<PAGE>
<TABLE>
<S> <C>
PUTNAM HARTFORD INHERITANCE MANAGER
VARIABLE LIFE
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
SEPARATE ACCOUNT FIVE
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
TELEPHONE: 1-800-231-5453 [LOGO]
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Prospectus describes information you should know before you purchase Putnam
Hartford Inheritance Manager Variable Life. Please read it carefully.
Putnam Hartford Inheritance Manager Variable Life is a modified single premium
variable life insurance policy. It is:
x Modified single premium, because you make one single premium payment, and
under certain limited circumstances, you may make additional premium
payments.
x Variable, because the value of your life insurance policy will fluctuate with
the performance of the underlying funds.
- --------------------------------------------------------------------------------
At purchase, you allocate your payments to "Sub-Accounts" or subdivisions of our
Separate Account, an account that keeps your life insurance policy assets
separate from our company assets. These Sub-Accounts then purchase shares of
mutual funds set up exclusively for variable annuity or variable life insurance
products. These funds are not the same mutual funds that you buy through your
stockbroker or through a retail mutual fund. They may have similar investment
strategies and the same fund managers as retail mutual funds. This life
insurance policy offers you funds with investment strategies ranging from
conservative to aggressive and you may pick those funds that meet your
investment style.
The following Sub-Accounts are available under the Policy:
<TABLE>
<CAPTION>
<S> <C>
SUB-ACCOUNT PURCHASES SHARES OF:
Putnam Asia Pacific Growth Sub-Account Class IA of Putnam VT Asia Pacific Growth Fund of
Putnam Variable Trust
Putnam Diversified Income Sub-Account Class IA of Putnam VT Diversified Income Fund of
Putnam Variable Trust
Putnam The George Putnam Fund of Boston Sub-Account Class IA of Putnam VT The George Putnam Fund of
Boston of Putnam Variable Trust
Putnam Global Asset Allocation Sub-Account Class IA of Putnam VT Global Asset Allocation Fund
of Putnam Variable Trust
Putnam Global Growth Sub-Account Class IA of Putnam VT Global Growth Fund of Putnam
Variable Trust
Putnam Growth and Income Sub-Account Class IA of Putnam VT Growth and Income Fund of
Putnam Variable Trust
Putnam Health Sciences Sub-Account Class IA of Putnam VT Health Sciences Fund of
Putnam Variable Trust
Putnam High Yield Sub-Account Class IA of Putnam VT High Yield Fund of Putnam
Variable Trust
Putnam Income Sub-Account (formerly Putnam U.S. Government Class IA of Putnam VT Income Fund (formerly Putnam
and High Quality Bond Sub-Account) VT U.S. Government and High Quality Bond Fund) of
Putnam Variable Trust
Putnam International Growth Sub-Account Class IA of Putnam VT International Growth Fund of
Putnam Variable Trust
Putnam International Growth and Income Sub-Account Class IA of Putnam VT International Growth and
Income Fund of Putnam Variable Trust
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUB-ACCOUNT PURCHASES SHARES OF:
Putnam International New Opportunities Sub-Account Class IA of Putnam VT International New
Opportunities Fund of Putnam Variable Trust
Putnam Investors Sub-Account Class IA of Putnam VT Investors Fund of Putnam
Variable Trust
Putnam Money Market Sub-Account Class IA of Putnam VT Money Market Fund of Putnam
Variable Trust
Putnam New Opportunities Sub-Account Class IA of Putnam VT New Opportunities Fund of
Putnam Variable Trust
Putnam New Value Sub-Account Class IA of Putnam VT New Value Fund of Putnam
Variable Trust
Putnam OTC & Emerging Growth Sub-Account Class IA of Putnam VT OTC & Emerging Growth Fund
of Putnam Variable Trust
Putnam Research Sub-Account Class IA of Putnam VT Research Fund of Putnam
Variable Trust
Putnam Small Cap Value Sub-Account Class IA of Putnam VT Small Cap Value Fund of
Putnam Variable Trust
Putnam Utilities Growth and Income Sub-Account Class IA of Putnam VT Utilities Growth and Income
Fund of Putnam Variable Trust
Putnam Vista Sub-Account Class IA of Putnam VT Vista Fund of Putnam
Variable Trust
Putnam Voyager Sub-Account Class IA of Putnam VT Voyager Fund of Putnam
Variable Trust
</TABLE>
If you decide to buy this life insurance policy, you should keep this prospectus
for your records. Although we file the Prospectus with the Securities and
Exchange Commission, the Commission doesn't approve or disapprove these
securities or determine if the information is truthful or complete. Anyone who
represents that the Securities and Exchange Commission ("SEC") does these things
may be guilty of a criminal offense.
You can call us at 1-800-231-5453 to ask us questions, or to get a Statement of
Additional Information, free of charge. The Statement of Additional Information
contains more information about this life insurance policy and, like this
prospectus, is filed with the Securities and Exchange Commission.
We file other information with the Securities and Exchange Commission. You may
read and copy any document we file at the SEC's public reference room in
Washington, DC 20549-6009. Please call the SEC at 1-800-SEC-0330 for further
information. Our SEC filings, including this prospectus, are also available to
the public at the SEC's web site at http://www.sec.gov.
This life insurance policy IS NOT:
- a bank deposit or obligation
- federally insured
- endorsed by any bank or governmental agency
- available for sale in all states
- --------------------------------------------------------------------------------
PROSPECTUS DATED: MAY 3, 1999
REVISED DATED: OCTOBER 18, 1999
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
PAGE
- ----------------------------------------------------------------------
<S> <C>
SUMMARY OF BENEFITS AND RISKS 4
- ----------------------------------------------------------------------
FEE TABLE 5
- ----------------------------------------------------------------------
ABOUT US 7
- ----------------------------------------------------------------------
Hartford Life and Annuity Insurance Company 7
- ----------------------------------------------------------------------
Separate Account Five 7
- ----------------------------------------------------------------------
The Funds 7
- ----------------------------------------------------------------------
CHARGES AND DEDUCTIONS 9
- ----------------------------------------------------------------------
YOUR POLICY 11
- ----------------------------------------------------------------------
Policy Rights 11
- ----------------------------------------------------------------------
Policy Limitations 11
- ----------------------------------------------------------------------
Changes to Policy or Separate Account 12
- ----------------------------------------------------------------------
PREMIUMS 12
- ----------------------------------------------------------------------
DEATH BENEFITS AND POLICY VALUES 14
- ----------------------------------------------------------------------
MAKING WITHDRAWALS FROM YOUR POLICY 15
- ----------------------------------------------------------------------
LOANS 16
- ----------------------------------------------------------------------
LAPSE AND REINSTATEMENT 16
- ----------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS 17
- ----------------------------------------------------------------------
LEGAL PROCEEDINGS 19
- ----------------------------------------------------------------------
OTHER MATTERS 20
- ----------------------------------------------------------------------
Legal Matters 20
- ----------------------------------------------------------------------
Year 2000 20
- ----------------------------------------------------------------------
GLOSSARY OF SPECIAL TERMS 22
- ----------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SUMMARY OF BENEFITS AND RISKS
BENEFITS OF YOUR POLICY
FLEXIBILITY -- The policy is designed to be flexible to meet your specific life
insurance needs. You have the flexibility to choose your premium payment,
settlement options and investment options.
RIGHT TO EXAMINE -- For a limited time, usually 10 days after you receive your
life insurance policy, you may cancel it without paying a surrender charge. A
longer period maybe provided in certain states.
CASH VALUES -- Your policy has a cash value. The value of your policy will
fluctuate with the performance of the underlying funds.
DEATH BENEFIT -- You designate a beneficiary who will receive the Death Benefit
if you die while the policy is in force. The policy pays a minimum Death
Benefit, called the "Face Amount." The actual Death Benefit may be larger than
the Face Amount if the underlying funds of the policy perform well.
INVESTMENT OPTIONS -- Your policy offers a choice of investment options. You may
transfer money among your investment options, subject to the restrictions
described in this prospectus and the funds' prospectuses.
SURRENDERS -- At any time, you may surrender all or part of your policy. Each
year you may surrender the greater of up to 10% of your premium payments or 100%
of your Account Value minus premiums paid without being charged a surrender
charge. (See "Risks of Your Policy" below)
LOANS -- You can take a loan on the policy. Your policy provides for two types
of cash loans. Your policy secures the loans. Loans may not exceed 90% of the
policy's cash value.
SETTLEMENT OPTIONS -- You may choose to receive surrender or death benefit
proceeds over a period of time by using one of our settlement options.
WHAT DOES YOUR PREMIUM PAYMENT PAY FOR?
Your premium payment pays for insurance coverage, it acts as an investment in
the Sub-Accounts, and it pays for sales charges, premium taxes and
administrative fees.
RISKS OF YOUR POLICY
INVESTMENT PERFORMANCE -- The value of your policy will fluctuate with the
performance of its underlying funds. Your investment options may decline in
value, or they may not perform to your expectations. Your policy values in the
Sub-Accounts are not guaranteed.
UNSUITABLE FOR SHORT-TERM SAVINGS -- The policy is designed for long term
financial planning. You should not purchase the policy if you will need your
premium payment in a short time.
RISK OF LAPSE -- Your policy could terminate if the value of the policy becomes
so low that it cannot support the policy's monthly charges and fees. If this
occurs, we will notify you in writing. You will then have a 61-day grace period
to pay additional amounts to prevent the policy from terminating.
LOANS -- Taking a loan from your policy may increase the risk that your policy
will terminate, may have a permanent effect on the policy's Account Value, and
may reduce the death benefit proceeds.
SURRENDER AND PARTIAL SURRENDERS -- You may have to pay tax on the money you
take out and, if you take money out before you are 59 1/2 you may have to pay a
federal income tax penalty.
TRANSFER LIMITATIONS -- We reserve the right to limit the size of transfers and
to limit the number and frequency of transfers among your investment options.
ADVERSE TAX CONSEQUENCES -- Under current tax law, your Beneficiaries will
receive the Death Benefit free of federal income tax. However, you may be
required to pay federal income tax if you receive any loans, surrenders or other
amounts from the policy, and you may also be subject to a 10% federal income
penalty tax if you take money out prior to age 59 1/2.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
- --------------------------------------------------------------------------------
FEE TABLE
The following tables describes the MAXIMUM fees and expenses that you will pay
when buying, owning, and surrendering the policy. The first table describes the
maximum fees and expenses that you will pay at the time that you surrender the
policy.
SURRENDER FEES
<TABLE>
<CAPTION>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED POLICIES FROM WHICH CHARGE IS DEDUCTED
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Surrender Charges When you fully or partially A percentage of the amount All, if the surrender is subject to a
surrender your policy. surrendered, not to exceed the charge.
premium payments, depending on
the Policy Year, in which the
premium payment was made.
The percentage is as follows:
Policy Year Percentage
-- -----
1 7.5%
2 7.5%
3 7.5%
4 6%
5 6%
6 4%
7 4%
8 2%
9 2%
10+ 0%
- ------------------------------------------------------------------------------------------------------------------------------
Unamortized Tax Upon surrender or partial A percentage of the Account Only policies which elect Option 1.
Charge surrender of the policy. Value depending on the Policy
Year the surrender takes place.
The percentage is as follows:
Policy Year Percentage
-- -----
1 2.25%
2 2.00%
3 1.75%
4 1.50%
5 1.25%
6 1.00%
7 0.75%
8 0.50%
9 0.25%
10+ 0.00%
</TABLE>
The next table describes the MAXIMUM fees and expenses that you will pay
periodically during the time that you own the policy, not including Fund fees
and expenses.
ANNUAL CHARGES OTHER THAN FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED POLICIES FROM WHICH CHARGE IS DEDUCTED
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Cost of Insurance Monthly. Individualized depending on All
Charges age, sex and other factors.
- ----------------------------------------------------------------------------------------------------------------------------
Mortality and Monthly. - Under Option 1: .90% All
Expense Risk Charge (annualized) of Sub-Account
Value in Policy Years 1-10
and .50% (annualized) for
Policy Years 11 and beyond
- Under Option 2: .65%
(annualized) of Sub-Account
Value in Policy Years 1-10
and .50% (annualized) for
Policy Years 11 and beyond
- ----------------------------------------------------------------------------------------------------------------------------
Tax Expense Charge Under Option 1: Monthly. - Under Option 1: .40% All
(annualized) of Account Value
for Policy Years 1-10
Under Option 2: Receipt of - Under Option 2: 4% of each
Premium Payment. premium payment in all Policy
Years
- ----------------------------------------------------------------------------------------------------------------------------
Annual Maintenance On Policy Anniversary Date or $30.00 Only policies with an Account Value of
Fee upon surrender of the policy. less than $50,000 on the Policy
Anniversary Date or date of surrender.
- ----------------------------------------------------------------------------------------------------------------------------
Administrative Monthly. .40% (annualized) of All
Charge Sub-Account Value
</TABLE>
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
The next table describes the Fund fees and expenses that you will pay
periodically during the time that you own the policy. The table shows the
minimum and maximum fees and expenses charged by any of the Funds. More detail
concerning each Fund's fees and expenses is contained in the prospectus for each
Fund.
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED (ANNUALIZED) POLICIES FROM WHICH CHARGE IS DEDUCTED
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Management Fees Daily net asset values of a 0.450% - 1.200% All policies, but deductions only from
Fund reflect Management Fees underlying Funds selected by you.
already deducted from assets
of the Fund.
- ----------------------------------------------------------------------------------------------------------------------------
Other Expenses Daily net asset values of a 0.040% - 0.590% All policies, but deductions only from
Fund reflect Other Expenses underlying Funds selected by you.
already deducted from the
assets of the Fund.
- ----------------------------------------------------------------------------------------------------------------------------
Total Fund Annual Daily net asset values of a 0.500% - 1.620% All policies, but deductions only from
Expenses Fund reflect Total Fund Annual underlying Funds selected by you.
Operating Expenses already
deducted from assets of the
Fund.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
ABOUT US
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company 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, the District of Columbia and
Puerto Rico, except New York. On January 1, 1998, Hartford's name changed from
ITT Hartford Life and Annuity Insurance Company to Hartford Life and Annuity
Insurance Company. We were originally incorporated under the laws of Wisconsin
on January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
A.M. Best and
Company, Inc. 1/1/99 A+ Financial performance
- ----------------------------------------------------------------------------
Standard & Poor's 6/1/98 AA Insurer financial strength
- ----------------------------------------------------------------------------
Duff & Phelps 12/21/98 AA+ Claims paying ability
- ----------------------------------------------------------------------------
</TABLE>
SEPARATE ACCOUNT FIVE
The Sub-Accounts are subdivisions of our separate account, called Separate
Account Five. The Separate Account was established to keep your life insurance
policy assets separate from our company assets. The investment performance of
the Separate Account is independent from the investment performance of
Hartford's other assets. Hartford's other assets are utilized to pay our
insurance obligations under the policy. Your assets in the Separate Account are
held exclusively for your benefit and the benefit of other policy owners and may
not be used for any other liability of Hartford. Separate Account Five was
established on August 17, 1994 under the laws of Connecticut.
THE FUNDS
The Sub-Accounts purchase shares of Putnam Variable Trust, an open-end series
investment company with multiple portfolios ("Funds"). Putnam Investment
Management, Inc. ("Putnam Management") serves as the investment manager for the
Funds. Putnam Management is ultimately controlled by Marsh & McLennan Companies,
Inc., a publicly owned holding company whose principal businesses are
international insurance brokerage and employee benefit consulting.
We do not guarantee the investment results of any of the underlying Funds. Since
each underlying Fund has different investment objectives, each is subject to
different risks. These risks and the Funds' expenses are more fully described in
the accompanying prospectus for the Funds, and the Statement of Additional
Information, which may be ordered from us. The Funds' prospectus should be read
in conjunction with this Prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
PUTNAM VT ASIA PACIFIC GROWTH FUND -- Seeks capital appreciation by investing
primarily in securities of companies located in Asia and in the Pacific Basin.
The fund's investments will normally include common stocks, preferred stocks,
securities convertible into common stocks or preferred stocks, and warrants to
purchase common stocks or preferred stocks.
PUTNAM VT DIVERSIFIED INCOME FUND -- Seeks high current income consistent with
capital preservation by investing in the following three sectors of the fixed
income securities markets: a U.S. Government and Investment Grade Sector, a High
Yield Sector (which invests primarily in securities commonly known as "junk
bonds"), and an International Sector. See the special considerations for
investments in high yield securities described in the Fund prospectus.
PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON -- Seeks to provide a balanced
investment composed of a well-diversified portfolio of stocks and bonds which
will produce both capital growth and current income.
PUTNAM VT GLOBAL ASSET ALLOCATION FUND -- Seeks a high level of long-term total
return consistent with preservation of capital by investing in U.S. equities,
international equities, U.S. fixed income securities, and international fixed
income securities.
PUTNAM VT GLOBAL GROWTH FUND -- Seeks capital appreciation through a globally
diversified portfolio of common stocks.
PUTNAM VT GROWTH AND INCOME FUND -- Seeks capital growth and current income by
investing primarily in common stocks that offer potential for capital growth,
current income, or both.
PUTNAM VT HEALTH SCIENCES FUND -- Seeks capital appreciation by investing
primarily in common stocks and other securities of companies in the health
sciences industries.
PUTNAM VT HIGH YIELD FUND -- Seeks high current income and, when consistent with
this objective, a secondary objective of capital growth, by investing primarily
in high-yielding, lower-rated fixed income securities, constituting a portfolio
which Putnam Management believes does not involve undue risk to income or
principal. See the special considerations for investments in high yield
securities described in the Fund prospectus.
PUTNAM VT INCOME FUND (FORMERLY PUTNAM U.S. GOVERNMENT AND HIGH QUALITY BOND
FUND) -- Seeks high current income consistent with what Putnam Management
believes to be prudent risk. The Fund will normally invest mostly in bonds and
other debt securities, and, to a lesser degree, in preferred stocks.
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH FUND -- Seeks capital appreciation by investing
primarily in equity securities of companies located in a country other than the
United States.
PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND -- Seeks capital growth, and a
secondary objective of high current income by investing primarily in common
stocks that Putnam Management believes offer potential for capital growth and
may, when consistent with its investment objectives, invest in common stocks
that Putnam Management believes offer potential for current income. Under normal
market conditions, the fund expects to invest substantially all of its assets in
securities principally traded on markets outside the United States.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND -- Seeks long term capital
appreciation by investing in companies that have above-average growth prospects
due to the fundamental growth of their market sector. Under normal market
conditions, the fund expects to invest substantially all of its total assets,
other than cash or short-term investments held pending investment, in common
stocks, preferred stocks, convertible preferred stocks, convertible bonds and
other equity securities principally traded in securities markets outside the
United States.
PUTNAM VT INVESTORS FUND -- Seeks long-term growth of capital and any increased
income that results from this growth by investing primarily in common stocks
that Putnam Management believes afford the best opportunity for capital growth
over the long term.
PUTNAM VT MONEY MARKET FUND -- Seeks as high a rate of current income as Putnam
Management believes is consistent with preservation of capital and maintenance
of liquidity by investing in high-quality money market instruments.
PUTNAM VT NEW OPPORTUNITIES FUND -- Seeks long-term capital appreciation by
investing principally in common stocks of companies in sectors of the economy
which Putnam Management believes possess above-average long-term growth
potential.
PUTNAM VT NEW VALUE FUND -- Seeks long-term capital appreciation by investing
primarily in common stocks that Putnam Management believes are undervalued at
the time of purchase and have the potential for long-term capital appreciation.
PUTNAM VT OTC & EMERGING GROWTH FUND -- Seeks capital appreciation by investing
primarily in common stocks that Putnam Management believes have potential for
capital appreciation significantly greater than that of market averages.
PUTNAM VT RESEARCH FUND -- Seeks capital appreciation. The fund is not intended
to be a complete investment program, and there is no assurance it will achieve
its objective.
PUTNAM VT SMALL CAP VALUE FUND -- Seeks capital appreciation. The Fund will
generally invest in value stocks, which stocks are those that Putnam Management
believes are currently undervalued compared to their true worth.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND -- Seeks capital growth and current
income by concentrating its investments in debt and equity securities issued by
companies in the public utilities industries.
PUTNAM VT VISTA FUND -- Seeks capital appreciation by investing in a diversified
portfolio of common stocks which Putnam Management believes have the potential
for above-average capital appreciation.
PUTNAM VT VOYAGER FUND -- Seeks capital appreciation by investing primarily in
common stocks of companies that Putnam Management believes have potential for
capital appreciation that is significantly greater than that of market averages.
The Funds are generally managed in styles similar to other open-end investment
companies which are managed by Putnam Management and whose shares are generally
offered to the public. These other Putnam funds may, however, employ different
investment practices and may invest in securities different from those in which
their counterpart Funds invest, and consequently will not have identical
portfolios or experience identical investment results.
Subject to the general oversight of the Trustees of Putnam Variable Trust,
Putnam Management manages the Funds' portfolios in accordance with their stated
investment objectives and policies, makes investment decisions for the Funds,
places orders to purchase and sell securities on behalf of the Funds, and
administers the affairs of the Funds. For its services, the Funds pay Putnam
Management a quarterly fee. See the accompanying Funds prospectus for a more
complete description of Putnam Management and the respective fees of the Funds.
MIXED AND SHARED FUNDING -- Shares of the Funds may be sold to our other
separate accounts and our insurance company affiliates or other unaffiliated
insurance companies to serve as the underlying investment for both variable
annuity contracts and variable life insurance policies, a practice known as
"mixed and shared funding." As a result, there is a possibility that a material
conflict may arise between the interests of policy owners, owners of other
policies or owners of variable annuity contracts with values allocated to one or
more of these other separate accounts investing in any one of the Funds. In the
event of any such material conflicts, we will consider what action may be
appropriate, including removing the Fund from the Separate Account or replacing
the Fund with another underlying fund. There are certain risks associated with
mixed and shared funding, as disclosed in the Funds' prospectus.
VOTING RIGHTS -- We are the legal owners of all Fund shares held in the Separate
Account and we have the right to vote at the Fund's shareholder meetings. To the
extent required by federal securities laws or regulations, we will:
- - Notify you of any Fund shareholders' meeting if the shares held for your
policy may be voted.
- - Send proxy materials and a form of instructions that you can use to tell us
how to vote the Fund shares held for your policy.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
- - Arrange for the handling and tallying of proxies received from policy owners.
- - Vote all Fund shares attributable to your policy according to instructions
received from you, and
- - Vote all Fund shares for which no voting instructions are received in the same
proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any Shareholder Meeting at which shares held for your policy may be
voted. After we begin to make annuity payouts to you, the number of votes you
have will decrease.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
The deductions or charges associated with this policy are subtracted, depending
on the type of deduction or charge, from premium payments as they are made, upon
surrender or partial surrender of the policy, on the Policy Anniversary Date or
on a monthly pro rated basis from each Sub-Account ("Deduction Amount").
Deductions are taken from premium payments before allocations to the
Sub-Accounts are made.
Deduction Amounts are subtracted on the Policy Date and on each Monthly Activity
Date after the Policy Date to cover charges and expenses incurred in connection
with a policy.
Each Deduction Amount will be subtracted pro rata from each Sub-Account so 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. If the Cash Surrender Value is not sufficient to cover a
Deduction Amount due on any Monthly Activity Date, the policy may lapse. See
"Lapse and Reinstatement".
The deductions and charges associated with your policy are listed below.
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 tenth 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. The
guaranteed cost of insurance charge is a guaranteed maximum monthly rate,
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. A table of guaranteed maximum 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. For standard risks that require full
underwriting, the guaranteed maximum cost of insurance rate is 100% of the 1980
Commissioner's Standard Ordinary Smoker/Nonsmoker Sex Distinct Age Last Birthday
Mortality Table (1980 CSO) Table). For standard risks eligible for simplified
underwriting, the guaranteed cost of insurance rate is 125% of the 1980 CSO
table through age 90, grading to 100% of the 1980 CSO Table at age 100.
Substandard risks will be assessed a higher guaranteed maximum cost of insurance
rate that will not exceed rates based on a multiple of the 1980 CSO Table. The
multiple will be based on the Insured's substandard rating. Unisex rates may be
required in some states.
Your Coverage Amount is first set on the date we issue your policy and then on
each Monthly Activity Date. The Coverage Amount is the Face Amount minus the
Account Value. There is a Minimum Coverage Amount. It 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 = $70,000
Insured's attained age = 60
Minimum Coverage Amount percentage for age 60 = 30%
On the Monthly Activity Date, the Coverage Amount is $30,000. This is calculated
by subtracting the Account Value on the Monthly Activity Date ($70,000) 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 $21,000 (30% of $70,000). Since $21,000 is less than the Face
Amount less the Account Value ($30,000), no adjustment is necessary. Therefore,
the Coverage Amount will be $30,000.
Assume that the Account Value in the above example was $90,000. The Minimum
Coverage Amount would be $27,000 (30% of $90,000). Since this is greater than
the Face Amount less the Account Value ($10,000), the Coverage Amount for the
Policy Month is $27,000. (For an explanation of the Death Benefit, see "Death
Benefit and Policy Values".)
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.
POLICY OWNER OPTIONS
You, at the time the policy is issued, will elect one of two options described
below to pay charges relating to CERTAIN TAXES AND MORTALITY AND EXPENSE RISK
CHARGES. The option selected by you may affect your Account Value.
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
OPTION 1 -- ASSET-BASED CHARGES -- Under this payment option, you will pay:
MORTALITY AND EXPENSE RISK CHARGE -- For assuming mortality and expense risks
under the policy, we deduct monthly from Sub-Account Value for Policy Years 1
through 10 a charge equal to an annual rate of 0.90%. In Policy Years 11 and
beyond, the charge drops to an annual rate of 0.50%. The mortality and expense
risk charge is broken into charges for mortality risks and for expense risks:
MORTALITY RISK -- The mortality risk we assume is that the cost of insurance
charges specified in the policy will be insufficient to pay claims. We also
assume a risk that the Death Proceeds will exceed: (1) the Coverage Amount on
the date of death; and (2) your policy's Account Value on the date we receive
written notice of death.
EXPENSE RISK -- The expense risk we assume is that expenses we incur in issuing
and administering your policy will exceed the administrative charges.
We may profit from the mortality and expense risk charge and may use any profits
for any proper purpose, including any difference between the cost we incur in
distributing the policies and the proceeds of the Surrender Charge. The
mortality and expense risk charge is deducted while the policy is in force,
including the duration of a settlement option.
TAX EXPENSE CHARGE -- During the first ten years of your policy, we deduct a
monthly charge equal to an annual rate of 0.40% from your Account Value. This
tax expense charge compensates us for certain expenses including:
(1) Premium taxes imposed by various states and local jurisdictions.
A premium tax deduction of 0.25% of the Account Value is deducted over ten
Policy Years and approximates our average expenses for state and local premium
taxes. 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, we do not expect to make
a profit from this deduction.
(2) The cost of the capitalization of certain policy acquisition expenses under
Section 848 of the Internal Revenue Code.
During your first ten Policy Years, we deduct a charge of 0.15% of Account
Value. This charge helps reimburse us for the approximate expenses we incur from
federal taxes we pay under Section 848 of the Internal Revenue Code.
UNAMORTIZED TAX CHARGE -- Under Option 1, during the first nine Policy Years, an
Unamortized Tax charge is imposed on surrender or partial surrenders. The
Unamortized Tax charge is shown below, as a percentage of amount surrendered,
during each Policy Year:
<TABLE>
<CAPTION>
POLICY YEAR RATE
<S> <C>
- ------------------
1 2.25%
- ------------------
2 2.00%
- ------------------
3 1.75%
- ------------------
4 1.50%
- ------------------
5 1.25%
- ------------------
6 1.00%
- ------------------
7 0.75%
- ------------------
8 0.50%
- ------------------
9 0.25%
- ------------------
10+ 0.00%
- ------------------
</TABLE>
After the ninth Policy Year, no Unamortized Tax charge will be imposed.
OPTION 2 -- FRONTED CHARGES -- Under this option, you will pay:
MORTALITY AND EXPENSE RISK CHARGE -- For assuming mortality and expense risks
under the policy, we will deduct monthly from Sub-Account Value for Policy Years
1 through 10 a charge equal to an annual rate of 0.65%. In Policy Years 11 and
beyond, the charge drops to an annual rate of 0.50%. The mortality and expense
risk charge is broken into charges for mortality risks and for expense risks:
MORTALITY RISK -- The mortality risk we assume is that the cost of insurance
charges specified in the policy will be insufficient to pay claims. We also
assume a risk that your policy's Death Benefit will exceed: (1) the Coverage
Amount on the date of death; and (2) your policy's Account Value on the date we
receive written notice of death.
EXPENSE RISK -- The expense risk we assume is that expenses we incur in issuing
and administering the Policies will exceed the administrative charges set in the
policy.
TAX EXPENSE CHARGE -- We deduct a charge equal to 4.0% from all premium
payments. This charge compensates us for certain expenses including:
(1) Premium taxes imposed by various states and local jurisdictions.
A premium tax deduction of 2.5% of premium approximates our average expenses for
state and local premium taxes. 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, we do not expect to make a profit from this deduction.
(2) The cost of the capitalization of certain policy acquisition expenses under
Section 848 of the Internal Revenue Code.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
The charge of 1.5% of premium payments helps reimburse us for the approximate
expenses we incur from federal taxes we pay under Section 848 of the Internal
Revenue Code.
This Option may not be available in all states.
OTHER CHARGES
ANNUAL MAINTENANCE FEE -- The annual maintenance fee is a flat fee that is
deducted from your Account Value to reimburse us for expenses relating to the
maintenance of the policy. The annual $30 charge is deducted on a Policy
Anniversary or when the policy is fully surrendered if the Account Value at
either of those times is less than $50,000. We reserve the right to waive the
annual maintenance fee under other conditions.
ADMINISTRATIVE CHARGE -- We will deduct a monthly administrative charge from
Sub-Account Value equal to an annual rate of 0.40%. This charge compensates us
for expenses incurred in the administration of the Separate Account and the
policy.
SURRENDER CHARGE -- We may charge you a Surrender Charge when you surrender
amounts invested in your policy. We assess a Surrender Charge on amounts
surrendered in any Policy Year that exceed the greater of 10% of the premiums
you have paid into your policy or 100% of your Account Value minus premiums
paid. If the amount you paid has been in your policy:
x For Policy Years 1, 2 and 3, the charge is 7.5%.
x For Policy Years 4 and 5, the charge is 6%.
x For Policy Years 6 and 7, the charge is 4%.
x For Policy Years 8 and 9, the charge is 2%
x For Policy Years 10 and beyond, the charge is 0%
In determining the Surrender Charge, any surrender or partial surrender during
the first ten Policy Years will first come from premiums paid and then from
earnings. If an amount equal to all premiums paid has been withdrawn, no
Surrender Charge will be assessed on the remaining Account Value.
The Surrender Charge is imposed to cover a portion of the sales expense incurred
by us in distributing the Policies. This expense includes commissions,
advertising and the printing of prospectuses.
CHARGES AGAINST THE FUNDS -- The Separate Account purchases shares of the Funds
at net asset value. The net asset value of the Fund shares reflects investment
advisory fees and administrative expenses already deducted from the assets of
the Funds. These charges are described in the Funds' prospectuses accompanying
this Prospectus.
YOUR POLICY
- --------------------------------------------------------------------------------
POLICY RIGHTS
POLICY OWNER, OR "YOU" -- As long as your policy is in force, you may exercise
all rights under the policy while the Insured is alive and a beneficiary has not
been irrevocably named.
BENEFICIARY -- You name the beneficiary in the application for the policy. You
may change the beneficiary (unless irrevocably named) during the Insured's
lifetime by written request to us. 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 -- You may assign your policy as collateral for a loan or other
obligation. Until you notify us in writing, we are not responsible for any
payment made or action taken. We are not responsible for the validity of any
assignment.
STATEMENTS TO POLICY OWNERS -- We will send you a statement at least once each
year, showing:
(a) the current Account Value, Cash Surrender Value and Face Amount;
(b) the premiums paid, monthly deduction amounts and any loans since your last
statement;
(c) the amount of any Indebtedness;
(d) any notifications required by the provisions of your policy; and
(e) any other information required by the Insurance Department of the state
where your policy was delivered.
LIMIT ON RIGHT TO CONTEST -- During the Insured's lifetime, we may not contest
the validity of the policy after it has been in force for two years from the
date we issue the policy. 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 payment is contestable for two years from its effective
date. In addition, if the Insured commits suicide within two years from the date
we issue the policy, or such period as specified in state law, the benefit
payable will be limited to the Account Value minus 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.
POLICY LIMITATIONS
DIVIDENDS -- No dividends will be paid under the policy.
TRANSFERS OF ACCOUNT VALUE -- While the policy remains in force, and subject to
our transfer rules then in effect, you may request that part or all of the
Account Value of a particular Sub-Account be transferred to other Sub-Accounts.
We reserve the right to restrict the number of these 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.
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Transfers may be made by written request or by calling us toll free
1-800-231-5453. Transfers by telephone may be made by the agent of record or by
an attorney-in-fact pursuant to a power of attorney. Telephone transfers may not
be permitted in some states. Hartford, its agents or affiliates will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be genuine. We will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. The procedures we follow for
transactions initiated by telephone include requirements that callers provide
certain information for identification purposes. All transfer instructions
received by telephone are tape-recorded. We will send you a confirmation of the
transfer within five days from the date of any transfer.
It is your responsibility to verify the accuracy of all confirmations and to
promptly advise us of any inaccuracies within 30 days of receipt.
CHANGES TO POLICY OR SEPARATE ACCOUNT
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- We reserve the right, subject
to any applicable law, to make certain changes to the Funds offered under your
policy. We may, in our sole discretion, establish new Funds. New Funds will be
will be made available to existing policyholders as we determine appropriate. We
may also close one or more Funds to additional payments or transfers from
existing Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any reason
and to substitute shares of another registered investment company for the shares
of any Fund already purchased or to be purchased in the future by the Separate
Account. To the extent required by the Investment Company Act of 1940 (the "1940
Act"), substitutions of shares attributable to your interest in a Fund will not
be made until we have the approval of the Commission and we have notified you of
the change.
In the event of any change, we may, by appropriate endorsement, make any changes
in the policy necessary or appropriate to reflect the modification. If we decide
that it is in the best interest contracts owners, the Separate Account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under the 1940 Act in the event such registration
is no longer required, or may be combined with one or more other Separate
Accounts.
SEPARATE ACCOUNT TAXES -- Currently, there is no charge for federal income taxes
that may be attributable to the Separate Account. However, we reserve the right
to make such a charge in the future. Charges for other taxes, if any,
attributable to the Separate Account may also be made.
OTHER BENEFITS OF YOUR POLICY
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 policy 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 "Statement of
Additional Information."
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. The younger Insured's attained age is used to calculate the Minimum Death
Benefit to ensure that the policy continues to qualify as life insurance.
6. Additional tax disclosures applicable to last survivor policies are provided
in "Federal Tax Considerations."
PREMIUMS
- --------------------------------------------------------------------------------
APPLICATION FOR A POLICY -- To purchase a policy you must submit an application
to us. A policy will be issued only on the lives of Insureds age 90 and under
who supply evidence of insurability satisfactory to us. Acceptance is subject to
our underwriting rules and we reserve the right to reject an application for any
reason. If your application for a policy is rejected, then your initial premium
payment will be returned along with an additional amount for interest, based on
the current rate being credited by us. Other than those described in this
prospectus, no change in the terms or conditions of a policy will be made
without your consent. Generally, the minimum initial premium we accept is
$10,000. We may accept less than $10,000 under certain circumstances.
Your policy is effective after we receive all outstanding delivery requirements
and receive your initial premium. The date your policy becomes effective is
called the Policy Date. This date is the date used to determine all future
cyclical transactions on your policy. The Policy Date may be prior to, or the
same as, the date your policy is issued ("Issue Date").
If your Coverage Amount is over then current limits established by us, we will
not accept your initial premium payment with your application. In other cases
where we receive the initial payment with the application, we will provide fixed
conditional insurance during underwriting according to the terms of conditional
receipt established by us. The fixed conditional insurance will be
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
the insurance applied for, up to a maximum that varies by age. If no fixed
conditional insurance was in effect, then on policy delivery we will require a
sufficient payment to place the insurance in force.
PREMIUM PAYMENTS -- You pay a single premium and, subject to restrictions,
additional premiums. You may choose a minimum initial premium of 80%, 90% or
100% of the Guideline Single Premium (based on the Face Amount).
UNDERWRITING RULES OF YOUR POLICY
- - Under current underwriting rules, which are subject to change, if you are
between ages 35 and 80, you may be eligible for simplified underwriting
without a medical examination if you meet simplified underwriting standards.
- - If you are below age 35 or above age 80, or do not meet simplified
underwriting eligibility, full underwriting applies, except that substandard
underwriting applies only in those cases that represent substandard risks
according to customary underwriting guidelines.
Your policy allows for additional premium payments so long as the additional
premiums do not cause the policy to fail to meet the definition of a life
insurance policy under Section 7702 of the Code. The amount and frequency of
additional premium payments will affect the Cash Value and the amount and
duration of insurance. We may require evidence of insurability for any
additional premiums that increase the Coverage Amount. Premiums, which do not
meet the tax qualification guidelines for life insurance under the Internal
Revenue Code, will not be applied to your policy.
ALLOCATION OF PREMIUMS -- Within three business days of receipt of your
completed application and your initial premium payment at our Home Office, we
allocate your entire premium payment to the Putnam Money Market Sub-Account.
We will then allocate the Account Value in the Putnam Money Market Sub-Account
to the Sub-Accounts according to the premium allocations you specify in your
policy application. The allocation is made upon the expiration of the right to
examine policy period, or the date we receive the final requirement to put the
policy in force, whichever is later.
ACCUMULATION UNITS -- The premiums you allocate to the Sub-Accounts are used to
purchase Accumulation Units in such Sub-Accounts. We determine the number of
Accumulation Units of each Sub-Account by dividing the amount of premium you
have allocated to the Sub-Account by the accumulation unit value of that
particular Sub-Account.
ACCUMULATION UNIT VALUES -- The accumulation unit value for each Sub-Account
varies to reflect the investment experience of the applicable underlying Fund.
To determine the current accumulation unit value, we take the prior Valuation
Day's accumulation unit value and multiply it by the Net Investment Factor for
the Valuation Period then ended.
The Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next. The Net Investment Factor for
each Sub-Account equals:
- - The net asset value per share of each Fund held in the Sub-Account at the end
of the current Valuation Period; divided by
- - The net asset value per share of each Fund held in the Sub-Account at the
beginning of the Valuation Period.
You should refer to the Funds' prospectuses accompanying this Prospectus for a
description of how the assets of each Fund are valued, since these
determinations have a direct bearing on the Accumulation Unit Value of the
Sub-Account and therefore the Account Value of a policy.
All valuations in connection with a policy, will be made on the date your
request or payment is received by us before the close of the New York Stock
Exchange on any Valuation Day at our Home Office. Otherwise a valuation will be
made on the next date which is a Valuation Day.
ACCOUNT VALUE -- Each policy has an Account Value. There is no minimum
guaranteed Account Value. A policy's Account Value equals the policy's value in
all of the Sub-Accounts and any amounts in the Loan Account.
The Account Value of your policy is related to the net asset value of the Funds
to which your have allocated your premiums. The Account Value on any Valuation
Day is calculated by multiplying the number of Accumulation Units by the
Accumulation Unit Value and then totaling the results for all the Sub-Accounts.
The Account Value of a policy changes on a daily basis and is computed on each
Valuation Day. Therefore, your Account Value varies to reflect the investment
performance of the underlying Funds, the value of the Loan Account and the
monthly Deduction Amounts.
SUSPENSION OF VALUATION, PAYMENTS AND TRANSFERS -- We will suspend all
procedures requiring valuation (including transfers, surrenders and loans) when:
(a) the New York Stock Exchange is closed;
(b) trading on the New York Stock Exchange is restricted by the SEC;
(c) the SEC permits and orders postponement; or
(d) the SEC determines that an emergency exists to restrict valuation.
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
DEATH BENEFITS AND POLICY VALUES
DEATH BENEFIT -- While in force, your policy provides for the payment of the
Death Proceeds to the beneficiary when the Insured under the policy dies. You
must notify us in writing as soon as possible after the death of the Insured.
The Death Proceeds payable to the beneficiary equal the Death Benefit less any
loans outstanding.
We 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 settlement option
is elected. At such times, the proceeds are not subject to the investment
experience of the Separate Account.
The Death Benefit equals the greater of:
(1) the Face Amount; or
(2) the Account Value multiplied by a specified percentage.
The percentage varies according to the attained age of the Insured and is
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. This is illustrated in the following examples:
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%
- -----------------------------------------------------
</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 we 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%).
DEATH BENEFIT POLICY PROCEEDS -- Proceeds from the Death Benefit left with us
remain in the Sub-Accounts to which they were allocated at the time of death,
unless the beneficiary elects to reallocate them. Full or partial surrenders may
be made at any time.
All or part of the Death Proceeds may be paid in cash or applied under a
Settlement Option.
SETTLEMENT OPTIONS -- The surrender proceeds or Death Proceeds under your policy
may be paid in a lump sum or may be applied to one of our settlement options.
The minimum amount that may be applied under a settlement option is $5,000,
unless we consent to a lesser amount. UNDER SETTLEMENTS OPTIONS LIFE ANNUITY,
LIFE ANNUITY WITH 120,180, OR 240 MONTHLY PAYMENTS CERTAIN AND JOINT AND LAST
SURVIVOR ANNUITY, NO SURRENDER OR PARTIAL SURRENDERS ARE PERMITTED AFTER
PAYMENTS START. FULL SURRENDER OR PARTIAL SURRENDERS MAY BE MADE FROM THE
INTEREST INCOME SETTLEMENT OPTION, PAYMENTS FOR A DESIGNATED PERIOD SETTLEMENT
OPTION OR THE DEATH BENEFIT POLICY PROCEEDS, BUT THEY ARE SUBJECT TO THE
SURRENDER CHARGE, IF APPLICABLE. THERE MAY BE ADVERSE TAX CONSEQUENCES FOR
PARTIAL SURRENDERS FROM PAYMENTS FOR A DESIGNATED PERIOD SETTLEMENT OPTION.
PLEASE CHECK WITH YOUR TAX ADVISOR BEFORE REQUESTING A PARTIAL SURRENDER.
The following settlement options are available under your policy:
OPTION 1 -- INTEREST INCOME -- This option offers payments of interest, at the
rate we declare, on the amount applied under this settlement option. The
interest rate will never be less than 3 1/2% per year.
OPTION 2 -- LIFE ANNUITY -- Death Proceeds are used to purchase a variable
annuity where we make annuity payments as long as the annuitant is living. When
the annuitant dies, we stop making annuity payments. A payee would receive only
one annuity payment if the annuitant dies after the first payment, two annuity
payments if the annuitant dies after the second payment, and so forth.
OPTION 3 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN -- We
make monthly annuity payments during the lifetime of the annuitant but annuity
payments are at least guaranteed for a minimum of 120, 180 or 240 months, as you
elect. If, at the death of the annuitant, annuity payments have been made for
less than the minimum elected number of months, then the beneficiary can either
receive the present value (as of the date of the annuitant's death) of the
remaining payments in one sum or continue annuity payments for the remaining
period certain.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- We will make annuity
payments as long as the annuitant and joint annuitant are living. When one
annuitant dies, we continue to make annuity payments until that second annuitant
dies. The annuitant may elect that the payment be less than the payment made
during the joint lifetime of the annuitants. When choosing this option, you must
decide what will happen to the annuity payments after the first annuitant dies.
Under this option, it is possible for an annuitant and joint annuitant to
receive only one payment in the event of the common or simultaneous death of the
annuitants prior to the date of the second payment.
OPTION 5 -- PAYMENTS FOR A DESIGNATED PERIOD -- We will make annuity payments
for the number of years that you select. You can select between 5 years and 30
years. Under this option, you may, at any time, request a full surrender and
receive the Cash Surrender Value of your policy.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
VARIABLE AND FIXED ANNUITY PAYMENTS -- When the settlement option you select
involves an annuity, unless you specify otherwise, the surrender proceeds or
Death Proceeds provide a variable annuity. Fixed annuity options are also
available.
VARIABLE ANNUITY -- Your policy contains tables indicating the minimum dollar
amount of the first monthly payment under a variable annuity for each $1,000 of
value of a Sub-Account. Your first monthly payment varies with the annuity
option chosen and specific parameters chosen by you. The policy contains
variable payment annuity tables derived from the 1983(a) Individual Annuity
Mortality Table, with ages set back one year and with an assumed investment rate
("A.I.R.") of 5% per annum. The assumed investment rate is the investment return
used to calculate subsequent variable annuity payments.
We determine the total first monthly variable annuity payment by multiplying the
Death Proceeds (expressed in thousands of dollars) in a Sub-Account by the
amount of the first monthly payment per $1,000 of value obtained from the tables
in the policy.
The amount of your first monthly variable annuity payment is divided by the
value of an annuity unit for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due. This determines 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 assumed investment rate. Payments will vary
up or down as the investment rate varies up or down relative to the assumed
investment rate.
FIXED ANNUITY PAYMENTS -- You will receive equal fixed annuity payments
throughout the annuity payment period. We determine fixed annuity payment
amounts by multiplying the amount applied to the annuity by an annuity rate. The
annuity rate is set by us and is not less than the rate specified in the fixed
payment annuity tables in your policy.
Hartford will make any other arrangements for income payments as may be agreed
on.
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 us, we will pay you the Cash Surrender Value. In such case, the
policy will terminate and we will have no further obligations under the policy.
The Maturity Date may be extended by rider where approved, but see "Federal Tax
Considerations -- Income Taxation of Policy Benefits."
CHARGES AND POLICY VALUES -- Your policy value decreases due to the deduction of
policy charges. Policy value may increase or decrease depending on investment
performance. Fluctuations in your Account Value may have an effect on your Death
Benefit. If your policy lapses, your policy terminates and no Death Benefit will
be paid.
MAKING WITHDRAWALS FROM YOUR POLICY
- --------------------------------------------------------------------------------
SURRENDERS -- While your policy is in force, you may, without the consent of the
beneficiary (provided the designation of beneficiary is not irrevocable), fully
surrender your policy. Upon surrender, you receive the Cash Surrender Value
determined as of the day we receive your request or the date requested by you,
whichever is later. The Cash Surrender Value equals the Account Value less any
Surrender Charges and any Unamortized Tax charge and all Indebtedness. We pay
the Cash Surrender Value of the policy within seven days of our receipt of your
written request or on the effective surrender date requested by you, whichever
is later. Your policy will terminate on the date of our receipt of the written
request, or the date you request the surrender to be effective, whichever is
later. For a discussion of the tax consequences of surrendering your policy, see
"Federal Tax Considerations".
If you choose to apply the surrender proceeds to a settlement option, the
Surrender 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 Surrender Charge. However, any Unamortized Tax
charge, if applicable, will be deducted from the surrender proceeds to be
applied. In addition, amounts you withdraw from the Interest Income settlement
option, the Payments for a Designated Period settlement option or the Death
Benefit Policy Proceeds are subject to any applicable Surrender Charge.
PARTIAL SURRENDERS -- While your policy is in force, you may elect, by written
request, to make partial surrenders from the Cash Surrender Value. The Cash
Surrender Value, after partial surrender, must at least equal our minimum amount
rules then in effect; otherwise, the request will be treated as a request for
full surrender. The partial surrenders will be deducted pro rata from each
Sub-Account, unless the you instruct otherwise. The Face Amount will be reduced
proportionate to the reduction in the Account Value due to the partial
surrender. Partial surrenders in excess of the greater of 10% of premiums or
100% of Account Value less premiums paid will be subject to the Surrender Charge
and any Unamortized Tax charges. For a discussion of the tax consequences of
partial surrenders, see "Federal Tax Considerations".
RIGHT TO EXAMINE -- You have a limited right to return your policy for
cancellation. You may deliver or mail the policy to us or to the agent from whom
it was purchased any time during your free look period. Your free look period
begins on the day you get your policy and ends ten days after you get it (or
longer in some
<PAGE>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
states). In such event, the policy will be rescinded and we will pay an amount
equal to the greater of the premiums paid for the policy less any Indebtedness
or the sum of: i) the Account Value less any Indebtedness, on the date the
returned policy is received by us or the agent from whom it was purchased; and,
ii)any deductions under the policy or charges associated with the Separate
Account. If your policy is replacing another policy, your free look period and
the amount paid to you upon the return of your policy vary by state.
RIGHT TO EXCHANGE -- Once the policy is in effect, it may be exchanged, during
the first 24 months after its issuance, for a non-variable flexible premium
adjustable life insurance policy offered by us (or an affiliated company) on the
life of the Insured. No evidence of insurability will be required. The new
policy will have, at your election, either the same Coverage Amount as 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. The exchange is subject to adjustments in payments and Account Values to
reflect variances, if any, in the payments and Account Values under this policy
and the new policy.
LOANS
- --------------------------------------------------------------------------------
AVAILABILITY OF LOANS -- At any time while the policy is in force, you, without
the consent of the beneficiary, (provided the designation of beneficiary is not
irrevocable) may borrow against the policy by assigning it as sole security to
us. Two types of cash loans are available. Any new loan taken together with any
existing Indebtedness may not exceed 90% of the Cash Value. The minimum loan
amount that we will allow is $25.00.
The proceeds of a loan will be delivered to you within seven business days of
our receipt of the loan request.
Unless you specify otherwise, all loan amounts will be transferred pro rata
basis from each Sub-Account to the Loan Account. 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.
If total Indebtedness equals or exceeds the Account Value of the policy on any
Monthly Activity Date, we will give you written notice that, unless we receive
an additional payment within 61 days to reduce the aggregate outstanding loan(s)
secured by the policy, the policy may lapse. See "Lapse and Reinstatement."
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."
LOAN REPAYMENTS -- You can repay all or any part of a loan at any time while
your policy is in force. The amount of your policy loan repayment will be
deducted from the Loan Account. It will be allocated among the Sub-Accounts in
the same percentage as premiums are allocated. Any outstanding loan at the end
of a grace period must be repaid before the policy will be reinstated.
EFFECT OF LOANS ON ACCOUNT VALUE -- A loan, whether or not repaid, has a
permanent effect on your Account Value. This effect occurs because the
investment result of each Sub-Account applies only to the amount remaining in
such Sub-Accounts. The longer a loan is outstanding, the greater the effect on
your Account Value 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, your Account Value will not increase as
rapidly as it would have had no loan been made. If the Sub-Accounts earn less
than the Loan Account, then your Account Value will be greater than it would
have been had no loan been made. If not repaid, the aggregate amount of the
outstanding Indebtedness will reduce the Death Proceeds and the Cash Surrender
Value otherwise payable. For a discussion of the consequences of obtaining a
loan against the policy see "Federal Tax Considerations."
CREDITED INTEREST -- Any amounts in the Loan Account will be credited with
interest at an annual rate of 4.0%. The annual rate for Preferred Loans is 6%.
POLICY LOAN RATES -- The loan interest rate that we will charge on all loans is
6% per annum.
LAPSE AND REINSTATEMENT
- --------------------------------------------------------------------------------
LAPSE -- Your policy will remain in force until the Cash Surrender Value is
insufficient to cover the Deduction Amount due on a Monthly Activity Date. We
will notify you of the default in writing, warning you that your policy is in
danger of terminating.
GRACE PERIOD -- Your policy provides a 61-day 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 "Death Benefits and Policy Values."
REINSTATEMENT -- If your policy lapses, you may apply for reinstatement of the
policy by payment of the reinstatement premium shown in the policy and any
applicable charges. A
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
- --------------------------------------------------------------------------------
request for reinstatement may be made within five years of lapse. If a loan is
outstanding at the time of lapse, we require repayment of the loan before
permitting reinstatement. In addition, we reserve the right to require evidence
of insurability satisfactory to Hartford.
The Account Value on the reinstatement date will reflect:
(a) the Cash Value at the time of termination; plus
(b) Net Premiums derived from premiums paid at the time of reinstatement; minus
(c) the Monthly Deduction Amounts that were due and unpaid during the Policy
Grace Period; plus
(d) the Surrender Charge at the time of reinstatement.
The surrender charge is based on the duration from the original policy date as
through the policy has never lapsed.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
GENERAL
Since federal tax law is complex, the tax consequences of purchasing this policy
will vary depending on your situation. You may need tax or legal advice to help
you determine whether purchasing this policy is right for you.
Our general discussion of the tax treatment of this policy is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this policy cannot be made in the prospectus. We also do not discuss
state, municipal or other tax laws that may apply to this policy. For detailed
information, you should consult with a qualified tax adviser familiar with your
situation.
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 "Premiums -- Account Value"). 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 contracts under Section 7702 of the Code. The death benefit under a
life insurance contract is generally excluded from the gross income of the
beneficiary. Also, a life insurance Policy Owner is generally not taxed on
increments in the contract 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 contract for federal income tax purposes after the scheduled
Maturity Date. However, due to the lack of specific guidance on this issue, the
result is not certain. If the Policy is not treated as a life insurance contract
for federal income tax purposes after the scheduled Maturity Date, among other
things, the Death Proceeds may be taxable to the recipient. The 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 contract 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 contract.
MODIFIED ENDOWMENT CONTRACTS
A life insurance contract is treated as a "modified endowment contract" under
Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay" test of Section 7702A. The seven-pay test
provides that 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
<PAGE>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
as a modified endowment contract for federal income tax purposes. However, an
exchange under Section 1035 of the Code of a life insurance contract issued
before June 21, 1988 will not cause the new Policy to be treated as a modified
endowment contract if no additional premiums are paid.
A contract that is classified as modified endowment contract is eligible for
certain aspects of 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 $650,000 (1999) from the
estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the credit
over the next seven 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, as adjusted for inflation. 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
The Code requires that investments supporting your policy be adequately
diversified. Code Section 817 provides that a variable life insurance contract
will not be treated as a life insurance contract for any period during which the
investments made by the separate account or underlying fund are not adequately
diversified. If a contract is not treated as a life insurance contract, the
policy owner will be subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
- - no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,
- - no more than 70% is represented by any two investments,
- - no more than 80% is represented by any three investments and
- - no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
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 still comply within a reasonable period and avoid
the taxation of contract 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.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend 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 contract to qualify for tax deferral,
assets in the separate accounts supporting the contract must be considered to be
owned by the insurance company and not by the policy owner. It is unclear under
what circumstances an investor is considered to have enough control over the
assets in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say that certain incidents of ownership by the
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
policy owner, such as the ability to select and control investments in a
separate account, will cause the policy owner to be treated as the owner of the
assets for tax purposes.
In its explanation of the diversification regulations, the Treasury Department
recognized 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, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a policy owner is considered the owner of the assets for
tax purposes. We reserve the right to modify the policy, as necessary, to
prevent you from being considered the owner of assets in the separate account.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any increase
in an Owner's Investment Value is generally not taxable to the Policy Owner
unless amounts are received (or are deemed to be received) under the Policy
prior to the Insured's death. If the Policy is surrendered or matures, the
amount received will be includable in the Policy Owner's income to the extent
that it exceeds the Policy Owner's "investment in the contract." (If there is
any debt at the time of a surrender, then such debt will be treated as an amount
distributed to the Owner.) The "investment in the contract" is the aggregate
amount of premium payments and other consideration paid for the Policy, less the
aggregate amount received previously under the Policy to the extent such amounts
received were excluded from gross income. Since this Policy is a modified
endowment contract, partial withdrawals (or other such amounts deemed to be
distributed) from the Policy constitute income to the Policy Owner for Federal
income tax purposes.
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 contracts. 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.
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.
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
OTHER MATTERS
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.
YEAR 2000
IN GENERAL -- The Year 2000 issue relates to the ability or inability of
computer hardware, software and other information technology (IT) systems, as
well as non-IT systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the year 2000 as "1900", or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition, Year
2000 problems that occur with third parties with which a company does business,
such as suppliers, computer vendors, distributors and others, may also adversely
affect any given company.
The integrity and reliability of Hartford's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of Hartford's business.
Hartford issues insurance policies, annuities, mutual funds and other financial
products to individual and business customers, nearly all of which contain date
sensitive data, such as policy expiration dates, birth dates and premium payment
dates. In addition, various IT systems support communications and other systems
that integrate Hartford's various business segments and field offices. Hartford
also has business relationships with numerous third parties that affect
virtually all aspects of Hartford's business, including, without limitation,
suppliers, computer hardware and software vendors, insurance agents and brokers,
securities broker-dealers and other distributors of financial products, many of
which provide date sensitive data to Hartford, and whose operations are
important to Hartford's business.
INTERNAL YEAR 2000 EFFORTS AND TIMETABLE -- Beginning in 1990, Hartford began
working on making its IT systems Year 2000 ready, either through installing new
programs or replacing systems. Since January 1998, Hartford's Year 2000 efforts
have focused on the remaining Year 2000 issues related to IT and non-IT systems
in all of Hartford's business segments. These Year 2000 efforts include the
following five main initiatives: (1) identifying and assessing Year 2000 issues;
(2) taking actions to remediate IT and non-IT systems so that they are Year 2000
ready; (3) testing IT and non-IT systems for Year 2000 readiness; (4) deploying
such remediated and tested systems back into their respective production
environments; and (5) conducting internal and external integrated testing of
such systems. As of December 31, 1998, Hartford substantially completed
initiatives (1) through (4) of its internal Year 2000 efforts. Hartford has
begun initiative (5) and management currently anticipates that such activity
will continue into the fourth quarter of 1999.
THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE -- Hartford's Year 2000 efforts
include assessing the potential impact on Hartford of third parties' Year 2000
readiness. Hartford's third party Year 2000 efforts include the following three
main initiatives: (1) identifying third parties which have significant business
relationships with Hartford, including, without limitation, insurance agents,
brokers, third party administrators, banks and other distributors and servicers
of financial products, and inquiring of such third parties regarding their Year
2000 readiness; (2) evaluating such third parties' responses to Hartford's
inquiries; and (3) based on the evaluation of third party responses (or a third
party's failure to respond) and the significance of the business relationship,
conducting additional activities with respect to third parties as determined to
be necessary in each case. These activities may include conducting additional
inquiries, more in-depth evaluations of Year 2000 readiness and plans, and
integrated IT systems testing. Hartford has completed the first third party
initiative and, as of early 1999, had substantially completed evaluating third
party responses received. Hartford has begun conducting the additional
activities described in initiative (3) and management currently anticipates that
it will continue to do so through the end of 1999. However, notwithstanding
these third party Year 2000 efforts, Hartford does not have control over these
third parties and, as a result, Hartford cannot currently determine to what
extent future operating results may be adversely affected by the failure of
these third parties to adequately address their Year 2000 issues.
YEAR 2000 COSTS -- The costs of Hartford's Year 2000 program that were incurred
through the year ended December 31, 1997 were not material to Hartford's
financial condition or results of operations. The after-tax costs of Hartford's
Year 2000 efforts for the year ended December 31, 1998 were approximately $3
million. Management currently estimates that after-tax costs related to the Year
2000 program to be incurred in 1999 will be less than $10 million. These costs
are being expensed as incurred.
RISKS AND CONTINGENCY PLANS -- If significant Year 2000 problems arise,
including problems arising with third parties, failures of IT and non-IT systems
could occur, which in turn could result in substantial interruptions in
Hartford's business. In addition, Hartford's investing activities are an
important aspect of its business and Hartford may be exposed to the risk that
issuers of
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
- --------------------------------------------------------------------------------
investments held by it will be adversely impacted by Year 2000 issues. Given the
uncertain nature of Year 2000 problems that may arise, especially those related
to the readiness of third parties discussed above, management cannot determine
at this time whether the consequences of Year 2000 related problems that could
arise will have a material impact on Hartford's financial condition or results
of operations.
Hartford is in the process of developing certain contingency plans so that if,
despite its Year 2000 efforts, Year 2000 problems ultimately arise, the impact
of such problems may be avoided or minimized. These contingency plans are being
developed based on, among other things, known or reasonably anticipated
circumstances and potential vulnerabilities. The contingency planning also
includes assessing the dependency of Hartford's business on third parties and
their Year 2000 readiness. Hartford currently anticipates that internal and
external contingency plans will be substantially complete by the end of the
second quarter of 1999. However, in many contexts, Year 2000 issues are dynamic,
and ongoing assessments of business functions, vulnerabilities and risks must be
made. As such, new contingency plans may be needed in the future and/or existing
plans may need to be modified as circumstances warrant.
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The current value of the Sub-Accounts plus the value of the Loan
Account under the policy.
ACCUMULATION UNIT: A unit of measure we use to calculate the value of a
Sub-Account.
ANNUAL WITHDRAWAL AMOUNT: The amount of a surrender or partial surrender that is
not subject to the Surrender Charge. This amount in any Policy Year is the
greater of 10% of premiums or 100% of your Account Value minus premiums paid.
ANNUITY UNIT: A unit of measure we use to calculate the amount of annuity
payments.
CASH SURRENDER VALUE: The policy's Cash Value minus all Indebtedness.
CASH VALUE: The policy's Account Value minus any Surrender Charge and any
Unamortized Tax charge due upon surrender.
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 we will pay on the death of the Insured. This
equals the Death Benefit minus any Indebtedness.
DEDUCTION AMOUNT: A charge on the Policy Date and on each Monthly Activity Date
for the cost of insurance, Tax Expense charges under Option 1, an administrative
charge and a mortality and expense risk charge.
FACE AMOUNT: On the Policy Date, the Face Amount is the amount shown on the
policy's Specifications page. Thereafter, the Face Amount is reduced in
proportion to any partial surrenders.
HARTFORD, WE OR US: Hartford Life and Annuity Insurance Company.
HOME OFFICE: Currently located at 200 Hopmeadow Street, Simsbury, Connecticut;
however, the mailing address is P.O. Box 2999, Hartford, Connecticut 06104-2999.
INDEBTEDNESS: Monies you owe us, including all outstanding loans on the policy,
any interest due or accrued and any unpaid Deduction Amount or annual
maintenance fee arising during a grace period.
INSURED: The person on whose life the policy is issued.
ISSUE AGE: As of the Policy Date, the Insured's age on Insured's last birthday.
LOAN ACCOUNT: An account in our general account, established for any amounts
transferred from the Sub-Accounts for requested loans. The Loan Account credits
a fixed rate of interest that is not based on the investment experience of the
Separate Account.
MONTHLY ACTIVITY DATE: The day of each month on which any deductions or charges
are subtracted from Account Value of your policy. Monthly Activity Dates occur
on the same day of the month as the Policy Anniversary.
POLICY ANNIVERSARY: The yearly anniversary of the Policy Date.
POLICY DATE: The issue date of the policy.
POLICY LOAN RATE: The interest rate charged on policy loans.
POLICY OWNER OR YOU: The owner of the policy.
POLICY YEAR: The twelve months between Policy Anniversaries.
SUB-ACCOUNT VALUE: The current value of the Sub-Accounts.
SURRENDER CHARGE: A charge which may be assessed upon surrender of the policy or
partial surrenders in excess of the Annual Withdrawal Amount.
VALUATION DAY: The date on which the Sub-Account is valued. The Valuation Day is
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.
<PAGE>
PART B
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT FIVE
This Statement of Additional Information is not a prospectus. We will send you a
prospectus if you write us at P.O. Box 2999, Hartford, CT 06104-2999, or if you
call us at 1-800-231-5453.
DATE OF PROSPECTUS: MAY 3, 1999, REVISED OCTOBER 18, 1999
DATE OF STATEMENT OF ADDITIONAL INFORMATION: MAY 3, 1999, REVISED OCTOBER 18,
1999
<PAGE>
2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
- ----------------------------------------------------------------------
GENERAL INFORMATION AND HISTORY 3
- ----------------------------------------------------------------------
SERVICES 5
- ----------------------------------------------------------------------
EXPERTS 5
- ----------------------------------------------------------------------
DISTRIBUTION OF THE POLICIES 6
- ----------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT CHARGES 6
- ----------------------------------------------------------------------
ILLUSTRATION OF BENEFITS 7
- ----------------------------------------------------------------------
FINANCIAL STATEMENTS SA-1
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
- --------------------------------------------------------------------------------
GENERAL INFORMATION AND HISTORY
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY -- Hartford Life and Annuity
Insurance Company 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, the District of Columbia and Puerto Rico, except New York.
On January 1, 1998, Hartford's name changed from ITT Hartford Life and Annuity
Insurance Company to Hartford Life and Annuity Insurance Company. We were
originally incorporated under the laws of Wisconsin on January 9, 1956, and
subsequently redomiciled to Connecticut. Our offices are located in Simsbury,
Connecticut; however, our mailing address is P.O. Box 2999, Hartford, CT
06104-2999. We are ultimately controlled by The Hartford Financial Services
Group, Inc., one of the largest financial service providers in the United
States.
The following table shows a brief description of the business experience of
officers and directors of Hartford Life and Annuity Insurance Company:
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
Wendell J. Bossen 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 Senior Vice President, Vice President & Controller (1995-1997), Hartford Life
Director, 1997* Insurance Company; Director (1997-Present); Senior Vice
President (1997-Present), Chief Financial Officer &
Treasurer (1997-1998); 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 Senior Vice President, Vice President (1993-1997), Hartford; Senior Vice President,
1997 (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.
Timothy M. Fitch Vice President, 1995 Vice President (1995-Present); Actuary (1994-Present);
Actuary, 1997 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.
Mary Jane B. Fortin Vice President & Chief Vice President & Chief Accounting Office (1998-Present),
Accounting Officer, Hartford Life Insurance Company; Vice President & Chief
1998 Accounting Officer, (1998-Present), Royal Life Insurance
Company of America; Vice President & Chief Accounting
Officer (1998-Present) Alpine Life Insurance Company; Chief
Accounting Officer (1997-Present), Hartford Life, Inc.;
Director, Finance (1995-1997), Value Health, Inc.; Senior
Manager (1993-1995), Coopers and Lybrand; Audit Manager
(1993-1996) Arthur Andersen & Co.
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
David T. Foy Senior Vice President & Senior Vice President (1998-Present), Vice President (1998),
Treasurer, 1998 Assistant Vice President (1995-1998), Hartford; Senior Vice
President (1998-Present), Hartford Life and Accident
Insurance Company; Director, Strategic Planning Corporate
Finance (1995-1996), IA Product Development (1994-1995),
Hartford; Various Actuarial Roles (1989-1993) Milliman &
Robertson
Lynda Godkin Senior Vice President, Assistant General Counsel and Secretary (1994-1995),
1997 Hartford; Director (1997-Present); Senior Vice President
General Counsel, 1996 (1997-Present); General Counsel (1996-Present); Corporate
Corporate Secretary, Secretary (1995-Present); Associate General Counsel
1996 (1995-1996); Assistant General Counsel and Secretary
Director, 1997* (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 Senior Vice President, Vice President (1994-1998), Hartford; Senior Vice President
1998 (1998-Present); Vice President (1993-1997); Assistant Vice
Vice President, 1994 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.
Stephen T. Joyce 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 Vice President, 1998 Vice President (1998-Present); Hartford Life and Accident
Insurance Company; Vice President (1995-1997), Providian
Insurance; Supervisor/Manager (1985-1995), U.S. West
Communications.
Robert A. Kerzner Senior Vice President, Senior Vice President (1998-Present); Vice President
1998 (1994-1998), Hartford; Senior Vice President (1998-Present);
Vice President, 1997 Vice President (1994-1997); Regional Vice President
(1991-1994), Hartford Life Insurance Company.
Thomas M. Marra Executive Vice Senior Vice President (1993-1996); Director of Individual
President, 1996 Annuities (1991-1993), Hartford; Director (1994-Present);
Director, Individual Executive Vice President (1995-Present); Director,
Life Individual Life and Annuity Division (1994-Present); Senior
and Annuity Division, Vice President (1994-1995); Vice President (1989-1994);
1993 Actuary (1987-1997), Hartford Life and Accident Insurance
Director, 1994* 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 Vice President, 1984 Director of New Business (1984-1997), Hartford.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Craig R. Raymond Senior Vice President, Vice President (1993-1997); Assistant Vice President
1997 (1992-1993); Actuary (1989-1994), Hartford; Senior Vice
Chief Actuary, 1994 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.
Lowndes A. Smith President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive (1981-Present); President (1989-Present); Chief Executive
Officer, 1997 Officer (1997-Present); Chief Operating Officer (1989-1997),
Director, 1985* 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.
David M. Znamierowski Senior Vice President, Vice President (1997) Senior Vice President (1997) Director,
1997 Risk Management Strategy (1996) Director (1998), Hartford;
Director, 1998 Director (1998-Present); Senior Vice President
(1997-Present); Hartford Life and Accident Insurance
Company; Vice President, Investment Strategy (1997-Present),
Hartford Life, Inc.; Vice President, Investment Strategy &
Policy (1991-1996), Aetna Life and Casualty.
</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 of the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
SEPARATE ACCOUNT FIVE -- was established as a separate account under Connecticut
law on August 17, 1994. The Separate Account is classified as a unit investment
trust registered with the Securities and Exchange Commission under the
Investment Company Act of 1940.
SERVICES
- --------------------------------------------------------------------------------
SAFEKEEPING OF ASSETS -- The assets of the Separate Account are held by
Hartford. The assets of the Separate Account are kept physically segregated and
held separate and apart from the General Account of Hartford. Hartford maintains
records of all purchases and redemptions of shares of the Fund. Additional
protection for the assets of the Separate Account is afforded by Hartford's
blanket fidelity bond, issued by Aetna Casualty and Surety Company, in the
aggregate of $50 million, covering all of the officers and employees of
Hartford.
EXPERTS
- --------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS -- The audited financial statements included in
this 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
financial statements of Hartford Life and Annuity Insurance Company which states
the statutory 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.
ACTUARIAL EXPERT -- The hypothetical Policy illustrations included in this
Statement of Additional Information 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.
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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
Hartford Equity Sales Company, Inc. ("HESCO") or certain other independent,
registered broker-dealers. Any sales representative or employee will have been
qualified to sell variable life insurance Policies under applicable federal and
state laws. Each broker-dealer is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and all are members of the
National Association of Securities Dealers, Inc.
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account .
Both HESCO and HSD are affiliates of Hartford. The principal business address of
HESCO and HSD is the same as that of Hartford.
The following table shows officers and directors of HSD:
<TABLE>
- -------------------------------------------------------------------
<CAPTION>
NAME AND
PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES
<S> <C>
Lowndes A. Smith President and Chief Executive Officer,
Director
- -------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director
- -------------------------------------------------------------------
Robert A. Kerzner Executive Vice President
- -------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary, Director
- -------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- -------------------------------------------------------------------
David T. Foy Treasurer
- -------------------------------------------------------------------
George R. Jay Controller
- -------------------------------------------------------------------
</TABLE>
The maximum sales commission payable to Hartford agents, independent registered
insurance brokers, and other registered broker-dealers is 7.0% of initial and
subsequent premiums.
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 the 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.
ADDITIONAL INFORMATION ABOUT CHARGES
- --------------------------------------------------------------------------------
UNDERWRITING PROCEDURES -- To purchase a policy you must submit an application
to us. Generally, the minimum initial premium we accept is $10,000. A policy
will be issued only on the lives of insureds age 90 and under who supply
evidence of insurability satisfactory to us. Acceptance is subject to our
underwriting rules and we reserve the right to reject an application for any
reason. No change in the terms or conditions of a policy will be made without
your consent.
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 tenth 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. The
guaranteed cost of insurance charge is a guaranteed maximum monthly rate,
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. A table of guaranteed maximum 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. For standard risks that require full
underwriting, the guaranteed maximum cost of insurance rate is 100% of the 1980
Commissioner's Standard Ordinary Smoker/Nonsmoker Sex Distinct Age Last Birthday
Mortality Table (1980 CSO Table). For standard risks eligible for simplified
underwriting, the guaranteed cost of insurance rate is 125% of the 1980 CSO
table through age 90, grading to 100% of the 1980 CSO Table at age 100.
Substandard risks will be assessed a higher guaranteed maximum cost of insurance
rate that will not exceed rates based on a multiple of the 1980 CSO Table. The
multiple will be based on the insured's substandard rating. Unisex rates may be
required in some states.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES
AND CASH SURRENDER VALUES
The tables illustrate the way in which a Policy operates. They show how the
death benefit and surrender value could vary over an extended period of time
assuming hypothetical gross rates of return equal to constant after tax annual
rates of 0%, 6% and 12%. The 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 $44,053,
$34,014 and $20,001, respectively, are illustrated for the single life preferred
Policy for both Policy Owner Option 1 and Policy Owner Option 2. The
illustrations for the last survivor preferred Policy assume male and female of
equal ages, including age 55 and 65 for Face Amounts of $45,872 and $28,491.
The death benefit and surrender value for a Policy would be different from those
shown if the rates of return averaged 0%, 6% and 12% over a period of years, but
also fluctuated above or below those averages for individual Policy Years. They
would also differ if any Policy loan were made during the period of time
illustrated.
The tables reflect the deductions of current Policy charges for Policy Owner
Option 1 and Policy Owner Option 2 and guaranteed Policy charges for a single
gross interest rate. The death benefits and surrender values would change if the
current cost of insurance charges change.
The amounts shown for the death benefit and surrender value as of the end of
each Policy Year take into account an average daily charge equal to an annual
charge of 0.82% of the average daily net assets of the Funds for investment
advisory and administrative services fees. The gross annual investment return
rates of 0%, 6% and 12% on the Fund's assets are equal to net annual investment
return rates (net of the annual charge of 0.82% described above) of -0.82%,
5.18% and 11.18%, respectively.
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
"Changes to Policy or Separate Account -- Separate Account Taxes").
The "Premium Paid Plus Interest" column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes of 5% per year, compounded annually.
Hartford will furnish upon request, a comparable illustration reflecting the
proposed Insureds age, risk classification, Face Amount or initial premium
requested, and reflecting guaranteed cost of insurance rates. Hartford will also
furnish an additional similar illustration reflecting current cost of insurance
rates which may be less than, but never greater than, the guaranteed cost of
insurance rates.
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,860 9,835 44,053 10,778 9,755 44,053
2 11,025 11,760 10,745 44,053 11,586 10,574 44,053
3 11,576 12,738 11,736 44,053 12,461 11,463 44,053
4 12,155 13,801 12,964 44,053 13,409 12,578 44,053
5 12,763 14,954 14,137 44,053 14,437 13,626 44,053
6 13,401 16,207 15,615 44,053 15,551 14,965 44,053
7 14,071 17,567 17,006 44,053 16,759 16,204 44,053
8 14,775 19,045 18,719 44,053 18,070 17,750 44,053
9 15,513 20,649 20,367 44,053 19,493 19,215 44,053
10 16,289 22,391 22,361 44,053 21,040 21,010 44,053
11 17,103 24,478 24,448 44,053 22,909 22,879 44,053
12 17,959 26,763 26,733 44,053 24,967 24,937 44,053
13 18,856 29,265 29,235 44,053 27,239 27,209 44,053
14 19,799 32,018 31,988 44,185 29,753 29,723 44,053
15 20,789 35,062 35,032 46,982 32,542 32,512 44,053
16 21,829 38,407 38,377 49,929 35,636 35,606 46,326
17 22,920 42,068 42,038 53,847 39,031 39,001 49,959
18 24,066 46,075 46,045 58,054 42,746 42,716 53,859
19 25,270 50,460 50,460 62,569 46,811 46,781 58,045
20 26,533 55,292 55,292 67,456 51,261 51,261 62,538
25 33,864 87,104 87,104 101,040 80,746 80,746 93,665
35 55,160 215,814 215,814 228,762 199,928 199,928 211,924
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,273 9,262 44,053 10,191 9,182 44,053
2 11,025 10,524 9,533 44,053 10,346 9,360 44,053
3 11,576 10,780 9,812 44,053 10,495 9,531 44,053
4 12,155 11,044 10,249 44,053 10,635 9,845 44,053
5 12,763 11,316 10,544 44,053 10,765 10,001 44,053
6 13,401 11,594 11,048 44,053 10,883 10,345 44,053
7 14,071 11,880 11,361 44,053 10,987 10,474 44,053
8 14,775 12,174 11,883 44,053 11,071 10,786 44,053
9 15,513 12,476 12,215 44,053 11,133 10,875 44,053
10 16,289 12,787 12,757 44,053 11,168 11,138 44,053
11 17,103 13,211 13,181 44,053 11,265 11,235 44,053
12 17,959 13,650 13,620 44,053 11,331 11,301 44,053
13 18,856 14,105 14,075 44,053 11,363 11,333 44,053
14 19,799 14,577 14,547 44,053 11,356 11,326 44,053
15 20,789 15,065 15,035 44,053 11,301 11,271 44,053
16 21,829 15,570 15,540 44,053 11,190 11,160 44,053
17 22,920 16,093 16,063 44,053 11,015 10,985 44,053
18 24,066 16,635 16,605 44,053 10,760 10,730 44,053
19 25,270 17,197 17,167 44,053 10,411 10,381 44,053
20 26,533 17,778 17,748 44,053 9,952 9,922 44,053
25 33,864 21,010 20,980 44,053 5,240 5,210 44,053
35 55,160 29,447 29,417 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,687 8,713 44,053 9,605 8,638 44,053
2 11,025 9,355 8,437 44,053 9,176 8,275 44,053
3 11,576 9,034 8,168 44,053 8,744 7,905 44,053
4 12,155 8,722 8,038 44,053 8,305 7,652 44,053
5 12,763 8,421 7,780 44,053 7,859 7,259 44,053
6 13,401 8,128 7,692 44,053 7,403 7,003 44,053
7 14,071 7,845 7,443 44,053 6,934 6,575 44,053
8 14,775 7,571 7,352 44,053 6,449 6,258 44,053
9 15,513 7,305 7,111 44,053 5,943 5,779 44,053
10 16,289 7,048 7,018 44,053 5,413 5,383 44,053
11 17,103 6,853 6,823 44,053 4,894 4,864 44,053
12 17,959 6,663 6,633 44,053 4,339 4,309 44,053
13 18,856 6,477 6,447 44,053 3,742 3,712 44,053
14 19,799 6,296 6,266 44,053 3,097 3,067 44,053
15 20,789 6,119 6,089 44,053 2,398 2,368 44,053
16 21,829 5,946 5,916 44,053 1,636 1,606 44,053
17 22,920 5,777 5,747 44,053 800 770 44,053
18 24,066 5,612 5,582 44,053 -- -- --
19 25,270 5,451 5,421 44,053 -- -- --
20 26,533 5,294 5,264 44,053 -- -- --
25 33,864 4,561 4,531 44,053 -- -- --
35 55,160 3,333 3,303 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,493 9,713 44,053 10,407 9,627 44,053
2 11,025 11,437 10,657 44,053 11,253 10,473 44,053
3 11,576 12,468 11,688 44,053 12,175 11,395 44,053
4 12,155 13,595 12,965 44,053 13,181 12,551 44,053
5 12,763 14,827 14,197 44,053 14,279 13,649 44,053
6 13,401 16,174 15,744 44,053 15,479 15,049 44,053
7 14,071 17,646 17,216 44,053 16,789 16,359 44,053
8 14,775 19,255 19,025 44,053 18,223 17,993 44,053
9 15,513 21,014 20,784 44,053 19,791 19,561 44,053
10 16,289 22,937 22,907 44,053 21,510 21,480 44,053
11 17,103 25,076 25,046 44,053 23,432 23,402 44,053
12 17,959 27,417 27,387 44,053 25,550 25,520 44,053
13 18,856 29,984 29,954 44,053 27,889 27,859 44,053
14 19,799 32,817 32,787 45,287 30,479 30,449 44,053
15 20,789 35,941 35,911 48,160 33,354 33,324 44,694
16 21,829 39,371 39,341 51,182 36,533 36,503 47,492
17 22,920 43,125 43,095 55,199 40,014 39,984 51,217
18 24,066 47,233 47,203 59,513 43,823 43,793 55,217
19 25,270 51,729 51,729 64,143 47,992 47,962 59,509
20 26,533 56,682 56,682 69,152 52,555 52,555 64,117
25 33,864 89,295 89,295 103,585 82,785 82,785 96,030
35 55,160 221,241 221,241 234,515 204,975 204,975 217,273
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,927 9,152 44,053 9,840 9,072 44,053
2 11,025 10,234 9,454 44,053 10,048 9,268 44,053
3 11,576 10,551 9,771 44,053 10,252 9,472 44,053
4 12,155 10,880 10,250 44,053 10,451 9,821 44,053
5 12,763 11,219 10,589 44,053 10,644 10,014 44,053
6 13,401 11,570 11,140 44,053 10,828 10,398 44,053
7 14,071 11,933 11,503 44,053 11,001 10,571 44,053
8 14,775 12,309 12,079 44,053 11,160 10,930 44,053
9 15,513 12,697 12,467 44,053 11,300 11,070 44,053
10 16,289 13,098 13,068 44,053 11,419 11,389 44,053
11 17,103 13,533 13,503 44,053 11,528 11,498 44,053
12 17,959 13,984 13,954 44,053 11,609 11,579 44,053
13 18,856 14,451 14,421 44,053 11,656 11,626 44,053
14 19,799 14,935 14,905 44,053 11,665 11,635 44,053
15 20,789 15,436 15,406 44,053 11,629 11,599 44,053
16 21,829 15,954 15,924 44,053 11,538 11,508 44,053
17 22,920 16,491 16,461 44,053 11,383 11,353 44,053
18 24,066 17,047 17,017 44,053 11,152 11,122 44,053
19 25,270 17,623 17,593 44,053 10,830 10,800 44,053
20 26,533 18,220 18,190 44,053 10,399 10,369 44,053
25 33,864 21,537 21,507 44,053 5,893 5,863 44,053
35 55,160 30,194 30,164 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,361 8,629 44,053 9,274 8,548 44,053
2 11,025 9,098 8,386 44,053 8,911 8,212 44,053
3 11,576 8,842 8,149 44,053 8,540 7,869 44,053
4 12,155 8,592 8,047 44,053 8,159 7,639 44,053
5 12,763 8,349 7,818 44,053 7,767 7,271 44,053
6 13,401 8,111 7,757 44,053 7,361 7,037 44,053
7 14,071 7,880 7,535 44,053 6,939 6,632 44,053
8 14,775 7,654 7,471 44,053 6,497 6,337 44,053
9 15,513 7,434 7,255 44,053 6,031 5,880 44,053
10 16,289 7,219 7,189 44,053 5,536 5,506 44,053
11 17,103 7,021 6,991 44,053 5,017 4,987 44,053
12 17,959 6,827 6,797 44,053 4,461 4,431 44,053
13 18,856 6,637 6,607 44,053 3,863 3,833 44,053
14 19,799 6,452 6,422 44,053 3,218 3,188 44,053
15 20,789 6,271 6,241 44,053 2,519 2,489 44,053
16 21,829 6,095 6,065 44,053 1,756 1,726 44,053
17 22,920 5,922 5,892 44,053 921 891 44,053
18 24,066 5,754 5,724 44,053 -- -- --
19 25,270 5,590 5,560 44,053 -- -- --
20 26,533 5,429 5,399 44,053 -- -- --
25 33,864 4,682 4,652 44,053 -- -- --
35 55,160 3,428 3,398 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,860 9,835 34,014 10,732 9,711 34,014
2 11,025 11,760 10,745 34,014 11,493 10,483 34,014
3 11,576 12,738 11,736 34,014 12,317 11,322 34,014
4 12,155 13,801 12,964 34,014 13,214 12,386 34,014
5 12,763 14,954 14,137 34,014 14,190 13,383 34,014
6 13,401 16,207 15,615 34,014 15,253 14,671 34,014
7 14,071 17,567 17,006 34,014 16,410 15,857 34,014
8 14,775 19,045 18,719 34,014 17,669 17,351 34,014
9 15,513 20,649 20,367 34,014 19,040 18,762 34,014
10 16,289 22,391 22,361 34,014 20,536 20,506 34,014
11 17,103 24,478 24,448 34,014 22,355 22,325 34,014
12 17,959 26,770 26,740 34,014 24,376 24,346 34,014
13 18,856 29,324 29,294 34,602 26,629 26,599 34,014
14 19,799 32,150 32,120 37,615 29,153 29,123 34,109
15 20,789 35,247 35,217 40,886 31,959 31,929 37,071
16 21,829 38,642 38,612 44,438 35,033 35,003 40,288
17 22,920 42,374 42,344 47,882 38,414 38,384 43,407
18 24,066 46,479 46,449 51,591 42,132 42,102 46,766
19 25,270 51,000 51,000 55,590 46,227 46,197 50,387
20 26,533 55,972 55,972 61,009 50,701 50,701 55,264
25 33,864 89,008 89,008 94,348 80,626 80,626 85,463
35 55,160 221,151 221,151 232,208 197,373 197,373 207,241
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,273 9,262 34,014 10,146 9,138 34,014
2 11,025 10,524 9,533 34,014 10,254 9,269 34,014
3 11,576 10,780 9,812 34,014 10,352 9,391 34,014
4 12,155 11,044 10,249 34,014 10,441 9,654 34,014
5 12,763 11,316 10,544 34,014 10,518 9,757 34,014
6 13,401 11,594 11,048 34,014 10,581 10,045 34,014
7 14,071 11,880 11,361 34,014 10,625 10,115 34,014
8 14,775 12,174 11,883 34,014 10,643 10,359 34,014
9 15,513 12,476 12,215 34,014 10,627 10,371 34,014
10 16,289 12,787 12,757 34,014 10,573 10,543 34,014
11 17,103 13,211 13,181 34,014 10,562 10,532 34,014
12 17,959 13,650 13,620 34,014 10,507 10,477 34,014
13 18,856 14,105 14,075 34,014 10,405 10,375 34,014
14 19,799 14,577 14,547 34,014 10,249 10,219 34,014
15 20,789 15,065 15,035 34,014 10,032 10,002 34,014
16 21,829 15,570 15,540 34,014 9,739 9,709 34,014
17 22,920 16,093 16,063 34,014 9,349 9,319 34,014
18 24,066 16,635 16,605 34,014 8,834 8,804 34,014
19 25,270 17,197 17,167 34,014 8,163 8,133 34,014
20 26,533 17,778 17,748 34,014 7,298 7,268 34,014
25 33,864 21,010 20,980 34,014 -- -- --
35 55,160 29,447 29,417 34,014 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,687 8,713 34,014 9,561 8,598 34,014
2 11,025 9,355 8,437 34,014 9,085 8,192 34,014
3 11,576 9,034 8,168 34,014 8,603 7,777 34,014
4 12,155 8,722 8,038 34,014 8,115 7,476 34,014
5 12,763 8,421 7,780 34,014 7,618 7,035 34,014
6 13,401 8,128 7,692 34,014 7,108 6,723 34,014
7 14,071 7,845 7,443 34,014 6,580 6,238 34,014
8 14,775 7,571 7,352 34,014 6,028 5,848 34,014
9 15,513 7,305 7,111 34,014 5,443 5,291 34,014
10 16,289 7,048 7,018 34,014 4,819 4,789 34,014
11 17,103 6,853 6,823 34,014 4,185 4,155 34,014
12 17,959 6,663 6,633 34,014 3,498 3,468 34,014
13 18,856 6,477 6,447 34,014 2,754 2,724 34,014
14 19,799 6,296 6,266 34,014 1,946 1,916 34,014
15 20,789 6,119 6,089 34,014 1,066 1,036 34,014
16 21,829 5,946 5,916 34,014 97 67 34,014
17 22,920 5,777 5,747 34,014 -- -- --
18 24,066 5,612 5,582 34,014 -- -- --
19 25,270 5,451 5,421 34,014 -- -- --
20 26,533 5,294 5,264 34,014 -- -- --
25 33,864 4,561 4,531 34,014 -- -- --
35 55,160 3,333 3,303 34,014 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,493 9,713 34,014 10,360 9,580 34,014
2 11,025 11,437 10,657 34,014 11,155 10,375 34,014
3 11,576 12,468 11,688 34,014 12,024 11,244 34,014
4 12,155 13,595 12,965 34,014 12,976 12,346 34,014
5 12,763 14,827 14,197 34,014 14,020 13,390 34,014
6 13,401 16,174 15,744 34,014 15,164 14,734 34,014
7 14,071 17,646 17,216 34,014 16,419 15,989 34,014
8 14,775 19,255 19,025 34,014 17,796 17,566 34,014
9 15,513 21,014 20,784 34,014 19,308 19,078 34,014
10 16,289 22,937 22,907 34,014 20,971 20,941 34,014
11 17,103 25,076 25,046 34,014 22,844 22,814 34,014
12 17,959 27,435 27,405 34,014 24,925 24,895 34,014
13 18,856 30,067 30,037 35,478 27,247 27,217 34,014
14 19,799 32,965 32,935 38,568 29,848 29,818 34,922
15 20,789 36,141 36,111 41,924 32,722 32,692 37,957
16 21,829 39,623 39,593 45,566 35,871 35,841 41,251
17 22,920 43,450 43,420 49,098 39,332 39,302 44,445
18 24,066 47,661 47,631 52,903 43,141 43,111 47,886
19 25,270 52,298 52,298 57,004 47,335 47,305 51,594
20 26,533 57,396 57,396 62,561 51,916 51,916 56,588
25 33,864 91,272 91,272 96,748 82,558 82,558 87,511
35 55,160 226,778 226,778 238,117 202,105 202,105 212,209
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,927 9,152 34,014 9,794 9,029 34,014
2 11,025 10,234 9,454 34,014 9,952 9,175 34,014
3 11,576 10,551 9,771 34,014 10,103 9,323 34,014
4 12,155 10,880 10,250 34,014 10,249 9,619 34,014
5 12,763 11,219 10,589 34,014 10,386 9,756 34,014
6 13,401 11,570 11,140 34,014 10,513 10,083 34,014
7 14,071 11,933 11,503 34,014 10,623 10,193 34,014
8 14,775 12,309 12,079 34,014 10,712 10,482 34,014
9 15,513 12,697 12,467 34,014 10,772 10,542 34,014
10 16,289 13,098 13,068 34,014 10,797 10,767 34,014
11 17,103 13,533 13,503 34,014 10,800 10,770 34,014
12 17,959 13,984 13,954 34,014 10,760 10,730 34,014
13 18,856 14,451 14,421 34,014 10,673 10,643 34,014
14 19,799 14,935 14,905 34,014 10,536 10,506 34,014
15 20,789 15,436 15,406 34,014 10,339 10,309 34,014
16 21,829 15,954 15,924 34,014 10,068 10,038 34,014
17 22,920 16,491 16,461 34,014 9,702 9,672 34,014
18 24,066 17,047 17,017 34,014 9,216 9,186 34,014
19 25,270 17,623 17,593 34,014 8,577 8,547 34,014
20 26,533 18,220 18,190 34,014 7,748 7,718 34,014
25 33,864 21,537 21,507 34,014 -- -- --
35 55,160 30,194 30,164 34,014 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,361 8,629 34,014 9,228 8,506 34,014
2 11,025 9,098 8,386 34,014 8,816 8,125 34,014
3 11,576 8,842 8,149 34,014 8,394 7,735 34,014
4 12,155 8,592 8,047 34,014 7,962 7,454 34,014
5 12,763 8,349 7,818 34,014 7,517 7,036 34,014
6 13,401 8,111 7,757 34,014 7,056 6,744 34,014
7 14,071 7,880 7,535 34,014 6,573 6,280 34,014
8 14,775 7,654 7,471 34,014 6,062 5,911 34,014
9 15,513 7,434 7,255 34,014 5,514 5,373 34,014
10 16,289 7,219 7,189 34,014 4,922 4,892 34,014
11 17,103 7,021 6,991 34,014 4,289 4,259 34,014
12 17,959 6,827 6,797 34,014 3,602 3,572 34,014
13 18,856 6,637 6,607 34,014 2,858 2,828 34,014
14 19,799 6,452 6,422 34,014 2,051 2,021 34,014
15 20,789 6,271 6,241 34,014 1,172 1,142 34,014
16 21,829 6,095 6,065 34,014 204 174 34,014
17 22,920 5,922 5,892 34,014 -- -- --
18 24,066 5,754 5,724 34,014 -- -- --
19 25,270 5,590 5,560 34,014 -- -- --
20 26,533 5,429 5,399 34,014 -- -- --
25 33,864 4,682 4,652 34,014 -- -- --
35 55,160 3,428 3,398 34,014 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,860 9,835 20,001 10,646 9,627 20,001
2 11,025 11,760 10,745 20,001 11,311 10,304 20,001
3 11,576 12,738 11,736 20,001 12,031 11,040 20,001
4 12,155 13,801 12,964 20,001 12,817 11,995 20,001
5 12,763 14,954 14,137 20,001 13,681 12,880 20,001
6 13,401 16,207 15,615 20,001 14,638 14,062 20,001
7 14,071 17,567 17,006 20,001 15,707 15,159 20,001
8 14,775 19,049 18,724 21,144 16,913 16,598 20,001
9 15,513 20,671 20,390 22,531 18,289 18,013 20,001
10 16,289 22,421 22,391 24,438 19,832 19,802 21,617
11 17,103 24,518 24,488 26,479 21,684 21,654 23,419
12 17,959 26,821 26,791 28,698 23,717 23,687 25,377
13 18,856 29,328 29,298 31,381 25,929 25,899 27,743
14 19,799 32,084 32,054 34,008 28,361 28,331 30,062
15 20,789 35,089 35,059 37,194 31,007 30,977 32,867
16 21,829 38,393 38,363 40,312 33,923 33,893 35,619
17 22,920 41,996 41,996 44,095 37,095 37,065 38,949
18 24,066 45,940 45,910 48,236 40,540 40,510 42,566
19 25,270 50,257 50,257 53,769 44,275 44,245 46,488
20 26,533 55,015 55,015 57,766 48,319 48,289 50,734
25 33,864 86,484 86,484 90,808 74,047 74,047 77,749
35 55,160 213,896 213,896 216,034 177,563 177,563 179,338
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,273 9,262 20,001 10,058 9,051 20,001
2 11,025 10,524 9,533 20,001 10,057 9,075 20,001
3 11,576 10,780 9,812 20,001 10,023 9,067 20,001
4 12,155 11,044 10,249 20,001 9,951 9,174 20,001
5 12,763 11,316 10,544 20,001 9,833 9,090 20,001
6 13,401 11,594 11,048 20,001 9,660 9,147 20,001
7 14,071 11,880 11,361 20,001 9,420 8,942 20,001
8 14,775 12,174 11,863 20,001 9,094 8,837 20,001
9 15,513 12,476 12,215 20,001 8,663 8,438 20,001
10 16,289 12,787 12,757 20,001 8,102 8,072 20,001
11 17,103 13,211 13,281 20,001 7,448 7,418 20,001
12 17,959 13,650 13,620 20,001 6,602 6,572 20,001
13 18,856 14,105 14,075 20,001 5,519 5,489 20,001
14 19,799 14,577 14,547 20,001 4,137 4,107 20,001
15 20,789 15,065 15,035 20,001 2,373 2,343 20,001
16 21,829 15,570 15,540 20,001 108 78 20,001
17 22,920 16,093 16,063 20,001 -- -- --
18 24,066 16,635 16,605 20,001 -- -- --
19 25,270 17,197 17,167 20,001 -- -- --
20 26,533 17,778 17,748 20,001 -- -- --
25 33,864 21,010 20,980 22,060 -- -- --
35 55,160 29,471 29,441 29,765 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,687 8,713 20,001 9,469 8,516 20,001
2 11,025 9,355 8,437 20,001 8,875 8,002 20,001
3 11,576 9,034 8,168 20,001 8,241 7,449 20,001
4 12,155 8,722 8,038 20,001 7,560 6,963 20,001
5 12,763 8,421 7,780 20,001 6,821 6,296 20,001
6 13,401 8,128 7,692 20,001 6,011 5,681 20,001
7 14,071 7,845 7,443 20,001 5,113 4,840 20,001
8 14,775 7,571 7,352 20,001 4,104 3,971 20,001
9 15,513 7,305 7,111 20,001 2,955 2,858 20,001
10 16,289 7,048 7,018 20,001 1,635 1,605 20,001
11 17,103 6,853 6,823 20,001 116 86 20,001
12 17,959 6,663 6,663 20,001 -- -- --
13 18,856 6,477 6,447 20,001 -- -- --
14 19,799 6,296 6,266 20,001 -- -- --
15 20,789 6,119 6,089 20,001 -- -- --
16 21,829 5,946 5,916 20,001 -- -- --
17 22,920 5,777 5,747 20,001 -- -- --
18 24,066 5,612 5,582 20,001 -- -- --
19 25,270 5,451 5,421 20,001 -- -- --
20 26,533 5,294 5,264 20,001 -- -- --
25 33,864 4,561 4,531 20,001 -- -- --
35 55,160 3,333 3,303 20,001 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,493 9,713 20,001 10,265 9,485 20,001
2 11,025 11,437 10,657 20,001 10,954 10,174 20,001
3 11,576 12,468 11,688 20,001 11,706 10,926 20,001
4 12,155 13,595 12,965 20,001 12,532 11,902 20,001
5 12,763 14,827 14,197 20,001 13,447 12,817 20,001
6 13,401 16,174 15,744 20,001 14,467 14,037 20,001
7 14,071 17,646 17,216 20,001 15,615 15,185 20,001
8 14,775 19,260 19,030 21,378 16,919 16,689 20,001
9 15,513 21,038 20,808 22,930 18,420 18,190 20,078
10 16,289 22,967 22,937 25,034 20,106 20,076 21,915
11 17,103 25,117 25,087 27,126 21,984 21,954 23,742
12 17,959 27,477 27,447 29,400 24,045 24,015 25,728
13 18,856 30,046 30,016 32,149 26,288 26,258 28,128
14 19,799 32,870 32,840 34,842 28,755 28,725 30,479
15 20,789 35,950 35,920 38,106 31,438 31,408 33,324
16 21,829 39,336 39,306 41,302 34,395 34,365 36,114
17 22,920 43,028 42,998 45,178 37,611 37,581 39,491
18 24,066 47,069 47,039 49,422 41,104 41,074 43,159
19 25,270 51,493 51,493 54,067 44,892 44,862 47,136
20 26,533 56,369 56,369 59,187 48,993 48,963 51,442
25 33,864 88,612 88,612 93,042 75,081 75,081 78,834
35 55,160 219,158 219,158 221,349 180,040 180,040 181,840
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,927 9,152 20,001 9,697 8,940 20,001
2 11,025 10,234 9,454 20,001 9,737 8,977 20,001
3 11,576 10,551 9,771 20,001 9,747 8,986 20,001
4 12,155 10,880 10,250 20,001 9,720 9,107 20,001
5 12,763 11,219 10,589 20,001 9,650 9,041 20,001
6 13,401 11,570 11,140 20,001 9,527 9,116 20,001
7 14,071 11,933 11,503 20,001 9,339 8,935 20,001
8 14,775 12,309 12,079 20,001 9,068 8,856 20,001
9 15,513 12,697 12,467 20,001 8,695 8,491 20,001
10 16,289 13,098 13,068 20,001 8,195 8,165 20,001
11 17,103 13,533 13,503 20,001 7,553 7,523 20,001
12 17,959 13,984 13,954 20,001 6,721 6,691 20,001
13 18,856 14,451 14,421 20,001 5,655 5,625 20,001
14 19,799 14,935 14,905 20,001 4,294 4,264 20,001
15 20,789 15,436 15,406 20,001 2,557 2,527 20,001
16 21,829 15,954 15,924 20,001 324 294 20,001
17 22,920 16,491 16,461 20,001 -- -- --
18 24,066 17,047 17,017 20,001 -- -- --
19 25,270 17,623 17,593 20,001 -- -- --
20 26,533 18,220 18,190 20,001 -- -- --
25 33,864 21,537 21,507 22,613 -- -- --
35 55,160 30,219 30,189 30,521 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,361 8,629 20,001 9,129 8,415 20,001
2 11,025 9,098 8,386 20,001 8,591 7,917 20,001
3 11,576 8,842 8,149 20,001 8,009 7,378 20,001
4 12,155 8,592 8,047 20,001 7,375 6,902 20,001
5 12,763 8,349 7,818 20,001 6,679 6,248 20,001
6 13,401 8,111 7,757 20,001 5,908 5,642 20,001
7 14,071 7,880 7,535 20,001 5,043 4,812 20,001
8 14,775 7,654 7,471 20,001 4,062 3,951 20,001
9 15,513 7,434 7,255 20,001 2,935 2,846 20,001
10 16,289 7,219 7,189 20,001 1,630 1,600 20,001
11 17,103 7,021 6,991 20,001 111 81 20,001
12 17,959 6,827 6,797 20,001 -- -- --
13 18,856 6,637 6,607 20,001 -- -- --
14 19,799 6,452 6,422 20,001 -- -- --
15 20,789 6,271 6,241 20,001 -- -- --
16 21,829 6,095 6,065 20,001 -- -- --
17 22,920 5,922 5,892 20,001 -- -- --
18 24,066 5,754 5,724 20,001 -- -- --
19 25,270 5,590 5,560 20,001 -- -- --
20 26,533 5,429 5,399 20,001 -- -- --
25 33,864 4,682 4,652 20,001 -- -- --
35 55,160 3,428 3,398 20,001 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,927 9,902 45,872 10,927 9,902 45,872
2 11,025 11,901 10,883 45,872 11,901 10,883 45,872
3 11,576 12,958 11,952 45,872 12,958 11,952 45,872
4 12,155 14,105 13,263 45,872 14,105 13,263 45,872
5 12,763 15,348 14,526 45,872 15,348 14,526 45,872
6 13,401 16,696 16,099 45,872 16,696 16,099 45,872
7 14,071 18,156 17,590 45,872 18,156 17,590 45,872
8 14,775 19,738 19,410 45,872 19,738 19,410 45,872
9 15,513 21,452 21,168 45,872 21,452 21,168 45,872
10 16,289 23,308 23,278 45,872 23,308 23,278 45,872
11 17,103 25,526 25,496 45,872 25,525 25,495 45,872
12 17,959 27,958 27,928 45,872 27,954 27,924 45,872
13 18,856 30,627 30,597 45,872 30,622 30,592 45,872
14 19,799 33,566 33,536 45,872 33,560 33,530 45,872
15 20,789 36,813 36,783 45,872 36,806 36,776 45,872
16 21,829 40,415 40,385 46,476 40,407 40,377 46,467
17 22,920 44,396 44,366 50,168 44,388 44,358 50,158
18 24,066 48,772 48,742 54,137 48,763 48,733 54,126
19 25,270 53,584 53,584 58,406 53,574 53,574 58,395
20 26,533 58,880 58,880 64,179 58,869 58,869 64,166
25 33,864 94,020 94,020 99,6615 94,002 94,002 99,642
35 55,160 236,261 236,261 248,073 230,345 230,345 241,862
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,338 9,325 45,872 10,338 9,325 45,872
2 11,025 10,649 9,656 45,872 10,649 9,656 45,872
3 11,576 10,963 9,991 45,872 10,963 9,991 45,872
4 12,155 11,277 10,478 45,872 11,277 10,478 45,872
5 12,763 11,591 10,816 45,872 11,591 10,816 45,872
6 13,401 11,902 11,353 45,872 11,902 11,353 45,872
7 14,071 12,215 11,694 45,872 12,208 11,686 45,872
8 14,775 12,537 12,245 45,872 12,503 12,210 45,872
9 15,513 12,869 12,607 45,872 12,783 12,521 45,872
10 16,289 13,210 13,180 45,872 13,042 13,012 45,872
11 17,103 13,669 13,639 45,872 13,382 13,352 45,872
12 17,959 14,146 14,116 45,872 13,695 13,665 45,872
13 18,856 14,641 14,611 45,872 13,973 13,943 45,872
14 19,799 15,154 15,124 45,872 14,208 14,178 45,872
15 20,789 15,686 15,656 45,872 14,390 14,360 45,872
16 21,829 16,238 16,208 45,872 14,504 14,474 45,872
17 22,920 16,810 16,780 45,872 14,530 14,500 45,872
18 24,066 17,404 17,374 45,872 14,443 14,413 45,872
19 25,270 18,020 17,990 45,872 14,210 14,180 45,872
20 26,533 18,658 18,628 45,872 13,795 13,765 45,872
25 33,864 22,226 22,196 45,872 7,069 7,039 45,872
35 55,160 31,646 31,616 45,872 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,748 8,767 45,872 9,748 8,767 45,872
2 11,025 9,466 8,537 45,872 9,466 8,537 45,872
3 11,576 9,182 8,303 45,872 9,182 8,303 45,872
4 12,155 8,896 8,199 45,872 8,896 8,199 45,872
5 12,763 8,604 7,950 45,872 8,604 7,950 45,872
6 13,401 8,319 7,873 45,872 8,305 7,859 45,872
7 14,071 8,042 7,630 45,872 7,994 7,584 45,872
8 14,775 7,773 7,548 45,872 7,667 7,445 45,872
9 15,513 7,512 7,313 45,872 7,318 7,124 45,872
10 16,289 7,259 7,229 45,872 6,942 6,912 45,872
11 17,103 7,070 7,040 45,872 6,583 6,553 45,872
12 17,959 6,885 6,855 45,872 6,177 6,147 45,872
13 18,856 6,704 6,674 45,872 5,715 5,685 45,872
14 19,799 6,527 6,497 45,872 5,188 5,158 45,872
15 20,789 6,354 6,324 45,872 4,581 4,551 45,872
16 21,829 6,185 6,155 45,872 3,877 3,847 45,872
17 22,920 6,020 5,990 45,872 3,053 3,023 45,872
18 24,066 5,858 5,828 45,872 2,074 2,044 45,872
19 25,270 5,700 5,670 45,872 902 872 45,872
20 26,533 5,545 5,515 45,872 -- -- --
25 33,864 4,821 4,791 45,872 -- -- --
35 55,160 3,593 3,563 45,872 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,559 9,779 45,872 10,559 9,779 45,872
2 11,025 11,573 10,793 45,872 11,573 10,793 45,872
3 11,576 12,682 11,902 45,872 12,682 11,902 45,872
4 12,155 13,893 13,263 45,872 13,893 13,263 45,872
5 12,763 15,215 14,585 45,872 15,215 14,585 45,872
6 13,401 16,658 16,228 45,872 16,658 16,228 45,872
7 14,071 18,234 17,804 45,872 18,234 17,804 45,872
8 14,775 19,953 19,723 45,872 19,953 19,723 45,872
9 15,513 21,830 21,600 45,872 21,830 21,600 45,872
10 16,289 23,878 23,848 45,872 23,878 23,848 45,872
11 17,103 26,157 26,127 45,872 26,157 26,127 45,872
12 17,959 28,655 28,625 45,872 28,655 28,625 45,872
13 18,856 31,401 31,371 45,872 31,400 31,370 45,872
14 19,799 34,426 34,396 45,872 34,426 34,396 45,872
15 20,789 37,773 37,743 45,872 37,772 37,742 45,872
16 21,829 41,483 41,453 47,705 41,483 41,453 47,705
17 22,920 45,571 45,541 51,495 45,571 45,541 51,495
18 24,066 50,064 50,064 55,570 50,063 50,063 55,570
19 25,270 55,037 55,037 59,990 55,037 55,037 59,989
20 26,533 60,477 60,477 65,919 60,476 60,476 65,919
25 33,864 96,569 96,569 102,363 96,569 96,569 102,362
35 55,160 242,667 242,667 254,800 236,635 236,635 248,466
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,989 9,210 45,872 9,989 9,210 45,872
2 11,025 10,355 9,575 45,872 10,355 9,575 45,872
3 11,576 10,728 9,948 45,872 10,728 9,948 45,872
4 12,155 11,107 10,477 45,872 11,107 10,477 45,872
5 12,763 11,490 10,860 45,872 11,490 10,860 45,872
6 13,401 11,875 11,445 45,872 11,875 11,445 45,872
7 14,071 12,267 11,837 45,872 12,259 11,829 45,872
8 14,775 12,672 12,442 45,872 12,638 12,408 45,872
9 15,513 13,092 12,862 45,872 13,008 12,778 45,872
10 16,289 13,528 13,498 45,872 13,364 13,334 45,872
11 17,103 13,999 13,969 45,872 13,719 13,689 45,872
12 17,959 14,488 14,458 45,872 14,048 14,018 45,872
13 18,856 14,996 14,966 45,872 14,344 14,314 45,872
14 19,799 15,522 15,492 45,872 14,599 14,569 45,872
15 20,789 16,068 16,038 45,872 14,803 14,773 45,872
16 21,829 16,634 16,604 45,872 14,940 14,910 45,872
17 22,920 17,221 17,191 45,872 14,993 14,963 45,872
18 24,066 17,830 17,800 45,872 14,936 14,906 45,872
19 25,270 18,461 18,431 45,872 14,737 14,707 45,872
20 26,533 19,117 19,087 45,872 14,361 14,331 45,872
25 33,864 22,776 22,746 45,872 7,966 7,936 45,872
35 55,160 32,438 32,408 45,872 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,419 8,682 45,872 9,419 8,682 45,872
2 11,025 9,205 8,484 45,872 9,205 8,484 45,872
3 11,576 8,986 8,282 45,872 8,986 8,282 45,872
4 12,155 8,761 8,206 45,872 8,761 8,206 45,872
5 12,763 8,528 7,987 45,872 8,528 7,987 45,872
6 13,401 8,299 7,937 45,872 8,284 7,923 45,872
7 14,071 8,075 7,722 45,872 8,026 7,675 45,872
8 14,775 7,856 7,669 45,872 7,749 7,564 45,872
9 15,513 7,642 7,460 45,872 7,448 7,269 45,872
10 16,289 7,434 7,404 45,872 7,115 7,085 45,872
11 17,103 7,241 7,211 45,872 6,755 6,725 45,872
12 17,959 7,052 7,022 45,872 6,347 6,317 45,872
13 18,856 6,868 6,838 45,872 5,884 5,854 45,872
14 19,799 6,687 6,657 45,872 5,355 5,325 45,872
15 20,789 6,511 6,481 45,872 4,747 4,717 45,872
16 21,829 6,338 6,308 45,872 4,043 4,013 45,872
17 22,920 6,169 6,139 45,872 3,219 3,189 45,872
18 24,066 6,004 5,974 45,872 2,241 2,211 45,872
19 25,270 5,843 5,813 45,872 1,070 1,040 45,872
20 26,533 5,685 5,655 45,872 -- -- --
25 33,864 4,946 4,916 45,872 -- -- --
35 55,160 3,693 3,663 45,872 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
32 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,921 9,895 28,491 10,921 9,895 28,491
2 11,025 11,875 10,857 28,491 11,875 10,857 28,491
3 11,576 12,895 11,889 28,491 12,895 11,889 28,491
4 12,155 13,992 13,152 28,491 13,987 13,147 28,491
5 12,763 15,185 14,365 28,491 15,158 14,338 28,491
6 13,401 16,482 15,887 28,491 16,414 15,819 28,491
7 14,071 17,893 17,329 28,491 17,764 17,201 28,491
8 14,775 19,427 19,100 28,491 19,221 18,895 28,491
9 15,513 21,096 20,813 28,491 20,799 20,517 28,491
10 16,289 22,911 22,881 28,491 22,521 22,491 28,491
11 17,103 25,087 25,057 28,491 24,618 24,588 28,491
12 17,959 27,511 27,481 29,437 26,979 26,949 28,867
13 18,856 30,185 30,155 32,297 29,600 29,570 31,671
14 19,799 33,120 33,090 35,106 32,477 32,447 34,425
15 20,789 36,323 36,293 38,502 35,617 35,587 37,754
16 21,829 39,843 39,813 41,834 39,068 39,038 41,021
17 22,920 43,681 43,651 45,864 42,831 42,801 44,972
18 24,066 47,859 47,829 50,251 46,927 46,897 49,273
19 25,270 52,436 52,436 55,058 51,379 51,379 53,947
20 26,533 57,488 57,488 60,362 56,241 56,241 59,053
25 33,864 91,052 91,052 95,604 87,126 87,126 91,482
35 55,160 228,413 228,413 230,696 209,893 209,893 211,992
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,331 9,319 28,491 10,331 9,319 28,491
2 11,025 10,622 9,629 28,491 10,622 9,629 28,491
3 11,576 10,898 9,927 28,491 10,897 9,927 28,491
4 12,155 11,182 10,384 28,491 11,154 10,356 28,491
5 12,763 11,474 10,701 28,491 11,385 10,613 28,491
6 13,401 11,775 11,227 28,491 11,585 11,039 28,491
7 14,071 12,084 11,563 28,491 11,744 11,226 28,491
8 14,775 12,402 12,110 28,491 11,850 11,561 28,491
9 15,513 12,730 12,468 28,491 11,890 11,630 28,491
10 16,289 13,066 13,036 28,491 11,844 11,814 28,491
11 17,103 13,521 13,491 28,491 11,791 11,761 28,491
12 17,959 13,992 13,962 28,491 11,617 11,587 28,491
13 18,856 14,481 14,451 28,491 11,295 11,265 28,491
14 19,799 14,988 14,958 28,491 10,792 10,762 28,491
15 20,789 15,514 15,484 28,491 10,063 10,033 28,491
16 21,829 16,060 16,030 28,491 9,045 9,015 28,491
17 22,920 16,626 16,596 28,491 7,649 7,619 28,491
18 24,066 17,212 17,182 28,491 5,750 5,720 28,491
19 25,270 17,821 17,791 28,491 3,173 3,143 28,491
20 26,533 18,452 18,422 28,491 -- -- --
25 33,864 21,978 21,948 28,491 -- -- --
35 55,160 31,289 31,259 31,602 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
34 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,742 8,762 28,491 9,742 8,762 28,491
2 11,025 9,439 8,512 28,491 9,439 8,512 28,491
3 11,576 9,128 8,254 28,491 9,116 8,243 28,491
4 12,155 8,827 8,135 28,491 8,769 8,081 28,491
5 12,763 8,535 7,886 28,491 8,390 7,751 28,491
6 13,401 8,251 7,809 28,491 7,970 7,542 28,491
7 14,071 7,976 7,567 28,491 7,498 7,112 28,491
8 14,775 7,709 7,487 28,491 6,959 6,755 28,491
9 15,513 7,451 7,253 28,491 6,332 6,160 28,491
10 16,289 7,199 7,169 28,491 5,595 5,565 28,491
11 17,103 7,012 6,982 28,491 4,762 4,732 28,491
12 17,959 6,828 6,798 28,491 3,754 3,724 28,491
13 18,856 6,648 6,618 28,491 2,534 2,504 28,491
14 19,799 6,473 6,443 28,491 1,054 1,024 28,491
15 20,789 6,301 6,271 28,491 -- -- --
16 21,829 6,133 6,103 28,491 -- -- --
17 22,920 5,969 5,939 28,491 -- -- --
18 24,066 5,808 5,778 28,491 -- -- --
19 25,270 5,651 5,621 28,491 -- -- --
20 26,533 5,497 5,467 28,491 -- -- --
25 33,864 4,778 4,748 28,491 -- -- --
35 55,160 3,559 3,529 28,491 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,552 9,772 28,491 10,552 9,772 28,491
2 11,025 11,546 10,766 28,491 11,546 10,766 28,491
3 11,576 12,617 11,837 28,491 12,617 11,837 28,491
4 12,155 13,778 13,148 28,491 13,771 13,141 28,491
5 12,763 15,050 14,420 28,491 15,018 14,388 28,491
6 13,401 16,442 16,012 28,491 16,367 15,937 28,491
7 14,071 17,966 17,536 28,491 17,829 17,399 28,491
8 14,775 19,635 19,405 28,491 19,420 19,190 28,491
9 15,513 21,461 21,231 28,491 21,161 20,931 28,491
10 16,289 23,460 23,430 28,491 23,078 23,048 28,491
11 17,103 25,697 25,667 28,491 25,250 25,220 28,491
12 17,959 28,196 28,166 30,170 27,696 27,666 29,634
13 18,856 30,937 30,907 33,102 30,387 30,357 32,514
14 19,799 33,946 33,916 35,982 33,342 33,312 35,342
15 20,789 37,230 37,200 39,463 36,567 36,537 38,760
16 21,829 40,838 40,808 42,880 40,110 40,080 42,115
17 22,920 44,773 44,743 47,011 43,974 43,944 46,173
18 24,066 49,057 49,027 51,509 48,181 48,151 50,589
19 25,270 53,750 53,750 56,437 52,752 52,752 55,389
20 26,533 58,928 58,928 61,873 57,745 57,745 60,632
25 33,864 93,333 93,333 97,999 89,455 89,455 93,927
35 55,160 234,133 234,133 236,474 215,506 215,506 217,660
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
36 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,982 9,204 28,491 9,982 9,204 28,491
2 11,025 10,327 9,547 28,491 10,327 9,547 28,491
3 11,576 10,664 9,884 28,491 10,662 9,882 28,491
4 12,155 11,013 10,383 28,491 10,980 10,350 28,491
5 12,763 11,374 10,744 28,491 11,278 10,648 28,491
6 13,401 11,748 11,318 28,491 11,549 11,119 28,491
7 14,071 12,135 11,705 28,491 11,784 11,354 28,491
8 14,775 12,536 12,306 28,491 11,972 11,742 28,491
9 15,513 12,952 12,722 28,491 12,098 11,868 28,491
10 16,289 13,382 13,352 28,491 12,146 12,116 28,491
11 17,103 13,848 13,818 28,491 12,116 12,086 28,491
12 17,959 14,331 14,301 28,491 11,968 11,938 28,491
13 18,856 14,833 14,803 28,491 11,678 11,648 28,491
14 19,799 15,353 15,323 28,491 11,213 11,183 28,491
15 20,789 15,893 15,863 28,491 10,531 10,501 28,491
16 21,829 16,452 16,422 28,491 9,569 9,539 28,491
17 22,920 17,033 17,003 28,491 8,244 8,214 28,491
18 24,066 17,634 17,604 28,491 6,434 6,404 28,491
19 25,270 18,259 18,229 28,491 3,972 3,942 28,491
20 26,533 18,906 18,876 28,491 625 595 28,491
25 33,864 22,523 22,493 28,491 -- -- --
35 55,160 32,074 32,044 32,394 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,412 8,677 28,491 9,412 8,677 28,491
2 11,025 9,177 8,459 28,491 9,177 8,459 28,491
3 11,576 8,932 8,232 28,491 8,919 8,220 28,491
4 12,155 8,693 8,142 28,491 8,632 8,084 28,491
5 12,763 8,460 7,922 28,491 8,309 7,781 28,491
6 13,401 8,232 7,873 28,491 7,943 7,596 28,491
7 14,071 8,010 7,659 28,491 7,522 7,191 28,491
8 14,775 7,792 7,607 28,491 7,029 6,859 28,491
9 15,513 7,580 7,399 28,491 6,446 6,287 28,491
10 16,289 7,373 7,343 28,491 5,749 5,719 28,491
11 17,103 7,182 7,152 28,491 4,918 4,888 28,491
12 17,959 6,994 6,964 28,491 3,913 3,883 28,491
13 18,856 6,811 6,781 28,491 2,697 2,667 28,491
14 19,799 6,632 6,602 28,491 1,223 1,193 28,491
15 20,789 6,457 6,427 28,491 -- -- --
16 21,829 6,285 6,255 28,491 -- -- --
17 22,920 6,117 6,087 28,491 -- -- --
18 24,066 5,954 5,924 28,491 -- -- --
19 25,270 5,793 5,763 28,491 -- -- --
20 26,533 5,636 5,606 28,491 -- -- --
25 33,864 4,903 4,873 28,491 -- -- --
35 55,160 3,659 3,629 28,491 -- -- --
- ------------------------------------------------------------------------------------------------------
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life and Annuity Insurance Company Putnam Capital Manager Trust
Separate Account Five and to the Owners of Units of Interest therein:
We have audited the accompanying statements of assets and liabilities of
Hartford Life and Annuity Insurance Company Putnam Capital Manager Trust
Separate Account Five (Asia Pacific Growth, Diversified Income, The George
Putnam Fund of Boston, Global Asset Allocation, Global Growth, Growth and
Income, Health Sciences, High Yield, International Growth, International Growth
and Income, International New Opportunities, Investors, Money Market, New
Opportunities, New Value, OTC & Emerging Growth, Research, U.S. Government and
High Quality Bond, Utilities Growth and Income, Vista, and Voyager),
(collectively, the Account) as of December 31, 1998, and the related statements
of operations and the statements of changes in net assets for the periods
presented. 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 Account as of December 31,
1998, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 15, 1999 ARTHUR ANDERSEN LLP
SA-1
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Assets & Liabilities
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1998 Asia Pacific Diversified The George Global Asset
Growth Income Putnam Fund Allocation
Sub-Account Sub-Account of Boston Sub-Account
Sub-Account
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
-------------------------------------------------------------------------------------------
PUTNAM VT ASIA PACIFIC GROWTH
FUND
Shares 45,266
Cost $459,302
..........................................................................................
Market Value: $377,065 $ -- $ -- $ --
-------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
Shares 261,588
Cost $2,865,478
..........................................................................................
Market Value: -- 2,744,055 -- --
-------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND
OF BOSTON
Shares 8,504
Cost $85,947
..........................................................................................
Market Value: -- -- 87,421 --
-------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION
FUND
Shares 208,991
Cost $3,556,181
..........................................................................................
Market Value: -- -- -- 3,960,381
-------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Shares 477,729
Cost $8,042,791
..........................................................................................
Market Value: -- -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
Shares 1,176,109
Cost $28,936,293
..........................................................................................
Market Value: -- -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT HEALTH SCIENCES FUND
Shares 26,666
Cost $266,542
..........................................................................................
Market Value: -- -- -- --
-------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 3 64 -- 36
..........................................................................................
Receivable from fund shares sold -- -- -- --
..........................................................................................
Total Assets 377,068 2,744,119 87,421 3,960,417
..........................................................................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company -- -- -- --
..........................................................................................
Payable for fund shares purchased -- -- -- --
..........................................................................................
TOTAL LIABILITIES -- -- -- --
-------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $377,068 $ 2,744,119 $87,421 $ 3,960,417
-------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Global Growth Health
Growth and Income Sciences
Sub-Account Sub-Account Sub-Account
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
-------------------------------------------------------------------------------------------
PUTNAM VT ASIA PACIFIC GROWTH
FUND
Shares 45,266
Cost $459,302
................................
Market Value: $ -- $ -- $ --
-------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
Shares 261,588
Cost $2,865,478
................................
Market Value: -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND
OF BOSTON
Shares 8,504
Cost $85,947
................................
Market Value: -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION
FUND
Shares 208,991
Cost $3,556,181
................................
Market Value: -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Shares 477,729
Cost $8,042,791
................................
Market Value: 9,688,338 -- --
-------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
Shares 1,176,109
Cost $28,936,293
................................
Market Value: -- 33,836,645 --
-------------------------------------------------------------------------------------------
PUTNAM VT HEALTH SCIENCES FUND
Shares 26,666
Cost $266,542
................................
Market Value: -- -- 291,722
-------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company -- -- --
................................
Receivable from fund shares sold -- -- --
................................
Total Assets 9,688,338 33,836,645 291,722
................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company 29 53 --
................................
Payable for fund shares purchased -- 209 1
................................
TOTAL LIABILITIES 29 262 1
-------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $ 9,688,309 $ 33,836,383 $291,721
-------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-2
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Assets and Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1998 High Yield International International International
Sub-Account Growth Growth and New
Sub-Account Income Opportunities
Sub-Account Sub-Account
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
--------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
Shares 329,573
Cost $4,210,751
...........................................................................................
Market Value: $3,856,004 $ -- $ -- $ --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
FUND
Shares 57,698
Cost $697,874
...........................................................................................
Market Value: -- 780,074 -- --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
AND INCOME FUND
Shares 60,301
Cost $718,967
...........................................................................................
Market Value: -- -- 738,081 --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
Shares 62,518
Cost $665,327
...........................................................................................
Market Value: -- -- -- 718,333
--------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
Shares 21,886
Cost $227,856
...........................................................................................
Market Value: -- -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT MONEY MARKET FUND
Shares 3,594,608
Cost $3,594,608
...........................................................................................
Market Value: -- -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT NEW OPPORTUNITIES FUND
Shares 681,464
Cost $12,250,816
...........................................................................................
Market Value: -- -- -- --
--------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 18 18 -- --
...........................................................................................
Receivable from fund shares sold -- -- -- --
...........................................................................................
Total Assets 3,856,022 780,092 738,081 718,333
...........................................................................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company -- -- 42 10
...........................................................................................
Payable for fund shares purchased -- -- -- --
...........................................................................................
TOTAL LIABILITIES -- -- 42 10
--------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $3,856,022 $780,092 $738,039 $718,323
--------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Investors Money New
Sub-Account Market Opportunities
Sub-Account Sub-Account
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
--------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
Shares 329,573
Cost $4,210,751
................................
Market Value: $ -- $ -- $ --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
FUND
Shares 57,698
Cost $697,874
................................
Market Value: -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
AND INCOME FUND
Shares 60,301
Cost $718,967
................................
Market Value: -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
Shares 62,518
Cost $665,327
................................
Market Value: -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
Shares 21,886
Cost $227,856
................................
Market Value: 254,975 -- --
--------------------------------------------------------------------------------------------
PUTNAM VT MONEY MARKET FUND
Shares 3,594,608
Cost $3,594,608
................................
Market Value: -- 3,594,608 --
--------------------------------------------------------------------------------------------
PUTNAM VT NEW OPPORTUNITIES FUND
Shares 681,464
Cost $12,250,816
................................
Market Value: -- -- 17,758,954
--------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 1 88,017 561
................................
Receivable from fund shares sold -- -- --
................................
Total Assets 254,976 3,682,625 17,759,515
................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company -- -- --
................................
Payable for fund shares purchased -- 87,285 --
................................
TOTAL LIABILITIES -- 87,285 --
--------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $254,976 $3,595,340 $ 17,759,515
--------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Assets & Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1998 New OTC & Research U.S. Government
Value Emerging Sub-Account and High
Sub-Account Growth Quality Bond
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
----------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
Shares 71,088
Cost $755,429
.............................................................................................
Market Value: $855,191 $ -- $ -- $ --
----------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH
FUND
Shares 4,540
Cost $41,954
.............................................................................................
Market Value: -- 45,809 -- --
----------------------------------------------------------------------------------------------
PUTNAM RESEARCH FUND
Shares 531
Cost $5,337
.............................................................................................
Market Value: -- -- 6,329 --
----------------------------------------------------------------------------------------------
PUTNAM VT U.S. GOVERNMENT AND
HIGH QUALITY BOND FUND
Shares 129,727
Cost $1,705,963
.............................................................................................
Market Value: -- -- -- 1,781,152
----------------------------------------------------------------------------------------------
PUTNAM VT UTILITIES GROWTH &
INCOME FUND
Shares 180,546
Cost $2,627,965
.............................................................................................
Market Value: -- -- -- --
----------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
Shares 47,643
Cost $554,768
.............................................................................................
Market Value: -- -- -- --
----------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
Shares 430,252
Cost $14,508,848
.............................................................................................
Market Value: -- -- -- --
----------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company -- -- -- --
.............................................................................................
Receivable from fund shares sold -- -- -- --
.............................................................................................
Total Assets 855,191 45,809 6,329 1,781,152
.............................................................................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company 5 -- -- 1
.............................................................................................
Payable for fund shares purchased -- -- -- --
.............................................................................................
TOTAL LIABILITIES 5 -- -- 1
----------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $855,186 $45,809 $6,329 $1,781,151
----------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Utilities Vista Voyager
Growth Sub-Account Sub-Account
and Income
Sub-Account
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
----------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
Shares 71,088
Cost $755,429
................................
Market Value: $ -- $ -- $ --
----------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH
FUND
Shares 4,540
Cost $41,954
................................
Market Value: -- -- --
----------------------------------------------------------------------------------------------
PUTNAM RESEARCH FUND
Shares 531
Cost $5,337
................................
Market Value: -- -- --
----------------------------------------------------------------------------------------------
PUTNAM VT U.S. GOVERNMENT AND
HIGH QUALITY BOND FUND
Shares 129,727
Cost $1,705,963
................................
Market Value: -- -- --
----------------------------------------------------------------------------------------------
PUTNAM VT UTILITIES GROWTH &
INCOME FUND
Shares 180,546
Cost $2,627,965
................................
Market Value: 3,284,125 -- --
----------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
Shares 47,643
Cost $554,768
................................
Market Value: -- 701,307 --
----------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
Shares 430,252
Cost $14,508,848
................................
Market Value: -- -- 19,727,033
----------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 205 -- 619
................................
Receivable from fund shares sold -- -- --
................................
Total Assets 3,284,330 701,307 19,727,652
................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company -- 3 --
................................
Payable for fund shares purchased -- -- 209
................................
TOTAL LIABILITIES -- 3 209
----------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $ 3,284,330 $701,304 $ 19,727,443
----------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Assets and Liabilities (continued)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
December 31, 1998 Units Unit Contract
Owned by Price Liability
Participants
<S> <C> <C> <C>
-------------------------------------------------------------------------------------
Deferred life contracts:
Asia Pacific Growth Fund 41,882 $9.003084 $ 377,068
....................................................................................
Diversified Income Fund 198,869 13.798650 2,744,119
....................................................................................
George Putnam Fund 8,456 10.338503 87,421
....................................................................................
Global Asset Allocation 202,019 19.604138 3,960,417
....................................................................................
Global Growth Fund 477,598 20.285477 9,688,309
....................................................................................
Growth and Income Fund 1,426,245 23.724100 33,836,383
....................................................................................
Health Sciences Fund 26,640 10.950541 291,721
....................................................................................
High Yield Fund 268,383 14.367617 3,856,022
....................................................................................
International Growth Fund 56,593 13.784342 780,092
....................................................................................
International Growth and Income Fund 55,543 13.287617 738,039
....................................................................................
International New Opportunities Fund 62,218 11.545331 718,323
....................................................................................
Investors Fund 22,097 11.539064 254,976
....................................................................................
Money Market Fund 2,932,369 1.226087 3,595,340
....................................................................................
New Opportunities Fund 722,243 24.589388 17,759,515
....................................................................................
New Value Fund 68,439 12.495592 855,186
....................................................................................
OTC & Emerging Markets Fund 4,547 10.074314 45,809
....................................................................................
Research Fund 505 12.540201 6,329
....................................................................................
U.S. Government and High Quality Bond Fund 122,682 14.518456 1,781,151
....................................................................................
Utilities Growth and Income Fund 148,147 22.169452 3,284,330
....................................................................................
Vista Fund 47,638 14.721507 701,304
....................................................................................
Voyager Fund 783,992 25.162820 19,727,443
....................................................................................
GRAND TOTAL: $105,089,297
-------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended Asia Pacific Diversified The George Global
December 31, 1998 Growth Income Putnam Fund Asset
Sub-Account Sub-Account of Boston Allocation
Sub-Account* Sub-Account
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 15,691 $115,993 $ 533 $ 74,618
........................................................................................
Capital gains income -- 49,267 -- 320,508
........................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
........................................................................................
Net realized gain (loss) on
security transactions (2,525) (4,217) (1) (1,780)
........................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (33,195) (207,136) 1,474 50,334
........................................................................................
Net gain (loss) on investments (35,720) (211,353) 1,473 48,554
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $(20,029) $(46,093) $ 2,006 $443,680
-----------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Global Growth Health
December 31, 1998 Growth and Income Sciences
Sub-Account Sub-Account Sub-Account*
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 192,953 $ 462,353 $ 260
................................
Capital gains income 964,765 3,018,243 --
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized gain (loss) on
security transactions 3,991 (9,131) (8,148)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 952,580 635,979 25,180
................................
Net gain (loss) on investments 956,571 626,848 17,032
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $ 2,114,289 $ 4,107,444 $17,292
-----------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended High Yield International International International
December 31, 1998 Sub-Account Growth Growth and New
Sub-Account Income Opportunities
Sub-Account Sub-Account
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 317,574 $ 2,618 $ 9,068 $ 1,182
.........................................................................................
Capital gains income 49,833 -- 23,112 --
.........................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
.........................................................................................
Net realized gain (loss) on
security transactions (5,698) 162 (8,827) 627
.........................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (617,216) 68,425 5,747 84,216
.........................................................................................
Net gain (loss) on investments (622,914) 68,587 (3,080) 84,843
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $(255,507) $71,205 $29,100 $86,025
------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Investors Money New
December 31, 1998 Sub-Account* Market Opportunities
Sub-Account Sub-Account
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 279 $203,946 $ --
................................
Capital gains income -- -- 199,094
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized gain (loss) on
security transactions (2) -- (13,414)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 27,119 -- 3,153,786
................................
Net gain (loss) on investments 27,117 -- 3,140,372
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $27,396 $203,946 $ 3,339,466
------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended New OTC & Research U.S. Government
December 31, 1998 Value Emerging Sub-Account** and High
Sub-Account Growth Quality Bond
Sub-Account* Sub-Account
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $15,023 $ 11 $ 10 $ 69,049
.........................................................................................
Capital gains income 14,769 -- 1 1,797
.........................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
.........................................................................................
Net realized gain (loss) on
security transactions (10,038) (2,332) 5 2,076
.........................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 16,198 3,855 992 46,607
.........................................................................................
Net gain (loss) on investments 6,160 1,523 997 48,683
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $35,952 $1,534 $1,008 $119,529
------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Utilities Vista Voyager
December 31, 1998 Growth Sub-Account Sub-Account
and Income
Sub-Account
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 81,719 $ -- $ 36,862
................................
Capital gains income 140,845 -- 899,428
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized gain (loss) on
security transactions (5,378) (5,989) (5,067)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 193,433 104,296 2,742,962
................................
Net gain (loss) on investments 188,055 98,307 2,737,895
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $410,619 $98,307 $ 3,674,185
------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
**From inception, October 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended Asia Pacific Diversified The George Global Asset
December 31, 1998 Growth Income Putnam Fund Allocation
Sub-Account Sub-Account of Boston Sub-Account
Sub-Account*
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 15,691 $ 115,993 $ 533 $ 74,618
.............................................................................................
Capital gains income -- 49,267 -- 320,508
.............................................................................................
Net realized gain (loss) on
security transactions (2,525) (4,217) (1) (1,780)
.............................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (33,195) (207,136) 1,474 50,334
.............................................................................................
Net increase (decrease) in net
assets resulting from
operations (20,029) (46,093) 2,006 443,680
.............................................................................................
UNIT TRANSACTIONS:
Purchases -- 247 1,000 30
.............................................................................................
Net transfers 44,963 504,241 84,597 567,261
.............................................................................................
Surrenders (6,023) (147,039) (131) (159,728)
.............................................................................................
Net loan activity (6) (46,391) -- (1,101)
.............................................................................................
Cost of insurance (2,403) (19,553) (51) (22,714)
.............................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 36,531 291,505 85,415 383,748
.............................................................................................
Total increase (decrease) in net
assets 16,502 245,412 87,421 827,428
.............................................................................................
NET ASSETS:
Beginning of period 360,566 2,498,707 -- 3,132,989
----------------------------------------------------------------------------------------------
END OF PERIOD $377,068 $ 2,744,119 $ 87,421 $ 3,960,417
----------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Global Growth Health
December 31, 1998 Growth and Income Sciences
Sub-Account Sub-Account Sub-Account*
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 192,953 $ 462,353 $ 260
................................
Capital gains income 964,765 3,018,243 --
................................
Net realized gain (loss) on
security transactions 3,991 (9,131) (8,148)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 952,580 635,979 25,180
................................
Net increase (decrease) in net
assets resulting from
operations 2,114,289 4,107,444 17,292
................................
UNIT TRANSACTIONS:
Purchases 133 475 1,000
................................
Net transfers 1,500,956 6,667,783 275,928
................................
Surrenders (236,217) (1,155,100) (1,830)
................................
Net loan activity (27,699) (95,023) (2)
................................
Cost of insurance (53,883) (190,625) (667)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 1,183,290 5,227,510 274,429
................................
Total increase (decrease) in net
assets 3,297,579 9,334,954 291,721
................................
NET ASSETS:
Beginning of period 6,390,730 24,501,429 --
----------------------------------------------------------------------------------------------
END OF PERIOD $ 9,688,309 $ 33,836,383 $291,721
----------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended High Yield International International International
December 31, 1998 Sub-Account Growth Growth and New
Sub-Account Income Opportunities
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 317,574 $ 2,618 $ 9,068 $ 1,182
.............................................................................................
Capital gains income 49,833 -- 23,112 --
.............................................................................................
Net realized gain (loss) on
security transactions (5,698) 162 (8,827) 627
.............................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (617,216) 68,425 5,747 84,216
.............................................................................................
Net increase (decrease) in net
assets resulting from
operations (255,507) 71,205 29,100 86,025
.............................................................................................
UNIT TRANSACTIONS:
Purchases -- -- 12 --
.............................................................................................
Net transfers 955,419 436,437 369,699 96,630
.............................................................................................
Surrenders (189,929) (32,004) (18,515) (12,804)
.............................................................................................
Net loan activity 4,370 (476) (160) (16)
.............................................................................................
Cost of insurance (26,315) (3,272) (3,970) (4,122)
.............................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 743,545 400,685 347,066 79,688
.............................................................................................
Total increase (decrease) in net
assets 488,038 471,890 376,166 165,713
.............................................................................................
NET ASSETS:
Beginning of period 3,367,984 308,202 361,873 552,610
----------------------------------------------------------------------------------------------
END OF PERIOD $ 3,856,022 $780,092 $738,039 $718,323
----------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Investors Money New
December 31, 1998 Sub-Account* Market Opportunities
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 279 $ 203,946 $ --
................................
Capital gains income -- -- 199,094
................................
Net realized gain (loss) on
security transactions (2) -- (13,414)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 27,119 -- 3,153,786
................................
Net increase (decrease) in net
assets resulting from
operations 27,396 203,946 3,339,466
................................
UNIT TRANSACTIONS:
Purchases 1,000 18,282,533 312
................................
Net transfers 227,413 (18,970,303) 2,416,753
................................
Surrenders (581) (84,770) (425,737)
................................
Net loan activity (13) (167,934) (19,980)
................................
Cost of insurance (239) (37,639) (93,946)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 227,580 (978,113) 1,877,402
................................
Total increase (decrease) in net
assets 254,976 (774,167) 5,216,868
................................
NET ASSETS:
Beginning of period -- 4,369,507 12,542,647
----------------------------------------------------------------------------------------------
END OF PERIOD $254,976 $ 3,595,340 $ 17,759,515
----------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-10
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended New OTC & Research U.S.
December 31, 1998 Value Emerging Sub-Account** Government
Sub-Account Growth and High
Sub-Account* Quality Bond
Sub-Account
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 15,023 $ 11 $ 10 $ 69,049
........................................................................................
Capital gains income 14,769 -- 1 1,797
........................................................................................
Net realized gain (loss) on
security transactions (10,038) (2,332) 5 2,076
........................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 16,198 3,855 992 46,607
........................................................................................
Net increase (decrease) in net
assets resulting from
operations 35,952 1,534 1,008 119,529
........................................................................................
UNIT TRANSACTIONS:
Purchases 6 1,000 1,000 --
........................................................................................
Net transfers 7,892 43,737 4,389 753,569
........................................................................................
Surrenders (24,964) (116) (40) (43,665)
........................................................................................
Net loan activity (40,176) (301) (13) (368)
........................................................................................
Cost of insurance (5,238) (45) (15) (10,772)
........................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions (62,480) 44,275 5,321 698,764
........................................................................................
Total increase (decrease) in net
assets (26,528) 45,809 6,329 818,293
........................................................................................
NET ASSETS:
Beginning of period 881,714 -- -- 962,858
-----------------------------------------------------------------------------------------
END OF PERIOD $855,186 $45,809 $6,329 $1,781,151
-----------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Utilities Vista Voyager
December 31, 1998 Growth Sub-Account Sub-Account
and Income
Sub-Account
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 81,719 $ -- $ 36,862
................................
Capital gains income 140,845 -- 899,428
................................
Net realized gain (loss) on
security transactions (5,378) (5,989) (5,067)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 193,433 104,296 2,742,962
................................
Net increase (decrease) in net
assets resulting from
operations 410,619 98,307 3,674,185
................................
UNIT TRANSACTIONS:
Purchases -- -- 372
................................
Net transfers 704,200 169,516 3,138,920
................................
Surrenders (96,008) (9,634) (527,418)
................................
Net loan activity (13,012) (2,798) (17,815)
................................
Cost of insurance (20,396) (4,013) (107,679)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 574,784 153,071 2,486,380
................................
Total increase (decrease) in net
assets 985,403 251,378 6,160,565
................................
NET ASSETS:
Beginning of period 2,298,927 449,926 13,566,878
-----------------------------------------------------------------------------------------
END OF PERIOD $ 3,284,330 $701,304 $ 19,727,443
-----------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
**From inception, October 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-11
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended Asia Diversified Global Global
December 31, 1997 Pacific Income Asset Growth
Growth Sub-Account Allocation Sub-Account
Sub-Account Sub-Account
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 6,828 $ 132,930 $ 69,277 $ 104,380
.......................................................................................
Capital gains income -- 20,956 118,411 112,272
.......................................................................................
Net realized gain (loss) on
security transactions 132 11,405 1,345 (747)
.......................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (65,164) 14,728 222,497 425,520
.......................................................................................
Net increase (decrease) in net
assets resulting from
operations (58,204) 180,019 411,530 641,425
.......................................................................................
UNIT TRANSACTIONS:
Purchases -- -- -- --
.......................................................................................
Net transfers 79,345 672,116 1,228,080 2,514,584
.......................................................................................
Surrenders (6,561) (19,125) (73,245) (102,670)
.......................................................................................
Net loan activity 10 13 (8,703) (72,872)
.......................................................................................
Cost of insurance (2,368) (18,488) (16,817) (37,044)
.......................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 70,426 634,516 1,129,315 2,301,998
.......................................................................................
Total increase (decrease) in net
assets 12,222 814,535 1,540,845 2,943,423
.......................................................................................
NET ASSETS:
Beginning of period 348,344 1,684,172 1,592,144 3,447,307
----------------------------------------------------------------------------------------
END OF PERIOD $360,566 $ 2,498,707 $ 3,132,989 $ 6,390,730
----------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Growth High Yield International International
December 31, 1997 and Income Sub-Account Growth Growth
Sub-Account Sub-Account* and Income
Sub-Account*
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 324,482 $ 165,816 $ 4,598 $ 10,865
................................
Capital gains income 789,799 19,228 -- --
................................
Net realized gain (loss) on
security transactions (3,845) 1,555 (3) 145
................................
Net unrealized appreciation
(depreciation) of investments
during the period 2,878,520 177,334 13,775 13,367
................................
Net increase (decrease) in net
assets resulting from
operations 3,988,956 363,933 18,370 24,377
................................
UNIT TRANSACTIONS:
Purchases -- -- 1,000 1,000
................................
Net transfers 8,374,826 1,399,456 298,426 346,481
................................
Surrenders (532,447) (72,741) (2,846) (3,498)
................................
Net loan activity (152,771) 3,935 (5,512) (5,432)
................................
Cost of insurance (129,399) (18,397) (1,236) (1,055)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 7,560,209 1,312,253 289,832 337,496
................................
Total increase (decrease) in net
assets 11,549,165 1,676,186 308,202 361,873
................................
NET ASSETS:
Beginning of period 12,952,264 1,691,798 -- --
----------------------------------------------------------------------------------------
END OF PERIOD $ 24,501,429 $ 3,367,984 $308,202 $361,873
----------------------------------------------------------------------------------------
</TABLE>
*From inception, January 2, 1997 to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-12
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended International Money New New
December 31, 1997 New Market Opportunities Value
Opportunities Sub-Account Sub-Account Sub-Account*
Sub-Account*
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 1,554 $ 263,015 $ -- $ --
............................................................................................
Capital gains income -- -- -- --
............................................................................................
Net realized gain (loss) on
security transactions (129) -- 24,784 (7,183)
............................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (31,210) -- 2,122,853 83,564
............................................................................................
Net increase (decrease) in net
assets resulting from
operations (29,785) 263,015 2,147,637 76,381
............................................................................................
UNIT TRANSACTIONS:
Purchases 1,000 24,471,594 -- 1,000
............................................................................................
Net transfers 594,284 (25,898,707) 3,948,752 822,347
............................................................................................
Surrenders (6,019) (138,936) (264,042) (9,033)
............................................................................................
Net loan activity (4,621) (1,205,487) (71,438) (5,472)
............................................................................................
Cost of insurance (2,249) (47,389) (64,510) (3,509)
............................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 582,395 (2,818,925) 3,548,762 805,333
............................................................................................
Total increase (decrease) in net
assets 552,610 (2,555,910) 5,696,399 881,714
............................................................................................
NET ASSETS:
Beginning of period -- 6,925,417 6,846,248 --
---------------------------------------------------------------------------------------------
END OF PERIOD $552,610 $ 4,369,507 $ 12,542,647 $881,714
---------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended U.S. Government Utilities Vista Voyager
December 31, 1997 and High Growth Sub-Account* Sub-Account
Quality Bond and Income
Sub-Account Sub-Account
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 41,593 $ 50,859 $ 33 $ 18,916
................................
Capital gains income -- 69,354 -- 407,658
................................
Net realized gain (loss) on
security transactions 1,535 2,809 (8,009) 4,822
................................
Net unrealized appreciation
(depreciation) of investments
during the period 23,755 341,948 42,243 2,153,271
................................
Net increase (decrease) in net
assets resulting from
operations 66,883 464,970 34,267 2,584,667
................................
UNIT TRANSACTIONS:
Purchases -- -- 1,000 --
................................
Net transfers 290,877 842,138 425,017 4,061,985
................................
Surrenders (30,658) (45,296) (3,307) (284,657)
................................
Net loan activity 43,121 (11,744) (5,648) (36,310)
................................
Cost of insurance (5,318) (12,723) (1,403) (71,377)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 298,022 772,375 415,659 3,669,641
................................
Total increase (decrease) in net
assets 364,905 1,237,345 449,926 6,254,308
................................
NET ASSETS:
Beginning of period 597,953 1,061,582 -- 7,312,570
---------------------------------------------------------------------------------------------
END OF PERIOD $ 962,858 $ 2,298,927 $449,926 $ 13,566,878
---------------------------------------------------------------------------------------------
</TABLE>
*From inception, January 2, 1997 to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-13
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Notes to Financial Statements
December 31, 1998
1. ORGANIZATION:
Putnam Capital Manager Trust Separate Account Five (the Account) is a separate
investment account within Hartford Life & 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.
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 various
mutual funds (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 is
accrued as of the ex-dividend date. Capital gains income represents dividends
from the Funds which are characterized as capital gains under tax regulations.
B) SECURITY VALUATION -- The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1998.
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:
A) COST OF INSURANCE -- In accordance with terms of the contracts, the Company
makes deductions for costs of insurance to cover the Company's anticipated
mortality costs. Because a policy's account value and death benefit may vary
from month to month, the cost of insurance charges may also vary.
B) MORTALITY AND EXPENSE UNDERTAKINGS -- The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and, with
respect to the Account, receives a maximum annual fee of 0.90% of the Account's
average daily net assets. The Company also provides administrative services and
receives an annual fee of 0.40% of the Account's average daily net assets. These
expenses are reflected in surrenders on the accompanying statements of changes
in net assets.
C) DEDUCTION OF ANNUAL MAINTENANCE FEE -- Annual maintenance fees are deducted
through termination of units of interest from applicable contract owners'
accounts, in accordance with the terms of the contracts. These expenses are
reflected in surrenders on the accompanying statements of changes in net assets.
D) TAX EXPENSE CHARGE -- The Company will deduct monthly from the account value
a tax expense charge equal to an annual rate of 0.40% for the first ten years.
During the first nine policy years, a premium tax charge will be imposed on full
or partial surrenders at a maximum rate of 2.25%.
SA-14
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of Hartford Life and
Annuity Insurance Company (a Connecticut Corporation and wholly owned subsidiary
of Hartford Life Insurance Company) (the Company) as of December 31, 1998 and
1997, and the related statutory statements of operations, changes in capital and
surplus, and cash flows for each of the three years in the period ended December
31, 1998. 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 of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of the Company as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998.
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, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with statutory accounting practices as described in Note 1.
Hartford, Connecticut
January 26, 1999 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
BALANCE SHEETS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
<S> <C> <C>
--------------------------
<CAPTION>
1998 1997
<S> <C> <C>
--------------------------
ASSETS
Bonds $ 1,453,792 $ 1,501,311
Common stocks 40,650 64,408
Mortgage loans 59,548 85,103
Policy loans 47,212 36,533
Cash and short-term investments 469,955 309,432
--------------------------
Other invested assets 2,188 20,942
--------------------------
Total cash and invested assets 2,073,345 2,017,729
Investment income due and accrued 20,126 15,878
Premium balances receivable 333 389
Receivables from affiliates -- 1,269
Other assets 45,358 22,788
Separate account assets 32,876,278 23,208,728
--------------------------
TOTAL ASSETS $35,015,440 $25,266,781
--------------------------
LIABILITIES
Aggregate reserves for future benefits $ 579,140 $ 605,183
Policy and contract claims 5,667 5,672
Liability for premium and other deposit funds 2,011,672 1,795,149
Asset valuation reserve 21,782 13,670
Payable to affiliates 19,271 20,972
Other liabilities (974,882) (754,393)
Separate account liabilities 32,876,278 23,208,728
--------------------------
TOTAL LIABILITIES 34,538,928 24,894,981
--------------------------
CAPITAL AND SURPLUS
Common stock 2,500 2,500
Gross paid-in and contributed surplus 226,043 226,043
Unassigned funds 247,969 143,257
--------------------------
TOTAL CAPITAL AND SURPLUS 476,512 371,800
--------------------------
TOTAL LIABILITIES, CAPITAL AND SURPLUS $35,015,440 $25,266,781
--------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-2
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
----------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
----------------------------------
REVENUES
Premiums and annuity considerations $ 469,343 $ 296,645 $ 250,244
Annuity and other fund deposits 2,051,251 1,981,246 1,897,347
Net investment income 129,982 102,285 98,441
Commissions and expense allowances on
reinsurance ceded 444,241 396,921 370,637
Reserve adjustment on reinsurance ceded 3,185,590 3,672,076 3,864,395
Other revenues 458,190 288,632 161,906
----------------------------------
TOTAL REVENUES 6,738,597 6,737,805 6,642,970
----------------------------------
BENEFITS AND EXPENSES
Death and annuity benefits 43,390 66,176 60,194
Disability and other benefit payments 6,114 7,316 6,555
Surrenders 739,663 454,417 270,165
Commissions and other expenses 666,515 564,077 491,637
Increase (Decrease) in aggregate reserves for
future benefits (26,043) 33,213 27,351
Increase in liability for premium and other
deposit funds 216,523 640,006 207,156
Net transfers to separate accounts 4,956,007 4,914,980 5,492,964
----------------------------------
TOTAL BENEFITS AND EXPENSES 6,602,169 6,680,185 6,556,022
----------------------------------
NET GAIN FROM OPERATIONS
Before federal income tax (benefit) expense 136,428 57,620 86,948
Federal income tax (benefit) expense 35,887 (14,878) 19,360
----------------------------------
NET GAIN FROM OPERATIONS 100,541 72,498 67,588
Net realized capital gains, after tax 2,085 1,544 407
----------------------------------
NET INCOME $ 102,626 $ 74,042 $ 67,995
----------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-3
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
-----------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-----------------------------
COMMON STOCK
Beginning and end of year $ 2,500 $ 2,500 $ 2,500
-----------------------------
GROSS PAID-IN AND CONTRIBUTED SURPLUS
Beginning and end of year $ 226,043 $ 226,043 $ 226,043
-----------------------------
UNASSIGNED FUNDS
Balance, beginning of year $ 143,257 $ 74,570 $ 9,791
Net income 102,626 74,042 67,995
Change in net unrealized capital gains (losses)
on common stocks
and other invested assets 1,688 2,186 (5,171)
Change in asset valuation reserve (8,112) (6,228) 568
Change in non-admitted assets (1,277) (1,313) 1,387
Credit on reinsurance ceded 9,787 -- --
-----------------------------
Balance, end of year $ 247,969 $ 143,257 $ 74,570
-----------------------------
CAPITAL AND SURPLUS
End of year $ 476,512 $ 371,800 $ 303,113
-----------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-4
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
----------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
----------------------------------
OPERATIONS
Premiums and annuity considerations $ 2,520,655 $ 2,277,874 $ 2,147,627
Investment income 127,425 101,991 106,178
Other income 4,092,964 4,381,718 4,396,892
----------------------------------
Total income 6,741,044 6,761,583 6,650,697
----------------------------------
Benefits paid 790,051 529,733 338,998
Federal income taxes (received) paid on
operations 25,780 (14,499) 28,857
Other expenses 5,859,063 5,754,725 6,254,139
----------------------------------
Total benefits and expenses 6,674,894 6,269,959 6,621,994
----------------------------------
NET CASH FROM OPERATIONS 66,150 491,624 28,703
----------------------------------
PROCEEDS FROM INVESTMENTS
Bonds 633,926 614,413 871,019
Common stocks 34,010 11,481 72,100
Mortgage loans 85,275 -- --
Other 127 152 10
----------------------------------
NET INVESTMENT PROCEEDS 753,338 626,046 943,129
----------------------------------
Taxes paid on capital gains -- -- 936
Other cash provided 1,269 -- 41,998
----------------------------------
TOTAL PROCEEDS 820,757 1,117,670 1,012,894
----------------------------------
COST OF INVESTMENTS ACQUIRED
Bonds 586,913 848,267 914,523
Common stocks 7,012 28,302 82,495
Mortgage loans 59,702 85,103 --
Other 1,168 18,548 130
----------------------------------
TOTAL INVESTMENTS ACQUIRED 654,795 980,220 997,148
----------------------------------
Other cash applied
Other 5,439 4,848 12,220
----------------------------------
Total other cash applied 5,439 4,848 12,220
----------------------------------
TOTAL APPLICATIONS 660,234 985,068 1,009,368
----------------------------------
Net change in cash and short-term investments 160,523 132,602 3,526
Cash and short-term investments, beginning of year 309,432 176,830 173,304
----------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 469,955 $ 309,432 $ 176,830
----------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Hartford Life and Annuity Insurance Company ("ILA" or "the Company"), formerly
known as ITT Hartford Life and Annuity Insurance Company, 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 basis financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners ("NAIC"), the State of
Connecticut Department of Insurance and the State of Wisconsin for the 1996
period, as applicable. Certain prior year amounts and balances have been
reclassified to conform with current year presentation.
Current prescribed statutory accounting practices include accounting
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass accounting practices approved by State
Insurance Departments. The Company does not follow any permitted statutory
accounting practices that have a material effect on statutory surplus, statutory
net income or risk-based capital.
Final approval of the NAIC's proposed "Comprehensive Guide" on statutory
accounting principles was distributed in 1998. The requirements are effective
January 1, 2001, and are not expected to have a material impact on statutory
surplus of the Company.
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 include those used in
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 for GAAP purposes;
(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.,
negative Interest Maintenance Reserve, past due agents' balances and
furniture and equipment) from the balance sheet for statutory purposes by
directly charging surplus;
F-6
<PAGE>
(6) establishing accruals for post-retirement and post-employment health care
benefits currently, or using a twenty year phase-in approach, whereas GAAP
liabilities are recorded upon adoption of the applicable standard;
(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;
as well as, the accounting for retroactive reinsurance which is immediately
charged to surplus for statutory accounting purposes whereas GAAP precludes
immediate gain recognition unless the ceding enterprise's liability to its
policyholders is extinguished; as well as reinsurance ceded that fails to
meet GAAP risk transfer guidelines would result in deposit accounting for
GAAP where as for statutory, reserves ceded and assumed would be reflected
in the statutory basis statements of operations;
(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, the significant differences between
Statutory and GAAP basis net income and capital and surplus for the Company are
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
----------------------------------------
GAAP Net Income $ 74,525 $ 58,050 $ 41,202
Amortization and deferral of policy
acquisition costs, net (331,882) (345,657) (341,571)
Change in unearned revenue reserve 22,131 4,641 55,504
Deferred taxes 2,476 47,092 2,090
Separate accounts 259,287 282,818 306,978
Asset impairments and write-downs 17,250 -- --
Benefit reserve adjustment 32,759 24,666 (1,013)
Deposit accounting for Lyndon
reinsurance (Note 3) 24,627 -- --
Other, net 1,453 2,432 4,805
----------------------------------------
STATUTORY NET INCOME $ 102,626 $ 74,042 $ 67,995
----------------------------------------
GAAP Capital and Surplus $ 648,097 $ 570,469 $ 503,887
Deferred policy acquisition costs (1,615,653) (1,283,771) (938,114)
Unearned revenue reserve 156,920 134,789 130,148
Deferred taxes 68,936 64,522 12,823
Separate accounts 1,183,642 924,355 640,101
Asset impairments and write-downs 17,250 -- --
Unrealized gains on bonds (26,119) (21,451) (7,978)
Benefit reserve adjustment 65,029 16,378 7,035
Asset valuation reserve (21,782) (13,670) (7,442)
Adjustment relating to Lyndon
contribution (Note 3) -- (23,671) (36,126)
Other, net 192 3,850 (1,221)
----------------------------------------
STATUTORY CAPITAL AND SURPLUS $ 476,512 $ 371,800 $ 303,113
----------------------------------------
</TABLE>
F-7
<PAGE>
As more fully described in Note 3, Lyndon Insurance Company (Lyndon) was
contributed to the Company on June 30, 1995. The GAAP net assets contributed
exceeded the statutory basis net assets by $41,277 as of December 31, 1995,
relating primarily to statutory reserves for future benefits, GAAP deposit
accounting receivables and deferred tax liabilities. In 1998, the majority of
the former Lyndon's assumed business was recaptured by the unaffiliated direct
writer.
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 basis statements of operations.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds that 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.
Short-term investments consist of money market funds and are stated at cost,
which approximates fair value. 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 Company uses a variety of derivative financial instruments as part of an
overall risk management strategy. These instruments, including interest rate and
foreign currency swaps, caps, and floors are used as a means of hedging exposure
to price, foreign currency and/or interest rate risk on planned investment
purchases or existing assets and liabilities. The Company does not hold or issue
derivative financial instruments for trading purposes. Derivatives must be
designated at inception as a hedge measured for effectiveness both at inception
and on an ongoing basis. The Company's correlation threshold for hedge
designation is 80% to 120%. If correlation, which is assessed monthly and
measured based on a rolling three month average, falls outside the 80% to 120%
range, hedge accounting will be terminated.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to net investment income. Should the swap be terminated the gains or losses are
adjusted into the basis of the asset or liability and amortized over the
remaining life. Should the hedged asset be sold or liability terminated without
terminating the swap position, any swap gains or losses are immediately
recognized in net investment income. Interest rate swaps purchased in
anticipation of an asset purchase ("anticipatory transaction") are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the statutory basis statements of operations while
the change in market value is recognized as an unrealized gain or loss. Foreign
currency swaps are similar to interest rate swaps except there is an initial
exchange of principal in two currencies and an agreement to re-exchange the
currencies at a future date, at an agreed upon exchange rate.
Premiums paid on purchased floor or cap agreements and the premium received on
issued cap or floor agreements (used for risk management) are adjusted into the
basis of the applicable asset and amortized over the asset life. Gains or losses
on termination of such positions are adjusted into the basis of the asset or
liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.
Derivatives used to create a synthetic asset must meet synthetic accounting
criteria, including designation at inception and consistency of terms between
the synthetic and the instrument being replicated. Consistent with industry
practice, synthetic instruments are accounted for like the financial instrument
they are intended to replicate. Derivatives which fail to meet risk management
criteria subsequent to acquisition, are accounted for at fair market value with
the impact reflected in the statutory basis statements of operations.
Open forward commitment contracts are marked to market through surplus. Such
contracts are accounted for at settlement by recording the purchase of specified
securities at the previously committed price. Gains or losses resulting from
termination of the forward commitment contracts before the delivery of the
securities are recognized immediately in the statutory basis statements of
operations as a component of Net Realized Capital Gains, after tax.
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 $8,112 and $6,228
in 1998 and 1997, respectively and decreased $(568) in 1996. Additionally, the
Interest Maintenance Reserve ("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 life of the mortgage
loan or bond sold. The IMR balance as of December 31, 1998 and December 31, 1997
was $452
F-8
<PAGE>
and $(193), respectively and is reflected in Other Liabilities and as a
component of non-admitted assets in Unassigned Funds for each of the years then
ended. For the years ended December 31, 1998, 1997 and 1996, amortization of IMR
is included in Other Revenues and was $(207), $(85) and $(392), respectively.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the statutory basis statements of operations. Realized investment gains and
losses are determined on a specific identification basis.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $1,187 million and $923 million as of December 31, 1998 and
1997, respectively. The balances are classified in accordance with NAIC
prescribed practices.
MORTGAGE LOANS
Mortgage loans, which are carried at cost and approximate fair value, include
investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
Interest income from bonds and short-term investments $ 123,370 $ 100,475 $ 89,940
Interest income from policy loans 3,133 1,958 1,846
Interest and dividends from other investments 4,482 1,005 7,864
-------------------------------
Gross investment income 130,985 103,438 99,650
Less: investment expenses 1,003 1,153 1,209
-------------------------------
NET INVESTMENT INCOME $ 129,982 $ 102,285 $ 98,441
-------------------------------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
Gross unrealized capital gains $ 2,204 $ 537 $ 713
Gross unrealized capital losses (1,871) (1,820) (4,160)
-------------------------------
Net unrealized capital (losses)/gains 333 (1,283) (3,447)
Balance, beginning of year (1,283) (3,447) 1,724
-------------------------------
CHANGE IN NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS $ 1,616 $ 2,164 $ (5,171)
-------------------------------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
Gross unrealized capital gains $ 10,905 $ 23,357 $ 11,821
Gross unrealized capital losses (833) (1,906) (3,842)
-------------------------------
Net unrealized capital gains 10,072 21,451 7,979
Balance, beginning of year 21,451 7,979 20,877
-------------------------------
CHANGE IN NET UNREALIZED CAPITAL GAINS ON BONDS AND SHORT-TERM
INVESTMENTS $ (11,379) $ 13,472 $ (12,898)
-------------------------------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
Bonds and short-term investments $ 1,314 $ (120) $ 2,756
Common stocks 1,624 -- --
Real estate and other (1) 114 --
-------------------------------
Realized capital (losses) gains 2,937 (6) 2,756
Capital gains (benefit) tax -- (831) 936
-------------------------------
Net realized capital gains 2,937 825 1,820
Amounts transferred to IMR 852 (719) 1,413
-------------------------------
NET REALIZED CAPITAL GAINS $ 2,085 $ 1,544 $ 407
-------------------------------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet risk
as of December 31, 1998.
F-9
<PAGE>
(F) CONCENTRATION OF CREDIT RISK
The Company has invested in securities of a single issuer, Bankers Trust
Corporation, in an amount greater than 10% of the Company's statutory capital
and surplus. The statement value of this investment was $105,221 as of December
31, 1998. The NAIC ratings on these holdings were 1z and 2. Excluding this and
U.S. government and government agency investments, the Company had no other
significant concentrations of credit risk as of December 31, 1998.
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
1998
<S> <C> <C> <C> <C>
------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
------------------------------------------------
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored $ 4,982 $ 35 $ (2) $ 5,015
-- Guaranteed and sponsored -- asset-backed 75,615 -- -- 75,615
States, municipalities and political subdivisions 10,402 415 -- 10,817
International governments 7,466 568 -- 8,034
Public utilities 94,475 1,330 (39) 95,766
All other corporate 607,679 8,473 (792) 615,360
All other corporate -- asset-backed 505,900 -- -- 505,900
Short-term investments 343,783 -- -- 343,783
Certificates of deposit 130,216 84 -- 130,300
Parents, subsidiaries and affiliates 117,057 -- -- 117,057
------------------------------------------------
TOTAL BONDS AND SHORT-TERM INVESTMENTS $1,897,575 $10,905 $(833) $1,907,647
------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
------------------------------------------------
Common stock -- unaffiliated $ 4,933 $ 290 $ (50) $ 5,173
Common stock -- affiliated 35,384 1,914 (1,821) 35,477
------------------------------------------------
TOTAL COMMON STOCKS $40,317 $2,204 $(1,871) $40,650
------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1997
<S> <C> <C> <C> <C>
------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair 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 -- 26,733
International governments 7,609 500 -- 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 -- -- 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 Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
------------------------------------------------
Common stock -- unaffiliated $30,307 $537 $ -- $30,844
Common stock -- affiliated 35,384 -- (1,820) 33,564
------------------------------------------------
TOTAL COMMON STOCKS $65,691 $537 $(1,820) $64,408
------------------------------------------------
</TABLE>
F-10
<PAGE>
The amortized cost and estimated fair value of bonds and short-term investments
as of December 31, 1998 by estimated maturity year are shown below. Asset-backed
securities, including mortgage backed securities and collaterialized mortgage
obligations, are distributed to maturity year based on ILA's estimates of the
rate of future prepayments of principal over the remaining lives of the
securities. Expected maturities differ from contractual maturities due to call
or repayment provisions.
<TABLE>
<CAPTION>
Amortized Estimated
Maturity Cost Fair Value
<S> <C> <C>
--------------------------
One year or less $ 788,845 $ 792,826
Over one year through five years 689,025 692,811
Over five years through ten years 308,661 310,357
Over ten years 111,044 111,653
--------------------------
TOTAL $ 1,897,575 $ 1,907,647
--------------------------
</TABLE>
Proceeds from sales and maturities of investments in bonds and short-term
investments during 1998, 1997 and 1996 were $1,354,563, $1,435,820 and
$1,139,073, respectively, resulting in gross realized gains of $1,705, $964 and
$3,675, respectively, and gross realized losses of $391, $1,084 and $919,
respectively, before transfers to IMR.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C> <C> <C>
------------------------------------------------------
<CAPTION>
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
------------------------------------------------------
ASSETS
Bonds and short-term investments $ 1,898 $ 1,908 $ 1,779 $ 1,800
Common stocks 41 41 64 64
Policy loans 47 47 37 37
Mortgage loans 60 60 85 85
Other invested assets 2 2 21 21
LIABILITIES
Liabilities on investment
contracts $ 2,053 $ 2,129 $ 1,911 $ 1,835
</TABLE>
The estimated fair value of bonds and short-term investments was determined by
the Company primarily using NAIC market values. The carrying amounts for policy
loans approximates fair value. The fair value of mortgage loans was determined
by discounting future expected cash flows using interest rates currently being
offered for similar loans. The fair value of liabilities on investment contracts
is determined by forecasting future cash flows and discounting the forecasted
cash flows at current market interest rates.
3. AGGREGATE RESERVES FOR FUTURE BENEFITS:
The Company's existing reserves consist of life, health, annuity and
supplementary contracts. The Company cedes and assumes insurance to and from
non-affiliated insurers in order to limit its maximum loss. Such transfers do
not relieve the Company or the unaffiliated reinsured of their primary
liabilities. The Company cedes to RGA Reinsurance Company and its affiliate
Employers Reassurance Corporation, on a modified coinsurance basis, 80% of the
variable annuity business written since 1994 and 100% of the variable life and
variable universal life excess sales load refund obligation effective 1998.
There were no material reinsurance recoverables from reinsurers outstanding as
of, and for the years ended, December 31, 1998 and 1997.
A summary of reinsurance information as of and for the years ended December 31,
follows:
<TABLE>
<CAPTION>
1998 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Premium and Annuity Considerations $ 483,328 $ 24,954 $ (38,939) $ 469,343
Death, Annuity, Disability and
Other Benefits $ 64,331 $ 1,574 $ (16,401) $ 49,504
Surrenders $ 739,663 $ -- $ -- $ 739,663
Aggregate Reserves for Future
Benefits $ 713,425 $ -- $ (134,285) $ 579,140
Policy and Contract Claims $ 5,895 $ 85 $ (313) $ 5,667
<CAPTION>
1997 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Premium and Annuity Considerations $ 266,427 $ 51,630 $ (21,412) $ 296,645
Death, Annuity, Disability and
Other Benefits $ 79,779 $ 839 $ (7,126) $ 73,492
Surrenders $ 454,417 $ -- $ -- $ 454,417
Aggregate Reserves for Future
Benefits $ 651,820 $ -- $ (46,637) $ 605,183
Policy and Contract Claims $ 5,861 $ 157 $ (346) $ 5,672
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
1996 Direct Assumed Ceded Net
------------------------------------------------------
<S> <C> <C> <C> <C>
Premium and Annuity Considerations $ 226,612 $ 33,817 $ (10,185) $ 250,244
Death, Annuity, Disability and
Other Benefits $ 34,950 $ 35,138 $ (3,339) $ 66,749
Surrenders $ 270,165 $ -- $ -- $ 270,165
</TABLE>
In connection with the distribution described in Note 1, on June 30, 1995, the
assets of Lyndon were contributed to the Company. The statutory basis assets in
excess of statutory basis liabilities was approximately $112 million and was
reflected as an increase in Gross Paid-In and Contributed Surplus at December
31, 1995. In 1998, the majority of former Lyndon's assumed business was
recaptured by the unaffiliated direct writer. A ceding commission of $25,622 and
change in reserve of $26,404 for the year ended December 31, 1998, is reflected
in Other Revenue and Increase/(Decrease) in Aggregate Reserves for Future
Benefits in the statutory basis statements of operations, respectively.
Analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal
Characteristics as of December 31, 1998 (including general and separate account
liabilities) are as follows:
<TABLE>
<CAPTION>
% of
Subject to discretionary withdrawal: Amount Total
<S> <C> <C>
----------------------
With market value adjustment $ 4,563 0.0%
At book value less current surrender charge of 5% or more 1,378,056 4.1%
At market value 31,087,511 93.8%
----------------------
Total with adjustment or at market value 32,470,130 97.9%
At book value without adjustment (minimal or no charge or adjustment) 665,159 2.0%
Not subject to discretionary withdrawal 19,739 0.1%
----------------------
Reinsurance ceded 33,155,028
TOTAL, NET $33,155,028
----------------------
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within The Hartford relate
principally to tax settlements, reinsurance, rental and service fees, capital
contributions and payments of dividends. The Company has also invested in bonds
of its affiliates, Hartford Financial Services Corporation and HL Investment
Advisors, Inc., and common stock of its subsidiary, ITT Hartford Life, LTD.
5. 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 filing separate Federal, state and local
income tax returns.
As long as The Hartford continues to own 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 intention of The Hartford and
its non-life subsidiaries to file a single consolidated Federal income tax
return. The life insurance companies will file a separate consolidated Federal
income tax return. Federal income taxes (received) paid by the Company for
operations and capital gains were $25,780, $(14,499) and $29,793 in 1998, 1997
and 1996, respectively. The effective tax rate was 26%, (26)% and 22% in 1998,
1997 and 1996, respectively.
The Company is currently under audit by the Internal Revenue Service (IRS) for
the three year tax period ending 1995. The audit is not yet complete. As of
December 31, 1998, the Company does not currently expect any material
adjustments to arise from this audit.
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>
1998 1997 1996
<S> <C> <C> <C>
--------------------
Tax provision at U.S. Federal statutory rate $ 48 $ 20 $ 30
Tax deferred acquisition costs 25 25 27
Statutory to tax reserve differences 8 1 --
Unrealized gain on separate accounts (41) (44) (21)
Investments and other (4) (17) (17)
--------------------
FEDERAL INCOME TAX (BENEFIT) EXPENSE $ 36 $ (15) $ 19
--------------------
</TABLE>
F-12
<PAGE>
6. 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 generally restricted
to the greater of 10% of surplus as of the preceding December 31st or the net
gain from operations for the previous year. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1998,
1997 and 1996. The amount available for dividend in 1999 is $100,541.
7. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
HLI'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.
HLI's funding policy is to contribute annually an amount between the minimum
funding requirements set forth in the Employee Retirement Income Security Act of
1974, as amended, and the maximum amount that can be deducted for U.S. Federal
income tax purposes. Generally, pension costs are funded through the purchase of
affiliated group pension contracts. The cost to HLI was approximately $9,000 in
1998 and $7,000 in both 1997 and 1996.
HLI also provides, through The Hartford, certain health care and life insurance
benefits for eligible retired employees. A substantial portion of HLI's
employees may become eligible for these benefits upon retirement. HLI's
contribution for health care benefits will depend on the retiree's date of
retirement and years of service. In addition, the plan has a defined dollar cap
which limits average company contributions. HLI has prefunded a portion of the
health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Postretirement health
care and life insurance benefits expense, allocated by The Hartford, was
immaterial to the results of operations for 1998, 1997 and 1996.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year 2003. Increasing
the health care trend rates by one percent per year would have an immaterial
impact on the accumulated postretirement benefit obligation and the annual
expense. To the extent that the actual experience differs from the inherent
assumptions, the effect will be amortized over the average future service of
covered employees.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $32.9
billion and $23.2 billion as of December 31, 1998 and 1997, 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
$360 million, $252 million and $144 million in 1998, 1997 and 1996,
respectively, and are recorded as a component of other revenues on the statutory
basis statements of operations.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1998, 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 pending and threatened litigation in
the normal course of its business in which claims for monetary and punitive
damages have been asserted. Although there can be no assurances, at the present
time the Company does not anticipate that the ultimate liability arising from
such pending or threatened litigation, after consideration of provisions made
for potential losses and costs of defense, will have a material adverse effect
on the statutory capital and surplus of the Company.
As discussed in Note 5, issues may potentially be raised by the IRS in future
audits of open years. Management does not believe that possible audit
adjustments will have a material effect on the statutory capital and surplus of
the Company.
Under insurance guaranty fund laws in each state, insurers licensed to do
business 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 $1,043, $1,544 and $1,262 in 1998, 1997 and
1996, respectively. ILA incurred guaranteed fund expense of $548 in 1998, 1997
and 1996.
F-13
