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HARTFORD LIFE INSURANCE COMPANY --
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT
P.O. Box 5085
Hartford, Connecticut 06102-5085
TELEPHONE: 1-800-521-0538
- --------------------------------------------------------------------------------
This Prospectus describes the Putnam Capital Manager Plan, a tax deferred
variable annuity issued by Hartford Life Insurance Company ("Hartford Life").
Payments for the Contract will be held in a series of Hartford Life Insurance
Company - Putnam Capital Manager Trust Separate Account (the "Separate
Account"). Allocations to and transfers to and from the Fixed Account are not
permitted in certain states.
There are currently sixteen Sub-Accounts available under the Contract. The
underlying investment portfolios ("Funds") of Putnam Variable Trust for the
Sub-Accounts are Putnam VT Asia Pacific Growth Fund, Putnam VT Diversified
Income Fund, Putnam VT Global Asset Allocation Fund, Putnam VT Global Growth
Fund, Putnam VT Growth and Income Fund, Putnam VT High Yield Fund, Putnam VT
International Growth Fund, Putnam VT International Growth & Income Fund,
Putnam VT International New Opportunities Fund, Putnam VT Money Market Fund,
Putnam VT New Opportunities Fund, Putnam VT New Value Fund, Putnam VT U.S.
Government and High Quality Bond Fund, Putnam VT Utilities Growth and Income
Fund, Putnam VT Vista Fund, and Putnam VT Voyager Fund.
This Prospectus sets forth the information concerning the Separate Account and
the Fixed Account that investors should know before investing. This
Prospectus should be kept for future reference. Additional information about
the Separate Account and the Fixed Account has been filed with the Securities
and Exchange Commission and is available without charge upon request. To
obtain the Statement of Additional Information send a written request to
Hartford Life Insurance Company, Attn: Annuity Marketing Services, P.O. Box
5085, Hartford, CT 06102-5085. The Table of Contents for the Statement of
Additional Information may be found on page __ of this Prospectus. The
Statement of Additional Information is incorporated by reference into this
Prospectus.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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THIS PROSPECTUS IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR PUTNAM VARIABLE
TRUST AND IS VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE TRUST.
---------------------------------------------------------------------
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
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ENDORSED OR GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR
OTHERWISE PROTECTED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY; THEY ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
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Prospectus Dated: May 1, 1996
-------------------
Statement of Additional Information Dated: May 1, 1996
-------------------
Revised effective: January 2, 1997
-----------------------
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TABLE OF CONTENTS
PAGE
----
GLOSSARY OF SPECIAL TERMS 6
FEE TABLE 9
SUMMARY 12
ACCUMULATION UNIT VALUES 14
PERFORMANCE RELATED INFORMATION 17
INTRODUCTION 18
THE CONTRACT 18
Right to Cancel Period 20
THE SEPARATE ACCOUNT 20
THE FIXED ACCOUNT 21
THE COMPANY 22
THE FUNDS 23
OPERATION OF THE CONTRACT/ACCUMULATION PERIOD 26
Premium Payments 26
Value of Accumulation Units 27
Value of the Fixed Account 28
Value of the Contract 28
Transfers Among Sub-Accounts 28
Transfers Between the Fixed Account and the Sub-Accounts 29
Redemption/Surrender of a Contract 29
DEATH BENEFIT 31
CHARGES UNDER THE CONTRACT 33
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Contingent Deferred Sales Charges 33
During the First Seven Contract Years 33
After the Seventh Contract Year 33
Mortality and Expense Risk Charge 35
Administration and Maintenance Fees 35
Premium Taxes 36
ANNUITY BENEFITS 36
Annuity Options 37
The Annuity Unit and Valuation 39
Determination of Payment Amount 39
FEDERAL TAX CONSIDERATIONS 41
General 41
Taxation of Hartford Life and the Separate Account 41
Taxation of Annuities -- General Provisions Affecting 42
Purchasers Other Than Qualified Retirement Plans
Federal Income Tax Withholding 48
General Provisions Affecting Qualified Retirement Plans 49
Annuity Purchases by Nonresident Aliens and Foreign 49
Corporations
GENERAL MATTERS 50
Assignment 50
Modification 50
Delay of Payments 50
Voting Rights 50
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Distribution of the Contracts 51
Other Contracts Offered 52
Custodian of Separate Account Assets 52
Legal Proceedings 52
Legal Counsel 52
Experts 52
Additional Information 53
APPENDIX I 54
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 59
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate values
before Annuity payments begin.
ANNUAL WITHDRAWAL AMOUNT: The amount which can be withdrawn in any Contract
year prior to incurring surrender charges.
ANNUITANT: The person or Participant upon whose life the Contract is issued.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for a designated period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to
commence. Under a group unallocated Contract, the date for each Participant is
determined by the Contract Owner in accordance with the terms of the Plan.
ANNUITY UNIT: An accounting unit of measure used to calculate the value of
Annuity payments.
BENEFICIARY: The person(s) who receive Contract Values in the event of the
Annuitant's or Contract Owner's death under certain conditions. Under a group
unallocated Contract, the person named within the Plan documents/enrollment
forms by each Participant entitled to receive benefits as per the terms of the
Contract in case of the death of the Participant.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTINGENT ANNUITANT: The person so designated by the Contract Owner, who
upon the Annuitant's death, prior to the Annuity Commencement Date, becomes
the Annuitant.
CONTRACT ANNIVERSARY: The anniversary of the Contract Date.
CONTRACT OWNER(S): The owner(s) of the Contract, trustee or other entity,
sometimes herein referred to as "you".
CONTRACT VALUE: The aggregate value of any Sub-Account Accumulation Units
held under the Contract plus the value of the Fixed Account.
CONTRACT YEAR: A period of 12 months commencing with the Contract Date or any
anniversary thereof.
DEATH BENEFIT: The amount payable upon the death of a Contract Owner,
Annuitant, or
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Participant, in the case of group Contracts, before annuity payments have
started.
FIXED ACCOUNT: Part of the General Account of Hartford Life to which a
Contract Owner may allocate all or a portion of his Premium Payment or
Contract Value.
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain
fixed in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
FUNDS: Currently, the portfolios of Putnam Variable Trust described on page
__ of this Prospectus.
GENERAL ACCOUNT: The General Account of Hartford Life which consists of all
assets of Hartford Life Insurance Company other than those allocated to the
separate accounts of the Hartford Life Insurance Company.
HARTFORD LIFE: Hartford Life Insurance Company.
HOME OFFICE OF THE COMPANY: Currently located at 200 Hopmeadow Street,
Simsbury, Connecticut. All correspondence concerning the Contract should be
sent to P.O. Box 5085, Hartford, CT 06102-5085, Attn: Individual Annuity
Services.
MAXIMUM ANNIVERSARY VALUE - A value used in determining the death benefit.
It is based on a series of calculations of Contract Values on Contract
Anniversaries, premium payments and partial surrenders, as described on
page __.
NON-QUALIFIED CONTRACT: A Contract which is not classified as a tax-qualified
retirement plan using pre-tax dollars under the Internal Revenue Code.
PARTICIPANT: (For Group Unallocated Contracts Only). Any eligible employee
of an employer/Contract Owner participating in the Plan.
PLAN: A voluntary Plan of an Employer which qualifies for special tax
treatment under a section of the Internal Revenue Code.
PREMIUM PAYMENT: A payment made to Hartford Life pursuant to the terms of the
Contract.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments or
Contract Values.
QUALIFIED CONTRACT: A Contract which qualifies as a tax-qualified retirement
plan using pre-tax dollars under the Internal Revenue Code, such as an
employer-sponsored Section 401(k) or an Individual Retirement Annuity (IRA).
SEPARATE ACCOUNT: The Hartford Life separate account entitled "Hartford Life
Insurance Company -- Putnam Capital Manager Trust Separate Account".
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SUB-ACCOUNT: Accounts established within the Separate Account with respect to
a Fund.
TERMINATION VALUE: The Contract Value upon termination of the Contract prior
to the Annuity Commencement Date, less any applicable Premium Taxes, the
Annual Maintenance Fee and any applicable contingent deferred sales charges.
TRUST: Putnam Variable Trust.
UNALLOCATED CONTRACTS: Contracts issued to employers or such other entities
as Contract Owners with no allocation to a specific Participant, as defined
herein. The Plans will be responsible for the individual allocations.
VALUATION DAY: Every day the New York Stock Exchange is open for trading.
The value of the Separate Account is determined at the close of the New York
Stock Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets of the Separate
Account.
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FEE TABLE
SUMMARY
CONTRACT OWNER TRANSACTION EXPENSES
(ALL SUB-ACCOUNTS)
Sales Load Imposed on Purchases (as a percentage of premium payments) None
Exchange Fee $0
Deferred Sales Load (as a percentage of amounts withdrawn)
First Year (1) 6%
Second Year 6%
Third Year 5%
Fourth Year 5%
Fifth Year 4%
Sixth Year 3%
Seventh Year 2%
Eighth Year 0%
Annual Maintenance Fee (2) $30
Annual Expenses-Separate Account
(as percentage of average account value)
Mortality and Expense Risk 1.250%
Administration Fees 0.150%
Total 1.400%
ANNUAL FUND OPERATING EXPENSES
(AS PERCENTAGE OF NET ASSETS)
Management
Other Operating Total
Expenses Fees Expenses Fund
- -------- ----- --------- ----
Putnam VT Asia Pacific Growth Fund (3) 0.80% 0.90% 1.70%
Putnam VT Diversified Income Fund 0.70% 0.15% 0.85%
Putnam VT Global Asset Allocation Fund 0.70% 0.14% 0.84%
Putnam VT Global Growth Fund 0.60% 0.15% 0.75%
Putnam VT Growth and Income Fund 0.52% 0.05% 0.57%
Putnam VT High Yield Fund 0.70% 0.09% 0.79%
Putnam VT International Growth Fund (4) 0.80% 0.18% 0.98%
Putnam VT International Growth 0.80% 0.17% 0.97%
and Income Fund (4)
Putnam VT International New 1.20% 0.19% 1.39%
Opportunities Fund (4)
Putnam VT Money Market Fund 0.45% 0.12% 0.57%
Putnam VT New Opportunities Fund 0.70% 0.14% 0.84%
Putnam VT New Value Fund (4) 0.70% 0.13% 0.83%
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Putnam VT U.S. Government and High Quality
Bond Fund 0.61% 0.09% 0.70%
Putnam VT Utilities Growth and Income Fund (5) 0.70% 0.08% 0.78%
Putnam VT Vista Fund (4) 0.65% 0.16% 0.81%
Putnam VT Voyager Fund 0.62% 0.06% 0.68%
- ----------------------
(1) Length of time from premium payment.
(2) The Annual Maintenance Fee is a single $30 charge on a Contract. It is
deducted proportionally from the investment options in use at the time
of the charge. Pursuant to requirements of the 1940 Act, the Annual
Maintenance Fee has been reflected in the Examples by a method intended
to show the "average" impact of the Annual Maintenance Fee on an
investment in the Separate Account. The Annual Maintenance Fee is
deducted only when the accumulated value is less than $50,000. In the
Example, the Annual Maintenance Fee is approximated as a 0.08% annual
asset charge based on the experience of the Contracts.
(3) The annualized total expenses and management fees shown above for the
Putnam VT Asia Pacific Growth Fund reflect the termination of an expense
limitation in effect for the period. Actual annualized management fees
and total expenses would have been 0.33% and 1.22%, respectively.
(4) Putnam VT International Growth Fund, Putnam VT International Growth and
Income Fund, Putnam VT International New Opportunities Fund, Putnam VT
New Value Fund, and Putnam VT Vista Fund are new funds; operating
expenses are based on annualized estimates of such expenses to be
incurred in the current fiscal year.
(5) On July 11, 1996, shareholders approved an increase in the fees payable to
Putnam Management under the Management Contract for the Putnam VT
Utilities Growth and Income Fund. The management fees and total
expenses shown in the table have been restated to reflect the increase.
Actual management fees and total expenses were 0.60% and 0.68%,
respectively.
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<TABLE>
<CAPTION>
EXAMPLE
If you surrender your If you annuitize at the If you do not surrender
contract at the end of end of the applicable your contract: You would
the applicable time time period: You would pay the following
period: You would pay pay the following expenses on a $1,000
the following expenses expenses on a $1,000 investment, assuming a
on a $1,000 investment, investment, assuming a 5% annual return on
assuming a 5% annual 5% annual return on assets:
return on assets: assets:
SUB-ACCOUNT 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PCM Growth and Income Fund $81 $115 $151 $240 $20 $64 $110 $239 $21 $65 $111 $240
PCM High Yield Fund 83 122 163 263 22 71 122 262 23 72 123 263
PCM Global Growth Fund 83 120 161 259 22 70 120 258 23 70 121 259
PCM Money Market Fund 81 115 151 240 20 64 110 239 21 65 111 240
PCM Global Asset Allocation Fund 84 123 165 268 23 72 124 267 24 73 125 268
PCM U.S. Government and High
Quality Bond Fund 82 119 158 253 22 68 117 252 22 69 118 253
PCM Utilities Growth and Income Fund 83 121 162 262 22 71 121 261 23 71 122 262
PCM Voyager Fund 82 118 157 251 21 67 116 250 22 68 117 251
PCM Diversified Income Fund 84 124 166 269 23 73 125 268 24 74 126 269
PCM New Opportunities Fund 84 123 175 268 23 72 124 267 24 73 125 268
PCM Asia Pacific Growth Fund 93 149 209 353 32 99 168 352 33 99 169 353
PCM International Growth Fund 85 128 172 282 24 77 132 281 25 78 132 282
PCM International Growth and Income Fund 85 127 172 281 24 76 131 280 25 77 132 281
PCM International New Opportunities Fund 89 140 193 323 29 89 152 322 29 90 153 323
PCM New Value Fund 84 123 165 267 23 72 124 266 24 73 125 267
PCM Vista Fund 83 122 164 265 23 71 123 264 23 72 124 265
</TABLE>
The purpose of this table is to assist the Contract Owner in understanding
various costs and expenses that a Contract Owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and
underlying Funds. Premium taxes may also be applicable.
This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
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ACCUMULATION UNIT VALUES
(For an accumulation unit outstanding throughout the period)
The following information, insofar as it relates to the period ended December
31, 1995, has been examined by Arthur Andersen LLP, independent public
accountants, whose report thereon is included in the Statement of Additional
information, which is incorporated by reference to this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PCM VOYAGER FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $23.445 $23.530 $20.102 $18.472 $12.822 $13.272 $10.170 $10.000(a)
Accumulation unit value at end of period $32.520 $23.445 $23.530 $20.102 $18.472 $12.822 $13.272 $10.170
Number accumulation units outstanding at
end of period (in thousands) 36,379 29,315 21,915 14,667 8,419 3,714 2,968 762
PCM GROWTH AND INCOME FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $20.178 $20.390 $18.096 $16.720 $14.243 $14.166 $11.848 $10.000(a)
Accumulation unit value at end of period $27.201 $20.178 $20.390 $18.096 $16.720 $14.243 $14.166 $11.848
Number accumulation units outstanding at
end of period (in thousands) 76,865 67,016 53,464 32,856 19,420 10,888 7,037 2,187
PCM GLOBAL ASSET ALLOCATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $16.355 $16.988 $14.665 $13.992 $11.922 $12.068 $10.545 $10.000(a)
Accumulation unit value at end of period $20.087 $16.355 $16.988 $14.665 $13.992 $11.922 $12.068 $10.545
Number accumulation units outstanding at
end of period (in thousands) 16,019 16,507 12,914 8,580 5,829 4,300 3,293 2,274
PCM HIGH YIELD FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $17.476 $17.890 $15.173 $12.932 $ 9.055 $10.200 $10.624 $10.000(a)
Accumulation unit value at end of period $20.390 $17.476 $17.890 $15.173 $12.932 $ 9.055 $10.200 $10.624
Number accumulation units outstanding at
end of period (in thousands) 13,646 11,462 11,174 7,076 3,296 2,072 2,680 1,822
PCM U.S. GOVERNMENT AND HIGH QUALITY
FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $15.533 $16.277 $14.833 $13.994 $12.100 $11.414 $10.150 $10.000(a)
Accumulation unit value at end of period $18.448 $15.533 $16.277 $14.833 $13.994 $12.100 $11.414 $10.150
Number accumulation units outstanding at
end of period (in thousands) 30,489 33,516 37,806 27,611 16,368 8,107 5,399 2,786
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PCM MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $ 1.325 $ 1.294 $ 1.277 $ 1.250 $ 1.197 $ 1.124 $ 1.045 $ 1.000(a)
Accumulation unit value at end of period $ 1.379 $ 1.325 $ 1.294 $ 1.277 $ 1.250 $ 1.197 $ 1.124 $ 1.045
Number accumulation units outstanding at
end of period (in thousands) 107,934 144,950 86,677 80,182 62,638 64,849 21,986 13,212
PCM GLOBAL GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $13.119 $13.432 $10.289 $10.472 $ 9.233 $10.000(b) - -
Accumulation unit value at end of period $14.963 $13.119 $13.432 $10.289 $10.472 $ 9.233 - -
Number accumulation units outstanding at
end of period (in thousands) 29,701 30,285 17,711 7,638 3,800 1,405 0 -
PCM UTILITIES GROWTH AND INCOME FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.889 $11.876 $10.618 $10.000(c) - - - -
Accumulation unit value at end of period $14.075 $10.889 $11.876 $10.618 - - - -
Number accumulation units outstanding at
end of (in thousands) 22,892 23,090 26,176 5,956 - - - -
PCM DIVERSIFIED INCOME FUND SUB-ACCOUNT
Accumulation unit value at end of period $ 9.622 $10.188 $10.000(d) - - - - -
Accumulation unit value at end of period $11.302 $ 9.622 $10.188 - - - - -
Number accumulation units outstanding at
end of period (in thousands) 14,967 13,403 4,428 - - - - -
PCM NEW OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.718 $10.000(e) - - - - - -
Accumulation unit value at end of period $15.312 $10.718 - - - - - -
Number accumulation units outstanding at
end of period (in thousands) 15,860 3,681 - - - - - -
PCM ASIA PACIFIC GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000(f)
Accumulation unit value at end of period $10.135
Number accumulation units outstanding at end of
period (in thousands) 1,040
</TABLE>
(a) Inception date February 1, 1988.
(b) Inception date May 1, 1990.
(c) Inception date May 1, 1992.
(d) Inception date September 15, 1993.
(e) Inception date June 20, 1994.
(f) Inception date May 1, 1995.
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SUMMARY
WHAT IS THE CONTRACT AND HOW MAY I PURCHASE ONE?
The Contract offered is a tax deferred Variable Annuity Contract (see
"Taxation of Annuities in General," page __). Generally, the Contract is
purchased by completing an application or an order to purchase a Contract and
submitting it, along with the initial Premium Payments, to Hartford Life for
its approval. The minimum initial Premium Payment is $1,000 with a minimum
allocation to any Fund of $500. Certain plans may make smaller initial and
subsequent periodic premium payments. Subsequent Premium Payments, if made,
must be a minimum of $500. Generally, a Contract Owner may exercise his right
to cancel the Contract within 10 days of delivery of the Contract by
returning the Contract to Hartford Life at its Home Office. If the Contract
Owner exercises his right to cancel, Hartford Life will return either the
Contract Value or the original Premium Payments to the Contract Owner. The
duration of the right to cancel period and Hartford Life's obligation to
either return the Contract Value or the original Premium will depend on state
law. (see "Right to Cancel Period" page __.)
WHO MAY PURCHASE THE CONTRACT?
Any individual, group or trust may purchase the Contracts, including any
trustee or custodian for a retirement plan which qualifies for special
Federal tax treatment under the Internal Revenue Code, including individual
retirement annuities. (See "Federal Tax Considerations" commencing on page __
and Appendix I commencing on page __.)
WHAT TYPES OF INVESTMENTS ARE AVAILABLE UNDER THE CONTRACT?
The underlying investments for the Contract are shares of Putnam Variable
Trust, an open-end series investment company with multiple portfolios ("the
Funds") as follows: Putnam VT Asia Pacific Growth Fund, Putnam VT
Diversified Income Fund, Putnam VT Global Asset Allocation Fund, Putnam VT
Global Growth Fund, Putnam VT Growth and Income Fund, Putnam VT High Yield
Fund, Putnam VT International Growth Fund, Putnam VT International Growth &
Income Fund, Putnam VT International New Opportunities Fund, Putnam VT Money
Market Fund, Putnam VT New Opportunities Fund, Putnam VT New Value Fund,
Putnam VT U.S. Government and High Quality Bond Fund, Putnam VT Utilities
Growth and Income Fund, Putnam VT Vista Fund, Putnam VT Voyager Fund, and
such other Funds as shall be offered from time to time, and the Fixed
Account, or a combination of the Funds and the Fixed Account. (See "The
Funds" commencing on page __ and "The Fixed Account" commencing on page __.)
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WHAT ARE THE CHARGES UNDER THE CONTRACTS?
SALES EXPENSES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered. (See "Contingent Deferred Sales Charges"
commencing on page __.)
The length of time from receipt of a Premium Payment to the time of surrender
determines the contingent deferred sales charge. For this purpose, Premium
Payments will be deemed to be surrendered in the order in which they are
received and all surrenders will be first from Premium Payments and then from
other Contract values. The charge is a percentage of the amount withdrawn
(not to exceed the aggregate amount of the Premium Payments made). The
charge is as follows:
Length of Time
Charge from Premium Payment
------ --------------------
(Number of Years)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
No contingent deferred sales charge will be assessed in the event of death of
the Annuitant or Contract Owner, or upon the exercise of the withdrawal
privilege or if Contract Values are applied to an Annuity option provided for
under the Contract (except that a surrender out of Annuity Option Four will
be subject to a contingent deferred sales charge where applicable). (See
"Contingent Deferred Sales Charges" commencing on page __.)
FREE WITHDRAWAL PRIVILEGE
Withdrawals of up to 10% per Contract Year, on a noncumulative basis, of the
Premium Payments made to a Contract may be made without the imposition of the
contingent deferred sales charge during the first seven Contract years. (See
"Contingent Deferred Sales Charges" commencing on page __.) Certain plans or
programs may have different withdrawal privileges.
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MORTALITY AND EXPENSE RISKS
For assuming the mortality and expense risks under the Contract, Hartford Life
will impose a 1.25% per annum charge against all Contract Values held in the
Sub-Accounts, (See "Mortality and Expense Risk Charge," page __.)
ANNUAL ADMINISTRATION AND MAINTENANCE FEE
The Contract provides for administration and Contract maintenance charges. For
administration, the charge is .15% per annum against all Contract Values held in
the Separate Account. For Contract maintenance, the charge is $30 annually.
(See "Administration and Maintenance Fees," page __.) Contracts with a
Contract Value of $50,000 or more at time of Contract Anniversary will not be
assessed this charge.
PREMIUM TAXES
A deduction will be made for Premium Taxes for Contracts sold in certain states.
(See "Premium Taxes," page __.)
CHARGES BY THE FUNDS
The Funds are subject to certain fees, charges and expenses. (See the
Prospectus for the Trust accompanying this Prospectus.)
CAN I GET MY MONEY IF I NEED IT?
Subject to any applicable charges, the Contract may be surrendered, or portions
of the value of such Contract may be withdrawn, at any time prior to the Annuity
Commencement Date. However, if less than $500 remains in a Contract as a result
of a withdrawal, Hartford Life may terminate the Contract in its entirety. (See
"Redemption/Surrender of a Contract," page __.)
DOES THE CONTRACT PAY ANY DEATH BENEFITS?
A Death Benefit is provided in the event of death of the Annuitant or Contract
Owner or Joint Contract Owner before Annuity payments have commenced. (See
"Death Benefit," page __.)
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACT?
There are five available Annuity options under the Contract which are described
on page __. The Annuity Commencement Date may not be deferred beyond the
Annuitant's 90th birthday except in certain states where the Annuity
Commencement Date may not be deferred beyond the Annuitant's 85th birthday. If
a Contract Owner does not elect otherwise, the
<PAGE>
Page 17
Contract Value less applicable premium taxes will be applied on the Annuity
Commencement Date under the second option to provide a life annuity with 120
monthly payments certain.
DOES THE CONTRACT OWNER HAVE ANY VOTING RIGHTS UNDER THE CONTRACT?
Contract Owners will have the right to vote on matters affecting an underlying
Fund to the extent that proxies are solicited by such Fund. If a Contract Owner
does not vote, Hartford Life shall vote such interests in the same proportion as
shares of the Fund for which instructions have been received by Hartford Life.
(See "Voting Rights," page __.)
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
PCM Asia Pacific Growth Fund, PCM Diversified Income Fund, PCM Global Asset
Allocation Fund, PCM Global Growth Fund, PCM Growth and Income Fund, PCM High
Yield Fund, PCM International Growth Fund, PCM International Growth and Income
Fund, PCM International New Opportunities Fund, PCM Money Market Fund, PCM New
Opportunities Fund, PCM New Value Fund, PCM U.S. Government and High Quality
Bond Fund, PCM Utilities Growth and Income Fund, PCM Vista Fund, and PCM Voyager
Fund Sub-Accounts may include total return in advertisements or other sales
material.
When a Sub-Account advertises its total return, it will usually be calculated
for one year, five years, and ten years or some other relevant periods if the
Sub-Account has not been in existence for at least ten years. Total return is
measured by comparing the value of an investment in the Sub-Account at the
beginning of the relevant period to the value of the investment at the end of
the period (assuming the deduction of any contingent deferred sales charge which
would be payable if the investment were redeemed at the end of the period).
PCM Diversified Income Fund, PCM Growth and Income Fund, PCM International
Growth and Income Fund, PCM High Yield Fund, and PCM U.S. Government and High
Quality Bond Fund Sub-Accounts may advertise yield in addition to total return.
The yield will be computed in the following manner: The net investment income
per unit earned during a recent one month period is divided by the unit value on
the last day of the period. This figure reflects the recurring charges at the
Separate Account level including the Annual Maintenance Fee.
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PCM Money Market Fund Sub-Account may advertise yield and effective yield. The
yield of this 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 reflects the recurring charges at the Separate Account level including the
Annual Maintenance Fee.
Total return at the Separate Account level includes all Contract charges: sales
charges, mortality and expense risk charges, and the Annual Maintenance Fee, and
is therefore lower than total return at the Fund level, with no comparable
charges. Likewise, yield at the Separate Account level includes all recurring
charges (except sales charges), and is therefore lower than yield at the Fund
level, with no comparable charges.
Hartford Life may provide information on various topics to Contract Owners and
prospective Contract Owners in advertising, sales literature or other materials.
These topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in tax-
advantaged and taxable instruments, customer profiles and hypothetical purchase
scenarios, financial management and tax and retirement planning, and other
investment alternatives, including comparisons between the Contracts and the
characteristics of and market for such alternatives.
INTRODUCTION
This Prospectus has been designed to provide you with the necessary information
to make a decision on purchasing a tax deferred Variable Annuity Contract
offered by Hartford Life and funded by the Fixed Account and/or a series of the
Separate Account. Please read the Glossary of Special Terms on pages __ and __
prior to reading this Prospectus to familiarize yourself with the terms being
used.
THE CONTRACT
The Putnam Capital Manager Plan is a tax deferred Variable Annuity Contract.
Payments for the Contract will be held in the Fixed Account and/or a series of
the Separate Account. Initially there are no deductions from your Premium
Payments (except for Premium Taxes, if applicable) so your entire Premium
Payment is put to work in the investment
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Sub-Account(s) of your choice or the Fixed Account. Each Sub-Account invests
in a different underlying Fund with its own distinct investment objectives.
You pick the Sub-Account(s) with the investment objectives that meet your
needs. You may select one or more Sub-Accounts and/or the Fixed Account and
determine the percentage of your Premium Payment that is put into a
Sub-Account or the Fixed Account. You may also transfer assets among the
Sub-Accounts and the Fixed Account so that your investment program meets your
specific needs over time. There are minimum requirements for investing in
each Sub-Account and the Fixed Account which are described later in this
Prospectus. In addition, there are certain other limitations on withdrawals
and transfers of amounts in the Sub-Accounts and the Fixed Account as
described in this Prospectus. See "Charges Under the Contract" for a
description of the charges for redeeming a Contract and other charges made
under the Contract.
Generally, the Contract contains the five optional forms of Annuity described
later in this Prospectus. Options 2, 4 and 5 are available with respect to
Qualified Contracts only if the guaranteed payment period is less than the life
expectancy of the Annuitant at the time the option becomes effective. Such life
expectancy shall be computed on the basis of the mortality table prescribed by
the IRS, or if none is prescribed, the mortality table then in use by Hartford
Life.
The Contract Owner may select an Annuity Commencement Date and an Annuity option
which may be on a fixed or variable basis, or a combination thereof. The
Annuity Commencement Date may not be deferred beyond the Annuitant's 90th
birthday except in certain states where the Annuity Commencement Date may not be
deferred beyond the Annuitant's 85th birthday.
The Annuity Commencement Date and/or the Annuity option may be changed from time
to time, but any such change must be made at least 30 days prior to the date on
which payments are scheduled to begin. If you do not elect otherwise, payments
will begin at the Annuitant's age 90 under Option 2 with 120 monthly payments
certain (Option 1 for Contracts issued in Texas).
When an Annuity is effected under a Contract, unless otherwise specified,
Contract Values held in the Sub-Accounts will be applied to provide a Variable
Annuity based on the pro rata amount in the various Sub-Accounts. Fixed Account
Contract Values will be applied to provide a Fixed Annuity. Variable Annuity
payments will vary in accordance with the investment performance of the
Sub-Accounts you have selected. The Contract allows the Contract Owner to
change the Sub-Accounts on which variable payments are based after payments have
commenced once every three (3) months. Any Fixed Annuity allocation may not be
changed.
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The Contract offered under this Prospectus may be purchased by any individual
("Non-Qualified Contract") or by an individual, trustee or custodian for a
retirement plan qualified under Sections 401(a) or 403(a) of the Internal
Revenue Code; annuity purchase plans adopted by public school systems and
certain tax-exempt organizations according to Section 403(b) of the Internal
Revenue Code; Individual Retirement Annuities adopted according to Section 408
of the Internal Revenue Code; employee pension plans established for employees
by a state, a political subdivision of a state, or an agency or instrumentality
of either a state or a political subdivision of a state, and certain eligible
deferred compensation plans as defined in Section 457 of the Internal Revenue
Code ("Qualified Contracts").
RIGHT TO CANCEL PERIOD
If you are not satisfied with your purchase you may surrender the Contract by
returning it within ten days (or longer in some states) after you receive it. A
written request for cancellation must accompany the Contract. In such event,
Hartford Life will, without deduction for any charges normally assessed
thereunder, pay you an amount equal to the Contract Value on the date of receipt
of the request for cancellation. You bear the investment risk during the period
prior to the Company's receipt of request for cancellation. Hartford Life will
refund the premium paid only for individual retirement annuities (if returned
within seven days of receipt) and in those states where required by law.
THE SEPARATE ACCOUNT
The Separate Account was established on June 22, 1987, in accordance with
authorization by the Board of Directors of Hartford Life. It is the Separate
Account in which Hartford Life sets aside and invests the assets attributable to
variable annuity Contracts, including the Contracts sold under this Prospectus.
Although the Separate Account is an integral part of Hartford Life, it is
registered as a unit investment trust under the Investment Company Act of 1940.
This registration does not, however, involve supervision by the Commission of
the management or the investment practices or policies of the Separate Account
or Hartford Life. The Separate Account meets the definition of "separate
account" under federal securities law.
Under Connecticut law, the assets of the Separate Account attributable to the
Contracts offered under this Prospectus are held for the benefit of the owners
of, and the persons entitled to payments under, those Contracts. Income, gains,
and losses, whether or not realized, from assets allocated to the Separate
Account, are, in accordance with the Contracts, credited to or charged against
the Separate Account. Also, the assets in the Separate
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Account are not chargeable with liabilities arising out of any other business
Hartford Life may conduct. So Contract Values allocated to the Sub-Accounts
will not be affected by the rate of return of Hartford Life's General
Account, nor by the investment performance of any of Hartford Life's other
separate accounts. However, the obligations arising under the Contracts are
general obligations of Hartford Life.
Your investment in the Separate Account is allocated to one or more
Sub-Accounts as per your specifications. Each Sub-Account is invested
exclusively in the shares of one underlying Fund. Net Premium Payments and
proceeds of transfers between Funds are applied to purchase shares in the
appropriate Fund at net asset value determined as of the end of the Valuation
Period during which the payments were received or the transfer made. All
distributions from the Funds are reinvested at net asset value. The value of
your investment will therefore vary in accordance with the net income and the
market value of the portfolios of the underlying Fund(s). During the
Variable Annuity payout period, both your Annuity payments and reserve values
will vary in accordance with these factors.
Hartford Life does not guarantee the investment results of the Funds or any of
the underlying investments. There is no assurance that the value of a Contract
during the years prior to retirement or the aggregate amount of the Variable
Annuity payments will equal the total of Premium Payments made under the
Contract. Since each underlying Fund has different investment objectives and
policies, each is subject to different risks. These risks are more fully
described in the accompanying Trust Prospectus.
Hartford Life reserves the right, subject to compliance with the law, to
substitute the shares of any other registered investment company for the shares
of any Fund held by the Separate Account. Substitution may occur only if shares
of the Fund(s) become unavailable or if there are changes in applicable law or
interpretations of law. Current law requires notification to you of any such
substitution and approval of the Commission.
The Separate Account may be subject to liabilities arising from a Series of the
Separate Account whose assets are attributable to other variable annuity
Contracts or variable life insurance policies offered by the Separate Account
which are not described in this Prospectus.
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT
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NOR ANY INTERESTS THEREIN ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF
THE 1933 ACT OR THE 1940 ACT, AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT
HAS NOT BEEN REVIEWED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION.
THE FOLLOWING DISCLOSURE ABOUT THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE
ACCURACY AND COMPLETENESS OF DISCLOSURE.
Premium Payments and Contract Values allocated to the Fixed Account become a
part of the general assets of Hartford Life. Hartford Life invests the assets
of the General Account in accordance with applicable laws governing investments
of Insurance Company General Accounts.
Currently, Hartford Life guarantees that it will credit interest at a rate of
not less than 3% per year, compounded annually, to amounts allocated to the
Fixed Account under the Contracts. However, Hartford Life reserves the right to
change the rate according to state insurance law. Hartford Life may credit
interest at a rate in excess of 3% per year; however, Hartford Life is not
obligated to credit any interest in excess of 3% per year. There is no specific
formula for the determination of excess interest credits. Some of the factors
that the Company may consider in determining whether to credit excess interest
to amounts allocated to the Fixed Account and the amount thereof, are general
economic trends, rates of return currently available and anticipated on the
Company's investments, regulatory and tax requirements and competitive factors.
ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3%
PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF THE COMPANY. THE OWNER
ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT
EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
THE COMPANY
Hartford Life Insurance Company ("Hartford Life") was originally incorporated
under the laws of Massachusetts on June 5, 1902. It was subsequently
redomiciled to Connecticut. It is a stock life insurance company engaged in the
business of writing health and life insurance, both ordinary and group, in all
states of the United States and the District of Columbia. The offices of
Hartford Life are located in Simsbury, Connecticut; however, its mailing address
is P.O. Box 2999, Hartford, CT 06102-2999.
Hartford Life is ultimately 100% owned by Hartford Fire Insurance Company, one
of the largest multiple lines insurance carriers in the United States. On
December 20, 1995, Hartford Fire Insurance Company became an independent,
publicly traded corporation.
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Hartford Life is rated A+ (superior) by A.M. Best and Company, Inc., on the
basis of its financial soundness and operating performance. Hartford Life is
rated AA by Standard & Poor's and AA+ by Duff and Phelps on the basis of its
claims paying ability. These ratings do not apply to the investment performance
of the Sub-Accounts of the Separate Account. The ratings apply to Hartford
Life's ability to meet its insurance obligations, including those under the
Contract.
THE FUNDS
The underlying investments for the Contracts are shares of Putnam Variable
Trust, an open-end series investment company with multiple portfolios ("Funds").
The underlying Funds corresponding to each Sub-Account and their investment
objectives are described below. Hartford Life reserves the right, subject to
compliance with the law, to offer additional funds with differing investment
objectives. The Funds may not be available in all states.
PUTNAM VT ASIA PACIFIC GROWTH FUND
Seeks capital appreciation by investing primarily in securities of companies
located in Asia and in the Pacific Basin.
PUTNAM VT DIVERSIFIED INCOME FUND
Seeks high current income consistent with capital preservation by investing in
the following three sectors of the fixed income securities markets: U.S.
Government Sector, High Yield Sector (which invests primarily in what are
commonly referred to as "junk bonds"), and International Sector. See the
special considerations for investments in high yield securities described in the
Fund prospectus.
PUTNAM VT GLOBAL ASSET ALLOCATION FUND
Seeks a high level of long-term total return consistent with preservation of
capital by investing in U.S. equities, international equities, U.S. fixed income
securities, and international fixed income securities.
PUTNAM VT GLOBAL GROWTH FUND
Seeks capital appreciation through a globally diversified common stock
portfolio.
PUTNAM VT GROWTH AND INCOME FUND
Seeks capital growth and current income by investing primarily in common stocks
that offer potential for capital growth, current income, or both.
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PUTNAM VT HIGH YIELD FUND
Seeks high current income by investing primarily in high-yielding, lower-rated
fixed income securities (commonly referred to as "junk bonds"), constituting a
diversified portfolio which Putnam Investment Management, Inc. ("Putnam
Management") believes does not involve undue risk to income or principal.
Capital growth is a secondary objective when consistent with high current
income. See the special considerations for investments in high yield securities
described in the Fund prospectus.
PUTNAM VT INTERNATIONAL GROWTH FUND
Seeks capital appreciation by investing primarily equity securities of companies
located in a country other than the United States.
PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND
Seeks capital growth, with current income as a secondary objective, by investing
primarily in common stocks with potential for capital growth principally traded
on markets outside the United States.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND
Seeks long term capital appreciation by investing principally in equity
securities of companies in sectors of economies outside of the United States
which Putnam Management believes possess above-average growth potential.
PUTNAM VT MONEY MARKET FUND
Seeks to achieve as high a level of current income as Putnam Management believes
is consistent with preservation of capital and maintenance of liquidity by
investing in high-quality money market instruments.
PUTNAM VT NEW OPPORTUNITIES FUND
Seeks long-term capital appreciation by investing principally in common stocks
of companies in sectors of the economy which Putnam Management believes possess
above-average long-term growth potential.
PUTNAM VT NEW VALUE FUND
Seeks long-term capital appreciation by investing primarily in common stocks
that Putnam Management believes are undervalued at the time of purchase and have
the potential for long-term capital appreciation.
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PUTNAM VT U.S. GOVERNMENT AND HIGH QUALITY BOND FUND
Seeks current income consistent with preservation of capital by investing
primarily in securities issued or guaranteed as to principal and interest by the
U.S. Government or by its agencies or instrumentalities and in other debt
obligations rated at least A by Standard & Poor's or Moody's or, if not rated,
determined by Putnam Management to be of comparable quality.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND
Seeks capital growth and current income by concentrating its investments in
securities issued by companies in the public utilities industries.
PUTNAM VT VISTA FUND
Seeks capital appreciation by investing in a diversified portfolio of common
stocks which have the potential for above-average capital appreciation.
PUTNAM VT VOYAGER FUND
Aggressively seeks capital appreciation primarily from a portfolio of common
stocks of companies that which Putnam Management believes have potential for
capital appreciation which is significantly greater than that of market
averages.
Putnam VT Asia Pacific Growth Fund, Putnam VT Diversified Income Fund, Putnam
VT Global Growth Fund, Putnam VT Growth and Income Fund, Putnam VT High Yield
Fund, Putnam VT International Growth Fund, Putnam VT International Growth and
Income Fund, Putnam VT International New Opportunities Fund, Putnam VT Money
Market Fund, Putnam VT New Opportunities Fund, Putnam VT Utilities Growth and
Income Fund, Putnam VT Vista Fund, and Putnam VT Voyager Fund are generally
managed in styles similar to other open-end investment companies which are
managed by Putnam Management and whose shares are generally offered to the
public. These other Putnam funds may, however, employ different investment
practices and may invest in securities different from those in which their
counterpart Funds invest, and consequently will not have identical portfolios or
experience identical investment results.
The Funds are available only to serve as the underlying investment for variable
annuity and variable life Contracts. A full description of the Funds, their
investment objectives, policies and restrictions, risks, charges and expenses
and other aspects of their operation are contained in the accompanying Trust
Prospectus which should be read in conjunction with this Prospectus before
investing, and in the Trust Statement of Additional Information which may be
ordered without charge from Putnam Investor Services, Inc.
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It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although Hartford Life and the Funds do not
currently foresee any such disadvantages either to variable annuity Contract
Owners or to variable life insurance Policy Owners, the Trust's Board of
Trustees intends to monitor events in order to identify any material conflicts
between such Contract Owners and Policy Owners and to determine what action, if
any, should be taken in response thereto. If the Board of Trustees of the Funds
were to conclude that separate funds should be established for variable life and
variable annuity separate accounts, the variable annuity Contract Owners would
not bear any expenses attendant upon establishment of such separate funds.
Putnam Management, One Post Office Square, Boston, Massachusetts, 02109, serves
as the investment manager for the Funds. An affiliate, The Putnam Advisory
Company, Inc., manages domestic and foreign institutional accounts and mutual
funds. Another affiliate , Putnam Fiduciary Trust Company, provides investment
advice to institutional clients under its banking and fiduciary policies.
Putnam Management and its affiliates are wholly-owned subsidiaries of Marsh &
McLennan Companies, Inc., a publicly owned holding company whose principal
businesses are international insurance brokerage and employee benefit
consulting.
Subject to the general oversight of the Trustees of the Trust, Putnam Management
manages the Funds' portfolios in accordance with their stated investment
objectives and policies, makes investment decisions for the Funds, places orders
to purchase and sell securities on behalf of the Funds, and administers the
affairs of the Funds. For its services, the Funds pay Putnam Management a
quarterly fee. See the accompanying Trust Prospectus for a more complete
description of Putnam Management and the respective fees of the Funds.
OPERATION OF THE CONTRACT/ACCUMULATION PERIOD
PREMIUM PAYMENTS
The balance of each initial Premium Payment remaining after the deduction of any
applicable Premium Tax is credited to your Contract within two business days of
receipt of a properly completed application or an order to purchase a Contract
and the initial Premium Payment by Hartford Life at its Home Office, P.O. Box
5085, Hartford, CT 06102-5085. It will be credited to the Sub-Account(s)
and/or the Fixed Account in accordance with your election. If the application
or other information is incomplete when received, the balance of each initial
Premium Payment, after deduction of any applicable Premium Tax, will be credited
to the Sub-Account(s) or the Fixed Account within five business days of receipt
or the entire Premium Payment will be immediately returned unless you have been
informed of the delay and request that the Premium Payment not be returned.
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Subsequent Premium Payments are priced on the Valuation Day received by Hartford
Life in its Home Office or other designated administrative office.
The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment being
credited to each Sub-Account by the value of an Accumulation Unit in that
Sub-Account on that date.
The minimum initial Premium Payment is $1,000. Subsequent Premium Payments, if
made, must be a minimum of $500. Certain plans may make smaller initial and
subsequent periodic payments. Each Premium Payment may be split among the
various Sub-Accounts and the Fixed Account subject to minimum amounts then in
effect.
VALUE OF ACCUMULATION UNITS
The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for that
Sub-Account for the Valuation Period then ended. The "Net Investment Factor"
for each of the Sub-Accounts is equal to the net asset value per share of the
corresponding Fund at the end of the Valuation Period (plus the per share amount
of any dividends or capital gains distributed by that Fund if the ex-dividend
date occurs in the Valuation Period then ended) divided by the net asset value
per share of the corresponding Fund at the beginning of the Valuation Period.
You should refer to the Trust Prospectus which accompanies this Prospectus for a
description of how the assets of each Fund are valued since each determination
has a direct bearing on the Accumulation Unit value of the Sub-Account and
therefore the value of a Contract. The Accumulation Unit value is affected by
the performance of the underlying Fund(s), expenses and deduction of the charges
described in this Prospectus.
The shares of the Fund are valued at net asset value on each Valuation Day. A
description of the valuation methods used in valuing Fund shares may be found in
the accompanying Prospectus of the Trust.
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VALUE OF THE FIXED ACCOUNT
Hartford Life will determine the value of the Fixed Account by crediting
interest to amounts allocated to the Fixed Account. The minimum Fixed Account
interest rate is 3%, compounded annually. Hartford Life may credit a lower
minimum interest rate according to state law. Hartford Life also may credit
interest at rates greater than the minimum Fixed Account interest rate.
VALUE OF THE CONTRACT
The value of the Sub-Account investments under your Contract at any time prior
to the commencement of Annuity payments can be determined by multiplying the
total number of Accumulation Units credited to your Contract in each Sub-Account
by the then current Accumulation Unit values for the applicable Sub-Account.
The value of the Fixed Account under your Contract will be the amount allocated
to the Fixed Account plus interest credited. You will be advised at least
semi-annually of the number of Accumulation Units credited to each Sub-Account,
the current Accumulation Unit values, the Fixed Account Value, and the total
value of your Contract.
TRANSFERS AMONG SUB-ACCOUNTS
You may transfer the values of your Sub-Account allocations from one or more
Sub-Accounts to another free of charge. However, Hartford Life reserves the
right to limit the number of transfers to twelve (12) per Contract Year, with no
two (2) transfers occurring on consecutive Valuation Days. Transfers by
telephone may be made by calling (800) 521-0538. Telephone transfers may not be
permitted by some states for their residents who purchase variable annuities.
The policy of Hartford Life and its agents and affiliates is that they will not
be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. Hartford Life will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine;
otherwise, Hartford Life may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures Hartford Life follows for transactions
initiated by telephone include requirements that callers provide certain
information for identification purposes. All transfer instructions by telephone
are tape recorded.
Hartford Life may permit the Contract Owner to preauthorize transfers among Sub-
Accounts and between the Sub-Accounts and the Fixed Account under certain
circumstances. Transfers between the Sub-Accounts may be made both before and
after Annuity payments commence (limited to once a quarter) provided that the
minimum allocation to any Sub-Account may not be less than $500. No minimum
balance is presently required in any Sub-Account.
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The right to reallocate Contract Values between the Sub-Accounts is subject to
modification if Hartford Life determines, in its sole discretion, that the
exercise of that right by one or more Contract Owners is, or would be, to the
disadvantage of other Contract Owners. Any modification could be applied to
transfers to or from some or all of the Sub-Accounts and could include, but not
be limited to, the requirement of a minimum time period between each transfer,
not accepting transfer requests of an agent acting under a power of attorney on
behalf of more than one Contract Owner, or limiting the dollar amount that may
be transferred between the Sub-Accounts and the Fixed Account by a Contract
Owner at any one time. Such restrictions may be applied in any manner
reasonably designed to prevent any use of the transfer right which is considered
by Hartford Life to be to the disadvantage of other Contract Owners.
TRANSFERS BETWEEN THE FIXED ACCOUNT AND THE SUB-ACCOUNTS
Subject to the restrictions set forth above, transfers from the Fixed Account
into a Sub-Account may be made at any time during the Contract Year. The
maximum amount which may be transferred from the Fixed Account during any
Contract Year is the greater of 30% of the Fixed Account balance as of the last
Contract Anniversary or the greatest amount of any prior transfer from the Fixed
Account. If Hartford Life permits preauthorized transfers from the Fixed
Account to the Sub-Accounts, this restriction is inapplicable. However, if any
interest rate is renewed at a rate at least one percentage point less than the
previous rate, the Contract Owner may elect to transfer up to 100% of the funds
receiving the reduced rate within sixty days of notification of the interest
rate decrease. Generally, transfers may not be made from any Sub-Account into
the Fixed Account for the six-month period following any transfer from the Fixed
Account into one or more of the Sub-Accounts. Hartford Life reserves the right
to defer transfers from the Fixed Account for up to six months from the date of
request.
REDEMPTION/SURRENDER OF A CONTRACT
At any time prior to the Annuity Commencement Date, you have the right, subject
to any IRS provisions applicable thereto, to surrender the value of the Contract
in whole or in part. Under any of the Annuity options excluding Options 4 and 5,
no surrenders are permitted after Annuity payments commence. Only full
surrenders are allowed out of Option 4 and any such surrender will be subject to
contingent deferred sales charges, if applicable. Full or partial withdrawals
may be made from Option 5 at any time and contingent deferred sales charges will
not be applied.
FULL SURRENDERS. At any time prior to the Annuity Commencement Date (and after
the Annuity Commencement Date with respect to values applied to
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Option 4), the Contract Owner has the right to terminate the Contract. In
such event, the Termination Value of the Contract may be taken in the form of
a lump sum cash settlement. The Termination Value of the Contract is equal
to the Contract Value less any applicable Premium Taxes, the Annual
Maintenance Fee, if applicable, and any applicable contingent deferred sales
charges. The Termination Value may be more or less than the amount of the
Premium Payments made to a Contract.
PARTIAL SURRENDERS. The Contract Owner may make a partial surrender of Contract
Values at any time prior to the Annuity Commencement Date so long as the amount
surrendered is at least equal to the minimum amount rules then in effect.
Additionally, if the remaining Contract Value following a surrender is less than
$500 (and, for Texas Contracts, there were no Premium Payments made during the
preceding two Contract Years), Hartford Life may terminate the Contract and pay
the Termination Value.
Certain plans or programs may have different withdrawal privileges. Hartford
Life may permit the Contract Owner to preauthorize partial surrenders subject to
certain limitations then in effect.
THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(B) TAX SHELTERED ANNUITIES. AS OF
DECEMBER 31, 1988, ALL SECTION 403(B) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL
SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY
INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS
THE CONTRACT OWNER/EMPLOYEE HAS A) ATTAINED AGE 59 1/2, B) TERMINATED
EMPLOYMENT, C) DIED, D) BECOME DISABLED OR E) EXPERIENCED FINANCIAL HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL BE
SUBJECT TO A PENALTY TAX OF 10%.
HARTFORD LIFE WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A
WITHDRAWAL IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR
SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY 1,
1989 ACCOUNT VALUES.
ANY SUCH FULL OR PARTIAL SURRENDER DESCRIBED ABOVE MAY RESULT IN ADVERSE TAX
CONSEQUENCES TO THE CONTRACT OWNER. THE CONTRACT OWNER, THEREFORE, SHOULD
CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE
"FEDERAL TAX CONSIDERATIONS" COMMENCING ON PAGE __.)
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Payment on any request for a full or partial surrender from the Sub-Accounts
and/or the Fixed Account will be made as soon as possible and in any event no
later than seven days after the written request is received by Hartford Life at
its Home Office, Attn: Individual Annuity Services, P.O. Box 5085, Hartford, CT
06102-5085. Hartford Life may defer payment of any amounts from the Fixed
Account for up to six months from the date of the request for surrender. If
Hartford Life defers payment for more than 30 days, Hartford Life will pay
interest of at least 3% per annum on the amount deferred. In requesting a
partial withdrawal you should specify the Fixed Account and/or the
Sub-Account(s) from which the partial withdrawal is to be taken. Otherwise,
such withdrawal and any applicable contingent deferred sales charges will be
effected on a pro rata basis according to the value in the Fixed Account and
each Sub-Account under a Contract. Within this context, the contingent deferred
sales charges are taken from the Premium Payments in the order in which they
were received: from the earliest Premium Payments to the latest Premium
Payments. (See "Contingent Deferred Sales Charges," page __ .)
DEATH BENEFIT
The Contracts provide that in the event the Annuitant dies before the Annuity
Commencement Date, the Contingent Annuitant will become the Annuitant. If the
Annuitant dies before the Annuity Commencement Date and either (a) there is no
designated Contingent Annuitant, (b) the Contingent Annuitant predeceases the
Annuitant, or (c) if any Contract Owner dies before the Annuity Commencement
Date, the Beneficiary as determined under the Contract Control Provisions, will
receive the Death Benefit as determined on the date of receipt of due proof of
death by Hartford Life in its Home Office. With regard to Joint Contract
Owners, at the first death of a Joint Contract Owner prior to the Annuity
Commencement Date, the Beneficiary will be the surviving Contract Owner
notwithstanding that the beneficiary designation may be different.
GUARANTEED DEATH BENEFIT - If the Annuitant dies before the Annuity Commencement
Date and there is no designated Contingent Annuitant surviving, or if the
Contract Owner dies before the Annuity Commencement Date, the Beneficiary will
receive the greatest of (a) the Contract Value determined as of the day written
proof of death of such person is received by Hartford Life, or (b) 100% of the
total Premium Payments made to such Contract, reduced by any prior surrenders,
or (c) the Maximum Anniversary Value immediately preceding the date of death.
The Maximum Anniversary Value is equal to the greatest Anniversary Value
attained from the following:
As of the date of receipt of due proof of death, the Company will calculate an
Anniversary Value for each Contract Anniversary prior to the deceased's attained
age 81. The Anniversary Value is equal to the Contract Value on a
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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.
If the Annuitant or Contract Owner, as applicable, dies after the Annuity
Commencement Date, then the Death Benefit will equal the present value of any
remaining payments under the elected Annuity Option.
PAYMENT OF DEATH BENEFIT - Death Benefit proceeds will remain invested in the
Separate Account in accordance with the allocation instructions given by the
Contract Owner until the proceeds are paid or Hartford Life receives new
instructions from the Beneficiary. The Death Benefit may be taken in one sum,
payable within 7 days after the date Due Proof of Death is received, or under
any of the settlement options then being offered by the Company provided,
however, that: (a) in the event of the death of any Contract Owner prior to the
Annuity Commencement Date, the entire interest in the Contract will be
distributed within 5 years after the death of the Contract Owner, and (b) in the
event of the death of any Contract Owner or Annuitant which occurs on or after
the Annuity Commencement Date, any remaining interest in the Contract will be
paid at least as rapidly as under the method of distribution in effect at the
time of death, or, if the benefit is payable over a period not extending beyond
the life expectancy of the Beneficiary or over the life of the Beneficiary, such
distribution must commence within one year of the date of death. The proceeds
due on the death may be applied to provide variable payments, fixed payments, or
a combination of variable and fixed payments. However, in the event of the
Contract Owner's death where the sole Beneficiary is the spouse of the Contract
Owner and the Annuitant or Contingent Annuitant is living, such spouse may
elect, in lieu of receiving the death benefit, to be treated as the Contract
Owner. The Contract Value and the Maximum Anniversary Value of the Contract
will be unaffected by treating the spouse as the Contract Owner.
If the Contract is owned by a corporation or other non-individual, the Death
Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same settlement
options and in the same manner as if an individual Contract Owner died on the
date of the Annuitant's death.
There may be postponement in the payment of Death Benefits whenever (a) the New
York Stock Exchange is closed, except for holidays or weekends, or trading on
the New York Stock Exchange is restricted as determined by the Securities and
Exchange Commission; (b) the Securities and Exchange Commission permits
postponement and so orders; or (c) the Securities and Exchange Commission
determines that an emergency exists making valuation of the amounts or disposal
of securities not reasonably practicable.
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GROUP UNALLOCATED CONTRACTS - For Group Unallocated Contracts Hartford Life
requires that detailed accounting of cumulative purchase payments, cumulative
gross surrenders, and current Contract Value attached to each Plan Participant
be submitted on an annual basis by the Contract Owner. Failure to submit
accurate data satisfactory to Hartford Life will give Hartford Life the right to
terminate this extension of benefits.
CHARGES UNDER THE CONTRACT
CONTINGENT DEFERRED SALES CHARGES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered.
The length of time from receipt of a Premium Payment to the time of surrender
determines the contingent deferred sales charge. Premium payments will be
deemed to be surrendered in the order in which they were received.
DURING THE FIRST SEVEN CONTRACT YEARS
During the first seven Contract years, all surrenders will be first from Premium
Payments and then from other Contract Values. If an amount equal to all premium
payments has been surrendered, a contingent deferred sales charge will not be
assessed against the surrender of the remaining Contract Value.
AFTER THE SEVENTH CONTRACT YEAR
After the seventh Contract year, all surrenders will first be from earnings and
then from premium payments. A contingent deferred sales charge will not be
assessed against the surrender of earnings. If an amount equal to all earnings
has been surrendered, a contingent deferred sales charge will not be assessed
against premium payments received more than seven years prior to surrender, but
will be assessed against premium payments received less than seven years prior
to surrender.
The charge is a percentage of the amount withdrawn (not to exceed the aggregate
amount of the Premium Payments made) and equals:
CHARGE LENGTH OF TIME FROM PREMIUM PAYMENT
------ -----------------------------------
(Number of Years)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
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The contingent deferred sales charges are used to cover expenses relating to the
sale and distribution of the Contracts, including commissions paid to any
distribution organization and its sales personnel, the cost of preparing sales
literature and other promotional activities. To the extent that these charges
do not cover such distribution expenses, the expenses will be borne by Hartford
Life from its general assets, including surplus. The surplus might include
profits resulting from unused mortality and expense risk charges.
During the first seven Contract Years, on a non-cumulative basis, a Contract
Owner may make a partial surrender of Contract Values of up to 10% of the
aggregate Premium Payments made to the Contract (as determined on the date of
the requested withdrawal) without the application of the contingent deferred
sales charge. After the seventh Contract year, the Contract Owner may make a
partial surrender of 10% of premium payments made during the seven years prior
to the surrender and 100% of the Contract Value less the premium payments made
during the seven years prior to the surrender. The amounts not subject to sales
charges are known as the Annual Withdrawal Amount. The Annual Withdrawal
Amount is the amount which can be withdrawn in any Contract Year prior to
incurring surrender charges. An Extended Withdrawal Privilege rider allows an
Annuitant who attains age 70 1/2 under a Qualified Plan to withdraw an amount in
excess of the Annual Withdrawal Amount to comply with IRS minimum distribution
rules.
The contingent deferred sales charges which cover expenses relating to the sale
and distribution of the Contracts may be reduced for certain sales of the
Contracts under circumstances which may result in savings of such sales and
distribution expenses. Therefore, the contingent deferred sales charges may be
reduced if the Contracts are sold to certain employee and professional groups.
In addition, there may be other circumstances of which Hartford Life is not
presently aware which could result in reduced sales or distribution expenses.
Reductions in these charges will not be unfairly discriminatory against any
Contract Owner.
Hartford Life may offer certain employer sponsored savings plans, in its
discretion reduced fees and charges including, but not limited to, the
contingent deferred sales charges, the mortality and expense risk charge and the
maintenance fee for certain sales under circumstances which may result in
savings of certain costs and expenses. Reductions in these fees and charges
will not be unfairly discriminatory against any Contract Owner.
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MORTALITY AND EXPENSE RISK CHARGE
Although Variable Annuity payments made under the Contracts will vary in
accordance with the investment performance of the underlying Fund shares held in
the Sub-Account(s), the payments will not be affected by (a) Hartford Life's
actual mortality experience among Annuitants before or after the Annuity
Commencement Date or (b) Hartford Life's actual expenses, if greater than the
deductions provided for in the Contracts because of the expense and mortality
undertakings by Hartford Life.
For assuming these risks under the Contracts, Hartford Life will make a daily
charge at the rate of 1.25% per annum against all Contract Values held in the
Sub-Accounts during the life of the Contract, including the payout period,
(estimated at .90% for mortality and .35% for expense).
The mortality undertaking provided by Hartford Life under the Contracts,
assuming the selection of one of the forms of life Annuities, is to make monthly
Annuity payments (determined in accordance with the 1983a Individual Annuity
Mortality Table and other provisions contained in the Contract) to Annuitants
regardless of how long an Annuitant may live, and regardless of how long all
Annuitants as a group may live. Hartford Life also assumes the liability for
payment of a minimum Death Benefit under the Contract.
The mortality undertakings are based on Hartford Life's determination of
expected mortality rates among all Annuitants. If actual experience among
Annuitants during the Annuity payment period deviates from Hartford Life's
actuarial determination of expected mortality rates among Annuitants because, as
a group, their longevity is longer than anticipated, Hartford Life must provide
amounts from its general funds to fulfill its Contract obligations. Hartford
Life will bear the loss in such a situation. Also, in the event of the death of
an Annuitant or Contract Owner before the commencement of Annuity payments,
whichever is earlier, Hartford Life can, in periods of declining value,
experience a loss resulting from the assumption of the mortality risk relative
to the minimum Death Benefit.
In providing an expense undertaking, Hartford Life assumes the risk that the
contingent deferred sales charges and the Administration and Maintenance Fees
for maintaining the Contracts prior to the Annuity Commencement Date may be
insufficient to cover the actual cost of providing such items.
ADMINISTRATION AND MAINTENANCE FEES
Hartford Life will deduct certain fees from Contract Values to reimburse it for
expenses relating to the administration and maintenance of the Contract and the
Fixed Account. For Contract maintenance, Hartford Life will deduct an
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Annual Maintenance Fee of $30 on each Contract Anniversary on or before the
Annuity Commencement Date. The deduction will be made pro rata according to
the value in each Sub-Account and the Fixed Account under a Contract. If
during a Contract Year the Contract is surrendered for its full value,
Hartford Life will deduct the Annual Maintenance Fee at the time of such
surrender. For administration, Hartford Life makes a daily charge at the
rate of .15% per annum against all Contract Values held in the Separate
Account during both the accumulation and annuity phases of the Contract.
There is not necessarily a relationship between the amount of administrative
charge imposed on a given Contract and the amount of expenses that may be
attributable to that Contract; expenses may be more or less than the charge.
The types of expenses incurred by the Separate Account include, but are not
limited to, expenses of issuing the Contract and expenses for confirmations,
Contract quarterly statements, processing of transfers and surrenders,
responding to Contract Owner inquiries, reconciling and depositing cash
receipts, calculation and monitoring daily Sub-Account unit values, Separate
Account reporting, including semiannual and annual reports and mailing and
tabulation of shareholder proxy solicitations.
You should refer to the Trust Prospectus for a description of deductions and
expenses paid out of the assets of the Trust's portfolios.
PREMIUM TAXES
A deduction is also made for Premium Tax, if applicable, imposed by a state or
other governmental entity. Certain states impose a Premium Tax, currently
ranging up to 3.5%. Some states assess the tax at the time purchase payments
are made; others assess the tax at the time of annuitization. Hartford Life
will pay Premium Taxes at the time imposed under applicable law. At its sole
discretion, Hartford Life may deduct Premium Taxes at the time Hartford Life
pays such taxes to the applicable taxing authorities, at the time the Contract
is surrendered, or at the time the Contract annuitizes.
ANNUITY BENEFITS
You select an Annuity Commencement Date and an Annuity option which may be on a
fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be deferred beyond the Annuitant's 90th birthday except for
certain states where deferral past age 85 is not permitted. The Annuity
Commencement Date and/or the Annuity option may be changed from time to time,
but any change must be at least 30 days prior to the date on which Annuity
payments are scheduled to begin. The Contract allows the Contract Owner to
change the Sub-Accounts on which variable payments are based after payments have
commenced once every three (3) months. Any Fixed Annuity allocation may not be
changed.
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ANNUITY OPTIONS
The Contract contains the five optional Annuity forms described below. Options
2, 4 and 5 are available to Qualified Contracts only if the guaranteed payment
period is less than the life expectancy of the Annuitant at the time the option
becomes effective. Such life expectancy shall be computed on the basis of the
mortality table prescribed by the IRS, or if none is prescribed, the mortality
table then in use by Hartford Life. With respect to Non-Qualified Contracts, if
you do not elect otherwise, payments in most states will automatically begin at
the Annuitant's age 90 (with the exception of states that do not allow deferral
past age 85) under Option 2 with 120 monthly payments certain. For Qualified
Contracts and Contracts issued in Texas, if you do not elect otherwise, payments
will begin automatically at the Annuitant's age 90 under Option 1 to provide a
life Annuity.
Under any of the Annuity options excluding Options 4 and 5, no surrenders are
permitted after Annuity payments commence. Only full surrenders are allowed out
of Option 4 and any such surrender will be subject to contingent deferred sales
charges, if applicable. Full or partial withdrawals may be made from Option 5
at any time and contingent deferred sales charges will not be applied.
Option 1: Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant and
terminating with the last payment preceding the death of the Annuitant. This
options offers the largest payment amount of any of the life Annuity options
since there is no guarantee of a minimum number of payments nor a provision for
a death benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the date of the third Annuity payment, etc.
Option 2: Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments have
been made for less than the minimum elected number of months, then the present
value as of the date of the Annuitant's death, of any remaining guaranteed
payments will be paid in one sum to the Beneficiary or Beneficiaries designated
unless other provisions have been made and approved by Hartford Life.
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Option 3: Joint and Last Survivor Annuity
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford Life, the Annuitant may elect
that the payment to the survivor be less than the payment made during the joint
lifetime of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated second
person to receive only one payment in the event of the common or simultaneous
death of the parties prior to the due date for the second payment and so on.
Option 4: Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from 5
to 30 years. Under this option, you may, at any time, surrender the Contract
and receive, within seven days, the Termination Value of the Contract as
determined by Hartford Life.
In the event of the Annuitant's death prior to the end of the designated period,
the present value as of the date of the Annuitant's death, of any remaining
guaranteed payments will be paid in one sum to the Beneficiary or Beneficiaries
designated unless other provisions have been made and approved by Hartford Life.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Contracts thus provide no real benefit to a Contract Owner.
Option 5: Death Benefit Remaining with Hartford Life
Proceeds from the Death Benefit may be left with Hartford Life for a period not
to exceed five years from the date of the Contract Owner's death prior to the
Annuity Commencement Date. These proceeds will remain in the Sub-Account(s) to
which they were allocated at the time of death unless the Beneficiary elects to
reallocate them. Full or partial withdrawals may be made at any time. In the
event of withdrawals, the remaining value will equal the Contract Value of the
proceeds left with Hartford Life, minus any withdrawals.
Hartford Life may offer other annuity options from time to time.
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THE ANNUITY UNIT AND VALUATION
The value of the Annuity Unit for each Sub-Account in the Separate Account for
any day is determined by multiplying the value for the preceding day by the
product of (1) the net investment factor (See "Valuation of Accumulation Units,"
commencing on page __) for the day for which the Annuity Unit value is being
calculated and (2) a factor to neutralize the assumed investment rate of 5.00%
per annum discussed below.
DETERMINATION OF PAYMENT AMOUNT
When Annuity payments are to commence, the value of the Contract is determined
as the sum of the value of the Fixed Account no earlier than the close of
business on the fifth Valuation Day preceding the date the first Annuity payment
is due plus the product of the value of the Accumulation Unit of each
Sub-Account on that same day, and the number of Accumulation Units credited to
each Sub-Account as of the date the Annuity is to commence.
The Contract contains tables indicating the minimum dollar amount of the first
monthly payment under the optional forms of Annuity for each $1,000 of value of
a Sub-Account under a Contract. The first monthly payment varies according to
the form and type of Annuity selected. The Contract contains Annuity tables
derived from the 1983a Individual Annuity Mortality Table with ages set back one
year and with an assumed investment rate ("A.I.R.") of 3% per annum for the
Fixed Annuity and 5% per annum for the Variable Annuity.
The total first monthly Variable Annuity payment is determined by multiplying
the value (expressed in thousands of dollars) of a Sub-Account (less any
applicable Premium Taxes) by the amount of the first monthly payment per $1,000
of value obtained from the tables in the Contracts.
Fixed Annuity payments are determined at annuitization by multiplying the values
allocated to the Fixed Account (less applicable Premium Taxes) by a rate to be
determined by Hartford Life which is no less than the rate specified in the
Annuity tables in the Contract. The Annuity payment will remain level for the
duration of the Annuity.
The amount of the first monthly Variable Annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account no earlier than the close of business on the fifth Valuation Day
preceding the day on which the payment is due in order to determine the number
of Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the Annuity payment period, and in each subsequent month
the dollar amount of the Variable Annuity payment is determined by multiplying
this fixed number of Annuity Units by the then current Annuity Unit value.
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THE A.I.R. ASSUMED IN THE MORTALITY TABLES WOULD PRODUCE LEVEL VARIABLE ANNUITY
PAYMENTS IF THE INVESTMENT RATE REMAINED CONSTANT. IN FACT, PAYMENTS WILL VARY
UP OR DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
The Annuity Unit value used in calculating the amount of the Variable Annuity
payments will be based on an Annuity Unit value determined as of the close of
business on a day no earlier than the fifth Valuation Day preceding the date of
the Annuity payment.
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FEDERAL TAX CONSIDERATIONS
What are some of the Federal tax consequences which affect these Contracts?
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING TO
THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT DESCRIBED
HEREIN.
It should be understood that any detailed description of the Federal income tax
consequences regarding the purchase of these Contracts cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. The discussion here and in
Appendix I, commencing on page __, is based on Hartford Life's understanding
of current Federal income tax laws as they are currently interpreted.
B. TAXATION OF HARTFORD LIFE AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford Life which is taxed as a life
insurance company in accordance with the Internal Revenue Code (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" commencing on page __). 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.
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C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER THAN
QUALIFIED RETIREMENT PLANS
Section 72 of the Internal Revenue Code governs the taxation of annuities in
general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC. Section 72 contains
provisions for Contract Owners which are non-natural persons. Non-
natural persons include corporations, trusts, and partnerships. The
annual net increase in the value of the Contract is currently
includable in the gross income of a non-natural person unless the non-
natural person holds the Contract as an agent for a natural person.
There is an exception from current inclusion for certain annuities
held by structured settlement companies, 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 not an individual, the primary Annuitant
shall be treated as the Contract Owner for purposes of making
distributions which are required to be made upon the death of the
Contract Owner. If there is a change in the primary Annuitant, such
change shall be treated as the death of the Contract Owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not
taxed on increases in the value of the Contract until an amount is
received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other
annuity contracts or life insurance contracts which were purchased
prior to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not
includable in gross income equal the "investment in the
contract" under Section 72 of the Code.
ii. To the extent that the value of the Contract (ignoring any
surrender charges except on a full surrender) exceeds the
"investment in the contract," such excess constitutes the
"income on the contract."
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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.
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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 Life believes that for any
annuity subject to such aggregation, the values under the
Contracts and the investment in the contracts will be added
together to determine the taxation under subparagraph 2.a.,
above, of amounts received or deemed received prior to the
Annuity Commencement Date. Withdrawals will first be treated as
withdrawals of income until all of the income from all such
Contracts is withdrawn. As of the date of this Prospectus, there
are no regulations interpreting this provision.
d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract
(before or after the Annuity Commencement Date), the Code
applies a penalty tax equal to ten percent of the portion of
the amount includable in gross income, unless an exception
applies.
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ii. The 10% penalty tax will not apply to the following
distributions (exceptions vary based upon the precise plan
involved):
1. Distributions made on or after the date the recipient
has attained the age of 59 1/2.
2. Distributions made on or after the death of the holder
or where the holder is not an individual, the death of
the primary annuitant.
3. Distributions attributable to a recipient's becoming
disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments for the life (or
life expectancy) of the recipient (or the joint lives
or life expectancies of the recipient and the
recipient's Beneficiary).
5. Distributions of amounts which are allocable to the
"investment in the contract" prior to August 14, 1982
(see next subparagraph e.).
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-
FREE EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS
PURCHASED PRIOR TO AUGUST 14, 1982. If the Contract was
obtained by a tax-free exchange of a life insurance or annuity
Contract purchased prior to August 14, 1982, then any amount
received or deemed received prior to the Annuity Commencement
Date shall be deemed to come (1) first from the amount of the
"investment in the contract" prior to August 14, 1982 ("pre-
8/14/82 investment") carried over from the prior Contract, (2)
then from the portion of the "income on the contract" (carried
over to, as well as accumulating in, the successor Contract) that
is attributable to such pre-8/14/82 investment, (3) then from the
remaining "income on the contract" and (4) last from the
remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not
exceed such pre-8/14/82 investment, such amount is not includable
in gross income., In addition, to the extent that such amount
received or deemed received does not exceed the sum of (a) such
pre-8/14/82 investment and (b) the "income on the contract"
attributable thereto, such amount is not subject to the 10%
penalty tax. In all other respects, amounts received or deemed
received from such post-exchange Contracts are generally subject
to the rules described in this subparagraph 3.
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Page 46
f. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary
provisions in ii or iii below:
1. If any Contract Owner dies on or after the Annuity
Commencement Date and before the entire interest in the
Contract has been distributed, the remaining portion of
such interest shall be distributed at least as rapidly
as under the method of distribution being used as of
the date of such death;
2. If any Contract Owner dies before the Annuity
Commencement Date, the entire interest in the Contract
will be distributed within 5 years after such death;
and
3. If the Contract Owner is not an individual, then for
purposes of 1. or 2. above, the primary annuitant under
the Contract shall be treated as the Contract Owner,
and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The
primary annuitant is the individual, the events in the
life of whom are of primary importance in affecting the
timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner
described in i. above is payable to or for the benefit of a
designated beneficiary, such beneficiary may elect to have
the portion distributed over a period that does not extend
beyond the life or life expectancy of the beneficiary. The
election and payments must begin within a year of the death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is
payable to or for the benefit of his or her spouse, and the
Annuitant or Contingent Annuitant is living, such spouse
shall be treated as the Contract Owner of such portion for
purposes of section i. above.
3. DIVERSIFICATION REQUIREMENTS. Section 817 of the Code provides that a
variable annuity contract will not be treated as an annuity contract
for any period during which the investments made by the
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Page 47
separate account or underlying fund are not adequately diversified in
accordance with regulations prescribed by the Treasury Department. If
a Contract is not treated as an annuity contract, the Contract Owner
will be subject to income tax on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the
value of the total assets of the segregated asset account underlying a
variable contract is represented by any one investment, no more than
70% is represented by any two investments, no more than 80% is
represented by any three investments, and no more than 90% is
represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer,
all interests in the same real property project, and all interests in
the same commodity are each treated as a single investment. In
addition, in the case of government securities, each government agency
or instrumentality shall be treated as a separate issuer.
A separate account must be in compliance with the diversification
standards on the last day of each calendar quarter or within 30 days
after the quarter ends. If an insurance company inadvertently fails
to meet the diversification requirements, the company may comply
within a reasonable period and avoid the taxation of contract income
on an ongoing basis. However, either the company or the Contract
Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford Life monitors the diversification of investments in the
separate accounts and tests for diversification as required by the
Code. Hartford Life intends to administer all contracts subject to
the diversification requirements in a manner that will maintain
adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT. In order for a
variable annuity contract to qualify for tax deferral, assets in the
segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the
variable contract owner. The Internal Revenue Service ("IRS") has
issued several rulings which discuss investor control. The IRS has
ruled that 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.
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Page 48
Further, in the explanation to the temporary Section 817
diversification regulations, the Treasury Department noted that the
temporary regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a
segregated asset account may cause the investor, rather than the
insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary
regulations provide that in appropriate cases a segregated asset
account may include multiple sub-accounts, but do not specify the
extent to which policyholders may direct their investments to
particular sub-accounts without being treated as the owners of the
underlying assets. Guidance on this and other issues will be provided
in regulations or revenue rulings under Section 817(d), relating to
the definition of variable contract." The final regulations issued
under Section 817 did not provide guidance regarding investor
control, and as of the date of this prospectus, no other such guidance
has been issued. Further, Hartford Life does not know if or in what
form such guidance will be issued. In addition, although regulations
are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of
specific guidance regarding the issue of investor control, there is
necessarily some uncertainty regarding whether a Contract Owner could
be considered the owner of the assets for tax purposes. Hartford Life
reserves the right to modify the contracts, as necessary, to prevent
Contract Owners from being considered the owners of the assets in the
separate accounts.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will be
subject to Federal income tax withholding, pursuant to Section 3405 of the Code.
The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS. The portion of a non-periodic
distribution which constitutes taxable income will be subject to
Federal income tax withholding unless the recipient elects not to have
taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as Federal
income tax. Election forms will be provided at the time distributions
are requested. If the necessary election forms are not submitted to
Hartford Life, Hartford Life will automatically withhold 10% of the
taxable distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER
THAN ONE YEAR). The portion of a periodic distribution which
constitutes taxable income will be subject to Federal income tax
withholding as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld
or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
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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 commencing on page __ for information
relative to the types of plans for which it may be used and the general
explanation of the tax features of such plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to annuity purchasers that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies. In addition, purchasers may be subject to
state premium tax, other state and/or municipal taxes, and taxes that may be
imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax advisor regarding U.S.,
state, and foreign taxation with respect to an annuity purchase.
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GENERAL MATTERS
ASSIGNMENT
Ownership of a Contract described herein is generally assignable. However, if
the Contracts are issued pursuant to some form of qualified retirement plan, it
is possible that the ownership of the Contracts may not be transferred or
assigned depending on the type of qualified retirement plan involved. An
assignment of a Non-Qualified Contract may subject the assignment proceeds to
income taxes and certain penalty taxes. (See "Taxation of Annuities in General
- - Non-Tax Qualified Purchasers," page __.)
MODIFICATION
Hartford Life reserves the right to modify the Contract, but only if such
modification: (i) is necessary to make the Contract or the Separate Account
comply with any law or regulation issued by a governmental agency to which
Hartford Life is subject; or (ii) is necessary to assure continued qualification
of the Contract under the Code or other federal or state laws relating to
retirement annuities or annuity Contracts; or (iii) is necessary to reflect a
change in the operation of the Separate Account or the Sub-Account(s) or (iv)
provides additional Separate Account options or (v) withdraws Separate Account
options. In the event of any such modification Hartford Life will provide
notice to the Contract Owner or to the payee(s) during the Annuity period.
Hartford Life may also make appropriate endorsement in the Contract to reflect
such modification.
DELAY OF PAYMENTS
There may be postponement of a surrender payment or death benefit whenever (a)
the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation or disposal of
securities not reasonably practicable.
VOTING RIGHTS
Hartford Life is the legal owner of all Fund shares held in the Separate
Account. As the owner, Hartford Life has the right to vote at the Funds'
shareholder meetings. However, to the extent required by federal securities
laws or regulations, Hartford Life will:
1. Vote all Fund shares attributable to a Contract according to instructions
received from the Contract Owner, and
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Page 51
2. Vote shares attributable to a Contract for which no voting instructions are
received in the same proportion as shares for which instructions are received.
If any federal securities laws or regulations, or their present interpretation
change to permit Hartford Life to vote Fund shares in its own right, Hartford
Life may elect to do so.
Hartford Life will notify you of any Fund shareholders' meeting if the shares
held for your account may be voted at such meetings. Hartford Life will also
send proxy materials and a form of instruction by means of which you can
instruct Hartford Life with respect to the voting of the Fund shares held for
your account.
In connection with the voting of Fund shares held by it, Hartford Life will
arrange for the handling and tallying of voting instructions received from
Contract Owners. Hartford Life as such, shall have no right, except as
hereinafter provided, to vote any Fund shares held by it hereunder which may be
registered in its name or the names of its nominees. Hartford Life will,
however, vote the Fund shares held by it in accordance with the instructions
received from the Contract Owners for whose accounts the Fund shares are held.
If a Contract Owner desires to attend any meeting at which shares held for the
Contract Owner's benefit may be voted, the Contract Owner may request Hartford
Life to furnish a proxy or otherwise arrange for the exercise of voting rights
with respect to the Fund shares held for such Contract Owner's account. In the
event that the Contract Owner gives no instructions or leaves the manner of
voting discretionary, Hartford Life will vote such shares of the appropriate
Fund in the same proportion as shares of that Fund for which instructions have
been received. During the Annuity period under a Contract the number of votes
will decrease as the assets held to Fund Annuity benefits decrease.
DISTRIBUTION OF THE CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is a wholly-owned subsidiary of Hartford Life. The principal business address
of HSD is the same as Hartford Life.
The securities will be sold by salespersons of HSD who represent Hartford Life
as insurance and variable annuity agents and who are registered representatives
of Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Commission under the Securities Exchange Act of 1934
as a Broker-Dealer and is a member of the National Association of Securities
Dealers, Inc.
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Commissions will be paid by Hartford Life and will not be more than 6% of
Premium Payments.
From time to time, Hartford Life may pay or permit other promotional incentives,
in cash or credit or other compensation.
OTHER CONTRACTS OFFERED
In addition to the Contracts described in this Prospectus, it is contemplated
that other forms of group or individual Variable Annuities may be sold providing
benefits which vary in accordance with the investment experience of the Separate
Account.
CUSTODIAN OF SEPARATE ACCOUNT ASSETS
The assets of the Separate Account are held by Hartford Life under a safekeeping
arrangement.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. Hartford Life and Putnam
Management are engaged in various matters of routine litigation which in their
judgments are not of material importance in relation to their respective total
assets.
LEGAL COUNSEL
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,
Esquire, General Counsel and Secretary, ITT Hartford Life Insurance Companies,
P.O. Box 2999, Hartford, Connecticut 06104-2999.
EXPERTS
The financial statements and schedules incorporated by reference in this
Prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance on the
authority of said firm as experts in accounting and auditing in giving said
report. Reference is made to said report of Hartford Life Insurance Company
(the depositor), which includes an explanatory paragraph with respect to the
adoption of new account standards changing the methods of accounting for debt
and equity securities. The principal business address of Arthur Andersen LLP is
One Financial Plaza, Hartford, Connecticut 06103.
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Page 53
ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
Hartford Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Telephone: (800) 521-0538
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Page 54
APPENDIX I
INFORMATION REGARDING TAX-QUALIFIED PLANS
The tax rules applicable to tax qualified contract owners, including
restrictions on contributions and distributions, taxation of distributions
and tax penalties, vary according to the type of plan as well as the terms
and conditions of the plan itself. Various tax penalties may apply to
contributions in excess of specified limits, to distributions in excess of
specified limits, distributions which do not satisfy certain requirements
and certain other transactions with respect to qualified plans.
Accordingly, this summary provides only general information about the tax
rules associated with use of the Contract by a qualified plan. Contract
owners, plan participants and beneficiaries are cautioned that the rights
and benefits of any person to benefits are controlled by the terms and
conditions of the plan regardless of the terms and conditions of the
Contract. Some qualified plans are subject to distribution and other
requirements which are not incorporated into Hartford Life's administrative
procedures. Owners, participants and beneficiaries are responsible for
determining that contributions, distributions and other transactions comply
with applicable law. Because of the complexity of these rules, owners,
participants and beneficiaries are encouraged to consult their own tax
advisors as to specific tax consequences.
A. QUALIFIED PENSION PLANS
Provisions of the Code permit eligible employers to establish pension or
profit sharing plans (described in Section 401(a) and 401(k), if
applicable, and exempt from taxation under Section 501(a) of the Code), and
Simplified Employee Pension Plans (described in Section 408(k)). Such
plans are subject to limitations on the amount that may be contributed, the
persons who may be eligible and the time when distributions must commence.
Corporate employers intending to use these contracts in connection with
such plans should seek competent advice.
B. TAX SHELTERED ANNUITIES UNDER SECTION 403(B)
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts,
and, subject to certain limitations, exclude such contributions from gross
income. Generally, such contributions may not exceed the lesser of $9,500
or 20% of the employees "includable compensation" for his most recent full
year of employment, subject to other adjustments. Special provisions may
allow some employees to elect a different overall limitation.
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Page 55
Tax-sheltered annuity programs under Section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT unless such
distribution is made:
(1) after the participating employee attains age 59 1/2;
(2) upon separation from service;
(3) upon death or disability, or
(4) in the case of hardship.
The above restrictions apply to distributions of employee contributions
made after December 31, 1988, earnings on those contributions, and earnings
on amounts attributable to employee contributions held as of December 31,
1988. They do not apply to distributions of any employer or other after-
tax contributions, employee contributions made on or before December 31,
1988, and earnings credited to employee contributions before December 31,
1988.
C. DEFERRED COMPENSATION PLANS UNDER SECTION 457
Employees and independent contractors performing services for such
employers may contribute on a before tax basis to the Deferred Compensation
Plan of their employer in accordance with the employer's plan and Section
457 of the Code. Section 457 places limitations on contributions to
Deferred Compensation Plans maintained by a State ("State" means a State, a
political sub-division of a State, and an agency or instrumentality of a
State or political sub-division of a State) or other tax-exempt
organization. Generally, the limitation is 33 1/3% of includable
compensation (25% of gross compensation) or $7,500, whichever is less. The
plan may also provide for additional "catch-up" deferrals during the three
taxable years ending before a Participant attains normal retirement age.
An employee electing to participate in a plan should understand that his
rights and benefits are governed strictly by the terms of the plan, that
the employer is legal owner of any contract issued with respect to the plan
and that deferred amounts will be subject to the claims of the employer's
creditors. The employer as owner of the contract(s) retains all voting and
redemption rights which may accrue to the contract(s) issued with respect
to the plan. The participating employee should look to the terms of his
plan for any charges in regard to participating therein other than those
disclosed in this Prospectus.
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Page 56
Distributions from a Section 457 Deferred Compensation Plan are prohibited
unless made after the participating employee attains the age specified in
the plan, separates from service, dies, becomes permanently and totally
disabled or suffers an unforeseeable financial emergency. Present federal
tax law does not allow tax-free transfers or rollovers for amounts
accumulated in a Section 457 plan except for transfers to other Section 457
plans in limited cases.
D. INDIVIDUAL RETIREMENT ANNUITIES UNDER SECTION 408
Section 408 of the Code permits eligible individuals to establish
individual retirement programs through the purchase of Individual
Retirement Annuities ("IRAs"). IRAs are subject to limitations on the
amount that may be contributed, the contributions that may be deducted from
taxable income, the persons who may be eligible and the time when
distributions may commence. Also, distributions from certain qualified
plans may be "rolled-over" on a tax-deferred basis into an IRA.
E. TAX PENALTIES
Distributions from retirement plans are generally taxed under Section 72 of
the Code. Under these rules, a portion of each distribution may be
excludable from income. The excludable amount is the portion of the
distribution which bears the same ratio as the after-tax contributions bear
to the expected return.
1. PREMATURE DISTRIBUTION
Distributions from a qualified plan before the Participant attains age
59 1/2 are generally subject to an additional tax equal to 10% of the
taxable portion of the distribution. The 10% penalty does not apply
to distributions made after the employee's death, on account of
disability and distributions in the form of a life annuity and, except
in the case of an IRA, certain distributions after separation from
service at or after age 55 and certain distributions for eligible
medical expenses. A life annuity is defined as a scheduled series of
substantially equal periodic payments for the life or life expectancy
of the Participant (or the joint lives or life expectancies of the
Participant and Beneficiary).
2. MINIMUM DISTRIBUTION TAX
If the amount distributed is less than the minimum required
distribution for the year, the Participant is subject to a 50% tax on
the amount that was not properly distributed.
An individual's interest in a retirement plan must generally be
distributed or begin to be distributed not later than April 1 of the
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Page 57
calendar year in which the individual attains age 70 1/2 ("required
beginning date"). The required beginning date with respect to certain
government plans may be further deferred. The entire interest of the
Participant must be distributed beginning no later than this required
beginning date over a period which may not extend beyond a maximum of
the life expectancy of the Participant and a designated Beneficiary.
Each annual distribution must equal or exceed a "minimum distribution
amount" which is determined by dividing the account balance by the
applicable life expectancy. This account balance is generally based
upon the account value as of the close of business on the last day of
the previous calendar year. In addition, minimum distribution
incidental benefit rules may require a larger annual distribution.
If an individual dies before reaching his or her required beginning
date, the individual's entire interest must generally be distributed
within five years of the individuals' death. However, this rule will
be deemed satisfied, if distributions begin before the close of the
calendar year following the individual's death to a designated
Beneficiary (or over a period not extending beyond the life expectancy
of the beneficiary). If the Beneficiary is the individual's surviving
spouse, distributions may be delayed until the individual would have
attained age 70 1/2.
If an individual dies after reaching his or her required beginning
date or after distributions have commenced, the individual's interest
must generally be distributed at least as rapidly as under the method
of distribution in effect at the time of the individual's death.
3. EXCESS DISTRIBUTION TAX
If the aggregate distributions from all IRAs and certain other
qualified plans in a calendar year exceed the greater of (i) $150,000,
or (ii) $112,500 as indexed for inflation ($155,000 as of January 1,
1996), a penalty tax of 15% is generally imposed on the excess portion
of the distribution.
4. WITHHOLDING
Periodic distributions from a qualified plan lasting for a period of
10 or more years are generally subject to voluntary income tax
withholding. 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.
Otherwise, the amount withheld on such distributions is determined at
the rate applicable to wages as if the recipient were married claiming
three exemptions.
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Nonperiodic distributions from an IRA are subject to income tax
withholding at a flat 10% rate. The recipient may elect not to have
withholding apply.
Nonperiodic distributions from other qualified plans are generally
subject to mandatory income tax withholding at the flat rate of 20%
unless such distributions are:
(a) the non-taxable portion of the distribution;
(b) required minimum distributions;
(c) eligible rollover distributions.
Eligible rollover distributions are direct payments to an IRA or to
another qualified employer plan.
Any distribution from plans described in Section 457 of the Code is
subject to regular wage withholding rules.
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TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
SECTION PAGE
- ------- ----
INTRODUCTION
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
SAFEKEEPING OF ASSETS
INDEPENDENT PUBLIC ACCOUNTANTS
DISTRIBUTION OF CONTRACTS
ANNUITY/PAYOUT PERIOD
Annuity Payments
The Annuity Unit and Valuation
Determination of Payment Amount
CALCULATION OF YIELD AND RETURN
PERFORMANCE COMPARISONS
FINANCIAL STATEMENTS
<PAGE>
Page 60
- - - - - - - - - - - - - - - - - -
To Obtain a Statement of Additional Information, please complete the form below
and mail to:
Hartford Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for the Putnam Capital Manager
Variable Annuity to me at the following address:
_____________________________________
Name
______________________________________
Address
______________________________________
City/State Zip Code
- - - - - - - - - - - - - - - - - -
