<PAGE>
As filed with the Securities and Exchange Commission April 15, 1997
File No. 33-53692
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 6
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
A. Exact name of trust: Separate Account VL I
B. Name of depositor: Hartford Life Insurance Company
(EIN # 06-0974148)
C. Complete address of depositor's principal executive offices:
P.O. Box 2999
Hartford, CT 06104-2999
D. Name and complete address of agent for service:
Margaret E. Hankard, Esq.
Hartford Life Insurance Companies
P.O. Box 2999
Hartford, 06104-2999
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
-----
on May 1, 1997 pursuant to paragraph (b) of Rule 485
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
X on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485
-----
this post-effective amendment designates a new effective date for
----- a previously filed post-effective amendment.
E. Title and amount of securities being registered: Pursuant to Rule 24f-2
under the Investment Company Act of 1940, the Registrant has registered
an indefinite amount of securities. The Rule 24f-2 Notice for the
Registrant's most recent fiscal year was filed on or about February 28,
1997.
F. Proposed maximum aggregate offering price to the public of the securities
being registered: Not yet determined.
G. Amount of filing fee: Not applicable.
H. Approximate date of proposed public offering: As soon as practicable after
the effective date of this registration statement.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
1. Cover page
2. Cover page
3. Not applicable
4. The Company; Distribution of the Policies
5. Summary - Separate Account VL I; Separate
Account VL I - General
6. Separate Account VL I - General
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; Separate Account VL I - Funds; The
Policy - Application for a Policy; Detailed
Description of Policy Benefits and
Provisions; Other Matters - Voting Rights,
Dividends
11. Summary; Separate Account VL I - Funds
12. Summary; Separate Account VL I - Funds
13. Deductions and Charges from the Account
Value; Distribution of the Policies; Federal
Tax Considerations
14. Detailed Description of Policy Benefits and
Provisions - Application for a Policy
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
15. Detailed Description of Policy Benefits and
Provisions - Allocation of Premium Payments
16. Separate Account VL I - Funds; Detailed
Description of Policy Benefits and
Provisions - Allocation of Premium Payments
17. Summary; Detailed Description of Policy
Benefits and Provisions - Cash Value and
Amount Payable on Surrender of the Policy,
The Right to Examine or Exchange the Policy
and Surrender/Continuation Options.
18. Separate Account VL I - Funds; Deduction and
Charges from the Account Value; Federal Tax
Considerations
19. Other Matters - Statements to Policy Owners
20. Not applicable
21. Detailed Description of Policy Benefits and
Provisions - Policy Loans
22. Not applicable
23. Safekeeping of the Separate Account Assets
24. Other Matters - Assignment
25. The Company
26. Not applicable
27. The Company
28. The Company; Management
29. The Company
30. Not applicable
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. Distribution of the Policies
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Policies
39. The Company; Distribution of the Policies
40. Not applicable
41. The Company; Distribution of the Policies
42. Not applicable
43. Not applicable
44. Detailed Description of Policy Benefits and
Provisions - Allocation of Premium Payments
45. Not applicable
46. Detailed Description of Policy Benefits and
Provision - Cash Value
47. Separate Account VL I - Funds
48. Cover page; The Company
49. Not applicable
50. Separate Account VL I - General
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
51. Summary; The Company; Detailed Description
of Policy Benefits and Provisions; Other
Matters - Beneficiary
52. Separate Account VL I - Funds, Investment
Advisers
53. Federal Tax Considerations
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
STAG VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICIES
PROSPECTUS DATED: MAY 1, 1997
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
[LOGO] TELEPHONE: 1-800-243-5433
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This Prospectus describes a flexible premium variable life insurance policy (the
"Policies", and each individually a "Policy") offered by Hartford Life Insurance
Company ("Hartford") to applicants age 80 and under. For a given amount of Death
Benefit chosen, the Policy Owner has considerable flexibility in selecting the
timing and amount of premium payments. In addition, the Policy Owner can select
a Guarantee Period, of from one to ten years, during which additional guarantees
are provided. Among these is the guarantee that the Death Benefit will be no
less than the initial Face Amount and the Policy will not lapse as long as
certain Scheduled Premiums are paid or are provided for by favorable investment
experience. Unscheduled Premium payments are also allowed.
The Guarantee Period selected by You will affect the benefits provided by the
Policy. In general, the longer the Guarantee Period is, the higher the front-end
sales loads and surrender charges are. However, the advantages of a longer
Guarantee Period include lower cost of insurance rates and lower mortality and
expense risk rates. See "Detailed Description of Policy Benefits and Provisions
- -- Death Benefit -- Death Benefit Guarantee," page 14, for more details.
Sales agents can provide prospective purchasers with individualized sales
illustrations which reflect all the fees and charges associated with the Policy
options selected.
The Policies provide for a Death Benefit payable at the Insured's death. The
Policy Owner may select one of three Death Benefit options; a fixed amount equal
to the Face Amount, a variable amount equal to the Face Amount plus the Account
Value, or a variable amount equal to the Face Amount plus a return of Scheduled
Premiums.
Under all three options, the Policies have Cash Values which increase with the
payment of each premium and which decrease to reflect fees and charges made by
the Hartford. These fees and charges vary depending on the Face Amount of the
Policy, the age of the Insured, the level of the premiums paid, and the length
of the Guarantee Period.
If a Policy is surrendered during the first two Policy Years, the Policy Owner
may be entitled to a refund of excess sales loads in addition to the Cash
Surrender Value.
There is no guaranteed minimum Cash Value for a Policy. The Cash Value of a
Policy will also vary up or down to reflect the investment experience of the
Funds to which the Net Premium(s) has been allocated and the Policy Owner bears
the investment risk for all amounts so allocated.
The initial Net Premium will be allocated to Hartford Money Market Sub-Account
and after the Right to Examine Period has expired, to one or more of the
Sub-Accounts or to the Fixed Account as specified in the Policy Owner's
application. The Funds underlying the Sub-Accounts presently are: Hartford
Advisers Fund, Inc., Hartford Capital Appreciation Fund, Inc., Hartford Bond
Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford Index Fund, Inc.,
Hartford International Opportunities Fund, Inc., Hartford Mortgage Securities
Fund, Inc., Hartford Stock Fund, Inc., and HVA Money Market Fund, Inc. (the
"Hartford Funds") of Hartford Mutual Funds, each of which is managed by HL
Investment Advisors, Inc.: 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 Money Market Fund, Putnam VT New
Opportunities Fund, Putnam VT U.S. Government and High Quality Bond Fund, Putnam
VT Utilities Growth and Income Fund, and Putnam VT Voyager Fund (the "Putnam
Funds") of the Putnam Variable Trust, each of which is managed by Putnam
Investment Management, Inc. ("Putnam Management"), and the VIP Equity-Income
Portfolio and the VIP Overseas Portfolio of the Variable Insurance Products Fund
and the VIP II Asset Manager Portfolio of the Variable Insurance Products Fund
II, each of which is managed by Fidelity Management & Research Company (the
"Fidelity VIP Funds," and collectively with the Hartford Funds and the Putnam
Funds, the "Funds").
These Policies are subject to a front-end sales load and surrender charge which
are set forth in the sections entitled "Deduction from the Premium" and
"Deductions and Charges from the Account Value" on page 18. In addition, there
are examples on pages 21 and 22 to help you in your selection of a Guarantee
Period.
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MAXIMUM FRONT-END SALES LOADS ARE 50% OF THE PREMIUMS PAID IN THE FIRST POLICY
YEAR, 11% IN YEARS 2 THROUGH 10 AND 3% IN YEARS 11 AND LATER. THE MAXIMUM
SURRENDER CHARGE UNDER THE POLICY IS 110% OF THE PREMIUM PAID IN THE FIRST
POLICY YEAR. HOWEVER, ACTUAL CHARGES MAY BE LESS. SEE "DETAILED DESCRIPTION OF
POLICY BENEFITS AND PROVISIONS -- DEDUCTIONS FROM THE PREMIUM -- FRONT-END SALES
LOAD" ON PAGE 18, "DETAILED DESCRIPTION OF POLICY BENEFITS AND PROVISIONS --
DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE -- SURRENDER CHARGES" ON PAGE 20,
AND "DETAILED DESCRIPTION OF POLICY BENEFITS AND PROVISIONS -- CASH VALUES --
LOAD REFUND" ON PAGE 12 FOR MORE DETAILS.
IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
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THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE
APPLICABLE ELIGIBLE FUNDS WHICH CONTAIN A FULL DESCRIPTION OF THOSE FUNDS. ALL
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
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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THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.
<PAGE>
2 HARTFORD LIFE INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................. 4
SUMMARY............................................................... 6
DETAILED DESCRIPTION OF POLICY BENEFITS AND PROVISIONS................ 10
General............................................................. 10
Premiums............................................................ 10
Premium Payment Flexibility....................................... 10
Scheduled Premiums................................................ 11
Unscheduled Premiums.............................................. 11
Allocation of Premium Payments.................................... 11
Accumulation Units................................................ 11
Accumulation Unit Values.......................................... 12
Premium Limitation................................................ 12
Cash Values......................................................... 12
Amount Payable on Surrender of the Policy......................... 12
Load Refund....................................................... 12
Partial Withdrawals............................................... 12
Transfers of Account Value.......................................... 13
Amount and Frequency of Transfers................................. 13
Transfers to or from Sub-Accounts................................. 13
Transfers from the Fixed Account.................................. 13
Dollar Cost Averaging Option...................................... 13
Policy Loans........................................................ 13
Loan Interest..................................................... 14
Credited Interest................................................. 14
Preferred Loan.................................................... 14
Loan Repayments................................................... 14
Termination Due to Excessive Indebtedness......................... 14
Effect of Loans on Account Value.................................. 14
Death Benefit....................................................... 14
Death Benefit Options............................................. 14
Option Change..................................................... 14
Death Benefit Guarantee........................................... 14
Minimum Death Benefit............................................. 15
Increases and Decreases in Face Amount............................ 15
Benefits at Maturity................................................ 15
Lapse and Reinstatement............................................. 15
Policy Surplus.................................................... 15
Lapse and Grace Period............................................ 16
Reinstatement..................................................... 16
Automatic Premium Loan Option..................................... 16
The Right to Examine or Exchange the Policy......................... 17
Surrender/Continuation Options...................................... 17
Option Descriptions............................................... 17
Valuation of Payments and Transfers................................. 17
Application for a Policy............................................ 18
Reduced Charges for Eligible Groups................................. 18
Deductions from the Premium......................................... 18
Front End Sales Load.............................................. 18
Premium Related Tax Charge........................................ 18
Deductions and Charges from the Account Value....................... 18
Monthly Deduction Amounts......................................... 18
Surrender Charges................................................. 20
Examples of Front-End Sales Loads and Surrender Charges........... 20
Charges Against the Funds......................................... 22
Taxes............................................................. 23
THE COMPANY........................................................... 23
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
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<TABLE>
<CAPTION>
PAGE
----
SEPARATE ACCOUNT VL I................................................. 24
<S> <C>
General........................................................... 24
Funds............................................................. 24
Hartford Funds.................................................. 24
Putnam Funds.................................................... 24
Fidelity VIP Funds.............................................. 25
Investment Adviser.................................................. 26
Hartford Funds.................................................... 26
Putnam Funds...................................................... 26
Fidelity VIP Funds................................................ 27
THE FIXED ACCOUNT..................................................... 27
OTHER MATTERS......................................................... 27
Voting Rights....................................................... 27
Statements to Policy Owners......................................... 28
Limit on Right to Contest........................................... 28
Misstatement as to Age.............................................. 28
Payment Options..................................................... 28
Beneficiary......................................................... 28
Assignment.......................................................... 29
Dividends........................................................... 29
SUPPLEMENTAL BENEFITS................................................. 29
Deduction Amount Waiver Rider....................................... 29
Accidental Death Benefit Rider...................................... 29
Increase in Coverage Option Rider................................... 29
Maturity Date Extension Rider....................................... 29
EXECUTIVE OFFICERS AND DIRECTORS...................................... 30
DISTRIBUTION OF THE POLICIES.......................................... 31
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS.......................... 31
FEDERAL TAX CONSIDERATIONS............................................ 31
General............................................................. 31
Taxation of Hartford and the Separate Account....................... 32
Income Taxation of Policy Benefits.................................. 32
Modified Endowment Contracts........................................ 32
Estate and Generation Skipping Taxes................................ 33
Diversification Requirements........................................ 33
Ownership of the Assets in the Separate Account..................... 34
Life Insurance Purchased for Use in Split Dollar Arrangements....... 34
Federal Income Tax Withholding...................................... 34
Non-Individual Ownership of Policies................................ 34
Other............................................................... 34
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 34
LEGAL PROCEEDINGS..................................................... 34
EXPERTS............................................................... 35
REGISTRATION STATEMENT................................................ 35
LEGAL MATTERS......................................................... 35
APPENDIX A ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES AND
SURRENDER VALUES.................................................... 36
</TABLE>
THE POLICIES MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
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GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: Value used to determine certain Policy benefits and charges.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Sub-Account.
ANNUAL SCHEDULED PREMIUM AND/OR SCHEDULED PREMIUMS: The amount of premiums
selected by You within limits established under the Policy.
ATTAINED AGE: The Issue Age plus the number of fully completed Policy Years.
CASH SURRENDER VALUE: Cash Value less all Indebtedness.
CASH VALUE: The Account Value less all remaining surrender charges, if any.
CODE: The Internal Revenue Code of 1986, as amended.
DATE OF ISSUE: The date from which the provisions governing the suicide and
incontestability are measured.
DEATH BENEFIT: The Death Benefit Option in effect determines how the Death
Benefit is calculated. The three Death Benefit Options provided are described in
the Death Benefit section of this Prospectus.
DEATH PROCEEDS: The amount which We will pay on the death of the Insured. This
amount equals the Death Benefit less any Indebtedness.
FACE AMOUNT: On the Policy Date, the Face Amount equals the initial Face Amount.
Thereafter it may change in accordance with the terms of the Policy.
FIXED ACCOUNT: Portion of Account Value invested in Hartford's general account.
FIXED ACCOUNT MINIMUM CREDITED RATE: The minimum rate credited to amounts
allocated to the Fixed Account.
FUNDS: The registered open-end management investment companies in which assets
of the Separate Account may be invested.
GUARANTEE PERIOD: The period, selected by You, from one to ten Policy Years,
during which additional Policy guarantees are provided. Among these is the
guarantee that if Scheduled Premiums are paid, the Death Benefit will be no less
than the initial Face Amount regardless of the investment performance of the
Sub-Accounts. See "Detailed Description of Policy Benefits and Provisions
- --Death Benefit -- Death Benefit Guarantee," page 14.
GUIDELINE ANNUAL PREMIUM: The level annual premium payment necessary to provide
the future benefits under the Policy through maturity, based on certain
assumptions specified under the Federal securities laws. These assumptions
include mortality charges based on the 1980 CSO Table, an assumed annual net
rate of return of 5% per year, and deduction of the fees and charges specified
in the Policy. For purposes of the Policy, the Guideline Annual Premium is used
only in limiting front-end sales loads and surrender charges.
HARTFORD (ALSO WE, US, OUR OR THE COMPANY): Hartford Life Insurance Company.
IN WRITING: In a written form satisfying to Us.
INDEBTEDNESS: The outstanding loan on the Policy, including any interest due or
accrued.
INSURED: The person on whose life the Policy is issued.
ISSUE AGE: As of the Policy Date, the Insured's age on his/ her last birthday.
LOAN ACCOUNT: An account established for any amounts transferred from the Fixed
Account and Sub-Accounts as a result of loans. Amounts are held as collateral
and are credited with interest at the Fixed Account Minimum Credited Rate.
Amounts are not subject to the investment experience of the Separate Account.
MATURITY DATE: The date on which the Policy will mature.
MONTHLY ACTIVITY DATE: The Policy Date and the same date in each succeeding
month as the Policy Date except that whenever the Monthly Activity Date falls on
a date other than a Valuation Day, the Monthly Activity Date will be deemed the
next Valuation Day.
MONTHLY DEDUCTION AMOUNT: The fees and charges deducted from the Account Value
on the Monthly Activity Date.
NATIONAL SERVICE CENTER: Located in Minneapolis, Minnesota.
NET PREMIUM: The amount of premium actually credited to the Account Value.
POLICY: The flexible premium variable life insurance contract issued by Hartford
described in this Prospectus.
POLICY ANNIVERSARY: An anniversary of the Policy Date. Similarly, Policy Years
are measured from the Policy Date.
POLICY DATE: The date from which Policy Anniversaries and Policy Years are
determined.
POLICY OWNER (ALSO YOU, YOUR): The person having rights to benefits under the
Policy during the lifetime of the Insured; the Policy Owner may or may not be
the Insured.
POLICY SURPLUS: An amount which We calculate for each Policy Year during the
Guarantee Period to determine whether or not payment of a Scheduled Premium is
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
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required and is calculated as described in "Policy Surplus" on page 15.
POLICY YEARS: Annual periods computed from the Policy Date.
PRO RATA BASIS: An allocation method based on the proportion of the Account
Value in the Fixed Account and each Sub-Account.
SCHEDULED PREMIUM: Amount of premium shown on Your specifications.
SEPARATE ACCOUNT (ALSO "SEPARATE ACCOUNT VL I"): An account established by
Hartford to separate the assets funding the Policies from other assets of
Hartford; in this case, "Separate Account VL I."
SUB-ACCOUNT: The subdivisions of the Separate Account.
TARGET ACCOUNT VALUE: The Account Value, determined at issue, that would result
on each Policy Anniversary assuming all annual Scheduled Premiums were paid when
due (including the one due on that anniversary for the next Policy Year), a 6%
net yield on assets (after fund level charges are deducted but before the
mortality and expense risk charge is deducted) and current cost of insurance and
expense charges.
UNSCHEDULED PREMIUMS: Any premium payment other than a Scheduled Premium
Payment.
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.
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
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- -------------------------------------------
SUMMARY
- -------------------------------- THE POLICY
The flexible premium variable life insurance Policies offered by this
Prospectus are funded by the Fixed Account and Separate Account VL I, a separate
account established by Hartford pursuant to Connecticut insurance law and
organized as a unit investment trust registered under the Investment Company Act
of 1940. The Separate Account is presently comprised of 22 sub-accounts (the
"Sub-Accounts" and each individually a "Sub-Account"), each of which invests
exclusively in one of the underlying Funds. If an initial premium is submitted
with an application for a Policy, the Net Premium will be allocated, to the
Hartford Money Market Sub-Account. At a later date the values in the Hartford
Money Market Sub-Account will be allocated to one or more of the Sub-Accounts or
the Fixed Account as specified in the Policy Owner's application. This later
date is the latest of 45 days after the application is signed, ten days after We
receive the premium and the date We receive the final requirement to put the
Policy in force. The Policies are credited with units ("Accumulation Units") in
each selected Sub-Account, the assets of which are invested in the applicable
Fund. A Policy Owner may transfer amounts invested among the Sub-Accounts and
the Fixed Account subject to a transfer charge, if applicable. See "Detailed
Description of Policy Benefits and Provisions --Transfers of Account Value,"
page 13.
The Policies are first and foremost life insurance policies with death
benefits, cash values, and other features traditionally associated with life
insurance. The Policies are called "flexible premium" because, once the desired
level and pattern of Death Benefits have been determined, a Policy Owner has
considerable flexibility in the selection of the timing and amount of premium to
be paid. The Policies are called "variable" because, unlike the fixed benefits
of an ordinary whole life insurance policy, the Cash Value will, and the Death
Benefit may increase or decrease depending on the investment experience of the
Funds to which the Net Premium(s) has been allocated. However, as long as the
Policy remains in force, no partial withdrawals occur, and there are no requests
to increase or decrease the Face Amount, the Death Benefit will never be less
than the initial Face Amount. See "Detailed Description of Policy Benefit and
Provisions -- Death Benefit," page 14.
- ---------------------------------------------------
POLICY DESIGN OPTIONS
The options in the Policy are structured to give a prospective purchaser and
his or her sales agent the ability to select a Policy tailor-made for the
purchaser's specific life insurance needs.
The Policy options which provide such flexibility fall into four major
categories:
1. Death Benefit Options -- These allow the Policy Owner to select various
levels and patterns of Death Benefit payments.
2. Premium Options -- Once the Policy Owner has decided on the appropriate
Death Benefit, he or she then has considerable flexibility in determining
the desired premium schedule.
3. Guarantee Period Options -- The Policy Owner also has the ability to choose
a Guarantee Period from one to ten years. During this period, additional
contractual guarantees are provided. Among these is the guarantee that the
Death Benefit will be no less than the initial Face Amount and the Policy
will not lapse as long as certain Scheduled Premiums selected by the Policy
Owner are paid or provided for by favorable investment experience.
4. Investment Options -- The Policy Owner has the choice of allocating the
Policy's Account Value among nine or less of the Policy's 23 investment
options. These include the 22 variable Sub-Accounts and the Fixed Account.
- ---------------------------------------------------
DEATH BENEFIT
The Policies provide for three Death Benefit options. These can be level and
equal to the Face Amount, a Face Amount plus Return of Account Value Death
Benefit or a Face Amount plus Return of Scheduled Premium Death Benefit. At the
death of the Insured, we will pay the Death Proceeds to the Beneficiary. The
Death Proceeds equal the Death Benefit less any Indebtedness under the Policy.
See "Detailed Description of Policy Benefits and Provisions -- Death Benefit,"
page 14.
- ---------------------------------------------------
PREMIUM
You have considerable flexibility as to when and in what amounts You pay
premiums.
Prior to issue, You can choose the level of the Scheduled Premiums, within a
range determined by Hartford based on the Face Amount of the Policy, the
Insured's sex (except where unisex rates apply) and Issue Age, and the Insured's
risk classification.
During the Guarantee Period, Hartford will guarantee that the Policy will
not lapse, regardless of the investment experience of the Funds, if You pay the
Scheduled Premiums when due. In addition, Unscheduled Premium Payments are
allowed during the Guarantee Period.
Even if You do not pay all Scheduled Premiums due during the Guarantee
Period, the Policy will stay in force as
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
long as the Policy Surplus exceeds any Indebtedness under the Policy.
After the Guarantee Period, You may change Your Scheduled Premiums to any
level You desire, and Unscheduled Premium Payments are still allowed. Once the
Guarantee Period has expired, the Policy will not lapse as long as the Cash
Surrender Value is sufficient to cover the Monthly Deduction Amounts.
No premium payment will be accepted which causes the Policy to not meet the
tax qualification guidelines for life insurance under the Internal Revenue Code
of 1986, as amended.
There are circumstances, usually if a Policy Owner wants to refund future
benefits in seven years or less, when the Policy may become a Modified Endowment
Contract under federal tax law. If it does, loans and other predeath
distributions are includable in gross income on an income-first basis. A 10%
penalty tax may be imposed on income distributed before the insured attains age
59 1/2. Prospective purchasers and Policy Owners are advised to consult a
qualified tax adviser before taking steps that may affect whether the Policy
becomes a Modified Endowment Contract. See "Federal Tax Considerations --
Modified Endowment Contracts," page 32, for a discussion of the "seven pay
test."
- ---------------------------------------------------
GUARANTEE PERIOD
The Guarantee Period selected by You will affect the benefits provided by
the Policy. In general, the longer the Guarantee Period is, the higher the
front-end sales loads and surrender charges are. However, the advantages of a
longer Guarantee Period include:
a. a longer period during which Your Death Benefit is guaranteed, regardless of
the investment experience of the Sub-Accounts,
b. a longer period during which Your current administrative fees are guaranteed
(as a result, the longer the Guarantee Period is, the lower the guaranteed
administrative fees are),
c. a longer period during which Your current cost of insurance rates are
guaranteed (as a result, the longer the Guarantee Period is, the lower the
guaranteed cost of insurance rates are),
d. lower current cost of insurance rates,
e. lower mortality and expense risk rates.
In addition, if you choose a Guarantee Period longer than five years, You
may be given the right to purchase additional coverage, subject to limitations,
without any evidence of insurability. See "Supplemental Benefits," page 29.
Due to the way the different charges and fees depend on different factors,
such as the length of the Guarantee Period, it is difficult to anticipate the
net effect of these charges on the Policy values without a sales illustration.
Once a purchaser, in consultation with his or her sales agent, has decided on a
combination of Policy features, (such as Face Amount, level of Scheduled
Premiums, Guarantee Period, and the Issue Age and sex of Insured) the sales
agent will provide that purchaser with an illustration which reflects the
charges and benefits of that particular combination and a summary of Policy
charges and fees. In addition, these illustrations are available for any
allowable combination of benefits which a prospective purchaser may request.
For more information concerning front-end sales loads, see page 18,
surrender charges, see page 20, cost of insurance charges, see page 19, and
mortality and expense risk charges, see page 19.
- ---------------------------------------------------
SEPARATE ACCOUNT VL I
Separate Account VL I is a separate account established by Hartford pursuant
to the insurance laws of the State of Connecticut and organized as a registered
unit investment trust under the Investment Company Act of 1940. Separate Account
VL I is presently comprised of 22 Sub-Accounts, each of which invests
exclusively in one of the Funds. Each Hartford Fund is organized as a
corporation under the laws of the State of Maryland and is a diversified
open-end management investment company registered under the Investment Company
Act of 1940. The Putnam Funds are portfolios of Putnam Variable Trust (formerly
named Putnam Capital Manager Trust), a Massachusetts business trust organized on
September 24, 1987 that is an open-end, series investment company with multiple
portfolios or funds registered under the Investment Company Act of 1940. The
Fidelity VIP Funds are portfolios of the Variable Insurance Products Fund and
the Variable Insurance Products Fund II, two diversified open-end management
investment companies, each with multiple portfolios and organized as a
Massachusetts business trust. The VIP Equity-Income Portfolio and VIP Overseas
Portfolio are portfolios of the Variable Insurance Products Fund, organized on
November 13, 1981. The VIP II Asset Manager Portfolio is a portfolio of the
Variable Insurance Products Fund II, organized on March 21, 1988.
Registration under the Investment Company Act of 1940 does not involve
supervision of the management or investment practices or policies by the
Commission. The shares of the Funds are sold to the Separate Account and to
other separate accounts of Hartford or its affiliates which fund similar annuity
or life insurance products.
Currently, the Funds are Hartford Advisers Fund, Inc., Hartford Capital
Appreciation Fund, Inc., Hartford Bond
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford Index Fund, Inc.,
Hartford International Opportunities Fund, Inc., Hartford Mortgage Securities
Fund, Inc., Hartford Stock Fund, Inc., and HVA Money Market Fund, Inc.
(hereinafter the "Hartford Funds"), 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 Money Market Fund, Putnam VT
New Opportunities Fund, Putnam VT U.S. Government and High Quality Bond Fund,
Putnam VT Utilities Growth and Income Fund, and Putnam VT Voyager Fund
(hereinafter the "Putnam Funds"), and the VIP Equity-Income Portfolio, VIP
Overseas Portfolio and VIP II Asset Manager Portfolio (hereinafter the "Fidelity
VIP Funds"). Applicants should read the prospectus for each of the Funds
accompanying this Prospectus in connection with the purchase of a Policy. The
investment objectives of each of the Funds are as set forth in "Separate Account
VL I," page 24.
The investment adviser for the Hartford Funds is HL Investment Advisors,
Inc. ("HL Advisors"), a wholly-owned subsidiary of Hartford. HL Advisors retains
Wellington Investment Management, L.L.P. ("Wellington Management") as an
investment sub-adviser with respect to certain of the Hartford Funds. In
addition, HL Advisors has entered an investment services agreement with Hartford
Investment Management Company, Inc. ("HIMCO") for the provision of investment
services for certain of the Hartford Funds. The Putnam Funds are advised by
Putnam Management, a subsidiary of Putnam Investments, Inc. The Fidelity VIP
Funds are managed by Fidelity Management & Research Company. See "Separate
Account VL I," page 24.
- ---------------------------------------------------
FIXED ACCOUNT
Premium payments and Cash Values allocated to the Fixed Account become part
of the general assets of the Hartford. Hartford invests the assets of the
general account in accordance with applicable law governing the investments of
insurance company general accounts.
- ---------------------------------------------------
DEDUCTIONS FROM THE PREMIUM
Before the allocation of the premium to the Account Value, a deduction as a
percentage of premium is made for the front-end sales load and premium taxes.
The amount of each premium allocated to the Account Value is Your Net Premium.
- ---------------------------------------------------
FRONT-END SALES LOAD
The front-end sales load portion of the premium deduction is based on the
level of Scheduled Premiums, the length of the Guarantee Period, and the amount
of any Unscheduled Premiums paid.
The maximum front-end sales load percentages are 50% of the premiums paid in
the first Policy Year, 11% in Policy Years 2 through 10, and 3% in Policy Years
11 and later.
For all Guarantee Periods, the maximum amount of premium paid in any Policy
Year subject to a front-end sales load is the Guideline Annual Premium. In
addition, if Scheduled Premiums are less than the Guideline Annual Premium, the
maximum amount of premium paid in the first Policy Year subject to a front-end
sales load is the Scheduled Premium.
The actual schedule of front-end sales loads for any given Policy is
specified in that Policy.
- ---------------------------------------------------
PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover premium-based taxes assessed
against Hartford by a state or other governmental entity. This percentage will
vary by locale depending on the tax rates in effect there. The range is
generally between 0% and 4%.
- ---------------------------------------------------
DEDUCTIONS AND CHARGES FROM
THE ACCOUNT VALUE
We will subtract amounts from Your Account Value to provide for the Monthly
Deduction Amount. These will be taken on a Pro Rata Basis from the Fixed Account
and Sub-Accounts on each Monthly Activity Date.
The Monthly Deduction Amount equals:
(a) the cost of insurance; plus
(b) the charges for additional benefits provided by rider, if any; plus
(c) the charges for "special" insurance class rating, if any; plus
(d) the monthly administrative fee, plus
(e) the mortality and expense risk charge.
Hartford may also set up a provision for income taxes against the assets of
the Separate Account. See "Detailed Description of Policy Benefits and
Provisions -- Deductions and Charges From the Account Value," page 18, and
"Federal Tax Considerations," page 31.
For Policy Years one through twenty, the mortality and expense risk charge
ranges from 1.40% annually for a Policy with a one-year Guarantee Period and
decreases as the Guarantee Period gets longer to .60% on a Policy with a ten-
year Guarantee Period. After the twentieth Policy Year, the mortality and
expense risk charge for all Policies will equal .60% annually.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
Prospective purchasers should review the prospectuses for the Funds which
accompany this Prospectus for a description of the charges assessed against the
assets of each of the Funds.
- ---------------------------------------------------
SURRENDER CHARGES
A contingent deferred sales load ("Surrender Charge") is assessed against
the Account Value of a Policy if the Policy lapses or is surrendered during the
first nine Policy Years. The amount of the Surrender Charge applicable during
the first Policy Year is established by Hartford based on the premiums and the
length of the Guarantee Period chosen by the Policy Owner. Subject to certain
limits imposed by state insurance law, the Surrender Charge decreases by an
equal amount each Policy Year until it reaches zero during the tenth Policy
Year.
The actual schedule of Surrender Charges for any given Policy is set forth
in that Policy. In addition, sales agents will provide, upon request, the
schedule of Surrender Charges which would apply under any given circumstances.
- ---------------------------------------------------
LIMITS ON FRONT-END SALES LOADS
AND SURRENDER CHARGES
Certain state insurance laws and regulations limit the front-end sales loads
and Surrender Charges which can be assessed on these Policies. The front-end
sales loads and Surrender Charges assessed in these Policies comply with these
limitations.
Front-end sales loads and Surrender Charges which cover expenses relating to
the sale and distribution of the Policies may be reduced for certain sales of
the Policies under circumstances which may result in savings of such sales and
distribution expenses.
- ---------------------------------------------------
CASH VALUE
As with many other types of insurance policies, each Policy will have a cash
value ("Cash Value"). The Cash Value of the Policy will increase or decrease to
reflect the interest credited to the Fixed Account and Loan Account, investment
experience of the Sub-Accounts applicable to the Policy and deductions for the
Monthly Deduction Amount. There is no minimum guaranteed Cash Value and the
Policy Owner bears the risk of the investment in the Funds. See "Detailed
Description of the Policy Benefits and Provisions -- Cash Values," page 12.
- ---------------------------------------------------
POLICY LOANS
A Policy Owner may obtain a cash loan from Hartford. The loan is secured by
the Policy. At the time a loan is requested, the Indebtedness (including the
currently applied for loan) may not exceed 90% of the Cash Value. See "Detailed
Description of Policy Benefits and Provisions -- Policy Loans," page 13.
- ---------------------------------------------------
CHARGES AGAINST THE FUNDS
The Separate Account purchases shares of the Funds at net asset value. The
net asset value of the Fund shares reflects investment advisory fees and
administrative and other expenses already deducted from the assets of the Funds.
These charges are described herein. See "Detailed Description of Policy Benefits
and Provisions -- Deductions and Charges from the Account Value -- Charges
Against the Funds," page 22.
The following table shows total fund operating expenses for the year ending
December 31, 1996 for the Funds:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FUND NAME FEES EXPENSES EXPENSES
- ------------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
Hartford Advisers Fund......... 0.615% 0.017% 0.632%
Hartford Bond Fund............. 0.490% 0.030% 0.520%
Hartford Capital Appreciation
Fund.......................... 0.629% 0.017% 0.646%
Hartford Dividend and Growth
Fund.......................... 0.709% 0.017% 0.726%
Hartford Index Fund............ 0.374% 0.019% 0.393%
Hartford International
Opportunities Fund............ 0.691% 0.095% 0.786%
Hartford Mortgage Securities
Fund.......................... 0.424% 0.029% 0.453%
Hartford Stock Fund............ 0.441% 0.016% 0.457%
HVA Money Market Fund.......... 0.423% 0.021% 0.444%
Putnam VT Diversified Income
Fund.......................... 0.70% 0.13% 0.83%
Putnam VT Global Asset
Allocation Fund............... 0.68% 0.15% 0.83%
Putnam VT Global Growth Fund... 0.60% 0.16% 0.76%
Putnam VT Growth and Income
Fund.......................... 0.49% 0.05% 0.54%
Putnam VT High Yield Fund...... 0.68% 0.08% 0.76%
Putnam VT Money Market Fund
(1)........................... 0.45% 0.10% 0.55%
Putnam VT New Opportunities
Fund.......................... 0.63% 0.09% 0.72%
Putnam VT U.S. Government and
High Quality Bond Fund........ 0.62% 0.07% 0.69%
Putnam VT Utilities Growth and
Income Fund (2)............... 0.69% 0.09% 0.78%
</TABLE>
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FUND NAME FEES EXPENSES EXPENSES
- ------------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
Putnam VT Voyager Fund......... 0.57% 0.06% 0.63%
Fidelity VIP Equity-Income
Portfolio..................... 0.51% 0.07% 0.58%
Fidelity VIP Overseas
Portfolio..................... 0.76% 0.17% 0.93%
Fidelity VIP II Asset Manager
Portfolio (3)................. 0.64% 0.10% 0.74%
</TABLE>
- ------------------------
(1) Other expenses for Putnam VT Money Market Fund have been restated to reflect
the cost of certain insurance purchased by the Fund. See "Putnam VT Money
Market Fund -- Insurance" in the Fund's prospectus accompanying this
Prospectus. Actual other expenses and total Fund operating expenses were
0.08% and 0.53%, respectively.
(2) On July 11, 1996, shareholders approved an increase in the fees payable to
Putnam Management under the management contract for 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 0.64% and 0.73%, respectively.
(3) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest earned
on uninvested cash balances was used to reduce custodian and transfer agent
expenses. Absent these reductions, the total operating expenses presented in
the table would have been 0.56% for Fidelity VIP Equity Income Portfolio,
0.92% for Fidelity VIP Overseas Portfolio and 0.73% for Fidelity VIP II
Asset Manager Portfolio.
- ---------------------------------------------------
THE RIGHT TO EXAMINE THE POLICY
An applicant has a limited right to return his or her Policy for
cancellation. If the applicant returns the Policy within ten days after delivery
of the Policy, or within 45 days after completion of the application, whichever
is latest (subject to applicable state regulation), Hartford will return to the
applicant, within seven days thereafter, the greater of the premium paid, less
any Indebtedness, or the sum of (1) the Account Value, less any Indebtedness, on
the date the returned Policy is received by Hartford or its agent and (2) any
deductions under the Policy or by the Funds for taxes, charges or fees.
- ---------------------------------------------------
SURRENDER/CONTINUATION OPTIONS
At any time prior to the Maturity Date, provided the Policy has a Cash
Surrender Value, You may generally choose to have the Cash Surrender Value
applied under one of the following options:
OPTION A -- Surrender for Cash
OPTION B -- Continue as Extended Term Insurance
OPTION C -- Continue as Paid-Up Insurance
See "Detailed Description of Policy Benefits and Provisions --
Surrender/Continuation Options", page 17.
- ---------------------------------------------------
TAX CONSEQUENCES
The current federal tax law generally excludes all Death Benefit payments
from the gross income of the Policy beneficiary. See "Federal Tax
Considerations," page 31.
- ---------------------------------------------------
DETAILED DESCRIPTION OF POLICY
BENEFITS AND PROVISIONS
- -------------------------------- GENERAL
This Prospectus describes a flexible premium variable life insurance policy
where the Policy Owner has considerable flexibility in selecting the timing and
amount of premium payments. In addition, the Policy Owner can select a Guarantee
Period, from one to ten years, during which additional guarantees are provided
such as the guarantee that the Death Benefit will be no less than the initial
Face Amount and the Policy will not lapse as long as certain Scheduled Premiums
are paid or are provided for by favorable investment experience. As stated
below, Unscheduled Premium payments are also allowed.
- ---------------------------------------------------
PREMIUMS
PREMIUM PAYMENT FLEXIBILITY
A significant feature of the Policy is that it gives You the ability to pay
amounts greater or less than the Scheduled Premiums.
Prior to issue, You can choose the level of the Scheduled Premiums, within a
range determined by Hartford, based on the Face Amount of the Policy, the
Insured's sex (except where unisex rates apply), age at issue, and the Insured's
risk classification.
During the Guarantee Period, Hartford will guarantee that the Policy will
not lapse, regardless of the investment experience of the Funds, if You pay the
Scheduled Premiums when due and the Indebtedness never exceeds the Cash Value.
In addition, Unscheduled Premium payments are allowed during the Guarantee
Period.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
Even if You do not pay all Scheduled Premiums due during the Guarantee
Period, the Policy will stay in force as long as the Policy Surplus exceeds the
Indebtedness in the Policy.
After the Guarantee Period, You may change your Scheduled Premiums to any
level you desire, and Unscheduled Premium payments are still allowed. Once the
Guarantee Period has expired, the Policy will not lapse as long as the Cash
Surrender Value is sufficient to cover the Monthly Deduction Amounts.
See, also, "-- Lapse and Reinstatement," page 15, for more details.
SCHEDULED PREMIUMS
You have the right to pay Scheduled Premiums annually, semiannually,
quarterly, or monthly. The first Scheduled Premium is due on the Policy Date.
During the Guarantee Period, each Scheduled Premium after the first is due at
the expiration of the period for which the preceding Scheduled Premium was paid.
A Scheduled Premium may be paid at any time prior to its due date, subject to
the premium limitations set forth by the Internal Revenue Code (see "-- Premiums
- -- Premium Limitation," page 12.
During the Guarantee Period, if all Scheduled Premiums are paid when due and
if Indebtedness does not exceed the Cash Value, the Policy will not terminate
due to insufficient Cash Surrender Value, regardless of the investment
experience of the Funds.
During the Guarantee Period, if You fail to pay a Scheduled Premium when
due, and if, on the premium due date and for the rest of that Policy Year, the
Policy Surplus exceeds the Indebtedness, payment of that Scheduled Premium will
not be required in that year or in any future Policy Year. The Policy will not
terminate due to this nonpayment. However, future Scheduled Premiums during the
Guarantee Period will be required unless the Policy Surplus continues to exceed
the Indebtedness in those future Policy Years. In addition, as is true with any
premium, Your Account Value and Policy Surplus in future years will be larger if
You make the premium payment than if You do not.
For example, to determine whether or not non-payment of a Scheduled Premium
in the second Policy Year would result in a lapse, You would compare the actual
Account Value on the first Policy Anniversary to the first Target Account Value.
If the actual Account Value was equal to or greater than the Target Account
Value and the Indebtedness remained less than this Policy Surplus, failure to
pay any Scheduled Premiums due in the second Policy Year would not result in a
lapse.
After the Guarantee Period, the Company will send reminder notices for the
Owner to pay Scheduled Premiums during the Insured's lifetime. Payment of the
Scheduled Premium may not be sufficient to keep the Policy in force after the
end of the Guarantee Period.
UNSCHEDULED PREMIUMS
Any premium We receive under the Policy in an amount different from the
Scheduled Premium will be considered an Unscheduled Premium. Unscheduled
Premiums of at least $50.00 can be made at any time while the Policy is in
force.
ALLOCATION OF PREMIUM PAYMENTS
The initial Net Premium will be allocated to the Hartford Money Market
Sub-Account on the later of the Policy Date or the date We receive the premium.
The value in this Hartford Money Market Sub-Account will then be allocated
to the Fixed Account and Sub-Accounts according to the premium allocation
specified in the application on the latest of 45 days after the application is
signed, ten days after We receive the premium and the date We receive the final
requirement to put the Policy in force.
Any additional Net Premiums received by Us prior to such date will be
allocated to the Hartford Money Market Fund Sub-Account.
Upon written request, You may change the Net Premium allocation. Portions
allocated to the Fixed Account and Sub-Accounts must be whole percentages of 10%
or more. Subsequent Net Premiums will be allocated to the Fixed Account and
Sub-Accounts according to Your most recent instructions, subject to the
following. The Account Value may be allocated to no more than nine of these. If
We receive a premium and Your most recent allocation instructions would violate
this requirement, We will allocate the Net Premium to the Fixed Account and Sub-
Accounts according to Your previous premium allocation.
The Policy Owner receives several different types of notification as to what
his or her current premium allocation is. The initial allocation chosen by the
Policy Owner is shown in the Policy. And, each transactional confirmation
received after a premium payment will show how that Net Premium has been
allocated. In addition, each quarterly statement summarized the current premium
allocation in effect for that Policy.
ACCUMULATION UNITS
Net Premiums allocated to the Sub-Accounts are used to credit Accumulation
Units to those Sub-Accounts.
The number of Accumulation Units in each Sub-Account to be credited to a
Policy (including the initial allocation to Hartford Money Market Sub-Account)
and the
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
amount credited to the Fixed Account will be determined first by multiplying the
Net Premium by the appropriate allocation percentage to determine the portion to
be invested in the Fixed Account or Sub-Account. Each portion to be invested in
a Sub-Account is then divided by the then Accumulation Unit Value of that
particular Sub-Account next computed following receipt of the payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
Valuation Day by multiplying the Accumulation Unit Value of the particular
Sub-Account on the preceding Valuation Day by a Net Investment Factor for that
Sub-Account for the Valuation Period then ended. The Net Investment Factor for
each of the Sub-Accounts is equal to the net asset value per share of the
corresponding Fund at the end of the Valuation Period (plus the per share amount
of any dividend or capital gain distributions paid by that Fund 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.
All valuations in connection with a Policy, e.g., with respect to
determining Cash Value and Account Value and in connection with Policy loans, or
calculation of Death Benefits, or with respect to determining the number of
Accumulation Units to be credited to a Policy with each premium payment, other
than the initial premium payment, will be made on the date the request or
payment is received by Hartford at the National Service Center if such date is a
Valuation Day; otherwise such determination will be made on the next succeeding
date which is a Valuation Day.
PREMIUM LIMITATION
If premiums are received which would cause the Policy to fail to meet the
definition of a life insurance policy in accordance with the Internal Revenue
Code, We will refund the excess premium payments. We will refund such premium
payments and interest thereon within 60 days after the end of a Policy Year.
Except for Scheduled Premiums that are required, a premium payment that
results in an increase in the Death Benefit greater than the amount of the
premium will be accepted only after We approve evidence of insurability.
- ---------------------------------------------------
CASH VALUES
As with traditional life insurance, each Policy will have a Cash Value. The
Cash Value is equal to the Account Value less any remaining Surrender Charges.
There is no minimum guaranteed Cash Value.
The Account Value of a Policy changes on a daily basis and will be computed
on each Valuation Day. The Account Value will vary to reflect the investment
experience of the Sub-Accounts, and the interest credited to the Fixed Account
and Loan Account as well as the Monthly Deduction Amounts.
The Account Value of a particular Policy is related to the net asset value
of the Funds invested in by the Sub-Accounts, if any, to which Net Premiums on
the Policy have been allocated. The Account Value in the Sub-Accounts on any
Valuation Day is calculated by multiplying the number of Accumulation Units in
each Sub-Account as of the Valuation Day by the current Accumulation Unit Value
of that Sub-Account and then summing the result for all the Sub-Accounts. The
Account Value of a Policy equals the Account Value in the Sub-Accounts plus the
value of the Fixed Account and Loan Account. The Cash Value is the Account Value
minus any remaining Surrender Charge. The Cash Surrender Value which is the net
amount available upon surrender of the Policy, is the Cash Value less any
Indebtedness. See "-- Premiums -- Accumulation Unit Values," page 12.
AMOUNT PAYABLE ON SURRENDER OF THE POLICY
As long as the Policy is in effect, a Policy Owner may elect, without the
consent of the beneficiary (provided the designation of beneficiary is not
irrevocable), to fully surrender the Policy. Upon surrender, the Policy Owner
will receive the Cash Surrender Value determined as of the day Hartford receives
the Policy Owner's written request or the date requested by the Policy Owner,
whichever is later. The Cash Surrender Value equals the Cash Value less any
Indebtedness. The Policy will terminate on the date of receipt of the written
request, or the date the Policy Owner requests the surrender to be effective,
whichever is later.
LOAD REFUND
If a Policy is surrendered during the first two Policy Years, the Policy
Owner may be entitled to payment of a refund in addition to the Cash Surrender
Value.
The refund will be equal to the excess, if any, of the sum of the actual
front-end sales load charged to-date plus the Surrender Charge assessed upon
Surrender over:
1. the sum of 30% of payments in aggregate amount less than or equal to one
Guideline Annual Premium plus 10% of payments in aggregate amount greater
than one Guideline Annual Premium but not more than two Guideline Annual
Premiums; and
2. 9% of each payment made in excess of two Guideline Annual Premiums.
PARTIAL WITHDRAWALS
After the Guarantee Period, partial withdrawals are allowed. The minimum
partial withdrawal allowed is $500.00. The maximum partial withdrawal is the
Cash Surrender Value, less $1,000.00. Up to one (1) partial withdrawal is
allowed per month, (i.e., between any successive Monthly Activity Dates). The
Face Amount is reduced by the
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
amount of the Partial Withdrawal. Unless specified otherwise, the Partial
Withdrawal will be deducted on a Pro Rata Basis from the Fixed Account and the
Sub-Accounts. Currently, Hartford does not impose a partial withdrawal charge.
However, Hartford reserves the right to impose a partial withdrawal charge of up
to $50.
- ---------------------------------------------------
TRANSFERS OF ACCOUNT VALUE
AMOUNT AND FREQUENCY OF TRANSFERS
Upon request and as long as the Policy is in effect, You may transfer
amounts among the Fixed Account and Sub-Accounts. Transfers may be made by
written request or by calling our National Service Center toll free at
1-800-231-5453. Transfers by telephone may be made by the agent of record or by
the attorney-in-fact pursuant to a power of attorney. Telephone transfers may
not be permitted in some states. The policy of Hartford and its agents and
affiliates is that they will not be responsible for losses resulting from acting
upon telephone requests reasonably believed to be genuine. We will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine; otherwise, We may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures We follow for transactions initiated by
telephone include requirements that callers provide certain identifying
information for themselves ( if not the Policy Owner) and the Policy Owner. All
transfer instructions by telephone are tape recorded.
The amounts which may be transferred and the number of transfers will be
limited by Our rules then in effect.
Currently there are no restrictions on transfers other than those described
below. There is no charge currently for the first four (4) transfers in any
Policy Year. Each subsequent transfer is subject to a $25 Transfer Charge.
We reserve the right at a future date to limit the size of transfers and
remaining balances, and to limit the number and frequency of transfers.
TRANSFERS TO OR FROM SUB-ACCOUNTS
In the event of a transfer from a Sub-Account, the number of Accumulation
Units credited to the Sub-Account from which the transfer is made will be
reduced. The reduction will be determined by dividing:
1. the amount transferred by,
2. the Accumulation Unit Value for that Sub-Account on the Valuation Day, We
receive Your request for transfer In Writing.
In the event of a transfer to a Sub-Account, We will increase the number of
Accumulation Units credited to the Sub-Account. The increase will equal:
1. the amount transferred divided by,
2. the Accumulation Unit Value for that Sub-Account determined on the Valuation
Day, We receive Your request for transfer In Writing.
TRANSFERS FROM THE FIXED ACCOUNT
In addition to the conditions above, transfers from the Fixed Account are
subject to the following:
(a) the transfer must occur during the 30-day period following each Policy
Anniversary; and
(b) if the Accumulated Value in Your Fixed Account exceeds $1,000, the amount
transferred in any Policy Year may be no larger than 25% of the Accumulated
Value in the Fixed Account on the date of transfer.
DOLLAR COST AVERAGING OPTION
You may elect to allocate Your Net Premiums among the Sub-Accounts and the
Fixed Account pursuant to the dollar cost averaging (DCA) option. If You choose
the DCA option, Net Premiums will be deposited into the Hartford Money Market
Sub-Account. Each month, amounts will be withdrawn from that Sub-Account and
allocated to the other investment options according to Your allocation
instructions. The transfer date will be the monthly anniversary of Your first
transfer under Your initial DCA election. The first transfer will commence
within five (5) business days after Hartford receives Your initial election,
either In Writing or by telephone subject to the telephone transfer procedures
described above. The dollar amount will be allocated to the investment options
that You specify, in the proportions that You specify. If, on any transfer date,
Your Cash Value allocated to the Hartford Money Market Account is less than the
amount You have elected to transfer, Your DCA program will end. You may also
cancel Your DCA election by notice to Hartford In Writing or by calling Our
National Service Center at 1-800-231-5453.
The main objective of a DCA program is to minimize the impact of short term
price fluctuations. Since the same dollar amount is transferred to other
investment options at set intervals, DCA allows You to purchase more
Accumulation Units when prices are low and fewer Accumulation Units when prices
are high. Therefore, a lower average cost per Accumulation Unit may be achieved
over the long term. A DCA program allows Policy Owners to take advantage of
market fluctuations. However, it is important to understand that a DCA program
does not assure a profit or protect against loss in a declining market. Policy
Owners who choose the DCA option should be individuals who have the financial
ability to continue making investments through periods of low price levels.
- ---------------------------------------------------
POLICY LOANS
As long as the Policy is in effect, a Policy Owner may obtain, without the
consent of the beneficiary (provided the
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
designation of beneficiary is not irrevocable), a cash loan from Hartford. The
total Indebtedness at the time of the new loan (including the accrued interest
on prior loans plus the currently applied for loan) may not exceed 90% of the
Cash Value.
The amount of each loan will be transferred on a Pro Rata Basis from the
Fixed Account and each of the Sub-Accounts (unless the Policy Owner specifies
otherwise) to the Loan Account. The Loan Account is a mechanism used to ensure
that any outstanding Indebtedness remains fully secured by the Account Value.
LOAN INTEREST
Interest will accrue daily on the Indebtedness at the Policy Loan Interest
Rate indicated in the Policy. The difference between the value of the Loan
Account and the Indebtedness will be transferred on a Pro Rata Basis from the
Fixed Account and Sub-Accounts to the Loan Account on each Monthly Activity
Date.
CREDITED INTEREST
Loan Accounts, other than those attributable to Preferred Loans (as
described in the subsection entitled "Policy Loans -- Preferred Loan," on page
14), will be credited with interest in the following manner. During the first
ten Policy Years, any amounts in the Loan Account will be credited with interest
at a rate of 2%. For Policy Years eleven and beyond, the Loan Account will be
credited with interest at a rate equal to 3%.
PREFERRED LOAN
If, any time after the tenth Policy Anniversary, the Cash Value exceeds the
total of all premiums paid since issue, a Preferred Loan is available. The
amount available for a Preferred Loan is the amount by which the Cash Value
exceeds total premiums paid. For Policy Years eleven and beyond, the amount of
the Loan Account which equals a Preferred Loan will be credited with interest at
a rate of 4%. The amount of Indebtedness that qualifies as a Preferred Loan is
determined on each Monthly Activity Date.
LOAN REPAYMENTS
You can repay any part of or the entire Indebtedness at any time.
The amount of loan repayment will be deducted from the Loan Account and will
be allocated among the Fixed Account and Sub-Accounts in the same percentage as
premiums are allocated.
TERMINATION DUE TO EXCESSIVE INDEBTEDNESS
If total Indebtedness equals or exceeds the Cash Value, the Policy will
terminate 61 days after We have mailed notice to Your last known address and
that of any assignees of record. If sufficient loan repayment if not made by the
end of this 61 day period, the Policy will end without value.
EFFECT OF LOANS ON ACCOUNT VALUE
A loan, whether or not repaid, will have a permanent effect on the Account
Value because the investment results of each Sub-Account will apply only to the
amount remaining in such Sub-Accounts. In addition, the rate of interest
credited to the Fixed Account will usually be different than the rate credited
to the Loan Account. The longer a loan is outstanding, the greater the effect is
likely to be. The effect could be favorable or unfavorable. If the Fixed Account
and Sub-Accounts earn more than the annual interest rate for funds held in the
Loan Account, a Policy Owner's Account Value will not increase as rapidly as it
would have had no loan been made. If the Fixed Account and Sub-Accounts earn
less than the Loan Account, the Policy Owner's Account Value will be greater
than it would have been had no loan been made. Also, if not repaid, the
aggregate amount of the outstanding Indebtedness will reduce the Death Proceeds
and Cash Surrender Value otherwise payable.
- ---------------------------------------------------
DEATH BENEFIT
The Policies provide for the payment of the Death Proceeds to the named
beneficiary when the Insured under the Policy dies. The Death Proceeds payable
to the beneficiary equal the Death Benefit less any Indebtedness. The Death
Benefit depends on the Death Benefit Option selected by You.
DEATH BENEFIT OPTIONS
There are three Death Benefit Options: the Level Death Benefit Option, the
Return of Account Value Death Benefit Option and the Return of Premium Death
Benefit Option. Subject to the Minimum Death Benefit described below, the Death
Benefits under each option are:
1. Under the Level Death Benefit Option, the Death Benefit is the Face Amount.
2. Under the Return of Account Value Death Benefit Option, the Death Benefit is
the Face Amount plus the Account Value.
3. Under the Return of Premium Death Benefit Option, the Death Benefit is the
Face Amount plus the sum of the Scheduled Premiums paid.
OPTION CHANGE
After the Guarantee Period, You may change the Return of Premium Death
Benefit Option or Return of Account Value Death Benefit Option to the Level
Death Benefit Option. If that option change is elected, the Face Amount will
become that amount available as a Death Benefit immediately prior to the option
change.
DEATH BENEFIT GUARANTEE
During the Guarantee Period, if all Scheduled Premiums are paid when due and
if Indebtedness does not
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
exceed the Cash Value, the Policy will not terminate due to insufficient Cash
Surrender Value, regardless of the investment experience of the Funds.
MINIMUM DEATH BENEFIT
Notwithstanding the above, there is a minimum Death Benefit equal to the
Account Value multiplied by a specified percentage. This percentage varies
according to the Insured's Issue Age, Attained Age, sex (where unisex rates are
not used), and insurance class and are specified in the Policy.
EXAMPLES OF THE MINIMUM DEATH BENEFIT:
<TABLE>
<CAPTION>
A B
---------- ----------
<S> <C> <C>
Face Amount............................ $ 100,000 $ 100,000
Account Value on Date of Death......... 46,500 34,000
Specified Percentage................... 250% 250%
Death Benefit Option................... Level Level
</TABLE>
In Example A, the minimum Death Benefit equals $116,250, i.e., the greater
of $100,000 (the Face Amount) or $116,250 (the Account Value at the Date of
Death of $46,500, multiplied by the specified percentage of 250%). This amount
less any outstanding Indebtedness constitutes the Death Proceeds which We would
pay to the beneficiary.
In Example B, the death benefit is $100,000, i.e., the greater of $100,000
(the Face Amount) or $85,000 (the Account Value of $34,000 multiplied by the
specified percentage of 250%).
All or part of the Death Proceeds may be paid in cash or applied under a
"Payment Option." See "Other Matters -- Payment Options," page 28.
INCREASES AND DECREASES IN FACE AMOUNT
At any time after the Guarantee Period, You may request a change in the Face
Amount by writing to Us.
The minimum Face Amount for an increase or decrease will be based on Our
rules then in effect.
All requests to increase the Face Amount must be applied for on a new
application and accompanied by the Policy. All requests will be subject to
evidence of insurability satisfactory to Us. Any increase approved by Us will be
effective on the date shown on the new Policy specifications page provided that
the deduction for the cost of insurance for the first month is made. The monthly
administrative fee on the first Monthly Activity Date on or after the effective
date of the increase will reflect a charge for the increase.
A decrease in the Face Amount will be effective on the Monthly Activity Date
following the date we receive the request. The remaining Face Amount must not be
less than Our minimum rules then in effect. Decreases will be applied:
(a) to the most recent increase; then
(b) successively to each prior increase; and then
(c) to the initial Face Amount.
If You ask to decrease Your Face Amount below the initial Face Amount, We
will deduct a portion of any remaining Surrender Charge from Your Account Value.
This will be done on a Pro Rata Basis. Your Surrender Charge will be reduced by
the same amount.
The amount of the reduction will be equal to:
(a) the initial Face Amount minus the requested Face Amount, times
(b) the Surrender Charge on the date of the request to change the Face Amount,
divided by
(c) the initial Face Amount.
We reserve the right to limit the number of increases or decreases made
under the Policy to no more than one in any 12 month period.
- ---------------------------------------------------
BENEFITS AT MATURITY
If the Insured is living on the "Maturity Date" (the anniversary of the
Policy Date on which the Insured is attained age 100), on surrender of the
Policy to Hartford, Hartford will pay to the Policy Owner the Cash Surrender
Value. On the Maturity Date, the Policy will terminate and Hartford will have no
further obligations under the Policy.
- ---------------------------------------------------
LAPSE AND REINSTATEMENT
POLICY SURPLUS
We use the Policy Surplus to determine whether or not a Policy will
terminate if Scheduled Premiums are not paid when due. If the Policy Surplus is
greater than zero for a Policy Year, the Scheduled Premiums may not be required.
If, however, the Policy Surplus for a Policy Year during the Guarantee Period is
zero, all Scheduled Premiums due in that year are required.
Here is how We determine the Policy Surplus.
The Policy Surplus for the first Policy Year is zero.
The Policy Surplus for each subsequent Policy Year is (a) minus (b), but
never less than zero where:
(a) is the Account Value at the end of the previous Policy Year; and
(b) is the Target Account Value for the previous Policy Year. The Target Account
Values are shown in the Policy.
Once determined for a given Policy Year, the Policy Surplus remains constant
for the entire Policy Year.
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
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LAPSE AND GRACE PERIOD
During the Guarantee Period: If, on any given Monthly Activity Date the
Policy Surplus for that Policy Year is zero or less than the Indebtedness, all
Scheduled Premiums due in that Policy Year, on or before that date are required
to keep the Policy in force. For any such required Scheduled Premium not paid on
or before its due date, We will allow a grace period which ends 61 days after
that Monthly Activity Date. During this time the Policy will continue in force.
If any such required Scheduled Premium is not paid by the end of this grace
period, the Policy will terminate except as provided under the non-forfeiture
options or unless You have elected the Automatic Premium Loan Option and there
is sufficient Cash Value to cover the amounts due.
After the Guarantee Period: The Policy may terminate 61 days after a Monthly
Activity Date on which the Cash Surrender Value is less than zero. The 61-day
period is the grace period. If sufficient premium is not paid by the end of the
grace period, the Policy will terminate without value. The Company will mail the
Policy Owner and any assignee written notice of the amount of premium that will
be required to continue the Policy in force at least 61 days before the end of
the grace period. The premiums required will be no greater then the amount
required to pay three Monthly Deduction Amounts as of the day the grace period
began. If that premium is not paid by the end of the grace period, the Policy
will terminate.
REINSTATEMENT
Prior to the death of the Insured, and unless the Policy has been
surrendered for cash, the Policy may be reinstated prior to the Maturity Date,
provided:
(a) You make Your request within five years;
(b) satisfactory evidence of insurability is submitted;
(c) You pay all overdue required Scheduled Premiums, if any; and
(d) if, at the time of reinstatement, the Guarantee Period has expired, and, if
the amount paid in is insufficient to reinstate the Policy, sufficient
premium must be paid to:
(i) cover all Monthly Deduction Amounts that are due and unpaid during the
grace period, and
(ii) keep the Policy in force for three months after the date of
reinstatement.
The Face Amount of the reinstated Policy cannot exceed the Face Amount at
the time of lapse. The Account Value on the reinstatement date will reflect:
(a) The Account Value at the time of termination; plus
(b) Net Premiums attributable to premiums paid at the time of reinstatement;
minus
(c) a charge to reflect the benefits, if any, provided under the extended term
or reduced paid-up options.
The Surrender Charges for the reinstated Policy will be the same as they
would have been on the original Policy had no lapse and subsequent reinstatement
taken place.
Upon reinstatement, any Indebtedness at the time of termination must be
repaid or carried over to the reinstated Policy.
AUTOMATIC PREMIUM LOAN OPTION
If You elect this option, We will automatically process a Policy loan to pay
any Scheduled Premium which is due and not paid by the end of its grace period
following the due date. You may elect this option in the application or by
requesting it In Writing while no Scheduled Premium is outstanding beyond its
due date. In most states, Automatic Premium Loans will be treated as Preferred
Loans.
The Automatic Premium Loan Option will not be available if:
(a) You have revoked the election In Writing; or
(b) the loan amount needed to pay any unpaid Scheduled Premium would exceed the
Cash Surrender Value on the most recent Scheduled Premium due date.
In either instance, the surrender/continuation options will apply as of the
end of the grace period.
In most states, if You have outstanding Indebtedness pursuant to this
option, Hartford will allow You to restore the Death Benefit at the end of the
Guarantee Period to the amount that it would have equaled had no Indebtedness
been incurred pursuant to this option. In such case, Hartford will not require
You to provide evidence of insurability. To accomplish this removal of
Indebtedness, Hartford will reduce Your Account Value, and the amount of
Indebtedness outstanding at the end of the Guarantee Period, by the sum of the
Policy loan incurred pursuant to the Automatic Premium Loan Option, plus all
interest accrued thereon. There will be no reduction in the Face Amount of Your
Policy as a result of this adjustment.
If You have outstanding Indebtedness pursuant to the Automatic Premium Loan
Option at the end of the Guarantee Period and You have not previously elected to
restore the Death Benefit at the end of a Guarantee Period as described above,
Hartford will assume that You have elected to restore the Death Benefit at the
end of the Guarantee Period then in effect. Hartford will notify You at least
thirty days prior to the Policy Anniversary occurring at the end of such
Guarantee Period that it will make such adjustment unless You instruct Hartford
not to make this adjustment.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 17
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THE RIGHT TO EXAMINE OR EXCHANGE THE POLICY
An applicant has a limited right to return a Policy for cancellation. If the
Policy is returned, by mail or personal delivery to Hartford or to the agent who
sold the Policy, to be canceled within ten days after delivery of the Policy to
the Policy Owner, within 10 days of Hartford's mailing or personal delivery of a
Notice of Right to Withdraw or within 45 days of completion of the Policy
application (whichever is later, and subject to applicable state regulation),
Hartford will return to the applicant, within seven days thereafter, the greater
of the premium paid, less any Indebtedness, or the sum of (1) the Account Value,
less any Indebtedness, on the date the returned Policy is received by Hartford
or its agent and (2) any deductions under the Policy or by the Funds for taxes,
charges or fees.
Once the Policy is in effect, it may be exchanged during the first 24 months
after its issuance, for a non-variable life insurance policy offered by Us or an
affiliate on the life of the Insured. No evidence of insurability will be
required. The new policy will have an amount at risk which equals or is less
than the amount ar risk in effect on the date of exchange. Premiums under the
new policy will be based on the same risk classifications as this Policy. An
exchange of the Policy under these circumstances should be a tax-free
transaction under Section 1035 of the Internal Revenue Code.
- ---------------------------------------------------
SURRENDER/CONTINUATION OPTIONS
At any time prior to the Maturity Date, provided the Policy has a Cash
Surrender Value, You may choose to have the Cash Surrender Value applied under
one of the following options:
OPTION A -- Surrender for Cash
OPTION B -- Continue as Extended Term Insurance
OPTION C -- Continue as Paid-Up Insurance
In addition, if during the Guarantee Period:
(a) a Scheduled Premium which is required is not paid by the end of the grace
period; and
(b) the Automatic Premium Loan Option is not elected or not available due to
insufficient Cash Surrender Value,
You may choose one of the above options. You may notify Us of Your choice In
Writing within 61 days after the due date of the outstanding Scheduled Premium.
In the absence of such notification, We will automatically apply the Cash
Surrender Value to option B unless the insurance class shown in your Policy is
"special" in which case the automatic option will be option C. If the Policy has
no Cash Surrender Value, it will terminate at the end of the grace period.
WHEN EFFECTIVE -- The effective date of this benefit will be the earlier of:
(a) the date We receive Your request; or
(b) the end of the grace period.
When a surrender/continuation option becomes effective, all benefit riders
attached to the Policy will terminate unless otherwise provided in the rider.
OPTION DESCRIPTIONS
OPTION A -- Surrender for Cash
If You choose this option, You must surrender the Policy to Us. We will pay
You the Cash Surrender Value at the time of surrender, and Our liability under
the Policy will cease.
OPTION B -- Continue as Extended Term Insurance.
This option is not available unless the insurance class shown in the Policy
is "standard" or "preferred." If you choose this option, the extended term
insurance Death Benefit will be the Death Benefit in effect on the effective
date of the non-forfeiture benefit less any Indebtedness. The term period will
begin on the effective date of this benefit and will extend for a period of time
equal to that which the Cash Surrender Value will provide as a net single
premium at the Insured's then Attained Age. At the end of that term period, Our
liability under the Policy will cease. We will pay You any Cash Surrender Value
not used to provide extended term insurance.
OPTION C -- Continue as Paid-Up Insurance.
If You choose this option, the Policy will continue as paid-up life
insurance. The amount of paid-up life insurance will be calculated using the
Cash Surrender Value of the Policy as a net single premium as of the effective
date of this benefit at the then Attained Age of the Insured. The Company
reserves the right to require evidence of insurability or limit the amount of
the benefit if the paid-up amount exceeds the Death Benefit in effect on the
effective date of this benefit. We will pay You any Cash Surrender Value not
used to provide paid-up insurance.
If the Policy is continued under option B or option C above, the Cash
Surrender Value available within 30 days after any Policy Anniversary will not
be less than the Cash Value on such Policy Anniversary minus any Indebtedness.
- ---------------------------------------------------
VALUATION OF PAYMENTS AND TRANSFERS
We value the Policy on every Valuation Day.
We will pay Death Proceeds, Cash Surrender Values, partial withdrawal
proceeds, and loan amounts attributable to the Sub-Accounts within seven (7)
days after We receive
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
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all the information needed to process the payment unless the New York Stock
Exchange is closed for other than a regular holiday or weekend, trading is
restricted by the Securities and Exchange Commission (SEC) or that the SEC
declares that an emergency exists.
Hartford may defer payment of any amounts not attributable to the
Sub-Accounts for up to six months from the date on which we receive the request.
- ---------------------------------------------------
APPLICATION FOR A POLICY
Individuals wishing to purchase a Policy must submit an application to
Hartford. Within limits, an applicant may choose the Scheduled Premiums and the
initial Face Amount and the Guarantee Period. Policies generally will be issued
only on the lives of Insureds age 80 and under who supply evidence of
insurability satisfactory to Hartford. Acceptance is subject to Hartford's
underwriting rules and Hartford reserves the right to reject an application for
any reason. No change in the terms or conditions of a Policy will be made
without the consent of the Policy Owner.
The Policy will be effective on the Policy Date only after Hartford has
received all outstanding delivery requirements and received the initial premium.
The Policy Date is the date used to determine all future cyclical transactions
on the Policy, e.g., Monthly Activity Date and Policy Years.
- ---------------------------------------------------
REDUCED CHARGES FOR ELIGIBLE GROUPS
Certain of the charges and deductions described below may be reduced for
Policies issued in connection with a specific plan in accordance with Our rules
in effect as of the date an application for a Policy is approved. To qualify for
such a reduction, a plan must satisfy certain criteria as to, for example, size
of the plan, expected number of participants and anticipated premium payment
from the plan. Generally, the sales contacts and effort, administrative costs
and mortality cost per Policy vary based on such factors as the size of the
plan, the purposes for which Policies are purchased and certain characteristics
for the plan's members. The amount of reduction and the criteria for
qualification will reflect in the reduced sales effort and administrative costs
resulting from, and the different mortality experience expected as a result of,
sales to qualifying plans. We may modify from time to time on a uniform basis
both the amounts of reductions and the criteria for qualification. Reductions in
these charges will not be unfairly discriminatory against any person, including
the affected Policy Owners invested in the Separate Account.
- ---------------------------------------------------
DEDUCTIONS FROM THE PREMIUM
Before the allocation of the premium payment to the Account Value, a
deduction as a percentage of premium is made for the front-end sales load and
premium taxes. The amount of each premium allocated to the Account Value is Your
Net Premium.
FRONT END SALES LOAD
The front-end sales load portion of the premium deduction is based on the
level of Scheduled Premiums, the length of the Guarantee Period, and the amount
of any Unscheduled Premiums paid.
The maximum front-end sales load percentages for Policies are 50% of the
premiums paid in the first Policy Year, 11% in Policy Years 2 through 10, and 3%
in Policy Years 11 and later.
For all Guarantee Periods, the maximum amount of premium paid in any Policy
Year that is subject to a front-end sales load is the Guideline Annual Premium.
In addition, if Scheduled Premiums are less than the Guideline Annual Premiums,
the maximum amount of premium paid in the first Policy Year subject to a
front-end sales load is the Scheduled Premium.
The actual schedule of front-end sales loads for any given Policy is
specified in that Policy.
Generally, the shorter the Guarantee Period, the lower the front-end sales
loads. The levels range from those for the ten-year Guarantee Period cited above
to 0% on a contract with a One Year Guarantee Period. However, there are other
contractual charges that are lower for longer Guarantee Periods. See "Summary --
Guarantee Period," page 7, for a further description.
For an example of the effect of Front-End Sales Loads, see "-- Deductions
and Charges from the Account Value -- Examples of Front-End Sales Loads and
Surrender Charges," page 20.
PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover premium-based taxes assessed
against Hartford by a state or other governmental entity. This percentage will
vary by locale depending on the tax rates in effect there. The range is
generally between 0% and 4%.
- ---------------------------------------------------
DEDUCTIONS AND CHARGES FROM
THE ACCOUNT VALUE
MONTHLY DEDUCTION AMOUNTS
On the Policy Date and on each subsequent Monthly Activity Date, Hartford
will deduct an amount (the "Monthly Deduction Amount") from the Account Value to
cover certain charges and expenses incurred in connection with a Policy. Each
Monthly Deduction Amount will be deducted on a Pro Rata Basis from the Fixed
Account and each of the Sub-Accounts. The Monthly Deduction Amount will vary
from month to month.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
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The Monthly Deduction Amount equals:
(a) the charge for the cost of insurance; plus
(b) the charges for additional benefits provided by rider, if any; plus
(c) the charges for "special" insurance class rating, if any; plus
(d) the monthly administrative fee; plus
(e) the mortality and expense risk charge
(a)COST OF INSURANCE CHARGE
The charge for the cost of insurance is equal to:
(i) the cost of insurance rate per $1,000; multiplied by
(ii) the amount at risk; divided by
(iii) $1,000
The amount at risk equals the Death Benefit less the Account Value on that
date, prior to assessing the Monthly Deduction Amount.
The cost of insurance charge is to cover Hartford's anticipated mortality
costs. For standard risks, the cost of insurance rate will not exceed those
based on the 1980 Commissioners Standard Ordinary Mortality Table. A table
of guaranteed cost of insurance rates per $1,000 will be included in each
Policy; however, Hartford reserves the right to use rates less than those
shown in the table. Substandard risks will be charged a higher cost of
insurance rate that will not exceed rates based on a multiple of the 1980
Commissioners Standard Ordinary Mortality Table. The multiple will be based
on the Insured's risk class. Hartford will determine the cost of insurance
rate at the start of each Policy Year. Any changes in the cost of insurance
rate will be made uniformly for all Insureds in the same risk class.
Because the Account Value and the Death Benefit Amount under a Policy may
vary from month to month, the cost of insurance charge may also vary on each
Monthly Activity Date.
(b)RIDER CHARGE
If the Policy includes riders, a charge is made applicable to the riders
from the Account Value on each Monthly Activity Date.
The charge applicable to these riders is to compensate Hartford for
anticipated cost of providing these benefits and are specified on the
applicable rider.
The riders available are described on page 29 under "Supplemental
Benefits" section.
(c)SPECIAL CLASS CHARGE
A charge for a special insurance class rating of the Insured may be made
against the Account Value, if applicable. This charge is to compensate
Hartford for the additional mortality risk associated with individuals in
these classes.
(d)
MONTHLY ADMINISTRATIVE FEE AND OTHER EXPENSE CHARGES
AGAINST SUB-ACCOUNTS
Hartford will assess a monthly administrative charge to compensate
Hartford for administrative costs in connection with the Policies. This
charge will be $8.33 per month initially and is guaranteed never to exceed
that level during the Guarantee Period. After the Guarantee Period, this
charge is guaranteed never to exceed $12.00 per month. This charge covers
the average expected cost for these expenses.
In addition, in the first Policy Year, there is a monthly first year
charge to compensate Hartford for the up-front costs to underwrite and issue
a policy. This additional first year charge, subject to certain maximums, is
equal to $8.33 per month plus an amount that varies by issue age and the
initial Face Amount (IFA). This additional first Policy Year charge and the
maximums are summarized in the chart below for some sample ages.
<TABLE>
<CAPTION>
MAXIMUM MONTHLY
ISSUE AGE ADDITIONAL FIRST YEAR MONTHLY CHARGE AMOUNT
- --------- ---------------------------------------- ---------------
<C> <S> <C>
25 $8.33 plus $.0333 per $1,000 of IFA $ 50.00
35 $8.33 plus $.0375 per $1,000 of IFA $ 54.17
45 $8.33 plus $.0417 per $1,000 of IFA $ 62.50
55 $8.33 plus $.0625 per $1,000 of IFA $ 62.50
65 $8.33 plus $.0708 per $1,000 of IFA $ 62.50
</TABLE>
(e)MORTALITY AND EXPENSE RISK CHARGE
A charge is made for mortality and expense risks assumed by Hartford. This
charge is allocated to Hartford's general account. Hartford may profit from
this charge. See, also, "-- Cash Values," page 12.
The mortality and expense risk charge for any Monthly Activity Date is
equal to:
(i) the mortality and expense risk rate; multiplied by
(ii) the portion of the Account Value allocated to the Sub-Account on the
Monthly Activity Date prior to assessing the Monthly Deduction Amount.
During the first twenty Policy Years, the longer the Guarantee Period, the
lower the mortality and expense risk charge rate. Specifically, for Policy
Years one through twenty, the mortality and expense risk charge rate ranges
from 1.40% annually for a Policy with a one-year Guarantee Period, and
decreases as the length of the Guarantee Period increases, to .60% on a
Policy with a ten-year Guarantee Period. After the twentieth Policy Year,
the mortality and expense risk charge rate for all Policies will equal .60%
annually. There are
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
other contractual charges that are higher for longer Guarantee Periods. See
"Summary -- Guarantee Period," page 7, for a fuller description.
The mortality risk assumed is that the actual cost of insurance charges
specified in the Policy will be insufficient to meet actual claims. Hartford
also assumes the risk of the Death Benefit Guarantee during the Guarantee
Period. See "-- Death Benefit -- Death Benefit Guarantee," page 14. The
expense risk assumed is that expenses incurred in issuing and administering
the Policies will exceed the administrative charges set in the Policy.
For Policies with a one-year Guarantee Period, Hartford also incurs an
expense risk that the costs associated with distributing the Policies will
be greater than the proceeds from any sales charges deducted under the
Policies.
SURRENDER CHARGES
A Surrender Charge is assessed against the Account Value of a Policy if the
Policy lapses or is surrendered during the first nine Policy Years. The amount
of the Surrender Charge applicable during the first Policy Year is established
by Hartford based on the premiums paid during the first Policy Year and the
length of the Guarantee Period chosen by the Policy Owner. Subject to certain
limits imposed by state insurance law, the Surrender Charge decreases by an
equal amount each Policy Year until it reaches zero during the tenth Policy
Year.
Specifically, the maximum first year Surrender Charge under a Policy is
equal to the sum of (i) a specified percentage of the Scheduled Premium up to
the Guideline Annual Premium and (ii) 5% of the excess, of the first year
premium over the Guideline Annual Premium. The longer the Guarantee Period, the
higher the percentage is which is used in the preceding calculation. This
percentage is equal to 110% with respect to Policies with a ten-year Guarantee
Period and decreases as the Guarantee Period chosen decreases to 10% for
Policies with a one-year Guarantee Period. However, there are other contractual
charges that are lower for longer Guarantee Periods. See "Summary -- Guarantee
Period," page 7, for a fuller description.
The actual schedule of Surrender Charges for any given Policy is set forth
in that Policy. In addition, sales agents will provide, upon request, the
schedule of Surrender Charges which would apply under any given circumstances.
Generally, the total sales load under the Policy will not exceed 180% of the
Guideline Annual Premium, or 9% of the sum of the Guideline Annual Premium that
would be paid over a 20-year period. In cases where the anticipated life
expectancy of the Insured named in the Policy is less than 20 years, the total
sales load will not exceed 9% of the sum of the Guideline Annual Premiums for
the shorter period.
For an example of the effect of Surrender Charges, see "-- Examples of
Front-End Sales Loads and Surrender Charges," below.
EXAMPLES OF FRONT-END SALES LOADS AND SURRENDER CHARGES
An example of the actual front-end sales loads and Surrender Charge schedule
as well as and the impact of the sales load refund, if any, (see "-- Cash Values
- -- Load Refund," page 12), for a Policy with a ten-year Guarantee Period is
shown below. This example uses the same specific information (i.e., Issue Age,
Face Amount, premium level, etc.) as the illustration on page of this
Prospectus.
<TABLE>
<S> <C>
Death Benefit Option: Level
Face Amount: $250,000
Guarantee Period: 10 years
Charges Assumed: Current
Issue Age/Sex/Class: 45/Male/Preferred
Scheduled Premium: $4,000.00 per year
Guideline Annual Premium: $4,819.38
Assumed Gross Annual Investment Return: 0%
</TABLE>
The "Total Cumulative Sales Load If Surrendered" column on the far right
represents the sum of all loads which would have been assessed since the issue
of the Policy assuming a surrender of the Policy at the end of the corresponding
Policy Year.
This is:
a) The sum of the Cumulative Front-End Sales Load, plus
b) The actual Surrender Charge for that Policy Year, minus
c) The Sales Load Refund, if any, applicable to that Policy year. (See "-- Cash
Values -- Load Refund," page 12.)
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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Additional Charges/Credits if Surrendered -- Ten Year Guarantee Period
<TABLE>
<CAPTION>
SURRENDER CHARGES
- ---------------------------------------------------------------------------------------
CUMULATIVE TOTAL
FRONT-END MAXIMUM YEAR END ACTUAL SALES CUMULATIVE
POLICY SALES SURRENDER ACCOUNT SURRENDER LOAD SALES LOAD IF
YEAR LOAD CHARGE VALUE CHARGE REFUND SURRENDERED**
- ---------- ----------- ----------- --------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 2,000 4,400 1,232 1,232 2,032 1,200
2 2,440 3,911 4,074 3,911 4,590 1,791
3 2,880 3,422 6,764 3,422 0 6,302
4 3,320 2,933 9,345 2,933 0 6,253
5 3,760 2,444 11,843 2,444 0 6,204
6 4,200 1,956 14,274 1,956 0 6,156
7 4,640 1,467 16,645 1,467 0 6,107
8 5,080 978 18,971 978 0 6,058
9 5,520 489 21,246 489 0 6,009
10 5,960 0 23,456 0 0 5,960
11 6,080 0 25,850 0 0 6,080
</TABLE>
*The Actual Surrender Charge assessed is the smaller of:
a) The contractual maximum surrender charge, or
b) Policy Year-End Account Value
**Assumes a surrender of the Policy at the end of that Policy Year
An example of the actual Front-End Sales Loads and Surrender Charge schedule
as well as the impact of the sales load refund, if any, (see "-- Cash Values --
Load Refund," page 12) for a Policy with a one-year Guarantee Period is shown
below. This example uses the same specific information (i.e., Issue Age, Face
Amount, premium level) as the illustration on page of this Prospectus.
<TABLE>
<S> <C>
Death Benefit Option: Level
Face Amount: $250,000
Guarantee Period: 1 Year
Charges Assumed: Current
Issue Age/Sex/Class: 45/Male/Preferred
Scheduled Premium: $4,000.00 per year
Guideline Annual Premium: $4,819.38
Assumed Hypothetical Gross Annual Investment
Return: 0%
</TABLE>
The "Total Cumulative Sales Load If Surrendered" column on the far right
represents the sum of all loads which would have been assessed since the issue
of the Policy assuming a surrender of the Policy at the end of the corresponding
Policy Year.
This is:
a) The sum of the Cumulative Front-End Sales Load, plus
b) The Actual Surrender Charge for that Policy Year, minus
c) The Sales Load Refund, if any, applicable to that Policy Year. (See "-- Cash
Values -- Load Refund," page 12.)
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Additional Charges/Credits if Surrendered -- One Year Guarantee Period
<TABLE>
<CAPTION>
SURRENDER CHARGES
- ---------------------------------------------------------------------------------------
CUMULATIVE TOTAL
FRONT-END MAXIMUM YEAR END ACTUAL SALES CUMULATIVE
POLICY SALES SURRENDER ACCOUNT SURRENDER LOAD SALES LOAD IF
YEAR LOAD CHARGE VALUE CHARGE REFUND SURRENDERED**
- ---------- ----------- ----------- --------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 0 400 3169 400 0 400
2 0 355 6361 355 0 355
3 0 311 9381 311 0 311
4 0 267 12273 267 0 267
5 0 222 15067 222 0 222
6 0 178 17780 178 0 178
7 0 133 20422 133 0 133
8 0 89 23008 89 0 89
9 0 44 25529 44 0 44
10 0 0 27976 0 0 0
11 0 0 30273 0 0 0
</TABLE>
*The Actual Surrender Charge assessed is the smaller of:
a) The contractual maximum surrender charge, or
b) Policy Year-End Account Value
**Assumes a surrender of the Policy at the end of that Policy Year
CHARGES AGAINST THE FUNDS
The investment advisers charge the Funds a daily investment management fee
as compensation for services. The following Table shows the fee charged for each
Fund available for investment by Policy Owners.
<TABLE>
<CAPTION>
ANNUAL INVESTMENT MANAGEMENT AS A
HARTFORD FUNDS PERCENTAGE OF AVERAGE DAILY NET ASSETS
- -------------------------------------------------------------------------- --------------------------------------------------------
<S> <C>
Hartford Capital Appreciation Fund, Inc.
Hartford Advisers Fund, Inc.
Hartford International Opportunities Fund, Inc.
Hartford Dividend and Growth Fund, Inc.................................. .575% of the first $250 million of average net assets
.525% of the next $250 million of average net assets
.475% of the next $250 million of average net assets
.425% of any amount over $1.0 billion
Hartford Bond Fund, Inc.
Hartford Stock Fund, Inc................................................ .325% of the first $250 million of average net assets
.300% of the next $250 million of average net assets
.275% of the next $250 million of average net assets
.250% of any amount over $1.0 billion
Hartford Index Fund, Inc.................................................. .20% of average net assets
Hartford Mortgage Securities Fund, Inc.
HVA Money Market Fund, Inc.............................................. .25% of average net assets
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL INVESTMENT MANAGEMENT AS A
PUTNAM FUNDS PERCENTAGE OF AVERAGE DAILY NET ASSETS
- -------------------------------------------------------------------------- --------------------------------------------------------
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT High Yield Fund
Putnam VT New Opportunities Fund
Putnam VT Utilities Growth and Income Fund
Putnam VT Voyager Fund.................................................. .70% of the first $500 million of average net assets
.60% of the next $500 million of average net assets
.55% of the next $500 million of average net assets
.50% of the next $5 billion of average net assets
.0475% of the next $5 billion of average net assets
.455% of the next $5 billion of average net assets
.44% of the next $5 billion of average net assets
.43% of any excess thereafter
<S> <C>
Putnam VT Money Market Fund............................................... .45% of the first $500 million of average net assets
.35% of the next $500 million of average net assets
.30% of the next $500 million of average net assets
.25% of the next $5 billion of average net assets
.225% of the next $5 billion of average net assets
.205% of the next $5 billion of average net assets
.19% of the next $5 billion of average net assets
.18% of any excess thereafter
Putnam VT Growth and Income Fund
Putnam VT U.S. Government and High Quality Bond Fund.................... .65% of the first $500 million of average net assets
.55% of the next $500 million of average net assets
.50% of the next $500 million of average net assets
.45% of the next $5 billion of average net assets
.425% of the next $5 billion of average net assets
.405% of the next $5 billion of average net assets
.39% of the next $5 billion of average net assets
.38% of any excess thereafter
Putnam VT Global Growth Fund.............................................. .60% of average net assets
<CAPTION>
ANNUAL INVESTMENT MANAGEMENT AS A
FIDELITY FUNDS PERCENTAGE OF AVERAGE DAILY NET ASSETS
- -------------------------------------------------------------------------- --------------------------------------------------------
<S> <C>
VIP Equity-Income Portfolio............................................... .52%
VIP Overseas Portfolio.................................................... .77%
VIP II Asset Manager Portfolio............................................ .72%
</TABLE>
TAXES
Currently, no charge is made to the Separate Account for federal, state, and
local taxes that may be attributable to the Separate Account. A change in the
applicable federal, state or local tax laws which impose tax on Hartford and/or
the Separate Account may result in a charge against the Policy in the future.
Charges for other taxes, if any, attributable to the Separate Account may also
be made.
- ---------------------------------------------------
THE COMPANY
Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing health and life insurance, both
individual and group, in all states of the United States and the District of
Columbia. Hartford was originally incorporated under the laws of Massachusetts
on June 5, 1902, and was subsequently redomiciled to Connecticut. Its offices
are located in Simsbury, Connecticut; however, its mailing address is P.O. Box
2999, Hartford, CT 06104-2999. Hartford is a subsidiary of Hartford Fire
Insurance Company, one of the largest multiple lines insurance carriers in the
United States. Hartford is ultimately owned by ITT Hartford Group, Inc., a
Delaware corporation. Subject to shareholder approval on May 2, 1997, the name
of ITT Hartford Group, Inc. will change to The Hartford Financial Services
Group, Inc.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. Hartford 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's ability to
meet its insurance obligations, including those described in this Prospectus.
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- ---------------------------------------------------
SEPARATE ACCOUNT VL I
- -------------------------------- GENERAL
The Separate Account is a separate account of Hartford established on
September 18, 1992 pursuant to the insurance laws of the State of Connecticut
and organized as a unit investment trust registered with the Securities and
Exchange Commission under the Investment Company Act of 1940. Under Connecticut
law, the assets of the Separate Account are held exclusively for the benefit of
Policy Owners and persons entitled to payments under the Policies. The assets
for the Separate Account are not chargeable with liabilities arising out of any
other business which Hartford may conduct.
- ---------------------------------------------------
FUNDS
The assets of each Sub-Account of the Separate Account are invested
exclusively in one of the Funds. A Policy Owner may allocate Net Premiums among
the Sub-Accounts. Policy Owners should review the following brief descriptions
of the investment objectives of each of the Funds in connection with that
allocation. There is no assurance that any Fund will achieve its stated
objectives. Policy Owners are also advised to read the prospectus for each of
the Funds accompanying this Prospectus for more detailed information.
HARTFORD FUNDS
HARTFORD ADVISERS FUND, INC.
Seeks maximum long term total rate of return consistent with prudent
investment risk by investing in common stock and other equity securities, bonds
and other debt securities, and money market instruments.
HARTFORD BOND FUND, INC.
Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets of
this Fund may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's Investor Services, Inc. or "BB" by Standard &
Poor's) or, if unrated, are determined to be of comparable quality by the Fund's
investment adviser. Securities rated below investment grade are commonly
referred to as "high yield-high risk securities" or "junk bonds." For more
information concerning the risks associated with investing in such securities,
please refer to the section in each of the accompanying prospectuses for the
Hartford Funds entitled "Hartford Bond Fund, Inc. -- Investment Policies."
HARTFORD CAPITAL APPRECIATION FUND, INC.
Seeks growth of capital by investing in securities selected solely on the
basis of potential for capital appreciation; income, if any, is an incidental
consideration.
HARTFORD DIVIDEND AND GROWTH FUND, INC.
Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
HARTFORD INDEX FUND, INC.
Seeks to provide investment results which approximate the price and yield
performance of publicly-traded common stocks in the aggregate, as represented by
the Standard & Poor's 500 Composite Stock Price Index.*
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
Seeks long-term total rate of return consistent with prudent investment risk
through investment primarily in equity securities issued by non-U.S. companies.
HARTFORD MORTGAGE SECURITIES FUND, INC.
Seeks maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related securities,
including securities issued by the Government National Mortgage Association.
HARTFORD STOCK FUND, INC.
Seeks long-term capital growth primarily through capital appreciation, with
income as a secondary consideration, by investing primarily in equity
securities.
HVA MONEY MARKET FUND, INC.
Seeks maximum current income consistent with liquidity and preservation of
capital.
PUTNAM FUNDS
PUTNAM VT DIVERSIFIED INCOME FUND
Seeks high current income consistent with capital preservation by investing
in the following three sections of the fixed income securities markets: a U.S.
Government Sector, a High Yield Sector (which invests primarily in what are
commonly referred to as "junk bonds"), and an International Sector. See the
special considerations for investments in high yield securities described in the
Fund prospectus accompanying this 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.
* "STANDARD & POOR'S-REGISTERED TRADEMARK-", "S&P-REGISTERED TRADEMARK-", "S&P
500-REGISTERED TRADEMARK-", "STANDARD & POOR'S 500", AND "500" ARE TRADEMARKS
OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD
LIFE INSURANCE COMPANY. THE HARTFORD INDEX FUND, INC. ("INDEX FUND") IS NOT
SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND STANDARD
&POOR'S MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE
INDEX FUND.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Seeks capital appreciation through a globally diversified portfolio of
common stocks.
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.
PUTNAM VT HIGH YIELD FUND
Seeks high current income by investing primarily in high-yielding,
lower-rated fixed income securities (commonly known as "junk bonds"),
constituting a diversified portfolio which 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 accompanying this Prospectus.
PUTNAM VT MONEY MARKET FUND
Seeks to achieve as high rate 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 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 a nationally recognized security rating agency
such as Standard & Poor's or Moody's Investor Services, Inc. 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 VOYAGER FUND
Seeks capital appreciation primarily from a portfolio of common stocks of
companies that Putnam Management believes have potential for capital
appreciation that is significantly greater than that of market averages.
FIDELITY VIP FUNDS
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Seeks reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the Portfolio will also consider the
potential for capital appreciation. The Portfolio's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the Standard &
Poor's Daily Stock Price Index of 500 Common Stocks.
In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of lower-rated
securities, see "Risks of Lower-Rated Debt Securities" in the Fidelity
prospectus for this Portfolio.
FIDELITY VIP OVERSEAS PORTFOLIO
Seeks long-term growth of capital primarily through investments in foreign
securities and provides a means for aggressive investors to diversify their own
portfolios by participating in companies and economies outside of the United
States.
In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of lower-rated
securities, see "Risks of Lower-Rated Debt Securities" in the Fidelity
prospectus for this Portfolio.
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Seeks high total return with reduced risk over the long-term by allocating
its assets among stocks, bonds and short-term fixed-income instruments.
In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of lower-rated
securities, see "Risks of Lower-Rated Debt Securities" in the Fidelity
prospectus for this Portfolio.
The Hartford Funds are organized as corporations under the laws of the State
of Maryland and are registered as diversified open-end management companies
under the Investment Company Act of 1940. The Putnam Funds are portfolios of the
Putnam Variable Trust, which is organized as a business trust under the laws of
Massachusetts and is an open-end series investment company under the Investment
Company Act of 1940. The Fidelity VIP Funds are a series of two diversified
open-end management investment companies, each with multiple portfolios and
organized as a Massachusetts business trust. The VIP Equity-Income Portfolio and
the VIP Overseas Portfolio are portfolios of the Variable Insurance Products
Fund. The VIP II Asset Manager Portfolio is a portfolio of the Variable
Insurance
<PAGE>
26 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Products Fund II. Each Fund continually issues an unlimited number of full and
fractional shares of beneficial interest in the Fund. Such shares are offered to
separate accounts, including the Separate Account, established by Hartford or
one of its affiliated companies specifically to fund the Policies and other
policies issued by Hartford or its affiliates as permitted by the Investment
Company Act of 1940.
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Funds simultaneously. Although neither Hartford nor the Funds
currently foresee any such disadvantages either to variable life insurance
policy owners or to variable annuity policy owners, the Board of Directors
intend for the Hartford Funds and the Board of Trustees for the Putnam Funds,
and the Board of Trustees for the Fidelity Funds (collectively the "Board") to
monitor events in order to identify any material conflicts between such Policy
Owners and to determine what action, if any, should be taken in response
thereto. If the Boards were to conclude that separate funds should be
established for variable life and variable life insurance separate accounts,
Hartford will bear the attendant expenses.
All investment income of and other distributions to each Sub-Account of the
Separate Account arising from the applicable Fund are reinvested in shares of
that Fund at net asset value. The income and both realized gains or losses on
the assets of each Sub-Account of the Separate Account are therefore separate
and are credited to or charged against the Sub-Account without regard to income,
gains or losses from any other Sub-Account or from any other business of
Hartford. Hartford will purchase shares in the Funds in connection with premium
payments allocated to the applicable Sub-Account in accordance with Policy
Owners directions and will redeem shares in the Funds to meet Policy obligations
or make adjustments in reserves, if any. The Funds are required to redeem Fund
shares at net asset value and generally to make payment within seven days.
Hartford reserves the right, subject to compliance with the law as then in
effect, to make additions to, deletions from, or substitutions for the Separate
Account and its Sub-Accounts which fund the Policies. If shares of any of the
Funds should no longer be available for investment, or if, in the judgment of
Hartford's management, further investment in shares of any Fund should become
inappropriate in view of the purposes of the Policies, Hartford may substitute
shares of another Fund for shares already purchased, or to be purchased in the
future, under the Policies. No substitution of securities will take place
without notice to and consent of Policy Owners and without prior approval of the
Securities and Exchange Commission to the extent required by the Investment
Company Act of 1940. Subject to Policy Owner approval, if required, Hartford
also reserves the right to end the registration under the Investment Company Act
of 1940 of the Separate Account or any other separate accounts of which it is
the depositor which may fund the Policies.
Each Fund is subject to certain investment restrictions which may not be
changed without the approval of a majority of the shareholders of the Fund. See
the prospectus for each of the Funds accompanying this Prospectus.
- ---------------------------------------------------
INVESTMENT ADVISER
HARTFORD FUNDS
The investment adviser for each of the Hartford Funds is HL Investment
Advisors, Inc. ("HL Advisors"), Hartford Plaza, Hartford, Connecticut 06115. HL
Advisors provides investment advice and, in general, supervises the management
and investment program of the Hartford Funds pursuant to an Investment Advisory
Agreement entered into with each of these Funds, for which HL Advisors receives
a fee.
HL Advisors has entered into an investment services agreement with HIMCO, an
affiliate of Hartford organized under Connecticut law, pursuant to which HIMCO
provides certain investment services to Hartford Bond Fund, Hartford Index Fund,
Hartford Mortgage Securities Fund and HVA Money Market Fund.
Wellington Management serves as the investment sub-adviser to Hartford
Advisers Fund, Hartford Capital Appreciation Fund, Hartford Dividend and Growth
Fund, Hartford International Opportunities Fund and Hartford Stock Fund.
Wellington Management is a professional investment counseling firm which
provides investment services to investment companies, other institutions and
individuals. Wellington Management is organized as a private Massachusetts
partnership and its predecessor organizations have provided investment advisory
services to investment companies since 1933 and to investment counseling clients
since 1960. See the accompanying prospectus for each of the Hartford Funds for a
more complete description of HL Advisors, HIMCO and Wellington Management, and
their respective fees.
PUTNAM FUNDS
Putnam Management, One Post Office Square, Boston, Massachusetts, 02109,
serves as the investment manager for the Putnam Funds. An affiliate, 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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
FIDELITY VIP FUNDS
The Fidelity VIP Funds are managed by Fidelity Management & Research Company
("Fidelity Management"), whose principal business address is 82 Devonshire
Street, Boston, Massachusetts. Fidelity Management is one of America's largest
investment management organizations. It is composed of a number of different
companies, which provide a variety of financial services and products. Fidelity
Management is the original Fidelity company, founded in 1946. It provides a
number of mutual funds and other clients with investment research and portfolio
management services. Various Fidelity companies perform certain activities
required to operate Variable Insurance Products Fund and Variable Insurance
Products Fund II.
- ---------------------------------------------------
THE FIXED ACCOUNT
THAT PORTION OF THE POLICY 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 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 Cash Values allocated to the Fixed Account become a
part of the general assets of Hartford. Hartford invests the assets of the
general account in accordance with applicable law governing the investments of
insurance company general accounts.
The Fixed Account Minimum Credited Rate is shown in the Policy. Currently,
Hartford guarantees that it will credit interest at a rate of not less than 4%
per year, compounded annually, to amounts allocated to the Fixed Account under
the Policies. Hartford may credit interest at a rate in excess of the Fixed
Account Minimum Credited Rate, however, Hartford is not obligated to credit any
interest in excess of the Fixed Account Minimum Credited Rate. 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 THE FIXED ACCOUNT MINIMUM CREDITED RATE WILL BE DETERMINED IN THE SOLE
DISCRETION OF THE COMPANY. THE POLICY OWNER ASSUMES THE RISK THAT INTEREST
CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE FIXED ACCOUNT MINIMUM
CREDITED RATE.
- ---------------------------------------------------
OTHER MATTERS
- -------------------------------- VOTING RIGHTS
In accordance with its view of presently applicable law, Hartford will vote
the shares of the Funds at regular and special meetings of the shareholders of
the Funds in accordance with instructions from Policy Owners (or the assignee of
the Policy, as the case may be) having a voting interest in the Separate
Account. The number of shares held in the Separate Account which are
attributable to each Policy Owner is determined by dividing the Policy Owner's
interest in each Sub-Account by the net asset value of the applicable shares of
the Funds. Hartford will vote shares for which no instructions have been given
and shares which are not attributable to Policy Owners (i.e., shares owned by
Hartford) in the same proportion as it votes shares for which it has received
instructions. If the Investment Company Act of 1940 or any rule promulgated
thereunder should be amended, however, or if Hartford's present interpretation
should change and, as a result, Hartford determines it is permitted to vote the
shares of the Funds in its own right, it may elect to do so.
The voting interests of the Policy Owner (or the assignee) in the Funds will
be determined as follows: Policy Owners may cast one vote for each full or
fractional Accumulation Unit owned under the Policy and allocated to a
Sub-Account the assets of which are invested in the particular Fund on the
record date for the shareholder meeting for that Fund. If, however, a Policy
Owner has taken a loan secured by the Policy, amounts transferred from the Sub-
Account(s) to the Loan Account(s) in connection with the Indebtedness (see
"Detailed Description of Policy Benefits and Provisions -- Policy Loans," page
13) will not be considered in determining the voting interests of the Policy
Owner. Policy Owners should review the prospectuses for the Funds which
accompany this Prospectus to determine matters on which shareholders may vote.
Hartford may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to cause a change in the sub-classification or investment objective
of one or more of the Funds or to approve or disapprove an
<PAGE>
28 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
investment advisory policy for the Funds. In addition, Hartford itself may
disregard voting instructions in favor of changes initiated by a Policy Owner in
the investment policy or the investment adviser of the Funds if Hartford
reasonably disapproves of such changes. A change would be disapproved only if
the proposed change is contrary to state law or prohibited by state regulatory
authorities. In the event Hartford does disregard voting instructions, a summary
of that action and the reasons for such action will be included in the next
periodic report to Policy Owners.
- ---------------------------------------------------
STATEMENTS TO POLICY OWNERS
We will send You a statement at least once each Policy Year, showing:
(a) the current Account Value, Cash Value and Face Amount;
(b) the premiums paid, Monthly Deduction Amounts and loans since the last
report;
(c) the amount of any Indebtedness;
(d) notifications required by the provisions of the Policy; and
(e) any other information required by the insurance department of the state
where the Policy was delivered
- ---------------------------------------------------
LIMIT ON RIGHT TO CONTEST
Hartford may not contest the validity of the Policy after it has been in
effect during the Insured's lifetime for two years from the Issue Date. If the
Policy is reinstated, the two-year period is measured from the date of
reinstatement. Any increase in the Face Amount as a result of a premium payment
is contestable for two years from its effective date. In addition, if the
Insured commits suicide in the two-year period, or such period as specified in
state law, the benefit payable will be limited to the premiums paid less any
Indebtedness and partial withdrawals.
- ---------------------------------------------------
MISSTATEMENT AS TO AGE
If the age of the Insured is incorrectly stated, the amount of Death Benefit
will be appropriately adjusted as specified in the Policy.
- ---------------------------------------------------
PAYMENT OPTIONS
Proceeds under the Policies may be paid in a lump sum or may be applied to
one of Hartford's payment options. The minimum amount that may be placed under a
payment option is $5,000 unless Hartford consents to a lesser amount. Once
payments under options 2, 3 or 4 commence, no surrender of the Policy may be
made for the purpose of receiving a lump sum settlement in lieu of the life
insurance payments. The following options are available under the Policies.
FIRST OPTION -- Interest Income
Payments of interest at the rate we declare, but not less than 3 1/2% per
year, on the amount applied under this option.
SECOND OPTION -- Income of Fixed Amount
Equal payments of the amount chosen until the amount applied under this
option, with interest of not less than 3 1/2% per year, is exhausted. The final
payment will be for the balance remaining.
THIRD OPTION -- Payments for a Fixed Period
An amount payable monthly for the number of years selected which may be from
1 to 30 years.
FOURTH OPTION -- Life Income
LIFE ANNUITY -- an annuity payable monthly during the lifetime of the
annuitant and terminating with the last monthly payment due preceding the
death of the annuitant.
LIFE ANNUITY WITH 120 MONTHLY PAYMENTS CERTAIN -- an annuity providing
monthly income to the annuitant for a fixed period of 120 months and for as
long thereafter as the annuitant shall live.
The Tables in the Policy provide for guaranteed dollar amounts of monthly
payments for each $1,000 applied under the four payment options. Under the
fourth option, the amount of each payment will depend upon the age of the
annuitant at the time the first payment is due. If any periodic payment due any
payee is less than $200, Hartford may make payments less often.
The Table for the fourth option is based on the 1983 Individual Annuity
Mortality Table set back one year and a net investment rate of 3.5% per annum.
The Tables for the first, second and third options are based on a net investment
rate of 3.5% per annum. Hartford may, however, from time to time, at our
discretion if mortality appears more favorable and interest rates justify, apply
other tables which will result in higher monthly payments for each $1,000
applied under one or more of the four payment options.
Hartford will make any other arrangements for income payments as may be
agreed on.
- ---------------------------------------------------
BENEFICIARY
The applicant names the beneficiary in the application for the Policy. The
Policy Owner may change the beneficiary (unless irrevocably named) during the
Insured's lifetime by
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
written request to Hartford. If no beneficiary is living when the Insured dies,
the Death Proceeds will be paid to the Policy Owner if living; otherwise to the
Policy Owner's estate.
- ---------------------------------------------------
ASSIGNMENT
The Policy may be assigned as collateral for a loan or other obligation.
Hartford is not responsible for any payment made or action taken before receipt
of written notice of such assignment. Proof of interest must be filed with any
claim under a collateral assignment.
- ---------------------------------------------------
DIVIDENDS
No dividends will be paid under the Policies.
- ---------------------------------------------------
SUPPLEMENTAL BENEFITS
The following supplemental benefits, which are subject to the restrictions
and limitations set forth therein, may be included in a Policy.
- ---------------------------------------------------
DEDUCTION AMOUNT WAIVER RIDER
Subject to certain age and underwriting restrictions, the Policy may include
a Deduction Amount Waiver Rider. This rider provides for the waiver of the
Policy's Monthly Deduction Amounts in the event of total disability prior to the
Insured reaching Attained Age 65 and continuing for at least six months. The
number of Monthly Deduction Amounts waived depends on the Insured's Attained Age
when the disability began. If this rider is added, the Monthly Deduction Amounts
will be increased to include the charges for this rider.
- ---------------------------------------------------
ACCIDENTAL DEATH BENEFIT RIDER
Subject to certain age and underwriting requirements, the Policy may include
an Accidental Death Benefit Rider.
This rider provides for an increase in the amount paid upon the death of the
Insured if the death results from an accident.
If this rider is added, the Monthly Deduction Amounts will be increased to
include the charges for this rider.
- ---------------------------------------------------
INCREASE IN COVERAGE OPTION RIDER
Subject to certain age and underwriting requirements, the Policy may include
an Increase in Coverage Option Rider.
This rider gives the Owner the guaranteed right to purchase a new flexible
premium variable life insurance policy on the life of the Insured, without
evidence of insurability, if certain conditions are met. These conditions
include:
1. the original Policy has been in force for five years,
2. the Insured's Attained Age is less than 80, and
3. the Account Value of the original Policy is sufficient to "pay-up" the
policy under assumptions defined in the rider.
The Face Amount of the new policy will be equal to the Face Amount times a
percentage. This percentage depends on the Insured's age, sex (except where
unisex rates are used), and insurance class. The Scheduled Premium fee for the
new policy is based on the Scheduled Premium for the original policy.
- ---------------------------------------------------
MATURITY DATE EXTENSION RIDER
We will extend the Maturity Date (the date on which the Policy will mature)
to the date of the Insureds' death, regardless of the age of the Insured.
Certain Death Benefit and premium restrictions apply. See "Federal Tax
Considerations -- Income Taxation of Policy Benefits," page 32.
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH HARTFORD LIFE, OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- ------------------------------ ------------------------------------- ------------------------------------------------------------
<S> <C> <C>
Wendell J. Bossen 63 Vice President, 1992** President (1992-Present), International Corporate Marketing
Group, Inc.; Executive Vice President (1984-1992), Mutual
Benefit.
Gregory A. Boyko 45 Vice President, 1995 Vice President & Controller (1995-Present), Hartford; Chief
Financial Officer (1994-1995), IMG American Life; Senior
Vice President (1992-1994), Connecticut Mutual Life
Insurance Company.
Peter W. Cummins 60 Vice President, 1989 Vice President, Individual Annuity Operations
(1989-Present), Hartford.
Ann M. deRaismes 46 Vice President, 1994 Vice President (1994-Present); Assistant Vice President
(1992-1994); Director of Human Resources (1991-1997),
Hartford.
Timothy M. Fitch 44 Vice President, 1995 Actuary (1997-Present); Vice President (1995-Present);
Actuary, 1997 Assistant Vice President (1993-1995); Director
(1991-1993), Hartford.
Bruce D. Gardner 46 Vice President, 1996 Vice President (1996-Present); General Counsel and Corporate
Director, 1994* Secretary (1991-1995), Hartford.
Joseph H. Gareau 50 Executive Vice President & Senior Vice President & Chief Investment Officer
Chief Investment Officer, 1993 (1992-1993), Hartford; Senior Vice President and Chief
Director, 1993* Investment Officer (1992), Hartford Insurance Group.
J. Richard Garrett 52 Vice President, 1993 Treasurer (1994-Present), Hartford; Treasurer (1977),
Treasurer, 1977 Hartford Insurance Group.
John P. Ginnetti 51 Executive Vice President & Senior Vice President, (1988-1994), Hartford.
Director, Asset Management
Services, 1994
Director, 1988
Lynda Godkin 43 General Counsel, 1996 Associate General Counsel and Corporate Secretary
Corporate Secretary, 1995 (1995-1996); Assistant General Counsel and Secretary
(1994-1995); Counsel (1990-1994), Hartford.
Lois W. Grady 52 Vice President, 1993 Assistant Vice President (1988-1993), Hartford.
David A. Hall 43 Senior Vice President & Senior Vice President & Actuary (1992-Present), Hartford.
Actuary, 1992
Robert A. Kerzner 45 Vice President, 1994 Vice President (1994-Present); Regional Vice President
(1991-1994), Hartford.
Andrew W. Kohnke 48 Vice President, 1992 Vice President (1992-Present); Assistant Vice President
(1989-1992), Hartford.
Steven M. Maher 42 Vice President & Vice President & Actuary (1993-Present); Assistant Vice
Actuary, 1993 President (1987), Hartford.
William B. Malchodi, Jr. 46 Vice President, 1994 Vice President (1994-Present); Director of Taxes
Director of Taxes, 1992 (1992-1997), Hartford Insurance Group.
Thomas M. Marra 38 Executive Vice President & Senior Vice President & Director, Individual Life and
Director, Individual Life and Annuity Division (1993-1996); Director of Individual
Annuity Division, 1996 Annuities (1991-1993), Hartford.
Director, 1994*
Robert F. Nolan 42 Vice President, 1995 Assistant Vice President (1992-1995), Hartford; Manager
Public Relations (1986), Aetna Life and Casualty Insurance
Company.
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD LIFE, OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- ------------------------------ ------------------------------------- ------------------------------------------------------------
<S> <C> <C>
Joseph J. Noto 45 Vice President, 1989 President, and Director (1994-Present), American Maturity
Life Insurance Company.
Leonard E. Odell, Jr. 52 Senior Vice President, 1994 Senior Vice President (1994-Present); Vice President and
Director, 1994* Chief Actuary (1982-1994), Hartford.
Craig D. Raymond 36 Vice President, 1993 Assistant Vice President (1992-1993); Actuary (1989-1994),
Chief Actuary, 1994 Hartford.
Lowndes A. Smith 57 President & Chief Operating President & Chief Operating Officer (1989-Present),
Officer, 1989 Hartford.
Director, 1981*
Edward J. Sweeney 40 Vice President, 1993 Chicago Regional Manager (1985-1993), Hartford.
Raymond P. Welnicki 48 Senior Vice President & Senior Vice President & Director, Employee Benefit Division,
Director, Employee Benefit (1994-Present) Vice President (1993-1994), Hartford; Board
Division, 1994 of Directors, Ethix Corp.
Director, 1994*
Walter C. Welsh 50 Vice President, 1995 Assistant Vice President (1993-1995), Hartford.
James J. Westervelt 50 Senior Vice President & Senior Vice President & Group Controller (1994-Present);
Group Controller, 1994 Vice President and Group Controller (1989-1994), Hartford
Insurance Group.
Lizabeth H. Zlatkus 38 Vice President, 1994 Vice President (1994-Present); Assistant Vice President
Director, 1994* (1992-1994), Hartford.
<FN>
- ------------------------
* Denotes date of election to Board of Directors.
** ITT Hartford Affiliated Company.
</TABLE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
- ---------------------------------------------------
DISTRIBUTION OF THE POLICIES
Hartford intends to sell the Policies in all jurisdictions where it is
licensed to do business. The Policies will be sold by life insurance sales
representatives who represent Hartford and who are registered representatives of
Hartford Equity Sales Company, Inc. ("HESCO"), 200 Hopmeadow Street, Simsbury,
Connecticut 06089, or certain other registered Broker-Dealers. Any sales
representative or employee will have been qualified to sell variable life
insurance policies under applicable Federal and State laws. Each Broker-Dealer
is registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 and all are members of the National Association of
Securities Dealers, Inc. HESCO is the principal underwriter for the Policies.
During the first Policy Year, the maximum sales commission payable to Hartford
agents, independent registered insurance brokers, and other registered Broker-
Dealers is 45% of the premiums paid up to a target premium and 5% of any excess.
In Policy Years 2 through 10, agent commissions will not exceed 5.5% of premiums
paid. For Policy Years 11 and later, the agent commissions will not exceed 2% of
the premiums paid. In addition, expense allowances may be paid. The sales
representative may be required to return all or a portion of the commissions
paid if the Policy terminates prior to the second Policy Anniversary.
- ---------------------------------------------------
SAFEKEEPING OF THE SEPARATE
ACCOUNT'S ASSETS
The assets of the Separate Account are held by Hartford. The assets of the
Separate Account are kept physically segregated and held separate and apart from
the general account of Hartford. Hartford maintains records of all purchases and
redemptions of shares of the Funds. Additional protection for the assets of the
Separate Account is afforded by Hartford's blanket fidelity bond issued by Aetna
Casualty and Surety Company, in the aggregate amount of $50 million, covering
all of the officers and employees of Hartford.
- ---------------------------------------------------
FEDERAL TAX CONSIDERATIONS
- -------------------------------- GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE POLICY OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE POLICY IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY
<PAGE>
32 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
CONTEMPLATING THE PURCHASE OF A POLICY DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Policies 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. This discussion of federal tax
considerations is based upon Hartford's understanding of existing federal income
tax laws as they are currently interpreted.
- ---------------------------------------------------
TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment income
and realized capital gains on the assets of the Separate Account (the underlying
Funds) are reinvested and are taken into account in determining the value of the
Accumulation Units As a result, such investment income and realized capital
gains are automatically applied to increase reserves under the Policy. (See
"Detailed Description of Policy Benefits and Provisions -- Premiums --
Accumulation Unit Values," page 12).
Hartford does not expect to incur any federal income tax on the earnings or
realized capital gains attributable to the Separate Account. Based upon this
expectation, no charge is currently being made to the Separate Account for
federal income taxes. If Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for such taxes against the Separate Account.
- ---------------------------------------------------
INCOME TAXATION OF POLICY BENEFITS
For federal income tax purposes, the Policies should be treated as life
insurance policies under Section 7702 of the Code. The death benefit under a
life insurance policy is generally excluded from the gross income of the
beneficiary. Also, a life insurance Policy Owner is generally not taxed on
increments in the policy value until the Policy is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a Policy that is treated as life insurance. Hartford intends to monitor premium
levels to assure compliance with the Section 7702 requirements.
Hartford also believes that any loan received under a Policy will be treated
as Indebtedness of the Policy Owner, and that no part of any loan under a Policy
will constitute income to the Policy Owner. A surrender or assignment of the
Policy may have tax consequences depending upon the circumstances. Policy Owners
should consult a qualified tax adviser concerning the effect of such changes.
During the first fifteen Policy Years, an "income first" rule generally
applies to distributions of cash required to be made under Code Section 7702
because of a reduction in benefits under the Policy.
The Maturity Date Extension Rider allows a Policy Owner to extend the
Maturity Date to the date of the death of the insured. If the Maturity Date of
the Policy is extended by rider, Hartford believes that the Policy will continue
to be treated as a life insurance contract for federal income tax purposes after
the scheduled Maturity Date. However, due to the lack of specific guidance on
this issue, the result is not certain. If the Policy is not treated as a life
insurance contract for federal income tax purposes after the scheduled Maturity
Date, among other things, the Death Proceeds may be taxable to the recipient.
The Policy Owner should consult a qualified tax adviser regarding the possible
adverse tax consequences resulting from an extension of the scheduled Maturity
Date.
- ---------------------------------------------------
MODIFIED ENDOWMENT CONTRACTS
Code Section 7702A applies an additional test, the "seven-pay" test, to life
insurance contracts. The seven-pay test provides that premiums cannot be paid at
a rate more rapidly than that allowed by the payment of seven annual premiums
using specified computational rules described in Section 7702A(c). A modified
endowment contract ("MEC") is a life insurance policy that either: (i) satisfies
the Section 7702 definition of life insurance, but fails the seven-pay test of
Section 7702A or (ii) is exchanged for a MEC.
If the Policy satisfies the seven-pay test at issuance, distributions and
loans made thereafter will not be subject to the MEC rules, unless the Policy is
changed materially. The seven-pay test will be applied anew at any time the
Policy undergoes a material change, which includes an increase in the Face
Amount. In addition, if there is a reduction in benefits under the Policy within
the first seven years, the seven-pay test is applied as if the Policy had
initially been issued at the reduced benefit level. Any reduction in benefits
attributable to the nonpayment of premiums will not be taken into account for
purposes of the seven-pay test if the benefits are reinstated within 90 days
after the reduction.
A policy that is classified as a MEC is eligible for certain aspects of the
beneficial tax treatment accorded to life insurance. That is, the death benefit
is excluded from income and increments in value are not subject to current
taxation. However, if the contract is classified as a MEC then withdrawals from
the contract will be considered first as withdrawals of income and then as a
recovery of premium
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
payments. Thus, withdrawals will be includible in income to the extent the
contract value exceeds the investment in the contract. The amount of any loan
(including unpaid interest thereon) under the contract will be treated as a
withdrawal from the contract for tax purposes. In addition, if the Owner assigns
or pledges any portion of the value of a contract (or agrees to assign or pledge
any portion), then such portion will be treated as a withdrawal from the
contract for tax purposes. Taxable withdrawals are subject to an additional 10%
tax, with certain exceptions. The Owner's investment in the contract is
increased by the amount includible in income with respect to such assignment,
pledge, or loan, though it is not affected by any other aspect of the
assignment, pledge, or loan (including its release or repayment).
Generally, only distributions and loans made in the first year in which a
policy becomes a MEC, and in subsequent years, are taxable. However,
distributions and loans made in the two years prior to a policy's failing the
seven-pay test are deemed to be in anticipation of failure and are subject to
tax.
Before assigning, pledging, or requesting a loan under a contract that is a
MEC, an Owner should consult a qualified tax adviser.
All MEC policies that are issued within any calendar year to the same policy
owner by one company or its affiliates are treated as one MEC policy for the
purpose of determining the taxable portion of any loan or distribution.
Hartford has instituted procedures to monitor whether a Policy may become
classified as a MEC after issue.
- ---------------------------------------------------
ESTATE AND GENERATION SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includible in
the Policy Owner's estate for purposes of federal estate tax if the Insured
owned the Policy. If the Policy Owner was not the Insured, the fair market value
of the Policy would be included in the Policy Owner's estate upon the Policy
Owner's death. The Policy would not be includible in the Insured's estate if the
Insured neither retained incidents of ownership at death nor had given up
ownership within three years before death.
Federal estate tax is integrated with federal gift tax under a unified rate
schedule. In general, estates of less than $600,000 will not incur a federal
estate tax liability. In addition, an unlimited marital deduction may be
available for federal estate and gift tax purposes. The unlimited marital
deduction permits the deferral of taxes until the death of the surviving spouse.
If the Policy Owner (whether or not he or she is the Insured) transfers
ownership of the Policy to someone two or more generations younger, the transfer
may be subject to the generation skipping transfer tax, the taxable amount being
the value of the Policy. The generation-skipping transfer tax provisions
generally apply to transfers which would be subject to the gift and estate tax
rules. Individuals are generally allowed an aggregate generation skipping
transfer exemption of $1 million. Because these rules are complex, the Policy
Owner should consult with a qualified tax adviser for specific information if
ownership is passing to younger generations.
- ---------------------------------------------------
DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable life insurance contract
(other than a pension plan policy) will not be treated as a life insurance
contract for any period during which the investments made by the separate
account or underlying fund are not adequately diversified in accordance with
regulations prescribed by the Treasury Department. If a Policy is not treated as
a life insurance contract, the Policy 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 policy income on an ongoing basis. However, either the company or
the Policy Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford intends
to administer all contracts subject to the diversification requirements in a
manner that will maintain adequate diversification.
<PAGE>
34 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- ---------------------------------------------------
OWNERSHIP OF THE ASSETS IN
THE SEPARATE ACCOUNT
In order for a variable life insurance 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.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
Prospectus, no other such guidance has been issued. Further, Hartford does not
know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Policy Owner could be considered the owner of
the assets for tax purposes. Hartford reserves the right to modify the Policies,
as necessary, to prevent Policy Owners from being considered the owners of the
assets in the separate accounts.
- ---------------------------------------------------
LIFE INSURANCE PURCHASED FOR USE IN
SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM")
on the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
- ---------------------------------------------------
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Policy Owner,
such amounts will be subject to federal income tax withholding and reporting,
pursuant to the Code.
- ---------------------------------------------------
NON-INDIVIDUAL OWNERSHIP OF POLICIES
Legislation has recently been proposed which would limit certain of the tax
advantages now afforded non-individual owners of life insurance contracts.
Prospective Policy Owners which are not individuals should consult a qualified
tax adviser to determine the status of this proposed legislation and its
potential impact on the purchaser.
- ---------------------------------------------------
OTHER
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Policy proceeds depend on the
circumstances of each Policy Owner or beneficiary. A qualified tax adviser
should be consulted to determine the impact of these taxes.
- ---------------------------------------------------
LIFE INSURANCE PURCHASES BY NONRESIDENT
ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to life insurance 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 taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
- ---------------------------------------------------
LEGAL PROCEEDINGS
There are no pending material legal proceedings to which the Separate
Account is a party.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
- ---------------------------------------------------
EXPERTS
The audited consolidated financial statements and financial statement
schedules included in this Prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports. Reference is made to said report on the consolidated financial
statements of Hartford Life Insurance Company (the Depositor), which includes an
explanatory paragraph with respect to the change in method of accounting for
debt and equity securities as of January 1, 1994, as discussed in Note 2 of
Notes to Consolidated Financial Statements. The principal business address of
Arthur Andersen LLP is One Financial Plaza, Hartford, CT 06103.
The hypothetical Policy illustrations have been approved by Ken A. McCullum,
FSA, MAAA, Director of Individual Life Product Development, and are included in
this Prospectus in reliance upon his opinion as to their reasonableness.
- ---------------------------------------------------
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended. This Prospectus does not
contain all information set forth in the registration statement, its amendments
and exhibits, to all of which reference is made for further information
concerning the Separate Account, Hartford, and the Policies.
- ---------------------------------------------------
LEGAL MATTERS
Legal matters in connection with the issue and sale of the flexible premium
variable life insurance polices described in this Prospectus and the
organization of Hartford, its authority to issue the Policies under Connecticut
law and the validity of the forms of the Policies under Connecticut law and
legal matters relating to the federal securities and income tax laws have been
passed on by Lynda Godkin, General Counsel of Hartford Life Insurance Companies.
<PAGE>
36 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX A
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES
AND CASH SURRENDER VALUES
The following tables illustrate how the Death Benefits, Account Values and Cash
Surrender Values of a Policy may change with the investment experience of the
Separate Account. The tables show how the Death Benefits, Account Values and
Cash Surrender Values of a Policy issued to an Insured of a given age would vary
over time if the investment return on the assets held in each Fund were a
uniform, gross annual rate of 0%, 6% and 12%. The Death Benefits, Account Values
and Cash Surrender Values would be different from those shown if the gross
annual investment returns averaged 0%, 6% and 12% over a period of years, but
fluctuated above and below those averages for individual Policy Years. The
tables assume that no Policy loans are made and that no partial withdrawals have
been made. The tables are also based on the assumption that the Owner has not
requested an increase or decrease in the Face Amount and that no fund transfers
have been made in any Policy Year.
The tables on pages 37 to 45 illustrate a Policy issued to a Male Insured,
Age 45 in the Preferred Premium Class with an Initial Face Amount of $250,000
and a Scheduled Premium that is paid at the beginning of each Policy Year. The
Death Benefits, Account Values and Cash Surrender Values would be lower if the
Insured was a smoker or in a special class since the cost of insurance charges
would increase.
The tables reflect the fact that the net return on the assets held in the
Sub-Accounts is lower than the gross after-tax return of the Funds. This is
because these tables assume an investment management fee and other estimated
Fund expenses totaling 0.70%. The 0.70% figure is based on an average of the
current management fees and expenses of the available twenty-two Funds, taking
into account any applicable expense caps or reimbursement arrangements. Actual
fees and expenses of the Funds associated with a Policy may be more or less than
0.70%, will vary from year to year, and will depend on how the Account Value is
allocated.
As their headings indicate, the tables reflect the deductions of current
contractual charges and guaranteed contractual charges for a single gross
interest rate. These charges include the monthly charge to the Account for
assuming mortality and expense risks, the monthly administrative charge, and the
monthly mortality charge. All tables assume a charge of 2.00% for taxes
attributable to premiums and reflect the fact that no charges against the
Account are currently made for federal, state or local taxes attributable to the
Policy.
Each table also shows the amount to which the premiums would accumulate if
an amount equal to those premiums were invested to earn interest, after taxes,
at 5% compounded annually.
Upon request, Hartford will furnish a comparable illustration based on a
proposed Policy's specific circumstances.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- --------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 3,151 2,751 250,000 3,151 2,751 250,000
2 8,610 6,310 5,955 250,000 5,882 5,526 250,000
3 13,241 9,282 8,971 250,000 8,494 8,183 250,000
4 18,103 12,112 11,846 250,000 10,986 10,719 250,000
5 23,208 14,831 14,609 250,000 13,352 13,130 250,000
6 28,568 17,457 17,280 250,000 15,583 15,405 250,000
7 34,196 20,000 19,867 250,000 17,671 17,538 250,000
8 40,106 22,475 22,386 250,000 19,605 19,516 250,000
9 46,312 24,875 24,831 250,000 21,371 21,327 250,000
10 52,827 27,190 27,190 250,000 22,957 22,957 250,000
11 59,669 29,346 29,346 250,000 24,350 24,350 250,000
12 66,852 31,337 31,337 250,000 25,539 25,539 250,000
13 74,395 33,140 33,140 250,000 26,518 26,518 250,000
14 82,314 34,761 34,761 250,000 27,268 27,268 250,000
15 90,630 36,200 36,200 250,000 27,768 27,768 250,000
16 99,361 37,345 37,345 250,000 27,990 27,990 250,000
17 108,530 38,313 38,313 250,000 27,908 27,908 250,000
18 118,156 39,100 39,100 250,000 27,479 27,479 250,000
19 128,264 39,698 39,698 250,000 26,656 26,656 250,000
20 138,877 40,098 40,098 250,000 25,392 25,392 250,000
25 200,454 40,788 40,788 250,000 11,227 11,227 250,000
30 279,043 31,885 31,885 250,000 -- -- --
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
38 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ----------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ---------- ----------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 3,361 2,961 250,000 3,361 2,961 250,000
2 8,610 6,928 6,572 250,000 6,486 6,130 250,000
3 13,241 10,507 10,196 250,000 9,669 9,358 250,000
4 18,103 14,144 13,877 250,000 12,909 12,643 250,000
5 23,208 17,869 17,647 250,000 16,203 15,980 250,000
6 28,568 21,706 21,528 250,000 19,539 19,362 250,000
7 34,196 25,664 25,531 250,000 22,913 22,780 250,000
8 40,106 29,766 29,677 250,000 26,312 26,224 250,000
9 46,312 34,008 33,964 250,000 29,726 29,681 250,000
10 52,827 38,387 38,387 250,000 33,140 33,140 250,000
11 59,669 42,835 42,835 250,000 36,543 36,543 250,000
12 66,852 47,351 47,351 250,000 39,926 39,926 250,000
13 74,395 51,916 51,916 250,000 43,282 43,282 250,000
14 82,314 56,539 56,539 250,000 46,594 46,594 250,000
15 90,630 61,226 61,226 250,000 49,844 49,844 250,000
16 99,361 65,881 65,881 250,000 53,008 53,008 250,000
17 108,530 70,614 70,614 250,000 56,062 56,062 250,000
18 118,156 75,428 75,428 250,000 58,971 58,971 250,000
19 128,264 80,327 80,327 250,000 61,692 61,692 250,000
20 138,877 85,315 85,315 250,000 64,188 64,188 250,000
25 200,454 116,776 116,776 250,000 73,949 73,949 250,000
30 279,043 153,444 153,444 250,000 69,025 69,025 250,000
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,000 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ---------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200 3,571 3,171 250,000 3,571 3,171 250,000
2 8,610 7,571 7,215 250,000 7,116 6,760 250,000
3 13,241 11,834 11,523 250,000 10,945 10,634 250,000
4 18,103 16,434 16,167 250,000 15,085 14,818 250,000
5 23,208 21,434 21,212 250,000 19,560 19,338 250,000
6 28,568 26,894 26,716 250,000 24,395 24,217 250,000
7 34,196 32,870 32,736 250,000 29,619 29,486 250,000
8 40,106 39,427 39,339 250,000 35,262 35,173 250,000
9 46,312 46,621 46,577 250,000 41,358 41,313 250,000
10 52,827 54,505 54,505 250,000 47,944 47,944 250,000
11 59,669 63,082 63,082 250,000 55,066 55,066 250,000
12 66,852 72,426 72,426 250,000 62,779 62,799 250,000
13 74,395 82,603 82,603 250,000 71,152 71,152 250,000
14 82,314 93,717 93,717 250,000 80,251 80,251 250,000
15 90,630 105,877 105,877 250,000 90,156 90,156 250,000
16 99,361 119,136 119,136 250,000 100,957 100,957 250,000
17 108,530 133,714 133,714 254,356 112,762 112,762 250,000
18 118,156 149,615 149,615 277,077 125,694 125,694 250,000
19 128,264 166,878 166,878 301,046 139,896 139,896 252,371
20 138,877 185,619 185,619 326,385 155,302 155,302 273,077
25 200,454 318,737 318,737 497,708 256,840 256,840 401,056
30 279,043 524,886 524,886 739,645 401,491 401,491 565,763
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
40 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- --------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 3,625 3,175 253,625 3,625 3,175 253,625
2 9,686 7,241 6,841 257,241 6,802 6,402 256,802
3 14,896 10,647 10,297 260,647 9,838 9,488 259,838
4 20,365 13,890 13,590 263,890 12,731 12,431 262,731
5 26,109 17,001 16,751 267,001 15,475 15,225 265,475
6 32,139 19,999 19,799 269,999 18,057 17,857 268,057
7 38,471 22,893 22,743 272,893 20,470 20,320 270,470
8 45,120 25,701 25,601 275,701 22,700 22,600 272,700
9 52,101 28,414 28,364 278,414 24,731 24,681 274,731
10 59,431 31,020 31,020 281,020 26,548 26,548 276,548
11 67,127 33,435 33,435 283,435 28,136 18,136 278,136
12 75,208 35,652 35,652 285,652 29,484 29,484 279,484
13 83,694 37,641 37,641 287,641 30,585 30,585 280,585
14 92,604 39,408 39,408 289,408 31,415 31,415 281,415
15 101,959 40,951 40,951 290,951 31,956 31,956 281,956
16 111,782 42,138 42,138 292,138 32,176 32,176 282,176
17 122,096 43,108 43,108 293,108 32,050 32,050 282,050
18 132,926 43,855 43,855 293,855 31,535 31,535 281,535
19 144,297 44,370 44,370 294,370 30,585 30,585 280,585
20 156,237 44,645 44,645 294,645 29,159 29,159 279,159
25 225,511 44,242 44,242 294,242 14,241 14,241 264,241
30 313,924 32,894 32,894 282,894 -- -- --
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ----------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ---------- ----------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 3,864 3,414 253,864 3,864 3,414 253,864
2 9,686 7,943 7,543 257,943 7,491 7,091 257,491
3 14,896 12,041 11,691 262,041 11,180 10,830 261,180
4 20,365 16,201 15,901 266,201 14,928 14,628 264,928
5 26,109 20,454 20,204 270,454 18,727 18,477 268,727
6 32,139 24,820 24,620 274,820 22,565 22,365 272,565
7 38,471 29,310 29,160 279,310 26,431 26,281 276,431
8 45,120 33,946 33,846 283,946 30,307 30,207 280,307
9 52,101 38,722 38,672 288,722 34,175 34,125 284,175
10 59,431 43,629 43,629 293,629 38,014 38,014 288,014
11 67,127 48,584 48,584 298,584 41,804 41,804 291,804
12 75,208 53,575 53,575 303,575 45,525 45,525 295,525
13 83,694 58,571 58,571 308,571 49,161 49,161 299,161
14 92,604 63,571 63,571 313,571 52,683 52,683 302,683
15 101,959 68,570 68,570 318,570 56,057 56,057 306,057
16 111,782 73,426 73,426 323,426 59,242 59,242 309,242
17 122,096 78,270 78,270 328,270 62,197 62,197 312,197
18 132,926 83,090 83,090 333,090 64,860 64,860 314,860
19 144,297 87,872 87,872 337,872 67,166 67,166 317,166
20 156,237 92,601 92,601 342,601 69,048 69,048 319,048
25 225,511 120,053 120,053 370,053 71,824 71,824 321,824
30 313,924 141,905 141,905 391,905 50,165 50,165 300,165
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
42 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,500 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ---------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,725 4,103 3,653 254,103 4,103 3,653 254,103
2 9,686 8,675 8,275 258,675 8,208 7,808 258,208
3 14,896 13,551 13,201 263,551 12,636 12,286 262,636
4 20,365 18,805 18,505 268,805 17,409 17,109 267,409
5 26,109 24,501 24,251 274,501 22,553 22,303 272,553
6 32,139 30,702 30,502 280,702 28,088 27,888 278,088
7 38,471 37,464 37,314 287,464 34,040 33,890 284,040
8 45,120 44,857 44,757 294,857 40,430 40,330 290,430
9 52,101 52,932 52,882 302,932 47,282 47,232 297,282
10 59,431 61,741 61,741 311,741 54,618 54,618 304,618
11 67,127 71,264 71,264 321,264 62,468 62,468 312,468
12 75,208 81,558 81,558 331,558 70,862 70,862 320,862
13 83,694 92,663 92,663 342,663 79,841 79,841 329,841
14 92,604 104,657 104,657 354,657 89,433 89,433 339,433
15 101,959 117,623 117,623 367,623 99,670 99,670 349,670
16 111,782 131,508 131,508 381,508 110,576 110,576 360,576
17 122,096 146,542 146,542 396,542 122,182 122,182 372,182
18 132,926 162,826 162,826 412,826 134,504 134,504 384,504
19 144,297 180,469 180,469 430,469 147,552 147,552 397,552
20 156,237 199,588 199,588 449,588 161,345 161,345 411,345
25 225,511 336,127 336,127 586,127 248,835 248,835 498,835
30 313,924 547,896 547,896 797,896 362,941 362,941 612,941
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,300 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- --------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,515 3,433 3,003 254,300 3,433 3,003 254,300
2 9,256 6,857 6,475 258,600 6,416 6,034 258,600
3 14,234 10,074 9,739 262,900 9,257 8,922 262,900
4 19,460 13,127 12,840 267,200 11,951 11,664 267,200
5 24,948 16,045 15,807 271,500 14,490 14,251 271,500
6 30,711 18,850 18,659 275,800 16,861 16,670 275,800
7 36,761 21,548 21,405 280,100 19,052 18,908 280,100
8 43,114 24,157 24,061 284,400 21,044 20,949 284,400
9 49,785 26,667 26,619 288,700 22,821 22,773 288,700
10 56,789 29,065 29,065 293,000 24,359 24,359 293,000
11 64,144 31,259 31,259 297,300 25,638 25,638 297,300
12 71,866 33,240 33,240 301,600 26,637 26,637 301,600
13 79,974 34,971 34,971 305,900 27,342 27,342 305,900
14 88,488 36,453 36,453 310,200 27,719 27,719 310,200
15 97,427 37,678 37,678 314,500 27,733 27,733 314,500
16 106,814 38,493 38,493 318,800 27,336 27,336 318,800
17 116,669 39,042 39,042 323,100 26,482 26,482 323,100
18 127,018 39,312 39,312 327,400 25,097 25,097 327,400
19 137,884 39,281 39,281 331,700 23,103 23,102 331,700
20 149,293 38,932 38,932 336,000 20,411 20,411 336,000
25 215,488 33,515 33,515 357,500 -- -- --
30 299,971 10,674 10,674 379,000 -- -- --
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
44 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,300 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30%NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ----------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ---------- ----------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,515 3,660 3,230 254,300 3,660 3,230 254,300
2 9,256 7,526 7,144 258,600 7,071 6,689 258,600
3 14,234 11,401 11,066 262,900 10,533 10,198 262,900
4 19,460 15,328 15,041 267,200 14,040 13,753 267,200
5 24,948 19,336 19,097 271,500 17,585 17,346 271,500
6 30,711 23,447 23,256 275,800 21,153 20,962 275,800
7 36,761 27,673 27,529 280,100 24,732 24,589 280,100
8 43,114 32,032 31,937 284,400 28,304 28,208 284,400
9 49,785 36,522 36,475 288,700 31,847 31,779 288,700
10 56,789 41,133 41,133 293,000 35,338 35,338 293,000
11 64,144 45,780 45,780 297,300 38,753 38,753 297,300
12 71,866 50,453 50,453 301,600 42,070 42,070 301,600
13 79,974 55,119 55,119 305,900 45,268 45,268 305,900
14 88,488 59,778 59,778 310,200 48,310 48,310 310,200
15 97,427 64,426 64,426 314,500 51,159 51,159 314,500
16 106,814 68,920 68,920 318,800 53,760 53,760 318,800
17 116,669 73,388 73,388 323,100 56,061 56,061 323,100
18 127,018 77,821 77,821 327,400 57,984 57,984 327,400
19 137,884 82,202 82,202 331,700 59,439 59,439 331,700
20 149,293 86,516 86,516 336,000 60,333 60,333 336,000
25 215,488 111,491 111,491 357,500 54,169 54,169 357,500
30 299,971 130,484 130,484 379,000 6,043 6,043 379,000
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 45
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
GUARANTEE PERIOD: 1 YEAR
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$4,300 SCHEDULED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ---------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,515 3,887 3,457 254,300 3,887 3,457 254,300
2 9,256 8,223 7,840 258,600 7,754 7,372 258,600
3 14,234 12,839 12,504 262,900 11,918 11,583 262,900
4 19,460 17,808 17,521 267,200 16,402 16,115 267,200
5 24,948 23,196 22,957 271,500 21,230 20,991 271,500
6 30,711 29,063 28,872 275,800 26,421 26,230 275,800
7 36,761 35,466 35,323 280,100 32,002 31,858 280,100
8 43,114 42,475 42,379 284,400 37,995 37,899 284,400
9 49,785 50,142 50,094 288,700 44,426 44,378 288,700
10 56,789 58,522 58,522 293,000 51,322 51,322 293,000
11 64,144 67,602 67,602 297,300 58,719 58,719 297,300
12 71,866 77,450 77,450 301,600 66,657 66,657 301,600
13 79,974 88,120 88,120 305,900 75,187 75,187 305,900
14 88,488 99,708 99,708 310,200 84,357 84,357 310,200
15 97,427 112,316 112,316 314,500 94,221 94,221 314,500
16 106,814 125,951 125,951 318,800 104,835 104,835 318,800
17 116,669 140,851 140,851 323,100 116,271 116,271 323,100
18 127,018 157,166 157,166 327,400 128,600 128,600 327,400
19 137,884 175,060 175,060 331,700 141,907 141,907 331,700
20 149,293 194,718 194,718 342,384 156,300 156,300 336,000
25 215,488 335,067 335,067 523,207 256,481 256,481 400,495
30 299,971 552,426 552,426 778,452 402,823 402,823 567,640
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Hartford Life
Insurance Company (a Connecticut corporation and wholly-owned subsidiary of
Hartford Life and Accident Insurance Company) and subsidiaries as of December
31, 1996 and 1995, and the related consolidated statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1996. These consolidated financial statements and the
schedules referred to below are the responsibility of Hartford Life Insurance
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hartford Life Insurance Company and subsidiaries as of December 31, 1996 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
As discussed in Note 2 of Notes to Consolidated Financial Statements, Hartford
Life Insurance Company adopted a new accounting standard promulgated by the
Financial Accounting Standards Board, changing its method of accounting, as of
January 1, 1994, for debt and equity securities.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in the
Index to Consolidated Financial Statements and Schedules are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not a required part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic consolidated financial statements and, in our opinion, fairly state
in all material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 10, 1997
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1996 1995 1994
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other considerations............... $1,705 $1,487 $1,100
Net investment income........................... 1,397 1,328 1,292
Net realized capital (losses) gains............. (213) (11) 7
------ ------ ------
Total Revenues................................ 2,889 2,804 2,399
------ ------ ------
Benefits, Claims and Expenses
Benefits, claims and claim adjustment
expenses....................................... 1,535 1,422 1,405
Amortization of deferred policy acquisition
costs.......................................... 234 199 145
Dividends to policyholders...................... 635 675 419
Other insurance expenses........................ 427 317 227
------ ------ ------
Total Benefits, Claims and Expenses........... 2,831 2,613 2,196
------ ------ ------
Income before income tax expense................ 58 191 203
Income tax expense.............................. 20 62 65
------ ------ ------
Net income........................................ $ 38 $ 129 $ 138
------ ------ ------
------ ------ ------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1996 1995
------- -------
<S> <C> <C>
(IN MILLIONS
EXCEPT SHARE
DATA)
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost $13,579 and $14,440)..... $13,624 $14,400
Equity securities, available for sale, at fair
value.......................................... 119 63
Policy loans, at outstanding balance............ 3,836 3,381
Mortgage loans, at outstanding balance.......... 2 265
Other investments, at cost...................... 54 156
------- -------
Total investments............................. 17,635 18,265
Cash............................................ 43 46
Premiums and amounts receivable................. 137 165
Accrued investment income....................... 407 394
Reinsurance recoverable......................... 6,066 6,221
Deferred policy acquisition costs............... 2,760 2,188
Deferred income tax............................. 474 420
Other assets.................................... 357 234
Separate account assets......................... 49,690 36,264
------- -------
Total assets.................................. $77,569 $64,197
------- -------
------- -------
Liabilities
Future policy benefits.......................... $ 2,281 $ 2,373
Other policyholder funds........................ 22,134 22,598
Other liabilities............................... 1,572 1,233
Separate account liabilities.................... 49,690 36,264
------- -------
Total liabilities............................. 75,677 62,468
------- -------
Stockholder's Equity
Common stock, $5,690 par value, 1,000 shares
authorized, issued and outstanding............. 6 6
Capital surplus................................. 1,045 1,007
Net unrealized capital gain (loss) on
investments, net of tax........................ 30 (57)
Retained earnings............................... 811 773
------- -------
Total stockholder's equity.................... 1,892 1,729
------- -------
Total liabilities and stockholder's equity...... $77,569 $64,197
------- -------
------- -------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
NET UNREALIZED
CAPITAL GAIN
(LOSS) ON TOTAL
COMMON CAPITAL INVESTMENTS, RETAINED STOCKHOLDER'S
STOCK SURPLUS NET OF TAX EARNINGS EQUITY
------ -------------- -------------- -------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
Balance, December 31, 1993.............. $6 $ 676 $ (5) $516 $1,193
Net income............................ -- -- -- 138 138
Dividends declared on common stock.... -- -- -- (10) (10)
Capital contribution.................. -- 150 -- -- 150
Change in net unrealized capital loss
on investments, net of tax(1)........ -- -- (649) -- (649)
--
------ ------ -------- ------
Balance, December 31, 1994.............. 6 826 (654) 644 822
Net income............................ -- -- -- 129 129
Capital contribution.................. -- 181 -- -- 181
Change in net unrealized capital gain
on investments, net of tax........... -- -- 597 -- 597
--
------ ------ -------- ------
Balance, December 31, 1995.............. 6 1,007 (57) 773 1,729
Net income............................ -- -- -- 38 38
Capital contribution.................. -- 38 -- -- 38
Change in net unrealized capital gain
on investments, net of tax........... -- -- 87 -- 87
--
------ ------ -------- ------
Balance, December 31, 1996.............. $6 $1,045 $ 30 $811 $1,892
--
--
------ ------ -------- ------
------ ------ -------- ------
</TABLE>
- ------------------------
(1) The 1994 change in net unrealized capital loss on investments, net of tax,
includes a gain of $91 due to the adoption of SFAS No. 115 as discussed in
Note 2(b) of Notes to Consolidated Financial Statements.
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
(IN MILLIONS)
Operating Activities
Net income............................ $ 38 $ 129 $ 138
Adjustments to net income:
Net realized capital losses (gains) on
sale of investments.................. 213 11 (7)
Net amortization of premium on fixed
maturities........................... 14 21 41
Increase in deferred income taxes..... (102) (172) (128)
Increase in deferred policy
acquisition costs.................... (572) (379) (441)
Decrease (increase) in premiums and
amounts receivable................... 10 (81) 10
Increase in accrued investment
income............................... (13) (16) (106)
(Increase) decrease in other assets... (132) (177) 101
Decrease (increase) in reinsurance
recoverable.......................... 179 (35) 75
(Decrease) increase in liability for
future policy benefits............... (92) 483 224
Increase in other liabilities......... 477 281 191
-------- -------- --------
Cash provided by operating
activities......................... 20 65 98
-------- -------- --------
Investing Activities
Purchases of fixed maturity
investments.......................... (5,747) (6,228) (9,127)
Sales of fixed maturity investments... 3,459 4,845 5,713
Maturities and principal paydowns of
fixed maturity investments........... 2,693 1,741 1,931
Net purchase of other investments..... (107) (871) (1,338)
Net sales (purchases) of short-term
investments.......................... 84 (24) 135
-------- -------- --------
Cash provided by (used for)
investing activities............... 382 (537) (2,686)
-------- -------- --------
Financing Activities
Capital contribution.................. 38 -- 150
Dividends paid........................ -- -- (10)
Net (disbursements for) receipts from
investment and universal life-type
contracts (charged from) credited to
policyholder accounts................ (443) 498 2,467
-------- -------- --------
Cash (used for) provided by
financing activities............... (405) 498 2,607
-------- -------- --------
Net (decrease) increase in cash....... (3) 26 19
Cash--beginning of year............... 46 20 1
-------- -------- --------
Cash--end of year....................... $ 43 $ 46 $ 20
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(IN MILLIONS)
- ---------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
These consolidated financial statements include Hartford Life Insurance
Company and its wholly-owned subsidiaries (the "Company"), ITT Hartford Life and
Annuity Insurance Company ("ILA") and ITT Hartford International Life
Reassurance Corporation ("HLRe"), formerly American Skandia Life Reinsurance
Corporation. The Company is a wholly-owned subsidiary of Hartford Life and
Accident Insurance Company ("HLA"), a wholly-owned subsidiary of Hartford Life,
Inc. ("Hartford Life"), a direct subsidiary of Hartford Accident and Indemnity
Company, an indirect subsidiary of ITT Hartford Group, Inc. ("The Hartford").
Hartford Life was formed on December 13, 1996 and capitalized on December 16,
1996 with the contribution of all the outstanding common stock of HLA. On
February 10, 1997, The Hartford, the ultimate parent of Hartford Life, announced
its intention to sell up to 20% of Hartford Life during the second quarter of
1997. Management believes that this transaction will not have a material impact
on the operations of the Company (See Note 11).
On December 19, 1995, ITT Industries, Inc. (formerly ITT Corporation)("ITT")
distributed all the outstanding shares of capital stock of The Hartford to ITT
stockholders of record on such date (the transactions relating to such
distribution are referred to herein as the "ITT Spin-off"). As a result of the
ITT Spin-off, The Hartford became an independent, publicly traded company.
The Company is a leading insurance and financial services company which
provides: (a) investment products such as individual variable annuities and
fixed market value adjusted annuities, deferred compensation plan services and
mutual funds for savings and retirement needs; (b) life insurance for income
protection and estate planning; and (c) employee benefits products such as
corporate owned life insurance.
- ---------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These financial statements present the financial position, results of
operations and cash flows of the Company, and all material intercompany
transactions and balances between Hartford Life Insurance Company and its
subsidiaries have been eliminated. The consolidated financial statements are
prepared on a basis of generally accepted accounting principles which differ
materially from the statutory accounting prescribed by various insurance
regulatory authorities.
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(B) CHANGES IN ACCOUNTING PRINCIPLES
On November 14, 1996, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 96-12, "Recognition of Interest Income and Balance Sheet
Classification of Structured Notes". This Issue requires companies to record
income on certain structured securities on a retrospective interest method. The
Company adopted EITF No. 96-12 for structured securities acquired after November
14, 1996. Adoption of EITF No. 96-12 did not have a material effect on the
Company's financial condition or results of operations.
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities".
This statement established criteria for determining whether transferred assets
should be accounted for as sales or secured borrowings. Subsequently, in
December 1996, the FASB issued SFAS No. 127, "Deferral of Effective Date of
Certain Provisions of FASB Statement No. 125", which defers the effective date
of certain provisions of SFAS No. 125 for one year. Adoption of SFAS No. 125 is
not expected to have a material effect on the Company's financial condition or
results of operations.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which is effective in 1996. As permitted by SFAS No. 123, the
Company continues to measure compensation costs of employee stock option plans
(relating to options on common stock of The Hartford) using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25. As of February
10, 1997, the Company had not adopted an employee stock compensation plan.
Certain officers of the Company participate in The Hartford's stock option plan.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Compensation costs allocated by The Hartford to the Company, as well as pro
forma compensation costs as determined under SFAS No. 123, were immaterial to
the results of operations for 1996 and 1995.
Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". The new standard requires,
among other things, that securities be classified as "held-to-maturity",
"available-for-sale" or "trading" based on the Company's intentions with respect
to the ultimate disposition of the security and its ability to effect those
intentions. The classification determines the appropriate accounting carrying
value (cost basis or fair value) and, in the case of fair value, whether the
fair value difference from cost, net of tax, impacts stockholder's equity
directly or is reflected in the Consolidated Statements of Income. Investments
in equity securities had previously been and continue to be recorded at fair
value with the corresponding after-tax impact included in stockholder's equity.
Under SFAS No. 115, the Company's fixed maturity investments are classified as
"available-for-sale" and, accordingly, these investments are reflected at fair
value with the corresponding impact included as a component of stockholder's
equity designated as "Net unrealized capital gain (loss) on investments, net of
tax." As with the underlying investment security, unrealized capital gains and
losses on derivative financial instruments are considered in determining the
fair value of the portfolios. The impact of adoption was an increase to
stockholder's equity of $91 million. The Company's cash flows were not impacted
by this change in accounting principle.
(C) REVENUE RECOGNITION
Revenues for universal life policies and investment products consist of
policy charges for the cost of insurance, policy administration and surrender
charges assessed to policy account balances and are recognized in the period in
which services are provided. Premiums for traditional life insurance policies
are recognized as revenues when they are due from policyholders.
(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS
Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal and
mortality assumptions appropriate at the time the policies were issued.
Liabilities for universal life-type and investment contracts are stated at
policyholder account values before surrender charges.
(E) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, including commissions and certain underwriting
expenses associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, generally 20 years. Generally, acquisition
costs are deferred and amortized using the retrospective deposit method. Under
the retrospective deposit method, acquisition costs are amortized in proportion
to the present value of expected gross profits from surrender charges,
investment, mortality and expense margins. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization for the books of business are
reestimated and readjusted by a cumulative charge or credit to income.
(F) POLICYHOLDER REALIZED CAPITAL GAINS AND LOSSES
Realized capital gains and losses on security transactions associated with
the Company's immediate participation guaranteed contracts are excluded from
revenues and deferred, since under the terms of the contracts the realized gains
and losses will be credited to policyholders in future years as they are
entitled to receive them.
(G) FOREIGN CURRENCY TRANSLATION
Foreign currency translation gains and losses are reflected in stockholder's
equity. Balance sheet accounts are translated at the exchange rates in effect at
each year end and income statement accounts are translated at the average rates
of exchange prevailing during the year. The national currencies of international
operations are generally their functional currencies.
(H) INVESTMENTS
The Company's investments in fixed maturities include bonds, redeemable
preferred stock and commercial paper which are classified as
"available-for-sale" and accordingly are carried at fair value with the
after-tax difference from cost reflected as a component of stockholder's equity
designated as "Net unrealized capital gain (loss) on investments, net of tax".
Equity securities, which include common and non-redeemable preferred stocks, are
carried at fair value with the after-tax difference from cost reflected in
stockholder's equity. Policy and mortgage loans are each carried at their
outstanding balance which approximates fair value. Investments in partnerships
and trusts are carried at cost. Net realized capital gains (losses), after
deducting the policyholders' share, are reported as a component of revenue and
are determined on a specific identification basis.
The Company's accounting policy for impairment recognition requires
recognition of an other than temporary impairment charge on a security if it is
determined that the Company is unable to recover all amounts due under the
contractual obligations of the security. In addition, the Company has
established specific criteria to be used in the
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
impairment evaluation of an individual portfolio of assets. Specifically, if the
asset portfolio is supporting a runoff operation, is forced to be liquidated
prior to maturity to meet liability commitments, and has fair value below
amortized cost, which will not materially fluctuate as a result of future
interest rate changes, then an other than temporary impairment condition has
been determined to have occurred. Each individual security within that portfolio
is evaluated to determine whether or not it is impaired. Once an impairment
charge has been recorded, the Company then continues to review the individual
impaired securities for appropriate valuation on an ongoing basis.
During 1996, it was determined that certain individual securities within the
investment portfolio supporting the Company's closed block of guaranteed rate
contracts ("Closed Book GRC") were impaired. With the initiation of certain
hedge transactions, which eliminated the possibility that the fair value of the
Closed Book GRC investments would recover to their current amortized cost, an
other than temporary impairment loss of $88 after tax was determined to have
occurred and was recorded.
(I) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses a variety of derivative financial instruments including
swaps, caps, floors, forwards and exchange traded financial futures and options
as part of an overall risk management strategy. These instruments are used as a
means of hedging exposure to price, foreign currency and/or interest rate risk
on anticipated investment purchases or existing assets and liabilities. The
Company does not hold or issue derivative financial instruments for trading
purposes. The Company's accounting for derivative financial instruments used to
manage risk is in accordance with the concepts established in SFAS No. 80,
"Accounting for Futures Contracts," SFAS No. 52, "Foreign Currency Translation",
American Institute of Certified Public Accountants Statement of Position 86-2,
"Accounting for Options", and various EITF pronouncements. Written options are,
in all cases, used in conjunction with other assets and derivatives as part of
the Company's asset/liability management strategies. Derivative instruments are
carried at values consistent with the asset or liability being hedged.
Derivatives used to hedge fixed maturities or equities are carried at fair value
with the after-tax difference from cost reflected in stockholder's equity.
Derivatives used to hedge other invested assets or liabilities are carried at
cost.
Derivatives must be designated at inception as a hedge and measured for
effectiveness both at inception and on an ongoing basis. The Company's minimum
correlation threshold for hedge designation is 80%. If correlation, which is
assessed monthly and measured based on a rolling three month average, falls
below 80%, hedge accounting will be terminated. Derivatives used to create a
synthetic asset must meet synthetic accounting criteria including designation at
inception and consistency of terms between the synthetic and the instrument
being replicated. Interest rate swaps are the primary type of derivatives used
to convert London interbank offered quotations for U.S. dollar deposits
("LIBOR") based variable rate instruments to fixed rate instruments. Synthetic
instrument accounting, consistent with industry practice, provides that the
synthetic asset is accounted for like the financial instrument it is intended to
replicate. Derivatives which fail to meet risk management criteria are marked to
market with the impact reflected in the Consolidated Statements of Income.
Gains or losses on financial futures contracts entered into in anticipation
of the future receipt of product cash flows are deferred and, at the time of the
ultimate purchase, reflected as an adjustment to the cost basis of the purchased
asset. Gains or losses on futures used in invested asset risk management are
deferred and adjusted into the cost basis of the hedged asset when the futures
contracts are closed, except for futures used in duration hedging which are
deferred and are adjusted into the cost basis on a quarterly basis. The
adjustments to the cost basis are amortized into investment income over the
remaining asset life.
Open forward commitment contracts are marked to market through stockholder's
equity. Such contracts are recorded at settlement by recording the purchase of
the specified securities at the previously committed price. Gains or losses
resulting from the termination of the forward commitment contracts before the
delivery of the securities are recognized immediately in the Consolidated
Statements of Income as a component of net investment income.
The cost of purchased options and/or premiums received on covered written
options, entered into as part of an asset/liability management strategy, is/are
adjusted into the cost basis of the underlying asset or liability and amortized
over the remaining life of the hedge. Gains or losses on expiration or
termination of the hedge are adjusted into the basis of the underlying asset or
liability and amortized over the remaining asset life. The Company had no
written options as of December 31, 1996 and 1995.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to income. Should the swap be terminated, the gain or loss is adjusted into the
basis of the asset or liability and amortized over the remaining life. Should
the hedged asset be sold or liability terminated without terminating the swap
position, any swap gains or losses are immediately recognized in earnings.
Interest rate swaps purchased in anticipation of an asset purchase (an
"anticipatory transaction") are recognized consistent with the underlying asset
components such that the settlement component is recognized in the Consolidated
Statements of Income while the change in market value is recognized as an
unrealized gain or loss.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Premiums paid on purchased floor or cap agreements and the premium received
on issued floor or cap agreements (used for risk management) are adjusted into
the basis of the applicable asset and amortized over the asset life. Gains or
losses on termination of such positions are adjusted into the basis of the asset
or liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.
Forward exchange contracts and foreign currency swaps are accounted for in
accordance with SFAS No. 52.
(J) RELATED PARTY TRANSACTIONS
Transactions of the Company with HLA and its affiliates relate principally
to tax settlements, reinsurance, insurance coverage, rental and service fees and
payment of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and employee
benefit plan expenses, are initially paid by Hartford Fire Insurance Company, an
indirect subsidiary of The Hartford ("Hartford Fire"). Direct expenses are
allocated to the Company using specific identification, and indirect expenses
are allocated using other applicable methods. Indirect expenses include those
for corporate areas which, depending on the type, are allocated based on either
a percentage of direct expenses or on utilization. Indirect expenses allocated
to the Company by Hartford Fire were $40, $45 and $41 in 1996, 1995 and 1994,
respectively. Management of the Company believes that the methods used are
reasonable. In addition, the Company was charged its share of costs allocated to
The Hartford by ITT prior to the ITT Spin-off, which were immaterial in 1995 and
1994. The Company had a receivable from The Hartford of $1 and a payable to The
Hartford of $2 at December 31, 1996 and 1995, respectively.
In 1996, the Company ceded approximately $33.3 billion of group life
insurance in force and $318 million of disability premium to HLA and assumed
$8.5 billion of individual life insurance in force from HLA.
On June 30, 1995, the ownership of ITT Lyndon Insurance Company was
transferred to the Company via a capital contribution of $181 million,
representing the net assets of the company. Also, in 1996, the Company received
a capital contribution of $37.5 million from its parent HLA.
(K) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings of the life insurance
subsidiaries of the Company. The participating insurance in force accounted for
44%, 41%, and 43% in 1996, 1995, and 1994, respectively, of total life insurance
in force.
- ---------------------------------------------------
3. INVESTMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest income................ $ 1,452 $ 1,338 $ 1,247
(Losses) income from other
investments................... (42) 1 54
--------- --------- ---------
Gross investment income........ 1,410 1,339 1,301
Less: Investment expenses...... 13 11 9
--------- --------- ---------
Net investment income.......... $ 1,397 $ 1,328 $ 1,292
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Fixed maturities............... $ (201) $ 23 $ (34)
Equity securities.............. 2 (6) (11)
Real estate and other.......... (4) (25) 47
Less: (Increase) decrease in
liability to policyholders for
realized capital gains
(losses)...................... (10) (3) 5
--------- --------- ---------
Net realized capital (losses)
gains......................... $ (213) $ (11) $ 7
--------- --------- ---------
--------- --------- ---------
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
----- ----- ---------
<S> <C> <C> <C>
Gross unrealized gains........... $ 13 $ 4 $ 2
Gross unrealized losses.......... (1) (2) (11)
--- --- ---------
Net unrealized capital gains
(losses)........................ 12 2 (9)
Deferred income tax liability
(asset)......................... 4 1 (3)
--- --- ---------
Net unrealized capital gains
(losses), after tax............. 8 1 (6)
Balance beginning of year........ 1 (6) (5)
--- --- ---------
Change in net unrealized capital
gains (losses) on investments... $ 7 $ 7 $ (1)
--- --- ---------
--- --- ---------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Gross unrealized gains..................................................................................... $ 386 $ 529
Gross unrealized losses.................................................................................... (341) (569)
Unrealized (gains) losses credited to policyholders........................................................ (11) (52)
--------- ---------
Net unrealized capital gains (losses)...................................................................... 34 (92)
Deferred income tax liability (asset)...................................................................... 12 (34)
--------- ---------
Net unrealized capital gains (losses), after tax........................................................... 22 (58)
Balance beginning of year.................................................................................. (58) (648)
--------- ---------
Change in net unrealized capital gains (losses) on investments............................................. $ 80 $ 590
--------- ---------
--------- ---------
<CAPTION>
1994
---------
<S> <C>
Gross unrealized gains..................................................................................... $ 150
Gross unrealized losses.................................................................................... (1,185)
Unrealized (gains) losses credited to policyholders........................................................ 37
---------
Net unrealized capital gains (losses)...................................................................... (998)
Deferred income tax liability (asset)...................................................................... (350)
---------
Net unrealized capital gains (losses), after tax........................................................... (648)
Balance beginning of year.................................................................................. 161
---------
Change in net unrealized capital gains (losses) on investments............................................. $ (809)
---------
---------
</TABLE>
(E) COMPONENTS OF FIXED MATURITIES INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
---------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
----------- --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)............ $ 166 $ 12 $ (3)
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed..................................................................... 1,970 161 (128)
States, municipalities and political subdivisions............................................. 373 6 (11)
International governments..................................................................... 281 12 (4)
Public utilities.............................................................................. 877 12 (8)
All other corporate including international................................................... 4,656 120 (107)
All other corporate--asset-backed............................................................. 3,601 49 (59)
Short-term investments........................................................................ 1,655 14 (21)
----------- --------- ---------
Total fixed maturities.................................................................... $ 13,579 $ 386 $ (341)
----------- --------- ---------
----------- --------- ---------
<CAPTION>
AS OF DECEMBER 31, 1995
---------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
----------- --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)............ $ 502 $ 4 $ (9)
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed..................................................................... 3,568 210 (387)
States, municipalities and political subdivisions............................................. 201 4 (3)
International governments..................................................................... 291 19 (4)
Public utilities.............................................................................. 949 29 (2)
All other corporate including international................................................... 3,065 76 (55)
All other corporate--asset-backed............................................................. 5,056 187 (109)
Short-term investments........................................................................ 808 -- --
----------- --------- ---------
Total fixed maturities.................................................................... $ 14,440 $ 529 $ (569)
----------- --------- ---------
----------- --------- ---------
<CAPTION>
FAIR
VALUE
---------
<S> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)............ $ 175
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed..................................................................... 2,003
States, municipalities and political subdivisions............................................. 368
International governments..................................................................... 289
Public utilities.............................................................................. 881
All other corporate including international................................................... 4,669
All other corporate--asset-backed............................................................. 3,591
Short-term investments........................................................................ 1,648
---------
Total fixed maturities.................................................................... $ 13,624
---------
---------
FAIR
VALUE
---------
<S> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)............ $ 497
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed..................................................................... 3,391
States, municipalities and political subdivisions............................................. 202
International governments..................................................................... 306
Public utilities.............................................................................. 976
All other corporate including international................................................... 3,086
All other corporate--asset-backed............................................................. 5,134
Short-term investments........................................................................ 808
---------
Total fixed maturities.................................................................... $ 14,400
---------
---------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
The amortized cost and fair value of fixed maturities at December 31, 1996,
by maturity, are shown below. Asset-backed securities, including mortgage-backed
securities and collateralized mortgage obligations, are distributed to maturity
year based on the Company's estimates of the rate of future prepayments of
principal over the remaining lives of such securities. These estimates are
developed using prepayment speeds reported in broker consensus data and can be
expected to vary from actual experience. Expected maturities differ from
contractual maturities due to call or prepayment provisions.
<TABLE>
<CAPTION>
MATURITY AMORTIZED COST FAIR VALUE
- -------------------------- -------------- -----------
<S> <C> <C>
One year or less.......... $ 2,632 $ 2,642
Over one year through five
years.................... 5,871 5,928
Over five years through
ten years................ 3,320 3,311
Over ten years............ 1,756 1,743
------- -----------
Total................. $ 13,579 $ 13,624
------- -----------
------- -----------
</TABLE>
Sales of fixed maturities excluding short-term fixed maturities for the
years ended December 31, 1996, 1995 and 1994 resulted in proceeds of $3,459,
$4,848 and $5,708, respectively, resulting in gross realized capital gains of
$87, $91 and $71, respectively, and gross realized capital losses (including
investment writedowns) of $298, $72 and $100, respectively, not including
policyholder gains and losses. Sales of equity securities for the years ended
December 31, 1996, 1995 and 1994 resulted in proceeds of $74, $64 and $159,
respectively, resulting in gross realized capital gains of $2, $28 and $3,
respectively, and gross realized capital losses of $0, $59 and $14,
respectively, not including policyholder gains and losses.
(F) CONCENTRATION OF CREDIT RISK
As of December 31, 1996, the Company had a reinsurance recoverable of $3.8
billion from Mutual Benefit Life Assurance Corporation ("Mutual Benefit"),
supported by assets in a security trust of $3.8 billion (including policy loans
of $3.3 billion). The risk of Mutual Benefit becoming insolvent is mitigated by
the reinsurance agreement's requirement that the assets be kept in a security
trust with the Company as sole beneficiary. Excluding investments in U.S.
government and agencies, the Company has no other significant concentrations of
credit risk in fixed maturities.
(G) DERIVATIVE INVESTMENTS
Derivatives play an important role in facilitating the management of
interest rate risk, creating opportunities to fund product obligations hedging
against indexation risks that affect the value of certain liabilities and
adjusting broad investment risk characteristics when dictated by significant
changes in market risks. As an end user of derivatives, the Company uses a
variety of derivative financial instruments, including swaps, caps, floors,
forwards and exchange traded financial futures and options in order to hedge
exposure to price, foreign currency and/or interest rate risk on anticipated
investment purchases or existing assets and liabilities. The notional amounts of
derivative contracts represent the basis upon which pay and receive amounts are
calculated and are not reflective of credit risk for derivative contracts.
Credit risk for derivative contracts is limited to the amounts calculated to be
due to the Company on such contracts. The Company believes it maintains prudent
policies regarding the financial stability and credit standing of its major
counterparties and typically requires credit enhancement provisions to further
limit its credit risk. Many of these derivative contracts are bilateral
agreements that are not assignable without the consent of the relevant
counterparty. Notional amounts pertaining to derivative financial instruments
totaled $9.9 billion and $8.8 billion at December 31, 1996 and 1995,
respectively ($7.4 billion and $7.1 billion related to life insurance
investments and $2.5 billion and $1.7 billion related to life insurance
liabilities at December 31, 1996 and 1995, respectively).
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
The following table summarizes the Company's derivatives, segregated by
major categories, as of December 31, 1996 and 1995:
<TABLE>
<CAPTION>
AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING
LIABILITY HEDGES)
--------------------------------------------------
PURCHASED
TOTAL ISSUED CAPS OPTIONS,
CARRYING & CAPS &
1996 VALUE FLOORS(C) FLOORS(D) FUTURES(E)
- ------------------------------------------------------------------------ --------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and anticipatory)... $ 5,242 $ 500 $ 2,454 $ --
Inverse floaters(a)..................................................... 352 98 856 --
Anticipatory(g)......................................................... -- -- -- 132
Other bonds and notes................................................... 7,369 425 440 5
Short-term investments.................................................. 661 -- -- --
--------- ----------- ----------- -----
Total fixed maturities.............................................. 13,624 1,023 3,750 137
Equity securities, policy loans and other investments................... 4,011 -- -- --
--------- ----------- ----------- -----
Total investments................................................... $ 17,635 $ 1,023 $ 3,750 $ 137
--------- ----------- ----------- -----
--------- ----------- ----------- -----
Total derivatives-fair value(b)..................................... $ (10) $ 35 $ --
----------- ----------- -----
----------- ----------- -----
<CAPTION>
AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING
LIABILITY HEDGES)
--------------------------------------------------
PURCHASED
TOTAL ISSUED CAPS OPTIONS,
CARRYING & CAPS &
1995 VALUE FLOORS(C) FLOORS(D) FUTURES(E)
- ------------------------------------------------------------------------ --------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and anticipatory)... $ 5,764 $ 118 $ 3,133 $ 322
Inverse floaters(a)..................................................... 711 560 354 6
Anticipatory(g)......................................................... -- -- -- 213
Other bonds and notes................................................... 7,118 33 66 322
Short-term investments.................................................. 807 -- -- --
--------- ----------- ----------- -----
Total fixed maturities.............................................. 14,400 711 3,553 863
Equity securities, policy loans and other investments................... 3,865 -- -- --
--------- ----------- ----------- -----
Total investments................................................... $ 18,265 $ 711 $ 3,553 $ 863
--------- ----------- ----------- -----
--------- ----------- ----------- -----
Total derivatives-fair value(b)..................................... $ (32) $ 46 $ --
----------- ----------- -----
----------- ----------- -----
<CAPTION>
INTEREST FOREIGN TOTAL
RATE CURRENCY NOTIONAL
1996 SWAPS(H) SWAPS(F) AMOUNT
- ------------------------------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and anticipatory)... $ 941 $ -- $ 3,895
Inverse floaters(a)..................................................... 346 -- 1,300
Anticipatory(g)......................................................... -- -- 132
Other bonds and notes................................................... 1,079 125 2,074
Short-term investments.................................................. -- -- --
----------- ----- -----------
Total fixed maturities.............................................. 2,366 125 7,401
Equity securities, policy loans and other investments................... 19 -- 19
----------- ----- -----------
Total investments................................................... $ 2,385 $ 125 $ 7,420
----------- ----- -----------
----------- ----- -----------
Total derivatives-fair value(b)..................................... $ (25) $ (9) $ (9)
----------- ----- -----------
----------- ----- -----------
INTEREST FOREIGN TOTAL
RATE CURRENCY NOTIONAL
1995 SWAPS(H) SWAPS(F) AMOUNT
- ------------------------------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and anticipatory)... $ 290 $ -- $ 3,863
Inverse floaters(a)..................................................... 681 -- 1,601
Anticipatory(g)......................................................... 25 -- 238
Other bonds and notes................................................... 757 187 1,365
Short-term investments.................................................. -- -- --
----------- ----- -----------
Total fixed maturities.............................................. 1,753 187 7,067
Equity securities, policy loans and other investments................... 18 -- 18
----------- ----- -----------
Total investments................................................... $ 1,771 $ 187 $ 7,085
----------- ----- -----------
----------- ----- -----------
Total derivatives-fair value(b)..................................... $ (108) $ (24) $ (118)
----------- ----- -----------
----------- ----- -----------
</TABLE>
- ------------------------
(a) Inverse floaters are variations of collateralized mortgage obligations
("CMOs") for which the coupon rates move inversely with an index rate such
as LIBOR. The risk to principal is considered negligible as the underlying
collateral for the securities is guaranteed or sponsored by government
agencies. To address the volatility risk created by the coupon variability,
the Company uses a variety of derivative instruments, primarily interest
rate swaps and purchased caps and floors.
(b) The fair value of derivative instruments including swaps, caps, floors,
futures, options and forward commitments, was determined using a pricing
model which is validated through quarterly comparison to dealer quoted
market prices, for 1996 and dealer quoted prices for 1995.
(c) The 1996 data includes issued caps of $433 with a weighted average strike
rate of 8.21% (ranging from 7.0% to 9.5%) and over 93% maturing in 2000
through 2005. In addition, issued floors totaled $590, had a weighted
average strike rate of 5.17% (ranging from 5.00% to 7.85%) with all of them
maturing by the end of 2005. The 1995 data includes issued caps of $475 with
a weighted average strike rate of 8.5% (ranging from 7.0% to 10.4%) and over
85% maturing in 2000 through 2004. In addition, issued floors totaled $236,
had a weighted average strike rate of 8.1% (ranging from 5.3% to 10.9%) and
mature through 2007, with 76% maturing by 2004.
(d) The 1996 data includes purchased floors of $2.4 billion and purchased caps
of $1.3 billion. The floors had a weighted average strike rate of 5.84%
(ranging from 3.70% to 7.85%) and over 87% mature in 1997 through 1999. The
options mature in 1997. The caps had a weighted average strike rate of 7.59%
(ranging from 4.40% to 10.125%) and over 76% mature in 1997 through 2001.
The 1995 data includes purchased floors of $1.8 billion and purchased caps
of $1.7 billion. The floors had a weighted average strike price of 5.8%
(ranging from 3.7% to 6.8%) and over 85% mature in 1997 through 1999. The
caps had a weighted average strike price of 7.5% (ranging from 4.5% and
10.1%) and over 82% mature in 1997 through 1999.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(e) As of December 31, 1996 and 1995, over 39% and 95%, respectively, of the
notional futures contracts, expire within one year.
(f) As of December 31, 1996 and 1995, over 42% and 25%, respectively, of the
Company's foreign currency swaps, expire within one year; the balance mature
over the succeeding 4 to 5 years.
(g) Deferred gains and losses on anticipatory transactions are included in the
carrying value of bond investments in the Consolidated Balance Sheets. At
the time of the ultimate purchase, they are reflected as a basis adjustment
to the purchased asset. At December 31, 1996, the Company had $1 million in
net deferred gains for futures, interest rate swaps and purchased options.
The Company expects to basis adjust $1 million of the deferred gains in
1997. At December 31, 1995, the Company had $5.3 million in net deferred
gains for futures, interest rate swaps and purchased options.
(h) The following table summarizes the maturities by notional value of interest
rate swaps outstanding at December 31, 1996 and 1995, and the related
weighted average interest pay rate or receive rate. The variable rates
represent spot rates (primarily 90 day LIBOR), as of December 31, 1996 and
1995. Such variable rates have been calculated assuming that the spot rates
remain unchanged throughout the life of the interest rate swaps.
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001
- ------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $-- $50 $125 $35 $125
Weighted Average Pay Rate -- 5.7 % 5.9 % 5.5 % 5.5%
Weighted Average Receive Rate -- 3.2 % -- 6.5 % 6.4%
PAY VARIABLE/RECEIVE FIXED
Notional Value $86 $25 $486 $74 $582
Weighted Average Pay Rate 7.5 % -- 6.4 % 6.7 % 7.0%
Weighted Average Receive Rate 5.6 % -- 5.6 % 5.7 % 6.2%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $19 $15 $-- $200 $--
Weighted Average Pay Rate 5.9 % 5.7 % -- 6.4 % --
Weighted Average Receive Rate 3.7 % 5.5 % -- 5.0 % --
Total Interest Rate Swaps $105 $90 $611 $309 $707
Total Weighted Average Pay Rate 7.2 % 5.7 % 6.3 % 6.4 % 6.7%
Total Weighted Average Receive Rate 5.2 % 3.8 % 4.3 % 5.4 % 6.3%
<CAPTION>
1995 1996 1997 1998 1999 2000
- ------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $15 $50 $-- $453 $31
Weighted Average Pay Rate 5.0 % 7.2 % -- 8.1 % 7.1%
Weighted Average Receive Rate 5.8 % 5.9 % -- 5.8 % 5.7%
PAY VARIABLE/RECEIVE FIXED
Notional Value $100 $68 $25 $25 $35
Weighted Average Pay Rate 5.9 % 8.6 % 5.9 % -- 5.9%
Weighted Average Receive Rate 2.4 % 7.9 % 4.0 % -- 6.5%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $50 $18 $36 $12 $200
Weighted Average Pay Rate 5.8 % -- 3.7 % 3.5 % 4.5%
Weighted Average Receive Rate 5.4 % -- 5.6 % 5.2 % 6.8%
Total Interest Rate Swaps $165 $136 $61 $490 $266
Total Weighted Average Pay Rate 5.8 % 7.8 % 4.6 % 7.6 % 5.0%
Total Weighted Average Receive Rate 3.6 % 7.2 % 4.9 % 5.4 % 6.6%
<CAPTION>
LATEST
1996 THEREAFTER TOTAL MATURITY
- ------------------------------------------------------------ ------------- ----------- -----------
<S> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $170 $505 2003
Weighted Average Pay Rate 5.7 % 5.7 %
Weighted Average Receive Rate 6.9 % 4.7 %
PAY VARIABLE/RECEIVE FIXED
Notional Value $349 $1,602 2007
Weighted Average Pay Rate 6.9 % 6.8 %
Weighted Average Receive Rate 5.9 % 5.9 %
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $44 $278 2003
Weighted Average Pay Rate 12.9 % 7.4 %
Weighted Average Receive Rate 6.4 % 5.2 %
Total Interest Rate Swaps $563 $2,385 2007
Total Weighted Average Pay Rate 7.0 % 6.6 %
Total Weighted Average Receive Rate 6.3 % 5.5 %
LATEST
1995 THEREAFTER TOTAL MATURITY
- ------------------------------------------------------------ ------------- ----------- -----------
<S> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $229 $778 2004
Weighted Average Pay Rate 7.8 % 7.8 %
Weighted Average Receive Rate 5.9 % 5.9 %
PAY VARIABLE/RECEIVE FIXED
Notional Value $190 $443 2007
Weighted Average Pay Rate 5.4 % 5.4 %
Weighted Average Receive Rate 6.9 % 6.9 %
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $234 $550 2004
Weighted Average Pay Rate 16.3 % 5.7 %
Weighted Average Receive Rate 5.9 % 6.4 %
Total Interest Rate Swaps $653 $1,771 2007
Total Weighted Average Pay Rate 7.3 % 6.9 %
Total Weighted Average Receive Rate 6.3 % 5.8 %
</TABLE>
In addition, interest rate sensitivity related to certain Company insurance
liabilities was altered primarily through interest rate swap agreements. The
notional amount of the liability agreements in which the Company generally pays
one variable rate in exchange for another was $2.4 billion and $1.7 billion at
December 31, 1996 and 1995, respectively. As of December 31, 1996, the weighted
average pay rate was 5.6% and the weighted average receive rate was 6.5%. These
agreements mature at various times through 2001.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
A reconciliation between notional amounts at December 31, 1995 and 1996 by
derivative type and strategy is as follows:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
---------------------------------------------
12/31/95 MATURITIES/
NOTIONAL AMOUNT ADDITIONS TERMINATIONS
----------------- ----------- -------------
<S> <C> <C> <C>
Caps..................................................................... $ 2,184 $ 1,286 $ 1,715
Floors................................................................... 2,180 2,053 1,065
Options.................................................................. -- 10 --
Swaps/Forwards........................................................... 3,566 3,989 2,694
Futures.................................................................. 863 2,092 2,818
------ ----------- ------
Total................................................................ $ 8,793 $ 9,430 $ 8,292
------ ----------- ------
------ ----------- ------
<CAPTION>
BY STRATEGY
---------------------------------------------
12/31/95 MATURITIES/
NOTIONAL AMOUNT ADDITIONS TERMINATIONS
----------------- ----------- -------------
<S> <C> <C> <C>
Liability................................................................ $ 1,708 $ 1,940 $ 1,137
Anticipatory............................................................. 238 516 622
Asset.................................................................... 2,984 1,265 2,137
Portfolio................................................................ 3,863 5,709 4,396
------ ----------- ------
Total................................................................ $ 8,793 $ 9,430 $ 8,292
------ ----------- ------
------ ----------- ------
<CAPTION>
12/31/96
NOTIONAL AMOUNT
-----------------
<S> <C>
Caps..................................................................... $ 1,755
Floors................................................................... 3,168
Options.................................................................. 10
Swaps/Forwards........................................................... 4,861
Futures.................................................................. 137
------
Total................................................................ $ 9,931
------
------
12/31/96
NOTIONAL AMOUNT
-----------------
<S> <C>
Liability................................................................ $ 2,511
Anticipatory............................................................. 132
Asset.................................................................... 2,112
Portfolio................................................................ 5,176
------
Total................................................................ $ 9,931
------
------
</TABLE>
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF DECEMBER 31,
1996 1995
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities............................................................. $ 13,624 $ 13,624 $ 14,400 $ 14,400
Equity securities............................................................ 119 119 63 63
Policy loans................................................................. 3,836 3,836 3,381 3,381
Mortgage loans............................................................... 2 2 265 265
Investments in partnerships and trust........................................ 48 48 94 97
Other........................................................................ 6 56 62 62
LIABILITIES
Other policy benefits........................................................ $ 11,707 $ 11,469 $ 12,727 $ 12,767
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument: fair value for fixed maturities and
equity securities approximate those quotations published by applicable stock
exchanges or received from other reliable sources; policy and mortgage loan
carrying amounts approximate fair value; investments in partnerships and trusts
are based on external market valuations from partnership and trust managements;
fair value of derivative instruments, including swaps, caps, floors, futures,
and forward commitments, is determined by using a pricing model which is
validated through quarterly comparison to dealer quoted market prices; and other
policy benefits payable for investment type contracts are determined by
estimating future cash flows discounted at the year end market rate.
- ---------------------------------------------------
4. INCOME TAX
Hartford Life and The Hartford have entered into a tax sharing agreement
under which each member, including the Company, in the consolidated U.S. federal
income tax return will make payments between them such that, with respect to any
period, the amount of taxes to be paid by Hartford Life for the Company, subject
to certain adjustments, generally will be determined as though the Company were
to file separate federal, state and local income tax returns.
As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of Hartford Life, the Company will be included for
federal income tax purposes in the consolidated group of which The Hartford is
the common parent. It is the current intention of The Hartford and its
subsidiaries to continue to file a consolidated federal income tax return. The
Company will continue to remit to (receive from) The Hartford a current income
tax provision (benefit) computed in accordance with such tax sharing agreement.
The Company's effective tax rate was 35%, 32% and 32% in 1996, 1995 and 1994,
respectively.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Income tax expense was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Current............................. $ 122 $ 211 $ 185
Deferred........................... (102) (149) (120)
--------- --------- ---------
Total............................ $ 20 $ 62 $ 65
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of the tax provision at the U.S. federal statutory rate to
the provision for income taxes was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Tax provision at U.S. statutory
rate............................... $ 20 $ 67 $ 71
Tax-exempt income.................. -- (3) (3)
Foreign tax credit................. -- (4) (1)
Other.............................. -- 2 (2)
--------- --------- ---------
Total............................ $ 20 $ 62 $ 65
--------- --------- ---------
--------- --------- ---------
</TABLE>
Income taxes paid were $189, $162 and $244 in 1996, 1995 and 1994,
respectively. The current tax refund due from The Hartford to the Company was
$72 and $8 as of December 31, 1996 and 1995, respectively.
Deferred tax assets (liabilities) included the following:
<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Tax return deferred acquisition costs......... $ 514 $ 410
Financial statement deferred acquisition costs
and reserves................................. (242) 138
Employee benefits............................. 8 8
Unrealized (gain) loss on investments......... (16) 32
Investments and other......................... 210 (168)
--------- ---------
Total..................................... $ 474 $ 420
--------- ---------
--------- ---------
</TABLE>
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In such circumstances, the deferred income
was accumulated in a "Policyholders' Surplus Account" and will be taxable in the
future only under conditions which management considers to be remote; therefore,
no Federal income taxes have been provided on this deferred income. The balance
for tax return purposes of the Policyholders' Surplus Account as of December 31,
1996 was $37.
- ---------------------------------------------------
5. REINSURANCE
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve the Company of its primary
liability. The Company also assumes insurance from other insurers.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Gross premiums..................... $ 1,834 $ 1,545 $ 1,316
Insurance assumed.................. 173 591 299
Insurance ceded.................... (302) (649) (515)
--------- --------- ---------
Total.......................... $ 1,705 $ 1,487 $ 1,100
--------- --------- ---------
--------- --------- ---------
</TABLE>
Life reinsurance recoveries, which reduced death and other benefits, for the
years ended December 31, 1996, 1995 and 1994 approximated $140, $220 and $164,
respectively.
In December 1994, the Company ceded to a third party $1.0 billion in
individual fixed and variable annuities on a modified coinsurance basis. In
December 1995, the Company ceded approximately $1.2 billion in individual
variable annuities on a modified coinsurance basis to a third party. These
transactions did not have a material impact on consolidated net income.
In May 1994, the Company assumed the life insurance policies and the
individual annuities of Pacific Standard with reserves and account values of
approximately $434 million. The Company received cash and investment grade
assets to support the life insurance and individual annuity contract obligations
assumed.
- ---------------------------------------------------
6.PENSION PLANS AND OTHER POSTRETIREMENT
BENEFITS
The Company's employees are included in Hartford Fire's noncontributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, as amended, and the maximum amount that
can be deducted for Federal income tax purposes. Generally, pension costs are
funded through the purchase of the Company's group pension contracts. The cost
to the Company was approximately $5, $2 and $2 in 1996, 1995 and 1994,
respectively.
The Company also provides, through Hartford Fire, certain health care and
life insurance benefits for eligible retired employees. A substantial portion of
the Company's employees may become eligible for these benefits upon retirement.
The Company's contribution for health care benefits will depend on the retiree's
date of retirement and years of service. In addition, the plan has a defined
dollar cap which limits average Company contributions. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial for 1996, 1995 and 1994, respectively.
The assumed rate of future increases in the per capita cost of health care
(the health care trend rate) was 9.3% for 1996, decreasing ratably to 6.0% in
the year 2001. Increasing the health care trend rates by one percent per year
would have an immaterial impact on the accumulated postretirement benefit
obligation and the annual expense. To the extent that the actual experience
differs from the inherent assumptions, the effect will be amortized over the
average future service of the covered employees.
- ---------------------------------------------------
7. BUSINESS SEGMENT INFORMATION
The Company sells financial products such as fixed and variable annuities,
retirement plan services, and life insurance on both an individual and a group
basis. The Company divides its core businesses into three segments: Investment
Products, Individual Life Insurance and Employee Benefits. In addition, the
Company also maintains a corporate operation and also classifies certain of its
business as Runoff operations. The Investment Products segment offers individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services, mutual funds, investment management
services and other financial products. The Individual Life Insurance segment
sells a variety of individual life insurance products, including variable life,
universal life, and interest-sensitive whole life policies. The Employee
Benefits segment sells corporate owned life insurance. Through its corporate
operation, the Company reports net investment income on assets representing
surplus not assigned to any of its business segments and certain other revenues
and expenses not specifically allocable to any of its business segments. The
Company's Runoff operations are comprised of Closed Book GRC. With the exception
of Closed Book GRC, net realized capital gains and losses are recognized in the
period of realization but are allocated to the segments utilizing durations of
the segment portfolios.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Investment Products............... $ 1,013 $ 759 $ 594
Individual Life Insurance......... 440 383 375
Employee Benefits................. 1,366 1,273 919
Corporate Operations.............. 81 52 30
Runoff Operations................. (11) 337 481
--------- --------- ---------
Total Revenues.................. $ 2,889 $ 2,804 $ 2,399
--------- --------- ---------
--------- --------- ---------
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
INCOME BEFORE INCOME TAX EXPENSE
Investment Products............... $ 230 $ 172 $ 127
Individual Life Insurance......... 68 56 39
Employee Benefits................. 43 37 27
Corporate Operations.............. 65 16 8
Runoff Operations................. (348) (90) 2
--------- --------- ---------
Income Before Income Tax
Expense........................ $ 58 $ 191 $ 203
--------- --------- ---------
--------- --------- ---------
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investment Products............... $ 53,743 $ 40,624 $ 29,115
Individual Life Insurance......... 3,753 3,173 2,808
Employee Benefits................. 14,515 13,494 7,847
Corporate Operations.............. 1,891 1,729 822
Runoff Operations................. 3,667 5,177 7,257
--------- --------- ---------
Total Assets.................... $ 77,569 $ 64,197 $ 47,849
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ---------------------------------------------------
8. STATUTORY NET INCOME AND SURPLUS
A significant percentage of the consolidated statutory surplus is
permanently reinvested or is subject to various state regulatory restrictions
which limit the payment of dividends without prior approval. The total amount of
statutory dividends which may be paid by the insurance subsidiaries of the
Company in 1997, without prior approval, is estimated to be $121 million.
Statutory net income and surplus as of and for the years ended December 31 were:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Statutory net income...... $ 144 $ 112 $ 58
Statutory surplus......... $ 1,207 $ 1,125 $ 941
</TABLE>
The insurance subsidiaries of the Company prepare their statutory financial
statements in accordance with accounting practices prescribed by the State of
Connecticut Insurance Department. Prescribed statutory accounting practices
include publications of the National Association of Insurance Commissioners
("NAIC"), as well as state laws, regulations, and general administrative rules.
- ---------------------------------------------------
9. SEPARATE ACCOUNTS
The Company maintained separate account assets and liabilities totaling
$49.7 billion and $36.3 billion at December 31, 1996 and 1995, respectively,
which are reported at fair value. Separate account assets are segregated from
other investments, and investment income and gains and losses accrue directly to
the policyholder. Separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts totaling $39.4 billion and $25.9 billion at
December 31, 1996 and 1995, respectively, wherein the policyholder assumes the
investment risk, and
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
guaranteed separate account assets totaling $10.3 billion at December 31, 1996
and 1995, wherein the Company contractually guarantees either a minimum return
or account value to the policyholder. Included in the non-guaranteed category
are policy loans totaling $2.0 billion and $1.7 billion at December 31, 1996 and
1995, respectively. Investment income (including investment gains and losses)
and interest credited to policyholders on separate account assets are not
reflected in the Consolidated Statements of Income. Separate account management
fees, net of minimum guarantees, were $538, $387 and $256 in 1996, 1995 and
1994, respectively.
The guaranteed separate accounts include modified guaranteed individual
annuity and modified guaranteed life insurance. The average credited interest
rate on these contracts was 6.53% at December 31, 1996. The assets that support
these liabilities were comprised of $10.2 billion in fixed maturities at
December 31, 1996. The portfolios are segregated from other investments and are
managed so as to minimize liquidity and interest rate risk. To minimize the risk
of disintermediation associated with early withdrawals, individual annuity and
modified guaranteed life insurance contracts carry a graded surrender charge as
well as a market value adjustment. Additional investment risk is hedged using a
variety of derivatives which totaled $0.1 billion in carrying value and $2.4
billion in notional amounts at December 31, 1996.
- ---------------------------------------------------
10. COMMITMENTS AND CONTINGENCIES
Under insurance guaranty fund laws existing in each state, the District of
Columbia and Puerto Rico, insurers licensed to do business can be assessed by
state insurance guaranty associations for certain obligations of insolvent
insurance companies to policyholders and claimants. Recent regulatory actions
against certain large life insurers encountering financial difficulty have
prompted various state insurance guaranty associations to begin assessing life
insurance companies for the deemed losses. Most of these laws do provide,
however, that an assessment may be excused or deferred if it would threaten an
insurer's solvency and further provide annual limits on such assessments. A
large part of the assessments paid by the Company's insurance subsidiaries
pursuant to these laws may be used as credits for a portion of the Company's
insurance subsidiaries' premium taxes. The Company paid guaranty fund
assessments of approximately $11, $10 and $8 in 1996, 1995 and 1994,
respectively, of which $5, $6 and $4 were estimated to be creditable against
premium taxes.
The Company is a defendant in various lawsuits arising in the ordinary
course of business. In the opinion of management, the resolution of these
matters is not expected to have a material adverse effect on the Company's
business, financial position, or results of operations.
The rent paid to Hartford Fire for the space occupied by the Company was $3
in 1996, 1995, and 1994. The Company expects to pay annual rent of $7 in 1997,
1998, and 1999, respectively, $12 in 2000 and 2001, and $96 thereafter, over the
remaining term of the sublease, which expires on December 31, 2009. Rental
expense is recognized on a level basis over the term of the sublease and
amounted to approximately $8 in 1996, 1995 and 1994.
- ---------------------------------------------------
11. SUBSEQUENT EVENTS
On February 10, 1997, Hartford Life filed a registration statement with the
Securities and Exchange Commission relating to the U.S. and international
offerings of shares of Class A common stock (the "Equity Offerings")
representing up to 20% ownership of Hartford Life. After completion of the
Equity Offerings, The Hartford would own all of the shares of Class B Common
Stock (after reclassification of Hartford Life's common stock into Class B
Common Stock prior to March 31, 1997). Hartford Life intends to use the
estimated net proceeds of the Equity Offerings to make a capital contribution to
its insurance subsidiaries, to reduce its third-party indebtedness and for other
general corporate purposes.
The Hartford has advised the Company that its current intent is to continue
to beneficially own at least 80% of Hartford Life, but it is under no
contractual obligation to do so, except for a limited period. Provided that The
Hartford continues to beneficially own at least 80% of the combined voting power
or the value of the outstanding capital stock of Hartford Life, Hartford Life
will be included for federal income tax purposes in the controlled group of
which The Hartford is the common parent. Each member of a controlled group is
jointly and severally liable for pension funding and pension termination
liabilities of each other member of the controlled group, as well as certain
benefit plan taxes. Accordingly, the Company could be liable for pension
funding, pension termination liabilities and certain other pension related
excise taxes as well as other taxes of another member of The Hartford controlled
group in the event any such liability is incurred, and not discharged, by such
other member.
In connection with the proposed Equity Offerings, Hartford Life plans to
enter into formal agreements, including a master intercompany agreement,
investment management agreements and a new tax sharing agreement, with The
Hartford covering such matters as corporate services, approval of certain
corporate activities, registration rights, owned and leased space, allocation of
expenses, taxes and liabilities, investment advisory services, use of trademarks
and certain other corporate matters. As part of the master intercompany
agreement, Hartford Life would agree to remit to The Hartford 30% of any shared
liabilities for which The Hartford is responsible in respect of the ITT
Spin-off, 30% of any taxes which may be assessed to The
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Hartford relating to the ITT Spin-off and will indemnify The Hartford for
certain other tax liabilities. As of December 31, 1996 there was no known
liability associated with the ITT Spin-off. Such agreements are meant to
maintain the relationship between Hartford Life and The Hartford in a manner
consistent in all material respects with past practice. As a result, management
believes these agreements should not have a material impact on the results of
operations of the Company.
In addition, under insurance company holding laws, agreements between
Hartford Life's insurance subsidiaries and The Hartford must be fair and
reasonable and may be subject to the approval of applicable insurance
commissioners. The agreements will be intended to maintain the relationship
between Hartford Life and The Hartford in a manner generally consistent with
past practices. However, none of these arrangements will result from
arm's-length negotiations and, therefore, the prices charged to Hartford Life
and its subsidiaries for services provided under these arrangements may be
higher or lower than prices that may be charged by third parties.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I -- SUMMARY OF INVESTMENTS (OTHER THAN INVESTMENTS IN AFFILIATES)
AS OF DECEMBER 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
ESTIMATED
FAIR
TYPE OF INVESTMENT COST VALUE
- ------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Fixed Maturities
Bonds and Notes
U.S. Government and government agencies and authorities
(guaranteed sponsored)........................................................................ $ 166 $ 175
U.S. Government and government agencies and authorities
(guaranteed sponsored)--asset-backed.......................................................... 1,970 2,003
States, municipalities and political subdivisions................................................ 373 368
International governments........................................................................ 281 289
Public utilities................................................................................. 877 881
All other corporate including international...................................................... 4,656 4,669
All other corporate--asset-backed................................................................ 3,601 3,591
Short-term investments........................................................................... 1,655 1,648
--------- -----------
Total Fixed Maturities........................................................................... $ 13,579 $ 13,624
Equity Securities
Common Stocks--industrial, miscellaneous, and all other.......................................... 110 119
Total Fixed Maturities and Equity Securities..................................................... $ 13,689 $ 13,743
Other Investments
Policy Loans..................................................................................... 3,836 3,836
Mortgage Loans................................................................................... 2 2
Investments in partnerships and trusts........................................................... 48 48
Futures, options, and miscellaneous.............................................................. 6 56
Total Other Investments.......................................................................... 3,892 3,942
--------- -----------
Total Investments................................................................................ $ 17,581 $ 17,685
--------- -----------
--------- -----------
<CAPTION>
AMOUNT AT
WHICH SHOWN
ON
TYPE OF INVESTMENT BALANCE SHEET
- ------------------------------------------------------------------------------------------------- -------------
<S> <C>
Fixed Maturities
Bonds and Notes
U.S. Government and government agencies and authorities
(guaranteed sponsored)........................................................................ $ 175
U.S. Government and government agencies and authorities
(guaranteed sponsored)--asset-backed.......................................................... 2,003
States, municipalities and political subdivisions................................................ 368
International governments........................................................................ 289
Public utilities................................................................................. 881
All other corporate including international...................................................... 4,669
All other corporate--asset-backed................................................................ 3,591
Short-term investments........................................................................... 1,648
-------------
Total Fixed Maturities........................................................................... $ 13,624
Equity Securities
Common Stocks--industrial, miscellaneous, and all other.......................................... 119
Total Fixed Maturities and Equity Securities..................................................... $ 13,743
Other Investments
Policy Loans..................................................................................... 3,836
Mortgage Loans................................................................................... 2
Investments in partnerships and trusts........................................................... 48
Futures, options, and miscellaneous.............................................................. 6
Total Other Investments.......................................................................... 3,892
-------------
Total Investments................................................................................ $ 17,635
-------------
-------------
</TABLE>
Note: The fair values for short-term investments approximate cost.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
FUTURE POLICY
BENEFITS, UNPAID OTHER POLICY
CLAIMS AND CLAIMS AND
DEFERRED POLICY CLAIM ADJUSTMENT BENEFITS
SEGMENT ACQUISITION COSTS EXPENSES PAYABLE
- ---------------------------------------------------------------- ----------------- ------------------- ---------------
<S> <C> <C> <C>
1996
Investment Products............................................. $ 2,030 $ 1,554 $ 6,599
Individual Life Insurance....................................... 730 346 2,160
Employee Benefits............................................... -- 381 9,834
Corporate Operations............................................ -- -- --
Runoff Operations............................................... -- -- 3,541
------ ------ -------
Consolidated Operations......................................... $ 2,760 $ 2,281 $ 22,134
------ ------ -------
------ ------ -------
1995
Investment Products............................................. $ 1,561 $ 1,314 $ 6,204
Individual Life Insurance....................................... 615 706 1,932
Employee Benefits............................................... 12 325 9,285
Corporate Operations............................................ -- -- --
Runoff Operations............................................... -- 28 5,177
------ ------ -------
Consolidated Operations......................................... $ 2,188 $ 2,373 $ 22,598
------ ------ -------
------ ------ -------
1994
Investment Products............................................. $ 1,244 $ 895 $ 4,617
Individual Life Insurance....................................... 565 582 2,543
Employee Benefits............................................... -- 369 6,911
Corporate Operations............................................ -- -- --
Runoff Operations............................................... -- 44 7,257
------ ------ -------
Consolidated Operations......................................... $ 1,809 $ 1,890 $ 21,328
------ ------ -------
------ ------ -------
<CAPTION>
BENEFITS CLAIMS, AMORTIZATION OF
NET REALIZED AND CLAIM DEFERRED POLICY
CAPITAL (LOSSES) ADJUSTMENT ACQUISITION
SEGMENT GAINS EXPENSES COSTS
- ---------------------------------------------------------------- ----------------- ------------------- ---------------
<S> <C> <C> <C>
1996
Investment Products............................................. $ -- $ 451 $ 175
Individual Life Insurance....................................... -- 245 59
Employee Benefits............................................... -- 546 --
Corporate Operations............................................ 6 -- --
Runoff Operations............................................... (219) 293 --
------ ------ -------
Consolidated Operations......................................... $ (213) $ 1,535 $ 234
------ ------ -------
------ ------ -------
1995
Investment Products............................................. $ -- $ 349 $ 117
Individual Life Insurance....................................... -- 127 70
Employee Benefits............................................... -- 496 --
Corporate Operations............................................ (11) 33 --
Runoff Operations............................................... -- 417 12
------ ------ -------
Consolidated Operations......................................... $ (11) $ 1,422 $ 199
------ ------ -------
------ ------ -------
1994
Investment Products............................................. $ -- $ 383 $ 90
Individual Life Insurance....................................... -- 179 51
Employee Benefits............................................... -- 376 --
Corporate Operations............................................ 7 -- --
Runoff Operations............................................... -- 467 4
------ ------ -------
Consolidated Operations......................................... $ 7 $ 1,405 $ 145
------ ------ -------
------ ------ -------
<CAPTION>
PREMIUMS AND NET
OTHER INVESTMENT
SEGMENT CONSIDERATIONS INCOME
- ---------------------------------------------------------------- --------------- -----------
<S> <C> <C>
1996
Investment Products............................................. $ 536 $ 477
Individual Life Insurance....................................... 287 153
Employee Benefits............................................... 881 485
Corporate Operations............................................ -- 75
Runoff Operations............................................... 1 207
------ -----------
Consolidated Operations......................................... $ 1,705 $ 1,397
------ -----------
------ -----------
1995
Investment Products............................................. $ 319 $ 436
Individual Life Insurance....................................... 246 137
Employee Benefits............................................... 922 351
Corporate Operations............................................ -- 67
Runoff Operations............................................... -- 337
------ -----------
Consolidated Operations......................................... $ 1,487 $ 1,328
------ -----------
------ -----------
1994
Investment Products............................................. $ 263 $ 330
Individual Life Insurance....................................... 268 108
Employee Benefits............................................... 569 350
Corporate Operations............................................ -- 23
Runoff Operations............................................... -- 481
------ -----------
Consolidated Operations......................................... $ 1,100 $ 1,292
------ -----------
------ -----------
DIVIDENDS TO OTHER
SEGMENT POLICYHOLDERS EXPENSES
- ---------------------------------------------------------------- --------------- -----------
<S> <C> <C>
1996
Investment Products............................................. $ -- $ 156
Individual Life Insurance....................................... -- 68
Employee Benefits............................................... 635 143
Corporate Operations............................................ -- 16
Runoff Operations............................................... -- 44
------ -----------
Consolidated Operations......................................... $ 635 $ 427
------ -----------
------ -----------
1995
Investment Products............................................. $ -- $ 115
Individual Life Insurance....................................... -- 55
Employee Benefits............................................... 675 138
Corporate Operations............................................ -- 11
Runoff Operations............................................... -- (2)
------ -----------
Consolidated Operations......................................... $ 675 $ 317
------ -----------
------ -----------
1994
Investment Products............................................. $ -- $ (31)
Individual Life Insurance....................................... -- 107
Employee Benefits............................................... 419 100
Corporate Operations............................................ -- 43
Runoff Operations............................................... -- 8
------ -----------
Consolidated Operations......................................... $ 419 $ 227
------ -----------
------ -----------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
GROSS CEDED TO ASSUMED FROM NET
AMOUNT OTHER COMPANIES OTHER COMPANIES AMOUNT
---------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
Year Ended December 31, 1996
Life Insurance in Force............................... $ 177,094 $ 106,146 $ 31,957 $ 102,905
---------- -------- ------- ----------
Insurance Revenues
Life Insurance and Annuities........................ $ 1,801 $ 298 $ 169 $ 1,672
Accident and Health Insurance....................... 33 4 4 33
---------- -------- ------- ----------
Total................................................. $ 1,834 $ 302 $ 173 $ 1,705
---------- -------- ------- ----------
---------- -------- ------- ----------
For the Year Ended December 31, 1995
Life Insurance in Force............................... $ 182,716 $ 112,774 $ 26,996 $ 96,938
---------- -------- ------- ----------
Insurance Revenues
Life Insurance and Annuities........................ $ 1,232 $ 325 $ 574 $ 1,481
Accident and Health Insurance....................... 313 324 17 6
---------- -------- ------- ----------
Total................................................. $ 1,545 $ 649 $ 591 $ 1,487
---------- -------- ------- ----------
---------- -------- ------- ----------
For the Year Ended December 31, 1994
Life Insurance in Force............................... $ 136,929 $ 87,553 $ 35,016 $ 84,392
---------- -------- ------- ----------
Insurance Revenues
Life Insurance and Annuities........................ $ 1,008 $ 211 $ 294 $ 1,091
Accident and Health Insurance....................... 308 304 5 9
---------- -------- ------- ----------
Total................................................. $ 1,316 $ 515 $ 299 $ 1,100
---------- -------- ------- ----------
---------- -------- ------- ----------
<CAPTION>
PERCENTAGE OF
AMOUNT ASSUMED
TO NET
-----------------
<S> <C>
Year Ended December 31, 1996
Life Insurance in Force............................... 31.1%
Insurance Revenues
Life Insurance and Annuities........................ 10.1%
Accident and Health Insurance....................... 12.1%
Total................................................. 10.1%
For the Year Ended December 31, 1995
Life Insurance in Force............................... 27.8%
Insurance Revenues
Life Insurance and Annuities........................ 38.8%
Accident and Health Insurance....................... 283.3%
Total................................................. 39.7%
For the Year Ended December 31, 1994
Life Insurance in Force............................... 41.5%
Insurance Revenues
Life Insurance and Annuities........................ 26.9%
Accident and Health Insurance....................... 55.6%
Total................................................. 27.2%
</TABLE>
<PAGE>
42 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
(This page has been left blank intentionally.)
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company
Separate Account Variable Life One and to the
Owners of Units of Interest Therein:
We have audited the accompanying statement of assets and liabilities of the Bond
Fund Sub-Account, Stock Fund Sub-Account, Money Market Fund Sub-Account,
Advisers Fund Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage
Securities Fund Sub-Account, Index Fund Sub-Account, International Opportunities
Fund Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity VIP Equity
Income Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and
Fidelity VIP II Asset Manager Portfolio Sub-Account (constituting Hartford Life
Insurance Company Separate Account Variable Life One) (the Accounts) as of
December 31, 1996, and the related statement of operations for the year then
ended and statements of changes in net assets for each of the two years in the
period then ended (except for Fidelity VIP Equity Income Portfolio Sub-Account,
Fidelity VIP Overseas Portfolio Sub-Account and Fidelity VIP II Asset Manager
Portfolio Sub-Account which reflect the year ended December 31, 1996 and the
period from inception, May 1, 1995, to December 31, 1995). These financial
statements are the responsibility of the Accounts' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Bond Fund Sub-Account,
Stock Fund Sub-Account, Money Market Fund Sub-Account, Advisers Fund Sub-
Account, Capital Appreciation Fund Sub-Account, Mortgage Securities Fund Sub-
Account, Index Fund Sub-Account, International Opportunities Fund Sub-Account,
Dividend and Growth Fund Sub-Account, Fidelity VIP Equity Income Portfolio Sub-
Account, Fidelity VIP Overseas Portfolio Sub-Account and Fidelity VIP II Asset
Manager portfolio Sub-Account (constituting Hartford Life Insurance Company
Separate Account Variable Life One) as of December 31, 1996, the results of its
operations for the year then ended and the changes in its net assets for each of
the two years in the period then ended (except for Fidelity VIP Equity Income
Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and Fidelity
VIP II Asset Manager Portfolio Sub-Account which reflect the year ended December
31, 1996 and the period from inception, May 1, 1995, to December 31, 1995) in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Separate Account Variable Life One
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 2,687,282
Cost $ 2,631,020
Market Value......... $2,685,106 -- -- --
Hartford Stock Fund,
Inc.
Shares 3,505,678
Cost $11,740,314
Market Value......... -- $14,523,007 -- --
HVA Money Market Fund,
Inc.
Shares 21,462,703
Cost $21,462,703
Market Value......... -- -- $21,462,703 --
Hartford Advisers Fund,
Inc.
Shares 4,560,663
Cost $ 8,504,445
Market Value......... -- -- -- $9,894,495
Hartford Capital
Appreciation Fund,
Inc.
Shares 5,157,901
Cost $17,295,440
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 1,303,872
Cost $ 1,346,063
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 2,546,926
Cost $ 5,238,540
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 6,198,604
Cost $ 7,856,691
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 2,089,543
Cost $ 2,922,702
Market Value......... -- -- -- --
Fidelity VIP Equity
Income Fund
Shares 228,727
Cost $ 4,438,947
Market Value......... -- -- -- --
Fidelity VIP Overseas
Fund
Shares 52,389
Cost $ 912,742
Market Value......... -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 38,692
Cost $ 619,842
Market Value......... -- -- -- --
Due from Hartford Life
Insurance Company..... 126 13,544 1,547,822 76,303
Receivable from fund
shares sold........... -- -- -- --
----------- ------------ ------------ -------------
Total Assets........... 2,685,232 14,536,551 23,010,525 9,970,798
----------- ------------ ------------ -------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- --
Payable for fund shares
purchased............. 122 13,659 1,547,471 76,799
----------- ------------ ------------ -------------
Total Liabilities...... 122 13,659 1,547,471 76,799
----------- ------------ ------------ -------------
Net Assets (variable
life contract
liabilities).......... $2,685,110 $14,522,892 $21,463,054 $9,893,999
----------- ------------ ------------ -------------
----------- ------------ ------------ -------------
Units Outstanding........ 2,176,786 8,115,365 18,251,689 6,326,595
Accumulation Unit Value
at end of year......... $ 1.233518 $ 1.789555 $ 1.175949 $ 1.563874
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 2,687,282
Cost $ 2,631,020
Market Value......... -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 3,505,678
Cost $11,740,314
Market Value......... -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 21,462,703
Cost $21,462,703
Market Value......... -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 4,560,663
Cost $ 8,504,445
Market Value......... -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 5,157,901
Cost $17,295,440
Market Value......... $20,189,726 -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 1,303,872
Cost $ 1,346,063
Market Value......... -- $1,376,588 -- -- --
Hartford Index Fund,
Inc.
Shares 2,546,926
Cost $ 5,238,540
Market Value......... -- -- $6,066,192 -- --
Hartford International
Opportunities Fund,
Inc.
Shares 6,198,604
Cost $ 7,856,691
Market Value......... -- -- -- $8,720,692 --
Hartford Dividend and
Growth Fund, Inc.
Shares 2,089,543
Cost $ 2,922,702
Market Value......... -- -- -- -- $3,233,400
Fidelity VIP Equity
Income Fund
Shares 228,727
Cost $ 4,438,947
Market Value......... -- -- -- -- --
Fidelity VIP Overseas
Fund
Shares 52,389
Cost $ 912,742
Market Value......... -- -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 38,692
Cost $ 619,842
Market Value......... -- -- -- -- --
Due from Hartford Life
Insurance Company..... 56,080 138 11,236 3,856 6,837
Receivable from fund
shares sold........... -- -- -- -- --
----------------- --------------- ----------- ------------------ ------------
Total Assets........... 20,245,806 1,376,726 6,077,428 8,724,548 3,240,237
----------------- --------------- ----------- ------------------ ------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- -- --
Payable for fund shares
purchased............. 56,023 137 11,392 3,909 6,885
----------------- --------------- ----------- ------------------ ------------
Total Liabilities...... 56,023 137 11,392 3,909 6,885
----------------- --------------- ----------- ------------------ ------------
Net Assets (variable
life contract
liabilities).......... $20,189,783 $1,376,589 $6,066,036 $8,720,639 $3,233,352
----------------- --------------- ----------- ------------------ ------------
----------------- --------------- ----------- ------------------ ------------
Units Outstanding........ 11,564,044 1,112,101 3,461,603 5,827,532 2,133,538
Accumulation Unit Value
at end of year......... $ 1.745910 $ 1.237827 $ 1.752378 $ 1.496455 $ 1.515489
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Fidelity VIP Equity
Income Fund
Shares
Cost
Market Value......... $4,810,134 -- --
Fidelity VIP Overseas
Fund
Shares
Cost
Market Value......... -- $ 987,009 --
Fidelity VIP II Asset
Manager Fund
Shares
Cost
Market Value......... -- -- $ 655,053
Due from Hartford Life
Insurance Company..... 65,465 -- 24,687
Receivable from fund
shares sold........... -- 5,676 --
------------------ ------------- ----------
Total Assets........... 4,875,599 992,685 679,740
------------------ ------------- ----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- 5,788 --
Payable for fund shares
purchased............. 64,505 -- 24,921
------------------ ------------- ----------
Total Liabilities...... 64,505 5,788 24,921
------------------ ------------- ----------
Net Assets (variable
life contract
liabilities).......... $4,811,094 $ 986,897 $ 654,819
------------------ ------------- ----------
------------------ ------------- ----------
Units Outstanding........ 3,511,186 811,791 518,972
Accumulation Unit Value
at end of year......... $ 1.370219 $1.215706 $1.261761
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE ONE
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $130,339 $ 166,505 $617,137 $ 203,460
----------- ----------- ----------- -------------
Net investment income
(loss).............. 130,339 166,505 617,137 203,460
----------- ----------- ----------- -------------
CAPITAL GAINS INCOME..... -- 309,113 -- 107,033
----------- ----------- ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (2,539) (10,306) -- 1,174
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (35,847) 1,824,641 -- 815,705
----------- ----------- ----------- -------------
Net realized and
unrealized gain
(loss) on
investments......... (38,386) 1,814,335 -- 816,879
----------- ----------- ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 91,953 $ 2,289,953 $617,137 $1,127,372
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 94,066 $61,146 $ 80,193 $120,669 $ 41,572
----------------- ------- ----------- -------- ------------
Net investment income
(loss).............. 94,066 61,146 80,193 120,669 41,572
----------------- ------- ----------- -------- ------------
CAPITAL GAINS INCOME..... 567,054 -- 33,058 118,054 2,804
----------------- ------- ----------- -------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (15,665) 21 2,355 (1,547) 678
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 1,913,546 195 656,725 544,630 305,389
----------------- ------- ----------- -------- ------------
Net realized and
unrealized gain
(loss) on
investments......... 1,897,881 216 659,080 543,083 306,067
----------------- ------- ----------- -------- ------------
Net increase
(decrease) in net
assets resulting
from operations..... $2,559,001 $61,362 $772,331 $781,806 $350,443
----------------- ------- ----------- -------- ------------
----------------- ------- ----------- -------- ------------
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 28,598 $ 2,647 $ 4,226
-------- ------------- -------
Net investment income
(loss).............. 28,598 2,647 4,226
-------- ------------- -------
CAPITAL GAINS INCOME..... 11,171 2,911 --
-------- ------------- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (3,448) 1,350 884
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 333,297 71,916 32,712
-------- ------------- -------
Net realized and
unrealized gain
(loss) on
investments......... 329,849 73,266 33,596
-------- ------------- -------
Net increase
(decrease) in net
assets resulting
from operations..... $369,618 $78,824 $37,822
-------- ------------- -------
-------- ------------- -------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Separate Account Variable Life One
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 130,339 $ 166,505 $ 617,137 $ 203,460
Capital gains income... -- 309,113 -- 107,033
Net realized gain
(loss) on security
transactions.......... (2,539) (10,306) -- 1,174
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (35,847) 1,824,641 -- 815,705
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 91,953 2,289,953 617,137 1,127,372
----------- ------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 177,130 1,770,443 78,140,461 1,889,169
Net transfers.......... 932,335 4,457,656 (62,761,807) 2,840,668
Surrenders............. (69,207) (362,933) (814,963) (264,048)
Net loan withdrawals... (22,111) (179,201) (2,187,733) (50,031)
Cost of insurance...... (76,606) (391,509) (1,139,390) (289,178)
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 941,541 5,294,456 11,236,568 4,126,580
----------- ------------ ------------- -------------
Total increase
(decrease) in net
assets................ 1,033,494 7,584,409 11,853,705 5,253,952
NET ASSETS:
Beginning of period.... 1,651,616 6,938,483 9,609,349 4,640,047
----------- ------------ ------------- -------------
End of period.......... $2,685,110 $ 14,522,892 $ 21,463,054 $9,893,999
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------- -------------
OPERATIONS:
Net investment income
(loss)................ $ 72,383 $ 97,045 $ 305,022 $ 121,941
Capital gains income... -- 85,946 -- 30,081
Net realized gain
(loss) on security
transactions.......... 7,394 5,809 -- 2,907
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 97,007 1,009,567 -- 667,925
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 176,784 1,198,367 305,022 822,854
----------- ------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 80,111 891,394 30,911,497 599,791
Net transfers.......... 1,202,083 3,494,521 (22,537,618) 1,102,448
Surrenders............. (16,941) (130,094) (212,380) (101,194)
Net loan withdrawals... (73,159) (82,429) (5,589,429) (26,807)
Cost of insurance and
other fees............ (33,808) (192,045) (484,560) (126,639)
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,158,286 3,981,347 2,087,510 1,447,599
----------- ------------ ------------- -------------
Total increase
(decrease) in net
assets................ 1,335,070 5,179,714 2,392,532 2,270,453
NET ASSETS:
Beginning of period.... 316,546 1,758,769 7,216,817 2,369,594
----------- ------------ ------------- -------------
End of period.......... $1,651,616 $ 6,938,483 $ 9,609,349 $4,640,047
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
</TABLE>
* From inception, May 1, 1995, to December 31, 1995.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPTIAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 94,066 $ 61,146 $ 80,193 $ 120,669 $ 41,572
Capital gains income... 567,054 -- 33,058 118,054 2,804
Net realized gain
(loss) on security
transactions.......... (15,665) 21 2,355 (1,547) 678
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 1,913,546 195 656,725 544,630 305,389
----------------- --------------- ------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 2,559,001 61,362 772,331 781,806 350,443
----------------- --------------- ------------ ------------------ ------------
UNIT TRANSACTIONS:
Purchases.............. 3,679,346 125,959 2,296,903 1,694,971 278,275
Net transfers.......... 7,290,692 552,359 3,171,094 2,966,744 2,674,253
Surrenders............. (485,609) (13,643) (96,179) (285,131) (20,374)
Net loan withdrawals... (245,321) (8,001) (1,375,343) (69,836) (67,575)
Cost of insurance...... (644,012) (28,469) (200,560) (306,356) (42,548)
----------------- --------------- ------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 9,595,096 628,205 3,795,915 4,000,392 2,822,031
----------------- --------------- ------------ ------------------ ------------
Total increase
(decrease) in net
assets................ 12,154,097 689,567 4,568,246 4,782,198 3,172,474
NET ASSETS:
Beginning of period.... 8,035,686 687,022 1,497,790 3,938,441 60,878
----------------- --------------- ------------ ------------------ ------------
End of period.......... $20,189,783 $1,376,589 $ 6,066,036 $8,720,639 $3,233,352
----------------- --------------- ------------ ------------------ ------------
----------------- --------------- ------------ ------------------ ------------
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------ ------------------ ------------
OPERATIONS:
Net investment income
(loss)................ $ 48,724 $ 39,041 $ 16,866 $ 46,972 $ 536
Capital gains income... 159,934 -- 117 19,345 --
Net realized gain
(loss) on security
transactions.......... (91) 66 232 1,947 67
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 998,680 47,911 170,588 351,014 5,309
----------------- --------------- ------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 1,207,247 87,018 187,803 419,278 5,912
----------------- --------------- ------------ ------------------ ------------
UNIT TRANSACTIONS:
Purchases.............. 1,865,000 9,664 258,782 968,432 30,236
Net transfers.......... 2,860,807 112,099 942,414 909,391 37,813
Surrenders............. (209,729) (6,610) (20,596) (161,497) (12,610)
Net loan withdrawals... (53,870) -- (30,128) (39,629) --
Cost of insurance and
other fees............ (276,771) (9,804) (42,284) (150,874) (473)
----------------- --------------- ------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 4,185,437 105,349 1,108,188 1,525,823 54,966
----------------- --------------- ------------ ------------------ ------------
Total increase
(decrease) in net
assets................ 5,392,684 192,367 1,295,991 1,945,101 60,878
NET ASSETS:
Beginning of period.... 2,643,002 494,655 201,799 1,993,340 --
----------------- --------------- ------------ ------------------ ------------
End of period.......... $ 8,035,686 $ 687,022 $ 1,497,790 $3,938,441 $ 60,878
----------------- --------------- ------------ ------------------ ------------
----------------- --------------- ------------ ------------------ ------------
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME FUND OVERSEAS FUND ASSET MANAGER FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 28,598 $ 2,647 $ 4,226
Capital gains income... 11,171 2,911 --
Net realized gain
(loss) on security
transactions.......... (3,448) 1,350 884
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 333,297 71,916 32,712
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from
operations............ 369,618 78,824 37,822
------------------ ------------- --------
UNIT TRANSACTIONS:
Purchases.............. 889,845 203,728 94,706
Net transfers.......... 3,109,762 760,222 513,253
Surrenders............. (64,856) (18,172) (14,935)
Net loan withdrawals... (111,464) (91,281) (1,047)
Cost of insurance...... (97,433) (22,781) (11,950)
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,725,854 831,716 580,027
------------------ ------------- --------
Total increase
(decrease) in net
assets................ 4,095,472 910,540 617,849
NET ASSETS:
Beginning of period.... 715,622 76,357 36,970
------------------ ------------- --------
End of period.......... $4,811,094 $986,897 $654,819
------------------ ------------- --------
------------------ ------------- --------
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME FUND OVERSEAS FUND ASSET MANAGER FUND
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
------------------ ------------- ------------------
OPERATIONS:
Net investment income
(loss)................ $ 5,067 $ -- $--
Capital gains income... -- -- --
Net realized gain
(loss) on security
transactions.......... (7) 140 229
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 37,890 2,351 2,499
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from
operations............ 42,950 2,491 2,728
------------------ ------------- --------
UNIT TRANSACTIONS:
Purchases.............. 206,082 18,683 12,310
Net transfers.......... 474,024 67,416 34,943
Surrenders............. (7,434) (12,233) (13,011)
Net loan withdrawals... -- -- --
Cost of insurance and
other fees............ -- -- --
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 672,672 73,866 34,242
------------------ ------------- --------
Total increase
(decrease) in net
assets................ 715,622 76,357 36,970
NET ASSETS:
Beginning of period.... -- -- --
------------------ ------------- --------
End of period.......... $ 715,622 $ 76,357 $ 36,970
------------------ ------------- --------
------------------ ------------- --------
</TABLE>
<PAGE>
50 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE ONE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- ---------------------------------------------------
1. ORGANIZATION:
Separate Account Variable Life One (the Account) is a separate investment
account within Hartford Life Insurance Company (the Company) and is registered
with the Securities and Exchange Commission (SEC) as a unit investment trust
under the Investment Company Act of 1940, as amended. The Account consists of
twenty two sub-accounts. These financial statements include twelve sub-accounts
which invest solely in Hartford Mutual Funds and Fidelity Mutual Funds (the
Funds). The other ten sub-accounts, which invest in Putnam Variable Trust Funds,
are presented in separate financial statements. Both the Company and the Account
are subject to supervision and regulation by the Department of Insurance of the
State of Connecticut and the SEC. The Account invests deposits by variable life
contractholders of the Company in the Funds as directed by the contractholders.
- ---------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are
recorded on the trade date (date the order to buy or sell is executed).
Cost of investments sold is determined on the basis of identified cost.
Dividend and capital gains income are accrued as of the ex-dividend
date. Capital gains income represents dividends from the Funds which are
characterized as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the
Funds are valued at the closing net asset value per share as determined
by the appropriate Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the
Account form a part of, and are taxed with, the total operations of the
Company, which is taxed as an insurance company under the Internal
Revenue Code. Under current law, no federal income taxes are payable
with respect to the operations of the Account.
d) USE OF ESTIMATES--The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the date of the financial
statements and the reported amounts of income and expenses during the
period. Operating results in the future could vary from the amounts
derived from management's estimates.
- ---------------------------------------------------
3.ADMINISTRATION OF THE ACCOUNT AND
RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative fees,
and state premium taxes. These charges are deducted through termination of units
of interest from applicable contractholders' accounts in accordance with the
terms of the contracts.
<PAGE>
Report of Independent Public Accountants
To Hartford Life Insurance Company Putnam Capital Manager Trust Separate
Account Variable Life One and to the Owners of Units of Interest therein:
We have audited the accompanying statement of assets and liabilities of
Diversified Income Fund Sub-Account, Global Asset Allocation Fund Sub-
Account, Global Growth Fund Sub-Account, Growth and Income Fund Sub-
Account, High Yield Fund Sub-Account, Money Market Fund Sub-Account, New
Opportunities Fund Sub-Account, U.S. Government and High Quality Bond
Fund Sub-Account, Utilities Growth and Income Fund Sub-Account and
Voyager Fund Sub-Account (constituting Hartford Life Insurance Company
Putnam Capital Manager Trust Separate Account Variable Life One) (the
Account) as of December 31, 1996, and the related statement of
operations for the year then ended and statements of changes in net
assets for each of the two years in the period then ended. These
financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Diversified
Income Fund Sub-Account, Global Asset Allocation Fund Sub-Account,
Global Growth Fund Sub-Account, Growth and Income Fund Sub-Account, High
Yield Fund Sub-Account, Money Market Fund Sub-Account, New Opportunities
Fund Sub-Account, U.S. Government and High Quality Bond Fund Sub-
Account, Utilities Growth and Income Fund Sub-Account and Voyager Fund
Sub-Account (constituting Hartford Life Insurance Company Putnam Capital
Manager Trust Separate Account Variable Life One) as of December 31,
1996, the results of its operations for the year then ended and the
changes in its net assets for each of the two years in the period then
ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
<PAGE>
<TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE ONE -- HARTFORD LIFE INSURANCE COMPANY
<CAPTION>
Statement of Assets & Liabilities
- ----------------------------------------------------------------------------------------------------
December 31, 1996 Diversified Global Asset Global Growth High Yield
Income Allocation Growth and Income Fund
Fund Fund Fund Fund Sub-Account
Sub-Account Sub-Account Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Investments:
.....................................................................................................
Putnam VT Diversified Income Fund
Shares 38,605
Cost $422,674
.....................................................................................................
Market Value: $435,083 $ -- $ -- $ -- $ --
.....................................................................................................
Putnam VT Global Asset
Allocation Fund
Shares 338,776
Cost $4,929,519
.....................................................................................................
Market Value: -- 5,843,885 -- -- --
.....................................................................................................
Putnam VT Global Growth Fund
Shares 697,882
Cost $10,354,773
.....................................................................................................
Market Value: -- -- 11,780,245 -- --
.....................................................................................................
Putnam VT Growth and Income Fund
Shares 673,834
Cost $13,684,147
.....................................................................................................
Market Value: -- -- -- 16,549,365 --
.....................................................................................................
Putnam VT High Yield Fund
Shares 195,211
Cost $2,368,169
.....................................................................................................
Market Value: -- -- -- -- 2,529,937
.....................................................................................................
Putnam VT Money Market Fund
Shares 1,736,570
Cost $1,736,570
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Putnam VT New Opportunities Fund
Shares 577,100
Cost $9,925,787
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Putnam VT U.S. Government and
High Quality Bond Fund
Shares 361,426
Cost $4,675,759
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Putnam VT Utilities Growth and
Income Fund
Shares 132,241
Cost $1,606,704
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Putnam VT Voyager Fund
Shares 764,339
Cost $21,417,935
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Due from Hartford Life
Insurance Company 200 3,483 11,088 16,222 7,130
.....................................................................................................
Receivable from fund
shares sold -- -- -- -- --
- ----------------------------------------------------------------------------------------------------
Total Assets 435,283 5,847,368 11,791,333 16,565,587 2,537,067
- ----------------------------------------------------------------------------------------------------
Liabilities
Due to Hartford Life
Insurance Company -- -- -- -- --
.....................................................................................................
Payable for fund shares
purchased 200 3,489 11,088 16,329 7,147
.....................................................................................................
Total Liabilities 200 3,489 11,088 16,329 7,147
- ----------------------------------------------------------------------------------------------------
Net Assets (variable
annuity contract
liabilities) $435,083 $5,843,879 $11,780,245 $16,549,258 $2,529,920
- ----------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Assets & Liabilities (Continued)
- ----------------------------------------------------------------------------------------------------------
December 31, 1996 Money New U.S. Govt. Utilities Voyager
Market Opportunities and High Growth Fund
Fund Fund Quality Bond and Income Sub-Account
Sub-Account Sub-Account Fund Fund
Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Investments:
...........................................................................................................
Putnam VT Diversified Income Fund
Shares 38,605
Cost $422,674
...........................................................................................................
Market Value: $ -- $ -- $ -- $ -- $ --
...........................................................................................................
Putnam VT Global Asset
Allocation Fund
Shares 338,776
Cost $4,929,519
...........................................................................................................
Market Value: -- -- -- -- --
...........................................................................................................
Putnam VT Global Growth Fund
Shares 697,882
Cost $10,354,773
...........................................................................................................
Market Value: -- -- -- -- --
...........................................................................................................
Putnam VT Growth and Income Fund
Shares 673,834
Cost $13,684,147
...........................................................................................................
Market Value: -- -- -- -- --
...........................................................................................................
Putnam VT High Yield Fund
Shares 195,211
Cost $2,368,169
...........................................................................................................
Market Value: -- -- -- -- --
...........................................................................................................
Putnam VT Money Market Fund
Shares 1,736,570
Cost $1,736,570
...........................................................................................................
Market Value: 1,736,570 -- -- -- --
...........................................................................................................
Putnam VT New Opportunities Fund
Shares 577,100
Cost $9,925,787
...........................................................................................................
Market Value: -- 9,937,669 -- -- --
...........................................................................................................
Putnam VT U.S. Government and
High Quality Bond Fund
Shares 361,426
Cost $4,675,759
...........................................................................................................
Market Value: -- -- 4,774,443 -- --
...........................................................................................................
Putnam VT Utilities Growth and
Income Fund
Shares 132,241
Cost $1,606,704
...........................................................................................................
Market Value: -- -- -- 1,957,164 --
...........................................................................................................
Putnam VT Voyager Fund
Shares 764,339
Cost $21,417,935
...........................................................................................................
Market Value: -- -- -- -- 24,863,947
...........................................................................................................
Due from Hartford Life
Insurance Company -- 18,858 199 -- 39,530
...........................................................................................................
Receivable from fund
shares sold 10 -- -- 2,230 --
- ----------------------------------------------------------------------------------------------------------
Total Assets 1,736,580 9,956,527 4,774,642 1,959,394 24,903,477
- ----------------------------------------------------------------------------------------------------------
Liabilities
Due to Hartford Life 1 -- -- $2,254 --
Insurance Company
...........................................................................................................
Payable for fund shares
purchased -- 18,785 199 -- 39,611
...........................................................................................................
Total Liabilities 1 18,785 199 2,254 39,611
- ----------------------------------------------------------------------------------------------------------
Net Assets (variable
annuity contract
liabilities) $1,736,579 $9,937,742 $4,774,443 $1,957,140 $24,863,866
- ----------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE ONE -- HARTFORD LIFE INSURANCE COMPANY
<CAPTION>
Statement of Assets and Liablilites (continued)
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1996 Units Unit Contract
Owned by Price Liability
Participants
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred annuity contracts in the accumulation period:
Group Sub-Accounts:
.............................................................................................................................
Diversified Income Fund Sub-Account 36,063 $12.064581 $435,083
.............................................................................................................................
Global Asset Allocation Fund Sub-Account 381,904 15.301933 5,843,879
.............................................................................................................................
Global Growth Fund Sub-Account 741,021 15.897325 11,780,245
.............................................................................................................................
Growth and Income Fund Sub-Account 929,091 17.812315 16,549,258
.............................................................................................................................
High Yield Fund Sub-Account 174,838 14.470063 2,529,920
.............................................................................................................................
Money Market Fund Sub-Account 1,483,882 1.170296 1,736,579
.............................................................................................................................
New Opportunities Fund Sub-Account 670,053 14.831271 9,937,742
.............................................................................................................................
U.S. Government and High Quality Bond Fund Sub-Account 381,812 12.504679 4,774,443
.............................................................................................................................
Utilities Growth and Income Fund Sub-Account 132,125 14.812870 1,957,140
.............................................................................................................................
Voyager Fund Sub-Account 1,356,650 18.327403 24,863,866
- ----------------------------------------------------------------------------------------------------------------------------
Grand Total $80,408,155
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE ONE -- HARTFORD LIFE INSURANCE COMPANY
<CAPTION>
Statement of Operations
- -------------------------------------------------------------------------------------------------------------------------
For the year ended Diversified Global Asset Global Growth
December 31, 1996 Income Allocation Growth and Income
Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Dividends $ 3,462 $188,398 $ 127,576 $ 373,127
..........................................................................................................................
Capital gains income -- 123,629 185,843 169,182
..........................................................................................................................
Net realized and
unrealized gain (loss)
on investments:
..........................................................................................................................
Net realized gain (loss)
on security transactions 552 (7,261) (629) 3,431
..........................................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 11,226 402,313 939,399 1,721,046
..........................................................................................................................
Net gain (loss) on
investments 11,778 395,052 938,770 1,724,477
- -------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in net
assets resulting
from operations $15,240 $707,079 $1,252,189 $2,266,786
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Operations (Continued)
- --------------------------------------------------------------------------------------------------------------------------
For the year ended High Yield Money New U.S. Govt.
December 31, 1996 Fund Market Opportunities and High
Sub-Account Fund Fund Quality Bond
Sub-Account Sub-Account Fund
Sub-Account
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Dividends $100,269 $64,821 $ -- $118,810
...........................................................................................................................
Capital gains income -- -- -- --
...........................................................................................................................
Net realized and
unrealized gain (loss)
on investments:
...........................................................................................................................
Net realized gain (loss)
on security transactions 1,207 -- (12,125) 1,512
...........................................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 110,874 -- (46,287) 39,260
...........................................................................................................................
Net gain (loss) on
investments 112,081 -- (58,412) 40,772
- --------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in net
assets resulting
from operations $212,350 $64,821 $(58,412) $159,582
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Operations (Continued)
- ---------------------------------------------------------------------------------
For the year ended Utilities Voyager
December 31, 1996 Growth Fund
and Income Sub-Account
Fund
Sub-Account
- ---------------------------------------------------------------------------------
<S> <C> <C>
Investment income:
Dividends $ 54,039 $275,323
..................................................................................
Capital gains income -- 535,426
..................................................................................
Net realized and
unrealized gain (loss)
on investments:
..................................................................................
Net realized gain (loss)
on security transactions 5,913 (21,665)
..................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 187,466 1,014,491
..................................................................................
Net gain (loss) on
investments 193,379 992,826
- ---------------------------------------------------------------------------------
Net increase
(decrease) in net
assets resulting
from operations $247,418 $1,803,575
- ---------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE ONE -- HARTFORD LIFE INSURANCE COMPANY
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------------------
For the year ended Diversified Global Asset Global Growth
December 31, 1996 Income Allocation Growth and Income
Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment
income $ 3,462 $ 188,398 $ 127,576 $ 373,127
..........................................................................................................................
Capital gains income -- 123,629 185,843 169,182
..........................................................................................................................
Net realized gain (loss)
on security transactions 552 (7,261) (629) 3,431
..........................................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 11,226 402,313 939,399 1,721,046
..........................................................................................................................
Net increase (decrease)
in net assets resulting
from operations 15,240 707,079 1,252,189 2,266,786
..........................................................................................................................
Unit transactions:
Purchases 24,807 452,006 2,362,436 2,593,033
..........................................................................................................................
Net transfers 389,351 1,230,543 4,268,747 5,653,969
..........................................................................................................................
Surrenders (2,488) (134,352) (261,978) (232,793)
..........................................................................................................................
Loan withdrawals -- (15,060) (136,654) (131,861)
..........................................................................................................................
Cost of insurance (6,035) (129,436) (380,278) (386,556)
..........................................................................................................................
Total net increase
in net assets resulting
from unit transactions 405,635 1,403,701 5,852,273 7,495,792
..........................................................................................................................
Total increase
in net assets 420,875 2,110,780 7,104,462 9,762,578
..........................................................................................................................
Net assets:
Beginning of period 14,208 3,733,099 4,675,783 6,786,680
- -------------------------------------------------------------------------------------------------------------------------
End of period $435,083 $5,843,879 $11,780,245 $16,549,258
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Changes in Net Assets (Continued)
- --------------------------------------------------------------------------------------------------------------------------
For the year ended High Yield Money New U.S. Govt.
December 31, 1996 Fund Market Opportunities and High
Sub-Account Fund Fund Quality Bond
Sub-Account Sub-Account Fund
Sub-Account
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment
income $ 100,269 $ 64,821 $ -- $ 118,810
...........................................................................................................................
Capital gains income -- -- -- --
...........................................................................................................................
Net realized gain (loss)
on security transactions 1,207 -- (12,125) 1,512
...........................................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 110,874 -- (46,287) 39,260
...........................................................................................................................
Net increase (decrease)
in net assets resulting
from operations 212,350 64,821 (58,412) 159,582
...........................................................................................................................
Unit transactions:
Purchases 623,832 222,153 1,916,795 851,577
...........................................................................................................................
Net transfers 827,225 1,174,039 7,598,113 2,649,806
...........................................................................................................................
Surrenders (75,658) (15,114) (180,695) (43,664)
...........................................................................................................................
Loan withdrawals (62,507) (32,391) (15,220) (88,504)
...........................................................................................................................
Cost of insurance (118,676) (75,543) (207,683) (175,229)
...........................................................................................................................
Total net increase
in net assets resulting
from unit transactions 1,194,216 1,273,144 9,111,310 3,193,986
...........................................................................................................................
Total increase
in net assets 1,406,566 1,337,965 9,052,898 3,353,568
...........................................................................................................................
Net assets:
Beginning of period 1,123,354 398,614 884,844 1,420,875
- --------------------------------------------------------------------------------------------------------------------------
End of period $2,529,920 $1,736,579 $9,937,742 $4,774,443
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Changes in Net Assets (Continued)
- ---------------------------------------------------------------------------------
For the year ended Utilities Voyager
December 31, 1996 Growth Fund
and Income Sub-Account
Fund
Sub-Account
- ---------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment
income $ 54,039 $ 275,323
..................................................................................
Capital gains income -- 535,426
..................................................................................
Net realized gain (loss)
on security transactions 5,913 (21,665)
..................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 187,466 1,014,491
..................................................................................
Net increase (decrease)
in net assets resulting
from operations 247,418 1,803,575
..................................................................................
Unit transactions:
Purchases 197,577 4,304,397
..................................................................................
Net transfers 374,918 9,073,061
..................................................................................
Surrenders (23,356) (688,697)
..................................................................................
Loan withdrawals (8,504) (311,045)
..................................................................................
Cost of insurance (46,157) (810,828)
..................................................................................
Total net increase
in net assets resulting
from unit transactions 494,478 11,566,888
..................................................................................
Total increase
in net assets 741,896 13,370,463
..................................................................................
Net assets:
Beginning of period 1,215,244 11,493,403
- ---------------------------------------------------------------------------------
End of period $1,957,140 $24,863,866
- ---------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE ONE -- HARTFORD LIFE INSURANCE COMPANY
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------------------
For the year ended Diversified Global Asset Global Growth
December 31, 1995 Income Allocation Growth and Income
Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment
income $ -- $ 39,388 $ 24,814 $ 121,893
..........................................................................................................................
Capital gains income -- -- 46,171 31,376
..........................................................................................................................
Net realized gain
on security transactions 10 14,435 932 1,768
..........................................................................................................................
Net unrealized
appreciation of
investments during
the period 1,182 535,036 471,341 1,198,951
..........................................................................................................................
Net increase in net
assets resulting
from operations 1,192 588,859 543,258 1,353,988
..........................................................................................................................
Unit transactions:
Purchases 765 339,758 1,154,464 899,746
..........................................................................................................................
Net transfers 12,424 2,127,164 1,287,158 2,362,146
..........................................................................................................................
Surrenders (57) (72,050) (133,739) (160,057)
..........................................................................................................................
Loan withdrawals -- (55,002) (58,904) (75,016)
..........................................................................................................................
Cost of insurance (116) (78,172) (172,021) (152,234)
..........................................................................................................................
Net increase
in net assets resulting
from unit transactions 13,016 2,261,698 2,076,958 2,874,585
..........................................................................................................................
Total increase
in net assets 14,208 2,850,557 2,620,216 4,228,573
..........................................................................................................................
Net assets:
Beginning of period -- 882,542 2,055,567 2,558,107
- -------------------------------------------------------------------------------------------------------------------------
End of period $14,208 $3,733,099 $4,675,783 $6,786,680
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Changes in Net Assets (Continued)
- -------------------------------------------------------------------------------------------------------------------------
For the year ended High Yield Money New U.S. Govt.
December 31, 1995 Fund Market Opportunities and High
Sub-Account Fund Fund Quality Bond
Sub-Account Sub-Account Fund
Sub-Account
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment
income $ 45,484 $ 14,226 $ -- $ 22,761
..........................................................................................................................
Capital gains income -- -- -- --
..........................................................................................................................
Net realized gain
on security transactions 35 -- 56 2,030
..........................................................................................................................
Net unrealized
appreciation of
investments during
the period 64,042 -- 58,166 74,145
..........................................................................................................................
Net increase in net
assets resulting
from operations 109,561 14,226 58,222 98,936
..........................................................................................................................
Unit transactions:
Purchases 232,533 77,580 140,605 165,903
..........................................................................................................................
Net transfers 488,483 106,176 712,707 964,335
..........................................................................................................................
Surrenders (36,113) (5,881) (14,763) (33,996)
..........................................................................................................................
Loan withdrawals (3,445) (31,209) (5,438) (11,534)
..........................................................................................................................
Cost of insurance (47,259) (14,549) (6,489) (27,019)
..........................................................................................................................
Net increase
in net assets resulting
from unit transactions 634,199 132,117 826,622 1,057,689
..........................................................................................................................
Total increase
in net assets 743,760 146,343 884,844 1,156,625
..........................................................................................................................
Net assets:
Beginning of period 379,594 252,271 -- 264,250
- -------------------------------------------------------------------------------------------------------------------------
End of period $1,123,354 $398,614 $884,844 $1,420,875
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Changes in Net Assets (Continued)
- ---------------------------------------------------------------------------------
For the year ended Utilities Voyager
December 31, 1995 Growth Fund
and Income Sub-Account
Fund
Sub-Account
- ---------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment
income $ 47,950 $ 14,475
..................................................................................
Capital gains income -- 106,726
..................................................................................
Net realized gain
on security transactions 3,151 1,707
..................................................................................
Net unrealized
appreciation of
investments during
the period 229,924 2,361,906
..................................................................................
Net increase in net
assets resulting
from operations 281,025 2,484,814
..................................................................................
Unit transactions:
Purchases 168,645 2,208,784
..................................................................................
Net transfers 71,815 4,010,510
..................................................................................
Surrenders (74,646) (313,366)
..................................................................................
Loan withdrawals (2,201) (64,074)
..................................................................................
Cost of insurance (26,397) (368,558)
..................................................................................
Net increase
in net assets resulting
from unit transactions 137,216 5,473,296
..................................................................................
Total increase
in net assets 418,241 7,958,110
..................................................................................
Net assets:
Beginning of period 797,003 3,535,293
- ---------------------------------------------------------------------------------
End of period $1,215,244 $11,493,403
- ---------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE ONE --
HARTFORD LIFE INSURANCE COMPANY
Notes to Financial Statements
December 31, 1996
1. ORGANIZATION:
Separate Account Variable Life One (the Account) is a separate
investment account within Hartford Life Insurance Company (the Company)
and is registered with the Securities and Exchange Commission (SEC) as a
unit investment trust under the Investment Company Act of 1940, as
amended. The Account consists of twenty two sub-accounts. These
financial statements include ten subaccounts which invest solely in the
Putnam Variable Trust Funds (the Funds). The other twelve sub-accounts,
which invest in Hartford Mutual Funds and Fidelity Mutual Funds, are
presented in separate financial statements. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life contractholders of the Company in the various
mutual funds as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
A) Security Transactions -- Security transactions are recorded on the
trade date (date the order to buy or sell is executed). Cost of
investments sold is determined on the basis of identified cost.
Dividends and capital gains income are accrued as of the ex-dividend
date. Capital gains income represents dividends from the Funds which are
characterized as capital gains under tax regulations.
B) Security Valuation -- The investments in shares of the Funds are
valued at the closing net asset value per share as determined by the
appropriate Fund as of December 31, 1996.
C) Federal Income Taxes -- The operations of the Account form a part of,
and are taxed with, the total operations of the Company, which is taxed
as an insurance company under the Internal Revenue Code. Under current
law, no federal income taxes are payable with respect to the operations
of the Account.
D) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the date of the financial
statements and the reported amounts of income and expenses during the
period. Operating results in the future could vary from the amounts
derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes
deductions for mortality and expense undertakings, cost of insurance,
administrative fees, and state premium taxes. These charges are deducted
through termination of units of interest from applicable contract
owners' accounts, in accordance with the terms of the contracts.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 76 pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required by
paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of Hartford Life Insurance
Company ("Hartford") authorizing the establishment of the Separate
Account. (1)
(A2) Not applicable.
(A3a) Principal Underwriting Agreement. (2)
(A3b) Form of Selling Agreements. (2)
(A3c) Not applicable.
(A4) Not applicable.
(A5) Form of Flexible Premium Variable Life Insurance Policy. (1)
(A6a) Charter of Hartford.
(A6b) Bylaws of Hartford. (1)
(A7) Not applicable.
- ---------------
(1) Incorporated by reference to Post-Effective Amendment No. 3, to the
Registration Statement File No. 33-53692, dated May 1, 1995.
(2) Incorporated by reference to Post Effective Amendment No. 4, to the
Registration Statement File No. 33-53692, dated May 1, 1996.
<PAGE>
(A8) Not applicable.
(A9) Not applicable.
(A10) Form of Application for Flexible Premium Variable Life Insurance
Policies. (1)
(A11) Memorandum describing transfer and redemption procedures. (1)
(2) Opinion and Counsel of Lynda Godkin, General Counsel.
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
(4) Not applicable.
(5) Opinion and consent of Ken A. McCullum, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Certified Public Accountants.
(7) Power of Attorney.
(8) Financial Data Schedule.
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
Hartford Life Insurance Company ("Hartford") hereby represents that the
aggregate fees and charges under the Policy are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by Hartford.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
UNDERTAKINGS AND REPRESENTATIONS AS REQUIRED BY RULE 6e-3(T)
1. Separate Account VL I meets the definition of "Separate Account" under
Rule 6e-3(T).
2. Hartford undertakes to keep and make available to the Commission upon
request any documents used to support any representation as to the
reasonableness of fees.
UNDERTAKING ON INDEMNIFICATION
Article VIII of the Bylaws of Hartford Life Insurance Company, a Connecticut
corporation, provides for indemnification of its officers, directors and
employees to the extent consistent with statutory requirements.
Connecticut General Laws Section 33-320a provides for indemnification of
officers, directors and employees of a corporation as follows:
(b) Except as otherwise provided in this section, a corporation shall indemnify
any person made a party to any proceeding, other than an action by or in the
right of the corporation, by reason of the fact that he, or the person whose
legal representative he is, is or was a shareholder, director, officer, employee
or agent of the corporation, or an eligible outside party, against judgments,
fines, penalties, amounts paid in settlement and reasonable expenses actually
incurred by him, and the person whose legal representative he is, in connection
with such proceeding. The corporation shall not so indemnify any such person
unless (1) such person, and the person whose legal representative he is, was
successful on the merits in the defense of any proceeding referred to in this
subsection, or (2) it shall be concluded as provided in subsection (d) of this
section that such person, and the person whose legal representative he is, acted
in good faith and in a manner he reasonably believed to be in the best interests
of the corporation or, in the case of a person serving as a fiduciary of an
employee benefit plan or trust, either in the best interests of the corporation
or in the best interests of the participants and beneficiaries of such employee
benefit plan or trust and consistent with the provisions of such employee
benefit plan or trust and, with respect to any criminal action or proceeding,
that he had no reasonable cause to believe his
<PAGE>
conduct was unlawful, or (3) the court, on application as provided in subsection
(e) of this section, shall have determined that in view of all the circumstances
such person is fairly and reasonably entitled to be indemnified, and then for
such amount as the court shall determine; except that, in connection with an
alleged claim based upon his purchase or sale of securities of the corporation
or of another enterprise, which he serves or served at the request of the
corporation, the corporation shall only indemnify such person after the court
shall have determined, on application as provided in subsection (e) of this
section, that in view of all the circumstances such person is fairly and
reasonably entitled to be indemnified, and then for such amount as the court
shall determine. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
or in a manner which he did not reasonably believe to be in the best interests
of the corporation or of the participants and beneficiaries of such employee
benefit plan or trust and consistent with the provisions of such employee
benefit plan or trust, or, with respect to any criminal action or proceeding,
that he had reasonable cause to believe that his conduct was unlawful.
(c) Except as otherwise provided in this section, a corporation shall
indemnify any person made a party to any proceeding, by or in the right of the
corporation, to procure a judgment in its favor by reason of the fact that he,
or the person whose legal representative he is, is or was a shareholder,
director, officer, employee or agent of the corporation, or an eligible outside
party, against reasonable expenses actually incurred by him in connection with
such proceeding in relation to matters as to which such person, or the person
whose legal representative he is, is finally adjudged not to have breached his
duty to the corporation, or where the court, on application as provided in
subsection (e) of this section, shall have determined that in view of all the
circumstances such person is fairly and reasonably entitled to be indemnified,
and then for such amount as the court shall determine. The corporation shall
not so indemnify any such person for amounts paid to the corporation, to a
plaintiff or to counsel for a plaintiff in settling or otherwise disposing of a
proceeding, with or without court approval; or for expenses incurred in
defending a proceeding which is settled or otherwise disposed of without court
approval.
(d) The conclusion provided for in subsection (b) of this section may be
reached by any one of the following: (1) The Board of Directors of the
corporation by a consent in writing signed by a majority of those directors who
were not parties to such proceeding; (2) independent legal counsel selected by a
consent in writing signed by a majority of those directors who were not parties
to such proceeding; (3) in the case of any employee or agent who is not an
officer or director of the corporation, the corporation's general counsel; or
(4) the shareholders of the corporation by the affirmative vote of at least a
majority of the voting power of shares not owned by parties to such proceeding,
represented at an annual or special meeting of shareholders, duly called with
notice of such purpose stated. Such person shall also be entitled to apply to a
court for such conclusion, upon application as provided in subsection (e), even
though the conclusion reached by any of the foregoing shall have been adverse to
him or to the person whose legal representative he is.
(e) Where an application for indemnification or for a conclusion as provided in
this section is made to a court, it shall be made to the court in which the
proceeding is pending or to the
<PAGE>
superior court for the judicial district where the principal office of the
corporation is located. The application shall be made in such manner and form
as may be required by the applicable rules of the court or, in the absence
thereof, by direction of the court. The court may also direct the notice be
given in such manner as it may require at the expense of the corporation to the
shareholders of the corporation and to such other persons as the court may
designate. In the case of an application to a court in which a proceeding is
pending in which the person seeking indemnification is a party by reason of the
fact that he, or the person whose legal representative he is, is or was serving
at the request of the corporation as a director, partner, trustee, officer,
employee or agent of another enterprise, or as a fiduciary of an employee
benefit plan or trust maintained for the benefit of employees of any other
enterprise, timely notice of such application shall be given by such person to
the corporation.
(f) Expenses which may be indemnifiable under this section incurred in
defending a proceeding may be paid by the corporation in advance of the final
disposition of such proceeding as authorized by the Board of Directors upon
agreement by or on behalf of the shareholder, director, officer, employee, agent
or eligible outside party, or his legal representative, to repay such amount if
he is later found not entitled to be indemnified by the corporation as
authorized in this section.
(g) A corporation shall not indemnify any shareholder, director, officer,
employee, agent or eligible outside party, other than a shareholder, director,
officer, employee, agent or eligible outside party who is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee or
agent of another enterprise, against judgments, fines, penalties, amounts paid
in settlement and expenses to an extent either greater or less than that
authorized in this section. No provision made a part of the incorporation, the
bylaws, a resolution or shareholders or directors, an agreement, or otherwise on
or after October 1, 1982, shall be valid unless consistent with this section.
Notwithstanding the foregoing, the corporation may procure insurance providing
greater indemnification and may share the premium cost with any shareholder,
director, officer, employee, agent or eligible outside party on such basis as
may be agreed upon. The rights and remedies provided in this section shall be
exclusive."
The registrant hereby undertakes that insofar as indemnification for liability
arising under the Securities Act of 1933 (the "Act") may be permitted to
directors, officers and controlling persons of the registrant, pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned thereunto duly authorized, and attested, all in the Town of
Simsbury, and State of Connecticut, on the 10 day of April, 1997.
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL I
(Registrant)
By: /s/ Gregory A. Boyko
----------------------------------------------
Gregory A. Boyko, Vice President & Controller
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Gregory A. Boyko
----------------------------------------------
Gregory A. Boyko, Vice President & Controller
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
Bruce D. Gardner, Vice President
Director *
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director *
John P. Ginnetti, Executive Vice
President, Director *
Thomas M. Marra, Executive Vice *By: /s/ Lynda Godkin
President, Director * ------------------------------
Leonard E. Odell, Jr., Senior Lynda Godkin
Vice President, Director * Attorney-In-Fact
Lowndes A. Smith, President,
Chief Operating Officer,
Director *
Dated: April 10, 1997
Raymond P. Welnicki, Senior Vice
President, Director *
Lizabeth H. Zlatkus, Vice President
Director *
<PAGE>
EXHIBIT INDEX
(1) (A6a) Charter of Hartford.
(2) Opinion and Consent of Lynda Godkin, General Counsel.
(5) Opinion and Consent of Ken McCullum, FSA, MAAA.
(6) Consent of Arthur Andersen, LLP.
(7) Copy of Power of Attorney.
(8) Financial Data Schedule.
<PAGE>
FILING #0001681565 PG 04 OF 05 VOL B-00105
FILED 12/31/1996 10:21 AM PAGE 00680
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
HARTFORD LIFE INSURANCE COMPANY
CERTIFICATE AMENDING
RESTATED CERTIFICATE OF INCORPORATION
BY ACTIONS OF THE BOARD OF DIRECTORS AND THE SOLE SHAREHOLDER
1. The name of the Corporation is HARTFORD LIFE INSURANCE COMPANY.
2. The Restated Certificate of Incorporation of the Corporation is amended by
the following resolution of each of the Board of Directors and the Sole
Shareholder:
RESOLVED, that the Restated Certificate of Incorporation of the
Company, as supplemented and amended to date, is hereby further
amended by and adding the following Sections 4 and 5. All other
sections of the Restated Certificate of Incorporation shall
remain unchanged and continue in full force and effect.
"Section 4. The Board of Directors may, at any time, appoint
from among its own members such committees as it
may deem necessary for the proper conduct of the
business of the Company. The Board of Directors
shall be unrestricted as to the powers it may
confer upon such committees."
"Section 5. So much of the charter of said corporation, as
amended, as is inconsistent herewith is repealed,
provided that such repeal shall not invalidate or
otherwise affect any action taken pursuant to the
charter of the corporation, in accordance with its
terms, prior to the effective date of such
repeal."
3. The above resolutions were consented to by the Board of Directors and the
Sole Shareholder of the Corporation. The number of shares of the
Corporation's common capital stock entitled to vote thereon was 1,000 and
the vote required for adoption was 660 shares. The vote favoring adoption
was 1,000 shares, which was the greatest vote required to pass the
resolution.
<PAGE>
2
Dated at Simsbury, Connecticut this 30th day of December, 1996.
We hereby declare, under penalty of false statement, that the statements made in
the foregoing Certificate are true.
HARTFORD LIFE INSURANCE COMPANY
/s/ John P. Ginnetti
---------------------------------
John P. Ginnetti, Executive Vice
President
/s/ Lynda Godkin
---------------------------------
Lynda Godkin, Associate General Counsel
& Secretary
<PAGE>
3
RESTATED CERTIFICATE OF INCORPORATION
HARTFORD LIFE INSURANCE COMPANY
This Restated Certificate of Incorporation gives effect to
the amendment of the Certificate of Incorporation of the corporation
and otherwise purports merely to restate all those provisions
already in effect. This Restated Certificate of Incorporation has
been adopted by the Board of Directors and by the sole shareholder.
Section 1. The name of the corporation is Hartford Life
Insurance Company and it shall have all the powers granted
by the general statutes, as now enacted or hereinafter
amended to corporations formed under the Stock Corporation
Act.
Section 2. The corporation shall have the purposes and
powers to write any and all forms of insurance which any
other corporation now or hereafter chartered by Connecticut
and empowered to do an insurance business may now or
hereafter may lawfully do; to accept and to issue cede
reinsurance; to issue policies and contracts for any kind
or combination of kinds of insurance; to policies or
contracts either with or without participation in profits;
to acquire and hold any or all of the shares or other
securities of any insurance corporation; and to engage in
any lawful act or activity for which corporations may be
formed under the Stock Corporation Act. The corporation is
authorized to exercise the powers herein granted in any
state, territory or jurisdiction of the United States or in
any foreign country.
Section 3. The capital with which the corporation shall
commence business shall be an amount not less than one
thousand dollars. The authorized capital shall be two
million five hundred thousand dollars divided into one
thousand shares of common capital stock with a par value of
twenty-five hundred dollars each.
<PAGE>
4
We hereby declare, under the penalties of false statement
that the statements made in the foregoing Certificate are true.
Dated: February 10, 1982 HARTFORD LIFE INSURANCE COMPANY
By /s/ ROBERT B. GOODE, JR.
----------------------------
Attest:
/s/ WM. A. MCMAHON
- ----------------------
7342D
<PAGE>
THE [LOGO]
HARTFORD
April 10, 1997 Lynda Godkin
General Counsel & Secretary
Law Department
Board of Directors
Hartford Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT VL I
HARTFORD LIFE INSURANCE COMPANY
FILE NO. 33-53692
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life Insurance Company (the
"Company"), a Connecticut insurance company, and Hartford Life Insurance Company
Separate Account VL I (the "Account") in connection with the registration of an
indefinite amount of securities in the form of flexible premium variable life
insurance policies (the "Policies") with the Securities and Exchange Commission
under the Securities Act of 1933, as amended. I have examined such documents
(including the Form S-6 Registration Statement) and reviewed such questions of
law as I considered necessary and appropriate, and on the basis of such
examination and review, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is
duly authorized by the Insurance Department of the State of Connecticut to
issue the Policies.
2. The Account is a duly authorized and validly existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
3. To the extent so provided under the Policies, that portion of the assets of
the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.
Hartford Life Insurance Companies
200 Hopmeadow Street
Simsbury, CT 06089
860 843 3153
860 843 8665 Fax
Mailing Address: P.O. Box 2999
Hartford, CT 06104-2999
<PAGE>
Board of Directors
Hartford Life Insurance Company
April 10, 1997
Page 2
4. The Policies, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations of
the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form S-6
Registration Statement for the Policies and the Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
[LOGO]
ITT HARTFORD ITT HARTFORD LIFE INSURANCE COMPANIES
KEN A. MCCULLUM, FSA, MAAA 200 Hopmeadow Street
Assistant Vice President Simsbury, CT 06089
Individual Life Product Development Mailing Address: P.O. Box 2999
Hartford, CT 06104-2999
Telephone (860) 843-3169
Fax (860) 843-5859
April 1, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
This opinion is furnished in connection with the Form S-6 Registration Statement
under the Securities Act of 1933, as amended ("Securities Act"), of a certain
flexible premium variable life insurance policy (the "Policy") that will be
offered and sold by Hartford Life Insurance Company and certain units of
interest to be issued in connection with the Policy.
The hypothetical illustrations of the Policy used in the Form S-6 Registration
Statement accurately reflect reasonable estimates of projected performance of
the Policy under the stipulated rates of investment return, the contractual
expense deductions and guaranteed cost-of-insurance rates, and utilizing a
reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus included as part of such Form S-6 Registration
Statement.
Very truly yours,
/s/ Ken A. McCullum
Ken A. McCullum, FSA, MAAA
Director Individual Life
Product Development
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 33-53692 for Hartford Life Insurance
Company Separate Account VL I on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 14, 1997
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
AND
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
POWER OF ATTORNEY
Donald R. Frahm
Bruce D. Gardner
Joseph H. Gareau
John P. Ginnetti
Thomas M. Marra
Leonard E. Odell, Jr.
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty,
and Margaret E. Hankard to sign as their agent, any Registration Statement,
pre-effective amendment, post-effective amendment and any application for
exemptive relief of the Hartford Life Insurance Company and Hartford Life and
Accident Insurance Company under the Securities Act of 1933 and/or the
Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Donald R. Frahm /s/Leonard E. Odell, Jr.
- --------------------------------------- ----------------------------------
Donald R. Frahm Leonard E. Odell, Jr.
/s/Bruce D. Gardner /s/Lowndes A. Smith
- --------------------------------------- ----------------------------------
Bruce D. Gardner Lowndes A. Smith
/s/Joseph H. Gareau /s/Raymond P. Welnicki
- --------------------------------------- ----------------------------------
Joseph H. Gareau Raymond P. Welnicki
/s/John P. Ginetti /s/Lizabeth H. Zlatkus
- --------------------------------------- ----------------------------------
John P. Ginnetti Lizabeth H. Zlatkus
/s/Thomas M. Marra
- ---------------------------------------
Thomas M. Marra
Dated: December 3, 1996
-------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000893748
<NAME> HARTFORD LIFE SEPARATE ACCOUNT VL I
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 156,091,487
<INVESTMENTS-AT-VALUE> 175,012,408
<RECEIVABLES> 1,910,720
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 176,923,128
<PAYABLE-FOR-SECURITIES> 1,902,671
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,043
<TOTAL-LIABILITIES> 1,910,714
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 175,012,414
<DIVIDEND-INCOME> 2,856,383
<INTEREST-INCOME> 0
<OTHER-INCOME> 1,685
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 2,856,383
<REALIZED-GAINS-CURRENT> 2,109,170
<APPREC-INCREASE-CURRENT> 10,842,697
<NET-CHANGE-FROM-OPS> 15,808,250
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 105,378,054
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.000
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0.000
<EXPENSE-RATIO> 0.000
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
