<PAGE>
As filed with the Securities and Exchange Commission on April 13, 1998.
File No. 333-00259
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
A. Exact name of trust: Separate Account Five
B. Name of depositor: Hartford Life and Annuity Insurance Company
C. Complete address of depositor's principal executive offices:
P.O. Box 2999
Hartford, CT 06104-2999
D. Name and complete address of agent for service:
Marianne O'Doherty, Esq.
Hartford Life and Annuity Insurance Company
P.O. Box 2999
Hartford, CT 06104-2999
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on May 1, 1998 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on May 1, 1998 pursuant to paragraph (a)(1) of Rule 485
___ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
E. Title and amount of securities being registered: Pursuant to Rule 24f-2
under the Investment Company Act of 1940, the Registrant has registered an
indefinite amount of securities.
F. Proposed maximum aggregate offering price to the public of the securities
being registered: Not yet determined.
G. Amount of filing fee: Not applicable.
H. Approximate date of proposed public offering: As soon as practicable after
the effective date of this registration statement.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B AND PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
1. Cover page
2. Cover page
3. Not applicable
4. Hartford Life and Annuity Insurance Company; Distribution of the
Policies
5. Summary - The Separate Account; The Separate Account-
General
6. The Separate Account - General
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; The Separate Account - Portfolios; The Policy -
Application for a Policy; Policy Benefits and Rights; Other
Matters - Voting Rights, Dividends
11. Summary; The Separate Account - Portfolios
12. Summary; The Separate Account-Portfolios
13. Deductions and Charges; Distribution of the Policies; Federal
Tax Considerations
14. The Policy - Application for a Policy
15. The Policy - Allocation of Premium
16. The Separate Account - Portfolios; The Policy - Allocation of
Premium
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
17. Summary; Policy Benefits and Rights - Account Value and Amount
Payable on Surrender of the Policy, Cancellation and Examine
Rights
18. The Separate Account - Portfolios; Deduction and Charges; Federal
Tax Considerations
19. Other Matters - Statement to Policy Owners
20. Not applicable
21. Policy Benefits and Rights - Policy Loans
22. Not applicable
23. Safekeeping of Separate Account Assets
24. Other Matters - Assignment
25. Hartford Life and Annuity Insurance Company
26. Not applicable
27. Hartford Life and Annuity Insurance Company
28. Hartford Life and Annuity Insurance Company
29. Hartford Life and Annuity Insurance Company
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. Distribution of Policies
36. Not required by Form S-6
37. Not applicable
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
38. Distribution of the Policies
39. Hartford Life and Annuity Insurance Company; Distribution of the
Policies
40. Not applicable
41. Hartford Life and Annuity Insurance Company; Distribution of the
Policies
42. Not applicable
43. Not applicable
44. The Policy - Allocation of Premium
45. Not applicable
46. Policy Benefits and Rights - Account Value
47. The Separate Account - Portfolio
48. Cover Page; Hartford Life and Annuity Insurance Company
49. Not applicable
50. The Separate Account - General
51. Summary; Hartford Life and Annuity Insurance Company; The
Policy; Policy Benefits and Rights; Other Matters - Beneficiary
52. The Separate Account - Portfolios, Investment Adviser
53. Federal Tax Considerations
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY -
SELECT DIMENSIONS LIFE
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE POLICIES
P.O. Box 2999
Hartford, CT 06104-2999
Telephone: (800) 231-5453 (Policy Owner)
(800) 862-4397 (Account Executive)
- --------------------------------------------------------------------------------
This Prospectus describes Select Dimensions Life, a modified single premium
variable life insurance policy ("Policy" or "Policies") offered by Hartford Life
and Annuity Insurance Company ("Hartford") to applicants age 90 and under. The
Policy lets the Policy Owner pay a single premium, and subject to restrictions,
additional premiums.
The Policy is a modified endowment contract for federal income tax purposes,
except in certain cases described under "Federal Tax Considerations," page 24. A
LOAN, DISTRIBUTION OR OTHER AMOUNT RECEIVED FROM A MODIFIED ENDOWMENT CONTRACT
DURING THE LIFE OF THE INSURED WILL BE TAXED TO THE EXTENT OF ANY ACCUMULATED
INCOME IN THE CONTRACT. ANY AMOUNTS THAT ARE TAXABLE WITHDRAWALS WILL BE SUBJECT
TO A 10% ADDITIONAL TAX, WITH CERTAIN EXCEPTIONS.
Generally, the minimum initial premium Hartford will accept is $10,000. The
initial premium will be allocated to the Money Market Portfolio. After the right
to cancel period has expired, the amount so allocated will be transferred to the
Portfolios specified in the Policy Owner's application. There are currently
eighteen Sub-Accounts available under the Policy. Underlying investment
portfolios ("Portfolios") are available through the Dean Witter Select
Dimensions Investment Series, the Morgan Stanley Universal Funds, Inc. and the
Van Kampen American Capital Life Investment Trust (individually, a "Fund",
collectively, the "Funds"). The following Portfolios are available under the
Policy: the Money Market Portfolio, the North American Government Securities
Portfolio, the Diversified Income Portfolio, the Balanced Growth Portfolio, the
Utilities Portfolio, the Dividend Growth Portfolio, the Value-Added Market
Portfolio, the Growth Portfolio, the American Value Portfolio, the Mid-Cap
Growth Portfolio, the Global Equity Portfolio, the Developing Growth Portfolio,
and the Emerging Markets Portfolio of the Dean Witter Select Dimensions
Investment Series, the High Yield Portfolio, the Mid-Cap Value Portfolio and the
Emerging Markets Debt Portfolio of the Morgan Stanley Universal Funds, Inc. and
the Strategic Stock Portfolio and the Enterprise Portfolio of the Van Kampen
American Capital Life Investment Trust.
There is no guaranteed minimum Account Value for a Policy. The Account Value of
a Policy will vary up or down to reflect the investment experience of the
Portfolios to which premiums have been allocated. The Policy Owner bears the
investment risk for all amounts so allocated. The Policy continues in effect
while the Cash Surrender Value is sufficient to pay the monthly charges under
the Policy ("Deduction Amount"). The Policy may terminate if the cash surrender
value is insufficient to cover a Deduction Amount, and after expiration of a
specified period, no additional premium payments are made.
The Policies provide for a Face Amount, which is the minimum death benefit under
the Policy. The Death Benefit may be greater than the Face Amount. The Account
Value will, and under certain circumstances the Death Benefit of the Policy may,
increase or decrease based on the investment experience of the Portfolios to
which premiums have been allocated. However, while the Policy is in force, the
Death Benefit will never be less than the Face Amount. At the death of the
Insured, Hartford will pay the Death Proceeds to the beneficiary. The Death
Proceeds equal the Death Benefit less any Indebtedness under the Policy.
IT MAY NOT BE ADVANTAGEOUS TO PURCHASE VARIABLE LIFE INSURANCE AS A REPLACEMENT
FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A VARIABLE LIFE INSURANCE
POLICY.
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE
APPLICABLE ELIGIBLE PORTFOLIOS WHICH CONTAIN A FULL DESCRIPTION OF THOSE
PORTFOLIOS. ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THE PRODUCTS DESCRIBED HEREIN ARE NOT DEPOSITS OF, OR GUARANTEED BY ANY BANK,
NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPLE AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1998
1 - PROSPECTUS
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
----------------------------------------------------------------------------
<S> <C>
Special Terms 3
----------------------------------------------------------------------------
Summary 4
----------------------------------------------------------------------------
Hartford Life and Annuity Insurance Company 7
----------------------------------------------------------------------------
The Separate Account 7
----------------------------------------------------------------------------
General 7
----------------------------------------------------------------------------
Portfolios 7
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The Policy 10
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Application for a Policy 10
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Premiums 10
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Allocation of Premiums 11
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Accumulation Unit Values 11
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Deductions and Charges 11
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Monthly Deductions 11
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Annual Maintenance Fee 12
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Taxes Charged Against the Separate Account 12
----------------------------------------------------------------------------
Charges Against the Portfolios 12
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Contingent Deferred Sales Charge 13
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Premium Tax Charge 13
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Policy Benefits and Rights 13
----------------------------------------------------------------------------
Death Benefit 13
----------------------------------------------------------------------------
Account Value 13
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Transfer of Account Value 14
----------------------------------------------------------------------------
Policy Loans 14
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Amount Payable on Surrender of the Policy 15
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Partial Withdrawals 15
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Benefits at Maturity 15
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Lapse and Reinstatement 15
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Cancellation and Exchange Rights 15
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Suspension of Valuation, Payments and Transfers 16
----------------------------------------------------------------------------
Last Survivor Policies 16
----------------------------------------------------------------------------
Other Matters 16
----------------------------------------------------------------------------
<CAPTION>
PAGE
<S> <C>
----------------------------------------------------------------------------
Voting Rights 16
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Statements to Policy Owners 17
----------------------------------------------------------------------------
Limit on Right to Contest 17
----------------------------------------------------------------------------
Misstatement as to Age and Sex 17
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Payment Options 17
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Beneficiary 18
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Assignment 18
----------------------------------------------------------------------------
Dividends 18
----------------------------------------------------------------------------
Executive Officers and Directors 19
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Distribution of the Policies 23
----------------------------------------------------------------------------
Safekeeping of the Separate Account's Assets 24
----------------------------------------------------------------------------
Federal Tax Considerations 24
----------------------------------------------------------------------------
General 24
----------------------------------------------------------------------------
Taxation of Hartford and the Separate Account 24
----------------------------------------------------------------------------
Income Taxation of Policy Benefits 24
----------------------------------------------------------------------------
Last Survivor Policies 25
----------------------------------------------------------------------------
Modified Endowment Policies 25
----------------------------------------------------------------------------
Estate and Generation Skipping Taxes 25
----------------------------------------------------------------------------
Diversification Requirements 25
----------------------------------------------------------------------------
Ownership of the Assets in the Separate Account 26
----------------------------------------------------------------------------
Life Insurance Purchased for Use in Split Dollar Arrangements 26
----------------------------------------------------------------------------
Federal Income Tax Withholding 26
----------------------------------------------------------------------------
Non-Individual Ownership of Policies 26
----------------------------------------------------------------------------
Other 26
----------------------------------------------------------------------------
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporations 27
----------------------------------------------------------------------------
Legal Proceedings 27
----------------------------------------------------------------------------
Legal Matters 27
----------------------------------------------------------------------------
Experts 27
----------------------------------------------------------------------------
Registration Statement 27
----------------------------------------------------------------------------
Appendix A Illustrations of Benefits 28
----------------------------------------------------------------------------
</TABLE>
THE POLICIES MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
2 - PROSPECTUS
<PAGE>
SPECIAL TERMS
--------------------------------------------------------------------
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The current value of Accumulation Units plus the value of the
Loan Account under the Policy.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Sub-Account.
ADMINISTRATIVE OFFICE: Currently located at 200 Hopmeadow Street, Simsbury,
Connecticut; however, the mailing address is P.O. Box 2999, Hartford,
Connecticut 06104-2999.
ANNUAL WITHDRAWAL AMOUNT: The amount of a surrender or partial surrender that is
not subject to the contingent deferred sales charge. This amount in any Policy
Year is the greater of 10% of Premiums Paid or 100% of cumulative earnings
(Account Value less premiums paid).
CASH VALUE: The Account Value less any Surrender Charge and any Unamortized Tax
charge due upon surrender.
CASH SURRENDER VALUE: The Cash Value less all Indebtedness.
CODE: The Internal Revenue Code of 1986, as amended.
COVERAGE AMOUNT: The Death Benefit less the Account Value.
DEATH BENEFIT: The greater of (1) the Face Amount specified in the Policy or (2)
the Account Value on the date of death multiplied by a stated percentage as
specified in the Policy.
DEATH PROCEEDS: The amount that Hartford will pay on the death of the Insured.
This equals the Death Benefit less any Indebtedness.
DEDUCTION AMOUNT: A deduction on the Policy Date and on each Monthly Activity
Date for the cost of insurance, a tax expense charge, an administrative charge,
and a mortality and expense risk charge.
FACE AMOUNT: On the Policy Date, the initial Face Amount is the amount shown on
the Policy's Specifications page. Thereafter, the Face Amount is reduced by any
partial withdrawals.
FUNDS: Currently, the Dean Witter Select Dimensions Investment Series, the
Morgan Stanley Universal Funds, Inc. and the Van Kampen American Capital Life
Investment Trust.
GUIDELINE SINGLE PREMIUM: The "Guideline Single Premium" as defined in Section
7702 of the Code.
INDEBTEDNESS: All monies owed to Hartford by the Policy Owner. These monies
include all outstanding loans on the Policy, including any interest due or
accrued Deduction Amount or Annual Maintenance Fee.
INSURED: The person on whose life the Policy is issued.
LOAN ACCOUNT: An account in Hartford's General Account, established for any
amounts transferred from the Sub-Accounts for requested loans. The Loan Account
credits a fixed rate of interest of 4% per annum that is not based on the
investment experience of the Separate Account.
MONTHLY ACTIVITY DATE: The day of each month on which the Deduction Amount is
deducted from the Account Value of the Policy. Monthly Activity Dates occur on
the same day of the month as the Policy Date.
POLICY ANNIVERSARY: The yearly anniversary of the Policy Date.
POLICY DATE: A date not later than three business days after receipt of the
initial premium at Hartford's Home Office.
POLICY OWNER: The person having rights to benefits under the Policy during the
lifetime of the Insured; the Policy Owner may or may not be the Insured.
POLICY YEARS: Annual periods computed from the Policy Date.
PORTFOLIOS: Currently, the portfolios of Dean Witter Select Dimensions
Investment Series, the Morgan Stanley Universal Funds, Inc. and Van Kampen
American Capital Life Investment Trust described on page 7 of this Prospectus.
PREFERRED LOAN: The amount of the Loan Account that equals the difference
between the Account Value and the total of all premiums paid under the Policy.
SEPARATE ACCOUNT: Separate Account Five, an account established by Hartford to
separate the assets funding the Policies from other assets of Hartford.
SUB-ACCOUNT: The subdivisions of the Separate Account used to allocate a Policy
Owner's Account Value, less Indebtedness, among the Portfolios.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (generally 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
3 - PROSPECTUS
<PAGE>
SUMMARY
--------------------------------------------------------------------
THE POLICIES
The Policies are life insurance policies with death benefits, cash values, and
other traditional life insurance features. The Policies are "variable." Unlike
the fixed benefits of ordinary whole life insurance, the Account Value will, and
the Death Benefit may, increase or decrease based on the investment experience
of the Portfolios to which premiums have been allocated. The Policies are
credited with units ("Accumulation Units") to calculate cash values. The Policy
Owner may transfer the cash values among the Portfolios. The Policies can be
issued on a single life or "last survivor" basis. For a discussion of how last
survivor Policies operate differently from single life Policies, see "Last
Survivor Policies," page 16.
THE SEPARATE ACCOUNT AND
THE PORTFOLIOS
Separate Account Five ("Separate Account") funds the variable life insurance
Policies offered by this Prospectus. Hartford established the Separate Account
pursuant to Wisconsin insurance law and organized as a unit investment trust
registered under the Investment Company Act of 1940. The Policies currently
offer 18 sub-accounts ("Sub-Accounts"), each investing exclusively in a
Portfolio. If an initial premium is submitted with an application for a Policy,
it will be allocated, within three business days of receipt at Hartford's
Administrative Office, to the Money Market Portfolio. After the expiration of
the right to cancel period, the values in the Money Market Portfolio will be
allocated to one or more of the Portfolios as specified in the Policy Owner's
application. See "The Policy -- Allocation of Premiums," page 11.
Currently, the Portfolios available under the Policies are: the Money Market
Portfolio, the North American Government Securities Portfolio, the Diversified
Income Portfolio, the Balanced Growth Portfolio, the Utilities Portfolio, the
Dividend Growth Portfolio, the Value-Added Market Portfolio, the Growth
Portfolio, the American Value Portfolio, the Mid-Cap Growth Portfolio, the
Global Equity Portfolio, the Developing Growth Portfolio, and the Emerging
Markets Portfolio of the Dean Witter Select Dimensions Investment Series, the
High Yield Portfolio, the Mid-Cap Value Portfolio and the Emerging Markets Debt
Portfolio of the Morgan Stanley Universal Funds, Inc. and the Strategic Stock
Portfolio and the Enterprise Portfolio of the Van Kampen American Capital Life
Investment Trust. Applicants should read the prospectuses for the Portfolios
accompanying this Prospectus in connection with the purchase of a Policy. The
investment objectives of the Portfolios are as set forth in "The Separate
Account," page 7.
The following table shows Annual Fund Operating Expenses:
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
<TABLE>
<CAPTION>
OTHER
MANAGEMENT EXPENSES
FEES (ABSENT ANY TOTAL FUND
(ABSENT ANY EXPENSE OPERATING
FEE WAIVERS) REIMBURSEMENT) EXPENSES (1)
------------ --------------- ------------
<S> <C> <C> <C>
DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:
Money Market
Portfolio............. 0.500% 0.050% 0.550%
North American
Government Securities
Portfolio............. 0.650% 0.610% 1.260%
Diversified Income
Portfolio............. 0.400% 0.150% 0.550%
Balanced Growth
Portfolio (2)......... 0.620% 0.110% 0.730%
Utilities Portfolio.... 0.650% 0.110% 0.760%
Dividend Growth
Portfolio............. 0.625% 0.025% 0.650%
Value-Added Market
Portfolio............. 0.500% 0.080% 0.580%
Growth Portfolio (2)... 0.810% 0.160% 0.970%
American Value
Portfolio............. 0.625% 0.055% 0.680%
Mid-Cap Growth
Portfolio (3)......... 0.750% 0.370% 1.120%
Global Equity
Portfolio............. 1.000% 0.130% 1.130%
Developing Growth
Portfolio............. 0.500% 0.100% 0.600%
Emerging Markets
Portfolio............. 1.250% 0.460% 1.710%
MORGAN STANLEY UNIVERSAL FUNDS, INC.:
High Yield Portfolio
(4)................... 0.500% 1.180% 1.680%
Mid-Cap Value Portfolio
(4)................... 0.750% 1.380% 2.130%
Emerging Markets Debt
Portfolio (4)......... 0.800% 1.260% 2.060%
VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST:
Strategic Stock
Portfolio (5)......... 0.500% 2.090% 2.590%
Enterprise Portfolio
(5)................... 0.500% 0.170% 0.670%
</TABLE>
- ------------------------
(1) Management Fees generally represent the fees paid to the investment adviser
or its affiliates for investment and adminstrative services provided. Other
Expenses are expenses (other than Management Fees) which are deducted from
the fund including legal, accounting and custodian
4 - PROSPECTUS
<PAGE>
fees. For a complete description of the nature of the services provided in
consideration of the operating expenses deducted, please see the Fund
prospectuses.
(2) On March 2, 1998, the Balanced Portfolio was renamed the Balanced Growth
Portfolio. As of that date, its Management Fee was lowered from 0.75% to
0.60%. Also, on March 2, 1998, the Core Equity Portfolio was renamed the
Growth Portfolio. As of that date, its Management Fee was lowered from 0.85%
to 0.80%.
(3) The Investment Manager has undertaken to assume all expenses of the Mid-Cap
Growth Portfolio and waive the compensation provided for that Portfolio in
its Management Agreement with the Portfolio until such time as the Portfolio
has $50 million of net assets or until July 31, 1998, whichever occurs
first.
(4) With respect to the High Yield, Mid-Cap Value and Emerging Markets Debt
Portfolios, the investment advisers have voluntarily agreed to waive their
investment advisory fees and to reimburse the Portfolios if such fees would
cause their respective "Total Fund Operating Expenses" to exceed those set
forth in the following table:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
PORTFOLIO FEES EXPENSES EXPENSES
- ----------------------- ------------ --------------- ------------
<S> <C> <C> <C>
High Yield............. 0.000% 0.800% 0.800%
Mid-Cap Value.......... 0.000% 1.050% 1.050%
Emerging Markets
Debt.................. 0.090% 1.210% 1.300%
</TABLE>
(5) With respect to the Strategic Stock Portfolio and the Enterprise Portfolio,
the investment adviser, Van Kampen American Capital Asset Management, Inc.,
has voluntarily agreed to waive its investment advisory fees and to
reimburse the Portfolios if such fees would cause their respective "Total
Fund Operating Expenses" to exceed those set forth in the following table:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
PORTFOLIO FEES EXPENSES EXPENSES
- ----------------------- ------------ --------------- ------------
<S> <C> <C> <C>
Strategic Stock........ 0.000% 0.650% 0.650%
Enterprise............. 0.430% 0.170% 0.600%
</TABLE>
PREMIUMS
The Policy permits the Policy Owner to pay a large single premium, and subject
to restrictions, additional premiums. The Policy Owner may choose a minimum
initial premium of 80%, 90%, or 100% of the Guideline Single Premium (based on
the Face Amount). Under current underwriting rules, which are subject to change,
applicants between the ages of 45 and 80 who pay an initial premium of 100% of
the Guideline Single Premium are eligible for simplified underwriting without a
medical examination if they meet simplified underwriting standards as evidenced
in their responses in the application. For Policy Owners who pay an initial
premium of 80% or 90% of the Guideline Single Premium or who are below age 45 or
above age 80, standard underwriting applies, except that substandard
underwriting applies only in those cases that represent substandard risks
according to customary underwriting guidelines. Additional premiums are allowed
if they do not cause the Policy to fail to meet the definition of a life
insurance policy under Section 7702 of the Code. Hartford may require evidence
of insurability for any additional premiums which increase the Coverage Amount.
Generally, the minimum initial premium Hartford will accept is $10,000. Hartford
may accept less than $10,000 under certain circumstances. No premium will be
accepted which does not meet the tax qualification guidelines for life insurance
under the Code.
DEDUCTIONS AND CHARGES
On the Policy Date and on each Monthly Activity Date, Hartford will deduct a
Deduction Amount from the Account Value. The Deduction Amount will be made pro
rata respecting each Sub-Account attributable to the Policy. The Deduction
Amount includes a cost of insurance charge, tax expense charge, administrative
charge, and a mortality and expense risk charge. The monthly cost of insurance
charge is to cover Hartford's anticipated mortality costs. In addition, Hartford
will deduct monthly from the Account Value a tax expense charge equal to an
annual rate of 0.40% for the first ten Policy Years. This charge compensates
Hartford for premium taxes imposed by various states and local jurisdictions and
for the cost of capitalization of certain Policy acquisition expenses under
Section 848 of the Code. The charge includes a premium tax deduction of 0.25%
and Section 848 costs of 0.15%. The premium tax deduction represents an average
premium tax of 2.5% of premiums over ten years. Hartford will deduct from the
Account Value attributable to the Separate Account a monthly administrative
charge equal to an annual rate of 0.40%. This charge compensates Hartford for
administrative expenses incurred in the administration of the Separate Account
and the Policies. Hartford will also deduct from the Account Value attributable
to the Separate Account a monthly charge equal to an annual rate of 0.90% for
the mortality risks and expense risks Hartford assumes in relation to the
variable portion of the Policies. If the Cash Surrender Value is not sufficient
to cover a Deduction Amount due on any Monthly Activity Date, the Policy may
lapse. See "Deductions and Charges -- Monthly Deductions," page 11, and "Policy
Benefits and Rights -- Lapse and Reinstatement," page 15.
5 - PROSPECTUS
<PAGE>
The following table shows the monthly deductions discussed above:
<TABLE>
<CAPTION>
MONTHLY DEDUCTION AMOUNT
(as an annual percentage of Account Value)
<S> <C>
Cost of Insurance
Not to exceed the guaranteed cost of
insurance charge, see "Deductions and
Charges -- Monthly Deductions," page 11.
Tax Expense Charge........................ 0.40%
Administrative Charge..................... 0.40%
Mortality and Expense Risk Charge......... 0.90%
</TABLE>
If the Account Value on a Policy Anniversary is less than $50,000, Hartford will
deduct on such date or any surrender date an Annual Maintenance Fee of $30. This
fee will help reimburse Hartford for administrative and maintenance costs of the
Policies. See "Deductions and Charges -- Annual Maintenance Fee," page 12.
Hartford may set up a provision for income taxes against the assets of the
Separate Account. See "Deductions and Charges -- Taxes Charged Against the
Separate Account," page 12 and "Federal Tax Considerations," page 24.
Applicants should review the prospectus for the Fund which accompanies this
Prospectus for a description of the charges assessed against the assets of the
Portfolios.
Upon surrender of the Policy or partial surrenders in excess of the Annual
Withdrawal Amount, a contingent deferred sales charge may be assessed:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(% of Account Value
attributable to
POLICY YEAR premiums paid)
- ------------ ---------------------
<S> <C>
1 7.5%
2 7.5%
3 7.5%
4 6.0%
5 6.0%
6 4.0%
7 4.0%
8 2.0%
9 2.0%
10+ 0.0%
</TABLE>
The contingent deferred sales charge is imposed to cover a portion of the sales
expense incurred by Hartford in distributing the Policies. This expense includes
agents commissions, advertising and the printing of prospectuses. See
"Deductions and Charges -- Contingent Deferred Sales Charge," page 13.
During the first nine Policy Years, an additional premium tax charge will be
imposed on surrender or partial withdrawals at a maximum of 2.25%. See
"Deductions and Charges -- Premium Tax Charge," page 13.
For a discussion of the tax consequences of surrender of the Policy or a partial
surrender, see "Federal Tax Considerations," page 24.
DEATH BENEFIT
The Policies provide for a Face Amount which is the minimum Death Benefit under
the Policy. The Death Benefit may be greater than the Face Amount. At the death
of the Insured, Hartford will pay the Death Proceeds to the beneficiary. The
Death Proceeds equal the Death Benefit less any Indebtedness under the Policy.
See "Policy Benefits and Rights -- Death Benefit," page 13.
ACCOUNT VALUE
The Account Value of the Policy will increase or decrease to reflect the
investment experience of the Portfolios applicable to the Policy and deductions
for the monthly Deduction Amount. There is no minimum guaranteed Account Value
and the Policy Owner bears the risk of the investment in the Portfolios. See
"Policy Benefits and Rights -- Account Value," page 13.
POLICY LOANS
A Policy Owner may obtain two types of cash loans from Hartford. Both types of
loans are secured by the Policy. At the time a loan is requested, the aggregate
amount of all loans (including the currently applied for loan) may not exceed
90% of Cash Value.
LAPSE
Under certain circumstances a Policy may terminate if the Cash Surrender Value
on any Monthly Activity Date is less than the required Monthly Deduction Amount.
Hartford will give wren notice to the Policy Owner and a 61-day grace period
during which additional amounts may be paid to continue the Policy. See "Policy
Benefits and Rights -- Policy Loans," page 14, and "Lapse and Reinstatement,"
page 15.
CANCELLATION AND
EXCHANGE RIGHTS
A Policy Owner has a limited right to return his or her Policy for cancellation.
If the applicant returns the Policy, by mail or hand delivery, to Hartford or to
the agent who sold the Policy, to be cancelled within ten days after receipt of
the Policy by the Policy Owner (in certain cases, this free-look period is
longer), Hartford will return to the Policy Owner within seven days thereafter
the greater of the premiums paid for the Policy or the sum of (1) the Account
Value on the date the returned Policy is received by Hartford or its agent and
(2) any deductions under the Policy or by the Portfolios for taxes, charges or
fees.
In addition, once the Policy is in effect it may be exchanged during the first
24 months after its issuance for a permanent life insurance policy on the life
of the Insured without submitting
6 - PROSPECTUS
<PAGE>
proof of insurability. See "Policy Benefits and Rights -- Cancellation and
Exchange Rights," page 15.
TAX CONSEQUENCES
The current federal tax law generally excludes all death benefit payments from
the gross income of the Policy beneficiary. The Policies generally will be
treated as modified endowment contracts. This status does not affect the
Policies' classification as life insurance, nor does it affect the exclusion of
death benefit payments from gross income. HOWEVER, LOANS, DISTRIBUTIONS OR OTHER
AMOUNTS RECEIVED UNDER A MODIFIED ENDOWMENT CONTRACT ARE TAXED TO THE EXTENT OF
ACCUMULATED INCOME IN THE CONTRACT (GENERALLY, THE EXCESS OF ACCOUNT VALUE OVER
PREMIUMS PAID) AND MAY BE SUBJECT TO A 10% PENALTY TAX. SEE "FEDERAL TAX
CONSIDERATIONS," PAGE 24.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------
Hartford Life and Annuity Insurance Company ("Hartford") is a stock life
insurance company engaged in the business of writing life insurance and
annuities, both individual and group, in all states of the United States and the
District of Columbia, except New York. Hartford's name changed from ITT Hartford
Life and Annuity Insurance Company to Hartford Life and Annuity Insurance
Company on January 1, 1998. Hartford was originally incorporated under the laws
of Wisconsin on January 9, 1956, and was subsequently redomiciled to
Connecticut. Its offices are located in Simsbury, Connecticut; however, its
mailing address is P.O. Box 2999, Hartford, CT 06104-2999. Hartford is a
subsidiary of Hartford Fire Insurance Company, one of the largest multiple lines
insurance carriers in the United States. Hartford is ultimately controlled by
The Hartford Financial Services Group, Inc., a Delaware corporation.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis of
its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps on the basis of its claims paying
ability. These ratings do not apply to the investment performance of the
Sub-Accounts. The ratings apply to Hartford's ability to meet its insurance
obligations, including those described in this Prospectus.
THE SEPARATE ACCOUNT
--------------------------------------------------------------------
GENERAL
Separate Account Five ("Separate Account") is a separate account of Hartford
established on August 17, 1994 pursuant to the insurance laws of the State of
Connecticut and organized as a unit investment trust registered with the
Securities and Exchange Commission under the Investment Company Act of 1940. The
Separate Account meets the definition of "separate account" under federal
securities law. Under Connecticut law, the assets of the Separate Account are
held exclusively for the benefit of Policy Owners and persons entitled to
payments under the Policies. The assets of the Separate Account are not
chargeable with liabilities arising out of any other business which Hartford may
conduct.
PORTFOLIOS
The underlying investment for the Policies are shares of the Dean Witter Select
Dimensions Investment Series, the Morgan Stanley Universal Funds, Inc. and Van
Kampen American Capital Life Investment Trust, all open-end management
investment companies. The underlying Portfolios corresponding to each
Sub-Account and their investment objectives are described below. Hartford
reserves the right, subject to compliance with the law, to offer additional
portfolios with differing investment objectives. The Portfolios may not be
available in all states.
DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:
--------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Seeks high current income, preservation of capital and liquidity by investing in
the following money market instruments: U.S. Government securities, obligations
of U.S. regulated banks and savings institutions having total assets of more
than $1 billion, or less than $1 billion if such are fully federally insured as
to principal (the interest may not be insured) and high grade corporate debt
obligations maturing in thirteen months or less.
NORTH AMERICAN GOVERNMENT SECURITIES PORTFOLIO
Seeks to earn a high level of current income while maintaining relatively low
volatility of principal, by investing primarily in investment grade fixed-income
securities issued or guaranteed by the U.S., Canadian or Mexican governments.
DIVERSIFIED INCOME PORTFOLIO
Seeks, as a primary objective, to earn a high level of current income and, as a
secondary objective, to maximize total return, but only to the extent consistent
with its primary objective, by
7 - PROSPECTUS
<PAGE>
equally allocating its assets among three separate groupings of fixed-income
securities. Up to one-third of the securities in which the Diversified Income
Portfolio may invest will include securities rated Baa/BBB or lower. See the
Special Considerations for Investments for High Yield Securities disclosed in
the Funds prospectuses.
BALANCED GROWTH PORTFOLIO
Seeks to provide capital growth with reasonable current income by investing,
under normal market conditions, at least 60% of its total assets in a
diversified portfolio of common stocks of companies which have a record of
paying dividends and, in the opinion of the Investment Manager, have the
potential for increasing dividends and in securities convertible into common
stock, and at least 20% of its total assets in investment grade fixed-income
(fixed-rate and adjustable-rate) securities such as corporate notes and bonds
and obligations issued or guaranteed by the U.S. Government, its agencies and
its instrumentalities.
UTILITIES PORTFOLIO
Seeks to provide current income and long-term growth of income and capital by
investing in equity and fixed-income securities of companies in the public
utilities industry.
DIVIDEND GROWTH PORTFOLIO
Seeks to provide reasonable current income and long-term growth of income and
capital by investing primarily in common stock of companies with a record of
paying dividends and the potential for increasing dividends.
VALUE-ADDED MARKET PORTFOLIO
Seeks to achieve a high level of total return on its assets through a
combination of capital appreciation and current income, by investing, on an
equally-weighted basis, in a diversified portfolio of common stocks of the
companies which are represented in the Standard & Poor's 500 Composite Stock
Price Index.
GROWTH PORTFOLIO
Seeks long-term growth of capital by investing primarily in common stocks and
securities convertible into common stocks issued by domestic and foreign
companies.
AMERICAN VALUE PORTFOLIO
Seeks long-term capital growth consistent with an effort to reduce volatility,
by investing principally in common stock of companies in industries which, at
the time of the investment, are believed to be attractively valued given their
above average relative earnings growth potential at that time.
MID-CAP GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in equity securities of
"mid-cap" companies (that is, companies whose equity market capitalization falls
within the range of $250 million to $5 billion).
GLOBAL EQUITY PORTFOLIO
Seeks a high level of total return on its assets primarily through long-term
capital growth and, to a lesser extent, from income, through investments in all
types of common stocks and equivalents (such as convertible securities and
warrants), preferred stocks and bonds and other debt obligations of domestic and
foreign companies, governments and international organizations.
DEVELOPING GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in common stocks of
smaller and medium-sized companies that, in the opinion of the Investment
Manager, have the potential for growing more rapidly than the economy and which
may benefit from new products or services, technological developments or changes
in management.
EMERGING MARKETS PORTFOLIO
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging market countries. The Emerging Markets Portfolio may
invest up to 35% of its total assets in high risk fixed-income securities that
are rated below investment grade or are unrated (commonly referred to as "junk
bonds"). See the special considerations for investments in high yield securities
disclosed in the Fund prospectus.
MORGAN STANLEY UNIVERSAL FUNDS, INC.:
--------------------------------------------------------------------
HIGH YIELD PORTFOLIO
Seeks above-average total return over a market cycle of three to five years by
investing primarily in a diversified portfolio of high yield securities,
including corporate bonds and other fixed income securities and derivatives.
High yield securities are rated below investment grade and are commonly referred
to as "junk bonds". The Portfolio's average weighted maturity will ordinarily
exceed five years and will usually be between five and fifteen years. See the
special considerations for investments in high yield securities disclosed in the
Fund prospectus.
MID-CAP VALUE PORTFOLIO
Seeks above-average total return over a market cycle of three to five years by
investing in common stocks and other equity securities of issuers with equity
capitalizations in the range of the companies represented in the S&P MidCap 400
Index.
8 - PROSPECTUS
<PAGE>
EMERGING MARKETS DEBT PORTFOLIO
Seeks high total return by investing primarily in fixed income securities of
government and government related issues located in emerging market countries
which securities provide a high level of current income while at the same time
holding the potential for capital appreciation if the perceived creditworthiness
of the issuer improves due to the improving economic, financial, political,
social or other conditions in the country in which the issuer is located.
VAN KAMPEN AMERICAN CAPITAL LIFE
INVESTMENT TRUST:
--------------------------------------------------------------------
STRATEGIC STOCK PORTFOLIO
Seeks to provide investors with an above average total return through a
combination of potential capital appreciation and dividend income, consistent
with the preservation of invested capital by investing primarily in a portfolio
of dividend paying equity securities included in the Dow Jones Industrial
Average or in the Morgan Stanley Capital International USA Index.
ENTERPRISE PORTFOLIO
Seeks capital appreciation through investments in securities believed by the
investment adviser to have above average potential for capital appreciation.
The Portfolios are available only to serve as the underlying investment for
variable annuity contracts and variable life policies. A full description of the
Portfolios, including their investment objectives, policies and restrictions,
risks, charges and expenses and other aspects of their operation, is contained
in the accompanying Funds prospectuses which should be read in conjunction with
this Prospectus before investing, and in the Fund Statement of Additional
Information which may be ordered without charge from the Funds.
It is conceivable that in the future it may be disadvantageous for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the Portfolios simultaneously. Although Hartford and the Fund do not currently
foresee any such disadvantages either to variable life insurance policy owners
or variable annuity contract owners, the Fund's Board of Trustees intends to
monitor events in order to identify any material conflicts between variable life
insurance Policy Owners and variable annuity contract owners and to determine
what action, if any, should be taken in response thereto. If the Fund's Board of
Trustees were to conclude that separate Portfolios should be established for
variable life and variable annuity separate accounts, Hartford will bear the
attendant expenses.
All investment income of and other distributions to each Sub-Account of the
Separate Account arising from the applicable Portfolio are reinvested in shares
of that Portfolio at net asset value. The income and both realized gains or
losses on the assets of each Sub-Account of the Separate Account are therefore
separate and are credited to or charged against the Sub-Account, without regard
to income, gains or losses from any other Sub-Account or from any other business
of Hartford. Hartford will purchase shares in the Portfolios in connection with
premiums allocated to the applicable Sub-Account in accordance with Policy
Owners' directions and will redeem shares in the Portfolios to meet Policy
obligations or make adjustments in reserves, if any. The Portfolios are required
to redeem Portfolio shares at net asset value and to make payment within seven
days.
Hartford reserves the right, subject to compliance with the law as then in
effect, to make additions to, deletions from, or substitutions for the Separate
Account and its Sub-Accounts which fund the Policies. If shares of any of the
Portfolios should no longer be available for investment, or if, in the judgment
of Hartford's management, further investment in shares of any Portfolio should
become inappropriate in view of the purposes of the Policies, Hartford may
substitute shares of another Portfolio for shares already purchased, or to be
purchased in the future, under the Policies. No substitution of securities will
take place without notice to and consent of Policy Owners and without prior
approval of the Securities and Exchange Commission to the extent required by the
Investment Company Act of 1940. Subject to Policy Owner approval, Hartford also
reserves the right to end the registration under the Investment Company Act of
1940 of the Separate Account or any other separate accounts of which it is the
depositor and which may fund the Policies.
Each Portfolio is subject to investment restrictions which may not be changed
without the approval of a majority of the shareholders of the Fund. See the Fund
prospectus accompanying this Prospectus.
THE INVESTMENT ADVISERS
Dean Witter InterCapital Inc. ("InterCapital"), a Delaware Corporation, whose
address is Two World Trade Center, New York, New York 10048, is the Investment
Manager for the Money Market Portfolio, the North American Government Securities
Portfolio, the Diversified Income Portfolio, the Balanced Growth Portfolio, the
Utilities Portfolio, the Dividend Growth Portfolio, the Value-Added Market
Portfolio, the Growth Portfolio, the American Value Portfolio, the Mid-Cap
Growth Portfolio, the Global Equity Portfolio, the Developing Growth Portfolio,
and the Emerging Markets Portfolio of the Dean Witter Select Dimensions
Investment Series (the "Dean Witter Portfolios"). InterCapital was incorporated
in July, 1992 and is a wholly-owned subsidiary of Morgan Stanley, Dean Witter,
Discover, Co. ("MSDWD")
9 - PROSPECTUS
<PAGE>
InterCapital provides administrative services, manages the Dean Witter
Portfolios' business affairs and manages the investment of the Dean Witter
Portfolios' assets, including the placing of orders for the purchase and sales
of portfolio securities. InterCapital has retained Dean Witter Services Company
Inc., its wholly-owned subsidiary, to perform the aforementioned administrative
services for the Dean Witter Portfolios. For its services, the Dean Witter
Portfolios pay InterCapital a monthly fee. See the accompanying Fund prospectus
for a more complete description of InterCapital and the respective fees of the
Dean Witter Portfolios.
With regard to the North American Government Securities Portfolio and the
Emerging Markets Portfolio, TCW Funds Management ("TCW"), under a Sub-Advisory
Agreement with InterCapital, provides these Portfolios with investment advice
and portfolio management, in each case subject to the overall supervision of the
InterCapital. TCW's address is 865 South Figueroa Street, Suite 1800, Los
Angeles, California 90017.
With regard to the Growth Portfolio, Morgan Stanley Asset Management Inc.
("MSAM"), under a Sub-Advisory Agreement with InterCapital, provides the Growth
Portfolio with investment advice and portfolio management, subject to the
overall supervision of InterCapital. MSAM, like InterCapital, is a wholly-owned
subsidiary of MSDWD. MSAM's address is 1221 Avenue of the Americas, New York,
New York 10020.
In addition to acting as the Sub-Advisor for the Growth Portfolio, MSAM,
pursuant to an Investment Advisory Agreement with the Morgan Stanley Universal
Funds, Inc., is the investment adviser for the Emerging Markets Debt Portfolio.
As the investment advisor, MSAM, provides investment advice and portfolio
management services for the Emerging Markets Debt Portfolio, subject to the
supervision of the Morgan Stanley Universal Fund's Board of Directors.
The investment advisor for the High Yield Portfolio and the Mid Cap Value
Portfolio is Miller, Anderson & Sherrerd, LLP ("MAS"). MAS is a Pennsylvania
limited liability partnership founded in 1969 with its principal offices at One
Tower Bridge, West Conshohocken, Pennsylvania 19428. MAS provides investment
advisory services to employee benefit plans, endowment funds, foundations and
other institutional investors and has served as an investment advisor to several
open-end investment companies. MAS is a indirect wholly owned subsidiary of
MSDWD.
The Investment Adviser with respect to the Strategic Stock Portfolio and the
Enterprise Portfolio is Van Kampen American Capital Asset Management, Inc., a
wholly-owned subsidiary of Van Kampen American Capital, Inc. Van Kampen American
Capital, Inc. is an indirect wholly-owned subsidiary of MSDWD. Van Kampen
American Capital, Inc. is a diversified asset management company with more than
two million retail investor accounts, extensive capabilities for managing
institutional portfolios, and more than $60 billion under management or
supervision. Van Kampen American Capital Inc.'s more than 50 open-end and 38
closed end funds and more than 2,500 unit investment trusts are professionally
distributed by leading financial advisers nationwide.
THE POLICY
--------------------------------------------------------------------
APPLICATION FOR A POLICY
Individuals wishing to purchase a Policy must submit an application to Hartford.
A Policy will be issued only on the lives of insureds age 90 at the time of
application and under who supply evidence of insurability satisfactory to
Hartford. Acceptance is subject to Hartford's underwriting rules and Hartford
reserves the right to reject an application for any reason. IF AN APPLICATION
FOR A POLICY IS REJECTED, THEN YOUR INITIAL PREMIUM WILL BE RETURNED ALONG WITH
AN ADDITIONAL AMOUNT FOR INTEREST, BASED ON THE POLICY RATE BEING CREDITED BY
HARTFORD. No change in the terms or conditions of a Policy will be made without
the consent of the Policy Owner.
The Policy will be effective on the Policy Date only after Hartford has received
all outstanding delivery requirements and received the initial premium. The
Policy Date is the date used to determine all future cyclical transactions on
the Policy, e.g., Monthly Activity Date, Policy Months and Policy Years. The
Policy Date may be prior to, or the same as, the date the Policy is issued
("Issue Date").
If the Coverage Amount is over then-current limits established by Hartford, the
initial payment will not be accepted with the application. In other cases where
Hartford receives the initial payment with the application, Hartford will
provide fixed conditional insurance during underwriting according to the terms
of a conditional receipt. The fixed conditional insurance will be the insurance
applied for, up to a maximum that varies by age. If no fixed conditional
insurance was in effect, on Policy delivery Hartford will require a sufficient
payment to place the insurance in force.
PREMIUMS
The Policy permits the Policy Owner to pay a large single premium and, subject
to restrictions, additional premiums. The Policy Owner may choose a minimum
initial premium of 80%, 90% or 100% of the Guideline Single Premium (based on
the Face Amount). Under current underwriting rules, which are subject to change,
applicants between ages 45 and 80 who pay an initial premium of 100% of the
Guideline Single Premium (subject to then current premium limits) are eligible
for simplified underwriting without a medical examination if they meet
10 - PROSPECTUS
<PAGE>
simplified underwriting standards as evidenced in their responses in the
application. For Policy Owners who pay an initial premium of 80% or 90% of the
Guideline Single Premium or who are below age 45 or above age 80, standard
underwriting applies, except that substandard underwriting applies only in those
cases that represent substandard risks according to customary underwriting
guidelines. Additional premiums are allowed if they do not cause the Policy to
fail to meet the definition of a life insurance policy under Section 7702 of the
Code. Hartford may require evidence of insurability for any additional premiums
which increase the Coverage Amount. Generally, the minimum initial premium
Hartford will accept is $10,000. Hartford may accept less than $10,000 under
certain circumstances. No premium will be accepted which does not meet the tax
qualification guidelines for life insurance under the Code.
ALLOCATION OF PREMIUMS
Within three business days of receipt of a completed application and the initial
premium at Hartford's Home Office, Hartford will allocate the entire premium to
the Money Market Portfolio. After the expiration of the right to cancel period
the Account Value in the Money Market Portfolio will be allocated among the
Portfolios in whole percentages to purchase Accumulation Units in the applicable
Sub-Accounts as the Policy Owner directs in the application. Premiums received
on or after the expiration of the right to cancel period will be allocated among
the Sub-Accounts to purchase Accumulation Units in such Sub-Accounts as directed
by the Policy Owner or, in the absence of directions, as specified in the
original application. The number of Accumulation Units in each Sub-Account to be
credited to a Policy (including the initial allocation to the Money Market
Portfolio) will be determined first by multiplying the premium by the percentage
to be allocated to each Portfolio to determine the portion to be invested in the
Sub-Account. Each portion to be invested in each Sub-Account is then divided by
the Accumulation Unit Value of that particular Sub-Account next computed after
receipt of the payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each Sub-Account will vary to reflect the
investment experience of the applicable Portfolio and will be determined on each
Valuation Day by multiplying the Accumulation Unit Value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for that
Sub-Account for the Valuation Period then ended. The Net Investment Factor for
each Sub-Account is the net asset value per share of the corresponding Portfolio
at the end of the Valuation Period (plus the per share dividends or capital
gains by that Portfolio if the ex-dividend date occurs in the Valuation Period
then ended) divided by the net asset value per share of the corresponding
Portfolio at the beginning of the Valuation Period. Applicants should refer to
the prospectus for the Portfolios which accompanies this Prospectus for a
description of how the assets of each Portfolio are valued since such
determination has a direct bearing on the Accumulation Unit Value of the Sub-
Account and therefore the Account Value of a Policy. See also, "Policy Benefits
and Rights -- Account Value," page 13.
All valuations in connection with a Policy, e.g., with respect to determining
Account Value and Cash Surrender Value and in connection with Policy Loans, or
calculation of Death Benefits, or with respect to determining the number of
Accumulation Units to be credited to a Policy with each premium, other than the
initial premium, will be made on the date the request or payment is received by
Hartford at its Home Office if such date is a Valuation Day; otherwise such
determination will be made on the next succeeding date which is a Valuation Day.
DEDUCTIONS AND CHARGES
--------------------------------------------------------------------
MONTHLY DEDUCTIONS
On the Policy Date, and on each Monthly Activity Date after the Policy Date,
Hartford will deduct an amount ("Deduction Amount") to cover charges and
expenses incurred in connection with a Policy. Each monthly Deduction Amount
will be deducted pro rata from each Sub-Account attributable to the Policy such
that the proportion of Account Value of the Policy attributable to each
Sub-Account remains the same before and after the deduction. The Deduction
Amount will vary from month to month. The Deduction Amount reduces the number of
Accumulation Units credited to the Policy. If the Cash Surrender Value is not
sufficient to cover a Deduction Amount due on any Monthly Activity Date, the
Policy may lapse. See "Policy Benefits and Rights -- Lapse and Reinstatement,"
page 15. The following is a summary of the monthly deductions and charges which
constitute the Deduction Amount:
COST OF INSURANCE CHARGE: The cost of insurance charge covers Hartford's
anticipated mortality costs for standard and substandard risks. Current cost of
insurance rates are lower after the 10th Policy Year and are based on whether
100%, 90% or 80% of the Guideline Single Premium has been paid. The current cost
of insurance charge will not exceed the guaranteed cost of insurance charge.
This charge is a guaranteed maximum monthly rate multiplied by the Coverage
Amount on the Policy Date or any Monthly Activity Date. For standard risks, the
guaranteed cost of insurance rate is based on the 1980 Commissioners Standard
Ordinary Mortality Table, age last birthday. (Unisex rates may be required in
some states.) A table of guaranteed cost of insurance rates per $1,000 will be
included in each Policy; however, Hartford reserves the right to use rates less
than those shown in the table. Substandard risks will be charged at a higher
cost of insurance rate that will not exceed rates based on a
11 - PROSPECTUS
<PAGE>
multiple of the 1980 Commissioners Standard Ordinary Mortality Table, age last
birthday. The multiple will be based on the insured's substandard rating.
The Coverage Amount is first set on the Policy Date and then on each Monthly
Activity Date. On such days, it is the Face Amount less the Account Value
subject to a Minimum Coverage Amount. The Coverage Amount remains level between
the Monthly Activity Dates.
The Coverage Amount may be adjusted to continue to qualify the Policies as life
insurance policies under the current federal tax law. Under that law, the
Minimum Coverage Amount is a stated percentage of the Account Value of the
Policy determined on each Monthly Activity Date. The percentages vary according
to the attained age of the Insured.
EXAMPLE:
Face Amount = $100,000
Account Value on the
Monthly Activity Date = $30,000
Insured's attained age = 40
Minimum Coverage Amount percentage for age 40 = 150%
On the Monthly Activity Date, the Coverage Amount is $70,000. This is calculated
by subtracting the Account Value on the Monthly Activity Date ($30,000) from the
Face Amount ($100,000), subject to a possible Minimum Coverage Amount
adjustment. This Minimum Coverage Amount is determined by taking a percentage of
the Account Value on the Monthly Activity Date. In this case, the Minimum
Coverage Amount is $45,000 (150% of $30,000). Since $45,000 is less than the
Face Amount less the Account Value ($70,000), no adjustment is necessary.
Therefore, the Coverage Amount will be $70,000.
Assume that the Account Value in the above example was $50,000. The Minimum
Coverage Amount would be $75,000 (150% of $50,000). Since this is greater than
the Face Amount less the Account Value ($50,000), the Coverage Amount for the
Policy Month is $75,000. (For an explanation of the Death Benefit, see "Policy
Benefits and Rights," page 13.)
Because the Account Value and, as a result, the Coverage Amount under a Policy
may vary from month to month, the cost of insurance charge may also vary on each
Monthly Activity Date.
TAX EXPENSE CHARGE: Hartford will deduct monthly from the Account Value a tax
expense charge equal to an annual rate of 0.40% for the first ten Policy Years.
This charge compensates Hartford for premium taxes imposed by various states and
local jurisdictions and for the cost of capitalization of certain policy
acquisition expenses under Section 848 of the Code. The charge includes a
premium tax deduction of 0.25% and Section 848 costs of 0.15%. The 0.25% premium
tax deduction over ten Policy Years approximates Hartford's average expenses for
state and local premium taxes (2.5%). Premium taxes vary, ranging from zero to
more than 4.0%. The premium tax deduction is made whether or not any premium tax
applies. The deduction may be higher or lower than the premium tax imposed.
However, Hartford does not expect to make a profit from this deduction. The
0.15% charge helps reimburse Hartford for approximate expenses incurred from
federal taxes under Section 848 of the Code. The federal tax deduction is a
factor Hartford must use when computing the maximum sales load chargeable under
Securities and Exchange Commission rules.
ADMINISTRATIVE CHARGE: Hartford will deduct monthly from the Account Value
attributable to the Separate Account an administrative charge equal to an annual
rate of 0.40%. This charge compensates Hartford for administrative expenses
incurred in the administration of the Separate Account and the Policies.
MORTALITY AND EXPENSE RISK CHARGE: Hartford will deduct monthly from the Account
Value attributable to the Separate Account a charge equal to an annual rate of
0.90% for the mortality risks and expense risks Hartford assumes in relation to
the variable portion of the Policies. The mortality risk assumed is that the
cost of insurance charges specified in the Policy will be insufficient to meet
claims. Hartford also assumes a risk that the Face Amount (the minimum Death
Benefit) will exceed the Coverage Amount on the date of death plus the Account
Value on the date Hartford receives wren notice of death. The expense risk
assumed is that expenses incurred in issuing and administering the Policies will
exceed the administrative charges set in the Policy. Hartford may profit from
the mortality and expense risk charge and may use any profits for any proper
purpose, including any difference between the cost it incurs in distributing the
Policies and the proceeds of the contingent deferred sales charge.
ANNUAL MAINTENANCE FEE
If the Account Value on a Policy Anniversary is less than $50,000, Hartford will
deduct on such date an Annual Maintenance Fee of $30. This fee will help
reimburse Hartford for administrative and maintenance costs of the Policies. The
sum of the monthly administrative charges and the Annual Maintenance Fee will
not exceed the cost Hartford incurs in providing administrative services under
the Policies.
TAXES CHARGED AGAINST
THE SEPARATE ACCOUNT
Currently, no charge is made to the Separate Account for federal income taxes
that may be attributable to the Separate Account. Hartford may, however, make
such a charge in the future. Charges for other taxes, if any, attributable to
the Separate Account may also be made.
CHARGES AGAINST THE PORTFOLIOS
The Separate Account purchases shares of the Portfolios at net asset value. The
net asset value of the Portfolio shares reflects investment advisory fees and
administrative expenses already
12 - PROSPECTUS
<PAGE>
deducted from the assets of the Portfolios. These charges are described in the
prospectus for the Portfolios.
CONTINGENT DEFERRED
SALES CHARGE
Upon surrender of the Policy and partial withdrawals in excess of the Annual
Withdrawal Amount, a contingent deferred sales charge may be assessed:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(% of Account Value
attributable to
POLICY YEAR premiums paid)
------------- -------------------
<S> <C>
1 7.5%
2 7.5%
3 7.5%
4 6.0%
5 6.0%
6 4.0%
7 4.0%
8 2.0%
9 2.0%
10+ 0.0%
</TABLE>
In determining the contingent deferred sales charge and the additional premium
tax charge discussed below, any surrender or partial surrender during the first
ten Policy Years will be deemed first from premiums paid and then from earnings.
If an amount equal to all premiums paid has been withdrawn, no charge will be
assessed on a withdrawal of the remaining Account Value.
The contingent deferred sales charge is imposed to cover a portion of the sales
expense incurred by Hartford in distributing the Policies. This expense includes
agents' commissions, advertising and the printing of prospectuses.
See "Policy Benefits and Rights -- Amount Payable on Surrender of the Policy,"
page 13.
PREMIUM TAX CHARGE
During the first nine Policy Years, an additional premium tax charge will be
imposed on surrender or partial withdrawals. The additional premium tax charge
is shown below, as a percent of Account Value, at the end of each Policy Year:
<TABLE>
<CAPTION>
POLICY YEAR RATE
- ------------- -----
<S> <C>
1 2.50%
2 2.25%
3 2.00%
4 1.75%
5 1.50%
6 1.25%
7 1.00%
8 0.75%
9 0.50%
10+ 0.00%
</TABLE>
After the ninth Policy Year, no additional premium tax charge will be imposed.
POLICY BENEFITS AND RIGHTS
--------------------------------------------------------------------
DEATH BENEFIT
While in force, the Policy provides for the payment of the Death Proceeds to the
named beneficiary when the Insured under the Policy dies. The Death Proceeds
payable to the beneficiary equal the Death Benefit less any loans outstanding.
The Death Benefit equals the greater of (1) the Face Amount or (2) the Account
Value multiplied by a specified percentage. The percentages vary according to
the attained age of the Insured and are specified in the Policy. Therefore, an
increase in Account Value may increase the Death Benefit. However, because the
Death Benefit will never be less than the Face Amount, a decrease in Account
Value may decrease the Death Benefit but never below the Face Amount.
EXAMPLES:
<TABLE>
<CAPTION>
A B
-------- --------
<S> <C> <C>
Face Amount........................ $100,000 $100,000
Insured's Age...................... 40 40
Account Value on Date of Death..... 46,500 34,000
Specified Percentage............... 250% 250%
Account Value on Date of Death X
Specified Percentage.............. $116,250 $ 85,000
</TABLE>
In Example A, the Death Benefit equals $116,250, i.e., the greater of $100,000
(the Face Amount) or $116,250 (the Account Value at the Date of Death of
$46,500, multiplied by the specified percentage of 250%). This amount less any
outstanding loans constitutes the Death Proceeds which Hartford would pay to the
beneficiary.
In Example B, the death benefit is $100,000, i.e., the greater of $100,000 (the
Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the
specified percentage of 250%).
All or part of the Death Proceeds may be paid in cash or applied under a
"Payment Option." See "Other Matters -- Payment Options," page 17.
ACCOUNT VALUE
The Account Value of a Policy will be computed on each Valuation Day. The
Account Value will vary to reflect the investment experience of the Portfolios,
the value of the Loan Account and the monthly Deduction Amounts. There is no
minimum guaranteed Account Value.
13 - PROSPECTUS
<PAGE>
The Account Value of a particular Policy is related to the net asset value of
the Portfolios to which premiums on the Policy have been allocated. The Account
Value on any Valuation Day is calculated by multiplying the number of
Accumulation Units credited to the Policy in each Sub-Account as of the
Valuation Day by the Accumulation Unit Value of that Sub-Account and then
summing the result for all the Sub-Accounts credited to the Policy and the value
of the Loan Account. See "The Policy -- Accumulation Unit Values," page 11.
TRANSFER OF ACCOUNT VALUE
While the Policy remains in effect and subject to Hartford's transfer rules then
in effect, the Policy Owner may request that part or all of the Account Value of
a particular Sub-Account be transferred to other Sub-Accounts. Hartford reserves
the right to restrict the number of such transfers to no more than 12 per Policy
Year with no two transfers being made on consecutive Valuation Days. However,
there are no restrictions on the number of transfers at the present time.
Transfers may be made by wren request or by calling toll free 1-800-231-5453.
Telephone transfers may not be permitted in some states. The policy of Hartford
and its agents and affiliates is that they will not be responsible for losses
resulting from acting upon telephone requests reasonably believed to be genuine.
Hartford will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine; otherwise, Hartford may be liable for any
losses due to unauthorized or fraudulent instructions. The procedures Hartford
follows for transactions initiated by telephone include requirements that
callers provide certain information for identification purposes. All transfer
instructions by telephone are tape recorded.
It is the responsibility of the Policy Owner to verify the accuracy of all
confirmations of transfers and to promptly advise Hartford of any inaccuracies
within 30 days of receipt of the confirmation. Hartford will send the Policy
Owner a confirmation of the transfer within five days from the date of any
instruction.
Hartford may modify the right to reallocate Account Value among the Sub-Accounts
if Hartford determines, in its sole discretion, that the exercise of that right
by one or more Policy Owners is, or would be, to the disadvantage of other
Policy Owners. Any modification could be applied to transfers to or from some or
all of the Sub-Accounts and could include, but not be limited to, the
requirement of a minimum period between each transfer, not accepting transfer
requests of an agent acting under the power of attorney on behalf of more than
one Policy Owner, or limiting the dollar amount that may be transferred among
the Sub-Accounts at one time. These restrictions may be applied in any manner
reasonably designed to prevent any use of the transfer right that Hartford
considered to be disadvantageous to other Policy Owners.
As a result of a transfer, the number of Accumulation Units credited to the
Sub-Account from which the transfer is made will be reduced by the number
obtained by dividing the amount transferred by the Accumulation Unit Value of
that Sub-Account on the Valuation Day Hartford receives the transfer request.
The number of Accumulation Units credited to the Sub-Account to which the
transfer is made will be increased by the number obtained by dividing the amount
transferred by the Accumulation Unit Value of that Sub-Account on the Valuation
Day Hartford receives the transfer request.
POLICY LOANS
While the Policy is in effect, a Policy Owner may obtain, without the consent of
the beneficiary (provided the designation of beneficiary is not irrevocable),
one or both of two types of cash loans from Hartford ("Regular Loans" or
"Preferred Loans"). Both types of loans are secured by the Policy. The aggregate
loans (including the currently applied for loan) may not exceed at the time a
loan is requested 90% of the Cash Value.
The loan amount will be transferred pro rata from each Sub-Account attributable
to the Policy (unless the Policy Owner specifies otherwise) to the Loan Account.
The amounts allocated to the Loan Account will earn interest at a rate of 4% per
annum (6% for "Preferred Loans"). The amount of the Loan Account that equals the
difference between the Cash Value and the total of all premiums paid under the
Policy is considered a "Preferred Loan." For exchanges which take place
according to IRC Section 1035(a) that have an outstanding loan at the time of
transfer, the difference between the Account Value and the total of all premiums
paid under the Policy is considered a Preferred Loan. The loan interest rate
that Hartford will charge on all loans is 6% per annum. The difference between
the value of the Loan Account and the Indebtedness will be transferred on a
pro-rata basis from the Sub-Accounts to the Loan Account on each Monthly
Activity Date. The proceeds of a loan will be delivered to the Policy Owner
within seven business days of Hartford's receipt of the loan request.
If the aggregate outstanding loan(s) secured by the Policy exceeds the Account
Value of the Policy less any contingent deferred sales charges and due and
unpaid Deduction Amount, Hartford will give wren notice to the Policy Owner that
unless Hartford receives an additional payment within 61 days to reduce the
aggregate outstanding loan(s) secured by the Policy, the Policy may lapse.
All or any part of any loan secured by a Policy may be repaid while the Policy
is still in effect. When loan repayments or interest payments are made, they
will be allocated among the Sub-Account(s) in the same percentage as premiums
are allocated (unless the Policy Owner requests a different allocation) and an
amount equal to the payment will be deducted from the Loan Account. Any
outstanding loan at the end of a grace period must be repaid before the Policy
will be reinstated. See "Policy Benefits and Rights -- Lapse and Reinstatement,"
page 15.
A loan, whether or not repaid, will have a permanent effect on the Account Value
because the Loan Account does not participate in the investment results of the
Sub-Accounts. The longer a
14 - PROSPECTUS
<PAGE>
loan is outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the Sub-Accounts earn more than the annual interest
rate for amounts held in the Loan Account, a Policy Owner's Account Value will
not increase as rapidly as it would have had no loan been made. If the Sub-
Accounts earn less than the annual interest rate for amounts held in the Loan
Account, the Policy Owner's Account Value will be greater than it would have
been had no loan been made. Also, if not repaid, the aggregate outstanding
loan(s) will reduce the Death Proceeds and Cash Surrender Value otherwise
payable.
AMOUNT PAYABLE ON SURRENDER
OF THE POLICY
While the Policy is in effect, a Policy Owner may elect, without the consent of
the beneficiary (provided the designation of beneficiary is not irrevocable), to
fully surrender the Policy. Upon surrender, the Policy Owner will receive the
Cash Surrender Value determined as of the day Hartford receives the Policy
Owner's wren request or the date requested by the Policy Owner whichever is
later. The Cash Surrender Value equals the Account Value less any contingent
deferred sales charges and additional premium tax charge and all Indebtedness.
Hartford will pay the Cash Surrender Value of the Policy within seven days of
receipt by Hartford of the wren request or on the effective surrender date
requested by the Policy Owner, whichever is later. The Policy will terminate on
the date of receipt of the wren request, or the date the Policy Owner requests
the surrender to be effective, whichever is later. For a discussion of the tax
consequences of surrendering the Policy, see "Federal Tax Considerations," page
24.
If the Policy Owner chooses to apply the surrender proceeds to a payment option
(see "Other Matters -- Payment Options," page 17), the contingent deferred sales
charge will not be imposed to the surrender proceeds applied to the option. In
other words, the surrender proceeds will equal the Cash Surrender Value without
reduction for the contingent deferred sales charge. However, the additional
premium tax charge, if applicable, will be deducted from the surrender proceeds
to be applied, and amounts withdrawn from Options 1, 5 or Policy Proceeds
Settlement Option will be subject to the contingent deferred sales charge, if
applicable.
PARTIAL SURRENDERS
While the Policy is in effect, a Policy Owner may elect, by written request, to
make partial surrenders from the Cash Surrender Value. The Cash Surrender Value,
after partial withdrawal, must at least equal Hartford's minimum amount rules
then in effect; otherwise, the request will be treated as a request for full
surrender. The partial surrender will be deducted pro rata from each
Sub-Account, unless the Policy Owner instructs otherwise. The Face Amount will
be reduced proportionate to the reduction in the Account Value due to the
partial surrender. Partial surrender in excess of the Annual Withdrawal Amount
will be subject to the contingent deferred sales charge and any additional
premium tax charges. See "Deductions and Charges -- Contingent Deferred Sales
Charge," and "-- Premium Tax Charge," page 13. For a discussion of the tax
consequences of partial surrender, see "Federal Tax Considerations," page 24.
BENEFITS AT MATURITY
If the Insured is living on the "Maturity Date" (the anniversary of the Policy
Date on which the Insured is age 100), on surrender of the Policy to Hartford,
Hartford will pay to the Policy Owner the Cash Surrender Value. In such case,
the Policy will terminate and Hartford will have no further obligations under
the Policy. (The Maturity Date may be extended by rider where approved, but see
"Income Taxation of Policy Benefits," page 24.)
LAPSE AND REINSTATEMENT
The Policy will remain in effect until the Cash Surrender Value is insufficient
to cover a Deduction Amount due on a Monthly Activity Date. Hartford will notify
the Policy Owner of the deficiency in writing and will provide a 61 day period
("Grace Period") to pay an amount sufficient to cover the Deduction Amounts Due.
The Notice will indicate the amount that must be paid. The Policy will continue
through the Grace Period, but if no additional premium payment is made, it will
terminate at the end of the Grace Period. If the person insured under the Policy
dies during the Grace Period, the Death Proceeds payable under the Policy will
be reduced by the Deduction Amount(s) due and unpaid. See "Policy Benefits and
Rights -- Death Benefit," page 13.
If the Policy lapses, the Policy Owner may apply for reinstatement of the Policy
by payment of the reinstatement premium (and any applicable charges) shown in
the Policy. A request for reinstatement may be made within five years of lapse.
If a loan was outstanding at the time of lapse, Hartford will require repayment
of the loan before permitting reinstatement. In addition, Hartford reserves the
right to require evidence of insurability satisfactory to Hartford.
CANCELLATION AND
EXCHANGE RIGHTS
An applicant has a limited right to return a Policy for cancellation. If the
Policy is returned, by mail or personal delivery to Hartford or to the agent who
sold the Policy, to be cancelled within ten days after receipt of the Policy by
the Policy Owner (a longer free-look period is provided in certain cases),
Hartford will return to the applicant within seven days the greater of premiums
paid for the Policy or the sum of (1) the Account Value on the date the returned
Policy is received by Hartford or its agent and (2) any deductions under Policy
or by the Portfolios for taxes, charges or fees.
Once the Policy is in effect, it may be exchanged during the first 24 months
after its issuance, for a non-variable flexible premium
15 - PROSPECTUS
<PAGE>
adjustable life insurance Policy offered by Hartford (or an affiliated company)
on the life of the Insured. No evidence of insurability will be required. The
new Policy will have, at the election of the Policy Owner, either the same
Coverage Amount under the exchanged Policy on the date of exchange or the same
Death Benefit. The effective date, issue date and issue age will be the same as
existed under the exchanged Policy. If a Policy loan was outstanding, the entire
loan must be repaid. There may be a cash adjustment required on the exchange.
SUSPENSION OF VALUATION,
PAYMENTS AND TRANSFERS
Hartford will suspend all procedures requiring valuation (including transfers,
surrenders and loans) on any day a national stock exchange is closed or trading
is restricted due to an existing emergency as defined by the Securities and
Exchange Commission, or on any day the Securities and Exchange Commission has
ordered that the right of surrender of the Policies be suspended for the
protection of Policy Owners, until such condition has ended.
LAST SURVIVOR POLICIES
--------------------------------------------------------------------
The Policies are offered on both a single life and a "last survivor" basis.
Policies sold on a last survivor basis operate in a manner almost identical to
the single life version. The most important difference is that the last survivor
version involves two Insureds and the Death Proceeds are paid on the death of
the last surviving Insured. The other significant differences between the last
survivor and single life versions are listed below.
1. The cost of insurance charges under the last survivor Policies are
determined in a manner that reflects the anticipated mortality of the two
Insureds and the fact that the Death Benefit is not payable until the death
of the second Insured. See the last survivor illustrations in "Appendix A,"
page 28.
2. To qualify for simplified underwriting under a last survivor Policy, both
Insureds must meet the simplified underwriting standards.
3. For a last survivor Policy to be reinstated, both Insureds must be alive on
the date of reinstatement.
4. The Policy provisions regarding misstatement of age or sex, suicide and
incontestability apply to either Insured.
5. Additional tax disclosures applicable to last survivor Policies are provided
in "Federal Tax Considerations," page 24.
OTHER MATTERS
--------------------------------------------------------------------
VOTING RIGHTS
In accordance with its interpretation of presently applicable law, Hartford will
vote the shares of the Portfolios at regular and special meetings of the
shareholders of the Portfolios in accordance with instructions from Policy
Owners (or the assignee of the Policy, as the case may be) having a voting
interest in the Separate Account. The number of shares held in the Separate
Account which are attributable to each Policy Owner is determined by dividing
the Policy Owner's interest in each Sub-Account by the net asset value of the
applicable shares of the Portfolios. Hartford will vote shares for which no
instructions have been given and shares which are not attributable to Policy
Owners (i.e., shares owned by Hartford) in the same proportion as it votes
shares for which it has received instructions. However, if the Investment
Company Act of 1940 or any rule promulgated thereunder should be amended, or if
Hartford's present interpretation should change and, as a result, Hartford
determines it is permitted to vote the shares of the Portfolios in its own
right, it may elect to do so.
The voting interests of the Policy Owner (or the assignee) in the Portfolios
will be determined as follows: Policy Owners may cast one vote for each full or
fractional Accumulation Unit owned under the Policy and allocated to a
Sub-Account the assets of which are invested in the particular Portfolio on the
record date for the shareholder meeting for that Portfolio. If, however, a
Policy Owner has taken a loan secured by the Policy, amounts transferred from
the Sub-Account(s) to the Loan Account in connection with the loan (see "Policy
Benefits and Rights -- Policy Loans," page - ) will not be considered in
determining the voting interests of the Policy Owner. Policy Owners should
review the prospectus for the Portfolios accompanying this Prospectus to
determine matters on which shareholders may vote.
Hartford may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that the shares be voted so as
to cause a change in the sub-classification or investment objective of one or
more of the Portfolios or to approve or disapprove an investment advisory policy
for the Portfolios.
In addition, Hartford itself may disregard voting instructions in favor of
changes, initiated by a Policy Owner, in the investment policy or the investment
adviser of the Portfolios if Hartford reasonably disapproves of such changes. A
change would be disapproved only if the proposed change is contrary to state law
or prohibited by state regulatory authorities. If Hartford does disregard voting
instructions, a summary of that action and the reasons for such action will be
included in the next periodic report to Policy Owners.
16 - PROSPECTUS
<PAGE>
STATEMENTS TO POLICY OWNERS
Hartford will maintain all records relating to the Separate Account and the
Sub-Accounts. At least once each Policy Year, Hartford will send to Policy
Owners a statement showing the Coverage Amount and the Account Value of the
Policy (indicating the number of Accumulation Units credited to the Policy in
each Sub-Account and the corresponding Accumulation Unit Value) and any
outstanding loan secured by the Policy as of the date of the statement. The
statement will also show premium paid, and Deduction Amounts under the Policy
since the last statement, and any other information required by any applicable
law or regulation.
LIMIT ON RIGHT TO CONTEST
Hartford may not contest the validity of the Policy after it has been in effect
during the Insured's lifetime for two years from the Issue Date. If the Policy
is reinstated, the two-year period is measured from the date of reinstatement.
Any increase in the Coverage Amount as a result of a premium is contestable for
two years from its effective date. In addition, if the Insured commits suicide
in the two-year period, or such period as specified in state law, the benefit
payable will be limited to the Account Value, less any Indebtedness.
MISSTATEMENT AS TO AGE AND SEX
If the age or sex of the Insured is incorrectly stated, the Death Benefit will
be appropriately adjusted as specified in the Policy.
PAYMENT OPTIONS
The surrender proceeds or Death Proceeds under the Policies may be paid in a
lump sum or may be applied to one of Hartford's payment options. The minimum
amount that may be applied under a payment option is $5,000, unless Hartford
consents to a lesser amount. Under Options 2, 3 and 4, no surrender or partial
withdrawals are permitted after payments commence. Full surrender or partial
withdrawals may be made from Option 1 or Option 6, but they are subject to the
contingent deferred sales charge, if applicable. Only a full surrender is
allowed from Option 5. A surrender from Option 5 will also be subject to the
contingent deferred sales charge, if applicable.
Hartford will pay interest of at least 3 1/2% per year on the Death Proceeds
from the date of the Insured's death to the date payment is made or a payment
option is elected. At such times, the proceeds are not subject to the investment
experience of the Separate Account.
The following options are available under the Policies (Hartford may offer other
payment options):
OPTION 1: INTEREST INCOME
This option offers payments of interest, at the rate Hartford declares, on the
amount applied under this option. The interest rate will never be less than
3 1/2% per year.
OPTION 2: LIFE ANNUITY
A life annuity is an annuity payable during the lifetime of the payee and
terminating with the last payment preceding the death of the payee. This option
offers the largest payment amount of any of the life annuity options since there
is no guarantee of a minimum number of payments nor a provision for a death
benefit payable to a beneficiary.
It would be possible under this option for a payee to receive only one annuity
payment if he died prior to the due date of the second annuity payment, two if
he died before the date of the third annuity payment, etc.
OPTION 3: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
This annuity option is an annuity payable monthly during the lifetime of the
payee with the provision that payments will be made for a minimum of 120, 180 or
240 months, as elected. If, at the death of the payee, payments have been made
for less than the minimum elected number of months, then the present value, as
of the date of the payee's death, of any remaining guaranteed payments will be
paid in one sum to the beneficiary or beneficiaries designated, unless other
provisions have been made and approved by Hartford.
OPTION 4: JOINT AND LAST SURVIVOR ANNUITY
An annuity payable monthly during the joint lifetime of the payee and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford, the payee may elect that the
payment to the survivor be less than the payment made during the joint lifetime
of the payee and a designated second person.
It would be possible under this option for a payee and designated second person
to receive only one payment in the event of the common or simultaneous death of
the parties prior to the due date for the second payment and so on.
OPTION 5: PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected which may be from
five to 30 years. Under this option, you may, at any time, request a full
surrender and receive, within seven days, the termination value of the Policy as
determined by Hartford.
In the event of the payee's death prior to the end of the designated period, the
present value, as of the date of the payee's death, of any remaining guaranteed
payments will be paid in one sum to the beneficiary or beneficiaries designated,
unless other provisions have been made and approved by Hartford.
Option 5 is an option that does not involve life contingencies.
OPTION 6: DEATH PROCEEDS REMAINING WITH HARTFORD
Proceeds from the Death Benefit left with Hartford. These proceeds will remain
in the Sub-Accounts to which they were allocated at the time of death, unless
the beneficiary elects to
17 - PROSPECTUS
<PAGE>
reallocate them. Full or partial surrenders may be made at any time.
VARIABLE AND FIXED ANNUITY PAYMENTS: When an annuity is effected, unless
otherwise specified, the surrender proceeds or Death Proceeds held in the
Sub-Accounts will be applied to provide a variable annuity based on the pro rata
amount in the various Sub-Accounts. Fixed annuities options are also available.
YOU SHOULD CONSIDER WHETHER THE ALLOCATION OF PROCEEDS AMONG SUB-ACCOUNTS OF THE
SEPARATE ACCOUNT FOR YOUR ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT
ALTERNATIVE BEST SUITED TO YOUR RETIREMENT NEEDS.
VARIABLE ANNUITY: The Policy contains tables indicating the minimum dollar
amount of the first monthly payment under the optional variable forms of annuity
for each $1,000 of value of a Sub-Account. The first monthly payment varies
according to the form and type of variable payment annuity selected. The Policy
contains variable payment annuity tables derived from the 1983a Individual
Annuity Mortality Table with ages set back one year and with an assumed
investment rate ("A.I.R.") of 5% per annum. The total first monthly variable
annuity payment is determined by multiplying the proceeds value (expressed in
thousands of dollars) of a Sub-Account by the amount of the first monthly
payment per $1,000 of value obtained from the tables in the Policies.
The amount of the first monthly variable annuity payment is divided by the value
of an annuity unit (an accounting unit of measure used to calculate the value of
annuity payments) for the appropriate Sub-Account no earlier than the close of
business on the fifth Valuation Day preceding the day on which the payment is
due in order to determine the number of annuity units represented by the first
payment. This number of annuity units remains fixed during the annuity payment
period, and in each subsequent month the dollar amount of the variable annuity
payment is determined by multiplying this fixed number of annuity units by the
current annuity unit value.
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP OR DOWN
AS THE INVESTMENT RATE VARIES UP OR DOWN RELATIVE TO THE A.I.R.
FIXED ANNUITY: Fixed annuity payments are determined by multiplying the amount
applied to the annuity by a rate to be determined by Hartford which is no less
than the rate specified in the fixed payment annuity tables in the Policy. The
annuity payment will remain level for the duration of the annuity.
Hartford will make any other arrangements for income payments as may be agreed
on.
BENEFICIARY
The applicant names the beneficiary in the application for the Policy. The
Policy Owner may change the beneficiary (unless irrevocably named) during the
Insured's lifetime by wren request to Hartford. If no beneficiary is living when
the Insured dies, the Death Proceeds will be paid to the Policy Owner if living;
otherwise to the Policy Owner's estate.
ASSIGNMENT
The Policy may be assigned as collateral for a loan or other obligation.
Hartford is not responsible for any payment made or action taken before receipt
of wren notice of such assignment. Proof of interest must be filed with any
claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Policies.
18 - PROSPECTUS
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
--------------------------------------------------------------------
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD; FOR PAST 5 YEARS;
NAME; AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
Wendell J. Bossen, 64 Vice President, 1995** Vice President (1992-Present), Hartford Life and
Accident Insurance Company; Vice President
(1992-Present), Hartford Life Insurance Company;
President (1992-Present), International Corporate
Marketing Group, Inc.
Gregory A. Boyko, 46 Senior Vice President, Chief Vice President & Controller (1995-1997), Hartford;
Financial Officer and Director (1997-Present); Senior Vice President,
Treasurer, 1997 Chief Financial Officer & Treasurer
Director, 1997* (1997-Present); Vice President & Controller
(1995-1997), Hartford Life and Accident Insurance
Company; Director (1997-Present); Senior Vice
President, Chief Financial Officer & Treasurer
(1997-Present); Vice President and Controller
(1995-1997), Hartford Life Insurance Company;
Senior Vice President, Chief Financial Officer &
Treasurer (1997-Present), Hartford Life, Inc.;
Chief Financial Officer (1994-1995), IMG American
Life; Senior Vice President (1992-1994),
Connecticut Mutual Life Insurance Company.
Peter W. Cummins, 60 Senior Vice President, 1997 Vice President (1993-1997), Hartford; Senior Vice
President, (1997-Present); Vice President
(1989-1997), Hartford Life and Accident Insurance
Company; Senior Vice President (1997-Present);
Vice President (1989-1997); Senior Vice President
(1997-Present); Vice President (1989-1997),
Hartford Life Insurance Company.
Ann M. de Raismes, 47 Senior Vice President, 1997 Vice President (1994-1997), Hartford; Senior Vice
Director of Human Resources, President (1997-Present); Vice President
1994 (1994-1997); Assistant Vice President
(1992-1994); Director of Human Resources
(1991-Present), Hartford Life and Accident
Insurance Company; Senior Vice President
(1997-Present); Vice President (1994-1997);
Assistant Vice President (1992-1994); Director of
Human Resources (1991-Present), Hartford Life
Insurance Company; Vice President, Human
Resources (1997-Present), Hartford Life, Inc.
James R. Dooley, 61 Vice President, 1993 Director, Information Services (1973-1997),
Hartford Life Insurance Company.
</TABLE>
19 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD; FOR PAST 5 YEARS;
NAME; AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
Timothy M. Fitch, 45 Vice President, 1995 Vice President (1995-Present); Actuary
Actuary, 1997 (1994-Present); Assistant Vice President
(1992-1995), Hartford Life and Accident Insurance
Company; Vice President (1995-Present); Actuary
(1994-Present); Assistant Vice President
(1992-1995), Hartford Life Insurance Company.
David T. Foy, 31 Vice President, 1998 Assistant Vice President (1995-1998), Hartford;
Vice President (1998-Present), Assistant Vice
President (1995-1998), Hartford Life Insurance
Company.
J. Richard Garrett, 53 Vice President, 1994 Treasurer (1994-1997), Hartford; Vice President
Assistant Treasurer, 1997 (1993-Present); Assistant Treasurer
(1997-Present); Treasurer (1984-1997), Hartford
Life and Accident Insurance Company; Vice
President, (1993-Present); Assistant Treasurer
(1997-Present); Treasurer (1986-1997), Hartford
Life Insurance Company; Vice President
(1997-Present), Hartford Life, Inc.
Donald J. Gillette, 52 Vice President, 1997 Assistant Vice President (1995-1997), Hartford;
Assistant Vice President (1995-1997), Hartford
Life and Accident Insurance Company; Assistant
Vice President (1995-Present), Hartford Life
Insurance Company.
John P. Ginnetti, 52 Executive Vice President and Senior Vice President, Individual Life and Annuity
Director, Asset Management Division (1988-1994), Hartford; Director
Services, 1994 (1988-Present); Director (1988-Present);
Director, 1988 Executive Vice President & Director, Asset
Management Services (1994-Present); Senior Vice
President, Individual Life and Annuity Division
(1988-1994), Hartford Life and Accident Insurance
Company; Executive Vice President, Asset
Management, Hartford Life, Inc. (1997-Present).
William A. Godfrey, III, 41 Senior Vice President, 1997 Senior Vice President (1997-Present), Hartford;
Senior Vice President (1997-Present), Hartford
Life and Accident Insurance Company; Vice
President, Information Technology (1997-Present),
Hartford Life, Inc.
</TABLE>
20 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD; FOR PAST 5 YEARS;
NAME; AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
Lynda Godkin, 44 Senior Vice President, 1997 Assistant General Counsel and Secretary
General Counsel, 1996 (1994-1995), Hartford; Director (1997-Present);
Corporate Secretary, 1996 Senior Vice President (1997-Present); General
Director, 1997* Counsel (1996-Present); Corporate Secretary
(1995-Present); Associate General Counsel
(1995-1996); Assistant General Counsel and
Secretary (1994-1995); Counsel (1990-1994),
Hartford Life and Accident Insurance Company;
Senior Vice President (1997-Present); General
Counsel (1996-Present); Corporate Secretary
(1995-Present); Director (1997-Present);
Associate General Counsel (1995-1996); Assistant
General Counsel and Secretary (1994-1995);
Counsel (1990-1994), Hartford Life Insurance
Company; Vice President and General Counsel
(1997-Present), Hartford Life, Inc.
Lois W. Grady, 53 Senior Vice President, 1998 Vice President (1994-1998), Hartford; Senior Vice
Vice President, 1994 President (1998-Present); Vice President
(1993-1997); Assistant Vice President
(1987-1993), Hartford Life and Accident Insurance
Company; Senior Vice President (1998-Present);
Vice President (1994-1997); Assistant Vice
President (1987-1994), Hartford Life Insurance
Company.
Christopher Graham, 47 Vice President, 1997
Mark E. Hunt, 37 Vice President, 1998 Assistant Vice President (1997-1998), Hartford;
Vice President (1998-Present), Hartford Life and
Accident Insurance Company.
Stephen T. Joyce, 39 Vice President, 1997 Assistant Vice President (1995-1997), Hartford;
Assistant Vice President (1994-1997), Hartford
Life and Accident Insurance Company; Vice
President (1997-Present); Assistant Vice
President (1994-1997), Hartford Life Insurance
Company.
Michael D. Keeler, 37 Vice President, 1998 Vice President (1998-Present); Hartford Life and
Accident Insurance Company.
Robert A. Kerzner, 46 Senior Vice President, 1998 Senior Vice President (1998-Present); Vice
Vice President, 1997 President (1994-1998), Hartford; Senior Vice
President (1998-Present); Vice President
(1994-1997); Regional Vice President (1991-1994),
Hartford Life Insurance Company.
David N. Levenson, 31 Vice President, 1998 Assistant Vice President (1997-1998), Hartford.
William B. Malchodi, Jr., 50 Vice President, 1994 Vice President (1994-Present); Director of Taxes
(1992-1998), Hartford Life and Accident Insurance
Company; Vice President (1994-Present); Director
of Taxes (1991-1998), Hartford Life Insurance
Company.
</TABLE>
21 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD; FOR PAST 5 YEARS;
NAME; AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
Thomas M. Marra, 39 Executive Vice President, 1996 Senior Vice President (1993-1996); Director of
Director, Individual Life and Individual Annuities (1991-1993), Hartford;
Annuity Division, 1993 Director (1994-Present); Executive Vice President
Director, 1994* (1995-Present); Director, Individual Life and
Annuity Division (1994-Present); Senior Vice
President (1994-1995); Vice President
(1989-1994); Actuary (1987-1997), Hartford Life
and Accident Insurance Company; Director
(1994-Present); Executive Vice President
(1995-Present); Director, Individual Life and
Annuity Division (1994-Present); Senior Vice
President (1994-1995); Vice President
(1989-1994); Actuary (1987-1995), Hartford Life
Insurance Company; Executive Vice President,
Individual Life and Annuities (1997-Present),
Hartford Life, Inc.
Steven L. Matthieson, 53 Vice President, 1984 Director of New Business (1984-1997), Hartford.
C. Michael O'Halloran, 51 Vice President, 1997 Vice President (1997-Present), Hartford Life and
Accident Insurance Company; Vice President
(1997-Present), Hartford Life Insurance Company;
Corporate Secretary (1997-Present), Hartford
Life, Inc.; Senior Associate General Counsel
(1988-Present), Director of Corporate Law
(1994-Present), The Hartford Financial Services
Group.
Craig R. Raymond, 37 Senior Vice President, 1997 Vice President (1993-1997); Assistant Vice
Chief Actuary, 1994 President (1992-1993); Actuary (1989-1994),
Hartford; Senior Vice President (1997-Present);
Chief Actuary (1995-Present); Vice President
(1993-1997); Actuary (1990-1995), Hartford Life
and Accident Insurance Company; Senior Vice
President (1997-Present); Chief Actuary
(1994-Present); Vice President (1993-1997);
Assistant Vice President (1992-1993); Actuary
(1989-1994), Hartford Life Insurance Company;
Vice President and Chief Actuary (1997-Present),
Hartford Life, Inc.
David T. Schrandt, 50 Vice President, 1987 Treasurer (1987-1997); Controller (1987-1997),
Hartford.
Lowndes A. Smith, 58 President, 1989 Chief Operating Officer (1989-1997), Hartford;
Chief Executive Officer, 1997 Director (1981-Present); President
Director, 1985* (1989-Present); Chief Executive Officer
(1997-Present); Chief Operating Officer
(1989-1997), Hartford Life and Accident Insurance
Company; Director (1981-Present); President
(1989-Present), Chief Executive Officer
(1997-Present); Chief Operating Officer
(1989-1997), Hartford Life Insurance Company;
Chief Executive Officer and President and
Director (1997-Present), Hartford Life, Inc.
</TABLE>
22 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD; FOR PAST 5 YEARS;
NAME; AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
Raymond P. Welnicki, 49 Senior Vice President and Vice President (1993-1994), Hartford; Director
Director, Employee Benefit (1994-Present); Senior Vice President
Division, 1994 (1995-Present); Director, Employee Benefit
Director, 1994* Division (1997-Present); Vice President
(1993-1995), Hartford Life and Accident Insurance
Company; Senior Vice President, Employee Benefits
(1997-Present), Hartford Life, Inc.; Board of
Directors, Ethix Corp.
Walter C. Welsh, 51 Senior Vice President, 1997 Senior Vice President (1997-Present); Vice
President (1994-1997); Assistant Vice President
(1992-1995), Hartford Life and Accident Insurance
Company; Senior Vice President (1997-Present);
Vice President (1995-1997); Assistant Vice
President (1992-1995), Hartford Life Insurance
Company; Vice President, Government Affairs
(1997-Present), Hartford Life, Inc.
Lizabeth H. Zlatkus, 39 Senior Vice President, 1997 Vice President (1994-1997); Assistant Vice
Director, 1994* President (1992-1994), Hartford; Director
(1994-Present); Senior Vice President
(1997-Present); Vice President (1994-1997);
Assistant Vice President (1992-1994), Hartford
Life and Accident Insurance Company; Vice
President, Group Life and Disability
(1997-Present), Hartford Life, Inc.
David M. Znamierowski, 38 Senior Vice President, 1997 Director (1998-Present); Senior Vice President
Director, 1998 (1997-Present), Hartford Life and Accident
Insurance Company; Director (1998-Present);
Senior Vice President (1997-Present); Director,
Risk Management Strategy (1996-Present); Vice
President (1997), Hartford Life Insurance
Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice
President, Investment Strategy & Policy, Aetna
Life and Casualty Company.
</TABLE>
- ------------------------
* Denotes date of election to Board of Directors of Hartford.
** Affiliated Company of The Hartford Financial Services Group, Inc.
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
DISTRIBUTION OF THE POLICIES
--------------------------------------------------------------------
Hartford intends to sell the Policies in all jurisdictions where it is licensed
to do business. The Policies will be sold by life insurance sales
representatives who represent Hartford and who are registered representatives of
Dean Witter Reynolds, Inc. ("Dean Witter"). Any sales representative will have
been qualified to sell variable life insurance Policies under applicable federal
and state laws. Dean Witter is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc.
Hartford Securities Distribution Company, Inc. serves as Principal Underwriter
for the securities issued with respect to the Separate Account. HSD is a
wholly-owned subsidiary of Hartford Life Insurance Company. The principal
business address HSD is the same as that of Hartford.
23 - PROSPECTUS
<PAGE>
The maximum sales commission payable to Hartford agents, independent registered
insurance brokers and other registered broker-dealers is 8.0% of initial and
subsequent premiums. From time to time, Hartford may pay or permit other
promotional incentives, in cash or credit or other compensation. Broker-dealers
or financial institutions are compensated according to a schedule set forth by
HSD and any applicable rules or regulations for variable insurance compensation.
Compensation is generally based on premium payments made by policyholders or
contract owners. This compensation is usually paid from the sales charges
described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.
Hartford may provide information on various topics to Policy Owners and
prospective Policy Owners in advertising, sales literature or other materials.
These topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in
tax-advantaged and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
variable annuities and other investment alternatives, including comparisons
between the Policies and the characteristics of, and market for, such
alternatives.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
--------------------------------------------------------------------
The assets of the Separate Account are held by Hartford. The assets of the
Separate Account are kept physically segregated and held separate and apart from
the General Account of Hartford. Hartford maintains records of all purchases and
redemptions of shares of the Portfolio. Additional protection for the assets of
the Separate Account is afforded by Hartford's blanket fidelity bond issued by
Aetna Casualty and Surety Company, in the aggregate of $50 million, covering all
of the officers and employees of Hartford.
FEDERAL TAX CONSIDERATIONS
--------------------------------------------------------------------
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING TO
THE ACTUAL STATUS OF THE POLICY OWNER INVOLVED, LEGAL AND TAX ADVICE MAY BE
NEEDED BY A PERSON, EMPLOYER OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A
POLICY DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income tax
consequences regarding the purchase of these Policies cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. This discussion of federal tax
considerations is based upon Hartford's understanding of existing Federal income
tax laws as they are currently interpreted.
TAXATION OF HARTFORD
AND THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment income
and realized capital gains on the assets of the Separate Account (the underlying
Funds) are reinvested and are taken into account in determining the value of the
Accumulation Units (see "Policy Benefits and Right -- Account Value," on page
13). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Policy.
Hartford does not expect to incur any federal income tax on the earnings or
realized capital gains attributable to the Separate Account. Based upon this
expectation, no charge is currently being made to the Separate Account for
federal income taxes. If Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for such taxes against the Separate Account.
INCOME TAXATION OF
POLICY BENEFITS
For federal income tax purposes, the Policies should be treated as life
insurance Policies under Section 7702 of the Code. The death benefit under a
life insurance Policy is generally excluded from the gross income of the
beneficiary. Also, a life insurance
24 - PROSPECTUS
<PAGE>
Policy Owner is generally not taxed on increments in the Policy value until the
Policy is partially or completely surrendered. Section 7702 limits the amount of
premiums that may be invested in a Policy that is treated as life insurance.
Hartford intends to monitor premium levels to assure compliance with the Section
7702 requirements.
During the first fifteen Policy Years, an "income first" rule generally applies
to distributions of cash required to be made under Code Section 7702 because of
a reduction in benefits under the Policy.
The Maturity Date Extension Rider allows a Policy Owner to extend the Maturity
Date to the date of the Insured's death. If the Maturity Date of the Policy is
extended by rider, Hartford believes that the Policy will continue to be treated
as a life insurance Policy for federal income tax purposes after the scheduled
Maturity Date. However, due to the lack of specific guidance on this issue, the
result is not certain. If the Policy is not treated as a life insurance Policy
for federal income tax purposes after the scheduled Maturity Date, among other
things, the Death Proceeds may be taxable to the recipient. The Policy Owner
should consult a qualified tax adviser regarding the possible adverse tax
consequences resulting from an extension of the scheduled Maturity Date.
LAST SURVIVOR POLICIES
Although Hartford believes that the last survivor Policies are in compliance
with Section 7702 of the Code, the manner in which Section 7702 should be
applied to certain features of a joint survivorship life insurance Policy is not
directly addressed by Section 7702. In the absence of final regulations or other
guidance issued under Section 7702, there is necessarily some uncertainty
whether a last survivor Policy will meet the Section 7702 definition of a life
insurance Policy.
MODIFIED ENDOWMENT CONTRACTS
A life insurance Policy is treated as a "modified endowment contract" under
Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay" test of Section 7702A. The seven-pay test
provides that premiums cannot be paid at a rate more rapidly than that allowed
by the payment of seven annual premiums using specified computational rules
provided in Section 7702A(c). The large single premium permitted under the
Policy does not meet the specified computational rules for the "seven-pay test"
under Section 7702A(c). Therefore, the Policy will generally be treated as a
modified endowment contract for federal income tax purposes. However, an
exchange under Section 1035 of the Code of a life insurance Policy issued before
June 21, 1988 will not cause the new Policy to be treated as a modified
endowment contract if no additional premiums are paid and there is no change in
the death benefit as the result of the exchange.
A Policy that is classified as modified endowment contract is generally eligible
for the beneficial tax treatment accorded to life insurance. That is, the death
benefit is excluded from income and increments in value are not subject to
current taxation. However, loans, distributions or other amounts received from a
modified endowment contract during the life of the Insured will be taxed to the
extent of any accumulated income in the Policy (generally, the excess of account
value over premiums paid). Amounts that are taxable withdrawals will be subject
to a 10% additional tax, with certain exceptions.
All modified endowment contracts that are issued within any calendar year to the
same Policy Owner by one company or its affiliates shall be treated as one
modified endowment contract in determining the taxable portion of any loan or
distributions.
ESTATE AND GENERATION
SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includible in the
Policy Owner's estate for purposes of federal estate tax if the last surviving
Insured owned the Policy. If the Policy Owner was not the last surviving
Insured, the fair market value of the Policy would be included in the Policy
Owner's estate upon the Policy Owner's death. Nothing would be includible in the
last surviving Insured's estate if he or she neither retained incidents of
ownership at death nor had given up ownership within three years before death.
The federal estate tax is integrated with the federal gift tax under a unified
rate schedule and unified credit which shelters up to $625,000 (1998) from the
estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the credit
over the next eight years to $1,000,000. In addition, an unlimited marital
deduction may be available for federal estate and gift tax purposes. The
unlimited marital deduction permits the deferral of taxes until the death of the
surviving spouse (when the Death Proceeds would be available to pay taxes due
and other expenses incurred).
If the Policy Owner (whether or not he or she is an Insured) transfers ownership
of the Policy to someone two or more generations younger, the transfer may be
subject to the generation-skipping transfer tax, the taxable amount being the
value of the Policy. The generation-skipping transfer tax provisions generally
apply to transfers which would be subject to the gift and estate tax rules.
Individuals are generally allowed an aggregate generation skipping transfer
exemption of $1 million. Because these rules are complex, the Policy Owner
should consult with a qualified tax adviser for specific information if
ownership is passing to younger generations.
DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable life insurance Policy (other
than a pension plan policy) will not be treated as a life insurance Policy for
any period during which the investments made by the separate account or
underlying fund are not adequately diversified in accordance with regulations
prescribed by the Treasury Department. If a Policy is not treated as
25 - PROSPECTUS
<PAGE>
a life insurance Policy, the Policy Owner will be subject to income tax on the
annual increases in cash value.
The Treasury Department has issued diversification regulations which generally
require, among other things, that no more than 55% of the value of the total
assets of the segregated asset account underlying a variable Policy is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards on
the last day of each calendar quarter or within 30 days after the quarter ends.
If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either the company or
the Policy Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the separate accounts
and tests for diversification as required by the Code. Hartford intends to
administer all Policies subject to the diversification requirements in a manner
that will maintain adequate diversification.
OWNERSHIP OF THE ASSETS IN
THE SEPARATE ACCOUNT
In order for a variable life insurance Policy to qualify for tax deferral,
assets in the segregated asset accounts supporting the variable Policy must be
considered to be owned by the insurance company and not by the variable Policy
Owner. The Internal Revenue Service ("IRS") has issued several rulings which
discuss investor control. The IRS has ruled that certain incidents of ownership
by the Policy Owner, such as the ability to select and control investments in a
separate account, will cause the contract owner to be treated as the owner of
the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
Prospectus, no other such guidance has been issued. Further, Hartford does not
know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Policy Owner could be considered the owner of
the assets for tax purposes. Hartford reserves the right to modify the Policies,
as necessary, to prevent Policy Owners from being considered the owners of the
assets in the separate accounts.
LIFE INSURANCE PURCHASED FOR
USE IN SPLIT DOLLAR
ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM") on
the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Policy Owner, such
amounts will be subject to federal income tax withholding and reporting,
pursuant to the Code.
NON-INDIVIDUAL OWNERSHIP
OF POLICIES
In certain circumstances, the Code limits the application of specific tax
advantages to individual owners of life insurance Policies. Prospective Policy
Owners which are not individuals should consult a qualified tax adviser to
determine the potential impact on the purchaser.
OTHER
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Policy proceeds depend on the
circumstances of each Policy Owner or beneficiary. A tax adviser should be
consulted to determine the impact of these taxes.
26 - PROSPECTUS
<PAGE>
LIFE INSURANCE PURCHASES BY
NONRESIDENT ALIENS AND FOREIGN
CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to life insurance purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S. state, and foreign taxation with respect to a life insurance
Policy purchase.
LEGAL PROCEEDINGS
--------------------------------------------------------------------
There are no material legal proceedings pending to which the Separate Account is
a party.
LEGAL MATTERS
--------------------------------------------------------------------
Legal matters in connection with the issue and sale of modified single premium
variable life insurance Policies described in this Prospectus and the
organization of Hartford, its authority to issue the Policies under Connecticut
law and the validity of the forms of the Policies under Connecticut law and
legal matters relating to the federal securities and income tax laws have been
passed on by Lynda Godkin, Senior Vice President, General Counsel and Corporate
Secretary of Hartford.
EXPERTS
--------------------------------------------------------------------
The audited financial statements included in this prospectus and elsewhere in
the registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports. Reference is made to the report on the statutory-basis financial
statements of Hartford Life and Annuity Insurance Company (formerly ITT Hartford
Life and Annuity Insurance Company) which states the statutory-basis financial
statements are presented in accordance with statutory accounting practices
prescribed or permitted by the National Association of Insurance Commissioners
and the State of Connecticut Insurance Department, and are not presented in
accordance with generally accepted accounting principles. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.
The hypothetical Policy illustrations included in this Prospectus and the
registration statement with respect to the Separate Account have been approved
by Michael Winterfield, FSA, MAAA, Assistant Vice President and Director,
Individual Annuity Product Management, for Hartford, and are included in
reliance upon his opinion as to their reasonableness.
REGISTRATION STATEMENT
--------------------------------------------------------------------
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended. This Prospectus does not
contain all information set forth in the registration statement, its amendments
and exhibits, to all of which reference is made for further information
concerning the Separate Account, the Portfolios, Hartford and the Policies.
27 - PROSPECTUS
<PAGE>
APPENDIX A
--------------------------------------------------------------------
ILLUSTRATIONS OF BENEFITS
The tables in Appendix A illustrate the way in which a Contract operates. They
show how the death benefit and surrender value could vary over an extended
period of time assuming hypothetical gross rates of return equal to constant
after tax annual rates of 0%, 6% and 12%. The tables are based on an initial
premium of $10,000. A male age 45, a female age 55 and a male age 65 with Face
Amounts of $40,161, $33,334 and $19,380, respectively, are illustrated for the
single life Contract. The illustrations for the last survivor Contract assume
male and female of equal ages, including age 55 and 65 for Face Amounts of
$44,053 and $27,778.
The death benefit and surrender value for a Contract would be different from
those shown if the rates of return averaged 0%, 6% and 12% over a period of
years, but also fluctuated above or below those averages for individual Contract
Years. They would also differ if any contract loan were made during the period
of time illustrated.
The tables reflect the deductions of current Contract charges and guaranteed
Contract charges for a single gross interest rate. The death benefits and
surrender values would change if the current cost of insurance charges change.
The amounts shown for the death benefit and surrender value as of the end of
each Contract Year take into account an average daily charge equal to an annual
charge of 0.75% of the average daily net assets of the Portfolios for investment
advisory and administrative services fees. The gross annual investment return
rates of 0%, 6% and 12% on the Portfolio's assets are equal to net annual
investment return rates (net of the 0.75% average daily charge) of -0.75%, 5.25%
and 11.25%, respectively.
In addition the death benefit and surrender value as of the end of each Contract
Year take into account the (1) tax expense charge equal to an annual rate of
0.40% of Account Value for the first ten Contract Years; (2) administrative
charge equal to an annual rate of 0.40% of Account Value attributable to the
Separate Account; (3) mortality and expense risk charge equal to an annual rate
of 0.90% of Account Value attributable to the Separate Account; and (4) any
Contingent Deferred Sales Charge and Premium Tax Charge which may be applicable
in the first nine Contract Years.
The hypothetical returns shown in the tables are without any tax charges that
may be attributable to the Separate Account in the future. In order to produce
after tax returns of 0%, 6%, and 12%, the Separate Account would have to earn a
sufficient amount in excess of 0% or 6% or 12% to cover any tax charges (see
"Deductions and Charges -- Taxes Charged Against the Separate Account," page
12).
The 'Premium Paid Plus Interest' column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes of 5% per year, compounded annually.
Hartford will furnish upon request, a comparable illustration reflecting the
proposed insureds age, risk classification, Face Amount or initial premium
requested, and reflecting guaranteed cost of insurance rates. Hartford will also
furnish an additional similar illustration reflecting current cost of insurance
rates which may be less than, but never greater than, the guaranteed cost of
insurance rates.
28 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 40,161 10,756 9,764 40,161
2 11,025 11,740 10,755 40,161 11,575 10,593 40,161
3 11,576 12,724 11,751 40,161 12,463 11,495 40,161
4 12,155 13,794 12,987 40,161 13,427 12,626 40,161
5 12,763 14,956 14,169 40,161 14,474 13,693 40,161
6 13,401 16,219 15,657 40,161 15,613 15,057 40,161
7 14,071 17,592 17,060 40,161 16,851 16,324 40,161
8 14,775 19,083 18,788 40,161 18,198 17,907 40,161
9 15,513 20,704 20,452 40,161 19,666 19,417 40,161
10 16,289 22,465 22,465 40,161 21,268 21,268 40,161
11 17,103 24,501 24,501 40,161 23,113 23,113 40,161
12 17,959 26,724 26,724 40,161 25,145 25,145 40,161
13 18,856 29,153 29,153 41,398 27,386 27,386 40,161
14 19,799 31,808 31,808 43,896 29,864 29,864 41,213
15 20,789 34,714 34,714 46,517 32,590 32,590 43,670
16 21,829 37,895 37,895 49,264 35,574 35,574 46,247
17 22,920 41,367 41,367 52,951 38,832 38,832 49,705
18 24,066 45,156 45,156 56,897 42,386 42,386 53,407
19 25,270 49,292 49,292 61,122 46,266 46,266 57,371
20 26,533 53,807 53,807 65,645 50,502 50,502 61,613
25 33,864 83,601 83,601 96,978 78,372 78,372 90,912
35 55,160 201,997 201,997 214,118 180,092 189,092 200,438
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
29 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 40,161 10,171 9,192 40,161
2 11,025 10,506 9,546 40,161 10,337 9,380 40,161
3 11,576 10,769 9,831 40,161 10,497 9,564 40,161
4 12,155 11,040 10,275 40,161 10,651 9,891 40,161
5 12,763 11,319 10,577 40,161 10,796 10,061 40,161
6 13,401 11,605 11,089 40,161 10,930 10,421 40,161
7 14,071 11,900 11,411 40,161 11,052 10,569 40,161
8 14,775 12,202 11,941 40,161 11,158 10,902 40,161
9 15,513 12,514 12,282 40,161 11,244 11,016 40,161
10 16,289 12,833 12,833 40,161 11,309 11,309 40,161
11 17,103 13,228 13,228 40,161 11,394 11,394 40,161
12 17,959 13,636 13,636 40,161 11,455 11,455 40,161
13 18,856 14,058 14,058 40,161 11,486 11,486 40,161
14 19,799 14,494 14,494 40,161 11,486 11,486 40,161
15 20,789 14,944 14,944 40,161 11,450 11,450 40,161
16 21,829 15,409 15,409 40,161 11,370 11,370 40,161
17 22,920 15,889 15,889 40,161 11,239 11,239 40,161
18 24,066 16,385 16,385 40,161 11,048 11,048 40,161
19 25,270 16,898 16,898 40,161 10,787 10,787 40,161
20 26,533 17,428 17,428 40,161 10,442 10,442 40,161
25 33,864 20,353 20,353 40,161 6,987 6,987 40,161
35 55,160 27,852 27,852 40,161 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
30 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 40,161 9,586 8,649 40,161
2 11,025 9,340 8,404 40,161 9,169 8,291 40,161
3 11,576 9,026 8,118 40,161 8,747 7,925 40,161
4 12,155 8,721 7,990 40,161 8,319 7,699 40,161
5 12,763 8,425 7,720 40,161 7,883 7,312 40,161
6 13,401 8,138 7,657 40,161 7,438 7,113 40,161
7 14,071 7,860 7,401 40,161 6,980 6,696 40,161
8 14,775 7,591 7,353 40,161 6,506 6,461 40,161
9 15,513 7,330 7,111 40,161 6,013 6,002 40,161
10 16,289 7,076 7,076 40,161 5,498 5,717 40,161
11 17,103 6,865 6,865 40,161 4,978 5,211 40,161
12 17,959 6,659 6,659 40,161 4,427 4,673 40,161
13 18,856 6,459 6,459 40,161 3,843 4,100 40,161
14 19,799 6,264 6,264 40,161 3,221 3,488 40,161
15 20,789 6,073 6,073 40,161 2,558 2,833 40,161
16 21,829 5,888 5,888 40,161 1,845 2,127 40,161
17 22,920 5,707 5,707 40,161 1,075 1,361 40,161
18 24,066 5,531 5,531 40,161 237 526 40,161
19 25,270 5,360 5,360 40,161 -- -- --
20 26,533 5,193 5,193 40,161 -- -- --
25 33,864 4,420 4,420 40,161 -- -- --
35 55,160 3,145 3,145 40,161 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
31 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 33,334 10,727 9,736 33,334
2 11,025 11,740 10,755 33,334 11,517 10,537 33,334
3 11,576 12,724 11,751 33,334 12,378 11,411 33,334
4 12,155 13,794 12,987 33,334 13,317 12,517 33,334
5 12,763 14,956 14,169 33,334 14,343 13,564 33,334
6 13,401 16,219 15,657 33,334 15,464 14,909 33,334
7 14,071 17,592 17,060 33,334 16,688 16,163 33,334
8 14,775 19,083 18,788 33,334 18,025 17,735 33,334
9 15,513 20,704 20,452 33,334 19,487 19,238 33,334
10 16,289 22,465 22,465 33,334 21,088 21,088 33,334
11 17,103 24,501 24,501 33,334 22,940 22,940 33,334
12 17,959 26,736 26,736 33,334 24,991 24,991 33,334
13 18,856 29,218 29,218 34,478 27,270 27,270 33,334
14 19,799 31,946 31,946 37,377 29,804 29,804 34,891
15 20,789 34,928 34,928 40,517 32,585 32,585 37,799
16 21,829 38,190 38,190 43,919 35,625 35,625 40,969
17 22,920 41,765 41,765 47,195 38,958 38,958 44,023
18 24,066 45,686 45,686 50,712 42,614 42,614 47,301
19 25,270 49,992 49,992 54,492 46,627 46,627 50,824
20 26,533 54,687 54,687 59,609 51,004 51,004 55,594
25 33,864 85,841 85,841 90,992 80,060 80,060 84,864
35 55,160 208,273 208,273 218,687 192,260 192,260 201,873
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
32 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 33,334 10,142 9,164 33,334
2 11,025 10,506 9,546 33,334 10,279 9,324 33,334
3 11,576 10,769 9,831 33,334 10,412 9,480 33,334
4 12,155 11,040 10,275 33,334 10,539 9,781 33,334
5 12,763 11,319 10,577 33,334 10,661 9,928 33,334
6 13,401 11,605 11,089 33,334 10,774 10,266 33,334
7 14,071 11,900 11,411 33,334 10,875 10,394 33,334
8 14,775 12,202 11,941 33,334 10,959 10,704 33,334
9 15,513 12,514 12,282 33,334 11,021 10,793 33,334
10 16,289 12,833 12,833 33,334 11,055 11,055 33,334
11 17,103 13,228 13,228 33,334 11,106 11,106 33,334
12 17,959 13,636 13,636 33,334 11,127 11,127 33,334
13 18,856 14,058 14,058 33,334 11,117 11,117 33,334
14 19,799 14,494 14,494 33,334 11,073 11,073 33,334
15 20,789 14,944 14,944 33,334 10,988 10,988 33,334
16 21,829 15,409 15,409 33,334 10,854 10,854 33,334
17 22,920 15,889 15,889 33,334 10,656 10,656 33,334
18 24,066 16,385 16,385 33,334 10,375 10,375 33,334
19 25,270 16,898 16,898 33,334 9,991 9,991 33,334
20 26,533 17,428 17,428 33,334 9,479 9,479 33,334
25 33,864 20,353 20,353 33,334 3,955 3,955 33,334
35 55,160 27,852 27,852 33,334 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
33 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75 NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 33,334 9,558 8,593 33,334
2 11,025 9,340 8,404 33,334 9,112 8,179 33,334
3 11,576 9,026 8,118 33,334 8,662 7,761 33,334
4 12,155 8,721 7,990 33,334 8,209 7,486 33,334
5 12,763 8,425 7,720 33,334 7,750 7,053 33,334
6 13,401 8,138 7,657 33,334 7,283 6,810 33,334
7 14,071 7,860 7,401 33,334 6,803 6,352 33,334
8 14,775 7,591 7,353 33,334 6,305 6,073 33,334
9 15,513 7,330 7,111 33,334 5,782 5,568 33,334
10 16,289 7,076 7,076 33,334 5,230 5,230 33,334
11 17,103 6,865 6,865 33,334 4,665 4,665 33,334
12 17,959 6,659 6,659 33,334 4,061 4,061 33,334
13 18,856 6,459 6,459 33,334 3,419 3,419 33,334
14 19,799 6,264 6,264 33,334 2,733 2,733 33,334
15 20,789 6,073 6,073 33,334 1,997 1,997 33,334
16 21,829 5,888 5,888 33,334 1,200 1,200 33,334
17 22,920 5,707 5,707 33,334 324 324 33,334
18 24,066 5,531 5,531 33,334 -- -- --
19 25,270 5,360 5,360 33,334 -- -- --
20 26,533 5,193 5,193 33,334 -- -- --
25 33,864 4,420 4,420 33,334 -- -- --
35 55,160 3,145 3,145 33,334 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
34 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 19,380 10,650 9,660 19,380
2 11,025 11,740 10,755 19,380 11,357 10,380 19,380
3 11,576 12,724 11,751 19,380 12,131 11,169 19,380
4 12,155 13,794 12,987 19,380 12,984 12,190 19,380
5 12,763 14,956 14,169 19,380 13,930 13,156 19,380
6 13,401 16,219 15,657 19,380 14,986 14,436 19,380
7 14,071 17,595 17,063 19,883 16,172 15,650 19,380
8 14,775 19,106 18,810 21,208 17,516 17,228 19,443
9 15,513 20,760 20,508 22,629 19,027 18,780 20,740
10 16,289 22,549 22,549 24,578 20,664 20,664 22,524
11 17,103 24,595 24,595 26,563 22,536 22,536 24,340
12 17,959 26,837 26,837 28,716 24,587 24,587 26,309
13 18,856 29,275 29,275 31,325 26,816 26,816 28,693
14 19,799 31,947 31,947 33,864 29,260 29,260 31,016
15 20,789 34,856 34,856 36,948 31,916 31,916 33,831
16 21,829 38,046 38,046 39,949 34,834 34,834 36,576
17 22,920 41,517 41,517 43,594 38,005 38,005 39,906
18 24,066 45,308 45,308 47,574 41,447 41,447 43,520
19 25,270 49,448 49,448 51,921 45,177 45,177 47,436
20 26,533 53,969 53,969 56,667 49,215 49,215 51,677
25 33,864 83,837 83,837 88,030 74,965 74,965 78,714
35 55,160 202,335 202,335 204,358 175,528 175,528 177,284
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
35 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 19,380 10,062 9,086 19,380
2 11,025 10,506 9,546 19,380 10,104 9,152 19,380
3 11,576 10,769 9,831 19,380 10,123 9,196 19,380
4 12,155 11,040 10,275 19,380 10,116 9,364 19,380
5 12,763 11,319 10,577 19,380 10,077 9,351 19,380
6 13,401 11,605 11,089 19,380 10,002 9,502 19,380
7 14,071 11,900 11,411 19,380 9,880 9,406 19,380
8 14,775 12,202 11,941 19,380 9,703 9,454 19,380
9 15,513 12,514 12,282 19,380 9,455 9,232 19,380
10 16,289 12,833 12,833 19,380 9,124 9,124 19,380
11 17,103 13,228 13,228 19,380 8,730 8,730 19,380
12 17,959 13,636 13,636 19,380 8,217 8,217 19,380
13 18,856 14,058 14,058 19,380 7,564 7,564 19,380
14 19,799 14,494 14,494 19,380 6,738 6,738 19,380
15 20,789 14,944 14,944 19,380 5,699 5,699 19,380
16 21,829 15,409 15,409 19,380 4,387 4,387 19,380
17 22,920 15,889 15,889 19,380 2,723 2,723 19,380
18 24,066 16,385 16,385 19,380 595 595 19,380
19 25,270 16,898 16,898 19,380 -- -- --
20 26,533 17,428 17,428 19,380 -- -- --
25 33,864 20,353 20,353 21,371 -- -- --
35 55,160 27,854 27,854 28,133 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
36 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 19,380 9,475 8,512 19,380
2 11,025 9,340 8,404 19,380 8,923 7,994 19,380
3 11,576 9,026 8,118 19,380 8,340 7,444 19,380
4 12,155 8,721 7,990 19,380 7,720 7,004 19,380
5 12,763 8,425 7,720 19,380 7,056 6,368 19,380
6 13,401 8,138 7,657 19,380 6,338 5,875 19,380
7 14,071 7,869 7,401 19,380 5,553 5,111 19,380
8 14,775 7,591 7,353 19,380 4,684 4,461 19,380
9 15,513 7,330 7,111 19,380 3,712 3,503 19,380
10 16,289 7,076 7,076 19,380 2,616 2,616 19,380
11 17,103 6,865 6,865 19,380 1,379 1,379 19,380
12 17,959 6,659 6,659 19,380 -- -- --
13 18,856 6,459 6,459 19,380 -- -- --
14 19,799 6,264 6,264 19,380 -- -- --
15 20,789 6,073 6,073 19,380 -- -- --
16 21,829 5,888 5,888 19,380 -- -- --
17 22,920 5,707 5,707 19,380 -- -- --
18 24,066 5,531 5,531 19,380 -- -- --
19 25,270 5,360 5,360 19,380 -- -- --
20 26,533 5,193 5,193 19,380 -- -- --
25 33,864 4,420 4,420 19,380 -- -- --
35 55,160 3,145 3,145 19,380 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
37 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE\55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,902 9,906 44,053 10,902 9,906 44,053
2 11,025 11,882 10,894 44,053 11,882 10,894 44,053
3 11,576 12,946 11,970 44,053 12,946 11,970 44,053
4 12,155 14,103 13,292 44,053 14,103 13,292 44,053
5 12,763 15,360 14,568 44,053 15,360 14,568 44,053
6 13,401 16,726 16,159 44,053 16,726 16,159 44,053
7 14,071 18,210 17,674 44,053 18,210 17,674 44,053
8 14,775 19,825 19,526 44,053 19,822 19,523 44,053
9 15,513 21,585 21,331 44,053 21,574 21,320 44,053
10 16,289 23,505 23,505 44,053 23,477 23,477 44,053
11 17,103 25,727 25,727 44,053 25,652 25,652 44,053
12 17,959 28,162 28,162 44,053 28,031 28,031 44,053
13 18,856 30,830 30,830 44,053 30,640 30,640 44,053
14 19,799 33,755 33,755 44,053 33,507 33,507 44,053
15 20,789 36,960 36,960 44,053 36,667 36,667 44,053
16 21,829 40,479 40,479 46,551 40,154 40,154 46,177
17 22,920 44,337 44,337 50,102 43,981 43,981 49,699
18 24,066 48,565 48,565 53,908 48,175 48,175 53,475
19 25,270 53,202 53,202 57,991 52,774 52,774 57,524
20 26,533 58,305 58,305 63,553 57,828 57,828 63,033
25 33,864 92,176 92,176 97,707 91,132 91,132 96,600
35 55,160 230,373 230,373 241,893 219,404 219,404 230,374
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
38 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE\ 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,314 9,332 44,053 10,314 9,332 44,053
2 11,025 10,632 9,669 44,053 10,632 9,669 44,053
3 11,576 10,954 10,012 44,053 10,954 10,012 44,053
4 12,155 11,279 10,509 44,053 11,279 10,509 44,053
5 12,763 11,605 10,860 44,053 11,605 10,860 44,053
6 13,401 11,941 11,422 44,053 11,931 11,412 44,053
7 14,071 12,288 11,796 44,053 12,255 11,763 44,053
8 14,775 12,646 12,383 44,053 12,574 12,311 44,053
9 15,513 13,015 12,782 44,053 12,885 12,652 44,053
10 16,289 13,396 13,396 44,053 13,182 13,182 44,053
11 17,103 13,858 13,858 44,053 13,517 13,517 44,053
12 17,959 14,337 14,337 44,053 13,834 13,834 44,053
13 18,856 14,834 14,834 44,053 14,127 14,127 44,053
14 19,799 15,349 15,349 44,053 14,393 14,393 44,053
15 20,789 15,883 15,883 44,053 14,624 14,624 44,053
16 21,829 16,436 16,436 44,053 14,809 14,809 44,053
17 22,920 17,010 17,010 44,053 14,938 14,938 44,053
18 24,066 17,606 17,606 44,053 14,991 14,991 44,053
19 25,270 18,223 18,223 44,053 14,949 14,949 44,053
20 26,533 18,863 18,863 44,053 14,787 14,787 44,053
25 33,864 22,433 22,433 44,053 11,078 11,078 44,053
35 55,160 31,836 31,836 44,053 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
39 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE\ 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,726 8,757 44,053 9,726 8,757 44,053
2 11,025 9,452 8,512 44,053 9,451 8,512 44,053
3 11,576 9,177 8,266 44,053 9,177 8,266 44,053
4 12,155 8,899 8,166 44,053 8,899 8,166 44,053
5 12,763 8,628 7,920 44,053 8,618 7,910 44,053
6 13,401 8,365 7,881 44,053 8,331 7,848 44,053
7 14,071 8,108 7,647 44,053 8,035 7,575 44,053
8 14,775 7,859 7,619 44,053 7,727 7,489 44,053
9 15,513 7,616 7,397 44,053 7,403 7,185 44,053
10 16,289 7,380 7,380 44,053 7,058 7,058 44,053
11 17,103 7,186 7,186 44,053 6,713 6,713 44,053
12 17,959 6,996 6,996 44,053 6,334 6,334 44,053
13 18,856 6,811 6,811 44,053 5,916 5,916 44,053
14 19,799 6,630 6,630 44,053 5,451 5,451 44,053
15 20,789 6,453 6,453 44,053 4,932 4,932 44,053
16 21,829 6,280 6,280 44,053 4,345 4,345 44,053
17 22,920 6,110 6,110 44,053 3,673 3,673 44,053
18 24,066 5,945 5,945 44,053 2,896 2,896 44,053
19 25,270 5,783 5,783 44,053 1,985 1,985 44,053
20 26,533 5,625 5,625 44,053 910 910 44,053
25 33,864 4,885 4,885 44,053 0 0 0
35 55,160 3,633 3,633 44,053 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
40 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE\ 65 FEMALE
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,897 9,902 27,778 10,897 9,902 27,778
2 11,025 11,862 10,875 27,778 11,862 10,875 27,778
3 11,576 12,903 11,927 27,778 12,902 11,926 27,778
4 12,155 14,037 13,227 27,778 14,021 13,211 27,778
5 12,763 15,274 14,483 27,778 15,229 14,439 27,778
6 13,401 16,623 16,057 27,778 16,535 15,969 27,778
7 14,071 18,094 17,558 27,778 17,948 17,413 27,778
8 14,775 19,698 19,399 27,778 19,482 19,185 27,778
9 15,513 21,447 21,193 27,778 21,155 20,902 27,778
10 16,289 23,354 23,354 27,778 22,988 22,988 27,778
11 17,103 25,561 25,561 27,778 25,115 25,115 27,778
12 17,959 27,981 27,981 29,940 27,485 27,485 29,409
13 18,856 30,632 30,632 32,776 30,076 30,076 32,182
14 19,799 33,537 33,537 35,550 32,914 32,914 34,889
15 20,789 36,721 36,721 38,925 36,007 36,007 38,168
16 21,829 40,211 40,211 42,222 39,396 39,396 41,367
17 22,920 44,035 44,035 46,238 43,088 43,088 45,243
18 24,066 48,227 48,227 50,639 47,104 47,104 49,460
19 25,270 52,820 52,820 55,462 51,466 51,466 54,040
20 26,533 57,887 57,887 60,782 56,231 56,231 59,043
25 33,864 91,514 91,514 96,090 86,546 86,546 90,874
35 55,160 228,720 228,720 231,007 203,577 203,577 205,613
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
41 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE\ 65 FEMALE
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,309 9,327 27,778 10,309 9,327 27,778
2 11,025 10,612 9,650 27,778 10,612 9,650 27,778
3 11,576 10,917 9,976 27,778 10,907 9,967 27,778
4 12,155 11,232 10,463 27,778 11,191 10,423 27,778
5 12,763 11,556 10,812 27,778 11,460 10,717 27,778
6 13,401 11,891 11,372 27,778 11,710 11,193 27,778
7 14,071 12,236 11,744 27,778 11,935 11,445 27,778
8 14,775 12,592 12,329 27,778 12,126 11,866 27,778
9 15,513 12,960 12,727 27,778 12,275 12,045 27,778
10 16,289 13,339 13,339 27,778 12,370 12,370 27,778
11 17,103 13,799 13,799 27,778 12,451 12,451 27,778
12 17,959 14,276 14,276 27,778 12,455 12,455 27,778
13 18,856 14,770 14,770 27,778 12,368 12,368 27,778
14 19,799 15,283 15,283 27,778 12,172 12,172 27,778
15 20,789 15,815 15,815 27,778 11,843 11,843 27,778
16 21,829 16,366 16,366 27,778 11,347 11,347 27,778
17 22,920 16,937 16,937 27,778 10,641 10,641 27,778
18 24,066 17,530 17,530 27,778 9,661 9,661 27,778
19 25,270 18,144 18,144 27,778 8,326 8,326 27,778
20 26,533 18,781 18,781 27,778 6,527 6,527 27,778
25 33,864 22,335 22,335 27,778 0 0 0
35 55,160 31,696 31,696 32,014 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
42 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE\ 65 FEMALE
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,721 8,752 27,778 9,721 8,752 27,778
2 11,025 9,432 8,493 27,778 9,432 8,493 27,778
3 11,576 9,147 8,236 27,778 9,129 8,220 27,778
4 12,155 8,869 8,136 27,778 8,809 8,077 27,778
5 12,763 8,599 7,891 27,778 8,466 7,760 27,778
6 13,401 8,336 7,852 27,778 8,095 7,614 27,778
7 14,071 8,080 7,619 27,778 7,687 7,230 27,778
8 14,775 7,831 7,592 27,778 7,232 6,996 27,778
9 15,513 7,589 7,370 27,778 6,716 6,499 27,778
10 16,289 7,354 7,354 27,778 6,122 6,122 27,778
11 17,103 7,161 7,161 27,778 5,457 5,457 27,778
12 17,959 6,972 6,972 27,778 4,673 4,673 27,778
13 18,856 6,787 6,787 27,778 3,747 3,747 27,778
14 19,799 6,606 6,606 27,778 2,652 2,652 27,778
15 20,789 6,430 6,430 27,778 1,349 1,349 27,778
16 21,829 6,257 6,257 27,778 0 0 0
17 22,920 6,088 6,088 27,778 0 0 0
18 24,066 5,923 5,923 27,778 0 0 0
19 25,270 5,762 5,762 27,778 0 0 0
20 26,533 5,604 5,604 27,778 0 0 0
25 33,864 4,866 4,866 27,778 0 0 0
35 55,160 3,619 3,619 27,778 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
43 - PROSPECTUS
<PAGE>
SEPARATE ACCOUNT FIVE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT FIVE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of the
Money Market Portfolio Sub-Account, North American Government Securities
Portfolio Sub-Account, Balanced Portfolio Sub-Account, Utilities Portfolio
Sub-Account, Dividend Growth Portfolio Sub-Account, Value-Added Market Portfolio
Sub-Account, Core-Equity Portfolio Sub-Account, American Value Portfolio
Sub-Account, Global Equity Value Portfolio Sub-Account, Developing Growth
Portfolio Sub-Account, Emerging Markets Portfolio Sub-Account, Diversified
Income Portfolio Sub-Account and Mid-Cap Growth Portfolio Sub-Account
(constituting ITT Hartford Life and Annuity Insurance Company Separate Account
Five) (the Account) as of December 31, 1997, and the related statement of
operations and statement of changes in net assets for the period from inception,
May 20, 1997, to December 31, 1997. These financial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Money Market Portfolio
Sub-Account, North American Government Securities Portfolio Sub-Account,
Balanced Portfolio Sub-Account, Utilities Portfolio Sub-Account, Dividend Growth
Portfolio Sub-Account, Value-Added Market Portfolio Sub-Account, Core-Equity
Portfolio Sub-Account, American Value Portfolio Sub-Account, Global Equity Value
Portfolio Sub-Account, Developing Growth Portfolio Sub-Account, Emerging Markets
Portfolio Sub-Account, Diversified Income Portfolio Sub-Account and Mid-Cap
Growth Portfolio Sub-Account (constituting ITT Hartford Life and Annuity
Insurance Company Separate Account Five) as of December 31, 1997, the results of
its operations and the changes in its net assets for the period from inception,
May 20, 1997, to December 31, 1997, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 16, 1998
<PAGE>
SEPARATE ACCOUNT FIVE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT DIVIDEND
MONEY MARKET SECURITIES BALANCED UTILITIES AND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean Witter Select Dimensions
Investment Series:
Money Market Portfolio
Shares 796,437
Cost $ 796,437
Market Value............................. $ 796,437 -- -- -- --
North American Government Securities
Portfolio
Shares 102
Cost $ 1,030
Market Value............................. -- $ 1,042 -- -- --
Balanced Portfolio
Shares 11,020
Cost $ 163,054
Market Value............................. -- -- $ 165,626 -- --
Utilities Portfolio
Shares 422
Cost $ 6,260
Market Value............................. -- -- -- $ 6,687 --
Dividend and Growth Portfolio
Shares 80,887
Cost $1,566,131
Market Value............................. -- -- -- -- $1,582,969
Value-Added Market Portfolio
Shares 7,479
Cost $ 128,573
Market Value............................. -- -- -- -- --
Core-Equity Portfolio
Shares 7,299
Cost $ 119,430
Market Value............................. -- -- -- -- --
American Value Portfolio
Shares 34,623
Cost $ 666,591
Market Value............................. -- -- -- -- --
Global Equity Value Portfolio
Shares 39,257
Cost $ 505,232
Market Value............................. -- -- -- -- --
Developing Growth Portfolio
Shares 10,906
Cost $ 206,994
Market Value............................. -- -- -- -- --
Emerging Market Portfolio
Shares 3,273
Cost $ 37,927
Market Value............................. -- -- -- -- --
Diversified Income Portfolio
Shares 44,216
Cost $ 455,007
Market Value............................. -- -- -- -- --
Mid-Cap Growth Portfolio
Shares 11,757
Cost $ 129,561
Market Value............................. -- -- -- -- --
Due from ITT Hartford Life and Annuity
Insurance Company......................... -- -- 1 -- 1
Receivable from fund shares sold........... -- -- -- -- --
------------- ----------- ----------- ----------- -----------
Total Assets............................... 796,437 1,042 165,627 6,687 1,582,970
------------- ----------- ----------- ----------- -----------
LIABILITIES
Due to ITT Hartford Life and Annuity
Insurance Company......................... -- -- -- -- --
Payable for fund shares purchased.......... -- -- -- -- --
------------- ----------- ----------- ----------- -----------
Total Liabilities.......................... -- -- -- -- --
------------- ----------- ----------- ----------- -----------
Net Assets (variable life contract
liabilities).............................. $ 796,437 $ 1,042 $ 165,627 $ 6,687 $1,582,970
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
Group Sub-Accounts:
Units Owned by Contractholders............. 771,485 100 14,784 543 141,825
Unit Values................................ $ 1.032342 $10.420600 $11.202964 $12.314200 $11.161390
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
GLOBAL
VALUE-ADDED AMERICAN EQUITY DEVELOPING
MARKET CORE-EQUITY VALUE VALUE GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean Witter Select Dimensions
Investment Series:
Money Market Portfolio
Shares 796,437
Cost $ 796,437
Market Value............................. -- -- -- -- --
North American Government Securities
Portfolio
Shares 102
Cost $ 1,030
Market Value............................. -- -- -- -- --
Balanced Portfolio
Shares 11,020
Cost $ 163,054
Market Value............................. -- -- -- -- --
Utilities Portfolio
Shares 422
Cost $ 6,260
Market Value............................. -- -- -- -- --
Dividend and Growth Portfolio
Shares 80,887
Cost $1,566,131
Market Value............................. -- -- -- -- --
Value-Added Market Portfolio
Shares 7,479
Cost $ 128,573
Market Value............................. $ 131,338 -- -- -- --
Core-Equity Portfolio
Shares 7,299
Cost $ 119,430
Market Value............................. -- $ 120,870 -- -- --
American Value Portfolio
Shares 34,623
Cost $ 666,591
Market Value............................. -- -- $ 681,732 -- --
Global Equity Value Portfolio
Shares 39,257
Cost $ 505,232
Market Value............................. -- -- -- $ 509,165 --
Developing Growth Portfolio
Shares 10,906
Cost $ 206,994
Market Value............................. -- -- -- -- 208,967
Emerging Market Portfolio
Shares 3,273
Cost $ 37,927
Market Value............................. -- -- -- -- --
Diversified Income Portfolio
Shares 44,216
Cost $ 455,007
Market Value............................. -- -- -- -- --
Mid-Cap Growth Portfolio
Shares 11,757
Cost $ 129,561
Market Value............................. -- -- -- -- --
Due from ITT Hartford Life and Annuity
Insurance Company......................... -- -- -- -- --
Receivable from fund shares sold........... -- -- -- -- --
----------- ----------- ------------ ----------- -------------
Total Assets............................... 131,338 120,870 681,732 509,165 208,967
----------- ----------- ------------ ----------- -------------
LIABILITIES
Due to ITT Hartford Life and Annuity
Insurance Company......................... 1 -- 1 4 1
Payable for fund shares purchased.......... -- -- -- -- --
----------- ----------- ------------ ----------- -------------
Total Liabilities.......................... 1 -- 1 4 1
----------- ----------- ------------ ----------- -------------
Net Assets (variable life contract
liabilities).............................. $ 131,337 $ 120,870 $ 681,731 $ 509,161 $ 208,966
----------- ----------- ------------ ----------- -------------
----------- ----------- ------------ ----------- -------------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
Group Sub-Accounts:
Units Owned by Contractholders............. 11,342 10,527 53,983 50,897 17,358
Unit Values................................ $11.579600 $11.482200 $ 12.628705 $10.003694 $12.038601
<CAPTION>
EMERGING DIVERSIFIED MID-CAP
MARKETS INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments in Dean Witter Select Dimensions
Investment Series:
Money Market Portfolio
Shares 796,437
Cost $ 796,437
Market Value............................. -- -- --
North American Government Securities
Portfolio
Shares 102
Cost $ 1,030
Market Value............................. -- -- --
Balanced Portfolio
Shares 11,020
Cost $ 163,054
Market Value............................. -- -- --
Utilities Portfolio
Shares 422
Cost $ 6,260
Market Value............................. -- -- --
Dividend and Growth Portfolio
Shares 80,887
Cost $1,566,131
Market Value............................. -- -- --
Value-Added Market Portfolio
Shares 7,479
Cost $ 128,573
Market Value............................. -- -- --
Core-Equity Portfolio
Shares 7,299
Cost $ 119,430
Market Value............................. -- -- --
American Value Portfolio
Shares 34,623
Cost $ 666,591
Market Value............................. -- -- --
Global Equity Value Portfolio
Shares 39,257
Cost $ 505,232
Market Value............................. -- -- --
Developing Growth Portfolio
Shares 10,906
Cost $ 206,994
Market Value............................. -- -- --
Emerging Market Portfolio
Shares 3,273
Cost $ 37,927
Market Value............................. $ 37,013 -- --
Diversified Income Portfolio
Shares 44,216
Cost $ 455,007
Market Value............................. -- $ 454,987 --
Mid-Cap Growth Portfolio
Shares 11,757
Cost $ 129,561
Market Value............................. -- -- $ 134,031
Due from ITT Hartford Life and Annuity
Insurance Company......................... -- -- --
Receivable from fund shares sold........... -- -- --
------------- ----------- -----------
Total Assets............................... 37,013 454,987 134,031
------------- ----------- -----------
LIABILITIES
Due to ITT Hartford Life and Annuity
Insurance Company......................... -- -- --
Payable for fund shares purchased.......... -- -- --
------------- ----------- -----------
Total Liabilities.......................... -- -- --
------------- ----------- -----------
Net Assets (variable life contract
liabilities).............................. $ 37,013 $ 454,987 $ 134,031
------------- ----------- -----------
------------- ----------- -----------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
Group Sub-Accounts:
Units Owned by Contractholders............. 3,988 42,778 11,317
Unit Values................................ $ 9.281000 $10.635925 $11.843234
</TABLE>
<PAGE>
SEPARATE ACCOUNT FIVE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION MAY 20, 1997, TO DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT DIVIDEND
MONEY MARKET SECURITIES BALANCED UTILITIES AND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investment income:
Dividends.................................. $ 12,586 $30 $ 238 $ 21 $ 3,650
------------- --- ----------- ----- -----------
Net investment income...................... 12,586 30 238 21 3,650
------------- --- ----------- ----- -----------
Capital gains income......................... -- -- 3 4 37
------------- --- ----------- ----- -----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) on security
transactions.............................. -- -- 2 -- 4
Net unrealized appreciation (depreciation)
of investments during the period.......... -- 12 2,572 427 16,838
------------- --- ----------- ----- -----------
Net realized and unrealized gain (loss)
on investments.......................... -- 12 2,574 427 16,842
------------- --- ----------- ----- -----------
Net increase (decrease) in net assets
resulting from operations............... $ 12,586 $42 $2,815 $452 $20,529
------------- --- ----------- ----- -----------
------------- --- ----------- ----- -----------
</TABLE>
* From inception, January 21, 1997 to December 31, 1997.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
GLOBAL
VALUE-ADDED AMERICAN EQUITY DEVELOPING EMERGING
MARKET CORE-EQUITY VALUE VALUE GROWTH MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends.................................. $ 185 $ 32 $ 318 $ 257 $ 10 $ 3
---------- ---------- ----------- ---------- ---------- -----
Net investment income...................... 185 32 318 257 10 3
---------- ---------- ----------- ---------- ---------- -----
Capital gains income......................... 2 5 22 2 -- --
---------- ---------- ----------- ---------- ---------- -----
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) on security
transactions.............................. (1) (3) 5 5 160 (1)
Net unrealized appreciation (depreciation)
of investments during the period.......... 2,765 1,440 15,141 3,933 1,973 (914)
---------- ---------- ----------- ---------- ---------- -----
Net realized and unrealized gain (loss)
on investments.......................... 2,764 1,437 15,146 3,938 2,133 (915)
---------- ---------- ----------- ---------- ---------- -----
Net increase (decrease) in net assets
resulting from operations............... $2,951 $1,474 $15,486 $4,197 $2,143 $(912)
---------- ---------- ----------- ---------- ---------- -----
---------- ---------- ----------- ---------- ---------- -----
<CAPTION>
DIVERSIFIED MID-CAP
INCOME GROWTH
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT*
---------- ----------
<S> <C> <C>
Investment income:
Dividends.................................. $4,938 $ 76
---------- ----------
Net investment income...................... 4,938 76
---------- ----------
Capital gains income......................... 2 --
---------- ----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) on security
transactions.............................. 15 --
Net unrealized appreciation (depreciation)
of investments during the period.......... (20) 4,470
---------- ----------
Net realized and unrealized gain (loss)
on investments.......................... (5) 4,470
---------- ----------
Net increase (decrease) in net assets
resulting from operations............... $4,935 $4,546
---------- ----------
---------- ----------
</TABLE>
<PAGE>
SEPARATE ACCOUNT FIVE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION MAY 20, 1997 TO DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH
AMERICAN
MONEY GOVERNMENT DIVIDEND
MARKET SECURITIES BALANCED UTILITIES AND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income...................... $ 12,586 $ 30 $ 238 $ 21 $ 3,650
Capital gains income....................... -- -- 3 4 37
Net realized gain (loss) on security
transactions.............................. -- -- 2 -- 4
Net unrealized appreciation (depreciation)
of investments during the period.......... -- 12 2,572 427 16,838
----------- -------- --------- -------- -----------
Net increase (decrease) in net assets
resulting from operations................. 12,586 42 2,815 452 20,529
----------- -------- --------- -------- -----------
Unit transactions:
Purchases.................................. 5,462,868 1,000 1,000 1,000 1,000
Net transfers.............................. (3,978,866) -- 162,221 5,243 1,566,768
Surrenders................................. (4,968) -- (294) (3) (3,663)
Loan withdrawals........................... (691,140) -- -- -- (2)
Cost of insurance.......................... (4,043) -- (115) (5) (1,662)
----------- -------- --------- -------- -----------
Net increase in net assets resulting from
unit transactions......................... 783,851 1,000 162,812 6,235 1,562,441
----------- -------- --------- -------- -----------
Total increase in net assets............. 796,437 1,042 165,627 6,687 1,582,970
Net Assets:
Beginning of period........................ -- -- -- -- --
----------- -------- --------- -------- -----------
End of period.............................. $ 796,437 $1,042 $165,627 $6,687 $1,582,970
----------- -------- --------- -------- -----------
----------- -------- --------- -------- -----------
</TABLE>
* From inception, January 21, 1997 to December 31, 1997.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
GLOBAL
VALUE-ADDED AMERICAN EQUITY DEVELOPING EMERGING DIVERSIFIED
MARKET CORE-EQUITY VALUE VALUE GROWTH MARKETS INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------- --------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income...................... $ 185 $ 32 $ 318 257 $ 10 $ 3 $ 4,938
Capital gains income....................... 2 5 22 2 -- -- 2
Net realized gain (loss) on security
transactions.............................. (1) (3) 5 5 160 (1) 15
Net unrealized appreciation (depreciation)
of investments during the period.......... 2,765 1,440 15,141 3,933 1,973 (914) (20)
--------- --------- --------- --------- ---------- --------- ---------
Net increase (decrease) in net assets
resulting from operations................. 2,951 1,474 15,486 4,197 2,143 (912) 4,935
--------- --------- --------- --------- ---------- --------- ---------
Unit transactions:
Purchases.................................. 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Net transfers.............................. 127,593 118,955 667,750 506,969 206,516 37,031 451,162
Surrenders................................. (101) (397) (1,813) (2,610) (526) (76) (1,494)
Loan withdrawals........................... -- (1) (2) (1) (1) -- --
Cost of insurance.......................... (106) (161) (690) (394) (166) (30) (616)
--------- --------- --------- --------- ---------- --------- ---------
Net increase in net assets resulting from
unit transactions......................... 128,386 119,396 666,245 504,964 206,823 37,925 450,052
--------- --------- --------- --------- ---------- --------- ---------
Total increase in net assets............. 131,337 120,870 681,731 509,161 208,966 37,013 454,987
Net Assets:
Beginning of period........................ -- -- -- -- -- -- --
--------- --------- --------- --------- ---------- --------- ---------
End of period.............................. $131,337 $120,870 $681,731 $509,161 $208,966 $37,013 $454,987
--------- --------- --------- --------- ---------- --------- ---------
--------- --------- --------- --------- ---------- --------- ---------
<CAPTION>
MID-CAP
GROWTH
PORTFOLIO
SUB-ACCOUNT*
---------
<S> <C>
Operations:
Net investment income...................... $ 76
Capital gains income....................... --
Net realized gain (loss) on security
transactions.............................. --
Net unrealized appreciation (depreciation)
of investments during the period.......... 4,470
---------
Net increase (decrease) in net assets
resulting from operations................. 4,546
---------
Unit transactions:
Purchases.................................. 1,000
Net transfers.............................. 128,658
Surrenders................................. (123)
Loan withdrawals........................... --
Cost of insurance.......................... (50)
---------
Net increase in net assets resulting from
unit transactions......................... 129,485
---------
Total increase in net assets............. 134,031
Net Assets:
Beginning of period........................ --
---------
End of period.............................. $134,031
---------
---------
</TABLE>
<PAGE>
SEPARATE ACCOUNT FIVE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION:
Separate Account Five (the Account) is a separate investment account within ITT
Hartford Life and Annuity Insurance Company (the Company) and is registered with
the Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. The Account consists of
forty-one sub-accounts. These financial statements include thirteen sub-accounts
which invest solely in Dean Witter Select Dimensions Portfolios (the Funds). The
twelve sub-accounts which invest in Hartford Mutual Funds and the sixteen
sub-accounts which invest in Putnam VT Mutual Funds are presented in separate
financial statements. Both the Company and the Account are subject to
supervision and regulation by the Department of Insurance of the State of
Connecticut and the SEC. The Account invests deposits by variable life
contractholders of the Company in the Funds as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Account,
which are in accordance with generally accepted accounting principles in the
investment company industry:
a) Security Transactions -- Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income
are accrued as of the ex-dividend date. Capital gains income represents
dividends from the Funds which are characterized as capital gains under tax
regulations.
b) Security Valuation -- The investment in shares of the Dean Witter Select
Dimensions Investment Series Mutual Funds are valued at the closing net asset
value per share as determined by the appropriate Fund as of December 31, 1997.
c) Federal Income Taxes -- The operations of the Account form a part of,
and are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.
d) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT
AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions for
mortality and expense undertakings, cost of insurance, administrative fees, and
state premium taxes. These charges are deducted through termination of units of
interest from applicable contract owners' accounts.
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of ITT Hartford Life
and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of ITT Hartford Life
and Annuity Insurance Company (a Connecticut Corporation and wholly owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1997 and 1996, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.
In our opinion, because the differences in accounting practices as described in
Note 1 are material, the statutory financial statements referred to above do not
present fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of three years in the
period ended December 31, 1997.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1997 and 1996, and the results of operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with statutory accounting practices as described in Note 1.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 27, 1998
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
($000)
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 296,645 $ 250,244 $ 165,792
Annuity and other fund deposits................. 1,981,246 1,897,347 1,087,661
Net investment income........................... 102,285 98,441 78,787
Commissions and expense allowances on
reinsurance ceded.............................. 396,921 370,637 183,380
Reserve adjustment on reinsurance ceded......... 3,672,076 3,864,395 1,879,785
Other revenues.................................. 288,632 161,906 140,796
---------- ---------- ----------
Total Revenues................................ 6,737,805 6,642,970 3,536,201
---------- ---------- ----------
Benefits and Expenses
Death and annuity benefits...................... 66,013 60,111 53,029
Surrenders and other benefit payments........... 461,733 276,720 221,392
Commissions and other expenses.................. 564,240 491,720 236,202
Increase in aggregate reserves for future
benefits....................................... 33,213 27,351 94,253
Increase in liability for premium and other
deposit funds.................................. 640,006 207,156 460,124
Net transfers to Separate Accounts.............. 4,914,980 5,492,964 2,414,669
---------- ---------- ----------
Total Benefits and Expenses................... 6,680,185 6,556,022 3,479,669
---------- ---------- ----------
Net Gain from Operations Before Federal Income
Taxes............................................ 57,620 86,948 56,532
Federal income tax (benefit) expense............ (14,878) 19,360 14,048
---------- ---------- ----------
Net Gain from Operations.......................... 72,498 67,588 42,484
Net realized capital gains, after tax........... 1,544 407 374
---------- ---------- ----------
Net Income........................................ $ 74,042 $ 67,995 $ 42,858
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
1997 1996
----------- -----------
($000)
<S> <C> <C>
Assets
Bonds........................................... $ 1,501,311 $ 1,268,480
Common stocks................................... 64,408 44,996
Mortgage loans.................................. 85,103 0
Policy loans.................................... 36,533 28,853
Cash and short-term investments................. 309,432 176,830
Other invested assets........................... 20,942 2,858
----------- -----------
Total cash and invested assets................ 2,017,729 1,522,017
----------- -----------
Investment income due and accrued............... 15,878 14,555
Premium balances receivable..................... 389 373
Receivables from affiliates..................... 1,269 257
Other assets.................................... 22,788 19,099
Separate Account assets......................... 23,208,728 14,619,324
----------- -----------
Total Assets.................................. $25,266,781 $16,175,625
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 605,183 $ 571,970
Policy and contract claims...................... 5,672 6,806
Liability for premium and other deposit funds... 1,795,149 1,155,143
Asset valuation reserve......................... 13,670 7,442
Payable to affiliates........................... 20,972 10,022
Other liabilities............................... (754,393) (498,195)
Separate Account liabilities.................... 23,208,728 14,619,324
----------- -----------
Total liabilities............................. 24,894,981 15,872,512
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 143,257 74,570
----------- -----------
Total capital and surplus..................... 371,800 303,113
----------- -----------
Total liabilities, capital and surplus.......... $25,266,781 $16,175,625
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
($000)
<S> <C> <C> <C>
Capital and surplus -- beginning of year $ 303,113 $ 238,334 $ 91,285
--------- --------- ---------
Net income...................................... 74,042 67,995 42,858
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 2,186 (5,171) 1,709
Change in asset valuation reserve............... (6,228) 568 (5,588)
Change in non-admitted assets................... (1,313) 1,387 (1,944)
Aggregate write-ins for surplus (See Note 3).... 0 0 8,080
Dividends to shareholder........................ 0 0 (10,000)
Paid-in surplus................................. 0 0 111,934
--------- --------- ---------
Change in capital and surplus................... 68,687 64,779 147,049
--------- --------- ---------
Capital and surplus -- end of year.............. $ 371,800 $ 303,113 $ 238,334
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
($000)
<S> <C> <C> <C>
Operations
Premiums, annuity considerations and fund
deposits....................................... $ 2,277,874 $ 2,147,627 $ 1,253,511
Investment income............................... 101,991 106,178 78,328
Other income.................................... 4,381,718 4,396,892 2,253,466
----------- ----------- -----------
Total income.................................. 6,761,583 6,650,697 3,585,305
----------- ----------- -----------
Benefits Paid................................... 529,733 338,998 277,965
Federal income taxes (received) paid on
operations..................................... (14,499) 28,857 208,423
Other expenses.................................. 5,754,725 6,254,139 2,664,385
----------- ----------- -----------
Total benefits and expenses..................... 6,269,959 6,621,994 3,150,773
----------- ----------- -----------
Net cash from operations........................ 491,624 28,703 434,532
----------- ----------- -----------
Proceeds from Investments
Bonds........................................... 614,413 871,019 287,941
Common stocks................................... 11,481 72,100 52
Other........................................... 152 10 28
----------- ----------- -----------
Net investment proceeds....................... 626,046 943,129 288,021
----------- ----------- -----------
Taxes Paid on Capital Gains....................... 0 936 226
Paid-In Surplus................................... 0 0 111,934
Other Cash Provided............................. 0 41,998 28,199
----------- ----------- -----------
Total Proceeds................................ 1,117,670 1,012,894 862,460
----------- ----------- -----------
Cost of Investments Acquired
Bonds........................................... 848,267 914,523 720,521
Common stocks................................... 28,302 82,495 35,794
Mortgage loans.................................. 85,103 0 0
Miscellaneous applications...................... 18,548 130 2,146
----------- ----------- -----------
Total Investments Acquired.................... 980,220 997,148 758,461
----------- ----------- -----------
Other Cash Applied
Dividends paid to stockholders.................. 0 0 10,000
Other........................................... 4,848 12,220 5,007
----------- ----------- -----------
Total other cash applied...................... 4,848 12,220 15,007
----------- ----------- -----------
Total applications.......................... 985,068 1,009,368 773,468
----------- ----------- -----------
Net Change in Cash and Short-Term Investments..... 132,602 3,526 88,992
Cash and Short-Term Investments, Beginning of
Year........................................... 176,830 173,304 84,312
----------- ----------- -----------
Cash and Short-Term Investments, End of Year.... $ 309,432 $ 176,830 $ 173,304
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
ITT Hartford Life and Annuity Insurance Company ("ILA" or "the Company"),
formerly known as ITT Life Insurance Corporation, is a wholly owned subsidiary
of Hartford Life Insurance Company ("HLIC"), which is an indirect subsidiary of
Hartford Life, Inc. ("HLI"), which is majority owned by The Hartford Financial
Services Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, HLI filed a registration statement,
as amended, with the Securities and Exchange Commission relating to the initial
public offering of HLI Class A Common Stock (the "Offering"). Pursuant to the
Offering on May 22, 1997, HLI sold to the public 26 million shares, representing
18.6% of the equity ownership of HLI. On December 19, 1995, ITT Corporation
distributed all the outstanding shares of The Hartford to ITT shareholders of
record in an action known herein as the "Distribution". As a result of the
Distribution, The Hartford became an independent, publicly traded company.
During 1996, ILA re-domesticated from the State of Wisconsin to the State of
Connecticut.
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners ("NAIC") and the State of
Connecticut Department of Insurance.
The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates. The most significant estimates are
for determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.
Statutory accounting practices and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and selling
expenses, premium taxes, etc.) which are charged to expense when incurred
for statutory purposes rather than on a pro-rata basis over the expected
life of the policy;
(2) recognition of premium revenues, which for statutory purposes are generally
recorded as collected or when due during the premium paying period of the
contract and which for GAAP purposes, for universal life policies and
investment products, generally, are only recorded for policy charges for the
cost of insurance, policy administration and surrender charges assessed to
policy account balances. Also, for GAAP purposes, premiums for traditional
life insurance policies are recognized as revenues when they are due from
policyholders and the retrospective deposit method is used in accounting for
universal life and other types of contracts where the payment pattern is
irregular or surrender charges are a significant source of profit. The
prospective deposit method is used for GAAP purposes where investment
margins are the primary source of profit;
(3) development of liabilities for future policy benefits, which for statutory
purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income (tax return) only
for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g., past
due agents' balances and furniture and equipment) from the balance sheet for
statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health care
benefits on an option basis, using a twenty year phase-in approach, whereas
GAAP liabilities are recorded upon adoption of the applicable standard;
<PAGE>
- --------------------------------------------------------------------------------
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where risk
transfer has taken place; whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost, whereas GAAP requires
that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
affect those intentions. The Company's bonds were classified on a GAAP basis
as "available-for-sale" and accordingly, those investments and common stocks
were reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
gains (losses) on securities net of tax". For statutory reporting purposes,
Change in Net Unrealized Capital Gains (Losses) on Common Stocks and Other
Invested Assets includes the change in unrealized gains (losses) on common
stock reported at fair value; and
(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance
sheet of the general account), whereas GAAP liabilities are valued at
account value.
As of and for the years ended December 31, 1997, 1996 and 1995, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Net Income............... $ 58,050 $ 41,202 $ 38,821
Amortization and
deferral of policy
acquisition costs............ (345,658) (341,572) (174,341)
Change in unearned revenue
reserve...................... 4,641 55,504 32,300
Deferred taxes................ 47,113 2,090 2,801
Separate accounts............. 282,818 306,978 146,635
Other, net.................... 27,078 3,793 (3,358)
------------ ---------- ----------
Statutory Net Income.......... $ 74,042 $ 67,995 $ 42,858
------------ ---------- ----------
------------ ---------- ----------
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Capital and
Surplus...................... $ 570,469 $ 503,887 $ 455,541
Deferred policy acquisition
costs........................ (1,283,771) (938,114) (596,542)
Unearned revenue reserve...... 134,789 130,148 74,644
Deferred taxes................ 64,522 12,823 1,493
Separate accounts............. 923,040 640,101 333,123
Asset valuation reserve....... (13,670) (7,442) (8,010)
Unrealized gains (losses) on
bonds........................ 13,943 5,112 (1,696)
Adjustment relating to Lyndon
contribution (see Note 3).... (41,277) (41,277) (41,277)
Other, net.................... 3,755 (2,125) 21,058
------------ ---------- ----------
Statutory Capital and
Surplus...................... $ 371,800 $ 303,113 $ 238,334
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY FOR PREMIUM AND OTHER
DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 6%. Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from 2.5% to 8.75% and using
CARVM. Accident and health reserves are established using a two year preliminary
term method and morbidity tables based on Company experience.
ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the Statutory Statements of
Income.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds which are deemed
ineligible to be held at amortized cost by the NAIC Securities Valuation Office
("SVO") are carried at the appropriate SVO published value. When a permanent
reduction in the value of publicly traded securities occurs, the decrease is
reported as a realized loss and the carrying value is adjusted accordingly.
Common stocks are carried at fair value with the current year change in the
difference from cost reflected in surplus. Other invested assets are generally
recorded at fair value.
The Asset Valuation Reserve ("AVR") is designed to provide a standardized
reserving process for realized and unrealized losses due to default and equity
risks associated with invested assets. The reserve increased by $6,228 in 1997,
decreased by $568 in 1996 and increased by $5,588 in 1995. Additionally, the
Interest Maintenance Reserve
<PAGE>
- --------------------------------------------------------------------------------
("IMR") captures net realized capital gains and losses, net of applicable income
taxes, resulting from changes in interest rates and amortizes these gains or
losses into income over the remaining life of the mortgage loan or bond sold.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the Statutory Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital losses
reclassified from the IMR was $719 in 1997 and the amount of net capital gains
reclassified was $1,413 and $39 in 1996 and 1995, respectively. The amount of
income amortized was $85, $392 and $256 in 1997, 1996 and 1995, respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $923 million and $640 million as of December 31, 1997 and
1996, respectively. The balances are classified in accordance with NAIC
accounting practices.
MORTGAGE LOANS
Mortgage loans, carried at cost, which approximates fair value, include
investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments....... $100,475 $89,940 $ 76,100
Interest income from policy
loans........................ 1,958 1,846 1,504
Interest and dividends from
other investments............ 1,005 7,864 2,288
-------- ------- --------
Gross investment income....... 103,438 99,650 79,892
Less: investment expenses..... 1,153 1,209 1,105
-------- ------- --------
Net investment income......... $102,285 $98,441 $ 78,787
-------- ------- --------
-------- ------- --------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $ 537 $ 713 $ 1,724
Gross unrealized capital losses at
end of year........................ (1,820) (4,160) 0
-------- ------- --------
Net unrealized capital (losses)
gains.............................. (1,283) (3,447) 1,724
Balance at beginning of year........ (3,447) 1,724 15
-------- ------- --------
Change in net unrealized capital
gains (losses) on common stocks.... $ 2,164 $(5,171) $ 1,709
-------- ------- --------
-------- ------- --------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $23,357 $ 11,821 $ 22,251
Gross unrealized capital losses at
end of year........................ (1,906) (3,842) (1,374)
------- -------- --------
Net unrealized capital gains........ 21,451 7,979 20,877
Balance at beginning of year........ 7,979 20,877 33,732
------- -------- --------
Change in net unrealized capital
gains (losses) on bonds and
short-term investments............. $13,472 $(12,898) $ 54,609
------- -------- --------
------- -------- --------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Bonds and short-term investments......... $ (120) $ 2,756 $ 56
Common stocks............................ 0 0 52
Real estate and other.................... 114 0 0
------- ------- ------
Realized capital (losses) gains.......... (6) 2,756 208
Capital gains (benefit) tax.............. (831) 936 (205)
------- ------- ------
Net realized capital gains, after tax.... 825 1,820 413
Less: IMR capital (losses) gains......... (719) 1,413 39
------- ------- ------
Net realized capital gains............... $ 1,544 $ 407 $ 374
------- ------- ------
------- ------- ------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1997 and 1996.
(F) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company is
not exposed to any significant concentration of credit risk.
<PAGE>
- --------------------------------------------------------------------------------
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 11,114 $ 55 $ (51) $ 11,118
Guaranteed and sponsored -- asset-backed... 55,506 1,056 (269) 56,293
States, municipalities and political
subdivisions................................ 26,404 329 0 26,733
International governments.................... 7,609 500 0 8,109
Public utilities............................. 73,024 754 (132) 73,646
All other corporate.......................... 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.......... 630,069 5,005 (739) 634,335
Short-term investments....................... 277,330 33 (8) 277,355
Certificates of deposit...................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates......... 86,100 0 0 86,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,778,641 $23,357 $(1,906) $ 1,800,092
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 30,307 $ 537 $ 0 $ 30,844
Common stock -- affiliated................... 35,384 0 (1,820) 33,564
----------- ---------- ---------- -----------
Total common stocks.......................... $ 65,691 $ 537 $(1,820) $ 64,408
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 58,761 $ 6 $ (195) $ 58,572
Guaranteed and sponsored -- asset-backed... 78,237 1,477 (609) 79,105
States, municipalities and political
subdivisions................................ 25,958 163 (2) 26,119
International governments.................... 7,447 205 0 7,652
Public utilities............................. 70,116 396 (424) 70,088
All other corporate.......................... 410,530 6,357 (1,355) 415,532
All other corporate -- asset-backed.......... 485,953 2,654 (1,081) 487,526
Short-term investments....................... 148,094 0 (66) 148,028
Certificates of deposit...................... 83,378 563 (110) 83,831
Parents, subsidiaries and affiliates......... 48,100 0 0 48,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,416,574 $11,821 $(3,842) $ 1,424,553
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 13,064 $ 713 $ 0 $ 13,777
Common stock -- affiliated................... 35,379 0 (4,160) 31,219
----------- ---------- ---------- -----------
Total common stocks.......................... $ 48,443 $ 713 $(4,160) $ 44,996
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term
investments at December 31, 1997 by management's anticipated maturity are shown
below. Asset-backed securities are distributed to maturity year based on ILA's
estimate of the rate of future prepayments of principal
<PAGE>
- --------------------------------------------------------------------------------
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- --------------------------------------------- ---------- -----------
<S> <C> <C>
Due in one year or less...................... $ 424,518 $ 696,203
Due after one year through five years........ 586,980 708,365
Due after five years through ten years....... 451,963 295,896
Due after ten years.......................... 315,180 99,628
---------- -----------
Total...................................... $1,778,641 $ 1,800,092
---------- -----------
---------- -----------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1997, 1996 and 1995 were $367,626, $668,078 and $313,961, respectively,
resulting in gross realized gains of $964, $3,675 and $1,419, respectively, and
gross realized losses of $1,084, $919 and $1,263, respectively, before transfers
to IMR. The Company had realized gains of $52 during 1995 from a capital gain
distribution.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term investments........... $1,778 $ 1,800 $1,417 $ 1,425
Common stocks.............................. 64 64 45 45
Policy loans............................... 37 37 29 29
Mortgage loans............................. 85 85 0 0
Other invested assets...................... 21 21 3 3
LIABILITIES
Liabilities on investment contracts........ $1,911 $ 1,835 $1,245 $ 1,191
</TABLE>
The carrying amounts for policy loans approximates fair value. The fair
value of liabilities on investment contracts are determined by forecasting
future cash flows and discounting the forecasted cash flows at current market
rates.
3. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within The Hartford
relate principally to tax settlements, reinsurance, service fees, capital
contributions and payments of dividends. The Company has also invested in bonds
of its subsidiaries, Hartford Financial Services Corporation and HL Investment
Advisors, Inc., and common stock of its subsidiary, ITT Hartford Life, LTD.
On June 30, 1995, the assets of Lyndon Insurance Company were contributed to
ILA. As a result, ILA received approximately $365 million in bonds and
short-term investments, common stocks and cash, $28 million in policy reserves,
$187 million of current tax liability, $26 million in IMR, $8 million in AVR
(offset by an aggregate write-in to surplus), and $4 million of other
liabilities. The assets in excess of liabilities of $112 million were recorded
as an increase to paid-in surplus.
For additional information, see Note 5.
4. FEDERAL INCOME TAXES:
The Company and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were to file separate Federal, state and local
income tax returns.
As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of HLI, the Company will be included for Federal
income tax purposes in the consolidated group of which The Hartford is the
common parent. It is the current intention of The Hartford and its subsidiaries
to continue to file a single consolidated Federal income tax return. The Company
will continue to remit (receive from) The Hartford a current income tax
provision (benefit) computed in accordance with such tax sharing agreement.
Federal income taxes (received) paid by the Company were $(14,499), $29,792 and
$215,921 in 1997, 1996 and 1995, respectively. The effective tax rate was (26)%,
22% and 25% in 1997, 1996 and 1995, respectively. The following schedule
provides a reconciliation of the tax provision at the U.S. Federal Statutory
rate to Federal income tax (benefit) expense (in millions).
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate........................................ $ 20 $ 30 $ 20
Tax deferred acquisition costs............... 25 27 8
Statutory to tax reserve differences......... 1 0 3
Unrealized gain on separate accounts......... (44) (21) (13)
Investments and other........................ (17) (17) (4)
----- ----- -----
Federal income tax (benefit) expense......... $ (15) $ 19 $ 14
----- ----- -----
----- ----- -----
</TABLE>
5. CAPITAL AND SURPLUS AND SHAREHOLDER
DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior approval,
by State of Connecticut insurance companies to shareholders is subject to
restrictions relating to statutory surplus. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1997 or
1996. ILA paid dividends of $10 million to its parent, HLIC, in 1995. As a
result of the Distribution by ITT, the assets of ITT Lyndon Insurance Company
(Lyndon) were contributed to ILA in June 1995. Substantially all the business
was removed from Lyndon prior to the contribution. The amount of assets which
<PAGE>
- --------------------------------------------------------------------------------
exceeded liabilities at the contribution date ($112 million) was included in
paid-in surplus.
6. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
The Company's employees are included in The Hartford's non-contributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974 and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of HLIC's group pension contracts. Pension expense was
$265, $358, and $1,034 in 1997, 1996 and 1995, respectively. Liabilities for the
plan are held by The Hartford.
The Company also participates in The Hartford's Investment and Savings Plan,
which includes a deferred compensation option under IRC section 401(k) and an
ESOP allocation under IRC section 404(k). The liabilities for these plans are
included in the financial statements of The Hartford. The cost to ILA was not
material in 1997, 1996 and 1995.
The Company's employees are included in The Hartford's contributory defined
health care and life insurance benefit plans. These plans provide health care
and life insurance benefits for retired employees. Substantially all employees
may become eligible for those benefits if they reach normal or early retirement
age while still working for the Company. The Company has prefunded a portion of
the health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Amounts allocated by
The Hartford for post-retirement health care and life insurance benefits expense
(not including provisions for accrual of post-retirement benefit obligations)
are immaterial. The assumed rate of future increases in the per capita cost of
health care (the health care trend rate) was 8.5% for 1997, decreasing ratably
to 6% in the year 2001. Increasing the health care trend rates by one percent
per year would have an immaterial impact on the accumulated post-retirement
benefit obligation and the annual expense. The cost to ILA was not material in
1997, 1996 and 1995.
Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long-term disability. Post-employment
benefit expense was not material in 1997, 1996 and 1995.
7. REINSURANCE:
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve ILA of its primary liability. ILA
also assumes insurance from other insurers.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Direct premiums................... $266,427 $226,612 $159,918
Premiums assumed.................. 51,630 33,817 13,299
Premiums ceded.................... (21,412) (10,185) (7,425)
-------- -------- --------
Premiums and annuity
considerations................... $296,645 $250,244 $165,792
-------- -------- --------
-------- -------- --------
</TABLE>
The Company cedes to RGA Reinsurance Company, on a modified coinsurance
basis, 80% of the variable annuity business written since 1994.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $23.2
billion and $14.6 billion at December 31, 1997 and 1996, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with CARVM, which approximates the market value less
applicable surrender charges. Separate account assets are segregated from other
investments, the policyholder assumes the investment risk, and the investment
income and gains and losses accrue directly to the policyholder. Separate
account management fees, net of minimum guarantees, were $252 million, $144
million and $72 million in 1997, 1996 and 1995, respectively, and are recorded
as a component of other revenues on the Statutory Statements of Income.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1997 and 1996, the Company had no material contingent
liabilities, nor had the Company committed any surplus funds for any contingent
liabilities or arrangements. The Company is involved in various legal actions
which have arisen in the normal course of its business. In the opinion of
management, the ultimate liability with respect to such lawsuits as well as
other contingencies is not considered to be material in relation to the results
of operations and financial position of the Company.
Under insurance guaranty laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on ILA under these
laws cannot be reasonably estimated. Most of the laws do provide, however, that
an assessment may be excused or deferred if it would threaten an insurer's own
financial strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the Company in certain states. ILA paid guaranty
fund assessments of $1,544, $1,262 and $1,684 in 1997, 1996 and 1995,
respectively. ILA incurred guaranteed fund expense of $548 in 1997 and 1996 and
$0 in 1995.
<PAGE>
PART II
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 43 pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required
by paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of Hartford Life and Annuity
Insurance Company ("Hartford") authorizing the establishment of the
Separate Account. (1)
(A2) Not Applicable.
(A3a) Principal Underwriting Agreement. (2)
(A3b) Form of Selling Agreement. (2)
(A3c) Not applicable.
(A4) Not applicable.
(A5) Form of Modified Single Premium Variable Life Insurance Policy and
Last Survivor Modified Single Premium Variable Life Insurance
Policy. (1)
(A6a) Certificate of Incorporation of Hartford.
(A6b) Bylaws of Hartford. (2)
________________________
(1) Incorporated by reference to the Initial Submission, to the Registration
Statement File No. 333-00259 filed on January 17, 1996.
(2) Incorporated by reference to the Pre-Effective Amendment No. 1, to the
Registration Statement File No. 333-00259 filed on November 1, 1996.
<PAGE>
(A7) Not Applicable.
(A8) Not Applicable.
(A9) Not Applicable.
(A10) Form of Application for Modified Single Premium Variable Life
Insurance Policies and Last Survivor Modified Single Premium
Variable Life Insurance Policy. (1)
(11) Memorandum describing transfer and redemption procedures. (1)
(2) Opinion and consent of Lynda Godkin, Senior Vice President, General Counsel
and Corporate Secretary.
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1 (b) or (c) of Part I.
(4) Not Applicable.
(5) Opinion and Consent of Michael Winterfield, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants.
(7) Power of Attorney.
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
Hartford Life and Annuity Insurance Company ("Hartford") hereby represents that
the aggregate fees and charges under the Contract are reasonable in relation to
the services rendered, the expenses expected to be incurred, and the risks
assumed by Hartford.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
UNDERTAKINGS AND REPRESENTATIONS AS REQUIRED BY RULE 6e-3(T)
1. Separate Account Five meets the definition of "Separate Account" under Rule
6e-3(T).
2. Hartford undertakes to keep and make available to the Commission upon
request any documents used to support any representation as to the
reasonableness of fees.
UNDERTAKING ON INDEMNIFICATION
Under Section 33-772 of the Connecticut General Statutes, unless limited by its
certificate of incorporation, the Registrant must indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director of the corporation
against reasonable expenses incurred by him in connection with the proceeding.
The Registrant may indemnify an individual made a party to a proceeding because
he is or was a director against liability incurred in the proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Registrant, and, with respect to any criminal
proceeding, had no reason to believe his conduct was unlawful. Conn. Gen. Stat.
Section 33-771(a). Additionally, pursuant to Conn. Gen. Stat. Section 33-776,
the Registrant may indemnify officers and employees or agents for liability
incurred and for any expenses to which they becomes subject by reason of being
or having been an employees or officers of the Registrant. Connecticut law does
not prescribe standards for the indemnification of officers, employees and
agents and expressly states that their indemnification may be broader than the
right of indemnification granted to directors.
The foregoing statements are specifically made subject to the detailed
provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the Registrant to
indemnify a only a
<PAGE>
director that was successful on the merits in a suit, under Article VIII,
Section 1 of the Registrant's bylaws, the Registrant must indemnify both
directors and officers of the Registrant for (1) any claims and liabilities
to which they become subject by reason of being or having been a directors or
officers of the company and legal and (2) other expenses incurred in
defending against such claims, in each case, to the extent such is consistent
with statutory provisions.
Additionally, the directors and officers of Hartford and Hartford Securities
Distribution Company, Inc. ("HSD") are covered under a directors and officers
liability insurance policy issued to The Hartford Financial Services Group, Inc.
and its subsidiaries. Such policy will reimburse the Registrant for any
payments that it shall make to directors and officers pursuant to law and will,
subject to certain exclusions contained in the policy, further pay any other
costs, charges and expenses and settlements and judgments arising from any
proceeding involving any director or officer of the Registrant in his past or
present capacity as such, and for which he may be liable, except as to any
liabilities arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned thereunto duly authorized, and attested, all in the Town of
Simsbury, and State of Connecticut, on the 13th day of April, 1998.
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY - SEPARATE ACCOUNT FIVE
(Registrant)
By: /s/ Gregory A. Boyko
-------------------------------------------
Gregory A. Boyko, Senior Vice President, Chief
Financial Officer and Treasurer, Director
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY (Depositor)
By: /s/ Gregory A. Boyko
-------------------------------------------
Gregory A. Boyko, Senior Vice President, Chief
Financial Officer and Treasurer, Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
Gregory A. Boyko, Senior Vice
President, Chief Financial Officer and
Treasurer, Director*
Lynda Godkin, Senior Vice President
General Counsel and Corporate
Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ Lynda Godkin
President and Director, Individual -----------------------
Life and Annuity Division, Director* Lynda Godkin
Lowndes A. Smith, President and Attorney-In-Fact
Chief Executive Officer,
Director* Dated: April 13, 1998
David M. Znamierowski, Senior ----------------
Vice President, Director*
<PAGE>
EXHIBIT INDEX
(1) (A6a) Charter of Hartford.
(2) Opinion and Consent of Lynda Godkin, General Counsel.
(5) Opinion and Consent of Michael Winterfield, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants
(7) Copy of Power of Attorney.
<PAGE>
EXHIBIT 6(a)
FILING #0001734855 PG 03 OF OS VOL B-00133
FILED 07/11/1997 11:32 AM PAGE 03683
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
FIRST AMENDMENT TO AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION BY ACTIONS OF THE
BOARD OF DIRECTORS AND THE SOLE SHAREHOLDER
1. The name of the Corporation is ITT Hartford Life and Annuity Insurance
Company (the "Company").
2. The Amended and Restated Certificate of Incorporation of the Company (the
"Certificate of Incorporation") is further amended by the following
resolution:
RESOLVED, that the Certificate of Incorporation be further amended
by deleting Section 1 in its entirety and replacing it with the
following, such amendment to become effective at January 1, 1998.
All other sections of the Certificate of Incorporation shall remain
unchanged and continue in full force and effect:
Section 1. Effective January 1, 1998, the name of the Company
is HARTFORD LIFE AND ANNUITY INSURANCE COMPANY.
3. The above resolution was adopted by each of the Company's Board of
Directors and its sole shareholder. The number of shares of the Company's
common capital stock entitled to vote thereon was 3,000 and the vote
required for adoption was 2,000 shares. The vote favoring adoption was
3,000 shares, which was the greatest vote required to pass the resolution.
Dated at Simsbury, Connecticut this 30 day of June, 1997.
We hereby declare, under penalty of false statement, that the statements made
in the foregoing Certificate are true.
HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
/s/ Thomas M. Marra
-----------------------------------------
Thomas M. Marra, Executive Vice President
/s/ Lynda Godkin
-----------------------------------------
Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary
<PAGE>
FILING #0001681641 PG 04 OF 05 VOL B-00105
FILED 12/31/1996 10:00 AM PAGE 00897
SECRETARY OF STATE
CONNECTICUT SECRETARY OF THE STATE
CERTIFICATE AMENDING
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
BY ACTIONS OF THE BOARD OF DIRECTORS AND THE SOLE SHAREHOLDER
1. The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY.
2. The Amended and Restated Certificate of Incorporation is amended by the
following resolution of each of the Board of Directors and the Sole
Shareholder:
RESOLVED, that the Amended and Restated Certificate of
Incorporation of the Company, as supplemented and amended to
date, is hereby amended by striking out Section 9 in its entirety
and adding the following Sections 9 and 10. All other sections
of the Amended and Restated Certificate of Incorporation shall
remain unchanged and continue in full force and effect.
"Section 9. The Board of Directors may, at any time, appoint
from among its own members such committees as it
may deem necessary for the proper conduct of the
business of the Company. The Board of Directors
shall be unrestricted as to the powers it may
confer upon such committees."
"Section 10. So much of the charter of said corporation, as
amended, as is inconsistent herewith is repealed,
provided that such repeal shall not invalidate or
otherwise affect any action taken pursuant to the
charter of the corporation, in accordance with its
terms, prior to the effective date of such
repeal."
3. The above resolutions were passed by the Board of Directors and the Sole
Shareholder of the Corporation. The number of shares of the Corporation's
common capital stock entitled to vote thereon was 3,000 and the vote
required for adoption was 2,000 shares. The vote favoring adoption was
3,000 shares, which was the greatest vote required to pass the resolution.
<PAGE>
2
Dated at Simsbury, Connecticut this 30th day of December, 1996.
We hereby declare, under penalty of false statement, that the statements made in
the foregoing Certificate are true.
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
/s/Thomas M. Marra
------------------------------------
Thomas M. Marra, Executive Vice
President and Director - Individual
Life and Annuity Division
/s/Lynda Godkin
------------------------------------
Lynda Godkin, General Counsel and
Corporate Secretary
<PAGE>
CERTIFICATE AMENDING AND RESTATING
THE CERTIFICATE OF INCORPORATION BY
ACTION OF THE BOARD OF DIRECTORS AND SHAREHOLDERS
The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY.
2. The Certificate of Incorporation is amended and restated by the following
resolution of the Board of Directors and Shareholder of the Corporation.
RESOLVED, that the Certificate of Incorporation of the Corporation, as
supplemented and amended to date, is further amended and restated to read
as follows:
Section 1. The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY.
Section 2. The address of the Registered Office of the Corporation is
Hartford Plaza, Hartford, Connecticut 06104-2999.
Section 3. The Corporation is a body politic and corporate and shall
have all the powers granted by the general statutes, as now
enacted or hereinafter amended, to corporations formed under
the Stock Corporation Act.
Section 4. The Corporation shall have the purposes and powers to write
any and all forms of insurance which any other corporation
now or hereafter chartered in Connecticut and empowered to
do an insurance business may now or hereafter lawfully do;
to accept and to cede reinsurance; to issue policies and
contracts for any kind or combination of kinds of insurance;
to issue policies or contracts either with or without
participation in profits; to acquire and hold any or all of
the shares or other securities of any insurance corporation
or any other kind of corporation; and to engage in any
lawful act or activity for which corporations may be formed
under the Stock Corporation Act. The corporation is
authorized to exercise the powers herein granted in any
state, territory or jurisdiction of the United States or
in any foreign country.
Section 5. The Corporation shall obtain a license from the insurance
commissioner prior to the commencement of business and
shall be subject to all general statutes applicable to
insurance companies.
Section 6. The aggregate number of shares which the corporation shall
have authority to issue is 3,000 shares consisting of one
class only, designated as Common Shares, of the par value
of $1,250.
Section 7. No shareholder shall, because of his ownership of shares,
have a preemptive or other right to purchase, subscribe for,
or take any part of any shares or any
<PAGE>
2
part of the notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase
shares of this corporation issued, optioned, or sold by it
after its incorporation.
Section 8. The minimum amount of stated capital with which the
corporation shall commence business is One Thousand
Dollars ($1,000.00).
Section 9. So much of the charter of said corporation is amended, as is
inconsistent herewith is repealed, provided such repeal shall
not invalidate or otherwise affect any action taken pursuant
to the charter of the corporation, in accordance with its
terms, prior to the effective date of such repeal.
3. The above resolution was passed by the Board of Directors and the
Shareholder of the Corporation. The number of shares entitled to vote
thereon was 3,000 and the vote required for adoption was 2,000 shares.
The vote favoring adoption was 3,000 which was the greatest vote needed to
pass the resolution.
Dated at Simsbury, Connecticut this 30th day of April, 1996.
We hereby declare, under the penalties of false statement, that the
statements made in the foregoing Certificate are true.
ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY
/s/ Lowndes A. Smith
---------------------------------
Lowndes A. Smith, President
/s/ Lynda Godkin
----------------------------------
Lynda Godkin, General Counsel
and Corporate Secretary
<PAGE>
EXHIBIT 2
[LOGO]
Hartford Life
April 8, 1998 LYNDA GODKIN
SENIOR VICE PRESIDENT, GENERAL
COUNSEL & CORPORATE SECRETARY
Law Department
Board of Directors
Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT FIVE
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
FILE NO. 333-00259
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life and Annuity Insurance Company
(the "Company"), a Connecticut insurance company, and Hartford Life and Annuity
Insurance Company Separate Account Five (the "Account") in connection with the
registration of an indefinite amount of securities in the form of modified
single premium variable life insurance contracts (the "Contracts") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
I have examined such documents (including the Form S-6 Registration Statement)
and reviewed such questions of law as I considered necessary and appropriate,
and on the basis of such examination and review, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is
duly authorized by the Insurance Department of the State of Connecticut to
issue the Contracts.
2. The Account is a duly authorized and validly existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
3. To the extent so provided under the Contracts, that portion of the assets
of the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.
4. The Contracts, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations of
the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form S-6
Registration Statement for the Contracts and the Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
EXHIBIT 5
[Logo]
Hartford Life
MICHAEL R. WINTERFIELD, FSA, MAAA
Assistant Vice President
Individual Annuity Product Management
April 8, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
This opinion is furnished in connection with the Form S-6 Registration Statement
under the Securities Act of 1933, as amended ("Securities Act"), of a certain
modified single premium variable life insurance policy (the "Policy") that will
be offered and sold by Hartford Life and Annuity Insurance Company and certain
units of interest to be issued in connection with the Policy.
The hypothetical illustrations of the Policy used in the Form S-6 Registration
Statement accurately reflect reasonable estimates of projected performance of
the Policy under the stipulated rates of investment return, the contractual
expense deductions and guaranteed cost-of-insurance rates, and utilizing a
reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus included as a part of such Form S-6 Registration
Statement.
Very truly yours,
/s/ Michael Winterfield
Michael Winterfield, FSA, MAAA
Director Individual Annuity Product Management
<PAGE>
EXHIBIT 6
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 333-00259 for Hartford Life and Annuity
Insurance Company Separate Account Five on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 13, 1998
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
Gregory A. Boyko
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty,
and Leslie T. Soler to sign as their agent, any Registration Statement,
pre-effective amendment, post-effective amendment and any application for
exemptive relief of the Hartford Life and Annuity Insurance Company under the
Securities Act of 1933 and/or the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Gregory A. Boyko Dated as of March 16, 1998
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Gregory A. Boyko
/s/ Lynda Godkin Dated as of March 16, 1998
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Lynda Godkin
/s/ Thomas M. Marra Dated as of March 16, 1998
- ------------------------------ --------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of March 16, 1998
- ------------------------------ --------------------------
Lowndes A. Smith
/s/ David M. Znamierowski Dated as of March 16, 1998
- ------------------------------ --------------------------
David M. Znamierowski
