<PAGE>
File No. 33-80738
Securities and Exchange Commission
Washington, D.C.
Form N-4
Registration Statement Under the Securities Act of 19
----
Pre-Effective Amendment No. / /
------
----
Post-Effective Amendment No. 2 / X /
------- ---
and/or
Registration Statement Under the Investment Company Act of 1940
Amendment No. 2
----
(check appropriate box or boxes)
Hartford Life Insurance Company
Separate Account Three
(Exact Name of Registrant)
Hartford Life Insurance Company
(Name of Depositor)
P.O. Box 2999
Hartford, CT 06104-2999
(Address of Depositor's Principal Offices)
Depositor's Telephone Number: (203) 843-8847
Rodney J. Vessels, Esquire
P.O. Box 2999
Hartford, CT 06104-2999
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
----
X on (May 1, 1995) pursuant to paragraph (b)(1)(v) of Rule 485
----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
----
on May 1, 1995 pursuant to paragraph (a)(1) of Rule 485
----
75 days after filing pursuant to paragraph (a)(2) of Rule 485
----
on ______ pursuant to paragraph (a)(2) of Rule 485
----
Calculation of Registration Fee Under Securities Act of 1933
<PAGE>
2
Calculation of Registration Fee Under Securities Act of 1933
- - --------------------------------------------------------------------------------
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities Being Offering Aggregate Registration
Being Registered Price Per Unit Offering Price Fee
Requested
- - --------------------------------------------------------------------------------
PAID
Hartford Life Insurance Company - Pursuant to Regulation 270.24f-2 under
Separate Account Three Units of the Investment Company Act of 1940,
Interest Registrant hereby elects to register an
indefinite number of units of interest in
this Separate Account.
- - --------------------------------------------------------------------------------
The Rule 24f-2 Notice for the Registrant's most recent fiscal year will be filed
on or about February 28, 1995.
<PAGE>
3
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(A)
N-4 Item No. Prospectus Heading
- - ------------------------------- ---------------------------
<S> <C>
1. Cover Page Cover Page
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Information Statement of Additional
Information
5. General Description of Registrant, The Contract;
Depositor, and Portfolio Companies The Separate Account;
The Fixed Account;
The Company;
The Portfolios; General
Matters
6. Deductions Charges Under the Contract
7. General Description of Operation of the Contract
Annuity Contracts Accumulation Period;
Death Benefit;
The Contract;
The Separate Account;
General Matters
8. Annuity Period Annuity/Payout Period
9. Death Benefit Death Benefit
10. Purchases and Contract Value Operation of the
Contract/Accumulation Period
11. Redemptions Operation of the
Contract/Accumulation Period
12. Taxes Federal Tax Considerations
13. Legal Proceedings General Matters - Legal
Proceedings
14. Table of Contents of the Statement Table of Contents to Statement
of Additional Information of Additional Information
15. Cover Page Part B; Statement of Additional
Information
16. Table of Contents Tables of Contents
<PAGE>
4
17. General Information and History Introduction
18. Services None
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments Annuity/Payout Period
23. Financial Statements Financial Statements
24. Financial Statements and Financial Statements and
Exhibits Exhibits
25. Directors and Officers of the Directors and Officers of the
Depositor Depositor
26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Depositor Common Control with the Depositor
or Registrant or Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
</TABLE>
<PAGE>
5
HARTFORD LIFE INSURANCE COMPANY--
SEPARATE ACCOUNT THREE
This Prospectus describes the Dean Witter Select Dimensions Plan, a tax deferred
variable annuity issued by Hartford Life Insurance Company ("HL"). Payments for
the Contract will be held in the Fixed Account and/or a series of Hartford Life
Insurance Company - Separate Account Three (the "Separate Account").
Allocations to and transfers to and from the Fixed Account are not permitted in
certain states.
There are currently twelve Sub-Accounts available under the Contract. The
underlying investment portfolios ("Portfolios") of the Dean Witter Select
Dimensions Investment Series for the Sub-Accounts are the Money Market
Portfolio, the North American Government Securities Portfolio, the Diversified
Income Portfolio, the Balanced Portfolio, the Utilities Portfolio, the Dividend
Growth Portfolio, the Value-Added Market Portfolio, the Core Equity Portfolio,
the American Value Portfolio, the Global Equity Portfolio, the Developing Growth
Portfolio, and the Emerging Markets Portfolio.
This Prospectus sets forth the information concerning the Separate Account and
the Fixed Account that investors should know before investing. This Prospectus
should be kept for future reference. Additional information about the Separate
Account and the Fixed Account has been filed with the Securities and Exchange
Commission and is available without charge upon request. To obtain the
Statement of Additional Information send a written request to Hartford Life
Insurance Company, Attn: Individual Annuity Operations, P.O. Box 5085,
Hartford, CT 06102-5085. The Table of Contents for the Statement of Additional
Information may be found on page ___ of this Prospectus. The Statement of
Additional Information is incorporated by reference into this Prospectus.
- - --------------------------------------------------------------------------------
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 IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE DEAN WITTER
SELECT DIMENSIONS INVESTMENT SERIES ("FUND") AND IS VALID ONLY WHEN ACCOMPANIED
BY A CURRENT PROSPECTUS FOR THE FUND
- - --------------------------------------------------------------------------------
Prospectus Dated: May 1, 1995
----------------------
Statement of Additional Information Dated: May 1, 1995
---------------
<PAGE>
6
TABLE OF CONTENTS
PAGE
GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE RELATED INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right to Cancel Period . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE SEPARATE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE FIXED ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATION OF THE CONTRACT/ACCUMULATION PERIOD. . . . . . . . . . . . . . . . .
Premium Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value of Accumulation Units. . . . . . . . . . . . . . . . . . . . . . . . .
Value of the Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . .
Value of the Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers Among Sub-Accounts . . . . . . . . . . . . . . . . . . . . . . . .
Transfers Between the Fixed Account and the Sub-Accounts . . . . . . . . . .
Redemption/Surrender of a Contract . . . . . . . . . . . . . . . . . . . . .
DEATH BENEFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
7
TABLE OF CONTENTS
PAGE
CHARGES UNDER THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent Deferred Sales Charges. . . . . . . . . . . . . . . . . . . . . .
During the First Seven Contract Years. . . . . . . . . . . . . . . . . . . .
After the Seventh Contract Year. . . . . . . . . . . . . . . . . . . . . . .
Mortality and Expense Risk Charge. . . . . . . . . . . . . . . . . . . . . .
Administration and Maintenance Fees. . . . . . . . . . . . . . . . . . . . .
Premium Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNUITY BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Annuity Unit and Valuation . . . . . . . . . . . . . . . . . . . . . . .
Determination of Payment Amount. . . . . . . . . . . . . . . . . . . . . . .
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . .
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of HL and the Separate Account. . . . . . . . . . . . . . . . . . .
Taxation of Annuities in General - Non-Tax Qualified Purchasers. . . . . . .
Federal Income Tax Withholding . . . . . . . . . . . . . . . . . . . . . . .
General Provisions Affecting Tax Qualified Plans . . . . . . . . . . . . . .
Aggregation of Two or More Annuity Contracts . . . . . . . . . . . . . . . .
GENERAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delay of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
8
TABLE OF CONTENTS
PAGE
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution of the Contracts. . . . . . . . . . . . . . . . . . . . . . . .
Other Contracts Offered. . . . . . . . . . . . . . . . . . . . . . . . . . .
Custodian of Separate Account Assets . . . . . . . . . . . . . . . . . . . .
Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . .
<PAGE>
9
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate values
before Annuity payments begin.
ANNUAL WITHDRAWAL AMOUNT: The amount which can be withdrawn in any Contract
year without surrender charges.
ANNUITANT: The person or participant upon whose life the Contract is issued.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for a designated period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
For group unallocated contracts, the date for each Participant is determined by
the Contract Owner in accordance with the terms of the Plan.
ANNUITY UNIT: An accounting unit of measure used to calculate the value of
Annuity payments.
BENEFICIARY: The person(s) who receive Contract Values in the event of the
Annuitant's or Contract Owner's death under certain conditions. Under a group
unallocated Contract, the person named within the Plan documents/enrollment
forms by each Participant entitled to receive benefits as per the terms of the
Contract in case of the death of the Participant.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTINGENT ANNUITANT: The person so designated by the Contract Owner, who upon
the Annuitant's death, prior to the Annuity Commencement Date, becomes the
Annuitant.
CONTRACT ANNIVERSARY: The anniversary of the Contract Date.
CONTRACT OWNER(S): The owner(s) of the Contract, trustee or other entity,
sometimes herein referred to as "you".
CONTRACT VALUE: The aggregate value of any Sub-Account Accumulation Units held
under the Contract plus the value of the Fixed Account.
CONTRACT YEAR: A period of 12 months commencing with the Contract Date or any
anniversary thereof.
DEATH BENEFIT: The amount payable upon the death of a Contract Owner,
Annuitant, or Participant, in the case of group contracts, before annuity
payments have started.
FIXED ACCOUNT: Part of the General Account of HL to which a Contract Owner may
allocate all or a portion of his Premium Payment or Contract Value.
<PAGE>
10
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
FUND: Dean Witter Select Dimensions Investment Series.
GENERAL ACCOUNT: The General Account of HL which consists of all assets of the
Hartford Life Insurance Company other than those allocated to the separate
accounts of the Hartford Life Insurance Company.
HL: Hartford Life Insurance Company.
HOME OFFICE OF THE COMPANY: Currently located at 200 Hopmeadow Street,
Simsbury, Connecticut. All correspondence concerning the Contract should be
sent to P.O. Box 5085, Hartford, CT 06102-5085,
Attn: Individual Annuity Operations.
MAXIMUM ANNIVERSARY VALUE: A value used in determining the death benefit. It
is based on a series of calculations of Contract Values on Contract
Anniversaries, premium payments and partial surrenders, as described on
page___.
MINIMUM DEATH BENEFIT: The minimum amount payable upon the death of the
Contract Owner/Annuitant or Participant in the case of group contracts, before
annuity payments have commenced.
PARTICIPANT: (For Group Unallocated Contracts Only). Any eligible employee of
an employer/Contract Owner participating in the Plan.
PLAN: A voluntary Plan of an Employer which qualifies for special tax treatment
under a section of the Internal Revenue Code.
PORTFOLIOS: Currently, the portfolios of Dean Witter Select Dimensions
Investment Series described on page____ of this Prospectus.
PREMIUM PAYMENT: A payment made to HL pursuant to the terms of the Contract.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments or
Contract Values.
SEPARATE ACCOUNT: The HL separate account entitled "Hartford Life Insurance
Company - Separate Account Three".
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
TERMINATION VALUE: The Contract Value upon termination of the Contract prior to
the Annuity Commencement Date, less any applicable Premium Taxes, the Annual
Maintenance Fee and any applicable contingent deferred sales charges.
<PAGE>
11
UNALLOCATED CONTRACTS: Contracts issued to employers or such other entities as
Contract Owners with no allocation to a specific Participant, as defined herein.
The Plans will be responsible for the individual allocations.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets of the Separate Account.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY
Contract Owner Transaction Expenses
(All Sub Accounts)
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium payments) . . . . . . . . . . . . . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0
Deferred Sales Load (as a percentage of amounts withdrawn. . . . . . . . . . . . . . . . . . . . . . . . . .
First Year (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Second Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Third Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fourth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fifth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Sixth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
Seventh Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
Eighth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Annual Contract Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30 (2)
Annual Expenses - Separate Account
(as a percentage of average account value)
Mortality and Expense Risk 1.250%
Administration Fees 0.150%
---------
Total 1.400%
<CAPTION>
Annual Fund Operating Expense
(as a percentage of net assets)
Total Fund
Management Other Operating
Fees Expenses Expenses
-------- -------- --------
<S> <C> <C> <C>
The Money Market Portfolio . . . . . . . . . . . . . . . . 0.323% 0.209% 0.532%
The North American Government Securities Portfolio . . . . 0.650% 0.302% 0.952%
The Diversified Income Portfolio . . . . . . . . . . . . . 0.391% 0.374% 0.765%
The Balanced Portfolio . . . . . . . . . . . . . . . . . . 0.750% 0.242% 0.992%
The Utilities Portfolio. . . . . . . . . . . . . . . . . . 0.640% 0.291% 0.931%
The Dividend Growth Portfolio. . . . . . . . . . . . . . . 0.625% 0.215% 0.840%
The Value-Added Market Portfolio . . . . . . . . . . . . . 0.500% 0.270% 0.770%
The Core Equity Portfolio. . . . . . . . . . . . . . . . . 0.850% 0.258% 1.108%
The American Value Portfolio . . . . . . . . . . . . . . . 0.625% 0.260% 0.885%
The Global Equity Portfolio. . . . . . . . . . . . . . . . 1.000% 0.292% 1.292%
The Developing Growth Portfolio. . . . . . . . . . . . . . 0.500% 0.266% 0.766%
The Emerging Markets Portfolio . . . . . . . . . . . . . . 1.250% 0.494% 1.744%
<FN>
(1) Length of time from premium payment.
(2) The annual contract fee is a single $30 charge on a Contract. It is deducted
proportionally from the investment options in use at the time of the charge. In
the Example, the annual contract fee is approximated as a 0.08% annual asset
charge based on the experience of the Contracts.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXAMPLE
If you surrender your contract at If you annuitize at the end of the
the end of the applicable time period: applicable time period:
You would pay the following expenses You would pay the following expenses
on a $1,000 investment, assuming a 5% on a $1,000 investment, assuming a -
annual return on assets: annual return on assets:
------ ------- ------- -------- ------ ------ ------- --------
Sub-Account 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>
The Money Market Portfolio . . . . . . . 81 114 149 236 20 63 108 235
The North American Government. . . . . . 85 127 171 279 24 76 130 278
The Diversified Income Portfolio . . . . 83 121 161 260 22 70 121 259
The Balanced Portfolio . . . . . . . . . 85 128 173 283 25 77 132 282
The Utilities Portfolio. . . . . . . . . 85 126 170 277 24 75 129 276
The Dividend Growth Portfolio. . . . . . 84 123 165 268 23 72 124 267
The Value-Added Market Portfolio . . . . 83 121 162 261 22 70 121 260
The Core Equity Portfolio. . . . . . . . 87 131 179 295 26 81 138 294
The American Value Portfolio . . . . . . 84 125 168 273 23 74 127 272
The Global Equity Portfolio. . . . . . . 88 137 188 313 28 86 147 312
The Developing Growth Portfolio. . . . . 83 121 161 260 22 70 121 259
The Emerging Markets Portfolio . . . . . 93 151 211 357 32 100 170 356
If you do not surrender your
contract:
You would pay the following expenses
on a $1,000 investment assuming a 5%
annual return on assets:
------ ------- ------- --------
Sub-Account 1 year 3 years 5 years 10 years
- - ----------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
The Money Market Portfolio . . . . . . . 21 64 109 236
The North American Government. . . . . . 25 77 131 279
The Diversified Income Portfolio . . . . 23 71 121 260
The Balanced Portfolio . . . . . . . . . 25 78 133 283
The Utilities Portfolio. . . . . . . . . 25 76 130 277
The Dividend Growth Portfolio. . . . . . 24 73 125 268
The Value-Added Market Portfolio . . . . 23 71 122 261
The Core Equity Portfolio. . . . . . . . 27 81 139 295
The American Value Portfolio . . . . . . 24 75 128 273
The Global Equity Portfolio. . . . . . . 28 87 148 313
The Developing Growth Portfolio. . . . . 23 71 121 260
The Emerging Markets Portfolio . . . . . 33 101 171 357
</TABLE>
The purpose of this table is to assist the contractowner in understanding
various costs and expenses that a contract owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and underlying
Funds. Premium taxes may also be applicable.
This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
<PAGE>
16
SUMMARY
WHAT IS THE CONTRACT AND HOW MAY I PURCHASE ONE?
The Contract offered is a tax deferred Variable Annuity Contract (see "Taxation
of Annuities in General," page ___). Generally, the Contract is purchased by
completing an application or an order to purchase a Contract and submitting it,
along with the initial Premium Payments, to HL for its approval. The minimum
initial Premium Payment is $1,000 with a minimum allocation to any Fund of $500.
Certain plans may make smaller initial and subsequent periodic premium payments.
Subsequent Premium Payments, if made, must be a minimum of $500. A Contract
Owner may, at any time within 10 days of delivery of a Contract sold hereunder,
return the Contract to HL at its Home Office and the value of the Contract
(without deduction for any charges normally assessed thereunder) will be
refunded. The Contract Owner bears the investment risk during the period prior
to the Company's receipt of request for cancellation, except for Contract Owners
in Georgia, North Carolina, South Carolina, Washington, West Virginia, Utah, and
other states where required by law who will be refunded the premiums (see "Right
to Cancel Period," page ___).
WHO MAY PURCHASE THE CONTRACT?
Any individual, group or trust may purchase the Contracts, including any trustee
or custodian for a retirement plan which qualifies for special Federal tax
treatment under the Internal Revenue Code ("Qualified Contracts"). These
Contracts are also available for IRA's. (See "Federal Tax Considerations"
commencing on page ___ and Appendix I commencing on page ___.)
WHAT TYPES OF INVESTMENTS ARE AVAILABLE UNDER THE CONTRACT?
The underlying investments for the Contract are shares of the Dean Witter Select
Dimensions Investment Series, an open-end diversified series investment company
with multiple portfolios ("Portfolio") as follows: the Money Market Portfolio,
the North American Government Securities Portfolio, the Diversified Income
Portfolio, the Balanced Portfolio, the Utilities Portfolio, the Dividend Growth
Portfolio, the Value-Added Market Portfolio, the Core Equity Portfolio, the
American Value Portfolio, the Global Equity Portfolio, the Developing Growth
Portfolio, and the Emerging Markets Porfolio and such other Portfolios as shall
be offered from time to time, and the Fixed Account, or a combination of the
Portfolios and the Fixed Account. (See "The Portfolios" commencing on page
and "The Fixed Account" commencing on page ___.)
WHAT ARE THE CHARGES UNDER THE CONTRACTS?
SALES EXPENSES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered. (See "Contingent Deferred Sales Charges"
commencing on page ___.)
The length of time from receipt of a Premium Payment to the time of
surrender determines the contingent deferred sales charge. For this
purpose, Premium Payments will be deemed to be surrendered in the order in
which they are received and all surrenders will be first from Premium
Payments and then from other Contract values. The charge is a percentage of
the amount withdrawn (not to exceed the aggregate amount of the Premium
Payments made). The charge is as follows:
<PAGE>
17
Length of Time
<TABLE>
<CAPTION>
<S> <C>
CHARGE FROM PREMIUM PAYMENT
------ --------------------
(Number of Years)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
</TABLE>
No contingent deferred sales charge will be assessed in the event of death
of the Annuitant or Contract Owner, or upon the exercise of the withdrawal
privilege or if Contract Values are applied to an Annuity option provided
for under the Contract (except that a surrender out of Annuity Option Four
will be subject to a contingent deferred sales charge where applicable).
(See "Contingent Deferred Sales Charges" commencing on page ___.)
FREE WITHDRAWAL PRIVILEGE Withdrawals of up to 10% per Contract Year, on a
noncumulative basis, of the Premium Payments made to a Contract may be made
without the imposition of the contingent deferred sales charge during the
first seven contract years. (See "Contingent Deferred Sales Charges"
commencing on page ___). Certain plans or programs may have different
withdrawal privileges.
MORTALITY AND EXPENSE RISKS
For assuming the mortality and expense risks under the Contract, HL will
impose a 1.25% per annum charge against all Contract Values held in the
Sub-Accounts, (see "Mortality and Expense Risk Charge," page ___).
ANNUAL ADMINISTRATION AND MAINTENANCE FEE
The Contract provides for administration and Contract maintenance charges.
For administration, the charge is .15% per annum against all Contract Values
held in the Separate Account. For Contract maintenance, the charge is $30
annually. (See "Administration and Maintenance Fees," page ___). Contracts
with a Contract value of $50,000 or more at time of Contract Anniversary
will not be assessed this fee.
PREMIUM TAXES
A deduction will be made for Premium Taxes for Contracts sold in certain
states. (See "Premium Taxes," page ___.)
CHARGES BY THE PORTFOLIOS
The Portfolios are subject to certain fees, charges and expenses. (See the
Prospectus for the Fund attached hereto.)
<PAGE>
18
CAN I GET MY MONEY IF I NEED IT?
Subject to any applicable charges, the Contract may be surrendered, or portions
of the value of such Contract may be withdrawn, at any time prior to the Annuity
Commencement Date. However, if less than $500 remains in a Contract as a result
of a withdrawal, HL may terminate the Contract in its entirety. (See
"Redemption/Surrender of a Contract," page ___; see also "Federal Tax
Considerations," page ___, for a discussion of federal tax consequences,
including a 10% penalty tax that may apply upon surrender or withdrawal.)
DOES THE CONTRACT PAY ANY DEATH BENEFITS?
A Minimum Death Benefit is provided in the event of death of the Annuitant or
Contract Owner or Joint Contract Owner before Annuity payments have commenced.
(See "Death Benefit," page ___.)
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACT?
There are five available Annuity options under the Contract which are described
on page ___. The Annuity Commencement Date may not be deferred beyond the
Annuitant's 90th birthday except in certain states where the Annuity
Commencement Date may not be deferred beyond the Annuitant's 85th birthday. If
a Contract Owner does not elect otherwise, the Contract Value less applicable
premium taxes will be applied on the Annuity Commencement Date under the second
option to provide a life annuity with 120 monthly payments certain.
DOES THE CONTRACT OWNER HAVE ANY VOTING RIGHTS UNDER THE CONTRACT?
Contract Owners will have the right to vote on matters affecting an underlying
Fund to the extent that proxies are solicited by such Portfolio. If a Contract
Owner does not vote, HL shall vote such interests in the same proportion as
shares of the Portfolio for which instructions have been received by HL. (See
"Voting Rights," page ___.)
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
Each Portfolio may include total return in advertisements or other sales
material.
When a Sub-Account advertises its total return, it will usually be calculated
for one year, five years, and ten years or some other relevant periods if the
Sub-Account has not been in existence for at least ten years. Total return is
measured by comparing the value of an investment in the Sub-Account at the
beginning of the relevant period to the value of the investment at the end of
the period (assuming the deduction of any contingent deferred sales charge which
would be payable if the investment were redeemed at the end of the period).
The North American Government Securities Portfolio and Diversified Income
Portfolio may advertise yield in addition to total return. The yield will be
computed in the following manner: The net investment income per unit earned
during a recent one month period is divided by the unit value on the last day of
the period. This figure reflects the recurring charges at the Separate Account
level including the Contract Maintenance Fee.
<PAGE>
19
The Money Market Portfolio Sub-Account may advertise yield and effective yield.
The yield of a Sub-Account is based upon the income earned by the Sub-Account
over a seven-day period and then annualized, i.e. the income earned in the
period is assumed to be earned every seven days over a 52-week period and stated
as a percentage of the investment. Effective yield is calculated similarly but
when annualized, the income earned by the investment is assumed to be reinvested
in Sub-Account units and thus compounded in the course of a 52-week period.
Yield reflect the recurring charges at the Separate Account level including the
Contract Maintenance Fee.
Total return at the Separate Account level includes all Contract charges: sales
charges, mortality and expense risk charges, and the Contract Maintenance Fee,
and is therefore lower than total return at the Fund level, with no comparable
charges. Likewise, yield at the Separate Account level includes all recurring
charges (except sales charges), and is therefore lower than yield at the
Portfolio level, with no comparable charges.
INTRODUCTION
This Prospectus has been designed to provide you with the necessary information
to make a decision on purchasing a tax deferred Variable Annuity Contract
offered by HL and funded by the Fixed Account and/or a series of the Separate
Account. Please read the Glossary of Special Terms on pages ___ and ___ prior
to reading this Prospectus to familiarize yourself with the terms being used.
THE CONTRACT
The Dean Witter Select Dimensions Plan is a tax deferred Variable Annuity
Contract. Payments for the Contract will be held in the Fixed Account and/or a
series of the Separate Account. Initially there are no deductions from your
Premium Payments (except for Premium Taxes, if applicable) so your entire
Premium Payment is put to work in the investment Sub-Account(s) of your choice
or the Fixed Account. Each Sub-Account invests in a different underlying
Portfolio with its own distinct investment objectives. You pick the
Sub-Account(s) with the investment objectives that meet your needs. You may
select one or more Sub-Accounts and/or the Fixed Account and determine the
percentage of your Premium Payment that is put into a Sub-Account or the Fixed
Account. You may also transfer assets among the Sub-Accounts and the Fixed
Account so that your investment program meets your specific needs over time.
There are minimum requirements for investing in each Sub-Account and the Fixed
Account which are described later in this Prospectus. In addition, there are
certain other limitations on withdrawals and transfers of amounts in the
Sub-Accounts and the Fixed Account as described in this Prospectus. See
"Charges Under the Contract" for a description of the charges for redeeming a
Contract and other charges made under the Contract.
Generally, the Contract contains the five optional forms of Annuity described
later in this Prospectus. Options 2, 4 and 5 are available with respect to
Qualified Contracts only if the guaranteed payment period is less than the life
expectancy of the Annuitant at the time the option becomes effective. Such life
expectancy shall be computed on the basis of the mortality table prescribed by
the IRS, or if none is prescribed, the mortality table then in use by HL.
The Contract Owner may select an Annuity Commencement Date and an Annuity option
which may be on a fixed or variable basis, or a combination thereof. The
Annuity Commencement Date may not be deferred beyond the Annuitant's 90th
birthday except in certain states where the Annuity Commencement Date may not be
deferred beyond the Annuitant's 85th birthday.
<PAGE>
20
The Annuity Commencement Date and/or the Annuity option may be changed from time
to time, but any such change must be made at least 30 days prior to the date on
which payments are scheduled to begin. If you do not elect otherwise, payments
will begin at the Annuitant's age 90 under Option 2 with 120 monthly payments
certain (Option 1 for contracts issued in Texas).
When an Annuity is effected under a Contract, unless otherwise specified,
Contract Values held in the Sub-Accounts will be applied to provide a Variable
Annuity based on the pro rata amount in the various Sub-Accounts. Fixed Account
Contract Values will be applied to provide a Fixed Annuity. Variable Annuity
payments will vary in accordance with the investment performance of the
Sub-Accounts you have selected. The Contract allows the Contract Owner to
change the Sub-Accounts on which variable payments are based after payments have
commenced once every three (3) months. Any Fixed Annuity allocation may not be
changed.
The Contract offered under this Prospectus may be purchased by any individual
("Non-Qualified Contract") or by an individual, trustee or custodian for a
retirement plan qualified under Sections 401(a) or 403(a) of the Internal
Revenue Code; annuity purchase plans adopted by public school systems and
certain tax-exempt organizations according to Section 403(b) of the Internal
Revenue Code; Individual Retirement Annuities adopted according to Section 408
of the Internal Revenue Code; employee pension plans established for employees
by a state, a political subdivision of a state, or an agency or instrumentality
of either a state or a political subdivision of a state, and certain eligible
deferred compensation plans as defined in Section 457 of the Internal Revenue
Code ("Qualified Contracts").
RIGHT TO CANCEL PERIOD
If you are not satisfied with your purchase you may surrender the Contract by
returning it within ten days (or longer in some states) after you receive it. A
written request for cancellation must accompany the Contract. In such event, HL
will, without deduction for any charges normally assessed thereunder, pay you an
amount equal to the sum of (i) the difference between the Premium Payment and
the amounts allocated to the Sub-Account(s) and/or the Fixed Account under the
Contract and (ii) the Contract Value on the date of surrender attributable to
the amounts so allocated. You bear the investment risk during the period prior
to the Company's receipt of request for cancellation. HL will refund the
premium paid only for individual retirement annuities (if returned within seven
days of receipt)and in those states where required by law.
THE SEPARATE ACCOUNT
The Separate Account was established on June 13, 1994, in accordance with
authorization by the Board of Directors of HL. It is the Separate Account in
which HL sets aside and invests the assets attributable to variable annuity
contracts, including the contracts sold under this Prospectus. Although the
Separate Account is an integral part of HL, it is registered as a unit
investment trust under the Investment Company Act of 1940. This registration
does not, however, involve supervision by the Commission of the management or
the investment practices or policies of the Separate Account or HL. The
Separate Account meets the definition of "separate account" under federal
securities law.
Under Connecticut law, the assets of the Separate Account attributable to the
Contracts offered under this Prospectus are held for the benefit of the owners
of, and the persons entitled to payments under, those Contracts. Income, gains,
and losses, whether or not realized, from assets allocated to the Separate
Account, are, in accordance with the Contracts, credited to or charged against
the Separate Account. Also, the assets in the Separate Account are not
chargeable with liabilities arising out of any other business HL may conduct.
So Contract Values allocated to the Sub-Accounts will not be affected by the
rate of return of HL's General Account, nor by the investment performance of any
of HL's other separate accounts.
<PAGE>
21
However, the obligations arising under the Contracts are general obligations of
HL.
Your investment in the Separate Account is allocated to one or more Sub-Accounts
as per your specifications. Each Sub-Account is invested exclusively in the
shares of one underlying Portfolio. Net Premium Payments and proceeds of
transfers between Portfolios are applied to purchase shares in the appropriate
Fund at net asset value determined as of the end of the Valuation Period during
which the payments were received or the transfer made. All distributions from
the Portfolios are reinvested at net asset value. The value of your investment
will therefore vary in accordance with the net income and the market value of
the Portfolios of the underlying Portfolio. During the Variable Annuity payout
period, both your Annuity payments and reserve values will vary in accordance
with these factors.
HL does not guarantee the investment results of the Portfolios or any of the
underlying investments. There is no assurance that the value of a Contract
during the years prior to retirement or the aggregate amount of the Variable
Annuity payments will equal the total of Premium Payments made under the
Contract. Since each underlying Portfolio has different investment objectives
and policies, each is subject to different risks. These risks are more fully
described in the accompanying Fund Prospectus.
HL reserves the right, subject to compliance with the law, to substitute the
shares of any other registered investment company for the shares of any
Portfolio held by the Separate Account. Substitution may occur only if shares
of the Portfolio(s) become unavailable or if there are changes in applicable law
or interpretations of law. Current law requires notification to you of any such
substitution and approval of the Commission.
The Separate Account may be subject to liabilities arising from a Series of the
Separate Account whose assets are attributable to other variable annuity
contracts or variable life insurance policies offered by the Separate Account
which are not described in this Prospectus.
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN
ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT,
AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED BY THE
STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE ABOUT
THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF
THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF
DISCLOSURE.
Premium Payments and Contract Values allocated to the Fixed Account become a
part of the general assets of HL. HL invests the assets of the General Account
in accordance with applicable laws governing investments of Insurance Company
General Accounts.
Currently, HL guarantees that it will credit interest at a rate of not less than
3% per year, compounded annually, to amounts allocated to the Fixed Account
under the Contracts. However, HL reserves the right to change the rate
according to state insurance law. HL may credit interest at a rate in excess of
3% per year; however, HL is not obligated to credit any interest in excess of 3%
per year. There is no specific formula for the determination of excess interest
credits. Some of the factors that the Company may consider in determining
whether to credit excess interest to amounts allocated to the Fixed Account and
the amount thereof, are general economic trends, rates of return currently
<PAGE>
22
available and anticipated on the Company's investments, regulatory and tax
requirements and competitive factors. ANY INTEREST CREDITED TO AMOUNTS
ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE DETERMINED IN
THE SOLE DISCRETION OF THE COMPANY. THE OWNER ASSUMES THE RISK THAT INTEREST
CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF
3% FOR ANY GIVEN YEAR.
THE COMPANY
Hartford Life Insurance Company was originally incorporated under the laws of
Massachusetts on June 5, 1902. It was subsequently redomiciled to Connecticut.
It is a stock life insurance company engaged in the business of writing health
and life insurance, both ordinary and group, in all states of the United States
and the District of Columbia. The offices of HL are located in Simsbury,
Connecticut; however, its mailing address is P.O. Box 5085, Hartford, CT
06102-5085, Attn: Individual Annuity Operations. HL is ultimately 100% owned
by Hartford Fire Insurance Company, one of the largest multiple lines insurance
carriers in the United States. Hartford Fire Insurance Company is a subsidiary
of ITT Corporation.
HL has an A++ (superior) rating from A.M. Best and Company, Inc. HL has an
AA+ rating from Standard & Poor's and Duff and Phelp's highest rating
(AAA) on the basis of its claims paying ability.
These ratings do not apply to the performance of the Separate Account. However,
the contractual obligations under this variable annuity are the general
corporate obligations of HL. These ratings do apply to HL's ability to meet its
insurance obligations under the Contract.
THE PORTFOLIOS
The underlying investment for the Contracts are shares of the Dean Witter Select
Dimensions Investment Series ("Fund"), an open-end diversified series investment
company with multiple portfolios. The underlying Portfolio corresponding to
each Sub-Account and their investment objectives are described below. HL
reserves the right, subject to compliance with the law, to offer additional
portfolios with differing investment objectives. The Portfolios may not be
available in all states.
MONEY MARKET PORTFOLIO
Seeks high current income, preservation of capital and liquidity by investing in
the following money market instruments: U.S. Government securities, obligations
of U.S. regulated banks and savings institutions having total assets of more
than $1 billion, or less than $1 billion if such are fully federally insured as
to principal (the interest may not be insured) and high grade corporate debt
obligations maturing in thirteen months or less.
NORTH AMERICAN GOVERNMENT SECURITIES PORTFOLIO
Seeks to earn a high level of current income while maintaining relatively low
volatility of principal, by investing primarily in investment grade fixed-income
securities issued or guaranteed by the U.S., Canadian or Mexican governments.
<PAGE>
23
DIVERSIFIED INCOME PORTFOLIO
Seeks, as a primary objective, to earn a high level of current income and, as a
secondary objective, to maximize total return, but only to the extent consistent
with its primary objective, by equally allocating its assets among three
separate groupings of fixed-income securities. Up to one-third of the
securities in which the Diversified Income Portfolio may invest will include
securities rated Baa/BBB or lower. See the special considerations for
investments for high yield securities disclosed in the Fund prospectus.
BALANCED PORTFOLIO
Seeks to achieve high total return through a combination of income and capital
appreciation, by investing in a diversified portfolio of common stocks and
investment grade fixed-income securities.
UTILITIES PORTFOLIO
Seeks to provide current income and long-term growth of income and capital by
investing in equity and fixed-income securities of companies in the public
utilities industry.
DIVIDEND GROWTH PORTFOLIO
Seeks to provide reasonable current income and long-term growth of income and
capital by investing primarily in common stock of companies with a record of
paying dividends and the potential for increasing dividends.
VALUE-ADDED MARKET PORTFOLIO
Seeks to achieve a high level of total return on its assets through a
combination of capital appreciation and current income, by investing, on an
equally-weighted basis, in a diversified portfolio of common stocks of the
companies which are represented in the Standard & Poor's 500 Composite Stock
Price Index.
CORE EQUITY PORTFOLIO
Seeks long-term growth of capital by investing primarily in common stocks and
securities convertible into common stocks issued by domestic and foreign
companies.
AMERICAN VALUE PORTFOLIO
Seeks long-term capital growth consistent with an effort to reduce volatility,
by investing principally in common stock of companies in industries which, at
the time of the investment, are believed to be undervalued in the marketplace.
GLOBAL EQUITY PORTFOLIO
Seeks a high level of total return on its assets primarily through long-term
capital growth and, to a lesser extent, from income, through investments in all
types of common stocks and equivalents (such as convertible securities and
warrants), preferred stocks and bonds and other debt obligations of domestic and
foreign companies and governments and international organizations.
DEVELOPING GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in common stocks of
smaller and medium-sized companies that, in the opinion of the Investment
Manager, have the potential for growing more rapidly than the economy and which
<PAGE>
24
may benefit from new products or services, technological developments or
changes in management.
EMERGING MARKETS PORTFOLIO
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging market countries. The Emerging Markets Portfolio may
invest up to 35% of its total assets in high risk fixed-income securities that
are rated below investment grade or are unrated (commonly referred to as "junk
bonds"). See the special considerations for investments in high yield
securities disclosed in the Fund prospectus.
The Portfolios are managed in styles similar to other investment companies whose
shares are generally offered to the public which are managed by Dean Witter
InterCapital, Inc., the Investment Manager, or by TCW Funds Management, Inc.,
the Sub-Adviser to certain of the Portfolios. The portfolios of these other
investment companies may, however, employ different investment practices and may
invest in securities different from those in which their counterpart Portfolios
invest, and consequently will not have identical portfolios or experience
identical investment results.
The Portfolios are available only to serve as the underlying investment for
variable annuity and variable life contracts. A full description of the
Portfolios, their investment objectives, policies and restrictions, risks,
charges and expenses and other aspects of their operation is contained in the
accompanying Fund Prospectus which should be read in conjunction with this
Prospectus before investing, and in the Fund Statement of Additional Information
which may be ordered without charge from Dean Witter Select Dimensions
Investment Series.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Portfolios simultaneously. Although HL and the Fund do not
currently foresee any such disadvantages either to variable annuity contract
owners or to variable life insurance policyowners, the Fund's Board of Trustees
would monitor events in order to identify any material conflicts between such
Contract Owners and policyowners and to determine what action, if any, should be
taken in response thereto. If the Board of Trustees of the Fund were to
conclude that separate Portfolios should be established for variable life and
variable annuity separate accounts, the variable annuity Contract holders would
not bear any expenses attendant upon establishment of such separate funds.
Dean Witter InterCapital, Inc. ("InterCapital" or the "Investment Manager"), a
Delaware Corporation, whose address is Two World Trade Center, New York, New
York 10048, is the Fund's Investment Manager. The Investment Manager, which was
incorporated in July, 1992, is a wholly-owned subsidiary of Dean Witter,
Discover & Co., ("DWDC"), a balanced financial services organization providing a
broad range of nationally marketed credit and investment products.
The Fund has retained the Investment Manager to provide administrative services,
manage its business affairs and manage the investment of the Fund's assets,
including the placing of orders for the purchase and sales of portfolio
securities. Inter-Capital has retained its wholly-owned subsidiary, Dean Witter
Services Company Inc., to perform the aforementioned administrative services for
the Fund. For its services, the Portfolios pay the Investment Manager a
monthly fee. See the accompanying Fund Prospectus for a more complete
description of the Investment Manager and the respective fees of the Portfolios.
With regard to the North American Government Securities Portfolio, the Balanced
Portfolio, the Core Equity Portfolio and the Emerging Markets Portfolio, under
a Sub-Advisory Agreement between TCW Funds Management, Inc. (the "Sub-Adviser")
<PAGE>
25
and the Investment Manager, the Sub-Adviser provides these Portfolios with
investment advice and portfolio management, in each case subject to the overall
supervision of the Investment Manager. The Sub-Adviser's address is 865 South
Figueroa Street, Suite 1800, Los Angeles, California 90017.
The Fund's Board of Trustees reviews the various services provided by or under
the direction of the Investment Manager (or by the Sub-Adviser) to ensure that
the Fund's general investment policies and programs are being properly carried
out and that administrative services are being provided to the Fund in a
satisfactory manner.
OPERATION OF THE CONTRACT/ACCUMULATION PERIOD
PREMIUM PAYMENTS
The balance of each initial Premium Payment remaining after the deduction of any
applicable Premium Tax is credited to your Contract within two business days of
receipt of a properly completed application or an order to purchase a Contract
and the initial Premium Payment by HL at its Home Office, P.O. Box 30197,
Hartford, CT 06150-0197. It will be credited to the Sub-Account(s) and/or the
Fixed Account in accordance with your election. If the application or other
information is incomplete when received, the balance of each initial Premium
Payment, after deduction of any applicable Premium Tax, will be credited to the
Sub-Account(s) or the Fixed Account within five business days of receipt or the
entire Premium Payment will be immediately returned unless you have been
informed of the delay and request that the Premium Payment not be returned.
Subsequent Premium Payments are priced on the Valuation Day received by HL in
its Home Office or other designated administrative office.
The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment being
credited to each Sub-Account by the value of an Accumulation Unit in that
Sub-Account on that date.
The minimum initial Premium Payment is $1,000. Subsequent Premium Payments, if
made, must be a minimum of $500. Certain plans may make smaller initial and
subsequent periodic payments. Each Premium Payment may be split among the
various Sub-Accounts and the Fixed Account subject to minimum amounts then in
effect.
Hartford Equity Sales Company, Inc. ("HESCO") currently serves as principal
underwriter for the securities issued with respect to the Separate Account.
Hartford Securities Distribution Company, Inc. ("HSD") will replace HESCO as
principal underwriter upon approval by the Commission, the National Association
of Securities Dealers, Inc. ("NASD") and applicable state regulatory
authorities. Both HESCO and HSD are wholly-owned subsidiaries of HL. The
principal business address of HESCO and HSD is the same as HL.
VALUE OF ACCUMULATION UNITS
The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Portfolio and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for that
Sub-Account for the Valuation Period then ended. The "Net Investment Factor"
for each of the Sub-Accounts is equal to the net asset value per share of the
corresponding Portfolio at the end of the Valuation Period (plus the per share
amount of any dividends or capital gains distributed by that Portfolio if
<PAGE>
26
the ex-dividend date occurs in the Valuation Period then ended) divided by the
net asset value per share of the corresponding Portfolio at the beginning of the
Valuation Period and subtracting from that amount the amount of any mortality
and expense risk and administration charges assessed during the Valuation Period
then ending. You should refer to the Fund Prospectus which accompanies this
Prospectus for a description of how the assets of each Portfolio are valued
since each determination has a direct bearing on the Accumulation Unit value of
the Sub-Account and therefore the value of a Contract. The Accumulation Unit
value is affected by the performance of the underlying Portfolio(s), expenses
and deduction of the charges described in this Prospectus.
The shares of the Portfolio are valued at net asset value on each Valuation Day.
A description of the valuation methods used in valuing Portfolio shares may be
found in the accompanying Prospectus of the Fund.
VALUE OF THE FIXED ACCOUNT
HL will determine the value of the Fixed Account by crediting interest to
amounts allocated to the Fixed Account. The minimum Fixed Account interest rate
is 3%, compounded annually. HL may credit a lower minimum interest rate
according to state law. HL also may credit interest at rates greater than the
minimum Fixed Account interest rate.
VALUE OF THE CONTRACT
The value of the Sub-Account investments under your Contract at any time prior
to the commencement of Annuity payments can be determined by multiplying the
total number of Accumulation Units credited to your Contract in each Sub-Account
by the then current Accumulation Unit values for the applicable Sub-Account.
The value of the Fixed Account under your Contract will be the amount allocated
to the Fixed Account plus interest credited. You will be advised at least
semi-annually of the number of Accumulation Units credited to each Sub-Account,
the current Accumulation Unit values, the Fixed Account Value, and the total
value of your Contract.
TRANSFERS AMONG SUB-ACCOUNTS
You may transfer the values of your Sub-Account allocations from one or more
Sub-Accounts to another free of charge. Transfers by telephone may be made by
the agent of record or by the attorney-in-fact pursuant to a power of attorney
by calling (800) 862-6668. Telephone transfers may not be permitted by some
states for their residents who purchase variable annuities. The policy of HL
and its agents and affiliates is that they will not be responsible for losses
resulting from acting upon telephone requests reasonably believed to be genuine.
HL will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine; otherwise, HL may be liable for any losses due to
unauthorized or fraudulent instructions. The procedures HL follows for
transactions initiated by telephone include requirements that callers on behalf
of a Contract Owner identify themselves and the Contract Owner by name and
social security number. All transfer instructions by telephone are tape
recorded.
HL reserves the right to limit the number of transfers to twelve (12) per
Contract Year, with no two (2) transfers occurring on consecutive Valuation
Days. HL may permit the Contract Owner to preauthorize transfers between the
Sub-Accounts and the Fixed Account under certain circumstances.
The right to reallocate Contract Values between the Sub-Accounts is subject to
modification if HL determines, in its sole discretion, that the exercise of that
right by one or more Contract Owners is, or would be, to the disadvantage of
other Contract Owners. Any modification could be applied to transfers to or
from some or all of the Sub-Accounts and could include, but not be limited to,
<PAGE>
27
the requirement of a minimum time period between each transfer, not accepting
transfer requests of an agent acting under a power of attorney on behalf of more
than one Contract Owner, or limiting the dollar amount that may be transferred
between the Sub-Accounts and the Fixed Account by a Contract Owner at any one
time. Such restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which is considered by HL to be to the
disadvantage of other Contract Owners.
Transfers between the Sub-Accounts may be made both before and after Annuity
payments commence (limited to once a quarter) provided that the minimum
allocation to any Sub-Account may not be less than $500. No minimum balance is
presently required in any Sub-Account.
TRANSFERS BETWEEN THE FIXED ACCOUNT AND THE SUB-ACCOUNTS
Subject to the restrictions set forth above, transfers from the Fixed Account
into a Sub-Account may be made at any time during the Contract Year. The
maximum amount which may be transferred from the Fixed Account during any
Contract Year is the greater of 30% of the Fixed Account balance as of the last
Contract Anniversary or the greatest amount of any prior transfer from the Fixed
Account. If HL permits preauthorized transfers from the Fixed Account to the
Sub-Accounts, this restriction is inapplicable. However, if any interest rate
is renewed at a rate at least one percentage point less than the previous rate,
the Contract Owner may elect to transfer up to 100% of the Portfolios receiving
the reduced rate within sixty days of notification of the interest rate
decrease. Generally, transfers may not be made from any Sub-Account into the
Fixed Account for the six-month period following any transfer from the Fixed
Account into one or more of the Sub-Accounts. HL reserves the right to defer
transfers from the Fixed Account for up to six months from the date of request.
REDEMPTION/SURRENDER OF A CONTRACT
At any time prior to the Annuity Commencement Date, you have the right, subject
to any IRS provisions applicable thereto, to surrender the value of the Contract
in whole or in part. Surrenders are not permitted after Annuity payments
commence EXCEPT that a full surrender is allowed when payments for a designated
period (Option 4 or 5) are selected as the Annuity option.
FULL SURRENDERS. At any time prior to the Annuity Commencement Date (and after
the Annuity Commencement Date with respect to values applied to Option 4), the
Contract Owner has the right to terminate the Contract. In such event, the
Termination Value of the Contract may be taken in the form of a lump sum cash
settlement. The Termination Value of the Contract is equal to the Contract
Value less any applicable Premium Taxes, the Contract Maintenance Fee, if
applicable, and any applicable contingent deferred sales charges. The
Termination Value may be more or less than the amount of the Premium Payments
made to a Contract.
PARTIAL SURRENDERS. The Contract Owner may make a partial surrender of Contract
Values at any time prior to the Annuity Commencement Date so long as the amount
surrendered is at least equal to the minimum amount rules then in effect.
Currently, there is no minimum amount rule in effect. However, HL may institute
minimum amount rules at some future time. Additionally, if the remaining
Contract Value following a surrender is less than $500 (and, for Texas
contracts, there were no Premium Payments made during the preceding two contract
years), HL may terminate the Contract and pay the Termination Value.
Certain plans or programs may have different withdrawal privileges. HL may
permit the Contract Owner to preauthorize partial surrenders subject to certain
limitations then in effect.
<PAGE>
28
THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(B) TAX SHELTERED ANNUITIES. AS OF
DECEMBER 31, 1988, ALL SECTION 403(B) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL
SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY
INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS
THE CONTRACT OWNER/EMPLOYEE HAS A) ATTAINED AGE 59 1/2, B) TERMINATED
EMPLOYMENT, C) DIED, D) BECOME DISABLED OR E) EXPERIENCED FINANCIAL HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL BE
SUBJECT TO A PENALTY TAX OF 10%.
HL WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A WITHDRAWAL IS
PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR SITUATION; OR IN
MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY 1, 1989 ACCOUNT
VALUES.
ANY SUCH FULL OR PARTIAL SURRENDER DESCRIBED ABOVE MAY RESULT IN ADVERSE TAX
CONSEQUENCES TO THE CONTRACT OWNER. THE CONTRACT OWNER, THEREFORE, SHOULD
CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE
"FEDERAL TAX CONSIDERATIONS" COMMENCING ON PAGE ___.)
Payment on any request for a full or partial surrender from the Sub-Accounts
and/or the Fixed Account will be made as soon as possible and in any event no
later than seven days after the written request is received by HL at its Home
Office, Attn: Individual Annuity Operations, P.O. Box 5085, Hartford, CT
06102-5085. HL may defer payment of any amounts from the Fixed Account for up
to six months from the date of the request for surrender. If HL defers payment
for more than 30 days, HL will pay interest of at least 3% per annum on the
amount deferred. In requesting a partial withdrawal you should specify the
Fixed Account and/or the Sub-Account(s) from which the partial withdrawal is to
be taken. Otherwise, such withdrawal and any applicable contingent deferred
sales charges will be effected on a pro rata basis according to the value in the
Fixed Account and each Sub-Account under a Contract. Within this context, the
contingent deferred sales charges are taken from the Premium Payments in the
order in which they were received: from the earliest Premium Payments to the
latest Premium Payments. (See "Contingent Deferred Sales Charges," page ___.)
DEATH BENEFIT
The Contracts provide that in the event the Annuitant dies before the Annuity
Commencement Date, the Contingent Annuitant will become the Annuitant. If the
Annuitant dies before the Annuity Commencement Date and either (a) there is no
designated Contingent Annuitant, (b) the Contingent Annuitant predeceases the
Annuitant, or (c) if any Contract Owner dies before the Annuity Commencement
Date, the Beneficiary as determined under the Contract Control Provisions, will
receive the Minimum Death Benefit as determined on the date of receipt of due
proof of death by HL in its Home Office. With regard to Joint Contract Owners,
after the death of a Joint Contract Owner prior to the Annuity Commencement
Date, the Beneficiary will be the surviving Contract Owner notwithstanding that
the beneficiary designation may be different.
GUARANTEED DEATH BENEFIT - Upon death prior to the Annuity Commencement Date,
the Annuitant or Contract Owner, as applicable, the Beneficiary will receive the
greatest of (a) the Contract Value determined as of the day written proof of
death of such person is received by HL, or (b) 100% of the total Premium
Payments made to such contract, reduced by any prior surrenders, or (c) the
Maximum Anniversary Value immediately preceding the date of death.
<PAGE>
29
The Maximum Anniversary Value is equal to the greatest Anniversary Value
attained from the following:
As of the date of receipt of due proof of death, the Company will calculate an
Anniversary Value for each Contract Anniversary prior to the deceased's attained
age 81. The Anniversary Value is equal to the Contract Value on a Contract
Anniversary, increased by the dollar amount of any premium payment made since
that anniversary and reduced by the dollar amount of any partial surrenders
since that anniversary.
PAYMENT OF DEATH BENEFIT - Death Benefit proceeds will remain invested in the
Separate Account in accordance with the allocation instructions given by the
Certificate Owner until the proceeds are paid or HL receives new instructions
from the Beneficiary. The Death Benefit may be taken in one sum, payable
within 7 days after the date Due Proof of Death is received, or under any of the
settlement options then being offered by the Company provided, however, that:
(a) in the event of the death of any Contract Owner prior to the Annuity
Commencement Date, the entire interest in the Contract will be distributed
within 5 years after the death of the Contract Owner and (b) in the event of the
death of any Contract Owner or Annuitant which occurs on or after the Annuity
Commencement Date, any remaining interest in the Contract will be paid at least
as rapidly as under the method of distribution in effect at the time of death,
or, if the benefit is payable over a period not extending beyond the life
expectancy of the Beneficiary or over the life of the Beneficiary, such
distribution must commence within one year of the date of death.
Notwithstanding the foregoing, in the event of the Contract Owner's death where
the sole Beneficiary is the spouse of the Contract Owner and the Annuitant or
Contingent Annuitant is living, such spouse may elect, in lieu of receiving the
death benefit, to be treated as the Contract Owner. The proceeds due on the
death may be applied to provide variable payments, fixed payments, or a
combination of variable and fixed payments.
If the Contract is owned by a corporation or other non-individual, the Death
Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same settlement
options and in the same manner as if an individual Contract Owner died on the
date of the Annuitant's death.
There may be postponement in the payment of Death Benefits whenever (a) the New
York Stock Exchange is closed, except for holidays or weekends, or trading on
the New York Stock Exchange is restricted as determined by the Securities and
Exchange Commission; (b) the Securities and Exchange Commission permits
postponement and so orders; or (c) the Securities and Exchange Commission
determines that an emergency exists making valuation of the amounts or disposal
of securities not reasonably practicable.
GROUP UNALLOCATED CONTRACTS - For Group Unallocated Contracts HL requires that
detailed accounting of cumulative purchase payments, cumulative gross
surrenders, and current Contract Value attached to each Plan Participant be
submitted on an annual basis by the Contract Owner. Failure to submit accurate
data satisfactory to HL will give HL the right to terminate this extension of
benefits.
CHARGES UNDER THE CONTRACT
CONTINGENT DEFERRED SALES CHARGES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered.
The length of time from receipt of a Premium Payment to the time of surrender
determines the contingent deferred sales charge. Premium payments will be
<PAGE>
30
deemed to be surrendered in the order in which they were received.
DURING THE FIRST SEVEN CONTRACT YEARS
During the first seven contract years, all surrenders will be first from Premium
Payments and then from other Contract Values. If an amount equal to all premium
payments has been surrendered, a contingent deferred sales charge will not be
assessed against the surrender of the remaining Contract Value.
AFTER THE SEVENTH CONTRACT YEAR
After the seventh contract year, all surrenders will first be from earnings and
then from premium payments. A contingent deferred sales charge will not be
assessed against the surrender of earnings. If an amount equal to all earnings
has been surrendered, a contingent deferred sales charge will not be assessed
against premium payments received more than seven years prior to surrender, but
will be assessed against premium payments received less than seven years prior
to surrender.
The charge is a percentage of the amount withdrawn (not to exceed the aggregate
amount of the Premium Payments made) and equals:
CHARGE LENGTH OF TIME FROM PREMIUM PAYMENT
------ -----------------------------------
(Number of Years)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
The contingent deferred sales charges are used to cover expenses relating to the
sale and distribution of the Contracts, including commissions paid to any
distribution organization and its sales personnel, the cost of preparing sales
literature and other promotional activities. To the extent that these charges
do not cover such distribution expenses, the expenses will be borne by HL from
its general assets, including surplus. The surplus might include profits
resulting from unused mortality and expense risk charges.
During the first seven Contract Years, on a non-cumulative basis, a Contract
Owner may make a partial surrender of Contract Values of up to 10% of the
aggregate Premium Payments made to the contract (as determined on the date of
the requested withdrawal) without the application of the contingent deferred
sales charge. After the seventh Contract year, the Contract Owner may make a
partial surrender of 10% of premium payments made during the seven years prior
to the surrender and 100% of the Contract Value less the premium payments made
during the seven years prior to the surrender. The amounts not subject to sales
charges are known as the Annual Withdrawal Amount. The Annual Withdrawal
Amount is the amount which can be withdrawn in any any Contract Year prior to
incurring surrender charges. An Extended Withdrawl Privilege rider allows an
Annuitant who attains age 70 1/2 under a Qualified Plan to withdraw an
amount in excess of the Annual Withdrawl Amount to comply with IRS mimimum
distributions rules.
The contingent deferred sales charges which cover expenses relating to the sale
and distribution of the Contracts may be reduced for certain sales of the
Contracts under circumstances which may result in savings of such sales and
distribution expenses. Therefore, the contingent deferred sales charges may be
<PAGE>
31
reduced if the Contracts are sold to certain employee and professional groups.
In addition, there may be other circumstances of which HL is not presently
aware which could result in reduced sales or distribution expenses. Reductions
in these charges will not be unfairly discriminatory against any Contract Owner.
HL may offer certain employer sponsored savings plans, in its discretion reduced
fees and charges including, but not limited to, the contingent deferred sales
charges, the mortality and expense risk charge and the maintenance fee for
certain sales under circumstances which may result in savings of certain costs
and expenses. Reductions in these fees and charges will not be unfairly
discriminatory against any Contract Owner.
MORTALITY AND EXPENSE RISK CHARGE
Although Variable Annuity payments made under the Contracts will vary in
accordance with the investment performance of the underlying Portfolio shares
held in the Sub-Account(s), the payments will not be affected by (a) HL's actual
mortality experience among Annuitants before or after the Annuity Commencement
Date or (b) HL's actual expenses, if greater than the deductions provided for in
the Contracts because of the expense and mortality undertakings by HL.
For assuming these risks under the Contracts, HL will make a daily charge at the
rate of 1.25% per annum against all Contract Values held in the Sub-Accounts
during the life of the Contract, including the payout period, (estimated at .90%
for mortality and .35% for expense).
The mortality undertaking provided by HL under the Contracts, assuming the
selection of one of the forms of life Annuities, is to make monthly Annuity
payments (determined in accordance with the 1983a Individual Annuity Mortality
Table and other provisions contained in the Contract) to Annuitants regardless
of how long an Annuitant may live, and regardless of how long all Annuitants as
a group may live. HL also assumes the liability for payment of a minimum death
benefit under the Contract.
The mortality undertakings are based on HL's determination of expected mortality
rates among all Annuitants. If actual experience among Annuitants during the
Annuity payment period deviates from HL's actuarial determination of expected
mortality rates among Annuitants because, as a group, their longevity is longer
than anticipated, HL must provide amounts from its general Portfolios to fulfill
its Contract obligations. In that event, a loss will fall on HL. Also, in the
event of the death of an Annuitant or Contract Owner before the commencement of
Annuity payments, whichever is earlier, HL can, in periods of declining value,
experience a loss resulting from the assumption of the mortality risk relative
to the minimum death benefit.
In providing an expense undertaking, HL assumes the risk that the contingent
deferred sales charges and the Administration and Maintenance Fees for
maintaining the Contracts prior to the Annuity Commencement Date may be
insufficient to cover the actual cost of providing such items.
ADMINISTRATION AND MAINTENANCE FEES
HL will deduct certain fees from Contract Values to reimburse it for expenses
relating to the administration and maintenance of the Contract and the Fixed
<PAGE>
32
Account. For Contract maintenance, HL will deduct an annual fee of $30 on each
Contract Anniversary on or before the Annuity Commencement Date. The deduction
will be made pro rata according to the value in each Sub-Account and the Fixed
Account under a Contract. If during a Contract Year the Contract is surrendered
for its full value, HL will deduct the Contract Maintenance Fee at the time of
such surrender. For administration, HL makes a daily charge at the rate of .15%
per annum against all Contract Values held in the Separate Account during both
the accumulation and annuity phases of the Contract. There is not necessarily a
relationship between the amount of administrative charge imposed on a given
Contract and the amount of expenses that may be attributable to that Contract;
expenses may be more or less than the charge.
The types of expenses incurred by the Separate Account include, but are not
limited to, expenses of issuing the Contract and expenses for confirmations,
Contract quarterly statements, processing of transfers and surrenders,
responding to Contract Holder inquiries, reconciling and depositing cash
receipts, calculation and monitoring daily Sub-Account unit values, Separate
Account reporting, including semiannual and annual reports and mailing and
tabulation of shareholder proxy solicitations.
You should refer to the Fund Prospectus for a description of deductions and
expenses paid out of the assets of the Portfolios.
PREMIUM TAXES
A deduction is also made for Premium Tax, if applicable, imposed by a state or
other governmental entity. Certain states impose a Premium Tax, currently
ranging up to 3.5%. Some states assess the tax at the time purchase payments
are made; others assess the tax at the time of annuitization. HL will pay
Premium Taxes at the time imposed under applicable law. At its sole discretion,
HL may deduct Premium Taxes at the time HL pays such taxes to the applicable
taxing authorities, at the time the Contract is surrendered, or at the time the
Contract annuitizes.
ANNUITY BENEFITS
You select an Annuity Commencement Date and an Annuity option which may be on a
fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be deferred beyond the Annuitant's 90th birthday except for
certain states where deferral past age 85 is not permitted. The Annuity
Commencement Date and/or the Annuity option may be changed from time to time,
but any change must be at least 30 days prior to the date on which Annuity
payments are scheduled to begin. The contract allows the Contract Owner to
change the Sub-Accounts on which variable payments are based after payments have
commenced once every three (3) months. Any Fixed Annuity allocation may not be
changed.
ANNUITY OPTIONS
The Contract contains the five optional Annuity forms described below. Options
2, 4 and 5 are available to Qualified Contracts only if the guaranteed payment
period is less than the life expectancy of the Annuitant at the time the option
becomes effective. Such life expectancy shall be computed on the basis of the
mortality table prescribed by the IRS, or if none is prescribed, the mortality
table then in use by the HL. With respect to Non-Qualified Contracts, if you do
not elect otherwise, payments in most states will automatically begin at the
Annuitant's age 90 (with the exception of states that do not allow deferral past
age 85) under Option 2 with 120 monthly payments certain. For Qualified
Contracts and contracts issued in Texas, if you do not elect otherwise, payments
will begin automatically at the Annuitant's age 90 under Option 1 to provide a
life Annuity.
<PAGE>
33
Under any of the Annuity options excluding Options 4 and 5, no surrenders are
permitted after Annuity payments commence. Only full surrenders are allowed out
of Option 4 and any such surrender will be subject to contingent deferred sales
charges, if applicable. Full or partial withdrawals may be made from Option 5
at any time and contingent deferred sales charges will not be applied.
Option 1: Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant and
terminating with the last payment preceding the death of the Annuitant. This
option offers the largest payment amount of any of the life Annuity options
since there is no guarantee of a minimum number of payments nor a provision for
a death benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the date of the third Annuity payment, etc.
Option 2: Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments have
been made for less than the minimum elected number of months, then the present
value as of the date of the Annuitant's death, of any remaining guaranteed
payments will be paid in one sum to the Beneficiary or Beneficiaries designated
unless other provisions have been made and approved by the company.
Option 3: Joint and Last Survivor Annuity
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by HL, the Annuitant may elect that the
payment to the survivor be less than the payment made during the joint lifetime
of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated second
person to receive only one payment in the event of the common or simultaneous
death of the parties prior to the due date for the second payment and so on.
Option 4: Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from 5
to 30 years. Under this option, you may, at any time, surrender the contract
and receive, within seven days, the Termination Value of the Contract as
determined by HL.
In the event of the Annuitant's death prior to the end of the designated period,
the present value as of the date of the Annuitant's death, of any remaining
guaranteed payments will be paid in one sum to the Beneficiary or Beneficiaries
designated unless other provisions have been made and approved by the Company.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
contracts thus provide no real benefit to a Contract Owner.
<PAGE>
34
Option 5: Death Benefit Remaining with HL
Proceeds from the Death Benefit may be left with HL for a period not to exceed
five years from the date of the Contract Owner's death prior to the Annuity
Commencement Date. These proceeds will remain in the Sub-Account(s) to which
they were allocated at the time of death unless the Beneficiary elects to
reallocate them. Full or partial withdrawals may be made at any time. In the
event of withdrawals, the remaining value will equal the Contract Value of the
proceeds left with HL, minus any withdrawals.
HL may offer other annuity options from time to time.
THE ANNUITY UNIT AND VALUATION
The value of the Annuity Unit for each Sub-Account in the Separate Account for
any day is determined by multiplying the value for the preceding day by the
product of (1) the net investment factor (See "Valuation of Accumulation Units,"
commencing on page ___) for the day for which the Annuity Unit value is being
calculated and (2) a factor to neutralize the assumed investment rate of 5.00%
per annum discussed below.
DETERMINATION OF PAYMENT AMOUNT
When Annuity payments are to commence, the value of the Contract is determined
as the sum of the value of the Fixed Account no earlier than the close of
business on the fifth Valuation Day preceding the date the first Annuity payment
is due plus the product of the value of the Accumulation Unit of each
Sub-Account on that same day, and the number of Accumulation Units credited to
each Sub-Account as of the date the Annuity is to commence.
The Contract contains tables indicating the minimum dollar amount of the first
monthly payment under the optional forms of Annuity for each $1,000 of value of
a Sub-Account under a Contract. The first monthly payment varies according to
the form and type of Annuity selected. The Contract contains Annuity tables
derived from the 1983a Individual Annuity Mortality Table with ages set back one
year and with an assumed investment rate ("A.I.R.") of 3% per annum for the
Fixed Annuity and 5% per annumm for the Variable Annuity.
The total first monthly Variable Annuity payment is determined by multiplying
the value (expressed in thousands of dollars) of a Sub-Account (less any
applicable Premium Taxes) by the amount of the first monthly payment per $1,000
of value obtained from the tables in the Contracts.
Fixed Annuity payments are determined at annuitization by multiplying the values
allocated to the Fixed Account (less applicable Premium Taxes) by a rate to be
determined by HL which is no less than the rate specified in the Annuity tables
in the Contract. The Annuity payment will remain level for the duration of the
Annuity.
The amount of the first monthly Variable Annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account no earlier than the close of business on the fifth Valuation Day
preceding the day on which the payment is due in order to determine the number
of Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the Annuity payment period, and in each subsequent month
the dollar amount of the Variable Annuity payment is determined by multiplying
this fixed number of Annuity Units by the then current Annuity Unit value.
THE A.I.R. ASSUMED IN THE MORTALITY TABLES WOULD PRODUCE LEVEL VARIABLE ANNUITY
PAYMENTS IF THE INVESTMENT RATE REMAINED CONSTANT. IN FACT, PAYMENTS WILL VARY
<PAGE>
35
UP OR DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
The Annuity Unit value used in calculating the amount of the Variable Annuity
payments will be based on an Annuity Unit value determined as of the close of
business on a day no earlier than the fifth Valuation Day preceding the date of
the Annuity payment.
FEDERAL TAX CONSIDERATIONS
What are some of the Federal tax consequences which affect these Contracts?
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY
ACCORDING TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE
TYPE OF PLAN UNDER WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE
MAY BE NEEDED BY A PERSON, TRUSTEE OR OTHER ENTITY CONTEMPLATING THE
PURCHASE OF A CONTRACT DESCRIBED HEREIN.
It should be understood that any detailed description of the Federal
income tax consequences regarding the purchase of these Contracts cannot
be made in this Prospectus and that special tax rules may be applicable
with respect to certain purchase situations not discussed herein. In
addition, no attempt is made here to consider any applicable state or
other tax laws. For detailed information, a qualified tax adviser should
always be consulted. The discussion here and in Appendix I, commencing
on page ___, is based on HL's understanding of current Federal income tax
laws as they are currently interpreted.
B. TAXATION OF HL AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of HL which is taxed as a life
insurance company in accordance with the Internal Revenue Code (the
"Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the
Code. Investment income and any realized capital gains on the assets of
the Separate Account are reinvested and are taken into account in
determining the value of the Accumulation and Annuity Units (See "Value
of Accumulation Units" commencing on page 11). As a result, such
investment income and realized capital gains are automatically applied to
increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term
capital gains earned by the Separate Account with respect to Qualified or
Non-Qualified Contracts.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER
THAN QUALIFIED PLANS
Section 72 of the Internal Revenue Code governs the taxation of annuities
in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC. Section 72 contains
provisions for Contract Owners which are non-natural persons. Non-
natural persons include corporations, trusts, and partnerships. The
annual net increase in the value of the Contract is currently
includable in the gross income of a non-natural person unless the non-
natural person holds the Contract as an agent for a natural person.
There is an exception from current inclusion for certain annuities
held by structured settlement companies, certain annuities held by an
<PAGE>
36
an employer with respect to a terminated Qualified Plan and certain
immediate annuities. A non-natural person which is a tax-exempt
entity for Federal tax purposes will not be subject to income tax as
a result of this provision.
If the Contract Owner is not an individual, the primary Annuitant
shall be treated as the Contract Owner for purposes of making
distributions which are required to be made upon the death of the
Contract Owner. If there is a change in the primary Annuitant, such
change shall be treated as the death of the Contract Owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not
taxed on increases in the value of the Contract until an amount is
received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other
annuity contracts or life insurance contracts which were purchased
prior to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less prior withdrawals which were not
includable in gross income equal the "investment in the
contract" under Section 72 of the Code.
ii. When the value of the Contract (ignoring any surrender
charges) exceeds the "investment in the contract," any amount
surrendered which is less than or equal to the difference
between such value of the Contract and the "investment in the
contract" will be included in gross income.
iii. When such value of the Contract is less than or equal to the
"investment in the contract," any amount surrendered which is
less than or equal to the "investment in the contract" shall
be treated as a return of "investment in the contract" and
will not be included in gross income.
iv. The receipt of any amount as a loan under the Contract or the
assignment or pledge of any portion of the value of the
Contract shall be treated as an amount surrendered which will
be covered by the provisions in subparagraph ii. or iii.
above.
v. In general, the transfer of the Contract, without full and
adequate consideration, will be treated as an amount
surrendered which will be covered by the provisions in
subparagraph ii. or iii. above. This transfer rule does not
apply, however, to certain transfers of property between
spouses or incident to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments
made after the Annuity Commencement Date are includable in gross
income to the extent the payments exceed the amount determined
by the application of the ratio of the "investment in the
contract" to the total amount of the payments to be made after
the Annuity Commencement Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application
of the exclusion ratio is equal to the investment in the
contract as of the Annuity Commencement Date, any
<PAGE>
37
additional payments (including surrenders) will be entirely
includable in gross income.
ii. If the annuity payments cease by reason of the death of the
Annuitant and, as of the date of death, the amount of annuity
payments excluded from gross income by the exclusion ratio
does not exceed the investment in the contract as of the
Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for
the last taxable year of the Annuitant.
iii. Certain distributions, such as surrenders made after the
Annuity Commencement Date, are not treated as annuity
payments, and shall be included in gross income.
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or
affiliated insurer) to the same Contract Owner within the same
calendar year (other than certain contracts held in connection
with a tax-qualified retirement arrangement) will be treated as
one annuity Contract for the purpose of determining the
taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for
another annuity contract or life insurance contract may be
treated as a new Contract for this purpose. HL believes that
for any annuity subject to such aggregation, the values under
the Contracts and the investment in the contracts will be added
together to determine the taxation of amounts received or
deemed received prior to the Annuity Commencement Date.
Withdrawals will first be treated as withdrawals of income
until all of the income from all such Contracts is withdrawn.
As of the date of this Prospectus, there are no regulations
interpreting this provision.
d. PENALTY -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the
Contract (before or after the Annuity Commencement Date),
the Code applies a penalty tax equal to ten percent of the
portion of the amount includable in gross income, unless an
exception applies.
ii. The penalty will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has
attained the age of 59 1/2.
2. Distributions made on or after the death of the holder or
where the holder is not an individual, the death of the
primary Annuitant.
3. Distributions attributable to a recipient's becoming
disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments for the life (or life
expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's
Beneficiary).
5. Distributions of amounts which are allocable to
"investments in the contract" made prior to August 14,
1982.
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-
FREE EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS
PURCHASED PRIOR TO AUGUST 14, 1982.
<PAGE>
38
If the Contract was obtained by a tax-free exchange of a life
insurance or annuity Contract purchased prior to August 14,
1982, then any amount surrendered prior to the Annuity
Commencement Date which does not exceed the portion of the
"investment in the contract" (generally premiums paid into the
prior Contract, less amounts deemed received) prior to August
14, 1982, shall not be included in gross income. In all other
respects, the general provisions apply to distributions from
such Contracts.
f. REQUIRED DISTRIBUTIONS IN THE EVENT OF CONTRACT OWNER'S DEATH.
i. If any Contract Owner dies before the Annuity Commencement
Date, the entire interest must be distributed within five
years of the date of death; however, a portion or all of such
interest may be payable to a designated Beneficiary over the
life of such Beneficiary or for a period not extending beyond
the life expectancy of such Beneficiary with payments starting
within one year of the date of death.
ii. If any Contract Owner or Annuitant dies on or after the
Annuity Commencement Date and before the entire interest in
the Contract has been distributed, any remaining portion of
such interest must be distributed at least as rapidly as under
the method of distribution in effect at the time of death.
iii. If a spouse is designated as a Beneficiary at the time of the
Contract Owner's death and there is a surviving Annuitant or
Contingent Annuitant, then such spouse will be treated as the
Contract Owner under subparagraph i. and ii. above.
iv. If the Contract Owner is not an individual, the primary
Annuitant shall be treated as the Contract Owner under
subparagraphs i. and ii. above. If there is a change in the
primary Annuitant, such change shall be treated as the death
of the Contract Owner.
3. DIVERSIFICATION REQUIREMENTS.
Section 817 of the Code provides that a variable annuity contract
(other than certain contracts held in connection with a tax-qualified
retirement arrangement) will not be treated as an annuity contract for
any period during which the investments made by the separate account
or underlying fund are not adequately diversified in accordance with
regulations prescribed by the Treasury. If a Contract is not treated
as an annuity contract, the Contract Owner will be subject to income
tax on the annual increases in cash value. The Treasury has issued
diversification regulations which, among other things, require that no
more than 55% of the assets of a mutual fund (such as the HL mutual
funds) underlying a variable annuity contract, be invested in any one
investment. In determining whether the diversification standards are
met, each United States Government Agency or instrumentality shall be
treated as a separate issuer.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient
will be subject to Federal income tax withholding, pursuant to Section
3405 of the Internal Revenue Code. The application of this provision
is summarized below:
1. Non-Period Distributions
The portion of a non-periodic distribution which constitutes taxable
income will be subject to Federal income tax withholding unless the
<PAGE>
39
recipient elects not to have taxes withheld. If an election not to
have taxes withheld is not provided, 10% of the taxable distribution
will be withheld as Federal income tax. Election forms will be
provided at the time distributions are requested. If the necessary
election forms are not submitted to HL, HL will automatically
withhold 10% of the taxable distribution.
2. Periodic Distributions (distributions payable over a period greater
than one year)
The portion of a periodic distribution which constitutes taxable
income will be subject to Federal income tax withholding as if the
recipient were married claiming three exemptions. A recipient may
elect not to have income taxes withheld or have income taxes
withheld at a different rate by providing a completed election form.
Election forms will be provided at the time distributions are
requested.
E. GENERAL PROVISIONS AFFECTING TAX QUALIFIED PLANS
The Contract may be used for a number of qualified plans. If the
Contract is being purchased with respect to some form of Qualified
Plan, please refer to Appendix I commencing on page ___ for
information relative to the types of plans for which it may be used
and the general explanation of the tax features of such plans.
GENERAL MATTERS
ASSIGNMENT
Ownership of a Contract described herein is generally assignable. However,
if the Contracts are issued pursuant to some form of Qualified Plan, it is
possible that the ownership of the Contracts may not be transferred or
assigned depending on the type of qualified retirement plan involved. An
assignment of a Non-Qualified Contract may subject the assignment proceeds to
income taxes and certain penalty taxes. (See "Taxation of Annuities in
General - Non-Tax Qualified Purchasers," page ___.)
MODIFICATION
HL reserves the right to modify the Contract, but only if such modification:
(i) is necessary to make the Contract or the Separate Account comply with any
law or regulation issued by a governmental agency to which HL is subject; or
(ii) is necessary to assure continued qualification of the Contract under the
Code or other federal or state laws relating to retirement annuities or
annuity Contracts; or (iii) is necessary to reflect a change in the operation
of the Separate Account or the Sub-Account(s) or (iv) provides additional
Separate Account options or (v) withdraws Separate Account options. In the
event of any such modification HL will provide notice to the Contract Owner
or to the payee(s) during the Annuity period. HL may also make appropriate
endorsement in the Contract to reflect such modification.
DELAY OF PAYMENTS
There may be postponement of a surrender payment or death benefit whenever
(a) the New York Stock Exchange is closed, except for holidays or weekends,
or trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation or disposal
of securities not reasonably practicable.
<PAGE>
40
VOTING RIGHTS
HL is the legal owner of all Fund shares held in the Separate Account. As
the owner, HL has the right to vote at the Funds' shareholder meetings.
However, to the extent required by federal securites laws or regulations, HL
will:
1. Vote all Fund shares attributable to a Contract according to instructions
received from Contract Owner, and
2. Vote shares attributable to a Contract for which no voting instructions
are received in the same proportion as shares for which instructions are
received.
If any federal securities laws or regulations, or their present
interpretation change to permit HL to vote Fund shares in its own right, HL
may elect to do so.
HL will notify you of any Portfolio shareholders' meeting if the shares held
for your account may be voted at such meetings. HL will also send proxy
materials and a form of instruction by means of which you can instruct HL
with respect to the voting of the Portfolio shares held for your account.
In connection with the voting of Portfolio shares held by it, HL will arrange
for the handling and tallying of voting instructions received from Contract
Owners. HL as such, shall have no right, except as hereinafter provided, to
vote any Fund shares held by it hereunder which may be registered in its name
or the names of its nominees. HL will, however, vote the Portfolio shares
held by it in accordance with the instructions received from the Contract
Owners for whose accounts the Fund shares are held. If a Contract Owner
desires to attend any meeting at which shares held for the Contract Owner's
benefit may be voted, the Contract Owner may request HL to furnish a proxy or
otherwise arrange for the exercise of voting rights with respect to the
Portfolio shares held for such Contract Owner's account. In the event that
the Contract Owner gives no instructions or leaves the manner of voting
discretionary, HL will vote such shares of the appropriate Portfolio in the
same proportion as shares of that Portfolio for which instructions have been
received. During the Annuity period under a Contract the number of votes
will decrease as the assets held to Portfolio Annuity benefits decrease.
DISTRIBUTION OF THE CONTRACTS
The securities will be sold by insurance and Variable Annuity agents of HL
who are registered representatives of Dean Witter Reynold Inc. Dean Witter
is registered with the Commission under the Securities Exchange Act of 1934
as a Broker-Dealer and is a members of the National Association of Securities
Dealers, Inc.
Commissions will be paid by HL and will not be more than 6% of Premium
Payments.
From time to time, HL may pay or permit other promotional incentives, in cash
or credit or other compensation.
OTHER CONTRACTS OFFERED
In addition to the Contracts described in this Prospectus, it is contemplated
that other forms of group or individual Variable Annuities may be sold
providing benefits which vary in accordance with the investment experience of
the Separate Account.
<PAGE>
41
CUSTODIAN OF SEPARATE ACCOUNT ASSETS
The assets of the Separate Account are held by HL under a safekeeping
arrangement.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. HL and Dean Witter
Select Dimensions are engaged in various matters of routine litigation which
in their judgments are not of material importance in relation to their
respective total assets.
EXPERTS
Arthur Andersen LLP, One Financial Plaza, Hartford, Connecticut, independent
public accountants, will perform an annual audit of HL and the Separate
Account. The financial statements included in the Statement of Additional
Information have been audited by Arthur Andersen LLP to the extent and for
the periods indicated in their report and are included therein in reliance
upon the report of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
Hartford Life Insurance Company
Attn: Individual Annuity Operations
P.O. Box 5085
Hartford, CT 06102-5085
Telephone: (800) 862-6668
<PAGE>
42
APPENDIX I
INFORMATION REGARDING TAX QUALIFIED PLANS
THE TAX REFORM ACT OF 1986 AND THE TECHNICAL AND MISCELLANEOUS REVENUE ACT OF
1988 HAVE MADE SUBSTANTIAL CHANGES TO QUALIFIED PLANS. YOU SHOULD CONSULT YOUR
TAX ADVISER TO FULLY ADDRESS ALL CHANGES OCCURRING AS A RESULT OF THE TAX REFORM
ACT AND THE TECHNICAL AND MISCELLANEOUS REVENUE ACT OF 1988 AND THEIR EFFECT ON
QUALIFIED PLANS.
A. Contributions
1. Pension, Profit-Sharing and Simplified Employee Pension Plans
Contributions to pension or profit-sharing plans (described in Section 401(a)
and 401(k), if applicable, and exempt from taxation under Section 501(a) of
the Code), and Simplified Employee Pension Plans (described in Section
408(k)), which do not exceed certain limitations prescribed in the Code are
fully tax deductible to the employer. Such contributions are not currently
taxable to the covered employees, and increases in the value of Contracts
purchased with such contributions are not subject to taxation until received
by the covered employees or their beneficiaries in the form of Annuity
payments or other distributions.
2. Tax-Deferred Annuity Plans for Public School Teachers and Employers and
Employees of Certain Tax-Exempt Organizations
Contributions to tax-deferred annuity plans (described in Section 403(a) and
403(b) of the Code) by employers are not includable within the employee's
income to the extent those contributions do not exceed the lesser of $9,500
or the exclusion allowance. Generally, the exclusion allowance is equal to
20% of the employee's includable compensation for his most recent full year
of employment multiplied by the number of years of his service, less the
aggregate amount contributed by the employer for Annuity Contracts which were
not included within the gross income of the employee for any prior taxable
year. There are special provisions which may allow an employee of an
educational institution, a hospital or a home health service agency to elect
an overall limitation different from the limitation described above.
3. Deferred Compensation Plans for Tax-Exempt Organizations and State and Local
Governments
Employees may contribute on a before tax basis to The Deferred Compensation
Plan of their employer in accordance with The employer's Plan and Section 457
of the Code. Section 457 places limitations on contributions to Deferred
Compensation Plans maintained by a State ("State" means a State, a political
sub-division of a State, and an agency or instrumentality of a State or
political sub-division of a State) or other tax-exempt organization.
Generally, the limitation is 33 1/3% of includable compensation (25% of gross
compensation) or $7,500, whichever is less. The plan may also provide for
additional contributions during the three taxable years ending before normal
retirement age of a Participant for a total of up to $15,000 per year for
such three years.
An employee electing to participate in a plan should understand that his
rights and benefits are governed strictly by the terms of the plan, that he
is in fact a general creditor of the employer under the terms of the plan,
<PAGE>
43
that the employer is legal owner of any Contract issued with respect to the
plan and that the employer as owner of the Contract(s) retains all voting
and redemption rights which may accrue to the Contract(s) issued with
respect to the plan. The participating employee should look to the terms of
his plan for any charges in regard to participating therein other than those
disclosed in this Prospectus.
Certain distributions are required to be made upon the death of a
Participant. These requirements are generally described in Section C.2.f. of
"Federal Tax Considerations" on page ___.
4. Individual Retirement Annuities ("IRA's")
Individuals may contribute and deduct the lesser of $2,000 or 100 percent of
their compensation to an IRA. In the case of a spousal IRA, the maximum
deduction is the lesser of $2,250 or 100 percent of compensation. The
deduction for contributions is phased out between $40,000 and $50,000 of
adjusted gross income (AGI) for a married individual (and between $25,000 and
$35,000 for single individuals) if either the individual or his or her spouse
is an active Participant in any Section 401(a), 403(a), 403(b) or 408(k) plan
regardless of whether the individual's interest is vested.
To the extent deductible contributions are not allowed, individuals may make
designated nondeductible contributions to an IRA, subject to the above
limits.
B. Distributions
1. Pension and Profit Sharing Plans, Tax Sheltered Annuities, Individual
Retirement Annuities.
Annuity payments made under the Contracts are taxable under Section 72 of the
Code as ordinary income, in the year of receipt, to the extent that they
exceed the "excludable amount." The investment in the Contract is the
aggregate amount of the contributions made by or on behalf of an employee
which were included as a part of his taxable income and not deducted. Thus,
annual premiums deducted for an IRA are not included in the investment in the
contract. The employee's investment in the Contract is divided by the
expected number of payments to be made under the Contract. The amount so
computed constitutes the "excludable amount," which is the amount of each
annuity payment considered a return of investment in each year and,
therefore, not taxable. Once the employee's investment in the Contract is
recouped, the full amount of each payment will be fully taxable. If the
employee dies prior to recouping his or her investment in the Contract, a
deduction is allowed for the last taxable year. The rules for determining
the excludable amount are contained in Section 72 of the Code.
Generally, distributions or withdrawals prior to age 59 1/2 may be subject to
an additional income tax of 10% of the amount includable in income. This
additional tax does not apply to distributions made after the employee's
death, on account of disability and distributions in the form of a life
annuity and, except in the case of an IRA, certain distributions after
separation from service at or after age 55, and certain distributions for
eligible medical expenses. A life annuity is defined as a scheduled series
of substantially equal periodic payments for the life or life expectancy of
the Participant (or the joint lives or life expectancies of the Participant
and Beneficiary). The taxation of withdrawals and other distributions varies
depending on the type of distribution and the type of plan from which the
distribution is made. With respect to tax-deferred annuity Contracts under
Section 403(b) contributions to the Contract made after December 31, 1988 and
any increases in cash value, after that date may not be distributed prior to
attaining age 59 1/2, separation of service, death or disability.
Contributions (but not earnings) made after December 31, 1988 may also be
distributed by reason of financial hardship.
<PAGE>
44
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments or annual distributions MUST commence by April 1 of the calendar
year following the year in which the Participant attains age 70 1/2. The
entire interest of the Participant must be distributed beginning no later
than this required beginning date over a period which may not extend beyond a
maximum of the lives or life expectancies of the Participant and a designated
Beneficiary. Each annual distribution must equal or exceed a "minimum
distribution amount" which is determined by dividing the account balance by
the applicable life expectancy. With respect to a section 403(b) plan, this
account balance is based upon earnings and contributions after December 31,
1986. In addition, minimum distribution incidental benefit rules may require
a larger annual distribution based upon dividing the entire account balance
as of the close of business on the last day of the previous calendar year by
a factor promulgated by the Internal Revenue Service which ranges from 26.2
(at age 70) to 1.8 (at age 115). Special rules apply to require that
distributions be made to beneficiaries after the death of the Participant. A
penalty tax of up to 50% of the amount which should be distributed may be
imposed by the Internal Revenue Service for failure to make such a
distribution.
2. Deferred Compensation Plans for Tax-Exempt Organizations and State and Local
Governments
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments or annual distributions must commence by April 1 of the calendar
year following the year in which the Participant attains age 70 1/2. Minimum
distributions under a Section 457 Deferred Compensation Plan may be further
deferred if the Participant remains employed. The entire interest of the
Participant must be distributed beginning no later than this required
beginning date over a period which may not extend beyond a maximum of the
life expectancy of the Participant and a designated Beneficiary. Each annual
distribution must equal or exceed a "minimum distribution amount" which is
determined by dividing the account balance by the applicable life expectancy.
This account balance is generally based upon the account value as of the
close of business on the last day of the previous calendar year. In
addition, minimum distribution incidental benefit rules may require a larger
annual distribution based upon dividing the account balance by a factor
promulgated by the Internal Revenue Service which ranges from 26.2 (at age
70) to 1.8 (at age 115). Special rules apply to require that distributions
be made to Beneficiaries after the death of the Participant. A penalty tax
of up to 50% of the amount which should be distributed may be imposed by the
Internal Revenue Service for failure to make a distribution. Upon receipt of
any monies pursuant to the terms of a Deferred Compensation Plans for a
tax-exempt organization, state or local government under Section 457 of the
Code, such monies are taxable to such employee as ordinary income in the
year in which received.
C. Federal Income Tax Withholding
The portion of a distribution which is taxable income to the recipient will
be subject to Federal income tax withholding, pursuant to Section 3405 of the
Internal Revenue Code. The application of this provision is summarized
below:
1. Eligible Rollover Distributions
a. The Unemployment Compensation Amendments Act of 1992 requires that
federal income taxes be withheld from certain
distributions from tax-qualified retirement plans and from
tax-sheltered annuities under Section 403(b). These provisions
DO NOT APPLY to distributions from individual retirement annuities
under section 408(b) or from deferred compensation programs under
section 457.
<PAGE>
45
b. If any portion of a distribution is an "eligible rollover
distribution", the law requires that 20% of that amount be
withheld. This amount is sent to the IRS as withheld income taxes.
The following types of payments DO NOT constitute an eligible
rollover distribution (and, therefore, the mandatory withholding
rules will not apply):
- the non-taxable portion of the distribution;
- distributions which are part of a series of equal (or substantially
equal) payments made at least annually for your lifetime (or your
life expectancy), or your lifetime and your Beneficiary's lifetime
(or life expectancies), or for a period of ten years or more.
- required minimum distributions made pursuant to section 401(a)(9) of
the IRC.
c. However, these mandatory withholding requirements do not apply in the
event that all or a portion of any eligible rollover distribution is
paid in a "direct rollover". A direct rollover is the direct payment
of an eligible rollover distribution or portion thereof to an
individual retirement arrangement or annuity (IRA) or to another
qualified employer plan. IF A DIRECT ROLLOVER IS ELECTED, NO INCOME
TAX WILL BE WITHHELD.
d. If any portion of a distribution is not an eligible rollover
distribution but is taxable, the mandatory withholding rules
described above do not apply. In this case, the voluntary
withholding rules described below apply.
2. Non-Eligible Rollover Distributions
a. Non-Periodic Distributions
The portion of a non-periodic distribution which constitutes taxable
income will be subject to Federal income tax withholding unless the
recipient elects not to have taxes withheld. If an election not to have
taxes withheld is not provided, 10% of the taxable distribution will be
withheld as Federal income tax. Election forms will be provided at the
time distributions are requested.
b. Periodic Distributions (distributions payable over a period greater
than one year)
The portion of a periodic distribution which constitutes taxable income
will be subject to Federal income tax withholding as if the recipient
were married claiming three exemptions. A recipient may elect not to
have income taxes withheld or have income taxes withheld at a different
rate by providing a completed election form. Election forms will be
provided at the time distributions are requested.
D. Any distribution from plans described in A.3 on page ___ is subject to the
regular wage withholding rules.
<PAGE>
46
THIS FORM MUST BE COMPLETED FOR ALL TAX SHELTERED ANNUITIES.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The Hartford Variable Annuity Contract which you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1989 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. attained age 59 1/2
b. terminated employment
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions may also be made if you
have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made because of financial
hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford Variable Annuity. Please refer to your
Plan.
Please complete the following and return to:
Hartford Life Insurance Company
Individual Annuity Operations
P.O. Box 5085
Hartford, CT 06102-5085
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Name of Contract Owner/Participant
Address
City or Plan/School District
Date:
<PAGE>
47
TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
SECTION PAGE NO.
- - ------- --------
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY . . . . . . . . . . . . . . . .
SAFEKEEPING OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNUITY/PAYOUT PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Annuity Unit and Valuation . . . . . . . . . . . . . . . . . . . . . . .
Determination of Payment Amount. . . . . . . . . . . . . . . . . . . . . . .
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
48
- - - - - - - - - - - -
To Obtain a Statement of Additional Information, please complete the form below
and mail to:
Hartford Life Insurance Company
Attn: Individual Annuity Operations
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for Separate Account Three to
me at the following address:
- - -------------------------------------------------
Name
- - -------------------------------------------------
Address
- - -------------------------------------------------
City/State Zip Code
- - - - - - - - - - - -
<PAGE>
PART B
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT THREE
This Statement of Additional Information is not a Prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to Hartford Life Insurance
Company, Attn: Individual Annuity Operations, P.O. Box 5085, Hartford, CT
06102-5085.
Date of Prospectus: May 1, 1995
Date of Statement of Additional Information: May 1, 1995
Form HV- Printed in U.S.A.
<PAGE>
TABLE OF CONTENTS
SECTION PAGE NO.
- - ------- --------
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY. . . . . . . . . . . . . . .
SAFEKEEPING OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . .
ANNUITY/PAYOUT PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Annuity Unit and Valuation . . . . . . . . . . . . . . . . . . . .
Determination of Payment Amount. . . . . . . . . . . . . . . . . . . .
CALCULATION OF YIELD AND RETURN . . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS . . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
-4-
INTRODUCTION
The tax deferred Variable Annuity Contracts described in the Prospectus are
designed to provide Annuity benefits to individuals who have established or wish
to establish retirement programs which may or may not qualify for special
Federal income tax treatment. The Annuitant under these Contracts may receive
Annuity benefits in accordance with the Annuity option selected and the
retirement program, if any, under which the Contracts have been purchased.
Annuity payments under a Contract will begin on a particular future date which
may be selected at any time under the Contract or automatically when the
Annuitant reaches age 90, except in certain states where the Annuitant must
reach age 85. There are several alternative annuity payment options available
under the Contract (see "Optional Forms of Annuity," page___ of the Prospectus).
The Premium Payments under a Contract, less any applicable Premium Taxes, will
be applied to the Separate Account and/or the Fixed Account. Accordingly, the
net Premium Payment under the Contract will be applied to purchase interests in
one or more of the following twelve portfolios of the Dean Witter Select
Dimensions Investment Series, an open-end diversified series investment company:
the Money Market Portfolio, the North American Government Securities Portfolio,
the Diversified Income Portfolio, the Balanced Portfolio, the Utilities
Portfolio, the Dividend Growth Portfolio, the Value-Added Market Portfolio, the
Core Equity Portfolio, the American Value Portfolio, the Global Equity
Portfolio, The Developing Growth Portfolio, and the Emerging Markets Portfolio.
Shares of the Portfolios are purchased by the Separate Account without the
imposition of any additional sales charge. The value of a Contract depends on
the value of the shares of the Portfolio held by the Separate Account pursuant
to that Contract. As a result, the Contract Owner bears the investment risk
since market value of the shares may increase or decrease.
The Contracts provide that in the event the Annuitant dies before the selected
Annuity Commencement Date, the Contingent Annuitant will become the Annuitant.
If the Annuitant dies before the Annuity Commencement Date and there is no
designated Contingent Annuitant, or the Contingent Annuitant predeceases the
Annuitant, or if the Contract Owner dies before the Annuity Commencement Date,
the Beneficiary will receive the Contract Value determined on the date of
receipt of due proof of death by HL in its Home Office. Upon death prior to the
Annuity Commencement Date,the Beneficiary will receive the greater of (a) the
Contract Value determined as of the day written proof of death of such person is
received by HL, or (b) 100% of the total Premium Payments made to such Contract,
reduced by any prior surrenders, or (c) the Contract Value on the Specified
Contract Anniversary immediately preceding the date of death, increased by the
dollar amount of any Premium Payments made and reduced by the dollar amount of
any partial terminations since the immediately preceding Specified Contract
Anniversary.
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company ("HL") was originally incorporated under the
laws of Massachusetts on June 5, 1902. It was subsequently redomiciled to
Connecticut. It is a stock life insurance company engaged in the business of
writing health and life insurance, both ordinary and group, in all states of the
United States and the District of Columbia. The offices of HL are located in
Simsbury, Connecticut; however its mailing address is P.O. Box 5085, Hartford,
Connecticut 06102-5085. HL is ultimately 100% owned by Hartford Fire Insurance
Company, one of the largest multiple lines insurance carriers in the United
States. Hartford Fire Insurance Company is a subsidiary of ITT Corporation.
<PAGE>
-5-
HL has an A++ (superior) rating from A.M. Best and Company, Inc. HL has an AA+
rating from Standard & Poor's and Duff and Phelps highest rating (AAA) on the
basis of its claims paying ability.
These ratings do not apply to the performance of the Separate Account. However,
the contractual obligation under this variable annuity are the general corporate
obligations of HL. These ratings do apply to HL's ability to meet its insurance
obligations under the Contract.
SAFEKEEPING OF ASSETS
The assets of the Separate Account are held by HL under a safekeeping
arrangement.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, One Financial Plaza, Hartford, Connecticut, independent
public accountants, will perform an annual audit of the Separate Account. The
financial statements included in this Statement of Additional Information have
been audited by Arthur Andersen LLP to the extent and for the periods indicated
in their report and are included herein in reliance upon the report of said firm
as experts in accounting and auditing.
DISTRIBUTION OF CONTRACTS
Hartford Equity Sales Company, Inc. ("HESCO") currently serves as principal
underwriter for the securities issued with respect to the Separate Account.
Hartford Securities Distribution Company, Inc. ("HSD") will replace HESCO as
principal underwriter upon approval by the Commission, the National Association
of Securities Dealers, Inc. ("NASD") and applicable state regulatory
authorities. Both HESCO and HSD are wholly-owned subsidiaries of HL. The
principal business address of HESCO and HSD is the same as HL.
The securities will be sold by insurance and Variable Annuity agents of HL who
are registered representatives of Dean Witter Reynold Inc. Dean Witter is
registered with the Commission under the Securities Exchange Act of 1934 as a
Broker-Dealer and is a member of the National Association of Securities Dealers,
Inc.
The offering of the Separate Account Contracts is continuous.
ANNUITY/PAYOUT PERIOD
ANNUITY PAYMENTS
Variable Annuity payments are determined on the basis of (1) a mortality table
set forth in the Contracts and the type of Annuity payment option selected, and
(2) the investment performance of the investment medium selected. Fixed Annuity
payments are based on the Annuity tables contained in the Contracts, and will
remain level for the duration of the Annuity.
The amount of the Annuity payments will not be affected by adverse mortality
experience or by an increase in expenses in excess of the expense deduction for
which provision has been made (see "Mortality and Expense Risk Charge,"
<PAGE>
-6-
page of the prospectus).
For a Variable Annuity, the Annuitant will be paid the value of a fixed number
of Annuity Units each month. The value of such units and the amounts of the
monthly Variable Annuity payments will, however, reflect investment income
occurring after retirement, and thus the Variable Annuity payments will vary
with the investment experience of the Portfolio shares selected.
THE ANNUITY UNIT AND VALUATION
The value of the Annuity Unit for each Sub-Account in the Separate Account for
any day is determined by multiplying the value for the preceding day by the
product of (1) the net investment factor (see "Valuation of Accumulation Units,"
page of the Prospectus) for the day for which the Annuity Unit value is
being calculated, and (2) a factor to neutralize the assumed investment rate
discussed below.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
1. Net Investment Factor for period. . . . . . . . . . . . . . . . . . 1.011225
2. Adjustment for 4% Assumed Investment Rate . . . . . . . . . . . . . .999892
3. 2x1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.011116
4. Annuity Unit value, beginning of period . . . . . . . . . . . . . . .995995
5. Annuity Unit value, end of period (3x4) . . . . . . . . . . . . . . 1.007066
DETERMINATION OF PAYMENT AMOUNT
When Annuity payments are to commence, the value of the Contract is determined
as the sum of the value of the Fixed Account no earlier than the close of
business on the fifth Valuation Day preceding the date the first Annuity payment
is due plus the product of the value of the Accumulation Unit of each
Sub-Account on that same day, and the number of Accumulation Units credited to
each Sub-Account as of the date the Annuity is to commence.
The Contract contains tables indicating the minimum dollar amount of the first
monthly payment under the optional forms of Annuity for each $1,000 of value of
a Sub-Account under a Contract. The first monthly payment varies according to
the form and type of Annuity selected. The Contracts contain Annuity tables
derived from the 1983a Individual Annuity Mortality Table with ages set back one
year with an assumed investment rate ("A.I.R.") of 3.00% per annum for a Fixed
Annuity and 5.00% per annum for a Variable Annuity. The total first monthly
Variable Annuity payment is determined by multiplying the value (expressed in
thousands of dollars) of a Sub-Account (less any applicable Premium Taxes) by
the amount of the first monthly payment per $1,000 of value obtained from the
tables in the Contracts.
Fixed Annuity payments are determined at annuitization by multiplying the values
allocated to the Fixed Account by a rate to be determined by HL which is no less
than the rate specified in the Annuity tables in the Contract. The Annuity
payment will remain level for the duration of the Annuity.
<PAGE>
-7-
The amount of the first monthly Variable Annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account no earlier than the close of business on the fifth Valuation Day
preceding the day on which the payment is due in order to determine the number
of Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the Annuity Period, and in each subsequent month the dollar
amount of the Variable Annuity payment is determined by multiplying this fixed
number of Annuity Units by the then current Annuity Unit value.
The A.I.R. assumed in the mortality tables would produce level Variable Annuity
payments if the investment rate remained constant. In fact, payments will vary
up or down as the investment rate varies up or down from the A.I.R.
The Annuity payments will be made on the fifteenth day of each month following
selection. The Annuity Unit value used in calculating the amount of the
Variable Annuity payments will be based on an Annuity Unit value determined as
of the close of business on a day no earlier than the fifth Valuation Day
preceding the date of the Annuity payment.
CALCULATION OF YIELD AND RETURN
YIELD OF THE MONEY MARKET PORTFOLIO SUB-ACCOUNT. As summarized in the
Prospectus under the heading "Performance Related Information," the yield of the
Sub-Account for a seven day period (the "base period") will be computed by
determining the "net change in value" of a hypothetical account having a balance
of one unit at the beginning of the period, dividing the net change in account
value by the value of the account at the beginning of the base period to obtain
the base period return, and multiplying the base period return by 365/7 with the
resulting yield figure carried to the nearest hundredth of one percent. Net
changes in value of a hypothetical account will include net investment income of
the account (accrued dividends as declared by the underlying funds, less expense
and Contract charges of the account) for the period, but will not include
realized gains or losses or unrealized appreciation or depreciation on the
underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from the
result, according to the following formula:
Effective Yield = [(Base Period Return + 1) (365/7)] - 1
The Money Market Portfolio Sub-Account's yield and effective yield will vary
in response to fluctuations in interest rates and in the expenses of the
Sub-Account.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information", total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula
for total return used herein includes three steps: (1) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period; (2) assuming redemption at
the end of the period and deducting any applicable contingent deferred sales
charge and (3) dividing this account value for the hypothetical investor by the
initial $1,000 investment and annualizing the result for periods of less than
one year. Total return will be calculated for one year, five years, and ten
years or some other relevant periods if a Sub-Account has not been in existence
for at least ten years.
<PAGE>
-8-
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. The total return and yield may also be used to compare
the performance of the Sub-Accounts against certain widely acknowledged outside
standards or indices for stock and bond market performance. Index performance
is not representative of the performance of the Sub-Account to which it is
compared and is not adjusted for commissions and other costs. Portfolio
holdings of the Sub-Account will differ from those of the index to which it is
compared. Performance comparison indices include the following:
The Consumer Price Index, prepared by the U.S. Bureau of Labor Statistics, is a
commonly used measure of the rate of inflation. The index shows the average
change in the cost of selected consumer goods and services and does not
represent a return on an investment vehicle.
The Dow Jones Industrial Average is an unmanaged list of 30 common stocks
frequently used as a general measure of stock market performance. Its
performance figures reflect changes of market prices and reinvestment of all
distributions.
Lehman Brothers Corporate Bond Index is an unmanaged list of publicly issued,
fixed-rate, non-convertible investment-grade domestic corporate debt securities
frequently used as a general measure of the performance of fixed-income
securities. The average quality of bonds included in the index may be higher
than the average quality of those bonds in which High Yield Fund customarily
invests. The index does not include bonds in certain of the lower rating
classifications in which the Fund may invest. The performance figures of the
index reflect changes in market prices and reinvestment of all interest
payments.
The Lehman Brothers Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted
issues are not included in the SL Government Index.
The Lehman Brothers Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency. The index does not include bonds in certain of the lower-rating
classifications in which High Yield Fund invests. Its performance figures
reflect changes in market prices and reinvestment of all interest payments.
Morgan Stanley Capital International World Index is an unmanaged list of
approximately 1,450 equity securities listed on the stock exchanges of the
United States, Europe, Canada, Australia, New Zealand and the Far East, with all
values expressed in U.S. dollars. Performance figures reflect changes in market
prices and reinvestment of distributions net of withholding taxes. The
securities in the index change over time to maintain representativeness.
<PAGE>
-9-
The NASDAQ-OTC Industrial Average (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks relative to the base measure of 100.00 on
February 5, 1971. The NASDAQ Index is composed entirely of common stocks of
companies traded over-the-counter and often through the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system. Only those
over-the-counter stocks having only one market maker or traded on exchanges are
excluded. Its performance figures reflect changes of market prices but do not
reflect reinvestment of cash dividends.
Salomon Brothers Long-Term High-Grade Corporate Bond Index is an unmanaged list
of publicly traded corporate bonds having a rating of at least AA by Standard &
Poor's or Aa by Moody's and is frequently used as general measure of the
performance of fixed-income securities. The average quality of bonds included
in the index may be higher than the average quality of those bonds in which PCM
High Yield customarily invests. The index does not include bonds in certain of
the lower rating classifications in which the Fund may invest. Performance
figures for the index reflect changes of market prices and reinvestment of all
distributions.
The Salomon Brothers 7-10 Year Government Bond Index is an unmanaged list of
U.S. Government and government agency securities with maturities of 7 to 10
years. Performance figures for the index reflect changes of market prices and
reinvestment of all interest payments.
The Standard & Poor's Composite Index of 500 stocks (the "S&P 500") a market
value-weighted and unmanaged index showing changes in the aggregate market value
of 500 stocks relative to the base period 1941-43. The S&P 500 is composed
almost entirely of common stocks of companies listed on the New York Stock
Exchange, although the common stocks of a few companies listed on the American
Stock Exchange or traded over-the-counter are included. The 500 companies
represented include 400 industrial, 60 transportation and 40 financial services
concerns. The S&P 500 represents about 80% of the market value of all issues
traded on the New York Stock Exchange. Its performance figures reflect changes
of market prices and reinvestment of all regular cash dividends.
The Standard & Poor's 40 Utilities Index is unmanaged list of 40 utility stocks.
The Index assumes reinvestment of all distributions and reflects changes in
market prices but does not take into account brokerage commissions or other
fees.
The manner in which total return and yield will be calculated for public use is
described above.
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Hartford Life
Insurance Company (a Connecticut corporation and wholly-owned subsidiary of
Hartford Life and Accident Insurance Company) and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of income,
stockholder's equity and cash flow for each of the three years in the period
ended December 31, 1994. These consolidated financial statements and the
schedules referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hartford Life Insurance Company and subsidiaries as of December 31, 1994 and
1993 and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
As discussed in the accompanying notes to the consolidated financial statements,
the Company adopted new accounting standards promulgated by the Financial
Accounting Standards Board, changing its methods of accounting, as of
January 1, 1994, for debt and equity securities, and, effective January 1, 1992,
for postretirement benefits other than pensions and postemployment benefits.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in
the index to Consolidated Financial Statements and Schedules are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not a required part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic consolidated financial statements and, in our opinion, fairly state
in all material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
/s/ Arthur Andersen LLP
Hartford, Connecticut
January 30, 1995
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Premiums and other considerations $ 1,100 $ 747 $ 259
Net investment income 1,292 1,051 907
Net realized gains on investments 7 16 5
---------- ---------- ----------
2,399 1,814 1,171
BENEFITS, CLAIMS AND EXPENSES:
Benefits, claims and claim
adjustment expenses 1,405 1,046 797
Amortization of deferred policy
acquisition costs 145 113 55
Dividends to policyholders 419 227 47
Other insurance expenses 227 210 138
---------- ---------- ----------
2,196 1,596 1,037
INCOME BEFORE INCOME TAX AND
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 203 218 134
Income tax expense 65 75 45
---------- ---------- ----------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 138 143 89
Cumulative effect of changes in
accounting principles net of tax benefit of $7 - - (13)
---------- ---------- ----------
NET INCOME $ 138 $ 143 $ 76
---------- ---------- ----------
---------- ---------- ----------
- - ---------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------
AS OF DECEMBER 31,
1994 1993
------------ -------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, available for sale, at fair value in 1994 and at
amortized cost in 1993 (amortized cost, $14,464 in 1994; fair
value, $12,845 in 1993) $ 13,429 $ 12,597
Equity securities, at fair value 68 90
Mortgage loans, at outstanding principal balance 316 228
Policy loans, at outstanding balance 2,614 1,397
Other investments 107 40
------------ -------------
16,534 14,352
Cash 20 1
Premiums and amounts receivable 160 327
Reinsurance recoverable 5,466 5,532
Accrued investment income 378 241
Deferred policy acquisition costs 1,809 1,334
Deferred income tax 590 114
Other assets 83 101
Separate account assets 22,809 16,284
------------ -------------
$ 47,849 $ 38,286
------------ -------------
------------ -------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Future policy benefits $ 1,890 $ 1,659
Other policyholder funds 21,328 18,234
Other liabilities 1,000 916
Separate account liabilities 22,809 16,284
------------ -------------
47,027 37,093
Common stock - authorized 1,000 shares, $5,690 par value,
issued and outstanding 1,000 shares 6 6
Capital surplus 826 676
Unrealized losses on securities, net of tax (654) (5)
Retained earnings 644 516
------------ -------------
822 1,193
------------ -------------
$ 47,849 $ 38,286
------------ -------------
------------ -------------
- - -----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------
UNREALIZED
GAINS(LOSSES) TOTAL
COMMON CAPITAL ON RETAINED STOCKHOLDER'S
STOCK SURPLUS SECURITIES EARNINGS EQUITY
----- ------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991 $ 6 $ 439 $ 1 $ 297 $ 743
Net Income 76 76
Capital Contribution - 25 - - 25
Excess of assets over liabilities on
reinsurance assumed from affiliate - 34 - - 34
Change in unrealized losses on equity
securities, net of tax - - (1) - (1)
---------- ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1992 6 498 0 373 877
---------- ---------- ---------- ---------- ----------
Net Income - - - 143 143
Capital Contribution - 180 - - 180
Excess of assets over liabilities on
reinsurance assumed from affiliate - (2) - - (2)
Change in unrealized losses on equity
securities, net of tax - - (5) - (5)
---------- ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1993 6 676 (5) 516 1,193
---------- ---------- ---------- ---------- ----------
Net Income - - - 138 138
Capital Contribution - 150 - - 150
Dividends Paid - - - (10) (10)
Change in unrealized losses on securities,
net of tax* - - (649) - (649)
---------- ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1994 $ 6 $ 826 $ (654) $ 644 $ 822
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
- - ----------------------------------------------------------------------------------------------------------------------
<FN>
* The 1994 change in unrealized losses on securities, net of tax, includes a
gain of $91 due to adoption of SFAS #115 as discussed in note 1b to the
consolidated financial statements.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-5
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOW
(IN MILLIONS)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
NET INCOME $ 138 $ 143 $ 76
Cumulative effect of accounting changes - - 13
Adjustments to net income:
Net realized investment gains before tax (7) (16) (5)
Net policyholder investment losses (gains) before tax 5 (15) (15)
Net deferred policy acquisition costs (441) (292) (278)
Net amortization of premium (discount) on fixed maturities 41 2 (16)
Deferred income tax benefits (128) (121) (14)
(Increase) decrease in premiums and amounts receivable 10 (28) (14)
Increase in accrued investment income (106) (4) (116)
Decrease (increase) in other assets 101 (36) 88
Decrease (increase) in reinsurance recoverable 75 (121) 0
Increase in liability for future policy benefits 224 360 527
Increase in other liabilities 191 176 92
---------- ----------- -----------
CASH PROVIDED BY OPERATING ACTIVITIES 103 48 338
---------- ----------- -----------
INVESTING ACTIVITIES:
Purchases of fixed maturity investments (9,127) (12,406) (8,948)
Proceeds from sales of fixed maturity investments 5,708 8,813 5,728
Maturities and principal paydowns of long-term investments 1,931 2,596 1,207
Net purchases of other investments (1,338) (206) (106)
Net sales (purchases) of short-term investments 135 (564) 221
---------- ----------- -----------
CASH USED FOR INVESTING ACTIVITIES (2,691) (1,767) (1,898)
FINANCING ACTIVITIES:
Net receipts from investment and UL-type contracts credited to policyholder account balances 2,467 1,513 1,512
Capital contribution 150 180 25
Excess of assets over liabilities on reinsurance assumed from affiliate - - 34
Dividends paid (10) - -
---------- ----------- -----------
CASH PROVIDED BY FINANCING ACTIVITIES 2,607 1,693 1,571
---------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 19 (26) 11
Cash at beginning of period 1 27 16
---------- ----------- -----------
CASH AT END OF PERIOD $ 20 $ 1 $ 27
---------- ----------- -----------
---------- ----------- -----------
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-6
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS)
1. SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION:
These consolidated financial statements include Hartford Life Insurance
Company (the Company or HLIC) and its wholly-owned subsidiaries, ITT
Hartford Life and Annuity Company (ILA) and ITT Hartford International
Life Reassurance Corporation (HLR), formerly American Skandia Life
Reinsurance Corporation. HLIC is a wholly-owned subsidiary of Hartford
Life and Accident Insurance Company (HLA). The Company is ultimately
owned by Hartford Fire Insurance Company (Hartford Fire), which is
ultimately owned by ITT Hartford Group, Inc., a subsidiary of ITT
Corporation (ITT).
The consolidated financial statements are prepared in conformity with
generally accepted accounting principles which differ in certain
material respects from the accounting practices prescribed or permitted
by various insurance regulatory authorities.
Certain reclassifications have been made to prior year financial
statements to conform to current year classifications.
(b) CHANGES IN ACCOUNTING PRINCIPLES:
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" and SFAS No. 112,
Employers' Accounting for Postemployment Benefits", using the immediate
recognition method. Accordingly, a cumulative adjustment (through
December 31, 1991) of $7 after-tax has been recognized at January 1,
1992.
Effective January 1, 1994, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities".
The new standard requires, among other things, that fixed maturities be
classified as "held-to-maturity", "available-for-sale" or "trading"
based on the Company's intentions with respect to the ultimate
disposition of the security and its ability to effect those intentions.
The classification determines the appropriate accounting carrying value
(cost basis or fair value) and, in the case of fair value, whether the
adjustment impacts Stockholder's Equity directly or is reflected in the
Consolidated Statements of Income. Investments in equity securities
had previously been recorded at fair value with the corresponding
impact included in Stockholder's Equity. Under SFAS No. 115, the
Company's fixed maturities are classified as "available for sale" and
accordingly, these investments are reflected at fair value with the
corresponding impact included as a component of Stockholder's Equity
designated as "Unrealized Loss on Securities, Net of Tax." As with the
underlying investment security, unrealized gains and losses on
derivative financial instruments are considered in determining the fair
value of the portfolios. The impact of adoption was an increase to
stockholder's equity of $91.
The Company's cash flows were not impacted by these changes in
accounting principles.
(c) REVENUE RECOGNITION:
Revenues for universal life policies and investment products consist of
policy charges for the cost of insurance.
F-7
<PAGE>
policy administration and surrender charges assessed to policy account
balances. Premiums for traditional life insurance policies are
recognized as revenues when they are due from policyholders. Deferred
acquisition costs are amortized using the retrospective deposit method
for universal life and other types of contracts where the payment
pattern is irregular or surrender charges are a significant source of
profit and the prospective deposit method is used where investment
margins are the primary source of profit.
(d) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS:
Liabilities for future policy benefits are computed by the net level
premium method using interest rate assumptions varying from 3% to 11%
and withdrawal, mortality and morbidity assumptions which vary by plan,
year of issue and policy durations and include a provision for adverse
deviation. Liabilities for universal life insurance and investment
products represent policy account balances before applicable surrender
charges.
(e) POLICYHOLDER REALIZED GAINS AND LOSSES:
Realized gains and losses on security transactions associated with the
Company's immediate participation guaranteed contracts are excluded
from revenues, since under the terms of the contracts the realized
gains and losses will be credited to policyholders in future years as
they are entitled to receive them.
(f) DEFERRED POLICY ACQUISITION COSTS:
Policy acquisition costs, including commissions and certain
underwriting expenses associated with acquiring traditional life
insurance products, are deferred and amortized over the lesser of the
estimated or actual contract life. For universal life insurance and
investment products, acquisition costs are being amortized generally in
proportion to the present value of expected gross profits from
surrender charges, investment, mortality and expense margins.
(g) INVESTMENTS:
Investments in fixed maturities are classified as available for sale
and accordingly reflected at fair value with the corresponding impact
of unrealized gains and losses, net of tax, included as a component of
stockholder's equity. Securities and derivative instruments, including
swaps, caps, floors, futures, forward commitments and collars, are
based on dealer quotes or quoted market prices for the same or similar
securities. While the Company has the ability and intent to hold all
fixed income securities until maturity, due to contract obligations,
interest rates and tax laws, portfolio activity occurs. These trades
are motivated by the need to optimally position investment portfolios
in reaction to movements in capital markets or distribution of
policyholder liabilities. When an other than temporary reduction in
the value of publicly traded securities occurs, the decrease is
reported as a realized loss and the carrying value is adjusted
accordingly. Real estate is carried at cost less accumulated
depreciation. Equity securities, which include common stocks, are
carried at market value with the after-tax difference from cost
reflected in stockholder's equity. Realized investment gains and
losses, after deducting life and pension policyholders share are
reported as a component of revenue and are determined on a specific
identification basis.
(h) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses a variety of derivative financial instruments as part
of an overall risk management strategy. These instruments, including
swaps, caps, collars and exchange traded financial futures, are used as
a means of hedging exposure to price, foreign currency and/or interest
rate risk on planned investment purchases or existing assets and
liabilities. The Company does not hold or issue derivative financial
instruments for trading purposes. The Company's minimum correlation
threshold for hedge designation is 80%. If correlation, which is
assessed monthly and measured based on a rolling three month average,
falls below 80%, hedge accounting will be terminated. Gains or losses
on futures purchased in anticipation of the future receipt of product
cash flows are deferred and, at the time of the ultimate purchase,
reflected as a basis adjustment to the purchased asset. Gains or
losses on futures used in invested asset risk management are deferred
and adjusted into the basis of the hedged asset when the contract is
closed. The basis adjustments are amortized into investment income
over the remaining asset life.
F-8
<PAGE>
Open forward commitment contracts are marked to market through
Stockholder's Equity. Such contracts are recorded at settlement by
recording the purchase of the specified securities at the previously
committed price. Gains or losses resulting from the termination of the
forward commitment contracts before the delivery of the securities are
recognized immediately in the income statement as a component of
investment income.
The Company's accounting for interest rate swaps and purchased or
written caps, floors, and options used to manage risk is in accordance
with the concepts established in SFAS 80, "Accounting for Futures
Contracts", the American Institute of Certified Public Accountants
Statement of Position 86-2, "Accounting for Options" and various EITF
pronouncements, except for written options which are written in all
cases in conjunction with other assets and derivatives as part of an
overall risk management strategy. Such synthetic instruments are
accounted for as hedges. Derivatives, used as part of a risk
management strategy, must be designated at inception and have
consistency of terms between the synthetic instrument and the financial
instrument being replicated. Synthetic instrument accounting,
consistent with industry practice, provides that the synthetic asset is
accounted for like the financial instrument it is intended to
replicate. Interest rate swaps and purchased or written caps, floors
and options which fail to meet management criteria are accounted for at
fair market value with the impact reflected in net income.
Interest rate swaps involve the periodic exchange of payments without
the exchange of underlying principal or notional amounts. Net payments
are recognized as an adjustment to income. Should the swap be
terminated, the gains or losses are adjusted into the basis of the
asset or liability and amortized over the remaining life. The basis of
the underlying asset or liability is adjusted to reflect changing
market conditions such as prepayment experience. Should the asset be
sold or liability terminated, the gains or losses on the terminated
position are immediately recognized in earnings. Interest rate swaps
purchased in anticipation of an asset purchase ("anticipatory
transaction") are recognized consistent with the underlying asset
components. That is, the settlement component is recognized in the
Statement of Income while the change in market is recognized as an
unrealized gain or loss.
Premiums paid on purchased floor or cap agreements and the premium
received on issued cap or floor agreements used for risk management, as
well as the net payments, are adjusted into the basis of the applicable
asset and amortized over the asset life. Gains or losses on
termination of such positions are adjusted into the basis of the asset
or liability and amortized over the remaining asset life.
Forward exchange contracts and foreign currency swaps are accounted for
in accordance with SFAS 52. Changes in the spot rate of instruments
designated as hedges of the net investment in a foreign subsidiary are
reflected in the cumulative translation adjustment component of
stockholder's equity.
(i) RELATED PARTY TRANSACTIONS:
Transactions of the Company with its parent and affiliates relate
principally to tax settlements, insurance coverage, rental and service
fees and payment of dividends and capital contributions. In addition,
certain affiliated insurance companies purchased group annuity
contracts from the Company to fund pension costs and claim annuities to
settle casualty claims.
Substantially all general insurance expenses related to the Company,
including rent expenses, are initially paid by Hartford Fire. Direct
expenses are allocated to the Company using specific identification and
indirect expenses are allocated using other applicable methods.
The rent paid to Hartford Fire for the space occupied by the Company
was $3 in 1994, 1993, and 1992 respectively. The Company expects to
pay rent of $3 in 1995, 1996, 1997, 1998, and 1999 respectively and $60
thereafter, over the contract life of the lease.
See also Note (4) for the related party coinsurance agreements.
F-9
<PAGE>
2. INVESTMENTS
(a) COMPONENTS OF NET INVESTMENT INCOME:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest income $ 1,247 $ 1,007 $ 894
Income from other investments 54 53 15
----------- ----------- -----------
GROSS INVESTMENT INCOME 1,301 1,060 909
Less: investment expenses 9 9 2
----------- ----------- -----------
NET INVESTMENT INCOME $ 1,292 $ 1,051 $ 907
----------- ----------- -----------
----------- ----------- -----------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
(b) UNREALIZED GAINS (LOSSES) ON EQUITY SECURITIES:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross unrealized gains $ 2 $ 3 $ 2
Gross unrealized losses (11) (11) (2)
Deferred income tax expense (benefit) (3) (3) 0
----------- ----------- -----------
NET UNREALIZED LOSSES AFTER TAX (6) (5) 0
Balance at beginning of year (5) 0 1
----------- ----------- -----------
CHANGE IN NET UNREALIZED LOSSES ON EQUITY SECURITIES $ (1) $ (5) $ (1)
----------- ----------- -----------
----------- ----------- -----------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
(c) UNREALIZED GAINS (LOSSES) ON FIXED MATURITIES:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross unrealized gains $ 150 $ 538 $ 521
Gross unrealized losses (1,185) (290) (302)
----------- ----------- -----------
NET UNREALIZED (LOSSES) GAINS (1,035) 248 219
Unrealized losses credited to policyholders 37 0 0
Deferred income tax expense (benefit) (350) 87 75
----------- ----------- -----------
NET UNREALIZED (LOSSES) GAINS AFTER TAX (648) 161 144
Balance at beginning of year 161 144 297
----------- ----------- -----------
CHANGE IN NET UNREALIZED (LOSSES) GAINS ON FIXED MATURITIES $ (809) $ 17 $ (153)
----------- ----------- -----------
----------- ----------- -----------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
(d) COMPONENTS OF NET REALIZED GAINS:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Fixed maturities $ (34) $ (12) $ 20
Equity securities (11) 0 3
Real estate and other 47 43 (3)
Less: (decrease) increase in liability to policyholders for realized gains (5) 15 15
----------- ----------- -----------
NET REALIZED GAINS $ 7 $ 16 $ 5
----------- ----------- -----------
----------- ----------- -----------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-10
<PAGE>
(e) DERIVATIVE INVESTMENTS:
A summary of investments, segregated by major category along with the
types of derivatives and their respective notional amounts, are as
follows as of December 31, 1994:
SUMMARY OF INVESTMENTS
AS OF DECEMBER 31, 1994
(CARRYING AMOUNTS)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------
ISSUED CAPS, PURCHASED
TOTAL CARRYING NON- FLOORS & CAPS, FLOORS FUTURES SWAPS
VALUE DERIVATIVE OPTIONS (B) & OPTIONS (C) (D) (F)
-------------- ---------- ------------- ------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Asset Backed Securities $5,670 $5,690 $(31) $24 $0 $(13)
Inverse Floaters (A) 474 482 (9) 4 0 (3)
Anticipatory (E) (30) 0 0 2 0 (32)
-------- -------- -------- -------- -------- --------
TOTAL ASSET BACKED 6,114 6,172 (40) 30 0 (48)
SECURITIES
Other Bonds and Notes 6,533 6,606 0 0 0 (73)
Short-Term Investments 782 782 0 0 0 0
-------- -------- -------- -------- -------- --------
TOTAL FIXED MATURITIES 13,429 13,560 (40) 30 0 (121)
Other Investments 3,105 3,105 0 0 0 0
-------- -------- -------- -------- -------- --------
TOTAL INVESTMENTS $16,534 $16,665 $(40) $30 $0 $(121)
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SUMMARY OF INVESTMENTS IN DERIVATIVES
AS OF DECEMBER 31, 1994
(NOTIONAL AMOUNTS)
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
ISSUED CAPS, PURCHASED
TOTAL NOTIONAL FLOORS & CAPS, FLOORS SWAPS
AMOUNT OPTIONS (B) & OPTIONS (C) FUTURES (D) (F)
-------------- ------------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Asset Backed Securities $4,244 $1,311 $2,546 $75 $312
Inverse Floaters (A) 1,129 277 63 3 786
Anticipatory (E) 835 0 209 101 525
-------- -------- -------- -------- --------
TOTAL ASSET BACKED 6,208 1,588 2,818 179 1,623
Other Bonds and Notes 670 0 72 74 524
Short-Term Investments 0 0 0 0 0
-------- -------- -------- -------- --------
TOTAL FIXED MATURITIES 6,878 1,588 2,890 253 2,147
Other Investments 16 0 3 0 13
-------- -------- -------- -------- --------
TOTAL INVESTMENTS $6,894 $1,588 $2,893 $253 $2,160
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
F-11
<PAGE>
A summary of the notional and fair value of derivatives with off Balance Sheet
risk as of December 31, 1993 is as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Issued Swaps, Caps
Floors and Collars Futures Forwards Total
------------------ ------- -------- -----
<S> <C> <C> <C> <C>
Notional $7,015 $1,792 $91 $8,898
Fair Value $(4) $0 $1 $(3)
---------------------------------------------------------------------------------------
</TABLE>
(A) Inverse floaters, which are variations of CMO's for which the
coupon rates move Inversely with an index rate (e.g. LIBOR). The risk
to principal is considered negligible as the underlying collateral for
the securities is guaranteed or sponsored by government agencies. To
address the volatility risk created by the coupon variability, the
Company uses a variety of derivative instruments, primarily interest
rate swaps and issued floors.
(B) Comprised primarily of caps ($1,459) with a weighted average strike
rate of 7.7% (ranging from 6.8% to 10.2%). Over 70% mature in 1997 and
1998. Issued floors total $125 with a weighted average strike rate of
6.3% and mature in 2004.
(C) Comprised of purchased floors (1,856), purchased options and
collars ($633) and purchased caps ($404). The floors have a weighted
average strike price of 5.8% (ranging from 4.8% and 6.6%) and over 85%
mature in 1997 and 1998. The options and collars generally mature in
1995 and 2002. The caps have a weighted average strike price of 7.2%
(ranging from 4.5% and 8.9%) and over 65% mature in 1997 through 1999.
(D) Over 95% of futures contracts expire before December 31, 1995.
(E) Deferred gains and losses on anticipatory transactions are included
in the carrying value of bond investments in the consolidated balance
sheets. At the time of the ultimate purchase, they are reflected as a
basis adjustment to the purchased asset. At December 31, 1994, these
were ($33) million in net deferred losses for futures, interest rate
swaps and purchased options.
(F) The following table summarizes the maturities of interest rate and
foreign currency swaps outstanding at December 31, 1994 and the related
weighted average interest pay rate or receive rate assuming current
market conditions:
Maturity of Swaps on Investments as of December 31, 1994
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Last
Derivative Type 1995 1996 1997 1998 1999 2000+ Total Maturity
--------------- -------- -------- -------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS:
PAY FIXED/RECEIVE VARIABLE:
Notional Value $0 $15 $50 $0 $446 $268 $779 2004
Weighted Average Pay Rate 0.0% 5.0% 7.2% 0.0% 8.2% 7.8% 7.9%
Weighted Average Receive Rate 0.0% 6.4% 5.7% 0.0% 7.5% 6.5% 7.0%
PAY VARIABLE/RECEIVE FIXED:
Notional Value $311 $50 $100 $25 $175 $100 $761 2002
Weighted Average Pay Rate 5.1% 5.3% 5.5% 5.3% 5.4% 6.0% 5.4%
Weighted Average Receive Rate 8.0% 8.0% 7.5% 4.0% 4.5% 7.2% 6.9%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE:
Notional Value $95 $50 $18 $15 $5 $232 $415 2005
Weighted Average Pay Rate 4.2% 6.4% 6.8% 6.2% 0.0% 6.0% 5.7%
Weighted Average Receive Rate 9.1% 6.3% 9.5% 6.4% 0.0% 6.3% 7.1%
TOTAL INTEREST RATE SWAPS $406 $115 $168 $40 $626 $600 $1,955 2004
Total Weighted Average Pay Rate 4.9% 5.7% 6.1% 5.6% 7.4% 6.8% 6.5%
Total Weighted Average Receive Rate 8.2% 7.1% 7.2% 4.9% 6.7% 6.5% 7.0%
FOREIGN CURRENCY SWAPS $35 $46 $29 $15 $10 $70 $205 2002
TOTAL SWAPS $441 $161 $197 $55 $636 $670 $2,160 2005
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-12
<PAGE>
In addition to risk management through derivative financial instruments
pertaining to the investment portfolio, interest rate sensitivity
related to certain Company liabilities was altered primarily through
interest rate swap agreements. The notional amount of the liability
agreements in which the Company generally pays one variable rate in
exchange for another, was $1.7 billion and $1.3 billion at December
31, 1994 and 1993 respectively. The weighted average pay rate is 6.2%;
the weighted average receive rate is 6.6%, and these agreements mature
at various times through 2004.
(f) CONCENTRATION OF CREDIT RISK:
The Company has a reinsurance recoverable of $4.4 billion from Mutual
Benefit Life Assurance Corporation (Mutual Benefit). The risk of Mutual
Benefit becoming Insolvent is mitigated by the reinsurance agreement's
requirement that the assets be kept in a security trust with the
Company as sole beneficiary. Excluding investments in U.S. government
and agencies, the Company has no other significant concentrations of
credit risk.
The Company currently owns $39.2 million par value of Orange County,
California Pension Obligation Bonds. $17.1 million of which it
continues to carry as available for sale under FASB 115 and $22.1
million which are included in the Separate Account Assets. While Orange
County is currently operating under Protection of Chapter 9 of the
Federal Bankruptcy Laws, the Company believes it is probable that it
will collect all amounts due under the contractual terms of the bonds
and that the bonds are not permanently or other than temporarily
impaired.
As of December 31, 1994 the Company owned $66.1 million of Mexican
bonds, $52.3 million of which are payable in Mexican pesos but are
fully hedged back to U.S. dollars, and $13.8 million of U.S. Dollar
Denomination Mexican bonds. The primary risks associated with these
securities is a default by the Mexican government or imposition of
currency controls that prevent conversion of Mexican pesos to U.S.
dollars. The Company believes both of these risks are remote.
(g) FIXED MATURITIES:
The schedule below details the amortized cost and fair values of the
Company's fixed maturities by component, along with the gross
unrealized gains and losses:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
1994
--------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
U.S. Government and government agencies and
authorities:
- guaranteed and sponsored $1,516 $1 $(87) $1,430
- guaranteed and sponsored - asset backed 4,256 78 (571) 3,763
States, municipalities and political subdivisions 148 1 (12) 137
International governments 189 1 (14) 176
Public utilities 531 1 (32) 500
All other corporate 3,717 38 (297) 3,458
All other corporate - asset backed 2,442 30 (121) 2,351
Short-term investments 1,665 0 (51) 1,614
------- ------- -------- -------
TOTAL $14,464 $150 $(1,185) $13,429
------- ------- -------- -------
------- ------- -------- -------
----------------------------------------------------------------------------------------------------------------
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
1993
--------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
U.S. Government and government agencies and
authorities:
- guaranteed and sponsored $ 1,637 $ 15 $ (12) $ 1,640
- guaranteed and sponsored - asset backed 4,070 235 (219) 4,086
States, municipalities and political subdivisions 73 9 0 82
International governments 100 5 (3) 102
Public utilities 423 20 (2) 441
All other corporate 3,598 180 (42) 3,736
All other corporate - asset backed 1,806 74 (12) 1,868
Short-term investments 890 0 0 890
----------- ------------ ------------ ------------
TOTAL $12,597 $538 $ (290) $12,845
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
------------------------------------------------------------------------------------------------------
</TABLE>
The amortized cost and estimated fair value of fixed maturity
investments at December 31, 1994, by maturity, are shown below. Asset
backed securities are distributed to maturity year based on the
Company's estimate of the rate of future prepayments of principal over
the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting the borrower's rights to call or
prepay their obligations.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Amortized Cost Estimated Fair Value
-------------- --------------------
Maturity
--------
<S> <C> <C>
Due in one year or less $ 2,214 $ 2,183
Due after one year through five years 7,000 6,647
Due after five years through ten years 3,678 3,334
Due after ten years 1,572 1,265
-------- --------
$ 14,464 $ 13,429
-------- --------
-------- --------
-------------------------------------------------------------------------------------------
</TABLE>
Sales of fixed maturities excluding short-term fixed maturities for the
years ended 1994, 1993, and 1992 resulted in proceeds of $5,708,
$8,813, and $5,728, respectively, resulting in gross realized gains of
$71, $192, and $140, and gross realized losses of $100, $219, and $135,
respectively, not including policyholder gains and losses. Sales of
equity securities and other investments for the years ended December
31, 1994, 1993, and 1992 resulted in proceeds of $159, $127 and $7,
respectively, resulting in gross realized gains of $3, $0, and $3, and
gross realized losses of $14, $0, and $0, respectively, not including
policyholder gains and losses.
F-14
<PAGE>
(h) FAIR VALUE OF FINANCIAL INSTRUMENTS NOT DISCLOSED ELSEWHERE:
BALANCE SHEET ITEMS:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
1994 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Other invested assets:
Policy loans $ 2,614 $ 2,614 $ 1,397 $ 1,397
Mortgage loans 316 316 228 228
Investments in partnership and trusts 36 42 14 34
Miscellaneous 67 67 22 63
LIABILITIES
Other policy claims and benefits $ 13,001 $ 12,374 $ 11,140 $ 11,415
--------------------------------------------------------------------------------------------------
</TABLE>
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument: policy and mortgage loan
carrying amounts approximate fair value; investments in partnerships
and trusts are based on external market valuations from partnership
and trust management; and other policy claims and benefits payable are
determined by estimating future cash flows discounted at the current
market rate.
3. INCOME TAX
The Company is included in ITT's consolidated U.S. Federal income tax
return and remits to (receives from) ITT a current income tax provision
(benefit) computed in accordance with the tax sharing arrangements
between ITT and its insurance subsidiaries. The effective tax rate was
32% in 1994, and approximates the U.S. statutory tax rates of 35% in
1993 and 34% in 1992. The provision for income taxes was as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------
INCOME TAX EXPENSE:
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Current $ 185 $ 190 $ 124
Deferred (120) (115) (79)
------ ------ ------
$ 65 $ 75 $ 45
------ ------ ------
------ ------ ------
-----------------------------------------------------------------
</TABLE>
F-15
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
TAX PROVISION AT U.S. STATUTORY RATE $ 71 $ 76 $ 46
Tax-exempt income (3) 0 0
Foreign tax credit (1) 0 0
Other (2) (1) (1)
------ ------ ------
PROVISION FOR INCOME TAX $ 65 $ 75 $ 45
------ ------ ------
------ ------ ------
------------------------------------------------------------------------
</TABLE>
Income taxes paid were $ 244, $301 and $36 in 1994, 1993, and 1992
respectively. The current taxes due from or (to) Hartford Fire were
$46, and $19 in 1994 and 1993 respectively.
DEFERRED TAX ASSETS INCLUDE THE FOLLOWING:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
1994 1993
------ ------
<S> <C> <C>
Tax deferred acquisition cost $ 284 $ 158
Book deferred acquisition costs and reserves (134) (30)
Employee benefits 7 7
Unrealized loss on "available for sale" securities 353 3
Investments and other 80 (24)
------ ------
TAX DEFERRED ACQUISITION COST $ 590 $ 114
------ ------
------ ------
-----------------------------------------------------------------------
</TABLE>
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income
Tax Act of 1959 permitted the deferral from taxation of a portion of
statutory income under certain circumstances. In these situations, the
deferred income was accumulated in a "Policyholders' Surplus Account"
and will be taxable in the future only under conditions which
management considers to be remote; therefore, no Federal income
taxes have been provided on this deferred income. The balance for tax
return purposes of the Policyholders' Surplus Account as of December
31, 1994 was $24.
4. REINSURANCE
The Company cedes insurance to non-affiliated insurers in order to
limit its maximum loss. Such transfer does not relieve the Company
of its primary liability. The Company also assumes insurance from other
insurers. Group life and accident and health insurance business is
substantially reinsured to affiliated companies.
LIVE INSURANCE NET RETAINED PREMIUMS WERE COMPRISED OF THE FOLLOWING:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
1994 1993 1992
------- -------- ------
<S> <C> <C> <C>
Gross premiums $ 1,316 $ 1,135 $ 680
Reinsurance assumed 299 93 30
Reinsurance ceded 515 481 451
------- ------- -------
NET RETAINED PREMIUMS $ 1,100 $ 747 $ 259
------- ------- -------
------- ------- -------
-------------------------------------------------------------------------------
</TABLE>
F-16
<PAGE>
Life reinsurance recoveries, which reduced death and other benefits,
for the years ended December 31, 1994, 1993, and 1992 approximated
$164, $149, and $73, respectively.
In December 1994, the Company assumed from a third party approximately
$500 million of corporate owned life insurance reserves on a
coinsurance basis. Also in December 1994, ILA ceded to ITT Lyndon
Insurance Company $1 billion in individual fixed and variable
annuities on a modified coinsurance basis. These transactions did not
have a material impact on consolidated net income.
In October 1994, HLR recaptured approximately $500 million of
corporate owned life insurance from a third party reinsurer.
Subsequent to this transaction, HLIC and HLR restructured their
coinsurance agreement from coinsurance to modified coinsurance, with
the assets and policy liabilities placed in the separate account. In
May 1994, HLIC assumed and reinsured the life insurance policies and
the individual annuities of Pacific Standard with reserves and account
values of approximately $400 million. The Company received cash and
investment grade assets to support the life insurance and individual
annuity contract obligations assumed.
In June 1993, the Company assumed and partially reinsured the annuity,
life and accident and sickness insurance policies of Fidelity Bankers
Life Insurance Company in Receivership for Conservation and
Rehabilitation, with account values of $3.2 billion. The Company
received cash and investment grade assets to assume insurance and
annuity contract obligations. Substantially all of these contracts
were placed in the Company's separate accounts.
In November 1993, ILA acquired, through an assumption reinsurance
transaction, substantially all of the individual fixed and variable
annuity business of HLA. As a result of this transaction, the assets
and liabilities of the company increased approximately $1 billion. The
excess of liabilities assumed over assets received, of $2, was
recorded as a decrease to capital surplus. The impact on consolidated
net income was not significant.
On November 4, 1992, the Company entered into a definitive agreement
whereby the Company assumed the contract obligations of Mutual Benefit
Life Assurance Corporation's (Mutual Benefit) individual corporate
owned life insurance (COLI) contracts. The Company received $5.6
billion in cash and invested assets, $5.3 billion of which were policy
loans, from Mutual Benefit for assuming the contract obligations.
Simultaneously, the Company coinsured approximately 84% of the
contract obligations back to Mutual Benefit, HLR and an unaffiliated
reinsurer. In August 1993, the Company received assets of $300 million
for assuming the group COLI contract obligations of Mutual Benefit,
through an assumption reinsurance transaction. Under the terms of the
agreement, the Company coinsured back 75% of the liabilities to Mutual
Benefit. All assets supporting Mutual Benefit's reinsurance liability
to HLIC are placed in a "security trust", with Hartford Life as the
sole beneficiary. The impact on 1992 consolidated net income was not
significant.
In 1992, all ordinary individual life insurance written and in force
in HLA was assumed HLIC. As a result of this transaction, the assets
of HLIC increased by approximately $437, liabilities increased
approximately $403. The excess of assets over liabilities of $34 was
recorded as an increase in capital.
5. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company's employees are included in Hartford Fire's
noncontributory defined benefit pension plans. These plans provide
pension benefits that are based on years of service and the employee's
compensation during the last ten years of employment. The Company's
funding policy is to contribute annually an amount between the minimum
funding requirements set forth in the Employee Retirement Income
Security Act of 1974 and the maximum amount that can be deducted for
Federal income tax purposes. Generally, pension costs are funded
through the purchase of the Company's group pension contracts. The
cost to the Company was approximately $2, $3 and $2 in 1994, 1993 and
1992, respectively.
The Company provides certain health care and life insurance benefits
for eligible retired employees. A substantial portion of the Company's
employees may become eligible for these benefits upon retirement.
Effective January 1, 1992, the Company adopted SFAS No. 106, using the
immediate recognition method for all benefits accumulated to date. As
of June 1992, the Company amended its plans, effective January 1,
1993, whereby the Company's contribution for health care benefits
will depend on the retiree's date of retirement and years of service.
In addition, the plan amendments increased deductibles and set a
defined dollar cap which
F-17
<PAGE>
limits average company contributions. The effect of these changes is
not material. The Company has prefunded a portion of the health care
and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense,
allocated by Hartford Fire, was $1, $1, and $1, for 1994, 1993, and
1992 respectively.
The assumed rate of future increases in the per capita cost of health
care (the health care trend rate) was 11% for 1994, decreasing ratably
to 6% in the year 2001. Increasing the health care trend rates by one
percent per year would have an immaterial impact on the accumulated
postretirement benefit obligation and the annual expense. The assumed
weighted average discount rate was 8.5%. To the extent that the actual
experience differs from the inherent assumptions, the effect will be
amortized over the average future service of the covered employees.
6. BUSINESS SEGMENT INFORMATION
The reportable segments and product groups of HLIC and its subsidiaries
are:
INDIVIDUAL LIFE AND ANNUITIES (ILAD)
- Individual life
- Fixed and variable retirement annuities
ASSET MANAGEMENT SERVICES (AMS)
- Group Pension Plans products and services
- Deferred Compensation Plans products and services
- Structured Settlements and lottery annuities
SPECIALTY
- Corporate Owned Life Insurance (COLI) and HLR
<TABLE>
<CAPTION>
----------------------------------------------------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
REVENUES:
ILAD $ 691 $ 595 $ 305
AMS 789 794 770
Specialty 919 425 96
------- ------- -------
$ 2,399 $ 1,814 $ 1,171
------- ------- -------
------- ------- -------
INCOME BEFORE INCOME TAX:
ILAD $ 139 $ 129 $ 73
AMS 38 71 56
Specialty 26 18 5
------- ------- -------
$ 203 $ 218 $ 134
------- ------- -------
------- ------- -------
IDENTIFIABLE ASSETS:
ILAD $26,668 $19,147 $ 9,474
AMS 13,334 12,416 11,198
Specialty 7,847 6,723 5,910
------- ------- -------
$47,849 $38,286 $26,582
------- ------- -------
------- ------- -------
----------------------------------------------------------------------
</TABLE>
7. STATUTORY NET INCOME AND SURPLUS
Substantially all of the statutory surplus is permanently reinvested
or is subject to dividend restrictions relating to various state
regulations which limit the payment of dividends without prior
approval.
Statutory net income and surplus as of December 31 were:
F-18
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Statutory net income $ 58 $ 63 $ 65
Statutory surplus $ 941 $ 812 $ 614
----------------------------------------------------------------------
</TABLE>
The Company prepares its statutory financial statements in accordance with
accounting practices prescribed by the State of Connecticut Insurance
Department. Prescribed statutory accounting practices include publications
of the National Association of Insurance Commissioners ("NAIC"), as well as
state laws, regulations, and general administrative rules.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling
$22.8 billion and $16.3 billion at December 31, 1994 and 1993, respectively
which are reported at fair value. Separate account assets are segregated
from other investments and are not subject to claims that arise out of any
other business of the Company. Investment income and gains and losses of
separate accounts accrue directly to the policyholder. Separate accounts
reflect two categories of risk assumption: non-guaranteed separate accounts
totaling $14.8 billion and $11.5 billion at December 31, 1994 and 1993,
respectively, wherein the policyholder assumes the investment risk, and
guaranteed separate account assets totaling $8.0 billion and $4.8 billion
at December 31, 1994 and 1993, respectively, wherein the Company
contractually guarantees either a minimum return or account value to the
policyholder. Investment income (including investment gains and losses) on
separate account assets are not reflected in the Consolidated Statements of
Income. Separate account management fees, net of minimum guarantees, were
$256, $189, and $92, in 1994, 1993, and 1992, respectively.
The guaranteed separate accounts include modified guaranteed individual
annuity, and modified guaranteed life insurance. The average credit
interest rate on these contracts is 6.44%. The assets that support these
liabilities are comprised of $7.5 billion in bonds and $.5 billion in
policy loans. The portfolios are segregated from other investments and are
managed so as to minimize liquidity and interest rate risk. In order to
minimize the risk of disintermediation associated with early withdrawals,
individual annuity and modified guaranteed life insurance contracts carry a
graded surrender charge as well as a market value adjustment. Additional
investment risk is hedged using a variety of derivatives which total
$(16.2) million in carrying value and $3.2 billion in notional amounts.
9. COMMITMENTS AND CONTINGENCIES
In August 1994, HLIC renewed a two year note purchase facility agreement
which in certain instances obligates the Company to purchase up to
$100 million in collateralized notes from a third party. The Company is
receiving fees for this commitment. At December 31, 1994, the Company has
not purchased any notes under this agreement.
In March 1987, HLIC guaranteed the commercial mortgages (principal and
accrued interest) that were sold under a pooling and servicing agreement of
the same date. Mortgages aggregating approximately $53.0 million were sold
in this transaction, and the remaining balance on these loans is
$21.1 million. There was no impact on operations due to this guarantee.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses
incurred by insolvent companies. The amount of any future assessments on
HLIC under these laws cannot be reasonably estimated. Most of these laws
do provide, however, that an assessment may be excused or deferred if it
would threaten an insurer's own financial strength. Additionally, guaranty
fund assessments are used to reduce state premium taxes paid by the Company
in certain states.
The Company is involved in various legal actions, some of which involve
claims for substantial amounts. In the opinion of management the ultimate
liability with respect to such lawsuits, as well as other contingencies,
is not considered material in relation to the consolidated financial
position of the Company.
F-19
<PAGE>
PART C
<PAGE>
-2-
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) A copy of the resolution authorizing the Separate Account is
filed with this Registration Statement.
(2) Not applicable. HL maintains custody of all assets.
(3) Principal Underwriter Agreement between HL and Hartford Equity
Sales Company, Inc. filed with this Registration Statement.
(4) A copy of the Individual Flexible Premium Variable Annuity
contract is filed with this Registration Statement.
(5) The form of Application is filed with this Registration
Statement.
(6) (a) Certificate of Incorporation of Hartford Life Insurance
Company is filed with this Registration Statement.
(b) Bylaws of Hartford Life Insurance Company is filed with this
Registration Statement.
(7) Not applicable.
(8) Not applicable.
(9) Not applicable.
(10) Consent of Arthur Andersen LLP is filed herewith.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(14) The Form of Share Purchase Agreement by the registrant and Dean
Witter Select Dimensions Investment Series is filed with this
Registration Statement.
(15) Power of Attorney
<PAGE>
-3-
Item 25. Directors and Officers of the Depositor
Louis J. Abdou Vice President
David H. Annis Vice President
Paul J. Boldischar, Jr. Vice President
Wendell J. Bossen Vice President
Peter W. Cummins Vice President
Juliana B. Dalton Vice President
Ann M. deRaismes Vice President
Allen Douma, M.D. Medical Director
Donald R. Frahm Chairman & CEO
Bruce D. Gardner General Counsel & Secretary
Joseph H. Gareau Executive Vice President &
Chief Investment Officer
Richard J. Garrett Vice President & Treasurer
John P. Ginnetti Executive Vice President and
Director Asset Management
Services
Lynda Godkin Assistant General Counsel &
Secretary
Lois W. Grady Vice President
David A. Hall Senior Vice President &
Actuary
Joseph Kanarek Vice President
Kevin J. Kirk Vice President
Andrew W. Kohnke Vice President
Stephen M. Maher Vice President & Actuary
William B. Malchodi, Jr. Vice President & Director
of Taxes
Thomas M. Marra Senior Vice President &
Actuary and Director
Individual Life and Annuity
Division
<PAGE>
-4-
David J. McDonald Senior Vice President
Kevin A. North Vice President
Joseph J. Noto Vice President
Leonard E. Odell, Jr. Senior Vice President
Michael C. O'Halloran Vice President & Senior
Associate General Counsel
Craig R. Raymond Vice President & Chief Actuary
Lowndes A. Smith President & Chief Operating
Officer
Edward J. Sweeney Vice President
James E. Trimble Vice President & Actuary
Raymond P. Welnicki Senior Vice President
James T. Westervelt Senior Vice President &
Group Comptroller
Lizabeth H. Zlatkus Vice President
Donald J. Znamierowski Vice President
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Exhibit 26 is incorporated by reference to Part C of the Registration
Statement filed on June 28, 1988.
Item 27. Number of Contract Owners
As of ________________, there were contract owners.
Item 28. Indemnification-Incorporated herein by reference to the Registration
Statement filed on September 14, 1987.
Item 29. Principal Underwriters
(a) HESCO acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company -
DC Variable Account I
<PAGE>
-5-
Hartford Life Insurance Company -
Separate Account Two (DC Variable Account II)
Hartford Life Insurance Company -
Separate Account Two (Variable Account "A")
Hartford Life Insurance Company -
Separate Account Two (QP Variable Account)
Hartford Life Insurance Company -
Separate Account Two (NQ Variable Account)
Hartford Life Insurance Company -
Separate Account One
Hartford Life Insurance Company -
Separate Account Two (Director)
Hartford Money Market Fund, Inc.
Hartford Life Insurance Company - Separate Account Three
ITT Hartford Life and Annuity Insurance Company - Separate Account
Three
Hartford Life Insurance Company - Separate Account Five
ITT Hartford Life and Annuity Insurance Company - Separate Account
Five
ITT Hartford Life and Annuity Insurance Company - Separate Account Six
Hartford Life Insurance Company Separate Account VL I
(b) Directors and Officers of HESCO
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ---------------------
Donald E. Waggaman, Jr. Treasurer
Bruce D. Gardner Secretary
George R. Jay Controller
Lowndes A. Smith President
<PAGE>
-6-
Item 30. Location of Accounts and Records
Accounts and records are maintained by HL.
Item 31. Management Services
None
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in the
registration statement are never more than 16 months old so long
as payments under the Variable Annuity Contracts may be accepted.
(b) The Registrant hereby undertakes to include either (1) as part of
any application to purchase a Contract offered by the Prospectus,
a space that an applicant can check to request a Statement of
Additional Information, or (2) a post card or similar written
communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional
Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be
made available under this Form promptly upon written or oral
request.
The Registrant is relying on the no-action letter issued by the Division of
Investment Management to American Council of Life Insurance, Ref. No. IP-6-88,
November 28, 1988. The Registrant has complied with the four provisions of the
no-action letter.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 486(b) under the
Securities Act of 1933 and duly caused this Registration Statement to be signed
on its behalf, in the City of Hartford, and State of Connecticut on this 28 day
of February 1995.
HARTFORD LIFE INSURANCE COMPANY
(SEPARATE ACCOUNT THREE)
(Registrant)
*By: *By: /s/ Rodney J. Vessels
--------------------------------------- ------------------------------
Thomas M. Marra, Senior Vice President Rodney J. Vessels
Attorney-in-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
*By:
--------------------------------------
Thomas M. Marra, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in the
capacity and on the date indicated.
Donald R. Frahm, Chairman and
Chief Executive Officer, Director*
Bruce D. Gardner, General Counsel
Corporate Secretary, Director*
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director*
John P. Ginnetti, Senior Vice
President, Director*
Thomas M. Marra, Senior Vice *By: /s/ Rodney J. Vessels
President, Director* ----------------------------
Leonard E. Odell, Jr., Senior Rodney J. Vessels
Vice President, Director* Attorney-in-Fact
Lowndes A. Smith, President,
Chief Operating Officer, Dated: February 28, 1995
Director* ---------------------------
Raymond P. Welnicki, Senior Vice
President, Director*
Lizabeth H. Zlatkus, Vice President
Director*
Donald J. Znamierowski, Vice President
Comptroller, Director*
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN AFFILIATES
DECEMBER 31, 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
AMOUNT
SHOWN ON
BALANCE
TYPE OF INVESTMENT COST FAIR VALUE SHEET
------------------ ---------- ---------- ----------
<S> <C> <C> <C>
FIXED MATURITIES
Bonds
U.S. Government and government agencies
and authorities:
- guaranteed and sponsored $ 1,516 $ 1,429 $ 1,429
- guaranteed and sponsored - asset backed 4,256 3,763 3,763
States, municipalities and political subdivisions 148 137 137
International governments 189 176 176
Public utilities 531 500 500
All other corporate 3,717 3,458 3,458
All other corporate - asset backed 2,442 2,350 2,350
Short-term investments 1,665 1,616 1,616
------ ------ ------
TOTAL FIXED MATURITIES 14,464 13,429 13,429
EQUITY SECURITIES
Common Stocks - industrial, miscellaneous and all other 76 68 68
------ ------ ------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES 14,540 13,497 13,497
Policy loans 2,614 2,614 2,614
Mortgage loans 316 316 316
Other investments 103 109 107
------ ------ ------
TOTAL INVESTMENTS $ 17,573 $ 16,536 $ 16,534
------ ------ ------
------ ------ ------
</TABLE>
Note: Fair values for stocks and bonds approximate those quotations published
by applicable stock exchanges or are received from other reliable
sources. The fair value for short - term investments approximates
cost.
Policy and mortgage loan carrying amounts approximate fair value.
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
(IN MILLIONS)
<TABLE>
<CAPTION>
BENEFITS, AMORTIZ-
CLAIMS ATION OF
AND CLAIM DEFERRED
DEFERRED FUTURE OTHER PREMIUMS NET ADJUST- POLICY OTHER
POLICY POLICY POLICYHOL- AND OTHER INVESTMENT MENT ACQUISI- INSURANCE
ACQUISITION BENEFITS DER FUNDS CONSIDERA- INCOME EXPENSES TION EXPENSES
SEGMENT COSTS * * TIONS (1) (2) COSTS (3)
- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended
December 31,
1994
- - --------------
ILAD $ 1,708 $ 582 $ 4,257 $ 492 $ 199 $ 334 $ 137 $ 80
AMS 101 845 10,160 39 750 695 8 48
SPECIALTY 0 463 6,911 569 350 376 0 518
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 1,809 $ 1,890 $ 21,328 $ 1,100 $ 1,299 $ 1,405 $ 145 $ 646
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Year ended
December 31,
1993
- - --------------
ILAD $ 1,237 $ 428 $ 3,535 $ 423 $ 172 $ 249 $ 97 $ 120
AMS 97 703 9,026 35 759 662 16 45
SPECIALTY 0 528 5,673 289 136 135 0 272
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 1,334 $ 1,659 $ 18,234 $ 747 $ 1,067 $ 1,046 $ 113 $ 437
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Year ended
December 31,
1992
- - -------------
ILAD $ 698 $ 1,115 $ 1,004 $ 178 $ 127 $ 104 $ 49 $ 79
AMS 101 583 8,256 27 743 657 6 51
SPECIALTY 0 46 5,822 54 42 36 0 55
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 799 $ 1,744 $ 15,082 $ 259 $ 912 $ 797 $ 55 $ 185
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<FN>
(*) As Restated
(1) Investment income is allocated to the segments based on each segment's
share of investable funds or on a direct basis, where applicable, including
realized capital gains and losses.
(2) Benefits, claims and claim adjustment expenses includes the increase in
liability for future policy benefits and death, disability and other
contract benefit payments.
(3) Other insurance expenses are allocated to the segments based on specific
identification, where possible, and related activities, including dividends
to policyholders.
</TABLE>
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV - REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
LIFE INSURANCE IN FORCE $ 136,929 $ 87,553 $ 35,016 $ 84,392 41.5%
--------- --------- --------- ---------
Premiums and other considerations
ILAD $ 448 $ 71 $ 106 $ 483 22.0%
AMS 39 0 0 39 0.0%
Specialty 521 140 188 569 33.0%
Accident and Health 308 304 5 9 55.6%
--------- --------- --------- ---------
TOTAL $ 1,316 515 299 1,100 27.2%
--------- --------- --------- ---------
--------- --------- --------- ---------
YEAR ENDED DECEMBER 31, 1993
LIFE INSURANCE IN FORCE $ 93,099 $ 71,415 $ 27,067 $ 48,751 55.5%
--------- --------- --------- ---------
Premiums and other considerations
ILAD $ 417 $ 85 $ 91 $ 423 21.5%
AMS 25 0 0 25 0.0%
Specialty 386 97 0 289 0.0%
Accident and Health 307 299 2 10 20.0%
--------- --------- --------- ---------
TOTAL $ 1,135 $ 481 $ 93 $ 747 12.4%
--------- --------- --------- ---------
--------- --------- --------- ---------
YEAR ENDED DECEMBER 31, 1992
LIFE INSURANCE IN FORCE $ 44,661 $ 64,207 $ 51,430 $ 31,884 161.3%
--------- ---------
Premiums and other considerations
ILAD $ 208 $ 71 $ 27 $ 164 16.5%
AMS 27 0 0 27 0.0%
Specialty 153 99 0 54 0.0%
Accident and Health 292 281 3 14 21.4%
--------- --------- --------- ---------
TOTAL $ 680 $ 451 $ 30 $ 259 37.9%
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
S-3
<PAGE>
EXHIBIT (b)(1)
HARTFORD LIFE INSURANCE COMPANY
CONSENT OF DIRECTORS
The undersigned, being all of the Directors of Hartford Life Insurance Company,
hereby consent to the following action, such action to have the same force and
effect as if taken at a meeting duly called and held for such purpose.
ESTABLISHMENT OF SEPARATE ACCOUNTS
RESOLVED, that the Company is hereby authorized to establish a new separate
account designated Separate Account Three, herein referred to as the "Account."
RESOLVED, that the Officers of the Company are hereby authorized and directed to
take all actions necessary to:
1. Designate or redesignate the Account as such Officers deem appropriate;
2. Comply with applicable state and federal laws and regulations applicable to
the establishment and operation of the Account; including filing all
necessary registrations and application for exemptive relief under the
federal securities law.
3. Establish, from time to time, the terms and conditions pursuant to which
interests in the Account will be sold to contract owners;
4. Establish all procedures, standards and arrangements necessary or
appropriate for the operation of the Account.
/s/ Donald R. Frahm /s/ David J. McDonald
-------------------------- ---------------------------
Donald R. Frahm David J. McDonald
/s/ Joseph M. Gareau /s/ Lowndes A. Smith
-------------------------- ---------------------------
Joseph M. Gareau Lowndes A. Smith
/s/ John P. Ginnetti /s/ Michael S. Wilder
-------------------------- ---------------------------
John P. Ginnetti Michael S. Wilder
/s/ Larry K. Lance /s/ Donald J. Znamierowski
-------------------------- ---------------------------
Larry K. Lance Donald J. Znamierowski
Dated: June 22, 1994
<PAGE>
EXHIBIT (b)(3)
PRINCIPAL UNDERWRITER AGREEMENT
THIS AGREEMENT, dated as of the ________________, 1994, made by and between
HARTFORD LIFE INSURANCE COMPANY ("HLIC" or the "Sponsor"), a corporation
organized and existing under the laws of the State of Connecticut, and HARTFORD
EQUITY SALES COMPANY, INC. ("HESCO"), a corporation organized and existing under
the laws of the State of Connecticut,
WITNESSETH:
WHEREAS, the Board of Directors of HLIC has made provision for the
establishment of a separate account within HLIC in accordance with the laws
of the State of Connecticut, which separate account was organized and is
established and registered as a unit trust type investment company with the
Securities and Exchange Commission under the Investment Company Act of
1940, as amended, and which is designated Separate Account Three of
Hartford Life Insurance Company (referred to as the "Unit Trust"); and
WHEREAS, HESCO offers to the public a certain Tax Deferred Variable Annuity
Insurance Policy (the "Policy") issued by HLIC with respect to the Unit
Trust units of interest thereunder which are registered under the
Securities Act of 1933, as amended; and
WHEREAS, HESCO has previously agreed to act as distributor in connection
with offers and sales of the Policy under the terms and conditions set
forth in this Distribution Agreement.
NOW THEREFORE, in consideration of the mutual agreements made herein, the
Sponsor and HESCO agree as follows:
I.
HESCO'S DUTIES
1. HESCO, as principal underwriter for the Policy, will use its best efforts
to effect offers and sales of the Policy through broker-dealers that are
members of the National Association of Securities Dealers, Inc. and whose
registered representatives are duly licensed as insurance agents of HLIC.
HESCO is responsible for compliance with all applicable requirements of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the Investment Company Act of 1940, as amended, and the rules
and regulations relating to the sales and distribution of the Policy, the
need for which arises out of its duties as principal underwriter of said
Policy and relating to the creation of the Unit Trust.
2. HESCO agrees that it will not use any prospectus, sales literature, or any
other printed matter or material or offer for sale or sell the Policy if
any of the foregoing in any way represent the duties, obligations, or
liabilities of HLIC as being greater than, or different
<PAGE>
from, such duties, obligations and liabilities as are set forth in this
Agreement, as it may be amended from time to time.
3. HESCO agrees that it will utilize the then currently effective prospectus
relating to the Unit Trust's Policies in connection with its selling
efforts.
As to the other types of sales materials, HESCO agrees that it will use
only sales materials which conform to the requirements of federal and state
insurance laws and regulations and which have been filed, where necessary,
with the appropriate regulatory authorities.
4. HESCO agrees that it or its duly designed agent shall maintain records
of the name and address of, and the securities issued by the Unit Trust and
held by, every holder of any security issued pursuant to this Agreement, as
required by the Section 26(a)(4) of the Investment Company Act of 1940, as
amended.
5. HESCO's services pursuant to this Agreement shall not be deemed to be
exclusive, and it may render similar services and act as an underwriter,
distributor, or dealer for other investment companies in the offering of
their shares.
6. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties hereunder on the part
of HESCO, HESCO shall not be subject to liability under a Policy for any
act or omission in the course, or connected with, rendering services
hereunder.
II.
1. The Unit Trust reserves the right at any time to suspend or limit the
public offering of the Policies upon 30 days' written notice to HESCO,
except where the notice period may be shortened because of legal action
taken by any regulatory agency.
2. The Unit Trust agrees to advice HESCO immediately:
(a) Of any request by the Securities and Exchange Commission for amendment
of its Securities Act registration statement or for additional
information;
(b) Of the issuance by the Securities and Exchange Commission of any stop
order suspending the effectiveness of the Securities Act registration
statement relating to units of interest issued with respect to the
Unit Trust or of the initiation of any proceedings for that purpose;
(c) Of the happening of any material event, if known, which makes untrue
any statement in said Securities Act registration statement or which
requires change therein in order to make any statement therein not
misleading.
6
<PAGE>
HLIC will furnish to HESCO such information with respect to the Unit Trust
and the Policies in such form and signed by such of its officers and
directors and HESCO may reasonable request and will warrant that the
statements therein contained when so signed will be true and correct. HLIC
will also furnish, from time to time, such additional information regarding
the Unit Trust's financial condition as HESCO may reasonably request.
III.
COMPENSATION
For providing the principal underwriting functions on behalf of the Unit Trust,
HESCO shall be entitled to receive compensation as agreed upon from time to time
by HLIC and HESCO.
IV.
RESIGNATION AND REMOVAL OF PRINCIPAL UNDERWRITER
HESCO may resign as a Principal Underwriter hereunder, upon 120 days' prior
written notice to HLIC. However, such resignation shall not become effective
until either the Unit Trust has been completely liquidated and the proceeds of
the liquidation distributed through HLIC to the Contract Owners or a successor
Principal Underwriter has been designated and has accepted its duties.
V.
MISCELLANEOUS
1. This Agreement may not be assigned by any of the parties hereto without the
written consent of the other party.
2. All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage
prepaid, addressed as follows:
(a) If to HLIC - Hartford Life Insurance Company, P.O. Box 2999,
Hartford, Connecticut 06104.
(b) If to HESCO - Hartford Equity Sales Company, Inc., P.O. Box 2999,
Hartford, Connecticut 06104.
or to such other address as HESCO or the Sponsor shall designate by written
notice to the other.
3. This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which shall be deemed one
instrument, and an executed
7
<PAGE>
copy of this Agreement and all amendments hereto shall be kept on file by
the Sponsor and shall be open to inspection any time during the business
hours of the Sponsor.
4. This Agreement shall inure to the benefit of and be binding upon the
successor of the parties hereto.
5. This Agreement shall be construed and governed by and according to the laws
of the State of Connecticut.
6. This Agreement may be amended from time to time by the mutual agreement and
consent of the parties hereto.
7. (a) This Agreement shall become effective May 6, 1995, and shall
continue in effect for a period of two years from that date and,
unless sooner terminated in accordance with 7(b) below, shall
continue in effect from year to year thereafter provided that its
continuance is specifically approved at least annually by a majority
of the members of the Board of Directors of HLIC.
(b) This Agreement (1) may be terminated at any time, without the payment
of any penalty, either by a vote of a majority of the members of the
Board of Directors of HLIC on 60 days' prior written notice to
HESCO; (2) shall immediately terminate in the event of its assignment
and (3) may be terminated by HESCO on 60 days' prior written notice
to HLIC, but such termination will not be effective until HLIC shall
have policy with one or more persons to act as principal
underwriter of the Policies. HESCO hereby agrees that it will
continue to act as principal underwriter until its successor or
successors assume such undertaking.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
(Seal) HARTFORD LIFE INSURANCE COMPANY
By:
-----------------------------------
Thomas M. Marra
Senior Vice President
HARTFORD EQUITY SALES COMPANY, INC.
Attest:
By:
- - ---------------------------- -----------------------------------
Lynda Godkin Peter Cummins
Secretary Vice President
8
<PAGE>
EXHIBIT (b)(4)
INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
Hartford Life Insurance Company
P.O. Box 2999
Hartford, Connecticut 06104-2999
(a stock life insurance company, herein called the Company)
Unless otherwise directed by the Contract Owner, the Company agrees to pay the
named Annuitant, on the Annuity Commencement Date, if the Annuitant and Contract
Owner are then living, the first of a series of annuity payments the frequency,
period and dollar amounts of which shall be determined on the basis as set forth
herein, in accordance with the Annuity Option selected.
This contract is issued in consideration of the payment of the initial premium
payment.
This contract is subject to the laws of the jurisdiction where it is delivered.
The Contract Specifications on Page 3 and the conditions and provisions on this
and the following pages are part of the contract.
RIGHT TO EXAMINE CONTRACT
We want you to be satisfied with the contract you have purchased. We urge you to
closely examine its provisions. If for any reason you are not satisfied with
your purchase you may surrender the contract by returning the contract within
ten days after you receive it. A written request for cancellation must accompany
the contract. In such event, we will pay to the Contract Owner an amount equal
to the sum of (i) the difference between the premiums paid and the amounts
allocated to any Account under the contract and (ii) the Contract Value on the
date of surrender. The Contract Owner bears only the investment risk during the
period prior to the Company's receipt of request for cancellation.
Signed for the Company
/s/ Bruce D. Gardner /s/ Lowndes A. Smith
--------------------------- ---------------------------
Bruce D. Gardner, SECRETARY Lowndes A. Smith, PRESIDENT
Premium Payments are flexible as described herein.
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SUB-ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED
DOLLAR AMOUNT. DETAILS OF THE VARIABLE PROVISIONS ARE DESCRIBED UNDER VALUATION
PROVISIONS, PAGES 9 AND 10.
[ITT HARTFORD LOGO]
<PAGE>
TABLE OF CONTENTS
Page
Contract Specifications 3
Definition of Certain Terms 4
Premium Payments Provision 5
Contract Control Provisions 6
General Provisions 7
Valuation Provisions 9
Termination Provisions 10
Settlement Provisions 12
Annuity Tables 15
Page 2
<PAGE>
CONTRACT SPECIFICATIONS
CONTRACT NUMBER [SPECIMEN] CONTRACT DATE [FEBRUARY]
NAME OF ANNUITANT [JAMES SCOTT] DATE OF ISSUE [FEBRUARY]
AGE OF ANNUITANT [35] ANNUITY COMMENCEMENT
DATE [JANUARY]
SEX OF ANNUITANT [MALE] INITIAL PREMIUM PAYMENT [$20,000]
MINIMUM SUBSEQUENT
PAYMENT 500
MINIMUM FIXED ACCOUNT
INTEREST RATE 3%
CONTINGENT
ANNUITANT [PAUL SCOTT]
DESIGNATED
BENEFICIARY [ANN SCOTT] CONTRACT OWNER [SAME]
(IF OTHER THAN ANNUITANT)
- - --------------------------------------------------------------------------------
DESCRIPTION OF BENEFITS
INDIVIDUAL FLEXIBLE VARIABLE ANNUITY CONTRACT
ANNUAL WITHDRAWAL AMOUNT: CONTRACT YEARS 1-7
------------------
10% OF PREMIUM PAYMENTS
AFTER CONTRACT YEAR 7
---------------------
THE GREATER OF:
100% OF THE CONTRACT VALUE REDUCED BY THE
TOTAL OF ANY PREMIUM PAYMENTS MADE DURING
THE 7 YEARS PRIOR TO WITHDRAWAL; OR
10% OF PREMIUM PAYMENTS MADE DURING THE 7
YEARS PRIOR TO WITHDRAWAL.
ANNUAL CONTRACT MAINTENANCE FEE: $0 IF THE CONTRACT VALUE IS $50,000 OR MORE
ON THE CONTRACT ANNIVERSARY
$30 IF THE CONTRACT VALUE IS LESS THAN
$50,000 ON THE CONTRACT ANNIVERSARY
MORTALITY AND EXPENSE RISK CHARGE: 1.25% PER ANNUM OF THE AVERAGE DAILY
CONTRACT VALUE
ADMINISTRATION CHARGE: .15% PER ANNUM OF THE AVERAGE DAILY CONTRACT
VALUE. THIS CHARGE WILL NOT BE ASSESSED
AGAINST FIXED ACCOUNT VALUES.
Page 3
<PAGE>
CONTINGENT DEFERRED SALES CHARGES:
SUBJECT TO THE ANNUAL WITHDRAWAL AMOUNT, SURRENDERS OF CONTRACT VALUES
ATTRIBUTABLE TO PREMIUM PAYMENTS MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE ("CHARGE"). THE LENGTH OF TIME FROM RECEIPT OF THE PREMIUM PAYMENT TO THE
TIME OF SURRENDER DETERMINES THE CHARGES.
DURING THE FIRST SEVEN CONTRACT YEARS, ALL SURRENDERS WILL BE FIRST FROM PREMIUM
PAYMENTS AND THEN FROM EARNINGS. IF AN AMOUNT EQUAL TO ALL PREMIUM PAYMENTS HAS
BEEN SURRENDERED, A CHARGE WILL NOT BE ASSESSED AGAINST THE SURRENDER OF THE
REMAINING CONTRACT VALUE.
AFTER THE SEVENTH CONTRACT YEAR, ALL SURRENDERS WILL FIRST BE FROM EARNINGS AND
THEN FROM PREMIUM PAYMENTS. A CHARGE WILL NOT BE ASSESSED AGAINST THE SURRENDER
OF EARNINGS. IF AN AMOUNT EQUAL TO ALL EARNINGS HAS BEEN SURRENDERED, A CHARGE
WILL NOT BE ASSESSED AGAINST PREMIUM PAYMENTS RECEIVED MORE THAN SEVEN YEARS
PRIOR TO SURRENDER, BUT WILL BE ASSESSED AGAINST PREMIUM PAYMENTS RECEIVED LESS
THAN SEVEN YEARS PRIOR TO SURRENDER. FOR THIS PURPOSE, PREMIUM PAYMENTS WILL BE
DEEMED TO BE SURRENDERED IN THE ORDER IN WHICH THEY WERE RECEIVED.
THE CHARGE IS A PERCENTAGE OF THE AMOUNT SURRENDERED (NOT TO EXCEED THE
AGGREGATE AMOUNT OF THE PREMIUM PAYMENTS MADE) AND EQUALS:
LENGTH OF TIME FROM PREMIUM PAYMENT
CHARGE (NUMBER OF YEARS)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 AND THEREAFTER
NO CONTINGENT DEFERRED SALES CHARGES WILL BE ASSESSED IN THE EVENT THE CONTRACT
TERMINATES DUE TO THE DEATH OF THE ANNUITANT OR CONTRACT OWNER (AS APPLICABLE),
OR IF CONTRACT VALUES ARE APPLIED TO AN ANNUITY OPTION PROVIDED FOR UNDER THIS
CONTRACT (PROVIDED HOWEVER, ANY SURRENDER OUT OF OPTION 4 WILL BE SUBJECT TO
CONTINGENT DEFERRED SALES CHARGES, IF APPLICABLE) OR UPON THE EXERCISE OF THE
ANNUAL WITHDRAWAL AMOUNT.
Page 3 (Continued)
<PAGE>
FUND OPTIONS
THE INITIAL PREMIUM PAYMENT WILL BE ALLOCATED AS SPECIFIED IN YOUR APPLICATION.
THE SAME ALLOCATION WILL BE MADE FOR SUBSEQUENT PREMIUM PAYMENTS UNLESS YOU
CHANGE THE ALLOCATION OR, AT THE TIME OF A PREMIUM PAYMENT, YOU INSTRUCT US TO
ALLOCATE THAT PAYMENT DIFFERENTLY.
SEPARATE ACCOUNT: PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT
SUB-ACCOUNT BASED ON:
PCM VOYAGER FUND PCM VOYAGER FUND
PCM GLOBAL GROWTH FUND PCM GLOBAL GROWTH FUND
PCM GLOBAL ASSET ALLOCATION FUND PCM GLOBAL ASSET ALLOCATION FUND
PCM GROWTH & INCOME FUND PCM GROWTH & INCOME FUND
PCM UTILITIES GROWTH & INCOME FUND PCM UTILITIES GROWTH & INCOME FUND
PCM HIGH YIELD FUND PCM HIGH YIELD FUND
PCM DIVERSIFIED INCOME FUND PCM DIVERSIFIED INCOME FUND
PCM U.S. GOVERNMENT & HIGH PCM U.S. GOVERNMENT &
QUALITY BOND FUND HIGH QUALITY BOND FUND
PCM MONEY MARKET FUND PCM MONEY MARKET FUND
OR OTHER FUNDS AS MAY BE MADE AVAILABLE FROM TIME TO TIME.
Page 3 (Continued)
<PAGE>
DEFINITION OF ACCOUNT - Any of the Sub-Accounts or the Fixed Account.
CERTAIN TERMS
ACCUMULATION UNIT - An accounting unit of measure used to
calculate the value of a Sub-Account of this contract before
annuity payments begin.
ADMINISTRATIVE OFFICE OF THE COMPANY - Currently located at
200 Hopmeadow St., Simsbury, Ct. All correspondence concerning
this contract should be sent to our mailing address at P.O.
Box 2999, Attn: Individual Annuity Operations, Hartford, CT
06104-2999.
ANNUAL WITHDRAWAL AMOUNT - The amount that can be withdrawn in
any Contract Year prior to incurring surrender charges.
ANNUITANT - The person on whose life this contract is issued.
ANNUITY COMMENCEMENT DATE - The date on which annuity payments
are to begin as described under Settlement Provisions in this
contract.
ANNUITY UNIT - An accounting unit of measure used to calculate
the amount of annuity payments under the variable annuity
option.
BENEFICIARY - The person entitled to receive benefits as per
the terms of the contract in case of the death of the Contract
Owner or Annuitant, as applicable.
COMPANY - The Hartford Life Insurance Company.
CONTINGENT ANNUITANT - The person so designated by the
Contract Owner who, upon the Annuitant's death, prior to the
Annuity Commencement Date, becomes the Annuitant.
CONTRACT ANNIVERSARY - An anniversary of the Contract Date.
Similarly, Contract Years are measured from the Contract Date.
The Contract Date is shown on Page 3.
CONTRACT MAINTENANCE FEE - An amount which is deducted from
the value of the contract at the end of the Contract Year or
on the date of surrender of this contract, if earlier.
CONTRACT OWNER - The owner(s) of the contract.
CONTRACT VALUE - The value of the Sub-Accounts plus the value
of the Fixed Account on any day.
DATE OF ISSUE - The date on which an Account is established
for the Contract Owner by the Company.
DOLLAR COST AVERAGING - Contract Owner initiated systematic
transfers from one or more Accounts to any other available
Sub-Accounts.
DUE PROOF OF DEATH - A certified copy of the death
certificate, an order of a court of competent jurisdiction, a
statement from a physician who attended the deceased, or any
other proof acceptable to the Company.
FIXED ACCOUNT - Part of the Company's General Account to which
all or a portion of the Contract Value may be allocated.
Page 4
<PAGE>
DEFINITION OF FUND(S) - Currently the Funds specified on Page 3 or any other
CERTAIN TERMS Fund(s) that may be added by the Company.
(CONTINUED)
GENERAL ACCOUNT - All assets of the Company other than those
allocated to the Separate Accounts of the Company.
MAXIMUM ANNIVERSARY VALUE - A value used in determining the
death benefit. It is based on a series of calculations of
Account Values on Contract Anniversaries, premium payments and
partial surrenders.
As of the date of death, the Company will calculate an
Anniversary Value for each Contract Anniversary prior to the
deceased's attained age 81. The Anniversary Value is equal to
the Account Value on a Contract Anniversary, increased by the
dollar amount of any premium payments made since that
anniversary and reduced by the dollar amount of any partial
surrenders since that anniversary. The Maximum Anniversary
Value is equal to the greatest Anniversary Value attained from
this series of calculations.
PREMIUM TAX - The amount of tax, if any, charged by a federal,
state or municipal entity on premium payments or Contract
Values.
SEPARATE ACCOUNT - An Account established by the Company to
separate the assets funding the variable benefits for the
class of contracts to which this contract belongs from the
other assets of the Company. The assets in the Separate
Account are not chargeable with liabilities arising out of any
other business the Company may conduct. The Separate Account
and the Funds, which are the underlying securities of the
Separate Account, are listed on the Contract Specifications on
Page 3 of this contract.
SUB-ACCOUNT - The subdivisions of the Separate Account which
are used to determine how the Contract Owner's Account is
allocated between the Funds.
TERMINATION VALUE - The value of the contract upon
termination, as described in the section of the contract
captioned "Termination Provisions."
VALUATION DAY - Every day the New York Stock Exchange is open
for trading.
PREMIUM PREMIUM PAYMENTS
PAYMENTS
Premium payments are payable at the Administrative Office of
the Company. Payments may be made by check payable to Hartford
Life Insurance Company or by any other method which the
Company deems acceptable.
The Initial Premium Payment is shown on Page 3. This is a
flexible premium annuity. Additional payments may be accepted
by the Company. The additional payments must be at least equal
to the minimum subsequent premium payment shown on Page 3.
ALLOCATION OF PREMIUM PAYMENTS
The Contract Owner shall specify that portion of any premium
payment to be allocated to each Account, provided, however,
that the minimum allocation to any Account may not be less
than the Company's minimum amount then in effect.
Page 5
<PAGE>
PREMIUM The Contract Owner may transfer Contract Values held in the
PAYMENTS Accounts into other Accounts; however, the Company reserves
(CONTINUED) the right to limit the number of transfers to no more
frequently than 12 per Contract Year with no two transfers
being made on consecutive Valuation Days. Subject to the
following two paragraphs, any such limitations will apply to
all Contract Owners.
The right to reallocate Contract Values between the Accounts
is subject to modification if the Company determines, in its
sole opinion, that the exercise of that right by one or more
Contract Owners is, or would be, to the disadvantage of other
Contract Owners. Any modification could be applied to
transfers to or from some or all of the Accounts and could
include, but not be limited to, the requirement of a minimum
time period between each transfer, not accepting transfer
requests of an agent acting under a power of attorney on
behalf of more than one Contract Owner, or limiting the dollar
amount that may be transferred between the Accounts by a
Contract Owner at any one time. Such restrictions may be
applied in any manner reasonably designed to prevent any use
of the transfer right which is considered by the Company to be
to the disadvantage of other Contract Owners.
The maximum amount transferable from the Fixed Account during
any Contract Year is the greater of 30% of the Fixed Account
balance as of the last Contract Anniversary or the greatest of
any prior transfer from the Fixed Account. This limitation
does not apply to Dollar Cost Averaging. However, if any
interest rate is renewed at a rate at least one percentage
point less than the previous rate, the Contract Owner may
elect to transfer up to 100% of the Funds receiving that
reduced rate within 60 days of notification of the interest
rate decrease. Transfers may not be made from the Sub-Accounts
into the Fixed Account for the six-month period following any
transfer from the Fixed Account into the other Sub-Accounts.
The Company reserves the right to defer transfers from the
Fixed Account for up to six months from the date of request.
CONTRACT ANNUITANT, CONTINGENT ANNUITANT, CONTRACT OWNER
CONTROL
PROVISIONS The Annuitant may not be changed.
The designations of Contract Owner and Contingent Annuitant
will remain in effect until changed by the Contract Owner.
Changes in the designation of the Contract Owner may be made
during the lifetime of the Annuitant by written notice to the
Company. Changes in the designation of Contingent Annuitant
may be made at any time prior to the Annuity Commencement Date
by written notice to the Company. Notwithstanding the
foregoing, if no Contingent Annuitant has been named and the
Contract Owner/Annuitant's spouse is the Beneficiary, it will
be assumed that the Contract Owner/Annuitant's spouse is the
Contingent Annuitant.
The Contract Owner has the sole power to exercise all the
rights, options and privileges granted by this contract or
permitted by the Company and to agree with the Company to any
change in or amendment to the contract. The rights of the
Contract Owner shall be subject to the rights of any assignee
of record with the Company and of any irrevocably designated
Beneficiary. In the case of joint Contract Owners, each
Contract Owner alone may exercise all rights, options and
privileges, except with respect to the Termination and Partial
Surrender/Annual Withdrawal Amount Provisions and change of
ownership.
Page 6
<PAGE>
CONTRACT BENEFICIARY
CONTROL
PROVISIONS The Designated Beneficiary will remain in effect until
(CONTINUED) changed by the Contract Owner. Changes in the Designated
Beneficiary may be made during the lifetime of the
Annuitant by written notice to the Administrative Office of
the Company. If the Designated Beneficiary has been designated
irrevocably, however, such designation cannot be changed or
revoked without such Beneficiary's written consent. Upon
receipt of such notice and written consent, if required, at
the Administrative Office of the Company, the new designation
will take effect as of the date the notice is signed, whether
or not the Annuitant or Contract Owner is alive at the time of
receipt of such notice. The change will be subject to any
payments made or other action taken by the Company before the
receipt of the notice.
In the event of the death of the Annuitant when there is no
surviving Contingent Annuitant, the Beneficiary will be as
follows. If the death of the Annuitant occurs prior to the
Annuity Commencement Date, the Beneficiary shall be the
surviving Contract Owner, or joint Contract Owners, if
applicable, notwithstanding that the Designated Beneficiary
may be different. Otherwise, the Beneficiary will be the
Designated Beneficiary then in effect. If the Annuitant is the
sole Contract Owner and there is no Designated Beneficiary in
effect, the Annuitant's estate will be the Beneficiary.
In the event of the death of a Contract Owner prior to the
Annuity Commencement Date, the Beneficiary will be as follows.
If the owner was the sole Contract Owner, the Beneficiary
shall be the Designated Beneficiary then in effect. If no
Beneficiary designation is in effect or if the Designated
Beneficiary has predeceased the Contract Owner, the Contract
Owner's estate shall be the Beneficiary. At the first death of
a joint Contract Owner prior to the Annuity Commencement Date,
the Beneficiary shall be the surviving Contract Owner
notwithstanding that the Designated Beneficiary may be
different.
GENERAL THE CONTRACT
PROVISIONS
This contract constitutes the entire contract.
MODIFICATION
No modification of this contract shall be made except over the
signature of the President, a Vice President, a Secretary or
an Assistant Secretary of the Company.
The Company reserves the right to modify the contract, but
only if such modification: (i) is necessary to make the
contract or the Separate Account comply with any law or
regulation issued by a governmental agency to which the
Company is subject; (ii) is necessary to assure continued
qualification of the contract under the Internal Revenue Code
or other federal or state laws relating to retirement
annuities or annuity contracts; (iii) is necessary to reflect
a change in the operation of the Separate Account or the Sub-
Account(s); (iv) provides additional Account options; or (v)
withdraws Account options. In the event of any such
modification, the Company will provide notice to the Contract
Owner, or to the payee(s) during the annuity period. The
Company may also make appropriate endorsement in the Contract
to reflect such modification.
Page 7
<PAGE>
GENERAL MINIMUM VALUE STATEMENT
PROVISIONS
(CONTINUED) Any Termination Values, death benefits or settlement
provisions available under this contract equal or exceed those
required by the state in which the contract is delivered.
NON-PARTICIPATION
This contract does not share in the surplus earnings of the
Company. That portion of the assets of the Separate Account
equal to the reserves and other contract liabilities of the
Separate Account shall not be chargeable with liabilities
arising out of any other business the Company may conduct.
MISSTATEMENT OF AGE AND SEX
If the age or sex of the Annuitant has been misstated, the
amount of the annuity payable by the Company shall be that
provided by that portion of the amounts allocated to effect
such annuity on the basis of the corrected information without
changing the date of the first payment of such annuity. Any
underpayments by the Company shall be made up immediately and
any overpayments shall be charged against future amounts
becoming payable.
If the age of the Annuitant or Contract Owner has been
misstated, the amount of any death benefit payable shall be
determined based upon the correct age of the Annuitant or
Contract Owner.
INCONTESTABILITY
We cannot contest this Contract.
REPORTS TO THE CONTRACT OWNER
There shall be furnished to each Contract Owner copies of any
shareholder reports of the Funds and of any other notices,
reports or documents required by law to be delivered to
Contract Owners. Annually, a statement of the Contract Value
is sent to the Contract Owner.
VOTING RIGHTS
The Company shall notify the Contract Owner of any Fund
shareholder's meetings at which the shares held for the
Contract Owner's Account may be voted and shall also send
proxy materials and a form of instruction by means of which
the Contract Owner can instruct the Company with respect to
the voting of the shares held for the Contract Owner's
Account. In connection with the voting of Fund shares held by
it, the Company shall arrange for the handling and tallying of
proxies received from Contract Owners. The Company will vote
the Fund shares held by it in accordance with the instructions
received from the Contract Owners having the right to give
voting instructions. If a Contract Owner desires to attend any
meeting which shares held for the Contract Owner's benefit may
be voted, the Contract Owner may request the Company to
furnish a proxy or otherwise arrange for the exercise of
voting rights with respect to the Fund shares held for such
Contract Owner's Account.
Page 8
<PAGE>
GENERAL In the event that the Contract Owner gives no
PROVISIONS instructions or leaves the manner of voting
(CONTINUED) discretionary, the Company will vote such shares of the
appropriate Fund in the same proportion as shares of that Fund
for which instructions have been received. Also, the Company
will vote the Fund Shares in this proportionate manner which
are held by the Company for its own Account. During the
annuity period under a contract the number of votes will
decrease as the assets held to fund annuity benefits decrease.
SUBSTITUTION
The Company reserves the right to substitute the shares of any
other registered investment company for the shares of any Fund
already purchased or to be purchased in the future by the
Separate Account provided that the substitution has been
approved by the Securities and Exchange Commission.
CHANGE IN THE OPERATION OF THE SEPARATE ACCOUNT
At the Company's election and subject to any necessary vote by
persons having the right to give instructions with respect to
the voting of the Fund shares held by the Sub-Accounts, the
Variable Account may be operated as a management company under
the Investment Company Act of 1940 or it may be deregistered
under the Investment Company Act of 1940 in the event
registration is no longer required. Deregistration of the
Variable Account requires an order by the Securities and
Exchange Commission.
PROOF OF SURVIVAL
The payment of any annuity benefit will be subject to evidence
that the Annuitant is alive on the date such payment is
otherwise due.
VALUATION NET PREMIUM PAYMENTS
PROVISIONS
The net premium payment is equal to the premium payment minus
any applicable Premium Taxes. The net premium payment is
applied to provide Fixed Account values or Sub-Account
Accumulation Units with respect to the Sub-Account(s) selected
by the Contract Owner.
The number of Accumulation Units credited to each Sub-Account
is determined by dividing the net premium payment allocated to
a Sub-Account by the dollar value of one Accumulation Unit for
such Sub-Account, next computed after the receipt of a premium
payment by the Company. The number of Accumulation Units so
determined will not be affected by any subsequent change in
the value of such Accumulation Units. The Accumulation Unit
value in any Sub-Account may increase or decrease from day to
day as described below.
The Company will determine the value of the Fixed Account by
crediting interest to amounts allocated to the Fixed Account.
The minimum Fixed Account interest rate is the rate shown on
Page 3, compounded annually. The Company, at its discretion,
may credit interest rates greater than the minimum Fixed
Account interest rate.
Page 9
<PAGE>
VALUATION NET INVESTMENT FACTOR
PROVISIONS
(CONTINUED) The net investment factor for each of the Sub-Accounts is
equal to the net asset value per share of the corresponding
Fund at the end of the valuation period (plus the per share
amount of any unpaid dividends or capital gains by that Fund)
divided by the net asset value per share of the corresponding
Fund at the beginning of the valuation period and subtracting
from that amount the mortality and expense risk charge and the
administration charge shown on Page 3. The General Account net
investment factor is guaranteed to be equal to the Minimum
Fixed Account Interest Rate shown on Page 3.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Sub-Account will vary to
reflect the investment experience of the applicable Fund and
will be determined on each Valuation Day by multiplying the
Accumulation Unit Value of the particular Sub-Account on the
preceding Valuation Day by the net investment factor for that
Sub-Account for the valuation period then ended. The value of
the Sub-Account on each Valuation Day is then determined by
multiplying the number of Accumulation Units in that Sub-
Account by the Accumulation Unit Value on that Valuation Day.
ANNUITY UNIT VALUE
The value of an Annuity Unit for each Sub-Account of the
Separate Account will vary to reflect the investment
experience of the applicable Funds and will be determined by
multiplying the value of the Annuity Unit for that Sub-Account
on the preceding day by the product of (a) the net investment
factor for that Sub-Account for the day for which the Annuity
Unit value is being calculated, and (b) 0.999866, which is a
factor that neutralizes an assumed interest rate of 5%.
CONTRACT MAINTENANCE FEE
During each year that this contract is in force prior to the
Annuity Commencement Date, a fee will be deducted from the
contract at the end of the Contract Year or on the date of
surrender of this contract, if earlier. The fee will be
charged against the Contract Value by reducing the Fixed
Account value and, with respect to the Sub-Accounts, the
number of Accumulation Units held on that date on a pro-rata
basis with respect to each active Account.
The number of Accumulation Units deducted from the Sub-Account
is determined by dividing the pro-rata portion of the Contract
Maintenance Fee applicable to that Sub-Account, by the value
of an Accumulation Unit for the Sub-Account at the end of the
Contract Year, or on the date of surrender, as applicable.
TERMINATION TERMINATION PRIOR TO THE ANNUITY COMMENCEMENT DATE
PROVISIONS
FULL SURRENDER
At any time prior to the Annuity Commencement Date, the
Contract Owner has the right to terminate the contract by
submitting a written request to the Administrative Office of
the Company. In such event, the Termination Value of the
contract may be taken in the form of a cash settlement.
Page 10
<PAGE>
TERMINATION The Termination Value of the contract is equal
PROVISIONS to the Contract Value less:
(CONTINUED)
(a) any applicable Premium Taxes not previously deducted;
(b) the Contract Maintenance Fee as specified on Page 3; and
(c) any applicable contingent deferred sales charges as
specified on Page 3.
The Termination Value provided by the contract is not less
than the minimum values required by the insurance laws of the
state in which this contract is issued.
PARTIAL SURRENDERS/ANNUAL WITHDRAWAL AMOUNT
The Contract Owner may request, in writing, a partial
surrender of Contract Values at any time prior to the Annuity
Commencement Date provided the Contract Value remaining after
the surrender is at least equal to the Company's minimum
amount rules then in effect. If the remaining Contract Value
following such surrender is less than the Company's minimum
amount rules, the Company will terminate the contract and pay
the Termination Value.
The contingent deferred sales charge will be assessed against
any Contract Values surrendered as described on Page 3.
However, on a noncumulative basis, the Contract Owner may make
partial surrenders during any Contract Year, up to the Annual
Withdrawal Amount shown on Page 3 and the contingent deferred
sales charge will not be assessed against such amounts.
Surrender of Contract Values in excess of the Withdrawal
Amount and additional surrenders made in any Contract Year
will be subject to the contingent deferred sales charge, as
described on Page 3, if applicable.
For Federal tax purposes, any surrenders will be deemed to be
first from earnings, to the extent that they exist, and then
from the premium payments.
TERMINATION AFTER THE ANNUITY COMMENCEMENT DATE
This contract may not be surrendered for its Termination Value
after the commencement of annuity payments, except with
respect to Options Four and Five.
PAYMENT ON SURRENDER - DEFERRAL OF PAYMENT
Payment on any request for surrender will be made as soon as
possible and, with respect to the Contract Values in the Sub-
Accounts, no later than seven days after the written request
is received by the Company. However, such payment may be
subject to postponement:
(a) for any period during which the New York Stock Exchange
is closed or during which trading on the New York Stock
Exchange is restricted;
(b) for any period during which an emergency exists as a
result of which (i) disposal of the securities held in
the Sub-Accounts is not reasonably practicable, or (ii)
it is not reasonably practicable for the value of the net
assets of the Separate Account to be fairly determined;
and
(c) for such other periods as the Securities and Exchange
Commission may, by order, permit for the protection of
the Contract Owners. The conditions under which trading
shall be deemed to be restricted or any emergency shall
be deemed to exist shall be determined by rules and
regulations of the Securities and Exchange Commission.
Page 11
<PAGE>
TERMINATION The Company may defer payment of any amounts
PROVISIONS from the Fixed Account for up to six months
(CONTINUED) from the date of the request to surrender. If the Company
defers payment for more than 30 days, the Company will pay
interest of at least 3% per annum on the amount deferred.
DEATH BENEFIT
If the Annuitant dies before the Annuity Commencement Date and
there is no designated Contingent Annuitant surviving, or if
the Contract Owner dies before the Annuity Commencement Date,
the Death Benefit will be payable as determined under the
Contract Control Provisions. The Death Benefit is calculated
as of the date the Company receives written notification of
Due Proof of Death at the Administration Office of the
Company.
The Death Benefit will be the greatest of:
(a) The Contract Value on the date of receipt of Due Proof of
Death at the Administration Office of the Company; or
(b) The Maximum Anniversary Value as described on Page 5 if
this Contract; or
(c) 100% of all premium payments made under the Contract,
reduced by the dollar amount of any partial surrenders
since the Date of Issue.
The Death Benefit may be taken in one sum or under any of the
settlement options then being offered by the Company provided,
however, that, in the event of a Contract Owner's death, any
settlement option must provide that any amount payable as a
death benefit will commence upon notification of Due Proof of
Death and be completed within five years of the date of death
or, if the benefit is payable over a period not extending
beyond the life expectancy of the Beneficiary or over the life
of the Beneficiary, such distribution must commence within one
year of the date of death. Notwithstanding the foregoing, in
the event of the Contract Owner's death where the sole
Beneficiary is the spouse of the Contract Owner and the
Annuitant or Contingent Annuitant is living, such spouse may
elect, in lieu of receiving the death benefit, to be treated
as the Contract Owner.
SETTLEMENT When payment is taken in one sum, payment will be made within
PROVISIONS 7 days after the date Due Proof of Death is received, except
when the Company is permitted to defer such payment under the
Investment Company Act of 1940.
ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date is shown on Page 3. This date
may be changed by the Contract Owner with 30 days advance
written notification and may be the fifteenth day of any month
before or including the month of the Annuitant's 90th
birthday. In the event the Contingent Annuitant becomes the
Annuitant and in the absence of a written election to the
contrary, the Annuity Commencement Date will be the fifteenth
day of the month coincident with or next following the
Annuitant's 90th birthday.
Page 12
<PAGE>
SETTLEMENT ELECTION OF ANNUITY OPTION
PROVISIONS
(CONTINUED) The Contract Owner may elect to have the Termination Value,
without deduction for any contingent deferred sales charge,
applied on the Annuity Commencement Date under any one of the
annuity options described below except the fifth option or
under any of the settlement options then being offered by the
Company. The Termination Value is determined on the basis of
the Accumulation Unit value of each Sub-Account and the value
of the Fixed Account no later than the fifth Valuation Day
preceding the date annuity payments are to commence.
DATE OF PAYMENT
The first payment under any option shall be made on the
fifteenth day of the month immediately following approval of
claim for settlement. Subsequent payments shall be made on the
fifteenth day of each subsequent month in accordance with the
manner of payment selected.
DEATH OF THE ANNUITANT
In the event of the death of the Annuitant while receiving
annuity payments, the present value of any remaining payments
will be paid in one sum to the Beneficiary unless other
provisions shall have been made and approved by the Company.
If the Annuitant was also the Contract Owner, any method of
distribution must provide that any amount payable as a death
benefit will be distributed at least as rapidly as under the
method of distribution in effect at the Contract Owner's
death. In the case of the Separate Account calculations, for
such present value of the remaining payments the Company will
assume a net investment rate of 5% per annum. The Annuity Unit
value on the date of receipt of Due Proof of Death shall be
used for the purpose of determining such present value. In the
case of the General Account the net investment rate assumed
will be the rate used by the Company to determine the amount
of each certain payment.
ALLOCATION OF ANNUITY
The person electing an annuity option may further elect to
have the value of the contract applied to provide a variable
annuity, a fixed dollar annuity or a combination of both. Once
very 3 months, following the commencement of annuity payments,
the Contract Owner may elect, in writing, to transfer among
any Sub-Account(s) on which variable annuity payments are
based. No transfers may be made between the Sub-Accounts and
the General Account.
If no election is made to the contrary, the value of each Sub-
Account shall be applied to provide a variable annuity based
thereon, and the value of the Fixed Account shall be applied
to provide a fixed dollar annuity.
VARIABLE ANNUITY AND FIXED DOLLAR ANNUITY
VARIABLE ANNUITY - A variable annuity is an annuity with
payments increasing or decreasing in amount in accordance
with the net investment results of the Sub-Account(s) of the
Separate Account (as described in the Valuation Provisions).
After the first monthly payment for a variable annuity has
been determined in accordance with the provisions of this
contract, a number of Sub-Account Annuity Units is determined
by dividing that first monthly payment by the appropriate Sub-
Account Annuity Unit value on the effective date of the
annuity payments.
Page 13
<PAGE>
SETTLEMENT Once variable annuity payments have begun, the number
PROVISIONS of Annuity Units remains fixed with respect to a particular
(CONTINUED) Sub-Account. If the Contract Owner elects that continuing
annuity payments be based on a different Sub-Account, the
number will change effective with that election but will
remain fixed in number following such election. The method of
calculating the unit value is described under Valuation
Provisions.
The dollar amount of the second and subsequent variable
annuity payments is not predetermined and may increase or
decrease from month to month. The actual amount of each
variable annuity payment after the first is determined by
multiplying the number of Sub-Account Annuity Units by the
Sub-Account Annuity Unit value as described in the Valuation
Provisions. The Sub-Account Annuity Unit value will be
determined no earlier than the fifth Valuation Day preceding
the date the annuity payment is due.
The Company guarantees that the dollar amount of variable
annuity payments will not be adversely affected by variations
in the expense results and in the actual mortality experience
of payees from the mortality assumptions, including any age
adjustment, used in determining the first monthly payment.
Fixed Dollar Annuity - A fixed dollar annuity is an annuity
with payments which remain fixed as to dollar amount
throughout the payment period.
ANNUITY OPTIONS
FIRST OPTION - Life Annuity - An annuity payable monthly
during the lifetime of the payee, ceasing with the last
payment due prior to the death of the payee.
SECOND OPTION - Life Annuity with 120, 180 or 240 Monthly
Payments Certain - An annuity providing monthly income to the
payee for a fixed period of 120 months, 180 months, or 240
months (as selected), and for as long thereafter as the
payee shall live.
THIRD OPTION - Joint and Last Survivor Life Annuity - An
annuity payable monthly during the joint lifetime of the payee
and a secondary payee, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior
to the death of the survivor.
FOURTH OPTION - Payment for a Designated Period - An amount
payable monthly for the number of years selected which may be
from 5 to 30 years. The remaining balance of proceeds in the
General Account or the Separate Account for any day is equal
to the balance on the previous day decreased by the amount of
any installment paid on that day and the remainder multiplied
by the applicable net investment factor for the day as
described in the valuation provisions. Any surrender out of
this option will be subject to contingent deferred sales
charges, as described on Page 3.
If this contract is issued to qualify under Section 401, 403,
or 408 of the Internal Revenue Code of 1954 as amended, the
fourth option shall be available only if the guaranteed
payment period is less than the life expectancy of the
Annuitant at the time the option becomes effective. Such life
expectancy will be computed under the mortality table then in
use by the Company.
Page 14
<PAGE>
SETTLEMENT FIFTH OPTION - Death Benefit Remaining with the Company
PROVISIONS - Proceeds from the Death Benefit left with the
(CONTINUED) Company for a period not to exceed five years from the
date of the Contract Owner's death prior to the Annuity
Commencement Date. The proceeds will remain in the Sub-
Account(s) to which they were allocated at the time of death
unless the Beneficiary elects to reallocate them. Full or
partial withdrawals may be made at any time. In the event of
withdrawals, the remaining value will equal the Contract Value
of the proceeds left with the Company, minus any withdrawals.
In the absence of an election by the Contract Owner, the
Termination Value, without deduction for any contingent
deferred sales charge, will be applied on the Annuity
Commencement Date under the second option to provide a life
annuity with 120 monthly payments certain.
ANNUITY TABLES DESCRIPTION OF TABLES
The attached tables show the minimum dollar amount of the
first monthly payments for each $1,000 applied under the
options. Under the First or Second Options, the amount of each
payment will depend upon the age and sex of the payee at the
time the first payment is due. Under the Third Option, the
amount of each payment will depend upon the sex of both payees
and their ages at the time the first payment is due.
The variable payment annuity tables for the First, Second and
Third Options are based on the 1983a Individual Annuity
Mortality Table with ages set back one year and an interest
rate of 5% per annum. The table for the Fourth Option is based
on an interest rate of 5% per annum.
The fixed annuity payment tables for the First, Second and
Third Options are based on the 1983a Individual Annuity
Mortality Table with ages set back one year and an interest
rate of 3% per annum. The table for the Fourth Option
is based on an interest rate of 3% per annum.
Once the Contract Owner has elected an annuity option, that
election may not be changed with respect to any Annuitant
following the commencement of annuity payments.
MINIMUM PAYMENT
No election of any options or combination of options may be
made under this contract unless the first payment for each
affected Account would be at least equal to the minimum
payment amount according to Company rules then in effect. If
at any time, payments to be made to any payee from each
Account are or become less than the minimum payment amount,
the Company shall have the right to change the frequency of
payment to such intervals as will result in a payment at least
equal to the minimum. If any amount due would be less than the
minimum payment amount per annum, the Company may make such
other settlement as may be equitable to the payee.
Page 15
<PAGE>
VARIABLE PAYMENT ANNUITY TABLES
Amount of First Monthly Payment
For Each $1,000 Applied to
Variable Payment Annuities
Second and subsequent annuity payments, when based on the investment experience
of a Separate Account, are variable and are not guaranteed as to fixed dollar
amount.
SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
Male Payee Female Payee
---------- ------------
Age Monthly Payments Guaranteed Monthly Payments Guaranteed
-------------------------------- --------------------------------
None 120 180 240 None 120 180 240
<S> <C> <C> <C> <C> <C> <C> <C> <C>
35 $4.68 $4.67 $4.66 $4.64 $4.52 $4.52 $4.51 $4.50
40 4.86 4.85 4.82 4.79 4.65 4.65 4.64 4.62
45 5.10 5.07 5.03 4.97 4.83 4.82 4.80 4.77
50 5.41 5.35 5.28 5.20 5.06 5.04 5.01 4.97
51 5.48 5.41 5.34 5.24 5.12 5.09 5.06 5.01
52 5.55 5.48 5.40 5.30 5.17 5.14 5.11 5.05
53 5.63 5.55 5.46 5.35 5.23 5.20 5.16 5.10
54 5.71 5.63 5.53 5.40 5.30 5.26 5.22 5.15
55 5.80 5.70 5.60 5.45 5.37 5.33 5.28 5.20
56 5.89 5.79 5.67 5.51 5.44 5.40 5.34 5.26
57 5.99 5.88 5.74 5.57 5.52 5.47 5.40 5.31
58 6.10 5.97 5.82 5.62 5.60 5.54 5.47 5.37
59 6.21 6.07 5.90 5.68 5.69 5.62 5.54 5.43
60 6.33 6.17 5.98 5.74 5.79 5.71 5.62 5.49
61 6.46 6.28 6.07 5.80 5.89 5.80 5.70 5.55
62 6.60 6.40 6.16 5.86 6.00 5.90 5.78 5.61
63 6.75 6.52 6.25 5.91 6.11 6.00 5.86 5.67
64 6.91 6.64 6.34 5.97 6.23 6.11 5.95 5.74
65 7.09 6.78 6.43 6.02 6.37 6.22 6.04 5.80
66 7.27 6.91 6.52 6.08 6.51 6.34 6.14 5.87
67 7.47 7.06 6.62 6.12 6.66 6.47 6.24 5.93
68 7.68 7.21 6.71 6.17 6.82 6.60 6.34 5.99
69 7.91 7.36 6.81 6.22 7.00 6.74 6.44 6.05
70 8.15 7.52 6.90 6.26 7.19 6.89 6.54 6.11
75 9.65 8.35 7.30 6.41 8.41 7.74 7.06 6.34
80 11.78 9.16 7.59 6.48 10.24 8.70 7.46 6.46
85 14.73 9.80 7.74 6.51 13.00 9.55 7.69 6.50
90 18.62 10.21 7.80 6.51 17.00 10.10 7.79 6.51
</TABLE>
JOINT AND LAST SURVIVOR ANNUITY
<TABLE>
<CAPTION>
Age of Age of Female Payee
Male 35 40 45 50 55 60 65 70 75 80 85 90
Payee
- - -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35 $4.38 $4.42 $4.47 $4.52 $4.56 $4.59 $4.62 $4.64 $4.65 $4.66 $4.67 $4.68
40 4.41 4.47 4.54 4.60 4.66 4.71 4.75 4.79 4.81 4.83 4.85 4.85
45 4.43 4.51 4.60 4.68 4.77 4.85 4.91 4.97 5.01 5.05 5.07 5.08
50 4.45 4.55 4.65 4.76 4.88 5.00 5.10 5.19 5.26 5.31 5.35 5.37
55 4.47 4.57 4.70 4.84 4.99 5.15 5.30 5.44 5.56 5.65 5.71 5.75
60 4.49 4.60 4.73 4.90 5.09 5.30 5.52 5.73 5.92 6.07 6.17 6.24
65 4.50 4.61 4.76 4.95 5.17 5.43 5.73 6.04 6.34 6.59 6.79 6.91
70 4.50 4.63 4.78 4.98 5.23 5.54 5.92 6.34 6.79 7.21 7.55 7.80
75 4.51 4.64 4.80 5.01 5.28 5.63 6.07 6.60 7.22 7.87 8.46 8.91
80 4.51 4.64 4.81 5.03 5.31 5.69 6.18 6.81 7.60 8.52 9.45 10.24
85 4.52 4.65 4.82 5.04 5.34 5.73 6.25 6.96 7.89 9.07 10.40 11.67
90 4.52 4.65 4.82 5.05 5.35 5.75 6.30 7.05 8.09 9.49 11.21 13.03
</TABLE>
PAYMENTS FOR A DESIGNATED PERIOD
<TABLE>
<CAPTION>
Amount Amount Amount Amount Amount Amount
No. of No. of No. of No. of No. of No. of
of Monthly of Monthly of Monthly of Monthly of Monthly of Monthly
Years Payments Years Payments Years Payments Years Payments Years Payments Years Payments
- - ----- -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 $18.74 10 $10.51 15 $7.82 20 $6.51 25 $5.76 30 $5.28
6 15.99 11 9.77 16 7.49 21 6.33 26 5.65
7 14.02 12 9.16 17 7.20 22 6.17 27 5.54
8 12.56 13 8.64 18 6.94 23 6.02 28 5.45
9 11.42 14 8.20 19 6.71 24 5.88 29 5.36
</TABLE>
The monthly payment for any combination of ages not shown will be quoted upon
request.
Page 16
<PAGE>
FIXED PAYMENT ANNUITY TABLES
Amount of Monthly Payments
For Each $1,000 Applied to
Fixed Payment Annuities
Payments are fixed and are guaranteed as to fixed dollar amount.
FIRST AND SECOND OPTIONS - SINGLE LIFE ANNUITIES WITH:
<TABLE>
<CAPTION>
Male Payee Female Payee
---------- ------------
Age Monthly Payments Guaranteed Monthly Payments Guaranteed
-------------------------------- --------------------------------
None 120 180 240 None 120 180 240
<S> <C> <C> <C> <C> <C> <C> <C> <C>
35 $3.41 $3.40 $3.39 $3.38 $3.23 $3.23 $3.22 $3.22
40 3.61 3.60 3.58 3.56 3.39 3.38 3.38 3.37
45 3.87 3.85 3.82 3.77 3.59 3.58 3.57 3.55
50 4.19 4.15 4.10 4.03 3.84 3.83 3.81 3.77
51 4.27 4.22 4.17 4.08 3.90 3.89 3.86 3.82
52 4.34 4.29 4.23 4.14 3.97 3.95 3.92 3.88
53 4.43 4.37 4.30 4.20 4.03 4.01 3.98 3.93
54 4.51 4.45 4.37 4.26 4.10 4.08 4.04 3.99
55 4.60 4.54 4.45 4.32 4.18 4.15 4.11 4.04
56 4.70 4.62 4.53 4.39 4.25 4.22 4.18 4.11
57 4.80 4.72 4.61 4.45 4.34 4.30 4.25 4.17
58 4.91 4.82 4.69 4.51 4.42 4.38 4.32 4.23
59 5.03 4.92 4.78 4.58 4.52 4.47 4.40 4.30
60 5.15 5.03 4.87 4.64 4.61 4.56 4.48 4.37
61 5.28 5.14 4.96 4.71 4.72 4.66 4.57 4.44
62 5.42 5.26 5.06 4.78 4.83 4.76 4.66 4.51
63 5.57 5.39 5.16 4.84 4.95 4.86 4.75 4.58
64 5.74 5.52 5.26 4.90 5.07 4.98 4.85 4.65
65 5.91 5.66 5.36 4.96 5.21 5.10 4.95 4.72
66 6.10 5.81 5.46 5.02 5.35 5.22 5.05 4.79
67 6.29 5.96 5.56 5.08 5.51 5.36 5.16 4.86
68 6.50 6.11 5.66 5.13 5.67 5.50 5.26 4.93
69 6.73 6.28 5.76 5.18 5.85 5.65 5.37 5.00
70 6.97 6.44 5.86 5.23 6.04 5.80 5.49 5.06
75 8.45 7.32 6.31 5.40 7.26 6.69 6.04 5.32
80 10.55 8.17 6.62 5.48 9.07 7.69 6.48 5.45
</TABLE>
THIRD OPTION - JOINT AND LAST SURVIVOR ANNUITY
<TABLE>
<CAPTION>
Age of Age of Female Payee
Male 35 40 45 50 55 60 65 70 75 80
Payee
- - -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35 $3.07 $3.14 $3.20 $3.25 $3.30 $3.33 $3.35 $3.37 $3.39 $3.40
40 3.11 3.20 3.28 3.36 3.42 3.48 3.52 3.55 3.57 3.59
45 3.15 3.25 3.36 3.46 3.56 3.64 3.71 3.76 3.80 3.83
50 3.17 3.29 3.42 3.56 3.69 3.82 3.92 4.01 4.08 4.12
55 3.19 3.32 3.47 3.64 3.81 3.99 4.16 4.29 4.40 4.48
60 3.20 3.34 3.51 3.70 3.92 4.15 4.39 4.61 4.79 4.93
65 3.21 3.36 3.54 3.75 4.00 4.29 4.61 4.94 5.24 5.48
70 3.22 3.37 3.56 3.78 4.06 4.40 4.80 5.25 5.70 6.12
75 3.22 3.38 3.57 3.81 4.11 4.48 4.95 5.51 6.15 6.80
80 3.23 3.38 3.58 3.82 4.14 4.54 5.05 5.71 6.52 7.45
</TABLE>
FORTH OPTION - PAYMENTS FOR A DESIGNATED PERIOD
<TABLE>
<CAPTION>
Amount Amount Amount Amount Amount Amount
No. of No. of No. of No. of No. of No. of
of Monthly of Monthly of Monthly of Monthly of Monthly of Monthly
Years Payments Years Payments Years Payments Years Payments Years Payments Years Payments
- - ----- -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 $17.91 10 $9.61 15 $6.87 20 $5.51 25 $4.71 30 $4.18
6 15.14 11 8.86 16 6.53 21 5.32 26 4.59
7 13.16 12 8.24 17 6.23 22 5.15 27 4.47
8 11.68 13 7.71 18 5.96 23 4.99 28 4.37
9 10.53 14 7.26 19 5.73 24 4.84 29 4.27
</TABLE>
The monthly payment for any combination of ages not shown will be quoted upon
request.
Page 17
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
[ITT HARTFORD LOGO]
Hartford Life Insurance Company
P.O. Box 2999
Hartford, Connecticut 06104-2999
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Application for U.S.P.S.-First Class or Express-Mail to: Private Express Mail Carriers-Mo
Variable Annuity Contract ITT Hartford 200 Hopmeadow Street
Attn: IAO-PCM Simsbury, CT 06089
Hartford Life Insurance Company P.O. Box 2999
Hartford, CT 06104-2999
[ITT HARTFORD LOGO]
- - ------------------------------------------------------------------------------------------------------------------------------------
--- -- ----
1. Contract Owner James Scott SS#/TIN 123 45 6789
------------------------------------ --- -- ----
If no Annuitant is Name -- -- --
specified in Section 3, Date of Birth 09 10 58
the Contract Owner 1 Main Street -- -- --
will be the Annuitant. ------------------------------------ month day year
Street Address
Hartford CT 06106
------------------------------------ /X/ Male / / Female / / Trustee
City State Zip
- - ------------------------------------------------------------------------------------------------------------------------------------
2. Joint Contract ------------------------------------
Owner (if any) Name
--- -- ----
------------------------------------ SS#/TIN
Relationship to Contract Owner / / Male / / Female --- -- ----
-- -- --
Date of Birth
-- -- --
month day year
- - ------------------------------------------------------------------------------------------------------------------------------------
3. Annuitant ------------------------------------ --- -- ----
Name SS#/TIN
Complete only if --- -- ----
different from the ------------------------------------
contract owner in Street Address -- -- --
Section 1. Date of Birth
------------------------------------ -- -- --
City State Zip / / Male / / Female
month day year
- - ------------------------------------------------------------------------------------------------------------------------------------
4. Contingent Annuitant Paul Scott Brother
------------------------------------------------------------------------------------------------------
Name Relationship to Owner
- - ------------------------------------------------------------------------------------------------------------------------------------
5. Beneficiary (ies) Ann Scott Wife 100%
------------------------------------------------------------------------------------------------------
Designated Name(s) Relationship to Contract Owner Percentage
------------------------------------------------------------------------------------------------------
Contingent Name(s) Relationship to Contract Owner Percentage
- - ------------------------------------------------------------------------------------------------------------------------------------
6. Tax Qualified Plans A. / / Initial / / Transfer / / Rollover
Check the appropriate B. / / IRA / / 403(b) / / 401(k) / / 401(a) / / SEP-IRA / / Other
box(es) in A, B, and C. --------------------
C. / / Individual Accounts / / Unallocated Plan Account
Tax Year for which initial contribution is being made:
-------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
7. Fund Selection Please check selected fund(s) and note whole percentage allocations.
The initial premium /X/ PCM Voyager Fund 50 % / / PCM High Yield Fund %
will be allocated as ---- ----
selected here. If / / PCM Global Growth Fund % / / PCM Diversified Income Fund %
Dollar Cost Averaging, ---- ----
complete the DCA / / PCM Global Asset Allocation Fund % / / PCM U.S. Gov. & High Quality Bond %
enrollment section ---- Fund ----
on the reverse side. / / PCM Growth & Income Fund % / / PCM Money Market Fund %
---- ----
/X/ PCM Utilities Growth & Income Fund 50 % / / PCM Fixed Account %
---- ----
/ / Other %
-------------------- ----
Make checks payable to: ITT Hartford Life Insurance Companies Initial $ 20,000 Total 100 %
-------- ----
Monies remitted via /X/ check / / wire / / 1035 / / Qualified Transfer
- - ------------------------------------------------------------------------------------------------------------------------------------
8. Special Remarks
- - ------------------------------------------------------------------------------------------------------------------------------------
Will the annuity applied for replace one or more existing annuity or life insurance contracts? / / Yes /X/ No (If yes, explain
Have you purchased another ITT Hartford Annuity during the previous 12 months? / / Yes /X/ No in Special
Remarks)
I hereby represent my answers to the above questions to be true and correct to the best of my knowledge and belief. I UNDERSTAND
THAT ANNUITY PAYMENTS OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND NOT
GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
/X/ RECEIPT OF A VARIABLE ANNUITY AND FUND PROSPECTUS IS HEREBY ACKNOWLEDGED. If not checked, the appropriate prospectus will be
mailed to you.
SIGNED AT Hartford, CT ON 2-4-94 /s/ James Scott
------------------------ ---------- ------------------------------------------------------------------
City, State Date (Contract Owner's signature)
Do you, as Agent, have reason to believe the contract applied
for will replace existing annuities or insurance? / / Yes /X/ No ------------------------------------------------------------------
(Joint Contract Owner's signature)
LICENSED
AGENT /s/ John Adams Broker/Dealer Paine Webber
--------------------------------- ----------------------------------------------------
(signature)
John Adams Address Financial Plaza, Hartford, CT
--------------------------------- -----------------------------------------------------------
(print)
Telephone # (203) 547-5000
--------------------------------- -------------------------------------------------------
License I.D. # (Florida Agents Only)
</TABLE>
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
HARTFORD LIFE INSURANCE COMPANY
This Restated Certificate of Incorporation gives effect to the
amendment of the Certificate of Incorporation of the corporation and otherwise
purports merely to restate all those provisions already in effect. This
Restated Certificate of Incorporation has been adopted by the Board of Directors
and by the sole shareholder.
Section 1. The name of the corporation is Hartford Life Insurance
Company and it shall have all the powers granted by the general
statutes, as now enacted or hereinafter amended to corporations formed
under the Stock Corporation Act.
Section 2. The corporation shall have the purposes and powers to
write any and all forms of insurance which any other corporation now
or hereafter chartered by Connecticut and empowered to do an insurance
business may now or hereafter may lawfully do; to accept and to cede
reinsurance; to issue policies and contracts for any kind or
combinations of kinds of insurance; to issue policies or contracts
either with or without participation in profits; to acquire and hold
any or all of the shares or other securities of any insurance
corporation; and to engage in any lawful act or activity for which
corporations may be formed under the Stock Corporation Act. The
corporation is authorized to exercise the powers herein granted in any
state, territory or jurisdiction of the United States or in any
foreign country.
Section 3. The capital with which the corporation shall commence
business shall be an amount not less than one thousand dollars. The
authorized capital shall be two million five hundred thousand dollars
divided into one thousand shares of common capital stock with a par
value of twenty-five hundred dollars each.
We hereby declare, under the penalties of false statement that the
statements made in the foregoing Certificate are true.
Dated: February 10, 1982 HARTFORD LIFE INSURANCE COMPANY
By /s/ illegible
------------------------------
Attest:
/s/ William A. McMahon
- - ------------------------------
<PAGE>
EXHIBIT (b)(6)(b)
By-Laws
of the
HARTFORD LIFE INSURANCE COMPANY
As passed and effective
February 13, 1978
and amended on
July 13, 1978
January 5, 1979
and
February 29, 1984
<PAGE>
ARTICLE I
Name - Home Office
Section 1. This corporation shall be named HARTFORD LIFE INSURANCE
COMPANY.
Section 2. The principal place of business and Home Office shall be
in the City of Hartford, Connecticut.
ARTICLE II
Stockholders' Meetings - Notice - Quorum - Right to Vote
Section 1. All meetings of the Stockholders shall be held at the
principal business office of the Company unless the Directors shall otherwise
provide and direct.
Section 2. The annual meeting of the Stockholders shall be held on
such day and at such hour as the Board of Directors may decide. For cause the
Board of Directors may postpone or adjourn such annual meeting to any other time
during the year.
Section 3. Special meetings of the Stockholders may be called by the
Board of Directors, the Executive Committee, the Chairman of the Board, the
President or any Vice President.
Section 4. Notice of Stockholders' meetings shall be mailed to each
Stockholder, at his address as it appears on the records of the Company, at
least seven days prior to the meeting. The notice shall state the place, date
and time of the meeting and shall specify all matters proposed to be acted upon
at the meeting.
Section 5. At each annual meeting the Stockholders choose Directors
as hereinafter provided.
Section 6. Each Stockholder shall be entitled to one vote for each
share of stock held by him at all meetings of the Company. Proxies may be
authorized by written power of attorney.
Section 7. Holders of one-half of the whole amount of the stock
issued and outstanding shall constitute a quorum.
<PAGE>
- 2 -
Section 8. Each Stockholder shall be entitled to a certificate of
stock which shall be signed by the President or a Vice President, and either the
Treasurer or an Assistant Treasurer of the Company, and shall bear the seal of
the Company, but such signatures and seal may be facsimile if permitted by the
laws of the State of Connecticut.
ARTICLE III
Directors - Meetings - Quorum
Section 1. The property, business and affairs of the Company shall be
managed by a board of not less than three nor more than twenty Directors, who
shall be chosen by ballot at each annual meeting. Vacancies occurring between
annual meetings may be filled by the Board of Directors by election. Each
Director shall hold office until the next annual meeting of Stockholders and
until his successor is chosen and qualified.
Section 2. Meetings of the Board of Directors may be called by the
direction of the Chairman of the Board, the President, or any three Directors.
Section 3. Three days' notice of meetings of the Board of Directors
shall be given to each Director, either personally or by mail or telegraph, at
his residence or usual place of business, but notice may be waived, at any time,
in writing.
Section 4. One third of the number of existing directorships, but not
less than two Directors, shall constitute a quorum.
ARTICLE IV
Election of Officers - Duties of Board of
Directors and Executive Committee
Section 1. The President shall be elected by the Board of Directors.
The Board of Directors may also elect one of its members to serve as Chairman of
the Board of Directors. The Chairman of the Board, or an individual appointed
by him, shall have authority to appoint all other officers, except as stated
herein, including one or more Vice Presidents and Assistant Vice Presidents, the
Treasurer
<PAGE>
- 3 -
and one or more Associate or Assistant Treasurers, one or more Secretaries and
Assistant Secretaries and such other Officers as the Chairman of the Board may
from time to time designate. All Officers of the Company shall hold office
during the pleasure of the Board of Directors. The Directors may require any
Officer of the Company to give security for the faithful performance of his
duties.
Section 2. The Directors may fill any vacancy among the officers by
election for the unexpired term.
Section 3. The Board of Directors may appoint from its own number an
Executive Committee of not less than five Directors. The Executive Committee
may exercise all powers vested in and conferred upon the Board of Directors at
any time when the Board is not in session. A majority of the members of said
Committee shall constitute a quorum.
Section 4. Meetings of the Executive Committee shall be called
whenever the Chairman of the Board, the President or a majority of its members
shall request. Forty-eight hours' notice shall be given of meetings but notice
may be waived, at any time, in writing.
Section 5. The Board of Directors shall annually appoint from its own
number a Finance Committee of not less than three Directors, whose duties shall
be as hereinafter provided.
Section 6. The Board of Directors may, at any time, appoint such
other Committees, not necessarily from its own number, as it may deem necessary
for the proper conduct of the business of the Company, which Committees shall
have only such powers and duties as are specifically assigned to them by the
Board of Directors or the Executive Committee.
Section 7. The Board of Directors may make contributions, in such
amounts as it determines to be reasonable, for public welfare or for charitable,
scientific or educational purposes, subject to the limits and restrictions
imposed by law and to such rules and regulations consistent with law as it
makes.
ARTICLE V
Officers
Chairman of the Board
Section 1. The Chairman of the Board shall preside at the meetings of
the Board of Directors and the Executive Committee and, in the absence of the
Chairman of the Finance Committee, at the meetings of the Finance Committee. In
the absence or inability of the Chairman of the Board to so preside, the
President shall preside in his place.
<PAGE>
- 4 -
President
Section 2. The President, under the supervision and control of the
Chairman of the Board, shall have general charge and oversight of the business
and affairs of the Company. The President shall preside at the meetings of the
Stockholders. He shall be a member of and shall preside at all meetings of all
Committees not referred to in Section 1 of this ARTICLE except that he may
designate a Chairman for each such other Committee.
Section 3. In the absence or inability of the President to perform
his duties, the Chairman of the Board may designate a Vice President to exercise
the powers and perform the duties of the President during such absence or
inability.
Secretary
Section 4. The Secretary of the Corporation shall keep a record of
all the meetings of the Company, of the Board of Directors and of the Executive
Committee, and he shall discharge all other duties specifically required of the
Secretary by law. The other Secretaries and Assistant Secretaries shall perform
such duties as may be assigned to them by the Board of Directors or by their
senior officers and any Secretary or Assistant Secretary may affix the seal of
the Company and attest it and the signature of any officer to any and all
instruments.
Treasurer
Section 5. The Treasurer shall keep, or cause to be kept, full and
accurate accounts of the Company. He shall see that the funds of the Company
are disbursed as may be ordered by the Board of Directors or the Finance
Committee. He shall have charge of all moneys paid to the Company and on
deposit to the credit of the Company or in any other properly authorized name,
in such banks or depositories as may be designated in a manner provided by these
by-laws. He shall also discharge all other duties that may be required of him
by law.
Other Officers
Section 6. The other officers shall perform such duties as may be
assigned to them by the President or the Board of Directors.
<PAGE>
- 5 -
ARTICLE VI
Finance Committee
Section 1. If a Finance Committee is established it shall be the duty
of that committee to supervise the investment of the funds of the Company in
securities in which insurance companies are permitted by law to invest, and all
other matters connected with the management of investments. If no Finance
Committee is established this duty shall be performed by the Board of Directors.
Section 2. All loans or purchases for the investment and reinvestment
of the funds of the Company shall be submitted for approval to the Finance
Committee, if not specifically approved by the Board of Directors.
Section 3. Sale or transfer of any stocks or bonds shall be made upon
authorization of the Finance Committee unless specifically authorized by the
Board of Directors.
Section 4. Transfers of stock and registered bonds, deeds, leases,
releases, sales, mortgages chattle or real, assignments or partial releases of
mortgages chattel or real, and in general all instruments of defeasance of
property and all agreements or contracts affecting the same, except discharges
of mortgages and entries to foreclose the same as hereinafter provided, shall be
authorized by the Finance Committee or the Board of Directors, and be executed
jointly for the Company by two persons, to wit: The Chairman of the Board, the
President or a Vice President, and a Secretary, the Treasurer or an Assistant
Treasurer, but may be acknowledged and delivered by either one of those
executing the instrument; provided, however, that either a Secretary, the
Treasurer, or an Assistant Treasurer alone, when authorized as aforesaid, or any
person specially authorized by the Finance Committee as attorney for the
Company, may make entry to foreclose any mortgage, and a Secretary, the
Treasurer or an Assistant Treasurer alone is authorized, without the necessity
of further authority, to discharge by deed or otherwise any mortgage on payment
to the Company of the principal, interest and all charges due.
Section 5. The Finance Committee may fix times and places for regular
meetings. No notice of regular meetings shall be necessary. Reasonable notice
shall be given of special meetings but the action of a majority of the Finance
Committee at any meeting shall be valid notwithstanding any defect in the notice
of such meeting.
<PAGE>
- 6 -
Section 6. In the absence of specific authorization from the Board of
Directors or the Finance Committee, the Chairman of the Board, the President, a
Vice President or the Treasurer shall have the power to vote or execute proxies
for voting any shares held by the Company.
ARTICLE VII
Funds
Section 1. All monies belonging to the Company shall be deposited to
the credit of the Company, or in such other name as the Finance Committee, the
Chairman of the Finance Committee or such executive officers as are designated
by the Board of Directors shall direct, in such bank or banks as may be
designated from time to time by the Finance Committee, the Chairman of the
Finance Committee, or by such executive officers as are designated by the Board
of Directors. Such monies shall be drawn only on checks or drafts signed by any
two executive officers of the Company, provided that the Board of Directors may
authorize the withdrawal of such monies by check or draft signed with the
facsimile signature of any one or more executive officers, and provided further,
that the Finance Committee may authorize such alternative methods of withdrawals
as it deems proper.
The Board of Directors, the President, the Chairman of the Finance
Committee, a Vice President, or such executive officers as are designated by the
Board of Directors may authorize withdrawal of funds by checks or drafts drawn
at offices of the Company to be signed by Managers, General Agents or employees
of the Company, provided that all such checks or drafts shall be signed by two
such authorized persons, except checks or drafts used for the payment of
claims or losses which need be signed by only one such authorized person, and
provided further that the Board of Directors of the Company or executive
officers designated by the Board of Directors may impose such limitations or
restrictions upon the withdrawal of such funds as it deems proper.
<PAGE>
- 7 -
ARTICLE VIII
Indemnity of Directors and Officers
Section 1. The Company shall indemnify and hold harmless each
Director and officer now or hereafter serving the Company, whether or not then
in office, from and against any and all claims and liabilities to which he may
be or become subject by reason of his being or having been a Director or officer
of the Company, or of any other company which he serves as a Director or officer
at the request of the Company, to the extent such is consistent with the
statutory provisions pertaining to indemnification, and shall provide such
further indemnification for legal and/or all other expenses reasonably incurred
in connection with defending against such claims and liabilities as is
consistent with statutory requirements.
ARTICLE IX
Amendment of ByLaws
Section 1. The Directors shall have power to adopt, amend and repeal
such bylaws as may be deemed necessary or appropriate for the management of the
property and affairs of the Company.
Section 2. The Stockholders at any annual or special meeting may
amend or repeal these bylaws or adopt new ones if the notice of such meeting
contains a statement of the proposed alteration, amendment, repeal or adoption,
or the substance thereof.
<PAGE>
2
ARTICLE I
Name - Home Office
Section 1. This corporation shall be named Hartford Life Insurance Company.
Section 2. The principal place of business and Home Office shall be in the
City of Hartford, Connecticut.
ARTICLE II
Stockholders' Meetings - Notice - Quorum - Right to Vote
Section 1. All meetings of the Stockholders shall be held at the principal
business office of the Company unless the Directors shall otherwise provide
and direct.
Section 2. The annual meeting of the Stockholders shall be held on such day
and at such hour as the Board of Directors may decide. For cause the Board of
Directors may postpone or adjourn such annual meeting to any other time
during the year.
Section 3. Special meetings of the Stockholders may be called by the Board
of Directors, the Executive Committee, the Chairman of the Board, the President
or any Vice President.
Section 4. Notice of Stockholders' meetings shall be mailed to each
Stockholder, at his address as it appears on the records of the Company, at
least seven days prior to the meeting. The notice shall state the place, date
and time of the meeting and shall specify all matters proposed to be acted upon
at the meeting.
Section 5. At each annual meeting the Stockholders shall choose Directors as
hereinafter provided.
Section 6. Each Stockholder shall be entitled to one vote for each share of
stock held by him at all meetings of the Company. Proxies may be authorized
by written power of attorney.
Section 7. Holders of one-half of the whole amount of the stock issued and
outstanding shall constitute a quorum.
<PAGE>
3
Section 8. Each Stockholder shall be entitled to a certificate of stock which
shall be signed by the President or a Vice President, and either the Treasurer
or an Assistant Treasurer of the Company, and shall bear the seal of the
Company, but such signatures and seal may be facsimile if permitted by the laws
of the State of Connecticut.
ARTICLE III
Directors - Meetings - Quorum
Section 1. The property, business and affairs of the Company shall be managed
by a board of not less than three nor more than twenty Directors, who
shall be chosen by ballot at each annual meeting. Vacancies occurring between
annual meetings may be filled by the Board of Directors by election. Each
Director shall hold office until the next annual meeting of Stockholders and
until his successor is chosen and qualified.
Section 2. Meetings of the Board of Directors may be called by the
direction of the Chairman of the Board, the President, or any three Directors.
Section 3. Three days' notice of meetings of the Board of Directors shall be
given to each Director, either personally or by mail or telegraph, at his
residence or usual place of business, but notice may be waived, at any time,
in writing.
Section 4. One third of the number of existing directorships, but not less
than two Directors, shall constitute a quorum.
ARTICLE IV
Election of Officers - Duties of Board of
Directors and Executive Committee
Section 1. The Board of Directors shall annually elect a Chairman of the Board,
a President, a Secretary of the Corporation and a Treasurer. It may elect such
Vice Presidents, other Secretaries, Assistant Secretaries, Assistant Treasurers
and such other officers as it may determine. All officers of the Company shall
hold office during the pleasure of the Board of Directors.
<PAGE>
4
Section 2. The Directors may fill any vacancy among the officers by election
for the unexpired term.
Section 3. The Board of Directors may appoint from its own number an Executive
Committee of not less than five Directors. The Executive Committee may
exercise all powers vested in and conferred upon the Board of Directors at
any time when the Board is not in session. A majority of the members of said
Committee shall constitute a quorum.
Section 4. Meetings of the Executive Committee shall be called whenever the
Chairman of the Board, the President or a majority of its members shall
request. Forty-eight hours' notice shall be given of meetings but notice
may be waived, at any time, in writing.
Section 5. The Board of Directors shall annually appoint from its own number
a Finance Committee of not less than three Directors, whose duties shall be as
hereinafter provided.
Section 6. The Board of Directors may, at any time, appoint such other
Committees, not necessarily from its own number, as it may deem necessary
for the proper conduct of the business of the Company, which Committees shall
have only such powers and duties as are specifically assigned to them by the
Board of Directors or the Executive Committee.
Section 7. The Board of Directors may make contributions, in such amounts as
it determines to be reasonable, for public welfare or for charitable,
scientific or educational purposes, subject to the limits and restrictions
imposed by law and to such rules and regulations consistent with law as it
makes.
ARTICLE V
Officers
Chairman of the Board
Section 1. The Chairman of the Board shall preside at the meetings of the
Board of Directors and the Executive Committee and, in the
<PAGE>
5
absence of the Chairman of the Finance Committee, at the meetings of the
Finance Committee. In the absence or inability of the Chairman of the Board
to so preside, the President shall preside in his place.
President
Section 2. The President, under the supervision and control of the Chairman of
the Board, shall have general charge and oversight of the business and affairs
of the Company. The President shall preside at the meetings of the
Stockholders. He shall be a member of and shall preside at all meetings of all
Committees not referred to in Section 2 of this ARTICLE except that he may
designate a Chairman for each such other Committee.
Section 3. In the absence or inability of the President to perform his duties,
the Chairman of the Board may designate a Vice President to exercise the powers
and perform the duties of the President during such absence or inability.
Secretary
Section 4. The Secretary of the Corporation shall keep a record of all the
meetings of the Company, of the Board of Directors and of the Executive
Committee, and he shall discharge all other duties specifically required of the
Secretary by law. The other Secretaries and the Assistant Secretaries shall
perform such duties as may be assigned to them by the Board of Directors or by
their senior officers and any Secretary or Assistant Secretary may affix the
seal of the Company and attest it and the signature of any officer to any and
all instruments.
Treasurer
Section 5. The Treasurer shall keep, or cause to be kept, full and accurate
accounts of the Company. He shall see that the funds of the Company are
disbursed as may be ordered by the Board of Directors or the Finance Committee.
He shall have charge of all moneys paid to the Company and on deposit to the
credit of the Company or in any other properly authorized name, in such banks
or depositories as may be designated in a manner provided by these bylaws.
He shall also discharge all other duties that may be required of him by law.
<PAGE>
6
Other Officers
Section 6. The other officers shall perform such duties as may be assigned to
them by the President or the Board of Directors.
ARTICLE VI
Finance Committee
Section 1. If a Finance Committee is established it shall be the duty of that
committee to supervise the investment of the funds of the Company in securities
in which insurance companies are permitted by law to invest, and all other
matters connected with the management of investments. If no Finance Committee
is established, this duty shall be performed by the Board of Directors.
Section 2. All loans or purchases for the investment and reinvestment
of the funds of the Company shall be submitted for approval to the Finance
Committee, if not specifically approved by the Board of Directors.
Section 3. Sale or transfer of any stocks or bonds shall be made upon
authorization of the Finance Committee unless specifically authorized by the
Board of Directors.
Section 4. Transfers of stock and registered bonds, deeds, leases, releases,
sales, mortgages chattel or real, assignments or partial releases of mortgages
chattel or real, and in general all instruments of defeasance of property and
all agreements or contracts affecting the same, except discharges of mortgages
and entries to foreclose the same as hereinafter provided, shall be authorized
by the Finance Committee or the Board of Directors, and be executed jointly for
the Company by two persons, to wit: the Chairman of the Board, the President
or a Vice President, and a Secretary, the Treasurer or an Assistant Treasurer,
but may be acknowledged and delivered by either one of those executing the
instrument; provided, however, that either a Secretary, the Treasurer, or an
Assistant Treasurer alone, when authorized as aforesaid, or any person
specially authorized by the Finance Committee as attorney for the Company, may
make entry to foreclose any mortgage, and a Secretary, the Treasurer or an
Assistant Treasurer alone is authorized, without the necessity of further
authority, to discharge by deed or otherwise any mortgage on payment to the
Company of the principal, interest and all charges due.
<PAGE>
7
Section 5. The Finance Committee may fix times and places for regular meetings.
No notice of regular meetings shall be necessary. Reasonable notice shall be
given of special meetings but the action of a majority of the Finance Committee
at any meeting shall be valid notwithstanding any defect in the notice of such
meeting.
Section 6. In the absence of specific authorization from the Board of
Directors or the Finance Committee, the Chairman of the Board, the President, a
Vice President or the Treasurer shall have the power to vote or execute proxies
for voting any shares held by the Company.
ARTICLE VII
Funds
Section 1. All monies belonging to the Company shall be deposited to the
credit of the Company, or in such other name as the Finance Committee, the
Chairman of the Finance Committee or such executive officers as are designated
by the Board of Directors shall direct, in such bank or banks as may be
designated from time to time by the Finance Committee, the Chairman of the
Finance Committee or by such executive officers as are designated by the Board
of Directors. Such monies shall be drawn only on checks or drafts signed by any
two executive officers of the Company, provided that the Board of Directors may
authorize the withdrawal of such monies by check or draft signed with the
facsimile signature of any one or more executive officers, and provided further,
that the Finance Committee may authorize such alternative methods of withdrawal
as it deems proper.
The Board of Directors, the President, the Chairman of the Finance Committee,
a Vice President, or such executive officers as are designated by the Board of
Directors may authorize withdrawal of funds by checks or drafts drawn at
offices of the Company to be signed by Managers, General Agents or employees
of the Company, provided that all such checks or drafts shall be signed by two
such authorized persons, except checks or drafts used for the payment of
claims or losses which need be signed by only one such authorized person, and
provided further that the Board of Directors of the Company or executive
officers designated by the Board of Directors may impose such limitations or
restrictions upon the withdrawal of such funds as it deems proper.
<PAGE>
8
ARTICLE VIII
Indemnity of Directors and Officers
Section 1. The Company shall indemnify and hold harmless each Director and
officer now or hereafter serving the Company, whether or not then in office,
from and against any and all claims and liabilities to which he may be or
become subject by reason of his being or having been a director or officer of
the Company, or of any other company which he serves as a director or officer
at the request of the Company, to the extent such is consistent with statutory
provisions pertaining to indemnification, and shall provide such further
indemnification for legal and/or all other expenses reasonably incurred in
connection with defending against such claims - and liabilities as is consistent
with statutory requirements.
ARTICLE IX
Amendment of ByLaws
Section 1. The Directors shall have power to adopt, amend and repeal such
bylaws as may be deemed necessary or appropriate for the management of the
property and affairs of the Company.
Section 2. The Stockholders at any annual or special meeting may amend or
repeal these bylaws or adopt new ones if the notice of such meeting contains a
statement of the proposed alteration, amendment, repeal or adoption, or the
substance thereof.
<PAGE>
Exhibit (b)(10)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
Registration Statement File no 33-80738 on Form S-1 for Hartford Life
Insurance Company.
/s/ ARTHUR ANDERSEN LLP
Hartford, Conneticut
April 6, 1995
<PAGE>
EXHIBIT (b)(14)
PARTICIPATION AGREEMENT
THIS AGREEMENT is entered into this 31st day of August, 1994 by HARTFORD
LIFE INSURANCE COMPANY ("Hartford Life"), a Connecticut corporation, on its own
behalf and on behalf of its Separate Account Three, ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY ("ITT Hartford"), a Wisconsin corporation, on its own
behalf and on behalf of its Separate Account Three, and DEAN WITTER SELECT
DIMENSIONS INVESTMENT SERIES, a Massachusetts business trust ("Fund").
WHEREAS, Hartford Life and ITT Hartford (singly "Company" and together
"Companies") have each established a Separate Account Three (singly "Account"
and together "Accounts"), as unit investment trusts to purchase shares from the
Fund for the purpose of funding variable annuity contracts ("Contracts") issued
by the Companies;
WHEREAS, the Fund wishes to permit the Companies and the Separate Accounts
to participate in the purchase of shares of the Fund for the purpose of funding
the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Companies
and the Fund agree as follows:
1. PURCHASE OF SHARES. The Companies will purchase shares at the net
asset value applicable to the then currently effective prospectus of the Fund.
The Companies will order Fund shares in the quantities and at the times each
Company determines to be necessary to meet the requirements of its Contracts.
Orders from Contract owners received and processed by the Companies prior to the
close of the New York Stock Exchange ("Exchange") on any given day that the
Exchange is open ("business day") will be executed by the Fund at the net asset
value determined as of the close of the Exchange on such business day. Any
orders received and processed on such day but after the close of the Exchange
will be executed by the Fund at the net asset value determined as of the close
of the Exchange on the next business day following the day of receipt of such
order. Each Company will forward to the Fund a list of names and specimen
signatures of persons authorized to act on the Company's behalf. The Fund shall
not accept orders given on behalf of a Company by persons not on such list. Each
Company agrees to promptly notify the Fund in writing of any additions,
deletions or other modifications to such list. Until so notified of such
modifications, the Fund shall have no liability as a result of the execution of
orders given by a person previously identified on the list as authorized.
2. SALES OF SHARES. The Fund will sell its shares to the Companies for
allocation to their respective Accounts. The Fund will execute share orders on a
daily basis at the next determined net asset value per share after receipt by
the Fund or its designee of the order for shares of the applicable Portfolio of
the Fund determined as set forth in the Fund prospectus. For each Portfolio, the
Fund will determine the closing net asset value, dividend and capital gain rate
information at the close of each business day. The Fund will provide this
information to the Companies by 5:30 p.m. Eastern Time or as soon thereafter as
is practicable. By 10:00 a.m. Eastern Time the following such business day or as
soon thereafter as is practicable, the Companies will send directly to the Fund
or its specified agent orders to purchase or redeem Fund shares for the
preceding business day. Payment for net purchases will be wired by the Companies
to a custodial account designated by the Fund as nearly as practicable to
coincide with the order for shares of the Fund. The Fund shares will be sold
only to insurance companies and separate accounts which have entered into
agreements to purchase shares or participation agreements substantially
identical to this Agreement, except that the Fund may sell its shares to its
investment manager(s) consistent with Section 817(h) of the Internal Revenue
Code ("Code") and Treasury Regulation 1.817-5, as amended from time to time, and
any Treasury interpretations thereof, relating to the diversification
requirements for variable annuity or variable life insurance contracts and any
amendments or other modifications to such section or Regulations. No shares of
the Fund will be sold to the general public. The Fund will send confirmations of
Fund share purchases by a Company directly to the Company. The Fund will
maintain all Fund share purchases in a book share account in the name of each
Company.
3. REDEMPTION OF SHARES. At a Company's request, the Fund agrees to
redeem for cash without charge, any full or fractional shares of the Fund held
by the Company, executing such requests on a daily basis at the net asset value
of the applicable Portfolio computed after receipt of the redemption request;
provided, however, that the Fund reserves the right to suspend the right of
redemption or to postpone the date of payment upon redemption of the shares of
any Portfolio under the circumstances and for the period
<PAGE>
of time specified in the prospectus. To the extent that it is able to do so,
payments for net redemptions of shares of the Funds will be wired by the Fund
from the Fund's custodial account to an account designated by each Company.
Until the Fund is so able to wire such redemption proceeds, they may be sent by
check or by such other means as the Fund and each Company agree.
4. AVAILABILITY OF SHARES. The Fund agrees to make its shares available
for purchase by the Companies at the applicable net asset value per share on
those days on which the Fund calculates its net asset value pursuant to rules of
the Securities and Exchange Commission ("SEC"). The Fund shall use reasonable
efforts to calculate such net asset value on each day on which the Exchange is
open for trading. The Fund shall have the right to suspend the sale of its
shares if (a) the Exchange has closed or has suspended or materially restricted
trading, (b) an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets,
(c) the SEC, by order, so permits, (d) a banking moratorium shall have been
declared by federal or New York authorities, or (e) there shall have been some
other extraordinary event which, in the judgment of the Fund, makes it
impracticable to sell the shares.
5. PAYMENT OF SHARES. The Companies shall pay for Fund shares within five
days after they place the order for Fund shares. The Fund reserves the right to
delay issuing or transferring Fund shares and/or to delay accruing or declaring
dividends in accordance with any policy set forth in the prospectus with respect
to such shares until any payment check has cleared. If the Fund does not receive
payment within the five-day period, the Fund may, without notice, cancel the
order and require a Company to reimburse the Fund promptly for any loss the Fund
suffered by reason of the Company failing to timely pay for its shares.
6. FEE FOR SHARES. The Companies shall purchase and redeem shares in the
Fund at net asset value.
7. FUND'S REGISTRATION STATEMENT AND PROSPECTUS. The Fund shall amend the
Registration Statement for its shares under the Securities Act of 1933 ("1933
Act") and the Investment Company Act of 1940 ("1940 Act") from time to time as
required in order to effect the continuous offering of its shares and, at the
expense of Dean Witter Reynolds Inc., shall provide the Companies with as many
copies of its current prospectus as the Companies may reasonably request.
The Companies shall not accept any order for an additional purchase payment
to a Contract funded by the Fund unless a current prospectus of the Fund shall
have been furnished by the applicable Company, at the expense of Dean Witter
Reynolds Inc., to the Contract Owner no later than with the confirmation for
such order. Unless and until the procedure described below has been established,
the Companies agree that current prospectuses of the Fund will be routinely
distributed by the Companies, at the expense of Dean Witter Reynolds Inc., to
all existing Contract Owners, whether or not additional purchase payments have
been made to the Contract, on an annual basis. The Companies agree to use their
best efforts to establish a procedure to identify Contract Owners who are making
an additional purchase payment to their Contracts and who have not previously
been furnished with a then current prospectus of the Fund, and to have the
procedure in place by the time the Fund's 1997 prospectus is effective so that a
current prospectus can be mailed by the Companies, at the expense of Dean Witter
Reynolds Inc., solely to those Contract Owners so identified, with the
confirmation for such additional purchase payment. There can be no assurance
that the procedure will be in place by the time the Fund's 1997 prospectus is
effective. Such procedure may be established only with the consent of the Fund,
which consent will not be unreasonably withheld. Until such time as the
procedure is in place, current prospectuses of the Fund will be routinely
distributed by the Companies, at the expense of Dean Witter Reynolds Inc., to
Contract Owners, whether or not additional purchase payments have been made to
the Contract, on an annual basis as described above.
8. INVESTMENT OF ASSETS. The Fund agrees to invest its assets in
accordance with its investment policies as disclosed in the prospectus and the
provisions of Section 817(h) of the Code and Treasury Regulation 1.817-5, as
amended from time to time, and any Treasury interpretations thereof, relating to
the diversification requirements for variable annuity and variable life
insurance contracts and any amendments or other modifications to such Section or
Regulations.
9. ADMINISTRATION OF CONTRACTS. The Companies shall be responsible for
administering their respective Contracts and keeping records on the Contracts.
2
<PAGE>
10. SHAREHOLDER INFORMATION. The Fund shall in a timely manner, at the
expense of the Fund or Dean Witter Reynolds Inc., furnish the Companies copies
of its proxy material, reports to shareholders and other communication to
shareholders in such quantity as the Companies shall reasonably require for
distributing to owners or participants under the Contracts. The Companies, at
the expense of the Fund or Dean Witter Reynolds Inc., will distribute these
materials to such owners or participants as required; provided that any proxy
materials required as a result of events originating from the Companies will be
furnished and distributed at the expense of the Companies.
11. RECORD KEEPING AND ACCESS TO RECORDS. Each Company and the Fund shall
maintain records in accordance with the applicable federal and state statutes,
rules and regulations applicable to their respective operations in connection
with the performance of their duties under this Agreement. Upon request, a party
to this Agreement shall promptly provide to another party copies of such records
as the party shall reasonably request. At the expense of the requesting party,
each party to this Agreement shall cooperate with and assist the requesting
party's auditors or representatives of regulatory agencies having jurisdiction
over the requesting party in connection with inquiries, complaints or judicial
proceedings involving responsibilities carried out under this Agreement. Such
cooperation and assistance shall include the production of copies of potentially
relevant records if so requested.
12. VOTING. To the extent required by law, the Companies shall vote Fund
shares in accordance with instructions received from Contract owners. If,
however, the 1940 Act or any regulation thereunder should be amended or if the
present interpretation thereof should change, and as a result the Companies
determine that they are permitted to vote the Fund's shares in their own right,
they may elect to do so. The Companies shall vote shares of a Portfolio for
which no instructions have been received in the same proportion as the voting
instructions which are received with respect to all Contracts participating in
that Portfolio. Neither the Companies nor persons under their control shall
recommend action in connection with solicitation of proxies for Fund shares
allocated to the Accounts. The Companies shall also vote shares they own that
are not attributable to Contract owners in the same proportion. The Companies
may, when required by state insurance regulatory authorities, disregard voting
instructions if the instructions require that the shares be voted so as to cause
a change in the sub-classification or investment objective of the Fund or one or
more of its Portfolios or to approve or disapprove an investment advisory
contract for a Portfolio of the Fund. In addition, the Companies themselves may
disregard voting instructions in favor of changes initiated by a Contract owner
in the investment policy or the investment adviser of a Portfolio of the Fund if
the Companies reasonably disapprove of such changes.
13. FUND'S WARRANTY. The Fund represents and warrants that Fund shares
sold pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with all applicable federal and state
laws.
14. EACH COMPANY'S WARRANTY. Each Company represents and warrants that it
is an insurance company duly organized and in good standing under the law of its
state of domicile and that it has legally and validly established its Account
under the laws of its state of domicile, and will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for certain Contracts. Each Company further
represents and warrants that its Contracts will be registered under the 1933 Act
and will be issued and sold in compliance with all applicable federal and state
laws.
15. TERMINATION OF AGREEMENT. (a) The parties may terminate this
Agreement as follows:
(i) at the option of a Company with respect to that Company or the
Fund upon 180 days' written notice to the other parties;
(ii) at the option of each Company if, for any reason except for those
specified in Section 4, Fund shares are not available to meet the
requirements of the Company's Contracts as determined by the Company;
(iii) at the option of the Fund with respect to a Company, upon the
National Association of Securities Dealers, Inc. ("NASD"), the SEC, the
director of the Department of Insurance in a Company's state of domicile or
any other regulatory body instituting legal proceedings against the Company
regarding its duties under this Agreement;
3
<PAGE>
(iv) at the option of each Company upon institution of formal
proceedings against the Fund by the SEC or other regulatory body; or
(v) at the option of each Company if Fund shares are not registered,
issued or sold in conformance with applicable federal or state law,
including Section 817(h) and Regulations and Treasury interpretations
thereunder. Prompt notice shall be given to the Companies if the conditions
of this provision occur.
(b) This Agreement shall automatically terminate in the event of its
assignment.
(c) Notwithstanding any termination of this Agreement, the Fund shall, at
the Companies' option, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"), so long as the Fund is in existence.
Specifically, without limitation, the owners of the Existing Contracts shall be
permitted to reallocate investments in the Fund, redeem investments in the Fund,
or invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. A termination under Section 18 of this Agreement shall end
rights of the owners of Existing Contracts.
(d) The Companies shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Companies' assets held
in the Accounts) except (i) as necessary to implement transactions permitted
under the Contracts, or (ii) as required by state or federal laws or regulations
or judicial or other legal precedent of general application (hereinafter
referred to as a "Legally Required Redemption"). Upon request, a Company will
promptly furnish to the Fund the opinion of counsel for the Company (which
counsel shall be reasonably satisfactory to the Fund) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts, a
Company shall not prevent its Contract owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund 90 days' notice of its intention to do so.
16. EACH COMPANY'S INDEMNIFICATION AGREEMENT. (a) Each Company agrees to
indemnify and hold harmless the Fund and each of its Trustees who is not an
"interested person" of the Fund, as defined in the 1940 Act (collectively the
"Fund's Indemnified Parties" for purposes of this Section 16), against any
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or expenses or actions to which the Fund's
Indemnified Parties may become subject, under the Federal securities laws or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements arise as a result of any failure by
the Company to provide the services and furnish the materials under the terms of
this Agreement or which arise from erroneous instructions by the Company to the
Fund concerning the particular Portfolio or Portfolios whose shares are to be
allocated to the Account. This indemnity agreement is in addition to any
liability which the Company may otherwise have.
(b) The Company will reimburse the Fund's Indemnified Parties for any
legal or other expenses reasonably incurred by the Fund's Indemnified Parties in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by any of the Fund's Indemnified Parties of
notice of the commencement of any action, or the making of any claim for which
indemnity may apply under this section, the Fund's Indemnified Parties will, if
a claim in respect thereof is to be made against the Fund, notify the Company of
the commencement thereof; but the omission so to notify the Company will not
relieve the Company from any liability which it may have to the Fund's
Indemnified Parties otherwise than under this Agreement. In case any such action
is brought against the Fund's Indemnified Parties, and the Company is notified
of the commencement thereof, the Company will be entitled to participate therein
and to assume the defense thereof, with counsel satisfactory to the party named
in the action, and after notice from the Company to such party of the Company's
election to assume the defense thereof, the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense thereof other than
reasonable costs of investigation.
4
<PAGE>
17. FUND INDEMNIFICATION AGREEMENT. (a) The Fund agrees to indemnify and
hold harmless each Company and each of the Company's Directors who is not an
"interested person" of the Company, as defined in the 1940 Act (collectively the
"Company's Indemnified Parties" for purposes of this Section 17), against any
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or expenses or actions to which the Company's
Indemnified Parties may become subject, under the Federal securities laws or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement;
(ii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of the Fund (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that this Agreement to indemnify shall not apply
as to the Company's Indemnified Parties if such statement or omission was
made in reliance upon and in conformity with information furnished to the
Fund by or on behalf of the Company for use in the registration statement
or prospectus of the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(iii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Fund, including a failure, whether unintentional or in good faith or
otherwise, to comply with the requirements specified in Section 8 of this
Agreement. This indemnity agreement is in addition to any liability which
the Fund may otherwise have.
(b) The Fund represents and warrants that the Fund will at all times
invest its assets in such a manner as to ensure that the Contracts will be
treated as variable annuity or flexible premium life insurance contracts under
the Code and the regulations thereunder. Without limiting the scope of the
foregoing, the Fund will at all times comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5, as amended from time to time, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity or variable life insurance contracts and any amendments or
other modifications to such section or Regulations.
(c) Fund shares will not be sold to any person or entity that would result
in the Contracts not being treated as annuity contracts or variable life
contracts.
(d) The Fund will reimburse the Companies, as shareholders of the Fund,
for pricing errors respecting Fund shares transacted with incorrect net asset
values by paying the Companies the amount of the difference between the
incorrect net asset value as of the date of the error and the correct net asset
value as of the date of the error, provided that: (a) in the case of an
overstatement of net asset value, any such reimbursement resulting from
overpayments by the Companies on Fund share purchases during the period the
error in pricing was in effect will be net of overpayments to the Companies on
Fund share redemptions during such period, (b) in the case of an understatement
of net asset value, any such reimbursement resulting from underpayments to the
Companies on Fund share redemptions during the period the error in pricing was
in effect will be net of underpayments by the Companies on Fund share purchases
during such period, and (c) in the case of a series of pricing errors over a
period of days consisting alternately of overstatements and understatements of
net asset value, any such reimbursements shall reflect the combined effect of
the net of all overpayments and underpayments during such period; and provided
further that reimbursements in connection with a pricing error discovered for a
period for which another pricing error has previously been corrected will be
calculated as if all errors pertaining to that period had been discovered at the
same time for purposes of the foregoing netting process.
(e) The Fund will reimburse the Company's Indemnified Parties for any
legal or other expenses reasonably incurred by the Company's Indemnified Parties
in connection with investigating or defending of any such loss, claim, damage,
liability or action.
5
<PAGE>
(f) Promptly after receipt by any of the Company's Indemnified Parties of
notice of the commencement of any action, or the making of any claim for which
indemnity may apply under this section, the Company's Indemnified Parties will,
if a claim in respect thereof is to be made against the Company, notify the Fund
of commencement thereof; but the omission so to notify the Fund will not relieve
the Fund from any liability which it may have to the Company's Indemnified
Parties otherwise than under this Agreement. In case any such action is brought
against the Company's Indemnified Parties, and the Fund is notified of the
commencement thereof, the Fund will be entitled to participate therein and to
assume the defense thereof, with counsel satisfactory to the party named in the
action, and after notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Fund will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
18. POTENTIAL CONFLICTS. (a) The Trustees of the Fund will monitor the
operations of the Fund for the existence of any material irreconcilable conflict
between the interests of the contract owners of all separate accounts investing
in the Fund. An irreconcilable material conflict may arise for a variety of
reasons, including: (i) an action by any state insurance regulatory authority;
(ii) a change in applicable Federal or state insurance, tax, or securities laws
or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (iii) an administrative or judicial decision in any
relevant proceeding; (iv) the manner in which the investments of any Portfolio
are being managed; (v) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (vi) a decision
by an insurer to disregard the voting instructions of contract owners. The
Trustees shall promptly inform the Companies if they determine that an
irreconcilable material conflict exists and the implications thereof.
(b) Each Company will report any potential or existing conflicts of which
it is aware to the Trustees of the Fund. The Company will assist the Trustees in
carrying out their responsibilities under sections (a) and (b) of this section,
by providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Trustees whenever contract owner voting
instructions are disregarded.
(c) If it is determined by a majority of the Trustees, or a majority of
the Trustees who are not parties to this Agreement or interested persons of any
such party and who have no direct or indirect financial interest in this
Agreement or any agreement related thereto (the "Independent Trustees"), that a
material irreconcilable conflict exists, the Company shall, at its expense and
to the extent reasonably practicable (as determined by a majority of the
Independent Trustees), take whatever steps are necessary to remedy or eliminate
the irreconcilable material conflict, up to and including: (i) withdrawing the
assets allocable to the Account from the Fund or any Portfolio and reinvesting
such assets in a different investment medium, including (but not limited to)
another Portfolio of the Fund, or submitting the question whether such
segregation should be implemented to a vote of all affected contract owners and,
as appropriate, segregating the assets of variable annuity contract owners
invested in the Account from those of any other appropriate group (i.e., annuity
contract owners, life insurance contract owners, or variable contract owners of
other life insurance companies) that votes in favor of such segregation, or
offering to the contract owners the option of making such a change; and
(ii) establishing a new registered management investment company or managed
separate account.
(d) If a material irreconcilable conflict arises because of a decision by
a Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the Independent
Trustees. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Fund shall continue
to accept and implement orders by the Company for the purchase (and redemption)
of shares of the Fund.
(e) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to a Company conflicts with the
majority of other state regulators, then the Company will
6
<PAGE>
withdraw the Account's investment in the Fund and terminate this Agreement
within six months after the Trustees inform the Company in writing that they
have determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the Independent Trustees. Until the end of the
foregoing six month period, the Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
(f) For purposes of sections (c) through (f) of this section, a majority
of the Independent Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Fund be required to establish a new funding medium for the Contracts. A
Company shall not be required by section (c) to establish a new funding medium
for its Contracts if an offer to do so has been declined by vote of a majority
of contract owners materially adversely affected by the irreconcilable material
conflict. In the event that the Trustees determine that any proposed action does
not adequately remedy any irreconcilable material conflict, then the Company
will withdraw its Account's investment in the Fund and terminate this Agreement
within six (6) months after the Trustees inform the Company in writing of the
foregoing determination, provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the Independent Trustees.
19. DURATION OF THIS AGREEMENT. This Agreement shall become effective as
of the date first above written and shall remain in force until April 30, 1996
and thereafter, but only so long as such continuance is specifically approved at
least annually by the Trustees of the Fund, or by the vote of a majority of the
outstanding voting securities of the Fund, cast in person or by proxy. This
Agreement also may be terminated in accordance with Section 15 hereof.
The terms "vote of a majority of the outstanding voting securities",
"assignment" and "interested person", when used in this Agreement, shall have
the respective meanings specified in the 1940 Act.
20. AMENDMENTS OF THIS AGREEMENT. This Agreement may be amended by the
parties only if such amendment is specifically approved by: (i) the Trustees of
the Fund, or by the vote of a majority of outstanding voting securities of the
Fund, and (ii) a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval.
21. GOVERNING LAW. This Agreement shall be construed in accordance with
the law of the State of New York and the applicable provisions of the 1933, 1934
and 1940 Acts and the rules and regulations and rulings thereunder including
such exemptions from those statutes, rules and regulations as the SEC may grant
and the terms hereof shall be interpreted and construed in accordance therewith.
To the extent the applicable law of the State of New York, or any of the
provisions herein, conflicts with the applicable provisions of the 1940 Act, the
latter shall control. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise the remainder of the
Agreement shall not be affected thereby.
22. NOTICES. Any notice under this Agreement shall be in writing and if
to the Fund, delivered or mailed postage prepaid to it at Two World Trade
Center, New York, NY 10048; and if to the Companies, delivered or mailed postage
prepaid to Vice President, Individual Annuity Sales and Marketing, 200 Hopmeadow
Street, Simsbury, CT 06070, with a copy to General Counsel at the same address.
The parties shall have the right to designate any other address hereafter by
written notice to the other parties.
23. PERSONAL LIABILITY. The Declaration of Trust establishing Dean Witter
Select Dimensions Investment Series, dated June 2, 1994, a copy of which,
together with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, provides that the
name Dean Witter Select Dimensions Investment Series refers to the Trustees
under the Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or agent of Dean
Witter Select Dimensions Investment Series shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise, in connection with the
affairs of said Dean Witter Select Dimensions Investment Series, but the Trust
Estate only shall be liable.
7
<PAGE>
EXHIBIT (b)(15)
HARTFORD LIFE INSURANCE COMPANY, INC.
AND
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, INC.
POWER OF ATTORNEY
Donald R. Frahm
Bruce D. Gardner
Joseph H. Gareau
John P. Ginnetti
Thomas M. Marra
Leonard E. Odell, Jr.
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
Donald J. Znamierowski
do hereby jointly and severally authorize Bruce D. Gardner and/or Rodney J.
Vessels to sign as their agent, any Registration Statement, pre-effective
amendment, and any post-effective amendment of the Hartford Life Insurance
Company, Inc. and Hartford Life and Accident Insurance Company, Inc. under the
Securities Act of 1933 and/or the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Donald R. Frahm Dated:
- - --------------------------- -------------------------
Donald R. Frahm
/s/ Bruce D. Gardner Dated:
- - --------------------------- -------------------------
Bruce D. Gardner
/s/ John P. Ginnetti Dated:
- - --------------------------- -------------------------
John P. Ginnetti
/s/ Thomas M. Marra Dated: 12/9/94
- - --------------------------- -------------------------
Thomas M. Marra
/s/ Leonard E. Odell, Jr. Dated: 12/2/94
- - --------------------------- -------------------------
Leonard E. Odell, Jr.
/s/ Lowndes A. Smith Dated:
- - --------------------------- -------------------------
Lowndes A. Smith
/s/ Raymond P.Welnicki Dated:
- - --------------------------- -------------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated:
- - --------------------------- -------------------------
Lizabeth H. Zlatkus
/s/ Donald J. Znamierowski Dated: 12/8/94
- - --------------------------- -------------------------
Donald J. Znamierowski
