<PAGE>
As filed with the Securities and Exchange Commission on February 5, 1999.
File No. 33-73570
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. 26 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 105 [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, INC.
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 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.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration shall
become effective on such date as the Commission, acting pursuant to Section
8(a), may determine.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
<TABLE>
<CAPTION>
N-4 ITEM NO. PROSPECTUS HEADING
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<S> <S>
1. Cover Page Hartford Life Insurance Company - The Director
Separate Account Two
2. Definitions Definitions
3. Synopsis or Highlights Highlights
4. Condensed Financial Accumulation Unit Values
Information
5. General Description of General Contract Information
Registrant
6. Deductions The Contract: Charges and Fees
7. General Description of The Contract
Annuity Contracts
8. Annuity Period Annuity Payouts
9. Death Benefit The Contract: Death Benefit
10. Purchases and Contract Value The Contract
11. Redemptions The Contract: Surrenders
12. Taxes Federal Tax Considerations
13. Legal Proceedings Other Matters: Legal Matters & Experts
14. Table of Contents of the Table of Contents to
Statement of Additional Statement of Additional
Information 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
18. Services None
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of Contracts
</TABLE>
<PAGE>
<TABLE>
<S> <C>
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments Annuity Payouts
23. Financial Statements Financial Statements
24. Financial Statements and Financial Statements and
Exhibits Exhibits
25. Directors and Officers of the Directors and Officers of the
Depositor Depositor
26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Common Control with the Depositor
Depositor or Registrant or Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Location of Accounts and Records
Records
31. Management Services Management Services
32. Undertakings Undertakings
</TABLE>
<PAGE>
PART A
<PAGE>
THE DIRECTOR
SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668 (CONTRACT OWNERS)
[LOGO] 1-800-862-7155 (REGISTERED REPRESENTATIVES)
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This Prospectus describes information you should know before you purchase The
Director variable annuity. Please read it carefully.
The Director variable annuity is a contract between you and Hartford Life
Insurance Company where you agree to make at least one Premium Payment to us and
we agree to make a series of Annuity Payouts at a later date. This Annuity is a
flexible premium, tax-deferred, variable annuity offered to both individuals and
groups. It is:
X Flexible, because you may add Premium Payments at any time.
X Tax-deferred, which means you don't pay taxes until you take money out or
until we start to make Annuity Payouts.
X Variable, because the value of your Annuity will fluctuate with the
performance of the underlying funds.
At the time you purchase your Annuity, you allocate your Premium Payment 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 purchases 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.
You may also allocate some or all of your Premium Payment to the "Fixed
Account," which pays an interest rate guaranteed for a certain time period from
the time the Premium Payment is made. Premium Payments allocated to the Fixed
Account are not segregated from our company assets like the assets of the
Separate Account.
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
<PAGE>
Statement of Additional information with the Securities and Exchange Commission
("SEC"), the SEC doesn't approve or disapprove these securities or determine if
the information is truthful or complete. Anyone who represents that the SEC does
these things may be guilty of a criminal offense. This Prospectus and the
Statement of Additional Information can also be obtained from the SEC'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.
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PROSPECTUS DATED: MAY 1, 1999
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 1, 1999
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS........................................................... 4
FEE TABLE............................................................. 6
ACCUMULATION UNIT VALUES.............................................. 8
HIGHLIGHTS............................................................ 10
GENERAL CONTRACT INFORMATION.......................................... 11
Hartford Life Insurance Company..................................... 11
The Separate Account................................................ 11
The Funds........................................................... 11
PERFORMANCE RELATED INFORMATION....................................... 13
THE FIXED ACCOUNT..................................................... 14
THE CONTRACT.......................................................... 15
Purchases and Contract Value........................................ 15
Charges and Fees.................................................... 17
Death Benefit....................................................... 18
Surrenders.......................................................... 20
ANNUITY PAYOUTS....................................................... 21
OTHER PROGRAMS AVAILABLE.............................................. 23
OTHER INFORMATION..................................................... 23
Year 2000........................................................... 24
Legal Matters and Experts........................................... 24
More Information.................................................... 25
FEDERAL TAX CONSIDERATIONS............................................ 25
General............................................................. 25
Taxation of Hartford and the Separate Account....................... 25
Taxation of Annuities -- General Provisions Affecting Purchasers
Other Than Qualified Retirement Plans.............................. 25
Federal Income Tax Withholding...................................... 28
General Provisions Affecting Qualified Retirement Plans............. 28
Annuity Purchases By Nonresident Aliens and Foreign Corporations.... 28
APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED PLANS............... 29
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION.............. 32
</TABLE>
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
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DEFINITIONS
These terms are capitalized when used throughout this prospectus. Please refer
to these defined terms if you have any questions as you read your prospectus.
ACCOUNT: Any of the Sub-Accounts or Fixed Account.
ACCUMULATION UNITS: If you allocate your Premium Payment to any of the
Sub-Accounts, we will convert those payments into Accumulation Units in the
selected Sub-Accounts. Accumulation Units are valued at the end of each
Valuation Day and are used to calculate the value of your Contract prior to
Annuitization.
ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation
Day.
ADMINISTRATIVE OFFICE OF THE COMPANY: Our location and overnight mailing address
is: 200 Hopmeadow Street, Simsbury, Connecticut 06089. Our standard mailing
address is: Investment Product Services, P.O. Box 5085, Hartford, CT 06102-5085.
ANNIVERSARY VALUE: The value equal to the Contract Value as of a Contract
Anniversary, increased by the dollar amount of any Premium Payments made since
that anniversary and reduced by the dollar amount of any partial Surrenders
since that anniversary.
ANNUAL MAINTENANCE FEE: An annual $30 charge deducted on a Contract Anniversary
or upon full Surrender if the Contract Value at either of those times is less
than $50,000. The charge is deducted proportionately from each Account in which
you are invested.
ANNUAL WITHDRAWAL AMOUNT: This is the amount you can Surrender per Contract Year
without paying a Contingent Deferred Sales Charge. This amount is
non-cumulative, meaning that it cannot be carried over from one year to the
next.
ANNUITANT: The person on whose life the Contract is based. The Annuitant may not
be changed after your Contract is issued.
ANNUITIZATION: The time when regularly scheduled Annuity Payouts begin.
ANNUITY: This is a Contract issued by us that provides, in exchange for Premium
Payments, a series of Annuity Payouts. This Contract allows your Premium
Payments and earnings to accumulate tax deferred until Surrenders are taken or
Annuity Payouts are made.
ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout.
ANNUITY COMMENCEMENT DATE: The date we start to make Annuity Payouts.
ANNUITY PAYOUT: The money we pay out after the Annuity Commencement Date for the
duration and frequency you select.
ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity
Commencement Date or death of the Contract Owner or Annuitant.
ANNUITY UNIT(S): The unit of measure we use to calculate the value of your
Annuity Payouts under a variable dollar amount Annuity Payout Option.
ANNUITY UNIT VALUE: The daily price of Annuity Units on any Valuation Day.
BENEFICIARY: The person(s) entitled to receive a Death Benefit upon the death of
the Contract Owner or Annuitant.
CHARITABLE REMAINDER TRUST: An irrevocable trust, where an individual donor
makes a gift to the trust, and in return receives an income tax deduction. In
addition, the individual donor has the right to receive a percentage of the
trust earnings for a specified period of time.
CODE: The Internal Revenue Code of 1986, as amended.
COMMUTED VALUE: The present value of any remaining guaranteed Annuity Payouts.
CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if
the original Annuitant dies before the Annuity Commencement Date. You must name
a Contingent Annuitant before the original Annuitant's death.
CONTINGENT DEFERRED SALES CHARGE: The deferred sales charge that may apply when
you make a full or partial Surrender.
CONTRACT: The individual Annuity Contract and any endorsements or riders. Group
participants and some individuals will receive a certificate rather than a
Contract.
CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If
the Contract Anniversary falls on a Non-Valuation Day, then the Contract
Anniversary will be the next Valuation Day.
CONTRACT OWNER OR YOU: The owner or holder of this Annuity. We do not capitalize
"you" in the prospectus.
CONTRACT VALUE: The total value of the Accounts on any Valuation Day.
CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning
with the date the Contract was issued.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
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DEATH BENEFIT: The amount payable after the Contract Owner or the Annuitant
dies.
DOLLAR COST AVERAGING: A program that allows you to systematically make
transfers between Accounts available in your Contract.
FIXED ACCOUNT: Part of our General Account, where you may allocate all or a
portion of your Contract Value.
FUNDS: The investment options described in this prospectus or any supplements to
the prospectus.
GENERAL ACCOUNT: The General Account includes our company assets and any money
you have invested in the Fixed Account.
HARTFORD, WE OR OUR: Hartford Life Insurance Company. Only Hartford is a
capitalized term in the prospectus.
JOINT ANNUITANT: The person on whose life Annuity Payouts are based if the
Annuitant dies after Annuitization. You may name a Joint Annuitant only if your
Annuity Payout Option provides for a survivor. The Joint Annuitant may not be
changed.
MAXIMUM ANNIVERSARY VALUE: This is the highest Anniversary Value prior to the
deceased's 81st birthday or the date of death, if earlier.
NET INVESTMENT FACTOR: This is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next, and is also used to calculate
your Annuity Payout amount.
NON-QUALIFIED CONTRACT: A Contract that is not defined as a tax-qualified
retirement plan by the Code.
NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading.
PAYEE: The person or party you designate to receive Annuity Payouts.
PREMIUM PAYMENT: Money sent to us to be invested in your Annuity.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments.
QUALIFIED CONTRACT: A Contract that is defined as a tax-qualified retirement
plan in the Code.
REQUIRED MINIMUM DISTRIBUTION: A federal requirement that individuals age 70 1/2
and older must take a distribution from their tax-qualified retirement account
by December 31, each year. For employer sponsored Qualified Contracts, the
individual must begin taking distributions at the age of 70 1/2 or upon
retirement, whichever comes later.
SEPARATE ACCOUNT: An account that we established to separate the assets of the
variable Sub-Accounts from the assets of the company.
SUB-ACCOUNT: A division of the Separate Account that purchases the Funds
available in this Contract.
SUB-ACCOUNT VALUE: The value on or before the Annuity Calculation Date, which is
determined on any day by multiplying the number of Accumulation Units by the
Accumulation Unit Value for that Sub-Account.
SURRENDER: A complete or partial withdrawal from your Contract.
SURRENDER VALUE: The amount we pay you if you terminate your Contract before the
Annuity Commencement Date. The Surrender Value is equal to the Contract Value
minus any applicable charges.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values
of the Separate Account are determined as of the close of the New York Stock
Exchange, generally 4:00 p.m. Eastern Time.
VALUATION PERIOD: The time span between the close of trading on the New York
Stock Exchange from one Valuation Day to the next.
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
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FEE TABLE
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of Premium
Payments)....................................................... None
Deferred Sales Charge (as a percentage of amounts Surrendered)
First Year (1)................................................ 6%
Second Year................................................... 6%
Third Year.................................................... 5%
Fourth Year................................................... 5%
Fifth Year.................................................... 4%
Sixth Year.................................................... 3%
Seventh Year.................................................. 2%
Eighth Year................................................... 0%
Annual Maintenance Fee (2)........................................ $30
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average
Sub-Account Value)
Mortality and Expense Risk Charge............................. 1.25%
</TABLE>
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(1) Length of time from Premium Payment.
(2) An annual $30 charge deducted on a Contract Anniversary or upon full
Surrender if the Contract Value at either of those times is less than
$50,000. The charge is deducted proportionately from each Account in which
you are invested.
Annual Fund Operating Expenses
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OPERATING
FEES EXPENSES
INCLUDING OTHER INCLUDING
WAIVERS EXPENSES WAIVERS
---------- -------- ----------
<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 & 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 MidCap HLS Fund........................ 0.775% 0.040% 0.815%
Hartford Money Market HLS Fund.................. 0.450% 0.015% 0.465%
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>
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(1) Hartford Global Leaders HLS Fund, Hartford High Yield HLS Fund, and Hartford
Growth and Income 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. Before this waiver, the Management Fee and Total Fund Operating
Expenses would be:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Hartford Global Leaders Fund.................... 0.750% 0.200% 0.950%
Hartford Growth and Income Fund................. 0.750% 0.150% 0.900%
Hartford High Yield Fund........................ 0.750% 0.150% 0.900%
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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EXAMPLE
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
If you Surrender your Contract If you annuitize your Contract If you do not Surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period you would pay the time period you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Fund.................... $ 73 $ 107 $ 141 $ 218 $ 18 $ 58 $ 100 $ 217 $ 19 $ 59 $ 101 $ 218
Stock Fund................... 72 105 137 211 18 56 97 211 18 57 97 211
Money Market Fund............ 72 104 137 210 18 56 96 209 18 56 97 210
Advisers Fund................ 74 110 147 231 20 62 106 230 20 62 107 231
Capital Appreciation Fund.... 74 111 147 232 20 62 107 231 20 63 107 232
Mortgage Securities Fund..... 72 105 137 211 18 56 97 211 18 57 97 211
Index Fund................... 72 103 134 205 17 54 94 204 18 55 94 205
International Opportunities
Fund....................... 76 115 154 246 21 66 114 245 22 67 114 246
Dividend & Growth Fund....... 75 112 150 236 20 63 109 235 21 64 110 236
International Advisers
Fund....................... 77 118 159 256 22 69 119 255 23 70 119 256
MidCap Fund.................. 76 115 N/A N/A 21 67 N/A N/A 22 67 N/A N/A
Small Company Fund........... 76 115 154 246 21 66 114 245 22 67 114 246
Growth and Income Fund....... 71 110 N/A N/A 16 62 N/A N/A 17 62 N/A N/A
High Yield Fund.............. 71 110 N/A N/A 16 62 N/A N/A 17 62 N/A N/A
Global Leaders Fund.......... 72 112 N/A N/A 17 64 N/A N/A 18 64 N/A N/A
</TABLE>
The purpose of this table is to assist you in understanding various fees and
charges you will pay directly or indirectly. The table reflects expenses of the
Separate Account and underlying Funds. Premium Taxes, if any, have been taken
into account. This EXAMPLE should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown. The
Annual Maintenance Fee has been reflected in the Example by a method intended to
show the "average" impact of the Annual Maintenance Fee on an investment in the
Separate Account. We do this by approximating an "average" 0.08% annual charge.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the audited financial
statements of the Separate Account, which have been audited by Arthur Andersen
LLP, independent public Accountants, as indicated in their 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 Prospectus. There is no information regarding the Global
Leaders Fund, Growth and Income Fund, and High Yield Fund Sub-Accounts because
as of December 31, 1997, the Sub-Accounts had not commenced operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993 1992
--------- ------- ------- ------- ------- -------
BOND SUB-ACCOUNT
(Inception date August 1, 1986)
<S> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value at beginning of period............ $1.992 $1.880 $1.607 $1.694 $1.556 $1.493
Accumulation Unit Value at end of period.................. $2.114 $1.922 $1.880 $1.607 $1.694 $1.556
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 111,586 96,857 99,377 85,397 79,080 41,204
STOCK SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $3.546 $2.887 $2.180 $2.250 $1.993 $1.834
Accumulation Unit Value at end of period.................. $4.602 $3.546 $2.887 $2.180 $2.250 $1.993
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 372.754 333,176 285,640 248,563 203,873 121,100
MONEY MARKET SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $1.587 $1.528 $1.462 $1.424 $1.401 $1.369
Accumulation Unit Value at end of period.................. $1.650 $1.587 $1.528 $1.462 $1.424 $1.401
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 140,797 151,978 102,635 138,396 102,328 78,664
ADVISERS SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $2.905 $2.523 $1.991 $2.072 $1.870 $1.748
Accumulation Unit Value at end of period.................. $3.572 $2.905 $2.523 $1.991 $2.072 $1.870
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 1,012,472 953,998 888,803 858,014 688,865 295,387
CAPITAL APPRECIATION SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $4.010 $3.364 $2.615 $2.583 $2.165 $1.874
Accumulation Unit Value at end of period.................. $4.845 $4.010 $3.364 $2.615 $2.583 $2.165
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 351,189 330,580 292,671 220,936 160,934 75,653
MORTGAGE SECURITIES SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $1.949 $1.878 $1.637 $1.685 $1.604 $1.552
Accumulation Unit Value at end of period.................. $2.098 $1.949 $1.878 $1.637 $1.685 $1.604
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 81,143 89,098 101,881 112,417 138,666 98,494
INDEX SUB-ACCOUNT
(Inception date May 1, 1987)
Accumulation Unit Value at beginning of period............ $2.845 $2.359 $1.750 $1.755 $1.629 $1.544
Accumulation Unit Value at end of period.................. $3.726 $2.845 $2.359 $1.750 $1.755 $1.629
Number Accumulation Units outstanding at end of (in
thousands)............................................... 109,837 87,611 65,954 50,799 46,504 29,723
INTERNATIONAL OPPORTUNITIES SUB-ACCOUNT
(Inception date July 2, 1990)
Accumulation Unit Value at end of period.................. $1.482 $1.329 $1.181 $1.220 $0.924 $0.979
Accumulation Unit Value at end of period.................. $1.469 $1.482 $1.329 $1.181 $1.220 $0.924
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 264,642 266,962 238,086 246,259 132,795 32,597
DIVIDEND & GROWTH SUB-ACCOUNT
(Inception date March 8, 1994)
Accumulation Unit Value at beginning of period............ $1.650 $1.359 $1.009 $1.000 -- --
Accumulation Unit Value at end of period.................. $2.149 $1.650 $1.359 $1.009 -- --
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 308,682 190,958 83,506 29,146 -- --
<CAPTION>
1991 1990 1989 1988
------- ------- ------ ------
BOND SUB-ACCOUNT
(Inception date August 1, 1986)
<S> <C> <C> <C> <C>
Accumulation Unit Value at beginning of period............ $1.298 $1.212 $1.095 $1.031
Accumulation Unit Value at end of period.................. $1.493 $1.298 $1.212 $1.095
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 25,267 14,753 9,267 5,786
STOCK SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $1.490 $1.569 $1.261 $1.073
Accumulation Unit Value at end of period.................. $1.834 $1.490 $1.569 $1.261
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 72,780 31,149 30,096 9.158
MONEY MARKET SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $1.307 $1.225 $1.136 $1.071
Accumulation Unit Value at end of period.................. $1.369 $1.307 $1.225 $1.136
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 60,774 67,059 28,291 29,043
ADVISERS SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $1.470 $1.470 $1.223 $1.085
Accumulation Unit Value at end of period.................. $1.748 $1.470 $1.470 $1.223
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 166,408 101,758 79,738 56.584
CAPITAL APPRECIATION SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $1.231 $1.400 $1.142 $0.916
Accumulation Unit Value at end of period.................. $1.874 $1.231 $1.400 $1.142
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 39,031 10,501 8,041 3,606
MORTGAGE SECURITIES SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period............ $1.370 $1.264 $1.132 $1.057
Accumulation Unit Value at end of period.................. $1.552 $1.370 $1.264 $1.132
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 46,464 18,632 12,248 11,061
INDEX SUB-ACCOUNT
(Inception date May 1, 1987)
Accumulation Unit Value at beginning of period............ $1.207 $1.274 $0.989 $0.862
Accumulation Unit Value at end of period.................. $1.544 $1.207 $1.274 $0.989
Number Accumulation Units outstanding at end of (in
thousands)............................................... 15,975 10,015 6,306 2,868
INTERNATIONAL OPPORTUNITIES SUB-ACCOUNT
(Inception date July 2, 1990)
Accumulation Unit Value at end of period.................. $0.877 $1.000 -- --
Accumulation Unit Value at end of period.................. $0.979 $0.877 -- --
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 13,109 2,892 -- --
DIVIDEND & GROWTH SUB-ACCOUNT
(Inception date March 8, 1994)
Accumulation Unit Value at beginning of period............ -- -- -- --
Accumulation Unit Value at end of period.................. -- -- -- --
Number Accumulation Units outstanding at end of period (in
thousands)............................................... -- -- -- --
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
INTERNATIONAL ADVISERS SUB-ACCOUNT ------------------------------------------------------
(Inception date March 1, 1995) 1997 1996 1995 1994 1993 1992
--------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value at beginning of period............ $1.266 $1.146 $1.000 -- -- --
Accumulation Unit Value at end of period.................. $1.319 $1.266 $1.146 -- -- --
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 43,217 23,174 6,577 -- -- --
SMALL COMPANY SUB-ACCOUNT
(Inception date August 9, 1996)
Accumulation Unit Value at beginning of period............ $1.066 $1.000 -- -- -- --
Accumulation Unit Value at end of period.................. $1.247 $1.066 -- -- -- --
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 56,706 12,563 -- -- -- --
MIDCAP SUB-ACCOUNT
(Inception date July 15, 1997)
Accumulation Unit Value at beginning of period............ $1.000 -- -- -- -- --
Accumulation Unit Value at end of period.................. $1.097 -- -- -- -- --
Number Accumulation Units outstanding at end of period (in
thousands)............................................... 8,306 -- -- -- -- --
<CAPTION>
INTERNATIONAL ADVISERS SUB-ACCOUNT
(Inception date March 1, 1995) 1991 1990 1989 1988
------- ------- ------ ------
<S> <C> <C> <C> <C>
Accumulation Unit Value at beginning of period............ -- -- -- --
Accumulation Unit Value at end of period.................. -- -- -- --
Number Accumulation Units outstanding at end of period (in
thousands)............................................... -- -- -- --
SMALL COMPANY SUB-ACCOUNT
(Inception date August 9, 1996)
Accumulation Unit Value at beginning of period............ -- -- -- --
Accumulation Unit Value at end of period.................. -- -- -- --
Number Accumulation Units outstanding at end of period (in
thousands)............................................... -- -- -- --
MIDCAP SUB-ACCOUNT
(Inception date July 15, 1997)
Accumulation Unit Value at beginning of period............ -- -- -- --
Accumulation Unit Value at end of period.................. -- -- -- --
Number Accumulation Units outstanding at end of period (in
thousands)............................................... -- -- -- --
</TABLE>
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HIGHLIGHTS
HOW DO I PURCHASE THIS ANNUITY?
You must complete our application or order request and submit it to us for
approval with your first Premium Payment. Your first Premium Payment must be at
least $1,000 and subsequent Premium Payments must be at least $500, unless you
take advantage of our InvestEase-Registered Trademark- program or are part of
certain retirement plans.
- - For a limited time, usually within ten days after you receive your Contract,
you may cancel your Annuity without paying a Contingent Deferred Sales
Charge. You may bear the investment risk for your Premium Payment prior to
our receipt of your request for cancellation.
WHAT TYPE OF SALES CHARGE WILL I PAY?
You don't pay a sales charge when you purchase your Annuity. We may charge
you a Contingent Deferred Sales Charge when you partially or fully Surrender
your Annuity. The Contingent Deferred Sales Charge will depend on the length of
time the Premium Payment you made has been in your Annuity. If the amount you
paid has been in your Annuity:
X For less than two years, the charge is 6%.
X For more than two years and less than four years, the charge is 5%.
X For more than four years and less than five years, the charge is 4%.
X For more than five years and less than six years, the charge is 3%
X For more than six years and less than seven years, the charge is 2%.
You won't be charged a Contingent Deferred Sales Charge on:
X The Annual Withdrawal Amount
X Premium Payments or earnings that have been in your Annuity for more than
seven years.
X Distributions made due to death
X Most payments we make to you as part of your Annuity Payout
IS THERE AN ANNUAL MAINTENANCE FEE?
We deduct this $30.00 fee each year on your Contract Anniversary or when you
fully Surrender your Annuity, if, on either of those dates, the value of your
Annuity is less than $50,000.
WHAT CHARGES WILL I PAY ON AN ANNUAL BASIS?
You pay two different types of charges each year. The first type of charge
is the fee you pay for insurance. This charge is:
A mortality and expense risk charge that is subtracted daily and is equal to
an annual charge of 1.25% of your Contract Value invested in the Funds.
The second type of charge is the fee you pay for the Funds.
Currently, Fund charges range from 0.42% to 0.90% annually of the average
daily value of the amount you have invested in the Funds. See Annual Fund
Operating Expenses table for more complete information and the Funds'
prospectuses accompanying this prospectus.
CAN I TAKE OUT ANY OF MY MONEY?
You may Surrender all or part of the amounts you have invested at any time
before we start making Annuity Payouts, or after Annuity Payouts begin under the
Payment for a Designated Period Annuity Payout Option.
- - You may have to pay tax on the money you take out and, if you Surrender
before you are age 59 1/2, you may have to pay an income tax penalty.
- - You may have to pay a Contingent Deferred Sales Charge on the money you
Surrender.
WILL HARTFORD PAY A DEATH BENEFIT?
There is a Death Benefit if the Contract Owner, joint owner or the Annuitant
die before we begin to make Annuity Payouts. The Death Benefit will be
calculated as of the date we receive a certified death certificate or other
legal documents acceptable to us and will be the greater of:
- - The total Premium Payments you have made to us minus any amounts you have
Surrendered, or
- - The Contract Value of your Annuity, or
- - Your Maximum Anniversary Value, which is described below.
The Maximum Anniversary Value is based on a series of calculations on
Contract Anniversaries of Contract Values, Premium Payments and partial
Surrenders. We will calculate an Anniversary Value for each Contract Anniversary
prior to the deceased's 81st birthday or date of death, whichever is earlier.
The Anniversary Value is equal to the Contract Value as of a Contract
Anniversary, increased by the dollar amount of any premium payments made since
that anniversary and reduced by the dollar amount of any partial Surrenders
since that anniversary. The Maximum Anniversary Value is equal to the greatest
Anniversary Value attained from this series of calculations.
This Death Benefit amount will remain invested in the Sub-Accounts according
to your last instructions and will fluctuate with the performance of the
underlying Funds.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
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WHAT ANNUITY PAYOUT OPTIONS ARE AVAILABLE?
When it comes time for us to make payouts, you may choose one of the
following Annuity Payout Options: Option 1 -- Life Annuity, Option 2 -- Life
Annuity with 120, 180 or 240 Monthly Payments Certain, Option 3 -- Joint and
Last Survivor Life Annuity and Option 4 -- Payments For a Designated Period. We
may make other Annuity Payout Options available at any time.
You must begin to take payouts before the Annuitant's 90th birthday. If you
do not tell us what Annuity Payout Option you want before that time, we will
make payments under Option 2 -- Life Annuity with 120, 180 or 240 Monthly
Payments Certain for 120 monthly payments certain.
GENERAL CONTRACT INFORMATION
HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company is a stock life insurance company engaged in
the business of writing life insurance, both individual and group, in all states
of the United States 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 5085, Hartford,
CT 06102-5085. We are ultimately controlled by The Hartford Financial Services
Group, Inc., one of the largest financial service providers in the United
States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
EFFECTIVE
DATE
RATING AGENCY OF 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>
THE SEPARATE ACCOUNT
The Separate Account is where we set aside and invest the assets of some of
our annuity contracts, including this Contract. The Separate Account was
established on June 2, 1986 and is registered as a unit investment trust under
the Investment Company Act of 1940. This registration does not involve
supervision by the SEC of the management or the investment practices of the
Separate Account or Hartford. The Separate Account meets the definition of
"Separate Account" under federal securities law. This Separate Account holds
only assets for variable annuity contracts. The Separate Account:
- - Holds assets for your benefit and the benefit of other Contract Owners, and
the persons entitled to the payouts described in the Contract.
- - Is not subject to the liabilities arising out of any other business Hartford
may conduct.
- - Is not affected by the rate of return of Hartford's General Account or by the
investment performance of any of Hartford's other Separate Accounts.
- - May be subject to liabilities from a Sub-Account of the Separate Account that
holds assets of other variable annuity contracts offered by the Separate
Account, which are not described in this Prospectus.
- - Is credited with income and gains, and takes losses, whether or not realized,
from the assets it holds.
We do not guarantee the investment results of the Separate Account. There is
no assurance that the value of your Annuity will equal the total of the payments
you make to us.
THE FUNDS
All of the Funds are sponsored and administered by Hartford Life Insurance
Company. HL Investment Advisors, Inc. ("HL Advisors") serves as the investment
adviser to each of the 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, policies and procedures
are more fully described in the accompanying Funds' prospectus and Statement of
Additional Information, which your may order from us. The Funds' prospectus
should be read in conjunction with this prospectus before investing.
The Funds may not be available in all states.
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 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 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 HLS 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 and reasonable investment risk.
Sub-advised by Wellington Management.
HARTFORD GLOBAL LEADERS HLS FUND -- Seeks growth of capital by investing
primarily in equity securities issued by U.S. companies and non-U.S. companies.
HARTFORD GROWTH AND INCOME HLS FUND -- Seeks growth of capital and current
income by investing primarily in equity securities with earnings growth
potential and steady rising dividends.
HARTFORD HIGH YIELD HLS FUND -- Seeks high current income by investing in
non-investment grade fixed-income securities. Growth of capital is a secondary
objective.
HARTFORD INDEX HLS FUND -- Seeks to provide investment 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 consistent with prudent investment risk by investing in a portfolio of
equity, debt and money market securities. Securities in which the Fund invests
primarily will be denominated in non-U.S. currencies and will be traded in
non-U.S. markets. 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.
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 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 may be 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 policies, a practice known as "mixed
funding." As a result, there is a possibility that a material conflict may arise
between the interests of Contract Owners, and of owners of other contracts whose
contract values are allocated to one or more of these other separate accounts
investing in any one of the Funds. In the event of any such material conflicts,
we will consider what action may be appropriate, including removing the Fund
from the Separate Account or replacing the Fund with another underlying fund.
There are certain risks associated with mixed funding, as disclosed in the
Funds' prospectus.
VOTING RIGHTS -- We are the legal owners of all Fund shares held in the
Separate Account and we have the right to vote at the Fund's shareholder
meetings. To the extent required by federal securities laws or regulations, we
will:
* "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>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
- - Notify you of any Fund shareholders' meeting if the shares held for your
Contract may be voted.
- - Send proxy materials and a form of instructions that you can use to tell us
how to vote the Fund shares held for your Contract.
- - Arrange for the handling and tallying of proxies received from Contract
Owners.
- - Vote all Fund shares attributable to your Contract according to instructions
received from you, and
- - Vote all Fund shares for which no voting instructions are received in the same
proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present
interpretation, change to permit us to vote Fund shares on our own, we may
decide to do so. You may attend any Shareholder Meeting at which shares held for
your Contract may be voted. After we begin to make payouts to you, the number of
votes you have will decrease.
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 determine
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 Investment Company Act of 1940
(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 any changes in the Contract necessary or appropriate to
reflect the 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 is divided by the unit
value on the last day of the period. This figure includes 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 include 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 these periods, 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
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 systematic 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 tax and retirement planning, and other
investment alternatives, including comparisons between the Contract and the
characteristics of and market for such alternatives.
THE FIXED ACCOUNT
IMPORTANT INFORMATION YOU SHOULD KNOW: THIS PORTION OF THE PROSPECTUS
RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933
("1933 ACT") AND THE FIXED ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY
UNDER THE 1940 ACT. THE FIXED ACCOUNT OR ANY OF ITS INTERESTS ARE NOT SUBJECT TO
THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURE REGARDING
THE FIXED ACCOUNT. THE FOLLOWING DISCLOSURE ABOUT THE FIXED ACCOUNT MAY BE
SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES
LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURE.
Premium Payments and Contract Values allocated to the Fixed Account become a
part of our General Account assets. We invest the assets of the General Account
according to the laws governing the investments of insurance company General
Accounts.
Currently, we guarantee that we will credit interest at a rate of not less
than 3% per year, compounded annually, to amounts you allocate to the Fixed
Account. We reserve the right to change the rate subject only to applicable
state insurance law. We may credit interest at a rate in excess of 3% per year.
We will periodically publish the Fixed Account interest rates currently in
effect. There is no specific formula for determining interest rates. Some of the
factors that we may consider in determining whether to credit excess interest
are; general economic trends, rates of return currently available and
anticipated on our investments, regulatory and tax requirements and competitive
factors. We will account for any deductions, Surrenders or transfers from the
Fixed Account on a "first-in first-out" basis. For Contracts issued in the state
of New York, the Fixed Account interest rates may vary from other states.
IMPORTANT: ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED
ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE DETERMINED AT OUR SOLE DISCRETION. YOU
ASSUME THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT MAY NOT EXCEED THE
MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
From time to time, we may credit increased interest rates under certain
programs established in our sole discretion.
DOLLAR COST AVERAGING ("DCA") PROGRAMS -- Currently, you may enroll in a
special pre-authorized transfer program known as our DCA Bonus Program (the
"Program"). Under this Program, Contract Owners who enroll may allocate a
minimum of $5,000 of their Premium Payment into the Program (we may allow a
lower minimum Premium Payment for qualified plan transfers or rollovers,
including IRAs) and pre-authorize transfers to any of the Sub-Accounts under
either the 6 Month Transfer Program or 12 Month Transfer Program. The 6-Month
Transfer Program and the 12-Month Transfer Program will generally have different
credited interest rates. Under the 6-Month Transfer Program, the interest rate
can accrue up to 6 months and all Premium Payments and accrued interest must be
transferred from the Program to the selected Sub-Accounts in 3 to 6 months.
Under the 12-Month Transfer Program, the interest rate can accrue up to 12
months and all Premium Payments and accrued interest must be transferred to the
selected Sub-Accounts in 7 to 12 months. This will be accomplished by monthly
transfers for the period selected and a final transfer of the entire amount
remaining in the Program. Contract owners who purchase their Contracts in New
York have a different DCA Bonus Program. Currently, only one DCA Bonus Program
transfer period is available in New York, but that period allows transfers to
selected Sub-Accounts in 3 to 12 months.
The pre-authorized transfers will begin within 1-5 days of receipt of the
Program payment provided we receive complete enrollment instructions. If we do
not receive complete Program enrollment instructions within 15 days of receipt
of the initial Program payment, the Program will be voided and the entire
balance in the Program will be transferred to the Accounts designated by you. If
you do not designate an Account, you will receive the Fixed Account's current
effective interest rate. Any subsequent payments we receive within the Program
period selected will be allocated to the Sub-Accounts over the remainder of that
Program transfer period.
You may elect to terminate the pre-authorized transfers by calling or
writing us of your intent to cancel enrollment in the Program. Upon
cancellation, you will no longer receive the Program interest rate and unless we
receive instructions to the contrary, the amounts remaining in the Program may
accrue the interest rate currently in effect for the Fixed Account.
We reserve the right to discontinue, modify or amend the Program or any
other interest rate program we establish.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
Any change to the Program will not affect Contract Owners currently enrolled in
the Program. This Program may not be available in all states; please contact us
to determine if it is available in your state.
You may only have one DCA program in place at one time. The Fixed Account
and Dollar Cost Averaging Bonus Program are not available in Oregon.
THE CONTRACT
PURCHASES AND CONTRACT VALUE
WHAT TYPES OF CONTRACTS ARE AVAILABLE?
The Contract is an individual or group tax-deferred variable annuity
contract. It is designed for retirement planning purposes and may be purchased
by any individual, group or trust, including:
- - Any trustee or custodian for a retirement plan qualified under Sections 401(a)
or 403(a) of the Code;
- - Annuity purchase plans adopted by public school systems and certain tax-exempt
organizations according to Section 403(b) of the Code;
- - Individual Retirement Annuities adopted according to Section 408 of the Code;
- - Employee pension plans established for employees by a state, a political
subdivision of a state, or an agency of either a state or a political
subdivision of a state, and
- - Certain eligible deferred compensation plans as defined in Section 457 of the
Code.
The examples above represent Qualified Contracts, as defined by the Code. In
addition, individuals and trusts can also purchase Contracts that are not part
of a tax qualified retirement plan. These are known as Non-Qualified Contracts.
HOW DO I PURCHASE A CONTRACT?
You may purchase a Contract by completing and submitting an application or
an order request along with an initial Premium Payment. For most Contracts, the
minimum Premium Payment is $1,000. For additional Premium Payments, the minimum
Premium Payment is $500. Under certain situations, we may allow smaller Premium
Payments, for example, if you enroll in our InvestEase-Registered Trademark-?
program or are part of certain tax qualified retirement plans. Prior approval is
required for Premium Payments of $1,000,000 or more.
You and your Annuitant must not be older than age 85 on the date that your
Contract is issued. You must be of legal age in the state where the Contract is
being purchased or a guardian must act on your behalf.
HOW ARE PREMIUM PAYMENTS APPLIED TO MY CONTRACT?
Your initial Premium Payment will be invested within two Valuation Days of
our receipt of a properly completed application or an order request and the
Premium Payment. Subsequent Premium Payments are priced on the same Valuation
Day they are received. If we receive your Premium Payment on a Non-Valuation
Day, the amount will be invested on the next Valuation Day. Unless we receive
new instructions, we will invest the Premium Payment based on your last
allocation instructions. We will send you a confirmation when we invest your
Premium Payment.
If the request or other information accompanying the Premium Payment is
incomplete when received, we will hold the money in a non-interest bearing
account for up to five Valuation Days while we try to obtain complete
information. If we cannot obtain the information within five Valuation Days, we
will return the Premium Payment and explain why the Premium Payment could not be
processed, unless you authorize us to keep the Premium Payment until the
necessary information is received.
CAN I CANCEL MY CONTRACT AFTER I PURCHASE IT?
We want you to be satisfied with the Contract you have purchased. We urge
you to closely examine its provisions. If for any reason you are not satisfied
with your Contract, simply return it with a written request for cancellation
that indicates your tax-withholding instructions, within ten days after you
receive the Contract. In some states, you may be allowed more time to cancel
your Contract. We will not deduct any Contingent Deferred Sales Charges during
this time. We may require additional information, including a signature
guarantee, before we can cancel your Contract.
You bear the investment risk from the time the Contract is issued until we
receive your complete cancellation request.
The amount we pay you upon cancellation depends on the requirements of the
state where you purchased your Contract, the method of purchase, the type of
Contract you purchased and your age.
HOW IS THE VALUE OF MY CONTRACT CALCULATED BEFORE THE ANNUITY COMMENCEMENT DATE?
The Contract Value is the sum of all Accounts. There are two things that
affect your Sub-Account value: (1) the number of Accumulation Units and (2) the
Accumulation Unit Value. The Sub-Account value is determined by multiplying the
number of Accumulation Units by the Accumulation Unit Value. Therefore, on any
Valuation Day your Contract Value reflects the investment performance of the
Sub-Accounts and will fluctuate with the performance of the underlying Funds.
When Premium Payments are credited to your Sub-Accounts, they are converted
into Accumulation Units by
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16 HARTFORD LIFE INSURANCE COMPANY
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dividing the amount of your Premium Payments, minus any Premium Taxes, by the
Accumulation Unit Value for that day. The more Premium Payments you put into
your Contract, the more Accumulation Units you will own. You decrease the number
of Accumulation Units you have by requesting Surrenders, transferring money out
of an Account, submitting a Death Benefit claim or by annuitizing your Contract.
To determine the current Accumulation Unit Value, we take the prior
Valuation Day's Accumulation Unit Value and multiply it by the Net Investment
Factor for the current Valuation Day.
The Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next. The Net Investment Factor for
each Sub-Account equals:
- - The net asset value per share of each Fund held in the Sub-Account at the end
of the current Valuation Day divided by
- - The net asset value per share of each Fund held in the Sub-Account at the end
of the prior Valuation Day; minus
- - The daily mortality and expense risk charge adjusted for the number of days in
the period, and any other applicable charge.
We will send you a statement in each calendar quarter, which tells you how
many Accumulation Units you have, their value and your total Contract Value.
CAN I TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER?
TRANSFERS BETWEEN SUB-ACCOUNTS -- You may transfer from one Sub-Account to
another before and after the Annuity Commencement Date at no extra charge. Your
transfer request will be processed on the day that it is received as long as it
is received on a Valuation Day before the close of the New York Stock Exchange.
Otherwise, your request will be processed on the following Valuation Day. We
will send you a confirmation when we process your transfer. You are responsible
for verifying transfer confirmations and promptly advising us of any errors
within 30 days of receiving the confirmation.
SUB-ACCOUNT TRANSFER RESTRICTIONS -- We reserve the right to limit the
number of transfers to 12 per Contract Year, with no transfers occurring on
consecutive Valuation Days. We also have the right to restrict transfers if we
believe that the transfers could have an adverse effect on other Contract
Owners. In all states except New York, Florida, Maryland and Oregon, we may:
- - Require a minimum time period between each transfer,
- - Limit the dollar amount that may be transferred on any one Valuation Day, and
- - Not accept transfer requests from an agent acting under a power of attorney
for more than one Contract Owner.
We also have a restriction in place that involves individuals who act as a
power of attorney for multiple Contract Owners. If the total value of the
Contract Owner's Accounts total more than $2 million, we will not accept
transfer instructions from the power of attorney unless the power of attorney
has entered into a Third Party Transfer Services Agreement with us.
Some states may have different restrictions.
FIXED ACCOUNT TRANSFERS -- During each Contract Year, you may make transfers
out of the Fixed Account to Sub-Accounts. All transfer allocations must be in
whole numbers (e.g., 1%). You may transfer either:
- - 30% of your total amount in the Fixed Account, or
- - An amount equal to the largest previous transfer.
These transfer limits do not include transfers done through Dollar Cost
Averaging or the DCA Bonus Program.
If your interest rate renews at a rate at least 1% lower than your prior
interest rate, you may transfer an amount equal to up to 100% of the amount to
be invested at the renewal rate. You must make this transfer request within 60
days of being notified of the renewal rate.
FIXED ACCOUNT TRANSFER RESTRICTIONS -- We reserve the right to defer
transfers from the Fixed Account for up to 6 months from the date of your
request. After any transfer, you must wait six months before moving Sub-Account
Values back to the Fixed Account.
TELEPHONE TRANSFERS -- In most states, you can make transfers by calling us
at (800) 862-6668. Hartford, our agents or our affiliates are not responsible
for losses resulting from telephone requests that we believe are genuine. We
will use reasonable procedures to confirm that telephone instructions are
genuine, including requiring that callers provide certain identification
information and recording all telephone transfer instructions.
POWER OF ATTORNEY -- You may authorize another person to make transfers on
your behalf by submitting a completed Power of Attorney form. Once we have the
completed form on file, we will accept transfer instructions from your
designated third party until we receive new instructions in writing from you.
CHARGES AND FEES
There are 4 charges and fees associated with the Contract:
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HARTFORD LIFE INSURANCE COMPANY 17
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1. THE CONTINGENT DEFERRED SALES CHARGE
The Contingent Deferred Sales Charge covers some of the expenses relating to
the sale and distribution of the Contract, including commissions paid to
registered representatives and the cost of preparing sales literature and other
promotional activities.
We assess a Contingent Deferred Sales Charge when you request a full or
partial Surrender. The percentage of the Contingent Deferred Sales Charge is
based on how long your Premium Payments have been in the Contract. The
Contingent Deferred Sales Charge will not exceed the total amount of the Premium
Payments made. Each Premium Payment has its own Contingent Deferred Sales Charge
schedule. Premium Payments are Surrendered in the order in which they were
received. The longer you leave your Premium Payments in the Contract, the lower
the Contingent Deferred Sales Charge will be when you Surrender.
The Contingent Deferred Sales Charge is a percentage of the amount
Surrendered and is equal to:
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED
NUMBER OF YEARS SALES
FROM PREMIUM PAYMENT CHARGE
- ------------------------------ -----
<S> <C>
1 6%
2 6%
3 5%
4 5%
5 4%
6 3%
7 2%
8 or more 0%
</TABLE>
THE FOLLOWING SURRENDERS ARE NOT SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE:
- - ANNUAL WITHDRAWAL AMOUNT -- During the first seven years from each Premium
Payment, you may, each Contract Year, take partial Surrenders up to 10% of the
total Premium Payments. If you do not take 10% one year, you may not take more
than 10% the next year. These amounts are different for Contracts issued to a
Charitable Remainder Trust.
- - SURRENDERS MADE FROM PREMIUM PAYMENTS INVESTED FOR MORE THAN SEVEN YEARS --
After the seventh Contract Year, you may take the total of: (a) all of your
earnings, and (b) all Premium Payments held in your Contract for more than
seven years, and (c) 10% of Premium Payments made during the last seven years.
UNDER THE FOLLOWING SITUATIONS, THE CONTINGENT DEFERRED SALES CHARGE IS
WAIVED:
- - Upon eligible confinement as described in the Waiver of Sales Charge Rider. We
will waive any Contingent Deferred Sales Charge applicable to a partial or
full Surrender if you, the joint owner or the Annuitant, is confined for at
least 180 calendar days to a: (a) facility recognized as a general hospital by
the proper authority of the state in which it is located; or (b) facility
recognized as a general hospital by the Joint Commission on the Accreditation
of Hospitals; or (c) facility certified as a hospital or long-term care
facility; or (d) nursing home licensed by the state in which it is located and
offers the services of a registered nurse 24 hours a day. If you, the joint
owner or the Annuitant is confined when you purchase the Contract, this waiver
is not available. For it to apply, you must: (a) have owned the Contract
continuously since it was issued, (b) provide written proof of confinement
satisfactory to us, and (c) request the Surrender within 90 calendar days of
the last day of confinement. This waiver may not be available in all states.
Please contact your Registered Representative or us to determine if it is
available for you.
- - For Required Minimum Distributions -- This allows Annuitants who are age
70 1/2 or older, with a Contract held under an Individual Retirement Account
or 403(b) plan, to Surrender an amount equal to the Required Minimum
Distribution for the Contract without a Contingent Deferred Sales Charge. All
requests for Required Minimum Distributions must be in writing.
- - On or after the Annuitant's 90th birthday.
- - For disabled participants enrolled in a group unallocated, tax qualified
retirement plan. With our approval and under certain conditions, participants
who become disabled can receive Surrenders free of Contingent Deferred Sales
Charge.
THE FOLLOWING SITUATIONS ARE NOT SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE:
- - Upon death of the Annuitant or Contract Owner -- No Contingent Deferred Sales
Charge will be deducted if the Annuitant or Contract Owner dies, unless the
Contract Owner is not a natural person (e.g. a trust).
- - Upon Annuitization -- The Contingent Deferred Sales Charge is not deducted
when you annuitize the Contract. We will charge a Contingent Deferred Sales
Charge if the Contract is fully Surrendered during the Contingent Deferred
Sales Charge period under an Annuity Payout Option which allows Surrenders.
- - Upon cancellation during the Right to Cancel Period.
2. MORTALITY AND EXPENSE RISK CHARGE
For assuming mortality and expense risks under the Contract, we deduct a
daily charge at the rate of 1.25% per year of Sub-Account Value (estimated at
.90% for mortality and .35% for expenses). The mortality and expense risk charge
is broken into charges for mortality risks and for an expense risk:
- - MORTALITY RISK -- Ther are two types of mortality risks that we assume, those
made while your Premium Payments are accumulating and those made once Annuity
Payouts have begun.
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18 HARTFORD LIFE INSURANCE COMPANY
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During the period your Premium Payments are accumulating, we are required to
cover any difference between the Death Benefit paid and the Surrender Value.
These differences may occur during periods of declining value or in periods
where the Contingent Deferred Sales Charges would have been applicable. The
risk that we bear during this period is that actual mortality rates, in
aggregate, may exceed expected mortality rates.
Once Annuity Payouts have begun, we may be required to make Annuity Payouts as
long as the Annuitant is living, regardless of how long the Annuitant lives.
We would be required to make these payments if the Payout Option chosen is the
Life Annuity, Life Annuity With Payments for a Period Certain or Joint and
Last Survivor Life Annuity Payout Option. The risk that we bear during this
period is that the actual mortality rates, in aggregate, may be lower than the
expected mortality rates.
- - EXPENSE RISK -- We also bear an expense risk that the Contingent Deferred
Sales Charges and the Annual Maintenance Fee collected before the Annuity
Commencement Date may not be enough to cover the actual cost of selling,
distributing and administering the Contract.
Although variable Annuity Payouts will fluctuate with the performance of the
underlying Fund selected, your Annuity Payouts will NOT be affected by (a) the
actual mortality experience of our Annuitants, or (b) our actual expenses if
they are greater than the deductions stated in the Contract. Because we cannot
be certain how long our Annuitants will live, we charge this percentage fee
based on the mortality tables currently in use. The mortality and expense risk
charge enables us to keep our commitments and to pay you as planned.
3. ANNUAL MAINTENANCE FEE
The Annual Maintenance Fee is a flat fee that is deducted from your Contract
Value to reimburse us for expenses relating to the administrative maintenance of
the Contract and the Accounts. The annual $30 charge is deducted on a Contract
Anniversary or when the Contract is fully Surrendered if the Contract Value at
either of those times is less than $50,000. The charge is deducted
proportionately from each Account in which you are invested.
WHEN IS THE ANNUAL MAINTENANCE FEE WAIVED?
We will waive the Annual Maintenance Fee if your Contract Value is $50,000
or more on your Contract Anniversary or when you fully Surrender your Contract.
In addition, we will waive one Annual Maintenance Fee for Contract Owners if you
own more than one Contract with a combined Contract Value between $50,000 and
$100,000. If you have multiple Contracts with a combined Contract Value of
$100,000 or greater, we will waive the Annual Maintenance Fee on all Contracts.
However, we reserve the right to limit the number of waivers to a total of six
Contracts. We also reserve the right to waive the Annual Maintenance Fee under
certain other conditions.
4. PREMIUM TAXES
We deduct Premium Taxes, if required, by a state or other government agency.
Some states collect the taxes when Premium Payments are made; others collect at
Annuitization. Since we pay Premium Taxes when they are required by applicable
law, we may deduct them from your Contract when we pay the taxes, upon
Surrender, or on the Annuity Commencement Date. The Premium Tax rate varies by
state or municipality. Currently, the maximum rate charged by any state is 3.5%
and 4% in Puerto Rico.
WE MAY OFFER, IN OUR DISCRETION, REDUCED FEES AND CHARGES INCLUDING, BUT NOT
LIMITED TO CONTINGENT DEFERRED SALES CHARGES, THE MORTALITY AND EXPENSE RISK
CHARGE, AND THE ANNUAL MAINTENANCE FEE, FOR CERTAIN CONTRACTS (INCLUDING
EMPLOYER SPONSORED SAVINGS PLANS) WHICH RESULT IN COST AND EXPENSE SAVINGS.
REDUCTIONS IN THESE FEES AND CHARGES WILL NOT BE UNFAIRLY DISCRIMINATORY AGAINST
ANY CONTRACT OWNER.
DEATH BENEFIT
WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED?
The Death Benefit is the amount we will pay upon the death of the Contract
Owner or the Annuitant. The Death Benefit is calculated when we receive a
certified death certificate or other legal document acceptable to us.
The calculated Death Benefit will remain invested in the same Accounts,
according to the Contract Owner's last instructions until we receive complete
written settlement instructions from the Beneficiary. Therefore, the Death
Benefit amount will fluctuate with the performance of the underlying Funds. When
there is more than one Beneficiary, we will calculate the Accumulation Units for
each Sub-account and the dollar amount for the Fixed Account for each
Beneficiary's portion of the proceeds.
If death occurs before the Annuity Commencement Date, the Death Benefit is
the greatest of:
- - The Contract Value on the date the death certificate or other legal document
acceptable to us is received; or
- - 100% of all Premium Payments paid into the Contract minus any partial
Surrenders; or
- - The Maximum Anniversary Value, which is described below.
The Maximum Anniversary Value is based on a series of calculations on
Contract Anniversaries of Contract Values, Premium Payments and partial
Surrenders. We will calculate an Anniversary Value for each Contract Anniversary
prior to the deceased's 81st birthday or date of death, whichever is earlier.
The Anniversary Value is equal to the
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HARTFORD LIFE INSURANCE COMPANY 19
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Contract Value as of a Contract Anniversary, increased by the dollar amount of
any Premium Payments made since that anniversary and reduced by the dollar
amount of any partial Surrenders since that anniversary. The Maximum Anniversary
Value is equal to the greatest Anniversary Value attained from this series of
calculations.
The Maximum Anniversary Value is only calculated until the earlier of the
Contract Owner or Annuitant's 81st birthday or death.
WHO WILL RECEIVE THE DEATH BENEFIT?
The distribution of the Death Benefit is based on whether death is before,
on or after the Annuity Commencement Date.
IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE:
<TABLE>
<CAPTION>
IF THE DECEASED
IS
THE... AND... AND... THEN THE...
- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Contract Owner There is a The Annuitant Joint Contract
surviving joint is living or Owner receives
Contract Owner deceased the Death
Benefit.
Contract Owner There is no The Annuitant Designated
surviving joint is living or Beneficiary
Contract Owner deceased receives the
Death Benefit.
Contract Owner There is no The Annuitant Contract Owner's
surviving joint is living or estate receives
Contract Owner deceased the Death
and the Benefit.
Beneficiary
predeceases the
Contract Owner
Annuitant The Contract There is no Death Benefit is
Owner is still named Contingent paid to the
living Annuitant Contract
Owner(s), and
not the
designated
Beneficiary.
Annuitant The Contract The Contingent Contingent
Owner is alive Annuitant is Annuitant
alive becomes the
Annuitant, and
the Contract
continues.
</TABLE>
IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE:
<TABLE>
<CAPTION>
IF THE DECEASED
IS
THE... AND... THEN THE...
- ---------------- -------------------- --------------------
<S> <C> <C>
Contract Owner The Annuitant is Designated
living Beneficiary becomes
the Contract Owner.
Annuitant The Contract Owner Contract Owner
is living receives the Death
Benefit.
Annuitant The Annuitant is Designated
also the Contract Beneficiary receives
Owner the Death Benefit.
</TABLE>
THESE ARE THE MOST COMMON DEATH BENEFIT SCENARIOS, HOWEVER, THERE ARE OTHERS.
SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT RESULT IN A DEATH BENEFIT PAYOUT. IF
YOU HAVE QUESTIONS ABOUT THESE AND ANY OTHER SCENARIOS, PLEASE CONTACT YOUR
REGISTERED REPRESENTATIVE OR US.
HOW IS THE DEATH BENEFIT PAID?
The Death Benefit may be taken in one lump sum or under any of the Annuity
Payout Options then being offered by us. On the date we receive complete
instructions from the Beneficiary, we will compute Death Benefit amount to be
paid out or applied to a selected Annuity Payout Option. When there is more than
one Beneficiary, we will calculate the Death Benefit amount for each
Beneficiary's portion of the proceeds and then pay it out or apply it to a
selected Annuity Payout Option according to each Beneficiary's instructions. If
we receive the complete instructions on a Non-Valuation Day, computations will
take place on the next Valuation Day.
The Beneficiary may elect under the Annuity Payout Option "Death Benefit
Remaining with the Company" to leave proceeds from the Death Benefit with us for
up to five years from the date of the Contract Owner's death if the Contract
Owner died before the Annuity Commencement Date. Once we receive a certified
death certificate or other legal documents acceptable to us, the Beneficiary
can: (a) make Sub-Account transfers and (b) take Surrenders without paying
Contingent Deferred Sales Charges.
REQUIRED DISTRIBUTIONS -- If the Contract Owner dies before the Annuity
Commencement Date, the Death Benefit must be distributed within five years after
death. The Beneficiary can choose any Annuity Payout Option that results in
complete Annuity Payout within five years.
If the Contract Owner dies on or after the Annuity Commencement Date under
an Annuity Payout Option with a Death Benefit, any remaining value must be
distributed at least as rapidly as under the payment method being used as of the
Contract Owner's death.
If the Contract Owner is not an individual (e.g. a trust), then the original
Annuitant will be treated as the Contract Owner in the situations described
above and any change in the original Annuitant will be treated as the death of
the Contract Owner.
WHAT SHOULD THE BENEFICIARY CONSIDER?
Alternatives to the Required Distributions: The selection of an Annuity
Payout Option and the timing of the selection will have an impact on the tax
treatment of the Death Benefit. To receive favorable tax treatment, the Annuity
Payout Option selected: (a) cannot extend beyond the Beneficiary's life or life
expectancy, and (b) must begin within one year of the date of death.
If these conditions are NOT met, the Death Benefit will be treated as a lump
sum payment for tax purposes. This
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20 HARTFORD LIFE INSURANCE COMPANY
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sum will be taxable in the year in which it is considered received.
SPOUSAL CONTRACT CONTINUATION -- If the Beneficiary is the Contract Owner's
spouse, the Beneficiary may elect to continue the Contract as the Contract
Owner, receive the death benefit in one lump sum payment or elect an Annuity
Payout Option.
SURRENDERS
WHAT KINDS OF SURRENDERS ARE AVAILABLE?
FULL SURRENDERS BEFORE THE ANNUITY COMMENCEMENT DATE -- When you Surrender
your Contract before the Annuity Commencement Date, the Surrender Value of the
Contract will be made in a lump sum payment. The Surrender Value is the Contract
Value minus any applicable Premium Taxes, Contingent Deferred Sales Charges and
the Annual Maintenance Fee. The Surrender Value may be more or less than the
amount of the Premium Payments made to a Contract.
PARTIAL SURRENDERS BEFORE THE ANNUITY COMMENCEMENT DATE -- You may request a
partial Surrender of Contract Values at any time before the Annuity Commencement
Date. There are two restrictions:
- - The partial Surrender amount must be at least equal to $100, our current
minimum for partial Surrenders, and
- - The Contract must have a minimum Contract Value of $500 after the Surrender.
The minimum Contract Value in New York must be $1000 after the Surrender. We
reserve the right to close your Contract and pay the full Surrender Value if
the Contract Value is under $500 after the Surrender. If your Contract was
issued in Texas, a remaining value of $500 is not required to continue the
Contract if Premium Payments were made in the last two Contract Years.
FULL SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE -- You may Surrender
your Contract on or after the Annuity Commencement Date only if you selected the
Payment For a Period Certain Annuity Payout Option. Under this option, we pay
you the Commuted Value of your Contract minus any applicable Contingent Deferred
Sales Charges. The Commuted Value is determined on the day we receive your
written request for Surrender.
NO PARTIAL SURRENDERS ARE ALLOWED AFTER THE ANNUITY COMMENCEMENT DATE.
HOW DO I REQUEST A SURRENDER?
Requests for full Surrenders must be in writing. Requests for partial
Surrenders can be made in writing or by telephone. We will send your money
within seven days of receiving completed instructions. However, we may postpone
payment of Surrenders whenever: (a) the New York Stock Exchange is closed,
except for holidays or weekends, or trading on the New York Stock Exchange is
restricted by the Securities and Exchange Commission (the "SEC"), (b) the SEC
permits postponement and so orders, or (c) the SEC determines that an emergency
exists to restrict valuation.
WRITTEN REQUESTS -- To request a full or partial Surrender, complete a
Surrender Form or send us a letter, signed by you, stating:
- - the dollar amount that you want to receive, either before or after we withhold
taxes and deduct for any applicable charges,
- - your tax withholding amount or percentage, if any, and
- - your mailing address.
If there are joint Contract Owners, both must authorize all Surrenders. For
a partial Surrender, specify the Accounts that you want your Surrender to come
from, otherwise, the Surrender will be taken in proportion to the value in each
Account.
TELEPHONE REQUESTS -- To request a partial Surrender by telephone, we must
have received your completed Telephone Redemption Program Enrollment Form. If
there are joint Contract Owners, both must sign this form. By signing the form,
you authorize us to accept telephone instructions for partial Surrenders from
either Contract Owner. Telephone authorization will remain in effect until we
receive a written cancellation notice from you or your joint Contract Owner, we
discontinue the program; or you are no longer the owner of the Contract. There
are some restrictions on telephone surrenders, please call us with any
questions.
We may record telephone calls and use other procedures to verify information
and confirm that instructions are genuine. We will not be liable for losses or
expenses arising from telephone instructions reasonably believed to be genuine.
WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME.
Telephone Surrender instructions received before the close of the New York
Stock Exchange, generally 4:00 p.m. Eastern Time, will be processed with that
day's values.
COMPLETING A POWER OF ATTORNEY FORM FOR ANOTHER PERSON MAY PREVENT YOU FROM
MAKING SURRENDERS VIA TELEPHONE.
WHAT SHOULD BE CONSIDERED ABOUT TAXES?
There are certain tax consequences associated with Surrenders:
PRIOR TO AGE 59 1/2 -- If you make a Surrender prior to age 59 1/2, there
may be adverse tax consequences including a10% federal income tax penalty on the
taxable portion of the Surrender payment. Surrendering before age 59 1/2 may
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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also affect the continuing tax-qualified status of some Contracts.
WE DO NOT MONITOR SURRENDER REQUESTS. TO DETERMINE WHETHER A SURRENDER IS
PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY, PLEASE CONSULT YOUR
PERSONAL TAX ADVISER. MORE THAN ONE CONTRACT ISSUED IN THE SAME CALENDAR YEAR:
If you own more than one contract issued by us or our affiliates in the same
calendar year, then these contracts may be treated as one contract for the
purposes of determining the taxation of distributions prior to the Annuity
Commencement Date. Please consult your tax adviser for additional information.
INTERNAL REVENUE CODE SECTION 403(B) ANNUITIES -- As of December 31, 1988,
all section 403(b) annuities have limits on full and partial Surrenders.
Contributions to your Contract made after December 31, 1988 and any increases in
cash value after December 31, 1988 may not be distributed unless you are: (a)
age 59 1/2, (b) no longer employed, (c) deceased, (d) disabled, or (e)
experiencing a financial hardship (cash value increases may not be distributed
for hardships prior to age 59 1/2). Distributions prior to age 59 1/2 due to
financial hardship; unemployment or retirement may still be subject to a penalty
tax of 10%.
WE ENCOURAGE YOU TO CONSULT WITH YOUR TAX ADVISER BEFORE MAKING ANY
SURRENDERS. PLEASE SEE THE "FEDERAL TAX CONSIDERATIONS" SECTION FOR MORE
INFORMATION.
ANNUITY PAYOUTS
THIS SECTION DESCRIBES WHAT HAPPENS WHEN WE BEGIN TO MAKE REGULAR ANNUITY
PAYOUTS FROM YOUR CONTRACT. YOU, AS THE CONTRACT OWNER, SHOULD ANSWER FIVE
QUESTIONS:
1. When do you want Annuity Payouts to begin?
2. What Annuity Payout Option do you want to use?
3. How often do you want to receive Annuity Payouts?
4. What is the Assumed Investment Rate?
5. Do you want Annuity Payouts to be fixed or variable or a combination?
Please check with your financial advisor to select the Annuity Payout Option
that best meets your income needs.
1. WHEN DO YOU WANT ANNUITY PAYOUTS TO BEGIN?
You select an Annuity Commencement Date when you purchase your Contract or
at any time before you begin receiving Annuity Payouts. You may change the
Annuity Commencement Date by notifying us within thirty days prior to the date.
The Annuity Commencement Date cannot be deferred beyond the 15th day of the
month of the Annuitant's 90th birthday. If this Contract is issued to the
trustee of a Charitable Remainder Trust, the Annuity Commencement Date may be
deferred to the Annuitant's 100th birthday.
The Annuity Calculation Date is when the amount of your Annuity Payout is
determined. This occurs within five Valuation Days before your selected Annuity
Commencement Date.
All Annuity Payouts, regardless of frequency, will occur on the same day of
the month as the Annuity Commencement Date. After the initial payout, if an
Annuity Payout date falls on a Non-Valuation Day, the Annuity Payout is computed
on the prior Valuation Day. If the Annuity Payout date does not occur in a given
month due to a leap year or months with only 28 days (i.e. the 31st), the
Annuity Payout will be computed on the last Valuation Day of the month.
2. WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE?
Your Contract contains the Annuity Payout Options described below. The
Annuity Proceeds Settlement Option is an option that can be elected by the
Beneficiary after the death of the Contract Owner and is described in the "Death
Benefit" section. We may at times offer other Annuity Payout Options.
OPTION 1 -- LIFE ANNUITY -- We make Annuity Payouts as long as the Annuitant
is living. When the Annuitant dies, we stop making Annuity Payouts. A Payee
would receive only one Annuity Payout if the Annuitant dies after the first
payout, two Annuity Payouts if the Annuitant dies after the second payout, and
so forth.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN -- We
make monthly Annuity Payouts during the lifetime of the Annuitant but Annuity
Payouts are at least guaranteed for a minimum of 120, 180 or 240 months, as you
elect. If, at the death of the Annuitant, Annuity Payouts have been made for
less than the minimum elected number of months, then the Commuted Value as of
the date of the Annuitant's death will be paid in one sum to the Beneficiary.
OPTION 3 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- We will make Annuity
Payouts as long as the Annuitant and Joint Annuitant are living. When one
Annuitant dies, we continue to make Annuity Payouts to the other Annuitant until
that second Annuitant dies. When choosing this option, you must decide what will
happen to the Annuity Payouts; either fixed or variable, after the first
Annuitant dies. You must select Annuity Payouts that:
- - Remain the same at 100%, or
- - Decrease to 66.67%, or
- - Decrease to 50%.
For variable Annuity Payouts, these percentages represent Annuity Units; for
fixed Annuity Payouts, they represent actual dollar amounts. The percentage will
also
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22 HARTFORD LIFE INSURANCE COMPANY
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impact the Annuity Payout amount we pay while both Annuitants are living. If you
pick a lower percentage, your original Annuity Payouts will be higher while both
Annuitants are alive.
OPTION 4 -- PAYMENTS FOR A DESIGNATED PERIOD -- We will make Annuity Payouts
for the number of years that you select. You can select between 5 years and 30
years.
IMPORTANT INFORMATION:
- - YOU CANNOT SURRENDER YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE
SELECTED THE PAYMENTS FOR A DESIGNATED PERIOD ANNUITY PAYOUT OPTION. A
CONTINGENT DEFERRED SALES CHARGE MAY BE DEDUCTED.
- - For Non-Qualified Contracts, if you do not elect an Annuity Payout Option,
fixed Annuity Payouts will automatically begin on the Annuity Commencement
Date under the Life Annuity with 120,180 or 240 Monthly Payments Certain
Annuity Payout Option with payouts for 120 months.
- - For Qualified Contracts and Contracts issued in Texas, if you do not elect an
Annuity Payout Option, fixed Annuity Payouts will begin automatically on the
Annuity Commencement Date, under the Annuity Payout Option 1 -- Life Annuity.
3.HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS?
In addition to selecting an Annuity Commencement Date and an Annuity Payout
Option, you must also decide how often you want the Payee to receive Annuity
Payouts. You may choose to receive Annuity Payouts:
- - monthly,
- - quarterly,
- - semi-annually,
- - or annually.
Once you select a frequency, it cannot be changed. If you do not make a
selection, the Payee will receive monthly Annuity Payouts. You must select a
frequency that results in an Annuity Payout of at least $50. If the amount falls
below $50, we have the right to change the frequency to bring the Annuity Payout
up to at least $50. For Contracts issued in New York, the minimum monthly
Annuity Payout is $20.
4. WHAT IS THE ASSUMED INVESTMENT RATE?
The Assumed Investment Return is the investment return used to calculate
variable Annuity Payouts. The Assumed Investment Return for your Annuity is 5%.
The first Annuity Payout will be based upon a 5% Assumed Investment Return. The
remaining Annuity Payouts will fluctuate based on the actual investment results
of the Sub-Accounts.
5. DO YOU WANT ANNUITY PAYOUTS TO BE FIXED OR VARIABLE?
You may choose an Annuity Payout Option with fixed-dollar amounts or
variable-dollar amounts, depending on your income needs.
FIXED-DOLLAR AMOUNT ANNUITY PAYOUTS -- Once a fixed-dollar amount Annuity
Payout begins, you cannot change your selection to receive variable-dollar
amount Annuity Payout. You will receive equal fixed-dollar amount Annuity
Payouts throughout the Annuity Payout period. Fixed-dollar amount Annuity Payout
amounts are determined by multiplying the Contract Value, minus any applicable
Premium Taxes, by an Annuity rate. The annuity rate is set by us and is not less
than the rate specified in the fixed-dollar amount Annuity Payout Option tables
in your Contract.
VARIABLE-DOLLAR AMOUNT ANNUITY PAYOUTS -- A variable-dollar amount Annuity
Payout based on the investment performance of the Sub-Accounts. The
variable-dollar amount Annuity Payouts may fluctuate with the performance of the
underlying Funds. To begin making variable-dollar amount Annuity Payouts, we
convert the first Annuity Payout amount to a set number of Annuity Units and
then price those units to determine the Annuity Payout amount. The number of
Annuity Units that determines the Annuity Payout amount remains fixed unless you
transfer units between Sub-Accounts.
The dollar amount of the first variable Annuity Payout depends on:
- - the Annuity Payout Option chosen,
- - the Annuitant's attained age and gender (if applicable), and,
- - the applicable annuity purchase rates based on the 1983a Individual Annuity
Mortality table
The total amount of the first variable-dollar amount Annuity Payout is the
sum of the values of each Sub-Account. This is determined by dividing the
Contract Value minus any applicable Premium Taxes, by $1,000 and multiplying the
result by the payment factor defined in the Contract for the selected Annuity
Payout Option.
The dollar amount of each subsequent variable-dollar amount Annuity Payout
is equal to:
Sub-Account Annuity Units, determined from the first Annuity Payout,
multiplied by Annuity Unit Value.
The Annuity Unit Value of each Sub-Account for any Valuation Period is equal
to the Accumulation Unit Value Net Investment Factor for the current Valuation
Period multiplied by the Annuity Unit factor, multiplied by the Annuity Unit
Value for the preceding Valuation Period.
TRANSFER OF ANNUITY UNITS -- After the Annuity Calculation Date, you may
transfer dollar amounts of Annuity Units
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HARTFORD LIFE INSURANCE COMPANY 23
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from one Sub-Account to another. On the day you make a transfer, the dollar
amounts are equal for both Sub-Accounts and the number of Annuity Units will be
different. We will transfer the dollar amount of your Annuity Units the day we
receive your written request if received before the close of the New York Stock
Exchange.
OTHER PROGRAMS AVAILABLE
INVESTEASE -- InvestEase is an electronic transfer program that allows you
to have money automatically withdrawn from your checking or savings account, and
invested in your Contract. It is available for Premium Payments made after your
initial Premium Payment. The minimum amount for each transfer is $50. You can
elect to have transfers occur either monthly or quarterly, and they can be made
into any Account available in your Contract.
AUTOMATIC INCOME PROGRAM -- The Automatic Income Program allows you to
Surrender up to 10% of your total Premium Payments each Contract Year. We can
Surrender from the Accounts you select systematically on a monthly, quarterly,
semiannual, or annual basis. The Automatic Income Program may change based on
your instructions after your seventh Contract Year.
ASSET ALLOCATION PROGRAM -- Asset Allocation is a program that allows you to
choose an allocation for your Sub-Accounts to help you reach your investment
goals. Some Contracts offer model allocations with pre-selected Sub-Accounts and
percentages that have been established for each type of investor -- ranging from
conservative to aggressive. Over time, Sub-Account performance may cause your
Contract's allocation percentages to change, but under the Asset Allocation
Program, your Sub-Account allocations are rebalanced to the percentages in the
current model you have chosen. You can transfer freely between allocation models
up to twelve times per year. You can also allocate a portion of your investment
to Sub-Accounts that may not be part of the model. You can only participate in
one asset allocation model at a time.
ASSET REBALANCING -- Asset Rebalancing is another type of asset allocation
program in which you customize your Sub-Accounts to meet your investment needs.
You select the Sub-Accounts and the percentages you want allocated to each
Sub-Account. Based on the frequency you select, your model will automatically
rebalance to the original percentages chosen. You can transfer freely between
models up to twelve times per year. You can also allocate a portion of your
investment to Sub-Accounts that are not part of the model. You can only
participate in one asset rebalancing model at a time.
OTHER INFORMATION
ASSIGNMENT -- Ownership of this Contract is generally assignable. However,
if the Contract is issued to a tax qualified retirement plan, it is possible
that the ownership of the Contract may not be transferred or assigned. An
assignment of a Non-Qualified Contract may subject the Contract Values or
Surrender Value to income taxes and certain penalty taxes.
CONTRACT MODIFICATION -- The Annuitant may not be changed. However, if the
Annuitant is still living, the Contingent Annuitant may be changed at any time
prior to the Annuity Commencement Date by sending us written notice. We may
modify the Contract, but no modification will effect the amount or term of any
Contract unless a modification is required to conform the Contract to applicable
Federal or State law. No modification will effect the method by which Contract
Values are determined.
HOW CONTRACTS ARE SOLD -- Hartford Securities Distribution Company, Inc.
("HSD") serves as Principal Underwriter for the securities issued with respect
to the Separate Account. HSD is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 as a Broker-Dealer and is a
member of the National Association of Securities Dealers, Inc. HSD is an
affiliate of ours. Our parent company indirectly owns 100% of HSD. The principal
business address of HSD is the same as ours. The securities will be sold by
salesperson of HSD who represent us as insurance agents and who are registered
representatives of Broker-Dealers that have entered into distribution agreements
with HSD.
Commissions will be paid by Hartford and will not be more than 6% of Premium
Payments. From time to time, Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
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 institution 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
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24 HARTFORD LIFE INSURANCE COMPANY
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by the policyholders or Contract Owners to purchase, hold or Surrender variable
insurance products.
The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Hartford will credit the Contract with
an additional 5.0% of the Premium Payment. This additional percentage of Premium
Payment in no way affects present or future charges, rights, benefits or current
values of other Contract Owners. The following class of individuals are eligible
for this feature: (1) current or retired officers, directors, trustees and
employees (and their families) of the ultimate parent and affiliates of
Hartford; and (2) employees and registered representatives (and their families)
of registered broker-dealers (or their financial institutions) that have a sales
agreement with Hartford and its principal underwriter to sell the Contracts.
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 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 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 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.
LEGAL MATTERS AND EXPERTS
There are no material legal proceedings pending to which the Separate
Account is a party.
Counsel with respect to federal laws and regulations applicable to the issue
and sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
Senior Vice President, General Counsel and Corporate Secretary, Hartford Life
Insurance Company, P.O. Box 2999, Hartford, Connecticut 06104-2999.
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.
MORE INFORMATION
You may call your Representative if you have any questions or write or call
us at the address below:
Hartford Life Insurance Company
Attn: Individual Annuity Services
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HARTFORD LIFE INSURANCE COMPANY 25
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P.O. Box 5085
Hartford, Connecticut 06102-5085.
Telephone: (800) 862-6668 (Contract Owners)
(800) 862-7155 (Investment Consultants)
FEDERAL TAX CONSIDERATIONS
What are some of the federal tax consequences that affect these Contracts?
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF THE CONTRACT DESCRIBED IN
THIS PROSPECTUS.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Contracts cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. The discussion
here and in Appendix I is based on Hartford's understanding of existing 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 that is taxed as a life
insurance company in accordance with the Code. Accordingly, the Separate Account
will not be taxed as a "regulated investment company" under subchapter M of
Chapter 1 of the Code. Investment income and any realized capital gains on the
assets of the Separate Account are reinvested and are taken into Account in
determining the value of the Accumulation and Annuity Units (See "Accumulation
Unit Values"). 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 ANNUITIES -- GENERAL PROVISIONS
AFFECTING PURCHASERS OTHER THAN
QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Section 72 contains provisions for Contract Owners that are non-natural
persons. Non-natural persons include corporations, trusts, limited liability
companies and partnerships. The annual net increase in the value of the Contract
is currently includable in the gross income of a non-natural person, unless the
non-natural person holds the Contract as an agent for a natural person. There
are additional exceptions from current inclusion for (i) certain annuities held
by structured settlement companies, (ii) certain annuities held by an employer
with respect to a terminated qualified retirement plan and (iii) certain
immediate annuities. A non-natural person that is a tax-exempt entity for
federal tax purposes will not be subject to income tax as a result of this
provision.
If the Contract Owner is not an individual, the primary Annuitant shall be
treated as the Contract Owner for purposes of making distributions 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.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract
until an amount is received or deemed received, e.g., in the form of a lump sum
payment (full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other Annuity
Contracts or life insurance Contracts that were purchased prior to August 14,
1982.
A. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total Premium Payments less amounts received that were not includable in
gross income equal the "investment in the Contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any Surrender
charges except on a full Surrender) exceeds the "investment in the
Contract," such excess constitutes the "income on the Contract."
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial Surrender) is deemed to come first from any
such "income on the Contract" and then from "investment in the Contract,"
and for these purposes such "income on the Contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c. below. As a result,
any such amount received or deemed received (1) shall be includable in
gross income to the extent that such amount does not exceed any such
"income
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26 HARTFORD LIFE INSURANCE COMPANY
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on the Contract," and (2) shall not be includable in gross income to the
extent that such amount does exceed any such "income on the Contract." If
at the time that any amount is received or deemed received there is no
"income on the Contract" (e.g., because the gross value of the Contract
does not exceed the "investment in the Contract" and no aggregation rule
applies), then such amount received or deemed received will not be
includable in gross income, and will simply reduce the "investment in the
Contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
B. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the Contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the Contract as of the Annuity
Commencement Date, any additional payments (including Surrenders) will be
entirely includable in gross income.
ii. If the Annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of Annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
Contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, non-periodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full Surrender
after such date, only the excess of the amount received (after any
Surrender charge) over the remaining "investment in the Contract" shall be
includable in gross income (except to the extent that the aggregation rule
referred to in the next subparagraph c. may apply).
C. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year (other than
certain Contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one Annuity Contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An Annuity Contract received in a tax-free exchange for another Annuity
Contract or life insurance Contract may be treated as a new Contract for this
purpose. Hartford believes that for any Annuity subject to such aggregation, the
values under the Contracts and the investment in the Contracts will be added
together to determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement Date. Withdrawals
will first be treated as withdrawals of income until all of the income from all
such Contracts is withdrawn. As of the date of this Prospectus, there are no
regulations interpreting this provision.
D. 10% PENALTY TAX-- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary Annuitant.
3. A distribution attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal
periodic payments for the life (or life expectancy) of the recipient (or
the joint lives or life expectancies of the recipient and the
recipient's Beneficiary).
5. Distributions of amounts that are allocable to the "investment in the
Contract" prior to August 14, 1982 (see next subparagraph e.).
E. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO
AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or
Annuity Contract purchased prior to August 14, 1982, then any amount received or
deemed
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HARTFORD LIFE INSURANCE COMPANY 27
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received prior to the Annuity Commencement Date shall be deemed to come (1)
first from the amount of the "investment in the Contract" prior to August 14,
1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2) then
from the portion of the "income on the Contract" (carried over to, as well as
accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the Contract" and
(4) last from the remaining "investment in the Contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income. In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
Contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange Contracts are generally subject to the rules described in this
subparagraph 3.
F. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse Beneficiary provisions in
ii or iii below:
1. If any Contract Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Contract Owner dies before the Annuity Commencement Date, the
entire interest in the Contract will be distributed within 5 years after
such death; and
3. If the Contract Owner is not an individual, then for purposes of 1 or 2
above, the primary Annuitant under the Contract shall be treated as the
Contract Owner, and any change in the primary Annuitant shall be treated
as the death of the Contract Owner. The primary Annuitant is the
individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner described in i. above
is payable to or for the benefit of a designated Beneficiary, such
Beneficiary may elect to have the portion distributed over a period that
does not extend beyond the life or life expectancy of the Beneficiary. The
election and payments must begin within a year of the death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is payable to or for
the benefit of his or her spouse, and the Annuitant or Contingent Annuitant
is living, such spouse shall be treated as the Contract Owner of such
portion for purposes of section i. above.
3. DIVERSIFICATION REQUIREMENTS.
Section 817 of the Code provides that a variable Annuity Contract will not
be treated as an Annuity Contract for any period during which the investments
made by the Separate Account or underlying Fund are not adequately diversified
in accordance with regulations prescribed by the Treasury Department. If a
Contract is not treated as an Annuity Contract, the Contract Owner will be
subject to income tax on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset Account underlying a variable Contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A Separate Account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of Contract income on an ongoing basis. However, either the company or
the Contract Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the Separate
Accounts and tests for diversification as required by the Code. Hartford intends
to administer all Contracts subject to the diversification requirements in a
manner that will maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable Annuity Contract to qualify for tax deferral, assets
in the segregated asset Accounts supporting the variable Contract must be
considered to be owned by the insurance company and not by the variable Contract
Owner. The Internal Revenue Service ("IRS") has
<PAGE>
28 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
issued several rulings that discuss investor control. The IRS has ruled that
certain incidents of ownership by the Contract Owner, such as the ability to
select and control investments in a Separate Account, will cause the Contract
Owner to be treated as the owner of the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset Account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
Account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset Account may include
multiple Sub-Accounts, but do not specify the extent to which policyholders may
direct their investments to particular Sub-Accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of variable Contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
prospectus, no other such guidance has been issued. Further, Hartford does not
know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Contract Owner could be considered the owner of
the assets for tax purposes. Hartford reserves the right to modify the
Contracts, as necessary, to prevent Contract Owners from being considered the
owners of the assets in the Separate Accounts.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution that is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of the
Code. The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS.
The portion of a non-periodic distribution that constitutes taxable income
will be subject to federal income tax withholding unless the recipient elects
not to have taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal income
tax. Election forms will be provided at the time distributions are requested. If
the necessary election forms are not submitted to Hartford, Hartford will
automatically withhold 10% of the taxable distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR).
The portion of a periodic distribution that 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.
GENERAL PROVISIONS AFFECTING
QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If the
Contract is being purchased with respect to some form of qualified retirement
plan, please refer to Appendix I commencing on page for information relative to
the types of plans for which it may be used and the general explanation of the
tax features of such plans.
ANNUITY PURCHASES BY NONRESIDENT
ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to Annuity purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on Annuity distributions at a
30% rate, unless a lower treaty rate applies. In addition, purchasers may be
subject to state Premium Tax, other state and/or municipal taxes, and taxes that
may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S., state, and foreign taxation with respect to an Annuity purchase.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
APPENDIX I
INFORMATION REGARDING TAX-QUALIFIED PLANS
The tax rules applicable to tax-Qualified Contract Owners, including
restrictions on contributions and distributions, taxation of distributions and
tax penalties, vary according to the type of plan as well as the terms and
conditions of the plan itself. Various tax penalties may apply to contributions
in excess of applicable limits, distributions prior to age 59 1/2 (subject to
certain exceptions), distributions which do not conform to applicable
commencement and minimum distribution rules, and certain other transactions with
respect to tax-qualified plans. Therefore, this summary does not attempt to
provide more than general information about the tax rules associated with use of
a Contract by a tax-qualified retirement plan. Contract Owners, plan
participants and beneficiaries are cautioned that the rights and benefits of any
person to benefits may be controlled by the terms and conditions of the
tax-qualified retirement plan itself, regardless of the terms and conditions of
a Contract, but that Hartford is not bound by the terms and conditions of such
plans to the extent such terms conflict with a Contract, unless Hartford
specifically consents to be bound. Additionally, some tax-qualified retirement
plans are subject to distribution and other requirements that are not
incorporated into Hartford's administrative procedures. Contract Owners,
participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions comply with applicable law.
Because of the complexity of these rules, owners, participants and beneficiaries
are encouraged to consult their own tax advisors as to specific tax
consequences.
A. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS -- Provisions of the Code
permit eligible employers to establish tax-qualified pension or profit sharing
plans (described in Section 401(a) and 401(k), if applicable, and exempt from
taxation under Section 501(a) of the Code), and Simplified Employee Pension
Plans (described in Section 408(k)). Such plans are subject to limitations on
the amount that may be contributed, the persons who may be eligible to
participate and the time when distributions must commence. Employers intending
to use these Contracts in connection with tax-qualified pension or
profit-sharing plans should seek competent tax and other legal advice.
B. TAX SHELTERED ANNUITIES UNDER SECTION 403(b) -- Section 403(b) of the
Code permits public school employees and employees of certain types of
charitable, educational and scientific organizations, as specified in Section
501(c)(3) of the Code, to purchase Annuity Contracts, and, subject to certain
limitations, to exclude such contributions from gross income. Generally, such
contributions may not exceed the lesser of $10,000 (indexed) or 20% of an
employee's "includable compensation" for such employee's most recent full year
of employment, subject to other adjustments. Special provisions under the Code
may allow some employees to elect a different overall limitation.
Tax-sheltered Annuity programs under Section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such
distribution is made:
(1) After the participating employee attains age 59 1/2;
(2) Upon separation from service;
(3) Upon death or disability; or
(4) In the case of hardship (and in the case of hardship, any income
attributable to such contributions may not be distributed).
Generally, the above restrictions do not apply to distributions attributable
to cash values or other amounts held under a Section 403(b) Contract as of
December 31, 1988.
C. DEFERRED COMPENSATION PLANS UNDER SECTION 457 -- Employees and
independent Contractors performing services for eligible employers may have
contributions made to an Eligible Deferred Compensation Plan of their employer
in accordance with the employer's plan and Section 457 of the Code. Section 457
places limitations on contributions to Eligible Deferred Compensation Plans
maintained by a State or other tax-exempt organization. For these purposes, the
term "State" means a State, a political sub-division of a State, and an agency
or instrumentality of a
State or political sub-division of a State. Generally, the limitation is 33 1/3%
of includable compensation (typically 25% of gross compensation) or, for 1998,
$8,000 (indexed), whichever is less. Such a plan may also provide for additional
"catch-up" deferrals during the three taxable years ending before a Participant
attains normal retirement age.
An employee electing to participate in an Eligible Deferred Compensation
Plan should understand that his or her rights and benefits are governed strictly
by the terms of the plan and that the employer is the legal owner of any
Contract issued with respect to the plan. The employer, as owner of the
Contract(s), retains all voting and redemption rights that may accrue to the
Contract(s) issued with respect to the plan. The participating employee should
look to the terms of his or her plan for any charges in regard to participating
therein other than those disclosed in this Prospectus. Participants should also
be aware that effective August 20,
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
1996, the Small Business Job Protection Act of 1996 requires that all assets and
income of an Eligible Deferred Compensation Plan established by a governmental
employer which is a State, a political subdivision of a State, or any agency or
instrumentality of a State or political subdivision of a State, must be held in
trust (or under certain specified Annuity Contracts or custodial Accounts) for
the exclusive benefit of participants and their beneficiaries. Special
transition rules apply to such Eligible governmental Deferred Compensation Plans
already in existence on August 20, 1996, and provide that such plans need not
establish a trust before January 1, 1999. However, this requirement of a trust
does not apply to amounts under an Eligible Deferred Compensation Plan of a
tax-exempt (non-governmental) organization, and such amounts will be subject to
the claims of such tax-exempt employer's general creditors.
In general, distributions from an Eligible Deferred Compensation Plan are
prohibited under Section 457 of the Code unless made after the participating
employee attains age 70?, separates from service, dies, or suffers an
unforeseeable financial emergency. Present federal tax law does not allow
tax-free transfers or rollovers for amounts accumulated in a Section 457 plan
except for transfers to other Section 457 plans in limited cases.
D. INDIVIDUAL RETIREMENT ANNUITIES UNDER SECTION 408 -- Section 408 of the
Code permits eligible individuals to establish individual retirement programs
through the purchase of Individual Retirement Annuities ("IRAs"). IRAs are
subject to limitations on the amount that may be contributed, the contributions
that may be deducted from taxable income, the persons who may be eligible and
the time when distributions may commence. Also, distributions from certain
qualified plans may be "rolled-over" on a tax-deferred basis into an IRA.
The Contracts may be offered as SIMPLE IRAs in connection with a SIMPLE IRA
plan of an employer. Special rollover rules apply to SIMPLE IRAs. Amounts can be
rolled over from one SIMPLE IRA to another SIMPLE IRA. However, amounts can be
rolled over from a SIMPLE IRA to a regular IRA only after two years have expired
since the participant first commenced participation in your employer's SIMPLE
IRA plan. Amounts cannot be rolled over to a SIMPLE IRA from a qualified plan or
a regular IRA. Hartford is a non-designated financial institution.
Beginning in 1998, the Contracts may be offered as ROTH IRAs under Section
408A of the Code. Contributions to a ROTH IRA are not deductible. Subject to
special limitations, a regular IRA may be converted into a ROTH IRA or a
distribution from a regular IRA may be rolled over to a ROTH IRA. However, a
conversion or a rollover from a regular IRA to a ROTH IRA is not excludable from
gross income. If certain conditions are met, qualified distributions from a ROTH
IRA are tax-free.
E. FEDERAL TAX PENALTIES AND WITHHOLDING -- Distributions from retirement
plans are generally taxed under Section 72 of the Code. Under these rules, a
portion of each distribution may be excludable from income. The excludable
amount is the portion of the distribution that bears the same ratio as the
after-tax contributions bear to the expected return.
1. PREMATURE DISTRIBUTION
Distributions from a tax-qualified plan before the Participant attains age
59 1/2 are generally subject to an additional penalty tax equal to 10% of the
taxable portion of the distribution. The 10% penalty does not apply to
distributions made after the employee's death, on Account of disability, for
eligible medical expenses and distributions in the form of a life Annuity and,
except in the case of an IRA, certain distributions after separation from
service after age 55. For these purposes, a life Annuity means a scheduled
series of substantially equal periodic payments for the life or life expectancy
of the Participant (or the joint lives or life expectancies of the Participant
and Beneficiary).
In addition, effective for distributions made from an IRA after December 31,
1997, there is no such penalty tax on distributions that do not exceed the
amount of certain qualifying higher education expenses, as defined by Section
72(t)(7) of the Code, or which are qualified first-time home buyer distributions
meeting the requirements of Section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware that the
10% penalty tax discussed above is increased to 25% with respect to non-exempt
premature distributions made from your SIMPLE IRA during the first two years
following the date you first commenced participation in any SIMPLE IRA plan of
your employer.
2. MINIMUM DISTRIBUTION TAX
If the amount distributed is less than the minimum required distribution for
the year, the Participant is subject to a 50% tax on the amount that was not
properly distributed.
An individual's interest in a tax-qualified retirement plan generally must
be distributed, or begin to be distributed, not later than April 1 of the
calendar year following the later of (i) the calendar year in which the
individual attains age 70 1/2 or (ii) the calendar year in which the individual
retires from service with the employer sponsoring the plan ("required beginning
date"). However, the required beginning date for an individual who is a five (5)
percent owner (as defined in the Code), or who is the owner of an IRA, is April
1 of the calendar year following the calendar year in which the individual
attains age 70 1/2. The entire interest of the Participant must be distributed
beginning no later than the required beginning date over a period that may not
extend beyond a maximum of the life expectancy of
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
the Participant and a designated Beneficiary. Each annual distribution must
equal or exceed a "minimum distribution amount" which is determined by dividing
the Account balance by the applicable life expectancy. This Account balance is
generally based upon the Account value as of the close of business on the last
day of the previous calendar year. In addition, minimum distribution incidental
benefit rules may require a larger annual distribution.
If an individual dies before reaching his or her required beginning date,
the individual's entire interest must generally be distributed within five years
of the individual's death. However, this rule will be deemed satisfied, if
distributions begin before the close of the calendar year following the
individual's death to a designated Beneficiary (or over a period not extending
beyond the life expectancy of the Beneficiary). If the Beneficiary is the
individual's surviving spouse, distributions may be delayed until the individual
would have attained age 70 1/2.
If an individual dies after reaching his or her required beginning date or
after distributions have commenced, the individual's interest must generally be
distributed at least as rapidly as under the method of distribution in effect at
the time of the individual's death.
3. WITHHOLDING
In general, distributions from IRAs and plans described in Section 457 of
the Code are subject to regular wage withholding rules. Periodic distributions
from other tax-qualified retirement plans that are made for a specified period
of 10 or more years or for the life or life expectancy of the participant (or
the joint lives or life expectancies of the participant and Beneficiary) are
generally subject to federal income tax withholding as if the recipient were
married claiming three exemptions. The recipient of periodic distributions may
generally elect not to have withholding apply or to have income taxes withheld
at a different rate by providing a completed election form.
Other distributions from such other tax-qualified retirement plans are
generally subject to mandatory income tax withholding at the flat rate of 20%
unless such distributions are:
a) The non-taxable portion of the distribution;
b) Required minimum distributions; or
c) Direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Code section 401(a)(31).
<PAGE>
32 HARTFORD LIFE INSURANCE COMPANY
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TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION PAGE
------------------------------------------------------------------------ ----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY..........................
SAFEKEEPING OF ASSETS...................................................
INDEPENDENT PUBLIC ACCOUNTANTS..........................................
DISTRIBUTION OF CONTRACTS...............................................
CALCULATION OF YIELD AND RETURN.........................................
PERFORMANCE COMPARISONS.................................................
FINANCIAL STATEMENTS....................................................
</TABLE>
<PAGE>
This form must be completed for all tax sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The Hartford Variable Annuity Contract that you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1988 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. Attained age 59 1/2,
b. Separated from service,
c. Died, or
d. Become disabled.
Distributions of post December 31, 1988 contributions (excluding any income
thereon) may also be made if you have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made prior to age 59 1/2
because of financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford Variable Annuity. Please refer to your
Plan.
Please complete the following and return to:
Hartford Life Insurance Company
Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Name of Contract Owner/Participant
- -------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City or Plan/School District
- --------------------------------------------------------------------------------
Date:
- --------------------------------------------------------------------------------
Contract No:
- --------------------------------------------------------------------------------
Signature:
- --------------------------------------------------------------------------------
<PAGE>
To obtain a Statement of Additional Information, please complete the form
below and mail to:
Hartford Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information to me at the following
address:
- ----------------------------------------------------
Name
- ------------------------------------------------------------
Address
- ------------------------------------------------------------
City/State Zip
Code
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO
THE DIRECTOR VARIABLE ANNUITY
This Statement of Additional Information is not a prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to Hartford Life Insurance
Company Attn: Individual Annuity Services, P.O. Box 5085, Hartford, CT
06102-5085.
Date of Prospectus: May 1, 1999
Date of Statement of Additional Information: May 1, 1999
33-73570
<PAGE>
2
TABLE OF CONTENTS
SECTION PAGE
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
SAFEKEEPING OF ASSETS
INDEPENDENT PUBLIC ACCOUNTANTS
DISTRIBUTION OF CONTRACTS
CALCULATION OF YIELD AND RETURN
PERFORMANCE COMPARISONS
FINANCIAL STATEMENTS
<PAGE>
3
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 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
EFFECTIVE
RATING AGENCY DATE OF RATING RATING BASIS 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
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. The assets are
kept physically segregated and are held separate and apart from Hartford's
general corporate assets. Records are maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited 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.
DISTRIBUTION OF CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as principal
underwriter for the securities issued with respect to the Separate Account and
will offer the Contracts on a continuous basis.
HSD is an affiliate of Hartford. Hartford's parent company indirectly owns
100% of HSD. The principal business address of HSD is the same as Hartford.
<PAGE>
4
The securities will be sold by salespersons of HSD, who represent Hartford as
insurance and Variable Annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a Broker-Dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD").
CALCULATION OF YIELD AND RETURN
YIELD OF THE MONEY MARKET FUND SUB-ACCOUNT. As summarized in the Prospectus
under the heading "Performance Related Information," the yield of the Money
Market Fund Sub-Account for a seven day period (the "base period") will be
computed by determining the "net change in value" (calculated as set forth
below) of a hypothetical account having a balance of one accumulation unit of
the Sub-Account at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from Contract Owner accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then multiplying the base period return by
365/7 with the resulting yield figure carried to the nearest hundredth of one
percent. Net changes in value of a hypothetical account will include net
investment income of the account (accrued daily dividends as declared by the
underlying funds, less daily expense charges of the account) for the period, but
will not include realized gains or losses or unrealized appreciation or
depreciation on the underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from the
result, according to the following formula:
Effective Yield = [(Base Period Return + 1) (365/7)] - 1
THE MONEY MARKET FUND SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY IN
RESPONSE TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE
SUB-ACCOUNT. THE CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON
THE SEPARATE ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.
The yield and effective yield for the seven day period ending December 31, 1997
for the Money Market Fund Sub-Account was as follows ($30 Annual Maintenance
Fee):
SUB-ACCOUNTS YIELD EFFECTIVE YIELD
Money Market Fund* 4.11% 4.20%
* Yield and effective yield for the seven day period ending December 31, 1997.
<PAGE>
5
YIELDS OF BOND FUND, HIGH YIELD FUND, AND MORTGAGE SECURITIES FUND
SUB-ACCOUNTS. As summarized in the Prospectus under the heading "Performance
Related Information," yields of the above 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. Net changes in the
value of a hypothetical account will assume the change in the underlying
mutual fund's "net asset value per share" for the same period in addition to
the daily expense charge assessed, at the sub-account level for the
respective period. The 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 underlying Fund.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.
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 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:
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1)(6) - 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.
SUB-ACCOUNTS YIELD
- ------------ -----
Bond Fund** 5.02%
Mortgage Securities Fund** 5.34%
** Yield quotation based on a 30 day period ended December 31, 1997.
<PAGE>
6
The yield for the Hartford High Yield Fund is not yet available because the
Fund is new.
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.
The method of calculating yields described above for these Sub-Accounts differs
from the method used by the Sub-Accounts prior to May 1, 1988. The denominator
of the fraction used to calculate yield was previously the average unit value
for the period calculated. That denominator will hereafter be the unit value of
the Sub-Accounts on the last trading day of the period calculated.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information," total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula
for total return used herein includes three steps: (1) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period; (2) assuming redemption at
the end of the period and deducting any applicable contingent deferred sales
charge and (3) dividing this 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 fiscal year ended December 31, 1997. No information
is included for the Global Leaders Fund Sub-Account, Growth and Income Fund
Sub-Account, High Yield Fund Sub-Account, because as of December 31, 1997,
the Sub-Accounts had not commenced operations.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
10 YEAR OR SINCE
SUB-ACCOUNTS INCEPTION DATE 1 YEAR 5 YEAR INCEPTION*
- ------------ -------------- ------ ------ ----------------
<S> <C> <C> <C> <C>
Advisers Fund 3/31/83 13.96% 10.61% 10.55%
</TABLE>
<PAGE>
7
<TABLE>
<S> <C> <C> <C> <C>
Bond Fund 8/31/77 .97% 2.74% 5.04%
Capital Appreciation Fund 4/2/84 11.83% 14.60% 16.43%
Dividend & Growth Fund 3/8/94 21.25% n/a 18.65%
Index Fund 5/1/87 21.96% 14.91% 13.80%
International Advisers Fund 3/1/95 -4.80% na 5.82%
International Opportunities Fund 7/2/90 -9.85% 6.72% 2.11%
MidCap Fund 7/30/97 na na .68%
Mortgage Securities Fund 1/1/85 -1.34% 1.85% 4.69%
Small Company Fund 8/9/96 7.91% na 8.74%
Stock Fund 8/31/77 20.75% 15.19% 13.71%
Money Market Fund 6/30/80 -4.98% -.45% 1.71%
</TABLE>
*Figures represent performance since inception for Sub-Accounts in existence for
less than 10 years, or performance for 10 years for Sub-Accounts in existence
for more than 10 years.
In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the contingent deferred sales charge and the Annual Maintenance Fee
are not deducted. Therefore, non-standardized total return for a Sub-Account is
higher than standardized total return for a Sub-Account.
The following are the non-standardized annualized total return quotations for
the Sub-Accounts for the fiscal year ended December 31, 1997. No information
is included for the Global Leaders Fund Sub-Account, Growth and Income Fund
Sub-Account, High Yield Fund Sub-Account, because as of December 31, 1997,
the Sub-Accounts had not commenced operations.
<PAGE>
8
NON-STANDARDIZED ANNUALIZED TOTAL RETURN FOR YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
10 YEAR OR SINCE
SUB-ACCOUNTS INCEPTION DATE 1 YEAR 5 YEAR INCEPTION*
- ------------ -------------- ------ ------ ----------------
<S> <C> <C> <C> <C>
Advisers Fund 3/31/83 22.96% 13.83% 12.66%
Bond Fund 8/31/77 9.97% 6.32% 7.45%
Capital Appreciation Fund 4/2/84 20.83% 17.48% 18.13%
Dividend & Growth Fund 3/8/94 30.25% na 22.09%
Index Fund 5/1/87 30.96% 18.00% 15.76%
International Advisers Fund 3/1/95 4.20% n/a 10.26%
International Opportunities Fund 7/2/90 -.91% 9.73% 5.26%
MidCap Fund 7/30/97 na na 9.68%
Mortgage Securities Fund 1/1/85 7.66% 5.51% 7.09%
Small Company Fund 8/9/96 16.91% na 16.84%
Stock Fund 8/31/77 29.75% 18.22% 15.67%
Money Market Fund 6/30/80 4.02% 3.33% 4.42%
</TABLE>
*Figures represent performance since inception for Sub-Accounts in existence for
less than 10 years, or performance for 10 years for Sub-Accounts in existence
for more than 10 years.
<PAGE>
9
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.
<PAGE>
10
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
The Composite Index for Hartford Advisers Fund is comprised of the S&P 500
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned above,
and 90 Day U.S. Treasury Bills (10%).
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) Resolution of the Board of Directors of Hartford Life Insurance
Company ("Hartford") authorizing the establishment of the
Separate Account.(1)
(2) Not applicable.
(3) (a) Principal Underwriter Agreement.(2)
(3) (b) Form of Dealer Agreement.(2)
(4) Form of Individual Flexible Premium Variable Annuity Contract.(1)
(5) Form of Application.(1)
(6) (a) Articles of Incorporation of Hartford.(3)
(6) (b) Bylaws of Hartford.(1)
(7) Not applicable.
(8) Not applicable.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel, and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants
to be filed by amendment.
(11) No financial statements are omitted.
- ----------------------
(1) Incorporated by reference to Post-Effective Amendment No. 2, to the
Registration Statement File No. 33-73570, dated May 1, 1995.
(2) Incorporated by reference to Post Effective Amendment No. 3, to the
Registration Statement File No. 33-73570, dated April 29, 1996.
(3) Incorporated by reference to Post Effective Amendment No. 19, to the
Registration Statement File No. 33-73570, filed on April 14, 1997.
<PAGE>
(12) Not applicable.
(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 and 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
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
- --------------------------------------------------------------------------------
Michael D. Keeler Vice President
- --------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- --------------------------------------------------------------------------------
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 Senior Vice President
- --------------------------------------------------------------------------------
Joseph J. Noto Vice President
- --------------------------------------------------------------------------------
C.Michael. 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*
- --------------------------------------------------------------------------------
<PAGE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes Board of Directors.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 16.
Item 27. Number of Contract Owners
As of ______________, 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.
<PAGE>
Additionally, the directors and officers of Hartford and Hartford
Securities Distribution Company, Inc. ("HSD") are covered under a
directors and officers liability insurance policy issued to The
Hartford Financial Services Group, Inc. and its subsidiaries. Such
policy will reimburse the Registrant for any payments that it shall
make to directors and officers pursuant to law and will, subject to
certain exclusions contained in the policy, further pay any other
costs, charges and expenses and settlements and judgments arising from
any proceeding involving any director or officer of the Registrant in
his past or present capacity as such, and for which he may be liable,
except as to any liabilities arising from acts that are deemed to be
uninsurable.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being 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 Company - 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
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.
<PAGE>
(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 caused this Registration Statement to be signed on its
behalf, in the Town of Simsbury, and State of Connecticut on this 5th day of
February, 1999.
HARTFORD LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT TWO
(Registrant)
*By: Thomas M. Marra *By: /s/ Marianne O'Doherty
--------------------------- ----------------------
Thomas M. Marra, Executive Marianne O'Doherty
Vice President 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*
Lynda Godkin, Senior Vice President,
General Counsel & Corporate Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ Marianne O'Doherty
President, Director* ------------------------
Lowndes A. Smith, President & Marianne O'Doherty
Chief Operating Officer, Director* Attorney-In-Fact
Raymond P. Welnicki, Senior Vice
President, Director* Dated: February 5, 1999
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
February 5, 1999 LYNDA GODKIN
Senior Vice President, General
Counsel & Corporate Secretary
Board of Directors
Hartford Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
FILE NO. 33-73570
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life Insurance Company (the
"Company"), a Connecticut insurance company, and Hartford Life Insurance Company
Separate Account Two (the "Account") in Connecticut with the registration of an
indefinite amount of securities in the form of variable annuity contracts (the
"Contracts") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended. I have examined such documents (including the Form N-4
registration statement) and reviewed such questions of law as I considered
necessary and appropriate, and on the basis of such examination and review, it
is my opinion that:
1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is duly
authorized by the Insurance Department of the State of Connecticut to issue
the Contacts.
2. The Account is a duly authorized and existing separate account established
pursuant to the provisions of Section 38a-433 of the Connecticut Statutes.
3. To the extent so provided under the Contracts, that portion of the assets of
the Account equal to the reserves and other contract liabilities with respect
to the Account will not be chargeable with liabilities arising out of any
other business that the Company may conduct.
4. The Contracts, when issued as contemplated by the Form N-4 Registration
Statement, will constitute legal, validity issued and binding obligations
of the Company.
<PAGE>
Board of Directors
February 5, 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>
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>
<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>
