<PAGE>
2 HARTFORD LIFE INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS........................................................... 3
FEE AND EXPENSE TABLES................................................ 5
SUMMARY............................................................... 7
HARTFORD, THE SEPARATE ACCOUNT AND THE FUNDS.......................... 8
Hartford Life Insurance Company..................................... 8
Separate Account.................................................... 8
The Funds........................................................... 9
PERFORMANCE RELATED INFORMATION....................................... 10
DESCRIPTION OF THE CONTRACTS.......................................... 10
Purchasing a Contract............................................... 10
Right to Examine the Contract....................................... 11
Crediting and Allocating the Premium Payment........................ 11
Contract Value -- Before Income Start Date.......................... 11
The Net Investment Factor........................................... 11
Sub-Account Value Transfers Before and After Income Start Date...... 12
Surrenders.......................................................... 12
Death Before Income Start Date...................................... 13
Death On or After the Income Start Date............................. 13
Determination of the Death Benefit.................................. 13
Distribution Requirements: Prior to the Income Start Date........... 13
Payments Under the Contract......................................... 14
SELECTING AN ANNUITY PAYMENT OPTION................................... 14
Annuity Payment Options............................................. 14
Annuity Calculation Date and Income Start Date...................... 15
Income Payment Dates................................................ 15
Variable Annuity Payments........................................... 15
CONTRACT FEES AND CHARGES............................................. 16
Contingent Deferred Sales Charge.................................... 16
Premium Tax Charge.................................................. 17
Mortality and Expense Risk Charge................................... 17
Fund Expenses....................................................... 17
ADDITIONAL CONTRACT INFORMATION....................................... 17
Contract Ownership.................................................. 17
Changing the Contract Owner or Beneficiary.......................... 17
Misstatement of Age or Sex.......................................... 18
Change of Contract Terms............................................ 18
Reports to Contract Owners.......................................... 18
Miscellaneous....................................................... 18
Voting Privileges................................................... 18
FEDERAL TAX CONSIDERATIONS............................................ 19
General............................................................. 19
Taxation of Hartford and the Separate Account....................... 19
Taxation of Purchasers of Non-Qualified Contracts................... 19
Taxation of Purchasers of Qualified Contracts....................... 20
Federal Income Tax Withholding...................................... 23
Contract Owners That Are Nonresident Aliens or Foreign
Corporations....................................................... 23
Other Tax Consequences.............................................. 23
OTHER INFORMATION..................................................... 23
Distribution of the Contracts....................................... 23
Legal Proceedings................................................... 24
FINANCIAL STATEMENTS.................................................. 24
ILLUSTRATIONS OF ANNUITY PAYMENTS ASSUMING HYPOTHETICAL RATES OF
RETURN.............................................................. 25
ILLUSTRATIONS OF ANNUITY PAYMENTS USING HISTORIC RATES OF RETURN...... 28
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............. 41
</TABLE>
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HARTFORD LIFE INSURANCE COMPANY 3
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DEFINITIONS
ACCUMULATION UNIT: An accounting unit of measure used to calculate Sub-Account
Value prior to the Annuity Calculation Date.
ANNIVERSARY VALUE: The Commuted Value calculated as of a Contract Anniversary.
ANNUITANT: The person (or persons) whose life (or lives) determines the Annuity
Payments payable under the Contract and whose death determines the Death Benefit
after the Income Start Date. With regard to joint and last survivor Annuity
Payment Options, the maximum number of joint Annuitants is two and provisions
referring to the death of an Annuitant mean the death of the last surviving
Annuitant. Provisions relating to an action by the Annuitant mean, in case of
joint Annuitants, both Annuitants acting jointly. Unless otherwise specified,
the Contract Owner is the Annuitant.
ANNUITY CALCULATION DATE: The date as of which the first Annuity Payment will be
calculated. It will be no more than five days prior to the Income Start Date.
Values calculated prior to the Income Start Date but after the Annuity
Calculation Date will equal values as of the Annuity Calculation Date.
ANNUITY PAYMENT: One of several periodic payments made by Hartford to the Payee
under an Annuity Payment Option.
ANNUITY PAYMENT OPTION: The form of Annuity Payments selected by the Contract
Owner. The Annuity Payment Option is shown on the Contract specifications page
as the "Annuity Benefit."
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
Variable Annuity Payments.
ANNUITY UNIT FACTOR: The factor applied in computing Annuity Unit values to
neutralize the effect of the Assumed Investment Return.
ASSUMED INVESTMENT RETURN (AIR): The annual rate of return shown on the
specification page of the Contract. This rate is used to determine the degree of
fluctuation in the amount of Variable Annuity Payments in response to
fluctuations in the net investment return of selected Sub-Accounts by assuming
(among other things) that the assets in the Sub-Accounts supporting the Contract
will have a net annual return over the anticipated Annuity Payment period equal
to that rate of return. If the actual performance of the selected Sub-Accounts
is equal to the AIR, the payment will be constant. If the actual performance is
greater than the AIR, the payment will increase. If the actual performance is
less than the AIR, the Variable Annuity Payment amount will be lower.
BENEFICIARY: The person(s) entitled to receive the Contract Value upon the death
of the Contract Owner or Annuitant prior to the Income Start Date or, the Death
Benefit upon the death of the Annuitant after the Income Start Date available
under some Annuity Payment Options.
CANCELLATION PERIOD: The "Right to Examine" period described on the cover page
of the Contract during which the Contract Owner may return the Contract.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: U.S. Securities and Exchange Commission.
COMMUTED VALUE: The present value of the remaining guaranteed Annuity Payments
under an Annuity Payment Option having Annuity Payments guaranteed for a
specified number of years, computed using the Assumed Investment Return for the
Contract and the Annuity Unit Value(s) calculated as of the date that Hartford
receives a fully completed request for surrender, or Due Proof of Death of the
Annuitant.
CONTRACT ANNIVERSARY: The same date in each Contract Year as the Contract Issue
Date.
CONTRACT ISSUE DATE: The date on which Hartford issues the Contract and on which
the Contract becomes effective. The Contract Issue Date is shown on the
specifications page of the Contract and is used to determine Contract Years and
Contract Anniversaries.
CONTRACT OWNER(S): The person (or persons) who owns (or own) the Contract and
who is (are) entitled to exercise all rights and privileges provided in the
Contract. The maximum number of joint Contract Owners is two. Provisions
relating to action by the Contract Owner mean, in the case of joint Contract
Owners, both Contract Owners acting jointly.
CONTRACT VALUE: The sum of the Sub-Account Values under the Contract prior to
the Annuity Calculation Date.
CONTRACT YEAR: A 12-month period beginning on the Contract Issue Date or on a
Contract Anniversary.
DEATH BENEFIT: The amount payable by Hartford based upon the death of the
Contract Owner or Annuitant prior to the Income Start Date, or upon the death of
Annuitant on or after the Income Start Date. The Death Benefit is calculated as
of the date that Due Proof of Death is received at Hartford.
DUE PROOF OF DEATH: A certified copy of a death certificate, an order of a court
of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to Hartford.
FUND: Any open-end management investment company (or investment portfolio
thereof) or unit investment trust (or series thereof) in which a Sub-Account
invests.
HARTFORD: Hartford Life Insurance Company.
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4 HARTFORD LIFE INSURANCE COMPANY
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HOME OFFICE: Hartford's offices at 200 Hopmeadow Street, Simsbury, CT 06070
(mailing address: P.O. Box 5085, Hartford, CT 06102-5085, Attn: Individual
Annuity Services).
INCOME PAYMENT DATE: The date each month, quarter, semi-annual period, or year
as of which Hartford computes the Annuity Payments.
INCOME START DATE: The date as of which the Annuity Payments are to begin. It is
the first Income Payment Date and is shown on the specifications page of the
Contract.
IRA: An "individual retirement annuity" as described in Section 408 of the Code.
JOINT ANNUITANT: A person, other than the primary Annuitant, whose life
determines the Annuity Payments payable. The Contract will have a Joint
Annuitant only if a joint life Annuity Payment Option is elected.
MAXIMUM ANNIVERSARY VALUE: The greatest Anniversary Value under the Contract
while the Annuitant is alive prior to his or her 81st birthday reduced by the
dollar amount of Annuity Payments made since that anniversary.
NET ASSET VALUE PER SHARE: The value per share of any Fund on any Valuation Day.
The method of computing the Net Asset Value Per Share is described in the
prospectus for each Fund.
NET INVESTMENT FACTOR: The Net Investment Factor for each of the Sub-Accounts,
equal to the Net Asset Value Per Share of the corresponding Fund at the end of
the Valuation Period (plus the per share amount of any dividends or capital
gains 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.
NON-QUALIFIED CONTRACT: A Contract that is not a Qualified Contract.
PAYEE: The person or party designated by the Contract Owner to receive Annuity
Payments. Unless otherwise specified the Annuitant is the Payee.
PAYMENT FACTOR: The factor used on the Annuity Calculation Date to calculate the
first Annuity Payment.
PREMIUM PAYMENT: The payment made to Hartford pursuant to the terms of the
Contract.
PREMIUM TAX: The amount of tax charged by a state or municipality on the Premium
Payment or Contract Value.
QUALIFIED CONTRACT: A Contract that is issued in connection with a retirement
plan that qualifies for special federal income tax treatment under Section 408
or Section 457 of the Code.
SEPARATE ACCOUNT: Hartford Life Insurance Company Separate Account Two.
SUB-ACCOUNT: A subdivision of the Separate Account, the assets of which are
invested in a corresponding Fund.
SUB-ACCOUNT VALUE: On or before the Annuity Calculation Date, the amount is
determined on any day by multiplying the number of Accumulation Units
attributable to the Contract in that Sub-Account by the Accumulation Unit value
for that Sub-Account.
SURRENDER VALUE: The Contract Value less any applicable Premium Tax prior to the
Annuity Calculation Date, or the Commuted Value less applicable contingent
deferred sales charges on or after the Annuity Calculation Date.
VALUATION DAY: Every day that the New York Stock Exchange is open for trading.
VALUATION PERIOD: The period that starts at the close of regular trading on the
New York Stock Exchange on any Valuation Day and ends at the close of regular
trading on the next succeeding Valuation Day.
VARIABLE ANNUITY PAYMENT: An Annuity Payment that may vary in amount from one
Income Payment Date to the next as a function of the investment performance of
one or more Sub-Accounts selected by the Contract Owner to support Annuity
Payments.
WRITTEN NOTICE: A notice or request submitted in writing in a form satisfactory
to Hartford that is manually signed by the Contract Owner(s) and received at the
Home Office.
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HARTFORD LIFE INSURANCE COMPANY 5
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FEE AND EXPENSE TABLES
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Sales Charge imposed on Premium Payment........................... None
Contingent Deferred Sales Charge (as a percentage of Commuted
Value)*
First Year.................................................... 6%
Second Year................................................... 6%
Third Year.................................................... 5%
Fourth Year................................................... 5%
Fifth Year.................................................... 4%
Sixth Year.................................................... 3%
Seventh Year.................................................. 2%
Eighth Year................................................... 0%
Exchange Fee...................................................... None
</TABLE>
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* Only applies to PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS Annuity
Payment Option, after the Income Start Date.
Annual Separate Account Expenses
(as a percentage of average annual net assets)
<TABLE>
<S> <C>
Mortality and Expense Risk Charge................................. 1.25%
Other Charges..................................................... None
Total Separate Account Expenses................................... 1.25%
</TABLE>
Annual Fund Operating Expenses After Reimbursements
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Hartford Advisers Fund.......................... 0.615% 0.017% 0.632%
Hartford Bond Fund.............................. 0.490% 0.030% 0.520%
Hartford Capital Appreciation Fund.............. 0.629% 0.017% 0.646%
Hartford Dividend & Growth Fund................. 0.709% 0.017% 0.726%
Hartford Index Fund............................. 0.374% 0.019% 0.393%
Hartford International Advisers Fund............ 0.746% 0.214% 0.960%
Hartford International Opportunities Fund....... 0.691% 0.095% 0.786%
Hartford MidCap Fund (1)........................ 0.520% 0.150% 0.670%
HVA Money Market Fund........................... 0.423% 0.021% 0.444%
Hartford Mortgage Securities Fund............... 0.424% 0.029% 0.453%
Hartford Small Company Fund..................... 0.750% 0.040% 0.790%
Hartford Stock Fund............................. 0.441% 0.016% 0.457%
</TABLE>
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(1) Hartford MidCap Fund is a new Fund: Operating expenses are based on
annualized estimates of such expenses to be incurred in the current fiscal
year. HL Investment Advisors, Inc. has agreed to waive its fees for the
Hartford MidCap Fund until the assets of the Fund (excluding assets
contributed by companies affiliated with HL Investment Advisors, Inc.) first
reach $20 million. Absent this waiver, the investment advisory fee would be
0.575% annually and the total fund operating expense ratio would be 0.900%
(annualized).
Premium Taxes, currently ranging from 0% to 4 % may be applicable, depending
upon the laws of various jurisdictions.
The above tables are intended to assist the Contract Owner in understanding
the costs and expenses that he or she will bear directly or indirectly. The
table reflects the current management fees, other expenses and total expenses
for each Fund. For a more complete description of the various costs and
expenses, see "Charges and Deductions" and the prospectus for the Funds which
accompanies this Prospectus.
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6 HARTFORD LIFE INSURANCE COMPANY
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EXAMPLES
A Contract Owner will pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets and an Annuitant age 65 with a 5% Assumed
Investment Return:
1. If the LIFE Annuity Payment Option is selected and you do not surrender your
Contract:
<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Hartford Advisers Fund....... $ 19 $ 60
Hartford Bond Fund........... 18 56
Hartford Capital Appreciation
Fund....................... 19 60
Hartford Dividend and Growth
Fund....................... 20 63
Hartford Index Fund.......... 17 52
Hartford International
Advisers Fund.............. 23 70
Hartford International
Opportunities Fund......... 21 64
Hartford MidCap Fund......... 19 61
HVA Money Market Fund........ 17 54
Hartford Mortgage Securities
Fund....................... 17 54
Hartford Small Company
Fund....................... 21 64
Hartford Stock Fund.......... 17 54
</TABLE>
2. If the PAYMENTS GUARANTEED FOR 20 YEARS Annuity Payment Option is selected
and you do not surrender your Contract:
<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Hartford Advisers Fund....... $ 19 $ 60
Hartford Bond Fund........... 18 56
Hartford Capital Appreciation
Fund....................... 19 60
Hartford Dividend and Growth
Fund....................... 20 63
Hartford Index Fund.......... 17 52
Hartford International
Advisers Fund.............. 23 70
Hartford International
Opportunities Fund......... 21 64
Hartford MidCap Fund......... 19 61
HVA Money Market Fund........ 17 54
Hartford Mortgage Securities
Fund....................... 17 54
Hartford Small Company
Fund....................... 21 64
Hartford Stock Fund.......... 17 54
</TABLE>
3. If the GUARANTEED PAYMENTS FOR 20 YEARS Annuity Payment Option is selected
and you surrender your Contract:
<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Hartford Advisers Fund....... $ 79 $ 110
Hartford Bond Fund........... 78 106
Hartford Capital Appreciation
Fund....................... 79 110
Hartford Dividend and Growth
Fund....................... 80 113
Hartford Index Fund.......... 77 102
Hartford International
Advisers Fund.............. 83 120
Hartford International
Opportunities Fund......... 81 114
Hartford MidCap Fund......... 79 111
HVA Money Market Fund........ 77 104
Hartford Mortgage Securities
Fund....................... 77 104
Hartford Small Company
Fund....................... 81 114
Hartford Stock Fund.......... 77 104
</TABLE>
These examples should not be considered representations of past or future
performance or expenses. The actual expenses paid or performance achieved may be
greater or less than those shown.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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SUMMARY
GENERAL DESCRIPTION
This Prospectus is designed to provide prospective Contract Owners with
information necessary to decide whether or not to purchase a Contract. This
summary provides a concise description of the more significant aspects of the
Contract. Further detail is provided in this Prospectus, the related Statement
of Additional Information, the Contract, and the prospectus for the Funds. For
further information, contact Hartford at its Home Office or your registered
representative.
PURCHASING A CONTRACT
A prospective Contract Owner may purchase a Contract by completing and
submitting an application or an order request along with a single Premium
Payment to Hartford at its Home Office. The minimum Premium Payment for a
Contract is $25,000 and the maximum Premium Payment generally is $1,000,000 (See
"Purchasing a Contract"), unless approved by Hartford.
Subject to certain minimum allocation requirements that may be in effect
from time to time, the Premium Payment is allocated to each Sub-Account as
specified on the application or order request. All percentage allocations must
be in whole numbers. (See "Crediting an Allocating Premium Payments.")
RIGHT TO EXAMINE THE CONTRACT
Contract Owners may cancel the Contract during the Cancellation Period and
receive a refund equal to the Contract Value. The Cancellation Period is a
ten-day period of time beginning when the Contract is received by a Contract
Owner. Some states require a longer Cancellation Period and return of the
Premium Payment. (See "Right to Examine the Contract.")
TRANSFERS
Prior to the Annuity Calculation Date, a Contract Owner may transfer all or
part of any Sub-Account Value to another available Sub-Account(s), subject to
certain restrictions. (See "Sub-Account Value Transfers.") Similar transfers may
be made after the Income Start Date, subject to certain restrictions. (See
"Variable Annuity Payments.")
ANNUITY PAYMENT OPTIONS
The following Annuity Payment Options are available under the Contract: Life
Annuity; Life Annuity with Cash Refund; Life Annuity with Payments Guaranteed
For a Specified Number of Years; Joint and Last Survivor; Joint and Last
Survivor Life Annuity With Payments Guaranteed For a Specified Number of Years;
and Payments Guaranteed For a Specified Number of Years.
DEATH BENEFITS
The Contract provides for a Death Benefit, under certain Annuity Payment
Options, in the event the Annuitant or Contract Owner(s) die(s) prior to the
Income Start Date and if the Annuitant dies after the Income Start Date. (See
"Payment Upon the Death of Any Contract Owner or the Annuitant.") Certain
Annuity Payment Options do not provide a Death Benefit.
SURRENDERS
Upon Written Notice prior to the Annuity Calculation Date, a Contract Owner
may surrender the Contract and receive the Contract Value. On or after the
Income Start Date under a PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS
Annuity Payment Option, a Contract Owner also may surrender the Contract for the
Surrender Value. (See "Surrenders.") Surrenders may have adverse federal income
tax consequences including the possibility of being subject to a penalty tax.
(See "Federal Tax Considerations.")
CHARGES AND FEES
The following charges and fees are assessed under the Contracts:
CONTINGENT DEFERRED SALES CHARGE. Hartford deducts a contingent deferred
sales charge if the Contract is surrendered after the Income Start Date under
PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS Annuity Payment Option. The
contingent deferred sales charge is 6% of the Commuted Value (less any
applicable Premium Tax charge) if surrendered during the first two Contract
Years; 5% of the Commuted Value (less any applicable Premium Tax charge) if
surrendered during the third or fourth contract years; and decreases 1% each
Contract Year up to and including the seventh Contract Year. The contingent
deferred sales charge is 0% if the Contract is surrendered after the seventh
Contract Year. No contingent deferred sales charge is assessed upon the death of
the Annuitant after the Income Start Date.
MORTALITY AND EXPENSE RISK CHARGE. Hartford makes a daily charge of
0.003446% (approximately equivalent to an effective annual rate of 1.25%) of the
Separate Account's net assets to compensate it for assuming certain mortality
and expense risks. (See "Mortality and Expense Risk Charge.")
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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PREMIUM TAX CHARGE. Generally, taxes on Premium Payments, if any, are
incurred as of the Annuity Calculation Date, and a Premium Tax Charge is
Deducted from the Contract Value as of that date. These taxes currently range
from 0% to 4.0% of Premium Payments. (See "Premium Tax Charge.")
EXPENSES OF THE FUNDS. The investment experience of each Sub-Account
reflects that of the Fund whose shares it holds. The investment experience of
each Fund, in turn, reflects its fees and other operating expenses. Please read
the prospectus for each of the Funds for details.
HARTFORD, THE SEPARATE 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 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 controlled by The Hartford Financial
Services Group, Inc., a Delaware corporation.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc. on the basis
of its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps on the basis of its claims paying
ability. These ratings do not apply to the investment performance of the
Sub-Accounts of the Separate Account. The ratings apply to Hartford's ability to
meet its insurance obligations, including those described in this Prospectus.
SEPARATE ACCOUNT
The Separate Account is a separate investment account of Hartford
established under Connecticut law on June 2, 1986. Hartford owns the assets of
the Separate Account. These assets are held separate from Hartford's general
account and its other separate accounts. That portion of the Separate Account's
assets that is equal to the reserves and other Contract liabilities of the
Separate Account is not chargeable with liabilities arising out of any other
business Hartford may conduct.
The Separate Account is registered with the Commission under the Investment
Company Act of 1940 (the "1940 Act") as a unit investment trust and meets the
definition of a "separate account" under the federal securities laws. Such
registration does not involve any supervision by the Commission of the
management of the Separate Account or of Hartford. The Separate Account is also
governed by the laws of Connecticut, Hartford's state of domicile, and may also
be governed by laws of other states in which Hartford does business.
The investment in the Separate Account is allocated to one or more
Sub-Accounts as per the Contract Owner's specifications. Each Sub-Account is
invested exclusively in the assets of one underlying Fund. The Separate Account
has 12 Sub-Accounts, each of which invests in shares of a corresponding Fund.
Income, gains and losses, realized or unrealized, from assets allocated to a
Sub-Account are credited to or charged against that Sub-Account without regard
to other income, gains or losses of Hartford.
CHANGES TO THE SEPARATE ACCOUNT. Where permitted by applicable law, Hartford
may make the following changes to the Separate Account:
1. Any changes required by the 1940 Act or other applicable law or
regulation;
2. combine separate accounts, including the Separate Account;
3. add new Sub-Accounts to or remove existing Sub-Accounts from the Separate
Account or combine Sub-Accounts;
4. make Sub-Accounts (including new Sub-Accounts) available to such classes
of Contracts as Hartford may determine;
5. add new Funds or remove existing Funds;
6. substitute new Funds for any existing Fund if shares of the Fund are no
longer available for investment or if Hartford determines that investment in a
Fund is no longer appropriate in light of the purposes of the Separate Account;
7. de-register the Separate Account under the 1940 Act if such registration
is no longer required; and
8. operate the Separate Account as a management investment company under the
1940 Act or as any other form permitted by law.
No such changes will be made without any necessary approval of the
Commission and applicable state insurance departments. Contract Owners will be
notified of any changes.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
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THE FUNDS
Each Sub-Account invests in a corresponding Fund. Each of the Funds is an
open-end diversified management investment company managed by HL Investment
Advisors, Inc. ("HL Advisors"), a registered investment adviser. HL Advisors has
retained Wellington Management Company to act as investment sub-adviser to the
Funds indicated by an asterisk. In addition, HL Advisors has entered into an
investment services agreement with Hartford Investment Management Company
("HIMCO"), for the provision of investment services to the remaining Funds. The
Funds, as well as a brief description of their investment objectives, are
provided below:
HARTFORD ADVISERS FUND, INC.
Seeks to achieve 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 to achieve maximum current income consistent with preservation of
capital by investing primarily in fixed-income securities.
HARTFORD CAPITAL APPRECIATION FUND, INC.
Seeks to achieve 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. The Fund invests primarily in equity securities and
securities convertible into equity securities.*
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.(1)
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
Seeks to provide maximum long-term total return consistent with prudent
investment risk. The Fund assets will be diversified among at least five
countries and will be allocated among equity and debt securities and money
market instruments.*
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
Seeks to achieve long-term total rate of return consistent with prudent
investment risk through investment primarily in equity securities issued by
non-U.S. companies.*
HARTFORD MIDCAP FUND, INC.
Seeks to achieve long-term capital growth through capital appreciation by
investing primarily in equity securities.*
HARTFORD MORTGAGE SECURITIES FUND, INC.
Seeks to achieve 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 to achieve growth of capital by investing primarily in equity
securities selected on the basis of potential for capital appreciation.*
HARTFORD STOCK FUND, INC.
Seeks to achieve 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 to achieve maximum current income consistent with liquidity and
preservation of capital. The Fund invests in short-term money market securities.
NO ONE CAN ASSURE THAT ANY FUND WILL ACHIEVE ITS STATED OBJECTIVES AND
POLICIES. SINCE EACH UNDERLYING FUND HAS DIFFERENT INVESTMENT OBJECTIVES, EACH
IS SUBJECT TO DIFFERENT RISKS. More detailed information concerning the
investment objectives, policies and restrictions of the Funds, the expenses of
the Funds, the risks attendant to investing in the Funds and other aspects of
their operations can be found in the current prospectus for each Fund which
accompanies this Prospectus and the current statement of additional information
for the Funds. THE FUNDS' PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION CAN
ALSO BE OBTAINED BY CALLING 1-800-862-6668. The Funds' prospectus should be read
carefully before any decision is made concerning the allocation of the Premium
Payment or transfers of Contract Value among the Sub-Accounts.
Hartford cannot guarantee that each Fund will always be available under the
Contracts, but in the unlikely event that a Fund is not available, Hartford will
take reasonable steps to secure the availability of a comparable fund. Shares of
each Fund are purchased and redeemed at net asset value, without a sales charge.
Shares of the Funds are sold to separate accounts of Hartford and its
insurance company affiliates other than the Separate Account to serve as the
underlying investment for both variable annuity contracts and variable life
insurance
(1) "STANDARD & POOR'S-REGISTERED TRADEMARK-", "S&P-REGISTERED TRADEMARK-", "S&P
500-REGISTERED TRADEMARK-", "STANDARD & POOR'S 500", AND "500" ARE
TRADEMARKS OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE
BY HARTFORD LIFE INSURANCE COMPANY. THE INDEX FUND IS NOT SPONSORED,
ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S ("S&P") AND S&P MAKES NO
REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE INDEX FUND.
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10 HARTFORD LIFE INSURANCE COMPANY
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contracts, a practice known as "mixed funding." As a result, there is a
possibility that a material conflict may arise between the interests of Contract
Owners, and of owners of other contracts whose contract values are allocated to
one or more of these other separate accounts investing in any one of the Funds.
In the event of any such material conflicts, Hartford will consider what action
may be appropriate, including removing the Fund from the Separate Account or
replacing the Fund with another Fund. There are certain risks associated with
mixed funding, as disclosed in the Funds' prospectus.
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 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 MidCap Fund, Hartford Mortgage Securities Fund, Hartford Small Company
Fund, Hartford Stock Fund, and HVA Money Market 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 is 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 and Hartford Mortgage Securities 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.
The HVA Money Market Fund Sub-Account may advertise yield and effective
yield. The yield of the HVA Money Market 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.
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.
DESCRIPTION OF THE CONTRACTS
PURCHASING A CONTRACT
A prospective Contract Owner may purchase a Contract by completing and
submitting an application or an order request. The maximum age for Annuitants on
the Contract Issue Date is 90. A single Premium Payment must be delivered to the
Home Office along with the Contract Owner's application or an order request. The
minimum Premium Payment is $25,000 unless Hartford specifically consents to a
lower Premium Payment. No additional Premium Payments may be made under the
Contracts. Unless Hartford gives its prior approval, it will not accept a
Premium Payment in excess of $1,000,000. Hartford will
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HARTFORD LIFE INSURANCE COMPANY 11
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send Contract Owners a confirmation notice upon receipt and acceptance of the
Contract Owner's Premium Payment.
RIGHT TO EXAMINE THE CONTRACT
Contract Owners may cancel the Contract during the Cancellation Period,
which is the 10-day period beginning on the day the Contract Owner receives the
Contract. Some states may require a longer Cancellation Period. To cancel the
Contract, the Contract Owner must mail or deliver within 10 days, a written
request for cancellation accompanied by the Contract to the Home Office of
Hartford.
Hartford will refund the Contract Value as of the date of receipt of the
request for cancellation. The Contract Owner bears the investment risk during
the period prior to Hartford's receipt of the request for cancellation. Hartford
will refund the Premium Payment where required by law.
CREDITING AND ALLOCATING
THE PREMIUM PAYMENT
If the application or an order request for a Contract is properly completed
and is accompanied by any additional information necessary to process it, the
Premium Payment will be allocated, as designated by the Contract Owner, to one
or more of the Sub-Accounts within two business days of receipt. If the
application, order request, or other required information is incomplete when
received, Hartford reserves the right to retain the Premium Payment for up to
five business days while it attempts to complete the information. If the
information cannot be made complete within five business days, the applicant
will be informed of the reasons for the delay and the Premium Payment will be
returned unless the applicant specifically consents to Hartford retaining the
Premium Payment until the information is made complete. The Premium Payment will
then be allocated within two business days after receipt of the complete
information.
Contract Owners may allocate the Premium Payment among any or all available
Sub-Accounts subject to minimum amounts then in effect. Currently, amounts
allocated to any one Sub-Account must equal at least 1% of the net Premium
Payment. All percentage allocations must be in whole numbers.
CONTRACT VALUE -- BEFORE INCOME START DATE
SUB-ACCOUNT VALUE. The Contract Value is the sum of all Sub-Account Values
and therefore reflects the investment performance of the Sub-Accounts to which
it is allocated. The Sub-Account Value for any Sub-Account as of the Contract
Issue Date is equal to the amount of the Premium Payment allocated to that
Sub-Account. The Sub-Account Value for a Contract is determined on any given day
by the multiplying the number of Accumulation Units attributable to the Contract
in that Sub-Account by the Accumulation Unit value for that Sub-Account.
Therefore, on any Valuation Day the Contract Owner's Sub-Account Value reflects
any variation of the interest income, dividends, net capital gains or losses,
realized or unrealized, and any amounts transferred into or out of that
Sub-Account.
ACCUMULATION UNITS. The portions of the Premium Payment allocated to a
Sub-Account or amounts of Contract Value transferred to a Sub-Account are
converted into Accumulation Units. For any Contract, the number of Accumulation
Units credited to a Sub-Account is determined by dividing the dollar amount
directed to the Sub-Account by the value of the Accumulation Unit for that Sub-
Account for the Valuation Day as of which the portion of the Premium Payment or
transferred Contract Value is invested in the Sub-Account. Transferred Contract
Value is invested in a Sub-Account as of the end of the Valuation Period during
which the transfer request was received. Therefore, a Premium Payment or portion
thereof allocated to or amounts transferred to a Sub-Account under a Contract
increase the number of Accumulation Units of that Sub-Account credited to the
Contract.
Surrenders, transfers out of a Sub-Account, the death of any Contract Owner
or the Annuitant before the Income Start Date, and the application of Contract
Value less Premium Tax to an Annuity Payment Option on the Annuity Calculation
Date all result in a decrease in the number of Accumulation Units of one or more
Sub-Accounts. Accumulation Units are valued as of the end of the Valuation
Period.
The Accumulation Unit value for each Sub-Account was arbitrarily set
initially at $1 when the Sub-Account began operations. Thereafter, the
Accumulation Unit value at the end of every Valuation Day equals the
Accumulation Unit value at the end of the preceding Valuation Day multiplied by
the Net Investment Factor (described below).
THE NET INVESTMENT FACTOR (BEFORE AND
AFTER INCOME START DATE)
The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. For each
Sub-Account, the Net Investment Factor reflects the investment performance of
the Fund in which that Sub-Account invests and the charges assessed against that
Sub-Account for a Valuation Period. The Net Investment Factor is calculated by
dividing (1) by (2) and subtracting (3) from the result, where:
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12 HARTFORD LIFE INSURANCE COMPANY
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(1) is the result of:
a. the Net Asset Value Per Share of the Fund held in the Sub-Account,
determined at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
made by the Fund held in the Sub-Account.
(2) is the Net Asset Value Per Share of the Fund held in the Sub-Account,
determined at the beginning of the Valuation Period.
(3) is a daily factor representing the mortality and expense risk charge
deducted from the Sub-Account, adjusted for the number of days in the
Valuation Period.
SUB-ACCOUNT VALUE TRANSFERS BEFORE AND
AFTER INCOME START DATE
The Contract Owner may transfer the values of the Sub-Accounts allocations
from one or more Sub-Accounts to another free of charges. 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 the callers provide certain information for
identification purposes. All transfer instructions by telephone are tape
recorded.
Transfers between Sub-Accounts may be made both before and after the Income
Start Date provided that the minimum allocation to any Sub-Account may not be
less than $500. All percentage (%) allocations must be in whole numbers (e.g.,
1%).
It is the responsibility of the Contract Owner 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 instructions.
Subject to exceptions set forth in the following paragraph, 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
could include, but would not be limited to, the requirements of a minimum time
period between each transfer, not accepting transfer requests of an agent acting
under power of attorney on behalf of more than one Contract Owner, or limiting
the dollar amount that may be transferred between the Sub-Accounts 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. Some states may
have certain limitations.
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.
SURRENDERS
ON OR BEFORE THE INCOME START DATE. A Contract Owner may surrender the
Contract for its Surrender Value at any time on or before the Income Start Date.
A Contract's Surrender Value fluctuates daily as a function of the investment
performance of the Sub-Accounts in which a Contract Owner is invested. Hartford
does not guarantee any minimum Surrender Value. The Surrender Value will be
determined as of the date Hartford receives the Written Notice for surrender at
the Home Office.
AFTER THE INCOME START DATE. A Contract Owner may surrender the Contract on
or after the Income Start Date only if the Payments Guaranteed for a Specified
Number of Years Annuity Payment Option is in effect. Upon such a surrender
Hartford pays the Contract Owner the Commuted Value less any applicable
contingent deferred sales charges. This surrender charge is computed as of the
date Hartford receives the Written Notice for surrender at the Home Office.
CONTRACT OWNERS SHOULD CONSULT THEIR TAX ADVISER REGARDING THE TAX
CONSEQUENCES OF A SURRENDER. A surrender made before age 59 1/2 may result in
adverse tax consequences, including the imposition of a penalty tax of 10% of
the taxable portion of the Surrender Value. See "Federal Tax Considerations" for
more details.
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HARTFORD LIFE INSURANCE COMPANY 13
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DEATH BEFORE INCOME START DATE
If the Contract Owner or the Annuitant dies before the Income Start Date,
Hartford will pay the Death Benefit.
The Death Benefit is an amount equal to the Contract Value. The Contract
Value may be taken in one sum or under any of the settlement options then being
offered by Hartford.
IF THE CONTRACT OWNER DIES before the Income Start Date, any surviving joint
Contract Owner becomes the Beneficiary. If there is no surviving joint Contract
Owner, the designated Beneficiary will be the Beneficiary. If the Contract
Owner's spouse is the sole Beneficiary and the Annuitant is living, the spouse
may elect, in lieu of receiving the Contract Value, to be treated as the
Contract Owner. If no Beneficiary designation is in effect or if the Beneficiary
has predeceased the Contract Owner, the Contract Owner's estate will be the
Beneficiary.
IF THE ANNUITANT DIES prior to the Income Start Date and the Contract Owner
is living, the Contract Owner shall be the Beneficiary. In that case, the rights
of any designated Beneficiary shall be voided.
DEATH ON OR AFTER THE INCOME START DATE
If the Annuitant dies on or after the Income Start Date, Hartford will pay
the Death Benefit under the Annuity Payment Option in effect as of the
Annuitant's death. Under some Annuity Payment Options, there is no Death
Benefit.
The Death Benefit on or after the Income Start Date, under the Payments
Guaranteed for a Specified Number of Years Annuity Payment Option, is the
greatest of:
a) the Commuted Value;
b) 100% of the Premium Payment reduced by the aggregate dollar amount of
all Annuity Payments made since the Income Start Date; and
c) the Maximum Anniversary Value (the greatest Anniversary Value under the
Contract while the Annuitant is alive prior to his or her 81st birthday reduced
by the dollar amount of Annuity Payments made since that anniversary).
IF THE ANNUITANT DIES on or after the Income Start Date, the Beneficiary
will have the option of having payments continue to the Beneficiary for the
remainder of the period or taking the Death Benefit in one sum.
IF A CONTRACT OWNER WHO IS NOT THE ANNUITANT, DIES on or after the Income
Start Date, any surviving joint Contract Owner becomes the sole Contract Owner.
If there is no surviving Contract Owner, the Payee becomes the new Contract
Owner. If any Contract Owner dies, the remaining Annuity Payments will be
distributed at least as rapidly as under the method of distribution being used
as of the date of such death.
DETERMINATION OF THE DEATH BENEFIT
The Death Benefit will be calculated as of the date Hartford receives
Written Notice of Due Proof of Death. Any Annuity Payments made on or after the
date of death, but before receipt of Written Notice of Due Proof of Death will
be recovered by Hartford from the Payee.
PRIOR TO THE INCOME START DATE, in the absence of complete instructions to
either pay the Death Benefit in one sum or under one of the settlement options
being offered, the Contract Value will be moved to the Money Market Fund.
ON OR AFTER THE INCOME START DATE, in the absence of complete instructions
to either pay the Death Benefit in one sum or continue payments, the present
value of the guaranteed remaining payments will be moved to the Money Market
Fund.
Upon receipt of complete instructions, Hartford will proceed as follows: If
the instructions are to resume payments, Hartford will make any payments that
went unpaid since the date Hartford received Written Notice of Due Proof of
Death. Hartford will then reallocate the remaining balance in the Money Market
Fund according to the instructions and resume payments. If the instructions are
to pay the Death Benefit in one sum, Hartford will pay the Death Benefit.
DISTRIBUTION REQUIREMENTS: PRIOR TO
THE INCOME START DATE
The Contract Value will be distributed based on the Contract Owner's or
Annuitant's date of death and the Beneficiary's election:
1) in a single lump sum within five years;
2) under an Annuity Payment Option provided that :
a) Annuity Payments begin within one year of the date of death, and
b) Annuity Payments are made in substantially equal installments over the
life of the Beneficiary, or
c) Annuity Payments are made in substantially equal installments over a
period not greater than the life expectancy of the Beneficiary;
3) if the sole Beneficiary is the spouse of the deceased Contract Owner, he
or she may by Written Notice
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14 HARTFORD LIFE INSURANCE COMPANY
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within one year of the Contract Owner's death, elect to continue the
Contract as the new Contract Owner. If the spouse so elects, all of his
or her rights as Beneficiary cease and if the deceased Contract Owner was
also the sole Annuitant and appointed no contingent Annuitant, he or she
will become the Annuitant; or
4) if the Contract Owner is not an individual, then the "primary Annuitant"
shall be treated as the Contract Owner under 1) and 2) above. For this
purpose, the "primary Annuitant" means 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.
PAYMENTS UNDER THE CONTRACT
Hartford generally makes payments of surrenders, Death Benefits, or any
Annuity Payments within seven days of receipt of all applicable Written Notices
and/or Due Proofs of Death. However, Hartford may postpone such payments for any
of the following reasons:
1. when the New York Stock Exchange ("NYSE") is closed for trading other
than customary holiday or weekend closing, or trading on the NYSE is
restricted, as determined by the Commission; or
2. when the Commission by order permits a postponement for the protection of
Contract Owners; or
3. when the Commission determines that an emergency exists that would make
the disposal of securities held in the Separate Account or the
determination of their value not reasonably practicable.
If a recent check or draft has been submitted, Hartford has the right to
defer payment of surrenders, payments upon the death of the Contract Owner or
Annuitant before the Income Start Date, Death Benefits, or Annuity Payments
until the check or draft has been honored.
SELECTING AN ANNUITY
PAYMENT OPTION
The Annuity Payment Option specifies the type of annuity to be paid and
determines how long the annuity will be paid, the frequency of payment, and the
amount of each Annuity Payment. The Contract Owner must select the Annuity
Payment Option when applying for the Contract. This election is irrevocable once
the Contract is issued. The Contract Owner must select the Sub-Accounts to which
Contract Value less applicable Premium Tax will be applied. Unless otherwise
directed, Sub-Account values, as they exist on the Annuity Calculation Date, are
used to calculate the first Annuity Payment.
ANNUITY PAYMENT OPTIONS
LIFE ANNUITY. Hartford makes Annuity Payments to the Payee for as long as
the Annuitant lives. UNDER THIS OPTION, A PAYEE WOULD RECEIVE ONLY ONE ANNUITY
PAYMENT IF THE ANNUITANT DIES AFTER THE FIRST ANNUITY PAYMENT, TWO ANNUITY
PAYMENTS IF THE ANNUITANT DIES AFTER THE SECOND ANNUITY PAYMENT, ETC.
LIFE ANNUITY WITH CASH REFUND. Hartford makes Annuity Payments to the Payee
as long as the Annuitant lives. If the Annuitant dies and the sum of all Annuity
Payments made are less than the Contract Value less Premium Tax used to purchase
Annuity Units on the Annuity Calculation Date, the Beneficiary is entitled to a
Death Benefit. The Death Benefit equals the Contract Value less Premium Tax used
to purchase Annuity Units on the Annuity Calculation Date minus the sum of all
Annuity Payments made. This Option is only available using the 5% A.I.R
LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF
YEARS. Hartford makes Annuity Payments to the Payee for as long as the Annuitant
lives. At the time this Option is selected, the Contract Owner must select a
specific number of years (a minimum of five years and maximum of: a) 100 minus
the Annuitant's age or b) 40 years, whichever is less). If the Annuitant dies
before the specified number of years has passed, the Beneficiary will have the
option of either having the payments continue to the Beneficiary for the
remainder of the period or receiving the Commuted Value in one sum. Some
restrictions apply to Qualified Contracts with regards to the specified number
of years for which payments are guaranteed.
JOINT AND LAST SURVIVOR LIFE ANNUITY. Hartford makes Annuity Payments to the
Payee while both Annuitants are living. After the death of either Annuitant,
Annuity Payments continue to the Payee for as long as the other Annuitant lives.
UNDER THIS OPTION, A PAYEE WOULD RECEIVE ONLY ONE ANNUITY PAYMENT IF BOTH
ANNUITANTS DIE AFTER THE FIRST ANNUITY PAYMENT, ETC. At the time of purchase the
Contract Owner must elect to have Annuity Payments after the death of the first
Annuitant made in amounts equal to 100%, 66.67% or 50% of the amount that would
otherwise be paid.
JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR A
SPECIFIED NUMBER OF YEARS. Hartford makes Annuity Payments to the Payee while
both Annuitants are living. After the death of either Annuitant, Annuity
Payments continue to the Payee for as long as the other Annuitant lives. At the
time of purchase, the Contract Owner must elect to have Annuity Payments after
the death of the first Annuitant made in amounts equal to 100%, 66.67% or 50% of
the amount that would otherwise be paid. At the time this Option is selected,
the Contract Owner must select a specific number of years (a minimum of five
years
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HARTFORD LIFE INSURANCE COMPANY 15
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and maximum of 100 minus the younger Annuitant's age). If the Annuitants die
before the specified number of years has passed, the Beneficiary will have the
option of either having the payments continue to the Beneficiary for the
remainder of the period or receiving the Commuted Value in one sum. Some
restrictions apply to Qualified Contracts with regards to the specified number
of years for which payments are guaranteed.
PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS. Hartford makes Annuity
Payments to the Payee for the number of years (a minimum of five years and
maximum of 100 minus the Annuitant's age) selected by the Contract Owner. If the
Annuitant dies before the specified number of years has passed, payments to the
Beneficiary will continue until the specified number of years has elapsed. After
the death of the Annuitant, the Beneficiary will have the option of either
having the payments continue to the Beneficiary for the remainder of the period
or receiving the Commuted Value in one sum. Some restrictions apply to Qualified
Contracts with regards to the specified number of years for which payments are
guaranteed.
Prior to the death of the Annuitant, the Contract Owner may elect to receive
the Commuted Value. If the Contract Owner makes this election, Hartford will
deduct the contingent deferred sales charge from the Commuted Value before
paying it to the Contract Owner.
ANNUITY CALCULATION DATE AND
INCOME START DATE
The Contract Owner selects the Income Start Date in the application or order
request. The Annuity Calculation Date will be no more than five Valuation Days
before the Income Start Date. The Contract Value less any applicable Premium Tax
is applied to purchase Annuity Units of the Sub-Accounts selected by the
Contract Owner as of the Annuity Calculation Date. The first Annuity Payment is
computed using the value of such Annuity Units as of the Annuity Calculation
Date.
INCOME PAYMENT DATES
All Annuity Payments after the first Annuity Payment are computed and
payable as of the Income Payment Dates. These dates are the same day of the
month as the Income Start Date based on the Annuity Payment frequency selected
by the Contract Owner and shown on the specification page of the Contract.
Available Annuity Payment frequency includes monthly, quarterly, semi-annual and
annual. The Annuity Payment Frequency may not be changed once selected by the
Contract Owner.
In the event that the Contract Owner does not select a payment frequency,
Annuity Payments will be made monthly.
VARIABLE ANNUITY PAYMENTS
THE FIRST VARIABLE ANNUITY PAYMENT. Variable Annuity Payments are periodic
payments from Hartford to the designated Payee, the amount of which varies from
one Income Payment Date to the next as a function of the net investment
performance of the Sub-Accounts selected by the Contract Owner to support such
Annuity Payments. The dollar amount of the first Variable Annuity Payment
depends on the Annuity Payment Option chosen, the age of the Annuitant, the
gender of the Annuitant (if applicable), the amount of Contract Value applied to
purchase the Annuity Payments, and the applicable annuity purchase rates based
on the 1983a Individual Annuity Mortality table using projection scale G
projected to the year 2000 and an Assumed Investment Return of not less than
3.0%.
The dollar amount of the first Variable Annuity Payment attributable to each
Sub-Account is determined by dividing the dollar amount of the Contract Value
less applicable Premium Tax applied to that Sub-Account on the Annuity
Calculation Date by $1,000 and multiplying the result by the Payment Factor in
the Contract for the selected Annuity Payment Option. The dollar value of the
first Variable Annuity Payment is the sum of the first Variable Annuity Payments
attributable to each Sub-Account.
ANNUITY UNITS. The number of Annuity Units attributable to a Sub-Account is
derived by dividing the first Variable Annuity Payment attributable to that
Sub-Account by the Annuity Unit Value for that Sub-Account for the Valuation
Period ending on the Annuity Calculation Date or during which the Annuity
Calculation Date falls if the Valuation Period does not end on such date. The
number of Annuity Units attributable to each Sub-Account under a Contract
remains fixed unless there is a transfer of Annuity Units between Sub-Accounts.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS. The dollar amount of each subsequent
Variable Annuity Payment attributable to each Sub-Account is determined by
multiplying the number of Annuity Units of that Sub-Account credited under the
Contract by the Annuity Unit Value (described below) for that Sub-Account for
the Valuation Period ending on the Income Payment Date, or during which the
Annuity Payment Date falls if the Valuation Period does not end on such date.
The dollar value of each subsequent Variable Annuity Payment is the sum of the
subsequent Variable Annuity Payments attributable to each Sub-Account.
Notwithstanding the foregoing, when an Income Payment Date would fall on a day
that is not a Valuation Day, the Income Payment is computed as of the Valuation
Day immediately preceding what would have been the Income Payment Date.
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16 HARTFORD LIFE INSURANCE COMPANY
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The Annuity Unit Value of each Sub-Account for any Valuation Period is equal
to (a) multiplied by (b) divided by (c) where:
(a) is the Net Investment Factor for the Valuation Period for which the
Annuity Unit Value is being calculated;
(b) is the Annuity Unit Value for the preceding Valuation Period; and
(c) is a daily Assumed Investment Return factor (for the 3%, 5% or 6%
Assumed Investment Return) adjusted for the number of days in the Valuation
Period.
The Annuity Unit Factor is equal to one plus the applicable Assumed
Investment Return percentage. Therefore, for 3%, it is 1.03, for 5% it is 1.05
and for 6% it is 1.06. The annual factors can be translated into daily factor of
1.00008098, 1.00013368, and 1.00015965, respectively.
THE ASSUMED INVESTMENT RETURN. The Annuity Unit value will increase or
decrease from one Income Payment Date to the next in direct proportion to the
net investment return of the Sub-Account or Sub-Accounts supporting the Variable
Annuity Payments, less an adjustment to neutralize the selected Assumed
Investment Return. Dividing what would otherwise be the Annuity Unit value by
the Assumed Investment Return factor is necessary in order to adjust the change
in the Annuity Unit value (resulting from the Net Investment Factor) so that the
Annuity Unit value only changes to the extent that the Net Investment Factor
represents a rate of return greater than or less than the Assumed Investment
Return selected by the Contract Owner. Without this adjustment, the Net
Investment Factor would decrease the Annuity Unit value to the extent that such
value represented an annualized rate of return of less than 0.0% and increase
the Annuity Unit value to the extent that such value represented an annualized
rate of return of greater than 0.0%.
The Contract permits Contract Owners to select one of three Assumed
Investment Returns: 3%, 5% or 6%. A higher Assumed Investment Return will result
in a higher initial payment, a more slowly rising series of subsequent payments
when actual investment performance (minus any deductions and expenses) exceeds
the Assumed Investment Return, and a more rapid drop in subsequent payments when
actual investment performance (minus any deductions and expenses) is less than
the Assumed Investment Return. The following examples may help clarify the
impact of selecting one Assumed Investment Return over another:
1. If a Contract Owner selects a 3% ASSUMED INVESTMENT RETURN and if the
net investment return of the Sub-Account for an Annuity Payment period is equal
to the pro-rated portion of the 3% Assumed Investment Return, the Variable
Annuity Payment attributable to that Sub-Account for that period will equal the
Annuity Payment for the prior period. To the extent that such net investment
return exceeds an annualized rate of return of 3% for a payment period, the
Annuity Payment for that period will be greater than the Annuity Payment for the
prior period and to the extent that such return for a period falls short of an
annualized rate of 3%, the Annuity Payment for that period will be less than the
Annuity Payment for the prior period.
2. If a Contract Owner selects a 5% ASSUMED INVESTMENT RETURN and if the
net investment return of the Sub-Account for an Annuity Payment period is equal
to the pro-rated portion of the 5% Assumed Investment Return, the Variable
Annuity Payment attributable to that Sub-Account for that period will equal the
Annuity Payment for the prior period. To the extent that such net investment
return exceeds an annualized rate of return of 5% for a payment period, the
Annuity Payment for that period will be greater than the Annuity Payment for the
prior period and to the extent that such return for a period falls short of an
annualized rate of 5%, the Annuity Payment for that period will be less than the
Annuity Payment for the prior period.
3. If a Contract Owner selects a 6% ASSUMED INVESTMENT RETURN and if the
net investment return of the Sub-Account for an Annuity Payment period is equal
to the pro-rated portion of the 6% Assumed Investment Return, the Variable
Annuity Payment attributable to that Sub-Account for that period will equal the
Annuity Payment for the prior period. To the extent that such net investment
return exceeds an annualized rate of return of 6% for a payment period, the
Annuity Payment for that period will be greater than the Annuity Payment for the
prior period and to the extent that such return for a period falls short of an
annualized rate of 6%, the Annuity Payment for that period will be less than the
Annuity Payment for the prior period.
EXCHANGE ("TRANSFER") OF ANNUITY UNITS. After the Annuity Calculation Date,
the Contract Owner may exchange (i.e., "transfer") the dollar value of a
designated number of Annuity Units of a particular Sub-Account for an equivalent
dollar amount of Annuity Units of another Sub-Account. On the date of the
transfer, the dollar amount of a Variable Annuity Payment generated from the
Annuity Units of either Sub-Account would be the same. Transfers are executed as
of the day Hartford receives Written Notice requesting transfer. For guidelines
refer to "Sub-Account Value Transfers" on page 12.
CONTRACT FEES AND CHARGES
CONTINGENT DEFERRED SALES CHARGE
No sales charge is deducted from the Premium Payment at the time that the
Payment is made. However, a contingent deferred sales charge is deducted when a
Contract Owner elects to receive the Commuted Value under the PAYMENTS
GUARANTEED FOR A SPECIFIED NUMBER OF YEARS ANNUITY PAYMENT OPTION.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 17
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In the event that surrender charges from the Contracts are not sufficient to
cover the expenses of selling the Contracts, Hartford will bear such expenses.
Conversely, if the revenue from such charges exceeds such expenses, the excess
of revenues from such charges over expenses will be retained by Hartford.
The surrender charge is equal to a percentage of the Commuted Value (not to
exceed the Premium Payment) and is deducted from those values prior to their
being paid.
<TABLE>
<CAPTION>
SURRENDER CHARGE AS A PERCENTAGE
CONTRACT YEAR OF COMMUTED VALUE
- -------------------------- -----------------------------------
<S> <C>
1 6%
2 6%
3 5%
4 5%
5 4%
6 3%
7 2%
8 or more 0%
</TABLE>
PREMIUM TAX CHARGE
Certain states and municipalities impose a tax on Hartford in connection
with the receipt of Premium Payments or Contract Value. This tax can range from
0% to 4% of either the Premium Payment or the Contract Value and is generally
based on the Contract Owner's state of residence. Taxes are generally incurred
by Hartford as of the Annuity Calculation Date. Hartford deducts the charge for
taxes from the Contract Value on the Annuity Calculation Date. Some
jurisdictions impose a tax on Premium Payments at the time the Premium Payment
is received. In those jurisdictions, Hartford's current practice is to pay the
tax on Premium Payments and then deduct the charge for these taxes from the
Contract Value on a surrender prior to Annuity Calculation Date, or on the
Annuity Commencement Date.
MORTALITY AND EXPENSE RISK CHARGE
Hartford deducts a daily charge from the assets of the Separate Account to
compensate Hartford for mortality and expense risks that Hartford assumes under
the Contracts. The daily charge is at the rate of 0.003446% (approximately
equivalent to an effective annual rate of 1.25%) of the net assets of the
Separate Account. Approximately .90% of this annual charge is for the assumption
of mortality risk and .35% is for the assumption of expense risk.
The mortality risk that Hartford assumes (for life contingency based Annuity
Payment Options) is the risk that Annuitants, as a group, will live for a longer
period of time than Hartford estimated when it established the annuity purchase
rates in the Contract. Because of these guarantees, each Contract Owner is
assured that the Annuitant's longevity will not have an adverse effect on the
Annuity Payments that the Payee receives under Annuity Payment Options based on
life contingencies. Hartford also assumes a mortality risk because the Contracts
guarantee a "death benefit" if the Contract Owner or Annuitant dies before the
Income Start Date.
FUND EXPENSES
The investment performance of each Fund reflects the management fee that the
Fund pays to its investment manager as well as other operating expenses that the
Fund incurs. Investment management fees are generally daily fees computed as a
percent of a Fund's average daily net assets at an annual rate. Please read the
prospectus for each Fund for complete details.
ADDITIONAL CONTRACT INFORMATION
CONTRACT OWNERSHIP
The Contract belongs to the Contract Owner. A Contract Owner may exercise
all of the rights and options described in the Contract. Only the Annuitant may
be the owner of an IRA Contract.
The Contract Owner's rights include the right to: (1) select or change the
Contract Owner, (2) select or change any Beneficiary or contingent Beneficiary,
(3) select or change the Payee while the Annuitant is still alive, (4) allocate
the Premium Payment among and between the Sub-Accounts, (5) transfer Contract
Value among and between the Sub-Accounts, and (6) exchange or transfer Annuity
Units between Sub-Accounts on which Variable Annuity Payments are based.
The rights of owners of Qualified Contracts may be restricted by the terms
of a related employee benefit plan. For example, such plans may require an owner
of a Qualified Contract to obtain the consent of his or her spouse before
exercising certain ownership rights or may restrict withdrawals. See "Federal
Tax Considerations" for more details.
Selection of an Annuitant or Payee who is not the Contract Owner may have
adverse tax consequences. See "Federal Tax Considerations" for more details.
CHANGING THE CONTRACT OWNER OR BENEFICIARY
At any time, after the Cancellation Period, an Contract Owner may transfer
ownership of the Contract subject to Hartford's policies and procedures at the
time of the change.
At any time prior to the death of the Annuitant, the Contract Owner may name
a new Beneficiary by Written
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
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Notice unless an irrevocable Beneficiary has previously been named. When an
irrevocable Beneficiary has been designated, the Contract Owner must provide the
irrevocable Beneficiary's written consent to Hartford before a new Beneficiary
is designated.
These changes take effect as of the day the Written Notice was signed and
dated. Hartford is not liable for any payments made under the Contract prior to
the effectiveness of any change. For possible tax consequences of these changes,
see "Federal Tax Considerations."
MISSTATEMENT OF AGE OR SEX
If an age or sex of the Annuitant given to Hartford (in the application or
otherwise) is misstated, Hartford will adjust the benefits it pays under the
Contract to the amount that would have been payable at the correct age or sex.
If Hartford made any underpayments because of any such misstatement, it shall
pay the amount of such underpayment to the Payee or Beneficiary in one sum. If
Hartford makes any overpayments because of a misstatement of age or sex, it
shall deduct from current or future payments due under the Contract, the amount
of such overpayment.
CHANGE OF CONTRACT TERMS
Upon notice to the Contract Owner, Hartford may modify the Contract to:
1. conform the Contract or the operations of Hartford or of the Separate
Account to the requirements of any law to which the Contract, Hartford or the
Separate Account is subject;
2. assure continued qualification of the Contract as an annuity contract or
a Qualified Contract under the Code;
3. reflect a change (as permitted in the Contract) in the operation of the
Separate Account.
In the event of any such modification, Hartford will make appropriate
endorsements to the Contract.
No modification of this Contract shall be made except over the signature of
the President, a Vice President, an Assistant Vice President or a Secretary of
Hartford. Any modification or waiver must be in writing. No agent may bind
Hartford by making any promise not contained in the Contract.
REPORTS TO CONTRACT OWNERS
Hartford sends each Contract Owner a report at least annually, or more often
as required by law, indicating: the number of Accumulation or Annuity Units and
the dollar value of such units; the Contract Value prior to the Annuity
Calculation Date; the Premium Payment; or surrenders made before the Annuity
Calculation Date; Annuity Payments on or after the Income Start Date; and any
other information required by law.
The reports, which are mailed to Contract Owners at their last known
address, include any information that may be required by the Commission or the
insurance supervisory official of the jurisdiction in which the Contract is
issued.
Hartford also sends any other reports, notices or documents required by law
to be furnished to Owners.
MISCELLANEOUS
NON-PARTICIPATING. The Contract does not participate in the surplus or
profits of Hartford and Hartford does not pay dividends on the Contract.
PROOF OF AGE AND SURVIVAL. Hartford reserves the right to require proof of
the Annuitant's age and gender prior to the Annuity Calculation Date. In
addition, Hartford reserves the right to require proof that the Annuitant is
living before any Income Payment Date.
CONTRACT APPLICATION OR ORDER REQUEST. Hartford issues the Contract in
consideration of the Contract Owner's application or order request and payment
of the Premium. The entire Contract is made up of the Contract and any attached
endorsements or riders. In the absence of fraud, Hartford considers statements
made in the application or order request to be representations and not
warranties. Hartford will not use any statement in defense of a claim or to void
the Contract unless it is contained in the application or order request.
Hartford will not contest the Contract.
VOTING PRIVILEGES
In accordance with current interpretations of applicable law, Hartford votes
Fund shares held in the Separate Account at regular and special shareholder
meetings of the Funds in accordance with instructions received from persons
having voting interests in the corresponding Sub-Accounts.
The number of votes that a Contract Owner has the right to instruct are
calculated separately for each Sub-Account, and may include fractional votes.
Prior to the Annuity Calculation Date, the Contract Owner holds a voting
interest in each Sub-Account to which Variable Contract Value is allocated.
After the Annuity Calculation Date, the Contract Owner has a voting interest in
each Sub-Account from which Variable Annuity Payments are made.
For each Contract Owner prior to the Annuity Calculation Date, the number of
votes attributable to a Sub-Account will be determined by dividing the Contract
Owner's Sub-Account Value by the Net Asset Value Per Share of the Fund
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
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in which that Sub-Account invests. For each Contract Owner after the Annuity
Calculation Date, the number of votes attributable to a Sub-Account is
determined by dividing the liability for future Variable Annuity Payments to be
paid from that Sub-Account by the Net Asset Value Per Share of the Fund in which
that Sub-Account invests. This liability for future payments is calculated on
the basis of the mortality assumptions, the selected Assumed Investment Return
and the Annuity Unit Value of that Sub-Account. As Variable Annuity Payments are
made to the Payee, the liability for future payments decreases as does the
number of votes.
The number of votes available to a Contract Owner are determined as of the
date coinciding with the date established by the Fund for determining
shareholders eligible to vote at the relevant meeting of the Fund's
shareholders. Voting instructions are solicited by written communication prior
to such meeting in accordance with procedures established for the Fund. Each
Contract Owner or Payee having a voting interest in a Sub-Account will receive
proxy materials and reports relating to any meeting of shareholders of the Funds
in which that Sub-Account invests.
Fund shares as to which no timely instructions are received and shares held
by Hartford in a Sub-Account as to which no Owner or Payee has a beneficial
interest are voted in proportion to the voting instructions that are received
with respect to all Contracts participating in that Sub-Account. Voting
instructions to abstain on any item to be voted upon are applied to reduce the
total number of votes eligible to be cast on a matter.
FEDERAL TAX CONSIDERATIONS
GENERAL
TAX LAW IS COMPLEX AND TAX CONSEQUENCES WILL VARY ACCORDING TO THE ACTUAL
STATUS OF THE CONTRACT OWNER AND, IF APPLICABLE, THE TYPE OF RETIREMENT PROGRAM
FOR WHICH THE CONTRACT IS PURCHASED. THEREFORE, A PERSON, TRUSTEE OR OTHER
ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT MAY NEED LEGAL AND TAX ADVICE.
This Prospectus does not provide a detailed description of the federal
income tax consequences of purchasing a Contract. Special tax rules may apply 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 prospective purchaser should always consult a qualified tax
adviser. This discussion is based on Hartford's understanding of current federal
income tax laws as they are currently interpreted.
TAXATION OF HARTFORD AND
THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company under Subchapter L of Chapter 1 of the Code. Accordingly, the
Separate Account is not separately taxed as a "regulated investment company"
under subchapter M. 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. 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.
TAXATION OF PURCHASERS OF
NON-QUALIFIED CONTRACTS
CORPORATIONS, TRUSTS AND OTHER NON-NATURAL PERSONS. Section 72 of the Code
governs the taxation of annuity contracts and contains provisions relating to
non-natural Contract Owners. Non-natural persons include, among others,
corporations, trusts, and partnerships. In general, unless the non-natural
person holds a Contract as agent for a natural person, the annual net increase
in the value of the Contract is includable in the non-natural person's gross
income for the tax period in which the net increase occurs. There is, however,
an exception to this general rule for certain annuity contracts held by
structured settlement companies, certain annuity contracts held by an employer
with respect to a terminated qualified retirement plan and certain immediate
annuity contracts. For this purpose, an immediate annuity means an annuity that
is purchased with a single premium payment, that has an annuity start date
commencing no later than one year from the date of purchase, and that provides
for a series of substantially equal periodic payments to be made not less
frequently than annually during the annuity period. A non-natural person which
is a tax-exempt entity for federal income tax purposes is not subject to income
tax as a result of Section 72 of the Code.
NATURAL PERSONS. Section 72 generally provides that a Contract Owner is not
taxed on increases in the value of the Contract until an amount distributed from
the Contract is received (or deemed received) by the Contract Owner, either in
the form of Annuity Payments, as contemplated by the Contract, or in some other
form (i.e., surrender or Death Benefit). However, this tax deferral generally
applies only if: (1) the investments in the Separate Account are "adequately
diversified" in accordance with Treasury Department regulations, (2) Hartford,
rather than the Contract Owner, is considered the owner of such assets for
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
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federal income tax purposes, and (3) certain distribution requirements are met
in the event that the Contract Owner dies. These requirements are discussed
further under the caption "Tax Status of the Contract" below.
DISTRIBUTIONS PRIOR TO THE INCOME START DATE. The Contract does not permit
partial withdrawals or partial surrenders or loans. If, however, a Contract is
surrendered prior to the Income Start Date, amounts received by the Contract
Owner are includable in his or her income to the extent that such amounts exceed
the "investment in the contract." For this purpose, the investment in the
contract at any time equals the Premium Payment (to the extent that such Payment
was neither deductible when made nor excludable from income as, for example, in
the case of certain contributions to Qualified Contracts), less any amounts
previously received from the Contract which were not includable in income. Also,
the Surrender Value may be subject to a penalty tax, described below. In
general, an assignment of the Contract (or other change of ownership) without
full and adequate consideration will be treated as a distribution from the
Contract and taxed in the same manner as a surrender (except where the Contract
is transferred between spouses or incident to a divorce).
The Contract provides that upon the death of Contract Owner, Annuitant or
Joint Annuitant, the Beneficiary will receive the Contract Value. This
distribution is includable in the Beneficiary's income as follows: (1) if
distributed in a lump sum, it is taxed in the same manner as a surrender, (2) if
it is distributed in the form of Annuity Payments, it is taxed in the same
manner as Annuity Payments (see below).
DISTRIBUTIONS AFTER THE INCOME START DATE. The portion of each Annuity
Payment taxable as ordinary income is equal to the excess of the Annuity Payment
over the "exclusion amount." The "exclusion amount" is the investment in the
Contract (described above), adjusted for any guaranteed period, divided by the
number of Annuity Payments expected to be made (determined by Treasury
Department regulations that take into account the Annuitant's life expectancy
and the Annuity Payment Option elected). After the dollar amount of the
investment in the Contract, adjusted for any guaranteed period, is deemed to be
recovered, the entire amount of each Annuity Payment is fully includable in
income. Nonetheless, should the Annuity Payments cease before the adjusted
investment in the Contract is fully recovered, a deduction is allowed for the
unrecovered amount of the adjusted investment in the Contract. Where a
guaranteed period of Annuity Payments is selected and the Annuitant does not
live to the end of that period, the Annuity Payments for the remainder of the
period are includable in income as follows: (1) if distributed in a lump sum,
they are included in income to the extent that they exceed the unrecovered
investment in the Contract at that time, or (2) if received as Annuity Payments,
they are fully excluded from income until the remaining investment in the
Contract is deemed to be recovered. All Annuity Payments thereafter are fully
includable in income.
PENALTY TAX ON CERTAIN DISTRIBUTIONS. Distributions received (or deemed
received) from a Contract (before or after the Income Start Date) may be subject
to a penalty tax equal to 10% of the amount treated as taxable income. In
general, however, there is no penalty tax on distributions:
1. made on or after a taxpayer reaches age 59 1/2;
2. made on or after the death of the Contract Owner;
3. attributable to a taxpayer's becoming disabled;
4. that are part of a series of substantially equal periodic payments (not
less frequently than annually) for the life (or the life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his
or her designated beneficiary;
5. made under certain annuities issued in connection with structured
settlement agreements; and
6. made under an annuity contract that is purchased with a single premium
payment when the annuity date is no later than a year from purchase and
substantially equal periodic payments are made, not less frequently than
annually, during the annuity payment period.
AGGREGATION OF TWO OR MORE CONTRACTS. All non-qualified deferred annuity
contracts that are issued by Hartford (or its affiliates) to the same owner
during any calendar year are treated as one annuity contract for purposes of
determining the amount includable in gross income under Section 72(e) of the
Code. The effects of this rule are not yet clear; however, it could affect the
time when income is taxable and the amount that might be subject to the 10%
penalty tax described above. In addition, the Treasury Department has specific
authority to issue regulations that prevent the avoidance of Section 72(e) of
the Code through the serial purchase of annuity contracts or otherwise. There
may also be other situations in which the Treasury Department may conclude that
it would be appropriate to aggregate two or more deferred or immediate annuity
contracts purchased by the same owner. Accordingly, a Contract Owner should
consult a competent tax adviser before purchasing more than one annuity contract
in a calendar year.
POSSIBLE CHANGES IN TAXATION. In past years, legislation has been proposed
that would have adversely modified the federal taxation of certain annuity
contracts. For example, one such proposal would have changed the tax treatment
of non-qualified annuities that did not have "substantial life contingencies" by
taxing income as it is credited to the annuity contract. Although as of the date
of this Prospectus Congress is not considering any legislation regarding
taxation of annuity contracts, there is always the possibility that the tax
treatment of annuities could change by legislation or other means (such as IRS
regulations, revenue rulings, judicial decisions, etc.). Moreover, it is also
possible that any
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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change could be retroactive (that is, effective prior to the date of the
change).
CONTRACTS OBTAINED THROUGH A TAX-FREE EXCHANGE OF OTHER ANNUITY OR LIFE
INSURANCE CONTRACTS. Section 1035 of the Code generally provides that no gain or
loss shall be recognized on the exchange of one annuity contract for another. If
the surrendered contract was issued prior to August 14, 1982, the tax rules
formerly provided that the surrender was taxable only to the extent the amount
received exceeds the owner's investment in the contract will and continue to
apply to amounts allocable to investments in that contract prior to August 14,
1982. In contrast, contracts issued after January 19, 1985 in a Code Section
1035 exchange are treated as new contracts for purposes of the penalty and
distribution-at-death rules. Special rules and procedures apply to Section 1035
transactions. Prospective Contract Owners wishing to take advantage of Section
1035 should consult their tax adviser.
TAX STATUS OF THE CONTRACTS. The foregoing discussion assumes that the
Contracts qualify as "annuity contracts" for federal income tax purposes under
the Code.
DIVERSIFICATION REQUIREMENTS. Section 817(h) of the Code provides that
separate account investments underlying a contract must be "adequately
diversified" in accordance with Treasury Department regulations in order for the
contract to qualify as an annuity contract under Section 72 of the Code. The
Separate Account, through each underlying Fund, intends to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code, which affect how the assets in the various Sub-Accounts may be
invested. Although Hartford does not have direct control over the Funds in which
the Separate Account invests, Hartford believes that each Fund will meet the
diversification requirements, and therefore, the Contract will be treated as an
annuity contract under the Code.
The Treasury Department has issued diversification regulations which
generally require, in effect, among other things, that no more than 55% of the
value of the total assets of each Fund 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.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includable in the variable
annuity contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular Sub-Accounts without being treated as
owners of the underlying assets." As of the date of this Prospectus, no such
guidance has been issued.
The ownership rights under the Contracts are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the Contract Owner has the choice of several Sub-Accounts in which to
allocate the Premium Payment and Contract Value, and may be able to transfer
Contract Value among Sub-Accounts more frequently than in such rulings. In
addition, the Contract provides for more Sub-Accounts than did the variable
contracts that were the subject of the such rulings. These differences could
result in a Contract Owner being treated as the owner of the assets of the
Separate Account. In addition, Hartford does not know what standards will be set
forth, if any, in the regulations or rulings which the Treasury Department has
stated it expects to issue. Hartford therefore reserves the right to modify the
Contract as necessary to attempt to prevent the Contact Owner from being
considered the owner of the Separate Account's assets.
REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for
federal income tax purposes, Section 72(s) of the Code requires any
Non-Qualified Contract to provide that: (a) if any Contract Owner dies on or
after the Income Start Date but prior to the time the entire interest in the
Contract has been distributed, the remaining portion of such interest will be
distributed at least as rapidly as under the method of distribution being used
as of the date of that Contract Owner's death; and (b) if any Contract Owner
dies prior to the Income Start Date, the entire interest in the Contract will be
distributed within five years after the date of the Contract Owner's death.
These requirements will be considered satisfied as to any portion of the
Contract Owner's interest that is payable to or for the benefit of a "designated
beneficiary," and that is distributed over the life of such Beneficiary or over
a period not extending beyond the life expectancy of that Beneficiary, provided
that such
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22 HARTFORD LIFE INSURANCE COMPANY
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distributions begin within one year of that Contract Owner's death. The Contract
Owner's "designated beneficiary" is the person designated by such Contract Owner
as a Beneficiary and must be a natural person. However, if the Contract Owner's
sole designated beneficiary is the surviving spouse of the Contract Owner, the
Contract may be continued with the surviving spouse as the new Contract Owner.
The requirements further provide that if the Contract Owner is not an
individual, the primary Annuitant shall be treated as the Contract Owner for
purposes of making distributions that 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. The Contract does not
permit a change of the Annuitants, however.
Non-Qualified Contracts contain provisions that are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. Hartford will review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code Section 72(s) when clarified by regulation or otherwise.
TAXATION OF PURCHASERS OF QUALIFIED CONTRACTS
The Contracts are designed for use as Individual Retirement Annuities
("IRAs") or in connection with Deferred Compensation Plans established and
maintained by state or local governments or tax-exempt organizations. Important
differences exist between the tax rules which are applicable to IRAs and
Deferred Compensation Plans. These rules are complex and may vary depending on
individual circumstances. Adverse tax consequences may result from distributions
prior to age 59 1/2 (subject to certain exceptions); distributions that do not
conform to applicable commencement and minimum distribution rules; aggregate
distributions in excess of a specified annual amount; and in other
circumstances. Therefore, no attempt is made to provide more than general
information about the use of the Contracts as IRAs or when owned by eligible
employers in connection with Deferred Compensation Plans. Contract Owners,
Annuitants, and Beneficiaries are cautioned that the rights of any person to any
benefits under a Deferred Compensation Plan may be subject to the terms and
conditions of the plan itself, regardless of the terms and conditions of the
Contract, but that Hartford is not bound by the terms and conditions of such
plans to the extent such terms conflict with the Contract, unless Hartford
specifically consents to be bound. A brief description of some of the federal
income tax rules which apply to IRAs and Deferred Compensation Plans is set
forth below. Hartford may amend the Contract as necessary to conform it to the
requirements of applicable law.
INDIVIDUAL RETIREMENT ANNUITIES. The Contract is designed for use as an IRA
purchased through a tax-deferred rollover contribution from another IRA, a
retirement plan qualified under Section 401 or Section 403(a) of the Code or tax
sheltered annuity contract under Section 403(b) of the Code. Amounts held under
a Deferred Compensation Plan under Section 457 of the Code CANNOT be rolled over
or transferred to an IRA.
DISTRIBUTIONS FROM AN IRA. In general, payments from an IRA which are not
rolled over must be included in gross income as ordinary taxable income in the
year in which they are received. Required minimum distributions must begin by
April 1 of the calendar year following the calendar year in which the IRA owner
attains the age of 70 1/2. Certain other mandatory distribution rules apply upon
the death of the IRA owner.
TEN PERCENT PENALTY TAX ON EARLY DISTRIBUTIONS. Distributions received (or
deemed received) from an IRA may be subject to a penalty tax equal to ten
percent (10%) of the amount treated as taxable income. In general, however,
there is no such penalty tax on distributions:
1. made on or after the date on which the taxpayer reaches age 59 1/2,
2. made to a beneficiary (or to the estate of the taxpayer) on or after the
death of the taxpayer,
3. attributable to the taxpayer's becoming disabled, or
4. which are part of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his
or her designated beneficiary.
In addition, effective for distributions from an IRA made after December 31,
1996, there is no such penalty tax on distributions:
5. made to the taxpayer to the extent such distributions do not exceed the
amount allowable as a deduction for federal income tax purposes allowed to the
taxpayer for amounts paid during the taxable year for medical care, or
6. if certain conditions are met, made to an unemployed taxpayer after
separation from employment, for health insurance premiums.
CODE SECTION 457 DEFERRED COMPENSATION PLANS. The Contract may be purchased
by a state or local government or tax-exempt organization that is an employer
sponsoring a Deferred Compensation Plan under Section 457 of the Code in order
to effect distribution of plan benefits to participants under the plan. In
general, distributions from a Deferred Compensation Plan are prohibited unless
made after the participant attains the age specified in the plan, separates from
service, dies, or suffers an unforeseeable financial emergency. Distributions
under plans that meet the requirements of Section 457 of the Code are taxable as
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
ordinary income in the year paid or made available to the participant or
beneficiary.
Generally, required minimum distributions must begin by April 1 of the
calendar year following the calendar year in which the participating employee
attains the age of 70 1/2. Certain other mandatory distribution rules apply upon
the death of the participating employee.
Amounts held under a Deferred Compensation Plan under Section 457 of the
Code CANNOT be rolled over or transferred to an IRA.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution from a Contract that is taxable income to the
recipient is generally subject to withholding for the recipient's federal income
tax liability at rates that vary according to the type of distribution and the
recipient's tax status. Section 3405 of the Code governs withholding and is
summarized below:
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.
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. A recipient may elect not to have income
taxes withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
DEFERRED COMPENSATION PLANS. Distributions from a non-qualified deferred
compensation plan meeting the requirements of Section 457 of the Code are
generally subject to regular wage withholding rules.
Certain states also require withholding of state income tax whenever federal
income tax is withheld.
CONTRACT OWNERS THAT ARE NONRESIDENT
ALIENS OR FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to Contract Owners 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 and any required tax forms are submitted to
Hartford. In addition, purchasers may be subject to state premium tax, other
state and/or municipal taxes, and taxes that may be imposed by the purchaser's
country of citizenship or residence. Prospective purchasers are advised to
consult with a qualified tax adviser regarding U.S., state, and foreign taxation
with respect to the purchase of a Contract.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the federal tax consequences
under these Contracts are not exhaustive, and special rules may apply to other
tax situations not discussed in this Prospectus. Further, the federal income tax
consequences discussed herein reflect Hartford's understanding of current law
and the law may change. Federal estate and state and local estate, inheritance
and other tax consequences of ownership or receipt of distributions under a
Contract depend on the individual circumstances of each Contract Owner or
recipient of the distribution. In particular, gift and/or estate tax
consequences may result in situations where the Contract Owner is not also the
Annuitant, Payee, and Beneficiary. A competent tax adviser should be consulted
for further information.
OTHER INFORMATION
DISTRIBUTION OF THE CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD"), which is located at
200 Hopmeadow Street, Simsbury, CT 06070, is principal underwriter and
distributor of the Contracts. HSD is an affiliate of Hartford, is registered
with the Commission as a broker-dealer, and is a member of the National
Association of Securities Dealers, Inc. Hartford pays HSD for acting as
principal underwriter under a distribution agreement. The Contracts are offered
on a continuous basis and Hartford does not anticipate discontinuing the offer.
Applications for Contracts are solicited by agents who are licensed by
applicable state insurance authorities to sell Hartford's insurance contracts
and who are also registered representatives of a broker-dealer having a selling
agreement with HSD. Such broker-dealers will generally receive commissions based
on a percent of Premium Payments made (up to a maximum of 6%). The writing agent
will receive a percentage of these commissions from the respective
broker-dealer, depending on the practice of that broker-dealer. Contract Owners
do not pay these commissions.
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
to which the assets of the Separate Account are subject.
FINANCIAL STATEMENTS
The audited financial statements and financial statement schedules included
in this Prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. Reference is made to
said report on the financial statements of Hartford Life Insurance Company,
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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF ANNUITY PAYMENTS
ASSUMING HYPOTHETICAL RATES OF RETURN
The following graph has been prepared to show how investment performance could
affect Variable Annuity Payments over time. The graph illustrates the Variable
Annuity Payments of a Non-Qualified Contact under three rate of return
scenarios. Of course, the illustrations merely represent what Variable Annuity
Payments might be paid under a HYPOTHETICAL Non-Qualified Contract.
WHAT THE GRAPHS ILLUSTRATE. Each curve plotted on the graph illustrates the
payments under a hypothetical Non-Qualified Contract (described in more detail
below) assuming a different hypothetical rate of return for a single Sub-Account
supporting the Contract by plotting one point for each contract year. Each such
annual point on the graph represents the average of twelve monthly Variable
Annuity Payments made in that contract year under the hypothetical Contract
(hereinafter, an "Average Monthly Payment"). Each curve on the graph assumes
that the initial Variable Annuity Payment under the hypothetical Contract is
$1,000 (discussed in more detail below).
HYPOTHETICAL RATES OF RETURN. The Variable Annuity Payments reflect three
different assumptions for a constant investment return before fees and expenses:
0%, 6% and 12%. Net of all expenses, these constant returns are: -1.83%, 4.06%
and 9.95%. Average Monthly Payments reflect the assumed investment return net of
all expenses of the illustrated Sub-Account (and the Funds) over the periods
shown in each graph. Fund management fees and operating expenses are assumed to
be at an annual rate of 0.60% of their average daily net assets. This is the
weighted average of Fund expenses shown in the fee table on page 5. The
mortality and expense risk charge is assumed to be at an annual rate of 1.25% of
the illustrated Sub-Account's average daily net assets.
Nevertheless, THE AVERAGE MONTHLY PAYMENTS DEPICTED IN THE GRAPH ARE BASED
ON HYPOTHETICAL CONTRACTS AND HYPOTHETICAL INVESTMENT RESULTS AND ARE NOT
PROJECTIONS OR INDICATIONS OF FUTURE RESULTS. HARTFORD DOES NOT GUARANTEE OR
EVER SUGGEST THAT ANY SUB-ACCOUNT OR CONTRACT ISSUED BY IT WOULD GENERATE THESE
OR SIMILAR AVERAGE MONTHLY PAYMENTS FOR ANY PERIOD OF TIME. THE GRAPHS ARE FOR
ILLUSTRATION PURPOSES ONLY AND DO NOT REPRESENT FUTURE VARIABLE ANNUITY PAYMENTS
OR FUTURE INVESTMENT RETURNS. Variable Annuity Payments under a real Contract
may be more or less than those forming the basis for the Average Monthly
Payments shown in these illustrations if the actual returns of the Sub-Accounts
selected by a Contract Owner are different from the hypothetical returns.
Because it is very likely that a Sub-Account's investment return will fluctuate
over time, one can expect Variable Annuity Payments under a real Contract to
fluctuate. Moreover, under a real Contract, the total amount of Variable Annuity
Payments ultimately received by a Payee depends upon which Annuity Payment
Option the Contract Owner selects and, for life contingent annuity payment
options, how long the Annuitant lives. See "Selecting An Annuity Payment Option"
on page 14.
ASSUMPTIONS ON WHICH THE HYPOTHETICAL CONTRACT IS BASED. In order to
illustrate a hypothetical Contract, Hartford had to make several assumptions
about the Contract. These assumptions are that: (1) the hypothetical Contract is
a Non-Qualified Contract, (2) the entire Contract Value of the hypothetical
Contract is allocated (on the Annuity Calculation Date) to a Sub-Account having
a constant investment return before fees and expenses of 0%, 6%, or 12%, (3) the
Contract Owner selected an Assumed Investment Return of 5%, (4) the Contract
Owner elects to receive monthly Variable Annuity Payments, and (5) the Contract
Value (less any applicable Premium Tax) applied to the purchase of Annuity Units
on the Annuity Calculation Date under the Annuity Payment Option selected
results in an initial Variable Annuity Payment of $1,000.
For a discussion of how a Contract Owner may elect to receive monthly,
quarterly, semi-annual or annual Variable Annuity Payments, see "Income Payment
Dates" on page 15.
ASSUMED INVESTMENT RETURN. Among the most important factors that determines
that amount of Variable Annuity Payments is the Assumed Investment Return
selected by the Contract Owner. The hypothetical Contract has an Assumed
Investment Return of 5%. A Contract Owner may, however, select a 3%, 5% or 6%
Assumed Investment Return under a real Contract. Generally, Variable Annuity
Payments will increase in size from one Income Payment Date to the next if the
annualized net rate of return during that time is greater than the Assumed
Investment Return, and will decrease if the annualized net rate of return over
this period is less than the Assumed Investment Return. (The Assumed Investment
Return is an important component of the Payment Factor.) For a detailed
discussion of Assumed Investment Returns, see "Variable Annuity Payments" on
page 15.
THE $1,000 INITIAL ANNUITY PAYMENT. The hypothetical Contract has an
initial Variable Annuity Payment of $1,000. The dollar amount of the first
Variable Annuity Payment under a real Contract generally depends upon the
Annuity Payment Option selected by the Contract Owner, the amount of Contract
Value applied to purchase the Variable Annuity Payments, the annuity purchase
rates in the Contract at the time it is purchased (I.E., the Payment Factor),
the age of the Annuitant, and, in most cases (E.G., Non-Qualified Contracts),
the sex of the Annuitant. For each of the illustrations, the entire Contract
Value under the hypothetical Contract is allocated to a Sub-Account
<PAGE>
26 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
having a constant investment return before fees and expenses of 0%, 6%, or 12%.
However, for a real Contract, Contract Value is often allocated among several
Sub-Accounts prior to the Annuity Calculation Date. The dollar amount of the
first Variable Annuity Payment attributable to each Sub-Account is determined
under a real Contract by dividing the dollar amount of Contract Value (less
applicable Premium Tax) applied to that Sub-Account on the Annuity Calculation
Date by $1,000, and multiplying the result by the annuity Payment Factor in the
Contract for the selected Annuity Payment Option. The dollar value of the first
Variable Annuity Payment is the sum of the first Variable Annuity Payments
attributable to each Sub-Account. For a detailed discussion of how the first
Variable Annuity Payment is determined, see "Variable Annuity Payments" on page
15.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATIONS
<TABLE>
<CAPTION>
HYPOTHETICAL 0% GROSS HYPOTHETICAL 6% GROSS HYPOTHETICAL 12% GROSS
RATE RATE RATE
AVERAGE MONTHLY AVERAGE MONTHLY AVERAGE MONTHLY
PAYMENT PAYMENT PAYMENT
FOR EACH YEAR SHOWN FOR EACH YEAR SHOWN FOR EACH YEAR SHOWN
$1,000 INITIAL $1,000 INITIAL $1,000 INITIAL
PAYMENT; 5% AIR PAYMENT; 5% AIR PAYMENT; 5% AIR
- ---------------------- ---------------------- ----------------------
AVERAGE AVERAGE AVERAGE
CONTRACT MONTHLY CONTRACT MONTHLY CONTRACT MONTHLY
YEAR PAYMENT YEAR PAYMENT YEAR PAYMENT
- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1 970 1 996 1 1,021
2 907 2 987 2 1,070
3 848 3 978 3 1,120
4 793 4 969 4 1,173
5 741 5 961 5 1,228
6 693 6 952 6 1,286
7 648 7 943 7 1,346
8 606 8 935 8 1,410
9 566 9 927 9 1,476
10 529 10 918 10 1,546
11 495 11 910 11 1,619
12 463 12 902 12 1,695
13 433 13 894 13 1,775
14 404 14 886 14 1,858
15 378 15 878 15 1,946
16 353 16 870 16 2,038
17 330 17 862 17 2,134
18 309 18 854 18 2,234
19 289 19 847 19 2,340
20 270 20 839 20 2,450
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CONTRACT YEAR 0% GROSS RATE 6% GROSS RATE 12% GROSS RATE
<S> <C> <C> <C>
1 970 996 1021
2 907 967 1070
3 848 978 1120
4 793 969 1173
5 741 961 1228
6 693 952 1286
7 648 943 1346
8 606 935 1410
9 586 927 1476
10 529 916 1548
11 495 910 1619
12 463 902 1695
13 433 894 1775
14 404 888 1858
15 378 878 1948
16 353 870 2038
17 330 862 2134
18 309 854 2234
19 288 847 2340
20 270 839 2450
</TABLE>
<PAGE>
28 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF ANNUITY PAYMENTS
USING HISTORIC RATES OF RETURN
The following graphs have been prepared to show how investment performance
affects Variable Annuity Payments over time. These graphs illustrate the
"performance" of a Non-Qualified Contract under which Variable Annuity Payments
begin at the end of the month that the Contract was issued which is the same
month that each Sub-Account illustrated began operations. Of course, Hartford
did not sell Contracts prior to the date of this Prospectus (I.E., during any of
the time periods shown) and therefore the illustrations merely represent what
Variable Annuity Payments might have been under a HYPOTHETICAL Non-Qualified
Contract had one existed during the years shown.
WHAT THE GRAPHS ILLUSTRATE. Each graph illustrates the "performance" of a
particular Sub-Account based on hypothetical Non-Qualified Contract (described
in more detail below) by plotting one point for each calendar year since the
Sub-Account began operations. Each such annual point on the graph represents the
average of twelve monthly Variable Annuity Payments made in that year under the
hypothetical Contract. Each graph assumes that the initial Variable Annuity
Payment under the hypothetical Contract is $1,000 (discussed in more detail
below). All of the graphs end on July 31, 1997 and the point plotted for 1997
represents the average of the seven monthly Variable Annuity Payments made under
the hypothetical Contract up to that time in 1997. Likewise, where a Sub-Account
began operations in mid-year, the point for the first year represents the
average of monthly Variable Annuity Payments made (which is fewer than 12) under
the hypothetical Contract during that year. The points therefore represent, in
each case, the average monthly Variable Annuity Payment (hereinafter, an
"Average Monthly Payment").
Average Monthly Payments reflect the actual PAST investment return after all
expenses of the Sub-Accounts over the periods shown in each graph. Nevertheless,
THE AVERAGE MONTHLY PAYMENTS DEPICTED IN THE GRAPHS ARE BASED ON HYPOTHETICAL
CONTRACTS AND PAST INVESTMENT RESULTS AND ARE NOT PROJECTIONS OR INDICATIONS OF
FUTURE RESULTS. HARTFORD DOES NOT GUARANTEE OR EVEN SUGGEST THAT ANY CONTRACT
ISSUED BY IT WOULD GENERATE THESE OR SIMILAR VARIABLE ANNUITY PAYMENTS FOR ANY
PERIOD OF TIME. THE GRAPHS ARE FOR ILLUSTRATION PURPOSES ONLY AND DO NOT
REPRESENT FUTURE VARIABLE ANNUITY PAYMENTS OR FUTURE INVESTMENT RETURNS.
Variable Annuity Payments under a real Contract may be more or less than those
forming the basis for the Average Monthly Payments shown in these illustrations
if the actual returns of the Sub-Accounts selected by a Contract Owner are
different from the past returns of the Sub-Accounts. Because it is very likely
that a Sub-Account's investment return will fluctuate over time, one can expect
Variable Annuity Payments under a real Contract to fluctuate. Moreover, under a
real Contract, the total amount of Variable Annuity Payments ultimately received
by a Payee depends upon which Annuity Payment Option the Contract Owner selects
and, for life contingent annuity options, how long the Annuitant lives. See
"Selecting An Annuity Payment Option" on page 14.
ASSUMPTIONS ON WHICH THE HYPOTHETICAL CONTRACT IS BASED. In order to
illustrate a hypothetical Contract, Hartford had to make several assumptions
about the Contract. These assumptions are that: (1) the hypothetical Contract is
a Non-Qualified Contract, (2) the entire Contract Value of the hypothetical
Contract is allocated (on the Annuity Calculation Date) to the Sub-Account being
illustrated, (3) the Contract Owner selected an Assumed Investment Return of 5%,
(4) the Contract Owner elects to receive monthly Variable Annuity Payments and
elects an Income Start Date that is the last day of the month in which the
Contract was issued, (5) the Contract Value (less any applicable premium tax)
applied to the purchase of Annuity Units on the Annuity Calculation Date under
the Annuity Payment Option selected results in an initial Variable Annuity
Payment of $1,000, and (6) the Income Start Date is the last day of the month
that the Sub-Account illustrated began operations. TO THE EXTENT THAT A REAL
CONTRACT IS ISSUED BY HARTFORD ON A BASIS DIFFERENT FROM THE FOREGOING
ASSUMPTIONS, THAT REAL CONTRACT WOULD HAVE HAD AVERAGE MONTHLY PAYMENTS
DIFFERENT FROM THOSE ILLUSTRATED EVEN DURING THE PERIODS ILLUSTRATED.
For a discussion of how a Contract Owner may elect to receive monthly,
quarterly, semi-annual or annual Variable Annuity Payments, see "Income Payment
Dates" on page 15.
ASSUMED INVESTMENT RETURN. Among the most important factors that determines
that amount of Variable Annuity Payments is the Assumed Investment Return
selected by the Contract Owner. The hypothetical Contract has an Assumed
Investment Return of 5%. A Contract Owner may, however, select a 3%, 5% or 6%
Assumed Investment Return under a real Contract. Generally, Variable Annuity
Payments will increase in size from one Income Payment Date to the next if the
annualized net rate of return during that time is greater than the Assumed
Investment Return, and will decrease if the annualized net rate of return over
this period is less than the Assumed Investment Return. (The Assumed Investment
Return is an important component of the Payment Factor.) For a detailed
discussion of Assumed Investment Returns, see "Variable Annuity Payments" on
page 15. Standardized and non-standardized average annual total returns as well
as the Sub-Account
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
Annual Percentage Change column reflect the performance of the Sub-Account being
illustrated without adjustment for an Assumed Investment Return.
THE $1,000 INITIAL ANNUITY PAYMENT. The hypothetical Contract has an
initial Variable Annuity Payment of $1,000. The dollar amount of the first
Variable Annuity Payment under a real Contract generally depends upon the
Annuity Payment Option selected by the Contract Owner, the amount of Contract
Value applied to purchase the Variable Annuity Payments, the annuity purchase
rates in the Contract at the time it is purchased (I.E., the Payment Factor),
the age of the Annuitant, and, in most cases (E.G., Non-Qualified Contracts),
the sex of the Annuitant. For each of the illustrations, the entire Contract
Value under the hypothetical Contract is allocated to the Sub-Account shown in
the illustrations. However, for a real Contract, Contract Value is often
allocated among several Sub-Accounts prior to the Annuity Calculation Date. The
dollar amount of the first Variable Annuity Payment attributable to each
Sub-Account is determined under a real Contract by dividing the dollar amount of
Contract Value (less applicable Premium Tax) applied to that Sub-Account on the
Annuity Calculation Date by $1,000, and multiplying the result by the annuity
Payment Factor in the Contract for the selected Annuity Payment Option. The
dollar value of the first Variable Annuity Payment is the sum of the first
Variable Annuity Payments attributable to each Sub-Account. For a detailed
discussion of how the first Variable Annuity Payment is determined, see
"Variable Annuity Payments" on page 15.
Historical rates of return illustrations for the Hartford MidCap Fund are
unavailable because the Fund's inception date was on July 1997, the month on
which the graphs end.
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HARTFORD ADVISERS FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983 * 990 1.26%
1984 948 6.05%
1985 1,078 25.26%
1986 1,253 11.27%
1987 1,337 4.66%
1988 1,322 12.71%
1989 1,479 20.24%
1990 1,459 0.01%
1991 1,584 18.88%
1992 1,630 6.96%
1993 1,731 10.86%
1994 1,688 -3.94%
1995 1,821 26.74%
1996 2,042 15.14%
1997 ** 2,313 22.32%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL
RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ------------------------------------------
<S> <C>
1 Year 36.09%
5 Year 14.77%
10 Year 11.45%
Since Inception 12.16%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL
RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- -------------------------------------
<S> <C>
1 Year 30.09%
5 Year 14.30%
10 Year 11.45%
Since Inception 12.16%
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford Advisers Fund Sub-Account.]
* Fund inception was 4/83. Therefore, the Average Monthly Payment represents the
average monthly payment from April 1983 to December 1983. The Annual Sub-Account
Return is based on the period from April 1983 to December 1983.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984 * 1,038 9.16%
1985 1,237 34.37%
1986 1,485 7.65%
1987 1,496 -5.55%
1988 1,451 24.67%
1989 1,694 22.60%
1990 1,550 -12.02%
1991 1,852 52.16%
1992 2,100 15.55%
1993 2,492 19.30%
1994 2,562 1.26%
1995 2,897 28.63%
1996 3,328 19.20%
1997 ** 3,688 23.15%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 43.05%
5 Year 21.75%
10 Year 15.45%
Since Inception 17.04%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 37.05%
5 Year 21.38%
10 Year 15.45%
Since Inception 17.04%
</TABLE>
[GRAPHS]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford Capital Appreciation Fund Sub-Account.]
* Fund inception was 4/84. Therefore, the Average Monthly Payment represents the
average monthly payment from April 1984 to December 1984. The Annual Sub-Account
Return is based on the period from April 1984 to December 1984.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
32 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HARTFORD INDEX FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987 * 978 -14.02%
1988 890 14.75%
1989 1,049 28.73%
1990 1,035 -5.24%
1991 1,145 27.93%
1992 1,205 5.49%
1993 1,256 7.76%
1994 1,228 -0.31%
1995 1,401 34.85%
1996 1,653 20.58%
1997 ** 1,962 28.80%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 49.28%
5 Year 18.37%
10 Year 12.77%
Since Inception 13.51%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 43.28%
5 Year 17.96%
10 Year 12.77%
Since Inception 13.51%
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford Index Fund Sub-Account.]
* Fund inception was 5/87. Therefore, the Average Monthly Payment represents the
average monthly payment from May 1987 to December 1987. The Annual Sub-Account
Return is based on the period from May 1987 to December 1987.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990 * 900 -12.18%
1991 890 11.60%
1992 869 -5.62%
1993 911 32.07%
1994 999 -3.15%
1995 967 12.51%
1996 1,056 11.53%
1997 ** 1,103 12.71%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 21.68%
5 Year 11.59%
10 Year --
Since Inception 7.52%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 15.68%
5 Year 11.08%
10 Year --
Since Inception 7.52%
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford International Opportunities Fund
Sub-Account.]
* Fund inception was 7/90. Therefore, the Average Monthly Payment represents the
average monthly payment from July 1990 to December 1990. The Annual Sub-Account
Return is based on the period from July 1990 to December 1990.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
34 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HVA MONEY MARKET FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977
1978
1979
1980 * 1,009 5.09%
1981 1,074 14.29%
1982 1,162 12.39%
1983 1,212 8.01%
1984 1,254 9.35%
1985 1,296 7.19%
1986 1,313 5.45%
1987 1,311 5.17%
1988 1,319 6.06%
1989 1,347 7.77%
1990 1,375 6.76%
1991 1,386 4.72%
1992 1,364 2.35%
1993 1,324 1.66%
1994 1,286 2.67%
1995 1,272 4.45%
1996 1,261 3.86%
1997 ** 1,251 2.29%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 3.96%
5 Year 3.14%
10 Year 4.48%
Since Inception 6.37%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year -2.04%
5 Year 2.43%
10 Year 4.48%
Since Inception 6.37%
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the HVA Money Market Sub-Account.]
* Fund inception was 6/80. Therefore, the Average Monthly Payment represents the
average monthly payment from June 1980 to December 1980. The Annual Sub-Account
Return is based on the period from June 1980 to December 1980.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
HARTFORD SMALL COMPANY FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 6% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996 * 1,025 4.26%
1997 ** 1,028 14.36%
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURNS FOR THE PERIOD
8/9/96 - 7/31/97***
- ---------------------------------------------
<S> <C>
21.95% (does not reflect
contingent deferred sales charge)
15.95% (reflects contingent deferred
sales charge)
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED 8/31/97
- ---------------------------------------------
<S> <C>
1 Year 15.76%****
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford Small Company Sub-Account.]
* Fund inception was 8/96. Therefore, the Average Monthly Payment represents the
average monthly payment from August 1996 to December 1996. The Annual
Sub-Account Return is based on the period from August 1996 to December 1996.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** These returns are not annualized.
**** Standardized Average Annual Total Returns reflect a deduction for the
contingent deferred sales charge.
<PAGE>
36 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HARTFORD BOND FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977 * 998 1.00%
1978 979 1.34%
1979 959 1.63%
1980 929 4.91%
1981 932 9.12%
1982 1,045 26.16%
1983 1,132 1.48%
1984 1,121 11.78%
1985 1,262 19.11%
1986 1,396 10.78%
1987 1,360 -1.26%
1988 1,364 6.25%
1989 1,397 10.73%
1990 1,416 7.06%
1991 1,506 15.02%
1992 1,579 4.23%
1993 1,645 8.86%
1994 1,541 -5.14%
1995 1,585 17.01%
1996 1,596 2.24%
1997 ** 1,615 6.44%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 11.40%
5 Year 5.75%
10 Year 7.28%
Since Inception 7.73%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 5.40%
5 Year 5.10%
10 Year 7.28%
Since Inception 7.73%
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford Bond Fund Sub-Account.]
* Fund inception was 8/77. Therefore, the Average Monthly Payment represents the
average monthly payment from August 1977 to December 1977. The Annual
Sub-Account Return is based on the period from August 1977 to December 1977.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994 * 1,024 4.07%
1995 1,146 34.68%
1996 1,383 21.39%
1997 ** 1,625 25.74%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 43.24%
5 Year --
10 Year --
Since Inception 23.81%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 37.24%
5 Year --
10 Year --
Since Inception 23.08%
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford Dividend and Growth Fund Sub-Account.]
* Fund inception was 3/94. Therefore, the Average Monthly Payment represents the
average monthly payment from March 1994 to December 1994. The Annual Sub-Account
Return is based on the period from March 1994 to December 1994.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
38 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995 * 1,037 11.45%
1996 1,099 10.41%
1997 ** 1,144 9.83%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 17.79%
5 Year --
10 Year --
Since Inception 14.60%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 11.79%
5 Year --
10 Year --
Since Inception 12.86%
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford International Advisers Fund Sub-Account.]
* Fund inception was 3/95. Therefore, the Average Monthly Payment represents the
average monthly payment from March 1995 to December 1995. The Annual Sub-Account
Return is based on the period from March 1995 to December 1995.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984 * 1,000
1985 1,064 19.13%
1986 1,162 9.75%
1987 1,151 1.36%
1988 1,170 7.03%
1989 1,205 11.74%
1990 1,239 8.35%
1991 1,324 13.31%
1992 1,365 3.35%
1993 1,372 4.99%
1994 1,297 -2.83%
1995 1,336 14.73%
1996 1,348 3.77%
1997 ** 1,361 4.81%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 9.17%
5 Year 4.97%
10 Year 6.99%
Since Inception 7.76%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 3.17%
5 Year 4.31%
10 Year 6.99%
Since Inception 7.76%
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford Mortgage Fund Sub-Account.]
* Fund inception was 12/84. Therefore, the Average Monthly Payment for December
1984.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
40 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HARTFORD STOCK FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL
YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ---------- ---------- ----------
<S> <C> <C>
1977 * 999 1.72%
1978 992 3.55%
1979 1,044 21.10%
1980 1,228 29.61%
1981 1,349 -0.64%
1982 1,311 19.81%
1983 1,652 12.50%
1984 1,500 -0.70%
1985 1,718 29.85%
1986 2,052 10.93%
1987 2,305 4.09%
1988 2,172 17.51%
1989 2,536 24.49%
1990 2,450 -5.07%
1991 2,701 23.07%
1992 2,758 8.68%
1993 2,982 12.92%
1994 2,980 -3.11%
1995 3,306 32.43%
1996 3,937 22.83%
1997 ** 4,713 29.97%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 48.84%
5 Year 19.98%
10 Year 13.08%
Since Inception 14.23%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 7/31/1997***
- ---------------------------------------------
<S> <C>
1 Year 42.84%
5 Year 19.59%
10 Year 13.08%
Since Inception 14.23%
</TABLE>
[GRAPH]
[Line graph with number of calendar years (1977-1997) as the horizontal axis and
dollar amounts ($0 through $5000 in $1000 increments) as the vertical axis,
depicting one line, representing the average monthly payments based on the
historic performance of the Hartford Stock Fund Sub-Account.]
* Fund inception was 8/77. Therefore, the Average Monthly Payment represents the
average monthly payment from August 1977 to December 1977. The Annual
Sub-Account Return is based on the period from August 1977 to December 1977.
** Fund performance is through 7/97. Therefore, the 1997 Average Monthly Payment
represents the average monthly payment from January 1997 to July 1997. The
Annual Sub-Account Return is based on the period from January 1997 to July 1997.
*** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
FOR
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY........................
SERVICES..............................................................
CALCULATION OF YIELD AND RETURN.......................................
Yield of the HVA Money Market Fund Sub-Account......................
Yield of the Hartford Bond Fund and Hartford Mortgage Securities
Fund Sub-Accounts..................................................
Calculation of Total Return.........................................
PERFORMANCE COMPARISONS...............................................
Yield and Total Return
VARIABLE ANNUITY PAYMENTS.............................................
Annuity Unit Value..................................................
Illustration of Calculation of Annuity Unit Value...................
Illustration of Variable Annuity Payments...........................
OTHER INFORMATION.....................................................
</TABLE>
