<PAGE>
DIRECTOR IMMEDIATE VARIABLE ANNUITY CONTRACT
INDIVIDUAL SINGLE PREMIUM PAYMENT
HARTFORD LIFE INSURANCE COMPANY
200 HOPMEADOW STREET
SIMSBURY, CONNECTICUT 06070
TELEPHONE: 1-800-862-6668 (CONTRACT
OWNERS)
[LOGO] 1-800-862-7155 (INVESTMENT REPRESENTATIVES)
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This prospectus ("Prospectus") describes the individual variable immediate
annuity contract (the "Contract") offered by Hartford Life Insurance Company
("Hartford"). The Contract may be sold to or issued in connection with
retirement plans, including plans that qualify for special federal income tax
treatment under the Internal Revenue Code.
Contract Owner(s) may allocate the Premium Payment and transfer Contract Value
to one or more Sub-Accounts of Hartford Life Insurance Company Separate Account
One (the "Separate Account"). The assets of each Sub-Account are invested solely
in a corresponding mutual fund (the "Funds"). The Funds are:
<TABLE>
<S> <C> <C>
Advisers Fund Sub-Account -- shares of Class IA of Hartford Advisers HLS Fund, Inc.
("Hartford Advisers Fund")
Bond Fund Sub-Account -- shares of Class IA of Hartford Bond HLS Fund, Inc.
("Hartford Bond Fund")
Capital Appreciation Fund Sub-Account -- shares of Class IA of Hartford Capital Appreciation HLS
Fund, Inc. ("Hartford Capital Appreciation Fund")
Dividend and Growth Fund Sub-Account -- shares of Class IA of Hartford Dividend and Growth HLS
Fund, Inc. ("Hartford Dividend and Growth Fund")
Index Fund Sub-Account -- shares of Class IA of Hartford Index HLS Fund, Inc.
("Hartford Index Fund")
International Advisers Fund Sub-Account -- shares of Class IA of Hartford International Advisers HLS
Fund, Inc. ("Hartford International Advisers Fund")
International Opportunities Fund Sub-Account -- shares of Class IA of Hartford International Opportunities
HLS Fund, Inc. ("Hartford International Opportunities
Fund")
MidCap Fund Sub-Account -- shares of Class IA of Hartford MidCap HLS Fund, Inc.
("Hartford MidCap Fund")
Money Market Fund Sub-Account -- shares of Class IA of Hartford Money Market HLS Fund, Inc.
("Hartford Money Market Fund")
Mortgage Securities Fund Sub-Account -- shares of Class IA of Hartford Mortgage Securities HLS
Fund, Inc. ("Hartford Mortgage Securities Fund")
Small Company Fund Sub-Account -- shares of Class IA of Hartford Small Company HLS Fund,
Inc. ("Hartford Small Company Fund")
Stock Fund Sub-Account -- shares of Class IA of Hartford Stock HLS Fund, Inc.
("Hartford Stock Fund")
</TABLE>
Under the Contract, Hartford makes periodic Annuity Payments to the Contract
Owner(s) (or other designated Payee). The dollar amount of each Annuity Payment
varies according to the investment performance of the Funds in which the
selected Sub-Accounts are invested. The Contract Owner(s) bear the investment
risk of amounts invested in the Separate Account.
This Prospectus sets forth the basic information regarding the Contract and the
Separate Account that a prospective investor should know before purchasing a
Contract. The prospectus for the Funds, which provides information regarding
investment objectives and policies of each Fund, should be read in conjunction
with this Prospectus. A Statement of Additional Information providing additional
information about the Contract and the Separate Account has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. The
table of contents for the Statement of Additional Information is on page 43 of
this Prospectus. Call 1-800-862-6668, or write the Administrative Office of
Hartford to obtain a free copy of the Statement of Additional Information.
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PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS MUST BE ACCOMPANIED BY THE CURRENT PROSPECTUS FOR EACH OF THE FUNDS.
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AN INVESTMENT IN A CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, NOR IS THE CONTRACT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A
CONTRACT INVOLVES CERTAIN RISKS, INCLUDING THE RISK OF LOSS OF THE PREMIUM
PAYMENT (PRINCIPAL).
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROSPECTUS DATED: MAY 1, 1998
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 1, 1998
<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
ACCUMULATION UNIT VALUES.............................................. 7
SUMMARY............................................................... 8
HARTFORD, THE SEPARATE ACCOUNT AND THE FUNDS.......................... 9
Hartford Life Insurance Company..................................... 9
Separate Account.................................................... 9
The Funds........................................................... 9
PERFORMANCE RELATED INFORMATION....................................... 11
DESCRIPTION OF THE CONTRACTS.......................................... 11
Purchasing a Contract............................................... 11
Right to Examine the Contract....................................... 12
Crediting and Allocating the Premium Payment........................ 12
Contract Value Before Income Start Date............................. 12
The Net Investment Factor........................................... 12
Sub-Account Value Transfers Before and After Income Start Date...... 13
Surrenders.......................................................... 13
Death Before Income Start Date...................................... 13
Death On or After the Income Start Date............................. 14
Determination of the Death Benefit.................................. 14
Distribution Requirements: Prior to the Income Start Date........... 14
Payments Under the Contract......................................... 15
SELECTING AN ANNUITY PAYMENT OPTION................................... 15
Annuity Payment Options............................................. 15
Annuity Calculation Date and Income Start Date...................... 16
Income Payment Dates................................................ 16
Variable Annuity Payments........................................... 16
CONTRACT FEES AND CHARGES............................................. 18
Contingent Deferred Sales Charge.................................... 18
Premium Tax Charge.................................................. 18
Mortality and Expense Risk Charge................................... 18
Fund Expenses....................................................... 18
ADDITIONAL CONTRACT INFORMATION....................................... 18
Contract Ownership.................................................. 18
Changing the Contract Owner or Beneficiary.......................... 19
Misstatement of Age or Sex.......................................... 19
Change of Contract Terms............................................ 19
Reports to Contract Owners.......................................... 19
Miscellaneous....................................................... 19
Voting Privileges................................................... 19
FEDERAL TAX CONSIDERATIONS............................................ 20
General............................................................. 20
Taxation of Hartford and the Separate Account....................... 20
Taxation of Purchasers of Non-Qualified Contracts................... 20
Taxation of Purchasers of Qualified Contracts....................... 23
Federal Income Tax Withholding...................................... 24
Contract Owners That Are Nonresident Aliens or Foreign
Corporations....................................................... 24
Other Tax Consequences.............................................. 24
OTHER INFORMATION..................................................... 25
Distribution of the Contracts....................................... 25
Legal Proceedings................................................... 25
Experts............................................................. 25
ILLUSTRATIONS OF ANNUITY PAYMENTS ASSUMING HYPOTHETICAL RATES OF
RETURN.............................................................. 26
ILLUSTRATIONS OF ANNUITY PAYMENTS USING HISTORIC RATES OF RETURN...... 29
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............. 43
</TABLE>
<PAGE>
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.
ADMINISTRATIVE OFFICE OF HARTFORD: Currently located at 200 Hopmeadow Street,
Simsbury, CT. All correspondence concerning this Contract should be sent to P.O.
Box 5085, Hartford, CT 06102-5085, Attn.: Individual Annuity Services, except
overnight or express mail packages, which should be sent to: 200 Hopmeadow
Street, Simsbury, CT 06089.
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 Annuity Payment will be constant. If the actual
performance is greater than the AIR, the Annuity 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
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
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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.
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: The value per share of any Fund on any Valuation Day. The
method of computing the Net Asset Value is described in the prospectus for each
Fund.
NET INVESTMENT FACTOR: The Net Investment Factor for each of the Sub-Accounts is
equal to the Net Asset Value 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 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
Administrative Office of Hartford.
<PAGE>
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
(as percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Hartford Advisers Fund.......................... 0.610% 0.020% 0.630%
Hartford Bond Fund.............................. 0.490% 0.020% 0.510%
Hartford Capital Appreciation Fund.............. 0.620% 0.020% 0.640%
Hartford Dividend and Growth Fund............... 0.660% 0.020% 0.680%
Hartford Index Fund............................. 0.375% 0.015% 0.390%
Hartford International Advisers Fund............ 0.750% 0.120% 0.870%
Hartford International Opportunities Fund....... 0.680% 0.090% 0.770%
Hartford Money Market Fund...................... 0.425% 0.015% 0.440%
Hartford MidCap Fund (1)........................ 0.750% 0.040% 0.790%
Hartford Mortgage Securities Fund............... 0.425% 0.025% 0.450%
Hartford Small Company Fund..................... 0.750% 0.020% 0.770%
Hartford Stock Fund............................. 0.430% 0.020% 0.450%
</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.
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. Premium Taxes, ranging from 0% to 4%, may also be applicable. For
a more complete description of the various costs and expenses, see "Contract
Fees and Charges," page 18 and the prospectus for the Funds which accompanies
this Prospectus.
<PAGE>
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>
1 3
SUB-ACCOUNT YEAR YEARS
----- ------
<S> <C> <C>
Advisers Fund................................ $19 $60
Bond Fund.................................... 18 56
Capital Appreciation Fund.................... 19 60
Dividend and Growth Fund..................... 20 61
Index Fund................................... 17 52
International Advisers Fund.................. 22 67
International Opportunities Fund............. 21 64
MidCap Fund.................................. 21 65
Money Market Fund............................ 17 54
Mortgage Securities Fund..................... 17 54
Small Company Fund........................... 21 64
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>
1 3
SUB-ACCOUNT YEAR YEARS
----- ------
<S> <C> <C>
Advisers Fund................................ $19 $60
Bond Fund.................................... 18 56
Capital Appreciation Fund.................... 19 61
Dividend and Growth Fund..................... 20 52
Index Fund................................... 17 67
International Advisers Fund.................. 22 64
International Opportunities Fund............. 21 65
MidCap Fund.................................. 21 54
Money Market Fund............................ 17 54
Mortgage Securities Fund..................... 17 54
Small Company Fund........................... 21 64
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>
1 3
SUB-ACCOUNT YEAR YEARS
----- ------
<S> <C> <C>
Advisers Fund................................ $79 $110
Bond Fund.................................... 78 106
Capital Appreciation Fund.................... 79 110
Dividend and Growth Fund..................... 80 111
Index Fund................................... 77 102
International Advisers Fund.................. 82 117
International Opportunities Fund............. 81 114
MidCap Fund.................................. 81 115
Money Market Fund............................ 77 104
Mortgage Securities Fund..................... 77 104
Small Company Fund........................... 81 114
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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ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the audited financial
statements of the Separate Account which have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and should be read in conjunction with those statements which are
included in the Statement of Additional Information, which is incorporated by
reference in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
----------------
<S> <C>
BOND FUND SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $2.114
Number accumulation units outstanding at end of period
(in thousands)........................................ 111,586
STOCK FUND SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $4.602
Number accumulation units outstanding at end of period
(in thousands)........................................ 372,754
MONEY MARKET FUND SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $1.650
Number accumulation units outstanding at end of period
(in thousands)........................................ 140,797
ADVISERS FUND SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $3.572
Number accumulation units outstanding at end of period
(in thousands)........................................ 1,012,472
CAPITAL APPRECIATION FUND SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $4.845
Number accumulation units outstanding at end of period
(in thousands)........................................ 351,189
MORTGAGE SECURITIES FUND SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $2.098
Number accumulation units outstanding at end of period
(in thousands)........................................ 81,143
INDEX FUND SUB-ACCOUNT
(INCEPTION DATE MAY 1, 1987)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $3.726
Number accumulation units outstanding at end of (in
thousands)............................................ 109,837
INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
(INCEPTION DATE JULY 2, 1990)
Accumulation unit value at end of period............... $1.000
Accumulation unit value at end of period............... $1.469
Number accumulation units outstanding at end of period
(in thousands)........................................ 264,642
DIVIDEND & GROWTH FUND SUB-ACCOUNT
(INCEPTION DATE MARCH 8, 1994)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $2.149
Number accumulation units outstanding at end of period
(in thousands)........................................ 308,682
INTERNATIONAL ADVISERS FUND SUB-ACCOUNT
(INCEPTION DATE MARCH 1, 1995)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $1.319
Number accumulation units outstanding at end of period
(in thousands)........................................ 43,217
HARTFORD SMALL COMPANY FUND SUB-ACCOUNT
(INCEPTION DATE AUGUST 9, 1996)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $1.247
Number accumulation units outstanding at end of period
(in thousands)........................................ 56,706
HARTFORD MIDCAP FUND SUB-ACCOUNT
(INCEPTION DATE JULY 30, 1997)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $1.097
Number of accumulation units outstanding at end of
period (in thousands)................................. 8,306
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
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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 the Administrative Office of Hartford 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 the Administrative Office of Hartford. The minimum Premium Payment
for a Contract is $25,000 and the maximum Premium Payment generally is
$1,000,000 (See "Purchasing a Contract," page - ), 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 Payment," page - .)
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," page - .)
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," page - .) Similar
transfers may be made after the Income Start Date, subject to certain
restrictions. (See "Variable Annuity Payments," page - .)
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," page - .)
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," page - .) Surrenders may have adverse
federal income tax consequences including the possibility of being subject to a
penalty tax. (See "Federal Tax Considerations," page - .)
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 .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 - .)
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12 HARTFORD LIFE INSURANCE COMPANY
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PREMIUM TAX CHARGE.
Generally, taxes , if any, on the Premium Payment 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 the
Premium Payment. (See "Premium Tax Charge," page - .)
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.
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22 HARTFORD LIFE INSURANCE COMPANY
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HARTFORD RATINGS
<TABLE>
<CAPTION>
EFFECTIVE
DATE OF
RATING AGENCY RATING RATING RATING BASIS OF RATING
- -------------------------- --------- ----------- ----------------------
<S> <C> <C> <C>
A.M. Best and Company, 9/9/97 A+ Financial soundness
Inc. and operating
performance.
Standard & Poor's 1/23/98 AA Claims paying ability
Duff & Phelps 1/23/98 AA+ Claims paying ability
</TABLE>
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.
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.
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, L.L.P. 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 Seeks to achieve maximum long-term total rate of return
by investing in common stocks and other equity securities, bonds and other debt
securities, and money market instruments.*
HARTFORD BOND FUND Seeks to achieve maximum current income consistent with
preservation of capital by investing primarily in fixed-income securities.
HARTFORD CAPITAL APPRECIATION FUND Seeks to achieve growth of capital by
investing in equity securities selected solely on the basis of potential for
capital appreciation.*
HARTFORD DIVIDEND AND GROWTH FUND 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 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 Seeks to provide maximum long-term total
return consistent with prudent
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
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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 Seeks growth of capital by investing
primarily in equity securities issued by non-U.S. companies.*
HARTFORD MIDCAP FUND Seeks to achieve long-term capital growth through capital
appreciation by investing primarily in equity securities.*
HARTFORD MORTGAGE SECURITIES FUND 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 Seeks to achieve growth of capital by investing
primarily in equity securities selected on the basis of potential for capital
appreciation.*
HARTFORD STOCK FUND Seeks to achieve long-term growth of capital growth by
investing primarily in equity securities.*
HARTFORD MONEY MARKET FUND Seeks to achieve maximum current income consistent
with liquidity and preservation of capital. The Fund invests in short-term money
market securities.
(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.
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 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.
ALL FUNDS MAY NOT BE AVAILABLE IN ALL STATES.
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 Advisers Fund, Bond Fund, Capital Appreciation Fund, Dividend and Growth
Fund,Index Fund, International Advisers Fund, International Opportunities Fund,
MidCap Fund, Mortgage Securities Fund, Small Company Fund, Stock Fund, and 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 Bond Fund and Mortgage Securities Fund Sub-Accounts may advertise yield
in addition to total return. The yield will be computed in the following manner:
The net
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
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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 Money Market Fund Sub-Account may advertise yield and effective yield.
The yield of the Money Market Fund 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
Administrative Office of Hartford 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 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 Administrative
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.
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
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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 Accumulation Unit value 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:
(1) is the result of:
a. the Net Asset Value 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 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
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HARTFORD LIFE INSURANCE COMPANY 25
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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 30 days 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 Administrative Office of Hartford.
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 Administrative Office of Hartford.
Contract Owners should consult their tax adviser regarding the tax
consequences of a surrender. 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," page for more details.
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
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26 HARTFORD LIFE INSURANCE COMPANY
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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 Hartford 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 Hartford 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 Hartford 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 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
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HARTFORD LIFE INSURANCE COMPANY 27
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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.
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24 HARTFORD LIFE INSURANCE COMPANY
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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 Annuity Payments,
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. 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. WHILE BOTH ANNUITANTS ARE LIVING.
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 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
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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 an Annuity 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 following what would have been
the Income Payment Date.
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%.
<PAGE>
26 HARTFORD LIFE INSURANCE COMPANY
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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. 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. 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. 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. 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.
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 Premium Payment 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 the Premium Payment at the time the Premium Payment is received. In those
jurisdictions,
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HARTFORD LIFE INSURANCE COMPANY 27
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Hartford's current practice is to pay the tax on the Premium Payment 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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
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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," page - for more details.
Selection of an Annuitant or Payee who is not the Contract Owner may have
adverse tax consequences. See "Federal Tax Considerations," page - for more
details.
CHANGING THE CONTRACT OWNER OR BENEFICIARY
At any time after the Cancellation Period, a 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 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," page - .
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.
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
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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 Premium Payment. 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 of the Fund 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 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
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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
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.
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
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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
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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 17
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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 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 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.
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
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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. 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 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. 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
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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 the Premium Payment 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.
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. ^ The principal
business address of Arthur Andersen LLP is One Financial Plaza, Hartford,
Connecticut 06103.
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
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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," page - .
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," page - .
ASSUMED INVESTMENT RETURN.
Among the most important factors that determine 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%. Subject
to state approval, 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," page - .
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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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(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 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," page - .
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 1
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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 December 31, 1997. 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," page - .)
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," page - .
ASSUMED INVESTMENT RETURN.
Among the most important factors that determine 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%. Subject
to state approval, 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," page - . Standardized and
non-standardized average annual total returns as well as the Sub-Account Annual
Percentage Change column reflect the performance of the Sub-Account being
illustrated without adjustment for an Assumed Investment Return.
<PAGE>
2 HARTFORD LIFE INSURANCE COMPANY
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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,"
page - .
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
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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>
AVERAGE MONTHLY PAYMENT
<S> <C> <C> <C>
Contract Year 0% Gross Rate 6% Gross Rate 12% Gross Rate
1 970 996 1,021
2 907 987 1,070
3 848 978 1,120
4 793 969 1,173
5 741 961 1,228
6 693 952 1,286
7 648 943 1,346
8 606 935 1,410
9 566 927 1,476
10 529 918 1,546
11 495 910 1,619
12 463 902 1,695
13 433 894 1,775
14 404 886 1,858
15 378 878 1,946
16 353 870 2,038
17 330 862 2,134
18 309 854 2,234
19 289 847 2,340
20 270 839 2,450
</TABLE>
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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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 the Administrative Office of Hartford 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 the Administrative Office of Hartford. The minimum Premium Payment
for a Contract is $25,000 and the maximum Premium Payment generally is
$1,000,000 (See "Purchasing a Contract," page 11), 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 Payment," page 12.)
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," page 12.)
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," page 13.) Similar
transfers may be made after the Income Start Date, subject to certain
restrictions. (See "Variable Annuity Payments," page 16.)
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
"Death Before Income Start Date;" and "Death On or After Income Start Date,"
pages 13-14.) 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," page 13.) Surrenders may have adverse
federal income tax consequences including the possibility of being subject to a
penalty tax. (See "Federal Tax Considerations," page 20.)
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 .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 18.)
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
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PREMIUM TAX CHARGE
Generally, taxes, if any, on the Premium Payment 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 the
Premium Payment. (See "Premium Tax Charge," page 18.)
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 RATINGS
<TABLE>
<CAPTION>
EFFECTIVE
DATE OF
RATING AGENCY RATING RATING BASIS OF RATING
- --------------------- --------- ----------- ----------------------
<S> <C> <C> <C>
9/9/97 A+ Financial soundness
A.M. Best and and operating
Company, Inc......... performance.
Standard & Poor's.... 1/23/98 AA Claims paying ability
Duff & Phelps........ 1/23/98 AA+ Claims paying ability
</TABLE>
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
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.
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,
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Inc. ("HL Advisors"), a registered investment adviser. HL Advisors has retained
Wellington Management Company, LLP 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 The Hartford Investment Management Company,
Inc. ("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
Seeks to achieve maximum long-term total rate of return by investing in
common stocks and other equity securities, bonds and other debt securities, and
money market instruments.*
HARTFORD BOND FUND
Seeks to achieve maximum current income consistent with preservation of
capital by investing primarily in fixed-income securities.
HARTFORD CAPITAL APPRECIATION FUND
Seeks to achieve growth of capital by investing in equity securities
selected solely on the basis of potential for capital appreciation.*
HARTFORD DIVIDEND AND GROWTH FUND
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
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
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
Seeks growth of capital by investing primarily in equity securities issued
by non-U.S. companies.*
HARTFORD MIDCAP FUND
Seeks to achieve long-term capital growth through capital appreciation by
investing primarily in equity securities.*
HARTFORD MORTGAGE SECURITIES FUND
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
Seeks to achieve growth of capital by investing primarily in equity
securities selected on the basis of potential for capital appreciation.*
HARTFORD STOCK FUND
Seeks to achieve long-term growth of capital growth by investing primarily
in equity securities.*
HARTFORD MONEY MARKET FUND
Seeks to achieve maximum current income consistent with liquidity and
preservation of capital.
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 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
(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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
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.
THESE FUNDS MAY NOT BE AVAILABLE IN ALL STATES.
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 Advisers Fund, Bond Fund, Capital Appreciation Fund, Dividend and Growth
Fund,Index Fund, International Advisers Fund, International Opportunities Fund,
MidCap Fund, Mortgage Securities Fund, Small Company Fund, Stock Fund, and 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 Bond Fund and 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 Money Market Fund Sub-Account may advertise yield and effective yield.
The yield of the Money Market Fund 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
Administrative Office of Hartford 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 send
Contract Owners a confirmation notice upon receipt and acceptance of the
Contract Owner's Premium Payment.
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 Administrative
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 Accumulation Unit value 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:
(1) is the result of:
a. the Net Asset Value of the Fund held in the Sub-Account, determined at
the end of the current Valuation Period; plus
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
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 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 advise Hartford of any inaccuracies within 30
days 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 Administrative Office of Hartford.
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 Administrative Office of Hartford.
Contract Owners should consult their tax adviser regarding the tax
consequences of a surrender. 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," page 20 for more details.
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
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 Hartford 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 Hartford 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 Hartford 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 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
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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 Annuity Payments,
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. 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 WHILE BOTH
ANNUITANTS ARE LIVING
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 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
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
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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 an Annuity 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 following what would have been
the Income Payment Date.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 17
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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%.
Subject to state approval, 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. 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. 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. 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. 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 13.
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
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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.
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 Premium Payment 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 the Premium Payment at the time the Premium Payment is received. In those
jurisdictions, Hartford's current practice is to pay the tax on the Premium
Payment 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," page 20 for more details.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
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Selection of an Annuitant or Payee who is not the Contract Owner may have
adverse tax consequences. See "Federal Tax Considerations," page 20 for more
details.
CHANGING THE CONTRACT OWNER OR BENEFICIARY
At any time after the Cancellation Period, a 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 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," page 20.
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 Premium Payment. 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
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
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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 of the Fund 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 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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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
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
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
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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
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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
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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 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 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.
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
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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. Contracts 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
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
Deferred compensation plans 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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
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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 the Premium Payment 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.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by policyholders or contract owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institutions of insurance
products. These payments, which may be different for different broker-dealers or
financial institutions, will be made by HSD, its affiliates or Hartford out of
their own assets and will not effect the amounts paid by the policyholders or
contract owners to purchase, hold or surrender variable insurance products.
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.
EXPERTS
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 the reports. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.
<PAGE>
26 HARTFORD LIFE INSURANCE COMPANY
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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," page 15.
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," page 16.
ASSUMED INVESTMENT RETURN.
Among the most important factors that determine 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%. Subject
to state approval, 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," page 16.
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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 27
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(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 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," page 16.
<PAGE>
28 HARTFORD LIFE INSURANCE COMPANY
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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>
AVERAGE MONTHLY PAYMENT
<S> <C> <C> <C>
Contract Year 0% Gross Rate 6% Gross Rate 12% Gross Rate
1 970 996 1,021
2 907 987 1,070
3 848 978 1,120
4 793 969 1,173
5 741 961 1,228
6 693 952 1,286
7 648 943 1,346
8 606 935 1,410
9 566 927 1,476
10 529 918 1,546
11 495 910 1,619
12 463 902 1,695
13 433 894 1,775
14 404 886 1,858
15 378 878 1,946
16 353 870 2,038
17 330 862 2,134
18 309 854 2,234
19 289 847 2,340
20 270 839 2,450
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 29
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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 December 31, 1997. 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," page 15.)
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," page 16.
ASSUMED INVESTMENT RETURN
Among the most important factors that determine 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%. Subject
to state approval, 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," page 16. Standardized and
non-standardized average annual total returns as well as the Sub-Account Annual
Percentage Change column reflect the performance of the Sub-Account being
illustrated without adjustment for an Assumed Investment Return.
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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," page 16.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
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 2,384 22.96%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 22.96%
5 Year 13.83%
10 Year 12.66%
Since Inception 11.84%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 16.96%
5 Year 13.35%
10 Year 12.66%
Since Inception 11.84%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Advisers Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983* 990
1984 948
1985 1,078
1986 1,253
1987 1,337
1988 1,322
1989 1,479
1990 1,459
1991 1,584
1992 1,630
1993 1,731
1994 1,688
1995 1,821
1996 2,042
1997 2,384
</TABLE>
* 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.
** 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
- --------------------------------------------------------------------------------
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 3,881 20.83%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 20.83%
5 Year 17.48%
10 Year 18.13%
Since Inception 16.32%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 14.83%
5 Year 17.06%
10 Year 18.13%
Since Inception 16.32%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Capital Appreciation Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984* 1,038
1985 1,237
1986 1,485
1987 1,496
1988 1,451
1989 1,694
1990 1,550
1991 1,852
1992 2,100
1993 2,492
1994 2,562
1995 2,897
1996 3,328
1997 3,881
</TABLE>
* 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.
** 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
- --------------------------------------------------------------------------------
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 2,044 30.96%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 30.96%
5 Year 18.00%
10 Year 15.76%
Since Inception 13.12%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 24.96%
5 Year 17.58%
10 Year 15.76%
Since Inception 13.12%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Index Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987* 978
1988 890
1989 1,049
1990 1,035
1991 1,145
1992 1,205
1993 1,256
1994 1,228
1995 1,401
1996 1,653
1997 2,044
</TABLE>
* 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.
** 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
- --------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES 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 * 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 1,090 -0.91%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year -0.91%
5 Year 9.73%
10 Year --
Since Inception 5.26%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year -6.91%
5 Year 9.17%
10 Year --
Since Inception 5.26%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
International Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990* 900
1991 890
1992 869
1993 911
1994 999
1995 967
1996 1,056
1997 1,090
</TABLE>
* 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.
** 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
- --------------------------------------------------------------------------------
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 1,248 4.02%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 4.02%
5 Year 3.33%
10 Year 4.42%
Since Inception 6.31%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED 12/31/1997**
- --------------------------------------------------
<S> <C>
1 Year -1.98%
5 Year 2.62%
10 Year 4.42%
Since Inception 6.31%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Money Market Fund
Calendar Year Sub-Account
1977
1978
1979
1980* 1,009
1981 1,074
1982 1,162
1983 1,212
1984 1,254
1985 1,296
1986 1,313
1987 1,311
1988 1,319
1989 1,347
1990 1,375
1991 1,386
1992 1,364
1993 1,324
1994 1,286
1995 1,272
1996 1,261
1997 1,248
</TABLE>
* 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.
** 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>
36 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
SMALL COMPANY 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
1996 * 1,025 4.26%
1997 1,092 16.91%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 16.91%
5 Year --
10 Year --
Since Inception 16.84%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 10.91%
5 Year --
10 Year --
Since Inception 13.05%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Small Company Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996* 1,025
1997 1,092
</TABLE>
* 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.
** 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
- --------------------------------------------------------------------------------
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 1,637 9.97%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 9.97%
5 Year 6.32%
10 Year 7.45%
Since Inception 7.74%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 3.97%
5 Year 5.69%
10 Year 7.45%
Since Inception 7.74%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Bond Fund
Calendar Year Sub-Account
1977* 998
1978 979
1979 959
1980 929
1981 932
1982 1,045
1983 1,132
1984 1,121
1985 1,262
1986 1,396
1987 1,360
1988 1,364
1989 1,397
1990 1,416
1991 1,506
1992 1,579
1993 1,645
1994 1,541
1995 1,585
1996 1,596
1997 1,637
</TABLE>
* 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.
** 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
- --------------------------------------------------------------------------------
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 1,695 30.25%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 30.25%
5 Year --
10 Year --
Since Inception 22.09%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 24.25%
5 Year --
10 Year --
Since Inception 21.45%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Dividend and Growth Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994* 1,024
1995 1,146
1996 1,383
1997 1,695
</TABLE>
* 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.
** 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
- --------------------------------------------------------------------------------
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 1,143 4.20%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 4.20%
5 Year --
10 Year --
Since Inception 10.26%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year -1.80%
5 Year --
10 Year --
Since Inception 8.75%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
International Advisers
Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995* 1,037
1996 1,099
1997 1,143
</TABLE>
* 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.
** 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
- --------------------------------------------------------------------------------
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 1,372 7.66%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 7.66%
5 Year 5.51%
10 Year 7.09%
Since Inception 7.72%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 1.66%
5 Year 4.86%
10 Year 7.09%
Since Inception 7.72%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Mortgage Securities Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984* 1,000
1985 1,064
1986 1,162
1987 1,151
1988 1,170
1989 1,205
1990 1,239
1991 1,324
1992 1,365
1993 1,372
1994 1,297
1995 1,336
1996 1,348
1997 1,372
</TABLE>
* Fund inception was 12/84. Therefore, the Average Monthly Payment represents
the monthly payment for December 1984.
** 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
- --------------------------------------------------------------------------------
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 4,893 29.75%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 29.75%
5 Year 18.22%
10 Year 15.67%
Since Inception 13.91%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 23.75%
5 Year 17.81%
10 Year 15.67%
Since Inception 13.91%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Stock Fund
Calendar Year Sub-Account
1977* 999
1978 992
1979 1,044
1980 1,228
1981 1,349
1982 1,311
1983 1,652
1984 1,500
1985 1,718
1986 2,052
1987 2,305
1988 2,172
1989 2,536
1990 2,450
1991 2,701
1992 2,758
1993 2,982
1994 2,980
1995 3,306
1996 3,937
1997 4,893
</TABLE>
* 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.
** 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>
42 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MID-CAP 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
1996
1997 * 1,026 9.68%
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURNS FOR THE PERIOD ENDED
7/31/97 - 12/31/1997**
- ------------------------------------------------------------
<S> <C>
9.68% (does not reflect contingent deferred sales charge)
<CAPTION>
3.68% (reflects contingent deferred sales charge)
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Mid-Cap Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997* 1,026
</TABLE>
* Fund inception was 7/97. Therefore, the Average Monthly Payment represents
the average monthly payment from July 1997 to December 1997. The Annual
Sub-Account Return is based on the period from July 1997 to December 1997.
** These returns are not annualized.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
FOR
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY...........................
INDEPENDENT PUBLIC ACCOUNTANTS...........................................
CALCULATION OF YIELD AND RETURN..........................................
Yield of the Money Market Fund Sub-Account.............................
Yield of the Bond Fund and 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>
<PAGE>
To obtain a Statement of Additional Information, please complete the form
below and mail to:
Hartford Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for the Immediate Variable
Annuity to me at the following address:
- ----------------------------------------------------
Name
- ------------------------------------------------------------
Address
- ------------------------------------------------------------
City/State Zip
Code
