such contracts are accounted for at settlement by recording the purchase
of the specified securities at the previously committed price. Gains or losses
resulting from the termination of forward commitment contracts before the
delivery of the securities are recognized immediately in the Consolidated
Statements of Income as a component of net investment income.

The cost of options entered into as part of a risk management strategy are
basis adjusted to the underlying asset or liability and amortized over the
remaining life of the option. Gains or losses on expiration or termination are
adjusted into the basis of the underlying asset or liability and amortized over
the remaining asset life.

Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to investment income. Should the swap be terminated, the gain or loss is
adjusted into the basis of the asset or liability and amortized over the
remaining life. Should the hedged asset be sold or liability terminated without
terminating the swap position, any swap gains or losses are immediately
recognized in net investment income. Interest rate swaps purchased in
anticipation of an asset purchase ("anticipatory transaction") are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the Consolidated Statements of Income while the
change in market value is recognized as an unrealized capital gain or loss.

Premiums paid on purchased floor or cap agreements and the premium received
on issued cap or floor agreements (used for risk management) are adjusted into
the basis of the applicable asset and amortized over the asset life. Gains or
losses on termination of such positions are adjusted into the basis of the asset
or liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.

Forward exchange contracts and foreign currency swaps are accounted for in
accordance with SFAS No. 52. Changes in the spot rate of instruments designated
as hedges of the net investment in a foreign subsidiary are reflected in the
cumulative translation adjustments component of Stockholder's Equity. Cash flows
from futures, options, and swaps, accounted for as hedges, are included with the
cash flows of the item being hedged.

(H) SEPARATE ACCOUNTS

The Company maintains separate account assets and liabilities which are
reported at fair value. Separate account assets are segregated from other
investments, and investment income and gains and losses accrue directly to the
policyholders. Separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts, wherein the policyholder assumes the
investment risk, and guaranteed separate account assets, wherein the Company
contractually guarantees either a minimum return or account value to the
policyholder.

(I) DEFERRED POLICY ACQUISITION COSTS

Policy acquisition costs, which include commissions and certain underwriting
expenses associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, generally 20 years. Generally, acquisition
costs are deferred and amortized using the retrospective deposit method. Under
the retrospective deposit method, acquisition costs are amortized in proportion
to the present value of expected gross profits from surrender charges,
investment, mortality and expense margins. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization
<PAGE>

- --------------------------------------------------------------------------------

for the books of business are reestimated and adjusted by a cumulative charge or
credit to income.

The Company's other expenses include the following:

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Commissions........................... $ 976 $ 848 $ 619
Deferred acquisition costs............ (862) (823) (618)
Other................................. 472 402 316
--------- --------- ---------
Total other expenses.............. $ 586 $ 427 $ 317
--------- --------- ---------
--------- --------- ---------
</TABLE>

(J) DIVIDENDS TO POLICYHOLDERS

Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings of the life insurance
subsidiaries of the Company. The participating insurance in force accounted for
55%, 44%, and 41% in 1997, 1996, and 1995, respectively, of total insurance in
force.

3. INITIAL PUBLIC OFFERING

On February 10, 1997, Hartford Life filed a registration statement, as
amended, with the Securities and Exchange Commission, relating to the IPO of
Hartford Life's Class A Common Stock. Pursuant to the IPO on May 22, 1997,
Hartford Life sold to the public 26 million shares at $28.25 per share and
received proceeds, net of offering expenses, of $687. Of the proceeds, $527 was
used to retire debt related to Hartford Life's promissory notes outstanding and
line of credit. The remaining $160 was contributed by Hartford Life to HLA to
support growth in its core businesses. The 26 million shares sold in the
Offering represent approximately 18.6% of the equity ownership in Hartford Life
and approximately 4.4% of the combined voting power of Hartford Life's Class A
and Class B Common Stock. The Hartford owns all of the 114 million outstanding
shares of Class B Common Stock of Hartford Life, representing approximately
81.4% of the equity ownership in Hartford Life and approximately 95.6% of the
combined voting power of Hartford Life's Class A and Class B Common Stock.
Holders of Class A Common Stock generally have identical rights to the holders
of Class B Common Stock except that the holders of Class A Common Stock are
entitled to one vote per share while holders of Class B Common Stock are
entitled to five votes per share on all matters submitted to a vote of Hartford
Life's stockholders.

4. INVESTMENTS AND DERIVATIVE INSTRUMENTS

(A) COMPONENTS OF NET INVESTMENT INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Interest income from fixed
maturities......................... $ 932 $ 918 $ 996
Interest income from policy loans... 425 477 342
Income from other investments....... 26 15 1
--------- --------- ---------
Gross investment income............. 1,383 1,410 1,339
Less: Investment expenses........... 15 13 11
--------- --------- ---------
Net investment income............... $ 1,368 $ 1,397 $ 1,328
--------- --------- ---------
--------- --------- ---------
</TABLE>

(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------------
1997 1996 1995
----- --------- ---------
<S> <C> <C> <C>
Fixed maturities......................... $ (7) $ (201) $ 23
Equity securities........................ 12 2 (6)
Real estate and other.................... (1) (4) (25)
Less: Increase in liability to
policyholders for realized capital
gains................................... -- (10) (3)
--- --------- ---------
Net realized capital gains (losses) $ 4 $ (213) $ (11)
--- --------- ---------
--- --------- ---------
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Gross unrealized capital gains.............. $ 14 $ 13 $ 4
Gross unrealized capital losses............. -- (1) (2)
--- --- ---
Net unrealized capital gains................ 14 12 2
Deferred income tax expense................. 5 4 1
--- --- ---
Net unrealized capital gains, net of tax.... 9 8 1
Balance -- beginning of year................ 8 1 (6)
--- --- ---
Net change in unrealized capital gains
(losses) on equity securities.............. $ 1 $ 7 $ 7
--- --- ---
--- --- ---
</TABLE>

<PAGE>

- --------------------------------------------------------------------------------

(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Gross unrealized capital gains................................... $ 371 $ 386 $ 529
Gross unrealized capital losses.................................. (80) (341) (569)
Unrealized capital (gains) losses credited to policyholders...... (30) (11) (52)
----- ----- -----
Net unrealized capital gains (losses)............................ 261 34 (92)
Deferred income tax expense (benefit)............................ 91 12 (34)
----- ----- -----
Net unrealized capital gains (losses), net of tax................ 170 22 (58)
Balance -- beginning of year..................................... 22 (58) (648)
----- ----- -----
Net change in unrealized capital gains (losses) on fixed
maturities...................................................... $ 148 $ 80 $ 590
----- ----- -----
----- ----- -----
</TABLE>

(E) FIXED MATURITY INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored)...................................... $ 217 $ 3 $ (1) $ 219
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,175 64 (35) 1,204
States, municipalities and political subdivisions................ 211 7 (1) 217
International governments........................................ 376 20 (3) 393
Public utilities................................................. 871 26 (3) 894
All other corporate including international...................... 5,033 200 (25) 5,208
All other corporate -- asset backed.............................. 4,091 41 (8) 4,124
Short-term investments........................................... 1,318 -- -- 1,318
Certificates of deposit.......................................... 593 10 (4) 599
---------- ----- ----- ----------
Total fixed maturities....................................... $13,885 $371 $(80) $14,176
---------- ----- ----- ----------
---------- ----- ----- ----------
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored)...................................... $ 166 $ 12 $ (3) $ 175
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,970 161 (128) 2,003
States, municipalities and political subdivisions................ 373 6 (11) 368
International governments........................................ 281 12 (4) 289
Public utilities................................................. 877 12 (8) 881
All other corporate including international...................... 4,656 120 (107) 4,669
All other corporate -- asset backed.............................. 3,601 49 (59) 3,591
Short-term investments........................................... 1,655 14 (21) 1,648
---------- ----- ----------- ----------
Total fixed maturities....................................... $13,579 $386 $(341) $13,624
---------- ----- ----------- ----------
---------- ----- ----------- ----------
</TABLE>

The amortized cost and estimated fair value of fixed maturity investments at
December 31, 1997 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. Asset backed securities, including MBS and CMO's, are distributed to
maturity year based on the Company's estimates of the rate of future prepayments
of principal over the remaining lives of the securities. These estimates are
developed using prepayment speeds provided in broker consensus data. Such
estimates are derived from prepayment speeds experienced at the interest rate
levels projected for the applicable underlying collateral and can be expected to
vary from actual experience.

MATURITY

<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
----------- -----------
<S> <C> <C>
One year or less......................... $ 2,838 $ 2,867
Over one year through five years......... 5,528 5,595
Over five years through ten years........ 3,094 3,156
Over ten years........................... 2,425 2,558
----------- -----------
Total................................ $ 13,885 $ 14,176
----------- -----------
----------- -----------
</TABLE>

<PAGE>

- --------------------------------------------------------------------------------

Sales of fixed maturities, excluding short-term fixed maturities, for the
years ended December 31, 1997, 1996 and 1995 resulted in proceeds of $4.2
billion, $3.5 billion and $4.8 billion, gross realized capital gains of $169,
$87 and $91, gross realized capital losses (including writedowns) of $176, $298
and $72, respectively. Sales of equity security investments for the years ended
December 31, 1997, 1996 and 1995 resulted in proceeds of $132, $74 and $64,
gross realized capital gains of $12, $2 and $28 and gross realized capital
losses of $0, $0 and $59, respectively.

(F) CONCENTRATION OF CREDIT RISK

Excluding investments in U.S. government and agencies, the Company has not
invested in the securities of a single issuer in amounts greater than 10% of
stockholder's equity at December 31, 1997.

(G) DERIVATIVE INSTRUMENTS

The Company utilizes a variety of derivative instruments, including swaps,
caps, floors, forwards and exchange traded futures and options, in accordance
with Company policy and in order to achieve one of three Company approved
objectives: to hedge risk arising from interest rate, price or currency exchange
rate volatility; to manage liquidity; or, to control transactions costs. The
Company utilizes derivative instruments to manage market risk through four
principal risk management strategies: hedging anticipated transactions, hedging
liability instruments, hedging invested assets and hedging portfolios of assets
and/or liabilities. The Company does not trade in these instruments for the
express purpose of earning trading profits.
The Company maintains a derivatives counterparty exposure policy which
establishes market-based credit limits, favors long-term financial stability and
creditworthiness, and typically requires credit enhancement/credit risk reducing
agreements. Credit risk is measured as the amount owed to the Company based on
current market conditions and potential payment obligations between the Company
and its counterparties. Credit exposures are quantified weekly and netted, and
collateral is pledged to or held by the Company to the extent the current value
of derivatives exceed exposure policy thresholds.

The Company's derivative program is monitored by an internal compliance unit
and is reviewed by senior management and Hartford Life's Finance Committee.
Notional amounts, which represent the basis upon which pay or receive amounts
are calculated and are not reflective of credit risk, pertaining to derivative
financial instruments (excluding the Company's guaranteed separate account
derivative investments), totaled $6.5 billion and $9.9 billion ($4.6 billion and
$7.4 billion related to the Company's investments, $1.9 billion and $2.5 billion
on the Company's liabilities) at December 31, 1997 and 1996, respectively.

The table below provides a summary of derivative instruments held by the
Company at December 31, 1997 and 1996, segregated by major investment and
liability category:

<TABLE>
<CAPTION>
1997 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
----------------------------------------------------------------------------------
PURCHASED
CAPS, FOREIGN
TOTAL ISSUED FLOORS INTEREST CURRENCY TOTAL
CARRYING CAPS & AND FUTURES RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS OPTIONS (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- -------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities (excluding
inverse floaters and
anticipatory)..................... $ 5,253 $ 500 $ 1,404 $ 28 $ 221 $-- $ 2,153
Inverse floaters (1)............... 75 47 80 -- 25 -- 152
Anticipatory (4)................... -- -- -- -- -- -- --
Other bonds and notes.............. 7,531 462 460 22 1,258 91 2,293
Short-term investments............. 1,317 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total fixed maturities......... 14,176 1,009 1,944 50 1,504 91 4,598
Equity securities, policy loans and
other investments................. 3,983 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total investments.............. $ 18,159 $ 1,009 $ 1,944 $ 50 $ 1,504 $91 $ 4,598
Long term debt................. -- -- -- -- -- -- --
Other policy claims............ -- 10 150 -- 1,747 -- 1,907
-------- -------- ---------- --- ---------- --- ----------
Total derivatives -- notional
value........................... $ 1,019 $ 2,094 $ 50 $ 3,251 $91 $ 6,505
-------- -------- ---------- --- ---------- --- ----------
Total derivatives -- fair value.... $ (8) $ 23 $ -- $ 19 $(6) $ 28
-------- -------- ---------- --- ---------- --- ----------
-------- -------- ---------- --- ---------- --- ----------
</TABLE>

<PAGE>

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1996 --AMOUNT HEDGED (NOTIONAL AMOUNTS)
--------------------------------------------------------------------------
FOREIGN
TOTAL ISSUED PURCHASED INTEREST CURRENCY TOTAL
CARRYING CAPS & CAPS, FLOORS RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS AND OPTIONS FUTURES (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- ------- ------------ ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities (excluding
inverse floaters and
anticipatory)..................... $ 5,242 $ 500 $ 2,454 $ -- $ 941 $ -- $3,895
Inverse floaters (1)............... 352 98 856 -- 346 -- 1,300
Anticipatory (4)................... -- -- -- 132 -- -- 132
Other bonds and notes.............. 7,369 425 440 5 1,079 125 2,074
Short-term investments............. 661 -- -- -- -- -- --
-------- ------- ------------ ----- --------- -------- -------
Total fixed maturities......... 13,624 1,023 3,750 137 2,366 125 7,401
Equity securities, policy loans and
other investments................. 4,011 -- -- -- 19 -- 19
-------- ------- ------------ ----- --------- -------- -------
Total investments.............. $ 17,635 $ 1,023 $ 3,750 $ 137 $ 2,385 $ 125 $7,420
Long term debt................. -- -- -- -- -- -- --
Other policy claims............ -- 10 150 -- 2,351 -- 2,511
-------- ------- ------------ ----- --------- -------- -------
Total derivatives -- notional
value......................... $ 1,033 $ 3,900 $ 137 $ 4,736 $ 125 $9,931
-------- ------- ------------ ----- --------- -------- -------
Total derivatives -- fair
value......................... $ (10) $ 38 $ -- $ 2 $ (9 ) $ 21
-------- ------- ------------ ----- --------- -------- -------
-------- ------- ------------ ----- --------- -------- -------
</TABLE>

- ---------

(1) Inverse floaters are variations of collateralized mortgage obligations
("CMO's") for which the coupon rates move inversely with an index rate such as
the London interbank offered rate ("LIBOR"). The risk to principal is considered
negligible as the underlying collateral for the securities is guaranteed or
sponsored by government agencies. To address the volatility risk created by the
coupon variability, the Company uses a variety of derivative instruments,
primarily interest rate swaps, caps and floors.

(2) As of December 31, 1997 and 1996, over 44% and 39% , respectively, of
the notional futures contracts expire within one year.

(3) As of December 31, 1997 and 1996, over 16% and 42%, respectively, of
foreign currency swaps expire within one year; the balance matures over the
succeeding 9 years.

(4) Deferred gains and losses on anticipatory transactions are included in
the carrying value of fixed maturities in the Consolidated Balance Sheets. At
the time of the ultimate purchase, they are reflected as a basis adjustment to
the purchased asset. At December 31, 1997, the Company had $0 deferred gains and
losses. At December 31, 1996, the Company had $0.9 in net deferred gains for
futures, interest rate swaps and purchased options of which $2.0 was basis
adjusted in 1997.

The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1997 and 1996:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 MATURITIES/ DECEMBER 31, 1997
NOTIONAL AMOUNT ADDITIONS TERMINATIONS (1) NOTIONAL AMOUNT
----------------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
BY DERIVATIVE TYPE
Caps......................................... $1,755 $ 14 $ 530 $1,239
Floors....................................... 3,168 28 1,332 1,864
Swaps/Forwards............................... 4,861 941 2,460 3,342
Futures...................................... 137 131 218 50
Options...................................... 10 -- -- 10
------- -------- ------- -------
Total.................................... $9,931 $1,114 $4,540 $6,505
------- -------- ------- -------
BY STRATEGY
Liability.................................... $2,511 $ 191 $ 795 $1,907
Anticipatory................................. 132 4 136 --
Asset........................................ 2,112 739 1,046 1,805
Portfolio.................................... 5,176 180 2,563 2,793
------- -------- ------- -------
Total.................................... $9,931 $1,114 $4,540 $6,505
------- -------- ------- -------
------- -------- ------- -------
</TABLE>

- ---------

(1) During 1997, the Company had no significant gains or losses on terminations
of hedge positions using derivative financial instruments.
<PAGE>

- --------------------------------------------------------------------------------

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107 "Disclosure about Fair
Value of Financial Instruments" requires disclosure of fair value information of
financial instruments. For certain financial instruments where quoted market
prices are not available, other independent valuation techniques and assumptions
are used. Because considerable judgment is used, these estimates are not
necessarily indicative of amounts that could be realized in a current market
exchange. SFAS No. 107 excludes certain financial instruments from disclosure,
including insurance contracts.

For cash, short-term investments, accounts receivable, policy loans,
mortgage loans and other liabilities, carrying amounts on the Consolidated
Balance Sheets approximate fair value.

Fair value for fixed maturities and marketable equity securities are based
upon quoted market prices. Fair value for securities that are not publicly
traded are analytically determined. These amounts are disclosed in Note 4 of
Notes to Consolidated Financial Statements.

The fair value of derivative financial instruments, including swaps, caps,
floors, futures, options and forward commitments, is determined using a pricing
model which is validated through quarterly comparison to dealer quoted prices.
Amounts are disclosed in Note 4 of Notes to Consolidated Financial Statements.

Fair value for partnerships and trusts are based on external market
valuations from partnership and trust management.

Other policy claims and benefits payable fair value information is
determined by estimating future cash flows, discounted at the current market
rate.

The carrying amount and fair values of the Company's financial instruments
at December 31, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ------- --------- -------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities..................................... $ 14,176 $14,176 $ 13,624 $13,624
Equity securities.................................... 180 180 119 119
Policy loans......................................... 3,756 3,756 3,836 3,836
Mortgage loans....................................... -- -- 2 2
Investments in partnerships, trusts and other........ 47 91 54 104
LIABILITIES
Other policy benefits................................ $ 11,769 $11,755 $ 11,707 $11,469
</TABLE>

6. SEPARATE ACCOUNTS

The Company maintained separate account assets and liabilities totaling
$69.1 billion and $49.7 billion at December 31, 1997 and 1996, respectively,
which are reported at fair value. Separate account assets are segregated from
other investments and net investment income and net realized capital gains and
losses accrue directly to the policyholder. Separate accounts reflect two
categories of risk assumption: non-guaranteed separate accounts totaling $58.6
billion and $39.4 billion at December 31, 1997 and 1996, respectively, wherein
the policyholder assumes the investment risk, and guaranteed separate accounts
totaling $10.5 and $10.3 billion at December 31, 1997 and 1996, respectively,
wherein the Company contractually guarantees either a minimum return or account
value to the policyholder. Included in the non-guaranteed category were policy
loans totaling $1.9 billion and $2.0 billion at December 31, 1997 and 1996,
respectively. Net investment income (including net realized capital gains and
losses) and interest credited to policyholders on separate account assets are
not reflected in the Consolidated Statements of Income.

Separate account management fees were $699, $538 and $387 in 1997, 1996 and
1995, respectively. The guaranteed separate accounts include fixed market value
adjusted individual annuity and modified guaranteed life insurance. The average
credited interest rate on these contracts was 6.52% at December 31, 1997. The
assets that support these liabilities were comprised of $10.2 billion in fixed
maturities as of December 31, 1997. The portfolios are segregated from other
investments and are managed to minimize liquidity and interest rate risk. In
order to minimize the risk of disintermediation associated with early
withdrawals, fixed MVA annuity and modified guaranteed life insurance contracts
carry a graded surrender charge as well as a market value adjustment. Additional
investment risk is hedged using a variety of derivatives which totaled $119 in
carrying value and $3.0 billion in notional amounts as of December 31, 1997.
<PAGE>

- --------------------------------------------------------------------------------

7. INCOME TAX

Hartford Life and The Hartford have entered into a tax sharing agreement
under which each member in the consolidated U.S. Federal income tax return will
make payments between them such that, with respect to any period, the amount of
taxes to be paid by the Company, subject to certain adjustments, generally will
be determined as though the Company were filing separate Federal, state and
local income tax returns.

As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of Hartford Life, the Company will be included for
Federal income tax purposes in the affiliated group of which The Hartford is the
common parent. To the extent allowed by law, it is the intention of The Hartford
and its subsidiaries to continue to file a single consolidated Federal income
tax return. The Company will continue to remit (receive from) The Hartford a
current income tax provision (benefit) computed in accordance with such tax
sharing agreement. The Company's effective tax rate was 36%, 35% and 32% in
1997, 1996 and 1995, respectively.

Income tax expense is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
1997 1996 1995
---- ------ ------
<S> <C> <C> <C>
Current...................................... $119 $ 122 $ 211
Deferred..................................... 48 (102) (149)
---- ------ ------
Income tax expense......................... $167 $ 20 $ 62
---- ------ ------
---- ------ ------
</TABLE>

A reconciliation of the tax provision at the U.S. Federal statutory rate to
the provision for income taxes is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
--------- ----- -----
<S> <C> <C> <C>
Tax provision at the U.S. Federal statutory
rate...................................... $ 164 $ 20 $ 67
Tax-exempt income.......................... -- -- (3)
Foreign tax credit......................... -- -- (4)
Other...................................... 3 -- 2
--------- --- ---
Total.................................... $ 167 $ 20 $ 62
--------- --- ---
--------- --- ---
</TABLE>

Deferred tax assets include the following at December 31:

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Tax return deferred acquisition costs............ $ 639 $ 514
Financial statement deferred acquisition costs
and reserves.................................... (366) (242)
Employee benefits................................ 5 8
Net unrealized capital gains on securities....... (96) (16)
Investments and other............................ 166 210
--------- ---------
Total.......................................... $ 348 $ 474
--------- ---------
--------- ---------
</TABLE>

Income taxes paid were $9, $189 and $162 in 1997, 1996 and 1995,
respectively. The Company had a current tax payment of $27 due to The Hartford
at December 31, 1997 and a tax refund due from The Hartford of $72 at December
31, 1996.

Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In these situations, the deferred income was
accumulated in a "Policyholders' Surplus Account" and will be taxable in the
future only under conditions which management considers to be remote; therefore,
no Federal income taxes have been provided on this deferred income. The balance
for tax return purposes of the Policyholders' Surplus Account as of December 31,
1997 was $37.

8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS

(A) PENSION PLANS

The Company's employees are included in The Hartford's noncontributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, as amended, and the maximum amount that
can be deducted for U.S. Federal income tax purposes. Generally, pension costs
are funded through the purchase of the Company's group pension contracts. The
cost to the Company was approximately $5, $5 and $2 in 1997, 1996 and 1995,
respectively.

The Company also provides, through The Hartford, certain health care and
life insurance benefits for eligible retired employees. A substantial portion of
the Company's employees may become eligible for these benefits upon retirement.
The Company's contribution for health care benefits will depend on the retiree's
date of retirement and years of service. In addition, the plan has a defined
dollar cap which limits average Company contributions. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial to the results of operations for 1997, 1996 and 1995,
respectively.

The assumed rate in the per capita cost of health care (the health care
trend rate) was 8.5% for 1997, decreasing ratably to 6.0% in the year 2001.
Increasing the health care trend rates by one percent per year would have an
immaterial impact on the accumulated postretirement benefit obligation and the
annual expense. To the extent that the actual experience differs from the
inherent assumptions,
<PAGE>

- --------------------------------------------------------------------------------

the effect will be amortized over the average future service of covered
employees.

(B) INVESTMENT AND SAVINGS PLAN
Substantially all employees of the Company are eligible to participate in The
Hartford's Investment and Savings Plan. Under this plan, designated
contributions, which may be invested in Class A Common Stock of Hartford Life or
certain other investments, are matched, up to 3% of compensation, by the
Company. The cost to the Company for the above-mentioned plans was approximately
$2 in 1997.

9. STOCK COMPENSATION PLANS

During the second quarter of 1997, Hartford Life adopted the 1997 HLI
Incentive Stock Plan (the "Plan"). Under the Plan, options granted may be either
non-qualified options or incentive stock options qualifying under Section 422A
of the Internal Revenue Code. The aggregate number of shares of Class A Common
Stock which may be awarded in any one year shall be subject to an annual limit.
The maximum number of shares of Class A Common Stock which may be granted under
the Plan in each year shall be 1.5% of the total issued and outstanding shares
of Hartford Life Class A Common Stock and treasury stock as reported in the
Annual Report on Hartford Life's Form 10-K for the preceding year plus unused
portions of such limit from prior years. In addition, no more than 5,000,000
shares of Class A Common Stock shall be cumulatively available for awards of
incentive stock options under the Plan, and no more than 20% of the total number
of shares on a cumulative basis shall be available for restricted stock and
performance shares.

All options granted have an exercise price equal to the market price of
Hartford Life's stock on the date of grant and an option's maximum term is ten
years. Certain nonperformance based options become exercisable upon the
attainment of specified market price appreciation of Hartford Life's common
shares or at seven years after the date of grant, while the remaining
nonperformance based options become exercisable over a three year period
commencing with the date of grant.

Also included in the Plan are long term performance awards which become
payable upon the attainment of specific performance goals achieved over a three
year period.

During the second quarter of 1997, Hartford Life established the HLI
Employee Stock Purchase Plan ("ESPP"). Under this plan, eligible employees of
Hartford Life and the Company may purchase Class A Common Stock of Hartford Life
at a 15% discount from the lower of the market price at the beginning or end of
the quarterly offering period. Hartford Life may sell up to 2,700,000 shares of
stock to eligible employees. Hartford Life sold 54,316 shares under the ESPP in
1997.

10. REINSURANCE

The Company cedes insurance to other insurers, including its parent HLA, in
order to limit its maximum loss. Such transfer does not relieve the Company of
its primary liability. The Company also assumes insurance from other insurers.
Failure of reinsurers to honor their obligations could result in losses to the
Company. The Company evaluates the financial condition of its reinsurers and
monitors concentration of credit risk.

Net premiums and other considerations were comprised of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Gross premiums............................... $ 2,164 $ 2,138 $ 1,545
Assumed...................................... 159 190 591
Ceded........................................ (686) (623) (649)
--------- --------- ---------
Net premiums and other considerations...... $ 1,637 $ 1,705 $ 1,487
--------- --------- ---------
--------- --------- ---------
</TABLE>

The Company ceded approximately $76, $100 and $101 of group life premium in
1997, 1996 and 1995, respectively, representing $33.6 billion, $33.3 billion and
$32.3 billion of insurance in force, respectively. The Company ceded $339, $318
and $320 of accident and health premium to HLA in 1997, 1996 and 1995,
respectively. The Company assumed $89, $101 and $103 of premium in 1997, 1996
and 1995, respectively, representing $8.2 billion, $8.5 billion and $8.5 billion
of individual life insurance in force, respectively, from HLA.

Life reinsurance recoveries, which reduce death and other benefits,
approximated $158, $140 and $220 for the years ended December 31, 1997, 1996 and
1995, respectively.

As of December 31, 1997, the Company had reinsurance recoverables of $5.0
billion from Mutual Benefit Life Assurance Corporation ("Mutual Benefit"),
supported by assets in a security trust of $5.0 billion (including policy loans
and accrued interest of $4.5 billion). The risk of Mutual Benefit becoming
insolvent is mitigated by the reinsurance agreement's requirement that the
assets be kept in a security trust with the Company as sole beneficiary. The
Company has no other significant reinsurance-related concentrations of credit
risk.

11. RELATED PARTY TRANSACTIONS

Transactions of the Company with HA&I and its affiliates relate principally
to tax settlements, reinsurance, insurance coverage, rental and service fees,
payment of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and employee
benefit plan expenses, are initially paid by The Hartford. Direct expenses are
allocated to the Company using specific identification, and indirect expenses
are allocated using other applicable methods. Indirect expenses include those
for corporate areas which,
<PAGE>

- --------------------------------------------------------------------------------

depending on type, are allocated based on either a percentage of direct expenses
or on utilization. Indirect expenses allocated to the Company by The Hartford
were $34, $40, and $45 in 1997, 1996 and 1995, respectively. Management believes
that the methods used are reasonable.

The rent paid to Hartford Fire for space occupied by the Company was $7 in
1997, and $3 in 1996 and 1995. The Company expects to pay annual rent of $7 in
1998 and 1999, respectively, $12 in 2000 and 2001, respectively, $13 in 2002 and
$87 thereafter, over the remaining term of the sublease, which expires on
December 31, 2009. Rental expense is recognized over a level basis over the term
of the sublease and amounted to approximately $9 in 1997 and $8 in 1996 and
1995.

12. STATUTORY RESULTS

The domestic insurance subsidiaries of Hartford Life prepare their statutory
financial statements in accordance with accounting practices prescribed by the
State of Connecticut Insurance Department. Prescribed statutory accounting
practices include publications of the National Association of Insurance
Commissioners ("NAIC"), as well as state laws, regulations, and general
administrative rules.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Statutory net income......................... $ 214 $ 144 $ 112
------ ------ ------
Statutory surplus............................ $1,441 $1,207 $1,125
------ ------ ------
------ ------ ------
</TABLE>

A significant percentage of the consolidated statutory surplus is
permanently reinvested or is subject to various state regulatory restrictions
which limit the payment of dividends without prior approval. The total amount of
statutory dividends which may be paid by the insurance subsidiaries of the
Company in 1998 is estimated to be $144.

13. COMMITMENTS AND CONTINGENT LIABILITIES

(A) LITIGATION

The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for monetary and punitive damages have
been asserted. Although there can be no assurances, management, at the present
time, does not anticipate that the ultimate liability arising from such pending
or threatened litigation will have a material effect on the financial condition
or operating results of the Company.

(B) GUARANTY FUNDS

Under insurance guaranty fund laws in each state, the District of Columbia
and Puerto Rico, insurers licensed to do business can be assessed by state
insurance guaranty associations for certain obligations of insolvent insurance
companies to policyholders and claimants. Recent regulatory actions against
certain large life insurers encountering financial difficulty have prompted
various state insurance guaranty associations to begin assessing life insurance
companies for the deemed losses. Most of these laws do provide, however, that an
assessment may be excused or deferred if it would threaten an insurer's solvency
and further provide annual limits on such assessments. A large part of the
assessments paid by the Company's insurance subsidiaries pursuant to these laws
may be used as credits for a portion of the Company's insurance subsidiaries'
premium taxes. The Company paid guaranty fund assessments of approximately $15,
$11 and $10 in 1997, 1996 and 1995, respectively, of which $4, $5, and $6 were
estimated to be creditable against premium taxes.

14. BUSINESS SEGMENT INFORMATION

The Company, along with its parent, sells financial products such as fixed
and variable annuities, retirement plan services, and life and disability
insurance on both an individual and a group basis. The Company divides its core
businesses into three segments: Annuity, Individual Life Insurance, and Employee
Benefits. The Company also maintains a Guaranteed Investment Contracts segment,
which is primarily comprised of guaranteed rate contract business written prior
to 1995 and a Corporate Operation. The Annuity segment offers individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services, mutual funds, investment management
services and other financial products. The Individual Life Insurance segment
sells a variety of individual life insurance products, including variable life,
universal life, interest-sensitive whole life, and term life policies. The
Employee Benefits segment sells group insurance products, including group life,
group short and long-term disability and corporate owned life insurance, and
engages in certain international operations. The Guaranteed Investment Contracts
segment sells a limited amount of guaranteed investment contracts and contains
Closed Book GRC. Through its Corporate Operation, the Company reports items that
are not directly allocable to any of its business segments. Included in the
Corporate Operation are unallocated income and expense and certain other items
not directly allocable to any segment. Net realized capital gains and losses are
recognized in the period of realization, but are allocated to the segments
utilizing durations of the segment portfolios.
<PAGE>

- --------------------------------------------------------------------------------

The following table outlines revenues, operating income and assets by
business segment:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Annuity.............................................. $ 1,269 $ 968 $ 759
Individual Life Insurance............................ 487 440 383
Employee Benefits.................................... 972 1,366 1,273
Guaranteed Investment Contracts...................... 241 34 337
Corporate Operation.................................. 40 81 52
-------- -------- --------
Total revenues..................................... $ 3,009 $ 2,889 $ 2,804
-------- -------- --------
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
Annuity.............................................. $ 317 $ 226 $ 171
Individual Life Insurance............................ 85 68 56
Employee Benefits.................................... 53 44 37
Guaranteed Investment Contracts...................... -- (346) (103)
Corporate Operation.................................. 14 66 30
-------- -------- --------
Total income before income tax expense............. $ 469 $ 58 $ 191
-------- -------- --------
-------- -------- --------
ASSETS
Annuity $ 69,152 $ 52,877 $ 39,732
Individual Life Insurance............................ 4,918 3,753 3,173
Employee Benefits.................................... 18,196 14,708 13,494
Guaranteed Investment Contracts...................... 3,347 4,533 6,069
Corporate Operation.................................. 2,343 1,891 1,729
-------- -------- --------
Total assets....................................... $ 97,956 $ 77,762 $ 64,197
-------- -------- --------
-------- -------- --------
</TABLE>

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

SCHEDULE I -- SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1997
(IN MILLIONS)

<TABLE>
<CAPTION>
AMOUNT AT
WHICH
FAIR SHOWN ON
TYPE OF INVESTMENT COST VALUE BALANCE SHEET
- --------------------------------------------- ------- ------- --------------
<S> <C> <C> <C>
Fixed Maturities
Bonds and Notes
U. S. gov't and gov't agencies and
authorities (guaranteed and sponsored) $ 217 $ 219 $ 219
U. S. gov't and gov't agencies and
authorities (guaranteed and sponsored) --
asset-backed.............................. 1,175 1,204 1,204
States, municipalities and political
subdivisions.............................. 211 217 217
International governments.................. 376 393 393
Public utilities........................... 871 894 894
All other corporate including
international............................. 5,033 5,208 5,208
All other corporate -- asset-backed........ 4,091 4,124 4,124
Short-term investments..................... 1,318 1,318 1,318
Certificates of deposit...................... 593 599 599
------- ------- -------
Total fixed maturities....................... 13,885 14,176 14,176
------- ------- -------
Equity Securities
Common Stocks
Public utilities........................... -- -- --
Banks, trusts and insurance companies...... -- -- --
Industrial and miscellaneous............... 166 180 180
Nonredeemable preferred stocks............. -- -- --
------- ------- -------
Total equity securities...................... 166 180 180
------- ------- -------
Total fixed maturities and equity
securities.................................. 14,051 14,356 14,356
------- ------- -------
Real Estate.................................. -- -- --
Other Investments
Mortgage loans on real estate.............. -- -- --
Policy loans............................... 3,756 3,756 3,756
Investments in partnerships, trusts and
other..................................... 47 91 47
------- ------- -------
Total other investments...................... 3,803 3,847 3,803
------- ------- -------
Total investments............................ $17,854 $18,203 $18,159
------- ------- -------
------- ------- -------
</TABLE>

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
FUTURE
POLICY
BENEFITS,
UNPAID OTHER
DEFERRED CLAIMS POLICY
POLICY AND CLAIM CLAIMS AND PREMIUMS NET
ACQUISITION ADJUSTMENT BENEFITS AND OTHER INVESTMENT
SEGMENT COSTS EXPENSES PAYABLE CONSIDERATIONS INCOME
- --------------------------------------------- ----------- --------- ---------- --------------- ---------

<S> <C> <C> <C> <C> <C>
1997
Annuity...................................... $2,478 $2,070 $ 6,838 $ 769 $ 500
Individual Life Insurance.................... 837 392 2,182 323 164
Employee Benefits............................ -- 780 9,232 541 431
Guaranteed Investment Contracts.............. -- -- 2,782 2 239
Corporate Operation.......................... -- 28 -- 2 34
----------- --------- ---------- ------ ---------
Consolidated operations...................... $3,315 $3,270 $21,034 $1,637 $1,368
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------

1996
Annuity...................................... $2,030 $1,526 $ 6,016 $ 535 $ 433
Individual Life Insurance.................... 730 346 2,160 287 153
Employee Benefits............................ -- 574 9,834 881 485
Guaranteed Investment Contracts.............. -- -- 4,124 2 251
Corporate Operation.......................... -- 28 -- -- 75
----------- --------- ---------- ------ ---------
Consolidated operations...................... $2,760 $2,474 $22,134 $1,705 $1,397
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------

1995
Annuity...................................... $1,561 $1,314 $ 5,661 $ 319 $ 400
Individual Life Insurance.................... 615 706 1,932 246 137
Employee Benefits............................ 12 325 9,285 922 351
Guaranteed Investment Contracts.............. -- 28 5,720 -- 377
Corporate Operation.......................... -- -- -- -- 63
----------- --------- ---------- ------ ---------
Consolidated operations...................... $2,188 $2,373 $22,598 $1,487 $1,328
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------

NET BENEFITS, AMORTIZATION
REALIZED CLAIMS AND OF DEFERRED
CAPITAL CLAIM POLICY
GAINS ADJUSTMENT ACQUISITION DIVIDENDS TO OTHER
SEGMENT (LOSSES) EXPENSES COSTS POLICYHOLDERS EXPENSES
- --------------------------------------------- ----------- ----------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
1997
Annuity...................................... $ -- $ 445 $250 $ -- $ 257
Individual Life Insurance.................... -- 242 83 -- 77
Employee Benefits............................ -- 425 2 240 252
Guaranteed Investment Contracts.............. -- 232 -- -- 9
Corporate Operation.......................... 4 35 -- -- (9)
----------- ----------- ----- ----- -----
Consolidated operations...................... $ 4 $1,379 $335 $240 $ 586
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1996
Annuity...................................... $ -- $ 412 $174 $ -- $ 156
Individual Life Insurance.................... -- 245 59 -- 68
Employee Benefits............................ -- 546 -- 635 141
Guaranteed Investment Contracts.............. (219) 332 1 -- 47
Corporate Operation.......................... 6 -- -- -- 15
----------- ----------- ----- ----- -----
Consolidated operations...................... $(213) $1,535 $234 $635 $ 427
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1995
Annuity...................................... $ -- $ 317 $117 $ -- $ 114
Individual Life Insurance.................... -- 203 70 -- 54
Employee Benefits............................ -- 424 -- 675 137
Guaranteed Investment Contracts.............. -- 453 12 -- 15
Corporate Operation.......................... (11) 25 -- -- (3)
----------- ----------- ----- ----- -----
Consolidated operations...................... $ (11) $1,422 $199 $675 $ 317
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
</TABLE>

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

SCHEDULE IV -- REINSURANCE
(IN MILLIONS)

<TABLE>
<CAPTION>
CEDED TO ASSUMED FROM PERCENTAGE
GROSS OTHER OTHER NET OF AMOUNT
AMOUNT COMPANIES COMPANIES AMOUNT ASSUMED TO NET
-------- -------------- -------------- -------- ---------------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1997
Life insurance in force........................... $245,487 $ 178,771 $ 33,156 $ 99,872 33.2%
Insurance revenues
Life insurance and annuities.................... 1,818 340 157 1,635 9.6%
Accident and health insurance................... 346 346 2 2 100.0%
-------- -------------- ------- --------
Total insurance revenues.......................... $ 2,164 $ 686 $ 159 $ 1,637 9.7%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1996
Life insurance in force......................... $177,094 $ 106,146 $ 31,957 $102,905 31.1%
Insurance revenues
Life insurance and annuities.................... 1,801 298 169 1,672 10.1%
Accident and health insurance................... 337 325 21 33 63.6%
-------- -------------- ------- --------
Total insurance revenues.......................... $ 2,138 $ 623 $ 190 $ 1,705 11.1%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1995
Life insurance in force......................... $182,716 $ 112,774 $ 26,996 $ 96,938 27.8%
Insurance revenues
Life insurance and annuities.................... 1,232 325 574 1,481 38.8%
Accident and health insurance................... 313 324 17 6 283.3%
-------- -------------- ------- --------
Total insurance revenues.......................... $ 1,545 $ 649 $ 591 $ 1,487 39.7%
-------- -------------- ------- --------
-------- -------------- ------- --------
</TABLE>
<PAGE>

PART C

<PAGE>

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) All financial statements are included in Part A and Part B of the
Registration Statement.

(b) (1) Resolution of the board of directors of Hartford Life Insurance
Company ("Hartford") authorizing the establishment of the
Separate Account. (1)

(2) Not applicable.

(3) (a) Principal Underwriting Agreement. (2)

(3) (b) Form of Sales Agreement. (2)

(4) Form of Group Variable Annuity Contract. (1)

(5) Form of the Application. (1)

(6) (a) Articles of Incorporation of Hartford. (3)

(b) Bylaws of Hartford. (1)

(7) Not applicable.

(8) Participation Agreement. (1)

(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary.

(10) Consent of Arthur Andersen LLP, Independent Public Accountants.

- -----------------------------

(1) Incorporated by reference to Pre-Effective Amendment No. 2, to the
Registration Statement File No. 33-59541, filed on December 29, 1995.

(2) Incorporated by reference to Post Effective Amendment No. 1, to the
Registration Statement File No. 33-59541, dated May 1, 1996.

(3) Incorporated by reference to Post Effective Amendment No. 2, to the
Registration Statement File No. 33-59541, filed on April 17, 1997.

<PAGE>

(11) No financial statements are omitted.

(12) Not applicable.

(13) Not applicable.

(14) Not applicable.

(15) Copy of Power of Attorney.

(16) Organizational Chart.

Item 25. Directors and Officers of the Depositor

<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
- ----------------------------------------------------------------------------------
<S> <C>
Mark E. Hunt Vice President
- ----------------------------------------------------------------------------------
Stephen T. Joyce Vice President
- ----------------------------------------------------------------------------------
Michael D. Keeler Vice President
- ----------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- ----------------------------------------------------------------------------------
David N. Levenson Vice President
- ----------------------------------------------------------------------------------
Steven M. Maher Vice President and Actuary
- ----------------------------------------------------------------------------------
William B. Malchodi, Jr. Vice President
- ----------------------------------------------------------------------------------
Raymond J. Marra Vice President
- ----------------------------------------------------------------------------------
Thomas M. Marra Executive Vice President and Director Individual
Life and Annuity Division, Director*
- ----------------------------------------------------------------------------------
Robert F. Nolan Senior Vice President
- ----------------------------------------------------------------------------------
Joseph J. Noto Vice President
- ----------------------------------------------------------------------------------
Michael C. O'Halloran Vice President
- ----------------------------------------------------------------------------------
Lawrence M. O'Rourke Vice President
- ----------------------------------------------------------------------------------
Daniel E. O'Sullivan Vice President
- ----------------------------------------------------------------------------------
Craig D. Raymond Senior Vice President and Chief Actuary
- ----------------------------------------------------------------------------------
Mary P. Robinson Vice President
- ----------------------------------------------------------------------------------
Donald A. Salama Vice President
- ----------------------------------------------------------------------------------
Timothy P. Schiltz Vice President
- ----------------------------------------------------------------------------------
Lowndes A. Smith President and Chief Operating Officer, Director*
- ----------------------------------------------------------------------------------
Keith A. Stevenson Vice President
- ----------------------------------------------------------------------------------
Edward A. Sweeney Vice President
- ----------------------------------------------------------------------------------
Judith V. Tilbor Vice President
- ----------------------------------------------------------------------------------
Raymond P. Welnicki Senior Vice President and Director, Employee
Benefit Division, Director*
- ----------------------------------------------------------------------------------
Walter C. Welsh Senior Vice President
- ----------------------------------------------------------------------------------
</TABLE>

<PAGE>

Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.

*Denotes Board of Directors.

Item 26. Persons Controlled By or Under Common Control with the Depositor
or Registrant

See Exhibit 16.

Item 27. Number of Contract Owners

As of March 9, 1998, there were 6,243 Contract Owners.

Item 28. Indemnification

Under Section 33-772 of the Connecticut General Statutes, unless
limited by its certificate of incorporation, the Registrant must
indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party
because he is or was a director of the corporation against reasonable
expenses incurred by him in connection with the proceeding.

The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred
in the proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Registrant, and, with respect to any criminal proceeding, had no
reason to believe his conduct was unlawful. Conn. Gen. Stat. Section
33-771(a). Additionally, pursuant to Conn. Gen. Stat. Section 33-776,
the Registrant may indemnify officers and employees or agents for
liability incurred and for any expenses to which they becomes subject
by reason of being or having been an employees or officers of the
Registrant. Connecticut law does not prescribe standards for the
indemnification of officers, employees and agents and expressly states
that their indemnification may be broader than the right of
indemnification granted to directors.

The foregoing statements are specifically made subject to the detailed
provisions of Section 33- 770 et seq.

Notwithstanding the fact that Connecticut law obligates the
Registrant to indemnify a only a director that was successful on the
merits in a suit, under Article VIII,

<PAGE>

Section 1 of the Registrant's bylaws, the Registrant must indemnify
both directors and officers of the Registrant for (1) any claims
and liabilities to which they become subject by reason of being or
having been a directors or officers of the company and legal and
(2) other expenses incurred in defending against such claims, in
each case, to the extent such is consistent with statutory
provisions.

Additionally, the directors and officers of Hartford and Hartford
Securities Distribution Company, Inc. ("HSD") are covered under a
directors and officers liability insurance policy issued to The
Hartford Financial Services Group, Inc. and its subsidiaries. Such
policy will reimburse the Registrant for any payments that it shall
make to directors and officers pursuant to law and will, subject to
certain exclusions contained in the policy, further pay any other
costs, charges and expenses and settlements and judgments arising from
any proceeding involving any director or officer of the Registrant in
his past or present capacity as such, and for which he may be liable,
except as to any liabilities arising from acts that are deemed to be
uninsurable.

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 foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

Item 29. Principal Underwriters

(a) HESCO acts as principal underwriter for the following investment
companies:

Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account I)
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account II)
Hartford Life Insurance Company - Separate Account Two (QP Variable
Account)
Hartford Life Insurance Company - Separate Account Two (Variable
Account "A")

<PAGE>

Hartford Life Insurance Company - Separate Account Two (NQ Variable
Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account One
Hartford Life and Annuity Insurance Company - Putnam Capital Manager
Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account Three
Hartford Life and Annuity Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account Six
American Maturity Life Insurance - Separate Account AMLVA

(b) Directors and Officers of HSD

Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ---------------------

Lowndes A. Smith President and Chief Executive Officer,
Director
John P. Ginnetti Executive Vice President & Director
Thomas M. Marra Executive Vice President & Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller

Item 30. Location of Accounts and Records

All of the accounts, books, records or other documents required to
be kept by Section 31(a) of the Investment Company Act of 1940 and
rules thereunder, are maintained by the Hartford at 200 Hopmeadow
Street, Simsbury, Connecticut 06089.

Item 31. Management Services

All management contracts are discussed in Part A and Part B of this
registration statement.

Item 32. Undertakings

(a) The Registrant hereby undertakes to file a post-effective amendment to
this

<PAGE>

registration statement as frequently as is necessary to ensure
that the audited financial statements in the registration statement
are never more than 16 months old so long as payments under the
variable annuity contracts may be accepted.

(b) The Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication
affixed to or included in the Prospectus that the applicant can remove
to send for a Statement of Additional Information.

(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be
made available under this Form promptly upon written or oral request.

(d) Hartford hereby represents that the aggregate fees and charges under
the Contract are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by Hartford.

The Registrant is relying on the no-action letter issued by the Division of
Investment Management to American Council of Life Insurance, Ref. No. IP-6-88,
November 28, 1988. The Registrant has complied with the four provisions of the
no-action letter.

<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and duly caused this Registration Statement to be signed
on its behalf, in the City of Hartford, and State of Connecticut on this 10th
day of April, 1998.

HARTFORD LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT TWO (DC VARIABLE ACCOUNT II)
(Registrant)

*By: /s/ John P. Ginnetti *By: /s/ Lynda Godkin
-------------------------------------------- --------------------
John P. Ginnetti, Executive Vice President Lynda Godkin
Attorney-in-Fact

HARTFORD LIFE INSURANCE COMPANY
(Depositor)

*By: /s/ John P. Ginnetti
------------------------------------------
John P. Ginnetti, Executive Vice President

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in the
capacity and on the date indicated.

Gregory A. Boyko, Senior Vice President,
Chief Financial Officer & Treasurer, Director*
John P. Ginnetti, Executive Vice
President, Director*
Lynda Godkin, Senior Vice President,
General Counsel & Corporate Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ Lynda Godkin
------------------------
President, Director* Lynda Godkin
Lowndes A. Smith, President & Attorney-In-Fact
Chief Operating Officer, Director*
Raymond P. Welnicki, Senior Vice
President, Director* Dated: April 10, 1998
Lizabeth H. Zlatkus, Senior Vice President,
Director*
David M. Znamierowski, Senior Vice
President and Director*

<PAGE>
EXHIBIT INDEX

(9) Opinion and Consent of Lynda Godkin, Senior Vice President, General Counsel
and Corporate Secretary

(10) Consent of Arthur Andersen LLP, Independent Public Accountants

(15) Copy of Power of Attorney

(16) Organizational Chart

<PAGE>

EXHIBIT 9

[LOGO]
HARTFORD LIFE

April 10, 1998
Lynda Godkin
Senior Vice President, General
Counsel & Corporate Secretary
Law Department

Board of Directors
Hartford Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089

RE: SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
FILE NO. 33-59541

Dear Sir/Madam:

I have acted as General Counsel to Hartford Life Insurance Company (the
"Company"), a Connecticut insurance company, and Hartford Life Insurance Company
Separate Account Two (the "Account") in connection with the registration of an
indefinite amount of securities in the form of variable annuity contracts (the
"Contracts") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended. I have examined such documents (including the Form N-4
Registration Statement) and reviewed such questions of law as I considered
necessary and appropriate, and on the basis of such examination and review, it
is my opinion that:

1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is
duly authorized by the Insurance Department of the State of Connecticut to
issue the Contracts.

2. The Account is a duly authorized and validly existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.

3. To the extent so provided under the Contracts, that portion of the assets
of the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.

<PAGE>

Board of Directors
Hartford Life Insurance Company
April 10, 1998
Page 2

4. The Contracts, when issued as contemplated by the Form N-4 Registration
Statement, will constitute legal, validly issued and binding obligations of
the Company.

I hereby consent to the filing of this opinion as an exhibit to the Form N-4
Registration Statement for the Contracts and the Account.

Sincerely,

/s/ Lynda Godkin

Lynda Godkin

<PAGE>

EXHIBIT 10

ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included or made a part of this
Registration Statement File No. 33-59541 for Hartford Life Insurance Company
Separate Account Two (DC Variable Account-II) on Form N-4.

/s/ Arthur Andersen LLP
Hartford, Connecticut
April 13, 1998

<PAGE>

HARTFORD LIFE INSURANCE COMPANY

POWER OF ATTORNEY
-----------------

Gregory A. Boyko
John P. Ginnetti
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
David M. Znamierowski

do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty,
and Leslie T. Soler to sign as their agent, any Registration Statement,
pre-effective amendment, post-effective amendment and any application for
exemptive relief of the Hartford Life Insurance Company and Hartford Life and
Accident Insurance Company under the Securities Act of 1933 and/or the
Investment Company Act of 1940.

IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.

/s/ Gregory A. Boyko Dated as of March 16, 1998
- --------------------------------------- --------------------------
Gregory A. Boyko

/s/ John P. Ginnetti Dated as of March 16, 1998
- --------------------------------------- --------------------------
John P. Ginnetti

/s/ Lynda Godkin Dated as of March 16, 1998
- --------------------------------------- --------------------------
Lynda Godkin

/s/ Thomas M. Marra Dated as of March 16, 1998
- --------------------------------------- --------------------------
Thomas M. Marra

/s/ Lowndes A. Smith Dated as of March 16, 1998
- --------------------------------------- --------------------------
Lowndes A. Smith

/s/ Raymond P. Welnicki Dated as of March 16, 1998
- --------------------------------------- --------------------------
Raymond P. Welnicki

/s/ Lizabeth H. Zlatkus Dated as of March 16, 1998
- --------------------------------------- --------------------------
Lizabeth H. Zlatkus

/s/ David M. Znamierowski Dated as of March 16, 1998
- --------------------------------------- --------------------------
David M. Znamierowski

<PAGE>

<S> <C>
THE HARTFORD
The Hartford Financial Services Group, Inc.
(Delaware)
|
- -------------------------------------------------------------------------------------------------------------
Nutmeg Insurance Company The Hartford Investment
(Connecticut) Management Company
| (Delaware)
Hartford Fire Insurance Company |
(Connecticut) Hartford Investment
| Services, Inc.
Hartford Accident and Indemnity Company (Connecticut)
(Connecticut)
|
Hartford Life, Inc.
(Delaware)
|
Hartford Life and Accident Insurance Company
(Connecticut)
|
|
|
- -------------------------------------------------------------------------------------------------------------
Alpine Life Hartford Financial Hartford Life American Maturity ITT Hartford Canada
Insurance Services Life Insurance Company Life Insurance Holdings, Inc.
Company Insurance Co. (Connecticut) Company (Canada)
(New Jersey) (Connecticut) | (Connecticut) |
| | |
| AML Financial, Inc. |
| (Connecticut) Hartford Life
| Insurance Company
| of Canada
| (Canada)
|
|
- -------------------------------------------------------------------------------------------------------------
Hartford Life and Annuity ITT Hartford International Hartford Financial Services Royal Life
Insurance Company Life Reassurance Corporation Corporation Insurance
(Connecticut) (Connecticut) (Delaware) Company of
| | America
| | (Connecticut)
| |
ITT Hartford Life, Ltd. |
(Bermuda) |
|
|
- -------------------------------------------------------------------------------------------------------------
MS Fund HL Funding HL Investment Hartford Hartford Securities Hartford-Comp. Emp.
America Company, Inc. Advisors, Inc. Equity Sales Distribution Benefit Service
1993-K, Inc. (Connecticut) (Connecticut) Company, Inc. Company, Inc. Company
(Delaware) | (Connecticut) (Connecticut) (Connecticut)
|
Hartford Investment
Financial Services
Company
(Delaware)
</TABLE>