<PAGE>
DIRECTOR LIFE SERIES II
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE POLICIES
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
[LOGO] Telephone: 1-800-231-5453
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This Prospectus describes information you should know before you purchase Series
II of Director Life. Please read it carefully.
Director Life Series II 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 portfolio 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>
SUB-ACCOUNT PURCHASES SHARES OF:
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<S> <C> <C>
Advisers Sub-Account -- Class IA of Hartford Advisers HLS Fund, Inc.
Bond Sub-Account -- Class IA of Hartford Bond HLS Fund, Inc.
Capital Appreciation Sub-Account -- Class IA of Hartford Capital Appreciation HLS Fund, Inc.
Dividend and Growth Sub-Account -- Class IA of Hartford Dividend and Growth HLS Fund, Inc.
Global Leaders Sub-Account -- Class IA of Hartford Global Leaders HLS Fund of Hartford
Series Fund
Growth and Income Sub-Account -- Class IA of Hartford Growth and Income HLS Fund of
Hartford Series Fund
High Yield Sub-Account -- Class IA of Hartford High Yield HLS Fund of Hartford
Series Fund
Index Sub-Account -- Class IA of Hartford Index HLS Fund, Inc.
International Advisers Sub-Account -- Class IA of Hartford International Advisers HLS Fund, Inc.
International Opportunities Sub-Account -- Class IA of Hartford International Opportunities HLS Fund,
Inc.
MidCap Sub-Account -- Class IA of Hartford MidCap HLS Fund, Inc.
Mortgage Securities Sub-Account -- Class IA of Hartford Mortgage Securities HLS Fund, Inc.
Money Market Sub-Account -- Class IA of Hartford Money Market HLS Fund, Inc.
Small Company Sub-Account -- Class IA of Hartford Small Company HLS Fund, Inc.
Stock Sub-Account -- Class IA of Hartford Stock HLS Fund, Inc.
</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
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PROSPECTUS DATED: MAY 3, 1999
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2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
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PAGE
----
<S> <C>
SUMMARY OF BENEFITS AND RISKS......................................... 3
FEE TABLE............................................................. 4
ABOUT US.............................................................. 6
Hartford Life and Annuity Insurance Company......................... 6
Separate Account Five............................................... 6
The Funds........................................................... 6
CHARGES AND DEDUCTIONS................................................ 8
YOUR POLICY........................................................... 10
PREMIUMS.............................................................. 11
DEATH BENEFITS AND POLICY VALUES...................................... 13
MAKING WITHDRAWALS FROM YOUR POLICY................................... 14
LOANS................................................................. 15
LAPSE AND REINSTATEMENT............................................... 16
FEDERAL TAX CONSIDERATIONS............................................ 16
LEGAL PROCEEDINGS..................................................... 19
OTHER MATTERS......................................................... 19
GLOSSARY OF SPECIAL TERMS............................................. 21
</TABLE>
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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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.
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4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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
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<CAPTION>
POLICIES FROM WHICH
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED CHARGE IS DEDUCTED
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<S> <C> <C> <C>
Surrender Charges When you fully or partially A percentage of the amount All, if the surrender is subject
surrender your policy. surrendered, not to exceed the to a 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%
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Unamortized Tax Charge Upon surrender or partial A percentage of the Account Value Only policies which elect Option
surrender of the policy. depending on the Policy Year the 1.
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>
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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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>
POLICIES FROM WHICH
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED CHARGE IS DEDUCTED
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<S> <C> <C> <C>
Cost of Insurance Monthly. Individualized depending on age, All
Charges sex and other factors.
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Mortality and Expense Monthly. - Under Option 1: All
Risk Charge .90% (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
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Tax Expense Charge Under Option 1: - Under Option 1:
Monthly. .40% (annualized) of Account
Value for Policy Years 1-10
Under Option 2: - Under Option 2: All
Receipt of Premium Payment. 4% of each premium payment in
all Policy Years
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Annual Maintenance Fee On Policy Anniversary Date or upon $30.00 Only policies with an Account
surrender of the policy. Value of less than $50,000 on the
Policy Anniversary Date or date of
surrender.
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Administrative Charge Monthly. .25% (annualized) of Sub-Account All
Value
</TABLE>
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>
AMOUNT DEDUCTED POLICIES FROM WHICH
CHARGE WHEN CHARGE IS DEDUCTED (ANNUALIZED) CHARGE IS DEDUCTED
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<S> <C> <C> <C>
Management Fees Daily net asset values of a Fund 0.382% - 0.775% All policies, but deductions only
reflect Management Fees already from underlying Funds selected by
deducted from assets of the Fund. you.
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Other Expenses Daily net asset values of a Fund 0.015% - 0.120% All policies, but deductions only
reflect Other Expenses already from underlying Funds selected by
deducted from the assets of the you.
Fund.
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Total Fund Annual Daily net asset values of a Fund 0.401% - 0.895% All policies, but deductions only
Expenses reflect Total Fund Annual from underlying Funds selected by
Operating Expenses already you.
deducted from assets of the Fund.
</TABLE>
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6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 OF
RATING AGENCY 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
All of the Funds are sponsored and administered by Hartford Life and Annuity
Insurance Company. HL Investment Advisors, LLC ("HL Advisors") serves as the
investment adviser to each of the Funds. Wellington Management Company, LLP
("Wellington Management") and The Hartford Investment Management Company
("HIMCO") serve as sub-investment advisors and provide day to day investment
services.
Each Fund, except for the Hartford Global Leaders HLS Fund, the Hartford
Growth and Income HLS Fund and the Hartford High Yield HLS Fund, is a separate
Maryland corporation registered as an open-end management investment company.
The Hartford Global Leaders HLS Fund, the Hartford Growth and Income HLS Fund
and the Hartford High Yield HLS Fund are diversified series of Hartford Series
Fund, Inc., a Maryland corporation, also registered as an open-end management
investment company. The shares of each Fund have been divided into Class IA and
Class IB. Only Class IA shares are available in this policy.
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 Funds' prospectus and 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:
HARTFORD ADVISERS HLS FUND -- Seeks maximum long-term total rate of return
by investing in common stocks and other equity securities, bonds and other debt
securities, and money market instruments. Sub-advised by Wellington Management.
HARTFORD BOND HLS FUND -- Seeks maximum current income consistent with
preservation of capital by investing primarily in investment grade fixed-income
securities. Up to 20% of the total assets of this Fund may be invested in debt
securities rated in the highest category below investment grade ("Ba" by Moody's
Investor Services, Inc. or "BB" by Standard & Poor's) or, if unrated, are
determined to be of comparable quality by the Fund's investment adviser.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning the
risks associated with investing in such securities, please refer to the section
in the accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund,
Inc." Sub-advised by HIMCO.
HARTFORD CAPITAL APPRECIATION HLS FUND -- Seeks growth of capital by
investing in equity securities selected solely on the basis of potential for
capital appreciation. Sub-advised by Wellington Management.
HARTFORD DIVIDEND AND GROWTH HLS FUND -- Seeks a high level of current
income consistent with growth of capital by investing primarily in dividend
paying equity securities. Sub-advised by Wellington Management.
HARTFORD GLOBAL LEADERS HLS FUND -- Seeks growth of capital by investing
primarily in equity securities issued by
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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U.S. an non-U.S. high quality growth companies worldwide that, in the opinion of
Wellington Management, are leaders within their respective industries as
indicated by an established market presence and strong competitive position on a
global, regional or country basis. Sub-advised by Wellington Management.
HARTFORD GROWTH AND INCOME HLS FUND -- Seeks growth of capital and current
income by investing primarily in equity securities with growth potential and
steady or rising dividends. Sub-advised by Wellington Management.
HARTFORD HIGH YIELD HLS FUND -- Seeks high current income by investing in
non-investment grad fixed-income securities. Growth of capital is a secondary
objective. Securities related below investment grade are commonly referred to as
"high yield-high risk securities" or "junk bonds." For more information
concerning the risks associated with investing in such securities, please refer
to the Section in the accompanying prospectus for the Funds entitled "Hartford
High Yield HLS Fund." Sub-advised by HIMCO.
HARTFORD INDEX HLS FUND -- Seeks to provide investment results that
approximate the price and yield performance of publicly traded common stocks in
the aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index.* Sub-advised by HIMCO.
HARTFORD INTERNATIONAL ADVISERS HLS FUND -- Seeks maximum long-term total
return by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets. Sub-advised by Wellington
Management.
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND -- Seeks growth of capital by
investing primarily in equity securities issued by non-U.S. companies.
Sub-advised by Wellington Management.
HARTFORD MIDCAP HLS FUND -- Seeks to achieve long-term capital growth
through capital appreciation by investing primarily in equity securities of
companies with market capitalizations within the range represented by the
Standard & Poor's MidCap 400 Index. Sub-advised by Wellington Management.
HARTFORD MORTGAGE SECURITIES HLS FUND -- Seeks maximum current income
consistent with safety of principal and maintenance of liquidity by investing
primarily in mortgage-related securities, including securities issued by the
Government National Mortgage Association. Sub-advised by HIMCO.
HARTFORD SMALL COMPANY HLS FUND -- Seeks growth of capital by investing
primarily in equity securities within the range represented by the Russell 2000
Index selected on the basis of potential for capital appreciation. Sub-advised
by Wellington Management.
HARTFORD STOCK HLS FUND -- Seeks long-term growth by investing primarily in
equity securities. Sub-advised by Wellington Management.
HARTFORD MONEY MARKET HLS FUND -- Seeks maximum current income consistent
with liquidity and preservation of capital. Sub-advised by HIMCO.
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.
- - 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.
* "STANDARD & POOR'S," "S&P-REGISTERED TRADEMARK-," "S&P 500-REGISTERED
TRADEMARK-," "STANDARD & POOR'S 500," AND "500" ARE TRADEMARKS OF THE
MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD. THE
INDEX FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S
AND STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF
INVESTING IN THE INDEX FUND.
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8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 CS0 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.
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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
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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.
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.
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10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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ADMINISTRATIVE CHARGE -- We will deduct a monthly administrative charge from
Sub-Account Value equal to an annual rate of 0.25%. 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.
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
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
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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
the insurance
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 Money Market Sub-Account.
We will then allocate the Account Value in the 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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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
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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.
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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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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 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 retaining 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.
<PAGE>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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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 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,
<PAGE>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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- - 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 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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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.
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
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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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
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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
DATE OF STATEMENT OF ADDITIONAL INFORMATION: MAY 3, 1999
<PAGE>
2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY....................................... 3
SERVICES.............................................................. 6
EXPERTS............................................................... 6
DISTRIBUTION OF THE POLICIES.......................................... 6
ADDITIONAL INFORMATION ABOUT CHARGES.................................. 7
ILLUSTRATION OF BENEFITS.............................................. 8
FINANCIAL STATEMENTS.................................................. SA-1
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 3
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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 HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME YEAR OF ELECTION FOR PAST 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 Insurance
Director, 1997* 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, 1997 Vice President (1993-1997), Hartford; Senior Vice President,
(1997-Present); Vice President (1989-1997), Hartford Life and
Accident Insurance Company; Senior Vice President
(1997-Present); Vice President (1989-1997); Senior Vice
President (1997-Present); Vice President (1989-1997), Hartford
Life Insurance Company.
Timothy M. Fitch Vice President, 1995 Vice President (1995-Present); Actuary (1994-Present); Assistant
Actuary, 1997 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.
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- --------------------------- ------------------------------------- ----------------------------------------------------------------
<S> <C> <C>
Mary Jane B. Fortin Vice President & Chief Accounting Vice President & Chief Accounting Office (1998-Present),
Officer, 1998 Hartford Life Insurance Company; Vice President & Chief
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.
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, 1997 Assistant General Counsel and Secretary (1994-1995), Hartford;
General Counsel, 1996 Director (1997-Present); Senior Vice President (1997-Present);
Corporate Secretary, 1996 General Counsel (1996-Present); Corporate Secretary
Director, 1997* (1995-Present); Associate General Counsel (1995-1996);
Assistant General Counsel and Secretary (1994-1995); Counsel
(1990-1994), Hartford Life and Accident Insurance Company;
Senior Vice President (1997-Present); General Counsel
(1996-Present); Corporate Secretary (1995-Present); Director
(1997-Present); Associate General Counsel (1995-1996);
Assistant General Counsel and Secretary (1994-1995); Counsel
(1990-1994), Hartford Life Insurance Company; Vice President
and General Counsel (1997-Present), Hartford Life, Inc.
Lois W. Grady Senior Vice President, 1998 Vice President (1994-1998), Hartford; Senior Vice President
Vice President, 1994 (1998-Present); Vice President (1993-1997); Assistant Vice
President (1987-1993), Hartford Life and Accident Insurance
Company; Senior Vice President (1998-Present); Vice President
(1994-1997); Assistant Vice President (1987-1994), Hartford
Life Insurance Company.
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.
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- --------------------------- ------------------------------------- ----------------------------------------------------------------
<S> <C> <C>
Robert A. Kerzner Senior Vice President, 1998 Senior Vice President (1998-Present); Vice President
Vice President, 1997 (1994-1998), Hartford; Senior Vice President (1998-Present);
Vice President (1994-1997); Regional Vice President
(1991-1994), Hartford Life Insurance Company.
Thomas M. Marra Executive Vice President, 1996 Senior Vice President (1993-1996); Director of Individual
Director, Individual Life and Annuities (1991-1993), Hartford; Director (1994-Present);
Annuity Division, 1993 Executive Vice President (1995-Present); Director, Individual
Director, 1994* Life and Annuity Division (1994-Present); Senior Vice
President (1994-1995); Vice President (1989-1994); Actuary
(1987-1997), Hartford Life and Accident Insurance Company;
Director (1994-Present); Executive Vice President
(1995-Present); Director, Individual Life and Annuity Division
(1994-Present); Senior Vice President (1994-1995); Vice
President (1989-1994); Actuary (1987-1995), Hartford Life
Insurance Company; Executive Vice President, Individual Life
and Annuities (1997-Present), Hartford Life, Inc.
Steven L. Matthieson Vice President, 1984 Director of New Business (1984-1997), Hartford.
Craig R. Raymond Senior Vice President, 1997 Vice President (1993-1997); Assistant Vice President
Chief Actuary, 1994 (1992-1993); Actuary (1989-1994), Hartford; Senior Vice
President (1997-Present); Chief Actuary (1995-Present); Vice
President (1993-1997); Actuary (1990-1995), Hartford Life and
Accident Insurance Company; Senior Vice President
(1997-Present); Chief Actuary (1994-Present); Vice President
(1993-1997); Assistant Vice President (1992-1993); Actuary
(1989-1994), Hartford Life Insurance Company; Vice President
and Chief Actuary (1997-Present), Hartford Life, Inc.
Lowndes A. Smith President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive Officer, 1997 (1981-Present); President (1989-Present); Chief Executive
Director, 1985* Officer (1997-Present); Chief Operating Officer (1989-1997),
Hartford Life and Accident Insurance Company; Director
(1981-Present); President (1989-Present), Chief Executive
Officer (1997-Present); Chief Operating Officer (1989-1997),
Hartford Life Insurance Company; Chief Executive Officer and
President and Director (1997-Present), Hartford Life, Inc.
David M. Znamierowski Senior Vice President, 1997 Vice President (1997) Senior Vice President (1997) Director,
Director, 1998 Risk Management Strategy (1996) Director (1998), Hartford;
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.
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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.
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-
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 7
- --------------------------------------------------------------------------------
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>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 0.62% 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 0.62% described above) of -0.62%,
5.38% and 11.38%, 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>
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 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,895 9,870 44,053 10,814 9,790 44,053
2 11,025 11,838 10,822 44,053 11,664 10,651 44,053
3 11,576 12,866 11,860 44,053 12,589 11,589 44,053
4 12,155 13,985 13,145 44,053 13,595 12,761 44,053
5 12,763 15,204 14,384 44,053 14,690 13,876 44,053
6 13,401 16,533 15,938 44,053 15,882 15,293 44,053
7 14,071 17,981 17,416 44,053 17,181 16,622 44,053
8 14,775 19,558 19,230 44,053 18,596 18,273 44,053
9 15,513 21,276 20,993 44,053 20,140 19,860 44,053
10 16,289 23,149 23,119 44,053 21,827 21,797 44,053
11 17,103 25,391 25,361 44,053 23,864 23,834 44,053
12 17,959 27,855 27,825 44,053 26,118 26,088 44,053
13 18,856 30,568 30,538 44,053 28,618 28,588 44,053
14 19,799 33,576 33,546 46,334 31,398 31,368 44,053
15 20,789 36,894 36,864 49,438 34,490 34,460 46,215
16 21,829 40,550 40,520 52,714 37,905 37,875 49,276
17 22,920 44,564 44,534 57,041 41,655 41,625 53,318
18 24,066 48,971 48,941 61,704 45,772 45,742 57,673
19 25,270 53,811 53,811 66,725 50,294 50,294 62,364
20 26,533 59,159 59,159 72,174 55,292 55,292 67,456
25 33,864 94,746 94,746 109,905 88,545 88,545 102,712
35 55,160 242,623 242,623 257,180 226,591 226,591 240,186
</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>
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 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,308 9,297 44,053 10,226 9,216 44,053
2 11,025 10,596 9,604 44,053 10,419 9,430 44,053
3 11,576 10,891 9,921 44,053 10,606 9,641 44,053
4 12,155 11,196 10,398 44,053 10,788 9,996 44,053
5 12,763 11,511 10,737 44,053 10,962 10,195 44,053
6 13,401 11,835 11,287 44,053 11,127 10,585 44,053
7 14,071 12,169 11,648 44,053 11,278 10,764 44,053
8 14,775 12,513 12,221 44,053 11,415 11,127 44,053
9 15,513 12,868 12,606 44,053 11,531 11,272 44,053
10 16,289 13,234 13,204 44,053 11,624 11,594 44,053
11 17,103 13,721 13,691 44,053 11,785 11,755 44,053
12 17,959 14,227 14,197 44,053 11,921 11,891 44,053
13 18,856 14,753 14,723 44,053 12,028 11,998 44,053
14 19,799 15,299 15,269 44,053 12,100 12,070 44,053
15 20,789 15,867 15,837 44,053 12,131 12,101 44,053
16 21,829 16,456 16,426 44,053 12,112 12,082 44,053
17 22,920 17,069 17,039 44,053 12,036 12,006 44,053
18 24,066 17,706 17,676 44,053 11,888 11,858 44,053
19 25,270 18,368 18,338 44,053 11,655 11,625 44,053
20 26,533 19,056 19,026 44,053 11,322 11,292 44,053
25 33,864 22,920 22,890 44,053 7,445 7,415 44,053
35 55,160 33,275 33,245 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 11
- --------------------------------------------------------------------------------
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% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,722 8,744 44,053 9,639 8,669 44,053
2 11,025 9,422 8,497 44,053 9,243 8,335 44,053
3 11,576 9,130 8,256 44,053 8,840 7,992 44,053
4 12,155 8,847 8,153 44,053 8,430 7,768 44,053
5 12,763 8,571 7,920 44,053 8,010 7,399 44,053
6 13,401 8,303 7,858 44,053 7,578 7,169 44,053
7 14,071 8,043 7,631 44,053 7,132 6,763 44,053
8 14,775 7,790 7,565 44,053 6,667 6,470 44,053
9 15,513 7,544 7,344 44,053 6,180 6,011 44,053
10 16,289 7,304 7,274 44,053 5,666 5,636 44,053
11 17,103 7,129 7,099 44,053 5,165 5,135 44,053
12 17,959 6,956 6,926 44,053 4,625 4,595 44,053
13 18,856 6,788 6,758 44,053 4,042 4,012 44,053
14 19,799 6,622 6,592 44,053 3,409 3,379 44,053
15 20,789 6,460 6,430 44,053 2,720 2,690 44,053
16 21,829 6,301 6,271 44,053 1,966 1,936 44,053
17 22,920 6,146 6,116 44,053 1,135 1,105 44,053
18 24,066 5,993 5,963 44,053 215 185 4,053
19 25,270 5,844 5,814 44,053 -- -- --
20 2,533 5,697 5,667 44,053 -- -- --
25 33,864 5,008 4,978 44,053 -- -- --
35 55,160 3,822 3,792 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>
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 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,528 9,748 44,053 10,441 9,661 44,053
2 11,025 11,513 10,733 44,053 11,329 10,549 44,053
3 11,576 12,592 11,812 44,053 12,300 11,520 44,053
4 12,155 13,777 13,147 44,053 13,363 12,733 44,053
5 12,763 15,075 14,445 44,053 14,529 13,899 44,053
6 13,401 16,500 16,070 44,053 15,808 15,378 44,053
7 14,071 18,061 17,631 44,053 17,212 16,782 44,053
8 14,775 19,774 19,544 44,053 18,754 18,524 44,053
9 15,513 21,653 21,423 44,053 20,448 20,218 44,053
10 16,289 23,713 23,683 44,053 22,314 22,284 44,053
11 17,103 26,011 25,981 44,053 24,408 24,378 44,053
12 17,959 28,535 28,505 44,053 26,726 26,696 44,053
13 18,856 31,325 31,295 44,481 29,299 29,269 44,053
14 19,799 34,414 34,384 47,491 32,161 32,131 44,382
15 20,789 37,817 37,787 50,674 35,336 35,306 47,349
16 21,829 41,564 41,534 54,033 38,835 38,805 50,485
17 22,920 45,680 45,650 58,470 42,678 42,648 54,628
18 24,066 50,199 50,199 63,250 46,898 46,868 59,091
19 25,270 55,193 55,193 68,439 51,531 51,531 63,898
20 26,533 60,679 60,679 74,028 56,653 56,653 69,116
25 33,864 97,180 97,180 112,729 90,724 90,724 105,239
35 55,160 248,855 248,855 263,786 232,167 232,167 246,096
</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 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 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,961 9,184 44,053 9,874 9,104 44,053
2 11,025 10,304 9,524 44,053 10,118 9,338 44,053
3 11,576 10,660 9,880 44,053 10,361 9,581 44,053
4 12,155 11,029 10,399 44,053 10,601 9,971 44,053
5 12,763 11,413 10,783 44,053 10,838 10,208 44,053
6 13,401 11,811 11,381 44,053 11,070 10,640 44,053
7 14,071 12,223 11,793 44,053 11,294 10,864 44,053
8 14,775 12,651 12,421 44,053 11,507 11,277 44,053
9 15,513 13,096 12,866 44,053 11,704 11,474 44,053
10 16,289 13,557 13,527 44,053 11,884 11,854 44,053
11 17,103 14,056 14,026 44,053 12,060 12,030 44,053
12 17,959 14,575 14,545 44,053 12,212 12,182 44,053
13 18,856 15,114 15,084 44,053 12,336 12,306 44,053
14 19,799 15,675 15,645 44,053 12,427 12,397 44,053
15 20,789 16,257 16,227 44,053 12,478 12,448 44,053
16 21,829 16,862 16,832 44,053 12,481 12,451 44,053
17 22,920 17,491 17,461 44,053 12,429 12,399 44,053
18 24,066 18,144 18,114 44,053 12,307 12,277 44,053
19 25,270 18,823 18,793 44,053 12,104 12,074 44,053
20 26,533 19,529 19,499 44,053 11,803 11,773 44,053
25 33,864 23,493 23,463 44,053 8,160 8,130 44,053
35 55,160 34,116 34,086 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>
14 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 0% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,394 8,659 44,053 9,307 8,579 44,053
2 11,025 9,162 8,445 44,053 8,975 8,272 44,053
3 11,576 8,936 8,236 44,053 8,634 7,956 44,053
4 12,155 8,715 8,162 44,053 8,281 7,754 44,053
5 12,763 8,498 7,958 44,053 7,916 7,411 44,053
6 13,401 8,286 7,924 44,053 7,536 7,204 44,053
7 14,071 8,078 7,725 44,053 7,137 6,822 44,053
8 14,775 7,875 7,688 44,053 6,717 6,553 44,053
9 15,513 7,677 7,493 44,053 6,271 6,116 44,053
10 16,289 7,482 7,452 44,053 5,795 5,765 44,053
11 17,103 7,303 7,273 44,053 5,294 5,264 44,053
12 17,959 7,127 7,097 44,053 4,753 4,723 44,053
13 18,856 6,955 6,925 44,053 4,170 4,140 44,053
14 19,799 6,786 6,756 44,053 3,538 3,508 44,053
15 20,789 6,621 6,591 44,053 2,849 2,819 44,053
16 21,829 6,459 6,429 44,053 2,094 2,064 44,053
17 22,920 6,300 6,270 44,053 1,265 1,235 44,053
18 24,066 6,145 6,115 44,053 345 315 44,053
19 25,270 5,992 5,962 44,053 -- -- --
20 26,533 5,843 5,813 44,053 -- -- --
25 33,864 5,139 5,109 44,053 -- -- --
35 55,160 3,929 3,899 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 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 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,895 9,870 34,014 10,768 9,746 34,014
2 11,025 11,838 10,822 34,014 11,571 10,559 34,014
3 11,576 12,866 11,860 34,014 12,445 11,447 34,014
4 12,155 13,985 13,145 34,014 13,400 12,569 34,014
5 12,763 15,204 14,384 34,014 14,444 13,633 34,014
6 13,401 16,533 15,938 34,014 15,585 14,999 34,014
7 14,071 17,981 17,416 34,014 16,833 16,277 34,014
8 14,775 19,558 19,230 34,014 18,198 17,877 34,014
9 15,513 21,276 20,993 34,014 19,692 19,413 34,014
10 16,289 23,149 23,119 34,014 21,332 21,302 34,014
11 17,103 25,392 25,362 34,014 23,326 23,296 34,014
12 17,959 27,881 27,851 34,014 25,552 25,522 34,014
13 18,856 30,664 30,634 36,184 28,047 28,017 34,014
14 19,799 33,732 33,702 39,466 30,842 30,812 36,085
15 20,789 37,105 37,075 43,042 33,924 33,894 39,351
16 21,829 40,815 40,785 46,937 37,313 37,283 42,909
17 22,920 44,906 44,876 50,744 41,050 41,020 46,386
18 24,066 49,422 49,392 54,858 45,175 45,145 50,143
19 25,270 54,411 54,411 59,307 49,732 49,702 54,207
20 26,533 59,912 59,912 65,304 54,727 54,727 59,652
25 33,864 96,858 96,858 102,669 88,476 88,476 93,784
35 55,160 248,728 248,728 261,164 223,856 223,856 235,049
</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>
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 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,308 9,297 34,014 10,181 9,172 34,014
2 11,025 10,596 9,604 34,014 10,326 9,339 34,014
3 11,576 10,891 9,921 34,014 10,463 9,500 34,014
4 12,155 11,196 10,398 34,014 10,594 9,805 34,014
5 12,763 11,511 10,737 34,014 10,715 9,951 34,014
6 13,401 11,835 11,287 34,014 10,824 10,286 34,014
7 14,071 12,169 11,648 34,014 10,917 10,405 34,014
8 14,775 12,513 12,221 34,014 10,987 10,702 34,014
9 15,513 12,868 12,606 34,014 11,027 10,769 34,014
10 16,289 13,234 13,204 34,014 11,031 11,001 34,014
11 17,103 13,721 13,691 34,014 11,087 11,057 34,014
12 17,959 14,227 14,197 34,014 11,104 11,074 34,014
13 18,856 14,753 14,723 34,014 11,078 11,048 34,014
14 19,799 15,299 15,269 34,014 11,007 10,977 34,014
15 20,789 15,867 15,837 34,014 10,881 10,851 34,014
16 21,829 16,456 16,426 34,014 10,686 10,656 34,014
17 22,920 17,069 17,039 34,014 10,404 10,374 34,014
18 24,066 17,706 17,676 34,014 10,009 9,979 34,014
19 25,270 18,368 18,338 34,014 9,471 9,441 34,014
20 26,533 19,056 19,026 34,014 8,754 8,724 34,014
25 33,864 22,920 22,890 34,014 784 754 34,014
35 55,160 33,275 33,245 34,938 -- -- --
</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 17
- --------------------------------------------------------------------------------
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% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,722 8,744 34,014 9,595 8,629 34,014
2 11,025 9,422 8,497 34,014 9,151 8,252 34,014
3 11,576 9,130 8,256 34,014 8,700 7,865 34,014
4 12,155 8,847 8,153 34,014 8,239 7,591 34,014
5 12,763 8,571 7,920 34,014 7,768 7,175 34,014
6 13,401 8,303 7,858 34,014 7,282 6,888 34,014
7 14,071 8,043 7,631 34,014 6,777 6,425 34,014
8 14,775 7,790 7,565 34,014 6,245 6,059 34,014
9 15,513 7,544 7,344 34,014 5,678 5,521 34,014
10 16,289 7,304 7,274 34,014 5,071 5,041 34,014
11 17,103 7,129 7,099 34,014 4,454 4,424 34,014
12 17,959 6,956 6,926 34,014 3,782 3,752 34,014
13 18,856 6,788 6,758 34,014 3,051 3,021 34,014
14 19,799 6,622 6,592 34,014 2,254 2,224 34,014
15 20,789 6,460 6,430 34,014 1,383 1,353 34,014
16 21,829 6,301 6,271 34,014 420 390 3,014
17 22,920 6,146 6,116 34,014 -- -- --
18 24,066 5,993 5,963 34,014 -- -- --
19 25,270 5,844 5,814 34,014 -- -- --
20 26,533 5,697 5,667 34,014 -- -- --
25 33,864 5,008 4,978 34,014 -- -- --
35 55,160 3,822 3,792 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>
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 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,528 9,748 34,014 10,395 9,615 34,014
2 11,025 11,513 10,733 34,014 11,231 10,451 34,014
3 11,576 12,592 11,812 34,014 12,149 11,369 34,014
4 12,155 13,777 13,147 34,014 13,159 12,529 34,014
5 12,763 15,075 14,445 34,014 14,270 13,640 34,014
6 13,401 16,500 16,070 34,014 15,495 15,065 34,014
7 14,071 18,061 17,631 34,014 16,843 16,413 34,014
8 14,775 19,774 19,544 34,014 18,330 18,100 34,014
9 15,513 21,653 21,423 34,014 19,970 19,740 34,014
10 16,289 23,713 23,683 34,014 21,785 21,755 34,014
11 17,103 26,016 25,986 34,014 23,835 23,805 34,014
12 17,959 28,584 28,554 34,014 26,126 26,096 34,014
13 18,856 31,444 31,414 37,103 28,695 28,665 34,014
14 19,799 34,590 34,560 40,469 31,562 31,532 36,927
15 20,789 38,050 38,020 44,137 34,717 34,687 40,271
16 21,829 41,855 41,825 48,132 38,185 38,155 43,913
17 22,920 46,051 46,021 52,037 42,011 41,981 47,472
18 24,066 50,683 50,683 56,257 46,233 46,203 51,318
19 25,270 55,833 55,833 60,857 50,898 50,898 55,478
20 26,533 61,478 61,478 67,010 56,044 56,044 61,088
25 33,864 99,389 99,389 105,352 90,605 90,605 96,041
35 55,160 255,229 255,229 267,990 229,242 229,242 240,704
</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 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 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,961 9,184 34,014 9,828 9,061 34,014
2 11,025 10,304 9,524 34,014 10,022 9,242 34,014
3 11,576 10,660 9,880 34,014 10,212 9,432 34,014
4 12,155 11,029 10,399 34,014 10,399 9,769 34,014
5 12,763 11,413 10,783 34,014 10,581 9,951 34,014
6 13,401 11,811 11,381 34,014 10,754 10,324 34,014
7 14,071 12,223 11,793 34,014 10,916 10,486 34,014
8 14,775 12,651 12,421 34,014 11,059 10,829 34,014
9 15,513 13,096 12,866 34,014 11,177 10,947 34,014
10 16,289 13,557 13,527 34,014 11,265 11,235 34,014
11 17,103 14,056 14,026 34,014 11,335 11,305 34,014
12 17,959 14,575 14,545 34,014 11,369 11,339 34,014
13 18,856 15,114 15,084 34,014 11,362 11,332 34,014
14 19,799 15,675 15,645 34,014 11,310 11,280 34,014
15 20,789 16,257 16,227 34,014 11,206 11,176 34,014
16 21,829 16,862 16,832 34,014 11,036 11,006 34,014
17 22,920 17,491 17,461 34,014 10,782 10,752 34,014
18 24,066 18,144 18,114 34,014 10,418 10,388 34,014
19 25,270 18,823 18,793 34,014 9,915 9,885 34,014
20 26,533 19,529 19,499 34,014 9,240 9,210 34,014
25 33,864 23,493 23,463 34,014 1,615 1,585 34,014
35 55,160 34,116 34,086 35,822 -- -- --
</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>
20 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 0% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,394 8,659 34,014 9,261 8,537 34,014
2 11,025 9,162 8,445 34,014 8,881 8,185 34,014
3 11,576 8,936 8,236 34,014 8,488 7,822 34,014
4 12,155 8,715 8,162 34,014 8,084 7,569 34,014
5 12,763 8,498 7,958 34,014 7,666 7,176 34,014
6 13,401 8,286 7,924 34,014 7,229 6,910 34,014
7 14,071 8,078 7,725 34,014 6,770 6,469 34,014
8 14,775 7,875 7,688 34,014 6,280 6,125 34,014
9 15,513 7,677 7,493 34,014 5,752 5,607 34,014
10 16,289 7,482 7,452 34,014 5,179 5,149 34,014
11 17,103 7,303 7,273 34,014 4,563 4,533 34,014
12 17,959 7,127 7,097 34,014 3,892 3,862 34,014
13 18,856 6,955 6,925 34,014 3,161 3,131 34,014
14 19,799 6,786 6,756 34,014 2,366 2,336 34,014
15 20,789 6,621 6,591 34,014 1,496 1,466 34,014
16 21,829 6,459 6,429 34,014 535 505 34,014
17 22,920 6,300 6,270 34,014 -- -- --
18 24,066 6,145 6,115 34,014 -- -- --
19 25,270 5,992 5,962 34,014 -- -- --
20 26,533 5,843 5,813 34,014 -- -- --
25 33,864 5,139 5,109 34,014 -- -- --
35 55,160 3,929 3,899 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 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 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,895 9,870 20,001 10,683 9,662 20,001
2 11,025 11,838 10,822 20,001 11,390 10,382 20,001
3 11,576 12,866 11,860 20,001 12,162 11,169 20,001
4 12,155 13,985 13,145 20,001 13,010 12,184 20,001
5 12,763 15,204 14,384 20,001 13,948 13,144 20,001
6 13,401 16,533 15,938 20,001 14,994 14,414 20,001
7 14,071 17,981 17,416 20,318 16,171 15,620 20,001
8 14,775 19,564 19,236 21,715 17,508 17,191 20,001
9 15,513 21,301 21,018 23,218 19,039 18,761 20,752
10 16,289 23,181 23,151 25,267 20,715 20,685 22,579
11 17,103 25,435 25,405 27,470 22,726 22,696 24,544
12 17,959 27,918 27,888 29,871 24,941 24,911 26,686
13 18,856 30,629 30,599 32,773 27,358 27,328 29,272
14 19,799 33,619 33,589 35,636 30,025 29,995 31,826
15 20,789 36,891 36,861 39,104 32,937 32,907 34,912
16 21,829 40,500 40,470 42,525 36,156 36,126 37,963
17 22,920 44,449 44,419 46,671 39,669 39,639 41,652
18 24,066 48,785 48,755 51,224 43,498 43,468 45,673
19 25,270 53,548 53,548 56,225 47,665 47,635 50,048
20 26,533 58,812 58,812 61,753 52,193 52,193 54,802
25 33,864 93,991 93,991 98,690 81,366 81,366 85,434
35 55,160 240,259 240,259 242,661 201,657 201,657 203,673
</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>
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 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,308 9,297 20,001 10,093 9,086 20,001
2 11,025 10,596 9,604 20,001 10,130 9,147 20,001
3 11,576 10,891 9,921 20,001 10,136 9,179 20,001
4 12,155 11,196 10,398 20,001 10,108 9,327 20,001
5 12,763 11,511 10,737 20,001 10,038 9,283 20,001
6 13,401 11,835 11,287 20,001 9,918 9,392 20,001
7 14,071 12,169 11,648 20,001 9,734 9,242 20,001
8 14,775 12,513 12,221 20,001 9,472 9,205 20,001
9 15,513 12,868 12,606 20,001 9,112 8,877 20,001
10 16,289 13,234 13,204 20,001 8,631 8,601 20,001
11 17,103 13,721 13,691 20,001 8,075 8,045 20,001
12 17,959 14,227 14,197 20,001 7,341 7,311 20,001
13 18,856 14,753 14,723 20,001 6,389 6,359 20,001
14 19,799 15,299 15,269 20,001 5,163 5,133 20,001
15 20,789 15,867 15,837 20,001 3,585 3,555 20,001
16 21,829 16,456 16,426 20,001 1,544 1,514 20,001
17 22,920 17,069 17,039 20,001 -- -- --
18 24,066 17,706 17,676 20,001 -- -- --
19 25,270 18,368 18,338 20,001 -- -- --
20 26,533 19,056 19,026 20,008 -- -- --
25 33,864 22,920 22,890 24,066 -- -- --
35 55,160 33,302 33,272 33,635 -- -- --
</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 23
- --------------------------------------------------------------------------------
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% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,722 8,744 20,001 9,504 8,547 20,001
2 11,025 9,422 8,497 20,001 8,942 8,062 20,001
3 11,576 9,130 8,256 20,001 8,339 7,538 20,001
4 12,155 8,847 8,153 20,001 7,687 7,081 20,001
5 12,763 8,571 7,920 20,001 6,976 6,440 20,001
6 13,401 8,303 7,858 20,001 6,193 5,853 20,001
7 14,071 8,043 7,631 20,001 5,320 5,037 20,001
8 14,775 7,790 7,565 20,001 4,334 4,196 20,001
9 15,513 7,544 7,344 20,001 3,208 3,106 20,001
10 16,289 7,304 7,274 20,001 1,909 1,879 20,001
11 17,103 7,129 7,099 20,001 411 381 20,001
12 17,959 6,956 6,926 20,001 -- -- --
13 18,856 6,788 6,758 20,001 -- -- --
14 19,799 6,622 6,592 20,001 -- -- --
15 20,789 6,460 6,430 20,001 -- -- --
16 21,829 6,301 6,271 20,001 -- -- --
17 22,920 6,146 6,116 20,001 -- -- --
18 24,066 5,993 5,963 20,001 -- -- --
19 25,270 5,844 5,814 20,001 -- -- --
20 26,533 5,697 5,667 20,001 -- -- --
25 33,864 5,008 4,978 20,001 -- -- --
35 55,160 3,822 3,792 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>
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 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,528 9,748 20,001 10,300 9,520 20,001
2 11,025 11,513 10,733 20,001 11,031 10,251 20,001
3 11,576 12,592 11,812 20,001 11,834 11,054 20,001
4 12,155 13,777 13,147 20,001 12,721 12,091 20,001
5 12,763 15,075 14,445 20,001 13,710 13,080 20,001
6 13,401 16,500 16,070 20,001 14,820 14,390 20,001
7 14,071 18,061 17,631 20,409 16,078 15,648 20,001
8 14,775 19,781 19,551 21,956 17,518 17,288 20,001
9 15,513 21,678 21,448 23,629 19,175 18,945 20,900
10 16,289 23,746 23,716 25,883 21,000 20,970 22,890
11 17,103 26,056 26,026 28,140 23,039 23,009 24,882
12 17,959 28,600 28,570 30,601 25,285 25,255 27,054
13 18,856 31,378 31,348 33,574 27,736 27,706 29,677
14 19,799 34,442 34,412 36,508 30,440 30,410 32,266
15 20,789 37,795 37,765 40,062 33,393 33,363 35,396
16 21,829 41,493 41,463 43,568 36,656 36,626 38,489
17 22,920 45,539 45,509 47,816 40,219 40,189 42,229
18 24,066 49,983 49,953 52,482 44,101 44,071 46,306
19 25,270 54,864 54,864 57,607 48,327 48,297 50,743
20 26,533 60,258 60,258 63,270 52,918 52,918 55,563
25 33,864 96,301 96,301 101,115 82,496 82,496 86,621
35 55,160 246,162 246,162 248,623 204,458 204,458 206,502
</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 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 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,961 9,184 20,001 9,731 8,971 20,001
2 11,025 10,304 9,524 20,001 9,808 9,043 20,001
3 11,576 10,660 9,880 20,001 9,858 9,088 20,001
4 12,155 11,029 10,399 20,001 9,874 9,252 20,001
5 12,763 11,413 10,783 20,001 9,852 9,231 20,001
6 13,401 11,811 11,381 20,001 9,782 9,361 20,001
7 14,071 12,223 11,793 20,001 9,652 9,236 20,001
8 14,775 12,651 12,421 20,001 9,447 9,228 20,001
9 15,513 13,096 12,866 20,001 9,148 8,935 20,001
10 16,289 13,557 13,527 20,001 8,733 8,703 20,001
11 17,103 14,056 14,026 20,001 8,189 8,159 20,001
12 17,959 14,575 14,545 20,001 7,472 7,442 20,001
13 18,856 15,114 15,084 20,001 6,539 6,509 20,001
14 19,799 15,675 15,645 20,001 5,337 5,307 20,001
15 20,789 16,257 16,227 20,001 3,788 3,758 20,001
16 21,829 16,862 16,832 20,001 1,784 1,754 20,001
17 22,920 17,491 17,461 20,001 -- -- --
18 24,066 18,144 18,114 20,001 -- -- --
19 25,270 18,823 18,793 20,001 -- -- --
20 26,533 19,529 19,499 20,505 -- -- --
25 33,864 23,493 23,463 24,667 -- -- --
35 55,160 34,145 34,115 34,486 -- -- --
</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>
26 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 0% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,394 8,659 20,001 9,162 8,445 20,001
2 11,025 9,162 8,445 20,001 8,656 7,977 20,001
3 11,576 8,936 8,236 20,001 8,104 7,466 20,001
4 12,155 8,715 8,162 20,001 7,500 7,020 20,001
5 12,763 8,498 7,958 20,001 6,832 6,392 20,001
6 13,401 8,286 7,924 20,001 6,088 5,815 20,001
7 14,071 8,078 7,725 20,001 5,250 5,010 20,001
8 14,775 7,875 7,688 20,001 4,293 4,177 20,001
9 15,513 7,677 7,493 20,001 3,190 3,096 20,001
10 16,289 7,482 7,452 20,001 1,907 1,877 20,001
11 17,103 7,303 7,273 20,001 409 379 20,001
12 17,959 7,127 7,097 20,001 -- -- --
13 18,856 6,955 6,925 20,001 -- -- --
14 19,799 6,786 6,756 20,001 -- -- --
15 20,789 6,621 6,591 20,001 -- -- --
16 21,829 6,459 6,429 20,001 -- -- --
17 22,920 6,300 6,270 20,001 -- -- --
18 24,066 6,145 6,115 20,001 -- -- --
19 25,270 5,992 5,962 20,001 -- -- --
20 26,533 5,843 5,813 20,001 -- -- --
25 33,864 5,139 5,109 20,001 -- -- --
35 55,160 3,929 3,899 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 27
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 MALE PREFERRED/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,964 9,937 45,872 10,964 9,937 45,872
2 11,025 11,980 10,961 45,872 11,980 10,961 45,872
3 11,576 13,088 12,079 45,872 13,088 12,079 45,872
4 12,155 14,294 13,449 45,872 14,294 13,449 45,872
5 12,763 15,606 14,781 45,872 15,606 14,781 45,872
6 13,401 17,034 16,434 45,872 17,034 16,434 45,872
7 14,071 18,589 18,019 45,872 18,589 18,019 45,872
8 14,775 20,279 19,948 45,872 20,279 19,948 45,872
9 15,513 22,118 21,833 45,872 22,118 21,833 45,872
10 16,289 24,119 24,089 45,872 24,119 24,089 45,872
11 17,103 26,511 26,481 45,872 26,511 26,481 45,872
12 17,959 29,145 29,115 45,872 29,145 29,115 45,872
13 18,856 32,051 32,021 45,872 32,051 32,021 45,872
14 19,799 35,267 35,237 45,872 35,267 35,237 45,872
15 20,789 38,839 38,809 45,872 38,839 38,809 45,872
16 21,829 42,806 42,776 49,226 42,806 42,776 49,226
17 22,920 47,181 47,151 53,314 47,181 47,151 53,314
18 24,066 52,004 52,004 57,724 52,004 52,004 57,724
19 25,270 57,359 57,359 62,521 57,359 57,359 62,521
20 26,533 63,237 63,237 68,927 63,237 63,237 68,927
25 33,864 102,656 102,656 108,815 102,656 102,656 108,815
35 55,160 266,613 266,613 279,943 259,988 259,988 272,987
</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>
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/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,373 9,359 45,872 10,373 9,359 45,872
2 11,025 10,722 9,727 45,872 10,722 9,727 45,872
3 11,576 11,076 10,102 45,872 11,076 10,102 45,872
4 12,155 11,433 10,632 45,872 11,433 10,632 45,872
5 12,763 11,793 11,015 45,872 11,793 11,015 45,872
6 13,401 12,152 11,601 45,872 12,152 11,601 45,872
7 14,071 12,515 11,991 45,872 12,509 11,985 45,872
8 14,775 12,890 12,595 45,872 12,860 12,565 45,872
9 15,513 13,276 13,013 45,872 13,198 12,935 45,872
10 16,289 13,675 13,645 45,872 13,520 13,490 45,872
11 17,103 14,201 14,171 45,872 13,930 13,900 45,872
12 17,959 14,747 14,717 45,872 14,319 14,289 45,872
13 18,856 15,316 15,286 45,872 14,679 14,649 45,872
14 19,799 15,909 15,879 45,872 15,004 14,974 45,872
15 20,789 16,525 16,495 45,872 15,282 15,252 45,872
16 21,829 17,166 17,136 45,872 15,501 15,471 45,872
17 22,920 17,834 17,804 45,872 15,642 15,612 45,872
18 24,066 18,528 18,498 45,872 15,682 15,652 45,872
19 25,270 19,251 19,221 45,872 15,589 15,559 45,872
20 26,533 20,004 19,974 45,872 15,330 15,300 45,872
25 33,864 24,250 24,220 45,872 9,799 9,769 45,872
35 55,160 35,763 35,733 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 29
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 MALE PREFERRED/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,782 8,798 45,872 9,782 8,798 45,872
2 11,025 9,533 8,597 45,872 9,533 8,597 45,872
3 11,576 9,280 8,392 45,872 9,280 8,392 45,872
4 12,155 9,023 8,317 45,872 9,023 8,317 45,872
5 12,763 8,759 8,094 45,872 8,759 8,094 45,872
6 13,401 8,499 8,044 45,872 8,486 8,032 45,872
7 14,071 8,246 7,824 45,872 8,200 7,780 45,872
8 14,775 7,999 7,769 45,872 7,896 7,669 45,872
9 15,513 7,758 7,554 45,872 7,570 7,369 45,872
10 16,289 7,524 7,494 45,872 7,213 7,183 45,872
11 17,103 7,355 7,325 45,872 6,876 6,846 45,872
12 17,959 7,190 7,160 45,872 6,491 6,461 45,872
13 18,856 7,027 6,997 45,872 6,048 6,018 45,872
14 19,799 6,867 6,837 45,872 5,538 5,508 45,872
15 20,789 6,710 6,680 45,872 4,948 4,918 45,872
16 21,829 6,556 6,526 45,872 4,259 4,229 45,872
17 22,920 6,405 6,375 45,872 3,448 3,418 45,872
18 24,066 6,257 6,227 45,872 2,482 2,452 45,872
19 25,270 6,111 6,081 45,872 1,319 1,289 45,872
20 26,533 5,968 5,938 45,872 -- -- --
25 33,864 5,293 5,263 45,872 -- -- --
35 55,160 4,118 4,088 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>
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/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,594 9,814 45,872 10,594 9,814 45,872
2 11,025 11,650 10,870 45,872 11,650 10,870 45,872
3 11,576 12,809 12,029 45,872 12,809 12,029 45,872
4 12,155 14,079 13,449 45,872 14,079 13,449 45,872
5 12,763 15,471 14,841 45,872 15,471 14,841 45,872
6 13,401 16,996 16,566 45,872 16,996 16,566 45,872
7 14,071 18,668 18,238 45,872 18,668 18,238 45,872
8 14,775 20,500 20,270 45,872 20,500 20,270 45,872
9 15,513 22,508 22,278 45,872 22,508 22,278 45,872
10 16,289 24,709 24,679 45,872 24,709 24,679 45,872
11 17,103 27,167 27,137 45,872 27,167 27,137 45,872
12 17,959 29,874 29,844 45,872 29,874 29,844 45,872
13 18,856 32,864 32,834 45,872 32,864 32,834 45,872
14 19,799 36,175 36,145 45,872 36,175 36,145 45,872
15 20,789 39,855 39,825 46,231 39,855 39,825 46,231
16 21,829 43,930 43,900 50,519 43,930 43,900 50,519
17 22,920 48,421 48,391 54,715 48,421 48,391 54,715
18 24,066 53,372 53,372 59,242 53,372 53,372 59,242
19 25,270 58,867 58,867 64,165 58,867 58,867 64,165
20 26,533 64,899 64,899 70,740 64,899 64,899 70,740
25 33,864 105,355 105,355 111,676 105,355 105,355 111,676
35 55,160 273,623 273,623 287,304 266,825 266,825 280,165
</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 31
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 MALE PREFERRED/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,023 9,243 45,872 10,023 9,243 45,872
2 11,025 10,426 9,646 45,872 10,426 9,646 45,872
3 11,576 10,839 10,059 45,872 10,839 10,059 45,872
4 12,155 11,261 10,631 45,872 11,261 10,631 45,872
5 12,763 11,690 11,060 45,872 11,690 11,060 45,872
6 13,401 12,124 11,694 45,872 12,124 11,694 45,872
7 14,071 12,568 12,138 45,872 12,562 12,132 45,872
8 14,775 13,028 12,798 45,872 12,999 12,769 45,872
9 15,513 13,507 13,277 45,872 13,431 13,201 45,872
10 16,289 14,004 13,974 45,872 13,853 13,823 45,872
11 17,103 14,543 14,513 45,872 14,280 14,250 45,872
12 17,959 15,104 15,074 45,872 14,688 14,658 45,872
13 18,856 15,687 15,657 45,872 15,068 15,038 45,872
14 19,799 16,295 16,265 45,872 15,414 15,384 45,872
15 20,789 16,927 16,897 45,872 15,717 15,687 45,872
16 21,829 17,584 17,554 45,872 15,962 15,932 45,872
17 22,920 18,269 18,239 45,872 16,133 16,103 45,872
18 24,066 18,981 18,951 45,872 16,206 16,176 45,872
19 25,270 19,723 19,693 45,872 16,152 16,122 45,872
20 26,533 20,494 20,464 45,872 15,937 15,907 45,872
25 33,864 24,849 24,819 45,872 10,777 10,747 45,872
35 55,160 36,655 36,625 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>
32 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/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,452 8,713 45,872 9,452 8,713 45,872
2 11,025 9,270 8,545 45,872 9,270 8,545 45,872
3 11,576 9,082 8,371 45,872 9,082 8,371 45,872
4 12,155 8,887 8,324 45,872 8,887 8,324 45,872
5 12,763 8,682 8,131 45,872 8,682 8,131 45,872
6 13,401 8,479 8,110 45,872 8,465 8,097 45,872
7 14,071 8,280 7,918 45,872 8,233 7,874 45,872
8 14,775 8,084 7,893 45,872 7,981 7,792 45,872
9 15,513 7,893 7,705 45,872 7,704 7,520 45,872
10 16,289 7,706 7,676 45,872 7,394 7,364 45,872
11 17,103 7,533 7,503 45,872 7,055 7,025 45,872
12 17,959 7,364 7,334 45,872 6,668 6,638 45,872
13 18,856 7,198 7,168 45,872 6,225 6,195 45,872
14 19,799 7,035 7,005 45,872 5,714 5,684 45,872
15 20,789 6,875 6,845 45,872 5,124 5,094 45,872
16 21,829 6,718 6,688 45,872 4,435 4,405 45,872
17 22,920 6,564 6,534 45,872 3,625 3,595 45,872
18 24,066 6,413 6,383 45,872 2,659 2,629 45,872
19 25,270 6,264 6,234 45,872 1,499 1,469 45,872
20 26,533 6,118 6,088 45,872 96 66 45,872
25 33,864 5,430 5,400 45,872 -- -- --
35 55,160 4,231 4,201 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 33
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,957 9,931 28,491 10,957 9,931 28,491
2 11,025 11,954 10,935 28,491 11,954 10,935 28,491
3 11,576 13,025 12,017 28,491 13,025 12,017 28,491
4 12,155 14,180 13,337 28,491 14,176 13,334 28,491
5 12,763 15,440 14,617 28,491 15,417 14,594 28,491
6 13,401 16,815 16,217 28,491 16,755 16,158 28,491
7 14,071 18,315 17,748 28,491 18,203 17,636 28,491
8 14,775 19,953 19,623 28,491 19,774 19,445 28,491
9 15,513 21,739 21,455 28,491 21,487 21,203 28,491
10 16,289 23,689 23,659 28,491 23,370 23,340 28,491
11 17,103 26,039 26,009 28,491 25,668 25,638 28,491
12 17,959 28,672 28,642 30,679 28,257 28,227 30,235
13 18,856 31,564 31,534 33,773 31,107 31,077 33,284
14 19,799 34,749 34,719 36,833 34,245 34,215 36,299
15 20,789 38,237 38,207 40,531 37,682 37,652 39,942
16 21,829 42,083 42,053 44,186 41,471 41,441 43,544
17 22,920 46,291 46,261 48,605 45,618 45,588 47,898
18 24,066 50,888 50,888 53,432 50,148 50,148 52,655
19 25,270 55,975 55,975 58,773 55,122 55,122 57,877
20 26,533 61,570 61,570 64,648 60,538 60,538 63,565
25 33,864 99,140 99,140 104,096 95,342 95,342 100,109
35 55,160 257,042 257,042 259,612 237,392 237,392 239,765
</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 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>
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/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,367 9,353 28,491 10,367 9,353 28,491
2 11,025 10,695 9,701 28,491 10,695 9,701 28,491
3 11,576 11,011 10,038 28,491 11,011 10,038 28,491
4 12,155 11,336 10,536 28,491 11,310 10,510 28,491
5 12,763 11,673 10,897 28,491 11,587 10,812 28,491
6 13,401 12,020 11,470 28,491 11,836 11,288 28,491
7 14,071 12,378 11,855 28,491 12,049 11,528 28,491
8 14,775 12,748 12,455 28,491 12,213 11,922 28,491
9 15,513 13,130 12,867 28,491 12,314 12,054 28,491
10 16,289 13,525 13,495 28,491 12,337 12,307 28,491
11 17,103 14,044 14,014 28,491 12,365 12,335 28,491
12 17,959 14,584 14,554 28,491 12,281 12,251 28,491
13 18,856 15,147 15,117 28,491 12,062 12,032 28,491
14 19,799 15,732 15,702 28,491 11,678 11,648 28,491
15 20,789 16,341 16,311 28,491 11,086 11,056 28,491
16 21,829 16,975 16,945 28,491 10,231 10,201 28,491
17 22,920 17,635 17,605 28,491 9,029 8,999 28,491
18 24,066 18,321 18,291 28,491 7,367 7,337 28,491
19 25,270 19,036 19,006 28,491 5,084 5,054 28,491
20 26,533 19,779 19,749 28,491 1,959 1,929 28,491
25 33,864 23,976 23,946 28,491 -- -- --
35 55,160 35,355 35,325 35,708 -- -- --
</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 35
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,776 8,793 28,491 9,776 8,793 28,491
2 11,025 9,506 8,573 28,491 9,506 8,573 28,491
3 11,576 9,226 8,342 28,491 9,214 8,332 28,491
4 12,155 8,953 8,252 28,491 8,896 8,199 28,491
5 12,763 8,688 8,028 28,491 8,545 7,896 28,491
6 13,401 8,429 7,978 28,491 8,152 7,714 28,491
7 14,071 8,177 7,759 28,491 7,705 7,309 28,491
8 14,775 7,932 7,704 28,491 7,190 6,980 28,491
9 15,513 7,694 7,491 28,491 6,586 6,408 28,491
10 16,289 7,462 7,432 28,491 5,871 5,841 28,491
11 17,103 7,294 7,264 28,491 5,061 5,031 28,491
12 17,959 7,129 7,099 28,491 4,075 4,045 28,491
13 18,856 6,967 6,937 28,491 2,876 2,846 28,491
14 19,799 6,809 6,779 28,491 1,416 1,386 28,491
15 20,789 6,653 6,623 28,491 -- -- --
16 21,829 6,500 6,470 28,491 -- -- --
17 22,920 6,350 6,320 28,491 -- -- --
18 24,066 6,203 6,173 28,491 -- -- --
19 25,270 6,058 6,028 28,491 -- -- --
20 26,533 5,916 5,886 28,491 -- -- --
25 33,864 5,245 5,215 28,491 -- -- --
35 55,160 4,078 4,048 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>
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/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,587 9,807 28,491 10,587 9,807 28,491
2 11,025 11,623 10,843 28,491 11,623 10,843 28,491
3 11,576 12,743 11,963 28,491 12,743 11,963 28,491
4 12,155 13,963 13,333 28,491 13,958 13,328 28,491
5 12,763 15,303 14,673 28,491 15,275 14,645 28,491
6 13,401 16,774 16,344 28,491 16,708 16,278 28,491
7 14,071 18,390 17,960 28,491 18,269 17,839 28,491
8 14,775 20,165 19,935 28,491 19,979 19,749 28,491
9 15,513 22,115 21,885 28,491 21,860 21,630 28,491
10 16,289 24,257 24,227 28,491 23,947 23,917 28,491
11 17,103 26,680 26,650 28,814 26,325 26,295 28,491
12 17,959 29,384 29,354 31,440 28,991 28,961 31,020
13 18,856 32,348 32,318 34,612 31,916 31,886 34,149
14 19,799 35,613 35,583 37,749 35,136 35,106 37,244
15 20,789 39,188 39,158 41,539 38,663 38,633 40,983
16 21,829 43,131 43,101 45,287 42,552 42,522 44,680
17 22,920 47,445 47,415 49,816 46,808 46,778 49,148
18 24,066 52,157 52,157 54,765 51,457 51,457 54,029
19 25,270 57,371 57,371 60,239 56,561 56,561 59,388
20 26,533 63,105 63,105 66,260 62,119 62,119 65,224
25 33,864 101,612 101,612 106,692 97,831 97,831 102,722
35 55,160 263,452 263,452 266,087 243,590 243,590 246,025
</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 37
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.38% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,016 9,236 28,491 10,016 9,236 28,491
2 11,025 10,398 9,618 28,491 10,398 9,618 28,491
3 11,576 10,774 9,994 28,491 10,772 9,992 28,491
4 12,155 11,165 10,535 28,491 11,134 10,504 28,491
5 12,763 11,570 10,940 28,491 11,479 10,849 28,491
6 13,401 11,992 11,562 28,491 11,800 11,370 28,491
7 14,071 12,430 12,000 28,491 12,090 11,660 28,491
8 14,775 12,886 12,656 28,491 12,338 12,108 28,491
9 15,513 13,359 13,129 28,491 12,530 12,300 28,491
10 16,289 13,850 13,820 28,491 12,651 12,621 28,491
11 17,103 14,383 14,353 28,491 12,703 12,673 28,491
12 17,959 14,937 14,907 28,491 12,649 12,619 28,491
13 18,856 15,514 15,484 28,491 12,464 12,434 28,491
14 19,799 16,114 16,084 28,491 12,121 12,091 28,491
15 20,789 16,739 16,709 28,491 11,580 11,550 28,491
16 21,829 17,389 17,359 28,491 10,786 10,756 28,491
17 22,920 18,065 18,035 28,491 9,662 9,632 28,491
18 24,066 18,769 18,739 28,491 8,097 8,067 28,491
19 25,270 19,502 19,472 28,491 5,939 5,909 28,491
20 26,533 20,264 20,234 28,491 2,978 2,948 28,491
25 33,864 24,569 24,539 28,491 -- -- --
35 55,160 36,238 36,208 36,600 -- -- --
</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>
38 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/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.62% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,446 8,707 28,491 9,446 8,707 28,491
2 11,025 9,242 8,519 28,491 9,242 8,519 28,491
3 11,576 9,028 8,321 28,491 9,014 8,308 28,491
4 12,155 8,817 8,258 28,491 8,757 8,202 28,491
5 12,763 8,611 8,065 28,491 8,463 7,926 28,491
6 13,401 8,410 8,043 28,491 8,125 7,770 28,491
7 14,071 8,212 7,853 28,491 7,730 7,391 28,491
8 14,775 8,018 7,827 28,491 7,263 7,088 28,491
9 15,513 7,828 7,641 28,491 6,704 6,540 28,491
10 16,289 7,642 7,612 28,491 6,031 6,001 28,491
11 17,103 7,470 7,440 28,491 5,224 5,194 28,491
12 17,959 7,302 7,272 28,491 4,242 4,212 28,491
13 18,856 7,137 7,107 28,491 3,048 3,018 28,491
14 19,799 6,976 6,946 28,491 1,595 1,565 28,491
15 20,789 6,817 6,787 28,491 -- -- --
16 21,829 6,661 6,631 28,491 -- -- --
17 22,920 6,508 6,478 28,491 -- -- --
18 24,066 6,357 6,327 28,491 -- -- --
19 25,270 6,210 6,180 28,491 -- -- --
20 26,533 6,065 6,035 28,491 -- -- --
25 33,864 5,381 5,351 28,491 -- -- --
35 55,160 4,191 4,161 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 SA-1
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life and Annuity Insurance Company
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 Separate Account Five (Bond Fund,
Stock Fund, Money Market Fund, Advisers Fund, Capital Appreciation Fund,
Mortgage Securities Fund, Index Fund, International Opportunities Fund, Dividend
and Growth Fund, International Advisers Fund, Small Company Fund, MidCap Fund,
Growth and Income Fund, Global Leaders Fund, and High Yield Fund) (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 16, 1999 ARTHUR ANDERSEN LLP
<PAGE>
SA-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS
Fund, Inc. - Class
IA
Shares 6,096,035
Cost $6,396,727
Market Value....... $ 6,587,772 --
Hartford Stock HLS
Fund, Inc. - Class
IA
Shares 8,610,961
Cost $39,066,028
Market Value....... -- $ 56,502,251
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 15,049,987
Cost $15,049,987
Market Value....... -- --
Hartford Advisers HLS
Fund, Inc. - Class
IA
Shares 21,809,777
Cost $50,112,038
Market Value....... -- --
Hartford Capital
Appreciation HLS
Fund, Inc. - Class
IA
Shares 10,602,103
Cost $40,302,366
Market Value....... -- --
Hartford Mortgage
Securities HLS Fund,
Inc. - Class IA
Shares 2,116,100
Cost $2,298,881
Market Value....... -- --
Hartford Index HLS
Fund, Inc. - Class
IA
Shares 4,598,688
Cost $11,430,523
Market Value....... -- --
Due from Hartford Life
and Annuity Insurance
Company............... -- 52,354
Receivable from fund
shares sold........... 10,000 --
------------- -------------
Total Assets........... 6,597,772 56,554,605
------------- -------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... 9,982 --
Payable for fund shares
purchased............. -- 52,225
------------- -------------
Total Liabilities...... 9,982 52,225
------------- -------------
Net Assets (variable
life contract
liabilities).......... $ 6,587,790 $ 56,502,380
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ --------------- ------------------ ---------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS
Fund, Inc. - Class
IA
Shares 6,096,035
Cost $6,396,727
Market Value....... -- -- -- -- --
Hartford Stock HLS
Fund, Inc. - Class
IA
Shares 8,610,961
Cost $39,066,028
Market Value....... -- -- -- -- --
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 15,049,987
Cost $15,049,987
Market Value....... $ 15,049,987 -- -- -- --
Hartford Advisers HLS
Fund, Inc. - Class
IA
Shares 21,809,777
Cost $50,112,038
Market Value....... -- $ 65,107,702 -- -- --
Hartford Capital
Appreciation HLS
Fund, Inc. - Class
IA
Shares 10,602,103
Cost $40,302,366
Market Value....... -- -- $50,456,269 -- --
Hartford Mortgage
Securities HLS Fund,
Inc. - Class IA
Shares 2,116,100
Cost $2,298,881
Market Value....... -- -- -- $2,295,023 --
Hartford Index HLS
Fund, Inc. - Class
IA
Shares 4,598,688
Cost $11,430,523
Market Value....... -- -- -- -- $ 16,419,396
Due from Hartford Life
and Annuity Insurance
Company............... 857,405 116,025 13,490 6 123,311
Receivable from fund
shares sold........... -- -- -- -- --
------------ --------------- ------------------ ---------------- -------------
Total Assets........... 15,907,392 65,223,727 50,469,759 2,295,029 16,542,707
------------ --------------- ------------------ ---------------- -------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- -- -- -- --
Payable for fund shares
purchased............. 854,472 115,826 14,473 -- 123,521
------------ --------------- ------------------ ---------------- -------------
Total Liabilities...... 854,472 115,826 14,473 -- 123,521
------------ --------------- ------------------ ---------------- -------------
Net Assets (variable
life contract
liabilities).......... $ 15,052,920 $ 65,107,901 $50,455,286 $2,295,029 $ 16,419,186
------------ --------------- ------------------ ---------------- -------------
------------ --------------- ------------------ ---------------- -------------
</TABLE>
<PAGE>
SA-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------- --------------
<S> <C> <C>
ASSETS:
Investments:
Hartford
International
Opportunities HLS
Fund, Inc. - Class
IA
Shares 11,266,751
Cost $15,194,582
Market Value....... $15,264,838 --
Hartford Dividend and
Growth HLS Fund,
Inc. - Class IA
Shares 15,990,996
Cost $26,669,300
Market Value....... -- $ 34,548,323
Hartford
International
Advisers HLS Fund,
Inc. - Class IA
Shares 3,225,562
Cost $3,675,003
Market Value....... -- --
Hartford Small
Company HLS Fund,
Inc. - Class IA
Shares 1,889,370
Cost $2,230,637
Market Value....... -- --
Hartford MidCap HLS
Fund, Inc. - Class
IA
Shares 589,420
Cost $711,553
Market Value....... -- --
Hartford Growth &
Income HLS Fund -
Class IA
Shares 121,170
Cost $137,178
Market Value....... -- --
Hartford Global
Leader HLS Fund -
Class IA
Shares 66,905
Cost $83,010
Market Value....... -- --
Hartford High Yield
HLS Fund - Class IA
Shares 24,179
Cost $24,824
Market Value....... -- --
Due from Hartford Life
and Annuity Insurance
Company............... -- 12,625
Receivable from fund
shares sold........... -- --
------------------- --------------
Total Assets........... 15,264,838 34,560,948
------------------- --------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... 85 --
Payable for fund shares
purchased............. -- 12,341
------------------- --------------
Total Liabilities...... 85 12,341
------------------- --------------
Net Assets (variable
life contract
liabilities).......... $15,264,753 $ 34,548,607
------------------- --------------
------------------- --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL MIDCAP GROWTH AND GLOBAL HIGH
ADVISERS FUND COMPANY FUND FUND INCOME FUND LEADERS FUND YIELD FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford
International
Opportunities HLS
Fund, Inc. - Class
IA
Shares 11,266,751
Cost $15,194,582
Market Value....... -- -- -- -- -- --
Hartford Dividend and
Growth HLS Fund,
Inc. - Class IA
Shares 15,990,996
Cost $26,669,300
Market Value....... -- -- -- -- -- --
Hartford
International
Advisers HLS Fund,
Inc. - Class IA
Shares 3,225,562
Cost $3,675,003
Market Value....... $3,724,520 -- -- -- -- --
Hartford Small
Company HLS Fund,
Inc. - Class IA
Shares 1,889,370
Cost $2,230,637
Market Value....... -- $2,496,074 -- -- -- --
Hartford MidCap HLS
Fund, Inc. - Class
IA
Shares 589,420
Cost $711,553
Market Value....... -- -- $ 848,326 -- -- --
Hartford Growth &
Income HLS Fund -
Class IA
Shares 121,170
Cost $137,178
Market Value....... -- -- -- $ 143,703 -- --
Hartford Global
Leader HLS Fund -
Class IA
Shares 66,905
Cost $83,010
Market Value....... -- -- -- -- $ 85,985 --
Hartford High Yield
HLS Fund - Class IA
Shares 24,179
Cost $24,824
Market Value....... -- -- -- -- -- $ 24,584
Due from Hartford Life
and Annuity Insurance
Company............... -- -- -- -- -- --
Receivable from fund
shares sold........... -- -- -- -- -- --
-------------- ------------- ------------- ------------ ------------- -------------
Total Assets........... 3,724,520 2,496,074 848,326 143,703 85,985 24,584
-------------- ------------- ------------- ------------ ------------- -------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... 34 28 3 -- -- --
Payable for fund shares
purchased............. -- -- -- -- -- --
-------------- ------------- ------------- ------------ ------------- -------------
Total Liabilities...... 34 28 3 -- -- --
-------------- ------------- ------------- ------------ ------------- -------------
Net Assets (variable
life contract
liabilities).......... $3,724,486 $2,496,046 $ 848,323 $ 143,703 $ 85,985 $ 24,584
-------------- ------------- ------------- ------------ ------------- -------------
-------------- ------------- ------------- ------------ ------------- -------------
</TABLE>
<PAGE>
SA-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
-------------- ----------- ------------
<S> <C> <C> <C>
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Bond Fund Sub-Account............ 4,463,212 $ 1.47602 $ 6,587,790
Stock Fund Sub-Account........... 19,524,095 2.893982 56,502,380
Money Market Fund Sub-Account.... 12,223,160 1.231508 15,052,920
Advisers Fund Sub-Account........ 28,214,943 2.307568 65,107,901
Capital Appreciation Fund
Sub-Account..................... 22,796,221 2.213318 50,455,286
Mortgage Securities Fund
Sub-Account..................... 1,615,347 1.420765 2,295,029
Index Fund Sub-Account........... 5,822,503 2.819953 16,419,186
International Opportunities Fund
Sub-Account..................... 10,257,253 1.488191 15,264,753
Dividend and Growth Fund
Sub-Account..................... 13,498,555 2.55943 34,548,607
International Advisers Fund
Sub-Account..................... 2,404,789 1.548779 3,724,486
MidCap Fund Sub-Account.......... 644,809 1.31562 848,323
------------
SUB-TOTAL GROUP SUB-ACCOUNTS..... 266,806,661
------------
GROUP SUB-ACCOUNTS:
High Yield Fund Sub-Account...... 23,682 1.03809 24,584
Growth and Income Fund
Sub-Account..................... 124,853 1.150984 143,703
Global Leaders Fund
Sub-Account..................... 65,201 1.318766 85,985
Small Company Fund Sub-Account... 1,921,287 1.299154 2,496,046
------------
SUB-TOTAL GROUP SUB-ACCOUNTS..... 2,750,318
------------
GRAND TOTAL........................ $269,556,979
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
[This page intentionally left blank]
<PAGE>
SA-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $310,867 $ 425,157
------------- -------------
CAPITAL GAINS INCOME..... -- 1,195,486
------------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 337 (29,330)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 62,577 10,654,625
------------- -------------
Net gain (loss) on
investments......... 62,914 10,625,295
------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $373,781 $ 12,245,938
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ --------------- ------------------ ---------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $563,092 $ 1,280,919 $ 268,384 $139,853 $ 132,802
------------ --------------- ------------------ -------- -------------
CAPITAL GAINS INCOME..... 190 1,465,098 2,761,262 -- 272,547
------------ --------------- ------------------ -------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- (9,456) 28,295 1,924 (21,988)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 8,649,288 3,751,151 (25,693) 2,904,724
------------ --------------- ------------------ -------- -------------
Net gain (loss) on
investments......... -- 8,639,832 3,779,446 (23,769) 2,882,736
------------ --------------- ------------------ -------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $563,282 $ 11,385,849 $6,809,092 $116,084 $ 3,288,085
------------ --------------- ------------------ -------- -------------
------------ --------------- ------------------ -------- -------------
<CAPTION>
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
-------------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $ 198,529
-------------------
CAPITAL GAINS INCOME..... 823,226
-------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (4,950)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 562,948
-------------------
Net gain (loss) on
investments......... 557,998
-------------------
Net increase
(decrease) in net
assets resulting
from operations..... $1,579,753
-------------------
-------------------
</TABLE>
<PAGE>
SA-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
DIVIDEND AND
GROWTH FUND
SUB-ACCOUNT
--------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $ 544,970
--------------
CAPITAL GAINS INCOME..... 871,742
--------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 1,267
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,960,422
--------------
Net gain (loss) on
investments......... 2,961,689
--------------
Net increase
(decrease) in net
assets resulting
from operations..... $4,378,401
--------------
--------------
</TABLE>
* From inception, June 1, 1998, to December 31, 1998.
** From inception, September 30, 1998, to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL MIDCAP GROWTH AND GLOBAL HIGH
ADVISERS FUND COMPANY FUND FUND INCOME FUND LEADERS FUND YIELD FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT** SUB-ACCOUNT**
-------------- ------------- ------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $285,452 $-- $ 4 $ 542 $ 101 $ 451
-------------- ------------- ------------- ------ ------ ------
CAPITAL GAINS INCOME..... 67,948 17,778 -- -- 2,088 --
-------------- ------------- ------------- ------ ------ ------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 567 (1,718) (3,505) 16 4 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 13,314 272,458 133,792 6,525 2,975 (240)
-------------- ------------- ------------- ------ ------ ------
Net gain (loss) on
investments......... 13,881 270,740 130,287 6,541 2,979 (240)
-------------- ------------- ------------- ------ ------ ------
Net increase
(decrease) in net
assets resulting
from operations..... $367,281 $288,518 $130,291 $7,083 $5,168 $ 211
-------------- ------------- ------------- ------ ------ ------
-------------- ------------- ------------- ------ ------ ------
</TABLE>
* From inception, June 1, 1998, to December 31, 1998.
** From inception, September 30, 1998, to December 31, 1998.
<PAGE>
SA-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 310,867 $ 425,157
Capital gains income... -- 1,195,486
Net realized gain
(loss) on security
transactions.......... 337 (29,330)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 62,577 10,654,625
------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 373,781 12,245,938
------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 46,311 16,926
Net transfers.......... 3,067,527 13,961,989
Surrenders for benefit
payments and fees..... (107,425) (1,506,358)
Net loan activity...... (11,064) (140,475)
Cost of insurance...... (33,445) (260,595)
------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 2,961,904 12,071,487
------------- -------------
Net increase (decrease)
in net assets......... 3,335,685 24,317,425
NET ASSETS:
Beginning of period.... 3,252,105 32,184,955
------------- -------------
End of period.......... $ 6,587,790 $ 56,502,380
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ --------------- ------------------ ---------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 563,092 $ 1,280,919 $ 268,384 $ 139,853 $ 132,802
Capital gains income... 190 1,465,098 2,761,262 -- 272,547
Net realized gain
(loss) on security
transactions.......... -- (9,456) 28,295 1,924 (21,988)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 8,649,288 3,751,151 (25,693) 2,904,724
------------ --------------- ------------------ ---------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 563,282 11,385,849 6,809,092 116,084 3,288,085
------------ --------------- ------------------ ---------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 62,062,192 32,794 16,742 -- 10,249
Net transfers.......... (54,690,953) 15,334,793 4,545,203 589,382 3,377,452
Surrenders for benefit
payments and fees..... (1,724,767) (1,683,040) (1,471,654) (31,118) (708,786)
Net loan activity...... (2,052,054) (407,150) (324,672) (8,665) (138,230)
Cost of insurance...... (112,624) (328,975) (284,868) (11,916) (86,318)
------------ --------------- ------------------ ---------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,481,794 12,948,422 2,480,751 537,683 2,454,367
------------ --------------- ------------------ ---------------- -------------
Net increase (decrease)
in net assets......... 4,045,076 24,334,271 9,289,843 653,767 5,742,452
NET ASSETS:
Beginning of period.... 11,007,844 40,773,630 41,165,443 1,641,262 10,676,734
------------ --------------- ------------------ ---------------- -------------
End of period.......... $ 15,052,920 $ 65,107,901 $50,455,286 $2,295,029 $ 16,419,186
------------ --------------- ------------------ ---------------- -------------
------------ --------------- ------------------ ---------------- -------------
<CAPTION>
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
-------------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 198,529
Capital gains income... 823,226
Net realized gain
(loss) on security
transactions.......... (4,950)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 562,948
-------------------
Net increase (decrease)
in net assets
resulting from
operations............ 1,579,753
-------------------
UNIT TRANSACTIONS:
Purchases.............. 11
Net transfers.......... 2,336,307
Surrenders for benefit
payments and fees..... (500,386)
Net loan activity...... (71,420)
Cost of insurance...... (89,406)
-------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,675,106
-------------------
Net increase (decrease)
in net assets......... 3,254,859
NET ASSETS:
Beginning of period.... 12,009,894
-------------------
End of period.......... $15,264,753
-------------------
-------------------
</TABLE>
<PAGE>
SA-14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
DIVIDEND AND
GROWTH FUND
SUB-ACCOUNT
--------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 544,970
Capital gains income... 871,742
Net realized gain
(loss) on security
transactions.......... 1,267
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,960,422
--------------
Net increase (decrease)
in net assets
resulting from
operations............ 4,378,401
--------------
UNIT TRANSACTIONS:
Purchases.............. 10,000
Net transfers.......... 8,163,378
Surrenders for benefit
payments and fees..... (866,498)
Net loan activity...... (327,128)
Cost of insurance...... (185,670)
--------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 6,794,082
--------------
Net increase (decrease)
in net assets......... 11,172,483
NET ASSETS:
Beginning of period.... 23,376,124
--------------
End of period.......... $ 34,548,607
--------------
--------------
</TABLE>
* From inception, June 1, 1998, to December 31, 1998.
** From inception, September 30, 1998, to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-15
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL MIDCAP GROWTH AND GLOBAL HIGH
ADVISERS FUND COMPANY FUND FUND INCOME FUND LEADERS FUND YIELD FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT** SUB-ACCOUNT**
-------------- ------------- ------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 285,452 $ -- $ 4 $ 542 $ 101 $ 451
Capital gains income... 67,948 17,778 -- -- 2,088 --
Net realized gain
(loss) on security
transactions.......... 567 (1,718) (3,505) 16 4 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 13,314 272,458 133,792 6,525 2,975 (240)
-------------- ------------- ------------- -------------- ------- -------
Net increase (decrease)
in net assets
resulting from
operations............ 367,281 288,518 130,291 7,083 5,168 211
-------------- ------------- ------------- -------------- ------- -------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- 1,000 2,000 2,000
Net transfers.......... 1,048,999 1,383,287 645,414 135,859 78,949 22,414
Surrenders for benefit
payments and fees..... (98,488) (109,974) (4,632) (172) (105) (29)
Net loan activity...... (36,658) (44,570) (11,492) -- -- --
Cost of insurance...... (20,129) (10,508) (2,955) (67) (27) (12)
-------------- ------------- ------------- -------------- ------- -------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 893,724 1,218,235 626,335 136,620 80,817 24,373
-------------- ------------- ------------- -------------- ------- -------
Net increase (decrease)
in net assets......... 1,261,005 1,506,753 756,626 143,703 85,985 24,584
NET ASSETS:
Beginning of period.... 2,463,481 989,293 91,697 -- -- --
-------------- ------------- ------------- -------------- ------- -------
End of period.......... $3,724,486 $2,496,046 $848,323 $143,703 $85,985 $24,584
-------------- ------------- ------------- -------------- ------- -------
-------------- ------------- ------------- -------------- ------- -------
</TABLE>
* From inception, June 1, 1998, to December 31, 1998.
** From inception, September 30, 1998, to December 31, 1998.
<PAGE>
SA-16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 156,755 $ 274,037 $ 632,382 $ 789,490
Capital gains income... -- 904,272 -- 1,045,984
Net realized gain
(loss) on security
transactions.......... 894 12,939 -- 3,344
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 118,897 4,902,064 -- 4,613,047
------------- ------------- ------------ ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 276,546 6,093,312 632,382 6,451,865
------------- ------------- ------------ ---------------
UNIT TRANSACTIONS:
Purchases.............. 16 50,244 63,908,110 243,543
Net transfers.......... 1,318,984 12,296,285 (62,169,665) 13,868,301
Surrenders for benefit
payments and fees..... (43,171) (1,275,425) (393,227) (1,057,654)
Net loan activity...... (15,758) (97,878) (2,491,658) (64,323)
Cost of insurance...... (16,113) (151,064) (109,762) (204,969)
------------- ------------- ------------ ---------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,243,958 10,822,162 (1,256,202) 12,784,898
------------- ------------- ------------ ---------------
Net increase (decrease)
in net assets......... 1,520,504 16,915,474 (623,820) 19,236,763
NET ASSETS:
Beginning of period.... 1,731,601 15,269,481 11,631,664 21,536,867
------------- ------------- ------------ ---------------
End of Period.......... $ 3,252,105 $ 32,184,955 $ 11,007,844 $ 40,773,630
------------- ------------- ------------ ---------------
------------- ------------- ------------ ---------------
</TABLE>
* From inception, July 15, 1997, to December 31, 1997.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-17
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ---------------- ------------- ------------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 190,756 $ 79,693 $ 116,095 $ 108,028 $ 324,234
Capital gains income... 1,971,454 -- 474,812 587,257 328,863
Net realized gain
(loss) on security
transactions.......... 4,174 141 (3,017) (1,502) (3,678)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 4,126,792 18,347 1,522,964 (918,735) 3,808,104
------------------ ---------------- ------------- ------------------- --------------
Net increase (decrease)
in net assets
resulting from
operations............ 6,293,176 98,181 2,110,854 (224,952) 4,457,523
------------------ ---------------- ------------- ------------------- --------------
UNIT TRANSACTIONS:
Purchases.............. 103,255 -- 27 40,040 156
Net transfers.......... 12,570,924 882,852 3,834,337 6,039,925 9,250,118
Surrenders for benefit
payments and fees..... (1,417,215) (17,802) (430,212) (433,918) (388,933)
Net loan activity...... (35,024) 4,385 (42,196) (14,211) (126,702)
Cost of insurance...... (204,886) (7,440) (51,934) (63,263) (107,665)
------------------ ---------------- ------------- ------------------- --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 11,017,054 861,995 3,310,022 5,568,573 8,626,974
------------------ ---------------- ------------- ------------------- --------------
Net increase (decrease)
in net assets......... 17,310,230 960,176 5,420,876 5,343,621 13,084,497
NET ASSETS:
Beginning of period.... 23,855,213 681,086 5,255,858 6,666,273 10,291,627
------------------ ---------------- ------------- ------------------- --------------
End of Period.......... $41,165,443 $1,641,262 $ 10,676,734 $12,009,894 $ 23,376,124
------------------ ---------------- ------------- ------------------- --------------
------------------ ---------------- ------------- ------------------- --------------
<CAPTION>
INTERNATIONAL SMALL MIDCAP
ADVISERS FUND COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- ------------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 72,657 $ 449 $ 82
Capital gains income... 4,846 44,954 --
Net realized gain
(loss) on security
transactions.......... 691 (415) (2)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 9,052 (7,085) 2,981
-------------- ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 87,246 37,903 3,061
-------------- ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 136 -- 1,000
Net transfers.......... 1,063,784 956,329 87,826
Surrenders for benefit
payments and fees..... (57,314) (12,652) (110)
Net loan activity...... (23,857) (1,427) --
Cost of insurance...... (13,409) (2,262) (80)
-------------- ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 969,340 939,988 88,636
-------------- ------------- -------------
Net increase (decrease)
in net assets......... 1,056,586 977,891 91,697
NET ASSETS:
Beginning of period.... 1,406,895 11,402 --
-------------- ------------- -------------
End of Period.......... $2,463,481 $989,293 $91,697
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
* From inception, July 15, 1997, to December 31, 1997.
<PAGE>
SA-18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION:
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 those
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:
Deduction and Charges -- Certain amounts are deducted from the Contracts, as
described below:
a) COST OF INSURANCE CHARGE -- 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 charge may also vary.
b) MORTALITY AND EXPENSE RISK CHARGES -- The Company will make deductions at
a maximum annual rate of 0.90% of the Contract's value for the mortality and
expense risks which the Company undertakes. These expenses are included in
surrenders for benefit payments and fees on the accompanying statements of
changes in net assets.
c) TAX EXPENSE CHARGE -- If applicable, the Company will make deductions at
a maximum rate of 4.0% of the Contract's value to meet premium tax requirements.
An additional tax charge based on a percentage of the Contract's value may be
assessed to partial withdrawals or surrenders. These expenses are included in
surrenders for benefit payments and fees on the accompanying statements of
changes in net assets.
d) ADMINISTRATIVE CHARGE -- The Company will make deductions to cover
administrative expenses at a maximum annual rate of 0.25% of the Contract's
value. These expenses are included in surrenders for benefit payments and fees
on the accompanying statements of changes in net assets.
e) ANNUAL MAINTENANCE FEE -- An annual maintenance fee in the amount of $30
may be deducted from the Contract's value each contract year. However, this fee
is not applicable to contracts with values of $50,000 or more, as determined on
the most recent contract anniversary. These expenses are included in surrenders
for benefit payments and fees on the accompanying statements of changes in net
assets.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-1
- --------------------------------------------------------------------------------
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.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 26, 1999
<PAGE>
F-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
BALANCE SHEETS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------
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.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-3
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
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.
<PAGE>
F-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
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.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-5
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
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.
<PAGE>
F-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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;
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-7
- --------------------------------------------------------------------------------
(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;
(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>
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
<PAGE>
F-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-9
- --------------------------------------------------------------------------------
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 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) 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.
<PAGE>
F-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
1998
------------------------------------------------
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
------------------------------------------------
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>
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>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-11
- --------------------------------------------------------------------------------
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
-------------------------- --------------------------
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
<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.
<PAGE>
F-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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>
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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-13
- --------------------------------------------------------------------------------
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.
