<PAGE>
As filed with the Securities and Exchange Commission on July 17, 2000.
File No. 333-36136
811-04732
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 [X]
-----
Post-Effective Amendment No. [ ]
-----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 162 [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) 843-5445
(Depositor's Telephone Number, Including Area Code)
Christopher M. Grinnell, Esq.
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 ____________, 2000 pursuant to paragraph (b) of Rule 485
----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
----
on ____________, 2000 pursuant to paragraph (a)(1) of Rule 485
----
this post-effective amendment designates a new effective date for a
---- previously filed post-effective amendment.
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
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
-------------------------------------------------------------------------------------
<S> <C>
1. Cover Page Hartford Life Insurance Company -
Separate Account Two
2. Definitions Definitions
3. Synopsis or Highlights Highlights
4. Condensed Financial Performance Related Information
Information
5. General Description of Hartford Life Insurance Company, The Funds
Registrant The Separate Account
6. Deductions Charges and Fees
7. General Description of The Contract, The Separate Account,
Annuity Contracts and Surrenders
8. Annuity Period Surrenders, Annuity Payouts
9. Death Benefit Death Benefit
10. Purchases and Contract Value The Contract
11. Redemptions Surrenders
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Matters and 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 Summary
<PAGE>
18. Services None
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments Settlement Provisions
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>
<TABLE>
<S> <C>
DIRECTOR VISION
SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
P. O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668 (CONTRACT OWNERS)
1-800-862-7155 (REGISTERED REPRESENTATIVES) [LOGO]
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This prospectus describes information you should know before you purchase the
Director Vision variable annuity. Please read it carefully.
Director Vision 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 that are part of your Registered Representative's Wrap Fee Program. 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 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:
- HARTFORD ADVISERS HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford Advisers HLS Fund, Inc.
- HARTFORD BOND HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford Bond HLS Fund, Inc.
- HARTFORD CAPITAL APPRECIATION HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Capital Appreciation HLS Fund, Inc.
- HARTFORD DIVIDEND AND GROWTH HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Dividend and Growth HLS Fund, Inc.
- HARTFORD GLOBAL HEALTH HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Global Health HLS Fund of Hartford Series Fund, Inc.
- HARTFORD GLOBAL LEADERS HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Global Leaders HLS Fund of Hartford Series Fund, Inc.
- HARTFORD GLOBAL TECHNOLOGY HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Global Technology HLS Fund of Hartford
Series Fund, Inc.
- HARTFORD GROWTH AND INCOME HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Growth and Income HLS Fund of Hartford
Series Fund, Inc.
- HARTFORD HIGH YIELD HLS FUND SUB-ACCOUNT WHICH purchases shares of Class IA of
Hartford High Yield HLS Fund of Hartford Series Fund, Inc.
- HARTFORD INDEX HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford Index HLS Fund, Inc.
- HARTFORD INTERNATIONAL ADVISERS HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford International Advisers HLS Fund, Inc.
- HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND SUB-ACCOUNT which purchases
shares of Class IA of Hartford International Opportunities HLS Fund, Inc.
- HARTFORD MIDCAP HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford MidCap HLS Fund, Inc.
- HARTFORD MONEY MARKET HLS FUND SUB-ACCOUNT which purchases shares of Class IA
of Hartford Money Market HLS Fund, Inc.
- HARTFORD MORTGAGE SECURITIES HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Mortgage Securities HLS Fund, Inc.
<PAGE>
- HARTFORD SMALL COMPANY HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Small Company HLS Fund, Inc.
- HARTFORD STOCK HLS FUND SUB-ACCOUNT which purchases of Class IA of Hartford
Stock HLS Fund, Inc.
If you decide to buy this Annuity, you should keep this prospectus for your
records. You can also call us at 1-800-862-6668 to get a Statement of Additional
Information, free of charge. The Statement of Additional Information contains
more information about this Annuity and, like this prospectus, is filed with the
Securities and Exchange Commission ("SEC"). We have included the Table of
Contents for the Statement of Additional Information at the end of this
prospectus.
Although we file the prospectus and the Statement of Additional information with
the 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.
--------------------------------------------------------------------------------
PROSPECTUS DATED: , 2000
STATEMENT OF ADDITIONAL INFORMATION DATED: , 2000
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
--------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
----------------------------------------------------------------------
DEFINITIONS 4
----------------------------------------------------------------------
FEE TABLE 6
----------------------------------------------------------------------
HIGHLIGHTS 10
----------------------------------------------------------------------
GENERAL CONTRACT INFORMATION 11
----------------------------------------------------------------------
Hartford Life Insurance Company 11
----------------------------------------------------------------------
The Separate Account 11
----------------------------------------------------------------------
The Funds 11
----------------------------------------------------------------------
PERFORMANCE RELATED INFORMATION 13
----------------------------------------------------------------------
THE CONTRACT 14
----------------------------------------------------------------------
Purchases and Contract Value 14
----------------------------------------------------------------------
Charges and Fees 15
----------------------------------------------------------------------
Death Benefit 16
----------------------------------------------------------------------
Surrenders 18
----------------------------------------------------------------------
ANNUITY PAYOUTS 20
----------------------------------------------------------------------
OTHER PROGRAMS AVAILABLE 22
----------------------------------------------------------------------
OTHER INFORMATION 22
----------------------------------------------------------------------
Legal Matters and Experts 23
----------------------------------------------------------------------
More Information 23
----------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS 23
----------------------------------------------------------------------
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 27
----------------------------------------------------------------------
APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT
PLANS 28
----------------------------------------------------------------------
APPENDIX II -- OPTIONAL DEATH BENEFIT -- EXAMPLES 31
----------------------------------------------------------------------
</TABLE>
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
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.
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 the
Annuity Commencement Date.
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, Connecticut
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.
ANNUITANT: The person on whose life the Contract is based. The Annuitant may not
be changed after your Contract is issued.
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: 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.
This amount is calculated using the Assumed Investment Return for variable
dollar amount Annuity Payouts or the underlying rate of return for fixed dollar
amounts 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.
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 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.
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.
GENERAL ACCOUNT: This account holds our company assets and any assets not
allocated to a Separate Account. The assets in this account are available to the
creditors of Hartford.
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-VALUATION DAY: Any day the New York Stock Exchange is not open for trading.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
--------------------------------------------------------------------------------
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.
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
--------------------------------------------------------------------------------
FEE TABLE
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES (1)
---------------------------------------------------------------------
Sales Charge Imposed on Purchases (as a percentage of
Premium Payments) None
---------------------------------------------------------------------
Contingent Deferred Sales Charge (as a percentage of
amounts Surrendered) None
---------------------------------------------------------------------
ANNUAL MAINTENANCE FEE (2) $30
---------------------------------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average
daily Sub-Account Value)
Mortality and Expense Risk Charge 0.40%
---------------------------------------------------------------------
Total Separate Account Annual Expenses 0.40%
---------------------------------------------------------------------
OPTIONAL CHARGES (as a percentage of average daily
Sub-Account Value)
Optional Death Benefit Charge 0.15%
---------------------------------------------------------------------
Total Separate Account Annual Expenses with the Optional
Death Benefit Charge 0.55%
---------------------------------------------------------------------
</TABLE>
(1) When you sign up for the Wrap Fee Program, your Registered Representative
will explain any fee and charges associated with the Program that you may
have to pay. These fees and the expenses are separate from and in addition
to the fees described in this prospectus that Hartford deducts for your
annuity.
(2) An annual $30 charge deducted on a Contract Anniversary or upon Surrender if
the Contract Value at either of those times is less than $50,000. It is
deducted proportionately from the Accounts in which you are invested at the
time of the charge.
The purpose of the Fee Table and Examples is to assist you in understanding
various costs and expenses that you will pay directory or indirectly. The Fee
Table and Examples reflect expenses of the Separate Account and underlying
Funds. We will deduct any Premium Taxes that apply. The Examples assume that any
fee waivers or expense reimbursements for the underlying Funds will continue for
the period shown in the Examples.
The Examples 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 Examples 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" 0.06% annual charge.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
--------------------------------------------------------------------------------
Annual Fund Operating Expenses
As of the Fund's Year End
(As a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
OTHER OPERATING
MANAGEMENT FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund 0.63% 0.02% 0.65%
----------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 0.49% 0.03% 0.52%
----------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS
Fund 0.64% 0.02% 0.66%
----------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth HLS
Fund 0.65% 0.03% 0.68%
----------------------------------------------------------------------------------------------------------------
Hartford Global Health HLS Fund
(1) 0.85% 0.25% 1.10%
----------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 0.74% 0.12% 0.86%
----------------------------------------------------------------------------------------------------------------
Hartford Global Technology HLS
Fund (1) 0.85% 0.25% 1.10%
----------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS
Fund 0.78% 0.04% 0.82%
----------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 0.66% 0.06% 0.72%
----------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 0.40% 0.03% 0.43%
----------------------------------------------------------------------------------------------------------------
Hartford International Advisers
HLS Fund 0.76% 0.09% 0.85%
----------------------------------------------------------------------------------------------------------------
Hartford International
Opportunities HLS Fund 0.69% 0.09% 0.78%
----------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 0.76% 0.03% 0.79%
----------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 0.45% 0.02% 0.47%
----------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities HLS
Fund 0.45% 0.03% 0.48%
----------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 0.75% 0.03% 0.78%
----------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 0.46% 0.02% 0.48%
----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Hartford Global Health HLS Fund and Hartford Global Technology HLS Fund are
new Funds. "Total Fund Operating Expenses" are based on annualized estimates
of such expenses to be incurred during the current fiscal year.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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EXAMPLE
THE FOLLOWING EXAMPLE ASSUMES THE OPTIONAL DEATH BENEFIT IS NOT SELECTED:
<TABLE>
<CAPTION>
If you Surrender your Contract at the If you annuitize your Contract at the If you do not Surrender your
end of the applicable time period you end of the applicable time period you Contract, you would pay the
would pay the following expenses on would pay the following expenses on following expenses on a $1,000
a $1,000 investment, assuming a 5% a $1,000 investment, assuming a 5% investment, assuming a 5% annual
annual return on assets: annual return on assets: return on assets:
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>
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
Advisers HLS
Fund $11 $35 $61 $136 $11 $35 $61 $135 $11 $35 $61 $136
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Bond
HLS Fund 10 31 54 121 9 31 54 120 10 31 54 121
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
Capital
Appreciation
HLS Fund 11 36 62 137 11 35 61 136 11 36 62 137
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
Dividend and
Growth HLS
Fund 12 36 63 139 11 36 62 138 12 36 63 139
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Global
Health HLS
Fund 16 50 N/A N/A 15 49 N/A N/A 16 50 N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Global
Leaders HLS
Fund 14 42 73 160 13 41 72 159 14 42 73 160
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Global
Technology
HLS Fund 16 50 N/A N/A 15 49 N/A N/A 16 50 N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Growth
and Income
HLS Fund 13 41 71 155 13 40 70 154 13 41 71 155
-----------------------------------------------------------------------------------------------------------------------------------
Hartford High
Yield HLS
Fund 12 38 65 144 11 37 65 143 12 38 65 144
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Index
HLS Fund 9 29 49 110 9 28 49 109 9 29 49 110
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
International
Advisers HLS
Fund 13 42 72 159 13 41 72 158 13 42 72 159
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
International
Opportunities
HLS Fund 13 40 68 151 12 39 68 150 13 40 68 151
-----------------------------------------------------------------------------------------------------------------------------------
Hartford MidCap
HLS Fund 13 40 69 152 12 39 68 151 13 40 69 152
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Money
Market HLS
Fund 10 30 52 115 9 29 51 114 10 30 52 115
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
Mortgage
Securities
HLS Fund 10 30 52 116 9 29 52 115 10 30 52 116
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Small
Company HLS
Fund 13 40 68 151 12 39 68 150 13 40 68 151
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Stock
HLS Fund 10 30 52 116 9 29 52 115 10 30 52 116
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
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EXAMPLE
THE FOLLOWING EXAMPLE ASSUMES THE OPTIONAL DEATH BENEFIT IS SELECTED:
<TABLE>
<CAPTION>
If you Surrender your Contract at the If you annuitize your Contract at the If you do not Surrender your
end of the applicable time period you end of the applicable time period you Contract, you would pay the
would pay the following expenses on would pay the following expenses on following expenses on a $1,000
a $1,000 investment, assuming a 5% a $1,000 investment, assuming a 5% investment, assuming a 5% annual
annual return on assets: annual return on assets: return on assets:
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>
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
Advisers HLS
Fund $13 $40 $70 $153 $12 $40 $69 152 $13 $40 $70 153
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Bond
HLS Fund 12 36 63 138 11 35 62 137 12 36 63 138
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
Capital
Appreciation
HLS Fund 13 41 70 154 12 40 69 153 13 41 70 154
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
Dividend and
Growth HLS
Fund 13 41 71 156 13 40 70 156 13 41 71 156
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Global
Health HLS
Fund 18 54 N/A N/A 17 54 N/A N/A 18 54 N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Global
Leaders HLS
Fund 15 47 81 177 14 46 80 176 15 47 81 177
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Global
Technology
HLS Fund 18 54 N/A N/A 17 54 N/A N/A 18 54 N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Growth
and Income
HLS Fund 15 46 79 172 14 45 78 171 15 46 79 172
-----------------------------------------------------------------------------------------------------------------------------------
Hartford High
Yield HLS
Fund 14 42 73 161 13 42 73 160 14 42 73 161
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Index
HLS Fund 11 33 58 128 10 33 57 127 11 33 58 128
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
International
Advisers HLS
Fund 15 46 80 176 14 46 80 175 15 46 80 176
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
International
Opportunities
HLS Fund 14 44 77 168 14 44 76 167 14 44 77 168
-----------------------------------------------------------------------------------------------------------------------------------
Hartford MidCap
HLS Fund 14 45 77 169 14 44 76 168 14 45 77 169
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Money
Market HLS
Fund 11 35 60 132 10 34 59 131 11 35 60 132
-----------------------------------------------------------------------------------------------------------------------------------
Hartford
Mortgage
Securities
HLS Fund 11 35 60 133 11 34 60 133 11 35 60 133
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Small
Company HLS
Fund 14 44 77 168 14 44 76 167 14 44 77 168
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Stock
HLS Fund 11 35 60 133 11 34 60 133 11 35 60 133
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
HIGHLIGHTS
HOW DO I PURCHASE THIS ANNUITY?
This Annuity is only offered through a Wrap Fee Program available at your
brokerage firm.
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 $10,000 and subsequent Premium Payments must be at least $500, unless you
take advantage of our InvestEase Program-Registered Trademark- 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. 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.
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?
In addition to the Annual Maintenance Fee, 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 is subtracted daily and is equal to an
annual charge of 0.40% of your Contract Value invested in the Funds.
The second type of charge is the fee you pay for the Funds. Please see the
Annual Fund Operating Expenses table for more complete information and the
Funds' prospectuses accompanying this prospectus.
If you elect the Optional Death Benefit, we will subtract an additional charge
on a daily basis until we begin making Annuity Payouts which is equal to an
annual charge of .15% of your Contract Value invested in the Funds.
When you sign up for the Wrap Fee Program, your Registered Representative will
explain any fee and charges associated with the Program that you may have to
pay. These fees and the expenses are separate from and in addition to the fees
described in this prospectus that Hartford deducts for your annuity.
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 Period Certain, Life Annuity with Payments for a Period Certain or
Joint and Last Survivor Annuity with Payments for a Period Certain Annuity
Payout Options.
- You may have to pay income 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.
Since this Annuity is part of a Wrap Fee Program, you might have to pay
Surrender charges associated with that Program if you Surrender your annuity. We
don't expect that you will pay any fees or expenses associated with the Wrap Fee
Program by taking partial Surrenders from your annuity. If you do, you may have
to pay income tax on the money you use to pay these fees, and, if you are under
age 59 1/2, you may have to pay an income tax penalty.
WILL HARTFORD PAY A DEATH BENEFIT?
Your Contract has a Death Benefit which is equal to the amount payable under the
standard Death Benefit or the Interest Accumulation Death Benefit ("Optional
Death Benefit"). We pay the Death Benefit if the Contract Owner, joint owner or
Annuitant, die before we begin to make annuity payments. The 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. We
calculate the Death Benefit as of the date we receive a certified death
certificate or other legal document acceptable to us.
The Death Benefit will be the greater of:
- the total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders;
- 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.
If you elect the Optional Death Benefit, the Death Benefit will be the greater
of:
- the total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders;
- the Contract Value of your annuity;
- your Maximum Anniversary Value or
- your Interest Accumulation Value.
The Optional Death Benefit may not be available if the Contract Owner or
Annuitant is age 75 or older. The Optional Death Benefit is not available in
Washington and New York.
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HARTFORD LIFE INSURANCE COMPANY 11
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The Optional Death Benefit calculation will be different if you add the Optional
Death Benefit after you purchase your Annuity.
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: Life Annuity, Life Annuity with a Cash Refund, Life
Annuity with Payments for a Period Certain, Joint and Last Survivor Life
Annuity, Joint and Last Survivor Life Annuity with Payments for Period Certain
and Payments for a Period Certain. We may make other Annuity Payout Options
available at any time.
You must begin to take payouts by the Annuitant's 90th birthday or the end of
the 10th Contract Year, whichever is later unless you elect a later date to
begin receiving payments subject to the laws and regulations then in effect and
our approval. If you do not tell us what Annuity Payout Option you want before
that time, we will make payments under the Life Annuity with Payments for a ten
year Period Certain Annuity Payout Option.
GENERAL CONTRACT INFORMATION
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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. 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. 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
Company, Inc. 1/1/99 A+ Financial performance
--------------------------------------------------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
--------------------------------------------------------------------------------
Duff & Phelps 7/1/99 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
Hartford HLS Funds are sponsored and administered by Hartford Life Insurance
Company. HL Investment Advisors, LLC ("HL Advisors") serves as the investment
adviser to each of the Hartford HLS Funds. Wellington Management Company, LLP
("Wellington Management") and Hartford Investment Management Company ("HIMCO")
serve as sub-investment advisors and provide day to day investment services.
Each Hartford HLS Fund, except for Hartford Global Health HLS Fund, Hartford
Global Leaders HLS Fund, Hartford Global Technology HLS Fund, Hartford Growth
and Income HLS Fund and Hartford High Yield HLS Fund, is a separate Maryland
corporation registered with the Securities and Exchange Commission as an
open-end management investment company. Hartford Global Leaders HLS Fund,
Hartford Growth and Income HLS Fund and 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. Hartford Global Health HLS Fund and Hartford Global
Technology HLS Fund are non-diversified series of Hartford Series Fund, Inc. The
shares of each Fund have been divided into Class IA and Class IB. Only Class IA
shares are available in this Annuity.
We do not guarantee the investment results of any of the underlying Funds. Since
each underlying Fund has different investment objectives, each is subject to
different risks. These risks and the Funds' expenses are more fully described in
the accompanying Funds' prospectus and Statement of Additional Information,
which may be ordered from us. The Funds' prospectus should be read in
conjunction with this prospectus before investing.
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12 HARTFORD LIFE INSURANCE COMPANY
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The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
HARTFORD ADVISERS HLS FUND -- Seeks maximum long-term total rate of return by
investing in common stocks and other equity securities, bonds and other debt
securities, and money market instruments. Sub-advised by Wellington Management.
HARTFORD BOND HLS FUND -- Seeks maximum current income consistent with
preservation of capital by investing primarily in investment grade fixed-income
securities. Up to 20% of the total assets of this Fund may be invested in debt
securities rated in the highest category below investment grade ("Ba" by Moody's
Investor Services, Inc. or "BB" by Standard & Poor's) or, if unrated, are
determined to be of comparable quality by the Fund's investment adviser.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning the
risks associated with investing in such securities, please refer to the section
in the accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund,
Inc." Sub-advised by HIMCO.
HARTFORD CAPITAL APPRECIATION HLS FUND -- Seeks growth of capital by investing
in equity securities selected solely on the basis of potential for capital
appreciation. Sub-advised by Wellington Management.
HARTFORD DIVIDEND AND GROWTH HLS FUND -- Seeks a high level of current income
consistent with growth of capital by investing primarily in dividend paying
equity securities. Sub-advised by Wellington Management.
HARTFORD GLOBAL HEALTH HLS FUND -- Seeks long-term capital appreciation by
investing in equity securities of health care companies worldwide. Sub-advised
by Wellington Management.
HARTFORD GLOBAL LEADERS HLS FUND -- Seeks growth of capital by investing
primarily in equity securities issued by high quality growth companies worldwide
that, in the opinion of Wellington Management, are leaders within their
respective industries as indicated by an established market presence and strong
competitive position on a global, regional or country basis. Sub-advised by
Wellington Management.
HARTFORD GLOBAL TECHNOLOGY HLS FUND -- Seeks long-term capital appreciation by
investing in equity securities technology companies worldwide. Sub-advised by
Wellington Management.
HARTFORD GROWTH AND INCOME HLS FUND -- Seeks growth of capital and current
income by investing primarily in equity securities with earnings growth
potential and steady or rising dividends. Sub-advised by Wellington Management.
HARTFORD HIGH YIELD HLS FUND -- Seeks high current income by investing in
non-investment grade fixed-income securities. Growth of capital is a secondary
objective. 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
High Yield HLS Fund." Sub-advised by HIMCO.
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
by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets. Sub-advised by Wellington
Management.
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND -- Seeks growth of capital by
investing primarily in equity securities issued by non-U.S. companies.
Sub-advised by Wellington Management.
HARTFORD MIDCAP HLS FUND -- Seeks to achieve long-term capital growth through
capital appreciation by investing primarily in equity securities of companies
with market capitalizations within the range represented by the Standard &
Poor's MidCap 400 Index. Sub-advised by Wellington Management.
HARTFORD MONEY MARKET HLS FUND -- Seeks maximum current income consistent with
liquidity and preservation of capital. Sub-advised by HIMCO.
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. Sub-advised by HIMCO.
HARTFORD SMALL COMPANY HLS FUND -- Seeks growth of capital by investing
primarily in equity securities within the range represented by the Russell 2000
Index selected on the basis of potential for capital appreciation. Sub-advised
by Wellington Management.
HARTFORD STOCK HLS FUND -- Seeks long-term growth by investing primarily in
equity securities. Sub-advised by Wellington Management.
MIXED AND SHARED 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 and shared 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 and
shared funding, as disclosed in the Funds' prospectus.
* "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
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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:
- 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 Annuity 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
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 of
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.
ADMINISTRATIVE SERVICES -- Hartford has entered into agreements with the
investment advisers or distributors of many of the Funds. Under the terms of
these agreements, Hartford provides administrative services and the Funds pay a
fee to Hartford that is usually based on an annual percentage of the average
daily net assets of the Funds. These arrangements may be different for each Fund
or each Fund family.
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 since the inception of the Separate Account 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 that predates the inception of the Separate
Account. 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.
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 Hartford Money Market HLS 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.
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
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THE CONTRACT
PURCHASES AND CONTRACT VALUE
WHAT TYPES OF CONTRACTS ARE AVAILABLE?
This Annuity is only offered through a Wrap Fee Program available at your
brokerage firm.
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 which is part of a Wrap Fee Program, 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.
If you are purchasing the Contract for use in an IRA or other qualified
retirement plan, you should consider other features of the Contract besides tax
deferral, since any investment vehicle used within an IRA or other qualified
plan receives tax deferred treatment under the Code.
HOW DO I PURCHASE A CONTRACT?
This Annuity is only offered through a Wrap Fee Program available through your
brokerage firm.
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 $10,000. 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 90 on the date that your
Contract is issued or age 85 if your Contract is issued in New York. 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. If we receive your subsequent Premium Payment before the close of the
New York Stock Exchange, it will be priced on the same Valuation Day. If we
receive your Premium Payment after the close of the New York Stock Exchange, it
will be processed on the next Valuation Day. If we receive your subsequent
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 either return the Premium Payment and explain why the Premium Payment could
not be processed or keep the Premium Payment if you authorize us to keep it
until you provide the necessary information.
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 within ten days after you receive it with a
written request for cancellation that indicates your tax-withholding
instructions. In some states, you may be allowed more time to cancel your
Contract. 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 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
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of an Account, settling 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, including any Optional Death
Benefit 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 under a
power of attorney for multiple Contract Owners. If the value of the Contract
Owner's Accounts add up to 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.
TELEPHONE AND INTERNET TRANSFERS -- In most states, you can make transfers:
- By calling us at (800) 862-6668.
- Electronically, when available, by the Internet through our website at
http://online.hartfordlife.com
Transfer instructions received by telephone on any Valuation Day before the
close of the New York Stock Exchange will be carried out that day. Otherwise,
the instructions will be carried out at the close of the New York Stock Exchange
on the next Valuation Day.
Transfer instructions you send electronically are considered to be received by
Hartford at the time and date stated on the electronic acknowledgement Hartford
returns to you. If the time and date indicated on the acknowledgement is before
the close of the New York Stock Exchange on a Valuation Day, the instructions
will be carried out that day. Otherwise, the instructions will be carried out at
the close of the New York Stock Exchange the next Valuation Day. If you do not
receive an electronic acknowledgement, you should telephone us as soon as
possible.
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.
Telephone or Internet transfer requests may currently only be cancelled by
calling us at (800) 862-6668 before the close of the New York Stock Exchange.
Hartford, our agents or our affiliates are NOT responsible for losses resulting
from telephone or electronic requests that we believe are genuine. We will use
reasonable procedures to confirm that instructions received by telephone or
through our website are genuine, including a requirement that contract owners
provide certain identification information, including a personal identification
number. We record all telephone transfer instructions. We reserve the right to
suspend, modify, or terminate telephone or electronic transfer privileges at any
time.
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, subject to any transfer restrictions in place, until we
receive new instructions in writing from you. You will not be able to make
transfers or other changes to your Contract if you have authorized someone else
to act under a power of attorney.
CHARGES AND FEES
There are 4 charges and fees associated with the Contract and the Optional Death
Benefit charge:
1. MORTALITY AND EXPENSE RISK CHARGE
For assuming risks under the Contract, we will deduct a daily charge at the
annual rate of 0.40% of Contract Value (estimated at 0.30% for mortality and
0.10% for expenses).
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16 HARTFORD LIFE INSURANCE COMPANY
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- MORTALITY RISK -- There 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
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. The risk that we
bear during this period is that actual mortality rates may be lower than
anticipated.
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 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.
2. 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 who 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.
3. 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.
4. CHARGES AGAINST THE FUNDS
The Separate Account purchases shares of the Funds at net asset value. The net
asset value of the Fund shares reflects investment advisory fees and
administrative expenses already deducted from the assets of the Funds. These
charges are described in the Funds' prospectuses accompanying this prospectus.
OPTIONAL DEATH BENEFIT CHARGE: If you elect the Optional Death Benefit, we will
subtract an additional charge on a daily basis which is equal to an annual
charge of .15% of your Contract Value invested in the Funds.
WRAP FEE PROGRAM CHARGES -- There are fees and charges associated with your Wrap
Fee Program which are separate from and in addition to the charges described in
this prospectus that Hartford deducts for your annuity. Your Registered
Representative will be able to describe these fees and charges to you.
WE MAY OFFER, IN OUR DISCRETION, REDUCED FEES AND CHARGES INCLUDING, BUT NOT
LIMITED TO THE MORTALITY AND EXPENSE RISK CHARGE, OPTIONAL DEATH BENEFIT CHARGE
AND THE ANNUAL MAINTENANCE FEE, FOR CERTAIN CONTRACTS (INCLUDING EMPLOYER
SPONSORED SAVINGS PLANS) WHICH MAY RESULT IN DECREASED COSTS AND EXPENSES.
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?
Your Contract has a Death Benefit which is equal to the amounts payable under
the standard Death Benefit or the Optional Death Benefit. We pay the Death
Benefit if the Contract Owner, joint owner or Annuitant, die before we begin to
make annuity payments. The 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. We calculate the Death Benefit as of the
date we receive a certified death certificate or other legal document acceptable
to us.
If you do not elect the Optional Death Benefit, the Death Benefit will be the
greater of:
- the total Premium Payments you have made to us minus any amounts you have
Surrenders;
- The Contract Value of your annuity, or
- Your Maximum Anniversary Value, which is described below.
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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
resulting from this series of calculations.
The Death Benefit will be the greater of:
- the total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders;
- the Contract Value of your annuity;
- your Maximum Anniversary Value or
- your Interest Accumulation Value.
The Interest Accumulation Value is equal to:
- Your Contract Value of your Annuity;
- Plus any Premium Payments made;
- Minus any partial Surrenders;
- Compounded daily at an annual rate of 5%.
If you have taken any partial Surrenders, the Interest Accumulation Value will
be adjusted to reduce the Optional Death Benefit proportionally for any partial
Surrenders.
The Interest Accumulation Value stops compounding on the deceased 81st birthday.
After that date, the Interest Accumulation Value will be adjusted to add any
Premium Payments made after that date, and minus any proportional adjustments
for partial Surrenders.
The Optional Death Benefit is limited to a maximum of 200% of any Premium
Payments made less proportional adjustments for any Surrenders.
If you elect the Optional Death Benefit, we will subtract an additional charge
on a daily basis until we begin to make Annuity Payouts that is equal to an
annual charge of .15% of your Contract Value invested in the Funds.
The Optional Death Benefit may not be available if the Contract Owner of
Annuitant is age 75 or older. The Optional Death Benefit is not available in the
states of Washington and New York.
If you elect to add the Optional Death Benefit after you purchase your Annuity,
the Interest Accumulation Value will be:
- Your Contract Value on the date we add the Optional Death Benefit to your
Annuity;
- Plus any Premium Payments made after the Optional Death Benefit is added;
- Minus any partial Surrenders after the Optional Death Benefit is added;
- Compounded daily at an annual interest rate of 5%.
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 the 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 Proceeds Settlement Option, 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
document acceptable to us, the Beneficiary can: (a) make Sub-Account transfers
and (b) take Surrenders.
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 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. If the Contract continues with the Spouse as Contract Owner, we
will
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adjust the Contract Value to the amount that we would have paid as the Death
Benefit. This spousal continuation is available only once for each Contract.
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 surviving joint The Annuitant is living or Joint Contract Owner
Contract Owner deceased receives the Death
Benefit.
Contract Owner There is no surviving The Annuitant is living or Designated Beneficiary
joint Contract Owner deceased receives the Death
Benefit.
Contract Owner There is no surviving The Annuitant is living or Contract Owner's estate
joint Contract Owner and deceased receives the Death
the Beneficiary Benefit.
predeceases the Contract
Owner
Annuitant The Contract Owner is There is no named Death Benefit is paid to
living Contingent Annuitant the Contract Owner(s) and
not the designated
Beneficiary.
Annuitant The Contract Owner is The Contingent Annuitant Contingent Annuitant
living is living 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 living Designated Beneficiary becomes the
Contract Owner
Annuitant The Contract Owner is living Contract Owner receives the Death
Benefit.
Annuitant The Annuitant is also the Contract Owner Designated Beneficiary receives 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.
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 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 the minimum 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. The Commuted Value is determined on the
day we receive your written request for Surrender.
PARTIAL SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE: Partial Surrenders are
permitted after the Annuity Commencement Date if you select the Life Annuity
with Payments for a Period Certain Annuity Payout Option, Joint and Last
Survivor Life Annuity with Payments for a Period Certain or the Payment for a
Period Certain Annuity Payout Options. You may
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take partial Surrenders of amounts equal to the Commuted Value of the payments
that we would have made during the "Period Certain" or the number of years you
select under the Annuity Payout Option that we guarantee to make Annuity
Payouts.
To qualify for partial Surrenders under these Annuity Payout Options you must
elect a variable dollar amount Annuity Payout and you must make the Surrender
request during the Period Certain.
Hartford will deduct any applicable Contingent Deferred Sales Charges.
If you elect to take the entire Commuted Value of the Annuity Payouts we would
have made during the Period Certain, Hartford will not make any Annuity Payouts
during the remaining Period Certain. If you elect to take only some of the
Commuted Value of the Annuity Payouts we would have made during the Period
Certain, Hartford will reduce the remaining Annuity Payouts during the remaining
Period Certain. Annuity Payouts that are to be made after the Period Certain is
over will not change.
Please check with your qualified tax adviser because there could be adverse tax
consequences for partial Surrenders 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 complete instructions. However, we may postpone payment of
Surrenders whenever: (a) the New York Stock Exchange is closed, (b) trading on
the New York Stock Exchange is restricted by the SEC, (c) the SEC permits and
orders postponement, or (d) 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 will be processed on that Valuation Day. Otherwise, your request will
be processed on the next Valuation Day.
COMPLETING A POWER OF ATTORNEY FORM FOR ANOTHER PERSON TO ACT ON YOUR BEHALF 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
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 purpose 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 QUALIFIED TAX ADVISER BEFORE MAKING ANY
SURRENDERS. PLEASE SEE THE "FEDERAL TAX CONSIDERATIONS" SECTION FOR MORE
INFORMATION.
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20 HARTFORD LIFE INSURANCE COMPANY
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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 the payee to receive Annuity Payouts?
4. What level of Assumed Investment Return do you prefer?
5. Do you want fixed-dollar amount or variable-dollar amount Annuity
Payouts or a combination or both?
Please check with your financial adviser 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 Annuitant's 90th
birthday or the end of the 10th Contract Year, whichever is later unless you
elect a later date to begin receiving payments subject to the laws and
regulations then in effect and our approval. If your Contract is issued in New
York, you cannot defer beyond 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. Once we begin to
make Annuity Payouts, the Annuity Payout Option cannot be changed.
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.
LIFE ANNUITY WITH A CASH REFUND -- We will make Annuity Payouts as long as the
Annuitant is living. When the Annuitant dies, if the Annuity Payouts already
made are less than the Contract Value minus any Premium Tax, the remaining value
will be paid to the Beneficiary. The remaining value is equal to the Contract
Value minus any Premium Tax minus the Annuity Payouts already made. This option
is only available for Annuity Payouts using the 5% Assumed Investment Return.
LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN -- We will make Annuity Payouts
as long as the Annuitant is living, but we at least guarantee to make Annuity
Payouts for a time period you select, between 5 years and 100 years minus the
Annuitant's age. If the Annuitant dies before the guaranteed number of years
have passed, then the Beneficiary may elect to (a) continue Annuity Payouts for
the remainder of the guaranteed number of years or (b) receive the Commuted
Value in one sum.
For Qualified Contracts, the guaranteed number of years must be less than the
life expectancy of the Annuitant at the time the Annuity Payouts begin. We
compute life expectancy using the IRS mortality tables.
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 Payout 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-dollar amount Annuity Payouts, these percentages represent Annuity
Units. For fixed-dollar amount Annuity Payouts, the percentages represent actual
dollar amounts. The percentage will also 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.
JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN -- We
will make Annuity Payouts as long as either the Annuitant or Joint Annuitant are
living, but we at least guarantee to make Annuity Payouts for a time period you
select, between 5 years and 100 years minus the Annuitant's age. If the
Annuitant and the Joint Annuitant both die before the guaranteed number of years
have passed, then the Beneficiary has two options, (a) continue Annuity Payouts
for the remainder of the guaranteed number of years or (b) receive the Commuted
Value in one sum.
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HARTFORD LIFE INSURANCE COMPANY 21
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When choosing this option, you must decide what will happen to the Annuity
Payouts 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-dollar amount Annuity Payouts, these percentages represent Annuity
Units. For fixed-dollar amount Annuity Payouts, these percentages represent
actual dollar amounts. The percentage will also 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.
PAYMENTS FOR A PERIOD CERTAIN -- We will make Annuity Payouts for the number of
years that you select. You can select between 5 years and 30 years.
IMPORTANT INFORMATION:
- 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 Payments for a Period Certain Annuity Payout Option using a ten
year period certain.
- 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 Life Annuity Annuity Payout Option.
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 LEVEL OF ASSUMED INVESTMENT RETURN DO YOU PREFER?
The Assumed Investment Return ("AIR") is the investment return you select before
we start to make Annuity Payouts. It is a critical assumption for calculating
variable dollar amount Annuity Payouts. The first Annuity Payout will be based
upon the AIR. The remaining Annuity Payouts will fluctuate based on the
performance of the underlying Funds.
Subject to the approval of your State, you can select one of three AIRs: 3%, 5%
or 6%. The greater the AIR, the greater the initial Annuity Payout. A higher AIR
may result in smaller potential growth in the Annuity Payouts. On the other
hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity
Payouts have the potential to be greater.
For example, if the second monthly Annuity Payout is the same as the first, the
sub-accounts earned exactly the same return as the AIR. If the second monthly
Annuity Payout is more than the first, the sub-accounts earned more than the
AIR. If the second Annuity Payout is less than the first, the sub-account earned
less than the AIR.
Level variable dollar amount Annuity Payouts would be produced if the investment
returns remained constant and equal to the AIR. In fact, Annuity Payouts will
vary up or down as the investment rate varies up or down from the AIR.
5. DO YOU WANT FIXED-DOLLAR AMOUNT OR VARIABLE-DOLLAR AMOUNT ANNUITY PAYOUTS OR
A COMBINATION OF BOTH?
You may choose an Annuity Payout Option with fixed-dollar amounts,
variable-dollar amounts or a combination 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 is 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 Assumed Investment Return
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The total amount of the first variable-dollar amount Annuity Payout 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 the total of:
Annuity Units for each Sub-Account multiplied by Annuity Unit Value for each
Sub-Account.
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.
COMBINATION ANNUITY PAYOUTS -- You may choose to receive a combination of
fixed-dollar amount and variable-dollar amount annuity payouts as long as they
total 100% of your Annuity Payout. For example, you may choose to receive 40%
fixed-dollar amount and 60% variable-dollar amount to meet your income needs.
TRANSFER OF ANNUITY UNITS: After the Annuity Calculation Date, you may transfer
dollar amounts of Annuity Units 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. Otherwise, the transfer will be made
on the next Valuation Day.
OTHER PROGRAMS AVAILABLE
--------------------------------------------------------------------------------
INVESTEASE -- InvestEase is an electronic transfer program that allows you to
have money automatically transferred 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 a customized allocation for your Sub-Accounts to help you reach your
investment goals. 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 you have chosen. 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
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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 affect 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. Both HSD and Hartford are ultimately controlled by The Hartford Financial
Services Group, Inc. The principal business address of HSD is the same as ours.
The securities will be sold individuals 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 7% of Premium
Payments. From time to time, Hartford may pay
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HARTFORD LIFE INSURANCE COMPANY 23
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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 affect the amounts paid by the policyholders or Contract
Owners to purchase, hold or Surrender variable insurance products.
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: Investment Product Services
P.O. Box 5085
Hartford, Connecticut 06102-5085.
Telephone: (800) 862-6668 (Contract Owners)
(800) 862-7155 (Registered Representatives)
FEDERAL TAX CONSIDERATIONS
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What are some of the federal tax consequences which affect these Contracts?
A. GENERAL
Since federal tax law is complex, the tax consequences of purchasing this
contract will vary depending on your situation. You may need tax or legal advice
to help you determine whether purchasing this contract is right for you.
Our general discussion of the tax treatment of this contract is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this contract cannot be made in the prospectus. We also do not
discuss state, municipal or other tax laws that may apply to this contract. For
detailed information, you should consult with a qualified tax adviser familiar
with your situation.
B. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units (See "Value of Accumulation Units"). As a
result, such investment income and realized capital gains are automatically
applied to increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Contracts.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER THAN
QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
NON-NATURAL PERSONS, CORPORATIONS, ETC.
Code Section 72 contains provisions for contract owners which are not natural
persons. Non-natural persons include corporations, trusts, limited liability
companies, partnerships and other types of legal entities. The tax rules for
contracts owned by non-natural persons are different from the rules for
contracts owned by individuals. For example, the annual net increase in the
value of the contract is currently includible 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:
- certain annuities held by structured settlement companies,
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24 HARTFORD LIFE INSURANCE COMPANY
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- certain annuities held by an employer with respect to a terminated qualified
retirement plan and
- certain immediate annuities.
A non-natural person which is a tax-exempt entity for federal tax purposes will
not be subject to income tax as a result of this provision.
If the contract owner is a non-natural person, the primary annuitant is treated
as the contract owner in applying mandatory distribution rules. These rules
require that certain distributions be made upon the death of the contract owner.
A change in the primary annuitant is also treated as the death of the contract
owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract until an
amount is received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are summarized
briefly below. Also summarized are special rules affecting distributions from
Contracts obtained in a tax-free exchange for other annuity contracts or life
insurance contracts which were purchased prior to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial surrender) is deemed to come first from any
such "income on the contract" and then from "investment in the contract,"
and for these purposes such "income on the contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c. below. As a result,
any such amount received or deemed received (1) shall be includable in
gross income to the extent that such amount does not exceed any such
"income on the contract," and (2) shall not be includable in gross income
to the extent that such amount does exceed any such "income on the
contract." If at the time that any amount is received or deemed received
there is no "income on the contract" (e.g., because the gross value of the
Contract does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed received
will not be includable in gross income, and will simply reduce the
"investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the
Annuity Commencement Date, any additional payments (including surrenders)
will be entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full surrender
after such date, only the excess of the amount received (after any
surrender charge) over the remaining "investment in the contract" shall be
includable in gross income (except to the extent that the aggregation
rule referred to in the next subparagraph c. may apply).
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year (other than
certain contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity Contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new Contract for this
purpose. Hartford believes that for any annuity subject to such aggregation, the
values under the Contracts and the investment in the contracts will be added
together to determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement Date. Withdrawals
will first be treated as withdrawals of income until all of the income from all
such Contracts
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HARTFORD LIFE INSURANCE COMPANY 25
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is withdrawn. As of the date of this prospectus, there are no regulations
interpreting this provision.
d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal
periodic payments (not less frequently than annually) for the life (or
life expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's designated
Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO
AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or
annuity Contract purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be deemed to come
(1) first from the amount of the "investment in the contract" prior to
August 14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract,
(2) then from the portion of the "income on the contract" (carried over to, as
well as accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income. In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange Contracts are generally subject to the rules described in this
subparagraph 3.
f. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii
or iii below:
1. If any Contract Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Contract Owner dies before the Annuity Commencement Date, the
entire interest in the Contract will be distributed within 5 years after
such death; and
3. If the Contract Owner is not an individual, then for purposes of 1. or
2. above, the primary annuitant under the Contract shall be treated as
the Contract Owner, and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The primary annuitant is the
individual, the events in the life of whom are of primary 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. Distributions must begin within a
year of the Contract Owner's 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. This spousal continuation shall apply only
once for this contract.
3. DIVERSIFICATION REQUIREMENTS.
The Code requires that investments supporting your contract be adequately
diversified. Code Section 817 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.
If a contract is not treated as an annuity contract, the contract owner will be
subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations 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,
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26 HARTFORD LIFE INSURANCE COMPANY
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- 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 the
case of government securities, each government agency or instrumentality is
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 still 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.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend 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 separate accounts supporting the contract must be considered to be owned by
the insurance company and not by the contract owner. It is unclear under what
circumstances an investor is considered to have enough control over the assets
in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say 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.
In its explanation of the diversification regulations, the Treasury Department
recognized 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, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a contract owner is considered the owner of the assets
for tax purposes. We reserve the right to modify the contract, as necessary, to
prevent you from being considered the owner of assets in the separate account.
D. FEDERAL INCOME TAX WITHHOLDING
Any portion of a distribution that is (or is deemed to be) current taxable
income to the Contract Owner will be subject to federal income tax withholding
and reporting under the Code. Generally, however, a Contract Owner may elect not
to have income taxes withheld or to have income taxes withheld at a different
rate by filing a completed election form with us. Election forms will be
provided at the time distributions are required.
E. 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 for information relative to the types of plans
for which it may be used and the general explanation of the tax features of such
plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to annuity purchasers that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies. In addition, purchasers may be subject to
state premium tax, other state and/or municipal taxes, and taxes that may be
imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax adviser regarding U.S.,
state, and foreign taxation with respect to an annuity purchase.
G. GENERATION-SKIPPING TRANSFERS
Under certain circumstances, the Internal Revenue Code may impose a "generation
skipping transfer tax" when all or part of an annuity is transferred to, or a
death benefit is paid to, an individual two or more generations younger than the
owner. Federal tax law may require us to deduct the tax from your contract, or
from any applicable payment, and pay it directly to the Internal Revenue
Service.
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HARTFORD LIFE INSURANCE COMPANY 27
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TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION
<S> <C>
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DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
----------------------------------------------------------------------
SAFEKEEPING OF ASSETS
----------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
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DISTRIBUTION OF CONTRACTS
----------------------------------------------------------------------
CALCULATION OF YIELD AND RETURN
----------------------------------------------------------------------
PERFORMANCE COMPARISONS
----------------------------------------------------------------------
FINANCIAL STATEMENTS
----------------------------------------------------------------------
</TABLE>
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28 HARTFORD LIFE INSURANCE COMPANY
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APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about the
federal income tax rules associated with use of a Contract by a tax-qualified
retirement plan. Because of the complexity of the federal tax rules, owners,
participants and beneficiaries are encouraged to consult their own tax advisors
as to specific tax consequences.
The federal tax rules applicable to owners of Contracts under tax-qualified
retirement plans vary according to the type of plan as well as the terms and
conditions of the plan itself. Contract owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person may be
controlled by the terms and conditions of the tax-qualified retirement plan
itself, regardless of the terms and conditions of a Contract. We are not bound
by the terms and conditions of such plans to the extent such terms conflict with
a Contract, unless we specifically consent to be bound.
Some tax-qualified retirement plans are subject to distribution and other
requirements that are not incorporated into our administrative procedures.
Contract owners, participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions comply with applicable
law. Tax penalties may apply to transactions with respect to tax-qualified
retirement plans if applicable federal income tax rules and restrictions are not
carefully observed.
We do not currently offer the Contracts in connection with all of the types of
tax-qualified retirement plans discussed below and may not offer the Contracts
for all types of tax-qualified retirement plans in the future.
1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS -- Eligible employers can
establish certain tax-qualified pension and profit-sharing plans under section
401 of the Code. Rules under section 401(k) of the Code govern certain "cash or
deferred arrangements" under such plans. Rules under section 408(k) govern
"simplified employee pensions". Tax-qualified pension and profit-sharing 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 the Contracts in connection with
tax-qualified pension or profit-sharing plans should seek competent tax and
other legal advice.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(b) -- Public schools and certain
types of charitable, educational and scientific organizations, as specified in
section 501(c)(3) of the Code, can purchase tax-sheltered annuity contracts for
their employees. Tax-deferred contributions can be made to tax-sheltered annuity
contracts under section 403(b) of the Code, subject to certain limitations.
Generally, such contributions may not exceed the lesser of $10,500 (indexed) or
20% of the 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:
- after the participating employee attains age 59 1/2;
- upon separation from service;
- upon death or disability; or
- 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.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457 -- A governmental employer or a
tax-exempt employer other than a governmental unit can establish a Deferred
Compensation Plan under section 457 of the Code. For these purposes, a
"governmental employer" is a State, a political subdivision of a State, or an
agency or an instrumentality of a State or political subdivision of a State.
Employees and independent contractors performing services for a governmental or
tax-exempt employer can elect to have contributions made to a Deferred
Compensation Plan of their employer in accordance with the employer's plan and
section 457 of the Code.
Deferred Compensation Plans that meet the requirements of section 457(b) of the
Code are called "eligible" Deferred Compensation Plans. Section 457(b) limits
the amount of contributions that can be made to an eligible Deferred
Compensation Plan on behalf of a participant. Generally, the limitation on
contributions is 33 1/3% of a participant's includable compensation (typically
25% of gross compensation) or, for 1999, $8,000 (indexed), whichever is less.
The plan may provide for additional "catch-up" contributions during the three
taxable years ending before the year in which the participant attains normal
retirement age.
All of the assets and income of an eligible Deferred Compensation Plan of a
governmental employer must be held in trust for the exclusive benefit of
participants and their beneficiaries. For this purpose, custodial accounts and
certain annuity contracts are treated as trusts. The requirement of a trust does
not apply to amounts under a Deferred Compensation Plan of a tax-exempt
(non-governmental) employer. In addition, the requirement of a trust does not
apply to amounts under a Deferred Compensation Plan of a governmental employer
if the Deferred Compensation Plan is not an eligible plan within the meaning of
section 457(b) of the Code. In the absence of such a trust,
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HARTFORD LIFE INSURANCE COMPANY 29
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amounts under the plan will be subject to the claims of the employer's general
creditors.
In general, distributions from an eligible Deferred Compensation Plan are
prohibited under section 457 of the Code unless made after the participating
employee:
- attains age 70 1/2,
- separates from service,
- dies, or
- suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Deferred Compensation
Plan under section 457 of the Code cannot be transferred or rolled over on a
tax-deferred basis except for certain transfers to other Deferred Compensation
Plans under section 457 in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS") UNDER SECTION 408
TRADITIONAL IRAS -- Eligible individuals can establish individual retirement
programs under section 408 of the Code through the purchase of an IRA. Section
408 imposes limits with respect to IRAs, including limits on the amount that may
be contributed to an IRA, the amount of such contributions that may be deducted
from taxable income, the persons who may be eligible to contribute to an IRA,
and the time when distributions commence from an IRA. Distributions from certain
tax-qualified retirement plans may be "rolled-over" to an IRA on a tax-deferred
basis.
SIMPLE IRAS -- Eligible employees may establish SIMPLE IRAs in connection with a
SIMPLE IRA plan of an employer under section 408(p) of the Code. 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 Traditional IRA only after two years have expired since the employee first
commenced participation in the employer's SIMPLE IRA plan. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a Traditional IRA. Hartford
is a non-designated financial institution for purposes of the SIMPLE IRA rules.
ROTH IRAS -- Eligible individuals may establish Roth IRAs under section 408A of
the Code. Contributions to a Roth IRA are not deductible. Subject to special
limitations, a Traditional IRA may be converted into a Roth IRA or a
distribution from a Traditional IRA may be rolled over to a Roth IRA. However, a
conversion or a rollover from a Traditional 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.
5. FEDERAL TAX PENALTIES AND WITHHOLDING -- Distributions from tax-qualified
retirement plans are generally taxed as ordinary income 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.
(a) PENALTY TAX ON EARLY DISTRIBUTIONS Section 72(t) of the Code imposes an
additional penalty tax equal to 10% of the taxable portion of a distribution
from certain tax-qualified retirement plans. However, the 10% penalty tax
does not apply to a distribution that is:
- Made on or after the date on which the employee reaches age 59 1/2;
- Made to a beneficiary (or to the estate of the employee) on or after the death
of the employee;
- Attributable to the employee becoming disabled (as defined in the Code);
- Part of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the employee or the
joint lives (or joint life expectancies) of the employee and his or her
designated beneficiary;
- Except in the case of an IRA, made to an employee after separation from
service after reaching age 55; or
- Not greater than the amount allowable as a deduction to the employee for
eligible medical expenses during the taxable year.
IN ADDITION, THE 10% PENALTY TAX DOES NOT APPLY TO A DISTRIBUTION FROM AN IRA
THAT IS:
- Made after separation from employment to an unemployed IRA owner for health
insurance premiums, if certain conditions are met;
- Not in excess of the amount of certain qualifying higher education expenses,
as defined by section 72(t)(7) of the Code; or
- A qualified first-time homebuyer distribution meeting the requirements
specified at 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 is increased to 25% with respect to non-exempt early 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.
(b) MINIMUM DISTRIBUTION PENALTY TAX If the amount distributed is less than the
minimum required distribution for the year, the Participant is subject to a
50% penalty 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 the Required Beginning
Date. Generally, the Required Beginning Date is April 1 of the calendar year
following the later of:
- the calendar year in which the individual attains age 70 1/2; or
- the calendar year in which the individual retires from service with the
employer sponsoring the plan.
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
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:
- the life of the Participant or the lives of the Participant and the
Participant's designated beneficiary, or
- over a period not extending beyond the life expectancy of the Participant or
the joint life expectancy of the Participant and the Participant's 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 and distribution is over the life
of such 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.
(c) WITHHOLDING In general, regular wage withholding rules apply to
distributions from IRAs and plans described in section 457 of the Code.
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.
Mandatory federal income tax withholding at a flat rate of 20% will generally
apply to other distributions from such other tax-qualified retirement plans
unless such distributions are:
- the non-taxable portion of the distribution;
- required minimum distributions; or
- direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Code section 401(a)(31).
Certain states require withholding of state taxes when federal income tax is
withheld.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 31
--------------------------------------------------------------------------------
APPENDIX II -- OPTIONAL DEATH BENEFIT -- EXAMPLES
EXAMPLE 1
Assume that you make a Premium Payment of $100,000. On the first Contract
Anniversary assume your Contract Value is $108,000.00. The Interest Accumulation
Value is $105,000 or 5% accumulation on the $100,000 Premium Payment.
<TABLE>
<C> <S>
$100,000 Premium Payment
$5,000 Interest of 5%
--------
$105,000 Interest Accumulation Value
</TABLE>
If you request a partial Surrender of $10,000 the next day, your Interest
Accumulation Value will change. The adjustment for the partial Surrender is
determined by dividing the partial Surrender amount by the Contract Value prior
to the Surrender and multiplying that amount by the Interest Accumulation Value
prior to the Surrender. To determine the new Interest Accumulation Value, that
total is then subtracted from the Interest Accumulation Value prior to the
Surrender.
<TABLE>
<C> <S>
$10,000 partial Surrender divided by
$108,000 Contract Value prior to Surrender equals
.09259 multiplied by
$105,000 Interest Accumulation Value for a total of
$9,722 to be deducted from the Interest Accumulation Value equals
$95,278 the new Interest Accumulation Value
</TABLE>
--------------------------------------------------------------------------------
EXAMPLE 2
Assume that you make a Premium Payment of $100,000. On the first Contract
Anniversary assume your Contract Value is $92,000.00. The Interest Accumulation
Value is $105,000 or 5% accumulation on the $100,000 Premium Payment.
<TABLE>
<C> <S>
$100,000 Premium Payment
$5,000 Interest of 5%
--------
$105,000 Interest Accumulation Value
</TABLE>
--------------------------------------------------------------------------------
If you request a partial Surrender of $10,000 the next day, your Interest
Accumulation Value will change. The adjustment for the partial Surrender is
determined by dividing the partial Surrender amount by the Contract Value prior
to the Surrender and multiplying that amount by the Interest Accumulation Value
prior to the Surrender. To determine the new Interest Accumulation Value, that
total is then subtracted from the Interest Accumulation Value prior to the
Surrender.
<TABLE>
<S> <C>
partial Surrender divided by $ 10,000
Contract Value prior to Surrender equals $ 92,000
----------------------------------------------------------------------
multiplied by .10870
----------------------------------------------------------------------
Interest Accumulation Value for a total of $105,000
----------------------------------------------------------------------
to be deducted from the Interest Accumulation Value equals $ 11,413
the New Interest Accumulation Value $ 93,587
----------------------------------------------------------------------
</TABLE>
<PAGE>
This form must be completed for all tax-sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The 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:
- attained age 59 1/2,
- separated from service,
- died or
- 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 your annuity. Please refer to your Plan.
Please complete the following and return to:
Hartford Life Insurance Company
Investment Product Services
P.O. Box 5085
Hartford, Connecticut 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 for the Director Vision variable
annuity, please complete the form below and mail to:
Hartford Life Insurance Company
Attn: Investment Product 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
DIRECTOR VISION
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: Investment Product Services, P.O. Box 5085, Hartford, Connecticut
06102-5085.
Date of Prospectus: __________, 2000
Date of Statement of Additional Information: __________, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY............................ 3
SAFEKEEPING OF ASSETS .................................................... 3
INDEPENDENT PUBLIC ACCOUNTANTS ........................................... 3
DISTRIBUTION OF CONTRACTS................................................. 3
CALCULATION OF YIELD AND RETURN........................................... 4
PERFORMANCE COMPARISONS................................................... 8
FINANCIAL STATEMENTS ..................................................... 11
</TABLE>
<PAGE>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company is a stock life insurance company engaged in the
business of writing life insurance, both individual and group, in all states of
the United States as well as the District of Columbia. 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. We are
ultimately controlled by The Hartford Financial Services Group, Inc., one of the
largest financial service providers in the United States.
<TABLE>
<CAPTION>
HARTFORD'S RATINGS
--------------------------------------------------------------------------------------------
Rating Agency Effective Rating Basis of Rating
Date of Rating
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc. 1/1/99 A+ Financial performance
--------------------------------------------------------------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
--------------------------------------------------------------------------------------------
Duff & Phelps 7/1/99 AA+ Claims paying ability
--------------------------------------------------------------------------------------------
</TABLE>
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. The assets are
kept physically segregated and are held separate and apart from Hartford's
general corporate assets. Records are maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited 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.
<PAGE>
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 that of Hartford.
The securities will be sold by salespersons of HSD, who represent Hartford as
insurance and Variable Annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the 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").
Hartford currently pays HSD underwriting commissions for its role as principal
underwriter of all variable annuities associated with this Separate Account. For
the past three years, the aggregate dollar amount of underwriting commissions
paid to HSD in its role principal underwriter has been: 1999: $226,178,603;
1998: $107,925,386; and 1997: $134,304,585. HSD has retained none of these
commissions.
CALCULATION OF YIELD AND RETURN
YIELD OF A MARKET SUB-ACCOUNT. As summarized in the Prospectus under the heading
"Performance Related Information," the yield of a money market Sub-Account for a
seven-day period (the "base period") will be computed by determining the "net
change in value" (calculated as set forth below) of a hypothetical account
having a balance of one accumulation unit of the Sub-Account at the beginning of
the period, subtracting a hypothetical charge reflecting deductions from
Contract Owner accounts, and dividing the difference by the value of the account
at the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to the nearest hundredth of one percent. Net changes in value of a
hypothetical account will include net investment income of the account (accrued
daily dividends as declared by the underlying funds, less daily expense charges
of the account) for the period, but will not include realized gains or losses or
unrealized appreciation or depreciation on the underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7 and subtracting 1
from the result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
YIELD AND EFFECTIVE YIELD FOR THE SEVEN-DAY PERIOD ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
SUB-ACCOUNT YIELD EFFECTIVE YIELD
--------------------------------------------------------------------------------
<S> <C> <C>
<PAGE>
Hartford Money Market HLS 4.94% 5.06%
Fund
--------------------------------------------------------------------------------
</TABLE>
THE MONEY MARKET SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY IN RESPONSE
TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE SUB-ACCOUNT. THE
CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON THE SEPARATE
ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.
YIELD OF SUB-ACCOUNTS. As summarized in the Prospectus under the heading
"Performance Related Information," yields of 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 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 Funds.
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 based charges
assessed under the Contract over the base period. Yield quotations based on a
30-day period are computed by dividing the dividends and interests earned during
the period by the maximum offering price per unit on the last day of the period,
according to the following formula:
Example:
6
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period that
were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
YIELD QUOTATION BASED ON A 30-DAY PERIOD ENDED DECEMBER 31, 1999
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
SUB-ACCOUNT YIELD
--------------------------------------------------------------------------------
<S> <C>
Hartford Bond HLS Fund 6.59%
--------------------------------------------------------------------------------
Hartford High Yield HLS Fund 9.22%
--------------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 6.41%
--------------------------------------------------------------------------------
</TABLE>
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information," total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula for
total return used herein includes three steps: (1) calculating the value of the
hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period; (2) assuming redemption at
the end of the period and deducting any applicable contingent deferred sales
charge and (3) dividing this account value for the hypothetical investor by the
initial $1,000 investment and annualizing the result for periods of less than
one year. Standardized total return will be calculated since the inception of
the Separate Account 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. (These returns assume a mortality and risk expense charge of
0.40%.) There is no information for Hartford Global Health HLS Fund and Hartford
Global Technology HLS Fund Sub-Accounts, because as of December 31, 1999 the
Sub-Accounts had not commenced operations.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
SEPARATE
ACCOUNT 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION OF SEPARATE
SUB-ACCOUNT DATE ACCOUNT
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS Fund 5/20/91 10.14% 20.28% N/A 14.40%
-------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 5/20/91 -2.41% 7.25% N/A 6.73%
-------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation 5/20/91 36.91% 24.51% N/A 21.17%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
<PAGE>
Hartford Dividend and Growth 3/9/94 4.89% 21.58% N/A 18.61%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 10/1/98 49.77% N/A N/A 72.28%
-------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income 5/29/98 21.34% N/A N/A 25.80%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 10/1/98 4.29% N/A N/A 6.28%
-------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 5/20/91 20.01% 27.30% N/A 18.65%
-------------------------------------------------------------------------------------------------------------------
Hartford International Advisers 3/1/95 22.67% N/A N/A 13.83%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford International 5/20/91 39.30% 14.90% N/A 11.84%
Advisers HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 7/30/97 51.20% N/A N/A 37.58%
-------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 5/20/91 4.47% 4.86% N/A 4.25%
-------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities 5/20/91 1.11% 7.16% N/A 6.22%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 8/9/96 65.17% N/A N/A 28.07%
-------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 5/20/91 19.30% 27.98% N/A 18.97%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Performance figures above do not reflect any deductions for Optional Death
Benefit charges. Performance would have been lower had the Optional Death
Benefit been available and been chosen.
In addition to the standardized total return, the Sub-Accounts may advertise a
non-standardized total return. This figure will usually be calculated since the
inception of the underlying fund 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
following are the non-standardized annualized total return quotations for the
Sub-Accounts. (These returns assume a mortality and risk expense charge of
0.40%.) There is no information for Hartford Global Health HLS Fund and Hartford
Global Technology HLS Fund Sub-Accounts, because as of December 31, 1999 the
Sub-Accounts had not commenced operations.
<PAGE>
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE
INCEPTION DATE OF THE SEPARATE ACCOUNT FOR YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
FUND
SUB-ACCOUNT INCEPTION 1 YEAR 5 YEAR 10 YEAR SINCE
DATE INCEPTION OF
FUND
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS Fund 3/31/83 10.14% 20.28% 13.53% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 8/31/77 -2.41% 7.25% 6.97% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation 4/2/84 36.91% 24.51% 19.29% N/A
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth 3/8/94 4.89% 21.58% N/A 18.61%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 10/1/98 49.77% N/A N/A 72.28%
-------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income 5/29/98 21.34% N/A N/A 25.80%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 10/1/98 4.29% N/A N/A 6.28%
-------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 5/1/87 20.01% 27.30% 16.97% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford International Advisers 3/1/95 22.67% N/A N/A 13.83%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford International 7/2/90 39.30% 14.90% N/A 9.92%
Opportunities HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 7/30/97 51.20% N/A N/A 37.58%
-------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 6/30/80 4.47% 4.86% 4.68% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities 1/1/85 1.11% 7.16% 6.68% N/A
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 8/9/96 65.17% N/A N/A 28.07%
-------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 8/31/77 19.30% 27.98% 17.41% N/A
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Performance figures above do not reflect any deductions for Optional Death
Benefit charges. Performance would have been lower had the Optional Death
Benefit been available and been chosen.
<PAGE>
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time-to-time include its total
return in advertisements or in information furnished to present or prospective
shareholders. Each Sub-Account may from time-to-time include its yield and total
return in advertisements or information furnished to present or prospective
shareholders. Each Sub-Account may from time-to-time include in advertisements
its total return (and yield in the case of certain Sub-Accounts) the ranking of
those performance figures relative to such figures for groups of other annuities
analyzed by Lipper Analytical Services and Morningstar, Inc. as having the same
investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index of
500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks of
companies listed on the New York Stock Exchange, although the common stocks of a
few companies listed on the American Stock Exchange or traded over-the-counter
are included. The 500 companies represented include about 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange.
The NASDAQ-OTC Composite Price Index (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks relative to the base measure of 100.00 on
February 5, 1971. The NASDAQ Index is composed entirely of common stocks of
companies traded over-the-counter and often through the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system. Only those
over-the-counter stocks having only one market maker or traded on exchanges are
excluded.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index is
weighted by market capitalization, and therefore, it has a heavy representation
in countries with large stock markets, such as Japan.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted issues
are not included in the SL
<PAGE>
Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
The Composite Index for Hartford Advisers HLS 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>
<TABLE>
<S> <C>
DIRECTOR CHOICE VISION
SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
P. O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668 (CONTRACT OWNERS)
1-800-862-7155 (REGISTERED REPRESENTATIVES) [LOGO]
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This prospectus describes information you should know before you purchase the
Director Choice Vision variable annuity. Please read it carefully.
Director Choice Vision 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 that are part of your Registered Representative's Wrap
Fee Program. 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 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:
- MITCHELL HUTCHINS SERIES TRUST GROWTH AND INCOME PORTFOLIO SUB-ACCOUNT which
purchases shares of Class I of Mitchell Hutchins Growth and Income Portfolio
of the Mitchell Hutchins Series Trust ("Mitchell Hutchins Growth and Income
Portfolio")
- MITCHELL HUTCHINS SERIES TRUST STRATEGIC INCOME PORTFOLIO SUB-ACCOUNT which
purchases shares of Class I of Mitchell Hutchins Strategic Income Portfolio of
the Mitchell Hutchins Series Trust ("Mitchell Hutchins Strategic Income
Portfolio")
- MITCHELL HUTCHINS SERIES TRUST TACTICAL ALLOCATION PORTFOLIO SUB-ACCOUNT which
purchases shares of Class I of Mitchell Hutchins Tactical Allocation Portfolio
of the Mitchell Hutchins Series Trust ("Mitchell Hutchins Tactical Allocation
Portfolio")
- HARTFORD ADVISERS HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford Advisers HLS Fund, Inc.
- HARTFORD BOND HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford Bond HLS Fund, Inc.
- HARTFORD CAPITAL APPRECIATION HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Capital Appreciation HLS Fund, Inc.
- HARTFORD DIVIDEND AND GROWTH HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Dividend and Growth HLS Fund, Inc.
- HARTFORD GLOBAL HEALTH HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Global Health HLS Fund of Hartford Series Fund, Inc.
- HARTFORD GLOBAL LEADERS HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Global Leaders HLS Fund of Hartford Series Fund, Inc.
- HARTFORD GLOBAL TECHNOLOGY HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Global Technology HLS Fund of Hartford
Series Fund, Inc.
- HARTFORD GROWTH AND INCOME HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Growth and Income HLS Fund of Hartford
Series Fund, Inc.
- HARTFORD HIGH YIELD HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford High Yield HLS Fund of Hartford Series Fund, Inc.
- HARTFORD INDEX HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford Index HLS Fund, Inc.
- HARTFORD INTERNATIONAL ADVISERS HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford International Advisers HLS Fund, Inc.
<PAGE>
- HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND SUB-ACCOUNT which purchases
shares of Class IA of Hartford International Opportunities HLS Fund, Inc.
- HARTFORD MIDCAP HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford MidCap HLS Fund, Inc.
- HARTFORD MONEY MARKET HLS FUND SUB-ACCOUNT which purchases shares of Class IA
of Hartford Money Market HLS Fund, Inc.
- HARTFORD MORTGAGE SECURITIES HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Mortgage Securities HLS Fund, Inc.
- HARTFORD SMALL COMPANY HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Small Company HLS Fund, Inc.
- HARTFORD STOCK HLS FUND SUB-ACCOUNT which purchases of Class IA of Hartford
Stock HLS Fund, Inc.
If you decide to buy this Annuity, you should keep this prospectus for your
records. You can also call us at 1-800-862-6668 to get a Statement of Additional
Information, free of charge. The Statement of Additional Information contains
more information about this Annuity and, like this prospectus, is filed with the
Securities and Exchange Commission ("SEC"). We have included the Table of
Contents for the Statement of Additional Information at the end of this
prospectus.
Although we file the prospectus and the Statement of Additional information with
the 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.
--------------------------------------------------------------------------------
PROSPECTUS DATED: , 2000
STATEMENT OF ADDITIONAL INFORMATION DATED: , 2000
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
--------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
----------------------------------------------------------------------
DEFINITIONS 4
----------------------------------------------------------------------
FEE TABLE 6
----------------------------------------------------------------------
HIGHLIGHTS 10
----------------------------------------------------------------------
GENERAL CONTRACT INFORMATION 11
----------------------------------------------------------------------
Hartford Life Insurance Company 11
----------------------------------------------------------------------
The Separate Account 11
----------------------------------------------------------------------
The Funds 11
----------------------------------------------------------------------
PERFORMANCE RELATED INFORMATION 14
----------------------------------------------------------------------
THE CONTRACT 14
----------------------------------------------------------------------
Purchases and Contract Value 14
----------------------------------------------------------------------
Charges and Fees 16
----------------------------------------------------------------------
Death Benefit 17
----------------------------------------------------------------------
Surrenders 19
----------------------------------------------------------------------
ANNUITY PAYOUTS 21
----------------------------------------------------------------------
OTHER PROGRAMS AVAILABLE 23
----------------------------------------------------------------------
OTHER INFORMATION 23
----------------------------------------------------------------------
Legal Matters and Experts 24
----------------------------------------------------------------------
More Information 24
----------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS 24
----------------------------------------------------------------------
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 28
----------------------------------------------------------------------
APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT
PLANS 29
----------------------------------------------------------------------
</TABLE>
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
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.
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 the
Annuity Commencement Date.
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, Connecticut
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.
ANNUITANT: The person on whose life the Contract is based. The Annuitant may not
be changed after your Contract is issued.
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: 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.
This amount is calculated using the Assumed Investment Return for variable
dollar amount Annuity Payouts or the underlying rate of return for fixed dollar
amounts 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.
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 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.
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.
GENERAL ACCOUNT: This account holds our company assets and any assets not
allocated to a Separate Account. The assets in this account are available to the
creditors of Hartford.
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-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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
--------------------------------------------------------------------------------
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.
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
--------------------------------------------------------------------------------
FEE TABLE
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES (1)
---------------------------------------------------------------------
Sales Charge Imposed on Purchases (as a percentage of
Premium Payments) None
---------------------------------------------------------------------
Contingent Deferred Sales Charge (as a percentage of
amounts Surrendered) None
---------------------------------------------------------------------
ANNUAL MAINTENANCE FEE (2) $30
---------------------------------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average
daily Sub-Account Value)
Mortality and Expense Risk Charge 0.40%
---------------------------------------------------------------------
Total Separate Account Annual Expenses 0.40%
---------------------------------------------------------------------
OPTIONAL CHARGES (as a percentage of average daily
Sub-Account Value)
Optional Death Benefit Charge 0.15%
---------------------------------------------------------------------
Total Separate Account Annual Expenses with the Optional
Death Benefit Charge 0.55%
---------------------------------------------------------------------
</TABLE>
(1) When you sign up for the Wrap Fee Program, your Registered Representative
will explain any fee and charges associated with the Program that you may
have to pay. These fees and the expenses are separate from and in addition
to the fees described in this prospectus that Hartford deducts for your
annuity.
(2) An annual $30 charge deducted on a Contract Anniversary or upon full
Surrender if the Contract Value at either of those time is less than
$50,000. The charge is deducted proportionately from each Account in which
you are invested.
The purpose of the Fee Table and Examples is to assist you in understanding
various costs and expenses that you will pay directory or indirectly. The Fee
Table and Examples reflect expenses of the Separate Account and underlying
Funds. We will deduct any Premium Taxes that apply. The Examples assume that any
fee waivers or expense reimbursements for the underlying Funds will continue for
the period shown in the Examples.
The Examples 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 Examples 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" 0.06% annual charge.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
--------------------------------------------------------------------------------
Annual Fund Operating Expenses
As of the Fund's Year End
(As a percentage of net assets)
<TABLE>
<CAPTION>
12B-1
DISTRIBUTION TOTAL FUND
AND/OR OTHER OPERATING
MANAGEMENT FEES SERVICING FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust Growth and Income Portfolio
(1) 0.70% 0.25% 0.53% 1.48%
----------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust Strategic Income Portfolio
(1) 0.75% 0.25% 0.87% 1.87%
----------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust Tactical Allocation Portfolio
(1) 0.50% 0.25% 0.24% 0.99%
----------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund 0.63% N/A 0.02% 0.65%
----------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 0.49% N/A 0.03% 0.52%
----------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS Fund 0.64% N/A 0.02% 0.66%
----------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth HLS Fund 0.65% N/A 0.03% 0.68%
----------------------------------------------------------------------------------------------------------------------
Hartford Global Health HLS Fund (2) 0.85% N/A 0.25% 1.10%
----------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 0.74% N/A 0.12% 0.86%
----------------------------------------------------------------------------------------------------------------------
Hartford Global Technology HLS Fund (2) 0.85% N/A 0.25% 1.10%
----------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS Fund 0.78% N/A 0.04% 0.82%
----------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 0.66% N/A 0.06% 0.72%
----------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 0.40% N/A 0.03% 0.43%
----------------------------------------------------------------------------------------------------------------------
Hartford International Advisers HLS Fund 0.76% N/A 0.09% 0.85%
----------------------------------------------------------------------------------------------------------------------
Hartford International Opportunities HLS Fund 0.69% N/A 0.09% 0.78%
----------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 0.76% N/A 0.03% 0.79%
----------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 0.45% N/A 0.02% 0.47%
----------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 0.45% N/A 0.03% 0.48%
----------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 0.75% N/A 0.03% 0.78%
----------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 0.46% N/A 0.02% 0.48%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Class I shares of the Portfolios sponsored by Mitchell Hutchins are
subject to fees imposed under a distribution plan ("Distribution Plan")
adopted by the Portfolios pursuant to Rule 12b-1 under the 1940 Act. The
Distribution Plan provides that each Portfolio pays a distribution fee at
the annual rate of 0.25% of its average daily net assets attributable to its
Class I shares to certain distributors with respect to activities primarily
intended to result in the sale of the Class I shares.
(2) Hartford Global Health HLS Fund and Hartford Global Technology HLS Fund are
new Funds. "Total Fund Operating Expenses" are based on annualized estimates
of such expenses to be incurred during the current fiscal year.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
EXAMPLE
THE FOLLOWING EXAMPLE ASSUMES THE OPTIONAL DEATH BENEFIT IS NOT SELECTED:
<TABLE>
<CAPTION>
If you Surrender your Contract at If you annuitize your Contract at
the end of the applicable time the end of the applicable time If you do not Surrender your
period you would pay the following period you would pay the following Contract, you would pay the
expenses on a $1,000 investment, expenses on a $1,000 investment, following expenses on a $1,000
assuming a 5% annual return on assuming a 5% annual return on investment, assuming a 5% annual
assets: assets: return on assets:
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>
---------------------------------------------------------------------------------------------------------------------------
Mitchell
Hutchins
Series Trust
Growth and
Income
Portfolio $20 $61 $106 $228 $19 $61 $105 $227 $20 $61 $106 $228
---------------------------------------------------------------------------------------------------------------------------
Mitchell
Hutchins
Series Trust
Strategic
Income
Portfolio 24 74 126 269 23 73 125 268 24 74 126 269
---------------------------------------------------------------------------------------------------------------------------
Mitchell
Hutchins
Series Trust
Tactical
Allocation
Portfolio 15 46 80 174 14 46 79 174 15 46 80 174
---------------------------------------------------------------------------------------------------------------------------
Hartford
Advisers HLS
Fund $11 $35 $ 61 $136 $11 $35 $ 61 $135 $11 $35 $ 61 $136
---------------------------------------------------------------------------------------------------------------------------
Hartford Bond
HLS Fund $10 $31 $ 54 $121 $ 9 $31 $ 54 $120 $10 $31 $ 54 $121
---------------------------------------------------------------------------------------------------------------------------
Hartford
Capital
Appreciation
HLS Fund $11 $36 $ 62 $137 $11 $35 $ 61 $136 $11 $36 $ 62 $137
---------------------------------------------------------------------------------------------------------------------------
Hartford
Dividend and
Growth HLS
Fund 12 36 63 139 11 36 62 138 12 36 63 139
---------------------------------------------------------------------------------------------------------------------------
Hartford Global
Health HLS
Fund 16 50 N/A N/A 15 49 N/A N/A 16 50 N/A N/A
---------------------------------------------------------------------------------------------------------------------------
Hartford Global
Leaders HLS
Fund 14 42 73 160 13 41 72 159 14 42 73 160
---------------------------------------------------------------------------------------------------------------------------
Hartford Global
Technology
HLS Fund 16 50 N/A N/A 15 49 N/A N/A 16 50 N/A N/A
---------------------------------------------------------------------------------------------------------------------------
Hartford Growth
and Income
HLS Fund 13 41 71 155 13 40 70 154 13 41 71 155
---------------------------------------------------------------------------------------------------------------------------
Hartford High
Yield HLS
Fund 12 38 65 144 11 37 65 143 12 38 65 144
---------------------------------------------------------------------------------------------------------------------------
Hartford Index
HLS Fund 9 29 49 110 9 28 49 109 9 29 49 110
---------------------------------------------------------------------------------------------------------------------------
Hartford
International
Advisers HLS
Fund 13 42 72 159 13 41 72 158 13 42 72 159
---------------------------------------------------------------------------------------------------------------------------
Hartford
International
Opportunities
HLS Fund 13 40 68 151 12 39 68 150 13 40 68 151
---------------------------------------------------------------------------------------------------------------------------
Hartford MidCap
HLS Fund 13 40 69 152 12 39 68 151 13 40 69 152
---------------------------------------------------------------------------------------------------------------------------
Hartford Money
Market HLS
Fund 10 30 52 115 9 29 51 114 10 30 52 115
---------------------------------------------------------------------------------------------------------------------------
Hartford
Mortgage
Securities
HLS Fund 10 30 52 116 9 29 52 115 10 30 52 116
---------------------------------------------------------------------------------------------------------------------------
Hartford Small
Company HLS
Fund 13 40 68 151 12 39 68 150 13 40 68 151
---------------------------------------------------------------------------------------------------------------------------
Hartford Stock
HLS Fund 10 30 52 116 9 29 52 115 10 30 52 116
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
--------------------------------------------------------------------------------
EXAMPLE
THE FOLLOWING EXAMPLE ASSUMES THE OPTIONAL DEATH BENEFIT IS SELECTED:
<TABLE>
<CAPTION>
If you Surrender your Contract at If you annuitize your Contract at
the end of the applicable time the end of the applicable time If you do not Surrender your
period you would pay the following period you would pay the following Contract, you would pay the
expenses on a $1,000 investment, expenses on a $1,000 investment, following expenses on a $1,000
assuming a 5% annual return on assuming a 5% annual return on investment, assuming a 5% annual
assets: assets: return on assets:
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>
---------------------------------------------------------------------------------------------------------------------------
Mitchell
Hutchins
Series Trust
Growth and
Income
Portfolio $21 $66 $113 $244 $21 $65 $113 $243 $21 $66 $113 $244
---------------------------------------------------------------------------------------------------------------------------
Mitchell
Hutchins
Series Trust
Strategic
Income
Portfolio 25 78 134 284 25 78 133 283 25 78 134 284
---------------------------------------------------------------------------------------------------------------------------
Mitchell
Hutchins
Series Trust
Tactical
Allocation
Portfolio 16 51 88 191 16 50 87 190 16 51 88 191
---------------------------------------------------------------------------------------------------------------------------
Hartford
Advisers HLS
Fund $13 $40 $ 70 $153 $12 $40 $ 69 $152 $13 $40 $ 70 $153
---------------------------------------------------------------------------------------------------------------------------
Hartford Bond
HLS Fund $12 $36 $ 63 $138 $11 $35 $ 62 $137 $12 $36 $ 63 $138
---------------------------------------------------------------------------------------------------------------------------
Hartford
Capital
Appreciation
HLS Fund $13 $41 $ 70 $154 $12 $40 $ 62 $153 $13 $41 $ 70 $154
---------------------------------------------------------------------------------------------------------------------------
Hartford
Dividend and
Growth HLS
Fund 13 41 71 156 13 40 70 156 13 41 71 156
---------------------------------------------------------------------------------------------------------------------------
Hartford Global
Health HLS
Fund 18 54 N/A N/A 17 54 N/A N/A 18 54 N/A N/A
---------------------------------------------------------------------------------------------------------------------------
Hartford Global
Leaders HLS
Fund 15 47 81 177 14 46 80 176 15 47 81 177
---------------------------------------------------------------------------------------------------------------------------
Hartford Global
Technology
HLS Fund 18 54 N/A N/A 17 54 N/A N/A 18 54 N/A N/A
---------------------------------------------------------------------------------------------------------------------------
Hartford Growth
and Income
HLS Fund 15 46 79 172 14 45 78 171 15 46 79 172
---------------------------------------------------------------------------------------------------------------------------
Hartford High
Yield HLS
Fund 14 42 73 161 13 42 73 160 14 42 73 161
---------------------------------------------------------------------------------------------------------------------------
Hartford Index
HLS Fund 11 33 58 128 10 33 57 127 11 33 58 128
---------------------------------------------------------------------------------------------------------------------------
Hartford
International
Advisers HLS
Fund 15 46 80 176 14 46 80 175 15 46 80 176
---------------------------------------------------------------------------------------------------------------------------
Hartford
International
Opportunities
HLS Fund 14 44 77 168 14 44 76 167 14 44 77 168
---------------------------------------------------------------------------------------------------------------------------
Hartford MidCap
HLS Fund 14 45 77 169 14 44 76 168 14 45 77 169
---------------------------------------------------------------------------------------------------------------------------
Hartford Money
Market HLS
Fund 11 35 60 132 10 34 59 131 11 35 60 132
---------------------------------------------------------------------------------------------------------------------------
Hartford
Mortgage
Securities
HLS Fund 11 35 60 133 11 34 60 133 11 35 60 133
---------------------------------------------------------------------------------------------------------------------------
Hartford Small
Company HLS
Fund 14 44 77 168 14 44 76 167 14 44 77 168
---------------------------------------------------------------------------------------------------------------------------
Hartford Stock
HLS Fund 11 35 60 133 11 34 60 133 11 35 60 133
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
HIGHLIGHTS
HOW DO I PURCHASE THIS ANNUITY?
This Annuity is only offered through a Wrap Fee Program available at your
brokerage firm.
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 $10,000 and subsequent Premium Payments must be at least $500, unless you
take advantage of our InvestEase Program-Registered Trademark- 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. 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.
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?
In addition to the Annual Maintenance Fee, 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 is subtracted daily and is equal to an
annual charge of 0.40% of your Contract Value invested in the Funds.
The second type of charge is the fee you pay for the Funds. Please see the
Annual Fund Operating Expenses table for more complete information and the
Funds' prospectuses accompanying this prospectus.
If you elect the Optional Death Benefit, we will subtract an additional charge
on a daily basis until we begin making Annuity Payouts which is equal to an
annual charge of .15% of your Contract Value invested in the Funds.
When you sign up for the Wrap Fee Program, your Registered Representative will
explain any fee and charges associated with the Program that you may have to
pay. These fees and the expenses are separate from and in addition to the fees
described in this prospectus that Hartford deducts for your annuity.
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 Period Certain Annuity, Joint and Last Survivor Annuity with
Payments for a Period Certain or Life Annuity with Payments for a Period Certain
Payout Options.
- You may have to pay income 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.
Since this Annuity is part of a Wrap Fee Program, you might have to pay
Surrender charges associated with that Program if you Surrender your annuity. We
don't expect that you will pay any fees or expenses associated with the Wrap Fee
Program by taking partial Surrenders from your annuity. If you do, you may have
to pay income tax on the money you use to pay these fees, and, if you are under
age 59 1/2, you may have to pay an income tax penalty.
WILL HARTFORD PAY A DEATH BENEFIT?
Your Contract has a Death Benefit which is equal to the amount payable under the
standard Death Benefit or the Interest Accumulation Death Benefit ("Optional
Death Benefit"). We pay the Death Benefit if the Contract Owner, joint owner or
Annuitant, die before we begin to make annuity payments. The 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. We
calculate the Death Benefit as of the date we receive a certified death
certificate or other legal document acceptable to us.
The Death Benefit will be the greater of:
- the total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders;
- 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.
If you elect the Optional Death Benefit, the Death Benefit will be the greater
of:
- the total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders;
- the Contract Value of your annuity;
- your Maximum Anniversary Value or
- your Interest Accumulation Value.
The Optional Death Benefit may not be available if the Contract Owner or
Annuitant is age 75 or older. The Optional Death Benefit is not available in the
states of Washington and New York.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
--------------------------------------------------------------------------------
The Optional Death Benefit calculation will be different if you add the Optional
Death Benefit after you purchase your Annuity.
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: Life Annuity, Life Annuity with a Cash Refund, Life
Annuity with Payments for a Period Certain, Joint and Last Survivor Life
Annuity, Joint and Last Survivor Life Annuity with Payments for Period Certain
and Payments for a Period Certain. We may make other Annuity Payout Options
available at any time.
You must begin to take payouts by the Annuitant's 90th birthday or the end of
the 10th Contract Year, whichever is later unless you elect a later date to
begin receiving payments subject to the laws and regulations then in effect and
our approval. If you do not tell us what Annuity Payout Option you want before
that time, we will make payments under the Life Annuity with Payments for a ten
year Period Certain Annuity Payout Option .
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. 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. 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
Company, Inc. 1/1/99 A+ Financial performance
--------------------------------------------------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
--------------------------------------------------------------------------------
Duff & Phelps 7/1/99 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
Mitchell Hutchins Asset Management Inc. is a wholly-owned asset management
subsidiary of PaineWebber Incorporated. Mitchell Hutchins provides investment
advisory and administrative services to the Mitchell Hutchins Series Trust
Growth and Income Portfolio, Mitchell Hutchins Series Trust Strategic Income
Portfolio and the Mitchell Hutchins Series Trust Tactical Allocation Portfolio.
Hartford HLS Funds are sponsored and administered by Hartford Life Insurance
Company. HL Investment Advisors, LLC ("HL Advisors") serves as the investment
adviser to each of the Hartford HLS Funds. Wellington Management Company, LLP
("Wellington Management") and Hartford Investment Management Company ("HIMCO")
serve as sub-investment advisors and provide day to day investment services.
Each Hartford HLS Fund, except for Hartford Global Health HLS Fund, Hartford
Global Leaders HLS Fund, Hartford Global Technology HLS Fund, Hartford Growth
and Income HLS Fund and Hartford High Yield HLS Fund, is a separate Maryland
corporation registered with the Securities and Exchange Commission as an
open-end management investment company. Hartford Global Leaders HLS Fund,
Hartford Growth and Income HLS Fund and 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. Hartford Global Health HLS Fund and Hartford Global
Technology HLS Fund are non-diversified series of Hartford Series Fund, Inc. The
shares of each Fund have been divided into Class IA and Class IB. Only Class IA
shares are available in this Annuity.
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12 HARTFORD LIFE INSURANCE COMPANY
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We do not guarantee the investment results of any of the underlying Funds. Since
each underlying Fund has different investment objectives, each is subject to
different risks. These risks and the Funds' expenses are more fully described in
the accompanying Funds' prospectus and Statement of Additional Information,
which may be ordered from us. The Funds' prospectus should be read in
conjunction with this prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
MITCHELL HUTCHINS SERIES TRUST GROWTH AND INCOME PORTFOLIO -- Seeks current
income and capital growth by investing primarily in dividend-paying equity
securities of companies believed to have the potential for rapid earnings
growth.
MITCHELL HUTCHINS SERIES TRUST STRATEGIC INCOME PORTFOLIO -- Has a primary
investment objective of high current income and a secondary objective of capital
appreciation. This Fund strategically allocates its investments among three bond
market sectors: U.S. Government and investment grade bonds; U.S. high yield
bonds (sometimes called "junk bonds") and foreign and emerging market bonds.
MITCHELL HUTCHINS SERIES TRUST TACTICAL ALLOCATION PORTFOLIO -- Seeks total
return, consisting of long-term capital appreciation and current income, by
using the Tactical Allocation Model, a systematic investment strategy that
allocates its investments between an equity portion designed to track the
S&P 500 Composite Price Index and a fixed income portion that generally will be
comprised of either five-year U.S. Treasury notes or 30 day U.S. Treasury Bills.
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 investment grade fixed-income
securities. Up to 20% of the total assets of this Fund may be invested in debt
securities rated in the highest category below investment grade (Ba by Moody's
Investor Services, Inc. or BB by Standard & Poor's) or, if unrated, are
determined to be of comparable quality by the Fund's investment adviser.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning the
risks associated with investing in such securities, please refer to the section
in the accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund,
Inc." Sub-advised by HIMCO.
HARTFORD CAPITAL APPRECIATION HLS FUND -- Seeks growth of capital by investing
in equity securities selected solely on the basis of potential for capital
appreciation. Sub-advised by Wellington Management.
HARTFORD DIVIDEND AND GROWTH HLS FUND -- Seeks a high level of current income
consistent with growth of capital by investing primarily in dividend paying
equity securities. Sub-advised by Wellington Management.
HARTFORD GLOBAL HEALTH HLS FUND -- Seeks long-term capital appreciation by
investing in equity securities of health care companies worldwide. Sub-advised
by Wellington Management.
HARTFORD GLOBAL LEADERS HLS FUND -- Seeks growth of capital by investing
primarily in equity securities issued by high quality growth companies worldwide
that, in the opinion of Wellington Management, are leaders within their
respective industries as indicated by an established market presence and strong
competitive position on a global, regional or country basis. Sub-advised by
Wellington Management.
HARTFORD GLOBAL TECHNOLOGY HLS FUND -- Seeks long-term capital appreciation by
investing in equity securities technology companies worldwide. Sub-advised by
Wellington Management.
HARTFORD GROWTH AND INCOME HLS FUND -- Seeks growth of capital and current
income by investing primarily in equity securities with earnings growth
potential and steady or rising dividends. Sub-advised by Wellington Management.
HARTFORD HIGH YIELD HLS FUND -- Seeks high current income by investing in
non-investment grade fixed-income securities. Growth of capital is a secondary
objective. 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
High Yield HLS Fund." Sub-advised by HIMCO.
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
by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets. Sub-advised by Wellington
Management.
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND -- Seeks growth of capital by
investing primarily in equity securities issued by non-U.S. companies.
Sub-advised by Wellington Management.
HARTFORD MIDCAP HLS FUND -- Seeks to achieve long-term capital growth through
capital appreciation by investing primarily in equity securities of companies
with market capitalizations within the range represented by the Standard &
Poor's MidCap 400 Index. Sub-advised by Wellington Management.
* "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.
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HARTFORD LIFE INSURANCE COMPANY 13
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HARTFORD MONEY MARKET HLS FUND -- Seeks maximum current income consistent with
liquidity and preservation of capital. Sub-advised by HIMCO.
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. Sub-advised by HIMCO.
HARTFORD SMALL COMPANY HLS FUND -- Seeks growth of capital by investing
primarily in equity securities within the range represented by the Russell 2000
Index selected on the basis of potential for capital appreciation. Sub-advised
by Wellington Management.
HARTFORD STOCK HLS FUND -- Seeks long-term growth by investing primarily in
equity securities. Sub-advised by Wellington Management.
MIXED AND SHARED 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 and shared 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 and
shared 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:
- 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 Annuity 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
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 of
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.
ADMINISTRATIVE SERVICES -- Hartford has entered into agreements with the
investment advisers or distributors of many of the Funds. Under the terms of
these agreements, Hartford provides administrative services and the Funds pay a
fee to Hartford that is usually based on an annual percentage of the average
daily net assets of the Funds. These arrangements may be different for each Fund
or each Fund family.
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14 HARTFORD LIFE INSURANCE COMPANY
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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 since the inception of the Separate Account 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 that predates the inception of the Separate
Account. 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.
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 Hartford Money Market HLS 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 CONTRACT
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PURCHASES AND CONTRACT VALUE
WHAT TYPES OF CONTRACTS ARE AVAILABLE?
This Annuity is only offered through a Wrap Fee Program available at your
brokerage firm.
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 which is part of a Wrap Fee Program, 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.
If you are purchasing the Contract for use in an IRA or other qualified
retirement plan, you should consider other features of the Contract besides tax
deferral, since any investment vehicle used within an IRA or other qualified
plan receives tax deferred treatment under the Code.
HOW DO I PURCHASE A CONTRACT?
This Annuity is only offered through a Wrap Fee Program available through your
brokerage firm.
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 $10,000. 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 90 on the date that your
Contract is issued or age 85 if your Contract is issued in New York. You must be
of legal age in the state where the Contract is being purchased or a guardian
must act on your behalf.
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HARTFORD LIFE INSURANCE COMPANY 15
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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. If we receive your subsequent Premium Payment before the close of the
New York Stock Exchange, it will be priced on the same Valuation Day. If we
receive your Premium Payment after the close of the New York Stock Exchange, it
will be invested on the next Valuation Day. If we receive your subsequent
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 either return the Premium Payment and explain why the Premium Payment could
not be processed or keep the Premium Payment if you authorize us to keep it
until you provide the necessary information.
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 within ten days after you receive it with a
written request for cancellation that indicates your tax-withholding
instructions. In some states, you may be allowed more time to cancel your
Contract. 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 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, settling 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, including any Optional Death
Benefit 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 under a
power of attorney for multiple Contract Owners. If the value of the Contract
Owner's Accounts add up to 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.
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16 HARTFORD LIFE INSURANCE COMPANY
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TELEPHONE AND INTERNET TRANSFERS -- In most states, you can make transfers:
- By calling us at (800) 862-6668.
- Electronically, when available, by the Internet through our website at
http://online.hartfordlife.com
Transfer instructions received by telephone on any Valuation Day before the
close of the New York Stock Exchange will be carried out that day. Otherwise,
the instructions will be carried out at the close of the New York Stock Exchange
on the next Valuation Day.
Transfer instructions you send electronically are considered to be received by
Hartford at the time and date stated on the electronic acknowledgement Hartford
returns to you. If the time and date indicated on the acknowledgement is before
the close of the New York Stock Exchange on a Valuation Day, the instructions
will be carried out that day. Otherwise, the instructions will be carried out at
the close of the New York Stock Exchange the next Valuation Day. If you do not
receive an electronic acknowledgement, you should telephone us as soon as
possible.
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.
Telephone or Internet transfer requests may currently only be cancelled by
calling us at (800) 862-6668 before the close of the New York Stock Exchange.
Hartford, our agents or our affiliates are NOT responsible for losses resulting
from telephone or electronic requests that we believe are genuine. We will use
reasonable procedures to confirm that instructions received by telephone or
through our website are genuine, including a requirement that contract owners
provide certain identification information, including a personal identification
number. We record all telephone transfer instructions. We reserve the right to
suspend, modify, or terminate telephone or electronic transfer privileges at any
time.
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, subject to any transfer restrictions in place, until we
receive new instructions in writing from you. You will not be able to make
transfers or other changes to your Contract if you have authorized someone else
to act under a power of attorney.
CHARGES AND FEES
There are 4 charges and fees associated with the Contract and the Optional Death
Benefit charge:
1. MORTALITY AND EXPENSE RISK CHARGE
For assuming risks under the Contract, we will deduct a daily charge at the
annual rate of 0.40% of Contract Value (estimated at 0.30% for mortality and
0.10% for expenses).
- MORTALITY RISK -- There 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
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. The risk that
we bear during this period is that actual mortality rates may be lower than
anticipated.
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 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.
2. 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 who 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.
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HARTFORD LIFE INSURANCE COMPANY 17
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3. 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.
4. CHARGES AGAINST THE FUNDS
The Separate Account purchases shares of the Funds at net asset value. The net
asset value of the Fund shares reflects investment advisory fees and
administrative expenses already deducted from the assets of the Funds. These
charges are described in the Funds' prospectuses accompanying this prospectus.
OPTIONAL DEATH BENEFIT CHARGE -- If you elect the Optional Death Benefit, we
will subtract an additional charge on a daily basis which is equal to an annual
charge of .15% of your Contract Value invested in the Funds.
WRAP FEE PROGRAM CHARGES -- There are fees and charges associated with your Wrap
Fee Program which are separate from and in addition to the charges described in
this prospectus that Hartford deducts for your annuity. Your Registered
Representative will be able to describe these fees and charges to you.
WE MAY OFFER, IN OUR DISCRETION, REDUCED FEES AND CHARGES INCLUDING, BUT NOT
LIMITED TO THE MORTALITY AND EXPENSE RISK CHARGE, OPTIONAL DEATH BENEFIT CHARGE
AND THE ANNUAL MAINTENANCE FEE, FOR CERTAIN CONTRACTS (INCLUDING EMPLOYER
SPONSORED SAVINGS PLANS) WHICH MAY RESULT IN DECREASED COSTS AND EXPENSES.
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?
Your Contract has a Death Benefit which is equal to the amounts payable under
the standard Death Benefit or the Optional Death Benefit. We pay the Death
Benefit if the Contract Owner, joint owner or Annuitant, die before we begin to
make annuity payments. The 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. We calculate the Death Benefit as of the
date we receive a certified death certificate or other legal document acceptable
to us.
If you do not elect the Optional Death Benefit, the Death Benefit will be the
greater of:
- the total Premium Payments you have made to us minus any amounts you have
Surrenders;
- 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
resulting from this series of calculations.
The Death Benefit will be the greater of:
- the total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders;
- the Contract Value of your annuity;
- your Maximum Anniversary Value or
- your Interest Accumulation Value.
The Interest Accumulation Value is equal to:
- Your Contract Value of your Annuity;
- Plus any Premium Payments made;
- Minus any partial Surrenders;
- Compounded daily at an annual rate of 5%.
If you have taken any partial Surrenders, the Interest Accumulation Value will
be adjusted to reduce the Optional Death Benefit proportionally for any partial
Surrenders.
The Interest Accumulation Value stops compounding on the deceased 81st birthday.
After that date, the Interest Accumulation Value will be adjusted to add any
Premium Payments made after that date, and minus any proportional adjustments
for partial Surrenders.
The Optional Death Benefit is limited to a maximum of 200% of any Premium
Payments made less proportional adjustments for any Surrenders.
If you elect the Optional Death Benefit, we will subtract an additional charge
on a daily basis until we begin to make Annuity Payouts that is equal to an
annual charge of .15% of your Contract Value invested in the Funds.
The Optional Death Benefit may not be available if the Contract Owner of
Annuitant is age 75 or older. The Optional Death Benefit is not available in the
states of Washington and New York.
If you elect to add the Optional Death Benefit after you purchase your Annuity,
the Interest Accumulation Value will be:
- Your Contract Value on the date we add the Optional Death Benefit to your
Annuity;
- Plus any Premium Payments made after the Optional Death Benefit is added;
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18 HARTFORD LIFE INSURANCE COMPANY
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- Minus any partial Surrenders after the Optional Death Benefit is added;
- Compounded daily at an annual interest rate of 5%.
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 the 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 Proceeds Settlement Option, 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
document acceptable to us, the Beneficiary can: (a) make Sub-Account transfers
and (b) take Surrenders.
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 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. If the Contract continues with the Spouse as Contract Owner, we
will adjust the Contract Value to the amount that we would have paid as the
Death Benefit. This spousal continuation is available only once for each
Contract.
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 surviving joint The Annuitant is living or Joint Contract Owner
Contract Owner deceased receives the Death
Benefit.
Contract Owner There is no surviving The Annuitant is living or Designated Beneficiary
joint Contract Owner deceased receives the Death
Benefit.
Contract Owner There is no surviving The Annuitant is living or Contract Owner's estate
joint Contract Owner and deceased receives the Death
the Beneficiary Benefit.
predeceases the Contract
Owner
Annuitant The Contract Owner is There is no named Death Benefit is paid to
living Contingent Annuitant the Contract Owner(s) and
not the designated
Beneficiary.
Annuitant The Contract Owner is The Contingent Annuitant Contingent Annuitant
living is living becomes the Annuitant, and
the Contract continues.
</TABLE>
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HARTFORD LIFE INSURANCE COMPANY 19
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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 living Designated Beneficiary becomes the
Contract Owner
Annuitant The Contract Owner is living Contract Owner receives the Death
Benefit.
Annuitant The Annuitant is also the Contract Owner Designated Beneficiary receives 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.
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 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 the minimum 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. The Commuted Value is determined on the
day we receive your written request for Surrender.
PARTIAL SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE -- Partial Surrenders are
permitted after the Annuity Commencement Date if you select the Life Annuity
with Payments for a Period Certain Annuity Payout Option, Joint and Last
Survivor Life Annuity with Payments for a Period Certain or the Payment for a
Period Certain Annuity Payout Options. You may take partial Surrenders of
amounts equal to the Commuted Value of the payments that we would have made
during the "Period Certain" or the number of years you select under the Annuity
Payout Option that we guarantee to make Annuity Payouts.
To qualify for partial Surrenders under these Annuity Payout Options you must
elect a variable dollar amount Annuity Payout and you must make the Surrender
request during the Period Certain.
Hartford will deduct any applicable Contingent Deferred Sales Charges.
If you elect to take the entire Commuted Value of the Annuity Payouts we would
have made during the Period Certain, Hartford will not make any Annuity Payouts
during the remaining Period Certain. If you elect to take only some of the
Commuted Value of the Annuity Payouts we would have made during the Period
Certain, Hartford will reduce the remaining Annuity Payouts during the remaining
Period Certain. Annuity Payouts that are to be made after the Period Certain is
over will not change.
Please check with your qualified tax adviser because there could be adverse tax
consequences for partial Surrenders 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 complete instructions. However, we may postpone payment of
Surrenders whenever: (a) the New York Stock Exchange is closed, (b) trading on
the New York Stock Exchange is restricted by the SEC, (c) the SEC permits and
orders postponement, or (d) 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.
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20 HARTFORD LIFE INSURANCE COMPANY
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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 will be processed on that Valuation Day. Otherwise, your request will
be processed on the next Valuation Day.
COMPLETING A POWER OF ATTORNEY FORM FOR ANOTHER PERSON TO ACT ON YOUR BEHALF 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
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 purpose 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 QUALIFIED TAX ADVISER BEFORE MAKING ANY
SURRENDERS. PLEASE SEE THE "FEDERAL TAX CONSIDERATIONS" SECTION FOR MORE
INFORMATION.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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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 the payee to receive Annuity Payouts?
4. What level of Assumed Investment Return do you prefer?
5. Do you want fixed-dollar amount or variable-dollar amount Annuity Payouts or
a combination of both?
Please check with your financial adviser 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 Annuitant's 90th
birthday or the end of the 10th Contract Year, whichever is later unless you
elect a later date to begin receiving payments subject to the laws and
regulations then in effect and our approval. If your Contract is issued in New
York, you cannot defer beyond 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. Once we begin to
make Annuity Payouts, the Annuity Payout Option cannot be changed.
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.
LIFE ANNUITY WITH A CASH REFUND -- We will make Annuity Payouts as long as the
Annuitant is living. When the Annuitant dies, if the Annuity Payouts already
made are less than the Contract Value minus any Premium Tax, the remaining value
will be paid to the Beneficiary. The remaining value is equal to the Contract
Value minus any Premium Tax minus the Annuity Payouts already made. This option
is only available for Annuity Payouts using the 5% Assumed Investment Return.
LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN -- We will make Annuity Payouts
as long as the Annuitant is living, but we at least guarantee to make Annuity
Payouts for a time period you select, between 5 years and 100 years minus the
Annuitant's age. If the Annuitant dies before the guaranteed number of years
have passed, then the Beneficiary may elect to (a) continue Annuity Payouts for
the remainder of the guaranteed number of years or (b) receive the Commuted
Value in one sum.
For Qualified Contracts, the guaranteed number of years must be less than the
life expectancy of the Annuitant at the time the Annuity Payouts begin. We
compute life expectancy using the IRS mortality tables.
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 Payout 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-dollar amount Annuity Payouts, these percentages represent Annuity
Units. For fixed-dollar amount Annuity Payouts, the percentages represent actual
dollar amounts. The percentage will also 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.
JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN -- We
will make Annuity Payouts as long as either the Annuitant or Joint Annuitant are
living, but we at least guarantee to make Annuity Payouts for a time period you
select, between 5 years and 100 years minus the Annuitant's age. If the
Annuitant and the Joint Annuitant both die before the guaranteed number of years
have passed, then the Beneficiary has two options, (a) continue Annuity Payouts
for the remainder of the guaranteed number of years or (b) receive the Commuted
Value in one sum.
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
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When choosing this option, you must decide what will happen to the Annuity
Payouts 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-dollar amount Annuity Payouts, these percentages represent Annuity
Units. For fixed-dollar amount Annuity Payouts, these percentages represent
actual dollar amounts. The percentage will also 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.
PAYMENTS FOR A PERIOD CERTAIN -- We will make Annuity Payouts for the number of
years that you select. You can select between 5 years and 30 years.
IMPORTANT INFORMATION:
- 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 Payments for a Period Certain Annuity Payout Option using a ten
year period certain.
- 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 Life Annuity Annuity Payout Option.
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 LEVEL OF ASSUMED INVESTMENT RETURN DO YOU PREFER?
The Assumed Investment Return ("AIR") is the investment return you select before
we start to make Annuity Payouts. It is a critical assumption for calculating
variable dollar amount Annuity Payouts. The first Annuity Payout will be based
upon the AIR. The remaining Annuity Payouts will fluctuate based on the
performance of the underlying Funds.
Subject to the approval of your State, you can select one of three AIRs: 3%, 5%
or 6%. The greater the AIR, the greater the initial Annuity Payout. A higher AIR
may result in smaller potential growth in the Annuity Payouts. On the other
hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity
Payouts have the potential to be greater.
For example, if the second monthly Annuity Payout is the same as the first, the
sub-accounts earned exactly the same return as the AIR. If the second monthly
Annuity Payout is more than the first, the sub-accounts earned more than the
AIR. If the second Annuity Payout is less than the first, the sub-account earned
less than the AIR.
Level variable dollar amount Annuity Payouts would be produced if the investment
returns remained constant and equal to the AIR. In fact, Annuity Payouts will
vary up or down as the investment rate varies up or down from the AIR.
5. DO YOU WANT FIXED-DOLLAR AMOUNT OR VARIABLE-DOLLAR AMOUNT ANNUITY PAYOUTS OR
A COMBINATION OF BOTH?
You may choose an Annuity Payout Option with fixed-dollar amounts,
variable-dollar amounts or a combination 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 is 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 Assumed Investment Return
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HARTFORD LIFE INSURANCE COMPANY 23
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The total amount of the first variable-dollar amount Annuity Payout 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 the total of:
Annuity Units for each Sub-Account multiplied by Annuity Unit Value for each
Sub-Account.
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.
COMBINATION ANNUITY PAYOUTS -- You may choose to receive a combination of
fixed-dollar amount and variable-dollar amount annuity payouts as long as they
total 100% of your Annuity Payout. For example, you may choose to receive 40%
fixed-dollar amount and 60% variable-dollar amount to meet your income needs.
TRANSFER OF ANNUITY UNITS -- After the Annuity Calculation Date, you may
transfer dollar amounts of Annuity Units 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. Otherwise, the transfer will be
made on the next Valuation Day.
OTHER PROGRAMS AVAILABLE
--------------------------------------------------------------------------------
INVESTEASE -- InvestEase is an electronic transfer program that allows you to
have money automatically transferred 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 a customized allocation for your Sub-Accounts to help you reach your
investment goals. 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 you have chosen. 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 affect 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. Both HSD and Hartford are ultimately controlled by The Hartford Financial
Services Group, Inc. The principal business address of HSD is the same as ours.
The securities will be sold individuals 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 7% of Premium
Payments. From time to time, Hartford may pay
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
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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 affect the amounts paid by the policyholders or Contract
Owners to purchase, hold or Surrender variable insurance products.
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: Investment Product Services
P.O. Box 5085
Hartford, Connecticut 06102-5085.
Telephone: (800) 862-6668 (Contract Owners)
(800) 862-7155 (Registered Representatives)
FEDERAL TAX CONSIDERATIONS
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What are some of the federal tax consequences which affect these Contracts?
A. GENERAL
Since federal tax law is complex, the tax consequences of purchasing this
contract will vary depending on your situation. You may need tax or legal advice
to help you determine whether purchasing this contract is right for you.
Our general discussion of the tax treatment of this contract is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this contract cannot be made in the prospectus. We also do not
discuss state, municipal or other tax laws that may apply to this contract. For
detailed information, you should consult with a qualified tax adviser familiar
with your situation.
B. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units (See "Value of Accumulation Units"). As a
result, such investment income and realized capital gains are automatically
applied to increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Contracts.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER THAN
QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Code Section 72 contains provisions for contract owners which are not natural
persons. Non-natural persons include corporations, trusts, limited liability
companies, partnerships and other types of legal entities. The tax rules for
contracts owned by non-natural persons are different from the rules for
contracts owned by individuals. For example, the annual net increase in the
value of the contract is currently includible 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:
- certain annuities held by structured settlement companies,
- certain annuities held by an employer with respect to a terminated qualified
retirement plan and
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HARTFORD LIFE INSURANCE COMPANY 25
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- certain immediate annuities.
A non-natural person which is a tax-exempt entity for federal tax purposes will
not be subject to income tax as a result of this provision.
If the contract owner is a non-natural person, the primary annuitant is treated
as the contract owner in applying mandatory distribution rules. These rules
require that certain distributions be made upon the death of the contract owner.
A change in the primary annuitant is also treated as the death of the contract
owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract until an
amount is received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are summarized
briefly below. Also summarized are special rules affecting distributions from
Contracts obtained in a tax-free exchange for other annuity contracts or life
insurance contracts which were purchased prior to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial surrender) is deemed to come first from any
such "income on the contract" and then from "investment in the contract,"
and for these purposes such "income on the contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c. below. As a result,
any such amount received or deemed received (1) shall be includable in
gross income to the extent that such amount does not exceed any such
"income on the contract," and (2) shall not be includable in gross income
to the extent that such amount does exceed any such "income on the
contract". If at the time that any amount is received or deemed received
there is no "income on the contract" (e.g., because the gross value of the
Contract does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed received
will not be includable in gross income, and will simply reduce the
"investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the
Annuity Commencement Date, any additional payments (including surrenders)
will be entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full surrender
after such date, only the excess of the amount received (after any
surrender charge) over the remaining "investment in the contract" shall be
includable in gross income (except to the extent that the aggregation
rule referred to in the next subparagraph c. may apply).
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year (other than
certain contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity Contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new Contract for this
purpose. Hartford believes that for any annuity subject to such aggregation, the
values under the Contracts and the investment in the contracts will be added
together to determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement Date. Withdrawals
will first be treated as withdrawals of income until all of the income from all
such Contracts is withdrawn. As of the date of this prospectus, there are no
regulations interpreting this provision.
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26 HARTFORD LIFE INSURANCE COMPANY
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d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal
periodic payments (not less frequently than annually) for the life (or
life expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's designated
Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO
AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or
annuity Contract purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be deemed to come
(1) first from the amount of the "investment in the contract" prior to
August 14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract,
(2) then from the portion of the "income on the contract" (carried over to, as
well as accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income. In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange Contracts are generally subject to the rules described in this
subparagraph 3.
f. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii
or iii below:
1. If any Contract Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Contract Owner dies before the Annuity Commencement Date, the
entire interest in the Contract will be distributed within 5 years after
such death; and
3. If the Contract Owner is not an individual, then for purposes of 1. or
2. above, the primary annuitant under the Contract shall be treated as
the Contract Owner, and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The primary annuitant is the
individual, the events in the life of whom are of primary 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. Distributions
must begin within a year of the Contract Owner's 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. This spousal continuation shall apply only
once for this contract.
3. DIVERSIFICATION REQUIREMENTS.
The Code requires that investments supporting your contract be adequately
diversified. Code Section 817 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.
If a contract is not treated as an annuity contract, the contract owner will be
subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations 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,
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HARTFORD LIFE INSURANCE COMPANY 27
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- 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 the
case of government securities, each government agency or instrumentality is
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 still 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.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend 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 separate accounts supporting the contract must be considered to be owned by
the insurance company and not by the contract owner. It is unclear under what
circumstances an investor is considered to have enough control over the assets
in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say 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.
In its explanation of the diversification regulations, the Treasury Department
recognized 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, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a contract owner is considered the owner of the assets
for tax purposes. We reserve the right to modify the contract, as necessary, to
prevent you from being considered the owner of assets in the separate account.
D. FEDERAL INCOME TAX WITHHOLDING
Any portion of a distribution that is (or is deemed to be) current taxable
income to the Contract Owner will be subject to federal income tax withholding
and reporting under the Code. Generally, however, a Contract Owner may elect not
to have income taxes withheld or to have income taxes withheld at a different
rate by filing a completed election form with us. Election forms will be
provided at the time distributions are required.
E. 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 for information relative to the types of plans
for which it may be used and the general explanation of the tax features of such
plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to annuity purchasers that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies. In addition, purchasers may be subject to
state premium tax, other state and/or municipal taxes, and taxes that may be
imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax adviser regarding U.S.,
state, and foreign taxation with respect to an annuity purchase.
G. GENERATION-SKIPPING TRANSFERS
Under certain circumstances, the Internal Revenue Code may impose a "generation
skipping transfer tax" when all or part of an annuity is transferred to, or a
death benefit is paid to, an individual two or more generations younger than the
owner. Federal tax law may require us to deduct the tax from your contract, or
from any applicable payment, and pay it directly to the Internal Revenue
Service.
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28 HARTFORD LIFE INSURANCE COMPANY
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TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION
<S> <C>
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DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
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SAFEKEEPING OF ASSETS
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INDEPENDENT PUBLIC ACCOUNTANTS
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DISTRIBUTION OF CONTRACTS
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CALCULATION OF YIELD AND RETURN
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PERFORMANCE COMPARISONS
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FINANCIAL STATEMENTS
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</TABLE>
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HARTFORD LIFE INSURANCE COMPANY 29
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APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about the
federal income tax rules associated with use of a Contract by a tax-qualified
retirement plan. Because of the complexity of the federal tax rules, owners,
participants and beneficiaries are encouraged to consult their own tax advisors
as to specific tax consequences.
The federal tax rules applicable to owners of Contracts under tax-qualified
retirement plans vary according to the type of plan as well as the terms and
conditions of the plan itself. Contract owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person may be
controlled by the terms and conditions of the tax-qualified retirement plan
itself, regardless of the terms and conditions of a Contract. We are not bound
by the terms and conditions of such plans to the extent such terms conflict with
a Contract, unless we specifically consent to be bound.
Some tax-qualified retirement plans are subject to distribution and other
requirements that are not incorporated into our administrative procedures.
Contract owners, participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions comply with applicable
law. Tax penalties may apply to transactions with respect to tax-qualified
retirement plans if applicable federal income tax rules and restrictions are not
carefully observed.
We do not currently offer the Contracts in connection with all of the types of
tax-qualified retirement plans discussed below and may not offer the Contracts
for all types of tax-qualified retirement plans in the future.
1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS -- Eligible employers can
establish certain tax-qualified pension and profit-sharing plans under section
401 of the Code. Rules under section 401(k) of the Code govern certain "cash or
deferred arrangements" under such plans. Rules under section 408(k) govern
"simplified employee pensions". Tax-qualified pension and profit-sharing 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 the Contracts in connection with
tax-qualified pension or profit-sharing plans should seek competent tax and
other legal advice.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(b) -- Public schools and certain
types of charitable, educational and scientific organizations, as specified in
section 501(c)(3) of the Code, can purchase tax-sheltered annuity contracts for
their employees. Tax-deferred contributions can be made to tax-sheltered annuity
contracts under section 403(b) of the Code, subject to certain limitations.
Generally, such contributions may not exceed the lesser of $10,500 (indexed) or
20% of the 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:
- after the participating employee attains age 59 1/2;
- upon separation from service;
- upon death or disability; or
- 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.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457 -- A governmental employer or a
tax-exempt employer other than a governmental unit can establish a Deferred
Compensation Plan under section 457 of the Code. For these purposes, a
"governmental employer" is a State, a political subdivision of a State, or an
agency or an instrumentality of a State or political subdivision of a State.
Employees and independent contractors performing services for a governmental or
tax-exempt employer can elect to have contributions made to a Deferred
Compensation Plan of their employer in accordance with the employer's plan and
section 457 of the Code.
Deferred Compensation Plans that meet the requirements of section 457(b) of the
Code are called "eligible" Deferred Compensation Plans. Section 457(b) limits
the amount of contributions that can be made to an eligible Deferred
Compensation Plan on behalf of a participant. Generally, the limitation on
contributions is 33 1/3% of a participant's includable compensation (typically
25% of gross compensation) or, for 1999, $8,000 (indexed), whichever is less.
The plan may provide for additional "catch-up" contributions during the three
taxable years ending before the year in which the participant attains normal
retirement age.
All of the assets and income of an eligible Deferred Compensation Plan of a
governmental employer must be held in trust for the exclusive benefit of
participants and their beneficiaries. For this purpose, custodial accounts and
certain annuity contracts are treated as trusts. The requirement of a trust does
not apply to amounts under a Deferred Compensation Plan of a tax-exempt
(non-governmental) employer. In addition, the requirement of a trust does not
apply to amounts under a Deferred Compensation Plan of a governmental employer
if the Deferred Compensation Plan is not an eligible plan within the meaning of
section 457(b) of the Code. In the absence of such a trust,
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amounts under the plan will be subject to the claims of the employer's general
creditors.
In general, distributions from an eligible Deferred Compensation Plan are
prohibited under section 457 of the Code unless made after the participating
employee:
- attains age 70 1/2,
- separates from service,
- dies, or
- suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Deferred Compensation
Plan under section 457 of the Code cannot be transferred or rolled over on a
tax-deferred basis except for certain transfers to other Deferred Compensation
Plans under section 457 in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS") UNDER SECTION 408
TRADITIONAL IRAS. -- Eligible individuals can establish individual retirement
programs under section 408 of the Code through the purchase of an IRA. Section
408 imposes limits with respect to IRAs, including limits on the amount that may
be contributed to an IRA, the amount of such contributions that may be deducted
from taxable income, the persons who may be eligible to contribute to an IRA,
and the time when distributions commence from an IRA. Distributions from certain
tax-qualified retirement plans may be "rolled-over" to an IRA on a tax-deferred
basis.
SIMPLE IRAS. -- Eligible employees may establish SIMPLE IRAs in connection with
a SIMPLE IRA plan of an employer under section 408(p) of the Code. 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 Traditional IRA only after two years have expired since the employee first
commenced participation in the employer's SIMPLE IRA plan. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a Traditional IRA. Hartford
is a non-designated financial institution for purposes of the SIMPLE IRA rules.
ROTH IRAS. -- Eligible individuals may establish Roth IRAs under section 408A of
the Code. Contributions to a Roth IRA are not deductible. Subject to special
limitations, a Traditional IRA may be converted into a Roth IRA or a
distribution from a Traditional IRA may be rolled over to a Roth IRA. However, a
conversion or a rollover from a Traditional 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.
5. FEDERAL TAX PENALTIES AND WITHHOLDING -- Distributions from tax-qualified
retirement plans are generally taxed as ordinary income 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.
(a) PENALTY TAX ON EARLY DISTRIBUTIONS Section 72(t) of the Code imposes an
additional penalty tax equal to 10% of the taxable portion of a distribution
from certain tax-qualified retirement plans. However, the 10% penalty tax
does not apply to a distribution that is:
- Made on or after the date on which the employee reaches age 59 1/2;
- Made to a beneficiary (or to the estate of the employee) on or after the death
of the employee;
- Attributable to the employee becoming disabled (as defined in the Code);
- Part of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the employee or the
joint lives (or joint life expectancies) of the employee and his or her
designated beneficiary;
- Except in the case of an IRA, made to an employee after separation from
service after reaching age 55; or
- Not greater than the amount allowable as a deduction to the employee for
eligible medical expenses during the taxable year.
In addition, the 10% penalty tax does not apply to a distribution from an IRA
that is:
- Made after separation from employment to an unemployed IRA owner for health
insurance premiums, if certain conditions are met;
- Not in excess of the amount of certain qualifying higher education expenses,
as defined by section 72(t)(7) of the Code; or
- A qualified first-time homebuyer distribution meeting the requirements
specified at 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 is increased to 25% with respect to non-exempt early 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.
(b) MINIMUM DISTRIBUTION PENALTY TAX If the amount distributed is less than the
minimum required distribution for the year, the Participant is subject to a
50% penalty 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 the Required Beginning
Date. Generally, the Required Beginning Date is April 1 of the calendar year
following the later of:
- the calendar year in which the individual attains age 70 1/2; or
- the calendar year in which the individual retires from service with the
employer sponsoring the plan.
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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:
- the life of the Participant or the lives of the Participant and the
Participant's designated beneficiary, or
- over a period not extending beyond the life expectancy of the Participant or
the joint life expectancy of the Participant and the Participant's 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 and distribution is over the life
of such 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.
(c) WITHHOLDING In general, regular wage withholding rules apply to
distributions from IRAs and plans described in section 457 of the Code.
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.
Mandatory federal income tax withholding at a flat rate of 20% will generally
apply to other distributions from such other tax-qualified retirement plans
unless such distributions are:
- the non-taxable portion of the distribution;
- required minimum distributions; or
- direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Code section 401(a)(31).
Certain states require withholding of state taxes when federal income tax is
withheld.
<PAGE>
This form must be completed for all tax-sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The 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:
- attained age 59 1/2,
- separated from service,
- died, or
- 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 your annuity. Please refer to your Plan.
Please complete the following and return to:
Hartford Life Insurance Company
Investment Product Services
P.O. Box 5085
Hartford, Connecticut 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 for the Director Choice Vision,
please complete the form below and mail to:
Hartford Life Insurance Company
Attn: Investment Product Services
P.O. Box 5085
Hartford, Connecticut 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
DIRECTOR CHOICE VISION
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: Investment Product Services, P.O. Box 5085, Hartford, Connecticut
06102-5085.
Date of Prospectus: _________, 2000
Date of Statement of Additional Information: _________, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY.......................... 3
SAFEKEEPING OF ASSETS .................................................. 3
INDEPENDENT PUBLIC ACCOUNTANTS ......................................... 3
DISTRIBUTION OF CONTRACTS............................................... 3
CALCULATION OF YIELD AND RETURN......................................... 4
PERFORMANCE COMPARISONS................................................. 8
FINANCIAL STATEMENTS ................................................... 11
</TABLE>
<PAGE>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company is a stock life insurance company engaged in the
business of writing life insurance, both individual and group, in all states of
the United States as well as the District of Columbia. 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. We are
ultimately controlled by The Hartford Financial Services Group, Inc., one of the
largest financial service providers in the United States.
<TABLE>
<CAPTION>
HARTFORD'S RATINGS
--------------------------------------------------------------------------------------------
Rating Agency Effective Rating Basis of Rating
Date of Rating
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc. 1/1/99 A+ Financial performance
--------------------------------------------------------------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
--------------------------------------------------------------------------------------------
Duff & Phelps 7/1/99 AA+ Claims paying ability
--------------------------------------------------------------------------------------------
</TABLE>
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. The assets are
kept physically segregated and are held separate and apart from Hartford's
general corporate assets. Records are maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited 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.
<PAGE>
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 that of Hartford.
The securities will be sold by salespersons of HSD, who represent Hartford as
insurance and Variable Annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the 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").
Hartford currently pays HSD underwriting commissions for its role as principal
underwriter of all variable annuities associated with this Separate Account. For
the past three years, the aggregate dollar amount of underwriting commissions
paid to HSD in its role principal underwriter has been: 1999: $226,178,603;
1998: $107,925,386; and 1997: $134,304,585. HSD has retained none of these
commissions.
CALCULATION OF YIELD AND RETURN
YIELD OF A MARKET SUB-ACCOUNT. As summarized in the Prospectus under the heading
"Performance Related Information," the yield of a money market Sub-Account for a
seven-day period (the "base period") will be computed by determining the "net
change in value" (calculated as set forth below) of a hypothetical account
having a balance of one accumulation unit of the Sub-Account at the beginning of
the period, subtracting a hypothetical charge reflecting deductions from
Contract Owner accounts, and dividing the difference by the value of the account
at the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to the nearest hundredth of one percent. Net changes in value of a
hypothetical account will include net investment income of the account (accrued
daily dividends as declared by the underlying funds, less daily expense charges
of the account) for the period, but will not include realized gains or losses or
unrealized appreciation or depreciation on the underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7 and subtracting 1
from the result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
YIELD AND EFFECTIVE YIELD FOR THE SEVEN-DAY PERIOD ENDING DECEMBER 31, 1999
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
SUB-ACCOUNT YIELD EFFECTIVE YIELD
--------------------------------------------------------------------------------
<S> <C> <C>
Hartford Money Market HLS Fund 4.94% 5.06%
--------------------------------------------------------------------------------
</TABLE>
THE MONEY MARKET SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY IN RESPONSE
TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE SUB-ACCOUNT. THE
CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON THE SEPARATE
ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.
YIELD OF SUB-ACCOUNTS. As summarized in the Prospectus under the heading
"Performance Related Information," yields of 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 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 Funds.
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 based charges
assessed under the Contract over the base period. Yield quotations based on a
30-day period are computed by dividing the dividends and interests earned during
the period by the maximum offering price per unit on the last day of the period,
according to the following formula:
Example:
6
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period
that were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
YIELD QUOTATION BASED ON A 30-DAY PERIOD ENDED DECEMBER 31, 1999
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
SUB-ACCOUNT YIELD
--------------------------------------------------------------------------------
<S> <C>
Hartford Bond HLS Fund 6.59%
--------------------------------------------------------------------------------
Hartford High Yield HLS Fund 9.22%
--------------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 6.41%
--------------------------------------------------------------------------------
</TABLE>
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information," total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula for
total return used herein includes three steps: (1) calculating the value of the
hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period; (2) assuming redemption at
the end of the period and deducting any applicable contingent deferred sales
charge and (3) dividing this account value for the hypothetical investor by the
initial $1,000 investment and annualizing the result for periods of less than
one year. Standardized total return will be calculated since the inception of
the Separate Account 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. (These returns assume a mortality and risk expense charge of
0.40%.) There is no information for Hartford Global Health HLS Fund and Hartford
Global Technology HLS Fund Sub-Accounts, because as of December 31, 1999 the
Sub-Accounts had not commenced operations.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
SEPARATE
ACCOUNT 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
SUB-ACCOUNT INCEPTION OF SEPARATE
DATE ACCOUNT
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mitchell Hutchins Series Trust 1/2/92 10.01% 21.59% N/A 12.09%
Growth and Income Portfolio
-------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust 9/29/98 1.48% N/A N/A 3.38%
Strategic Growth Portfolio
-------------------------------------------------------------------------------------------------------------------
<PAGE>
-------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust 9/29/98 17.97% N/A N/A 36.16%
Tactical Allocation Portfolio
-------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund 5/20/91 10.14% 20.28% N/A 14.40%
-------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 5/20/91 -2.41% 7.25% N/A 6.73%
-------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation 5/20/91 36.91% 24.51% N/A 21.17%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth 3/9/94 4.89% 21.58% N/A 18.61%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 10/1/98 49.77% N/A N/A 72.28%
-------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income 5/29/98 21.34% N/A N/A 25.80%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 10/1/98 4.29% N/A N/A 6.28%
-------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 5/20/91 20.01% 27.30% N/A 18.65%
-------------------------------------------------------------------------------------------------------------------
Hartford International Advisers 3/1/95 22.67% N/A N/A 13.83%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford International 5/20/91 39.30% 14.90% N/A 11.84%
Opportunities HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 7/30/97 51.20% N/A N/A 37.58%
-------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 5/20/91 4.47% 4.86% N/A 4.25%
-------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities 5/20/91 1.11% 7.16% N/A 6.22%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 8/9/96 65.17% N/A N/A 28.07%
-------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 5/20/91 19.30% 27.98% N/A 18.97%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Performance figures above do not reflect any deductions for Optional Death
Benefit charges. Performance would have been lower had the Optional Death
Benefit been available and been chosen.
In addition to the standardized total return, the Sub-Accounts may advertise a
non-standardized total return. This figure will usually be calculated since the
inception of the underlying fund 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
<PAGE>
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 following are the
non-standardized annualized total return quotations for the Sub-Accounts. (These
returns assume a mortality and risk expense charge of 0.40%.) There is no
information for Hartford Global Health HLS Fund and Hartford Global Technology
HLS Fund Sub-Accounts, because as of December 31, 1999 the Sub-Accounts had not
commenced operations.
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE
INCEPTION DATE OF THE SEPARATE ACCOUNT FOR YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
FUND
SUB-ACCOUNT INCEPTION 1 YEAR 5 YEAR 10 YEAR SINCE
DATE INCEPTION OF
FUND
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mitchell Hutchins Series Trust 1/2/92 10.01% 21.59% N/A 12.09%
Growth and Income Portfolio
-------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust 9/29/98 1.48% N/A N/A 3.38%
Strategic Growth Portfolio
-------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust 9/29/98 17.97% N/A N/A 36.16%
Tactical Allocation Portfolio
-------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund 3/31/83 10.14% 20.28% 13.53% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 8/31/77 -2.41% 7.25% 6.97% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation 4/2/84 36.91% 24.51% 19.29% N/A
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth 3/8/94 4.89% 21.58% N/A 18.61%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 10/1/98 49.77% N/A N/A 72.28%
-------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income 5/29/98 21.34% N/A N/A 25.80%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 10/1/98 4.29% N/A N/A 6.28%
-------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 5/1/87 20.01% 27.30% 16.97% N/A
-------------------------------------------------------------------------------------------------------------------
<PAGE>
-------------------------------------------------------------------------------------------------------------------
Hartford International Advisers 3/1/95 22.67% N/A N/A 13.83%
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford International 7/2/90 39.30% 14.90% N/A 9.92%
Opportunities HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 7/30/97 51.20% N/A N/A 37.58%
-------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 6/30/80 4.47% 4.86% 4.68% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities 1/1/85 1.11% 7.16% 6.68% N/A
HLS Fund
-------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 8/9/96 65.17% N/A N/A 28.07%
-------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 8/31/77 19.30% 27.98% 17.41% N/A
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Performance figures above do not reflect any deductions for Optional Death
Benefit charges. Performance would have been lower had the Optional Death
Benefit been available and been chosen.
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 about 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange.
<PAGE>
The NASDAQ-OTC Composite Price Index (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks relative to the base measure of 100.00 on
February 5, 1971. The NASDAQ Index is composed entirely of common stocks of
companies traded over-the-counter and often through the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system. Only those
over-the-counter stocks having only one market maker or traded on exchanges are
excluded.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index is
weighted by market capitalization, and therefore, it has a heavy representation
in countries with large stock markets, such as Japan.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted issues
are not included in the SL Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
The Composite Index for Hartford Advisers HLS 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>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO AND TO THE OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account Two (Bond Fund, Stock Fund,
Money Market Fund, Advisers Fund, Capital Appreciation Fund, Mortgage Securities
Fund, Index Fund, International Opportunities Fund, Dividend and Growth Fund,
International Advisers Fund, Small Company Fund, MidCap Fund, Growth and Income
Fund, High Yield Fund, Global Leaders Fund, Smith Barney Cash Portfolio, Smith
Barney Appreciation Fund, Smith Barney Government Portfolio, BB&T Growth &
Income Fund, AmSouth Equity Income Fund, Mentor VIP Capital Growth Fund, Mentor
VIP Perpetual International Fund, Mentor VIP Growth Fund, Mitchell Hutchins
Growth and Income Portfolio, Mitchell Hutchins Strategic Income Portfolio,
Mitchell Hutchins Tactical Allocation Portfolio, Huntington VA Income Equity
Fund and AmSouth Select Equity Fund) (collectively, the Account) as of December
31, 1999, and the related statements of operations and the statements of changes
in net assets for the periods presented. These financial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
_____________________________________SA-1 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 381,925,372
Cost $398,919,676
Market Value...................... $379,581,114 -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 446,551,430
Cost $1,739,620,114
Market Value...................... -- $3,191,676,331 --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 416,009,296
Cost $416,009,296
Market Value...................... -- -- $416,009,296
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 1,924,549,471
Cost $3,837,456,863
Market Value...................... -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 437,319,084
Cost $1,404,391,777
Market Value...................... -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 163,664,753
Cost $176,379,736
Market Value...................... -- -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 208,576,729
Cost $500,271,928
Market Value...................... -- -- --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 270,848,565
Cost $312,238,682
Market Value...................... -- -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 462,406,230
Cost $749,888,851
Market Value...................... -- -- --
Due from Hartford Life Insurance
Company.............................. -- -- --
Receivable from fund shares sold...... 160,437 77,855 38,653,596
------------ -------------- ------------
Total Assets.......................... 379,741,551 3,191,754,186 454,662,892
------------ -------------- ------------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. 160,617 79,461 38,625,437
Payable for fund shares purchased..... -- -- --
------------ -------------- ------------
Total Liabilities..................... 160,617 79,461 38,625,437
------------ -------------- ------------
Net Assets (variable annuity contract
liabilities)......................... $379,580,934 $3,191,674,725 $416,037,455
============ ============== ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
_____________________________________SA-2 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- ----------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 381,925,372
Cost $398,919,676
Market Value...................... -- -- -- -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 446,551,430
Cost $1,739,620,114
Market Value...................... -- -- -- -- --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 416,009,296
Cost $416,009,296
Market Value...................... -- -- -- -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 1,924,549,471
Cost $3,837,456,863
Market Value...................... $5,705,854,235 -- -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 437,319,084
Cost $1,404,391,777
Market Value...................... -- $2,665,629,499 -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 163,664,753
Cost $176,379,736
Market Value...................... -- -- $170,128,202 -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 208,576,729
Cost $500,271,928
Market Value...................... -- -- -- $ 873,682,031 --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 270,848,565
Cost $312,238,682
Market Value...................... -- -- -- -- $508,094,303
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 462,406,230
Cost $749,888,851
Market Value...................... -- -- -- -- --
Due from Hartford Life Insurance
Company.............................. -- 14,808,231 85,563 205,321 1,011,121
Receivable from fund shares sold...... 2,195,184 -- -- -- --
-------------- -------------- ------------ ------------- ------------
Total Assets.......................... 5,708,049,419 2,680,437,730 170,213,765 873,887,352 509,105,424
-------------- -------------- ------------ ------------- ------------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. 2,196,979 -- -- -- --
Payable for fund shares purchased..... -- 14,808,295 81,591 206,074 1,012,471
-------------- -------------- ------------ ------------- ------------
Total Liabilities..................... 2,196,979 14,808,295 81,591 206,074 1,012,471
-------------- -------------- ------------ ------------- ------------
Net Assets (variable annuity contract
liabilities)......................... $5,705,852,440 $2,665,629,435 $170,132,174 $ 873,681,278 $508,092,953
============== ============== ============ ============= ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND AND
GROWTH FUND
SUB-ACCOUNT
--------------
<S> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 381,925,372
Cost $398,919,676
Market Value...................... --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 446,551,430
Cost $1,739,620,114
Market Value...................... --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 416,009,296
Cost $416,009,296
Market Value...................... --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 1,924,549,471
Cost $3,837,456,863
Market Value...................... --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 437,319,084
Cost $1,404,391,777
Market Value...................... --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 163,664,753
Cost $176,379,736
Market Value...................... --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 208,576,729
Cost $500,271,928
Market Value...................... --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 270,848,565
Cost $312,238,682
Market Value...................... --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 462,406,230
Cost $749,888,851
Market Value...................... $ 993,631,453
Due from Hartford Life Insurance
Company.............................. --
Receivable from fund shares sold...... 398,320
-------------
Total Assets.......................... 994,029,773
-------------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. 397,708
Payable for fund shares purchased..... --
-------------
Total Liabilities..................... 397,708
-------------
Net Assets (variable annuity contract
liabilities)......................... $ 993,632,065
=============
</TABLE>
_____________________________________SA-3 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL SMALL
ADVISERS COMPANY MIDCAP
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
International Advisers HLS Fund, Inc.
- Class IA
Shares 78,142,562
Cost $91,062,085
Market Value...................... $109,141,013 -- --
Small Company HLS Fund, Inc. -
Class IA
Shares 116,111,010
Cost $161,087,349
Market Value...................... -- $254,024,997 --
MidCap HLS Fund, Inc. - Class IA
Shares 126,461,413
Cost $205,816,508
Market Value...................... -- -- $259,688,385
Hartford Growth and Income HLS Fund
- Class IA
Shares 44,914,208
Cost $57,056,947
Market Value...................... -- -- --
Hartford High Yield HLS Fund -
Class IA
Shares 17,416,534
Cost $18,153,355
Market Value...................... -- -- --
Hartford Global Leaders HLS Fund -
Class IA
Shares 27,623,494
Cost $42,769,890
Market Value...................... -- -- --
Smith Barney Cash Portfolio
Shares 471,343
Cost $471,343
Market Value...................... -- -- --
Smith Barney Appreciation Fund
Shares 14,215
Cost $117,589
Market Value...................... -- -- --
Smith Barney Government Portfolio
Shares 31,310
Cost $31,310
Market Value...................... -- -- --
BB&T Growth & Income Fund
Shares 2,248,623
Cost $27,485,794
Market Value...................... -- -- --
AmSouth Equity Income Fund
Shares 2,572,237
Cost $28,494,557
Market Value...................... -- -- --
Due from Hartford Life Insurance
Company.............................. 119,851 5,463,600 16,063,484
Receivable from fund shares sold...... -- -- --
------------ ------------ ------------
Total Assets.......................... 109,260,864 259,488,597 275,751,869
------------ ------------ ------------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- -- --
Payable for fund shares purchased..... 120,096 5,463,705 16,063,809
------------ ------------ ------------
Total Liabilities..................... 120,096 5,463,705 16,063,809
------------ ------------ ------------
Net Assets (variable annuity contract
liabilities)......................... $109,140,768 $254,024,892 $259,688,060
============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
____________________________________ SA-4 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND GLOBAL SMITH BARNEY SMITH BARNEY SMITH BARNEY
INCOME HIGH YIELD LEADERS CASH APPRECIATION GOVERNMENT
FUND FUND FUND PORTFOLIO FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
International Advisers HLS Fund, Inc
- Class IA
Shares 78,142,562
Cost $91,062,085
Market Value...................... -- -- -- -- -- --
Small Company HLS Fund, Inc. -
Class IA
Shares 116,111,010
Cost $161,087,349
Market Value...................... -- -- -- -- -- --
MidCap HLS Fund, Inc. - Class IA
Shares 126,461,413
Cost $205,816,508
Market Value...................... -- -- -- -- -- --
Hartford Growth and Income HLS Fund
- Class IA
Shares 44,914,208
Cost $57,056,947
Market Value...................... $64,301,022 -- -- -- -- --
Hartford High Yield HLS Fund -
Class IA
Shares 17,416,534
Cost $18,153,355
Market Value...................... -- $17,501,387 -- -- -- --
Hartford Global Leaders HLS Fund -
Class IA
Shares 27,623,494
Cost $42,769,890
Market Value...................... -- -- $52,840,981 -- -- --
Smith Barney Cash Portfolio
Shares 471,343
Cost $471,343
Market Value...................... -- -- -- $ 471,343 -- --
Smith Barney Appreciation Fund
Shares 14,215
Cost $117,589
Market Value...................... -- -- -- -- $223,601 --
Smith Barney Government Portfolio
Shares 31,310
Cost $31,310
Market Value...................... -- -- -- -- -- $31,310
BB&T Growth & Income Fund
Shares 2,248,623
Cost $27,485,794
Market Value...................... -- -- -- -- -- --
AmSouth Equity Income Fund
Shares 2,572,237
Cost $28,494,557
Market Value...................... -- -- -- -- -- --
Due from Hartford Life Insurance
Company.............................. 119,444 -- 279,383 26,631 -- --
Receivable from fund shares sold...... -- 16,018 -- -- 14 11
----------- ----------- ----------- --------- -------- -------
Total Assets.......................... 64,420,466 17,517,405 53,120,364 497,974 223,615 31,321
----------- ----------- ----------- --------- -------- -------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- 15,974 -- -- 77 19
Payable for fund shares purchased..... 119,350 -- 279,292 27,259 -- --
----------- ----------- ----------- --------- -------- -------
Total Liabilities..................... 119,350 15,974 279,292 27,259 77 19
----------- ----------- ----------- --------- -------- -------
Net Assets (variable annuity contract
liabilities)......................... $64,301,116 $17,501,431 $52,841,072 $ 470,715 $223,538 $31,302
=========== =========== =========== ========= ======== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BB&T AMSOUTH
GROWTH & EQUITY INCOME
INCOME FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
ASSETS:
Investments:
International Advisers HLS Fund, Inc
- Class IA
Shares 78,142,562
Cost $91,062,085
Market Value...................... -- --
Small Company HLS Fund, Inc. -
Class IA
Shares 116,111,010
Cost $161,087,349
Market Value...................... -- --
MidCap HLS Fund, Inc. - Class IA
Shares 126,461,413
Cost $205,816,508
Market Value...................... -- --
Hartford Growth and Income HLS Fund
- Class IA
Shares 44,914,208
Cost $57,056,947
Market Value...................... -- --
Hartford High Yield HLS Fund -
Class IA
Shares 17,416,534
Cost $18,153,355
Market Value...................... -- --
Hartford Global Leaders HLS Fund -
Class IA
Shares 27,623,494
Cost $42,769,890
Market Value...................... -- --
Smith Barney Cash Portfolio
Shares 471,343
Cost $471,343
Market Value...................... -- --
Smith Barney Appreciation Fund
Shares 14,215
Cost $117,589
Market Value...................... -- --
Smith Barney Government Portfolio
Shares 31,310
Cost $31,310
Market Value...................... -- --
BB&T Growth & Income Fund
Shares 2,248,623
Cost $27,485,794
Market Value...................... $28,017,845 --
AmSouth Equity Income Fund
Shares 2,572,237
Cost $28,494,557
Market Value...................... -- $35,728,377
Due from Hartford Life Insurance
Company.............................. 2,564 170,059
Receivable from fund shares sold...... -- --
----------- -----------
Total Assets.......................... 28,020,409 35,898,436
----------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- --
Payable for fund shares purchased..... 2,585 170,055
----------- -----------
Total Liabilities..................... 2,585 170,055
----------- -----------
Net Assets (variable annuity contract
liabilities)......................... $28,017,824 $35,728,381
=========== ===========
</TABLE>
_____________________________________SA-5 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP
CAPITAL GROWTH PERPETUAL INTERNATIONAL
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- -----------------------
<S> <C> <C>
ASSETS:
Investments:
Mentor VIP Capital Growth Fund
Shares 1,714,877
Cost $21,738,831
Market Value..................................... $24,728,524 --
Mentor VIP Perpetual International Fund
Shares 1,160,994
Cost $16,298,880
Market Value..................................... -- $22,755,484
Mentor VIP Growth Fund
Shares 1,040,522
Cost $11,202,467
Market Value..................................... -- --
Mitchell Hutchins Growth & Income Portfolio -
Class I
Shares 245,997
Cost $3,654,815
Market Value..................................... -- --
Mitchell Hutchins Strategic Income Portfolio -
Class I
Shares 98,344
Cost $1,219,298
Market Value..................................... -- --
Mitchell Hutchins Tactical Allocation Portfolio -
Class I
Shares 1,320,950
Cost $21,338,736
Market Value..................................... -- --
Huntington VA Income Equity Fund
Shares 23,178
Cost $228,633
Market Value..................................... -- --
AmSouth Select Equity Fund
Shares 290,955
Cost $2,680,109
Market Value..................................... -- --
Due from Hartford Life Insurance Company............. -- 17,786
Receivable from fund shares sold..................... 7,221 --
----------- -----------
Total Assets......................................... 24,735,745 22,773,270
----------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company............... 7,301 --
Payable for fund shares purchased.................... -- 17,847
----------- -----------
Total Liabilities.................................... 7,301 17,847
----------- -----------
Net Assets (variable annuity contract liabilities)... $24,728,444 $22,755,423
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
____________________________________SA-6 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
MENTOR VIP MITCHELL HUTCHINS MITCHELL HUTCHINS MITCHELL HUTCHINS
GROWTH GROWTH AND INCOME STRATEGIC INCOME TACTICAL ALLOCATION
FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Mentor VIP Capital Growth Fund
Shares 1,714,877
Cost $21,738,831
Market Value..................................... -- -- -- --
Mentor VIP Perpetual International Fund
Shares 1,160,994
Cost $16,298,880
Market Value..................................... -- -- -- --
Mentor VIP Growth Fund
Shares 1,040,522
Cost $11,202,467
Market Value..................................... $14,432,037 -- -- --
Mitchell Hutchins Growth & Income Portfolio -
Class I
Shares 245,997
Cost $3,654,815
Market Value..................................... -- $4,022,057 -- --
Mitchell Hutchins Strategic Income Portfolio -
Class I
Shares 98,344
Cost $1,219,298
Market Value..................................... -- -- $1,153,572 --
Mitchell Hutchins Tactical Allocation Portfolio -
Class I
Shares 1,320,950
Cost $21,338,736
Market Value..................................... -- -- -- $21,769,264
Huntington VA Income Equity Fund
Shares 23,178
Cost $228,633
Market Value..................................... -- -- -- --
AmSouth Select Equity Fund
Shares 290,955
Cost $2,680,109
Market Value..................................... -- -- -- --
Due from Hartford Life Insurance Company............. 9,714 -- -- 1,537
Receivable from fund shares sold..................... -- 137 -- --
----------- ---------- ---------- -----------
Total Assets......................................... 14,441,751 4,022,194 1,153,572 21,770,801
----------- ---------- ---------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company............... -- 134 38 --
Payable for fund shares purchased.................... 9,738 -- -- 1,531
----------- ---------- ---------- -----------
Total Liabilities.................................... 9,738 134 38 1,531
----------- ---------- ---------- -----------
Net Assets (variable annuity contract liabilities)... $14,432,013 $4,022,060 $1,153,534 $21,769,270
=========== ========== ========== ===========
<CAPTION>
HUNTINGTON VA AMSOUTH
INCOME EQUITY SELECT EQUITY
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -------------
<S> <C> <C>
ASSETS:
Investments:
Mentor VIP Capital Growth Fund
Shares 1,714,877
Cost $21,738,831
Market Value..................................... -- --
Mentor VIP Perpetual International Fund
Shares 1,160,994
Cost $16,298,880
Market Value..................................... -- --
Mentor VIP Growth Fund
Shares 1,040,522
Cost $11,202,467
Market Value..................................... -- --
Mitchell Hutchins Growth & Income Portfolio -
Class I
Shares 245,997
Cost $3,654,815
Market Value..................................... -- --
Mitchell Hutchins Strategic Income Portfolio -
Class I
Shares 98,344
Cost $1,219,298
Market Value..................................... -- --
Mitchell Hutchins Tactical Allocation Portfolio -
Class I
Shares 1,320,950
Cost $21,338,736
Market Value..................................... -- --
Huntington VA Income Equity Fund
Shares 23,178
Cost $228,633
Market Value..................................... $228,763 --
AmSouth Select Equity Fund
Shares 290,955
Cost $2,680,109
Market Value..................................... -- $2,476,028
Due from Hartford Life Insurance Company............. -- 21,838
Receivable from fund shares sold..................... -- --
-------- ----------
Total Assets......................................... 228,763 2,497,866
-------- ----------
LIABILITIES:
Due to Hartford Life Insurance Company............... 8 --
Payable for fund shares purchased.................... -- 21,834
-------- ----------
Total Liabilities.................................... 8 21,834
-------- ----------
Net Assets (variable annuity contract liabilities)... $228,755 $2,476,032
======== ==========
</TABLE>
____________________________________SA-7 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- ---------- ---------------
<S> <C> <C> <C>
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
Bond Fund Qualified 1.00%........ 213,341 $ 4.242785 $ 905,161
Bond Fund Non-Qualified 1.00%.... 1,528,336 4.178271 6,385,802
Bond Fund 1.25%.................. 167,706,691 2.184598 366,371,702
Bond Fund .25%................... 52,746 1.498860 79,060
Bond Fund 1.4%................... 755,787 2.182434 1,649,454
Bond Fund 1.5%................... 2,733,792 0.994947 2,719,978
Stock Fund Qualified 1.00%....... 2,764,533 13.310539 36,797,424
Stock Fund Qualified 1.00%....... 679,578 13.920026 9,459,745
Stock Fund 1.25%................. 432,423,789 7.175612 3,102,905,327
Stock Fund .25%.................. 1,068,046 3.885218 4,149,591
Stock Fund 1.4%.................. 2,104,901 7.168535 15,089,057
Stock Fund 1.5%.................. 11,808,607 1.223394 14,446,580
Stock Fund 1.65%................. 69,390 1.222948 84,860
Money Market Fund Qualified
1.00%........................... 459,952 2.782454 1,279,796
Money Market Fund Non-Qualified
1.00%........................... 6,995,552 2.783765 19,473,975
Money Market Fund 1.25%.......... 213,832,400 1.777341 380,053,091
Money Market Fund .25%........... 423,001 1.359855 575,220
Money Market Fund 1.65%.......... 95,824 1.049997 100,615
Money Market Fund 1.4%........... 1,061,435 1.775591 1,884,675
Money Market Fund 1.5%........... 11,251,805 1.050377 11,818,637
Advisers Fund Qualified 1.00%.... 2,884,286 7.230781 20,855,639
Advisers Fund Non-Qualified
1.00%........................... 8,513,289 7.230781 61,557,730
Advisers Fund 1.25%.............. 1,156,230,489 4.803097 5,553,487,191
Advisers Fund .25%............... 1,122,511 2.760456 3,098,643
Advisers Fund 1.65%.............. 90,120 1.127468 101,608
Advisers Fund 1.4%............... 4,952,412 4.798347 23,763,390
Advisers Fund 1.5%............... 24,758,627 1.127880 27,924,760
Capital Appreciation Fund
Qualified 1.00%................. 693,728 12.687752 8,801,850
Capital Appreciation Fund
Non-Qualified 1.00%............. 1,995,203 12.682513 25,304,182
Capital Appreciation Fund
1.25%........................... 347,433,441 7.501418 2,606,243,470
Capital Appreciation Fund .25%... 1,770,832 3.719454 6,586,527
Capital Appreciation Fund
1.65%........................... 56,270 1.334003 75,064
Capital Appreciation Fund 1.4%... 1,112,300 7.494011 8,335,584
Capital Appreciation Fund 1.5%... 5,291,692 1.334491 7,061,715
Mortgage Securities Fund
Qualified 1.00%................. 455,136 2.859263 1,301,354
Mortgage Securities Fund
Non-Qualified 1.00%............. 4,637,303 2.859263 13,259,270
Mortgage Securities Fund 1.25%... 69,554,953 2.216665 154,180,031
Mortgage Securities Fund .25%.... 14,431 1.476954 21,314
Mortgage Securities Fund 1.4%.... 120,468 2.214471 266,772
Mortgage Securities Fund 1.5%.... 435,786 1.022434 445,563
Index Fund Qualified 1.00%....... 180,991 2.226696 403,011
Index Fund Non-Qualified 1.00%... 705,606 2.226696 1,571,169
Index Fund 1.25%................. 152,272,495 5.607574 853,879,286
Index Fund .25%.................. 225,894 3.702905 836,463
Index Fund 1.65%................. 7,659 1.239923 9,497
Index Fund 1.4%.................. 1,106,937 5.602011 6,201,075
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
____________________________________SA-8 _____________________________________
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- ---------- ---------------
<S> <C> <C> <C>
Index Fund 1.5%.................. 5,947,828 $ 1.240377 $ 7,377,549
International Opportunities Fund
Qualified 1.00%................. 164,957 2.321965 383,024
International Opportunities Fund
Non-Qualified 1.00%............. 1,040,352 2.320729 2,414,376
International Opportunities Fund
1.25%........................... 218,271,540 2.266827 494,783,822
International Opportunities Fund
.25%............................ 693,181 2.614527 1,812,341
International Opportunities Fund
1.4%............................ 449,187 2.264582 1,017,221
International Opportunities Fund
1.5%............................ 5,242,257 1.273461 6,675,810
Dividend and Growth Fund
Qualified 1.00%................. 302,679 2.607548 789,249
Dividend and Growth Fund
Non-Qualified 1.00%............. 1,206,465 2.607548 3,145,915
Dividend and Growth Fund 1.25%... 381,269,170 2.569946 979,841,178
Dividend and Growth Fund .25%.... 208,016 2.723583 566,550
Dividend and Growth Fund 1.65%... 17,587 1.045671 18,390
Dividend and Growth Fund 1.4%.... 1,030,411 2.567396 2,645,474
Dividend and Growth Fund 1.5%.... 4,376,833 1.046052 4,578,395
International Advisers Fund
Qualified 1.00%................. 12,397 1.817544 22,533
International Advisers Fund
Non-Qualified 1.00%............. 153,873 1.817544 279,670
International Advisers Fund
1.25%........................... 57,796,510 1.795704 103,785,423
International Advisers Fund
.25%............................ 38,176 1.884645 71,947
International Advisers Fund
1.65%........................... 8,093 1.178048 9,534
International Advisers Fund
1.4%............................ 390,910 1.793926 701,264
International Advisers Fund
1.5%............................ 3,383,042 1.178481 3,986,850
Small Company Fund Qualified
1.00%........................... 227,604 2.269744 516,604
Small Company Fund Non-Qualified
1.00%........................... 2,533,564 2.269744 5,750,541
Small Company Fund 1.25%......... 107,808,156 2.250630 242,636,270
Small Company Fund .25%.......... 237,848 2.328130 553,741
Small Company Fund 1.65%......... 23,341 1.592576 37,173
Small Company Fund 1.4%.......... 725,945 2.248401 1,632,216
Small Company Fund 1.5%.......... 1,659,166 1.593152 2,643,303
MidCap Fund Sub-Account 1.00%
Qualified....................... 276,421 2.068062 571,655
MidCap Fund Sub-Account 1.00%
Non-Qualified................... 4,561,273 2.068062 9,432,996
MidCap Fund Sub-Account .25%..... 100,099 2.105927 210,800
MidCap Fund 1.65%................ 12,943 1.520083 19,674
MidCap Fund 1.4%................. 1,455,391 2.053534 2,988,695
MidCap Fund 1.5%................. 2,064,651 1.520630 3,139,571
MidCap Fund 1.25%................ 118,305,628 2.055574 243,185,973
Growth and Income Fund 1.65%..... 16,881 1.308008 22,081
Growth and Income Fund 1.4%...... 1,551,524 1.420460 2,203,878
Growth and Income Fund Non-
Qualified 1.00%................. 94,246 1.427512 134,538
Growth and Income Fund Qualified
1.00%........................... 297,288 1.427512 424,382
Growth and Income Fund .25%...... 18,437 1.444538 26,633
Growth and Income Fund 1.25%..... 41,231,825 1.421882 58,626,791
Growth and Income Fund 1.5%...... 2,107,446 1.308485 2,757,561
High Yield Fund 1.4%............. 707,437 1.069043 756,281
High Yield Fund 1.5%............. 754,351 1.066776 804,723
High Yield Fund .25%............. 10,000 1.083588 10,836
High Yield Fund 1.25%............ 14,681,047 1.070110 15,710,335
High Yield Fund Qualified
1.00%........................... 9,996 1.073454 10,730
High Yield Fund Non-Qualified
1.00%........................... 28,832 1.073454 30,950
</TABLE>
__________________________________ SA-9 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
-------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- ---------- ---------------
<S> <C> <C> <C>
Global Leaders Fund 1.4%......... 601,937 $ 1.950512 $ 1,174,085
Global Leaders Fund .25%......... 34,138 1.976824 67,485
Global Leaders Fund 1.25%........ 25,342,886 1.952453 49,480,795
Global Leaders Fund Non-Qualified
1.00%........................... 132,669 1.958438 259,824
Global Leaders Fund 1.00%........ 30,778 1.958438 60,278
Global Leaders Fund 1.5%......... 912,978 1.946293 1,776,922
Smith Barney Cash Portfolio
Qualified 1.00%................. 40,848 2.996122 122,387
Smith Barney Cash Portfolio
Non-Qualified 1.00%............. 112,352 3.100326 348,328
Smith Barney Appreciation Fund
1.00%........................... 17,669 12.651528 223,538
Smith Barney Government Portfolio
1.00%........................... 11,614 2.695221 31,302
BB&T Growth and Income Fund
1.4%............................ 164,327 1.263735 207,666
BB&T Growth and Income Fund
1.25%........................... 21,984,471 1.264991 27,810,158
AmSouth Equity Income Fund
1.4%............................ 868,023 1.400354 1,215,539
AmSouth Equity Income Fund
1.25%........................... 24,604,396 1.401746 34,489,115
Mentor VIP Capital Growth Fund
1.4%............................ 100,477 1.129778 113,517
Mentor VIP Capital Growth Fund
1.25%........................... 21,765,940 1.130892 24,614,927
Mentor VIP Perpetual
International Fund 1.4%......... 117,617 1.531949 180,183
Mentor VIP Perpetual
International Fund 1.25%........ 14,721,728 1.533464 22,575,240
Mentor VIP Growth Fund 1.4%...... 39,023 1.085030 42,341
Mentor VIP Growth Fund 1.25%..... 13,248,938 1.086100 14,389,672
Mitchell Hutchins Growth and
Income Portfolio 1.5%........... 28,159 1.082851 30,491
Mitchell Hutchins Growth and
Income Portfolio 1.4%........... 24,198 1.168150 28,267
Mitchell Hutchins Growth and
Income Portfolio 1.25%.......... 3,389,460 1.169302 3,963,302
Mitchell Hutchins Strategic
Income Portfolio 1.5%........... 39,574 0.975253 38,595
Mitchell Hutchins Strategic
Income Portfolio 1.4%........... 48,568 1.002380 48,683
Mitchell Hutchins Strategic
Income Portfolio 1.25%.......... 1,062,673 1.003372 1,066,256
Mitchell Hutchins Tactical
Allocation Portfolio 1.5%....... 1,771,459 1.065485 1,887,463
Mitchell Hutchins Tactical
Allocation Portfolio 1.4%....... 260,842 1.235332 322,226
Mitchell Hutchins Tactical
Allocation Portfolio 1.25%...... 15,817,865 1.236550 19,559,581
Huntington VA Income Equity Fund
1.4%............................ 6,274 0.992986 6,230
Huntington VA Income Equity Fund
1.25%........................... 224,042 0.993229 222,525
AmSouth Select Equity Fund
1.4%............................ 213,869 0.846981 181,143
AmSouth Select Equity Fund
1.25%........................... 2,706,783 0.847829 2,294,889
---------------
SUB-TOTAL:....................... 15,780,380,307
---------------
ANNUITY CONTRACTS IN THE ANNUITY
PERIOD:
Bond Fund Non-Qualified 1.00%.... 13,487 4.178271 56,352
Bond Fund 1.25%.................. 646,995 2.184598 1,413,425
Stock Fund Non-Qualified 1.00%... 21,934 13.310539 291,952
Stock Fund 1.25%................. 1,177,626 7.175612 8,450,189
Money Market Fund Qualified
1.00%........................... 317 2.782454 883
Money Market Fund Non-Qualified
1.00%........................... 70,673 2.783765 196,736
Money Market Fund 1.25%.......... 367,868 1.777341 653,827
Advisers Fund Qualified 1.00%.... 1,924 7.230781 13,909
Advisers Fund Non-Qualified
1.00%........................... 107,185 7.230781 775,030
Advisers Fund 1.25%.............. 2,971,945 4.803097 14,274,540
Capital Appreciation Fund
Non-Qualified 1.00%............. 15,299 12.682513 194,028
Capital Appreciation Fund
1.25%........................... 403,526 7.501418 3,027,015
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
___________________________________ SA-10 _____________________________________
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- ---------- ---------------
<S> <C> <C> <C>
Mortgage Securities Fund
Non-Qualified 1.00%............. 57,599 $ 2.859263 $ 164,690
Mortgage Securities Fund 1.25%... 222,487 2.216665 493,180
Index Fund 1.25%................. 603,079 5.607574 3,381,807
Index Fund Non-Qualified 1.00%... 9,620 2.226696 21,421
International Opportunities Fund
Non-Qualified 1.00%............. 4,586 2.320729 10,643
International Opportunities Fund
1.25%........................... 439,255 2.266827 995,716
Dividend and Growth Fund 1.25%... 796,481 2.569946 2,046,914
International Advisers Fund
1.25%........................... 157,903 1.795704 283,547
Small Company Fund 1.25%......... 113,321 2.250630 255,044
MidCap Fund 1.25%................ 67,473 2.055574 138,696
Growth and Income Fund 1.25%..... 74,023 1.421882 105,252
High Yield Fund 1.25%............ 165,941 1.070110 177,576
Global Leaders Fund 1.25%........ 11,105 1.952453 21,683
AmSouth Equity Income Fund....... 16,927 1.401746 23,727
---------------
SUB-TOTAL........................ 37,467,782
---------------
GRAND TOTAL........................ $15,817,848,089
===============
</TABLE>
___________________________________ SA-11 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 20,856,394 $ 21,835,245
EXPENSES:
Mortality and expense undertakings.... (4,786,965) (35,154,364)
------------ ------------
Net investment income (loss)........ 16,069,429 (13,319,119)
------------ ------------
CAPITAL GAINS INCOME.................... 2,623,245 216,819,144
------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... (203,417) 318,938
Net unrealized (depreciation)
appreciation of investments during
the period........................... (31,230,646) 275,463,487
------------ ------------
Net (loss) gain on investments...... (31,434,063) 275,782,425
------------ ------------
Net (decrease) increase in net
assets resulting from operations... $(12,741,389) $479,282,450
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-12 _____________________________________
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $19,516,607 $119,254,083 $ 8,050,639 $ 9,514,435 $ 8,124,740 $ 4,967,210
EXPENSES:
Mortality and expense undertakings.... (5,024,718) (66,290,644) (27,044,767) (2,222,251) (9,248,662) (5,283,728)
----------- ------------ ------------ ----------- ------------ ------------
Net investment income (loss)........ 14,491,889 52,963,439 (18,994,128) 7,292,184 (1,123,922) (316,518)
----------- ------------ ------------ ----------- ------------ ------------
CAPITAL GAINS INCOME.................... 9,037 410,469,104 127,112,714 -- 10,953,439 --
----------- ------------ ------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... -- 2,721,491 8,239,831 106,051 3,676 12,898,810
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- 6,294,211 578,461,865 (6,915,906) 121,670,024 137,769,735
----------- ------------ ------------ ----------- ------------ ------------
Net (loss) gain on investments...... -- 9,015,702 586,701,696 (6,809,855) 121,673,700 150,668,545
----------- ------------ ------------ ----------- ------------ ------------
Net (decrease) increase in net
assets resulting from operations... $14,500,926 $472,448,245 $694,820,282 $ 482,329 $131,503,217 $150,352,027
=========== ============ ============ =========== ============ ============
<CAPTION>
DIVIDEND
AND GROWTH
FUND
SUB-ACCOUNT
------------
<S> <C>
INVESTMENT INCOME:
Dividends............................. $ 16,011,869
EXPENSES:
Mortality and expense undertakings.... (12,526,370)
------------
Net investment income (loss)........ 3,485,499
------------
CAPITAL GAINS INCOME.................... 38,610,231
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... 2,185,191
Net unrealized (depreciation)
appreciation of investments during
the period........................... (5,417,975)
------------
Net (loss) gain on investments...... (3,232,784)
------------
Net (decrease) increase in net
assets resulting from operations... $ 38,862,946
============
</TABLE>
__________________________________ SA-13 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL SMALL
ADVISERS COMPANY
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 1,927,226 $ --
EXPENSES:
Mortality and expense undertakings.... (1,089,997) (1,741,126)
----------- -----------
Net investment income (loss)........ 837,229 (1,741,126)
----------- -----------
CAPITAL GAINS INCOME.................... -- 315,082
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... 295,153 4,251,712
Net unrealized appreciation
(depreciation) of investments during
the period........................... 17,296,426 81,907,566
----------- -----------
Net gain (loss) on investments...... 17,591,579 86,159,278
----------- -----------
Net increase (decrease) in net
assets resulting from operations... $18,428,808 $84,733,234
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-14 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND GLOBAL SMITH BARNEY SMITH BARNEY
MIDCAP INCOME HIGH YIELD LEADERS CASH APPRECIATION
FUND FUND FUND FUND PORTFOLIO FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ -- $ 172,552 $ 967,224 $ 67,709 $22,683 $ 1,997
EXPENSES:
Mortality and expense undertakings.... (1,335,119) (353,581) (122,260) (182,154) (4,908) (2,133)
----------- ---------- --------- ----------- ------- -------
Net investment income (loss)........ (1,335,119) (181,029) 844,964 (114,445) 17,775 (136)
----------- ---------- --------- ----------- ------- -------
CAPITAL GAINS INCOME.................... 10,415,254 397,311 1,135 238,680 -- 22,203
----------- ---------- --------- ----------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... (224,429) 46,869 (15,929) (9,270) -- 123
Net unrealized appreciation
(depreciation) of investments during
the period........................... 46,937,316 6,503,899 (642,094) 10,060,655 -- 5,735
----------- ---------- --------- ----------- ------- -------
Net gain (loss) on investments...... 46,712,887 6,550,768 (658,023) 10,051,385 -- 5,858
----------- ---------- --------- ----------- ------- -------
Net increase (decrease) in net
assets resulting from operations... $55,793,022 $6,767,050 $ 188,076 $10,175,620 $17,775 $27,925
=========== ========== ========= =========== ======= =======
<CAPTION>
SMITH BARNEY BB&T GROWTH AMSOUTH
GOVERNMENT & INCOME EQUITY INCOME
PORTFOLIO FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $1,568 $ 300,770 $ 354,120
EXPENSES:
Mortality and expense undertakings.... (347) (320,977) (336,848)
------ ----------- ----------
Net investment income (loss)........ 1,221 (20,207) 17,272
------ ----------- ----------
CAPITAL GAINS INCOME.................... -- 393,152 --
------ ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... -- 3,527 (4,172)
Net unrealized appreciation
(depreciation) of investments during
the period........................... -- (1,805,236) 6,229,908
------ ----------- ----------
Net gain (loss) on investments...... -- (1,801,709) 6,225,736
------ ----------- ----------
Net increase (decrease) in net
assets resulting from operations... $1,221 $(1,428,764) $6,243,008
====== =========== ==========
</TABLE>
___________________________________ SA-15 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP
CAPITAL GROWTH PERPETUAL INTERNATIONAL
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- -----------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 32,268 $ --
EXPENSES:
Mortality and expense undertakings.... (282,453) (195,980)
---------- ----------
Net investment (loss) income........ (250,185) (195,980)
---------- ----------
CAPITAL GAINS INCOME.................... 37,363 10,315
---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on security
transactions......................... 496 9,042
Net unrealized appreciation
(depreciation) of investments during
the period........................... 1,293,466 5,855,275
---------- ----------
Net gain (loss) on investments...... 1,293,962 5,864,317
---------- ----------
Net increase (decrease) in net
assets resulting from operations... $1,081,140 $5,678,652
========== ==========
</TABLE>
* From inception, November 1, 1999 to December 31, 1999
** From inception, May 3, 1999 to December 31, 1999
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-16 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
MENTOR VIP MITCHELL HUTCHINS MITCHELL HUTCHINS MITCHELL HUTCHINS HUNTINGTON VA
GROWTH GROWTH AND INCOME STRATEGIC INCOME TACTICAL ALLOCATION INCOME
FUND PORTFOLIO PORTFOLIO PORTFOLIO EQUITY FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
----------- ----------------- ----------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 16,104 $ 41 $ 63,920 $ 71,190 $1,302
EXPENSES:
Mortality and expense undertakings.... (131,586) (27,575) (7,295) (111,510) (175)
---------- -------- -------- ---------- ------
Net investment (loss) income........ (115,482) (27,534) 56,625 (40,320) 1,127
---------- -------- -------- ---------- ------
CAPITAL GAINS INCOME.................... -- -- -- 1,339,390 --
---------- -------- -------- ---------- ------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on security
transactions......................... 21,602 3,219 165 31,237 --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 2,619,527 367,262 (65,581) 430,021 131
---------- -------- -------- ---------- ------
Net gain (loss) on investments...... 2,641,129 370,481 (65,416) 461,258 131
---------- -------- -------- ---------- ------
Net increase (decrease) in net
assets resulting from operations... $2,525,647 $342,947 $ (8,791) $1,760,328 $1,258
========== ======== ======== ========== ======
<CAPTION>
AMSOUTH
SELECT EQUITY
FUND
SUB-ACCOUNT**
-------------
<S> <C>
INVESTMENT INCOME:
Dividends............................. $ 6,148
EXPENSES:
Mortality and expense undertakings.... (11,570)
---------
Net investment (loss) income........ (5,422)
---------
CAPITAL GAINS INCOME.................... --
---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on security
transactions......................... 73
Net unrealized appreciation
(depreciation) of investments during
the period........................... (204,081)
---------
Net gain (loss) on investments...... (204,008)
---------
Net increase (decrease) in net
assets resulting from operations... $(209,430)
=========
</TABLE>
* From inception, November 1, 1999 to December 31, 1999
** From inception, May 3, 1999 to December 31, 1999
__________________________________ SA-17 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 16,069,429 $ (13,319,119)
Capital gains income.................. 2,623,245 216,819,144
Net realized (loss) gain on security
transactions......................... (203,417) 318,938
Net unrealized (depreciation)
appreciation of investments during
the period........................... (31,230,646) 275,463,487
------------ --------------
Net (decrease) increase in net assets
resulting from operations............ (12,741,389) 479,282,450
------------ --------------
UNIT TRANSACTIONS:
Purchases............................. 27,921,938 243,534,289
Net transfers......................... 28,910,921 204,580,762
Surrenders for benefit payments and
fees................................. (42,745,328) (238,079,087)
Net annuity transactions.............. 414,745 4,064,471
------------ --------------
Net increase (decrease) in net assets
resulting from unit transactions..... 14,502,276 214,100,435
------------ --------------
Net increase (decrease) in net
assets............................... 1,760,887 693,382,885
NET ASSETS:
Beginning of period................... 377,820,047 2,498,291,840
------------ --------------
End of period......................... $379,580,934 $3,191,674,725
============ ==============
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 14,116,691 $ (7,282,872)
Capital gains income.................. -- 63,980,079
Net realized (loss) gain on security
transactions......................... (17,730) (1,720,391)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 5,723,478 522,612,064
------------ --------------
Net increase in net assets resulting
from operations...................... 19,822,439 577,588,880
------------ --------------
UNIT TRANSACTIONS:
Purchases............................. 41,906,997 201,628,213
Net transfers......................... 95,280,889 107,789,657
Surrenders for benefit payments and
fees................................. (24,892,187) (143,970,482)
Net annuity transactions.............. 321,142 560,255
------------ --------------
Net increase (decrease) in net assets
resulting from unit transactions..... 112,616,841 166,007,643
------------ --------------
Net increase (decrease) in net
assets............................... 132,439,280 743,596,523
NET ASSETS:
Beginning of period................... 245,380,767 1,754,695,317
------------ --------------
End of period......................... $377,820,047 $2,498,291,840
============ ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
____________________________________ SA-18 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX
FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 14,491,889 $ 52,963,439 $ (18,994,128) $ 7,292,184 $ (1,123,922)
Capital gains income.................. 9,037 410,469,104 127,112,714 -- 10,953,439
Net realized (loss) gain on security
transactions......................... -- 2,721,491 8,239,831 106,051 3,676
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- 6,294,211 578,461,865 (6,915,906) 121,670,024
------------- -------------- -------------- ------------ ------------
Net (decrease) increase in net assets
resulting from operations............ 14,500,926 472,448,245 694,820,282 482,329 131,503,217
------------- -------------- -------------- ------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 52,032,809 400,762,799 114,346,316 5,634,859 86,228,724
Net transfers......................... 179,073,766 425,533,878 47,043,624 2,063,743 94,024,710
Surrenders for benefit payments and
fees................................. (172,457,509) (514,511,813) (177,116,018) (28,509,889) (63,335,518)
Net annuity transactions.............. 66,069 4,945,760 853,857 213,909 2,159,559
------------- -------------- -------------- ------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 58,715,135 316,730,624 (14,872,221) (20,597,378) 119,077,475
------------- -------------- -------------- ------------ ------------
Net increase (decrease) in net
assets............................... 73,216,061 789,178,869 679,948,061 (20,115,049) 250,580,692
NET ASSETS:
Beginning of period................... 342,821,394 4,916,673,571 1,985,681,374 190,247,223 623,100,586
------------- -------------- -------------- ------------ ------------
End of period......................... $ 416,037,455 $5,705,852,440 $2,665,629,435 $170,132,174 $873,681,278
============= ============== ============== ============ ============
<CAPTION>
INTERNATIONAL DIVIDEND
OPPORTUNITIES AND GROWTH
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (316,518) $ 3,485,499
Capital gains income.................. -- 38,610,231
Net realized (loss) gain on security
transactions......................... 12,898,810 2,185,191
Net unrealized (depreciation)
appreciation of investments during
the period........................... 137,769,735 (5,417,975)
------------ ------------
Net (decrease) increase in net assets
resulting from operations............ 150,352,027 38,862,946
------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 13,080,473 65,414,965
Net transfers......................... (10,281,590) (15,678,141)
Surrenders for benefit payments and
fees................................. (43,785,344) (69,729,336)
Net annuity transactions.............. 123,273 320,965
------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... (40,863,188) (19,671,547)
------------ ------------
Net increase (decrease) in net
assets............................... 109,488,839 19,191,399
NET ASSETS:
Beginning of period................... 398,604,114 974,440,666
------------ ------------
End of period......................... $508,092,953 $993,632,065
============ ============
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX
FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $11,836,148 $ 44,020,326 $ (12,238,662) $ 9,644,833 $ (1,323,774)
Capital gains income.................. -- 130,914,844 114,733,928 -- 10,662,058
Net realized (loss) gain on security
transactions......................... -- 1,826,471 (4,786,085) 473,273 (704,518)
Net unrealized appreciation
(depreciation) of investments during
the period........................... -- 709,363,622 140,386,292 (228,914) 110,953,813
------------ -------------- -------------- ------------ ------------
Net increase in net assets resulting
from operations...................... 11,836,148 886,125,263 238,095,473 9,889,192 119,587,579
------------ -------------- -------------- ------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 34,983,693 374,759,005 143,597,572 9,146,977 67,409,255
Net transfers......................... 123,126,442 280,406,929 (12,597,119) 8,722,639 58,996,655
Surrenders for benefit payments and
fees................................. (94,130,526) (329,416,389) (117,626,736) (28,665,195) (34,320,175)
Net annuity transactions.............. (32,392) 3,527,169 304,016 39,959 271,456
------------ -------------- -------------- ------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 63,947,217 329,276,714 13,677,733 (10,755,620) 92,357,191
------------ -------------- -------------- ------------ ------------
Net increase (decrease) in net
assets............................... 75,783,365 1,215,401,977 251,773,206 (866,428) 211,944,770
NET ASSETS:
Beginning of period................... 267,038,029 3,701,271,594 1,733,908,168 191,113,651 411,155,816
------------ -------------- -------------- ------------ ------------
End of period......................... $342,821,394 $4,916,673,571 $1,985,681,374 $190,247,223 $623,100,586
============ ============== ============== ============ ============
<CAPTION>
INTERNATIONAL DIVIDEND
OPPORTUNITIES AND GROWTH
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 189,021 $ 4,915,811
Capital gains income.................. 25,347,181 25,624,259
Net realized (loss) gain on security
transactions......................... 1,455,876 (465,941)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 17,463,831 82,775,505
------------ ------------
Net increase in net assets resulting
from operations...................... 44,455,909 112,849,634
------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 16,804,591 141,279,121
Net transfers......................... (27,399,853) 99,305,048
Surrenders for benefit payments and
fees................................. (28,546,428) (49,052,200)
Net annuity transactions.............. 244,437 835,197
------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... (38,897,253) 192,367,166
------------ ------------
Net increase (decrease) in net
assets............................... 5,558,656 305,216,800
NET ASSETS:
Beginning of period................... 393,045,458 669,223,866
------------ ------------
End of period......................... $398,604,114 $974,440,666
============ ============
</TABLE>
__________________________________ SA-19 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL SMALL
ADVISERS COMPANY
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 837,229 $ (1,741,126)
Capital gains income.................. -- 315,082
Net realized gain (loss) on security
transactions......................... 295,153 4,251,712
Net unrealized appreciation
(depreciation) of investments during
the period........................... 17,296,426 81,907,566
------------ ------------
Net increase (decrease) in net assets
resulting from operations............ 18,428,808 84,733,234
------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 10,659,922 13,837,871
Net transfers......................... 10,728,100 42,134,966
Surrenders for benefit payments and
fees................................. (6,643,729) (9,812,254)
Net annuity transactions.............. 129,729 (1,998)
------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 14,874,022 46,158,585
------------ ------------
Net increase (decrease) in net
assets............................... 33,302,830 130,891,819
NET ASSETS:
Beginning of period................... 75,837,938 123,133,073
------------ ------------
End of period......................... $109,140,768 $254,024,892
============ ============
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
INTERNATIONAL SMALL
ADVISERS COMPANY
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 5,711,299 $ (1,090,110)
Capital gains income.................. 1,559,601 1,255,431
Net realized (loss) gain on security
transactions......................... (62,176) 1,445,433
Net unrealized (depreciation)
appreciation of investments during
the period........................... (222,372) 9,623,019
----------- ------------
Net increase in net assets resulting
from operations...................... 6,986,352 11,233,773
----------- ------------
UNIT TRANSACTIONS:
Purchases............................. 9,244,144 17,606,410
Net transfers......................... 5,996,311 27,369,558
Surrenders for benefit payments and
fees................................. (3,894,672) (4,568,343)
Net annuity transactions.............. 83,430 98,040
----------- ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 11,429,213 40,505,665
----------- ------------
Net increase (decrease) in net
assets............................... 18,415,565 51,739,438
NET ASSETS:
Beginning of period................... 57,422,373 71,393,635
----------- ------------
End of period......................... $75,837,938 $123,133,073
=========== ============
</TABLE>
** From inception, June 1, 1998 to December 31, 1998
*** From inception, September 30, 1998 to December 31, 1998
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-20 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND GLOBAL SMITH BARNEY SMITH BARNEY
MIDCAP INCOME HIGH YIELD LEADERS CASH APPRECIATION
FUND FUND FUND FUND PORTFOLIO FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (1,335,119) $ (181,029) $ 844,964 $ (114,445) $ 17,775 $ (136)
Capital gains income.................. 10,415,254 397,311 1,135 238,680 -- 22,203
Net realized gain (loss) on security
transactions......................... (224,429) 46,869 (15,929) (9,270) -- 123
Net unrealized appreciation
(depreciation) of investments during
the period........................... 46,937,316 6,503,899 (642,094) 10,060,655 -- 5,735
------------ ----------- ----------- ----------- -------- --------
Net increase (decrease) in net assets
resulting from operations............ 55,793,022 6,767,050 188,076 10,175,620 17,775 27,925
------------ ----------- ----------- ----------- -------- --------
UNIT TRANSACTIONS:
Purchases............................. 28,146,551 15,704,459 4,494,431 8,251,247 -- --
Net transfers......................... 131,121,514 36,678,430 11,579,453 34,966,058 -- --
Surrenders for benefit payments and
fees................................. (1,798,300) (1,186,192) (881,151) (1,167,939) (33,763) (4,174)
Net annuity transactions.............. 122,890 88,032 177,075 16,976 -- --
------------ ----------- ----------- ----------- -------- --------
Net increase (decrease) in net assets
resulting from unit transactions..... 157,592,655 51,284,729 15,369,808 42,066,342 (33,763) (4,174)
------------ ----------- ----------- ----------- -------- --------
Net increase (decrease) in net
assets............................... 213,385,677 58,051,779 15,557,884 52,241,962 (15,988) 23,751
NET ASSETS:
Beginning of period................... 46,302,383 6,249,337 1,943,547 599,110 486,703 199,787
------------ ----------- ----------- ----------- -------- --------
End of period......................... $259,688,060 $64,301,116 $17,501,431 $52,841,072 $470,715 $223,538
============ =========== =========== =========== ======== ========
<CAPTION>
SMITH BARNEY BB&T GROWTH AMSOUTH
GOVERNMENT & INCOME EQUITY INCOME
PORTFOLIO FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 1,221 $ (20,207) $ 17,272
Capital gains income.................. -- 393,152 --
Net realized gain (loss) on security
transactions......................... -- 3,527 (4,172)
Net unrealized appreciation
(depreciation) of investments during
the period........................... -- (1,805,236) 6,229,908
------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 1,221 (1,428,764) 6,243,008
------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. -- 2,806,902 8,947,643
Net transfers......................... -- 4,398,250 60,144
Surrenders for benefit payments and
fees................................. (4,276) (1,469,630) (2,025,318)
Net annuity transactions.............. -- -- (8,117)
------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... (4,276) 5,735,522 6,974,352
------- ----------- -----------
Net increase (decrease) in net
assets............................... (3,055) 4,306,758 13,217,360
NET ASSETS:
Beginning of period................... 34,357 23,711,066 22,511,021
------- ----------- -----------
End of period......................... $31,302 $28,017,824 $35,728,381
======= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND GLOBAL SMITH BARNEY
MIDCAP INCOME HIGH YIELD LEADERS CASH
FUND FUND FUND FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT** SUB-ACCOUNT*** SUB-ACCOUNT*** SUB-ACCOUNT
----------- ------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (320,020) $ 5,967 $ 32,022 $ 472 $ 19,946
Capital gains income.................. -- -- -- 16,340 --
Net realized (loss) gain on security
transactions......................... (3,698) (2,267) (287) 1,084 --
Net unrealized (depreciation)
appreciation of investments during
the period........................... 6,597,665 740,175 (9,874) 10,436 --
----------- ---------- ---------- -------- --------
Net increase in net assets resulting
from operations...................... 6,273,947 743,875 21,861 28,332 19,946
----------- ---------- ---------- -------- --------
UNIT TRANSACTIONS:
Purchases............................. 13,468,482 1,325,581 226,463 114,768 --
Net transfers......................... 18,368,378 4,236,085 1,697,571 456,296 --
Surrenders for benefit payments and
fees................................. (982,314) (56,204) (2,348) (286) (42,255)
Net annuity transactions.............. -- -- -- -- --
----------- ---------- ---------- -------- --------
Net increase (decrease) in net assets
resulting from unit transactions..... 30,854,546 5,505,462 1,921,686 570,778 (42,255)
----------- ---------- ---------- -------- --------
Net increase (decrease) in net
assets............................... 37,128,493 6,249,337 1,943,547 599,110 (22,309)
NET ASSETS:
Beginning of period................... 9,173,890 -- -- -- 509,012
----------- ---------- ---------- -------- --------
End of period......................... $46,302,383 $6,249,337 $1,943,547 $599,110 $486,703
=========== ========== ========== ======== ========
<CAPTION>
SMITH BARNEY SMITH BARNEY BB&T GROWTH AMSOUTH
APPRECIATION GOVERNMENT & INCOME EQUITY INCOME
FUND PORTFOLIO FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 526 $ 1,465 $ 28,796 $ 134,592
Capital gains income.................. 15,116 -- -- --
Net realized (loss) gain on security
transactions......................... 51 -- 1,013 4,124
Net unrealized (depreciation)
appreciation of investments during
the period........................... 17,076 -- 1,927,801 971,715
-------- ------- ----------- -----------
Net increase in net assets resulting
from operations...................... 32,769 1,465 1,957,610 1,110,431
-------- ------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. -- -- 9,760,778 14,622,450
Net transfers......................... -- -- 6,090,057 5,094,816
Surrenders for benefit payments and
fees................................. (3,555) (4,272) (574,799) (733,985)
Net annuity transactions.............. -- -- -- 25,393
-------- ------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... (3,555) (4,272) 15,276,036 19,008,674
-------- ------- ----------- -----------
Net increase (decrease) in net
assets............................... 29,214 (2,807) 17,233,646 20,119,105
NET ASSETS:
Beginning of period................... 170,573 37,164 6,477,420 2,391,916
-------- ------- ----------- -----------
End of period......................... $199,787 $34,357 $23,711,066 $22,511,021
======== ======= =========== ===========
</TABLE>
** From inception, June 1, 1998 to December 31, 1998
*** From inception, September 30, 1998 to December 31, 1998
__________________________________ SA-21 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP
CAPITAL GROWTH PERPETUAL INTERNATIONAL
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- -----------------------
<S> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (250,185) $ (195,980)
Capital gains income.................. 37,363 10,315
Net realized gain on security
transactions......................... 496 9,042
Net unrealized appreciation
(depreciation) of investments during
the period........................... 1,293,466 5,855,275
----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 1,081,140 5,678,652
----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 2,920,379 1,966,282
Net transfers......................... 2,776,202 4,932,157
Surrenders for benefit payments and
fees................................. (727,009) (634,023)
Net annuity transactions.............. -- --
----------- -----------
Net increase in net assets resulting
from unit transactions............... 4,969,572 6,264,416
----------- -----------
Net increase in net assets............ 6,050,712 11,943,068
NET ASSETS:
Beginning of period................... 18,677,732 10,812,355
----------- -----------
End of period......................... $24,728,444 $22,755,423
=========== ===========
</TABLE>
* From inception, November 1, 1999 to December 31, 1999
** From inception, May 3, 1999 to December 31, 1999
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP
CAPITAL GROWTH PERPETUAL INTERNATIONAL
FUND FUND
SUB-ACCOUNT* SUB-ACCOUNT*
-------------- -----------------------
<S> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (85,499) $ (51,799)
Capital gains income.................. -- --
Net realized (loss) gain on security
transactions......................... (4,500) 1,684
Net unrealized appreciation
(depreciation) of investments during
the period........................... 1,696,228 601,328
----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 1,606,229 551,213
----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 11,672,774 6,236,230
Net transfers......................... 5,647,677 4,185,922
Surrenders for benefit payments and
fees................................. (248,948) (161,010)
Net annuity transactions.............. -- --
----------- -----------
Net increase in net assets resulting
from unit transactions............... 17,071,503 10,261,142
----------- -----------
Total increase in net assets.......... 18,677,732 10,812,355
NET ASSETS:
Beginning of period................... -- --
----------- -----------
End of period......................... $18,677,732 $10,812,355
=========== ===========
</TABLE>
* From inception, March 2, 1998 to December 31, 1998
**** From inception, December 16, 1998 to December 31, 1998
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-22 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
MENTOR VIP MITCHELL HUTCHINS MITCHELL HUTCHINS MITCHELL HUTCHINS HUNTINGTON VA
GROWTH GROWTH AND STRATEGIC INCOME TACTICAL ALLOCATION INCOME
FUND INCOME PORTFOLIO PORTFOLIO PORTFOLIO EQUITY FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
----------- ----------------- ----------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (115,482) $ (27,534) $ 56,625 $ (40,320) $ 1,127
Capital gains income.................. -- -- -- 1,339,390 --
Net realized gain on security
transactions......................... 21,602 3,219 165 31,237 --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 2,619,527 367,262 (65,581) 430,021 131
----------- ---------- ---------- ----------- --------
Net increase (decrease) in net assets
resulting from operations............ 2,525,647 342,947 (8,791) 1,760,328 1,258
----------- ---------- ---------- ----------- --------
UNIT TRANSACTIONS:
Purchases............................. 1,591,255 3,251,474 741,317 12,031,575 171,554
Net transfers......................... 186,787 512,571 475,556 8,174,292 55,943
Surrenders for benefit payments and
fees................................. (341,906) (95,651) (64,519) (207,496) --
Net annuity transactions.............. -- -- -- -- --
----------- ---------- ---------- ----------- --------
Net increase in net assets resulting
from unit transactions............... 1,436,136 3,668,394 1,152,354 19,998,371 227,497
----------- ---------- ---------- ----------- --------
Net increase in net assets............ 3,961,783 4,011,341 1,143,563 21,758,699 228,755
NET ASSETS:
Beginning of period................... 10,470,230 10,719 9,971 10,571 --
----------- ---------- ---------- ----------- --------
End of period......................... $14,432,013 $4,022,060 $1,153,534 $21,769,270 $228,755
=========== ========== ========== =========== ========
<CAPTION>
AMSOUTH
SELECT EQUITY
FUND
SUB-ACCOUNT**
-------------
<S> <C>
OPERATIONS:
Net investment (loss) income.......... $ (5,422)
Capital gains income.................. --
Net realized gain on security
transactions......................... 73
Net unrealized appreciation
(depreciation) of investments during
the period........................... (204,081)
----------
Net increase (decrease) in net assets
resulting from operations............ (209,430)
----------
UNIT TRANSACTIONS:
Purchases............................. 1,791,654
Net transfers......................... 958,043
Surrenders for benefit payments and
fees................................. (64,235)
Net annuity transactions.............. --
----------
Net increase in net assets resulting
from unit transactions............... 2,685,462
----------
Net increase in net assets............ 2,476,032
NET ASSETS:
Beginning of period................... --
----------
End of period......................... $2,476,032
==========
</TABLE>
<TABLE>
<CAPTION>
MENTOR VIP MITCHELL HUTCHINS MITCHELL HUTCHINS MITCHELL HUTCHINS
GROWTH GROWTH AND INCOME STRATEGIC INCOME TACTICAL ALLOCATION
FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT* SUB-ACCOUNT**** SUB-ACCOUNT**** SUB-ACCOUNT****
------------ ----------------- ----------------- -------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (44,785) $ 38 $ 111 $ 7
Capital gains income.................. -- 702 6 56
Net realized (loss) gain on security
transactions......................... (1,365) -- -- --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 610,042 (20) (145) 507
----------- ------- ------ -------
Net increase (decrease) in net assets
resulting from operations............ 563,892 720 (28) 570
----------- ------- ------ -------
UNIT TRANSACTIONS:
Purchases............................. 6,771,031 10,000 10,000 10,000
Net transfers......................... 3,215,967 -- -- --
Surrenders for benefit payments and
fees................................. (80,660) (1) (1) 1
Net annuity transactions.............. -- -- -- --
----------- ------- ------ -------
Net increase in net assets resulting
from unit transactions............... 9,906,338 9,999 9,999 10,001
----------- ------- ------ -------
Total increase in net assets.......... 10,470,230 10,719 9,971 10,571
NET ASSETS:
Beginning of period................... -- -- -- --
----------- ------- ------ -------
End of period......................... $10,470,230 $10,719 $9,971 $10,571
=========== ======= ====== =======
</TABLE>
__________________________________ SA-23 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
--------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account Two (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable annuity contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents those
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expense during the period. Operating results in the
future could vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
Certain amounts are deducted from the contracts, as described below:
a) MORTALITY AND EXPENSE RISK CHARGE--The Company, will make deductions at a
maximum annual rate of 1.50% of the contract's value for the mortality
and expense risks which the Company undertakes.
b) TAX EXPENSE CHARGE--If applicable, the Company will make deductions at a
maximum rate of 4.0% of the contract's value to meet premium tax
requirements. An additional tax charge based on a percentage of the
contract's value may be assessed to partial withrawals or surrenders.
These expenses are included in surrenders for benefit payments and fees
in the accompanying statements of changes in net assets.
c) ANNUAL MAINTENANCE FEE--An annual maintenance fee in the amount of $30
may be deducted from the contract's value each contract year. However,
this fee is not applicable to contracts with values of $50,000 or more,
as determined on the most recent contract anniversary. These expenses are
included in surrenders for benefit payments and fees in the accompanying
statements of changes in net assets.
__________________________________ SA-24 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------------------
To Hartford Life Insurance Company:
We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company and subsidiaries as of December 31, 1999 and 1998, and the
related Consolidated Statements of Income, Changes in Stockholder's Equity and
Cash Flows for each of the three years in the period ended December 31, 1999.
These Consolidated Financial Statements and the schedules referred to below are
the responsibility of Hartford Life Insurance Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the Consolidated Financial Statements referred to above present
fairly, in all material respects, the financial position of Hartford Life
Insurance Company and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index to
Consolidated Financial Statements and Schedules are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Hartford, Connecticut
January 31, 2000 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
REVENUES
Premiums and other considerations $2,045 $2,218 $1,637
Net investment income 1,359 1,759 1,368
Net realized capital gains (losses) (4) (2) 4
----------------------------------------------------------------------------------------------
TOTAL REVENUES 3,400 3,975 3,009
----------------------------------------------------------------------------------------------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 1,574 1,911 1,379
Amortization of deferred policy acquisition costs 539 431 335
Dividends to policyholders 104 329 240
Other expenses 631 766 586
----------------------------------------------------------------------------------------------
TOTAL BENEFITS, CLAIMS AND EXPENSES 2,848 3,437 2,540
----------------------------------------------------------------------------------------------
Income before income tax expense 552 538 469
Income tax expense 191 188 167
----------------------------------------------------------------------------------------------
NET INCOME $ 361 $ 350 $ 302
----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
<S> <C> <C>
------------------------------------------------------------------------------------------
1999 1998
------------------------------------------------------------------------------------------
(in millions, except
for share data)
ASSETS
Investments
Fixed maturities, available for sale, at fair value
(amortized cost of $13,923 and $14,505) $ 13,499 $ 14,818
Equity securities, at fair value 56 31
Policy loans, at outstanding balance 4,187 6,684
Other investments 342 264
------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 18,084 21,797
------------------------------------------------------------------------------------------
Cash 55 17
Premiums receivable and agents' balances 29 17
Reinsurance recoverables 1,274 1,257
Deferred policy acquisition costs 4,013 3,754
Deferred income tax 459 464
Other assets 654 695
Separate account assets 110,397 90,262
------------------------------------------------------------------------------------------
TOTAL ASSETS $134,965 $118,263
------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 4,332 $ 3,595
Other policyholder funds 16,004 19,615
Other liabilities 1,613 2,094
Separate account liabilities 110,397 90,262
------------------------------------------------------------------------------------------
TOTAL LIABILITIES 132,346 115,566
------------------------------------------------------------------------------------------
STOCKHOLDER'S EQUITY
Common stock -- 1,000 shares authorized, issued and
outstanding, par value $5,690 6 6
Capital surplus 1,045 1,045
Accumulated other comprehensive income (loss)
Net unrealized capital gains (losses) on securities, net
of tax (255) 184
------------------------------------------------------------------------------------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (255) 184
------------------------------------------------------------------------------------------
Retained earnings 1,823 1,462
------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY 2,619 2,697
------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $134,965 $118,263
------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income (Loss)
-----------------
<S> <C> <C> <C> <C> <C>
Net Unrealized
Capital Gains
(Losses) on Total
Common Capital Securities, Retained Stockholder's
Stock Surplus Net of Tax Earnings Equity
-------------------------------------------------------------------------------------------------------------
(in millions)
1999
Balance, December 31, 1998 $6 $1,045 $ 184 $1,462 $2,697
Comprehensive income
Net income -- -- -- 361 361
Other comprehensive income (loss), net of
tax (1):
Changes in net unrealized capital gains
(losses) on securities (2) -- -- (439) -- (439)
Total other comprehensive income (loss) (439)
Total comprehensive income (loss) (78)
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 $6 $1,045 $(255) $1,823 $2,619
-------------------------------------------------------------------------------------------------------------
1998
Balance, December 31, 1997 $6 $1,045 $ 179 $1,113 $2,343
Comprehensive income
Net income -- -- -- 350 350
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital gains
on securities (2) -- -- 5 -- 5
Total other comprehensive income 5
Total comprehensive income 355
Dividends (1) (1)
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $6 $1,045 $ 184 $1,462 $2,697
-------------------------------------------------------------------------------------------------------------
1997
Balance, December 31, 1996 $6 $1,045 $ 30 $ 811 $1,892
Comprehensive income
Net income -- -- -- 302 302
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital gains
on securities (2) -- -- 149 -- 149
Total other comprehensive income 149
Total comprehensive income 451
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 $6 $1,045 $ 179 $1,113 $2,343
-------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net unrealized capital gain (loss) on securities is reflected net of tax of
$(236), $3 and $80, for the years ended December 31, 1999, 1998 and 1997,
respectively.
(2) Net of reclassification adjustment for after-tax gains (losses) realized in
net income of $(2), $(1) and $2 for the years ended December 31, 1999, 1998
and 1997, respectively.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
OPERATING ACTIVITIES
Net income $ 361 $ 350 $ 302
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization (18) (23) 8
Net realized capital losses (gains) 4 2 (4)
Loss due to commutation of reinsurance 16 -- --
(Increase) decrease in premiums receivable and agents'
balances (18) 1 119
(Decrease) increase in other liabilities (263) (79) 223
Change in receivables, payables, and accruals 125 83 107
(Decrease) increase in accrued taxes (163) 60 126
Decrease (increase) in deferred income tax 241 (118) 40
Increase in deferred policy acquisition costs (358) (439) (555)
Increase in future policy benefits 797 536 585
Increase in reinsurance recoverables (318) (101) (31)
Other, net (81) 99 52
--------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 325 371 972
--------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of investments (5,753) (6,061) (6,869)
Sales of investments 6,383 4,901 4,256
Maturity of investments 1,818 1,761 2,329
Purchases of affiliates and other (25) -- --
--------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 2,423 601 (284)
--------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net disbursements for investment and universal life-type
contracts charged against policyholder accounts (2,710) (1,009) (677)
--------------------------------------------------------------------------------------------
Net cash used for financing activities (2,710) (1,009) (677)
--------------------------------------------------------------------------------------------
Net increase (decrease) in cash 38 (37) 11
Cash -- beginning of year 17 54 43
--------------------------------------------------------------------------------------------
Cash -- end of year $ 55 $ 17 $ 54
--------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for:
Income taxes $ 111 $ 263 $ 9
Noncash Investing Activities:
In 1999, the Company's parent, Hartford Life and Accident Insurance Company, recaptured an
in force block of individual life insurance previously ceded to the Company. This
commutation resulted in a reduction in the Company's assets of $666, consisting of $556
of invested assets, $99 of deferred policy acquisition costs and $11 of other assets.
Liabilities decreased $650, consisting of $543 of other policyholder funds, $60 of future
policy benefits and $47 of other liabilities. As a result, the Company recognized an
after-tax loss relating to this transaction of $16.
In 1998, due to the recapture of an in force block of business previously ceded to MBL
Life Assurance Co. of New Jersey, reinsurance recoverables of $4,753 were exchanged for
the fair value of assets comprised of $4,310 in policy loans and $443 in other net
assets.
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA UNLESS OTHERWISE STATED)
-----------------------------------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
These Consolidated Financial Statements include Hartford Life Insurance Company
and its wholly-owned subsidiaries ("Hartford Life Insurance Company" or the
"Company"), Hartford Life and Annuity Insurance Company (HLAI) and Hartford
International Life Reassurance Corporation (HLRe), formerly American Skandia
Life Reinsurance Corporation. The Company is a wholly-owned subsidiary of
Hartford Life and Accident Insurance Company (HLA), a wholly-owned subsidiary of
Hartford Life, Inc. (Hartford Life). Hartford Life is a direct subsidiary of
Hartford Accident and Indemnity Company (HA&I), an indirect subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford). In November 1998,
Hartford Life Insurance Company transferred in the form of a dividend, Hartford
Financial Services, LLC and its subsidiaries to HLA.
Pursuant to an initial public offering (the "IPO") on May 22, 1997, Hartford
Life sold 26 million shares of Class A Common Stock at $28.25 per share and
received proceeds, net of offering expenses, of $687. Of the proceeds, $527 was
used to retire debt related to Hartford Life's outstanding promissory notes and
line of credit with the remaining $160 contributed by Hartford Life to its
insurance subsidiaries to support growth in its core businesses. Hartford Life
became a publicly traded company upon the sale of 26 million shares representing
approximately 18.6% of the equity ownership in Hartford Life.
Along with its parent, HLA, the Company is a leading financial services and
insurance company which provides (a) investment products such as individual
variable annuities and fixed market value adjusted annuities, mutual funds and
retirement plan services for savings and retirement needs; (b) life insurance
for income protection and estate planning; (c) employee benefits products such
as group life and disability insurance that is directly written by the Company
and is substantially ceded to its parent, HLA, and (d) corporate owned life
insurance.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These Consolidated Financial Statements are prepared on the basis of accounting
principles generally accepted in the United States, which differ materially from
the statutory accounting practices prescribed by various insurance regulatory
authorities. All material intercompany transactions and balances between
Hartford Life Insurance Company and its subsidiaries have been eliminated.
The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The most significant estimates include those used in determining deferred policy
acquisition costs and the liability for future policy benefits and other
policyholder funds. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
Certain reclassifications have been made to prior year financial information to
conform to the current year presentation.
(B) ADOPTION OF NEW ACCOUNTING STANDARDS
Effective January 1, 1999, Hartford Life Insurance Company adopted Statement of
Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". This SOP provides guidance on
accounting for the costs of internal use software and in determining whether the
software is for internal use. The SOP defines internal use software as software
that is acquired, internally developed, or modified solely to meet internal
needs and identifies stages of software development and accounting for the
related costs incurred during the stages. Adoption of this SOP did not have a
material impact on the Company's financial condition or results of operations.
Effective January 1, 1999, Hartford Life Insurance Company adopted SOP
No. 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments". This SOP addresses accounting by insurance and other enterprises
for assessments related to insurance activities, including recognition,
measurement and disclosure of guaranty fund or other assessments. Adoption of
this SOP did not have a material impact on the Company's financial condition or
results of operations.
The Company's cash flows were not impacted by these changes in accounting
principles.
(C) FUTURE ADOPTION OF NEW ACCOUNTING STANDARDS
In June 1999, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133". This statement amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", to defer its effective date for
one year, to fiscal years beginning after June 15, 2000. Initial
F-6
<PAGE>
application for Hartford Life Insurance Company will begin January 1, 2001. SFAS
No. 133 establishes accounting and reporting guidance for derivative
instruments, including certain derivative instruments embedded in other
contracts. The standard requires, among other things, that all derivatives be
carried on the balance sheet at fair value. The standard also specifies hedge
accounting criteria under which a derivative can qualify for special accounting.
In order to receive special accounting, the derivative instrument must qualify
as either a hedge of the fair value or the variability of the cash flow of a
qualified asset or liability. Special accounting for qualifying hedges provides
for matching the timing of gain or loss recognition on the hedging instrument
with the recognition of the corresponding changes in value of the hedged item.
The Company has reviewed its derivative holdings and is in the process of
quantifying the impact of SFAS No. 133. The Company is also assessing what
actions, if any, need to be taken to minimize potential volatility, while at the
same time maintaining the economic protection needed to support the goals of its
business.
In October 1998, the American Institute of Certified Public Accountants (AICPA)
issued SOP No. 98-7, "Accounting for Insurance and Reinsurance Contracts That Do
Not Transfer Insurance Risk". This SOP provides guidance on the method of
accounting for insurance and reinsurance contracts that do not transfer
insurance risk, defined in the SOP as the deposit method. This SOP is effective
for financial statements for fiscal years beginning after June 15, 1999 and is
not expected to have a material impact on the Company's financial condition or
results of operations.
(D) REVENUE RECOGNITION
Revenues for investment products and universal life-type policies consist of
policy charges for policy administration, cost of insurance and surrender
charges assessed to policy account balances and are recognized in the period in
which services are provided. Premiums for traditional life insurance and
disability policies are recognized as revenues ratably over the policy period.
(E) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that enable
the policyholder to participate in the earnings on that participating block of
business of the life insurance subsidiaries of the Company. The participating
insurance in force accounted for 34%, 35% and 33% in 1999, 1998 and 1997,
respectively, of total insurance in force.
(F) INVESTMENTS
Hartford Life Insurance Company's investments in both fixed maturities, which
include bonds, redeemable preferred stock and commercial paper, and equity
securities, which include common and non-redeemable preferred stocks, are
classified as "available for sale" in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". Accordingly, these
securities are carried at fair value with the after-tax difference from cost
reflected in stockholder's equity as a component of accumulated other
comprehensive income. Policy loans are carried at outstanding balance which
approximates fair value. Other invested assets consist primarily of partnership
investments, which are accounted for by the equity method, and mortgage loans,
whereby the carrying value approximates fair value. Realized capital gains and
losses on security transactions associated with the Company's immediate
participation guaranteed contracts are excluded from revenues and deferred over
the expected maturity of the securities, since under the terms of the contracts
the realized gains and losses will be credited to policyholders in future years
as they are entitled to receive them. Net realized capital gains and losses,
excluding those related to immediate participation guaranteed contracts, are
reported as a component of revenue and are determined on a specific
identification basis.
The Company's accounting policy for impairment requires recognition of an other
than temporary impairment charge on a security if it is determined that the
Company is unable to recover all amounts due under the contractual obligations
of the security. In addition, for securities expected to be sold, an other than
temporary impairment charge is recognized if the Company does not expect the
fair value of a security to recover to cost or amortized cost prior to the
expected date of sale. Once an impairment charge has been recorded, the Company
then continues to review the other than temporarily impaired securities for
additional impairment, if necessary.
(G) DERIVATIVE INSTRUMENTS
HEDGE ACCOUNTING -- Hartford Life Insurance Company uses a variety of derivative
instruments, including swaps, caps, floors, forwards and exchange traded
financial futures and options as part of an overall risk management strategy.
These instruments are used as a means of hedging exposure to price, foreign
currency and/or interest rate risk on planned investment purchases or existing
assets and liabilities. Hartford Life Insurance Company does not hold or issue
derivative instruments for trading purposes. Hartford Life Insurance Company's
accounting for derivative instruments used to manage risk is in accordance with
the concepts established in SFAS No. 80, "Accounting for Futures Contracts",
SFAS No. 52, "Foreign Currency Translation", AICPA SOP No. 86-2, "Accounting for
Options" and various Emerging Issues Task Force pronouncements. Written options
are used, in all cases in conjunction with other assets and derivatives, as part
of the Company's asset and liability management strategy. Derivative instruments
are carried at values consistent with the asset or liability being hedged.
Derivative instruments used to hedge fixed maturities or equity securities are
carried at fair value with the after-tax difference from cost reflected in
stockholder's equity. Derivative instruments used to hedge other invested assets
or liabilities are carried at cost. For a discussion of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", issued in June
1998, see (c) Future Adoption of New Accounting Standards.
Derivative instruments must be designated at inception as a hedge and measured
for effectiveness both at inception
F-7
<PAGE>
and on an ongoing basis. Hartford Life Insurance Company's correlation threshold
for hedge designation is 80% to 120%. If correlation, which is assessed monthly
or quarterly and measured based on a rolling three month average, falls outside
the 80% to 120% range, hedge accounting will be terminated. Derivative
instruments used to create a synthetic asset must meet synthetic accounting
criteria, including designation at inception and consistency of terms between
the synthetic and the instrument being replicated. Consistent with industry
practice, synthetic instruments are accounted for like the financial instrument
they are intended to replicate. Derivative instruments which fail to meet risk
management criteria, subsequent to acquisition, are marked to market with the
impact reflected in the Consolidated Statements of Income.
FUTURES -- Gains or losses on financial futures contracts entered into in
anticipation of the investment of future receipt of product cash flows are
deferred and, at the time of the ultimate investment purchase, reflected as an
adjustment to the cost basis of the purchased asset. Gains or losses on futures
used in invested asset risk management are deferred and adjusted into the cost
basis of the hedged asset when the contract futures are closed, except for
futures used in duration hedging, which are deferred and basis adjusted on a
quarterly basis. The basis adjustments are amortized into net investment income
over the remaining asset life.
FORWARD COMMITMENTS -- Open forward commitment contracts are marked to market
through stockholder's equity. Such contracts are accounted for at settlement by
recording the purchase of the specified securities at the previously committed
price. Gains or losses resulting from the termination of forward commitment
contracts are recognized immediately in the Consolidated Statements of Income as
a component of net investment income.
OPTIONS -- The cost of options entered into as part of a risk management
strategy are basis adjusted to the underlying asset or liability and amortized
over the remaining life of the option. Gains or losses on expiration or
termination are adjusted into the basis of the underlying asset or liability and
amortized over the remaining asset life.
INTEREST RATE SWAPS -- Interest rate swaps involve the periodic exchange of
payments without the exchange of underlying principal or notional amounts. Net
receipts or payments are accrued and recognized over the life of the swap
agreement as an adjustment to investment income. Should the swap be terminated,
the gain or loss is adjusted into the basis of the asset or liability and
amortized over the remaining life. Should the hedged asset be sold or liability
terminated without terminating the swap position, any swap gains or losses are
immediately recognized in earnings. Interest rate swaps purchased in
anticipation of an asset purchase (anticipatory transaction) are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the Consolidated Statements of Income while the
change in market value is recognized as an unrealized capital gain or loss.
INTEREST RATE CAPS AND FLOORS -- Premiums paid on purchased cap or floor
agreements and the premium received on issued cap or floor agreements (used for
risk management) are adjusted into the basis of the applicable asset and
amortized over the asset life. Gains or losses on termination of such positions
are adjusted into the basis of the asset or liability and amortized over the
remaining asset life. Net payments are recognized as an adjustment to income or
basis adjusted and amortized depending on the specific hedge strategy.
FORWARD EXCHANGE AND CURRENCY SWAPS CONTRACTS -- Forward exchange contracts and
foreign currency swaps are accounted for in accordance with SFAS No. 52. Changes
in the spot rate of instruments designated as hedges of the net investment in a
foreign subsidiary are reflected in the cumulative translation adjustment
component of stockholder's equity.
Cash flows from futures, options and swaps, accounted for as hedges, are
included with the cash flows of the item being hedged.
(H) SEPARATE ACCOUNTS
Hartford Life Insurance Company maintains separate account assets and
liabilities which are reported at fair value. Separate account assets are
segregated from other investments. Separate accounts reflect two categories of
risk assumption: non-guaranteed separate accounts, wherein the policyholder
assumes substantially all the investment risk and rewards, and guaranteed
separate accounts, wherein the Company contractually guarantees either a minimum
return or account value to the policyholder.
(I) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, which include commissions and certain other expenses
associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, usually 20 years. Generally, acquisition costs
are deferred and amortized using the retrospective deposit method. Under the
retrospective deposit method, acquisition costs are amortized in proportion to
the present value of expected gross profits from surrender charges, investment
charges, mortality and expense margins. Actual gross profits can vary from
management's estimates, resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization for the books of business are
re-estimated and adjusted by a cumulative charge or credit to income.
F-8
<PAGE>
Acquisition costs and their related deferral are included in the Company's other
expenses as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Commissions $ 887 $1,069 $ 976
Deferred acquisition costs (898) (891) (862)
Other 642 588 472
------------------------------
TOTAL OTHER EXPENSES $ 631 $ 766 $ 586
------------------------------
</TABLE>
(J) FUTURE POLICY BENEFITS
Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal and
mortality assumptions appropriate at the time the policies were issued.
(K) OTHER POLICYHOLDER FUNDS
Other policyholder funds include reserves for investment contracts without life
contingencies, corporate owned life insurance and universal life insurance
contracts. These reserves are based on account values, which represent the
balance that accrues to the benefit of policyholders.
3. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------------
Interest income from fixed maturities $ 934 $ 952 $ 932
Interest income from policy loans 391 789 425
Income from other investments 48 32 26
--------------------------------
Gross investment income 1,373 1,773 1,383
Less: Investment expenses 14 14 15
--------------------------------
NET INVESTMENT INCOME $1,359 $1,759 $1,368
--------------------------------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Fixed maturities $(7) $(28) $(7)
Equity securities 2 21 12
Real estate and other 1 5 (1)
--------------------------
NET REALIZED CAPITAL GAINS (LOSSES) $(4) $(2) $ 4
--------------------------
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Gross unrealized capital gains $ 9 $ 2 $14
Gross unrealized capital losses (2) (1) --
--------------------------
Net unrealized capital gains 7 1 14
Deferred income tax expense 2 -- 5
--------------------------
Net unrealized capital gains, net of tax 5 1 9
Balance -- beginning of year 1 9 8
--------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY
SECURITIES $ 4 $(8) $ 1
--------------------------
</TABLE>
F-9
<PAGE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
----------------------------
1999 1998 1997
<S> <C> <C> <C>
----------------------------
Gross unrealized capital gains $ 48 $ 421 $371
Gross unrealized capital losses (472) (108) (80)
Unrealized capital (gains) losses credited to policyholders 24 (32) (30)
----------------------------
Net unrealized capital gains (losses) (400) 281 261
Deferred income tax expense (benefit) (140) 98 91
----------------------------
Net unrealized capital gains (losses), net of tax (260) 183 170
Balance -- beginning of year 183 170 22
----------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED
MATURITIES $(443) $ 13 $148
----------------------------
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
As of December 31, 1999
---------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
---------------------------------------------
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 180 $ 5 $ (3) $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 5 (35) 1,064
States, municipalities and political subdivisions 155 2 (1) 156
Foreign governments 289 6 (14) 281
Public utilities 865 7 (39) 833
All other corporate, including international 5,646 18 (244) 5,420
All other corporate -- asset backed 4,103 5 (123) 3,985
Short-term investments 1,156 -- -- 1,156
Certificates of deposit 434 -- (12) 422
Redeemable preferred stock 1 -- (1) --
---------------------------------------------
TOTAL FIXED MATURITIES $13,923 $48 $(472) $13,499
---------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1998
---------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
---------------------------------------------
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 121 $ 2 $ -- $ 123
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,001 23 (8) 1,016
States, municipalities and political subdivisions 165 8 -- 173
Foreign governments 393 26 (7) 412
Public utilities 844 33 (3) 874
All other corporate, including international 5,469 260 (42) 5,687
All other corporate -- asset backed 4,155 58 (42) 4,171
Short-term investments 1,847 -- -- 1,847
Certificates of deposit 510 11 (6) 515
---------------------------------------------
TOTAL FIXED MATURITIES $14,505 $421 $(108) $14,818
---------------------------------------------
</TABLE>
The amortized cost and estimated fair value of fixed maturity investments as of
December 31, 1999 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. Asset backed securities, including mortgage backed securities and
collateralized mortgage obligations, are distributed to maturity year based on
the Company's estimates of the rate of future prepayments of principal over the
remaining lives of the securities. These estimates are developed using
prepayment speeds provided in broker consensus
F-10
<PAGE>
data. Such estimates are derived from prepayment speeds experienced at the
interest rate levels projected for the applicable underlying collateral and can
be expected to vary from actual experience.
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
<S> <C> <C>
----------------------------
MATURITY
One year or less $ 2,454 $ 2,440
Over one year through five years 4,874 4,787
Over five years through ten years 3,072 2,940
Over ten years 3,523 3,332
----------------------------
TOTAL $13,923 $13,499
----------------------------
</TABLE>
(F) SALES OF FIXED MATURITY AND EQUITY SECURITY INVESTMENTS
Sales of fixed maturities, excluding short-term fixed maturities, for the years
ended December 31, 1999, 1998 and 1997 resulted in proceeds of $3.4 billion,
$3.2 billion and $4.2 billion, gross realized capital gains of $153, $103 and
$169, gross realized capital losses (including writedowns) of $160, $131 and
$176, respectively. Sales of equity security investments for the years ended
December 31, 1999, 1998 and 1997 resulted in proceeds of $7, $35 and $132 and
gross realized capital gains of $2, $21 and $12, respectively, and no gross
realized capital losses for all periods.
(G) CONCENTRATION OF CREDIT RISK
The Company is not exposed to any significant concentration of credit risk in
fixed maturities of a single issuer greater than 10% of stockholder's equity.
(H) DERIVATIVE INSTRUMENTS
Hartford Life Insurance Company utilizes a variety of derivative instruments,
including swaps, caps, floors, forwards and exchange traded futures and options,
in accordance with Company policy and in order to achieve one of three Company
approved objectives: to hedge risk arising from interest rate, price or currency
exchange rate volatility; to manage liquidity; or, to control transactions
costs. The Company utilizes derivative instruments to manage market risk through
four principal risk management strategies: hedging anticipated transactions,
hedging liability instruments, hedging invested assets and hedging portfolios of
assets and/or liabilities. The Company does not trade in these instruments for
the express purpose of earning trading profits.
The Company maintains a derivatives counterparty exposure policy which
establishes market based credit limits, favors long-term financial stability and
creditworthiness, and typically requires credit enhancement/credit risk reducing
agreements. Credit risk is measured as the amount owed to the Company based on
current market conditions and potential payment obligations between the Company
and its counterparties. Credit exposures are quantified weekly and netted, and
collateral is pledged to or held by the Company to the extent the current value
of derivatives exceed exposure policy thresholds.
The Company's derivative program is monitored by an internal compliance unit and
is reviewed by senior management. Notional amounts, which represent the basis
upon which pay or receive amounts are calculated and are not reflective of
credit risk, pertaining to derivative financial instruments (excluding the
Company's guaranteed separate account derivative investments), totaled $5.5
billion and $6.2 billion ($3.9 billion and $3.9 billion related to the Company's
investments, $1.6 billion and $2.3 billion on the Company's liabilities) as of
December 31, 1999 and 1998, respectively.
The tables below provide a summary of derivative instruments held by Hartford
Life Insurance Company as of December 31, 1999 and 1998, segregated by major
investment and liability category:
F-11
<PAGE>
<TABLE>
<CAPTION>
1999 -- Amount Hedged (Notional Amounts)
----------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps, Floors Swaps & Currency Notional
ASSETS HEDGED Value Floors & Options Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,049 $ -- $ -- $ -- $ 911 $-- $ 911
Anticipatory (3) -- -- -- 5 112 -- 117
Other bonds and notes 7,294 494 611 -- 1,676 80 2,861
Short-term investments 1,156 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL FIXED MATURITIES 13,499 494 611 5 2,699 80 3,889
Equity securities, policy loans and
other investments 4,585 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL INVESTMENTS $18,084 494 611 5 2,699 80 3,889
----------------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $16,004 -- 1,150 -- 430 -- 1,580
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 494 $1,761 $ 5 $3,129 $80 $5,469
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (22) $ 8 $ -- $ (30) $ 2 $ (42)
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1998 -- Amount Hedged (Notional Amounts)
-------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps & Swaps & Currency Notional
ASSETS HEDGED Value Floors Floors Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,187 $ 44 $ 243 $ 3 $ 885 $-- $1,175
Anticipatory (3) -- -- -- -- 235 -- 235
Other bonds and notes 7,683 461 597 18 1,300 90 2,466
Short-term investments 1,948 -- -- -- -- -- --
-------------------------------------------------------------------------------
TOTAL FIXED MATURITIES 14,818 505 840 21 2,420 90 3,876
Equity securities, policy loans and
other investments 6,979 -- -- -- -- -- --
-------------------------------------------------------------------------------
TOTAL INVESTMENTS $21,797 505 840 21 2,420 90 3,876
-------------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $19,615 -- 1,150 -- 1,195 -- 2,345
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 505 $1,990 $21 $3,615 $90 $6,221
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (6) $ 19 $-- $ 27 $(7) $ 33
-------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1999 and 1998, approximately 100% and 5%,
respectively, of the notional futures contracts expire within one year.
(2) As of December 31, 1999 and 1998, approximately 28% and 11%,
respectively, of foreign currency swaps expire within one year.
(3) Deferred gains and losses on anticipatory transactions are included in
the carrying value of fixed maturities in the Consolidated Balance Sheets. At
the time of the ultimate purchase, they are reflected as a basis adjustment to
the purchased asset. As of December 31, 1999, the Company had $1.4 of net
deferred losses on interest rate swaps and futures. The Company expects to basis
adjust the entire loss in 2000. During 1999, $0.2 of new future activity was
basis adjusted. As of December 31, 1998, the Company had no deferred gains for
interest rate swaps.
F-12
<PAGE>
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Maturities/ December 31, 1999
Notional Amount Additions Terminations (1) Notional Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Caps $1,912 $ -- $ 148 $1,764
Floors 583 -- 178 405
Swaps/Forwards 3,705 991 1,487 3,209
Futures 21 292 308 5
Options -- 86 -- 86
-------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
-------------------------------------------------------------------------------------------------------------------------------
BY STRATEGY
-------------------------------------------------------------------------------------------------------------------------------
Liability $2,345 $ 17 $ 782 $1,580
Anticipatory 235 204 322 117
Asset 2,398 831 427 2,802
Portfolio 1,243 317 590 970
-------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During 1999, the Company had no significant gains or losses on
terminations of hedge positions using derivative financial instruments.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 "Disclosure about Fair Value of Financial Instruments" requires
disclosure of fair value information of financial instruments. For certain
financial instruments where quoted market prices are not available, other
independent valuation techniques and assumptions are used. Because considerable
judgment is used, these estimates are not necessarily indicative of amounts that
could be realized in a current market exchange. SFAS No. 107 excludes certain
financial instruments from disclosure, including insurance contracts. Hartford
Life Insurance Company uses the following methods and assumptions in estimating
the fair value of each class of financial instrument.
Fair value for fixed maturities and marketable equity securities approximates
those quotations published by applicable stock exchanges or received from other
reliable sources.
For policy loans, carrying amounts approximate fair value.
Other invested assets consist primarily of partnership investments, which are
accounted for by the equity method, and mortgage loans, whereby the carrying
value approximates fair value.
Other policyholder funds fair value information is determined by estimating
future cash flows, discounted at the current market rate.
The fair value of derivative financial instruments, including swaps, caps,
floors, futures, options and forward commitments, is determined using a pricing
model which is similar to external valuation models.
The carrying amount and fair values of Hartford Life Insurance Company's
financial instruments as of December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
------------------------------------
ASSETS
Fixed maturities $13,499 $13,499 $14,818 $14,818
Equity securities 56 56 31 31
Policy loans 4,187 4,187 6,684 6,684
Other investments 342 348 264 309
LIABILITIES
Other policyholder funds (1) 11,734 11,168 11,709 11,726
------------------------------------
</TABLE>
(1) Excludes corporate owned life insurance and universal life insurance
contracts.
F-13
<PAGE>
5. SEPARATE ACCOUNTS
Hartford Life Insurance Company maintained separate account assets and
liabilities totaling $110.4 billion and $90.3 billion as of December 31, 1999
and 1998, respectively, which are reported at fair value. Separate account
assets, which are segregated from other investments, reflect two categories of
risk assumption: non-guaranteed separate accounts totaling $101.7 billion and
$80.6 billion as of December 31, 1999 and 1998, respectively, wherein the
policyholder assumes substantially all the investment risk, and guaranteed
separate accounts totaling $8.7 and $9.7 billion as of December 31, 1999 and
1998, respectively, wherein Hartford Life Insurance Company contractually
guarantees either a minimum return or account value to the policyholder.
Included in non-guaranteed separate account assets were policy loans totaling
$860 and $1.8 billion as of December 31, 1999 and 1998, respectively. Net
investment income (including net realized capital gains and losses) and interest
credited to policyholders on separate account assets are not reflected in the
Consolidated Statements of Income.
Separate account management fees and other revenues were $1.1 billion, $908 and
$699 in 1999, 1998 and 1997, respectively. The guaranteed separate accounts
include fixed market value adjusted (MVA) individual annuities and modified
guaranteed life insurance. The average credited interest rate on these contracts
was 6.5% and 6.6% as of December 31, 1999 and 1998, respectively. The assets
that support these liabilities were comprised of $8.7 billion and $9.5 billion
in fixed maturities as of December 31, 1999 and 1998, respectively, and $0.2
billion of other invested assets as of December 31, 1998. The portfolios are
segregated from other investments and are managed to minimize liquidity and
interest rate risk. In order to minimize the risk of disintermediation
associated with early withdrawals, fixed MVA annuity and modified guaranteed
life insurance contracts carry a graded surrender charge as well as a market
value adjustment. Additional investment risk is hedged using a variety of
derivatives which totaled $(96) and $40 in carrying value and $2.0 billion and
$3.5 billion in notional amounts as of December 31, 1999 and 1998, respectively.
6. STATUTORY RESULTS
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Statutory net income $ 151 $ 211 $ 214
------------------------------------
Statutory capital and surplus $1,905 $1,676 $1,441
------------------------------------
</TABLE>
A significant percentage of the consolidated statutory surplus is permanently
reinvested or is subject to various state regulatory restrictions which limit
the payment of dividends without prior approval. The total amount of statutory
dividends which may be paid by the insurance subsidiaries of the Company in
2000, without prior regulatory approval, is estimated to be $190.
Hartford Life Insurance Company and its domestic insurance subsidiaries prepare
their statutory financial statements in accordance with accounting practices
prescribed by the applicable state of domicile. Prescribed statutory accounting
practices include publications of the National Association of Insurance
Commissioners (NAIC), as well as state laws, regulations and general
administrative rules.
The NAIC adopted the Codification of Statutory Accounting Principles (SAP) in
March 1998. The proposed effective date for the statutory accounting guidance is
January 1, 2001. It is expected that Hartford Life Insurance Company's
domiciliary state will adopt the SAP and the Company will make the necessary
changes required for implementation. The Company has not yet determined the
impact that the SAP will have on the statutory financial statements of Hartford
Life Insurance Company and its insurance subsidiaries.
7. STOCK COMPENSATION PLANS
Hartford Life Insurance Company's employees are included in the 1997 Hartford
Life, Inc. Incentive Stock Plan (the "Plan"), which was adopted during the
second quarter of 1997. Under the Plan, options granted may be either non-
qualified options or incentive stock options qualifying under Section 422A of
the Internal Revenue Code, stock appreciation rights, performance shares or
restricted stock, or any combination of the foregoing. The aggregate number of
shares of Class A Common Stock which may be awarded in any one year shall be
subject to an annual limit. The maximum number of shares of Class A Common Stock
which may be granted under the Plan in each year shall be 1.5% of the total
issued and outstanding shares of Hartford Life Class A and Class B Common Stock
and treasury stock as reported in the Annual Report on Hartford Life's Form 10-K
of the Company for the preceding year plus unused portions of such limit from
prior years.
In addition, no more than 5 million shares of Class A Common Stock shall be
cumulatively available for awards of incentive stock options under the Plan, and
no more than 20% of the total number of shares on a cumulative basis shall be
available for restricted stock and performance shares awards. Performance shares
awards of common stock granted under the Plan become payable upon the attainment
of specific performance goals achieved over a three year period.
F-14
<PAGE>
All options granted have an exercise price equal to the market price of the
Company's stock on the date of grant and an option's maximum term is ten years.
Certain non-performance based options become exercisable upon the attainment of
specified market price appreciation of Hartford Life's common shares or at seven
years after the date of grant, while the remaining non-performance based options
become exercisable over a three year period commencing with the date of grant.
During the second quarter of 1997, Hartford Life established the Hartford Life,
Inc. Employee Stock Purchase Plan (ESPP). Under this plan, eligible employees of
Hartford Life and the Company may purchase Class A Common Stock of Hartford Life
at a 15% discount from the lower of the market price at the beginning or end of
the quarterly offering period. Hartford Life may sell up to 2,700,000 shares of
stock to eligible employees. Hartford Life sold 120,694, 121,943 and 54,316
shares under the ESPP in 1999, 1998 and 1997, respectively. The weighted average
fair value of the discount under the ESPP was $7.48 per share in 1999, $13.74
per share in 1998 and $9.63 per share in 1997.
8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS
(A) PENSION PLANS
Hartford Life Insurance Company's employees are included in The Hartford's
noncontributory defined benefit pension plans. These plans provide pension
benefits that are based on years of service and the employee's compensation
during the last ten years of employment. The Company's funding policy is to
contribute annually an amount between the minimum funding requirements set forth
in the Employee Retirement Income Security Act of 1974, as amended, and the
maximum amount that can be deducted for U.S. federal income tax purposes.
Generally, pension costs are funded through the purchase of the Company's group
pension contracts. The cost to the Company was approximately $6 in both 1999 and
1998, and $5 in 1997.
The Company also provides, through The Hartford, certain health care and life
insurance benefits for eligible retired employees. A substantial portion of the
Company's employees may become eligible for these benefits upon retirement. The
Company's contribution for health care benefits will depend on the retiree's
date of retirement and years of service. In addition, the plan has a defined
dollar cap which limits average Company contributions. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial to the results of operations for 1999, 1998 and 1997.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.1% for 1999, decreasing ratably to 5.0% in the year 2003. Increasing
or decreasing the health care trend rates by one percent per year would have an
immaterial impact on the accumulated postretirement benefit obligation and the
annual expense. To the extent that the actual experience differs from the
inherent assumptions, the effect will be amortized over the average future
service of covered employees.
(B) INVESTMENT AND SAVINGS PLAN
Substantially all employees of the Company are eligible to participate in The
Hartford's Investment and Savings Plan. Under this plan, designated
contributions, which may be invested in Class A Common Stock of Hartford Life or
certain other investments, are matched, up to 3% of compensation, by the
Company. The cost to Hartford Life Insurance Company for the above-mentioned
plan was approximately $4 in both 1999 and 1998, and $2 in 1997.
9. REINSURANCE
Hartford Life Insurance Company cedes insurance to other insurers in order to
limit its maximum losses. Such transfer does not relieve Hartford Life Insurance
Company of its primary liability. Failure of reinsurers to honor their
obligations could result in losses to Hartford Life Insurance Company. Hartford
Life Insurance Company reduces this risk by evaluating the financial condition
of reinsurers, and monitoring for possible concentrations of credit risk.
Hartford Life Insurance Company has no significant reinsurance related
concentrations of credit risk.
The Company records a receivable for the portion of reinsured benefits paid and
insurance liabilities. Reinsurance recoveries on ceded reinsurance contracts
were $397, $300 and $418 for the years ended December 31, 1999, 1998 and 1997,
respectively. Hartford Life Insurance Company also assumes insurance from other
insurers.
The effect of reinsurance on premiums and other considerations is summarized as
follows:
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Direct premiums and other considerations $2,660 $2,722 $2,164
Reinsurance assumed 95 150 159
Reinsurance ceded (710) (654) (686)
------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS $2,045 $2,218 $1,637
------------------------------------
</TABLE>
F-15
<PAGE>
Hartford Life Insurance Company maintains certain reinsurance agreements with
HLA, whereby the Company cedes both group life and group accident and health
risk. Under these treaties, the Company ceded group life premium of $119, $132
and $80 in 1999, 1998 and 1997, respectively, and accident and health premium of
$430, $379, and $335, respectively, to HLA.
Pursuant to a reinsurance agreement dating back to 1992, the Company assumed
100% of certain blocks of individual life insurance from HLA. Under this
reinsurance agreement Hartford Life Insurance Company assumed $9, $13 and $18 of
premium from HLA in 1999, 1998 and 1997, respectively. On December 1, 1999, HLA
recaptured this in force block of individual life insurance previously ceded to
the Company. This commutation resulted in a reduction in the Company's assets of
$666, consisting of $556 of invested assets, $99 of deferred policy acquisition
costs and $11 of other assets. Liabilities decreased $650, consisting of $543 of
other policyholder funds, $60 of future policy benefits and $47 of other
liabilities. As a result, the Company recognized an after-tax loss relating to
this transaction of $16.
In 1998, the Hartford Life recaptured an in force block of Corporate Owned Life
Insurance (COLI) business previously ceded to MBL Assurance Co. of New Jersey
(MBL Life). The transaction was consummated through an assignment of a
reinsurance arrangement between Hartford Life and MBL Life to a Hartford Life
subsidiary. Hartford Life originally assumed the life insurance block in 1992
from Mutual Benefit Life, which was placed in court-supervised rehabilitation in
1991, and reinsured a portion of those policies back to MBL Life. This recapture
was effective January 1, 1998 and resulted in a decrease in ceded premiums and
other considerations of $163 in 1998. Additionally, this transaction resulted in
a decrease in reinsurance recoverables of $4.8 billion, which was exchanged for
the fair value of assets comprised of $4.3 billion in policy loans and $443 in
other net assets.
10. INCOME TAX
Hartford Life and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were filing separate federal, state and local
income tax returns.
As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of Hartford Life,
the Company will be included for federal income tax purposes in the affiliated
group of which The Hartford is the common parent. It is the intention of The
Hartford and its non-life subsidiaries to file a single consolidated federal
income tax return. The life insurance companies will file a separate
consolidated federal income tax return for 1997 and 1998 and intend to file a
separate consolidated federal income tax return for 1999. The Company's
effective tax rate was 35%, 35% and 36% in 1999, 1998 and 1997, respectively.
Income tax expense (benefit) is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Current $(50) $307 $162
Deferred 241 (119) 5
------------------------------
INCOME TAX EXPENSE $191 $188 $167
------------------------------
</TABLE>
A reconciliation of the tax provision at the U.S. federal statutory rate to the
provision (benefit) for income taxes is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Tax provision at the U.S. federal statutory rate $193 $188 $164
Other (2) -- 3
------------------------------
TOTAL $191 $188 $167
------------------------------
</TABLE>
Deferred tax assets (liabilities) include the following as of December 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C> <C>
---------------------
Tax basis deferred policy acquisition costs $ 720 $ 751
Financial statement deferred policy acquisition costs and
reserves 11 103
Employee benefits (3) 4
Net unrealized capital losses (gains) on securities 138 (98)
Investments and other (407) (296)
---------------------
TOTAL $ 459 $ 464
---------------------
</TABLE>
F-16
<PAGE>
Hartford Life Insurance Company had a current tax receivable of $56 as of
December 31, 1999 and a current tax payable of $65 as of December 31, 1998.
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax Act
of 1959 permitted the deferral from taxation of a portion of statutory income
under certain circumstances. In these situations, the deferred income was
accumulated in a "Policyholders' Surplus Account" and, based on current tax law,
will be taxable in the future only under conditions which management considers
to be remote; therefore, no federal income taxes have been provided on the
balance in this account, which for tax return purposes was $104 as of December
31, 1999.
11. RELATED PARTY TRANSACTIONS
Transactions of the Company with its affiliates relate principally to tax
settlements, reinsurance, insurance coverage, rental and service fees, payment
of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and employee
benefit plan expenses, are initially paid by The Hartford. Direct expenses are
allocated to the Company using specific identification, and indirect expenses
are allocated using other applicable methods. Indirect expenses include those
for corporate areas which, depending on type, are allocated based on either a
percentage of direct expenses or on utilization. Indirect expenses allocated to
the Company by The Hartford were $47 in both 1999 and 1998 and $39 in 1997.
12. COMMITMENTS AND CONTINGENT LIABILITIES
(A) LITIGATION
Hartford Life Insurance Company is involved in pending and threatened litigation
in the normal course of its business in which claims for alleged economic and
punitive damages have been asserted. Some of these cases have been filed as
purported class actions and some cases have been filed in certain jurisdictions
that permit punitive damage awards disproportionate to the actual damages
incurred. Although there can be no assurances, at the present time the Company
does not anticipate that the ultimate liability arising from such pending or
threatened litigation, after consideration of provisions made for estimated
losses and costs of defense, will have a material adverse effect on the
financial condition or operating results of the Company.
(B) GUARANTY FUNDS
Under insurance guaranty fund laws in each state, the District of Columbia and
Puerto Rico, insurers licensed to do business can be assessed by state insurance
guaranty associations for certain obligations of insolvent insurance companies
to policyholders and claimants. Recent regulatory actions against certain large
life insurers encountering financial difficulty have prompted various state
insurance guaranty associations to begin assessing life insurance companies for
the deemed losses. Most of these laws do provide, however, that an assessment
may be excused or deferred if it would threaten an insurer's solvency and
further provide annual limits on such assessments. Part of the assessments paid
by the Company and its subsidiaries pursuant to these laws may be used as
credits for a portion of the associated premium taxes. The Company paid guaranty
fund assessments of approximately $2, $9 and $15 in 1999, 1998 and 1997,
respectively, of which $1 in 1999 and $4 in both 1998 and 1997 were estimated to
be creditable against premium taxes.
(C) LEASES
The rent paid to Hartford Fire for space occupied by the Company was $9 in 1999
and $7 in both 1998 and 1997. Future minimum rental commitments are as follows:
<TABLE>
<S> <C>
2000 $ 14
2001 14
2002 13
2003 12
2004 12
Thereafter 62
--------
TOTAL $ 127
--------
</TABLE>
The principal executive offices of Hartford Life Insurance Company, together
with its parent, are located in Simsbury, Connecticut. Rental expense is
recognized on a level basis over the term of the primary sublease for the
facility located in Simsbury, Connecticut, which expires on December 31, 2009,
and amounted to approximately $9 in each of the years ended December 31, 1999,
1998 and 1997.
(D) TAX MATTERS
Hartford Life's federal income tax returns are routinely audited by the Internal
Revenue Service. Hartford Life's 1996-1997 federal income tax returns are
currently under audit by the Internal Revenue Service. Management believes that
sufficient provision has been made in the financial statements for issues that
may result from tax examinations and other tax related matters for all open tax
years.
F-17
<PAGE>
13. SEGMENT INFORMATION
Hartford Life Insurance Company is organized into three reportable operating
segments which include Investment Products, Individual Life and Corporate Owned
Life Insurance (COLI). Investment Products offers individual fixed and variable
annuities, mutual funds, retirement plan services other investment products.
Individual Life sells a variety of life insurance products, including variable
life, universal life, interest sensitive whole life and term life insurance.
COLI primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments, as well as certain employee benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent, HLA.
The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2.
Hartford Life Insurance Company evaluates performance of its segments based on
revenues, net income and the segment's return on allocated capital. The Company
charges direct operating expenses to the appropriate segment and allocates the
majority of indirect expenses to the segments based on an intercompany expense
arrangement. Intersegment revenues are not significant and primarily occur
between corporate and the operating segments. These amounts include interest
income on allocated surplus and the amortization of net realized capital gains
and losses through net investment income utilizing the duration of the segment's
investment portfolios. The Company's revenues are primarily derived from
customers within the United States. The Company's long-lived assets primarily
consist of deferred policy acquisition costs and deferred tax assets from within
the United States. The following tables outlines summarized financial
information concerning the Company's segments.
<TABLE>
<CAPTION>
Investment Individual
1999 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
Total revenues $ 1,884 $ 574 $ 830 $ 112 $ 3,400
Net investment income 699 169 431 60 1,359
Amortization of deferred policy acquisition costs 411 128 -- -- 539
Income tax expense (benefit) 159 37 15 (20) 191
Net income (loss) 300 68 28 (35) 361
Assets 106,352 5,962 20,198 2,453 134,965
</TABLE>
<TABLE>
<CAPTION>
Investment Individual
1998 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
Total revenues $ 1,779 $ 543 $ 1,567 $ 86 $ 3,975
Net investment income 736 181 793 49 1,759
Amortization of deferred policy acquisition costs 326 105 -- -- 431
Income tax expense (benefit) 145 35 12 (4) 188
Net income (loss) 270 64 24 (8) 350
Assets 87,207 5,228 22,631 3,197 118,263
</TABLE>
<TABLE>
<CAPTION>
Investment Individual
1997 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
-------------------------------------------------
Total revenues $ 1,510 $ 487 $ 980 $ 32 $ 3,009
Net investment income 739 164 429 36 1,368
Amortization of deferred policy acquisition costs 250 83 -- 2 335
Income tax expense 111 30 15 11 167
Net income 206 55 27 14 302
Assets 72,288 4,914 17,800 2,743 97,745
</TABLE>
14. QUARTERLY RESULTS FOR 1999 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, June 30, September 30, December 31,
------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------
Revenues $838 $915 $853 $721 $846 $826 $863 $1,513
Benefits, claims and expenses 703 787 722 591 695 688 728 1,371
Net income 88 83 85 85 100 89 88 93
</TABLE>
F-18
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I -- SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
Amount at
Fair which shown
Type of Investment Cost Value on Balance Sheet
<S> <C> <C> <C>
------------------------------------
FIXED MATURITIES
Bonds and Notes
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 180 $ 182 $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 1,064 1,064
States, municipalities and political subdivisions 155 156 156
Foreign governments 289 281 281
Public utilities 865 833 833
All other corporate, including international 5,646 5,420 5,420
All other corporate -- asset backed 4,103 3,985 3,985
Short-term investments 1,156 1,156 1,156
Certificates of deposit 434 422 422
Redeemable preferred stock 1 -- --
------------------------------------
TOTAL FIXED MATURITIES 13,923 13,499 13,499
------------------------------------
EQUITY SECURITIES
Common Stocks
Industrial and miscellaneous 49 56 56
------------------------------------
TOTAL EQUITY SECURITIES 49 56 56
------------------------------------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES 13,972 13,555 13,555
------------------------------------
Policy Loans 4,187 4,187 4,187
------------------------------------
OTHER INVESTMENTS
Mortgage loans on real estate 198 198 198
Other invested assets 127 150 144
------------------------------------
TOTAL OTHER INVESTMENTS 325 348 342
------------------------------------
TOTAL INVESTMENTS $18,484 $18,090 $18,084
------------------------------------
</TABLE>
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
Net Benefits,
Deferred Realized Claims and
Policy Future Other Premiums Net Capital Claim
Acquisition Policy Policyholder and Other Investment Gains Adjustment
Segment Costs Benefits Funds Considerations Income (Losses) Expenses
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
1999
Investment Products $3,099 $2,744 $ 8,859 $1,185 $ 699 $-- $ 660
Individual Life 914 270 1,880 405 169 -- 254
Corporate Owned Life Insurance -- 321 5,244 399 431 -- 621
Other -- 997 21 56 60 (4) 39
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $4,013 $4,332 $16,004 $2,045 $1,359 $(4) $1,574
-------------------------------------------------------------------------------------------
1998
-------------------------------------------------------------------------------------------
Investment Products $2,823 $2,407 $ 9,194 $1,043 $ 736 $-- $ 670
Individual Life 931 466 2,307 363 181 (1) 262
Corporate Owned Life Insurance -- 225 8,097 774 793 -- 924
Other -- 497 17 38 49 (1) 55
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,754 $3,595 $19,615 $2,218 $1,759 $(2) $1,911
-------------------------------------------------------------------------------------------
1997
-------------------------------------------------------------------------------------------
Investment Products $2,478 $2,070 $ 9,620 $ 771 $ 739 $-- $ 677
Individual Life 837 392 2,182 323 164 -- 242
Corporate Owned Life Insurance -- 56 9,259 551 429 -- 439
Other -- 541 (27) (8) 36 4 21
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,315 $3,059 $21,034 $1,637 $1,368 $ 4 $1,379
-------------------------------------------------------------------------------------------
<CAPTION>
Amortization
of Deferred
Policy
Acquisition Dividends to Other
Segment Costs Policyholders Expenses
<S> <C> <C> <C>
---------------------------------------
1999
Investment Products $411 $ -- $354
Individual Life 128 -- 87
Corporate Owned Life Insurance -- 104 62
Other -- -- 128
---------------------------------------
CONSOLIDATED OPERATIONS $539 $104 $631
---------------------------------------
1998
---------------------------------------
Investment Products $326 $ -- $368
Individual Life 105 -- 77
Corporate Owned Life Insurance -- 329 278
Other -- -- 43
---------------------------------------
CONSOLIDATED OPERATIONS $431 $329 $766
---------------------------------------
1997
---------------------------------------
Investment Products $250 $ -- $266
Individual Life 83 -- 77
Corporate Owned Life Insurance -- 240 259
Other 2 -- (16)
---------------------------------------
CONSOLIDATED OPERATIONS $335 $240 $586
---------------------------------------
</TABLE>
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
Percentage
Gross Ceded to Assumed From Net of Amount
Amount Other Companies Other Companies Amount Assumed to Net
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1999
Life insurance in force $307,970 $131,162 $11,785 $188,593 6.2%
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 2,212 $ 275 $ 84 $ 2,021 4.2%
Accident and health insurance 448 435 11 24 45.8%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,660 $ 710 $ 95 $ 2,045 4.6%
------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------------------------------------------
Life insurance in force $326,400 $200,782 $18,289 143,907 12.7%
------------------------------------------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 2,329 $ 271 142 $ 2,200 6.5%
Accident and health insurance 393 383 8 18 44.4%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,722 $ 654 150 $ 2,218 6.8%
------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------------
Life insurance in force $245,487 $178,771 $33,156 $ 99,872 33.2%
------------------------------------------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 1,818 $ 340 $ 157 $ 1,635 9.6%
Accident and health insurance 346 346 2 2 100.0%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,164 $ 686 $ 159 $ 1,637 9.7%
------------------------------------------------------------------------
</TABLE>
S-3
<PAGE>
PART C
<PAGE>
PART C
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 to be filed by Amendment.
(6) (a) Certificate of Incorporation of Hartford.(3)
(6) (b) Bylaws of Hartford.(1)
(7) Not applicable.
(8) Not applicable.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
------------------------
(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 the Post-Effective Amendment No. 19, to
the Registration Statement File No. 33-73570, dated April 14, 1997.
<PAGE>
(11) No financial statements are omitted.
(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
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
--------------------------------------------------------------------------------
<S> <C>
David A. Carlson Vice President
--------------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
--------------------------------------------------------------------------------
Bruce W. Ferris Vice President
--------------------------------------------------------------------------------
Timothy M. Fitch Vice President & Actuary
--------------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
--------------------------------------------------------------------------------
David T. Foy Senior Vice President, Chief
Financial Officer and Treasurer, Director*
--------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel, and
Corporate Secretary, Director*
--------------------------------------------------------------------------------
Lois W. Grady Senior Vice President
--------------------------------------------------------------------------------
Stephen T. Joyce Senior Vice President
--------------------------------------------------------------------------------
Michael D. Keeler Vice President
--------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
--------------------------------------------------------------------------------
Thomas M. Marra President, Director*
--------------------------------------------------------------------------------
Steven L. Matthiesen Vice President
--------------------------------------------------------------------------------
Deanne Osgood Vice President
--------------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
--------------------------------------------------------------------------------
Donald A. Salama Vice President
--------------------------------------------------------------------------------
Lowndes A. Smith Chief Executive Officer, Director*
--------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President and Chief Investment Officer,
Director*
--------------------------------------------------------------------------------
</TABLE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
<PAGE>
-4-
*Denotes election to 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 April 29, 2000, there were 250,651 Contract Owners.
Item 28. Indemnification
Sections 33-770 to 33-778, inclusive, of the Connecticut General Statutes
("CGS") provide that a corporation may provide indemnification of or
advance expenses to a director, officer, employee or agent. Reference is
hereby made to Section 33-771(e) of CGS regarding indemnification of
directors and Section 33-776(d) of CGS regarding indemnification of
officers, employees and agents of Connecticut corporations. These statutes
provide, in general, that Connecticut corporations incorporated prior to
January 1, 1997 shall, except to the extent that their certificate of
incorporation expressly provides otherwise, indemnify their directors,
officers, employees and agents against "liability" (defined as the
obligation to pay a judgment, settlement, penalty, fine, including an
excise tax assessed with respect to an employee benefit plan, or reasonable
expenses incurred with respect to a proceeding) when (1) a determination is
made pursuant to Section 33-775 that the party seeking indemnification has
met the standard of conduct set forth in Section 33-771 or (2) a court has
determined that indemnification is appropriate pursuant to Section 33-774.
Under Section 33-775, the determination of and the authorization for
indemnification are made (a) by the disinterested directors, as defined in
Section 33-770(3); (b) by special counsel; (c) by the shareholders; or (d)
in the case of indemnification of an officer, agent or employee of the
corporation, by the general counsel of the corporation or such other
officer(s) as the board of directors may specify. Also, Section 33-772
provides that a corporation shall indemnify an individual who was wholly
successful on the merits or otherwise against reasonable expenses incurred
by him in connection with a proceeding to which he was a party because he
was a director of the corporation. In the case of a proceeding by or in the
right of the corporation or with respect to conduct for which the director,
officer, agent or employee was adjudged liable on the basis that he
received a financial benefit to which he was not entitled, indemnification
is limited to reasonable expenses incurred in connection with the
proceeding against the corporation to which the individual was named a
party.
Under the Depositor's bylaws, the Depositor must indemnify both directors
and officers of the Depositor for (1) any claims and liabilities to which
they become
<PAGE>
-5-
subject by reason of being or having been directors or officers of the
Depositor and (2) legal and other expenses incurred in defending against
such claims, in each case, to the extent such is consistent with statutory
provisions.
Section 33-777 of CGS specifically authorizes a corporation to procure
indemnification insurance on behalf of an individual who was a director,
officer, employer or agent of the corporation. Consistent with the statute,
the directors and officers of the Depositor 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.
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:
<TABLE>
<S><C>
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC Variable Account I)
Hartford Life Insurance Company - Separate Account Two (DC Variable Account II)
Hartford Life Insurance Company - Separate Account Two (QP Variable Account)
Hartford Life Insurance Company - Separate Account Two (Variable Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust Separate
Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life Insurance Company - Separate Account Seven
Hartford Life and Annuity Insurance Company - Separate Account One
Hartford Life and Annuity Insurance Company - Putnam Capital Manager Trust
<PAGE>
-6-
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
Hartford Life and Annuity Insurance Company - Separate Account Seven
Hart Life Insurance Company - Separate Account One
Hart Life Insurance Company - Separate Account Two
American Maturity Life Insurance Company - Separate Account AMLVA
Servus Life Insurance Company - Separate Account One
Servus Life Insurance Company - Separate Account Two
</TABLE>
(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
Robert A. Kerzner Executive Vice President
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary
David T. Foy Treasurer
George R. Jay Controller
Unless otherwise indicated, the principal business address of each the
above individuals is P. O. Box 2999, Hartford, Connecticut 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
<PAGE>
-7-
Registration Statement as frequently as is necessary to ensure
that the audited financial statements in the Registration Statement
are never more than 16 months old so long as payments under the
variable annuity contracts may be accepted.
(b) The Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication
affixed to or included in the Prospectus that the applicant can remove
to send for a Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be
made available under this Form promptly upon written or oral request.
(d) Hartford hereby represents that the aggregate fees and charges under
the Contract are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by Hartford.
The Registrant is relying on the no-action letter issued by the
Division of Investment Management to American Counsel of Life
Insurance, Ref. No. IP-6-88, November 28, 1988. Registrant has
complied with conditions one through four of the no-action letter.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it has caused this Registration Statement to
be signed on its behalf, in the City of Hartford, and State of Connecticut on
this 17th day of July, 2000.
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO
(Registrant)
By: Thomas M. Marra *By: /s/ Marianne O'Doherty
-------------------------------------- -----------------------
Thomas M. Marra, President* Marianne O'Doherty
Attorney-in-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
By: Thomas M. Marra
--------------------------------------
Thomas M. Marra, President*
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
David T. Foy, Senior Vice President, Chief
Financial Officer and Treasurer, Director*
Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary, Director*
Thomas M. Marra, President, Directror* *By: /s/ Marianne O'Doherty
Lowndes A. Smith, Chief Executive Officer, -----------------------
Director * Marianne O'Doherty
Raymond P. Welnicki, Senior Vice President, Attorney-in-Fact
Director*
Lizabeth H. Zlatkus, Executive Vice President, Dated: July 17, 2000
Director*
David M. Znamierowski, Senior Vice President
and Chief Investment Officer, Director*
<PAGE>
EXHIBIT INDEX
(9) Opinion and Consent of Lynda Godkin, Senior Vice President, General Counsel
and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
