As filed with the Securities and Exchange File No. 33-80750
Commission on April 17, 1998 File No. 811-8582
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- --------------------------------------------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 9 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
- --------------------------------------------------------------------------------
Variable Annuity Account I of Aetna Insurance Company of America
Aetna Insurance Company of America
151 Farmington Avenue, RE4A, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code (860) 273-4686
Julie E. Rockmore, Counsel
Aetna Insurance Company of America
151 Farmington Avenue, RE4A, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
-------- immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1998 pursuant to paragraph (b) of Rule 485
--------
<PAGE>
VARIABLE ANNUITY ACCOUNT I
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION
<S> <C> <C>
1 Cover Page........................................... Cover Page
2 Definitions.......................................... Definitions
3 Synopsis............................................. Prospectus Summary; Fee Table
4 Condensed Financial Information...................... Condensed Financial Information
5 General Description of Registrant, Depositor,
and Portfolio Companies............................. The Company, Variable Annuity
Account I, The Funds
6 Deductions and Expenses.............................. Charges and Deductions;
Distribution
7 General Description of Variable Annuity
Contracts............................................ Purchase; Transfers;
Miscellaneous
8 Annuity Period....................................... Annuity Period
9 Death Benefit........................................ Death Benefit
10 Purchases and Contract Value......................... Purchase; Contract Valuation
11 Redemptions.......................................... Withdrawals; Purchase Right to
Cancel; Systematic Distribution
Options
12 Taxes................................................ Tax Status
13 Legal Proceedings.................................... Miscellaneous - Legal Matters
and Proceedings
14 Table of Contents of the Statement of
Additional Information............................... Contents of the Statement of
Additional Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM N-4 PART B (STATEMENT OF ADDITIONAL
ITEM NO. INFORMATION) LOCATION
<S> <C> <C>
15 Cover Page........................................... Cover page
16 Table of Contents.................................... Table of Contents
17 General Information and History...................... General Information and History
18 Services............................................. General Information and History;
Independent Auditors
19 Purchase of Securities Being Offered................. Offering and Purchase of
Contracts
20 Underwriters......................................... Offering and Purchase of
Contracts
21 Calculation of Performance Data...................... Performance Data; Average
Annual Total Return Quotations
22 Annuity Payments..................................... Annuity Payments
23 Financial Statements................................. Financial Statements of the Separate
Account; Financial Statements of the
Company
</TABLE>
Part C (Other Information)
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
===============================================================================
The Contracts offered in connection with this Prospectus are the "Growth Plus"
group and individual deferred variable annuity contracts ("Contracts") issued
by Aetna Insurance Company of America (the "Company"). The Contracts are
available as (1) nonqualified deferred variable annuity contracts; (2)
Individual Retirement Annuities ("IRA") under Section 408(b) of the Internal
Revenue Code ("Code") (may be subject to approval by state regulatory
agencies); and (3) contracts issued in connection with certain employer
sponsored qualified retirement plans (may be subject to approval by the Company
and state regulatory agencies). Currently, the IRA is not available as a
"SIMPLE IRA" as defined in Section 408(p) of the Internal Revenue Code. In most
states, group Contracts are offered to certain broker-dealers or banks which
have agreed to act as Distributors of the Contracts. Individuals who have
established accounts with those broker-dealers or banks are eligible to
participate in the Contract. Individual Contracts are offered only in those
states where the group Contracts are not authorized for sale. (See "Purchase.")
The securities offered in this Prospectus are distributed through Aetna Life
Insurance and Annuity Company, an affiliate of the Company as the Underwriter
and by registered broker-dealers or banks selected by it as Distributors. See
"Purchase."
The Contracts provide that Purchase Payments may be allocated to the AICA
Guaranteed Account (the "Guaranteed Account"), a credited interest option, or
to one or more of the Subaccounts of Variable Annuity Account I, a separate
account of the Company. The Subaccounts invest directly in shares of the
following investment series of the Federated Insurance Series ("Trust"), a
Massachusetts business trust that is not affiliated with the Company:
[bullet] Federated American Leaders Fund II
[bullet] Federated Equity Income Fund II
[bullet] Federated Fund for U.S. Government Securities II
[bullet] Federated Growth Strategies Fund II
[bullet] Federated High Income Bond Fund II
[bullet] Federated International Equity Fund II
[bullet] Federated Prime Money Fund II
[bullet] Federated Utility Fund II
Except as specifically mentioned, this Prospectus describes only investments
through the Separate Account. The Guaranteed Account is described in the
Appendix to this Prospectus, as well as in the Guaranteed Account's prospectus.
This Prospectus provides investors with the information about the Separate
Account that they should know before investing in the Contracts. Additional
information about the Separate Account is contained in a Statement of
Additional Information ("SAI") which is available at no charge. The SAI has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Table of Contents for the SAI is printed on page 23 of
this Prospectus. An SAI for this Prospectus and for any of the Fund
prospectuses may be obtained by indicating the request on your Application or
by calling the number listed under the "Inquiries" section of the Prospectus
Summary.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE FUNDS AND THE AICA GUARANTEED ACCOUNT. ALL PROSPECTUSES SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE.
THIS PROSPECTUS, THE STATEMENT OF ADDITIONAL INFORMATION AND OTHER INFORMATION
ABOUT SEPARATE ACCOUNT I REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION CAN BE FOUND IN THE SEC'S WEB SITE AT http://www.sec.gov.
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.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION ARE DATED MAY 1,
1998.
<PAGE>
TABLE OF CONTENTS
===============================================================================
<TABLE>
<S> <C>
DEFINITIONS ................................................ DEFINITIONS - 1
PROSPECTUS SUMMARY ......................................... SUMMARY - 1
FEE TABLE .................................................. FEE TABLE - 1
CONDENSED FINANCIAL INFORMATION ............................ AUV HISTORY - 1
THE COMPANY ............................................................ 1
VARIABLE ANNUITY ACCOUNT I ............................................. 1
INVESTMENT OPTIONS ..................................................... 1
The Funds ............................................................ 1
Credited Interest Option ............................................. 3
PURCHASE ............................................................... 3
Contract Availability ................................................ 3
Purchasing Interests in the Contract ................................. 3
General .............................................................. 4
Purchase Payments .................................................... 4
Contract Rights ...................................................... 4
Designations of Beneficiary and Annuitant ............................ 4
Right to Cancel ...................................................... 5
CHARGES AND DEDUCTIONS ................................................. 5
Daily Deductions from the Separate Account ........................... 5
Mortality and Expense Risk Charge .................................. 5
Administrative Charge .............................................. 5
Maintenance Fee ...................................................... 5
Deferred Sales Charge ................................................ 6
Fund Expenses ........................................................ 7
Premium and Other Taxes .............................................. 7
CONTRACT VALUATION ..................................................... 7
Account Value ........................................................ 7
Accumulation Units ................................................... 7
Net Investment Factor ................................................ 7
TRANSFERS .............................................................. 8
Telephone Transfers .................................................. 8
Dollar Cost Averaging Program ........................................ 8
Account Rebalancing Program .......................................... 8
WITHDRAWALS ............................................................ 9
SYSTEMATIC DISTRIBUTION OPTIONS ........................................ 9
DEATH BENEFIT DURING ACCUMULATION PERIOD ............................... 10
Death Benefit Amount ................................................. 10
Death Benefit Payment Options ........................................ 11
Death of the Annuitant ............................................... 11
ANNUITY PERIOD ......................................................... 12
Annuity Period Elections ............................................. 12
Partial Annuitization ................................................ 12
Annuity Options ...................................................... 12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Annuity Payments ....................................................... 13
Charges Deducted During the Annuity Period ............................. 13
Death Benefit Payable During the Annuity Period ........................ 13
Death of the Certificate Holder During the Annuity Period .............. 14
TAX STATUS ............................................................... 14
Introduction ........................................................... 14
Taxation of the Company ................................................ 14
Tax Status of the Contract ............................................. 15
Taxation of Annuity Contracts .......................................... 16
Contracts Used with Certain Retirement Plans ........................... 18
Qualified Contracts in General ....................................... 18
Section 457 Plans .................................................... 18
Section 401(a) Plans ................................................. 19
Section 403(b) Plans ................................................. 19
Individual Retirement Annuities and Simplified Employee Pension Plans 20
Withholding ............................................................ 20
MISCELLANEOUS ............................................................ 20
Distribution ........................................................... 20
Delay or Suspension of Payments ........................................ 20
Performance Reporting .................................................. 21
Voting Rights .......................................................... 21
Modification of the Contract ........................................... 21
Transfers of Ownership; Assignment ..................................... 21
Involuntary Terminations ............................................... 22
Legal Matters and Proceedings .......................................... 22
Year 2000 .............................................................. 22
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ...................... 23
APPENDIX--AICA GUARANTEED ACCOUNT ........................................ 24
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY
PERSON TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THE OFFERING CONTAINED IN THIS PROSPECTUS EXCEPT AS OTHERWISE CONTAINED HEREIN.
<PAGE>
DEFINITIONS
===============================================================================
The following terms are defined as they are used in this Prospectus:
Account: A record that identifies contract values accumulated on each
Certificate Holder's behalf during the Accumulation Period.
Account Value: The total dollar value of amounts held in an Account as of each
Valuation Date during the Accumulation Period.
Account Year: A period of twelve months measured from the date on which an
Account is established (the effective date) or from an anniversary of such
effective date.
Accumulation Period: The period during which Purchase Payment(s) credited to an
Account are invested to fund future annuity payments.
Accumulation Unit: A measure of the value of each Subaccount before annuity
payments begin.
Adjusted Account Value: The Account Value, plus or minus the aggregate market
value adjustment for amounts allocated to the Guaranteed Account.
Adviser: Federated Advisers or Federated Global Research Corp., the investment
adviser of the Funds.
Annuitant: The person on whose life or life expectancy the annuity payments are
based.
Annuity: A series of payments for life, a definite period or a combination of
the two.
Annuity Date: The date on which annuity payments begin.
Annuity Period: The period during which annuity payments are made.
Annuity Unit: A measure of the value of each Subaccount selected during the
Annuity Period.
Application: The form or collection of information required by the Company to
purchase an interest in a group Contract or an individual Contract.
Beneficiary(ies): The person or persons who are entitled to receive any death
benefit proceeds. Under Nonqualified Contracts, Individual Retirement Annuities
and Section 403(b) Contracts, Beneficiary refers to the beneficiary named under
the Contract. Under Qualified Contracts sold in conjunction with 401(a) or 457
Plans, Beneficiary refers to the beneficiary under the plan.
Certificate: The document issued to a Certificate Holder for an Account
established under a group contract.
Certificate Holder (You): A person or entity who purchases an individual
Contract or acquires an interest under a group Contract.
Company (We, Us): Aetna Insurance Company of America.
Contract: The group and individual deferred, variable annuity contracts offered
by this Prospectus.
Distributor(s): The registered broker-dealers, or banks that may be acting as
broker-dealers without separate registration under the Securities Exchange Act
of 1934, which have entered into selling agreements with the Underwriter to
distribute interests in the Contracts. The Underwriter may also serve as a
Distributor.
Fund(s): An open-end registered management investment company whose shares are
purchased by the Separate Account to fund the benefits provided by the
Contract.
Group Contract Holder: The entity to which a group Contract is issued.
- --------------------------------------------------------------------------------
DEFINITIONS - 1
<PAGE>
Home Office: The Company's principal executive offices located at 151
Farmington Avenue, Hartford, Connecticut 06156.
Individual Contract Holder: A person or entity who has purchased an individual
variable annuity Contract (also referred to as a "Certificate Holder").
Individual Retirement Annuity: An individual or group variable deferred annuity
intended to qualify under Code Section 408(b).
Nonqualified Contract: A Contract established to supplement an individual's
retirement income, or to provide an alternative investment option under an
Individual Retirement Account qualified under Code Section 408(a).
1940 Act: The Investment Company Act of 1940, as amended.
Purchase Payment(s): The gross payment(s) made to the Company under an Account.
Qualified Contracts: Contracts available for use with plans entitled to special
federal income tax treatment under Code Sections 401(a), 403(b), 408(b) or 457.
Registered Representative: The individual who is registered with a
broker-dealer acting as Distributor to offer and sell securities, or who is an
employee of a bank acting as Distributor that is exempt from broker-dealer
registration under the Securities Exchange Act of 1934. Registered
Representatives must also be licensed as insurance agents to sell variable
annuity contracts.
Separate Account: Variable Annuity Account I, a separate account established
for the purpose of funding variable annuity contracts issued by the Company.
Subaccount(s): The portion of the assets of the Separate Account that is
allocated to a particular Fund. Each Subaccount invests in the shares of only
one corresponding Fund.
Surrender Value: The amount payable upon the withdrawal of all or any portion
of an Account Value.
Underwriter: The registered broker-dealer which contracts with other registered
broker-dealers, or with banks exempt from broker-dealer registration, to offer
and sell the Contracts. Aetna Life Insurance and Annuity Company will serve as
Underwriter.
Valuation Date: The date and time at which the Accumulation Unit Value and
Annuity Unit Value of a Subaccount is calculated. Currently, this calculation
occurs after the close of business of the New York Stock Exchange on any normal
business day, Monday through Friday, that the New York Stock Exchange is open.
- --------------------------------------------------------------------------------
DEFINITIONS - 2
<PAGE>
PROSPECTUS SUMMARY
===============================================================================
CONTRACTS OFFERED
The Contracts offered in connection with this Prospectus are group and
individual deferred variable annuity contracts issued by Aetna Insurance
Company of America (the "Company"). The purpose of the Contract is to
accumulate values and to provide benefits upon retirement. The Contracts are
currently available for use as (1) individual nonqualified purchases (we
reserve the right to limit the ownership of nonqualified contracts to natural
persons); (2) Individual Retirement Annuities ("IRAs"), other than "SIMPLE
IRAs" as defined in Section 408(p) of the Internal Revenue Code (may be subject
to approval by state regulatory agencies); and (3) contracts issued in
conjunction with employer sponsored retirement plans under Sections 401(a),
403(b) or 457 of the Code (may be subject to approval by the Company and by
state regulatory agencies. See "Purchase.")
The Contracts are generally group variable annuity contracts under which
accounts are established for persons in the group. Individual Contracts are
offered in those states where the group Contracts are not authorized for sale.
CONTRACT PURCHASE
You may purchase an interest in the Contract by completing an Application
and submitting it to the Company. Contracts may be purchased by two individuals
as joint Certificate Holders. Joint Certificate Holders are allowed only on
Nonqualified Contracts. A joint Certificate Holder must be the spouse of the
other joint Certificate Holder (unless otherwise prohibited by state law).
References to "Certificate Holders" in this Prospectus mean both of the
Certificate Holders on joint Accounts. Purchase Payments can be applied to the
Contract through a lump-sum payment or through ongoing contributions. (See
"Purchase.")
FREE LOOK PERIOD
You may cancel the Contract or Certificate within 10 days after you
receive it (or longer if required by state law) by returning it to the Company
along with a written notice of cancellation. Unless state law requires
otherwise, the amount you will receive upon cancellation will reflect the
investment performance of the Subaccounts into which your Purchase Payments
were deposited. In some cases this may be more or less than the amount of your
Purchase Payments. Under a Contract issued as an Individual Retirement Annuity,
you will receive a refund of your Purchase Payment. (See "Purchase--Right to
Cancel.")
INVESTMENT OPTIONS
The Company has established Variable Annuity Account I, a registered unit
investment trust, for the purpose of funding the variable portion of the
Contracts. The Separate Account is divided into Subaccounts which invest
directly in shares of the Funds described herein. The Contract allows investment
in the Subaccounts, as well as in the Guaranteed Account described below. For a
complete list of the Funds available under the Contracts, and a description of
the investment objectives of each of the Funds and their investment adviser, see
"Investment Options-- The Funds" in this Prospectus, as well as the prospectuses
for each of the Funds.
The Guaranteed Account is the credited interest option available under the
Contract which allows you to earn fixed rates of interest, if held for the
guaranteed term. (See the Appendix to this Prospectus and the prospectus for
the Guaranteed Account.)
CHARGES AND DEDUCTIONS
Certain charges are associated with these Contracts. These charges include
daily deductions from the Separate Account (the mortality and expense risk
charges and an administrative charge), as well as any applicable maintenance
fee, transfer fees and premium and other taxes. The Funds also incur certain
fees and expenses which are deducted directly from the Funds. A deferred sales
charge may apply upon a full or partial withdrawal of the Account Value. (See
the Fee Table and "Charges and Deductions.")
- --------------------------------------------------------------------------------
SUMMARY - 1
<PAGE>
TRANSFERS
Prior to the Annuity Date, and subject to certain limitations, you can
transfer Account Values among the Subaccounts and the Guaranteed Account. If
approved by your state, during the Annuity Period, if you have elected variable
payments you can make transfers among the Subaccounts available during the
Annuity Period. Currently, during the Accumulation Period transfers are without
charge. However, the Company reserves the right to charge up to $10 for each
additional transfer if more than 12 transfers are made in a calendar year.
Transfers can be requested in writing or by telephone in accordance with the
Company's transfer procedures. If approved by your state, during the Annuity
Period, you can currently make up to four transfers each calendar year. There
is no charge for these transfers. (Transfers from the Guaranteed Account may be
restricted and subject to a market value adjustment. See the Appendix.)
The Company also offers a Dollar Cost Averaging Program and an Account
Rebalancing Program. The Dollar Cost Averaging Program permits the automatic
transfer of amounts from any of the Subaccounts and an available Guaranteed
Term to any of the other Subaccounts on a monthly or quarterly basis. The
Account Rebalancing Program allows you to request that each year, or at more
frequent intervals as allowed by the Company, We automatically reallocate your
Account Value to a specified percentages among the subaccounts in which you
invest. (See "Transfers.")
WITHDRAWALS
All or a part of the Account Value may be withdrawn prior to the Annuity
Date by properly completing a disbursement form and sending it to the Company.
Certain charges may be assessed upon withdrawal. Amounts withdrawn from the
Guaranteed Account may be subject to a market value adjustment ("MVA"). (See
the Appendix.) The taxable portion of the withdrawal may also be subject to
income tax and a federal tax penalty. (See "Withdrawals.")
The Contract also offers certain Systematic Distribution Options during
the Accumulation Period subject to certain criteria. Some Systematic
Distribution Options are not available in all states and may not be suitable in
every situation. (See "Systematic Distribution Options.")
GUARANTEED DEATH BENEFIT
These Contracts contain a guaranteed death benefit feature. Upon the death
of the Certificate Holder, or the Annuitant if the Certificate Holder is a
non-natural person, the Account Value may be increased under certain
circumstances. (See "Death Benefit During Accumulation Period.")
After Annuity Payments have commenced, a death benefit may be payable to
the Beneficiary depending upon the terms of the Contract and the Annuity Option
selected. (See "Death Benefit Payable During the Annuity Period.")
THE ANNUITY PERIOD
On the Annuity Date, you may elect to begin receiving Annuity Payments.
Annuity Payments can be made on either a fixed, variable or combination fixed
and variable basis. If a variable payout is selected, the payments will
continue to vary with the investment performance of the Subaccount(s) selected.
The Company reserves the right to limit the number of Subaccounts that may be
available during the Annuity Period. (See "Annuity Period.")
TAXES
Earnings are not generally taxed until you or your Beneficiary(ies)
actually receive a distribution from the Contract. A 10% federal tax penalty
may be imposed on certain withdrawals. (See "Tax Status.")
INQUIRIES
Questions, inquiries or requests for additional information can be
directed to your agent or local representative, or you may contact the Company
as follows:
[bullet] Write to: Aetna Insurance Company of America
151 Farmington Avenue
Hartford, Connecticut 06156-5996
Attention: Customer Service
[bullet] Call Customer Service: 1-800-531-4547 (for automated transfers
or changes in the allocation of Account
Values, call: 1-800-262-3862)
- --------------------------------------------------------------------------------
SUMMARY - 2
<PAGE>
FEE TABLE
===============================================================================
This Fee Table describes the various charges and expenses associated with the
Contract. No sales charge is paid upon purchase of the Contract. All costs that
are borne directly or indirectly under the Subaccounts and Funds are shown
below. The charges and expenses shown below do not include premium taxes that
may be applicable. For more information regarding expenses paid out of assets
of a particular Fund, see the Fund's prospectus.
CONTRACT HOLDER TRANSACTION EXPENSES
Deferred Sales Charge for withdrawals under each Contract (as a percentage
of Purchase Payments withdrawn):
<TABLE>
<CAPTION>
Years from Receipt of Deferred Sales
Purchase Payment Charge Deduction
- --------------------- ----------------
<S> <C>
Less than 1 7%
1 or more but less than 2 6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more 0%
</TABLE>
<TABLE>
<S> <C>
Annual Maintenance Fee (1) ................ $30.00
Transfer Charge (2) ....................... $00.00
SEPARATE ACCOUNT ANNUAL EXPENSES
(Daily deductions, equal to the percentage shown on an annual
basis, made from amounts allocated to the variable
options under each Contract)
DURING THE ACCUMULATION PERIOD:
Mortality and Expense Risk Charge ......... 1.25%
Administrative Charge ..................... 0.15%
----
Total Subaccount Annual Expenses .......... 1.40%
====
DURING THE ANNUITY PERIOD:
Mortality and Expense Risk Charge ......... 1.25%
Administrative Charge ..................... 0.00%(3)
----
Total Subaccount Annual Expenses .......... 1.25%
====
</TABLE>
Reduced charges apply to Purchase Payments in excess of $1.5 million.
- ------------------
(1) The maintenance fee if applicable will generally be deducted from each
Account annually and if the full Account Value is withdrawn. The
maintenance fee is waived when the Account Value is $50,000 or more on
the date the maintenance fee is due.
(2) During the Accumulation Period, we currently allow an unlimited number
of transfers without charge. However, we reserve the right to impose a
fee of $10 for each transfer in excess of 12 per year.
(3) We currently do not impose an Administrative Charge during the Annuity
Period. However, we reserve the right to deduct a daily charge of not
more than 0.25% per year from the Subaccounts.
- --------------------------------------------------------------------------------
FEE TABLE - 1
<PAGE>
ANNUAL EXPENSES OF THE FUNDS
The following table illustrates the advisory fees and other expenses applicable
to the Funds. Except as noted, the following figures are a percentage of
average net assets and, except where otherwise indicated, are based on figures
for the year ended December 31, 1997. A Fund's "Other Expenses" include
operating costs of the Fund. These expenses are reflected in the Fund's net
asset value and are not deducted from the Account Value.
<TABLE>
<CAPTION>
Investment
Advisory Fees(1) Other Expenses
(after expense (after expense Total Fund
reimbursement) reimbursement) Annual Expenses
------------------ ---------------- ----------------
<S> <C> <C> <C>
Federated American Leaders Fund II(2) 0.66% 0.19% 0.85%
Federated Equity Income Fund(3) 0.00% 0.85% 0.85%
Federated Fund for U.S. Government Securities II(2) 0.15% 0.65% 0.80%
Federated Growth Strategies Fund II(2) 0.08% 0.77% 0.85%
Federated High Income Bond Fund II(2) 0.51% 0.29% 0.80%
Federated International Equity Fund II(2) 0.02% 1.21% 1.23%
Federated Prime Money Fund II(2) 0.30% 0.50% 0.80%
Federated Utility Fund II(2) 0.48% 0.37% 0.85%
</TABLE>
- ------------------
(1) The Adviser reimburses the Company for administrative costs incurred in
connection with administering the Funds as variable funding options
under the Contract. These reimbursements are paid out of the investment
advisory fees and are not charged to investors.
(2) The management fee for each of the funds has been reduced to reflect a
voluntary waiver of a portion of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion. The
maximum management fee for each of the Funds is as follows:
0.75%--American Leaders Fund II, Growth Strategies Fund II, and Utility
Fund II; 0.60%--Fund for U.S. Government Securities II and High Income
Bond Fund II; 1.00%--International Equity Fund II; and 0.50%--Prime
Money Fund II.
The total operating expenses of each of the funds, absent the voluntary
waiver of a portion of the management fee, would have been: 0.94% for
the American Leaders Fund II; 1.25% for the Fund for U.S. Government
Securities II; 1.52% for the Growth Strategies Fund II; 0.89% for the
High Income Bond Fund II; 2.21% for the International Equity Fund II;
1.00% for the Prime Money Fund II; and 1.12% for the Utility Fund II.
(3) The management fee has been reduced to reflect the voluntary waiver of
the management fee. The adviser can terminate this voluntary waiver at
any time at its sole discretion. The maximum investment advisory fee is
0.75%. The fund has no present intention of paying or accruing the 12b-1
fee during the fiscal year ending December 31, 1998. If the fund were
paying or accruing the 12b-1 fee, Institutional Shares would be able to
pay up to 0.25% of its average daily net assets for the 12b-1 fee. See
"Fund Information" in the Fund prospectus.
The total operating expenses would have been 2.29% absent the voluntary
waiver of the management fee and the voluntary reimbursement of certain
other operating expenses.
- --------------------------------------------------------------------------------
FEE TABLE - 2
<PAGE>
HYPOTHETICAL ILLUSTRATION (EXAMPLE)
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
The following Examples illustrate the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. For the
purposes of these Examples, the maximum maintenance fee of $30.00 that can be
deducted under the Contract has been converted to a percentage of assets equal
to 0.022%.
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
If you withdraw the entire Account If you do not withdraw the Account
Value at the end of the periods Value, or if you annuitize at the end
shown, you would pay the following of the periods shown, you would pay
expenses, including any applicable the following expenses (no deferred
deferred sales charge: sales charge is reflected):
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Federated American Leaders Fund II $85 $104 $138 $261 $23 $71 $122 $261
Federated Equity Income Fund II $85 $104 $138 $261 $23 $71 $122 $261
Federated Fund for U.S. Government Securities II $84 $103 $136 $256 $23 $69 $119 $256
Federated Growth Strategies Fund II $85 $104 $138 $261 $23 $71 $122 $261
Federated High Income Bond Fund II $84 $103 $136 $256 $23 $69 $119 $256
Federated International Equity Fund II $88 $116 $157 $299 $27 $82 $141 $299
Federated Prime Money Fund II $84 $103 $136 $256 $23 $69 $119 $256
Federated Utility Fund II $85 $104 $138 $261 $23 $71 $122 $261
</TABLE>
- --------------------------------------------------------------------------------
FEE TABLE - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION
(Selected data for accumulation units outstanding throughout each period)
===============================================================================
The condensed financial information presented below for each of the periods in
the three-year period ended December 31, 1997 (as applicable), is derived from
the financial statements of the Separate Account, which have been audited by
KPMG Peat Marwick LLP, independent auditors. The financial statements and the
independent auditors' report thereon for the year ended December 31, 1997 are
included in the Statement of Additional Information.
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
FEDERATED AMERICAN LEADERS FUND II
Value at beginning of period $13.639 $ 11.378 $10.000(2)
Value at end of period $17.796 $ 13.639 $11.378
Increase (decrease) in value of accumulation unit(1) 30.48% 19.87% 13.78%
Number of accumulation units outstanding at end of period 6,408,594 4,255,333 1,444,344
FEDERATED EQUITY INCOME FUND II
Value at beginning of period $10.539
Value at end of period $12.305
Increase (decrease) in value of accumulation unit(1) 16.76%(3)
Number of accumulation units outstanding at end of period 1,051,764
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II
Value at beginning of period $10.809 $ 10.521 $10.000(4)
Value at end of period $11.572 $ 10.809 $10.521
Increase (decrease) in value of accumulation unit(1) 7.06% 2.74% 5.21%
Number of accumulation units outstanding at end of period 487,807 227,252 150,860
FEDERATED GROWTH STRATEGIES FUND II
Value at beginning of period $12.596 $ 10.277 $10.000(5)
Value at end of period $15.777 $ 12.596 $10.277
Increase (decrease) in value of accumulation unit(1) 25.25% 22.57% 2.77%
Number of accumulation units outstanding at end of period 1,558,314 778,060 18,233
FEDERATED HIGH INCOME BOND FUND II
Value at beginning of period $11.920 $ 10.576 $10.000(4)
Value at end of period $13.379 $ 11.920 $10.576
Increase (decrease) in value of accumulation unit(1) 12.24% 12.71% 5.76%
Number of accumulation units outstanding at end of period 1,939,238 972,454 302,293
FEDERATED INTERNATIONAL EQUITY FUND II
Value at beginning of period $10.924 $ 10.229 $10.000(4)
Value at end of period $11.858 $ 10.924 $10.229
Increase (decrease) in value of accumulation unit(1) 8.54% 6.80% 2.29%
Number of accumulation units outstanding at end of period 1,695,555 1,037,619 300,714
FEDERATED PRIME MONEY FUND II
Value at beginning of period $10.515 $ 10.180 $10.000(4)
Value at end of period $10.877 $ 10.515 $10.180
Increase (decrease) in value of accumulation unit(1) 3.46% 3.29% 1.80%
Number of accumulation units outstanding at end of period 345,598 333,600 403,430
FEDERATED UTILITY FUND II
Value at beginning of period $12.361 $ 11.238 $10.000(6)
Value at end of period $15.434 $ 12.361 $11.238
Increase (decrease) in value of accumulation unit(1) 24.86% 9.99% 12.38%
Number of accumulation units outstanding at end of period 1,367,351 1,078,803 451,294
</TABLE>
- ------------------
(1) The above figures are calculated by subtracting the beginning
Accumulation Unit value from the ending Accumulation Unit value, and
dividing the result by the beginning Accumulation Unit value. These
figures do not reflect the deferred sales charge or the fixed dollar
annual maintenance fee, if any. Inclusion of these charges would reduce
the investment results shown.
(2) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during October 1995,
when the Fund became available under the Contract.
(3) Reflects less than a full year of performance activity. Funds were first
received in this option during January 1997.
(4) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during July 1995,
when the Fund became available under the Contract.
(5) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during November 1995,
when the Fund became available under the Contract.
(6) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during June 1995,
when the Fund became available under the Contract.
- --------------------------------------------------------------------------------
AUV HISTORY - 1
<PAGE>
THE COMPANY
===============================================================================
Aetna Insurance Company of America (the "Company"), the depositor of
Variable Annuity Account I, is the issuer of the Contract, and as such, it is
responsible for providing the insurance and annuity benefits under the
Contract. The Company is a wholly owned subsidiary of Aetna Life Insurance and
Annuity Company ("ALIAC"). ALIAC is a wholly owned subsidiary of Aetna
Retirement Holdings, Inc., which is in turn a wholly owned subsidiary of Aetna
Retirement Services, Inc. and an indirect wholly owned subsidiary of Aetna Inc.
The Company's principal executive offices are located at 151 Farmington Avenue,
Hartford, Connecticut 06156.
VARIABLE ANNUITY ACCOUNT I
===============================================================================
The Company established Variable Annuity Account I (the "Separate
Account") in 1994 as a segregated asset account for the purpose of funding its
variable annuity contracts. The Separate Account is registered as a unit
investment trust under the Investment Company Act of 1940 (the "1940 Act"), and
meets the definition of "separate account" under federal securities laws. The
Separate Account is divided into "subaccounts" which do not invest directly in
stocks, bonds or other investments. Instead, each Subaccount buys and sells
shares of a corresponding Fund.
Although the Company holds title to the assets of the Separate Account,
such assets are not chargeable with liabilities of any other business conducted
by the Company. Income, gains or losses of the Separate Account are credited to
or charged against the assets of the Separate Account without regard to other
income, gains or losses of the Company. All obligations arising under the
Contracts are obligations of the Company.
INVESTMENT OPTIONS
===============================================================================
THE FUNDS
Purchase Payments may be allocated to one or more of the Subaccounts of
the Federated Insurance Series (the "Trust") as designated on the Application.
In turn, the Subaccounts invest in the corresponding Funds at net asset value.
The availability of Funds may be subject to regulatory authorization. In
addition, the Company may add or withdraw Funds, as permitted by applicable
law.
If the shares of any Fund should no longer be available for investment by
the Separate Account or if in the judgment of the Company, further investment
in such shares should become inappropriate in view of the purpose of the
Contract, we may cease to make such Fund shares available for investment under
the Contract prospectively. The Company may, alternatively, substitute shares
of another Fund for shares already acquired. The Company reserves the right to
substitute shares of another Fund for shares already acquired without a proxy
vote. Any elimination, substitution or addition of Funds will be done in
accordance with applicable state and federal securities laws.
[bullet] Federated Insurance Series--Federated American Leaders Fund II
(formerly IMS Equity Growth and Income Fund) The primary objective of
the Fund is to achieve long-term growth of capital. The Fund's
secondary objective is to provide income. The Fund pursues its
investment objective by investing, under normal circumstances, at least
65% of its total assets in common stock of "blue-chip" companies.
"Blue-chip" companies generally are top-quality, established growth
companies which, in the opinion of the Fund's adviser meet certain
criteria.(1)
[bullet] Federated Insurance Series--Federated Equity Income Fund II seeks to
provide above average income and capital appreciation. The Fund
attempts to achieve its objectives by investing at least 65% of its
assets in income-producing equity securities. Equity securities include
common stocks, preferred stocks, and securities (including debt
securities) that are convertible into common stocks. The portion of the
Fund's total assets invested in common stocks, preferred stocks, and
convertible securities will vary according to the Fund's assessment of
market and economic conditions and outlook.(1)
- --------------------------------------------------------------------------------
1
<PAGE>
[bullet] Federated Insurance Series--Federated Fund for U.S. Government
Securities II (formerly IMS U.S. Government Bond Fund) seeks to provide
current income. The Fund pursues its investment objective by investing
at least 65% of the value of its total assets in securities issued or
guaranteed as to ayment of principal and interest by the U.S.
government, its agencies or instrumentalities.(1)
[bullet] Federated Insurance Series--Federated Growth Strategies Fund II
(formerly IMS Growth Stock Fund) seeks capital appreciation. The Fund
pursues its objective by investing at least 65% of its assets in equity
securities of companies with prospects for above-average growth in
earnings and dividends or companies where significant fundamental
changes are taking place. Equity securities include common stocks,
preferred stocks, and securities (including debt securities) that are
convertible into common stocks.(1)
[bullet] Federated Insurance Series--Federated High Income Bond Fund II
(formerly IMS Corporate Bond Fund) seeks high current income by
investing primarily in a diversified portfolio of professionally
managed fixed income securities. The fixed-income securities in which
the Fund intends to invest are lower-rated corporate debt obligations
(commonly known as "junk bonds" or "high yield, high risk bonds" which
involve significant degree of risk). (See the Fund's prospectus for a
discussion of the risk factors involved in investing in lower-rated
corporate debt obligations).(1)
[bullet] Federated Insurance Series--Federated International Equity Fund II
(formerly IMS International Stock Fund) seeks total return on its
assets by investing at least 65% of its assets (and under normal market
conditions, substantially all of its assets) in equity securities of
issuers located in at least three different countries outside of the
United States. Investing in non-U.S. securities carries substantial
risks in addition to those associated with domestic investments.(2)
[bullet] Federated Insurance Series--Federated Prime Money Fund II (formerly IMS
Prime Money Fund) seeks to provide current income consistent with
stability of principal and liquidity. The Fund pursues its investment
objective by investing exclusively in a portfolio of money market
instruments maturing in 397 days or less. The average maturity of the
money market instruments in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. An investment in this
Fund is neither insured nor guaranteed by the U.S. government.(1)
[bullet] Federated Insurance Series--Federated Utility Fund II (formerly IMS
Utility Fund) seeks to achieve high current income and moderate capital
appreciation by investing primarily in a professionally managed and
diversified portfolio of equity and debt securities of utility
companies. Under normal market conditions, the Fund will invest at
least 65% of its total assets in securities of utility companies.(1)(3)
Investment Advisers for the Funds:
(1) Federated Advisers
(2) Federated Global Research Corp.
(3) Federated Global Research Corp. (Subadviser)
Risks Associated with Investment in the Funds. Some of the Funds may use
instruments known as derivatives as part of their investment strategies. The
use of certain derivatives may involve high risk of volatility to a Fund, and
the use of leverage in connection with such derivatives can also increase risk
of losses. Some of the Funds may also invest in foreign or international
securities which involve greater risks than U.S. investments.
More comprehensive information, including a discussion of potential
risks, is found in the current prospectus for each Fund which is distributed
with and accompanies this prospectus. You should read the Fund prospectuses and
consider carefully, and on a continuing basis, which Fund or combination of
Funds is best suited to your long-term investment objectives. Additional
prospectuses and statements of Additional Information for this Prospectus and
for each of the Funds can be obtained from the Company's Home Office at the
address and telephone number listed under the "Inquiries" section of the
Prospectus Summary.
Conflicts of Interest (Mixed and Shared Funding). Shares of the Funds are
sold to each of the Subaccounts for funding the variable annuity contracts
issued by the Company. Shares of the Funds may also be sold to other insurance
companies for the same purpose. This is referred to as "shared funding." Shares
of the Funds may also be used for funding variable life insurance contracts
issued by the Company or by third parties. This is referred to as "mixed
funding."
- --------------------------------------------------------------------------------
2
<PAGE>
Because the Funds available under the Contract are sold to fund variable
annuity contracts and variable life insurance policies issued by us or by other
companies, certain conflicts of interest could arise. If a conflict of interest
were to occur, one of the separate accounts might withdraw its investment in
the Trust, which might force the Trust to sell portfolio securities at
disadvantageous prices, causing its per share value to decrease. The Board of
Trustees of the Trust has agreed to monitor events in order to identify any
material irreconcilable conflicts which might arise and to determine what
action, if any, should be taken to address such conflict.
CREDITED INTEREST OPTION
Purchase Payments may be allocated to the AICA Guaranteed Account (the
"Guaranteed Account"). Through the Guaranteed Account, we guarantee stipulated
rates of interest for stated periods of time. Amounts must remain in the
Guaranteed Account for specified periods of the guaranteed term to receive the
quoted interest rates, or a market value adjustment (which may be positive or
negative) will be applied. (See the Appendix.)
PURCHASE
===============================================================================
CONTRACT AVAILABILITY
The Contracts are offered as (1) nonqualified deferred annuity contracts
(we reserve the right to limit ownership of nonqualified Contracts to natural
persons); (2) Individual Retirement Annuities, other than "SIMPLE IRAs" as
defined in Section 408(p) of the Internal Revenue Code; or (3) qualified
contracts used in conjunction with certain employer sponsored retirement plans
pursuant to Section 401(a), 403(b) and 457 of the Code. Individual Retirement
Annuities are currently available as rollovers, and may permit ongoing
contributions, subject to state regulatory approval. Additionally, availability
of the Qualified Contracts described under item (3) is subject to approval by
the Company and state regulatory agencies.
The maximum issue age for a Certificate Holder is generally 90; however,
some states may require a lower maximum issue age.
Joint Certificate Holders. Contracts may be purchased by two individuals
as Joint Certificate Holders. A Joint Certificate Holder must be the spouse of
the other Joint Certificate Holder unless otherwise prohibited by state law.
Tax law prohibits the purchase of Qualified Contracts by Joint Certificate
Holders.
PURCHASING INTERESTS IN THE CONTRACT
Group Contracts. Groups will generally consist of those eligible
individuals who have established an account with a broker-dealer or a bank who
has agreed to act as a Distributor for the Contracts. The Distributor or its
designee will execute a master application and return it to the Company. The
master application will then be delivered to the Company for its approval. Once
the Application is approved, the Contract will be issued and the Contract
Holder will be entitled to exercise certain limited rights under the Contract.
(See "Contract Rights.") Under certain circumstances, the person who would
otherwise be the Contract Holder may designate a trustee or other third party
to act as Contract Holder in its place subject to applicable insurance laws. In
that event, the third party would exercise the Contract rights for the group
Contract.
Eligible individuals who want to purchase an interest in a Contract as
part of the group will fill out an Application and return it with their initial
Purchase Payment to their Registered Representative or to the Underwriter for
delivery to the Company. Once the Application is accepted, a Certificate will
be issued to the individual evidencing his or her interest in the group
Contract.
Individual Contracts. Certain states will not allow a group Contract to
be offered due to provisions in their insurance laws. In those states, an
eligible individual will submit an application and will be issued a Contract
rather than a Certificate. Individuals who want to purchase a Contract must
fill out an Application and return it with their initial Purchase Payment to
their Registered Representative or to the Underwriter for delivery to the
Company. Once the Application is accepted, an individual Contract will be
issued to the purchaser.
Rejection. Any Application and initial Purchase Payment tendered by a
prospective Certificate Holder may be rejected for any reason by the Company.
The Company will also return any forms that are incomplete
- --------------------------------------------------------------------------------
3
<PAGE>
or that do not include sufficient information to set up an Account, unless the
forms are completed within five business days from the date the Company
receives them, or unless the prospective Certificate Holder consents to the
forms being held for a longer period of time. All forms that are rejected will
be returned with a refund of all Purchase Payments submitted with them.
GENERAL
Certificate Holders. The Term "Certificate Holders," as used in this
Prospectus, includes individuals purchasing an interest in the Contract as part
of a group and individuals who acquire individual Contracts. Generally,
Nonqualified Certificate Holders must be natural persons.
Joint Certificate Holders. Contracts may be purchased by two individuals
as joint Certificate Holders, except for Contracts acquired by individuals for
purposes of establishing a Qualified Contract. A joint Certificate Holder must
be the spouse of the other joint Certificate Holder unless otherwise prohibited
by state law. (See "Tax Status" and "Contract Rights.")
PURCHASE PAYMENTS
You may make Purchase Payments under the Contract in one lump sum,
through periodic payments or as a transfer from a pre-existing plan.
The minimum initial Purchase Payment amount is $1,500. Additional
Purchase Payments must be at least $500, or if made by automatic check plan,
$50 per month. In some states, a Contract issued as an Individual Retirement
Annuity can accept only a lump sum, rollover Purchase Payment. Additional
Purchase Payments made to an existing Contract are subject to the terms and
conditions published by us at the time of the subsequent payment. A Purchase
Payment of more than $1,000,000 will be allowed only with the Company's
consent. We also reserve the right to reject any Purchase Payment to a
prospective or existing Account without advance notice, unless prohibited by
state law.
For Qualified Contracts, the Code imposes a maximum limit on annual
Purchase Payments which may be excluded from a Certificate Holder's gross
income. (See "Tax Status.")
Allocation of Purchase Payments. Purchase Payments will initially be
allocated to the Subaccounts or the Guaranteed Account as specified on the
Application. Changes in such allocation may be made in writing or by telephone
transfer. Allocations must be in whole percentages, and there may be
limitations on the number of investment options that can be selected.
CONTRACT RIGHTS
The Contract Holder has title to the Contract and has the right to accept
or reject any modifications to the Contract. For group Contracts, this is the
only right the Contract Holder has. All other rights, specifically those
relating to the Account under the Contract, are held by the Certificate Holder.
Certificate Holders' rights are subject to rights of any assignee under an
assignment filed with the Company and to the rights of any irrevocably named
beneficiary.
Joint Certificate Holders have equal rights under the Contract and with
respect to their Account. On the death of a joint Certificate Holder prior to
the Annuity Date, the surviving Certificate Holder may retain all ownership
rights under the Contract or elect to have the proceeds distributed. (See
"Death Benefits.") All rights under the Contract must be exercised by both
joint Certificate Holders with the exception of transfers among investment
options; which can be exercised by one joint Certificate Holder, after the
Account has been established.
DESIGNATIONS OF BENEFICIARY AND ANNUITANT
You generally designate the beneficiary under the Contract on the
Application. However, for Qualified Contracts issued in conjunction with a Code
Section 401(a) qualified pension or profit sharing plan or a Code Section 457
deferred compensation plan, the employer or trustee must be both the
Certificate Holder and the Beneficiary under the Contract, and the participant
on whose behalf the Account was established must be the Annuitant. Under such
plans the participant is generally allowed to designate a beneficiary under the
plan, and the Certificate Holder may direct that we pay any death proceeds to
the plan beneficiary. "Beneficiary" as used in this Prospectus refers to the
person who is ultimately entitled to receive such proceeds.
For Qualified Contracts issued in conjunction with a Code Section 403(b)
tax deferred annuity program subject to the Employee Retirement Income Security
Act (ERISA), the spouse of a married participant must be the beneficiary of at
least 50% of the Account Value. If the married participant is age 35 or older,
the participant may name an alternate beneficiary provided he or she furnishes
a waiver and spousal consent which meets the requirements of ERISA Section 205.
The
- --------------------------------------------------------------------------------
4
<PAGE>
participant on whose behalf the Account was established must be the Annuitant.
For Qualified Contracts issued as an Individual Retirement Annuity, the
Certificate Holder must be the Annuitant. For Nonqualified Contracts, the
Certificate Holder and the Annuitant may, but need not, be the same person.
RIGHT TO CANCEL
You may cancel the Contract or Certificate without penalty by returning
it to the Company or to the person from whom the Contract was purchased with a
written notice of your intent to cancel. In most states, you have ten days to
exercise this right; some states allow you longer. Unless state law requires
otherwise, the amount you will receive upon cancellation will reflect the
investment performance of the Subaccounts into which your Purchase Payments
were deposited. In some cases this may be more or less than the amount of your
Purchase Payments; therefore, you bear the entire investment risk for amounts
allocated among the Subaccounts during the free look period. Under Contracts
issued as Individual Retirement Annuities, you will receive a refund of your
Purchase Payment. Account Values will be determined as of the Valuation Date on
which we receive your request for cancellation at our Home Office.
CHARGES AND DEDUCTIONS
===============================================================================
DAILY DEDUCTIONS FROM THE SEPARATE ACCOUNT
Mortality and Expense Risk Charge. The Company makes a daily deduction
from each of the Subaccounts for the mortality and expense risk charge. The
charge is equal, on an annual basis, to 1.25% of the daily net assets of the
Subaccounts and compensates the Company for the assumption of the mortality and
expense risks under the Contract. The mortality risks are those assumed for our
promise to make lifetime payments according to annuity rates specified in the
Contract. The expense risk is the risk that the actual expenses for costs
incurred under the Contract will exceed the maximum costs that can be charged
under the Contract.
If the amount deducted for mortality and expense risks is not sufficient
to cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess may be used to
recover distribution expenses relating to the Contracts and as a source of
profit to the Company. The Company expects to make a profit from the mortality
and expense risk charge.
Administrative Charge. During the Accumulation Period, the Company makes
a daily deduction from each of the Subaccounts for an administrative charge.
The charge is equal, on an annual basis, to 0.15% of the daily net assets of
the Subaccounts and compensates the Company for administrative expenses that
exceed revenues from the maintenance fee described below. The charge is set at
a level which does not exceed the average expected cost of the administrative
services to be provided while the Contract is in force. The Company does not
expect to make a profit from this charge.
During the Annuity Period, the Company reserves the right to make a
deduction for the administrative charge of an amount equal, on an annual basis,
up to 0.25% of the daily net assets of the Subaccounts. There is currently no
administrative charge during the Annuity Period. Once an Annuity Option is
elected, the charge will be established and will be effective during the entire
Annuity Period.
MAINTENANCE FEE
During the Accumulation Period, the Company will deduct an annual
maintenance fee from the Account Value. The maintenance fee is to reimburse the
Company for some of its administrative expenses relating to the establishment
and maintenance of the Accounts.
The maintenance fee deducted under the Contract is $30. The maintenance
fee will be deducted annually on the anniversary of the Contract effective
date. It is deducted on a pro rata basis from each investment option in which
you have an interest. If your entire Account Value is withdrawn, the full
maintenance fee, if applicable, will be deducted at the time of withdrawal. The
maintenance fee will not be deducted (either annually or upon withdrawal) if
your Account Value is $50,000 or more on the day the maintenance fee is due.
- --------------------------------------------------------------------------------
5
<PAGE>
DEFERRED SALES CHARGE
Withdrawals of all or a portion of the Account Value may be subject to a
deferred sales charge. The deferred sales charge is a percentage of the
Purchase Payments withdrawn from the Subaccounts and the Guaranteed Account and
is based on the number of years which have elapsed since the Purchase Payment
was made. The deferred sales charge for each Purchase Payment is determined by
multiplying the Purchase Payment withdrawn by the appropriate percentage, in
accordance with the schedule set forth in the table below.
The charge only applies to the Purchase Payment (not to any associated
changes in value). To satisfy a partial withdrawal, the deferred sales charge
is calculated as if the Purchase Payments are withdrawn in the same order they
were applied to the Account. Partial withdrawals from the Guaranteed Account
will be treated as described in the Appendix and the prospectus for the
Guaranteed Account. The total charge will be the sum of the charges applicable
for all of the Purchase Payments withdrawn. Reduced charges apply to Purchase
Payments in excess of $1.5 million.
<TABLE>
<CAPTION>
- -----------------------------------------------------
Years since receipt of Deferred Sales
Purchase Payment Charge Deduction
---------------------- -----------------
<S> <C>
Less than 1 7%
1 or more but less than 2 6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more 0%
- -----------------------------------------------------
</TABLE>
A deferred sales charge will not be deducted from any portion of a
Purchase Payment withdrawn if the withdrawal is:
[bullet] applied to provide Annuity benefits;
[bullet] paid to a Beneficiary due to the Certificate Holder's death before
Annuity Payments start, up to a maximum of the Purchase Payment(s) in
the Account on the Certificate Holder's date of death (if the
Certificate Holder is a non-natural person, death benefits are paid at
the death of the Annuitant);
[bullet] made due to the election of an Additional Withdrawal Option (see
"Systematic Distribution Options");
[bullet] if approved by your state, under a Qualified Contract when the amount
withdrawn is equal to the minimum distribution required by the Code for
this Contract calculated using a method permitted under the Code and
agreed to by the Company;
[bullet] paid upon a full withdrawal where the Account Value is $2,500 or less
and no amount has been withdrawn during the prior 12 months; or
[bullet] paid if we close out your Account when the value is less than $2,500
(or other amount required by state law).
After the first Account Year, you may withdraw all or a portion of your
Purchase Payments without a deferred sales charge, provided that (1) such
withdrawal occurs within three years of your admission to a licensed nursing
care facility (including non-licensed facilities in New Hampshire), and (2) you
have spent at least 45 consecutive days in such facility. This waiver of
deferred sales charge does not apply if you are in a nursing care facility at
the time the Account is established. It will also not apply if otherwise
prohibited by state law.
The Company does not anticipate that the deferred sales charge will cover
all sales and administrative expenses which it incurs in connection with the
Contract. The difference will be covered by the general assets of the Company
which are attributable, in part, to mortality and expense risk charges under
the Contract described above.
Free Withdrawals. At least 12 months after the date the first Purchase
Payment is applied to your Account and subject to the restrictions described
below, you may withdraw up to 15% of your current Account Value during each
calendar year without imposition of a deferred sales charge. The free
withdrawal applies only to the first partial or full withdrawal in each
calendar year. The free withdrawal amount will be based on the Account Value
calculated on the Valuation Date next following our receipt of your request for
withdrawal. If your withdrawal exceeds the free withdrawal allowance, we will
deduct a deferred sales charge on the excess amount. (See the Appendix for a
discussion of withdrawals from the Guaranteed Account.) This provision may not
be exercised if an Additional Withdrawal Option is in effect in the same
calendar year or if you have withdrawn a minimum distribution required by the
Code for which the deferred sales
- --------------------------------------------------------------------------------
6
<PAGE>
charge has been waived in the same calendar year. (See "Systematic Distribution
Options.")
FUND EXPENSES
Each Fund incurs certain expenses which are paid out of its net assets.
These expenses include, among other things, the investment advisory or
"management" fee. The expenses of the Funds are set forth in the Fee Table in
this Prospectus and described more fully in the accompanying Fund prospectuses.
PREMIUM AND OTHER TAXES
Several states and municipalities currently impose a premium tax on
Annuities. These taxes currently range from 0% to 4%. Ordinarily, any
applicable state premium tax will be deducted from the Account Value when it is
applied to an Annuity option. However, we reserve the right to deduct state
premium tax at any time from the Purchase Payment(s) or from the Account Value,
but no earlier than when we have a tax liability under state law.
Any municipal premium tax assessed at a rate in excess of 1% will be
deducted from the Purchase Payment(s) or from the amount applied to an Annuity
option based on our determination of when such tax is due. We will absorb any
municipal premium tax which is assessed at 1% or less. We reserve the right,
however, to reflect this added expense in our Annuity purchase rates for
residents of such municipalities.
CONTRACT VALUATION
================================================================================
ACCOUNT VALUE
Until the Annuity Date, the Account Value is the total dollar value of
amounts held in the Account as of any Valuation Date. The Account Value at any
given time is based on the value of the units held in each Subaccount, plus the
value of amounts held in the Guaranteed Account.
ACCUMULATION UNITS
The value of your interests in a Subaccount is expressed as the number of
"Accumulation Units" that you hold multiplied by an "Accumulation Unit Value"
(or "AUV") for each unit. The AUV on any Valuation Date is determined by
multiplying the value on the immediately preceding Valuation Date by the net
investment factor of that Subaccount for the period between the immediately
preceding Valuation Date and the current Valuation Date. (See "Net Investment
Factor" below.) The Accumulation Unit Value will be affected by the investment
performance, expenses and charges of the applicable Fund and is reduced each
day by a percentage that accounts for the daily assessment of mortality and
expense risk charges and the administrative charge.
Initial Purchase Payments will be credited to your Account at the AUV
next computed following our acceptance of the Application as described under
"Purchasing Interests in the Contract." Each subsequent Purchase Payment (or
amount transferred) received by the Company by the close of business of the New
York Stock Exchange will be credited to your Account at the AUV next computed
following our receipt of your payment or transfer request. The value of an
Accumulation Unit may increase or decrease.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment performance
of a Subaccount from one Valuation Date to the next. The net investment factor
for a Subaccount for any valuation period is equal to the sum of 1.0000 plus
the net investment rate. The net investment rate equals:
(a) the net assets of the Fund held by the Subaccount on the current
Valuation Date, minus
(b) the net assets of the Fund held by the Subaccount on the preceding
Valuation Date, plus or minus
(c) taxes or provisions for taxes, if any, attributable to the operation
of the Subaccount;
(d) divided by the total value of the Subaccount's Accumulation and
Annuity Units on the preceding Valuation Date,
(e) minus a daily charge at the annual effective rate of 1.25% for
mortality and expense risks, and an administrative charge of 0.15%
during the Accumulation Period and up to 0.25% during the Annuity
Period (currently 0% during the Annuity Period).
The net investment rate may be either positive or negative.
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TRANSFERS
================================================================================
At any time prior to the Annuity Date, you can transfer amounts held
under your Account among the investment options available. Transfers from the
Guaranteed Account may be subject to a market value adjustment. (See the
Appendix.). If approved by your state, during the Annuity Period, if you have
elected a Variable Annuity, you can make transfers only among the Subaccounts
available during the Annuity Period. (See "Annuity Options") A request for
transfer can be made either in writing or by telephone. (See "Telephone
Transfers" below.) All transfers must be in accordance with the terms of the
Contract. Any transfer will be based on the Accumulation Unit Value next
determined after the Company receives a valid transfer request at its Home
Office.
During the Accumulation Period, twelve free transfers are allowed per
calendar year. Thereafter, the Company reserves the right to charge up to $10
for each additional transfer. We currently do not impose this charge. Currently,
during the Annuity Period, four transfers are allowed each calendar year.
TELEPHONE TRANSFERS
You automatically have the right to make transfers among Funds by
telephone. We have enacted procedures to prevent abuses of Account transactions
by telephone, including requiring the use of a personal identification number
(PIN) to execute transactions. You are responsible for safeguarding your PIN,
and for keeping Account information confidential. Although the Company's
failure to follow reasonable procedures may result in the Company's liability
for any losses due to unauthorized or fraudulent telephone transfers, the
Company will not be liable for following instructions communicated by telephone
which it reasonably believes to be genuine. Any losses incurred pursuant to
actions taken by the Company in reliance on telephone instructions reasonably
believed to be genuine shall be borne by you. To ensure authenticity, we record
calls on the 800 line.
DOLLAR COST AVERAGING PROGRAM
You may establish automated transfers of Account Values on a monthly or
quarterly basis through the Company's Dollar Cost Averaging Program. Dollar
Cost Averaging is a system for investing a fixed amount of money at regular
intervals over a period of time. The Dollar Cost Averaging Program permits the
transfer of amounts from any of the variable funding options and an available
Guaranteed Term to any of the Subaccounts. A market value adjustment will not
be applied to dollar cost averaging transfers from any such Guaranteed Term.
(See the Appendix for a discussion of the restrictions and features
attributable to the Guaranteed Account.)
Dollar Cost Averaging does not ensure a profit nor guarantee against loss
in a declining market. You should consider your financial ability to continue
purchases through periods of low price levels. For additional information,
please refer to the "Inquiries" section of the Prospectus Summary, which
describes how you can obtain further information.
Dollar Cost Averaging is not available to individuals who have elected an
Additional Withdrawal Option or the Account Rebalancing Program.
ACCOUNT REBALANCING PROGRAM
The Account Rebalancing Program allows you to have portions of your
Account Value automatically reallocated annually to a specified percentage or
at other more frequent intervals as allowed by the Company under the program.
Only Account Values accumulating in the Subaccounts can be rebalanced. You may
participate in this program by completing the Account Rebalancing section of
the Application, or by sending a written request to the Company at its Home
Office.
Account Rebalancing is not available to Certificate Holders who have
elected the Dollar Cost Averaging Program.
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WITHDRAWALS
================================================================================
All or a portion of your Account Value may be withdrawn at any time
during the Accumulation Period. Withdrawal restrictions applicable to Section
403(b) Contracts are described below. To request a withdrawal, you must
properly complete a disbursement form and send it to our Home Office. Payments
for withdrawal requests will be made in accordance with Securities and Exchange
Commission requirements, but normally not later than seven calendar days
following our receipt of a disbursement form. Withdrawals may be subject to a
deferred sales charge (See "Charges and Deductions") and to taxes and to tax
penalties. (See "Tax Status.")
Withdrawals may be requested in one of the following forms:
[bullet] Full Withdrawal of an Account: The amount paid for a full withdrawal
will be the Adjusted Account Value minus any applicable deferred sales
charge and maintenance fee due.
[bullet] Partial Withdrawals (Percentage): The amount paid will be the
percentage of the Adjusted Account Value requested minus any applicable
deferred sales charge.
[bullet] Partial Withdrawals (Specified Dollar Amount): The amount paid will be
the dollar amount requested. However, the amount withdrawn from your
Account will equal the amount you request plus any applicable deferred
sales charge and plus or minus any applicable market value adjustment.
For any partial withdrawal, the value of the Accumulation Units canceled
will be withdrawn proportionately from the Guaranteed Account or each
Subaccount in which your Account is invested, unless you request otherwise in
writing. All amounts paid will be based on your Account Value as of the next
Valuation Date after we receive a request for withdrawal at our Home Office, or
on such later date as the disbursement form may specify.
The tax treatment of withdrawals from each Nonqualified Contract may be
affected if you own other annuity contracts issued by us (or our affiliates)
that were purchased on or after October 21, 1988. (See "Tax Status.")
Withdrawal Restrictions from 403(b) Plans. Under Section 403(b)
Contracts, the withdrawal of salary reduction contributions and earnings on
such contributions is generally prohibited prior to the participant's death,
disability, attainment of age 59-1/2, separation from service or financial
hardship. (See "Tax Status.")
SYSTEMATIC DISTRIBUTION OPTIONS
================================================================================
The Company offers certain withdrawal options under the Contract that are
not considered annuity options ("Systematic Distribution Options"). To exercise
these options, your Account Value must meet the minimum dollar amounts and age
criteria applicable to that option.
The Systematic Distribution Options currently available under the
Contract include the following:
[bullet] SWO--Systematic Withdrawal Option. SWO is a series of partial
withdrawals from your Account based on a payment method you select. It
is designed for those who want a periodic income while retaining
investment flexibility for amounts accumulated under a Contract.
[bullet] ECO--Estate Conservation Option. ECO offers the same investment
flexibility as SWO but is designed for those who want to receive only
the minimum distribution that the Code requires each year. ECO is
available only under Qualified Contracts. Under ECO, the Company
calculates the minimum distribution amount required by law, and pays
you that amount once a year. (See "Tax Status.")
Other Systematic Distribution Options may be added from time to time.
Additional information relating to any of the Systematic Distribution Options
may be obtained from your local representative or from the Company at its Home
Office.
If you select one of the Systematic Distribution Options, you will retain
all of the rights and flexibility permitted under the Contract during the
Accumulation Period. Your Account Value will continue to be subject to the
charges and deductions described in this Prospectus. Taking a withdrawal under
one of these Systematic Distribution Options may have tax
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consequences. Any person concerned about tax implications should consult a
competent tax advisor prior to electing an option.
Once you elect an Additional Withdrawal Option, you may revoke it any
time by submitting a written request to our Home Office. Once an option is
revoked, it may not be elected again for three years, nor may any other
Systematic Distribution Options be elected unless permitted by the Code. The
Company reserves the right to discontinue the availability of one or all of
these Systematic Distribution Options for new elections at any time, and/or to
change the terms of future elections.
DEATH BENEFIT DURING ACCUMULATION PERIOD
================================================================================
A death benefit will be payable to the Beneficiary(ies) if the
Certificate Holder dies before Annuity Payments have commenced. Upon the death
of a Joint Certificate Holder prior to the Annuity Date, the surviving
Certificate Holder, if any, will become the designated Beneficiary. Any other
Beneficiary designation on record with the Company at the time of death will be
treated as a contingent Beneficiary. If the Certificate Holder is a non-natural
person, the death benefit will be paid to the Beneficiary(ies) at the death of
the Annuitant.
A Beneficiary may elect the death benefit to be paid under one of the
options described below or if the designated Beneficiary is the spouse of the
Certificate Holder, he or she may continue as a Certificate Holder and exercise
all the deceased Certificate Holder's rights under the Contract.
DEATH BENEFIT AMOUNT
Upon the death of the Certificate Holder (or the Annuitant when the
Certificate Holder is a non-natural person), the death benefit proceeds will be
the greatest of:
(1) The Account Value as of the Valuation Date next following our receipt at our
Home Office of proof of death and election of the payment type to be made;
or
(2) The Account Value on the most recent seventh year anniversary of the
Effective Date plus any Purchase Payments made after such Effective Date
anniversary less any withdrawals and any amounts annuitized; or
(3) The amount of the death benefit determined as of the Valuation Date
corresponding to the date of death as follows:
(i) Until the first Effective Date anniversary, the death benefit is equal
to the Purchase Payments made by the Certificate Holder during that
year, less any withdrawals and any amounts annuitized.
For each year thereafter, the death benefit during the year is equal to
the death benefit at the beginning of the year (see (ii) below) plus all
Purchase Payments made during the year less any withdrawals and any amounts
annuitized that year.
(ii) On the anniversary of the Effective Date each year, the death benefit
is determined as follows:
(a) The death benefit on the previous Effective Date anniversary increased
by the death benefit factor of 4%; plus
(b) Purchase Payments made by the Certificate Holder during the year since
the last anniversary of the Effective Date increased by the death
benefit factor of 4% for the portion of the year since the Purchase
Payment was made; less
(c) Any withdrawals or amounts applied to an Annuity Option during the year
increased by the death benefit factor of 4% for the portion of the year
since the withdrawal or election of an Annuity Option.
Currently there is no limitation on the maximum death benefit payable;
however, we reserve the right, in the future, to impose a limitation on the
maximum allowable death benefit under sections (2) and (3) above. We currently
do not anticipate imposing such a limitation prior to May 1, 2000.
The death benefit calculation described in (2) and (3) applies until the
Certificate Holder attains age 85. Thereafter, the death benefit is only
adjusted for Purchase Payments, withdrawals and annuitizations. If the
Certificate Holder attains age 85 prior to the seventh anniversary of the
Effective Date, the death benefit will be the greater of (1) or (3) above. If
the
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Certificate Holder is a non-natural person the Death Benefit calculation will
be based on the age of the Annuitant.
The excess, if any, of the guaranteed death benefit value over the
Account Value is determined when we receive proof of death at our Home Office.
Any excess amount is allocated to the Federated Prime Money Fund II Subaccount.
The Account Value plus any excess amount deposited becomes the Account Value.
In the case of a spousal Beneficiary who continues the Account in his or
her own name, the death benefit shall be equal to the Adjusted Account Value
less any applicable deferred sales charge on any Purchase Payment made after we
receive proof of death.
For amounts held in the Guaranteed Account, see the Appendix for a
discussion of the calculation of death benefit proceeds.
DEATH BENEFIT PAYMENT OPTIONS
Death benefit proceeds may be paid to the Beneficiary as described below.
Prior to any election, the Account Value will remain in the Account and the
Account Value will continue to be affected by the investment performance of the
investment option(s) selected. The Beneficiary has the right to allocate or
transfer any amount to any available investment option (subject to an MVA, as
applicable). The Code requires that distributions begin within a certain time
period, as described below. If no elections are made, no distributions will be
made. Failure to commence distribution within those time periods can result in
tax penalties.
Nonqualified Contracts. If the Certificate Holder (or Annuitant if the
Certificate Holder is a non-natural person) dies and the Beneficiary is the
surviving spouse, he or she will automatically become the successor Certificate
Holder. The successor Certificate Holder may exercise all rights under the
Contract and elect to (1) continue in the Accumulation Period, or (2) apply
some or all of the Adjusted Account Value to any of the Annuity Options or (3)
receive, at any time, a lump sum payment of the death benefit. Under the Code,
distributions are not required until the successor Certificate Holder's death.
If the Certificate Holder (or Annuitant if the Certificate Holder is a
non-natural person) dies and the Beneficiary is not the surviving spouse, he or
she may elect Option (2) or (3) above. Any portion of the death benefit
distributed in installments over the life or life expectancy beginning within
one year of the date of death, must be distributed within five years of the
date of death. (See "Tax Status of the Contract.") A market value adjustment
will apply at the time the death benefit is paid.
Qualified Contracts. Under a Qualified Contract where the Certificate
Holder is a trust or an employer, the death benefit is paid at the death of the
Annuitant. The Beneficiary has the following options: (1) apply some or all of
the Adjusted Account Value to any of the Annuity Options, subject to the
distribution rules in Code Section 401(a)(9), or (2) receive at any time a lump
sum payment equal to all or a portion of the Adjusted Account Value. If the
Account was established in conjunction with a Section 401(a) qualified pension
or profit sharing plan or a Section 457 deferred compensation plan, payment
will be made, as directed by the Certificate Holder, to either the Certificate
Holder or to the plan beneficiary.
If ECO or SWO is in effect and the participant dies before the required
beginning date for minimum distributions, payments will cease. A Beneficiary
may receive distributions under ECO or SWO provided the election would satisfy
the Code minimum distribution rules and would be permitted under the Plan.
If ECO or SWO is in effect and the participant dies after the required
beginning date for minimum distributions, payments will continue as permitted
under the Code minimum distribution rules, unless revoked.
Death benefit payments must satisfy the distribution rules in Code
Section 401(a)(9). (See "Tax Status of the Contract.")
DEATH OF THE ANNUITANT
If the Certificate Holder is a non-natural person, a death benefit is
paid at the death of the Annuitant and a new Annuitant may not be named. In all
other circumstances, if the Annuitant who is not a Certificate Holder dies on
or before the Annuity Date, no Death Benefit is due and a new Annuitant may be
named. If no Annuitant is named, the Certificate Holder will be the Annuitant.
If the Annuitant dies after the Annuity Date, the death benefit, if any, will
be payable to the Beneficiary as specified in the Annuity Option elected. We
will require proof of the Annuitant's death. Death benefits will be paid at
least as rapidly as would have been paid under the method of distribution in
effect at the time of the Annuitant's death.
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ANNUITY PERIOD
================================================================================
ANNUITY PERIOD ELECTIONS
You must notify us in writing of the date you want Annuity Payments to
start (the "Annuity Date") and the Annuity Option elected. Payments may not
begin earlier than one year after purchase, or, unless we consent, later than
the later of (a) first day of the month following the Annuitant's 90th birthday
or (b) the tenth anniversary (fifth anniversary for Contracts or Certificates
issued in Pennsylvania) of the last Purchase Payment.
As of January 1, 1997, the Code generally requires that for Qualified
Contracts, other than for IRAs and for five-percent owners in other Qualified
Contracts, minimum annual distributions of the Account Value must begin by
April 1st of the calendar year following the calendar year in which a
participant attains age 70-1/2 or retires, whichever occurs later. For IRA
depositors and for five-percent owners, minimum distributions must begin by
April 1 of the calendar year following the calendar year in which the
participant attains age 70-1/2. In addition, distributions must be in a form and
amount sufficient to satisfy the Code requirements. These requirements may be
satisfied by the election of certain Annuity Options or Systematic Distribution
Options. (See "Tax Status.") For Nonqualified Contracts, failure to select an
Annuity Option and an Annuity Date, or postponement of the Annuity Date past
the Annuitant's 90th birthday or tenth anniversary of the last Purchase
Payment, may have adverse tax consequences. You should consult with a qualified
tax advisor if you are considering such a course of action.
At least 30 days prior to the Annuity Date, you must notify us in writing
of the following:
[bullet] the date on which you would like annuity payments to begin;
[bullet] the Annuity Option under which you want payments to be calculated and
paid;
[bullet] whether the payments are to be made monthly, quarterly, semi-annually
or annually; and
[bullet] the investment option(s) used to provide annuity payments (i.e., a
fixed annuity using the general account or any of the Subaccounts
available at the time of annuitization).
Annuity Payments will not begin until you have selected an Annuity
Option. Until a date and option are elected, the Account will continue in the
Accumulation Period. Once annuity payments begin, the Annuity Option may not be
changed.
PARTIAL ANNUITIZATION
You may elect an Annuity Option with respect to a portion of the Account
Value, while leaving the remaining portion of the Account Value invested in the
Accumulation Period. The Code and the regulations do not specifically address
the tax treatment applicable to payments provided in this way. Whether such
payments are taxable as annuity payments or as withdrawals is currently
unclear, therefore you should consult with a qualified tax advisor if you are
considering a partial annuitization of your Account.
ANNUITY OPTIONS
You may choose one of the following Annuity Options.
The Certificate Holder may choose one of the following Annuity Options:
Lifetime Annuity Options:
[bullet] Option 1--Life Annuity--An annuity with payments ending on the
Annuitant's death.
[bullet] Option 2--Life Annuity with Guaranteed Payments--An annuity with
payments guaranteed for 5-30 years.
[bullet] Option 3--Life Annuity with Cash Refund Feature--An annuity with a
cash refund feature. Payments are guaranteed for the amount applied to
the Annuity option. If the Annuitant dies before the amount applied to
the Annuity Option (less any applicable premium tax) has been paid, any
remaining balance will be paid in one sum to the Beneficiary. This
option is available only when all payments are as a fixed Annuity.
[bullet] Option 4--Life Annuity Based Upon the Lives of Two Annuitants--An
annuity paid during the lives of the Annuitant and a second Annuitant.
The Certificate Holder selects an Annuity with 100%, 662/3% or 50% of
the payment to continue after the first death, or an
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Annuity with 100% of the payment to continue at the death of the second
Annuitant and 50% of the payment to continue at the death of the Annuitant.
[bullet] Option 5--Life Annuity Based Upon the Lives of Two Annuitants with
Guaranteed Payments--An Annuity with Payments for a minimum of 5-30
years, with 100% of the payment to continue after the first death.
[bullet] Option 6--Life Annuity Based Upon the Lives of Two Annuitants with a
Cash Refund Feature--An Annuity with 100% of the payment to continue
after the first death with a cash refund feature. Payments are
guaranteed for the amount applied to the Annuity Option. If both
Annuitants die prior to the total payment of the amount applied to the
Annuity Option (less any premium tax), any remaining balance will be
paid in one sum to the beneficiary. This option is available only when
all payments are as a Fixed Annuity.
*(If approved by your state)
If Option 1 or 4 is elected, it is possible that only one Annuity Payment
will be made if the Annuitant under Option 1, or the surviving Annuitant under
Option 4, should die prior to the due date of the second Annuity Payment. Once
lifetime Annuity payments begin, the Certificate Holder cannot elect to receive
a lump-sum settlement.
Nonlifetime Annuity Option:
Under this option, payments may be made for 5-30 years, as selected by
the Certificate Holder. If this option is elected as a variable Annuity, the
Certificate Holder may request that the present value of all or any portion of
the remaining variable payments be paid in one sum. If elected on a fixed
basis, you cannot elect to receive a lump-sum settlement.
We may also offer additional Annuity Options under your Contract from
time to time. You can call the number listed in the "Inquiries" section of the
Prospectus Summary, to determine which options are available and the terms of
such options. Additional or enhanced options may not be available to those who
have already commenced receiving Annuity payments.
ANNUITY PAYMENTS
Duration of Payments. For Qualified Contracts only, Annuity payments may
not extend beyond (a) the life of the Annuitant, (b) the joint lives of the
Annuitant and beneficiary, (c) a period certain greater than the Annuitant's
life expectancy, or (d) a period certain greater than the joint life
expectancies of the Annuitant and beneficiary.
Amount of Each Annuity Payment. The amount of each payment depends on how
you allocate your Account Value between fixed and variable payouts (some
options require all payments be made on a fixed basis). No election may be made
that would result in the first Annuity Payment of less than $50, or $250 per
year for total yearly Annuity Payments (less if required by state law). If the
Account Value on the Annuity Date is insufficient to elect an option for the
minimum amount specified, a lump-sum payment must be elected.
If Annuity Payments are to be made on a variable basis, the first and
subsequent payments will vary depending on the assumed net investment rate
selected (3-1/2% or 5% per annum). Selection of a 5% rate causes a higher first
payment, but Annuity Payments will increase thereafter only to the extent that
the net investment rate exceeds 5% on an annualized basis (plus up to 0.25% to
offset any applicable administrative charge). Annuity Payments would decline if
the rate were below 5%. Use of the 3-1/2% assumed rate causes a lower first
payment, but subsequent payments would increase more rapidly or decline more
slowly as changes occur in the net investment rate. (See the Statement of
Additional Information for further discussion on the impact of selecting an
assumed net investment rate.)
CHARGES DEDUCTED DURING THE ANNUITY PERIOD
We make a daily deduction for mortality and expense risks from any
amounts held on a variable basis. Therefore, electing the nonlifetime option on
a variable basis will result in a deduction being made even though we assume no
mortality risk. We may also deduct a daily administrative charge from amounts
held under the variable options. This charge, established when a variable
Annuity Option is elected, will not exceed 0.25% per year of amounts held on a
variable basis. Once established, the charge will be effective during the
entire Annuity Period. (See "Charges and Deductions.")
DEATH BENEFIT PAYABLE DURING THE ANNUITY PERIOD
The death benefit, if any, due when the Annuitant dies after Annuity
Payments have begun, will depend on the terms of the Contract and the Annuity
Option selected. If Option 1 or Option 4 was elected, Annuity Payments will
cease on the death of the Annuitant under Option 1 or the death of the
surviving Annuitant under Option 4.
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If Lifetime Option 2 or Option 5 was elected and the death of the
Annuitant under Option 2, or the surviving Annuitant under Option 5, occurs
prior to the end of the guaranteed minimum payment period, we will continue
payments to the Beneficiary unless the Beneficiary elects a lump sum.
If the nonlifetime option was elected, and the Annuitant dies before all
payments are made, the value of any remaining payments will be paid to the
Beneficiary unless the Beneficiary elects a lump sum.
When the Annuitant dies after Annuity Payments have begun and if there is
a death benefit payable under the Annuity option elected, the remaining value
must be distributed to the Beneficiary at least as rapidly as under the
original method of distribution.
Any lump-sum payment paid under the applicable lifetime or nonlifetime
Annuity options will be made within seven calendar days after acceptable proof
of death, and a request for payment are received at our Home Office. The value
of any death benefit proceeds will be determined as of the next Valuation Date
after we receive acceptable proof of death and a request for payment. Under
Options 2 and 5, such value will be reduced by any payments made after the date
of death.
DEATH OF THE CERTIFICATE HOLDER DURING THE ANNUITY PERIOD
If the Certificate Holder is the Annuitant, and the Annuity Payments are
solely life contingent, the death of the Certificate Holder after the Annuity
Date terminates the Annuity payments. If the Certificate Holder is not the
Annuitant, or if Annuity Payments are for a stated period of time, the
Certificate Holder's death after the Annuity Date will not affect the Annuity
payment except as provided under "Death of the Annuitant." The remaining
payments under the Annuity Option elected will be made to the Beneficiary at
least as rapidly as under the method of distribution in effect at the time of
the Certificate Holder's death.
TAX STATUS
================================================================================
INTRODUCTION
The following provides a general discussion and is not intended as tax
advice. This discussion reflects the Company's understanding of current federal
income tax law. Such laws may change in the future, and it is possible that any
change could be retroactive (i.e., effective prior to the date of the change).
In addition, this discussion does not cover the potential application of
federal estate and gift tax laws, or state, local or any other tax law. The
Company makes no guarantee regarding the tax treatment of any contract or
transaction involving a Contract.
The Contract may be purchased on a non-tax qualified basis ("Nonqualified
Contract") or purchased and used in connection with certain retirement
arrangements entitled to special income tax treatment under Section 401(a),
403(b), 408(b) or 457 of the Code ("Qualified Contracts"). The ultimate effect
of federal income taxes on the amounts held under a Contract, on Annuity
payments, and on the economic benefit to the Contract Holder, Certificate
Holder or Beneficiary may depend upon the tax status of the individual
concerned. Any person concerned about these tax implications should consult a
competent tax adviser before initiating any transaction.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under the Code. Since
the Separate Account is not an entity separate from the Company, it will not be
taxed separately as a "regulated investment company" under the Code. Investment
income and realized capital gains are automatically applied to increase
reserves under the Contracts. Under existing federal income tax law, the
Company believes that the Separate Account investment income and realized net
capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the Contracts.
Accordingly, the Company does not anticipate that it will incur any
federal income tax liability attributable to the Separate Account and,
therefore, the Company does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretation thereof result in
the Company being taxed on income or gains attributable to the Separate
Account, then the Company may impose a charge against the Separate Account
(with respect to some or all Contracts) in order to set aside provisions to pay
such taxes.
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TAX STATUS OF THE CONTRACT
Diversification. Section 817(h) of the Code requires that with respect to
Nonqualified Contracts, the investments of the Funds be "adequately
diversified" in accordance with Treasury Regulations in order for the Contracts
to qualify as annuity contracts under federal tax law. The Separate Account,
through the Funds, intends to comply with the diversification requirements
prescribed by the Treasury in Reg. Sec. 1.817-5, which affects how the Funds'
assets may be invested.
In addition, in certain circumstances, owners of variable annuity
contracts may be considered the owners, for federal income tax purposes, of the
assets of the separate accounts used to support their contracts. In these
circumstances, income and gains from the separate account assets would be
includible in the variable contract owner's gross income. The IRS has stated in
published rulings that a variable contract owner will be considered the owner
of separate account assets if the owner possesses incidents of investment
control over the assets. The ownership rights under the contract are similar
to, but different in certain respects from those described by the IRS in
rulings in which it was determined that owners were not owners of separate
account assets. For example, a Certificate Holder has additional flexibility in
allocating premium payments and account values. In addition, the number of
funds provided under the Contract is greater than the number of funds offered
in contracts on which rulings have been issued. These differences could result
in a Certificate Holder being treated as the owner of a pro rata portion of the
assets of the Separate Account. The Company reserves the right to modify the
Contract as necessary to attempt to prevent a Certificate Holder from being
considered the owner of a pro rata share of the assets of the Separate Account.
Required Distributions--Nonqualified Contracts. In order to be treated as
an annuity contract for federal income tax purposes, Section 72(s) of the Code
requires Nonqualified Contracts to provide that (a) if any Certificate Holder
dies on or after the Annuity Date but prior to the time the entire interest in
the Contract has been distributed, the remaining portion of such interest will
be distributed at least as rapidly as under the method of distribution in
effect at the time of the Certificate Holder's death, and (b) if any
Certificate Holder dies prior to the annuity date, the entire interest in the
Contract will be distributed within five years after the date of such
Certificate Holder's death. These requirements will be considered satisfied as
to any portion of a Certificate Holder's interest which is payable to or for
the benefit of a "designated beneficiary" and which is distributed over the
life of such "designated beneficiary" or over a period not extending beyond the
life expectancy of that beneficiary, provided that such distributions begin
within one year of the Certificate Holder's death. The "designated beneficiary"
refers to a natural person designated by the Certificate Holder as a
Beneficiary and to whom ownership of the contract passes by reason of death.
However, if the "designated beneficiary" is the surviving spouse of the
deceased Certificate Holder, the Certificate may be continued with the
surviving spouse as the new Certificate Holder.
The Nonqualifed Contracts contain provisions which are intended to comply
with the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. The Company intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Code Section 72(s) when clarified by regulation or
otherwise.
The discussion under "Taxation of Annuities" below is based on the
assumption that the Contract qualifies as an annuity contract for federal
income tax purposes.
Required Distributions--Qualified Contracts. The Code has required
distribution rules for Section 401(a), 403(b) and 457 Plans and Individual
Retirement Annuities. Other than for IRAs and for five-percent owners in other
Qualified Contracts distributions must generally begin by April 1 of the
calendar year following the calendar year in which the participant attains age
70-1/2 or retires, whichever occurs later. For IRA depositors and for
five-percent owners, minimum distributions must begin by April 1 of the
calendar year following the calendar year in which the participant attains age
70-1/2 or retires, whichever occurs later. Under 403(b) plans, if the Company
maintains separate records, distribution of amounts held as of December 31,
1986 must generally begin by the end of the calendar year in which the
participant attains age 75 (or retires, whichever occurs later). However,
special rules require that some or all of the balance be distributed earlier if
any distributions are taken in excess of the minimum required amount.
To comply with these provisions, distributions must be in a form and
amount sufficient to satisfy the
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minimum distribution and minimum distribution incidental death benefit rules
specified in Section 401(a) (9) of the Code.
In general, annuity payments must be distributed over the participant's
life or the joint lives of the participant and beneficiary, or over a period
not greater than the participant's life expectancy or the joint life
expectancies of the participant and beneficiary. Also, any distribution under a
Section 457 Plan payable over a period of more than one year must be made in
substantially nonincreasing amounts.
If the participant dies on or after the required beginning date for
minimum distributions, distributions to the beneficiary must be made at least
as rapidly as the method of distribution in effect at the time of the
participant's death. However, if the required minimum distribution is
calculated each year based on the participant's single life expectancy or the
joint life expectancies of the participant and beneficiary, the regulations for
Code Section 401(a)(9) provide specific rules for calculating the required
minimum distributions at the participant's death. For example, if ECO was
elected with the calculation based on the participant's single life expectancy,
and the life expectancy is recalculated each year, the recalculated life
expectancy becomes zero in the calendar year following the participant's death
and the entire remaining interest must be distributed to the beneficiary by
December 31 of the year following the participant's death. However, a spousal
beneficiary, other than under a Section 457 Plan, has certain rollover rights
which can only be exercised in the year of the participant's death. The rules
are complex and the participant should consult a tax adviser before electing
the method of calculation to satisfy the minimum distribution requirements.
If the participant dies before the required beginning date for minimum
distributions, the entire interest must be distributed by December 31 of the
calendar year containing the fifth anniversary of the date of the participant's
death. Alternatively, payments may be made over the life of the beneficiary or
over a period not extending beyond the life expectancy of the beneficiary, not
to exceed 15 years for a non-spousal beneficiary under a Section 457 Plan,
provided the distribution begins to a non-spouse beneficiary by December 31 of
the calendar year following the calendar year of the participant's death. If
payments are made to a spousal beneficiary, distribution must begin by the
later of December 31 of the calendar year following the calendar year of the
death or December 31 of the calendar year in which the participant would have
attained age 70-1/2.
An exception applies for a spousal beneficiary under an Individual
Retirement Annuity. In lieu of taking a distribution under these rules, a
spousal beneficiary may elect to treat the Account as his or her own IRA and
defer taking a distribution until his or her age 70-1/2. The surviving spouse is
deemed to have made such an election if the surviving spouse makes a rollover
to or from the Account or fails to take a distribution within the required time
period.
If the participant or beneficiary fails to take the required minimum
distribution for any tax year, a 50% excise tax is imposed on the required
amount that was not distributed.
TAXATION OF ANNUITY CONTRACTS
In General. Section 72 of the Code governs taxation of annuities in
general. The Company believes that a Certificate Holder under a Nonqualified
Contract who is a natural person generally is not taxed on increases in the
Account Value until distribution occurs by withdrawing all or part of such
Account Value (e.g., withdrawals or Annuity Payments under the Annuity Option
elected). The taxable portion of a distribution (in the form of a single sum
payment or an annuity) is taxable as ordinary income.
Non-Natural Holders of a Nonqualified Contract. If the Certificate Holder
is not a natural person, a Nonqualified Contract is not treated as an annuity
for income tax purposes and the "income on the contract" for the taxable year
is currently taxable as ordinary income. "Income on the contract" is any
increase over the year in the Surrender Value, adjusted for Purchase Payments
made during the year, amounts previously distributed and amounts previously
included in income. There are some exceptions to the rule and a non-natural
person should consult with its tax advisor prior to purchasing this Contract. A
non-natural person exempt from federal income taxes should consult with its tax
advisor regarding treatment of "income on the contract" for purposes of the
unrelated business income tax. When the Certificate Holder is not a natural
person, the Annuitant is considered the Certificate Holder for the purpose of
meeting the required distribution-at-death rules. In addition, when the
Certificate Holder is not a natural person, a change in
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Annuitant is treated as the death of the Certificate Holder.
The following discussion generally applies to Qualified Contracts or
Nonqualified Contracts owned by a natural person.
Withdrawals. In the case of a withdrawal under a Qualified Contract,
including withdrawals under SWO or ECO, the amount taxable is generally based
on the ratio of the "investment in the contract" to Account Value. The
"investment in the contract" generally equals the amount of any nondeductible
Purchase Payments paid by or on behalf of any individual less any amount
received previously which was excludable from gross income. For a Qualified
Contract, the "investment in the contract" can be zero. Special tax rules may
be available for certain distributions from a Qualified Contract.
With respect to Nonqualified Contracts, partial withdrawals, including
withdrawals under SWO, are generally treated as taxable income to the extent
that the Account Value immediately before the withdrawal exceeds the
"investment in the contract" at that time. The Account Value immediately before
a withdrawal may have to be increased by any positive market value adjustment
(MVA) that results from such a withdrawal. There is, however, no definitive
guidance on the proper tax treatment of MVAs in these circumstances, and a
Certificate Holder should contact a competent tax advisor with respect to the
potential tax consequences of any MVA that arises as a result of a partial
withdrawal.
Full withdrawals of a Nonqualified Contract are treated as taxable income
to the extent that the amount received exceeds the "investment in the
contract."
Annuity Payments. Although the tax consequences may vary depending on the
Annuity Payment elected under the Contract, in general, only the portion of the
Annuity Payment that represents the amount by which the Account Value exceeds
the "investment in the contract" will be taxed; after the "investment in the
contract" is recovered, the full amount of any additional annuity payments is
taxable. For variable Annuity Payments, the taxable portion is generally
determined by an equation that establishes a specific dollar amount of each
payment that is not taxed. The dollar amount is determined by dividing the
"investment in the contract" by the total number of expected periodic payments.
However, the entire distribution will be taxable once the recipient has
recovered the dollar amount of his or her "investment in the contract." For
fixed annuity payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the Annuity Payments for the term of the
payments; however, the remainder of each Annuity Payment is taxable. Once the
"investment in the contract" has been fully recovered, the full amount of any
additional Annuity Payments is taxable. If Annuity Payments cease as a result
of an Annuitant's death before full recovery of the "investment in the
contract," consult a competent tax advisor regarding deductibility of the
unrecovered amount.
Penalty Tax: In the case of a distribution pursuant to a Nonqualified
Contract, or a Qualified Contract other than a Qualified Contract sold in
conjunction with a Code Section 457 Plan, there may be imposed a federal income
tax penalty equal to 10% of the amount treated as taxable income.
In general, there is no penalty tax on distributions from a Nonqualified
Contract: (1) made on or after the date on which the taxpayer attains age
59-1/2; (2) made as a result of the death of the Certificate Holder; (3)
attributable to the taxpayer's total and permanent disability; (4) received in
substantially equal periodic payments (at least annually) over the life or life
expectancy of the taxpayer or the joint lives or joint life expectancies of the
taxpayer and a "designated beneficiary"; or (5) allocable to "investment in the
contract" before August 14, 1982.
If a distribution is made from a Qualified Contract sold in conjunction
with a Section 401(a) Plan or Section 403(b) Plan, the penalty tax will not
apply on distributions made when the participant (a) attains age 59-1/2, (b)
becomes permanently and totally disabled, (c) dies, (d) separates from service
with the plan sponsor at or after age 55, (e) rolls over the distribution
amount to another plan of the same type in accordance with the terms of the
Code, or (f) takes the distributions in substantially equal periodic payments
(at least annually) over his or her life or life expectancy or the joint lives
or joint life expectancies of the participant and plan beneficiary, provided
the participant has separated from service with the plan sponsor. In addition,
the penalty tax does not apply for the amount of a distribution equal to
unreimbursed medical expenses incurred by the participant that qualify for
deduction as specified in
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the Code. The Code may impose other penalty taxes in other circumstances.
In general, the same exceptions described in the preceding paragraph will
apply to distributions made from an Individual Retirement Annuity. Beginning
January 1, 1997, the penalty tax is also waived on distributions made from an
IRA to pay for health insurance premiums for certain unemployed individuals.
Taxation of Death Benefit Proceeds: Amounts may be distributed from the
Contract because of the death of a Certificate Holder or the Annuitant.
Generally, such amounts are includible in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender as described above, or (2) if distributed under an Annuity
Option, they are taxed in the same manner as Annuity Payments, as described
above.
Transfers, Assignments or Exchanges of the Contract: A transfer of
ownership of a Contract, the designation of an Annuitant, payee or other
beneficiary who is not also a Certificate Holder, the selection of certain
Annuity Dates, or the exchange of a Contract may result in certain tax
consequences. The assignment, pledge, or agreement to assign or pledge any
portion of the Account Value generally will be treated as a distribution. The
assignment or transfer of ownership of a Qualified Contract generally is not
allowed. Anyone contemplating any such designation, transfer, assignment,
selection, or exchange should contact a competent tax advisor with respect to
the potential tax effects of such a transaction.
Multiple Contracts: All deferred nonqualified annuity contracts that are
issued by the Company (or its affiliates) to the same owner during any calendar
year are treated as one annuity contract for purposes of determining the amount
includible in gross income under Section 72(e) of the Code. In addition, the
Treasury Department has specific authority to issue regulations that prevent
the avoidance of Section 72(e) through the serial purchase of annuity contracts
or otherwise. Congress has also indicated that the Treasury Department may have
authority to treat the combination purchase of an immediate annuity contract
and separate deferred annuity contracts as a single annuity contract under its
general authority to prescribe rules as may be necessary to enforce the income
tax laws.
CONTRACTS USED WITH CERTAIN RETIREMENT PLANS
Qualified Contracts in General
The Qualified Contract is designed for use as an Individual Retirement
Annuity or as a Contract used in connection with certain employer sponsored
retirement plans. The tax rules applicable to participants and beneficiaries in
Qualified Contracts are complex. Special favorable tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 59-1/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
aggregate distributions in excess of a specified annual amount; and in other
specified circumstances.
The Company makes no attempt to provide more than general information
about use of the Contracts with the various types of retirement plans.
Participants and beneficiaries under Qualified Contracts may be subject to the
terms and conditions of the retirement plans themselves, in addition to the
terms and conditions of the Contract issued in connection with such plans. Some
retirement plans are subject to distribution and other requirements that are
not incorporated in the provisions of the Contracts. Purchasers are responsible
for determining that contributions, distributions and other transactions with
respect to the Contracts satisfy applicable laws, and should consult their
legal counsel and tax advisor regarding the suitability of the Contract.
Section 457 Plans. Code Section 457 provides for certain deferred
compensation plans. These plans may be offered with respect to service for
state governments, local governments, political subdivisions, agencies,
instrumentalities and certain affiliates of such entities, and tax exempt
organizations. These plans are subject to various restrictions on contributions
and distributions. The plans may permit participants to specify the form of
investment for their deferred compensation account.
Prior to the August 20, 1996 enactment of the Small Business Job
Protection Act of 1996 (the "Small Business Act") compensation deferred under
the plans, all property and rights purchased with such amounts, and all income
attributable to such amounts, property or rights remained solely the property
and rights of the employer (without being restricted to the provision of
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benefits) subject only to the claims of the employer's general creditors. For
that reason, depending on the terms of the particular plan, the employer may
have been entitled to draw on deferred amounts for purposes unrelated to its
Section 457 plan obligations.
Under the Small Business Act, plans maintained by State or local
governments, their political subdivisions, agencies, instrumentalities and
certain affiliates will be required to hold all assets and income of the Plan
in trust for the exclusive benefit of plan participants and their
beneficiaries. For purposes of meeting the new requirement, custodial accounts
and annuity contracts are treated as trusts. State and local government plans
that were in existence on August 20, 1996 are allowed a transition period that
ends January 1, 1999 to comply with the new requirement.
In general, all amounts received under a Section 457 plan are taxable and
reportable to the IRS as taxable income. Also, all amounts except death benefit
proceeds are subject to federal income tax withholding as wages. If we make
payments directly to a participant on behalf of the employer as owner, we will
withhold federal taxes (and state taxes, if applicable).
The Code imposes a maximum limit on annual Purchase Payments which may be
excluded from the participant's gross income. Such limit is generally the lesser
of $8,000 (as adjusted to reflect changes in the cost of living) or 33-1/3% of
the participant's includible compensation (25% of gross compensation).
Section 401(a) Plans. Section 401(a) permits corporate employers to
establish various types of retirement plans for employees, and permits self-
employed individuals to establish various types of retirement plans for
themselves and for their employees. These retirement plans may permit the
purchase of the Contract to accumulate retirement savings under the plans.
Adverse tax consequences to the plan, to the participant or to both may result
if this Contract is assigned or transferred to an individual except to a
participant as a means to provide benefit payments.
The Code imposes a maximum limit on annual Purchase Payments that may be
excluded from a participant's gross income. Such limit must be calculated under
the Plan by the employer in accordance with Section 415 of the Code. This limit
is generally the lesser of 25% of the participant's compensation or $30,000. In
addition, Purchase Payments will be excluded from a participant's gross income
only if the Section 401(a) Plan meets certain nondiscrimination requirements.
All distributions will be taxed as they are received unless the
distribution is rolled over to another plan of the same type or to an individual
retirement annuity/account ("IRA") in accordance with the Code, or unless the
participant has made after-tax contributions to the plan, which are not taxed
upon distribution. The Code has specific rules that apply, depending on the type
of distribution received, if after-tax contributions were made.
In general, payments received by a beneficiary after the participant's
death are taxed in the same manner as if the participant had received those
payments, except that a limited death benefit exclusion may apply for payments
due to deaths that occurred on or before August 20, 1996. This exclusion no
longer applies to payments due to deaths occurring after August 20, 1996.
Section 403(b) Plans. Under Section 403(b), contributions made by public
school systems or nonprofit healthcare organizations and other Section
501(c)(3) tax exempt organizations to purchase annuity contracts for their
employees are generally excludable from the gross income of the employee.
In order to be excludable from taxable income, total annual contributions
made by the participant and his or her employer cannot exceed either of two
limits set by the Code. The first limit, under Section 415, is generally the
lesser of 25% of includible compensation or $30,000. The second limit, which is
the exclusion allowance under Section 403(b), is usually calculated according
to a formula that takes into account the participant's length of employment and
any pretax contributions to certain other retirement plans. These two limits
apply to the participant's contributions as well as to any contributions made
by the employer on behalf of the participant. There is an additional limit that
specifically limits salary reduction contributions to generally no more than
$10,000 annually (subject to indexing); a participant's own limit may be higher
or lower, depending on certain conditions. In addition, Purchase Payments will
be excluded from a participant's gross income only if the Plan meets certain
nondiscrimination requirements.
Section 403(b)(11) restricts the distribution under Section 403(b)
contracts of: (1) salary reduction
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contributions made after December 31, 1988; (2) earnings on those
contributions; and (3) earnings during such period on amounts held as of
December 31, 1988. Distribution of those amounts may only occur upon death of
the participant, attainment of age 59-1/2, separation from service, total and
permanent disability, or financial hardship. In addition, income attributable
to salary reduction contributions may not be distributed in the case of
hardship.
Individual Retirement Annuities and Simplified Employee Pension Plans.
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity,
hereinafter referred to as an "IRA." Also, distributions from certain other
types of qualified plans may be "rolled over" on a tax-deferred basis into an
IRA. Employers may establish Simplified Employee Pension ("SEP") Plans and
contribute to an IRA owned by the employee. Purchasers of a Qualified Contract
for use with IRAs will be provided with supplemental information required by the
Internal Revenue Service. Purchasers should seek competent advice as to the
suitability of the Contract for use with IRAs.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding
for the recipient's federal income tax liability at rates that vary according
to the type of distribution and the recipient's tax status. Recipients may be
provided the opportunity to elect not to have tax withheld from distributions;
however, certain distributions from Section 401(a) Plans and Section 403(b)
tax-deferred annuities are subject to mandatory 20% federal income tax
withholding. We will report to the IRS the taxable portion of all
distributions.
MISCELLANEOUS
================================================================================
DISTRIBUTION
Aetna Life Insurance and Annuity Company ("ALIAC") will serve as the
principal underwriter for the securities sold by this Prospectus. ALIAC is
registered as a broker-dealer with the Securities and Exchange Commission
("SEC") and is a member of the National Association of Securities Dealers, Inc.
("NASD"). As principal underwriter, ALIAC will contract with one or more
registered broker-dealers, or with banks that may be acting as broker-dealers
without separate registration under the Securities Exchange Act of 1934
pursuant to legal and regulatory exceptions ("Distributors"), to offer and sell
the Contracts. All individuals offering and selling the Contracts must either
be registered representatives of a broker-dealer, or employees of a bank exempt
from registration under the Securities Act of 1934, and must also be licensed
as insurance agents to sell variable annuity contracts.
Federated Securities Corp. ("FSC"), an affiliate of the Adviser, may
enter into agreements with some of the Distributors to provide services to
customers in connection with the Funds acquired through the Contracts. These
services will include providing customers with information concerning the
Funds, their investment objectives, policies and limitations; portfolio
securities; performance, responding to customer inquiries and providing such
other services as the parties may agree. Fees for these services may be based
on the total number of assets in the Funds attributable to the Distributors'
customers.
Payment of Commissions. Commissions will be paid to Distributors who sell
the Contracts. Distributors will be paid commissions, up to an amount currently
equal to 6.5% of Purchase Payments. The Company may, by agreement with the
Distributor, pay commissions as a combination of a certain percentage amount at
the time of sale and a trail commission of up to 0.40% of assets attributable
to Purchase Payments (which, when combined, could exceed 6.5% of Purchase
Payments). Other than the mortality and expense risk charge, the administrative
charge and the reimbursements by Federated Advisers for administrative charges,
all expenses incurred in the operations of the Separate Account are borne by
the Company.
DELAY OR SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of payment
for any benefit or values (a) on any Valuation Date on which the New York Stock
Exchange ("Exchange") is closed (other than customary weekend and holiday
closings) or when trading on the Exchange is restricted; (b) when an emergency
exists, as determined by the SEC, so that disposal of securities held in the
Subaccounts is not reasonably practicable or it is not reasonably practicable
for the Company fairly to determine the value of the Subaccount's assets; or
(c)
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during such other periods as the SEC may by order permit for the protection of
investors. The conditions under which restricted trading or an emergency exists
shall be determined by the rules and regulations of the SEC.
PERFORMANCE REPORTING
From time to time, the Company may advertise different types of
historical performance for the Subaccounts of the Separate Account. The Company
may advertise the "standardized average annual total returns" of the
Subaccounts, calculated in a manner prescribed by the SEC, as well as the
"non-standardized returns." "Standardized average annual total returns" are
computed according to a formula in which a hypothetical investment of $1,000 is
applied to the Subaccount and then related to the ending redeemable values over
the most recent one, five and ten-year periods (or since contributions were
first received in the Fund under the Separate Account, if less than the full
period). Standardized returns will reflect the reduction of all recurring
charges during each period (e.g., mortality and expense risk charges, annual
maintenance fees, the administrative charge and any applicable deferred sales
charge). "Non-standardized returns" will be calculated in a similar manner,
except that non-standardized figures will not reflect the deduction of any
applicable deferred sales charge (which would decrease the level of performance
shown if reflected in these calculations). The non-standardized figures may
also include monthly, quarterly, year-to-date and three-year periods and may
include performance from the Fund's inception date.
The Company may also advertise certain ratings, rankings or other
information related to the Company, the Subaccounts or the Funds. Further
details regarding performance reporting and advertising are described in the
Statement of Additional Information.
VOTING RIGHTS
Each Contract Holder may direct us in the voting of shares at
shareholders' meetings of the appropriate Funds(s). The number of votes to
which each Contract Holder may give direction will be determined as of the
record date. The number of votes each Contract Holder is entitled to direct
with respect to a particular Fund during the Accumulation Period equals the
portion of the Account Values(s) attributable to the Certificate Holder's
interest in that Fund, divided by the net asset value of one share of that
Fund. During the Annuity Period, the number of votes is equal to the valuation
reserve for the portion of the Contract attributable to the Certificate
Holder's interest in that Fund, divided by the net asset value of one share of
that Fund. In determining the number of votes, fractional votes will be
recognized. Where the value of the Contract or valuation reserve relates to
more than one Fund, the calculation of votes will be performed separately for
each Fund.
Certificate Holders under a group Contract have a fully vested (100%)
interest in the benefits provided to them under their Account. Therefore,
Certificate Holders may instruct the group Contract Holder how to direct the
Company to cast the votes for the portion of the value or valuation reserve
attributable to their Account. Votes attributable to those Certificate Holders
who do not instruct the group Contract Holder will be cast by the Company in
the same proportion as votes for which instructions have been received by the
group Contract Holder. Votes attributable to individual or group Contract
Holders who do not direct us will be cast by us in the same proportion as votes
for which directions the Company has received.
You will receive a notice of each meeting of shareholders, together with
any proxy solicitation materials, and a statement of the number of votes
attributable to your Account.
MODIFICATION OF THE CONTRACT
The Company may change the Contract as required by federal or state law.
In addition, the Company may, upon 30 days written notice to the Contract
Holder and the Certificate Holder, make other changes to group Contracts that
would apply only to individuals who become Certificate Holders under that
Contract after the effective date of such changes. If the group Contract Holder
does not agree to a change the Company reserves the right to refuse to
establish new Accounts under the Contract. Certain changes will require the
approval of appropriate state or federal regulatory authorities.
TRANSFERS OF OWNERSHIP; ASSIGNMENT
Assignments or transfers of ownership of a Qualified Contract generally
are not allowed except as permitted under the Code, incident to a divorce. The
prohibition does not apply to a Qualified Contract sold in conjunction with (1)
a Section 457 deferred compensation plan, or (2) a Section 401(a) plan where
the Contract is owned by the trustee. We will accept
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assignments or transfers of ownership of a Nonqualified Contract or a Qualified
Contract where assignments or transfers of ownership are not prohibited, with
proper notification. The date of any such transfer will be the date we receive
the notification at our Home Office. Refer to "Tax Status" for general tax
information. If you are contemplating a transfer of ownership or assignment you
should consult a tax adviser due to the potential for tax liability.
No assignment of a Contract will be binding on us unless made in writing
and sent to us at our Home Office. The Company will use reasonable procedures
to confirm that the assignment is authentic, including verification of
signature. If the Company fails to follow its procedures, it would be liable
for any losses to you directly resulting from the failure. Otherwise, we are
not responsible for the validity of any assignment. The rights of the Owner and
the interest of the Annuitant and any Beneficiary will be subject to the rights
of any assignee of record.
INVOLUNTARY TERMINATIONS
We reserve the right to terminate any Account with a value of $2,500 or
less immediately following a partial withdrawal (unless otherwise required by
state law). However, an Individual Retirement Annuity may only be closed out
when Purchase Payments have not been received for a 24-month period and the
paid-up annuity benefit at maturity would be less than $20 per month. If such
right is exercised, you will be given 90 days advance written notice. No
deferred sales charge will be deducted for involuntary terminations. The
Company does not intend to exercise this right in cases where the Account Value
is reduced to $2,500 or less solely due to investment performance.
LEGAL MATTERS AND PROCEEDINGS
The Company knows of no material legal proceedings pending to which the
Separate Account or the Company is a party or which would materially affect the
Separate Account. The validity of the securities offered by this Prospectus has
been passed upon by Counsel to the Company.
YEAR 2000
As a healthcare and financial services enterprise, Aetna Inc. (referred
to collectively with its affiliates and subsidiaries as Aetna), is dependent on
computer systems and applications to conduct its business. Aetna has developed
and is currently executing a comprehensive risk-based plan designed to make its
computer systems, applications and facilities Year 2000 ready. The plan covers
four stages including (i) inventory, (ii) assessment, (iii) remediation and
(iv) testing and certification. At year end 1997, Aetna , including the
Company, had substantially completed the inventory and assessment stages. The
remediation process is currently underway and targeted for completion by
December 31, 1998. Testing and certification of these systems and applications
are targeted for completion by mid-1999. The costs of these efforts will not
affect the Separate Account.
The Company, its affiliates and the mutual funds that serve as investment
options for the Separate Account also have relationships with investment
advisers, broker dealers, transfer agents, custodians or other securities
industry participants or other service providers that are not affiliated with
Aetna. Aetna, including the Company, is initiating communication with its
critical external relationships to determine the extent to which Aetna may be
vulnerable to such parties' failure to resolve their own Year 2000 issues.
Where practicable Aetna and the Company will assess and attempt to mitigate
their risks with respect to the failure of these parties' to be Year 2000
ready. There can be no assurance that failure of third parties to complete
adequate preparations in a timely manner, and any resulting systems
interruptions or other consequences, would not have an adverse effect, directly
or indirectly, on the Separate Account, including, without limitation, its
operation or the valuation of its assets and units.
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CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
================================================================================
The Statement of Additional Information contains more specific information
on the Separate Account and the Contract, as well as the financial statements
of the Separate Account and the Company. A list of the contents of the SAI is
set forth below:
General Information and History
Variable Annuity Account I
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Annuity Payments
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of the Company
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APPENDIX A
AICA GUARANTEED ACCOUNT
================================================================================
The AICA Guaranteed Account (the "Guaranteed Account") is a credited
interest option available during the Accumulation Period under the Contracts.
The AICA Guaranteed Account is only offered in states where the offer and sale
has been authorized by the appropriate regulatory authorities. This Appendix is
a summary of the Guaranteed Account and is not intended to replace the
Guaranteed Account prospectus. You should read the accompanying Guaranteed
Account prospectus carefully before investing.
The Guaranteed Account is a credited interest option in which we guarantee
stipulated rates of interest for stated periods of time on amounts directed to
the Guaranteed Account. A guaranteed rate is credited for the full term. The
interest rate stipulated is an annual effective yield; that is, it reflects a
full year's interest. Interest is credited daily at a rate that will provide
the guaranteed annual effective yield for one year. Guaranteed interest rates
will never be less than an annual effective rate of 3%.
During a deposit period, amounts may be applied to any of the available
guaranteed terms. A Guaranteed Term is the period of time specified by the
Company for which a specific Guaranteed Rate or Rates are offered on amounts
invested during a specific Deposit Period. Guaranteed Terms are made available
by the Company subject to the Company's terms and conditions. See the
prospectus for the Guaranteed Account for further details regarding Guaranteed
Terms. The Company may offer more than one Guaranteed Term of the same
duration. Purchase Payments received after the initial payment will be
allocated in the same proportions as the last allocation, if no new allocation
instructions are received with the Purchase Payment. For amounts allocated to
the Guaranteed Account, if the same guaranteed term(s) are not available, the
next shortest term will be used. If no shorter guaranteed term is available,
the next longer guaranteed term will be used.
Except for transfers from an available Guaranteed Term subject to the
Company's terms and conditions in connection with the Dollar Cost Averaging
Program and withdrawals taken in connection with an Estate Conservation Option
or Systematic Withdrawal Option and, if approved by your state, withdrawals for
minimum distributions required by the Code for which the deferred sales charge
is waived, withdrawals or transfers from a guaranteed term before the
guaranteed term matures may be subject to a market value adjustment ("MVA"). An
MVA reflects the change in the value of the investment due to changes in
interest rates since the date of deposit. When interest rates increase after
the date of deposit, the value of the investment decreases, and the MVA is
negative. Conversely, when interest rates decrease after the date of deposit,
the value of the investment increases, and the MVA is positive. It is possible
that a negative MVA could result in the Certificate Holder receiving an amount
which is less than the amount paid into the Guaranteed Account
If a Certificate Holder requests a partial withdrawal of the Account Value
without designating from which investment option it should be taken, a
proportionate share will be withdrawn from the Guaranteed Account. The amount
will be withdrawn from all guaranteed term groups as defined in the prospectus
for the Guaranteed Account.
As a Guaranteed Term matures, assets accumulating under the Guaranteed
Account may be (a) transferred to a new Guaranteed Term, (b) transferred to
other available investment options, or (c) withdrawn. Amounts withdrawn may be
subject to a deferred sales charge. If no direction is received by the Company
at its Home Office by the maturity date of a guaranteed term, the amount from
the maturing guaranteed term will be transferred to the current deposit period
for a similar length guaranteed term. If the same guaranteed term is no longer
available, the next shortest guaranteed term available in the current deposit
period will be used. If no shorter guaranteed term is available, the next
longer guaranteed term will be used.
If you do not provide instructions concerning the maturity value of a
maturing guaranteed term, the maturity value transfer provision applies. This
provision allows you to transfer without an MVA to available guaranteed terms
of the current deposit period or to other available investment options, or
surrender without an MVA (if applicable, a deferred sales charge is assessed on
the surrendered amount). The provision is available only during the calendar
- --------------------------------------------------------------------------------
24
<PAGE>
month immediately following a guaranteed term maturity date and only applies to
the first transaction regardless of the amount involved in the transaction.
MORTALITY AND EXPENSE RISK CHARGES
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited rate.
TRANSFERS
Amounts applied to a guaranteed term during a deposit period may not be
transferred to any other funding option or to another guaranteed term during
that deposit period or for 90 days after the close of that deposit period. This
does not apply to (1) amounts transferred on the Maturity Date or under the
maturity value transfer provision; (2) amounts transferred from the Guaranteed
Account before the Maturity Date due to the election of an Annuity option, (3)
amounts transferred from an available Guaranteed Term in connection with the
Dollar Cost Averaging Program; and (4) amounts distributed under the Estate
Conservation or Systematic Withdrawal Option. Transfers after the 90-day period
are permitted from guaranteed term(s) to other guaranteed term(s) available
during a deposit period or to other available investment options. Except for
transactions described in items (1), (3) and (4) above, amounts withdrawn or
transferred from the Guaranteed Account prior to the maturity date will be
subject to a Market Value Adjustment. However, only a positive aggregate MVA
will be applied to transfers made due to annuitizations under one of Lifetime
Annuity Options described in item (2) above.
The Company reserves the right to limit the number of investment options
selected during the Accumulation Period. At this time there is no limit on the
number of investment options selected during the Accumulation Period, but the
number of investment options that may be selected at any one time by a
Certificate Holder presently is limited to 18. Under the Guaranteed Account,
each guaranteed term is counted as one funding option. If a guaranteed term
matures, and is renewed for the same term, it will not count as an additional
funding option.
Transfers of the Guaranteed Account values on or within one calendar month
of a term's maturity date are not counted as one of the 12 free transfers of
accumulated values in the Certificate Holder's Account.
By notifying us at least 30 days prior to the Annuity Date, you may elect
a variable annuity and have amounts that have been accumulating under the
Guaranteed Account transferred to one or more of the Subaccounts available
during the Annuity Period. The Guaranteed Account cannot be used as an
investment option during the Annuity Period. Transfers made due to the election
of a Lifetime Annuity Option will be subject to only a positive aggregate MVA.
DEATH BENEFIT
Full and partial withdrawals and transfers made from the Guaranteed
Account (including transfers due to annuitization) within six months after the
date of the Certificate Holder's death (or Annuitant's death, if the
Certificate Holder is a non-natural person) will be the greater of:
(a) The aggregate MVA amount (i.e., the sum of all market value adjusted
amounts calculated due to a withdrawal of amounts). This total may be
greater or less than the Account Value of those amounts; or
(b) The applicable portion of the Account Value attributable to the Guaranteed
Account.
After the six-month period, the surrender or transfer amount will be
adjusted for the aggregate MVA amount, which may be greater or less than the
Account Value of those amounts. However, only a positive aggregate Market Value
Adjustment will be applied to transfers made due to annuitization under one of
the Lifetime Annuity Options.
DISTRIBUTION
The Company is the principal underwriter of the Contract. The Company is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a broker-dealer, and is a member of the National
Association of Securities Dealers, Inc.
From time to time, the Company may offer customers of certain
brokers-dealers special guaranteed rates in connection with the Guaranteed
Account offered through the Contracts, and may negotiate different commissions
for these broker-dealers.
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25
<PAGE>
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VARIABLE ANNUITY ACCOUNT I
OF
AETNA INSURANCE COMPANY OF AMERICA
- -------------------------------------------------------------------------------
Statement of Additional Information dated May 1, 1998
AICA Growth Plus
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account I (the
"Separate Account") dated May 1, 1998
A free prospectus is available upon request from the local Aetna Insurance
Company of America office or by writing to or calling:
Aetna Insurance Company of America
Customer Service
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-531-4547
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the prospectus.
TABLE OF CONTENTS
Page
General Information and History......................................... 2
Variable Annuity Account I.............................................. 2
Offering and Purchase of Contracts...................................... 3
Performance Data........................................................ 3
General........................................................... 3
Average Annual Total Return Quotations............................ 4
Annuity Payments........................................................ 5
Sales Material and Advertising.......................................... 6
Independent Auditors.................................................... 6
Financial Statements of the Separate Account............................ S-1
Financial Statements of the Company..................................... F-1
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Insurance Company of America (the "Company") is a stock life insurance
company which was organized under the insurance laws of the State of Connecticut
in 1990. The Company is a wholly owned subsidiary of Aetna Life Insurance and
Annuity Company ("ALIAC"), a wholly owned subsidiary of Aetna Retirement
Holdings, Inc., which is in turn a wholly owned subsidiary of Aetna Retirement
Services, Inc., and an indirect wholly owned subsidiary of Aetna Inc. The
Company's Home Office is located at 151 Farmington Avenue, Hartford, Connecticut
06156.
ALIAC, a registered broker-dealer under the Securities Exchange Act of 1934,
serves as the principal underwriter for the Separate Account. ALIAC is also a
registered investment adviser under the Investment Advisers Act of 1940.
Other than the mortality and expense risk charges and administrative charge
described in the prospectus, all expenses incurred in the operations of the
Separate Account are borne by the Company. See "Charges and Deductions" in the
prospectus. The Company receives reimbursement for certain administrative costs
from the investment advisers for the Federated Funds.
The assets of the Separate Account are held by the Company. The Separate Account
has no custodian. However, the Funds in whose shares the assets of the Separate
Account are invested each have custodians, as discussed in their respective
prospectuses.
VARIABLE ANNUITY ACCOUNT I
Variable Annuity Account I (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940, as amended. Purchase Payments made under the Contract may be
allocated to one or more Subaccounts. Each Subacount invests in the shares of
only one of the Funds listed below. The Company may make additions to, deletions
from or substitutions of available investment options as permitted by law and
subject to the conditions of the Contract. The availability of the Funds is
subject to applicable regulatory authorization. Not all Funds are available in
all jurisdictions or under all Contracts. The Funds currently available under
the Contract are as follows:
Federated American Leaders Fund II
Federated Equity Income Fund II
Federated Fund for U.S. Government Securities II
Federated Growth Strategies Fund II
Federated High Income Bond Fund II
Federated International Equity Fund II
Federated Prime Money Fund II
Federated Utility Fund II
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the Funds.
2
<PAGE>
OFFERING AND PURCHASE OF CONTRACTS
The Company is the depositor and ALIAC is the principal underwriter for the
securities sold by the prospectus. ALIAC offers the Contracts through life
insurance agents licensed to sell variable annuities who are Registered
Representatives as defined in the prospectus. The offering of the Contracts is
continuous. A description of the manner in which Contracts are purchased may be
found in the prospectus under the sections entitled "Purchase" and "Contract
Valuation."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account available under the
Contracts. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as "non-standardized returns,"
both of which are described below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the various Subaccounts under the Contract, and then
related to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. The standardized figures use the actual returns of the Fund since
inception and then adjust them to reflect the deduction of all recurring charges
under the Contracts during each period (e.g., 1.25% mortality and expense risk
charge, $30.00 maintenance fee, 0.15% administrative charge, and a deferred
sales charge of 7% of Purchase Payments grading down to 0% after 7 years). These
charges will be deducted on a pro rata basis in the case of fractional periods.
The maintenance fee is converted to a percentage of assets based on the average
account size under the Contracts described in the prospectus.
The non-standardized figures will be calculated in a similar manner, except that
they will not reflect the deduction of any applicable deferred sales charge
(which would decrease the level of performance shown if reflected in these
calculations). The non-standardized figures may also include monthly, quarterly,
year-to-date and three-year periods and may include returns calculated from the
Fund's inception date and/or date the Fund was added to the Separate Account.
Investment results of the Subaccounts will fluctuate over time, and any
presentation of the Subaccounts' total return quotations for any prior period
should not be considered as a representation of how the Subaccounts will perform
in any future period. Additionally, the Account Value upon redemption may be
more or less than your original cost.
3
<PAGE>
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables below reflect the average annual standardized and non-standardized
total return quotation figures for the periods ended December 31, 1997 for the
variable investment options under the Contracts issued by the Company.
For those Subaccounts where results are not available for the full calendar
period indicated, performance for such partial periods is shown in the column
labeled "Since Inception". For standardized performance, the "Since Inception"
column shows the average annual return since the date contributions were first
received in the Fund under the Separate Account. For nonstandardized
performance, the "Since Inception" column shows average annual total return
since the Fund's inception date.
<TABLE>
<CAPTION>
TABLE A
- --------------------------------------------------------------------------------------------------------------------------
Date
Contributions
STANDARDIZED First Received
Under the
Separate Account
- --------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Year 10 Year Inception*
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Federated American Leaders Fund II 22.63% 24.61% 10/31/95
- --------------------------------------------------------------------------------------------------------------------------
Federated Equity Income Fund II 8.37% 01/31/97
- --------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II 0.61% 4.47% 07/31/95
- --------------------------------------------------------------------------------------------------------------------------
Federated Growth Strategies Fund II 17.72% 21.25% 11/30/95
- --------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II 5.48% 11.11% 07/31/95
- --------------------------------------------------------------------------------------------------------------------------
Federated International Equity Fund II 2.01% 5.63% 07/31/95
- --------------------------------------------------------------------------------------------------------------------------
Federated Prime Money Fund II(1) (2.77%) 1.74% 07/31/95
- --------------------------------------------------------------------------------------------------------------------------
Federated Utility Fund II 17.35% 17.82% 06/30/95
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included and methodology used in the Standardized and Non-Standardized
figures. These figures represent historical performance and should not be
considered a projection of future performance.
* Reflects performance from the date contributions were first received in the
Fund under the Separate Account.
(1) The current yield for the Subaccount for the 7-day period ended December 31,
1997 (on an annualized basis) was 3.68%. The current yield reflects the
deduction of all charges under the Contract that are deducted from the total
return quotations shown above except the maximum 7% deferred sales charge.
<TABLE>
<CAPTION>
TABLE B
- ---------------------------------------------------------------------------------------------------------------------------
NON-STANDARDIZED Fund
Inception
Date
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 3 Years 5 Years 10 Years Inception**
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federated American Leaders Fund II 30.46% 27.27% 19.84% 02/10/94
- ---------------------------------------------------------------------------------------------------------------------------
Federated Equity Income Fund II 23.03% 01/02/97
- ---------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II 7.04% 5.64% 4.89% 03/28/94
- ---------------------------------------------------------------------------------------------------------------------------
Federated Growth Strategies Fund II 25.23% 22.42% 10/02/95
- ---------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II 12.22% 14.49% 9.76% 03/01/94
- ---------------------------------------------------------------------------------------------------------------------------
Federated International Equity Fund II 8.52% 6.71% 05/08/95
- ---------------------------------------------------------------------------------------------------------------------------
Federated Prime Money Fund II(1) 3.44% 3.47% 3.44% 11/17/94
- ---------------------------------------------------------------------------------------------------------------------------
Federated Utility Fund II 24.84% 18.90% 12.93% 02/10/94
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
** Reflects performance from the Fund's inception date.
(1) The current yield for the Subaccount for the 7-day period ended December 31,
1997 (on an annualized basis) was 3.68%. The current yield reflects the
deduction of all charges under the Contract that are deducted from the
total return quotations shown above. As in the table above, the maximum 7%
deferred sales charge is not reflected.
4
<PAGE>
ANNUITY PAYMENTS
When Annuity payments are to begin, the value of the Account is determined using
Accumulation Unit values as of the tenth Valuation Date before the first Annuity
payment is due. Such value (less any applicable premium tax) is applied to
provide an Annuity in accordance with the Annuity and investment options
elected.
The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first Annuity payment for each $1,000 of value applied.
Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a
higher first payment, but Annuity payments will increase thereafter only to the
extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.
When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first Annuity payment based on a particular investment
option, and (b) is the then current Annuity Unit value for that investment
option. As noted, Annuity Unit values fluctuate from one Valuation Date to the
next; such fluctuations reflect changes in the net investment factor for the
appropriate Subaccount(s) (with a ten Valuation Date lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
EXAMPLE:
Assume that, at the date Annuity payments are to begin, there are 3,000
Accumulation Units credited under a particular Account and that the value of an
Accumulation Unit for the tenth Valuation Date prior to retirement was
$13.650000. This produces a total value of $40,950.
Assume also that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.
Assume then that the value of an Annuity Unit for the Valuation Date on which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.
If the net investment factor with respect to the appropriate Subaccount is
1.0015000 as of the tenth Valuation Date preceding the due date of the second
monthly payment, multiplying this factor by .9999058* (to neutralize the assumed
net investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for the prior Valuation Date (assume such value to be
$13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation
Date on which the second payment is due.
5
<PAGE>
The second monthly payment is then determined by multiplying the number of
Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359,
which produces a payment of $276.07.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.
SALES MATERIAL AND ADVERTISING
The Company may include hypothetical illustrations in its sales literature that
explain the mathematical principles of dollar cost averaging, compounded
interest, tax deferred accumulation, and the mechanics of variable annuity
contracts. The Company may also discuss the difference between variable annuity
contracts and other types of savings or investment products, including, but not
limited to, personal savings accounts and certificates of deposit.
We may distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Subaccounts to established market
indices such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average or to the percentage change in values of other management
investment companies that have investment objectives similar to the Subaccount
being compared.
We may publish in advertisements and reports, the ratings and other information
assigned to us by one or more independent rating organizations such as A.M. Best
Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors
Services, Inc. The purpose of the ratings is to reflect our financial strength
and/or claims-paying ability. We may also quote ranking services such as
Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable
Insurance Products Performance Analysis Service (VIPPAS), which rank variable
annuity or life Subaccounts or their underlying funds by performance and/or
investment objective. We may categorize the underlying Funds in terms of the
asset classes they represent and use such categories in marketing materials for
the Contracts. We may illustrate in advertisements the performance of the
underlying funds, if accompanied by performance which also shows the performance
of such funds, reduced by applicable charges under the Separate Account. We may
also show in advertisements the portfolio holdings of the underlying funds,
updated at various intervals. From time to time, we will quote articles from
newspapers and magazines or other publications or reports, including, but not
limited to The Wall Street Journal, Money magazine, USA Today and The VARDS
Report.
The Company may provide in advertising, sales literature, periodic publications
or other materials information on various topics of interest to current and
prospective Certificate Holders. These topics may include the relationship
between sectors of the economy and the economy as a whole and its effect on
various securities markets, investment strategies and techniques (such as value
investing, market timing, dollar cost averaging, asset allocation, constant
ratio transfer and account rebalancing), the advantages and disadvantages of
investing in tax-deferred and taxable investments, customer profiles and
hypothetical purchase and investment scenarios, financial management and tax and
retirement planning, and investment alternatives to certificates of deposit and
other financial instruments, including comparison between the Contracts and the
characteristics of and market for such financial instruments.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the
independent auditors for the Separate Account and for the Company. The services
provided to the Separate Account include primarily the examination of the
Separate Account's financial statements and review of filings made with the SEC.
6
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT I
Index
Statement of Assets and Liabilities..................................... S-2
Statements of Operations and Changes in Net Assets...................... S-6
Notes to Financial Statements........................................... S-7
Independent Auditors' Report............................................ S-23
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at net asset value: (Note 1)
Aetna Variable Fund; 460,341 shares (cost $16,614,943) .............................. $15,483,675
Aetna Income Shares; 235,061 shares (cost $3,031,485) ............................... 3,020,620
Aetna Variable Encore Fund; 1,149,925 shares (cost $15,164,499) ..................... 15,367,881
Aetna Investment Advisers Fund, Inc.; 279,051 shares (cost $4,380,315) .............. 4,473,919
Aetna Ascent Variable Portfolio; 76,815 shares (cost $1,127,454) .................... 1,084,513
Aetna Crossroads Variable Portfolio; 31,718 shares (cost $411,609) .................. 415,033
Aetna Legacy Variable Portfolio; 68,340 shares (cost $822,611) ...................... 826,919
Aetna Variable Portfolios, Inc.:
Aetna Variable Capital Appreciation Portfolio; 74,816 shares (cost $1,022,182) ..... 891,486
Aetna Variable Growth Portfolio; 91,990 shares (cost $1,170,578) ................... 905,783
Aetna Variable Index Plus Portfolio; 279,320 shares (cost $3,808,630) .............. 3,915,267
Aetna Variable Small Company Portfolio; 201,662 shares (cost $2,745,151) ........... 2,575,173
Alger American Funds:
Balanced Portfolio; 130,207 shares (cost $1,275,903) ............................... 1,401,032
Income and Growth Portfolio; 342,849 shares (cost $3,522,033) ...................... 3,767,914
Leveraged AllCap Portfolio; 126,003 shares (cost $2,653,864) ....................... 2,919,482
American Century Investments:
Balanced Fund; 79,700 shares (cost $612,625) ....................................... 656,724
International Fund; 299,358 shares (cost $1,938,702) ............................... 2,047,606
Calvert Social Balanced Portfolio; 16,398 shares (cost $38,333) ..................... 32,500
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio; 1,414,165 shares (cost $29,762,531) ....................... 34,335,916
Growth Portfolio; 502,429 shares (cost $16,027,024) ................................ 18,640,127
High Income Portfolio; 840,560 shares (cost $10,736,627) ........................... 11,414,802
Overseas Portfolio; 155,660 shares (cost $2,905,453) ............................... 2,988,676
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio; 210,350 shares (cost $3,540,570) .......................... 3,788,411
Contrafund Portfolio; 1,248,608 shares (cost $21,593,730) .......................... 24,897,252
Index 500 Portfolio; 200,197 shares (cost $19,996,691) ............................. 22,900,554
Investment Grade Bond Portfolio; 114,744 shares (cost $1,378,087) .................. 1,441,187
Insurance Management Series:
American Leaders Fund II; 5,810,863 shares (cost $86,494,347) ...................... 114,067,242
Equity Income Fund II; 1,051,372 shares (cost $12,226,145) ......................... 12,942,385
Growth Strategies Fund II; 1,522,348 shares (cost $20,206,907) ..................... 24,585,918
High Income Bond Fund II; 2,370,858 shares (cost $24,105,525) ...................... 25,960,897
International Equity Fund II; 1,638,572 shares (cost $18,263,063) .................. 20,105,275
Prime Money Fund II; 3,759,186 shares (cost $3,759,186) ............................ 3,759,186
U.S. Government Securities Fund II; 535,586 shares (cost $5,420,161) ............... 5,645,077
Utility Fund II; 1,478,185 shares (cost $16,701,803) ............................... 21,123,263
Janus Aspen Series:
Aggressive Growth Portfolio; 318,959 shares (cost $5,868,670) ...................... 6,554,615
Balanced Portfolio; 442,266 shares (cost $6,980,252) ............................... 7,726,386
Flexible Income Portfolio; 169,853 shares (cost $1,968,733) ........................ 2,000,867
Growth Portfolio; 545,327 shares (cost $9,051,127) ................................. 10,077,645
Worldwide Growth Portfolio; 1,912,294 shares (cost $39,994,925) .................... 44,728,546
Lexington Emerging Markets Fund; 138,054 shares (cost $1,532,488) ................... 1,230,059
Lexington Natural Resources Trust Fund; 96,267 shares (cost $1,424,122) ............. 1,435,334
MFS Funds:
Total Return Series; 410,009 shares (cost $6,222,891) .............................. 6,818,458
World Government Series; 52,289 shares (cost $529,421) ............................. 533,867
</TABLE>
S-2
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1997 (continued):
<TABLE>
<S> <C>
Oppenheimer Funds:
Capital Appreciation Fund; 19,573 shares (cost $814,715) ........................... $ 801,718
Global Securities Fund; 47,278 shares (cost $1,003,515) ............................ 1,010,341
Growth and Income Fund; 220,089 shares (cost $4,392,520) ........................... 4,529,430
Strategic Bond Fund; 270,619 shares (cost $1,392,363) .............................. 1,385,569
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio; 589,192 shares (cost $25,548,157) ............. 25,276,316
PPI MFS Research Growth Portfolio; 1,461,688 shares (cost $14,428,746) ............. 14,192,990
PPI MFS Value Equity Portfolio; 73,407 shares (cost $2,171,416) .................... 2,195,611
PPI Scudder International Growth Portfolio; 1,806 shares (cost $25,926) ............ 25,466
PPI T. Rowe Price Growth Equity Portfolio; 498,910 shares (cost $21,325,466) ....... 21,757,475
------------
NET ASSETS (cost $498,134,220) ...................................................... $560,662,388
============
Net assets represented by:
Reserves for annuity contracts in accumulation and payment period: (Notes 1 and 5)
Aetna Variable Fund:
Annuity contracts in accumulation .................................................. $ 15,483,675
Aetna Income Shares:
Annuity contracts in accumulation .................................................. 3,020,620
Aetna Variable Encore Fund:
Annuity contracts in accumulation .................................................. 15,367,881
Aetna Investment Advisers Fund, Inc.:
Annuity contracts in accumulation .................................................. 4,473,919
Aetna Ascent Variable Portfolio:
Annuity contracts in accumulation .................................................. 1,084,513
Aetna Crossroads Variable Portfolio:
Annuity contracts in accumulation .................................................. 415,033
Aetna Legacy Variable Portfolio:
Annuity contracts in accumulation .................................................. 793,678
Annuity contracts in payment period ................................................ 33,241
Aetna Variable Portfolios, Inc.:
Aetna Variable Capital Appreciation Portfolio:
Annuity contracts in accumulation .................................................. 891,486
Aetna Variable Growth Portfolio:
Annuity contracts in accumulation .................................................. 905,783
Aetna Variable Index Plus Portfolio:
Annuity contracts in accumulation .................................................. 3,915,267
Aetna Variable Small Company Portfolio:
Annuity contracts in accumulation .................................................. 2,575,173
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation .................................................. 1,401,032
Income and Growth Portfolio:
Annuity contracts in accumulation .................................................. 3,767,914
Leveraged AllCap Portfolio:
Annuity contracts in accumulation .................................................. 2,919,482
American Century Investments:
Balanced Fund:
Annuity contracts in accumulation .................................................. 656,724
</TABLE>
S-3
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1997 (continued):
<TABLE>
<S> <C>
International Fund:
Annuity contracts in accumulation ...................... $ 2,047,606
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation ...................... 32,500
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation ...................... 34,335,916
Growth Portfolio:
Annuity contracts in accumulation ...................... 18,640,127
High Income:
Annuity contracts in accumulation ...................... 11,414,802
Overseas Portfolio:
Annuity contracts in accumulation ...................... 2,988,676
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation ...................... 3,788,411
Contrafund Portfolio:
Annuity contracts in accumulation ...................... 24,897,252
Index 500 Portfolio:
Annuity contracts in accumulation ...................... 22,900,554
Investment Grade Bond Portfolio:
Annuity contracts in accumulation ...................... 1,441,187
Insurance Management Series:
American Leaders Fund II:
Annuity contracts in accumulation ...................... 114,050,410
Annuity contracts in payment period .................... 16,832
Equity Income Fund II:
Annuity contracts in accumulation ...................... 12,942,385
Growth Strategies Fund II:
Annuity contracts in accumulation ...................... 24,585,918
High Income Bond Fund II:
Annuity contracts in accumulation ...................... 25,944,158
Annuity contracts in payment period .................... 16,739
International Equity Fund II:
Annuity contracts in accumulation ...................... 20,105,275
Prime Money Fund II:
Annuity contracts in accumulation ...................... 3,759,186
U.S. Government Securities Fund II:
Annuity contracts in accumulation ...................... 5,645,077
Utility Fund II:
Annuity contracts in accumulation ...................... 21,104,322
Annuity contracts in payment period .................... 18,941
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation ...................... 6,554,615
Balanced Portfolio:
Annuity contracts in accumulation ...................... 7,726,386
Flexible Income Portfolio:
Annuity contracts in accumulation ...................... 2,000,867
Growth Portfolio:
Annuity contracts in accumulation ...................... 10,077,645
</TABLE>
S-4
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1997 (continued):
<TABLE>
<S> <C>
Worldwide Growth Portfolio:
Annuity contracts in accumulation ......... $ 44,728,546
Lexington Emerging Markets Fund:
Annuity contracts in accumulation ......... 1,230,059
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation ......... 1,435,334
MFS Funds:
Total Return Series:
Annuity contracts in accumulation ......... 6,818,458
World Government Series:
Annuity contracts in accumulation ......... 533,867
Oppenheimer Funds:
Capital Appreciation Fund:
Annuity contracts in accumulation ......... 801,718
Global Securities Fund:
Annuity contracts in accumulation ......... 1,010,341
Growth and Income Fund:
Annuity contracts in accumulation ......... 4,529,430
Strategic Bond Fund:
Annuity contracts in accumulation ......... 1,385,569
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation ......... 25,276,316
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation ......... 14,192,990
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation ......... 2,195,611
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation ......... 25,466
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation ......... 21,757,475
------------
$560,662,388
============
</TABLE>
See Notes to Financial Statements
S-5
<PAGE>
Variable Annuity Account I
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Income: (Notes 1, 3 and 5)
Dividends .......................................................... $ 13,569,495 $ 3,142,826
Expenses: (Notes 2 and 5)
Valuation period deductions ........................................ (5,565,448) (1,469,442)
------------- ------------
Net investment income ............................................... 8,004,047 1,673,384
------------- ------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1, 4 and 5)
Proceeds from sales ................................................ 170,076,421 30,774,009
Cost of investments sold ........................................... 157,030,583 30,447,382
------------- ------------
Net realized gain ................................................. 13,045,838 326,627
Net unrealized gain on investments: (Note 5)
Beginning of year .................................................. 13,871,018 1,366,008
End of year ........................................................ 62,528,168 13,871,018
------------- ------------
Net change in unrealized gain ..................................... 48,657,150 12,505,010
------------- ------------
Net realized and unrealized gain on investments ..................... 61,702,988 12,831,637
------------- ------------
Net increase in net assets resulting from operations ................ 69,707,035 14,505,021
------------- ------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ......................... 230,999,062 151,305,122
Transfers from the Company's fixed account options .................. 55,038,062 21,839,958
Redemptions by contract holders ..................................... (14,064,451) (2,630,806)
Annuity Payments .................................................... (14,846) 0
Other ............................................................... 99,606 121,009
------------- ------------
Net increase in net assets from unit transactions (Note 5) ......... 272,057,433 170,635,283
------------- ------------
Change in net assets ................................................ 341,764,468 185,140,304
NET ASSETS:
Beginning of year ................................................... 218,897,920 33,757,616
------------- ------------
End of year ......................................................... $ 560,662,388 $218,897,920
============= ============
</TABLE>
See Notes to Financial Statements
S-6
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997
1. Summary of Significant Accounting Policies
Variable Annuity Account I (the "Account") is a separate account
established by Aetna Insurance Company of America (the "Company") and is
registered under the Investment Company Act of 1940 as a unit investment
trust. The Account is sold exclusively for use with variable annuity
contracts that may be entitled to tax-deferred treatment under specific
sections of the Internal Revenue Code of 1986, as amended. The Account
commenced operations on June 28, 1995.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported therein. Although actual results
could differ from these estimates, any such differences are expected to be
immaterial to the net assets of the Account.
a. Valuation of Investments
Investments in the following Funds are stated at the closing net asset
value per share as determined by each Fund on December 31, 1997:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Aetna Variable Portfolios, Inc.:
[bullet] Aetna Variable Capital Appreciation Portfolio
[bullet] Aetna Variable Growth Portfolio
[bullet] Aetna Variable Index Plus Portfolio
[bullet] Aetna Variable Small Company Portfolio
Alger American Funds:
[bullet] Balanced Portfolio
[bullet] Income and Growth Portfolio
[bullet] Leveraged AllCap Portfolio
American Century Investments:
[bullet] Balanced Fund
[bullet] International Fund
Calvert Social Balanced Portfolio
Fidelity Investments Variable Insurance Products Fund:
[bullet] Equity-Income Portfolio
[bullet] Growth Portfolio
[bullet] High Income Portfolio
[bullet] Overseas Portfolio
Fidelity Investments Variable Insurance Products Fund II:
[bullet] Asset Manager Portfolio
[bullet] Contrafund Portfolio
[bullet] Index 500 Portfolio
[bullet] Investment Grade Bond Portfolio
Insurance Management Series:
[bullet] American Leaders Fund II
[bullet] Equity Income Fund II
[bullet] Growth Strategies Fund II
[bullet] High Income Bond Fund II
[bullet] International Equity Fund II
[bullet] Prime Money Fund II
[bullet] U.S. Government Securities Fund II
[bullet] Utility Fund II
Janus Aspen Series:
[bullet] Aggressive Growth Portfolio
[bullet] Balanced Portfolio
[bullet] Flexible Income Portfolio
[bullet] Growth Portfolio
[bullet] Worldwide Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust Fund
MFS Funds:
[bullet] Total Return Series
[bullet] World Government Series
Oppenheimer Funds:
[bullet] Capital Appreciation Fund
[bullet] Global Securities Fund
[bullet] Growth and Income Fund
[bullet] Strategic Bond Fund
Portfolio Partners, Inc.:
[bullet] PPI MFS Emerging Equities Portfolio
[bullet] PPI MFS Research Growth Portfolio
[bullet] PPI MFS Value Equity Portfolio
[bullet] PPI Scudder International Growth Portfolio
[bullet] PPI T. Rowe Price Growth Equity Portfolio
b. Other
Investment transactions are accounted for on a trade date basis and
dividend income is recorded on the ex-dividend date. The cost of
investments sold is determined by specific identification.
S-7
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
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 a life insurance company under
the Internal Revenue Code of 1986, as amended.
d. Annuity Reserves
Annuity reserves held in the Separate Accounts are computed for currently
payable contracts according to the 83a and 83GAM tables using various
assumed interest rates. Mortality experience is monitored by the Company.
Charges to annuity reserves for mortality experience are reimbursed to the
Company if the reserves required are less than originally estimated. If
additional reserves are required, the Company reimburses the Account.
2. Valuation Period Deductions
Deductions by the Account for mortality and expense risk charges are made
in accordance with the terms of the contracts and are paid to the Company.
3. Dividend Income
On an annual basis, the Funds distribute substantially all of their taxable
income and realized capital gains to their shareholders. Distributions to
the Account are automatically reinvested in shares of the Funds. The
Account's proportionate share of each Fund's undistributed net investment
income (distributions in excess of net investment income) and accumulated
net realized gain (loss) on investments is included in net unrealized gain
(loss) in the Statements of Operations and Changes in Net Assets.
4. Purchases and Sales of Investments
The cost of purchases and proceeds from sales of investments other than
short-term investments for the years ended December 31, 1997 and 1996
aggregated $450,137,902 and $170,076,421; $203,082,676 and $30,774,009,
respectively.
S-8
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund: $2,917,442 ($125,993) $ 772,972 $ 648,307 $ 124,665
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares: 151,053 (26,889) 754,709 750,000 4,709
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: 322,525 (170,170) 19,808,667 19,627,696 180,971
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 443,088 (36,303) 411,120 371,132 39,988
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 66,289 (9,238) 1,580,817 1,443,402 137,415
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 26,978 (2,883) 5,444 4,842 602
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 45,122 (6,136) 199,255 188,641 10,614
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Portfolios, Inc.:
Aetna Variable Capital Appreciation Portfolio: 141,848 (2,366) 140,737 134,978 5,759
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Growth Portfolio: 242,318 (2,483) 311,238 305,917 5,321
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 156,860 (28,110) 1,772,894 1,552,332 220,562
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Small Company Portfolio: 155,307 (7,993) 104,643 86,811 17,832
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 24,076 (13,590) 120,684 99,159 21,525
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: (1) 89,153 (132,536) 15,600,119 13,181,627 2,418,492
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio: 65,111 (31,295) 1,374,610 1,109,169 265,441
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio: 0 (36,689) 1,293,544 1,102,668 190,876
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
MidCap Portfolio: (1) 80,363 (75,046) 9,541,316 8,551,109 990,207
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio: (2) 338,930 (118,559) 12,725,130 12,057,293 667,837
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
American Century Investments:
Balanced Fund: 29,309 (8,128) 203,349 186,540 16,809
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-9
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
($143,001) ($ 1,131,268) ($ 988,267) $ 9,726,519
$3,829,309 $15,483,675
- -----------------------------------------------------------------------------------------------------------------------------
(21,783) (10,865) 10,918 1,877,585
1,003,244 3,020,620
- -----------------------------------------------------------------------------------------------------------------------------
61,606 203,382 141,776 6,513,403
8,379,376 15,367,881
- -----------------------------------------------------------------------------------------------------------------------------
15,913 93,604 77,691 3,246,840
702,615 4,473,919
- -----------------------------------------------------------------------------------------------------------------------------
56,427 (42,941) (99,368) (175,693)
1,165,108 1,084,513
- -----------------------------------------------------------------------------------------------------------------------------
(282) 3,424 3,706 309,890
76,740 415,033
- -----------------------------------------------------------------------------------------------------------------------------
(3,582) 4,308 7,890 669,065
100,364 793,678
0 33,241
- -----------------------------------------------------------------------------------------------------------------------------
0 (130,696) (130,696) 876,941
0 891,486
- -----------------------------------------------------------------------------------------------------------------------------
0 (264,795) (264,795) 925,422
0 905,783
- -----------------------------------------------------------------------------------------------------------------------------
(786) 106,638 107,424 3,426,210
32,321 3,915,267
- -----------------------------------------------------------------------------------------------------------------------------
0 (169,978) (169,978) 2,580,005
0 2,575,173
- -----------------------------------------------------------------------------------------------------------------------------
19,051 125,129 106,078 755,128
507,815 1,401,032
- -----------------------------------------------------------------------------------------------------------------------------
331,002 0 (331,002) (8,508,847)
6,464,740 0
- -----------------------------------------------------------------------------------------------------------------------------
43,184 245,881 202,697 2,618,690
647,270 3,767,914
- -----------------------------------------------------------------------------------------------------------------------------
53,728 265,618 211,890 540,838
2,012,567 2,919,482
- -----------------------------------------------------------------------------------------------------------------------------
172,467 0 (172,467) (4,925,256)
4,102,199 0
- -----------------------------------------------------------------------------------------------------------------------------
(40,650) 0 40,650 (7,934,029)
7,005,171 0
- -----------------------------------------------------------------------------------------------------------------------------
10,011 44,098 34,087 211,174
373,473 656,724
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-10
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation
Period
Dividends Deductions
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund: (3) $ 13,359 ($10,581)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
International Fund: 43,440 (24,794)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 0 (2)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 1,381,407 (329,134)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Growth Portfolio: 387,748 (199,645)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
High Income Portfolio: 258,910 (88,291)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Overseas Portfolio: 123,104 (32,314)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 167,003 (32,759)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Contrafund Portfolio: 273,634 (226,793)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Index 500 Portfolio: 198,117 (197,448)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 34,282 (13,109)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 2,021,951 (1,254,649)
Annuity contracts in accumulation
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------------------
Equity Income Fund II: 42,089 (75,051)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 83,791 (249,588)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
High Income Bond Fund II: 1,053,521 (275,549)
Annuity contracts in accumulation
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------------------
International Equity Fund II: 15,632 (226,665)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Prime Money Fund II: 210,825 (62,256)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Proceeds Cost of Net
from Investments Realized
Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund: (3) $1,483,901 $1,555,024 ($71,123)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
International Fund: 793,249 675,144 118,105
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 6,738 7,426 (688)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 1,006,879 870,117 136,762
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Growth Portfolio: 1,523,787 1,391,777 132,010
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
High Income Portfolio: 1,389,256 1,263,386 125,870
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Overseas Portfolio: 372,931 345,379 27,552
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 95,686 90,640 5,046
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 624,535 485,003 139,532
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 2,562,053 1,860,408 701,645
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 292,775 284,565 8,210
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 3,672,802 2,283,020 1,389,782
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------
Equity Income Fund II: 125,938 117,498 8,440
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 644,437 464,629 179,808
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
High Income Bond Fund II: 1,329,211 1,199,797 129,414
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------
International Equity Fund II: 792,013 683,940 108,073
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Prime Money Fund II: 5,616,613 5,616,577 36
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
</TABLE>
S-11
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
($11,204) $0 $11,204 ($403,000)
$460,141 $0
- ------------------------------------------------------------------------------------------------------------------------
47,176 108,904 61,728 1,023,868
825,259 2,047,606
- ------------------------------------------------------------------------------------------------------------------------
0 (5,832) (5,832) 39,022
0 32,500
- ------------------------------------------------------------------------------------------------------------------------
763,902 4,573,383 3,809,481 17,482,048
11,855,352 34,335,916
- ------------------------------------------------------------------------------------------------------------------------
339,925 2,613,104 2,273,179 6,518,902
9,527,933 18,640,127
- ------------------------------------------------------------------------------------------------------------------------
99,376 678,175 578,799 7,802,056
2,737,458 11,414,802
- ------------------------------------------------------------------------------------------------------------------------
66,703 83,223 16,520 1,531,886
1,321,928 2,988,676
- ------------------------------------------------------------------------------------------------------------------------
56,785 247,841 191,056 2,241,299
1,216,766 3,788,411
- ------------------------------------------------------------------------------------------------------------------------
438,859 3,303,522 2,864,663 15,304,885
6,541,331 24,897,252
- ------------------------------------------------------------------------------------------------------------------------
375,527 2,903,863 2,528,336 14,780,907
4,888,997 22,900,554
- ------------------------------------------------------------------------------------------------------------------------
10,325 63,100 52,775 910,396
448,634 1,441,187
- ------------------------------------------------------------------------------------------------------------------------
7,073,040 27,572,894 20,499,854 33,372,942
58,037,362 114,050,410
0 16,832
- ------------------------------------------------------------------------------------------------------------------------
0 716,240 716,240 12,250,666
0 12,942,385
- ------------------------------------------------------------------------------------------------------------------------
890,268 4,379,010 3,488,742 11,282,487
9,800,678 24,585,918
- ------------------------------------------------------------------------------------------------------------------------
442,872 1,855,372 1,412,500 12,049,585
11,591,426 25,944,158
0 16,739
- ------------------------------------------------------------------------------------------------------------------------
599,852 1,842,212 1,242,360 7,630,546
11,335,329 20,105,275
- ------------------------------------------------------------------------------------------------------------------------
0 0 0 102,916
3,507,665 3,759,186
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-12
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Government Securities Fund II: $136,009 ($57,878) $815,197 $816,209 ($1,012)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Utility Fund II: 698,490 (236,725) 1,251,178 1,013,333 237,845
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 0 (64,625) 1,801,019 1,701,173 99,846
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 181,361 (69,510) 417,457 346,860 70,597
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 87,894 (14,471) 333,439 322,660 10,779
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 219,777 (99,435) 947,759 774,701 173,058
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio: (4) 10,649 (6,397) 1,087,777 1,072,304 15,473
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 522,386 (448,359) 2,135,232 1,701,774 433,458
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 1,295 (21,167) 1,232,664 1,305,131 (72,467)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 41,210 (18,555) 1,350,194 1,215,906 134,288
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
MFS Funds:
Emerging Growth Series: (2) 0 (116,977) 15,517,072 13,662,725 1,854,347
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Research Series: (3) 0 (100,752) 13,471,461 12,125,968 1,345,493
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Total Return Series: 0 (54,566) 831,314 702,549 128,765
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Value Series: (5) 0 (5,724) 1,671,063 1,502,195 168,868
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
World Government Series: 15,615 (8,914) 711,009 723,530 (12,521)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Capital Appreciation Fund: 0 (2,638) 62,476 58,435 4,041
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Global Securities Fund: 0 (3,510) 38,265 35,536 2,729
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund: 12,626 (13,385) 107,192 95,273 11,919
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-13
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
($201) $224,916 $225,117 $2,886,389
$2,456,452 $5,645,077
- -----------------------------------------------------------------------------------------------------------------
1,106,478 4,421,460 3,314,982 3,773,450
13,335,221 21,104,322
0 18,941
- -----------------------------------------------------------------------------------------------------------------
17,905 685,946 668,041 3,097,139
2,754,214 6,554,615
- -----------------------------------------------------------------------------------------------------------------
46,718 746,135 699,417 4,857,371
1,987,150 7,726,386
- -----------------------------------------------------------------------------------------------------------------
5,974 32,134 26,160 1,497,111
393,394 2,000,867
- -----------------------------------------------------------------------------------------------------------------
90,906 1,026,518 935,612 5,734,794
3,113,839 10,077,645
- -----------------------------------------------------------------------------------------------------------------
(1,799) 0 1,799 (335,569)
314,045 0
- -----------------------------------------------------------------------------------------------------------------
658,071 4,733,621 4,075,550 26,343,094
13,802,417 44,728,546
- -----------------------------------------------------------------------------------------------------------------
(4,649) (302,429) (297,780) 854,308
765,870 1,230,059
- -----------------------------------------------------------------------------------------------------------------
98,720 11,212 (87,508) 36,049
1,329,850 1,435,334
- -----------------------------------------------------------------------------------------------------------------
13,628 0 (13,628) (5,940,064)
4,216,322 0
- -----------------------------------------------------------------------------------------------------------------
66,161 0 (66,161) (3,668,017)
2,489,437 0
- -----------------------------------------------------------------------------------------------------------------
22,362 595,567 573,205 4,989,205
1,181,849 6,818,458
- -----------------------------------------------------------------------------------------------------------------
156 0 (156) (207,849)
44,861 0
- -----------------------------------------------------------------------------------------------------------------
3,877 4,445 568 324,691
214,428 533,867
- -----------------------------------------------------------------------------------------------------------------
0 (12,997) (12,997) 813,312
0 801,718
- -----------------------------------------------------------------------------------------------------------------
0 6,826 6,826 1,004,296
0 1,010,341
- -----------------------------------------------------------------------------------------------------------------
0 136,910 136,910 4,381,360
0 4,529,430
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
S-14
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation
Period
Dividends Deductions
- -------------------------------------------------------------------------------
<S> <C> <C>
Strategic Bond Fund: $37,598 ($5,530)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio: 0 (33,567)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 0 (18,615)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 0 (2,523)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 0 (5)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 0 (28,585)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
Total Variable Annuity Account I $13,569,495 ($5,565,448)
===============================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Proceeds Cost of Net
from Investments Realized
Sales Sold Gain (Loss)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Strategic Bond Fund: $50,466 $49,763 $703
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio: 14,301,627 14,309,825 (8,198)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 13,341,021 13,351,443 (10,422)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 1,560,760 1,560,280 480
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 4 4 0
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 7,986,723 7,987,053 (330)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
Total Variable Annuity Account I $170,076,421 $157,030,583 $13,045,838
==================================================================================================
</TABLE>
(1) Effective November 28, 1997, assets from these funds were transferred to the
PPI T. Rowe Price Growth Equity Portfolio.
(2) Effective November 28, 1997, assets from these funds were transferred to the
PPI MFS Emerging Equities Portfolio.
(3) Effective November 28, 1997, assets from these funds were transferred to the
PPI MFS Research Growth Portfolio.
(4) Effective November 28, 1997, assets from these funds were transferred to the
Aetna Variable Encore Fund.
(5) Effective November 28, 1997, assets from these funds were transferred to the
PPI MFS Value Equity Portfolio.
S-15
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0 ($6,794) ($6,794) $1,359,592
$0 $1,385,569
- --------------------------------------------------------------------------------------------------------------------
0 (271,841) (271,841) 25,589,922
0 25,276,316
- --------------------------------------------------------------------------------------------------------------------
0 (235,756) (235,756) 14,457,783
0 14,192,990
- --------------------------------------------------------------------------------------------------------------------
0 24,196 24,196 2,173,458
0 2,195,611
- --------------------------------------------------------------------------------------------------------------------
0 (460) (460) 25,931
0 25,466
- --------------------------------------------------------------------------------------------------------------------
0 432,009 432,009 21,354,381
0 21,757,475
- --------------------------------------------------------------------------------------------------------------------
$13,871,018 $62,528,168 $48,657,150 $272,057,433 $218,897,920 $560,662,388
====================================================================================================================
</TABLE>
S-16
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund: $377,243 ($16,848) $678,021 $625,675 $52,346
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares: 53,910 (6,342) 361,706 364,811 (3,105)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: 271,781 (42,460) 8,817,411 8,991,630 (174,219)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 49,621 (6,268) 445,891 441,685 4,206
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 41,723 (4,767) 103,743 102,116 1,627
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 3,213 (150) 245 229 16
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 6,160 (98) 32,715 33,619 (904)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 175 (59) 32,626 30,948 1,678
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 1,752 (2,640) 164,226 164,428 (202)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 41,079 (39,330) 505,561 482,104 23,457
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio: 30,956 (3,277) 116,013 131,617 (15,604)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio: 1,193 (10,216) 138,877 145,053 (6,176)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
MidCap Portfolio: 6,167 (19,638) 1,125,112 1,181,040 (55,928)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio: 5,402 (43,782) 967,209 963,981 3,228
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 5,013 (60,690) 388,307 391,124 (2,817)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 6,182 (51,253) 683,984 650,467 33,517
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
High Income Portfolio: 0 (13,207) 809,332 772,725 36,607
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio: 0 (6,706) 553,209 544,802 8,407
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-17
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0 ($143,001) ($143,001) $3,559,569
$0 $3,829,309
- ----------------------------------------------------------------------------------------------------------
0 (21,783) (21,783) 980,564
0 1,003,244
- ----------------------------------------------------------------------------------------------------------
0 61,606 61,606 8,262,668
0 8,379,376
- ----------------------------------------------------------------------------------------------------------
0 15,913 15,913 639,143
0 702,615
- ----------------------------------------------------------------------------------------------------------
0 56,427 56,427 1,070,098
0 1,165,108
- ----------------------------------------------------------------------------------------------------------
0 (282) (282) 73,943
0 76,740
- ----------------------------------------------------------------------------------------------------------
0 (3,582) (3,582) 98,789
(1) 100,364
- ----------------------------------------------------------------------------------------------------------
0 (786) (786) 31,313
0 32,321
- ----------------------------------------------------------------------------------------------------------
0 19,051 19,051 489,854
0 507,815
- ----------------------------------------------------------------------------------------------------------
(303) 331,002 331,305 6,071,518
36,711 6,464,740
- ----------------------------------------------------------------------------------------------------------
0 43,184 43,184 592,011
0 647,270
- ----------------------------------------------------------------------------------------------------------
0 53,728 53,728 1,974,038
0 2,012,567
- ----------------------------------------------------------------------------------------------------------
0 172,467 172,467 3,999,130
1 4,102,199
- ----------------------------------------------------------------------------------------------------------
(1,042) (40,650) (39,608) 7,044,153
35,778 7,005,171
- ----------------------------------------------------------------------------------------------------------
0 763,902 763,902 11,149,944
0 11,855,352
- ----------------------------------------------------------------------------------------------------------
0 339,925 339,925 9,199,562
0 9,527,933
- ----------------------------------------------------------------------------------------------------------
0 99,376 99,376 2,614,682
0 2,737,458
- ----------------------------------------------------------------------------------------------------------
0 66,703 66,703 1,253,524
0 1,321,928
- ----------------------------------------------------------------------------------------------------------
</TABLE>
S-18
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: $0 ($4,829) $32,049 $30,456 $1,593
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 0 (23,542) 531,787 511,106 20,681
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 0 (22,040) 334,354 313,306 21,048
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 0 (1,771) 67,878 68,125 (247)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 662,642 (497,245) 925,465 746,157 179,308
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 295 (52,685) 106,659 89,128 17,531
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
High Income Bond Fund II: 611,472 (95,132) 310,773 300,649 10,124
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
International Equity Fund II: 20,351 (96,657) 280,807 261,882 18,925
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Prime Money Fund II: 164,619 (50,003) 6,053,920 6,053,922 (2)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II: 113,351 (26,261) 844,719 846,273 (1,554)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Utility Fund II: 381,276 (128,189) 639,721 566,100 73,621
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 7,466 (12,856) 1,050,437 1,088,069 (37,632)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 23,543 (7,391) 221,223 209,140 12,083
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 18,252 (2,109) 41,760 41,610 150
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 25,286 (14,653) 1,183,201 1,120,812 62,389
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio: 9,170 (2,222) 652,610 650,060 2,550
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 106,093 (61,217) 446,507 395,584 50,923
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 0 (3,899) 109,987 110,241 (254)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-19
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0 $56,785 $56,785 $1,163,217
$0 $1,216,766
- -----------------------------------------------------------------------------------------------------------
0 438,859 438,859 6,105,333
0 6,541,331
- -----------------------------------------------------------------------------------------------------------
0 375,527 375,527 4,514,462
0 4,888,997
- -----------------------------------------------------------------------------------------------------------
0 10,325 10,325 440,327
0 448,634
- -----------------------------------------------------------------------------------------------------------
871,936 7,073,040 6,201,104 35,057,409
16,434,144 58,037,362
- -----------------------------------------------------------------------------------------------------------
4,198 890,268 886,070 8,762,085
187,382 9,800,678
- -----------------------------------------------------------------------------------------------------------
47,839 442,872 395,033 7,472,858
3,197,071 11,591,426
- -----------------------------------------------------------------------------------------------------------
77,134 599,852 522,718 7,793,953
3,076,039 11,335,329
- -----------------------------------------------------------------------------------------------------------
0 0 0 (713,688)
4,106,739 3,507,665
- -----------------------------------------------------------------------------------------------------------
32,984 (201) (33,185) 816,834
1,587,267 2,456,452
- -----------------------------------------------------------------------------------------------------------
332,527 1,106,478 773,951 7,162,934
5,071,628 13,335,221
- -----------------------------------------------------------------------------------------------------------
0 17,905 17,905 2,779,331
0 2,754,214
- -----------------------------------------------------------------------------------------------------------
0 46,718 46,718 1,912,197
0 1,987,150
- -----------------------------------------------------------------------------------------------------------
0 5,974 5,974 371,127
0 393,394
- -----------------------------------------------------------------------------------------------------------
0 90,906 90,906 2,949,911
0 3,113,839
- -----------------------------------------------------------------------------------------------------------
0 (1,799) (1,799) 306,346
0 314,045
- -----------------------------------------------------------------------------------------------------------
0 658,071 658,071 13,048,547
0 13,802,417
- -----------------------------------------------------------------------------------------------------------
735 (4,649) (5,384) 750,550
24,857 765,870
- -----------------------------------------------------------------------------------------------------------
</TABLE>
S-20
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lexington Natural Resources Trust Fund: $4,095 ($5,265) $418,184 $424,395 ($6,211)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
MFS Funds:
Emerging Growth Series: 33,270 (14,548) 145,356 151,959 (6,603)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Research Series: 32,798 (7,629) 69,685 69,157 528
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return Series: 22,438 (3,611) 191,249 184,924 6,325
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Value Series: 606 (47) 3,366 3,307 59
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
World Government Series: 0 (961) 35,795 34,610 1,185
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.:
Balanced Fund: 1,396 (1,261) 21,355 20,655 700
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Fund: 2,369 (2,424) 89,869 97,034 (7,165)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
International Fund: 468 (3,264) 41,105 40,667 438
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account I $3,142,826 ($1,469,442) $30,774,009 $30,447,382 $326,627
=================================================================================================================================
</TABLE>
S-21
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0 $98,720 $98,720 $1,238,511
$0 $1,329,850
- ----------------------------------------------------------------------------------------------------------------
0 13,628 13,628 4,190,575
0 4,216,322
- ----------------------------------------------------------------------------------------------------------------
0 66,161 66,161 2,397,579
0 2,489,437
- ----------------------------------------------------------------------------------------------------------------
0 22,362 22,362 1,134,335
0 1,181,849
- ----------------------------------------------------------------------------------------------------------------
0 156 156 44,087
0 44,861
- ----------------------------------------------------------------------------------------------------------------
0 3,877 3,877 210,327
0 214,428
- ----------------------------------------------------------------------------------------------------------------
0 10,011 10,011 362,627
0 373,473
- ----------------------------------------------------------------------------------------------------------------
0 (11,204) (11,204) 478,565
0 460,141
- ----------------------------------------------------------------------------------------------------------------
0 47,176 47,176 780,441
0 825,259
- ----------------------------------------------------------------------------------------------------------------
$1,366,008 $13,871,018 $12,505,010 $170,635,283 $33,757,616 $218,897,920
================================================================================================================
</TABLE>
S-22
<PAGE>
Independent Auditors' Report
The Board of Directors of Aetna Insurance Company of America and
Contract Owners of Variable Annuity Account I:
We have audited the accompanying statement of assets and liabilities of Aetna
Insurance Company of America Variable Annuity Account I (the "Account") as of
December 31, 1997, and the related statements of operations and changes in net
assets for each of the years in the two-year period then ended and condensed
financial information for the year ended December 31, 1997. These financial
statements and condensed financial information are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements and condensed financial information 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 and condensed
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and condensed financial information. Our procedures
included confirmation of securities owned as of December 31, 1997, by
correspondence with the custodian. 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 and condensed financial information
referred to above present fairly, in all material respects, the financial
position of Aetna Insurance Company of America Variable Annuity Account I as of
December 31, 1997, the results of its operations and changes in its net assets
for each of the years in the two-year period then ended and condensed financial
information for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
February 27, 1998
S-23
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
Index to Financial Statements
Page
----
Independent Auditors' Report F-2
Financial Statements:
Statements of Income for the Years Ended
December 31, 1997, 1996 and 1995 F-3
Balance Sheets as of December 31, 1997
and 1996 F-4
Statements of Changes in Shareholder's Equity for
the Years Ended December 31, 1997, 1996 and 1995 F-5
Statements of Cash Flows for the Years
Ended December 31, 1997, 1996 and 1995 F-6
Notes to Financial Statements F-7
F-1
<PAGE>
Independent Auditors' Report
The Shareholder and Board of Directors
Aetna Insurance Company of America:
We have audited the accompanying balance sheets of Aetna Insurance Company of
America as of December 31, 1997 and 1996, and the related statements of income,
changes in shareholder's equity, and cash flows for each of the years in the
three-year period ended December 31, 1997. These financial statements are the
responsibility of the Company'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 Aetna Insurance Company of
America at December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1997, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, in 1997, the Company changed
its method for accounting for guaranty-fund and other insurance related
assessments.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
March 25 , 1998
F-2
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Statements of Income
(thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenue:
Charges assessed against policyholders $ 6,072.9 $ 1,293.0 $ 132.7
Net investment income 7,083.2 1,556.9 721.0
Net realized capital gains (losses) 101.6 (11.2) 8.3
Other income 243.2 66.4 --
---------- ----------- -----------
Total revenue 13,500.9 2,905.1 862.0
Benefits and expenses:
Current and future benefits 6,534.5 1,651.9 --
Operating expenses 3,675.6 2,430.4 481.8
Amortization of deferred policy acquisition costs 809.0 242.0 --
---------- ----------- -----------
Total benefits and expenses 11,019.1 4,324.3 481.8
Income (loss) before income taxes (benefits) and 2,481.8 (1,419.2) 380.2
cumulative effect adjustment
Income taxes (benefits) 768.7 (723.4) 212.3
---------- ----------- -----------
Income (loss) before cumulative effect adjustments 1,713.1 (695.8) 167.9
Cumulative effect adjustment, net of tax 520.0 -- --
---------- ----------- -----------
Net income (loss) $ 1,193.1 $ (695.8) $ 167.9
========= =========== ==========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Balance Sheets
(thousands, except share data)
<TABLE>
<CAPTION>
December 31,
Assets 1997 1996
- ------ ---- ----
<S> <C> <C>
Investments:
Debt securities, available for sale, at fair value:
(amortized cost: $135,850.1 and $24,736.8) $ 137,918.4 $ 24,770.3
Cash and cash equivalents 12,494.2 51,842.3
Deferred policy acquisition costs 45,364.0 21,057.0
Accrued investment income 2,041.5 325.8
Deferred tax asset 2,139.2 1,289.7
Income taxes receivable 1,429.7 1,133.2
Other assets 2,514.6 447.6
Separate Accounts assets 676,640.7 303,518.6
----------- -----------
Total assets $ 880,542.3 $ 404,384.5
=========== ===========
Liabilities and Shareholder's Equity
- ------------------------------------
Liabilities:
Policyholders' funds left with the Company 145,625.9 64,445.4
Other liabilities 5,212.1 4,753.2
Due to parent and affiliates 813.6 347.2
Separate Accounts liabilities 676,640.7 303,518.6
----------- -----------
Total liabilities 828,292.3 373,064.4
----------- -----------
Shareholder's equity:
Common capital stock, par value $2,000 (1,275 shares
authorized, issued and outstanding) 2,550.0 2,550.0
Paid-in capital 47,550.0 27,550.0
Accumulated other comprehensive income 155.4 90.3
Retained earnings 1,994.6 1,129.8
----------- -----------
Total shareholder's equity 52,250.0 31,320.1
----------- -----------
Total liabilities and shareholder's equity $ 880,542.3 $ 404,384.5
=========== ===========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Statements of Changes in Shareholder's Equity
(thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Shareholder's equity, beginning of year $ 31,320.1 $ 12,133.0 $ 11,675.3
Comprehensive income
Net income (loss) 1,193.1 (695.8) 167.9
Other comprehensive income, net of tax
Unrealized gains (losses) on securities ($100.2
thousand, ($95.5) thousand and $371.8 thousand,
pretax, respectively) 65.1 (62.1) 289.8
---------- ---------- ----------
Total comprehensive income 1,258.2 (757.9) 457.7
---------- ---------- ----------
Capital contributions 20,000.0 20,000.0 --
Other changes (328.3) (55.0) --
---------- ---------- ----------
Shareholder's equity, end of year $ 52,250.0 $ 31,320.1 $ 12,133.0
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Statements of Cash Flows
(thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 1,193.1 $ (695.8) $ 167.9
Adjustments to reconcile net income (loss) to net cash (used for)
provided by operating activities:
Increase in accrued investment income (1,715.7) (213.2) (21.1)
Increase in deferred policy acquisition costs (24,307.0) (18,990.6) (2,066.4)
Net change in amounts due to/from parent and affiliates 466.5 172.6 164.1
Net increase (decrease) in other assets and liabilities 924.1 (25.6) 1,915.9
Net change in income taxes (1,388.4) (2,710.7) 60.2
Net amortization of (discount) premium on debt securities (419.5) (104.6) 22.2
Net realized capital (gains) losses (101.6) 11.2 --
---------- ---------- ---------
Net cash (used for) provided by operating activities (25,348.5) (22,556.7) 242.8
---------- ---------- ---------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale 16,576.8 2,510.0 3,000.0
Investment maturities and repayments of:
Debt securites available for sale 3,192.0 -- --
Short-term investments 1,000.0 -- 500.0
Cost of investment purchases in:
Debt securities available for sale (132,734.8) (16,706.0) (3,939.2)
Short-term investments (1,000.0) -- (492.1)
---------- ---------- ---------
Net cash used for investing activities (112,966.0) (14,196.0) (931.3)
---------- ---------- ---------
Cash Flows from Financing Activities:
Deposits and interest credited for investment contracts 84,673.2 64,936.2 --
Withdrawal of investment contracts (5,706.8) (385.4) --
Capital contribution 20,000.0 20,000.0 --
---------- ---------- ---------
Net cash provided by financing activities 98,966.4 84,550.8 --
---------- ---------- ---------
Net (decrease) increase in cash and cash equivalents (39,348.1) 47,798.1 (688.5)
Cash and cash equivalents, beginning of year 51,842.3 4,044.2 4,732.7
---------- ---------- ---------
Cash and cash equivalents, end of year $ 12,494.2 $ 51,842.3 $ 4,044.2
========== ========== =========
Supplemental cash flow information:
Income taxes paid, net $ 1,493.0 $ 1,866.8 $ 92.4
========== ========== =========
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements
1. Summary of Significant Accounting Policies
Aetna Insurance Company of America (the "Company") is a stock life
insurance company organized in 1990 under the insurance laws of
Connecticut. The Company is a wholly owned subsidiary of Aetna Life
Insurance and Annuity Company ("ALIAC"). ALIAC is a wholly owned subsidiary
of Aetna Retirement Holdings, Inc. ("HOLDCO"). HOLDCO is a wholly owned
subsidiary of Aetna Retirement Services, Inc., whose ultimate parent is
Aetna Inc. ("Aetna"). During the second quarter of 1995, the Company began
marketing and servicing variable annuities to individuals in the qualified
and non-qualified markets.
Basis of Presentation
These financial statements have been prepared in conformity with generally
accepted accounting principles. Certain reclassifications have been made to
1996 and 1995 financial information to conform to the 1997 presentation.
New Accounting Standards
Reporting Comprehensive Income
As of December 31, 1997 the Company adopted Financial Accounting Standard
("FAS") No. 130, Reporting Comprehensive Income. This statement establishes
standards for the reporting and presentation of comprehensive income and
its components in a full set of financial statements. Comprehensive income
encompasses all changes in shareholder's equity (except those arising from
transactions with shareholders) and includes net income and net unrealized
capital gains or losses on available-for-sale securities. As this new
standard only requires additional information in a financial statement, it
does not affect the Company's financial position or results of operations.
Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments
In 1997, the Company adopted the American Institute of Certified Public
Accountants' Statement of Position ("SOP") 97-3, Accounting by Insurance
and Other Enterprises for Insurance-Related Assessments, effective as of
January 1, 1997. This statement required that the Company recognize a
liability for guaranty-fund and other insurance related assessments when
such assessments were probable and could be reasonably estimated. A
cumulative effect charge of $520.0 thousand, net of taxes of $280.0
thousand, related to the adoption of this statement is reflected in the
1997 Statements of Income.
F-7
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
Future Application of Accounting Standards
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
Financial Accounting Standard ("FAS") No. 125 , Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, was
issued in June 1996 and provides accounting and reporting standards for
transfers of financial assets and extinguishments of liabilities. FAS No.
125 is effective for 1997 financial statements; however, certain provisions
relating to accounting for repurchase agreements and securities lending are
not effective until January 1, 1998. Provisions effective in 1997 did not
have a material effect on the Company's financial position or results of
operations. The Company does not expect adoption of this statement for
provisions effective in 1998 to have a material effect on its financial
position or results of operations.
Accounting for Internal Use Software
In March of 1998, the AICPA issued SOP 98-1, Accounting for internal use
software, which provides guidance for determining when internal use
software costs (acquired or internally developed) are expensed as incurred
or capitalized. This Statement is effective for 1999 financial statements
with early adoption permitted. The Company has not determined, at this
time, the impact on the financial statements of adopting this standard.
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 amounts reported in the financial statements
and accompanying notes. Actual results could differ from reported results
using those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments
and other debt issues with a maturity of 90 days or less when purchased.
Investments
Debt securities are classified as available for sale and carried at fair
value. These securities are written down (as realized capital losses) for
other than temporary declines in value. Unrealized capital gains and losses
related to available for sale investments, other than amounts allocable to
experience rated contractholders, are reflected in shareholder's equity,
net of related taxes.
F-8
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
Fair values for debt securities are based on quoted market prices or dealer
quotations. Where quoted market prices or dealer quotations are not
available, fair values are measured utilizing quoted market prices for
similar securities or by using discounted cash flow methods. Cost for
mortgage-backed securities is adjusted for unamortized premiums and
discounts, which are amortized using the interest method over the estimated
remaining term of the securities, adjusted for anticipated prepayments.
The Company engages in securities lending whereby certain securities from
its portfolio are loaned to other institutions for short periods of time.
Initial collateral, primarily cash, is required at a rate of 102% of the
market value of a loaned domestic security and 105% of the market value of
a loaned foreign security. The collateral is deposited by the borrower with
a lending agent, and retained and invested by the lending agent according
to the Company's guidelines to generate additional income. The market value
of the loaned securities is monitored on a daily basis with additional
collateral obtained or refunded as the market value of the loaned
securities fluctuates. At December 31, 1997 and 1996, the Company had no
securities out on loan.
Purchases and sales of debt securities are recorded on the trade date.
Short-term investments, consisting primarily of money market instruments
and other debt issues purchased with a maturity of 91 days to one year, are
considered available for sale and are carried at fair value, which
approximates amortized cost.
Deferred Policy Acquisition Costs
Certain costs of acquiring insurance business are deferred. These costs,
all of which vary with and are primarily related to the production of new
and renewal business, consist principally of commissions, certain expenses
of underwriting and issuing contracts and certain agency expenses. Such
costs are amortized in proportion to estimated gross profits and adjusted
to reflect actual gross profits and are amortized over a period of up to
twenty years. Deferred policy acquisition costs are written off to the
extent that it is determined that future policy premiums and investment
income or gross profits are not adequate to cover related losses and
expenses.
Reserves
Policyholders' funds left with the Company include reserves for deferred
annuity investment contracts and immediate annuities without life
contingent payouts. Reserves on such contracts are equal to cumulative
deposits less charges and withdrawals plus credited interest thereon (rates
range from 4.85% to 7.00% for all years presented), net of adjustments for
investment experience that the Company is entitled to reflect in future
credited interest. Reserves on contracts subject to experience rating
reflect the rights of contractholders, plan participants and the Company.
F-9
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
1. Summary of Significant Accounting Policies (Continued)
Charges Assessed Against Policyholders and Other Income
Charges assessed against policyholders' funds for surrender charges,
actuarial margin and other fees are recorded as revenue when earned. Other
amounts received for these contracts are reflected as deposits and are not
recorded as revenue. Other income includes maintenance and surrender fees.
Separate Accounts
Assets held under variable annuity contracts are segregated in Separate
Accounts and are invested, as designated by the contractholder, in shares
of mutual funds that are managed by Aeltus or other selected mutual funds
not managed by Aeltus.
Separate Accounts assets and liabilities are carried at fair value except
for those relating to a guaranteed interest option. Since the Company bears
the investment risk where the contract is held to maturity, the assets of
the Separate Account supporting the guaranteed interest option are carried
at an amortized cost of $90.8 million for 1997 (fair value of $91.5
million) and $82.5 million for 1996 (fair value of $82.9 million). Reserves
relating to the guaranteed interest option are maintained at fund value and
reflect interest credited at rates ranging from 4.1% to 8.0% for all years
presented.
Separate Accounts assets and liabilities are shown as separate captions in
the Balance Sheets. Deposits, investment income and net realized and
unrealized capital gains and losses of the Separate Accounts are not
reflected in the Statements of Income (with the exception of realized
capital gains and losses on the sale of assets supporting the guaranteed
interest option). The Statements of Cash Flows do not reflect investment
activity of the Separate Accounts.
Income Taxes
The Company is included in the consolidated federal income tax return of
Aetna. The Company is taxed at regular corporate rates after adjusting
income reported for financial statement purposes for certain items.
Deferred income tax expenses/benefits result from changes during the year
in cumulative temporary differences between the tax basis and book basis of
assets and liabilities.
F-10
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
2. Investments
Debt securities available for sale at December 31, 1997 were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
(thousands)
<S> <C> <C> <C> <C>
U.S. government and government $ 37,839.6 $1,066.0 $ 1.2 $ 38,904.4
agencies and authorities
U.S. corporate securities:
Financial 31,267.3 705.3 12.1 31,960.5
Healthcare & consumer products 6,509.7 170.8 20.0 6,660.5
Media & broadcast 993.6 119.2 - 1,112.8
Natural resources 5,122.7 49.7 - 5,172.4
Transportation & capital goods 5,334.6 134.1 - 5,468.7
Utilities 6,049.0 66.2 - 6,115.2
Other corporate securities 764.2 45.9 - 810.1
---------- -------- --------- ----------
Total U.S. corporate securities 56,041.1 1,291.2 32.1 57,300.2
Foreign securities:
Government 991.3 - 243.1 748.2
Other 12,190.3 153.7 809.2 11,534.8
---------- -------- --------- ----------
Total foreign securities 13,181.6 153.7 1,052.3 12,283.0
Residential mortgage-backed
securities:
Pass-throughs 1,152.1 - 3.0 1,149.1
Collateralized mortgage obligations 8,602.9 399.3 12.1 8,990.1
---------- -------- --------- ----------
Total residential mortgage-backed
securities 9,755.0 399.3 15.1 10,139.2
Commercial/multifamily mortgage-
backed securities 8,555.3 165.3 - 8,720.6
Other asset-backed securities 10,477.5 93.5 - 10,571.0
---------- -------- --------- ----------
Total Debt Securities $135,850.1 $3,169.0 $1,100.7 $137,918.4
========== ======== ========= ==========
</TABLE>
F-11
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
2. Investments (Continued)
Debt securities available for sale at December 31, 1996 were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
(thousands)
<S> <C> <C> <C> <C>
U.S. government and government
agencies and authorities $ 8,111.1 $140.0 $ 1.1 $ 8,250.0
U.S. corporate securities:
Financial 7,375.4 - 59.2 7,316.2
Healthcare & consumer products 2,506.2 - 4.1 2,502.1
Natural resources 1,250.0 0.8 - 1,250.8
---------- -------- --------- ----------
Total U.S. corporate securities 11,131.6 0.8 63.3 11,069.1
Foreign securities - Other 2,032.3 - 46.0 1,986.3
Commercial/multifamily mortgage-
backed securities 2,480.9 3.5 - 2,484.4
Other asset-backed securities 980.9 - 0.4 980.5
---------- -------- --------- ----------
Total Debt Securities $24,736.8 $144.3 $110.8 $24,770.3
========== ======== ========= ==========
</TABLE>
At December 31, 1997 and 1996 net unrealized appreciation of $2,068.3
thousand and $33.5 thousand respectively, on available for sale debt
securities included unrealized gains (losses) of $1,829.2 thousand and
($105.4) thousand, respectively, related to experience rated contracts,
which were not reflected in shareholder's equity but in policyholders'
funds left with the Company.
F-12
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
2. Investments (Continued)
The carrying and fair value of debt securities for the year ended December
31, 1997 are shown below by contractual maturity. Actual maturities may
differ from contractual maturities because securities may be restructured,
called or prepaid.
Amortized Fair
Cost Value
---- -----
(thousands)
Due to mature:
After one year through five years $ 55,170.9 $ 55,726.9
After five years through ten years 26,682.4 26,824.3
After ten years 25,209.0 25,936.4
Mortgage-backed securities 18,310.3 18,859.8
Other asset-backed securities 10,477.5 10,571.0
---------- ----------
Total $135,850.1 $137,918.4
========== ==========
At December 31, 1997 and 1996, debt securities carried at $5.0 million and
$4.7 million, respectively, were on deposit as required by various state
regulatory agencies.
The Company does not have any investments in a single issuer, other than
obligations of the U.S. government, with a carrying value in excess of 10%
of the Company's shareholder's equity at December 31, 1997.
F-13
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
3. Financial Instruments
Estimated Fair Value
The carrying values and estimated fair values of certain of the Company's
financial instruments at December 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
----- ----- ----- -----
(thousands) (thousands)
<S> <C> <C> <C> <C>
Liabilities:
Investment contract liabilities:
With a fixed maturity $ 279.4 $ 275.6 $ - $ -
Without a fixed maturity $145,346.5 $134,795.4 $ 64,445.4 $ 59,401.6
</TABLE>
Fair value estimates are made at a specific point in time, based on
available market information and judgments about the financial instrument,
such as estimates of timing and amount of future cash flows. Such estimates
do not reflect any premium or discount that could result from offering for
sale at one time the Company's entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization of
unrealized gains or losses. In many cases, the fair value estimates cannot
be substantiated by comparison to independent markets, nor can the
disclosed value be realized in immediate settlement of the instrument. In
evaluating the Company's management of interest rate, price and liquidity
risks, the fair values of all assets and liabilities should be taken into
consideration, not only those presented above.
The following valuation methods and assumptions were used by the Company in
estimating the fair value of the above financial instruments:
Investment contract liabilities (included in policyholders' funds left with
the Company):
With a fixed maturity: Fair value is estimated by discounting cash flows at
interest rates currently being offered by, or available to, the Company for
similar contracts.
Without a fixed maturity: Fair value is estimated as the amount payable to
the contractholder upon demand. However, the Company has the right under
such contracts to delay payment of withdrawals which may ultimately result
in paying an amount different than that determined to be payable.
Off-Balance-Sheet and Other Financial Instruments
The Company did not have transactions in off-balance-sheet instruments in
1997 or 1996.
F-14
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
4. Net Investment Income
Sources of net investment income were as follows:
1997 1996 1995
---- ---- ----
(thousands)
Debt securities $ 6,009.4 $ 547.6 $ 457.5
Cash equivalents 1,190.3 1,039.2 261.1
Other 3.2 2.4 2.4
--------- --------- -------
Gross investment income 7,202.9 1,589.2 721.0
Less investment expenses 119.7 32.3 -
--------- --------- -------
Net investment income $ 7,083.2 $ 1,556.9 $ 721.0
========= ========= =======
Net investment income includes amounts allocable to experience rated
contractholders of $6,997.2 thousand and $855.2 thousand for the years
ended December 31, 1997 and 1996, respectively. There were no such amounts
for the year ended December 31, 1995. Interest credited to contractholders
is included in current and future benefits.
5. Dividend Restrictions and Shareholder's Equity
The amount of dividends that may be paid to the shareholder in 1998 without
prior approval by the Insurance Commissioner of the State of Connecticut is
$4.1 million.
The Insurance Department of the State of Connecticut (the "Department")
recognizes as net income and shareholder's capital and surplus those
amounts determined in conformity with statutory accounting practices
prescribed or permitted by the Department, which differ in certain respects
from generally accepted accounting principles ("GAAP"). Statutory net
income (loss) was $408.2 thousand, ($7,874.4) thousand and $378.9 thousand
for the years ended December 31, 1997, 1996 and 1995, respectively.
Statutory capital and surplus was $43.4 million and $23.5 million as of
December 31, 1997 and 1996, respectively. The Company has entered into
support agreements with ALIAC under which ALIAC has agreed to cause the
Company to have sufficient capital to meet a certain capital and surplus
level.
As of December 31, 1997 the Company does not utilize any statutory
accounting practices which are not prescribed by state regulatory
authorities that, individually or in the aggregate, materially affect
statutory capital and surplus.
F-15
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
6. Capital Gains and Losses on Investment Operations
Realized capital gains or losses are the difference between the carrying
value and sale proceeds of specific investments sold.
Net realized capital gains (losses) on debt securities, as reflected in the
Statements of Income for the years ended December 31, 1997, 1996 and 1995,
were $101.6 thousand, ($11.2) thousand and $8.3 thousand, respectively.
Net realized capital gains of $211.0 thousand allocable to experience rated
contracts, were deducted from net realized capital gains and an offsetting
amount was reflected in policyholders' funds left with the Company in 1997.
Net unamortized gains were $206.6 thousand at December 31, 1997. There were
no such amounts for 1996 and 1995.
Proceeds from the sale of available-for-sale debt securities and the
related gross gains and losses were as follows:
1997 1996 1995
---- ---- ----
(thousands)
Proceeds on sales $16,576.8 $2,510.0 $3,000.0
Gross gains 104.7 12.7 8.3
Gross losses 3.1 23.9 -
Changes in shareholder's equity related to changes in accumulated other
comprehensive income (unrealized capital gains and losses on securities),
(excluding those related to experience rated contractholders in 1997 and
1996), were as follows:
1997 1996 1995
---- ---- ----
(thousands)
Debt securities $100.2 $(95.5) $371.8
Increase (decrease) in deferred income taxes
(See Note 7) 35.1 (33.4) 82.0
------ ------ ------
Net change in accumulated other
comprehensive income $ 65.1 $(62.1) $289.8
====== ====== ======
Net unrealized capital gains (losses) allocable to experience rated
contracts of $1,829.2 thousand and ($105.4) at December 31, 1997 and 1996,
respectively, are reflected on the Balance Sheets in policyholders' funds
left with the Company and are not included in shareholder's equity.
F-16
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
6. Capital Gains and Losses on Investment Operations (Continued)
Shareholder's equity included the following accumulated other comprehensive
income, which is net of amounts allocable to experience rated
contractholders in 1997 and 1996, at December 31:
1997 1996 1995
---- ---- ----
(thousands)
Debt securities
Gross unrealized gains $239.5 $140.0 $237.4
Gross unrealized losses (0.4) (1.1) (3.0)
------ ------ ------
239.1 138.9 234.4
Deferred federal income taxes (see Note 7) 83.7 48.6 82.0
------ ------ ------
Net unrealized capital gains $155.4 $ 90.3 $152.4
====== ====== ======
Changes in accumulated other comprehensive income related to changes in
unrealized gains (losses) on securities (excluding those related to
experience rated contractholders) were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(thousands)
<S> <C> <C> <C>
Unrealized holding gains (losses) arising during the
period (1) $ 404.1 $ (1.4) $ 280.8
Less: reclassification adjustment for gains and
other items included in net income (2) 339.0 60.7 (9.0)
------- ------- --------
Net unrealized gains (losses) on securities $ 65.1 $ (62.1) $ 289.8
======= ======= ========
</TABLE>
(1) Pretax unrealized holding gains (losses) arising during the period
were $621.7 thousand, ($2.2) thousand and $432 thousand for 1997,
1996 and 1995, respectively.
(2) Pretax reclassification adjustments for gains and other items
included in net income were $521.5 thousand, $93.3 thousand and
($13.8) thousand for 1997, 1996 and 1995, respectively.
F-17
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
7. Income Taxes
The Company is included in the consolidated federal income tax return of
Aetna and combined Connecticut state income tax return of Aetna. Aetna
allocates to each member an amount approximating the tax it would have
incurred were it not a member of the consolidated group, and credits the
member for the use of its tax saving attributes used in the consolidated
returns.
Income taxes for the years ended December 31, consist of:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(thousands)
<S> <C> <C> <C>
Current taxes (benefits):
Income taxes (benefits):
Federal $1,219.2 $ 98.8 $ 635.2
State 0.2 (58.4) 123.4
Net realized capital gains (losses) 109.4 (3.9) 2.9
-------- --------- -------
1,328.8 36.5 761.5
-------- --------- -------
Deferred tax benefits:
Federal (486.2) (759.9) (549.2)
Net realized capital losses (73.9) - -
-------- --------- -------
(560.1) (759.9) (549.2)
-------- --------- -------
Total $ 768.7 $ (723.4) $ 212.3
======== ========= =======
</TABLE>
Income taxes were different from the amount computed by applying the federal
income tax rate to income before income taxes for the following reasons:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(thousands)
<S> <C> <C> <C>
Income (loss) before income taxes and
cumulative effect adjustment $2,481.8 $(1,419.2) $380.2
Tax rate 35% 35% 35%
-------- --------- ------
Application of the tax rate 868.6 (496.7) 133.1
Tax effect of:
State income tax, net of federal benefit 0.1 (37.9) 80.2
Excludable dividends (129.5) (190.5) -
Adjustment to prior year tax provision 3.7 2.1 (1.0)
Other, net 25.8 ( .4) -
-------- --------- ------
Income taxes (benefits) $ 768.7 $ (723.4) $212.3
======== ========= ======
</TABLE>
F-18
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
7. Income Taxes (Continued)
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities at December 31 are presented below:
<TABLE>
<CAPTION>
1997 1996
---- ----
(thousands)
<S> <C> <C>
Deferred tax assets:
Policyholders' funds left with the Company $14,242.8 $6,932.6
Unrealized gains allocable to experience rated
contracts 640.2 -
Postretirement benefits other than pensions 21.8 41.7
Guaranty fund assessments 146.0 ( .7)
Pension 163.5 52.6
Other 78.2 9.9
--------- --------
Total gross assets 15,292.5 7,036.1
Deferred tax liabilities:
Deferred policy acquisition costs 12,425.2 5,697.5
Net unrealized capital gains 723.9 48.6
Other 4.2 0.3
--------- --------
Total gross liabilities 13,153.3 5,746.4
--------- --------
Net deferred tax asset $ 2,139.2 $1,289.7
========= ========
</TABLE>
Net unrealized capital gains and losses are presented in shareholder's
equity net of deferred taxes. Valuation allowances are provided when it is
not considered more likely than not that deferred tax assets will be
realized. As of December 31, 1997 and 1996, no valuation allowances were
required.
The Internal Revenue Service ("Service") has completed examinations of the
consolidated federal income tax returns of Aetna through 1990. Discussions
are being held with the Service with respect to proposed adjustments.
Management believes there are adequate defenses against, or sufficient
reserves to provide for, any such adjustments. The Service has commenced
its examinations for the years 1991 through 1994.
8. Benefit Plans
The Company utilizes the employees of Aetna and its affiliates (primarily
ALIAC). The benefit plan charges allocated to the Company in 1997, 1996 and
1995 were immaterial.
F-19
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
8. Benefit Plans (Continued)
As of December 31, 1996, Aetna transferred to the Company approximately
$84.0 thousand of accrued liabilities, primarily related to the allocation
of ALIAC pension and postretirement benefit plans that had been previously
recorded by Aetna. The after tax amount of this transfer (approximately
$55.0 thousand) is reported as a reduction in retained earnings. In 1997,
other changes in shareholder's equity includes an additional $328.3
thousand reduction reflecting revisions to the allocation of these accrued
liabilities.
9. Related Party Transactions
Substantially all of the administrative and support functions of the
Company are provided by Aetna and its affiliates. The financial statements
reflect allocated charges, at cost, for these services based upon measures
appropriate for the type and nature of service provided. Total charges
allocated to the Company, including rent, salaries and other administrative
expenses, were $7.3 million and $4.7 million for the years ended December
31, 1997 and 1996, respectively, (of which $4.5 million and $2.7 million,
respectively, were capitalized as deferred policy acquisition costs). Total
charges allocated to the Company for the year ended December 31, 1995 were
$.3 million.
The Company is compensated by the Separate Accounts for bearing mortality
and expense risks pertaining to variable annuity contracts. Under the
insurance contracts, the Separate Accounts pay the Company a daily fee
which, on an annual basis, is 1.40% of their average daily net assets. The
amount of compensation and fees received from the Separate Accounts,
included in charges assessed against policyholders, amounted to $5,565.4
thousand, $1,293.0 thousand and $129.6 thousand for the years ended
December 31, 1997, 1996 and 1995, respectively.
The Company received capital contributions of $20.0 million in cash from
ALIAC in both 1997 and 1996. The Company received no capital contributions
in 1995.
Since August 1996, Aeltus Investment Management, Inc. ("Aeltus"), a wholly
owned subsidiary of HOLDCO and an affiliate of the Company, has been acting
as adviser for the general account assets. The Company pays Aeltus a fee
which, on an annual basis, is .06% of the average daily net assets under
management. The amount of such fees for the years ended December 31, 1997
and 1996 amounted to $119.7 thousand and $32.4 thousand, respectively.
F-20
<PAGE>
AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Notes to Financial Statements (Continued)
10. Commitments and Contingent Liabilities
Commitments
At December 31, 1997 and 1996 the Company had no commitments or contingent
liabilities.
Litigation
The Company is not currently involved in litigation.
F-21
<PAGE>
Form No. SAI.80750-98 AICA Ed. May 1998
<PAGE>
VARIABLE ANNUITY ACCOUNT I
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account I:
- Statement of Assets and Liabilities as of December 31, 1997
- Statements of Operations and Changes in Net Assets for the
years ended December 31, 1997 and December 31, 1996
- Notes to Financial Statements
- Independent Auditors' Report
Financial Statements of Depositor:
- Independent Auditors' Report
- Statements of Income for the years ended December 31, 1997,
1996 and 1995
- Balance Sheets for the years ended December 31, 1997 and
1996
- Statements of Changes in Shareholder's Equity for the years
ended December 31, 1997, 1996 and 1995
- Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995
- Notes to Financial Statements
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Insurance
Company of America establishing Variable Annuity Account I(1)
(2) Not applicable
(3.1) Selling Agreement(1)
(3.2) Principal Underwriting Agreement(2)
(3.3) Amendment to Principal Underwriting Agreement(2)
(4.1) Variable Annuity Contract G-CDA-GP2 (4/94)
(4.2) Variable Annuity Contract I-CDA-GP2 (4/94)
(4.3) Certificate of Group Annuity Coverage GP2CERT (4/94)
(4.4) Group Variable, Fixed, or Combination Annuity Contract
(Nonparticipating) G-GP2 (5/96)
(4.5) Individual Variable, Fixed or Combination Annuity Contract
(Nonparticipating) I-GP2 (5/96)(3)
(4.6) Variable Annuity Contract G-GP2 (5/97)
(4.7) Certificate of Group Annuity Coverage GP2CERT (5/97)(3)
(4.8) Endorsement GP2QEND (4/94) to Contract G-CDA-GP2
(4.9) Endorsement GP2NHEND (4/94) to Contract G-CDA-GP2
<PAGE>
(4.10) Endorsement GP2IRA (5/97) to Contract G-GP2 (5/97) and
Certificate GP2CERT (5/97)
(4.11) Endorsement GP2QP (5/97)
(4.12) Endorsement GP2DC (5/97)
(4.13) Endorsement G-GP2TDA (5/97)
(4.14) Endorsement I-GP2QP (5/97)
(4.15) Endorsement I-GP2IRA (5/97)
(4.16) Endorsement I-GP2DC (5/97)
(4.17) Endorsement I-GP2TDA (5/97)
(4.18) Endorsement G-GP2QP (5/96)
(4.19) Endorsement G-GP2IRA (5/96)
(4.20) Endorsement G-G-2TDA (5/96)
(4.21) Endorsement G-GP2DC (5/96)
(4.22) Endorsement I-GP2QP (4/96)
(4.23) Endorsement I-GP2IRA (5/96)
(4.24) Endorsement I-GP2TDA (5/96)
(4.25) Endorsement I-GP2DC (5/96)
(4.26) Endorsement I-GP2END(8/95)
(4.27) EndorsementGP2END(8/95)
(4.28) Endorsement GP2CERTEND(8/95)
(5) Application for Aetna Growth Plus Group Variable, Fixed or
Combination Annuity Contract (Nonparticipating)(4)
(6) Certification of Incorporation and By-laws of Aetna Insurance
Company of America(1)
(7) Reinsurance Agreement(4)
(8) Fund Participation Agreement between Insurance Management
Series, Federated Advisors and Aetna Insurance Company of
America(5)
(9) Opinion and Consent of Counsel
(10) Consent of Independent Auditors
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data
(14) Not applicable
(15.1) Powers of Attorney(6)
(15.2) Authorization for Signatures(1)
1. Incorporated by reference to Registration Statement on Form N-4 (File No.
33-59749), as filed electronically on June 1, 1995 (Accession No.
0000950109-95-002138).
2. Incorporated by reference to Registration Statement on Form S-1 (File No.
333-22723), as filed electronically on March 4, 1997 (Accession No.
0000950146-97-000292).
<PAGE>
3. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-4 (File No. 33-80750), as filed electronically on April
23, 1997 (Accession No. 0000950146-97-00634).
4. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-80750), as filed electronically on August
15, 1995 (Accession No. 0000950109-95-003244).
5. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-59749), as filed electronically on April
16, 1997 (Accession No. 0000950146-97-000620).
6. Incorporated by reference to Post-Effective Amendment No. 7 to registration
Statement on Form N-4 (File No. 33-59749), as filed electronically on April
17, 1998 (Accession No. 0000950146-98-000654).
<PAGE>
Item 25. Directors and Officers of the Depositor
Name and Principal
Business Address* Positions and Offices with Depositor
- ------------------ ------------------------------------
Thomas J. McInerney Director and President
Deborah Koltenuk Vice President and Treasurer, Corporate
Controller
Shaun P. Mathews Director and Senior Vice President
Catherine H. Smith Director
Maria F. McKeon Corporate Secretary and Counsel
Alastair G. Longley-Cook Vice President and Corporate Actuary
*The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
- ----------------------------------------------------------------------------
Registrant
- ----------
Incorporated herein by reference to Item 26 of Post-Effective Amendment No.
9 to the Registration Statement on Form N-4 (File No. 333-01107), as filed
electronically on April 7, 1998 (Accession No. 0000950146-98-000564).
Item 27. Number of Contract Owners
- ----------------------------------
As of February 28, 1998, there were 13,988 individuals holding interests in
variable annuity contracts funded through Variable Annuity Account I.
Item 28. Indemnification
- ------------------------
Reference is hereby made to Section 33-771(f) of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and Section 33-776(4)
regarding indemnification of officers, employees and agents of Connecticut
corporations. These statutes provide in general that Connecticut corporations
incorporated prior to January 1, 1997 shall indemnify their officers, directors,
employees and agents against "liability" (defined as the obligation to pay a
judgment, settlement, penalty, fine, excise tax in the case of an employee
benefit plan or reasonable expenses incurred with respect to a proceeding). In
the case of a proceeding by or in the right of the corporation, indemnification
is limited to reasonable expenses incurred in connection with the proceeding
against the corporation to which the individual was named a party. The
corporation's obligation to provide such indemnification does not apply unless
(1) the individual has met the standard of conduct set forth in Section 33-771;
and (2) a determination is made (by
<PAGE>
majority vote of a quorum of the board of directors who were not parties to the
proceeding, or if a quorum cannot be obtained, by a committee of the board
selected as described in Section 33-775(b)(2); by special legal counsel selected
by the board of directors or members thereof as described in Section
33-775(b)(3); by shareholders) that the individual met the standard set forth in
Section 33-771; or (3) the court, upon application by the individual, determines
in view of all the circumstances that such person is reasonably entitled to be
indemnified. Also, unless limited by its Certificate of Incorporation, a
corporation must indemnify an individual who was wholly successful on the merits
or otherwise against reasonable expenses incurred by him in connection with a
proceeding to which he was a party because of his relationship as director,
officer, employee or agent of the corporation.
The statute does specifically authorize a corporation to procure indemnification
insurance on behalf of an individual who is or was a director, officer, employer
or agent of the corporation. Consistent with the statute, Aetna Inc. has
procured insurance from Lloyd's of London and several major United States excess
insurers for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor.
Item 29. Principal Underwriters
- -------------------------------
(a) In addition to serving as the principal underwriter for the Registrant,
Aetna Life Insurance and Annuity Company (Aetna) also acts as the principal
underwriter and investment adviser for Portfolio Partners, Inc., Aetna Variable
Encore Fund, Aetna Variable Fund, Aetna Generation Portfolios, Inc., Aetna
Income Shares, Aetna Balanced VP, Inc., (formerly Aetna Investment Advisers
Fund, Inc.), Aetna GET Fund and Aetna Variable Portfolios, Inc. (all management
investment companies registered under the Investment Company Act of 1940 (1940
Act)). Effective May 1, 1998, Aetna will no longer be the investment adviser
Aetna Variable Encore Fund, Aetna Variable Fund, Aetna Generation Portfolios,
Inc., Aetna Income Shares, Aetna Balanced VP, Inc. (formerly Aetna Investment
Advisers Fund, Inc.), Aetna GET Fund, and Aetna Variable Portfolios, Inc.
Additionally, Aetna also acts as the principal underwriter and depositor for
Variable Life Account B of Aetna, Variable Annuity Account B of Aetna, Variable
Annuity Account C of Aetna and Variable Annuity Account G of Aetna (separate
accounts of Aetna registered as unit investment trusts under the 1940 Act).
(b) Directors and Officers of the Underwriter
Name and Principal
Business Address* Positions and Offices with Underwriter
- ------------------ --------------------------------------
Thomas J. McInerney Director and President
Shaun P. Mathews Director and Senior Vice President
Catherine H. Smith Director, Chief Financial Officer and Senior
Vice President
<PAGE>
Name and Principal
Business Address* Positions and Offices with Underwriter
- ------------------ --------------------------------------
Deborah Koltenuk Vice President and Treasurer, Corporate
Controller
Frederick D. Kelsven Vice President and Chief Compliance Officer
Kirk P. Wickman Vice President, General Counsel and
Corporate Secretary
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
(c) Compensation as of December 31, 1997:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commissions Compensation*
- ----------- ---------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Aetna Insurance $272,793 $5,651,756
Company of
America
</TABLE>
* Compensation shown in column 5 includes deductions for mortality and expense
risk guarantees and contract charges assessed to cover costs incurred in the
sales and administration of the contracts issued under Variable Annuity
Account I.
Item 30. Location of Accounts and Records
- -----------------------------------------
All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the rules under it relating to the securities
described in and issued under this Registration Statement are located at the
home office of the Depositor as follows:
Aetna Insurance Company of America
151 Farmington Avenue
Hartford, Connecticut 06156
Item 31. Management Services
- ----------------------------
Not applicable
Item 32. Undertakings
- ---------------------
<PAGE>
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement on
Form N-4 as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than
sixteen months old for as long as payments under the variable annuity
contracts may be accepted;
(b) to include as part of any application to purchase a contract offered by
a prospectus which is part of this registration statement on Form N-4,
a space that an applicant can check to request a Statement of
Additional Information; and
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
(d) The Company hereby represents that it is relying upon and complies with
the provisions of Paragraphs (1) through (4) of the SEC Staff's
No-Action Letter dated November 22, 1988 with respect to language
covering withdrawal restrictions applicable to plans established
pursuant to Section 403(b) of the Internal Revenue Code, See American
Counsel of Life Insurance; SEC No-Action Letter, [1989 Transfer Binder]
Fed. SEC. L.Rep. (CCH) 78,904 at 78,523 (November 22, 1988).
(e) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of 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.
(f) Aetna Insurance Company of America represents that the fees and charges
deducted under the contracts covered by this registration statement, in
the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by the
insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Variable Annuity Account I of Aetna Insurance Company of
America, certifies that it meets the requirements of Securities Act Rule 485(b)
for effectiveness of this Post-Effective Amendment to its Registration Statement
on Form N-4 (File No. 33-80750) and has duly caused this Post-Effective
Amendment to be signed on its behalf in the City of Hartford, and State of
Connecticut, on the ____ day of April, 1998.
VARIABLE ANNUITY ACCOUNT I OF AETNA
INSURANCE COMPANY OF AMERICA
(Registrant)
By: AETNA INSURANCE COMPANY OF AMERICA
(Depositor)
By /s/ Thomas J. McInerney*
-----------------------------------
Thomas J. McInerney
President
As required by the Securities Act of 1933, this Post-Effective Amendment No.
9 to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Thomas J. McInerney* Director and President )
- ------------------------
Thomas J. McInerney (principal executive officer) )
)
/s/ Deborah Koltenuk* Vice President and Treasurer, Corporate Controller ) April
- ------------------------
Deborah Koltenuk (principal accounting and financial officer) ) ___, 1998
)
/s/ Shaun P. Mathews* Director )
- ------------------------
Shaun P. Mathews )
)
/s/ Catherine H. Smith* Director )
- ------------------------
Catherine H. Smith )
</TABLE>
By: ---------------------------------------------
Julie E. Rockmore
*Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT I
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
<S> <C> <C>
99-B.1 Resolution of the Board of Directors of Aetna Insurance *
Company of America establishing Variable Annuity Account I
99-B.3.1 Selling Agreement *
99-B.3.2 Principal Underwriting Agreement *
99-B.3.3 Amendment to Principal Underwriting Agreement *
99-B.4.1 Variable Annuity Contract G-CDA-GP2 (4/94) --------
99-B.4.2 Variable Annuity Contract I-CDA-GP2 (4/94) --------
99-B.4.3 Certificate of Group Annuity Coverage GP2CERT (4/94) --------
99-B.4.4 Group Variable, Fixed, or Combination Annuity Contract
(Nonparticipating) G-GP2 (5/96) --------
99-B.4.5 Individual Variable, Fixed or Combination Annuity Contract *
(Nonparticipating) I-GP2 (5/96)
99-B.4.6 Variable Annuity Contract G-GP2 (5/97) --------
99-B.4.7 Certificate of Group Annuity Coverage GP2CERT (5/97) *
99-B.4.8 Endorsement GP2QEND (4/94) to Contract G-CDA-GP2 --------
99-B.4.9 Endorsement GP2NHEND (4/94) to Contract G-CDA-GP2 --------
99-B.4.10 Endorsement GP2IRA (5/97) to Contract G-GP2 (5/97) and
Certificate GP2CERT (5/97) --------
</TABLE>
*Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
<S> <C> <C>
99-B.4.11 Endorsement GP2QP (5/97) --------
99-B.4.12 Endorsement GP2DC (5/97) --------
99-B.4.13 Endorsement G-GP2TDA (5/97) --------
99-B.4.14 Endorsement I-GP2QP (5/97) --------
99-B.4.15 Endorsement I-GP2IRA (5/97) --------
99-B.4.16 Endorsement I-GP2DC (5/97) --------
99-B.4.17 Endorsement I-GP2TDA (5/97) --------
99-B.4.18 Endorsement G-GP2QP (5/96) --------
99-B.4.19 Endorsement G-GP2IRA (5/96) --------
99-B.4.20 Endorsement G-G-2TDA (5/96) --------
99-B.4.21 Endorsement G-GP2DC (5/96) --------
99-B.4.22 Endorsement I-GP2QP (4/96) --------
99-B.4.23 Endorsement I-GP2IRA (5/96) --------
99-B.4.24 Endorsement I-GP2TDA (5/96) --------
99-B.4.25 Endorsement I-GP2DC (5/96) --------
99-B.4.26 Endorsement I-GP2END(8/95) --------
99-B.4.27 EndorsementGP2END(8/95) --------
</TABLE>
*Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
<S> <C> <C>
99-B.4.28 Endorsement GP2CERTEND(8/95) --------
99-B.5 Application for Aetna Growth Plus Group Variable, Fixed or *
Combination Annuity Contract (Nonparticipating)
99-B.6 Certification of Incorporation and By-laws of Aetna Insurance Company of *
America
99-B.7 Reinsurance Agreement *
99-B.8 Fund Participation Agreement between Insurance Management *
Series, Federated Advisors and Aetna Insurance Company of America
99-B.9 Opinion and Consent of Counsel --------
99-B.10 Consent of Independent Auditors --------
99-B.13 Schedule for Computation of Performance Data --------
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
</TABLE>
*Incorporated by reference
--------------------------------------------------------
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
Group Variable, Fixed or Combination Annuity Contract (Nonparticipating)
Aetna Insurance Company of America (We or Us) agrees to pay benefits according
to the terms and conditions set forth in this Contract.
Specifications
- --------------------------------------------------------------------------------
Plan
- --------------------------------------------------------------------------------
Type of Plan
- --------------------------------------------------------------------------------
Contract Holder
- --------------------------------------------------------------------------------
Contact Number
- --------------------------------------------------------------------------------
Effective Date
This Contract is delivered in and
is subject to the laws and regulations of that state.
THE VARIABLE FEATURES OF THE CONTRACT ARE DESCRIBED IN SECTIONS 6 AND 12.
Right to Cancel
- --------------------------------------------------------------------------------
The Group Contract Holder may cancel this Contract within ten (10) days of
receiving it by returning it to Us at the address above or to the person from
whom it was purchased. Within seven (7) days of the cancellation request, We
will return the Certificate Holder's Purchase Payment(s) made plus any increase,
or minus any decrease, on the amount allocated to the Separate Account.
Signed at the Home Office on the Effective Date.
/s/ Dan Kearney /s/ Susan E. Schechter
President Secretary
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
G-CDA-GP2(4/94)
<PAGE>
Table of Contents
Page
Right to Cancel............................................................1
Contract Schedule..........................................................4
Separate Account......................................................4
AICA Guaranteed Account (AG Account)..................................4
Separate Account and AG Account.......................................4
Fixed Annuity.........................................................6
Section 1. Definitions....................................................7
Section 2. General Provisions.............................................9
The Contract..........................................................9
Certificates..........................................................9
Nonparticipating Contract.............................................9
Misstatements and Adjustments.........................................9
Reports...............................................................9
Premium Taxes.........................................................9
Protection of Proceeds................................................9
Evidence of Survival..................................................9
Proof of Age..........................................................9
Change of Contract....................................................9
Section 3. Ownership.....................................................10
Group Contract Holder................................................10
Certificate Holder Rights............................................10
Transfer of Ownership................................................10
Section 4. Beneficiary Provisions........................................11
Beneficiary..........................................................11
Change of Beneficiary................................................11
Death of Beneficiary.................................................11
Section 5. Purchase Payments.............................................11
Purchase Payments....................................................11
Allocation of Purchase Payments......................................11
Section 6. Separate Account..............................................12
General..............................................................12
Investment Allocations to the Separate Account.......................12
Valuation of Assets..................................................12
Accumulation Unit....................................................12
Net Return Factor for Each Valuation Period..........................12
Administrative Charge................................................13
Mortality Risk Charge................................................13
Expense Risk Charge..................................................13
Mortality and Expense Guarantee......................................13
2
<PAGE>
Section 7. AG Account....................................................13
AG Account Guaranteed Interest Rate..................................13
Deposit Period.......................................................13
Guaranteed Term......................................................13
Guaranteed Term(s) Groups............................................13
Maturity Date........................................................14
Allocation of Net Purchase Payments to the AG Account................14
AG Account Guaranteed Term Maturity Date and Maturity Value..........14
Transfers from the AG Account........................................14
Withdrawals from the AG Account......................................14
Reinvestment.........................................................14
AG Account Market Value Adjustment (Factor)..........................15
Section 8. Certificate Holder's Account Value; Transfers and
Withdrawals During the Accumulation Period....................15
Certificate Holder's Account Value...................................15
Transfers During the Accumulation Period.............................16
Withdrawals During the Accumulation Period...........................16
Deferred Sales Charge................................................16
Waiver of Deferred Sales Charge......................................16
Payment of Adjusted Certificate Holder Account Value.................17
Systematic Withdrawal Option (SWO)...................................17
Section 9. Maintenance Charge............................................18
Maintenance Charge...................................................18
Section 10. Proceeds Payable on Death....................................18
Death of the Certificate Holder Prior to the Annuity Date............18
Death Benefit Amount Prior to the Annuity Date.......................18
Death Benefit Payment Methods........................................19
Death of Certificate Holder On or After the Annuity Date.............20
Death of the Annuitant...............................................20
Section 11. Delay of Payments............................................20
Delay of Payments....................................................20
Section 12. Annuity Provisions...........................................20
Designation of Annuitant.............................................21
Terms of Annuity Options.............................................21
Annuity Unit.........................................................22
Annuity Unit Value...................................................23
Annuity Net Return Factor............................................23
Annuity Options......................................................23
3
<PAGE>
Contract Schedule
Separate Account
- -------------------------------------------------------------------------------
Separate Account: Variable Account I
Charges to the Separate A daily charge is deducted from the assets of the
Account: Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown
below:
(a) During the Accumulation Period:
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Separate Account Charges During
Accumulation Period 1.40%
(b) During the Annuity Period
Administrative Charge Not To Exceed 0.25%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Maximum Separate Account Charges
During Annuity Period 1.50%
AICA Guaranteed Account (AG Account)
- -------------------------------------------------------------------------------
Minimum Guaranteed 3.0%
Interest Rate (effective
annual rate of return):
Separate Account and AG Account
- -------------------------------------------------------------------------------
Minimum Initial Purchase
Payment: $1,500
Minimum Subsequent $500 or $50 per month if paid by an automatic
Purchase Payment: check plan
Maximum Subsequent $500,000 without Home Office approval
Purchase Payment:
4
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Transfers: We allow an unlimited number of transfers during the
Accumulation Period. Twelve (12) transfers in any
calendar year are free. Thereafter, We reserve the
right to charge a transfer charge up to $10 for each
subsequent transfer.
Maintenance Charge: The annual maintenance charge is $30. If the
Certificate Holder's Account is $50,000 or more on
the date the maintenance charge is to be deducted,
the maintenance charge is $0.
Deferred Sales Charge: For each withdrawal from a Certificate Holder's
Account, a deferred sales charge for each Net
Purchase Payment will be determined as follows:
Years from Receipt of Deferred
Net Purchase Payment Sales Charge
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
6-7 1%
7+ 0%
Waiver of Deferred Sales Section 8.05 provides for the following:
Charge:
(c) At least 12 months after the date of the first
Purchase Payment in an amount equal to or less
than 15% of the Certificate Holder's Account
Value.
(d) For a full withdrawal where the Certificate
Holder's Account Value does not exceed $2,500
and no withdrawals have been taken from the
Certificate Holder's Account within the prior 12
months.
Systematic Withdrawal (a) Specified Payment - Maximum Percentage: 10%
Option:
(b) Specified Period - Minimum Period: 10 years
(c) Specified Percentage - Maximum Percentage: 10%
Death Benefit Factor: 4%
Death Benefit Maximum There is no maximum death benefit amount.
Amount:
Death Benefit Maximum Age: 85 years
5
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Fund for Allocation of Federated Prime Money Fund II
Excess Guaranteed
Death Benefit Value:
Latest Annuity Date: The Certificate Holder's 90th birthday.
Fixed Annuity
- -------------------------------------------------------------------------------
Minimum Guaranteed 3.0%
Interest Rate
(effective annual rate
of return):
6
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Section 1. Definitions
- -------------------------------------------------------------------------------
1.01 Accumulation Period - The period during which one or more Net
Purchase Payments applied to a Certificate Holder's Account
accumulate to provide future Annuity payments.
1.02 Accumulation Unit - A measure of the net investment results for each
variable investment option during the Accumulation Period. The
Accumulation Units for the applicable Funds are used to calculate the
portion of a Certificate Holder's Account Value attributable to a
Separate Account during the Accumulation Period.
1.03 Adjusted Certificate Holder Account Value - The Certificate Holder's
Account Value, plus or minus any aggregate AG Account Market Value
Adjustment.
1.04 Annuitant - The natural person on whose life an Annuity payment is
based.
1.05 Annuity - A series of payments We make for life, a definite period or
a combination of the two.
1.06 Annuity Date - The date on which Annuity payments commence.
1.07 Annuity Options - Annuity payment methods available during the
Annuity Period.
1.08 Annuity Period - The period of time during which Annuity payments are
made.
1.09 Annuity Unit - A measure of the net investment results for each
variable investment option during the Annuity Period. Annuity Units
are used to calculate the amount of each variable Annuity payment.
1.10 Beneficiary - The person(s) entitled to receive any death benefit
under the Certificate Holder's Account. Upon the death of a joint
Certificate Holder, the surviving joint Certificate Holder, if any,
is treated as the Beneficiary. Any other Beneficiary designation on
record with Us at the time of death is treated as a contingent
Beneficiary.
1.11 Certificate - The document issued to a Certificate Holder to evidence
a Certificate Holder's Account established under the group Contract.
1.12 Certificate Holder - A person who has established a Certificate
Holder's Account under a group Contract. We reserve the right to
limit ownership to natural persons. If more than one Certificate
Holder owns an Account, each Certificate Holder shall be a joint
Certificate Holder. Any joint Certificate Holder must be the spouse
of the other joint Certificate Holder. Joint Certificate Holders have
joint ownership rights and both must authorize any exercising of
those ownership rights unless otherwise allowed by Us.
1.13 Certificate Holder's Account - A record We establish for each
Certificate Holder to maintain values under a group Contract.
1.14 Certificate Holder's Account Value - The dollar value as of any
Valuation Period of all amounts accumulated in a Certificate Holder's
Account.
1.15 Contract - This agreement between the Group Contract Holder and Us.
7
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1.16 Effective Date - The date a Certificate is issued to a Certificate
Holder.
1.17 Fund - One of the variable investment options which may be selected
by a Certificate Holder.
1.18 General Account - The General Account is made up of all of our
general assets other than those allocated to the separate accounts.
1.19 AICA Guaranteed Account (AG Account) - An investment option where We
guarantee specified rate(s) of interest for specified periods of
time. AG Account is a separate account established by Us in
accordance with the provisions of the Connecticut General Statutes
Section 38a-433. Certificate Holders do not participate in the
investment gain or loss from the assets held in the AG Account.
Assets in the AG Account may be charged with liabilities arising out
of any other business We may conduct.
1.20 Group Contract Holder - The entity to which a group Contract is
issued.
1.21 Home Office - Our headquarters, located at 151 Farmington Avenue,
Hartford, CT 06156.
1.22 Market Value Adjustment - An adjustment to any withdrawal made from
the AG Account before the end of a guaranteed term as stated in
Section 7.11.
1.23 Net Purchase Payment - The Purchase Payment less premium taxes, if
applicable.
1.24 Purchase Payment - The gross payment accepted by Us and allocated to
the Certificate Holder's Account. We reserve the right to refuse to
accept any Purchase Payment at any time for any reason.
1.25 Separate Account - A separate account that buys and holds shares of
the Fund(s). Income, gains or losses, realized or unrealized, are
credited or charged to the Separate Account without regard to Our
other income, gains or losses. We own the assets held in the Separate
Account and are not a trustee as to such amounts. The Separate
Account generally is not guaranteed and is held at market value. The
name of the Separate Account is shown on the Contract Schedule. The
assets of the Separate Account, to the extent of reserves and other
Contract liabilities of the Separate Account, will not be charged
with Our other liabilities.
1.26 Valuation Period - The period of time for which a Fund determines its
net asset value, usually from 4:15 p.m. Eastern time each day the New
York Stock Exchange is open until 4:15 p.m. the next such business
day, or such other day that one or more of the Funds determines its
net asset value. The assets of the Separate Account are not
chargeable with the liabilities arising out of any other business We
may conduct.
1.27 Variable Annuity Contract - An Annuity Contract providing for the
accumulation of value and/or for Annuity payments which vary in
amount based on investment results.
8
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Section 2. General Provisions
- -------------------------------------------------------------------------------
2.01 The Contract - The entire Contract consists of this Contract and any
attached applications or endorsements.
2.02 Certificates - A Certificate is issued to each Certificate Holder
whose Purchase Payment(s) is accepted by Us. The Certificate
evidences a Certificate Holder's Account established under the
Contract. Certificates are not part of the Contract.
2.03 Nonparticipating Contract - Neither the Group Contract Holder,
Certificate Holder nor any Beneficiary have a right to share in our
earnings.
2.04 Misstatements and Adjustments - If We learn that the age of any
Annuitant or second Annuitant is misstated, the correct age will be
used to adjust payments. We reserve the right to request
reimbursement or adjust future payments for any amount overpaid. We
will pay the amount of any underpayment.
2.05 Reports - We furnish each Certificate Holder with a report showing
the Certificate Holder's Account Value at least once each calendar
year. We also furnish an annual report of the Separate Account.
2.06 Premium Taxes - Any premium taxes paid to any governmental entity are
charged against Purchase Payments or a Certificate Holder's Account.
We may, at our sole discretion, pay premium taxes when due and deduct
that amount from the Certificate Holder's Account at a later date.
Payment at an earlier date does not waive any right We may have to
deduct amounts at a later date.
2.07 Protection of Proceeds - To the extent permitted by law, all payments
under this Contract to a Certificate Holder or Beneficiary shall be
free from legal process and the claim of any creditor.
2.08 Evidence of Survival - The Company may require satisfactory evidence
of the continued survival of any person(s) on whose life Annuity
payments are based.
2.09 Proof of Age - The Company may require evidence of age of any
Annuitant under Annuity Options 2 and 3 and of the designated second
Annuitant under Annuity Option 3.
2.10 Change of Contract - Only our authorized officers may change the
terms of this Contract. We will notify the Group Contract Holder in
writing at least 30 days before the effective date of any change. Any
change will not affect the amount or terms of any Annuity which
begins before the change.
We may make any change that affects the AG Account Market Value
Adjustment with at least thirty (30) days' advance written notice to
the Group Contract Holder and the Certificate Holder. Any such change
shall become effective for any new guaranteed term and will apply to
all present and future Certificate Holders' Accounts.
We reserve the right to change the terms of the Systematic Withdrawal
Option for future elections and discontinue the availability of this
option.
9
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Any change to any of the following provisions under this Contract
will not apply to Certificate Holder's Accounts in existence before
the effective date of the change:
(a) Net Purchase Payment (1.23)
(b) AG Account Guaranteed Interest Rate (7.01)
(c) Net Return Factor (6.05)
(d) Certificate Holder's Account Value (1.14)
(e) Deferred Sales Charge (8.04)
(f) Annuity Unit Value (12.04)
(g) Annuity Options (12.06)
(h) Fixed Annuity Interest Rates (12.01)
(i) Transfers (8.02).
Any change that affects the Annuity Option and the tables for the
Annuity Options may be made:
(a) No earlier than twelve (12) months after the Effective Date; and
(b) No earlier than twelve (12) months after the effective date of
any prior change.
Any Certificate Holder's Account established on or after the
effective date of any change will be subject to the change. If the
Group Contract Holder does not agree to any change under this
provision, We reserve the right to not allow any new Certificate
Holder's Accounts to be established under this Contract. This
Contract may also be changed as deemed necessary by Us to comply with
federal or state law.
Section 3. Ownership
- -------------------------------------------------------------------------------
3.01 Group Contract Holder - The Group Contract Holder has title to the
Contract. The Contract and any amounts accumulated thereunder are not
subject to the claims of the Group Contract Holder nor any of its
creditors.
3.02 Certificate Holder Rights - The Certificate Holder has all interest
and right to amounts held in his or her Certificate Holder's Account.
The Certificate Holder and any joint Certificate Holder are named on
the Specifications page. The Certificate Holder and any joint
Certificate Holder may exercise all the rights under the Certificate
Holder's Account, subject to the rights of:
(a) Any assignee under an assignment filed at our Home Office; and
(b) Any irrevocably named Beneficiary.
Upon the death of a Certificate Holder prior to the Annuity Date, a
spousal Beneficiary may elect to continue the Certificate Holder's
Account in his or her own name and retain all ownership rights and
privileges or take distribution of the death benefit as defined in
Section 10.
3.03 Transfer of Ownership - The Group Contract Holder may transfer
ownership of this Contract. A written request, dated and signed, must
be filed at our Home Office.
Any transfer of ownership terminates the interest of any existing
Group Contract Holder. It does not change the rights of any
Certificate Holder.
10
<PAGE>
A Certificate Holder may transfer all of his or her rights under the
Contract. A written request, dated and signed by the Certificate
Holder and any joint Certificate Holder, must be filed at our Home
Office. After the transfer is recorded, it will take effect as of the
date the request was signed. Any such transfer terminates the
interest of any existing Certificate Holder. It does not change the
Beneficiary, nor transfer the Beneficiary's interest. A transfer will
not affect any payments We may make or actions We may take before
such transfer has been recorded at our Home Office.
Section 4. Beneficiary Provisions
- -------------------------------------------------------------------------------
4.01 Beneficiary - The Certificate Holder may name a Beneficiary and a
contingent Beneficiary. At the death of the Certificate Holder prior
to the Annuity Date, the Beneficiary(ies) named in our records will
receive a death benefit as stated in Section 10. Upon the death of
either joint Certificate Holder prior to the Annuity Date, the
surviving joint Certificate Holder, if any, will be treated as the
designated Beneficiary and any other Beneficiary designation on
record with Us at the time of death is treated as a contingent
Beneficiary.
4.02 Change of Beneficiary - The Certificate Holder may change the
Beneficiary. A written request, dated and signed by the Certificate
Holder, must be filed at our Home Office. If there are joint
Certificate Holders, both must sign the request. After the change is
recorded, it will take effect as of the date the request was signed.
If the request reaches our Home Office and is recorded after the
Certificate Holder dies, but before any payment is made, the change
is valid.
4.03 Death of Beneficiary - If all of the Beneficiaries and contingent
Beneficiaries die prior to the Certificate Holder's death, We pay the
death benefit in one sum to the Certificate Holder's estate.
Section 5. Purchase Payments
- -------------------------------------------------------------------------------
5.01 Purchase Payments - Subject to the maximum and minimum shown on the
Contract Schedule, the Certificate Holder may determine the amount
and frequency of Purchase Payments. We reserve the right not to
accept any Purchase Payment. We will declare from time to time the
acceptability of additional Purchase Payments.
5.02 Allocation of Purchase Payments - The Certificate Holder may elect to
have each Net Purchase Payment accumulate:
(a) On a variable basis invested in shares of one or more Funds in
which the Separate Account invests;
(b) For guaranteed terms offered in the current deposit period(s)
under the AG Account; or
(c) In a combination of any of the available investment options.
Net Purchase Payments must be allocated in whole percentages. For
subsequent Purchase Payments, if no allocation instructions are
received with the Purchase Payment, the allocation will be as
indicated in the most recent directive from the Certificate Holder.
If the same guaranteed term(s) are not available, the next shortest
will be used. If no shorter guaranteed term is available, the next
longer guaranteed term will be used.
11
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Section 6. Separate Account
- -------------------------------------------------------------------------------
6.01 General - The assets of the Separate Account, equal to the reserves
and other Contract liabilities that depend on the investment
performance of the Separate Account are not chargeable with
liabilities arising out of any other business We may conduct. Income,
gains or losses of the Separate Account, realized or unrealized, are
credited to or charged against the assets of the Separate Account
without regard to Our other income, gains or losses.
6.02 Investment Allocations to the Separate Account - The assets of the
Separate Account are segregated by Fund. If the shares of any Fund
are no longer available for investment by the Separate Account or if
in our judgment, further investment in such shares should become
inappropriate in view of the purpose of the Contract, We may cease to
make such Fund shares available for investment under the Contract
prospectively, or We may substitute shares of another Fund for shares
already acquired. We may also, from time to time, add additional
Funds. Any elimination, substitution or addition of Funds will be
done in accordance with applicable state and federal securities laws.
We reserve the right to substitute shares of another Fund for shares
already acquired without a proxy vote.
6.03 Valuation of Assets - The shares of the Funds will be valued at their
net asset value at the end of each Valuation Period.
6.04 Accumulation Unit - A Net Purchase Payment that is allocated to one
or more Funds is credited to the Certificate Holder's Account as
Accumulation Units. The number of Accumulation Units credited is
determined by dividing the applicable portion of the Net Purchase
Payment by the Accumulation Unit value for the appropriate Fund. The
Accumulation Unit value used is that which is computed for the next
Valuation Period after which the Purchase Payment is received at our
Home Office. Accumulation Units attributable to the initial Purchase
Payments will be credited within two business days of acceptance.
Accumulation Unit values may increase or decrease from Valuation
Period to Valuation Period.
6.05 Net Return Factor for Each Valuation Period - The value of an
Accumulation Unit for any Valuation Period is calculated by
multiplying the Accumulation Unit value for the immediately preceding
Valuation Period by the net return factor of the appropriate Fund for
the current period.
The net return factor for each Fund is equal to 1.0000000 plus the
net return rate.
The net return rate equals:
(a) The value of the shares of the Fund held by the Separate Account
at the end of a Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate Account
at the start of the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) The total value of the Funds(s) Accumulation Units and Fund(s)
Annuity Units of the Separate Account at the start of the
Valuation Period; minus
(e) A daily actuarial charge as shown on the Contract Schedule for
Annuity mortality and expense risks and profit and a daily
administrative charge.
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The net return rate may be more or less than zero (0) percent.
The value of a share of the Fund is equal to the net assets of the
Fund divided by the number of shares outstanding.
6.06 Administrative Charge - We deduct an administrative charge equal, on
an annual basis, to the amount shown on the Contract Schedule.
6.07 Mortality Risk Charge - We deduct a mortality risk charge equal, on
an annual basis, to the amount shown on the Contract Schedule.
6.08 Expense Risk Charge - We deduct an expense risk charge equal, on an
annual basis, to the amount shown on the Contract Schedule.
6.09 Mortality and Expense Guarantee - We guarantee that the dollar amount
of each Annuity payment after the first will not be affected by
variations in mortality or expense experience.
Section 7. AG Account
- -------------------------------------------------------------------------------
7.01 AG Account Guaranteed Interest Rate - All amounts allocated to the AG
Account earn a rate of interest that is guaranteed for a specified
period of time. The rate will be credited daily and will never be
less than the minimum guaranteed interest rate shown on the Contract
Schedule. We determine the rate and it is not based on investment
experience.
For guaranteed terms of one year or less, one guaranteed interest
rate is credited for the full guaranteed term. For longer guaranteed
terms, an initial guaranteed interest rate is credited from the date
of deposit to the end of a specified period within the guaranteed
term. There may be different guaranteed interest rate(s) declared for
subsequent specified time intervals throughout the guaranteed term.
7.02 Deposit Period - A calendar week, a calendar month, a calendar
quarter, or any other period of time We specify during which Net
Purchase Payment(s), transfers and reinvestments are accepted into
the AG Account for one or more guaranteed terms. We reserve the right
to extend the deposit period.
7.03 Guaranteed Term - The period of time for which AG Account guaranteed
interest rates are guaranteed on Net Purchase Payments. Transfers and
reinvestments are made into a current deposit period for the AG
Account. Such period begins on the day following the close of the
deposit period and ends on the designated Maturity Date. Guaranteed
terms, if any, are offered at our discretion for various lengths of
time ranging up to and including ten years.
During a deposit period, We may make available any number of
guaranteed terms. The Certificate Holder may allocate Net Purchase
Payments and transfers into any or all of the available guaranteed
terms.
7.04 Guaranteed Term(s) Groups - All AG Account guaranteed term(s) with
the same length of time from the close of the deposit period until
the designated Maturity Date.
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7.05 Maturity Date - The last day of a guaranteed term.
7.06 Allocation of Net Purchase Payments to the AG Account - When the
Certificate Holder wishes to allocate all or any portion of a Net
Purchase Payment to the Guaranteed Account, he or she must tell Us
the percentage to apply to one or more of the AG Account guaranteed
term(s) available during the current deposit period. If no allocation
instructions are received, a Net Purchase Payment is allocated as
indicated in the most recent directive from the Certificate Holder.
If the same guaranteed term is not available for any amount allocated
to the AG Account, We will allocate the amount to the next shortest
guaranteed term available. If no shorter guaranteed term is
available, We will allocate it to the next longest guaranteed term.
7.07 AG Account Guaranteed Term Maturity Date and Maturity Value - On the
maturity date, the value of the total of all amounts allocated to
that guaranteed term is called the maturity value.
When Certificate Holders have assets in the AG Account, at least
eighteen (18) days before a maturity date, We notify them of the:
(a) Projected maturity value; and
(b) Guaranteed terms and the applicable guaranteed interest rates
available during the current deposit period.
When no allocation instructions are received and the assets in a
guaranteed term have been reinvested by Us in another guaranteed term
on the maturity date, the Certificate Holder may transfer or
withdraw, during the month following the maturity date, the
reinvested amount with interest earned (as of the date the request is
received at our Home Office) without incurring a Market Value
Adjustment. This transaction is allowed only once for each maturity
date, regardless of whether the transfer or withdrawal is partial or
full.
7.08 Transfers from the AG Account - A Certificate Holder may transfer any
portion, or all, of an amount in the AG Account to one or more of the
Funds or to another available guaranteed term. The amount withdrawn
for any reason before the maturity date is subject to a Market Value
Adjustment.
7.09 Withdrawals from the AG Account - When the Certificate Holder
requests a withdrawal from the AG Account, if instructions are not
provided by the Certificate Holder, amounts are withdrawn on a pro
rata basis from the guaranteed term(s) groups in which the
Certificate Holder's Account is currently invested. Within a
guaranteed term group, the amount to be withdrawn will be withdrawn
first from the oldest deposit period. Except on the maturity date,
withdrawals from the AG Account will be subject to a Market Value
Adjustment.
7.10 Reinvestment - We will mail a notice to the Certificate Holder before
a guaranteed term's maturity date. This notice will contain the
guaranteed terms available during the current deposit periods with
their guaranteed interest rate(s) and projected maturity value. If no
specific direction is given by the Certificate Holder prior to the
maturity date, each maturity value will be reinvested in the current
deposit period for a guaranteed term of the same duration. If a
guaranteed term of the same duration is unavailable, each matured
term value will automatically be reinvested in the current deposit
period for the next shortest guaranteed term available. If no shorter
guaranteed term is available, the next longer guaranteed term will be
used. We will mail a confirmation statement to
14
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the Certificate Holder after the maturity date. This notice will
state the guaranteed term and guaranteed interest rate(s) which will
apply to the reinvested matured term value.
7.11 AG Account Market Value Adjustment (Factor) - The Market Value
Adjustment factor (MVA factor) reflects any change in interest rates
from the time assets are allocated to the AG Account to the time they
are transferred or withdrawn. An MVA factor is applied to any amount
withdrawn or transferred from the AG Account before the end of a
guaranteed term, including amounts paid in a lump sum death benefit
or applied to an Annuity Option.
The amount withdrawn from the AG Account is multiplied by the MVA
factor which is calculated as follows:
x
---
365
(1 + i)
------------------
x
---
365
(1 + j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days remaining, (computed from Wednesday of the
week of withdrawal) in the guaranteed Term.
Determination of MVA factor parameters:
A yield is computed at the close of the last business day of each
week of the deposit period. The yield will equal the average of the
yields on U.S. Treasury Notes which matured during the last three
months of the applicable guaranteed term.
The deposit period yield is the average of those yields for the
deposit period. If withdrawal is made prior to the close of the
deposit period, it is the average of those yields on each week
preceding withdrawal.
The current yield is the average of the yields on the last business
day of the week preceding withdrawal on the same U.S. Treasury Notes
included in the deposit period yield.
If no U.S. Treasury Notes matured during the last three months of the
guaranteed term, We reserve the right to use the average of the
yields on U.S. Treasury Notes that mature during a following quarter.
Section 8. Certificate Holder's Account Value; Transfers and Withdrawals
During the Accumulation Period
- --------------------------------------------------------------------------------
8.01 Certificate Holder's Account Value - The value of a Certificate
Holder's Account is determined by adding the value of the total of
Accumulation Units attributed to the selected Fund(s) to the value of
any amounts attributed to the AG Account.
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8.02 Transfers During the Accumulation Period - Before the Annuity Date,
the Certificate Holder may transfer from any Fund or guaranteed term
of the AG Account to:
(a) Any other Fund; or
(b) Any guaranteed term of the AG Account available in the current
deposit period.
Transfer requests can be submitted as a percentage or as a dollar
amount. We may establish a minimum transfer amount. Within a
guaranteed term group, the amount transferred is withdrawn first from
the oldest deposit period, then from the next oldest, and so on until
the amount requested is satisfied.
The Certificate Holder may make an unlimited number of transfers
during the Accumulation Period. The number of free transfers allowed
is shown on the Contract Schedule. Transfers in excess of that number
may be subject to the transfer charge shown on the Contract Schedule.
Transfers of a matured term value from the AG Account on or within
one calendar month after a guaranteed term's maturity date do not
count against the annual transfer limit.
Amounts applied to guaranteed terms of the AG Account may not be
transferred to the Funds or to another guaranteed term during the
deposit period or for 90 days after the close of the deposit period
except for matured term value(s) during the calendar month following
the guaranteed term's maturity date.
Transfers from guaranteed terms of the AG Account are subject to a
Market Value Adjustment.
8.03 Withdrawals During the Accumulation Period - The Certificate Holder
may withdraw all or a portion of the Certificate Holder's Account
Value during the Accumulation Period by properly completing a
withdrawal request form. Withdrawal requests can be submitted as a
percentage or as a specific dollar amount. Net Purchase Payment
amounts are withdrawn first, and then the excess value, if any. For
any partial withdrawal, if instructions are not provided by the
Certificate Holder, amounts are withdrawn on a pro rata basis from
the Fund(s), and/or the guaranteed term(s) groups in which the
Certificate Holder's Account is currently invested. Within a
guaranteed term group, the amount to be withdrawn will be withdrawn
first from the oldest deposit period, then from the next oldest, and
so on until the amount requested is satisfied.
After deduction of the maintenance charge, if applicable, the
withdrawn amount shall be reduced by the applicable deferred sales
charge and any applicable premium taxes.
8.04 Deferred Sales Charge - The deferred sales charge only applies to the
portion of the amount withdrawn attributable to Net Purchase
Payment(s) and varies according to the elapsed time since receipt of
the Purchase Payment. The deferred sales charge is shown on the
Contract Schedule.
8.05 Waiver of Deferred Sales Charge - No deferred sales charge is
deducted when a Certificate Holder's Account Value is paid:
(a) To a Beneficiary as a death benefit, except for Purchase
Payments made by a surviving joint Certificate Holder as
described in Section 10.02(b);
(b) As a premium for an Annuity Option;
16
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(c) At least the number of months, as shown on the Contract
Schedule, after the date of the first Purchase Payment and in an
amount equal to or less than the percentage of the Certificate
Holder's Account Value as shown on the Contract Schedule. This
applies to the first withdrawal request, partial or full, in a
calendar year. The Certificate Holder's Account Value is
calculated as of the date the withdrawal request is received in
good order at our Home Office. This waiver is not available to
the Certificate Holder while a SWO is in effect;
(d) For a full withdrawal where the Certificate Holder's Account
Value does not exceed the amount shown on the Contract Schedule
and no withdrawals have been taken from the Certificate Holder's
Account within the prior 12 months;
(e) For a distribution made by Us under Section 8.06; or
(f) For a distribution which is part of a SWO under Section 8.07.
We reserve the right to allow the proceeds of a total withdrawal to
be reinstated under the terms and conditions as established by Us
from time to time.
8.06 Payment of Adjusted Certificate Holder Account Value - Upon 90 day's
written notice to the Certificate Holder, We will terminate any
Certificate Holder's Account if the Certificate Holder's Account
Value becomes less than $1,500 immediately following any partial
withdrawal. We do not intend to exercise this right in cases where
the Certificate Holder's Account Value is reduced to $1,500 or less
solely due to investment performance. When We make a distribution
pursuant to this provision, the deferred sales charge will not be
deducted.
8.07 Systematic Withdrawal Option (SWO) - We will allow the Certificate
Holder to establish a schedule of withdrawals to be made
automatically from the Certificate Holder's Account Value. All
distributed amounts will be withdrawn on a pro rata basis from the
Fund(s) and/or the guaranteed term(s) groups of the AG Account in
which the Certificate Holder's Account is invested.
The Certificate Holder must elect one of the following SWO methods:
(a) Specified Payment: Payments of a designated dollar amount. The
annual amount may not be greater than the percentage of the
Certificate Holder's Account Value at time of the election as
shown on the Contract Schedule. This annual dollar amount will
remain constant. At our discretion, We may require a minimum
payment amount; or
(b) Specified Period: Payments which are made over a period of time
which must be at least the minimum period as shown on the
Contract Schedule. The annual amount paid each year is
calculated by dividing the Certificate Holder's Account Value as
of December 31 of the prior year by the number of payment years
remaining; or
(c) Specified Percentage: Payment of a designated percentage which
cannot be greater than the percentage of the Certificate
Holder's Account Value at the time of election as shown on the
Contract Schedule. The percentage may be changed by written
request. We reserve the right to limit the number of times the
percentage may be changed. The annual amount is calculated by
multiplying the Certificate Holder's Account Value as of
December 31 of the year prior to the payment by the designated
percentage.
In our discretion, We may require a minimum initial Certificate
Holder's Account Value for election of this option. SWO may be
elected by submitting a completed and signed election form to Us.
17
<PAGE>
Once elected, this option may be revoked by submitting a written
request to Us. SWO may be elected only once by the Certificate Holder
or by a spousal Beneficiary.
Certificate Holders should consult their tax adviser prior to
requesting this distribution option. We are not responsible for any
adverse tax consequences due to a Certificate Holder's receiving SWO
payments. A ten (10) percent penalty tax may apply to distributions
to a Certificate Holder who has not reached age 59-1/2. Upon death of
the Certificate Holder, any payments will be made under the terms of
Section 10.
Section 9. Maintenance Charge
- --------------------------------------------------------------------------------
9.01 Maintenance Charge - We will deduct an annual maintenance charge as
shown in the Contract Schedule from the Certificate Holder's Account
during the Accumulation Period. We will deduct the maintenance charge
on the anniversary of the Effective Date of the Certificate for the
Certificate Holder's Account. This maintenance charge is also
deducted upon withdrawal of the entire Adjusted Certificate Holder's
Account. The maintenance charge is deducted proportionately from each
investment option used.
Section 10. Proceeds Payable on Death
- --------------------------------------------------------------------------------
10.01 Death of the Certificate Holder Prior to the Annuity Date In the
event of the death of the Certificate Holder or a joint Certificate
Holder prior to the Annuity Date, a death benefit is payable to the
Beneficiary(ies) designated by the Certificate Holder. Upon the death
of a joint Certificate Holder, the surviving joint Certificate
Holder, if any, will be treated as the designated Beneficiary. Any
other Beneficiary designation on record with Us at the time of death
will be treated as a contingent Beneficiary.
A Beneficiary may request We pay the death benefit under one of the
options described in Section 10.03. If the Beneficiary is the spouse
of the Certificate Holder, he or she may elect to continue the
Certificate Holder's Account in his or her own name and exercise all
the Certificate Holder's rights under the Contract.
10.02 Death Benefit Amount Prior to the Annuity Date -
(a) Except as set forth in Section 10.02(b), the amount of the
guaranteed death benefit value is equal to the greater of:
(i) The Certificate Holder's Account Value at the end of the
Valuation Period during which We receive at our Home
Office due proof of death and election of the type of
payment to be made; or
(ii) The death benefit determined as of the Valuation Period
corresponding to the date of death.
Until the first Effective Date anniversary, the death
benefit is equal to the Purchase Payments made by the
Certificate Holder prior to the Effective Date
anniversary less any withdrawals and any amounts applied
to an Annuity Option.
18
<PAGE>
For each Certificate year thereafter, the death benefit
during the Certificate year equals the death benefit at
the beginning of the Certificate year plus Purchase
Payments made during the year less any withdrawals and
any amounts applied to an Annuity Option.
On each Effective Date anniversary, the death benefit is
determined as follows:
(A) The death benefit on the previous Effective Date
anniversary increased by the death benefit factor
shown on the Contract Schedule; plus
(B) Purchase Payments made by the Certificate Holder
during the Certificate year increased by the death
benefit factor shown on the Contract Schedule for
the portion of the year since the Purchase Payment
was made; less
(C) Any withdrawals or amounts applied to an Annuity
Option during the Certificate year increased by the
death benefit factor shown on the Contract Schedule
for the portion of the Certificate year since the
withdrawal or election of Annuity option; or
(iii) The Certificate Holder's Account Value on the most
recent seventh year anniversary of the Effective Date
plus any Purchase Payments made after such Effective
Date anniversary less any withdrawals and any amounts
applied to an Annuity Option.
Notwithstanding the foregoing, the death benefit under (ii) or
(iii) will not exceed the death benefit maximum amount shown on
the Contract Schedule.
The death benefit calculation described in (ii) and (iii) above,
applies until the Certificate Holder reaches the death benefit
maximum age shown on the Contract Schedule. Thereafter, the
death benefit is only adjusted for Purchase Payments,
withdrawals and amounts applied to Annuity Options. If the
Certificate Holder reaches the death benefit maximum age shown
on the Contract Schedule prior to the seventh anniversary of the
Effective Date, the death benefit will be the greater of (i) or
(ii) above.
The excess, if any, of the guaranteed death benefit value over
the Certificate Holder's Account Value is determined when we
receive at our Home Office due proof of death and allocated to
the Fund shown on the Contract Schedule. The Certificate
Holder's Account Value plus any excess amount deposited becomes
the Certificate Holder's Account Value.
(b) In the case of a Beneficiary of a surviving joint Certificate
Holder who continued the Certificate Holder's Account in his or
her own name, the death benefit shall be equal to (a)(i) above
less any applicable deferred sales charge on any Purchase
Payment made after We have received at our Home Office due proof
of death of the first joint Certificate Holder.
10.03 Death Benefit Payment Methods - A non-spousal Beneficiary must elect
the death benefit to be paid under one of the following methods in
the event of the death of the Certificate Holder prior to the Annuity
Date:
Method 1 - Lump sum payment of the death benefit; or
Method 2 - The payment of the entire death benefit within (5) years
of the date of the Certificate Holder's death; or
19
<PAGE>
Method 3 - Payment of the death benefit over the lifetime of the
designated Beneficiary or over a period not extending beyond the life
expectancy of the designated Beneficiary with distribution beginning
within one year of the date of death of the Certificate Holder.
Any portion of the death benefit not applied under Option 3 within
one year of the date of Certificate Holder's death, must be
distributed within five (5) years of the date of death. A Market
Value Adjustment will apply at the time the death benefit is paid.
A spousal Beneficiary may elect to continue the Certificate Holder's
Account in his or her name, elect a lump sum payment of the death
benefit or apply the Adjusted Certificate Holder's Account Value to
an Annuity Option.
10.04 Death of Certificate Holder On or After the Annuity Date - If the
Certificate Holder who is not the Annuitant, dies on or after the
Annuity Date, the remaining payments under the Annuity Option elected
will be made to the Beneficiary at least as rapidly as under the
method of distribution in effect at the Certificate Holder's death.
10.05 Death of the Annuitant - If the Annuitant, who is not a Certificate
Holder, dies on or before the Annuity Date, a new Annuitant may be
named. If no Annuitant is named, the Certificate Holder will be the
Annuitant. If the Annuitant dies after the Annuity Date, the death
benefit, if any, will be payable to the Beneficiary as specified in
the Annuity Option elected. We will require proof of the Annuitant's
death. Death benefits will be paid at least as rapidly as under the
method of distribution in effect at the Annuitant's death.
Section 11. Delay of Payments
- --------------------------------------------------------------------------------
11.01 Delay of Payments - We will make any payments under this Contract
within seven days after a request is received in good order. We
reserve the right to suspend or postpone any type of payment from the
Separate Account for any period when:
(a) The New York Stock Exchange is closed for other than customary
weekend and holiday closings;
(b) Trading on the Exchange is restricted;
(c) An emergency exists as a result of which it is not reasonably
practicable to dispose of securities held in the Separate
Account or determine their value; or
(d) The Securities and Exchange Commission so permits delay for the
protection of security holders.
The applicable rules of the Securities and Exchange Commission will
govern as to whether the conditions in (b) or (c) exist.
We also reserve the right to delay any type of payment from the AG
Account for up to six (6) months.
Section 12. Annuity Provisions
- --------------------------------------------------------------------------------
20
<PAGE>
12.01 Designation of Annuitant - The Certificate Holder and the Annuitant
need not be the same person. The Certificate Holder names the
Annuitant and during the Accumulation Period, may change the
designated Annuitant. We change the Annuitant when We receive a
written request in good order at our Home Office. We will not change
the Annuitant when Annuity payments have commenced.
The Certificate Holder elects an Annuity Option by telling Us to use
all or any portion of the Certificate Holder's Adjusted Account Value
(minus any applicable premium taxes if not previously deducted) to
purchase Annuity payments under an Annuity Option.
When an Annuity Option is chosen the Certificate Holder must
designate a:
(a) Fixed Annuity using the General Account;
(b) Variable Annuity using any of the Funds available during the
Annuity Period; or
(c) Combination of (a) and (b).
If a fixed Annuity is chosen, We will calculate the amount using an
interest assumption no less than the percentage specified on the
Contract Schedule. We may calculate the amount using a higher
interest rate.
If a variable Annuity is chosen, an Assumed Annual Net Return Rate of
5% may be chosen. If not chosen, We will use an Assumed Annual Net
Return Rate of 3.5%.
Payments are made on a monthly basis to the Certificate Holder unless
the Certificate Holder requests a different mode of payment.
Once elected, an Annuity Option may not be revoked, except for Option
1 when elected on a variable basis.
12.02 Terms of Annuity Options - The minimum first payment amount must be
at least $50 per month and at least $250 per year.
If the Certificate Holder elects a fixed Annuity and We determine
that the Certificate Holder would receive larger payments by applying
the Certificate Holder's Account Value, reduced by the deferred sales
charge, to a single premium immediate Annuity currently offered by
Us, We will make the larger payments.
21
<PAGE>
We determine the first payment of a variable Annuity, or the payment
amount of a fixed Annuity, using the Annuitant's (and second
Annuitant's if applicable) adjusted age which We calculate as
follows:
(a) If Annuity payments begin any time between July 1, 1992 and
December 31, 1999, the adjusted age is the Annuitant's age as of
the birthday closest in time to the Annuity Date reduced by one
(1) year.
(b) If the Annuity begins any time between January 1, 2000 and
December 31, 2009, the adjusted age is the Annuitant's age as of
the birthday closest in time to the Annuity Date reduced by two
(2) years.
(c) For each succeeding decade, the adjusted age is the Annuitant's
age as determined in (b), reduced by one additional year.
The Annuity rates for Options 2 and 3 are based on mortality from
1983 Table A.
Assumed Annual Net Return Rate is the interest rate used to determine
the amount of the first Annuity payment under a variable Annuity. The
Separate Account must earn this rate plus enough to cover the
mortality and expense risks charges (which may include profit) and
administrative charges if future variable Annuity payments are to
remain level.
The Certificate Holder must give written notice to Us at least 30
days before the Annuity payments begin, electing or changing:
(a) The date on which Annuity payments are to begin;
(b) The Annuity Option;
(c) Whether the payments are to be made monthly, quarterly,
semiannually or annually;
(d) The investment options used to provide Annuity payments.
The first Annuity payment may not be earlier than one (1) calendar
year after the initial Purchase Payment, nor later than the later of
the:
(a) First day of the month following the Annuitant's birthday shown
on the Contract Schedule; or
(b) Tenth anniversary of the last Purchase Payment. In lieu of the
election of an Annuity, the Certificate Holder may request a
lump sum payment.
12.03 Annuity Unit - The number of Annuity Units per Fund is based on the
amount of the first variable Annuity payment which is equal to:
(a) The portion of the Certificate Holder's Account Value (minus any
premium taxes) applied to pay a variable Annuity; divided by,
(b) 1000; multiplied by,
(c) The payment rate for the Annuity Option chosen.
22
<PAGE>
Such amount, or portion, of the variable Annuity payment will be
divided by the Annuity Unit value for the appropriate Fund on the
tenth Valuation Period before the due date of the first payment to
determine the number of each Fund's Annuity Units. The number of each
Fund's Annuity Unit remains fixed. Each future payment is equal to
the sum of the products of each Fund's Annuity Unit value multiplied
by the appropriate number of units. The Fund's Annuity Unit value on
the tenth Valuation Period prior to the due date of the payment is
used.
12.04 Annuity Unit Value - For any Valuation Period, a Fund's Annuity Unit
value is equal to:
(a) The value for the previous Valuation Period; multiplied by,
(b) The Annuity Net Return Factor for the Valuation Period;
multiplied by,
(c) A daily factor to reflect the Assumed Annual Net Return Rate
(the factor for 3.5% per year is .9999058; for 5% per year it is
.9998663).
The dollar value of a Fund(s) Annuity Unit values and payments may go
up or down due to investment gain or loss.
12.05 Annuity Net Return Factor - The Annuity net return factor is used to
compute all Separate Account Annuity payments for any Fund.
The Annuity net return factor(s) for each Fund is equal to 1.0000000
plus the net return rate. The net return rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account
at the end of a Valuation Period; minus,
(b) The value of the shares of the Fund held by the Separate Account
at the start of the Valuation Period; plus or minus,
(c) Taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) The total value of the Fund(s) Accumulation Units and Fund(s)
Annuity Units of the Separate Account at the start of the
Valuation Period; minus,
(e) A daily actuarial charge as shown of the Contract Schedule for
Annuity mortality and expense risks and profit and a daily
administrative charge which will not exceed the administrative
charge as shown on the Contract Schedule.
The net return rate may be more or less than zero (o) percent.
The value of a share of the Fund is equal to the net assets of the
Fund divided by the number of shares outstanding.
12.06 Annuity Options
Option 1 - Payments for a Stated Period of Time - An Annuity will be
paid for the number of years chosen. The number of years must be at
least 5 and not more than 30.
If payments for this Annuity Option are made under a variable
Annuity, the present value of any remaining payments may be withdrawn
at any time.
23
<PAGE>
Option 2 - Life Income - An Annuity will be paid for the life of the
Annuitant. If also chosen, We will guarantee payments for 60, 120,
180, or 240 months.
Option 3 - Life Income Based upon the Lives of Two Annuitants - An
Annuity will be paid during the lives of the Annuitant and a second
Annuitant. Payments will continue until both Annuitants have died.
When this Annuity Option is chosen, a choice must be made of:
(a) 100% of the payment to continue after the first death;
(b) 66-2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) Payments for a minimum of 120 months with 100% of the payment to
continue after the first death; or
(e) 100% of the payment to continue at the death of the second
Annuitant and 50% of the payment to continue at the death of the
Annuitant.
We may make other options available as allowed by law.
24
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
- -------------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -------------------------------------------------------------------------------
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- -------------------------------------------------------------------------------
25
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ----------------------------------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.27 $ 3.90 $ 4.26 $ 3.90 $ 4.22 $ 3.89 $ 4.17 $ 3.86 $ 4.08 $ 3.82
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58
63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
66 6.30 5.51 6.21 5.47 5.96 5.36 5.56 5.16 5.08 4.86
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
26
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36
60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85
65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54
70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49
75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
- -----------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
27
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Adjusted Ages
- ---------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.75 $ 4.07 $ 4.26 $ 3.75 $ 3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12
60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54
65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14
70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96
75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
- ------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
28
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
- -------------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -------------------------------------------------------------------------------
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.85 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
- -------------------------------------------------------------------------------
29
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- -------------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -------------------------------------------------------------------------------
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
- -------------------------------------------------------------------------------
30
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Months
-------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ----------------------------------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.56 $ 4.20 $ 4.55 $ 4.19 $ 4.51 $ 4.18 $ 4.45 $ 4.15 $ 4.36 $ 4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
31
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Months
-------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ----------------------------------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 5.48 $ 5.12 $ 5.46 $ 5.11 $ 5.41 $ 5.09 $ 5.34 $ 5.06 $ 5.24 $ 5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.97 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
32
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Adjusted Ages
- ---------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.97 $ 4.35 $ 4.56 $ 3.97 $ 4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
- -----------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
33
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- --------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.03 $ 4.36 $ 4.55 $ 4.03 $ 4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83
60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39
65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14
70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20
75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
34
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- --------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.88 $ 5.26 $ 5.48 $ 4.88 $ 5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
35
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and the Second Annuitant is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- --------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.93 $ 5.27 $ 5.46 $ 4.93 $ 5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28
65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03
70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08
75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
36
<PAGE>
- -------------------------------------------------------------------------------
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
- -------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
G-CDA-GP2(4/94)
----------------------------------------------------------------
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
Individual Variable, Fixed or Combination Annuity Contract (Nonparticipating)
Aetna Insurance Company of America (We or Us) agrees to pay benefits according
to the terms and conditions set forth in this Contract.
Specifications
- --------------------------------------------------------------------------------
Plan
- --------------------------------------------------------------------------------
Type of Plan
- --------------------------------------------------------------------------------
Contract Holder
- --------------------------------------------------------------------------------
Annuitant
- --------------------------------------------------------------------------------
Contract Number
- --------------------------------------------------------------------------------
Effective Date
This Contract is delivered in and is subject to
the laws and regulations of that state.
THE VARIABLE FEATURES OF THE CONTRACT ARE DESCRIBED IN SECTIONS 6 AND 12.
Right to Cancel
- --------------------------------------------------------------------------------
The Contract Holder may cancel this Contract within ten (10) days of receiving
it by returning it to Us at the address above or to the person from whom it was
purchased. Within seven (7) days of the cancellation request, We will return the
Contract Holder's Purchase Payment(s) made plus any increase, or minus any
decrease on the amount allocated to the Separate Account.
Signed at the Home Office on the Effective Date.
/s/ Dan Kearney /s/ Susan E. Schechter
President Secretary
ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
I-CDA-GP2(4/94)
<PAGE>
Table of Contents
Page
Right to Cancel.............................................................1
Contract Schedule...........................................................4
Separate Account.....................................................4
AICA Guaranteed Account (AG Account).................................4
Separate Account and AG Account......................................4
Fixed Annuity........................................................6
Section 1. Definitions.....................................................7
Section 2. General Provisions..............................................8
The Contract.........................................................8
Nonparticipating Contract............................................8
Misstatements and Adjustments........................................8
Reports..............................................................9
Premium Taxes........................................................9
Protection of Proceeds...............................................9
Evidence of Survival.................................................9
Proof of Age.........................................................9
Change of Contract...................................................9
Section 3. Ownership.......................................................9
Contract Holder Rights...............................................9
Transfer of Ownership...............................................10
Section 4. Beneficiary Provisions.........................................10
Beneficiary.........................................................10
Change of Beneficiary...............................................10
Death of Beneficiary................................................10
Section 5. Purchase Payments..............................................10
Purchase Payments...................................................10
Allocation of Purchase Payments.....................................10
Section 6. Separate Account...............................................10
General.............................................................11
Investment Allocations to the Separate Account......................11
Valuation of Assets.................................................11
Accumulation Unit...................................................11
Net Return Factor for Each Valuation Period.........................11
Administrative Charge...............................................12
Mortality Risk Charge...............................................12
Expense Risk Charge.................................................12
Mortality and Expense Guarantee.....................................12
Section 7. AG Account.....................................................12
AG Account Guaranteed Interest Rate.................................12
Deposit Period......................................................12
Guaranteed Term.....................................................12
2
<PAGE>
Guaranteed Term(s) Groups...........................................12
Maturity Date.......................................................12
Allocation of Net Purchase Payments to the AG Account...............13
AG Account Guaranteed Term Maturity Date and Maturity Value.........13
Transfers from the AG Account.......................................13
Withdrawals from the AG Account.....................................13
Reinvestment........................................................13
AG Account Market Value Adjustment (Factor).........................14
Section 8. Contract Value; Transfers and Withdrawals During the
Accumulation Period Contract Value.............................14
Transfers During the Accumulation Period............................14
Withdrawals During the Accumulation Period..........................15
Deferred Sales Charge...............................................15
Waiver of Deferred Sales Charge.....................................15
Payment of Adjusted Contract Value..................................16
Systematic Withdrawal Option (SWO)..................................16
Section 9. Maintenance Charge.............................................17
Maintenance Charge..................................................17
Section 10. Proceeds Payable on Death.....................................17
Death of the Contract Holder Prior to the Annuity Date..............17
Death Benefit Amount Prior to the Annuity Date......................17
Death Benefit Payment Methods.......................................18
Death of Contract Holder On or After the Annuity Date...............19
Death of the Annuitant..............................................19
Section 11. Delay of Payments.............................................19
Delay of Payments...................................................19
Section 12. Annuity Provisions............................................19
Designation of Annuitant............................................19
Terms of Annuity Options............................................20
Annuity Unit........................................................21
Annuity Unit Value..................................................21
Annuity Net Return Factor...........................................21
Annuity Options.....................................................22
3
<PAGE>
Contract Schedule
Separate Account
- --------------------------------------------------------------------------------
Separate Account: Variable Account I
Charges to the A daily charge is deducted from the assets of the
Separate Account: Separate Account. The deduction is the daily
equivalent of the annual effective percentage
shown below:
(a) During the Accumulation Period:
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Separate Account Charges During
Accumulation Period 1.40%
(b) During the Annuity Period
Administrative Charge Not To Exceed 0.25%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Maximum Separate Account Charges
During Annuity Period 1.50%
AICA Guaranteed Account (AG Account)
- --------------------------------------------------------------------------------
Minimum Guaranteed 3.0%
Interest Rate
(effective annual rate
of return):
Separate Account and AG Account
- --------------------------------------------------------------------------------
Minimum Initial $1,500
Purchase Payment:
Minimum Subsequent $500 or $50 per month if paid by an automatic
Purchase Payment: check plan
Maximum Subsequent $500,000 without Home Office approval
Purchase Payment:
4
<PAGE>
Transfers: We allow an unlimited number of transfers during
the Accumulation Period. Twelve (12) transfers in
any calendar year are free. Thereafter, We reserve
the right to charge a transfer charge up to $10
for each subsequent transfer.
Maintenance Charge: The annual maintenance charge is $30. If the
Contract Value is $50,000 or more on the date the
maintenance charge is to be deducted, the
maintenance charge is $0.
Deferred Sales Charge: For each withdrawal from the Contract, a deferred
sales charge for Charge: each Net Purchase Payment
will be determined as follows:
Years from Receipt of Deferred
Net Purchase Payment Sales Charge
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
6-7 1%
7+ 0%
Waiver of Deferred Section 8.05 provides for the following:
Sales Charge:
(c) At least 12 months after the date of the
first Purchase Payment in an amount equal
to or less than 15% of the Contract
Value.
(d) For a full withdrawal where the Contract
Value does not exceed $2,500 and no
withdrawals have been taken from the
Contract within the prior 12 months.
Systematic (a) Specified Payment - Maximum Percentage: 10%
Withdrawal Option:
(b) Specified Period - Minimum Period: 10 years
(c) Specified Percentage - Maximum Percentage: 10%
Death Benefit Factor: 4%
Death Benefit There is no maximum death benefit amount.
Maximum Amount:
5
<PAGE>
Death Benefit 85 years
Maximum Age:
Fund for Allocation Federated Prime Money Fund
of Excess Guaranteed
Death Benefit Value:
Latest Annuity Date: The Contract Holder's 90th birthday.
Fixed Annuity
- --------------------------------------------------------------------------------
Minimum Guaranteed 3.0%
Interest Rate
(effective annual rate
of return):
6
<PAGE>
Section 1. Definitions
- --------------------------------------------------------------------------------
1.01 Accumulation Period - The period during which one or more Net Purchase
Payments applied to the Contract accumulate to provide future Annuity
payments.
1.02 Accumulation Unit - A measure of the net investment results for each
variable investment option during the Accumulation Period. The
Accumulation Units for the applicable Funds are used to calculate the
portion of the Contract Value attributable to a Separate Account during
the Accumulation Period.
1.03 Adjusted Contract Value - The Contract Value, plus or minus any
aggregate AG Account Market Value Adjustment.
1.04 Annuitant - The natural person on whose life an Annuity payment is
based.
1.05 Annuity - A series of payments We make for life, a definite period or a
combination of the two.
1.06 Annuity Date - The date on which Annuity payments commence.
1.07 Annuity Options - Annuity payment methods available during the Annuity
Period.
1.08 Annuity Period - The period of time during which Annuity payments are
made.
1.09 Annuity Unit - A measure of the net investment results for each
variable investment option during the Annuity Period. Annuity Units are
used to calculate the amount of each variable Annuity payment.
1.10 Beneficiary - The person(s) entitled to receive any death benefit under
the Contract. Upon the death of a joint Contract Holder, the surviving
joint Contract Holder, if any, is treated as the Beneficiary. Any other
Beneficiary designation on record with Us at the time of death is
treated as a contingent Beneficiary.
1.11 Contract Holder - The person who purchases this Contract. We reserve
the right to limit ownership to natural persons. If more than one
Contract Holder owns the Contract, each Contract Holder shall be a
joint Contract Holder. Any joint Contract Holder must be the spouse of
the other joint Contract Holder. Joint Contract Holders have joint
ownership rights and both must authorize any exercising of those
ownership rights unless otherwise allowed by Us.
1.12 Contract Value - The dollar value as of any Valuation Period of all
amounts accumulated in the Contract.
1.13 Contract - This agreement between the Contract Holder and Us.
1.14 Effective Date - The date the Contract is issued to the Contract
Holder.
1.15 Fund - One of the variable investment options which may be selected by
the Contract Holder.
7
<PAGE>
1.16 General Account - The General Account is made up of all of our general
assets other than those allocated to the separate accounts.
1.17 AICA Guaranteed Account (AG Account) - An investment option where We
guarantee specified rate(s) of interest for specified periods of time.
The AG Account is a separate account established by Us in accordance
with the provisions of the Connecticut General Statutes Section
38a-433. The Contract Holder does not participate in the investment
gain or loss from the assets held in the AG Account. Assets in the AG
Account may be charged with liabilities arising out of any other
business We may conduct.
1.18 Home Office - Our headquarters, located at 151 Farmington Avenue,
Hartford, CT 06156.
1.19 Market Value Adjustment - An adjustment to any withdrawal made from the
AG Account before the end of a guaranteed term as stated in Section
7.11.
1.20 Net Purchase Payment - The Purchase Payment less premium taxes, if
applicable.
1.21 Purchase Payment - The gross payment accepted by Us and allocated to
the Contract. We reserve the right to refuse to accept any Purchase
Payment at any time for any reason.
1.22 Separate Account - A separate account that buys and holds shares of the
Fund(s). Income, gains or losses, realized or unrealized, are credited
or charged to the Separate Account without regard to Our other income,
gains or losses. We own the assets held in the Separate Account and are
not a trustee as to such amounts. The Separate Account generally is not
guaranteed and is held at market value. The name of the Separate
Account is shown on the Contract Schedule. The assets of the Separate
Account, to the extent of reserves and other Contract liabilities of
the Separate Account, will not be charged with Our other liabilities.
1.23 Valuation Period - The period of time for which a Fund determines its
net asset value, usually from 4:15 p.m. Eastern time each day the New
York Stock Exchange is open until 4:15 p.m. the next such business day,
or such other day that one or more of the Funds determines its net
asset value. The assets of the Separate Account are not chargeable with
the liabilities arising out of any other business We may conduct.
1.24 Variable Annuity Contract - An Annuity Contract providing for the
accumulation of value and/or for Annuity payments which vary in amount
based on investment results.
Section 2. General Provisions
- --------------------------------------------------------------------------------
2.01 The Contract - The entire Contract consists of this Contract and any
attached applications or endorsements.
2.02 Nonparticipating Contract - Neither the Contract Holder nor any
Beneficiary have a right to share in our earnings.
2.03 Misstatements and Adjustments - If We learn that the age of any
Annuitant or second Annuitant is misstated, the correct age will be
used to adjust payments. We reserve the right to request
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reimbursement or adjust future payments for any amount overpaid. We
will pay the amount of any underpayment.
2.04 Reports - We furnish the Contract Holder with a report showing the
Contract Value at least once each calendar year. We also furnish an
annual report of the Separate Account.
2.05 Premium Taxes - Any premium taxes paid to any governmental entity are
charged against Purchase Payments or the Contract Value. We may, at our
sole discretion, pay premium taxes when due and deduct that amount from
the Contract at a later date. Payment at an earlier date does not waive
any right We may have to deduct amounts at a later date.
2.06 Protection of Proceeds - To the extent permitted by law, all payments
under this Contract to the Contract Holder or Beneficiary shall be free
from legal process and the claim of any creditor.
2.07 Evidence of Survival - The Company may require satisfactory evidence of
the continued survival of any person(s) on whose life Annuity payments
are based.
2.08 Proof of Age - The Company may require evidence of age of any Annuitant
under Annuity Options 2 and 3 and of the designated second Annuitant
under Annuity Option 3.
2.09 Change of Contract - We reserve the right to change the Contract, but
only if a change is necessary to:
(a) Make the Contract or the Separate Account comply with state or
federal laws or regulations; or
(b) Assure the continued qualified status of the Contract under the
Code or other federal laws or regulations governing annuity
contracts; or
(c) Reflect a change in the operation of the Separate Account or the
Funds; or
(d) Provide additional funds; or
(e) Withdraw Funds
We will notify the Contract Holder in writing 30 days before any change
becomes effective. When appropriate, We will endorse the Contract for
the change.
Section 3. Ownership
- --------------------------------------------------------------------------------
3.01 Contract Holder Rights - The Contract Holder has all interest and right
to amounts held in his or her Contract. The Contract Holder and any
joint Contract Holder are named on the Specifications page. The
Contract Holder and any joint Contract Holder may exercise all the
rights under the Contract, subject to the rights of:
(a) Any assignee under an assignment filed at our Home Office; and
(b) Any irrevocably named Beneficiary.
Upon the death of a Contract Holder prior to the Annuity Date, a
spousal Beneficiary may elect to continue the Contract in his or her
own name and retain all ownership rights and privileges or take
distribution of the death benefit as defined in Section 10.
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3.02 Transfer of Ownership - The Contract Holder may transfer all of his or
her rights under the Contract. A written request, dated and signed by
the Contract Holder and any joint Contract Holder, must be filed at our
Home Office. After the transfer is recorded, it will take effect as of
the date the request was signed. Any such transfer terminates the
interest of the existing Contract Holder. It does not change the
Beneficiary, nor transfer the Beneficiary's interest. A transfer will
not affect any payments We may make or actions We may take before such
transfer has been recorded at our Home Office.
Section 4. Beneficiary Provisions
- --------------------------------------------------------------------------------
4.01 Beneficiary - The Contract Holder may name a Beneficiary and a
contingent Beneficiary. At the death of the Contract Holder prior to
the Annuity Date, the Beneficiary(ies) named in our records will
receive a death benefit as stated in Section 10. Upon the death of a
joint Contract Holder prior to the Annuity Date, the surviving joint
Contract Holder, if any, will be treated as the designated Beneficiary
and any other Beneficiary designation on record with Us at the time of
death is treated as a contingent Beneficiary.
4.02 Change of Beneficiary - The Contract Holder may change the Beneficiary.
A written request, dated and signed by the Contract Holder, must be
filed at our Home Office. If there are joint Contract Holders, both
must sign the request. After the change is recorded, it will take
effect as of the date the request was signed. If the request reaches
our Home Office and is recorded after the Contract Holder dies, but
before any payment is made, the change is valid.
4.03 Death of Beneficiary - If all of the Beneficiaries and contingent
Beneficiaries die prior to the Contract Holder's death, We pay the
death benefit in one sum to the Contract Holder's estate.
Section 5. Purchase Payments
- --------------------------------------------------------------------------------
5.01 Purchase Payments - Subject to the maximum and minimum shown on the
Contract Schedule, the Contract Holder may determine the amount and
frequency of Purchase Payments. We reserve the right not to accept any
Purchase Payment. We will declare from time to time the acceptability
of additional Purchase Payments.
5.02 Allocation of Purchase Payments - The Contract Holder may elect to have
each Net Purchase Payment accumulate:
(a) On a variable basis invested in shares of one or more Funds in
which the Separate Account invests;
(b) For guaranteed terms offered in the current deposit period(s) under
the AG Account; or
(c) In a combination of any of the available investment options.
Net Purchase Payments must be allocated in whole percentages. For
subsequent Purchase Payments, if no allocation instructions are
received with the Purchase Payment, the allocation will be as indicated
in the most recent directive from the Contract Holder. If the same
guaranteed term(s) are not available, the next shortest will be used.
If no shorter guaranteed term is available, the next longer guaranteed
term will be used.
Section 6. Separate Account
- --------------------------------------------------------------------------------
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6.01 General - The assets of the Separate Account, equal to the reserves
and other Contract liabilities that depend on the investment
performance of the Separate Account are not chargeable with liabilities
arising out of any other business We may conduct. Income, gains or
losses of the Separate Account, realized or unrealized, are credited to
or charged against the assets of the Separate Account without regard to
Our other income, gains or losses.
6.02 Investment Allocations to the Separate Account - The assets of the
Separate Account are segregated by Fund. If the shares of any Fund are
no longer available for investment by the Separate Account or if in our
judgment, further investment in such shares should become inappropriate
in view of the purpose of the Contract, We may cease to make such Fund
shares available for investment under the Contract prospectively, or We
may substitute shares of another Fund for shares already acquired. We
may also, from time to time, add additional Funds. Any elimination,
substitution or addition of Funds will be done in accordance with
applicable state and federal securities laws. We reserve the right to
substitute shares of another Fund for shares already acquired without a
proxy vote.
6.03 Valuation of Assets - The shares of the Funds will be valued at their
net asset value at the end of each Valuation Period.
6.04 Accumulation Unit - A Net Purchase Payment that is allocated to one or
more Funds is credited to the Contract as Accumulation Units. The
number of Accumulation Units credited is determined by dividing the
applicable portion of the Net Purchase Payment by the Accumulation Unit
value for the appropriate Fund. The Accumulation Unit value used is
that which is computed for the next Valuation Period after which the
Purchase Payment is received at our Home Office. Accumulation Units
attributable to the initial Purchase Payments will be credited within
two business days of acceptance.
Accumulation Unit values may increase or decrease from Valuation Period
to Valuation Period.
6.05 Net Return Factor for Each Valuation Period - The value of an
Accumulation Unit for any Valuation Period is calculated by multiplying
the Accumulation Unit value for the immediately preceding Valuation
Period by the net return factor of the appropriate Fund for the current
period.
The net return factor for each Fund is equal to 1.0000000 plus the net
return rate.
The net return rate equals:
(a) The value of the shares of the Fund held by the Separate Account
at the end of a Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate Account
at the start of the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) The total value of the Funds(s) Accumulation Units and Fund(s)
Annuity Units of the Separate Account at the start of the
Valuation Period; minus
(e) A daily actuarial charge as shown on the Contract Schedule for
Annuity mortality and expense risks and profit and a daily
administrative charge.
The net return rate may be more or less than zero (0) percent.
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The value of a share of the Fund is equal to the net assets of the Fund
divided by the number of shares outstanding.
6.06 Administrative Charge - We deduct an administrative charge equal, on
an annual basis, to the amount shown on the Contract Schedule.
6.07 Mortality Risk Charge - We deduct a mortality risk charge equal, on an
annual basis, to the amount shown on the Contract Schedule.
6.08 Expense Risk Charge - We deduct an expense risk charge equal, on an
annual basis, to the amount shown on the Contract Schedule.
6.09 Mortality and Expense Guarantee - We guarantee that the dollar amount
of each Annuity payment after the first will not be affected by
variations in mortality or expense experience.
Section 7. AG Account
- --------------------------------------------------------------------------------
7.01 AG Account Guaranteed Interest Rate - All amounts allocated to the AG
Account earn a rate of interest that is guaranteed for a specified
period of time. The rate will be credited daily and will never be less
than the minimum guaranteed interest rate shown on the Contract
Schedule. We determine the rate and it is not based on investment
experience.
For guaranteed terms of one year or less, one guaranteed interest rate
is credited for the full guaranteed term. For longer guaranteed terms,
an initial guaranteed interest rate is credited from the date of
deposit to the end of a specified period within the guaranteed term.
There may be different guaranteed interest rate(s) declared for
subsequent specified time intervals throughout the guaranteed term.
7.02 Deposit Period - A calendar week, a calendar month, a calendar quarter,
or any other period of time We specify during which Net Purchase
Payment(s), transfers and reinvestments are accepted into the AG
Account for one or more guaranteed terms. We reserve the right to
extend the deposit period.
7.03 Guaranteed Term - The period of time for which AG Account guaranteed
interest rates are guaranteed on Net Purchase Payments. Transfers and
reinvestments are made into a current deposit period for the AG
Account. Such period begins on the day following the close of the
deposit period and ends on the designated Maturity Date. Guaranteed
terms, if any, are offered at our discretion for various lengths of
time ranging up to and including ten years.
During a deposit period, We may make available any number of guaranteed
terms. The Contract Holder may allocate Net Purchase Payments and
transfers into any or all of the available guaranteed terms.
7.04 Guaranteed Term(s) Groups - All AG Account guaranteed term(s) with the
same length of time from the close of the deposit period until the
designated Maturity Date.
7.05 Maturity Date - The last day of a guaranteed term.
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7.06 Allocation of Net Purchase Payments to the AG Account - When the
Contract Holder wishes to allocate all or any portion of a Net Purchase
Payment to the Guaranteed Account, he or she must tell Us the
percentage to apply to one or more of the AG Account guaranteed term(s)
available during the current deposit period. If no allocation
instructions are received, a Net Purchase Payment is allocated as
indicated in the most recent directive from the Contract Holder. If the
same guaranteed term is not available for any amount allocated to the
AG Account, We will allocate the amount to the next shortest guaranteed
term available. If no shorter guaranteed term is available, We will
allocate it to the next longest guaranteed term.
7.07 AG Account Guaranteed Term Maturity Date and Maturity Value - On the
maturity date, the value of the total of all amounts allocated to that
guaranteed term is called the maturity value.
When the Contract Holder has assets in the AG Account, at least
eighteen (18) days before a maturity date, We notify the Contract
Holder of the:
(a) Projected maturity value; and
(b) Guaranteed terms and the applicable guaranteed interest rates
available during the current deposit period.
When no allocation instructions are received and the assets in a
guaranteed term have been reinvested by Us in another guaranteed term
on the maturity date, the Contract Holder may transfer or withdraw,
during the month following the maturity date, the reinvested amount
with interest earned (as of the date the request is received at our
Home Office) without incurring a Market Value Adjustment. This
transaction is allowed only once for each maturity date, regardless of
whether the transfer or withdrawal is partial or full.
7.08 Transfers from the AG Account - The Contract Holder may transfer any
portion, or all, of an amount in the AG Account to one or more of the
Funds or to another available guaranteed term. The amount withdrawn for
any reason before the maturity date is subject to a Market Value
Adjustment.
7.09 Withdrawals from the AG Account - When the Contract Holder requests a
withdrawal from the AG Account, if instructions are not provided by the
Contract Holder, amounts are withdrawn on a pro rata basis from the
guaranteed term(s) groups in which the Contract Value is currently
invested. Within a guaranteed term group, the amount to be withdrawn
will be withdrawn first from the oldest deposit period. Except on the
maturity date, withdrawals from the AG Account will be subject to a
Market Value Adjustment.
7.10 Reinvestment - We will mail a notice to the Contract Holder before a
guaranteed term's maturity date. This notice will contain the
guaranteed terms available during the current deposit periods with
their guaranteed interest rate(s) and projected maturity value. If no
specific direction is given by the Contract Holder prior to the
maturity date, each maturity value will be reinvested in the current
deposit period for a guaranteed term of the same duration. If a
guaranteed term of the same duration is unavailable, each matured term
value will automatically be reinvested in the current deposit period
for the next shortest guaranteed term available. If no shorter
guaranteed term is available, the next longer guaranteed term will be
used. We will mail a confirmation statement to the Contract Holder
after the maturity date. This notice will state the guaranteed term and
guaranteed interest rate(s) which will apply to the reinvested matured
term value.
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7.11 AG Account Market Value Adjustment (Factor) - The Market Value
Adjustment factor (MVA factor) reflects any change in interest rates
from the time assets are allocated to the AG Account to the time they
are transferred or withdrawn. An MVA factor is applied to any amount
withdrawn or transferred from the AG Account before the end of a
guaranteed term, including amounts paid in a lump sum death benefit or
applied to an Annuity Option.
The amount withdrawn from the AG Account is multiplied by the MVA
factor which is calculated as follows:
x
---
365
(1 + i)
----------------
x
---
365
(1 + j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days remaining, (computed from Wednesday of
the week of withdrawal) in the guaranteed Term.
Determination of MVA factor parameters:
A yield is computed at the close of the last business day of each week
of the deposit period. The yield will equal the average of the yields
on U.S. Treasury Notes which matured during the last three months of
the applicable guaranteed term.
The deposit period yield is the average of those yields for the deposit
period. If withdrawal is made prior to the close of the deposit period,
it is the average of those yields on each week preceding withdrawal.
The current yield is the average of the yields on the last business day
of the week preceding withdrawal on the same U.S. Treasury Notes
included in the deposit period yield.
If no U.S. Treasury Notes matured during the last three months of the
guaranteed term, We reserve the right to use the average of the yields
on U.S. Treasury Notes that mature during a following quarter.
Section 8. Contract Value; Transfers and Withdrawals During the Accumulation
Period
- --------------------------------------------------------------------------------
8.01 Contract Value - The value of the Contract is determined by adding the
value of the total of Accumulation Units attributed to the selected
Fund(s) to the value of any amounts attributed to the AG Account.
8.02 Transfers During the Accumulation Period - Before the Annuity Date,
the Contract Holder may transfer from any Fund or guaranteed term of
the AG Account to:
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(a) Any other Fund; or
(b) Any guaranteed term of the AG Account available in the current
deposit period.
Transfer requests can be submitted as a percentage or as a dollar
amount. We may establish a minimum transfer amount. Within a guaranteed
term group, the amount transferred is withdrawn first from the oldest
deposit period, then from the next oldest, and so on until the amount
requested is satisfied.
The Contract Holder may make an unlimited number of transfers during
the Accumulation Period. The number of free transfers allowed is shown
on the Contract Schedule. Transfers in excess of that number may be
subject to the transfer charge shown on the Contract Schedule.
Transfers of a matured term value from the AG Account on or within one
calendar month after a guaranteed term's maturity date do not count
against the annual transfer limit.
Amounts applied to guaranteed terms of the AG Account may not be
transferred to the Funds or to another guaranteed term during the
deposit period or for 90 days after the close of the deposit period
except for matured term value(s) during the calendar month following
the guaranteed term's maturity date.
Transfers from guaranteed terms of the AG Account are subject to a
Market Value Adjustment.
8.03 Withdrawals During the Accumulation Period - The Contract Holder may
withdraw all or a portion of the Contract Value during the Accumulation
Period by properly completing a withdrawal request form. Withdrawal
requests ran be submitted as a percentage or as a specific dollar
amount. Net Purchase Payment amounts are withdrawn first, and then the
excess value, if any. For any partial withdrawal, if instructions are
not provided by the Contract Holder, amounts are withdrawn on a pro
rata basis from the Fund(s), and/or the guaranteed term(s) groups in
which the Contract is currently invested. Within a guaranteed term
group, the amount to be withdrawn will be withdrawn first from the
oldest deposit period, then from the next oldest, and so on until the
amount requested is satisfied.
After deduction of the maintenance charge, if applicable, the withdrawn
amount shall be reduced by the applicable deferred sales charge and any
applicable premium taxes.
8.04 Deferred Sales Charge - The deferred sales charge only applies to the
portion of the amount withdrawn attributable to Net Purchase Payment(s)
and varies according to the elapsed time since receipt of the Purchase
Payment. The deferred sales charge is shown on the Contract Schedule.
8.05 Waiver of Deferred Sales Charge - No deferred sales charge is deducted
when the Contract Value is paid:
(a) To a Beneficiary as a death benefit, except for Purchase Payments
made by a surviving joint Contract Holder as described in Section
10.02(b);
(b) As a premium for an Annuity Option;
(c) At least the number of months, as shown on the Contract Schedule,
after the date of the first Purchase Payment and in an amount equal
to or less than the percentage of the Contract Value as shown on
the Contract Schedule. This applies to the first withdrawal
request, partial or full, in a calendar year. The Contract Value is
calculated as of the date the withdrawal request is
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received in good order at our Home Office. This waiver is not
available to the Contract Holder while a SWO is in effect;
(d) For a full withdrawal where the Contract Value does not exceed
the amount shown on the Contract Schedule and no withdrawals have
been taken from the Contract within the prior 12 months;
(e) For a distribution made by Us under Section 8.06; or
(f) For a distribution which is part of a SWO under Section 8.07.
We reserve the right to allow the proceeds of a total withdrawal to be
reinstated under the terms and conditions as established by Us from
time to time.
8.06 Payment of Adjusted Contract Value - Upon 90 day's written notice to
the Contract Holder, We will terminate the Contract if the Contract
Value becomes less than $1,500 immediately following any partial
withdrawal. We do not intend to exercise this right in cases where the
Contract Value is reduced to $1,500 or less solely due to investment
performance. When We make a distribution pursuant to this provision,
the deferred sales charge will not be deducted.
8.07 Systematic Withdrawal Option (SWO) - We will allow the Contract Holder
to establish a schedule of withdrawals to be made automatically from
the Contract Value. All distributed amounts will be withdrawn on a pro
rata basis from the Fund(s) and/or the guaranteed term(s) groups of the
AG Account in which the Contract Value is invested.
The Contract Holder must elect one of the following SWO methods:
(a) Specified Payment: Payments of a designated dollar amount. The
annual amount may not be greater than the percentage of the
Contract Value at time of the election as shown on the Contract
Schedule. This annual dollar amount will remain constant. At our
discretion, We may require a minimum payment amount; or
(b) Specified Period: Payments which are made over a period of time
which must be at least the minimum period as shown on the Contract
Schedule. The annual amount paid each year is calculated by
dividing the Contract Value as of December 31 of the prior year by
the number of payment years remaining; or
(c) Specified Percentage: Payment of a designated percentage which
cannot be greater than the percentage of the Contract Value at the
time of election as shown on the Contract Schedule. The percentage
may be changed by written request. We reserve the right to limit
the number of times the percentage may be changed. The annual
amount is calculated by multiplying the Contract Value as of
December 31 of the year prior to the payment by the designated
percentage.
In our discretion, We may require a minimum initial Contract Value for
election of this option. SWO may be elected by submitting a completed
and signed election form to Us. Once elected, this option may be
revoked by submitting a written request to Us. SWO may be elected only
once by the Contract Holder or by a spousal Beneficiary.
The Contract Holder should consult his/her tax adviser prior to
requesting this distribution option. We are not responsible for any
adverse tax consequences due to a Contract Holder's receiving SWO
16
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payments. A ten (10) percent penalty tax may apply to distributions to
a Contract Holder who has not reached age 59-1/2. Upon death of the
Contract Holder, any payments will be made under the terms of Section
10.
Section 9. Maintenance Charge
- --------------------------------------------------------------------------------
9.01 Maintenance Charge - We will deduct an annual maintenance charge as
shown in the Contract Schedule from the Contract Value during the
Accumulation Period. We will deduct the maintenance charge on the
anniversary of the Effective Date of the Contract. This maintenance
charge is also deducted upon withdrawal of the entire Adjusted Contract
Value. The maintenance charge is deducted proportionately from each
investment option used.
Section 10. Proceeds Payable on Death
- --------------------------------------------------------------------------------
10.01 Death of the Contract Holder Prior to the Annuity Date - In the event
of the death of the Contract Holder or a joint Contract Holder prior to
the Annuity Date, a death benefit is payable to the Beneficiary(ies)
designated by the Contract Holder. Upon the death of a joint Contract
Holder, the surviving joint Contract Holder, if any, will be treated as
the designated Beneficiary. Any other Beneficiary designation on record
with Us at the time of death will be treated as a contingent
Beneficiary.
A Beneficiary may request We pay the death benefit under one of the
options described in Section 10.03. If the Beneficiary is the spouse of
the Contract Holder, he or she may elect to continue the Contract in
his or her own name and exercise all the Contract Holder's rights under
the Contract.
10.02 Death Benefit Amount Prior to the Annuity Date -
(a) Except as set forth in Section 10.02(b), the amount of the
guaranteed death benefit value is equal to the greater of:
(i) The Contract Value at the end of the Valuation Period during
which We receive at our Home Office due proof of death and
election of the type of payment to be made; or
(ii) The death benefit determined as of the Valuation Period
corresponding to the date of death.
Until the first Effective Date anniversary, the death benefit
is equal to the Purchase Payments made by the Contract Holder
prior to the Effective Date anniversary less any withdrawals
and any amounts applied to an Annuity Option.
For each Contract year thereafter, the death benefit during
the Contract year equals the death benefit at the beginning of
the Contract year plus Purchase Payments made during the year
less any withdrawals and any amounts applied to an Annuity
Option.
On each Effective Date anniversary, the death benefit is
determined as follows:
(A) The death benefit on the previous Effective Date
anniversary increased by the death benefit factor shown
on the Contract Schedule; plus
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(B) Purchase Payments made by the Contract Holder during the
Contract year increased by the death benefit factor shown
on the Contract Schedule for the portion of the year since
the Purchase Payment was made; less
(C) Any withdrawals or amounts applied to an Annuity Option
during the Contract year increased by the death benefit
factor shown on the Contract Schedule for the portion of
the Contract year since the withdrawal or election of
Annuity option; or
(iii) The Contract Value on the most recent seventh year anniversary
of the Effective Date plus any Purchase Payments made after
such Effective Date anniversary less any withdrawals and any
amounts applied to an Annuity Option.
Notwithstanding the foregoing, the death benefit under (ii) or
(iii) will not exceed the death benefit maximum amount shown on the
Contract Schedule.
The death benefit calculation described in (ii) and (iii) above,
applies until the Contract Holder reaches the death benefit maximum
age shown on the Contract Schedule. Thereafter, the death benefit
is only adjusted for Purchase Payments, withdrawals and amounts
applied to Annuity Options. If the Contract Holder reaches the
death benefit maximum age shown on the Contract Schedule prior to
the seventh anniversary of the Effective Date, the death benefit
will be the greater of (i) or (ii) above.
The excess, if any, of the guaranteed death benefit value over the
Contract Value is determined when We receive at our Home Office due
proof of death and allocated to the Fund shown on the Contract
Schedule. The Contract Value plus any excess amount deposited
becomes the Contract Value.
(b) In the case of a Beneficiary of a surviving joint Contract
Holder who continued the Contract in his or her own name, the death
benefit shall be equal to (a)(i) above less any applicable deferred
sales charge on any Purchase Payment made after We have received at
our Home Office due proof of death of the first joint Contract
Holder.
10.03 Death Benefit Payment Methods - A non-spousal Beneficiary must elect
the death benefit to be paid under one of the following methods in the
event of the death of the Contract Holder prior to the Annuity Date:
Method 1 - Lump sum payment of the death benefit; or
Method 2 - The payment of the entire death benefit within (5) years of
the date of the Contract Holder's death; or
Method 3 - Payment of the death benefit over the lifetime of the
designated Beneficiary or over a period not extending beyond the life
expectancy of the designated Beneficiary with distribution beginning
within one year of the date of death of the Contract Holder.
Any portion of the death benefit not applied under Option 3 within one
year of the date of Contract Holder's death, must be distributed within
five (5) years of the date of death. A Market Value Adjustment will
apply at the time the death benefit is paid.
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A spousal Beneficiary may elect to continue the Contract in his or her
name, elect a lump sum payment of the death benefit or apply the
Adjusted Contract Value to an Annuity Option.
10.04 Death of Contract Holder On or After the Annuity Date - If the Contract
Holder, who is not the Annuitant, dies on or after the Annuity Date,
the remaining payments under the Annuity Option elected will be made to
the Beneficiary at least as rapidly as under the method of distribution
in effect at the Contract Holder's death.
10.05 Death of the Annuitant - If the Annuitant, who is not the Contract
Holder, dies on or before the Annuity Date, a new Annuitant may be
named. If no Annuitant is named, the Contract Holder will be the
Annuitant. If the Annuitant dies after the Annuity Date, the death
benefit, if any, will be payable to the Beneficiary as specified in the
Annuity Option elected. We will require proof of the Annuitant's death.
Death benefits will be paid at least as rapidly as under the method of
distribution in effect at the Annuitant's death.
Section 11. Delay of Payments
- --------------------------------------------------------------------------------
11.01 Delay of Payments - We will make any payments under this Contract
within seven days after a request is received in good order. We reserve
the right to suspend or postpone any type of payment from the Separate
Account for any period when:
(a) The New York Stock Exchange is closed for other than customary
weekend and holiday closings;
(b) Trading on the Exchange is restricted;
(c) An emergency exists as a result of which it is not reasonably
practicable to dispose of securities held in the Separate Account
or determine their value; or
(d) The Securities and Exchange Commission so permits delay for the
protection of security holders.
The applicable rules of the Securities and Exchange Commission will
govern as to whether the conditions in (b) or (c) exist.
We also reserve the right to delay any type of payment from the AG
Account for up to six (6) months.
Section 12. Annuity Provisions
- --------------------------------------------------------------------------------
12.01 Designation of Annuitant - The Contract Holder and the Annuitant need
not be the same person. The Contract Holder names the Annuitant and
during the Accumulation Period, may change the designated Annuitant. We
change the Annuitant when We receive a written request in good order at
our Home Office. We will not change the Annuitant when Annuity payments
have commenced.
The Contract Holder elects an Annuity Option by telling us to use all
or any portion of the Contract Value (minus any applicable premium
taxes if not previously deducted) to purchase Annuity payments under an
Annuity Option.
When an Annuity Option is chosen the Contract Holder must designate a:
(a) Fixed Annuity using the General Account;
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<PAGE>
(b) Variable Annuity using any of the Funds available during the
Annuity Period; or
(c) Combination of (a) and (b).
If a fixed Annuity is chosen, We will calculate the amount using an
interest assumption no less than the percentage specified on the
Contract Schedule. We may calculate the amount using a higher interest
rate.
If a variable Annuity is chosen, an Assumed Annual Net Return Rate of
5% may be chosen. If not chosen, We will use an Assumed Annual Net
Return Rate of 3.5%.
Payments are made on a monthly basis to the Contract Holder unless the
Contract Holder requests a different mode of payment.
Once elected, an Annuity Option may not be revoked, except for Option 1
when elected on a variable basis.
12.02 Terms of Annuity Options - The minimum first payment amount must be at
least $50 per month and at least $250 per year.
If the Contract Holder elects a fixed Annuity and We determine that the
Contract Holder would receive larger payments by applying the Contract
Value, reduced by the deferred sales charge, to a single premium
immediate Annuity currently offered by Us, We will make the larger
payments.
We determine the first payment of a variable Annuity, or the payment
amount of a fixed Annuity, using the Annuitant's (and second
Annuitant's if applicable) adjusted age which We calculate as follows:
(a) If Annuity payments begin any time between July 1, 1992 and
December 31, 1999, the adjusted age is the Annuitant's age as of
the birthday closest in time to the Annuity Date reduced by one
(1) year.
(b) If the Annuity begins any time between January 1, 2000 and December
31, 2009, the adjusted age is the Annuitant's age as of the
birthday closest in time to the Annuity Date reduced by two (2)
years.
(c) For each succeeding decade, the adjusted age is the Annuitant's
age as determined in (b), reduced by one additional year.
The Annuity rates for Options 2 and 3 are based on mortality from 1983
Table A.
Assumed Annual Net Return Rate is the interest rate used to determine
the amount of the first Annuity payment under a variable Annuity. The
Separate Account must earn this rate plus enough to cover the mortality
and expense risks charges (which may include profit) and administrative
charges if future variable Annuity payments are to remain level.
The Contract Holder must give written notice to Us at least 30 days
before the Annuity payments begin, electing or changing:
(a) The date on which Annuity payments are to begin;
(b) The Annuity Option;
20
<PAGE>
(c) Whether the payments are to be made monthly, quarterly,
semiannually or annually;
(d) The investment options used to provide Annuity payments.
The first Annuity payment may not be earlier than one (1) calendar year
after the initial Purchase Payment, not later than the later of the:
(a) First day of the month following the Annuitant's birthday shown on
the Contract Schedule; or
(b) Tenth anniversary of the last Purchase Payment. In lieu of the
election of an Annuity, the Contract Holder may request a lump sum
payment.
12.03 Annuity Unit - The number of Annuity Units per Fund is based on the
amount of the first variable Annuity payment which is equal to:
(a) The portion of the Contract Value (minus any premium taxes) applied
to pay a variable Annuity; divided by,
(b) 1000; multiplied by,
(c) The payment rate for the Annuity Option chosen.
Such amount, or portion, of the variable Annuity payment will be
divided by the Annuity Unit value for the appropriate Fund on the tenth
Valuation Period before the due date of the first payment to determine
the number of each Fund's Annuity Units. The number of each Fund's
Annuity Unit remains fixed. Each future payment is equal to the sum of
the products of each Fund's Annuity Unit value multiplied by the
appropriate number of units. The Fund's Annuity Unit value on the tenth
Valuation Period prior to the due date of the payment is used.
12.04 Annuity Unit Value - For any Valuation Period, a Fund's Annuity Unit
value is equal to:
(a) The value for the previous Valuation Period; multiplied by,
(b) The Annuity Net Return Factor for the Valuation Period; multiplied
by,
(c) A daily factor to reflect the Assumed Annual Net Return Rate (the
factor for 3.5% per year is .9999058; for 5% per year it is
.9998663).
The dollar value of a Fund(s) Annuity Unit values and payments may go
up or down due to investment gain or loss.
12.05 Annuity Net Return Factor - The Annuity net return factor is used to
compute all Separate Account Annuity payments for any Fund.
The Annuity net return factor(s) for each Fund is equal to 1.0000000
plus the net return rate. The net return rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account at
the end of a Valuation Period; minus,
(b) The value of the shares of the Fund held by the Separate Account at
the start of the Valuation Period; plus or minus,
(c) Taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) The total value of the Fund(s) Accumulation Units and Fund(s)
Annuity Units of the Separate Account at the start of the Valuation
Period; minus,
21
<PAGE>
(e) A daily actuarial charge as shown of the Contract Schedule for
Annuity mortality and expense risks and profit and a daily
administrative charge which will not exceed the administrative
charge as shown on the Contract Schedule.
The net return rate may be more or less than zero (0) percent.
The value of a share of the Fund is equal to the net assets of the Fund
divided by the number of shares outstanding.
12.06 Annuity Options
Option 1 - Payments for a Stated Period of Time - An Annuity will be
paid for the number of years chosen. The number of years must be at
least 5 and not more than 30.
If payments for this Annuity Option are made under a variable Annuity,
the present value of any remaining payments may be withdrawn at any
time.
Option 2 - Life Income - An Annuity will be paid for the life of the
Annuitant. If also chosen, We will guarantee payments for 60, 120, 180,
or 240 months.
Option 3 - Life Income Based upon the Lives of Two Annuitants - An
Annuity will be paid during the lives of the Annuitant and a second
Annuitant. Payments will continue until both Annuitants have died. When
this Annuity Option is chosen, a choice must be made of:
(a) 100% of the payment to continue after the first death;
(b) 66-2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) Payments for a minimum of 120 months with 100% of the payment to
continue after the first death; or
(e) 100% of the payment to continue at the death of the second
Annuitant and 50% of the payment to continue at the death of the
Annuitant.
We may make other options available as allowed by law.
22
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
- --------------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- --------------------------------------------------------------------------------
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- -------------------------------------------------------------------------------
23
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
- ------------------------------------------------------------------------------------------------------------------------------
Age of
Annuitant Male Female Male Female Male Female Male Female Male Female
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.27 $ 3.90 $ 4.26 $ 3.90 $ 4.22 $ 3.89 $ 4.17 $ 3.86 $ 4.08 $ 3.82
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58
63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
66 6.30 5.51 6.21 5.47 5.96 5.36 5.56 5.16 5.08 4.86
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
24
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36
60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85
65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54
70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49
75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
- -----------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
25
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Adjusted Ages
- -----------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.75 $ 4.07 $ 4.26 $ 3.75 $ 3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12
60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54
65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14
70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96
75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
- --------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
26
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
- --------------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- --------------------------------------------------------------------------------
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.85 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
- --------------------------------------------------------------------------------
27
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- -------------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -------------------------------------------------------------------------------
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
- -------------------------------------------------------------------------------
28
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of -----------------------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.56 $ 4.20 $ 4.55 $ 4.19 $ 4.51 $ 4.18 $ 4.45 $ 4.15 $ 4.36 $ 4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.96 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
29
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ------------------------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 5.48 $ 5.12 $ 5.46 $ 5.11 $ 5.41 $ 5.09 $ 5.34 $ 5.06 $ 5.24 $ 5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.97 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
30
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Adjusted Ages
- -----------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.97 $ 4.35 $ 4.56 $ 3.97 $ 4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
- --------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
31
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.03 $ 4.36 $ 4.55 $ 4.03 $ 4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83
60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39
65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14
70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20
75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
- ---------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
32
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Adjusted Ages
- -----------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.88 $ 5.26 $ 5.48 $ 4.88 $ 5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
- -----------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
33
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and the Second Annuitant is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.93 $ 5.27 $ 5.46 $ 4.93 $ 5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28
65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03
70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08
75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
- ------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
34
<PAGE>
- --------------------------------------------------------------------------------
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
Individual Variable, Fixed, or Combination Annuity Contract
Nonparticipating
- --------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
I-CDA-GP2(4/94)
---------------------------------------------------
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
Aetna Insurance Company of America (We or Us) agrees to pay benefits according
to the terms and conditions set forth in this Contract.
- --------------------------------------------------------------------------------
Certificate of Group Annuity Coverage
Aetna certifies that an account is established for you under the Group Annuity
Contract and Certificate numbers shown below.
This certificate describes Group Annuity Contract provisions. It replaces any
and all prior certificates or endorsements issued to you under the stated
Contract and Certificate numbers. This Certificate is for information only and
is not a part of the Contract.
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN SECTIONS 6 AND 12.
- --------------------------------------------------------------------------------
Right to Cancel
The Certificate Holder may cancel the Certificate within ten (10) days of
receiving it by returning it to Us at the address above or the person from whom
it was purchased. Within seven (7) days of the cancellation request, We will
return the Certificate Holder's Purchase Payment(s) made plus any increase, or
minus any decrease on the amount allocated to the Separate Account.
Signed at the Home Office on the Effective Date.
/s/ Dan Kearney /s/ Maria F. McKeon
President Secretary
- --------------------------------------------------------------------------------
Contract Holder Group Annuity Contract Number
- --------------------------------------------------------------------------------
Certificate Holder Certificate Number
- --------------------------------------------------------------------------------
Annuitant Name Type of Plan
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CERTIFICATE CONTAINS A MARKET VALUE ADJUSTMENT
FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN
INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA
DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
GP2CERT(4/94)
<PAGE>
Table of Contents
Page
Right to Cancel...........................................................1
Contract Schedule.........................................................4
Separate Account.................................................4
AICA Guaranteed Account (AG Account).............................4
Separate Account and AG Account..................................4
Fixed Annuity....................................................6
Section 1. Definitions....................................................7
Section 2. General Provisions.............................................9
The Contract.....................................................9
Certificates.....................................................9
Nonparticipating Contract........................................9
Misstatements and Adjustments....................................9
Reports..........................................................9
Premium Taxes....................................................9
Protection of Proceeds...........................................9
Evidence of Survival.............................................9
Proof of Age.....................................................9
Change of Contract...............................................9
Section 3. Ownership.....................................................10
Group Contract Holder...........................................10
Certificate Holder Rights.......................................10
Transfer of Ownership...........................................10
Section 4. Beneficiary Provisions........................................11
Beneficiary.....................................................11
Change of Beneficiary...........................................11
Death of Beneficiary............................................11
Section 5. Purchase Payments.............................................11
Purchase Payments...............................................11
Allocation of Purchase Payments.................................11
Section 6. Separate Account..............................................12
General.........................................................12
Investment Allocations to the Separate Account..................12
Valuation of Assets.............................................12
Accumulation Unit...............................................12
Net Return Factor for Each Valuation Period.....................12
Administrative Charge...........................................13
Mortality Risk Charge...........................................13
Expense Risk Charge.............................................13
Mortality and Expense Guarantee.................................13
2
<PAGE>
Page
Section 7. AG Account....................................................13
AG Account Guaranteed Interest Rate.............................13
Deposit Period..................................................13
Guaranteed Term.................................................13
Guaranteed Term(s) Groups.......................................14
Maturity Date...................................................14
Allocation of Net Purchase Payments to the AG Account...........14
AG Account Guaranteed Term Maturity Date and Maturity Value.....14
Transfers from the AG Account...................................14
Withdrawals from the AG Account.................................14
Reinvestment....................................................14
AG Account Market Value Adjustment (Factor).....................15
Section 8. Certificate Holder's Account Value; Transfers and Withdrawals
During the Accumulation Period ...............................16
Certificate Holder's Account Value..............................16
Transfers During the Accumulation Period........................16
Withdrawals During the Accumulation Period......................16
Deferred Sales Charge...........................................16
Waiver of Deferred Sales Charge.................................17
Payment of Adjusted Certificate Holder Account Value............17
Systematic Withdrawal Option (SWO)..............................17
Section 9. Maintenance Charge............................................18
Maintenance Charge..............................................18
Section 10. Proceeds Payable on Death....................................18
Death of the Certificate Holder Prior to the Annuity Date.......18
Death Benefit Amount Prior to the Annuity Date..................18
Death Benefit Payment Methods...................................20
Death of Certificate Holder On or After the Annuity Date........20
Death of the Annuitant..........................................20
Section 11. Delay of Payments............................................20
Delay of Payments...............................................20
Section 12. Annuity Provisions...........................................21
Designation of Annuitant........................................21
Terms of Annuity Options........................................21
Annuity Unit....................................................22
Annuity Unit Value..............................................23
Annuity Net Return Factor.......................................23
Annuity Options.................................................23
3
<PAGE>
Contract Schedule
Separate Account
- --------------------------------------------------------------------------------
Separate Account: Variable Account I
Charges to the Separate A daily charge is deducted from the assets of the
Account: Separate Account. The deduction is the daily
equivalent of the annual effective percentage
shown below:
(a) During the Accumulation Period:
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Separate Account Charges During
Accumulation Period 1.40%
(b) During the Annuity Period
Administrative Charge Not To Exceed 0.25%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Maximum Separate Account Charges
During Annuity Period 1.50%
AICA Guaranteed Account (AG Account)
- --------------------------------------------------------------------------------
Minimum Guaranteed 3.0%
Interest Rate
(effective annual rate of
return):
Separate Account and AG Account
- --------------------------------------------------------------------------------
Minimum Initial $1,500
Purchase Payment:
Minimum Subsequent $500 or $50 per month if paid by an automatic
Purchase Payment: check plan
Maximum Subsequent $500,000 without Home Office approval
Purchase Payment:
Transfers: We allow an unlimited number of transfers during
the Accumulation Period. Twelve (12) transfers
in any calendar year are free. Thereafter, We
reserve the right to charge a transfer charge up to
$10 for each subsequent transfer.
4
<PAGE>
Maintenance Charge: The annual maintenance charge is $30. If the
Certificate Holder's Account is $50,000 or more on
the date the maintenance charge is to be deducted,
the maintenance charge is $0.
Deferred Sales For each withdrawal from a Certificate Holder's
Charge: Account, a deferred sales charge for each Net
Purchase Payment will be determined as follows:
Years from Receipt of Deferred
Net Purchase Payment Sales Charge
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
6-7 1%
7+ 0%
Waiver of Deferred Section 8.05 provides for the following:
Sales Charge:
(c) At least 12 months after the date of the first
Purchase Payment in an amount equal to or less
than 15% of the Certificate Holder's Account
Value.
(d) For a full withdrawal where the Certificate
Holder's Account Value does not exceed $2,500
and no withdrawals have been taken from the
Certificate Holder's Account within the prior
12 months.
Systematic (a) Specified Payment - Maximum Percentage: 10%
Withdrawal Option:
(b) Specified Period - Minimum Period: 10 years
(c) Specified Percentage - Maximum Percentage: 10%
Death Benefit Factor: 4%
Death Benefit There is no maximum death benefit amount.
Maximum Amount:
Death Benefit 85 years
Maximum Age:
Fund for Allocation of Federated Prime Money Fund II
Excess Guaranteed Death
Benefit Value:
Latest Annuity Date: The Certificate Holder's 90th birthday.
5
<PAGE>
Fixed Annuity
- --------------------------------------------------------------------------------
Minimum Guaranteed 3.0%
Interest Rate
(effective annual rate
of return):
6
<PAGE>
Section 1. Definitions
- --------------------------------------------------------------------------------
1.01 Accumulation Period - The period during which one or more Net
Purchase Payments applied to a Certificate Holder's Account
accumulate to provide future Annuity payments.
1.02 Accumulation Unit - A measure of the net investment results for
each variable investment option during the Accumulation Period.
The Accumulation Units for the applicable Funds are used to
calculate the portion of a Certificate Holder's Account Value
attributable to a Separate Account during the Accumulation
Period.
1.03 Adjusted Certificate Holder Account Value - The Certificate
Holder's Account Value, plus or minus any aggregate AG Account
Market Value Adjustment.
1.04 Annuitant - The natural person on whose life an Annuity payment
is based.
1.05 Annuity - A series of payments We make for life, a definite
period or a combination of the two.
1.06 Annuity Date - The date on which Annuity payments commence.
1.07 Annuity Options - Annuity payment methods available during the
Annuity Period.
1.08 Annuity Period - The period of time during which Annuity payments
are made.
1.09 Annuity Unit - A measure of the net investment results for each
variable investment option during the Annuity Period. Annuity
Units are used to calculate the amount of each variable Annuity
payment.
1.10 Beneficiary - The person(s) entitled to receive any death
benefit under the Certificate Holder's Account. Upon the death of
a joint Certificate Holder, the surviving joint Certificate
Holder, if any, is treated as the Beneficiary. Any other
Beneficiary designation on record with Us at the time of death is
treated as a contingent Beneficiary.
1.11 Certificate - The document issued to a Certificate Holder to
evidence a Certificate Holder's Account established under the
group Contract.
1.12 Certificate Holder - A person who has established a Certificate
Holder's Account under a group Contract. We reserve the right to
limit ownership to natural persons. If more than one Certificate
Holder owns an Account, each Certificate Holder shall be a joint
Certificate Holder. Any joint Certificate Holder must be the
spouse of the other joint Certificate Holder. Joint Certificate
Holders have joint ownership rights and both must authorize any
exercising of those ownership rights unless otherwise allowed by
Us.
1.13 Certificate Holder's Account - A record We establish for each
Certificate Holder to maintain values under a group Contract.
1.14 Certificate Holder's Account Value - The dollar value as of any
Valuation Period of all amounts accumulated in a Certificate
Holder's Account.
7
<PAGE>
1.15 Contract - This agreement between the Group Contract Holder and
Us.
1.16 Effective Date - The date a Certificate is issued to a
Certificate Holder.
1.17 Fund - One of the variable investment options which may be
selected by a Certificate Holder.
1.18 General Account - The General Account is made up of all of our
general assets other than those allocated to the separate
accounts.
1.19 AICA Guaranteed Account (AG Account) - An investment option
where We guarantee specified rate(s) of interest for specified
periods of time. The AG Account is a separate account established
by Us in accordance with the provisions of the Connecticut
General Statutes Section 38a-433. Certificate Holders do not
participate in the investment gain or loss from the assets held
in the AG Account. Assets in the AG Account may be charged with
liabilities arising out of any other business We may conduct.
1.20 Group Contract Holder - The entity to which a group Contract is
issued.
1.21 Home Office - Our headquarters, located at 151 Farmington Avenue,
Hartford, CT 06156.
1.22 Market Value Adjustment - An adjustment to any withdrawal made
from the AG Account before the end of a guaranteed term as stated
in Section 7.11.
1.23 Net Purchase Payment - The Purchase Payment less premium taxes,
if applicable.
1.24 Purchase Payment - The gross payment accepted by Us and
allocated to the Certificate Holder's Account. We reserve the
right to refuse to accept any Purchase Payment at any time for
any reason.
1.25 Separate Account - A separate account that buys and holds shares
of the Fund(s). Income, gains or losses, realized or unrealized,
are credited or charged to the Separate Account without regard to
Our other income, gains or losses. We own the assets held in the
Separate Account and are not a trustee as to such amounts. The
Separate Account generally is not guaranteed and is held at
market value. The name of the Separate Account is shown on the
Contract Schedule. The assets of the Separate Account, to the
extent of reserves and other Contract liabilities of the Separate
Account, will not be charged with Our other liabilities.
1.26 Valuation Period - The period of time for which a Fund determines
its net asset value, usually from 4:15 p.m. Eastern time each day
the New York Stock Exchange is open until 4:15 p.m. the next such
business day, or such other day that one or more of the Funds
determines its net asset value. The assets of the Separate
Account are not chargeable with the liabilities arising out of
any other business We may conduct.
1.27 Variable Annuity Contract - An Annuity Contract providing for the
accumulation of value and/or for Annuity payments which vary in
amount based on investment results.
8
<PAGE>
Section 2. General Provisions
- --------------------------------------------------------------------------------
2.01 The Contract - The entire Contract consists of this Contract and
any attached applications or endorsements.
2.02 Certificates - A Certificate is issued to each Certificate Holder
whose Purchase Payment(s) is accepted by Us. The Certificate
evidences a Certificate Holder's Account established under the
Contract. Certificates are not part of the Contract.
2.03 Nonparticipating Contract - Neither the Group Contract Holder,
Certificate Holder nor any Beneficiary have a right to share in
our earnings.
2.04 Misstatements and Adjustments - If We learn that the age of any
Annuitant or second Annuitant is misstated, the correct age will
be used to adjust payments. We reserve the right to request
reimbursement or adjust future payments for any amount overpaid.
We will pay the amount of any underpayment.
2.05 Reports - We furnish each Certificate Holder with a report
showing the Certificate Holder's Account Value at least once each
calendar year. We also furnish an annual report of the Separate
Account.
2.06 Premium Taxes - Any premium taxes paid to any governmental
entity are charged against Purchase Payments or a Certificate
Holder's Account. We may, at our sole discretion, pay premium
taxes when due and deduct that amount from the Certificate
Holder's Account at a later date. Payment at an earlier date does
not waive any right We may have to deduct amounts at a later
date.
2.07 Protection of Proceeds - To the extent permitted by law, all
payments under this Contract to a Certificate Holder or
Beneficiary shall be free from legal process and the claim of any
creditor.
2.08 Evidence of Survival - The Company may require satisfactory
evidence of the continued survival of any person(s) on whose life
Annuity payments are based.
2.09 Proof of Age - The Company may require evidence of age of any
Annuitant under Annuity Options 2 and 3 and of the designated
second Annuitant under Annuity Option 3.
2.10 Change of Contract - Only our authorized officers may change the
terms of this Contract. We will notify the Group Contract Holder
in writing at least 30 days before the effective date of any
change. Any change will not affect the amount or terms of any
Annuity which begins before the change.
We may make any change that affects the AG Account Market Value
Adjustment with at least thirty (30) days' advance written notice
to the Group Contract Holder and the Certificate Holder. Any such
change shall become effective for any new guaranteed term and
will apply to all present and future Certificate Holders'
Accounts.
We reserve the right to change the terms of the Systematic
Withdrawal Option for future elections and discontinue the
availability of this option.
9
<PAGE>
Any change to any of the following provisions under this Contract
will not apply to Certificate Holder's Accounts in existence
before the effective date of the change:
(a) Net Purchase Payment (1.23)
(b) AG Account Guaranteed Interest Rate (7.01)
(c) Net Return Factor (6.05)
(d) Certificate Holder's Account Value (1.14)
(e) Deferred Sales Charge (8.04)
(f) Annuity Unit Value (12.04)
(g) Annuity Options (12.06)
(h) Fixed Annuity Interest Rates (12.01)
(i) Transfers (8.02).
Any change that affects the Annuity Option and the tables for the
Annuity Options may be made:
(a) No earlier than twelve (12) months after the Effective Date;
and
(b) No earlier than twelve (12) months after the effective date
of any prior change.
Any Certificate Holder's Account established on or after the
effective date of any change will be subject to the change. If
the Group Contract Holder does not agree to any change under this
provision, We reserve the right to not allow any new Certificate
Holder's Accounts to be established under this Contract. This
Contract may also be changed as deemed necessary by Us to comply
with federal or state law.
Section 3. Ownership
- --------------------------------------------------------------------------------
3.01 Group Contract Holder - The Group Contract Holder has title to
the Contract. The Contract and any amounts accumulated thereunder
are not subject to the claims of the Group Contract Holder nor
any of its creditors.
3.02 Certificate Holder Rights - The Certificate Holder has all
interest and right to amounts held in his or her Certificate
Holder's Account. The Certificate Holder and any joint
Certificate Holder are named on the Specifications page. The
Certificate Holder and any joint Certificate Holder may exercise
all the rights under the Certificate Holder's Account, subject to
the rights of:
(a) Any assignee under an assignment filed at our Home Office;
and
(b) Any irrevocably named Beneficiary.
Upon the death of a Certificate Holder prior to the Annuity Date,
a spousal Beneficiary may elect to continue the Certificate
Holder's Account in his or her own name and retain all ownership
rights and privileges or take distribution of the death benefit
as defined in Section 10.
3.03 Transfer of Ownership - The Group Contract Holder may transfer
ownership of this Contract. A written request, dated and signed,
must be filed at our Home Office.
Any transfer of ownership terminates the interest of any existing
Group Contract Holder. It does
10
<PAGE>
not change the rights of any Certificate Holder.
A Certificate Holder may transfer all of his or her rights under
the Contract. A written request, dated and signed by the
Certificate Holder and any joint Certificate Holder, must be
filed at our Home Office. After the transfer is recorded, it will
take effect as of the date the request was signed. Any such
transfer terminates the interest of any existing Certificate
Holder. It does not change the Beneficiary, nor transfer the
Beneficiary's interest. A transfer will not affect any payments
We may make or actions We may take before such transfer has been
recorded at our Home Office.
Section 4. Beneficiary Provisions
- --------------------------------------------------------------------------------
4.01 Beneficiary - The Certificate Holder may name a Beneficiary and
a contingent Beneficiary. At the death of the Certificate Holder
prior to the Annuity Date, the Beneficiary(ies) named in our
records will receive a death benefit as stated in Section 10.
Upon the death of either joint Certificate Holder prior to the
Annuity Date, the surviving joint Certificate Holder, if any,
will be treated as the designated Beneficiary and any other
Beneficiary designation on record with Us at the time of death is
treated as a contingent Beneficiary.
4.02 Change of Beneficiary - The Certificate Holder may change the
Beneficiary. A written request, dated and signed by the
Certificate Holder, must be filed at our Home Office. If there
are joint Certificate Holders, both must sign the request. After
the change is recorded, it will take effect as of the date the
request was signed. If the request reaches our Home Office and is
recorded after the Certificate Holder dies, but before any
payment is made, the change is valid.
4.03 Death of Beneficiary - If all of the Beneficiaries and contingent
Beneficiaries die prior to the Certificate Holder's death, We pay
the death benefit in one sum to the Certificate Holder's estate.
Section 5. Purchase Payments
- --------------------------------------------------------------------------------
5.01 Purchase Payments - Subject to the maximum and minimum shown on
the Contract Schedule, the Certificate Holder may determine the
amount and frequency of Purchase Payments. We reserve the right
not to accept any Purchase Payment. We will declare from time to
time the acceptability of additional Purchase Payments.
5.02 Allocation of Purchase Payments - The Certificate Holder may
elect to have each Net Purchase Payment accumulate:
(a) On a variable basis invested in shares of one or more Funds
in which the Separate Account invests;
(b) For guaranteed terms offered in the current deposit period(s)
under the AG Account; or
(c) In a combination of any of the available investment options.
Net Purchase Payments must be allocated in whole percentages. For
subsequent Purchase Payments, if no allocation instructions are
received with the Purchase Payment, the allocation will be as
indicated in the most recent directive from the Certificate
Holder. If the same
11
<PAGE>
guaranteed term(s) are not available, the next shortest will be
used. If no shorter guaranteed term is available, the next longer
guaranteed term will be used.
Section 6. Separate Account
- --------------------------------------------------------------------------------
6.01 General - The assets of the Separate Account, equal to the
reserves and other Contract liabilities that depend on the
investment performance of the Separate Account are not chargeable
with liabilities arising out of any other business We may
conduct. Income, gains or losses of the Separate Account,
realized or unrealized, are credited to or charged against the
assets of the Separate Account without regard to Our other
income, gains or losses.
6.02 Investment Allocations to the Separate Account - The assets of
the Separate Account are segregated by Fund. If the shares of any
Fund are no longer available for investment by the Separate
Account or if in our judgment, further investment in such shares
should become inappropriate in view of the purpose of the
Contract, We may cease to make such Fund shares available for
investment under the Contract prospectively, or We may substitute
shares of another Fund for shares already acquired. We may also,
from time to time, add additional Funds. Any elimination,
substitution or addition of Funds will be done in accordance with
applicable state and federal securities laws. We reserve the
right to substitute shares of another Fund for shares already
acquired without a proxy vote.
6.03 Valuation of Assets - The shares of the Funds will be valued at
their net asset value at the end of each Valuation Period.
6.04 Accumulation Unit - A Net Purchase Payment that is allocated to
one or more Funds is credited to the Certificate Holder's Account
as Accumulation Units. The number of Accumulation Units credited
is determined by dividing the applicable portion of the Net
Purchase Payment by the Accumulation Unit value for the
appropriate Fund. The Accumulation Unit value used is that which
is computed for the next Valuation Period after which the
Purchase Payment is received at our Home Office. Accumulation
Units attributable to the initial Purchase Payments will be
credited within two business days of acceptance.
Accumulation Unit values may increase or decrease from Valuation
Period to Valuation Period.
6.05 Net Return Factor for Each Valuation Period - The value of an
Accumulation Unit for any Valuation Period is calculated by
multiplying the Accumulation Unit value for the immediately
preceding Valuation Period by the net return factor of the
appropriate Fund for the current period.
The net return factor for each Fund is equal to 1.0000000 plus
the net return rate.
The net return rate equals:
(a) The value of the shares of the Fund held by the Separate
Account at the end of a Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate
Account at the start of the Valuation Period; plus or minus
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<PAGE>
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the Funds(s) Accumulation Units and
Fund(s) Annuity Units of the Separate Account at the start
of the Valuation Period; minus
(e) A daily actuarial charge as shown on the Contract Schedule
for Annuity mortality and expense risks and profit and a
daily administrative charge.
The net return rate may be more or less than zero (0) percent.
The value of a share of the Fund is equal to the net assets of
the Fund divided by the number of shares outstanding.
6.06 Administrative Charge - We deduct an administrative charge equal,
on an annual basis, to the amount shown on the Contract Schedule.
6.07 Mortality Risk Charge - We deduct a mortality risk charge equal,
on an annual basis, to the amount shown on the Contract Schedule.
6.08 Expense Risk Charge - We deduct an expense risk charge equal, on
an annual basis, to the amount shown on the Contract Schedule.
6.09 Mortality and Expense Guarantee - We guarantee that the dollar
amount of each Annuity payment after the first will not be
affected by variations in mortality or expense experience.
Section 7. AG Account
- --------------------------------------------------------------------------------
7.01 AG Account Guaranteed Interest Rate - All amounts allocated to
the AG Account earn a rate of interest that is guaranteed for a
specified period of time. The rate will be credited daily and
will never be less than the minimum guaranteed interest rate
shown on the Contract Schedule. We determine the rate and it is
not based on investment experience.
For guaranteed terms of one year or less, one guaranteed interest
rate is credited for the full guaranteed term. For longer
guaranteed terms, an initial guaranteed interest rate is credited
from the date of deposit to the end of a specified period within
the guaranteed term. There may be different guaranteed interest
rate(s) declared for subsequent specified time intervals
throughout the guaranteed term.
7.02 Deposit Period - A calendar week, a calendar month, a calendar
quarter, or any other period of time We specify during which Net
Purchase Payment(s), transfers and reinvestments are accepted
into the AG Account for one or more guaranteed terms. We reserve
the right to extend the deposit period.
7.03 Guaranteed Term - The period of time for which AG Account
guaranteed interest rates are guaranteed on Net Purchase
Payments. Transfers and reinvestments are made into a current
deposit period for the AG Account. Such period begins on the day
following the close of the deposit period and ends on the
designated Maturity Date. Guaranteed terms, if any, are offered
at our discretion for various lengths of time ranging up to and
including ten years.
13
<PAGE>
During a deposit period, We may make available any number of
guaranteed terms. The Certificate Holder may allocate Net
Purchase Payments and transfers into any or all of the available
guaranteed terms.
7.04 Guaranteed Term(s) Groups - All AG Account guaranteed term(s)
with the same length of time from the close of the deposit period
until the designated Maturity Date.
7.05 Majority Date - The last day of a guaranteed term.
7.06 Allocation of Net Purchase Payments to the AG Account - When the
Certificate Holder wishes to allocate all or any portion of a Net
Purchase Payment to the AG Account, he or she must tell Us the
percentage to apply to one or more of the AG Account guaranteed
term(s) available during the current deposit period. If no
allocation instructions are received, a Net Purchase Payment is
allocated as indicated in the most recent directive from the
Certificate Holder. If the same guaranteed term is not available
for any amount allocated to the AG Account, We will allocate the
amount to the next shortest guaranteed term available. If no
shorter guaranteed term is available, We will allocate it to the
next longest guaranteed term.
7.07 AG Account Guaranteed Term Maturity Date and Maturity Value - On
the maturity date, the value of the total of all amounts
allocated to that guaranteed term is called the maturity value.
When Certificate Holders have assets in the AG Account, at least
eighteen (18) days before a maturity date, We notify them of the:
(a) Projected maturity value; and
(b) Guaranteed terms and the applicable guaranteed interest
rates available during the current deposit period.
When no allocation instructions are received and the assets in a
guaranteed term have been reinvested by Us in another guaranteed
term on the maturity date, the Certificate Holder may transfer or
withdraw, during the month following the maturity date, the
reinvested amount with interest earned (as of the date the
request is received at our Home Office) without incurring a
Market Value Adjustment. This transaction is allowed only once
for each maturity date, regardless of whether the transfer or
withdrawal is partial or full.
7.08 Transfers from the AG Account - A Certificate Holder may transfer
any portion, or all, of an amount in the AG Account to one or
more of the Funds or to another available guaranteed term. The
amount withdrawn for any reason before the maturity date is
subject to a Market Value Adjustment.
7.09 Withdrawals from the AG Account - When the Certificate Holder
requests a withdrawal from the AG Account, if instructions are
not provided by the Certificate Holder, amounts are withdrawn on
a pro rata basis from the guaranteed term(s) groups in which the
Certificate Holder's Account is currently invested. Within a
guaranteed term group, the amount to be withdrawn will be
withdrawn first from the oldest deposit period. Except on the
maturity date, withdrawals from the AG Account will be subject to
a Market Value Adjustment.
7.10 Reinvestment - We will mail a notice to the Certificate Holder
before a guaranteed term's
14
<PAGE>
maturity date. This notice will contain the guaranteed terms
available during the current deposit periods with their
guaranteed interest rate(s) and projected maturity value. If no
specific direction is given by the Certificate Holder prior to
the maturity date, each maturity value will be reinvested in the
current deposit period for a guaranteed term of the same
duration. If a guaranteed term of the same duration is
unavailable, each matured term value will automatically be
reinvested in the current deposit period for the next shortest
guaranteed term available. If no shorter guaranteed term is
available, the next longer guaranteed term will be used. We will
mail a confirmation statement to the Certificate Holder after the
maturity date. This notice will state the guaranteed term and
guaranteed interest rate(s) which will apply to the reinvested
matured term value.
7.11 AG Account Market Value Adjustment (Factor) - The Market Value
Adjustment factor (MVA factor) reflects any change in interest
rates from the time assets are allocated to the AG Account to the
time they are transferred or withdrawn. An MVA factor is applied
to any amount withdrawn or transferred from the AG Account before
the end of a guaranteed term, including amounts paid in a lump
sum death benefit or applied to an Annuity Option.
The amount withdrawn from the AG Account is multiplied by the MVA
factor which is calculated as follows:
x
---
365
(1 + i)
--------------------
x
---
365
(1 + j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days remaining, (computed from
Wednesday of the week of withdrawal) in the
guaranteed Term.
Determination of MVA factor parameters:
A yield is computed at the close of the last business day of each
week of the deposit period. The yield will equal the average of
the yields on U.S. Treasury Notes which matured during the last
three months of the applicable guaranteed term.
The deposit period yield is the average of those yields for the
deposit period. If withdrawal is made prior to the close of the
deposit period, it is the average of those yields on each week
preceding withdrawal.
The current yield is the average of the yields on the last
business day of the week preceding withdrawal on the same U.S.
Treasury Notes included in the deposit period yield.
If no U.S. Treasury Notes matured during the last three months of
the guaranteed term, We reserve the right to use the average of
the yields on U.S. Treasury Notes that mature during a
15
<PAGE>
following quarter.
Section 8. Certificate Holder's Account Value; Transfers and Withdrawals
During the Accumulation Period
- --------------------------------------------------------------------------------
8.01 Certificate Holder's Account Value - The value of a Certificate
Holder's Account is determined by adding the value of the total
of Accumulation Units attributed to the selected Fund(s) to the
value of any amounts attributed to the AG Account.
8.02 Transfers During the Accumulation Period - Before the Annuity
Date, the Certificate Holder may transfer from any Fund or
guaranteed term of the AG Account to:
(a) Any other Fund; or
(b) Any guaranteed term of the AG Account available in the
current deposit period.
Transfer requests can be submitted as a percentage or as a dollar
amount. We may establish a minimum transfer amount. Within a
guaranteed term group, the amount transferred is withdrawn first
from the oldest deposit period, then from the next oldest, and so
on until the amount requested is satisfied.
The Certificate Holder may make an unlimited number of transfers
during the Accumulation Period. The number of free transfers
allowed is shown on the Contract Schedule. Transfers in excess of
that number may be subject to the transfer charge shown on the
Contract Schedule. Transfers of a matured term value from the AG
Account on or within one calendar month after a guaranteed term's
maturity date do not count against the annual transfer limit.
Amounts applied to guaranteed terms of the AG Account may not be
transferred to the Funds or to another guaranteed term during the
deposit period or for 90 days after the close of the deposit
period except for matured term value(s) during the calendar month
following the guaranteed term's maturity date.
Transfers from guaranteed terms of the AG Account are subject to
a Market Value Adjustment.
8.03 Withdrawals During the Accumulation Period - The Certificate
Holder may withdraw all or a portion of the Certificate Holder's
Account Value during the Accumulation Period by properly
completing a withdrawal request form. Withdrawal requests can be
submitted as a percentage or as a specific dollar amount. Net
Purchase Payment amounts are withdrawn first, and then the excess
value, if any. For any partial withdrawal, if instructions are
not provided by the Certificate Holder, amounts are withdrawn on
a pro rata basis from the Fund(s), and/or the guaranteed term(s)
groups in which the Certificate Holder's Account is currently
invested. Within a guaranteed term group, the amount to be
withdrawn will be withdrawn first from the oldest deposit period,
then from the next oldest, and so on until the amount requested
is satisfied.
After deduction of the maintenance charge, if applicable, the
withdrawn amount shall be reduced by the applicable deferred
sales charge and any applicable premium taxes.
8.04 Deferred Sales Charge - The deferred sales charge only applies to
the portion of the amount
16
<PAGE>
withdrawn attributable to Net Purchase Payment(s) and varies
according to the elapsed time since receipt of the Purchase
Payment. The deferred sales charge is shown on the Contract
Schedule.
8.05 Waiver of Deferred Sales Charge - No deferred sales charge is
deducted when a Certificate Holder's Account Value is paid:
(a) To a Beneficiary as a death benefit, except for Purchase
Payments made by a surviving joint Certificate Holder as
described in Section 10.02(b);
(b) As a premium for an Annuity Option;
(c) At least the number of months, as shown on the Contract
Schedule, after the date of the first Purchase Payment and
in an amount equal to or less than the percentage of the
Certificate Holder's Account Value as shown on the Contract
Schedule. This applies to the first withdrawal request,
partial or full, in a calendar year. The Certificate
Holder's Account Value is calculated as of the date the
withdrawal request is received in good order at our Home
Office. This waiver is not available to the Certificate
Holder while a SWO is in effect;
(d) For a full withdrawal where the Certificate Holder's
Account Value does not exceed the amount shown on the
Contract Schedule and no withdrawals have been taken from
the Certificate Holder's Account within the prior 12 months;
(e) For a distribution made by Us under Section 8.06; or (f)
For a distribution which is part of a SWO under Section
8.07.
We reserve the right to allow the proceeds of a total withdrawal
to be reinstated under the terms and conditions as established by
Us from time to time.
8.06 Payment of Adjusted Certificate Holder Account Value - Upon 90
day's written notice to the Certificate Holder, We will terminate
any Certificate Holder's Account if the Certificate Holder's
Account Value becomes less than $1,500 immediately following any
partial withdrawal. We do not intend to exercise this right in
cases where the Certificate Holder's Account Value is reduced to
$1,500 or less solely due to investment performance. When We make
a distribution pursuant to this provision, the deferred sales
charge will not be deducted.
8.07 Systematic Withdrawal Option (SWO) - We will allow the
Certificate Holder to establish a schedule of withdrawals to be
made automatically from the Certificate Holder's Account Value.
All distributed amounts will be withdrawn on a pro rata basis
from the Fund(s) and/or the guaranteed term(s) groups of the AG
Account in which the Certificate Holder's Account is invested.
The Certificate Holder must elect one of the following SWO
methods:
(a) Specified Payment: Payments of a designated dollar amount.
The annual amount may not be greater than the percentage of
the Certificate Holder's Account Value at time of the
election as shown on the Contract Schedule. This annual
dollar amount will remain constant. At our discretion, We
may require a minimum payment amount; or
(b) Specified Period: Payments which are made over a period of
time which must be at least the minimum period as shown on
the Contract Schedule. The annual amount paid each
17
<PAGE>
year is calculated by dividing the Certificate Holder's
Account Value as of December 31 of the prior year by the
number of payment years remaining; or
(c) Specified Percentage: Payment of a designated percentage
which cannot be greater than the percentage of the
Certificate Holder's Account Value at the time of election
as shown on the Contract Schedule. The percentage may be
changed by written request. We reserve the right to limit
the number of times the percentage may be changed. The
annual amount is calculated by multiplying the Certificate
Holder's Account Value as of December 31 of the year prior
to the payment by the designated percentage.
In our discretion, We may require a minimum initial Certificate
Holder's Account Value for election of this option. SWO may be
elected by submitting a completed and signed election form to Us.
Once elected, this option may be revoked by submitting a written
request to Us. SWO may be elected only once by the Certificate
Holder or by a spousal Beneficiary.
Certificate Holders should consult their tax adviser prior to
requesting this distribution option. We are not responsible for
any adverse tax consequences due to a Certificate Holder's
receiving SWO payments. A ten (10) percent penalty tax may apply
to distributions to a Certificate Holder who has not reached age
59-1/2. Upon death of the Certificate Holder, any payments will
be made under the terms of Section 10.
Section 9. Maintenance Charge
- --------------------------------------------------------------------------------
9.01 Maintenance Charge - We will deduct an annual maintenance charge
as shown in the Contract Schedule from the Certificate Holder's
Account during the Accumulation Period. We will deduct the
maintenance charge on the anniversary of the Effective Date of
the Certificate for the Certificate Holder's Account. This
maintenance charge is also deducted upon withdrawal of the entire
Adjusted Certificate Holder's Account. The maintenance charge is
deducted proportionately from each investment option used.
Section 10. Proceeds Payable on Death
- --------------------------------------------------------------------------------
10.01 Death of the Certificate Holder Prior to the Annuity Date - In
the event of the death of the Certificate Holder or a joint
Certificate Holder prior to the Annuity Date, a death benefit is
payable to the Beneficiary(ies) designated by the Certificate
Holder. Upon the death of a joint Certificate Holder, the
surviving joint Certificate Holder, if any, will be treated as
the designated Beneficiary. Any other Beneficiary designation on
record with Us at the time of death will be treated as a
contingent Beneficiary.
A Beneficiary may request We pay the death benefit under one of
the options described in Section 10.03. If the Beneficiary is the
spouse of the Certificate Holder, he or she may elect to continue
the Certificate Holder's Account in his or her own name and
exercise all the Certificate Holder's rights under the Contract.
10.02 Death Benefit Amount Prior to the Annuity Date -
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<PAGE>
(a) Except as set forth in Section 10.02(b), the amount of the
guaranteed death benefit value is equal to the greater of:
(i) The Certificate Holder's Account Value at the end of
the Valuation Period during which We receive at our
Home Office due proof of death and election of the type
of payment to be made; or
(ii) The death benefit determined as of the Valuation
Period corresponding to the date of death.
Until the first Effective Date anniversary, the death
benefit is equal to the Purchase Payments made by the
Certificate Holder prior to the Effective Date
anniversary less any withdrawals and any amounts
applied to an Annuity Option.
For each Certificate year thereafter, the death benefit
during the Certificate year equals the death benefit at
the beginning of the Certificate year plus Purchase
Payments made during the year less any withdrawals and
any amounts applied to an Annuity Option.
On each Effective Date anniversary, the death benefit
is determined as follows:
(A) The death benefit on the previous Effective Date
anniversary increased by the death benefit factor
shown on the Contract Schedule; plus
(B) Purchase Payments made by the Certificate Holder
during the Certificate year increased by the death
benefit factor shown on the Contract Schedule for
the portion of the year since the Purchase Payment
was made; less
(C) Any withdrawals or amounts applied to an Annuity
Option during the Certificate year increased by
the death benefit factor shown on the Contract
Schedule for the portion of the Certificate year
since the withdrawal or election of Annuity
option; or
(iii) The Certificate Holder's Account Value on the most
recent seventh year anniversary of the Effective Date
plus any Purchase Payments made after such Effective
Date anniversary less any withdrawals and any amounts
applied to an Annuity Option.
Notwithstanding the foregoing, the death benefit under (ii)
or (iii) will not exceed the death benefit maximum amount
shown on the Contract Schedule.
The death benefit calculation described in (ii) and (iii)
above, applies until the Certificate Holder reaches the
death benefit maximum age shown on the Contract Schedule.
Thereafter, the death benefit is only adjusted for Purchase
Payments, withdrawals and amounts applied to Annuity
Options. If the Certificate Holder reaches the death benefit
maximum age shown on the Contract Schedule prior to the
seventh anniversary of the Effective Date, the death benefit
will be the greater of (i) or (ii) above.
The excess, if any, of the guaranteed death benefit value
over the Certificate Holder's Account Value is determined
when we receive at our Home Office due proof of death and
allocated to the Fund shown on the Contract Schedule. The
Certificate Holder's Account
19
<PAGE>
Value plus any excess amount deposited becomes the
Certificate Holder's Account Value.
(b) In the case of a Beneficiary of a surviving joint
Certificate Holder who continued the Certificate Holder's
Account in his or her own name, the death benefit shall be
equal to (a)(i) above less any applicable deferred sales
charge on any Purchase Payment made after We have received
at our Home Office due proof of death of the first joint
Certificate Holder.
10.03 Death Benefit Payment Methods - A non-spousal Beneficiary must
elect the death benefit to be paid under one of the following
methods in the event of the death of the Certificate Holder prior
to the Annuity Date:
Method 1 - Lump sum payment of the death benefit; or
Method 2 - The payment of the entire death benefit within (5)
years of the date of the Certificate Holder's death; or
Method 3 - Payment of the death benefit over the lifetime of the
designated Beneficiary or over a period not extending beyond the
life expectancy of the designated Beneficiary with distribution
beginning within one year of the date of death of the Certificate
Holder.
Any portion of the death benefit not applied under Option 3
within one year of the date of Certificate Holder's death, must
be distributed within five (5) years of the date of death. A
Market Value Adjustment will apply at the time the death benefit
is paid.
A spousal Beneficiary may elect to continue the Certificate
Holder's Account in his or her name, elect a lump sum payment of
the death benefit or apply the Adjusted Certificate Holder's
Account Value to an Annuity Option.
10.04 Death of Certificate Holder On or After the Annuity Date - If the
Certificate Holder who is not the Annuitant, dies on or after the
Annuity Date, the remaining payments under the Annuity Option
elected will be made to the Beneficiary at least as rapidly as
under the method of distribution in effect at the Certificate
Holder's death.
10.05 Death of the Annuitant - If the Annuitant, who is not a
Certificate Holder, dies on or before the Annuity Date, a new
Annuitant may be named. If no Annuitant is named, the Certificate
Holder will be the Annuitant. If the Annuitant dies after the
Annuity Date, the death benefit, if any, will be payable to the
Beneficiary as specified in the Annuity Option elected. We will
require proof of the Annuitant's death. Death benefits will be
paid at least as rapidly as under the method of distribution in
effect at the Annuitant's death.
Section 11. Delay of Payments
- --------------------------------------------------------------------------------
11.01 Delay of Payments - We will make any payments under this Contract
within seven days after a request is received in good order. We
reserve the right to suspend or postpone any type of payment from
the Separate Account for any period when:
20
<PAGE>
(a) The New York Stock Exchange is closed for other than
customary weekend and holiday closings;
(b) Trading on the Exchange is restricted;
(c) An emergency exists as a result of which it is not
reasonably practicable to dispose of securities held in the
Separate Account or determine their value; or
(d) The Securities and Exchange Commission so permits delay for
the protection of security holders.
The applicable rules of the Securities and Exchange Commission
will govern as to whether the conditions in (b) or (c) exist.
We also reserve the right to delay any type of payment from the
AG Account for up to six (6) months.
Section 12. Annuity Provisions
- --------------------------------------------------------------------------------
12.01 Designation of Annuitant - The Certificate Holder and the
Annuitant need not be the same person. The Certificate Holder
names the Annuitant and during the Accumulation Period, may
change the designated Annuitant. We change the Annuitant when We
receive a written request in good order at our Home Office. We
will not change the Annuitant when Annuity payments have
commenced.
The Certificate Holder elects an Annuity Option by telling Us to
use all or any portion of the Certificate Holder's Adjusted
Account Value (minus any applicable premium taxes if not
previously deducted) to purchase Annuity payments under an
Annuity Option.
When an Annuity Option is chosen the Certificate Holder must
designate a:
(a) Fixed Annuity using the General Account;
(b) Variable Annuity using any of the Funds available during the
Annuity Period; or
(c) Combination of (a) and (b).
If a fixed Annuity is chosen, We will calculate the amount using
an interest assumption no less than the percentage specified on
the Contract Schedule. We may calculate the amount using a higher
interest rate.
If a variable Annuity is chosen, an Assumed Annual Net Return
Rate of 5% may be chosen. If not chosen, We will use an Assumed
Annual Net Return Rate of 3.5%.
Payments are made on a monthly basis to the Certificate Holder
unless the Certificate Holder requests a different mode of
payment.
Once elected, an Annuity Option may not be revoked, except for
Option 1 when elected on a variable basis.
12.02 Terms of Annuity Options - The minimum first payment amount must
be at least $50 per month and at least $250 per year.
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If the Certificate Holder elects a fixed Annuity and We determine
that the Certificate Holder would receive larger payments by
applying the Certificate Holder's Account Value, reduced by the
deferred sales charge, to a single premium immediate Annuity
currently offered by Us, We will make the larger payments.
We determine the first payment of a variable Annuity, or the
payment amount of a fixed Annuity, using the Annuitant's (and
second Annuitant's if applicable) adjusted age which We calculate
as follows:
(a) If Annuity payments begin any time between July 1, 1992 and
December 31, 1999, the adjusted age is the Annuitant's age
as of the birthday closest in time to the Annuity Date
reduced by one (1) year.
(b) If the Annuity begins any time between January 1, 2000 and
December 31, 2009, the adjusted age is the Annuitant's age
as of the birthday closest in time to the Annuity Date
reduced by two (2) years.
(c) For each succeeding decade, the adjusted age is the
Annuitant's age as determined in (b), reduced by one
additional year.
The Annuity rates for Options 2 and 3 are based on mortality from
1983 Table A.
Assumed Annual Net Return Rate is the interest rate used to
determine the amount of the first Annuity payment under a
variable Annuity. The Separate Account must earn this rate plus
enough to cover the mortality and expense risks charges (which
may include profit) and administrative charges if future variable
Annuity payments are to remain level.
The Certificate Holder must give written notice to Us at least 30
days before the Annuity payments begin, electing or changing:
(a) The date on which Annuity payments are to begin;
(b) The Annuity Option;
(c) Whether the payments are to be made monthly, quarterly,
semiannually or annually; (d) The investment options used to
provide Annuity payments.
The first Annuity payment may not be earlier than one (1)
calendar year after the initial Purchase Payment, nor later than
the later of the:
(a) First day of the month following the Annuitant's birthday
shown on the Contract Schedule; or
(b) Tenth anniversary of the last Purchase Payment. In lieu of
the election of an Annuity, the Certificate Holder may
request a lump sum payment.
12.03 Annuity Unit - The number of Annuity Units per Fund is based on
the amount of the first variable Annuity payment which is equal
to:
(a) The portion of the Certificate Holder's Account Value (minus
any premium taxes) applied to pay a variable Annuity;
divided by,
22
<PAGE>
(b) 1000; multiplied by,
(c) The payment rate for the Annuity Option chosen.
Such amount, or portion, of the variable Annuity payment will be
divided by the Annuity Unit value for the appropriate Fund on the
tenth Valuation Period before the due date of the first payment
to determine the number of each Fund's Annuity Units. The number
of each Fund's Annuity Unit remains fixed. Each future payment is
equal to the sum of the products of each Fund's Annuity Unit
value multiplied by the appropriate number of units. The Fund's
Annuity Unit value on the tenth Valuation Period prior to the due
date of the payment is used.
12.04 Annuity Unit Value - For any Valuation Period, a Fund's Annuity
Unit value is equal to:
(a) The value for the previous Valuation Period; multiplied by,
(b) The Annuity Net Return Factor for the Valuation Period;
multiplied by,
(c) A daily factor to reflect the Assumed Annual Net Return
Rate (the factor for 3.5% per year is .9999058; for 5%
per year it is .9998663).
The dollar value of a Fund(s) Annuity Unit values and payments
may go up or down due to investment gain or loss.
12.05 Annuity Net Return Factor - The Annuity net return factor is
used to compute all Separate Account Annuity payments for any
Fund.
The Annuity net return factor(s) for each Fund is equal to
1.0000000 plus the net return rate. The net return rate is equal
to:
(a) The value of the shares of the Fund held by the Separate
Account at the end of a Valuation Period; minus,
(b) The value of the shares of the Fund held by the Separate
Account at the start of the Valuation Period; plus or minus,
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the Fund(s) Accumulation Units and
Fund(s) Annuity Units of the Separate Account at the start
of the Valuation Period; minus,
(e) A daily actuarial charge as shown on the Contract Schedule
for Annuity mortality and expense risks and profit and a
daily administrative charge which will not exceed the
administrative charge as shown on the Contract Schedule.
The net return rate may be more or less than zero (o) percent.
The value of a share of the Fund is equal to the net assets of
the Fund divided by the number of shares outstanding.
12.06 Annuity Options
Option 1 - Payments for a Stated Period of Time - An Annuity will
be paid for the number of years chosen. The number of years must
be at least 5 and not more than 30.
23
<PAGE>
If payments for this Annuity Option are made under a variable
Annuity, the present value of any remaining payments may be
withdrawn at any time.
Option 2 - Life Income - An Annuity will be paid for the life of
the Annuitant. If also chosen, We will guarantee payments for 60,
120, 180, or 240 months.
Option 3 - Life Income Based upon the Lives of Two Annuitants -
An Annuity will be paid during the lives of the Annuitant and a
second Annuitant. Payments will continue until both Annuitants
have died. When this Annuity Option is chosen, a choice must be
made of:
(a) 100% of the payment to continue after the first death;
(b) 66-2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) Payments for a minimum of 120 months with 100% of the
payment to continue after the first death; or
(e) 100% of the payment to continue at the death of the second
Annuitant and 50% of the payment to continue at the death of
the Annuitant.
We may make other options available as allowed by law.
24
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
- ---------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- ---------------------------------------------------------------------------
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- ---------------------------------------------------------------------------
25
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of -------------------------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.27 $ 3.90 $ 4.26 $ 3.90 $ 4.22 $ 3.89 $ 4.17 $ 3.86 $ 4.08 $ 3.82
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58
63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
66 6.30 5.51 6.21 5.47 5.96 5.36 5.56 5.16 5.08 4.86
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
26
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Adjusted Ages
- ---------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36
60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85
65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54
70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49
75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
- -----------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
27
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.75 $ 4.07 $ 4.26 $ 3.75 $ 3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12
60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54
65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14
70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96
75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
- ---------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
28
<PAGE>
OPTION I
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
- -----------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -----------------------------------------------------------------------
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.85 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
- -----------------------------------------------------------------------
29
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- -------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -------------------------------------------------------------------------
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
- -------------------------------------------------------------------------
30
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ------------------------------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.56 $ 4.20 $ 4.55 $ 4.19 $ 4.51 $ 4.18 $ 4.45 $ 4.15 $ 4.36 $ 4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
31
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ---------------------------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 5.48 $ 5.12 $ 5.46 $ 5.11 $ 5.41 $ 5.09 $ 5.34 $ 5.06 $ 5.24 $ 5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.97 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
32
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.97 $ 4.35 $ 4.56 $ 3.97 $ 4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
33
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant Is Female and Second Annuitant Is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.03 $ 4.36 $ 4.55 $ 4.03 $ 4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83
60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39
65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14
70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20
75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
- --------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
34
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant Is Male and Second Annuitant Is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.88 $ 5.26 $ 5.48 $ 4.88 $ 5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
35
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and the Second Annuitant is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.93 $ 5.27 $ 5.46 $ 4.93 $ 5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28
65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03
70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08
75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
36
<PAGE>
- --------------------------------------------------------------------------------
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 531-4547
Certificate of Group Annuity Coverage
- --------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
GP2CERT(4/94)
----------------------------------------------------
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800) 531-4547
You may call the toll-free number shown above for
answers to questions or to resolve a complaint
Group Variable, Fixed or Combination Annuity Contract (Nonparticipating)
Aetna Insurance Company of America (We or Us), a stock company, agrees to pay
benefits according to the terms and conditions set forth in this Contract.
Specifications
- --------------------------------------------------------------------------------
Plan
SPECIMEN
- --------------------------------------------------------------------------------
Type of Plan
SPECIMEN
- --------------------------------------------------------------------------------
Contract Holder
SPECIMEN
- --------------------------------------------------------------------------------
Contract Number
SPECIMEN
- --------------------------------------------------------------------------------
Effective Date
SPECIMEN
This Contract is delivered in YOUR STATE and is subject to the laws and
regulations of that state.
The variable features of the Group Contract are described in sections 6 and 12.
Right to Cancel
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The Group Contract Holder may cancel this Contract within ten (10) days of
receiving it by returning it to Us at the address above or to the person from
whom it was purchased. Within seven (7) days of the cancellation request, We
will return the Certificate Holder's Purchase Payment(s) made plus any increase,
or minus any decrease, on the amount allocated to the Separate Account.
Signed at the home office on the Effective Date.
/s/ Dan Kearney /s/ Maria F. McKeon
President Secretary
G-GP2 (5/96)
<PAGE>
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
2
<PAGE>
Table of Contents
Page
Right to Cancel...............................................................1
Contract Schedule.............................................................5
Separate Account..........................................................5
AICA Guaranteed Account (AG Account)......................................5
Separate Account and AG Account...........................................5
Fixed Annuity.............................................................6
Section 1. Definitions.......................................................7
Section 2. General Provisions................................................9
The Contract..............................................................9
Certificates..............................................................9
Nonparticipating Contract.................................................9
Misstatements and Adjustments.............................................9
Reports...................................................................9
Premium Taxes.............................................................9
Protection of Proceeds....................................................9
Evidence of Survival......................................................9
Proof of Age..............................................................9
Change of Contract........................................................9
Section 3. Ownership........................................................10
Group Contract Holder....................................................10
Certificate Holder Rights................................................10
Transfer of Ownership....................................................10
Section 4. Beneficiary Provisions...........................................11
Beneficiary..............................................................11
Change of Beneficiary....................................................11
Death of Beneficiary.....................................................11
Section 5. Purchase Payments................................................11
Purchase Payments........................................................11
Allocation of Purchase Payments..........................................11
Section 6. Separate Account.................................................12
General..................................................................12
Investment Allocations to the Separate Account...........................12
Valuation of Assets......................................................12
Accumulation Unit........................................................12
Net Return Factor for Each Valuation Period..............................12
Administrative Charge....................................................13
Mortality Risk Charge....................................................13
Expense Risk Charge......................................................13
Mortality and Expense Guarantee..........................................13
3
<PAGE>
Section 7. AG Account.......................................................13
AG Account Guaranteed Interest Rate......................................13
Deposit Period...........................................................13
Guaranteed Term..........................................................13
Guaranteed Term(s) Groups................................................13
Maturity Date............................................................13
Allocation of Net Purchase Payments to the AG Guaranteed Account.........14
AG Account Guaranteed Term Maturity Date and Maturity Value..............14
Withdrawals from the AG Account..........................................14
Reinvestment.............................................................15
AG Account Market Value Adjustment (Factor)..............................15
Section 8. Certificate Holder's Account Value; Transfers and Withdrawals
During the Accumulation Period...........................................16
Certificate Holder's Account Value.......................................16
Transfers During the Accumulation Period.................................16
Withdrawals During the Accumulation Period...............................16
Deferred Sales Charge....................................................17
Waiver of Deferred Sales Charge..........................................17
Payment of Adjusted Certificate Holder Account Value.....................17
Systematic Withdrawal Option (SWO).......................................17
Section 9. Maintenance Charge...............................................18
Maintenance Charge.......................................................18
Section 10. Proceeds Payable on Death.......................................18
Death of the Certificate Holder Prior to the Annuity Date................19
Death Benefit Amount Prior to the Annuity Date...........................19
Death Benefit Payment Methods............................................20
Death of Certificate Holder On or After the Annuity Date.................21
Death of the Annuitant...................................................21
Section 11. Delay of Payments...............................................21
Delay of Payments........................................................21
Section 12. Annuity Provisions..............................................22
Designation of Annuitant.................................................22
Terms of Annuity Options.................................................22
Annuity Unit.............................................................23
Annuity Unit Value.......................................................23
Annuity Net Return Factor................................................24
Annuity Options..........................................................24
4
<PAGE>
Contract Schedule
Separate Account
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Separate Account: Variable Account I
Charges to the A daily charge is deducted from the assets of the Separate
Separate Account: Account. The deduction is the daily equivalent of the annual
effective percentage shown below:
(a) During the Accumulation Period:
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Separate Account Charges During
Accumulation Period 1.40%
(b) During the Annuity Period
Administrative Charge Not To Exceed 0.25%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Maximum Separate Account Charges
During Annuity Period 1.50%
AICA Guaranteed Account (AG Guaranteed Account)
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Minimum Guaranteed Interest 3.0%
Rate (effective annual rate of
return):
Separate Account and AG Account
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Minimum Initial $1,500
Purchase Payment:
Minimum Subsequent $500 or $50 per month if paid by an automatic check plan
Purchase Payment:
Maximum Subsequent $1,000,000 without home office approval
Purchase Payment:
Transfers: We allow an unlimited number of transfers during the
Accumulation Period. Twelve (12) transfers in any calendar
year are free. Thereafter, We reserve the right to charge a
transfer charge up to $10 for each subsequent transfer.
Maintenance The annual maintenance charge is $30. If the Certificate
Charge: Holder's Account is $50,000 or more on the date the
maintenance charge is to be deducted, the maintenance charge
is $0.
5
<PAGE>
Deferred For each withdrawal from a Certificate Holder's Account, a
Sales Charge: deferred sales charge for each Net Purchase Payment will be
determined as follows:
Years from Receipt of Deferred
Net Purchase Payment Sales Charge
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
6-7 1%
7+ 0%
Waiver of Deferred Section 8.05 provides for the following:
Sales Charge:
(c) At least 12 months after the date of the first Purchase
Payment in an amount equal to or less than 15% of the
Certificate Holder's Account Value.
(d) For a full withdrawal where the Certificate Holder's
Account Value does not exceed $2,500 and no withdrawals
have been taken from the Certificate Holder's Account
within the prior 12 months.
Systematic (a) Specified Payment - Maximum Percentage: 10%
Withdrawal Option:
(b) Specified Period - Minimum Period: 10 years
(c) Specified Percentage - Maximum Percentage: 10%
Death Benefit 4%
Factor:
Death Benefit There is no maximum death benefit amount.
Maximum Amount:
Death Benefit 85 years
Maximum Age:
Fund for Federated Prime Money Fund II
Allocation of
Excess Guaranteed
Death Benefit Value:
Latest Annuity The Certificate Holder's 90th birthday.
Date:
Fixed Annuity
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Minimum Guaranteed 3.0%
Interest Rate
(effective annual
rate of return):
6
<PAGE>
Section 1. Definitions
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1.01 Accumulation Period - The period during which one or more Net
Purchase Payments applied to a Certificate Holder's Account
accumulate to provide future Annuity payments.
1.02 Accumulation Unit - A measure of the net investment results for
each variable investment option during the Accumulation Period.
The Accumulation Units for the applicable Funds are used to
calculate the portion of a Certificate Holder's Account Value
attributable to a Separate Account during the Accumulation Period.
1.03 Adjusted Certificate Holder Account Value - The Certificate
Holder's Account Value, plus or minus any aggregate AG Account
Market Value Adjustment.
1.04 ALIAC Guaranteed Account (AG Account) - An investment option where
We guarantee specified rate(s) of interest for specified periods
of time. The AG Account is a separate account established by Us in
accordance with the provisions of the Connecticut General Statutes
Section 38a-433. Certificate Holders do not participate in the
investment gain or loss from the assets held in the AG Account.
Assets in the AG Account may be charged with liabilities arising
out of any other business We may conduct.
1.05 Annuitant - The natural person on whose life an Annuity payment is
based.
1.06 Annuity - A series of payments We make for life, a definite period
or a combination of the two.
1.07 Annuity Date - The date on which Annuity payments commence.
1.08 Annuity Options - Annuity payment methods available during the
Annuity Period.
1.09 Annuity Period - The period of time during which Annuity payments
are made.
1.10 Annuity Unit - A measure of the net investment results for each
variable investment option during the Annuity Period. Annuity
Units are used to calculate the amount of each variable Annuity
payment.
1.11 Beneficiary - The person(s) entitled to receive any death benefit
under the Certificate Holder's Account. Upon the death of a joint
Certificate Holder, the surviving joint Certificate Holder, if
any, is treated as the Beneficiary. Any other Beneficiary
designation on record with Us at the time of death is treated as a
contingent Beneficiary.
1.12 Certificate - The document issued to a Certificate Holder to
evidence a Certificate Holder's Account established under the
group Contract.
1.13 Certificate Holder - A person who has established a Certificate
Holder's Account under a group Contract. We reserve the right to
limit ownership to natural persons. If more than one Certificate
Holder owns an Account, each Certificate Holder shall be a joint
Certificate Holder. Any joint Certificate Holder must be the
spouse of the other joint Certificate Holder. Joint Certificate
Holders have joint ownership rights and both must authorize any
exercising of those ownership rights unless otherwise allowed by
Us. If the Certificate Holder's Account is owned by a nonnatural
person, the death benefit will be paid at the death of the
Annuitant and a new Annuitant may not be named.
7
<PAGE>
1.14 Certificate Holder's Account - A record We establish for each
Certificate Holder to maintain values under a group Contract.
1.15 Certificate Holder's Account Value - The dollar value as of any
Valuation Period of all amounts accumulated in a Certificate
Holder's Account.
1.16 Contract - This agreement between the Group Contract Holder and
Us.
1.17 Dollar Cost Averaging - A program that permits the Certificate
Holder to systematically transfer amounts from any of the Funds
and the one-year guaranteed term of the AG Account to any of the
Funds. Dollar Cost Averaging is not available if the Systematic
Withdrawal Option is in effect.
1.18 Effective Date - The date a Certificate is issued to a Certificate
Holder.
1.19 Fund - One of the variable investment options which may be
selected by a Certificate Holder.
1.20 General Account - The General Account is made up of all of our
general assets other than those allocated to the separate
accounts.
1.21 Group Contract Holder - The entity to which a group Contract is
issued.
1.22 Home Office - Our headquarters, located at 151 Farmington Avenue,
Hartford, CT 06156.
1.23 Market Value Adjustment - An adjustment that may apply to a
withdrawal made from the AG Account before the end of a guaranteed
term as stated in Section 7.10.
1.24 Net Purchase Payment - The Purchase Payment less premium taxes, if
applicable.
1.25 Purchase Payment - The gross payment accepted by Us and allocated
to the Certificate Holder's Account. We reserve the right to
refuse to accept any Purchase Payment at any time for any reason.
1.26 Separate Account - A separate account that buys and holds shares
of the Fund(s). Income, gains or losses, realized or unrealized,
are credited or charged to the Separate Account without regard to
Our other income, gains or losses. We own the assets held in the
Separate Account and are not a trustee as to such amounts. The
Separate Account generally is not guaranteed and is held at market
value. The name of the Separate Account is shown on the Contract
Schedule. The assets of the Separate Account, to the extent of
reserves and other Contract liabilities of the Separate Account,
will not be charged with Our other liabilities.
1.27 Valuation Period - The period of time for which a Fund determines
its net asset value, usually from 4:15 p.m. Eastern time each day
the New York Stock Exchange is open until 4:15 p.m. the next such
business day, or such other day that one or more of the Funds
determines its net asset value. The assets of the Separate Account
are not chargeable with the liabilities arising out of any other
business We may conduct.
1.28 Variable Annuity Contract - An Annuity Contract providing for the
accumulation of value and/or for Annuity payments which vary in
amount based on investment results.
8
<PAGE>
Section 2. General Provisions
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2.01 The Contract - The entire Contract consists of this Contract and
any endorsements attached or subsequently issued.
2.02 Certificates - A Certificate is issued to each Certificate Holder
whose Purchase Payment(s) is accepted by Us. The Certificate
evidences a Certificate Holder's Account established under the
Contract. Certificates are not part of the Contract.
2.03 Nonparticipating Contract - Neither the Group Contract Holder,
Certificate Holder nor any Beneficiary have a right to share in
our earnings.
2.04 Misstatements and Adjustments - If We learn that the age of any
Annuitant or second Annuitant is misstated, the correct age will
be used to adjust payments. We reserve the right to request
reimbursement or adjust future payments for any amount overpaid.
We will pay the amount of any underpayment.
2.05 Reports - We furnish each Certificate Holder with a report showing
the Certificate Holder's Account Value at least once each calendar
year. We also furnish an annual report of the Separate Account.
2.06 Premium Taxes - Any premium taxes paid to any governmental entity
are charged against Purchase Payments or a Certificate Holder's
Account. We may, at our sole discretion, pay premium taxes when
due and deduct that amount from the Certificate Holder's Account
at a later date. Payment at an earlier date does not waive any
right We may have to deduct amounts at a later date.
2.07 Protection of Proceeds - To the extent permitted by law, all
payments under this Contract to a Certificate Holder or
Beneficiary shall be free from legal process and the claim of any
creditor.
2.08 Evidence of Survival - The Company may require satisfactory
evidence of the continued survival of any person(s) on whose life
Annuity payments are based.
2.09 Proof of Age - The Company may require evidence of age of any
Annuitant under Annuity Options 2 and 3 and of the designated
second Annuitant under Annuity Option 3.
2.10 Change of Contract - Only our authorized officers may change the
terms of this Contract. We will notify the Group Contract Holder
in writing at least 30 days before the effective date of any
change. Any change will not affect the amount or terms of any
Annuity which begins before the change.
We may make any change that affects the AG Account Market Value
Adjustment with at least thirty (30) days' advance written notice
to the Group Contract Holder and the Certificate Holder. Any such
change shall become effective for any new guaranteed term and will
apply to all present and future Certificate Holders' Accounts.
9
<PAGE>
We reserve the right to change the terms of the Systematic
Withdrawal Option for future elections and discontinue the
availability of this option.
Any change to any of the following provisions under this Contract
will not apply to Certificate Holder's Accounts in existence
before the effective date of the change:
(a) Net Purchase Payment (1.24)
(b) AG Account Guaranteed Interest Rate (7.01)
(c) Net Return Factor (6.05)
(d) Certificate Holder's Account Value (1.15)
(e) Deferred Sales Charge (8.04)
(f) Annuity Unit Value (12.04)
(g) Annuity Options (12.06)
(h) Fixed Annuity Interest Rates (12.01)
(i) Transfers (8.02).
Any change that affects the Annuity Option and the tables for the
Annuity Options may be made:
(a) No earlier than twelve (12) months after the Effective
Date; and
(b) No earlier than twelve (12) months after the effective
date of any prior change.
Any Certificate Holder's Account established on or after the
effective date of any change will be subject to the change. If the
Group Contract Holder does not agree to any change under this
provision, We reserve the right to not allow any new Certificate
Holder's Accounts to be established under this Contract. This
Contract may also be changed as deemed necessary by Us to comply
with federal or state law.
Section 3. Ownership
- --------------------------------------------------------------------------------
3.01 Group Contract Holder - The Group Contract Holder has title to the
Contract. The Contract and any amounts accumulated thereunder are
not subject to the claims of the Group Contract Holder nor any of
its creditors.
3.02 Certificate Holder Rights - The Certificate Holder has all
interest and right to amounts held in his or her Certificate
Holder's Account. The Certificate Holder and any joint Certificate
Holder are named on the Specifications page. The Certificate
Holder and any joint Certificate Holder may exercise all the
rights under the Certificate Holder's Account, subject to the
rights of:
(a) Any assignee under an assignment filed at our home office; and
(b) Any irrevocably named Beneficiary.
Upon the death of a Certificate Holder prior to the Annuity Date,
a spousal Beneficiary may elect to continue the Certificate
Holder's Account in his or her own name and retain all ownership
rights and privileges or take distribution of the death benefit as
defined in Section 10.
3.03 Transfer of Ownership - The Group Contract Holder may transfer
ownership of this Contract. A written request, dated and signed,
must be filed at our home office.
Any transfer of ownership terminates the interest of any existing
Group Contract Holder. It does not change the rights of any
Certificate Holder.
10
<PAGE>
A Certificate Holder may transfer all of his or her rights under
the Contract. We reserve the right not to accept an assignment or
transfer to a nonnatural person. A written request, dated and
signed by the Certificate Holder and any joint Certificate Holder,
must be filed at our home office. After the transfer is recorded,
it will take effect as of the date the request was signed. Any
such transfer terminates the interest of any existing Certificate
Holder. It does not change the Beneficiary, nor transfer the
Beneficiary's interest. A transfer will not affect any payments We
may make or actions We may take before such transfer has been
recorded at our home office.
Section 4. Beneficiary Provisions
- --------------------------------------------------------------------------------
4.01 Beneficiary - The Certificate Holder may name a Beneficiary and a
contingent Beneficiary. At the death of the Certificate Holder
prior to the Annuity Date, the Beneficiary(ies) named in our
records will receive a death benefit as stated in Section 10. Upon
the death of either joint Certificate Holder prior to the Annuity
Date, the surviving joint Certificate Holder, if any, will be
treated as the designated Beneficiary and any other Beneficiary
designation on record with Us at the time of death is treated as a
contingent Beneficiary. If the Certificate Holder is a nonnatural
person, the death benefit will be paid at the death of the
Annuitant.
4.02 Change of Beneficiary - The Certificate Holder may change the
Beneficiary. A written request, dated and signed by the
Certificate Holder, must be filed at our home office. If there are
joint Certificate Holders, both must sign the request. After the
change is recorded, it will take effect as of the date the request
was signed. If the request reaches our home office and is recorded
after the Certificate Holder dies, but before any payment is made,
the change is valid.
4.03 Death of Beneficiary - If all of the Beneficiaries and contingent
Beneficiaries die prior to the Certificate Holder's death, We pay
the death benefit in one sum to the Certificate Holder's estate.
If the Certificate Holder is a nonnatural person, and all of the
Beneficiaries and contingent Beneficiaries die prior to the
Annuitant's death, We will pay the death benefit in one sum to the
Certificate Holder.
Section 5. Purchase Payments
- --------------------------------------------------------------------------------
5.01 Purchase Payments - Subject to the maximum and minimum shown on
the Contract Schedule, the Certificate Holder may determine the
amount and frequency of Purchase Payments. We reserve the right
not to accept any Purchase Payment. We will declare from time to
time the acceptability of additional Purchase Payments.
5.02 Allocation of Purchase Payments - The Certificate Holder may elect
to have each Net Purchase Payment accumulate:
(a) On a variable basis invested in shares of one or more Funds
in which the Separate Account invests;
(b) For guaranteed terms offered in the current deposit
period(s) under the AG Account; or
(c) In a combination of any of the available investment options.
Net Purchase Payments must be allocated in whole percentages. For
subsequent Purchase Payments, if no allocation instructions are
received with the Purchase Payment, the allocation will be as
indicated in the most recent directive from the Certificate
Holder. If the same guaranteed term(s) are not available, the next
shortest will be used. If no shorter guaranteed term is available,
the next longer guaranteed term will be used.
11
<PAGE>
Section 6. Separate Account
- --------------------------------------------------------------------------------
6.01 General - The assets of the Separate Account, equal to the
reserves and other Contract liabilities that depend on the
investment performance of the Separate Account are not chargeable
with liabilities arising out of any other business We may conduct.
Income, gains or losses of the Separate Account, realized or
unrealized, are credited to or charged against the assets of the
Separate Account without regard to Our other income, gains or
losses.
6.02 Investment Allocations to the Separate Account - The assets of the
Separate Account are segregated by Fund. If the shares of any Fund
are no longer available for investment by the Separate Account or
if in our judgment, further investment in such shares should
become inappropriate in view of the purpose of the Contract, We
may cease to make such Fund shares available for investment under
the Contract prospectively, or We may substitute shares of another
Fund for shares already acquired. We may also, from time to time,
add additional Funds. Any elimination, substitution or addition of
Funds will be done in accordance with applicable state and federal
securities laws. We reserve the right to substitute shares of
another Fund for shares already acquired without a proxy vote.
6.03 Valuation of Assets - The shares of the Funds will be valued at
their net asset value at the end of each Valuation Period.
6.04 Accumulation Unit - A Net Purchase Payment that is allocated to
one or more Funds is credited to the Certificate Holder's Account
as Accumulation Units. The number of Accumulation Units credited
is determined by dividing the applicable portion of the Net
Purchase Payment by the Accumulation Unit value for the
appropriate Fund. The Accumulation Unit value used is that which
is computed for the next Valuation Period after which the Purchase
Payment is received at our home office. Accumulation Units
attributable to the initial Purchase Payments will be credited
within two business days of acceptance.
Accumulation Unit values may increase or decrease from Valuation
Period to Valuation Period.
6.05 Net Return Factor for Each Valuation Period - The value of an
Accumulation Unit for any Valuation Period is calculated by
multiplying the Accumulation Unit value for the immediately
preceding Valuation Period by the net return factor of the
appropriate Fund for the current period.
The net return factor for each Fund is equal to 1.0000000 plus the
net return rate. The net return rate equals:
(a) The value of the shares of the Fund held by the Separate
Account at the end of a Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate
Account at the start of the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the Funds(s) Accumulation Units and
Fund(s) Annuity Units of the Separate Account at the start
of the Valuation Period; minus
(e) A daily actuarial charge as shown on the Contract Schedule
for Annuity mortality and expense risks and profit and a
daily administrative charge.
12
<PAGE>
The net return rate may be more or less than zero (0) percent.
The value of a share of the Fund is equal to the net assets of the
Fund divided by the number of shares outstanding.
6.06 Administrative Charge - We deduct an administrative charge equal,
on an annual basis, to the amount shown on the Contract Schedule.
6.07 Mortality Risk Charge - We deduct a mortality risk charge equal,
on an annual basis, to the amount shown on the Contract Schedule.
6.08 Expense Risk Charge - We deduct an expense risk charge equal, on
an annual basis, to the amount shown on the Contract Schedule.
6.09 Mortality and Expense Guarantee - We guarantee that the dollar
amount of each Annuity payment after the first will not be
affected by variations in mortality or expense experience.
Section 7. AG Account
- --------------------------------------------------------------------------------
7.01 AG Account Guaranteed Interest Rate - All amounts allocated to the
AG Account earn a rate of interest that is guaranteed for a
specified period of time. The rate will be credited daily and will
never be less than the minimum guaranteed interest rate shown on
the Contract Schedule. We determine the rate and it is not based
on investment experience.
For guaranteed terms of one year or less, one guaranteed interest
rate is credited for the full guaranteed term. For longer
guaranteed terms, an initial guaranteed interest rate is credited
from the date of deposit to the end of a specified period within
the guaranteed term. There may be different guaranteed interest
rate(s) declared for subsequent specified time intervals
throughout the guaranteed term.
7.02 Deposit Period - A calendar week, a calendar month, a calendar
quarter, or any other period of time We specify during which Net
Purchase Payment(s), transfers and reinvestments are accepted into
the AG Account for one or more guaranteed terms. We reserve the
right to extend the deposit period.
7.03 Guaranteed Term - The period of time for which AG Account
guaranteed interest rates are guaranteed on Net Purchase Payments.
Transfers and reinvestments are made into a current deposit period
for the AG Account. Such period begins on the day following the
close of the deposit period and ends on the designated Maturity
Date. Guaranteed terms, if any, are offered at our discretion for
various lengths of time ranging up to and including ten years.
During a deposit period, We may make available any number of
guaranteed terms. The Certificate Holder may allocate Net Purchase
Payments and transfers into any or all of the available guaranteed
terms.
7.04 Guaranteed Term(s) Groups - All AG Account guaranteed term(s) with
the same length of time from the close of the deposit period until
the designated Maturity Date.
7.05 Maturity Date - The last day of a guaranteed term.
13
<PAGE>
7.06 Allocation of Net Purchase Payments to the AG Account - When the
Certificate Holder wishes to allocate all or any portion of a Net
Purchase Payment to the Guaranteed Account, he or she must tell Us
the percentage to apply to one or more of the AG Account
guaranteed term(s) available during the current deposit period. If
no allocation instructions are received, a Net Purchase Payment is
allocated as indicated in the most recent directive from the
Certificate Holder. If the same guaranteed term is not available
for any amount allocated to the AG Account, We will allocate the
amount to the next shortest guaranteed term available. If no
shorter guaranteed term is available, We will allocate it to the
next longest guaranteed term.
7.07 AG Account Guaranteed Term Maturity Date and Maturity Value - On
the maturity date, the value of the total of all amounts allocated
to that guaranteed term is called the maturity value.
When Certificate Holders have assets in the AG Account, at least
eighteen (18) days before a maturity date, We notify them of the:
(a) Projected maturity value; and
(b) Guaranteed terms and the applicable guaranteed interest
rates available during the current deposit period.
When no allocation instructions are received and the assets in a
guaranteed term have been reinvested by Us in another guaranteed
term on the maturity date, the Certificate Holder may transfer or
withdraw, during the month following the maturity date, the
reinvested amount with interest earned (as of the date the request
is received at our home office) without incurring a Market Value
Adjustment. This transaction is allowed only once for each
maturity date, regardless of whether the transfer or withdrawal is
partial or full.
7.08 Withdrawals and Transfers from the AG Account - When the
Certificate Holder requests a withdrawal or transfer from the AG
Account, if instructions are not provided by the Certificate
Holder, amounts are withdrawn on a pro rata basis from the
guaranteed term(s) groups in which the Certificate Holder's
Account is currently invested. Within a guaranteed term group, the
amount to be withdrawn will be withdrawn first from the oldest
deposit period. Withdrawals or transfers from an AG Account
guaranteed term before the maturity date are subject to a Market
Value Adjustment, except for:
(a) A one month period following the maturity date described in
7.07;
(b) Transfers under the Dollar Cost Averaging program; and
(c) Withdrawals under the Systematic Withdrawal Option described
in Section 8.07.
Only a positive Market Value Adjustment will apply to amounts
transferred from the AG Account when the Certificate Holder elects
Annuity Option 2 or 3.
14
<PAGE>
7.09 Reinvestment - We will mail a notice to the Certificate Holder
before a guaranteed term's maturity date. This notice will contain
the guaranteed terms available during the current deposit periods
with their guaranteed interest rate(s) and projected maturity
value. If no specific direction is given by the Certificate Holder
prior to the maturity date, each maturity value will be reinvested
in the current deposit period for a guaranteed term of the same
duration. If a guaranteed term of the same duration is
unavailable, each matured term value will automatically be
reinvested in the current deposit period for the next shortest
guaranteed term available. If no shorter guaranteed term is
available, the next longer guaranteed term will be used. We will
mail a confirmation statement to the Certificate Holder after the
maturity date. This notice will state the guaranteed term and
guaranteed interest rate(s) which will apply to the reinvested
matured term value.
7.10 AG Account Market Value Adjustment (Factor) - The Market Value
Adjustment factor (MVA factor) reflects any change in interest
rates from the time assets are allocated to the AG Account to the
time they are transferred or withdrawn. Except as noted in Section
7.09, 10.02 and 12.01, an MVA factor is applied to any amount
withdrawn or transferred from the AG Account before the end of a
guaranteed term.
The amount withdrawn from the AG Account is multiplied by the MVA
factor which is calculated as follows:
x
---
365
(1+i)
------------------
x
---
365
(1+j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days remaining, (computed from
Wednesday of the week of withdrawal) in the guaranteed
Term.
Determination of MVA factor parameters:
A yield is computed at the close of the last business day of each
week of the deposit period. The yield will equal the average of
the yields on U.S. Treasury Notes which matured during the last
three months of the applicable guaranteed term.
The deposit period yield is the average of those yields for the
deposit period. If withdrawal is made prior to the close of the
deposit period, it is the average of those yields on each week
preceding withdrawal.
The current yield is the average of the yields on the last
business day of the week preceding withdrawal on the same U.S.
Treasury Notes included in the deposit period yield.
15
<PAGE>
If no U.S. Treasury Notes matured during the last three months of
the guaranteed term, We reserve the right to use the average of
the yields on U.S. Treasury Notes that mature during a following
quarter.
Section 8. Certificate Holder's Account Value; Transfers and Withdrawals
During the Accumulation Period
- --------------------------------------------------------------------------------
8.01 Certificate Holder's Account Value - The value of a Certificate
Holder's Account is determined by adding the value of the total of
Accumulation Units attributed to the selected Fund(s) to the value
of any amounts attributed to the AG Account.
8.02 Transfers During the Accumulation Period - Before the Annuity
Date, the Certificate Holder may transfer from any Fund or
guaranteed term of the AG Account to:
(a) Any other Fund; or
(b) Any guaranteed term of the AG Account available in the
current deposit period.
Transfer requests can be submitted as a percentage or as a dollar
amount. We may establish a minimum transfer amount. Within a
guaranteed term group, the amount transferred is withdrawn first
from the oldest deposit period, then from the next oldest, and so
on until the amount requested is satisfied.
The Certificate Holder may make an unlimited number of transfers
during the Accumulation Period. The number of free transfers
allowed is shown on the Contract Schedule. Transfers in excess of
that number may be subject to the transfer charge shown on the
Contract Schedule. Transfers under the Dollar Cost Averaging
program do not count toward the annual limit. Transfers of a
matured term value from the AG Account on or within one calendar
month after a guaranteed term's maturity date do not count against
the annual transfer limit.
Amounts applied to guaranteed terms of the AG Account may not be
transferred to the Funds or to another guaranteed term during the
deposit period or for 90 days after the close of the deposit
period except for (1) matured term value(s) during the calendar
month following the guaranteed term's maturity date; (2) amounts
applied to an annuity option; (3) transfers from the one-year
guaranteed term under the Dollar Cost Averaging program; and (4)
amounts distributed under the Systematic Withdrawal Option.
Except as noted in Section 7.09, 10.02 and 12.01, transfers from
guaranteed terms of the AG Account before the Maturity Date are
subject to a Market Value Adjustment.
8.03 Withdrawals During the Accumulation Period - The Certificate
Holder may withdraw all or a portion of the Certificate Holder's
Account Value during the Accumulation Period by properly
completing a withdrawal request form. Withdrawal requests can be
submitted as a percentage or as a specific dollar amount. Net
Purchase Payment amounts are withdrawn first, and then the excess
value, if any. For any partial withdrawal, if instructions are not
provided by the Certificate Holder, amounts are withdrawn on a pro
rata basis from the Fund(s), and/or the guaranteed term(s) groups
in which the Certificate Holder's Account is currently invested.
Within a guaranteed term group, the amount to be withdrawn will be
withdrawn first from the oldest deposit period, then from the next
oldest, and so on until the amount requested is satisfied.
16
<PAGE>
After deduction of the maintenance charge, if applicable, the
withdrawn amount shall be reduced by the applicable deferred sales
charge and any applicable premium taxes.
8.04 Deferred Sales Charge - The deferred sales charge only applies to
the portion of the amount withdrawn attributable to Net Purchase
Payment(s) and varies according to the elapsed time since receipt
of the Purchase Payment. The deferred sales charge is shown on the
Contract Schedule.
8.05 Waiver of Deferred Sales Charge - No deferred sales charge is
deducted when a Certificate Holder's Account Value is paid:
(a) To a Beneficiary as a death benefit, except for Purchase
Payments made by a surviving joint Certificate Holder as
described in Section 10.02(b);
(b) As a premium for an Annuity Option;
(c) At least the number of months, as shown on the Contract
Schedule, after the date of the first Purchase Payment and
in an amount equal to or less than the percentage of the
Certificate Holder's Account Value as shown on the Contract
Schedule. This applies to the first withdrawal request,
partial or full, in a calendar year. The Certificate
Holder's Account Value is calculated as of the date the
withdrawal request is received in good order at our home
office. This waiver is not available to the Certificate
Holder while a SWO is in effect;
(d) For a full withdrawal where the Certificate Holder's Account
Value does not exceed the amount shown on the Contract
Schedule and no withdrawals have been taken from the
Certificate Holder's Account within the prior 12 months;
(e) For a distribution made by Us under Section 8.06; or
(f) For a distribution which is part of a SWO under Section
8.07.
We reserve the right to allow the proceeds of a total withdrawal
to be reinstated under the terms and conditions as established by
Us from time to time.
8.06 Payment of Adjusted Certificate Holder Account Value - Upon 90
day's written notice to the Certificate Holder, We will terminate
any Certificate Holder's Account if the Certificate Holder's
Account Value becomes less than $1,500 immediately following any
partial withdrawal. We do not intend to exercise this right in
cases where the Certificate Holder's Account Value is reduced to
$1,500 or less solely due to investment performance. When We make
a distribution pursuant to this provision, the deferred sales
charge will not be deducted.
8.07 Systematic Withdrawal Option (SWO) - We will allow the Certificate
Holder to establish a schedule of withdrawals to be made
automatically from the Certificate Holder's Account Value. All
distributed amounts will be withdrawn on a pro rata basis from the
Fund(s) and/or the guaranteed term(s) groups of the AG Account in
which the Certificate Holder's Account is invested.
The Certificate Holder must elect one of the following SWO
methods:
17
<PAGE>
(a) Specified Payment: Payments of a designated dollar amount.
The annual amount may not be greater than the percentage of
the Certificate Holder's Account Value at time of the
election as shown on the Contract Schedule. This annual
dollar amount will remain constant. At our discretion, We
may require a minimum payment amount; or
(b) Specified Period: Payments which are made over a period of
time which must be at least the minimum period as shown on
the Contract Schedule. The annual amount paid each year is
calculated by dividing the Certificate Holder's Account
Value as of December 31 of the prior year by the number of
payment years remaining; or
(c) Specified Percentage: Payment of a designated percentage
which cannot be greater than the percentage of the
Certificate Holder's Account Value at the time of election
as shown on the Contract Schedule. The percentage may be
changed by written request. We reserve the right to limit
the number of times the percentage may be changed. The
annual amount is calculated by multiplying the Certificate
Holder's Account Value as of December 31 of the year prior
to the payment by the designated percentage.
SWO payments will cease at the Certificate Holder's death (or if
the Certificate Holder is a nonnatural person, at the death of the
Annuitant). A beneficiary may elect to continue SWO as provided in
Section 10.01.
In our discretion, We may require a minimum initial Certificate
Holder's Account Value for election of this option. SWO may be
elected by submitting a completed and signed election form to Us.
Once elected, this option may be revoked by submitting a written
request to Us. SWO may be elected only once by the Certificate
Holder or by a spousal Beneficiary.
Certificate Holders should consult their tax adviser prior to
requesting this distribution option. We are not responsible for
any adverse tax consequences due to a Certificate Holder's
receiving SWO payments. A ten (10) percent penalty tax may apply
to distributions to a Certificate Holder who has not reached age
59-1/2. Upon death of the Certificate Holder, any payments will be
made under the terms of Section 10.
Dollar Cost Averaging is not available to Certificate Holders who
have elected SWO.
Section 9. Maintenance Charge
- --------------------------------------------------------------------------------
9.01 Maintenance Charge - We will deduct an annual maintenance charge
as shown in the Contract Schedule from the Certificate Holder's
Account during the Accumulation Period. We will deduct the
maintenance charge on the anniversary of the Effective Date of the
Certificate for the Certificate Holder's Account. This maintenance
charge is also deducted upon withdrawal of the entire Adjusted
Certificate Holder's Account. The maintenance charge is deducted
proportionately from each investment option used.
Section 10. Proceeds Payable on Death
- --------------------------------------------------------------------------------
18
<PAGE>
10.01 Death of the Certificate Holder Prior to the Annuity Date - In the
event of the death of the Certificate Holder or a joint
Certificate Holder prior to the Annuity Date, a death benefit is
payable to the Beneficiary(ies) designated by the Certificate
Holder. Upon the death of a joint Certificate Holder, the
surviving joint Certificate Holder, if any, will be treated as the
designated Beneficiary. Any other Beneficiary designation on
record with Us at the time of death will be treated as a
contingent Beneficiary. If the Certificate Holder is a nonnatural
person, the death benefit will be payable to the Beneficiary(ies)
at the death of the Annuitant.
A Beneficiary may request We pay the death benefit under one of
the methods described in Section 10.03. If the Beneficiary is the
spouse of the Certificate Holder, or the spouse of the Annuitant
if the Certificate Holder is a nonnatural person, he or she may
elect to continue the Certificate Holder's Account in his or her
own name and exercise all the Certificate Holder's rights under
the Contract.
10.02 Death Benefit Amount Prior to the Annuity Date -
(a) Except as set forth below, the amount of the guaranteed
death benefit value is equal to the greater of:
(i) The Certificate Holder's Account Value at the end of
the Valuation Period during which We receive at our
home office due proof of death and election of the
type of payment to be made; or
(ii) The death benefit determined as of the Valuation
Period corresponding to the date of death.
Until the first Effective Date anniversary, the death
benefit is equal to the Purchase Payments made by the
Certificate Holder prior to the Effective Date
anniversary less any withdrawals and any amounts
applied to an Annuity Option.
For each Certificate year thereafter, the death
benefit during the Certificate year equals the death
benefit at the beginning of the Certificate year plus
Purchase Payments made during the year less any
withdrawals and any amounts applied to an Annuity
Option.
On each Effective Date anniversary, the death benefit
is determined as follows:
(A) The death benefit on the previous Effective Date
anniversary increased by the death benefit factor
shown on the Contract Schedule; plus
(B) Purchase Payments made by the Certificate Holder
during the Certificate year increased by the
death benefit factor shown on the Contract
Schedule for the portion of the year since the
Purchase Payment was made; less
(C) Any withdrawals or amounts applied to an Annuity
Option during the Certificate year increased by
the death benefit factor shown on the Contract
Schedule for the portion of the Certificate year
since the withdrawal or election of Annuity
option; or
19
<PAGE>
(iii) The Certificate Holder's Account Value on the most
recent seventh year anniversary of the Effective Date
plus any Purchase Payments made after such Effective
Date anniversary less any withdrawals and any amounts
applied to an Annuity Option.
Notwithstanding the foregoing, the death benefit under (ii)
or (iii) will not exceed the death benefit maximum amount
shown on the Contract Schedule.
The death benefit calculation described in (ii) and (iii)
above, applies until the Certificate Holder reaches the
death benefit maximum age shown on the Contract Schedule. If
the Certificate Holder is a nonnatural person, death
provisions will be based on the age of the Annuitant.
Thereafter, the death benefit is only adjusted for Purchase
Payments, withdrawals and amounts applied to Annuity
Options. If the Certificate Holder reaches the death benefit
maximum age shown on the Contract Schedule prior to the
seventh anniversary of the Effective Date, the death benefit
will be the greater of (i) or (ii) above.
The excess, if any, of the guaranteed death benefit value
over the Certificate Holder's Account Value is determined
when we receive at our home office due proof of death and
allocated to the Fund shown on the Contract Schedule. The
Certificate Holder's Account Value plus any excess amount
deposited becomes the Certificate Holder's Account Value.
(b) In the case of a spousal Beneficiary who continued the
Certificate Holder's Account in his or her own name, the
death benefit shall be equal to the Adjusted Current Value
less any applicable deferred sales charge on any Purchase
Payment made after We have received at our home office due
proof of death of the joint Certificate Holder (or
Annuitant, if applicable).
When the Beneficiary withdraws or transfers all or any portion of
the death benefit in the AG Account within six months after the
date of death, the amount withdrawn or transferred from the AG
Account will be the greater of:
(1) The aggregate Market Value Adjustment amount (the amount
resulting from the application of relevant Market Value
Adjustment factors); or
(2) The applicable portion of Certificate Holder's Account Value
in the AG Account.
After the six-month period, when the Beneficiary withdraws or
transfers all or any portion of the death benefit in the AG
Account, the amount will be equal to the aggregate Market Value
Adjustment amount. Only a positive market value adjustment will
apply, however, to amounts transferred from the AG Account when
the Beneficiary elects Annuity Option 2 or 3.
At the death of a spousal Beneficiary who continued the
Certificate Holder's Account in his or her own name, when the
Beneficiary withdraws or transfers all or any portion of the death
benefit in the AG Account, the amount will be equal to the
Aggregate Market Value Adjustment amount.
10.03 Death Benefit Payment Methods - A non-spousal Beneficiary must
elect the death benefit to be paid under one of the following
methods in the event of the death of the Certificate Holder prior
to the Annuity Date:
20
<PAGE>
Method 1 - Lump sum payment of the death benefit; or
Method 2 - The payment of the entire death benefit within five
years of the date of the Certificate Holder's death; or
Method 3 - Payment of the death benefit over the lifetime of the
designated Beneficiary or over a period not extending beyond the
life expectancy of the designated Beneficiary with distribution
beginning within one year of the date of death of the Certificate
Holder.
Any portion of the death benefit not applied under Method 3 within
one year of the date of Certificate Holder's death, or the death
of the Annuitant if the Certificate Holder is a nonnatural person,
must be distributed within five years of the date of death.
A spousal Beneficiary may elect to continue the Certificate
Holder's Account in his or her name, elect a lump sum payment of
the death benefit, or apply the Adjusted Certificate Holder's
Account Value to an Annuity Option.
10.04 Death of Certificate Holder On or After the Annuity Date - If the
Certificate Holder who is not the Annuitant, dies on or after the
Annuity Date, the remaining payments under the Annuity Option
elected will be made to the Beneficiary at least as rapidly as
under the method of distribution in effect at the Certificate
Holder's death.
10.05 Death of the Annuitant - If the Annuitant, who is not a
Certificate Holder, dies on or before the Annuity Date, a new
Annuitant may be named. If no Annuitant is named, the Certificate
Holder will be the Annuitant. If the Certificate Holder is a
nonnatural person, the death benefit will be paid at the death of
the Annuitant and no new Annuitant may be named. If the Annuitant
dies after the Annuity Date, the death benefit, if any, will be
payable to the Beneficiary as specified in the Annuity Option
elected. We will require proof of the Annuitant's death. Death
benefits will be paid at least as rapidly as under the method of
distribution in effect at the Annuitant's death.
Section 11. Delay of Payments
- --------------------------------------------------------------------------------
11.01 Delay of Payments - We will make any payments under this Contract
within seven days after a request is received in good order. We
reserve the right to suspend or postpone any type of payment from
the Separate Account for any period when:
(a) The New York Stock Exchange is closed for other than
customary weekend and holiday closings;
(b) Trading on the Exchange is restricted;
(c) An emergency exists as a result of which it is not
reasonably practicable to dispose of securities held in the
Separate Account or determine their value; or
(d) The Securities and Exchange Commission so permits delay for
the protection of security holders.
The applicable rules of the Securities and Exchange Commission
will govern as to whether the conditions in (b) or (c) exist.
We also reserve the right to delay any type of payment from the AG
Account for up to six months.
21
<PAGE>
Section 12. Annuity Provisions
- --------------------------------------------------------------------------------
12.01 Designation of Annuitant - The Certificate Holder and the
Annuitant need not be the same person. The Certificate Holder
names the Annuitant and during the Accumulation Period, may change
the designated Annuitant. We change the Annuitant when We receive
a written request in good order at our home office. We will not
change the Annuitant when Annuity payments have commenced.
The Certificate Holder elects an Annuity Option by telling Us to
use all or any portion of the Certificate Holder's Account Value
(minus any applicable premium taxes if not previously deducted) to
purchase Annuity payments under an Annuity Option. If the
Certificate Holder elects Annuity Option 1, the amount applied to
purchase Annuity payments will be equal to the Adjusted
Certificate Holder's Account Value. If the Certificate Holder
elects Annuity Option 2 or 3, the amount applied to purchase
Annuity payments will be the greater of:
(1) The Adjusted Certificate Holder's Account Value; or
(2) The Certificate Holder's Account Value.
When an Annuity Option is chosen the Certificate Holder must
designate a:
(a) Fixed Annuity using the General Account;
(b) Variable Annuity using any of the Funds available during the
Annuity Period; or
(c) Combination of (a) and (b).
If a fixed Annuity is chosen, We will calculate the amount using
an interest assumption no less than the percentage specified on
the Contract Schedule. We may calculate the amount using a higher
interest rate.
If a variable Annuity is chosen, an Assumed Annual Net Return Rate
of 5% may be chosen. If not chosen, We will use an Assumed Annual
Net Return Rate of 3.5%
Payments are made on a monthly basis to the Certificate Holder
unless the Certificate Holder requests a different mode of
payment.
Once elected, an Annuity Option may not be revoked, except for
Option 1 when elected on a variable basis.
12.02 Terms of Annuity Options - The minimum first payment amount must
be at least $50 per month and at least $250 per year.
If the Certificate Holder elects a fixed Annuity and We determine
that the Certificate Holder would receive larger payments by
applying the Certificate Holder's Account Value, reduced by the
deferred sales charge, to a single premium immediate Annuity
currently offered by Us, We will make the larger payments.
We determine the first payment of a variable Annuity, or the
payment amount of a fixed Annuity, using the Annuitant's (and
second Annuitant's if applicable) adjusted age which We calculate
as follows:
22
<PAGE>
(a) If Annuity payments begin any time between July 1, 1992 and
December 31, 1999, the adjusted age is the Annuitant's age
as of the birthday closest in time to the Annuity Date
reduced by one (1) year.
(b) If the Annuity begins any time between January 1, 2000 and
December 31, 2009, the adjusted age is the Annuitant's age
as of the birthday closest in time to the Annuity Date
reduced by two (2) years.
(c) For each succeeding decade, the adjusted age is the
Annuitant's age as determined in (b), reduced by one
additional year.
The Annuity rates for Options 2 and 3 are based on mortality from
1983 Table A.
Assumed Annual Net Return Rate is the interest rate used to
determine the amount of the first Annuity payment under a variable
Annuity. The Separate Account must earn this rate plus enough to
cover the mortality and expense risks charges (which may include
profit) and administrative charges if future variable Annuity
payments are to remain level.
The Certificate Holder must give written notice to Us at least 30
days before the Annuity payments begin, electing or changing:
(a) The date on which Annuity payments are to begin;
(b) The Annuity Option;
(c) Whether the payments are to be made monthly, quarterly,
semiannually or annually;
(d) The investment options used to provide Annuity payments.
The first Annuity payment may not be earlier than one (1) calendar
year after the initial Purchase Payment, nor later than the later
of the:
(a) First day of the month following the Annuitant's birthday
shown on the Contract Schedule; or
(b) Tenth anniversary of the last Purchase Payment. In lieu of
the election of an Annuity, the Certificate Holder may
request a lump sum payment.
12.03 Annuity Unit - The number of Annuity Units per Fund is based on
the amount of the first variable Annuity payment which is equal
to:
(a) The portion of the Certificate Holder's Account Value (minus
any premium taxes) applied to pay a variable Annuity;
divided by,
(b) 1000; multiplied by,
(c) The payment rate for the Annuity Option chosen.
Such amount, or portion, of the variable Annuity payment will be
divided by the Annuity Unit value for the appropriate Fund on the
tenth Valuation Period before the due date of the first payment to
determine the number of each Fund's Annuity Units. The number of
each Fund's Annuity Unit remains fixed. Each future payment is
equal to the sum of the products of each Fund's Annuity Unit value
multiplied by the appropriate number of units. The Fund's Annuity
Unit value on the tenth Valuation Period prior to the due date of
the payment is used.
12.04 Annuity Unit Value - For any Valuation Period, a Fund's Annuity
Unit value is equal to:
23
<PAGE>
(a) The value for the previous Valuation Period; multiplied by,
(b) The Annuity Net Return Factor for the Valuation Period;
multiplied by,
(c) A daily factor to reflect the Assumed Annual Net Return Rate
(the factor for 3.5% per year is .9999058; for 5% per year
it is .9998663).
The dollar value of a Fund(s) Annuity Unit values and payments may
go up or down due to investment gain or loss.
12.05 Annuity Net Return Factor - The Annuity net return factor is used
to compute all Separate Account Annuity payments for any Fund.
The Annuity net return factor(s) for each Fund is equal to
1.0000000 plus the net return rate. The net return rate is equal
to:
(a) The value of the shares of the Fund held by the Separate
Account at the end of a Valuation Period; minus,
(b) The value of the shares of the Fund held by the Separate
Account at the start of the Valuation Period; plus or minus,
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the Fund(s) Accumulation Units and
Fund(s) Annuity Units of the Separate Account at the start
of the Valuation Period; minus,
(e) A daily actuarial charge as shown of the Contract Schedule
for Annuity mortality and expense risks and profit and a
daily administrative charge which will not exceed the
administrative charge as shown on the Contract Schedule.
The net return rate may be more or less than zero (o) percent.
The value of a share of the Fund is equal to the net assets of the
Fund divided by the number of shares outstanding.
12.06 Annuity Options
Option 1 - Payments for a Stated Period of Time - An Annuity will
be paid for the number of years chosen. The number of years must
be at least 5 and not more than 30.
If payments for this Annuity Option are made under a variable
Annuity, the present value of any remaining payments may be
withdrawn at any time. Option 2 - Life Income - An Annuity will be
paid for the life of the Annuitant. If also chosen, We will
guarantee payments for 60, 120, 180, or 240 months.
Option 3 - Life Income Based upon the Lives of Two Annuitants - An
Annuity will be paid during the lives of the Annuitant and a
second Annuitant. Payments will continue until both Annuitants
have died. When this Annuity Option is chosen, a choice must be
made of:
24
<PAGE>
(a) 100% of the payment to continue after the first death;
(b) 66-2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) Payments for a minimum of 120 months with 100% of the
payment to continue after the first death; or
(e) 100% of the payment to continue at the death of the second
Annuitant and 50% of the payment to continue at the death of
the Annuitant.
We may make other options available as allowed by law.
25
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
- -----------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -----------------------------------------------------------------------------
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- -----------------------------------------------------------------------------
26
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
Payments Guaranteed for a Stated Period of Months
-------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ------------------- ------------------- ------------------- ------------------- -------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.27 $ 3.90 $ 4.26 $ 3.90 $ 4.22 $ 3.89 $ 4.17 $ 3.86 $ 4.08 $ 3.82
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58
63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
66 6.30 5.51 6.21 5.47 5.96 5.36 5.56 5.16 5.08 4.86
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
27
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36
60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85
65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54
70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49
75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
28
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.75 $ 4.07 $ 4.26 $ 3.75 $ 3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12
60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54
65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14
70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96
75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
29
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
- -----------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -----------------------------------------------------------------------------
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.85 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
- -----------------------------------------------------------------------------
30
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- -----------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -----------------------------------------------------------------------------
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
- -----------------------------------------------------------------------------
31
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Months
-------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ------------------- ------------------- ------------------- ------------------- -------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.56 $ 4.20 $ 4.55 $ 4.19 $ 4.51 $ 4.18 $ 4.45 $ 4.15 $ 4.36 $ 4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
32
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Months
-------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ------------------- ------------------- ------------------- ------------------- -------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 5.48 $ 5.12 $ 5.46 $ 5.11 $ 5.41 $ 5.09 $ 5.34 $ 5.06 $ 5.24 $ 5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.97 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
33
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.97 $ 4.35 $ 4.56 $ 3.97 $ 4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 65 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
34
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.03 $ 4.36 $ 4.55 $ 4.03 $ 4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83
60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39
65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14
70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20
75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
35
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.88 $ 5.26 $ 5.48 $ 4.88 $ 5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
36
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.93 $ 5.27 $ 5.46 $4.93 $5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28
65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03
70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08
75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
37
<PAGE>
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800)531-4547
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
G-GP2 (5/96)
38
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800) 531-4547
You may call the toll-free number shown above for
answers to questions or to resolve a complaint.
Aetna Insurance Company of America (We or Us), a stock company, agrees to pay
benefits according to the terms and conditions set forth in this Contract.
- --------------------------------------------------------------------------------
Certificate of Group Annuity Coverage
Aetna certifies that an account is established for you under the Group Annuity
Contract and Certificate numbers shown below.
This certificate describes Group Annuity Contract provisions. It replaces any
and all prior certificates or endorsements issued to you under the stated
Contract and Certificate numbers. This Certificate is for information only and
is not a part of the Contract.
The variable features of the Group Contract are described in sections 6 and 12.
- --------------------------------------------------------------------------------
Right to Cancel
The Certificate Holder may cancel the Certificate within ten (10) days of
receiving it by returning it to Us at the address above or the person from whom
it was purchased. Within seven (7) days of the cancellation request, We will
return the Certificate Holder's Purchase Payment(s) made plus any increase, or
minus any decrease on the amount allocated to the Separate Account.
Signed at the home office on the Effective Date.
/s/ Dan Kearney /s/ Maria F. McKeon
President Secretary
- --------------------------------------------------------------------------------
Contract Holder Group Annuity Contract Number
SPECIMEN SPECIMEN
SPECIMEN
- --------------------------------------------------------------------------------
Certificate Holder Certificate Number
SPECIMEN SPECIMEN
SPECIMEN
- --------------------------------------------------------------------------------
Annuitant Name Type of Plan
SPECIMEN SPECIMEN
SPECIMEN
GP2CERT (5/97)
<PAGE>
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CERTIFICATE CONTAINS A MARKET VALUE ADJUSTMENT
FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN
INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA
DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
2
<PAGE>
Table of Contents
Page
Right to Cancel.............................................................1
Contract Schedule...........................................................5
Separate Account...................................................5
AICA Guaranteed Account (AG Account)...............................5
Separate Account and AG Account....................................5
Fixed Annuity......................................................7
Section 1. Definitions......................................................8
Section 2. General Provisions.............................................10
The Contract......................................................10
Certificates......................................................10
Nonparticipating Contract.........................................10
Misstatements and Adjustments.....................................10
Reports...........................................................10
Premium Taxes.....................................................10
Protection of Proceeds............................................10
Evidence of Survival..............................................11
Proof of Age......................................................11
Change of Contract................................................11
Section 3. Ownership......................................................12
Group Contract Holder.............................................12
Certificate Holder Rights.........................................12
Transfer of Ownership.............................................12
Section 4. Beneficiary Provisions.........................................12
Beneficiary.......................................................12
Change of Beneficiary.............................................13
Death of Beneficiary..............................................13
Section 5. Purchase Payments...............................................13
Purchase Payments.................................................13
Allocation of Purchase Payments...................................13
Section 6. Separate Account...............................................13
General...........................................................13
Investment Allocations to the Separate Account....................14
Valuation of Assets...............................................14
Accumulation Unit.................................................14
Net Return Factor for Each Valuation Period.......................14
Administrative Charge.............................................15
Mortality Risk Charge.............................................15
Expense Risk Charge...............................................15
Mortality and Expense Guarantee...................................15
3
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Page
Section 7. AG Account......................................................15
AG Account Guaranteed Interest Rate...............................15
Deposit Period....................................................15
Guaranteed Term...................................................15
Guaranteed Term(s) Groups.........................................15
Maturity Date.....................................................15
Allocation of Net Purchase Payments to the AG Guaranteed Account..16
AG Account Guaranteed Term Maturity Date and Maturity Value.......16
Withdrawals from the AG Account...................................16
Reinvestment......................................................17
AG Account Market Value Adjustment (Factor).......................17
Section 8. Certificate Holder's Account Value; Transfers and Withdrawals
During the Accumulation Period..................................18
Certificate Holder's Account Value................................18
Transfers During the Accumulation Period..........................18
Withdrawals During the Accumulation Period........................19
Deferred Sales Charge.............................................19
Waiver of Deferred Sales Charge...................................19
Payment of Adjusted Certificate Holder Account Value..............19
Systematic Withdrawal Option (SWO)................................20
Section 9. Maintenance Charge.............................................21
Maintenance Charge................................................21
Section 10. Proceeds Payable on Death.....................................21
Death of the Certificate Holder Prior to the Annuity Date.........21
Death Benefit Amount Prior to the Annuity Date....................21
Death Benefit Payment Methods.....................................23
Death of Certificate Holder On or After the Annuity Date..........23
Death of the Annuitant............................................23
Section 11. Delay of Payments.............................................24
Delay of Payments.................................................24
Section 12. Annuity Provisions............................................24
Designation of Annuitant..........................................24
Terms of Annuity Options..........................................25
Annuity Unit......................................................26
Annuity Unit Value................................................26
Annuity Net Return Factor.........................................26
Annuity Options...................................................27
4
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Contract Schedule
Separate Account
- --------------------------------------------------------------------------------
Separate Account: Variable Account B
Charges to the A daily charge is deducted from the assets of the
Separate Account: Separate Account. The deduction is the daily
equivalent of the annual effective percentage shown
below:
(a) During the Accumulation Period:
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Separate Account Charges During
Accumulation Period 1.40%
(b) During the Annuity Period
Administrative Charge Not To Exceed 0.25%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
TOTAL Maximum Separate Account Charges
During Annuity Period 1.50%
AICA Guaranteed Account (AG Guaranteed Account)
- --------------------------------------------------------------------------------
Minimum Guaranteed 3.0%
Interest Rate
(effective annual rate of
return):
Separate Account and AG Account
- --------------------------------------------------------------------------------
Minimum Initial $1,500
Purchase Payment:
Minimum Subsequent $500 or $50 per month if paid by an automatic check
Purchase Payment: plan
Maximum Subsequent $1,000,000 without home office approval Purchase
Payment:
Transfers: We allow an unlimited number of transfers during
the Accumulation Period. Twelve (12) transfers in
any calendar year are free. Thereafter, We reserve
the right to charge a transfer charge up to $10 for
each subsequent transfer.
5
<PAGE>
Maintenance Charge: The annual maintenance charge is $30. If the
Certificate Holder's Account is $50,000 or more on
the date the maintenance charge is to be deducted,
the maintenance charge is $0.
Deferred Sales Charge: For each withdrawal from a Certificate Holder's
Account, a deferred sales charge for each Net
Purchase Payment will be determined as follows:
Years from Receipt of Deferred
Net Purchase Payment Sales Charge
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
6-7 1%
7+ 0%
Waiver of Deferred Section 8.05 provides for the following:
Sales Charge:
(c) At least 12 months after the date of the first
Purchase Payment in an amount equal to or less
than 15% of the Certificate Holder's Account
Value.
(d) For a full withdrawal where the Certificate
Holder's Account Value does not exceed $2,500
and no withdrawals have been taken from the
Certificate Holder's Account within the prior
12 months.
Systematic (a) Specified
Withdrawal Option: Payment - Maximum Percentage: 10%
(b) Specified Period -
Minimum Period: 10 years
(c) Specified
Percentage - Maximum Percentage: 10%
Death Benefit Factor: 4%
Death Benefit There is no maximum death benefit amount.
Maximum Amount:
Death Benefit 85 years
Maximum Age:
Fund for Allocation of Federated Prime Money Fund II
Excess Guaranteed
Death Benefit Value:
6
<PAGE>
Latest Annuity Date: The Certificate Holder's 90th birthday.
Fixed Annuity:
- --------------------------------------------------------------------------------
Minimum Guaranteed 3.0%
Interest Rate
(effective annual rate
of return):
7
<PAGE>
Section 1. Definitions
- --------------------------------------------------------------------------------
1.01 Accumulation Period - The period during which one or more Net
Purchase Payments applied to a Certificate Holder's Account
accumulate to provide future Annuity payments.
1.02 Accumulation Unit - A measure of the net investment results for
each variable investment option during the Accumulation Period.
The Accumulation Units for the applicable Funds are used to
calculate the portion of a Certificate Holder's Account Value
attributable to a Separate Account during the Accumulation
Period.
1.03 Adjusted Certificate Holder Account Value - The Certificate
Holder's Account Value, plus or minus any aggregate AG Account
Market Value Adjustment.
1.04 AICA Guaranteed Account (AG Account) - An investment option where
We guarantee specified rate(s) of interest for specified periods
of time. The AG Account is a separate account established by Us
in accordance with the provisions of the Connecticut General
Statutes Section 38a-433. Certificate Holders do not participate
in the investment gain or loss from the assets held in the AG
Account. Assets in the AG Account may be charged with liabilities
arising out of any other business We may conduct.
1.05 Annuitant - The natural person on whose life an Annuity payment
is based.
1.06 Annuity - A series of payments We make for life, a definite
period or a combination of the two.
1.07 Annuity Date - The date on which Annuity payments commence.
1.08 Annuity Options - Annuity payment methods available during the
Annuity Period.
1.09 Annuity Period - The period of time during which Annuity payments
are made.
1.10 Annuity Unit - A measure of the net investment results for each
variable investment option during the Annuity Period. Annuity
Units are used to calculate the amount of each variable Annuity
payment.
1.11 Beneficiary - The person(s) entitled to receive any death benefit
under the Certificate Holder's Account. Upon the death of a joint
Certificate Holder, the surviving joint Certificate Holder, if
any, is treated as the Beneficiary. Any other Beneficiary
designation on record with Us at the time of death is treated as
a contingent Beneficiary.
1.12 Certificate - The document issued to a Certificate Holder to
evidence a Certificate Holder's Account established under the
group Contract.
8
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1.13 Certificate Holder - A person who has established a Certificate
Holder's Account under a group Contract. We reserve the right to
limit ownership to natural persons. If more than one Certificate
Holder owns an Account, each Certificate Holder shall be a joint
Certificate Holder. Any joint Certificate Holder must be the
spouse of the other joint Certificate Holder. Joint Certificate
Holders have joint ownership rights and both must authorize any
exercising of those ownership rights unless otherwise allowed by
Us. If the Certificate Holder's Account is owned by a nonnatural
person, the death benefit will be paid at the death of the
Annuitant and a new Annuitant may not be named.
1.14 Certificate Holder's Account - A record We establish for each
Certificate Holder to maintain values under a group Contract.
1.15 Certificate Holder's Account Value - The dollar value as of any
Valuation Period of all amounts accumulated in a Certificate
Holder's Account.
1.16 Contract - This agreement between the Group Contract Holder and
Us.
1.17 Dollar Cost Averaging - A program that permits the Certificate
Holder to systematically transfer amounts from any of the Funds
and the one-year guaranteed term of the AG Account to any of the
Funds. Dollar Cost Averaging is not available if the Systematic
Withdrawal Option is in effect.
1.18 Effective Date - The date a Certificate is issued to a
Certificate Holder.
1.19 Fund - One of the variable investment options which may be
selected by a Certificate Holder.
1.20 General Account - The General Account is made up of all of our
general assets other than those allocated to the separate
accounts.
1.21 Group Contract Holder - The entity to which a group Contract is
issued.
1.22 Home Office - Our headquarters, located at 151 Farmington Avenue,
Hartford, CT 06156.
1.23 Market Value Adjustment - An adjustment that may apply to a
withdrawal made from the AG Account before the end of a
guaranteed term as stated in Section 7.10.
1.24 Net Purchase Payment - The Purchase Payment less premium taxes,
if applicable.
1.25 Purchase Payment - The gross payment accepted by Us and allocated
to the Certificate Holder's Account. We reserve the right to
refuse to accept any Purchase Payment at any time for any reason.
9
<PAGE>
1.26 Separate Account - A separate account that buys and holds shares
of the Fund(s). Income, gains or losses, realized or unrealized,
are credited or charged to the Separate Account without regard to
Our other income, gains or losses. We own the assets held in the
Separate Account and are not a trustee as to such amounts. The
Separate Account generally is not guaranteed and is held at
market value. The name of the Separate Account is shown on the
Contract Schedule. The assets of the Separate Account, to the
extent of reserves and other Contract liabilities of the Separate
Account, will not be charged with Our other liabilities.
1.27 Valuation Period - The period of time for which a Fund determines
its net asset value, usually from 4:15 p.m. Eastern time each day
the New York Stock Exchange is open until 4:15 p.m. the next such
business day, or such other day that one or more of the Funds
determines its net asset value. The assets of the Separate
Account are not chargeable with the liabilities arising out of
any other business We may conduct.
1.28 Variable Annuity Contract - An Annuity Contract providing for the
accumulation of value and/or for Annuity payments which vary in
amount based on investment results.
Section 2. General Provisions
- --------------------------------------------------------------------------------
2.01 The Contract - The entire Contract consists of this Contract and
any endorsements attached or subsequently issued.
2.02 Certificates - A Certificate is issued to each Certificate Holder
whose Purchase Payment(s) is accepted by Us. The Certificate
evidences a Certificate Holder's Account established under the
Contract. Certificates are not part of the Contract.
2.03 Nonparticipating Contract - Neither the Group Contract Holder,
Certificate Holder nor any Beneficiary have a right to share in
our earnings.
2.04 Misstatements and Adjustments - If We learn that the age of any
Annuitant or second Annuitant is misstated, the correct age will
be used to adjust payments. We reserve the right to request
reimbursement or adjust future payments for any amount overpaid.
We will pay the amount of any underpayment.
2.05 Reports - We furnish each Certificate Holder with a report
showing the Certificate Holder's Account Value at least once each
calendar year. We also furnish an annual report of the Separate
Account.
2.06 Premium Taxes - Any premium taxes paid to any governmental entity
are charged against Purchase Payments or a Certificate Holder's
Account. We may, at our sole discretion, pay premium taxes when
due and deduct that amount from the Certificate Holder's Account
at a later date. Payment at an earlier date does not waive any
right We may have to deduct amounts at a later date.
2.07 Protection of Proceeds - To the extent permitted by law, all
payments under this Contract to a Certificate Holder or
Beneficiary shall be free from legal process and the claim of any
creditor.
10
<PAGE>
2.08 Evidence of Survival - The Company may require satisfactory
evidence of the continued survival of any person(s) on whose life
Annuity payments are based.
2.09 Proof of Age - The Company may require evidence of age of any
Annuitant under Annuity Options 2 and 3 and of the designated
second Annuitant under Annuity Option 3.
2.10 Change of Contract - Only our authorized officers may change the
terms of this Contract. We will notify the Group Contract Holder
in writing at least 30 days before the effective date of any
change. Any change will not affect the amount or terms of any
Annuity which begins before the change.
We may make any change that affects the AG Account Market Value
Adjustment with at least thirty (30) days' advance written notice
to the Group Contract Holder and the Certificate Holder. Any such
change shall become effective for any new guaranteed term and
will apply to all present and future Certificate Holders'
Accounts.
We reserve the right to change the terms of the Systematic
Withdrawal Option for future elections and discontinue the
availability of this option.
Any change to any of the following provisions under this Contract
will not apply to Certificate Holder's Accounts in existence
before the effective date of the change:
(a) Net Purchase Payment (1.24)
(b) AG Account Guaranteed Interest Rate (7.01)
(c) Net Return Factor (6.05)
(d) Certificate Holder's Account Value (1.15)
(e) Deferred Sales Charge (8.04)
(f) Annuity Unit Value (12.04)
(g) Annuity Options (12.06)
(h) Fixed Annuity Interest Rates (12.01)
(i) Transfers (8.02).
Any change that affects the Annuity Option and the tables for the
Annuity Options may be made:
(a) No earlier than twelve (12) months after the Effective Date;
and
(b) No earlier than twelve (12) months after the effective date
of any prior change.
Any Certificate Holder's Account established on or after the
effective date of any change will be subject to the change. If
the Group Contract Holder does not agree to any change under this
provision, We reserve the right to not allow any new Certificate
Holder's Accounts to be established under this Contract. This
Contract may also be changed as deemed necessary by Us to comply
with federal or state law.
11
<PAGE>
Section 3. Ownership
- --------------------------------------------------------------------------------
3.01 Group Contract Holder - The Group Contract Holder has title to
the Contract. The Contract and any amounts accumulated thereunder
are not subject to the claims of the Group Contract Holder nor
any of its creditors.
3.02 Certificate Holder Rights - The Certificate Holder has all
interest and right to amounts held in his or her Certificate
Holder's Account. The Certificate Holder and any joint
Certificate Holder are named on the Specifications page. The
Certificate Holder and any joint Certificate Holder may exercise
all the rights under the Certificate Holder's Account, subject to
the rights of:
(a) Any assignee under an assignment filed at our home office;
and
(b) Any irrevocably named Beneficiary.
Upon the death of a Certificate Holder prior to the Annuity Date,
a spousal Beneficiary may elect to continue the Certificate
Holder's Account in his or her own name and retain all ownership
rights and privileges or take distribution of the death benefit
as defined in Section 10.
3.03 Transfer of Ownership - The Group Contract Holder may transfer
ownership of this Contract. A written request, dated and signed,
must be filed at our home office.
Any transfer of ownership terminates the interest of any existing
Group Contract Holder. It does not change the rights of any
Certificate Holder.
A Certificate Holder may transfer all of his or her rights under
the Contract. We reserve the right not to accept an assignment or
transfer to a nonnatural person. A written request, dated and
signed by the Certificate Holder and any joint Certificate
Holder, must be filed at our home office. After the transfer is
recorded, it will take effect as of the date the request was
signed. Any such transfer terminates the interest of any existing
Certificate Holder. It does not change the Beneficiary, nor
transfer the Beneficiary's interest. A transfer will not affect
any payments We may make or actions We may take before such
transfer has been recorded at our home office.
Section 4. Beneficiary Provisions
- --------------------------------------------------------------------------------
4.01 Beneficiary - The Certificate Holder may name a Beneficiary and a
contingent Beneficiary. At the death of the Certificate Holder
prior to the Annuity Date, the Beneficiary(ies) named in our
records will receive a death benefit as stated in Section 10.
Upon the death of either joint Certificate Holder prior to the
Annuity Date, the surviving joint Certificate Holder, if any,
will be treated as the designated Beneficiary and any other
Beneficiary designation on record with Us at the time of death is
treated as a contingent Beneficiary. If the Certificate Holder is
a nonnatural person, the death benefit will be paid at the death
of the Annuitant.
12
<PAGE>
4.02 Change of Beneficiary - The Certificate Holder may change the
Beneficiary. A written request, dated and signed by the
Certificate Holder, must be filed at our home office. If there
are joint Certificate Holders, both must sign the request. After
the change is recorded, it will take effect as of the date the
request was signed. If the request reaches our home office and is
recorded after the Certificate Holder dies, but before any
payment is made, the change is valid.
4.03 Death of Beneficiary - If all of the Beneficiaries and contingent
Beneficiaries die prior to the Certificate Holder's death, We pay
the death benefit in one sum to the Certificate Holder's estate.
If the Certificate Holder is a nonnatural person, and all of the
Beneficiaries and contingent Beneficiaries die prior to the
Annuitant's death, We will pay the death benefit in one sum to
the Certificate Holder.
Section 5. Purchase Payments
- --------------------------------------------------------------------------------
5.01 Purchase Payments - Subject to the maximum and minimum shown on
the Contract Schedule, the Certificate Holder may determine the
amount and frequency of Purchase Payments. We reserve the right
not to accept any Purchase Payment. We will declare from time to
time the acceptability of additional Purchase Payments.
5.02 Allocation of Purchase Payments - The Certificate Holder may
elect to have each Net Purchase Payment accumulate:
(a) On a variable basis invested in shares of one or more Funds
in which the Separate Account invests;
(b) For guaranteed terms offered in the current deposit period(s)
under the AG Account; or
(c) In a combination of any of the available investment options.
Net Purchase Payments must be allocated in whole percentages. For
subsequent Purchase Payments, if no allocation instructions are
received with the Purchase Payment, the allocation will be as
indicated in the most recent directive from the Certificate
Holder. If the same guaranteed term(s) are not available, the
next shortest will be used. If no shorter guaranteed term is
available, the next longer guaranteed term will be used.
Section 6. Separate Account
- --------------------------------------------------------------------------------
6.01 General - The assets of the Separate Account, equal to the
reserves and other Contract liabilities that depend on the
investment performance of the Separate Account are not chargeable
with liabilities arising out of any other business We may
conduct. Income, gains or losses of the Separate Account,
realized or unrealized, are credited to or charged against the
assets of the Separate Account without regard to Our other
income, gains or losses.
13
<PAGE>
6.02 Investment Allocations to the Separate Account - The assets of
the Separate Account are segregated by Fund. If the shares of any
Fund are no longer available for investment by the Separate
Account or if in our judgment, further investment in such shares
should become inappropriate in view of the purpose of the
Contract, We may cease to make such Fund shares available for
investment under the Contract prospectively, or We may substitute
shares of another Fund for shares already acquired. We may also,
from time to time, add additional Funds. Any elimination,
substitution or addition of Funds will be done in accordance with
applicable state and federal securities laws. We reserve the
right to substitute shares of another Fund for shares already
acquired without a proxy vote.
6.03 Valuation of Assets - The shares of the Funds will be valued at
their net asset value at the end of each Valuation Period.
6.04 Accumulation Unit - A Net Purchase Payment that is allocated to
one or more Funds is credited to the Certificate Holder's Account
as Accumulation Units. The number of Accumulation Units credited
is determined by dividing the applicable portion of the Net
Purchase Payment by the Accumulation Unit value for the
appropriate Fund. The Accumulation Unit value used is that which
is computed for the next Valuation Period after which the
Purchase Payment is received at our home office. Accumulation
Units attributable to the initial Purchase Payments will be
credited within two business days of acceptance.
Accumulation Unit values may increase or decrease from Valuation
Period to Valuation Period.
6.05 Net Return Factor for Each Valuation Period - The value of an
Accumulation Unit for any Valuation Period is calculated by
multiplying the Accumulation Unit value for the immediately
preceding Valuation Period by the net return factor of the
appropriate Fund for the current period.
The net return factor for each Fund is equal to 1.0000000 plus
the net return rate.
The net return rate equals:
(a) The value of the shares of the Fund held by the Separate
Account at the end of a Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate
Account at the start of the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the Funds(s) Accumulation Units and
Fund(s) Annuity Units of the Separate Account at the start
of the Valuation Period; minus
(e) A daily actuarial charge as shown on the Contract Schedule
for Annuity mortality and expense risks and profit and a
daily administrative charge.
The net return rate may be more or less than zero (0) percent.
The value of a share of the Fund is equal to the net assets of
the Fund divided by the number of shares outstanding.
14
<PAGE>
6.06 Administrative Charge - We deduct an administrative charge equal,
on an annual basis, to the amount shown on the Contract Schedule.
6.07 Mortality Risk Charge - We deduct a mortality risk charge equal,
on an annual basis, to the amount shown on the Contract Schedule.
6.08 Expense Risk Charge - We deduct an expense risk charge equal, on
an annual basis, to the amount shown on the Contract Schedule.
6.09 Mortality and Expense Guarantee - We guarantee that the dollar
amount of each Annuity payment after the first will not be
affected by variations in mortality or expense experience.
Section 7. AG Account
- --------------------------------------------------------------------------------
7.01 AG Account Guaranteed Interest Rate - All amounts allocated to
the AG Account earn a rate of interest that is guaranteed for a
specified period of time. The rate will be credited daily and
will never be less than the minimum guaranteed interest rate
shown on the Contract Schedule. We determine the rate and it is
not based on investment experience.
For guaranteed terms of one year or less, one guaranteed interest
rate is credited for the full guaranteed term. For longer
guaranteed terms, an initial guaranteed interest rate is credited
from the date of deposit to the end of a specified period within
the guaranteed term. There may be different guaranteed interest
rate(s) declared for subsequent specified time intervals
throughout the guaranteed term.
7.02 Deposit Period - A calendar week, a calendar month, a calendar
quarter, or any other period of time We specify during which Net
Purchase Payment(s), transfers and reinvestments are accepted
into the AG Account for one or more guaranteed terms. We reserve
the right to extend the deposit period.
7.03 Guaranteed Term - The period of time for which AG Account
guaranteed interest rates are guaranteed on Net Purchase
Payments. Transfers and reinvestments are made into a current
deposit period for the AG Account. Such period begins on the day
following the close of the deposit period and ends on the
designated Maturity Date. Guaranteed terms, if any, are offered
at our discretion for various lengths of time ranging up to and
including ten years.
During a deposit period, We may make available any number of
guaranteed terms. The Certificate Holder may allocate Net
Purchase Payments and transfers into any or all of the available
guaranteed terms.
7.04 Guaranteed Term(s) Groups - All AG Account guaranteed term(s)
with the same length of time from the close of the deposit period
until the designated Maturity Date.
7.05 Maturity Date - The last day of a guaranteed term.
15
<PAGE>
7.06 Allocation of Net Purchase Payments to the AG Account - When the
Certificate Holder wishes to allocate all or any portion of a Net
Purchase Payment to the Guaranteed Account, he or she must tell
Us the percentage to apply to one or more of the AG Account
guaranteed term(s) available during the current deposit period.
If no allocation instructions are received, a Net Purchase
Payment is allocated as indicated in the most recent directive
from the Certificate Holder. If the same guaranteed term is not
available for any amount allocated to the AG Account, We will
allocate the amount to the next shortest guaranteed term
available. If no shorter guaranteed term is available, We will
allocate it to the next longest guaranteed term.
7.07 AG Account Guaranteed Term Maturity Date and Maturity Value - On
the maturity date, the value of the total of all amounts
allocated to that guaranteed term is called the maturity value.
When Certificate Holders have assets in the AG Account, at least
eighteen (18) days before a maturity date, We notify them of the:
(a) Projected maturity value; and
(b) Guaranteed terms and the applicable guaranteed interest
rates available during the current deposit period.
When no allocation instructions are received and the assets in a
guaranteed term have been reinvested by Us in another guaranteed
term on the maturity date, the Certificate Holder may transfer or
withdraw, during the month following the maturity date, the
reinvested amount with interest earned (as of the date the
request is received at our home office) without incurring a
Market Value Adjustment. This transaction is allowed only once
for each maturity date, regardless of whether the transfer or
withdrawal is partial or full.
7.08 Withdrawals and Transfers from the AG Account - When the
Certificate Holder requests a withdrawal or transfer from the AG
Account, if instructions are not provided by the Certificate
Holder, amounts are withdrawn on a pro rata basis from the
guaranteed term(s) groups in which the Certificate Holder's
Account is currently invested. Within a guaranteed term group,
the amount to be withdrawn will be withdrawn first from the
oldest deposit period. Withdrawals or transfers from an AG
Account guaranteed term before the maturity date are subject to a
Market Value Adjustment, except for:
(a) A one month period following the maturity date described in
7.07;
(b) Transfers under the Dollar Cost Averaging program; and
(c) Withdrawals under the Systematic Withdrawal Option described
in Section 8.07.
Only a positive Market Value Adjustment will apply to amounts
transferred from the AG Account when the Certificate Holder
elects Annuity Option 2 or 3.
16
<PAGE>
7.09 Reinvestment - We will mail a notice to the Certificate Holder
before a guaranteed term's maturity date. This notice will
contain the guaranteed terms available during the current deposit
periods with their guaranteed interest rate(s) and projected
maturity value. If no specific direction is given by the
Certificate Holder prior to the maturity date, each maturity
value will be reinvested in the current deposit period for a
guaranteed term of the same duration. If a guaranteed term of the
same duration is unavailable, each matured term value will
automatically be reinvested in the current deposit period for the
next shortest guaranteed term available. If no shorter guaranteed
term is available, the next longer guaranteed term will be used.
We will mail a confirmation statement to the Certificate Holder
after the maturity date. This notice will state the guaranteed
term and guaranteed interest rate(s) which will apply to the
reinvested matured term value.
7.10 AG Account Market Value Adjustment (Factor) - The Market Value
Adjustment factor (MVA factor) reflects any change in interest
rates from the time assets are allocated to the AG Account to the
time they are transferred or withdrawn. Except as noted in
Section 7.09, 10.02 and 12.01, an MVA factor is applied to any
amount withdrawn or transferred from the AG Account before the
end of a guaranteed term.
The amount withdrawn from the AG Account is multiplied by the MVA
factor which is calculated as follows:
x
---
365
(1 + i)
------------------
x
---
365
(1 + j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days remaining, (computed from
Wednesday of the week of withdrawal) in the
guaranteed Term.
Determination of MVA factor parameters:
A yield is computed at the close of the last business day of each
week of the deposit period. The yield will equal the average of
the yields on U.S. Treasury Notes which matured during the last
three months of the applicable guaranteed term.
The deposit period yield is the average of those yields for the
deposit period. If withdrawal is made prior to the close of the
deposit period, it is the average of those yields on each week
preceding withdrawal.
The current yield is the average of the yields on the last
business day of the week preceding withdrawal on the same U.S.
Treasury Notes included in the deposit period yield.
17
<PAGE>
If no U.S. Treasury Notes matured during the last three months of
the guaranteed term, We reserve the right to use the average of
the yields on U.S. Treasury Notes that mature during a following
quarter.
Section 8. Certificate Holder's Account Value; Transfers and Withdrawals
During the Accumulation Period
- --------------------------------------------------------------------------------
8.01 Certificate Holder's Account Value - The value of a Certificate
Holder's Account is determined by adding the value of the total
of Accumulation Units attributed to the selected Fund(s) to the
value of any amounts attributed to the AG Account.
8.02 Transfers During the Accumulation Period - Before the Annuity
Date, the Certificate Holder may transfer from any Fund or
guaranteed term of the AG Account to:
(a) Any other Fund; or
(b) Any guaranteed term of the AG Account available in the
current deposit period.
Transfer requests can be submitted as a percentage or as a dollar
amount. We may establish a minimum transfer amount. Within a
guaranteed term group, the amount transferred is withdrawn first
from the oldest deposit period, then from the next oldest, and so
on until the amount requested is satisfied.
The Certificate Holder may make an unlimited number of transfers
during the Accumulation Period. The number of free transfers
allowed is shown on the Contract Schedule. Transfers in excess of
that number may be subject to the transfer charge shown on the
Contract Schedule. Transfers under the Dollar Cost Averaging
program do not count toward the annual limit. Transfers of a
matured term value from the AG Account on or within one calendar
month after a guaranteed term's maturity date do not count
against the annual transfer limit.
Amounts applied to guaranteed terms of the AG Account may not be
transferred to the Funds or to another guaranteed term during the
deposit period or for 90 days after the close of the deposit
period except for (1) matured term value(s) during the calendar
month following the guaranteed term's maturity date; (2) amounts
applied to an annuity option; (3) transfers from the one-year
guaranteed term under the Dollar Cost Averaging program; and (4)
amounts distributed under the Systematic Withdrawal Option.
Except as noted in Section 7.09, 10.02 and 12.01, transfers from
guaranteed terms of the AG Account before the Maturity Date are
subject to a Market Value Adjustment.
18
<PAGE>
8.03 Withdrawals During the Accumulation Period - The Certificate
Holder may withdraw all or a portion of the Certificate Holder's
Account Value during the Accumulation Period by properly
completing a withdrawal request form. Withdrawal requests can be
submitted as a percentage or as a specific dollar amount. Net
Purchase Payment amounts are withdrawn first, and then the excess
value, if any. For any partial withdrawal, if instructions are
not provided by the Certificate Holder, amounts are withdrawn on
a pro rata basis from the Fund(s), and/or the guaranteed term(s)
groups in which the Certificate Holder's Account is currently
invested. Within a guaranteed term group, the amount to be
withdrawn will be withdrawn first from the oldest deposit period,
then from the next oldest, and so on until the amount requested
is satisfied.
After deduction of the maintenance charge, if applicable, the
withdrawn amount shall be reduced by the applicable deferred
sales charge and any applicable premium taxes.
8.04 Deferred Sales Charge - The deferred sales charge only applies
to the portion of the amount withdrawn attributable to Net
Purchase Payment(s) and varies according to the elapsed time
since receipt of the Purchase Payment. The deferred sales charge
is shown on the Contract Schedule.
8.05 Waiver of Deferred Sales Charge - No deferred sales charge is
deducted when a Certificate Holder's Account Value is paid:
(a) To a Beneficiary as a death benefit, except for Purchase
Payments made by a surviving joint Certificate Holder as
described in Section 10.02(b);
(b) As a premium for an Annuity Option;
(c) At least the number of months, as shown on the Contract
Schedule, after the date of the first Purchase Payment and
in an amount equal to or less than the percentage of the
Certificate Holder's Account Value as shown on the Contract
Schedule. This applies to the first withdrawal request,
partial or full, in a calendar year. The Certificate
Holder's Account Value is calculated as of the date the
withdrawal request is received in good order at our home
office. This waiver is not available to the Certificate
Holder while a SWO is in effect;
(d) For a full withdrawal where the Certificate Holder's
Account Value does not exceed the amount shown on the
Contract Schedule and no withdrawals have been taken from
the Certificate Holder's Account within the prior 12
months;
(e) For a distribution made by Us under Section 8.06; or
(f) For a distribution which is part of a SWO under Section
8.07.
We reserve the right to allow the proceeds of a total withdrawal
to be reinstated under the terms and conditions as established by
Us from time to time.
8.06 Payment of Adjusted Certificate Holder Account Value - Upon 90
day's written notice to the Certificate Holder, We will terminate
any Certificate Holder's Account if the Certificate Holder's
Account Value becomes less than $1,500 immediately following any
partial withdrawal. We do not intend to exercise this right in
cases where the Certificate Holder's Account Value is reduced to
$1,500 or less solely due to investment performance. When We make
a distribution pursuant to this provision, the deferred sales
charge will not be deducted.
19
<PAGE>
8.07 Systematic Withdrawal Option (SWO) - We will allow the
Certificate Holder to establish a schedule of withdrawals to be
made automatically from the Certificate Holder's Account Value.
All distributed amounts will be withdrawn on a pro rata basis
from the Fund(s) and/or the guaranteed term(s) groups of the AG
Account in which the Certificate Holder's Account is invested.
The Certificate Holder must elect one of the following SWO
methods:
(a) Specified Payment: Payments of a designated dollar amount.
The annual amount may not be greater than the percentage of
the Certificate Holder's Account Value at time of the
election as shown on the Contract Schedule. This annual
dollar amount will remain constant. At our discretion, We
may require a minimum payment amount; or
(b) Specified Period: Payments which are made over a period of
time which must be at least the minimum period as shown on
the Contract Schedule. The annual amount paid each year is
calculated by dividing the Certificate Holder's Account
Value as of December 31 of the prior year by the number of
payment years remaining; or
(c) Specified Percentage: Payment of a designated percentage
which cannot be greater than the percentage of the
Certificate Holder's Account Value at the time of election
as shown on the Contract Schedule. The percentage may be
changed by written request. We reserve the right to limit
the number of times the percentage may be changed. The
annual amount is calculated by multiplying the Certificate
Holder's Account Value as of December 31 of the year prior
to the payment by the designated percentage.
SWO payments will cease at the Certificate Holder's death (or if
the Certificate Holder is a nonnatural person, at the death of
the Annuitant). A beneficiary may elect to continue SWO as
provided in Section 10.01.
In our discretion, We may require a minimum initial Certificate
Holder's Account Value for election of this option. SWO may be
elected by submitting a completed and signed election form to Us.
Once elected, this option may be revoked by submitting a written
request to Us. SWO may be elected only once by the Certificate
Holder or by a spousal Beneficiary.
Certificate Holders should consult their tax adviser prior to
requesting this distribution option. We are not responsible for
any adverse tax consequences due to a Certificate Holder's
receiving SWO payments. A ten (10) percent penalty tax may apply
to distributions to a Certificate Holder who has not reached age
59-1/2. Upon death of the Certificate Holder, any payments will
be made under the terms of Section 10.
Dollar Cost Averaging is not available to Certificate Holders who
have elected SWO.
20
<PAGE>
Section 9. Maintenance Charge
- --------------------------------------------------------------------------------
9.01 Maintenance Charge - We will deduct an annual maintenance charge
as shown in the Contract Schedule from the Certificate Holder's
Account during the Accumulation Period. We will deduct the
maintenance charge on the anniversary of the Effective Date of
the Certificate for the Certificate Holder's Account. This
maintenance charge is also deducted upon withdrawal of the entire
Adjusted Certificate Holder's Account. The maintenance charge is
deducted proportionately from each investment option used.
Section 10. Proceeds Payable on Death
- --------------------------------------------------------------------------------
10.01 Death of the Certificate Holder Prior to the Annuity Date - In
the event of the death of the Certificate Holder or a joint
Certificate Holder prior to the Annuity Date, a death benefit is
payable to the Beneficiary(ies) designated by the Certificate
Holder. Upon the death of a joint Certificate Holder, the
surviving joint Certificate Holder, if any, will be treated as
the designated Beneficiary. Any other Beneficiary designation on
record with Us at the time of death will be treated as a
contingent Beneficiary. If the Certificate Holder is a nonnatural
person, the death benefit will be payable to the Beneficiary(ies)
at the death of the Annuitant.
A Beneficiary may request We pay the death benefit under one of
the methods described in Section 10.03. If the Beneficiary is the
spouse of the Certificate Holder, or the spouse of the Annuitant
if the Certificate Holder is a nonnatural person, he or she may
elect to continue the Certificate Holder's Account in his or her
own name and exercise all the Certificate Holder's rights under
the Contract.
10.02 Death Benefit Amount Prior to the Annuity Date -
(a) Except as set forth below, the amount of the guaranteed
death benefit value is equal to the greater of:
(i) The Certificate Holder's Account Value at the end of
the Valuation Period during which We receive at our
home office due proof of death and election of the
type of payment to be made; or
(ii) The death benefit determined as of the Valuation
Period corresponding to the date of death.
Until the first Effective Date anniversary, the
death benefit is equal to the Purchase Payments made
by the Certificate Holder prior to the Effective Date
anniversary less any withdrawals and any amounts
applied to an Annuity Option.
For each Certificate year thereafter, the death
benefit during the Certificate year equals the death
benefit at the beginning of the Certificate year plus
Purchase Payments made during the year less any
withdrawals and any amounts applied to an Annuity
Option.
21
<PAGE>
On each Effective Date anniversary, the death benefit
is determined as follows:
(A) The death benefit on the previous Effective
Date anniversary increased by the death benefit factor
shown on the Contract Schedule; plus
(B) Purchase Payments made by the Certificate
Holder during the Certificate year increased by the
death benefit factor shown on the Contract Schedule
for the portion of the year since the Purchase Payment
was made; less
(C) Any withdrawals or amounts applied to an
Annuity Option during the Certificate year increased
by the death benefit factor shown on the Contract
Schedule for the portion of the Certificate year since
the withdrawal or election of Annuity option; or
(iii) The Certificate Holder's Account Value on the most
recent seventh year anniversary of the Effective Date
plus any Purchase Payments made after such Effective
Date anniversary less any withdrawals and any amounts
applied to an Annuity Option.
Notwithstanding the foregoing, the death benefit under (ii)
or (iii) will not exceed the death benefit maximum amount
shown on the Contract Schedule.
The death benefit calculation described in (ii) and (iii)
above, applies until the Certificate Holder reaches the
death benefit maximum age shown on the Contract Schedule.
If the Certificate Holder is a nonnatural person, death
provisions will be based on the age of the Annuitant.
Thereafter, the death benefit is only adjusted for Purchase
Payments, withdrawals and amounts applied to Annuity
Options. If the Certificate Holder reaches the death
benefit maximum age shown on the Contract Schedule prior to
the seventh anniversary of the Effective Date, the death
benefit will be the greater of (i) or (ii) above.
The excess, if any, of the guaranteed death benefit value
over the Certificate Holder's Account Value is determined
when we receive at our home office due proof of death and
allocated to the Fund shown on the Contract Schedule. The
Certificate Holder's Account Value plus any excess amount
deposited becomes the Certificate Holder's Account Value.
(b) In the case of a spousal Beneficiary who continued the
Certificate Holder's Account in his or her own name, the
death benefit shall be equal to the Adjusted Current Value
less any applicable deferred sales charge on any Purchase
Payment made after We have received at our home office due
proof of death of the joint Certificate Holder (or
Annuitant, if applicable).
When the Beneficiary withdraws or transfers all or any portion of
the death benefit in the AG Account within six months after the
date of death, the amount withdrawn or transferred from the AG
Account will be the greater of:
(1) The aggregate Market Value Adjustment amount (the amount
resulting from the application of relevant Market Value
Adjustment factors); or
(2) The applicable portion of Certificate Holder's Account Value
in the AG Account.
22
<PAGE>
After the six-month period, when the Beneficiary withdraws or
transfers all or any portion of the death benefit in the AG
Account, the amount will be equal to the aggregate Market Value
Adjustment amount. Only a positive market value adjustment will
apply, however, to amounts transferred from the AG Account when
the Beneficiary elects Annuity Option 2 or 3.
At the death of a spousal Beneficiary who continued the
Certificate Holder's Account in his or her own name, when the
Beneficiary withdraws or transfers all or any portion of the
death benefit in the AG Account, the amount will be equal to the
Aggregate Market Value Adjustment amount.
10.03 Death Benefit Payment Methods - A non-spousal Beneficiary must
elect the death benefit to be paid under one of the following
methods in the event of the death of the Certificate Holder prior
to the Annuity Date:
Method 1 - Lump sum payment of the death benefit; or
Method 2 - The payment of the entire death benefit within five
years of the date of the Certificate Holder's death; or
Method 3 - Payment of the death benefit over the lifetime of the
designated Beneficiary or over a period not extending beyond the
life expectancy of the designated Beneficiary with distribution
beginning within one year of the date of death of the Certificate
Holder.
Any portion of the death benefit not applied under Method 3
within one year of the date of Certificate Holder's death, or the
death of the Annuitant if the Certificate Holder is a nonnatural
person, must be distributed within five years of the date of
death.
A spousal Beneficiary may elect to continue the Certificate
Holder's Account in his or her name, elect a lump sum payment of
the death benefit, or apply the Adjusted Certificate Holder's
Account Value to an Annuity Option.
10.04 Death of Certificate Holder On or After the Annuity Date - If the
Certificate Holder who is not the Annuitant, dies on or after the
Annuity Date, the remaining payments under the Annuity Option
elected will be made to the Beneficiary at least as rapidly as
under the method of distribution in effect at the Certificate
Holder's death.
10.05 Death of the Annuitant - If the Annuitant, who is not a
Certificate Holder, dies on or before the Annuity Date, a new
Annuitant may be named. If no Annuitant is named, the Certificate
Holder will be the Annuitant. If the Certificate Holder is a
nonnatural person, the death benefit will be paid at the death of
the Annuitant and no new Annuitant may be named. If the Annuitant
dies after the Annuity Date, the death benefit, if any, will be
payable to the Beneficiary as specified in the Annuity Option
elected. We will require proof of the Annuitant's death. Death
benefits will be paid at least as rapidly as under the method of
distribution in effect at the Annuitant's death.
23
<PAGE>
Section 11. Delay of Payments
- --------------------------------------------------------------------------------
11.01 Delay of Payments - We will make any payments under this Contract
within seven days after a request is received in good order. We
reserve the right to suspend or postpone any type of payment from
the Separate Account for any period when:
(a) The New York Stock Exchange is closed for other than
customary weekend and holiday closings;
(b) Trading on the Exchange is restricted;
(c) An emergency exists as a result of which it is not
reasonably practicable to dispose of securities held in the
Separate Account or determine their value; or
(d) The Securities and Exchange Commission so permits delay for
the protection of security holders.
The applicable rules of the Securities and Exchange Commission
will govern as to whether the conditions in (b) or (c) exist.
We also reserve the right to delay any type of payment from the
AG Account for up to six months.
Section 12. Annuity Provisions
- --------------------------------------------------------------------------------
12.01 Designation of Annuitant - The Certificate Holder and the
Annuitant need not be the same person. The Certificate Holder
names the Annuitant and during the Accumulation Period, may
change the designated Annuitant. We change the Annuitant when We
receive a written request in good order at our home office. We
will not change the Annuitant when Annuity payments have
commenced.
The Certificate Holder elects an Annuity Option by telling Us to
use all or any portion of the Certificate Holder's Account Value
(minus any applicable premium taxes if not previously deducted)
to purchase Annuity payments under an Annuity Option. If the
Certificate Holder elects Annuity Option 1, the amount applied to
purchase Annuity payments will be equal to the Adjusted
Certificate Holder's Account Value. If the Certificate Holder
elects Annuity Option 2 or 3, the amount applied to purchase
Annuity payments will be the greater of:
(1) The Adjusted Certificate Holder's Account Value; or
(2) The Certificate Holder's Account Value.
When an Annuity Option is chosen the Certificate Holder must
designate a:
(a) Fixed Annuity using the General Account;
(b) Variable Annuity using any of the Funds available during the
Annuity Period; or
(c) Combination of (a) and (b).
If a fixed Annuity is chosen, We will calculate the amount using
an interest assumption no less than the percentage specified on
the Contract Schedule. We may calculate the amount using a higher
interest rate.
24
<PAGE>
If a variable Annuity is chosen, an Assumed Annual Net Return
Rate of 5% may be chosen. If not chosen, We will use an Assumed
Annual Net Return Rate of 3.5%.
Payments are made on a monthly basis to the Certificate Holder
unless the Certificate Holder requests a different mode of
payment.
Once elected, an Annuity Option may not be revoked, except for
Option 1 when elected on a variable basis.
12.02 Terms of Annuity Options - The minimum first payment amount must
be at least $50 per month and at least $250 per year.
If the Certificate Holder elects a fixed Annuity and We determine
that the Certificate Holder would receive larger payments by
applying the Certificate Holder's Account Value, reduced by the
deferred sales charge, to a single premium immediate Annuity
currently offered by Us, We will make the larger payments.
We determine the first payment of a variable Annuity, or the
payment amount of a fixed Annuity, using the Annuitant's (and
second Annuitant's if applicable) adjusted age which We calculate
as follows:
(a) If Annuity payments begin any time between July 1, 1992 and
December 31, 1999, the adjusted age is the Annuitant's age
as of the birthday closest in time to the Annuity Date
reduced by one (1) year.
(b) If the Annuity begins any time between January 1, 2000 and
December 31, 2009, the adjusted age is the Annuitant's age
as of the birthday closest in time to the Annuity Date
reduced by two (2) years.
(c) For each succeeding decade, the adjusted age is the
Annuitant's age as determined in (b), reduced by one
additional year.
The Annuity rates for Options 2 and 3 are based on mortality from
1983 Table A.
Assumed Annual Net Return Rate is the interest rate used to
determine the amount of the first Annuity payment under a
variable Annuity. The Separate Account must earn this rate plus
enough to cover the mortality and expense risks charges (which
may include profit) and administrative charges if future variable
Annuity payments are to remain level.
25
<PAGE>
The Certificate Holder must give written notice to Us at least 30
days before the Annuity payments begin, electing or changing:
(a) The date on which Annuity payments are to begin;
(b) The Annuity Option;
(c) Whether the payments are to be made monthly, quarterly,
semiannually or annually;
(d) The investment options used to provide Annuity payments.
The first Annuity payment may not be earlier than one (1)
calendar year after the initial Purchase Payment, nor later than
the later of the:
(a) First day of the month following the Annuitant's birthday
shown on the Contract Schedule; or
(b) Tenth anniversary of the last Purchase Payment. In lieu of
the election of an Annuity, the Certificate Holder may
request a lump sum payment.
12.03 Annuity Unit - The number of Annuity Units per Fund is based on
the amount of the first variable Annuity payment which is equal
to:
(a) The portion of the Certificate Holder's Account Value (minus
any premium taxes) applied to pay a variable Annuity;
divided by,
(b) 1000; multiplied by,
(c) The payment rate for the Annuity Option chosen.
Such amount, or portion, of the variable Annuity payment will be
divided by the Annuity Unit value for the appropriate Fund on the
tenth Valuation Period before the due date of the first payment
to determine the number of each Fund's Annuity Units. The number
of each Fund's Annuity Unit remains fixed. Each future payment is
equal to the sum of the products of each Fund's Annuity Unit
value multiplied by the appropriate number of units. The Fund's
Annuity Unit value on the tenth Valuation Period prior to the due
date of the payment is used.
12.04 Annuity Unit Value - For any Valuation Period, a Fund's Annuity
Unit value is equal to:
(a) The value for the previous Valuation Period; multiplied by,
(b) The Annuity Net Return Factor for the Valuation Period;
multiplied by,
(c) A daily factor to reflect the Assumed Annual Net Return Rate
(the factor for 3.5% per year is .9999058; for 5% per year
it is .9998663).
The dollar value of a Fund(s) Annuity Unit values and payments
may go up or down due to investment gain or loss.
12.05 Annuity Net Return Factor - The Annuity net return factor is used
to compute all Separate Account Annuity payments for any Fund.
26
<PAGE>
The Annuity net return factor(s) for each Fund is equal to
1.0000000 plus the net return rate. The net return rate is equal
to:
(a) The value of the shares of the Fund held by the Separate
Account at the end of a Valuation Period; minus,
(b) The value of the shares of the Fund held by the Separate
Account at the start of the Valuation Period; plus or
minus,
(c) Taxes (or reserves for taxes) on the Separate Account (if
any); divided by
(d) The total value of the Fund(s) Accumulation Units and
Fund(s) Annuity Units of the Separate Account at the start
of the Valuation Period; minus,
(e) A daily actuarial charge as shown of the Contract Schedule
for Annuity mortality and expense risks and profit and a
daily administrative charge which will not exceed the
administrative charge as shown on the Contract Schedule.
The net return rate may be more or less than zero (0) percent.
The value of a share of the Fund is equal to the net assets of
the Fund divided by the number of shares outstanding.
12.06 Annuity Options
Option 1 - Payments for a Stated Period of Time - An Annuity will
be paid for the number of years chosen. The number of years must
be at least 5 and not more than 30.
If payments for this Annuity Option are made under a variable
Annuity, the present value of any remaining payments may be
withdrawn at any time. Option 2 - Life Income - An Annuity will
be paid for the life of the Annuitant. If also chosen, We will
guarantee payments for 60, 120, 180, or 240 months.
Option 3 - Life Income Based upon the Lives of Two Annuitants -
An Annuity will be paid during the lives of the Annuitant and a
second Annuitant. Payments will continue until both Annuitants
have died. When this Annuity Option is chosen, a choice must be
made of:
(a) 100% of the payment to continue after the first death;
(b) 66-2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) Payments for a minimum of 120 months with 100% of the
payment to continue after the first death; or
(e) 100% of the payment to continue at the death of the second
Annuitant and 50% of the payment to continue at the death
of the Annuitant.
We may make other options available as allowed by law.
27
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
- -------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -------------------------------------------------------------------------
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
- -------------------------------------------------------------------------
28
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of -----------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.27 $3.90 $4.26 $ 3.90 $ 4.22 $ 3.89 $ 4.17 $ 3.86 $ 4.08 $ 3.82
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58
63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
66 6.30 5.51 6.21 5.47 5.96 5.36 5.56 5.16 5.08 4.86
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
29
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36
60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85
65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54
70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49
75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
- --------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
30
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.75 $ 4.07 $ 4.26 $ 3.75 $ 3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12
60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54
65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14
70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96
75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
31
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
- -----------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- -----------------------------------------------------------------------------
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.85 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
- -----------------------------------------------------------------------------
32
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- ----------------------------------------------------------------------------
Guaranteed Monthly Quarterly Semi-Annual Annual
Years Rate Payment Payment Payment Payment
- ----------------------------------------------------------------------------
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
- ----------------------------------------------------------------------------
33
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ----------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 4.56 $ 4.20 $ 4.55 $ 4.19 $ 4.51 $ 4.18 $ 4.45 $ 4.15 $ 4.36 $ 4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
34
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Months
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Adjusted None 60 120 180 240
Age of ----------------------------------------------------------------------------------------------
Annuitant Male Female Male Female Male Female Male Female Male Female
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.97 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
35
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 3.97 $ 4.35 $ 4.56 $ 3.97 $ 4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
36
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and Second Annuitant is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- -------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.03 $ 4.36 $ 4.55 $ 4.03 $ 4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83
60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39
65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14
70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20
75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
37
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Male and Second Annuitant is Female)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- -----------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.88 $ 5.26 $ 5.48 $ 4.88 $ 5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
38
<PAGE>
OPTION 3
Life Income for Two Payees
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
(Annuitant is Female and the Second Annuitant is Male)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------
Second
Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $ 4.93 $ 5.27 $ 5.46 $ 4.93 $ 5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28
65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03
70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08
75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
- -------------------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
39
<PAGE>
- --------------------------------------------------------------------------------
Aetna Insurance Company of America
Home Office: 151 Farmington Avenue
P.O. Box 30670
Hartford, Connecticut 06150-0670
(800) 531-4547
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
- --------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
GP2CERT(5/97)
Aetna Insurance Company of America
ENDORSEMENT
This Contract is endorsed as follows:
The following provisions apply to a Contract which qualifies as an Individual
Retirement Annuity under Internal Revenue Code ("Code") Section 408(b). In the
case of a conflict with any provision in the Contract, the provisions of this
Endorsement control.
1. The Certificate Holder and the Annuitant must be the same person. Joint
Certificate Holders are not permitted.
2. The Certificate Holder's Account and the Certificate Holder's rights
under the Contract are not transferable. The Certificate Holder may not
sell, assign, transfer, pledge or use as collateral for a loan or as
security for the performance of an obligation or for any other purpose,
his or her interest in the Contract to any person other than the issuer
of the Contract.
3. The Certificate Holder's entire interest in the Contract is
nonforfeitable.
4. The Certificate Holder's Account is established for the exclusive
benefit of the Certificate Holder or his or her Beneficiary(ies).
5. All contributions must be in cash. Except in the case of a rollover
contribution as permitted by Code Section 402(c), 403(a) (4), 403 (b)
(8), or 408(d) (3) or a contribution made in accordance with the terms
of a Simplified Employee Pension (SEP) as described in Code Section
408(k), the total contributions shall not exceed $2,000 for any taxable
year.
6. The entire interest of the Certificate Holder will be distributed, or
begin to be distributed, no later than the first day of April following
the calendar year in which the Certificate Holder attains age 70-1/2
(required beginning date), over:
(a) The life of the Certificate Holder, or the lives of the Certificate
Holder and his or her designated Beneficiary, or
(b) A period certain not extending beyond the life expectancy of the
Certificate Holder or the joint and last survivor expectancy of
the Certificate Holder and his or her designated beneficiary.
GP2QEND (4/94)
<PAGE>
Payments must be made in periodic payments at intervals of no longer
than one year. In addition, payments must be either nonincreasing or
they may increase only as provided in Questions and Answers F-3 of
Section 1.401 (a) (9)-1 of the Proposed Income Tax Regulations.
All distributions made hereunder shall be made in accordance with the
requirements of Section 401(a) (9) of the Code, including the incidental
death benefit requirements of Section 401(a) (9) (G) of the Code, and
the regulations thereunder, including the minimum distribution
incidental benefit requirements of Section 1.401(a) (9)-2 of the
Proposed Income Tax Regulations.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Life
expectancy for distributions under an Annuity Option may not be
recalculated.
7. If distributions are to be made under the Systematic Withdrawal Option
(SWO) after the required beginning date, a higher amount will be
distributed in any year if required under the minimum distribution
requirements of the Code. The minimum amount to be distributed each
year, beginning with the first calendar year for which distributions are
required and then for each succeeding calendar year, shall not be less
than the quotient obtained by dividing the Certificate Holder's Account
Value by the lesser of (1) the applicable life expectancy or (2) if the
Certificate Holder's spouse is not the designated Beneficiary, the
applicable divisor determined from the table set forth in Questions and
Answers - 4 or Questions and Answers - 5, as applicable, of section
1.401(a) 9-2 of the Proposed Income Tax Regulations. For purposes of
this determination, life expectancy for the initial distribution year
will be calculated based on single life expectancy from Table V of
Section 1.72-9 of the Income Tax Regulations. Distributions for any
subsequent year shall be calculated based on such life expectancy
reduced by one for each calendar year which has elapsed since the
calendar year life expectancy was first calculated.
8. At the death of the Certificate Holder:
(a) If the Certificate Holder dies on or after distribution of his or
her interest has begun, the remaining portion of such interest, if
any, will continue to be distributed at least as rapidly as under
the method of distribution being used prior to the Certificate
Holder's death;
(b) If the Certificate Holder dies before distribution of his or her
interest begins, the death benefit payable to the Beneficiary will
be distributed no later than December 31 of the calendar year
which contains the fifth anniversary of the date of the
Certificate Holder's death except to the extent that an election
is made to receive distribution under an Annuity Option in
accordance with (i) or (ii) below.
2
<PAGE>
(i) Distributions to the Beneficiary may be made in installments
over the life or over a period not extending beyond the life
expectancy of the Beneficiary commencing no later than
December 31 of the calendar year immediately following the
calendar year in which the Certificate Holder died.
(ii) If the Beneficiary is the Certificate Holder's surviving
spouse, and distributions are to be made in accordance with
(i) above, distributions must begin on or before the later of
December 31 of the calendar year immediately following the
calendar year in which the Certificate Holder died or
December 31 of the calendar year in which the Certificate
Holder would have attained age 70-1/2.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of Section 1.72-9 of the Income Tax
Regulations. Life expectancies for distributions under an Annuity Option
may not be recalculated.
Distributions under this section are considered to have begun if
distributions are made on account of the Certificate Holder reaching the
required beginning date or if prior to the required beginning date
distributions irrevocably commence over a period permitted and in an
Annuity Option acceptable under Section .401(a) (9) of the Income Tax
Regulations.
A spousal Beneficiary may elect an Annuity Option, a lump sum payment or
treat the Certificate Holder's Account as his or her own IRA. This
election will be deemed to have been made if such surviving spouse makes
a rollover to or from such Certificate older's Account, or fails to
elect any of the above provisions.
If SWO is in effect and the Certificate Holder dies before the required
beginning date for minimum distributions, SWO payments will cease and
the surviving spouse may claim the death benefit in accordance with the
terms of this Section.
If SWO is in effect and the Certificate Holder dies after the required
beginning date for minimum distributions, the surviving spouse may elect
to continue receiving SWO payments; otherwise, the surviving spouse must
elect to receive a lump sum payment.
If SWO is in effect on the date of the Certificate Holder's death, a
nonspousal Beneficiary must receive an automatic and immediate lump sum
payment.
9. We will furnish annual calendar year reports concerning the status of
the Certificate Holder's Account.
10. Upon 90 days written notice to the Certificate Holder, We may terminate
the Certificate Holder's Account if no Purchase Payments have been
received for two full consecutive Certificate years and the paid-up
Annuity benefit at maturity would be less than $20 per month.
3
<PAGE>
11. The Certificate Holder may cancel the Certificate within 10 days of
receiving it by returning it to Us at the address above or to the person
from whom it was purchased. Within seven days from the cancellation
request, We will return all the Certificate Holder's Purchase Payments.
/s/ Dan Kearney
President
Aetna Insurance Company of America
GP2QEND (4/94)
Aetna Insurance Company of America
ENDORSEMENT
The Contract is endorsed as follows:
When a Certificate Holder's Account Value is withdrawn in full, no Deferred
Sales Charge is deducted from Purchase Payments made prior to his or her
admission to a Licensed Nursing Care Facility if the Certificate Holder has
spent as least 45 consecutive days in that facility and the following conditions
are met:
(a) More than one calendar year has elapsed since the Effective Date of the
Certificate; and
(b) The withdrawal is requested within three years of admission to a Licensed
Nursing Care Facility.
This waiver does not apply if the Certificate Holder was in a Licensed Nursing
Care Facility on the Effective Date of the Certificate.
A Licensed Nursing Care Facility is an institution licensed by the state in
which it is located to provide skilled nursing care, intermediate nursing care
or custodial nursing care. We will require proof of confinement in a form
satisfactory to us.
/s/ Dan Kearney
President
Aetna Insurance Company of America
GP2NHEND (4/94)
Aetna Insurance Company of America
Endorsement
The Contract and Certificate are endorsed to meet the qualification requirements
for an Individual Retirement Annuity under Internal Revenue Code ("Code")
Section 408(b). The following provisions apply and, in the case of a conflict
with any provision in the Contract, this Endorsement controls.
Certificate Holder. The Certificate Holder and the Annuitant must be the same
person. Joint Certificate Holders are not permitted.
Nontransferable/Nonforfeitable. The Contract is nontransferable. The Certificate
Holder may not sell, assign, transfer, pledge or use as collateral for a loan or
as security for the performance of an obligation or for any other purpose, his
or her interest in the Contract to any person other than the issuer of the
Contract or to a spouse incident to a divorce under the provisions of Code
Section 408(d)(6). The Certificate Holder's entire interest in the Contract is
nonforfeitable.
Exclusive Benefit. The Certificate Holder's Account is established for the
exclusive benefit of the Certificate Holder or his or her Beneficiary(ies).
Contributions. All contributions must be in cash. Except in the case of a
rollover contribution as permitted by Code Section 402(c), 403(a)(4), 403(b)(8),
or 408(d)(3) or a contribution made in accordance with the terms of a Simplified
Employee Pension (SEP) as described in Code Section 408(k), the total
contributions shall not exceed $2,000 for any taxable year.
Distributions. All distributions will be made in accordance with the
requirements of Code Section 401(a)(9). Any periodic payments will be paid only
to the Certificate Holder.
Required Beginning Date. No later than the April 1 following the calendar year
in which the Certificate Holder attains age 70-1/2, the Certificate Holder may
elect to receive the entire interest in a lump sum, or may elect to begin
periodic payments under a systematic distribution option which must be
distributed over:
(a) The life of the Certificate Holder, or the lives of the Certificate Holder
and his or her designated Beneficiary, or
(b) A period certain not extending beyond the life expectancy of the
Certificate Holder or the joint and last survivor expectancy of the
Certificate Holder and his or her designated Beneficiary.
GP2IRA (5/97)
<PAGE>
Periodic payments must be made at intervals of no longer than one year. In
addition, payments made as an annuity must be either nonincreasing or they may
increase only as provided in Section 1.401(a)(9)-l of the Proposed Income Tax
Regulations.
Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancy for
distributions under an Annuity option may not be recalculated.
Payment of Death Benefit. Section 10.03 is deleted in its entirety. The death
benefit amount is determined in accordance with the provisions of Section 10.02.
At the death of the Certificate Holder:
(a) If the Certificate Holder dies on or after the date distribution of his
or her interest has begun, the remaining portion of such interest, if
any, will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Certificate Holder's
death.
(b) If the Certificate Holder dies before distribution of his or her
interest begins, the death benefit payable to the Beneficiary will be
distributed no later than December 31 of the calendar year which
contains the fifth anniversary of the date of the Certificate Holder's
death, except to the extent that an election is made to receive a
distribution in accordance with (i) or (ii) below.
(i) Distributions to the Beneficiary may be made in installments over
the life of the Beneficiary or over a period not extending beyond
the life expectancy of the Beneficiary, commencing no later than
December 31 of the calendar year immediately following the
calendar year in which the Certificate Holder died.
(ii) If the Beneficiary is the Certificate Holder's surviving spouse,
and distributions are to be made in accordance with (i) above,
distributions must begin on or before the later of December 31 of
the calendar year immediately following the calendar year in which
the Certificate Holder died or December 31 of the calendar year in
which the Certificate Holder would have attained age 70-1/2.
If the Certificate Holder dies before Annuity payments begin, a spousal
Beneficiary may elect an Annuity option, a systematic distribution option, a
lump sum payment or to treat the Certificate Holder's Account as his or her own
IRA. The election to treat the Certificate Holder's Account as his or her own
IRA will be deemed to have been made if such surviving spouse makes a rollover
to or from such Certificate Holder's Account, or fails to elect to receive a
distribution in accordance with (b) above.
Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancies for
distributions under an Annuity option may not be recalculated.
Distributions under this section are considered to have begun if distributions
are made on account of the Certificate Holder reaching the required beginning
date or if prior to the required beginning date distributions irrevocably
commence over a period permitted and in an Annuity option acceptable under
Section 1.401(a)(9) of the Proposed Income Tax Regulations.
2
<PAGE>
Annual Reports. Aetna will furnish annual calendar year reports concerning the
status of the Certificate Holder's Account.
Termination of Certificate Holder's Account. Upon 90 days written notice to the
Certificate Holder, Aetna may terminate the Certificate Holder's Account if no
Purchase Payments have been received for two full consecutive Certificate years
and the paid-up Annuity benefit at maturity would be less than $20 per month.
Right to Cancel. The Certificate Holder may cancel the Certificate within 10
days of receiving it by returning it to Aetna at the address above or to the
person from whom is was purchased. Within seven days from the cancellation
request, Aetna will return all the Certificate Holder's Purchase Payments.
Endorsed and made a part of the Contract and Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/ Dan Kearney
President
Aetna Insurance Company of America
3
GP2IRA(5/97)
Aetna Insurance Company of America
Endorsement
The Contract and Certificate are endorsed to permit the Contract to be used to
fund a pension or profit sharing plan qualified under Section 401(a) of the
Internal Revenue Code ("Code") and, if applicable, the Employee Retirement
Income Security Act (ERISA). The following provisions apply and, in the case of
a conflict with any provision in the Contract, this Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract or any Certificate Holder's Account may not be sold,
assigned, transferred or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose, except pursuant to a
qualified domestic relations order as described in Code Section 414(p). This
restriction shall not apply to the trustee of any trust described in Code
Section 401(a), which is exempt from tax under Section 501(a).
Certificate Holder. The Certificate Holder must be the employer sponsoring the
plan or, if the plan has a trust, the trustee of such trust.
Participant. The Participant is the participant under the Code Section 401(a)
plan on whose behalf the Certificate Holder's Account is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Beneficiary is the Certificate Holder.
Death Benefit Options. Section 10.03 is deleted in its entirety. At the death of
the Annuitant, Aetna will pay the death benefit amount, determined under Section
10.02, as directed by the Certificate Holder. The Certificate Holder is
responsible for complying with the minimum distribution requirements of Code
Section 401(a)(9). The Certificate Holder may elect a lump sum payment, or
periodic payments under a systematic distribution option or any of the Annuity
options provided the election satisfies the Code minimum distribution rules. If
the Certificate Holder's Account is subject to ERISA and the Certificate Holder
directs payment to a non-spouse plan beneficiary, the Certificate Holder must
certify to Aetna that the distribution complies with the waiver and spousal
consent requirements of Code Section 417. In the absence of such certification,
payment will be made to the Certificate Holder.
Distributions. The Certificate Holder may elect a lump sum payment, or periodic
payments under a systematic distribution option or any of the Annuity options
provided the election satisfies the Code minimum distribution rules. Any
periodic payments will be paid only to the Certificate Holder, or to the
Participant at the direction of the Certificate Holder. The Certificate Holder
is responsible for complying with the minimum distribution requirements of Code
Section 401(a)(9).
1
GP2QP(5/97)
<PAGE>
If the Certificate Holder's Account is subject to ERISA and a distribution is
made to a married Participant in a form other than a "Qualified Joint and
Survivor Annuity," the Certificate Holder must certify to Aetna that the
distribution complies with the waiver and spousal consent requirements of Code
Section 417. In the absence of such certification, payment will be made to the
Certificate Holder. A "Qualified Joint and Survivor Annuity" is an annuity
payable for the joint lives of the Participant and spouse with at least 50% of
the payment to continue to the surviving spouse after the Participant's death.
Annuity Purchase Rates. The tables provided in Addendum B should be used with
this endorsement.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/ Dan Kearney
President
Aetna Insurance Company of America
2
GP2QP(5/97)
Aetna Insurance Company of America
Endorsement
The Contract and Certificate are endorsed to permit purchase of an interest in
the Contract by an employer or trustee in conjunction with a deferred
compensation plan established under Section 457(b) of the Internal Revenue Code
("Code"). The following provisions apply and, in the case of a conflict with any
provision in the Contract, this Endorsement controls.
Certificate Holder. The Certificate Holder must be the employer who sponsors the
Code Section 457(b) deferred compensation plan or trustee of such plan.
Annuitant. The Annuitant is a participant in the employer's Code Section 457(b)
deferred compensation plan.
Beneficiary. The Beneficiary is the Certificate Holder.
Exclusive Benefit of Participant. If the Contract and Certificate are issued in
conjunction with a Code Section 457 plan established by a governmental employer
described in Code Section 457(e)(1)(A), then, the Contract Holder and
Certificate Holder agree that all amounts maintained under the Contract or under
the Certificate, and any amounts withdrawn or paid from the Contract or
Certificate, will be utilized for the exclusive benefit of plan participants and
their beneficiaries in accordance with Code Section 457(g). This provisions
shall be effective (1) in the case of a plan not yet in existence on August 20,
1996, when the endorsement becomes part of the Contract or Certificate, and (2)
in the case of a plan in existence on August 20, 1996, upon the earlier of (a)
the employer's election to maintain set-asides for the exclusive benefit of
participants and beneficiaries in accordance with Code Section 457(g) and (b)
January 1, 1999.
Death Benefit Options. Section 10.03 is deleted in its entirety. At the death of
the Annuitant, Aetna will pay the death benefit amount determined under Section
10.02 as directed by the Certificate Holder. The Certificate Holder may elect a
lump sum payment, or periodic payments under a systematic distribution option or
any of the Annuity options provided the election satisfies the distribution
requirements of Code Section 457(d). The Certificate Holder is responsible for
complying with the distribution requirements of Code Section 457(d).
Distributions. The Certificate Holder may elect on behalf of the Annuitant a
lump sum payment, or periodic payments under a systematic distribution option or
any of the Annuity options provided the election satisfies the distribution
requirements of Code Section 457(d). Any periodic payments will only be paid to
the Certificate Holder or, at the direction of the Certificate Holder, to the
Annuitant. The Certificate Holder is responsible for complying with the
distribution requirements of Code Section 457(d).
Annuity Purchase Rates. The tables provided in Addendum B should be used with
this endorsement.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/ Dan Kearney
President
Aetna Insurance Company of America
GP2DC(5/97)
Aetna Insurance Company of America
Endorsement
The Contract and Certificate are endorsed in order to meet the qualification
requirements of Section 403(b) of the Internal Revenue Code ("Code") and, if
applicable, the Employee Retirement Income Security Act (ERISA). The following
provisions apply and, in the case of a conflict with any provision in the
Contract, this Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract or any Account may not be sold, assigned, transferred or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose, except pursuant to a qualified domestic
relations order as described in Code Section 414(p).
Certificate Holder. The Certificate Holder must be either (1) the employer who
sponsors a Code Section 403(b) Tax Deferred Annuity program or, (2) if the
Purchase Payments are derived solely from a rollover or transfer amount, the
Participant under a Code Section 403(b) Tax Deferred Annuity program.
Participant. The Participant is the participant under the Code Section 403(b)
Tax Deferred Annuity program on whose behalf the Account is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Participant shall name a Beneficiary. If the 403(b) program is
subject to ERISA and the Participant is married, the spouse must be named as
Beneficiary of 50% of the Account value. However, if the Participant has
attained age 35, an alternate Beneficiary may be named for this portion of the
Account provided the Certificate Holder furnishes to Aetna a waiver and spousal
consent satisfying the requirements of ERISA Section 205. Any Beneficiary may be
named for the balance of the Account without the consent of the spouse.
Contributions. The Contract will accept on-going contributions and amounts
rolled over or transferred from (1) another contract qualified under Code
Section 403(b), or (2) from an Individual Retirement Account or Annuity
qualified under Code Sections 408(a) or 408(b) that contains only amounts
previously rolled over from a 403(b) Tax Deferred Annuity.
Limitations on Contributions. Except in the case of a rollover or transfer
contribution, the Purchase Payments made to the Account in any calendar year
cannot exceed the lesser of (1) the maximum exclusion allowance determined under
Code Section 403(b)(2), or (2) the annual additions limitation of Code Section
415(c)(1). In addition, in no event may annual Purchase Payment(s) attributable
to elective deferrals, as defined in Code Section 402(g), exceed $9,500, or such
larger amount as adjusted by the Secretary of the Treasury, unless the alternate
limitation
1
G-GP2 TDA (5/97)
<PAGE>
of Code Section 402(g)(8) applies. The Certificate Holder is responsible for
ensuring that the contributions do not exceed the prescribed limits.
Withdrawal Restrictions. In accordance with Code Section 403(b)(11), withdrawals
attributable to Purchase Payments made pursuant to a salary reduction agreement
may be made only after the Participant attains age 59-1/2, separates from
service, dies, becomes totally and permanently disabled (as defined in Code
Section 72(m)(7)) or in the case of hardship (as defined in Treasury
Regulations). In the case of hardship, only Purchase Payments, and not the
earnings, may be withdrawn. These restrictions do not apply to amounts held in a
403(b) Tax Deferred Annuity program as of December 31, 1988. The Contract will
not accept transfers from a Code Section 403(b)(7) custodial account.
Distributions. All distributions from the Account must satisfy the minimum
distribution rules set forth in Code Section 401(a)(9). Any periodic payments
will be paid only to the Certificate Holder or, if the Certificate Holder is the
employer, payments will be made to the Participant at the direction of the
Certificate Holder.
Required Beginning Date. Distributions must generally begin no later than April
1 following the year the Participant attains age 70-1/2 or retires, if later.
The entire value of the Account must be distributed, or distribution must be
made over the life of the Participant, the joint lives of the Participant and
Beneficiary or over a period that does not extend beyond the life expectancy of
the Participant or the joint life expectancies of the Participant and
Beneficiary.
If Aetna maintains separate records of the value as of December 31, 1986, this
value is not required to be taken before December 31 of the year the Participant
attains age 75 or retires, if later. If the Certificate Holder takes any
distribution other than the minimum distribution required under Code Section
401(a)(9), Aetna will reduce the December 31, 1986 value by the excess amount
taken.
Payment of Death Benefit. Section 10.03 is deleted in its entirety. The
Beneficiary must elect payment of the death benefit amount, determined under
Sections 10.02 and 10.04, in accordance with the minimum distribution
requirements of Code Section 401(a)(9). The Beneficiary may elect a lump sum
payment, or periodic payments under a systematic distribution option or any of
the Annuity options provided the election satisfies the Code minimum
distribution rules. The Beneficiary may make any investment choices permitted
under the Contract while the Contract remains in the Accumulation Period.
Death Before Distributions Begin. If the Participant dies before distributions
begin in accordance with the provisions of Code Section 401(a)(9), the entire
value of the Account must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of the Participant's death.
Alternatively, if the Participant has a designated Beneficiary, payments may be
made over the life of the Beneficiary or over a period not extending beyond the
life expectancy of the Beneficiary provided distribution to a non-spouse
Beneficiary begins by December 31 of the calendar year following the calendar
year of the Participant's death.
2
<PAGE>
For a spousal Beneficiary, such payments must begin by the later of December 31
of the calendar year following the calendar year of the Participant's death or
December 31 of the calendar year in which the Participant would have attained
age 70-1/2.
Death After Distributions Begin. If the Participant dies after distributions
begin in accordance with the provisions of Code Section 401(a)(9), payments to
the Beneficiary must be made at least as rapidly as the method of distribution
in effect at the time of the Participant's death. If the minimum distribution
requirements have been met by partial withdrawals based on the Participant's
life expectancy or the joint life expectancies of the Participant and
Beneficiary, death benefit payments to the Beneficiary must also satisfy any
additional requirements of Code Section 401(a)(9).
Spousal Consent. If the Account is subject to ERISA and the Participant does not
die before payments begin, distribution to a married Participant must be in the
form of a "Qualified Joint and Survivor Annuity" unless the Certificate Holder
furnishes to Aetna a waiver and spousal consent satisfying the requirements of
ERISA Section 205. A Qualified Joint and Survivor Annuity is an annuity payable
for the joint lives of the Participant and spouse with at least 50% of the
payment to continue to the surviving spouse after the Participant's death.
If the Account is subject to ERISA, the Annuitant dies before the payments begin
and the Beneficiary is not the current spouse, Aetna will pay 50% of the death
benefit to the current spouse in the form of a "Qualified Preretirement Survivor
Annuity" unless (1) a waiver and spousal consent, satisfying the requirements of
ERISA Section 205, is furnished to Aetna, or (2) a prior spouse is entitled to
all or a portion of the death benefit under a qualified domestic relations order
as described in Code Section 414(p). A Qualified Preretirement Survivor Annuity
is an annuity payable for the life of the surviving spouse which can be
purchased by 50% of the Account's Adjusted Current Value.
Annuity Purchase Rates. The tables provided in Addendum B should be used with
this endorsement.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/ Dan Kearney
President
Aetna Insurance Company of America
3
GP2TDA(5/97)
Aetna Insurance Company of America
Endorsement
The Contract is endorsed to permit the Contract to be used to fund a pension or
profit sharing plan qualified under Section 401(a) of the Internal Revenue Code
("Code") and, if applicable, the Employee Retirement Income Security Act
(ERISA). The following provisions apply and, in the case of a conflict with any
provision in the Contract, this Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract may not be sold, assigned, transferred or pledged as
collateral for a loan or as security for the performance of an obligation or for
any other purpose, except pursuant to a qualified domestic relations order as
described in Code Section 414(p). This restriction shall not apply to the
trustee of any trust described in Code Section 401(a), which is exempt from tax
under Section 501(a).
Contract Holder. The Contract Holder must be the employer sponsoring the plan
or, if the plan has a trust, the trustee of such trust.
Participant. The Participant is the participant under the Code Section 401(a)
plan on whose behalf the Contract is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Beneficiary is the Contract Holder.
Death Benefit Options. Section 10.03 is deleted in its entirety. At the death of
the Annuitant, Aetna will pay the death benefit amount, determined under Section
10.02, as directed by the Contract Holder. The Contract Holder is responsible
for complying with the minimum distribution requirements of Code Section
401(a)(9). The Contract Holder may elect a lump sum payment, or periodic
payments under a systematic distribution option or any of the Annuity options
provided the election satisfies the Code minimum distribution rules. If the
Contract is subject to ERISA and the Contract Holder directs payment to a
non-spouse plan beneficiary, the Contract Holder must certify to Aetna that the
distribution complies with the waiver and spousal consent requirements of Code
Section 417. In the absence of such certification, payment will be made to the
Contract Holder.
Distributions. The Contract Holder may elect a lump sum payment, or periodic
payments under a systematic distribution option or any of the Annuity options
provided the election satisfies the Code minimum distribution rules. Any
periodic payments will be paid only to the Contract Holder, or to the
Participant at the direction of the Contract Holder. The Contract Holder is
1
I-GP2QP (5/97)
<PAGE>
responsible for complying with the minimum distribution requirements of Code
Section 401(a)(9).
If the Contract is subject to ERISA and a distribution is made to a married
Participant in a form other than a "Qualified Joint and Survivor Annuity," the
Contract Holder must certify to Aetna that the distribution complies with the
waiver and spousal consent requirements of Code Section 417. In the absence of
such certification, payment will be made to the Contract Holder. A "Qualified
Joint and Survivor Annuity" is an annuity payable for the joint lives of the
Participant and spouse with at least 50% of the payment to continue to the
surviving spouse after the Participant's death.
Annuity Purchase Rates. The tables provided in Addendum B should be used with
this endorsement.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/ Dan Kearney
President
Aetna Insurance Company of America
2
I-GP2QP(5/97)
Aetna Insurance Company of America
Endorsement
The Contract is endorsed to meet the qualification requirements for an
Individual Retirement Annuity under Internal Revenue Code ("Code") Section
408(b). The following provisions apply and, in the case of a conflict with any
provision in the Contract, this Endorsement controls.
Contract Holder. The Contract Holder and the Annuitant must be the same person.
Joint Contract Holders are not permitted.
Nontransferable/Nonforfeitable. The Contract is nontransferable. The Contract
Holder may not sell, assign, transfer, pledge or use as collateral for a loan or
as security for the performance of an obligation or for any other purpose, his
or her interest in the Contract to any person other than the issuer of the
Contract or to a spouse incident to a divorce under the provisions of Code
Section 408(d)(6). The Contract Holder's entire interest in the Contract is
nonforfeitable.
Exclusive Benefit. The Contract is established for the exclusive benefit of the
Contract Holder or his or her Beneficiary(ies).
Contributions. All contributions must be in cash. Except in the case of a
rollover contribution as permitted by Code Section 402(c), 403(a)(4), 403(b)(8),
or 408(d)(3) or a contribution made in accordance with the terms of a Simplified
Employee Pension (SEP) as described in Code Section 408(k), the total
contributions shall not exceed $2,000 for any taxable year.
Distributions. All distributions will be made in accordance with the
requirements of Code Section 401(a)(9). Any periodic payments will be paid only
to the Contract Holder.
Required Beginning Date. No later than the April 1 following the calendar year
in which the Contract Holder attains age 70-1/2, the Contract Holder may elect
to receive the entire interest in a lump sum, or may elect to begin periodic
payments under a systematic distribution option which must be distributed over:
(a) The life of the Contract Holder, or the lives of the Contract Holder and
his or her designated Beneficiary, or
(b) A period certain not extending beyond the life expectancy of the Contract
Holder or the joint and last survivor expectancy of the Contract Holder and
his or her designated Beneficiary.
1
I-GP2IRA(5/97)
<PAGE>
Periodic payments must be made at intervals of no longer than one year. In
addition, payments made as an annuity must be either nonincreasing or they may
increase only as provided in Section 1.401(a)(9)-l of the Proposed Income Tax
Regulations.
Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancy for
distributions under an Annuity option may not be recalculated.
Payment of Death Benefit. Section 10.03 is deleted in its entirety. The death
benefit amount is determined in accordance with the provisions of Sections 10.02
and 10.04. At the death of the Contract Holder:
(a) If the Contract Holder dies on or after the date distribution of his or
her interest has begun, the remaining portion of such interest, if any,
will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Contract Holder's death.
(b) If the Contract Holder dies before distribution of his or her interest
begins, the death benefit payable to the Beneficiary will be distributed
no later than December 31 of the calendar year which contains the fifth
anniversary of the date of the Contract Holder's death, except to the
extent that an election is made to receive a distribution in accordance
with (i) or (ii) below.
(i) Distributions to the Beneficiary may be made in installments over
the life of the Beneficiary or over a period not extending beyond
the life expectancy of the Beneficiary, commencing no later than
December 31 of the calendar year immediately following the
calendar year in which the Contract Holder died.
(ii) If the Beneficiary is the Contract Holder's surviving spouse, and
distributions are to be made in accordance with (i) above,
distributions must begin on or before the later of December 31 of
the calendar year immediately following the calendar year in
which the Contract Holder died or December 31 of the calendar
year in which the Contract Holder would have attained age 70-1/2.
If the Contract Holder dies before Annuity payments begin, a spousal Beneficiary
may elect an Annuity option, a systematic distribution option, a lump sum
payment or to treat the Contract as his or her own IRA. The election to treat
the Contract as his or her own IRA will be deemed to have been made if such
surviving spouse makes a rollover to or from such Contract, or fails to elect to
receive a distribution in accordance with (b) above.
Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancies for
distributions under an Annuity option may not be recalculated.
Distributions under this section are considered to have begun if distributions
are made on account of the Contract Holder reaching the required beginning date
or if prior to the required beginning date distributions irrevocably commence
over a period permitted and in an Annuity option acceptable under Section
1.401(a)(9) of the Proposed Income Tax Regulations.
2
<PAGE>
Annual Reports. Aetna will furnish annual calendar year reports concerning the
status of the Contract's Current Value.
Termination of Contract. Upon 90 days written notice to the Contract Holder,
Aetna may terminate the Contract if no Purchase Payments have been received for
two full consecutive Contract years and the paid-up Annuity benefit at maturity
would be less than $20 per month.
Right to Cancel. The Contract Holder may cancel the Contract within 10 days of
receiving it by returning it to Aetna at the address above or to the person from
whom is was purchased. Within seven days from the cancellation request, Aetna
will return all the Contract Holder's Purchase Payments.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/ Dan Kearney
President
Aetna Insurance Company of America
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I-GP2IRA(5/97)
Aetna Insurance Company of America
Endorsement
The Contract is endorsed to permit purchase of the Contract by an employer or
trustee in conjunction with an eligible deferred compensation plan established
under Section 457(b) of the Internal Revenue Code ("Code"). The following
provisions apply and, in the case of a conflict with any provision in the
Contract, this Endorsement controls.
Contract Holder. The Contract Holder must be the employer who sponsors the Code
Section 457(b) deferred compensation plan or trustee of such plan.
Annuitant. The Annuitant is a participant in the employer's Code Section 457(b)
deferred compensation plan.
Beneficiary. The Beneficiary is the Contract Holder.
Exclusive Benefit of Participant. If the Contract is in conjunction with a Code
Section 457 plan established by a governmental employer described in Code
Section 457(e)(1)(A), then, the Contract Holder and the participant agree that
all amounts maintained under the Contract, and any amounts withdrawn or paid
from the Contract will be utilized for the exclusive benefit of plan
participants and their beneficiaries in accordance with Code Section 457(g).
This provisions shall be effective (1) in the case of a plan not yet in
existence on August 20, 1996, when the endorsement becomes part of the Contract,
and (2) in the case of a plan in existence on August 20, 1996, upon the earlier
of (a) the employer's election to maintain set-asides for the exclusive benefit
of participants and beneficiaries in accordance with Code Section 457(g) or (b)
January 1, 1999.
Death Benefit Options. Section 10.03 is deleted in its entirety. At the death of
the Annuitant, Aetna will pay the death benefit amount determined under Section
10.02 as directed by the Contract Holder. The Contract Holder may elect a lump
sum payment, or periodic payments under a systematic distribution option or any
of the Annuity options provided the election satisfies the distribution
requirements of Code Section 457(d). The Contract Holder is responsible for
complying with the distribution requirements of Code Section 457(d).
Distributions. The Contract Holder may elect on behalf of the Annuitant a lump
sum payment, or periodic payments under a systematic distribution option or any
of the Annuity options provided the election satisfies the distribution
requirements of Code Section 457(d). Any periodic payments will only be paid to
the Contract Holder or, at the direction of the Contract Holder, to the
Annuitant. The Contract Holder is responsible for complying with the
distribution requirements of Code Section 457(d).
Annuity Purchase Rates. The tables provided in Addendum B should be used with
this endorsement.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/ Dan Kearney
President
Aetna Insurance Company of America
I-GP2DC(5/97)
Aetna Insurance Company of America
Endorsement
The Contract is endorsed in order to meet the qualification requirements of
Section 403(b) of the Internal Revenue Code ("Code") and, if applicable, the
Employee Retirement Income Security Act (ERISA). The following provisions apply
and, in the case of a conflict with any provision in the Contract, this
Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract may not be sold, assigned, transferred or pledged as
collateral for a loan or as security for the performance of an obligation or for
any other purpose, except pursuant to a qualified domestic relations order as
described in Code Section 414(p).
Contract Holder. The Contract Holder must be either (1) the employer who
sponsors a Code Section 403(b) Tax Deferred Annuity program or, (2) if the
Purchase Payments are derived solely from a rollover or transfer amount, the
Participant under a Code Section 403(b) Tax Deferred Annuity program.
Participant. The Participant is the participant under the Code Section 403(b)
Tax Deferred Annuity program on whose behalf the Contract is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Participant shall name a Beneficiary. If the 403(b) program is
subject to ERISA and the Participant is married, the spouse must be named as
Beneficiary of 50% of the Contract value. However, if the Participant has
attained age 35, an alternate Beneficiary may be named for this portion of the
Contract provided the Contract Holder furnishes to Aetna a waiver and spousal
consent satisfying the requirements of ERISA Section 205. Any Beneficiary may be
named for the balance of the Contract without the consent of the spouse.
Contributions. The Contract will accept on-going contributions and amounts
rolled over or transferred from (1) another contract qualified under Code
Section 403(b), or (2) from an Individual Retirement Account or Annuity
qualified under Code Sections 408(a) or 408(b) that contains only amounts
previously rolled over from a 403(b) Tax Deferred Annuity.
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Limitations on Contributions. Except in the case of a rollover or transfer
contribution, the Purchase Payments made to the Contract in any calendar year
cannot exceed the lesser of (1) the maximum exclusion allowance determined under
Code Section 403(b)(2), or (2) the annual additions limitation of Code Section
415(c)(1). In addition, in no event may annual Purchase Payment(s) attributable
to elective deferrals, as defined in Code Section 402(g), exceed $9,500, or such
larger amount as adjusted by the Secretary of the Treasury, unless the alternate
limitation of Code Section 402(g)(8) applies. The Contract Holder is responsible
for ensuring that the contributions do not exceed the prescribed limits.
Withdrawal Restrictions. In accordance with Code Section 403(b)(11), withdrawals
attributable to Purchase Payments made pursuant to a salary reduction agreement
may be made only after the Participant attains age 59-1/2, separates from
service, dies, becomes totally and permanently disabled (as defined in Code
Section 72(m)(7)) or in the case of hardship (as defined in Treasury
Regulations). In the case of hardship, only Purchase Payments, and not the
earnings, may be withdrawn. These restrictions do not apply to amounts held in a
403(b) Tax Deferred Annuity program as of December 31, 1988. The Contract will
not accept transfers from a Code Section 403(b)(7) custodial account.
Distributions. All distributions from the Contract must satisfy the minimum
distribution rules set forth in Code Section 401(a)(9). Any periodic payments
will be paid only to the Contract Holder or, if the Contract Holder is the
employer, payments will be made to the Participant at the direction of the
Contract Holder.
Required Beginning Date. Distributions must generally begin no later than April
1 following the year the Participant attains age 70-1/2 or retires, if later.
The entire value of the Contract must be distributed, or distribution must be
made over the life of the Participant, the joint lives of the Participant and
Beneficiary or over a period that does not extend beyond the life expectancy of
the Participant or the joint life expectancies of the Participant and
Beneficiary.
If Aetna maintains separate records of the value as of December 31, 1986, this
value is not required to be taken before December 31 of the year the Participant
attains age 75 or retires, if later. If the Contract Holder takes any
distribution other than the minimum distribution required under Code Section
401(a)(9), Aetna will reduce the December 31, 1986 value by the excess amount
taken.
Payment of Death Benefit. Section 10.03 is deleted in its entirety. The
Beneficiary must elect payment of the death benefit amount, determined under
Sections 10.02 and 10.04, in accordance with the minimum distribution
requirements of Code Section 401(a)(9). The Beneficiary may elect a lump sum
payment, or periodic payments under a systematic distribution option or any of
the Annuity options provided the election satisfies the Code minimum
distribution rules. The Beneficiary may make any investment choices permitted
under the Contract while the Contract remains in the Accumulation Period.
Death Before Distributions Begin. If the Participant dies before distributions
begin in accordance with the provisions of Code Section 401(a)(9), the entire
value of the Contract must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of the Participant's death.
Alternatively, if the Participant has a designated Beneficiary, payments may be
made over the life of the Beneficiary or over a period not extending beyond the
life expectancy of the Beneficiary provided
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distribution to a non-spouse Beneficiary begins by December 31 of the calendar
year following the calendar year of the Participant's death.
For a spousal Beneficiary, such payments must begin by the later of December 31
of the calendar year following the calendar year of the Participant's death or
December 31 of the calendar year in which the Participant would have attained
age 70-1/2.
Death After Distributions Begin. If the Participant dies after distributions
begin in accordance with the provisions of Code Section 401(a)(9), payments to
the Beneficiary must be made at least as rapidly as the method of distribution
in effect at the time of the Participant's death. If the minimum distribution
requirements have been met by partial withdrawals based on the Participant's
life expectancy or the joint life expectancies of the Participant and
Beneficiary, death benefit payments to the Beneficiary must also satisfy any
additional requirements of Code Section 401(a)(9).
Spousal Consent. If the Contract is subject to ERISA and the Participant does
not die before payments begin, distribution to a married Participant must be in
the form of a "Qualified Joint and Survivor Annuity" unless the Contract Holder
furnishes to Aetna a waiver and spousal consent satisfying the requirements of
ERISA Section 205. A Qualified Joint and Survivor Annuity is an annuity payable
for the joint lives of the Participant and spouse with at least 50% of the
payment to continue to the surviving spouse after the Participant's death.
If the Contract is subject to ERISA, the Annuitant dies before the payments
begin and the Beneficiary is not the current spouse, Aetna will pay 50% of the
death benefit to the current spouse in the form of a "Qualified Preretirement
Survivor Annuity" unless (1) a waiver and spousal consent, satisfying the
requirements of ERISA Section 205, is furnished to Aetna, or (2) a prior spouse
is entitled to all or a portion of the death benefit under a qualified domestic
relations order as described in Code Section 414(p). A Qualified Preretirement
Survivor Annuity is an annuity payable for the life of the surviving spouse
which can be purchased by 50% of the Contract's Adjusted Current Value.
Annuity Purchase Rates. The tables provided in Addendum B should be used with
this endorsement.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/ Dan Kearney
President
Aetna Insurance Company of America
3
EX-99.B.4.18
Aetna Insurance Company of America
Endorsement
The Contract and Certificate are endorsed to permit the Contract to be used to
fund a pension or profit sharing plan qualified under Section 401(a) of the
Internal Revenue Code ("Code") and, if applicable, the Employee Retirement
Income Security Act (ERISA). The following provisions apply and, in the case of
a conflict with any provision in the Contract, this Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract or any Certificate Holder's Account may not be sold,
assigned, transferred or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose, except pursuant to a
qualified domestic relations order as described in Code Section 414(p). This
restriction will not apply to the trustee of any trust described in Code Section
401(a), which is exempt from tax under Section 501(a).
Certificate Holder. The Certificate Holder must be the employer sponsoring the
plan or, if the plan has a trust, the trustee of such trust.
Participant. The Participant is the participant under the Code Section 401(a)
plan on whose behalf the Certificate Holder's Account is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Beneficiary is the Certificate Holder.
Death Benefit Options. Sections 10.01, 10.03, 10.04 and 10.05 are deleted in
their entirety. At the death of the Annuitant, Aetna will pay the death benefit
amount, determined under Section 10.02, as directed by the Certificate Holder.
The Certificate Holder is responsible for complying with the minimum
distribution requirements of Code Section 401(a)(9). The Certificate Holder may
elect a lump sum payment, or periodic payments under the Systematic Withdrawal
Option (SWO), Estate Conservation Option (ECO) or any of the Annuity options
provided the election satisfies the Code minimum distribution rules. If the
Certificate Holder's Account is subject to ERISA and the Certificate Holder
directs payment to a non-spouse plan beneficiary, the Certificate Holder must
certify to Aetna that the distribution complies with the waiver and spousal
consent requirements of Code Section 417. In the absence of such certification,
payment will be made to the Certificate Holder.
Distributions. The Certificate Holder may elect a lump sum payment, or periodic
payments under the Systematic Withdrawal Option (SWO), Estate Conservation
Option (ECO) or any of the Annuity options provided the election satisfies the
Code minimum distribution rules. Any periodic payments will be paid only to the
Certificate Holder, or to the Participant at the direction of the Certificate
Holder. The Certificate Holder is responsible for complying with the minimum
distribution requirements of Code Section 401(a)(9).
If the Certificate Holder's Account is subject to ERISA and a distribution is
made to a married Participant in a form other than a "Qualified Joint and
Survivor Annuity," the Certificate Holder must certify to Aetna that the
distribution complies with the waiver and spousal consent requirements of Code
Section 417. In the absence of such certification, payment will be made to the
Certificate Holder. A "Qualified Joint and Survivor Annuity" is an annuity
payable for the joint lives of the Participant and spouse with at least 50% of
the payment to continue to the surviving spouse after the Participant's death.
Estate Conservation Option. The Estate Conservation Option (ECO) is a
distribution option under which a portion of the Certificate Holder's Account's
Value will automatically be surrendered and distributed
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each calendar year. The distributed amount is withdrawn pro rata from each
investment option under the Certificate Holder's Account.
Election and Revocation. The Certificate Holder, on behalf of the Participant or
plan beneficiary, may elect ECO by submitting a completed and signed election
form to Aetna's Home Office. The Certificate Holder must certify to Aetna that
the distribution complies with the waiver and spousal consent requirements of
Code Section 417.
Once elected, the Certificate Holder, on behalf of the Participant or plan
beneficiary, may revoke the option by submitting a written request to Aetna's
Home Office. Any revocation will apply only to amounts not yet paid.
Surrender Fee/Market Value Adjustment. A Surrender Fee will not be deducted
from, and a Market Value Adjustment will not be applied to, any portion of the
Certificate Holder's Account Value which is paid under ECO.
Amount of Distribution. Each year that ECO is in effect, Aetna will calculate
and distribute an amount equal to the minimum required distribution under Code
Section 401 (a)(9). The annual distribution will be determined by dividing the
Certificate Holder's Account's Value as of December 31 of the year prior to the
year for which payment is to be made by a life expectancy factor based on
expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations.
The Certificate Holder may elect, on behalf of the Participant, either the
single or joint life expectancy factor. If the joint life expectancy factor is
elected, the second life must be a plan beneficiary. If the Certificate Holder
elects ECO on behalf of a plan beneficiary after the Participant's death, only a
single life expectancy factor may be used. The life expectancy or joint life
expectancy factor will be recalculated each year in accordance with the rules
under Code Section 401(a)(9).
Minimum Account Value. At its discretion, Aetna may require a minimum initial
Certificate Holder's Account Value for election of this option. If after
election of this option the Certificate Holder's Account Value is insufficient
to make a scheduled ECO payment, Aetna will distribute the entire Certificate
Holder's Account balance.
Date of Distribution. The Certificate Holder, on behalf of the Participant, may
specify the initial distribution date. The earliest date is the first day of the
calendar year in which the Participant attains age 70 1/2 or, for plans of
government or church employers, retires if later. If the Certificate Holder
elects ECO on behalf of a plan beneficiary, the earliest date is the date of the
Participant's death. Subsequent distribution will be made annually on such date
as Aetna may designate or allow.
Reservation of Rights. Aetna reserves the right to change the terms of ECO for
future elections and to discontinue the availability of this option after proper
notification. Aetna also reserves the right to allow payments to be made more
frequently than annually.
Systematic Withdrawal Option. If distributions are made under the Systematic
Withdrawal Option (SWO) after payments are required to begin under the minimum
distribution requirements of Code Section 401(a)(9), the amount distributed in
any year will be increased if required under the Code minimum distribution
rules. For this purpose, the minimum amount to be distributed each year will be
determined by dividing the Certificate Holder's Account's Value as of December
31 of the year prior to the year for which payment is to be made by a life
expectancy factor, which for the initial distribution year will be based on
either the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Certificate Holder. If the joint life expectancy factor is elected, the second
life must be a plan beneficiary.
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If the Certificate Holder elects SWO on behalf of a plan beneficiary after the
Participant's death, only a single life expectancy factor may be used.
Distributions for any subsequent year will be calculated based on such life
expectancy factor reduced by one for each calendar year which has elapsed since
the life expectancy was first calculated.
If the specified period method is elected, the maximum specified period will be
limited by the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Certificate Holder. If elected on behalf of the Participant, either a single or
a joint life expectancy factor may be used. If elected on behalf of a plan
beneficiary, only a single life expectancy factor may be used.
Availability of ECO and SWO. If the Certificate Holder revokes ECO or SWO, the
Certificate Holder may not subsequently elect that option again, nor may the
Certificate Holder elect another withdrawal option unless permitted under the
Code minimum distribution rules.
If ECO or SWO is in effect and the Participant dies before the required
beginning date for minimum distributions, payments will cease. The Certificate
Holder, on behalf of a plan beneficiary, may elect ECO or SWO provided the
election would satisfy the Code minimum distribution rules.
If ECO or SWO is in effect and the Participant dies after the required beginning
date for minimum distributions, payments will continue as permitted under the
Code minimum distribution rules, unless revoked.
Surrender Fee. Subsection (c) of Section 8.05 will not apply while either ECO or
SWO is in effect.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/ Dan Kearney
President
Aetna Insurance Company of America
3
Aetna Insurance Company of America
Endorsement
The Contract and Certificate are endorsed to meet the qualification requirements
for an Individual Retirement Annuity under Internal Revenue Code ("Code")
Section 408(b). The following provisions apply and, in the case of a conflict
with any provision in the Contract, this Endorsement controls.
Certificate Holder. The Certificate Holder and the Annuitant must be the same
person. Joint Certificate Holders are not permitted.
Nontransferable/Nonforfeitable. The Contract is nontransferable. The Certificate
Holder may not sell, assign, transfer, pledge or use as collateral for a loan or
as security for the performance of an obligation or for any other purpose, his
or her interest in the Contract to any person other than the issuer of the
Contract or to a spouse incident to a divorce under the provisions of Code
Section 408(d)(6). The Certificate Holder's entire interest in the Contract is
nonforfeitable.
Exclusive Benefit. The Certificate Holder's Account is established for the
exclusive benefit of the Certificate Holder or his or her Beneficiary(ies).
Contributions. All contributions must be in cash. Except in the case of a
rollover contribution as permitted by Code Section 402(c), 403(a)(4), 403(b)(8),
or 408(d)(3) or a contribution made in accordance with the terms of a Simplified
Employee Pension (SEP) as described in Code Section 408(k), the total
contributions shall not exceed $2,000 for any taxable year.
Distributions. All distributions will be made in accordance with the
requirements of Code Section 401(a)(9). Any periodic payments will be paid only
to the Certificate Holder.
Required Beginning Date. No later than the April 1 following the calendar year
in which the Certificate Holder attains age 70-1/2, the Certificate Holder may
elect to receive the entire interest in a lump sum, or may elect to begin
periodic payments which must be distributed over:
(a) The life of the Certificate Holder, or the lives of the Certificate Holder
and his or her designated Beneficiary, or
(b) A period certain not extending beyond the life expectancy of the
Certificate Holder or the joint and last survivor expectancy of the
Certificate Holder and his or her designated Beneficiary.
Periodic payments must be made at intervals of no longer than one year. In
addition, payments made as an annuity must be either nonincreasing or they may
increase only as provided in Section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancy for
distributions under an Annuity option may not be recalculated.
Payment of Death Benefit. Sections 10.01, 10.03, 10.04 and 10.05 are deleted in
their entirety. The death benefit amount is determined in accordance with the
provisions of Section 10.02. At the death of the Certificate Holder:
(a) If the Certificate Holder dies on or after the date distribution of his or
her interest has begun, the remaining portion of such interest, if any,
will continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Certificate Holder's death.
G-GP2IRA(5/96)
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(b) If the Certificate Holder dies before distribution of his or her interest
begins, the death benefit payable to the Beneficiary will be distributed no
later than December 31 of the calendar year which contains the fifth
anniversary of the date of the Certificate Holder's death, except to the
extent that an election is made to receive a distribution in accordance
with (i) or (ii) below.
(i) Distributions to the Beneficiary may be made in installments over the
life of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary, commencing no later than December 31 of
the calendar year immediately following the calendar year in which the
Certificate Holder died.
(ii) If the Beneficiary is the Certificate Holder's surviving spouse, and
distributions are to be made in accordance with (i) above,
distributions must begin on or before the later of December 31 of the
calendar year immediately following the calendar year in which the
Certificate Holder died or December 31 of the calendar year in which
the Certificate Holder would have attained age 70-1/2.
If the Certificate Holder dies before Annuity payments begin, a spousal
Beneficiary may elect an Annuity option, ECO, SWO, a lump sum payment or to
treat the Certificate Holder's Account as his or her own IRA. The election to
treat the Certificate Holder's Account as his or her own IRA will be deemed to
have been made if such surviving spouse makes a rollover to or from such
Certificate Holder's Account, or fails to elect to receive a distribution in
accordance with (b) above.
Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancies for
distributions under an Annuity option may not be recalculated.
Distributions under this section are considered to have begun if distributions
are made on Certificate Holder's Account of the Certificate Holder reaching the
required beginning date or if prior to the required beginning date distributions
irrevocably commence over a period permitted and in an Annuity option acceptable
under Section 1.401(a)(9) of the Proposed Income Tax Regulations.
Estate Conservation Option. The Estate Conservation Option (ECO) is a
distribution option under which a portion of the Certificate Holder's Account
Value will automatically be surrendered and distributed each calendar year. The
distributed amount is withdrawn pro rata from each investment option under the
Certificate Holder's Account.
Election and Revocation. The Certificate Holder or a Beneficiary may elect ECO
by submitting a completed and signed election form to Aetna's Home Office. Once
elected, the Certificate Holder or Beneficiary may revoke the option by
submitting a written request to Aetna's Home Office. Any revocation will apply
only to amounts not yet paid.
Surrender Fee/Market Value Adjustment. A Surrender Fee will not be deducted
from, and a Market Value Adjustment will not be applied to, any portion of the
Current Value which is paid under ECO.
Amount of Distribution. Each year that ECO is in effect, Aetna will calculate
and distribute an amount equal to the minimum required distribution under the
Code. The annual distribution will be determined by dividing the Certificate
Holder's Account Value as of December 31 of the year prior to the year for which
payment is to be made by a life expectancy factor based on expected return
multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
The Certificate Holder shall elect either the single or joint life expectancy
factor. If the Certificate Holder elects the joint life expectancy, the second
life must be a Beneficiary under the Contract.
If a Beneficiary elects ECO after the Certificate Holder's death, only a single
life expectancy factor may be used, except that a spousal Beneficiary who
elected to treat the Certificate Holder's Account as his or her own IRA may
elect either a single or joint life expectancy factor. The life expectancy or
joint life
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expectancy factor will be recalculated each year in accordance with the rules
under Code Section 401(a)(9).
Minimum Current Value. At its discretion, Aetna may require a minimum initial
Current Value for election of this option. If after election of this option the
Current Value is insufficient to make a scheduled ECO payment, Aetna will
distribute the entire Certificate Holder's Account balance.
Date of Distribution. The Certificate Holder shall specify the initial
distribution date. The earliest date is the first day of the calendar year in
which the Certificate Holder attains age 70-1/2. For a Beneficiary electing ECO
after the Certificate Holder's death, the earliest date is the date of the
Certificate Holder's death. Subsequent distributions will be made annually on
such date as Aetna may designate or allow.
Reservation of Rights. Aetna reserves the right to change the terms of ECO for
future elections and to discontinue the availability of this option after proper
notification. Aetna also reserves the right to allow payments to be made more
frequently than annually.
Systematic Withdrawal Option. If distributions are made under the Systematic
Withdrawal Option (SWO) after payments are required to begin under the minimum
distribution requirements of Code Section 401(a)(9), the amount distributed in
any year will be increased if required under the Code minimum distribution
rules. For this purpose, the minimum amount to be distributed each year will be
determined by dividing the Certificate Holder's Account Value, as of December 31
of year prior to the year for which payment is to be made by a life expectancy
factor, which for the initial distribution year shall be based on either the
single life expectancy factor or the joint life expectancy factor in Tables V or
VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Certificate Holder. If the Certificate Holder elects the joint life expectancy
factor, the second life must be a Beneficiary under the Contract.
If a Beneficiary who elects SWO after the Certificate Holder's death, only a
single life expectancy factor may be used, except that a spousal Beneficiary who
has elected to treat the Certificate Holder's Account as his or her own IRA may
elect either a single or a joint life expectancy factor. Distributions for any
subsequent year will be calculated based on such life expectancy reduced by one
for each calendar year which has elapsed since the life expectancy was first
calculated.
If the specified period method is elected, the maximum specified period will be
limited by the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Certificate Holder. If elected by a Beneficiary, only a single life expectancy
factor may be used, except that a spousal Beneficiary who has elected to treat
the Certificate Holder's Account as his or her own IRA may elect either a single
or a joint life expectancy factor.
Availability of ECO and SWO. An individual who has revoked ECO or SWO may not
subsequently elect that option again, nor may the individual elect another
withdrawal option unless permitted under the Code minimum distribution rules.
If ECO or SWO is in effect and the Certificate Holder dies before the required
beginning date for minimum distributions, payments will cease. A Beneficiary may
elect ECO or SWO provided the election would satisfy the Code minimum
distribution rules.
If ECO or SWO is in effect and the Certificate Holder dies after the required
beginning date for minimum distributions, payments will continue as permitted
under the Code minimum distribution rules, unless revoked.
Annual Reports. Aetna will furnish annual calendar year reports concerning the
status of the Certificate Holder's Account.
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Termination of Certificate Holder's Account. Upon 90 days written notice to the
Certificate Holder, Aetna may terminate the Certificate Holder's Account if no
Purchase Payments have been received for two full consecutive Certificate years
and the paid-up Annuity benefit at maturity would be less than $20 per month.
Right to Cancel. The Certificate Holder may cancel the Certificate within 10
days of receiving it by returning it to Aetna at the address above or to the
person from whom is was purchased. Within seven days from the cancellation
request, Aetna will return all the Certificate Holder's Purchase Payments.
Surrender Fee. The Surrender Fee does not apply while SWO is in effect.
Endorsed and made a part of the Contract and Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/ Dan Kearney
---------------
President
Aetna Insurance Company of America
G-GP2IRA(5/96)
4
Aetna Insurance Company of America
Endorsement
The Contract and Certificate are endorsed in order to meet the qualification
requirements of Section 403(b) of the Internal Revenue Code ("Code") and, if
applicable, the Employee Retirement Income Security Act (ERISA). The following
provisions apply and, in the case of a conflict with any provision in the
Contract, this Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract or any Certificate Holder's Account may not be sold,
assigned, transferred or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose, except pursuant to a
qualified domestic relations order as described in Code Section 414(p).
Certificate Holder. The Certificate Holder must be either (1) the employer who
sponsors a Code Section 403(b) Tax Deferred Annuity program or, (2) if the
Purchase Payments are derived solely from a rollover or transfer amount, the
Participant under a Code Section 403(b) Tax Deferred Annuity program.
Participant. The Participant is the participant under the Code Section 403(b)
Tax Deferred Annuity program on whose behalf the Certificate Holder's Account is
maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Participant shall name a Beneficiary. If the 403(b) program is
subject to ERISA and the Participant is married, the spouse must be named as
Beneficiary of 50% of the Certificate Holder's Account value. However, if the
Participant has attained age 35, an alternate Beneficiary may be named for this
portion of the Certificate Holder's Account provided the Certificate Holder
furnishes to Aetna a waiver and spousal consent satisfying the requirements of
ERISA Section 205. Any Beneficiary may be named for the balance of the
Certificate Holder's Account without the consent of the spouse.
Contributions. The Contract will accept on-going contributions and amounts
rolled over or transferred from (1) another contract qualified under Code
Section 403(b), or (2) from an Individual Retirement Certificate Holder's
Account or Annuity qualified under Code Sections 408(a) or 408(b) that contains
only amounts previously rolled over from a 403(b) Tax Deferred Annuity.
Limitations on Contributions. Except in the case of a rollover or transfer
contribution, the Purchase Payments made to the Certificate Holder's Account in
any calendar year cannot exceed the lesser of (1) the maximum exclusion
allowance determined under Code Section 403(b)(2), or (2) the annual additions
limitation of Code Section 415(c)(1). In addition, in no event may annual
Purchase Payment(s) attributable to elective deferrals, as defined in Code
Section 402(g), exceed $9,500, or such larger amount as adjusted by the
Secretary of the Treasury, unless the alternate limitation of Code Section
402(g)(8) applies. The Certificate Holder is responsible for ensuring that the
contributions do not exceed the prescribed limits.
Withdrawal Restrictions. In accordance with Code Section 403(b)(11), withdrawals
attributable to Purchase Payments made pursuant to a salary reduction agreement
may be made only after the Participant attains age 59-1/2, separates from
service, dies, becomes totally and permanently disabled (as defined in Code
Section 72(m)(7)) or in the case of hardship (as defined in Treasury
Regulations). In the case of hardship, only Purchase Payments, and not the
earnings, may be withdrawn. These restrictions do not apply to amounts held in a
403(b) Tax Deferred Annuity program as of December 31, 1988. The Contract will
not accept transfers from a Code Section 403(b)(7) custodial Certificate
Holder's Account.
G-GP2TDA(5/96)
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Distributions. All distributions from the Certificate Holder's Account must
satisfy the minimum distribution rules set forth in Code Section 401(a)(9). Any
periodic payments will be paid only to the Certificate Holder or, if the
Certificate Holder is the employer, payments will be made to the Participant at
the direction of the Certificate Holder.
Required Beginning Date. Distributions must generally begin no later than April
1 following the year the Participant attains age 70-1/2. However, if the 403(b)
program is sponsored by a government or church employer, distribution must begin
no later than April 1 following the later of the year the Participant attains
age 70-1/2 or retires. The entire value of the Certificate Holder's Account must
be distributed, or distribution must be made over the life of the Participant,
the joint lives of the Participant and Beneficiary or over a period that does
not extend beyond the life expectancy of the Participant or the joint life
expectancies of the Participant and Beneficiary.
If Aetna maintains separate records of the value as of December 31, 1986, this
value is not required to be taken before December 31 of the year the Participant
attains age 75. Aetna will maintain separate records provided the Certificate
Holder does not take any distribution other than the minimum distribution
required under Code Section 401(a)(9).
Payment of Death Benefit. Sections 10.01, 10.03, 10.04 and 10.05 are deleted in
their entirety. The Beneficiary must elect payment of the death benefit amount,
determined under Section 10.02, in accordance with the minimum distribution
requirements of Code Section 401(a)(9). The Beneficiary may elect a lump sum
payment, or periodic payments under the Systematic Withdrawal Option (SWO),
Estate Conservation Option (ECO) or any of the Annuity options provided the
election satisfies the Code minimum distribution rules. The Beneficiary may make
any investment choices permitted under the Contract while the Contract remains
in the Accumulation Period.
Death Before Distributions Begin. If the Participant dies before distributions
begin in accordance with the provisions of Code Section 401(a)(9), the entire
value of the Certificate Holder's Account must be distributed by December 31 of
the calendar year containing the fifth anniversary of the date of the
Participant's death. Alternatively, if the Participant has a designated
Beneficiary, payments may be made over the life of the Beneficiary or over a
period not extending beyond the life expectancy of the Beneficiary provided
distribution to a non-spouse Beneficiary begins by December 31 of the calendar
year following the calendar year of the Participant's death.
For a spousal Beneficiary, such payments must begin by the later of December 31
of the calendar year following the calendar year of the Participant's death or
December 31 of the calendar year in which the Participant would have attained
age 70-1/2.
Death After Distributions Begin. If the Participant dies after distributions
begin in accordance with the provisions of Code Section 401(a)(9), payments to
the Beneficiary must be made at least as rapidly as the method of distribution
in effect at the time of the Participant's death. If the minimum distribution
requirements have been met by partial withdrawals based on the Participant's
life expectancy or the joint life expectancies of the Participant and
Beneficiary, death benefit payments to the Beneficiary must also satisfy any
additional requirements of Code Section 401(a)(9).
Estate Conservation Option. The Estate Conservation Option (ECO) is a
distribution option under which a portion of the Certificate Holder's Account
Value will automatically be surrendered and distributed each calendar year. The
distributed amount is withdrawn pro rata from each investment option under the
Certificate Holder's Account.
Election and Revocation. The Certificate Holder or Beneficiary may elect ECO by
submitting a completed and signed election form to Aetna's Home Office. If the
Certificate Holder's Account is subject to ERISA, the Certificate Holder must
also submit to Aetna a waiver and spousal consent satisfying the requirements of
ERISA Section 205.
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Once elected, the Certificate Holder or Beneficiary may revoke the option by
submitting a written request to Aetna's Home Office. Any revocation will apply
only to amounts not yet paid.
Surrender Fee/Market Value Adjustment. A Surrender Fee will not be deducted
from, and a Market Value Adjustment will not be applied to, any portion of the
Certificate Holder's Account Value which is paid under ECO.
Amount of Distribution. Each year that ECO is in effect, Aetna will calculate
and distribute an amount equal to the minimum required distribution under the
Code. If Aetna maintains separate records of the value as of December 31, 1986,
payments made during or after the year in which the Participant attains age
70-1/2 and before the year the Participant attains age 75, will only be
calculated on amounts contributed after December 31, 1986, plus all earnings on
all amounts after that date. The annual distribution will be determined by
dividing the Certificate Holder's Account Value as of December 31 of the year
prior to the year for which payment is to be made by a life expectancy factor
based on expected return multiples in Tables V and VI of Section 1.72-9 of the
Income Tax Regulations.
The Certificate Holder may elect either the single or joint life expectancy
factor. If the joint life expectancy factor is elected, the second life must be
a Beneficiary under the Contract. If the Beneficiary elects ECO after the
Participant's death, only a single life expectancy factor may be used. The life
expectancy or joint life expectancy factor will be recalculated each year in
accordance with the rules under Code Section 401(a)(9).
Minimum Account Value. At its discretion, Aetna may require a minimum initial
Certificate Holder's Account Value for election of this option. If after
election of this option the Certificate Holder's Account Value is insufficient
to make a scheduled ECO payment, Aetna will distribute the entire Certificate
Holder's Account balance.
Date of Distribution. The Certificate Holder shall specify the initial
distribution date. The earliest date is the first day of the calendar year in
which the Participant attains age 70-1/2 or, for plans of government or church
employers, retires if later. If a Beneficiary elects ECO, the earliest date is
the date of the Participant's death. Subsequent distributions will be made
annually on such date as Aetna may designate or allow.
Reservation of Rights. Aetna reserves the right to change the terms of ECO for
future elections and to discontinue the availability of this option after proper
notification. Aetna also reserves the right to allow payments to be made more
frequently than annually.
Systematic Withdrawal Option. If distributions are made under the Systematic
Withdrawal Option (SWO) after payments are required to begin under the minimum
distribution requirements of Code Section 401(a)(9), the amount distributed in
any year will be increased if required under the Code minimum distribution
rules. For this purpose, the minimum required distribution will be determined
each year by dividing the Certificate Holder's Account Value as of December 31
of the year prior to the year for which payment is to be made by a life
expectancy factor, which for the initial distribution year shall be based on
either the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Certificate Holder. If the joint life expectancy factor is elected, the second
life must be a Beneficiary under the Contract.
If the Beneficiary elects SWO after the Participant's death, only a single life
expectancy factor may be used. Distributions for any subsequent year will be
calculated based on such life expectancy factor reduced by one for each calendar
year which has elapsed since the life expectancy was first calculated.
If the specified period method is elected, the maximum specified period will be
limited by the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Certificate Holder. If elected by a Beneficiary, only a single life expectancy
factor may be used.
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Availability of ECO and SWO. An individual who has revoked ECO or SWO may not
subsequently elect that option again, nor may the individual elect another
withdrawal option unless permitted under the Code minimum distribution rules.
If ECO or SWO is in effect and the Participant dies before the required
beginning date for minimum distributions, payments will cease. A Beneficiary may
elect ECO or SWO provided the election satisfies the Code minimum distribution
rules.
If ECO or SWO is in effect and the Participant dies after the required beginning
date for minimum distributions, payments will continue as permitted under the
Code minimum distribution rules, unless revoked.
Spousal Consent. If the Certificate Holder's Account is subject to ERISA and the
Participant does not die before payments begin, distribution to a married
Participant must be in the form of a "Qualified Joint and Survivor Annuity"
unless the Certificate Holder furnishes to Aetna a waiver and spousal consent
satisfying the requirements of ERISA Section 205. A Qualified Joint and Survivor
Annuity is an annuity payable for the joint lives of the Participant and spouse
with at least 50% of the payment to continue to the surviving spouse after the
Participant's death.
If the Certificate Holder's Account is subject to ERISA, the Annuitant dies
before the payments begin and the Beneficiary is not the current spouse, Aetna
will pay 50% of the death benefit to the current spouse in the form of a
"Qualified Preretirement Survivor Annuity" unless (1) a waiver and spousal
consent, satisfying the requirements of ERISA Section 205, is furnished to
Aetna, or (2) a prior spouse is entitled to all or a portion of the death
benefit under a qualified domestic relations order as described in Code Section
414(p). A Qualified Preretirement Survivor Annuity is an annuity payable for the
life of the surviving spouse which can be purchased by 50% of the Certificate
Holder's Account Adjusted Value.
Surrender Fee. Subsection (c) of Section 8.05 will not apply while either ECO or
SWO is in effect.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/ Dan Kearney
---------------
President
Aetna Insurance Company of America
G-GP2TDA(5/96)
4
Aetna Insurance Company of America
Endorsement
The Contract and Certificate are endorsed to permit an employer to purchase an
interest in the Contract in conjunction with the employer's deferred
compensation plan under Section 457 of the Internal Revenue Code ("Code"). The
following provisions apply and, in the case of a conflict with any provision in
the Contract, this Endorsement controls.
Certificate Holder. The Certificate Holder must be the employer who sponsors the
Code Section 457 deferred compensation plan.
Annuitant. The Annuitant is a participant in the employer's Code Section 457
deferred compensation plan.
Beneficiary. The Beneficiary is the Certificate Holder.
Death Benefit Options. Sections 0.01, 10.03, 10.04 and 10.05 are deleted in
their entirety. At the death of the Annuitant, Aetna will pay the death benefit
amount determined under Section 10.02 directed by the Certificate Holder. The
Certificate Holder may elect a lump sum payment, or periodic payments under the
Systematic Withdrawal Option (SWO), Estate Conservation Option (ECO) or any of
the Annuity options provided the election satisfies the distribution
requirements of Code Section 457(d). The Certificate Holder is responsible for
complying with the distribution requirements of Code Section 457(d).
Distributions. The Certificate Holder may elect a lump sum payment, or periodic
payments under the Systematic Withdrawal Option (SWO), the Estate Conservation
Option (ECO) or any of the Annuity options provided the election satisfies the
distribution requirements of Code Section 457(d). Any periodic payments will
only be paid to the Certificate Holder or, at the direction of the Certificate
Holder, to the Annuitant. The Certificate Holder is responsible for complying
with the distribution requirements of Code Section 457(d).
Estate Conservation Option. The Estate Conservation Option (ECO) is a
distribution option under which a portion of the Certificate Holder's Account's
Value will automatically be surrendered and distributed each calendar year. The
distributed amount is withdrawn pro rata from each investment option under the
Certificate Holder's Account.
Election and Revocation. The Certificate Holder may elect ECO by submitting a
completed and signed election form to Aetna's Home Office. Once elected, the
Certificate Holder may revoke the option by submitting a written request to
Aetna's Home Office. Any revocation will apply only to amounts not yet paid.
A Surrender Fee/Market Value Adjustment. A Surrender Fee will not be deducted
from, and a Market Value Adjustment will not be applied to, any portion of the
Value which is paid under ECO.
G-GP2DC(5/96)
<PAGE>
Amount of Distribution. Each year that ECO is in effect, Aetna will calculate
and distribute an amount equal to the minimum required distribution under the
Code. The annual distribution will be determined by dividing the Certificate
Holder's Account's Value as of December 31 of the year prior to the year for
which payment is to be made by a life expectancy factor based on expected return
multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
The Certificate Holder shall elect either the single or joint life expectancy
factor. If the joint life expectancy is elected, the second life must be a plan
beneficiary.
If the Certificate Holder elects ECO on behalf of a plan beneficiary after the
Annuitant's death, only a single life expectancy factor may be used. The life
expectancy or joint life expectancy factor will be recalculated each year in
accordance with the rules under Code Section 401(a)(9).
Minimum Account Value. At its discretion, Aetna may require a minimum initial
Current Value for election of this option. If after election of this option the
Current Value is insufficient to make a scheduled ECO payment, Aetna will
distribute the entire Certificate Holder's Account balance.
Date of Distribution. The Certificate Holder shall specify the initial
distribution date. The earliest date is the first day of the calendar year in
which the Annuitant attains age 70-1/2 or, for plans of government or church
employers, retires if later. If the Certificate Holder elects ECO on behalf of a
plan beneficiary, the earliest date is the date of the Annuitant's death.
Subsequent distributions will be made annually on such date as Aetna may
designate or allow.
Reservation of Rights. Aetna reserves the right to change the terms of ECO for
future elections and to discontinue the availability of this option after proper
notification. Aetna also reserves the right to allow payments to be made more
frequently than annually.
Systematic Withdrawal Option. Subsection (a)(3) of Section 3.10 ("Specified
Percentage") is deleted.
The period selected under the specified period method and the annual amount
permitted under the specified payment method, including payments made prior to
the required beginning date under the Code Section 401(a)(9) minimum
distribution rules, will be limited by the minimum distribution rules.
Each year that the specified payment method is in effect, Aetna will distribute
the greater of the specified payment or the minimum required distribution. For
this purpose, Aetna will calculate the minimum required distribution by dividing
the Certificate Holder's Account's Current Value as of December 31 of the year
prior to the year for which payment is to be made by a life expectancy factor,
which for the initial distribution year shall be based on either the single life
expectancy factor or joint life expectancy factor in Table V or VI of Section
1.72-9 of the Income Tax Regulations, as elected by the Certificate Holder. If
joint life expectancy is elected, the second life must be a plan beneficiary.
If the Certificate Holder elects SWO on behalf of a plan beneficiary after the
Annuitant's death, only a single life expectancy factor may be used. For each
subsequent year, distributions will be calculated based on such life expectancy
factor reduced by one for each calendar year which has elapsed since the life
expectancy was first calculated.
If the specified period method is elected, the maximum specified period will be
limited by the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Certificate Holder. If elected on behalf of the Annuitant, either a single or
joint life expectancy factor may be used. If elected on behalf of a plan
beneficiary, only a single life expectancy factor may be used.
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<PAGE>
Availability of ECO and SWO. If the Certificate Holder revokes ECO or SWO, the
Certificate Holder may not subsequently elect that option again, nor may the
Certificate Holder elect another withdrawal option unless permitted under the
Code minimum distribution rules.
If ECO or SWO is in effect and the Annuitant dies before the required beginning
date for minimum distributions, payments will cease. The Certificate Holder, on
behalf of a plan beneficiary, may elect ECO or SWO provided the election
satisfies the Code minimum distribution rules.
If ECO or SWO is in effect and the Annuitant dies after the required beginning
date for minimum distributions, payments will continue as permitted under the
Code minimum distribution rule, unless revoked.
Surrender Fee. Subsection (d) of Section 3.14 will not apply while either ECO or
SWO is in effect.
Endorsed and made a part of the Contract and the Certificate as of the Effective
Date or when the endorsement is approved, whichever is later.
/s/ Dan Kearney
---------------
President
Aetna Insurance Company of America
G-GP2DC(5/96)
3
Aetna Insurance Company of America
Endorsement
The Contract is endorsed to permit the Contract to be used to fund a pension or
profit sharing plan qualified under Section 401(a) of the Internal Revenue Code
("Code") and, if applicable, the Employee Retirement Income Security Act
(ERISA). The following provisions apply and, in the case of a conflict with any
provision in the Contract, this Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract may not be sold, assigned, transferred or pledged as
collateral for a loan or as security for the performance of an obligation or for
any other purpose, except pursuant to a qualified domestic relations order as
described in Code Section 414(p). This restriction will not apply to the trustee
of any trust described in Code Section 401(a), which is exempt from tax under
Section 501(a).
Contract Holder. The Contract Holder must be the employer sponsoring the plan
or, if the plan has a trust, the trustee of such trust.
Participant. The Participant is the participant under the Code Section 401(a)
plan on whose behalf the Contract is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Beneficiary is the Contract Holder.
Death Benefit Options. Sections 10.01, 10.03, 10.04 and 10.05 are deleted in
their entirety. At the death of the Annuitant, Aetna will pay the death benefit
amount, determined under Section 10.02, as directed by the Contract Holder. The
Contract Holder is responsible for complying with the minimum distribution
requirements of Code Section 401(a)(9). The Contract Holder may elect a lump sum
payment, or periodic payments under the Systematic Withdrawal Option (SWO),
Estate Conservation Option (ECO) or any of the Annuity options provided the
election satisfies the Code minimum distribution rules. If the Contract is
subject to ERISA and the Contract Holder directs payment to a non-spouse plan
beneficiary, the Contract Holder must certify to Aetna that the distribution
complies with the waiver and spousal consent requirements of Code Section 417.
In the absence of such certification, payment will be made to the Contract
Holder.
Distributions. The Contract Holder may elect a lump sum payment, or periodic
payments under the Systematic Withdrawal Option (SWO), Estate Conservation
Option (ECO) or any of the Annuity options provided the election satisfies the
Code minimum distribution rules. Any periodic payments will be paid only to the
Contract Holder, or to the Participant at the direction of the Contract Holder.
The Contract Holder is responsible for complying with the minimum distribution
requirements of Code Section 401(a)(9).
I-GP2QP(5/96)
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If the Contract is subject to ERISA and a distribution is made to a married
Participant in a form other than a "Qualified Joint and Survivor Annuity," the
Contract Holder must certify to Aetna that the distribution complies with the
waiver and spousal consent requirements of Code Section 417. In the absence of
such certification, payment will be made to the Contract Holder. A "Qualified
Joint and Survivor Annuity" is an annuity payable for the joint lives of the
Participant and spouse with at least 50% of the payment to continue to the
surviving spouse after the Participant's death.
Estate Conservation Option. The Estate Conservation Option (ECO) is a
distribution option under which a portion of the Current Value will
automatically be surrendered and distributed each calendar year. The distributed
amount is withdrawn pro rata from each investment option under the Contract.
Election and Revocation. The Contract Holder, on behalf of the Participant or
plan beneficiary, may elect ECO by submitting a completed and signed election
form to Aetna's Home Office. The Contract Holder must certify to Aetna that the
distribution complies with the waiver and spousal consent requirements of Code
Section 417.
Once elected, the Contract Holder, on behalf of the Participant or plan
beneficiary, may revoke the option by submitting a written request to Aetna's
Home Office. Any revocation will apply only to amounts not yet paid.
Surrender Fee/Market Value Adjustment. A Surrender Fee will not be deducted
from, and a Market Value Adjustment will not be applied to, any portion of the
Current Value which is paid under ECO.
Amount of Distribution. Each year that ECO is in effect, Aetna will calculate
and distribute an amount equal to the minimum required distribution under Code
Section 401 (a)(9). The annual distribution will be determined by dividing the
Current Value as of December 31 of the year prior to the year for which payment
is to be made by a life expectancy factor based on expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
The Contract Holder may elect, on behalf of the Participant, either the single
or joint life expectancy factor. If the joint life expectancy factor is elected,
the second life must be a plan beneficiary. If the Contract Holder elects ECO on
behalf of a plan beneficiary after the Participant's death, only a single life
expectancy factor may be used. The life expectancy or joint life expectancy
factor will be recalculated each year in accordance with the rules under Code
Section 401(a)(9).
Minimum Current Value. At its discretion, Aetna may require a minimum initial
Current Value for election of this option. If after election of this option the
Current Value is insufficient to make a scheduled ECO payment, Aetna will
distribute the entire Current Value.
Date of Distribution. The Contract Holder, on behalf of the Participant, may
specify the initial distribution date. The earliest date is the first day of the
calendar year in which the Participant attains age 70-1/2 or, for plans of
government or church employers, retires if later. If the Contract Holder elects
ECO on behalf of a plan beneficiary, the earliest date is the date of the
Participant's death. Subsequent distribution will be made annually on such date
as Aetna may designate or allow.
Reservation of Rights. Aetna reserves the right to change the terms of ECO for
future elections and to discontinue the availability of this option after proper
notification. Aetna also reserves the right to allow payments to be made more
frequently than annually.
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<PAGE>
Systematic Withdrawal Option. If distributions are made under the Systematic
Withdrawal Option (SWO) after payments are required to begin under the minimum
distribution requirements of Code Section 401(a)(9), the amount distributed in
any year will be increased if required under the Code minimum distribution
rules. For this purpose, the minimum amount to be distributed each year will be
determined by dividing the Current Value as of December 31 of the year prior to
the year for which payment is to be made by a life expectancy factor, which for
the initial distribution year will be based on either the single life expectancy
factor or joint life expectancy factor in Table V or VI of Section 1.72-9 of the
Income Tax Regulations, as elected by the Contract Holder. If the joint life
expectancy factor is elected, the second life must be a plan beneficiary.
If the Contract Holder elects SWO on behalf of a plan beneficiary after the
Participant's death, only a single life expectancy factor may be used.
Distributions for any subsequent year will be calculated based on such life
expectancy factor reduced by one for each calendar year which has elapsed since
the life expectancy was first calculated.
If the specified period method is elected, the maximum specified period will be
limited by the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Contract Holder. If elected on behalf of the Participant, either a single or a
joint life expectancy factor may be used. If elected on behalf of a plan
beneficiary, only a single life expectancy factor may be used.
Availability of ECO and SWO. If the Contract Holder revokes ECO or SWO, the
Contract Holder may not subsequently elect that option again, nor may the
Contract Holder elect another withdrawal option unless permitted under the Code
minimum distribution rules.
If ECO or SWO is in effect and the Participant dies before the required
beginning date for minimum distributions, payments will cease. The Contract
Holder, on behalf of a plan beneficiary, may elect ECO or SWO provided the
election would satisfy the Code minimum distribution rules.
If ECO or SWO is in effect and the Participant dies after the required beginning
date for minimum distributions, payments will continue as permitted under the
Code minimum distribution rules, unless revoked.
Surrender Fee. Subsection (c) of Section 8.05 will not apply while either ECO or
SWO is in effect.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/ Dan Kearney
---------------
President
Aetna Insurance Company of America
I-GP2QP(5/96)
3
Aetna Insurance Company of America
Endorsement
The Contract is endorsed to meet the qualification requirements for an
Individual Retirement Annuity under Internal Revenue Code ("Code") Section
408(b). The following provisions apply and, in the case of a conflict with any
provision in the Contract, this Endorsement controls.
Contract Holder. The Contract Holder and the Annuitant must be the same person.
Joint Contract Holders are not permitted.
Nontransferable/Nonforfeitable. The Contract is nontransferable. The Contract
Holder may not sell, assign, transfer, pledge or use as collateral for a loan or
as security for the performance of an obligation or for any other purpose, his
or her interest in the Contract to any person other than the issuer of the
Contract or to a spouse incident to a divorce under the provisions of Code
Section 408(d)(6). The Contract Holder's entire interest in the Contract is
nonforfeitable.
Exclusive Benefit. The Contract is established for the exclusive benefit of the
Contract Holder or his or her Beneficiary(ies).
Contributions. All contributions must be in cash. Except in the case of a
rollover contribution as permitted by Code Section 402(c), 403(a)(4), 403(b)(8),
or 408(d)(3) or a contribution made in accordance with the terms of a Simplified
Employee Pension (SEP) as described in Code Section 408(k), the total
contributions shall not exceed $2,000 for any taxable year.
Distributions. All distributions will be made in accordance with the
requirements of Code Section 401(a)(9). Any periodic payments will be paid only
to the Contract Holder.
Required Beginning Date. No later than the April 1 following the calendar year
in which the Contract Holder attains age 70-1/2, the Contract Holder may elect
to receive the entire interest in a lump sum, or may elect to begin periodic
payments which must be distributed over:
(a) The life of the Contract Holder, or the lives of the Contract Holder and
his or her designated Beneficiary, or
(b) A period certain not extending beyond the life expectancy of the Contract
Holder or the joint and last survivor expectancy of the Contract Holder and
his or her designated Beneficiary.
Periodic payments must be made at intervals of no longer than one year. In
addition, payments made as an annuity must be either nonincreasing or they may
increase only as provided in Section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
I-GP2IRA(5/96)
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Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancy for
distributions under an Annuity option may not be recalculated.
Payment of Death Benefit. Sections 10.01, 10.03, 10.04 and 10.05 are deleted in
their entirety. The death benefit amount is determined in accordance with the
provisions of Section 10.02. At the death of the Contract Holder:
(a) If the Contract Holder dies on or after the date distribution of his or her
interest has begun, the remaining portion of such interest, if any, will
continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Contract Holder's death.
(b) If the Contract Holder dies before distribution of his or her interest
begins, the death benefit payable to the Beneficiary will be distributed no
later than December 31 of the calendar year which contains the fifth
anniversary of the date of the Contract Holder's death, except to the
extent that an election is made to receive a distribution in accordance
with (i) or (ii) below.
(i) Distributions to the Beneficiary may be made in installments over the
life of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary, commencing no later than December 31 of
the calendar year immediately following the calendar year in which the
Contract Holder died.
(ii) If the Beneficiary is the Contract Holder's surviving spouse, and
distributions are to be made in accordance with (i) above,
distributions must begin on or before the later of December 31 of the
calendar year immediately following the calendar year in which the
Contract Holder died or December 31 of the calendar year in which the
Contract Holder would have attained age 70-1/2.
If the Contract Holder dies before Annuity payments begin, a spousal Beneficiary
may elect an Annuity option, ECO, SWO, a lump sum payment or to treat the
Contract as his or her own IRA. The election to treat the Contract as his or her
own IRA will be deemed to have been made if such surviving spouse makes a
rollover to or from such Contract Holder's Account, or fails to elect to receive
a distribution in accordance with (b) above.
Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancies for
distributions under an Annuity option may not be recalculated.
Distributions under this section are considered to have begun if distributions
are made on Contract Holder's Account of the Contract Holder reaching the
required beginning date or if prior to the required beginning date distributions
irrevocably commence over a period permitted and in an Annuity option acceptable
under Section 1.401(a)(9) of the Proposed Income Tax Regulations.
Estate Conservation Option. The Estate Conservation Option (ECO) is a
distribution option under which a portion of the Contract will automatically be
surrendered and distributed each calendar year. The distributed amount is
withdrawn pro rata from each investment option under the Contract.
Election and Revocation. The Contract Holder or a Beneficiary may elect ECO by
submitting a completed and signed election form to Aetna's Home Office. Once
elected, the Contract Holder or
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Beneficiary may revoke the option by submitting a written request to Aetna's
Home Office. Any revocation will apply only to amounts not yet paid.
Surrender Fee/Market Value Adjustment. A Surrender Fee will not be deducted
from, and a Market Value Adjustment will not be applied to, any portion of the
Current Value which is paid under ECO.
Amount of Distribution. Each year that ECO is in effect, Aetna will calculate
and distribute an amount equal to the minimum required distribution under the
Code. The annual distribution will be determined by dividing the Contract Value
as of December 31 of the year prior to the year for which payment is to be made
by a life expectancy factor based on expected return multiples in Tables V and
VI of Section 1.72-9 of the Income Tax Regulations. The Contract Holder shall
elect either the single or joint life expectancy factor. If the Contract Holder
elects the joint life expectancy, the second life must be a Beneficiary under
the Contract.
If a Beneficiary elects ECO after the Contract Holder's death, only a single
life expectancy factor may be used, except that a spousal Beneficiary who
elected to treat the Contract Holder's Account as his or her own IRA may elect
either a single or joint life expectancy factor. The life expectancy or joint
life expectancy factor will be recalculated each year in accordance with the
rules under Code Section 401(a)(9).
Minimum Current Value. At its discretion, Aetna may require a minimum initial
Current Value for election of this option. If after election of this option the
Current Value is insufficient to make a scheduled ECO payment, Aetna will
distribute the entire Current Value.
Date of Distribution. The Contract Holder shall specify the initial distribution
date. The earliest date is the first day of the calendar year in which the
Contract Holder attains age 70-1/2. For a Beneficiary electing ECO after the
Contract Holder's death, the earliest date is the date of the Contract Holder's
death. Subsequent distributions will be made annually on such date as Aetna may
designate or allow.
Reservation of Rights. Aetna reserves the right to change the terms of ECO for
future elections and to discontinue the availability of this option after proper
notification. Aetna also reserves the right to allow payments to be made more
frequently than annually.
Systematic Withdrawal Option. If distributions are made under the Systematic
Withdrawal Option (SWO) after payments are required to begin under the minimum
distribution requirements of Code Section 401(a)(9), the amount distributed in
any year will be increased if required under the Code minimum distribution
rules. For this purpose, the minimum amount to be distributed each year will be
determined by dividing the Current Value, as of December 31 of year prior to the
year for which payment is to be made by a life expectancy factor, which for the
initial distribution year shall be based on either the single life expectancy
factor or the joint life expectancy factor in Tables V or VI of Section 1.72-9
of the Income Tax Regulations, as elected by the Contract Holder. If the
Contract Holder elects the joint life expectancy factor, the second life must be
a Beneficiary under the Contract.
If a Beneficiary who elects SWO after the Contract Holder's death, only a single
life expectancy factor may be used, except that a spousal Beneficiary who has
elected to treat the Contract Holder's Account as his or her own IRA may elect
either a single or a joint life expectancy factor. Distributions for any
subsequent year will be calculated based on such life expectancy reduced by one
for each calendar year which has elapsed since the life expectancy was first
calculated.
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If the specified period method is elected, the maximum specified period will be
limited by the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Contract Holder. If elected by a Beneficiary, only a single life expectancy
factor may be used, except that a spousal Beneficiary who has elected to treat
the Contract Holder's Account as his or her own IRA may elect either a single or
a joint life expectancy factor.
Availability of ECO and SWO. An individual who has revoked ECO or SWO may not
subsequently elect that option again, nor may the individual elect another
withdrawal option unless permitted under the Code minimum distribution rules.
If ECO or SWO is in effect and the Contract Holder dies before the required
beginning date for minimum distributions, payments will cease. A Beneficiary may
elect ECO or SWO provided the election would satisfy the Code minimum
distribution rules.
If ECO or SWO is in effect and the Contract Holder dies after the required
beginning date for minimum distributions, payments will continue as permitted
under the Code minimum distribution rules, unless revoked.
Annual Reports. Aetna will furnish annual calendar year reports concerning the
status of the Contract.
Termination of Contract Holder's Account. Upon 90 days written notice to the
Contract Holder, Aetna may terminate the Contract if no Purchase Payments have
been received for two full consecutive Contract years and the paid-up Annuity
benefit at maturity would be less than $20 per month.
Right to Cancel. The Contract Holder may cancel the Contract within 10 days of
receiving it by returning it to Aetna at the address above or to the person from
whom is was purchased. Within seven days from the cancellation request, Aetna
will return all the Contract Holder's Purchase Payments.
Surrender Fee. The Surrender Fee does not apply while SWO is in effect.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/ Dan Kearney
---------------
President
Aetna Insurance Company of America
I-GP2IRA(5/96)
4
Aetna Insurance Company of America
Endorsement
The Contract is endorsed in order to meet the qualification requirements of
Section 403(b) of the Internal Revenue Code ("Code") and, if applicable, the
Employee Retirement Income Security Act (ERISA). The following provisions apply
and, in the case of a conflict with any provision in the Contract, this
Endorsement controls.
Nontransferable. The Contract is nontransferable in accordance with Code Section
401(g). The Contract may not be sold, assigned, transferred or pledged as
collateral for a loan or as security for the performance of an obligation or for
any other purpose, except pursuant to a qualified domestic relations order as
described in Code Section 414(p).
Certificate Holder. The Contract Holder must be either (1) the employer who
sponsors a Code Section 403(b) Tax Deferred Annuity program or, (2) if the
Purchase Payments are derived solely from a rollover or transfer amount, the
Participant under a Code Section 403(b) Tax Deferred Annuity program.
Participant. The Participant is the participant under the Code Section 403(b)
Tax Deferred Annuity program on whose behalf the Contract is maintained.
Annuitant. The Annuitant is the Participant.
Beneficiary. The Participant shall name a Beneficiary. If the 403(b) program is
subject to ERISA and the Participant is married, the spouse must be named as
Beneficiary of 50% of the Current Value. However, if the Participant has
attained age 35, an alternate Beneficiary may be named for this portion of the
Current Value provided the Contract Holder furnishes to Aetna a waiver and
spousal consent satisfying the requirements of ERISA Section 205. Any
Beneficiary may be named for the balance of the Current Value without the
consent of the spouse.
Contributions. The Contract will accept on-going contributions and amounts
rolled over or transferred from (1) another contract qualified under Code
Section 403(b), or (2) from an Individual Retirement Annuity qualified under
Code Sections 408(a) or 408(b) that contains only amounts previously rolled over
from a 403(b) Tax Deferred Annuity.
Limitations on Contributions. Except in the case of a rollover or transfer
contribution, the Purchase Payments made to the Contract in any calendar year
cannot exceed the lesser of (1) the maximum exclusion allowance determined under
Code Section 403(b)(2), or (2) the annual additions limitation of Code Section
415(c)(1). In addition, in no event may annual Purchase Payment(s) attributable
to elective deferrals, as defined in Code Section 402(g), exceed $9,500, or such
larger amount as adjusted by the Secretary of the Treasury, unless the alternate
limitation of Code Section 402(g)(8) applies. The Contract Holder is responsible
for ensuring that the contributions do not exceed the prescribed limits.
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Withdrawal Restrictions. In accordance with Code Section 403(b)(11), withdrawals
attributable to Purchase Payments made pursuant to a salary reduction agreement
may be made only after the Participant attains age 59-1/2, separates from
service, dies, becomes totally and permanently disabled (as defined in Code
Section 72(m)(7)) or in the case of hardship (as defined in Treasury
Regulations). In the case of hardship, only Purchase Payments, and not the
earnings, may be withdrawn. These restrictions do not apply to amounts held in a
403(b) Tax Deferred Annuity program as of December 31, 1988. The Contract will
not accept transfers from a Code Section 403(b)(7) custodial Contract.
Distributions. All distributions from the Contract must satisfy the minimum
distribution rules set forth in Code Section 401(a)(9). Any periodic payments
will be paid only to the Contract Holder or, if the Contract Holder is the
employer, payments will be made to the Participant at the direction of the
Certificate Holder.
Required Beginning Date. Distributions must generally begin no later than April
1 following the year the Participant attains age 70-1/2. However, if the 403(b)
program is sponsored by a government or church employer, distribution must begin
no later than April 1 following the later of the year the Participant attains
age 70-1/2 or retires. The entire value of the Contract must be distributed, or
distribution must be made over the life of the Participant, the joint lives of
the Participant and Beneficiary or over a period that does not extend beyond the
life expectancy of the Participant or the joint life expectancies of the
Participant and Beneficiary.
If Aetna maintains separate records of the value as of December 31, 1986, this
value is not required to be taken before December 31 of the year the Participant
attains age 75. Aetna will maintain separate records provided the Contract
Holder does not take any distribution other than the minimum distribution
required under Code Section 401(a)(9).
Payment of Death Benefit. Sections 10.01, 10.03, 10.04 and 10.05 are deleted in
their entirety. The Beneficiary must elect payment of the death benefit amount,
determined under Section 10.02, in accordance with the minimum distribution
requirements of Code Section 401(a)(9). The Beneficiary may elect a lump sum
payment, or periodic payments under the Systematic Withdrawal Option (SWO),
Estate Conservation Option (ECO) or any of the Annuity options provided the
election satisfies the Code minimum distribution rules. The Beneficiary may make
any investment choices permitted under the Contract while the Contract remains
in the Accumulation Period.
Death Before Distributions Begin. If the Participant dies before distributions
begin in accordance with the provisions of Code Section 401(a)(9), the entire
value of the Contract must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of the Participant's death.
Alternatively, if the Participant has a designated Beneficiary, payments may be
made over the life of the Beneficiary or over a period not extending beyond the
life expectancy of the Beneficiary provided distribution to a non-spouse
Beneficiary begins by December 31 of the calendar year following the calendar
year of the Participant's death.
For a spousal Beneficiary, such payments must begin by the later of December 31
of the calendar year following the calendar year of the Participant's death or
December 31 of the calendar year in which the Participant would have attained
age 70-1/2.
Death After Distributions Begin. If the Participant dies after distributions
begin in accordance with the provisions of Code Section 401(a)(9), payments to
the Beneficiary must be made at least as rapidly as the method of distribution
in effect at the time of the Participant's death. If the minimum distribution
requirements have been met by partial withdrawals based on the Participant's
life expectancy or the joint life expectancies of the Participant and
Beneficiary, death benefit payments to the Beneficiary must also satisfy any
additional requirements of Code Section 401(a)(9).
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Estate Conservation Option. The Estate Conservation Option (ECO) is a
distribution option under which a portion of the Current Value will
automatically be surrendered and distributed each calendar year. The distributed
amount is withdrawn pro rata from each investment option under the Certificate
Holder's Account.
Election and Revocation. The Contract Holder or Beneficiary may elect ECO by
submitting a completed and signed election form to Aetna's Home Office. If the
Contract is subject to ERISA, the Contract Holder must also submit to Aetna a
waiver and spousal consent satisfying the requirements of ERISA Section 205.
Once elected, the Contract Holder or Beneficiary may revoke the option by
submitting a written request to Aetna's Home Office. Any revocation will apply
only to amounts not yet paid.
Surrender Fee/Market Value Adjustment. A Surrender Fee will not be deducted
from, and a Market Value Adjustment will not be applied to, any portion of the
Current Value which is paid under ECO.
Amount of Distribution. Each year that ECO is in effect, Aetna will calculate
and distribute an amount equal to the minimum required distribution under the
Code. If Aetna maintains separate records of the value as of December 31, 1986,
payments made during or after the year in which the Participant attains age
70-1/2 and before the year the Participant attains age 75, will only be
calculated on amounts contributed after December 31, 1986, plus all earnings on
all amounts after that date. The annual distribution will be determined by
dividing the Current Value as of December 31 of the year prior to the year for
which payment is to be made by a life expectancy factor based on expected return
multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
The Contract Holder may elect either the single or joint life expectancy factor.
If the joint life expectancy factor is elected, the second life must be a
Beneficiary under the Contract. If the Beneficiary elects ECO after the
Participant's death, only a single life expectancy factor may be used. The life
expectancy or joint life expectancy factor will be recalculated each year in
accordance with the rules under Code Section 401(a)(9).
Minimum Current Value. At its discretion, Aetna may require a minimum initial
Current Value for election of this option. If after election of this option the
Current Value is insufficient to make a scheduled ECO payment, Aetna will
distribute the entire Current Value.
Date of Distribution. The Contract Holder shall specify the initial distribution
date. The earliest date is the first day of the calendar year in which the
Participant attains age 70-1/2 or, for plans of government or church employers,
retires if later. If a Beneficiary elects ECO, the earliest date is the date of
the Participant's death. Subsequent distributions will be made annually on such
date as Aetna may designate or allow.
Reservation of Rights. Aetna reserves the right to change the terms of ECO for
future elections and to discontinue the availability of this option after proper
notification. Aetna also reserves the right to allow payments to be made more
frequently than annually.
Systematic Withdrawal Option. If distributions are made under the Systematic
Withdrawal Option (SWO) after payments are required to begin under the minimum
distribution requirements of Code Section 401(a)(9), the amount distributed in
any year will be increased if required under the Code minimum distribution
rules. For this purpose, the minimum required distribution will be determined
each year by dividing the Current Value as of December 31 of the year prior to
the year for which payment is to be made by a life expectancy factor, which for
the initial distribution year shall be based on either the single life
expectancy factor or joint life expectancy
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factor in Table V or VI of Section 1.72-9 of the Income Tax Regulations, as
elected by the Certificate Holder. If the joint life expectancy factor is
elected, the second life must be a Beneficiary under the Contract.
If the Beneficiary elects SWO after the Participant's death, only a single life
expectancy factor may be used. Distributions for any subsequent year will be
calculated based on such life expectancy factor reduced by one for each calendar
year which has elapsed since the life expectancy was first calculated.
If the specified period method is elected, the maximum specified period will be
limited by the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Certificate Holder. If elected by a Beneficiary, only a single life expectancy
factor may be used.
Availability of ECO and SWO. An individual who has revoked ECO or SWO may not
subsequently elect that option again, nor may the individual elect another
withdrawal option unless permitted under the Code minimum distribution rules.
If ECO or SWO is in effect and the Participant dies before the required
beginning date for minimum distributions, payments will cease. A Beneficiary may
elect ECO or SWO provided the election satisfies the Code minimum distribution
rules.
If ECO or SWO is in effect and the Participant dies after the required beginning
date for minimum distributions, payments will continue as permitted under the
Code minimum distribution rules, unless revoked.
Spousal Consent. If the Contract is subject to ERISA and the Participant does
not die before payments begin, distribution to a married Participant must be in
the form of a "Qualified Joint and Survivor Annuity" unless the Contract Holder
furnishes to Aetna a waiver and spousal consent satisfying the requirements of
ERISA Section 205. A Qualified Joint and Survivor Annuity is an annuity payable
for the joint lives of the Participant and spouse with at least 50% of the
payment to continue to the surviving spouse after the Participant's death.
If the Contract is subject to ERISA, the Annuitant dies before the payments
begin and the Beneficiary is not the current spouse, Aetna will pay 50% of the
death benefit to the current spouse in the form of a "Qualified Preretirement
Survivor Annuity" unless (1) a waiver and spousal consent, satisfying the
requirements of ERISA Section 205, is furnished to Aetna, or (2) a prior spouse
is entitled to all or a portion of the death benefit under a qualified domestic
relations order as described in Code Section 414(p). A Qualified Preretirement
Survivor Annuity is an annuity payable for the life of the surviving spouse
which can be purchased by 50% of the Adjusted Current Value.
Surrender Fee. Subsection (c) of Section 8.05 will not apply while either ECO or
SWO is in effect.
Endorsed and made a part of the Contract as of the Effective Date or when the
endorsement is approved, whichever is later.
/s/ Dan Kearney
---------------
President
Aetna Insurance Company of America
I-GP2TDA(5/96)
4
Aetna Insurance Company of America
Endorsement
The Contract is endorsed to permit an employer to purchase an interest in the
Contract in conjunction with the employer's deferred compensation plan under
Section 457 of the Internal Revenue Code ("Code"). The following provisions
apply and, in the case of a conflict with any provision in the Contract, this
Endorsement controls.
Contract Holder. The Contract Holder must be the employer who sponsors the Code
Section 457 deferred compensation plan.
Annuitant. The Annuitant is a participant in the employer's Code Section 457
deferred compensation plan.
Beneficiary. The Beneficiary is the Contract Holder.
Death Benefit Options. Sections 0.01, 10.03, 10.04 and 10.05 are deleted in
their entirety. At the death of the Annuitant, Aetna will pay the death benefit
amount determined under Section 10.02 directed by the Contract Holder. The
Contract Holder may elect a lump sum payment, or periodic payments under the
Systematic Withdrawal Option (SWO), Estate Conservation Option (ECO) or any of
the Annuity options provided the election satisfies the distribution
requirements of Code Section 457(d). The Contract Holder is responsible for
complying with the distribution requirements of Code Section 457(d).
Distributions. The Contract Holder may elect a lump sum payment, or periodic
payments under the Systematic Withdrawal Option (SWO), the Estate Conservation
Option (ECO) or any of the Annuity options provided the election satisfies the
distribution requirements of Code Section 457(d). Any periodic payments will
only be paid to the Contract Holder or, at the direction of the Contract Holder,
to the Annuitant. The Contract Holder is responsible for complying with the
distribution requirements of Code Section 457(d).
Estate Conservation Option. The Estate Conservation Option (ECO) is a
distribution option under which a portion of the Current Value will
automatically be surrendered and distributed each calendar year. The distributed
amount is withdrawn pro rata from each investment option under the Contract.
Election and Revocation. The Contract Holder may elect ECO by submitting a
completed and signed election form to Aetna's Home Office. Once elected, the
Contract Holder may revoke the option by submitting a written request to Aetna's
Home Office. Any revocation will apply only to amounts not yet paid.
A Surrender Fee/Market Value Adjustment. A Surrender Fee will not be deducted
from, and a Market Value Adjustment will not be applied to, any portion of the
Value which is paid under ECO.
I-GP2DC(5/96)
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Amount of Distribution. Each year that ECO is in effect, Aetna will calculate
and distribute an amount equal to the minimum required distribution under the
Code. The annual distribution will be determined by dividing the Current Value
as of December 31 of the year prior to the year for which payment is to be made
by a life expectancy factor based on expected return multiples in Tables V and
VI of Section 1.72-9 of the Income Tax Regulations. The Contract Holder shall
elect either the single or joint life expectancy factor. If the joint life
expectancy is elected, the second life must be a plan beneficiary.
If the Contract Holder elects ECO on behalf of a plan beneficiary after the
Annuitant's death, only a single life expectancy factor may be used. The life
expectancy or joint life expectancy factor will be recalculated each year in
accordance with the rules under Code Section 401(a)(9).
Minimum Current Value. At its discretion, Aetna may require a minimum initial
Current Value for election of this option. If after election of this option the
Current Value is insufficient to make a scheduled ECO payment, Aetna will
distribute the entire Current Value.
Date of Distribution. The Contract Holder shall specify the initial distribution
date. The earliest date is the first day of the calendar year in which the
Annuitant attains age 70-1/2 or, for plans of government or church employers,
retires if later. If the Contract Holder elects ECO on behalf of a plan
beneficiary, the earliest date is the date of the Annuitant's death. Subsequent
distributions will be made annually on such date as Aetna may designate or
allow.
Reservation of Rights. Aetna reserves the right to change the terms of ECO for
future elections and to discontinue the availability of this option after proper
notification. Aetna also reserves the right to allow payments to be made more
frequently than annually.
Systematic Withdrawal Option. Subsection (a)(3) of Section 3.10 ("Specified
Percentage") is deleted.
The period selected under the specified period method and the annual amount
permitted under the specified payment method, including payments made prior to
the required beginning date under the Code Section 401(a)(9) minimum
distribution rules, will be limited by the minimum distribution rules.
Each year that the specified payment method is in effect, Aetna will distribute
the greater of the specified payment or the minimum required distribution. For
this purpose, Aetna will calculate the minimum required distribution by dividing
the Current Value as of December 31 of the year prior to the year for which
payment is to be made by a life expectancy factor, which for the initial
distribution year shall be based on either the single life expectancy factor or
joint life expectancy factor in Table V or VI of Section 1.72-9 of the Income
Tax Regulations, as elected by the Contract Holder. If joint life expectancy is
elected, the second life must be a plan beneficiary.
If the Contract Holder elects SWO on behalf of a plan beneficiary after the
Annuitant's death, only a single life expectancy factor may be used. For each
subsequent year, distributions will be calculated based on such life expectancy
factor reduced by one for each calendar year which has elapsed since the life
expectancy was first calculated.
If the specified period method is elected, the maximum specified period will be
limited by the single life expectancy factor or joint life expectancy factor in
Table V or VI of Section 1.72-9 of the Income Tax Regulations, as elected by the
Contract Holder. If elected on behalf of the Annuitant, either a single or joint
life expectancy factor may be used. If elected on behalf of a plan beneficiary,
only a single life expectancy factor may be used.
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Availability of ECO and SWO. If the Contract Holder revokes ECO or SWO, the
Contract Holder may not subsequently elect that option again, nor may the
Contract Holder elect another withdrawal option unless permitted under the Code
minimum distribution rules.
If ECO or SWO is in effect and the Annuitant dies before the required beginning
date for minimum distributions, payments will cease. The Contract Holder, on
behalf of a plan beneficiary, may elect ECO or SWO provided the election
satisfies the Code minimum distribution rules.
If ECO or SWO is in effect and the Annuitant dies after the required beginning
date for minimum distributions, payments will continue as permitted under the
Code minimum distribution rule, unless revoked.
Surrender Fee. Subsection (d) of Section 3.14 will not apply while either ECO or
SWO is in effect.
Endorsed and made a part of the Contract as of the Effective Date or when the
Endorsement is approved, whichever is later.
/s/ Dan Kearney
---------------
President
Aetna Insurance Company of America
I-GP2DC(5/96)
3
Exhibit 99-B.4.26
Aetna Insurance Company of America
Endorsement
The Contract is endorsed as follows.
Add the following to Section 1., Definitions.
Dollar Cost Averaging - A program that permits the Contract Holder to
systematically transfer amounts from any of the Funds and the one-year
guaranteed term of the AG Account to any of the Funds by completing the
appropriate section of the enrollment form or a Dollar Cost Averaging
election form.
Delete Section 1.11, Contract Holder, and replace it with the following:
1.11 Contract Holder - The person who purchases this Contract. We
reserve the right to limit ownership to natural persons. If
more than one Contract Holder owns the Contract, each Contract
Holder shall be a joint Contract Holder. Any joint Contract
Holder must be the spouse of the other joint Contract Holder.
Joint Contract Holders have joint ownership rights and both
must authorize any exercising of those ownership rights unless
otherwise allowed by Us. If the Contract is owned by a
nonnatural person, the death benefit will be paid at the death
of the Annuitant and a new Annuitant may not be named.
Delete Section 1.19, Market Value Adjustment, and replace it with the following:
1.19 Market Value Adjustment - An adjustment that may apply to a
withdrawal or transfer from the AG Account before the end of a
guaranteed term as described in Section 7.11.
Delete Section 3.02, Transfer of Ownership and replace it with the following:
A Contract Holder may transfer all of his or her rights under
the Contract. We reserve the right not to accept an assignment
or transfer to a nonnatural person. A written request, dated
and signed by the Contract Holder and any joint Contract
Holder, must be filed at our Home Office. After the transfer
is recorded, it win take effect as of the date the request was
signed. Any such transfer terminates the interest of any
existing Contract Holder. It does not change the Beneficiary,
nor transfer the Beneficiary's interest. A transfer will not
affect any payments We may make or actions We may take before
such transfer has been recorded at our Home Office.
Delete Section 4.01, Beneficiary, and replace it with the following:
4.01 Beneficiary - The Contract Holder may name a Beneficiary and a
contingent Beneficiary. At the death of the Contract Holder
prior to the Annuity Date, the Beneficiary(ies) named in our
records will receive a death benefit as stated in Section 10.
Upon the death of either joint Contract Holder prior to the
Annuity Date, the surviving joint Contract Holder, if any,
will be treated as the designated Beneficiary and any other
Beneficiary designation on record with Us at the time of death
is treated as a contingent Beneficiary. If the Contract
I-GP2END(8/95) 1
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Holder is a nonnatural person, the death benefit will be paid
to the Beneficiary at the death of the Annuitant.
Delete Section 4.03, Death of Beneficiary, and replace it with the following:
4.03 Death of Beneficiary - If all of the Beneficiaries and
contingent Beneficiaries die prior to the Contract Holder's
death, We pay the death benefit in one sum to the Contract
Holder's estate. If the Contract Holder is a nonnatural person,
and all of the Beneficiaries and contingent Beneficiaries die
prior to the Annuitant's death, We pay the death benefit in one
sum to the Contract Holder.
Delete Section 7.08, Transfers from the AG Account.
Delete Section 7.09, Withdrawals from the AG Account, and replace it with the
following:
7.09 Withdrawals and Transfers frown the AG Account - When the
Contract Holder requests a withdrawal or transfer from the AG
Account, if instructions are not provided by the Contract
Holder, amounts are withdrawn on a pro rata basis from the
guaranteed term(s) groups in which the Contract is currently
invested. Within a guaranteed term group, the amount will be
taken first from the oldest deposit period. Withdrawals or
transfers from an AG Account guaranteed term before the
maturity date are subject to a Market Value Adjustment, except
for:
(a) Transfers under the Dollar Cost Averaging program; and
(b) Withdrawals under the Systematic Withdrawal Option
described in Section 8.07.
Only a positive Market Value Adjustment will apply to amounts
transferred from the AG Account when the Contract Holder
elects Annuity Option 2 or 3.
Delete the first paragraph of Section 7.11, AG Account Market Value Adjustment
(Factor), and replace it with the following:
7.11 AG Account Market Value Adjustment (Factor) - The Market Value
Adjustment factor (MVA factor) reflects any change in interest
rates from the time assets are allocated to the AG Account to
the time they are transferred or withdrawn. Except as noted in
Sections 7.09, 10.02 and 12.01, an MVA factor is applied to
any amount withdrawn or transferred from the AG Account before
the end of a guaranteed term.
Delete Section 8.02, Transfers During the Accumulation Period, and replace it
with the following:
8.02 Transfers During the Accumulation Period - Before the Annuity
Date, the Contract Holder may transfer from any Fund or
guaranteed term of the AG Account to:
(a) Any other Fund; or
(b) Any guaranteed term of the AG Account available in the
current deposit period.
Transfer requests can be submitted as a percentage or as a
dollar amount. We may establish a minimum transfer amount.
Within a guaranteed term group, the amount
I-GP2END(8/95) 2
<PAGE>
transferred is withdrawn first from the oldest deposit period,
then from the next oldest, and so on until the amount
requested is satisfied.
The Contract Holder may make an unlimited number of transfers
during the Accumulation Period. The number of free transfers
allowed is shown on the Contract Schedule. Transfers in excess
of that number may be subject to the transfer charge shown on
the Contract Schedule. Transfers of a matured term value from
the AG Account on or within one calendar month after a
guaranteed term's maturity date do not count against the
annual transfer limit.
Amounts applied to guaranteed terms of the AG Account may not
be transferred to the Funds or to another guaranteed term
during the deposit period or for 90 days after the close of
the deposit period except for (1) matured term value(s) during
the calendar month following the guaranteed term's maturity
date and (2) transfers from the one year guaranteed term under
the Dollar Cost Averaging program.
Except as noted in Section 7.09, 10.02 and 12.01, transfers
from guaranteed terms of the AG Account before the maturity
date are subject to a Market Value Adjustment.
Add the following paragraph to the end of Section 8.07, System Withdrawal Option
(SWO):
Dollar Cost Averaging is not available to Contract Holders who
have elected the Systematic Withdrawal Option.
Delete Section 10.01, Death of the Contract Holder Prior to the Annuity Date,
and replace it with the following:
10.01 Death of the Contract Holder Prior to the Annuity Date - In
the event of the death of the Contract Holder or a joint
Contract Holder prior to the Annuity Date, a death benefit is
payable to the Beneficiary(ies) designated by the Contract
Holder. Upon the death of a joint Contract Holder, the
surviving joint Contract Holder, if any, will be treated as
the designated Beneficiary. Any other Beneficiary designation
on record with Us at the time of death will be treated as a
contingent Beneficiary. If the Contract Holder is a nonnatural
person, the death benefit will be payable to the
Beneficiary(ies) at the death of the Annuitant.
A Beneficiary may request We pay the death benefit under one
of the options described in Section 10.03. If the Beneficiary
is the spouse of the Contract Holder, or the spouse of the
Annuitant if the Contract Holder is a nonnatural person, he or
she may elect to continue the Contract in his or her own name
and exercise all the Contract Holder's rights under the
Contract.
Delete Section 10.02, Death Benefit Amount Prior to the Annuity Date, and
replace it with the following:
10.02 Death Benefit Amount Prior to the Annuity Date:
(a) Except as set forth below, the amount of the
guaranteed death benefit value is equal to the
greater of:
I-GP2END(8/95) 3
<PAGE>
(i) The Contract Value at the end of the
Valuation Period during which We receive at
our Home Office due proof of death and
election of the type of payment to be made;
or
(ii) The death benefit determined as of the
Valuation Period corresponding to the date
of death.
Until the first Effective Date anniversary,
the death benefit is equal to the Purchase
Payments made by the Contract Holder prior
to the Effective Date anniversary less any
withdrawals and any amounts applied to an
Annuity Option.
For each Contract year thereafter, the death
benefit during the Contract year equals the
death benefit at the beginning of the
Contract year plus Purchase Payments made
during the year less any withdrawals and any
amounts applied to an Annuity Option.
On each Effective Date anniversary, the
death benefit is determined as follows:
(A) The death benefit on the previous
Effective Date anniversary increased by
the death benefit factor shown on the
Contract Schedule; plus
(B) Purchase Payments made by the Contract
Holder during the Contract year
increased by the death benefit factor
shown on the Contract Schedule for the
portion of the year since the Purchase
Payment was made; less
(C) Any withdrawals or amounts applied to
an Annuity Option during the Contract
year increased by the death benefit
factor shown on the Contract Schedule
for the portion of the Contract year
since the withdrawal or election of
Annuity option; or
(iii) The Contract Value on the most recent
seventh year anniversary of the Effective
Date plus any Purchase Payments made after
such Effective Date anniversary less any
withdrawals and any amounts applied to an
Annuity Option.
Notwithstanding the foregoing, the death benefit
under (ii) or (iii) will not exceed the death benefit
maximum amount shown on the Contract Schedule.
The death benefit calculation described in (ii) and
(iii) above, applies until the Contract Holder
reaches the death benefit maximum age shown on the
Contract Schedule. If the Contract Holder is a
nonnatural person, death benefit provisions will be
based on the age of the Annuitant. Thereafter, the
death benefit is only adjusted for Purchase Payments,
withdrawals and amounts applied to Annuity Options.
If the Contract Holder reaches the death benefit
maximum age shown on the Contract Schedule prior to
the
I-GP2END(8/95) 4
<PAGE>
seventh anniversary of the Effective Date, the death
benefit will be the greater of (i) or (ii) above.
The excess, if any, of the guaranteed death benefit
value over the Contract Value is determined when we
receive at our Home Office due proof of death and
allocated to the Fund shown on the Contract Schedule.
The Contract Value plus any excess amount deposited
becomes the Contract Value.
(b) In the case of a Beneficiary of a surviving
joint Contract Holder who continued the
Contract in his or her own name, the death
benefit shall be equal to (a)(i) above less
any applicable deferred sales charge on any
Purchase Payment made after We have received
at our Home Office due proof of death of the
first joint Contract Holder.
When the Beneficiary withdraws or transfers all or
any portion of the death benefit in the AG Account
within six months after the date of death, the amount
withdrawn or transferred from the AG Account will be
the greater of:
(1) The aggregate Market Value
Adjustment amount (the amount
resulting from the application of
relevant Market Value Adjustment
factors); or
(2) The applicable portion of Contract
Value in the AG Account.
After the six-month period, when the Beneficiary
withdraws or transfers all or any portion of the
death benefit in the AG Account, the amount will be
equal to the aggregate Market Value Adjustment
amount. Only a positive market value adjustment will
apply, however, to amounts transferred from the AG
Account when the Beneficiary elects Annuity Option 2
or 3.
Delete the last two paragraphs in Section 10.03, Death Benefit Payment Methods
and replace them with the following:
Any portion of the death benefit not applied under Method 3 within one
year of the date of the Contract Holder's death, or the death of the
Annuitant if the Contract Holder is a nonnatural person, must be
distributed within five years of the date of death.
A spousal beneficiary may elect to continue the Contract in his or her
own name, receive a lump sum payment of the death benefit, or use all
or any portion of the death benefit to purchase Annuity payments under
an Annuity Option.
Delete Section 10.05, Death of the Annuitant, and replace it with the following:
10.05 Death of the Annuitant - If the Annuitant, who is not a
Contract Holder, dies on or before the Annuity Date, a new
Annuitant may be named. If no Annuitant is named, the Contract
Holder will be the Annuitant. If the Contract Holder is a
nonnatural person, the death benefit will be paid at the death
of the Annuitant and no new Annuitant may be named. If the
Annuitant dies after the Annuity Date, the death benefit, if
any, will be payable to the Beneficiary as specified in the
Annuity Option elected. We will require proof of the
I-GP2END(8/95) 5
<PAGE>
Annuitant's death. Death benefits will be paid at least as
rapidly as under the method of distribution in effect at the
Annuitant's death.
Delete the second paragraph in Section 12.01, Designation of Annuitant, and
replace it with the following:
The Contract Holder elects an Annuity Option by telling Us to use
all or any portion of the Contract Value (minus any applicable
premium taxes if not previously deducted) to purchase Annuity
payments under an Annuity Option. If the Contract Holder elects
Annuity Option 1, the amount applied to purchase Annuity payments
will be equal to the Adjusted Contract Value. If the Contract
Holder elects Annuity Option 2 or 3, the amount applied to purchase
Annuity payments will be the greater of:
(1) The Adjusted Contract Value; or
(2) The Contract Value.
Endorsed and made part of this Contract on the Effective Date of the Contract.
/s/ Dan Kearney
President
Aetna Insurance Company of America
I-GP2END(8/95) 6
Exhibit 99-B.4.27
Aetna Insurance Company of America
Endorsement
The Contract is endorsed as follows.
Add the following to Section 1., Definitions.
Dollar Cost Averaging - A program that permits the Certificate Holder to
systematically transfer amounts from any of the Funds and the one-year
guaranteed term of the AG Account to any of the Funds by completing the
appropriate section of the enrollment form or a Dollar Cost Averaging
election form.
Delete Section 1.12, Certificate Holder, and replace it with the following:
1.12 Certificate Holder - A person who has established a Certificate
Holder's Account under a group Contract. We reserve the right to
limit ownership to natural persons. If more than one Certificate
Holder owns an Account, each Certificate Holder shall be a joint
Certificate Holder. Any joint Certificate Holder must be the
spouse of the other joint Certificate Holder. Joint Certificate
Holders have joint ownership rights and both must authorize any
exercising of those ownership rights unless otherwise allowed by
Us. If the Certificate Holder's Account is owned by a nonnatural
person, the death benefit will be paid at the death of the
Annuitant and a new Annuitant may not be named.
Delete Section 1.22, Market Value Adjustment, and replace it with the following:
1.22 Market Value Adjustment - An adjustment that may apply to a
withdrawal or transfer from the AG Account before the end of a
guaranteed term as described in Section 7.11.
Delete the third paragraph of Section 3.03, Transfer of Ownership and replace it
with the following:
A Certificate Holder may transfer all of his or her rights under
the Contract. We reserve the right not to accept an assignment or
transfer to a nonnatural person. A written request, dated and
signed by the Certificate Holder and any joint Certificate Holder,
must be filed at our Home Office. After the transfer is recorded,
it will take effect as of the date the request was signed. Any
such transfer terminates the interest of any existing Certificate
Holder. It does not change the Beneficiary, nor transfer the
Beneficiary's interest. A transfer will not affect any payments We
may make or actions We may take before such transfer has been
recorded at our Home Office.
GP2END(8/95) 1
<PAGE>
Delete Section 4.01, Beneficiary, and replace it with the following:
4.01 Beneficiary - The Certificate Holder may name a Beneficiary
and a contingent Beneficiary. At the death of the Certificate
Holder prior to the Annuity Date, the Beneficiary(ies) named
in our records will receive a death benefit as stated in
Section 10. Upon the death of either joint Certificate Holder
prior to the Annuity Date, the surviving joint Certificate
Holder, if any, will be treated as the designated Beneficiary
and any other Beneficiary designation on record with Us at the
time of death is treated as a contingent Beneficiary. If the
Certificate Holder is a nonnatural person, the death benefit
will be paid to the Beneficiary at the death of the Annuitant.
Delete Section 4.03, Death of Beneficiary, and replace it with the following:
4.03 Death of Beneficiary - If all of the Beneficiaries and
contingent Beneficiaries die prior to the Certificate Holder's
death, We pay the death benefit in one sum to the Certificate
Holder's estate. If the Certificate Holder is a nonnatural
person, and all of the Beneficiaries and contingent
Beneficiaries die prior to the Annuitant's death, We pay the
death benefit in one sum to the Certificate Holder.
Delete Section 7.08, Transfers from the AG Account.
Delete Section 7.09, Withdrawals from the AG Account, and replace it with the
following:
7.09 Withdrawals and Transfers from the AG Account - When the
Certificate Holder requests a withdrawal or transfer from the
AG Account, if instructions are not provided by the
Certificate Holder, amounts are withdrawn on a pro rata basis
from the guaranteed term(s) groups in which the Certificate
Holder's Account is currently invested. Within a guaranteed
term group, the amount will be taken first from the oldest
deposit period. Withdrawals or transfers from an AG Account
guaranteed term before the maturity date are subject to a
Market Value Adjustment, except for:
(a) Transfers under the Dollar Cost Averaging program; and
(b) Withdrawals under the Systematic Withdrawal Option
described in Section 8.07.
Only a positive Market Value Adjustment will apply to amounts
transferred from the AG Account when the Certificate Holder
elects Annuity Option 2 or 3.
Delete the first paragraph of Section 7.11, AG Account Market Value Adjustment
(Factor), and replace it with the following:
GP2END(8/95) 2
<PAGE>
7.11 AG Account Market Value Adjustment (Factor) - The Market Value
Adjustment factor (MVA factor) reflects any change in interest
rates from the time assets are allocated to the AG Account to
the time they are transferred or withdrawn. Except as noted in
Sections 7.09, 10.02 and 12.01, an MVA factor is applied to
any amount withdrawn or transferred from the AG Account before
the end of a guaranteed term.
Delete Section 8.02, Transfers During the Accumulation Period, and replace it
with the following:
8.02 Transfers During the Accumulation Period - Before the Annuity
Date, the Certificate Holder may transfer from any Fund or
guaranteed term of the AG Account to:
(a) Any other Fund; or
(b) Any guaranteed term of the AG Account available in the
current deposit period.
Transfer requests can be submitted as a percentage or as a
dollar amount. We may establish a minimum transfer amount.
Within a guaranteed term group, the amount transferred is
withdrawn first from the oldest deposit period, then from the
next oldest, and so on until the amount requested is
satisfied.
The Certificate Holder may make an unlimited number of
transfers during the Accumulation Period. The number of free
transfers allowed is shown on the Contract Schedule. Transfers
in excess of that number may be subject to the transfer charge
shown on the Contract Schedule. Transfers of a matured term
value from the AG Account on or within one calendar month
after a guaranteed term's maturity date do not count against
the annual transfer limit.
Amounts applied to guaranteed terms of the AG Account may not
be transferred to the Funds or to another guaranteed term
during the deposit period or for 90 days after the close of
the deposit period except for (1) matured term value(s) during
the calendar month following the guaranteed term's maturity
date and (2) transfers from the one year guaranteed term under
the Dollar Cost Averaging program.
Except as noted in Section 7.09, 10.02 and 12.01, transfers
from guaranteed terms of the AG Account before the maturity
date are subject to a Market Value Adjustment.
Add the following paragraph to the end of Section 8.07, System Withdrawal Option
(SWO):
Dollar Cost Averaging is not available to Certificate Holders
who have elected the Systematic Withdrawal Option.
GP2END(8/95) 3
<PAGE>
Delete Section 10.01, Death of the Certificate Holder Prior to the Annuity Date,
and replace it with the following:
10.01 Death of the Certificate Holder Prior to the Annuity Date - In
the event of the death of the Certificate Holder or a joint
Certificate Holder prior to the Annuity Date, a death benefit
is payable to the Beneficiary(ies) designated by the
Certificate Holder. Upon the death of a joint Certificate
Holder, the surviving joint Certificate Holder, if any, will
be treated as the designated Beneficiary. Any other
Beneficiary designation on record with Us at the time of death
will be treated as a contingent Beneficiary. If the
Certificate Holder is a nonnatural person, the death benefit
will be payable to the Beneficiary(ies) at the death of the
Annuitant.
A Beneficiary may request We pay the death benefit under one
of the options described in Section 10.03. If the Beneficiary
is the spouse of the Certificate Holder, or the spouse of the
Annuitant if the Certificate Holder is a nonnatural person, he
or she may elect to continue the Certificate Holder's Account
in his or her own name and exercise all the Certificate
Holder's rights under the Contract.
Delete Section 10.02, Death Benefit Amount Prior to the Annuity Date, and
replace it with the following:
10.02 Death Benefit Amount Prior to the Annuity Date -
(a) Except as set forth below, the amount of the guaranteed death
benefit value is equal to the greater of:
(i) the Certificate Holder's Account Value at the end of the
Valuation Period during which We receive at our Home
Office due proof of death and election of the type of
payment to be made; or
(ii) the death benefit determined as of the Valuation Period
corresponding to the date of death.
Until the first Effective Daft anniversary, the death
benefit is equal to the Purchase Payments made by the
Certificate Holder prior to the Effective Date anniversary
less any withdrawals and any amounts applied to an Annuity
Option.
For each Certificate year thereafter, the death benefit
during the Certificate year equals the death benefit at
the beginning of the Certificate year plus Purchase
Payments made during the year less any withdrawals and any
amounts applied to an Annuity Option.
GP2END(8/95) 4
<PAGE>
On each Effective Date anniversary, the death benefit is
determined as follows:
(A) The death benefit on the previous Effective
Date anniversary increased by the death benefit
factor shown on the Contract Schedule; plus
(B) Purchase Payments made by the Certificate
Holder during the Certificate year increased by
the death benefit factor shown on the Contract
Schedule for the portion of the year since the
Purchase Payment was made; less
(C) Any withdrawals or amounts applied to an
Annuity Option during the Certificate year
increased by the death benefit factor shown on
the Contract Schedule for the portion of the
Certificate year since the withdrawal or
election of Annuity option; or
(iii) The Certificate Holder's Account Value on the most recent
seventh year anniversary of the Effective Date plus any
Purchase Payments made after such Effective Date
anniversary less any withdrawals and any amounts applied
to an Annuity Option.
Notwithstanding the foregoing, the death benefit under (ii) or
(iii) will not exceed the death benefit maximum amount shown on
the Contract Schedule.
The death benefit calculation described in (ii) and (iii) above,
applies until the Certificate Holder reaches the death benefit
maximum age shown on the Contract Schedule. If the Certificate
Holder is a nonnatural person, death benefit provisions will be
based on the age of the Annuitant. Thereafter, the death benefit
is only adjusted for Purchase Payments, withdrawals and amounts
applied to Annuity Options. If the Certificate Holder reaches
the death benefit maximum age shown on the Contract Schedule
prior to the seventh anniversary of the Effective Date, the
death benefit will be the greater of (i) or (ii) above.
The excess, if any, of the guaranteed death benefit value over
the Certificate Holder's Account Value is determined when we
receive at our Home Office due proof of date and allocated to
the Fund shown on the Contract Schedule. The Certificate
Holder's Account Value plus any excess amount deposited becomes
the Certificate Holder's Account Value.
(b) In the case of a Beneficiary of a surviving joint Certificate
Holder who continued the Certificate Holder's Account in his or
her own name, the date benefit shall be equal to (a)(i) above
less any applicable deferred sales charge on any Purchase
Payment made after We have received at our Home Office due proof
of death of the first joint Certificate Holder.
GP2END(8/95) 5
<PAGE>
When the Beneficiary withdraws or transfers all or any portion of the
death benefit in the AG Account within six months after the date of
death, the amount withdrawn or transferred from the AG Account will be
the greater of:
(1) The aggregate Market Value Adjustment amount (the amount
resulting from the application of relevant Market Value
Adjustment factors); or
(2) The applicable portion of Certificate Holder's Account Value
in the AG Account.
After the six-month period, when the Beneficiary withdraws or transfers all
or any portion of the death benefit in the AG Account, the amount will be
equal to the aggregate Market Value Adjustment amount. Only a positive
market value adjustment will apply, however, to amounts transferred from
the AG Account when the Beneficiary elects Annuity Option 2 or 3.
Delete the last two paragraphs in Section 10.03, Death Benefit Payment Methods
and replace them with the following:
Any portion of the death benefit not applied under Method 3 within one year
of the date of the Certificate Holder's death, or the death of the
Annuitant if the Certificate Holder is a nonnatural person, must be
distributed within five years of the date of death.
A spousal beneficiary may elect to continue the Certificate Holder's
Account in his or her own name, receive a lump sum payment of the death
benefit, or use all or any portion of the death benefit to purchase Annuity
payments under an Annuity Option.
Delete Section 10.05, Death of the Annuitant, and replace it with the following:
10.05 Death of the Annuitant - If the Annuitant, who is not a
Certificate Holder, dies on or before the Annuity Date, a new
Annuitant may be named. If no Annuitant is named, the Certificate
Holder will be the Annuitant. If the Certificate Holder is a
nonnatural person, the death benefit will be paid at the death of
the Annuitant and no new Annuitant may be named. If the Annuitant
dies after the Annuity Date, the death benefit, if any, will be
payable to the Beneficiary as specified in the Annuity Option
elected. We will require proof of the Annuitant's death. Death
benefits will be paid at least as rapidly as under the method of
distribution in effect at the Annuitant's death.
Delete the second paragraph in Section 12.01, Designation of Annuitant, and
replace it with the following:
The Certificate Holder elects an Annuity Option by telling Us to
use all or any portion of the Certificate Holder's Account Value
(minus any applicable premium taxes if not previously deducted) to
purchase Annuity payments under an Annuity Option. If the
Certificate Holder elects Annuity Option 1, the amount applied to
purchase Annuity payments will be equal to the Adjusted Certificate
Holder's Account Value. If the
GP2END(8/95) 6
<PAGE>
Certificate Holder elects Annuity Option 2 or 3, the amount
applied to purchase Annuity payments will be the greater of:
GP2END(8/95) 7
<PAGE>
(1) The Adjusted Certificate Holder's Account Value; or
(2) The Certificate Holder's Account Value.
Endorsed and made part of this Contract on the Effective Date of the Contract.
/s/ Dan Kearney
President
Aetna Insurance Company of America
GP2END(8/95) 8
Exhibit 99-B.4.28
Aetna Insurance Company of America
Endorsement
The Certificate is endorsed as follows.
Add the following to Section 1., Definitions.
Dollar Cost Averaging - A program that permits the Certificate Holder
to systematically transfer amounts from any of the Funds and the
one-year guaranteed term of the AG Account to any of the Funds by
completing the appropriate section of the enrollment form or a Dollar
Cost Averaging election form.
Delete Section 1.12, Certificate Holder, and replace it with the following:
1.12 Certificate Holder - A person who has established a
Certificate Holder's Account under a group Contract. We
reserve the right to limit ownership to natural persons. If
more than one Certificate Holder owns an Account, each
Certificate Holder shall be a joint Certificate Holder. Any
joint Certificate Holder must be the spouse of the other joint
Certificate Holder. Joint Certificate Holders have joint
ownership rights and both must authorize any exercising of
those ownership rights unless otherwise allowed by Us. If the
Certificate Holder's Account is owned by a nonnatural person,
the death benefit will be paid at the death of the Annuitant
and a new Annuitant may not be named.
Delete Section 1.22, Market Value Adjustment, and replace it with the following:
1.22 Market Value Adjustment - An adjustment that may apply to a
withdrawal or transfer from the AG Account before the end of a
guaranteed term as described in Section 7.11.
Delete the third paragraph of Section 3.03, Transfer of Ownership and replace it
with the following:
A Certificate Holder may transfer all of his or her rights
under the Contract. We reserve the right not to accept an
assignment or transfer to a nonnatural person. A written
request, dated and signed by the Certificate Holder and any
joint Certificate Holder, must be filed at our Home Office.
After the transfer is recorded, it will take effect as of the
date the request was signed. Any such transfer terminates the
interest of any existing Certificate Holder. It does not
change the Beneficiary, nor transfer the Beneficiary's
interest. A transfer will not affect any payments We may make
or actions We may take before such transfer has been recorded
at our Home Office.
Delete Section 4.01, Beneficiary, and replace it with the following:
4.01 Beneficiary - The Certificate Holder may name a Beneficiary
and a contingent Beneficiary. At the death of the Certificate
Holder prior to the Annuity Date, the Beneficiary(ies) named
GP2CERTEND(8/95)
<PAGE>
in our records will receive a death benefit as stated in
Section 10. Upon the death of either joint Certificate Holder
prior to the Annuity Date, the surviving joint Certificate
Holder, if any, will be treated as the designated Beneficiary
and any other Beneficiary designation on record with Us at the
time of death is treated as a contingent Beneficiary. If the
Certificate Holder is a nonnatural person, the death benefit
will be paid to the Beneficiary at the death of the Annuitant.
Delete Section 4.03, Death of Beneficiary, and replace it with the following:
4.03 Death of Beneficiary - If all of the Beneficiaries and
contingent Beneficiaries die prior to the Certificate Holder's
death, We pay the death benefit in one sum to the Certificate
Holder's estate. If the Certificate Holder is a nonnatural
person, and all of the Beneficiaries and contingent
Beneficiaries die prior to the Annuitant's death, We pay the
death benefit in one sum to the Certificate Holder.
Delete Section 7.08,Transfers from the AG Account.
Delete Section 7.09, Withdrawals from the AG Account, and replace it with the
following:
7.09 Withdrawals and Transfers from the AG Account - When the
Certificate Holder requests a withdrawal or transfer from the
AG Account, if instructions are not provided by the
Certificate Holder, amounts are withdrawn on a pro rata basis
from the guaranteed term(s) groups in which the Certificate
Holder's Account is currently invested. Within a guaranteed
term group, the amount will be taken first from the oldest
deposit period. Withdrawals or transfers from an AG Account
guaranteed term before the maturity date are subject to a
Market Value Adjustment, except for:
(a) Transfers under the Dollar Cost Averaging program; and
(b) Withdrawals under the Systematic Withdrawal Option
described in Section 8.07.
Only a positive Market Value Adjustment will apply to amounts
transferred from the AG Account when the Certificate Holder
elects Annuity Option 2 or 3.
Delete the first paragraph of Section 7.11, AG Account Market Value Adjustment
(Factor), and replace it with the following:
7.11 AG Account Market Value Adjustment (Factor) - The Market Value
Adjustment factor (MVA factor) reflects any change in interest
rates from the time assets are allocated to the AG Account to
the time they are transferred or withdrawn. Except as noted in
Sections 7.09, 10.02 and 12.01, an MVA factor is applied to
any amount withdrawn or transferred from the AG Account before
the end of a guaranteed term.
Delete Section 8.02, Transfers During the Accumulation Period, and replace it
with the following:
8.02 Transfers During the Accumulation Period - Before the Annuity
Date, the Certificate Holder may transfer from any Fund or
guaranteed term of the AG Account to:
(a) Any other Fund; or
(b) Any guaranteed term of the AG Account available in the
current deposit period.
GP2CERTEND(8/95) 2
<PAGE>
Transfer requests can be submitted as a percentage or as a
dollar amount. We may establish a minimum transfer amount.
Within a guaranteed term group, the amount transferred is
withdrawn first from the oldest deposit period, then from the
next oldest, and so on until the amount requested is
satisfied.
The Certificate Holder may make an unlimited number of
transfers during the Accumulation Period. The number of free
transfers allowed is shown on the Contract Schedule. Transfers
in excess of that number may be subject to the transfer charge
shows on the Contract Schedule. Transfers of a matured term
value from the AG Account on or within one calendar month
after a guaranteed term's maturity date do not count against
the annual transfer limit.
Amounts applied to guaranteed terms of the AG Account may not
be transferred to the Funds or to another guaranteed term
during the deposit period or for 90 days after the close of
the deposit period except for (1) matured term value(s) during
the calendar month following the guaranteed term's maturity
date and (2) transfers from the one year guaranteed term under
the Dollar Cost Averaging program.
Except as noted in Section 7.09, 10.02 and 12.01, transfers
from guaranteed terms of the AG Account before the maturity
date are subject to a Market Value Adjustment.
Add the following paragraph to the end of Section 8.07, System Withdrawal Option
(SWO):
Dollar Cost Averaging is not available to Certificate Holders
who have elected the Systematic Withdrawal Option.
Delete Section 10.01, Death of the Certificate Holder Prior to the Annuity Date,
and replace it with the following:
10.01 Death of the Certificate Holder Prior to the Annuity Date - In
the event of the death of the Certificate Holder or a joint
Certificate Holder prior to the Annuity Date, a death benefit
is payable to the Beneficiary(ies) designated by the
Certificate Holder. Upon the death of a joint Certificate
Holder, the surviving joint Certificate Holder, if any, will
be treated as the designated Beneficiary. Any other
Beneficiary designation on record with Us at the time of death
will be treated as a contingent Beneficiary. If the
Certificate Holder is a nonnatural person, the death benefit
will be payable to the Beneficiary(ies) at the death of the
Annuitant.
A Beneficiary may request We pay the death benefit under one
of the options described in Section 10.03. If the Beneficiary
is the spouse of the Certificate Holder, or the spouse of the
Annuitant if the Certificate Holder is a nonnatural person, he
or she may elect to continue the Certificate Holder's Account
in his or her own name and exercise all the Certificate
Holder's rights under the Contract.
GP2CERTEND(8/95) 3
<PAGE>
Delete Section 10.02, Death Benefit Amount Prior to the Annuity Date, and
replace it with the following:
10.02 Death Benefit Amount Prior to the Annuity Date -
(a) Except as set forth below, the amount of the guaranteed death
benefit value is equal to the greater of:
(i) the Certificate Holder's Account Value at the end of
the Valuation Period during which We receive at our
Home Office due proof of death and election of the type
of payment to be made; or
(ii) the death benefit determined as of the Valuation Period
corresponding to the date of death.
Until the first Effective Date anniversary, the death
benefit is equal to the Purchase Payments made by the
Certificate Holder prior to the Effective Date
anniversary less any withdrawals and any amounts
applied to an Annuity Option.
For each Certificate year thereafter, the death benefit
during the Certificate year equals the death benefit at
the beginning of the Certificate year plus Purchase
Payments made during the year less any withdrawals and
any amounts applied to an Annuity Option.
On each Effective Date anniversary, the death benefit
is determined as follows:
(A) The death benefit on the previous Effective
Date anniversary increased by the death
benefit factor shown on the Contract
Schedule; plus
(B) Purchase Payments made by the Certificate
Holder during the Certificate year increased
by the death benefit factor shown on the
Contract Schedule for the portion of the
year since the Purchase Payment was made;
less
(C) Any withdrawals or amounts applied to an
Annuity Option during the Certificate year
increased by the death benefit factor shown
on the Contract Schedule for the portion of
the Certificate year since the withdrawal or
election of Annuity option; or
(iii) The Certificate Holder's Account Value on the most
recent seventh year anniversary of the Effective Date
plus any Purchase Payments made after such Effective
Date anniversary less any withdrawals and any amounts
applied to an Annuity Option.
Notwithstanding the foregoing, the death benefit under (ii) or
(iii) will not exceed the death benefit maximum amount shown
on the Contract Schedule.
The death benefit calculation described in (ii) and (iii)
above, applies until the Certificate Holder reaches the death
benefit maximum age shown on the Contract Schedule. If the
Certificate Holder is a nonnatural person, death benefit
provisions will be based on the age of the Annuitant.
Thereafter, the death benefit is only adjusted for Purchase
Payments, withdrawals and amounts applied to Annuity Options.
If the Certificate Holder reaches the death benefit maximum
age shown on the Contract Schedule prior to the seventh
anniversary of the Effective Date, the death benefit will be
the greater of (i) or (ii) above.
GP2CERTEND(8/95) 4
<PAGE>
The excess, if any, of the guaranteed death benefit value over
the Certificate Holder's Account Value is determined when we
receive at our Home Office due proof of death and allocated to
the Fund shown on the Contract Schedule. The Certificate
Holder's Account Value plus any excess amount deposited
becomes the Certificate Holder's Account Value.
(b) In the case of a Beneficiary of a surviving joint Certificate
Holder who continued the Certificate Holder's Account in his
or her own name, the death benefit shall be equal to (a)(i)
above less any applicable deferred sales charge on any
Purchase Payment made after We have received at our Home
Office due proof of death of the first joint Certificate
Holder.
When the Beneficiary withdraws or transfers all or any portion of the
death benefit in the AG Account within six months after the date of
death, the amount withdrawn or transferred from the AG Account will be
the greater of.
(1) The aggregate Market Value Adjustment amount (the
amount resulting from the application of relevant
Market Value Adjustment factors); or
(2) The applicable portion of Certificate Holder's Account
Value in the AG Account.
After the six-month period, when the Beneficiary withdraws or transfers
all or any portion of the death benefit in the AG Account, the amount
will be equal to the aggregate Market Value Adjustment amount. Only a
positive market value adjustment will apply, however, to amounts
transferred from the AG Account when the Beneficiary elects Annuity
Option 2 or 3.
Delete the last two paragraphs in Section 10.03, Death Benefit Payment Methods
and replace them with the following:
Any portion of the death benefit not applied under Method 3 within one
year of the date of the Certificate Holder's death, or the death of the
Annuitant if the Certificate Holder is a nonnatural person, must be
distributed within five years of the date of death.
A spousal beneficiary may elect to continue the Certificate Holder's
Account in his or her own name, receive a lump sum payment of the death
benefit, or use all or any portion of the death benefit to purchase
Annuity payments under an Annuity Option.
Delete Section 10.05, Death of the Annuitant, and replace it with the following:
10.05 Death of the Annuitant - If the Annuitant, who is not a
Certificate Holder, dies on or before the Annuity Date, a new
Annuitant may be named. If no Annuitant is named, the
Certificate Holder will be the Annuitant. If the Certificate
Holder is a nonnatural person, the death benefit will be paid
at the death of the Annuitant and no new Annuitant may be
named. If the Annuitant dies after the Annuity Date, the death
benefit, if any, will be payable to the Beneficiary as
specified in the Annuity Option elected. We will require proof
of the Annuitant's death. Death benefits will be paid at least
as rapidly as under the method of distribution in effect at
the Annuitant's death.
GP2CERTEND(8/95) 5
<PAGE>
Delete the second paragraph in Section 12.01, Designation of Annuitant, and
replace it with the following:
The Certificate Holder elects an Annuity Option by telling Us to
use all or any portion of the Certificate Holder's Account Value
(minus any applicable premium taxes if not previously deducted) to
purchase Annuity payments under an Annuity Option. If the
Certificate Holder elects Annuity Option 1, the amount applied to
purchase Annuity payments will be equal to the Adjusted Certificate
Holder's Account Value. If the Certificate Holder elects Annuity
Option 2 or 3, the amount applied to purchase Annuity payments will
be the greater of:
(1) The Adjusted Certificate Holder's Account Value; or
(2) The Certificate Holder's Account Value.
Endorsed and made part of this Certificate on the Effective Date of the
Certificate.
/s/ Dan Kearney
President
Aetna Insurance Company of America
GP2CERTEND(8/95) 6
[Aetna Letterhead]
{Aetna Logo]
151 Farmington Avenue
Hartford, CT 06156
Julie E. Rockmore
Counsel
Law Division, RE4A
Investments & Financial Services
(860) 273-4686
Fax: (860) 273-8340
April 17, 1998
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Aetna Insurance Company of America and its Variable
Annuity Account I
Post-Effective Amendment No. 9 to Registration Statement on
Form N-4
Prospectus Title: Aetna Insurance Company of America Growth Plus
Group and Individual Deferred Variable Annuity Contracts
File Nos.: 33-80750 and 811-8582
Dear Sir or Madam:
The undersigned serves as counsel to Aetna Insurance Company of America, a
Connecticut life insurance company (the "Company"). It is my understanding that
the Company, as depositor, has registered an indefinite amount of securities
(the "Securities") under the Securities Act of 1933 (the "Securities Act") as
provided in Rule 24f-2 under the Investment Company Act of 1940 (the "Investment
Company Act").
In connection with this opinion, I have reviewed the N-4 Registration Statement,
as amended to the date hereof, and this Post-Effective Amendment No. 9. I have
also examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, trust records and other instruments I have
deemed necessary or appropriate for the purpose of rendering this opinion. For
purposes of such examination, I have assumed the genuineness of all signatures
on original documents and the conformity to the original of all copies.
I am admitted to practice law in Connecticut, and do not purport to be an expert
on the laws of any other state. My opinion herein as to any other law is based
upon a limited inquiry thereof which I have deemed appropriate under the
circumstances.
<PAGE>
Based upon the foregoing, and, assuming the Securities are sold in accordance
with the provisions of the prospectus, I am of the opinion that the Securities
being registered will be legally issued and will represent binding obligations
of the Company.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Julie E. Rockmore
Julie E. Rockmore
Consent of Independent Auditors
The Board of Directors of Aetna Insurance Company of America and
Contractholders of Aetna Variable Annuity Account I:
We consent to the use of our reports dated March 25, 1998 and February 27, 1998
included in this Post-Effective Amendment No. 9 to Registration Statement (No.
33-80750) on Form N-4 and to the references to our firm under the headings
"Condensed Financial Information" in the prospectus and "Independent Auditors"
in the statement of additional information.
/s/KPMG Peat Marwick LLP
Hartford, Connecticut
April 17, 1998
ex13
EX-99.B.13
SCHEDULE FOR COMPUTATION OF TOTAL RETURN CALCULATIONS
TOTAL RETURN CALCUALTION (STANDARDIZED)
The standardized rate represents fund performance for the most recent 1-year,
5-year and 10-year periods. The "1-year rate" represents fund performance for
the period January 1, 1997 through December 31, 1997; the "5-year rate" is for
the period January 1, 1993 through December 31, 1997; the "10-year rate" is for
the period January 1, 1988 through December 31, 1997. "Since inception" figures
assume the redemption on December 31, 1997 of values attributable to a $1,000
payment made on the date contributions were first received in the fund under the
separate account.
The formula used in the computation of the total return calculation is as
follows:
Formula
P(1 + T) (n) = ERV
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of 1,
5, or 10 year periods (or a fractional
portion thereof) of a hypothetical $1,000
payment made at the beginning of the 1, 5,
or 10 year periods
The total returns reflect the deduction of all recurring charges during each
period (e.g., mortality and expense risk charges, maintenance fees,
administrative charges (if applicable) and deferred sales charges).
TOTAL RETURN CALCULATION (NON-STANDARDIZED)
The non-standardized rate represents fund performance for the most recent
1-year, 3-year, 5-year and 10-year periods. The "1-year rate" represents fund
performance for the period January 1, 1997 through December 31, 1997; the
"3-year rate" is for the period January 1, 1995 through December 31, 1997; the
"5-year rate" is for the period January 1, 1993 through December 31, 1997; and
the "10-year rate" is for the period January 1, 1988 through December 31, 1997.
The non-standardized figures will be calculated in a manner similar to the one
discussed above for the standardized figures, except that non-standardized
figures will not reflect the deduction of any applicable deferred sales charge
(which would decrease the level of performance shown if reflected in these
calculations), and the "since inception" figures assume the redemption on
December 31, 1997 of values attributable to a $1,000 payment made on the
inception dates of the funds.
For an illustration of the Computation of the Total Return Quotations, both
Standardized and Non-Standardized, see attached.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Maintenance One Year
Fund Name Fee As of Date As of AUV as of Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federated American Leaders Fund II 30 12/31/97 17.796478 12/31/96
- ------------------------------------------------------------------------------------------------------------
Federated Equity Income Fund II 30 12/31/97 12.305409 01/31/97
- ------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II 30 12/31/97 11.572356 12/31/96
- ------------------------------------------------------------------------------------------------------------
Federated Growth Strategies Fund II 30 12/31/97 15.777259 12/31/96
- ------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II 30 12/31/97 13.378532 12/31/96
- ------------------------------------------------------------------------------------------------------------
Federated International Equity Fund II 30 12/31/97 11.857639 12/31/96
- ------------------------------------------------------------------------------------------------------------
Federated Prime Money Fund II 30 12/31/97 10.87733 12/31/96
- ------------------------------------------------------------------------------------------------------------
Federated Utility Fund II 30 12/31/97 15.434458 12/31/96
- ------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
One Year One Year Five Year Five Year Five Year Ten Year Ten Year Ten Year
as of AUV w/ DSC as of Date as of AUV w/ DSC as of Date as of AUV w/ DSC
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
13.638736 22.63% 10/31/95 10/31/95
- --------------------------------------------------------------------------------------------------------------------
01/31/97 01/31/97
- --------------------------------------------------------------------------------------------------------------------
10.809372 0.61% 07/31/95 07/31/95
- --------------------------------------------------------------------------------------------------------------------
12.596299 17.72% 11/30/95 11/30/95
- --------------------------------------------------------------------------------------------------------------------
11.919773 5.48% 07/31/95 07/31/95
- --------------------------------------------------------------------------------------------------------------------
10.924363 2.01% 07/31/95 07/31/95
- --------------------------------------------------------------------------------------------------------------------
10.513173 (2.77%) 07/31/95 07/31/95
- --------------------------------------------------------------------------------------------------------------------
12.361127 17.35% 06/30/95 06/30/95
- --------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Separate
Inception Inception Inception Account One Year Three Year Five Year Ten Year
Date AUV w/ DSC Charge Free Out DSC DSC DSC DSC
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/95 10.791125 24.61% 140 0.15 6.00% 4.00% 2.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
01/31/97 10.558191 8.37% 140 0.15 6.00% 4.00% 2.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
07/31/95 10.032058 4.47% 140 0.15 6.00% 4.00% 2.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
11/30/95 10.288488 21.25% 140 0.15 6.00% 4.00% 2.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
07/31/95 10.052703 11.11% 140 0.15 6.00% 4.00% 2.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
07/31/95 10.020404 5.63% 140 0.15 6.00% 4.00% 2.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
07/31/95 10.025237 1.74% 140 0.15 6.00% 4.00% 2.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/95 9.978569 17.82% 140 0.15 6.00% 4.00% 2.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
- --------------
Inception
DSC
- --------------
<C>
5.00%
- --------------
7.00%
- --------------
5.00%
- --------------
5.00%
- --------------
5.00%
- --------------
5.00%
- --------------
5.00%
- --------------
5.00%
- --------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Maintenance One Year
Fund Name Fee As of Date As of AUV as of Date
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federated American Leaders Fund II 30 12/31/97 17.796478 12/31/96
- ----------------------------------------------------------------------------------------------------------------
Federated Equity Income Fund II 30 12/31/97 12.305409 01/02/97
- ----------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II 30 12/31/97 11.572356 12/31/96
- ----------------------------------------------------------------------------------------------------------------
Federated Growth Strategies Fund II 30 12/31/97 15.777259 12/31/96
- ----------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II 30 12/31/97 13.378532 12/31/96
- ----------------------------------------------------------------------------------------------------------------
Federated International Equity Fund II 30 12/31/97 11.857639 12/31/96
- ----------------------------------------------------------------------------------------------------------------
Federated Prime Money Fund II 30 12/31/97 10.87733 12/31/96
- ----------------------------------------------------------------------------------------------------------------
Federated Utility Fund II 30 12/31/97 15.434458 12/31/96
- ----------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
One Year One Year Three Year Three Year Three Year Five Year Five Year Five Year
as of AUV w/out DSC as of Date as of AUV w/out DSC as of Date as of AUV w/out DSC
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
13.638736 30.46% 12/30/94 8.629118 27.27% 02/10/94
- ----------------------------------------------------------------------------------------------------------------
01/02/97 01/02/97
- ----------------------------------------------------------------------------------------------------------------
10.809372 7.04% 12/30/94 9.80992 5.64% 03/28/94
- ----------------------------------------------------------------------------------------------------------------
12.596299 25.23% 10/02/95
- ----------------------------------------------------------------------------------------------------------------
11.919773 12.22% 12/30/94 8.909146 14.49% 03/01/94
- ----------------------------------------------------------------------------------------------------------------
10.924363 8.52% 05/07/95
- ----------------------------------------------------------------------------------------------------------------
10.513173 3.44% 12/30/94 9.814137 3.47% 11/17/94
- ----------------------------------------------------------------------------------------------------------------
12.361127 24.84% 12/30/94 9.176798 18.90% 02/10/94
- ----------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Separate
Ten Year Ten Year Ten Year Inception Inception Inception Account
as of Date as of AUV w/out DSC Date AUV w/out DSC Charge Free Out
- ------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
02/10/94 02/10/94 8.798073 19.84% 140 0.15
- ------------------------------------------------------------------------------------------------
01/02/97 01/02/97 10 23.03% 140 0.15
- ------------------------------------------------------------------------------------------------
03/28/94 03/28/94 9.662487 4.89% 140 0.15
- ------------------------------------------------------------------------------------------------
10/02/95 10/02/95 10.011456 22.42% 140 0.15
- ------------------------------------------------------------------------------------------------
03/01/94 03/01/94 9.352703 9.76% 140 0.15
- ------------------------------------------------------------------------------------------------
05/07/95 05/07/95 9.975852 6.71% 140 0.15
- ------------------------------------------------------------------------------------------------
11/17/94 11/17/94 9.781433 3.44% 140 0.15
- ------------------------------------------------------------------------------------------------
02/10/94 02/10/94 9.613932 12.93% 140 0.15
- ------------------------------------------------------------------------------------------------
</TABLE>
