HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT TWO
N-4/A, 1998-03-16
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<PAGE>
   
  As filed with the Securities and Exchange Commission on March 16, 1998.
                                                        File No. 333-41213
                                                        File No. 811-4372
    

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                FORM N-4

          REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

   
          Pre-Effective Amendment No. 1                       [X]
          Post-Effective Amendment No. ___                    [ ]
    

       REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
   
          Amendment No. _83_                                  [X]
    
                      HARTFORD LIFE INSURANCE COMPANY
                           SEPARATE ACCOUNT TWO
                        (Exact Name of Registrant)

                      HARTFORD LIFE INSURANCE COMPANY
                           (Name of Depositor)

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

                             (860) 843-6731
            (Depositor's Telephone Number, Including Area Code)

                         LESLIE T. SOLER, ESQ.
                             P.O. BOX 2999
                      HARTFORD, CT  06104-2999
               (Name and Address of Agent for Service)


Approximate Date of Proposed Public Offering as soon as practicable after the 
effective date of the Registration Statement.

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

PURSUANT TO RULE 24F-2 (a)(1), UNDER THE INVESTMENT COMPANY ACT OF 1940, THE 
REGISTRANT HEREBY ELECTS TO REGISTER AN INDEFINITE AMOUNT OF SECURITIES BEING 
OFFERED.

    

The registrant hereby amends this Registration Statement on such date or 
dates as may be necessary to delay its effective date until the Registrant 
shall file a further amendment which specifically states that this 
Registration Statement shall thereafter become effective in accordance with 
Section 8(a) of the Securities Act of 1933 or until the Registration 
Statement shall become effective on such date as the Commission, acting 
pursuant to said Section 8(a), may determine.


<PAGE>

                           CROSS REFERENCE SHEET
                          PURSUANT TO RULE 495(a)



N-4 ITEM NO.                         PROSPECTUS HEADING
- ------------                         ------------------
1.  Cover Page                       Hartford Life Insurance Company -
                                     Separate Account Two

2.  Definitions                      Glossary of Special Terms

3.  Synopsis or Highlights           Introduction

4.  Condensed Financial              Yield Information
    Information

5.  General Description of           Hartford, Separate Account Two,
    Registrant                       the Fixed Accumulation Feature, and the
                                     Funds

6.  Deductions                       Charges Under the Contract

7.  General Description of           The Contracts, Separate Account, the
    Annuity Contracts                Fixed Accumulation Feature, and Surrender
                                     Benefits

8.  Annuity Period                   Annuity Benefits

9.  Death Benefit                    Death Benefits

10. Purchases and Contract Value     The Contract, Contracts Offered, Premium
                                     Payments and Initial Allocations and 
                                     Contract Value

11. Redemptions                      Surrender Benefits

12. Taxes                            Federal Tax Considerations

13. Legal Proceedings                Legal Matters & Experts

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

15. Cover Page                       Part B; Statement of Additional Information

<PAGE>
16. Table of Contents                Table of Contents

17. General Information and History  Introduction

18. Services                         None

19. Purchase of Securities           Distribution of Contracts
    being Offered

20. Underwriters                     Distribution of Contracts

21. Calculation of Performance Data  Calculation of Yield and Return

22. Annuity Payments                 Annuity Benefits

23. Financial Statements             Financial Statements

24. Financial Statements and         Financial Statements and
    Exhibits                         Exhibits

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

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

27. Number of Contract Owners        Number of Contract Owners

28. Indemnification                  Indemnification

29. Principal Underwriters           Principal Underwriters

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

31. Management Services              Management Services

32. Undertakings                     Undertakings

<PAGE>
 
   
                           NATIONS VARIABLE ANNUITY
                             SEPARATE ACCOUNT TWO
                        HARTFORD LIFE INSURANCE COMPANY
                                 P.O. BOX 5085
                       HARTFORD, CONNECTICUT 06102-5085
                      TELEPHONE: 1-800-862-6668 (CONTRACT
                                    OWNERS)
[LOGO]            1-800-862-7155 (INVESTMENT REPRESENTATIVES)
 
- --------------------------------------------------------------------------------
    
- --------------------------------------------------------------------------------
 
   
This Prospectus describes Nations Variable Annuity, an individual and group tax
deferred variable annuity contract designed for retirement planning purposes
("Contracts").
    
 
The Contracts are issued by Hartford Life Insurance Company ("Hartford").
Payments for the Contracts will be held in a series of Hartford Life Insurance
Company Separate Account Two (the "Separate Account") or in the Fixed
Accumulation Feature of Hartford. Allocations to and transfers to and from the
Fixed Accumulation Feature are not permitted in certain states.
 
The following Sub-Accounts are available under the Contracts. Opposite each
Sub-Account is the name of the underlying investment for that Sub-Account.
 
   
<TABLE>
<S>                                           <C>  <C>
Nations Balanced Assets Portfolio             --   shares of the Nations Balanced Assets Portfolio of Nations
  Sub-Account                                      Annuity Trust ("Nations Balanced Asset Portfolio")
Nations Disciplined Equity Portfolio          --   shares of the Nations Disciplined Equity Portfolio of
  Sub-Account                                      Nations Annuity Trust ("Nations Disciplined Equity
                                                   Portfolio")
Nations International Growth Portfolio        --   shares of the Nations International Growth Portfolio of
  Sub-Account                                      Nations Annuity Trust ("Nations International Growth
                                                   Portfolio")
Nations Managed Index Portfolio Sub-Account   --   shares of the Nations Managed Index Portfolio of Nations
                                                   Annuity Trust ("Nations Managed Index Portfolio")
Nations Managed SmallCap Index Portfolio      --   shares of the Nations Managed SmallCap Index Portfolio of
  Sub-Account                                      Nations Annuity Trust ("Nations Managed SmallCap Index
                                                   Portfolio")
Nations Value Portfolio Sub-Account           --   shares of the Nations Value Portfolio of Nations Annuity
                                                   Trust ("Nations Value Portfolio")
Nations Marsico Growth &                      --   shares of the Nations Marsico Growth & Income Portfolio of
  Income Portfolio Sub-Account                     Nations Annuity Trust ("Nations Marsico Growth & Income
                                                   Portfolio")
Nations Marsico Focused Equities Portfolio    --   shares of the Nations Marsico Focused Equities Portfolio
  Sub-Account                                      of Nations Annuity Trust ("Nations Marsico Focused
                                                   Equities Portfolio")
Advisers Fund Sub-Account                     --   shares of Class IB of Hartford Advisers Fund, Inc.
                                                   ("Hartford Advisers Fund")
Bond Fund Sub-Account                         --   shares of Class IB of Hartford Bond Fund, Inc. ("Hartford
                                                   Bond Fund")
Capital Appreciation Fund Sub-Account         --   shares of Class IB of Hartford Capital Appreciation Fund,
                                                   Inc. ("Hartford Capital Appreciation Fund")
Dividend and Growth Fund Sub-Account          --   shares of Class IB of Hartford Dividend and Growth Fund,
                                                   Inc. ("Hartford Dividend and Growth Fund")
Money Market Fund Sub-Account                 --   shares of Class IB of HVA Money Market Fund, Inc. ("HVA
                                                   Money Market Fund")
International Opportunities Sub-Account       --   shares of Class IB of Hartford International Opportunities
                                                   Fund, Inc. ("Hartford International Opportunities Fund")
Small Company Fund Sub-Account                --   shares of Class IB of Hartford Small Company Fund, Inc.
                                                   ("Hartford Small Company Fund")
Stock Fund Sub-Account                        --   shares of Class IB of Hartford Stock Fund, Inc. ("Hartford
                                                   Stock Fund")
</TABLE>
    
 
This Prospectus sets forth the information concerning the Separate Account and
the Fixed Accumulation Feature, where available, that investors should know
before investing. This Prospectus should be kept for future reference.
Additional information about the Separate Account and the Fixed Accumulation
Feature has been filed with the Securities and Exchange Commission and is
available without charge upon
 
   
request. To obtain the Statement of Additional Information send a written
request to, or call Hartford Life Insurance Company, Attn: Individual Annuity
Services, P.O. Box 5085, Hartford, CT 06102-5085. The Table of Contents for the
Statement of Additional Information may be found on page 29 of this Prospectus.
The Statement of Additional Information is incorporated by reference into this
Prospectus.
    
 
- --------------------------------------------------------------------------------
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
 
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.
- --------------------------------------------------------------------------------
   
PROSPECTUS DATED: MARCH 16, 1998
    
   
STATEMENT OF ADDITIONAL INFORMATION DATED: MARCH 16, 1998
    
<PAGE>
2                                                HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
                               TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
 <S>                                                                     <C>
 GLOSSARY OF SPECIAL TERMS.............................................    3
 FEE TABLE.............................................................    5
 INTRODUCTION..........................................................    7
 HARTFORD, SEPARATE ACCOUNT TWO, THE FIXED ACCUMULATION FEATURE AND THE
   FUNDS...............................................................    8
   Hartford Life Insurance Company.....................................    8
   Separate Account Two................................................    8
   The Funds...........................................................    8
   The Fixed Accumulation Feature......................................   10
   Performance Related Information.....................................   11
 THE CONTRACTS.........................................................   12
   Contracts Offered...................................................   12
   Premium Payments and Initial Allocations............................   12
   Contract Value......................................................   13
   Transfers Between the Sub-Accounts/Fixed Accumulation Feature.......   13
   Charges Under the Contract..........................................   14
   Waiver of Sales Charge..............................................   16
   Death Benefits......................................................   16
   Surrender Benefits..................................................   17
   Settlement Provisions...............................................   18
   Other Information...................................................   20
 FEDERAL TAX CONSIDERATIONS............................................   20
   A. General..........................................................   20
   B. Taxation of Hartford and the Separate Account....................   20
   C. Taxation of Annuities -- General Provisions Affecting Purchasers
    other than Qualified Retirement Plans..............................   21
   D. Federal Income Tax Withholding...................................   23
   E. General Provisions Affecting Qualified Retirement Plans..........   24
   F. Annuity Purchases by Nonresident Aliens and Foreign
    Corporations.......................................................   24
 MISCELLANEOUS.........................................................   24
   How Contracts Are Sold..............................................   24
   Legal Matters and Experts...........................................   24
   Additional Information..............................................   25
 APPENDIX I -- INFORMATION REGARDING TAX QUALIFIED PLANS...............   25
 TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION.............   28
</TABLE>
    
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                                3
- --------------------------------------------------------------------------------
 
                           GLOSSARY OF SPECIAL TERMS
 
ACCUMULATION UNIT: An accounting unit of measure used to calculate values before
Annuity payments begin.
 
ANNUAL MAINTENANCE FEE: An annual $30 charge on a Contract having a Contract
Value of less than $50,000, as determined on the most recent Contract
Anniversary. The charge is deducted proportionally from the investment options
in use at the time of such deduction or upon full surrender of the Contract.
 
ANNUAL WITHDRAWAL AMOUNT: The amount which can be withdrawn in any Contract Year
prior to incurring surrender charges.
 
ANNUITANT: The person or Participant upon whose life the Contract is issued.
 
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for a designated period.
 
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
Under a group unallocated Contract, the date for each Participant is determined
by the Contract Owner in accordance with the terms of the Plan.
 
ANNUITY UNIT: An accounting unit of measure used to calculate the value of
Annuity payments.
 
BENEFICIARY: The person(s) who receive Contract Values in the event of the
Annuitant's or Contract Owner's death under certain conditions. Under a group
unallocated Contract, the person named by the Participant within the Plan
documents/enrollment forms who is entitled to receive benefits in case of the
death of the Participant.
 
CODE: The Internal Revenue Code of 1986, as amended.
 
COMMISSION: Securities and Exchange Commission.
 
CONTINGENT ANNUITANT: The person so designated by the Contract Owner, who upon
the Annuitant's death, prior to the Annuity Commencement Date, becomes the
Annuitant.
 
CONTRACT ANNIVERSARY: The anniversary of the Contract Date.
 
CONTRACT OWNER(S): The owner(s) of the Contract, trustee or other entity,
sometimes herein referred to as "you".
 
CONTRACT VALUE: The aggregate value of any Sub-Account Accumulation Units held
under the Contract plus the value of the Fixed Accumulation Feature.
 
CONTRACT YEAR: A period of 12 months commencing with the Contract Date or any
anniversary thereof.
 
DEATH BENEFIT: The amount payable upon the death of a Contract Owner, Annuitant
or Participant, in the case of group Contracts, before annuity payments have
commenced.
 
   
DUE PROOF OF DEATH: A certified copy of a death certificate, an order of a court
of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to Hartford.
    
 
FIXED ACCUMULATION FEATURE: Part of the General Account of Hartford to which a
Contract Owner may allocate all or a portion of his Premium Payment or Contract
Value. This term is referred to as the "Fixed Account" in your Contract.
 
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
 
FUNDS: The Funds described commencing on page 8 of this Prospectus and any
additional Funds which may be made available from time to time.
 
GENERAL ACCOUNT: The General Account of Hartford which consists of all assets of
the Hartford other than those allocated to the separate accounts of the
Hartford.
 
HARTFORD: Hartford Life Insurance Company.
 
HOME OFFICE OF THE COMPANY: Currently located at 200 Hopmeadow Street, Simsbury,
CT. All correspondence concerning this Contract should be sent to P.O. Box 5085,
Hartford, CT 06102-5085, Attn: Individual Annuity Services.
 
MAXIMUM ANNIVERSARY VALUE: Value used in determining the Death Benefit. It is
based on a series of calculations of Account Values on Contract Anniversaries,
premium payments and partial surrenders, as described on page 16.
 
NON-QUALIFIED CONTRACT: A Contract which is not part of a tax-qualified
retirement plan or arrangement which qualifies for special tax treatment under
the Code.
 
PARTICIPANT (FOR GROUP UNALLOCATED CONTRACTS ONLY): Any eligible employee of an
Employer/Contract Owner participating in the Plan.
 
PLAN: A voluntary plan of an employer or other person which qualifies for
special tax treatment under the Code.
 
PREMIUM PAYMENT: The payment made to Hartford pursuant to the terms of the
Contract.
 
PREMIUM TAX: A tax on premiums charged by a state or municipality on Premium
Payments or Contract Values.
 
QUALIFIED CONTRACT: A Contract which is part of a tax-qualified retirement plan
or arrangement which qualifies for special tax treatment under the Code, such as
an employer-sponsored Section 401(k) plan or an Individual Retirement Annuity
(IRA).
 
SEPARATE ACCOUNT: The Hartford separate account entitled "Hartford Life
Insurance Company Separate Account Two".
<PAGE>
4                                                HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
 
TERMINATION VALUE: The Contract Value upon termination of the Contract prior to
the Annuity Commencement Date, less any applicable Premium Taxes, the Annual
Maintenance Fee and any applicable contingent deferred sales charges.
 
   
UNALLOCATED CONTRACTS: Contracts issued to employers, or other entities, as
Contract Owner under which no allocation of Contract Values is made for a
specific Participant. The Plans will be responsible for the individual
allocations.
    
 
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (currently 4:00 p.m. Eastern Time) on such days.
 
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
 
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets of the Separate Account.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                                5
- --------------------------------------------------------------------------------
 
                                   FEE TABLE
                                    SUMMARY
 
                        Contract Owner Transaction Expenses
                               (All Sub-Accounts)
 
<TABLE>
 <S>                                                                 <C>
 Sales Load Imposed on Purchases (as a percentage of premium
   payments).......................................................    None
 Exchange Fee......................................................  $    0
 Deferred Sales Load (as a percentage of amounts withdrawn)
     First Year (1)................................................       6%
     Second Year...................................................       6%
     Third Year....................................................       5%
     Fourth Year...................................................       5%
     Fifth Year....................................................       4%
     Sixth Year....................................................       3%
     Seventh Year..................................................       2%
     Eighth Year...................................................       0%
 Annual Maintenance Fee (2)........................................  $   30
 Annual Expenses -- Separate Account (as percentage of average
   account value)
     Mortality and Expense Risk....................................   1.250%
</TABLE>
 
                         Annual Fund Operating Expenses
                         (as percentage of net assets)
 
   
<TABLE>
<CAPTION>
                                                                             12B-1
                                                                         DISTRIBUTION                     TOTAL FUND
                                                      MANAGEMENT            AND/OR                         OPERATING
                                                         FEES           SERVICING FEES       OTHER         EXPENSES
                                                    (AFTER WAIVERS)     (AFTER WAIVERS)    EXPENSES     (AFTER WAIVERS)
                                                  -------------------   ---------------   -----------   ---------------
<S>                                               <C>                   <C>               <C>           <C>
Nations Balanced Assets Portfolio...............         0.750%            0.000%(4)         0.250%         1.000%
Nations Disciplined Equity Portfolio............         0.750%            0.000%(4)         0.250%         1.000%
Nations International Growth Portfolio..........         0.900%            0.000%(4)         0.350%         1.250%
Nations Managed Index Portfolio.................         0.300%(5)         0.250%            0.200%         0.750%
Nations Managed SmallCap Index Portfolio (5)....         0.300%(5)         0.250%            0.200%         0.750%
Nations Value Portfolio.........................         0.750%            0.000%(4)         0.250%         1.000%
Nations Marsico Growth & Income Portfolio.......         0.850%            0.000%(4)         0.250%         1.100%
Nations Marsico Focused Equities Portfolio......         0.850%            0.000%(4)         0.250%         1.100%
Hartford Advisers Fund..........................         0.610%            0.180%(3)         0.020%         0.810%
Hartford Bond Fund..............................         0.490%            0.180%(3)         0.020%         0.690%
Hartford Capital Appreciation Fund..............         0.620%            0.180%(3)         0.020%         0.820%
Hartford Dividend and Growth Fund...............         0.660%            0.180%(3)         0.020%         0.860%
Hartford International Opportunities Fund.......         0.680%            0.180%(3)         0.090%         0.950%
HVA Money Market Fund...........................         0.425%            0.180%(3)         0.015%         0.620%
Hartford Small Company Fund.....................         0.750%            0.180%(3)         0.020%         0.950%
Hartford Stock Fund.............................         0.430%            0.180%(3)         0.020%         0.630%
</TABLE>
    
 
- ----------
(1) Length of time from premium payment.
 
   
(2) The Annual Maintenance Fee is a $30 charge deducted on an annual basis. It
    is deducted proportionally from the investment options in use at the time of
    the charge. Pursuant to requirements of the Investment Company Act of 1940,
    as amended (the "1940 Act"), the Annual Maintenance Fee has been reflected
    in the Examples by a method intended to show the "average" impact of the
    Annual Maintenance Fee on an investment in the Separate Account. The Annual
    Maintenance Fee is deducted only when the accumulated value is $50,000 or
    less. In the Example, the Annual Maintenance Fee is approximately a 0.06%
    annual asset charge based on the experience of the Contracts.
    
 
   
(3) The Class IB shares of the Funds sponsored by Hartford are subject to fees
    imposed under a distribution plan (herein, the "Distribution Plan") adopted
    by the Funds pursuant to Rule 12b-1 of the 1940 Act, as amended. The
    Distribution Plan provides that the Funds sponsored by Hartford may pay
    annually up to 0.250% of the average daily net assets of a Fund attributable
    to its Class IB shares to certain distributors with respect to activities
    primarily intended to result in the sale of the Class IB shares. Hartford
    has voluntarily and temporarily waived 0.700% of the average daily net
    assets of the Funds. Absent such waiver,"12b-1 Distribution and/or Servicing
    Fees" would be 0.250% and the "Total Fund Operating Expenses" would be as
    follows: Hartford Advisers Fund -- 0.880%; Hartford Bond Fund -- 0.760%;
    Hartford Capital Appreciation Fund -- 0.890%; Hartford Dividend and Growth
    Fund -- 0.930%; Hartford International Opportunities Fund -- 1.020%; HVA
    Money Market Fund -- 0.690%; Hartford Small Company Fund -- 1.020%; and
    Hartford Stock Fund -- 0.700%. Hartford reserves the right to discontinue
    the waiver at any time upon notice to shareholders.
    
<PAGE>
6                                                HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
   
(4) The Funds sponsored by Stephens Inc., are subject to fees of up to 0.250%
    paid by the Funds pursuant to a shareholder servicing and distribution plan.
    The shareholder servicing and distribution plan provides that the Funds may
    pay banks, broker/dealers, insurance companies or other financial
    institutions that they have entered into sales support agreements with
    Stephens Inc. or a shreholder servicing agreement with the Funds for certain
    expenses that are incurred in connection with sales support and shareholder
    support services. These fees are currently being voluntarily waived for the
    Nations Balanced Assets Portfolio, Nations Disciplined Equity Portfolio,
    Nations International Growth Portfolio, Nations Value Portfolio, Nations
    Marsico Growth & Income Portfolio and Nations Marsico Focused Equities
    Portfolio. Absent such waivers, "12b-1 Distribution and/or Servicing Fees"
    would be 0.250% and the "Total Fund Operating Expenses" would be as follows:
    Nations Balanced Assets Portfolio -- 1.25%, Nations Disciplined Equity
    Portfolio -- 1.25%, Nations International Growth Portfolio -- 1.50%, Nations
    Value Portfolio --1.25%, Nations Marsico Growth & Income Portfolio -- 1.35%
    and Nations Marsico Focused Equities Portfolio --1.35%.
    
 
   
(5) The adviser for these Funds has agreed to temporarily waive a portion of its
    management fee. In the absence of this waiver, "Management Fees" for both
    Funds would have been 0.500% and the "Total Fund Operating Expenses" for
    both Funds would have been 0.950%. There is no assurance that fee waivers
    will continue. In particular, to the extent "Other Expenses" are less than
    expected, waivers of "Management Fees," if any, may decrease. Contract
    Owners will be notified of any decrease that materially increases "Total
    Fund Operating Expenses."
    
 
   
EXAMPLES
    
   
<TABLE>
 <S>                           <C>    <C>     <C>     <C>        <C>    <C>     <C>     <C>        <C>    <C>     <C>     <C>
                               If you surrender your Contract    If you annuitize your Contract    If you do not surrender your
                               at the end of the applicable      at the end of the applicable      Contract, you would pay the
                               time period, you would pay the    time period, you would pay the    following expenses on a $1,000
                               following expenses on a $1,000    following expenses on a $1,000    investment, assuming a 5%
                               investment, assuming a 5%         investment, assuming a 5%         annual return on assets:
                               annual return on assets:          annual return on assets:
 
<CAPTION>
 SUB-ACCOUNT                   1 YEAR 3 YEARS 5 YEARS 10 YEARS   1 YEAR 3 YEARS 5 YEARS 10 YEARS   1 YEAR 3 YEARS 5 YEARS 10 YEARS
                               ------ ------- ------- --------   ------ ------- ------- --------   ------ ------- ------- --------
 <S>                           <C>    <C>     <C>     <C>        <C>    <C>     <C>     <C>        <C>    <C>     <C>     <C>
 Nations Balanced Assets
  Portfolio...................  $ 84   $ 123     N/A      N/A     $ 23   $  72     N/A      N/A     $ 24   $  73     N/A      N/A
 Nations Disciplined Equity
  Portfolio...................    84     123     N/A      N/A       23      72     N/A      N/A       24      73     N/A      N/A
 Nations International Growth
  Portfolio...................    86     131     N/A      N/A       26      80     N/A      N/A       26      81     N/A      N/A
 Nations Managed Index
  Portfolio...................    81     115     N/A      N/A       21      65     N/A      N/A       21      65     N/A      N/A
 Nations Managed SmallCap
  Index Portfolio.............    81     115     N/A      N/A       21      65     N/A      N/A       21      65     N/A      N/A
 Nations Value Portfolio......    84     123     N/A      N/A       23      72     N/A      N/A       24      73     N/A      N/A
 Nations Marsico Growth &
  Income Portfolio............    85     126     N/A      N/A       24      75     N/A      N/A       25      76     N/A      N/A
 Nations Marsico Focused
  Equities Portfolio..........    85     126     N/A      N/A       24      75     N/A      N/A       25      76     N/A      N/A
 Hartford Advisers Fund.......    82     117     155      247       21      65     112      241       22      67     115      247
 Hartford Bond Fund...........    81     113     149      234       20      61     106      228       21      63     109      234
 Hartford Capital Appreciation
  Fund........................    82     117     155      248       21      66     112      242       22      67     115      248
 Hartford Dividend and Growth
  Fund........................    82     119     158      252       22      67     114      246       22      69     118      252
 Hartford International
  Opportunities Fund..........    83     121     162      262       23      70     119      256       23      71     122      262
 HVA Money Market Fund........    80     111     145      227       19      59     102      221       20      61     105      227
 Hartford Small Company
  Fund........................    83     121     162      262       23      70     119      256       23      71     122      262
 Hartford Stock Fund..........    80     111     146      228       19      60     102      222       20      61     106      228
</TABLE>
    
 
    The purpose of this table is to assist the Contract Owner in understanding
various costs and expenses that a Contract Owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and underlying
Funds. Premium taxes may also be applicable.
 
    This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                                7
- --------------------------------------------------------------------------------
 
                                  INTRODUCTION
 
    This Prospectus has been designed to provide you with the necessary
information to make a decision on purchasing an individual or group tax deferred
Variable Annuity Contract offered by Hartford Life Insurance Company
("Hartford") in the Fixed Accumulation Feature and/or a series of Separate
Account Two. (See "Hartford Life Insurance Company," page 8; "The Contracts,"
page 12; and "The Separate Account Two," page 8.) Please read the Glossary of
Special Terms on pages 3 and 4 prior to reading this Prospectus to familiarize
yourself with the terms being used.
 
    The Contracts are available for purchase by individuals and groups on both a
non-qualified and qualified basis. The maximum issue age for the Contract is 85
years old. (See "The Contracts," page 12.) Generally, the minimum initial
Premium Payment is $1,000. Thereafter, the minimum payment is $500. There is no
deduction for sales expenses from Premium Payments when made. A deduction will
be made for state Premium Taxes for Contracts sold in certain states. (See
"Charges Under the Contract," page 14.)
 
    Generally, the Contracts are purchased by completing and submitting an
application or an order to purchase, along with the initial Premium Payment, to
Hartford for its approval. Generally, a Contract Owner may exercise his right to
cancel the Contract within ten days of delivery of the Contract by returning the
Contract to Hartford at its Home Office. If the Contract Owner exercises his
right to cancel, Hartford will return either the Contract Value or the original
Premium Payments to the Contract Owner. The duration of the right to cancel
period and Hartford's obligation to either return the Contract Value of the
original Premium Payment will depend on state law.
 
   
    The investment options for the Contracts are Nations Balanced Assets
Portfolio, Nations Disciplined Equity Portfolio, Nations International Growth
Portfolio, Nations Managed Index Portfolio, Nations Managed SmallCap Index
Portfolio, Nations Value Portfolio, Nations Marsico Growth & Income Portfolio,
Nations Marsico Focused Equities Portfolio, Hartford Advisers Fund, Hartford
Bond Fund, Hartford Capital Appreciation Fund, Hartford Dividend and Growth
Fund, Hartford International Opportunities Fund, HVA Money Market Fund, Hartford
Small Company Fund, Hartford Stock Fund, and such other funds as shall be
offered from time to time (the "Funds"), and the Fixed Accumulation Feature.
(See "The Funds," page 8, and "The Fixed Accumulation Feature," page 10.) With
certain limitations, Contract Owners may allocate their Premium Payments and
Contract Values to one or a combination of these investment options and transfer
among the investment options. (See "Transfers Between Sub-Accounts/ Fixed
Accumulation Feature," page 13.)
    
 
   
    An Annual Maintenance Fee in the amount of $30.00 is deducted from Contract
Values each Contract Year (not applicable to Contracts with Account Values of
$50,000 or more or under other circumstances at the sole discretion of Hartford)
and there is a 1.25% per annum mortality and expense risk charge applied against
all Contract Values held in the Separate Account. (See "Charges Under the
Contract," page 14). Finally, the Funds are subject to certain fees, charges and
expenses (see the Funds' prospectuses attached hereto).
    
 
    The Contracts may be surrendered, or portions of the value of the Contracts
may be withdrawn, at any time prior to the Annuity Commencement Date. (See
"Surrender Benefits," page 17.) However, a contingent deferred sales charge may
be assessed against Contract Values when they are surrendered. Contingent
deferred sales charges will not be assessed in certain instances, including
withdrawals up to the annual withdrawal amount and the payment of Death
Benefits. (See "Charges Under the Contract," page 14.)
 
    The Contract provides for a minimum Death Benefit in the event of the death
of the Annuitant or Contract Owner before Annuity payments have commenced (see
"Death Benefits," page 16). Various annuity options are available under the
Contract for election by the Contract Owner on either a fixed or variable basis.
In the absence of an annuity option election, the Contract Value (less
applicable Premium Taxes) will be applied on the Annuity Commencement Date to
provide a life annuity with 120 monthly payments certain (see "Annuity
Benefits," page 18).
 
    The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Hartford will credit the Contract with
an additional 5.0% of the premium payment. This additional percentage of premium
payment in no way affects present or future charges, rights, benefits or current
values of other Contract Owners. The following class of individuals are eligible
for this feature: (1) current or retired officers, directors, trustees and
employees (and their families) of the ultimate parent and affiliates of
Hartford; and (2) employees and registered representatives (and their families)
of registered broker-dealers (or financial institutions affiliated therewith)
that have a sales agreement with Hartford and its principal underwriter to sell
the Contracts.
<PAGE>
8                                                HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
                               HARTFORD, SEPARATE
                                ACCOUNT TWO, THE
                          FIXED ACCUMULATION FEATURE,
                                 AND THE FUNDS
 
                        HARTFORD LIFE INSURANCE COMPANY
 
   
    Hartford Life Insurance Company 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 ultimately controlled by The Hartford Financial Services
Group, Inc., one of the largest financial service providers in the United
States.
    
 
                                HARTFORD RATING
 
   
<TABLE>
<CAPTION>
                   EFFECTIVE
                    DATE OF
RATING AGENCY        RATING      RATING          BASIS OF RATING
- -----------------  ----------  -----------  -------------------------
<S>                <C>         <C>          <C>
A.M. Best and                               Financial soundness and
Company, Inc.          9/9/97          A+   operating performance.
Standard & Poor's     1/23/98          AA   Claims paying ability
Duff & Phelps         1/23/98         AA+   Claims paying ability
</TABLE>
    
 
                              SEPARATE ACCOUNT TWO
 
   
    The Separate Account was established on June 2, 1986. It is the Separate
Account in which Hartford sets aside and invests the assets attributable to
variable annuity contracts, including the Contracts sold under this Prospectus.
Separate Account assets are held by Hartford under a safekeeping arrangement.
Although the Separate Account is an integral part of Hartford, it is registered
as a unit investment trust under the 1940 Act. This registration does not,
however, involve Commission supervision of the management or the investment
practices or policies of the Separate Account or Hartford. The Separate Account
meets the definition of "separate account" under federal securities law.
    
 
    Your investment in the Separate Account is allocated to one or more
Sub-Accounts as per your specifications. Each Sub-Account is invested
exclusively in the assets of one underlying Fund. Hartford reserves the right,
subject to compliance with the law, to substitute the shares of any other
registered investment company for the shares of any Fund already purchased or to
be purchased in the future by the Separate Account provided that the
substitution has been approved by the Commission.
 
    Net Premium Payments and proceeds of transfers between Sub-Accounts are
applied to purchase shares in the appropriate Fund at net asset value determined
as of the end of the Valuation Period during which the payments were received or
the transfer made. All distributions from the Fund are reinvested at net asset
value. The value of your investment will therefore vary in accordance with the
net income and fluctuation in the individual investments within the underlying
Fund portfolio or portfolios. During the Variable Annuity payout period, both
your Annuity payments and reserve values will vary in accordance with these
factors.
 
   
    Under Connecticut law, the assets of the Separate Account attributable to
the Contracts offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Contracts. Income,
gains, and losses, whether or not realized, from assets allocated to the
Separate Account, are, in accordance with the Contracts, credited to or charged
against the Separate Account. Also, the assets in the Separate Account are not
chargeable with liabilities arising out of any other business Hartford may
conduct. Contract Values allocated to the Separate Account are not affected by
the rate of return of Hartford's General Account, nor by the investment
performance of any of Hartford's other separate accounts. The Separate Account
may be subject to liabilities arising from a Sub-Account of the Separate Account
whose assets are attributable to other variable annuity contracts offered by the
Separate Account which are not described in this Prospectus. However, all
obligations arising under the Contracts are general corporate obligations of
Hartford.
    
 
    Hartford does not guarantee the investment results of the Separate Accounts
or any of the underlying investments. There is no assurance that the value of a
Contract during the years prior to retirement or the aggregate amount of the
Variable Annuity payments will equal the total of Premium Payments made under
the Contract. Since each underlying Fund has different investment objectives,
each is subject to different risks. These risks are more fully described in the
accompanying Funds' prospectuses.
 
                                   THE FUNDS
 
    The Hartford Advisers Fund, Hartford Bond Fund, Hartford Capital
Appreciation Fund, Hartford Dividend and Growth Fund, Hartford International
Opportunities Fund, HVA Money Market Fund, Hartford Small Company Fund, and
Hartford Stock Fund are sponsored by Hartford and are incorporated under the
laws of the State of Maryland. HL Investment Advisors, Inc. ("HL Advisors")
serves as the investment adviser to each of the Funds sponsored by Hartford.
 
    Wellington Management Company, LLP serves as sub-investment adviser for
Hartford Advisers Fund, Hartford Capital Appreciation Fund, Hartford Dividend
and Growth
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                                9
- --------------------------------------------------------------------------------
 
Fund, Hartford International Opportunities Fund, Hartford Small Company Fund and
Hartford Stock Fund.
 
    In addition, HL Advisors has entered into an investment services agreement
with The Hartford Investment Management Company, Inc. ("HIMCO"), pursuant to
which HIMCO will provide certain investment services to Hartford Bond Fund and
HVA Money Market Fund.
 
   
    The Nations Balanced Assets Portfolio, Nations Disciplined Equity Portfolio,
Nations International Growth Portfolio, Nations Managed Index Portfolio, Nations
Managed SmallCap Index Portfolio, Nations Value Portfolio, Nations Marsico
Growth & Income Portfolio, and Nations Marsico Focused Equities Portfolio are
sponsored by Stephens Inc. and are investment portfolios of Nations Annuity
Trust, a Delaware business trust which is a registered open-end management
investment company. NationsBanc Advisors, Inc. serves as the investment adviser
to these Funds.
    
 
   
    TradeStreet Investment Associates, Inc. serves as the investment sub-adviser
to the Nations Balanced Assets Portfolio, Nations Disciplined Equity Portfolio,
Nations Managed Index Portfolio, Nations Managed SmallCap Index Portfolio, and
Nations Value Portfolio. Gartmore Global Partners is investment sub-adviser to
Nations International Growth Portfolio. The Nations Marsico Growth & Income
Portfolio and Nations Marsico Focused Equities Portfolio are sub-advised by
Marsico Capital Management, LLC.
    
 
    A full description of the Funds, their investment policies and restrictions,
risks, charges and expenses and all other aspects of their operation is
contained in the accompanying Funds' prospectuses which should be read in
conjunction with this Prospectus before investing and in the Funds' Statements
of Additional Information which may be ordered from Hartford. The Funds may not
be available in all states.
 
    The investment objectives of each of the Funds are as follows:
 
   
 NATIONS BALANCED ASSETS PORTFOLIO
    
 
    Seeks total return by investing in equity and fixed income securities.
 
 NATIONS DISCIPLINED EQUITY PORTFOLIO
 
    Seeks growth of capital by investing in companies that are expected to
produce significant increases in earnings per share.
 
 NATIONS INTERNATIONAL GROWTH PORTFOLIO
 
    Seeks long-term capital growth by investing primarily in equity securities
of companies domiciled in countries outside of the United States and listed on
major stock exchanges primarily in Europe and the Pacific Basin.
 
 NATIONS MANAGED INDEX PORTFOLIO
 
   
    Seeks, over the long-term, to provide a total return which (gross of fees
and expenses) exceeds the total return of the Standard & Poor's 500 Composite
Stock Price Index.(1)
    
 
 NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
 
   
    Seeks, over the long-term, to provide a total return which (gross of fees
and expenses) exceeds the total return of the Standard & Poor's SmallCap 600
Index.(2)
    
 
 NATIONS VALUE PORTFOLIO
 
    Seeks growth of capital by investing in companies that are believed to be
undervalued.
 
   
 NATIONS MARSICO GROWTH & INCOME PORTFOLIO
    
 
   
    Seeks long-term growth of capital with a limited emphasis on income.
    
 
 NATIONS MARSICO FOCUSED EQUITIES PORTFOLIO
 
   
    Seeks long-term growth of capital.
    
 
 HARTFORD ADVISERS FUND
 
    Seeks maximum long-term total rate of return consistent with prudent
investment risk by investing in common stock and other equity securities, bonds
and other debt securities, and money market instruments.
 
 HARTFORD BOND FUND
 
    Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets of
this Fund may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's Investor Services, Inc. and "BB" by Standard &
Poor's) or, if unrated, are determined to be of comparable quality by the Fund's
investment adviser. Securities rated below investment grade are commonly
referred to as "high yield-high risk securities" or "junk bonds." For more
information concerning the risks associated with investing in such securities,
please refer to the section in the accompanying prospectus for the Funds
 
entitled "Hartford Bond Fund, Inc. -- Investment Policies."
 
   
(1) "STANDARD & POOR'S 500" IS A REGISTERED SERVICE MARK OF STANDARD & POOR'S
    CORPORATION ("S&P").
    
   
(2) "STANDARD & POOR'S SMALLCAP 600" IS A REGISTERED SERVICE MARK OF S&P.
    
<PAGE>
10                                               HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
 HARTFORD CAPITAL APPRECIATION FUND
 
    Seeks growth of capital by investing in securities selected solely on the
basis of potential for capital appreciation; income, if any, is an incidental
consideration.
 
 HARTFORD DIVIDEND AND GROWTH FUND
 
    Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
 
 HARTFORD INTERNATIONAL OPPORTUNITIES FUND
 
    Seeks long-term total rate of return consistent with prudent investment risk
through investment primarily in equity securities issued by non-U.S. companies.
 
   
 HVA MONEY MARKET FUND
    
 
   
    Seeks maximum current income consistent with liquidity and preservation of
capital.
    
 
 HARTFORD SMALL COMPANY FUND
 
    Seeks growth of capital by investing primarily in equity securities selected
on the basis of potential for capital appreciation.
 
 HARTFORD STOCK FUND
 
    Seeks long-term capital growth primarily through capital appreciation, with
income as a secondary consideration, by investing primarily in equity
securities.
 
    VOTING RIGHTS -- Hartford is the legal owner of all Fund shares held in the
Separate Account. As the owner, Hartford has the right to vote at the Funds'
shareholder meetings. However, to the extent required by federal securities laws
or regulations, Hartford will:
 
1.  Vote all Fund shares attributable to a Contract according to instructions
    received from the Contract Owner, and
 
2.  Vote shares attributable to a Contract for which no voting instructions are
    received in the same proportion as shares for which instructions are
    received.
 
    If any federal securities laws or regulations, or their present
interpretation change to permit Hartford to vote Fund shares in its own right,
Hartford may elect to do so.
 
   
    Hartford will notify you of any Fund shareholders' meetings if the shares
held for your account may be voted at such meetings. Hartford will send proxy
materials and a form of instruction by means of which you can instruct Hartford
with respect to the voting of the Fund shares held for your account.
    
 
    In connection with the voting of Fund shares held by it, Hartford will
arrange for the handling and tallying of proxies received from Contract Owners.
Hartford as such, shall have no right, except as hereinafter provided, to vote
any Fund shares held by it hereunder which may be registered in its name or the
names of its nominees. Hartford will, however, vote the Fund shares held by it
in accordance with the instructions received from the Contract Owners for whose
accounts the Fund shares are held. If a Contract Owner desires to attend any
meeting at which shares held for the Contract Owner's benefit may be voted, the
Contract Owner may request Hartford to furnish a proxy or otherwise arrange for
the exercise of voting rights with respect to the Fund shares held for such
Contract Owner's account. Hartford will vote shares for which no instructions
have been given and shares which are not attributable to Contract Owners (i.e.
shares owned by Hartford) in the same proportion as it votes shares of that Fund
for which it has received instructions. During the Annuity period under a
Contract the number of votes will decrease as the assets held to fund Annuity
benefits decrease.
 
   
    The Funds are available to serve as the underlying investments for variable
annuity and variable life insurance contracts. It is conceivable that in the
future it may be disadvantageous for variable annuity separate accounts and
variable life insurance separate accounts to invest in the Funds simultaneously.
Although Hartford and the Funds do not currently foresee any such disadvantages
either to variable annuity Contract Owners or to variable life insurance Policy
Owners, the Funds' Boards of Directors/Trustees intend to monitor events in
order to identify any material conflicts between such Contract Owners and Policy
Owners and to determine what action, if any, should be taken in response
thereto. If the Boards of Directors/Trustees of the Funds were to conclude that
separate funds should be established for variable life and variable annuity
separate accounts, the variable annuity Contract Owners would not bear any
expenses attendant to the establishment of such separate funds.
    
 
                         THE FIXED ACCUMULATION FEATURE
 
   
    THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCUMULATION FEATURE IS
NOT REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED
ACCUMULATION FEATURE IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940
ACT. ACCORDINGLY, NEITHER THE FIXED ACCUMULATION FEATURE NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE
1940 ACT, AND THE DISCLOSURE REGARDING THE FIXED ACCUMULATION FEATURE HAS NOT
BEEN REVIEWED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE
FOLLOWING DISCLOSURE ABOUT THE FIXED ACCUMULATION FEATURE MAY BE SUBJECT TO
CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING
THE ACCURACY AND COMPLETENESS OF DISCLOSURE.
    
 
    Premium Payments and Contract Values allocated to the Fixed Accumulation
Feature become a part of the
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                               11
- --------------------------------------------------------------------------------
 
general assets of Hartford. Hartford invests the assets of the General Account
in accordance with applicable law governing the investments of Insurance Company
General Accounts.
 
   
    Currently, Hartford guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the Fixed
Accumulation Feature under the Contracts. However, Hartford reserves the right
to change the rate according to state insurance law. Hartford may credit
interest at a rate in excess of 3% per year. There is no specific formula for
the determination of excess interest credits. Some of the factors that the
Company may consider in determining whether to credit excess interest to amounts
allocated to the Fixed Accumulation Feature and the amount thereof, are general
economic trends, rates of return currently available and anticipated on the
Company's investments, regulatory and tax requirements and competitive factors.
ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCUMULATION FEATURE IN
EXCESS OF 3% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF HARTFORD. THE
OWNER ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED ACCUMULATION FEATURE
ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
    
 
    From time to time, Hartford may credit increased interest rates to Contract
Owners under certain programs established at the discretion of Hartford.
Contract Owners may enroll in a special preauthorized transfer program known as
Hartford's Dollar Cost Averaging Bonus Program (the "Program"). Under this
Program, Contract Owners who enroll may allocate a minimum of $5,000 of their
Premium Payment into the Program and preauthorize between 3 and 12 monthly
transfers to any of the Sub-Accounts. Contract Owners enrolled in the Program
will receive an increased interest rate guaranteed for a 12 month period.
 
    The preauthorized transfers will begin on or about 15 days following receipt
of an initial Program Premium Payment. That Premium Payment plus any subsequent
Premium Payments and any accrued interest will be completely transferred into
the Sub-Accounts within twelve months of receipt of the initial Program Premium
Payment. This will be accomplished by equal monthly transfers for the period
selected, and a final transfer of the entire amount remaining in the Program.
 
    Any subsequent Premium Payments received by Hartford within the period
selected for transfer will be allocated to the Sub-Accounts over the remainder
of the transfer period. If, while the Program is still in effect but the
transfer period has expired, a subsequent Premium Payment of $5,000 is received
by Hartford, a new Program cycle will be initiated. Unless instructed otherwise,
Hartford will allocate that Premium Payment in the same number of transfers and
into the same Sub-Accounts as the previous election. If, while the Program is
still in effect but the transfer period has expired, a subsequent Premium
Payment of less than $5,000 is received by Hartford, the entire amount will be
credited with the non-Program interest rate then in effect for the Fixed
Accumulation Feature.
 
    If complete Program enrollment instructions are not received by Hartford
within 15 days of receipt of the initial Program Premium Payment, the Program
will be voided and the entire balance in the Program will be credited with the
non-Program interest rate then in effect for the Fixed Accumulation Feature.
 
    The Contract Owner may elect to terminate the preauthorized transfers by
calling or writing Hartford of their intent to cancel their enrollment in the
Program. Upon cancellation of enrollment in the Program the Contract Owner will
no longer receive the increased interest rate. Hartford reserves the right to
discontinue, modify or amend the Program or any other interest rate program
established by Hartford. Any change to the Program will not affect Contract
Owners currently enrolled in the Program.
 
                        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 Nations Balanced Assets Portfolio, Nations Disciplined Equity Portfolio,
Nations International Growth Portfolio, Nations Managed Index Portfolio, Nations
Managed SmallCap Index Portfolio, Nations Value Portfolio, Nations Marsico
Growth & Income Portfolio, Nations Marsico Select Focused Portfolio, Hartford
Advisers Fund, Hartford Bond Fund, Hartford Capital Appreciation Fund, Hartford
Dividend and Growth Fund, Hartford International Opportunities Fund, HVA Money
Market Fund, Hartford Small Company Fund, and Hartford Stock Fund 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).
<PAGE>
12                                               HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
   
    In addition to the standardized total return, the Sub-Account may advertise
a non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the contingent deferred sales charge and the Annual Maintenance Fee
are not deducted. Therefore, non-standardized total return for a Sub-Account is
higher than standardized total return for a Sub-Account.
    
 
   
    The Hartford Bond Fund may advertise yield in addition to total return. The
yield will be computed in the following manner: The net investment income per
unit earned during a recent one month period, divided by the unit value on the
last day of the period. This figure reflects the recurring charges at the
Separate Account level including the Annual Maintenance Fee.
    
 
   
    The Money Market Fund Sub-Account may advertise yield and effective yield.
The yield of the Money Market Sub-Account is based upon the income earned by the
Sub-Account over a seven-day period and then annualized, i.e. the income earned
in the period is assumed to be earned every seven days over a 52-week period and
stated as a percentage of the investment. Effective yield is calculated
similarly but when annualized, the income earned by the investment is assumed to
be reinvested in Sub-Account units and thus compounded in the course of a
52-week period. Yield and effective yield reflect the recurring charges at the
Separate Account level including the Annual Maintenance Fee.
    
 
   
    The Separate Account may also disclose yield, standard average annual total
return, and non-standard average annual total return for periods prior to the
date the Separate Account commenced operations. For periods prior to the date
the Separate Account commenced operations, performance information for the
Sub-Accounts will be calculated based on the performance of the underlying Funds
and the assumption that the Sub-Accounts were in existence for the same periods
as those of the underlying Funds, with a level of charges equal to those
currently assessed against the Sub-Accounts.
    
 
    Hartford may provide information on various topics to Contract Owners and
prospective Contract Owners in advertising, sales literature or other materials.
These topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in tax-
advantaged and taxable instruments, customer profiles and hypothetical purchase
scenarios, financial management and tax and retirement planning, and other
investment alternatives, including comparisons between the Contracts and the
characteristics of and market for such alternatives.
 
                                 THE CONTRACTS
 
                               CONTRACTS OFFERED
 
   
    The Contracts are individual or group tax-deferred Variable Annuity
Contracts designed for retirement planning purposes and may be purchased by any
individual, group or trust, including any trustee or custodian for a retirement
plan qualified under Sections 401(a) or 403(a) of the Code; annuity purchase
plans adopted by public school systems and certain tax-exempt organizations
according to Section 403(b) of the Code; Individual Retirement Annuities adopted
according to Section 408 of the Code; employee pension plans established for
employees by a state, a political subdivision of a state, or an agency or
instrumentality of either a state or a political subdivision of a state, and
certain eligible deferred compensation plans as defined in Section 457 of the
Code ("Qualified Contracts"). The maximum issue age for the Contract is 85 years
old.
    
 
                    PREMIUM PAYMENTS AND INITIAL ALLOCATIONS
 
    The minimum initial Premium Payment is $1,000. Thereafter, the minimum
Premium Payment is $500. Certain plans may make smaller periodic payments. Each
Premium Payment may be split among the various Sub-Accounts and/or the Fixed
Accumulation Feature subject to minimum amounts then in effect.
 
    REFUND RIGHTS -- If you are not satisfied with your purchase you may cancel
the Contract by returning it within ten days (or longer in some states) after
you receive it. A written request for cancellation must accompany the Contract.
In such event, Hartford will, without deduction for any charges normally
assessed thereunder, pay you an amount equal to the Contract Value on the date
of receipt of the request for cancellation. You bear the investment risk during
the period prior to the Company's receipt of request for cancellation. Hartford
will refund the premium paid only for individual retirement annuities (if
returned within seven days of receipt) and in those states where required by
law.
 
    CREDITING AND VALUATION -- The balance of the initial Premium Payment
remaining after the deduction of any applicable Premium Tax is credited to your
Contract within two business days of receipt of a properly completed application
or an order to purchase a Contract and the initial Premium Payment by Hartford
at its Home Office, P.O. Box 5085, Hartford, CT 06102-5085. It will be credited
to the Sub-Account(s) and/or the Fixed Accumulation Feature in accordance with
your election. If the application or other information is incomplete when
received, the balance of the initial Premium Payment, after deduction of any
applicable Premium Tax, will be credited to the Sub-Account(s) or the Fixed
Accumulation Feature within five business days of
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                               13
- --------------------------------------------------------------------------------
 
receipt. If the initial Premium Payment is not credited within five business
days, the Premium Payment will be immediately returned unless you have been
informed of the delay and request that the Premium Payment not be returned.
 
    The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment being
credited to each Sub-Account by the value of an Accumulation Unit in that
Sub-Account on that date.
 
    Subsequent Premium Payments are priced on the Valuation Day received by
Hartford in its Home Office, or other designated administrative offices.
 
                                 CONTRACT VALUE
 
    The value of the Sub-Account investments under your Contract at any time
prior to the commencement of Annuity payments can be determined by multiplying
the total number of Accumulation Units credited to your Contract in each
Sub-Account by the then current Accumulation Unit values for the applicable
Sub-Account. The value of the Fixed Accumulation Feature under your Contract
will be the amount allocated to the Fixed Accumulation Feature plus interest
credited.
 
    You will be advised at least semiannually of the number of Accumulation
Units credited to each Sub-Account, the current Accumulation Unit values, the
Fixed Accumulation Feature value, and the total value of your Contract.
 
    ACCUMULATION UNIT VALUES -- The Accumulation Unit value for each Sub-Account
will vary to reflect the investment experience of the applicable Fund and will
be determined on each Valuation Day by multiplying the Accumulation Unit value
of the particular Sub-Account on the preceding Valuation Day by a "Net
Investment Factor" for that Sub-Account for the Valuation Period then ended. The
"Net Investment Factor" for each of the Sub-Accounts is equal to (a) the net
asset value per share of the corresponding Fund at the end of the Valuation
Period (plus the per share amount of any dividends or capital gains distributed
by that Fund if the ex-dividend date occurs in the Valuation Period then ended)
divided by the net asset value per share of the corresponding Fund at the
beginning of the Valuation Period, (b) minus the mortality and expense risk
charge and the administration charge described below. You should refer to the
prospectus for each of the Funds which accompanies this Prospectus for a
description of how the assets of each Fund are valued since each determination
has a direct bearing on the Accumulation Unit value of the Sub-Account and
therefore the value of a Contract. The Accumulation Unit Value is affected by
the performance of the underlying Fund(s), expenses and deduction of the charges
described in this Prospectus.
 
    VALUATION OF FUND SHARES -- The shares of the Fund are valued at net asset
value on each Valuation Day. A complete description of the valuation method used
in valuing Fund shares may be found in the accompanying Funds' prospectuses.
 
    VALUATION OF THE FIXED ACCUMULATION FEATURE -- Hartford will determine the
value of the Fixed Accumulation Feature by crediting interest to amounts
allocated to the Fixed Accumulation Feature.
 
                        TRANSFERS BETWEEN SUB-ACCOUNTS/
                           FIXED ACCUMULATION FEATURE
 
    You may transfer the values of your Sub-Account allocations from one or more
Sub-Accounts to another free of charge. However, Hartford reserves the right to
limit the number of transfers to twelve (12) per Contract Year, with no two (2)
transfers occurring on consecutive Valuation Days. Transfers by telephone may be
made by a Contract Owner or by the attorney-in-fact pursuant to a power of
attorney by calling (800) 862-6668 or by the agent of record by calling (800)
862-7155. Telephone transfers may not be permitted by some states for their
residents who purchase variable annuities.
 
    The policy of Hartford and its agents and affiliates is that they will not
be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. Hartford will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine; otherwise,
Hartford may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures Hartford follows for transactions initiated by
telephone include requirements that callers provide certain information for
identification purposes. All transfer instructions by telephone are tape
recorded.
 
    Hartford may permit the Contract Owner to preauthorize transfers among
Sub-Accounts and between Sub-Accounts and the Fixed Accumulation Feature under
certain circumstances. Transfers between the Sub-Accounts may be made both
before and after Annuity payments commence (limited to once a quarter) provided
that the minimum allocation to any Sub-Account may not be less than $500. No
minimum balance is required in any Sub-Account.
 
    It is the responsibility of the Contract Owner or Participant to verify the
accuracy of all confirmations of transfers and to promptly advise Hartford of
any inaccuracies within one business day of receipt of the confirmation.
Hartford will send the Contract Owner a confirmation of the transfer within five
days from the date of any instruction.
 
    Transfers from the Fixed Accumulation Feature into a Sub-Account may be made
at any time during the Contract Year. The maximum amount which may be
transferred from
<PAGE>
14                                               HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
the Fixed Accumulation Feature during any Contract Year is the greater of 30% of
the Fixed Accumulation Feature balance as of the last Contract Anniversary or
the greatest amount of any prior transfer from the Fixed Accumulation Feature.
If Hartford permits preauthorized transfers from the Fixed Accumulation Feature
to the Sub-Accounts, this restriction is inapplicable. Also, if any interest
rate is renewed at a rate of at least one percentage point less than the
previous rate, the Contract Owner may elect to transfer up to 100% of the funds
receiving the reduced rate within 60 days of notification of the interest rate
decrease. Generally, transfers may not be made from any Sub-Account into the
Fixed Accumulation Feature for the six-month period following any transfer from
the Fixed Accumulation Feature into one or more of the Sub-Accounts. Hartford
reserves the right to modify the limitations on transfers from the Fixed
Accumulation Feature and to defer transfers from the Fixed Accumulation Feature
for up to six months from the date of request.
 
    Subject to the exceptions set forth in the following two paragraphs, the
right to reallocate Contract Values is subject to modification if Hartford
determines, in its sole opinion, that the exercise of that right by one or more
Contract Owners is, or would be, to the disadvantage of other Contract Owners.
Any modification could be applied to transfers to or from some or all of the
Sub-Accounts and the Fixed Accumulation Feature and could include, but not be
limited to, the requirement of a minimum time period between each transfer, not
accepting transfer requests of an agent acting under a power of attorney on
behalf of more than one Contract Owner, or limiting the dollar amount that may
be transferred between the Sub-Accounts and the Fixed Accumulation Feature by a
Contract Owner at any one time. Such restrictions may be applied in any manner
reasonably designed to prevent any use of the transfer right which is considered
by Hartford to be to the disadvantage of other Contract Owners.
 
    For Contracts issued in the State of New York, the reservation of rights set
forth in the preceding paragraph is limited to (i) requiring up to a maximum of
10 Valuation Days between each transfer: (ii) limiting the amount to be
transferred on any one Valuation Day to no more than $2 million; and (iii) upon
30 days prior written notice, to only accepting transfer instructions from the
Contract Owner and not from the Contract Owner's representative, agent or person
acting under a power of attorney for the Contract Owner.
 
    Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that Hartford will not accept instructions from agents
acting under a power of attorney of multiple Contract Owners whose accounts
aggregate more than $2 million, unless the agent has entered into a third party
transfer services agreement with Hartford.
 
                           CHARGES UNDER THE CONTRACT
 
CONTINGENT DEFERRED SALES CHARGES
 
    There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered. The length of time from receipt of a Premium
Payment to the time of surrender determines the contingent deferred sales
charge. Premium payments will be deemed to be surrendered in the order in which
they were received.
 
   
    A Contract Owner who chooses to surrender a Contract in full who has not yet
withdrawn the Annual Withdrawal Amount during the current Contract Year (as
described at page 15 under the sub-heading "Payments Not Subject to Sales
Charges") may, depending upon the amount of investment gain experienced under
the Contract, reduce the amount of any contingent deferred sales charge paid by
first withdrawing the Annual Withdrawal Amount and then requesting a full
surrender of the Contract. Currently, regardless of whether a Contract Owner
first requests a partial withdrawal of the Annual Withdrawal Amount, upon
receiving a request for a full surrender of a Contract, Hartford assesses any
applicable contingent deferred sales charge against the surrender proceeds
representing the lesser of: (1) aggregate Premium Payments not previously
withdrawn; and (2) the Contract Value, less the Annual Withdrawal Amount
available at the time of the full surrender, less the Annual Maintenance Fee.
    
 
PAYMENTS SUBJECT TO SALES CHARGES DURING THE FIRST SEVEN CONTRACT YEARS
 
   
    During the first seven Contract years, a contingent deferred sales charge
will be assessed against the surrender of the Premium Payments in excess of the
Annual Withdrawal Amount. All surrenders will be first from Premium Payments and
then from other Contract Values.
    
 
AFTER THE SEVENTH CONTRACT YEAR
 
    After the seventh Contract year, all surrenders will first be from earnings
and then from premium payments. A contingent deferred sales charge will not be
assessed against the surrender of earnings. If an amount equal to all earnings
has been surrendered, a contingent deferred sales charge will not be assessed
against premium payments received more than seven years prior to surrender, but
will be assessed against premium payments received less than seven years prior
to surrender.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                               15
- --------------------------------------------------------------------------------
 
    The charge is a percentage of the amount withdrawn (not to exceed the
aggregate amount of the Premium Payments made) and equals:
 
<TABLE>
<CAPTION>
               LENGTH OF TIME
            FROM PREMIUM PAYMENT
 CHARGE      (NUMBER OF YEARS)
- ---------  ----------------------
<S>        <C>
   6%                1
   6%                2
   5%                3
   5%                4
   4%                5
   3%                6
   2%                7
   0%            8 or more
</TABLE>
 
    PAYMENTS NOT SUBJECT TO SALES CHARGES -- During the first seven Contract
Years, on a non-cumulative basis, a Contract Owner may make a partial surrender
of Contract Values of up to 10% of the aggregate Premium Payments made to the
Contract (as determined on the date of the requested withdrawal) without the
application of the contingent deferred sales charge. After the seventh Contract
year, the Contract Owner may make a partial surrender of 10% of premium payments
made during the seven years prior to the surrender and 100% of the Contract
Value less the premium payments made during the seven years prior to the
surrender. The amount which can be withdrawn in any Contract Year prior to
incurring sales charges is the "Annual Withdrawal Amount." An Extended
Withdrawal Privilege rider allows an Annuitant who attains age 70 1/2 under a
Qualified Plan to withdraw an amount in excess of the Annual Withdrawal Amount
to comply with IRS minimum distribution rules.
 
    Certain plans or programs may have different withdrawal privileges. Any such
withdrawal will be deemed to be from Contract Values other than Premium
Payments. From time to time, Hartford may permit the Contract Owner to
preauthorize partial surrenders subject to certain limitations then in effect.
Additional surrenders or any surrender of the Contract Values in excess of such
amount in any Contract Year during the period when contingent deferred sales
charges are applicable will be subject to the appropriate charge.
 
    No contingent deferred sales charges otherwise applicable will be assessed
in the event of death of the Annuitant, death of the Contract Owner or if
payments are made under an Annuity option (other than a surrender out of Option
4 described below) provided for under the Contract.
 
    PURPOSE OF SALES CHARGES -- The contingent deferred sales charges are used
to cover expenses relating to the sale and distribution of the Contracts,
including commissions paid to any distribution organization and its sales
personnel, the cost of preparing sales literature and other promotional
activities. To the extent that these charges do not cover such distribution
expenses they will be borne by Hartford from its general assets, including
surplus. The surplus might include profits resulting from unused mortality and
expense risk charges.
 
    MORTALITY AND EXPENSE RISK CHARGE -- Although Variable Annuity payments made
under the Contracts will vary in accordance with the investment performance of
the underlying Fund shares held in the Sub-Account(s), the payments will not be
affected by (a) Hartford's actual mortality experience among Annuitants before
or after the Annuity Commencement Date or (b) Hartford's actual expenses, if
greater than the deductions provided for in the Contracts because of the expense
and mortality undertakings by Hartford.
 
    For assuming these risks under the Contracts, Hartford will make a daily
charge at the rate of 1.25% per annum against all Contract Values held in the
Sub-Accounts during the life of the Contract (estimated at .90% for mortality
and .35% for expense).
 
    The mortality undertakings provided by Hartford under the Contracts,
assuming the selection of one of the forms of life Annuities, is to make monthly
Annuity payments (determined in accordance with the 1983a Individual Annuity
Mortality Table and other provisions contained in the Contract) to Annuitants
regardless of how long an Annuitant may live, and regardless of how long all
Annuitants as a group may live. Hartford also assumes the liability for payment
of a minimum Death Benefit under the Contract.
 
    The mortality undertakings are based on Hartford's determination of expected
mortality rates among all Annuitants. If actual experience among Annuitants
during the Annuity payment period deviates from Hartford's actuarial
determination of expected mortality rates among Annuitants because, as a group,
their longevity is longer than anticipated, Hartford must provide amounts from
its general funds to fulfill its Contract obligations. Hartford will bear the
loss in such a situation. Also, in the event of the death of an Annuitant or
Contract Owner before the commencement of Annuity payments, whichever is
earlier, Hartford can, in periods of declining value or in periods where the
contingent deferred sales loads would have been applicable, experience a loss
resulting from the assumption of the mortality risk relative to the guaranteed
Death Benefit.
 
   
    In providing an expense undertaking, Hartford assumes the risk that the
contingent deferred sales charges and the Annual Maintenance Fee for maintaining
the Contracts prior to the Annuity Commencement Date may be insufficient to
cover the actual cost of providing such items.
    
 
    ANNUAL MAINTENANCE FEE -- Each year, on each Contract Anniversary on or
before the Annuity Commencement
<PAGE>
16                                               HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
   
Date, Hartford will deduct an Annual Maintenance Fee, if applicable, from
Contract Values to reimburse it for expenses relating to the maintenance of the
Contract, the Fixed Accumulation Feature, and the Sub-Account(s) thereunder. If
during a Contract Year the Contract is surrendered for its full value, Hartford
will deduct the Annual Maintenance Fee at the time of such surrender. The fee is
a flat fee which will be due in the full amount regardless of the time of the
Contract Year that Contract Values are surrendered. The Annual Maintenance Fee
is $30.00 per Contract Year for Contracts with less than $50,000 Contract Value
on the Contract Anniversary. The deduction will be made pro rata according to
the value in each Sub-Account and the Fixed Accumulation Feature under a
Contract.
    
 
    PREMIUM TAXES -- A deduction is also made for Premium Tax, if applicable,
imposed by a state or other governmental entity. Certain states impose a Premium
Tax, currently ranging up to 3.5%. Some states assess the tax at the time
purchase payments are made; others assess the tax at the time of annuitization.
Hartford will pay Premium Taxes at the time imposed under applicable law. At its
sole discretion, Hartford may deduct Premium Taxes at the time Hartford pays
such taxes to the applicable taxing authorities, at the time the Contract is
surrendered, or at the time the Contract annuitizes.
 
   
    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.
    
 
   
    SALES COMPENSATION -- Commissions will be paid by Hartford and will not be
more than 6% of Premium Payments. From time to time, Hartford may pay or permit
other promotional incentives in cash or credit or other compensation.
    
 
    EXCEPTIONS -- Hartford may offer, in its discretion, reduced fees and
charges including, but not limited to, the contingent deferred sales charges,
the mortality and expense risk charge and the maintenance fee for certain sales
(including employer sponsored savings plans) under circumstances which may
result in savings of certain costs and expenses. Reductions in these fees and
charges will not be unfairly discriminatory against any Contract Owner.
 
                             WAIVER OF SALES CHARGE
 
    Hartford will waive any contingent deferred sales charges applicable to a
partial or full surrender of the Contract Value if the Annuitant is confined, at
the recommendation of a physician, for medically necessary reasons, for at least
180 calendar days to: a hospital recognized as a general hospital by the proper
authority of the state in which it is located; or a hospital recognized as a
general hospital by the Joint Commission on the Accreditation of Hospitals; or a
facility certified as a hospital or long-term care facility; or a nursing home
licensed by the state in which it is located and offers the services of a
registered nurse 24 hours a day.
 
    The Annuitant cannot be confined at the time the Contract was purchased in
order to receive the waiver and the Contract Owner(s) must have been the
Contract Owner(s) continuously since the Contract issue date; must provide
written proof of confinement satisfactory to Hartford; and must requests the
partial or full surrender of the Contract Value within 91 calendar days of the
last day of confinement.
 
    This contingent deferred sales charge waiver may not be available in all
states. Please contact your registered representative or Hartford to determine
state availability.
 
                                 DEATH BENEFITS
 
   
    The Contract provides that, in the event the Annuitant dies before the
selected Annuity Commencement Date, the Contingent Annuitant will become the
Annuitant. If (1) the Annuitant dies before the Annuity Commencement Date and
either (a) there is no designated Contingent Annuitant or (b) the Contingent
Annuitant predeceases the Annuitant, or (2) if any Contract Owner dies before
the Annuity Commencement Date, the Beneficiary as determined under the Contract
Control Provisions, will receive the Death Benefit as determined on the date of
receipt of Due Proof of Death by Hartford in its Home Office. With regard to
Joint Contract Owners, at the first death of a joint Contract Owner prior to the
Annuity Commencement Date, the Beneficiary will be the surviving Contract Owner
notwithstanding that the beneficiary designation may be different.
    
 
    GUARANTEED DEATH BENEFIT -- If the Annuitant dies before the Annuity
Commencement Date and there is no designated Contingent Annuitant surviving, or
if the Contract Owner dies before the Annuity Commencement Date, the Beneficiary
will receive the greatest of (a) the Contract Value determined as of the day
written proof of death of such person is received by Hartford, or (b) 100% of
the total Premium Payments made to such Contract, reduced by the dollar amount
of any partial surrenders since the issue date, or (c) the Maximum Anniversary
Value immediately preceding the date of death. The Maximum Anniversary Value is
equal to the greatest Anniversary Value attained from the following:
 
   
    As of the date of receipt of Due Proof of Death, Hartford will calculate an
Anniversary Value for each Contract Anniversary prior to the deceased's attained
age 81. The Anniversary Value is equal to the Contract Value on a Contract
Anniversary, increased by the dollar amount of any premium payments made since
that anniversary and
    
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                               17
- --------------------------------------------------------------------------------
 
reduced by the dollar amount of any partial surrenders since that anniversary.
 
    If the Annuitant or Contract Owner, as applicable, dies after the Annuity
Commencement Date, then the Death Benefit will equal the present value of any
remaining payments under the elected Annuity Option. In computing such present
value for the portion of such remaining payments attributable to the Separate
Account, Hartford will assume a net investment rate of 5.0% per year.
 
    PAYMENT OF DEATH BENEFIT -- Death Benefit proceeds will remain invested in
the Separate Account in accordance with the allocation instructions given by the
Contract Owner until the proceeds are paid or Hartford receives new instructions
from the Beneficiary. The Death Benefit may be taken in one sum, payable within
seven days after the date Due Proof of Death is received, or under any of the
settlement options then being offered by the Company provided, however, that:
(a) in the event of the death of any Contract Owner prior to the Annuity
Commencement Date, the entire interest in the Contract will be distributed
within five years after the death of the Contract Owner and (b) in the event of
the death of any Contract Owner or Annuitant which occurs on or after the
Annuity Commencement Date, any remaining interest in the Contract will be paid
at least as rapidly as under the method of distribution in effect at the time of
death, or, if the benefit is payable over a period not extending beyond the life
expectancy of the Beneficiary or over the life of the Beneficiary, such
distribution must commence within one year of the date of death. The proceeds
due on the death may be applied to provide variable payments, fixed payments, or
a combination of variable and fixed payments. However, in the event of the
Contract Owner's death where the sole Beneficiary is the spouse of the Contract
Owner and the Annuitant or Contingent Annuitant is living, such spouse may
elect, in lieu of receiving the death benefit, to be treated as the Contract
Owner. The Contract Value and the Maximum Anniversary Value of the Contract will
be unaffected by treating the spouse as the Contract Owner.
 
    If the Contract is owned by a corporation or other non-individual, the Death
Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same settlement
options and in the same manner as if an individual Contract Owner died on the
date of the Annuitant's death.
 
    There may be postponement in the payment of Death Benefits whenever (a) the
New York Stock Exchange is closed, except for holidays or weekends, or trading
on the New York Stock Exchange is restricted as determined by the Commission;
(b) the Commission permits postponement and so orders; or (c) the Commission
determines that an emergency exists making valuation of the amounts or disposal
of securities not reasonably practicable.
 
    GROUP UNALLOCATED CONTRACTS -- Hartford requires that detailed accounting of
cumulative purchase payments, cumulative gross surrenders, and current Contract
Value attached to each Plan Participant be submitted on an annual basis by the
Contract Owner. Failure to submit accurate data satisfactory to Hartford will
give Hartford the right to terminate this extension of benefits.
 
                               SURRENDER BENEFITS
 
    FULL SURRENDERS -- At any time prior to the Annuity Commencement Date (and
after the Annuity Commencement Date with respect to values applied to Option 4
or 5), the Contract Owner has the right to terminate the Contract. In such
event, the Termination Value of the Contract may be taken in the form of a lump
sum cash settlement.
 
    Under any of the Annuity options excluding Options 4 and 5, no surrenders
are permitted after Annuity payments commence. Only full surrenders are allowed
out of Option 4 and any such surrender will be subject to contingent deferred
sales charges, if applicable. Full or partial withdrawals may be made from
Option 5 at any time and contingent deferred sales charges will not be applied.
 
    The Termination Value of the Contract is equal to the Contract Value less
any applicable Premium Taxes, the Annual Maintenance Fee if applicable and any
applicable contingent deferred sales charges. The Termination Value may be more
or less than the amount of the Premium Payments made to a Contract.
 
    PARTIAL SURRENDERS -- The Contract Owner may make a partial surrender of
Contract Values at any time prior to the Annuity Commencement Date so long as
the amount surrendered is at least equal to the minimum amount rules then in
effect. Additionally, if the remaining Contract Value following a surrender is
less than $500 ($1,000 in New York), Hartford will terminate the Contract and
pay the Termination Value. For Contracts issued in Texas, there is an additional
requirement that the Contract will not be terminated when the remaining Contract
Value after a surrender is less than $500 unless there were no Premium Payments
made during the previous two Contract Years.
 
    In requesting a partial withdrawal you should specify the Sub-Account(s)
and/or the Fixed Accumulation Feature from which the partial withdrawal is to be
taken. Otherwise, such withdrawal and any applicable contingent deferred sales
charges will be effected on a pro rata basis according to the value in the Fixed
Accumulation Feature and each Sub-Account under a Contract.
 
    Hartford may permit the Contract Owner to preauthorize partial surrenders
subject to certain limitations then in effect.
<PAGE>
18                                               HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
    PAYMENT OF SURRENDER BENEFITS -- Payment on any request for a full or
partial surrender from the Sub-Accounts will be made as soon as possible and in
any event no later than seven days after the written request is received by
Hartford at its Home Office, Attn: Individual Annuity Services, P.O. Box 5085,
Hartford, CT 06102-5085. Hartford may defer payment of any amounts from the
Fixed Accumulation Feature for up to six months from the date of the request for
surrender. If Hartford defers payment for more than 30 days (10 working days in
New York), Hartford will pay interest of at least 3% per annum on the amount
deferred.
 
    There may be postponement in the payment of Surrender Benefits whenever (a)
the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation of the amounts
or disposal of securities not reasonably practicable.
 
    CERTAIN QUALIFIED CONTRACT SURRENDERS -- THERE ARE CERTAIN RESTRICTIONS ON
SECTION 403(B) TAX SHELTERED ANNUITIES. AS OF DECEMBER 31, 1988, ALL SECTION
403(B) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO
THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY INCREASES IN CASH VALUE AFTER
DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS THE CONTRACT OWNER/ EMPLOYEE HAS
A) ATTAINED AGE 59 1/2, B) SEPARATED FROM SERVICE, C) DIED, D) BECOME DISABLED
OR E) EXPERIENCED FINANCIAL HARDSHIP. (CASH VALUE INCREASES MAY NOT BE
DISTRIBUTED PRIOR TO AGE 59 1/2 FOR HARDSHIPS.)
 
    DISTRIBUTIONS PRIOR TO AGE 59 1/2 DUE TO FINANCIAL HARDSHIP OR SEPARATION
FROM SERVICE MAY STILL BE SUBJECT TO A PENALTY TAX OF 10%.
 
    HARTFORD WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A
WITHDRAWAL IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR
SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY 1,
1989 ACCOUNT VALUES.
 
    ANY SUCH FULL OR PARTIAL SURRENDER DESCRIBED ABOVE MAY AFFECT THE CONTINUING
TAX QUALIFIED STATUS OF SOME CONTRACTS OR PLANS AND MAY RESULT IN ADVERSE TAX
CONSEQUENCES TO THE CONTRACT OWNER. THE CONTRACT OWNER, THEREFORE, SHOULD
CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (See
"Federal Tax Considerations" commencing on page 20.)
 
   
                             SETTLEMENT PROVISIONS
    
 
ANNUITY OPTIONS
 
    You select an Annuity Commencement Date and an Annuity option which may be
on a fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be deferred beyond the Annuitant's 90th birthday (100th birthday
if sold as part of a Charitable Remainder Trust). The Annuity Commencement Date
and/or the Annuity option may be changed from time to time, but any change must
be at least 30 days prior to the date on which Annuity payments are scheduled to
begin. The Contract allows the Contract Owner to change the Sub-Accounts on
which variable payments are based after payments have commenced once every three
months. Any Fixed Annuity allocation may not be changed.
 
    The Contract contains the five optional Annuity forms described below.
Options 2, 4, and 5 are available to Qualified Contracts only if the guaranteed
payment period is less than the life expectancy of the Annuitant at the time the
option becomes effective. Such life expectancy shall be computed on the basis of
the mortality table prescribed by the IRS, or if none is prescribed, the
mortality table then in use by Hartford. With respect to Non-Qualified
Contracts, if you do not elect otherwise, payments in most states will
automatically begin at the Annuitant's age 90 under Option 2 with 120 monthly
payments certain. For Qualified Contracts and Contracts issued in Texas, if you
do not elect otherwise, payments will begin automatically at the Annuitant's age
90 under Option 1 to provide a life Annuity. After the Annuity Commencement
Date, the Annuity option elected may not be changed.
 
    Under any of the Annuity options excluding Options 4 and 5, no surrenders
are permitted after Annuity payments commence. Only full surrenders are allowed
out of Option 4 and any such surrender will be subject to contingent deferred
sales charges, if applicable. Full or partial withdrawals may be made from
Option 5 at any time and contingent deferred sales charges will not be applied.
 
OPTION 1 -- Life Annuity
 
    A life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last payment due preceding the death of the Annuitant.
This option offers the largest payment amount of any of the life Annuity options
since there is no guarantee of a minimum number of payments nor a provision for
a Death Benefit payable to a Beneficiary.
 
    It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the date of the third Annuity payment, etc.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                               19
- --------------------------------------------------------------------------------
 
OPTION 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Certain
 
    This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments have
been made for less than the minimum elected number of months, then the present
value as of the date of the Annuitant's death, of any remaining guaranteed
payments will be paid in one sum to the Beneficiary or Beneficiaries designated
unless other provisions have been made and approved by Hartford.
 
OPTION 3 -- Joint and Last Survivor Annuity
 
    An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford, the Annuitant may elect that
the payment to the survivor be less than the payment made during the joint
lifetime of the Annuitant and a designated second person.
 
    It would be possible under this option for an Annuitant and designated
second person to receive only one payment in the event of the common or
simultaneous death of the parties prior to the due date for the second payment
and so on.
 
OPTION 4 -- Payments for a Designated Period
 
    An amount payable monthly for the number of years selected which may be from
5 to 30 years. Under this option, you may, at any time, surrender the Contract
and receive, within seven days, the Termination Value of the Contract as
determined by Hartford.
 
    In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and approved by
Hartford.
 
    Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Contracts thus provide no real benefit to a Contract Owner.
 
   
DEATH BENEFIT PAYMENT OPTION
    
 
   
OPTION 5 -- Annuity Proceeds Settlement Option
    
 
   
    This option is available to a Beneficiary who opts to receive the Death
Benefit as annuity payments rather than as a lump sum. These Death Benefit
proceeds may be left with Hartford for a period not to exceed five years from
the date of the Contract Owner's death prior to the Annuity Commencement Date.
The proceeds will remain in the Sub-Account(s) to which they were allocated at
the time of death unless the Beneficiary elects to reallocate them. Full or
partial withdrawals may be made at any time. In the event of withdrawals, the
remaining value will equal the Contract Value of the proceeds left with
Hartford, minus any withdrawals.
    
 
    Hartford may offer other annuity options from time to time.
 
    VARIABLE AND FIXED ANNUITY PAYMENTS -- When an Annuity is effected under a
Contract, unless otherwise specified, Contract Values (less applicable Premium
Taxes) held in the Sub-Accounts will be applied to provide a Variable Annuity
based on the pro rata amount in the various Sub-Accounts. Fixed Accumulation
Feature Contract Values will be applied to provide a Fixed Annuity. YOU SHOULD
CONSIDER THE QUESTION OF ALLOCATION OF CONTRACT VALUES (LESS APPLICABLE PREMIUM
TAXES) AMONG SUB-ACCOUNTS OF THE SEPARATE ACCOUNT AND THE GENERAL ACCOUNT OF
HARTFORD TO MAKE CERTAIN THAT ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT
ALTERNATIVE BEST SUITED TO YOUR NEEDS FOR RETIREMENT.
 
    The minimum monthly Annuity payment is $50.00. No election may be made which
results in a first payment of less than $50.00. If at any time Annuity payments
are or become less than $50.00, Hartford has the right to change the frequency
of payment to intervals that will result in payments of at least $50.00. For New
York Contracts, the minimum monthly Annuity payment is $20.00.
 
    When Annuity payments are to commence, the value of the Contract is
determined as the sum of (1) the value of the Fixed Accumulation Feature no
earlier than the close of business on the fifth Valuation Day preceding the date
the first Annuity payment is due plus (2) the product of (a) the value of the
Accumulation Unit of each Sub-Account on that same day and (b) the number of
Accumulation Units credited to each Sub-Account as of the date the Annuity is to
commence.
 
    The first payment under any option should be made on the 15th day of the
month immediately following approval of the claim for settlement. Subsequent
payments shall be made on the 15th day of each subsequent month in accordance
with the manner of payment selected.
 
    VARIABLE ANNUITY -- The Contract contains tables indicating the minimum
dollar amount of the first monthly payment under the optional variable forms of
Annuity for each $1,000 of value of a Sub-Account under a Contract. The first
monthly payment varies according to the form and type of Variable Payment
Annuity selected. The Contract contains Variable Payment Annuity tables derived
from the 1983a Individual Annuity Mortality Table with ages set back one year
and with an assumed investment rate ("A.I.R.") of 5% per annum. The total first
monthly Variable Annuity payment is determined by multiplying the value
(expressed in thousands of dollars) of a Sub-Account (less any applicable
Premium Taxes) by the amount of the first monthly payment per $1,000 of value
obtained from the tables in the Contracts.
<PAGE>
20                                               HARTFORD LIFE INSURANCE COMPANY
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    The amount of the first monthly Variable Annuity payment is divided by the
value of an Annuity Unit for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due in order to determine the number of Annuity Units represented by
the first payment. This number of Annuity Units remains fixed during the Annuity
payment period, and in each subsequent month the dollar amount of the Variable
Annuity payment is determined by multiplying this fixed number of Annuity Units
by the then current Annuity Unit value.
 
    The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by the
product of (1) the net investment factor for the day for which the Annuity Unit
value is being calculated, and (2) a factor to neutralize the assumed investment
rate of 5.00% per annum. The Annuity Unit value used in calculating the amount
of the Variable Annuity payments will be based on an Annuity Unit value
determined as of the close of business on a day no earlier than the fifth
Valuation Day preceding the date of the Annuity payment.
 
    LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP OR DOWN
AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
 
    FIXED ANNUITY -- Fixed Annuity payments are determined at annuitization by
multiplying the Contract Value (less applicable Premium Taxes) by a rate to be
determined by Hartford which is no less than the rate specified in the Fixed
Payment Annuity tables in the Contract. The Annuity payment will remain level
for the duration of the Annuity.
 
                               OTHER INFORMATION
 
    ASSIGNMENT -- Ownership of a Contract described herein is generally
assignable. However, if the Contracts are issued pursuant to some form of
Qualified Plan, it is possible that the ownership of the Contracts may not be
transferred or assigned depending on the type of tax-qualified retirement plan
involved. An assignment of a Non-Qualified Contract may subject the Contract
values or assignment proceeds to income taxes and certain penalty taxes.
 
    CONTRACT MODIFICATION -- The Annuitant may not be changed; however, the
Contingent Annuitant may be changed at any time prior to the Annuity
Commencement Date by written notice to the Company.
 
   
    Subject to approval of the Commission, the Separate Account may contain
assets of other variable annuity and variable life contracts. In addition,
Hartford reserves the right to modify the Contract, but only if such
modification: (i) is necessary to make the Contract or the Separate Account
comply with any law or regulation issued by a governmental agency to which
Hartford is subject; or (ii) is necessary to assure continued qualification of
the Contract under the Code or other federal or state laws relating to
retirement annuities or annuity Contracts; or (iii) is necessary to reflect a
change in the operation of the Separate Account or the Sub-Account(s) or (iv)
provides additional Separate Account options or (v) withdraws Separate Account
options. In the event of any such modification Hartford will provide notice to
the Contract Owner or to the payee(s) during the Annuity period. Hartford may
also make appropriate endorsement in the Contract to reflect such modification.
    
 
                           FEDERAL TAX CONSIDERATIONS
 
  A. GENERAL
 
    SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE, OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT DESCRIBED
HEREIN.
 
    It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Contracts cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. The discussion
here and in Appendix I, commencing on page 26, is based on Hartford's
understanding of existing federal income tax laws as they are currently
interpreted.
 
  B. TAXATION OF HARTFORD AND
     THE SEPARATE ACCOUNT
 
    The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units. As a result, such investment income and
realized capital gains are automatically applied to increase reserves under the
Contract.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                               21
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    No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Contracts.
 
  C. TAXATION OF ANNUITIES -- GENERAL
     PROVISIONS AFFECTING PURCHASERS OTHER
     THAN QUALIFIED RETIREMENT PLANS
 
    Section 72 of the Code governs the taxation of annuities in general.
 
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
 
    Section 72 contains provisions for Contract Owners which are non-natural
persons. Non-natural persons include corporations, trusts, and partnerships. The
annual net increase in the value of the Contract is currently includable in the
gross income of a non-natural person unless the non-natural person holds the
Contract as an agent for a natural person. There is an exception from current
inclusion for certain annuities held in tax-qualified retirement arrangements,
certain annuities held by structured settlement companies, certain annuities
held by an employer with respect to a terminated tax-qualified retirement plan
and certain immediate annuities. A non-natural person which is a tax-exempt
entity for federal tax purposes will not be subject to income tax as a result of
this provision.
 
    If the Contract Owner is not an individual, the primary Annuitant shall be
treated as the Contract Owner for purposes of making distributions which are
required to be made upon the death of the Contract Owner. If there is a change
in the primary Annuitant, such change shall be treated as the death of the
Contract Owner.
 
2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
 
    A Contract Owner is not taxed on increases in the value of the Contract
until an amount is received or deemed received, e.g., in the form of a lump sum
payment (full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
 
    The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other annuity
contracts or life insurance contracts which were purchased prior to August 14,
1982.
 
 A. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
 
i.  Total premium payments less amounts received which were not includable in
    gross income equal the "investment in the contract" under Section 72 of the
    Code.
 
ii.  To the extent that the value of the Contract (ignoring any surrender
    charges except on a full surrender) exceeds the "investment in the
    contract," such excess constitutes the "income on the contract."
 
iii. Any amount received or deemed received prior to the Annuity Commencement
    Date (e.g., upon a partial surrender) is deemed to come first from any such
    "income on the contract" and then from "investment in the contract," and for
    these purposes such "income on the contract" shall be computed by reference
    to any aggregation rule in subparagraph 2.c., below. As a result, any such
    amount received or deemed received (1) shall be includable in gross income
    to the extent that such amount does not exceed any such "income on the
    contract," and (2) shall not be includable in gross income to the extent
    that such amount does exceed any such "income on the contract." If at the
    time that any amount is received or deemed received there is no "income on
    the contract" (e.g., because the gross value of the Contract does not exceed
    the "investment in the contract" and no aggregation rule applies), then such
    amount received or deemed received will not be includable in gross income,
    and will simply reduce the "investment in the contract."
 
iv.  The receipt of any amount as a loan under the Contract or the assignment or
    pledge of any portion of the value of the Contract shall be treated as an
    amount received for purposes of this subparagraph a. and the next
    subparagraph b.
 
v.  In general, the transfer of the Contract, without full and adequate
    consideration, will be treated as an amount received for purposes of this
    subparagraph a. and the next subparagraph b. This transfer rule does not
    apply, however, to certain transfers of property between spouses or incident
    to divorce.
 
 B. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
 
    Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
 
i.  When the total of amounts excluded from income by application of the
    exclusion ratio is equal to the investment in the contract as of the Annuity
    Commencement Date, any additional payments (including surrenders) will be
    entirely includable in gross income.
 
ii.  If the annuity payments cease by reason of the death of the Annuitant and,
    as of the date of death, the amount of annuity payments excluded from gross
    income by the exclusion ratio does not exceed the investment in the contract
    as of the Annuity Commencement Date, then the remaining portion of
    unrecovered investment shall be allowed as a deduction for the last taxable
    year of the Annuitant.
<PAGE>
22                                               HARTFORD LIFE INSURANCE COMPANY
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iii. Generally, nonperiodic amounts received or deemed received after the
    Annuity Commencement Date are not entitled to any exclusion ratio and shall
    be fully includable in gross income. However, upon a full surrender after
    such date, only the excess of the amount received (after any surrender
    charge) over the remaining "investment in the contract" shall be includable
    in gross income (except to the extent that the aggregation rule referred to
    in the next subparagraph c. may apply).
 
 C. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
 
    Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year (other than
certain contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity Contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new Contract for this
purpose. Hartford believes that for any annuity subject to such aggregation, the
values under the Contracts and the investment in the contracts will be added
together to determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement Date. Withdrawals
will first be treated as withdrawals of income until all of the income from all
such Contracts is withdrawn. As of the date of this Prospectus, there are no
regulations interpreting this provision.
 
 D. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY PAYMENTS.
 
i.  If any amount is received or deemed received on the Contract (before or
    after the Annuity Commencement Date), the Code applies a penalty tax equal
    to ten percent of the portion of the amount includable in gross income,
    unless an exception applies.
 
ii.  The 10% penalty tax will not apply to the following distributions
    (exceptions vary based upon the precise plan involved):
 
    1.  Distributions made on or after the date the recipient has attained the
        age of 59 1/2.
 
    2  .Distributions made on or after the death of the holder or where the
        holder is not an individual, the death of the primary annuitant.
 
    3.  Distributions attributable to a recipient's becoming disabled.
 
    4.  A distribution that is part of a scheduled series of substantially equal
        periodic payments for the life (or life expectancy) of the recipient (or
        the joint lives or life expectancies of the recipient and the
        recipient's Beneficiary).
 
    5.  Distributions of amounts which are allocable to the "investment in the
        contract" prior to August 14, 1982 (see next subparagraph e.).
 
 E. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE EXCHANGE
    OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO AUGUST 14,
    1982.
 
    If the Contract was obtained by a tax-free exchange of a life insurance or
annuity contract purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be deemed to come
(1) first from the amount of the "investment in the contract" prior to August
14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2)
then from the portion of the "income on the contract" (carried over to, as well
as accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income. In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange Contracts are generally subject to the rules described in this
subparagraph 3.
 
 F. REQUIRED DISTRIBUTIONS
 
i.  Death of Contract Owner or Primary Annuitant
 
    Subject to the alternative election or spouse beneficiary provisions in ii
    or iii below:
 
    1.  If any Contract Owner dies on or after the Annuity Commencement Date and
        before the entire interest in the Contract has been distributed, the
        remaining portion of such interest shall be distributed at least as
        rapidly as under the method of distribution being used as of the date of
        such death;
 
    2.  If any Contract Owner dies before the Annuity Commencement Date, the
        entire interest in the Contract will be distributed within 5 years after
        such death; and
 
    3.  If the Contract Owner is not an individual, then for purposes of 1. or
        2. above, the primary annuitant under the Contract shall be treated as
        the Contract Owner, and any change in the primary annuitant shall be
        treated as the death of the Contract Owner. The primary annuitant is the
        individual, the events in the life of whom are of primary
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                               23
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        importance in affecting the timing or amount of the payout under the
        Contract.
 
ii.  Alternative Election to Satisfy Distribution
    Requirements
 
    If any portion of the interest of a Contract Owner described in i. above is
    payable to or for the benefit of a designated beneficiary, such beneficiary
    may elect to have the portion distributed over a period that does not extend
    beyond the life or life expectancy of the beneficiary. The election and
    payments must begin within a year of the death.
 
iii. Spouse Beneficiary
 
    If any portion of the interest of a Contract Owner is payable to or for the
    benefit of his or her spouse, and the Annuitant or Contingent Annuitant is
    living, such spouse shall be treated as the Contract Owner of such portion
    for purposes of section i. above.
 
3. DIVERSIFICATION REQUIREMENTS.
 
    Section 817 of the Code provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified
in accordance with regulations prescribed by the Treasury Department. If a
Contract is not treated as an annuity contract, the Contract Owner will be
subject to income tax on the annual increases in cash value.
 
    The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
 
    A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of contract income on an ongoing basis. However, either the company or
the Contract Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
 
    Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford intends
to administer all contracts subject to the diversification requirements in a
manner that will maintain adequate diversification.
 
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
 
    In order for a variable annuity contract to qualify for tax deferral, assets
in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable contract
owner for tax purposes. The Internal Revenue Service ("IRS") has issued several
rulings which discuss investor control. The IRS has ruled that certain incidents
of ownership by the contract owner, such as the ability to select and control
investments in a separate account, could cause the contract owner to be treated
as the owner of the assets for tax purposes.
 
    Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
Prospectus, no other such guidance has been issued. Further, Hartford does not
know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Contract Owner could be considered the owner of
the assets for tax purposes. Hartford reserves the right to modify the
contracts, as necessary, to prevent Contract Owners from being considered the
owners of the assets in the separate accounts.
 
  D. FEDERAL INCOME TAX WITHHOLDING
 
    The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of the
Code. The application of this provision is summarized below:
<PAGE>
24                                               HARTFORD LIFE INSURANCE COMPANY
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1. NON-PERIODIC DISTRIBUTIONS.
    The portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding unless the recipient elects
not to have taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal income
tax. Election forms will be provided at the time distributions are requested. If
the necessary election forms are not submitted to Hartford, Hartford will
automatically withhold 10% of the taxable distribution.
 
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
   YEAR).
 
    The portion of a periodic distribution which constitutes taxable income will
be subject to federal income tax withholding as if the recipient were married
claiming three exemptions, unless the recipient elects otherwise. A recipient
may elect not to have income taxes withheld or to have income taxes withheld at
a different rate by providing a completed election form. Election forms will be
provided at the time distributions are requested.
  E. GENERAL PROVISIONS AFFECTING
     TAX-QUALIFIED RETIREMENT PLANS
 
    The Contract may be used for a number of tax-qualified retirement plans. If
the Contract is being purchased with respect to some form of tax-qualified
retirement plan, please refer to Appendix I commencing on page 26 for
information relative to the types of plans for which it may be used and the
general explanation of the tax features of such plans.
 
  F. ANNUITY PURCHASES BY NONRESIDENT
    ALIENS AND FOREIGN CORPORATIONS
 
    The discussion above provides general information regarding U.S. federal
income tax consequences to annuity purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on annuity distributions at a
30% rate, unless a lower treaty rate applies. In addition, purchasers may be
subject to state premium tax, other state and/or municipal taxes, and taxes that
may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax advisor
regarding U.S., state, and foreign taxation with respect to an annuity purchase.
 
                                 MISCELLANEOUS
 
                             HOW CONTRACTS ARE SOLD
 
    Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is a wholly-owned subsidiary of Hartford. The principal business address of HSD
is the same as that of Hartford.
 
   
    The securities will be sold by salespersons of HSD who represent Hartford as
insurance and variable annuity agents and who are registered representatives of
broker-dealers who have entered into distribution agreements with HSD.
    
 
   
    HSD is registered with the Commission under the Securities Exchange Act of
1934 as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc.
    
 
                           LEGAL MATTERS AND EXPERTS
 
    There are no material legal proceedings pending to which the Separate
Account is a party.
 
   
    Counsel with respect to federal laws and regulations applicable to the issue
and sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
General Counsel, Hartford Life, P.O. Box 2999, Hartford, Connecticut 06104-2999.
    
 
   
    The audited consolidated financial statements and financial statement
schedules included in this Prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
reports. Reference is made to said reports on the consolidated financial
statements of Hartford Life Insurance Company (the Depositor), which includes an
explanatory paragraph with respect to the change in method of accounting for
debt and equity securities as of January 1, 1994, as discussed in Note 2 of
Notes of Consolidated Financial Statements. The principal business address of
Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
    
 
                             ADDITIONAL INFORMATION
 
    Inquiries will be answered by calling your representative or by writing:
Hartford Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, Connecticut 06102-5085.
 
Telephone: (800) 862-6668 (Contract Owners)
          (800) 862-7155 (Investment Representatives)
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                               25
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                                   APPENDIX I
              INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
 
    The tax rules applicable to tax qualified contract owners, including
restrictions on contributions and distributions, taxation of distributions and
tax penalties, vary according to the type of plan as well as the terms and
conditions of the plan itself. Various tax penalties may apply to contributions
in excess of specified limits, to distributions in excess of specified limits,
distributions which do not satisfy certain requirements and certain other
transactions with respect to qualified plans. Accordingly, this summary provides
only general information about the tax rules associated with use of the Contract
by a qualified plan. Contract owners, plan participants and beneficiaries are
cautioned that the rights and benefits of any person to benefits are controlled
by the terms and conditions of the plan regardless of the terms and conditions
of the Contract. Some qualified plans are subject to distribution and other
requirements which are not incorporated into Hartford's administrative
procedures. Owners, participants, and beneficiaries are responsible for
determining that contributions, distributions and other transactions comply with
applicable law. Because of the complexity of these rules, owners, participants
and beneficiaries are encouraged to consult their own tax advisors as to
specific tax consequences.
 
  A. TAX-QUALIFIED PENSION OR
     PROFIT-SHARING PLANS
 
    Provisions of the Code permit eligible employers to establish tax-qualified
pension or profit sharing plans (described in Section 401(a) and 401(k), if
applicable, and exempt from taxation under Section 501(a) of the Code), and
Simplified Employee Pension Plans (described in Section 408(k)). Such plans are
subject to limitations on the amount that may be contributed, the persons who
may be eligible and the time when distributions must commence. Employers
intending to use these contracts in connection with such plans should seek
competent tax and other legal advice.
 
  B. TAX SHELTERED ANNUITIES
     UNDER SECTION 403(B)
 
   
    Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations specified
in Section 501(c)(3) of the Code to purchase annuity contracts, and, subject to
certain limitations, exclude such contributions from gross income. Generally,
such contributions may not exceed the lesser of $10,000 (indexed) or 20% of the
employees "includable compensation" for his most recent full year of employment,
subject to other adjustments. Special provisions may allow some employees to
elect a different overall limitation.
    
 
    Tax-sheltered annuity programs under Section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT unless such
distribution is made:
 
(1) after the participating employee attains age 59 1/2;
 
(2) upon separation from service;
 
(3) upon death or disability; or
 
(4) in the case of hardship (and in the case of hardship, any income
    attributable to such contributions may not be distributed).
 
    Generally, the above restrictions do not apply to distributions attributable
to cash values or other amounts held under a Section 403(b) contract as of
December 31, 1988.
 
  C. DEFERRED COMPENSATION PLANS
     UNDER SECTION 457
 
   
    Employees and independent contractors performing services for eligible
governmental or other tax-exempt employers may have contributions made to
Eligible Deferred Compensation Plans of their employers in accordance with the
employer's plan and Section 457 of the Code. Section 457 places limitations on
contributions to Eligible Deferred Compensation Plans maintained by a State or
other tax-exempt organization. ("State" means a State, a political sub-division
of a State, and an agency or instrumentality of a State or political
sub-division of a State.) Generally, the limitation is 33 1/3% of includable
compensation (typically 25% of gross compensation) or $8,000 (indexed),
whichever is less. Such a plan may also provide for additional "catch-up"
deferrals during the three taxable years ending before a participant attains
normal retirement age.
    
 
    An employee electing to participate in an Eligible Deferred Compensation
Plan should understand that his or her rights and benefits are governed strictly
by the terms of the plan and that the employer is the legal owner of any
contract issued with respect to the plan. The employer, as owner of the
contract(s), retains all voting and redemption rights which may accrue to the
contract(s) issued with respect to the plan. The participating employee should
look to the terms of his or her plan for any charges in regard to participating
therein other than those disclosed in this Prospectus. Participants should also
be aware that effective
<PAGE>
26                                               HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
   
August 20, 1996, the Small Business Job Protection Act of 1996 requires that all
assets and income of an Eligible Deferred Compensation Plan established by a
governmental employer which is a State, a political subdivision of a State, or
any agency or instrumentality of a State or political subdivision of a State,
must be held in trust (or under certain specified annuity contracts or custodial
accounts) for the exclusive benefit of Participants and their Beneficiaries.
Special transition rules apply to such governmental Eligible Deferred
Compensation Plans already in existence on August 20, 1996, and provide that
such plans need not establish a trust before January 1, 1999. However, this
requirement of a trust does not apply to amounts under an Eligible Deferred
Compensation Plan of a tax-exempt (non-governmental) organization and such
amounts will be subject to the claims of such tax-exempt employer's general
creditors.
    
 
    In general, distributions from an Eligible Deferred Compensation Plan are
prohibited under Section 457 of the Code unless made after the participating
employee attains age 70 1/2, separates from service, dies, or suffers an
unforeseeable financial emergency. Present federal tax law does not allow
tax-free transfers or rollovers for amounts accumulated in a Section 457 plan
except for transfers to other Section 457 plans in limited cases.
 
  D. INDIVIDUAL RETIREMENT ANNUITIES
     UNDER SECTION 408
 
    Section 408 of the Code permits eligible individuals to establish individual
retirement programs through the purchase of Individual Retirement Annuities
("IRAs"). IRAs are subject to limitations on the amount that may be contributed,
the contributions that may be deducted from gross income, the persons who may be
eligible and the time when distributions may commence. Also, distributions from
certain qualified plans may be "rolled-over" on a tax-deferred basis into an
IRA.
 
    IRAs generally may not invest in life insurance contracts. However, an
annuity that is used as an IRA may provide a death benefit that equals the
greater of the premiums paid and the annuity's cash value. The Contract offers
an enhanced Death Benefit that may exceed the greater of the Contract Value and
total Premium Payments less prior surrenders. For Contracts issued in most
states, Hartford has obtained approval from the Internal Revenue Service to use
the Contract as an IRA. For Contracts issued in New York, Hartford has asked the
Internal Revenue Service to approve use of the Contract as an IRA, but there is
no assurance that approval will be granted.
 
    Special rollover rules apply to SIMPLE IRAs. Amounts can be rolled over from
one SIMPLE IRA to another SIMPLE IRA. However, amounts can be rolled over from a
SIMPLE IRA to a regular IRA only after two years have expired since the
participant first commenced participation in the SIMPLE IRA. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a regular IRA.
 
    Effective after December 31, 1997, the Contract can be offered as ROTH IRAs
under Section 408A of the Code. Contributions to a ROTH IRA are not deductible.
Subject to special limitations, a distribution from a regular IRA may be rolled
over to a ROTH IRA. However, a rollover to a ROTH IRA is not excludable from
gross income. If certain specified conditions are met, qualified distributions
from a ROTH IRA are tax-free.
 
  E. TAX PENALTIES
 
    Distributions from retirement plans are generally taxed under Section 72 of
the Code. Under these rules, a portion of each distribution may be excludable
from income. The excludable amount is the portion of the distribution which
bears the same ratio as the after-tax contributions bear to the expected return.
 
1. PREMATURE DISTRIBUTION
 
   
    Distributions from an IRA or a qualified plan before the Participant attains
age 59 1/2 are generally subject to an additional tax equal to 10% of the
taxable portion of the distribution. The 10% penalty does not apply to
distributions made after the employee's death, on account of disability, for
eligible medical expenses and distributions in the form of a life annuity and,
except in the case of an IRA, certain distributions after separation from
service after age 55. For these purposes, "life annuity" means a scheduled
series of substantially equal periodic payments for the life or life expectancy
of the Participant (or the joint lives or life expectancies of the Participant
and Beneficiary).
    
 
    In addition, effective for distributions made from an IRA after December 31,
1997, there is no such penalty tax on distributions that do not exceed the
amount of certain qualifying higher education expenses, as defined by Section
72(t)(7) of the Code, or which are qualified first-time home buyer distributions
meeting the requirements of Section 72(t)(8) of the Code.
 
    If you are a participant in a SIMPLE IRA plan, you should be aware that the
10% penalty tax described above is increased to 25% with respect to non-exempt
premature distributions made from your SIMPLE IRA during the first two years
following the date you first commenced participation in any SIMPLE IRA plan of
your employer.
 
2. MINIMUM DISTRIBUTION TAX
 
    If the amount distributed is less than the minimum required distribution for
the year, the Participant is subject to a 50% tax on the amount that was not
properly distributed.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY                                               27
- --------------------------------------------------------------------------------
 
    An individual's interest in a tax-qualified retirement plan must generally
be distributed, or begin to be distributed, not later than April 1 of the
calendar year following the later of (i) the calendar year in which the
individual attains age 70 1/2 or (ii) the calendar year in which the individual
retires from service with the employer sponsoring the plan ("required beginning
date"). However, the required beginning date for an individual who is a five (5)
percent owner (as defined in the Code), or who is the owner of an IRA, is April
1 of the calendar year following the calendar year in which the individual
attains age 70 1/2. The entire interest of the Participant must be distributed
beginning no later than this required beginning date over a period which may not
extend beyond a maximum of the life expectancy of the Participant and a
designated Beneficiary. Each annual distribution must equal or exceed a "minimum
distribution amount" which is determined by dividing the account balance by the
applicable life expectancy. This account balance is generally based upon the
account value as of the close of business on the last day of the previous
calendar year. In addition, minimum distribution incidental benefit rules may
require a larger annual distribution.
 
    If an individual dies before reaching his or her required beginning date,
the individual's entire interest must generally be distributed within five years
of the individual's death. However, this rule will be deemed satisfied, if
distributions begin before the close of the calendar year following the
individual's death to a designated Beneficiary (or over a period not extending
beyond the life expectancy of the beneficiary). If the Beneficiary is the
individual's surviving spouse, distributions may be delayed until the individual
would have attained age 70 1/2.
 
    If an individual dies after reaching his or her required beginning date or
after distributions have commenced, the individual's interest must generally be
distributed at least as rapidly as under the method of distribution in effect at
the time of the individual's death.
 
3. EXCESS DISTRIBUTION TAX
 
    If the aggregate distributions from all IRAs and certain other tax-qualified
retirement plans in a calendar year exceed the greater of (i) $150,000, or (ii)
$112,500 as indexed for inflation, a penalty tax of 15% is generally imposed on
the excess portion of the distribution.
 
4. WITHHOLDING
 
    In general, distributions from IRAs and plans described in Section 457 of
the Code are subject to regular wage withholding rules.
 
    Periodic distributions from other tax-qualified retirement plans that are
made for a specified period of ten or more years or for the life or life
expectancy of the Participant (or the joint lives or life expectancies of the
Participant and the Beneficiary) are generally subject to federal income tax
withholding as if the recipient were married claiming three exemptions, unless
the recipient elects otherwise. The recipient of periodic distributions may
generally elect not to have withholding apply or to have income taxes withheld
at a different rate by providing a completed election form.
 
    Other distributions from such other tax-qualified retirement plans are
generally subject to mandatory income tax withholding at the flat rate of 20%,
unless such distributions are:
 
(a) the non-taxable portion of the distribution;
 
(b) required minimum distributions; or
 
(c) direct transfer distributions.
 
    Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Section 401(a)(31) of the Code.
<PAGE>
28                                               HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
                               TABLE OF CONTENTS
                                       TO
                      STATEMENT OF ADDITIONAL INFORMATION
 
<TABLE>
<CAPTION>
 SECTION                                                                 PAGE
 ----------------------------------------------------------------------  ----
 <S>                                                                     <C>
 INTRODUCTION..........................................................
 DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY........................
 SAFEKEEPING OF ASSETS.................................................
 INDEPENDENT PUBLIC ACCOUNTANTS........................................
 DISTRIBUTION OF CONTRACTS.............................................
 CALCULATION OF YIELD AND RETURN.......................................
 PERFORMANCE COMPARISONS...............................................
 FINANCIAL STATEMENTS..................................................
</TABLE>
 
<PAGE>
This form must be completed for all tax sheltered annuities.
 
                     SECTION 403(B)(11) ACKNOWLEDGMENT FORM
 
    The Hartford variable annuity Contract which you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1988 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
 
    a. attained age 59 1/2,
 
    b. separated from service,
 
    c. died, or
 
    d. become disabled.
 
Distributions of post December 31, 1988 contributions (excluding any income
thereon) may also be made if you have experienced a financial hardship.
 
Also, there may be a 10% penalty tax for distributions made prior to age 59 1/2
because of financial hardship or separation from service.
 
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford variable annuity. Please refer to your
Plan.
 
    Please complete the following and return to:
 
    Hartford Life Insurance Company
    Individual Annuity Services
    P.O. Box 5085
    Hartford, CT 06102-5085
 
Name of Contract Owner/Participant
- -------------------------------------------------------------------------
 
Address
- --------------------------------------------------------------------------------
 
City or Plan/School District
- --------------------------------------------------------------------------------
 
Date:
- --------------------------------------------------------------------------------
 
Contract No:
- --------------------------------------------------------------------------------
 
Signature:
- --------------------------------------------------------------------------------
 
<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 Nations Variable
Annuity to me at the following address:
    
 
- ----------------------------------------------------
                            Name
 
- ------------------------------------------------------------
                          Address
 
- ------------------------------------------------------------
    City/State                                        Zip
Code
<PAGE>

                                        PART B

                         STATEMENT OF ADDITIONAL INFORMATION

                           HARTFORD LIFE INSURANCE COMPANY
                                 SEPARATE ACCOUNT TWO


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


To obtain a Prospectus, send a written request to Hartford Life Insurance
Company Attn: Individual Annuity Services, P.O. Box 5085, Hartford, CT
06102-5085.




   
Date of Prospectus: March 16, 1998

Date of Statement of Additional Information: March 16, 1998
    

<PAGE>

                                       2

                                  TABLE OF CONTENTS



SECTION                                                         PAGE

INTRODUCTION .................................................

DESCRIPTION OF HARTFORD LIFE  INSURANCE COMPANY ..............

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

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

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

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

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

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

<PAGE>
                                       3

                                     INTRODUCTION

The individual and group tax-deferred variable annuity Contracts described in 
the Prospectus are designed to provide Annuity benefits to individuals who 
have established or wish to establish retirement programs which may or may 
not qualify for special federal income tax treatment.  The Annuitant under 
these Contracts may receive Annuity benefits in accordance with the Annuity 
option selected and the retirement program, if any, under which the Contracts 
have been purchased.  Annuity payments under a Contract will begin on a 
particular future date which may be selected at any time under the Contract 
or automatically when the Annuitant reaches age 90.  There are several 
alternative annuity payment options available under the Contract (see 
"Optional Annuity Forms," commencing on page __).

   
The Premium Payments under a Contract, less any applicable Premium Taxes, 
will be applied to the Separate Account and/or the Fixed Accumulation Feature.  
Accordingly, the net Premium Payment under the Contract will be applied to 
purchase interests in one or more of the Nations Balanced Assets Portfolio, 
Nations Disciplined Equity Portfolio, Nations International Growth Portfolio, 
Nations Managed Index Portfolio, Nations Managed SmallCap Index Portfolio, 
Nations Value Portfolio, Nations Marsico Growth & Income Portfolio, Nations 
Marsico Focused Equities Portfolio, Hartford Advisers Fund, Hartford Bond 
Fund, Hartford Capital Appreciation Fund, Hartford Dividend and Growth Fund, 
HVA Money Market Fund, Hartford International Opportunities Fund, Hartford
Small Company Fund, and Hartford Stock Fund.
    

Shares of the Funds are purchased by the Separate Account without the 
imposition of a sales charge.  The value of a Contract depends on the value 
of the shares of the Fund held by the Separate Account pursuant to that 
Contract.  As a result, the Contract Owner bears the investment risk since 
market value of the shares may increase or decrease.



The Contracts provide that in the event the Annuitant dies before the 
selected Annuity Commencement Date, the Contingent Annuitant will become the 
Annuitant. If the Annuitant dies before the Annuity Commencement Date and 
there is no designated Contingent Annuitant, or the Contingent Annuitant 
predeceases the Annuitant, or if the Contract Owner dies before the Annuity 
Commencement Date the Beneficiary will receive the Contract Value determined 
on the date of receipt of due proof of death by Hartford Life Insurance 
Company ("Hartford") at the Home Office.  If, upon death prior to the Annuity 
Commencement Date,  the Annuitant or Contract Owner, as applicable, had not 
attained his 90th birthday, the Beneficiary will receive the greater of (a) 
the Contract Value determined as of the day Hartford receives written due 
proof of death of such person, or (b) 100% of the total Premium Payments made 
to such Contract, reduced by any prior surrenders, or (c) the Maximum 
Anniversary Value immediately preceding the date of death established up to 
age 80, adjusted for additions and surrenders. (See "Death Benefits" 
commencing on page        of the Prospectus). 

<PAGE>
                                       4

                  DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY

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

<TABLE>
<CAPTION>

                                   HARTFORD RATINGS

RATING AGENCY                   EFFECTIVE       RATING       BASIS OF RATING
                              DATE OF RATING 
- ---------------------------------------------------------------------------------------
 <S>                             <C>             <C>          <C>

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


                                SAFEKEEPING OF ASSETS

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

                            INDEPENDENT PUBLIC ACCOUNTANTS

   
The audited consolidated financial statements and financial statement 
schedules included in this Statement of Additional Information and elsewhere 
in the registration statement have been audited by Arthur Andersen LLP, 
independent public accountants, as indicated in their report with respect 
thereto, and are included herein in reliance upon the authority of said firm 
as experts in giving said report. Reference is made to said reports on the 
consolidated financial statements of Hartford Life Insurance Company (the 
Depositor), which includes an explanatory paragraph with respect to the 
change in method of accounting for debt and equity securities as of January 
1, 1994, as discussed in Note 2 of Notes of Consolidated Financial Statements.
    

<PAGE>
                                       5

   
The principal business address of Arthur Andersen LLP is One Financial Plaza, 
Hartford, Connecticut 06103.
    


                              DISTRIBUTION OF CONTRACTS

Hartford Securities Distribution Company, Inc. ("HSD") serves as principal
underwriter for the securities issued with respect to the Separate Account and
will offer the Contracts on a continuous basis.

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

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

HSD is registered with the Securities and Exchange Commission under the
Securities and Exchange Act of 1934 as a Broker-Dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD").


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

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

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


<PAGE>
                                       6

   
THE MONEY MARKET FUND SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY IN
RESPONSE TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE
SUB-ACCOUNT.
    


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

The yield reflects recurring charges on the Separate Account level, including
the annual policy fee.

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

<PAGE>
                                       7
Example:

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

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

   
AT ANY TIME IN THE FUTURE, YIELDS AND TOTAL RETURN MAY BE HIGHER OR LOWER THAN
PAST YIELDS AND THERE CAN BE NO ASSURANCE THAT ANY HISTORICAL RESULTS WILL
CONTINUE.
    

CALCULATION OF TOTAL RETURN.  As summarized in the Prospectus under the 
heading "Performance Related Information," total return is a measure of the 
change in value of an investment in a Sub-Account over the period covered.  
The formula for total return used herein includes three steps: (1) 
calculating the value of the hypothetical initial investment of $1,000 as of 
the end of the period by multiplying the total number of units owned at the 
end of the period by the unit value per unit on the last trading day of the 
period; (2) assuming redemption at the end of the period and deducting any 
applicable contingent deferred sales charge and (3) dividing this 

<PAGE>
                                       8
account value for the hypothetical investor by the initial $1,000 
investment and annualizing the result for periods of less than one year.  
Total return will be calculated for one year, five years and ten years or 
some other relevant periods if a Sub-Account has not been in existence for at 
least ten years.

<PAGE>
                                       9

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


                                PERFORMANCE COMPARISONS

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

The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market 

<PAGE>
                                       10


performance.  The Standard & Poor's Composite Index of 500 Stocks (the "S&P 
500") is a market value-weighted and unmanaged index showing the changes in 
the aggregate market value of 500 stocks relative to the base period 1941-43. 
The S&P 500 is composed almost entirely of common stocks of companies listed 
on the New York Stock Exchange, although the common stocks of a few companies 
listed on the American Stock Exchange or traded over-the-counter are 
included.  The 500 companies represented include about 400 industrial, 60 
transportation and 40 financial services concerns.  The S&P 500 represents 
about 80% of the market value of all issues traded on the New York Stock 
Exchange.


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

The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an 
unmanaged index, which includes over 1,000 companies representing the stock 
markets of Europe,  Australia, New Zealand, and the Far East.  The EAFE Index 
is weighted by market capitalization, and therefore, it has a heavy 
representation in countries with large stock markets, such as Japan.

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

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

The Composite Index for Hartford Advisers Fund is comprised of the S&P 500 
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned 
above, and 90 Day U.S. Treasury Bills (10%).

<PAGE>
                                                 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Hartford Life Insurance Company
Separate Account Two and to the
Owners of Units of Interest Therein:
 
We have audited the accompanying statement of assets and liabilities of Hartford
Life Insurance Company Separate Account Two (the Account) as of December 31,
1997, and the related statement of operations for the year then ended and
statements of changes in net assets for each of the two years in the period then
ended. These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hartford Life Insurance Company
Separate Account Two as of December 31, 1997, the results of its operations for
the year then ended and the changes in its net assets for each of the two years
in the period then ended in conformity with generally accepted accounting
principles.
 
                                         ARTHUR ANDERSEN LLP
 
Hartford, Connecticut
February 16, 1998
<PAGE>
                      This page intentionally left blank.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
 Separate Account Two
 
Statement of Assets and Liabilities
December 31, 1997
 
<TABLE>
<CAPTION>
                                                            MONEY
                            BOND FUND      STOCK FUND    MARKET FUND
                           SUB-ACCOUNT    SUB-ACCOUNT    SUB-ACCOUNT
                           ------------  --------------  ------------
<S>                        <C>           <C>             <C>
ASSETS:
Investments:
  Hartford Bond Fund,
   Inc.
    Shares                        233,750,856
    Cost                       $ 239,212,290
    Market Value.........  $245,380,897        --             --
  Hartford Stock Fund,
   Inc.
    Shares                        342,491,362
    Cost                       $1,100,714,577
    Market Value.........       --       $1,754,695,243       --
  HVA Money Market Fund,
   Inc.
    Shares                        267,032,906
    Cost                       $ 267,032,906
    Market Value.........       --             --        $267,032,906
  Hartford Advisers Fund,
   Inc.
    Shares                       1,464,839,883
    Cost                       $2,548,538,776
    Market Value.........       --             --             --
  Hartford Capital
   Appreciation Fund,
   Inc.
    Shares                        393,201,702
    Cost                       $1,191,518,665
    Market Value.........       --             --             --
  Hartford Mortgage
   Securities Fund, Inc.
    Shares                        176,335,636
    Cost                       $ 190,215,927
    Market Value.........       --             --             --
  Hartford Index Fund,
   Inc.
    Shares                        142,876,568
    Cost                       $ 270,370,922
    Market Value.........       --             --             --
  Hartford International
   Opportunities Fund,
   Inc.
    Shares                        303,637,818
    Cost                       $ 352,424,043
    Market Value.........       --             --             --
  Hartford Dividend and
   Growth Fund, Inc.
    Shares                        342,782,937
    Cost                       $ 502,839,651
    Market Value.........       --             --             --
  Due from Hartford Life
   Insurance Company.....       509,273           3,595    34,153,395
  Receivable from fund
   shares sold...........           239      13,285,824             4
                           ------------  --------------  ------------
  Total Assets...........   245,890,409   1,767,984,662   301,186,305
                           ------------  --------------  ------------
LIABILITIES:
  Due to Hartford Life
   Insurance Company.....           240      13,285,750            74
  Payable for fund shares
   purchased.............       509,402           3,595    34,148,202
                           ------------  --------------  ------------
  Total Liabilities......       509,642      13,289,345    34,148,276
                           ------------  --------------  ------------
  Net Assets (variable
   annuity contract
   liabilities)..........  $245,380,767  $1,754,695,317  $267,038,029
                           ------------  --------------  ------------
                           ------------  --------------  ------------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                CAPITAL           MORTGAGE                       INTERNATIONAL      DIVIDEND AND
                           ADVISERS FUND   APPRECIATION FUND   SECURITIES FUND    INDEX FUND   OPPORTUNITIES FUND    GROWTH FUND
                            SUB-ACCOUNT       SUB-ACCOUNT        SUB-ACCOUNT     SUB-ACCOUNT      SUB-ACCOUNT        SUB-ACCOUNT
                           --------------  -----------------   ---------------   ------------  ------------------   -------------
<S>                        <C>             <C>                 <C>               <C>           <C>                  <C>
ASSETS:
Investments:
  Hartford Bond Fund,
   Inc.
    Shares                        233,750,856
    Cost                       $ 239,212,290
    Market Value.........        --              --                 --                --             --                  --
  Hartford Stock Fund,
   Inc.
    Shares                        342,491,362
    Cost                       $1,100,714,577
    Market Value.........        --              --                 --                --             --                  --
  HVA Money Market Fund,
   Inc.
    Shares                        267,032,906
    Cost                       $ 267,032,906
    Market Value.........        --              --                 --                --             --                  --
  Hartford Advisers Fund,
   Inc.
    Shares                       1,464,839,883
    Cost                       $2,548,538,776
    Market Value.........  $3,701,278,316        --                 --                --             --                  --
  Hartford Capital
   Appreciation Fund,
   Inc.
    Shares                        393,201,702
    Cost                       $1,191,518,665
    Market Value.........        --         $1,733,908,230          --                --             --                  --
  Hartford Mortgage
   Securities Fund, Inc.
    Shares                        176,335,636
    Cost                       $ 190,215,927
    Market Value.........        --              --             $191,109,211          --             --                  --
  Hartford Index Fund,
   Inc.
    Shares                        142,876,568
    Cost                       $ 270,370,922
    Market Value.........        --              --                 --           $411,157,188        --                  --
  Hartford International
   Opportunities Fund,
   Inc.
    Shares                        303,637,818
    Cost                       $ 352,424,043
    Market Value.........        --              --                 --                --          $393,046,097           --
  Hartford Dividend and
   Growth Fund, Inc.
    Shares                        342,782,937
    Cost                       $ 502,839,651
    Market Value.........        --              --                 --                --             --             $ 669,224,723
  Due from Hartford Life
   Insurance Company.....         452,648            7,173            99,310          --                 3,770          1,032,701
  Receivable from fund
   shares sold...........             549       13,688,014           142,887        6,849,126          108,721                182
                           --------------  -----------------   ---------------   ------------  ------------------   -------------
  Total Assets...........   3,701,731,513    1,747,603,417       191,351,408      418,006,314      393,158,588        670,257,606
                           --------------  -----------------   ---------------   ------------  ------------------   -------------
LIABILITIES:
  Due to Hartford Life
   Insurance Company.....             434       13,688,077           144,327        6,850,498          109,361                147
  Payable for fund shares
   purchased.............         459,485            7,172            93,430          --                 3,769          1,033,593
                           --------------  -----------------   ---------------   ------------  ------------------   -------------
  Total Liabilities......         459,919       13,695,249           237,757        6,850,498          113,130          1,033,740
                           --------------  -----------------   ---------------   ------------  ------------------   -------------
  Net Assets (variable
   annuity contract
   liabilities)..........  $3,701,271,594   $1,733,908,168      $191,113,651     $411,155,816     $393,045,458      $ 669,223,866
                           --------------  -----------------   ---------------   ------------  ------------------   -------------
                           --------------  -----------------   ---------------   ------------  ------------------   -------------
</TABLE>
 
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
 SEPARATE ACCOUNT TWO
 
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1997
 
<TABLE>
<CAPTION>
                           INTERNATIONAL      SMALL
                           ADVISERS FUND   COMPANY FUND
                            SUB-ACCOUNT    SUB-ACCOUNT
                           -------------   ------------
<S>                        <C>             <C>
ASSETS:
Investments:
  Hartford International
   Advisers Fund, Inc
    Shares                       48,879,214
    Cost                       $56,417,985
    Market Value.........   $57,422,859        --
  Hartford Small Company
   Fund, Inc.
    Shares                       59,385,385
    Cost                       $69,986,701
    Market Value.........       --         $71,393,763
  Hartford MidCap Fund,
   Inc.
    Shares                        8,067,718
    Cost                       $ 8,836,979
    Market Value.........       --             --
  Smith Barney Cash
   Portfolio
    Shares                         507,910
    Cost                       $  507,910
    Market Value.........       --             --
  Smith Barney
   Appreciation Fund
    Shares                          12,256
    Cost                       $   87,371
    Market Value.........       --             --
  Smith Barney Government
   Portfolio
    Shares                          37,076
    Cost                       $   37,076
    Market Value.........       --             --
  BB&T Growth & Income
   Fund
    Shares                         545,238
    Cost                       $ 6,067,937
    Market Value.........       --             --
  AmSouth Equity Income
   Fund
    Shares                         233,814
    Cost                       $ 2,359,717
    Market Value.........       --             --
  Dividend Receivable....       --             --
  Due from Hartford Life
   Insurance Company.....        25,458        175,566
  Receivable from fund
   shares sold...........             9             16
                           -------------   ------------
  Total Assets...........    57,448,326     71,569,345
                           -------------   ------------
LIABILITIES:
  Due to Hartford Life
   Insurance Company.....             8             19
  Payable for fund shares
   purchased.............        25,945        175,691
                           -------------   ------------
  Total Liabilities......        25,953        175,710
                           -------------   ------------
  Net Assets (variable
   annuity contract
   liabilities)..........   $57,422,373    $71,393,635
                           -------------   ------------
                           -------------   ------------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                                    SMITH BARNEY       BB&T          AMSOUTH
                                            SMITH BARNEY         SMITH BARNEY        GOVERNMENT     GROWTH AND       EQUITY
                           MIDCAP FUND     CASH PORTFOLIO      APPRECIATION FUND     PORTFOLIO      INCOME FUND    INCOME FUND
                           SUB-ACCOUNT       SUB-ACCOUNT          SUB-ACCOUNT       SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT
                           -----------   -------------------   -----------------   --------------   -----------   -------------
<S>                        <C>           <C>                   <C>                 <C>              <C>           <C>
ASSETS:
Investments:
  Hartford International
   Advisers Fund, Inc
    Shares                       48,879,214
    Cost                       $56,417,985
    Market Value.........      --             --                    --                 --               --            --
  Hartford Small Company
   Fund, Inc.
    Shares                       59,385,385
    Cost                       $69,986,701
    Market Value.........      --             --                    --                 --               --            --
  Hartford MidCap Fund,
   Inc.
    Shares                        8,067,718
    Cost                       $ 8,836,979
    Market Value.........  $9,173,875         --                    --                 --               --            --
  Smith Barney Cash
   Portfolio
    Shares                         507,910
    Cost                       $  507,910
    Market Value.........      --             $507,912              --                 --               --            --
  Smith Barney
   Appreciation Fund
    Shares                          12,256
    Cost                       $   87,371
    Market Value.........      --             --                   $170,562            --               --            --
  Smith Barney Government
   Portfolio
    Shares                          37,076
    Cost                       $   37,076
    Market Value.........      --             --                    --                $37,076           --            --
  BB&T Growth & Income
   Fund
    Shares                         545,238
    Cost                       $ 6,067,937
    Market Value.........      --             --                    --                 --           $6,477,421        --
  AmSouth Equity Income
   Fund
    Shares                         233,814
    Cost                       $ 2,359,717
    Market Value.........      --             --                    --                 --               --         $2,391,912
  Dividend Receivable....      --                1,205              --                     96           --            --
  Due from Hartford Life
   Insurance Company.....      48,940           26,690              --                 --               11,400          6,464
  Receivable from fund
   shares sold...........           1              162                  120                24           --            --
                           -----------        --------             --------           -------       -----------   -------------
  Total Assets...........   9,222,816          535,969              170,682            37,196        6,488,821      2,398,376
                           -----------        --------             --------           -------       -----------   -------------
LIABILITIES:
  Due to Hartford Life
   Insurance Company.....           1              200                  109                32           --            --
  Payable for fund shares
   purchased.............      48,925           26,757              --                 --               11,401          6,460
                           -----------        --------             --------           -------       -----------   -------------
  Total Liabilities......      48,926           26,957                  109                32           11,401          6,460
                           -----------        --------             --------           -------       -----------   -------------
  Net Assets (variable
   annuity contract
   liabilities)..........  $9,173,890         $509,012             $170,573           $37,164       $6,477,420     $2,391,916
                           -----------        --------             --------           -------       -----------   -------------
                           -----------        --------             --------           -------       -----------   -------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
 Separate Account Two
 
Statement of Assets and Liabilities -- (continued)
December 31, 1997
 
<TABLE>
<CAPTION>
                                                        UNITS
                                                      OWNED BY       UNIT        CONTRACT
                                                    PARTICIPANTS     PRICE      LIABILITY
                                                    -------------  ---------  --------------
DEFERRED ANNUITY CONTRACTS IN THE ACCUMULATION
 PERIOD:
<S>                                                 <C>            <C>        <C>
INDIVIDUAL SUB-ACCOUNTS:
  Bond Fund Qualified 1.00%.......................        276,322  $ 4.084713 $    1,128,696
  Bond Fund Non-Qualified 1.00%...................      1,879,248    4.022607      7,559,476
  Bond Fund 1.25%.................................    111,586,155    2.113753    235,865,570
  Bond Fund .25%..................................         57,428    1.421542         81,636
  Stock Fund Qualified 1.00%......................        848,097    8.882260      7,533,018
  Stock Fund Non-Qualified 1.00%..................      3,172,838    8.493415     26,948,230
  Stock Fund 1.25%................................    372,753,860    4.601624  1,715,273,108
  Stock Fund .25%.................................      1,113,935    2.442242      2,720,499
  Money Market Fund Qualified 1.00%...............        979,465    2.570693      2,517,904
  Money Market Fund Non-Qualified 1.00%...........     12,009,970    2.571915     30,888,622
  Money Market Fund 1.25%.........................    140,796,551    1.650311    232,358,097
  Money Market Fund .25%..........................        412,812    1.237665        510,923
  Advisers Fund Qualified 1.00%...................      3,353,386    5.351192     17,944,612
  Advisers Fund Non-Qualified 1.00%...............     11,223,033    5.351192     60,056,604
  Advisers Fund 1.25%.............................  1,012,471,703    3.572368  3,616,921,513
  Advisers Fund .25%..............................      1,064,392    2.012508      2,142,097
  Capital Appreciation Fund Qualified 1.00%.......        858,728    8.154392      7,002,405
  Capital Appreciation Fund Non-Qualified 1.00%...      2,279,033    8.150600     18,575,486
  Capital Appreciation Fund 1.25%.................    351,188,619    4.845288  1,701,610,001
  Capital Appreciation Fund .25%..................      2,365,382    2.354942      5,570,337
  Mortgage Securities Fund Qualified 1.00%........        694,613    2.692454      1,870,214
  Mortgage Securities Fund Non-Qualified 1.00%....      6,914,379    2.692454     18,616,647
  Mortgage Securities Fund 1.25%..................     81,142,537    2.097829    170,223,167
  Mortgage Securities Fund .25%...................         15,250    1.370090         20,891
  Index Fund 1.00%................................        102,566    1.472201        150,998
  Index Fund Non-Qualified 1.00%..................        557,157    1.472201        820,247
  Index Fund 1.25%................................    109,836,846    3.726058    409,258,459
  Index Fund .25%.................................        216,268    2.411839        521,604
  International Opportunities Fund Qualified
   1.00%..........................................        314,039    1.496781        470,048
  International Opportunities Fund Non-Qualified
   1.00%..........................................      1,518,024    1.496728      2,272,069
  International Opportunities Fund 1.25%..........    264,642,015    1.468965    388,749,858
  International Opportunities Fund .25%...........        733,875    1.660294      1,218,449
  Dividend and Growth Fund Qualified 1.00%........        390,646    2.169750        847,604
  Dividend and Growth Fund Non-Qualified 1.00%....      1,710,116    2.169750      3,710,524
  Dividend and Growth Fund 1.25%..................    308,682,099    2.149172    663,410,924
  Dividend and Growth Fund .25%...................        268,881    2.232593        600,302
  International Advisers Fund Sub-Account 1.00%...         37,492    1.328248         49,796
  International Advisers Fund Non-Qualified
   1.00%..........................................        223,145    1.328248        296,392
  International Advisers Fund 1.25%...............     43,216,995    1.318862     56,997,252
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                        UNITS
                                                      OWNED BY       UNIT        CONTRACT
                                                    PARTICIPANTS     PRICE      LIABILITY
                                                    -------------  ---------  --------------
INDIVIDUAL SUB-ACCOUNTS -- (CONTINUED)
<S>                                                 <C>            <C>        <C>
  ]International Advisers Fund .25%...............         39,807  $ 1.356789 $       54,010
  Hartford Small Company 1.00%....................         99,533    1.250966        124,512
  Hartford Small Company Non-Qualified 1.00%......        377,483    1.250966        472,218
  Hartford Small Company 1.25%....................     56,706,183    1.246631     70,691,687
  Hartford Small Company .25%.....................         48,170    1.264068         60,890
  MidCap Fund Sub-Account 1.00% Qualified.........         12,789    1.098000         14,042
  MidCap Fund Sub-Account 1.00% Non-Qualified.....         34,465    1.098000         37,843
  MidCap Fund Sub-Account 1.25%...................      8,305,640    1.096832      9,109,892
  MidCap Fund Sub-Account 1.00% Qualified.........         10,996    1.101485         12,113
  Smith Barney Shearson Daily Dividend, Inc.
   Qualified 1.00%................................         53,613    2.777393        148,906
  Smith Barney Shearson Daily Dividend, Inc.
   Non-Qualified 1.00%............................        125,291    2.874151        360,106
  Smith Barney Shearson Appreciation Fund, Inc.
   Qualified 1.00%................................         18,335    9.303319        170,573
  Smith Barney Shearson Gov't and Agencies, Inc.
   Qualified 1.00%................................         14,846    2.503304         37,164
  BB&T Growth and Income Fund Sub-Account.........      5,443,658    1.189902      6,477,420
  Am South Fund Sub-Account 1.00% Qualified.......      2,337,620    1.023227      2,391,916
                                                                              --------------
TOTAL ACCUMULATION PERIOD.........................                             9,503,477,571
                                                                              --------------
ANNUITY CONTRACTS IN THE ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
  Bond Fund Non-Qualified 1.00%...................         14,968    4.022607         60,210
  Bond Fund 1.25%.................................        324,152    2.113753        685,179
  Stock Fund Non-Qualified 1.00%..................         11,832    8.493415        100,494
  Stock Fund 1.25%................................        460,700    4.601624      2,119,968
  Money Market Fund Qualified 1.00%...............         11,497    2.570693         29,553
  Money Market Fund Non-Qualified 1.00%...........         75,465    2.571915        194,090
  Money Market Fund 1.25%.........................        326,508    1.650311        538,840
  Advisers Fund Qualified 1.00%...................          3,304    5.351192         17,680
  Advisers Fund Non-Qualified 1.00%...............         57,148    5.351192        305,810
  Advisers Fund 1.25%.............................      1,087,032    3.572368      3,883,278
  Capital Appreciation Fund Non-Qualified 1.00%...          2,576    8.150600         20,996
  Capital Appreciation Fund 1.25%.................        232,998    4.845288      1,128,942
  Mortgage Securities Fund Non-Qualified 1.00%....         72,723    2.692454        195,803
  Mortgage Securities Fund 1.25%..................         89,106    2.097829        186,929
  Index Fund 1.25%................................        108,562    3.726058        404,508
  International Opportunities Fund 1.25%..........        228,075    1.468965        335,034
  Dividend and Growth Fund 1.25%..................        304,541    2.149172        654,512
  International Advisers Fund 1.25%...............         18,897    1.318862         24,923
  Hartford Small Company 1.25%....................         35,558    1.246631         44,328
                                                                              --------------
TOTAL ANNUITY PERIOD..............................                                10,931,077
                                                                              --------------
GRAND TOTAL.......................................                            $9,514,408,648
                                                                              --------------
                                                                              --------------
</TABLE>
 
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
 SEPARATE ACCOUNT TWO
 
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
 
<TABLE>
<CAPTION>
                                                         MONEY
                            BOND FUND    STOCK FUND   MARKET FUND
                           SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT
                           -----------  ------------  -----------
<S>                        <C>          <C>           <C>
INVESTMENT INCOME:
  Dividends..............  $12,961,364  $ 16,077,936  $13,797,570
EXPENSES:
  Mortality and expense
   undertakings..........   (2,612,230)  (18,967,977)  (3,238,151)
                           -----------  ------------  -----------
    Net investment income
     (loss)..............   10,349,134    (2,890,041)  10,558,627
                           -----------  ------------  -----------
CAPITAL GAINS INCOME.....      --         64,909,605      --
                           -----------  ------------  -----------
NET REALIZED AND
  UNREALIZED GAIN (LOSS)
  ON INVESTMENTS:
  Net realized gain
   (loss) on security
   transactions..........       17,262     1,176,996      --
  Net unrealized
   appreciation
   (depreciation) of
   investments during
   the period............   10,119,718   315,737,284      --
                           -----------  ------------  -----------
    Net gain (loss) on
     investments.........   10,136,980   316,914,280      --
                           -----------  ------------  -----------
    Net increase
     (decrease) in net
     assets resulting
     from operations.....  $20,486,114  $378,933,844  $10,559,419
                           -----------  ------------  -----------
                           -----------  ------------  -----------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                            U.S. GOVERNMENT         CAPITAL           MORTGAGE                      INTERNATIONAL
                           ADVISERS FUND   MONEY MARKET FUND   APPRECIATION FUND   SECURITIES FUND   INDEX FUND   OPPORTUNITIES FUND
                            SUB-ACCOUNT       SUB-ACCOUNT         SUB-ACCOUNT        SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
                           -------------   -----------------   -----------------   ---------------   -----------  ------------------
<S>                        <C>             <C>                 <C>                 <C>               <C>          <C>
INVESTMENT INCOME:
  Dividends..............  $  77,714,905        $2,646           $  8,543,668        $11,347,408     $ 4,750,804     $  3,651,850
EXPENSES:
  Mortality and expense
   undertakings..........    (41,311,784)         (627)           (19,474,176)        (2,333,945)     (4,257,897)      (5,181,012)
                           -------------        ------         -----------------   ---------------   -----------  ------------------
    Net investment income
     (loss)..............     36,403,121         2,019            (10,930,508)         9,013,463         492,907       (1,529,162)
                           -------------        ------         -----------------   ---------------   -----------  ------------------
CAPITAL GAINS INCOME.....    129,600,221       --                 103,244,397           --            21,612,566       29,748,890
                           -------------        ------         -----------------   ---------------   -----------  ------------------
NET REALIZED AND
  UNREALIZED GAIN (LOSS)
  ON INVESTMENTS:
  Net realized gain
   (loss) on security
   transactions..........      2,159,454       --                     413,746             28,917         243,148           29,653
  Net unrealized
   appreciation
   (depreciation) of
   investments during
   the period............    501,068,905       --                 190,913,008          5,074,541      65,120,869      (32,127,237)
                           -------------        ------         -----------------   ---------------   -----------  ------------------
    Net gain (loss) on
     investments.........    503,228,359       --                 191,326,754          5,103,458      65,364,017      (32,097,584)
                           -------------        ------         -----------------   ---------------   -----------  ------------------
    Net increase
     (decrease) in net
     assets resulting
     from operations.....  $ 669,231,701        $2,019           $283,640,643        $14,116,921     $87,469,490     $ (3,877,856)
                           -------------        ------         -----------------   ---------------   -----------  ------------------
                           -------------        ------         -----------------   ---------------   -----------  ------------------
 
<CAPTION>
                           DIVIDEND AND
                           GROWTH FUND
                           SUB-ACCOUNT
                           ------------
<S>                        <C>
INVESTMENT INCOME:
  Dividends..............  $  9,408,629
EXPENSES:
  Mortality and expense
   undertakings..........    (6,174,075)
                           ------------
    Net investment income
     (loss)..............     3,234,554
                           ------------
CAPITAL GAINS INCOME.....     9,959,170
                           ------------
NET REALIZED AND
  UNREALIZED GAIN (LOSS)
  ON INVESTMENTS:
  Net realized gain
   (loss) on security
   transactions..........        (4,003)
  Net unrealized
   appreciation
   (depreciation) of
   investments during
   the period............   111,067,791
                           ------------
    Net gain (loss) on
     investments.........   111,063,788
                           ------------
    Net increase
     (decrease) in net
     assets resulting
     from operations.....  $124,257,512
                           ------------
                           ------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
 Separate Account Two
 
Statement of Operations -- (continued)
For the Year Ended December 31, 1997
 
<TABLE>
<CAPTION>
                           INTERNATIONAL      SMALL
                           ADVISERS FUND   COMPANY FUND
                            SUB-ACCOUNT    SUB-ACCOUNT
                           -------------   ------------
<S>                        <C>             <C>
INVESTMENT INCOME:
  Dividends..............   $1,605,717      $   32,487
EXPENSES:
  Mortality and expense
   undertakings..........     (569,723)       (489,607)
                           -------------   ------------
  Net investment income
   (loss)................    1,035,994        (457,120)
                           -------------   ------------
CAPITAL GAINS INCOME.....      110,732       3,307,195
                           -------------   ------------
NET REALIZED AND
  UNREALIZED GAIN (LOSS)
  ON INVESTMENTS:
  Net realized gain
   (loss) on security
   transactions..........       13,808         (36,223)
  Net unrealized
   appreciation
   (depreciation) of
   investments during the
   period................      118,913       1,332,603
                           -------------   ------------
    Net gain (loss) on
     investments.........      132,721       1,296,380
                           -------------   ------------
    Net increase
     (decrease) in net
     assets resulting
     from operations.....   $1,279,447      $4,146,455
                           -------------   ------------
                           -------------   ------------
</TABLE>
 
  * From inception, July 15, 1997, to December 31, 1997.
 
 ** From inception, June 3, 1997, to December 31, 1997.
 
*** From inception, October 23, 1997, to December 31, 1997.
 
   The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                     SMITH BARNEY        BB&T
                                             SMITH BARNEY         SMITH BARNEY        GOVERNMENT      GROWTH AND
                           MIDCAP FUND    CASH PORTFOLIO FUND   APPRECIATION FUND     PORTFOLIO       INCOME FUND
                           SUB-ACCOUNT*       SUB-ACCOUNT          SUB-ACCOUNT       SUB-ACCOUNT     SUB-ACCOUNT**
                           ------------   -------------------   -----------------   --------------   -------------
<S>                        <C>            <C>                   <C>                 <C>              <C>
INVESTMENT INCOME:
  Dividends..............    $  8,146           $26,755              $ 2,394            $1,998         $ 43,938
EXPENSES:
  Mortality and expense
   undertakings..........     (20,807)           (5,365)              (1,707)             (404)         (21,234)
                           ------------         -------              -------            ------       -------------
  Net investment income
   (loss)................     (12,661)           21,390                  687             1,594           22,704
                           ------------         -------              -------            ------       -------------
CAPITAL GAINS INCOME.....      --              --                     22,341            --                  662
                           ------------         -------              -------            ------       -------------
NET REALIZED AND
  UNREALIZED GAIN (LOSS)
  ON INVESTMENTS:
  Net realized gain
   (loss) on security
   transactions..........      (2,185)         --                      6,810            --               --
  Net unrealized
   appreciation
   (depreciation) of
   investments during the
   period................     336,895          --                      8,816            --              409,485
                           ------------         -------              -------            ------       -------------
    Net gain (loss) on
     investments.........     334,710          --                     15,626            --              409,485
                           ------------         -------              -------            ------       -------------
    Net increase
     (decrease) in net
     assets resulting
     from operations.....    $322,049           $21,390              $38,654            $1,594         $432,851
                           ------------         -------              -------            ------       -------------
                           ------------         -------              -------            ------       -------------
 
<CAPTION>
                               AMSOUTH
                            EQUITY INCOME
                                 FUND
                            SUB-ACCOUNT***
                           ----------------
<S>                        <C>
INVESTMENT INCOME:
  Dividends..............       $ 4,389
EXPENSES:
  Mortality and expense
   undertakings..........        (2,657)
                                -------
  Net investment income
   (loss)................         1,732
                                -------
CAPITAL GAINS INCOME.....       --
                                -------
NET REALIZED AND
  UNREALIZED GAIN (LOSS)
  ON INVESTMENTS:
  Net realized gain
   (loss) on security
   transactions..........            (1)
  Net unrealized
   appreciation
   (depreciation) of
   investments during the
   period................        32,196
                                -------
    Net gain (loss) on
     investments.........        32,195
                                -------
    Net increase
     (decrease) in net
     assets resulting
     from operations.....       $33,927
                                -------
                                -------
</TABLE>
 
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
 SEPARATE ACCOUNT TWO
 
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
 
<TABLE>
<CAPTION>
                                                             MONEY
                            BOND FUND      STOCK FUND     MARKET FUND
                           SUB-ACCOUNT    SUB-ACCOUNT     SUB-ACCOUNT
                           ------------  --------------  -------------
<S>                        <C>           <C>             <C>
OPERATIONS:
  Net investment income
   (loss)................  $ 10,349,134  $   (2,890,041) $  10,558,627
  Capital gains income...       --           64,909,605            792
  Net realized gain
   (loss) on security
   transactions..........        17,262       1,176,996       --
  Net unrealized
   appreciation
   (depreciation) of
   investments during the
   period................    10,119,718     315,737,284       --
                           ------------  --------------  -------------
  Net increase (decrease)
   in net assets
   resulting from
   operations............    20,486,114     378,933,844     10,559,419
                           ------------  --------------  -------------
UNIT TRANSACTIONS:
  Purchases..............    28,788,526     208,829,884     56,766,167
  Net transfers..........    19,102,654      45,780,800     (9,782,834)
  Surrenders.............   (18,300,042)    (92,238,226)   (68,418,264)
  Net annuity
   transactions..........       325,387         633,517         12,261
                           ------------  --------------  -------------
  Net increase (decrease)
   in net assets
   resulting from unit
   transactions..........    29,916,525     163,005,975    (21,422,670)
                           ------------  --------------  -------------
  Total increase
   (decrease) in net
   assets................    50,402,639     541,939,819    (10,863,251)
NET ASSETS:
  Beginning of period....   194,978,128   1,212,755,498    277,901,280
                           ------------  --------------  -------------
  End of period..........  $245,380,767  $1,754,695,317  $ 267,038,029
                           ------------  --------------  -------------
                           ------------  --------------  -------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
 
                                                             MONEY
                            BOND FUND      STOCK FUND     MARKET FUND
                           SUB-ACCOUNT    SUB-ACCOUNT     SUB-ACCOUNT
                           ------------  --------------  -------------
OPERATIONS:
  Net investment income
   (loss)................  $  9,645,789  $    3,458,346  $   9,260,160
  Capital gains income...       --           36,500,208       --
  Net realized gain
   (loss) on security
   transactions..........      (221,405)      1,221,317       --
  Net unrealized
   (depreciation)
   appreciation of
   investments during the
   period................    (5,160,742)    171,537,514       --
                           ------------  --------------  -------------
  Net increase (decrease)
   in net assets
   resulting from
   operations............     4,263,642     212,717,385      9,260,160
                           ------------  --------------  -------------
UNIT TRANSACTIONS:
  Purchases..............    25,740,584     167,200,796     69,939,055
  Net transfers..........   (16,696,613)     28,419,235     66,601,560
  Surrenders.............   (15,363,352)    (50,578,919)   (52,603,716)
  Net annuity
   transactions..........        63,477         (84,340)      (175,109)
                           ------------  --------------  -------------
  Net (decrease) increase
   in net assets
   resulting from unit
   transactions..........    (6,255,904)    144,956,772     83,761,790
                           ------------  --------------  -------------
  Total (decrease)
   increase in net
   assets................    (1,992,262)    357,674,157     93,021,950
NET ASSETS:
  Beginning of period....   196,970,390     855,081,341    184,879,330
                           ------------  --------------  -------------
  End of period..........  $194,978,128  $1,212,755,498  $ 277,901,280
                           ------------  --------------  -------------
                           ------------  --------------  -------------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                            U.S. GOVERNMENT         CAPITAL           MORTGAGE
                           ADVISERS FUND   MONEY MARKET FUND   APPRECIATION FUND   SECURITIES FUND    INDEX FUND
                            SUB-ACCOUNT       SUB-ACCOUNT         SUB-ACCOUNT        SUB-ACCOUNT     SUB-ACCOUNT
                           --------------  -----------------   -----------------   ---------------   ------------
<S>                        <C>             <C>                 <C>                 <C>               <C>
OPERATIONS:
  Net investment income
   (loss)................  $   36,403,121      $   2,019        $  (10,930,508)     $  9,013,463     $    492,907
  Capital gains income...     129,600,221       --                 103,244,397          --             21,612,566
  Net realized gain
   (loss) on security
   transactions..........       2,159,454       --                     413,746            28,917          243,148
  Net unrealized
   appreciation
   (depreciation) of
   investments during the
   period................     501,068,905       --                 190,913,008         5,074,541       65,120,869
                           --------------  -----------------   -----------------   ---------------   ------------
  Net increase (decrease)
   in net assets
   resulting from
   operations............     669,231,701          2,019           283,640,643        14,116,921       87,469,490
                           --------------  -----------------   -----------------   ---------------   ------------
UNIT TRANSACTIONS:
  Purchases..............     364,832,050       --                 194,562,087         7,925,304       65,766,703
  Net transfers..........      27,406,992        (88,379)          (11,521,643)       (9,594,437)      26,458,731
  Surrenders.............    (206,501,208)        (9,133)          (87,759,430)      (17,575,723)     (18,692,668)
  Net annuity
   transactions..........         725,608        (21,870)              361,130            (3,307)         190,331
                           --------------  -----------------   -----------------   ---------------   ------------
  Net increase (decrease)
   in net assets
   resulting from unit
   transactions..........     186,463,442       (119,382)           95,642,144       (19,248,163)      73,723,097
                           --------------  -----------------   -----------------   ---------------   ------------
  Total increase
   (decrease) in net
   assets................     855,695,143       (117,363)          379,282,787        (5,131,242)     161,192,587
NET ASSETS:
  Beginning of period....   2,845,576,451        117,363         1,354,625,381       196,244,893      249,963,229
                           --------------  -----------------   -----------------   ---------------   ------------
  End of period..........  $3,701,271,594      $--              $1,733,908,168      $191,113,651     $411,155,816
                           --------------  -----------------   -----------------   ---------------   ------------
                           --------------  -----------------   -----------------   ---------------   ------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
 
                                            U.S. GOVERNMENT         CAPITAL           MORTGAGE
                           ADVISERS FUND   MONEY MARKET FUND   APPRECIATION FUND   SECURITIES FUND    INDEX FUND
                            SUB-ACCOUNT       SUB-ACCOUNT         SUB-ACCOUNT        SUB-ACCOUNT     SUB-ACCOUNT
                           --------------  -----------------   -----------------   ---------------   ------------
OPERATIONS:
  Net investment income
   (loss)................  $   42,565,178      $   4,826        $   (6,448,058)     $ 10,591,830     $  1,647,249
  Capital gains income...      52,150,764       --                  66,515,678          --              3,111,887
  Net realized gain
   (loss) on security
   transactions..........       1,838,982       --                   2,074,856          (435,321)         136,100
  Net unrealized
   (depreciation)
   appreciation of
   investments during the
   period................     271,199,538       --                 145,316,093        (2,802,442)      34,189,219
                           --------------  -----------------   -----------------   ---------------   ------------
  Net increase (decrease)
   in net assets
   resulting from
   operations............     367,754,462          4,826           207,458,569         7,354,067       39,084,455
                           --------------  -----------------   -----------------   ---------------   ------------
UNIT TRANSACTIONS:
  Purchases..............     317,249,591       --                 189,467,703         8,471,412       45,748,598
  Net transfers..........      (5,375,317)       (10,049)           (3,020,837)      (18,731,894)      19,409,151
  Surrenders.............    (148,652,281)        (5,248)          (57,537,694)      (18,950,990)     (10,550,651)
  Net annuity
   transactions..........          (7,328)       (12,789)              159,816           (68,468)         (31,502)
                           --------------  -----------------   -----------------   ---------------   ------------
  Net (decrease) increase
   in net assets
   resulting from unit
   transactions..........     163,214,665        (28,086)          129,068,988       (29,279,940)      54,575,596
                           --------------  -----------------   -----------------   ---------------   ------------
  Total (decrease)
   increase in net
   assets................     530,969,127        (23,260)          336,527,557       (21,925,873)      93,660,051
NET ASSETS:
  Beginning of period....   2,314,607,324        140,623         1,018,097,824       218,170,766      156,303,178
                           --------------  -----------------   -----------------   ---------------   ------------
  End of period..........  $2,845,576,451      $ 117,363        $1,354,625,381      $196,244,893     $249,963,229
                           --------------  -----------------   -----------------   ---------------   ------------
                           --------------  -----------------   -----------------   ---------------   ------------
 
<CAPTION>
                             INTERNATIONAL      DIVIDEND AND
                           OPPORTUNITIES FUND    GROWTH FUND
                              SUB-ACCOUNT        SUB-ACCOUNT
                           ------------------   -------------
<S>                        <C>                  <C>
OPERATIONS:
  Net investment income
   (loss)................     $ (1,529,162)     $   3,234,554
  Capital gains income...       29,748,890          9,959,170
  Net realized gain
   (loss) on security
   transactions..........           29,653             (4,003)
  Net unrealized
   appreciation
   (depreciation) of
   investments during the
   period................      (32,127,237)       111,067,791
                           ------------------   -------------
  Net increase (decrease)
   in net assets
   resulting from
   operations............       (3,877,856)       124,257,512
                           ------------------   -------------
UNIT TRANSACTIONS:
  Purchases..............       38,595,370        159,109,767
  Net transfers..........      (16,075,692)        87,528,713
  Surrenders.............      (26,504,799)       (20,331,098)
  Net annuity
   transactions..........           66,746            349,515
                           ------------------   -------------
  Net increase (decrease)
   in net assets
   resulting from unit
   transactions..........       (3,918,375)       226,656,897
                           ------------------   -------------
  Total increase
   (decrease) in net
   assets................       (7,796,232)       350,914,409
NET ASSETS:
  Beginning of period....      400,841,689        318,309,457
                           ------------------   -------------
  End of period..........     $393,045,458      $ 669,223,866
                           ------------------   -------------
                           ------------------   -------------
STATEMENT OF CHANGES IN N
FOR THE YEAR ENDED DECEMB
                             INTERNATIONAL      DIVIDEND AND
                           OPPORTUNITIES FUND    GROWTH FUND
                              SUB-ACCOUNT        SUB-ACCOUNT
                           ------------------   -------------
OPERATIONS:
  Net investment income
   (loss)................     $  2,504,471      $   2,622,394
  Capital gains income...        9,391,222          2,783,157
  Net realized gain
   (loss) on security
   transactions..........           91,388             (4,854)
  Net unrealized
   (depreciation)
   appreciation of
   investments during the
   period................       27,779,181         37,804,713
                           ------------------   -------------
  Net increase (decrease)
   in net assets
   resulting from
   operations............       39,766,262         43,205,410
                           ------------------   -------------
UNIT TRANSACTIONS:
  Purchases..............       41,231,155         98,719,762
  Net transfers..........       19,333,907         69,845,165
  Surrenders.............      (21,132,233)        (8,446,511)
  Net annuity
   transactions..........            8,570            153,439
                           ------------------   -------------
  Net (decrease) increase
   in net assets
   resulting from unit
   transactions..........       39,441,399        160,271,855
                           ------------------   -------------
  Total (decrease)
   increase in net
   assets................       79,207,661        203,477,265
NET ASSETS:
  Beginning of period....      321,634,028        114,832,192
                           ------------------   -------------
  End of period..........     $400,841,689      $ 318,309,457
                           ------------------   -------------
                           ------------------   -------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
 Separate Account Two
 
Statement of Changes in Net Assets -- (continued)
For the Year Ended December 31, 1997
 
<TABLE>
<CAPTION>
                           INTERNATIONAL      SMALL
                           ADVISERS FUND   COMPANY FUND
                            SUB-ACCOUNT    SUB-ACCOUNT
                           -------------   ------------
<S>                        <C>             <C>
OPERATIONS:
  Net investment income
   (loss)................   $ 1,035,994    $  (457,120)
  Capital gains income...       110,732      3,307,195
  Net realized gain
   (loss) on security
   transactions..........        13,808        (36,223)
  Net unrealized
   appreciation
   (depreciation) of
   investments during the
   period................       118,913      1,332,603
                           -------------   ------------
  Net increase (decrease)
   in net assets
   resulting from
   operations............     1,279,447      4,146,455
                           -------------   ------------
UNIT TRANSACTIONS:
  Purchases..............    18,887,741     24,742,079
  Net transfers..........     9,531,179     30,544,670
  Surrenders.............    (2,110,213)    (1,630,264)
  Net annuity
   transactions..........        25,045         44,603
                           -------------   ------------
  Net increase (decrease)
   in net assets
   resulting from unit
   transactions..........    26,333,752     53,701,088
                           -------------   ------------
  Total increase
   (decrease) in net
   assets................    27,613,199     57,847,543
NET ASSETS:
  Beginning of period....    29,809,174     13,546,092
                           -------------   ------------
  End of period..........   $57,422,373    $71,393,635
                           -------------   ------------
                           -------------   ------------
  * From inception, July 15, 1997 to
  December 31, 1997.
 ** From inception, June 3, 1997 to
  December 31, 1997.
*** From inception, October 23, 1997 to
  December 31, 1997.
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
                           INTERNATIONAL      SMALL
                           ADVISERS FUND   COMPANY FUND
                            SUB-ACCOUNT    SUB-ACCOUNT****
                            ----------     ------------
OPERATIONS:
  Net investment income
   (loss)................   $   644,546    $   (17,678)
  Capital gains income...       595,787        --
  Net realized gain on
   security
   transactions..........        (3,562)           922
  Net unrealized
   (depreciation)
   appreciation of
   investments during the
   period................       708,119         74,459
                            ----------      ----------
 
  Net increase (decrease)
   in net assets
   resulting from
   operations............     1,944,890         57,703
                            ----------      ----------
UNIT TRANSACTIONS:
  Purchases..............    10,618,419      4,333,960
  Net transfers..........    10,257,798      9,203,248
  Surrenders.............      (609,471)       (48,819)
  Net annuity
   transactions..........       --             --
                            ----------      ----------
 
  Net increase (decrease)
   in net assets
   resulting from unit
   transactions..........    20,266,746     13,488,389
                            ----------      ----------
 
  Total increase
   (decrease) in net
   assets................    22,211,636     13,546,092
NET ASSETS:
  Beginning of period....     7,597,538        --
                            ----------      ----------
 
  End of period..........   $29,809,174    $13,546,092
                            ----------      ----------
                            ----------      ----------
</TABLE>
 
**** From inception, August 9, 1996 to December 31, 1996.
 
   The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                                     SMITH BARNEY        BB&T
                                             SMITH BARNEY         SMITH BARNEY        GOVERNMENT      GROWTH AND     AMSOUTH EQUITY
                           MIDCAP FUND      CASH PORTFOLIO      APPRECIATION FUND     PORTFOLIO       INCOME FUND      INCOME FUND
                           SUB-ACCOUNT*       SUB-ACCOUNT          SUB-ACCOUNT       SUB-ACCOUNT     SUB-ACCOUNT**   SUB-ACCOUNT***
                           ------------   -------------------   -----------------   --------------   -------------   ---------------
<S>                        <C>            <C>                   <C>                 <C>              <C>             <C>
OPERATIONS:
  Net investment income
   (loss)................   $  (12,661)        $ 21,390             $    687           $ 1,594         $   22,704       $    1,732
  Capital gains income...      --              --                     22,341            --                    662         --
  Net realized gain
   (loss) on security
   transactions..........       (2,185)        --                      6,810            --                --              --
  Net unrealized
   appreciation
   (depreciation) of
   investments during the
   period................      336,895         --                      8,816            --                409,485           32,195
                           ------------        --------             --------           -------       -------------   ---------------
  Net increase (decrease)
   in net assets
   resulting from
   operations............      322,049           21,390               38,654             1,594            432,851           33,927
                           ------------        --------             --------           -------       -------------   ---------------
UNIT TRANSACTIONS:
  Purchases..............    2,088,623         --                    --                 --              5,104,417        2,100,608
  Net transfers..........    6,774,154         --                    --                 --              1,006,220          259,438
  Surrenders.............      (10,936)         (93,309)             (40,942)           (4,272)           (66,068)          (2,057)
  Net annuity
   transactions..........      --              --                    --                 --                --              --
                           ------------        --------             --------           -------       -------------   ---------------
  Net increase (decrease)
   in net assets
   resulting from unit
   transactions..........    8,851,841          (93,309)             (40,942)           (4,272)         6,044,569        2,357,989
                           ------------        --------             --------           -------       -------------   ---------------
  Total increase
   (decrease) in net
   assets................    9,173,890          (71,919)              (2,288)           (2,678)         6,477,420        2,391,916
NET ASSETS:
  Beginning of period....      --               580,931              172,861            39,842            --              --
                           ------------        --------             --------           -------       -------------   ---------------
  End of period..........   $9,173,890         $509,012             $170,573           $37,164         $6,477,420       $2,391,916
                           ------------        --------             --------           -------       -------------   ---------------
                           ------------        --------             --------           -------       -------------   ---------------
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
                           SMITH BARNEY                           SMITH BARNEY
                               CASH          SMITH BARNEY          GOVERNMENT
                            PORTFOLIO      APPRECIATION FUND        PORTFOLIO
                           SUB-ACCOUNT        SUB-ACCOUNT          SUB-ACCOUNT
                           ------------   ------------------    ----------------
OPERATIONS:
  Net investment income
   (loss)................   $   22,053         $ 15,035             $  1,646
  Capital gains income...      --              --                    --
  Net realized gain on
   security
   transactions..........      --                   174              --
  Net unrealized
   (depreciation)
   appreciation of
   investments during the
   period................      --                11,776              --
                            ---------           -------              -------
 
  Net increase (decrease)
   in net assets
   resulting from
   operations............       22,053           26,985                1,646
                            ---------           -------              -------
UNIT TRANSACTIONS:
  Purchases..............           25         --                    --
  Net transfers..........      --              --                    --
  Surrenders.............      (10,494)          (2,558)              (4,273)
  Net annuity
   transactions..........      --              --                    --
                            ---------           -------              -------
 
  Net increase (decrease)
   in net assets
   resulting from unit
   transactions..........      (10,469)          (2,558)              (4,273)
                            ---------           -------              -------
 
  Total increase
   (decrease) in net
   assets................       11,584           24,427               (2,627)
NET ASSETS:
  Beginning of period....      569,347          148,434               42,469
                            ---------           -------              -------
 
  End of period..........   $  580,931         $172,861             $ 39,842
                            ---------           -------              -------
                            ---------           -------              -------
</TABLE>
 
<PAGE>
                                                 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
 
                              SEPARATE ACCOUNT TWO
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1997
 
 1. ORGANIZATION:
 
    Separate Account Two (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under the
Investment Company Act of 1940, as amended. Both the Company and the Account are
subject to supervision and regulation by the Department of Insurance of the
State of Connecticut and the SEC. The Account invests deposits by variable
annuity contractholders of the Company in various mutual funds (the Funds) as
directed by the contractholders.
 
 2. SIGNIFICANT ACCOUNTING POLICIES:
 
    The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
 
    a) SECURITY TRANSACTIONS -- Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income
are accrued as of the ex-dividend date. Capital gains income represents
dividends from the Funds which are characterized as capital gains under tax
regulations.
 
    b) SECURITY VALUATION -- The investment in shares of the Hartford, Smith
Barney, BB&T and AmSouth mutual funds are valued at the closing net asset value
per share as determined by the appropriate Fund as of December 31, 1997.
 
    c) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.
 
    d) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
 
 3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
 
    a) MORTALITY AND EXPENSE UNDERTAKINGS -- The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and, with
respect to the Account, receives a maximum annual fee of up to 1.25% of the
Account's average daily net assets.
 
    b) DEDUCTION OF ANNUAL MAINTENANCE FEE -- Annual maintenance fees are
deducted through termination of units of interest from applicable contract
owners' accounts, in accordance with the terms of the contracts.
 
 4. HARTFORD U.S GOVERNMENT MONEY
   MARKET FUND:
 
    On June 27, 1997, the Hartford U.S. Government Money Market Fund was merged
with the HVA Money Market Fund. Accordingly, all contractholder account values
held in the Hartford U.S. Government Money Market Fund were exchanged for
equivalent account values of HVA Money Market Fund on June 27, 1997.
<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
                         PART I. FINANCIAL INFORMATION
                                    ITEM 1.
                              FINANCIAL STATEMENTS

    The following unaudited condensed consolidated financial statements of
Hartford Life Insurance Company and its subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles and
reflect, in the opinion of management, all adjustments which are of normal
recurring nature necessary to present fairly the financial position, the results
of operations and the cash flows for the periods presented. Certain
reclassifications of prior year results were made to conform to current
presentation. Interim results are not indicative of the results which may be
expected for any other interim period or the full year. Certain statements
contained in this discussion, other than statements of historical fact, are
forward-looking statements. These statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements are made based upon management's expectations and
beliefs concerning future developments and their potential effect on the
Company. There can be no assurance that future developments will be in
accordance with management's expectations or that the effect of these future
developments on the Company will be those anticipated by management. Actual
results could differ materially from those expected by the Company, depending on
the outcome of certain factors, including those described with the
forward-looking statements. For a description of accounting policies, see Note 1
to Consolidated Financial Statements in the 1996 Form 10-K. The Company is an
indirect subsidiary of Hartford Life, Inc. ("HLI"). Accordingly, the financial
statements presented below are a partial disclosure of HLI's financial
statements. For a full disclosure of HLI's operations, refer to the HLI Form
10-Q, as filed with the Securities and Exchange Commission, for the quarter
ended September 30, 1997.

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                 (IN MILLIONS)
 
<TABLE>
<CAPTION>
                                                        QUARTER
                                                         ENDED        SIX MONTHS
                                                       SEPTEMBER         ENDED
                                                          30,        SEPTEMBER 30,
                                                      -----------   ---------------
                                                      1997   1996    1997     1996
                                                      ----   ----   ------   ------
                                                      (UNAUDITED)     (UNAUDITED)
 <S>                                                  <C>    <C>    <C>      <C>
 Revenues
   Premiums and other considerations...............   $360   $319   $  993   $1,262
   Net investment income...........................    319    355      978    1,006
   Net realized capital gains (losses).............     --   (202)       4     (203)
                                                      ----   ----   ------   ------
     Total Revenues................................    679    472    1,975    2,065
                                                      ----   ----   ------   ------
 Benefits, Claims and Expenses
   Benefits, claims and claim adjustment
    expenses.......................................    318    447      970    1,235
   Amortization of deferred policy acquisition
    costs..........................................     80     68      252      197
   Dividends to policyholders......................     47     63      119      410
   Other insurance expenses........................    105     58      295      256
                                                      ----   ----   ------   ------
     Total benefits, claims and expenses...........    550    636    1,636    2,098
                                                      ----   ----   ------   ------
   Income (loss) before income tax expense.........    129   (164)     339      (33)
   Income tax expense (benefit)....................     48    (58)     121      (13)
                                                      ----   ----   ------   ------
 Net income (loss).................................   $ 81   $(106) $  218   $  (20)
                                                      ----   ----   ------   ------
                                                      ----   ----   ------   ------
</TABLE>
 
<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN MILLIONS EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                       SEPTEMBER
                                                          30,        DECEMBER 31,
                                                         1997            1996
                                                      -----------    ------------
                                                      (UNAUDITED)
 <S>                                                  <C>            <C>
 Assets
   Investments:
   Fixed maturities, available for sale, at fair
    value (amortized cost $13,849 and $13,579).....     $14,046        $13,624
   Equity securities, available for sale, at fair
    value..........................................         155            119
   Mortgage loans, at outstanding balance..........          --              2
   Policy loans, at outstanding balance............       3,747          3,836
   Other investments, at cost......................          48             54
                                                      -----------    ------------
     Total investments.............................      17,996         17,635
   Cash............................................          53             43
   Premiums and amounts receivable.................         134            137
   Reinsurance recoverable.........................       6,356          6,259
   Accrued investment income.......................         359            407
   Deferred policy acquisition costs...............       3,156          2,760
   Deferred income tax.............................         431            474
   Other assets....................................         246            357
   Separate account assets.........................      64,020         49,690
                                                      -----------    ------------
     Total assets..................................     $92,751        $77,762
                                                      -----------    ------------
                                                      -----------    ------------
 Liabilities and Stockholders' Equity
   Future policy benefits..........................     $ 3,124        $ 2,474
   Other policyholder funds........................      21,168         22,134
   Other liabilities...............................       2,224          1,572
   Separate account liabilities....................      64,020         49,690
                                                      -----------    ------------
     Total liabilities.............................      90,536         75,870
                                                      -----------    ------------
                                                      -----------    ------------
   Common stock--authorized 1,000 shares, $5,690
    par value, issued and outstanding 1,000
    shares.........................................           6              6
   Additional paid-in capital......................       1,045          1,045
   Unrealized gain on securities, net of tax.......         135             30
   Retained earnings...............................       1,029            811
                                                      -----------    ------------
     Total stockholders' equity....................       2,215          1,892
                                                      -----------    ------------
   Total liabilities and stockholders' equity......     $92,751        $77,762
                                                      -----------    ------------
                                                      -----------    ------------
</TABLE>
 
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN MILLIONS)
 
<TABLE>
<CAPTION>
                                             NINE MONTHS ENDED
                                               SEPTEMBER 30,
                                            --------------------
                                              1997        1996
                                            --------    --------
                                                (UNAUDITED)
 <S>                                        <C>         <C>
 Operating Activities:
   Net income (loss).....................   $    218    $    (20)
   Adjustments to net income (loss):
     Net realized capital (gains)
      losses.............................         (4)        203
     Net increase in deferred policy
      acquisition costs..................       (396)       (399)
     Net amortization of premium on fixed
      maturities.........................          5           6
     Increase in deferred income tax
      benefit............................        (14)       (188)
     Decrease in premiums and amounts
      receivable.........................          3          75
     Decrease in other assets............        169          15
     Increase in reinsurance
      recoverable........................       (310)       (254)
     Increase in liability for future
      policy benefits....................        650         278
     Increase in other liabilities.......        131         116
     Decrease in accrued investment
      income.............................         48          --
                                            --------    --------
       Cash provided by (used for)
       operating activities..............        500        (168)
                                            --------    --------
 Investing Activities:
   Purchases of fixed maturities
    investments..........................     (4,628)     (4,111)
   Sales of fixed maturities
    investments..........................      3,039       2,450
   Maturities and principal paydowns of
    fixed maturities investments.........      1,643       2,124
   Net sales (purchases) of other
    investments..........................         32        (339)
   Net (purchases) sales of short-term
    investments..........................        (70)        328
                                            --------    --------
       Cash provided by investing
       activities........................         16         452
                                            --------    --------
 Financing Activities:
   Net disbursements for investment and
    universal life-type contracts charged
    from policyholder accounts...........       (506)       (316)
   Capital contribution..................         --          38
                                            --------    --------
       Cash used for financing
       activities........................       (506)       (278)
                                            --------    --------
   Net increase in cash..................         10           6
   Cash at beginning of period...........         43          46
                                            --------    --------
 Cash at end of period...................   $     53    $     52
                                            --------    --------
                                            --------    --------
</TABLE>
 
<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
 
 NOTE 1.HARTFORD LIFE INC. INITIAL PUBLIC OFFERING
 
    On February 10, 1997, HLI, an indirect parent of the Company, filed a
registration statement with the Securities and Exchange Commission, as amended,
relating to the Initial Public Offering ("IPO") of up to 20% of HLI's Class A
common stock. Pursuant to the IPO on May 22, 1997, HLI sold to the public 26
million shares at $28.25 per share and received net proceeds of $687. Of the
proceeds, $527 was used to retire debt related to HLI's promissory notes
outstanding and the line of credit discussed in the note below with the
remaining $160 contributed to HLI's insurance subsidiaries to be used for
working capital and other general corporate purposes.

    The 26 million shares sold from the IPO represent approximately 18.6% of the
equity ownership in HLI and approximately 4.4% of the combined voting power of
HLI's Class A and Class B Common Stock. The Hartford Financial Services Group,
Inc. ("The Hartford"), an indirect parent of HLI, owns all of the 114 million
outstanding shares of Class B Common Stock of HLI, representing 81.4% of the
equity ownership in HLI and approximately 95.6% of the combined voting power of
HLI's Class A and Class B Common Stock. Holders of Class A Common Stock
generally have identical rights to the holders of Class B Common Stock except
that the holders of Class A Common Stock are entitled to one vote per share
while holders of Class B Common Stock are entitled to five votes per share on
all matters submitted to a vote of the HLI stockholders.

 NOTE 2. HARTFORD LIFE INC. DEBT OFFERING

    On February 7, 1997, HLI declared a dividend of $1,184 payable to its direct
parent, Hartford Accident and Indemnity Company ("HA&I"). As a result, HLI
borrowed $1,084 on February 18, 1997, pursuant to a $1,300 line of credit, with
interest payable at the two-month Eurodollar rate plus 15 basis points, which,
together with a promissory note in the amount of $100, was paid as a dividend to
HA&I on February 20, 1997. Of the $1,184 dividend, $893 constituted a repayment
of the portion of HLI's third party indebtedness internally allocated, for
financial reporting purposes, to HLI's insurance subsidiaries (the "Allocated
Advances"). In addition, on April 4, 1997, HLI declared and paid a dividend of
$25 to its parent in the form of a promissory note. Subsequently, $12 of this
note was forgiven in the form of a capital contribution from HA&I.

    On February 14, 1997, HLI filed a shelf registration statement for the
issuance and sale of up to $1.0 billion in the aggregate of senior debt
securities, subordinated debt securities and preferred stock. On June 17, 1997,
HLI issued $650 of unsecured redeemable long-term debt in the form of notes and
debentures. Of this amount, $200 was in the form of 6.90% notes due June 15,
2004, $200 of 7.10% notes due June 15, 2007, and $250 of 7.65% debentures due
June 15, 2027. Interest on each of the notes and debentures is payable
semi-annually on June 15 and December 15, of each year, commencing December 15,
1997. HLI also issued $50 of short-term debt in the form of commercial paper. Of
the proceeds from this issuance, $670 was used to retire the remaining balance
on the $1,300 line of credit with the remainder being used for working capital
and other general corporate purposes. Subsequently, HLI reduced the capacity of
the line of credit from $1,300 to $250, which will be primarily used to support
the commercial paper program.

 NOTE 3. CONTINGENCIES

(A) LITIGATION

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

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
                    ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS
                            OF RESULTS OF OPERATIONS
                                 (IN MILLIONS)
           QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

SEGMENT RESULTS

<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED
                                     QUARTER ENDED
                                     SEPTEMBER 30,          SEPTEMBER 30,
                                 ----------------------  --------------------
                                    1997        1996       1997       1996
                                    -----     ---------  ---------  ---------
<S>                              <C>          <C>        <C>        <C>
Annuity........................   $      56   $      40  $     148  $     110
Individual Life Insurance......          15          11         38         30
Employee Benefits..............           8           8         23         22
Guaranteed Investment
  Contracts....................          --        (184)        --       (214)
Corporate Operation............           2          19          9         32
                                        ---   ---------  ---------  ---------
Net Income (Loss)..............   $      81   $    (106) $     218  $     (20)
                                        ---   ---------  ---------  ---------
                                        ---   ---------  ---------  ---------
</TABLE>

    Net income was $81 and $218 for the third quarter and nine months ended
September 30, 1997, as compared to a loss of $106 and $20 for the same periods
in 1996. Included in the results for the third quarter and nine months ended
September 30, 1996, are after-tax losses, primarily related to Closed Book GRC,
of $179 and $210. Excluding these after-tax losses, operating income increased
$8, or 11%, and $28, or 15%, for the third quarter and nine months ended
September 30, 1997, compared to the same periods in 1996. Net income in the
Annuity segment increased due to higher fee income on growing account values as
well as strong new business sales. Net income in the Individual Life Insurance
segment increased due to cost of insurance charges and other fee income on a
growing block of life insurance in-force. Guaranteed Investment Contracts
reported no net income in the third quarter of 1997 consistent with management's
expectations that net income (loss) subsequent to 1996 will be immaterial.
 
ANNUITY
 
<TABLE>
<CAPTION>
                                     QUARTER ENDED       NINE MONTHS ENDED
                                     SEPTEMBER 30,         SEPTEMBER 30,
                                  --------------------  --------------------
                                    1997       1996       1997       1996
                                  ---------  ---------  ---------  ---------
<S>                               <C>        <C>        <C>        <C>
Revenues........................  $     336  $     241  $     924  $     707
Expenses........................        280        201        776        597
                                  ---------  ---------  ---------  ---------
Net Income......................  $      56  $      40  $     148  $     110
                                  ---------  ---------  ---------  ---------
                                  ---------  ---------  ---------  ---------
</TABLE>

    Revenues, which are primarily comprised of investment income and fees earned
on assets under management, grew $95 or 39%, to $336 in the third quarter of
1997 and $217 or 31%, to $924 for the nine months ended September 30, 1997,
compared to the same periods in 1996. This growth resulted from an increase in
the average account value, primarily driven by individual variable annuities, of
$15.4 billion, or 36%, to $57.9 billion as of September 30, 1997 from $42.5
billion as of September 30, 1996, as a result of strong sales and market
appreciation in the separate account assets. Individual annuity sales were
approximately $2.6 billion and $7.6 billion for the third quarter and nine
months ended September 30, 1997, respectively, as compared to sales of $2.4
billion and $7.4 billion, respectively, for the same periods in 1996. Growth in
the assets under management by this segment also resulted in increased expenses
related to other insurance expenses, amortization of deferred policy acquisition
costs and taxes. Expenses increased $79, or 39%, to $280 in the third quarter of
1997 and $179, or 30%, to $776 for the nine months ended September 30, 1997,
compared to the same periods in 1996. Net income increased $16, or 40%, to $56
in the third quarter of 1997 and $38, or 35%, to $148 for the nine months ended
September 30, 1997, compared to the same periods in 1996.

INDIVIDUAL LIFE INSURANCE

<TABLE>
<CAPTION>
                                     QUARTER ENDED       NINE MONTHS ENDED
                                     SEPTEMBER 30,         SEPTEMBER 30,
                                  --------------------  --------------------
                                    1997       1996       1997       1996
                                  ---------  ---------  ---------  ---------
<S>                               <C>        <C>        <C>        <C>
Revenues........................  $     122  $     107  $     358  $     323
Expenses........................        107         96        320        293
                                  ---------  ---------  ---------  ---------
Net Income......................  $      15  $      11  $      38  $      30
                                  ---------  ---------  ---------  ---------
                                  ---------  ---------  ---------  ---------
</TABLE>

    Revenues increased $15, or 14%, to $122 in the third quarter of 1997 and
$35, or 11%, to $358 for the nine months ended September 30, 1997, over the
comparable periods in 1996. In the first quarter of 1996, a block of business
was assumed from Investors Equity which increased 1996 revenues by $9. Excluding
this transaction, year to date revenues increased $44, or 14% over prior year.
This growth was driven by increased cost of insurance charges and other fee
income earned on this growing block of business. Life insurance in-force grew
approximately $3 billion, or 6%, for September 30, 1997 over the prior period,
primarily due to sales of variable life products. Expenses in this segment
increased $11 or 11%, and $27 or 9%, for the third quarter and nine months ended
September 30, 1997, over the same periods in 1996, consistent with this growing
block of business. As a result, net income increased $4, or 36%, to $15 in the
third quarter of 1997 and $8, or 27%, to $38 for the nine months ended September
30, 1997, compared to the same periods in 1996.

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

<TABLE>
<CAPTION>
                                     QUARTER ENDED       NINE MONTHS ENDED
                                     SEPTEMBER 30,         SEPTEMBER 30,
                                  --------------------  --------------------
                                    1997       1996       1997       1996
                                  ---------  ---------  ---------  ---------
<S>                               <C>        <C>        <C>        <C>
Revenues........................  $     150  $     223  $     471  $     976
Expenses........................        142        215        448        954
                                  ---------  ---------  ---------  ---------
Net Income......................  $       8  $       8  $      23  $      22
                                  ---------  ---------  ---------  ---------
                                  ---------  ---------  ---------  ---------
</TABLE>

    Revenues declined $73, or 33%, to $150 in the third quarter of 1997 and
$505, or 52%, for the nine months ended September 30, 1997, as compared to the
same periods in 1996. This decline is mainly related to the passage of the
Health Insurance Portability and Accountability Act of 1996, which effectively
eliminated all future sales of leveraged COLI due to the phase out of the
interest deduction on policy loans by 1998. The Company continues to write
variable COLI. Expenses declined $73, or 34%, in the third quarter of 1997 and
$506, or 53%, for the nine months ended September 30, 1997, as compared to the
same periods in 1996. Significant declines in benefits, claims and claim
adjustment expenses and policyholder dividends are the result of the decline of
the block of COLI business. As a result, net income was unchanged for the third
quarter of 1997, as compared to the same periods in 1996 and increased $1, or
5%, for the nine months ended September 30, 1997, as compared to the same
periods in 1996.

GUARANTEED INVESTMENT CONTRACTS

<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED
                                     QUARTER ENDED
                                     SEPTEMBER 30,          SEPTEMBER 30,
                                 ----------------------  --------------------
                                    1997        1996       1997       1996
                                    -----     ---------  ---------  ---------
<S>                              <C>          <C>        <C>        <C>
Revenues.......................   $      62   $    (163) $     196  $     (23)
Expenses.......................          62          21        196        191
                                        ---   ---------  ---------  ---------
Net Income (Loss)..............   $       0   $    (184) $       0  $    (214)
                                        ---   ---------  ---------  ---------
                                        ---   ---------  ---------  ---------
</TABLE>

    This segment reported no net income for the nine months ended September 30,
1997, as compared to losses of $184 and $214 for the same periods last year.
Exclusive of after-tax realized losses and other charges taken in the third
quarter of 1996 related to Closed Book GRC, this segment had an operating loss
of $15 and $45 for the third quarter and nine months ended September 30, 1996.
These results are consistent with management's expectations that net income
(loss) from Closed Book GRC in the years subsequent to 1996 will be immaterial
based on the Company's current projections for the performance of the assets and
liabilities associated with Closed Book GRC due to actions taken in the third
quarter of 1996. However, no assurance can be given that, under certain
unanticipated economic circumstances which results in the Company's assumptions
being proven inaccurate, further losses in respect of Closed Book GRC will not
occur in the future.

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Hartford Life Insurance Company and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Hartford Life
Insurance Company (a Connecticut corporation and wholly-owned subsidiary of
Hartford Life and Accident Insurance Company) and subsidiaries as of December
31, 1996 and 1995, and the related consolidated statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1996. These consolidated financial statements and the
schedules referred to below are the responsibility of Hartford Life Insurance
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and schedules based on our audits.

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

   
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hartford Life Insurance Company and subsidiaries as of December 31, 1996 in 
conformity with generally accepted accounting principles.
    

As discussed in Note 2 of Notes to Consolidated Financial Statements, Hartford
Life Insurance Company adopted a new accounting standard promulgated by the
Financial Accounting Standards Board, changing its method of accounting, as of
January 1, 1994, for debt and equity securities.

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

                                         ARTHUR ANDERSEN LLP

Hartford, Connecticut
February 10, 1997

<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                        FOR THE YEARS ENDED
                                                            DECEMBER 31,
                                                      ------------------------
                                                       1996     1995     1994
                                                      ------   ------   ------
                                                               ($000)
 <S>                                                  <C>      <C>      <C>
 Revenues
   Premiums and other considerations...............   $1,705   $1,487   $1,100
   Net investment income...........................    1,397    1,328    1,292
   Net realized capital (losses) gains.............     (213)     (11)       7
                                                      ------   ------   ------
     Total Revenues................................    2,889    2,804    2,399
                                                      ------   ------   ------
 Benefits, Claims and Expenses
   Benefits, claims and claim adjustment
    expenses.......................................    1,535    1,422    1,405
   Amortization of deferred policy acquisition
    costs..........................................      234      199      145
   Dividends to policyholders......................      635      675      419
   Other insurance expenses........................      427      317      227
                                                      ------   ------   ------
     Total Benefits, Claims and Expenses...........    2,831    2,613    2,196
                                                      ------   ------   ------
   Income before income tax expense................       58      191      203
   Income tax expense..............................       20       62       65
                                                      ------   ------   ------
 Net income........................................   $   38   $  129   $  138
                                                      ------   ------   ------
                                                      ------   ------   ------
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
                            of the above statements.

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                       AS OF DECEMBER
                                                             31,
                                                      -----------------
                                                       1996      1995
                                                      -------   -------
 <S>                                                  <C>       <C>
                                                        (IN MILLIONS
                                                        EXCEPT SHARE
                                                            DATA)
 Assets
   Investments
   Fixed maturities, available for sale, at fair
    value (amortized cost $13,579 and $14,440).....   $13,624   $14,400
   Equity securities, available for sale, at fair
    value..........................................       119        63
   Policy loans, at outstanding balance............     3,836     3,381
   Mortgage loans, at outstanding balance..........         2       265
   Other investments, at cost......................        54       156
                                                      -------   -------
     Total investments.............................    17,635    18,265
   Cash............................................        43        46
   Premiums and amounts receivable.................       137       165
   Accrued investment income.......................       407       394
   Reinsurance recoverable.........................     6,066     6,221
   Deferred policy acquisition costs...............     2,760     2,188
   Deferred income tax.............................       474       420
   Other assets....................................       357       234
   Separate account assets.........................    49,690    36,264
                                                      -------   -------
     Total assets..................................   $77,569   $64,197
                                                      -------   -------
                                                      -------   -------
 
 Liabilities
   Future policy benefits..........................   $ 2,281   $ 2,373
   Other policyholder funds........................    22,134    22,598
   Other liabilities...............................     1,572     1,233
   Separate account liabilities....................    49,690    36,264
                                                      -------   -------
     Total liabilities.............................    75,677    62,468
                                                      -------   -------
 
 Stockholder's Equity
   Common stock, $5,690 par value, 1,000 shares
    authorized, issued and outstanding.............         6         6
   Capital surplus.................................     1,045     1,007
   Net unrealized capital gain (loss) on
    investments, net of tax........................        30       (57)
   Retained earnings...............................       811       773
                                                      -------   -------
     Total stockholder's equity....................     1,892     1,729
                                                      -------   -------
   Total liabilities and stockholder's equity......   $77,569   $64,197
                                                      -------   -------
                                                      -------   -------
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
                            of the above statements.

<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                       NET UNREALIZED
                                                                        CAPITAL GAIN
                                                                         (LOSS) ON                       TOTAL
                                            COMMON      CAPITAL         INVESTMENTS,     RETAINED    STOCKHOLDER'S
                                            STOCK       SURPLUS          NET OF TAX      EARNINGS       EQUITY
                                            ------   --------------    --------------    --------    -------------
 <S>                                        <C>      <C>               <C>               <C>         <C>
                                                                        (IN MILLIONS)
 Balance, December 31, 1993..............     $6         $  676            $  (5)          $516         $1,193
   Net income............................     --             --               --            138            138
   Dividends declared on common stock....     --             --               --            (10)           (10)
   Capital contribution..................     --            150               --             --            150
   Change in net unrealized capital loss
    on investments, net of tax(1)........     --             --             (649)            --           (649)
                                              --
                                                         ------           ------         --------       ------
 Balance, December 31, 1994..............      6            826             (654)           644            822
   Net income............................     --             --               --            129            129
   Capital contribution..................     --            181               --             --            181
   Change in net unrealized capital gain
    on investments, net of tax...........     --             --              597             --            597
                                              --
                                                         ------           ------         --------       ------
 Balance, December 31, 1995..............      6          1,007              (57)           773          1,729
   Net income............................     --             --               --             38             38
   Capital contribution..................     --             38               --             --             38
   Change in net unrealized capital gain
    on investments, net of tax...........     --             --               87             --             87
                                              --
                                                         ------           ------         --------       ------
 Balance, December 31, 1996..............     $6         $1,045            $  30           $811         $1,892
                                              --
                                              --
                                                         ------           ------         --------       ------
                                                         ------           ------         --------       ------
</TABLE>
 
- ---------
 
(1) The 1994 change in net unrealized capital loss on investments, net of tax,
    includes a gain of $91 due to the adoption of SFAS No. 115 as discussed in
    Note 2(b) of Notes to Consolidated Financial Statements.

The accompanying notes to consolidated financial statements are an integral part
                            of the above statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                            FOR THE YEARS ENDED DECEMBER 31,
                                            --------------------------------
                                              1996        1995        1994
                                            --------    --------    --------
 <S>                                        <C>         <C>         <C>
                                                     (IN MILLIONS)
 Operating Activities
   Net income............................   $     38    $    129    $    138
   Adjustments to net income:
   Net realized capital losses (gains) on
    sale of investments..................        213          11          (7)
   Net amortization of premium on fixed
    maturities...........................         14          21          41
   Increase in deferred income taxes.....       (102)       (172)       (128)
   Increase in deferred policy
    acquisition costs....................       (572)       (379)       (441)
   Decrease (increase) in premiums and
    amounts receivable...................         10         (81)         10
   Increase in accrued investment
    income...............................        (13)        (16)       (106)
   (Increase) decrease in other assets...       (132)       (177)        101
   Decrease (increase) in reinsurance
    recoverable..........................        179         (35)         75
   (Decrease) increase in liability for
    future policy benefits...............        (92)        483         224
   Increase in other liabilities.........        477         281         191
                                            --------    --------    --------
     Cash provided by operating
      activities.........................         20          65          98
                                            --------    --------    --------
 Investing Activities
   Purchases of fixed maturity
    investments..........................     (5,747)     (6,228)     (9,127)
   Sales of fixed maturity investments...      3,459       4,845       5,713
   Maturities and principal paydowns of
    fixed maturity investments...........      2,693       1,741       1,931
   Net purchase of other investments.....       (107)       (871)     (1,338)
   Net sales (purchases) of short-term
    investments..........................         84         (24)        135
                                            --------    --------    --------
     Cash provided by (used for)
      investing activities...............        382        (537)     (2,686)
                                            --------    --------    --------
 Financing Activities
   Capital contribution..................         38          --         150
   Dividends paid........................         --          --         (10)
   Net (disbursements for) receipts from
    investment and universal life-type
    contracts (charged from) credited to
    policyholder accounts................       (443)        498       2,467
                                            --------    --------    --------
     Cash (used for) provided by
      financing activities...............       (405)        498       2,607
                                            --------    --------    --------
   Net (decrease) increase in cash.......         (3)         26          19
   Cash--beginning of year...............         46          20           1
                                            --------    --------    --------
 Cash--end of year.......................   $     43    $     46    $     20
                                            --------    --------    --------
                                            --------    --------    --------
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
                            of the above statements.
<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996
                                 (IN MILLIONS)

 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

    These consolidated financial statements include Hartford Life Insurance
Company and its wholly-owned subsidiaries (the "Company"), ITT Hartford Life and
Annuity Insurance Company ("ILA") and ITT Hartford International Life
Reassurance Corporation ("HLRe"), formerly American Skandia Life Reinsurance
Corporation. The Company is a wholly-owned subsidiary of Hartford Life and
Accident Insurance Company ("HLA"), a wholly-owned subsidiary of Hartford Life,
Inc. ("Hartford Life"), a direct subsidiary of Hartford Accident and Indemnity
Company, an indirect subsidiary of ITT Hartford Group, Inc. ("The Hartford").
Hartford Life was formed on December 13, 1996 and capitalized on December 16,
1996 with the contribution of all the outstanding common stock of HLA. On
February 10, 1997, The Hartford, the ultimate parent of Hartford Life, announced
its intention to sell up to 20% of Hartford Life during the second quarter of
1997. Management believes that this transaction will not have a material impact
on the operations of the Company (See Note 11).

    On December 19, 1995, ITT Industries, Inc. (formerly ITT Corporation)("ITT")
distributed all the outstanding shares of capital stock of The Hartford to ITT
stockholders of record on such date (the transactions relating to such
distribution are referred to herein as the "ITT Spin-off"). As a result of the
ITT Spin-off, The Hartford became an independent, publicly traded company.

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

 2. SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PRESENTATION

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

    The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

(B) CHANGES IN ACCOUNTING PRINCIPLES

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

    In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities".
This statement established criteria for determining whether transferred assets
should be accounted for as sales or secured borrowings. Subsequently, in
December 1996, the FASB issued SFAS No. 127, "Deferral of Effective Date of
Certain Provisions of FASB Statement No. 125", which defers the effective date
of certain provisions of SFAS No. 125 for one year. Adoption of SFAS No. 125 is
not expected to have a material effect on the Company's financial condition or
results of operations.

    In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which is effective in 1996. As permitted by SFAS No. 123, the
Company continues to measure compensation costs of employee stock option plans
(relating to options on common stock of The Hartford) using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25. As of February
10, 1997, the Company had not adopted an employee stock compensation plan.
Certain officers of the Company participate in The Hartford's stock option plan.

    Compensation costs allocated by The Hartford to the Company, as well as pro
forma compensation costs as determined under SFAS No. 123, were immaterial to
the results of operations for 1996 and 1995.

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
    Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". The new standard requires,
among other things, that securities be classified as "held-to-maturity",
"available-for-sale" or "trading" based on the Company's intentions with respect
to the ultimate disposition of the security and its ability to effect those
intentions. The classification determines the appropriate accounting carrying
value (cost basis or fair value) and, in the case of fair value, whether the
fair value difference from cost, net of tax, impacts stockholder's equity
directly or is reflected in the Consolidated Statements of Income. Investments
in equity securities had previously been and continue to be recorded at fair
value with the corresponding after-tax impact included in stockholder's equity.
Under SFAS No. 115, the Company's fixed maturity investments are classified as
"available-for-sale" and, accordingly, these investments are reflected at fair
value with the corresponding impact included as a component of stockholder's
equity designated as "Net unrealized capital gain (loss) on investments, net of
tax." As with the underlying investment security, unrealized capital gains and
losses on derivative financial instruments are considered in determining the
fair value of the portfolios. The impact of adoption was an increase to
stockholder's equity of $91 million. The Company's cash flows were not impacted
by this change in accounting principle.

(C) REVENUE RECOGNITION

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

(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS

    Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal and
mortality assumptions appropriate at the time the policies were issued.
Liabilities for universal life-type and investment contracts are stated at
policyholder account values before surrender charges.

(E) DEFERRED POLICY ACQUISITION COSTS

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

(F) POLICYHOLDER REALIZED CAPITAL GAINS AND LOSSES

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

(G) FOREIGN CURRENCY TRANSLATION

    Foreign currency translation gains and losses are reflected in stockholder's
equity. Balance sheet accounts are translated at the exchange rates in effect at
each year end and income statement accounts are translated at the average rates
of exchange prevailing during the year. The national currencies of international
operations are generally their functional currencies.

(H) INVESTMENTS

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

    The Company's accounting policy for impairment recognition requires
recognition of an other than temporary impairment charge on a security if it is
determined that the Company is unable to recover all amounts due under the
contractual obligations of the security. In addition, the Company has
established specific criteria to be used in the impairment evaluation of an
individual portfolio of assets. Specifically, if the asset portfolio is
supporting a runoff operation, is forced to be liquidated prior to maturity to
meet liability commitments, and has fair value below amortized cost, which will
not materially fluctuate as a result of future

<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
interest rate changes, then an other than temporary impairment condition has
been determined to have occurred. Each individual security within that portfolio
is evaluated to determine whether or not it is impaired. Once an impairment
charge has been recorded, the Company then continues to review the individual
impaired securities for appropriate valuation on an ongoing basis.

    During 1996, it was determined that certain individual securities within the
investment portfolio supporting the Company's closed block of guaranteed rate
contracts ("Closed Book GRC") were impaired. With the initiation of certain
hedge transactions, which eliminated the possibility that the fair value of the
Closed Book GRC investments would recover to their current amortized cost, an
other than temporary impairment loss of $88 after tax was determined to have
occurred and was recorded.

(I) DERIVATIVE FINANCIAL INSTRUMENTS

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

    Derivatives must be designated at inception as a hedge and measured for
effectiveness both at inception and on an ongoing basis. The Company's minimum
correlation threshold for hedge designation is 80%. If correlation, which is
assessed monthly and measured based on a rolling three month average, falls
below 80%, hedge accounting will be terminated. Derivatives used to create a
synthetic asset must meet synthetic accounting criteria including designation at
inception and consistency of terms between the synthetic and the instrument
being replicated. Interest rate swaps are the primary type of derivatives used
to convert London interbank offered quotations for U.S. dollar deposits
("LIBOR") based variable rate instruments to fixed rate instruments. Synthetic
instrument accounting, consistent with industry practice, provides that the
synthetic asset is accounted for like the financial instrument it is intended to
replicate. Derivatives which fail to meet risk management criteria are marked to
market with the impact reflected in the Consolidated Statements of Income.

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

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

    The cost of purchased options and/or premiums received on covered written
options, entered into as part of an asset/liability management strategy, is/are
adjusted into the cost basis of the underlying asset or liability and amortized
over the remaining life of the hedge. Gains or losses on expiration or
termination of the hedge are adjusted into the basis of the underlying asset or
liability and amortized over the remaining asset life. The Company had no
written options as of December 31, 1996 and 1995.

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

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

    Forward exchange contracts and foreign currency swaps are accounted for in
accordance with SFAS No. 52.

(J) RELATED PARTY TRANSACTIONS

    Transactions of the Company with HLA and its affiliates relate principally
to tax settlements, reinsurance, insurance coverage, rental and service fees and
payment of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and employee
benefit plan expenses, are initially paid by Hartford Fire Insurance Company, an
indirect subsidiary of The Hartford ("Hartford Fire"). Direct expenses are
allocated to the Company using specific identification, and indirect expenses
are allocated using other applicable methods. Indirect expenses include those
for corporate areas which, depending on the type, are allocated based on either
a percentage of direct expenses or on utilization. Indirect expenses allocated
to the Company by Hartford Fire were $40, $45 and $41 in 1996, 1995 and 1994,
respectively. Management of the Company believes that the methods used are
reasonable. In addition, the Company was charged its share of costs allocated to
The Hartford by ITT prior to the ITT Spin-off, which were immaterial in 1995 and
1994. The Company had a receivable from The Hartford of $1 and a payable to The
Hartford of $2 at December 31, 1996 and 1995, respectively.

    In 1996, the Company ceded approximately $33.3 billion of group life
insurance in force and $318 million of disability premium to HLA and assumed
$8.5 billion of individual life insurance in force from HLA.

    On June 30, 1995, the ownership of ITT Lyndon Insurance Company was
transferred to the Company via a capital contribution of $181 million,
representing the net assets of the company. Also, in 1996, the Company received
a capital contribution of $37.5 million from its parent HLA.

(K) DIVIDENDS TO POLICYHOLDERS

    Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings of the life insurance
subsidiaries of the Company. The participating insurance in force accounted for
44%, 41%, and 43% in 1996, 1995, and 1994, respectively, of total life insurance
in force.

 3. INVESTMENTS

(A) COMPONENTS OF NET INVESTMENT INCOME

<TABLE>
<CAPTION>
                                     YEAR ENDED DECEMBER 31,
                                 -------------------------------
                                   1996       1995       1994
                                 ---------  ---------  ---------
<S>                              <C>        <C>        <C>
Interest income................  $   1,452  $   1,338  $   1,247
(Losses) income from other
 investments...................        (42)         1         54
                                 ---------  ---------  ---------
Gross investment income........      1,410      1,339      1,301
Less: Investment expenses......         13         11          9
                                 ---------  ---------  ---------
Net investment income..........  $   1,397  $   1,328  $   1,292
                                 ---------  ---------  ---------
                                 ---------  ---------  ---------
</TABLE>

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

<TABLE>
<CAPTION>
                                     YEAR ENDED DECEMBER 31,
                                 -------------------------------
                                   1996       1995       1994
                                 ---------  ---------  ---------
<S>                              <C>        <C>        <C>
Fixed maturities...............  $    (201) $      23  $     (34)
Equity securities..............          2         (6)       (11)
Real estate and other..........         (4)       (25)        47
Less: (Increase) decrease in
 liability to policyholders for
 realized capital gains
 (losses)......................        (10)        (3)         5
                                 ---------  ---------  ---------
Net realized capital (losses)
 gains.........................  $    (213) $     (11) $       7
                                 ---------  ---------  ---------
                                 ---------  ---------  ---------
</TABLE>

(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES

<TABLE>
<CAPTION>
                                         YEAR ENDED DECEMBER 31,
                                   -----------------------------------
                                      1996         1995        1994
                                      -----        -----     ---------
<S>                                <C>          <C>          <C>
Gross unrealized gains...........   $      13    $       4   $       2
Gross unrealized losses..........          (1)          (2)        (11)
                                          ---          ---   ---------
Net unrealized capital gains
 (losses)........................          12            2          (9)
Deferred income tax liability
 (asset).........................           4            1          (3)
                                          ---          ---   ---------
Net unrealized capital gains
 (losses), after tax.............           8            1          (6)
Balance beginning of year........           1           (6)         (5)
                                          ---          ---   ---------
Change in net unrealized capital
 gains (losses) on investments...   $       7    $       7   $      (1)
                                          ---          ---   ---------
                                          ---          ---   ---------
</TABLE>
 
<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES

<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                                         --------------------------
                                                          1996     1995      1994
                                                         ------   ------   --------
<S>                                                      <C>      <C>      <C>
Gross unrealized gains.................................  $  386   $  529   $    150
Gross unrealized losses................................    (341)    (569)    (1,185)
Unrealized (gains) losses credited to policyholders....     (11)     (52)        37
                                                         ------   ------   --------
Net unrealized capital gains (losses)..................      34      (92)      (998)
Deferred income tax liability (asset)..................      12      (34)      (350)
                                                         ------   ------   --------
Net unrealized capital gains (losses), after tax.......      22      (58)      (648)
Balance beginning of year..............................     (58)    (648)       161
                                                         ------   ------   --------
Change in net unrealized capital gains (losses) on
 investments...........................................  $   80   $  590   $   (809)
                                                         ------   ------   --------
                                                         ------   ------   --------
</TABLE>

(E) COMPONENTS OF FIXED MATURITIES INVESTMENTS

<TABLE>
<CAPTION>
                                                             AS OF DECEMBER 31, 1996
                                                         -------------------------------
                                                                     GROSS
                                                                   UNREALIZED
                                                         AMORTIZED ------------   FAIR
                                                          COST    GAINS LOSSES    VALUE
                                                         -------  ----  ------   -------
<S>                                                      <C>      <C>   <C>      <C>
U.S. government and government agencies and authorities
 (guaranteed and sponsored)............................  $  166   $ 12  $   (3)  $   175
U.S. government and government agencies and authorities
 (guaranteed and sponsored)--asset-backed..............   1,970    161    (128)    2,003
States, municipalities and political subdivisions......     373      6     (11)      368
International governments..............................     281     12      (4)      289
Public utilities.......................................     877     12      (8)      881
All other corporate including international............   4,656    120    (107)    4,669
All other corporate--asset-backed......................   3,601     49     (59)    3,591
Short-term investments.................................   1,655     14     (21)    1,648
                                                         -------  ----  ------   -------
    Total fixed maturities.............................  $13,579  $386  $ (341)  $13,624
                                                         -------  ----  ------   -------
                                                         -------  ----  ------   -------
 
<CAPTION>
 
                                                             AS OF DECEMBER 31, 1995
                                                         -------------------------------
                                                                     GROSS
                                                                   UNREALIZED
                                                         AMORTIZED ------------   FAIR
                                                          COST    GAINS LOSSES    VALUE
                                                         -------  ----  ------   -------
<S>                                                      <C>      <C>   <C>      <C>
U.S. government and government agencies and authorities
 (guaranteed and sponsored)............................  $  502   $  4  $   (9)  $   497
U.S. government and government agencies and authorities
 (guaranteed and sponsored)--asset-backed..............   3,568    210    (387)    3,391
States, municipalities and political subdivisions......     201      4      (3)      202
International governments..............................     291     19      (4)      306
Public utilities.......................................     949     29      (2)      976
All other corporate including international............   3,065     76     (55)    3,086
All other corporate--asset-backed......................   5,056    187    (109)    5,134
Short-term investments.................................     808     --      --       808
                                                         -------  ----  ------   -------
    Total fixed maturities.............................  $14,440  $529  $ (569)  $14,400
                                                         -------  ----  ------   -------
                                                         -------  ----  ------   -------
</TABLE>
 
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
    The amortized cost and fair value of fixed maturities at December 31, 1996,
by maturity, are shown below. Asset-backed securities, including mortgage-backed
securities and collateralized mortgage obligations, are distributed to maturity
year based on the Company's estimates of the rate of future prepayments of
principal over the remaining lives of such securities. These estimates are
developed using prepayment speeds reported in broker consensus data and can be
expected to vary from actual experience. Expected maturities differ from
contractual maturities due to call or prepayment provisions.

<TABLE>
<CAPTION>
         MATURITY           AMORTIZED COST  FAIR VALUE
- --------------------------  --------------  -----------
<S>                         <C>             <C>
One year or less..........    $    2,632     $   2,642
Over one year through five
 years....................         5,871         5,928
Over five years through
 ten years................         3,320         3,311
Over ten years............         1,756         1,743
                                 -------    -----------
    Total.................    $   13,579     $  13,624
                                 -------    -----------
                                 -------    -----------
</TABLE>

    Sales of fixed maturities excluding short-term fixed maturities for the
years ended December 31, 1996, 1995 and 1994 resulted in proceeds of $3,459,
$4,848 and $5,708, respectively, resulting in gross realized capital gains of
$87, $91 and $71, respectively, and gross realized capital losses (including
investment writedowns) of $298, $72 and $100, respectively, not including
policyholder gains and losses. Sales of equity securities for the years ended
December 31, 1996, 1995 and 1994 resulted in proceeds of $74, $64 and $159,
respectively, resulting in gross realized capital gains of $2, $28 and $3,
respectively, and gross realized capital losses of $0, $59 and $14,
respectively, not including policyholder gains and losses.

(F) CONCENTRATION OF CREDIT RISK

    As of December 31, 1996, the Company had a reinsurance recoverable of $3.8
billion from Mutual Benefit Life Assurance Corporation ("Mutual Benefit"),
supported by assets in a security trust of $3.8 billion (including policy loans
of $3.3 billion). The risk of Mutual Benefit becoming insolvent is mitigated by
the reinsurance agreement's requirement that the assets be kept in a security
trust with the Company as sole beneficiary. Excluding investments in U.S.
government and agencies, the Company has no other significant concentrations of
credit risk in fixed maturities.

(G) DERIVATIVE INVESTMENTS

    Derivatives play an important role in facilitating the management of
interest rate risk, creating opportunities to fund product obligations hedging
against indexation risks that affect the value of certain liabilities and
adjusting broad investment risk characteristics when dictated by significant
changes in market risks. As an end user of derivatives, the Company uses a
variety of derivative financial instruments, including swaps, caps, floors,
forwards and exchange traded financial futures and options in order to hedge
exposure to price, foreign currency and/or interest rate risk on anticipated
investment purchases or existing assets and liabilities. The notional amounts of
derivative contracts represent the basis upon which pay and receive amounts are
calculated and are not reflective of credit risk for derivative contracts.
Credit risk for derivative contracts is limited to the amounts calculated to be
due to the Company on such contracts. The Company believes it maintains prudent
policies regarding the financial stability and credit standing of its major
counterparties and typically requires credit enhancement provisions to further
limit its credit risk. Many of these derivative contracts are bilateral
agreements that are not assignable without the consent of the relevant
counterparty. Notional amounts pertaining to derivative financial instruments
totaled $9.9 billion and $8.8 billion at December 31, 1996 and 1995,
respectively ($7.4 billion and $7.1 billion related to life insurance
investments and $2.5 billion and $1.7 billion related to life insurance
liabilities at December 31, 1996 and 1995, respectively).

<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
    The following table summarizes the Company's derivatives, segregated by
major categories, as of December 31, 1996 and 1995:

<TABLE>
<CAPTION>
                                                                             AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING
                                                                                          LIABILITY HEDGES)
                                                                          --------------------------------------------------
                                                                                                   PURCHASED
                                                                            TOTAL    ISSUED CAPS   OPTIONS,
                                                                          CARRYING        &         CAPS &
1996                                                                        VALUE     FLOORS(C)    FLOORS(D)    FUTURES(E)
- ------------------------------------------------------------------------  ---------  -----------  -----------  -------------
<S>                                                                       <C>        <C>          <C>          <C>
Asset-backed securities (excluding inverse floaters and anticipatory)...  $   5,242   $     500    $   2,454     $      --
Inverse floaters(a).....................................................        352          98          856            --
Anticipatory(g).........................................................         --          --           --           132
Other bonds and notes...................................................      7,369         425          440             5
Short-term investments..................................................        661          --           --            --
                                                                          ---------  -----------  -----------        -----
    Total fixed maturities..............................................     13,624       1,023        3,750           137
Equity securities, policy loans and other investments...................      4,011          --           --            --
                                                                          ---------  -----------  -----------        -----
    Total investments...................................................  $  17,635   $   1,023    $   3,750     $     137
                                                                          ---------  -----------  -----------        -----
                                                                          ---------  -----------  -----------        -----
    Total derivatives-fair value(b).....................................              $     (10)   $      35     $      --
                                                                                     -----------  -----------        -----
                                                                                     -----------  -----------        -----
 
<CAPTION>
 
                                                                             AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING
                                                                                          LIABILITY HEDGES)
                                                                          --------------------------------------------------
                                                                                                   PURCHASED
                                                                            TOTAL    ISSUED CAPS   OPTIONS,
                                                                          CARRYING        &         CAPS &
1995                                                                        VALUE     FLOORS(C)    FLOORS(D)    FUTURES(E)
- ------------------------------------------------------------------------  ---------  -----------  -----------  -------------
<S>                                                                       <C>        <C>          <C>          <C>
Asset-backed securities (excluding inverse floaters and anticipatory)...  $   5,764   $     118    $   3,133     $     322
Inverse floaters(a).....................................................        711         560          354             6
Anticipatory(g).........................................................         --          --           --           213
Other bonds and notes...................................................      7,118          33           66           322
Short-term investments..................................................        807          --           --            --
                                                                          ---------  -----------  -----------        -----
    Total fixed maturities..............................................     14,400         711        3,553           863
Equity securities, policy loans and other investments...................      3,865          --           --            --
                                                                          ---------  -----------  -----------        -----
    Total investments...................................................  $  18,265   $     711    $   3,553     $     863
                                                                          ---------  -----------  -----------        -----
                                                                          ---------  -----------  -----------        -----
    Total derivatives-fair value(b).....................................              $     (32)   $      46     $      --
                                                                                     -----------  -----------        -----
                                                                                     -----------  -----------        -----
 
<CAPTION>
 
                                                                           INTEREST      FOREIGN       TOTAL
                                                                             RATE       CURRENCY     NOTIONAL
1996                                                                       SWAPS(H)     SWAPS(F)      AMOUNT
- ------------------------------------------------------------------------  -----------  -----------  -----------
<S>                                                                       <C>          <C>          <C>
Asset-backed securities (excluding inverse floaters and anticipatory)...   $     941    $      --    $   3,895
Inverse floaters(a).....................................................         346           --        1,300
Anticipatory(g).........................................................          --           --          132
Other bonds and notes...................................................       1,079          125        2,074
Short-term investments..................................................          --           --           --
                                                                          -----------       -----   -----------
    Total fixed maturities..............................................       2,366          125        7,401
Equity securities, policy loans and other investments...................          19           --           19
                                                                          -----------       -----   -----------
    Total investments...................................................   $   2,385    $     125    $   7,420
                                                                          -----------       -----   -----------
                                                                          -----------       -----   -----------
    Total derivatives-fair value(b).....................................   $     (25)   $      (9)   $      (9)
                                                                          -----------       -----   -----------
                                                                          -----------       -----   -----------
 
                                                                           INTEREST      FOREIGN       TOTAL
                                                                             RATE       CURRENCY     NOTIONAL
1995                                                                       SWAPS(H)     SWAPS(F)      AMOUNT
- ------------------------------------------------------------------------  -----------  -----------  -----------
<S>                                                                       <C>          <C>          <C>
Asset-backed securities (excluding inverse floaters and anticipatory)...   $     290    $      --    $   3,863
Inverse floaters(a).....................................................         681           --        1,601
Anticipatory(g).........................................................          25           --          238
Other bonds and notes...................................................         757          187        1,365
Short-term investments..................................................          --           --           --
                                                                          -----------       -----   -----------
    Total fixed maturities..............................................       1,753          187        7,067
Equity securities, policy loans and other investments...................          18           --           18
                                                                          -----------       -----   -----------
    Total investments...................................................   $   1,771    $     187    $   7,085
                                                                          -----------       -----   -----------
                                                                          -----------       -----   -----------
    Total derivatives-fair value(b).....................................   $    (108)   $     (24)   $    (118)
                                                                          -----------       -----   -----------
                                                                          -----------       -----   -----------
</TABLE>
 
- ---------
 
(a) Inverse floaters are variations of collateralized mortgage obligations
    ("CMOs") for which the coupon rates move inversely with an index rate such
    as LIBOR. The risk to principal is considered negligible as the underlying
    collateral for the securities is guaranteed or sponsored by government
    agencies. To address the volatility risk created by the coupon variability,
    the Company uses a variety of derivative instruments, primarily interest
    rate swaps and purchased caps and floors.

(b) The fair value of derivative instruments including swaps, caps, floors,
    futures, options and forward commitments, was determined using a pricing
    model which is validated through quarterly comparison to dealer quoted
    market prices, for 1996 and dealer quoted prices for 1995.

(c) The 1996 data includes issued caps of $433 with a weighted average strike
    rate of 8.21% (ranging from 7.0% to 9.5%) and over 93% maturing in 2000
    through 2005. In addition, issued floors totaled $590, had a weighted
    average strike rate of 5.17% (ranging from 5.00% to 7.85%) with all of them
    maturing by the end of 2005. The 1995 data includes issued caps of $475 with
    a weighted average strike rate of 8.5% (ranging from 7.0% to 10.4%) and over
    85% maturing in 2000 through 2004. In addition, issued floors totaled $236,
    had a weighted average strike rate of 8.1% (ranging from 5.3% to 10.9%) and
    mature through 2007, with 76% maturing by 2004.

(d) The 1996 data includes purchased floors of $2.4 billion and purchased caps
    of $1.3 billion. The floors had a weighted average strike rate of 5.84%
    (ranging from 3.70% to 7.85%) and over 87% mature in 1997 through 1999. The
    options mature in 1997. The caps had a weighted average strike rate of 7.59%
    (ranging from 4.40% to 10.125%) and over 76% mature in 1997 through 2001.
    The 1995 data includes purchased floors of $1.8 billion and purchased caps
    of $1.7 billion. The floors had a weighted average strike price of 5.8%
    (ranging from 3.7% to 6.8%) and over 85% mature in 1997 through 1999. The
    caps had a weighted average strike price of 7.5% (ranging from 4.5% and
    10.1%) and over 82% mature in 1997 through 1999.

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
(e) As of December 31, 1996 and 1995, over 39% and 95%, respectively, of the
    notional futures contracts, expire within one year.

(f) As of December 31, 1996 and 1995, over 42% and 25%, respectively, of the
    Company's foreign currency swaps, expire within one year; the balance mature
    over the succeeding 4 to 5 years.

(g) Deferred gains and losses on anticipatory transactions are included in the
    carrying value of bond investments in the Consolidated Balance Sheets. At
    the time of the ultimate purchase, they are reflected as a basis adjustment
    to the purchased asset. At December 31, 1996, the Company had $1 million in
    net deferred gains for futures, interest rate swaps and purchased options.
    The Company expects to basis adjust $1 million of the deferred gains in
    1997. At December 31, 1995, the Company had $5.3 million in net deferred
    gains for futures, interest rate swaps and purchased options.

(h) The following table summarizes the maturities by notional value of interest
    rate swaps outstanding at December 31, 1996 and 1995, and the related
    weighted average interest pay rate or receive rate. The variable rates
    represent spot rates (primarily 90 day LIBOR), as of December 31, 1996 and
    1995. Such variable rates have been calculated assuming that the spot rates
    remain unchanged throughout the life of the interest rate swaps.

<TABLE>
<CAPTION>
1996                                                             1997         1998         1999         2000         2001
- ------------------------------------------------------------  -----------  -----------  -----------  -----------  -----------
<S>                                                           <C>          <C>          <C>          <C>          <C>
  PAY FIXED/RECEIVE VARIABLE
    Notional Value                                                   $--         $50          $125          $35         $125
    Weighted Average Pay Rate                                         --          5.7 %        5.9 %        5.5 %        5.5%
    Weighted Average Receive Rate                                     --          3.2 %         --          6.5 %        6.4%
  PAY VARIABLE/RECEIVE FIXED
    Notional Value                                                   $86          $25         $486          $74         $582
    Weighted Average Pay Rate                                        7.5 %         --          6.4 %        6.7 %        7.0%
    Weighted Average Receive Rate                                    5.6 %         --          5.6 %        5.7 %        6.2%
  PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
    Notional Value                                                   $19          $15          $--         $200          $--
    Weighted Average Pay Rate                                        5.9 %        5.7 %         --          6.4 %         --
    Weighted Average Receive Rate                                    3.7 %        5.5 %         --          5.0 %         --
    Total Interest Rate Swaps                                       $105          $90         $611         $309         $707
    Total Weighted Average Pay Rate                                  7.2 %        5.7 %        6.3 %        6.4 %        6.7%
    Total Weighted Average Receive Rate                              5.2 %        3.8 %        4.3 %        5.4 %        6.3%
 
<CAPTION>
 
1995                                                             1996         1997         1998         1999         2000
- ------------------------------------------------------------  -----------  -----------  -----------  -----------  -----------
<S>                                                           <C>          <C>          <C>          <C>          <C>
  PAY FIXED/RECEIVE VARIABLE
    Notional Value                                                  $15           $50          $--         $453          $31
    Weighted Average Pay Rate                                        5.0 %        7.2 %         --          8.1 %        7.1%
    Weighted Average Receive Rate                                    5.8 %        5.9 %         --          5.8 %        5.7%
  PAY VARIABLE/RECEIVE FIXED
    Notional Value                                                  $100          $68          $25          $25          $35
    Weighted Average Pay Rate                                        5.9 %        8.6 %        5.9 %         --          5.9%
    Weighted Average Receive Rate                                    2.4 %        7.9 %        4.0 %         --          6.5%
  PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
    Notional Value                                                   $50          $18          $36          $12         $200
    Weighted Average Pay Rate                                        5.8 %         --          3.7 %        3.5 %        4.5%
    Weighted Average Receive Rate                                    5.4 %         --          5.6 %        5.2 %        6.8%
    Total Interest Rate Swaps                                       $165         $136          $61         $490         $266
    Total Weighted Average Pay Rate                                  5.8 %        7.8 %        4.6 %        7.6 %        5.0%
    Total Weighted Average Receive Rate                              3.6 %        7.2 %        4.9 %        5.4 %        6.6%
 
<CAPTION>
                                                                                            LATEST
1996                                                           THEREAFTER       TOTAL      MATURITY
- ------------------------------------------------------------  -------------  -----------  -----------
<S>                                                           <C>            <C>          <C>
  PAY FIXED/RECEIVE VARIABLE
    Notional Value                                                   $170          $505         2003
    Weighted Average Pay Rate                                         5.7  %        5.7 %
    Weighted Average Receive Rate                                     6.9  %        4.7 %
  PAY VARIABLE/RECEIVE FIXED
    Notional Value                                                   $349        $1,602         2007
    Weighted Average Pay Rate                                         6.9  %        6.8 %
    Weighted Average Receive Rate                                     5.9  %        5.9 %
  PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
    Notional Value                                                    $44          $278         2003
    Weighted Average Pay Rate                                        12.9  %        7.4 %
    Weighted Average Receive Rate                                     6.4  %        5.2 %
    Total Interest Rate Swaps                                        $563        $2,385         2007
    Total Weighted Average Pay Rate                                   7.0  %        6.6 %
    Total Weighted Average Receive Rate                               6.3  %        5.5 %
                                                                                            LATEST
1995                                                           THEREAFTER       TOTAL      MATURITY
- ------------------------------------------------------------  -------------  -----------  -----------
<S>                                                           <C>            <C>          <C>
  PAY FIXED/RECEIVE VARIABLE
    Notional Value                                                   $229          $778         2004
    Weighted Average Pay Rate                                         7.8  %        7.8 %
    Weighted Average Receive Rate                                     5.9  %        5.9 %
  PAY VARIABLE/RECEIVE FIXED
    Notional Value                                                   $190          $443         2007
    Weighted Average Pay Rate                                         5.4  %        5.4 %
    Weighted Average Receive Rate                                     6.9  %        6.9 %
  PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
    Notional Value                                                   $234          $550         2004
    Weighted Average Pay Rate                                        16.3  %        5.7 %
    Weighted Average Receive Rate                                     5.9  %        6.4 %
    Total Interest Rate Swaps                                        $653        $1,771         2007
    Total Weighted Average Pay Rate                                   7.3  %        6.9 %
    Total Weighted Average Receive Rate                               6.3  %        5.8 %
</TABLE>

    In addition, interest rate sensitivity related to certain Company insurance
liabilities was altered primarily through interest rate swap agreements. The
notional amount of the liability agreements in which the Company generally pays
one variable rate in exchange for another was $2.4 billion and $1.7 billion at
December 31, 1996 and 1995, respectively. As of December 31, 1996, the weighted
average pay rate was 5.6% and the weighted average receive rate was 6.5%. These
agreements mature at various times through 2001.

<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
    A reconciliation between notional amounts at December 31, 1995 and 1996 by
derivative type and strategy is as follows:

<TABLE>
<CAPTION>
                                                                                        BY DERIVATIVE TYPE
                                                                           ---------------------------------------------
                                                                               12/31/95                     MATURITIES/
                                                                            NOTIONAL AMOUNT    ADDITIONS   TERMINATIONS
                                                                           -----------------  -----------  -------------
<S>                                                                        <C>                <C>          <C>
Caps.....................................................................      $   2,184       $   1,286     $   1,715
Floors...................................................................          2,180           2,053         1,065
Options..................................................................             --              10            --
Swaps/Forwards...........................................................          3,566           3,989         2,694
Futures..................................................................            863           2,092         2,818
                                                                                  ------      -----------       ------
    Total................................................................      $   8,793       $   9,430     $   8,292
                                                                                  ------      -----------       ------
                                                                                  ------      -----------       ------
 
<CAPTION>
 
                                                                                            BY STRATEGY
                                                                           ---------------------------------------------
                                                                               12/31/95                     MATURITIES/
                                                                            NOTIONAL AMOUNT    ADDITIONS   TERMINATIONS
                                                                           -----------------  -----------  -------------
<S>                                                                        <C>                <C>          <C>
Liability................................................................      $   1,708       $   1,940     $   1,137
Anticipatory.............................................................            238             516           622
Asset....................................................................          2,984           1,265         2,137
Portfolio................................................................          3,863           5,709         4,396
                                                                                  ------      -----------       ------
    Total................................................................      $   8,793       $   9,430     $   8,292
                                                                                  ------      -----------       ------
                                                                                  ------      -----------       ------
 
<CAPTION>
 
                                                                               12/31/96
                                                                            NOTIONAL AMOUNT
                                                                           -----------------
<S>                                                                        <C>
Caps.....................................................................      $   1,755
Floors...................................................................          3,168
Options..................................................................             10
Swaps/Forwards...........................................................          4,861
Futures..................................................................            137
                                                                                  ------
    Total................................................................      $   9,931
                                                                                  ------
                                                                                  ------
 
                                                                               12/31/96
                                                                            NOTIONAL AMOUNT
                                                                           -----------------
<S>                                                                        <C>
Liability................................................................      $   2,511
Anticipatory.............................................................            132
Asset....................................................................          2,112
Portfolio................................................................          5,176
                                                                                  ------
    Total................................................................      $   9,931
                                                                                  ------
                                                                                  ------
</TABLE>

(H) FAIR VALUE OF FINANCIAL INSTRUMENTS

<TABLE>
<CAPTION>
                                                                                  AS OF DECEMBER 31,    AS OF DECEMBER 31,
                                                                                         1996                  1995
                                                                                 --------------------  --------------------
                                                                                 CARRYING     FAIR     CARRYING     FAIR
                                                                                  AMOUNT      VALUE     AMOUNT      VALUE
                                                                                 ---------  ---------  ---------  ---------
<S>                                                                              <C>        <C>        <C>        <C>
ASSETS
  Fixed maturities.............................................................  $  13,624  $  13,624  $  14,400  $  14,400
  Equity securities............................................................        119        119         63         63
  Policy loans.................................................................      3,836      3,836      3,381      3,381
  Mortgage loans...............................................................          2          2        265        265
  Investments in partnerships and trust........................................         48         48         94         97
  Other........................................................................          6         56         62         62
LIABILITIES
  Other policy benefits........................................................  $  11,707  $  11,469  $  12,727  $  12,767
</TABLE>

    The following methods and assumptions were used to estimate the fair value
of each class of financial instrument: fair value for fixed maturities and
equity securities approximate those quotations published by applicable stock
exchanges or received from other reliable sources; policy and mortgage loan
carrying amounts approximate fair value; investments in partnerships and trusts
are based on external market valuations from partnership and trust managements;
fair value of derivative instruments, including swaps, caps, floors, futures,
and forward commitments, is determined by using a pricing model which is
validated through quarterly comparison to dealer quoted market prices; and other
policy benefits payable for investment type contracts are determined by
estimating future cash flows discounted at the year end market rate.

 4. INCOME TAX

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

    As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of Hartford Life, the Company will be included for
federal income tax purposes in the consolidated group of which The Hartford is
the common parent. It is the current intention of The Hartford and its
subsidiaries to continue to file a consolidated federal income tax return. The
Company will continue to remit to (receive from) The Hartford a current income
tax provision (benefit) computed in accordance with such tax sharing agreement.
The Company's effective tax rate was 35%, 32% and 32% in 1996, 1995 and 1994,
respectively.

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
    Income tax expense was as follows:

<TABLE>
<CAPTION>
                                        FOR THE YEARS ENDED DECEMBER
                                                     31,
                                       -------------------------------
                                         1996       1995       1994
                                       ---------  ---------  ---------
<S>                                    <C>        <C>        <C>
 Current.............................  $     122  $     211  $     185
  Deferred...........................       (102)      (149)      (120)
                                       ---------  ---------  ---------
    Total............................  $      20  $      62  $      65
                                       ---------  ---------  ---------
                                       ---------  ---------  ---------
</TABLE>

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

<TABLE>
<CAPTION>
                                        FOR THE YEARS ENDED DECEMBER
                                                     31,
                                       -------------------------------
                                         1996       1995       1994
                                       ---------  ---------  ---------
<S>                                    <C>        <C>        <C>
 Tax provision at U.S. statutory
  rate...............................  $      20  $      67  $      71
  Tax-exempt income..................         --         (3)        (3)
  Foreign tax credit.................         --         (4)        (1)
  Other..............................         --          2         (2)
                                       ---------  ---------  ---------
    Total............................  $      20  $      62  $      65
                                       ---------  ---------  ---------
                                       ---------  ---------  ---------
</TABLE>

    Income taxes paid were $189, $162 and $244 in 1996, 1995 and 1994,
respectively. The current tax refund due from The Hartford to the Company was
$72 and $8 as of December 31, 1996 and 1995, respectively.

    Deferred tax assets (liabilities) included the following:

<TABLE>
<CAPTION>
                                                       AS OF
                                                    DECEMBER 31,
                                                --------------------
                                                  1996       1995
                                                ---------  ---------
<S>                                             <C>        <C>
Tax return deferred acquisition costs.........  $     514  $     410
Financial statement deferred acquisition costs
 and reserves.................................       (242)       138
Employee benefits.............................          8          8
Unrealized (gain) loss on investments.........        (16)        32
Investments and other.........................        210       (168)
                                                ---------  ---------
    Total.....................................  $     474  $     420
                                                ---------  ---------
                                                ---------  ---------
</TABLE>

    Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In such circumstances, the deferred income
was accumulated in a "Policyholders' Surplus Account" and will be taxable in the
future only under conditions which management considers to be remote; therefore,
no Federal income taxes have been provided on this deferred income. The balance
for tax return purposes of the Policyholders' Surplus Account as of December 31,
1996 was $37.

 5. REINSURANCE

    The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve the Company of its primary
liability. The Company also assumes insurance from other insurers.

    Life insurance net retained premiums were comprised of the following:

<TABLE>
<CAPTION>
                                         YEAR ENDED DECEMBER 31,
                                     -------------------------------
                                       1996       1995       1994
                                     ---------  ---------  ---------
<S>                                  <C>        <C>        <C>
Gross premiums.....................  $   1,834  $   1,545  $   1,316
Insurance assumed..................        173        591        299
Insurance ceded....................       (302)      (649)      (515)
                                     ---------  ---------  ---------
    Total..........................  $   1,705  $   1,487  $   1,100
                                     ---------  ---------  ---------
                                     ---------  ---------  ---------
</TABLE>

    Life reinsurance recoveries, which reduced death and other benefits, for the
years ended December 31, 1996, 1995 and 1994 approximated $140, $220 and $164,
respectively.

    In December 1994, the Company ceded to a third party $1.0 billion in
individual fixed and variable annuities on a modified coinsurance basis. In
December 1995, the Company ceded approximately $1.2 billion in individual
variable annuities on a modified coinsurance basis to a third party. These
transactions did not have a material impact on consolidated net income.

    In May 1994, the Company assumed the life insurance policies and the
individual annuities of Pacific Standard with reserves and account values of
approximately $434 million. The Company received cash and investment grade
assets to support the life insurance and individual annuity contract obligations
assumed.

 6. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

    The Company's employees are included in Hartford Fire's noncontributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, as amended, and the maximum amount that
can be deducted for Federal income tax purposes. Generally, pension costs are
funded through the purchase of the Company's group pension contracts. The cost
to the Company was approximately $5, $2 and $2 in 1996, 1995 and 1994,
respectively.

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

<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
expense, allocated by The Hartford, was immaterial for 1996, 1995 and 1994,
respectively.

    The assumed rate of future increases in the per capita cost of health care
(the health care trend rate) was 9.3% for 1996, decreasing ratably to 6.0% in
the year 2001. Increasing the health care trend rates by one percent per year
would have an immaterial impact on the accumulated postretirement benefit
obligation and the annual expense. To the extent that the actual experience
differs from the inherent assumptions, the effect will be amortized over the
average future service of the covered employees.

 7. BUSINESS SEGMENT INFORMATION

    The Company sells financial products such as fixed and variable annuities,
retirement plan services, and life insurance on both an individual and a group
basis. The Company divides its core businesses into three segments: Investment
Products, Individual Life Insurance and Employee Benefits. In addition, the
Company also maintains a corporate operation and also classifies certain of its
business as Runoff operations. The Investment Products segment offers individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services, mutual funds, investment management
services and other financial products. The Individual Life Insurance segment
sells a variety of individual life insurance products, including variable life,
universal life, and interest-sensitive whole life policies. The Employee
Benefits segment sells corporate owned life insurance. Through its corporate
operation, the Company reports net investment income on assets representing
surplus not assigned to any of its business segments and certain other revenues
and expenses not specifically allocable to any of its business segments. The
Company's Runoff operations are comprised of Closed Book GRC. With the exception
of Closed Book GRC, net realized capital gains and losses are recognized in the
period of realization but are allocated to the segments utilizing durations of
the segment portfolios.

<TABLE>
<CAPTION>
                                          YEAR ENDED DECEMBER 31,
                                      -------------------------------
                                        1996       1995       1994
                                      ---------  ---------  ---------
<S>                                   <C>        <C>        <C>
REVENUES
  Investment Products...............  $   1,013  $     759  $     594
  Individual Life Insurance.........        440        383        375
  Employee Benefits.................      1,366      1,273        919
  Corporate Operations..............         81         52         30
  Runoff Operations.................        (11)       337        481
                                      ---------  ---------  ---------
    Total Revenues..................  $   2,889  $   2,804  $   2,399
                                      ---------  ---------  ---------
                                      ---------  ---------  ---------
 
<CAPTION>
 
                                          YEAR ENDED DECEMBER 31,
                                      -------------------------------
                                        1996       1995       1994
                                      ---------  ---------  ---------
<S>                                   <C>        <C>        <C>
INCOME BEFORE INCOME TAX EXPENSE
  Investment Products...............  $     230  $     172  $     127
  Individual Life Insurance.........         68         56         39
  Employee Benefits.................         43         37         27
  Corporate Operations..............         65         16          8
  Runoff Operations.................       (348)       (90)         2
                                      ---------  ---------  ---------
    Income Before Income Tax
     Expense........................  $      58  $     191  $     203
                                      ---------  ---------  ---------
                                      ---------  ---------  ---------
<CAPTION>
 
                                          YEAR ENDED DECEMBER 31,
                                      -------------------------------
                                        1996       1995       1994
                                      ---------  ---------  ---------
<S>                                   <C>        <C>        <C>
ASSETS
  Investment Products...............  $  53,743  $  40,624  $  29,115
  Individual Life Insurance.........      3,753      3,173      2,808
  Employee Benefits.................     14,515     13,494      7,847
  Corporate Operations..............      1,891      1,729        822
  Runoff Operations.................      3,667      5,177      7,257
                                      ---------  ---------  ---------
    Total Assets....................  $  77,569  $  64,197  $  47,849
                                      ---------  ---------  ---------
                                      ---------  ---------  ---------
</TABLE>

 8. STATUTORY NET INCOME AND SURPLUS

    A significant percentage of the consolidated statutory surplus is
permanently reinvested or is subject to various state regulatory restrictions
which limit the payment of dividends without prior approval. The total amount of
statutory dividends which may be paid by the insurance subsidiaries of the
Company in 1997, without prior approval, is estimated to be $121 million.
Statutory net income and surplus as of and for the years ended December 31 were:

<TABLE>
<CAPTION>
                              1996       1995       1994
                            ---------  ---------  ---------
<S>                         <C>        <C>        <C>
Statutory net income......  $     144  $     112  $      58
Statutory surplus.........  $   1,207  $   1,125  $     941
</TABLE>

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

 9. SEPARATE ACCOUNTS

    The Company maintained separate account assets and liabilities totaling
$49.7 billion and $36.3 billion at December 31, 1996 and 1995, respectively,
which are reported at fair value. Separate account assets are segregated from
other investments, and investment income and gains and losses accrue directly to
the policyholder. Separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts totaling $39.4 billion and $25.9 billion at
December 31, 1996 and 1995, respectively, wherein the policyholder assumes the
investment risk, and

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
guaranteed separate account assets totaling $10.3 billion at December 31, 1996
and 1995, wherein the Company contractually guarantees either a minimum return
or account value to the policyholder. Included in the non-guaranteed category
are policy loans totaling $2.0 billion and $1.7 billion at December 31, 1996 and
1995, respectively. Investment income (including investment gains and losses)
and interest credited to policyholders on separate account assets are not
reflected in the Consolidated Statements of Income. Separate account management
fees, net of minimum guarantees, were $538, $387 and $256 in 1996, 1995 and
1994, respectively.

    The guaranteed separate accounts include modified guaranteed individual
annuity and modified guaranteed life insurance. The average credited interest
rate on these contracts was 6.53% at December 31, 1996. The assets that support
these liabilities were comprised of $10.2 billion in fixed maturities at
December 31, 1996. The portfolios are segregated from other investments and are
managed so as to minimize liquidity and interest rate risk. To minimize the risk
of disintermediation associated with early withdrawals, individual annuity and
modified guaranteed life insurance contracts carry a graded surrender charge as
well as a market value adjustment. Additional investment risk is hedged using a
variety of derivatives which totaled $0.1 billion in carrying value and $2.4
billion in notional amounts at December 31, 1996.

 10. COMMITMENTS AND CONTINGENCIES

    Under insurance guaranty fund laws existing in each state, the District of
Columbia and Puerto Rico, insurers licensed to do business can be assessed by
state insurance guaranty associations for certain obligations of insolvent
insurance companies to policyholders and claimants. Recent regulatory actions
against certain large life insurers encountering financial difficulty have
prompted various state insurance guaranty associations to begin assessing life
insurance companies for the deemed losses. Most of these laws do provide,
however, that an assessment may be excused or deferred if it would threaten an
insurer's solvency and further provide annual limits on such assessments. A
large part of the assessments paid by the Company's insurance subsidiaries
pursuant to these laws may be used as credits for a portion of the Company's
insurance subsidiaries' premium taxes. The Company paid guaranty fund
assessments of approximately $11, $10 and $8 in 1996, 1995 and 1994,
respectively, of which $5, $6 and $4 were estimated to be creditable against
premium taxes.

    The Company is a defendant in various lawsuits arising in the ordinary
course of business. In the opinion of management, the resolution of these
matters is not expected to have a material adverse effect on the Company's
business, financial position, or results of operations.

    The rent paid to Hartford Fire for the space occupied by the Company was $3
in 1996, 1995, and 1994. The Company expects to pay annual rent of $7 in 1997,
1998, and 1999, respectively, $12 in 2000 and 2001, and $96 thereafter, over the
remaining term of the sublease, which expires on December 31, 2009. Rental
expense is recognized on a level basis over the term of the sublease and
amounted to approximately $8 in 1996, 1995 and 1994.

 11. SUBSEQUENT EVENTS

    On February 10, 1997, Hartford Life filed a registration statement with the
Securities and Exchange Commission relating to the U.S. and international
offerings of shares of Class A common stock (the "Equity Offerings")
representing up to 20% ownership of Hartford Life. After completion of the
Equity Offerings, The Hartford would own all of the shares of Class B Common
Stock (after reclassification of Hartford Life's common stock into Class B
Common Stock prior to March 31, 1997). Hartford Life intends to use the
estimated net proceeds of the Equity Offerings to make a capital contribution to
its insurance subsidiaries, to reduce its third-party indebtedness and for other
general corporate purposes.

    The Hartford has advised the Company that its current intent is to continue
to beneficially own at least 80% of Hartford Life, but it is under no
contractual obligation to do so, except for a limited period. Provided that The
Hartford continues to beneficially own at least 80% of the combined voting power
or the value of the outstanding capital stock of Hartford Life, Hartford Life
will be included for federal income tax purposes in the controlled group of
which The Hartford is the common parent. Each member of a controlled group is
jointly and severally liable for pension funding and pension termination
liabilities of each other member of the controlled group, as well as certain
benefit plan taxes. Accordingly, the Company could be liable for pension
funding, pension termination liabilities and certain other pension related
excise taxes as well as other taxes of another member of The Hartford controlled
group in the event any such liability is incurred, and not discharged, by such
other member.

    In connection with the proposed Equity Offerings, Hartford Life plans to
enter into formal agreements, including a master intercompany agreement,
investment management agreements and a new tax sharing agreement, with The
Hartford covering such matters as corporate services, approval of certain
corporate activities, registration rights, owned and leased space, allocation of
expenses, taxes and liabilities, investment advisory services, use of trademarks
and certain other corporate matters. As part of the master intercompany
agreement, Hartford Life would agree to remit to The Hartford 30% of any shared
liabilities for which The Hartford is responsible in respect of the ITT
Spin-off, 30% of any taxes which may be assessed to The Hartford relating to the
ITT Spin-off and will indemnify The

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

Hartford for certain other tax liabilities. As of December 31, 1996 there was no
known liability associated with the ITT Spin-off. Such agreements are meant to
maintain the relationship between Hartford Life and The Hartford in a manner
consistent in all material respects with past practice. As a result, management
believes these agreements should not have a material impact on the results of
operations of the Company.

    In addition, under insurance company holding laws, agreements between
Hartford Life's insurance subsidiaries and The Hartford must be fair and
reasonable and may be subject to the approval of applicable insurance
commissioners. The agreements will be intended to maintain the relationship
between Hartford Life and The Hartford in a manner generally consistent with
past practices. However, none of these arrangements will result from
arm's-length negotiations and, therefore, the prices charged to Hartford Life
and its subsidiaries for services provided under these arrangements may be
higher or lower than prices that may be charged by third parties.

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
  SCHEDULE I -- SUMMARY OF INVESTMENTS (OTHER THAN INVESTMENTS IN AFFILIATES)
                            AS OF DECEMBER 31, 1996
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                                                                                                               ESTIMATED
                                                                                                                 FAIR
TYPE OF INVESTMENT                                                                                   COST        VALUE
- -------------------------------------------------------------------------------------------------  ---------  -----------
<S>                                                                                                <C>        <C>
Fixed Maturities
Bonds and Notes
  U.S. Government and government agencies and authorities
   (guaranteed sponsored)........................................................................  $     166   $     175
  U.S. Government and government agencies and authorities
   (guaranteed sponsored)--asset-backed..........................................................      1,970       2,003
States, municipalities and political subdivisions................................................        373         368
International governments........................................................................        281         289
Public utilities.................................................................................        877         881
All other corporate including international......................................................      4,656       4,669
All other corporate--asset-backed................................................................      3,601       3,591
Short-term investments...........................................................................      1,655       1,648
                                                                                                   ---------  -----------
Total Fixed Maturities...........................................................................  $  13,579   $  13,624
Equity Securities
Common Stocks--industrial, miscellaneous, and all other..........................................        110         119
Total Fixed Maturities and Equity Securities.....................................................  $  13,689   $  13,743
Other Investments
Policy Loans.....................................................................................      3,836       3,836
Mortgage Loans...................................................................................          2           2
Investments in partnerships and trusts...........................................................         48          48
Futures, options, and miscellaneous..............................................................          6          56
Total Other Investments..........................................................................      3,892       3,942
                                                                                                   ---------  -----------
Total Investments................................................................................  $  17,581   $  17,685
                                                                                                   ---------  -----------
                                                                                                   ---------  -----------

<CAPTION>
                                                                                                     AMOUNT AT
                                                                                                    WHICH SHOWN
                                                                                                        ON
TYPE OF INVESTMENT                                                                                 BALANCE SHEET
- -------------------------------------------------------------------------------------------------  -------------
<S>                                                                                                <C>
Fixed Maturities
Bonds and Notes
  U.S. Government and government agencies and authorities
   (guaranteed sponsored)........................................................................   $       175
  U.S. Government and government agencies and authorities
   (guaranteed sponsored)--asset-backed..........................................................         2,003
States, municipalities and political subdivisions................................................           368
International governments........................................................................           289
Public utilities.................................................................................           881
All other corporate including international......................................................         4,669
All other corporate--asset-backed................................................................         3,591
Short-term investments...........................................................................         1,648
                                                                                                   -------------
Total Fixed Maturities...........................................................................   $    13,624
Equity Securities
Common Stocks--industrial, miscellaneous, and all other..........................................           119
Total Fixed Maturities and Equity Securities.....................................................   $    13,743
Other Investments
Policy Loans.....................................................................................         3,836
Mortgage Loans...................................................................................             2
Investments in partnerships and trusts...........................................................            48
Futures, options, and miscellaneous..............................................................             6
Total Other Investments..........................................................................         3,892
                                                                                                   -------------
Total Investments................................................................................   $    17,635
                                                                                                   -------------
                                                                                                   -------------
</TABLE>

    Note: The fair values for short-term investments approximate cost.

<PAGE>
                                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
 
                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
              SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                                                                                        FUTURE POLICY
                                                                                      BENEFITS, UNPAID     OTHER POLICY
                                                                                         CLAIMS AND         CLAIMS AND
                                                                   DEFERRED POLICY    CLAIM ADJUSTMENT       BENEFITS
SEGMENT                                                           ACQUISITION COSTS       EXPENSES            PAYABLE
- ----------------------------------------------------------------  -----------------  -------------------  ---------------
<S>                                                               <C>                <C>                  <C>
1996
Investment Products.............................................      $   2,030           $   1,554          $   6,599
Individual Life Insurance.......................................            730                 346              2,160
Employee Benefits...............................................             --                 381              9,834
Corporate Operations............................................             --                  --                 --
Runoff Operations...............................................             --                  --              3,541
                                                                         ------              ------            -------
Consolidated Operations.........................................      $   2,760           $   2,281          $  22,134
                                                                         ------              ------            -------
                                                                         ------              ------            -------
 
1995
Investment Products.............................................      $   1,561           $   1,314          $   6,204
Individual Life Insurance.......................................            615                 706              1,932
Employee Benefits...............................................             12                 325              9,285
Corporate Operations............................................             --                  --                 --
Runoff Operations...............................................             --                  28              5,177
                                                                         ------              ------            -------
Consolidated Operations.........................................      $   2,188           $   2,373          $  22,598
                                                                         ------              ------            -------
                                                                         ------              ------            -------
 
1994
Investment Products.............................................      $   1,244           $     895          $   4,617
Individual Life Insurance.......................................            565                 582              2,543
Employee Benefits...............................................             --                 369              6,911
Corporate Operations............................................             --                  --                 --
Runoff Operations...............................................             --                  44              7,257
                                                                         ------              ------            -------
Consolidated Operations.........................................      $   1,809           $   1,890          $  21,328
                                                                         ------              ------            -------
                                                                         ------              ------            -------
 
<CAPTION>
 
                                                                                      BENEFITS CLAIMS,    AMORTIZATION OF
                                                                    NET REALIZED          AND CLAIM       DEFERRED POLICY
                                                                  CAPITAL (LOSSES)       ADJUSTMENT         ACQUISITION
SEGMENT                                                                 GAINS             EXPENSES             COSTS
- ----------------------------------------------------------------  -----------------  -------------------  ---------------
<S>                                                               <C>                <C>                  <C>
1996
Investment Products.............................................      $      --           $     451          $     175
Individual Life Insurance.......................................             --                 245                 59
Employee Benefits...............................................             --                 546                 --
Corporate Operations............................................              6                  --                 --
Runoff Operations...............................................           (219)                293                 --
                                                                         ------              ------            -------
Consolidated Operations.........................................      $    (213)          $   1,535          $     234
                                                                         ------              ------            -------
                                                                         ------              ------            -------
 
1995
Investment Products.............................................      $      --           $     349          $     117
Individual Life Insurance.......................................             --                 127                 70
Employee Benefits...............................................             --                 496                 --
Corporate Operations............................................            (11)                 33                 --
Runoff Operations...............................................             --                 417                 12
                                                                         ------              ------            -------
Consolidated Operations.........................................      $     (11)          $   1,422          $     199
                                                                         ------              ------            -------
                                                                         ------              ------            -------
 
1994
Investment Products.............................................      $      --           $     383          $      90
Individual Life Insurance.......................................             --                 179                 51
Employee Benefits...............................................             --                 376                 --
Corporate Operations............................................              7                  --                 --
Runoff Operations...............................................             --                 467                  4
                                                                         ------              ------            -------
Consolidated Operations.........................................      $       7           $   1,405          $     145
                                                                         ------              ------            -------
                                                                         ------              ------            -------
 
<CAPTION>
 
                                                                   PREMIUMS AND        NET
                                                                       OTHER       INVESTMENT
SEGMENT                                                           CONSIDERATIONS     INCOME
- ----------------------------------------------------------------  ---------------  -----------
<S>                                                               <C>              <C>
1996
Investment Products.............................................     $     536      $     477
Individual Life Insurance.......................................           287            153
Employee Benefits...............................................           881            485
Corporate Operations............................................            --             75
Runoff Operations...............................................             1            207
                                                                        ------     -----------
Consolidated Operations.........................................     $   1,705      $   1,397
                                                                        ------     -----------
                                                                        ------     -----------
1995
Investment Products.............................................     $     319      $     436
Individual Life Insurance.......................................           246            137
Employee Benefits...............................................           922            351
Corporate Operations............................................            --             67
Runoff Operations...............................................            --            337
                                                                        ------     -----------
Consolidated Operations.........................................     $   1,487      $   1,328
                                                                        ------     -----------
                                                                        ------     -----------
1994
Investment Products.............................................     $     263      $     330
Individual Life Insurance.......................................           268            108
Employee Benefits...............................................           569            350
Corporate Operations............................................            --             23
Runoff Operations...............................................            --            481
                                                                        ------     -----------
Consolidated Operations.........................................     $   1,100      $   1,292
                                                                        ------     -----------
                                                                        ------     -----------
 
                                                                   DIVIDENDS TO       OTHER
SEGMENT                                                            POLICYHOLDERS    EXPENSES
- ----------------------------------------------------------------  ---------------  -----------
<S>                                                               <C>              <C>
1996
Investment Products.............................................     $      --      $     156
Individual Life Insurance.......................................            --             68
Employee Benefits...............................................           635            143
Corporate Operations............................................            --             16
Runoff Operations...............................................            --             44
                                                                        ------     -----------
Consolidated Operations.........................................     $     635      $     427
                                                                        ------     -----------
                                                                        ------     -----------
1995
Investment Products.............................................     $      --      $     115
Individual Life Insurance.......................................            --             55
Employee Benefits...............................................           675            138
Corporate Operations............................................            --             11
Runoff Operations...............................................            --             (2)
                                                                        ------     -----------
Consolidated Operations.........................................     $     675      $     317
                                                                        ------     -----------
                                                                        ------     -----------
1994
Investment Products.............................................     $      --      $     (31)
Individual Life Insurance.......................................            --            107
Employee Benefits...............................................           419            100
Corporate Operations............................................            --             43
Runoff Operations...............................................            --              8
                                                                        ------     -----------
Consolidated Operations.........................................     $     419      $     227
                                                                        ------     -----------
                                                                        ------     -----------
</TABLE>
 
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES                              
- --------------------------------------------------------------------------------
 
                HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
                           SCHEDULE IV -- REINSURANCE
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                                                                                      PERCENTAGE
                                                                   ASSUMED            OF
                                                         CEDED TO   FROM              AMOUNT
                                                GROSS     OTHER     OTHER     NET     ASSUMED
                                                AMOUNT   COMPANIES COMPANIES  AMOUNT  TO NET
                                               --------  --------  -------  --------  ------
<S>                                            <C>       <C>       <C>      <C>       <C>
Year Ended December 31, 1996
Life Insurance in Force......................  $177,094  $106,146  $31,957  $102,905   31.1%
                                               --------  --------  -------  --------
Insurance Revenues
  Life Insurance and Annuities...............  $  1,801  $  298    $ 169    $  1,672   10.1%
  Accident and Health Insurance..............        33       4        4          33   12.1%
                                               --------  --------  -------  --------
Total........................................  $  1,834  $  302    $ 173    $  1,705   10.1%
                                               --------  --------  -------  --------
                                               --------  --------  -------  --------
For the Year Ended December 31, 1995
Life Insurance in Force......................  $182,716  $112,774  $26,996  $ 96,938   27.8%
                                               --------  --------  -------  --------
Insurance Revenues
  Life Insurance and Annuities...............  $  1,232  $  325    $ 574    $  1,481   38.8%
  Accident and Health Insurance..............       313     324       17           6  283.3%
                                               --------  --------  -------  --------
Total........................................  $  1,545  $  649    $ 591    $  1,487   39.7%
                                               --------  --------  -------  --------
                                               --------  --------  -------  --------
For the Year Ended December 31, 1994
Life Insurance in Force......................  $136,929  $87,553   $35,016  $ 84,392   41.5%
                                               --------  --------  -------  --------
Insurance Revenues
  Life Insurance and Annuities...............  $  1,008  $  211    $ 294    $  1,091   26.9%
  Accident and Health Insurance..............       308     304        5           9   55.6%
                                               --------  --------  -------  --------
Total........................................  $  1,316  $  515    $ 299    $  1,100   27.2%
                                               --------  --------  -------  --------
                                               --------  --------  -------  --------
</TABLE>
<PAGE>
                                        PART C

<PAGE>

                                  OTHER INFORMATION
                                           
Item 24.  Financial Statements and Exhibits

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

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

         (2)  Not applicable.

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

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

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

         (5)  Form of Application.(1)

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

         (6)  (b)  Bylaws of Hartford.(1)

         (7)  Not applicable. 
   
         (8)  Not applicable.
    
         (9)  Opinion and Consent of Lynda Godkin, Senior Vice President,
              General Counsel, and Corporate Secretary.

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

         (11) No financial statements are omitted.

         (12) Not applicable.

______________

  (1)  Incorporated by reference to Post-Effective Amendment No. 2, to the
       Registration Statement File No. 33-73570, dated May 1, 1995.

  (2)  Incorporated by reference to Post Effective Amendment No. 3, to
       the Registration Statement File No. 33-73570, dated April 29, 1996.

  (3)  Incorporated by reference to Post Effective Amendment No. 19, to the
       Registration Statement File No. 33-73570, filed on April 14, 1997.

<PAGE>

         (13) Not applicable.

         (14) Not applicable.          

   
         (15) Copy of Power of Attorney.(4)
    

         (16) Organizational Chart.

Item 25. Directors and Officers of the Depositor
   
NAME                                POSITION WITH HARTFORD
- ----                                -----------------------

Dong H. Ahn                         Vice President

Wendell J. Bossen                   Vice President

Gregory A. Boyko                    Senior Vice President, Chief Financial 
                                    Officer, and Treasurer, Director*

Peter W. Cummins                    Senior Vice President

Ann M. de Raismes                   Senior Vice President

Timothy M. Fitch                    Vice President and Actuary

David Foy                           Vice President

Bruce D. Gardner                    Vice President

J. Richard Garrett                  Vice President and Assistant Treasurer

John P. Ginnetti                    Executive Vice President & Director of 
                                    Asset Management Services, Director*

William A. Godfrey, III             Senior Vice President

Lynda Godkin                        Senior Vice President, General Counsel 
                                     and Corporate Secretary, Director*

Lois W. Grady                       Senior Vice President

Christopher Graham                  Vice President

Mark E. Hunt                        Vice President

Stephen T. Joyce                    Vice President

Michael D. Keeler                   Vice President

Robert A. Kerzner                   Vice President

David N. Levenson                   Vice President

Steven M. Maher                     Vice President and Actuary

William B. Malchodi, Jr.            Vice President

- -------------------------
(4) Incorporated by reference to the Initial Filing to the Registration 
    Statement File No. 333-41213, filed on November 26, 1997.
    

<PAGE>
   
Thomas M. Marra                     Executive Vice President and Director, 
                                    Individual Life and Annuity Division, 
                                    Director*

Robert F. Nolan, Jr.                Senior Vice President

Joseph J. Noto                      Vice President

Michael C. O'Halloran               Vice President

Lawrence M. O'Rourke                Vice President

Daniel E. O'Sullivan                Vice President

Craig R. Raymond                    Senior Vice President and Chief Actuary

Mary P. Robinson                   Vice President

Donald A. Salama                    Vice President

Timothy P. Schiltz                  Vice President

Lowndes A. Smith                    President and Chief Executive Officer, 
                                    Director*

Keith A. Stevenson                  Vice President

Edward A. Sweeney                   Vice President

Judith V. Tilbor                    Vice President

Raymond P. Welnicki                 Senior Vice President and Director, 
                                    Employee Benefit Division, Director*

Walter C. Welsh                     Senior Vice President

Lizabeth H. Zlatkus                 Senior Vice President, Director*

David M. Znamierowski               Senior Vice President, Director*

    

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

*Denotes Board of Directors.

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

         Filed herewith as Exhibit 16.
 
Item 27. Number of Contract Owners

   
         As of February 20, 1998, there are 154,444 Contract Owners.
    

Item 28. Indemnification

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

<PAGE>

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

         The foregoing statements are specifically made subject to the detailed
         provisions of Section 33-770 et seq.
   
         Notwithstanding the fact that Connecticut law obligates the Registrant
         to indemnify a only a director that was successful on the merits in a
         suit, under Article VIII, Section 1 of the Registrant's bylaws, the
         Registrant must indemnify both directors and officers of the
         Registrant for (1) any claims and liabilities to which they become
         subject by reason of being or having been a directors or officers of
         the company and legal and (2) other expenses incurred in defending
         against such claims, in each case, to the extent such is consistent
         with statutory provisions.
    
         Additionally, the directors and officers of Hartford and Hartford
         Securities Distribution Company, Inc. ("HSD") are covered under a
         directors and officers liability insurance policy issued to The
         Hartford Financial Services Group, Inc. and its subsidiaries.  Such
         policy will reimburse the Registrant for any payments that it shall
         make to directors and officers pursuant to law and will, subject to
         certain exclusions contained in the policy, further pay any other
         costs, charges and expenses and settlements and judgments arising from
         any proceeding involving any director or officer of the Registrant in
         his past or present capacity as such, and for which he may be liable,
         except as to any liabilities arising from acts that are deemed to be
         uninsurable.

         Insofar as indemnification for liabilities arising under the
         Securities Act of 1933 may be permitted to directors, officers and
         controlling persons of the Registrant pursuant to the foregoing
         provisions, or otherwise, the Registrant has been advised that in the
         opinion of the Securities and Exchange Commission such indemnification
         is against public policy as expressed in the Act and is, therefore,
         unenforceable.  In the event that a claim for indemnification against
         such liabilities (other than the payment by the Registrant of expenses
         incurred or paid by a director, officer or controlling person of the
         Registrant in the successful defense of any action, suit or
         proceeding) is asserted by such director, officer or controlling
         person in connection with the securities being 

<PAGE>

         registered, the Registrant will, unless in the opinion of its 
         counsel the matter has been settled by controlling precedent, 
         submit to a court of appropriate jurisdiction the question whether 
         such indemnification by it is against public policy as expressed 
         in the Act and will be governed by the final adjudication of such 
         issue.

Item 29. Principal Underwriters

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

   
<TABLE>

         <S>                               <C>
         Hartford Life Insurance Company - Separate Account One
         Hartford Life Insurance Company - Separate Account Two 
         Hartford Life Insurance Company - Separate Account Two (DC Variable Account I)
         Hartford Life Insurance Company - Separate Account Two (DC Variable Account II)
         Hartford Life Insurance Company - Separate Account Two (QP Variable Account)
         Hartford Life Insurance Company - Separate Account Two (Variable Account "A")
         Hartford Life Insurance Company - Separate Account Two (NQ Variable Account)
         Hartford Life Insurance Company - Putnam Capital Manager Trust Separate Account 
         Hartford Life Insurance Company - Separate Account Three
         Hartford Life Insurance Company - Separate Account Five
         Hartford Life and Annuity Insurance Company - Separate Account One
         Hartford Life and Annuity Insurance Company - Putnam Capital Manager
           Trust Separate Account Two
         Hartford Life and Annuity Insurance Company - Separate Account Three
         Hartford Life and Annuity Insurance Company - Separate Account Five 
         Hartford Life and Annuity Insurance Company - Separate Account Six
         American Maturity Life Insurance Company - Separate Account AMLVA

</TABLE>
    
         (b)  Directors and Officers of HSD

   
<TABLE>
<CAPTION>

         NAME AND PRINCIPAL          POSITIONS AND OFFICES
          BUSINESS ADDRESS              WITH  UNDERWRITER
         ---------------------       ------------------------
<S>                                  <C>
        Lowndes A. Smith              President and Chief Executive Officer, Director
        John P. Ginnetti              Executive Vice President, Director
        Thomas M. Marra               Executive Vice President, Director
        Peter W. Cummins              Senior Vice President
        Lynda Godkin                  Senior Vice President, General Counsel and 
                                       Corporate Secretary
        Donald E. Waggaman, Jr.       Treasurer
        George R. Jay                 Controller
        Paul E. Olson                 Supervising Registered Principal
        James Cubanski                Assistant Secretary
        Stephen T. Joyce              Assistant Secretary
        Glen J. Kvadus                Assistant Secretary
        Edward M. Ryan, Jr.           Assistant Secretary
        Michael Wilder                Director
</TABLE>
    

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

<PAGE>

Item 30. Location of Accounts and Records

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

Item 31. Management Services

         All management contracts are discussed in Part A and Part B of this
         Registration Statement.

Item 32. Undertakings

         
         (a) The Registrant hereby undertakes to file a post-effective 
             amendment to this Registration Statement as frequently as is 
             necessary to ensure that the audited financial statements in 
             the Registration Statement are never more than 16 months old 
             so long as payments under the variable annuity Contracts
             may be accepted.

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

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

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



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

<PAGE>
                                      SIGNATURES
                                           
   
As required by the Securities Act of 1933 and the Investment Company Act 
of 1940, the Registrant certifies that it meets all the requirements for 
effectiveness of this Registration Statement pursuant to Rule 485(b) under 
the Securities Act of 1933 and duly caused this Registration Statement to be 
signed on its behalf, in the City of Hartford, and State of Connecticut on 
this 16th day of March, 1998.
    

HARTFORD LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT TWO
      (Registrant)

*By:  /s/ Thomas M. Marra                 *By: /s/ Leslie T. Soler           
      -------------------------                ------------------------
      Thomas M. Marra, Executive Vice          Leslie T. Soler
      President and Director,                  Attorney-in-Fact
      Individual Life and Annuity 
      Division, Director

HARTFORD LIFE INSURANCE COMPANY
      (Depositor)

*By:  /s/ Thomas M. Marra 
      ---------------------------
      Thomas M. Marra, Executive Vice 
      President and Director, 
      Individual Life and Annuity
      Division, Director

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

   
Gregory A. Boyko, Senior Vice President,   
    Chief Financial Officer, and Treasurer,
    Director *                                    *By:  /s/ Leslie T. Soler
John P. Ginnetti, Executive Vice                        -------------------
   President and Director, Asset Management             Leslie T. Soler
   Services, Director*                                  Attorney-in-Fact
Lynda Godkin, Senior Vice President, General        Dated: March 16, 1998
    Counsel and Corporate Secretary, Director*   
Thomas M. Marra, Executive Vice             
    President and Director, Individual Life and
    Annuity Division, Director* 
Lowndes A. Smith, President and             
    Chief Executive Officer, Director*                     
Raymond P. Welnicki, Senior Vice
   President and Director, Employee Benefit
   Division, Director *
Lizabeth H. Zlatkus, Senior Vice President,
   Director *
    

<PAGE>


                                    EXHIBIT INDEX
                                           

   

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

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

(16)  Organizational Chart.
    



<PAGE>


                                                                     Exhibit 9
 
                                                [LOGO]
                                                HARTFORD LIFE



March 16, 1998                                  LYNDA GODKIN
                                                Senior Vice President, General
                                                Counsel & Corporate Secretary


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

RE: SEPARATE ACCOUNT TWO
    HARTFORD LIFE INSURANCE COMPANY
    FILE NO.: 333-41213

Dear Sir/Madam:

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

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

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

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


<PAGE>




Board of Directors
March 16, 1998
Page 2

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


Sincerely yours,

/s/ Lynda Godkin

Lynda Godkin






<PAGE>


                              ARTHUR ANDERSEN LLP



                  CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
                  -----------------------------------------


As independent public accountants, we hereby consent to the use of our report 
on the consolidated financial statements and schedules of Hartford Life 
Insurance Company and subsidiaries as of December 31, 1996 and 1995 and for 
the three years in the period ended December 31, 1996, dated February 10, 1997 
and our report on the financial statements of Hartford Life Insurance Company 
Separate Account Two, dated February 16, 1998 (and to all references to our 
Firm) included in or made a part of this Registration Statement File 
No. 333-41213 for Hartford Life Insurance Company Separate Account Two on 
Form N-4.


                                                      /s/ Arthur Andersen LLP



Hartford, Connecticut
March 13, 1998



<PAGE>






<TABLE>
<CAPTION>

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




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