<PAGE>
As filed with the Securities and Exchange Commission on January 29, 1999.
File No. 333-19605
811-4732
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
----
Post-Effective Amendment No. 3 [X]
----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 104 [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) 843-6733
(Depositor's Telephone Number, Including Area Code)
MARIANNE O'DOHERTY
HARTFORD LIFE
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
-----
on ______________, 1999 pursuant to paragraph (b) of Rule 485
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
X on May 1, 1999 pursuant to paragraph (a)(1) of Rule 485
-----
this post-effective amendment designates a new effective date for a
----- previously filed post-effective amendment.
PURSUANT TO RULE 24F-2(a)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE
REGISTRANT HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
N-4 ITEM NO. PROSPECTUS HEADING
-----------------------------------------------------
1. Cover Page Hartford Life Insurance Company,
Separate Account Two
2. Definitions Definitions
3. Condensed Financial Information None
4. Synopsis or Highlights Summary
5. General Description of Hartford, the Separate Account
Registrant and the Funds
6. Deductions Contract Fees and Charges
7. General Description of Annuity Description of the Contracts,
Contracts Contract Fees and Charges and
Additional Contract Information
8. Annuity Period Selecting an Annuity Payment
Option
9. Death Benefit Description of the Contracts
10. Purchases and Contract Value Description of the Contracts
11. Redemptions Surrenders
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Statement Table of Contents to Statement
Additional Information of Additional Information
15. Cover Page Part B; Statement of Additional
Information
16. Table of Contents Table of Contents
17. General Information and History Description of Hartford Life
Insurance Company
<PAGE>
18. Services None
19. Purchase of Securities Distribution of the Contracts
being Offered
20. Underwriters Distribution of the Contracts
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments Payments Under the Contract,
Selecting an Annuity Payment Option
23. Financial Statements Financial Statements
24. Financial Statements and Exhibits Financial Statements and 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 or Registrant Depositor 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>
PART A
<PAGE>
DIRECTOR IMMEDIATE VARIABLE ANNUITY
SEPARATE ACCOUNT TWO
INDIVIDUAL SINGLE PREMIUM PAYMENT
HARTFORD LIFE INSURANCE COMPANY
200 HOPMEADOW STREET
SIMSBURY, CONNECTICUT 06070
TELEPHONE: 1-800-862-6668 (CONTRACT OWNERS)
[LOGO] 1-800-862-7155 (REGISTERED REPRESENTATIVES)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Prospectus describes information you should know before you purchase the
Director Immediate Variable Annuity. Please read it carefully.
Director Immediate Variable Annuity is an individual variable immediate annuity
contract offered by Hartford Life Insurance Company. This annuity is single
premium, variable annuity which may be sold to or issued in connection with
retirement plans, including plans that qualify for special federal income tax
treatment under the Internal Revenue Code. It is:
x Single Premium, because you pay one premium payment.
x Immediate, because you may immediately begin to receive Annuity Payments.
x Variable, because the value of your annuity will fluctuate with the
performance of the underlying Funds.
At purchase, you allocate your Premium Payment, which is any purchase payment
less any premium taxes, to "Sub-Accounts". These are subdivisions of our
Separate Account, an account that keeps your annuity assets separate from our
company assets. The Sub-Accounts then purchase shares of mutual funds set up
exclusively for variable annuity or variable life insurance products. These
funds are not the same mutual funds that you buy through your stockbroker or
through a retail mutual fund. They may have similar investment strategies and
the same portfolio managers as retail mutual funds. This annuity offers you
funds with investment strategies ranging from conservative to aggressive and you
may pick those funds that meet your investment goals and risk tolerance. The
Sub-Accounts and the funds are listed below:
- - Advisers Sub-Account which purchases shares of Class IA of Hartford Advisers
HLS Fund, Inc.
- - Bond Sub-Account which purchases shares of Class IA of Hartford Bond HLS Fund,
Inc.
- - Capital Appreciation Sub-Account which purchases shares of Class IA of
Hartford Capital Appreciation HLS Fund, Inc.
- - Dividend and Growth Sub-Account which purchase shares of Class IA of Hartford
Dividend and Growth HLS Fund, Inc.
- - Global Leaders Sub-Account which purchases shares of Class IA of Hartford
Global Leaders HLS Fund
- - Growth and Income Sub-Account which purchases shares of Class IA of Hartford
Growth and Income HLS Fund
- - High Yield Sub-Account which purchases shares of class IA of Hartford High
Yield HLS Fund
- - Index Sub-Account which purchases shares of Class IA of Hartford Index HLS
Fund, Inc.
- - International Advisers Sub-Account which purchases shares of Class IA of
Hartford International Advisers HLS Fund, Inc.
- - International Opportunities Sub-Account which purchases shares of Class IA of
Hartford International Opportunities HLS Fund, Inc.
- - MidCap Sub-Account which purchases shares of Class IA of Hartford MidCap HLS
Fund, Inc.
- - Money Market Sub-Account which purchases shares of Class IA of Hartford Money
Market HLS Fund, Inc.
- - Mortgage Securities Sub-Account that purchases shares of Class IA of Hartford
Mortgage Securities HLS Fund, Inc.
- - Small Company Sub-Account which purchases shares of Class IA of Hartford Small
Company HLS Fund, Inc.
- - Stock Sub-Account which purchases of Class IA of Hartford Stock HLS Fund, Inc.
If you decide to buy this annuity, you should keep this prospectus for your
records. You can also call us at 1-800-862-6668 to get a Statement of Additional
Information, free of charge. The Statement of Additional Information contains
more information about this annuity and, like this prospectus, is filed with the
Securities and Exchange Commission. We have included the Table of Contents for
the Statement of Additional Information at the end of this Prospectus. Although
we file the Prospectus and the Statement of Additional Information with the
Securities and Exchange Commission, the Commission doesn't approve or
<PAGE>
disapprove these securities or determine if the information is truthful or
complete. Anyone who represents that the Securities and Exchange Commission does
these things may be guilty of a criminal offense.
This Prospectus and the Statement of Additional Information can also be obtained
from the Securities and Exchange Commission's website (HTTP://WWW.SEC.GOV).
This annuity IS NOT:
- - A bank deposit or obligation
- - Federally insured
- - Endorsed by any bank or governmental agency
This annuity may not be available for sale in all states.
- --------------------------------------------------------------------------------
PROSPECTUS DATED: MAY 1, 1999
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 1, 1999
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS........................................................... 4
FEE AND EXPENSE TABLES................................................ 6
ACCUMULATION UNIT VALUES.............................................. 8
SUMMARY............................................................... 9
HARTFORD, THE SEPARATE ACCOUNT AND THE FUNDS.......................... 10
Hartford Life Insurance Company..................................... 10
Separate Account.................................................... 10
The Funds........................................................... 10
PERFORMANCE RELATED INFORMATION....................................... 12
DESCRIPTION OF THE CONTRACTS.......................................... 13
Purchasing a Contract............................................... 13
Right to Examine the Contract....................................... 13
Crediting and Allocating the Premium Payment........................ 13
Contract Value Before Income Start Date............................. 13
The Net Investment Factor........................................... 14
Sub-Account Value Transfers Before and After Income Start Date...... 14
Surrenders.......................................................... 14
Death Before Income Start Date...................................... 15
Death On or After the Income Start Date............................. 15
Determination of the Death Benefit.................................. 15
Distribution Requirements: Prior to the Income Start Date........... 16
Payments Under the Contract......................................... 16
SELECTING AN ANNUITY PAYMENT OPTION................................... 16
Annuity Payment Options............................................. 16
Annuity Calculation Date and Income Start Date...................... 17
Income Payment Dates................................................ 17
Variable Annuity Payments........................................... 17
CONTRACT FEES AND CHARGES............................................. 19
Contingent Deferred Sales Charge.................................... 19
Premium Tax Charge.................................................. 19
Mortality and Expense Risk Charge................................... 19
Fund Expenses....................................................... 19
ADDITIONAL CONTRACT INFORMATION....................................... 19
Contract Ownership.................................................. 19
Changing the Contract Owner or Beneficiary.......................... 20
Misstatement of Age or Sex.......................................... 20
Change of Contract Terms............................................ 20
Reports to Contract Owners.......................................... 20
Miscellaneous....................................................... 20
Voting Privileges................................................... 21
FEDERAL TAX CONSIDERATIONS............................................ 21
General............................................................. 21
Taxation of Hartford and the Separate Account....................... 21
Taxation of Purchasers of Non-Qualified Contracts................... 21
Taxation of Purchasers of Qualified Contracts....................... 24
Federal Income Tax Withholding...................................... 25
Contract Owners That Are Nonresident Aliens or Foreign
Corporations....................................................... 25
Other Tax Consequences.............................................. 25
OTHER INFORMATION..................................................... 26
Distribution of the Contracts....................................... 26
Legal Proceedings................................................... 26
Year 2000........................................................... 26
Experts............................................................. 27
ILLUSTRATIONS OF ANNUITY PAYMENTS ASSUMING HYPOTHETICAL RATES OF
RETURN.............................................................. 28
ILLUSTRATIONS OF ANNUITY PAYMENTS USING HISTORIC RATES OF RETURN...... 31
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............. 45
</TABLE>
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
DEFINITIONS
ACCUMULATION UNIT: An accounting unit of measure used to calculate Sub-Account
Value prior to the Annuity Calculation Date.
ADMINISTRATIVE OFFICE OF HARTFORD: Currently located at 200 Hopmeadow Street,
Simsbury, CT. All correspondence concerning this Contract should be sent to P.O.
Box 5085, Hartford, CT 06102-5085, Attn.: Individual Annuity Services, except
overnight or express mail packages, which should be sent to: 200 Hopmeadow
Street, Simsbury, CT 06089.
ANNIVERSARY VALUE: The Commuted Value calculated as of a Contract Anniversary.
ANNUITANT: The person (or persons) whose life (or lives) determines the Annuity
Payments payable under the Contract and whose death determines the Death Benefit
after the Income Start Date. With regard to joint and last survivor Annuity
Payment Options, the maximum number of joint Annuitants is two and provisions
referring to the death of an Annuitant mean the death of the last surviving
Annuitant. Provisions relating to an action by the Annuitant mean, in case of
Joint Annuitants, both Annuitants acting jointly. Unless otherwise specified,
the Contract Owner is the Annuitant. Neither the Annuitant nor a Joint Annuitant
may be changed.
ANNUITY CALCULATION DATE: The date as of which the first Annuity Payment will be
calculated. It will be no more than five days prior to the Income Start Date.
Values calculated prior to the Income Start Date but after the Annuity
Calculation Date will equal values as of the Annuity Calculation Date.
ANNUITY PAYMENT: One of several periodic payments made by Hartford to the Payee
under an Annuity Payment Option.
ANNUITY PAYMENT OPTION: The form of Annuity Payments selected by the Contract
Owner. The Annuity Payment Option is shown on the Contract specifications page
as the "Annuity Benefit."
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
Variable Annuity Payments.
ANNUITY UNIT FACTOR: The factor applied in computing Annuity Unit values to
neutralize the effect of the Assumed Investment Return.
ASSUMED INVESTMENT RETURN (AIR): The annual rate of return shown on the
specification page of the Contract. This rate is used to determine the degree of
fluctuation in the amount of Variable Annuity Payments in response to
fluctuations in the net investment return of selected Sub-Accounts by assuming
(among other things) that the assets in the Sub-Accounts supporting the Contract
will have a net annual return over the anticipated Annuity Payment period equal
to that rate of return. If the actual performance of the selected Sub-Accounts
is equal to the AIR, the Annuity Payment will be constant. If the actual
performance is greater than the AIR, the Annuity Payment will increase. If the
actual performance is less than the AIR, the Variable Annuity Payment amount
will be lower.
BENEFICIARY: The person(s) entitled to receive the Contract Value upon the death
of the Contract Owner or Annuitant prior to the Income Start Date or, the Death
Benefit upon the death of the Annuitant after the Income Start Date available
under some Annuity Payment Options.
CANCELLATION PERIOD: The "Right to Examine" period described on the cover page
of the Contract during which the Contract Owner may return the Contract.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: U.S. Securities and Exchange Commission.
COMMUTED VALUE: The present value of the remaining guaranteed Annuity Payments
under an Annuity Payment Option having Annuity Payments guaranteed for a
specified number of years, computed using the Assumed Investment Return for the
Contract and the Annuity Unit value(s) calculated as of the date that Hartford
receives a fully completed request for surrender, or Due Proof of Death of the
Annuitant.
CONTRACT ANNIVERSARY: The same date in each Contract Year as the Contract Issue
Date.
CONTRACT ISSUE DATE: The date on which Hartford issues the Contract and on which
the Contract becomes effective. The Contract Issue Date is shown on the
specifications page of the Contract and is used to determine Contract Years and
Contract Anniversaries.
CONTRACT OWNER(S) OR YOU: The person (or persons) who owns (or own) the Contract
and who is (are) entitled to exercise all rights and privileges provided in the
Contract. The maximum number of joint Contract Owners is two. Provisions
relating to action by the Contract Owner mean, in the case of joint Contract
Owners, both Contract Owners acting jointly.
CONTRACT VALUE: The sum of the Sub-Account Values under the Contract prior to
the Annuity Calculation Date.
CONTRACT YEAR: A 12-month period beginning on the Contract Issue Date or on a
Contract Anniversary.
DEATH BENEFIT: The amount payable by Hartford based upon the death of the
Contract Owner or Annuitant prior to the Income Start Date, or upon the death of
Annuitant on or after the Income Start Date. The Death Benefit is calculated as
of the date that Due Proof of Death is received at Hartford.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
- --------------------------------------------------------------------------------
DEFERRED COMPENSATION PLAN: An eligible deferred compensation plan under Section
457 of the Code that is established and maintained by a state or local
governmental organization or a tax-exempt organization.
DUE PROOF OF DEATH: A certified copy of a death certificate, an order of a court
of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to Hartford.
FUND: Any open-end management investment company (or investment portfolio
thereof) or unit investment trust (or series thereof) in which a Sub-Account
invests.
HARTFORD OR WE: Hartford Life Insurance Company.
INCOME PAYMENT DATE: The date each month, quarter, semi-annual period, or year
as of which Hartford computes the Annuity Payments.
INCOME START DATE: The date as of which the Annuity Payments are to begin. It is
the first Income Payment Date and is shown on the specifications page of the
Contract.
IRA: An "individual retirement annuity" as described in Section 408 of the Code.
JOINT ANNUITANT: A person, other than the primary Annuitant, whose life
determines the Annuity Payments payable. The Contract will have a Joint
Annuitant only if a joint life Annuity Payment Option is elected. No Joint
Annuitant may be changed.
MAXIMUM ANNIVERSARY VALUE: The greatest Anniversary Value under the Contract
while the Annuitant is alive prior to his or her 81st birthday reduced by the
dollar amount of Annuity Payments made since that anniversary.
NET ASSET VALUE: The value per share of any Fund on any Valuation Day. The
method of computing the Net Asset Value is described in the prospectus for each
Fund.
NET INVESTMENT FACTOR: The Net Investment Factor for each of the Sub-Accounts is
equal to the Net Asset Value of the corresponding Fund at the end of the
Valuation Period (plus the per share amount of any dividends or capital gains
distributed by that Fund if the ex-dividend date occurs in the Valuation Period
then ended) divided by the Net Asset Value of the corresponding Fund at the
beginning of the Valuation Period, and subtracting from that amount the
mortality and expense charge.
NON-QUALIFIED CONTRACT: A Contract that is not a Qualified Contract.
PAYEE: The person or party designated by the Contract Owner to receive Annuity
Payments. Unless otherwise specified the Annuitant is the Payee.
PAYMENT FACTOR: The factor used on the Annuity Calculation Date to calculate the
first Annuity Payment.
PREMIUM PAYMENT: The payment made to Hartford pursuant to the terms of the
Contract.
PREMIUM TAX: The amount of tax charged by a state or municipality on the Premium
Payment or Contract Value.
QUALIFIED CONTRACT: A Contract that is issued in connection with a retirement
plan that qualifies for special federal income tax treatment under Section 408
or Section 457 of the Code.
SEPARATE ACCOUNT: Hartford Life Insurance Company Separate Account Two.
SUB-ACCOUNT: A subdivision of the Separate Account, the assets of which are
invested in a corresponding Fund.
SUB-ACCOUNT VALUE: On or before the Annuity Calculation Date, the amount is
determined on any day by multiplying the number of Accumulation Units
attributable to the Contract in that Sub-Account by the Accumulation Unit value
for that Sub-Account.
SURRENDER VALUE: The Contract Value less any applicable Premium Tax prior to the
Annuity Calculation Date, or the Commuted Value less applicable contingent
deferred sales charges on or after the Annuity Calculation Date.
VALUATION DAY: Every day that the New York Stock Exchange is open for trading.
VALUATION PERIOD: The period that starts at the close of regular trading on the
New York Stock Exchange on any Valuation Day and ends at the close of regular
trading on the next succeeding Valuation Day.
VARIABLE ANNUITY PAYMENT: An Annuity Payment that may vary in amount from one
Income Payment Date to the next as a function of the investment performance of
one or more Sub-Accounts selected by the Contract Owner to support Annuity
Payments.
WRITTEN NOTICE: A notice or request submitted in writing in a form satisfactory
to Hartford that is manually signed by the Contract Owner(s) and received at the
Administrative Office of Hartford.
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
FEE AND EXPENSE TABLES
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Sales Charge imposed on Premium Payment..................... None
Contingent Deferred Sales Charge (as a percentage of
Commuted Value)*
First Year.............................................. 6%
Second Year............................................. 6%
Third Year.............................................. 5%
Fourth Year............................................. 5%
Fifth Year.............................................. 4%
Sixth Year.............................................. 3%
Seventh Year............................................ 2%
Eighth Year............................................. 0%
Exchange Fee................................................ None
</TABLE>
- ---------
* Only applies to PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS. Annuity
Payment Option, after the Income Start Date.
Annual Separate Account Expenses
(as a percentage of average annual net assets)
<TABLE>
<S> <C>
Mortality and Expense Risk Charge........................... 1.25%
Other Charges............................................... None
Total Separate Account Expenses............................. 1.25%
</TABLE>
Annual Fund Operating Expenses
(as percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Hartford Advisers HLS Fund...................... 0.635% 0.020% 0.655%
Hartford Bond HLS Fund.......................... 0.515% 0.020% 0.535%
Hartford Capital Appreciation HLS Fund.......... 0.645% 0.020% 0.665%
Hartford Dividend and Growth HLS Fund........... 0.685% 0.020% 0.705%
Hartford Global Leaders HLS Fund (1)............ 0.200% 0.200% 0.400%
Hartford Growth and Income HLS Fund (1)......... 0.200% 0.150% 0.350%
Hartford High Yield HLS Fund (1)................ 0.200% 0.150% 0.350%
Hartford Index HLS Fund......................... 0.400% 0.015% 0.415%
Hartford International Advisers HLS Fund........ 0.775% 0.120% 0.895%
Hartford International Opportunities HLS Fund... 0.705% 0.090% 0.795%
Hartford Money Market HLS Fund.................. 0.450% 0.015% 0.465%
Hartford MidCap HLS Fund........................ 0.775% 0.040% 0.815%
Hartford Mortgage Securities HLS Fund........... 0.450% 0.025% 0.475%
Hartford Small Company HLS Fund................. 0.775% 0.020% 0.795%
Hartford Stock HLS Fund......................... 0.455% 0.020% 0.475%
</TABLE>
- ---------
(1) Hartford Growth and Income HLS Fund, Hartford Global Leaders HLS Fund and
Hartford High Yield HLS Fund are new funds. "Total Fund Operating Expenses"
are based on annualized estimates of such expenses to be incurred in the
current fiscal year. HL Investment Advisors, Inc. has agreed to waive its
fees for these until the assets of the Funds (excluding assets contributed
by companies affiliated with HL Investment Advisors, Inc.) reach $20
million. Absent this waiver, the "Management Fee" and "Total Fund Operating
Expenses" would have been:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT FEES OPERATING EXPENSES
---------------- ------------------
<S> <C> <C>
Hartford Growth and Income HLS Fund................................................... 0.750% 0.900%
Hartford Global Leaders HLS Fund...................................................... 0.750% 0.950%
Hartford High Yield HLS Fund.......................................................... 0.750% 0.900%
</TABLE>
The above tables are intended to assist the Contract Owner in understanding
the costs and expenses that he or she will bear directly or indirectly. The
table reflects the current management fees, other expenses and total expenses
for each Fund. Premium Taxes, ranging from 0% to 4%, may also be applicable. For
a more complete description of the various costs and expenses, see "Contract
Fees and Charges," and the prospectus for the Funds which accompanies this
Prospectus.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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EXAMPLES
A Contract Owner will pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets and an Annuitant age 65 with a 5% Assumed
Investment Return:
1. If the LIFE Annuity Payment Option is selected and you do not surrender
your Contract:
<TABLE>
<CAPTION>
1 3
SUB-ACCOUNT YEAR YEARS
----- ------
<S> <C> <C>
Advisers..................................... $20 $60
Bond......................................... 18 57
Capital Appreciation......................... 20 61
Dividend and Growth.......................... 20 62
Global Leaders............................... 17 62
Growth and Income............................ 16 60
High Yield................................... 16 60
Index........................................ 17 53
International Advisers....................... 22 68
International Opportunities.................. 21 65
MidCap....................................... 21 65
Money Market................................. 18 54
Mortgage Securities.......................... 18 55
Small Company................................ 21 65
Stock........................................ 18 55
</TABLE>
2. If the PAYMENTS GUARANTEED FOR 20 YEARS Annuity Payment Option is
selected and you do not surrender your Contract:
<TABLE>
<CAPTION>
1 3
SUB-ACCOUNT YEAR YEARS
----- ------
<S> <C> <C>
Advisers..................................... $20 $60
Bond......................................... 18 57
Capital Appreciation......................... 20 61
Dividend and Growth.......................... 20 62
Global Leaders............................... 17 62
Growth and Income............................ 16 60
High Yield................................... 16 60
Index........................................ 17 53
International Advisers....................... 22 68
International Opportunities.................. 21 65
MidCap....................................... 21 65
Money Market................................. 18 54
Mortgage Securities.......................... 18 55
Small Company................................ 21 65
Stock........................................ 18 55
</TABLE>
3. If the GUARANTEED PAYMENTS FOR 20 YEARS Annuity Payment Option is
selected and you surrender your Contract:
<TABLE>
<CAPTION>
1 3
SUB-ACCOUNT YEAR YEARS
----- ------
<S> <C> <C>
Advisers..................................... $80 $110
Bond......................................... 78 107
Capital Appreciation......................... 80 111
Dividend and Growth.......................... 80 112
Global Leaders............................... 77 112
Growth and Income............................ 76 110
High Yield................................... 76 110
Index........................................ 77 103
International Advisers....................... 82 118
International Opportunities.................. 81 115
MidCap....................................... 81 115
Money Market................................. 78 104
Mortgage Securities.......................... 78 105
Small Company................................ 81 115
Stock........................................ 78 105
</TABLE>
These examples should not be considered representations of past or future
performance or expenses. The actual expenses paid or performance achieved may be
greater or less than those shown.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the audited financial
statements of the Separate Account, which have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and should be read in conjunction with those statements, which are
included in the Statement of Additional Information, which is incorporated by
reference in this registration statement. There is no information regarding the
Growth and Income Sub-Account, the Global Leaders Sub-Account and the High Yield
Sub-Account because as of December 31, 1997, the Sub-Accounts had not commenced
operations.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
----------------
<S> <C>
BOND SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $2.114
Number accumulation units outstanding at end of period
(in thousands)........................................ 111,586
STOCK SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $4.602
Number accumulation units outstanding at end of period
(in thousands)........................................ 372,754
MONEY MARKET SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $1.650
Number accumulation units outstanding at end of period
(in thousands)........................................ 140,797
ADVISERS SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $3.572
Number accumulation units outstanding at end of period
(in thousands)........................................ 1,012,472
CAPITAL APPRECIATION SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $4.845
Number accumulation units outstanding at end of period
(in thousands)........................................ 351,189
MORTGAGE SECURITIES SUB-ACCOUNT
(INCEPTION DATE AUGUST 1, 1986)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $2.098
Number accumulation units outstanding at end of period
(in thousands)........................................ 81,143
INDEX SUB-ACCOUNT
(INCEPTION DATE MAY 1, 1987)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $3.726
Number accumulation units outstanding at end of (in
thousands)............................................ 109,837
INTERNATIONAL OPPORTUNITIES SUB-ACCOUNT
(INCEPTION DATE JULY 2, 1990)
Accumulation unit value at end of period............... $1.000
Accumulation unit value at end of period............... $1.469
Number accumulation units outstanding at end of period
(in thousands)........................................ 264,642
DIVIDEND & GROWTH SUB-ACCOUNT
(INCEPTION DATE MARCH 8, 1994)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $2.149
Number accumulation units outstanding at end of period
(in thousands)........................................ 308,682
INTERNATIONAL ADVISERS SUB-ACCOUNT
(INCEPTION DATE MARCH 1, 1995)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $1.319
Number accumulation units outstanding at end of period
(in thousands)........................................ 43,217
HARTFORD SMALL COMPANY SUB-ACCOUNT
(INCEPTION DATE AUGUST 9, 1996)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $1.247
Number accumulation units outstanding at end of period
(in thousands)........................................ 56,706
HARTFORD MIDCAP SUB-ACCOUNT
(INCEPTION DATE JULY 30, 1997)
Accumulation unit value at beginning of period......... $1.000
Accumulation unit value at end of period............... $1.097
Number of accumulation units outstanding at end of
period (in thousands)................................. 8,306
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
SUMMARY
HOW DO I PURCHASE THIS ANNUITY?
You must complete our application or order request and submit it to us for
approval with a single Premium Payment. The minimum Premium Payment for this
annuity is $25,000 and the maximum Premium Payment generally is $1,000,000,
unless approved by us.
- - RIGHT TO EXAMINE PERIOD: For a limited time, usually within ten days after you
receive your annuity, you may cancel it. You bear the investment risk for your
Premium Payment prior to our receipt of your request for cancellation. Some
states require a longer Right to Examine Period.
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
When you purchase your annuity, you may choose one of the following Annuity
Payment Options: Life Annuity; Life Annuity with Cash Refund; Life Annuity with
Payments Guaranteed for a Specified Number of Years; Joint and Last Survivor;
Joint and Last Survivor Life Annuity with Payments Guaranteed for a Specified
Number of Years; and Payments Guaranteed for a Specified Number Years.
WILL HARTFORD PAY A DEATH BENEFIT?
Your Contract has a Death Benefit under certain Annuity Payment Options.
Under these options, there is a Death Benefit if the Contract Owner, joint owner
or Annuitant, die before we begin to make annuity payments and if the Annuitant
dies after the Income Start Date.
- - Certain Annuity Payment Options do not provide a Death Benefit.
CAN I TAKE OUT ANY OF MY MONEY?
Prior to the Annuity Calculation Date, upon written notice, you may
surrender your Contract and receive the Contract Value. On or after the Income
Start Date, under the a PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS
annuity payment opiton, you can surrender your contract subject to a Contingent
Deferred Sales Charge.
WHAT TYPE OF SALES CHARGES WILL I PAY?
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
The CDSC covers expenses relating to the sale and distribution of the
Contracts, including commissions paid to distributing organizations and the cost
of preparing sales literature and other promotional activities.
We deduct a contingent deferred sales charge if the Contract is surrendered
after the Income Start Date under PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF
YEARS Annuity Payment Option.
The CDSC is a percentage of the Commuted Value and
is deducted from that prior to their being paid and equals:
<TABLE>
<CAPTION>
CONTRACT YEAR SURRENDER CHARGE
AS A PERCENTAGE OF COMMUTED VALUE CDSC CHARGE
- --------------------------------- -----------------
<S> <C>
1 6%
2 6%
3 5%
4 5%
5 4%
6 3%
7 2%
8 or more 0%
</TABLE>
WHAT CHARGES WILL I PAY?
We subtract a daily charge of .003446%, approximately equivalent to an
effective annual rate of 1.25%, of your Contract Value invested in the Funds
PREMIUM TAX CHARGE
Taxes on the Premium Payment are incurred as of the Annuity Calculation
Date, and a Premium Tax Charge is deducted from the Contract Value as of that
date. Depending on your state of residence, these taxes currently range from 0%
to 4.0% of the Premium Payment.
TOTAL OPERATING EXPENSES OF THE FUNDS
Currently, Fund charges range from 0.35% to 0.895% of the average daily
value of the amount you have invested in the Fund. See the Annual Operating
Expense Table for more complete information and the Funds' prospectuses attached
to this Prospectus.
HARTFORD, THE SEPARATE ACCOUNT AND THE FUNDS
HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing life insurance, both individual and
group, in all states of the United States as well as the District of Columbia
and Puerto Rico. We were originally incorporated under the laws of Massachusetts
on June 5, 1902, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. Hartford is a subsidiary of Hartford Fire Insurance
Company, one of the largest multiple lines insurance carriers in the United
States. We are ultimately controlled by The Hartford Financial Services Group,
Inc., one of the largest financial service providers in the United States.
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HARTFORD RATINGS
<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.
Insurer financial
Standard & Poor's... 1/23/98 AA strength
Duff & Phelps....... 1/23/98 AA+ Claims paying ability
</TABLE>
SEPARATE ACCOUNT
The Separate Account is a separate investment account of Hartford
established under Connecticut law on June 2, 1986. Hartford owns the assets of
the Separate Account. These assets are held separate from Hartford's general
account and its other separate accounts. That portion of the Separate Account's
assets that is equal to the reserves and other Contract liabilities of the
Separate Account is not chargeable with liabilities arising out of any other
business Hartford may conduct.
The Separate Account is registered with the Commission under the Investment
Company Act of 1940 (the "1940 Act") as a unit investment trust and meets the
definition of a "separate account" under the federal securities laws. Such
registration does not involve any supervision by the Commission of the
management of the Separate Account or of Hartford. The Separate Account is also
governed by the laws of Connecticut, Hartford's state of domicile, and may also
be governed by laws of other states in which Hartford does business.
The investment in the Separate Account is allocated to one or more
Sub-Accounts as per the Contract Owner's specifications. Each Sub-Account is
invested exclusively in the assets of one underlying Fund. The Separate Account
has 15 Sub-Accounts, each of which invests in shares of a corresponding Fund.
Income, gains and losses, realized or unrealized, from assets allocated to a
Sub-Account are credited to or charged against that Sub-Account without regard
to other income, gains or losses of Hartford.
CHANGES TO THE SEPARATE ACCOUNT -- Hartford may make the following changes
to the Separate Account:
1. Any changes required by the 1940 Act or other applicable law or regulation;
2. combine separate accounts, including the Separate Account;
3. add new Sub-Accounts to or remove existing Sub-Accounts from the Separate
Account or combine Sub-Accounts;
4. make Sub-Accounts (including new Sub-Accounts) available to such classes of
Contracts as Hartford may determine;
5. add new Funds or remove existing Funds;
6. substitute new Funds for any existing Fund if shares of the Fund are no
longer available for investment or if Hartford determines that investment in
a Fund is no longer appropriate in light of the purposes of the Separate
Account;
7. de-register the Separate Account under the 1940 Act if such registration is
no longer required; and
8. operate the Separate Account as a management investment company under the
1940 Act or as any other form permitted by law.
No such changes will be made without any necessary approval of the
Commission and applicable state insurance departments. Contract Owners will be
notified of any changes.
THE FUNDS
All of the Funds are sponsored by us and are incorporated under the laws of
the State of Maryland. HL Investment Advisors, LLC. ("HL Advisors") serves as
the investment adviser to each of these Funds. Wellington Management Company,
LLP ("Wellington Management") and The Hartford Investment Management Company
("HIMCO") serve as sub-investment advisors and provide day to day investment
services.
Each Fund, except for the Hartford Global Leaders HLS Fund, the Hartford
Growth and Income HLS Fund and the Hartford High Yield HLS Fund, is a separate
Maryland corporation registered with the Securities and Exchange Commission as
an open-end management investment company. The Hartford Global Leaders HLS Fund,
the Hartford Growth and Income HLS Fund and the Hartford High Yield HLS Fund are
diversified series of Hartford Series Fund, Inc., a Maryland corporation, also
registered with the Securities and Exchange Commission as an open-end management
investment company. The shares of each Fund have been divided into Class IA and
Class IB. Only Class IA shares are available in this Annuity.
We do not guarantee the investment results of any of the underlying Funds.
Since each underlying Fund has different investment objectives, each is subject
to different risks. These risks and the Funds' expenses are more fully described
in the accompanying Funds' prospectus and Statement of Additional Information,
which may be ordered from us. The Funds' prospectus should be read in
conjunction with this Prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
HARTFORD ADVISERS HLS FUND -- Seeks maximum long-term total rate of return
by investing in common stocks and
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
other equity securities, bonds and other debt securities, and money market
instruments. Sub-advised by Wellington Management.
HARTFORD BOND HLS FUND -- Seeks maximum current income consistent with
preservation of capital by investing primarily in investment grade fixed-income
securities. Up to 20% of the total assets of this Fund may be invested in debt
securities rated in the highest category below investment grade ("Ba" by Moody's
Investor Services, Inc. or "BB" by Standard & Poor's) or, if unrated, are
determined to be of comparable quality by the Fund's investment adviser.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning the
risks associated with investing in such securities, please refer to the section
in the accompanying prospectus for the Funds entitled "Hartford Bond Fund, Inc.
- -- Investment Policies." Sub-advised by HIMCO.
HARTFORD CAPITAL APPRECIATION HLS FUND -- Seeks growth of capital by
investing in equity securities selected solely on the basis of potential for
capital appreciation. Sub-advised by Wellington Management.
HARTFORD DIVIDEND AND GROWTH HLS FUND -- Seeks a high level of current
income consistent with growth of capital by investing primarily in dividend
paying equity securities. Sub-advised by Wellington Management.
HARTFORD GLOBAL LEADERS HLS FUND -- Seeks growth of capital by investing
primarily in equity securities issued by U.S. an non-U.S. high quality growth
companies worldwide that, in the opinion of Wellington Management, are leaders
within their respective industries as indicated by an established market
presence and strong competitive position on a global, regional or country basis.
Sub-advised by Wellington Management.
HARTFORD GROWTH AND INCOME HLS FUND -- Seeks growth of capital and current
income by investing primarily in equity securities with growth potential and
steady or rising dividends. Sub-advised by Wellington Management.
HARTFORD HIGH YIELD HLS FUND -- Seeks high current income by investing in
non-investment grad fixed-income securities. Growth of capital is a secondary
objective. Securities related 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
High Yield HLS Fund." Sub-advised by HIMCO.
HARTFORD INDEX HLS FUND -- Seeks to provide invest-
ment results that approximate the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index.* Sub-advised by HIMCO.
HARTFORD INTERNATIONAL ADVISERS HLS FUND -- Seeks maximum long-term total
return by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets. Sub-advised by Wellington
Management.
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND -- Seeks growth of capital by
investing primarily in equity securities issued by non-U.S. companies.
Sub-advised by Wellington Management.
HARTFORD MIDCAP HLS FUND -- Seeks to achieve long-term capital growth
through capital appreciation by investing primarily in equity securities of
companies with market capitalizations within the range represented by the
Standard & Poor's MidCap 400 Index. Sub-advised by Wellington Management.
HARTFORD MORTGAGE SECURITIES HLS FUND -- Seeks maximum current income
consistent with safety of principal and maintenance of liquidity by investing
primarily in mortgage-related securities, including securities issued by the
Government National Mortgage Association. Sub-advised by HIMCO.
HARTFORD SMALL COMPANY HLS FUND -- Seeks growth of capital by investing
primarily in equity securities within the range represented by the Russell 2000
Index selected on the basis of potential for capital appreciation. Sub-advised
by Wellington Management.
HARTFORD STOCK HLS FUND -- Seeks long-term growth by investing primarily in
equity securities. Sub-advised by Wellington Management.
HARTFORD MONEY MARKET HLS FUND -- Seeks maximum current income consistent
with liquidity and preservation of capital. Sub-advised by HIMCO.
MIXED FUNDING -- Shares of the Funds are sold to our other separate accounts
and our insurance company affiliates or other unaffiliated insurance companies
to serve as the underlying investment for both variable annuity contracts and
variable life insurance contracts, a practice known as "mixed funding." As a
result, there is a possibility that a material conflict may arise between the
interests of Contract Owners, and of owners of other contracts whose contract
values are allocated to one or more of these other
* "STANDARD & POOR'S," "S&P-REGISTERED TRADEMARK-," "S&P
500-REGISTERED TRADEMARK-," "STANDARD & POOR'S 500," AND "500" ARE TRADEMARKS OF
THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD. THE
INDEX FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND
STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF
INVESTING IN THE INDEX FUND.
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
separate accounts investing in any one of the Funds. In the event of any such
material conflicts, we will consider what action may be appropriate, including
removing the Fund from the Separate Account or replacing the Fund with another
Fund. There are certain risks associated with mixed funding, as disclosed in the
Funds' prospectus.
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- We reserve the right,
subject to any applicable law, to make certain changes to the Funds offered
under Your Contract. We may, in our sole discretion, establish new Funds. New
Funds will be will be made available to existing Contract Owners as we
determined appropriate. We may also close one or more Funds to additional
Payments or transfers from existing Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any
reason and to substitute shares of another registered investment company for the
shares of any Fund already purchased or to be purchased in the future by the
Separate Account. To the extent required by the 1940 Act, substitutions of
shares attributable to your interest in a Fund will not be made until we have
the approval of the Commission and we have notified you of the change.
In the event of any substitution or change, We may, by appropriate
endorsement, make such changes in the Contract as may be necessary or
appropriate to reflect such substitution or change. If we decide that it is in
the best interest Contracts Owners, the Separate Account may be operated as a
management company under the 1940 Act or any other form permitted by law, may be
de-registered under the 1940 Act in the event such registration is no longer
required, or may be combined with one or more other separate accounts.
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance-related information
concerning the 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.
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.
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 Annual Maintenance Fee is not deducted. Therefore,
non-standardized total return for a Sub-Account is higher than standardized
total return for a Sub-Account.
The Separate Account may also advertise NON-STANDARD TOTAL RETURNS THAT
PRE-DATE THE INCEPTION DATE OF THE SEPARATE ACCOUNT. These non-standardized
total returns are calculated by assuming that the Sub-Accounts have been in
existence for the same periods as the underlying Funds and by taking deductions
for charges equal to those currently assessed against the Sub-Accounts. These
non-standardized returns must be accompanied by standardized total returns.
If applicable, the Sub-Accounts may advertise YIELD IN ADDITION TO TOTAL
RETURN. The yield will be computed in the following manner: The net investment
income per unit earned during a recent one month period, divided by the unit
value on the last day of the period. This figure reflects the recurring charges
at the Separate Account level including the Annual Maintenance Fee.
The Money Market Fund Sub-Account may ADVERTISE YIELD AND EFFECTIVE YIELD.
The yield of a Sub-Account is based upon the income earned by the Sub-Account
over a seven-day period and then annualized, i.e. the income earned in the
period is assumed to be earned every seven days over a 52-week period and stated
as a percentage of the investment. Effective yield is calculated similarly but
when annualized, the income earned by the investment is assumed to be reinvested
in Sub-Account units and thus compounded in the course of a 52-week period.
Yield and effective yield reflect the recurring charges at the Separate Account
level including the Annual Maintenance Fee.
The Separate Account may also disclose yield 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.
We 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-deferred
and taxable instruments, customer profiles and hypothetical purchase scenarios,
financial management and
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
tax and retirement planning, and other investment alternatives, including
comparisons between the Contracts and the characteristics of and market for such
alternatives.
DESCRIPTION OF THE CONTRACTS
PURCHASING A CONTRACT
A prospective Contract Owner may purchase a Contract by completing and
submitting an application or an order request. The maximum age for Annuitants on
the Contract Issue Date is 90. A single Premium Payment must be delivered to the
Administrative Office of Hartford along with the Contract Owner's application or
an order request. The minimum Premium Payment is $25,000 unless Hartford
specifically consents to a lower Premium Payment. No additional Premium Payments
may be made under the Contracts. Unless Hartford gives its prior approval, it
will not accept a Premium Payment in excess of $1,000,000. Hartford will send
Contract Owners a confirmation notice upon receipt and acceptance of the
Contract Owner's Premium Payment.
RIGHT TO EXAMINE THE CONTRACT
Contract Owners may cancel the Contract during the Cancellation Period,
which is the 10-day period beginning on the day the Contract Owner receives the
Contract. Some states may require a longer Cancellation Period. To cancel the
Contract, the Contract Owner must mail or deliver within 10 days, a written
request for cancellation accompanied by the Contract to the Administrative
Office of Hartford.
Hartford will refund the Contract Value as of the date of receipt of the
request for cancellation. The Contract Owner bears the investment risk during
the period prior to Hartford's receipt of the request for cancellation. Hartford
will refund the Premium Payment where required by law.
CREDITING AND ALLOCATING
THE PREMIUM PAYMENT
If the application or an order request for a Contract is properly completed
and is accompanied by any additional information necessary to process it, the
Premium Payment will be allocated, as designated by the Contract Owner, to one
or more of the Sub-Accounts within two business days of receipt. If the
application, order request, or other required information is incomplete when
received, Hartford reserves the right to retain the Premium Payment for up to
five business days while it attempts to complete the information. If the
information cannot be made complete within five business days, the applicant
will be informed of the reasons for the delay and the Premium Payment will be
returned unless the applicant specifically consents to Hartford retaining the
Premium Payment until the information is made complete. The Premium Payment will
then be allocated within two business days after receipt of the complete
information.
Contract Owners may allocate the Premium Payment among any or all available
Sub-Accounts subject to minimum amounts then in effect. Currently, amounts
allocated to any one Sub-Account must equal at least 1% of the net Premium
Payment. All percentage allocations must be in whole numbers.
CONTRACT VALUE BEFORE INCOME START DATE
SUB-ACCOUNT VALUE -- The Contract Value is the sum of all Sub-Account Values
and therefore reflects the investment performance of the Sub-Accounts to which
it is allocated. The Sub-Account Value for any Sub-Account as of the Contract
Issue Date is equal to the amount of the Premium Payment allocated to that
Sub-Account. The Sub-Account Value for a Contract is determined on any given day
by the multiplying the number of Accumulation Units attributable to the Contract
in that Sub-Account by the Accumulation Unit value for that Sub-Account.
Therefore, on any Valuation Day the Contract Owner's Sub-Account Value reflects
any variation of the interest income, dividends, net capital gains or losses,
realized or unrealized, and any amounts transferred into or out of that
Sub-Account.
ACCUMULATION UNITS -- The portions of the Premium Payment allocated to a
Sub-Account or amounts of Contract Value transferred to a Sub-Account are
converted into Accumulation Units. For any Contract, the number of Accumulation
Units credited to a Sub-Account is determined by dividing the dollar amount
directed to the Sub-Account by the Accumulation Unit value for that Sub-Account
for the Valuation Day as of which the portion of the Premium Payment or
transferred Contract Value is invested in the Sub-Account. Transferred Contract
Value is invested in a Sub-Account as of the end of the Valuation Period during
which the transfer request was received. Therefore, a Premium Payment or portion
thereof allocated to or amounts transferred to a Sub-Account under a Contract
increase the number of Accumulation Units of that Sub-Account credited to the
Contract.
Surrenders, transfers out of a Sub-Account, the death of any Contract Owner
or the Annuitant before the Income Start Date (see "Death Before Income Start
Date," page 13), and the application of Contract Value less Premium Tax to an
Annuity Payment Option on the Annuity Calculation Date all result in a decrease
in the number of Accumulation Units of one or more Sub-Accounts. Accumulation
Units are valued as of the end of the Valuation Period.
The Accumulation Unit value for each Sub-Account was arbitrarily set
initially at $1 when the Sub-Account began operations. Thereafter, the
Accumulation Unit value at the
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
end of every Valuation Day equals the Accumulation Unit value at the end of the
preceding Valuation Day multiplied by the Net Investment Factor (described
below).
THE NET INVESTMENT FACTOR
(BEFORE AND AFTER INCOME START DATE)
The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. For each
Sub-Account, the Net Investment Factor reflects the investment performance of
the Fund in which that Sub-Account invests and the charges assessed against that
Sub-Account for a Valuation Period. The Net Investment Factor is calculated by
dividing (1) by (2) and subtracting (3) from the result, where:
(1) is the result of:
a. the Net Asset Value of the Fund held in the Sub-Account, determined at
the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions made
by the Fund held in the Sub-Account.
(2) is the Net Asset Value of the Fund held in the Sub-Account, determined at
the beginning of the Valuation Period.
(3) is a daily factor representing the mortality and expense risk charge
deducted from the Sub-Account, adjusted for the number of days in the
Valuation Period.
SUB-ACCOUNT VALUE TRANSFERS
BEFORE AND AFTER INCOME START DATE
The Contract Owner may transfer the values of the Sub-Accounts allocations
from one or more Sub-Accounts to another free of charges. However, Hartford
reserves the 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.
Hartford will value transfer requests on the Valuation Day it receives a request
for a transfer. However, if a transfer request is received after the close of
the New York Exchange, Hartford will value the transfer no later than the next
Valuation Day after it receives your transfer request.
The policy of Hartford and its agents and affiliates is that they will not
be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. Hartford will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine; otherwise,
Hartford may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures Hartford follows for transactions initiated by
telephone include requirements that the callers provide certain information for
identification purposes. All transfer instructions by telephone are tape
recorded.
Transfers between Sub-Accounts may be made both before and after the Income
Start Date provided that the minimum allocation to any Sub-Account may not be
less than $500. No transfers may occur until the end of the Cancellation Period.
All percentage (%) allocations must be in whole numbers (e.g., 1%).
It is the responsibility of the Contract Owner to verify the accuracy of all
confirmations of transfers and to advise Hartford of any inaccuracies within 30
days of receipt of the confirmation. Hartford will send the Contract Owner a
confirmation of the transfer within five days from the date of any instructions.
Subject to exceptions set forth in the following paragraph, the right to
reallocate Contract Values is subject to modification if Hartford determines, in
its sole opinion, that the exercise of that right by one or more Contract Owners
is, or would be, to the disadvantage of other Contract Owners. Any modification
could be applied to transfers to or from some or all of the Sub-Accounts and
could include, but would not be limited to, the requirements of a minimum time
period between each transfer, not accepting transfer requests of an agent acting
under power of attorney on behalf of more than one Contract Owner, or limiting
the dollar amount that may be transferred between the Sub-Accounts by a Contract
Owner at any one time. Such restrictions may be applied in any manner reasonably
designed to prevent any use of the transfer right which is considered by
Hartford to be to the disadvantage of other Contract Owners. Some states may
have certain limitations.
Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that Hartford will not accept instructions from agents
acting under a power of attorney of multiple Contract Owners whose accounts
aggregate more than $2 million, unless the agent has entered into a third party
transfer services agreement with Hartford. For transfers of Annuity Units after
the Annuity Calculation Date. See "Variable Annuity Payments."
SURRENDERS
ON OR BEFORE THE INCOME START DATE -- A Contract Owner may surrender the
Contract for its Surrender Value at any time on or before the Income Start Date.
A Contract's Surrender Value fluctuates daily as a function of the investment
performance of the Sub-Accounts in which a Contract Owner is invested. Hartford
does not guarantee any minimum Surrender Value. The Surrender Value will be
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
determined as of the date Hartford receives the Written Notice for surrender at
the Administrative Office of Hartford.
AFTER THE INCOME START DATE -- A Contract Owner may surrender the Contract
on or after the Income Start Date only if the PAYMENTS GUARANTEED FOR A
SPECIFIED NUMBER OF YEARS Annuity Payment Option is in effect. Upon such a
surrender Hartford pays the Contract Owner the Commuted Value less any
applicable contingent deferred sales charges. This surrender charge is computed
as of the date Hartford receives the Written Notice for surrender at the
Administrative Office of Hartford.
Contract Owners should consult their tax adviser regarding the tax
consequences of a surrender. result in adverse tax consequences, including the
imposition of a penalty tax of 10% of the taxable portion of the Surrender
Value. See "Federal Tax Considerations" for more details.
DEATH BEFORE INCOME START DATE
If the Contract Owner or the Annuitant dies before the Income Start Date,
Hartford will pay the Death Benefit. For these purposes, in the case of Joint
Annuitants, Hartford will pay a Death Benefit upon the death of the last
surviving Annuitant.
The Death Benefit is an amount equal to the Contract Value. The Contract
Value may be taken in one sum or under any of the settlement options then being
offered by Hartford.
IF THE CONTRACT OWNER DIES before the Income Start Date, any surviving joint
Contract Owner becomes the Beneficiary. If there is no surviving joint Contract
Owner, the designated Beneficiary will be the Beneficiary. If the Contract
Owner's spouse is the sole Beneficiary and the Annuitant is living, the spouse
may elect, in lieu of receiving the Contract Value, to be treated as the
Contract Owner. If no Beneficiary designation is in effect or if the Beneficiary
has predeceased the Contract Owner, the Contract Owner's estate will be the
Beneficiary.
IF THE ANNUITANT DIES prior to the Income Start Date and the Contract Owner
is living, the Contract Owner shall be the Beneficiary. In that case, the rights
of any designated Beneficiary shall be voided. For these purposes, in the case
of Joint Annuitants, if the last surviving Annuitant dies prior to the Income
Start Date and the Contract Owner is living, the Contract Owner shall be the
Beneficiary.
DEATH ON OR AFTER THE INCOME START DATE
If the Annuitant dies on or after the Income Start Date, Hartford will pay
the Death Benefit under the Annuity Payment Option in effect as of the
Annuitant's death. Under some Annuity Payment Options, there is no Death
Benefit.
The Death Benefit on or after the Income Start Date, under the PAYMENTS
GUARANTEED FOR A SPECIFIED NUMBER OF YEARS Annuity Payment Option, is the
greatest of:
a) the Commuted Value;
b) 100% of the Premium Payment reduced by the aggregate dollar amount of all
Annuity Payments made since the Income Start Date; and
c) the Maximum Anniversary Value (the greatest Anniversary Value under the
Contract while the Annuitant is alive prior to his or her 81st birthday
reduced by the dollar amount of Annuity Payments made since that
anniversary).
IF THE ANNUITANT DIES on or after the Income Start Date, the Beneficiary
will have the option of having payments continue to the Beneficiary for the
remainder of the period or taking the Death Benefit in one sum.
IF A CONTRACT OWNER WHO IS NOT THE ANNUITANT, DIES on or after the Income
Start Date, any surviving joint Contract Owner becomes the sole Contract Owner.
If there is no surviving Contract Owner, the Beneficiary becomes the new
Contract Owner. If any Contract Owner dies, the remaining Annuity Payments will
be distributed at least as rapidly as under the method of distribution being
used as of the date of such death.
DETERMINATION OF THE DEATH BENEFIT
The Death Benefit will be calculated as of the date Hartford receives
Written Notice of Due Proof of Death. Any Annuity Payments made on or after the
date of death, but before receipt of Written Notice of Due Proof of Death will
be recovered by Hartford from the Payee.
PRIOR TO THE INCOME START DATE, in the absence of complete instructions to
either pay the Death Benefit in one sum or under one of the settlement options
being offered, the Contract Value will be moved to the Hartford Money Market
Fund.
ON OR AFTER THE INCOME START DATE, in the absence of complete instructions
to either pay the Death Benefit in one sum or continue payments, the present
value of the guaranteed remaining payments will be moved to the Hartford Money
Market Fund.
Upon receipt of complete instructions, Hartford will proceed as follows: If
the instructions are to resume payments, Hartford will make any payments that
went unpaid since the date Hartford received Written Notice of Due Proof of
Death. Hartford will then reallocate the remaining balance in the Hartford Money
Market Fund according to the instructions and resume payments. If the
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16 HARTFORD LIFE INSURANCE COMPANY
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instructions are to pay the Death Benefit in one sum, Hartford will pay the
Death Benefit.
DISTRIBUTION REQUIREMENTS:
PRIOR TO THE INCOME START DATE
The Contract Value will be distributed based on the Contract Owner's or
Annuitant's date of death and the Beneficiary's election:
1) in a single lump sum within five years;
2) under an Annuity Payment Option provided that:
a) Annuity Payments begin within one year of the date of death, and
b) Annuity Payments are made in substantially equal installments over the
life of the Beneficiary, or
c) Annuity Payments are made in substantially equal installments over a
period not greater than the life expectancy of the Beneficiary;
3) if the sole Beneficiary is the spouse of the deceased Contract Owner, he or
she may by Written Notice within one year of the Contract Owner's death,
elect to continue the Contract as the new Contract Owner. If the spouse so
elects, all of his or her rights as Beneficiary cease and if the deceased
Contract Owner was also the sole Annuitant and appointed no contingent
Annuitant, he or she will become the Annuitant; or
4) if the Contract Owner is not an individual, then the "primary Annuitant"
shall be treated as the Contract Owner under 1) and 2) above. For this
purpose, the "primary Annuitant" means the individual, the events in the
life of whom are of primary importance in affecting the timing or amount of
the payout under the Contract.
PAYMENTS UNDER THE CONTRACT
Hartford generally makes payments of surrenders, Death Benefits, or any
Annuity Payments within seven days of receipt of all applicable Written Notices
and/or Due Proofs of Death. However, Hartford may postpone such payments for any
of the following reasons:
1. when the New York Stock Exchange ("NYSE") is closed for trading other than
customary holiday or weekend closing, or trading on the NYSE is restricted,
as determined by the Commission; or
2. when the Commission by order permits a postponement for the protection of
Contract Owners; or
3. when the Commission determines that an emergency exists that would make the
disposal of securities held in the Separate Account or the determination of
their value not reasonably practicable.
If a recent check or draft has been submitted, Hartford has the right to
defer payment of surrenders, payments upon the death of the Contract Owner or
Annuitant before the Income Start Date, Death Benefits, or Annuity Payments
until the check or draft has been honored.
SELECTING AN ANNUITY
PAYMENT OPTION
The Annuity Payment Option specifies the type of annuity to be paid and
determines how long the annuity will be paid, the frequency of Annuity Payments,
and the amount of each Annuity Payment. The Contract Owner must select the
Annuity Payment Option when applying for the Contract. This election is
irrevocable once the Contract is issued. The Contract Owner must select the
Sub-Accounts to which Contract Value less applicable Premium Tax will be
applied. Unless otherwise directed, Sub-Account values, as they exist on the
Annuity Calculation Date, are used to calculate the first Annuity Payment.
ANNUITY PAYMENT OPTIONS
LIFE ANNUITY -- Hartford makes Annuity Payments to the Payee for as long as
the Annuitant lives. UNDER THIS OPTION, A PAYEE WOULD RECEIVE ONLY ONE ANNUITY
PAYMENT IF THE ANNUITANT DIES AFTER THE FIRST ANNUITY PAYMENT, TWO ANNUITY
PAYMENTS IF THE ANNUITANT DIES AFTER THE SECOND ANNUITY PAYMENT, ETC.
LIFE ANNUITY WITH CASH REFUND -- Hartford makes Annuity Payments to the
Payee as long as the Annuitant lives. If the Annuitant dies and the sum of all
Annuity Payments made are less than the Contract Value less Premium Tax used to
purchase Annuity Units on the Annuity Calculation Date, the Beneficiary is
entitled to a Death Benefit. The Death Benefit equals the Contract Value less
Premium Tax used to purchase Annuity Units on the Annuity Calculation Date minus
the sum of all Annuity Payments made. This Option is only available using the 5%
A.I.R.
LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS
- -- Hartford makes Annuity Payments to the Payee for as long as the Annuitant
lives. At the time this Option is selected, the Contract Owner must select a
specific number of years (a minimum of five years and maximum of: a) 100 minus
the Annuitant's age or b) 40 years, whichever is less). If the Annuitant dies
before the specified number of years has passed, the Beneficiary will have the
option of either having the payments continue to the Beneficiary for the
remainder of the period or receiving the Commuted Value in one sum. Some
restrictions apply to Qualified Contracts with regards to the specified number
of years for which payments are guaranteed.
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HARTFORD LIFE INSURANCE COMPANY 17
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JOINT AND LAST SURVIVOR LIFE ANNUITY -- Hartford makes Annuity Payments to
the Payee while both Annuitants are living. After the death of either Annuitant,
Annuity Payments continue to the Payee for as long as the other Annuitant lives.
UNDER THIS OPTION, A PAYEE WOULD RECEIVE ONLY ONE ANNUITY PAYMENT IF BOTH
ANNUITANTS DIE AFTER THE FIRST ANNUITY PAYMENT, ETC. ANNUITY PAYMENTS AFTER THE
DEATH OF THE FIRST ANNUITANT MADE IN AMOUNTS EQUAL TO 100%, 66.67% OR 50% OF THE
AMOUNT THAT WOULD OTHERWISE BE PAID.
JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS
GUARANTEED FOR A SPECIFIED NUMBER OF YEARS WHILE BOTH
ANNUITANTS ARE LIVING -- Hartford makes Annuity Payments to the Payee while both
Annuitants are living. After the death of either Annuitant, Annuity Payments
continue to the Payee for as long as the other Annuitant lives. At the time of
purchase, the Contract Owner must elect to have Annuity Payments after the death
of the first Annuitant made in amounts equal to 100%, 66.67% or 50% of the
amount that would otherwise be paid. At the time this Option is selected, the
Contract Owner must select a specific number of years (a minimum of five years
and maximum of 100 minus the younger Annuitant's age). If the Annuitants die
before the specified number of years has passed, the Beneficiary will have the
option of either having the payments continue to the Beneficiary for the
remainder of the period or receiving the Commuted Value in one sum. Some
restrictions apply to Qualified Contracts with regards to the specified number
of years for which payments are guaranteed.
PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS -- Hartford makes
Annuity Payments to the Payee for the number of years (a minimum of five years
and maximum of 100 minus the Annuitant's age) selected by the Contract Owner. If
the Annuitant dies before the specified number of years has passed, payments to
the Beneficiary will continue until the specified number of years has elapsed.
After the death of the Annuitant, the Beneficiary will have the option of either
having the payments continue to the Beneficiary for the remainder of the period
or receiving the Commuted Value in one sum. Some restrictions apply to Qualified
Contracts with regards to the specified number of years for which payments are
guaranteed.
Prior to the death of the Annuitant, the Contract Owner may elect to receive
the Commuted Value. If the Contract Owner makes this election, Hartford will
deduct the contingent deferred sales charge from the Commuted Value before
paying it to the Contract Owner.
ANNUITY CALCULATION DATE
AND INCOME START DATE
The Contract Owner selects the Income Start Date in the application or order
request. The Annuity Calculation Date will be no more than five Valuation Days
before the Income Start Date. The Contract Value less any applicable Premium Tax
is applied to purchase Annuity Units of the Sub-Accounts selected by the
Contract Owner as of the Annuity Calculation Date. The first Annuity Payment is
computed using the value of such Annuity Units as of the Annuity Calculation
Date.
INCOME PAYMENT DATES
All Annuity Payments after the first Annuity Payment are computed and
payable as of the Income Payment Dates. These dates are the same day of the
month as the Income Start Date based on the Annuity Payment frequency selected
by the Contract Owner and shown on the specification page of the Contract.
Available Annuity Payment frequency includes monthly, quarterly, semi-annual and
annual. The Annuity Payment frequency may not be changed once selected by the
Contract Owner.
In the event that the Contract Owner does not select an Annuity Payment
frequency, Annuity Payments will be made monthly.
VARIABLE ANNUITY PAYMENTS
THE FIRST VARIABLE ANNUITY PAYMENT -- Variable Annuity Payments are periodic
payments from Hartford to the designated Payee, the amount of which varies from
one Income Payment Date to the next as a function of the net investment
performance of the Sub-Accounts selected by the Contract Owner to support such
Annuity Payments. The dollar amount of the first Variable Annuity Payment
depends on the Annuity Payment Option chosen, the age of the Annuitant, the
gender of the Annuitant (if applicable), the amount of Contract Value applied to
purchase the Annuity Payments, and the applicable annuity purchase rates based
on the 1983a Individual Annuity Mortality table using projection scale G
projected to the year 2000 and an Assumed Investment Return of not less than
3.0%.
The dollar amount of the first Variable Annuity Payment attributable to each
Sub-Account is determined by dividing the dollar amount of the Contract Value
less applicable Premium Tax applied to that Sub-Account on the Annuity
Calculation Date by $1,000 and multiplying the result by the Payment Factor in
the Contract for the selected Annuity Payment Option. The dollar value of the
first Variable Annuity Payment is the sum of the first Variable Annuity Payments
attributable to each Sub-Account.
ANNUITY UNITS -- The number of Annuity Units attributable to a Sub-Account
is derived by dividing the first Variable Annuity Payment attributable to that
Sub-Account by the Annuity Unit value for that Sub-Account for the Valuation
Period ending on the Annuity Calculation Date or during which the Annuity
Calculation Date falls if the Valuation Period does not end on such date. The
number of Annuity Units attributable to each Sub-Account under a
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18 HARTFORD LIFE INSURANCE COMPANY
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Contract remains fixed unless there is a transfer of Annuity Units between
Sub-Accounts.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS -- The dollar amount of each subsequent
Variable Annuity Payment attributable to each Sub-Account is determined by
multiplying the number of Annuity Units of that Sub-Account credited under the
Contract by the Annuity Unit value (described below) for that Sub-Account for
the Valuation Period ending on the Income Payment Date, or during which the
Annuity Payment Date falls if the Valuation Period does not end on such date.
The dollar value of each subsequent Variable Annuity Payment is the sum of the
subsequent Variable Annuity Payments attributable to each Sub-Account.
Notwithstanding the foregoing, when an Income Payment Date would fall on a day
that is not a Valuation Day, the Income Payment is computed as of the Valuation
Day immediately following what would have been the Income Payment Date.
The Annuity Unit value of each Sub-Account for any Valuation Period is equal
to (a) multiplied by (b) divided by (c) where:
(a) is the Net Investment Factor for the Valuation Period for which the Annuity
Unit value is being calculated;
(b) is the Annuity Unit value for the preceding Valuation Period; and
(c) is a daily Annuity Unit Factor (for the 3%, 5% or 6% Assumed Investment
Return) adjusted for the number of days in the Valuation Period.
The annual Annuity Unit Factor is equal to one plus the applicable Assumed
Investment Return percentage. Therefore, for 3%, it is 1.03, for 5% it is 1.05
and for 6% it is 1.06. The annual Annuity Unit Factor can be translated into a
daily Annuity Unit Factor of 1.00008098, 1.00013368, and 1.00015965,
respectively.
THE ASSUMED INVESTMENT RETURN -- The Annuity Unit value will increase or
decrease from one Income Payment Date to the next in direct proportion to the
net investment return of the Sub-Account or Sub-Accounts supporting the Variable
Annuity Payments, less an adjustment to neutralize the selected Assumed
Investment Return. Dividing what would otherwise be the Annuity Unit value by
the Assumed Investment Return factor is necessary in order to adjust the change
in the Annuity Unit value (resulting from the Net Investment Factor) so that the
Annuity Unit value only changes to the extent that the Net Investment Factor
represents a rate of return greater than or less than the Assumed Investment
Return selected by the Contract Owner. Without this adjustment, the Net
Investment Factor would decrease the Annuity Unit value to the extent that such
value represented an annualized rate of return of less than 0.0% and increase
the Annuity Unit value to the extent that such value represented an annualized
rate of return of greater than 0.0%.
Subject to state approval, the Contract permits Contract Owners to select
one of three Assumed Investment Returns: 3%, 5% or 6%. A higher Assumed
Investment Return will result in a higher initial payment, a more slowly rising
series of subsequent payments when actual investment performance (minus any
deductions and expenses) exceeds the Assumed Investment Return, and a more rapid
drop in subsequent payments when actual investment performance (minus any
deductions and expenses) is less than the Assumed Investment Return. The
following examples may help clarify the impact of selecting one Assumed
Investment Return over another:
1. If a Contract Owner selects a 3% ASSUMED INVESTMENT Return and if the net
investment return of the Sub-Account for an Annuity Payment period is equal
to the pro-rated portion of the 3% Assumed Investment Return, the Variable
Annuity Payment attributable to that Sub-Account for that period will equal
the Annuity Payment for the prior period. To the extent that such net
investment return exceeds an annualized rate of return of 3% for a payment
period, the Annuity Payment for that period will be greater than the Annuity
Payment for the prior period. To the extent that such return for a period
falls short of an annualized rate of 3%, the Annuity Payment for that period
will be less than the Annuity Payment for the prior period.
2. If a Contract Owner selects a 5% ASSUMED INVESTMENT RETURN and if the net
investment return of the Sub-Account for an Annuity Payment period is equal
to the pro-rated portion of the 5% Assumed Investment Return, the Variable
Annuity Payment attributable to that Sub-Account for that period will equal
the Annuity Payment for the prior period. To the extent that such net
investment return exceeds an annualized rate of return of 5% for a payment
period, the Annuity Payment for that period will be greater than the Annuity
Payment for the prior period. To the extent that such return for a period
falls short of an annualized rate of 5%, the Annuity Payment for that period
will be less than the Annuity Payment for the prior period.
3. If a Contract Owner selects a 6% ASSUMED INVESTMENT RETURN and if the net
investment return of the Sub-Account for an Annuity Payment period is equal
to the pro-rated portion of the 6% Assumed Investment Return, the Variable
Annuity Payment attributable to that Sub-Account for that period will equal
the Annuity Payment for the prior period. To the extent that such net
investment return exceeds an annualized rate of return of 6% for a payment
period, the Annuity Payment for that period will be greater than the Annuity
Payment for the prior period. To the extent that such return for a period
falls short of an annualized rate of 6%, the Annuity Payment for that period
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HARTFORD LIFE INSURANCE COMPANY 19
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will be less than the Annuity Payment for the prior period.
EXCHANGE ("TRANSFER") OF ANNUITY UNITS -- After the Annuity Calculation
Date, the Contract Owner may exchange (i.e., "transfer") the dollar value of a
designated number of Annuity Units of a particular Sub-Account for an equivalent
dollar amount of Annuity Units of another Sub-Account. On the date of the
transfer, the dollar amount of a Variable Annuity Payment generated from the
Annuity Units of either Sub-Account would be the same. No partial transfer will
be made if it results in any selected Sub-Account providing less than 10% of the
benefits under the Contract. Transfers are executed as of the day Hartford
receives Written Notice requesting transfer. For guidelines refer to
"Sub-Account Value Transfers."
CONTRACT FEES AND CHARGES
CONTINGENT DEFERRED SALES CHARGE
No sales charge is deducted from the Premium Payment at the time that the
Payment is made. However, a contingent deferred sales charge is deducted when a
Contract Owner elects to receive the Commuted Value under the PAYMENTS
GUARANTEED FOR A SPECIFIED NUMBER OF YEARS ANNUITY PAYMENT OPTION.
In the event that surrender charges from the Contracts are not sufficient to
cover the expenses of selling the Contracts, Hartford will bear such expenses.
Conversely, if the revenue from such charges exceeds such expenses, the excess
of revenues from such charges over expenses will be retained by Hartford.
The surrender charge is equal to a percentage of the Commuted Value (not to
exceed the Premium Payment) and is deducted from those values prior to their
being paid.
<TABLE>
<CAPTION>
SURRENDER CHARGE
AS A PERCENTAGE
CONTRACT YEAR OF COMMUTED VALUE
- ---------------- -----------------------
<S> <C>
1 6%
2 6%
3 5%
4 5%
5 4%
6 3%
7 2%
8 or more 0%
</TABLE>
PREMIUM TAX CHARGE
Certain states and municipalities impose a tax on Hartford in connection
with the Premium Payment or Contract Value. This tax can range from 0% to 4% of
either the Premium Payment or the Contract Value and is generally based on the
Contract Owner's state of residence. Taxes are generally incurred by Hartford as
of the Annuity Calculation Date. Hartford deducts the charge for taxes from the
Contract Value on the Annuity Calculation Date. Some jurisdictions impose a tax
on the Premium Payment at the time the Premium Payment is received. In those
jurisdictions, Hartford's current practice is to pay the tax on the Premium
Payment and then deduct the charge for these taxes from the Contract Value on a
surrender prior to Annuity Calculation Date, or on the Annuity Commencement
Date.
MORTALITY AND EXPENSE RISK CHARGE
Hartford deducts a daily charge from the assets of the Separate Account to
compensate Hartford for mortality and expense risks that Hartford assumes under
the Contracts. The daily charge is at the rate of 0.003446% (approximately
equivalent to an effective annual rate of 1.25%) of the net assets of the
Separate Account. Approximately .90% of this annual charge is for the assumption
of mortality risk and .35% is for the assumption of expense risk.
The mortality risk that Hartford assumes (for life contingency based Annuity
Payment Options) is the risk that Annuitants, as a group, will live for a longer
period of time than Hartford estimated when it established the annuity purchase
rates in the Contract. Because of these guarantees, each Contract Owner is
assured that the Annuitant's longevity will not have an adverse effect on the
Annuity Payments that the Payee receives under Annuity Payment Options based on
life contingencies. Hartford also assumes a mortality risk because the Contracts
guarantee a "death benefit" if the Contract Owner or Annuitant dies before the
Income Start Date.
FUND EXPENSES
The investment performance of each Fund reflects the management fee that the
Fund pays to its investment manager as well as other operating expenses that the
Fund incurs. Investment management fees are generally daily fees computed as a
percent of a Fund's average daily net assets at an annual rate. Please read the
prospectus for each Fund for complete details.
ADDITIONAL CONTRACT INFORMATION
CONTRACT OWNERSHIP
The Contract belongs to the Contract Owner. A Contract Owner may exercise
all of the rights and options described in the Contract. Only the Annuitant may
be the owner of an IRA Contract.
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20 HARTFORD LIFE INSURANCE COMPANY
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The Contract Owner's rights include the right to: (1) select or change the
Contract Owner, (2) select or change any Beneficiary or contingent Beneficiary,
(3) select or change the Payee while the Annuitant is still alive, (4) allocate
the Premium Payment among and between the Sub-Accounts, (5) transfer Contract
Value among and between the Sub-Accounts, and (6) exchange or transfer Annuity
Units between Sub-Accounts on which Variable Annuity Payments are based.
The rights of owners of Qualified Contracts may be restricted by the terms
of a related employee benefit plan. For example, such plans may require an owner
of a Qualified Contract to obtain the consent of his or her spouse before
exercising certain ownership rights or may restrict withdrawals. See "Federal
Tax Considerations," for more details.
Selection of an Annuitant or Payee who is not the Contract Owner may have
adverse tax consequences. See "Federal Tax Considerations," for more details.
CHANGING THE CONTRACT OWNER OR BENEFICIARY
At any time after the Cancellation Period, a Contract Owner may transfer
ownership of the Contract subject to Hartford's policies and procedures at the
time of the change.
At any time prior to the death of the Annuitant or the death of last
surviving Joint Annuitant, the Contract Owner may name a new Beneficiary by
Written Notice unless an irrevocable Beneficiary has previously been named. When
an irrevocable Beneficiary has been designated, the Contract Owner must provide
the irrevocable Beneficiary's written consent to Hartford before a new
Beneficiary is designated.
These changes take effect as of the day the Written Notice was signed and
dated. Hartford is not liable for any payments made under the Contract prior to
the effectiveness of any change. For possible tax consequences of these changes,
see "Federal Tax Considerations."
MISSTATEMENT OF AGE OR SEX
If an age or sex of the Annuitant given to Hartford (in the application or
otherwise) is misstated, Hartford will adjust the benefits it pays under the
Contract to the amount that would have been payable at the correct age or sex.
If Hartford made any underpayments because of any such misstatement, it shall
pay the amount of such underpayment to the Payee or Beneficiary in one sum. If
Hartford makes any overpayments because of a misstatement of age or sex, it
shall deduct from current or future payments due under the Contract, the amount
of such overpayment.
CHANGE OF CONTRACT TERMS
Upon notice to the Contract Owner, Hartford may modify the Contract to:
1. conform the Contract or the operations of Hartford or of the Separate
Account to the requirements of any law to which the Contract, Hartford or
the Separate Account is subject;
2. assure continued qualification of the Contract as an annuity contract or a
Qualified Contract under the Code;
3. reflect a change (as permitted in the Contract) in the operation of the
Separate Account.
In the event of any such modification, Hartford will make appropriate
endorsements to the Contract.
No modification of this Contract shall be made except over the signature of
the President, a Vice President, an Assistant Vice President or a Secretary of
Hartford. Any modification or waiver must be in writing. No agent may bind
Hartford by making any promise not contained in the Contract.
REPORTS TO CONTRACT OWNERS
Hartford sends each Contract Owner a report at least annually, or more often
as required by law, indicating: the number of Accumulation or Annuity Units and
the dollar value of such units; the Contract Value prior to the Annuity
Calculation Date; the Premium Payment; or surrenders made before the Annuity
Calculation Date; Annuity Payments on or after the Income Start Date; and any
other information required by law.
The reports, which are mailed to Contract Owners at their last known
address, include any information that may be required by the Commission or the
insurance supervisory official of the jurisdiction in which the Contract is
issued.
Hartford also sends any other reports, notices or documents required by law
to be furnished to Owners.
MISCELLANEOUS
NON-PARTICIPATING -- The Contract does not participate in the surplus or
profits of Hartford and Hartford does not pay dividends on the Contract.
PROOF OF AGE AND SURVIVAL -- Hartford reserves the right to require proof of
the Annuitant's age and gender prior to the Annuity Calculation Date. In
addition, Hartford reserves the right to require proof that the Annuitant is
living before any Income Payment Date.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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CONTRACT APPLICATION OR ORDER REQUEST -- Hartford issues the Contract in
consideration of the Contract Owner's application or order request and Premium
Payment. The entire Contract is made up of the Contract and any attached
endorsements or riders. In the absence of fraud, Hartford considers statements
made in the application or order request to be representations and not
warranties. Hartford will not use any statement in defense of a claim or to void
the Contract unless it is contained in the application or order request.
Hartford will not contest the Contract.
VOTING PRIVILEGES
In accordance with current interpretations of applicable law, Hartford votes
Fund shares held in the Separate Account at regular and special shareholder
meetings of the Funds in accordance with instructions received from persons
having voting interests in the corresponding Sub-Accounts.
The number of votes that a Contract Owner has the right to instruct are
calculated separately for each Sub-Account, and may include fractional votes.
Prior to the Annuity Calculation Date, the Contract Owner holds a voting
interest in each Sub-Account to which Variable Contract Value is allocated.
After the Annuity Calculation Date, the Contract Owner has a voting interest in
each Sub-Account from which Variable Annuity Payments are made.
For each Contract Owner prior to the Annuity Calculation Date, the number of
votes attributable to a Sub-Account will be determined by dividing the Contract
Owner's Sub-Account Value by the Net Asset Value of the Fund in which that
Sub-Account invests. For each Contract Owner after the Annuity Calculation Date,
the number of votes attributable to a Sub-Account is determined by dividing the
liability for future Variable Annuity Payments to be paid from that Sub-Account
by the Net Asset Value of the Fund in which that Sub-Account invests. This
liability for future payments is calculated on the basis of the mortality
assumptions, the selected Assumed Investment Return and the Annuity Unit value
of that Sub-Account. As Variable Annuity Payments are made to the Payee, the
liability for future payments decreases as does the number of votes.
The number of votes available to a Contract Owner are determined as of the
date coinciding with the date established by the Fund for determining
shareholders eligible to vote at the relevant meeting of the Fund's
shareholders. Voting instructions are solicited by written communication prior
to such meeting in accordance with procedures established for the Fund. Each
Contract Owner or Payee having a voting interest in a Sub-Account will receive
proxy materials and reports relating to any meeting of shareholders of the Funds
in which that Sub-Account invests.
Fund shares as to which no timely instructions are received and shares held
by Hartford in a Sub-Account as to which no Owner or Payee has a beneficial
interest are voted in proportion to the voting instructions that are received
with respect to all Contracts participating in that Sub-Account. Voting
instructions to abstain on any item to be voted upon are applied to reduce the
total number of votes eligible to be cast on a matter.
FEDERAL TAX CONSIDERATIONS
GENERAL
TAX LAW IS COMPLEX AND TAX CONSEQUENCES WILL VARY ACCORDING TO THE ACTUAL
STATUS OF THE CONTRACT OWNER AND, IF APPLICABLE, THE TYPE OF RETIREMENT PROGRAM
FOR WHICH THE CONTRACT IS PURCHASED. THEREFORE, A PERSON, TRUSTEE OR OTHER
ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT MAY NEED LEGAL AND TAX ADVICE.
This Prospectus does not provide a detailed description of the federal
income tax consequences of purchasing a Contract. Special tax rules may apply to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a prospective purchaser should always consult a qualified tax
adviser. This discussion is based on Hartford's understanding of current federal
income tax laws as they are currently interpreted.
TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company under Subchapter L of Chapter 1 of the Code. Accordingly, the
Separate Account is not separately taxed as a "regulated investment company"
under subchapter M. Investment income and any realized capital gains on the
assets of the Separate Account are reinvested and are taken into account in
determining the value of the Accumulation and Annuity Units. As a result, such
investment income and realized capital gains are automatically applied to
increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Contracts.
TAXATION OF PURCHASERS
OF NON-QUALIFIED CONTRACTS
CORPORATIONS, TRUSTS AND OTHER NON-NATURAL PERSONS -- Section 72 of the Code
governs the taxation of annuity contracts and contains provisions relating to
non-natural Contract Owners. Non-natural persons include, among others,
corporations, trusts, and partnerships. In general,
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22 HARTFORD LIFE INSURANCE COMPANY
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unless the non-natural person holds a Contract as agent for a natural person,
the annual net increase in the value of the Contract is includable in the
non-natural person's gross income for the tax period in which the net increase
occurs. There is, however, an exception to this general rule for certain annuity
contracts held by structured settlement companies, certain annuity contracts
held in connection with tax-qualified retirement arrangements and certain
immediate annuity contracts. For this purpose, an immediate annuity means an
annuity that is purchased with a single premium payment, that has an annuity
start date commencing no later than one year from the date of purchase, and that
provides for a series of substantially equal periodic payments to be made not
less frequently than annually during the annuity period. A non-natural person
which is a tax-exempt entity for federal income tax purposes is not subject to
income tax as a result of Section 72 of the Code.
NATURAL PERSONS -- Section 72 generally provides that a Contract Owner is
not taxed on increases in the value of the Contract until an amount distributed
from the Contract is received (or deemed received) by the Contract Owner, either
in the form of Annuity Payments, as contemplated by the Contract, or in some
other form (i.e., surrender or Death Benefit). However, this tax deferral
generally applies only if: (1) the investments in the Separate Account are
"adequately diversified" in accordance with Treasury Department regulations, (2)
Hartford, rather than the Contract Owner, is considered the owner of such assets
for federal income tax purposes, and (3) certain distribution requirements are
met in the event that the Contract Owner dies. These requirements are discussed
further under the caption "Tax Status of the Contract" below.
DISTRIBUTIONS PRIOR TO THE INCOME START DATE -- The Contract does not permit
partial withdrawals or partial surrenders or loans. If, however, a Contract is
surrendered prior to the Income Start Date, amounts received by the Contract
Owner are includable in his or her income to the extent that such amounts exceed
the "investment in the contract." For this purpose, the investment in the
contract at any time equals the Premium Payment (to the extent that such Payment
was neither deductible when made nor excludable from income as, for example, in
the case of certain contributions to Qualified Contracts), less any amounts
previously received from the Contract which were not includable in income. Also,
the Surrender Value may be subject to a penalty tax, described below. In
general, an assignment of the Contract (or other change of ownership) without
full and adequate consideration will be treated as a distribution from the
Contract and taxed in the same manner as a surrender (except where the Contract
is transferred between spouses or incident to a divorce).
The Contract provides that upon the death of Contract Owner, Annuitant or
Joint Annuitant, the Beneficiary will receive the Contract Value. This
distribution is includable in the Beneficiary's income as follows: (1) if
distributed in a lump sum, it is taxed in the same manner as a surrender, (2) if
it is distributed in the form of Annuity Payments, it is taxed in the same
manner as Annuity Payments (see below).
DISTRIBUTIONS AFTER THE INCOME START DATE -- The portion of each Annuity
Payment taxable as ordinary income is equal to the excess of the Annuity Payment
over the "exclusion amount." The "exclusion amount" is the investment in the
Contract (described above), adjusted for any guaranteed period, divided by the
number of Annuity Payments expected to be made (determined by Treasury
Department regulations that take into account the Annuitant's life expectancy
and the Annuity Payment Option elected). After the dollar amount of the
investment in the Contract, adjusted for any guaranteed period, is deemed to be
recovered, the entire amount of each Annuity Payment is fully includable in
income. Nonetheless, should the Annuity Payments cease before the adjusted
investment in the Contract is fully recovered, a deduction is allowed for the
unrecovered amount of the adjusted investment in the Contract. Where a
guaranteed period of Annuity Payments is selected and the Annuitant does not
live to the end of that period, the Annuity Payments for the remainder of the
period are includable in income as follows: (1) if distributed in a lump sum,
they are included in income to the extent that they exceed the unrecovered
investment in the Contract at that time, or (2) if received as Annuity Payments,
they are fully excluded from income until the remaining investment in the
Contract is deemed to be recovered. All Annuity Payments thereafter are fully
includable in income.
PENALTY TAX ON CERTAIN DISTRIBUTIONS -- Distributions received (or deemed
received) from a Contract (before or after the Income Start Date) may be subject
to a penalty tax equal to 10% of the amount treated as taxable income. In
general, however, there is no penalty tax on distributions:
1. made on or after a taxpayer reaches age 59 1/2;
2. made on or after the death of the Contract Owner;
3. attributable to a taxpayer's becoming disabled;
4. that are part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or the life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and
his or her designated beneficiary;
5. made under certain annuities issued in connection with structured settlement
agreements; and
6. made under an annuity contract that is purchased with a single premium
payment when the annuity date is no later than a year from purchase and
substantially equal periodic payments are made, not less frequently than
annually, during the annuity payment period.
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HARTFORD LIFE INSURANCE COMPANY 23
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AGGREGATION OF TWO OR MORE CONTRACTS -- All non-qualified deferred annuity
contracts that are issued by Hartford (or its affiliates) to the same owner
during any calendar year are treated as one annuity contract for purposes of
determining the amount includable in gross income under Section 72(e) of the
Code. The effects of this rule are not yet clear; however, it could affect the
time when income is taxable and the amount that might be subject to the 10%
penalty tax described above. In addition, the Treasury Department has specific
authority to issue regulations that prevent the avoidance of Section 72(e) of
the Code through the serial purchase of annuity contracts or otherwise. There
may also be other situations in which the Treasury Department may conclude that
it would be appropriate to aggregate two or more deferred or immediate annuity
contracts purchased by the same owner. Accordingly, a Contract Owner should
consult a competent tax adviser before purchasing more than one annuity contract
in a calendar year.
POSSIBLE CHANGES IN TAXATION -- In past years, legislation has been proposed
that would have adversely modified the federal taxation of certain annuity
contracts. For example, one such proposal would have changed the tax treatment
of non-qualified annuities that did not have "substantial life contingencies" by
taxing income as it is credited to the annuity contract. Although as of the date
of this Prospectus Congress is not considering any legislation regarding
taxation of annuity contracts, there is always the possibility that the tax
treatment of annuities could change by legislation or other means (such as IRS
regulations, revenue rulings, judicial decisions, etc.). Moreover, it is also
possible that any change could be retroactive (that is, effective prior to the
date of the change).
CONTRACTS OBTAINED THROUGH A TAX-FREE EXCHANGE OF OTHER ANNUITY OR LIFE
INSURANCE CONTRACTS -- Section 1035 of the Code generally provides that no gain
or loss shall be recognized on the exchange of one annuity contract for another.
If the surrendered contract was issued prior to August 14, 1982, the tax rules
formerly provided that the surrender was taxable only to the extent the amount
received exceeds the owner's investment in the contract will and continue to
apply to amounts allocable to investments in that contract prior to August 14,
1982. In contrast, contracts issued after January 19, 1985 in a Code Section
1035 exchange are treated as new contracts for purposes of the penalty and
distribution-at-death rules. Special rules and procedures apply to Section 1035
transactions. Prospective Contract Owners wishing to take advantage of Section
1035 should consult their tax adviser.
TAX STATUS OF THE CONTRACTS -- The foregoing discussion assumes that the
Contracts qualify as "annuity contracts" for federal income tax purposes under
the Code.
DIVERSIFICATION REQUIREMENTS -- Section 817(h) of the Code provides that
separate account investments underlying a contract must be "adequately
diversified" in accordance with Treasury Department regulations in order for the
contract to qualify as an annuity contract under Section 72 of the Code. The
Separate Account, through each underlying Fund, intends to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code, which affect how the assets in the various Sub-Accounts may be
invested. Although Hartford does not have direct control over the Funds in which
the Separate Account invests, Hartford believes that each Fund will meet the
diversification requirements, and therefore, the Contract will be treated as an
annuity contract under the Code.
The Treasury Department has issued diversification regulations which
generally require, in effect, among other things, that no more than 55% of the
value of the total assets of each Fund is represented by any one investment, no
more than 70% is represented by any two investments, no more than 80% is
represented by any three investments, and no more than 90% is represented by any
four investments. In determining whether the diversification standards are met,
all securities of the same issuer, all interests in the same real property
project, and all interests in the same commodity are each treated as a single
investment. In addition, in the case of government securities, each government
agency or instrumentality shall be treated as a separate issuer.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includable in the variable
annuity contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular Sub-Accounts without being treated as
owners of the underlying assets." As of the date of this Prospectus, no such
guidance has been issued.
The ownership rights under the Contracts are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract
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24 HARTFORD LIFE INSURANCE COMPANY
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owners were not owners of separate account assets. For example, the Contract
Owner has the choice of several Sub-Accounts in which to allocate the Premium
Payment and Contract Value, and may be able to transfer Contract Value among
Sub-Accounts more frequently than in such rulings. In addition, the Contract
provides for more Sub-Accounts than did the variable contracts that were the
subject of the such rulings. These differences could result in a Contract Owner
being treated as the owner of the assets of the Separate Account. In addition,
Hartford does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. Hartford therefore reserves the right to modify the Contract as necessary
to attempt to prevent the Contact Owner from being considered the owner of the
Separate Account's assets.
REQUIRED DISTRIBUTIONS -- In order to be treated as an annuity contract for
federal income tax purposes, Section 72(s) of the Code requires any
Non-Qualified Contract to provide that: (a) if any Contract Owner dies on or
after the Income Start Date but prior to the time the entire interest in the
Contract has been distributed, the remaining portion of such interest will be
distributed at least as rapidly as under the method of distribution being used
as of the date of that Contract Owner's death; and (b) if any Contract Owner
dies prior to the Income Start Date, the entire interest in the Contract will be
distributed within five years after the date of the Contract Owner's death.
These requirements will be considered satisfied as to any portion of the
Contract Owner's interest that is payable to or for the benefit of a "designated
beneficiary," and that is distributed over the life of such Beneficiary or over
a period not extending beyond the life expectancy of that Beneficiary, provided
that such distributions begin within one year of that Contract Owner's death.
The Contract Owner's "designated beneficiary" is the person designated by such
Contract Owner as a Beneficiary and must be a natural person. However, if the
Contract Owner's sole designated beneficiary is the surviving spouse of the
Contract Owner, the Contract may be continued with the surviving spouse as the
new Contract Owner. The requirements further provide that if the Contract Owner
is not an individual, the primary Annuitant shall be treated as the Contract
Owner for purposes of making distributions that are required to be made upon the
death of the Contract Owner. If there is a change in the primary Annuitant, such
change shall be treated as the death of the Contract Owner. The Contract does
not permit a change of the Annuitants, however.
Non-Qualified Contracts contain provisions that are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. Hartford will review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code Section 72(s) when clarified by regulation or otherwise.
TAXATION OF PURCHASERS OF QUALIFIED CONTRACTS
The Contracts are designed for use as IRAs or in connection with Deferred
Compensation Plans established and maintained by state or local governments or
tax-exempt organizations. Important differences exist between the tax rules
which are applicable to IRAs and Deferred Compensation Plans. These rules are
complex and may vary depending on individual circumstances. Adverse tax
consequences may result from distributions prior to age 59 1/2 (subject to
certain exceptions); distributions that do not conform to applicable
commencement and minimum distribution rules; and in other circumstances.
Therefore, no attempt is made to provide more than general information about the
use of the Contracts as IRAs or when owned by eligible employers in connection
with Deferred Compensation Plans. Contract Owners, Annuitants, and Beneficiaries
are cautioned that the rights of any person to any benefits under a Deferred
Compensation Plan may be subject to the terms and conditions of the plan itself,
regardless of the terms and conditions of the Contract, but that Hartford is not
bound by the terms and conditions of such plans to the extent such terms
conflict with the Contract, unless Hartford specifically consents to be bound. A
brief description of some of the federal income tax rules which apply to IRAs
and Deferred Compensation Plans is set forth below. Hartford may amend the
Contract as necessary to conform it to the requirements of applicable law.
INDIVIDUAL RETIREMENT ANNUITIES -- The Contract is designed for use as an
IRA purchased through a tax-deferred rollover contribution from another IRA, a
retirement plan qualified under Section 401 or Section 403(a) of the Code or tax
sheltered annuity contract under Section 403(b) of the Code. Amounts held under
a Deferred Compensation Plan under Section 457 of the Code CANNOT be rolled over
or transferred to an IRA.
DISTRIBUTIONS FROM AN IRA -- In general, payments from an IRA which are not
rolled over must be included in gross income as ordinary taxable income in the
year in which they are received. Required minimum distributions must begin by
April 1 of the calendar year following the calendar year in which the IRA owner
attains the age of 70 1/2. Certain other mandatory distribution rules apply upon
the death of the IRA owner.
TEN PERCENT PENALTY TAX ON EARLY DISTRIBUTIONS -- Distributions received (or
deemed received) from an IRA may be subject to a penalty tax equal to ten
percent (10%) of the amount treated as taxable income. In general, however,
there is no such penalty tax on distributions:
1. made on or after the date on which the taxpayer reaches age 59 1/2,
2. made to a beneficiary (or to the estate of the taxpayer) on or after the
death of the taxpayer,
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HARTFORD LIFE INSURANCE COMPANY 25
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3. attributable to the taxpayer's becoming disabled, or
4. which are part of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and
his or her designated beneficiary.
In addition, effective for distributions from an IRA made after December 31,
1996, there is no such penalty tax on distributions:
5. made to the taxpayer to the extent such distributions do not exceed the
amount allowable as a deduction for federal income tax purposes allowed to
the taxpayer for amounts paid during the taxable year for medical care, or
6. if certain conditions are met, made to an unemployed taxpayer after
separation from employment, for health insurance premiums.
7. made to the taxpayer to the extent the distribution does not exceed the
amount of certain qualifying higher education expenses, as defined by
Section 72(t)(7) of the Code, or
8. which are qualified first-time buyer distributions meeting the requirements
specified at Section 72(t)(8) of the Code.
CODE SECTION 457 DEFERRED COMPENSATION PLANS -- Contracts may be purchased
by a state or local government or tax-exempt organization that is an employer
sponsoring a Deferred Compensation Plan under Section 457 of the Code in order
to effect distribution of plan benefits to participants under the plan. In
general, distributions from a Deferred Compensation Plan are prohibited under
Section 457 unless made after the participant attains age 70 1/2, separates from
service, dies, or suffers an unforeseeable financial emergency. Distributions
under plans that meet the requirements of Section 457 of the Code are taxable as
ordinary income in the year paid or made available to the participant or
beneficiary.
Generally, required minimum distributions must begin by April 1 of the
calendar year following the calendar year in which the participating employee
attains the age of 70 1/2. Certain other mandatory distribution rules apply upon
the death of the participating employee.
Amounts held under a Deferred Compensation Plan under Section 457 of the
Code CANNOT be rolled over or transferred to an IRA.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution from a Contract that is taxable income to the
recipient is generally subject to withholding for the recipient's federal income
tax liability at rates that vary according to the type of distribution and the
recipient's tax status. Section 3405 of the Code governs withholding and is
summarized below:
NON-PERIODIC DISTRIBUTIONS -- The portion of a non-periodic distribution
which constitutes taxable income will be subject to federal income tax
withholding unless the recipient elects not to have taxes withheld. If an
election not to have taxes withheld is not provided, 10% of the taxable
distribution will be withheld as federal income tax. Election forms will be
provided at the time distributions are requested. If the necessary election
forms are not submitted to Hartford, Hartford will automatically withhold 10% of
the taxable distribution.
PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR) -- The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding as if the recipient were
married claiming three exemptions. A recipient may elect not to have income
taxes withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
DEFERRED COMPENSATION PLANS -- Deferred compensation plans meeting the
requirements of Section 457 of the Code are generally subject to regular wage
withholding rules.
Certain states also require withholding of state income tax whenever federal
income tax is withheld.
CONTRACT OWNERS THAT ARE NONRESIDENT
ALIENS OR FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to Contract Owners that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies and any required tax forms are submitted to
Hartford. In addition, purchasers may be subject to state premium tax, other
state and/or municipal taxes, and taxes that may be imposed by the purchaser's
country of citizenship or residence. Prospective purchasers are advised to
consult with a qualified tax adviser regarding U.S., state, and foreign taxation
with respect to the purchase of a Contract.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the federal tax consequences
under these Contracts are not exhaustive, and special rules may apply to other
tax situations not discussed in this Prospectus. Further, the federal income tax
consequences discussed herein reflect Hartford's understanding of current law
and the law may
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26 HARTFORD LIFE INSURANCE COMPANY
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change. Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of distributions under a Contract depend on
the individual circumstances of each Contract Owner or recipient of the
distribution. In particular, gift and/or estate tax consequences may result in
situations where the Contract Owner is not also the Annuitant, Payee, and
Beneficiary. A competent tax adviser should be consulted for further
information.
OTHER INFORMATION
DISTRIBUTION OF THE CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD"), which is located at
200 Hopmeadow Street, Simsbury, CT 06070, is principal underwriter and
distributor of the Contracts. HSD is an affiliate of Hartford. Hartford's parent
company indirectly owns 100% of HSD. HSD is registered with the Commission as a
broker-dealer, and is a member of the National Association of Securities
Dealers, Inc. Hartford pays HSD for acting as principal underwriter under a
distribution agreement. The Contracts are offered on a continuous basis and
Hartford does not anticipate discontinuing the offer.
Applications for Contracts are solicited by agents who are licensed by
applicable state insurance authorities to sell Hartford's insurance contracts
and who are also registered representatives of a broker-dealer having a selling
agreement with HSD. Such broker-dealers will generally receive commissions based
on a percent of the Premium Payment made (up to a maximum of 6%). The writing
agent will receive a percentage of these commissions from the respective
broker-dealer, depending on the practice of that broker-dealer. Contract Owners
do not pay these commissions.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by policyholders or contract owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institutions of insurance
products. These payments, which may be different for different broker-dealers or
financial institutions, will be made by HSD, its affiliates or Hartford out of
their own assets and will not effect the amounts paid by the policyholders or
contract owners to purchase, hold or surrender variable insurance products.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
to which the assets of the Separate Account are subject.
YEAR 2000
The Year 2000 issue relates to the ability or inability of computer systems
to properly process information and data containing or related to dates
beginning with the year 2000 and beyond. The Year 2000 issue exists because,
historically, many computer systems that are in use today were developed years
ago when a year was identified using a two-digit field rather than a four-digit
field. As information and data containing or related to the century date are
introduced to computer hardware, software and other systems, date sensitive
systems may recognize the year 2000 as 1900, or not at all, which may result in
computer systems processing information incorrectly. This, in turn, may
significantly and adversely affect the integrity and reliability of information
databases and may result in a wide variety of adverse consequences to a company.
In addition, Year 2000 problems that occur with third parties with which a
company does business, such as suppliers, computer vendors and others, may also
adversely affect any given company.
As an insurance and financial services company, Hartford has thousands of
individual and business customers that have purchased or invested in insurance
policies, annuities, mutual funds and other financial products. Nearly all of
these policies and products contain date sensitive data, such as policy
expiration dates, birth dates, premium payments dates and the like. In addition,
Hartford has business relationships with numerous third parties that affect
virtually all aspects of its business, including, without limitation, suppliers,
computer hardware and software vendors, insurance agents and brokers, securities
broker-dealers and other distributors of financial products.
Beginning in 1990, Hartford began working on making its computer systems
Year 2000 ready, either by installing new programs or by replacing systems. In
January 1998, Hartford commenced a company-wide program to further identify,
assess and remediate the impact of Year 2000 problems in all of Hartford's
business segments. Hartford currently anticipates that this internal program
will be substantially completed by the end of 1998, and testing of the computer
systems will continue through 1999.
In addition, as part of its Year 2000 program, Hartford is identifying third
parties with which it has significant business relations in order to attempt to
assess any potential impact on Hartford as a result of such third-party Year
2000 issues and remediation plans. Hartford currently anticipates that it will
substantially complete this evaluation by the end of 1998, and will conduct
systems testing with certain third
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HARTFORD LIFE INSURANCE COMPANY 27
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parties through 1999. Hartford does not have control over these third parties
and, as a result, Hartford cannot currently determine to what extent future
operating results may be adversely affected by the failure of these third
parties to successfully address their Year 2000 issues. Hartford will continue
to assess Year 2000 risk exposures related to its own operations and its
third-party relationships and is in the process of developing business
contingency plans.
The costs of addressing the Year 2000 issue that have been incurred through
the six months ended June 30, 1998 have not been material to Hartford's
financial condition or results of operations. Hartford will continue to incur
costs related to its Year 2000 efforts and does not anticipate that the costs to
be incurred will be material to its financial condition or results of
operations.
EXPERTS
The audited financial statements and financial statement schedules included
in this registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
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28 HARTFORD LIFE INSURANCE COMPANY
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ILLUSTRATIONS OF ANNUITY PAYMENTS
ASSUMING HYPOTHETICAL RATES OF RETURN
The following graph has been prepared to show how investment performance
could affect Variable Annuity Payments over time. The graph illustrates the
Variable Annuity Payments of a Non-Qualified Contact under three rate of return
scenarios. Of course, the illustrations merely represent what Variable Annuity
Payments might be paid under a HYPOTHETICAL Non-Qualified Contract.
WHAT THE GRAPHS ILLUSTRATE. -- Each curve plotted on the graph illustrates
the payments under a hypothetical Non-Qualified Contract (described in more
detail below) assuming a different hypothetical rate of return for a single
Sub-Account supporting the Contract by plotting one point for each contract
year. Each such annual point on the graph represents the average of twelve
monthly Variable Annuity Payments made in that contract year under the
hypothetical Contract (hereinafter, an "Average Monthly Payment"). Each curve on
the graph assumes that the initial Variable Annuity Payment under the
hypothetical Contract is $1,000 (discussed in more detail below).
HYPOTHETICAL RATES OF RETURN. -- The Variable Annuity Payments reflect three
different assumptions for a constant investment return before fees and expenses:
0%, 6% and 12%. Net of all expenses, these constant returns are: 1.83%, 4.06%
and 9.95%. Average Monthly Payments reflect the assumed investment return net of
all expenses of the illustrated Sub-Account (and the Funds) over the periods
shown in each graph. Fund management fees and operating expenses are assumed to
be at an annual rate of 0.60% of their average daily net assets. This is the
weighted average of Fund expenses shown in the fee table on page 5. The
mortality and expense risk charge is assumed to be at an annual rate of 1.25% of
the illustrated Sub-Account's average daily net assets.
Nevertheless, THE AVERAGE MONTHLY PAYMENTS DEPICTED IN THE GRAPH ARE BASED
ON HYPOTHETICAL CONTRACTS AND HYPOTHETICAL INVESTMENT RESULTS AND ARE NOT
PROJECTIONS OR INDICATIONS OF FUTURE RESULTS. HARTFORD DOES NOT GUARANTEE OR
EVER SUGGEST THAT ANY SUB-ACCOUNT OR CONTRACT ISSUED BY IT WOULD GENERATE THESE
OR SIMILAR AVERAGE MONTHLY PAYMENTS FOR ANY PERIOD OF TIME. THE GRAPHS ARE FOR
ILLUSTRATION PURPOSES ONLY AND DO NOT REPRESENT FUTURE VARIABLE ANNUITY PAYMENTS
OR FUTURE INVESTMENT RETURNS. Variable Annuity Payments under a real Contract
may be more or less than those forming the basis for the Average Monthly
Payments shown in these illustrations if the actual returns of the Sub-Accounts
selected by a Contract Owner are different from the hypothetical returns.
Because it is very likely that a Sub-Account's investment return will fluctuate
over time, one can expect Variable Annuity Payments under a real Contract to
fluctuate. Moreover, under a real Contract, the total amount of Variable Annuity
Payments ultimately received by a Payee depends upon which Annuity Payment
Option the Contract Owner selects and, for life contingent annuity payment
options, how long the Annuitant lives. See "Selecting An Annuity Payment
Option."
ASSUMPTIONS ON WHICH THE HYPOTHETICAL CONTRACT IS BASED. -- In order to
illustrate a hypothetical Contract, Hartford had to make several assumptions
about the Contract. These assumptions are that: (1) the hypothetical Contract is
a Non-Qualified Contract, (2) the entire Contract Value of the hypothetical
Contract is allocated (on the Annuity Calculation Date) to a Sub-Account having
a constant investment return before fees and expenses of 0%, 6%, or 12%, (3) the
Contract Owner selected an Assumed Investment Return of 5%, (4) the Contract
Owner elects to receive monthly Variable Annuity Payments, and (5) the Contract
Value (less any applicable Premium Tax) applied to the purchase of Annuity Units
on the Annuity Calculation Date under the Annuity Payment Option selected
results in an initial Variable Annuity Payment of $1,000.
For a discussion of how a Contract Owner may elect to receive monthly,
quarterly, semi-annual or annual Variable Annuity Payments, see "Income Payment
Dates."
ASSUMED INVESTMENT RETURN. -- Among the most important factors that
determine that amount of Variable Annuity Payments is the Assumed Investment
Return selected by the Contract Owner. The hypothetical Contract has an Assumed
Investment Return of 5%. Subject to state approval, a Contract Owner may,
however, select a 3%, 5% or 6% Assumed Investment Return under a real Contract.
Generally, Variable Annuity Payments will increase in size from one Income
Payment Date to the next if the annualized net rate of return during that time
is greater than the Assumed Investment Return, and will decrease if the
annualized net rate of return over this period is less than the Assumed
Investment Return. (The Assumed Investment Return is an important component of
the Payment Factor.) For a detailed discussion of Assumed Investment Returns,
see "Variable Annuity Payments."
THE $1,000 INITIAL ANNUITY PAYMENT. -- The hypothetical Contract has an
initial Variable Annuity Payment of $1,000. The dollar amount of the first
Variable Annuity Payment under a real Contract generally depends upon the
Annuity Payment Option selected by the Contract Owner, the amount of Contract
Value applied to purchase the Variable Annuity Payments, the annuity purchase
rates in the Contract at the time it is purchased (i.e., the Payment Factor),
the age of the Annuitant, and, in most cases (e.g., Non-Qualified Contracts),
the sex of the Annuitant. For each of the illustrations, the entire Contract
Value under the hypothetical Contract is allocated to a Sub-Account
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
having a constant investment return before fees and expenses of 0%, 6%, or 12%.
However, for a real Contract, Contract Value is often allocated among several
Sub-Accounts prior to the Annuity Calculation Date. The dollar amount of the
first Variable Annuity Payment attributable to each Sub-Account is determined
under a real Contract by dividing the dollar amount of Contract Value (less
applicable Premium Tax) applied to that Sub-Account on the Annuity Calculation
Date by $1,000, and multiplying the result by the annuity Payment Factor in the
Contract for the selected Annuity Payment Option. The dollar value of the first
Variable Annuity Payment is the sum of the first Variable Annuity Payments
attributable to each Sub-Account. For a detailed discussion of how the first
Variable Annuity Payment is determined, see "Variable Annuity Payments."
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATIONS
<TABLE>
<CAPTION>
HYPOTHETICAL 0% GROSS HYPOTHETICAL 6% GROSS HYPOTHETICAL 12% GROSS
RATE RATE RATE
AVERAGE MONTHLY AVERAGE MONTHLY AVERAGE MONTHLY
PAYMENT PAYMENT PAYMENT
FOR EACH YEAR SHOWN FOR EACH YEAR SHOWN FOR EACH YEAR SHOWN
$1,000 INITIAL $1,000 INITIAL $1,000 INITIAL
PAYMENT; 5% AIR PAYMENT; 5% AIR PAYMENT; 5% AIR
- ---------------------- ---------------------- ----------------------
AVERAGE AVERAGE AVERAGE
CONTRACT MONTHLY CONTRACT MONTHLY CONTRACT MONTHLY
YEAR PAYMENT YEAR PAYMENT YEAR PAYMENT
- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1 970 1 996 1 1,021
2 907 2 987 2 1,070
3 848 3 978 3 1,120
4 793 4 969 4 1,173
5 741 5 961 5 1,228
6 693 6 952 6 1,286
7 648 7 943 7 1,346
8 606 8 935 8 1,410
9 566 9 927 9 1,476
10 529 10 918 10 1,546
11 495 11 910 11 1,619
12 463 12 902 12 1,695
13 433 13 894 13 1,775
14 404 14 886 14 1,858
15 378 15 878 15 1,946
16 353 16 870 16 2,038
17 330 17 862 17 2,134
18 309 18 854 18 2,234
19 289 19 847 19 2,340
20 270 20 839 20 2,450
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C> <C> <C>
Contract Year 0% Gross Rate 6% Gross Rate 12% Gross Rate
1 970 996 1,021
2 907 987 1,070
3 848 978 1,120
4 793 969 1,173
5 741 961 1,228
6 693 952 1,286
7 648 943 1,346
8 606 935 1,410
9 566 927 1,476
10 529 918 1,546
11 495 910 1,619
12 463 902 1,695
13 433 894 1,775
14 404 886 1,858
15 378 878 1,946
16 353 870 2,038
17 330 862 2,134
18 309 854 2,234
19 289 847 2,340
20 270 839 2,450
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF ANNUITY PAYMENTS
USING HISTORIC RATES OF RETURN
The following graphs have been prepared to show how investment performance
affects Variable Annuity Payments over time. These graphs illustrate the
"performance" of a Non-Qualified Contract under which Variable Annuity Payments
begin at the end of the month that the Contract was issued which is the same
month that each Sub-Account illustrated began operations. Of course, Hartford
did not sell Contracts prior to the date of this Prospectus (i.e., during any of
the time periods shown) and therefore the illustrations merely represent what
Variable Annuity Payments might have been under a hypothetical Non-Qualified
Contract had one existed during the years shown.
WHAT THE GRAPHS ILLUSTRATE -- Each graph illustrates the "performance" of a
particular Sub-Account based on hypothetical Non-Qualified Contract (described
in more detail below) by plotting one point for each calendar year since the
Sub-Account began operations. Each such annual point on the graph represents the
average of twelve monthly Variable Annuity Payments made in that year under the
hypothetical Contract. Each graph assumes that the initial Variable Annuity
Payment under the hypothetical Contract is $1,000 (discussed in more detail
below). All of the graphs end on June 30, 1998. Where a Sub-Account began
operations in mid-year, the point for the first year represents the average of
monthly Variable Annuity Payments made (which is fewer than 12) under the
hypothetical Contract during that year. The points therefore represent, in each
case, the average monthly Variable Annuity Payment (hereinafter, an "Average
Monthly Payment").
Average Monthly Payments reflect the actual past investment return after all
expenses of the Sub-Accounts over the periods shown in each graph. Nevertheless,
THE AVERAGE MONTHLY PAYMENTS DEPICTED IN THE GRAPHS ARE BASED ON HYPOTHETICAL
CONTRACTS AND PAST INVESTMENT RESULTS AND ARE NOT PROJECTIONS OR INDICATIONS OF
FUTURE RESULTS. HARTFORD DOES NOT GUARANTEE OR EVEN SUGGEST THAT ANY CONTRACT
ISSUED BY IT WOULD GENERATE THESE OR SIMILAR VARIABLE ANNUITY PAYMENTS FOR ANY
PERIOD OF TIME. THE GRAPHS ARE FOR ILLUSTRATION PURPOSES ONLY AND DO NOT
REPRESENT FUTURE VARIABLE ANNUITY PAYMENTS OR FUTURE INVESTMENT RETURNS.
Variable Annuity Payments under a real Contract may be more or less than those
forming the basis for the Average Monthly Payments shown in these illustrations
if the actual returns of the Sub-Accounts selected by a Contract Owner are
different from the past returns of the Sub-Accounts. Because it is very likely
that a Sub-Account's investment return will fluctuate over time, one can expect
Variable Annuity Payments under a real Contract to fluctuate. Moreover, under a
real Contract, the total amount of Variable Annuity Payments ultimately received
by a Payee depends upon which Annuity Payment Option the Contract Owner selects
and, for life contingent annuity options, how long the Annuitant lives. (See
"Selecting An Annuity Payment Option.")
ASSUMPTIONS ON WHICH THE HYPOTHETICAL CONTRACT IS BASED -- In order to
illustrate a hypothetical Contract, Hartford had to make several assumptions
about the Contract. These assumptions are that: (1) the hypothetical Contract is
a Non-Qualified Contract, (2) the entire Contract Value of the hypothetical
Contract is allocated (on the Annuity Calculation Date) to the Sub-Account being
illustrated, (3) the Contract Owner selected an Assumed Investment Return of 5%,
(4) the Contract Owner elects to receive monthly Variable Annuity Payments and
elects an Income Start Date that is the last day of the month in which the
Contract was issued, (5) the Contract Value (less any applicable premium tax)
applied to the purchase of Annuity Units on the Annuity Calculation Date under
the Annuity Payment Option selected results in an initial Variable Annuity
Payment of $1,000, and (6) the Income Start Date is the last day of the month
that the Sub-Account illustrated began operations. TO THE EXTENT THAT A REAL
CONTRACT IS ISSUED BY HARTFORD ON A BASIS DIFFERENT FROM THE FOREGOING
ASSUMPTIONS, THAT REAL CONTRACT WOULD HAVE HAD AVERAGE MONTHLY PAYMENTS
DIFFERENT FROM THOSE ILLUSTRATED EVEN DURING THE PERIODS ILLUSTRATED.
For a discussion of how a Contract Owner may elect to receive monthly,
quarterly, semi-annual or annual Variable Annuity Payments, see "Income Payment
Dates."
ASSUMED INVESTMENT RETURN -- Among the most important factors that determine
that amount of Variable Annuity Payments is the Assumed Investment Return
selected by the Contract Owner. The hypothetical Contract has an Assumed
Investment Return of 5%. Subject to state approval, a Contract Owner may,
however, select a 3%, 5% or 6% Assumed Investment Return under a real Contract.
Generally, Variable Annuity Payments will increase in size from one Income
Payment Date to the next if the annualized net rate of return during that time
is greater than the Assumed Investment Return, and will decrease if the
annualized net rate of return over this period is less than the Assumed
Investment Return. (The Assumed Investment Return is an important component of
the Payment Factor.) For a detailed discussion of Assumed Investment Returns,
see "Variable Annuity Payments." Standardized and non-standardized average
annual total returns as well as the Sub-Account Annual Percentage Change column
reflect the performance of the Sub-Account being illustrated without adjustment
for an Assumed Investment Return.
THE $1,000 INITIAL ANNUITY PAYMENT -- The hypothetical Contract has an
initial Variable Annuity Payment of $1,000.
<PAGE>
32 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
The dollar amount of the first Variable Annuity Payment under a real Contract
generally depends upon the Annuity Payment Option selected by the Contract
Owner, the amount of Contract Value applied to purchase the Variable Annuity
Payments, the annuity purchase rates in the Contract at the time it is purchased
(i.e., the Payment Factor), the age of the Annuitant, and, in most cases (e.g.,
Non-Qualified Contracts), the sex of the Annuitant. For each of the
illustrations, the entire Contract Value under the hypothetical Contract is
allocated to the Sub-Account shown in the illustrations. However, for a real
Contract, Contract Value is often allocated among several Sub-Accounts prior to
the Annuity Calculation Date. The dollar amount of the first Variable Annuity
Payment attributable to each Sub-Account is determined under a real Contract by
dividing the dollar amount of Contract Value (less applicable Premium Tax)
applied to that Sub-Account on the Annuity Calculation Date by $1,000, and
multiplying the result by the annuity Payment Factor in the Contract for the
selected Annuity Payment Option. The dollar value of the first Variable Annuity
Payment is the sum of the first Variable Annuity Payments attributable to each
Sub-Account. For a detailed discussion of how the first Variable Annuity Payment
is determined, see "Variable Annuity Payments."
Historical rates of return illustrations for the Hartford Growth and Income
Fund, Hartford Global Leaders Fund and Hartford High Yield Fund are unavailable
because as of June 30, 1998, the Funds had not commenced operations.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
ADVISERS FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983 * 990 1.26%
1984 948 6.05%
1985 1,078 25.26%
1986 1,253 11.27%
1987 1,337 4.66%
1988 1,322 12.71%
1989 1,479 20.24%
1990 1,459 0.01%
1991 1,584 18.88%
1992 1,630 6.96%
1993 1,731 10.86%
1994 1,688 -3.94%
1995 1,821 26.74%
1996 2,042 15.14%
1997 2,384 22.96%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 22.96%
5 Year 13.83%
10 Year 12.66%
Since Inception 11.84%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 16.96%
5 Year 13.35%
10 Year 12.66%
Since Inception 11.84%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Advisers Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983* 990
1984 948
1985 1,078
1986 1,253
1987 1,337
1988 1,322
1989 1,479
1990 1,459
1991 1,584
1992 1,630
1993 1,731
1994 1,688
1995 1,821
1996 2,042
1997 2,384
</TABLE>
* Fund inception was 4/83. Therefore, the Average Monthly Payment represents
the average monthly payment from April 1983 to December 1983. The Annual
Sub-Account Return is based on the period from April 1983 to December 1983.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
34 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
CAPITAL APPRECIATION FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984 * 1,038 9.16%
1985 1,237 34.37%
1986 1,485 7.65%
1987 1,496 -5.55%
1988 1,451 24.67%
1989 1,694 22.60%
1990 1,550 -12.02%
1991 1,852 52.16%
1992 2,100 15.55%
1993 2,492 19.30%
1994 2,562 1.26%
1995 2,897 28.63%
1996 3,328 19.20%
1997 3,881 20.83%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 20.83%
5 Year 17.48%
10 Year 18.13%
Since Inception 16.32%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 14.83%
5 Year 17.06%
10 Year 18.13%
Since Inception 16.32%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Capital Appreciation Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984* 1,038
1985 1,237
1986 1,485
1987 1,496
1988 1,451
1989 1,694
1990 1,550
1991 1,852
1992 2,100
1993 2,492
1994 2,562
1995 2,897
1996 3,328
1997 3,881
</TABLE>
* Fund inception was 4/84. Therefore, the Average Monthly Payment represents
the average monthly payment from April 1984 to December 1984. The Annual
Sub-Account Return is based on the period from April 1984 to December 1984.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
INDEX FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987 * 978 -14.02%
1988 890 14.75%
1989 1,049 28.73%
1990 1,035 -5.24%
1991 1,145 27.93%
1992 1,205 5.49%
1993 1,256 7.76%
1994 1,228 -0.31%
1995 1,401 34.85%
1996 1,653 20.58%
1997 2,044 30.96%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 30.96%
5 Year 18.00%
10 Year 15.76%
Since Inception 13.12%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 24.96%
5 Year 17.58%
10 Year 15.76%
Since Inception 13.12%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Index Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987* 978
1988 890
1989 1,049
1990 1,035
1991 1,145
1992 1,205
1993 1,256
1994 1,228
1995 1,401
1996 1,653
1997 2,044
</TABLE>
* Fund inception was 5/87. Therefore, the Average Monthly Payment represents
the average monthly payment from May 1987 to December 1987. The Annual
Sub-Account Return is based on the period from May 1987 to December 1987.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
36 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990 * 900 -12.18%
1991 890 11.60%
1992 869 -5.62%
1993 911 32.07%
1994 999 -3.15%
1995 967 12.51%
1996 1,056 11.53%
1997 1,090 -0.91%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year -0.91%
5 Year 9.73%
10 Year --
Since Inception 5.26%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year -6.91%
5 Year 9.17%
10 Year --
Since Inception 5.26%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
International Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990* 900
1991 890
1992 869
1993 911
1994 999
1995 967
1996 1,056
1997 1,090
</TABLE>
* Fund inception was 7/90. Therefore, the Average Monthly Payment represents
the average monthly payment from July 1990 to December 1990. The Annual
Sub-Account Return is based on the period from July 1990 to December 1990.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
MONEY MARKET FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980 * 1,009 5.09%
1981 1,074 14.29%
1982 1,162 12.39%
1983 1,212 8.01%
1984 1,254 9.35%
1985 1,296 7.19%
1986 1,313 5.45%
1987 1,311 5.17%
1988 1,319 6.06%
1989 1,347 7.77%
1990 1,375 6.76%
1991 1,386 4.72%
1992 1,364 2.35%
1993 1,324 1.66%
1994 1,286 2.67%
1995 1,272 4.45%
1996 1,261 3.86%
1997 1,248 4.02%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 4.02%
5 Year 3.33%
10 Year 4.42%
Since Inception 6.31%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED 12/31/1997**
- --------------------------------------------------
<S> <C>
1 Year -1.98%
5 Year 2.62%
10 Year 4.42%
Since Inception 6.31%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Money Market Fund
Calendar Year Sub-Account
1977
1978
1979
1980* 1,009
1981 1,074
1982 1,162
1983 1,212
1984 1,254
1985 1,296
1986 1,313
1987 1,311
1988 1,319
1989 1,347
1990 1,375
1991 1,386
1992 1,364
1993 1,324
1994 1,286
1995 1,272
1996 1,261
1997 1,248
</TABLE>
* Fund inception was 6/80. Therefore, the Average Monthly Payment represents
the average monthly payment from June 1980 to December 1980. The Annual
Sub-Account Return is based on the period from June 1980 to December 1980.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
38 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
SMALL COMPANY FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996 * 1,025 4.26%
1997 1,092 16.91%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 16.91%
5 Year --
10 Year --
Since Inception 16.84%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 10.91%
5 Year --
10 Year --
Since Inception 13.05%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Small Company Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996* 1,025
1997 1,092
</TABLE>
* Fund inception was 8/96. Therefore, the Average Monthly Payment represents
the average monthly payment from August 1996 to December 1996. The Annual
Sub-Account Return is based on the period from August 1996 to December 1996.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
BOND FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977 * 998 1.00%
1978 979 1.34%
1979 959 1.63%
1980 929 4.91%
1981 932 9.12%
1982 1,045 26.16%
1983 1,132 1.48%
1984 1,121 11.78%
1985 1,262 19.11%
1986 1,396 10.78%
1987 1,360 -1.26%
1988 1,364 6.25%
1989 1,397 10.73%
1990 1,416 7.06%
1991 1,506 15.02%
1992 1,579 4.23%
1993 1,645 8.86%
1994 1,541 -5.14%
1995 1,585 17.01%
1996 1,596 2.24%
1997 1,637 9.97%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 9.97%
5 Year 6.32%
10 Year 7.45%
Since Inception 7.74%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 3.97%
5 Year 5.69%
10 Year 7.45%
Since Inception 7.74%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Bond Fund
Calendar Year Sub-Account
1977* 998
1978 979
1979 959
1980 929
1981 932
1982 1,045
1983 1,132
1984 1,121
1985 1,262
1986 1,396
1987 1,360
1988 1,364
1989 1,397
1990 1,416
1991 1,506
1992 1,579
1993 1,645
1994 1,541
1995 1,585
1996 1,596
1997 1,637
</TABLE>
* Fund inception was 8/77. Therefore, the Average Monthly Payment represents
the average monthly payment from August 1977 to December 1977. The Annual
Sub-Account Return is based on the period from August 1977 to December 1977.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
40 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
DIVIDEND AND GROWTH FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994 * 1,024 4.07%
1995 1,146 34.68%
1996 1,383 21.39%
1997 1,695 30.25%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 30.25%
5 Year --
10 Year --
Since Inception 22.09%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 24.25%
5 Year --
10 Year --
Since Inception 21.45%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Dividend and Growth Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994* 1,024
1995 1,146
1996 1,383
1997 1,695
</TABLE>
* Fund inception was 3/94. Therefore, the Average Monthly Payment represents
the average monthly payment from March 1994 to December 1994. The Annual
Sub-Account Return is based on the period from March 1994 to December 1994.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
INTERNATIONAL ADVISERS FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995 * 1,037 11.45%
1996 1,099 10.41%
1997 1,143 4.20%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 4.20%
5 Year --
10 Year --
Since Inception 10.26%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year -1.80%
5 Year --
10 Year --
Since Inception 8.75%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
International Advisers
Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995* 1,037
1996 1,099
1997 1,143
</TABLE>
* Fund inception was 3/95. Therefore, the Average Monthly Payment represents
the average monthly payment from March 1995 to December 1995. The Annual
Sub-Account Return is based on the period from March 1995 to December 1995.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
42 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MORTGAGE SECURITIES FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984 * 1,000
1985 1,064 19.13%
1986 1,162 9.75%
1987 1,151 1.36%
1988 1,170 7.03%
1989 1,205 11.74%
1990 1,239 8.35%
1991 1,324 13.31%
1992 1,365 3.35%
1993 1,372 4.99%
1994 1,297 -2.83%
1995 1,336 14.73%
1996 1,348 3.77%
1997 1,372 7.66%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 7.66%
5 Year 5.51%
10 Year 7.09%
Since Inception 7.72%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 1.66%
5 Year 4.86%
10 Year 7.09%
Since Inception 7.72%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Mortgage Securities Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984* 1,000
1985 1,064
1986 1,162
1987 1,151
1988 1,170
1989 1,205
1990 1,239
1991 1,324
1992 1,365
1993 1,372
1994 1,297
1995 1,336
1996 1,348
1997 1,372
</TABLE>
* Fund inception was 12/84. Therefore, the Average Monthly Payment represents
the monthly payment for December 1984.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
STOCK FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977 * 999 1.72%
1978 992 3.55%
1979 1,044 21.10%
1980 1,228 29.61%
1981 1,349 -0.64%
1982 1,311 19.81%
1983 1,652 12.50%
1984 1,500 -0.70%
1985 1,718 29.85%
1986 2,052 10.93%
1987 2,305 4.09%
1988 2,172 17.51%
1989 2,536 24.49%
1990 2,450 -5.07%
1991 2,701 23.07%
1992 2,758 8.68%
1993 2,982 12.92%
1994 2,980 -3.11%
1995 3,306 32.43%
1996 3,937 22.83%
1997 4,893 29.75%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 29.75%
5 Year 18.22%
10 Year 15.67%
Since Inception 13.91%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1997**
- ------------------------------------------------------------
<S> <C>
1 Year 23.75%
5 Year 17.81%
10 Year 15.67%
Since Inception 13.91%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Stock Fund
Calendar Year Sub-Account
1977* 999
1978 992
1979 1,044
1980 1,228
1981 1,349
1982 1,311
1983 1,652
1984 1,500
1985 1,718
1986 2,052
1987 2,305
1988 2,172
1989 2,536
1990 2,450
1991 2,701
1992 2,758
1993 2,982
1994 2,980
1995 3,306
1996 3,937
1997 4,893
</TABLE>
* Fund inception was 8/77. Therefore, the Average Monthly Payment represents
the average monthly payment from August 1977 to December 1977. The Annual
Sub-Account Return is based on the period from August 1977 to December 1977.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
Contingent Deferred Sales Charge where the latter do not.
<PAGE>
44 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MID-CAP FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
-------- -------- --------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997 * 1,026 9.68%
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURNS FOR THE PERIOD ENDED
7/31/97 - 12/31/1997**
- ------------------------------------------------------------
<S> <C>
9.68% (does not reflect contingent deferred sales charge)
<CAPTION>
3.68% (reflects contingent deferred sales charge)
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C>
Mid-Cap Fund
Calendar Year Sub-Account
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997* 1,026
</TABLE>
* Fund inception was 7/97. Therefore, the Average Monthly Payment represents
the average monthly payment from July 1997 to December 1997. The Annual
Sub-Account Return is based on the period from July 1997 to December 1997.
** These returns are not annualized.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 45
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
FOR
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY...........................
INDEPENDENT PUBLIC ACCOUNTANTS...........................................
CALCULATION OF YIELD AND RETURN..........................................
Yield of the Money Market Sub-Account..................................
Yield of the Bond and Mortgage Securities Sub-Accounts.................
Calculation of Total Return............................................
PERFORMANCE COMPARISONS..................................................
Yield and Total Return.................................................
VARIABLE ANNUITY PAYMENTS................................................
Annuity Unit Value.....................................................
Illustration of Calculation of Annuity Unit Value......................
Illustration of Variable Annuity Payments..............................
OTHER INFORMATION........................................................
</TABLE>
<PAGE>
To obtain a Statement of Additional Information, please complete the form
below and mail to:
Hartford Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for the Director Immediate
Variable Annuity to me at the following address:
- ----------------------------------------------------
Name
- ------------------------------------------------------------
Address
- ------------------------------------------------------------
City/State Zip
Code
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Individual Single Premium Payment Immediate Variable Annuity Contract
Issued by
Hartford Life Insurance Company
and
Hartford Life Insurance Company Separate Account Two
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1999, IS NOT A
PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH THE PROSPECTUS DATED MAY 1, 1999 FOR HARTFORD LIFE INSURANCE
COMPANY ("HARTFORD") SINGLE PURCHASE PAYMENT IMMEDIATE VARIABLE ANNUITY
CONTRACT WHICH IS REFERRED TO HEREIN.
THE PROSPECTUS SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD KNOW
BEFORE PURCHASING A CONTRACT. FOR A FREE COPY OF THE PROSPECTUS, SEND A
WRITTEN REQUEST TO THE ADMINISTRATIVE OFFICE OF HARTFORD AT 200 HOPMEADOW
STREET, SIMSBURY, CONNECTICUT 06070, OR TELEPHONE 1-800-862-6668.
<PAGE>
TABLE OF CONTENTS
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . .
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . . . . . . . . .
Yield of the Money Market Sub-Account . . . . . . . . . . . . . . . .
Yield of the Bond and Mortgage
Securities Sub-Accounts. . . . . . . . . . . . . . . . . . . . .
Calculation of Total Return . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . . . . . . . . .
Yield and Total Return . . . . . . . . . . . . . . . . . . . . . . .
VARIABLE ANNUITY PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Unit Value. . . . . . . . . . . . . . . . . . . . . . . . . .
Illustration of Calculation of Annuity Unit Value . . . . . . . . . .
Illustration of Variable Annuity Payments . . . . . . . . . . . . . .
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing life insurance, both individual
and group, in all states of the United States as well as the District of
Columbia and Puerto Rico. We were originally incorporated under the laws of
Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut.
Our offices are located in Simsbury, Connecticut; however, our mailing
address is P.O. Box 2999, Hartford, CT 06104-2999. Hartford is a subsidiary
of Hartford Fire Insurance Company, one of the largest multiple lines
insurance carriers in the United States. We are ultimately controlled by The
Hartford Financial Services Group, Inc., one of the largest financial service
providers in the United States.
HARTFORD RATINGS
- --------------------------------------------------------------------------------
RATING AGENCY EFFECTIVE RATING BASIS OF RATING
DATE OF RATING
- --------------------------------------------------------------------------------
A.M. Best and Company, Inc. 9/9/97 A+ Financial soundness
and operating
performance.
- --------------------------------------------------------------------------------
Standard & Poor's 1/23/98 AA Insurer financial
strength
- --------------------------------------------------------------------------------
Duff & Phelps 1/23/98 AA+ Claims paying
ability
- --------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements and financial statement schedules included
in this registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in giving said reports. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
CALCULATION OF YIELD AND RETURN
Yield of the Money Market Sub-Account
As summarized in the Prospectus under the heading "Performance Related
Information," the yield of the Money Market 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 365/7 and subtracting 1 from the
result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
2
<PAGE>
The Money Market Sub-Account's yield and effective yield will vary in
response to fluctuations in interest rates and in the expenses of the
Sub-Account.
THE CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON THE SEPARATE
ACCOUNT LEVEL.
MONEY MARKET SUB-ACCOUNT
The yield and effective yield for the seven day period ending December 31,
1997 for the Money Market Sub-Account was as follows:
Yield 4.11%
Effective Yield 4.20%
YIELDS OF THE BOND, HIGH YIELD AND MORTGAGE SECURITIES SUB-ACCOUNTS
As summarized in the Prospectus under the heading "Performance Related
Information," yields of these three Sub-Accounts will be computed by
annualizing a recent month's net investment income, divided by a Fund share's
net asset value on the last trading day of that month. The Bond, High Yield
and Mortgage Securities Sub-Accounts' yields will vary from time to time
depending upon market conditions and, the composition of the underlying
funds' portfolios. Yield should also be considered relative to changes in
the value of the Sub-Accounts' shares and to the relative risks associated
with the investment objectives and policies of the Bond, High Yield and
Mortgage Securities.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL.
BOND, HIGH YIELD AND
MORTGAGE SECURITIES SUB-ACCOUNTS
Yield calculations of the Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset charges assessed
against a Contract Owner's account over the base period. Yield quotations based
on a 30 day period ended December 31, 1997 were computed by dividing the
dividends and interests earned during the period by the maximum offering price
per unit on the last day of the period, according to the following formula:
Example:
6
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period
that were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
Bond
Yield = 5.02%
3
<PAGE>
Mortgage Securities
Yield = 5.34%
Yield information is not available for the High Yield Sub-Account
because as of December 31, 1997, the Sub-Account, had not commenced
operations.
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 (the
contingent deferred sales charged deducted under the "Since Inception" column
below depends on the fund inception date; 6% is deducted for 1 Year, 4% for 5
Year, and 0% for 10 Year periods); and (3) dividing this account value for the
hypothetical investor by the initial $1,000 investment and annualizing the
result for periods of less than one year. Total return will be calculated for
one year, five years and ten years or some other relevant periods if a
Sub-Account has not been in existence for at least ten years.
The following are the standardized average annual total return quotations
for the Sub-Accounts for the period ended December 31, 1997. Standardized
average annual total returns are not available for the Growth and Income,
Global Leaders and High Yield Sub-Accounts because as of December 31, 1997,
the Sub-Accounts had not commenced operations.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Sub-Accounts Inception Since
Date Inception 1 Year 5 Year 10 Year
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisers 3/31/83 11.84% 16.96% 13.35% 12.66%
Bond 8/31/77 7.74% 3.97% 5.69% 7.45%
Capital Appreciation 4/2/84 16.32% 14.83% 17.06% 18.13%
Dividend and Growth 3/8/94 21.45% 24.25% N/A N/A
Index 5/1/87 13.12% 24.96% 17.58% 15.76%
International Advisers 3/1/95 8.75% -1.80% N/A N/A
MidCap 7/30/97 3.68% N/A N/A N/A
Money Market 6/30/80 6.31% -1.98% 2.62% 4.42%
Mortgage Securities 1/1/85 7.72% 1.66% 4.86% 7.09%
Small Company 8/9/96 13.05% 10.91% N/A N/A
International Opportunities 7/2/90 5.26% -6.91% 9.17% N/A
Stock 8/31/77 13.91% 23.75% 17.81% 15.67%
- -----------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the contingent deferred sales charge is not deducted. Therefore,
non-standardized total return for a Sub-Account is higher than standardized
total return for a Sub-Account.
The following are the non-standardized annual total return quotations for the
Sub-Accounts for the period ended December 31, 1997. Non-standardized annual
total return quotations for the Growth and Income, Global Leaders and High
Yield Sub-Accounts are not available because as of December 31, 1997, the
Sub-Accounts had not commenced operations.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Sub-Accounts Inception Since
Date Inception 1 Year 5 Year 10 Year
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisers 3/31/83 11.84% 22.96% 13.83% 12.66%
Bond 8/31/77 7.74% 9.97% 6.32% 7.45%
Capital Appreciation 4/2/84 16.32% 20.83% 17.48% 18.13%
Dividend and Growth 3/8/94 22.09% 30.25% N/A N/A
Index 5/1/87 13.12% 30.96% 18.00% 15.76%
International Advisers 3/1/95 10.26% 4.20% N/A N/A
MidCap 7/30/97 9.68% N/A N/A N/A
Money Market 6/30/80 6.31% 4.02% 3.33% 4.42%
Mortgage Securities 1/1/85 7.72% 7.66% 5.51% 7.09%
Small Company 8/9/96 16.84% 16.91% N/A N.A
International Opportunities 7/2/90 5.26% -0.91% 9.73% N/A
Stock 8/31/77 13.91% 29.75% 18.22% 15.67%
- -----------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
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 performance. The Standard & Poor's Composite Index of
500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks
of companies listed on the New York Stock Exchange, although the common stocks
of a few companies listed on the American Stock Exchange or traded
over-the-counter are included. The 500 companies represented include 400
industrial, 60 transportation and 40 financial services concerns. The S&P 500
represents about 80% of the market value of all issues traded on the New York
Stock Exchange.
The NASDAQ-OTC 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%).
6
<PAGE>
VARIABLE ANNUITY PAYMENTS
ANNUITY UNIT VALUE
The value of an Annuity Unit is calculated at the same time that the value of an
Accumulation Unit is calculated and is based on the same values for Fund shares
and other assets and liabilities. (See "Annuity Payments" in the Prospectus.)
The Annuity Unit Value for each Sub-Account's first Valuation Period was set at
$10. The Annuity Unit Value of each Sub-Account for any subsequent Valuation
Period is equal to (a) multiplied by (b) divided by (c) where:
(a) is the Net Investment Factor for the Valuation Period for which the
Annuity Unit Value is being calculated;
(b) is the Annuity Unit Value for the preceding Valuation Period; and
(c) is a daily Assumed Investment Return factor (for the 3%, 5% or 6%
Assumed Investment Return) adjusted for the number of days in the
Valuation Period.
The Assumed Investment Return factor is equal to one plus the applicable
percentage. Therefore, for 3%, it is 1.03, for 4% it is 1.04 and for 6% it is
1.06. The annual factors can be translated into daily factor of 1.000080986,
1.00010746, and 1.000159654, respectively.
If a Contract Owner selects a 5% Assumed Investment Return rate and if the net
investment return of the Sub-Account for an Annuity Payment period is equal to
the pro-rated portion of the 5% Assumed Investment Return, the Variable Annuity
Payment attributable to that Sub-Account for that period will equal the Payment
for the prior period. To the extent that such net investment return exceeds an
annualized rate of return of 5% for a Payment period, the Payment for that
period will be greater than the Payment for the prior period and to the extent
that such return for a period falls short of an annualized rate of 5%, the
Payment for that period will be less than the Payment for the prior period.
The following illustrations show, by use of hypothetical examples, the method of
determining the Annuity Unit Value and the amount of several Variable Annuity
Payments based on one Sub-Account.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
<TABLE>
<CAPTION>
<S> <C>
1. Annuity Unit Value for immediately preceding
Valuation Period 10.00000000
2. Net Investment Factor 1.00036164
3. Daily factor to compensate for Assumed Investment
Return of 5% 1.00013368
4. Adjusted Net Investment Factor (2)/(3) 1.00028063
5. Annuity Unit Value for current Valuation Period (4)x(1) 10.00280630
<CAPTION>
ILLUSTRATION OF VARIABLE ANNUITY PAYMENTS
(assuming no premium tax is applicable)
<S> <C>
1. Number of Accumulation Units at Annuity Date 1,000.00
2. Accumulation Unit Value 12.55548000
3. Adjusted Contract Value (1)x(2) $12,555.48
4. First monthly Annuity Payment per $1,000 of
adjusted Contract Value $ 9.63
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
5. First monthly Annuity Payment (3)x(4)/1,000 $ 120.91
6. Annuity Unit Value 10.00280630
7. Number of Annuity Units (5)/(6) 12.08760785
8. Assume Annuity Unit value for second month equal to 10.04000000
9. Second Monthly Annuity Payment (7)X(8) $ 121.36
10. Assume Annuity Unit value for third month equal to 10.05000000
11. Third Monthly Annuity Payment (7)X(10) $ 121.48
</TABLE>
OTHER INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended, with respect to
the Contracts discussed in this Statement of Additional Information. Not all
the information set forth in the registration statement, amendments and exhibits
thereto has been included in this Statement of Additional Information.
Statements contained in this Statement of Additional Information concerning the
content of the Contracts and other legal instruments are summaries. For a
complete statement of the terms of these documents, reference should be made to
the instruments filed with the SEC.
8
<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.(1)
(4) Form of Individual Single Premium Immediate Variable Annuity
Contract.(3)
(5) Form of Application.(3)
(6) (a) Articles of Incorporation of Hartford.(3)
(6) (b) Bylaws of Hartford.(2)
(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
to be filed by Amendment to be filed by Amendment.
(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 Pre-Effective Amendment No. 1, to the
Registration Statement File No. 333-19605, filed May 9, 1997.
<PAGE>
(13) Not applicable.
(14) Not applicable.
(15) Copy of Power of Attorney.
(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, Director*
Peter W. Cummins Senior Vice President
Ann M. de Raismes Senior Vice President
Timothy M. Fitch Vice President and Actuary
David T. Foy Senior Vice President & Treasurer
Bruce D. Gardner Vice President
J. Richard Garrett Vice President and Assistant Treasurer
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 Senior Vice President
<PAGE>
- --------------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
- --------------------------------------------------------------------------------
David N. Levenson Vice President
Steven M. Maher Vice President and Actuary
William B. Malchodi, Jr. Vice President
Raymond J. Marra Vice President
Thomas M. Marra Executive Vice President and Director, Individual
Life and Annuity Division, Director*
Robert F. Nolan, Jr. Senior Vice President
Joseph J. Noto Vice President
Michael C. O'Halloran 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.
<PAGE>
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 _____________, 1999, there were _______ Contract Owners.
Item 28. Indemnification
Under Section 33-772 of the Connecticut General Statutes, unless
limited by its certificate of incorporation, the Registrant must
indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party
because he is or was a director of the corporation against reasonable
expenses incurred by him in connection with the proceeding.
The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred
in the proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Registrant, and, with respect to any criminal proceeding, had no
reason to believe his conduct was unlawful. Conn. Gen. Stat. Section
33-771(a). Additionally, pursuant to Conn. Gen. Stat. Section 33-776,
the Registrant may indemnify officers and employees or agents for
liability incurred and for any expenses to which they becomes subject
by reason of being or having been an employees or officers of the
Registrant. Connecticut law does not prescribe standards for the
indemnification of officers, employees and agents and expressly states
that their indemnification may be broader than the right of
indemnification granted to directors.
The foregoing statements are specifically made subject to the detailed
provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the Registrant
to indemnify a only a director that was successful on the merits in a
suit, under Article VIII, 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
<PAGE>
to law and will, subject to certain exclusions contained in the
policy, further pay any other costs, charges and expenses and
settlements and judgments arising from any proceeding involving any
director or officer of the Registrant in his past or present capacity
as such, and for which he may be liable, except as to any liabilities
arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 29. Principal Underwriters
(a) HSD acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two
(DC Variable Account I)
Hartford Life Insurance Company - Separate Account Two
(DC Variable Account II)
Hartford Life Insurance Company - Separate Account Two
(QP Variable Account)
Hartford Life Insurance Company - Separate Account Two
(Variable Account "A")
Hartford Life Insurance Company - Separate Account Two
(NQ Variable Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account
One
Hartford Life and Annuity Insurance Company - Putnam Capital
Manager Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account
Three
Hartford Life and Annuity Insurance Company - Separate Account
Five
Hartford Life and Annuity Insurance Company - Separate Account
Six
American Maturity Life Insurance - Separate Account AMLVA
<PAGE>
(b) Directors and Officers of HSD
Name and Principal Positions and Offices
Business Address With Underwriter
----------------- -----------------
Lowndes A. Smith President and Chief Executive Officer,
Director
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
Unless otherwise indicated, the principal business address of each the
above individuals is P.O. Box 2999, Hartford, CT 06104-2999.
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 has duly caused this Registration Statement to be signed
on its behalf, in the Town of Simsbury, and State of Connecticut on this 29th
day of January, 1999.
HARTFORD LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT TWO
(Registrant)
*By: Thomas M. Marra *By: /s/ Marianne O'Doherty
-------------------------------------------- -----------------------
Thomas M. Marra, Executive Vice President Marianne O'Doherty
Attorney-in-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
*By: Thomas M. Marra
---------------------------------------------
Thomas M. Marra, Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in the
capacity and on the date indicated.
Gregory A. Boyko, Senior Vice President,
Director * *By: /s/ Marianne O'Doherty
Lynda Godkin, Senior Vice President, General ----------------------
Counsel and Corporate Secretary, Director* Marianne O'Doherty
Thomas M. Marra, Executive Vice Attorney-in-Fact
President and Director, Individual Life and
Annuity Division, Director * Dated: January 29, 1999
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 *
David M. Znamierowski, Senior Vice President,
Director
<PAGE>
EXHIBIT INDEX
(9) Opinion and Consent of Lynda Godkin, Senior Vice President, General Counsel
and Corporate Secretary.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
<PAGE>
EXHIBIT 9
[LOGO]
HARTFORD LIFE
January 29, 1999 LYNDA GODKIN
Senior Vice President, General Counsel &
Corporate Secretary
Board of Directors
Hartford Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: Hartford Life Insurance Company Separate Account Two
Director Immediate Variable Annuity
File No. 333-19605
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 single premium variable annuity
insurance 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 to 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.
4. The Contracts, when issued as contemplated by the Form N-4 registration
statement, will constitute legal, validly issued and binding obligations of
the Company.
<PAGE>
Board of Directors
January 29, 1999
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>
EXHIBIT 15
HARTFORD LIFE INSURANCE COMPANY
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
John P. Ginnetti
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty,
and Leslie T. Soler to sign as their agent, any Registration Statement,
pre-effective amendment, post-effective amendment and any application for
exemptive relief of the Hartford Life Insurance Company and Hartford Life and
Accident Insurance Company under the Securities Act of 1933 and/or the
Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Gregory A. Boyko Dated as of March 16, 1998
- --------------------------------------- --------------------------
Gregory A. Boyko
/s/ John P. Ginnetti Dated as of March 16, 1998
- --------------------------------------- --------------------------
John P. Ginnetti
/s/ Lynda Godkin Dated as of March 16, 1998
- --------------------------------------- --------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of March 16, 1998
- --------------------------------------- --------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of March 16, 1998
- --------------------------------------- --------------------------
Lowndes A. Smith
/s/ Raymond P. Welnicki Dated as of March 16, 1998
- --------------------------------------- --------------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated as of March 16, 1998
- --------------------------------------- --------------------------
Lizabeth H. Zlatkus
/s/ David M. Znamierowski Dated as of March 16, 1998
- --------------------------------------- --------------------------
David M. Znamierowski
<PAGE>
EXHIBIT 16
<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>
