<PAGE>
THE BB&T DIRECTOR
SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668 (CONTRACT
OWNERS)
[LOGO] 1-800-862-7155 (INVESTMENT REPRESENTATIVES)
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This Prospectus describes The BB&T Director, an individual and group tax
deferred variable annuity contract designed for retirement planning purposes
("Contracts").
The Contracts are issued by Hartford Life Insurance Company ("Hartford").
Payments for the Contracts will be held in a series of Hartford Life Insurance
Company Sepa-
rate Account Two (the "Separate Account") or in the Fixed Account of Hartford.
Allocations to and transfers to and from the Fixed Account are not permitted in
certain states.
The following Sub-Accounts are available under the Contracts. Opposite each
Sub-Account is the name of the underlying investment for that Sub-Account.
<TABLE>
<S> <C> <C>
Advisers Fund Sub-Account -- shares of Hartford Advisers Fund, Inc. ("Hartford Advisers
Fund")
Bond Fund Sub-Account -- shares of Hartford Bond Fund, Inc. ("Hartford Bond Fund")
Capital Appreciation Fund Sub-Account -- shares of Hartford Capital Appreciation Fund, Inc.
("Hartford Capital Appreciation Fund")
Dividend and Growth Fund Sub-Account -- shares of Hartford Dividend and Growth Fund, Inc.
("Hartford Dividend and Growth Fund")
Index Fund Sub-Account -- shares of Hartford Index Fund, Inc. ("Hartford Index
Fund")
International Advisers Fund Sub-Account -- shares of Hartford International Advisers Fund, Inc.
("Hartford International Advisers Fund")
International Opportunities Fund Sub-Account -- shares of Hartford International Opportunities Fund, Inc.
("Hartford International Opportunities Fund")
Money Market Fund Sub-Account -- shares of HVA Money Market Fund, Inc. ("HVA Money Market
Fund")
Mortgage Securities Fund Sub-Account -- shares of Hartford Mortgage Securities Fund, Inc.
("Hartford Mortgage Securities Fund")
Small Company Fund Sub-Account -- shares of Hartford Small Company Fund, Inc. ("Hartford
Small Company Fund")
Stock Fund Sub-Account -- shares of Hartford Stock Fund, Inc. ("Hartford Stock
Fund")
BB&T Growth and Income Fund Sub-Account -- shares of BB&T Growth and Income Fund of the Variable
Insurance Funds ("BB&T Growth and Income Fund")
</TABLE>
This Prospectus sets forth the information concerning the Separate Account and
the Fixed Account, where available, that investors should know before investing.
This Prospectus should be kept for future reference. Additional information
about the Separate Account and the Fixed Account has been filed with the
Securities and Exchange Commission and is available without charge upon request.
To obtain the Statement of Additional Information send a written request to, or
call Hartford Life Insurance Company, Attn: Annuity Marketing Services, P.O. Box
5085, Hartford, CT 06102-5085. The Table of Contents for the Statement of
Additional Information may be found on page 27 of this Prospectus. The Statement
of Additional Information is incorporated by reference to this Prospectus.
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VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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PROSPECTUS DATED: JUNE 3, 1997
STATEMENT OF ADDITIONAL INFORMATION DATED: JUNE 3, 1997
<PAGE>
2 HARTFORD LIFE INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................. 3
FEE TABLE............................................................. 5
ACCUMULATION UNIT VALUES.............................................. 6
INTRODUCTION.......................................................... 7
HARTFORD, SEPARATE ACCOUNT TWO, THE FIXED ACCOUNT AND THE FUNDS....... 7
Hartford Life Insurance Company..................................... 7
Separate Account Two................................................ 8
The Funds........................................................... 8
The Fixed Account................................................... 10
Performance Related Information..................................... 10
THE CONTRACTS......................................................... 11
Contracts Offered................................................... 11
Premium Payments and Initial Allocations............................ 11
Contract Value...................................................... 12
Transfers Between the Sub-Accounts/Fixed Account.................... 12
Charges Under the Contracts......................................... 13
Death Benefits...................................................... 15
Surrender Benefits.................................................. 16
Annuity Benefits.................................................... 17
Other Information................................................... 19
FEDERAL TAX CONSIDERATIONS............................................ 19
A. General.......................................................... 19
B. Taxation of Hartford and the Separate Account.................... 19
C. Taxation of Annuities -- General Provisions Affecting Purchasers
other than Qualified Retirement Plans................................. 19
D. Federal Income Tax Withholding................................... 22
E. General Provisions Affecting Qualified Retirement Plans.......... 23
F. Annuity Purchases by Nonresident Aliens and Foreign
Corporations.......................................................... 23
MISCELLANEOUS......................................................... 23
How Contracts Are Sold.............................................. 23
Legal Matters and Experts........................................... 23
Additional Information.............................................. 23
APPENDIX I INFORMATION REGARDING TAX QUALIFIED PLANS.................. 24
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............. 27
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate values before
Annuity payments begin.
ANNUAL WITHDRAWAL AMOUNT: The amount which can be withdrawn in any Contract Year
prior to incurring surrender charges.
ANNUITANT: The person or Participant upon whose life the Contract is issued.
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.
Under a group unallocated Contract, the date for each Participant is determined
by the Contract Owner in accordance with the terms of the Plan.
ANNUITY UNIT: An accounting unit of measure used to calculate the value of
Annuity payments.
BENEFICIARY: The person(s) who receive Contract Values in the event of the
Annuitant's or Contract Owner's death under certain conditions. Under a group
unallocated Contract, the person named by the Participant within the Plan
documents/enrollment forms who is entitled to receive benefits in case of the
death of the Participant.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTINGENT ANNUITANT: The person so designated by the Contract Owner, who upon
the Annuitant's death, prior to the Annuity Commencement Date, becomes the
Annuitant.
CONTRACT ANNIVERSARY: The anniversary of the Contract Date.
CONTRACT OWNER(S): The owner(s) of the Contract, trustee or other entity,
sometimes herein referred to as "you".
CONTRACT VALUE: The aggregate value of any Sub-Account Accumulation Units held
under the Contract plus the value of the Fixed Account.
CONTRACT YEAR: A period of 12 months commencing with the Contract Date or any
anniversary thereof.
DEATH BENEFIT: The amount payable upon the death of a Contract Owner, Annuitant
or Participant, in the case of group Contracts, before annuity payments have
commenced.
FIXED ACCOUNT: Part of the General Account of Hartford to which a Contract Owner
may allocate all or a portion of his Premium Payment or Contract Value.
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
FUNDS: The Funds described commencing on page 8 of this Prospectus and any
additional Funds which may be made available from time to time.
GENERAL ACCOUNT: The General Account of Hartford which consists of all assets of
the Hartford other than those allocated to the separate accounts of the
Hartford.
HARTFORD: Hartford Life Insurance Company.
HOME OFFICE OF THE COMPANY: Currently located at 200 Hopmeadow Street, Simsbury,
CT. All correspondence concerning this Contract should be sent to P.O. Box 5085,
Hartford, CT 06102-5085, Attn: Individual Annuity Services.
MAXIMUM ANNIVERSARY VALUE: Value used in determining the Death Benefit. It is
based on a series of calculations of Account Values on Contract Anniversaries,
premium payments and partial surrenders, as described on page 13.
NON-QUALIFIED CONTRACT: A Contract which is not part of a tax-qualified
retirement plan or arrangement which qualifies for special tax treatment under
the Code.
PARTICIPANT -- (For Group Unallocated Contracts Only) -- Any eligible employee
of an Employer/Contract Owner participating in the Plan.
PLAN: A voluntary plan of an employer or other person which qualifies for
special tax treatment under the Code.
PREMIUM PAYMENT: The payment made to Hartford pursuant to the terms of the
Contract.
PREMIUM TAX: A tax on premiums charged by a state or municipality on Premium
Payments or Contract Values.
QUALIFIED CONTRACT: A Contract which is part of a tax-qualified retirement plan
or arrangement which qualifies for special tax treatment under the Code, such as
an employer-sponsored Section401(k) plan or an Individual Retirement Annuity
(IRA).
SEPARATE ACCOUNT: The Hartford separate account entitled "Hartford Life
Insurance Company Separate Account Two".
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
TERMINATION VALUE: The Contract Value upon termination of the Contract prior to
the Annuity Commencement Date, less any applicable Premium Taxes, the Annual
Maintenance Fee and any applicable contingent deferred sales charges.
UNALLOCATED CONTRACTS: Contracts issued to employers, or other entity, as
Contract Owner under which no allocation
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
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of Contract Values is made for a specific Participant. The Plans will be
responsible for the individual allocations.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets of the Separate Account.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
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FEE TABLE
SUMMARY
Contract Owner Transaction Expenses
(All Sub-Accounts)
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium
payments)...................................................... None
Exchange Fee...................................................... $ 0
Deferred Sales Load (as a percentage of amounts withdrawn)
First Year (1)................................................ 6%
Second Year................................................... 6%
Third Year.................................................... 5%
Fourth Year................................................... 5%
Fifth Year.................................................... 4%
Sixth Year.................................................... 3%
Seventh Year.................................................. 2%
Eighth Year................................................... 0%
Annual Contract Fee (2)........................................... $ 30
Annual Expenses-Separate Account (as percentage of average account
value)
Mortality and Expense Risk.................................... 1.250%
</TABLE>
Annual Fund Operating Expenses
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Hartford Bond Fund.............................. 0.490% 0.030% 0.520%
Hartford Stock Fund............................. 0.441% 0.016% 0.457%
HVA Money Market Fund........................... 0.423% 0.021% 0.444%
Hartford Advisers Fund.......................... 0.615% 0.017% 0.632%
Hartford Capital Appreciation Fund.............. 0.629% 0.017% 0.646%
Hartford Mortgage Securities Fund............... 0.424% 0.029% 0.453%
Hartford Index Fund............................. 0.374% 0.019% 0.393%
Hartford International Opportunities Fund....... 0.691% 0.095% 0.786%
Hartford Dividend & Growth Fund................. 0.709% 0.017% 0.726%
Hartford International Advisers Fund............ 0.746% 0.214% 0.960%
Hartford Small Company Fund (3)................. 0.577% 0.150% 0.727%
BB&T Growth and Income Fund (4)................. 0.500% 0.470% 0.970%
</TABLE>
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(1) Length of time from premium payment.
(2) The annual contract fee is a single $30 charge on a Contract. 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 has been reflected
in the Examples by a method intended to show the "average" impact of the
policy fee on an investment in the Separate Account. The Policy Fee is
deducted only when the accumulated value is $50,000 or less. In the Example,
the annual contract fee is approximately as a 0.06% annual asset charge
based on the experience of the Contracts.
(3) In 1996 management fees were waived for the Hartford Small Company Fund. In
the absence of this waiver, the 1996 total expense ratio would have been
.880% (annualized).
(4) The adviser has agreed to temporarily waive a portion of its management fee
for the BB&T Growth and Income Fund. In the absence of this waiver,
management fees would have been 0.740% and the total expense ratio of the
Fund would be 1.210%.
EXAMPLE
<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 assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Fund.................... $ 79 $ 108 $ 140 $ 216 $ 18 $ 57 $ 99 $ 215 $ 19 $ 58 $ 100 $ 216
Stock Fund................... 78 106 137 209 17 55 96 209 18 56 97 209
Money Market Fund............ 78 106 136 208 17 55 95 207 18 56 96 208
Advisers Fund................ 80 112 146 228 19 61 105 227 20 62 106 228
Capital Appreciation Fund.... 80 112 146 230 19 61 106 229 20 62 106 230
Mortgage Securities Fund..... 78 106 136 209 17 55 96 208 18 56 96 209
Index Fund................... 77 104 133 202 17 53 92 202 17 54 93 202
International Opportunities
Fund....................... 81 116 154 245 21 66 113 244 21 66 114 245
Dividend and Growth Fund..... 81 114 151 238 20 64 110 237 21 64 111 238
International Advisers
Fund....................... 83 122 163 263 23 71 122 262 23 72 123 263
Small Company Fund........... 81 114 N/A N/A 20 64 N/A N/A 21 64 N/A N/A
BB&T Growth and Income
Fund....................... 83 122 N/A N/A 23 71 N/A N/A 23 72 N/A N/A
</TABLE>
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. The 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.
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
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ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional information, which is incorporated by reference to this
Prospectus. No information is included for the BB&T Growth and Income Fund
Sub-Account because as of December 31, 1996, the Sub-Account had not commenced
operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1996 1995 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.880 $1.607 $1.694 $1.556 $1.493 $1.298 $1.212
Accumulation unit value at end of period.................. $1.922 $1.880 $1.607 $1.694 $1.556 $1.493 $1.298
Number accumulation units outstanding at end of period (in
thousands)............................................... 96,857 99,377 85,397 79,080 41,204 25,267 14,753
STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $2.887 $2.180 $2.250 $1.993 $1.834 $1.490 $1.569
Accumulation unit value at end of period.................. $3.546 $2.887 $2.180 $2.250 $1.993 $1.834 $1.490
Number accumulation units outstanding at end of period (in
thousands)............................................... 333,176 285,640 248,563 203,873 121,100 72,780 31,149
MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.528 $1.462 $1.424 $1.401 $1.369 $1.307 $1.225
Accumulation unit value at end of period.................. $1.587 $1.528 $1.462 $1.424 $1.401 $1.369 $1.307
Number accumulation units outstanding at end of period (in
thousands)............................................... 151,978 102,635 138,396 102,328 78,664 60,774 67,059
ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $2.523 $1.991 $2.072 $1.870 $1.748 $1.470 $1.470
Accumulation unit value at end of period.................. $2.905 $2.523 $1.991 $2.072 $1.870 $1.748 $1.470
Number accumulation units outstanding at end of period (in
thousands)............................................... 953,998 888,803 858,014 688,865 295,387 166,408 101,758
U.S. GOVERNMENT MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.468 $1.409 $1.376 $1.357 $1.331 $1.276 $1.202
Accumulation unit value at end of period.................. $1.521 $1.468 $1.409 $1.376 $1.357 $1.331 $1.276
Number accumulation units outstanding at end of period (in
thousands)............................................... 46 48 48 52 161 213 243
CAPITAL APPRECIATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $3.364 $2.615 $2.583 $2.165 $1.874 $1.231 $1.400
Accumulation unit value at end of period.................. $4.010 $3.364 $2.615 $2.583 $2.165 $1.874 $1.231
Number accumulation units outstanding at end of period (in
thousands)............................................... 330,580 292,671 220,936 160,934 75,653 39,031 10,501
MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.878 $1.637 $1.685 $1.604 $1.552 $1.370 $1.264
Accumulation unit value at end of period.................. $1.949 $1.878 $1.637 $1.685 $1.604 $1.552 $1.370
Number accumulation units outstanding at end of period (in
thousands)............................................... 89,098 101,881 112,417 138,666 98,494 46,464 18,632
INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $2.359 $1.750 $1.755 $1.629 $1.544 $1.207 $1.274
Accumulation unit value at end of period.................. $2.845 $2.359 $1.750 $1.755 $1.629 $1.544 $1.207
Number accumulation units outstanding at end of (in
thousands)............................................... 87,611 65,954 50,799 46,504 29,723 15,975 10,015
INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at end of period.................. $1.329 $1.181 $1.220 $0.924 $0.979 $0.877 $1.000(c)
Accumulation unit value at end of period.................. $1,482 $1.329 $1.181 $1.220 $0.924 $0.979 $0.877
Number accumulation units outstanding at end of period (in
thousands)............................................... 266,962 238,086 246,259 132,795 32,597 13,109 2,892
DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.359 $1.009 $1.000(d)
Accumulation unit value at end of period.................. $1.650 $1.359 $1.009
Number accumulation units outstanding at end of period (in
thousands)............................................... 190,958 83,506 29,146
INTERNATIONAL ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.146 $1,000(e)
Accumulation unit value at end of period.................. $1.266 $1.146
Number accumulation units outstanding at end of period (in
thousands)............................................... 23,174 6,577
SMALL COMPANY FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $0.000 $0.000(f)
Accumulation unit value at end of period.................. $1.066 $0.000
Number accumulation units outstanding at end of period (in
thousands)............................................... 12,563 0
<CAPTION>
1989 1988 1987 1986
------- ------- ------- -------
<S> <C> <C> <C> <C>
BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.095 $1.031 $1.044 $1.000(a)
Accumulation unit value at end of period.................. $1.212 $1.095 $1.031 $1.044
Number accumulation units outstanding at end of period (in
thousands)............................................... 9,267 5,786 3,576 802
STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.261 $1.073 $1.031 $1.000(a)
Accumulation unit value at end of period.................. $1.569 $1.261 $1.073 $1.031
Number accumulation units outstanding at end of period (in
thousands)............................................... 30,096 9.158 9,229 1,250
MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.136 $1.071 $1.019 $1.000(a)
Accumulation unit value at end of period.................. $1.225 $1.136 $1.071 $1.019
Number accumulation units outstanding at end of period (in
thousands)............................................... 28,291 29,043 11,633 243
ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.223 $1.085 $1.036 $1.000(a)
Accumulation unit value at end of period.................. $1.470 $1.223 $1.085 $1.036
Number accumulation units outstanding at end of period (in
thousands)............................................... 79,738 56.584 56,332 9,405
U.S. GOVERNMENT MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.122 $1.062 $1.018 $1.000(a)
Accumulation unit value at end of period.................. $1.202 $1.122 $1.062 $1.018
Number accumulation units outstanding at end of period (in
thousands)............................................... 297 281 187 10
CAPITAL APPRECIATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.142 $0.916 $0.969 $1.000(a)
Accumulation unit value at end of period.................. $1.400 $1.142 $0.916 $0.969
Number accumulation units outstanding at end of period (in
thousands)............................................... 8,041 3,606 2,989 431
MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.132 $1.057 $1.043 $1.000(a)
Accumulation unit value at end of period.................. $1.264 $1.132 $1.057 $1.043
Number accumulation units outstanding at end of period (in
thousands)............................................... 12,248 11,061 9,397 3,773
INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $0.989 $0.862 $1.000(b) --
Accumulation unit value at end of period.................. $1.274 $0.989 $0.862 --
Number accumulation units outstanding at end of (in
thousands)............................................... 6,306 2,868 1,758 --
INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at end of period.................. -- -- -- --
Accumulation unit value at end of period.................. -- -- -- --
Number accumulation units outstanding at end of period (in
thousands)............................................... -- --
DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............
Accumulation unit value at end of period..................
Number accumulation units outstanding at end of period (in
thousands)...............................................
INTERNATIONAL ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............
Accumulation unit value at end of period..................
Number accumulation units outstanding at end of period (in
thousands)...............................................
SMALL COMPANY FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............
Accumulation unit value at end of period..................
Number accumulation units outstanding at end of period (in
thousands)...............................................
</TABLE>
(a) Inception date August 1, 1986.
(b) Inception date May 1, 1987.
(c) Inception date July 2, 1990.
(d) Inception date March 8, 1994.
(e) Inception date March 1, 1995.
(f) Inception date August 9, 1996.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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INTRODUCTION
This Prospectus has been designed to provide you with the necessary
information to make a decision on purchasing an individual or group tax deferred
Variable Annuity Contract offered by Hartford Life Insurance Company
("Hartford") in the Fixed Account and/or a series of Separate Account Two. (See
"Hartford Life Insurance Company," page 7; "The Contracts," page 11; and "The
Separate Account," page 8.) Please read the Glossary of Special Terms on pages 3
and 4 prior to reading this Prospectus to familiarize yourself with the terms
being used.
The Contracts are available for purchase by individuals and groups on both a
non-qualified and qualified basis. The maximum issue age for the Contract is 85
years old. (See "The Contracts," page 11.) Generally, the minimum initial
Premium Payment is $1,000. Thereafter, the minimum payment is $500. There is no
deduction for sales expenses from Premium Payments when made. A deduction will
be made for state Premium Taxes for Contracts sold in certain states. (See
"Charges Under the Contracts," page 13.)
Generally, the Contracts are purchased by completing and submitting an
application or an order to purchase, along with the initial Premium Payment, to
Hartford for its approval. Generally, a Contract Owner may exercise his right to
cancel the Contract within ten days of delivery of the Contract by returning the
Contract to Hartford at its Home Office. If the Contract Owner exercises his
right to cancel, Hartford will return either the Contract Value or the original
Premium Payments to the Contract Owner. The duration of the right to cancel
period and Hartford's obligation to either return the Contract Value of the
original Premium Payment will depend on state law.
The investment options for the Contracts are the Hartford Advisers Fund,
Inc., Hartford Bond Fund, Inc., Hartford Capital Appreciation Fund, Inc.,
Hartford Dividend and Growth Fund, Inc., Hartford Index Fund, Inc., Hartford
International Advisers Fund, Inc., Hartford International Opportunities Fund,
Inc., Hartford Mortgage Securities Fund, Inc., Hartford Small Company Fund,
Inc., Hartford Stock Fund, Inc., HVA Money Market Fund, Inc., BB&T Growth and
Income Fund and such other funds as shall be offered from time to time (the
"Funds"), and the Fixed Account. (See "The Funds," page 8, and "The Fixed
Account," page 10.) With certain limitations, Contract Owners may allocate their
Premium Payments and Contract Values to one or a combination of these investment
options and transfer among the investment options. (See "Transfers Between
Sub-Accounts/Fixed Account," page 12.)
An Annual Maintenance Fee in the amount of $30.00 is deducted from Contract
Values each Contract Year (not applicable to Contracts with Account Values of
$50,000 or more or under other circumstances at the sole discretion of Hartford)
and there is a 1.25% per annum mortality and expense risk charge applied against
all Contract Values held in the Separate Account. (See "Charges Under the
Contracts," page 13). Finally, the Funds are subject to certain fees, charges
and expenses (see the Funds' prospectus attached hereto).
The Contracts may be surrendered, or portions of the
value of the Contracts may be withdrawn, at any time prior to the Annuity
Commencement Date. (See "Surrender Benefits," page 16.) However, a contingent
deferred sales charge may be assessed against Contract Values when they are
surrendered. Contingent deferred sales charges will not be assessed in certain
instances, including withdrawals up to the annual withdrawal amount and the
payment of Death Benefits. (See "Charges Under the Contracts," page 13.)
The Contract provides for a minimum Death Benefit in the event of the death
of the Annuitant or Contract Owner before Annuity payments have commenced (see
"Death Benefits," page 15). Various annuity options are available under the
Contract for election by the Contract Owner on either a fixed or variable basis.
In the absence of an annuity option election, the Contract Value (less
applicable Premium Taxes) will be applied on the Annuity Commencement Date to
provide a life annuity with 120 monthly payments certain (see "Annuity
Benefits," page 17).
The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Hartford will credit the Contract with
an additional 5.0% of the premium payment. This additional percentage of premium
payment in no way affects present or future charges, rights, benefits or current
values of other Contract Owners. The following class of individuals are eligible
for this feature: (1) current or retired officers, directors, trustees and
employees (and their families) of the ultimate parent and affiliates of
Hartford; and (2) employees and registered representatives (and their families)
of registered broker-dealers (or financial institutions affiliated therewith)
that have a sales agreement with Hartford and its principal underwriter to sell
the Contracts.
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HARTFORD, SEPARATE ACCOUNT
TWO, THE FIXED ACCOUNT,
AND THE FUNDS
- --------------------------------
HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing health and life insurance, both
individual and
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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group, in all states of the United States and the District of Columbia. Hartford
was originally incorporated under the laws of Massachusetts on June 5, 1902, and
was subsequently redomiciled to Connecticut. Its offices are located in
Simsbury, Connecticut; however, its mailing address is P.O. Box 2999, Hartford,
CT 06104-2999. Hartford is a subsidiary of Hartford Fire Insurance Company, one
of the largest multiple lines insurance carriers in the United States. Hartford
is ultimately owned by The Hartford Financial Services Group, Inc.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps, on the basis of its claims paying
ability. These ratings do not apply to the investment performance of the Sub-
Accounts of the Separate Account. The ratings apply to Hartford's ability to
meet its insurance obligations, including those described in this Prospectus.
- ---------------------------------------------------
SEPARATE ACCOUNT TWO
The Separate Account was established on June 2, 1986. It is the Separate
Account in which Hartford sets aside and invests the assets attributable to
variable annuity Contracts, including the Contracts sold under this Prospectus.
Separate Account assets are held by Hartford under a safekeeping arrangement.
Although the Separate Account is an integral part of Hartford, it is registered
as a unit investment trust under the Investment Company Act of 1940. This
registration does not, however, involve Commission supervision of the management
or the investment practices or policies of the Separate Account or Hartford. The
Separate Account meets the definition of "separate account" under federal
securities law.
Your investment in the Separate Account is allocated to one or more
Sub-Accounts as per your specifications. Each Sub-Account is invested
exclusively in the assets of one underlying Fund. Hartford reserves the right,
subject to compliance with the law, to substitute the shares of any other
registered investment company for the shares of any Fund already purchased or to
be purchased in the future by the Separate Account provided that the
substitution has been approved by the Commission.
Net Premium Payments 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 payments were received or
the transfer made. All distributions from the Fund are reinvested at net asset
value. The value of your investment will therefore vary 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, both
your Annuity payments and reserve values will vary in accordance with these
factors.
Under Connecticut law, the assets of the Separate Account attributable to
the Contracts offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Contracts. Income,
gains, and losses, whether or not realized, from assets allocated to the
Separate Account, are, in accordance with the Contracts, credited to or charged
against the Separate Account. Also, the assets in the Separate Account are not
chargeable with liabilities arising out of any other business Hartford may
conduct. Contract Values allocated to the Separate Account is not affected by
the rate of return of Hartford's General Account, nor by the investment
performance of any of Hartford's other separate accounts. The Separate Account
may be subject to liabilities arising from a Sub-Account of the Separate Account
whose assets are attributable to other variable annuity Contracts or variable
life insurance policies offered by the Separate Account which are not described
in this Prospectus. However, all obligations arising under the Contracts are
general corporate obligations of Hartford.
Hartford does not guarantee the investment results of the Separate Accounts
or any of the 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 total of Premium Payments made under
the Contract. Since each underlying Fund has different investment objectives,
each is subject to different risks. These risks are more fully described in the
accompanying Funds' prospectus.
- ---------------------------------------------------
THE FUNDS
The Hartford Bond Fund, Inc., Hartford Stock Fund, Inc., HVA Money Market
Fund, Inc., Hartford Advisers, Inc., Hartford Capital Appreciation Fund, Inc.,
Hartford Mortgage Securities Fund, Inc., Hartford Index Fund, Inc., Hartford
International Opportunities Fund, Inc., Hartford Dividend and Growth Fund, Inc.,
Hartford International Advisers Fund, Inc., and Hartford Small Company Fund,
Inc. are sponsored by Hartford and are incorporated under the laws of the State
of Maryland. HL Investment Advisors, Inc. ("HL Advisors") serves as the
investment adviser to each of the Hartford Funds.
Wellington Management Company, L.L.P. serves as sub-investment adviser for
Hartford Advisers Fund, Hartford Capital Appreciation Fund, Hartford Dividend
and Growth Fund, Hartford International Advisers Fund, Hartford International
Opportunities Fund, Hartford Small Company Fund and Hartford Stock Fund.
In addition, HL Advisors has entered an investment services agreement with
The Hartford Investment Management Company, Inc. ("HIMCO"), pursuant to which
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
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HIMCO will provide certain investment services to Hartford Bond Fund, Hartford
Index Fund, Hartford Mortgage Securities Fund and HVA Money Market Fund.
BB&T Growth and Income Fund is sponsored by Branch Banking and Trust Company
and is a diversified investment portfolio of the Variable Insurance Funds, a
Massachusetts business trust which is registered as an open-end management
investment company. BB&T serves as the investment adviser to the BB&T Growth and
Income Fund.
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 accompanying Funds' Prospectuses which should be read in
conjunction with this Prospectus before investing and in the Funds' Statements
of Additional Information which may be ordered from Hartford. The Funds may not
be available in all states.
The investment objectives of each of the Funds are as follows:
HARTFORD ADVISERS FUND, INC.
Seeks maximum long-term total rate of return consistent with prudent
investment risk by investing in common stock and other equity securities, bonds
and other debt securities, and money market instruments.
HARTFORD BOND FUND, INC.
Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets of
this Fund may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's or "BB" by S&P) or, if unrated, are determined
to be of comparable quality by the Fund's investment adviser. Securities rated
below investment grade are commonly referred to as "high yield-high risk
securities" or "junk bonds." For more information concerning the risks
associated with investing in such securities, please refer to the section in the
accompanying prospectus for the Hartford Funds entitled "Hartford Bond Fund,
Inc. -- Investment Policies."
HARTFORD CAPITAL APPRECIATION FUND, INC.
Seeks growth of capital by investing in securities selected solely on the
basis of potential for capital appreciation; income, if any, is an incidental
consideration.
HARTFORD DIVIDEND AND GROWTH FUND, INC.
Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
HARTFORD INDEX FUND, INC.
Seeks to provide investment results which approximate the price and yield
performance of publicly-traded common stocks in the aggregate, as represented by
the Standard & Poor's 500 Composite Stock Price Index.*
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
Seeks maximum long-term total rate of return consistent with prudent
investment risk by investing in a portfolio of equity, debt and money market
securities. Securities in which the Fund invests primarily will be denominated
in non-U.S. currencies and will be traded in non-U.S. markets.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
Seeks long-term total rate of return consistent with prudent investment risk
through investment primarily in equity securities issued by non-U.S. companies.
HARTFORD MORTGAGE SECURITIES FUND, INC.
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.
HARTFORD SMALL COMPANY FUND, INC.
Seeks growth of capital by investing primarily in equity securities selected
on the basis of potential for capital appreciation.
HARTFORD STOCK FUND, INC.
Seeks long-term capital growth primarily through capital appreciation, with
income as a secondary consideration, by investing primarily in equity
securities.
HVA MONEY MARKET FUND, INC.
Seeks maximum current income consistent with liquidity and preservation of
capital.
BB&T GROWTH AND INCOME FUND
Seeks to achieve capital growth, current income or both primarily through
investment in stocks. Under normal market conditions, this Fund will invest at
least 65% of its total assets in stocks, which may include common stock,
preferred stock, warrants or debt instruments that are convertible to common
stock.
VOTING RIGHTS -- Hartford is the legal owner of all Fund shares held in the
Separate Account. As the owner, Hartford has the right to vote at the Funds'
shareholder meetings. However, to the extent required by federal securities laws
or regulations, Hartford will:
* "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.
THE INDEX FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD &
POOR'S AND STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING THE
ADVISABILITY OF INVESTING IN THE INDEX FUND.
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
1. Vote all Fund shares attributable to a Contract according to instructions
received from the Contract Owner, and
2. Vote shares attributable to a Contract for which no voting instructions are
received in the same proportion as shares for which instructions are
received.
If any federal securities laws or regulations, or their present
interpretation change to permit Hartford to vote Fund shares in its own right,
Hartford may elect to do so.
Hartford will notify you of any Fund shareholders' meeting if the shares
held for your account may be voted at such meetings. Hartford will send proxy
materials and a form of instruction by means of which you can instruct Hartford
with respect to the voting of the Fund shares held for your account.
In connection with the voting of Fund shares held by it, Hartford will
arrange for the handling and tallying of proxies received from Contract Owners.
Hartford as such, shall have no right, except as hereinafter provided, to vote
any Fund shares held by it hereunder 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 the Contract Owners for whose
accounts the Fund shares are held. If a Contract Owner desires to attend any
meeting at which shares held for the Contract Owner's benefit may be voted, the
Contract Owner may request Hartford to furnish a proxy or otherwise arrange for
the exercise of voting rights with respect to the Fund shares held for such
Contract Owner's account. Hartford will vote shares for which no instructions
have been given and shares which are not attributable to Contract Owners (i.e.
shares owned by Hartford) in the same proportion as it votes shares of that Fund
for which it has received instructions. During the Annuity period under a
Contract the number of votes will decrease as the assets held to fund Annuity
benefits decrease.
The Funds are available only to serve as the underlying investment for
variable annuity and variable life insurance Contracts issued by Hartford. 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 Contract Owners or to variable
life insurance Policy Owners, the Funds' Board of Directors intends to monitor
events in order to identify any material conflicts between such Contract Owners
and Policy Owners and to determine what action, if any, should be taken in
response thereto. If the Board of Directors of the Funds were to conclude that
separate funds should be established for variable life and variable annuity
separate accounts, the variable annuity Contract Owners would not bear any
expenses attendant to the establishment of such separate funds.
- ---------------------------------------------------
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN
ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT,
AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED BY THE
STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE ABOUT
THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF
THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF
DISCLOSURE.
Premium Payments and Contract Values allocated to the Fixed Account become a
part of the general assets of Hartford. Hartford invests the assets of the
General Account in accordance with applicable law governing the investments of
Insurance Company General Accounts.
Currently, Hartford guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the Fixed
Account under the Contracts. However, Hartford reserves the right to change the
rate according to state insurance law. Hartford may credit interest at a rate in
excess of 3% per year. There is no specific formula for the determination of
excess interest credits. Some of the factors that the Company may consider in
determining whether to credit excess interest to amounts allocated to the Fixed
Account and the amount thereof, are general economic trends, rates of return
currently available and anticipated on the Company's investments, regulatory and
tax requirements and competitive factors. ANY INTEREST CREDITED TO AMOUNTS
ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE DETERMINED IN
THE SOLE DISCRETION OF THE COMPANY. THE OWNER ASSUMES THE RISK THAT INTEREST
CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3%
FOR ANY GIVEN YEAR.
- ---------------------------------------------------
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about a Sub-Account is
based on
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
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the Sub-Account's past performance only and is no indication of future
performance.
The Hartford Advisers Fund, Hartford Bond Fund, Hartford Capital
Appreciation Fund, Inc., Hartford Dividend and Growth Fund, Hartford Index Fund,
Hartford International Advisers Fund, Hartford International Opportunities Fund,
Hartford Mortgage Securities Fund, Hartford Small Company Fund, Hartford Stock
Fund, HVA Money Market Fund and BB&T Growth and Income Fund Sub-Accounts may
include total return in advertisements or other sales material.
When a Sub-Account advertises its standardized total return, it 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 an investment in the
Sub-Account at the beginning of the relevant period to the value of the
investment at the end of the 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).
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.
The Hartford Bond Fund, Hartford Mortgage Securities Fund and BB&T Growth
and Income 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, divided by the unit value on
the last day of the period. This figure reflects the recurring charges at the
Separate Account level including the annual maintenance fee.
The HVA Money Market Fund Sub-Account may advertise yield and effective
yield. The yield of a 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 the period is assumed to be earned every seven days over a 52-week period and
stated as a percentage of the investment. Effective yield is calculated
similarly but when annualized, the income earned by the investment is assumed to
be reinvested in Sub-Account units and thus compounded in the course of a
52-week period. Yield and effective yield reflect the recurring charges at the
Separate Account level including the annual maintenance fee.
The Separate Account may also disclose yield, standard total return, and
non-standard total return for periods prior to the date the Separate Account
commenced operations. For periods prior to the date the Separate Account
commenced operations, performance information for the Sub-Accounts will be
calculated based on the performance of the underlying Funds and the assumption
that the Sub-Accounts were in existence for the same periods as those of the
underlying Funds, with a level of charges equal to those currently assessed
against the Sub-Accounts.
Hartford may provide information on various topics to Contract Owners and
prospective Contract Owners in advertising, sales literature or other materials.
These topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in tax-
advantaged and taxable instruments, customer profiles and hypothetical purchase
scenarios, financial management and tax and retirement planning, and other
investment alternatives, including comparisons between the Contracts and the
characteristics of and market for such alternatives.
- ---------------------------------------------------
THE CONTRACTS
- --------------------------------
CONTRACTS OFFERED
The Contracts are individual or group tax-deferred Variable Annuity
Contracts designed for retirement planning purposes and may be purchased by any
individual, group or trust, including any trustee or custodian for a retirement
plan qualified under Sections 401(a) or 403(a) of the Code; annuity purchase
plans adopted by public school systems and certain tax-exempt organizations
according to Section 403(b) of the Code; Individual Retirement Annuities adopted
according to Section 408 of the Code; 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, and
certain eligible deferred compensation plans as defined in Section 457 of the
Code ("Qualified Contracts").
- ---------------------------------------------------
PREMIUM PAYMENTS AND INITIAL ALLOCATIONS
The minimum initial Premium Payment is $1,000. Thereafter, the minimum
Premium Payment is $500. Certain plans may make smaller periodic payments. Each
Premium Payment may be split among the various Sub-Accounts and/or the Fixed
Account subject to minimum amounts then in effect.
REFUND RIGHTS -- If you are not satisfied with your purchase you may cancel
the Contract by returning it within ten days (or longer in some states) after
you receive it. A
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
written request for cancellation must accompany the Contract. In such event,
Hartford will, without deduction for any charges normally assessed thereunder,
pay you an amount equal to the Contract Value on the date of receipt of the
request for cancellation. You bear the investment risk during the period prior
to the Company's receipt of request for cancellation. Hartford will refund the
premium paid only for individual retirement annuities (if returned within seven
days of receipt) and in those states where required by law.
CREDITING AND VALUATION -- The balance of the initial Premium Payment
remaining after the deduction of any applicable Premium Tax is credited to your
Contract within two business days of receipt of a properly completed application
or an order to purchase a Contract and the initial Premium Payment by Hartford
at its Home Office, P.O. Box 5085, Hartford, CT 06102-5085. It will be credited
to the Sub-Account(s) and/or the Fixed Account in accordance with your election.
If the application or other information is incomplete when received, the balance
of the initial Premium Payment, after deduction of any applicable Premium Tax,
will be credited to the Sub-Account(s) or the Fixed Account within five business
days of receipt. If the initial Premium Payment is not credited within five
business days, the Premium Payment will be immediately returned unless you have
been informed of the delay and request that the Premium Payment not be returned.
The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment being
credited to each Sub-Account by the value of an Accumulation Unit in that
Sub-Account on that date.
Subsequent Premium Payments are priced on the Valuation Day received by
Hartford in its Home Office, or other designated administrative offices.
- ---------------------------------------------------
CONTRACT VALUE
The value of the Sub-Account investments under your Contract at any time
prior to the commencement of Annuity payments can be determined by multiplying
the total number of Accumulation Units credited to your Contract in each
Sub-Account by the then current Accumulation Unit values for the applicable
Sub-Account. The value of the Fixed Account under your Contract will be the
amount allocated to the Fixed Account plus interest credited.
You will be advised at least semiannually of the number of Accumulation
Units credited to each Sub-Account, the current Accumulation Unit values, the
Fixed Account value, and the total value of your Contract.
ACCUMULATION UNIT VALUES -- 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 particular 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 (a) 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 distributed
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, (b) minus the mortality and expense risk
charge and the administration charge described below. You should refer to the
prospectus for each of the Funds which accompanies 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 Contract. The Accumulation Unit Value is affected by
the performance of the underlying Fund(s), expenses and deduction of the charges
described in this Prospectus.
VALUATION OF FUND SHARES -- The shares of the Fund are valued at net asset
value on each Valuation Day. A complete description of the valuation method used
in valuing Fund shares may be found in the accompanying Funds' prospectus.
VALUATION OF THE FIXED ACCOUNT -- Hartford will determine the value of the
Fixed Account by crediting interest to amounts allocated to the Fixed Account.
- ---------------------------------------------------
TRANSFERS BETWEEN SUB-ACCOUNTS/FIXED ACCOUNT
You may transfer the values of your Sub-Account allocations from one or more
Sub-Accounts to another free of charge. However, Hartford reserves the right to
limit the number of transfers to twelve (12) per Contract Year, with no two (2)
transfers occurring on consecutive Valuation Days. Transfers by telephone may be
made by a Contract Owner or by the attorney-in-fact pursuant to a power of
attorney by calling (800) 862-6668 or by the agent of record by calling (800)
862-7155. Telephone transfers may not be permitted by some states for their
residents who purchase variable annuities.
The policy of Hartford and its agents and affiliates is that they will not
be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. Hartford will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine; otherwise,
Hartford may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures Hartford follows for transactions initiated by
telephone include requirements that callers provide certain
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
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information for identification purposes. All transfer instructions by telephone
are tape recorded.
Hartford may permit the Contract Owner to preauthorize transfers among Sub-
Accounts and between Sub-Accounts and the Fixed Account under certain
circumstances. Transfers between the Sub-Accounts may be made both before and
after Annuity payments commence (limited to once a quarter) provided that the
minimum allocation to any Sub-Account may not be less than $500. No minimum
balance is required in any Sub-Account.
It is the responsibility of the Contract Owner or Participant to verify the
accuracy of all confirmations of transfers and to promptly advise Hartford of
any inaccuracies within one business day of receipt of the confirmation.
Hartford will send the Contract Owner a confirmation of the transfer within five
days from the date of any instruction.
Transfers from the Fixed Account into a Sub-Account may be made at any time
during the Contract Year. The maximum amount which may be transferred from the
Fixed Account during any Contract Year is the greater of 30% of the Fixed
Account balance as of the last Contract Anniversary or the greatest amount of
any prior transfer from the Fixed Account. If Hartford permits preauthorized
transfers from the Fixed Account to the Sub-Accounts, this restriction is
inapplicable. Also, if any interest rate is renewed at a rate of at least one
percentage point less than the previous rate, the Contract Owner may elect to
transfer up to 100% of the funds receiving the reduced rate within 60 days of
notification of the interest rate decrease. Generally, transfers may not be made
from any Sub-Account into the Fixed Account for the six-month period following
any transfer from the Fixed Account into one or more of the Sub-Accounts.
Hartford reserves the right to modify the limitations on transfers from the
Fixed Account and to defer transfers from the Fixed Account for up to six months
from the date of request.
Subject to the exceptions set forth in the following two paragraphs, the
right to reallocate Contract Values is subject to modification if Hartford
determines, in its sole opinion, that the exercise of that right by one or more
Contract Owners is, or would be, to the disadvantage of other Contract Owners.
Any modification could be applied to transfers to or from some or all of the
Sub-Accounts and the Fixed Account and could include, but not be limited to, the
requirement of 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 Contract Owner, or limiting the dollar amount that may be transferred
between the Sub-Accounts and the Fixed Account by a Contract Owner at any one
time. Such restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which is considered by Hartford to be to
the disadvantage of other Contract Owners.
For Contracts issued in the State of New York, the reservation of rights set
forth in the preceding paragraph is limited to (i) requiring up to a maximum of
10 Valuation Days between each transfer: (ii) limiting the amount to be
transferred on any one Valuation Day to no more than $2 million; and (iii) upon
30 days prior written notice, to only accepting transfer instructions from the
Contract Owner and not from the Contract Owner's representative, agent or person
acting under a power of attorney for the Contract Owner.
Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that Hartford will not accept instructions from agents
acting under a power of attorney of multiple Contract Owners whose accounts
aggregate more than $2 million, unless the agent has entered into a third party
transfer services agreement with Hartford.
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CHARGES UNDER THE CONTRACTS
CONTINGENT DEFERRED SALES CHARGES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered. The length of time from receipt of a Premium
Payment to the time of surrender determines the contingent deferred sales
charge. Premium payments will be deemed to be surrendered in the order in which
they were received.
A Contract Owner who chooses to surrender a Contract in full who has not yet
withdrawn the Annual Withdrawal Amount during the current Contract Year (as
described at page 14 below under the sub-heading "Payments Not Subject to Sales
Charges") may, depending upon the amount of investment gain experienced under
the Contract, reduce the amount of any contingent deferred sales charge paid by
first withdrawing the Annual Withdrawal Amount and then requesting a full
surrender of the Contract. Currently, regardless of whether a Contract Owner
first requests a partial withdrawal of the Annual Withdrawal Amount, upon
receiving a request for a full surrender of a Contract, Hartford assesses any
applicable contingent deferred sales charge against the surrender proceeds
representing the lesser of: (1) aggregate Premium Payments not previously
withdrawn; and (2) the Contract Value, less the Annual Withdrawal Amount
available at the time of the full surrender, less the Annual Maintenance Fee.
PAYMENTS SUBJECT TO SALES CHARGES DURING THE FIRST SEVEN CONTRACT YEARS
During the first seven Contract years, a contingent deferred sales charge
will be assessed against the surrender of the Premium Payments. All surrenders
will be first from Premium Payments and then from other Contract Values.
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
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AFTER THE SEVENTH CONTRACT YEAR
After the seventh Contract year, all surrenders will first be from earnings
and then from premium payments. A contingent deferred sales charge will not be
assessed against the surrender of earnings. If an amount equal to all earnings
has been surrendered, a contingent deferred sales charge will not be assessed
against premium payments received more than seven years prior to surrender, but
will be assessed against premium payments received less than seven years prior
to surrender.
The charge is a percentage of the amount withdrawn (not to exceed the
aggregate amount of the Premium Payments made) and equals: Length of Time from
Premium Payment Charge(Number of Years)
<TABLE>
<CAPTION>
LENGTH OF TIME
CHARGE FROM PREMIUM PAYMENT
- ----------- -----------------------
<S> <C>
(NUMBER OF YEARS)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
</TABLE>
PAYMETS NOT SUBJECT TO SALES CHARGES -- During the first seven Contract
Years, on a non-cumulative basis, a Contract Owner may make a partial surrender
of Contract Values of up to 10% of the aggregate Premium Payments made to the
Contract (as determined on the date of the requested withdrawal) without the
application of the contingent deferred sales charge. After the seventh Contract
year, the Contract Owner may make a partial surrender of 10% of premium payments
made during the seven years prior to the surrender and 100% of the Contract
Value less the premium payments made during the seven years prior to the
surrender. The amount which can be withdrawn in any Contract Year prior to
incurring sales charges is the "Annual Withdrawal Amount." An Extended
Withdrawal Privilege rider allows an Annuitant who attains age 70 1/2 under a
Qualified Plan to withdraw an amount in excess of the Annual Withdrawal Amount
to comply with IRS minimum distribution rules.
Certain plans or programs may have different withdrawal privileges. Any such
withdrawal will be deemed to be from Contract Values other than Premium
Payments. From time to time, Hartford may permit the Contract Owner to
preauthorize partial surrenders subject to certain limitations then in effect.
Additional surrenders or any surrender of the Contract Values in excess of such
amount in any Contract Year during the period when contingent deferred sales
charges are applicable will be subject to the appropriate charge.
No contingent deferred sales charges otherwise applicable will be assessed
in the event of death of the Annuitant, death of the Contract Owner or if
payments are made under an Annuity option (other than a surrender out of Option
4) provided for under the Contract.
PURPOSE OF SALES CHARGES -- The contingent deferred sales charges are used
to cover 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. To the extent that these charges do not cover such distribution
expenses they will be borne by Hartford from its general assets, including
surplus. The surplus might include profits resulting from unused mortality and
expense risk charges.
MORTALITY AND EXPENSE RISK CHARGE -- Although Variable Annuity payments made
under the Contracts will vary in accordance with the investment performance of
the underlying Fund shares held in the Sub-Account(s), the payments will not be
affected by (a) Hartford's actual mortality experience among Annuitants before
or after the Annuity Commencement Date or (b) Hartford's actual expenses, if
greater than the deductions provided for in the Contracts because of the expense
and mortality undertakings by Hartford.
For assuming these risks under the Contracts, Hartford will make a daily
charge at the rate of 1.25% per annum against all Contract Values held in the
Sub-Accounts during the life of the Contract (estimated at .90% for mortality
and .35% for expense).
The mortality undertakings provided by Hartford under the Contracts,
assuming the selection of one of the forms of life Annuities, is to make monthly
Annuity payments (determined in accordance with the 1983a Individual Annuity
Mortality Table and other provisions contained in the Contract) to Annuitants
regardless of how long an Annuitant may live, and regardless of how long all
Annuitants as a group may live. Hartford also assumes the liability for payment
of a minimum Death Benefit under the Contract.
The mortality undertakings are based on Hartford's determination of expected
mortality rates among all Annuitants. If actual experience among Annuitants
during the Annuity payment period deviates from Hartford's actuarial
determination of expected mortality rates among Annuitants because, as a group,
their longevity is longer than anticipated, Hartford must provide amounts from
its general funds to fulfill its Contract obligations. Hartford will bear the
loss in such a situation. Also, in the event of the death of an Annuitant or
Contract Owner before the commencement of Annuity payments, whichever is
earlier, Hartford can, in periods of declining value or in periods where the
contingent deferred sales loads would have been
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
applicable, experience a loss resulting from the assumption of the mortality
risk relative to the guaranteed Death Benefit.
In providing an expense undertaking, Hartford assumes the risk that the
contingent deferred sales charges and the Annual Maintenance Fee for maintaining
the Contracts prior to the Annuity Commencement Date may be insufficient to
cover the actual cost of providing such items.
ANNUAL MAINTENANCE FEE -- Each year, on each Contract Anniversary on or
before the Annuity Commencement Date, Hartford will deduct an Annual Maintenance
Fee, if applicable, from Contract Values to reimburse it for expenses relating
to the maintenance of the Contract, the Fixed Account, and the Sub-Account(s)
thereunder. If during a Contract Year the Contract is surrendered for its full
value, Hartford will deduct the Annual Maintenance Fee at the time of such
surrender. The fee is a flat fee which will be due in the full amount regardless
of the time of the Contract Year that Contract Values are surrendered. The
Annual Maintenance Fee is $30.00 per Contract Year for Contracts with less than
$50,000 Contract Value on the Contract Anniversary. The deduction will be made
pro rata according to the value in each Sub-Account and the Fixed Account under
a Contract.
PREMIUM TAXES -- A deduction is also made for Premium Tax, if applicable,
imposed by a state or other governmental entity. Certain states impose a Premium
Tax, currently ranging up to 3.5%. Some states assess the tax at the time
purchase payments are made; others assess the tax at the time of annuitization.
Hartford will pay Premium Taxes at the time imposed under applicable law. At its
sole discretion, Hartford may deduct Premium Taxes at the time Hartford pays
such taxes to the applicable taxing authorities, at the time the Contract is
surrendered, or at the time the Contract annuitizes.
EXCEPTIONS -- Hartford may offer, in its discretion, reduced fees and
charges including, but not limited to, the contingent deferred sales charges,
the mortality and expense risk charge and the maintenance fee for certain sales
(including employer sponsored savings plans) under circumstances which may
result in savings of certain costs and expenses. Reductions in these fees and
charges will not be unfairly discriminatory against any Contract Owner.
- ---------------------------------------------------
DEATH BENEFITS
The Contract provides that, in the event the Annuitant dies before the
selected Annuity Commencement Date, the Contingent Annuitant will become the
Annuitant. If (1) the Annuitant dies before the Annuity Commencement Date and
either (a) there is no designated Contingent Annuitant or (b) the Contingent
Annuitant predeceases the Annuitant, or (2) if any Contract Owner dies before
the Annuity Commencement Date, the Beneficiary as determined under the Contract
Control Provisions, will receive the Death Benefit as determined on the date of
receipt of due proof of death by Hartford in its Home Office. With regard to
Joint Contract Owners, at the first death of a joint Contract Owner prior to the
Annuity Commencement Date, the Beneficiary will be the surviving Contract Owner
notwithstanding that the beneficiary designation may be different.
GUARANTEED DEATH BENEFIT -- If the Annuitant dies before the Annuity
Commencement Date and there is no designated Contingent Annuitant surviving, or
if the Contract Owner dies before the Annuity Commencement Date, the Beneficiary
will receive the greatest of (a) the Contract Value determined as of the day
written proof of death of such person is received by Hartford, or (b) 100% of
the total Premium Payments made to such Contract, reduced by the dollar amount
of any partial surrenders since the issue date, or (c) the Maximum Anniversary
Value immediately preceding the date of death. The Maximum Anniversary Value is
equal to the greatest Anniversary Value attained from the following:
As of the date of receipt of due proof of death, the Company will calculate
an Anniversary Value for each Contract Anniversary prior to the deceased's
attained age 81. The Anniversary Value is equal to the Contract Value on a
Contract Anniversary, increased by the dollar amount of any premium payments
made since that anniversary and reduced by the dollar amount of any partial
surrenders since that anniversary.
If the Annuitant or Contract Owner, as applicable, dies after the Annuity
Commencement Date, then the Death Benefit will equal the present value of any
remaining payments under the elected Annuity Option. In computing such present
value for the portion of such remaining payments attributable to the Separate
Account, Hartford will assume a net investment rate of 5.0% per year.
PAYMENT OF DEATH BENEFIT -- Death Benefit proceeds will remain invested in
the Separate Account in accordance with the allocation instructions given by the
Contract Owner until the proceeds are paid or Hartford receives new instructions
from the Beneficiary. The Death Benefit may be taken in one sum, payable within
seven days after the date Due Proof of Death is received, or under any of the
settlement options then being offered by the Company provided, however, that:
(a) in the event of the death of any Contract Owner prior to the Annuity
Commencement Date, the entire interest in the Contract will be distributed
within five years after the death of the Contract Owner and (b) in the event of
the death of any Contract Owner or Annuitant which occurs on or after the
Annuity Commencement Date, any remaining interest in the Contract will be paid
at least as rapidly as under the method of distribution in effect at the time of
death, or, if the benefit is payable over a period not extending beyond the life
expectancy of the Beneficiary or
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
over the life of the Beneficiary, such distribution must commence within one
year of the date of death. The proceeds due on the death may be applied to
provide variable payments, fixed payments, or a combination of variable and
fixed payments. However, in the event of the Contract Owner's death where the
sole Beneficiary is the spouse of the Contract Owner and the Annuitant or
Contingent Annuitant is living, such spouse may elect, in lieu of receiving the
death benefit, to be treated as the Contract Owner. The Contract Value and the
Maximum Anniversary Value of the Contract will be unaffected by treating the
spouse as the Contract Owner.
If the Contract is owned by a corporation or other non-individual, the Death
Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same settlement
options and in the same manner as if an individual Contract Owner died on the
date of the Annuitant's death.
There may be postponement in the payment of Death Benefits whenever (a) the
New York Stock Exchange is closed, except for holidays or weekends, or trading
on the New York Stock Exchange is restricted as determined by the Commission;
(b) the Commission permits postponement and so orders; or (c) the Commission
determines that an emergency exists making valuation of the amounts or disposal
of securities not reasonably practicable.
GROUP UNALLOCATED CONTRACTS -- Hartford requires that detailed accounting of
cumulative purchase payments, cumulative gross surrenders, and current Contract
Value attached to each Plan Participant be submitted on an annual basis by the
Contract Owner. Failure to submit accurate data satisfactory to Hartford will
give Hartford the right to terminate this extension of benefits.
- ---------------------------------------------------
SURRENDER BENEFITS
FULL SURRENDERS -- At any time prior to the Annuity Commencement Date (and
after the Annuity Commencement Date with respect to values applied to Option 4
or 5), the Contract Owner has the right to terminate the Contract. In such
event, the Termination Value of the Contract may be taken in the form of a lump
sum cash settlement.
Under any of the Annuity options excluding Options 4 and 5, no surrenders
are permitted after Annuity payments commence. Only full surrenders are allowed
out of Option 4 and any such surrender will be subject to contingent deferred
sales charges, if applicable. Full or partial withdrawals may be made from
Option 5 at any time and contingent deferred sales charges will not be applied.
The Termination Value of the Contract is equal to the Contract Value less
any applicable Premium Taxes, the Annual Maintenance Fee if applicable and any
applicable contingent deferred sales charges. The Termination Value may be more
or less than the amount of the Premium Payments made to a Contract.
PARTIAL SURRENDERS -- The Contract Owner may make a partial surrender of
Contract Values at any time prior to the Annuity Commencement Date so long as
the amount surrendered is at least equal to the minimum amount rules then in
effect. Additionally, if the remaining Contract Value following a surrender is
less than $500 ($1,000 in New York), Hartford will terminate the Contract and
pay the Termination Value. For Contracts issued in Texas, there is an additional
requirement that the Contract will not be terminated when the remaining Contract
Value after a surrender is less than $500 unless there were no Premium Payments
made during the previous two Contract Years.
In requesting a partial withdrawal you should specify the Sub-Account(s)
and/or the Fixed Account from which the partial withdrawal is to be taken.
Otherwise, such withdrawal and any applicable contingent deferred sales charges
will be effected on a pro rata basis according to the value in the Fixed Account
and each Sub-Account under a Contract.
Hartford may permit the Contract Owner to preauthorize partial surrenders
subject to certain limitations then in effect.
PAYMENT OF SURRENDER BENEFITS -- Payment on any request for a full or
partial surrender from the Sub-Accounts will be made as soon as possible and in
any event no later than seven days after the written request is received by
Hartford at its Home Office, Attn: Individual Annuity Services, P.O. Box 5085,
Hartford, CT 06102-5085. Hartford may defer payment of any amounts from the
Fixed Account for up to six months from the date of the request for surrender.
If Hartford defers payment for more than 30 days (10 working days in New York),
Hartford will pay interest of at least 3% per annum on the amount deferred.
There may be postponement in the payment of Surrender Benefits whenever (a)
the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation of the amounts
or disposal of securities not reasonably practicable.
CERTAIN QUALIFIED CONTRACT SURRENDERS -- THERE ARE CERTAIN RESTRICTIONS ON
SECTION 403(B) TAX SHELTERED ANNUITIES. AS OF DECEMBER 31, 1988, ALL SECTION
403(B) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO
THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY INCREASES IN CASH VALUE AFTER
DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS THE CONTRACT OWNER/
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 17
- --------------------------------------------------------------------------------
EMPLOYEE HAS A) ATTAINED AGE 59 1/2, B) SEPARATED FROM SERVICE, C) DIED, D)
BECOME DISABLED OR E) EXPERIENCED FINANCIAL HARDSHIP. (CASH VALUE INCREASES MAY
NOT BE DISTRIBUTED PRIOR TO AGE 59 1/2 FOR HARDSHIPS.)
DISTRIBUTIONS PRIOR TO AGE 59 1/2 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.
ANY SUCH FULL OR PARTIAL SURRENDER DESCRIBED ABOVE MAY AFFECT THE CONTINUING
TAX QUALIFIED STATUS OF SOME CONTRACTS OR PLANS AND MAY RESULT IN ADVERSE TAX
CONSEQUENCES TO THE CONTRACT OWNER. THE CONTRACT OWNER, THEREFORE, SHOULD
CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE
"FEDERAL TAX CONSIDERATIONS" COMMENCING ON PAGE 19.)
- ---------------------------------------------------
ANNUITY BENEFITS
You select an Annuity Commencement Date and an Annuity option which may be
on a fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be deferred beyond the Annuitant's 90th birthday (85th birthday in
some states, 100th birthday if sold as part of a Charitable Remainder Trust).
The Annuity Commencement Date and/or the Annuity option may be changed from time
to time, but any change must be at least 30 days prior to the date on which
Annuity payments are scheduled to begin. The Contract allows the Contract Owner
to change the Sub-Accounts on which variable payments are based after payments
have commenced once every three months. Any Fixed Annuity allocation may not be
changed.
ANNUITY OPTIONS
The Contract contains the five optional Annuity forms described below.
Options 2, 4, and 5 are available to Qualified Contracts only if the guaranteed
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. With respect to Non-Qualified
Contracts, if you do not elect otherwise, payments in most states will
automatically begin at the Annuitant's age 90 (with the exception of states that
do not allow deferral past age 85) under Option 2 with 120 monthly payments
certain. For Qualified Contracts and Contracts issued in Texas, if you do not
elect otherwise, payments will begin automatically at the Annuitant's age 90
under Option 1 to provide a life Annuity. After the Annuity Commencement Date,
the Annuity option elected may not be changed.
Under any of the Annuity options excluding Options 4 and 5, no surrenders
are permitted after Annuity payments commence. Only full surrenders are allowed
out of Option 4 and any such surrender will be subject to contingent deferred
sales charges, if applicable. Full or partial withdrawals may be made from
Option 5 at any time and contingent deferred sales charges will not be applied.
OPTION 1 -- Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last payment due preceding the death of the Annuitant.
This option offers the largest payment amount of any of the life Annuity options
since there is no guarantee of a minimum number of payments nor a provision for
a Death Benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the date of the third Annuity payment, etc.
OPTION 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments have
been made for less than the minimum elected number of months, then the present
value as of the date of the Annuitant's death, of any remaining guaranteed
payments will be paid in one sum to the Beneficiary or Beneficiaries designated
unless other provisions have been made and approved by Hartford.
OPTION 3 -- Joint and Last Survivor Annuity
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford, the Annuitant may elect that
the payment to the survivor be less than the payment made during the joint
lifetime of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated
second person to receive only one payment in the event of the common or
simultaneous death of the parties prior to the due date for the second payment
and so on.
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
OPTION 4 -- Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from
5 to 30 years. Under this option, you may, at any time, surrender the Contract
and receive, within seven days, the Termination Value of the Contract as
determined by Hartford.
In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and approved by
Hartford.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Contracts thus provide no real benefit to a Contract Owner.
OPTION 5 -- Death Benefit Remaining with Hartford
Proceeds from the Death Benefit may be left with Hartford for a period not
to exceed five years from the date of the Contract Owner's death prior to the
Annuity Commencement Date. These proceeds will remain in the Sub-Account(s) to
which they were allocated at the time of death unless the Beneficiary elects to
reallocate them. Full or partial withdrawals may be made at any time. In the
event of withdrawals, the remaining value will equal the Contract Value of the
proceeds left with Hartford, minus any withdrawals.
Hartford may offer other annuity options from time to time.
VARIABLE AND FIXED ANNUITY PAYMENTS -- When an Annuity is effected under a
Contract, unless otherwise specified, Contract Values (less applicable Premium
Taxes) held in the Sub-Accounts will be applied to provide a Variable Annuity
based on the pro rata amount in the various Sub-Accounts. Fixed Account Contract
Values will be applied to provide a Fixed Annuity. YOU SHOULD CONSIDER THE
QUESTION OF ALLOCATION OF CONTRACT VALUES (LESS APPLICABLE PREMIUM TAXES) AMONG
SUB-ACCOUNTS OF THE SEPARATE ACCOUNT AND THE GENERAL ACCOUNT OF HARTFORD TO MAKE
CERTAIN THAT ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT ALTERNATIVE BEST
SUITED TO YOUR NEEDS FOR RETIREMENT.
The minimum monthly Annuity payment is $50.00. No election may be made which
results in a first payment of less than $50.00. If at any time Annuity payments
are or become less than $50.00, Hartford has the right to change the frequency
of payment to intervals that will result in payments of at least $50.00. For New
York Contracts, the minimum monthly Annuity payment is $20.00.
When Annuity payments are to commence, the value of the Contract is
determined as the sum of (1) the value of the Fixed Account no earlier than the
close of business on the fifth Valuation Day preceding the date the first
Annuity payment is due plus (2) the product of (a) the value of the Accumulation
Unit of each Sub-Account on that same day and (b) the number of Accumulation
Units credited to each Sub-Account as of the date the Annuity is to commence.
The first payment under any option should be made on the 15th day of the
month immediately following approval of the claim for settlement. Subsequent
payments shall be made on the 15th day of each subsequent month in accordance
with the manner of payment selected.
VARIABLE ANNUITY -- The Contract contains tables indicating the minimum
dollar amount of the first monthly payment under the optional variable forms of
Annuity for each $1,000 of value of a Sub-Account under a Contract. The first
monthly payment varies according to the form and type of Variable Payment
Annuity selected. The Contract contains Variable Payment Annuity tables derived
from the 1983a Individual Annuity Mortality Table with ages set back one year
and with an assumed investment rate ("A.I.R.") of 5% per annum. The total first
monthly Variable Annuity payment is determined by multiplying the value
(expressed in thousands of dollars) of a Sub-Account (less any applicable
Premium Taxes) by the amount of the first monthly payment per $1,000 of value
obtained from the tables in the Contracts.
The amount of the first monthly Variable Annuity payment is divided by the
value of an Annuity Unit for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due in order to determine the number of Annuity Units represented by
the first payment. This number of Annuity Units remains fixed during the Annuity
payment period, and in each subsequent month the dollar amount of the Variable
Annuity payment is determined by multiplying this fixed number of Annuity Units
by the then current Annuity Unit value.
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by the
product of (1) the net investment factor for the day for which the Annuity Unit
value is being calculated, and (2) a factor to neutralize the assumed investment
rate of 5.00% per annum. The Annuity Unit value used in calculating the amount
of the Variable Annuity payments will be based on an Annuity Unit value
determined as of the close of business on a day no earlier than the fifth
Valuation Day preceding the date of the Annuity payment.
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
FACT, PAYMENTS WILL VARY UP OR DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN
FROM THE A.I.R.
FIXED ANNUITY -- Fixed Annuity payments are determined at annuitization by
multiplying the Contract Value (less applicable Premium Taxes) by a rate to be
determined by Hartford which is no less than the rate specified in the Fixed
Payment Annuity tables in the Contract. The Annuity payment will remain level
for the duration of the Annuity.
- ---------------------------------------------------
OTHER INFORMATION
ASSIGNMENT -- Ownership of a Contract described herein is generally
assignable. However, if the Contracts are issued pursuant to some form of
Qualified Plan, it is possible that the ownership of the Contracts may not be
transferred or assigned depending on the type of tax-qualified retirement plan
involved. An assignment of a Non-Qualified Contract may subject the Contract
values or assignment proceeds to income taxes and certain penalty taxes.
CONTRACT MODIFICATION -- The Annuitant may not be changed; however, the
Contingent Annuitant may be changed at any time prior to the Annuity
Commencement Date by written notice to the Company.
Hartford reserves the right to modify the Contract, but only if such
modification: (i) is necessary to make the Contract or the Separate Account
comply with any law or regulation issued by a governmental agency to which
Hartford is subject; or (ii) is necessary to assure continued qualification of
the Contract under the Code or other federal or state laws relating to
retirement annuities or annuity Contracts; or (iii) is necessary to reflect a
change in the operation of the Separate Account or the Sub-Account(s) or (iv)
provides additional Separate Account options or (v) withdraws Separate Account
options. In the event of any such modification Hartford will provide notice to
the Contract Owner or to the payee(s) during the Annuity period. Hartford may
also make appropriate endorsement in the Contract to reflect such modification.
As of December 31, 1996, certain Hartford group pension contracts held
direct interest in shares as follows:
<TABLE>
<CAPTION>
PERCENT OF
SHARES TOTAL SHARES
---------- -------------
<S> <C> <C>
Hartford Advisers Fund, Inc. 18,752,510 0.69%
Hartford Bond Fund, Inc. 47,060 0.01%
Hartford Capital Appreciation Fund,
Inc. 15,519,596 1.79%
Hartford Dividend & Growth Fund, Inc. 443,556 0.08%
Hartford Index Fund, Inc. 16,432,999 6.30%
Hartford International Advisers Fund,
Inc. 27,096 0.03%
Hartford International Opportunities
Fund, Inc. 7,835,802 1.11%
Hartford Mortgage Securities Fund, Inc. 17,408,850 5.65%
Hartford Small Company Fund, Inc. 28,535 0.07%
Hartford Stock Fund, Inc. 92,167 0.01%
HVA Money Market Fund, Inc. 31,633 0.01%
</TABLE>
- ---------------------------------------------------
FEDERAL TAX CONSIDERATIONS
- --------------------------------
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,
TRUSTEE, 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. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. The discussion
here and in Appendix I, commencing on page 24, is based on Hartford's
understanding of existing federal income tax laws as they are currently
interpreted.
- ---------------------------------------------------
B. TAXATION OF HARTFORD AND THE
SEPARATE ACCOUNT
The Separate Account 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, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units (See "Accumulation Unit Values" commencing on
page 6). 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 the Separate Account with respect to Qualified or Non-Qualified
Contracts.
- ---------------------------------------------------
C. TAXATION OF ANNUITIES -- GENERAL
PROVISIONS AFFECTING PURCHASERS OTHER
THAN QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
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1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Section 72 contains provisions for Contract Owners which are non-natural
persons. Non-natural persons include corporations, trusts, and partnerships. The
annual net increase in the value of the Contract is currently includable in the
gross income of a non-natural person unless the non-natural person holds the
Contract as an agent for a natural person. There is an exception from current
inclusion for certain annuities held in tax-qualified retirement arrangements,
certain annuities held by structured settlement companies, certain annuities
held by an employer with respect to a terminated tax-qualified retirement plan
and certain immediate annuities. A non-natural person which is a tax-exempt
entity for federal tax purposes will not be subject to income tax as a result of
this provision.
If the Contract Owner is not an individual, the primary Annuitant shall be
treated as the Contract Owner for purposes of making distributions which are
required to be made upon the death of the Contract Owner. If there is a change
in the primary Annuitant, such change shall be treated as the death of the
Contract Owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract
until an amount is received or deemed received, e.g., in the form of a lump sum
payment (full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other annuity
contracts or life insurance contracts which were purchased prior to August 14,
1982.
A.DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial surrender) is deemed to come first from any such
"income on the contract" and then from "investment in the contract," and for
these purposes such "income on the contract" shall be computed by reference
to any aggregation rule in subparagraph 2.c., below. As a result, any such
amount received or deemed received (1) shall be includable in gross income
to the extent that such amount does not exceed any such "income on the
contract," and (2) shall not be includable in gross income to the extent
that such amount does exceed any such "income on the contract." If at the
time that any amount is received or deemed received there is no "income on
the contract" (e.g., because the gross value of the Contract does not exceed
the "investment in the contract" and no aggregation rule applies), then such
amount received or deemed received will not be includable in gross income,
and will simply reduce the "investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
B.DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the Annuity
Commencement Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the contract
as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and shall
be fully includable in gross income. However, upon a full surrender after
such date, only the excess of the amount received (after any surrender
charge) over the remaining "investment in the contract" shall be includable
in gross income (except to the extent that the aggregation rule referred to
in the next subparagraph c. may apply).
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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C. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year (other than
certain contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity Contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new Contract for this
purpose. Hartford believes that for any annuity subject to such aggregation, the
values under the Contracts and the investment in the contracts will be added
together to determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement Date. Withdrawals
will first be treated as withdrawals of income until all of the income from all
such Contracts is withdrawn. As of the date of this Prospectus, there are no
regulations interpreting this provision.
D.10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal
periodic payments for the life (or life expectancy) of the recipient (or
the joint lives or life expectancies of the recipient and the
recipient's Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
E.SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE EXCHANGE
OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO AUGUST 14,
1982.
If the Contract was obtained by a tax-free exchange of a life insurance
or annuity contract purchased prior to August 14, 1982, then any amount
received or deemed received prior to the Annuity Commencement Date shall be
deemed to come (1) first from the amount of the "investment in the
contract" prior to August 14, 1982 ("pre-8/14/82 investment") carried over
from the prior Contract, (2) then from the portion of the "income on the
contract" (carried over to, as well as accumulating in, the successor
Contract) that is attributable to such pre-8/14/82 investment, (3) then
from the remaining "income on the contract" and (4) last from the remaining
"investment in the contract." As a result, to the extent that such amount
received or deemed received does not exceed such pre-8/14/82 investment,
such amount is not includable in gross income. In addition, to the extent
that such amount received or deemed received does not exceed the sum of (a)
such pre-8/14/82 investment and (b) the "income on the contract"
attributable thereto, such amount is not subject to the 10% penalty tax. In
all other respects, amounts received or deemed received from such
post-exchange Contracts are generally subject to the rules described in
this subparagraph 3.
F. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii
or iii below:
1. If any Contract Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Contract Owner dies before the Annuity Commencement Date, the
entire interest in the Contract will be distributed within 5 years after
such death; and
3. If the Contract Owner is not an individual, then for purposes of 1. or
2. above, the primary annuitant under the Contract shall be treated as
the Contract Owner, and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The primary annuitant is the
individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner described in i. above is
payable to or for the benefit of a designated beneficiary, such beneficiary
may elect to
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
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have the portion distributed over a period that does not extend beyond the
life or life expectancy of the beneficiary. The election and payments must
begin within a year of the death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is payable to or for the
benefit of his or her spouse, and the Annuitant or Contingent Annuitant is
living, such spouse shall be treated as the Contract Owner of such portion
for purposes of section i. above.
3. DIVERSIFICATION REQUIREMENTS.
Section 817 of the Code provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified
in accordance with regulations prescribed by the Treasury Department. If a
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 asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of contract income on an ongoing basis. However, either the company or
the 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.
4.OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable annuity contract to qualify for tax deferral, assets
in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable contract
owner for tax purposes. 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, could 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 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.
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D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of the
Code. The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS.
The portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding unless the recipient elects
not to have taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal income
tax. Election forms will be provided at the time distributions are requested. If
the necessary election forms are not submitted to Hartford, Hartford will
automatically withhold 10% of the taxable distribution.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
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2.PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR).
The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding as if the recipient were
married claiming three exemptions, unless the recipient elects otherwise. A
recipient may elect not to have income taxes withheld or to have income taxes
withheld at a different rate by providing a completed election form. Election
forms will be provided at the time distributions are requested.
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E. GENERAL PROVISIONS AFFECTING
TAX-QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of tax-qualified retirement plans. If
the Contract is being purchased with respect to some form of tax-qualified
retirement plan, please refer to Appendix I commencing on page 24 for
information relative to the types of plans for which it may be used and the
general explanation of the tax features of such plans.
- ---------------------------------------------------
F. 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 advisor
regarding U.S., state, and foreign taxation with respect to an annuity purchase.
- ---------------------------------------------------
MISCELLANEOUS
- --------------------------------
HOW CONTRACTS ARE SOLD
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 salesperson 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.
HSD is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 6% of Premium
Payments.
From time to time, Hartford may pay or permit other promotional incentives,
in cash or credit or other compensation.
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LEGAL MATTERS AND EXPERTS
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 Companies, P.O. Box 2999, Hartford,
Connecticut 06104-2999.
The audited consolidated financial statements and financial statement
schedules included in this Prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports. Reference is made to said report on the consolidated financial
statements of Hartford Life Insurance Company (the Depositor), which includes an
explanatory paragraph with respect to the change in method of accounting for
debt and equity securities as of January 1, 1994, as discussed in Note 2 of
Notes to Consolidated Financial Statements. The principal business address of
Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
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ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
Hartford Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, Connecticut 06102-5085.
Telephone:(800) 862-6668 (Contract Owners)
(800) 862-7155 (Investment Representatives)
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
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APPENDIX I
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 specified limits, to distributions in excess of specified limits,
distributions which do not satisfy certain requirements and certain other
transactions with respect to qualified plans. Accordingly, this summary provides
only general information about the tax rules associated with use of the Contract
by a qualified plan. Contract owners, plan participants and beneficiaries are
cautioned that the rights and benefits of any person to benefits are controlled
by the terms and conditions of the plan regardless of the terms and conditions
of the Contract. Some qualified plans are subject to distribution and other
requirements which are not incorporated into Hartford's administrative
procedures. Owners, participants, and beneficiaries are responsible for
determining that contributions, distributions and other transactions comply with
applicable law. Because of the complexity of these rules, owners, participants
and beneficiaries are encouraged to consult their own tax advisors as to
specific tax consequences.
- ---------------------------------------------------
A. TAX-QUALIFIED PENSION OR
PROFIT-SHARING PLANS
Provisions of the Code permit eligible employers to establish tax-qualified
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 and the time when distributions must commence. Employers
intending to use these contracts in connection with such plans should seek
competent tax and other legal advice.
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B. 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 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 $9,500 or 20% of the employees
"includable compensation" for his most recent full year of employment, subject
to other adjustments. Special provisions 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:
(1) after the participating employee attains age 59 1/2;
(2) upon separation from service;
(3) upon death or disability; or
(4) 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.
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C.DEFERRED COMPENSATION PLANS
UNDER SECTION 457
Employees and independent contractors performing services for eligible
governmental or other tax-exempt employers may have contributions made to
Eligible Deferred Compensation Plans of their employers 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. ("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 $7,500 (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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
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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 governmental Eligible 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 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.
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.
- ---------------------------------------------------
D. 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.
IRAs generally may not invest in life insurance contracts. However, an
annuity that is used as an IRA may provide a death benefit that equals the
greater of the premiums paid and the annuity's cash value. The Contract offers
an enhanced Death Benefit that may exceed the greater of the Contract Value and
total Premium Payments less prior surrenders. For Contracts issued in most
states, Hartford has obtained approval from the Internal Revenue Service to use
the Contract as an IRA. For Contracts issued in New York, Hartford has asked the
Internal Revenue Service to approve use of the Contract as an IRA, but there is
no assurance that approval will be granted.
- ---------------------------------------------------
E. 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.
1. PREMATURE DISTRIBUTION
Distributions from a qualified plan before the Participant attains age
59 1/2 are generally subject to an additional 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, "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).
2. 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 must generally
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 this 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
<PAGE>
26 HARTFORD LIFE INSURANCE COMPANY
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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.
3. EXCESS DISTRIBUTION TAX
If the aggregate distributions from all IRAs and certain other tax-qualified
retirement plans in a calendar year exceed the greater of (i) $150,000, or (ii)
$112,500 as indexed for inflation, a penalty tax of 15% is generally imposed on
the excess portion of the distribution.
4. 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 ten or more years or for the life or life
expectancy of the Participant (or the joint lives or life expectancies of the
Participant and the Beneficiary) are generally subject to federal income tax
withholding as if the recipient were married claiming three exemptions, unless
the recipient elects otherwise. 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:
(a) the non-taxable portion of the distribution;
(b) required minimum distributions; or
(c) direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Section 401(a)(31) of the Code.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 27
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TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION
------------------------------------------------------------------------
<S> <C>
INTRODUCTION............................................................
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY..........................
SAFEKEEPING OF ASSETS...................................................
INDEPENDENT PUBLIC ACCOUNTANTS..........................................
DISTRIBUTION OF CONTRACTS...............................................
ANNUITY PERIOD..........................................................
A. Annuity Payments................................................
B. Electing the Annuity Commencement Date and Form of Annuity......
C. Optional Annuity Forms..........................................
D. The Annuity Unit and Valuation...................................
E. Determination of Amount of First Monthly Annuity Payment --
Fixed and Variable.................................................
F. Amount of Second and Subsequent Monthly Annuity Payments........
G. Date and Time of Annuity Payments................................
CALCULATION OF YIELD AND RETURN.........................................
PERFORMANCE COMPARISONS.................................................
FINANCIAL STATEMENTS....................................................
</TABLE>
