<PAGE>
1933 Act Registration No. 33-83020
1940 Act Registration No. 811-8714
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 2 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 3 /X/
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
(EXACT NAME OF REGISTRANT)
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
900 Cottage Grove Road, Hartford, Connecticut 06152
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE
(203) 726-6000
<TABLE>
<S> <C>
COPY TO:
Robert A. Picarello, Esquire Michael Berenson, Esquire
Connecticut General Life Insurance
Company Margaret E. Hankard, Esquire
900 Cottage Grove Road Jordan Burt & Berenson
Hartford, Connecticut 06152 Suite 400 East
(NAME AND ADDRESS OF 1025 Thomas Jefferson Street, N.W.
AGENT FOR SERVICE) Washington, D.C. 20007
</TABLE>
Approximate date of proposed public offering: Continuous
An indefinite amount of the securities being offered by this Registration
Statement has been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940, and the initial registration fee of $500 was paid with the
Rule 24f-2 declaration. No Rule 24f-2 Notice has yet been filed, since no sales
were made in Registrant's most recent fiscal year which ended December 31, 1994.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
It is proposed that this filing will become effective:
_________ immediately upon filing pursuant to paragraph (b) of Rule 485
_________ on May 1, 1995 pursuant to paragraph (b) of Rule 485
X 60 days after filing pursuant to paragraph (a) of Rule 485
- ---------
_________ on , pursuant to paragraph (a) of Rule 485
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<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495
SHOWING LOCATION IN PART A (PROSPECTUS) AND
PART B (STATEMENT OF ADDITIONAL INFORMATION)
OF REGISTRATION STATEMENT OF INFORMATION REQUIRED BY FORM N-4
PART A
<TABLE>
<CAPTION>
ITEM OF FORM N-4 PROSPECTUS CAPTION
- ------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
1. Cover Page........................................ Cover Page
2. Definitions....................................... Definitions
3. Synopsis.......................................... Highlights; Fees and Expenses
4. Condensed Financial Information................... Condensed Financial Information
5. General...........................................
(a) Depositor..................................... The Company, the Fixed Account and the Variable Account
(b) Registrant.................................... The Company, the Fixed Account and the Variable Account
(c) Portfolio Company............................. The Funds
(d) Fund Prospectus............................... The Funds
(e) Voting Rights................................. The Funds -- Voting Rights
6. Deductions and Expenses
(a) General....................................... Charges and Deductions
(b) Sales Load %.................................. Charges and Deductions -- Deduction for Contingent
Deferred Sales Charge (Sales Load)
(c) Special Purchase Plan......................... N/A
(d) Commissions................................... Distribution of the Contracts
(e) Fund Expenses................................. Fees and Expenses -- Fund Annual Expenses
(f) Organizational Expenses....................... N/A
7. Contracts
(a) Persons with Rights........................... Other Contract Features (Ownership Assignment,
Beneficiary, Change of Beneficiary, Annuitant,
Surrenders, Death of Owner, Death of Annuitant);
Annuity Provisions; Voting Rights
(b) (i) Allocation of Premium Payments............ Premium Payments and Contract Value -- Allocation of
Premium Payments
(ii) Transfers.................................... Transfer of Contract Values Between Sub-Accounts
(iii) Exchanges................................... N/A
(c) Changes....................................... Modification; Substitution of Securities; Change in
Operation of Variable Account
(d) Inquiries..................................... Cover Page; Highlights
8. Annuity Period.................................... Annuity Provisions
9. Death Benefit..................................... Death of the Owner; Death of the Annuitant;
10. Purchase and Contract Values
(a) Purchases..................................... Premium Payments
(b) Valuation..................................... Contract Value; Accumulation Unit;
(c) Daily Calculation............................. Accumulation Unit; Allocation of Premium Payments
(d) Underwriter................................... Distribution of the Contracts
11. Redemptions
(a) By Owners..................................... Surrenders
By Annuitant...................................... Annuity Provisions -- Variable Options
(b) Texas ORP..................................... N/A
(c) Check Delay................................... Delay of Payments
(d) Lapse......................................... N/A
(e) Free Look..................................... Highlights
12. Taxes............................................. Tax Status
13. Legal Proceedings................................. Legal Proceedings
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ITEM OF FORM N-4 PROSPECTUS CAPTION
- ------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
14. Table of Contents for the Statement of Additional
Information...................................... Table of Contents of the Statement of Additional
Information
</TABLE>
PART B
<TABLE>
<CAPTION>
ITEM OF FORM N-4 STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
15. Cover Page........................................ Cover Page
16. Table of Contents................................. Table of Contents
17. General Information and History................... a) N/A
b) N/A
c) (Prospectus) The Company, The Variable Account, The
Fixed Account
18. Services
(a) Fees and Expenses of Registrant............... N/A
(b) Management Contracts.......................... N/A
(c) Custodian..................................... Custody of Assets
Independent Accountant............................ Experts
(d) Assets of Registrant.......................... N/A
(e) Affiliated Person............................. N/A
(f) Principal Underwriter......................... N/A
19. Purchase of Securities Being Offered.............. Distribution of the Contracts
Offering Sales Load............................... Distribution of the Contracts; (Prospectus) Deductions
and Charges -- Deduction for Contingent Deferred Sales
Charge (Sales Load)
20. Underwriters...................................... Distribution of the Contracts; (Prospectus) Distribution
of the Contracts
21. Calculation of Performance Data................... Investment Experience; Historical Performance Data
22. Annuity Payments.................................. (Prospectus) Annuity Provisions;
23. Financial Statements.............................. Financial Statements
</TABLE>
PART C -- OTHER INFORMATION
<TABLE>
<CAPTION>
ITEM OF FORM N-4 PART C CAPTION
- ------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
24. Financial Statements and Exhibits................. Financial Statements and Exhibits
(a) Financial Statements.......................... Financial Statements
(b) Exhibits...................................... Exhibits
25. Directors and Officers of the Depositor........... Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control with
the Depositor or Registrant...................... Persons Controlled By or Under Common Control with the
Depositor or Registrant
27. Number of Owners.................................. Number of Owners
28. Indemnification................................... Indemnification
29. Principal Underwriters............................ Principal Underwriter
30. Location of Accounts and Records.................. Location of Accounts and Records
31. Management Services............................... Management Services
32. Undertakings...................................... Undertakings
Signature Page.................................... Signatures
</TABLE>
ii
<PAGE>
PART A. PROSPECTUS
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
[LOGO]
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
<TABLE>
<S> <C>
HOME OFFICE LOCATION: MAILING ADDRESS:
900 COTTAGE GROVE ROAD CIGNA INDIVIDUAL INSURANCE
HARTFORD, CT 06152 VARIABLE PRODUCTS SERVICE CENTER: ROUTING S-154
HARTFORD, CT 06152 - 2154
(800) (552-9898)
</TABLE>
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FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
The individual and group Flexible Payment Deferred Variable Annuity
Contracts (the "Contracts") described in this prospectus provide for
accumulation of Contract Values and eventual payment of monthly annuity payments
on a fixed or variable basis. The Contracts are designed to aid individuals in
long term planning for retirement or other long term purposes. The Contracts are
available for retirement plans which do not qualify for the special federal tax
advantages available under the Internal Revenue Code ("Non-Qualified Plans") and
for retirement plans which do qualify for the federal tax advantages available
under the Internal Revenue Code ("Qualified Plans"). (See "Tax Status --
Qualified Plans.") Premium payments for the Contracts will be allocated to a
segregated investment account of Connecticut General Life Insurance Company (the
"Company"), designated CG Variable Annuity Separate Account II (the "Variable
Account"), or to the Fixed Account, or some combination of them, as selected by
the owner of the Contract.
The following funding options are available under a Contract: Through the
Variable Account, the Company offers seventeen diversified open-end management
investment companies (commonly called mutual funds), each with a different
investment objective: Alger American Fund -- Alger American Small Capitalization
Portfolio, Alger American Leveraged AllCap Portfolio, Alger American MidCap
Growth Portfolio and Alger American Growth Portfolio; Fidelity Variable
Insurance Products Fund -- Equity-Income Portfolio and Money Market Portfolio;
Fidelity Variable Insurance Products Fund II -- Investment Grade Bond Portfolio
and Asset Manager Portfolio; MFS Variable Insurance Trust -- MFS Total Return
Series, MFS Utilities Series and MFS World Governments Series; Neuberger &
Berman Advisers Management Trust -- Balanced Portfolio, Limited Maturity Bond
Portfolio and Partners Portfolio; Quest for Value Accumulation Trust -- Global
Equity Portfolio, Managed Portfolio and Small Cap Portfolio. The fixed interest
option offered under a Contract is the Fixed Account. Premium payments or
transfers allocated to the Fixed Account, and 3% interest per year thereon, are
guaranteed, and additional interest may be credited, with certain withdrawals
subject to a market value adjustment and withdrawal charges. Unless specifically
mentioned, this prospectus only describes the variable investment options.
This entire prospectus, and those of the Funds, should be read carefully
before investing to understand the Contracts being offered. The "Statement of
Additional Information", available at no charge by calling or writing the
Company's Variable Products Service Center as shown above, provides further
information. Its table of contents is at the end of this prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES
OF THE MUTUAL FUNDS AVAILABLE AS FUNDING OPTIONS FOR THE CONTRACTS OFFERED BY
THIS PROSPECTUS. ALL PROSPECTUSES SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED: AUGUST __, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
DEFINITIONS.................................... 3
HIGHLIGHTS..................................... 6
FEES AND EXPENSES.............................. 8
THE COMPANY, THE FIXED ACCOUNT AND THE VARIABLE
ACCOUNT....................................... 11
THE FUNDS...................................... 12
General...................................... 15
Substitution of Securities................... 15
Voting Rights................................ 15
PREMIUM PAYMENTS AND
CONTRACT VALUE................................ 15
Premium Payments............................. 15
Allocation of Premium Payments............... 16
Dollar Cost Averaging........................ 18
Contract Value............................... 18
Accumulation Unit............................ 18
CHARGES AND DEDUCTIONS......................... 19
Deduction for Contingent Deferred Sales
Charge (Sales Load)......................... 19
Deduction for Mortality and Expense Risk
Charge...................................... 20
Deduction for Administrative Expense Charge.. 20
Deduction for Annuity Account Fee............ 21
Deduction for Premium Tax Equivalents........ 21
Deduction for Income Taxes................... 21
Deduction for Fund Expenses.................. 21
Deduction for Transfer Fee................... 21
OTHER CONTRACT FEATURES........................ 23
Ownership.................................... 23
Assignment................................... 24
Beneficiary.................................. 24
Change of Beneficiary........................ 24
Annuitant.................................... 24
Transfer of Contract Values between
Sub-Accounts................................ 24
Surrenders and Partial Withdrawals........... 25
Death of the Owner before the Annuity Date... 27
Death of the Annuitant before the Annuity
Date........................................ 28
<CAPTION>
CONTENTS PAGE
<S> <C>
Death of the Annuitant after the
Annuity Date................................ 28
Change in Operation of Variable Account...... 28
Modification................................. 28
Discontinuance............................... 29
ANNUITY PROVISIONS............................. 29
Annuity Date; Change in Annuity Date and
Annuity Option.............................. 29
Annuity Options.............................. 29
Fixed Options................................ 29
Variable Options............................. 30
Evidence of Survival......................... 31
Endorsement of Annuity Payments.............. 31
DISTRIBUTION OF THE CONTRACTS.................. 31
PERFORMANCE DATA............................... 31
Money Market Sub-Account..................... 31
Other Variable Account Sub-Accounts.......... 31
Performance Ranking or Rating................ 32
TAX STATUS..................................... 32
General...................................... 32
Diversification.............................. 33
Distribution Requirements.................... 34
Multiple Contracts........................... 34
Tax Treatment of Assignments................. 34
Withholding.................................. 35
Section 1035 Exchanges....................... 35
Tax Treatment of Withdrawals -- Non-Qualified
Contracts................................... 35
Qualified Plans.............................. 35
Section 403(b) Plans......................... 36
Individual Retirement Annuities.............. 36
Corporate Pension and Profit-Sharing Plans
and H.R. 10 Plans........................... 36
Deferred Compensation Plans.................. 36
Tax Treatment of Withdrawals -- Qualified
Contracts................................... 37
FINANCIAL STATEMENTS........................... 37
LEGAL PROCEEDINGS.............................. 37
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION........................ 38
</TABLE>
2
<PAGE>
DEFINITIONS
ACCUMULATION PERIOD: The period from the Effective Date to
the Annuity Date, the date on which the Death Benefit
becomes payable or the date on which the Contract is
surrendered or annuitized, whichever is earliest.
ACCUMULATION UNIT: A measuring unit used to calculate the
value of the Owner's interest in each funding option used in
the variable portion of the Contract prior to the Annuity
Date.
ANNUITANT: A person designated by the Owner in writing upon
whose continuation of life any series of payments for a
definite period or involving life contingencies depends. If
the Annuitant dies before the Annuity Date, the Owner
becomes the Annuitant until naming a new Annuitant.
ANNUITY ACCOUNT VALUE: The value of the Contract at any
point in time.
ANNUITY DATE: The date on which annuity payments commence.
ANNUITY OPTION: The arrangement under which annuity payments
are made.
ANNUITY PERIOD: The period starting on the Annuity Date.
ANNUITY UNIT: A measuring unit used to calculate the portion
of annuity payments attributable to each funding option used
in the variable portion of the Contract on and after the
Annuity Date.
BENEFICIARY: The person entitled to the Death Benefit, who
must also be the "Designated Beneficiary", for purposes of
Section 72(s) of the Code, upon the Owner's death.
CERTIFICATE: The document which evidences the participation
of an Owner in a group contract.
CODE: The Internal Revenue Code of 1986, as amended.
COMPANY: Connecticut General Life Insurance Company.
CONTRACT: The Variable Annuity Contract described in this
prospectus, i.e., either an individual contract, or a
Certificate evidencing the Owner's participation in a group
contract.
CONTRACT ANNIVERSARY, CONTRACT YEAR, EFFECTIVE DATE: The
Contract's Effective Date is the date it is issued. It is
also the date on which the first Contract Year, a 12-month
period, begins. Subsequent Contract Years begin on each
Contract Anniversary, which is the anniversary of the
Effective Date.
CONTRACT MONTH: The period from one Monthly Anniversary Date
to the next.
FIXED ACCOUNT: The portion of the Contract under which
principal is guaranteed and interest is credited. Fixed
Account Assets are maintained in the Company's General
Account and not allocated to the Variable Account.
FIXED ANNUITY: An annuity with payments which do not vary as
to dollar amount.
FUND(S): One or more of Alger American Fund -- Alger
American Small Capitalization Portfolio, Alger American
Leveraged AllCap Portfolio, Alger American MidCap Growth
Portfolio and Alger American Growth Portfolio; Fidelity
Variable Insurance Products Fund -- VIP Equity-Income
Portfolio and VIP Money Market Portfolio; Fidelity Variable
Insurance Products Fund II -- VIP II Investment Grade Bond
Portfolio and VIP II Asset Manager Portfolio; MFS Variable
Insurance Trust -- MFS Total Return Series, MFS Utilities
Series and MFS World Governments Series; Neuberger & Berman
Advisers
3
<PAGE>
Management Trust -- Balanced Portfolio, Limited Maturity
Bond Portfolio and Partners Portfolio; Quest for Value
Accumulation Trust -- Quest Global Equity Portfolio, Quest
Managed Portfolio and Quest Small Cap Portfolio. Each is an
open-end management investment company (mutual fund) whose
shares are available to fund the benefits provided by the
Contract.
GUARANTEED INTEREST RATE: The rate of interest credited by
the Company on a compound annual basis during a Guaranteed
Period.
GUARANTEED PERIOD: The period for which interest, at either
an initial or subsequent Guaranteed Interest Rate, will be
credited to any amounts which an Owner allocates to a Fixed
Account Sub-Account. In most states in which these Contracts
are issued, this period may be one, three, five, seven or
ten years, as elected by the Owner.
GUARANTEED PERIOD AMOUNT: Any portion of a Purchaser's
Annuity Account Value allocated to a specific Guaranteed
Period with a specified Expiration Date (including credited
interest thereon).
INDEX RATE: An index rate based on the Treasury Constant
Maturity Series published by the Federal Reserve Board.
IN WRITING: In a written form satisfactory to the Company
and received by the Company at its Variable Products Service
Center.
MONTHLY ANNIVERSARY DATE: The monthly anniversary of the
Effective Date, as shown on the specifications page of the
Contract, when the Company makes the monthly calculation of
any charge for the Optional Death Benefit.
NON-QUALIFIED CONTRACTS: A Contract used in connection with
a retirement plan which does not receive favorable federal
income tax treatment under Code Section 401, 403, 408, or
457. The owner of a Non-Qualified Contract must be a natural
person or an agent for a natural person in order for the
Contract to receive favorable income tax treatment as an
annuity.
OWNER: The person(s) initially designated in the application
or otherwise, unless later changed, as having all ownership
rights under the Contract; includes the Certificate Owner
under a group contract.
PAYEE: A recipient of payments under the Contract. The term
includes an Annuitant, a Beneficiary who becomes entitled to
benefits upon the death of the Annuitant, and the Owner's
estate.
PREMIUM PAYMENT: Any amount paid to the Company cleared in
good funds as consideration for the benefits provided by the
Contract. Premium Payment includes the initial Premium
Payment and subsequent Premium Payments.
QUALIFIED CONTRACT: A Contract used in connection with a
retirement plan which receives favorable federal income tax
treatment under Code Section 401, 403, 408 or 457.
SEVEN YEAR ANNIVERSARY: The seventh Contract Anniversary and
each succeeding Contract Anniversary occurring at any seven
year interval thereafter, for example, the 14th, 21st and
28th Contract Anniversaries.
SHARES: Shares of a Fund.
SUB-ACCOUNT: That portion of the Fixed Account associated
with specific Guaranteed Period(s) and Guaranteed Interest
Rate(s) and that portion of the Variable Account which
invests in shares of a specific Fund.
SURRENDER (OR WITHDRAWAL): When a lump sum amount
representing all or part of the Annuity Account Value (minus
any applicable withdrawal charges, market value
4
<PAGE>
adjustment, contract fees, or premium tax equivalents) is
paid to the Owner. After a full surrender, all of the
Owner's rights under the Contract are terminated. In this
prospectus, the terms "surrender" and "withdrawal" are used
interchangeably.
SURRENDER DATE: The date the Company processes the Owner's
election to surrender the Contract.
VALUATION DATE: Every day on which Accumulation Units are
valued, which is each day on which the New York Stock
Exchange ("NYSE") is open for business, except any day on
which trading on the NYSE is restricted, or on which an
emergency exists, as determined by the Securities and
Exchange Commission ("Commission"), so that valuation or
disposal of securities is not practicable.
VALUATION PERIOD: The period of time beginning on the day
following the Valuation Date and ending on the next
Valuation Date. A Valuation Period may be more than one day
in length.
VARIABLE ACCOUNT: CG Variable Annuity Separate Account II, a
separate account of the Company under Connecticut law, in
which the assets of the Sub-Account(s) funded through shares
of one or more of the Funds are maintained. Assets of the
Variable Account attributable to the Contracts are not
chargeable with the general liabilities of the Company.
VARIABLE ACCUMULATION UNIT: A unit of measure used in the
calculation of the value of each variable portion of the
Owner's Annuity Account during the Accumulation Period.
VARIABLE ANNUITY UNIT: A unit of measure used in the
calculation of the value of each variable portion of the
Owner's Annuity Account during the Annuity Period, to
determine the amount of each variable annuity payment.
VARIABLE PRODUCTS SERVICE CENTER: The office of the Company
to which Premium Payments should be sent, notices given and
any customer service requests made. Mailing address: CIGNA
Individual Insurance, Variable Products Service Center,
Routing S-154, Hartford, CT 06152-2154.
5
<PAGE>
HIGHLIGHTS
Premium Payments attributable to the variable portion of the
Contracts will be allocated to a segregated asset account of
Connecticut General Life Insurance Company (the "Company")
which has been designated CG Variable Annuity Separate
Account II (the "Variable Account"). The Variable Account
invests in shares of one or more of the Funds available to
fund the Contract as selected by the Owner. Owners bear the
investment risk for all amounts allocated to the Variable
Account. The Contract's provisions may vary in some states.
Inquiries about the Contracts may be made to the Company's
Variable Products Service Center.
The Contract may be returned within 10 days after it is
received. It can be mailed or delivered to either the
Company or the agent who sold it. Return of the Contract by
mail is effective on being postmarked, properly addressed
and postage prepaid. The Company will promptly refund the
Contract Value in states where permitted. This may be more
or less than the Premium Payment. In states where required,
the Company will promptly refund the Premium Payment, less
any partial surrenders. The Company has the right to
allocate initial Premium Payments to the Money Market
Sub-Account until the expiration of the right-to-examine
period. If the Company does so allocate an initial Premium
Payment, it will refund the greater of the Premium Payment,
less any partial surrenders, or the Contract Value. It is
the Company's current practice to directly allocate the
initial Premium Payment to the Fund(s) designated in the
application, unless state law requires a refund of Premium
Payments rather than of Annuity Account Value.
A Contingent Deferred Sales Charge (sales load) may be
deducted in the event of a full surrender or partial
withdrawal. The Contingent Deferred Sales Charge is imposed
on Premium Payments within seven (7) years after their being
made. Owners may, not more frequently than once each
Contract Year, make a withdrawal of up to fifteen percent
(15%) of Premium Payments made, or any remaining portion
thereof, ("the Fifteen Percent Free") without incurring a
Contingent Deferred Sales Charge. The Contingent Deferred
Sales Charge will vary in amount, depending upon the
Contract Year in which the Premium Payment being surrendered
or withdrawn was made. For purposes of determining the
applicability of the Contingent Deferred Sales Charge,
surrenders and withdrawals are deemed to be on a first-in,
first-out basis.
The Contingent Deferred Sales Charge is found in the fee
table (See "Charges and Deductions -- Deduction for
Contingent Deferred Sales Charge (Sales Load)"). The maximum
Contingent Deferred Sales Charge is 7% of Premium Payments.
There may also be a Market Value Adjustment on the Fixed
Account portion of the Contract.
There is a Mortality and Expense Risk Charge which is equal,
on an annual basis, to 1.20% of the average daily net assets
of the Variable Account. This Charge compensates the Company
for assuming the mortality and expense risks under the
Contract (See "Charges and Deductions -- Deduction for
Mortality and Expense Risk Charge"), other than the Optional
Death Benefit risk (See "Charges and Deductions -- Deduction
for Optional Death Benefit").
There is an Administrative Expense Charge which is equal, on
an annual basis, to 0.10% of the average daily net assets of
the Variable Account (See "Charges and Deductions --
Deduction for Administrative Expense Charge").
There is an annual Annuity Account Fee of $35 unless the
Annuity Account Value equals or exceeds $100,000 at the end
of the Contract Year (See "Charges and Deductions --
Deduction for Annuity Account Fee").
There is a charge for any Optional Death Benefit Risk(s)
elected (See "Charges and Deductions -- Deduction for
Optional Death Benefit").
6
<PAGE>
Premium tax equivalents or other taxes payable to a state or
other governmental entity will be charged against Annuity
Account Value (See "Charges and Deductions -- Deduction for
Premium Taxes").
Under certain circumstances there may be assessed a $10
transfer fee when an Owner transfers Annuity Account Values
from one Sub-Account to another (See "Charges and Deductions
-- Deduction for Transfer Fee").
There is a ten percent (10%) federal income tax penalty
applied to the income portion of any premature distribution
from Non-Qualified Contracts. However, the penalty is not
imposed on amounts distributed:
(a) after the Payee reaches age 59 1/2; (b) after the death
of the Owner (or, if the Owner is not a natural person, the
Annuitant); (c) if the Payee is totally disabled (for this
purpose, disability is as defined in Section 72(m)(7) of the
Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life
(or life expectancy) of the Payee or for the joint lives (or
joint life expectancies) of the Payee and his or her
beneficiary; (e) under an immediate annuity; or (f) which
are allocable to Premium Payments made prior to August 14,
1982. For federal income tax purposes, distributions are
deemed to be on a last-in, first-out basis. Different tax
withdrawal penalties and restrictions apply to Qualified
Contracts issued pursuant to plans qualified under Code
Section 401, 403(b), 408 or 457. (See "Tax Status -- Tax
Treatment of Withdrawals -- Qualified Contracts.") For a
further discussion of the taxation of the Contracts, see
"Tax Status."
MARKET VALUE ADJUSTMENT. In certain situations, a surrender
or transfer of amounts from the Fixed Account will be
subject to a Market Value Adjustment. The Market Value
Adjustment will reflect the relationship between a rate
based on an index published by the Federal Reserve Board as
to current yields on U.S. government securities of various
maturities at the time a surrender or transfer is made
("Index Rate"), and the Index Rate at the time that the
Premium Payments being surrendered or transferred were made.
Generally, if the Index Rate at the time of surrender or
transfer is lower than the Index Rate at the time the
Premium Payment was allocated, then the application of the
Market Value Adjustment will result in a higher payment upon
surrender or transfer. Similarly, if the Index Rate at the
time of surrender or transfer is higher than the Index Rate
at the time the Premium Payment was allocated, the
application of the Market Value Adjustment will generally
result in a lower payment upon surrender or transfer. The
Market Value Adjustment may also apply to Death Benefit
payments but only if it would increase the Death Benefit. It
is not applied against a surrender or transfer taking place
at the end of the Guaranteed Period.
7
<PAGE>
FEES AND EXPENSES
OWNER TRANSACTION FEES
Contingent Deferred Sales Charge (as a percentage of Premium
Payments):
<TABLE>
<CAPTION>
YEARS SINCE
PAYMENT CHARGE
------------- ------
<S> <C> <C> <C>
0-1 7%
1-2 6%
An Owner may, not more frequently than once each
2-3 5% Contract Year, make a withdrawal of up to 15% of Premium
3-4 4% Payments made, or the remaining portion thereof, without
4-5 3% incurring a Contingent Deferred Sales Charge.
5-6 2%
6-7 1%
7+ 0
</TABLE>
<TABLE>
<S> <C> <C> <C>
Transfer Fee........ $10
- Not imposed on the first three transfers during a Contract Year
or, if the Annuity Account Value is at least $5,000 at the time of
a transfer, on the fourth through twelfth transfers during a
Contract Year. Pre-scheduled automatic dollar cost averaging
transfers are not counted.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Annuity Account $35 per Contract Year
Fee.................
- Waived if Annuity Account Value at the end of the Contract Year is $100,000 or
more.
</TABLE>
Except under New York Contracts, an Owner may also elect the Optional Death
Benefit(s) for which there is a charge, prorated among the Sub-Accounts, which
depends on the age and gender classification (in accordance with state law) of
the Owner (or the Annuitant, if the Owner is a non-natural person) and on the
dollar amount which is at risk. (See "Deductions -- Optional Death Benefit.")
VARIABLE ACCOUNT ANNUAL EXPENSES
<TABLE>
<S> <C> <C>
(as a percentage of average account
value)
Mortality and Expense Risk Charge....... 1.20%
Administrative Expense Charge........... 0.10%
---
Total Variable Account Annual 1.30%
Expenses................................
</TABLE>
8
<PAGE>
FUND ANNUAL EXPENSES (as a percentage of Fund average net
assets).
The management fees for each Fund are based on a percentage
of that Fund's assets under management. The fees below
represent the amounts payable to the investment adviser of
each of the Funds on an annual basis as of the date of this
Prospectus, plus estimated other expenses. See "The Funds"
in this Prospectus and the discussion in each Fund's
prospectus.
<TABLE>
<CAPTION>
TOTAL
MANAGEMENT OTHER ANNUAL
FEES EXPENSES EXPENSES
----------- --------- -----------
<C> <S> <C> <C> <C>
ALGER AMERICAN Alger American Growth 0.75% 0.11% 0.86%
Portfolio....................
FUNDS Alger American Leveraged 0.85% 0.94%(1) 1.79%
AllCap Portfolio.............
0.80% 0.17% 0.97%
Alger American MidCap Growth
Portfolio....................
0.85% 0.11% 0.96%
Alger American Small
Capitalization Portfolio.....
FIDELITY FUNDS Asset Manager Portfolio....... 0.72% 0.08% 0.80%(2)
0.52% 0.06% 0.58%(2)
Equity-Income Portfolio.......
0.46% 0.21% 0.67%
Investment Grade Bond
Portfolio....................
0.20% 0.07% 0.27%
Money Market Portfolio........
MFS FUNDS(3) MFS Total Return Series....... 0.75% 0.25%(3) 1.00%(3)
0.75% 0.25%(3) 1.00%(3)
MFS Utilities Series..........
0.75% 0.25%(3) 1.00%(3)
MFS World Governments
Series.......................
NEUBERGER & BERMAN AMT Balanced Portfolio........ 0.80% 0.17% 0.97%
FUNDS(4) AMT Limited Maturity Bond 0.60% 0.13% 0.73%
Portfolio....................
0.80% 0.50% 1.30%
AMT Partners Portfolio(5).....
QUEST FOR VALUE Quest for Value Global Equity 0.75% 0.50% 1.25%
Portfolio....................
FUNDS(6) Quest for Value Managed 0.60% 0.06% 0.66%
Portfolio....................
0.60% 0.14% 0.74%
Quest for Value Small Cap
Portfolio....................
</TABLE>
(1) Includes 0.75% estimated Interest Expense.
(2) A portion of the brokerage commissions the Porfolio paid was used to
reduce its expenses. Without this reduction, "Total Annual Expenses" would
have been 0.81% for Asset Manager Portfolio and 0.60% for Equity-Income
Portfolio.
(3) The MFS Funds' Adviser has agreed to bear, subject to reimbursement,
expenses for each of the Total Return Series and Utilities Series, such that
each Series' aggregate operating expense shall not exceed, on an annualized
basis, 1.00% of the average daily net assets of the Series from November 2,
1994 through December 31, 1998, 1.25% of the average daily net assets of the
Series from January 1, 1997 through December 31, 1998, and 1.50% of the
average daily net assets of the Series from January 1, 1999 through December
31, 2004; provided however, that this obligation may be terminated or
revised at any time. Absent this expense arrangement, "Other Expenses" and
"Total Annual Expenses" would be 0.62% and 1.37%, respectively, for the
Total Return Series, and 0.93% and 1.58%, respectively, for the Utilities
Series, based upon estimated expenses for the Series' current fiscal year.
The Adviser has agreed to bear, subject to reimbursement, until December 31,
2004, expenses of the World Governments Series such that the Series'
aggregate operating expenses do not exceed 1.00%, on an annualized basis, of
its average daily net assets. Absent this expense arrangement, "Other
Expenses" and "Total Annual Expenses" for the World Governments Series would
be 0.63% and 1.38%, respectively.
(4) Until May 1, 1995, all of these Portfolios had a Distribution Plan
("Plan") pursuant to Rule 12b-1 which provided for the reimbursement of N&B
Management for certain Trust distribution expenses up to a maximum of 0.25%
on an annual basis of each Portfolio's average daily net assets. The "Total
Annual Expenses" shown here for each AMT Portfolio would be increased by
0.02% if the 12b-1 fees for the months of January through April, 1995 were
taken into account.
(5) Other Expenses, and therefore Total Annual Expenses, have been estimated
and are annualized for the Partners Portfolio.
(6) The expenses for the Quest for Value Managed, Small Cap and Global Equity
Portfolios will be voluntarily limited by Quest for Value Advisors so that
annualized operating fund expenses do not exceed 0.66%, 0.74%, and 1.25% for
the Quest for Value Managed, Small Cap and Global Equity Portfolios,
respectively, through December 31, 1995. Variations in the actual amount of
average assets in any of these Portfolios during 1995 can cause significant
variations in expenses expressed as a percentage of that Portfolio's average
net assets. It is estimated by Quest management that by the end of 1995, the
net assets of each of these Portfolios will be sufficient such that the
total annual expenses of each Portfolio will, on an annualized basis, be
approximately equal to, if not less than, the voluntary limits.
9
<PAGE>
The purpose of the foregoing Table on page 9 of this
Prospectus is to assist the Owner in understanding the
various costs and expenses that a Owner will incur, directly
or indirectly. For additional information, see the
discussion in each Fund's prospectus. Premium tax
equivalents and charges for the Optional Death Benefit(s),
if elected, are not reflected in the Table, though they may
apply.
EXAMPLES
The Owner would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets, and
assuming all Premium Payments are allocated to the Variable
Account:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1.IF THE CONTRACT IS SURRENDERED AT THE END OF THE APPLICABLE TIME
PERIOD:
Alger American Growth Portfolio.......................... $ 83 $ 114 $ 149 $ 264
Alger American Leveraged AllCap Portfolio................ $ 92 $ 142 $ 194 $ 353
Alger American MidCap Growth Portfolio................... $ 84 $ 118 $ 154 $ 275
Alger American Small Capitalization Portfolio............ $ 84 $ 117 $ 154 $ 274
Fidelity VIP Equity-Income Portfolio..................... $ 80 $ 106 $ 134 $ 235
Fidelity VIP Money Market Portfolio...................... $ 77 $ 96 $ 118 $ 202
Fidelity VIP II Asset Manager Portfolio.................. $ 82 $ 113 $ 145 $ 257
Fidelity VIP II Investment Grade Bond Portfolio.......... $ 81 $ 109 $ 139 $ 244
MFS Total Return Series.................................. $ 84 $ 119 $ 156 $ 278
MFS Utilities Series..................................... $ 84 $ 119 $ 156 $ 278
MFS World Governments Series............................. $ 84 $ 119 $ 156 $ 278
AMT Balanced Portfolio................................... $ 84 $ 118 $ 154 $ 275
AMT Limited Maturity Bond Portfolio...................... $ 82 $ 110 $ 142 $ 250
AMT Partners Portfolio................................... $ 87 $ 128 $ 170 $ 307
Quest For Value Global Equity Portfolio.................. $ 87 $ 126 $ 168 $ 302
Quest For Value Managed Portfolio........................ $ 81 $ 108 $ 138 $ 243
Quest For Value Small Cap Portfolio...................... $ 82 $ 111 $ 142 $ 251
</TABLE>
2.__IF THE CONTRACT IS NOT SURRENDERED OR IF IT IS
ANNUITIZED:
<TABLE>
<S> <C> <C> <C> <C>
Alger American Growth Portfolio.......... $ 23 $ 72 $ 123 $ 264
Alger American Leveraged AllCap
Portfolio............................... $ 33 $ 99 $ 169 $ 353
Alger American MidCap Growth Portfolio... $ 24 $ 75 $ 129 $ 275
Alger American Small Capitalization
Portfolio............................... $ 24 $ 75 $ 128 $ 274
Fidelity VIP Equity-Income Portfolio..... $ 21 $ 63 $ 109 $ 235
Fidelity VIP Money Market Portfolio...... $ 17 $ 54 $ 93 $ 202
Fidelity VIP II Asset Manager
Portfolio............................... $ 23 $ 70 $ 120 $ 257
Fidelity VIP II Investment Grade Bond
Portfolio............................... $ 21 $ 66 $ 113 $ 244
MFS Total Return Series.................. $ 25 $ 76 $ 130 $ 278
MFS Utilities Series..................... $ 25 $ 76 $ 130 $ 278
MFS World Governments Series............. $ 25 $ 76 $ 130 $ 278
AMT Balanced Portfolio................... $ 24 $ 75 $ 129 $ 275
AMT Limited Maturity Bond Portfolio...... $ 22 $ 68 $ 116 $ 250
AMT Partners Portfolio................... $ 28 $ 85 $ 145 $ 307
Quest For Value Global Equity
Portfolio............................... $ 27 $ 84 $ 142 $ 302
Quest For Value Managed Portfolio........ $ 21 $ 66 $ 113 $ 243
Quest For Value Small Cap Portfolio...... $ 22 $ 68 $ 117 $ 251
</TABLE>
The preceding tables are intended to assist the Owner in
understanding the costs and expenses borne, directly or
indirectly, by Premium Payments allocated to the Variable
Account. These include the expenses of the Funds, certain of
which are subject to expense reimbursement arrangements
which may be subject to change. See the Funds' Prospectuses.
In addition to the expenses listed above, charges for
premium tax equivalents and charges for any Optional Death
Benefit(s) available and selected may be applicable.
10
<PAGE>
These examples reflect the annual $35 Annuity Account Fee as
an annual charge of .14% of assets, based upon an
anticipated average Annuity Account Value of $25,000.
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
THE COMPANY, THE FIXED ACCOUNT AND THE VARIABLE ACCOUNT
THE COMPANY. The Company is a stock life insurance company
incorporated under the laws of Connecticut by special act of
the Connecticut General Assembly in 1865. Its Home Office
mailing address is Hartford, Connecticut 06152, Telephone
(203) 726-6000. It has obtained authorization to do business
in fifty states, the District of Columbia and Puerto Rico.
The Company issues group and individual life and health
insurance policies and annuities. The Company has various
wholly-owned subsidiaries which are generally engaged in the
insurance business. The Company is a wholly-owned subsidiary
of Connecticut General Corporation, Bloomfield, Connecticut.
Connecticut General Corporation is wholly-owned by CIGNA
Holdings Inc., Philadelphia, Pennsylvania which is in turn
wholly-owned by CIGNA Corporation, Philadelphia,
Pennsylvania. Connecticut General Corporation is the holding
company of various insurance companies, one of which is
Connecticut General Life Insurance Company.
THE FIXED ACCOUNT. THE FIXED ACCOUNT IS MADE UP OF THE
GENERAL ASSETS OF THE COMPANY OTHER THAN THOSE ALLOCATED TO
ANY SEPARATE ACCOUNT. THE FIXED ACCOUNT IS PART OF THE
COMPANY'S GENERAL ACCOUNT. BECAUSE OF APPLICABLE EXEMPTIVE
AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED ACCOUNT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "1933 ACT"), AND NEITHER THE FIXED ACCOUNT NOR THE
COMPANY'S GENERAL ACCOUNT HAS BEEN REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940 (THE "1940 ACT"). THEREFORE,
NEITHER THE FIXED ACCOUNT NOR ANY INTEREST THEREIN IS
GENERALLY SUBJECT TO REGULATION UNDER THE PROVISIONS OF THE
1933 ACT OR THE 1940 ACT. ACCORDINGLY, THE COMPANY HAS BEEN
ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT REVIEWED THE DISCLOSURE IN THIS
PROSPECTUS RELATING TO THE FIXED ACCOUNT.
The initial Premium Payment and any subsequent Premium
Payment(s) will be allocated to Sub-Accounts available in
connection with the Fixed Account to the extent elected by
the Owner at the time such payment is made. In addition, all
or part of the Owner's Annuity Account Value may be
transferred among Sub-Accounts available under the Contract
as described under "Transfer of Contract Values between
Sub-Accounts." Instead of the Owner's assuming all of the
investment risk as is the case for Premium Payments
allocated to the Variable Account, the Company guarantees it
will credit interest of at least 3% per year to amounts
allocated to the Fixed Account.
Assets supporting amounts allocated to Sub-Accounts within
the Fixed Account become part of the Company's general
account assets and are available to fund the claims of all
creditors of the Company. All of the Company's general
account assets will be available to fund benefits under the
Contracts. The Owner does not participate in the investment
performance of the assets of the Fixed Account or the
Company's general account.
The Company will invest the assets of the general account in
those assets chosen by the Company and allowed by applicable
state laws regarding the nature and quality of investments
that may be made by life insurance companies and the
percentage of their assets that may be committed to any
particular type of investment. In general, these laws permit
investments, within specified limits and subject to certain
qualifications, in federal, state and municipal obligations,
corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments.
If the Account Value within a Fixed Account Sub-Account is
maintained for the duration of the Sub-Account's Guaranteed
Period, the Company guarantees that it will credit interest
to that amount at the guaranteed rate specified for the
Sub-Account which may
11
<PAGE>
but need not be more than 3% per year. Any amount withdrawn
from the Sub-Account prior to the expiration of the
Sub-Account's Guaranteed Period is subject to a Market Value
Adjustment (see "Market Value Adjustment") and a Deferred
Sales Charge, if applicable. The Company guarantees,
however, that a Contract will be credited with interest at a
rate of not less than 3% per year, compounded annually, on
amounts allocated to any Fixed Account Sub-Account,
regardless of any application of the Market Value Adjustment
(that is, the Market Value Adjustment will not reduce the
amount available for surrender, withdrawal or transfer to an
amount less than the initial amount allocated or transferred
to the Fixed Account Sub-Account plus interest of 3% per
year). The Company reserves the right to defer the payment
or transfer of amounts withdrawn from the Fixed Account for
a period not to exceed six (6) months from the date a proper
request for surrender, withdrawal or transfer is received by
the Company.
THE VARIABLE ACCOUNT. The Variable Account was established
by the Company as a separate account on January 25, 1994
pursuant to a resolution of its Board of Directors. Under
Connecticut insurance law, the income, gains or losses of
the Variable Account are credited to or charged against the
assets of the Variable Account without regard to the other
income, gains, or losses of the Company. These assets are
held in relation to the Contracts described in this
Prospectus, to the extent necessary to meet the Company's
obligations thereunder. Although that portion of the assets
maintained in the Variable Account equal to the reserves and
other contract liabilities with respect to the Variable
Account will not be charged with any liabilities arising out
of any other business conducted by the Company, all
obligations arising under the Contracts, including the
promise to make annuity payments, are general corporate
obligations of the Company.
The Variable Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment
trust under the 1940 Act and meets the definition of a
separate account under the federal securities laws.
Registration with the Commission does not involve
supervision of the management or investment practices or
policies of the Variable Account or of the Company by the
Commission.
The assets of the Variable Account are divided into
Sub-Accounts. Each Sub-Account invests exclusively in shares
of a specific Fund. All amounts allocated to the Variable
Account will be used to purchase Fund shares as designated
by the Owner at their net asset value. Any and all
distributions made by the Fund with respect to the shares
held by the Variable Account will be reinvested to purchase
additional shares at their net asset value. Deductions from
the Variable Account for cash withdrawals, annuity payments,
death benefits, annuity account fees, mortality and expense
risk charges, administrative expense charges, the cost of
any Optional Death Benefit(s), if available, and any
applicable taxes will, in effect, be made by redeeming the
number of Fund shares at their net asset value equal in
total value to the amount to be deducted. The Variable
Account will purchase and redeem Fund shares on an aggregate
basis and will be fully invested in Fund shares at all
times.
THE FUNDS
Each of the seventeen Sub-Accounts of the Variable Account
is invested solely in shares of one of the seventeen Funds
available as funding vehicles under the Contracts. Each of
the Funds is a series of one of six Massachusetts or
Delaware business trusts, collectively referred to herein as
the "Trusts", each of which is registered as an open-end,
diversified management investment company under the 1940
Act.
12
<PAGE>
The Trusts and their investment advisers and distributors
are:
Alger American Fund ("Alger Trust"), managed by Fred
Alger Management, Inc., 75 Maiden Lane, New York, NY
10038; and distributed by Fred Alger & Company,
Incorporated, 30 Montgomery Street, Jersey City, NJ
07302;
Variable Insurance Products Fund I ("Fidelity Trust I"),
and Variable Insurance Products Fund II ("Fidelity Trust
II"), managed by Fidelity Management & Research Company
and distributed by Fidelity Distribution Corporation, 82
Devonshire Street, Boston, MA 02103;
MFS Variable Insurance Trust ("MFS Trust"), managed by
Massachusetts Financial Services Company and distributed
by MFS Investor Services, Inc., 500 Boylston Street,
Boston, MA 02116;
Neuberger & Berman Advisers Management Trust ("Neuberger
& Berman AMT Trust"), managed and distributed by
Neuberger & Berman Management Incorporated, 605 Third
Avenue, New York, NY 10158-0006;
Quest for Value Accumulation Trust ("Quest for Value
Trust"), managed by Quest for Value Advisors and
distributed by Quest for Value Distributors, One World
Financial Center, New York, NY 10281.
Four Funds of ALGER Trust are available under the Contracts:
Alger American Growth Portfolio;
Alger American Leveraged AllCap Portfolio;
Alger American MidCap Growth Portfolio;
Alger American Small Capitalization Portfolio.
Two Funds of FIDELITY Trust I are available under the
Contracts:
Equity-Income Portfolio ("Fidelity Equity-Income
Portfolio").
Money Market Portfolio ("Fidelity Money Market Fund").
Two Funds of FIDELITY Trust II are available under the
Contracts:
Asset Manager Portfolio ("Fidelity Asset Manager
Portfolio");
Investment Grade Bond Portfolio ("Fidelity Bond
Portfolio").
Three Funds of MFS Trust are available under the Contracts:
MFS Total Return Series;
MFS Utilities Series;
MFS World Governments Series.
Three Funds of NEUBERGER & BERMAN AMT Trust are available
under the Contracts:
AMT Balanced Portfolio;
AMT Limited Maturity Bond Portfolio;
AMT Partners Portfolio.
Three Funds of QUEST FOR VALUE Trust are available under the
Contracts:
Quest Global Equity Portfolio;
Quest Managed Portfolio;
Quest Small Cap Portfolio.
The investment advisory fees charged the Funds by their
advisers are shown in the Fee Table at page 9 of this
Prospectus.
There follows a brief description of the investment
objective of each Fund. There can be no assurance that any
of the stated investment objectives will be achieved.
ALGER AMERICAN GROWTH PORTFOLIO: Seeks long-term capital
appreciation by investing in a diversified, actively managed
portfolio of equity securities, primarily of companies with
total market capitalization of $1 billion or greater.
13
<PAGE>
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO: Seeks long-term
capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, with the ability to
engage in leveraging (up to one-third of assets) and options
and futures transactions.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO: Seeks long-term
capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, primarily of
companies with total market capitalization between $750
million and $3.5 billion.
ALGER AMERICAN SMALL CAP PORTFOLIO: Seeks long-term capital
appreciation by investing in a diversified, actively managed
portfolio of equity securities, primarily of companies with
total market capitalization of less than $1 billion.
FIDELITY ASSET MANAGER PORTFOLIO: Seeks high total return
with reduced risk over the long-term by allocating its
assets among domestic and foreign stocks, bonds and short-
term fixed-income instruments.
FIDELITY BOND PORTFOLIO: Seeks as high a level of current
income as is consistent with the preservation of capital by
investing in a broad range of investment-grade fixed-income
securities, with a dollar-weighted average portfolio
maturity of ten years or less.
FIDELITY EQUITY-INCOME PORTFOLIO: Seeks reasonable income by
investing primarily in income-producing equity securities,
with some potential for capital appreciation, seeking to
exceed the composite yield on the securities comprising the
Standard and Poor's 500 Composite Stock Price Index.
FIDELITY MONEY MARKET FUND: Seeks as high a level of current
income as is consistent with preserving capital and
providing liquidity, through investment in high quality U.S.
dollar denominated money market securities of domestic and
foreign issuers.
MFS TOTAL RETURN SERIES: Seeks primarily to obtain
above-average income (compared to a portfolio entirely
invested in equity securities), consistent with the prudent
employment of capital, and secondarily to provide a
reasonable opportunity for growth of capital and income.
MFS UTILITIES SERIES: Seeks capital growth and current
income (income above that obtainable from a portfolio
invested entirely in equity securities).
MFS WORLD GOVERNMENTS SERIES: Seeks not only preservation,
but also growth, of capital together with moderate current
income.
AMT BALANCED PORTFOLIO: Seeks long-term capital growth and
reasonable current income without undue risk to principal.
AMT LIMITED MATURITY BOND PORTFOLIO: Seeks the highest
current income consistent with low risk to principal and
liquidity; and secondarily, enhanced total return through
capital appreciation when market factors, such as falling
interest rates and rising bond prices, indicate that capital
appreciation may be available without significant risk to
principal.
AMT PARTNERS PORTFOLIO: Seeks capital growth.
QUEST GLOBAL EQUITY PORTFOLIO: Seeks long-term capital
appreciation through a global investment strategy primarily
involving equity securities.
QUEST MANAGED PORTFOLIO: Seeks growth of capital over time
through investment in a portfolio of common stocks, bonds
and cash equivalents, the percentage of which will vary
based on management's assessments of relative investment
values.
QUEST SMALL CAP PORTFOLIO: Seeks capital appreciation
through investments in a diversified portfolio of equity
securities of companies with market capitalizations of under
$1 billion.
14
<PAGE>
GENERAL
There is no assurance that the investment objective of any
of the Funds will be met. Owners bear the complete
investment risk for Annuity Account Values allocated to a
Variable Account Sub-Account. Each such Sub-Account involves
inherent investment risk, and such risk varies significantly
among the Sub-Accounts. Owners should read each Fund's
prospectus carefully and understand the Funds' relative
degrees of risk before making or changing investment
choices. Additional Funds may, from time to time, be made
available as investments to underlie the Contracts. However,
the right to make such selections will be limited by the
terms and conditions imposed on such transactions by the
Company (See "Premium Payments and Contract Value --
Allocation of Premium Payments").
SUBSTITUTION OF SECURITIES
If the shares of any Fund should no longer be available for
investment by the Variable Account or if, in the judgment of
the Company, further investment in such shares should become
inappropriate in view of the purpose of the Contracts, the
Company may substitute shares of another Fund. No
substitution of securities in any Sub-Account may take place
without prior approval of the Commission and under such
requirements as it may impose.
VOTING RIGHTS
In accordance with its view of present applicable law, the
Company will vote the shares of each Fund held in the
Variable Account at special meetings of the shareholders of
the particular Trust in accordance with written instructions
received from persons having the voting interest in the
Variable Account. The Company will vote shares for which it
has not received instructions, as well as shares
attributable to it, in the same proportion as it votes
shares for which it has received instructions. The Trusts do
not hold regular meetings of shareholders.
The number of shares which a person has a right to vote will
be determined as of a date to be chosen by the Company not
more than sixty (60) days prior to the meeting of the
particular Trust. Voting instructions will be solicited by
written communication at least fourteen (14) days prior to
the meeting.
The Funds' shares are issued and redeemed only in connection
with variable annuity contracts and variable life insurance
policies issued through separate accounts of the Company and
other life insurance companies. The Trusts do not foresee
any disadvantage to Owners arising out of the fact that
shares may be made available to separate accounts which are
used in connection with both variable annuity and variable
life insurance products. Nevertheless, the Trusts' Boards
intend to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to
determine what action, if any, should be taken in response
thereto. If such a conflict were to occur, one of the
separate accounts might withdraw its investment in a Fund.
This might force a Fund to sell portfolio securities at
disadvantageous prices.
PREMIUM PAYMENTS AND CONTRACT VALUE
PREMIUM PAYMENTS
The Contracts may be purchased under a flexible premium
payment plan. Premium Payments are payable in the frequency
and in the amount selected by the Owner. The initial Premium
Payment is due on the Effective Date. It must be at least
$2,500 ($2,000 for an Individual Retirement Annuity under
Section 408 of the Code). Subsequent Premium Payments must
be at least $100. These minimum amounts are not waived for
15
<PAGE>
Qualified Plans. The Company reserves the right to decline
any application or Premium Payment. A Premium Payment in
excess of $1 million requires preapproval by the Company.
The Company may, at its sole discretion, waive the minimum
payment requirements.
The Owner may elect to increase, decrease or change the
frequency of Premium Payments.
ALLOCATION OF PREMIUM PAYMENTS
Premium Payments are allocated to one or more of the
appropriate Sub-Accounts within the Variable Account and
Fixed Account as selected by the Owner. For each Variable
Account Sub-Account, the Premium Payments are converted into
Accumulation Units. The number of Accumulation Units
credited to the Contract is determined by dividing the
Premium Payment allocated to the Sub-Account by the value of
the Accumulation Unit for the Sub-Account.
The Company will allocate the initial Premium Payment
directly to the Sub-Account(s) selected by the Owner unless
state law requires, during the right-to-examine period, a
refund of Premium Payments rather than Annuity Account
Value.
Transfers do not necessarily affect the allocation
instructions for payments. Subsequent payments will be
allocated as directed by the Owner; if no direction is
given, the allocation will be that which has been most
recently directed for payments by the Owner. The Owner may
change the allocation of future payments without fee,
penalty or other charge upon written notice to the Variable
Products Service Center. A change will be effective for
payments received on or after receipt of the written notice
of change.
Not less than 10% of any Premium Payment at the time of any
allocation may be allocated to a single Sub-Account, and no
allocation can be made which would result in a Variable
Account Sub-Account value of less than $500 or a Fixed
Account Sub-Account value of less than $2,500.
For initial Premium Payments, if the application for a
Contract is in good order, the Company will apply the
Premium Payment to the Variable Account and credit the
Contract with Accumulation Units within two business days of
receipt at the Accumulation Unit Value for the Valuation
Period during which the Premium Payment is accepted unless
state law requires, during the right-to-examine period, a
refund of Premium Payments rather than Annuity Account
Value.
If the application for a Contract is not in good order, the
Company will attempt to get it in good order or the Company
will return the application and the Premium Payment within
five business days. The Company will not retain a Premium
Payment for more than five business days while processing an
incomplete application unless it has been so authorized by
the purchaser.
For each subsequent Premium Payment, the Company will apply
such payment to the Variable Account and credit the Contract
with Accumulation Units at the Accumulation
Unit Value for the Valuation Period during which each such
payment was received in good order.
FIXED ACCUMULATION VALUE. The fixed accumulation value of an
Annuity Account, if any, for any Valuation Period is equal
to the sum of the values of all Fixed Account Sub-Accounts
which are part of the Annuity Account for such Valuation
Period.
GUARANTEED PERIODS. The Owner may elect to allocate Premium
Payments to one or more Sub-Accounts within the Fixed
Account. Each Sub-Account will maintain a Guaranteed Period
with a duration of one, three, five, seven or ten years.
Every Premium Payment allocated to a Fixed Account
Sub-Account starts a new Sub-Account
16
<PAGE>
with its own duration and Guaranteed Interest Rate. The
duration of the Guaranteed Period will affect the Guaranteed
Interest Rate of the Sub-Account. Initial Premium Payments
and subsequent Premium Payments, or portions thereof, and
transferred amounts allocated to a Fixed Account
Sub-Account, less any amounts subsequently withdrawn, will
earn interest at the Guaranteed Interest Rate during the
particular Sub-Account's Guaranteed Period unless
prematurely withdrawn prior to the end of the Guaranteed
Period. Initial Sub-Account Guaranteed Periods begin on the
date a Premium Payment is accepted or, in the case of a
transfer, on the effective date of the transfer, and end on
the date after the number of calendar years in the
Sub-Account's Guaranteed Period elected from the date on
which the amount was allocated to the Sub-Account (the
"Expiration Date"). Any portion of Annuity Account Value
allocated to a specific Sub-Account with a specified
Expiration Date (including interest earned thereon) will be
referred to herein as a "Guaranteed Period Amount." Interest
will be credited daily at a rate equivalent to the compound
annual rate. As a result of renewals and transfers of
portions of the Annuity Account Value described under
"Transfer of Contract Values between Sub-Accounts" below,
which will begin new Sub-Account Guaranteed Periods, amounts
allocated to Sub-Accounts of the same duration may have
different Expiration Dates. Thus each Guaranteed Period
Amount will be treated separately for purposes of
determining any applicable Market Value Adjustment (see
"Market Value Adjustment").
The Company will notify the Owner in writing at least 60
days prior to the Expiration Date for any Guaranteed Period
Amount. A new Sub-Account Guaranteed Period of the same
duration as the previous Sub-Account Guaranteed Period will
commence automatically at the end of the previous Guaranteed
Period unless the Company receives, following such
notification but prior to the end of such Guaranteed Period,
a written election by the Owner to transfer the Guaranteed
Period Amount to a different Fixed Account Sub-Account or to
a Variable Account Sub-Account from among those being
offered by the Company at such time. Transfers of any
Guaranteed Period Amount which become effective upon the
expiration of the applicable Guaranteed Period are not
subject to the twelve (or three) transfers per Contract Year
limitations or the additional Fixed Sub-Account transfer
restrictions (see "Transfer of Contract Values between Sub-
Accounts").
GUARANTEED INTEREST RATES. The Company periodically will
establish an applicable Guaranteed Interest Rate for each of
the Sub-Account Guaranteed Periods within the Fixed Account.
Current Guaranteed Interest Rates may be changed by the
Company frequently or infrequently depending on interest
rates on investments available to the Company and other
factors as described below, but once established, rates will
be guaranteed for the entire duration of the respective
Sub-Account's Guaranteed Period. However, any amount
withdrawn from the Sub-Account may be subject to any
applicable withdrawal charges, Annuity Account Fees, Market
Value Adjustment, premium taxes or other fees. Amounts
transferred out of a Fixed Account Sub-Account prior to the
end of the Guaranteed Period will be subject to the Market
Value Adjustment.
The Guaranteed Interest Rate will not be less than 3% per
year compounded annually, regardless of any application of
the Market Value Adjustment. The Company has no specific
formula for determining the rate of interest that it will
declare as a Guaranteed Interest Rate, as these rates will
be reflective of interest rates available on the types of
debt instruments in which the Company intends to invest
amounts allocated to the Fixed Account (see "The Fixed
Account"). In addition, the Company's management may
consider other factors in determining Guaranteed Interest
Rates for a particular Sub-Account including: regulatory and
tax requirements; sales commissions and administrative
expenses borne by the Company; general economic trends; and
competitive factors.
17
<PAGE>
THERE IS NO OBLIGATION TO DECLARE A RATE IN EXCESS OF 3% PER
YEAR; THE OWNER ASSUMES THE RISK THAT DECLARED RATES WILL
NOT EXCEED 3% PER YEAR. THE COMPANY HAS COMPLETE DISCRETION
TO DECLARE ANY RATE, SO LONG AS THAT RATE IS AT LEAST 3% PER
YEAR.
DOLLAR COST AVERAGING
Dollar Cost Averaging is a program which, if elected,
enables a Contract Owner to systematically allocate
specified dollar amounts from the Money Market Sub-Account
or the One-Year Fixed Sub-Account to the Contract's other
Sub-Accounts at regular intervals. By allocating on a
regularly scheduled basis as opposed to allocating the total
amount at one particular time, an Owner may be less
susceptible to the impact of market fluctuations.
Dollar Cost Averaging may be selected by establishing a
Money Market Sub-Account or a One-Year Fixed Sub-Account
value of at least $12,000. The minimum amount per month to
allocate is $1,000. All Dollar Cost Averaging transfers will
be made effective the twentieth of the month (or the next
Valuation Date if the twentieth of the month is not a
Valuation Date). Election into this program may occur at any
time by properly completing the Dollar Cost Averaging
election form, returning it to the Company so it is received
by the tenth of the month, to be effective that month, and
insuring that sufficient value is in the Money Market
Sub-Account or the One-Year Fixed Sub-Account. Transfers to
the Fixed Account or from other than the One-Year Fixed
Sub-Account are not permitted under Dollar Cost Averaging.
Dollar Cost Averaging will terminate when any of the
following occurs: (1) the number of designated transfers has
been completed; (2) the value of the Money Market Sub-
Account or the One-Year Fixed Sub-Account is insufficient to
complete the next transfer; (3) the Owner requests
termination in writing and such writing is received by the
tenth of the month in order to cancel the transfer scheduled
to take effect that month; or (4) the Contract is
surrendered.
The Dollar Cost Averaging program may not be active
following the Annuity Date. There is no current charge for
Dollar Cost Averaging but the Company reserves the right to
charge for this program. In the event there are additional
transfers, the transfer fee may be charged. The Company does
not intend to profit from any such charge.
CONTRACT VALUE
The value of the Contract is the sum of the values
attributable to the Contract for each Fixed and Variable
Sub-Account. The value of each Variable Sub-Account is
determined by multiplying the number of Accumulation Units
attributable to the Contract in the Sub-Account by the value
of an Accumulation Unit for the Sub-Account.
ACCUMULATION UNIT
Premium Payments allocated to the Variable Account are
converted into Accumulation Units. This is done by dividing
each Premium Payment by the value of an Accumulation Unit
for the Valuation Period during which the Premium Payment is
allocated to the Variable Account. The Accumulation Unit
value for each Sub-Account was or will be set initially at
$10. It may increase or decrease from Valuation Period to
Valuation Period. The Accumulation Unit value for any later
Valuation Period is determined by multiplying
18
<PAGE>
the Accumulation Unit Value for that Sub-Account for the
preceding Valuation Period by the Net Investment Factor for
the current Valuation Period. The Net Investment Factor is
calculated as follows:
The Net Investment Factor for any Variable Account
Sub-Account for any Valuation Period is determined by
dividing (a) by (b) and then subtracting (c) from the
result, where:
(A) Is the net result of:
(1)the net asset value (as described in the prospectus
for the Fund) of a Fund share held in the Variable
Account Sub-Account determined as of the end of the
Valuation Period, plus
(2)the per share amount of any dividend or other
distribution declared by the Fund on the shares held
in the Variable Account Sub-Account if the
"ex-dividend" date occurs during the Valuation Period,
plus or minus
(3)a per share credit or charge with respect to any taxes
paid or reserved for by the Company during the
Valuation Period which are determined by the Company
to be attributable to the operation of the Variable
Account Sub-Account;
(B) is the net asset value of a Fund share held in the
Variable Account Sub-Account determined as of the end of
the preceding Valuation Period; and
(C) is the asset charge factor determined by the Company for
the Valuation Period to reflect the charges for assuming
the mortality and expense risks and for administrative
expenses.
The asset charge factor for any Valuation Period is equal to
the daily asset charge factor multiplied by the number of
24-hour periods in the Valuation Period.
CHARGES AND DEDUCTIONS
Various charges and deductions are made from Annuity Account
Values and the Variable Account. These charges and
deductions are:
DEDUCTION FOR CONTINGENT DEFERRED SALES CHARGE (SALES LOAD)
Upon a partial withdrawal or full surrender, a Contingent
Deferred Sales Charge (sales load) will be calculated and
will be deducted from the Annuity Account Value. This Charge
reimburses the Company for expenses incurred in connection
with the promotion, sale and distribution of the Contracts.
The Contingent Deferred Sales Charge applies only to those
Premium Payments received within seven (7) years of the date
of partial withdrawal or full surrender. In calculating the
Contingent Deferred Sales Charge, Premium Payments are
allocated to the amount surrendered or withdrawn on a
first-in, first-out basis. The amount of the Contingent
Deferred Sales Charge is calculated by: (a) allocating
Premium Payments to the amount surrendered; (b) multiplying
each allocated Premium Payment that has been held under the
Contract for the period shown below by the charge shown
below:
<TABLE>
<CAPTION>
YEARS SINCE
PAYMENT CHARGE
- ------------------ ------
<S> <C>
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
6-7 1%
7+ 0
</TABLE>
and (c) adding the products of each multiplication in (b)
above. The charge will not exceed 7% of the Premium
Payments. Any applicable negative Market Value Adjustment
19
<PAGE>
and Annuity Account Fee will be deducted before application
of the Contingent Deferred Sales Charge. The charge is not
imposed on any death benefit paid or upon amounts applied to
an annuity option.
An Owner may, not more frequently than once each Contract
Year, make a withdrawal of up to fifteen percent (15%) of
Premium Payments, or any remaining portion thereof, without
incurring a Contingent Deferred Sales Charge. The earliest
Premium Payments remaining in the Contract will be deemed
withdrawn first under this Fifteen Percent Free, even if no
Contingent Deferred Sales Charge would have been assessed on
such a withdrawal. No Contingent Deferred Sales Charge will
be deducted from Premium Payments which have been held under
the Contract for more than seven (7) Contract Years or as
annuity payments. The Company may also eliminate or reduce
the Contingent Deferred Sales Charge under the Company
procedures then in effect.
For a partial withdrawal, unless the Owner designates
otherwise, the Contingent Deferred Sales Charge will be
deducted proportionately from the Sub-Account(s) from which
the withdrawal is to be made by cancelling Accumulation
Units from each applicable Sub-Account in the ratio that the
value of each Sub-Account bears to the total of the values
of the Sub-Accounts from which the partial withdrawal is
made. If the value(s) of such Sub-Account(s) are
insufficient, the amount payable on the withdrawal will be
net of any remaining Contingent Deferred Sales Charges
unless the Owner and the Company agree otherwise.
Commissions will be paid to broker-dealers who sell the
Contracts. Broker-dealers will be paid commissions, up to an
amount equal to 6.50% of Premium Payments, for promotional
or distribution expenses associated with the marketing of
the Contracts. To the extent that the Contingent Deferred
Sales Charge is insufficient to cover the actual cost of
distribution, the Company may use any of its corporate
assets, including potential profit which may arise from the
Mortality and Expense Risk Charge, to make up any
difference.
DEDUCTION FOR MORTALITY AND EXPENSE RISK CHARGE
The Company deducts on each Valuation Date a Mortality and
Expense Risk Charge which is equal, on an annual basis, to
1.20% of the average daily net assets of the Variable
Account (consisting of approximately .70% for mortality
risks and approximately .50% for expense risks). The
mortality risks assumed by the Company arise from its
contractual obligation to make annuity payments after the
Annuity Date for the life of the Annuitant in accordance
with annuity rates guaranteed in the Contracts. The expense
risk assumed by the Company is that all actual expenses
involved in administering the Contracts, including Contract
maintenance costs, administrative costs, mailing costs, data
processing costs, legal fees, accounting fees, filing fees,
and the costs of other services may exceed the amount
recovered from the Annuity Account Fee and the
Administrative Expense Charge.
If the Mortality and Expense Risk Charge is insufficient to
cover the actual costs, the loss will be borne by the
Company. Conversely, if the amount deducted proves more than
sufficient, the excess will be a profit to the Company. The
Company expects to profit from this charge.
The Mortality and Expense Risk Charge is guaranteed by the
Company and cannot be increased.
DEDUCTION FOR ADMINISTRATIVE EXPENSE CHARGE
The Company deducts on each Valuation Date an Administrative
Expense Charge which is equal, on an annual basis, to 0.10%
of the average daily net assets of the Variable
20
<PAGE>
Account. This charge is to reimburse the Company for a
portion of its expenses in administering the Contracts. This
charge is guaranteed by the Company and cannot be increased,
and the Company will not derive a profit from this charge.
DEDUCTION FOR ANNUITY ACCOUNT FEE
The Company deducts an annual Annuity Account Fee of $35
from the Annuity Account Value on the last Valuation Date of
each Contract Year. This charge is to reimburse the Company
for a portion of its administrative expenses (see above).
Prior to the Annuity Date, this charge is deducted by
cancelling Accumulation Units from each applicable
Sub-Account in the ratio that the value of each Sub-Account
bears to the total Annuity Account Value. When the Contract
is annuitized or surrendered for its full Surrender Value on
other than a Contract Anniversary, the Annuity Account Fee
will be prorated at the time of surrender. On and after the
Annuity Date, the Annuity Account Fee will be collected
proportionately from the Sub-Account(s) on which the
Variable Annuity payment is based, prorated on a monthly
basis and will result in a reduction of the annuity
payments. The Annuity Account Fee will be waived for any
Contract Year in which the Annuity Account Value equals or
exceeds $100,000 as of the last Valuation Date of the
Contract Year.
DEDUCTION FOR PREMIUM TAX EQUIVALENTS
Premium tax equivalents or other taxes payable to a state,
municipality or other governmental entity will be charged
against Annuity Account Value. Premium taxes currently
imposed by certain states on the Contracts offered hereby
range from 0% to 3.5% of Premiums paid. Some states assess
premium taxes at the time Premium Payments are made; others
assess premium taxes at the time annuity payments begin. The
Company will, in its sole discretion, determine when taxes
have resulted from: the investment experience of the
Variable Account; receipt by the Company of the Premium
Payment(s); or commencement of annuity payments. The Company
may, at its sole discretion, pay taxes when due and deduct
an equivalent amount reflecting investment experience from
the Annuity Account Value at a later date. Payment at an
earlier date does not waive any right the Company may have
to deduct amounts at a later date.
DEDUCTION FOR INCOME TAXES
While the Company is not currently maintaining a provision
for federal income taxes, the Company has reserved the right
to establish a provision for income taxes if it determines,
in its sole discretion, that it will incur a tax as a result
of the operation of the Variable Account. The Company will
deduct for any income taxes incurred by it as a result of
the operation of the Variable Account whether or not there
was a provision for taxes and whether or not it was
sufficient.
DEDUCTION FOR FUND EXPENSES
There are other deductions from, and expenses paid out of,
the assets of the Funds which are described in the
accompanying Funds' prospectuses.
DEDUCTION FOR TRANSFER FEE
Prior to the Annuity Date, an Owner may transfer all or a
part of the Annuity Account Value in a Sub-Account to
another Sub-Account without the imposition of any transfer
fee or charge if there have been no more than three
transfers made in the Contract Year (twelve if the Annuity
Account Value is at least $5000 at the time of a transfer.)
For additional transfers, the Company reserves the right to
deduct a transfer fee of up to
21
<PAGE>
$10 per transfer. Prescheduled automatic dollar cost
averaging transfers are not counted toward the twelve (or
three) transfer limit. The Company reserves the right to
charge a fee of up to $10 for each transfer after the
Annuity Date. The transfer fee at any given time will not be
set at a level greater than its cost and will contain no
element of profit.
DEDUCTION FOR OPTIONAL DEATH BENEFIT
If no Optional Death Benefit is selected, the death benefit
under the Contract will be the Annuity Account Value as of
the date of payment of the death benefit. No additional
charge is imposed for that death benefit.
For an additional charge, as described below, an Optional
Death Benefit can be selected at the time the Contract is
applied for. Under each form of Optional Death Benefit, the
death benefit payable will be the greater of the Annuity
Account Value or some other amount as of the date of payment
of the death benefit. That other amount can be one or more
of
Option A. Premium Payments made, less partial withdrawals.
Option B. Premium Payments made, less partial withdrawals,
with interest compounded daily at a rate equivalent to 5%
per year during the first seven Contract Years. As of the
beginning of the eighth Contract Year, the amount of death
benefit will decrease and thereafter be equal to total
Premium Payments made, less partial withdrawals. Only
available if the Owner (or the Annuitant, if the Owner is a
non-natural person) has not reached his or her 72nd birthday
at the Effective Date.
Option C. The Annuity Account Value on the seven-year
Contract Anniversary immediately preceding the date the
death benefit election is effective or is deemed to become
effective, adjusted for any subsequent Premium Payments and
partial withdrawals and charges made between the immediate
preceding seven-year Contract Anniversary and the date and
death benefit election is effective or is deemed to become
effective (as referenced herein, seven-year Contract
Anniversary means the seventh Contract Anniversary and each
succeeding Contract Anniversary occurring at any seven-year
interval thereafter, for example, the 14th and 21st Contract
Anniversaries).
Option D. The highest Annuity Account Value ever attained on
a Contract Anniversary date, with adjustments for any
subsequent Premium Payments and partial withdrawals made
since the last determination of such highest value.
Once an election of one or more of these Optional Death
Benefits has been made, it will remain in effect for the
life of the Contract, unless the Owner chooses, by written
notice to the Variable Products Service Center, to
discontinue such election. The Owner can only give one
notice of discontinuance; such notice must address the
discontinuance of one or more of the Optional Death
Benefit(s) previously chosen. If no Optional Death
Benefit(s) are selected initially, they cannot be added
later, nor can the Owner change an initial selection to add
Optional Death Benefit(s) after the Contract is issued.
At each Contract Anniversary, a charge will be made against
Annuity Account Value (prorated among the Sub-Accounts used
in the Contract, if more than one be used) for any Optional
Death Benefit in effect for all or a portion of the Contract
Year then ended. Such charge will be computed in the
following manner, assuming for the sake of illustration that
the Optional Death Benefit is in effect for the entire
Contract Year.
On the last business day of each Contract Month during the
Contract Year, the Company will calculate whether the amount
payable under any of the Optional Death Benefits in effect
on that date would exceed the Annuity Account Value on that
date. If it would not exceed the Annuity Account Value on
that date, then no charge for the Optional Death Benefit is
accrued as of that date. If it would exceed the Annuity
Account Value on that
22
<PAGE>
date, then a charge for the Optional Death Benefit is
accrued as of that date. That charge is computed in
accordance with mortality tables which are made a part of
the Contract reflecting the Owner's age and gender
classification (in accordance with state law) is computed on
the Amount at Risk, which is the excess of the Optional
Death Benefit over the Annuity Account Value on the last
business day of the Contract Month. If the Owner is a
corporation, partnership or other non-natural person, the
measuring life will be the Annuitant's. No deduction is
actually made from Annuity Account Value for the Optional
Death Benefit until the Contract Anniversary except upon a
full surrender or Annuitization of the Contract or upon the
payment of a Death Benefit, when the sum of any charges
accrued at the end of each Contract Month during the
Contract Year is deducted.
The annual rate per $1,000 of Amount at Risk charged for the
Optional Death Benefit(s) is set forth in the following
table:
<TABLE>
<CAPTION>
COST OF OPTIONAL DEATH
BENEFIT(S)
ANNUAL RATE PER $1,000
OF AMOUNT AT RISK
-------------------------------
ATTAINED AGE MALE FEMALE UNISEX
- ------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
less than 40............................ $ 2.40 $ 1.99 $ 2.20
40-45................................... 3.02 2.54 2.78
46-50................................... 4.92 4.02 4.47
51-55................................... 7.30 5.70 6.50
56-60................................... 11.46 8.34 9.90
61-65................................... 17.54 11.55 14.55
66-70................................... 27.85 18.19 23.02
71-75................................... 43.30 27.57 35.44
76-80................................... 70.53 47.33 58.93
81-85................................... 117.25 87.04 102.15
86-90................................... 179.55 147.37 163.46
</TABLE>
If, for example, at the end of a Contract Month the Optional
Death Benefit (assuming payment of a death benefit on that
date) were $40,000 and the Annuity Account Value were
$30,000, the Amount at Risk would be $10,000. Suppose the
Owner (or, if applicable, the Annuitant) were a female age
60. The charge accrued for the Optional Death Benefit that
month would be 10 X $8.34, divided by 12 (reflecting
one-twelfth of a year), or $6.95. If that proved to be the
only Contract Month end during the Contract Year at which
there were an Amount at Risk, that would be the only
Optional Death Benefit charge accrued during the Contract
Year. There is no daily deduction of a percentage of
Contract Values for any Optional Death Benefit.
OTHER CONTRACT FEATURES
OWNERSHIP
The Owner has all rights and may receive all benefits under
the Contract. The Owner may change the Owner at any time. If
the Owner dies, a death benefit will be paid to the
Beneficiary upon proof of the Contract Owner's death. If the
Owner is a corporation, partnership or other non-natural
person, the death benefit is paid upon receipt of due proof
of the Annuitant's death. A change of Owner will
automatically revoke any prior designation of Contract
Owner. A request for change must be: (1) made in writing;
and (2) received by the Company at its Variable Products
Service Center. The change will become effective as of the
date the written request is signed. A new designation of
Owner will not apply to any payment made or action taken by
the Company prior to the time it was received. Any Optional
Death Benefit in effect at the time of a change of
23
<PAGE>
ownership will remain in effect. The cost of any Optional
Death Benefit(s) will be based on the attained age of the
new Owner (or the Annuitant, if the new Owner is a non-
natural person).
For non-qualified contracts, in accordance with Code Section
72(u), a deferred annuity contract held by a corporation or
other entity that is not a natural person is not treated as
an annuity contract for tax purposes. Income on the contract
is treated as ordinary income received by the owner during
the taxable year. But in accordance with Code Section 72(u),
an annuity contract held by a trust or other entity as agent
for a natural person is considered held by a natural person.
ASSIGNMENT
The Owner may assign the Contract at any time during his or
her lifetime. Unless provided otherwise, an assignment will
not affect the interest of any previously indicated
Beneficiary. The Company will not be bound by any assignment
until written notice is received by the Company at its
Variable Products Service Center. The Company is not
responsible for the validity of any assignment. The Company
will not be liable as to any payment or other settlement
made by the Company before such assignment has been recorded
at the Company's Variable Products Service Center.
If the Contract is issued pursuant to a Qualified Plan, it
may not be assigned, pledged or otherwise transferred except
as may be allowed under applicable law.
BENEFICIARY
The Beneficiary is named when the Contract is applied for
and, unless changed, is entitled to receive any death
benefits to be paid. Prior to the Annuity Date, death
benefits are paid to the Beneficiary on the death of the
Owner.
CHANGE OF BENEFICIARY
The Owner may change a Beneficiary by filing a written
request with the Company at its Variable Products Service
Center unless an irrevocable Beneficiary designation was
previously filed. After the change is recorded, it will take
effect as of the date the request was signed. If the request
reaches the Variable Products Service Center after the
Annuitant or Owner, as applicable, dies but before any
payment is made, the change will be valid. The Company will
not be liable for any payment made or action taken before it
records the change.
ANNUITANT
The Annuitant must be a natural person. The maximum age of
the Annuitant on the Effective Date is 85 years old. The
Annuitant may be changed at any time prior to the Annuity
Date. Joint Annuitants are allowed at the time of
annuitization only, if the Company chooses to make a joint
and survivor annuity payment option available in addition to
the options provided in the Contract. The Annuitant has no
rights or privileges prior to the Annuity Date. When an
Annuity Option is elected, the amount payable as of the
Annuity Date is based on the age and gender classification
(in accordance with state law) of the Annuitant, as well as
the Option selected and the Annuity Account Value.
TRANSFER OF CONTRACT VALUES BETWEEN SUB-ACCOUNTS
Prior to the Annuity Date, the Owner may transfer all or
part of the Annuity Account Value in a Sub-Account to
another Sub-Account without the imposition of any fee or
24
<PAGE>
charge if there have been no more than three transfers made
in the Contract Year (twelve if the Contract Value is at
least $5000 at the time of transfer). For additional
transfers, the Company reserves the right to deduct a
transfer fee of up to $10 (See "Charges and Deductions --
Deduction for Transfer Fee"). This Contract is not designed
for professional market timing organizations or other
entities using programmed and frequent transfers.
After the Annuity Date, provided a variable annuity option
was selected, the Owner may make up to three transfers
between Variable Sub-Accounts in any Contract Year.
All transfers are subject to the following:
A. The deduction of any transfer fee that may be imposed.
The transfer fee will be deducted from the amount which
is transferred if the entire amount in the Sub-Account is
being transferred, otherwise from the Sub-Account from
which the transfer is made.
B. The minimum amount which may be transferred is the lesser
of (i) $2,500 per Fixed Account Sub-Account or $500 per
Variable Account Sub-Account; or (ii) the Owner's entire
interest in the Sub-Account.
C. No partial transfer will be made if the Owner's remaining
Contract Value in the Sub-Account will be less than $500.
D. Transfers will be effected during the Valuation Period
next following receipt by the Company of a written
transfer request (or by telephone, if authorized)
containing all required information. However, no transfer
may be made effective within seven calendar days of the
date on which the first annuity payment is due. Transfers
may not be permitted during the right-to-examine period.
E. Any transfer request must clearly specify the amount
which is to be transferred and the Sub-Accounts which are
to be affected.
F. Transfers of all or a portion of any Fixed Account
Sub-Account values are subject to any applicable Market
Value Adjustment;
G. The Company reserves the right to defer transfers from
any Fixed Account Sub-Account for up to six months after
date of receipt of the transfer request;
H. Transfers involving the Variable Account Sub-Accounts are
subject to such restrictions as may be imposed by the
Funds;
I. The Company reserves the right at any time and without
prior notice to any party to terminate, suspend or modify
the transfer privileges described above.
J. After the Annuity Date, transfers may not take place
between a Fixed Annuity Option and a Variable Annuity
Option.
SURRENDERS AND PARTIAL WITHDRAWALS
While the Contract is in force and before the Annuity Date,
the Company will, upon written request to the Company by the
Owner, allow the surrender or Partial Withdrawal of all or a
portion of the Contract for its Surrender Value. Such
request may also be made by telephone if telephone transfers
have been previously authorized in writing. Surrenders or
Partial Withdrawals will result in the cancellation of
Accumulation Units from each applicable Sub-Account in the
ratio that the value of each Sub-Account bears to the total
Annuity Account Value, unless the Owner specifies in writing
in advance which units are to be cancelled. The Company will
pay the amount of any surrender or Partial Withdrawal within
seven (7) days of receipt of a valid request, unless the
"Delay of Payments" provision is in effect (See "Delay of
Payments and Transfers").
Certain tax withdrawal penalties and restrictions may apply
to surrenders and partial withdrawal from Contracts (See
"Tax Status"). Owners should consult their own tax counsel
or other tax adviser regarding any surrenders and partial
withdrawals.
25
<PAGE>
The Surrender Value is the Annuity Account Value for the
Valuation Period next following the Valuation Period during
which the written request to the Company for surrender is
received, reduced, in the case of full surrender, by the sum
of:
A. any applicable premium tax equivalents not previously
deducted;
B. any applicable Annuity Account Fee;
C. any applicable Contingent Deferred Sales Charge; and
D. any applicable accrued charges for the Optional Death
Benefit(s) risk
and, for partial withdrawals, by A and C above.
DELAY OF PAYMENTS AND TRANSFERS
The Company reserves the right to suspend or postpone
payments or transfers for any period when:
1. the New York Stock Exchange is closed (other than
customary weekend and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of
securities held in the Variable Account is not reasonably
practicable or it is not reasonably practicable to
determine the value of the Variable Account's net assets;
or
4. during any other period when the Commission, by order, so
permits for the protection of Owners.
The applicable rules and regulations of the Commission will
govern as to whether the conditions described in 2. and 3.
exist.
The Company reserves the right to defer the payment or
transfer of amounts withdrawn from any Fixed Account
Sub-Account for a period not to exceed six months from the
date written request for such withdrawal or transfer is
received by the Company. If payment or transfer is deferred
beyond thirty (30) days, the Company will pay interest of
not less than 3% per year on amounts so deferred.
In addition, payment of the amount of any withdrawal
derived, all or in part, from any Premium Payment paid to
the Company by check or draft may be postponed until the
Company determines the check or draft has been honored.
MARKET VALUE ADJUSTMENT
Any surrender or transfer of a Fixed Account Guaranteed
Period Amount, other than a surrender or transfer pursuant
to an election which becomes effective upon the Expiration
Date of the Guaranteed Period, will be subject to a Market
Value Adjustment ("MVA"). The MVA will be applied to the
amount being surrendered or transferred after deduction of
any applicable Annuity Account Fee and before deduction of
any applicable surrender charge.
The MVA generally reflects the relationship between the
Index Rate (based upon the Treasury Constant Maturity Series
published by the Federal Reserve) in effect at the time a
Premium Payment is allocated to a Sub-Account's Guaranteed
Period under the Contract and the Index Rate in effect at
the time of the Premium Payment's surrender or transfer. It
also reflects the time remaining in the Sub-Account's
Guaranteed Period. Generally, if the Index Rate at the time
of surrender or transfer is lower than the Index Rate at the
time the Premium Payment was allocated, then the application
of the MVA will result in a higher payment upon surrender or
transfer. Similarly, if the Index Rate at the time of
surrender or transfer is higher than the Index Rate at the
time the Premium Payment was allocated, the application of
the MVA will generally result in a lower payment upon
surrender or transfer.
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The MVA is computed by applying the following formula:
(1+A)N
-------------------------
(1+B)N
where:
A = an Index Rate (based on the Treasury Constant Maturity
Series published by the Federal Reserve) for a security with
time to maturity equal to the Sub-Account's Guaranteed
Period, determined at the beginning of the Guaranteed
Period.
B = an Index Rate (based on the Treasury Constant Maturity
Series published by the Federal Reserve) for a security with
time to maturity equal to the Sub-Account's Guaranteed
Period, determined at the time of surrender or transfer,
plus a 0.50% adjustment (unless otherwise limited by
applicable state law). If Index Rates "A" and "B" are within
.25% of each other when the index rate factor is determined,
no such percentage adjustment to "B" will be made, unless
otherwise required by state law. This adjustment builds into
the formula a factor representing direct and indirect costs
to the Company associated with liquidating general account
assets in order to satisfy surrender requests. This
adjustment of 0.50% has been added to the denominator of the
formula because it is anticipated that a substantial portion
of applicable general account portfolio assets will be in
relatively illiquid securities. Thus, in addition to direct
transaction costs, if such securities must be sold (E.G.,
because of surrenders), the market price may be lower.
Accordingly, even if interest rates decline, there will not
be a positive adjustment until this factor is overcome, and
then any adjustment will be lower than otherwise, to
compensate for this factor. Similarly, if interest rates
rise, any negative adjustment will be greater than
otherwise, to compensate for this factor. If interest rates
stay the same, this factor will result in a small but
negative Market Value Adjustment.
N = The number of years remaining in the Guaranteed Period
(E.G. 1 year and 73 days = 1 + (73 divided by 365) = 1.2
years)
See the Statement of Additional information for examples of
the application of the Market Value Adjustment.
DEATH OF THE OWNER BEFORE THE ANNUITY DATE
In the event of death of the Owner (or the Annuitant, if the
Owner is a non-natural person) prior to the Annuity Date, a
death benefit is payable to the Beneficiary designated by
the Owner. The value of the death benefit will be determined
as of the Valuation Period next following the date both due
proof of death (a certified copy of the Death Certificate)
and a payment election are received by the Company. Unless
the Optional Death Benefit is selected, the value of the
death benefit is equal to the Annuity Account Value. The
Beneficiary may, at any time before the end of the sixty
(60) day period immediately following receipt of due proof
of death by the Company, elect the death benefit to be paid
as follows:
1. the payment of the entire death benefit within five years
of the date of the death of the Owner or Annuitant,
whichever is applicable; or
2. payment over the lifetime of the designated Beneficiary
or over a period not extending beyond the life expectancy
of the Beneficiary, with distribution beginning within
one year of the date of death of the Owner or Annuitant,
whichever is applicable (see "Annuity Provisions --
Annuity Options"); or
3. payment in accordance with one of the settlement options
under the Contract (see "Annuity Provisions -- Annuity
Options"); or
4. if the designated Beneficiary is the Owner's spouse,
he/she can continue the Contract in his/her own name.
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If no payment option is elected, a single sum settlement
will be made by the Company within seven (7) days of the end
of the sixty (60) day period following receipt of due proof
of death of the Owner or Annuitant as applicable.
If the Owner is a non-natural person, then for purposes of
the death benefit, the Annuitant shall be treated as the
Owner.
DEATH OF THE ANNUITANT BEFORE THE ANNUITY DATE
If the Annuitant dies prior to the Annuity Date and the
Annuitant is different from the Owner, the Owner, if a
natural person, may designate a new Annuitant. Unless and
until one is designated, the Owner will be the Annuitant. If
the Owner is not a natural person, then the death benefit is
paid on the Annuitant's death.
DEATH OF THE ANNUITANT AFTER THE ANNUITY DATE
If the Annuitant dies after the Annuity Date, the death
benefit, if any, will be as specified in the Annuity Option
elected. The Company will require due proof of the
Annuitant's death. Death benefits will be paid at least as
rapidly as under the method of distribution in effect at the
Annuitant's death.
CHANGE IN OPERATION OF VARIABLE ACCOUNT
At the Company's election and if deemed in the best
interests of persons having voting rights under the
Contracts, the Variable Account may be operated as a
management company under the 1940 Act or any other form
permitted by law; de-registered under the 1940 Act in the
event registration is no longer required (deregistration of
the Variable Account requires an order by the Commission);
or combined with one or more other separate accounts. To the
extent permitted by applicable law, the Company also may
transfer the assets of the Variable Account associated with
the Contracts to another account or accounts. In the event
of any change in the operation of the Variable Account
pursuant to this provision, the Company may make appropriate
endorsement to the Contracts to reflect the change and take
such other action as may be necessary and appropriate to
effect the change.
MODIFICATION
Upon notice to the Owner (or the Payee(s) during the Annuity
Period), the Contracts may be modified by the Company if
such modification: (i) is necessary to make the Contracts or
the Variable Account comply with, or take advantage of, any
law or regulation issued by a governmental agency to which
the Company or the Variable Account is subject; or (ii) is
necessary to attempt to assure continued qualification of
the Contracts 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 Variable Account or its Sub-Account(s) (See "Change in
Operation of Variable Account"); or (iv) provides additional
Variable Account and/or fixed accumulation options. In the
event of any such modification, the Company may make
appropriate endorsement to the Contracts to reflect such
modification.
In addition, upon notice to the Owner, the Contracts may be
modified by the Company to change the withdrawal charges,
Annuity Account Fees, mortality and expense risk charges,
administrative expense charges, the tables used in
determining the amount of the first monthly fixed annuity
payment, and the formula used to calculate the Market Value
Adjustment, provided that such modification shall apply only
to Contracts established after the effective date of such
modification. In order to exercise its modification rights
in these particular instances, the Company must notify the
Owner of
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such modification in writing. All of the charges and the
annuity tables which are provided in the Contracts prior to
any such modification will remain in effect permanently,
unless improved by the Company, with respect to Contracts
established prior to the effective date of such
modification.
DISCONTINUANCE
The Company reserves the right to limit or discontinue the
offer and issuance of new Contracts. Such limitation or
discontinuance shall have no effect on rights or benefits
with respect to any Contracts issued prior to the effective
date of such limitation or discontinuance.
ANNUITY PROVISIONS
ANNUITY DATE; CHANGE IN ANNUITY DATE AND ANNUITY OPTION
The Owner selects an Annuity Date at the time of
application. The Owner may, upon at least thirty (30) days
prior written notice to the Company, at any time prior to
the Annuity Date, change the Annuity Date. The Annuity Date
must always be the first day of a calendar month. The
Annuity Date may not be later than the month following the
Annuitant's 90th birthday.
The Owner may, upon at least (30) days prior written notice
to the Company, at any time prior to the Annuity Date,
select and/or change the Annuity Option.
ANNUITY OPTIONS
Instead of having the proceeds paid in one sum, the Owner
may select one of the Annuity Options. These may be on a
fixed or variable basis, or a combination thereof. The
Annuity Option must be selected at least 30 days prior to
the Annuity Date. The Company may, at the time of election
of an Annuity Option, offer more favorable rates in lieu of
those guaranteed. The Company also may make available other
settlement options. The Company uses sex distinct or unisex
annuity rate tables when determining appropriate annuity
payments.
FIXED OPTIONS
Under a fixed option, once the selection has been made and
payments have begun, the amount of the payments will not
vary. The fixed options currently available are:
FIRST OPTION -- LIFE ANNUITY. The Company will make equal
monthly payments during the life of the Annuitant, ceasing
with the last payment due prior to the death of the
Annuitant.
SECOND OPTION -- LIFE ANNUITY WITH CERTAIN PERIOD. The
Company will make equal monthly payments during the life of
the Annuitant, but at least for the minimum period shown in
the annuity tables contained in the Contract. The amount of
each monthly payment per $1,000 of proceeds is based on the
age and gender classification (in accordance with state law)
of the Annuitant when the first payment is made and on the
minimum period chosen.
THIRD OPTION -- LIFE ANNUITY WITH CASH REFUND. The Company
will make equal monthly payments during the life of the
Annuitant. Upon the death of the Annuitant, after payments
have started, the Company will pay in one sum any excess of
the amount of the proceeds applied under this Option over
the total of all payments made under this Option. The amount
of each monthly payment per $1,000 of proceeds is based on
the age and gender (in accordance with state law) of the
Annuitant when the first payment is made.
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<PAGE>
FOURTH OPTION -- ANNUITY CERTAIN. The Company will make
equal monthly payments for a number of years selected, not
less than five or more than thirty years.
VARIABLE OPTIONS
The actual dollar amount of variable annuity payments is
dependent upon (i) the Annuity Account Value at the time of
annuitization, (ii) the annuity table specified in the
Contract, (iii) the Annuity Option selected, and (iv) the
investment performance of the Sub-Account selected.
The dollar amount of the first monthly variable annuity
payment is determined by applying the available value (after
deduction of any premium tax equivalents not previously
deducted) to the table using the age and gender (in
accordance with state law) of the Annuitant. The number of
Annuity Units is then determined by dividing this dollar
amount by the then current Annuity Unit value. Thereafter,
the number of Annuity Units remains unchanged during the
period of annuity payments. This determination is made
separately for each Sub-Account of the Variable Account. The
number of Annuity Units is determined for each Sub-Account
and is based upon the available value in each Sub-Account as
of the date annuity payments are to begin.
The dollar amount determined for each Sub-Account will then
be aggregated for purposes of making payments.
The dollar amount of the second and later variable annuity
payments is equal to the number of Annuity Units determined
for each Sub-Account times the Annuity Unit value for that
Sub-Account as of the due date of the payment. This amount
may increase or decrease from month to month.
The annuity tables contained in the Contract are based on a
three percent (3%) assumed net investment rate. If the
actual net investment rate exceeds three percent (3%),
payments will increase. Conversely, if the actual rate is
less than three percent (3%), annuity payments will
decrease.
The Annuitant receives the value of a fixed number of
Annuity Units each month. The value of a fixed number of
Annuity Units will reflect the investment performance of the
Sub-Account selected and the amount of each annuity payment
will vary accordingly.
The Annuity Unit Value for a Sub-Account is determined by
multiplying the Annuity Unit Value for that Sub-Account for
the preceding Valuation Period by the Net Investment Factor
for the current Valuation Period (calculated as described on
pages 18 and 19 of this Prospectus) and multiplying the
result by 0.999919020, the daily factor to neutralize the
assumed net investment rate, discussed above, of 3% per
annum which is built into the annuity rate table. It may
increase or decrease from Valuation Period to Valuation
Period.
The variable options currently available are:
OPTION I -- VARIABLE LIFE ANNUITY. Monthly annuity payments
are paid during the life of an Annuitant, ceasing with the
last annuity payment due prior to the Annuitant's death.
OPTION II -- VARIABLE LIFE ANNUITY WITH CERTAIN
PERIOD. Monthly annuity payments are paid during the life of
an Annuitant, but at least for the minimum period selected,
which may be five, ten, fifteen or twenty years;
OPTION III -- VARIABLE ANNUITY CERTAIN. Monthly annuity
payments are paid for a number of years selected, not less
than five or more than thirty years. Under this Option III,
the Annuitant may elect at any time during the period that
all or a portion of future payments be commuted and paid in
a lump sum or applied under Option I or Option II, subject
to the Company's rules about minimum payment amounts.
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After the Annuity Date, the payee may, by written request to
the Variable Products Service Center, exchange Annuity Units
of one Variable Sub-Account for Annuity Units of equivalent
value in another Variable Sub-Account up to three times each
Contract Year.
EVIDENCE OF SURVIVAL
The Company reserves the right to require evidence of the
survival of any Payee at the time any payment payable to
such Payee is due under the following Annuity Options: Life
Annuity (fixed), Life Annuity with Certain Period (fixed),
Cash Refund Life Annuity (fixed), Variable Life Annuity, and
Variable Life Annuity with Certain Period.
ENDORSEMENT OF ANNUITY PAYMENTS
The Company will make each annuity payment at its Home
Office by check. Each check must be personally endorsed by
the Payee or the Company may require that proof of the
Annuitant's survival be furnished.
DISTRIBUTION OF THE CONTRACTS
CIGNA Financial Advisors, Inc. ("CFA"), located at 900
Cottage Grove Road, Hartford, CT 06152, acts as the
principal underwriter and the distributor of the Contracts
as well as of variable life insurance policies and other
variable annuity contracts issued by the Company. CFA, a
registered broker-dealer under the Securities Exchange Act
of 1934, is a wholly-owned subsidiary of Connecticut General
Corporation. The Contracts are offered on a continuous
basis. CFA and the Company may enter into agreements to sell
the Contracts through various broker-dealers whose agents
are licensed to sell the Contracts.
PERFORMANCE DATA
MONEY MARKET SUB-ACCOUNT
From time to time, the Money Market Sub-Account may
advertise its "yield" and "effective yield." Both yield
figures will be based on historical earnings and are not
intended to indicate future performance. The "yield" of the
Money Market Sub-Account refers to the income generated by
Annuity Account Values in the Money Market Sub-Account over
a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is,
the amount of income generated by the investment during that
week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the Annuity Account
Values in the Money Market Sub-Account. The "effective
yield" is calculated similarly but, when annualized, the
income earned by Annuity Account Values in the Money Market
Sub-Account is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of
the compounding effect of this assumed reinvestment. The
computation of the yield calculation includes a deduction
for the Mortality and Expense Risk Charge, the
Administrative Expense Charge, and the Annuity Account Fee.
OTHER VARIABLE ACCOUNT SUB-ACCOUNTS
From time to time, the other Variable Account Sub-Accounts
may publish their current yields and total returns in
advertisements and communications to Owners. The current
yield for each Variable Account Sub-Account will be
calculated by dividing the annualization of the dividend and
interest income earned by the underlying Fund during a
recent 30-day period by the maximum Accumulation Unit value
at the end of such period. Total return information will
include the underlying Fund's average annual compounded rate
of return over the most recent four calendar quarters and
the period from the underlying Fund's inception of
operations, based upon the value of the
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Accumulation Units acquired through a hypothetical $1,000
investment at the Accumulation Unit value at the beginning
of the specified period and upon the value of the
Accumulation Unit at the end of such period, assuming
reinvestment of all distributions and the deduction of the
Mortality and Expense Risk Charge, the Administrative
Expense Charge and the Annuity Account Fee. Each Variable
Account Sub-Account may also advertise aggregate and average
total return information over different periods of time.
In each case, the yield and total return figures will
reflect all recurring charges against the Variable Account
Sub-Account's income, including the deduction for the
Mortality and Expense Risk Charge, the Administrative
Expense Charge and the Annuity Account Fee for the
applicable time period. Owners should note that the
investment results of each Sub-Account will fluctuate over
time, and any presentation of a Variable Account
Sub-Account's current yield or total return for any prior
period should not be considered as a representation of what
an investment may earn or what a Owner's yield or total
return may be in any future period. See "Historical
Performance Data" in the Statement of Additional
Information.
PERFORMANCE RANKING OR RATING
The performance of each or all of the Sub-Accounts of the
Variable Account may be compared in its advertising and
sales literature to the performance of other variable
annuity issuers in general or to the performance of
particular types of variable annuities investing in mutual
funds, or series of mutual funds with investment objectives
similar to each of the Sub-Accounts of the Variable Account.
Lipper Analytical Services, Inc. ("Lipper") Morningstar
Variable Annuity/Life Performance Report of Morningstar,
Inc. ("Morningstar") and the Variable Annuity Research and
Data Service ("VARDS-Registered Trademark-") are independent
services which monitor and rank or rate the performance of
variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis.
Lipper's rankings include variable life issuers as well as
variable annuity issuers. VARDS-Registered Trademark-
rankings compare only variable annuity issuers. Morningstar
ratings include mutual funds used by both variable life and
variable annuity issuers. The performance analyses prepared
by Lipper and VARDS-Registered Trademark- rank such issuers
on the basis of total return, assuming reinvestment of
distributions, but do not take sales charges, redemption
fees or certain expense deductions at the separate account
level into consideration. In addition,
VARDS-Registered Trademark- prepares risk-adjusted rankings,
which consider the effects of market risk on total return
performance. This type of ranking may address the question
as to which funds provide the highest total return with the
least amount of risk. Morningstar assigns ratings of zero to
five stars to the mutual funds taking into account primarily
historical performance and risk factors.
TAX STATUS
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S
UNDERSTANDING OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE
TO ANNUITIES IN GENERAL. THE COMPANY CANNOT PREDICT THE
PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
OWNERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING
THE POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT
GUARANTEE THE TAX STATUS OF THE CONTRACTS. OWNERS BEAR THE
COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS.
GENERAL
Section 72 of the Code governs taxation of annuities in
general. An Owner is not taxed on increases in the value of
a Contract until distribution occurs, either in the form of
a
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lump sum payment or as annuity payments under the Settlement
Option elected. For a lump sum payment received as a total
surrender (total redemption), the recipient is taxed on the
portion of the payment that exceeds the cost basis of the
Contract. For Non-Qualified Contracts, this cost basis is
generally the Premium Payments, while for Qualified
Contracts there may be no cost basis. The taxable portion of
the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, the taxable portion is determined by a
formula which establishes the ratio that the cost basis of
the Contract bears to the total value of annuity payments
for the term of the Contract. The taxable portion is taxed
at ordinary income rates. For certain types of Qualified
Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Owners, Annuitants and
Beneficiaries under the Contracts should seek competent
financial advice about the tax consequences of any
distributions.
The Company is taxed as a life insurance company under
Subchapter L of the Code. For federal income tax purposes,
the Variable Account is not a separate entity from the
Company, and its operations form a part of the Company.
Accordingly, the Variable Account will not be taxed
separately as a "regulated investment company" under
Subchapter M of the Code. The Company does not expect to
incur any federal income tax liability with respect to
investment income and net capital gains arising from the
activities of the Variable Account retained as part of the
reserves under the Contract. Based on this expectation, it
is anticipated that no charges will be made against the
Variable Account for federal income taxes. If, in future
years, any federal income taxes or other economic burden are
incurred by the Company with respect to the Variable Account
or the Contracts, the Company may make a charge for any such
amounts that are attributable to the Variable Account.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification
standards on the underlying assets of variable annuity
contracts. The Code provides that a variable annuity
contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments
are not adequately diversified in accordance with
regulations prescribed by the United States Treasury
Department ("Treasury Department"). Disqualification of the
Contract as an annuity contract would result in imposition
of federal income tax to the Owner with respect to earnings
allocable to the Contract prior to the receipt of payments
under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the
Contracts meet the diversification requirements if, as of
the end of each quarter, the underlying assets meet the
diversification standards for a regulated investment company
and no more than fifty-five percent (55%) of the total
assets consist of cash, cash items, U.S. government
securities and securities of other regulated investment
companies.
Treasury Department regulations (Treas. Reg. 1.817-5)
established diversification requirements for the investment
portfolios underlying variable contracts such as the
Contracts. The regulations amplify the diversification
requirements for variable contracts set forth in the Code
and provide an alternative to the safe harbor provision
described above. Under the regulations, an investment
portfolio will be deemed adequately diversified if: (1) no
more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more
than 70% of the value of the total assets of the portfolio
is represented by any two investments; (3) no more than 80%
of the value of the total assets of the portfolio is
represented by any three investments; and (4) no more than
90% of the value of the total assets of the portfolio is
represented by any four investments.
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The Code provides that for purposes of determining whether
or not the diversification standards imposed on the
underlying assets of variable contracts by Section 817(h) of
the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate
issuer."
The Company intends, and the Trusts have undertaken, that
all Funds underlying the Contracts will be managed in such a
manner as to comply with these diversification requirements.
The Treasury Department has indicated that guidelines may be
forthcoming under which a variable annuity contract will not
be treated as an annuity contract for tax purposes if the
owner of the contract has excessive control over the
investments underlying the contract (i.e., by being able to
transfer values among sub-accounts with only limited
restrictions). The issuance of such guidelines may require
the Company to impose limitations on a Owner's right to
control the investment. It is not known whether any such
guidelines would have a retroactive effect.
DISTRIBUTION REQUIREMENTS
Section 72(s) of the Code requires that in order to be
treated as an annuity contract for Federal income tax
purposes, any Nonqualified Contract must provide that (a) if
any Owner dies on or after the Annuity Date but prior to the
time the entire interest in the Contract has been
distributed, the remaining portion of such interest will be
distributed at least as rapidly as under the method of
distribution being used when the Owner died; and (b) if any
Owner dies prior to the Annuity Date, the entire interest in
the Contract will be distributed within five years after
such death. These requirements will be considered satisfied
as to any portion of the Owner's interest which is payable
to or for the benefit of a "designated beneficiary" and
which is distributed over the life of such "designated
beneficiary" or over a period not extending beyond the life
expectancy of that beneficiary, provided that such
distributions begin within one year of the Owner's death.
The Owner's "designated beneficiary" is the person
designated by such Owner as a Beneficiary and to whom
ownership of the Contract passes by reason of death and must
be a natural person. However, if the Owner's "designated
beneficiary" is the surviving spouse of the Owner, the
Contract may be continued with the surviving spouse as the
new Owner.
The Contracts contain provisions which are intended to
comply with the requirements of Section 72(s) of the Code,
although no regulations interpreting these requirements have
yet been issued. The Company intends to review such
provisions and modify them if necessary to try to assure
that they comply with the Section 72(s) requirements when
clarified by regulation or otherwise. Similar rules may
apply to a Qualified Contract.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity
Contracts which are issued during a calendar year to the
same Owner by one company or its affiliates are treated as
one annuity Contract for purposes of determining the tax
consequences of any distribution. Such treatment may result
in adverse tax consequences, including more rapid taxation
of the distributed amounts from such combination of
Contracts. Owners should consult a tax adviser prior to
purchasing more than one nonqualified annuity Contract in
any single calendar year.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable
event. Owners should therefore consult competent tax
advisers should they wish to assign their Contracts.
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WITHHOLDING
Withholding of federal income taxes on the taxable portion
of all distributions may be required unless the recipient
elects not to have any such amounts withheld and properly
notifies the Company of that election. Different rules may
apply to United States citizens or expatriates living
abroad. Withholding is mandatory for certain distributions
from Qualified Contracts. In addition, some states have
enacted legislation requiring withholding.
SECTION 1035 EXCHANGES
Code Section 1035 generally provides that no gain or loss
shall be recognized on the exchange of one annuity contract
for another. If the surrendered contract was issued prior to
August 14, 1982, the tax rules that formerly provided that
the surrender was taxable only to the extent the amount
received exceeds the owner's investment in the contract will
continue to apply to amounts allocable to investment in the
contract before August 14, 1982. Special rules and
procedures apply to Code Section 1035 transactions.
Prospective purchasers wishing to take advantage of Code
Section 1035 should consult their tax advisers.
TAX TREATMENT OF WITHDRAWALS --
NON-QUALIFIED CONTRACTS
Section 72 of the Code governs the treatment of
distributions from annuity contracts. It provides that if
the Annuity Account Value exceeds the aggregate Premium
Payments made, any amount withdrawn will be treated as
coming first from the earnings and then, only after the
income portion is exhausted, as coming from the principal.
Withdrawn earnings are includable in gross income. It
further provides that a ten percent (10%) penalty will apply
to the income portion of any premature distribution.
However, the penalty is not imposed on amounts received: (a)
after the Payee reaches age 59 1/2; (b) after the death of
the Owner (or, if the Owner is a non-natural person, the
Annuitant); (c) if the Payee is totally disabled (for this
purpose disability is as defined in Section 72(m)(7) of the
Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life
(or life expectancy) of the Payee or for the joint lives (or
joint life expectancies) of the Payee and his/her
beneficiary; (e) under an immediate annuity; or (f) which
are allocable to Premium Payments made prior to August 14,
1982.
The above information does not apply, except where noted, to
Qualified Contracts. However, separate tax withdrawal
penalties and restrictions may apply to such Qualified
Contracts (See "Tax Treatment of Withdrawals -- Qualified
Contracts").
QUALIFIED PLANS
The Contracts offered by this Prospectus are designed to be
suitable for use under various types of Qualified Plans.
Because of the minimum purchase payment requirements, these
Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified
Plan varies with the type of plan and terms and conditions
of each specific plan. Owners, Annuitants and Beneficiaries
are cautioned that benefits under a Qualified Plan may be
subject to the terms and conditions of the plan regardless
of the terms and conditions of the Contracts issued pursuant
to the plan. Although the Company provides administration
for the Contract, it does not provide administrative support
for Qualified Plans. Following are general descriptions of
the types of Qualified Plans with which the Contracts may be
used. Such descriptions are not exhaustive and are for
general informational purposes
35
<PAGE>
only. The tax rules regarding Qualified Plans are very
complex and will have differing applications, depending on
individual facts and circumstances. Each purchaser should
obtain competent tax advice prior to purchasing a Contract
issued in connection with a Qualified Plan.
Special favorable tax treatment may be available for certain
types of contributions and distributions (including special
rules for certain lump sum distributions). Adverse tax
consequences may result from contributions in excess of
specified limits, distributions prior to age 59 1/2 (subject
to certain exceptions), distributions that do not conform to
specified minimum distribution rules, aggregate
distributions in excess of a specified annual amount, and in
certain other circumstances. Therefore, the Company makes no
attempt to provide more than general information about use
of the Contract with the various types of qualified plans.
Purchasers and participants under qualified plans as well as
Annuitants, Payees and Beneficiaries are cautioned that the
rights of any person to any benefits under qualified plans
may be subject to the terms and conditions of the plan
themselves, regardless of the terms and conditions of the
Contract issued in connection therewith.
SECTION 403(B) PLANS
Under Section 403(b) of the Code, payments made by public
school systems and certain tax exempt organizations to
purchase annuity policies for their employees are excludable
from the gross income of the employee, subject to certain
limitations. However, such payments may be subject to FICA
(Social Security) taxes. Additionally, in accordance with
the requirements of the Code, Section 403(b) annuities
generally may not permit distribution of (i) elective
contributions made in years beginning after December 31,
1988, and (ii) earnings on those contributions and (iii)
earnings on amounts attributed to elective contributions
held as of the end of the last year beginning before January
1, 1989. Distributions of such amounts will be allowed only
upon the death of the employee, on or after attainment of
age 59 1/2, separation from service, disability, or
financial hardship, except that income attributable to
elective contributions may not be distributed in the case of
hardship.
INDIVIDUAL RETIREMENT ANNUITIES
Sections 219 and 408 of the Code permit individuals or their
employers to contribute to an individual retirement program
known as an "Individual Retirement Annuity" or an "IRA".
Individual Retirement Annuities are subject to limitation on
the amount which may be contributed and deducted and the
time when distributions may commence. In addition,
distributions from certain other types of qualified plans
may be placed into an Individual Retirement Annuity on a
tax-deferred basis.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Section 401(a) and 403(a) of the Code permit corporate
employers to establish various types of retirement plans for
employees and self-employed individuals to establish
qualified plans for themselves and their employees. Such
retirement plans may permit the purchase of the Contracts to
provide benefits under the plans.
DEFERRED COMPENSATION PLANS
Section 457 of the Code, while not actually providing for a
qualified plan as that term is normally used, provides for
certain deferred compensation plans with respect to service
for state governments, local governments, political
sub-divisions, agencies, instrumentalities and certain
affiliates of such entities and tax exempt organizations
which enjoy
36
<PAGE>
special treatment. The Contracts can be used with such
plans. Under such plans a participant may specify the form
of investment in which his or her participation will be
made. All such investments, however, are owned by, and are
subject to, the claims of the general creditors of the
sponsoring employer.
The above description of federal income tax consequences
pertaining to the different types of Qualified Plans that
may be funded by the Contracts is only a brief summary and
is not intended as tax advice. The rules governing the
provisions of Qualified Plans are extremely complex and
often difficult to comprehend. Anything less than full
compliance with the applicable rules, all of which are
subject to change, may have significant adverse tax
consequences. A prospective purchaser considering the
purchase of a Contract in connection with a Qualified Plan
should first consult a qualified and competent tax adviser
with regard to the suitability of the Contract as an
investment vehicle for the Qualified Plan.
TAX TREATMENT OF WITHDRAWALS --
QUALIFIED CONTRACTS
Section 72(t) of the Code imposes a 10% penalty tax on the
taxable portion of any distribution from qualified
retirement plans, including Contracts issued and qualified
under Code Sections 401, 403(b), 408 and 457. To the extent
amounts are not includable in gross income because they have
been properly rolled over to an IRA or to another eligible
Qualified Plan, no tax penalty will be imposed. The tax
penalty will not apply to the following distributions: (a)
if distribution is made on or after the date on which the
Payee reaches age 59 1/2; (b) distributions following the
death of the Owner or Annuitant (as applicable) or
disability of the Payee (for this purpose disability is as
defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)
of the Payee or the joint lives (or joint life expectancies)
of such Payee and his/her designated beneficiary; (d)
distributions to a Payee who has separated from service
after attaining age 55; (e) distributions made to the extent
such distributions do not exceed the amount allowable as a
deduction under Code Section 213 to the Payee for amounts
paid during the taxable year for medical care: and (f)
distributions made to an alternate payee pursuant to a
qualified domestic relations order.
The exceptions stated in Items (d), (e) and (f) above do not
apply in the case of an Individual Retirement Annuity.
FINANCIAL STATEMENTS
Audited financial statements of the Company as of December
31, 1994 and 1993 and for each of the three years in the
period ended December 31, 1994 are included in the Statement
of Additional Information. No financial statements are
included for the Variable Account, which did not commence
operations until April 10, 1995.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable
Account, the Distributor or the Company is a party except
for routine litigation which the Company does not believe is
relevant to the Contracts offered by this Prospectus.
37
<PAGE>
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available (at no cost) which contains
more details concerning some subjects discussed in this Prospectus. The
following is the Table of Contents for that Statement:
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
THE CONTRACTS-GENERAL PROVISIONS................ 3
The Contracts................................. 3
Loans......................................... 3
Non-Participating Contracts................... 3
Misstatement of Age........................... 3
Variable Accumulation Unit Value and
Variable Accumulation Value.................. 3
Net Investment Factor......................... 4
SAMPLE CALCULATIONS AND TABLES.................. 4
Variable Account Unit Value Calculations...... 4
Withdrawal Charge and Market Value Adjustment
Tables....................................... 5
STATE REGULATION OF THE COMPANY................. 6
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
ADMINISTRATION.................................. 7
PERIODIC REPORTS................................ 7
DISTRIBUTION OF THE CONTRACTS................... 7
CUSTODY OF ASSETS............................... 7
HISTORICAL PERFORMANCE DATA..................... 8
Money Market Sub-Account Yield................ 8
Other Sub-Account Yields...................... 8
Total Returns................................. 9
Other Performance Data........................ 9
LEGAL MATTERS................................... 10
LEGAL PROCEEDINGS............................... 10
EXPERTS......................................... 10
FINANCIAL STATEMENTS............................ 10
</TABLE>
38
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
[LOGO]
537401 (8/95)
<PAGE>
PART B. STATEMENT OF
ADDITIONAL INFORMATION
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ACCRU-REGISTERED TRADEMARK- VARIABLE ANNUITY CONTRACTS
Issued through
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
Offered by
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
Home Office Location
900 Cottage Grove Road
Hartford, Connecticut 06152
Mailing Address
CIGNA Individual Insurance
Variable Products Service Center
Routing S-154
Hartford, Connecticut 06152-2154
This Statement of Additional Information ("Statement") expands upon subjects
discussed in the current Prospectus for the ACCRU-Registered Trademark- Variable
Annuity Contracts (the "Contracts") offered by Connecticut General Life
Insurance Company through CG Variable Annuity Separate Account II. You may
obtain a copy of the Prospectus dated August , 1995, by calling (800) 552-9898,
or by writing to Variable Products Service Center, Routing S-154, Connecticut
General Life Insurance Company, Hartford, Connecticut 06152-2154. Terms used in
the current Prospectus for the Contracts are incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACTS AND CG VARIABLE
ANNUITY SEPARATE ACCOUNT II.
Dated: August , 1995
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE CONTRACTS -- GENERAL PROVISIONS........................................................................ 3
The Contracts............................................................................................ 3
Loans.................................................................................................... 3
Non-Participating Contracts.............................................................................. 3
Misstatement of Age...................................................................................... 3
CALCULATION OF VARIABLE ACCOUNT VALUES..................................................................... 3
Variable Accumulation Unit Value......................................................................... 3
Net Investment Factor.................................................................................... 4
SAMPLE CALCULATIONS AND TABLES............................................................................. 4
Variable Account Unit Value Calculations................................................................. 4
Withdrawal Charge and Market Value Adjustment Tables..................................................... 5
STATE REGULATION OF THE COMPANY............................................................................ 6
ADMINISTRATION............................................................................................. 7
PERIODIC REPORTS........................................................................................... 7
DISTRIBUTION OF THE CONTRACTS.............................................................................. 7
CUSTODY OF ASSETS.......................................................................................... 7
HISTORICAL PERFORMANCE DATA................................................................................ 8
Money Market Sub-Account Yield........................................................................... 8
Other Sub-Account Yields................................................................................. 8
Total Returns............................................................................................ 9
Other Performance Data................................................................................... 9
LEGAL MATTERS.............................................................................................. 10
LEGAL PROCEEDINGS.......................................................................................... 10
EXPERTS.................................................................................................... 10
FINANCIAL STATEMENTS....................................................................................... 10
</TABLE>
2
<PAGE>
In order to supplement the description in the Prospectus, the following
provides additional information about Connecticut General Life Insurance Company
(the "Company") and the Contracts which may be of interest to an Owner. Terms
have the same meaning as in the Prospectus, unless otherwise indicated.
THE CONTRACTS -- GENERAL PROVISIONS
THE CONTRACTS
A Contract, attached riders, amendments and any application, form the entire
contract. Only the President, a Vice President, a Secretary, a Director, or an
Assistant Director of the Company may change or waive any provision in a
Contract. Any changes or waivers must be in writing. The Company may change or
amend the Contracts if such change or amendment is necessary for the Contracts
to comply with or take advantage of any state or federal law, rule or
regulation.
LOANS
Under the Contracts, loans are not permitted.
NON-PARTICIPATING CONTRACTS
The Contracts do not participate or share in the profits or surplus earnings
of the Company.
MISSTATEMENT OF AGE
If the age of the Annuitant is misstated, any amounts payable by the Company
under the Contract will be adjusted to be those amounts which the Premium
Payments would have purchased for the correct age, according to the Company's
rates in effect on the Date of Issue. Any overpayment by the Company, with
interest at the rate of 6% per year, compounded annually, will be charged
against the payments to be made next succeeding the adjustment. Any underpayment
by the Company will be paid in a lump sum.
If the age or sex of the Owner is misstated, the Company will adjust the
charge associated with any Optional Death Benefits elected (not available in New
York) to the charges that would have been assessed for the correct age and sex.
CALCULATION OF VARIABLE ACCOUNT VALUES
On any Valuation Date, the Variable Account value is equal to the totals of
the values allocated to the Contracts in each Sub-Account. The portion of an
Owner's Annuity Account Value held in any Variable Account Sub-Account is equal
to the number of Sub-Account units allocated to a Contract multiplied by the
Sub-Account accumulation unit value as described below.
VARIABLE ACCUMULATION UNIT VALUE
Upon receipt of a Premium Payment by the Company at its Variable Products
Service Center, all or that portion, if any, of the Premium Payment to be
allocated to the Variable Account Sub-Accounts will be credited to the Variable
Account in the form of Variable Accumulation Units. The number of particular
Variable Accumulation Units to be credited is determined by dividing the dollar
amount allocated to the particular Variable Account Sub-Account by the Variable
Accumulation Unit Value for the particular Variable Account Sub-Account for the
Valuation Period during which the Premium Payment is received at the Company's
Variable Products Service Center (for the initial Premium Payment, for the
Valuation Period during which the Premium Payment is accepted).
The Variable Accumulation Unit Value for each Variable Account Sub-Account
was set initially at $10.00 for the first Valuation Period of the particular
Variable Account Sub-Account. The Variable Account commenced operations on April
10, 1995. The Variable Accumulation Unit Value for the particular Variable
Account Sub-Account for any subsequent Valuation Period is determined by
multiplying the Variable Accumulation Unit Value for the particular Variable
Account Sub-Account for the immediately preceding Valuation Period by the Net
Investment Factor for the particular Variable Account Sub-Account for such
subsequent Valuation Period. The Variable Accumulation Unit
3
<PAGE>
Value for each Variable Account Sub-Account for any Valuation Period is the
value determined as of the end of the particular Valuation Period and may
increase, decrease, or remain constant from Valuation Period to Valuation
Period.
The Variable Account portion of the Annuity Account Value, if any, for any
Valuation Period is equal to the sum of the value of all Variable Accumulation
Units of each Variable Account Sub-Account credited to the Contract for such
Valuation Period. The value in a Contract of each Variable Account Sub-Account
is determined by multiplying the number of Variable Accumulation Units, if any,
credited to such Variable Account Sub-Account in a Contract by the Variable
Accumulation Unit Value of the particular Variable Account Sub-Account for such
Valuation Period.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of a Variable Account Sub-Account from one Valuation Period to the
next. The Net Investment Factor may be greater or less than or equal to 1.0;
therefore, the value of a Variable Accumulation Unit may increase, decrease, or
remain the same.
The Net Investment Factor for any Variable Account Sub-Account for any
Valuation Period is determined by dividing (a) by (b) and then subtracting (c)
from the result where:
(a) is the net result of:
(1) the net asset value of a Fund share held in the Variable Account
Sub-Account determined as of the end of the Valuation Period, plus
(2) the per share amount of any dividend or other distribution declared
by the Fund on the shares held in the Variable Account Sub-Account if
the "ex-dividend" date occurs during the Valuation Period, plus or
minus
(3) a per share credit or charge with respect to any taxes paid or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Variable Account Sub-Account;
(b) is the net asset value of a Fund share held in the Variable Account
Sub-Account determined as of the end of the preceding Valuation Period;
and
(c) is the asset charge factor determined by the Company for the valuation
period to reflect the charges for assuming mortality and expense risks
and for the administrative expenses.
SAMPLE CALCULATIONS AND TABLES
VARIABLE ACCOUNT UNIT VALUE CALCULATIONS
VARIABLE ACCUMULATION UNIT VALUE CALCULATION. Assume the net asset value of
a Fund share at the end of the current Valuation Period is $16.50; and its value
at the end of the immediately preceding Valuation Period was $16.46; the
Valuation Period is one day; and no dividends or distributions caused Fund
shares to go "ex-dividend" during the current Valuation Period. $16.50 divided
by $16.46 is 1.002430134. Subtracting the one day risk factor for mortality and
expense risks and the administrative expense charge of .00003584933 (the daily
equivalent of the current charge of 1.30% on an annual basis) gives a net
investment factor of 1.00239428467. If the value of the Variable Accumulation
Unit for the immediately preceding Valuation Period had been $14.703693, the
value for the current Valuation Period would be $14.738898 ($14.703693 X
1.00239428467).
VARIABLE ANNUITY UNIT VALUE CALCULATION. The assumptions in the above
example exist. Also assume that the value of an Annuity Unit for the immediately
preceding Valuation Period had been $13.579136. As the first variable annuity
payment is determined by using an assumed interest rate of 3% per year, the
value of the Annuity Unit for the current Valuation Period would be $13.610546
[$13.579136 X 1.00239428467 (the net investment factor) X 0.999919020].
0.999919020 is the factor, for a one day Valuation Period, that neutralizes the
assumed interest rate of three percent (3%) per year used to establish the
Annuity Payment Rates found in the Contract.
4
<PAGE>
VARIABLE ANNUITY PAYMENT CALCULATION. Assume that a Participant's Variable
Annuity Account is credited with 5319.7531 Variable Accumulation Units of a
particular Sub-Account; that the Variable Accumulation Unit value and the
Annuity Unit Value for the particular Sub-Account for the Valuation Period which
ends immediately preceding the Annuity Date are $14.703693 and $13.579136
respectively; that the Annuity Payment Rate for the age and option elected is
$6.52 per $1,000; and that the Annuity Unit Value on the day prior to the second
variable annuity payment date is $13.610170. The first variable annuity payment
would be $509.99 (5319.7531 X $14.703693 X 6.52 divided by 1,000). The number of
Annuity Units credited would be 37.5569 ($509.99 divided by $13.579136) and the
second variable annuity payment would be $511.16 (37.5569 X $13.610170).
WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT TABLES
The following example illustrates the detailed calculations for a $100,000
deposit into the Fixed Account with a guaranteed rate of 8% for a duration of
five years. The intent of the example is to show the effect of the Market Value
Adjustment ("MVA") and the 3% minimum guarantee under various interest rates on
the calculation of the cash surrender (withdrawal) value. Any charges for
optional death benefit risks are not taken into account in the example. The
effect of the MVA is reflected in the index rate factor in column (2) and the
minimum 3% guarantee is shown under column (4) under the "Surrender Value
Calculation". The "Surrender Charge Calculation" assumes there have been no
prior withdrawals and illustrates the operation of the Fifteen Percent Free
provision of the Contract. The "Market Value Adjustment Tables" and "Minimum
Value Calculation" contain the explicit calculation of the index factors and the
3% minimum guarantee respectively. The "Annuity Value Calculation" and "Minimum
Value" calculations assume the imposition of the annual $35 Annuity Account Fee
charge, but that fee is waived if the Annuity Account Value at the end of a
Contract Year is
$100,000 or more.
WITHDRAWAL CHARGE TABLES
SAMPLE CALCULATIONS FOR MALE 35 ISSUE
CASH SURRENDER VALUES
<TABLE>
<S> <C>
Single premium..................... $100,000
Premium taxes...................... 0
Withdrawals........................ None
Guaranteed period.................. 5 years
Guaranteed interest rate........... 8%
Annuity date....................... Age 70
Index rate A....................... 7.5%
Index rate B....................... 8.00% end of contract year 1
7.75% end of contract year 2
7.00% end of contract year 3
6.50% end of contract year 4
Percentage adjustment to B......... 0.5%
</TABLE>
SURRENDER VALUE CALCULATION
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6) (7)
ANNUITY INDEX RATE ADJUSTED MINIMUM GREATER OF SURRENDER SURRENDER
CONTRACT YEAR VALUE FACTOR ANNUITY VALUE VALUE (3)&(4) CHARGE VALUE
- -------------------------------- ----------- ----------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1............................... $ 107,965 0.963640 $ 104,039 $ 102,965 $ 104,039 $ 5,950 $ 98,089
2............................... $ 116,567 0.993056 $ 115,758 $ 106,019 $ 115,758 $ 5,100 $ 110,658
3............................... $ 125,858 1.000000 $ 125,858 $ 109,165 $ 125,858 $ 4,250 $ 121,608
4............................... $ 135,891 1.004673 $ 136,526 $ 112,404 $ 136,526 $ 3,400 $ 133,126
5............................... $ 146,727 1.000000 $ 146,727 $ 115,742 $ 146,727 $ 2,550 $ 144,177
</TABLE>
5
<PAGE>
ANNUITY VALUE CALCULATION
<TABLE>
<CAPTION>
CONTRACT YEAR ANNUITY VALUE
- ------------------------------ ------------------------------------------
<S> <C>
1............................. $100,000 X 1.08 - $35 = $107,965
2............................. $107,965 X 1.08 - $35 = $116,567
3............................. $116,567 X 1.08 - $35 = $125,858
4............................. $125,858 X 1.08 - $35 = $135,891
5............................. $135,891 X 1.08 - $35 = $146,727
</TABLE>
SURRENDER CHARGE CALCULATION
<TABLE>
<CAPTION>
(1) (3)
SURRENDER (2) SURRENDER
CONTRACT YEAR CHARGE FACTOR SURRENDER CHARGE FACTOR CHARGE
- -------------------------------------------------------------- --------------- ----------------------- -----------
<S> <C> <C> <C>
1............................................................. 0.07 0.0595 $ 5,950
2............................................................. 0.06 0.0510 $ 5,100
3............................................................. 0.05 0.0425 $ 4,250
4............................................................. 0.04 0.0340 $ 3,400
5............................................................. 0.03 0.0255 $ 2,550
</TABLE>
MARKET VALUE ADJUSTMENT TABLES
INTEREST RATE FACTOR CALCULATION
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
INDEX INDEX ADJUSTED N (1+A)N
CONTRACT YEAR RATE A RATE B INDEX RATE B -- (1+B)N
- --------------------------------------------------------------- ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
1.............................................................. 7.5% 8.00 8.50 4 0.963640
2.............................................................. 7.5% 7.75 7.75 3 0.993056
3.............................................................. 7.5% 7.00 7.50 2 1.000000
4.............................................................. 7.5% 6.50 7.00 1 1.004673
5.............................................................. 7.5% NA NA 0 NA
</TABLE>
MINIMUM VALUE CALCULATION
<TABLE>
<CAPTION>
CONTRACT YEAR MINIMUM VALUE
- ------------------------------ ------------------------------------------
<S> <C>
1............................. $100,000 X 1.03 - $35 = $102,965
2............................. $102,965 X 1.03 - $35 = $106,019
3............................. $106,019 X 1.03 - $35 = $109,165
4............................. $109,165 X 1.03 - $35 = $112,404
5............................. $112,404 X 1.03 - $35 = $115,742
</TABLE>
STATE REGULATION OF THE COMPANY
The Company, a Connecticut corporation, is subject to regulation by the
Connecticut Department of Insurance. An annual statement is filed with the
Connecticut Department of Insurance each year covering the operations and
reporting on the financial condition of the Company as of December 31 of the
preceding year. Periodically, the Connecticut Department of Insurance or other
authorities examine the liabilities and reserves of the Company and the Variable
Account, and a full examination of the Company's operations is conducted
periodically by the Connecticut Department of Insurance. In addition, the
Company is subject to the insurance laws and regulations of other states within
which it is licensed to operate. Generally, the Insurance Department of any
other state applies the laws of the state of domicile in determining permissible
investments.
A Contract is governed by the laws of the state in which it is delivered.
The values and benefits of each Contract are at least equal to those required by
such state.
6
<PAGE>
ADMINISTRATION
The Company performs certain administrative functions relating to the
Contracts, the individual Annuity Accounts, the Fixed Account, and the Variable
Account. These functions include, among other things, maintaining the books and
records of the Variable Account, the Fixed Account, and the Sub-Accounts, and
maintaining records of the name, address, taxpayer identification number,
contract number, Annuity Account number and type, the status of each Annuity
Account and other pertinent information necessary to the administration and
operation of the Contracts.
PERIODIC REPORTS
At least once during each Calendar Year, the Company will furnish the Owner
with a report showing the Annuity Account Value at the end of the preceding
Calendar Year, all transactions during the Calendar Year, the current Annuity
Account Value, the number of Accumulation Units in each Variable Accumulation
Amount, the applicable Accumulation Unit Value as of the date of the report and
the interest rate credited to the Fixed Account Sub-Account(s). In addition,
each person having voting rights in the Variable Account and a Fund or Funds
will receive each such reports or prospectuses as may be required by the
Investment Company Act of 1940 and the Securities Act of 1933. The Company will
also send each Owner such statements reflecting transactions in the Owner's
Annuity Account as may be required by applicable laws, rules and regulations.
Upon request to the Variable Products Service Center, the Company will
provide an Owner with information regarding fixed and variable accumulation
values.
DISTRIBUTION OF THE CONTRACTS
The principal underwriter for the Contracts, CIGNA Financial Advisors, Inc.
("CFA"), Hartford, Connecticut 06152, which is an affiliate of the Company as
well as of CIGNA Corporation, has not yet received any commissions with respect
to sales of the Contracts as of the date of this Statement of Additional
Information.
Sales charges on and exchange privileges under the Contracts are described
in the Prospectus. There are no variations in the prices at which the Contracts
are offered for certain types of purchasers.
CUSTODY OF ASSETS
The Company is the Custodian of the assets of the Variable Account. The
Company will purchase Fund shares at net asset value in connection with amounts
allocated to the Variable Account Sub-Accounts in accordance with the
instructions of the Purchasers and redeem Fund shares at net asset value for the
purpose of meeting the contractual obligations of the Variable Account, paying
charges relative to the Variable Account or making adjustments for annuity
reserves held in the Variable Account. The assets of the Sub-Accounts of the
Variable Account are held separate and apart from the assets of any other
segregated asset accounts of the Company and separate and apart from the
Company's general account assets. The Company maintains records of all purchases
and redemptions of shares of each Fund held by each of the Sub-Accounts of the
Variable Account. Additional protection for the assets of the Variable Account
is afforded by the Company's fidelity bond covering the acts of officers and
employees of the Company which is presently (as of July 1, 1995) in the amount
of $10,000,000.
7
<PAGE>
HISTORICAL PERFORMANCE DATA
MONEY MARKET SUB-ACCOUNT YIELD
From time to time, the Money Market Sub-Account may advertise its "yield"
and "effective yield." Both yield figures will be based on historical earnings
and are not intended to indicate future performance. The "yield" of the Money
Market Sub-Account refers to the income generated by Annuity Account Values in
the Money Market Sub-Account over a seven-day period (which period will be
stated in the advertisement). This income is then "annualized." That is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
Annuity Account Values in the Money Market Sub-Account. The "effective yield" is
calculated similarly but, when annualized, the income earned by Annuity Account
Values in the Money Market Sub-Account is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The computation of the yield
calculation includes a deduction for the Mortality and Expense Risk Charge, the
Administrative Expense Charge, and the Annuity Account Fee.
The effective yield is calculated by compounding the unannualized base
period return according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)(365/7)] - 1
The yield on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Fund, the types and quality of portfolio securities held by the
Money Market Fund and its operating expenses. The yield figures do not reflect
withdrawal charges or premium taxes or any charges for Optional Death Benefit(s)
selected.
OTHER SUB-ACCOUNT YIELDS
The Company may from time to time advertise or disclose the current
annualized yield of one or more of the Sub-Accounts of the Variable Account
(except the Money Market Sub-Account) for 30-day periods. The annualized yield
of a Sub-Account refers to income generated by the Sub-Account over a specific
30-day period. Because the yield is annualized, the yield generated by a
Sub-Account during the 30-day period is assumed to be generated each 30-day
period over a 12-month period. The yield is computed by: (i) dividing the net
investment income per accumulation unit earned during the period by the maximum
offering price per unit on the last day of the period, according to the
following formula:
Yield = 2 [(a - b + 1)(6) - 1]
cd
Where: a = Net investment income earned during the period by
the Fund attributable to shares owned by the
Sub-Account.
b = Expenses accrued for the period.
c = The average daily number of accumulation units
outstanding during the period.
d = The maximum offering price per accumulation unit
on the last day of the period.
Because of the charges and deductions imposed by the Variable Account, the
yield for a Sub-Account of the Variable Account will be lower than the yield for
its corresponding Fund. The yield calculations do not reflect the effect of any
premium taxes or deferred sales charges that may be applicable to a particular
Contract. Deferred sales charges range from 7% to 1% of the amount withdrawn or
surrendered on total Premium Payments paid less prior partial withdrawals, based
on the Contract Year in which the withdrawal or surrender occurs.
8
<PAGE>
The yield on amounts held in the Sub-Accounts of the Variable Account
normally will fluctuate over time. Therefore, the disclosed yield for any given
past period is not an indication or representation of future yields or rates of
return. A Sub-Account's actual yield is affected by the types and quality of the
Fund's investments and its operating expenses.
TOTAL RETURNS
The Company may from time to time also advise or disclose annual average
total returns for one or more of the Sub-Accounts of the Variable Account for
various periods of time. When a Sub-Account has been in operation for 1, 5 and
10 years, respectively, the total return for these periods will be provided.
Total returns for other periods of time may from time to time also be disclosed.
Total returns represent the average annual compounded rates of return that would
equate the initial amount invested to the redemption value of that investment as
of the last day of each of the periods.
Total returns will be calculated using Sub-Account Unit Values which the
Company calculates on each Valuation Period based on the performance of the
Sub-Account's underlying Fund, and the deductions for the mortality and expense
risk charge, the administrative expense charge, and the Annuity Account Fee. The
Annuity Account Fee is reflected by dividing the total amount of such charges
collected during the year that are attributable to the Variable Account by the
total average net assets of all the Variable Sub-Accounts. The resulting
percentage is deducted from the return in calculating the ending redeemable
value. These figures will not reflect any premium taxes or any charges for any
Optional Death Benefit selected by the Owner. Total return calculations will
reflect the effect of deferred sales charges that may be applicable to a
particular period. The total return will then be calculated according to the
following formula:
P(1+T)(5) = ERV
Where: P = A hypothetical initial Premium Payment of $1,000.
T = Average annual total return.
n = Number of years in the period.
ERV = Ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one, five or
ten-year period, at the end of the one, five or
ten-year period (or fractional portion thereof).
OTHER PERFORMANCE DATA
The Company may from time to time also disclose average annual total returns
in a non-standard format in conjunction with the standard format described
above. The non-standard format will be identical to the standard one except that
the deferred sales charge percentage will be assumed to be 0%.
The Company may from time to time disclose cumulative total returns in
conjunction with the standard format described above. The cumulative returns
will be calculated using the following formula assuming that the deferred sales
charge percentage will be 0%.
CTR = (ERV/P) - 1
Where: CTR = The cumulative total return net of Sub-Account
recurring charges for the period.
ERV = The ending redeemable value of the hypothetical
investment made at the beginning of the one, five
or ten-year period, at the end of the one, five or
ten-year period (or fractional portion thereof).
P = A hypothetical initial payment of $10,000
All non-standard performance data will only be advertised if the standard
performance data is also disclosed.
9
<PAGE>
The Company may also from time to time use advertising which includes
hypothetical illustrations to compare the difference between the growth of a
taxable investment and a tax-deferred investment in a variable annuity.
LEGAL MATTERS
Legal advice regarding certain matters relating to the federal securities
laws applicable to the issuance of the Contracts described in the Prospectus and
this Statement has been provided by George N. Gingold, Esq., 197 King Philip
Drive, West Hartford, CT 06117. All matters of Connecticut law pertaining to the
Contracts, including the validity of the Contracts and the Company's right to
issue the Contracts under Connecticut Insurance Law and any other applicable
state insurance or securities laws, have been passed upon by Robert A.
Picarello, Chief Counsel, Individual Insurance, CIGNA Companies.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party or
to which the assets of the Variable Account are subject. The Company is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Variable Account.
EXPERTS
The consolidated financial statements of Connecticut General Life Insurance
Company as of December 31, 1994 and 1993 and for each of the three years in the
period ended December 31, 1994 included in this Statement of Additional
Information have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting. Price Waterhouse LLP's consent to this reference to the
firm as an "expert" is filed as an exhibit to the registration statement of
which this Statement of Additional Information is a part.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company which are included in
this Statement should be considered only as bearing on the ability of the
Company to meet the obligations under the Contracts. They should not be
considered as bearing on the investment performance of the assets held in the
Variable Account, or on the Guaranteed Interest Rate credited by the Company
during a Guaranteed Period. No financial statements of the Variable Account are
included, because the Variable Account did not commence operations until April
10, 1995.
10
<PAGE>
NORTHEAST INSURANCE SERVICES Telephone 203 240 2000
One Financial Plaza Facsimile 203 249 0457
Hartford, CT 06103
PRICE WATERHOUSE LLP [LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS
February 13, 1995
The Board of Directors and Shareholder
Connecticut General Life Insurance Company
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Connecticut
General Life Insurance Company and its subsidiaries at 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. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
The Company implemented certain new accounting pronouncements as discussed in
Note 1 to the consolidated financial statements.
PRICE WATERHOUSE LLP
11
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
(IN MILLIONS)
- ---------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1994 1993 1992
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Premiums and fees................................................. $ 4,960 $ 4,704 $ 4,541
Net investment income............................................. 2,805 2,742 2,649
Realized investment gains (losses)................................ 27 (65) (13)
Other revenues.................................................... 8 15 20
--------- --------- ---------
Total revenues................................................ 7,800 7,396 7,197
--------- --------- ---------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses.......................... 5,574 5,215 5,168
Policy acquisition expenses....................................... 89 84 75
Other operating expenses.......................................... 1,363 1,351 1,368
--------- --------- ---------
Total benefits, losses and expenses........................... 7,026 6,650 6,611
--------- --------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGES......................................................... 774 746 586
--------- --------- ---------
Income taxes (benefits):
Current......................................................... 220 433 131
Deferred........................................................ 45 (197) (61)
--------- --------- ---------
Total taxes................................................... 265 236 70
--------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES............. 509 510 516
Cumulative effect of accounting changes for postemployment and
postretirement benefits other than pensions, net of taxes....... -- -- (270)
Cumulative effect of accounting change for income taxes........... -- -- 105
--------- --------- ---------
NET INCOME........................................................ 509 510 351
Dividends declared................................................ (300) (190) (165)
Retained earnings, beginning of year.............................. 2,759 2,439 2,253
--------- --------- ---------
RETAINED EARNINGS, END OF YEAR.................................... $ 2,968 $ 2,759 $ 2,439
- ---------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
12
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
(IN MILLIONS)
- -----------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Held to maturity, at amortized cost (fair value, $10,075; $11,158)... $ 10,061 $ 9,950
Available for sale, at fair value (amortized cost, $8,571; $8,187)... 8,324 9,145
Mortgage loans......................................................... 8,975 8,854
Equity securities, at fair value (cost, $109; $121).................... 119 120
Policy loans........................................................... 5,237 3,623
Real estate............................................................ 1,442 1,484
Other long-term investments............................................ 128 94
Short-term investments................................................. 143 96
--------- ---------
Total investments.................................................. 34,429 33,366
Cash and cash equivalents................................................ 80 --
Accrued investment income................................................ 578 504
Premiums and accounts receivable......................................... 911 1,021
Reinsurance recoverables................................................. 2,533 2,815
Deferred policy acquisition costs........................................ 700 623
Property and equipment, net.............................................. 346 364
Current income taxes..................................................... 119 --
Deferred income taxes, net............................................... 661 434
Goodwill................................................................. 518 532
Other assets............................................................. 135 203
Separate account assets.................................................. 14,498 13,620
- -----------------------------------------------------------------------------------------------
Total.............................................................. $ 55,508 $ 53,482
- -----------------------------------------------------------------------------------------------
--------------------
LIABILITIES
Contractholder deposit funds............................................. $ 26,696 $ 25,054
Future policy benefits................................................... 7,875 7,915
Unpaid claims and claim expenses......................................... 1,096 1,210
Unearned premiums........................................................ 84 86
--------- ---------
Total insurance and contractholder liabilities..................... 35,751 34,265
Accounts payable, accrued expenses and other liabilities................. 1,632 1,539
Current income taxes..................................................... -- 76
Separate account liabilities............................................. 14,427 13,618
- -----------------------------------------------------------------------------------------------
Total liabilities.................................................. 51,810 49,498
- -----------------------------------------------------------------------------------------------
--------------------
CONTINGENCIES -- NOTE 9
SHAREHOLDER'S EQUITY
Common stock (6 shares outstanding)...................................... 30 30
Additional paid-in capital............................................... 764 764
Net unrealized appreciation (depreciation) on investments................ (66) 428
Net translation of foreign currencies.................................... 2 3
Retained earnings........................................................ 2,968 2,759
- -----------------------------------------------------------------------------------------------
Total shareholder's equity......................................... 3,698 3,984
- -----------------------------------------------------------------------------------------------
Total.............................................................. $ 55,508 $ 53,482
- -----------------------------------------------------------------------------------------------
--------------------
</TABLE>
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
13
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
(IN MILLIONS)
- -------------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1994 1993 1992
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before cumulative effect of accounting changes........... $ 509 $ 510 $ 516
Adjustments to reconcile income before cumulative effect of
accounting changes to net cash provided by (used in) operating
activities:
Insurance liabilities......................................... (249) 251 (360)
Reinsurance recoverables...................................... 282 (392) 128
Premiums and accounts receivable.............................. (188) 85 199
Deferred income taxes, net.................................... 45 (197) (61)
Other assets.................................................. 68 54 (72)
Accounts payable, accrued expenses, other liabilities and
current income taxes......................................... (192) 5 43
Other, net.................................................... (24) (82) (68)
--------- --------- ---------
Net cash provided by operating activities................... 251 234 325
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investments sold:
Fixed maturities -- available for sale........................ 1,389 -- --
Fixed maturities -- held to maturity.......................... 12 599 595
Mortgage loans................................................ 496 1,004 362
Equity securities............................................. 41 41 14
Other (primarily short-term investments)...................... 1,247 3,840 2,340
Investment maturities and repayments:
Fixed maturities -- available for sale........................ 686 -- --
Fixed maturities -- held to maturity.......................... 1,764 3,167 2,972
Mortgage loans................................................ 194 202 266
Investments purchased:
Fixed maturities -- available for sale........................ (2,390) -- --
Fixed maturities -- held to maturity.......................... (1,788) (5,128) (4,834)
Mortgage loans................................................ (882) (823) (795)
Equity securities............................................. (12) (112) (35)
Policy loans.................................................. (1,614) (1,561) (434)
Other (primarily short-term investments)...................... (1,093) (3,587) (2,176)
Other, net...................................................... (129) (48) (68)
--------- --------- ---------
Net cash used in investing activities....................... (2,079) (2,406) (1,793)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits and interest credited to contractholder deposit
funds......................................................... 6,388 7,537 5,294
Withdrawals from contractholder deposit funds................... (4,216) (5,166) (4,073)
Dividends paid to Parent........................................ (300) (190) (165)
Other, net...................................................... 36 (30) (47)
--------- --------- ---------
Net cash provided by financing activities................. 1,908 2,151 1,009
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents............ 80 (21) (459)
Cash and cash equivalents, beginning of year.................... -- 21 480
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year.......................... $ 80 $ -- $ 21
- -------------------------------------------------------------------------------------------------
-------------------------------
Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds............................. $ 411 $ 352 $ 301
Interest paid................................................. $ 5 $ 5 $ 3
- -------------------------------------------------------------------------------------------------
</TABLE>
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
14
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of Connecticut General Life Insurance Company (the Company) and its
wholly-owned subsidiaries, CIGNA Life Insurance Company, ICO, Inc., and First
Equicor Life Insurance Company (FELIC). During 1994, the Company sold FELIC, the
effects of which were not material to the financial statements. The Company is a
wholly-owned subsidiary of Connecticut General Corporation (the Parent), which
is an indirect wholly-owned subsidiary of CIGNA Corporation (CIGNA). These
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. Certain reclassifications have been
made to prior years' amounts to conform with the 1994 presentation.
B) RECENT ACCOUNTING PRONOUNCEMENTS: In 1993, the Company implemented
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." SFAS No. 115 requires that
debt and equity securities be classified into different categories and carried
at fair value if they are not classified as held to maturity. SFAS No. 115 does
not permit retroactive application of its provisions. The effect of implementing
SFAS No. 115 as of December 31, 1993 resulted in an increase in investment
assets of $958 million and an increase in shareholder's equity of $443 million
resulting from the classification of certain fixed maturities previously carried
at amortized cost to available for sale. The increase in shareholder's equity is
net of policyholder share of $277 million and deferred income taxes of $238
million. See Note 2 for additional information.
In 1993, the Financial Accounting Standards Board (FASB) issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," which provides guidance on
the accounting and disclosure for impaired loans, and must be implemented by the
first quarter of 1995, with the cumulative effect of implementation included in
net income. In October 1994, the FASB issued SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan --Income Recognition and Disclosures," which
eliminates the income recognition requirements of SFAS No. 114. The Company will
adopt SFAS Nos. 114 and 118 in 1995. The effect on the Company's results of
operations and financial condition upon adoption is not expected to be material.
In 1992, the Company implemented SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions;" SFAS No. 109, "Accounting for
Income Taxes;" and SFAS No. 112, "Employers' Accounting for Postemployment
Benefits." These accounting changes were implemented as of January 1, 1992
through cumulative effect adjustments. Prior year financial statements were not
restated.
The cumulative effect of implementing SFAS Nos. 106, 109 and 112 as of January
1, 1992 resulted in non-cash after-tax charges (benefit) to net income of $263
million, ($105) million and $7 million, respectively. In addition, the
implementation of SFAS No. 106 increased 1992 other operating expenses by $23
million ($15 million after-tax). The effect on income tax expense for 1992 as a
result of implementation of SFAS No. 109 was immaterial. There was no
incremental effect on 1992 net income from adopting SFAS No. 112. For additional
information on SFAS No. 109, see Note 5; for additional information on SFAS Nos.
106 and 112, see Note 6.
In 1992, the Company adopted the American Institute of Certified Public
Accountants' Statement of Position (SOP) 92-3, "Accounting for Foreclosed
Assets," which resulted in a realized investment loss of $5 million ($3 million
after-tax).
C) FINANCIAL INSTRUMENTS: In the normal course of business, the Company
enters into transactions involving various types of financial instruments,
including investments such as fixed maturities and equity securities; and
off-balance-sheet financial instruments such as investment and loan commitments,
financial guarantees, and interest rate swap and futures contracts. These
instruments have
15
<PAGE>
credit risk and also may be subject to risk of loss due to interest rate and
market fluctuations. However, risk of loss due to interest rate fluctuations is
reduced through the use of certain derivative instruments. The Company evaluates
and monitors each financial instrument individually and, where appropriate,
obtains collateral or other forms of security to minimize risk of loss.
D) INVESTMENTS: Investments in fixed maturities include bonds, asset-backed
securities, including collateralized mortgage obligations (CMOs); and redeemable
preferred stocks. Fixed maturities classified as held to maturity are carried at
amortized cost, net of impairments, and those classified as available for sale
are carried at fair value, with unrealized appreciation or depreciation included
in Shareholder's Equity. Fixed maturities are considered impaired and written
down to fair value when a decline in value is considered to be other than
temporary.
Mortgage loans are carried principally at unpaid principal balances, net of
valuation reserves. Generally, mortgage loans are considered impaired and a
valuation reserve is established when a decline in the fair value of the
collateral below the carrying value is other than temporary.
Fixed maturities and mortgage loans that are delinquent or restructured to
modify basic financial terms, typically to reduce the interest rate and, in
certain cases, extend the term, are placed on non-accrual status, and thereafter
interest income is recognized only when payment is received.
Real estate investments are either held for the production of income or held
for sale. Real estate investments held for the production of income are carried
at depreciated cost less valuation reserves when a decline in value is other
than temporary. Depreciation is generally calculated using the straight-line
method based on the estimated useful lives of the assets. Real estate
investments held for sale are those which are acquired through the foreclosure
of mortgage loans. These assets are valued at their fair value at the time of
foreclosure. The fair value is established as the new cost basis and the asset
acquired is reclassified from mortgage loans to real estate held for sale.
Subsequent to foreclosure, these investments are carried at the lower of
depreciated cost or current fair value less estimated costs to sell. Adjustments
to the carrying value as a result of changes in fair value subsequent to
foreclosure are recorded as valuation reserves and reported in realized
investment gains and losses. The Company considers several methods in
determining fair value for real estate acquired through foreclosure, with
greater emphasis placed on the use of discounted cash flow analyses and, in some
cases, the use of third-party appraisals. Assets held for sale are depreciated
using the straight-line method based on the estimated useful lives of the
assets.
Equity securities, which include common and non-redeemable preferred stocks,
are carried at fair value. Short-term investments are carried at fair value,
which approximates cost. Equity securities and short-term investments are
classified as available for sale.
Policy loans are generally carried at unpaid principal balances.
Realized investment gains and losses result from sales, investment asset
write-downs and changes in valuation reserves, after deducting amounts
attributable to experience-rated pension policyholders' contracts and
participating life policies ("policyholder share"). Generally, realized
investment gains and losses are based upon specific identification of the
investment assets.
Unrealized investment gains and losses, after deducting policyholder share and
net of deferred income taxes, if applicable, for investments carried at fair
value are included in Shareholder's Equity.
See Note 2(F) for a discussion of the Company's accounting policies for
derivative financial instruments.
E) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of three
months or less at the time of purchase are reported as cash equivalents.
F) REINSURANCE RECOVERABLES: Reinsurance recoverables are estimates of
amounts to be received from reinsurers, including amounts under reinsurance
agreements with affiliated companies. Allowances are established for amounts
deemed uncollectible.
16
<PAGE>
G) DEFERRED POLICY ACQUISITION COSTS: Acquisition costs consist of
commissions, premium taxes and other costs, which vary with, and are primarily
related to, the production of revenues. Group life and a portion of group health
insurance business acquisition costs are deferred and amortized over the terms
of the insurance policies. Acquisition costs related to universal life products
and contractholder deposit funds are deferred and amortized in proportion to
total estimated gross profits over the expected life of the contracts.
Acquisition costs related to annuity and other life insurance businesses are
deferred and amortized, generally in proportion to the ratio of annual revenue
to the estimated total revenues over the contract periods. Deferred acquisition
costs are reviewed to determine if they are recoverable from future income,
including investment income. If such costs are determined to be unrecoverable,
they are expensed at the time of determination.
H) PROPERTY AND EQUIPMENT: Property and equipment are carried at cost less
accumulated depreciation. When applicable, cost includes interest and real
estate taxes incurred during construction and other construction-related costs.
Depreciation is calculated principally on the straight-line method based on the
estimated useful lives of the assets. Accumulated depreciation was $333 million
and $261 million at December 31, 1994 and 1993, respectively.
I) OTHER ASSETS: Other Assets consists of various insurance-related assets,
principally ceded unearned premiums, reinsurance deposits and other amounts due
from affiliated companies.
J) GOODWILL: Goodwill represents the excess of the cost of businesses
acquired over the fair value of their net assets. These costs are amortized on
systematic bases over periods, not exceeding 40 years, that correspond with the
benefits expected to be derived from the acquisition. The Company evaluates the
carrying amount of goodwill by analyzing historical and expected future income
and undiscounted cash flows of the related businesses. Write-downs of goodwill
are recognized when it is determined that the amount has been impaired. Also,
amortization periods are revised if it is determined that the remaining period
of benefit of the goodwill has changed. Accumulated amortization was $70 million
and $56 million at December 31, 1994 and 1993, respectively.
K) SEPARATE ACCOUNTS: Separate account assets and liabilities are principally
carried at market value, with less than 4% carried at amortized cost, and
represent policyholder funds maintained in accounts having specific investment
objectives. The investment income, gains and losses of these accounts generally
accrue to the policyholders and, therefore, are not included in the Company's
net income.
L) CONTRACTHOLDER DEPOSIT FUNDS: Contractholder Deposit Funds are liabilities
for investment-related and universal life products which were $18.6 billion and
$8.1 billion as of December 31, 1994, respectively, compared with $19.1 billion
and $6.0 billion as of December 31, 1993, respectively. These liabilities
consist of deposits received from customers and investment earnings on their
fund balances, less administrative charges and, for universal life fund
balances, mortality and surrender charges.
M) FUTURE POLICY BENEFITS: Future policy benefits are liabilities for life,
health and annuity products. Such liabilities are established in amounts
adequate to meet the estimated future obligations of policies in force. These
liabilities are computed using premium assumptions for group annuity policies
and the net level premium method for individual life and annuity policies, and
are based upon estimates as to future investment yield, mortality and
withdrawals that include provisions for adverse deviation. Future policy
benefits for individual life insurance and annuity policies are computed using
interest rates ranging from 2% to 11%, generally graded down after 10 to 30
years. Mortality, morbidity, and withdrawal assumptions for all policies are
based on either the Company's own experience or various actuarial tables.
N) UNPAID CLAIMS AND CLAIM EXPENSES: Liabilities for unpaid claims and claim
expenses are estimates of payments to be made on insurance claims for reported
losses and estimates of losses incurred but not reported. The Company's prior
year claims and claim adjustment expenses were not material.
17
<PAGE>
O) UNEARNED PREMIUMS: Premiums for group life, and accident and health
insurance are reported as earned on a pro rata basis over the contract period.
The unexpired portion of these premiums is recorded as Unearned Premiums.
P) OTHER LIABILITIES: Other Liabilities consists principally of
postretirement and postemployment benefits and various insurance-related
liabilities, including amounts related to reinsurance contracts. Also included
in Other Liabilities are liabilities for guaranty fund assessments that can be
reasonably estimated.
Q) TRANSLATION OF FOREIGN CURRENCIES: Foreign operations primarily utilize
the local currencies as their functional currencies, and assets and liabilities
are translated at the rates of exchange as of the balance sheet date. Revenues
and expenses are translated at the average rates of exchange prevailing during
the year. The translation gain or loss on such functional currencies is
generally reflected in Shareholder's Equity, net of applicable taxes.
R) PREMIUM AND FEES, REVENUES AND RELATED EXPENSES: Premiums for group life
and accident and health insurance are recognized as revenue on a pro rata basis
over their contract periods. Premiums for individual life and health insurance
as well as individual and group annuity products, excluding universal life and
investment-related products, are recognized as revenue when due. Benefits,
losses and expenses are matched with premiums.
Revenues for universal life products consist of net investment income and
mortality, administration and surrender fees assessed against the fund values
during the period. Benefit expenses for universal life products consist of
benefit claims in excess of fund values and net investment income credited to
fund values. Revenues for investment-related products consist of net investment
income and contract charges assessed against the fund values during the period.
Benefit expenses for investment-related products primarily consist of net
investment income credited to the fund values after deduction for investment and
risk fees.
S) PARTICIPATING BUSINESS: Certain life insurance policies contain dividend
payment provisions that enable the policyholder to participate in the earnings
of the Company's business. The participating insurance in force accounted for
5.2% of total insurance in force at December 31, 1994, compared with 3.6% at
December 31, 1993 and .4% at December 31, 1992.
T) INCOME TAXES: The Company and its subsidiaries are included in the
consolidated United States federal income tax return filed by CIGNA. In
accordance with United States federal income tax consolidated return
regulations, all corporations included in a consolidated tax return are jointly
and severally liable for all tax liabilities. In accordance with a tax sharing
agreement, the provision for federal income tax is computed as if the Company
was filing a separate federal income tax return, except that benefits arising
from tax credits and net operating losses are allocated to those subsidiaries
producing such attributes only to the extent they are utilized in the
consolidated federal income tax provision.
Deferred income taxes are generally recognized when assets and liabilities
have different values for financial statement and tax reporting purposes. These
differences result primarily from loss reserves, policy acquisition expenses,
investments, reserves for postretirement benefits and unrealized appreciation or
depreciation on investments.
NOTE 2 -- INVESTMENTS
A) FIXED MATURITIES: Fixed maturities are net of cumulative write-downs of
$78 million and $76 million, including policyholder share, as of December 31,
1994 and 1993, respectively.
18
<PAGE>
The amortized cost and fair value by contractual maturity periods for fixed
maturities, including policyholder share, as of December 31, 1994 were as
follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Amortized Fair
(IN MILLIONS) Cost Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Held to Maturity (Carried at Amortized Cost)
Due in one year or less............................................... $ 201 $ 204
Due after one year through five years................................. 2,275 2,272
Due after five years through ten years................................ 3,424 3,383
Due after ten years................................................... 2,298 2,403
Asset-backed securities............................................... 1,863 1,813
- ---------------------------------------------------------------------------------------------
Total................................................................. $ 10,061 $ 10,075
- ---------------------------------------------------------------------------------------------
---------------------
Available for Sale (Carried at Fair Value)
Due in one year or less............................................... $ 85 $ 93
Due after one year through five years................................. 1,474 1,447
Due after five years through ten years................................ 1,769 1,681
Due after ten years................................................... 2,290 2,250
Asset-backed securities............................................... 2,953 2,853
- ---------------------------------------------------------------------------------------------
Total................................................................. $ 8,571 $ 8,324
- ---------------------------------------------------------------------------------------------
---------------------
</TABLE>
Actual maturities could differ from contractual maturities because issuers may
have the right to call or prepay obligations with or without call or prepayment
penalties. Also, the Company may extend maturities in some cases.
As of December 31, 1994, gross unrealized appreciation (depreciation) for
fixed maturities, including policyholder share, by type of issuer was as
follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Amortized Fair
(IN MILLIONS) Cost Appreciation Depreciation Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Held to Maturity (Carried at Amortized
Cost)
State and local government bonds.......... $ 61 $ 4 $ (1) $ 64
Foreign government bonds.................. 49 1 (1) 49
Corporate securities...................... 8,088 293 (232) 8,149
Asset-backed securities................... 1,863 46 (96) 1,813
- ---------------------------------------------------------------------------------------------
Total..................................... $ 10,061 $ 344 $ (330) $ 10,075
- ---------------------------------------------------------------------------------------------
-------------------------------------------------
Available for Sale (Carried at Fair Value)
Federal government bonds.................. $ 393 $ 35 $ (13) $ 415
State and local government bonds.......... 48 -- (4) 44
Foreign government bonds.................. 135 1 (6) 130
Corporate securities...................... 5,042 84 (244) 4,882
Asset-backed securities................... 2,953 98 (198) 2,853
- ---------------------------------------------------------------------------------------------
Total..................................... $ 8,571 $ 218 $ (465) $ 8,324
- ---------------------------------------------------------------------------------------------
-------------------------------------------------
</TABLE>
19
<PAGE>
As of December 31, 1993, gross unrealized appreciation (depreciation) for
fixed maturities, including policyholder share, by type of issuer was as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Amortized Fair
(IN MILLIONS) Cost Appreciation Depreciation Value
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Held to Maturity (Carried at Amortized
Cost)
State and local government bonds.......... $ 56 $ 12 $ -- $ 68
Foreign government bonds.................. 25 2 -- 27
Corporate securities...................... 8,495 1,106 (13) 9,588
Asset-backed securities................... 1,374 107 (6) 1,475
- --------------------------------------------------------------------------------------------------
Total..................................... $ 9,950 $ 1,227 $ (19) $ 11,158
- --------------------------------------------------------------------------------------------------
------------------------------------------------------
Available for Sale (Carried at Fair Value)
Federal government bonds.................. $ 77 $ 10 $ -- $ 87
State and local government bonds.......... 43 4 -- 47
Foreign government bonds.................. 209 12 (2) 219
Corporate securities...................... 5,244 670 (28) 5,886
Asset-backed securities................... 2,614 311 (19) 2,906
- --------------------------------------------------------------------------------------------------
Total..................................... $ 8,187 $ 1,007 $ (49) $ 9,145
- --------------------------------------------------------------------------------------------------
------------------------------------------------------
</TABLE>
At December 31, 1994, contractual fixed maturity investment commitments
approximated $226 million. The majority of investment commitments are for the
purchase of investment grade fixed maturities, bearing interest at a fixed
market rate, and require no collateral. These commitments are diversified by
issuer and maturity date, and it is estimated that the full amount will be
disbursed in 1995, with the majority occurring within the first three months.
B) SHORT-TERM INVESTMENTS: As of December 31, 1994 and 1993, short-term
investments include debt securities, principally corporate securities of $139
million and $36 million, respectively; federal government securities of $3
million and $53 million, respectively; and foreign government securities of $1
million and $7 million as of December 31, 1994 and 1993, respectively.
C) MORTGAGE LOANS AND REAL ESTATE: The Company's mortgage loans and real
estate investments are diversified by property type and location and, for
mortgage loans, by borrower. Mortgage loans are collateralized by the related
properties and generally approximate 80% of the property's value at the time the
original loan is made.
At December 31, the carrying values of mortgage loans and real estate
investments, including policyholder share, were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage Loans........................................................... $ 8,975 $ 8,854
--------- ---------
Real estate:
Held for sale.......................................................... 760 807
Held for production of income.......................................... 682 677
--------- ---------
Total real estate........................................................ 1,442 1,484
- -----------------------------------------------------------------------------------------------
Total.................................................................... $ 10,417 $ 10,338
- -----------------------------------------------------------------------------------------------
--------------------
</TABLE>
Valuation reserves for mortgage loans, including policyholder share, were $115
million and $160 million as of December 31, 1994 and 1993, respectively.
Valuation reserves and cumulative write-downs related to real estate, including
policyholder share, were $294 million and $321 million as of December 31, 1994
and 1993, respectively.
20
<PAGE>
During 1994, 1993 and 1992, non-cash investing activities included real estate
acquired through foreclosure of mortgage loans, which totaled $127 million, $458
million and $411 million, respectively.
At December 31, mortgage loans and real estate investments comprised the
following property types and geographic regions:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Property type:
Office buildings....................................................... $ 4,092 $ 4,252
Retail facilities...................................................... 3,867 3,650
Hotels................................................................. 819 876
Apartment buildings.................................................... 997 905
Other.................................................................. 642 655
- -----------------------------------------------------------------------------------------------
Total.................................................................... $ 10,417 $ 10,338
- -----------------------------------------------------------------------------------------------
--------------------
Geographic region:
Central................................................................ $ 3,664 $ 3,513
Pacific................................................................ 2,558 2,675
Middle Atlantic........................................................ 1,652 1,654
South Atlantic......................................................... 1,585 1,557
New England............................................................ 958 939
- -----------------------------------------------------------------------------------------------
Total.................................................................... $ 10,417 $ 10,338
- -----------------------------------------------------------------------------------------------
--------------------
</TABLE>
At December 31, 1994, scheduled mortgage loan maturities were as follows: 1995
- -- $752 million; 1996 -- $1.0 billion; 1997 -- $1.1 billion; 1998 -- $743
million; 1999 -- $1.2 billion, and $4.2 billion thereafter. Actual maturities
could differ from contractual maturities because borrowers may have the right to
prepay obligations with or without prepayment penalties, and loans may be
refinanced. During 1994 and 1993, the Company refinanced approximately $600
million and $800 million, respectively, of its mortgage loans relating to
borrowers that were unable to obtain alternative financing.
At December 31, 1994, contractual commitments to extend credit under
commercial mortgage loan agreements amounted to approximately $286 million, all
of which were at a fixed market rate of interest. These commitments generally
expire within one year, in most cases within three months, and are diversified
by property type and geographic region. Included in these commitments is
approximately $180 million of commitments to refinance mortgage loans, currently
in a separate account, relating to borrowers that are not expected to be able to
obtain alternative financing.
D) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS: Unrealized
appreciation and depreciation for investments carried at fair value as of
December 31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Unrealized appreciation:
Fixed maturities.......................................................... $ 218 $ 1,007
Equity securities......................................................... 22 4
--------- ---------
240 1,011
--------- ---------
Unrealized depreciation:
Fixed maturities.......................................................... (465) (49)
Equity securities......................................................... (12) (5)
--------- ---------
(477) (54)
--------- ---------
Less: Policyholder net unrealized appreciation (depreciation)............... (141) 298
--------- ---------
Shareholder net unrealized appreciation (depreciation)...................... (96) 659
Less: Deferred income tax expenses (benefits)............................... (30) 231
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation).................................. $ (66) $ 428
- --------------------------------------------------------------------------------------------------
--------------------
</TABLE>
21
<PAGE>
Net unrealized appreciation (depreciation) on investments that are carried at
fair value is included as a separate component of Shareholders' Equity, net of
policyholder share and deferred income taxes. The increase (decrease) in net
unrealized appreciation/depreciation was ($494) million, $423 million and ($3)
million for the years ended December 31, 1994, 1993 and 1992, respectively,
including ($446) million and $443 million for fixed maturities that are carried
at fair value for the years ended December 31, 1994 and 1993.
The net unrealized appreciation on fixed maturities that are carried at
amortized cost is not recorded in the financial statements. The increase
(decrease) in such net unrealized appreciation was ($1,194) million, ($129)
million, and $115 million in 1994, 1993 and 1992, respectively.
E) NON-INCOME PRODUCING INVESTMENTS: At December 31, the carrying values of
investments that were non-income producing during the preceding 12 months,
including policyholder share, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Fixed maturities.............................................................. $ 71 $ 83
Mortgage loans................................................................ 81 84
Real estate................................................................... 280 270
Other long-term investments................................................... 32 --
- ----------------------------------------------------------------------------------------------------
Total......................................................................... $ 464 $ 437
- ----------------------------------------------------------------------------------------------------
--------------------
</TABLE>
F) DERIVATIVE FINANCIAL INSTRUMENTS: The Company's investment strategy is to
manage investment assets to reflect the underlying characteristics of related
insurance and contractholder liabilities such as liquidity, currency, yield and
duration, which vary among the Company's principal product lines. In connection
with this investment strategy, the Company uses derivative instruments through
hedging applications to manage market risk.
Generally, the Company uses interest rate swap contracts to create, when
combined with cash flows from variable rate bonds, fixed rate cash flows that
meet its portfolio investment strategy. Currency swaps are used to match the
currency of individual investments to that of the associated liabilities.
Interest rate futures are used to temporarily hedge against changes in market
values of bonds and mortgage loans to be purchased or sold, and stock index
futures may be used to hedge the temporary cash position of equity accounts.
Interest rate futures also are used to hedge interest rate risk associated with
withdrawals by contractholders over a scheduled time period.
Cash requirements arise as a result of the Company's derivative activities.
Under interest rate swaps, the Company agrees with other parties to exchange, at
specified intervals, the difference between fixed rate and variable rate
interest amounts calculated by reference to an agreed-upon notional principal
amount. Under futures contracts, initial margin requirements are settled with
cash or other instruments and changes in the contract values are settled in cash
daily with the exchange on which the instrument is traded. Under currency swaps,
the parties generally exchange a principal amount in the two relevant
currencies, agreeing to re-exchange principal amounts at a specified future date
using an agreed-upon exchange rate, and agreeing to periodically exchange
amounts equal to interest payments using the agreed-upon exchange rate.
Because the Company's use of derivatives is limited to hedging applications,
changes in the market value of the derivatives are substantially offset by
changes in the market value of the hedged assets or underlying liabilities,
minimizing market risk. The Company routinely monitors, by individual
counterparty, exposure to credit risk associated with swap contracts. Futures
contracts are exchange-traded and, therefore, credit risk is limited since the
exchange assumes the obligations. The Company manages legal risks by following
industry standardized documentation procedures, by monitoring legal developments
and, consistent with its credit exposure policies, by limiting risks associated
with counterparty failure by diversifying the swaps portfolio among approved
dealers of high credit quality.
22
<PAGE>
Changes in the market value of futures contracts that qualify as hedges are
deferred and recorded as adjustments to the carrying value of the related bond
or mortgage loan. Deferred gains and losses are amortized into net investment
income over the life of the investments purchased or recognized in full as
realized investment gains and losses in the event that the investment or futures
contract is sold prior to maturity. Futures contracts totaled $142 million and
$129 million as of December 31, 1994 and 1993, respectively, and were accounted
for as hedges. At December 31, 1994, gains and losses on futures contracts
deferred in anticipation of investment purchases were $1 million and $3 million,
respectively.
Net interest received or paid on an interest rate swap contract is recognized
currently as an adjustment to net investment income. Underlying notional
principal amounts associated with interest rate swap contracts outstanding were
$596 million and $542 million at December 31, 1994 and 1993, respectively.
The interest payment cash flows received in U.S. dollars from currency swaps
related to foreign currency denominated investment securities (primarily
Canadian dollars, pound sterling, Swiss francs, New Zealand dollars and Japanese
yen) are recognized as net investment income when received. Gains and losses
from changes in exchange rates related to foreign currency swaps are recognized
in realized investment gains and losses, offset by exchange rate gains and
losses on the related investments. Underlying principal amounts associated with
currency swap contracts outstanding were $325 million and $248 million at
December 31, 1994 and 1993, respectively.
As of December 31, 1994, the Company's variable rate investments consisted of
approximately $810 million of fixed maturities and the Company's fixed rate
investments consisted of $18 billion of fixed maturities and $9 billion of
mortgage loans. For the year ended December 31, 1994, the average yield on the
Company's investments in fixed maturities and mortgage loans was 8.7%. For the
year ended December 31, 1994, net investment income on bonds and mortgage loans
was increased by $7 million and $1 million, respectively, as a result of
recognizing amortization of deferred market value changes in futures contracts.
In addition, the increase in net investment income for bonds resulting from
interest rate swap contracts was $12 million, $19 million and $17 million for
the years ended December 31, 1994, 1993 and 1992, respectively.
G) OTHER: As of December 31, 1994 and 1993, the Company had no concentration
of investments in a single investee exceeding 10% of Shareholder's Equity.
NOTE 3 -- INVESTMENT INCOME AND GAINS AND LOSSES
A) NET INVESTMENT INCOME: The components of net investment income, including
policyholder share, for the year ended December 31 were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993 1992
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities.................................................. $ 1,596 $ 1,547 $ 1,511
Mortgage loans.................................................... 776 892 931
Equity securities................................................. 20 16 9
Policy loans...................................................... 365 253 163
Real estate....................................................... 291 238 162
Other long-term investments....................................... 23 20 11
Short-term investments............................................ 8 18 34
--------- --------- ---------
3,079 2,984 2,821
Less investment expenses.......................................... 274 242 172
- ---------------------------------------------------------------------------------------------------
Net investment income............................................. $ 2,805 $ 2,742 $ 2,649
- ---------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
Net investment income attributable to policyholder contracts, which is
included in the Company's revenues and is primarily offset by amounts included
in Benefits, Losses and Settlement Expenses,
23
<PAGE>
was approximately $1.5 billion for 1994 and $1.6 billion for 1993 and 1992. Net
investment income for separate accounts, which is not reflected in the Company's
revenues, was $693 million, $604 million and $656 million for December 31, 1994,
1993 and 1992, respectively.
As of December 31, 1994, fixed maturities and mortgage loans on non-accrual
status, including policyholder share, were $272 million and $743 million,
including restructured investments of $148 million and $543 million,
respectively. Amounts on non-accrual status as of December 31, 1993 were $332
million of fixed maturities and $827 million of mortgage loans, including
restructurings of $245 million and $689 million, respectively. If interest on
these investments had been recognized in accordance with their original terms,
net income would have been increased by $14 million, $17 million and $20 million
in 1994, 1993 and 1992, respectively.
B) REALIZED INVESTMENT GAINS AND LOSSES: Realized gains and losses on
investments, excluding policyholder share, for the year ended December 31 were
as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Realized investment gains (losses):
Fixed maturities..................................................... $ 4 $ 28 $ 4
Mortgage loans....................................................... -- (5) (16)
Equity securities.................................................... 2 (5) 4
Real estate.......................................................... 15 (66) (13)
Other................................................................ 6 (17) 8
--- --- ---
27 (65) (13)
Income tax expenses (benefits)......................................... 12 (16) (31)
- -------------------------------------------------------------------------------------------------------------
Net realized investment gains (losses)................................. $ 15 $ (49) $ 18
- -------------------------------------------------------------------------------------------------------------
---------------------
</TABLE>
Impairments in the value of investments, net of recoveries, that are included
in realized investment gains and losses were $33 million, $55 million and $38
million in 1994, 1993 and 1992, respectively.
Realized investment gains (losses) for separate accounts, which are not
reflected in the Company's revenues, were ($51) million, $612 million and $243
million for the years ended December 31, 1994, 1993 and 1992, respectively.
Realized investment (losses) attributable to policyholder contracts, which also
are not reflected in the Company's revenues, were ($5) million and ($103)
million for the years ended December 31, 1993 and 1992, respectively. Net
realized investment gains (losses) attributable to policyholder contracts were
zero for the year ended December 31, 1994.
During 1994, proceeds from sales of available-for-sale fixed maturities and
equities, including policyholder share, were $1.4 billion. Such sales resulted
in gross realized gains and gross realized losses of $73 million and $70
million, respectively.
During 1994, the Company also sold $14 million of held to maturity fixed
maturities, including policyholder share, resulting in gross proceeds of $12
million and a pre-tax realized loss of $2 million. In addition, $82 million of
fixed maturities classified as held to maturity, including policyholder share,
were transferred to the available-for-sale category at fair value, which was not
significantly different from the carrying value. The sales of fixed maturities
classified as held to maturity and the transfer of such securities to the
available-for-sale category were the result of significant credit deterioration
of the issuers of the affected investments.
Prior to adoption of SFAS No. 115, proceeds from voluntary sales of
investments in fixed maturities, including policyholder share, were $599 million
and $595 million in 1993 and 1992, respectively. Such sales resulted in gross
realized gains and gross realized (losses), including policyholder share, of $36
million and ($3) million in 1993, compared with $36 million and ($14) million in
1992. These amounts exclude the effects of sales of fixed maturities that, prior
to the implementation of SFAS No. 115, were classified as short-term
investments.
24
<PAGE>
NOTE 4 -- SHAREHOLDER'S EQUITY AND DIVIDEND RESTRICTIONS
The Connecticut Insurance Department (the Department) recognizes as net income
and surplus (shareholder's equity) those amounts determined in conformity with
statutory accounting practices prescribed or permitted by the Department, which
differ in certain respects from generally accepted accounting principles. As of
December 31, 1994, there were no material permitted accounting practices
utilized by the Company.
Capital stock of the Company at December 31, 1994 and 1993 consisted of
5,978,322 shares of common stock authorized, issued and outstanding (par value
$5.00).
Statutory surplus was $2.0 billion at both December 31, 1994 and 1993. The
Connecticut Insurance Holding Company Act limits the maximum amount of annual
dividends or other distributions available to shareholders of Connecticut
insurance companies without prior approval of the Insurance Commissioner. Under
current law, the maximum dividend distribution which may be made by the Company
during 1995 without prior approval is $429 million.
NOTE 5 -- INCOME TAXES
In accordance with SFAS No. 109, the Company adopted the liability method of
accounting for income taxes as discussed in Note 1.
As of December 31, 1994 and 1993, the net deferred tax asset was $661 million
and $434 million, respectively.
Management believes, based on the Company's earnings history and its future
expectations, that the Company's taxable income in future years will be
sufficient to realize the net deferred tax asset. In determining the adequacy of
future taxable income, management considered the future reversal of its existing
taxable temporary differences and available tax planning strategies that could
be implemented, if necessary.
In accordance with the Life Insurance Company Income Tax Act of 1959, a
portion of the Company's statutory income was not subject to current income
taxation but was accumulated in an account designated Policyholders' Surplus
Account. Under the Tax Reform Act of 1984, no further additions may be made to
the Policyholders' Surplus Account for tax years ending after December 31, 1983.
The balance in the account of approximately $450 million at December 31, 1994
would result in a tax liability of $158 million (at a 35% rate), only if
distributed to the shareholders or if the account balance exceeded a prescribed
maximum. No income taxes have been provided on this amount because, in
management's opinion, the likelihood that these conditions will be met is
remote.
CIGNA's federal income tax returns are routinely audited by the Internal
Revenue Service (IRS), and provisions are made in the financial statements in
anticipation of the results of these audits. CIGNA resolved all issues relative
to the Company arising out of audits for 1982 through 1990 which resulted in an
increase to net income of $2 million, $3 million and $121 million for 1994, 1993
and 1992, respectively.
In management's opinion, adequate tax liabilities have been established for
all years.
25
<PAGE>
The tax effect of temporary differences which give rise to deferred income tax
assets and liabilities as of December 31 were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Insurance and contractholder liabilities.................................... $ 337 $ 410
Employee and retiree benefit plans.......................................... 175 166
Investments, net............................................................ 220 152
Unrealized depreciation on investments...................................... 30 --
Other....................................................................... 71 123
--------- ---------
Total deferred tax assets................................................... 833 851
--------- ---------
Deferred tax liabilities:
Policy acquisition expenses................................................. 60 68
Depreciation................................................................ 102 105
Unrealized appreciation on investments...................................... -- 235
Other....................................................................... 10 9
--------- ---------
Total deferred tax liabilities.............................................. 172 417
- ----------------------------------------------------------------------------------------------------
Deferred income taxes, net.................................................. $ 661 $ 434
- ----------------------------------------------------------------------------------------------------
--------------------
</TABLE>
As a result of the Omnibus Budget Reconciliation Act of 1993 (OBRA), the
federal corporate income tax rate increased by one percent to 35% retroactive to
January 1, 1993. Deferred income tax benefits for 1993 included $13 million
related to an increase in the Company's net deferred tax asset as of January 1,
1993, due to the effect of the tax rate increase.
Total income tax expense was less than the amount computed using the nominal
federal income tax rate for the following reasons:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993 1992
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax expense at nominal rate (35% for 1994 and 1993, 34% for 1992)..... $ 271 $ 261 $ 199
Tax-exempt interest income............................................ (7) (6) (5)
Dividends received deduction.......................................... (3) (4) (5)
Amortization of goodwill.............................................. 4 5 5
Resolved federal tax audit issues..................................... (2) (3) (121)
Increase in deferred tax asset for tax rate change.................... -- (13) --
Other, net............................................................ 2 (4) (3)
- -------------------------------------------------------------------------------------------------------
Total income tax expense.............................................. $ 265 $ 236 $ 70
- -------------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
Temporary and other differences which resulted in the deferred tax expense
(benefit) for the year ended December 31 were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993 1992
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Insurance and contractholder liabilities............................. $ 93 $ (80) $ (31)
Policy acquisition expenses.......................................... (8) (39) (11)
Investments, net..................................................... (19) (36) (3)
Employee and retiree benefit plans................................... (9) (16) (3)
Realized investment gains/losses..................................... (20) (24) (18)
Other................................................................ 8 (2) 5
- ------------------------------------------------------------------------------------------------------
Deferred taxes (benefits)............................................ $ 45 $ (197) $ (61)
- ------------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
26
<PAGE>
NOTE 6 -- PENSION AND OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS PLANS
A) PENSION PLANS: The Company provides retirement benefits to eligible
employees and agents. These benefits are provided through a single integrated
plan (the Plan) sponsored by CIGNA covering most domestic employees and by
several separate pension plans for various subsidiaries, agents and foreign
employees.
The Plan is a non-contributory, defined benefit, trusteed plan available to
eligible domestic employees. Benefits are based on employees' years of service
and compensation during the highest three or, if service commenced after
December 31, 1988, five consecutive years of employment, offset by a portion of
the Social Security benefit for which they are eligible. CIGNA funds at least
the minimum amount required by the Employee Retirement Income Security Act of
1974. Allocated pension cost for the Company was $31 million, $27 million and
$24 million in 1994, 1993 and 1992, respectively.
The Plan, and several separate pension plans for various subsidiaries and
agents, had deposits with the Company totalling approximately $1.7 billion and
$1.6 billion at December 31, 1994 and 1993, respectively.
B) OTHER POSTRETIREMENT BENEFITS PLANS: In addition to providing pension
benefits, the Company provides certain health care and life insurance benefits
to retired employees, spouses and other eligible dependents through various
plans sponsored by CIGNA. A substantial portion of the Company's employees may
become eligible for these benefits upon retirement. As of January 1, 1992, the
health care benefit plans required nominal contributions by retirees. In August
1992, CIGNA amended its plans effective January 1, 1993, whereby CIGNA's
contributions for health care benefits will depend upon a retiree's date of
retirement, age and years of service. In addition, the plan amendments increased
the level of other cost-sharing features, such as deductibles and coinsurance.
Under the terms of the benefit plans, benefit provisions and cost-sharing
features can continue to be adjusted. In general, retiree health care benefits
are not funded and are paid as covered expenses are incurred. Retiree life
insurance benefits are paid from plan assets or as covered expenses are
incurred.
Effective January 1, 1992, the Company adopted SFAS No. 106 for all of its
postretirement benefit plans (See Note 1). Under SFAS No. 106, an employer's
postretirement benefit liability is primarily measured by determining the
present value of the projected future costs of health benefits based on an
estimate of health care cost trend rates. Expense for postretirement benefits
other than pensions allocated to the Company totalled $28 million for 1994, $15
million for 1993 and $23 million for 1992. The other postretirement benefit
liability included in Accounts Payable, Accrued Expenses and Other Liabilities
as of December 31, 1994 and 1993 was $422 million and $415 million, including
net intercompany payables of $29 million and $32 million, respectively for
services provided by affiliates' employees.
C) OTHER POSTEMPLOYMENT BENEFITS: The Company provides certain salary
continuation (severance and disability), health care and life insurance benefits
to inactive and former employees, spouses and other eligible dependents through
various employee benefit plans sponsored by CIGNA. Those plans are unfunded and
noncontributory, except for the life insurance and health care plans.
Although severance benefits accumulate with additional service, the Company
recognizes severance expense when severance is probable and the costs can be
reasonably estimated. Postemployment benefits other than severance generally do
not vest or accumulate; therefore, the estimated cost of benefits is accrued
when determined to be probable and estimable, generally upon disability or
termination. See Note 1 for additional information regarding implementation of
SFAS No. 112.
D) CAPITAL ACCUMULATION PLANS: CIGNA sponsors various capital accumulation
plans in which employee contributions on a before-tax basis (401(k)) are
supplemented by CIGNA matching contributions. Contributions are invested, at the
election of the employee, in one or more of the following
27
<PAGE>
investments: CIGNA common stock fund, several non-CIGNA stock and bond
portfolios and a fixed-income fund. The Company's expense for such plans totaled
$14 million, $13 million and $12 million for December 31, 1994, 1993 and 1992,
respectively.
NOTE 7 -- LEASES AND RENTALS
Rental expenses for operating leases, principally with respect to buildings,
amounted to $62 million, $66 million and $65 million in 1994, 1993 and 1992,
respectively.
As of December 31, 1994, future net minimum rental payments under
non-cancelable operating leases were $151 million, payable as follows: 1995 -
$48 million; 1996 -$43 million; 1997 - $27 million; 1998 - $14 million; 1999 -
$10 million; and $9 million thereafter.
NOTE 8 -- REINSURANCE
In the normal course of business, the Company enters into agreements,
primarily relating to short-duration contracts, to assume and cede reinsurance
with other insurance companies. Reinsurance is ceded primarily to limit losses
from large exposures and to permit recovery of a portion of direct losses,
although ceded reinsurance does not relieve the originating insurer of
liability. The Company evaluates the financial condition of its reinsurers and
monitors concentrations of credit risk arising from similar geographic regions,
activities, or economic characteristics of its reinsurers. Failure of reinsurers
to indemnify the Company, as a result of reinsurer insolvencies or disputes,
could result in losses. As of December 31, 1994 and 1993 there were no
allowances for uncollectible amounts. While future charges for unrecoverable
reinsurance may materially affect results of operations in future periods, such
amounts are not expected to have a material adverse effect on the Company's
liquidity or financial condition.
The effects of reinsurance on net earned premiums and fees for the year ended
December 31 were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993 1992
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-DURATION CONTRACTS
Premiums and Fees:
Direct.......................................................... $ 3,419 $ 2,666 $ 2,461
Assumed......................................................... 716 1,248 1,320
Ceded........................................................... (291) (329) (197)
- ---------------------------------------------------------------------------------------------------
Net earned premiums and fees.................................... $ 3,844 $ 3,585 $ 3,584
- ---------------------------------------------------------------------------------------------------
-------------------------------
- ---------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994 1993 1992
- ---------------------------------------------------------------------------------------------------
LONG-DURATION CONTRACTS
Premiums and Fees:
Direct.......................................................... $ 1,068 $ 1,023 $ 827
Assumed......................................................... 126 166 204
Ceded........................................................... (78) (70) (74)
- ---------------------------------------------------------------------------------------------------
Net earned premiums and fees.................................... $ 1,116 $ 1,119 $ 957
- ---------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
The effects of reinsurance on written premiums and fees for short-duration
contracts were not materially different from the amounts shown above. Benefits,
Losses and Settlement Expenses for 1994, 1993 and 1992 were net of reinsurance
recoveries of $149 million, $119 million and $124 million, respectively.
28
<PAGE>
NOTE 9 -- CONTINGENCIES
A) FINANCIAL GUARANTEES: The Company is contingently liable for financial
guarantees provided in the ordinary course of business on the repayment of
principal and interest on certain industrial revenue bonds. The contractual
amounts of financial guarantees reflect the Company's maximum exposure to credit
loss in the event of nonperformance. To limit the Company's exposure in the
event of default of any guaranteed obligation, various programs are in place to
ascertain the creditworthiness of guaranteed parties and to monitor this status
on a periodic basis. Risk is further reduced through reinsurance and, in certain
programs, use of letters of credit and other types of security.
The industrial revenue bonds guaranteed directly by the Company have remaining
maturities of up to 21 years. The guarantees provide for payment of debt service
only as it becomes due; consequently, an event of default would not cause an
acceleration of scheduled principal and interest payments. The principal amount
of the bonds guaranteed by the Company at December 31, 1994 and 1993 was $296
million and $323 million, respectively. Revenues in connection with industrial
revenue bond guarantees are derived principally from equity participations in
the related projects and are included in Net Investment Income as earned. Loss
reserves for financial guarantees are established when a default has occurred or
when the Company believes that a loss has been incurred. During 1994 and 1992,
losses for industrial revenue bonds were $1 million, and $4 million,
respectively. There were no such losses in 1993.
Prior to 1993, the Company had an arrangement with CIGNA Property and Casualty
Insurance Company (CIGNA P&C), an affiliate, whereby the Company guaranteed the
performance of certain investments purchased to support a group accident and
health reinsurance agreement between the companies. (See Note 11 for additional
information.) In accordance with 1993 amendments to the reinsurance treaties,
the Company and CIGNA P&C mutually agreed to terminate this arrangement. The
principal amount of such investments guaranteed by the Company was $150 million
as of December 31, 1992. A loss of $2 million related to this guarantee was
reported by the Company in 1992.
The Company also guarantees a minimum level of benefits for certain separate
account contracts and, in the event that separate account assets are
insufficient to fund minimum policy benefits, the Company is obligated to fund
the difference. As of December 31, 1994 and 1993, the amount of minimum benefit
guarantees for separate account contracts was $4.8 billion and $4.9 billion,
respectively. Reserves in addition to the separate account liabilities are
established when the Company believes a payment will be required under one of
these guarantees. As of December 31, 1994 and 1993, reserves of $6 million were
recorded. Guarantee fees are part of the overall management fee charged to
separate accounts and are recognized in income as earned.
Although the ultimate outcome of any loss contingencies arising from the
Company's financial guarantees may adversely affect results of operations in
future periods, they are not expected to have a material adverse effect on the
Company's liquidity or financial condition.
B) REGULATORY AND INDUSTRY DEVELOPMENTS: The Company's businesses are subject
to a changing social, economic, legal, legislative and regulatory environment
which could adversely affect them. Some of the changes include initiatives to:
restrict insurance pricing and the application of underwriting standards; reform
health care; restrict investment practices; and expand regulation.
Proposals on national health care reform were under consideration in 1994
which could have significantly changed the way health care is financed and
delivered in the United States. Congress recessed in 1994 without enacting
health care reform. New legislation could be introduced in Congress in 1995;
however, comprehensive national reform is not likely to be proposed in 1995.
Instead, the Company expects federal and state proposals seeking modest
insurance reform and limitations on the formation and operation of efficient
health care networks. Due to uncertainties associated with the timing and
content of any health care legislation, the effect on the Company's future
results of operations, liquidity or financial condition cannot be reasonably
estimated at this time.
29
<PAGE>
The National Association of Insurance Commissioners (NAIC) has developed model
solvency-related guidelines ("risk-based capital" rules) to strengthen solvency
regulation of insurance companies. Depending on the ratio of the insurer's
surplus to its risk-based capital, the insurer could be subject to various
regulatory actions ranging from increased scrutiny to conservatorship. As of
December 31, 1994, the Company was adequately capitalized under the risk-based
capital rules. Also, the NAIC is addressing a proposal that would limit the
types and amounts of investments held. The Company does not expect such
guidelines to have a material adverse effect on its future results of
operations, liquidity or financial condition.
Unfavorable economic conditions have contributed to an increase in the number
of insurance companies that are impaired or insolvent. This is expected to
result in an increase in mandatory assessments by state guaranty funds of, or
voluntary payments by, solvent insurance companies to cover losses to
policyholders of insolvent or rehabilitated companies. Mandatory assessments,
which are subject to statutory limits, can be partially recovered through a
reduction in future premium taxes in some states. Assessments against the
Company were $12 million, $10 million and $7 million for 1994, 1993 and 1992,
respectively, before giving effect to future premium tax recoveries. Although
future assessments and payments may adversely affect results of operations in
future periods, such amounts are not expected to have a material adverse effect
on the Company's liquidity or financial condition.
The eventual effect on the Company of the changing environment in which it
operates remains uncertain.
C) LITIGATION:
The Company is routinely engaged in litigation incidental to its business,
including litigation associated with syndicated investment products. While the
outcome of all litigation involving the Company, including insurance-related
litigation, cannot be determined, litigation is not expected to result in losses
that differ from recorded reserves by amounts that would be material to results
of operations, liquidity or financial condition.
NOTE 10 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure requirements
(insurance contracts, real estate, goodwill and taxes are excluded) are carried
in the financial statements at amounts that approximate fair values, unless
otherwise indicated in the table below. The fair values used for financial
instruments are estimates that in many cases may differ significantly from the
amounts that could be realized upon immediate liquidation. In cases where market
prices are not available, estimates of fair value are based on discounted cash
flow analyses which utilize current interest rates for similar financial
instruments with comparable terms and credit quality. The fair value of
liabilities for contractholder deposit funds was estimated using the amount
payable on demand and, for those not payable on demand, discounted cash flow
analyses.
The following table presents carrying amounts and estimated fair values as of
December 31 for the Company's financial instruments that are not carried in the
financial statements at amounts approximating fair value.
<TABLE>
<CAPTION>
1994 1993
- ----------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
(IN MILLIONS) Amount Value Amount Value
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed maturities-held to maturity................... $ 10,061 $ 10,075 $ 9,950 $ 11,158
Mortgage loans...................................... $ 8,975 $ 8,610 $ 8,854 $ 9,053
Contractholder deposit funds --
non-insurance products............................. $ 18,561 $ 18,512 $ 19,042 $ 20,249
- ----------------------------------------------------------------------------------------------------
</TABLE>
For additional information on fair values of fixed maturities, see Note 2(A).
Fair values of off-balance-sheet financial instruments as of December 31, 1994
and 1993 were not material.
30
<PAGE>
NOTE 11 -- RELATED PARTY TRANSACTIONS
The Company has ceded group accident and health business under an
experience-rated stop loss agreement to CIGNA P&C. Reinsurance recoverables from
CIGNA P&C were $1.3 billion and $1.5 billion at December 31, 1994 and 1993,
respectively. During 1993 and 1992, the Company earned experience-rated refunds
from CIGNA P&C, net of premiums ceded, of $63 million, and $25 million,
respectively. Effective January 1, 1995 the reinsurance arrangement was
terminated. Effective with this termination, reserves of $312 million, primarily
related to long-term disability business, were recaptured, with CIGNA P&C
assuming responsibility for runout claims on the remaining reserves. Assets,
principally mortgages, with a fair market value equal to reserves were received
as part of the recapture.
The Company has assumed the settlement annuity and group pension business
written by Life Insurance Company of North America (LINA), an affiliate.
Reserves held by the Company with respect to this business were $1.8 billion at
December 31, 1994 and 1993.
The Company cedes all long-term disability business to LINA. Reinsurance
recoverables from LINA at December 31, 1994 and 1993 were $921 million and $911
million, respectively.
The Company had lines of credit available from affiliates totaling $600
million at both December 31, 1994 and 1993. All borrowings are payable upon
demand with interest rates equivalent to CIGNA's average monthly short-term
borrowing rate plus 1/4 of 1%. Interest expense was $1 million for 1994 and $3
million for 1993 and 1992. As of December 31, 1994 and 1993, there were no
borrowings outstanding under such lines.
The Company extended lines of credit to affiliates totalling $600 million at
December 31, 1994 and 1993. All loans are payable upon demand with interest
rates equivalent to CIGNA's average monthly short-term borrowing rate. As of
December 31, 1994 and 1993, the Company had $1.5 million and $2.5 million,
respectively, in outstanding loans to affiliates under such lines.
The Company, together with other CIGNA subsidiaries, has entered into a
pooling arrangement known as the CIGNA Corporate Liquidity Account (the Account)
for the purpose of maximizing earnings on funds available for short-term
investments. As of December 31, 1994 and 1993, the Company had a balance in the
Account of $259 million and $99 million, respectively.
CIGNA allocates to the Company its share of operating expenses incurred at the
corporate level. The Company also allocates a portion of its operating expenses
to affiliated companies on whose behalf it performs certain administrative
services.
31
<PAGE>
PART C. OTHER INFORMATION
<PAGE>
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(1)
Registrant -- Not Applicable. Registrant did not commence operations
until April 10, 1995.
(2)
Depositor
(A) Statements of Income and Retained Earnings for the Years Ended
December 31, 1994, 1993, and 1992.
(B) Balance Sheets As of December 31, 1994 and 1993.
(C) Statements of Cash Flows for the Years Ended December 31, 1994, 1993
and 1992.
(b) Exhibits
(1)
Resolution of Board of Directors Authorizing Establishment of Registrant*
(2)
Not Applicable
(3)
Form of Selling Agreement among Connecticut General Life Insurance
Company, CIGNA Financial Advisors, Inc. as principal underwriter, and
selling dealers.
(4)
(A)__Form of Connecticut General Life Insurance Company Variable Annuity
Contract Form Number AN 400, together with Optional Methods of Settlement
Riders (Form Numbers AR 400 and AR 401).*
(B)__Form of Connecticut General Life Insurance Company Group Variable
Annuity Contract Form Number AN 423, together with Optional Methods of
Settlement Riders (Form Numbers AR 423 and AR 423-U).
(C)__Form of Connecticut General Life Insurance Company Group Variable
Annuity Certificate Form Number AN 424, together with Optional Methods of
Settlement Riders (Form Numbers AR 424 and AR 424-U).
(5)
(A)__Form of Application Which May Be Used in Connection with the
Contract Shown As Exhibit (4)(A), and Addendum (Form Numbers B10242 and
B10243).*
(B)__Form of Application Which May Be Used in Connection with the
Contract Shown As Exhibit (4)(B) (Form Number B10279).
(C)__Form of Application Which May Be Used in Connection with the
Certificate Shown As Exhibit (4)(C), and Addendum (Form Numbers B10282
and B10281).
(6)
(A) Certificate of Incorporation (Charter) of Connecticut General Life
Insurance Company, as amended
(B) By-Laws of Connecticut General Life Insurance Company
(7)
Not Applicable
(8)
Not Applicable
(9)
Opinion of Robert A. Picarello, Esq., Chief Counsel of Connecticut
General Life Insurance Company
(10)
(A) Consent of Independent Accountants
(B) Consent of Counsel (included in Exhibit 9)
(11)
Not Applicable
(12)
Not Applicable
(13)
Schedules for Computation of Performance Data*
(14)
Not Applicable
* Incorporated by reference to previous filings of this Registration Statement
(Filed August 19, 1994)
1
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The principal business address of each of the directors and officers of
Connecticut General Life Insurance Company (the "Company") is the company's Home
Office, 900 Cottage Grove Road, Hartford, Connecticut 06152.
DIRECTORS AND OFFICERS OF DEPOSITOR
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH DEPOSITOR
- ----------------------- ---------------------------------------------------------------------
<S> <C>
Thomas C. Jones President (Principal Executive Officer)
James T. Kohan Vice President and Actuary (Principal Financial Officer)
Robert Moose Vice President (Principal Accounting Officer)
David C. Kopp Corporate Secretary
Harold W. Albert Director
S. Tyrone Alexander Director
Martin A. Brennan Director
Robert W. Burgess Director
John G. Day Director
R. Chris Doerr Director
Lawrence P. English Director
Joseph M. Fitzgerald Director
Arthur C. Reeds, III Director
W. Allen Schaffer, MD Director
Patricia L. Rowland Director
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
There follows a chart of persons controlled by or under common control with
the Depositor. The consolidated financial statements of the Depositor include
the accounts of the Depositor and its wholly-owned subsidiaries.
ITEM 27. NUMBER OF PURCHASERS
As of April 7, 1995 there were 0 owners of the Contracts.
ITEM 28. INDEMNIFICATION
The following provisions regarding the Indemnification of Directors and
Officers of the Registrant are applicable:
CONNECTICUT LAW. Except where an applicable insurance policy is procured,
Connecticut General Statutes ("C.G.S.") Section 33-320a is the sole source of
indemnification rights for directors and officers of Connecticut corporations
and for persons who may be deemed to be controlling persons by reason of their
status as a shareholder, director, officer, employee or agent of a Connecticut
corporation. Under C.G.S. Section 33-320a, a corporation shall indemnify any
director or officer who was or is a party, or was threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter referred to as
"proceeding") by virtue of the fact that he or the person whose legal
representative he is: (i) is or was a director or officer of the corporation;
(ii) while a director or an officer of the corporation, is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise (hereinafter referred to as "enterprise"), other than
an employee benefit plan or trust; or (iii) while a director or an officer of
the corporation, is or was a director or officer serving at the request of the
corporation as a fiduciary or an employee benefit plan or trust maintained for
the benefit of employees of the corporation or any other enterprise, against
"covered expenditures" if (and only if) his conduct met the applicable statutory
eligibility standard. The types of expenditures which are covered and the
statutory eligibility standard vary according to the type of proceeding to which
the director or officer is or was a party or was threatened to be made a party.
According to C.G.S. Section 33-320a, in non-derivative proceedings other
than ones brought in connection with an alleged claim based upon the purchase or
sale by a director or officer of securities of the corporation or of another
enterprise, which the director or officer serves or served at the request of the
corporation, the corporation shall indemnify
2
<PAGE>
a director or officer against judgments, fines, penalties, amounts paid in
settlement and reasonable expenses, including attorney's fees, actually incurred
by him in connection with the proceeding, or any appeal therein, IF AND ONLY IF
he acted (i) in good faith and (ii) in a manner he reasonably believed to be in
the best interests of the corporation or, in the case of a person serving as a
fiduciary of any employee benefit plan or trust, in a manner he reasonably
believed to be in the best interests of the corporation or in the best interest
of the participants and beneficiaries of such employee benefit plan or trust and
consistent with the provisions of such employee benefit plan or trust. However,
where the proceeding brought is criminal in nature, C.G.S. Section 33-320a
requires that the director or officer must satisfy the additional condition that
he had no reasonable cause to believe that his conduct was unlawful in order to
be indemnified. A director or officer also will be entitled to indemnification
as described above if (i) he is successful on the merits in the defense of any
non-derivative proceeding brought against him or (ii) a court shall have
determined that in view of all the circumstances he is fairly and reasonably
entitled to be indemnified. The decision about whether the director or officer
qualifies for indemnification under C.G.S. Section 33-320a may be made (i) in
writing by a majority of those members of the board of directors who were not
parties to the proceeding in question, (ii) in writing by independent legal
counsel selected by a consent in writing signed by a majority of those directors
who were not parties to the proceeding, or (iii) by the shareholders of the
corporation at a special or annual meeting by an affirmative vote of at least a
majority of the voting power of shares not owned by parties to the proceeding. A
director or officer also may apply to a court of competent jurisdiction for
indemnification even though he previously applied to the board, independent
legal counsel or the shareholders and his application for indemnification was
rejected.
For purposes of C.G.S. Section 33-320a, the termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not create, of itself, a presumption that the director or
officer did not act in good faith or in a manner which that director or officer
did not believe reasonably to be in the best interests of the corporation or of
the participants and beneficiaries of an employee benefit plan or trust and
consistent with the provisions of such plan or trust. Likewise, the termination
of a criminal act or proceeding shall not create, of itself, a presumption that
the director or officer had reasonable cause to believe that his conduct was
unlawful.
In non-derivative proceedings based on the purchase or sale of securities of
the corporation or of another enterprise, which the director or officer serves
or served at the request of the corporation, C.G.S. Section 33-320a provides
that the corporation shall indemnify the director or officer only after a court
shall have determined upon application that, in view of all the circumstances,
the director or officer is fairly and reasonably entitled to be indemnified.
Furthermore, the expenditures for which the director or officer shall be
indemnified shall be only such amount as the court determines to be appropriate.
Pursuant to C.G.S. Section 33-320a, where a director or officer was or is a
party or was threatened to be made a party to a derivative proceeding, the
corporation shall indemnify him against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the proceeding or any
appeal therein, in relation to matters as to which he is finally adjudged not to
have breached his duty to the corporation. The corporation also shall indemnify
a director or officer where the court determines that, in view of all the
circumstances, such person is fairly and reasonably entitled to be indemnified;
however, in such a situation, the individual shall be indemnified only for such
amount as the court determines to be appropriate. Furthermore, the statute
provides that the corporation shall not indemnify a director or officer for
amounts paid to the corporation, to a plaintiff or to counsel for a plaintiff in
settling or otherwise disposing of a threatened or pending action, with or
without court approval, or for expenses incurred in defending a threatened
action or a pending action which is settled or otherwise disposed of without
court approval.
C.G.S. Section 33-320a also provides that expenses incurred in defending a
proceeding may be paid by the corporation in advance of the final disposition of
such proceeding upon authorization of the board of directors, provided said
expenses are indemnifiable under the statute and the director or officer agrees
to repay such amount if he is later found not entitled to indemnification by the
corporation.
Lastly, C.G.S. Section 33-320a is intended to be an exclusive statute. A
corporation established under Connecticut statute cannot indemnify a director or
officer (other than a director or officer who is or was serving at the request
of the corporation as a director, officer, partner, trustee, employee or agent
of another enterprise), to an extent either greater or less than that authorized
by the statute, and any provision in the certificate of incorporation, the
by-laws, a shareholder or director resolution, or agreement or otherwise that is
inconsistent with the statute is invalid. Notwithstanding the above,
3
<PAGE>
C.G.S. Section 33-320a specifically authorizes a corporation to procure
insurance providing greater indemnification rights than those set out in the
statute the premium cost of which may be shared with the director or officer on
such basis as may be agreed upon.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provision, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The directors and officers may also be covered by an errors and omissions or
other insurance policies.
ITEM 29. PRINCIPAL UNDERWRITER
The Registrant's principal underwriter is CIGNA Financial Advisors, Inc.
("CFA"). CFA also acts as principal underwriter of Connecticut General Life
Insurance Company's CG Variable Annuity Separate Account, a registered unit
investment trust issuing variable annuity contracts, CG Variable Life Insurance
Separate Account I, a registered unit investment trust issuing variable life
insurance policies, and a separate account issuing variable life insurance
contracts not required to be registered under the Investment Company Act of
1940. CFA's address is 900 Cottage Grove Road, Hartford, Connecticut 06152.
DIRECTORS AND OFFICERS OF PRINCIPAL UNDERWRITER
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH UNDERWRITER
- -------------------- ------------------------------------------------------------------------
<S> <C>
Edward M. Berube President and Director
John Wilkinson Director
Roy H. Bubbs Vice President
Robert F. Clark Vice President
Karen R. Matheson Vice President
Allan P. Wick Vice President and Treasurer
Robert A. Picarello Chief Counsel and Assistant Secretary
Robert B. Pinkham Assistant Vice President
David C. Kopp Secretary
David A. Carlson Assistant Secretary
Howard R. Loos Assistant Secretary
Tina L. O'Connor Assistant Secretary
Pamela S. Williams Assistant Secretary
Charlotte J. Cardone Assistant Treasurer
Gail B. Marcus Assistant Treasurer
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The records required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder are
maintained by Connecticut General Life Insurance Company at its Home Office at
900 Cottage Grove Road, Hartford, CT 06152.
ITEM 31. MANAGEMENT SERVICES
All management policies are discussed in Part A or Part B.
4
<PAGE>
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes that it will file a post effective amendment to
this registration statement under the Securities Act of 1933 as frequently as
necessary to ensure that the audited financial statements in the registration
statement are never more than 16 months old for so long as Premium Payments
under the Contracts may be accepted.
(b) Registrant undertakes that it will include either (i) a postcard or
similar written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information or (ii) a
space in the Contract application that an applicant can check to request a
Statement of Additional Information.
(c) Registrant undertakes to deliver promptly, upon written or oral request
made to Connecticut General Life Insurance Company at the address or phone
number listed in the Prospectus, any Statement of Additional Information and any
financial statements required by Form N-4 to be made available to applicants or
owners.
SECTION 403(B) REPRESENTATION
Registrant represents that it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88),
regarding Sections 22(e), 27(c)(1) and 27(d) of the Investment Company Act of
1940, in connection with redeemability restrictions on Section 403(b) Contracts,
and that paragraphs numbered (1) through (4) of that letter will be complied
with.
5
<PAGE>
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this Post-Effective Amendment to its
Registration Statement on Form N-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Bloomfield and State of
Connecticut on this 16th day of June, 1995.
CG VARIABLE ANNUITY SEPARATE ACCOUNT
II
(Name of Registrant)
By: /s/ THOMAS C. JONES
-----------------------------------
Thomas C. Jones
PRESIDENT
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
(Name of Depositor)
By: /s/ THOMAS C. JONES
-----------------------------------
Thomas C. Jones
PRESIDENT
As required by the Securities Act of 1933, this Amendment to Registrant's
Registration Statement has been signed below on June 16, 1995 by the following
persons, as officers and directors of the Depositor, in the capacities
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------ ---------------------------------------------------------
<C> <S>
/S/ THOMAS C. JONES
-------------------------------------- President (Principal Executive Officer)
Thomas C. Jones
*
-------------------------------------- Vice President and Actuary
James T. Kohan (Principal Financial Officer)
*
-------------------------------------- Vice President
Robert Moose (Principal Accounting Officer)
*
-------------------------------------- Director
Harold W. Albert
*
-------------------------------------- Director
S. Tyrone Alexander
*
-------------------------------------- Director
Martin A. Brennan
</TABLE>
<PAGE>
<TABLE>
<C> <S>
*
-------------------------------------- Director
Robert W. Burgess
*
-------------------------------------- Director
John G. Day
*
-------------------------------------- Director
R. Chris Doerr
*
-------------------------------------- Director
Lawrence P. English
*
-------------------------------------- Director
Joseph M. Fitzgerald
*
-------------------------------------- Director
Arthur C. Reeds, III
*
-------------------------------------- Director
Patricia L. Rowland
*
-------------------------------------- Director
W. Allen Schaffer, M.D.
*By /s/ ROBERT A. PICARELLO
----------------------------------
Robert A. Picarello
ATTORNEY-IN-FACT
</TABLE>
<PAGE>
POWER OF ATTORNEY
We, the undersigned directors and officers of Connecticut General Life
Insurance Company, hereby severally constitute and appoint David C. Kopp and
Robert A. Picarello, and each of them individually, our true and lawful
attorneys-in-fact, with full power to them and each of them to sign for us, in
our names and in the capacities indicated below, any and all amendments to
Registration Statement No. 33-83020 filed with the Securities and Exchange
Commission under the Securities Act of 1933, hereby ratifying and confirming our
signatures as they may be signed by either of our attorneys-in-fact to any such
Registration Statement.
WITNESS our hands and common seal on this 31st day of May, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------ ---------------------------------------------------------
<C> <S>
/S/ THOMAS C. JONES
-------------------------------------- President (Principal Executive Officer)
Thomas C. Jones
/S/ JAMES T. KONAN
-------------------------------------- Vice President and Actuary (Principal Financial Officer)
James T. Konan
/S/ ROBERT MOOSE
-------------------------------------- Vice President (Principal Accounting Officer)
Robert Moose
/S/ HAROLD W. ALBERT
-------------------------------------- Director
Harold W. Albert
/S/ S. TYRONE ALEXANDER
-------------------------------------- Director
S. Tyrone Alexander
/S/ MARTIN A. BRENNAN
-------------------------------------- Director
Martin A. Brennan
/S/ ROBERT W. BURGESS
-------------------------------------- Director
Robert W. Burgess
/S/ JOHN G. DAY
-------------------------------------- Director
John G. Day
/S/ R. CHRIS DOERR
-------------------------------------- Director
R. Chris Doerr
/S/ LAWRENCE P. ENGLISH
-------------------------------------- Director
Lawrence P. English
/S/ JOSEPH M. FITZGERALD
-------------------------------------- Director
Joseph M. Fitzgerald
/S/ ARTHUR C. REEDS, III
-------------------------------------- Director
Arthur C. Reeds, III
/S/ W. ALLEN SCHAFFER, M.D.
-------------------------------------- Director
W. Allen Schaffer, M.D.
/S/ PATRICIA L. ROWLAND
-------------------------------------- Director
Patricia L. Rowland
</TABLE>
<PAGE>
Exhibit 3
BROKER-DEALER SELLING AGREEMENT
AGREEMENT by and between Connecticut General Life Insurance Company, a
Connecticut corporation ("CG Life"), CIGNA Financial Advisors, Inc. ("CFA"), a
registered broker-dealer with the Securities and Exchange Commission ("SEC")
under the Securities Exchange Act of 1934, and a member of the National
Association of Securities Dealers, Inc. ("NASD"); and __________________________
_____ ("Broker-Dealer"), also a registered broker-dealer with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 and a member of
the NASD.
WITNESSETH:
WHEREAS, CG Life proposes to have Broker-Dealer's registered
representatives ("Representatives") who are also licensed to sell insurance in
appropriate jurisdictions solicit and sell certain Variable Insurance Contracts
(the "Policies") more particularly described in this Agreement and which are
deemed to be securities under the Securities Act of 1933; and
WHEREAS, CG Life has appointed CFA as the Principal Distributor of the
Policies and has agreed with CFA that CFA shall be responsible for the training
and supervision of such Representatives, with respect to the solicitation and
offer or sale of any of the Policies, and also for the training and supervision
of any other "persons associated" with Broker-Dealer who are engaged directly or
indirectly therewith; and CFA proposes to delegate, to the extent legally
permitted, said supervisory duties to Broker-Dealer; and
WHEREAS, CG Life and CFA propose to have Broker-Dealer provide certain
administrative services as described within this Agreement to facilitate
solicitations for and sales of the Policies.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. APPOINTMENT OF BROKER-DEALER. CG Life and CFA hereby appoint
Broker-Dealer to sell the Policies through its Representatives and to provide
certain administrative services to facilitate solicitations for and sales of the
Policies.
2. THE POLICIES. The Policies issued by CG Life to which this Agreement
applies are listed in Exhibit A. Exhibit A may be amended from time-to-time by
CG Life. CG Life in its sole
<PAGE>
discretion and without notice to Broker-Dealer, may suspend sales of any
Policies or may amend any policies or contracts evidencing such Policies if, in
CG Life's opinion, such suspension or amendment is; (1) necessary for compliance
with federal, state, or local laws, regulations, or administrative order(s); or,
(2) necessary to prevent administrative or financial hardship to CG Life. In
all other situations, CG Life shall provide 30 days notice to Broker-Dealer
prior to suspending sales of any Policies or amending any policies or contracts
evidencing such Policies.
3. SECURITIES LICENSING. Broker-Dealer shall, at all times when
performing its functions under this agreement, be registered as a securities
broker with the SEC and NASD and licensed or registered as a securities
broker-dealer in the states and other local jurisdictions that require such
licensing or registration in connection with variable insurance contract sales
activities or the supervision of Representatives who perform such activities in
the respective location.
4. INSURANCE LICENSING. Broker-Dealer shall, at all times when
performing its functions under this agreement, be validly licensed as an
insurance agency in the states and other local jurisdictions that require such
licensing or registration in connection with Broker-Dealer's variable insurance
contract sales activities, or maintain a validly licensed insurance agency
subsidiary in those states in which Broker-Dealer cannot obtain a corporate
agent's license.
5. APPOINTMENTS. Broker-Dealer shall assist CG Life in the appointment
of Representatives under the applicable insurance laws to sell the Policies.
Broker-Dealer shall fulfill all requirements set forth in the General Letter of
Recommendation, attached as Exhibit B, in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of CG Life.
All such licensing/appointment papers should be submitted to CG Life or its duly
appointed agent by Broker-Dealer. Notwithstanding such submission, CG Life
shall have sole discretion to appoint, refuse to appoint, discontinue, or
terminate the appointment of any Representative as an insurance agent of CG
Life.
6. SECURING APPLICATIONS. All applications for Policies shall be made on
application forms supplied by CG Life and all payments collected by
Broker-Dealer or any Representative of Broker-Dealer shall be remitted promptly
in full, together with such application forms and any other required
documentation, directly to CG Life at the address indicated on such application
or to such other address as CG Life may, from time-to-time, designate
<PAGE>
in writing. Broker-Dealer shall review all such applications for completeness.
Checks or money orders in payment on any such Policy shall be drawn to the order
of "Connecticut General Life Insurance Company." All applications are subject
to acceptance or rejection by CG Life at its sole discretion. All records or
information obtained hereunder by Broker-Dealer shall not be disclosed or used
except as expressly authorized herein, and Broker-Dealer will keep such records
and information confidential, to be disclosed only as authorized or if expressly
required by federal or state regulatory authorities.
7. MONEY RECEIVED BY BROKER-DEALER. All money payable in connection with
any of the Policies, whether as premium or otherwise, and whether paid by or on
behalf of any policyholder, contract owner or anyone else having an interest in
the Policies, is the property of CG Life and shall be transmitted immediately in
accordance with the administrative procedures of CG Life without any deduction
or offset for any reason, including by example, but not limitation, any
deduction or offset for compensation claimed by Broker-Dealer.
8. SUPERVISION OF REPRESENTATIVES. Broker-Dealer shall have full
responsibility for the training and supervision of all Representatives
associated with Broker-Dealer who are engaged directly or indirectly in the
offer or sale of the Policies, and all such persons shall be subject to the
control of Broker-Dealer with respect to such persons' securities regulated
activities in connection with the Policies. Broker-Dealer will cause the
Representatives to be trained in the sale of the Policies; will cause such
Representatives to qualify under applicable federal and state laws to engage in
the sale of the Policies; will cause such Representatives to be registered
representatives of Broker-Dealer before such Representatives engage in the
solicitation of applications for the Policies; and will cause such
Representatives to limit solicitation of applications for the Policies to
jurisdictions where CG Life has authorized such solicitation. Broker-Dealer
shall cause such Representatives' qualifications to be certified to the
satisfaction of CFA and shall notify CFA if any Representative ceases to be a
registered representative of Broker-Dealer or ceases to maintain the proper
licensing required for the sale of the Policies. Each party shall be liable for
its own negligence and misconduct hereunder.
9. REPRESENTATIVES INSURANCE COMPLIANCE. Broker-Dealer, prior to
allowing its Representatives to solicit for sales or sell the Policies, shall
require such representatives to be validly insurance licensed, registered and
appointed by CG Life as a variable annuity agent in accordance with the
jurisdictional
<PAGE>
requirements of the place where the solicitations and sales take place as well
as the solicited person's or entity's place of residence.
10. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker-Dealer shall fully comply with the requirements of the
National Association of Securities Dealers, Inc. and of the Securities Exchange
Act of 1934 and all other applicable federal or state laws and will establish
such rules and procedures as may be necessary to cause diligent supervision of
the securities activities of the Representatives. Upon request by CFA,
Broker-Dealer shall furnish such appropriate records as may be necessary to
establish such diligent supervision.
11. NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of Broker-Dealer or
otherwise fails to meet the rules and standards imposed by Broker-Dealer on its
Representatives, Broker-Dealer shall advise CFA of this fact and shall
immediately notify such Representative that he or she is no longer authorized to
sell the Policies and Broker-Dealer shall take whatever additional action may be
necessary to terminate the sales activities of such Representative relating to
the Policies.
12. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING. Broker-Dealer
shall be provided, without any expense to Broker-Dealer, with prospectuses
relating to the Policies and such other material as CFA determines to be
necessary or desirable for use in connection with sales of the Policies. No
sales promotion materials or any advertising relating to the Policies shall be
used by Broker-Dealer unless the specific item has been approved in writing by
CFA.
In addition, Broker-Dealer shall not print, publish or distribute any
advertisement, circular or any document relating to CG Life unless such
advertisement, circular or document shall have been approved in writing by CG
Life; provided, however, that nothing herein shall prohibit Broker-Dealer from
advertising variable insurance in general or on a generic basis.
Upon termination of this Agreement, all prospectuses, sales promotion
material, advertising, circulars, and documents relating to the sales of the
Policies shall be promptly turned over to CG Life free from any claim or
retention of rights by the Broker-Dealer.
13. RIGHT OF REJECTION. Broker-Dealer and/or CG Life each in their sole
discretion, may reject any applications or payments
<PAGE>
remitted by Representative through the Broker-Dealer and may refund an
applicant's payments to the applicant. In the event such refunds are made and
if Broker-Dealer has received compensation based on an applicant's payment that
is refunded, Broker-Dealer shall promptly repay such compensation to CG Life.
If repayment is not promptly made, CG Life may at its sole option deduct any
amounts due it from Broker-Dealer from future commissions otherwise
payable to Broker-Dealer. This provision shall survive termination of this
Agreement.
14. COMPENSATION.
(a) Sales concessions payable to Broker-Dealer in connection with the
Policies shall be paid by CG Life to the Broker-Dealer. CFA will provide
Broker-Dealer with a copy of CG Life's current Schedule of Sales Concessions.
These fees and commissions will be paid as a percentage of premiums received in
cash or other legal tender and accepted by CG Life on applications obtained by
the various Representatives of the Broker-Dealer. Upon termination of this
Agreement, all compensation to the Broker-Dealer hereunder shall cease; however,
Broker-Dealer shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due CG Life hereunder.
(b) CG Life shall pay any sales concessions due Broker-Dealer within
fifteen (15) days after the end of the calendar month in which premiums upon
which such sales concessions are based are accepted by CG Life.
(c) CG Life may, upon at least ten (10) days prior written notice to
Broker-Dealer, change the Schedule of Sales Concessions. Any such change shall
be by written amendment of the particular schedule or schedules and shall apply
to compensation due on applications received by CG Life after the effective date
of such notice.
(d) If Broker-Dealer or any Representative of Broker-Dealer shall
rebate or offer to rebate all or any part of a premium on a Policy issued by CG
Life in violation of applicable state insurance laws or regulations, or if
Broker-Dealer or any Representative of Broker-Dealer shall withhold any premium
on any Policy issued by CG Life, the same may be grounds for termination of this
Agreement by CG Life. If Broker-Dealer or any Representative of Broker-Dealer
shall at any time induce or endeavor to induce any owner of a Policy to
relinquish the Policy except under circumstances where there is reasonable
grounds for believing the policy, contract or certificate is not suitable for
<PAGE>
such person, any and all compensation due Broker-Dealer hereunder shall cease
and terminate.
(e) Nothing in this Agreement shall be construed as giving
Broker-Dealer the right to incur any indebtedness on behalf of CG Life.
Broker-Dealer hereby authorizes CG Life to set off liabilities of Broker-Dealer
to CG Life against any and all amounts otherwise payable to Broker-Dealer by CG
Life.
15. POLICY DELIVERY. CG Life may, upon written request of Broker-Dealer,
transmit Policies to Broker-Dealer for delivery to Policyowners. Broker-Dealer
hereby agrees to deliver all such Policies to Policyowners within Ten (10) days
of their receipt by Broker-Dealer from CG Life. Broker-Dealer agrees to
indemnify and hold-harmless CG Life for any and all losses caused by Broker-
Dealer's failure to perform the undertakings described in this paragraph.
Broker-Dealer hereby authorizes CG Life to set off any amount it owes CG Life
under this paragraph against any and all amounts otherwise payable to Broker-
Dealer by CG Life.
16. WAIVER. Failure of any party to insist upon strict compliance with
any of the conditions of this Agreement shall not be construed as a waiver of
any of the conditions, but the same shall remain in full force and effect. No
waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver.
17. INDEPENDENT CONTRACTORS. CG Life and CFA are independent contractors
with respect to Broker-Dealer and to Representatives.
18. LIMITATIONS. No party other than CG Life shall have the authority on
behalf of CG Life to make, alter, or discharge any policy, contract, or
certificate issued by CG Life, to waive any forfeiture or to grant, permit, nor
extend the time for making any payments nor to guarantee earnings or rates, nor
to alter the forms which CG Life may prescribe or substitute other forms in
place of those prescribed by CG Life, nor to enter into any proceeding in a
court of law or before a regulatory agency in the name of or on behalf of CG
Life.
19. FIDELITY BOND. Broker-Dealer represents that all directors, officers,
employees and Representatives of Broker-Dealer who are licensed pursuant to this
Agreement as CG Life agents for state insurance law purposes or who have access
to funds of CG Life, including but not limited to funds submitted with
applications for the Policies or funds being returned to owners,
<PAGE>
are and shall be covered by a blanket fidelity bond, including coverage for
larceny and embezzlement, issued by a reputable bonding company. This bond
shall be maintained by Broker-Dealer at Broker-Dealer's expense. Such bond
shall be, at least, of the form, type and amount required under the NASD Rules
of Fair Practice. CG Life may require evidence, satisfactory to it, that such
coverage is in force and Broker-Dealer shall give prompt written notice to CG
Life of any notice of cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to CG Life to the extent of CG Life's loss due to activities covered by
the bond. If there is any deficiency amount, whether due to a deductible or
otherwise, Broker-Dealer shall promptly pay CG Life such amount on demand and
Broker-Dealer hereby indemnifies and holds harmless CG Life from any such
deficiency and from the costs of collection thereof (including reasonable
attorneys' fees).
20. BINDING EFFECT. This Agreement shall be binding on and shall inure to
the benefit of the parties to it and their respective successors and assigns;
provided that Broker-Dealer may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of CG Life, which
consent shall not be unreasonably withheld.
21. REGULATIONS. All parties agree to observe and comply with the
existing laws and rules or regulations of applicable local, state, or federal
regulatory authorities and with those which may be enacted or adopted during the
term of this Agreement regulating the business contemplated hereby in any
jurisdiction in which the business described herein is to be transacted, and to
provide information or reports with respect to their duties hereunder pursuant
to request by any regulatory authority having jurisdiction with respect thereto.
22. NOTICES. All notices or communications shall be sent to the addresses
shown below or to such other address as the party may request by giving written
notice to the other parties:
Connecticut General Life Insurance Company
Hartford, CT 06152
Attn: Annuity Marketing Department
S - 351
CIGNA Financial Advisors, Inc.
Hartford, CT 06152
<PAGE>
Broker-Dealer:
----------------------------------------
----------------------------------------
----------------------------------------
23. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the state of Connecticut.
24. AMENDMENT OF AGREEMENT. CG Life reserves the right to amend this
Agreement at any time, and the submission of an application by Broker-Dealer
after notice of any such amendment has been sent to the other parties shall
constitute the other parties' agreement to any such amendment.
25. TERMINATION. This Agreement may be terminated, without cause, by any
party upon thirty (30) days prior written notice; and may be terminated, for
failure to perform satisfactorily or other cause, by any party immediately; and
shall be terminated if CFA or Broker-Dealer shall cease to be registered
Broker-Dealers under the Securities Exchange Act of l934 and members of the
NASD.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By:
-------------------------------------
Roy H. Bubbs, Senior Vice President
CIGNA FINANCIAL ADVISORS, INC.
By:
-------------------------------------
Roy H. Bubbs, Vice President
BROKER-DEALER
<PAGE>
- -------------------------------------------
Name of Firm
Name:
-------------------------------------
(Please Type)
By:
-------------------------------------
(Signature)
Dated:
-----------------------------------
<PAGE>
EXHIBIT A
[Available Policy Forms]
<PAGE>
EXHIBIT B
General Letter of Recommendation
BROKER-DEALER hereby certifies to Connecticut General Life Insurance
Company ("CG Life") that all the following requirements will be fulfilled in
conjunction with the submission of appointment papers for all applicants as
agents of CG Life submitted by BROKER-DEALER. BROKER-DEALER will, upon request,
forward proof of compliance with same to CG Life in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence, business reputation, and experience
and declare that each applicant is personally known to us, has been
examined by us, is known to be of good moral character, has a good business
reputation, is reliable, is financially responsible and is worthy of
appointment as a variable annuity agent of CG Life. This inquiry and
background investigation has included a credit and criminal check on each
applicant. Based upon our investigation, we vouch for each applicant and
certify that each individual is trustworthy, competent and qualified to act
as an agent for CG Life to hold himself out in good faith to the general
public.
2. We have on file a B-300, B-301, or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements
for the registration of each applicant as a registered representative
through our NASD member firm, and each applicant is presently registered as
an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license or appointment and
all the findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state each applicant is licensed in, and that, all such persons have
fulfilled the appropriate examination, education and training requirements.
4. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will
be properly protected.
5. We will not permit any applicant to transact insurance as an agent until
duly licensed and appointed by CG Life. No applicants have been given a
contract or furnished supplies,
<PAGE>
nor have any applicants been permitted to write, solicit business, or act
as an agent in any capacity, and they will not be so permitted until the
certificate of authority applied for is received.
<PAGE>
SCHEDULE OF SALES CONCESSIONS
CONTRACTS FORM NUMBER CONTRACT % PER
- --------- ----------- PREMIUM PAYMENT
---------------
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
A Stock Company Home Office Location: 900 Cottage Grove Road
Bloomfield, Connecticut
MAILING ADDRESS: CIGNA INDIVIDUAL INSURANCE
VARIABLE PRODUCTS SERVICE CENTER - ROUTING S224
HARTFORD, CT 06152
The Company agrees with the Contract Owner to provide the benefits in this
contract.
RIGHT TO EXAMINE CONTRACT. The contract may be returned to the insurance agent
through whom it was purchased or to the Company via the Variable Products
Service Center within 10 days after its receipt (20 days after its receipt where
required by law for a contract issued in replacement of another contract). If
the contract is so returned, it will be deemed void from the Date of Issue, and
the Company will refund the Premium Payment(s) as provided plus or minus any
investment gains or losses under the contract as of the date the returned
contract is mailed or delivered to the agent through whom it was purchased or
the date it is delivered or mailed to the Company, unless required otherwise by
law.
The contract is governed by the laws of the jurisdiction of issue and is issued
and accepted subject to the terms set forth on this page and on the following
pages which are made a part of the contract. In consideration of the application
for it, this contract is executed by Connecticut General Life Insurance Company
as of its Date of Issue.
/s/ Thomas C. Jones
Registrar PRESIDENT
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE, INCLUDING WITHDRAWALS AND TRANSFERS. PAYMENTS
MADE FROM THE FIXED ACCOUNT PURSUANT TO AN ELECTION WHICH BECOMES EFFECTIVE AT
THE END OF A GUARANTEED PERIOD AND PAYMENTS MADE UNDER THE "ANNUITY BENEFIT"
PROVISIONS AND UNDER THE "PENALTY-FREE ANNUITIZATION" PROVISION ARE NOT SUBJECT
TO THE MARKET VALUE ADJUSTMENT. PAYMENTS MADE UNDER THE "DEATH BENEFIT"
PROVISIONS ARE NOT SUBJECT TO ANY NEGATIVE MARKET VALUE ADJUSTMENT.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
USE OF CONTRACT. This contract is available for retirement and deferred
compensation plans some of which may qualify for special tax treatment under
various sections of the Internal Revenue Code.
FLEXIBLE PAYMENT DEFERRED GROUP VARIABLE ANNUITY CONTRACT
WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING
THIS IS A LEGAL CONTRACT BETWEEN THE CONTRACT OWNER AND THE COMPANY
READ YOUR CONTRACT CAREFULLY.
AN423
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
CONTRACT SPECIFICATIONS................................................................................ 5
SCHEDULE OF CHARGES, EXPENSES AND FEES................................................................. 7
DEFINITIONS............................................................................................ 9
PREMIUM PAYMENT PROVISIONS.............................................................................10
Premium Payments
Allocation of Premium Payments
Annuity Account Continuation
Minimum Value Requirements
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS.......................................................11
Certificate Owner
Rights of Certificate Owner
Transfer of Certificate Ownership
Assignment
Beneficiary
Change of Beneficiary
FIXED AND VARIABLE ACCOUNTS PROVISIONS.................................................................12
Fixed Account and Sub-Accounts
Variable Account and Sub-Accounts
Investment Risk
Investments of the Variable Account Sub-Accounts
Substituted Securities
VALUES DURING ACCUMULATION PERIOD PROVISIONS...........................................................13
Part A -Fixed Account Value
Guaranteed Periods
Guaranteed Interest Rates
Fixed Accumulation Value
Minimum Surrender Value
Part B -Variable Account Value
Crediting Variable Accumulation Units
Variable Accumulation Unit Value
Variable Accumulation Value
Net Investment Factor
Part c -General
Annuity Account
Transfer Privilege
Annuity Account Fee
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE
ADJUSTMENT PROVISIONS..................................................................................16
Cash Withdrawals
Withdrawal Charges
Market Value Adjustment
</TABLE>
AN423 2
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (CONTINUED)
<S> <C>
PENALTY-FREE WITHDRAWALS, TRANSFERS AND ANNUITIZATION PROVISIONS.......................................18
Penalty-Free Partial Withdrawals or Transfers
Full or Partial Withdrawals and Transfers at the End of a Guaranteed Period
Waiver of Withdrawal Charge and/or Market Value Adjustment on
Death or Annuity Date
Penalty-Free Annuitization
BENEFIT PROVISIONS.....................................................................................19
Annuity Benefit
Annuity Date
Election and Effective Date of Election with Respect to Annuity Benefit
Determination of Amount
Income Payment Benefits
Death Benefit
Election and Effective Date of Election with Respect to Death Benefit
Payment of Death Benefit
Amount of Death Benefit
Changing Death Benefit Options
Charging for Death Benefit Options
Section 72(s)
GENERAL PROVISIONS.....................................................................................23
The Contract
Individual Certificates
Modification of Contract or Certificate
Non-Participation
Loans
Determination of Values
Endorsement of Income Payments
Misstatement of Age
Claims of Creditors
Periodic Reports
</TABLE>
Followed by Optional Methods of Settlement and any Riders
Note: Pages 4, 6, and 8 are intentionally "blank."
AN423 3
<PAGE>
CONTRACT SPECIFICATIONS
ANNUITANT PER EACH CERTIFICATE SPECIMEN CONTRACT NUMBER
AUGUST 1, 1995 DATE OF ISSUE
- -------------------------------------------------------------------------------
FORM BENEFIT
AN423 FLEXIBLE PAYMENT DEFERRED GROUP VARIABLE ANNUITY
WITH FIXED AND VARIABLE ACCOUNTS
DEATH BENEFIT OPTIONS(S) ELECTED: PER EACH CERTIFICATE
INITIAL PREMIUM PAYMENT ALLOCATION: PER EACH CERTIFICATE
FIXED ACCOUNT - SUB-ACCOUNTS
PERCENTAGE ADJUSTMENT TO INDEX RATE "B": .50%
INITIAL GUARANTEED PERIOD 1 YEAR
INITIAL GUARANTEED PERIOD 3 YEARS
INITIAL GUARANTEED PERIOD 5 YEARS
INITIAL GUARANTEED PERIOD 7 YEARS
INITIAL GUARANTEED PERIOD 10 YEARS
VARIABLE ACCOUNT - SUB-ACCOUNTS (FUNDS)
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND
EQUITY-INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUND II
ASSET MANAGER PORTFOLIO
INVESTMENT GRADE BOND PORTFOLIO
FRED ALGER MANAGEMENT, INC.
ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
MASSACHUSETTS FINANCIAL SERVICES
VARIABLE INSURANCE TRUST
MFS TOTAL RETURN SERIES
MFS UTILITIES SERIES
MFS WORLD GOVERNMENTS SERIES
(Continued on Page 5.1)
AN423 5
<PAGE>
CONTRACT SPECIFICATIONS (CONTINUED)
ANNUITANT PER EACH CERTIFICATE SPECIMEN CONTRACT NUMBER
AUGUST 1, 1995 DATE OF ISSUE
- -------------------------------------------------------------------------------
NEUBERGER & BERMAN
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
AMT BALANCED PORTFOLIO
AMT LIMITED MATURITY BOND PORTFOLIO
AMT PARTNERS PORTFOLIO
QUEST FOR VALUE
QUEST FOR VALUE ACCUMULATION TRUST
QUEST GLOBAL EQUITY PORTFOLIO
QUEST MANAGED PORTFOLIO
QUEST SMALL CAP PORTFOLIO
LIMITATIONS ON TRANSFERS FROM FIXED ACCOUNT: ONLY ONE SUCH TRANSFER ALLOWED PER
CERTIFICATE YEAR FROM EACH SUB-ACCOUNT, AND THE AMOUNT(S) TRANSFERRED MAY NOT
EXCEED 15% OF PREMIUM PAYMENT(S) MADE TO THE APPLICABLE SUB-ACCOUNT(S) OR THE
PORTION REMAINING THEREOF IN THE APPLICABLE SUB-ACCOUNT(S), IF LESS.
THIS CONTRACT IS FOR USE WITH "CG VARIABLE ANNUITY SEPARATE ACCOUNT II": A
CONNECTICUT GENERAL LIFE INSURANCE COMPANY SEPARATE INVESTMENT ACCOUNT WHICH WAS
ESTABLISHED ON JANUARY 25, 1994.
CONTRACT OWNER: CIGNA VARIABLE PRODUCTS TRUST (DATED XX/XX/95)
CERTIFICATE OWNER: PER EACH CERTIFICATE
BENEFICIARY: PER EACH CERTIFICATE
JURISDICTION OF ISSUE: RHODE ISLAND
AN423 5.1
<PAGE>
SCHEDULE OF CHARGES, EXPENSES AND FEES
Annuity Account Fee: Under each certificate the Annuity Account Fee is $35 per
Certificate Year and will be deducted on the last Valuation Date of each
Certificate Year. The Annuity Account Fee, however, will be waived for any year
for which the Annuity Account Value equals or exceeds $100,000 as of the last
Valuation Date of such Certificate Year.
Withdrawal Charges: The Withdrawal charges applicable under each
certificate are as follows:
Withdrawal Charge
Against Premium Pay- Year
ment Withdrawn Applicable
---------------------- ----------
7% During 1st year since Premium Payment Accepted
6% During 2nd year since Premium Payment Accepted
5% During 3rd year since Premium Payment Accepted
4% During 4th year since Premium Payment Accepted
3% During 5th year since Premium Payment Accepted
2% During 6th year since Premium Payment Accepted
1% During 7th year since Premium Payment Accepted
0% Thereafter
Each Subsequent Premium Payment will be subject to its own 7-year period.
Any Withdrawal from the Fixed Account prior to the end of a Guaranteed Period
may also be subject to a Market Value Adjustment which may increase, decrease,
or have no affect on the applicable account value(s). A Market Value Adjustment
would not apply to a withdrawal effective at the end of a Guaranteed Period.
Withdrawal charges are not applicable to certain partial withdrawals of 15% or
less of Premium Payments annually. Withdrawal charges and a Market Value
Adjustment are not applicable to annuitization of a certificate at any time, and
no negative Market Value Adjustment is applicable to payment of the Death
Benefit. (See "Penalty-Free Withdrawals, Transfers and Annuitization
Provisions.")
Asset Charges: Mortality and Expense Risk Charge is a charge equal to an
effective annual rate of 1.20% of the daily net assets of the Variable Account.
Administrative Expense Charge is a charge equal to an effective annual rate of
.10% of the daily net assets of the Variable Account. These charges are deducted
from the Variable Account Value of each certificate at the end of each Valuation
Period.
In addition, Daily Fund Operating Expenses will be applied by each Fund as set
forth in the prospectus for the applicable Fund(s).
(Continued on Page 7.1)
AN423 7
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SCHEDULE OF CHARGES, EXPENSES AND FEES (Continued)
Taxes: Premium tax equivalents (including any related retaliatory taxes), if
any, and any other taxes due under each certificate will be deducted if
applicable. It is currently the Company's practice to deduct such taxes, if any,
at the time the Annuity Account Value, or any portion thereof, becomes payable.
AN423 7.1
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DEFINITIONS
ACCUMULATION PERIOD. The period from the Certificate Date of a certificate to
(a) its Annuity Date, (b) the date on which the Death Benefit becomes payable,
or (c) the date on which the certificate is surrendered or annuitized, whichever
is earliest.
ANNUITANT. The person on whose life the first Income Payment is to be made upon
the annuitization of a certificate. The Annuitant is the person designated in
the Certificate Specifications and will remain the Annuitant under the
certificate unless the Certificate Owner exercises the right to change the
Annuitant as set forth in the "Rights of Certificate Owner" provision. If prior
to the Annuity Date, the Annuitant predeceases the Certificate Owner, the
Certificate Owner will then become the Annuitant until such time as the
Certificate Owner exercises the right to designate a new Annuitant as set forth
in the "Rights of Certificate Owner" provision. A request for change of
Annuitant must be in writing to the Company at its Variable Products Service
Center's Mailing Address and will not take effect until recorded by the Company.
ANNUITY ACCOUNT. The account which is comprised of the Fixed and Variable
Accounts with respect to a certificate.
ANNUITY ACCOUNT VALUE. The account value which at any time equals the sum of all
the then current values of the Fixed and Variable Accounts with respect to a
certificate. Applicable premium taxes, if any, will be deducted when the Annuity
Account Value amount to be applied under the Annuity Benefit, Death Benefit,
Cash Withdrawals or Penalty-Free Withdrawal and Annuitization provisions is
determined.
ANNUITY DATE. The date on which Income Payments begin upon the annuitization
of a certificate.
CERTIFICATE DATE. The date a certificate takes effect.
CERTIFICATE OWNER (OR "OWNER"). The Certificate Owner is defined under
"Ownership, Assignment and Beneficiary Provisions." The term "Owner," by
itself, shall mean Certificate Owner.
CERTIFICATE YEARS AND CERTIFICATE ANNIVERSARIES. All Certificate Years and
Certificate Anniversaries are 12 month periods measured from a Certificate Date.
CONTRACT OWNER. The person or entity designated in the Contract
Specifications.
DATE OF ISSUE. The date on which this contract becomes effective.
DUE PROOF OF DEATH. An original certified copy of an official death certificate,
an original certified copy of a decree of a court of competent jurisdiction as
to the finding of death, or any other proof of death satisfactory to the
Company.
EXPIRATION DATE(S). The date(s) on which Guaranteed Period(s), if any, end.
FIXED ACCOUNT. The term "Fixed Account" under each certificate means all Sub-
Account(s) associated with Guaranteed Period(s) and Guaranteed Interest
Rate(s). Fixed Account assets are general assets of the Company and are
distinguishable from those allocated to a separate account of the Company.
FUND(S). The Portfolio(s) of Fund Group(s) whose shares are acquired for the
Variable Account Sub-Accounts in which Premium Payments or Transfers may be
invested.
FUND GROUP(S). The open-end management investment companies (mutual funds)
registered under the Investment Company Act of 1940, as amended (hereinafter
referred as the "1940 Act"), one or more of whose Portfolio(s)' shares are made
available as investment vehicles through Variable Accounts Sub-Accounts.
GUARANTEED PERIOD. The Guaranteed Period is the period for which interest, at
either an initial or subsequent Guaranteed Interest Rate will be credited to an
amount under a Fixed Account Sub-Account.
AN423 9
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DEFINITIONS (CONTINUED)
HOME OFFICE. The term "Home Office" means Connecticut General Life Insurance
Company, the mailing address of which for this contract is CIGNA Individual
Insurance, Variable Products Service Center, Routing S224, Hartford, Connecticut
06152.
IN WRITING. The term "In writing" means in a written form satisfactory to the
Company and received by the Company at its Variable Products Service Center's
Mailing Address.
INCOME PAYMENTS. Income Payments are the amounts payable under a certificate
as determined by the settlement options provisions.
PAYOUT PERIOD. The period during which Income Payments are made under a
certificate.
SUB-ACCOUNT. That portion of the Fixed Account associated with specific
Guaranteed Period(s) and Guaranteed Interest Rate(s) and that portion of the
Variable Account which invests in shares of a specific Fund.
VALUATION DATE. Every day on which the New York Stock Exchange ("NYSE") is open
for business, except any day on which trading on the NYSE is restricted, or on
which an emergency exists, as determined by the Securities and Exchange
Commission ("SEC") so that valuation or disposal of securities is not
practicable.
VALUATION PERIOD. The period of time beginning on the day following the
Valuation Date and ending on the next Valuation Date. A Valuation Period may
be more than one day in length.
VARIABLE ACCOUNT. The term "Variable Account" under each certificate means all
Sub-Account(s) associated with investments in the Fund(s). Variable Account
assets are separate account assets of the Company, the investment performance of
which is kept separate from that of the general assets of the Company, and are
not chargeable with the general liabilities of the Company.
VARIABLE ACCUMULATION UNIT. A unit of measure used in the calculation of the
value of each Variable Account Sub-Account.
VARIABLE ANNUITY UNIT. A unit of measure used in the calculation of the value
of the variable portion of the Annuity Account during the Payout Period.
PREMIUM PAYMENT PROVISIONS
PREMIUM PAYMENTS. Premium Payments made under a certificate are payable to the
Company at its Variable Products Service Center's Mailing Address or to an
authorized agent of the Company. A receipt signed by the President or Secretary
and duly countersigned will be furnished upon request. The Initial Premium
Payment is the amount paid to the Company as consideration for the benefits
provided under a certificate on its Certificate Date. Subsequent Premium
Payments made under a certificate may be paid to the Company at its Variable
Products Service Center's Mailing Address from time to time after its
Certificate Date and prior to the Annuity Date. The Company will not accept any
Premium Payment which is less than the minimum amount requirement then in effect
as determined by the Company. In addition, the prior approval of the Company is
required before it will accept a Premium Payment in excess of the
maximum amount limit then in effect as determined by the Company. All Premium
Payments made under a certificate must meet the allocation requirements
specified under the "Allocation of Premium Payments" provision. The payment of
any amount under a certificate which is derived, all or in part, from any
Premium Payments made by check or draft may be postponed until such check or
draft has been honored by the financial institution upon which it is drawn.
ALLOCATION OF PREMIUM PAYMENTS. Upon receipt by the Company at its Variable
Products Service Center's Mailing Address, each Premium Payment made under a
certificate will be added to the Annuity Account established under the
certificate. The Annuity Account is described under the "Annuity Account"
provision and is comprised of Fixed Account Sub-Account(s) and Variable
Account Sub-Account(s). The Initial
AN423 10
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PREMIUM PAYMENT PROVISIONS (CONTINUED)
Premium Payment made under a certificate will be allocated to one or more such
Sub-Accounts in accordance with the allocation percentages specified by the
Certificate Owner and shown in the Certificate Specifications, provided such
allocations to Fixed and/or Variable Accounts conform to the Company's minimum
deposit requirements in effect as of the Certificate Date. Subsequent Premium
Payments made under each certificate will be allocated on the same basis as the
most recent previous Premium Payment unless the Company is otherwise instructed
by the Certificate Owner to change the allocation percentages. If a portion of
the most recent previous Premium Payment was allocated to the Fixed Account and
the allocation percentages when applied to a Subsequent Premium Payment does not
produce an amount which meets the Fixed Account minimum requirements, the
Company will promptly seek further instructions from the Certificate Owner
regarding allocation of the premium or otherwise return the applicable portion
of such Premium Payment as provided by law.
ANNUITY ACCOUNT CONTINUATION. The Annuity Account under each certificate shall
be continued automatically in full force from the Certificate Date until the
Annuity Date or until the certificate is surrendered or annuitized, the Death
Benefit is paid, or the Annuity Account Value no longer meets the requirements
specified in the "Minimum Value Requirements" provision, whichever occurs first.
MINIMUM VALUE REQUIREMENTS. If no Premium Payments have been made under a
certificate for three consecutive years and its Annuity Account Value decreases
to less than $500 during that period, or if any partial withdrawal decreases its
Annuity Account Value to less than $500, the Company reserves the right to
cancel the certificate and pay to the Certificate Owner an adjusted value of the
Annuity Account as would be calculated under the "Determination of Amount"
provision. The Company will, however, provide at least 30 days advance notice to
the Certificate Owner of its intended action. During the notification period an
additional Premium Payment may be made to meet the minimum value requirements.
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
CERTIFICATE OWNER. Under each certificate the Certificate Owner on the
Certificate Date will be the person designated in the Certificate
Specifications. If no Certificate Owner is designated, the Annuitant will be the
Certificate Owner.
RIGHTS OF CERTIFICATE OWNER. The Certificate Owner may exercise all rights and
privileges under the certificate including the right to: (a) agree with the
Company to any change in or amendment to the certificate, (b) transfer all
rights and privileges to another person, (c) change the Beneficiary, (d) change
the Annuitant any time prior to the Annuity Date or name a new Annuitant if the
Annuitant predeceases the Certificate Owner, (e) name the payee to whom Income
Payments are to be directed, and (f) assign the certificate.
All rights and privileges of the Certificate Owner may be exercised without the
consent of any designated transferee, or any Beneficiary if the Certificate
Owner has reserved the right to change the Beneficiary. All such rights and
privileges, however, may be exercised only with the consent of any assignee on
record with the Company.
TRANSFER OF CERTIFICATE OWNERSHIP. The Certificate Owner may transfer all
rights and privileges of the Owner. On the effective date of transfer, the
transferee will become the Certificate Owner and will have all the rights and
privileges of the Certificate Owner. The Certificate Owner may revoke any
transfer prior to its effective date.
Unless provided otherwise, a transfer will not affect the interest of any
Beneficiary designated prior to the effective date of the transfer.
A transfer of Certificate Ownership, or a revocation of transfer, must be in
writing to the Company at its Variable Products Service Center's Mailing
Address. A transfer or a revocation will not take effect until recorded in
writing by the Company at its Variable Product Service Center's Mailing Address.
When a transfer or revocation has been so recorded, it will take effect as of
the effective date specified by the Certificate Owner. Any payment made or any
action taken or allowed by the Company before the transfer or there vocation is
recorded will be without prejudice to the Company.
AN423 11
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OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS (CONTINUED)
ASSIGNMENT. A certificate may not be assigned and the Company will not be
affected by any assignment of a certificate until the original assignment or a
certified copy of the assignment is filed at the Home Office.
The Company does not assume responsibility for the validity or sufficiency of
any assignment. An assignment of a certificate will operate so long as the
assignment remains in force.
To the extent provided under the terms of the assignment, an assignment will
transfer the interest of any designated transferee or of any Beneficiary if the
Certificate Owner has reserved the right to change the Beneficiary.
BENEFICIARY. Under each certificate, the Beneficiary is the person who has the
right to receive the Death Benefit set forth in the certificate and, for
NonQualified Certificates, who is the "designated beneficiary" for purposes of
Section 72(s) of the Internal Revenue Code in the event of the Certificate
Owner's death. The Beneficiary on the Certificate Date will be the person
designated in the Certificate Specifications.
Unless provided otherwise, the interest of any Beneficiary who dies before the
Certificate Owner will vest in the Certificate Owner or the Certificate Owner's
administrators or assigns.
CHANGE OF BENEFICIARY. A new Beneficiary may be designated from time to time. A
request for change of Beneficiary must be in writing to the Company at its
Variable Products Service Center's Mailing Address. The request must be signed
by the Certificate Owner. The request must also be signed by the Beneficiary if
the right to change the Beneficiary has not been reserved to the Certificate
Owner.
A change of Beneficiary will not take effect until recorded by the Company. When
a change of Beneficiary has been so recorded, whether or not the Certificate
Owner is then alive, it will take effect as of the date the request was signed.
Any payment made or any action taken or allowed by the Company before the
change of Beneficiary is recorded will be without prejudice to the Company.
Unless provided otherwise, the right to change any Beneficiary is reserved to
the Certificate Owner.
FIXED AND VARIABLE ACCOUNTS PROVISIONS
FIXED ACCOUNT AND SUB-ACCOUNTS. Fixed Account assets are general assets of the
Company and are distinguishable from those allocated to a separate account of
the Company. Any portion of Premium Payments allocated by a Certificate Owner to
a Fixed Account Sub-Account will become part of the Fixed Account for that
certificate.
VARIABLE ACCOUNT AND SUB-ACCOUNTS. The Variable Account to which the variable
accumulation values, if any, under a certificate relate is shown in the Contract
Specifications as well as the Certificate Specifications for each certificate.
It was established pursuant to a resolution of its Board of Directors as a
"separate account" under governing law of Connecticut, the Company's state of
domicile, and registered as a unit investment trust under the 1940 Act. Under
Connecticut law, the Variable Account assets (except assets in excess of its
reserves and other contract liabilities) cannot be charged with the general
liabilities from any other business of the Company. The Variable Account assets
are owned and controlled exclusively by the Company, and the Company is not a
trustee with respect to those assets.
The Variable Account is divided into Sub-Accounts. Each Variable Account
SubAccount's assets are invested in shares of a particular Fund of one of the
Fund Groups made available as funding vehicles under each certificate. For each
Variable Account Sub-Account, the Company maintains Variable Accumulation Units
whose values reflect the investment performance of the Fund whose shares are
held in that Sub-Account.
Subject to any vote by persons having the right under the 1940 Act to vote
thereon, the Company may elect to operate the Variable Account as a management
company rather than a unit investment trust under the
AN423 12
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FIXED AND VARIABLE ACCOUNTS PROVISIONS (CONTINUED)
1940 Act, or, if registration is no longer required, to deregister the Variable
Account. In such event, the Company may endorse this contract and the
certificates issued under it to reflect such change and any necessary or
appropriate action taken to effect the change. Any changes in Variable Account
investment policy shall have been approved by the Connecticut Insurance
Commissioner and be approved or filed, as required, in the state or other
jurisdiction of issue.
INVESTMENT RISK. Each Variable Account Sub-Account's assets are always fully
invested in the shares of the particular Fund purchased for that Sub-Account.
Each Variable Account Sub-Account's investment performance reflects the
investment performance of the Fund. Fund share values fluctuate, reflecting the
risks of changing economic conditions and the ability of a Fund Group's
investment advisor or sub-adviser to manage that Fund and anticipate changes in
economic conditions. As to the Variable Account assets, the Certificate Owner
bears the entire investment risk of gain or loss.
INVESTMENTS OF THE VARIABLE ACCOUNT SUB-ACCOUNTS. All amounts allocated under a
certificate to a Variable Account Sub-Account will be used to purchase shares of
the specific Fund of a Fund Group used by that Sub-Account. Each Fund Group is
registered under the 1940 Act as an open-end management investment company, and
each Fund of that Fund Group is regulated as an open-end management investment
company.
All Funds available as funding vehicles under each certificate as of its
Certificate Date are listed in this contract on page 5. The Company may add
additional Fund Groups and additional Funds at any time or may change Funds or
Fund Groups in accordance with the "Substituted Securities" provision.
Any and all distributions made by a Fund will be reinvested in additional shares
of that Fund at net asset value. Deductions by the Company from a Variable
Account Sub-Account will be made by redeeming a number of Fund shares at net
asset value equal in total value to the amount to be deducted.
SUBSTITUTED SECURITIES. Shares corresponding to a particular Fund may not always
be available for purchase or the Company may decide that further investment in
such Fund is no longer appropriate in view of the purposes of the Variable
Account, or in view of legal, regulatory or federal income tax restrictions. In
such event, shares of another registered open-end investment company or unit
investment trust may be substituted both for Fund shares already purchased
and/or as the securities to be purchased in the future, provided that these
substitutions meet applicable Internal Revenue Service diversification
guidelines and any necessary regulatory or other approvals of such substitutions
have been obtained. In the event of any substitution pursuant to this provision,
the Company may make appropriate endorsement(s) to this contract and the
certificates issued under it to reflect the substitution.
VALUES DURING ACCUMULATION PERIOD PROVISIONS
PART A - FIXED ACCOUNT VALUE
GUARANTEED PERIODS. The Initial Guaranteed Period(s), if any, are selected by
each Certificate Owner and are shown in the Certificate Specifications. The
duration of the Initial Guaranteed Period(s) will affect the Initial
Guaranteed Interest Rate(s). Any Premium Payment or the portion thereof (or
amount transferred in accordance with the "Transfer Privilege" provision
described below) allocated under a certificate to a particular Guaranteed Period
will earn interest at the specified Guaranteed Interest Rate during the
Guaranteed Period. Initial Guaranteed Periods begin on the date a Premium
Payment is accepted (or, in the case of a transfer, on the effective date of the
transfer) and end on the Expiration Date for each duration selected.
Any portion of the Annuity Account Value comprising a particular Fixed Account
Sub-Account (including interest earned thereon) will be referred to in a
certificate as the "Guaranteed Period Amount." As a result of renewals,
Subsequent Payments, deductions for applicable Annuity Account Fee(s) and
transfers of portions of the Annuity Account Value, Guaranteed Period Amounts
for Guaranteed Periods of the same duration under a certificate may have
different Expiration Dates, and each Guaranteed Period Amount will be treated
separately for purposes of determining any Market Value Adjustment.
AN423 13
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VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)
The Company will automatically notify the Certificate Owner in writing at least
15 but not more than 45 days prior to the Expiration Date of a Guaranteed Period
with respect to a Fixed Account Sub-Account of the guaranteed period durations
available and the then currently quoted interest rates. A subsequent Guaranteed
Period of the same duration will begin automatically at the end of the previous
Guaranteed Period unless the Company receives, in writing at its Variable
Products Service Center's Mailing Address within the 60-day period immediately
preceding the end of such Guaranteed Period, an election by the Certificate
Owner of a different Guaranteed Period from among those being offered by the
Company at such time, or instructions to transfer all or a portion of the
applicable Guaranteed Period Amount to one or more Fixed Account or Variable
Account Sub-Accounts in accordance with the "Transfer Privilege" provision.
GUARANTEED INTEREST RATES. The Company will establish the applicable Guaranteed
Interest Rate that will be used to determine the interest with respect to a
Fixed Account Sub-Account for each Guaranteed Period at the beginning of the
Guaranteed Period. This rate will be guaranteed for the duration of the
applicable Guaranteed Period. The Initial or Subsequent Guaranteed Interest Rate
will never be less than 3% per year, compounded annually. Subsequent Guaranteed
Interest Rate(s) will also be determined at the beginning of Guaranteed
Period(s) and may be higher or lower than the previous rate, but will never be
less than 3% per year, compounded annually. (See "Minimum Surrender Value"
provision.) The Company will automatically notify the Certificate Owner of the
new Guaranteed Interest Rate as soon as possible after the beginning of each
subsequent Guaranteed Period.
FIXED ACCUMULATION VALUE. Upon receipt of a Premium Payment by the Company at
its Variable Products Service Center's Mailing Address, all or that portion, if
any, of the Premium Payment which is allocated to the Fixed Account will be
credited to the Fixed Account and allocated to the Fixed Account Sub-Accounts
selected by the Certificate Owner. The Fixed Accumulation Value, if any, at any
time, under a certificate is equal to the sum of the then current values of all
Guaranteed Period Amounts with respect to that certificate.
MINIMUM SURRENDER VALUE. The Minimum Surrender Value for the Fixed Account for a
given Certificate Year is the Premium Payment(s), or portion thereof, and
transfers allocated to the Fixed Account accumulated at 3% per year, compounded
annually, less the deduction of the applicable withdrawal charge(s), any prior
withdrawals or transfers out of the Fixed Account, premium taxes, if any, and
applicable Annuity Account Fee(s) and deductions, if any, for the cost of Death
Benefit Option(s) in effect.
PART B - VARIABLE ACCOUNT VALUE
CREDITING VARIABLE ACCUMULATION UNITS. Upon receipt of a Premium Payment (or a
request for transfer in accordance with the "Transfer Privilege" provision) by
the Company at its Variable Products Service Center's Mailing Address, all or
that portion, if any, of the Premium Payment (or the net amount transferred) to
be allocated to the Variable Account Sub-Accounts will be credited to the
Variable Account under a certificate in the form of Variable Accumulation Units.
The number of particular Variable Accumulation Units to be credited is
determined by dividing the dollar amount allocated to the particular Variable
Account Sub-Account by the Variable Accumulation Unit Value for the particular
Variable Account Sub-Account for the Valuation Period during which the Premium
Payment is received at the Company's Variable Products Service Center's Mailing
Address.
VARIABLE ACCUMULATION UNIT VALUE. The Variable Accumulation Unit Value for each
Variable Account Sub-Account was established at $10.00 for the first Valuation
Period of the particular Variable Account Sub-Account. The Variable Accumulation
Unit Value for the particular Variable Account Sub-Account for any subsequent
Valuation Period is determined by methodology which is the mathematical
equivalent of multiplying the Variable Accumulation Unit Value for the
particular Variable Account Sub-Account for the immediately preceding Valuation
Period by the Net Investment Factor for the particular Variable Account
Sub-Account for such subsequent Valuation Period. The Variable Accumulation Unit
Value for each Variable Account Sub-Account for any Valuation Period is the
value determined as of the end of the particular Valuation Period and may
increase, decrease or remain constant from Valuation Period to Valuation Period.
AN423 14
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VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)
VARIABLE ACCUMULATION VALUE. The Variable Accumulation Value of the Annuity
Account, if any, for any Valuation Period is equal to the sum of the value of
all Variable Accumulation Units of each Variable Account Sub-Account credited to
the Variable Account with respect to a certificate for such Valuation Period.
The Variable Accumulation Value of each Variable Account Sub-Account is
determined by multiplying the number of Variable Accumulation Units, if any,
credited to each Variable Account Sub-Account with respect to a certificate by
the Variable Accumulation Unit Value of the particular Variable Account
Sub-Account for such Valuation Period, less deductions for applicable expense
charges and fees and for the cost of Death Benefit Option(s), if any.
NET INVESTMENT FACTOR. The Net Investment Factor is an index applied to measure
the investment performance of a Variable Account Sub-Account from one Valuation
Period to the next. The Net Investment Factor may be greater or less than or
equal to 1.0; therefore, the value of a Variable Accumulation Unit may increase,
decrease or remain the same.
The Net Investment Factor for any Variable Account Sub-Account for any Valuation
Period is determined by dividing (a) by (b) and then subtracting (c) from the
result where:
(a) is the net result of:
(1) the net asset value (as described in the prospectus for the Fund)
of a Fund share held in the Variable Account Sub-Account determined as
of the end of the Valuation Period, plus
(2) the per share amount of any dividend or other distribution declared
by the Fund on the shares held in the Variable Account Sub-Account if
the "ex-dividend" date occurs during the Valuation Period, plus or
minus
(3) a per share credit or charge with respect to any taxes paid or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Variable Account Sub-Account;
(b) is the net asset value of a Fund share held in the Variable Account
Sub-Account determined as of the end of the preceding Valuation Period; and
(c) is the asset charge factor determined by the Company for the Valuation
Period to reflect the charges for assuming the mortality and expense risks
and for administrative expenses.
The asset charge factor for any Valuation Period is equal to the daily asset
charge factor multiplied by the number of 24-hour periods in the Valuation
Period. The daily asset charge factor will be determined annually by the
Company, but in no event may it exceed that specified in the Schedule of
Charges, Expenses and Fees.
PART C - GENERAL
ANNUITY ACCOUNT. The Company will establish an Annuity Account under each
certificate and will maintain the Annuity Account during the Accumulation
Period. The Annuity Account Value at any time equals the sum of all the then
current values of the Fixed and Variable Accounts with respect to that
certificate.
TRANSFER PRIVILEGE. At any time during the Accumulation Period, other than
during the "Right to Examine Certificate" period, the Certificate Owner may
transfer all or part of the Annuity Account Value to one or more of the Fixed or
Variable Account Sub-Accounts then available, subject to the provisions set
forth in the certificate. Transfers must be made in writing, or by telephone if
telephone transfers have been previously authorized in writing. Transfer
requests must be received at the Company's Variable Products Service Center
prior to the time of day set forth in the prospectus, and provided the NYSE is
open for business, in order to be processed as of the close of business on the
date the request is received; otherwise, the transfer will be processed on the
next business day the NYSE is open for business. The Company will not be legally
responsible for (a) any liability for acting in good faith upon any transfer
instructions given by telephone, or (b) the authenticity of such instructions.
AN423 15
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VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)
Transfers involving Variable Account Sub-Accounts will reflect the purchase or
cancellation of Variable Accumulation Units having an aggregate value equal to
the dollar amount being transferred to or from a particular Variable Account
Sub-Account. The purchase or cancellation of such units shall be made using
Variable Accumulation Unit Values of the applicable Variable Account
Sub-Account for the Valuation Period during which the transfer is effective.
Transfers to a Fixed Account Sub-Account will result in a new Guaranteed
Period for the amount being transferred. Any such Guaranteed Period under a
certificate will begin on the effective date of the transfer and end on its
Expiration Date. The amount transferred into such Fixed Account Sub-Account
will earn interest at the Guaranteed Interest Rate declared by the Company
for that Guaranteed Period as of the effective date of the transfer.
Transfers made under a certificate shall be subject to the following conditions:
(a) No transfer fee will be imposed on the 1st through 3rd transfer made during
a Certificate Year, and no transfer fee will be imposed on the 4th through 12th
transfer made during a Certificate Year if the Annuity Account Value under the
certificate at the time of the transfer is equal to or greater than $5,000;
otherwise, a transfer fee, based on the Company's then current fee schedule will
be imposed on each transfer made in excess of these limits (in counting the
number of transfers, the frequency limitation shown in the Certificate
Specifications with respect to transfers from the Fixed Account will be
included); (b) No withdrawal charge will be imposed on transferred amounts,
however, transfers of all or a portion out of a Fixed Account Sub-Account may be
subject to the Market Value Adjustment unless such transfer is made in
accordance with the "Full or Partial Withdrawals and Transfers at the End of a
Guaranteed Period" provision; (c) The amount being transferred may not be less
than $2,500 per Fixed Account Sub-Account or $500 per Variable Account
Sub-Account, unless the entire value of the Fixed or Variable Account
Sub-Account is being transferred; (d) The amount being transferred may not
exceed the Company's maximum amount limit then in effect; (e) The amount
transferred to any Fixed Account Sub-Account may not be less than $2,500; (f)
Unless a transfer out of a Fixed Account Sub-Account is made in accordance with
the "Full or Partial Withdrawals and Transfers at the End of a Guaranteed
Period" provision, the amount transferred from each Fixed Account Sub-Account
during a Certificate Year may not exceed the limits shown in the Certificate
Specifications; (g) Any value remaining in a Fixed Account Sub-Account,
following a transfer, may not be less than $1,000 and any value remaining in a
Variable Account Sub-Account, following a transfer, may not be less than $500;
(h) The Company reserves the right to defer transfers of amounts from the Fixed
Account for a period not to exceed six months from the date the request for such
transfer is received by the Company at its Variable Products Service Center; and
(i) Transfers involving Variable Account Sub-Account(s) shall be subject to
such terms and conditions as may be imposed by the Funds.
ANNUITY ACCOUNT FEE. Prior to the Annuity Date, on the last Valuation Date of
each Certificate Year the Company will deduct from the value of the Annuity
Account the annual Annuity Account Fee, if any, shown in the Schedule of
Charges, Expenses and Fees to reimburse it for administrative expenses relating
to the Annuity Account. Such Annuity Account Fee will be deducted on a pro rata
basis from amounts allocated to each Fixed and Variable Account Sub-Account in
which the Annuity Account values are invested at the time of such deduction. If
the Annuity Account under a certificate is surrendered for its full value, the
Annuity Account Fee will be deducted in full at the time of such surrender.
On the Annuity Date the value of the Annuity Account will be reduced by a
proportionate amount of the Annuity Account Fee to reflect the time elapsed
between the last Valuation Date of the most recent Certificate Year and the
day before the Annuity Date.
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS
CASH WITHDRAWALS. At any time before the Annuity Date, the Certificate Owner may
elect to receive a cash withdrawal payment from the Company by filing with the
Company at its Variable Products Service Center's Mailing Address a written
election in such form as the Company may require. Any such election shall
specify the amount of the withdrawal and will be effective on the date that it
is received at the Company's Variable Products Service Center's Mailing Address.
Any cash withdrawal payment will be paid within seven
AN423 16
<PAGE>
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS (CONTINUED)
days of the Company's receipt of such request, except as the Company may be
permitted to defer the payment of amounts withdrawn from the Variable Account in
accordance with the Investment Company Act of 1940. The Company reserves the
right to defer the payment of amounts withdrawn from the Fixed Account for a
period not to exceed six months from the date written request for such
withdrawal is received by the Company at its Variable Products Service Center's
Mailing Address.
The amount of the cash withdrawal payment may be for any amount not to exceed
the Annuity Account Value at the end of the Valuation Period during which the
election becomes effective, less any applicable Annuity Account Fee, plus or
minus any applicable Market Value Adjustment, and less any applicable withdrawal
charge and premium taxes. In the case of a full surrender, the Annuity Account
will be canceled and the certificate will terminate. A partial withdrawal will
result in a decrease in the Annuity Account Value under a certificate by an
amount with an aggregate dollar value equal to the dollar amount of the cash
withdrawal payment, plus or minus any applicable Market value Adjustment, any
applicable withdrawal charge and premium taxes.
In the case of a partial withdrawal, the Certificate Owner must instruct the
Company as to the amounts to be withdrawn from each Fixed and/or Variable
Account Sub-Account. If not so instructed, the Company will effect such
withdrawal from each Fixed and/or Variable Sub-Account in proportion to the then
current Sub-Account values. Partial withdrawals cannot reduce any Fixed Account
Sub-Account below $1,000 or any Variable Account Sub-Account below $500. Such
partial withdrawals will be treated as a full surrender of that Sub-Account
under the certificate and the balance will be transferred to the largest
Variable Account Sub-Account, if any. Partial withdrawals cannot reduce the
total Annuity Account Value below $500. (See "Minimum Value Requirements"
provision.) Such partial withdrawals will be treated as a full surrender.
Cash withdrawals from a Variable Account Sub-Account under a certificate will
result in the cancellation of Variable Accumulation Units attributable to the
Annuity Account with an aggregate value on the effective date of the withdrawal
equal to the total amount by which the Variable Account Sub-Account is reduced.
The cancellation of such units will be based on the Variable Accumulation Unit
values of the Variable Account Sub-Account for the Valuation Period during which
the cash withdrawal is effective.
All cash withdrawals or transfers of any portion of Fixed Account Sub-Accounts,
except those specified otherwise under "Penalty-Free Withdrawals, Transfers and
Annuitization Provisions," will be subject to the Market Value Adjustment
described below.
WITHDRAWAL CHARGES. If a cash withdrawal is made, a withdrawal charge may be
assessed by the Company. The length of time between the Company acceptance of
the Premium Payment(s) under a certificate and the receipt of a withdrawal
request determines the withdrawal charge. For this purpose each withdrawal is
deemed to represent a withdrawal of a Premium Payment previously accepted (or a
portion thereof). Premium Payments will be deemed to have been withdrawn in the
order in which the Premium Payments were received by the Company (i.e., oldest
premium first). After all Premium Payments have been deemed withdrawn,
the Company will deem further withdrawals to be from net investment results
attributable to such Premium Payments, if any. The schedule of withdrawal
charges is set forth in the "Schedule of Charges, Expenses and Fees." On
withdrawal, any applicable Annuity Account Fee, the cost of Death Benefit
Option(s), if any, and Market Value Adjustment will be deducted before
application of any withdrawal charge.
Withdrawal charges are deducted proportionately from the Fixed and/or Variable
Account Sub-Account(s) from which the withdrawal is to be made, provided such
Sub-Account(s) under the certificate have sufficient account value(s) for making
such deduction(s). If any of the account value(s) of such Sub-Account(s),
however, are insufficient, the amount payable upon withdrawals will be net of
any remaining withdrawal charges, unless the Certificate Owner and the Company
agree otherwise.
AN423 17
<PAGE>
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS (CONTINUED)
See "Penalty-Free Withdrawals, Transfers and Annuitization Provisions" for
situations in which a withdrawal charge is not imposed.
For the purpose of any qualified plan riders which may be attached to a
certificate, the term "Surrender Charge" wherever referenced therein, shall mean
"withdrawal charge" as set forth above, and the term "Annuity Value" shall mean
"Annuity Account Value."
MARKET VALUE ADJUSTMENT. Any cash withdrawal or transfer under a certificate
from a Fixed Account Sub-Account, except those specified otherwise under the
"Penalty-Free Withdrawals, Transfers and Annuitization Provisions," will be
subject to a Market Value Adjustment.
The amount payable on such cash withdrawal or transfer may be adjusted up or
down by the application of the Market Value Adjustment. The Index Rate Factor
applicable to the amount of such cash withdrawal or transfer is:
(1+A)N
------
(1+B)N
where:
A = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
applicable Guaranteed Period, determined at the beginning the Guaranteed Period.
B = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
applicable Guaranteed Period, determined at the time of cash withdrawal or
transfer, plus the percentage adjustment to "B" as shown in the Contract
Specifications. If Index Rates "A" and "B" are within .25% of each other when
the Index Rate Factor is determined, no such percentage adjustment to "B" will
be made.
N = The number of years remaining in the applicable Guaranteed Period (e.g. 1
year and 73 days = 1 + (73 divided by 365) = 1.2 years)
Straight-line interpolation is used for periods to maturity not quoted.
PENALTY-FREE WITHDRAWALS, TRANSFERS AND ANNUITIZATION PROVISIONS
PENALTY-FREE PARTIAL WITHDRAWALS OR TRANSFERS. Upon request in writing, the
Certificate Owner may, during any Certificate Year prior to the Annuity Date for
that certificate, withdraw up to 15% of the Premium Payment(s) or portion
remaining thereof, without incurring a withdrawal charge. For this purpose each
withdrawal is deemed to represent a withdrawal of a portion of a Premium Payment
previously accepted. Premium Payments will be deemed to be withdrawn in the
order in which they were received by the Company (i.e., the oldest premium
first). Any such withdrawal from a Fixed Account Sub-Account may be subject to a
Market Value Adjustment unless the withdrawal is made at the end of a Guaranteed
Period as set forth below. The Certificate Owner must specify from which Fixed
and/or Variable Sub-Accounts the withdrawal is to be made, otherwise the Company
may effect such withdrawal on a proportionate basis from all Fixed and/or
Variable Sub-Accounts in which the Annuity Account for that certificate is
invested.
Such partial withdrawals may be either taken as a lump sum or, upon consent of
the Company, paid in equal installments, however, (a) no more than one
penalty-free partial withdrawal may be made during any one Certificate Year,
(b) the first withdrawal in any Certificate Year will be deemed to be the
penalty-free withdrawal up to the amount specified above, and (c) the amount of
each such partial withdrawal must be at least $1,000.
AN423 18
<PAGE>
PENALTY-FREE WITHDRAWALS,
TRANSFERS AND ANNUITIZATION PROVISIONS (CONTINUED)
No withdrawal charge will be imposed on any withdrawal with respect to a Premium
Payment made under a certificate after the end of the seventh year following the
Company's acceptance of that Premium Payment.
The Certificate Owner may also transfer amounts within the Annuity Account
during the Accumulation Period without the application of a withdrawal charge,
however; (a) any transfers would be subject to any terms and conditions as may
be imposed under the "Transfer Privilege" provision, (b) transfers from a Fixed
Account Sub-Account may be subject to the "Market Value Adjustment" provision,
and (c) the amount of such transfer(s) must be at least $2,500 per Fixed Account
Sub-Account or $500 per Variable Account Sub-Account.
FULL OR PARTIAL WITHDRAWALS AND TRANSFERS AT THE END OF A GUARANTEED PERIOD. No
Market Value Adjustment will be imposed on a full or partial withdrawal or
transfer made from a Fixed Account Sub-Account which becomes effective at the
end of the applicable initial or subsequent Guaranteed Period. In such event,
the Certificate Owner's proper request for withdrawal or transfer must be
received at the Company's Variable Products Service Center's Mailing Address
within a 60-day period immediately preceding the end of such Guaranteed Period.
WAIVER OF WITHDRAWAL CHARGE AND/OR MARKET VALUE ADJUSTMENT ON DEATH OR ANNUITY
DATE. No withdrawal charge or Market Value Adjustment will be imposed upon
payments made under the Annuity Benefit provisions of a certificate, and no
negative Market Value Adjustment will be imposed upon payments made under the
"Death Benefit" provisions of a certificate.
PENALTY-FREE ANNUITIZATION. At any time the Certificate Owner may request in
writing payment of the then current Annuity Account Value under the certificate
in accordance with any one of the settlement options set forth in the
certificate. In such event, no withdrawal charge or Market Value Adjustment will
be imposed at the time such settlement is made. Such annuitization will
automatically result in a change in the Annuity Date to the date Income Payments
commence under the settlement option elected.
BENEFIT PROVISIONS
ANNUITY BENEFIT. On the Annuity Date the Company will pay all or a part of the
adjusted value of the Annuity Account under the certificate in cash or apply it
in accordance with the settlement option(s) elected by the Certificate Owner.
However, if the amount to be applied under any settlement option is less than
$5,000, or if the first Income Payment payable in accordance with such option is
less than $50, the Company will pay the adjusted value in a single payment to
the payee designated by the Certificate Owner.
ANNUITY DATE. The Annuity Date initially selected by each Certificate Owner is
shown in the Certificate Specifications. The Annuity Date may be changed from
time to time by the Certificate Owner by notifying the Company in writing. The
notice must be received at the Company's Variable Products Service Center's
Mailing Address at least 45 days prior to the Annuity Date then in effect. The
new Annuity Date selected must be at least 30 days after the effective date
of the change and not later than the Annuitant's 90th birthday.
After the Annuity Date, no change of a settlement option is permitted, no
payments may be requested under the "Cash Withdrawals" provision of the
certificate, and no Death Benefit is payable under the certificate except as
otherwise specified under the settlement option selected.
ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO ANNUITY BENEFIT.
During the lifetime of the Certificate Owner and prior to the Annuity Date,
the Certificate Owner may elect to have the adjusted value of the Annuity
Account applied on the Annuity Date under one or more of the settlement
options set forth in the certificate, or under any other settlement option as
agreed to by the Company. The Certificate Owner
AN423 19
<PAGE>
BENEFIT PROVISIONS (CONTINUED)
may also change any election, but any election or change of election must be
received at the Company's Variable Products Service Center's Mailing Address at
least 45 days prior to the Annuity Date. The election or change of election may
be made by filing with the Company at its Variable Products Service Center's
Mailing Address written notice in such form as the Company may require. If no
such election is in effect on the 30th day prior to the Annuity Date, the
adjusted value of the Annuity Account under a certificate will be applied under
a Life Annuity with 120 months guaranteed.
In such situation, the portion of the adjusted value of the Annuity Account
under a certificate to be applied for a Fixed Life Annuity under the Second
Option and/or a Variable Life Annuity under Option II will be determined on a
pro rata basis from the composition of the Annuity Account on the Annuity Date.
DETERMINATION OF AMOUNT. On the Annuity Date the Annuity Account under a
certificate will be canceled and the adjusted value of the Annuity Account to be
applied under the settlement options provisions shall be equal to the Annuity
Account Value for the Valuation Period which ends immediately preceding the
Annuity Date, minus a proportionate amount of the Annuity Account Fee to reflect
the time elapsed between the last Valuation Date for the most recent calendar
year and the Valuation Date before the Annuity Date, minus any applicable
premium or similar tax. For the purposes of any qualified plan riders which may
be attached to the certificate, the term "Annuity Value," wherever referenced
therein, shall mean the "adjusted value of the Annuity Account" as defined
above.
INCOME PAYMENT BENEFITS. On the Annuity Date, the adjusted value of the Annuity
Account under a certificate as determined under the "Determination of Amount"
provision may be applied, as elected by the Certificate Owner, under one or more
of the settlement options set forth in the certificate to effect: (a) a Fixed
Income Payment Benefit or a Variable Income Payment Benefit; or (b) a
combination of the Fixed Income Payment Benefit and the Variable Income Payment
Benefit. If a combination Fixed and Variable Income Payment Benefit is elected,
the Certificate Owner may specify the amount to be allocated to the Fixed Income
Payment Benefit and the amount to be allocated to the Variable Income Payment
Benefit. Such election and allocation may also be made by a Beneficiary to the
extent provided in the "Election and Effective Date of Election with Respect to
Death Benefit Provision."
DEATH BENEFIT. If the Certificate Owner dies before the Annuity Date specified
in the certificate, the Company will pay the Death Benefit to the Beneficiary
upon receipt of due proof of the death of the Certificate Owner in accordance
with the "Payment of Death Benefit" provision. If there is no Beneficiary living
on the date of death of the Certificate Owner, the Company will pay the Death
Benefit, upon receipt of due proof of the death of both the Certificate Owner
and the Beneficiary, in one sum to the estate of the Certificate Owner. If the
death of the Certificate Owner occurs on or after the Annuity Date, no death
benefit will be payable under the certificate except as may be provided under
the settlement option elected.
ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO DEATH BENEFIT. During
the lifetime of the Annuitant and prior to the Annuity Date specified in the
certificate, the Certificate Owner may elect one or more of the settlement
options set forth in the certificate to effect an annuity for the Beneficiary
as payee after the death of the Certificate Owner. This election may be made or
subsequently revoked by filing with the Company at its Variable Products Service
Center's Mailing Address a written election or revocation of an election in such
form as required by the Company.
Any election or revocation of an election of a method of settlement of the Death
Benefit will become effective on the date it is received by the Company at its
Variable Products Service Center's Mailing Address.
Unless otherwise specified in writing by the Certificate Owner, the Beneficiary
under the certificate may elect (a) to receive the Death Benefit as a cash
payment, in which event the Annuity Account will be canceled, or (b) to have the
Death Benefit applied under one or more of the settlement options set forth
under the certificate. This election may be made by filing with the Company a
written request in a form as required by the Company. Any written request for an
election of a settlement option for the Death Benefit by the Beneficiary will
become effective on the later of (a) the date the request is received by the
Company at its
AN423 20
<PAGE>
BENEFIT PROVISIONS (CONTINUED)
Variable Products Service Center's Mailing Address; or (b) the date due proof of
the death of the Certificate Owner is received by the Company at its Variable
Products Service Center's Mailing Address. If a written request for a
settlement option by the Beneficiary is not received by the Company within 60
days following the date due proof of the death of the Certificate Owner is
received by the Company, the Beneficiary shall be deemed to have elected a cash
payment as of the last day of the 60-day period.
Notwithstanding the above, the Certificate Owner or Beneficiary may only elect a
settlement option which provides for the distribution of the entire Death
Benefit to the Beneficiary within five years of the Certificate Owner's death
unless: (a) the entire interest in the contract is distributed over the life of
the Beneficiary, with distributions beginning within one year of the Certificate
Owner's death; (b) the entire interest in the certificate is distributed over a
period not extending beyond the life expectancy of the Beneficiary, with
distributions beginning within one year of the Certificate Owner's death; or (c)
the Beneficiary is the deceased Certificate Owner's spouse and elects to
continue the certificate and become the new Certificate Owner, but in no event
may such an election be made under the certificate more than once.
For purposes of Section 72(s) of the Internal Revenue Code, if any Certificate
Owner is not an individual, the death or change of any Annuitant under the
certificate is treated as the death of a Certificate Owner, and if the
Certificate Owner is a grantor trust within the meaning of the Internal Revenue
Code, the death of the grantor of such trust is also treated as the death of a
Certificate Owner.
PAYMENT OF DEATH BENEFIT. If the Death Benefit is to be paid in cash to the
Beneficiary, payment will be made within 7 days of the date the election becomes
effective or is deemed to become effective, provided due proof of the death of
the Certificate Owner is received by the Company at its Variable Products
Service Center's Mailing Address, except as the Company may be permitted to
defer any such payment of amounts derived from the Variable Account in
accordance with the Investment Company Act of 1940. If the Death Benefit is to
be paid in one sum to the estate of the deceased Certificate Owner, payment will
be made within 7 days of the date due proof of the death of the Certificate
Owner (and/or Beneficiary, if necessary) is received by the Company at its
Variable Products Service Center's Mailing Address, except as the Company may be
permitted to defer any such payment of amounts derived from the Variable Account
in accordance with the Investment Company Act of 1940. If settlement under the
settlement option provisions is elected, the Income Payments will commence 30
days following the effective date or the deemed effective date of the election
and the Annuity Account will be maintained in effect until such Income Payments
commence.
AMOUNT OF DEATH BENEFIT. No negative Market Value Adjustment is assessed
against amounts which are applied toward payment of a death benefit, and if no
Death Benefit Option(s) are then in effect, the amount of the death benefit
determined as of the effective date or deemed effective date of the death
benefit election (not as of the date of death) under a certificate is equal to
the Annuity Account Value for the Valuation Period during which the death
benefit election is effective or deemed to become effective. If however, one or
more of the following Death Benefit Options is in effect when the death benefit
becomes payable, the amount of the death benefit will be the greater of the
amount described above or the largest of the amounts of the Death Benefit
Option(s) in effect under the certificate.
The Death Benefit Option(s) in effect under a certificate, if any, are shown in
the Certificate Specifications as Death Benefit Options(s) A, B, C, and/or D;
such are described below:
Option A: The amount of death benefit equals Premium Payments made, less
partial withdrawals.
Option B: The amount of death benefit equals Premium Payments made, less
partial withdrawals, with interest compounded daily at a rate
equivalent to 5% per year during the first 7 Certificate Years.
As of the beginning of the 8th Certificate Year, the amount of
death benefit will decrease and thereafter be equal to total
Premium Payments made, less partial withdrawals.
AN423 21
<PAGE>
BENEFIT PROVISIONS (CONTINUED)
Option C: The amount of death benefit equals the Annuity Account Value on
the seven-year Certificate Anniversary immediately preceding the
date the death benefit election is effective or is deemed to
become effective, adjusted for any subsequent Premium Payments
and partial withdrawals and charges made between the immediate
preceding seven-year Certificate Anniversary and the date the
death benefit election is effective or is deemed to become
effective (as referenced herein, seven-year Certificate
Anniversary means the 7th Certificate Anniversary and each
succeeding Certificate Anniversary occurring at any seven-year
interval thereafter, for example, the 14th and 21st Certificate
Anniversaries).
Option D: The amount of death benefit equals the highest Annuity Account
Value ever attained on a Certificate Anniversary date, with
adjustments for any subsequent Premium Payments and partial
withdrawals and charges made since the last determination of such
highest value.
CHANGING DEATH BENEFIT OPTIONS. The election of the Death Benefit Option(s)
shown in the Certificate Specifications may be changed once, and only once,
while a certificate is in force, and the only change permitted is to drop one or
more of the Death Benefit Option(s) in effect at that time. The request for
change must be made in writing by the Owner. The Company reserves the right to
charge for the change at the time the request for change is processed.
CHARGING FOR DEATH BENEFIT OPTIONS. On each Certificate Anniversary the Company
will determine the amount of the death benefit in effect under the certificate
during the past Certificate Year, and if such amount is based on one or more
Death Benefit Options (i.e., A, B, C, or D), a cost of insurance charge will be
calculated as (a) times (b) where:
(a) equals the greatest coverage provided under the Death Benefit
Option(s) elected less the then current Annuity Account Value
(expressed on a per $1,000 basis), and
(b) is the appropriate cost of insurance rate per $1,000 from the
table below:
<TABLE>
<CAPTION>
Cost of Insurance
Annual Rates Per $1,000
-----------------------
Attained Age* Male Female
------------- ---- ------
<S> <C> <C>
less than 40 $2.40 $1.99
40-45 3.02 2.54
46-50 4.92 4.02
51-55 7.30 5.70
56-60 11.46 8.34
61-65 17.54 11.55
66-70 27.85 18.19
71-75 43.30 27.57
76-80 70.53 47.33
81-85 117.25 87.04
86-90 179.55 147.37
<FN>
* Attained Age of the person covered under the death benefit provisions of the
certificate.
</TABLE>
The cost of insurance charge will then be deducted on each Certificate
Anniversary on a pro-rata basis from the Fixed Account and Variable Account Sub-
Accounts under the certificate.
SECTION 72(s). The provisions above will be interpreted so as to comply with
the requirements of Section 72(s) of the Internal Revenue Code.
AN423 22
<PAGE>
GENERAL PROVISIONS
THE CONTRACT. The contract (including any amendments, endorsements or rider
attached thereto), the Contract Owner's application (a copy of which is attached
to the contract when issued), and the individual applications of the Certificate
Owners constitute the entire contract with the Company.
Only the President, a Vice President, an Assistant Vice President, a Secretary,
a Director or an Assistant Director of the Company may make or modify this
contract.
The contract is executed at the Company's Home Office, the mailing address of
which for this contract is CIGNA Individual Insurance, Variable Products Service
Center, Routing S224, Hartford, Connecticut 06152.
INDIVIDUAL CERTIFICATES. Individual certificates will be delivered to each
Certificate Owner under this contract. There certificate will include the
essential features of the coverage under this contract. The rights described in
the certificate are controlled by the provisions of this contract and are
subject to any changes in this contract.
MODIFICATION OF CONTRACT OR CERTIFICATE. The Company reserves the right to
modify this contract or any certificate issued under it to meet the requirements
of applicable state and federal laws or regulations. The Company will notify
the Contract Owner and/or the Certificate Owners in writing of any changes that
bear upon their contract or certificate.
NON-PARTICIPATION. The contract and the certificates issued under it are not
entitled to share in surplus distribution.
LOANS. Loans are not permitted under this contract or any certificate issued
under it.
DETERMINATION OF VALUES. The method of determination by the Company of the Net
Investment Factor and the number and value of Accumulation Units and Annuity
Units shall be conclusive upon the Certificate Owner, and any Beneficiary or
payee. Any paid-up annuity, cash surrender or death benefits that may be
available under a certificate will not be less than the minimum benefits
required by the jurisdiction of issue.
ENDORSEMENT OF INCOME PAYMENTS. The Company will make each Income Payment,
payable under a certificate, at the Home Office by check. Each check must be
personally endorsed by the payee/Annuitant, or the Company may require that
proof of the payee/Annuitant's survival be furnished.
MISSTATEMENT OF AGE. If the age of the Annuitant is misstated, the amount
payable under the applicable certificate will be adjusted to be the amount of
income which the actual premium paid would have purchased for the correct age
according to the Company's rates in effect on the Certificate Date. Any
overpayment by the Company, with interest at the rate of 6% per year, compounded
annually, will be charged against the payments to be made next succeeding the
adjustment. Any underpayment by the Company will be paid in a lump sum, with
interest at the rate of 6% per year, compounded annually.
CLAIMS OF CREDITORS. To the extent permitted by law, no amounts payable under a
certificate will be subject to the claims of creditors of any payee.
PERIODIC REPORTS. At least once each calendar year, the Company will furnish
the Certificate Owner a report as required by law showing the Annuity Account
Value at the end of the preceding year, all transactions during the year, the
current Annuity Account Value, the number of Accumulation Units in each Variable
Accumulation Account, the applicable Accumulation Unit Value as of the date of
the report and the interest rate credited to the Fixed Account Sub-Account(s).
The Company will also send such statements reflecting transactions in the
Annuity Account as may be required by applicable laws, rules and regulations.
AN423 23
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
FLEXIBLE PAYMENT DEFERRED GROUP VARIABLE ANNUITY CONTRACT
WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING
AN423
<PAGE>
OPTIONAL METHODS OF SETTLEMENT
This rider is made part of the contract to which it is attached as of the
Date of Issue. Upon written request, the Company will agree to pay in
accordance with any one of the options shown below all or part of the net
proceeds that may be payable under certificates issued under this contract.
While the Certificate Owner is alive, the request, including the designation
of the payee, may be made by the Certificate Owner. At the time a Death
Benefit becomes payable under a certificate, the request, including the
designation of the payee, may then be made by the Beneficiary. Once Income
Payments have begun, no surrender of the Annuity Value can be made (unless
Variable Income Payments are made under Option III) and the Annuitant cannot
be changed, nor can the settlement option be changed.
PAYMENT DATES. Under each certificate the first Income Payment under the
settlement option selected will be made on the first day of the month
following the Annuity Date. Subsequent payments will be made on the first day
of each month in accordance with the manner of payment selected.
MINIMUM PAYMENT AMOUNT. Under a certificate the settlement option elected
must result in an Income Payment at least equal to the minimum payment amount
in accordance with the Company's rules then in effect. If at any time
payments are less than the minimum payment amount, the Company has the right
to change the frequency to an interval that will provide the minimum payment
amount. If any amount due is less than the minimum per year, the Company may
make other arrangements that are equitable.
FIXED BENEFIT OPTIONS
FIXED INCOME PAYMENTS. Fixed Income Payments will remain constant pursuant to
the terms of the fixed settlement option(s) selected. The amount of each
Fixed Income Payment shall be determined in accordance with the terms of the
settlement option and the table(s) set forth in this rider, as applicable.
The mortality table used is the 1983 Individual Annuitant Mortality (IAM)
Table "a" and 3% interest. In determining the settlement amount, the
settlement age of the Annuitant will be reduced by one year when the first
instalment is payable during the 1990's, reduced by two years when the first
instalment is payable during the decade 2000-2009, and so on.
FIRST OPTION: LIFE ANNUITY. An annuity payable monthly to the payee during
the lifetime of the Annuitant, ceasing with the last payment due prior to the
death of the Annuitant.
SECOND OPTION: LIFE ANNUITY WITH CERTAIN PERIOD. An annuity providing
monthly income to the payee for a fixed period of 60, 120, 180, or 240 months
(as selected), and for as long thereafter as the Annuitant shall live.
THIRD OPTION: CASH REFUND LIFE ANNUITY. An annuity payable monthly to the
payee during the lifetime of the Annuitant ceasing with the last payment due
prior to the death of the Annuitant provided that, at the death of the
Annuitant, the payee will receive an additional payment equal to the excess,
if any, of (a) over (b) where: (a) is the initial value of the proceeds
applied under this option; and (b) is the dollar amount of payments already
paid.
FOURTH OPTION: ANNUITY CERTAIN. An amount payable monthly for the number of
years selected which may be from 5 to 30 years.
EXCESS INTEREST. At the sole discretion of the Company, excess interest may
be paid or credited from time to time in addition to the payments guaranteed
under any fixed benefit Optional Method of Settlement.
AR423 (Page 1)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
VARIABLE BENEFIT OPTIONS
VARIABLE INCOME PAYMENTS. The amount of the first Variable Income Payment
shall be determined in accordance with the terms of the settlement option and
the table(s) set forth in this rider, as applicable. The mortality table used
is the 1983 Individual Annuitant Mortality (IAM) Table "a" and 3%. In
determining the settlement amount, the settlement age of the Annuitant will
be reduced by one year when the first instalment is payable during the
1990's, reduced by two years when the first instalment is payable during the
decade 2000-2009 and so on.
All Variable Income Payments other than the first are determined by means of
Annuity Units credited to a certificate with respect to the particular payee.
The number of Annuity Units to be credited in respect of a particular
Sub-Account under a certificate is determined by dividing that portion of the
first Variable Income Payment attributable to that Sub-Account by the Annuity
Unit Value of that Sub-Account for the Valuation Period which ends
immediately preceding the Annuity Date. The number of Annuity Units of each
Sub-Account credited with respect to the particular payee then remains fixed
unless an exchange of Annuity Units is made pursuant to the "Exchange of
Variable Annuity Units" section. The dollar amount of each Variable Income
Payment after the first may increase, decrease or remain constant, and is
equal to the sum of the amounts determined by multiplying the number of
Annuity Units of a particular Sub-Account for the Valuation Period which ends
immediately preceding the due date of each subsequent payment by the Annuity
Unit Value for the particular Sub-Account for the first Valuation Period
occurring on or immediately prior to the first day of each month.
ANNUITY UNIT VALUE. The Annuity Unit Value for each Sub-Account was
established at $10.00 for the first Valuation Period of the particular
Sub-Account. The Annuity Unit Value for the particular Sub-Account for any
subsequent Valuation Period is determined by multiplying the Annuity Unit
Value for the particular Sub-Account for the immediately preceding Valuation
Period by the Net Investment Factor for the current Valuation Period and then
multiplying that product by a factor to neutralize the assumed interest rate
of 3% per year to establish the Annuity Payment Rates set forth in this
rider. The factor is 0.99991902 for a one day valuation period.
EXCHANGE OF VARIABLE ANNUITY UNITS. After the Annuity Date the payee may, by
filing a written request with the Company at its Variable Products Service
Center's Mailing Address, exchange the value of a designated number of
Annuity Units of particular Variable Sub-Accounts then credited with respect
to such payee into other Annuity Units, the value of which would be such that
the dollar amount of an Income Payment made on the date of the exchange would
be unaffected by the exchange. Unless otherwise authorized by the Company in
writing, no more than 3 exchanges may be made in any Certificate Year.
Exchanges may be made among the Variable Sub-Accounts only. Exchanges shall
be made using the Annuity Unit Values for the Valuation Period during which
the request for exchange is received by the Company at its Variable Products
Service Center's Mailing Address.
ANNUITY ACCOUNT FEE. After the Annuity Date an Annuity Account Fee amounting
to $35 per year will be deducted in equal amounts from each variable Income
Payment made during the year. For example, this would amount to a $2.92
deduction from each monthly Variable Income Payment. No deduction will be
made from Fixed Income Payments.
OPTION I: VARIABLE LIFE ANNUITY. A variable annuity payable monthly to the
payee during the lifetime of the Annuitant, ceasing with the last payment due
prior to the death of the Annuitant.
AR423 (Page 2)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
OPTION II: VARIABLE LIFE ANNUITY WITH CERTAIN PERIOD. A variable annuity
which provides monthly payments during the lifetime of the Annuitant and
further provides that if, at the death of the Annuitant, payments have been
made for less than the elected period certain, which may be 60, 120, 180 or
240 months, the annuity payments will be continued during the remainder of
such period.
OPTION III: VARIABLE ANNUITY CERTAIN. A variable amount payable monthly for
the number of years selected which may be from 5 to 30 years. At any time
during the period certain the Annuitant may elect that (1) all or a portion
of any future payments to which the Annuitant is entitled be commuted and
paid in one sum, or (2) such commuted amount, provided that the value thereof
meets the minimum payment amount in accordance with the Company's rules then
in effect, be applied to effect a variable annuity under one of the other
options described herein. At the expiration of the period certain, no further
payments of any kind are payable. If the Annuitant dies before the specified
number of certain payments have been received, the remainder of the payments
will be continued during the remainder of such period.
ADDITIONAL FIXED AND VARIABLE OPTIONS. Any proceeds payable under a
certificate may also be settled under any other method of settlement offered
by the Company at the time of the request.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
/S/ Thomas C. Jones
PRESIDENT
AR423 (Page 3)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
<TABLE>
<CAPTION>
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000 APPLIED - MALE
- ------------------------------------------------------------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST ANNUITANT NEAREST
BIRTHDAY 60 120 180 240 BIRTHDAY 60 120 180 240
- ------------------------------------------------------------------------------------------------------------------
AGE LIFE ANNUITY AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $2.87 $2.87 $2.87 $2.87 $2.87 35 $3.44 $3.44 $3.44 $3.43 $3.41
11 2.89 2.89 2.89 2.88 2.88 36 3.48 3.48 3.48 3.46 3.45
12 2.90 2.90 2.90 2.90 2.90 37 3.52 3.52 3.52 3.50 3.48
13 2.92 2.92 2.91 2.91 2.91 38 3.57 3.56 3.56 3.54 3.52
14 2.93 2.93 2.93 2.93 2.92 39 3.61 3.61 3.60 3.58 3.56
15 2.95 2.95 2.95 2.94 2.94 40 3.66 3.65 3.65 3.63 3.60
16 2.96 2.96 2.96 2.96 2.96 41 3.71 3.70 3.69 3.67 3.64
17 2.98 2.98 2.98 2.98 2.97 42 3.76 3.75 3.74 3.72 3.68
18 3.00 3.00 3.00 2.99 2.99 43 3.81 3.81 3.79 3.77 3.73
19 3.02 3.02 3.01 3.01 3.01 44 3.87 3.86 3.85 3.82 3.77
20 3.04 3.04 3.03 3.03 3.03 45 3.93 3.92 3.90 3.87 3.82
21 3.06 3.05 3.05 3.05 3.05 46 3.99 3.98 3.96 3.92 3.87
22 3.08 3.08 3.07 3.07 3.07 47 4.05 4.05 4.02 3.98 3.92
23 3.10 3.10 3.09 3.09 3.09 48 4.12 4.11 4.09 4.04 3.97
24 3.12 3.12 3.12 3.11 3.11 49 4.19 4.18 4.15 4.10 4.03
25 3.14 3.14 3.14 3.14 3.13 50 4.27 4.26 4.22 4.17 4.08
26 3.17 3.17 3.16 3.16 3.15 51 4.34 4.33 4.30 4.23 4.14
27 3.19 3.19 3.19 3.19 3.18 52 4.43 4.41 4.37 4.30 4.20
28 3.22 3.22 3.22 3.21 3.20 53 4.51 4.50 4.45 4.37 4.26
29 3.25 3.25 3.24 3.24 3.23 54 4.60 4.59 4.54 4.45 4.32
30 3.28 3.28 3.27 3.27 3.26 55 4.70 4.68 4.62 4.53 4.39
31 3.31 3.31 3.30 3.30 3.29 56 4.80 4.78 4.72 4.61 4.45
32 3.34 3.34 3.33 3.33 3.32 57 4.91 4.89 4.82 4.69 4.51
33 3.37 3.37 3.37 3.36 3.35 58 5.03 5.00 4.92 4.78 4.58
34 3.41 3.41 3.40 3.39 3.38 59 5.15 5.12 5.03 4.87 4.65
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000 APPLIED - MALE
- -----------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST
BIRTHDAY 60 120 180 240
- -----------------------------------------------------------
AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C>
60 $5.28 $5.25 $5.14 $4.96 $4.71
61 5.43 5.39 5.27 5.06 4.78
62 5.58 5.53 5.39 5.16 4.84
63 5.74 5.69 5.53 5.26 4.90
64 5.91 5.85 5.66 5.36 4.96
65 6.10 6.03 5.81 5.46 5.02
66 6.30 6.21 5.96 5.56 5.08
67 6.51 6.41 6.12 5.66 5.13
68 6.73 6.62 6.28 5.77 5.18
69 6.97 6.84 6.44 5.86 5.23
70 7.23 7.07 6.61 5.96 5.27
71 7.51 7.32 6.79 6.05 5.31
72 7.80 7.58 6.96 6.14 5.34
73 8.12 7.85 7.14 6.23 5.37
74 8.46 8.14 7.32 6.31 5.40
75 8.82 8.45 7.50 6.38 5.42
76 9.21 8.76 7.67 6.45 5.44
77 9.63 9.10 7.84 6.51 5.45
78 10.08 9.44 8.01 6.57 5.47
79 10.56 9.80 8.17 6.62 5.48
80 11.07 10.17 8.33 6.66 5.49
81 11.62 10.55 8.48 6.70 5.49
82 12.20 10.94 8.61 6.73 5.50
83 12.82 11.33 8.74 6.76 5.50
84 13.47 11.73 8.86 6.79 5.51
85 14.17 12.12 8.97 6.81 5.51
- -----------------------------------------------------------
</TABLE>
AR423 (Page 4)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
<TABLE>
<CAPTION>
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000 APPLIED - FEMALE
- -----------------------------------------------------------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST ANNUITANT NEAREST
BIRTHDAY 60 120 180 240 BIRTHDAY 60 120 180 240
- -----------------------------------------------------------------------------------------------------------------
AGE LIFE ANNUITY AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $2.80 $2.80 $2.80 $2.80 $2.80 35 $3.26 $3.26 $3.26 $3.25 $3.24
11 2.81 2.81 2.81 2.81 2.81 36 3.29 3.29 3.29 3.28 3.27
12 2.82 2.82 2.82 2.82 2.82 37 3.32 3.32 3.32 3.31 3.30
13 2.83 2.83 2.83 2.83 2.83 38 3.35 3.35 3.35 3.34 3.33
14 2.85 2.85 2.85 2.84 2.84 39 3.39 3.39 3.38 3.38 3.37
15 2.86 2.86 2.86 2.86 2.86 40 3.42 3.42 3.42 3.41 3.40
16 2.87 2.87 2.87 2.87 2.87 41 3.46 3.46 3.46 3.45 3.43
17 2.89 2.89 2.89 2.88 2.88 42 3.50 3.50 3.50 3.49 3.47
18 2.90 2.90 2.90 2.90 2.90 43 3.54 3.54 3.54 3.53 3.51
19 2.92 2.92 2.92 2.91 2.91 44 3.59 3.59 3.58 3.57 3.55
20 2.93 2.93 2.93 2.93 2.93 45 3.64 3.63 3.63 3.61 3.59
21 2.95 2.95 2.95 2.95 2.94 46 3.68 3.68 3.67 3.66 3.63
22 2.96 2.96 2.96 2.96 2.96 47 3.73 3.73 3.72 3.71 3.68
23 2.98 2.98 2.98 2.98 2.98 48 3.79 3.79 3.77 3.76 3.72
24 3.00 3.00 3.00 3.00 2.99 49 3.84 3.84 3.83 3.81 3.77
25 3.02 3.02 3.02 3.02 3.01 50 3.90 3.90 3.89 3.86 3.82
26 3.04 3.04 3.04 3.03 3.03 51 3.97 3.96 3.95 3.92 3.88
27 3.06 3.06 3.06 3.06 3.05 52 4.03 4.03 4.01 3.98 3.93
28 3.08 3.08 3.08 3.08 3.07 53 4.10 4.10 4.08 4.04 3.99
29 3.10 3.10 3.10 3.10 3.09 54 4.18 4.17 4.15 4.11 4.04
30 3.13 3.13 3.12 3.12 3.12 55 4.25 4.25 4.22 4.18 4.11
31 3.15 3.15 3.15 3.14 3.14 56 4.34 4.33 4.30 4.25 4.17
32 3.18 3.18 3.17 3.17 3.16 57 4.42 4.41 4.38 4.32 4.23
33 3.20 3.20 3.20 3.20 3.19 58 4.52 4.51 4.47 4.40 4.30
34 3.23 3.23 3.23 3.22 3.22 59 4.61 4.60 4.56 4.48 4.37
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000 APPLIED - FEMALE
- -----------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST
BIRTHDAY 60 120 180 240
- -----------------------------------------------------------
AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C>
60 $4.72 $4.70 $4.66 $4.57 $4.44
61 4.83 4.81 4.76 4.66 4.51
62 4.95 4.93 4.87 4.75 4.58
63 5.08 5.05 4.98 4.85 4.65
64 5.21 5.18 5.10 4.95 4.72
65 5.36 5.32 5.22 5.05 4.79
66 5.51 5.47 5.36 5.16 4.86
67 5.67 5.63 5.50 5.26 4.93
68 5.85 5.80 5.65 5.37 5.00
69 6.04 5.98 5.80 5.49 5.06
70 6.25 6.18 5.97 5.60 5.12
71 6.47 6.39 6.14 5.71 5.18
72 6.71 6.62 6.32 5.83 5.23
73 6.98 6.86 6.50 5.94 5.28
74 7.26 7.12 6.69 6.04 5.32
75 7.57 7.40 6.89 6.14 5.35
76 7.90 7.69 7.09 6.24 5.39
77 8.26 8.01 7.29 6.33 5.41
78 8.65 8.34 7.49 6.41 5.43
79 9.08 8.70 7.69 6.49 5.45
80 9.54 9.07 7.89 6.55 5.47
81 10.03 9.47 8.08 6.61 5.48
82 10.58 9.88 8.26 6.66 5.49
83 11.16 10.31 8.43 6.70 5.49
84 11.80 10.75 8.59 6.74 5.50
85 12.48 11.20 8.74 6.77 5.50
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED
- ---------------------------------------------------------------------------------------------------------------------------
NUMBERS OF YEARS AMOUNT OF EACH INSTALMENT NUMBER OF YEARS AMOUNT OF EACH INSTALMENT
DURING WHICH DURING WHICH
INSTALMENTS WILL BE INSTALMENTS WILL BE
PAID ANNUAL MONTHLY PAID ANNUAL MONTHLY
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 $ 211.99 $ 17.91 11 $ 104.93 $ 8.86
6 179.22 15.14 12 97.54 8.24
7 155.83 13.16 13 91.29 7.71
8 138.31 11.68 14 85.95 7.26
9 124.69 10.53 15 81.33 6.87
10 113.82 9.61 16 77.29 6.53
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED
- -----------------------------------------------------------
NUMBER OF YEARS AMOUNT OF EACH INSTALMENT
DURING WHICH
INSTALMENTS WILL BE
PAID ANNUAL MONTHLY
- -----------------------------------------------------------
<S> <C> <C>
17 $ 73.74 $ 6.23
18 70.59 5.96
19 67.78 5.73
20 65.26 5.51
25 55.76 4.71
- -----------------------------------------------------------
</TABLE>
AR423 (Page 5)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT
This rider is made part of the contract to which it is attached as of the
Date of Issue. Upon written request, the Company will agree to pay in
accordance with any one of the options shown below all or part of the net
proceeds that may be payable under the certificates issued under this
contract.
While the Certificate Owner is alive, the request, including the designation
of the payee, may be made by the Certificate Owner. At the time a Death
Benefit becomes payable under a certificate, the request, including the
designation of the payee, may then be made by the Beneficiary. Once Income
Payments have begun, no surrender of the Annuity Value can be made (unless
Variable Income Payments are made under Option III) and the Annuitant cannot
be changed, nor can the settlement option be changed.
PAYMENT DATES. Under each certificate the first Income Payment under the
settlement option selected will be made on the first day of the month
following the Annuity Date. Subsequent payments will be made on the first day
of each month in accordance with the manner of payment selected.
MINIMUM PAYMENT AMOUNT. Under each certificate the settlement option elected
must result in an Income Payment at least equal to the minimum payment amount
in accordance with the Company's rules then in effect. If at any time
payments are less than the minimum payment amount, the Company has the right
to change the frequency to an interval that will provide the minimum payment
amount. If any amount due is less than the minimum per year, the Company may
make other arrangements that are equitable.
FIXED BENEFIT OPTIONS
FIXED INCOME PAYMENTS. Fixed Income Payments will remain constant pursuant to
the terms of the fixed settlement option(s) selected. The amount of each
Fixed Income Payment shall be determined in accordance with the terms of the
settlement option and the table(s) set forth in this rider, as applicable.
The mortality table used is the 1983 Individual Annuitant Mortality (IAM)
Table "a" and 3% interest. In determining the settlement amount, the
settlement age of the Annuitant will be reduced by one year when the first
instalment is payable during the 1990's, reduced by two years when the first
instalment is payable during the decade 2000-2009, and so on.
FIRST OPTION: LIFE ANNUITY. An annuity payable monthly to the payee during
the lifetime of the Annuitant, ceasing with the last payment due prior to the
death of the Annuitant.
SECOND OPTION: LIFE ANNUITY WITH CERTAIN PERIOD. An annuity providing
monthly income to the payee for a fixed period of 60, 120, 180, or 240 months
(as selected), and for as long thereafter as the Annuitant shall live.
THIRD OPTION: CASH REFUND LIFE ANNUITY. An annuity payable monthly to the
payee during the lifetime of the Annuitant ceasing with the last payment due
prior to the death of the Annuitant provided that, at the death of the
Annuitant, the payee will receive an additional payment equal to the excess,
if any, of (a) over (b) where: (a) is the initial value of the proceeds
applied under this option; and (b) is the dollar amount of payments already
paid.
FOURTH OPTION: ANNUITY CERTAIN. An amount payable monthly for the number of
years selected which may be from 5 to 30 years.
EXCESS INTEREST. At the sole discretion of the Company, excess interest may
be paid or credited from time to time in addition to the payments guaranteed
under any fixed benefit Optional Method of Settlement.
AR423-U (Page 1)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
VARIABLE BENEFIT OPTIONS
VARIABLE INCOME PAYMENTS. The amount of the first Variable Income Payment
shall be determined in accordance with the terms of the settlement option and
the table(s) set forth in this rider, as applicable. The mortality table used
is the 1983 Individual Annuitant Mortality (IAM) Table "a" and 3%. In
determining the settlement amount, the settlement age of the Annuitant will
be reduced by one year when the first instalment is payable during the
1990's, reduced by two years when the first instalment is payable during the
decade 2000-2009 and so on.
All Variable Income Payments other than the first are determined by means of
Annuity Units credited to a certificate with respect to the particular payee.
The number of Annuity Units to be credited in respect of a particular
Sub-Account under a certificate is determined by dividing that portion of the
first Variable Income Payment attributable to that Sub-Account by the Annuity
Unit Value of that Sub-Account for the Valuation Period which ends
immediately preceding the Annuity Date. The number of Annuity Units of each
Sub-Account credited with respect to the particular payee then remains fixed
unless an exchange of Annuity Units is made pursuant to the "Exchange of
Variable Annuity Units" section. The dollar amount of each Variable Income
Payment after the first may increase, decrease or remain constant, and is
equal to the sum of the amounts determined by multiplying the number of
Annuity Units of a particular Sub-Account for the Valuation Period which ends
immediately preceding the due date of each subsequent payment by the Annuity
Unit Value for the particular Sub-Account for the first Valuation Period
occurring on or immediately prior to the first day of each month.
ANNUITY UNIT VALUE. The Annuity Unit Value for each Sub-Account was
established at $10.00 for the first Valuation Period of the particular
Sub-Account. The Annuity Unit Value for the particular Sub-Account for any
subsequent Valuation Period is determined by multiplying the Annuity Unit
Value for the particular Sub-Account for the immediately preceding Valuation
Period by the Net Investment Factor for the current Valuation Period and then
multiplying that product by a factor to neutralize the assumed interest rate
of 3% per year to establish the Annuity Payment Rates set forth in this
rider. The factor is 0.99991902 for a one day valuation period.
EXCHANGE OF VARIABLE ANNUITY UNITS. After the Annuity Date the payee may, by
filing a written request with the Company at its Variable Products Service
Center's Mailing Address, exchange the value of a designated number of
Annuity Units of particular Variable Sub-Accounts then credited with respect
to such payee into other Annuity Units, the value of which would be such that
the dollar amount of an Income Payment made on the date of the exchange would
be unaffected by the exchange. Unless otherwise authorized by the Company in
writing, no more than 3 exchanges may be made in any Certificate Year.
Exchanges may be made among the Variable Sub-Accounts only. Exchanges shall
be made using the Annuity Unit Values for the Valuation Period during which
the request for exchange is received by the Company at its Variable Products
Service Center's Mailing Address.
ANNUITY ACCOUNT FEE. After the Annuity Date an Annuity Account Fee amounting
to $35 per year will be deducted in equal amounts from each variable Income
Payment made during the year. For example, this would amount to a $2.92
deduction from each monthly Variable Income Payment. No deduction will be
made from Fixed Income Payments.
OPTION I: VARIABLE LIFE ANNUITY. A variable annuity payable monthly to the
payee during the lifetime of the Annuitant, ceasing with the last payment due
prior to the death of the Annuitant.
AR423-U (Page 2)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
OPTION II: VARIABLE LIFE ANNUITY WITH CERTAIN PERIOD. A variable annuity
which provides monthly payments during the lifetime of the Annuitant and
further provides that if, at the death of the Annuitant, payments have been
made for less than the elected period certain, which may be 60, 120, 180 or
240 months, the annuity payments will be continued during the remainder of
such period.
OPTION III: VARIABLE ANNUITY CERTAIN. A variable amount payable monthly for
the number of years selected which may be from 5 to 30 years. At any time
during the period certain the Annuitant may elect that (1) all or a portion
of any future payments to which the Annuitant is entitled be commuted and
paid in one sum, or (2) such commuted amount, provided that the value thereof
meets the minimum payment amount in accordance with the Company's rules then
in effect, be applied to effect a variable annuity under one of the other
options described herein. At the expiration of the period certain, no further
payments of any kind are payable. If the Annuitant dies before the specified
number of certain payments have been received, the remainder of the payments
will be continued during the remainder of such period.
ADDITIONAL FIXED AND VARIABLE BENEFIT OPTIONS. Any proceeds payable under a
certificate may also be settled under any other method of settlement offered
by the Company at the time of the request.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
/S/ THOMAS C. JONES
PRESIDENT
AR423-U (Page 3)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
<TABLE>
<CAPTION>
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000 APPLIED - UNISEX
- -------------------------------------------------------------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST ANNUITANT NEAREST
BIRTHDAY 60 120 180 240 BIRTHDAY 60 120 180 240
- -------------------------------------------------------------------------------------------------------------------
AGE LIFE ANNUITY AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C> <S> <C> <C> <C> <C> <C>
10 2.84 2.84 2.84 2.84 2.83 35 3.35 3.35 3.35 3.34 3.33
11 2.85 2.85 2.85 2.85 2.85 36 3.39 3.39 3.38 3.38 3.36
12 2.86 2.86 2.86 2.86 2.86 37 3.42 3.42 3.42 3.41 3.40
13 2.88 2.88 2.88 2.87 2.87 38 3.46 3.46 3.46 3.45 3.43
14 2.89 2.89 2.89 2.89 2.89 39 3.50 3.50 3.49 3.48 3.47
15 2.91 2.90 2.90 2.90 2.90 40 3.54 3.54 3.54 3.52 3.50
16 2.92 2.92 2.92 2.92 2.91 41 3.59 3.59 3.58 3.56 3.54
17 2.94 2.94 2.93 2.93 2.93 42 3.63 3.63 3.62 3.61 3.58
18 2.95 2.95 2.95 2.95 2.95 43 3.68 3.68 3.67 3.65 3.62
19 2.97 2.97 2.97 2.96 2.96 44 3.73 3.73 3.72 3.70 3.67
20 2.99 2.99 2.98 2.98 2.98 45 3.78 3.78 3.77 3.74 3.71
21 3.00 3.00 3.00 3.00 3.00 46 3.84 3.84 3.82 3.79 3.76
22 3.02 3.02 3.02 3.02 3.01 47 3.90 3.89 3.88 3.85 3.80
23 3.04 3.04 3.04 3.04 3.03 48 3.96 3.95 3.93 3.90 3.85
24 3.06 3.06 3.06 3.06 3.05 49 4.02 4.02 3.99 3.96 3.91
25 3.08 3.08 3.08 3.08 3.07 50 4.09 4.08 4.06 4.02 3.96
26 3.11 3.11 3.10 3.10 3.10 51 4.16 4.15 4.13 4.08 4.01
27 3.13 3.13 3.13 3.12 3.12 52 4.23 4.22 4.20 4.15 4.07
28 3.15 3.15 3.15 3.15 3.14 53 4.31 4.30 4.27 4.21 4.13
29 3.18 3.18 3.17 3.17 3.16 54 4.39 4.38 4.35 4.28 4.19
30 3.20 3.20 3.20 3.20 3.19 55 4.48 4.47 4.43 4.36 4.25
31 3.23 3.23 3.23 3.22 3.22 56 4.57 4.56 4.51 4.43 4.32
32 3.26 3.26 3.26 3.25 3.24 57 4.67 4.65 4.60 4.51 4.38
33 3.29 3.29 3.29 3.28 3.27 58 4.78 4.76 4.70 4.60 4.45
34 3.32 3.32 3.32 3.31 3.30 59 4.89 4.87 4.80 4.68 4.51
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000 APPLIED - UNISEX
- --------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST
BIRTHDAY 60 120 180 240
- --------------------------------------------------------------
AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C>
60 5.00 4.98 4.91 4.77 4.58
61 5.13 5.10 5.02 4.87 4.65
62 5.27 5.23 5.13 4.96 4.72
63 5.41 5.37 5.26 5.06 4.79
64 5.56 5.52 5.39 5.16 4.85
65 5.73 5.68 5.52 5.27 4.92
66 5.90 5.84 5.67 5.37 4.98
67 6.09 6.02 5.82 5.48 5.04
68 6.29 6.21 5.97 5.58 5.10
69 6.51 6.41 6.13 5.69 5.15
70 6.74 6.63 6.30 5.79 5.20
71 6.99 6.86 6.47 5.90 5.25
72 7.25 7.10 6.65 6.00 5.29
73 7.54 7.36 6.83 6.09 5.33
74 7.85 7.63 7.02 6.19 5.36
75 8.19 7.92 7.21 6.27 5.39
76 8.55 8.23 7.39 6.36 5.42
77 8.93 8.56 7.58 6.43 5.44
78 9.35 8.90 7.77 6.50 5.45
79 9.80 9.26 7.95 6.56 5.47
80 10.29 9.63 8.12 6.61 5.48
81 10.81 10.02 8.29 6.66 5.49
82 11.37 10.42 8.45 6.70 5.49
83 11.98 10.83 8.60 6.74 5.50
84 12.62 11.25 8.74 6.76 5.50
85 13.31 11.67 8.86 6.79 5.51
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED
- ----------------------------------------------------------------------------------------------------------------------------
NUMBERS OF YEARS AMOUNT OF EACH INSTALMENT NUMBER OF YEARS AMOUNT OF EACH INSTALMENT
DURING WHICH DURING WHICH
INSTALMENTS WILL BE INSTALMENTS WILL BE
PAID ANNUAL MONTHLY PAID ANNUAL MONTHLY
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5 211.99 17.91 11 104.93 8.86
6 179.22 15.14 12 97.54 8.24
7 155.83 13.16 13 91.29 7.71
8 138.31 11.68 14 85.95 7.26
9 124.69 10.53 15 81.33 6.87
10 113.82 9.61 16 77.29 6.53
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED
- ----------------------------------------------------------
NUMBER OF YEARS AMOUNT OF EACH INSTALMENT
DURING WHICH
INSTALMENTS WILL BE
PAID ANNUAL MONTHLY
- ----------------------------------------------------------
<S> <C> <C>
17 $ 73.74 $ 6.23
18 70.59 5.96
19 67.78 5.73
20 65.26 5.51
25 55.76 4.71
30 49.53 4.18
- ----------------------------------------------------------
</TABLE>
AR423-U (Page 4)
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
A Stock Company Home Office Location: 900 Cottage Grove Road
Bloomfield, Connecticut
MAILING ADDRESS: CIGNA INDIVIDUAL INSURANCE
VARIABLE PRODUCTS SERVICE CENTER - ROUTING S224
HARTFORD, CT 06152
The Company has issued a Flexible Payment Deferred Group Variable Annuity
Contract to the Contract Owner named in the Certificate Specifications. This
certificate describes the terms and conditions of the group contract. If there
is a conflict between the group contract and this certificate, the terms and
conditions of the group contract will control.
RIGHT TO EXAMINE CERTIFICATE. This certificate may be returned to the insurance
agent through whom it was purchased or to the Company via the Variable Products
Service Center within 10 days after its receipt (20 days after its receipt where
required by law for a certificate issued in replacement of another contract).
If the certificate is so returned, it will be deemed void from the Certificate
Date, and the Company will refund the Premium Payment(s) as provided plus or
minus any investment gains or losses under the certificate as of the date the
returned certificate is mailed or delivered to the agent through whom it was
purchased or the date it is delivered or mailed to the Company, unless required
otherwise by law.
The certificate is governed by the laws of the jurisdiction of issue of the
group contract and is issued and accepted subject to the terms set forth on this
page and on the following pages which are made a part of the certificate. In
consideration of the application for it and the Premium Payment(s) as provided,
this certificate is executed by Connecticut General Life Insurance Company as of
its Certificate Date.
/s/ Thomas C. Jones
Registrar PRESIDENT
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE, INCLUDING WITHDRAWALS AND TRANSFERS. PAYMENTS
MADE FROM THE FIXED ACCOUNT PURSUANT TO AN ELECTION WHICH BECOMES EFFECTIVE AT
THE END OF A GUARANTEED PERIOD AND PAYMENTS MADE UNDER THE "ANNUITY BENEFIT"
PROVISIONS AND UNDER THE "PENALTY-FREE ANNUITIZATION" PROVISION ARE NOT SUBJECT
TO THE MARKET VALUE ADJUSTMENT. PAYMENTS MADE UNDER THE "DEATH BENEFIT"
PROVISIONS ARE NOT SUBJECT TO ANY NEGATIVE MARKET VALUE ADJUSTMENT.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CERTIFICATE WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
USE OF CERTIFICATE. This certificate is available for retirement and deferred
compensation plans some of which may qualify for special tax treatment under
various sections of the Internal Revenue Code.
FLEXIBLE PAYMENT DEFERRED GROUP VARIABLE ANNUITY CERTIFICATE
WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING
THIS IS A LEGAL CONTRACT BETWEEN THE CERTIFICATE OWNER AND THE COMPANY
READ IT CAREFULLY.
AN424
<PAGE>
TABLE OF CONTENTS
CERTIFICATE SPECIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 5
SCHEDULE OF CHARGES, EXPENSES AND FEES . . . . . . . . . . . . . . . . . . . 7
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PREMIUM PAYMENT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 10
Premium Payments
Allocation of Premium Payments
Annuity Account Continuation
Minimum Value Requirements
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS . . . . . . . . . . . . . . 11
Certificate Owner
Rights of Certificate Owner
Transfer of Certificate Ownership
Assignment
Beneficiary
Change of Beneficiary
FIXED AND VARIABLE ACCOUNTS PROVISIONS . . . . . . . . . . . . . . . . . . . 12
Fixed Account and Sub-Accounts
Variable Account and Sub-Accounts
Investment Risk
Investments of the Variable Account Sub-Accounts
Substituted Securities
VALUES DURING ACCUMULATION PERIOD PROVISIONS . . . . . . . . . . . . . . . . 13
Part A - Fixed Account Value
Guaranteed Periods
Guaranteed Interest Rates
Fixed Accumulation Value
Minimum Surrender Value
Part B - Variable Account Value
Crediting Variable Accumulation Units
Variable Accumulation Unit Value
Variable Accumulation Value
Net Investment Factor
Part C - General
Annuity Account
Transfer Privilege
Annuity Account Fee
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE
ADJUSTMENT PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Cash Withdrawals
Withdrawal Charges
Market Value Adjustment
AN424 2
<PAGE>
TABLE OF CONTENTS (CONTINUED)
PENALTY-FREE WITHDRAWALS, TRANSFERS AND ANNUITIZATION PROVISIONS . . . . . . 18
Penalty-Free Partial Withdrawals or Transfers
Full or Partial Withdrawals and Transfers at the End of a
Guaranteed Period
Waiver of Withdrawal Charge and/or Market Value Adjustment on
Death or Annuity Date
Penalty-Free Annuitization
BENEFIT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Annuity Benefit
Annuity Date
Election and Effective Date of Election with Respect to Annuity Benefit
Determination of Amount
Income Payment Benefits
Death Benefit
Election and Effective Date of Election with Respect to Death Benefit
Payment of Death Benefit
Amount of Death Benefit
Changing Death Benefit Options
Charging for Death Benefit Options
Section 72(s)
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
The Contract and The Certificate
Modification of Certificate
Non-Participation
Loans
Determination of Values
Endorsement of Income Payments
Misstatement of Age
Claims of Creditors
Periodic Reports
Followed by Optional Methods of Settlement and any Riders
Note: Pages 4, 6, and 8 are intentionally "blank."
AN424 3
<PAGE>
CERTIFICATE SPECIFICATIONS
ANNUITANT JOHN DOE SPECIMEN CERTIFICATE NUMBER
AGE AT ISSUE 35 AUGUST 1, 1995 CERTIFICATE DATE
GROUP CONTRACT NUMBER SPECIMEN AUGUST 1, 2025 ANNUITY DATE
- --------------------------------------------------------------------------------
FORM BENEFIT INITIAL
PREMIUM
PAYMENT
AN424 FLEXIBLE PAYMENT DEFERRED GROUP VARIABLE ANNUITY $50,000
WITH FIXED AND VARIABLE ACCOUNTS
DEATH BENEFIT OPTION(S) ELECTED: NONE
INITIAL PREMIUM PAYMENT ALLOCATION PERCENTAGE
FIXED ACCOUNT - SUB-ACCOUNTS
PERCENTAGE ADJUSTMENT TO INDEX RATE "B": .50%
INITIAL GUARANTEED PERIOD/INTEREST RATE 1 YEAR / 4.55% 10%
INITIAL GUARANTEED PERIOD/INTEREST RATE 3 YEARS / 5.80% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 5 YEARS / 6.40% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 7 YEARS / 6.65% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 10 YEARS / 6.90% 0%
VARIABLE ACCOUNT - SUB-ACCOUNTS (FUNDS)
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND
EQUITY-INCOME PORTFOLIO 10%
MONEY MARKET PORTFOLIO 10%
VARIABLE INSURANCE PRODUCTS FUND II
ASSET MANAGER PORTFOLIO 0%
INVESTMENT GRADE BOND PORTFOLIO 0%
FRED ALGER MANAGEMENT, INC.
ALGER AMERICAN FUND 0%
ALGER AMERICAN GROWTH PORTFOLIO 0%
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO 10%
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO 0%
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO 10%
MASSACHUSETTS FINANCIAL SERVICES
VARIABLE INSURANCE TRUST
MFS TOTAL RETURN SERIES 10%
MFS UTILITIES SERIES 0%
MFS WORLD GOVERNMENTS SERIES 0%
(Continued on Page 5.1)
AN424 5
<PAGE>
CERTIFICATE SPECIFICATIONS (CONTINUED)
ANNUITANT JOHN DOE SPECIMEN CERTIFICATE NUMBER
AGE AT ISSUE 35 AUGUST 1, 1995 CERTIFICATE DATE
GROUP CONTRACT NUMBER SPECIMEN AUGUST 1, 2025 ANNUITY DATE
- --------------------------------------------------------------------------------
NEUBERGER & BERMAN
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST 0%
AMT BALANCED PORTFOLIO 0%
AMT LIMITED MATURITY BOND PORTFOLIO 10%
AMT PARTNERS PORTFOLIO 10%
QUEST FOR VALUE
QUEST FOR VALUE ACCUMULATION TRUST
QUEST GLOBAL EQUITY PORTFOLIO 10%
QUEST MANAGED PORTFOLIO 10%
QUEST SMALL CAP PORTFOLIO 0%
TOTAL 100%
SUBSEQUENT PREMIUM PAYMENTS ARE SUBJECT TO A 10% MINIMUM ALLOCATION REQUIREMENT
WITH RESPECT TO ANY ONE FIXED ACCOUNT SUB-ACCOUNT OR VARIABLE ACCOUNT SUB-
ACCOUNT AND THE FOLLOWING MINIMUM PAYMENT AMOUNTS:
$2,500 PER FIXED ACCOUNT GUARANTEED PERIOD
$ 100 PER VARIABLE ACCOUNT SUB-ACCOUNT
LIMITATIONS ON TRANSFERS FROM FIXED ACCOUNT: ONLY ONE SUCH TRANSFER ALLOWED PER
CERTIFICATE YEAR FROM EACH SUB-ACCOUNT, AND THE AMOUNT(S) TRANSFERRED MAY NOT
EXCEED 15% OF THE PREMIUM PAYMENT(S) MADE TO THE APPLICABLE SUB-ACCOUNT(S) OR
THE PORTION REMAINING THEREOF IN THE APPLICABLE SUB-ACCOUNT(S), IF LESS.
THIS CERTIFICATE IS FOR USE WITH "CG VARIABLE ANNUITY SEPARATE ACCOUNT II": A
CONNECTICUT GENERAL LIFE INSURANCE COMPANY SEPARATE INVESTMENT ACCOUNT WHICH WAS
ESTABLISHED ON JANUARY 25, 1994.
CONTRACT OWNER: CIGNA VARIABLE PRODUCTS TRUST (DATED X/X/95)
CERTIFICATE OWNER: THE ANNUITANT
BENEFICIARY: THE PERSON(S) DESIGNATED BY THE CERTIFICATE OWNER AND RECORDED BY
THE COMPANY
JURISDICTION OF ISSUE OF GROUP CONTRACT: RHODE ISLAND
AN424 5.1
<PAGE>
SCHEDULE OF CHARGES, EXPENSES AND FEES
Annuity Account Fee: The Annuity Account Fee is $35 per Certificate Year and
will be deducted on the last Valuation Date of each Certificate Year. The
Annuity Account Fee, however, will be waived for any year for which the Annuity
Account Value equals or exceeds $100,000 as of the last Valuation Date of such
Certificate Year.
Withdrawal Charges: The Withdrawal charges applicable under this certificate
are as follows.
<TABLE>
<CAPTION>
Withdrawal Charge
Against Premium Pay- Year
ment Withdrawn Applicable
-------------- ----------
<C> <S>
7% During 1st year since Premium Payment Accepted
6% During 2nd year since Premium Payment Accepted
5% During 3rd year since Premium Payment Accepted
4% During 4th year since Premium Payment Accepted
3% During 5th year since Premium Payment Accepted
2% During 6th year since Premium Payment Accepted
1% During 7th year since Premium Payment Accepted
0% Thereafter
</TABLE>
Each Subsequent Premium Payment will be subject to its own 7-year period.
Any Withdrawal from the Fixed Account prior to the end of a Guaranteed Period
may also be subject to a Market Value Adjustment which may increase, decrease,
or have no affect on the applicable account value(s). A Market Value Adjustment
would not apply to a withdrawal effective at the end of a Guaranteed Period.
Withdrawal charges are not applicable to certain partial withdrawals of 15% or
less of Premium Payments annually. Withdrawal charges and a Market Value
Adjustment are not applicable to annuitization of the certificate at any time,
and no negative Market Value Adjustment is applicable to payment of the Death
Benefit. (See "Penalty-Free Withdrawals, Transfers and Annuitization
Provisions.")
Asset Charges: Mortality and Expense Risk Charge is a charge equal to an
effective annual rate of 1.20% of the daily net assets of the Variable Account.
Administrative Expense Charge is a charge equal to an effective annual rate of
.10% of the daily net assets of the Variable Account. These charges are
deducted from the Variable Account Value at the end of each Valuation Period.
In addition, Daily Fund Operating Expenses will be applied by each Fund as set
forth in the prospectus for the applicable Fund(s).
(Continued on Page 7.1)
AN424 7
<PAGE>
SCHEDULE OF CHARGES, EXPENSES AND FEES (Continued)
Taxes: Premium tax equivalents (including any related retaliatory taxes), if
any, and any other taxes due under this certificate will be deducted if
applicable. It is currently the Company's practice to deduct such taxes, if
any, at the time the Annuity Account Value, or any portion thereof, becomes
payable.
AN424 7.1
<PAGE>
DEFINITIONS
ACCUMULATION PERIOD. The period from the Certificate Date to (a) the Annuity
Date, (b) the date on which the Death Benefit becomes payable, or (c) the date
on which the certificate is surrendered or annuitized, whichever is earliest.
ANNUITANT. The person on whose life the first Income Payment is to be made upon
the annuitization of the certificate. The Annuitant is the person designated in
the Certificate Specifications and will remain the Annuitant under the
certificate unless the Certificate Owner exercises the right to change the
Annuitant as set forth in the "Rights of Certificate Owner" provision. If prior
to the Annuity Date, the Annuitant predeceases the Certificate Owner, the
Certificate Owner will then become the Annuitant until such time as the
Certificate Owner exercises the right to designate a new Annuitant as set forth
in the "Rights of Certificate Owner" provision. A request for change of
Annuitant must be in writing to the Company at its Variable Products Service
Center's Mailing Address and will not take effect until recorded by the Company.
ANNUITY ACCOUNT. The account which is comprised of the Fixed and Variable
Accounts with respect to this certificate.
ANNUITY ACCOUNT VALUE. The account value which at any time equals the sum of
all the then current values of the Fixed and Variable Accounts with respect to
this certificate. Applicable premium taxes, if any, will be deducted when the
Annuity Account Value amount to be applied under the Annuity Benefit, Death
Benefit, Cash Withdrawals or Penalty-Free Withdrawal and Annuitization
provisions is determined.
ANNUITY DATE. The date on which Income Payments begin upon the annuitization of
the certificate.
CERTIFICATE DATE. The date this certificate takes effect.
CERTIFICATE OWNER (OR "OWNER"). The Certificate Owner is defined under
"Ownership, Assignment and Beneficiary Provisions." The term "Owner," by
itself, shall mean Certificate Owner.
CERTIFICATE YEARS AND CERTIFICATE ANNIVERSARIES. All Certificate Years and
Certificate Anniversaries are 12 month periods measured from the Certificate
Date.
CONTRACT OWNER. The person or entity designated in the Certificate
Specifications.
DUE PROOF OF DEATH. An original certified copy of an official death
certificate, an original certified copy of a decree of a court of competent
jurisdiction as to the finding of death, or any other proof of death
satisfactory to the Company.
EXPIRATION DATE(S). The date(s) on which Guaranteed Period(s), if any, end.
FIXED ACCOUNT. The term "Fixed Account" under this certificate means all Sub-
Account(s) associated with Guaranteed Period(s) and Guaranteed Interest Rate(s).
Fixed Account assets are general assets of the Company and are distinguishable
from those allocated to a separate account of the Company.
FUND(S). The Portfolio(s) of Fund Group(s) whose shares are acquired for the
Variable Account Sub-Accounts in which Premium Payments or Transfers may be
invested.
FUND GROUP(S). The open-end management investment companies (mutual funds)
registered under the Investment Company Act of 1940, as amended (hereinafter
referred as the "1940 Act"), one or more of whose Portfolio(s)' shares are made
available as investment vehicles for this certificate through Variable Accounts
Sub-Accounts.
GUARANTEED PERIOD. The Guaranteed Period is the period for which interest, at
either an initial or subsequent Guaranteed Interest Rate will be credited to an
amount under a Fixed Account Sub-Account.
AN424 9
<PAGE>
DEFINITIONS (CONTINUED)
HOME OFFICE. The term "Home Office" means Connecticut General Life Insurance
Company, the mailing address of which for this contract is CIGNA Individual
Insurance, Variable Products Service Center, Routing S224, Hartford, Connecticut
06152.
IN WRITING. The term "In writing" means in a written form satisfactory to the
Company and received by the Company at its Variable Products Service Center's
Mailing Address.
INCOME PAYMENTS. Income Payments are the amounts payable under this certificate
as determined by the settlement options provisions.
PAYOUT PERIOD. The period during which Income Payments are made under this
certificate.
SUB-ACCOUNT. That portion of the Fixed Account associated with specific
Guaranteed Period(s) and Guaranteed Interest Rate(s) and that portion of the
Variable Account which invests in shares of a specific Fund.
VALUATION DATE. Every day on which the New York Stock Exchange ("NYSE") is open
for business, except any day on which trading on the NYSE is restricted, or on
which an emergency exists, as determined by the Securities and Exchange
Commission ("SEC") so that valuation or disposal of securities is not
practicable.
VALUATION PERIOD. The period of time beginning on the day following the
Valuation Date and ending on the next Valuation Date. A Valuation Period may be
more than one day in length.
VARIABLE ACCOUNT. The term "Variable Account" under this certificate means all
Sub-Account(s) associated with investments in the Fund(s). Variable Account
assets are separate account assets of the Company, the investment performance of
which is kept separate from that of the general assets of the Company, and are
not chargeable with the general liabilities of the Company.
VARIABLE ACCUMULATION UNIT. A unit of measure used in the calculation of the
value of each Variable Account Sub-Account.
VARIABLE ANNUITY UNIT. A unit of measure used in the calculation of the value
of the variable portion of the Annuity Account during the Payout Period.
PREMIUM PAYMENT PROVISIONS
PREMIUM PAYMENTS. Premium Payments made under this certificate are payable to
the Company at its Variable Products Service Center's Mailing Address or to an
authorized agent of the Company. A receipt signed by the President or Secretary
and duly countersigned will be furnished upon request. The Initial Premium
Payment is the amount paid to the Company as consideration for the benefits
provided under this certificate on its Certificate Date. Subsequent Premium
Payments made under this certificate may be paid to the Company at its Variable
Products Service Center's Mailing Address from time to time after its
Certificate Date and prior to the Annuity Date. The Company will not accept any
Premium Payment which is less than the minimum amount requirement then in effect
as determined by the Company. In addition, the prior approval of the Company is
required before it will accept a Premium Payment in excess of the maximum amount
limit then in effect as determined by the Company. All Premium Payments made
under this certificate must meet the allocation requirements specified under the
"Allocation of Premium Payments" provision. The payment of any amount under
this certificate which is derived, all or in part, from any Premium Payments
made by check or draft may be postponed until such check or draft has been
honored by the financial institution upon which it is drawn.
The Initial Premium Payment attributable to this certificate is shown on the
Certificate Specifications page.
ALLOCATION OF PREMIUM PAYMENTS. Upon receipt by the Company at its Variable
Products Service Center's Mailing Address, each Premium Payment made under this
certificate will be added to the Annuity Account established under the
certificate. The Annuity Account is described under the "Annuity Account"
provision and is comprised of Fixed Account Sub-Account(s) and Variable Account
Sub-Account(s). The Initial
AN424 10
<PAGE>
PREMIUM PAYMENT PROVISIONS (CONTINUED)
Premium Payment made under this certificate will be allocated to one or more
such Sub-Accounts in accordance with the allocation percentages specified by the
Certificate Owner and shown in the Certificate Specifications, provided such
allocations to Fixed and/or Variable Accounts conform to the Company's minimum
deposit requirements in effect as of the Certificate Date. Subsequent Premium
Payments made under this certificate will be allocated on the same basis as the
most recent previous Premium Payment unless the Company is otherwise instructed
by the Certificate Owner to change the allocation percentages. If a portion of
the most recent previous Premium Payment was allocated to the Fixed Account and
the allocation percentages when applied to a Subsequent Premium Payment does not
produce an amount which meets the Fixed Account minimum requirements, the
Company will promptly seek further instructions from the Certificate Owner
regarding allocation of the premium or otherwise return the applicable portion
of such Premium Payment as provided by law.
ANNUITY ACCOUNT CONTINUATION. The Annuity Account under this certificate shall
be continued automatically in full force from the Certificate Date until the
Annuity Date or until the certificate is surrendered or annuitized, the Death
Benefit is paid, or the Annuity Account Value no longer meets the requirements
specified in the "Minimum Value Requirements" provision, whichever occurs first.
MINIMUM VALUE REQUIREMENTS. If no Premium Payments have been made under this
certificate for three consecutive years and its Annuity Account Value decreases
to less than $500 during that period, or if any partial withdrawal decreases its
Annuity Account Value to less than $500, the Company reserves the right to
cancel the certificate and pay to the Certificate Owner an adjusted value of the
Annuity Account as would be calculated under the "Determination of Amount"
provision. The Company will, however, provide at least 30 days advance notice
to the Certificate Owner of its intended action. During the notification period
an additional Premium Payment may be made to meet the minimum value
requirements.
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
CERTIFICATE OWNER. The Certificate Owner on the Certificate Date will be the
person designated in the Certificate Specifications. If no Certificate Owner is
designated, the Annuitant will be the Certificate Owner.
RIGHTS OF CERTIFICATE OWNER. The Certificate Owner may exercise all rights and
privileges under the certificate including the right to: (a) agree with the
Company to any change in or amendment to the certificate, (b) transfer all
rights and privileges to another person, (c) change the Beneficiary, (d) change
the Annuitant any time prior to the Annuity Date or name a new Annuitant if the
Annuitant predeceases the Certificate Owner, (e) name the payee to whom Income
Payments are to be directed, and (f) assign the certificate.
All rights and privileges of the Certificate Owner may be exercised without the
consent of any designated transferee, or any Beneficiary if the Certificate
Owner has reserved the right to change the Beneficiary. All such rights and
privileges, however, may be exercised only with the consent of any assignee on
record with the Company.
TRANSFER OF CERTIFICATE OWNERSHIP. The Certificate Owner may transfer all
rights and privileges of the Certificate Owner. On the effective date of
transfer, the transferee will become the Certificate Owner and will have all the
rights and privileges of the Certificate Owner. The Certificate Owner may revoke
any transfer prior to its effective date.
Unless provided otherwise, a transfer will not affect the interest of any
Beneficiary designated prior to the effective date of the transfer.
A transfer of Certificate Ownership, or a revocation of transfer, must be in
writing to the Company at its Variable Products Service Center's Mailing
Address. A transfer or a revocation will not take effect until recorded in
writing by the Company at its Variable Product Service Center's Mailing Address.
When a transfer or revocation has been so recorded, it will take effect as of
the effective date specified by the Certificate Owner. Any payment made or any
action taken or allowed by the Company before the transfer or there vocation is
recorded will be without prejudice to the Company.
AN424 11
<PAGE>
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS (CONTINUED)
ASSIGNMENT. This certificate may not be assigned and the Company will not be
affected by any assignment of the certificate until the original assignment or a
certified copy of the assignment is filed at the Home Office.
The Company does not assume responsibility for the validity or sufficiency of
any assignment. An assignment of the certificate will operate so long as the
assignment remains in force.
To the extent provided under the terms of the assignment, an assignment will
transfer the interest of any designated transferee or of any Beneficiary if the
Certificate Owner has reserved the right to change the Beneficiary.
BENEFICIARY. The Beneficiary is the person who has the right to receive the
Death Benefit set forth in the certificate and, for Non-Qualified Certificates,
who is the "designated beneficiary" for purposes of Section 72(s) of the
Internal Revenue Code in the event of the Certificate Owner's death. The
Beneficiary on the Certificate Date will be the person designated in the
Certificate Specifications.
Unless provided otherwise, the interest of any Beneficiary who dies before the
Certificate Owner will vest in the Certificate Owner or the Certificate Owner's
administrators or assigns.
CHANGE OF BENEFICIARY. A new Beneficiary may be designated from time to time. A
request for change of Beneficiary must be in writing to the Company at its
Variable Products Service Center's Mailing Address. The request must be signed
by the Certificate Owner. The request must also be signed by the Beneficiary if
the right to change the Beneficiary has not been reserved to the Certificate
Owner.
A change of Beneficiary will not take effect until recorded by the Company. When
a change of Beneficiary
has been so recorded, whether or not the Certificate Owner is then alive, it
will take effect as of the date the
request was signed. Any payment made or any action taken or allowed by the
Company before the change of Beneficiary is recorded will be without prejudice
to the Company.
Unless provided otherwise, the right to change any Beneficiary is reserved to
the Certificate Owner.
FIXED AND VARIABLE ACCOUNTS PROVISIONS
FIXED ACCOUNT AND SUB-ACCOUNTS. Fixed Account assets are general assets of the
Company and are distinguishable from those allocated to a separate account of
the Company. Any portion of Premium Payments allocated by the Certificate Owner
to a Fixed Account Sub-Account will become part of the Fixed Account.
VARIABLE ACCOUNT AND SUB-ACCOUNTS. The Variable Account to which the variable
accumulation values, if any, under this certificate relate is shown in the
Certificate Specifications. It was established pursuant to a resolution of its
Board of Directors as a "separate account" under governing law of Connecticut,
the Company's state of domicile, and registered as a unit investment trust under
the 1940 Act. Under Connecticut law, the Variable Account assets (except assets
in excess of its reserves and other contract liabilities) cannot be charged with
the general liabilities from any other business of the Company. The Variable
Account assets are owned and controlled exclusively by the Company, and the
Company is not a trustee with respect to those assets.
The Variable Account is divided into Sub-Accounts. Each Variable Account Sub-
Account's assets are invested in shares of a particular Fund of one of the Fund
Groups made available as funding vehicles under this certificate. For each
Variable Account Sub-Account, the Company maintains Variable Accumulation Units
whose values reflect the investment performance of the Fund whose shares are
held in that Sub-Account.
Subject to any vote by persons having the right under the 1940 Act to vote
thereon, the Company may elect to operate the Variable Account as a management
company rather than a unit investment trust under the
AN424 12
<PAGE>
FIXED AND VARIABLE ACCOUNTS PROVISIONS (CONTINUED)
1940 Act, or, if registration is no longer required, to deregister the Variable
Account. In such event, the Company may endorse this certificate to reflect
such change and any necessary or appropriate action taken to effect the change.
Any changes in Variable Account investment policy shall have been approved by
the Connecticut Insurance Commissioner and be approved or filed, as required, in
the state or other jurisdiction of issue.
INVESTMENT RISK. Each Variable Account Sub-Account's assets are always fully
invested in the shares of the particular Fund purchased for that Sub-Account.
Each Variable Account Sub-Account's investment performance reflects the
investment performance of the Fund. Fund share values fluctuate, reflecting the
risks of changing economic conditions and the ability of a Fund Group's
investment advisor or sub-adviser to manage that Fund and anticipate changes in
economic conditions. As to the Variable Account assets, the Certificate Owner
bears the entire investment risk of gain or loss.
INVESTMENTS OF THE VARIABLE ACCOUNT SUB-ACCOUNTS. All amounts allocated under
this certificate to a Variable Account Sub-Account will be used to purchase
shares of the specific Fund of a Fund Group used by that Sub-Account. Each Fund
Group is registered under the 1940 Act as an open-end management investment
company, and each Fund of that Fund Group is regulated as an open-end management
investment company.
All Funds available as funding vehicles under this certificate as of its
Certificate Date are listed on page 5. The Company may add additional Fund
Groups and additional Funds at any time or may change Funds or Fund Groups in
accordance with the "Substituted Securities" provision.
Any and all distributions made by a Fund will be reinvested in additional shares
of that Fund at net asset value. Deductions by the Company from a Variable
Account Sub-Account will be made by redeeming a number of Fund shares at net
asset value equal in total value to the amount to be deducted.
SUBSTITUTED SECURITIES. Shares corresponding to a particular Fund may not always
be available for purchase or the Company may decide that further investment in
such Fund is no longer appropriate in view of the purposes of the Variable
Account, or in view of legal, regulatory or federal income tax restrictions. In
such event, shares of another registered open-end investment company or unit
investment trust may be substituted both for Fund shares already purchased
and/or as the securities to be purchased in the future, provided that these
substitutions meet applicable Internal Revenue Service diversification
guidelines and any necessary regulatory or other approvals of such substitutions
have been obtained. In the event of any substitution pursuant to this
provision, the Company may make appropriate endorsement(s) to this certificate
to reflect the substitution and any such substitution.
VALUES DURING ACCUMULATION PERIOD PROVISIONS
PART A - FIXED ACCOUNT VALUE
GUARANTEED PERIODS. The Initial Guaranteed Period(s), if any, are selected by
the Certificate Owner and are shown in the Certificate Specifications. The
duration of the Initial Guaranteed Period(s) will affect the Initial Guaranteed
Interest Rate(s). Any Premium Payment or the portion thereof (or amount
transferred in accordance with the "Transfer Privilege" provision described
below) allocated to a particular Guaranteed Period will earn interest at the
specified Guaranteed Interest Rate during the Guaranteed Period. Initial
Guaranteed Periods begin on the date a Premium Payment is accepted (or, in the
case of a transfer, on the effective date of the transfer) and end on the
Expiration Date for each duration selected.
Any portion of the Annuity Account Value comprising a particular Fixed Account
Sub-Account (including interest earned thereon) will be referred to in this
certificate as the "Guaranteed Period Amount." As a result of renewals,
Subsequent Payments, deductions for applicable Annuity Account Fee(s) and
transfers of portions of the Annuity Account Value, Guaranteed Period Amounts
for Guaranteed Periods of the same duration under this certificate may have
different Expiration Dates, and each Guaranteed Period Amount will be treated
separately for purposes of determining any Market Value Adjustment.
AN424 13
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VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)
The Company will automatically notify the Certificate Owner in writing at least
15 but not more than 45 days prior to the Expiration Date of a Guaranteed Period
with respect to a Fixed Account Sub-Account of the guaranteed period durations
available and the then currently quoted interest rates. A subsequent Guaranteed
Period of the same duration will begin automatically at the end of the previous
Guaranteed Period unless the Company receives, in writing at its Variable
Products Service Center's Mailing Address within the 60-day period immediately
preceding the end of such Guaranteed Period, an election by the Certificate
Owner of a different Guaranteed Period from among those being offered by the
Company at such time, or instructions to transfer all or a portion of the
applicable Guaranteed Period Amount to one or more Fixed Account or Variable
Account Sub-Accounts in accordance with the "Transfer Privilege" provision.
GUARANTEED INTEREST RATES. The Company will establish the applicable Guaranteed
Interest Rate that will be used to determine the interest with respect to a
Fixed Account Sub-Account for each Guaranteed Period at the beginning of the
Guaranteed Period. This rate will be guaranteed for the duration of the
applicable Guaranteed Period. The Initial or Subsequent Guaranteed Interest
Rate will never be less than 3% per year, compounded annually. Subsequent
Guaranteed Interest Rate(s) will also be determined at the beginning of
Guaranteed Period(s) and may be higher or lower than the previous rate, but will
never be less than 3% per year, compounded annually. (See "Minimum Surrender
Value" provision.) The Company will automatically notify the Certificate Owner
of the new Guaranteed Interest Rate as soon as possible after the beginning of
each subsequent Guaranteed Period.
FIXED ACCUMULATION VALUE. Upon receipt of a Premium Payment by the Company at
its Variable Products Service Center's Mailing Address, all or that portion, if
any, of the Premium Payment which is allocated to the Fixed Account will be
credited to the Fixed Account and allocated to the Fixed Account Sub-Accounts
selected by the Certificate Owner. The Fixed Accumulation Value, if any, at any
time, under this certificate is equal to the sum of the then current values of
all Guaranteed Period Amounts with respect to this certificate.
MINIMUM SURRENDER VALUE. The Minimum Surrender Value for the Fixed Account for
a given Certificate Year is the Premium Payment(s), or portion thereof, and
transfers allocated to the Fixed Account accumulated at 3% per year, compounded
annually, less the deduction of the applicable withdrawal charge(s), any prior
withdrawals or transfers out of the Fixed Account, premium taxes, if any, and
applicable Annuity Account Fee(s) and deductions, if any, for the cost of Death
Benefit Option(s) in effect.
PART B - VARIABLE ACCOUNT VALUE
CREDITING VARIABLE ACCUMULATION UNITS. Upon receipt of a Premium Payment (or a
request for transfer in accordance with the "Transfer Privilege" provision) by
the Company at its Variable Products Service Center's Mailing Address, all or
that portion, if any, of the Premium Payment (or the net amount transferred) to
be allocated to the Variable Account Sub-Accounts will be credited to the
Variable Account under this certificate in the form of Variable Accumulation
Units. The number of particular Variable Accumulation Units to be credited is
determined by dividing the dollar amount allocated to the particular Variable
Account Sub-Account by the Variable Accumulation Unit Value for the particular
Variable Account Sub-Account for the Valuation Period during which the Premium
Payment is received at the Company's Variable Products Service Center's Mailing
Address.
VARIABLE ACCUMULATION UNIT VALUE. The Variable Accumulation Unit Value for each
Variable Account Sub-Account was established at $10.00 for the first Valuation
Period of the particular Variable Account Sub-Account. The Variable
Accumulation Unit Value for the particular Variable Account Sub-Account for any
subsequent Valuation Period is determined by methodology which is the
mathematical equivalent of multiplying the Variable Accumulation Unit Value for
the particular Variable Account Sub-Account for the immediately preceding
Valuation Period by the Net Investment Factor for the particular Variable
Account Sub-Account for such subsequent Valuation Period. The Variable
Accumulation Unit Value for each Variable Account Sub-Account for any Valuation
Period is the value determined as of the end of the particular Valuation Period
and may increase, decrease or remain constant from Valuation Period to Valuation
Period.
AN424 14
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VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)
VARIABLE ACCUMULATION VALUE. The Variable Accumulation Value of the Annuity
Account, if any, for any Valuation Period is equal to the sum of the value of
all Variable Accumulation Units of each Variable Account Sub-Account credited to
the Variable Account with respect to this certificate for such Valuation Period.
The Variable Accumulation Value of each Variable Account Sub-Account is
determined by multiplying the number of Variable Accumulation Units, if any,
credited to each Variable Account Sub-Account with respect to this certificate
by the Variable Accumulation Unit Value of the particular Variable Account Sub-
Account for such Valuation Period, less deductions for applicable expense
charges and fees and for the cost of Death Benefit Option(s), if any.
NET INVESTMENT FACTOR. The Net Investment Factor is an index applied to measure
the investment performance of a Variable Account Sub-Account from one Valuation
Period to the next. The Net Investment Factor may be greater or less than or
equal to 1.0; therefore, the value of a Variable Accumulation Unit may increase,
decrease or remain the same.
The Net Investment Factor for any Variable Account Sub-Account for any Valuation
Period is determined by dividing (a) by (b) and then subtracting (c) from the
result where:
(a) is the net result of:
(1) the net asset value (as described in the prospectus for the Fund)
of a Fund share held in the Variable Account Sub-Account determined as
of the end of the Valuation Period, plus
(2) the per share amount of any dividend or other distribution
declared by the Fund on the shares held in the Variable Account Sub-
Account if the "ex-dividend" date occurs during the Valuation Period,
plus or minus
(3) a per share credit or charge with respect to any taxes paid or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Variable Account Sub-Account;
(b) is the net asset value of a Fund share held in the Variable Account Sub-
Account determined as of the end of the preceding Valuation Period; and
(c) is the asset charge factor determined by the Company for the Valuation
Period to reflect the charges for assuming the mortality and expense risks
and for administrative expenses.
The asset charge factor for any Valuation Period is equal to the daily asset
charge factor multiplied by the number of 24-hour periods in the Valuation
Period. The daily asset charge factor will be determined annually by the
Company, but in no event may it exceed that specified in the Schedule of
Charges, Expenses and Fees.
PART C - GENERAL
ANNUITY ACCOUNT. The Company will establish an Annuity Account under this
certificate and will maintain the Annuity Account during the Accumulation
Period. The Annuity Account Value at any time equals the sum of all the then
current values of the Fixed and Variable Accounts with respect to this
certificate.
TRANSFER PRIVILEGE. At any time during the Accumulation Period, other than
during the "Right to Examine Certificate" period, the Certificate Owner may
transfer all or part of the Annuity Account Value to one or more of the Fixed or
Variable Account Sub-Accounts then available, subject to the provisions set
forth below. Transfers must be made in writing, or by telephone if telephone
transfers have been previously authorized in writing. Transfer requests must be
received at the Company's Variable Products Service Center prior to the time of
day set forth in the prospectus, and provided the NYSE is open for business, in
order to be processed as of the close of business on the date the request is
received; otherwise, the transfer will be processed on the next business day the
NYSE is open for business. The Company will not be legally responsible for (a)
any liability for acting in good faith upon any transfer instructions given by
telephone, or (b) the authenticity of such instructions.
AN424 15
<PAGE>
VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)
Transfers involving Variable Account Sub-Accounts will reflect the purchase or
cancellation of Variable Accumulation Units having an aggregate value equal to
the dollar amount being transferred to or from a particular Variable Account
Sub-Account. The purchase or cancellation of such units shall be made using
Variable Accumulation Unit Values of the applicable Variable Account Sub-Account
for the Valuation Period during which the transfer is effective. Transfers to a
Fixed Account Sub-Account will result in a new Guaranteed Period for the amount
being transferred. Any such Guaranteed Period under this certificate will begin
on the effective date of the transfer and end on its Expiration Date. The
amount transferred into such Fixed Account Sub-Account will earn interest at the
Guaranteed Interest Rate declared by the Company for that Guaranteed Period as
of the effective date of the transfer.
Transfers made under this certificate shall be subject to the following
conditions: (a) No transfer fee will be imposed on the 1st through 3rd transfer
made during a Certificate Year, and no transfer fee will be imposed on the 4th
through 12th transfer made during a Certificate Year if the Annuity Account
Value under the certificate at the time of the transfer is equal to or greater
than $5,000; otherwise, a transfer fee, based on the Company's then current fee
schedule will be imposed on each transfer made in excess of these limits (in
counting the number of transfers, the frequency limitation shown in the
Certificate Specifications with respect to transfers from the Fixed Account will
be included); (b) No withdrawal charge will be imposed on transferred amounts,
however, transfers of all or a portion out of a Fixed Account Sub-Account may be
subject to the Market Value Adjustment set forth below unless such transfer is
made in accordance with the "Full or Partial Withdrawals and Transfers at the
End of a Guaranteed Period" provision; (c) The amount being transferred may not
be less than $2,500 per Fixed Account Sub-Account or $500 per Variable Account
Sub-Account, unless the entire value of the Fixed or Variable Account Sub-
Account is being transferred; (d) The amount being transferred may not exceed
the Company's maximum amount limit then in effect; (e) The amount transferred to
any Fixed Account Sub-Account may not be less than $2,500; (f) Unless a transfer
out of a Fixed Account Sub-Account is made in accordance with the "Full or
Partial Withdrawals and Transfers at the End of a Guaranteed Period" provision,
the amount transferred from each Fixed Account Sub-Account during any
Certificate Year may not exceed the limits shown in the Certificate
Specifications; (g) Any value remaining in a Fixed Account Sub-Account,
following a transfer, may not be less than $1,000 and any value remaining in a
Variable Account Sub-Account, following a transfer, may not be less than $500;
(h) The Company reserves the right to defer transfers of amounts from the Fixed
Account for a period not to exceed six months from the date the request for such
transfer is received by the Company at its Variable Products Service Center; and
(i) Transfers involving Variable Account Sub-Account(s) shall be subject to such
terms and conditions as may be imposed by the Funds.
ANNUITY ACCOUNT FEE. Prior to the Annuity Date, on the last Valuation Date of
each Certificate Year the Company will deduct from the value of the Annuity
Account the annual Annuity Account Fee, if any, shown in the Schedule of
Charges, Expenses and Fees to reimburse it for administrative expenses relating
to the Annuity Account. Such Annuity Account Fee will be deducted on a pro rata
basis from amounts allocated to each Fixed and Variable Account Sub-Account in
which the Annuity Account values are invested at the time of such deduction. If
the Annuity Account under this certificate is surrendered for its full value,
the Annuity Account Fee will be deducted in full at the time of such surrender.
On the Annuity Date the value of the Annuity Account will be reduced by a
proportionate amount of the Annuity Account Fee to reflect the time elapsed
between the last Valuation Date of the most recent Certificate Year and the day
before the Annuity Date.
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS
CASH WITHDRAWALS. At any time before the Annuity Date, the Certificate Owner
may elect to receive a cash withdrawal payment from the Company by filing with
the Company at its Variable Products Service Center's Mailing Address a written
election in such form as the Company may require. Any such election shall
specify the amount of the withdrawal and will be effective on the date that it
is received at the Company's Variable Products Service Center's Mailing Address.
Any cash withdrawal payment will be paid within seven days of the Company's
receipt of such request, except as the Company may be permitted to defer the
AN424 16
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CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS (CONTINUED)
payment of amounts withdrawn from the Variable Account in accordance with the
Investment Company Act of 1940. The Company reserves the right to defer the
payment of amounts withdrawn from the Fixed Account for a period not to exceed
six months from the date written request for such withdrawal is received by the
Company at its Variable Products Service Center's Mailing Address.
The amount of the cash withdrawal payment may be for any amount not to exceed
the Annuity Account Value at the end of the Valuation Period during which the
election becomes effective, less any applicable Annuity Account Fee, plus or
minus any applicable Market Value Adjustment, and less any applicable withdrawal
charge and premium taxes. In the case of a full surrender, the Annuity Account
will be canceled and the certificate will terminate. A partial withdrawal will
result in a decrease in the Annuity Account Value under this certificate by an
amount with an aggregate dollar value equal to the dollar amount of the cash
withdrawal payment, plus or minus any applicable Market Value Adjustment, any
applicable withdrawal charge and premium taxes.
In the case of a partial withdrawal, the Certificate Owner must instruct the
Company as to the amounts to be withdrawn from each Fixed and/or Variable
Account Sub-Account. If not so instructed, the Company will effect such
withdrawal from each Fixed and/or Variable Sub-Account in proportion to the then
current Sub-Account values. Partial withdrawals cannot reduce any Fixed Account
Sub-Account below $1,000 or any Variable Account Sub-Account below $500. Such
partial withdrawals will be treated as a full surrender of that Sub-Account
under the certificate and the balance will be transferred to the largest
Variable Account Sub-Account, if any. Partial withdrawals cannot reduce the
total Annuity Account Value below $500. (See "Minimum Value Requirements"
provision.) Such partial withdrawals will be treated as a full surrender.
Cash withdrawals from a Variable Account Sub-Account under this certificate will
result in the cancellation of Variable Accumulation Units attributable to the
Annuity Account with an aggregate value on the effective date of the withdrawal
equal to the total amount by which the Variable Account Sub-Account is reduced.
The cancellation of such units will be based on the Variable Accumulation Unit
values of the Variable Account Sub-Account for the Valuation Period during which
the cash withdrawal is effective.
All cash withdrawals or transfers of any portion of Fixed Account Sub-Accounts,
except those specified otherwise under "Penalty-Free Withdrawals, Transfers and
Annuitization Provisions," will be subject to the Market Value Adjustment
described below.
WITHDRAWAL CHARGES. If a cash withdrawal is made, a withdrawal charge may be
assessed by the Company. The length of time between the Company acceptance of
the Premium Payment(s) under this certificate and the receipt of a withdrawal
request determines the withdrawal charge. For this purpose each withdrawal is
deemed to represent a withdrawal of a Premium Payment previously accepted (or a
portion thereof). Premium Payments will be deemed to have been withdrawn in the
order in which the Premium Payments were received by the Company (i.e., oldest
premium first). After all Premium Payments have been deemed withdrawn, the
Company will deem further withdrawals to be from net investment results
attributable to such Premium Payments, if any. The schedule of withdrawal
charges is set forth in the "Schedule of Charges, Expenses and Fees." On
withdrawal, any applicable Annuity Account Fee, the cost of Death Benefit
Option(s), if any, and Market Value Adjustment will be deducted before
application of any withdrawal charge.
Withdrawal charges are deducted proportionately from the Fixed and/or Variable
Account Sub-Account(s) from which the withdrawal is to be made, provided such
Sub-Account(s) under the certificate have sufficient account value(s) for making
such deduction(s). If any of the account value(s) of such Sub-Account(s),
however, are insufficient, the amount payable upon withdrawals will be net of
any remaining withdrawal charges, unless the Certificate Owner and the Company
agree otherwise.
AN424 17
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CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS (CONTINUED)
See "Penalty-Free Withdrawals, Transfers and Annuitization Provisions" for
situations in which a withdrawal charge is not imposed.
For the purpose of any qualified plan riders which may be attached to this
certificate, the term "Surrender Charge" wherever referenced therein, shall mean
"withdrawal charge" as set forth above, and the term "Annuity Value" shall mean
"Annuity Account Value."
MARKET VALUE ADJUSTMENT. Any cash withdrawal or transfer under this certificate
from a Fixed Account Sub-Account, except those specified otherwise under the
"Penalty-Free Withdrawals, Transfers and Annuitization Provisions," will be
subject to a Market Value Adjustment.
The amount payable on such cash withdrawal or transfer under this certificate
may be adjusted up or down by the application of the Market Value Adjustment.
The Index Rate Factor applicable to the amount of such cash withdrawal or
transfer is:
N
(1+A)
------
N
(1+B)
where:
A = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
applicable Guaranteed Period, determined at the beginning of the Guaranteed
Period.
B = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
applicable Guaranteed Period, determined at the time of cash withdrawal or
transfer, plus the percentage adjustment to "B" as shown in the Certificate
Specifications. If Index Rates "A" and "B" are within .25% of each other when
the Index Rate Factor is determined, no such percentage adjustment to "B" will
be made.
N = The number of years remaining in the applicable Guaranteed Period (e.g.
1 year and 73 days = 1 + (73 divided by 365) = 1.2 years)
Straight-line interpolation is used for periods to maturity not quoted.
PENALTY-FREE WITHDRAWALS, TRANSFERS AND ANNUITIZATION PROVISIONS
PENALTY-FREE PARTIAL WITHDRAWALS OR TRANSFERS. Upon request in writing, the
Certificate Owner may, during any Certificate Year prior to the Annuity Date,
withdraw up to 15% of the Premium Payment(s) or portion remaining thereof,
without incurring a withdrawal charge. For this purpose each withdrawal is
deemed to represent a withdrawal of a portion of a Premium Payment previously
accepted. Premium Payments will be deemed to be withdrawn in the order in which
they were received by the Company (i.e., the oldest premium first). Any such
withdrawal from a Fixed Account Sub-Account may be subject to a Market Value
Adjustment unless the withdrawal is made at the end of a Guaranteed Period as
set forth below. The Certificate Owner must specify from which Fixed and/or
Variable Sub-Accounts the withdrawal is to be made, otherwise the Company may
effect such withdrawal on a proportionate basis from all Fixed and/or Variable
Sub-Accounts in which the Annuity Account for this certificate is invested.
Such partial withdrawals may be either taken as a lump sum or, upon consent of
the Company, paid in equal installments, however, (a) no more than one penalty-
free partial withdrawal may be made during any one Certificate Year, (b) the
first withdrawal in any Certificate Year will be deemed to be the penalty-free
withdrawal up to the amount specified above, and (c) the amount of each such
partial withdrawal must be at least $1,000.
AN424 18
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PENALTY-FREE WITHDRAWALS,
TRANSFERS AND ANNUITIZATION PROVISIONS (CONTINUED)
No withdrawal charge will be imposed on any withdrawal with respect to a Premium
Payment made under this certificate after the end of the seventh year following
the Company's acceptance of that Premium Payment.
The Certificate Owner may also transfer amounts within the Annuity Account
during the Accumulation Period without the application of a withdrawal charge,
however; (a) any transfers would be subject to any terms and conditions as may
be imposed under the "Transfer Privilege" provision, (b) transfers from a Fixed
Account Sub-Account may be subject to the "Market Value Adjustment" provision,
and (c) the amount of such transfer(s) must be at least $2,500 per Fixed Account
Sub-Account or $500 per Variable Account Sub-Account.
FULL OR PARTIAL WITHDRAWALS AND TRANSFERS AT THE END OF A GUARANTEED PERIOD. No
Market Value Adjustment will be imposed on a full or partial withdrawal or
transfer made from a Fixed Account Sub-Account which becomes effective at the
end of the applicable initial or subsequent Guaranteed Period. In such event,
the Certificate Owner's proper request for withdrawal or transfer must be
received at the Company's Variable Products Service Center's Mailing Address
within a 60-day period immediately preceding the end of such Guaranteed Period.
WAIVER OF WITHDRAWAL CHARGE AND/OR MARKET VALUE ADJUSTMENT ON DEATH OR ANNUITY
DATE. No withdrawal charge or Market Value Adjustment will be imposed upon
payments made under the Annuity Benefit provisions of this certificate, and no
negative Market Value Adjustment will be imposed upon payments made under the
"Death Benefit" provisions of this certificate.
PENALTY-FREE ANNUITIZATION. At any time the Certificate Owner may request in
writing payment of the then current Annuity Account Value under this certificate
in accordance with any one of the settlement options set forth in this
certificate. In such event, no withdrawal charge or Market Value Adjustment
will be imposed at the time such settlement is made. Such annuitization will
automatically result in a change in the Annuity Date to the date Income Payments
commence under the settlement option elected.
BENEFIT PROVISIONS
ANNUITY BENEFIT. On the Annuity Date the Company will pay all or a part of the
adjusted value of the Annuity Account (as set forth below) in cash or apply it
in accordance with the settlement option(s) elected by the Certificate Owner.
However, if the amount to be applied under any settlement option is less than
$5,000, or if the first Income Payment payable in accordance with such option is
less than $50, the Company will pay the adjusted value in a single payment to
the payee designated by the Certificate Owner.
ANNUITY DATE. The Annuity Date initially selected by the Certificate Owner is
shown in the Certificate Specifications. The Annuity Date may be changed from
time to time by the Certificate Owner by notifying the Company in writing. The
notice must be received at the Company's Variable Products Service Center's
Mailing Address at least 45 days prior to the Annuity Date then in effect. The
new Annuity Date selected must be at least 30 days after the effective date of
the change and not later than the Annuitant's 90th birthday.
After the Annuity Date, no change of a settlement option is permitted, no
payments may be requested under the "Cash Withdrawals" provision of the
certificate, and no Death Benefit is payable under the certificate except as
otherwise specified under the settlement option selected.
ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO ANNUITY BENEFIT. During
the lifetime of the Certificate Owner and prior to the Annuity Date, the
Certificate Owner may elect to have the adjusted value of the Annuity Account
applied on the Annuity Date under one or more of the settlement options set
forth in this certificate, or under any other settlement option as agreed to by
the Company. The Certificate Owner
AN424 19
<PAGE>
BENEFIT PROVISIONS (CONTINUED)
may also change any election, but any election or change of election must be
received at the Company's Variable Products Service Center's Mailing Address at
least 45 days prior to the Annuity Date. The election or change of election may
be made by filing with the Company at its Variable Products Service Center's
Mailing Address written notice in such form as the Company may require. If no
such election is in effect on the 30th day prior to the Annuity Date, the
adjusted value of the Annuity Account under this certificate will be applied
under a Life Annuity with 120 months guaranteed.
In such situation, the portion of the adjusted value of the Annuity Account
under this certificate to be applied for a Fixed Life Annuity under the Second
Option and/or a Variable Life Annuity under Option II will be determined on a
pro rata basis from the composition of the Annuity Account on the Annuity Date.
DETERMINATION OF AMOUNT. On the Annuity Date the Annuity Account under this
certificate will be canceled and the adjusted value of the Annuity Account to be
applied under the settlement options provisions shall be equal to the Annuity
Account Value for the Valuation Period which ends immediately preceding the
Annuity Date, minus a proportionate amount of the Annuity Account Fee to reflect
the time elapsed between the last Valuation Date for the most recent calendar
year and the Valuation Date before the Annuity Date, minus any applicable
premium or similar tax. For the purposes of any qualified plan riders which may
be attached to this certificate, the term "Annuity Value," wherever referenced
therein, shall mean the "adjusted value of the Annuity Account" as defined
above.
INCOME PAYMENT BENEFITS. On the Annuity Date, the adjusted value of the Annuity
Account under this certificate as determined under the "Determination of Amount"
provision may be applied, as elected by the Certificate Owner, under one or more
of the settlement options set forth in the certificate to effect: (a) a Fixed
Income Payment Benefit or a Variable Income Payment Benefit; or (b) a
combination of the Fixed Income Payment Benefit and the Variable Income Payment
Benefit. If a combination Fixed and Variable Income Payment Benefit is elected,
the Certificate Owner may specify the amount to be allocated to the Fixed Income
Payment Benefit and the amount to be allocated to the Variable Income Payment
Benefit. Such election and allocation may also be made by a Beneficiary to the
extent provided in the "Election and Effective Date of Election with Respect to
Death Benefit Provision."
DEATH BENEFIT. If the Certificate Owner dies before the Annuity Date, the
Company will pay the Death Benefit to the Beneficiary upon receipt of due proof
of the death of the Certificate Owner in accordance with the "Payment of Death
Benefit" provision. If there is no Beneficiary living on the date of death of
the Certificate Owner, the Company will pay the Death Benefit, upon receipt of
due proof of the death of both the Certificate Owner and the Beneficiary, in one
sum to the estate of the Certificate Owner. If the death of the Certificate
Owner occurs on or after the Annuity Date, no death benefit will be payable
under the certificate except as may be provided under the settlement option
elected.
ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO DEATH BENEFIT. During
the lifetime of the Annuitant and prior to the Annuity Date, the Certificate
Owner may elect one or more of the settlement options set forth in this
certificate to effect an annuity for the Beneficiary as payee after the death of
the Certificate Owner. This election may be made or subsequently revoked by
filing with the Company at its Variable Products Service Center's Mailing
Address a written election or revocation of an election in such form as required
by the Company.
Any election or revocation of an election of a method of settlement of the Death
Benefit will become effective on the date it is received by the Company at its
Variable Products Service Center's Mailing Address.
Unless otherwise specified in writing by the Certificate Owner, the Beneficiary
may elect (a) to receive the Death Benefit as a cash payment, in which event the
Annuity Account will be canceled, or (b) to have the Death Benefit applied under
one or more of the settlement options set forth under the certificate. This
election may be made by filing with the Company a written request in a form as
required by the Company. Any written request for an election of a settlement
option for the Death Benefit by the Beneficiary will become effective on the
later of (a) the date the request is received by the Company at its Variable
Products Service
AN424 20
<PAGE>
BENEFIT PROVISIONS (CONTINUED)
Center's Mailing Address; or (b) the date due proof of the death of the
Certificate Owner is received by the Company at its Variable Products Service
Center's Mailing Address. If a written request for a settlement option by the
Beneficiary is not received by the Company within 60 days following the date due
proof of the death of the Certificate Owner is received by the Company, the
Beneficiary shall be deemed to have elected a cash payment as of the last day of
the 60-day period.
Notwithstanding the above, the Certificate Owner or Beneficiary may only elect a
settlement option which provides for the distribution of the entire Death
Benefit to the Beneficiary within five years of the Certificate Owner's death
unless: (a) the entire interest in the contract is distributed over the life of
the Beneficiary, with distributions beginning within one year of the Certificate
Owner's death; (b) the entire interest in the certificate is distributed over a
period not extending beyond the life expectancy of the Beneficiary, with
distributions beginning within one year of the Certificate Owner's death; or (c)
the Beneficiary is the deceased Certificate Owner's spouse and elects to
continue the certificate and become the new Certificate Owner, but in no event
may such an election be made under this certificate more than once.
For purposes of Section 72(s) of the Internal Revenue Code, if any Certificate
Owner is not an individual, the death or change of any Annuitant under this
certificate is treated as the death of a Certificate Owner, and if the
Certificate Owner is a grantor trust within the meaning of the Internal Revenue
Code, the death of the grantor of such trust is also treated as the death of a
Certificate Owner.
PAYMENT OF DEATH BENEFIT. If the Death Benefit is to be paid in cash to the
Beneficiary, payment will be made within 7 days of the date the election becomes
effective or is deemed to become effective, provided due proof of the death of
the Certificate Owner is received by the Company at its Variable Products
Service Center's Mailing Address, except as the Company may be permitted to
defer any such payment of amounts derived from the Variable Account in
accordance with the Investment Company Act of 1940. If the Death Benefit is to
be paid in one sum to the estate of the deceased Certificate Owner, payment will
be made within 7 days of the date due proof of the death of the Certificate
Owner (and/or Beneficiary, if necessary) is received by the Company at its
Variable Products Service Center's Mailing Address, except as the Company may be
permitted to defer any such payment of amounts derived from the Variable Account
in accordance with the Investment Company Act of 1940. If settlement under the
settlement option provisions is elected, the Income Payments will commence 30
days following the effective date or the deemed effective date of the election
and the Annuity Account will be maintained in effect until such Income Payments
commence.
AMOUNT OF DEATH BENEFIT. No negative Market Value Adjustment is assessed
against amounts which are applied toward payment of a death benefit, and if no
Death Benefit Option(s) are then in effect, the amount of the death benefit
determined as of the effective date or deemed effective date of the death
benefit election (not as of the date of death) under this certificate is equal
to the Annuity Account Value for the Valuation Period during which the death
benefit election is effective or deemed to become effective. If however, one or
more of the following Death Benefit Options is in effect when the death benefit
becomes payable, the amount of the death benefit will be the greater of the
amount described above or the largest of the amounts of the Death Benefit
Option(s) in effect under this certificate.
The Death Benefit Option(s) in effect under this certificate, if any, are shown
in the Certificate Specifications as Death Benefit Options(s) A, B, C, and/or D;
such are described below:
Option A: The amount of death benefit equals Premium Payments made, less
partial withdrawals.
Option B: The amount of death benefit equals Premium Payments made, less
partial withdrawals, with interest compounded daily at a rate
equivalent to 5% per year during the first 7 Certificate Years. As
of the beginning of the 8th Certificate Year, the amount of death
benefit will decrease and thereafter be equal to total Premium
Payments made, less partial withdrawals.
AN424 21
<PAGE>
BENEFIT PROVISIONS (CONTINUED)
Option C: The amount of death benefit equals the Annuity Account Value on
the seven-year Certificate Anniversary immediately preceding the
date the death benefit election is effective or is deemed to
become effective, adjusted for any subsequent Premium Payments
and partial withdrawals and charges made between the immediate
preceding seven-year Certificate Anniversary and the date the
death benefit election is effective or is deemed to become
effective (as referenced herein, seven-year Certificate
Anniversary means the 7th Certificate Anniversary and each
succeeding Certificate Anniversary occurring at any seven-year
interval thereafter, for example, the 14th and 21st Certificate
Anniversaries).
Option D: The amount of death benefit equals the highest Annuity Account
Value ever attained on a Certificate Anniversary date, with
adjustments for any subsequent Premium Payments and partial
withdrawals and charges made since the last determination of such
highest value.
CHANGING DEATH BENEFIT OPTIONS. The election of the Death Benefit Option(s)
shown in the Certificate Specifications may be changed once, and only once,
while the certificate is in force, and the only change permitted is to drop one
or more of the Death Benefit Option(s) in effect at that time. The request for
change must be made in writing by the Owner. The Company reserves the right to
charge for the change at the time the request for change is processed.
CHARGING FOR DEATH BENEFIT OPTIONS. On each Certificate Anniversary the Company
will determine the amount of the death benefit in effect under the certificate
during the past Certificate Year, and if such amount is based on one or more
Death Benefit Options (i.e., A, B, C, or D), a cost of insurance charge will be
calculated as (a) times (b) where:
(a) equals the greatest coverage provided under the Death Benefit
Option(s) elected less the then current Annuity Account Value
(expressed on a per $1,000 basis), and
(b) is the appropriate cost of insurance rate per $1,000 from the table
below:
<TABLE>
<CAPTION>
Cost of Insurance
Annual Rates Per $1,000
-----------------------
Attained Age* Male Female
------------- ---- ------
<S> <C> <C>
less than 40 $2.40 $1.99
40-45 3.02 2.54
46-50 4.92 4.02
51-55 7.30 5.70
56-60 11.46 8.34
61-65 17.54 11.55
66-70 27.85 18.19
71-75 43.30 27.57
76-80 70.53 47.33
81-85 117.25 87.04
86-90 179.55 147.37
<FN>
* Attained Age of the person covered under the death benefit provisions
of the certificate.
</TABLE>
The cost of insurance charge will then be deducted on each Certificate
Anniversary on a pro-rata basis from the Fixed Account and Variable Account Sub-
Accounts under the certificate.
SECTION 72(S). The provisions above will be interpreted so as to comply with
the requirements of Section 72(s) of the Internal Revenue Code.
AN424 22
<PAGE>
GENERAL PROVISIONS
THE CONTRACT AND THE CERTIFICATE. The contract is an agreement between the
Contract Owner and the Company and this certificate is based on the group
contract. The certificate (including any amendments, endorsements or rider
attached thereto), and the application for the certificate (a copy of which is
attached to the certificate when issued), constitute the entire certificate.
Only the President, a Vice President, an Assistant Vice President, a Secretary,
a Director or an Assistant Director of the Company may make or modify this
contract or any certificate issued under it.
Both the contract and this certificate are executed at the Company's Home
Office, the mailing address of which for this certificate is CIGNA Individual
Insurance, Variable Products Service Center, Routing S224, Hartford, Connecticut
06152.
MODIFICATION OF CERTIFICATE. The Company reserves the right to modify this
certificate to meet the requirements of applicable state and federal laws or
regulations. The Company will notify the Certificate Owner in writing of any
changes that bear upon the certificate.
NON-PARTICIPATION. This certificate is not entitled to share in surplus
distribution.
LOANS. Loans are not permitted under this certificate.
DETERMINATION OF VALUES. The method of determination by the Company of the Net
Investment Factor and the number and value of Accumulation Units and Annuity
Units shall be conclusive upon the Certificate Owner, and any Beneficiary or
payee. Any paid-up annuity, cash surrender or death benefits that may be
available under this certificate will not be less than the minimum benefits
required by the jurisdiction of issue.
ENDORSEMENT OF INCOME PAYMENTS. The Company will make each Income Payment,
payable under this certificate, at the Home Office by check. Each check must be
personally endorsed by the payee/Annuitant, or the Company may require that
proof of the payee/Annuitant's survival be furnished.
MISSTATEMENT OF AGE. If the age of the Annuitant is misstated, the amount
payable under the certificate will be adjusted to be the amount of income which
the actual premium paid would have purchased for the correct age according to
the Company's rates in effect on the Certificate Date. Any overpayment by the
Company, with interest at the rate of 6% per year, compounded annually, will be
charged against the payments to be made next succeeding the adjustment. Any
underpayment by the Company will be paid in a lump sum, with interest at the
rate of 6% per year, compounded annually.
CLAIMS OF CREDITORS. To the extent permitted by law, no amounts payable under
this certificate will be subject to the claims of creditors of any payee.
PERIODIC REPORTS. At least once each calendar year, the Company will furnish
the Certificate Owner a report as required by law showing the Annuity Account
Value at the end of the preceding year, all transactions during the year, the
current Annuity Account Value, the number of Accumulation Units in each Variable
Accumulation Account, the applicable Accumulation Unit Value as of the date of
the report and the interest rate credited to the Fixed Account Sub-Account(s).
The Company will also send such statements reflecting transactions in the
Annuity Account as may be required by applicable laws, rules and regulations.
AN424 23
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
FLEXIBLE PAYMENT DEFERRED GROUP VARIABLE ANNUITY CERTIFICATE
WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING
AN424
<PAGE>
OPTIONAL METHODS OF SETTLEMENT
This rider is made part of the certificate to which it is attached as of the
Certificate Date. Upon written request, the Company will agree to pay in
accordance with any one of the options shown below all or part of the net
proceeds that may be payable under the certificate.
While the Certificate Owner is alive, the request, including the designation of
the payee, may be made by the Certificate Owner. At the time a Death Benefit
becomes payable under the certificate, the request, including the designation of
the payee, may then be made by the Beneficiary. Once Income Payments have begun,
no surrender of the Annuity Value can be made (unless Variable Income Payments
are made under Option III) and the Annuitant cannot be changed, nor can the
settlement option be changed.
PAYMENT DATES. The first Income Payment under the settlement option selected
will be made on the first day of the month following the Annuity Date.
Subsequent payments will be made on the first day of each month in accordance
with the manner of payment selected.
MINIMUM PAYMENT AMOUNT. The settlement option elected must result in an Income
Payment at least equal to the minimum payment amount in accordance with the
Company's rules then in effect. If at any time payments are less than the
minimum payment amount, the Company has the right to change the frequency to an
interval that will provide the minimum payment amount. If any amount due is less
than the minimum per year, the Company may make other arrangements that are
equitable.
FIXED BENEFIT OPTIONS
FIXED INCOME PAYMENTS. Fixed Income Payments will remain constant pursuant to
the terms of the fixed settlement option(s) selected. The amount of each Fixed
Income Payment shall be determined in accordance with the terms of the
settlement option and the table(s) set forth in this rider, as applicable. The
mortality table used is the 1983 Individual Annuitant Mortality (IAM) Table "a"
and 3% interest. In determining the settlement amount, the settlement age of the
Annuitant will be reduced by one year when the first instalment is payable
during the 1990's, reduced by two years when the first instalment is payable
during the decade 2000-2009, and so on.
FIRST OPTION: LIFE ANNUITY. An annuity payable monthly to the payee during
the lifetime of the Annuitant, ceasing with the last payment due prior to the
death of the Annuitant.
SECOND OPTION: LIFE ANNUITY WITH CERTAIN PERIOD. An annuity providing
monthly income to the payee for a fixed period of 60, 120, 180, or 240 months
(as selected), and for as long thereafter as the Annuitant shall live.
THIRD OPTION: CASH REFUND LIFE ANNUITY. An annuity payable monthly to the payee
during the lifetime of the Annuitant ceasing with the last payment due prior to
the death of the Annuitant provided that, at the death of the Annuitant, the
payee will receive an additional payment equal to the excess, if any, of (a)
over (b) where: (a) is the initial value of the proceeds applied under this
option; and (b) is the dollar amount of payments already paid.
FOURTH OPTION: ANNUITY CERTAIN. An amount payable monthly for the number of
years selected which may be from 5 to 30 years.
EXCESS INTEREST. At the sole discretion of the Company, excess interest may be
paid or credited from time to time in addition to the payments guaranteed under
any fixed benefit Optional Method of Settlement.
AR424 (Page 1)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
VARIABLE BENEFIT OPTIONS
VARIABLE INCOME PAYMENTS. The amount of the first Variable Income Payment shall
be determined in accordance with the terms of the settlement option and the
table(s) set forth in this rider, as applicable. The mortality table used is the
1983 Individual Annuitant Mortality (IAM) Table "a" and 3%. In determining the
settlement amount, the settlement age of the Annuitant will be reduced by one
year when the first instalment is payable during the 1990's, reduced by two
years when the first instalment is payable during the decade 2000-2009 and so
on.
All Variable Income Payments other than the first are determined by means of
Annuity Units credited to the certificate with respect to the particular payee.
The number of Annuity Units to be credited in respect of a particular
Sub-Account under the certificate is determined by dividing that portion of the
first Variable Income Payment attributable to that Sub-Account by the Annuity
Unit Value of that Sub-Account for the Valuation Period which ends immediately
preceding the Annuity Date. The number of Annuity Units of each Sub-Account
credited with respect to the particular payee then remains fixed unless an
exchange of Annuity Units is made pursuant to the "Exchange of Variable Annuity
Units" section. The dollar amount of each Variable Income Payment after the
first may increase, decrease or remain constant, and is equal to the sum of the
amounts determined by multiplying the number of Annuity Units of a particular
Sub-Account for the Valuation Period which ends immediately preceding the due
date of each subsequent payment by the Annuity Unit Value for the particular
Sub-Account for the first Valuation Period occurring on or immediately prior to
the first day of each month.
ANNUITY UNIT VALUE. The Annuity Unit Value for each Sub-Account was established
at $10.00 for the first Valuation Period of the particular Sub-Account. The
Annuity Unit Value for the particular Sub-Account for any subsequent Valuation
Period is determined by multiplying the Annuity Unit Value for the particular
Sub-Account for the immediately preceding Valuation Period by the Net Investment
Factor for the current Valuation Period and then multiplying that product by a
factor to neutralize the assumed interest rate of 3% per year to establish the
Annuity Payment Rates set forth in this rider. The factor is 0.99991902 for a
one day valuation period.
EXCHANGE OF VARIABLE ANNUITY UNITS. After the Annuity Date the payee may, by
filing a written request with the Company at its Variable Products Service
Center's Mailing Address, exchange the value of a designated number of Annuity
Units of particular Variable Sub-Accounts then credited with respect to such
payee into other Annuity Units, the value of which would be such that the dollar
amount of an Income Payment made on the date of the exchange would be unaffected
by the exchange. Unless otherwise authorized by the Company in writing, no more
than 3 exchanges may be made in any Certificate Year.
Exchanges may be made among the Variable Sub-Accounts only. Exchanges shall be
made using the Annuity Unit Values for the Valuation Period during which the
request for exchange is received by the Company at its Variable Products Service
Center's Mailing Address.
ANNUITY ACCOUNT FEE. After the Annuity Date an Annuity Account Fee amounting to
$35 per year will be deducted in equal amounts from each variable Income Payment
made during the year. For example, this would amount to a $2.92 deduction from
each monthly Variable Income Payment. No deduction will be made from Fixed
Income Payments.
OPTION I: VARIABLE LIFE ANNUITY. A variable annuity payable monthly to the
payee during the lifetime of the Annuitant, ceasing with the last payment due
prior to the death of the Annuitant.
AR424 (Page 2)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
OPTION II: VARIABLE LIFE ANNUITY WITH CERTAIN PERIOD. A variable annuity which
provides monthly payments during the lifetime of the Annuitant and further
provides that if, at the death of the Annuitant, payments have been made for
less than the elected period certain, which may be 60, 120, 180 or 240 months,
the annuity payments will be continued during the remainder of such period.
OPTION III: VARIABLE ANNUITY CERTAIN. A variable amount payable monthly for the
number of years selected which may be from 5 to 30 years. At any time during the
period certain the Annuitant may elect that (1) all or a portion of any future
payments to which the Annuitant is entitled be commuted and paid in one sum, or
(2) such commuted amount, provided that the value thereof meets the minimum
payment amount in accordance with the Company's rules then in effect, be applied
to effect a variable annuity under one of the other options described herein. At
the expiration of the period certain, no further payments of any kind are
payable. If the Annuitant dies before the specified number of certain payments
have been received, the remainder of the payments will be continued during the
remainder of such period.
ADDITIONAL FIXED AND VARIABLE OPTIONS. Any proceeds payable under the
certificate may also be settled under any other method of settlement offered by
the Company at the time of the request.
Connecticut General Life Insurance Company
/s/ Thomas C. Jones
PRESIDENT
AR424 (Page 3)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000
APPLIED - MALE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST ANNUITANT NEAREST
BIRTHDAY 60 120 180 240 BIRTHDAY 60 120 180 240
- ------------------------------------------------------------------------------------------------------------------
AGE LIFE ANNUITY AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $2.87 $2.87 $2.87 $2.87 $2.87 35 $3.44 $3.44 $3.44 $3.43 $3.41
11 2.89 2.89 2.89 2.88 2.88 36 3.48 3.48 3.48 3.46 3.45
12 2.90 2.90 2.90 2.90 2.90 37 3.52 3.52 3.52 3.50 3.48
13 2.92 2.92 2.91 2.91 2.91 38 3.57 3.56 3.56 3.54 3.52
14 2.93 2.93 2.93 2.93 2.92 39 3.61 3.61 3.60 3.58 3.56
15 2.95 2.95 2.95 2.94 2.94 40 3.66 3.65 3.65 3.63 3.60
16 2.96 2.96 2.96 2.96 2.96 41 3.71 3.70 3.69 3.67 3.64
17 2.98 2.98 2.98 2.98 2.97 42 3.76 3.75 3.74 3.72 3.68
18 3.00 3.00 3.00 2.99 2.99 43 3.81 3.81 3.79 3.77 3.73
19 3.02 3.02 3.01 3.01 3.01 44 3.87 3.86 3.85 3.82 3.77
20 3.04 3.04 3.03 3.03 3.03 45 3.93 3.92 3.90 3.87 3.82
21 3.06 3.05 3.05 3.05 3.05 46 3.99 3.98 3.96 3.92 3.87
22 3.08 3.08 3.07 3.07 3.07 47 4.05 4.05 4.02 3.98 3.92
23 3.10 3.10 3.09 3.09 3.09 48 4.12 4.11 4.09 4.04 3.97
24 3.12 3.12 3.12 3.11 3.11 49 4.19 4.18 4.15 4.10 4.03
25 3.14 3.14 3.14 3.14 3.13 50 4.27 4.26 4.22 4.17 4.08
26 3.17 3.17 3.16 3.16 3.15 51 4.34 4.33 4.30 4.23 4.14
27 3.19 3.19 3.19 3.19 3.18 52 4.43 4.41 4.37 4.30 4.20
28 3.22 3.22 3.22 3.21 3.20 53 4.51 4.50 4.45 4.37 4.26
29 3.25 3.25 3.24 3.24 3.23 54 4.60 4.59 4.54 4.45 4.32
30 3.28 3.28 3.27 3.27 3.26 55 4.70 4.68 4.62 4.53 4.39
31 3.31 3.31 3.30 3.30 3.29 56 4.80 4.78 4.72 4.61 4.45
32 3.34 3.34 3.33 3.33 3.32 57 4.91 4.89 4.82 4.69 4.51
33 3.37 3.37 3.37 3.36 3.35 58 5.03 5.00 4.92 4.78 4.58
34 3.41 3.41 3.40 3.39 3.38 59 5.15 5.12 5.03 4.87 4.65
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST
BIRTHDAY 60 120 180 240
- -------------------------------------------------------------
AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C>
60 $5.28 $5.25 $5.14 $4.96 $4.71
61 5.43 5.39 5.27 5.06 4.78
62 5.58 5.53 5.39 5.16 4.84
63 5.74 5.69 5.53 5.26 4.90
64 5.91 5.85 5.66 5.36 4.96
65 6.10 6.03 5.81 5.46 5.02
66 6.30 6.21 5.96 5.56 5.08
67 6.51 6.41 6.12 5.66 5.13
68 6.73 6.62 6.28 5.77 5.18
69 6.97 6.84 6.44 5.86 5.23
70 7.23 7.07 6.61 5.96 5.27
71 7.51 7.32 6.79 6.05 5.31
72 7.80 7.58 6.96 6.14 5.34
73 8.12 7.85 7.14 6.23 5.37
74 8.46 8.14 7.32 6.31 5.40
75 8.82 8.45 7.50 6.38 5.42
76 9.21 8.76 7.67 6.45 5.44
77 9.63 9.10 7.84 6.51 5.45
78 10.08 9.44 8.01 6.57 5.47
79 10.56 9.80 8.17 6.62 5.48
80 11.07 10.17 8.33 6.66 5.49
81 11.62 10.55 8.48 6.70 5.49
82 12.20 10.94 8.61 6.73 5.50
83 12.82 11.33 8.74 6.76 5.50
84 13.47 11.73 8.86 6.79 5.51
85 14.17 12.12 8.97 6.81 5.51
- -------------------------------------------------------------
</TABLE>
AR424 (Page 4)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000
APPLIED - FEMALE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST ANNUITANT NEAREST
BIRTHDAY 60 120 180 240 BIRTHDAY 60 120 180 240
- -------------------------------------------------------------------------------------------------------------------------
AGE LIFE ANNUITY AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $2.80 $2.80 $2.80 $2.80 $2.80 35 $3.26 $3.26 $3.26 $3.25 $3.24
11 2.81 2.81 2.81 2.81 2.81 36 3.29 3.29 3.29 3.28 3.27
12 2.82 2.82 2.82 2.82 2.82 37 3.32 3.32 3.32 3.31 3.30
13 2.83 2.83 2.83 2.83 2.83 38 3.35 3.35 3.35 3.34 3.33
14 2.85 2.85 2.85 2.84 2.84 39 3.39 3.39 3.38 3.38 3.37
15 2.86 2.86 2.86 2.86 2.86 40 3.42 3.42 3.42 3.41 3.40
16 2.87 2.87 2.87 2.87 2.87 41 3.46 3.46 3.46 3.45 3.43
17 2.89 2.89 2.89 2.88 2.88 42 3.50 3.50 3.50 3.49 3.47
18 2.90 2.90 2.90 2.90 2.90 43 3.54 3.54 3.54 3.53 3.51
19 2.92 2.92 2.92 2.91 2.91 44 3.59 3.59 3.58 3.57 3.55
20 2.93 2.93 2.93 2.93 2.93 45 3.64 3.63 3.63 3.61 3.59
21 2.95 2.95 2.95 2.95 2.94 46 3.68 3.68 3.67 3.66 3.63
22 2.96 2.96 2.96 2.96 2.96 47 3.73 3.73 3.72 3.71 3.68
23 2.98 2.98 2.98 2.98 2.98 48 3.79 3.79 3.77 3.76 3.72
24 3.00 3.00 3.00 3.00 2.99 49 3.84 3.84 3.83 3.81 3.77
25 3.02 3.02 3.02 3.02 3.01 50 3.90 3.90 3.89 3.86 3.82
26 3.04 3.04 3.04 3.03 3.03 51 3.97 3.96 3.95 3.92 3.88
27 3.06 3.06 3.06 3.06 3.05 52 4.03 4.03 4.01 3.98 3.93
28 3.08 3.08 3.08 3.08 3.07 53 4.10 4.10 4.08 4.04 3.99
29 3.10 3.10 3.10 3.10 3.09 54 4.18 4.17 4.15 4.11 4.04
30 3.13 3.13 3.12 3.12 3.12 55 4.25 4.25 4.22 4.18 4.11
31 3.15 3.15 3.15 3.14 3.14 56 4.34 4.33 4.30 4.25 4.17
32 3.18 3.18 3.17 3.17 3.16 57 4.42 4.41 4.38 4.32 4.23
33 3.20 3.20 3.20 3.20 3.19 58 4.52 4.51 4.47 4.40 4.30
34 3.23 3.23 3.23 3.22 3.22 59 4.61 4.60 4.56 4.48 4.37
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST
BIRTHDAY 60 120 180 240
- -------------------------------------------------------------
AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C>
60 $4.72 $4.70 $4.66 $4.57 $4.44
61 4.83 4.81 4.76 4.66 4.51
62 4.95 4.93 4.87 4.75 4.58
63 5.08 5.05 4.98 4.85 4.65
64 5.21 5.18 5.10 4.95 4.72
65 5.36 5.32 5.22 5.05 4.79
66 5.51 5.47 5.36 5.16 4.86
67 5.67 5.63 5.50 5.26 4.93
68 5.85 5.80 5.65 5.37 5.00
69 6.04 5.98 5.80 5.49 5.06
70 6.25 6.18 5.97 5.60 5.12
71 6.47 6.39 6.14 5.71 5.18
72 6.71 6.62 6.32 5.83 5.23
73 6.98 6.86 6.50 5.94 5.28
74 7.26 7.12 6.69 6.04 5.32
75 7.57 7.40 6.89 6.14 5.35
76 7.90 7.69 7.09 6.24 5.39
77 8.26 8.01 7.29 6.33 5.41
78 8.65 8.34 7.49 6.41 5.43
79 9.08 8.70 7.69 6.49 5.45
80 9.54 9.07 7.89 6.55 5.47
81 10.03 9.47 8.08 6.61 5.48
82 10.58 9.88 8.26 6.66 5.49
83 11.16 10.31 8.43 6.70 5.49
84 11.80 10.75 8.59 6.74 5.50
85 12.48 11.20 8.74 6.77 5.50
- -------------------------------------------------------------
</TABLE>
ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
NUMBERS OF YEARS AMOUNT OF EACH INSTALMENT NUMBER OF YEARS AMOUNT OF EACH INSTALMENT
DURING WHICH DURING WHICH
INSTALMENTS WILL BE INSTALMENTS WILL BE
PAID ANNUAL MONTHLY PAID ANNUAL MONTHLY
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 $ 211.99 $ 17.91 11 $ 104.93 $ 8.86
6 179.22 15.14 12 97.54 8.24
7 155.83 13.16 13 91.29 7.71
8 138.31 11.68 14 85.95 7.26
9 124.69 10.53 15 81.33 6.87
10 113.82 9.61 16 77.29 6.53
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF YEARS AMOUNT OF EACH INSTALMENT
DURING WHICH
INSTALMENTS WILL BE
PAID ANNUAL MONTHLY
- ----------------------------------------------------------
<S> <C> <C>
17 $ 73.74 $ 6.23
18 70.59 5.96
19 67.78 5.73
20 65.26 5.51
25 55.76 4.71
- ----------------------------------------------------------
</TABLE>
AR424 (Page 5)
<PAGE>
OPTIONAL METHODS OF SETTLEMENT
This rider is made part of the certificate to which it is attached as of the
Certificate Date. Upon written request, the Company will agree to pay in
accordance with any one of the options shown below all or part of the net
proceeds that may be payable under the certificate.
While the Certificate Owner is alive, the request, including the designation of
the payee, may be made by the Certificate Owner. At the time a Death Benefit
becomes payable under the certificate, the request, including the designation of
the payee, may then be made by the Beneficiary. Once Income Payments have begun,
no surrender of the Annuity Value can be made (unless Variable Income Payments
are made under Option III) and the Annuitant cannot be changed, nor can the
settlement option be changed.
PAYMENT DATES. The first Income Payment under the settlement option selected
will be made on the first day of the month following the Annuity Date.
Subsequent payments will be made on the first day of each month in accordance
with the manner of payment selected.
MINIMUM PAYMENT AMOUNT. The settlement option elected must result in an Income
Payment at least equal to the minimum payment amount in accordance with the
Company's rules then in effect. If at any time payments are less than the
minimum payment amount, the Company has the right to change the frequency to an
interval that will provide the minimum payment amount. If any amount due is less
than the minimum per year, the Company may make other arrangements that are
equitable.
FIXED BENEFIT OPTIONS
FIXED INCOME PAYMENTS. Fixed Income Payments will remain constant pursuant to
the terms of the fixed settlement option(s) selected. The amount of each Fixed
Income Payment shall be determined in accordance with the terms of the
settlement option and the table(s) set forth in this rider, as applicable. The
mortality table used is the 1983 Individual Annuitant Mortality (IAM) Table "a"
and 3% interest. In determining the settlement amount, the settlement age of the
Annuitant will be reduced by one year when the first instalment is payable
during the 1990's, reduced by two years when the first instalment is payable
during the decade 2000-2009, and so on.
FIRST OPTION: LIFE ANNUITY. An annuity payable monthly to the payee during
the lifetime of the Annuitant, ceasing with the last payment due prior to
the death of the Annuitant.
SECOND OPTION: LIFE ANNUITY WITH CERTAIN PERIOD. An annuity providing
monthly income to the payee for a fixed period of 60, 120, 180, or 240
months (as selected), and for as long thereafter as the Annuitant shall
live.
THIRD OPTION: CASH REFUND LIFE ANNUITY. An annuity payable monthly to the payee
during the lifetime of the Annuitant ceasing with the last payment due prior to
the death of the Annuitant provided that, at the death of the Annuitant, the
payee will receive an additional payment equal to the excess, if any, of (a)
over (b) where: (a) is the initial value of the proceeds applied under this
option; and (b) is the dollar amount of payments already paid.
FOURTH OPTION: ANNUITY CERTAIN. An amount payable monthly for the number of
years selected which may be from 5 to 30 years.
EXCESS INTEREST. At the sole discretion of the Company, excess interest may be
paid or credited from time to time in addition to the payments guaranteed under
any fixed benefit Optional Method of Settlement.
(Page 1)
AR424-U
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
VARIABLE BENEFIT OPTIONS
VARIABLE INCOME PAYMENTS. The amount of the first Variable Income Payment shall
be determined in accordance with the terms of the settlement option and the
table(s) set forth in this rider, as applicable. The mortality table used is the
1983 Individual Annuitant Mortality (IAM) Table "a" and 3%. In determining the
settlement amount, the settlement age of the Annuitant will be reduced by one
year when the first instalment is payable during the 1990's, reduced by two
years when the first instalment is payable during the decade 2000-2009 and so
on.
All Variable Income Payments other than the first are determined by means of
Annuity Units credited to the certificate with respect to the particular payee.
The number of Annuity Units to be credited in respect of a particular
Sub-Account under the certificate is determined by dividing that portion of the
first Variable Income Payment attributable to that Sub-Account by the Annuity
Unit Value of that Sub-Account for the Valuation Period which ends immediately
preceding the Annuity Date. The number of Annuity Units of each Sub-Account
credited with respect to the particular payee then remains fixed unless an
exchange of Annuity Units is made pursuant to the "Exchange of Variable Annuity
Units" section. The dollar amount of each Variable Income Payment after the
first may increase, decrease or remain constant, and is equal to the sum of the
amounts determined by multiplying the number of Annuity Units of a particular
Sub-Account for the Valuation Period which ends immediately preceding the due
date of each subsequent payment by the Annuity Unit Value for the particular
Sub-Account for the first Valuation Period occurring on or immediately prior to
the first day of each month.
ANNUITY UNIT VALUE. The Annuity Unit Value for each Sub-Account was established
at $10.00 for the first Valuation Period of the particular Sub-Account. The
Annuity Unit Value for the particular Sub-Account for any subsequent Valuation
Period is determined by multiplying the Annuity Unit Value for the particular
Sub-Account for the immediately preceding Valuation Period by the Net Investment
Factor for the current Valuation Period and then multiplying that product by a
factor to neutralize the assumed interest rate of 3% per year to establish the
Annuity Payment Rates set forth in this rider. The factor is 0.99991902 for a
one day valuation period.
EXCHANGE OF VARIABLE ANNUITY UNITS. After the Annuity Date the payee may, by
filing a written request with the Company at its Variable Products Service
Center's Mailing Address, exchange the value of a designated number of Annuity
Units of particular Variable Sub-Accounts then credited with respect to such
payee into other Annuity Units, the value of which would be such that the dollar
amount of an Income Payment made on the date of the exchange would be unaffected
by the exchange. Unless otherwise authorized by the Company in writing, no more
than 3 exchanges may be made in any Certificate Year.
Exchanges may be made among the Variable Sub-Accounts only. Exchanges shall
be made using the Annuity Unit Values for the Valuation Period during which
the request for exchange is received by the Company at its Variable Products
Service Center's Mailing Address.
ANNUITY ACCOUNT FEE. After the Annuity Date an Annuity Account Fee
amounting to $35 per year will be deducted in equal amounts from each
variable Income Payment made during the year. For example, this would
amount to a $2.92 deduction from each monthly Variable Income Payment. No
deduction will be made from Fixed Income Payments.
OPTION I: VARIABLE LIFE ANNUITY. A variable annuity payable monthly to the
payee during the lifetime of the Annuitant, ceasing with the last payment
due prior to the death of the Annuitant.
(Page 2)
AR424-U
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
OPTION II: VARIABLE LIFE ANNUITY WITH CERTAIN PERIOD. A variable annuity which
provides monthly payments during the lifetime of the Annuitant and further
provides that if, at the death of the Annuitant, payments have been made for
less than the elected period certain, which may be 60, 120, 180 or 240 months,
the annuity payments will be continued during the remainder of such period.
OPTION III: VARIABLE ANNUITY CERTAIN. A variable amount payable monthly for the
number of years selected which may be from 5 to 30 years. At any time during the
period certain the Annuitant may elect that (1) all or a portion of any future
payments to which the Annuitant is entitled be commuted and paid in one sum, or
(2) such commuted amount, provided that the value thereof meets the minimum
payment amount in accordance with the Company's rules then in effect, be applied
to effect a variable annuity under one of the other options described herein. At
the expiration of the period certain, no further payments of any kind are
payable. If the Annuitant dies before the specified number of certain payments
have been received, the remainder of the payments will be continued during the
remainder of such period.
ADDITIONAL FIXED AND VARIABLE BENEFIT OPTIONS. Any proceeds payable under the
certificate may also be settled under any other method of settlement offered by
the Company at the time of the request.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
/s/ THOMAS C. JONES
PRESIDENT
(Page 3)
AR424-U
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
<TABLE>
<CAPTION>
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000 APPLIED - UNISEX
- ---------------------------------------------------------------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST ANNUITANT NEAREST
BIRTHDAY 60 120 180 240 BIRTHDAY 60 120 180 240
- ---------------------------------------------------------------------------------------------------------------------
AGE LIFE ANNUITY AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 2.84 2.84 2.84 2.84 2.83 35 3.35 3.35 3.35 3.34 3.33
11 2.85 2.85 2.85 2.85 2.85 36 3.39 3.39 3.38 3.38 3.36
12 2.86 2.86 2.86 2.86 2.86 37 3.42 3.42 3.42 3.41 3.40
13 2.88 2.88 2.88 2.87 2.87 38 3.46 3.46 3.46 3.45 3.43
14 2.89 2.89 2.89 2.89 2.89 39 3.50 3.50 3.49 3.48 3.47
15 2.91 2.90 2.90 2.90 2.90 40 3.54 3.54 3.54 3.52 3.50
16 2.92 2.92 2.92 2.92 2.91 41 3.59 3.59 3.58 3.56 3.54
17 2.94 2.94 2.93 2.93 2.93 42 3.63 3.63 3.62 3.61 3.58
18 2.95 2.95 2.95 2.95 2.95 43 3.68 3.68 3.67 3.65 3.62
19 2.97 2.97 2.97 2.96 2.96 44 3.73 3.73 3.72 3.70 3.67
20 2.99 2.99 2.98 2.98 2.98 45 3.78 3.78 3.77 3.74 3.71
21 3.00 3.00 3.00 3.00 3.00 46 3.84 3.84 3.82 3.79 3.76
22 3.02 3.02 3.02 3.02 3.01 47 3.90 3.89 3.88 3.85 3.80
23 3.04 3.04 3.04 3.04 3.03 48 3.96 3.95 3.93 3.90 3.85
24 3.06 3.06 3.06 3.06 3.05 49 4.02 4.02 3.99 3.96 3.91
25 3.08 3.08 3.08 3.08 3.07 50 4.09 4.08 4.06 4.02 3.96
26 3.11 3.11 3.10 3.10 3.10 51 4.16 4.15 4.13 4.08 4.01
27 3.13 3.13 3.13 3.12 3.12 52 4.23 4.22 4.20 4.15 4.07
28 3.15 3.15 3.15 3.15 3.14 53 4.31 4.30 4.27 4.21 4.13
29 3.18 3.18 3.17 3.17 3.16 54 4.39 4.38 4.35 4.28 4.19
30 3.20 3.20 3.20 3.20 3.19 55 4.48 4.47 4.43 4.36 4.25
31 3.23 3.23 3.23 3.22 3.22 56 4.57 4.56 4.51 4.43 4.32
32 3.26 3.26 3.26 3.25 3.24 57 4.67 4.65 4.60 4.51 4.38
33 3.29 3.29 3.29 3.28 3.27 58 4.78 4.76 4.70 4.60 4.45
34 3.32 3.32 3.32 3.31 3.30 59 4.89 4.87 4.80 4.68 4.51
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------
SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST
BIRTHDAY 60 120 180 240
- -----------------------------------------------------------------
AGE LIFE ANNUITY
<S> <C> <C> <C> <C> <C>
60 5.00 4.98 4.91 4.77 4.58
61 5.13 5.10 5.02 4.87 4.65
62 5.27 5.23 5.13 4.96 4.72
63 5.41 5.37 5.26 5.06 4.79
64 5.56 5.52 5.39 5.16 4.85
65 5.73 5.68 5.52 5.27 4.92
66 5.90 5.84 5.67 5.37 4.98
67 6.09 6.02 5.82 5.48 5.04
68 6.29 6.21 5.97 5.58 5.10
69 6.51 6.41 6.13 5.69 5.15
70 6.74 6.63 6.30 5.79 5.20
71 6.99 6.86 6.47 5.90 5.25
72 7.25 7.10 6.65 6.00 5.29
73 7.54 7.36 6.83 6.09 5.33
74 7.85 7.63 7.02 6.19 5.36
75 8.19 7.92 7.21 6.27 5.39
76 8.55 8.23 7.39 6.36 5.42
77 8.93 8.56 7.58 6.43 5.44
78 9.35 8.90 7.77 6.50 5.45
79 9.80 9.26 7.95 6.56 5.47
80 10.29 9.63 8.12 6.61 5.48
81 10.81 10.02 8.29 6.66 5.49
82 11.37 10.42 8.45 6.70 5.49
83 11.98 10.83 8.60 6.74 5.50
84 12.62 11.25 8.74 6.76 5.50
85 13.31 11.67 8.86 6.79 5.51
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBERS OF YEARS AMOUNT OF EACH INSTALMENT NUMBER OF YEARS AMOUNT OF EACH INSTALMENT
DURING WHICH DURING WHICH
INSTALMENTS WILL BE INSTALMENTS WILL BE
PAID ANNUAL MONTHLY PAID ANNUAL MONTHLY
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 211.99 17.91 11 104.93 8.86
6 179.22 15.14 12 97.54 8.24
7 155.83 13.16 13 91.29 7.71
8 138.31 11.68 14 85.95 7.26
9 124.69 10.53 15 81.33 6.87
10 113.82 9.61 16 77.29 6.53
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
NUMBER OF YEARS AMOUNT OF EACH INSTALMENT
DURING WHICH
INSTALMENTS WILL BE
PAID ANNUAL MONTHLY
- -----------------------------------------------------
<S> <C> <C>
17 $ 73.74 $ 6.23
18 70.59 5.96
19 67.78 5.73
20 65.26 5.51
25 55.76 4.71
30 49.53 4.18
- -----------------------------------------------------
</TABLE>
AR424-U (Page 4)
<PAGE>
<TABLE>
<CAPTION>
CONTRACT OWNER VARIABLE ANNUITY APPLICATION CONNECTICUT GENERAL LIFE INSURANCE COMPANY
A CIGNA Company
<S> <C>
No. 000001
=================================================================================================================================
1a. Name of Contract Owner b. Contract Owner Tax Iden. #
- -
--- --- --- --- --- --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------------------------
c. Address (No., Street, City, State & Zip Code) of Contract Owner
- ---------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL INSTRUCTIONS HOME OFFICE CHANGES OR CORRECTIONS
- ---------------------------------------------------------------------------------------------------------------------------------
The Contract Owner hereby applies to Connecticut General Life Insurance company for a Flexible Payment Deferred Group Variable
Annuity Contract. Under penalties of perjury, I (as an officer of the Contract Owner) hereby certify that the above Taxpayer
Identification number is correct.
- ----------------------------------------------------------------------------------------------------------------------------------
Dated at (City & State)
On ___ / ___ / ___
Mo. Day Year
- ---------------------------------------------------------------------------------------------------------------------------------
Registered Representative/Witness Signature and Title of Officer of Contract Owner
a. Print Name: _________________________________ a. Print Name: __________________________________
b. Signature: __________________________________ b. Signature: ___________________________________
c. SS#: ________________________________________ c. Title: _______________________________________
d. Telephone: __________________________________
e. Rep Code: ___________________________________
f. Field Office Code: __________________________
=================================================================================================================================
</TABLE>
B10279
<PAGE>
CERTIFICATE OWNER
VARIABLE ANNUITY APPLICATION CONNECTICUT GENERAL LIFE INSURANCE COMPANY
a CIGNA company
MAILING ADDRESS:
CIGNA INDIVIDUAL INSURANCE
VARIABLE PRODUCTS SERVICE CENTER, ROUTING S224
HARTFORD, CONNECTICUT 06152-2224
<TABLE>
<S> <C>
==================================================================================================================================
1
CERTIFICATE Name _____________________________________________________________________________________________________
OWNER First Middle Last
Address __________________________________________________________________________________________________
Number Street City State Zip Code
Date of Birth ____/____/____ SS#_____________________ Sex / / M Telephone (_____)______________(HOME)
Mo. Day Yr. (or Tax Iden. #) / / F (_____)______________(WORK)
Full Name of Trust ___________________________ _______________ Name(s) of Trustee(s)_____________________
(If applicable) (Date of Trust) (If applicable)
- ----------------------------------------------------------------------------------------------------------------------------------
2
ANNUITANT Name _____________________________________________________________________________________________________
(If different First Middle Last
from
Certificate Address __________________________________________________________________________________________________
Owner) Number Street City State Zip Code
(Annuitant Date of Birth ____/___ /____ SS#____________________ Sex / / M Telephone (_____)______________(HOME)
may not Mo. Day Yr. (or Tax Iden. #) / / F (_____)______________(WORK)
be a
corporation
or trust)
- -----------------------------------------------------------------------------------------------------------------------------------
3
CERTIFICATE Primary Beneficiary(s) and relationship to Contingent Beneficiary(s) and relationship to
OWNER'S Certificate Owner Certificate Owner
BENEFICIARY
DESIGNATION _______________________________________________ ____________________________________________________
_______________________________________________ ____________________________________________________
_______________________________________________ ____________________________________________________
_______________________________________________ ____________________________________________________
- ----------------------------------------------------------------------------------------------------------------------------------
4 I. Premium Payment $ ____________________ (MAKE CHECK PAYABLE TO "CGLIC")
PREMIUM
PAYMENT(S) II. Plan Type (CHECK ONE) / / QUALIFIED (IF QUALIFIED, PLEASE COMPLETE ADDENDUM TO APPLICATION -
FORM B10281)
/ / NON-QUALIFIED
III. Does any portion of the payment represent after-tax dollars?
/ / YES / / NO IF YES, SPECIFY THE AMOUNT $______________________________
- -----------------------------------------------------------------------------------------------------------------------------------
5
PREMIUM FIXED ACCOUNT GUARANTEED PERIODS - (SUB-ACCOUNTS)
PAYMENT -------------------------------------------------
ALLOCATION _____% 1 Year _____% 3 Years _____% 5 Years _____% 7 Years _____% 10 Years
(Allocation
to any one % _____% _____ Years (IF AVAILABLE FROM THE COMPANY)
line must be
10% or more.) VARIABLE ACCOUNT - SUB-ACCOUNTS (FUNDS)
---------------------------------------
(Use Whole FIDELITY INVESTMENTS NEUBERGER & BERMAN
percentages ___% Asset Manager Portfolio ___% AMT Balanced Portfolio
only. Must ___% Equity-Income Portfolio ___% AMT Limited Maturity Bond
total 100%.) ___% Investment Grade Bonds Portfolio Portfolio
___% Money Market Portfolio ___% AMT Partners Portfolio
If DOLLAR
COST FRED ALGER MANAGEMENT, INC.
AVERAGING is ___% Alger American Growth Portfolio QUEST FOR VALUE
employed, an ___% Alger American Leveraged AllCap ___% Quest Global Equity
allocation Portfolio Portfolio
must be made ___% Alger American MidCap Growth Portfolio ___% Quest Managed Portfolio
to the ___% Alger American Small Capitalization ___% Quest Small Cap Portfolio
Fidelity Portfolio
Investments
VIP Money MASSACHUSETTS FINANCIAL SERVICES OTHER (IF AVAILABLE FROM THE COMPANY)
Market ___% MFS Total Return Series ___% ______________________________
Portfolio and ___% MFS Utilities Series ___% ______________________________
the % ___% MFS World Governments Series
allocation
must result
in a least
$12,000 to
such account.
Please
complete
Section 9.
_____% TOTAL of percentages allocated to Fixed
Account and/or Variable Account (MUST EQUAL 100%).
- -----------------------------------------------------------------------------------------------------------------------------------
6 I(We) acknowledge that neither the Company nor any person authorized by the
TELEPHONE Company will be responsible for any claim, loss, liability or expense in
TRANSFER connection with a telephone transfer if the Company or such other person acted
AUTHOR- on telephone transfer instructions in good faith in reliance on this
IZATION authorization.
Check here if you DO NOT wish to authorize telephone transfer instructions. / /
Check here if you wish to authorize your registered representative/agent to
make telephone transfers. / /
===================================================================================================================================
</TABLE>
(Page 2)
<PAGE>
<TABLE>
<S> <C>
===================================================================================================================================
7 The Annuity Date (INCOME PAYMENTS BEGIN ON THE FIRST DAY OF THE MONTH FOLLOWING THE
ANNUITY DATE ANNUITY DATE) must be at least one year after the Date of Issue. If no date is selected, the initial
Annuity Date will be the Annuitant's 90th birthday (FOR QUALIFIED PLANS, AGE 70 1/2).
Initial Annuity Date ________________________
MONTH YEAR
- -----------------------------------------------------------------------------------------------------------------------------------
8 The certificate provides for a death benefit equal to the Annuity Account
DEATH BENEFIT Value. The death benefit options provide for greater amounts to be paid but
require additional charges under the certificate. (Please refer to the
prospectus.)
Death Benefit Options (Check one or more):
/ / Death Benefit Option A
/ / Death Benefit Option B (NOT AVAILABLE IF OWNER IS AGE 72 OR GREATER.)
/ / Death Benefit Option C
/ / Death Benefit Option D
- ----------------------------------------------------------------------------------------------------------------------------------
9 SELECT ONE TRANSFER OPTION ($1,000 MINIMUM PER TRANSFER):
DOLLAR COST
AVERAGING / / $_____________ monthly / / $_____________ quarterly
(For Variable Each amount transferred is to be applied to the following Fund(s) in these
Account only) percentages (USE WHOLE PERCENTAGES ONLY. TOTAL MUST EQUAL 100%.):
(FOLLOW FIDELITY INVESTMENTS NEUBERGER & BERMAN
INSTRUCTIONS ___% Asset Manager Portfolio ___% AMT Balanced Portfolio
IN SECTION 5 ___% Equity-Income Portfolio ___% AMT Limited Maturity Bond Portfolio
BEFORE ___% Investment Grade Bonds Portfolio ___% AMT Partners Portfolio
COMPLETING ___% Money Market Portfolio
THIS SECTION.)
FRED ALGER MANAGEMENT, INC. QUEST FOR VALUE
___% Alger American Growth Portfolio ___% Quest Global Equity Portfolio
___% Alger American Leveraged AllCap Portfolio ___% Quest Managed Portfolio
___% Alger American MidCap Growth Portfolio ___% Quest Small Cap Portfolio
___% Alger American Small Capitalization Portfolio
MASSACHUSETTS FINANCIAL SERVICES OTHER (IF AVAILABLE FROM THE COMPANY)
___% MFS Total Return Series ___% _______________________________
___% MFS Utilities Series ___% _______________________________
___% MFS World Government Series
- ----------------------------------------------------------------------------------------------------------------------------------
10 Will the certificate replace one or more existing annuity or life insurance contracts?
REPLACEMENT / / YES / / NO
IF YES, PLEASE PROVIDE COMPANY NAME, POLICY NUMBER AND
AMOUNT IN SPECIAL REMARKS SECTION AND FOR NON-QUALIFIED
PLANS, COMPLETE THE FOLLOWING:
INDICATE COST BASIS: COST BASIS GAIN
---------- ----
PRE-TEFRA (PRIOR TO 8/13/82) ____________________________ _________________________
POST-TEFRA (ON OR AFTER 8/13/82) ____________________________ _________________________
- ----------------------------------------------------------------------------------------------------------------------------------
11
SPECIAL
REMARKS
- ----------------------------------------------------------------------------------------------------------------------------------
12
HOME OFFICE
CHANGES OR
CORRECTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
13 I(We) hereby certify that the answers to the above questions are true and
SIGNATURE(S) correct to the best of my(our) knowledge and belief and agree that this
application will be made a part of any certificate issued
by the Company. ALL PAYMENTS AND VALUES BASED ON THE
FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE ADJUSTMENT
FORMULA THAT MAY INCREASE OR DECREASE THE VALUE OF ANY
PARTIAL OR FULL SURRENDER MADE PRIOR TO THE END OF A
GUARANTEED PERIOD. ALL PAYMENTS AND VALUES PROVIDED BY
THE CERTIFICATE WHEN BASED ON THE INVESTMENT EXPERIENCE
OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT. I(We) acknowledge receipt
of a current prospectus. Please check here / / if you
wish to receive a copy of the Statement of Additional
Information which supplements the information in the
prospectus. Under penalties of perjury, I (the
Certificate Owner) certify that the above Social Security
and Taxpayer Identification numbers are correct and that
I am of legal age to enter into this agreement.
Signed at (City and State) ___________________________________________ On ____/____/____
MO DAY YEAR
_______________________________________________________________________
SIGNATURE(S) OF CERTIFICATE OWNER(S)
- -----------------------------------------------------------------------------------------------------------------------------------
14 The Registered Representative hereby certifies that the certificate / / IS / / IS NOT intended
CERTIFICATION/ to replace or change any existing annuity or life insurance.
REPORT BY
REGISTERED Print Name ____________________________________________ Signature _______________________________________
REPRESENTA- SS# ____________________________________________ Telephone _______________________________________
TIVE/ Rep. Code/Percentage ________________ / ______________% Field Office Code _______________________________
WITNESS
Print Name ____________________________________________ Signature _______________________________________
SS# ____________________________________________ Telephone _______________________________________
Rep. Code/Percentage ________________ / ______________% Field Office Code _______________________________
- ----------------------------------------------------------------------------------------------------------------------------------
15
BROKER/ Print Name ____________________________________________ Telephone ____________________________________
DEALER Address ____________________________________________ Broker Code ____________________________________
INFORMATION ____________________________________________ Field Office Code ______________________________
==================================================================================================================================
</TABLE>
B10282 (Page 3)
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
HARTFORD, CONNECTICUT
ADDENDUM TO VARIABLE ANNUITY APPLICATION
<TABLE>
<CAPTION>
<C> <S>
=================================================================================================================================
SUPPLEMENTAL I. Specify below how payment is to be applied:
INFORMATION FOR
QUALIFIED PLANS / / IRA and/or SEP - Please complete the following:
(i) Does any portion of the payment represent an IRA and/or
SEP contribution? / / YES / / NO
IF YES, SPECIFY THE AMOUNT $_______________ AND TAX YEAR 19____.
(ii) I (the Certificate Owner) certify that my signature below
indicates that:
(A) I HAVE READ AND UNDERSTAND THE IRA DISCLOSURE STATEMENT WHICH HAS
BEEN PROVIDED; AND
(B) IF I AM OPENING THIS IRA WITH A DISTRIBUTION FROM AN EMPLOYER-SPONSORED
RETIREMENT PLAN, SUCH DISTRIBUTION IS A QUALIFIED DISTRIBUTION AS DEFINED
IN THE INTERNAL REVENUE CODE AND TREASURY REGULATIONS, THE DISTRIBUTION
QUALIFIES FOR ROLLOVER TREATMENT, AND I IRREVOCABLY ELECT TO TREAT THIS
DISTRIBUTION AS A ROLLOVER CONTRIBUTION.
/ / Tax Sheltered Annuity (403(b)) - Please complete the following:
(i) EMPLOYEE - I (the Certificate Owner) certify that my
signature below indicates that:
(A) I ACKNOWLEDGE AND UNDERSTAND THAT REDEMPTIONS ARE RESTRICTED TO THE
FOLLOWING EVENTS; DEATH, ATTAINMENT OF AGE 59 1/2, SEPARATION FROM
SERVICE, DISABILITY, OR FINANCIAL HARDSHIP, EXCEPT THAT INCOME
ATTRIBUTABLE TO ELECTIVE CONTRIBUTIONS MAY NOT BE DISTRIBUTED IN THE CASE OF
HARDSHIP; AND (B) I HAVE BEEN INFORMED OF AND UNDERSTAND THE INVESTMENT
ALTERNATIVES AVAILABLE UNDER MY EMPLOYERS 403(B) ARRANGEMENT TO WHICH I
MAY ELECT TO TRANSFER THE VALUE OF MY CERTIFICATE.
(ii) Please complete for ongoing contributions only: EMPLOYER - I
(as employer of the employee) represent that a salary reduction agreement
is currently in place between the sponsoring organization/employer and the
employee.____________________________ (EMPLOYER'S SIGNATURE)
/ / Pension Plan (Specify plan year-end date ____/____/____)
/ / Profit Sharing Plan (Specify plan year-end date ____/____/____)
/ / Other ________________________
II. Specify below the type of plan from which the distribution was made:
/ / IRA
/ / Tax Sheltered Annuity (403(b))
/ / Pension Plan
/ / Profit Sharing Plan (including 401(k))
/ / Other ________________________
=================================================================================================================================
SIGNED AT (CITY AND STATE) _________________________________________________ ON _____/_____/_____
MO DAY YEAR
- --------------------------------------------------------------------------------------------------------------------------------
SIGNATURE(S) OF CERTIFICATE OWNER(S)
</TABLE>
B10281
<PAGE>
Exhibit 6A
CERTIFICATE
REFUNDING OR RESTATING CERTIFICATE
INCORPORATION BY ACTION OF / / INCORPORATION
/ / BOARD OF DIRECTORS
/X/ BOARD OF DIRECTORS
AND SHAREHOLDERS
(Stock Corporation)
/ / BOARD OF DIRECTORS
AND MEMBERS
(Nonstock Corporation)
-----------------------
For office use only
-----------------------
STATE OF CONNECTICUT ACCOUNT NO.
SECRETARY OF THE STATE -----------------------
INITIALS
-----------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NAME OF CORPORATION DATE
CONNECTICUT GENERAL LIFE INSURANCE COMPANY July 20, 1982
- -------------------------------------------------------------------------------
THE CERTIFICATE OF INCORPORATION IS
/X/ A. AMENDED ONLY
/ / B. AMENDED AND RESTATED
/ / C. RESTATED ONLY
BY THE FOLLOWING RESOLUTION
SEE ATTACHED
(Omit if 2.A is checked.)
(A) THE ABOVE RESOLUTION MERELY RESTATES AND DOES NOT CHANGE THE PROVISIONS OF
THE ORIGINAL CERTIFICATE OF INCORPORATION AS SUPPLEMENTED AND AMENDED TO
DATE, EXCEPT AS FOLLOWS: (Indicate amendments made, if any; if none, so
indicate.)
Not Applicable
(B) OTHER THAN AS INDICATED IN PAR. 3(A), THERE IS NO DISCREPANCY BETWEEN THE
PROVISIONS OF THE ORIGINAL CERTIFICATE OF INCORPORATION AS SUPPLEMENTED TO
DATE, AND THE PROVISIONS OF THIS CERTIFICATE RESTATING THE CERTIFICATE OF
INCORPORATION.
BY ACTION OF THE INCORPORATORS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
/ / 4. THE ABOVE RESOLUTION WAS ADOPTED BY VOTE OF AT LEAST TWO-THIRDS OF THE
INCORPORATORS BEFORE THE ORGANIZATION MEETING OF THE CORPORATION, AND
APPROVED IN WRITING BY ALL SUBSCRIBERS (if any) FOR SHARES OF THE
CORPORATION, (or if nonstock corporation, by all applicants for
membership entitled to vote, if any.)
WE (at least two-thirds of the incorporators) HEREBY DECLARE, UNDER THE
PENALTIES OF FALSE STATEMENT THAT THE STATEMENTS MADE IN THE FOREGOING
CERTIFICATE ARE TRUE.
- --------------------------------------------------------------------------------
SIGNED SIGNED SIGNED
- --------------------------------------------------------------------------------
APPROVED
(All subscribers, or, if nonstock corporation, all applicants for membership
entitled to vote; if none, so indicate)
- --------------------------------------------------------------------------------
SIGNED SIGNED SIGNED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Over)
<PAGE>
(Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
/ / 4. (Omit if 2.C is checked.) THE ABOVE RESOLUTION WAS ADOPTED BY THE
BOARD OF DIRECTORS ACTING ALONE,
/ / THERE BEING NO SHAREHOLDERS OR SUBSCRIBERS.
/ / THE CORPORATION BEING A NONSTOCK CORPORATION AND HAVING NO MEMBERS AND NO
APPLICANTS FOR MEMBERSHIP ENTITLED TO VOTE ON SUCH RESOLUTION.
/ / THE BOARD OF DIRECTORS BEING SO AUTHORIZED PURSUANT TO SECTION 33-341,
CONN. G.S. AS AMENDED
- --------------------------------------------------------------------------------
5. THE NUMBER OF AFFIRMATIVE VOTES REQUIRED TO ADOPT SUCH RESOLUTION IS:
- --------------------------------------------------------------------------------
6. THE NUMBER OF DIRECTORS' VOTES IN FAVOR OF THE RESOLUTION WAS:
- --------------------------------------------------------------------------------
WE HEREBY DECLARE, UNDER THE PENALTIES OF FALSE STATEMENT THAT THE STATEMENTS
MADE IN THE FOREGOING CERTIFICATE ARE TRUE.
- --------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
- --------------------------------------------------------------------------------
SIGNED (President or Vice President)
- --------------------------------------------------------------------------------
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
- --------------------------------------------------------------------------------
SIGNED (Secretary or Assistant Secretary)
- --------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
- --------------------------------------------------------------------------------
/X/ 4. THE ABOVE RESOLUTION WAS ADOPTED BY THE BOARD OF DIRECTORS AND BY
SHAREHOLDERS.
5. VOTE OF SHAREHOLDERS:
(A) (Use if no shares are required to be voted as a class.)
- -----------------------------------
NUMBER OF SHARES ENTITLED TO VOTE
5,978,322
- -----------------------------------
TOTAL VOTING POWER
5,978,322
- -----------------------------------
VOTE REQUIRED FOR ADOPTION
3,985,548
- -----------------------------------
VOTE FAVORING ADOPTION
5,978,322
- --------------------------------------------------------------------------------
(B) (If the shares of any class are entitled to vote as a class, indicate the
designation and number of outstanding shares of each such class, the voting
power thereof, and the vote of each such class for the amendment
resolution.)
WE HEREBY DECLARE, UNDER THE PENALTIES OF FALSE STATEMENT THAT THE STATEMENTS
MADE IN THE FOREGOING CERTIFICATE ARE TRUE.
- --------------------------------------------------------------------------------
NAME OF PRESIDENT (Print or Type)
Hartzel Z. Lebed
- --------------------------------------------------------------------------------
SIGNED (President)
/s/ Hartzel Z. Lebed
- --------------------------------------------------------------------------------
NAME OF SECRETARY (Print or Type)
David C. Kopp
- --------------------------------------------------------------------------------
SIGNED (Secretary)
/s/ David C. Kopp
- --------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS AND MEMBERS
- --------------------------------------------------------------------------------
/ / 4. THE ABOVE RESOLUTION WAS ADOPTED BY THE BOARD OF DIRECTORS AND BY
MEMBERS.
5. VOTE OF MEMBERS:
(A) (Use if no members are required to vote as a class.)
- --------------------------------------------------------------------------------
NUMBER OF MEMBERS VOTING
- -----------------------------------
TOTAL VOTING POWER
- -----------------------------------
VOTE REQUIRED FOR ADOPTION
- -----------------------------------
VOTE FAVORING ADOPTION
- --------------------------------------------------------------------------------
(B) (If the members of any class are entitled to vote as a class, indicate the
designation and number of members of each such class, the voting power
thereof, and the vote of each such class for the amendment resolution.)
WE HEREBY DECLARE, UNDER THE PENALTIES OF FALSE STATEMENT THAT THE STATEMENTS
MADE IN THE FOREGOING CERTIFICATE ARE TRUE
- --------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT (Print or Type)
- --------------------------------------------------------------------------------
SIGNED (President or Vice President)
- --------------------------------------------------------------------------------
NAME OF SECRETARY OR ASSISTANT SECRETARY (Print or Type)
- --------------------------------------------------------------------------------
SIGNED (Secretary or Assistant Secretary)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For Office use only
- --------------------------------------------------------------------------------
FILED
STATE OF CONNECTICUT
JUL 21 1982
SECRETARY OF THE STATE
By Time 10:10 A.M.
---------------- ------
- --------------------------------------------------------------------------------
FILING FEE
$30.00
- ---------------------------------------------
CERTIFICATION FEE
$60 cc's @9.50 = 570.00
- ---------------------------------------------
TOTAL FEES
$600.00
- ---------------------------------------------
SIGNED (For Secretary of the State)
- ---------------------------------------------
CERTIFIED COPY SENT ON (Date)
Rec + 60 cc's
- ---------------------------------------------
INITIALS
- ---------------------------------------------
TO
David C. Kopp
c/o Connecticut General Htfd Ct. 0615
- ---------------------------------------------
DATE
- ---------------------------------------------
LIST
- ---------------------------------------------
PROOF
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
ATTACHMENT TO CERTIFICATE
AMENDING CERTIFICATE OF INCORPORATION (CHARTER)
RESOLVED: That Section 5 of the Corporation's Charter is hereby amended to read
as follows:
"The corporate office shall be at Bloomfield, Connecticut or at some
other place within or without the State of Connecticut and the
corporation may establish and maintain other offices and agencies in
other locations within or without the State. The property and affairs
of the corporation shall be managed under the direction of a board of
not less than nine directors, the number and the terms of office to be
determined from time to time by the board of directors in accordance
with the bylaws, provided no director shall be elected for a longer
term than five years. The directors shall be chosen by ballot by the
stockholders except that, if any vacancy occurs in the board of
directors, such vacancy may be filled by the remaining directors for
the unexpired portion of the term, and if the number of directors is
increased by vote of the board of directors between meetings of
stockholders, the additional directors may be chosen by the board of
directors for terms expiring with the next annual meeting thereafter.
Unless the bylaws provide for a lesser or greater quorum as may be
permitted by law, a majority of the authorized number of directors, as
fixed by the board of directors from time to time, shall constitute a
quorum."
RESOLVED: That Section 6 of the Corporation's Charter is hereby amended to read
as follows:
"The directors of the corporation shall elect a president, one or more
vice presidents, one or more secretaries, including a corporate
secretary, and such other officers as they may deem desirable. If
authorized by the board of directors, the chairman of the board, the
president and other designated officers shall each have the power to
appoint such officers, other than the chairman of the board, the
president and the corporate secretary, as the appointing officer may
deem desirable. The president shall be elected to hold office until
the next annual meeting, but he may continue to serve until his
successor has been chosen; and the other officers may be elected or
appointed for like or different terms and they may be removed at any
time at the pleasure of the directors or, in the case of appointed
officers only, of the appointing officer."
<PAGE>
CHARTER
OF
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
-------------------------
Consisting of Connecticut Special Act No. 173 of 1947 and the
amendments made by Special Act No. 536 of 1953, Special Act No. 76 of
1959, Special Act No. 358 of 1963 and Special Act No. 351 of 1967.
This document also contains the Resolution of the General Assembly of
Connecticut, approved June 22, 1865, under which Connecticut General
Life Insurance Company was organized June 26, 1865, together with all
amendments to date.
October 27, 1967
<PAGE>
CHARTER
OF
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
SECTION 1. Connecticut General Life Insurance Company shall continue under
that name, a body corporate, with power to purchase or otherwise acquire, have,
hold and enjoy lands, tenements, hereditaments, chattels, bonds, stocks, monies,
choses in action and property and effects of every kind, and the same to sell,
grant, demise, alien and convey and to loan, invest and reinvest any of such
assets in any manner now or hereafter permitted in the case of any other
corporation now or hereafter chartered by Connecticut and empowered to do a life
insurance business; to sue and be sued and to plead and be impleaded in all
courts of law and equity; to have and to hold and to change at pleasure a common
seal, and to ordain and to put into execution and to change at pleasure by-laws
consistent with the laws of this state and of the United States.
SEC. 2. The business of the corporation shall be life insurance,
endowments, annuities, accident insurance, health insurance and any other
business or type of business which any other corporation now or hereafter
chartered by Connecticut and empowered to do a life insurance business may now
or hereafter lawfully do; and the corporation is specifically empowered to
accept and to cede reinsurance of any such risks or hazards. The corporation
may exercise such powers outside of Connecticut to the extent permitted by the
laws of the particular jurisdiction. Policies or other contracts may be issued
stipulated to be with or without participation in profits; and they may be with
or without seal.
SEC. 3. The capital stock of the corporation shall be not less than three
million dollars and may from time to time be increased when and as authorized by
the stockholders and, unless the stockholders otherwise authorize, shall be
divided into shares of the par value of five dollars each. The capital stock of
the corporation shall be transferable in accordance with the bylaws; and a
transfer agent may be employed.
SEC. 4. The annual meeting of the stockholders of the corporation shall be
held at such time during the first half of each year and upon such notice as may
be determined from time to time either by or in accordance with the by-laws. If
the corporation shall fail to hold its annual meeting at the time specified for
the meeting in any year or shall fail to elect directors thereat, the
corporation shall not be dissolved nor shall its rights be impaired thereby, but
a special meeting of the stockholders shall be called; and at such meeting
directors to fill the places of the directors whose terms shall have expired may
be elected and any other proper business may be transacted. At all meetings of
the stockholders each stockholder shall be entitled to vote in person or by an
attorney duly authorized by a written proxy, each share of stock represented at
the meeting shall be entitled to one vote and the stockholders represented at
the meeting shall constitute a quorum.
SEC. 5. The corporate office shall be at Hartford or at some other town in
Connecticut and the corporation may establish and maintain other offices and
agencies in other towns of Connecticut and elsewhere. The property and affairs
of the corporation shall be managed by a board of not less than nine directors,
the number and the terms of office to be determined from time to time by the
board of directors in accordance with the bylaws, provided no director shall be
elected for a longer term than five years. The directors shall be chosen by
ballot by the stockholders except that if any vacancy occurs in the board of
directors such vacancy may be filled by the remaining directors for the
unexpired portion of the term, and if the number of directors is increased by
vote of the board of directors between meetings of stockholders, the additional
directors, not to exceed three, may be chosen by the board of directors for
terms expiring with the next annual meeting thereafter. Unless the bylaws
provide otherwise, five directors shall constitute a quorum. Directors serving
on the date of the acceptance of this act shall continue to serve for the terms
for which they were elected.
2
<PAGE>
SEC. 6. The directors of the corporation shall choose from among their
number a president and shall elect one or more vice presidents, one or more
secretaries and such other officers as they may deem desirable. The president
shall be elected to hold office until the next annual meeting, but he may
continue to serve until his successor shall have been chosen; and the other
officers may be elected for like or for different terms and they may be removed
at any time at the pleasure of the directors.
SEC. 7. Connecticut General Life Insurance Company is authorized to adopt a
plan of exchange under the terms of which the shares of its issued and
outstanding capital stock shall be exchanged for shares of Connecticut General
Insurance Corporation on a basis which shall be specified in the plan of
exchange. No such exchange shall be effected unless the plan of exchange is
first adopted by the board of directors of Connecticut General Life Insurance
Company and approved by the affirmative vote of the holders of at least two-
thirds of the voting power of the outstanding shares of its capital stock, nor
unless there has been filed in the office of the secretary of the state a
certificate setting forth the plan of exchange and the stockholder vote thereon,
and a copy of a certificate of the insurance commissioner stating that he has
approved and authorized the plan of exchange as provided in section 38-35 of the
general statutes. Any shareholder of Connecticut General Life Insurance Company
who objects to the plan of exchange shall have the right to be paid the value of
all shares of Connecticut General Life Insurance Company owned by him (but
excluding such value as is attributable to his interest as a beneficiary under
the CG Stockholders Trust and for which he is entitled to be compensated by
AEtna Insurance Company) in accordance with the provisions of section 33-374 of
the general statutes. For purposes of section 33-374, such shareholder shall be
deemed to be designated in subsection (c) of section 33-373 of the general
statutes; and Connecticut General Life Insurance Company shall have all the
rights and obligations of a "corporation" under section 33-374, provided the
term "corporation," as used in said section, shall refer only to Connecticut
General Life Insurance Company and the third sentence of section 33-374(h) shall
have no application. Except as may be otherwise provided in the plan of
exchange, and except as to shares for which payment must be made pursuant to the
two previous sentences, on the date on which the exchange becomes effective, all
certificates representing shares of the issued and outstanding stock of
Connecticut General Life Insurance Company shall automatically and without any
physical transfer or deposit be deemed for all purposes to be certificates
representing shares of the issued and outstanding stock of Connecticut General
Insurance Corporation.
SEC. 8. The charter of the Connecticut General Life Insurance Company,
incorporated by a resolution approved June 22, 1865, as amended, is hereby
further amended to read as above; and this act shall be valid as an amendment to
the charter of the corporation and shall constitute the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
copy of such acceptance filed in the office of the secretary of the state.
Special Act No. 173 of 1947 approved May 28, 1947; Certificate of Acceptance
filed February 3, 1948.
Special Act No. 536 of 1953 approved July 1, 1953; Certificate of Acceptance
filed February 23, 1954.
Special Act No. 76 of 1959 approved May 11, 1959; Certificate of Acceptance
filed January 26, 1960.
Special Act No. 358 of 1963 approved June 27, 1963; Certificate of Acceptance
filed March 10, 1964.
Special Act No. 351 of 1967 approved June 28, 1967; Certificate of Acceptance
filed October 27, 1967.
------------------------
3
<PAGE>
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
MAY SESSION, A.D. 1865.
Incorporating the Connecticut General Life Insurance Company.
Upon the petition of Edwin D. Tiffany and others, praying for an act of
incorporation:
RESOLVED BY THIS ASSEMBLY, SEC. 1. That Edwin D. Tiffany, Henry C. Deming,
John C. Palmer, Jonathan B. Bunce, George S. Gilman, Ebenezer N. Kellogg, John
A. Butler, Henry J. Johnson and George D. Jewett, with all others that may
become associated with them as stockholders, as hereinafter provided, and their
successors, be and they are hereby created a body corporate, for the purpose of
life insurance, and other purposes hereinafter mentioned, by the name of the
Connecticut General Life Insurance Company, and by that name are empowered to
purchase, have, hold and enjoy lands, tenements, hereditaments, chattels,
stocks, choses in action, and effects of every kind, and the same to sell,
grant, demise, aliene and convey; to sue and be sued, plead and be impleaded in
all courts of law and equity; to have and hold a common seal, and the same to
change at pleasure; and to ordain and put into execution by-laws and
regulations, as they may deem proper for the well ordering of said corporation,
and the transaction of its business; PROVIDED such by-laws and regulations be
consistent with the laws of this state and of the United States.
SEC. 2. The capital stock of said corporation shall not be less than five
hundred thousand dollars, and may be increased by vote of the stockholders, at
any time, to one million of dollars; the shares of the capital stock to be of
the value of one hundred dollars each; upon which ten dollars shall be paid upon
each share at the time it is subscribed for, as hereinafter provided, and ten
dollars additional shall be paid upon each share of stock subscribed for, to
said corporation, within twenty days from the time of the organization of said
company, and the remaining eighty dollars per share shall, within twenty days
from the organization of said company, be paid into the treasury of said
corporation, or be secured to be paid, either by mortgage of real estate, or by
such indorsed promissory notes as shall be approved by the directors of said
company.
SEC. 3. The capital stock of said company shall be transferable according
to their by-laws; and if any subscriber to said stock shall fail to pay his
subscription or secure the same to be paid as aforesaid for the space of thirty
days after the same shall become due, and if, upon the increase of the capital
stock of said company, any subscriber to the same shall fail to pay the
installments as called for by the directors of said company for the space of
thirty days after the same shall become due, then said stock of such delinquent
subscriber shall be sold by the directors at public auction upon at least
fifteen days notice of such sale by publication in some newspaper published in
Hartford, and the proceeds of said sale shall be first applied to the expenses
of said sale and payment of the installments due upon the stock, and the balance
of proceeds, if any, shall be refunded to the owner of said stock. The
delinquent stockholders may be notified in such way as the by-laws may provide
of the maturity of the installments. The stock, sold in manner above provided
for, shall entitle the purchaser to all the rights of a stockholder, to the
extent of shares so purchased.
SEC. 4. The business of said corporation shall be life insurance and
annuities, and contracts of insurance may be made, providing for all risks,
hazards, guarantees and contingencies to which life insurance is applicable,
conferring endowments and granting and purchasing annuities upon such conditions
and for such periods of time as may be determined by said corporation; and said
company may procure such re-insurance of their risks as may be deemed desirable.
Policies may be issued, stipulated to be with or without participation in
profits, and all dividends which shall be alloted to such participating policies
which are not claimed and called for within two years after the same shall have
been declared shall be forfeited to said company.
SEC. 5. Said company may issue policies upon lives for the benefit of and
payable to married women; and all contracts of insurance, so beneficial to
married women, whether made with said married women or with other persons in
their behalf, shall be, if so expressed in the policy, the sole and separate
estate of said married woman, and may be made payable at the maturity of said
policies, in case of previous death of said married women, to their children;
and the discharge of said policies by said married women, or their assigns and
their children (or their guardians, if minors), in case of death of said married
women, shall be a valid discharge of said contracts.
SEC. 6. The office of said company shall be located at Hartford, and its
affairs shall be managed by not less than seven nor more than twenty directors
(their number to be determined by the by-laws), to be chosen by ballot from
among and by the stockholders, a majority of whom shall be residents of this
state, which directors first chosen shall hold office until the first Tuesday in
May next ensuing the date of their election, and until others are chosen to
supply their places; and the annual meetings for the choice of directors shall,
after the first election, be holden at the city of Hartford on the first Tuesday
in May, or on such other day in the month of May as shall be determined by the
by-laws of said corporation. Each share of stock represented by the holder or
his proxy shall be entitled to one vote in the choice of directors.
SEC. 7. If it shall so happen that a choice of directors shall not be
made at the time of any annual meeting, said corporation shall not be thereby
dissolved, but an election may be had within one year thereafter at some time
signified by the directors last chosen. Public notice by order of the directors
shall always be given at least ten days previous to any meeting of the
stockholders in a newspaper printed at Hartford. The president may call a
special meeting of the stockholders at the request of five of the directors.
4
<PAGE>
SEC. 8. To carry out the provisions of this charter, and to organize the
said corporation, Edwin D. Tiffany, Jonathan B. Bunce and George S. Gilman are
authorized and appointed to receive subscriptions to the capital stock thereof,
and the payment of the first installment thereon, and when three thousand shares
of said stock shall have been subscribed for, and the first installment has been
paid thereon, upon their said Tiffany, Bunce and Gilman's call, by notice
published in a newspaper printed in Hartford ten days before the time of said
meeting, the subscribers may meet at the time and place named in said call, and
adopt such by-laws, rules and regulations as they may deem proper, in compliance
with this act; and said subscribers may at said meeting elect a board of
directors in the manner aforesaid, to hold office as above provided; and when
the by-laws have been adopted; and the board of directors have been organized by
the choice of a president and secretary, the said corporation may exercise all
the power conferred by this act.
SEC. 9. The directors may choose a president, vice-president and
secretary, and appoint such other officers, clerks and agents, and establish
such agencies in this state and elsewhere as shall be by them deemed advisable
for conducting the business of said company; fix their compensation, and take
bonds of any and all of them for the faithful discharge of their duties, and may
make such covenants and agreements as may be deemed necessary, and such
contracts and agreements signed either by the president or secretary shall be
binding on said company. The president and vice-president shall be chosen from
the board of directors, and may hold their appointments for one year, and until
others are chosen in their places; the other officers and employees of said
company may be removed, and new ones appointed at the pleasure of the directors.
In the absence or disability of the president and vice-president, the directors
may choose a president PRO TEMPORE, and in case a vacancy occurs in the board of
directors, the remaining directors may fill such vacancy.
SEC. 10. All policies or other contracts of insurance authorized by this
act may be made with or without the seal of said corporation, and shall be
signed by the president or vice-president and the secretary, and when so signed
and executed shall be binding and obligatory upon said corporation, according to
the true intent and meaning of said policies and contracts.
SEC. 11. The capital stock, acquired monies and personal estate of said
corporation may be invested, at the discretion of the directors, in loans upon
real estate, in bonds and mortgages, in loans upon or purchase of United States
notes and bonds, bank stocks or bonds issued by states or by municipal or other
corporations, or may be loaned upon indorsed promissory notes not having more
than twelve months to run; and the same may be called in and re-invested under
the provisions of this act; and it shall be the duty of said corporation to make
an annual report to the general assembly, containing a full and accurate
statement of its condition and affairs.
SEC. 12. This act shall take effect from the day of its passage, and may
be altered, amended or repealed at the pleasure of the general assembly; and
nothing contained therein shall be so construed as to authorize said company to
engage in the business of banking.
Approved, June 22, 1865.
--------------------
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1873.
Authorizing the Connecticut General Life Insurance Company
to Reduce its Capital Stock.
Upon the petition of the Connecticut General Life Insurance Company for
reduction of its capital stock:
RESOLVED BY THIS ASSEMBLY: SECTION 1. That power and authority be, and
hereby are, given to the Connecticut General Life Insurance Company to reduce
its capital stock, from time to time, to any amount not less than $125,000, by
reducing the number of shares, or the par value of the shares, of the respective
stockholders of said company, PRO RATA, and to return that portion of the
capital represented by stock notes to the respective stockholders whenever the
stockholders and directors shall so elect, and to return the cash portion of
said capital authorized by this act whenever the assets of said company shall
show a net surplus by the official valuation of the insurance department of this
state, exclusive of its capital stock, of the sum of twenty-five thousand
dollars, and a majority of the stockholders shall so vote, at a meeting or
meetings duly warned and held for acting on said subject, and said stockholders'
vote shall have been approved by a vote of at least two-thirds of the directors
of said company.
SEC. 2. Whenever the stockholders and directors of said company shall
have voted any reduction of the capital stock as aforesaid the directors shall
immediately cause a certificate of said action, signed by their president in the
name and behalf of said company, and countersigned by their secretary, and under
the corporate seal of said company, and acknowledged in the manner required by
law for conveyance of land, to be filed in the office of the secretary of this
state for record, and thereupon the charter of said company shall be deemed to
be amended in respect to the amount of its capital, and the number or the par
value of its shares, so as to conform to the said reduction voted and certified
to the secretary of state; and said company shall, with such reduced capital,
possess the same rights, and be subject to the same liabilities, that it
possessed or was subject to at the time of said reduction.
5
<PAGE>
SEC. 3. After said reduction of capital as aforesaid said company, by a
majority vote of its directors, may require each stockholder to return his
original certificate of stock held by him, and in lieu thereof shall issue new
certificates of stock for such number of shares, or of such par value as said
stockholders shall be entitled to in the proportion that the reduced capital
shall bear to the capital before said reduction; and said company shall
reimburse and pay each stockholder the par value of the reduced amount of his
stock in said company by first returning to him, or endorsing as paid on his
stock-note or notes held by the company the amount of said reduction if said
notes equal said reduction; and, in case said notes do not equal the amount of
said reduction, shall pay the balance in cash upon surrender of the original
certificate of stock.
Approved, June 19, 1873.
(CERTIFICATE OF ACCEPTANCE FILED FEBRUARY 28, 1874.)
--------------------
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1911.
[Senate Joint Resolution No. 51.]
[27.]
AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
RESOLVED BY THIS ASSEMBLY: SECTION 1. That the annual meeting of the
Connecticut General Life Insurance Company, after the year 1911, shall be holden
at the city of Hartford on the first Tuesday of February, or on such other day
in the month of February as shall be determined by the by-laws of said
corporation.
SEC. 2. Said corporation is hereby authorized and empowered to insure
persons against loss of life or personal injury resulting from any cause, and
against loss resulting from disabilities caused by disease.
SEC. 3. The affairs of said corporation shall be managed by not less than
nine nor more than fifteen directors, the number thereof to be determined by the
by-laws, a majority of whom shall be residents of this state, and who shall be
chosen by ballot from among and by the stockholders in manner following: at the
next annual meeting after the acceptance of this amendment the stockholders
shall elect not less than three nor more than five directors to serve for the
term of one year, not less than three nor more than five directors to serve for
the term of two years, and not less than three nor more than five directors to
serve for the term of three years; and annually thereafter not less than three
nor more than five directors shall be elected to hold office for the term of
three years. Whenever any vacancy shall occur in the board of directors by the
death or resignation of a director, such vacancy may be filled by the remaining
directors for the remainder of the term for which such director was elected.
SEC. 4. So much of the resolution incorporating said company, approved
June 22, 1865, as is inconsistent herewith is hereby repealed.
Approved, March 9, 1911.
(CERTIFICATE OF ACCEPTANCE FILED JUNE 1, 1911.)
--------------------
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1921.
[House Bill No. 510.]
[101.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
BE IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES IN GENERAL ASSEMBLY
CONVENED:
SECTION 1. The Connecticut General Life Insurance Company, incorporated
under resolution approved June 22, 1865, is hereby authorized to increase its
capital stock to an amount not exceeding in the aggregate the sum of five
million dollars.
6
<PAGE>
SEC. 2. This act shall become operative as an amendment to the charter of
the Connecticut General Life Insurance Company if within one year after its
approval it shall be accepted at a meeting of said corporation duly warned and
held for that purpose and an attested copy of such acceptance filed in the
office of the secretary of the state.
Approved, April 13, 1921.
(CERTIFICATE OF ACCEPTANCE FILED FEBRUARY 9, 1922.)
--------------------
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1929.
[Substitute for Senate Bill No. 207.]
[86.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
BE IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES IN GENERAL ASSEMBLY
CONVENED:
SECTION 1. The Connecticut General Life Insurance Company, incorporated by
resolution approved June 22, 1865, from time to time, may change the par value
and number of shares of its issued and outstanding capital stock, provided the
par value shall be not less than ten dollars for each share and the aggregate
par value be not altered by such change; but no such change shall be valid
unless approved by a vote of at least two-thirds of the stock represented at a
meeting of the stockholders duly warned and held for that purpose nor unless a
majority of the directors shall make, sign and swear to and file in the office
of the secretary of the state a certificate stating that such change has been
duly approved by the stockholders and setting forth a copy of the vote of the
stockholders, which vote shall show the details of such change.
SEC. 2. Said corporation may, from time to time, and to the amount of
capital stock authorized by its charter, issue shares of stock with the same par
value as that of its then outstanding capital stock.
SEC. 3. This act shall be valid as an amendment to the charter of said
corporation if, within one year after its passage, it shall be accepted at a
meeting of said corporation duly warned and held for that purpose and an
attested copy of such acceptance filed in the office of the secretary of the
state.
Approved, April 18, 1929.
(CERTIFICATE OF ACCEPTANCE FILED NOVEMBER 18, 1929.)
--------------------
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1941.
[Senate Bill No. 694.]
[480.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
BE IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES IN GENERAL ASSEMBLY
CONVENED:
SECTION 1. The Connecticut General Life Insurance Company incorporated
under a resolution approved June 22, 1865, is authorized to increase its capital
stock to an amount not exceeding in the aggregate the sum of ten million
dollars.
SEC. 2. The Connecticut General Life Insurance Company is authorized to
subscribe for, purchase, hold or dispose of capital stock of the Connecticut
General Casualty Insurance Company and the Connecticut General Insurance
Company.
SEC. 3. This act shall be valid as an amendment to the charter of said
corporation if, within two years after its passage, it shall be accepted at a
meeting of said corporation duly warned and held for that purpose and an
attested copy of such acceptance filed in the office of the secretary of the
state.
Approved, June 24, 1941.
(CERTIFICATE OF ACCEPTANCE FILED FEBRUARY 3, 1942.)
--------------------
7
<PAGE>
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1947.
[Substitute for Senate Bill No. 639.]
[173.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
SECTION 1. Connecticut General Life Insurance Company shall continue
under that name, a body corporate, with power to purchase or otherwise acquire,
have, hold and enjoy lands, tenements, hereditaments, chattels, bonds, stocks,
monies, choses in action and property and effects of every kind, and the same to
sell, grant, demise, alien and convey and to loan, invest and reinvest any of
such assets in any manner now or hereafter permitted in the case of any other
corporation now or hereafter chartered by Connecticut and empowered to do a life
insurance business; to sue and be sued and to plead and be impleaded in all
courts of law and equity; to have and to hold and to change at pleasure a common
seal, and to ordain and to put into execution and to change at pleasure by-laws
consistent with the laws of this state and of the United States.
SEC. 2. The business of the corporation shall be life insurance,
endowments, annuities, accident insurance, health insurance and any other
business or type of business which any other corporation now or hereafter
chartered by Connecticut and empowered to do a life insurance business may now
or hereafter lawfully do; and the corporation is specifically empowered to
accept and to cede reinsurance of any such risks or hazards. The corporation
may exercise such powers outside of Connecticut to the extent permitted by the
laws of the particular jurisdiction. Policies or other contracts may be issued
stipulated to be with or without participation in profits; and they may be with
or without seal.
SEC. 3. The capital stock of the corporation shall be not less than three
million dollars and may from time to time be increased when and as authorized by
the stockholders to any sum not exceeding in the aggregate twenty million
dollars and, unless the stockholders otherwise authorize, shall be divided into
shares of the par value of ten dollars each. The capital stock of the
corporation shall be transferable in accordance with the by-laws; and a transfer
agent may be employed.
SEC. 4. The annual meeting of the stockholders of the corporation shall
be held at such time during the first half of each year and upon such notice as
may be determined from time to time either by or in accordance with the by-laws.
If the corporation shall fail to hold its annual meeting at the time specified
for the meeting in any year or shall fail to elect directors thereat, the
corporation shall not be dissolved nor shall its rights be impaired thereby, but
a special meeting of the stockholders shall be called; and at such meeting
directors to fill the places of the directors whose terms shall have expired may
be elected and any other proper business may be transacted. At all meetings of
the stockholders each stockholder shall be entitled to vote in person or by an
attorney duly authorized by a written proxy, each share of stock represented at
the meeting shall be entitled to one vote and the stockholders represented at
the meeting shall constitute a quorum.
SEC. 5. The corporate office shall be at Hartford but the corporation may
establish and maintain other offices and agencies in other towns of Connecticut
and elsewhere. The property and affairs of the corporation shall be managed by
a board of not less than nine directors, the number from time to time to be
determined either by or in accordance with the by-laws. The directors shall be
chosen by ballot from among and by the stockholders and shall be divided into
three classes. At each annual meeting one class of directors shall be elected,
each director so elected to hold office for a term expiring with the third
annual meeting thereafter, but he may continue to serve until his successor
shall have been chosen. In the event of an increase in the number of directors
the term of any such additional director shall expire at the same time as the
terms of the other members of the class to which he shall have been assigned.
When any vacancy shall occur in the board of directors such vacancy may be
filled by the remaining directors for the unexpired portion of the term. Unless
the by-laws provide otherwise, three directors shall constitute a quorum.
Directors serving on the date of the acceptance of this act shall continue to
serve for the terms for which they were elected.
SEC. 6. The directors of the corporation shall choose from among their
number a president and shall elect one or more vice presidents, one or more
secretaries and such other officers as they may deem desirable. The president
shall be elected to hold office until the next annual meeting, but he may
continue to serve until his successor shall have been chosen; and the other
officers may be elected for like or for different terms and they may be removed
at any time at the pleasure of the directors.
SEC. 7. The charter of the Connecticut General Life Insurance Company,
incorporated by a resolution approved June 22, 1865, as amended, is hereby
further amended to read as above; and this act shall be valid as an amendment to
the charter of the corporation and shall constitute the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
copy of such acceptance filed in the office of the secretary of the state.
Approved, May 28, 1947.
(CERTIFICATE OF ACCEPTANCE FILED FEBRUARY 3, 1948.)
--------------------
8
<PAGE>
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1953.
[Substitute for Senate Bill No. 462.]
[536.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
SECTION 1. Section 3 of number 173 of the special acts of 1947 is amended
to read as follows: The capital stock of the corporation shall be not less than
three million dollars and may from time to time be increased when and as
authorized by the stockholders to any sum not exceeding in the aggregate fifty
million dollars and unless the stockholders otherwise authorize, shall be
divided into shares of the par value of ten dollars each. The capital stock of
the corporation shall be transferable in accordance with the by-laws; and a
transfer agent may be employed.
SEC. 2. Section 5 of said act is amended to read as follows: The
corporate office shall be at Hartford or at some other town in Connecticut and
the corporation may establish and maintain other offices and agencies in other
towns of Connecticut and elsewhere. The property and affairs of the corporation
shall be managed by a board of not less than nine directors, the number from
time to time to be determined either by or in accordance with the by-laws. The
directors shall be chosen by ballot from among and by the stockholders and shall
be divided into three classes. At each annual meeting one class of directors
shall be elected, each director so elected to hold office for a term expiring
with the third annual meeting thereafter, but he may continue to serve until his
successor shall have been chosen. In the event of an increase in the number of
directors the term of any such additional director shall expire at the same time
as the terms of the other members of the class to which he shall have been
assigned. When any vacancy shall occur in the board of directors such vacancy
may be filled by the remaining directors for the unexpired portion of the term.
Unless the by-laws provide otherwise, three directors shall constitute a quorum.
Directors serving on the date of the acceptance of this act shall continue to
serve for the terms for which they were elected.
SEC. 3. This act shall be valid as an amendment to the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
copy of such acceptance filed in the office of the secretary of the state.
Approved, July 1, 1953.
(CERTIFICATE OF ACCEPTANCE FILED FEBRUARY 23, 1954.)
--------------------
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1959.
[Substitute for House Bill No. 2655.]
[76.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
CONCERNING THE BOARD OF DIRECTORS
SECTION 1. Section 5 of the charter of the Connecticut General Life
Insurance Company, incorporated under a resolution approved June 22, 1865, as
amended by number 173 of the special acts of 1947, and section 2 of number 536
of the special acts of 1953, is amended to read as follows: The corporate
office shall be at Hartford or at some other town in Connecticut and the
corporation may establish and maintain other offices and agencies in other towns
of Connecticut and elsewhere. The property and affairs of the corporation shall
be managed by a board of not less than nine directors, the number and the terms
of office to be determined from time to time by the board of directors in
accordance with the by-laws, provided no director shall be elected for a longer
term than five years. The directors shall be chosen by ballot from among and by
the stockholders except that if any vacancy shall occur in the board of
directors such vacancy may be filled by the remaining directors for the
unexpired portion of the term, and if the number of directors shall be increased
by vote of the board of directors between meetings of stockholders the
additional directors, not to exceed three, may be chosen by the board of
directors for terms expiring with the next annual meeting thereafter. Unless
the by-laws provide otherwise, five directors shall constitute a quorum.
Directors serving on the date of the acceptance of this act shall continue to
serve for the terms for which they were elected.
9
<PAGE>
SEC. 2. This act shall be valid as an amendment to the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
copy of such acceptance filed in the office of the secretary of the state.
Approved, May 11, 1959.
(CERTIFICATE OF ACCEPTANCE FILED JANUARY 26, 1960.)
--------------------
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1963.
[House Bill No. 3699.]
[358.]
AN ACT CONCERNING THE CAPITAL STOCK OF CONNECTICUT GENERAL LIFE INSURANCE
COMPANY.
SECTION 1. Section 3 of the charter of the Connecticut General Life
Insurance Company is amended to read as follows: The capital stock of the
corporation shall be not less than three million dollars and may from time to
time be increased when and as authorized by the stockholders and, unless the
stockholders otherwise authorize, shall be divided into shares of the par value
of five dollars each. The capital stock of the corporation shall be
transferable in accordance with the bylaws; and a transfer agent may be
employed.
SEC. 2. This act shall be valid as an amendment to the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
copy of such acceptance filed in the office of the secretary of state.
Approved, June 27, 1963.
(CERTIFICATE OF ACCEPTANCE FILED MARCH 10, 1964.)
--------------------
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
JANUARY SESSION, A.D. 1967.
[Substitute for House Bill No. 2626.]
[351.]
AN ACT AMENDING THE CHARTER OF CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
SECTION 1. The charter of Connecticut General Life Insurance Company
is amended by inserting immediately after section 6 the following new section 7:
Connecticut General Life Insurance Company is authorized to adopt a plan of
exchange under the terms of which the shares of its issued and outstanding
capital stock shall be exchanged for shares of Connecticut General Insurance
Corporation on a basis which shall be specified in the plan of exchange. No
such exchange shall be effected unless the plan of exchange is first adopted by
the board of directors of Connecticut General Life Insurance Company and
approved by the affirmative vote of the holders of at least two-thirds of the
voting power of the outstanding shares of its capital stock, nor unless there
has been filed in the office of the secretary of the state a certificate setting
forth the plan of exchange and the stockholder vote thereon, and a copy of a
certificate of the insurance commissioner stating that he has approved and
authorized the plan of exchange as provided in section 38-35 of the general
statutes. Any shareholder of Connecticut General Life Insurance Company who
objects to the plan of exchange shall have the right to be paid the value of all
shares of Connecticut General Life Insurance Company owned by him (but excluding
such value as is attributable to his interest as a beneficiary under the CG
Stockholders Trust and for which he is entitled to be compensated by AEtna
Insurance Company) in accordance with the provisions of section 33-374 of the
general statutes. For purposes of section 33-374, such shareholder shall be
deemed to be designated in subsection (c) of section 33-373 of the general
statues; and Connecticut General Life Insurance Company shall have all the
rights and obligations of a "corporation" under section 33-374, provided the
term "corporation," as used in said section, shall refer only to Connecticut
General Life Insurance Company and the third sentence of section 33-374(h) shall
have no application. Except as may be otherwise provided in the plan of
exchange, and except as to shares for which payment must be made pursuant to the
two previous sentences, on the date on which the exchange becomes effective, all
certificates representing shares of the issued and outstanding stock of
Connecticut General Life Insurance Company shall automatically and without any
physical transfer or deposit be deemed for all purposes to be certificates
representing shares of the issued and outstanding stock of Connecticut General
Insurance Corporation.
10
<PAGE>
SEC. 2. The charter of Connecticut General Life Insurance Company, as
amended by number 173 of the special acts of 1947, is amended by renumbering
present section 7 as section 8.
SEC. 3. Section 1 of number 76 of the special acts of 1959, being section
5 of the charter of Connecticut General Life Insurance Company, is amended to
read as follows: The corporate office shall be at Hartford or at some other
town in Connecticut and the corporation may establish and maintain other offices
and agencies in other towns of Connecticut and elsewhere. The property and
affairs of the corporation shall be managed by a board of not less than nine
directors, the number and the terms of office to be determined from time to time
by the board of directors in accordance with the bylaws, provided no director
shall be elected for a longer term than five years. The directors shall be
chosen by ballot by the stockholders except that if any vacancy occurs in the
board of directors such vacancy may be filled by the remaining directors for the
unexpired portion of the term, and if the number of directors is increased by
vote of the board of directors between meetings of stockholders, the additional
directors, not to exceed three, may be chosen by the board of directors for
terms expiring with the next annual meeting thereafter. Unless the bylaws
provide otherwise, five directors shall constitute a quorum. Directors serving
on the date of the acceptance of this act shall continue to serve for the terms
for which they were elected.
SEC. 4. This act shall be valid as an amendment to the charter of the
corporation if, within two years after its passage, it is accepted at a meeting
of the corporation duly warned and held for that purpose and an attested copy of
such acceptance is filed in the office of the secretary of the state.
Approved June 28, 1967.
(CERTIFICATE OF ACCEPTANCE FILED OCTOBER 27, 1967.)
--------------------
11
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
BYLAWS
----------------
ARTICLE 1
The annual meeting of the stockholders shall be held on the fourth Monday in
April or on such other date as the directors may designate and at such place as
they may determine. All other meetings of the stockholders shall be held at such
times and places as the directors may determine. A written or printed notice of
any meeting shall be mailed to each stockholder at least ten days prior to the
meeting.
ARTICLE 2
The number and terms of office of the directors shall be determined from time to
time by the board of directors. No person shall be elected as a director after
attaining the age of 70 years. The compensation of directors shall be as
determined by the directors.
ARTICLE 3
The directors shall hold meetings at such times and places as they may
determine. Special meetings of the directors may be called by the chairman of
the board and shall be called by the chairman of the board or in his absence by
another director upon request in writing of the president or of any three
directors. One-third of the total number of directors shall constitute a quorum.
Action of the directors shall be by majority vote of the directors present.
ARTICLE 4
The directors shall determine the order of their business and their own rules of
order and they shall preserve a written record of their doings.
<PAGE>
ARTICLE 5
The directors, by resolution adopted by a majority of the entire board, may
appoint from their number one or more committees, each consisting of two or more
directors and each of which, to the extent provided in such resolution, shall
have all the authority of the board. A majority of the members of a committee
shall constitute a quorum.
ARTICLE 6
The directors shall choose from among their number a chairman of the board and
shall elect a president, one or more vice presidents and one or more
secretaries, including a corporate secretary. They may also elect such other
officers as they may deem desirable. They may also authorize the chairman of the
board, the president or other designated officers to appoint such officers,
other than the chairman of the board, the president and the corporate secretary,
with such titles, duties and powers as the appointing officer may deem
desirable.
ARTICLE 7
All loans and purchases for investment shall be authorized or approved by the
directors or by an authorized committee of the board.
ARTICLE 8
Real estate may be sold by the president or a vice president or an assistant
vice president and the instrument of conveyance shall be executed by the
president or a vice president or an assistant vice president and by a secretary
or an assistant secretary or an investment officer or an assistant investment
officer.
The sale of real estate where either the cost or the sale price exceeds
$1,000,000 shall be authorized or approved by the directors or an authorized
committee of the board, and all sales of real estate shall be reported to the
directors or an authorized committee of the board.
The president or a vice president or an assistant vice president or a secretary
or an assistant secretary or an investment officer or an assistant investment
officer is authorized to execute releases (or to execute powers authorizing
specific releases), assignments, or other instruments relating to mortgages,
trust deeds, judgment liens, or other liens, and to execute leases or other
contracts relating to real estate, and the president or a vice president or an
assistant vice president may delegate to others by written instrument authority
to execute leases.
<PAGE>
ARTICLE 9
The sale or other disposition of any investments other than those specifically
provided for in Article 8 shall be authorized or approved by the directors or
an authorized committee of the board.
The president or a vice president or an assistant vice president or a secretary
or an assistant secretary or an investment officer or an assistant investment
officer is authorized to execute any instruments necessary in connection with
the purchase or the sale or other disposition of any investments other than
those specifically provided for in Article 8 and to execute any agreements
relating to any such investments.
The directors or an authorized committee of the board may at any time and from
time to time enlarge, restrict or in any way modify the authorizations granted
in Articles 8 and 9.
ARTICLE 10
Auditors shall be chosen at each annual meeting of the stockholders and their
compensation shall be as determined by the directors.
ARTICLE 11
Transfers of stock shall be made only upon the books of the company. A transfer
agent may be employed.
<PAGE>
EXHIBIT 9
ROBERT A. PICARELLO
Chief Counsel
[LOGO]
CIGNA INDIVIDUAL
INSURANCE
June 12, 1995 LEGAL DEPARTMENT S-321
HARTFORD, CT 06152-2321
TELEPHONE 203.726.8064
FACSIMILE 203.726.1778
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Form N-4 Registration Statement - Amendment
CG Variable Annuity Separate Account II (the "Account")
Dear Sirs:
As Chief Counsel of the Individual Insurance Division of the CIGNA Companies,
I am familiar with the actions of the Board of Directors of Connecticut
General Life Insurance Company, (the "Company"), establishing the Account and
its method of operation and authorizing the filing of a registration
statement (and amendments thereto) under the Securities Act of 1933 for the
securities to be issued by the Account and the Investment Company Act of
1940 for the Account itself.
In the course of preparing this opinion, I have reviewed the Certificate of
Incorporation and the By-Laws of the Company, the Board actions with respect
to the Account, and such other matters as I deemed necessary or appropriate.
Based on such review, I am of the opinion that the group variable annuity
contracts (and interests therein) which are the subject of the amended
registration statement under the Securities Act of 1933 being filed for the
Account will, when issued, be legally issued and will represent binding
obligations of the Company, the depositor for the Account.
I further consent to the use of this opinion as an Exhibit to said
Registration Statement and to the reference to me under the heading "Experts"
in said Registration Statement.
Very truly yours,
/s/ Robert A. Picarello
Robert A. Picarello
Chief Counsel
<PAGE>
EXHIBIT 10(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 2 under the Securities
Act of 1933 and Amendment No. 3 under the Investment Company Act of 1940 to the
registration statement of CG Variable Annuity Separate Account II on Form N-4
of our report dated February 13, 1995, relating to the consolidated financial
statements of Connecticut General Life Insurance Company, which appears in such
Statement of Additional Information. We also consent to the reference to us
under the heading "Experts" in such Statement of Additional Information.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Hartford, Connecticut
June 19, 1995
