<PAGE>
As filed with the Securities and Exchange Commission on April 16, 1997
File No. 333-07465
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
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
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
_X_ on May 1, 1997 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ 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
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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
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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
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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
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
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50. Separate Account VL I - General
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 ARTISAN
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
PROSPECTUS DATED: MAY 1, 1997
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
[LOGO] TELEPHONE: 1-800-243-5453
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This Prospectus describes a flexible premium variable life insurance policy (the
"Policy") offered by Hartford Life Insurance Company ("Hartford") to applicants
generally between ages 0 and 80. The Policy allows considerable flexibility in
selecting the timing and amount of premium payments for the chosen amount of
Death Benefit.
The Policy provides for a Death Benefit payable at the death of the Insured. The
Policy Owner may select one of three Death Benefit Options; a level amount equal
to the Face Amount ("Option A"), a variable amount equal to the Face Amount plus
the Account Value ("Option B"), or an increasing amount equal to the Face Amount
plus a return of premium ("Option C"). The required minimum initial Face Amount
is generally $25,000.
Under all three options, the Policy has Account Values which increase with the
payment of each premium and which decrease to reflect fees and charges made by
Hartford. These fees and charges vary depending on such factors as the Face
Amount, the age of the Insured and the level of the premium paid. The Account
Value of a Policy will fluctuate to reflect the investment experience of the
Funds to which the premium payment(s) has been allocated. The Policy Owner bears
the investment risk for all amounts so allocated.
If a Policy is surrendered during the first two Policy Years, the Cash Surrender
Value may be adjusted upward to reflect a reduced Surrender Charge.
There is no guaranteed minimum Account Value for a Policy. However, if the Death
Benefit guarantee is in effect (see "Detailed Description of Policy Benefits and
Provisions -- Death Benefit," page 13), the Policy will not lapse due to poor
investment performance.
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 Bond Fund, Inc., Hartford Capital Appreciation
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
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 Global Asset
Allocation 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
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").
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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.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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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>
SPECIAL TERMS......................................................... 4
SUMMARY............................................................... 6
DETAILED DESCRIPTION OF POLICY BENEFITS AND PROVISIONS................ 9
General............................................................. 9
Premium............................................................. 9
Premium Payment Flexibility....................................... 9
Allocation of Premium Payments.................................... 9
Accumulation Units................................................ 10
Accumulation Unit Values.......................................... 10
Premium Limitation................................................ 10
Account Values...................................................... 10
Amount Payable on Surrender of the Policy......................... 10
Sales Load Refund................................................. 11
Withdrawals....................................................... 11
Transfers of Account Value.......................................... 11
Amount and Frequency of Transfers................................. 11
Transfers to or from Sub-Accounts................................. 11
Transfers from the Fixed Account.................................. 11
Dollar Cost Averaging Option...................................... 12
Policy Loans........................................................ 12
Preferred Loan.................................................... 12
Loan Interest..................................................... 12
Credited Interest................................................. 12
Loan Repayments................................................... 12
Termination Due to Excessive Indebtedness......................... 12
Effect of Loans on Account Value.................................. 12
Death Benefit....................................................... 13
Death Benefit Options............................................. 13
Option Change..................................................... 13
Death Benefit Guarantee........................................... 13
Minimum Death Benefit............................................. 13
Increases and Decreases in Face Amount............................ 14
Benefits at Maturity................................................ 14
Lapse and Reinstatement............................................. 14
Policy Lapse and Grace Period..................................... 14
Death Benefit Guarantee Default and Grace Period.................. 14
Reinstatement..................................................... 15
The Right to Examine or Exchange the Policy......................... 15
Withdrawal.......................................................... 15
Administrative Expense Surrender Charge........................... 15
Sales Surrender Charge............................................ 15
Valuation of Payments and Transfers............................... 16
Application for a Policy............................................ 16
Reduced Charges for Eligible Groups................................. 16
Deductions from the Premium......................................... 16
Premium Tax Charge and Federal Tax Charge......................... 16
Front-End Sales Load.............................................. 16
Examples of Front-End Sales Loads/Impact of Refund of Sales
Load............................................................. 17
Deductions and Charges from the Account Value....................... 18
Monthly Deduction Amounts......................................... 18
Charges Against the Funds......................................... 19
Taxes............................................................. 20
THE COMPANY........................................................... 20
SEPARATE ACCOUNT VL I................................................. 20
General............................................................. 20
Funds............................................................... 20
Hartford Funds.................................................... 20
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
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<TABLE>
<CAPTION>
PAGE
----
Putnam Funds...................................................... 21
<S> <C>
Fidelity VIP Funds................................................ 21
Investment Adviser.................................................. 22
Hartford Funds.................................................... 22
Putnam Funds...................................................... 23
Fidelity VIP Funds................................................ 23
THE FIXED ACCOUNT..................................................... 23
OTHER MATTERS......................................................... 23
Voting Rights....................................................... 23
Statements to Policy Owners......................................... 24
Limit on Right to Contest........................................... 24
Misstatement as to Age.............................................. 24
Payment Options..................................................... 24
Beneficiary......................................................... 25
Assignment.......................................................... 25
Dividends........................................................... 25
SUPPLEMENTAL BENEFITS................................................. 25
Maturity Date Extension Rider....................................... 25
Term Insurance Rider................................................ 25
Deduction Amount Waiver Rider....................................... 25
Waiver of Specified Amount Disability Benefit Rider................. 25
Accidental Death Benefit Rider...................................... 25
EXECUTIVE OFFICERS AND DIRECTORS...................................... 26
DISTRIBUTION OF THE POLICY............................................ 27
SAFEKEEPING OF SEPARATE ACCOUNT VL I'S ASSETS......................... 27
FEDERAL TAX CONSIDERATIONS............................................ 27
General............................................................. 27
Taxation of Hartford and the Separate Account....................... 28
Income Taxation of Contract Benefits................................ 28
Modified Endowment Contracts........................................ 28
Estate and Generation Skipping Taxes................................ 29
Diversification Requirements........................................ 29
Ownership of the Assets in the Separate Account..................... 29
Life Insurance Purchased for Use in Split Dollar Arrangements....... 30
Federal Income Tax Withholding...................................... 30
Non-Individual Ownership of Contracts............................... 30
Other............................................................... 30
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 30
LEGAL PROCEEDINGS..................................................... 30
LEGAL MATTERS......................................................... 30
EXPERTS............................................................... 30
REGISTRATION STATEMENT................................................ 31
APPENDIX A ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES AND CASH
SURRENDER VALUES.................................................... 32
FINANCIAL STATEMENTS.................................................. 44
</TABLE>
THE POLICY 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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- --------------------------------------------------------------------------------
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: An amount used to determine certain Policy benefits and charges
equal to the total of all amounts in the Fixed Account, the Loan Account and the
Sub-Accounts.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Sub-Account.
CASH SURRENDER VALUE: The Cash Value less all Indebtedness.
CASH VALUE: The Account Value less any applicable Surrender Charges.
CODE: The Internal Revenue Code of 1986, as amended.
COST OF INSURANCE: An amount deducted as part of the Monthly Deduction Amount to
help cover Hartford's anticipated mortality costs and other expenses.
CUMULATIVE DEATH BENEFIT GUARANTEE PREMIUM: The premium required to maintain the
Death Benefit guarantee.
DATE OF ISSUE: The date from which the Suicide and Incontestability provisions
are measured.
DEATH BENEFIT: On the Policy Date, the Death Benefit equals the Face Amount.
Thereafter, it may change in accordance with the terms of the Death Benefit
Option provision, the Minimum Death Benefit provision, the Death Benefit
Guarantee provision and the Withdrawals provision.
DEATH BENEFIT GUARANTEE PREMIUM: The amount of monthly premium shown in the
Policy's specifications page required to keep the Death Benefit guarantee
available and used to calculate the Cumulative Death Benefit Guarantee Premium.
DEATH BENEFIT OPTION: 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 and less any due and
unpaid Monthly Deduction Amount occurring during a Grace Period.
FACE AMOUNT: On the Policy Date, the Face Amount equals the initial Face Amount.
The Face Amount may be increased or decreased, in accordance with the terms of
the Policy.
FIXED ACCOUNT: Portion of Account Value invested in the General Account of
Hartford.
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.
GENERAL ACCOUNT: All assets of Hartford other than those allocated to its
separate accounts.
GRACE PERIOD: The 61 day period between the day Your policy goes into default
and the day on which Your policy terminates.
HARTFORD: Hartford Life Insurance Company.
IN WRITING: In a written form satisfactory to Us.
INDEBTEDNESS: All loans taken on the Policy, plus any interest due or accrued
minus any loan repayments.
INSURED: The person on whose life the Policy is issued.
ISSUE AGE: As of the Policy Date, the age of the Insured 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.
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 charges deducted from the Account Value on the
Monthly Activity Date.
NATIONAL SERVICE CENTER: Located in Minneapolis, Minnesota.
NET PREMIUM: The amount of premium credited to the Account Value. It is the
premium paid minus any deductions from premium.
OPTION C LIMIT: The maximum amount that will be returned in addition to the Face
Amount under the Option C (Return of Premium) Death Benefit. See the Policy's
specifications page.
PLANNED PREMIUM: The amount of premium that You intend to pay as indicated on
the application and shown on the Policy's specifications page.
POLICY: A flexible premium variable life insurance policy issued by Hartford, as
described in this Prospectus.
POLICY ANNIVERSARY: An anniversary of the Policy Date.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
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POLICY DATE: The date from which Policy Anniversaries and Policy Years are
determined.
POLICY OWNER: 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 YEARS: Annual periods computed from the Policy Date.
PREFERRED LOAN: A portion of the Indebtedness on which a lower interest rate is
charged.
PRO RATA BASIS: An allocation method based on the proportion of the Account
Value in the Fixed Account and each Sub-Account.
SCHEDULED MATURITY DATE: The date on which the Policy will mature, unless
extended by rider.
SEPARATE ACCOUNT: An account established by Hartford to separate the assets
funding the Policy from other assets of Hartford; in this case, "Separate
Account VL I."
SUB-ACCOUNT: The subdivisions of the Separate Account.
SURRENDER CHARGE: A charge that may be assessed if the Face Amount is decreased
or You surrender the Policy.
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.
WE, US, OUR: Hartford Life Insurance Company.
YOU, YOUR: The Policy Owner.
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
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- -------------------------------------------
SUMMARY
- -------------------------------- THE POLICY
The flexible premium variable life insurance Policy offered by this
Prospectus is funded by a 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. Separate Account VL I 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, it 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: (1) 45 days after the application is signed; (2) ten days after We
mail or personally deliver a Notice of Withdrawal Right; (3) ten days after We
receive the premium; and (4) the date We receive the final requirement to put
the Policy in force. The Policy is 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. See "Detailed Description of
Policy Benefits and Provisions -- Transfers of Account Value," page 11.
The Policy is first and foremost a life insurance policy with death
benefits, cash values and other features traditionally associated with life
insurance. The Policy is called "flexible premium" because, once the desired
level and pattern of death benefits have been determined, You have considerable
flexibility in choosing the timing and amount of premium to be paid. The Policy
is called "variable" because, unlike the fixed benefits of an ordinary whole
life insurance policy, the Account 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.
- ---------------------------------------------------
POLICY DESIGN OPTIONS
The Policy is designed to be flexible to give You the ability to select
options that are tailor-made for Your specific life insurance needs.
The Policy design options fall into three major categories:
1. Death Benefit Options -- These allow You to select various levels and
patterns of Death Benefits.
2. Investment Options -- Currently, the Policy offers 23 investment options
from which to choose. You can allocate Your Account Value among up to nine
of these options. (Hartford reserves the right to increase the number of
allocable investment options to more than nine.) These include the
twenty-two variable Sub-Accounts and the Fixed Account.
3. Premium Options -- You have the flexibility to choose, within limits, the
amount and frequency of premium payments.
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DEATH BENEFIT
The Policy features three Death Benefit Options. The Death Benefit can be
level and equal to the Face Amount ("Option A"), fluctuate and equal the Face
Amount plus Return of Account Value ("Option B") or increase and equal the Face
Amount plus the sum of premium paid, subject to the Option C Limit ("Option C").
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 and less any due and unpaid Monthly Deduction Amount occurring during a
Grace Period. See "Detailed Description of Policy Benefits and Provisions --
Death Benefit," page 13.
- ---------------------------------------------------
PREMIUM
You have considerable flexibility as to when and in what amounts You pay
premiums. Prior to issue, You choose a Planned Premium, within a range
determined by Hartford based on the Face Amount and sex of the Insured (except
where unisex rates apply), Issue Age and risk classification.
The Policy will not lapse as long as the Cash Surrender Value is sufficient
to cover the Monthly Deduction Amounts or the Death Benefit guarantee is
available. See "Detailed Description of Policy Benefits and Provisions -- Lapse
and Reinstatement," page 14.
The minimum premium is $50. We reserve the right to refund the excess
premium that would cause the Policy to fail to meet the definition of life
insurance under the Code. We reserve the right to require evidence of
insurability for any premium that results in an increase in the Death Benefit
greater than the amount of the premium. Any premium in excess of $1,000,000 is
subject to Hartford's approval.
There are circumstances (usually if a Policy Owner wants to prefund 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 Policy Owner attains
age 59 1/2. You are advised to consult a qualified tax adviser before taking
steps that may affect whether the Policy becomes a Modified
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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Endowment Contract. See "Federal Tax Considerations -- Modified Endowment
Contracts," page 28, for a discussion of the "seven-pay test."
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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 meets the definition of "separate account" under federal securities law.
Separate Account VL I is comprised of 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 Securities and Exchange
Commission. The shares of the Funds are sold to Separate Account VL I 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 Bond Fund,
Inc., Hartford Capital Appreciation 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.; Putnam VT Diversified Income 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 Global
Asset Allocation Fund, Putnam VT U.S. Government and High Quality Bond Fund,
Putnam VT Utilities Growth and Income Fund and Putnam VT Voyager Fund; and the
VIP Equity-Income Portfolio, VIP Overseas Portfolio and VIP II Asset Manager
Portfolio. 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 20.
The investment adviser for the Hartford Funds is HL Investment Advisors,
Inc. ("HL Advisors"), a wholly-owned subsidiary of Hartford Life Insurance
Company. HL Advisors retains Wellington Investment Management, L.L.P. as an
sub-investment 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 The Putnam Investments, Inc. The Fidelity VIP
Funds are managed by Fidelity Management & Research Company. See "Separate
Account VL I," page 20.
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FIXED ACCOUNT
Premium payments and Account Values allocated to the Fixed Account become
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.
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DEDUCTIONS FROM THE PREMIUM
Before allocating the premium to the Account Value, a deduction as a
percentage of premium is made for the premium tax and federal tax charge and
front-end sales load. The amount of each premium allocated to the Account Value
is Your Net Premium.
- ---------------------------------------------------
PREMIUM TAX CHARGE AND
FEDERAL TAX CHARGE
We deduct, as a premium tax charge, a percentage of each premium to cover
premium-based taxes assessed against Hartford by a state or other governmental
entity. This percentage will vary depending on the tax rates in effect there and
is based on the actual tax imposed. The range is generally between 0% and 4%. We
also deduct a current charge of 1.25% of each premium for federal taxes imposed
under Section 848 of the Code.
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FRONT-END SALES LOAD
The front-end sales load is a charge deducted from each premium payment. The
current and maximum front-end sales load for premium is 5.0% in the first Policy
Year and 2.0% in Policy Years 2 through 10. After Policy Year 10, the front-end
sales load is currently 0%. We reserve the right to charge a maximum of 2.0%.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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DEDUCTIONS AND CHARGES FROM
THE ACCOUNT VALUE
On each Monthly Activity Date, We will subtract the Monthly Deduction Amount
from Your Account Value. This will be taken on a Pro Rata Basis from the Fixed
Account and Sub-Accounts.
The Monthly Deduction Amount equals:
1. the Cost of Insurance; plus
2. the Monthly Administrative Charge; plus
3. the Mortality and Expense Risk Charge; plus
4. the charges for additional benefits provided by rider, if any.
Hartford may also set up a provision for income taxes against the assets of
Separate Account VL I. See "Detailed Description of Policy Benefits and
Provisions -- Deductions and Charges from the Account Value," page 18, and
"Federal Tax Considerations," page 27.
Applicants 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.
- ---------------------------------------------------
ACCOUNT VALUE
As with many other types of insurance policies, each Policy will have an
Account Value. The Account Value of a Policy will increase to reflect interest
credited to the Fixed Account and Loan Account (when applicable) and any premium
payments. The Account Value of a Policy will decrease to reflect deductions for
the Monthly Deduction Amount and any withdrawals. The Account Value of a Policy
will vary to reflect the investment experience of the underlying Funds. There is
no minimum guaranteed Account Value and the Policy Owner bears the risk of the
investment in the Funds. However, if the Death Benefit guarantee is available,
the Policy will not lapse due to poor investment performance. See "Detailed
Description of Policy Benefits and Provisions -- Account Values," page 10.
- ---------------------------------------------------
POLICY LOAN
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 the Cash Surrender Value. See
"Detailed Description of Policy Benefits and Provisions -- Policy Loans," page
12.
- ---------------------------------------------------
CHARGES AGAINST THE FUNDS
Separate Account VL I 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 19.
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 US 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%
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 such 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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
(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 OR EXCHANGE THE POLICY
An applicant has a limited right to return his or her Policy for
cancellation. If the applicant returns the Policy within: (1) ten days after
delivery of the Policy; (2) ten days after We mail or personally deliver a
Notice of Withdrawal Right; or (3) 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 Policy or by the Funds for taxes, charges or
fees.
In addition, once the Policy is in effect it may be exchanged during the
first 24 months after its Date of Issue for a non-variable life insurance policy
offered by Us on the life of the Insured without submitting proof of
insurability.
- ---------------------------------------------------
SURRENDER
At any time prior to the Scheduled Maturity Date, provided the Policy has a
Cash Surrender Value, you may surrender the Policy. During the first 15 Policy
Years, a Surrender Charge will apply. The Surrender Charge consists of two
component charges: an administrative expenses surrender charge and a sales
surrender charge. See "Detailed Description of Policy Benefits and Provisions --
Withdrawal," page 15.
- ---------------------------------------------------
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 27.
- ---------------------------------------------------
DETAILED DESCRIPTION OF POLICY
BENEFITS AND PROVISIONS
- -------------------------------- GENERAL
This Prospectus describes a flexible premium variable life insurance policy
that has considerable flexibility in selecting the timing and amount of premium
payments.
- ---------------------------------------------------
PREMIUM
PREMIUM PAYMENT FLEXIBILITY
You have considerable flexibility as to when and in what amounts You pay
premiums.
Prior to issue, You can choose a Planned Premium, within a range determined
by Hartford based on the Face Amount and the Insured's sex (except where unisex
rates apply), Issue Age and risk classification. We will send You premium
notices for Planned Premium. The notices may be sent on an annual, semi-annual
or quarterly basis. You may also have premiums automatically deducted from Your
checking account on a monthly basis. The Planned Premium and payment mode You
selected are shown on the Policy's specifications page. You may change the
Planned Premium at any time, subject to Our minimum amount rules then in effect.
The Policy will not lapse as long as the Cash Surrender Value is sufficient
to cover the Monthly Deduction Amounts or the Death Benefit guarantee is
available. See, also, "-- Lapse and Reinstatement," page 14, for more details.
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: (1) 45 days after the application
is signed; (2) ten days after We receive the premium; (3) ten days after We mail
or personally deliver a Notice of Withdrawal Right; and (4) the date We receive
the final requirement to put the Policy in force ("free-look end date").
Any additional Net Premium received prior to the free-look end date will be
allocated to the Hartford Money Market Sub-Account.
You may change Your premium allocation by request In Writing. Portions
allocated to the Fixed Account and Sub-
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Accounts must be whole percentages. Subsequent Net Premiums will be allocated to
the Fixed Account and Sub-Accounts according to Your most recent instructions,
subject to the following. Currently, the Account Value may be allocated to no
more than nine Sub-Accounts. (Hartford reserves the right to increase the number
of allocable investment options to more than nine.) 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 on a Pro-Rata
Basis.
You will receive several different types of notification as to what Your
current premium allocation is. The initial allocation chosen by the Policy Owner
is shown in the Policy. Each transactional confirmation received after a premium
payment will show how that Net Premium has been allocated. In addition, each
quarterly statement summarizes the current premium allocation in effect for that
Policy.
ACCUMULATION UNITS
Net Premium 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 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 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. It 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 Account Value, in connection with Policy loans, or in 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 a premium is received which would cause the Policy to fail to meet the
definition of a life insurance contract in accordance with the Code, We reserve
the right to refund the excess premium. We will refund such premium and interest
thereon within 60 days after the end of a Policy Year.
We reserve the right to require evidence of insurability for any premium
that results in an increase in the Death Benefit greater than the amount of the
premium.
The minimum subsequent premium is $50. Any premium in excess of $1,000,000
is subject to Hartford's approval.
- ---------------------------------------------------
ACCOUNT VALUES
The Policy will have an Account Value. There is no minimum guaranteed
Account Value. The Account Value of a Policy changes on a daily basis and will
be computed on each Valuation Day. The Account Value of a Policy will increase
to reflect interest credited to the Fixed Account and Loan Account (when
applicable) and any premium payments. The Account Value will decrease to reflect
deductions for the Monthly Deduction Amount and any withdrawals. The Account
Value will vary to reflect the investment experience of the underlying Funds.
The Account Value of a particular Policy is related to the net asset value
of the Funds associated with the Sub-Accounts, if any, to which premium payments
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 and Loan Accounts. The Cash Value equals the Account Value
less any applicable Surrender Charges. The Cash Surrender Value, which is the
net amount available upon surrender of the Policy, is the Cash Value less any
Indebtedness. See "-- Premium -- Accumulation Unit Values," page 10.
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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
the request In Writing, or the date the Policy Owner requests the surrender to
be effective, whichever is later.
SALES LOAD REFUND
If a Policy is surrendered during the first two Policy Years, the Cash
Surrender Value may be adjusted upward to reflect a reduced Surrender Charge.
For purposes of the Policy, the reduction in Surrender Charge will be equal to
the excess, if any, of the sum of the actual front-end sales load and the
Surrender Charge to date over 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.
For purposes of the Policy, "Guideline Annual Premium" means 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
Commissioners' Standard Ordinary Smoker or Non-Smoker (CSO) Table, an assumed
annual net rate of return of 5% per year and deduction of the fees and charges
specified in the Policy. The Guideline Annual Premium is only used in limiting
front-end sales loads and Surrender Charges.
WITHDRAWALS
One withdrawal is allowed each calendar month. The minimum withdrawal
allowed is $500. The maximum withdrawal is the Cash Surrender Value less $1,000.
If the Death Benefit Option then in effect is Option A or Option C, the Face
Amount is decreased by an amount equal to the reduction in the Account Value
resulting from the withdrawal. The minimum Face Amount required after a
withdrawal is subject to Our rules then in effect. Unless specified otherwise,
the withdrawal will be deducted on a Pro Rata Basis from the Fixed Account and
the Sub-Accounts. Currently, Hartford does not impose a withdrawal charge.
However, Hartford reserves the right to impose a withdrawal charge of up to $10.
In addition, a Surrender Charge will be deducted from the Account Value
equal to the proportion of the current Surrender Charge represented by the
amount of the withdrawal to the Account Value immediately prior to the
withdrawal.
Any decrease in the Face Amount resulting from a withdrawal may result in a
partial Surrender Charge. See "-- Death Benefit -- Increases and Decreases in
Face Amount," page 14.
- ---------------------------------------------------
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
request In Writing 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 transfer in any calendar
month. Each transfer in excess of one per calendar month is subject to a
Transfer Charge of up to $25.
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
You may request to transfer some or all of Your Account Value between the
Sub-Accounts. When You request a transfer, the number of Accumulation Units
credited to the Sub-Account from which the transfer was made will be reduced and
the number of Accumulation Units credited to the Sub-Account You requested will
be increased.
The amount of the increase or decrease will be determined by dividing:
1. the amount transferred by,
2. the Accumulation Unit Value for the respective Sub-Account determined as of
the next Valuation Day after We receive Your transfer request.
TRANSFERS FROM THE FIXED ACCOUNT
In addition to the conditions above, transfers from the Fixed Account are
subject to the following:
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
1. the transfer must occur during the 30-day period following each Policy
Anniversary; and
2. 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. We reserve the right to
modify the restrictions on transfers from the Fixed Account.
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 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 In Writing to Hartford 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 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 the Cash Surrender Value. The minimum loan
amount is $500.
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.
PREFERRED LOAN
If, at any time after the tenth Policy Anniversary, the Account Value
exceeds the total of all premium paid since issue, a Preferred Loan is
available. The amount available for a Preferred Loan is the amount by which the
Account Value exceeds total premiums paid. The amount of the Loan Account which
equals a Preferred Loan will be credited with interest at a rate equal to the
Fixed Account Minimum Credited Rate. The amount of Indebtedness that qualifies
as a Preferred Loan is determined on each Monthly Activity Date. A lower
interest rate is charged to Preferred Loans than to the rest of your
Indebtedness, if any.
LOAN INTEREST
Interest will accrue on Indebtedness on a daily basis. The table below shows
the interest rate We will charge on Your Indebtedness.
<TABLE>
<CAPTION>
FIXED ACCOUNT
PORTION OF MINIMUM CREDITED
POLICY YEAR INDEBTEDNESS RATE PLUS
- ---------------- ------------------------------ ---------------------
<S> <C> <C>
1-10 All Indebtedness 2%
11 and later Preferred loans (if any) 0%
All Indebtedness in excess
of Preferred Loans 1%
</TABLE>
CREDITED INTEREST
Any amounts in the Loan Account will be credited with interest at a rate
equal to the Fixed Account Minimum Credited Rate.
LOAN REPAYMENTS
You can repay all or any part of the entire Indebtedness at any time while
Your Policy is in force. Each loan repayment must be at least $50. An amount
equal to the 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
premium are allocated.
TERMINATION DUE TO EXCESSIVE INDEBTEDNESS
If total Indebtedness equals or exceeds the Cash Value on any Monthly
Activity Date, the Policy will terminate. See "-- Lapse and Reinstatement," page
14.
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 may be greater than
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
the Fixed Account Minimum Credited Rate. The longer a loan is outstanding, the
greater the effect, whether favorable or unfavorable, is likely to be. If the
Fixed Account and the 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 the
Sub-Accounts earn less than the annual interest rate for funds held in 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 loan (i.e., the Indebtedness) will reduce the Death Proceeds and
Cash Surrender Value otherwise payable.
- ---------------------------------------------------
DEATH BENEFIT
The Policy provides for the payment of the Death Proceeds to the named
beneficiary when the Insured dies. The Death Proceeds payable to the beneficiary
equal the Death Benefit less any Indebtedness and less any due and unpaid
Monthly Deduction Amount occurring during a Grace Period. The Death Benefit
depends on the Death Benefit Option selected by You, the minimum Death Benefit
provision and whether or not the Death Benefit guarantee is available. All or
part of the Death Proceeds may be paid in cash or applied under a "Payment
Option." See "Other Matters -- Payment Options," page 24.
DEATH BENEFIT OPTIONS
There are three Death Benefit Options: the Level Death Benefit Option
("Option A"), the Return of Account Value Death Benefit Option ("Option B") and
the Return of Premium Death Benefit Option ("Option C"). Subject to the minimum
Death Benefit described below, the Death Benefits under each option are:
1. Under Option A, the Death Benefit is equal to the Face Amount.
2. Under Option B, the Death Benefit is equal to the Face Amount plus the
Account Value.
3. Under Option C, the Death Benefit is equal to the Face Amount plus the
lesser of: (a) the sum of the premium paid and (b) the Option C Limit.
OPTION CHANGE
You may change Your Death Benefit Option by notifying Us In Writing of the
change. Such change will become effective on the Monthly Activity Date following
the date we receive Your request. If a change to Option A is elected, the Face
Amount will become that amount available as a Death Benefit immediately prior to
the option change. If a change to Option B is elected, the Face Amount will
become that amount available as a Death Benefit immediately prior to the option
change, reduced by the then-current Account Value. Changing your Death Benefit
Option may result in a Surrender Charge. (See "-- Increases and Decreases in
Face Amount," page 14.) You should consult a competent tax adviser regarding the
possible adverse tax consequences resulting from a change in your Death Benefit
Option.
DEATH BENEFIT GUARANTEE
The Death Benefit guarantee will keep the Policy in force, regardless of the
Policy's investment performance as long as the following conditions are met:
1. the Policy is in the first ten Policy Years (except in certain states where
a period less than ten years may apply); and
2. on each Monthly Activity Date during that period, the cumulative premium
paid into the Policy, less Indebtedness and less any withdrawals, equals or
exceeds the Cumulative Death Benefit Guarantee premium on that date.
If the Face Amount has not been increased or decreased, the Cumulative Death
Benefit Guarantee Premium is:
1. the Cumulative Death Benefit Guarantee Premium on the previous Monthly
Activity Date; plus
2. the current Monthly Death Benefit Guarantee Premium shown on the Policy
specifications page.
The Monthly Death Benefit Guarantee Premium will be adjusted to reflect any
increases or decreases in the Face Amount during the Death Benefit guarantee
period. We will send You a schedule showing the new Monthly Death Benefit
Guarantee Premium required for this period and the Death Benefit Guarantee
Premium received to date.
While the Death Benefit guarantee is available, the Death Benefit will be
the Face Amount, regardless of the Death Benefit Option.
MINIMUM DEATH BENEFIT
The Policy has a minimum Death Benefit feature which automatically increases
the Death Benefit so that it will never be less than the Account Value
multiplied by the Minimum Death Benefit Percentage specified in the Policy. This
percentage varies according to the Insured's Issue Age, the Policy Year, sex
(where unisex rates are not used) and insurance class.
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%).
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
This amount less any outstanding Indebtedness constitutes the Death Proceeds
which We would pay to the beneficiary.
In Example B, the minimum 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%).
INCREASES AND DECREASES IN FACE AMOUNT
At any time after the first Policy Year, You may make a request In Writing
to change the Face Amount. The minimum amount by which the Face Amount can be
increased or decreased is based on Our rules then in effect. We reserve the
right to limit the number of increases or decreases made under the Policy to not
more than one in any 12 month period.
A decrease in the Face Amount will be effective on the Monthly Activity Date
following the date We receive Your request. The remaining Face Amount must not
be less than that allowed by Our minimum rules then in effect. If You ask to
decrease Your Face Amount below the Initial Face Amount, a Surrender Charge may
be assessed, equal to:
1. the Surrender Charge applicable to the current Policy Year; multiplied by
2. the percentage described below.
The percentage used to determine the Surrender Charge will be calculated by:
1. subtracting the requested Face Amount from the lowest Face Amount prior to
the request; and
2. dividing that difference by the lowest Face Amount prior to the request.
The Surrender Charge assessed will be deducted from Your Account Value on
the Monthly Activity Date effective for the decrease.
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 Monthly Deduction Amount for the first month after the effective date of
increase is made.
- ---------------------------------------------------
BENEFITS AT MATURITY
If the Insured is living on the Scheduled Maturity Date, on surrender of the
Policy to Hartford, Hartford will pay to the Policy Owner the Cash Surrender
Value. On the Scheduled Maturity Date, unless extended by rider, the Policy will
terminate and Hartford will have no further obligations under the Policy.
- ---------------------------------------------------
LAPSE AND REINSTATEMENT
POLICY LAPSE AND GRACE PERIOD
During the first Policy Year, the Policy will be in default on any Monthly
Activity Date on which the Account Value less Indebtedness is not sufficient to
cover the Monthly Deduction Amount.
During the second Policy Year, the Policy will be in default on any Monthly
Activity Date on which the Account Value less Indebtedness less one-half of the
Surrender Charge for the second Policy Year is not sufficient to cover the
Monthly Deduction Amount.
During the third Policy Year and thereafter, the Policy will be in default
on any Monthly Activity Date if the Cash Surrender Value is not sufficient to
cover the Monthly Deduction Amount.
A 61-day period, called the "Grace Period," will begin from the date of
default. Hartford 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. The
premium required will be no greater than the amount required to pay Monthly
Deduction Amounts during the Grace Period plus three additional Monthly
Deduction Amounts. Unless the Death Benefit guarantee is available, the Policy
will terminate without value if the required premium is not paid by the end of
the Grace Period. If the Death Benefit guarantee is available and sufficient
premium has not been paid by the end of the Grace Period, the Death Benefit will
be reduced to the Face Amount and any Policy riders will no longer be in force.
If the Insured dies during the Grace Period, We will pay the Death Proceeds.
DEATH BENEFIT GUARANTEE DEFAULT AND GRACE PERIOD
On every Monthly Activity Date during the Death Benefit guarantee period, We
will compare the cumulative premium received, less Indebtedness, less
withdrawals, to the Cumulative Death Benefit Guarantee Premium for the Death
Benefit guarantee period in effect.
If the cumulative premiums received, less Indebtedness, less withdrawals,
are less than the Cumulative Death Benefit Guarantee Premium, the Death Benefit
guarantee will be deemed to be in default as of that Monthly Activity Date, and
the Grace Period will begin. We will mail the Policy Owner and any assignee
written notice of the amount of premium required to continue the Death Benefit
guarantee.
At the end of the Grace Period, the Death Benefit guarantee will be removed
from the Policy if We have not received the amount of the required premium.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
REINSTATEMENT
Unless the Policy has been surrendered for its Cash Surrender Value, the
Policy may be reinstated prior to the Scheduled Maturity Date, provided:
1. You make Your request In Writing within five years from the termination
date;
2. satisfactory evidence of insurability is submitted;
3. any Indebtedness existing at the time of termination is repaid or carried
over to the reinstated Policy; and
4. You pay a premium sufficient to cover ( a) all Monthly Deduction Amounts
that are due and unpaid during the Grace Period and (b) the sum of Monthly
Deduction Amounts for the next three months after the date of reinstatement.
The Account Value on the reinstatement date will equal:
1. The Cash Value at the time of termination; plus
2. Net Premium derived from premium paid at the time of reinstatement; minus
3. the Monthly Deduction Amounts that were due and unpaid during the Policy
Grace Period; plus
4. the Surrender Charge at the time of reinstatement. The Surrender Charge is
based on the duration from the original Policy Date.
- ---------------------------------------------------
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 ten 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. No evidence of insurability will be required. The new policy
will have an amount at risk which equals or is less than the amount at risk in
effect on the date of exchange. Premium under the new policy will be based on
the same risk classification as this Policy. An exchange of the Policy under
these circumstances should be a tax-free transaction under Section 1035 of the
Code.
- ---------------------------------------------------
WITHDRAWAL
At any time prior to the Scheduled Maturity Date, provided the Policy has a
Cash Surrender Value, You may surrender the Policy or withdraw money from it.
During the first 15 Policy Years, a Surrender Charge will apply. The Surrender
Charge consists of two component charges: an administrative expense surrender
charge and a sales surrender charge.
ADMINISTRATIVE EXPENSE SURRENDER CHARGE
The Administrative Expense Surrender Charge varies by the Insured's age on
the Date of Issue. Your sales representative can provide you with the actual
Administrative Expense Surrender Charge that applies to your Issue Age. The
following table represents the Administrative Expense Surrender Charge for a
person age 45 on the Date of Issue:
<TABLE>
<CAPTION>
AMOUNT PER AMOUNT PER
$1,000 OF $1,000 OF
POLICY INITIAL FACE POLICY INITIAL FACE
YEAR AMOUNT YEAR AMOUNT
- ----------- ------------- ----------- -------------
<S> <C> <C> <C>
1 $ 5.00 9 $ 3.18
2 $ 5.00 10 $ 2.73
3 $ 5.00 11 $ 2.27
4 $ 5.00 12 $ 1.82
5 $ 5.00 13 $ 1.36
6 $ 4.55 14 $ 0.91
7 $ 4.09 15 $ 0.45
8 $ 3.64 16 $ 0.00
</TABLE>
The amount of the charge remains level for five Policy Years. After the
fifth Policy Anniversary, the charge decreases uniformly each month until the
end of the fifteenth Policy Year when it is zero.
The Administrative Expense Surrender Charge is designed to cover the
administrative expenses associated with underwriting and issuing a Policy,
including the costs of processing applications, conducting medical examinations,
determining insurability and the Insured's underwriting class and establishing
policy records.
The sum of the Administrative Expense Surrender Charge and the Monthly
Administrative Charge will not exceed the cost Hartford incurs in providing
administrative services under the Policy. Hartford does not expect to profit
from the Administrative Expense Surrender Charge.
SALES SURRENDER CHARGE
The Sales Surrender Charge varies by the Insured's age on the Date of Issue.
Your sales representative can provide you with the actual Sales Surrender Charge
that applies to
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
your Issue Age. The following table represents the Sales Surrender Charge for a
person age 45 on the Date of Issue:
<TABLE>
<CAPTION>
AMOUNT PER AMOUNT PER
$1,000 OF $1,000 OF
POLICY INITIAL FACE POLICY INITIAL FACE
YEAR AMOUNT YEAR AMOUNT
- ----------- ------------- ----------- -------------
<S> <C> <C> <C>
1 $ 7.00 9 $ 4.45
2 $ 7.00 10 $ 3.82
3 $ 7.00 11 $ 3.18
4 $ 7.00 12 $ 2.55
5 $ 7.00 13 $ 1.91
6 $ 6.36 14 $ 1.27
7 $ 5.73 15 $ 0.64
8 $ 5.09 16 $ 0.00
</TABLE>
The amount of the charge remains level for five Policy Years. After the
fifth Policy Anniversary, the charge decreases uniformly each month until the
end of the fifteenth Policy Year, when it is zero.
The Sales Surrender Charges is designed to cover expenses relating to the
sale and distribution of the Policy, including commissions paid to any sales
personnel, the cost of preparing sales literature and other promotional
activities.
VALUATION OF PAYMENTS AND TRANSFERS
We value the Policy on every Valuation Day.
We will pay Death Proceeds, Cash Surrender Values, Withdrawals and loan
amounts allocable to the Sub-Accounts within seven days after We receive 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 the SEC declares that an emergency
exists.
Hartford may defer payment of any amounts allocated to the Fixed Account 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 initial Face Amount.
Policies generally will be issued only on the lives of Insureds between the ages
of 0 and 80 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.
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, Policy Months and Policy Years.
- ---------------------------------------------------
REDUCED CHARGES FOR ELIGIBLE GROUPS
Certain of the charges and deductions described below may be reduced for a
Policy 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, the
size of the plan, the expected number of participants and the 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 the Policy is purchased and certain
characteristics for the plan's members. The amount of reduction and the criteria
for qualification are a reflection of 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 funded by Separate
Account VL I.
- ---------------------------------------------------
DEDUCTIONS FROM THE PREMIUM
Before the allocation of the premium to the Account Value, a deduction is
made for the premium tax and federal tax charge and front-end sales load. The
amount of each premium allocated to the Account Value is Your Net Premium.
PREMIUM TAX CHARGE AND FEDERAL TAX CHARGE
We deduct, as a premium tax charge, 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 and is based on the actual tax imposed. The range is generally between 0%
and 4%.
We also deduct a 1.25% charge from each premium payment to cover the
estimated costs to Us of the federal income tax treatment of the Policy's
deferred acquisition costs under Section 848 of the Code. We have determined
that this charge is reasonable in relation to our increased federal income tax
burden under the Code resulting from the receipt of premium.
The Federal Tax Charge is a factor Hartford must use when computing the
maximum sales load chargeable under SEC rules.
FRONT-END SALES LOAD
The front-end sales load is a charge deducted from each premium. The current
and maximum front-end sales
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 17
- --------------------------------------------------------------------------------
load for all premium is 5.0% in the first Policy Year and 2.0% for Policy Years
2 through 10. After Policy Year 10, the front-end sales load is currently 0%. We
reserve the right to charge a maximum of 2.0%.
EXAMPLES OF FRONT-END SALES LOADS/IMPACT OF REFUND OF SALES LOAD
An example of the actual front-end sales loads and the impact of the load
refund, if any (see "-- Account Values -- Sales Load Refund," page 11), for a
Policy is shown below. This example uses the same specific information (i.e.,
Issue Age, Face Amount, premium level, etc.) as the illustration on page 33 of
this Prospectus.
<TABLE>
<S> <C>
Death Benefit Option: Level
Face Amount: $250,000
Charges Assumed: Current
Issue Age/Sex/Class: 45/Male/Preferred
Guideline Annual Premium: $4,483.41
Annual Planned Premium: $3,250.00
Assumed Gross Annual Investment Return 0%
</TABLE>
The "Total Cumulative Sales Load if Surrendered" column on the far right of
the table below 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:
(1) The sum of the cumulative front-end sales load; plus
(2) the actual Surrender Charge for that Policy Year; minus
(3) the sales load refund, if any, applicable to that Policy Year.
- --------------------------------------------------------------------------------
Additional Charges/Credits if Surrendered
<TABLE>
<CAPTION>
CUMULATIVE TOTAL
FRONT-END MAXIMUM YEAR END ACTUAL SALES SALES CUMULATIVE
POLICY SALES SURRENDER ACCOUNT SURRENDER SURRENDER LOAD SALES LOAD IF
YEAR LOAD CHARGE VALUE CHARGE CHARGE REFUND SURRENDERED**
- ---------- ----------- ----------- --------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 65 3,000 1,880 1,880 630 0 695
2 130 3,000 3,849 3,000 1,750 333 1,547
3 195 3,000 5,724 3,000 1,750 0 1,945
4 260 3,000 7,498 3,000 1,750 0 2,010
5 325 3,000 9247 3,000 1,750 0 2,075
6 390 2,727 10,887 2,727 1,590 0 1,980
7 455 2,455 12,433 2,455 1,433 0 1,888
8 520 2,183 13,878 2,183 1,273 0 1,793
9 585 1,910 15,212 1,910 1,113 0 1,698
10 650 1,638 16,429 1,638 955 0 1,605
11 715 1,363 17,807 1,363 795 0 1,510
12 780 1,090 19,172 1,090 638 0 1,418
13 845 818 20,385 818 478 0 1,323
14 910 545 21,431 545 318 0 1,228
15 975 273 22,292 273 160 0 1,135
16 1040 0 22,949 0 0 0 1,040
</TABLE>
*The Actual Surrender Charge assessed is the smaller of:
(a) The contractual maximum Surrender Charge, or
(b) Year-End Account Value
**The "Total Cumulative Sales Load If Surrendered" column assumes a
surrender of the Policy at the end of that Policy Year and is:
(a) The cumulative front-end sales load; plus
(b) Sales Surrender Charge; minus
(c) sales load refund.
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- -------------------------------------------
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.
The Monthly Deduction Amount equals:
1. the charge for the Cost of Insurance; plus
2. the Monthly Administrative charge; plus
3. the Mortality and Expense Risk Charge; plus
4. the charges for additional benefits provided by rider.
1. COST OF INSURANCE CHARGE
The charge for the Cost of Insurance is equal to:
(a) the Cost of Insurance rate per $1,000; multiplied by
(b) the amount at risk; divided by
(c) $1,000.
The amount at risk equals the Death Benefit less the Account Value on that
date, prior to assessing the Monthly Deduction Amount.
A charge for a special insurance class rating of an 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.
The Cost of Insurance charge is to cover Hartford's anticipated mortality
costs and other expenses. For standard risks, the Cost of Insurance rates
will not exceed those based on the 1980 Commissioners' Standard Ordinary
Mortality Smoker or Nonsmoker Table, age last birthday. 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 Smoker or Nonsmoker Table, age
last birthday. 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 of the same issue age, sex and risk class and
whose coverage has been in force for the same length of time. No change in
insurance class or cost will occur on account of deterioration of the
Insured's health.
Because the Account Value and the Death Benefit under a Policy may vary
from month to month, the Cost of Insurance charge may also vary on each
Monthly Activity Date.
2. MONTHLY ADMINISTRATIVE CHARGE
Hartford will assess a Monthly Administrative Charge to reimburse Hartford
for administrative costs in connection with the Policy. The current Monthly
Administrative Fee is $25 per month for the first Policy Year, $10 per month
in Policy Year 2 through 10 and $5 per month in Policy Years 11 and later,
not to exceed $7.50 per month in Policy Years 11 and later.
The sum of the Monthly Administrative Charge and the Administrative
Expense Surrender Charge will not exceed the cost Hartford incurs in
providing administrative services under the Policy.
3. MORTALITY AND EXPENSE RISK CHARGE
A charge is made for mortality and expense risks assumed by Hartford.
Hartford may profit from this charge. See, also, "-- Account Values," page
10.
The current Mortality and Expense Risk Charge for any Monthly Activity
Date is equal to:
(a) the current Mortality and Expense Risk Rate; multiplied by
(b) the portion of the Account Value allocated to the Sub-Accounts on
the Monthly Activity Date prior to assessing the Monthly Deduction Amount.
The current and guaranteed Mortality and Expense Risk Rate for the first
ten Policy Years is 0.80% (.067% per month). After the tenth Policy Year,
the current rate is 0.25% (.021% per month), with a maximum Rate of 0.50%
(.042% per month).
The mortality risk assumed is that the Cost of Insurance charges specified
in the Policy will be insufficient to meet actual claims. The expense risk
assumed is that expenses incurred in issuing and administering the Policy
will exceed the administrative charges set in the Policy. Hartford may
profit from the mortality and expense risk charge and may use any profits
for any proper purpose, including any difference between the cost it incurs
in distributing the Policy and the proceeds of the front-end sales load.
4. 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 25 under "Supplemental Benefits" section.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
CHARGES AGAINST THE FUNDS
The investment advisers charge the Funds an investment management fee on a
daily basis 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%
Hartford Mortgage Securities Fund, Inc.,
HVA Money Market Fund, Inc.............................................. .25%
<CAPTION>
ANNUAL INVESTMENT MANAGEMENT AS A
PUTNAM FUNDS PERCENTAGE OF AVERAGE DAILY NET ASSETS
- -------------------------------------------------------------------------- --------------------------------------------------------
<S> <C>
Putnam VTDiversified 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
.475% 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
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 and
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 VIP 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>
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
TAXES
Currently, no charge is made to Separate Account VL I for federal, state and
local taxes that may be allocable to Separate Account VL I. A change in the
applicable federal, state or local tax laws which impose tax on Hartford and/or
Separate Account VL I may result in a charge against the Policy in the future.
Charges for other taxes, if any, allocable to Separate Account VL I 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.
- ---------------------------------------------------
SEPARATE ACCOUNT VL I
- -------------------------------- GENERAL
Separate Account VL I 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. Separate Account
VL I meets the definition of "separate account" under federal securities law.
Under Connecticut law, the assets of Separate Account VL I are held exclusively
for the benefit of Policy Owners and persons entitled to payments under the
Policy. The assets
for Separate Account VL I are not chargeable with liabilities arising out of any
other business which Hartford may conduct.
- ---------------------------------------------------
FUNDS
The assets of each Sub-Account of Separate Account VL I are invested
exclusively in one of the Funds. A Policy Owner may allocate premium payments
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 guarantee that any of the Funds 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 the accompanying prospectus 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.*
* "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 AND AFFILIATES. 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 21
- --------------------------------------------------------------------------------
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 sectors of the fixed income securities markets: a U.S.
Government Sector, a High Yield Sector (which invests primarily in securities
commonly known as "junk bonds"), and an International Sector. See the special
considerations for investments in high yield securities described in the Fund
prospectus.
PUTNAM VT GLOBAL ASSET ALLOCATION FUND
Seeks a high level of long-term total return consistent with preservation of
capital by investing in U.S. equities, international equities, U.S. fixed income
securities, and international fixed income securities.
PUTNAM VT GLOBAL GROWTH FUND
Seeks capital appreciation through a globally diversified 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 and, when consistent with this objective, a
secondary objective of capital growth, by investing primarily in high-yielding,
lower-rated fixed income securities, constituting a portfolio which Putnam
Management believes does not involve undue risk to income or principal. See the
special considerations for investments for high yield securities described in
the Fund prospectus.
PUTNAM VT MONEY MARKET FUND
Seeks as high a 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 securities 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
debt and equity securities issued by companies in the public utilities
industries.
PUTNAM VT VOYAGER FUND
Seeks capital appreciation by investing primarily in 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 provide a means for aggressive investors to diversify their own
portfolios by participating in companies and economies outside of the United
States.
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 (formerly named the Putnam Capital Manager Trust), which
is organized as a business trust under the laws of Massachusetts as an open-end
series investment company 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 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 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 Separate Account VL I, established by Hartford or one of its
affiliated companies specifically to fund the Policy 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 Fidelity VIP 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
Separate Account VL I 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 Separate Account VL I 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 Separate
Account VL I and its Sub-Accounts which fund the Policy. 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 Policy, Hartford may substitute
shares of another Fund for shares already purchased, or to be purchased in the
future, under the Policy. 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 Separate Account VL I or any other separate accounts of which it is
the depositor which may fund the Policy.
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, CT 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 the Funds, for which HL Advisors receives a
fee.
HL Advisors has entered into an investment services agreement with HIMCO, an
affiliate of Hartford organized
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
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 the 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 prospectus for each of the Funds accompanying this
Prospectus for a more complete description of 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.
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 Account 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 Contract. 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 Policy. 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 Hartford 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
Hartford'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
HARTFORD. 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 Separate Account VL
I. The number of shares held in the Separate Account which are allocable to each
Policy Owner
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 allocable 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 loan (see "Detailed
Description of Policy Benefits and Provisions -- Policy Loans," page 12) 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 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:
1. the current Account Value, Cash Surrender Value and Face Amount;
2. the premium paid, Monthly Deduction Amounts and loans since the last report;
3. the amount of any Indebtedness;
4. notifications required by the provisions of the Policy; and
5. 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 lifetime of the Insured for two years from the Issue Date. If
the Policy is reinstated, the two-year period is measured from the date of
reinstatement. 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 premium paid less any Indebtedness and withdrawals.
- ---------------------------------------------------
MISSTATEMENT AS TO AGE
If the age of an Insured is incorrectly stated, the amount of Death Benefit
will be appropriately adjusted as specified in the Policy.
- ---------------------------------------------------
PAYMENT OPTIONS
Proceeds under the Policy 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 subject to the then current rules of Hartford. 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 Policy.
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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
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 1983a 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
lifetime of the Insured by 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 Policy.
- ---------------------------------------------------
SUPPLEMENTAL BENEFITS
The following supplemental benefits, which are subject to the restrictions
and limitations set forth therein, are among the options that may be included in
a Policy by rider. The Monthly Deduction Amount will be increased to include the
charges for any rider.
- ---------------------------------------------------
MATURITY DATE EXTENSION RIDER
We will extend the Scheduled Maturity Date (the date on which the Policy
will mature) to the date of the death of the Insured regardless of the age of
the Insured. Certain Death Benefit and premium restrictions apply. See "Federal
Tax Considerations -- Income Taxation of Policy Benefits," page 28.
- ---------------------------------------------------
TERM INSURANCE RIDER
We will pay an amount upon the death of a designated insured person other
than the Insured Person while this Policy remains in force.
- ---------------------------------------------------
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.
- ---------------------------------------------------
WAIVER OF SPECIFIED AMOUNT
DISABILITY BENEFIT RIDER
If the Insured becomes totally disabled, We will credit the Policy with a
premium equal to the Specified Amount Disability Benefit for as long as the
Insured remains totally disabled, subject to certain qualifications and
restrictions.
- ---------------------------------------------------
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.
<PAGE>
26 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH HARTFORD, 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 27
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD, 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 President & Chief Operating Officer (1989-Present),
Operating 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 POLICY
Hartford intends to sell the Policy in all jurisdictions where it is
licensed to do business. The Policy 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,
CT 06089, or certain other independent registered Broker-Dealers. Any sales
representative or employee will be 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 Policy.
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 premium paid up to a Target Premium, 2.0% of premium paid
between the Target Premium and a 2nd Tier Target Premium and 1.0% of premium
paid in excess of the 2nd Tier Target Premium. In Policy Years 2 and later,
sales representative commissions will not exceed 2.0% 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 first Policy Anniversary.
- ---------------------------------------------------
SAFEKEEPING OF SEPARATE
ACCOUNT VL I'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 Fund. 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 CONTRACT OWNER INVOLVED, LEGAL AND TAX ADVICE MAY BE
NEEDED BY A PERSON, EMPLOYER OR OTHER ENTITY
<PAGE>
28 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
CONTEMPLATING THE PURCHASE OF A CONTRACT DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Contracts cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. This discussion
of federal tax considerations is based upon Hartford's understanding of current
federal income tax laws as they are currently interpreted.
- ---------------------------------------------------
TAXATION OF HARTFORD AND
THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code ("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 (see "Detailed Description of Policy Benefits and Provisions
- -- Account Values," page 10). As a result, such investment income and realized
capital gains are automatically applied to increase reserves under the Contract.
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 CONTRACT BENEFITS
For federal income tax purposes, the Contracts should be treated as life
insurance contracts under Section 7702 of the Code. The death benefit under a
life insurance contract is generally excluded from the gross income of the
beneficiary. Also, a life insurance Contract Owner is generally not taxed on
increments in the contract value until the Contract is partially or completely
surrendered. Section 7702 limits the amount of premium that may be invested in a
Contract that is treated as life insurance. Hartford intends to monitor premium
levels to assure compliance with the Section 7702 requirements.
During the first fifteen Contract 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 Contract.
The Maturity Date Extension Rider allows a Contract Owner to extend the
Maturity Date to the date of the Insured's death. If the Maturity Date of the
Contract is extended by rider, Hartford believes that the Contract 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 Contract 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 Contract 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
A life insurance contract is treated as a "modified endowment contract"
under Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay" test of Section 7702A. The seven-pay test
provides that premium cannot be paid at a rate more rapidly than that allowed by
the payment of seven annual premiums using specified computational rules
provided in Section 7702A(c). The large single premium permitted under the
Contract does not meet the specified computational rules for the "seven-pay
test" under Section 7702A(c). Therefore, the Contract will generally be treated
as a modified endowment contract for federal income tax purposes. However, an
exchange under Section 1035 of the Code of a life insurance contract issued
before June 21, 1988 will not cause the new Contract to be treated as a modified
endowment contract if no additional premiums are paid and there is no change in
the death benefit as the result of the exchange.
A contract that is classified as modified endowment contract is generally
eligible for 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, a loan, distributions or other amounts
received from a modified endowment contract during the life of the Insured will
be taxed to the extent of any accumulated income in the contract (generally, the
excess of account value over premiums paid). Amounts that are taxable
withdrawals will be subject to a 10% additional tax, with certain exceptions.
All modified endowment contracts that are issued within any calendar year to
the same Contract Owner by one company or its affiliates shall be treated as one
modified endowment contract in determining the taxable portion of any loan or
distributions.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
- ---------------------------------------------------
ESTATE AND GENERATION SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includible in
the Contract Owner's estate for purposes of federal estate tax if the last
surviving Insured owned the Contract. If the Contract Owner was not the last
surviving Insured, the fair market value of the Contract would be included in
the Contract Owner's estate upon the Contract Owner's death. Nothing would be
includible in the last surviving Insured's estate if he or she 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 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 (when the Death
Proceeds would be available to pay taxes due and other expenses incurred).
If the Contract Owner (whether or not he or she is an Insured) transfers
ownership of the Contract 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 Contract. 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
Contract 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 Contract is not treated
as a life insurance contract, the Contract Owner will be subject to income tax
on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either the company or
the Contract Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford intends
to administer all contracts subject to the diversification requirements in a
manner that will maintain adequate diversification.
- ---------------------------------------------------
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
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
may be issued with retroactive effect. Due to the lack of specific guidance
regarding the issue of investor control, there is necessarily some uncertainty
regarding whether a Contract Owner could be considered the owner of the assets
for tax purposes. Hartford reserves the right to modify the contracts, as
necessary, to prevent Contract Owners from being considered the owners of the
assets in the separate accounts.
- ---------------------------------------------------
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 Contract
Owner, such amounts will be subject to federal income tax withholding and
reporting, pursuant to the Code.
- ---------------------------------------------------
NON-INDIVIDUAL OWNERSHIP OF CONTRACTS
Legislation has recently been proposed which would limit certain of the tax
advantages now afforded non-individual owners of life insurance contracts.
Prospective Contract Owners which are not individuals should consult a 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 Contract proceeds depend on the
circumstances of each Contract Owner or beneficiary. A 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 advisor
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
- ---------------------------------------------------
LEGAL PROCEEDINGS
There are no pending material legal proceedings affecting the Policy,
Separate Account VL I or any of the Funds.
- ---------------------------------------------------
LEGAL MATTERS
Legal matters in connection with the issue and sale of the flexible premium
variable life insurance policies described in this Prospectus and the
organization of Hartford, its authority to issue the Policy under Connecticut
law and the validity of the forms of the Policy under Connecticut law and legal
matters relating to the federal securities and income tax laws have been passed
on by Lynda Godkin, General Counsel, Hartford Life Insurance Companies.
- ---------------------------------------------------
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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
- ---------------------------------------------------
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 Separate Account VL I, Hartford, and the Policy.
<PAGE>
32 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX A
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES
AND CASH SURRENDER VALUES
The tables in Appendix A illustrate the way in which a Policy operates. They
show how the death benefit and surrender value could vary over an extended
period of time assuming hypothetical gross rates of return equal to constant
after tax annual rates of 0%, 6% and 12%. The illustrations assume the
following: a male, preferred, age 55, and a female, preferred, age 50, with
$1,000,000 of Face Amount and a premium of $15,500 paid in all years; a male,
preferred, age 55, and a female, preferred, age 50, with $750,000 of Face Amount
and $250,000 of Face Amount and a premium of $7,500 paid in all years; a male,
preferred, age 65, and a female, preferred, age 65, with $1,000,000 of Face
Amount and a premium of $27,000 paid for in all years; and a male, preferred,
age 65, and a female, preferred, age 65 with $750,000 of Face Amount and
$250,000 of Supplemental Face Amount and a premium of $21,500 paid in all years.
The death benefit and surrender value for a Policy would be different from
those shown if the rates of return averaged 0%, 6% and 12% over a period of
years, but also fluctuated above or below those averages for individual Policy
Years. They would also differ if any contract loan were made during the period
of time illustrated.
The tables reflect the deductions of current Policy charges and guaranteed
Policy charges for a single gross interest rate. The death benefits and
surrender values would change if the current Cost of Insurance charges change.
The amounts shown for the death benefit and surrender value as of the end of
each Policy Year take into account an average daily charge equal to an annual
charge of 0.70% of the average daily net assets of the Funds for investment
advisory and administrative services fees. The gross annual investment return
rates of 0%, 6% and 12% on the Fund's assets are equal to net annual investment
return rates (net of the 0.70% average daily charge) of -.70%, 5.30% and 11.30%,
respectively.
In addition, the death benefit and surrender value as of the end of each
Policy Year take into account the front-end sales load, federal tax charge,
premium tax charge, Cost of Insurance Charge, Monthly Administrative Fee, Issue
Charge, and Mortality and Expense Risk Charge. For purpose of the illustrations
in this Prospectus, the premium tax charge and federal tax charge is assumed to
be an average of 3.5%.
The hypothetical returns shown in the tables are without any tax charges
that may be allocable to the Separate Account in the future. In order to produce
after tax returns of 0%, 6%, and 12%, the Separate Account would have to earn a
sufficient amount in excess of 0% or 6% or 12% to cover any tax charges (see
"Detailed Description of Policy Benefits and Provisions -- Deductions and
Charges from the Account Value -- Taxes," page 20).
The "Premium Paid Plus Interest" column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes of 5% per year, compounded annually.
Hartford will furnish upon request, a comparable illustration reflecting the
proposed insureds age, risk classification, Face Amount or initial premium
requested, and reflecting guaranteed Cost of Insurance rates. Hartford will also
furnish an additional similar illustration reflecting current Cost of Insurance
rates which may be less than, but never greater than, the guaranteed Cost of
Insurance rates.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$3,250 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 3,413 1,880 0*** 250,000 1,880 0*** 250,000
2 6,996 3,849 849*** 250,000 3,849 849*** 250,000
3 10,758 5,724 2,724 250,000 5,724 2,724 250,000
4 14,708 7,499 4,499 250,000 7,499 4,499 250,000
5 18,856 9,247 6,247 250,000 9,168 6,168 250,000
6 23,212 10,887 8,160 250,000 10,724 7,997 250,000
7 27,785 12,433 9,979 250,000 12,153 9,699 250,000
8 32,586 13,878 11,696 250,000 13,442 11,260 250,000
9 37,628 15,212 13,303 250,000 14,576 12,667 250,000
10 42,922 16,430 14,794 250,000 15,539 13,903 250,000
11 48,481 17,808 16,444 250,000 16,400 15,036 250,000
12 54,317 19,173 18,082 250,000 17,063 15,972 250,000
13 60,446 20,386 19,568 250,000 17,519 16,701 250,000
14 66,880 21,432 20,887 250,000 17,746 17,200 250,000
15 73,637 22,293 22,020 250,000 17,717 17,444 250,000
16 80,731 22,950 22,950 250,000 17,402 17,402 250,000
17 88,180 23,380 23,380 250,000 16,767 16,767 250,000
18 96,002 23,549 23,549 250,000 15,762 15,762 250,000
19 104,214 23,423 23,423 250,000 14,332 14,332 250,000
20 112,838 22,968 22,968 250,000 12,423 12,423 250,000
25 162,869 15,834 15,834 250,000 -- -- --
35 308,218 -- -- -- -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH SURRENDER VALUES SHOWN. THE REFUND
PLUS THE CASH SURRENDER VALUE WOULD BE $0 IN YEAR ONE AND $1,182 IN YEAR
TWO.
THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 2% IN YEARS 1 THROUGH
10 AND 0% THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 2% IN ALL
YEARS. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</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>
34 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$3,250 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 3,413 2,026 0*** 250,000 2,026 0*** 250,000
2 6,996 4,265 1,265*** 250,000 4,265 1,265*** 250,000
3 10,758 6,537 3,537 250,000 6,537 3,537 250,000
4 14,708 8,838 5,838 250,000 8,838 5,838 250,000
5 18,856 11,245 8,245 250,000 11,164 8,164 250,000
6 23,212 13,679 10,951 250,000 13,507 10,779 250,000
7 27,785 16,155 13,700 250,000 15,853 13,399 250,000
8 32,586 18,667 16,485 250,000 18,190 16,008 250,000
9 37,628 21,208 19,299 250,000 20,499 18,590 250,000
10 42,922 23,773 22,136 250,000 22,768 21,132 250,000
11 48,481 26,695 25,331 250,000 25,087 23,723 250,000
12 54,317 29,776 28,685 250,000 27,345 26,254 250,000
13 60,446 32,888 32,070 250,000 29,530 28,712 250,000
14 66,880 36,022 35,477 250,000 31,620 31,074 250,000
15 73,637 39,164 38,891 250,000 33,587 33,314 250,000
16 80,731 42,299 42,299 250,000 35,399 35,399 250,000
17 88,180 45,411 45,411 250,000 37,021 37,021 250,000
18 96,002 48,474 48,474 250,000 38,399 38,399 250,000
19 104,214 51,461 51,461 250,000 39,477 39,477 250,000
20 112,838 54,344 54,344 250,000 40,195 40,195 250,000
25 162,869 67,606 67,606 250,000 35,927 35,927 250,000
35 308,218 56,169 56,169 250,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH SURRENDER VALUES SHOWN. THE REFUND
PLUS THE CASH SURRENDER VALUE WOULD BE $0 IN YEAR ONE AND $1,598 IN YEAR
TWO.
THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 2% IN YEARS 1 THROUGH
10 AND 0% THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 2% IN ALL
YEARS. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</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 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$3,250 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 3,413 2,173 0*** 250,000 2,173 0*** 250,000
2 6,996 4,698 1,698*** 250,000 4,698 1,698*** 250,000
3 10,758 7,420 4,420 250,000 7,420 4,420 250,000
4 14,708 10,354 7,354 250,000 10,354 7,354 250,000
5 18,856 13,600 10,600 250,000 13,517 10,517 250,000
6 23,212 17,105 14,378 250,000 16,925 14,198 250,000
7 27,785 20,915 18,461 250,000 20,953 18,138 250,000
8 32,586 25,056 22,874 250,000 24,536 22,354 250,000
9 37,628 29,555 27,646 250,000 28,771 26,862 250,000
10 42,922 34,448 32,811 250,000 33,320 31,683 250,000
11 48,481 40,192 38,828 250,000 38,356 36,992 250,000
12 54,317 46,602 45,511 250,000 43,795 42,704 250,000
13 60,446 53,630 52,812 250,000 49,681 48,863 250,000
14 66,880 61,343 60,797 250,000 56,060 55,514 250,000
15 73,637 69,816 69,543 250,000 62,978 62,706 250,000
16 80,731 79,138 79,138 250,000 70,493 70,493 250,000
17 88,180 89,413 89,413 250,000 78,670 78,670 250,000
18 96,002 100,753 100,753 250,000 87,580 87,580 250,000
19 104,214 113,294 113,294 250,000 97,308 97,308 250,000
20 112,838 127,202 127,202 250,000 107,966 107,966 250,000
25 162,869 226,451 226,451 262,684 181,362 181,362 250,000
35 308,218 681,261 681,261 715,324 531,828 531,828 558,419
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH SURRENDER VALUES SHOWN. THE REFUND
PLUS THE CASH SURRENDER VALUE WOULD BE $13 IN YEAR ONE AND $2,031 IN YEAR
TWO.
THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 2% IN YEARS 1 THROUGH
10 AND 0% THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 2% IN ALL
YEARS. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</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>
36 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$3,250 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 3,413 1,872 0*** 251,872 1,872 0*** 251,872
2 6,996 3,824 824*** 253,824 3,824 824*** 253,824
3 10,758 5,674 2,674 255,674 5,674 2,674 255,674
4 14,708 7,414 4,414 257,414 7,414 4,414 257,414
5 18,856 9,120 6,120 259,120 9,038 6,038 259,038
6 23,212 10,707 7,979 260,707 10,537 7,809 260,537
7 27,785 12,189 9,734 262,189 11,896 9,442 261,896
8 32,586 13,557 11,375 263,557 13,101 10,920 263,101
9 37,628 14,802 12,893 264,802 14,135 12,226 264,135
10 42,922 15,916 14,279 265,916 14,982 13,346 264,982
11 48,481 17,176 15,812 267,176 15,705 14,342 265,705
12 54,317 18,414 17,323 268,414 16,211 15,120 266,211
13 60,446 19,480 18,661 269,480 16,490 15,672 266,490
14 66,880 20,355 19,810 270,355 16,520 15,974 266,520
15 73,637 21,020 20,748 271,020 16,273 16,000 266,273
16 80,731 21,454 21,454 271,454 15,721 15,721 265,721
17 88,180 21,634 21,634 271,634 14,833 14,833 264,833
18 96,002 21,523 21,523 271,523 13,560 13,560 263,560
19 104,214 21,085 21,085 271,085 11,856 11,856 261,856
20 112,838 20,290 20,290 270,290 9,675 9,675 259,675
25 162,869 11,274 11,274 261,274 -- -- --
35 308,218 -- -- -- -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH SURRENDER VALUES SHOWN. THE REFUND
PLUS THE CASH SURRENDER VALUE WOULD BE $0 IN YEAR ONE AND $824 IN YEAR TWO.
THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 2% IN YEARS 1 THROUGH
10 AND 0% THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 2% IN ALL
YEARS. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</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 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$3,250 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 3,413 2,017 0 252,017 2,017 0*** 252,017
2 6,996 4,237 1,237*** 254,237 4,237 1,237*** 254,237
3 10,758 6,479 3,479 256,479 6,479 3,479 256,479
4 14,708 8,736 5,736 258,736 8,736 5,736 258,736
5 18,856 11,087 8,087 261,087 11,002 8,002 261,002
6 23,212 13,444 10,717 263,444 13,264 10,537 263,264
7 27,785 15,824 13,369 265,824 15,506 13,052 265,506
8 32,586 18,215 16,033 268,215 17,710 15,528 267,710
9 37,628 20,606 18,697 270,606 19,854 17,945 269,854
10 42,922 22,988 21,352 272,988 21,916 20,280 271,916
11 48,481 25,690 24,326 275,690 23,980 22,616 273,980
12 54,317 28,518 27,427 278,518 25,926 24,835 275,926
13 60,446 31,321 30,503 281,321 27,737 26,919 277,737
14 66,880 34,080 33,535 284,080 29,380 28,835 279,380
15 73,637 36,770 36,497 286,770 30,817 30,545 280,817
16 80,731 39,363 39,363 289,363 32,005 32,005 282,005
17 88,180 41,828 41,828 291,828 32,895 32,895 282,895
18 96,002 44,119 44,119 294,119 33,421 33,421 283,421
19 104,214 46,188 46,188 296,188 33,509 33,509 283,509
20 112,838 47,986 47,986 297,986 33,088 33,088 283,088
25 162,869 52,781 52,781 302,781 20,679 20,679 270,679
35 308,218 -- -- -- -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH SURRENDER VALUES SHOWN. THE REFUND
PLUS THE CASH SURRENDER VALUE WOULD BE $0 IN YEAR ONE AND $1,237 IN YEAR
TWO.
THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 2% IN YEARS 1 THROUGH
10 AND 0% THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 2% IN ALL
YEARS. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</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>
38 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF ACCOUNT VALUE
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$3,250 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 3,413 2,163 0*** 252,163 2,163 0*** 252,163
2 6,996 4,668 1,668*** 254,668 4,668 1,668*** 254,668
3 10,758 7,354 4,354 257,354 7,354 4,354 257,354
4 14,708 10,233 7,233 260,233 10,233 7,233 260,233
5 18,856 13,404 10,404 263,404 13,316 10,316 263,316
6 23,212 16,804 14,076 266,804 16,613 13,885 266,613
7 27,785 20,472 18,017 270,472 20,128 17,673 270,128
8 32,586 24,425 22,243 274,425 23,866 21,685 273,866
9 37,628 28,679 26,770 278,679 27,831 25,922 277,831
10 42,922 33,258 31,621 283,258 32,026 30,390 282,026
11 48,481 38,601 37,237 288,601 36,600 35,236 286,600
12 54,317 44,523 43,432 294,523 41,442 40,351 291,442
13 60,446 50,925 50,107 300,925 46,570 45,752 296,570
14 66,880 57,842 57,297 307,842 51,987 51,441 301,987
15 73,637 65,307 65,034 315,307 57,692 57,420 307,692
16 80,731 73,355 73,355 323,355 63,683 63,683 313,683
17 88,180 82,024 82,024 332,024 69,952 69,952 319,952
18 96,002 91,340 91,340 341,340 76,475 76,475 326,475
19 104,214 101,336 101,336 351,336 83,222 83,222 333,222
20 112,838 112,046 112,046 362,046 90,166 90,166 340,166
25 162,869 179,944 179,944 429,944 126,697 126,697 376,697
35 308,218 396,129 396,129 646,129 163,484 163,484 413,484
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH SURRENDER VALUES SHOWN. THE REFUND
PLUS THE CASH SURRENDER VALUE WOULD BE $3 IN YEAR ONE AND $1,668 IN YEAR
TWO.
THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 2% IN YEARS 1 THROUGH
10 AND 0% THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 2% IN ALL
YEARS. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</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 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$3,250 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 3,413 1,869 0*** 253,250 1,869 0*** 253,250
2 6,996 3,814 814*** 256,500 3,814 814*** 256,500
3 10,758 5,650 2,650 259,750 5,650 2,650 259,750
4 14,708 7,369 4,369 263,000 7,369 4,369 263,000
5 18,856 9,048 6,048 266,250 8,964 5,964 266,250
6 23,212 10,597 7,870 269,500 10,422 7,695 269,500
7 27,785 12,031 9,577 272,750 11,727 9,273 272,750
8 32,586 13,339 11,157 276,000 12,861 10,680 276,000
9 37,628 14,507 12,598 279,250 13,802 11,893 279,250
10 42,922 15,525 13,889 282,500 14,531 12,895 282,500
11 48,481 16,671 15,307 285,750 15,102 13,738 285,750
12 54,317 17,782 16,691 289,000 15,416 14,325 289,000
13 60,446 18,692 17,874 292,250 15,456 14,638 292,250
14 66,880 19,378 18,832 295,500 15,188 14,642 295,500
15 73,637 19,812 19,539 298,750 14,572 14,299 298,750
16 80,731 19,964 19,964 302,000 13,562 13,562 302,000
17 88,180 19,799 19,799 305,250 12,106 12,106 305,250
18 96,002 19,265 19,265 308,500 10,128 10,128 308,500
19 104,214 18,308 18,308 311,750 7,547 7,547 311,750
20 112,838 16,873 16,873 315,000 4,275 4,275 315,000
25 162,869 2,178 2,178 331,250 -- -- --
35 308,218 -- -- -- -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH SURRENDER VALUES SHOWN. THE REFUND
PLUS THE CASH SURRENDER VALUE WOULD BE $0 IN YEAR ONE AND $1,147 IN YEAR
TWO.
THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 2% IN YEARS 1 THROUGH
10 AND 0% THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 2% IN ALL
YEARS. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</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>
40 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$3,250 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30%NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 3,413 2,015 0*** 253,250 2,015 0*** 253,250
2 6,996 4,228 1,228*** 256,500 4,228 1,228*** 256,500
3 10,758 6,458 3,458 259,750 6,458 3,458 259,750
4 14,708 8,697 5,697 263,000 8,697 5,697 263,000
5 18,856 11,024 8,024 266,250 10,938 7,938 266,250
6 23,212 13,351 10,623 269,500 13,166 10,438 269,500
7 27,785 15,691 13,237 272,750 15,364 12,910 272,750
8 32,586 18,034 15,852 276,000 17,511 15,330 276,000
9 37,628 20,366 18,457 279,250 19,583 17,674 279,250
10 42,922 22,676 21,040 282,500 21,555 19,918 282,500
11 48,481 25,293 23,930 285,750 23,503 22,139 285,750
12 54,317 28,028 26,937 289,000 25,305 24,214 289,000
13 60,446 30,723 29,905 292,250 26,938 26,120 292,250
14 66,880 33,355 32,809 295,500 28,361 27,816 295,500
15 73,637 35,895 35,622 298,750 29,525 29,252 298,750
16 80,731 38,311 38,311 302,000 30,373 30,373 302,000
17 88,180 40,567 40,567 305,250 30,840 30,840 305,250
18 96,002 42,608 42,608 308,500 30,833 30,833 308,500
19 104,214 44,376 44,376 311,750 30,252 30,252 311,750
20 112,838 45,808 45,808 315,000 28,983 28,983 315,000
25 162,869 47,286 47,286 331,250 7,380 7,380 331,250
35 308,218 -- -- -- -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH SURRENDER VALUES SHOWN. THE REFUND
PLUS THE CASH SURRENDER VALUE WOULD BE $0 IN YEAR ONE AND $1,561 IN YEAR
TWO.
THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 2% IN YEARS 1 THROUGH
10 AND 0% THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 2% IN ALL
YEARS. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</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 41
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: RETURN OF PREMIUM
$250,000 FACE AMOUNT
ISSUE AGE 45 MALE PREFERRED
$3,250 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 3,413 2,161 0*** 253,250 2,161 0*** 253,250
2 6,996 4,660 1,660*** 256,500 4,660 1,660*** 256,500
3 10,758 7,336 4,336 259,750 7,336 4,336 259,750
4 14,708 10,200 7,200 263,000 10,200 7,200 263,000
5 18,856 13,354 10,354 266,250 13,265 10,265 266,250
6 23,212 16,734 14,007 269,500 16,540 13,812 269,500
7 27,785 20,380 17,926 272,750 20,030 17,575 272,750
8 32,586 24,311 22,130 276,000 23,742 21,560 276,000
9 37,628 28,546 26,637 279,250 27,678 25,769 279,250
10 42,922 33,109 31,472 282,500 31,848 30,211 282,500
11 48,481 38,445 37,082 285,750 36,400 35,037 285,750
12 54,317 44,377 43,286 289,000 41,234 40,143 289,000
13 60,446 50,815 49,997 292,250 46,370 45,552 292,250
14 66,880 57,806 57,261 295,500 51,824 51,278 295,500
15 73,637 65,399 65,126 298,750 57,605 57,332 298,750
16 80,731 73,650 73,650 302,000 63,727 63,727 302,000
17 88,180 82,624 82,624 305,250 70,204 70,204 305,250
18 96,002 92,386 92,386 308,500 77,036 77,036 308,500
19 104,214 103,015 103,015 311,750 84,229 84,229 311,750
20 112,838 114,607 114,607 315,000 91,796 91,796 315,000
25 162,869 193,638 193,638 331,250 136,356 136,356 331,250
35 308,218 570,676 570,676 599,209 290,693 290,693 363,750
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
*** IF YOU SURRENDER YOUR POLICY DURING THE FIRST TWO POLICY YEARS, YOU WILL
RECEIVE A REFUND IN ADDITION TO THE CASH SURRENDER VALUES SHOWN. THE REFUND
PLUS THE CASH SURRENDER VALUE WOULD BE $1 IN YEAR ONE AND $1,993 IN YEAR
TWO.
THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 2% IN YEARS 1 THROUGH
10 AND 0% THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 2% IN ALL
YEARS. THE SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY
SUBTRACTING THE CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.
THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH SURRENDER VALUES
WILL, DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</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>
PART II
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 69 pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signature page.
(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.
(A3b) Form of Selling Agreements.(2)
(A3c) Not applicable.
(A4) Not applicable.
(A5) Form of Flexible Premium Variable Life Insurance Policy.(2)
(A6a) Charter of Hartford.
(A6b) Bylaws of Hartford.(1)
(A7) Not applicable.
- --------------------
(1) Incorporated by reference to Post-Effective Amendment No. 3to the
Registration Statement File No. 33-53692, filed on April 20, 1995.
(2) Incorporated by reference to the Initial Submission, to the
Registration Statement File No. 333-07465, filed on July 2, 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 is
incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement File No. 333-07465, filed on November 4, 1996.
(2) Opinion and Consent 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 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 10th 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, Dated: April 10, 1997
Director * -----------------
Raymond P. Welnicki, Senior Vice
President, Director *
Lizabeth H. Zlatkus, Vice President
Director *
(VL I/VUL)
<PAGE>
EXHIBIT INDEX
(1) (A6a) Charter of Hartford.
(2) Opinion and Consent of Lynda Godkin, General Counsel and Secretary.
(5) Opinion and Consent of Ken A. 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>
EXHIBIT 2
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. 333-07465
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>
EXHIBIT 5
[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
HLIC/Stag VL I/Stag VL I (Artisan)
<PAGE>
EXHIBIT 6
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. 333-07465 on Form S-6 for Hartford Life
Insurance Company Separate Account VL I.
/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 VLI
<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> 0
<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>
