<PAGE>
Registration No. 333-00245
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
PRE-EFFECTIVE AMENDMENT NO. 1
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact name of trust: Separate Account Five
B. Name of depositor: Hartford Life Insurance Company
C. Complete address of depositor's principal executive offices:
P. O. Box 2999
Hartford, CT 06104-2999
D. Name and address of agent for service:
Thomas S. Clark, Esq.
ITT Hartford Life Insurance Companies
P. O. Box 2999
Hartford, CT 06104-2999
E. Title and amount of securities being registered:
Modified single premium variable life insurance contracts. Pursuant to
Rule 24f-2 under the Investment Company Act of 1940, the Registrant has
registered an indefinite amount of securities.
F. Proposed maximum aggregate offering price to the public of the securities
being registered:
Not yet determined.
G. Amount of filing fee: Paid
H. Approximate date of proposed public offering: As soon as practicable after
the effective date of this registration statement.
The Registrant hereby amends this Registration Statement on such dates as may
be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
The registrant hereby represents that it is relying on Section (13)(i)(B) of
Rule 6e-3(T).
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RECONCILIATION AND TIE BETWEEN
FORM N-8B AND PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
1. Cover page
2. Cover page
3. Not applicable
4. The Company; Distribution of the Contracts
5. Summary - The Separate Account; The Separate Account -
General
6. The Separate Account - General
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; The Separate Account - Portfolios; The Contract -
Application for a Contract; Contract Benefits and Rights;
Other Matters - Voting Rights, Dividends
11. Summary; The Separate Account - Portfolios
12. Summary; The Separate Account - Portfolios
13. Deductions and Charges; Distribution of the Contracts;
Federal Tax Considerations
14. The Contract - Application for a Contract
15. The Contract - Allocation of Premium
16. The Separate Account - Portfolios; The Contract -
Allocation of Premium
17. Summary; Contract Benefits and Rights - Account Value and
Amount Payable on Surrender of the Contract, Cancellation
and Examine Rights
18. The Separate Account - Portfolios; Deduction and Charges;
Federal Tax Considerations
19. Other Matters - Statement to Contract Owners
20. Not applicable
21. Contract Benefits and Rights - Contract Loans
22. Not applicable
23. Safekeeping of Separate Account Assets
24. Other Matters - Assignment
25. The Company
26. Not applicable
27. The Company
28. The Company
29. The Company
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. Distribution of Contracts
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Contracts
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ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
39. the Company; Distribution of the Contracts
40. Not applicable
41. The Company; Distribution of the Contracts
42. Not applicable
43. Not applicable
44. The Contract - Allocation of Premium
45. Not applicable
46. Contract Benefits and Rights - Account Value
47. The Separate Account - Portfolio
48. Cover Page; The Company
49. Not applicable
50. The Separate Account - General
51. Summary; The Company; The Contract; Contract Benefits
and Rights; Other Matters - Beneficiary
52. The Separate Account - Portfolios, Investment Adviser
53. Federal Tax Considerations
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
P.O. Box 2999
Hartford, CT 06104-2999
Telephone (800) 231-5453
SELECT DIMENSIONS LIFE
Modified Single Premium
Variable Life Insurance Contracts
[LOGO]
This prospectus describes Select Dimensions Life, a modified single premium
variable life insurance contract ("Contract" or "Contracts") offered by
Hartford Life Insurance Company ("Hartford Life") to applicants age 90 and
under. The Contract lets the Contract Owner pay a single premium, and subject
to restrictions, additional premiums.
The Contract is a modified endowment contract for federal income tax
purposes, except in certain cases described under "Federal Tax
Considerations," page . A LOAN, DISTRIBUTION OR OTHER AMOUNT RECEIVED FROM A
MODIFIED ENDOWMENT CONTRACT DURING THE LIFE OF THE INSURED WILL BE TAXED TO
THE EXTENT OF ANY ACCUMULATED INCOME IN THE CONTRACT. ANY AMOUNTS THAT ARE
TAXABLE WITHDRAWALS WILL BE SUBJECT TO A 10% ADDITIONAL TAX, WITH CERTAIN
EXCEPTIONS.
Generally, the minimum initial premium Hartford Life will accept is $10,000.
The initial premium will be allocated to the Money Market Portfolio. After the
Right to Cancel Period has expired, the amount so allocated will be
transferred to the Portfolios specified in the Contract Owner's application.
The following underlying investment portfolios ("Portfolios") of the Dean
Witter Select Dimensions Investment Series are available under the Contracts:
the Money Market Portfolio, the North American Government Securities
Portfolio, the Diversified Income Portfolio, the Balanced Portfolio, the
Utilities Portfolio, the Dividend Growth Portfolio, the Value-Added Market
Portfolio, the Core Equity Portfolio, the American Value Portfolio, the Global
Equity Portfolio, the Developing Growth Portfolio, and the Emerging Markets
Portfolio.
There is no guaranteed minimum Account Value for a Contract. The Account
Value of a Contract will vary up or down to reflect the investment experience
of the Portfolios to which premiums have been allocated. The Contract Owner
bears the investment risk for all amounts so allocated. The Contract continues
in effect while the Cash Surrender Value is sufficient to pay the monthly
charges under the Contract ("Deduction Amount"). The contract may terminate if
the cash surrender value is insufficient to cover a Deduction Amount, and
after expiration of a specified period, no additional premium payments are
made.
The Contracts provide for a Face Amount, which is the minimum death benefit
under the Contract. The death benefit ("Death Benefit") may be greater than
the Face Amount. The Account Value will, and under certain circumstances the
Death Benefit of the Contract may, increase or decrease based on the
investment experience of the Portfolios to which premiums have been allocated.
However, while the Contract is in force, the Death Benefit will never be less
than the Face Amount. At the death of the Insured, we will pay the death
proceeds ("Death Proceeds") to the beneficiary. The Death Proceeds equal the
Death Benefit less any Indebtedness under the Contract.
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IT MAY NOT BE ADVANTAGEOUS TO PURCHASE VARIABLE LIFE INSURANCE AS A
REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A VARIABLE
LIFE INSURANCE CONTRACT.
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THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE APPLICABLE ELIGIBLE PORTFOLIOS WHICH CONTAIN A FULL DESCRIPTION OF THOSE
PORTFOLIOS. ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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THE PRODUCTS DESCRIBED HEREIN ARE NOT DEPOSITS OF, OR GUARANTEED BY ANY BANK,
NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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The date of this Prospectus is .
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<PAGE>
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The current value of Accumulation Units plus the value of the
Loan Account under the Contract.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Sub-Account.
ANNUAL WITHDRAWAL AMOUNT: The amount of a surrender or partial withdrawal that
is not subject to the contingent deferred sales charge. This amount in any
Contract year is the greater of 10% of premiums or 100% of cumulative earnings
(Account Value less premiums paid).
CASH SURRENDER VALUE: The Account Value less any contingent deferred sales
charge and premium tax charge and all Indebtedness.
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY: The yearly anniversary of the Contract Date.
CONTRACT DATE: A date not later than three business days after receipt of the
initial premium at Hartford Life's Home Office.
CONTRACT OWNER: The person having rights to benefits under the Contract during
the lifetime of the Insured; the Contract Owner may or may not be the Insured.
CONTRACT YEARS: Annual periods computed from the Contract Date.
COVERAGE AMOUNT: The Death Benefit less the Account Value.
DEATH BENEFIT: The greater of (1) the Face Amount specified in the Contract or
(2) the Account Value on the date of death multiplied by a stated percentage as
specified in the Contract.
DEATH PROCEEDS: The amount that we will pay on the death of the Insured. This
equals the Death Benefit less any Indebtedness.
DEDUCTION AMOUNT: A deduction on the Contract Date and on each Monthly Activity
Date for the cost of insurance, a tax expense charge, an administrative charge,
and a mortality and expense risk charge.
FACE AMOUNT: On the Contract Date, the initial Face Amount is the amount shown
on the Contract's Specifications page. Thereafter, the Face Amount is reduced by
any partial withdrawals.
FUND: Dean Witter Select Dimensions Investment Series.
GUIDELINE SINGLE PREMIUM: The "Guideline Single Premium" as defined in Section
7702 of the Code.
HOME OFFICE: Currently located at 200 Hopmeadow Street, Simsbury, Connecticut;
however, the mailing address is P.O. Box 2999, Hartford, Connecticut 06104-2999.
INDEBTEDNESS: All monies owed to Hartford Life by the Contract Owner. These
monies include all outstanding loans on the Contract, including any interest due
or accrued Deduction Amount or annual maintenance fee.
INSURED: The person on whose life the Contract is issued.
LOAN ACCOUNT: An account in Hartford Life's General Account, established for any
amounts transferred from the Sub-Accounts for requested loans. The Loan Account
credits a fixed rate of interest of 4% per annum that is not based on the
investment experience of the Separate Account.
MONTHLY ACTIVITY DATE: The day of each month on which the Deduction Amount is
deducted from the Account Value of the Contract. Monthly Activity Dates occur on
the same day of the month as the Contract Date.
PORTFOLIOS: Currently, the portfolios of the Dean Witter Select Dimensions
Investment Series described on page 8 of this Prospectus.
PREFERRED LOAN: The amount of the Loan Account that equals the difference
between the Account Value and the total of all premiums paid under the Contract.
SEPARATE ACCOUNT: Separate Account Five, an account established by Hartford Life
to separate the assets funding the Contracts from other assets of Hartford Life.
SUB-ACCOUNT: The subdivisions of the Separate Account used to allocate a
Contract Owner's Account Value, less Indebtedness, among the Portfolios.
2
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VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SUMMARY................................................................. 6
THE COMPANY............................................................. 8
THE SEPARATE ACCOUNT.................................................... 9
General............................................................... 9
Portfolios............................................................ 9
Investment Adviser.................................................... 11
THE CONTRACT............................................................ 12
Application for a Contract............................................ 12
Premiums.............................................................. 12
Allocation of Premiums................................................ 12
Accumulation Unit Values.............................................. 13
DEDUCTIONS AND CHARGES.................................................. 13
Monthly Deductions.................................................... 13
Annual Maintenance Fee................................................ 14
Taxes Charged Against the Separate Account............................ 15
Charges Against the Portfolios........................................ 15
Contingent Deferred Sales Charge...................................... 15
Premium Tax Charge.................................................... 15
CONTRACT BENEFITS AND RIGHTS............................................ 15
Death Benefit......................................................... 15
Account Value......................................................... 16
Transfer of Account Value............................................. 16
Contract Loans........................................................ 16
Amount Payable on Surrender of the Contract........................... 17
Partial Withdrawals................................................... 18
Benefits at Maturity.................................................. 18
Lapse and Reinstatement............................................... 18
Cancellation and Exchange Rights...................................... 18
Suspension of Valuation, Payments and Transfers....................... 19
LAST SURVIVOR CONTRACTS................................................. 19
OTHER MATTERS........................................................... 19
Voting Rights......................................................... 19
Statements to Contract Owners......................................... 20
Limit on Right to Contest............................................. 20
Misstatement as to Age and Sex........................................ 20
Payment Options....................................................... 20
Beneficiary........................................................... 22
Assignment............................................................ 22
Dividends............................................................. 22
EXECUTIVE OFFICERS AND DIRECTORS........................................ 23
DISTRIBUTION OF THE CONTRACTS........................................... 25
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS............................ 26
FEDERAL TAX CONSIDERATIONS.............................................. 26
General............................................................... 26
Taxation of Hartford Life and the Separate Account.................... 26
Income Taxation of Contract Benefits.................................. 26
Last Survivor Contracts............................................... 27
Modified Endowment Contracts.......................................... 27
Estate and Generation Skipping Taxes.................................. 27
Diversification Requirements.......................................... 28
Ownership of the Assets in the Separate Account....................... 28
Life Insurance Purchased for Use in Split Dollar Arrangements......... 28
Federal Income Tax Withholding........................................ 29
Non-Individual Ownership of Contracts................................. 29
</TABLE>
4
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<TABLE>
<CAPTION>
PAGE
<S> <C>
Other................................................................. 29
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporation.......................................................... 29
LEGAL PROCEEDINGS....................................................... 29
LEGAL MATTERS........................................................... 29
EXPERTS................................................................. 29
REGISTRATION STATEMENT.................................................. 30
APPENDIX A.............................................................. 31
</TABLE>
THE CONTRACTS MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
5
<PAGE>
SUMMARY
THE CONTRACT
The Contracts are life insurance contracts with death benefits, cash values,
and other traditional life insurance features. The Contracts are "variable."
Unlike the fixed benefits of ordinary whole life insurance, the Account Value
will, and the Death Benefit may, increase or decrease based on the investment
experience of the Portfolios to which premiums have been allocated. The
Contracts are credited with units ("Accumulation Units") to calculate cash
values. The Contract Owner may transfer the cash values among the Portfolios.
The Contracts can be issued on a single life or "last survivor" basis. For a
discussion of how last survivor Contracts operate differently from single life
Contracts, see "Last Survivor Contracts," page 27.
THE SEPARATE ACCOUNT AND THE PORTFOLIOS
Separate Account Five ("Separate Account") funds the variable life insurance
Contracts offered by this prospectus. Hartford Life established the Separate
Account pursuant to Connecticut insurance law and organized as a unit investment
trust registered under the Investment Company Act of 1940. The Contracts
currently offer twelve sub-accounts ("Sub-Accounts"), each investing exclusively
in a Portfolio. If an initial premium is submitted with an application for a
Contract, it will be allocated, within three business days of receipt at
Hartford Life's Home Office, to the Money Market Portfolio. After the expiration
of the Right to Cancel Period, the values in the Money Market Portfolio will be
allocated to one or more of the Portfolios as specified in the Contract Owner's
application. See "The Contract -- Allocation of Premiums," page 12.
Currently, the Portfolios of the Dean Witter Select Dimensions Investment
Series available under the Contracts are: the Money Market Portfolio, the North
American Government Securities Portfolio, the Diversified Income Portfolio, the
Balanced Portfolio, the Utilities Portfolio, the Dividend Growth Portfolio, the
Value-Added Market Portfolio, the Core Equity Portfolio, the American Value
Portfolio, the Global Equity Portfolio, the Developing Growth Portfolio, and the
Emerging Markets Portfolio. Applicants should read the prospectus for the
Portfolios accompanying this prospectus in connection with the purchase of a
Contract. The investment objectives of the Portfolios are as set forth in "The
Separate Account," page 9.
The investment adviser for all the Portfolios is Dean Witter InterCapital
Inc. Dean Witter InterCapital Inc. retains a sub-investment adviser with respect
to some of the Portfolios. See "The Separate Account," page 9.
In 1994 and 1995, the Investment Adviser has agreed to waive the management
fee and to reimburse the Fund for all other expenses, except for any brokerage
fees and a portion of organizational expenses. For the period January 1, 1996
through December 31, 1996, the Investment Adviser will continue to waive the
management fee and to reimburse the operating expenses to the extent they exceed
0.50% of daily net assets of the Portfolio or until such time as the respective
Portfolio has $50 million of net assets, whichever comes first. There are no
12b-2 fees assessed against the underlying Portfolios. See the "The Fund and its
Management" within the Fund Prospectus for a complete description of the fees
that are payable for fund operating expenses and the conditions of the fee
waiver.
PREMIUMS
The Contract permits the Contract Owner to pay a large single premium, and
subject to restrictions, additional premiums. The Contract Owner may choose a
minimum initial premium of 80%, 90% or 100% of the Guideline Single Premium
(based on the Face Amount). Under current underwriting rules, which are subject
to change, Applicants between the ages of 45 and 80 who pay an initial premium
of 100% of the Guideline Single Premium are eligible for simplified underwriting
without a medical examination if they meet simplified underwriting standards as
evidenced in their responses in the application. For Contract Owners who pay an
initial premium of 80% or 90% of the Guideline Single Premium or who are below
age 45 or above age 80, standard underwriting applies, except that substandard
underwriting applies only in those cases that represent substandard risks
according to customary underwriting guidelines. Additional premiums are allowed
if they do not cause the Contract to fail to meet the definition of a life
insurance contract under Section 7702 of the Code. Hartford Life may require
evidence of insurability for any additional premiums which increase the Coverage
Amount. Generally, the minimum initial premium Hartford Life will accept is
$10,000. Hartford Life may accept less than $10,000 under certain circumstances.
No premium will be accepted which does not meet the tax qualification guidelines
for life insurance under the Code.
6
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DEDUCTIONS AND CHARGES
On the Contract Date and on each Monthly Activity Date, Hartford Life will
deduct a Deduction Amount from the Account Value. The Deduction Amount will be
made pro rata respecting each Sub-Account attributable to the Contract. The
Deduction Amount includes a cost of insurance charge, tax expense charge,
administrative charge, and a mortality and expense risk charge. The monthly cost
of insurance charge is to cover Hartford Life's anticipated mortality costs. In
addition, Hartford Life will deduct monthly from the Account Value a tax expense
charge equal to an annual rate of 0.40% for the first ten Contract Years. This
charge compensates Hartford Life for premium taxes imposed by various states and
local jurisdictions and for federal taxes imposed under Section 848 of the Code.
The charge includes a premium tax deduction of 0.25% and a federal tax deduction
of 0.15%. The premium tax deduction represents an average premium tax of 2.5% of
premiums over ten years. Hartford Life will deduct from the Account Value
attributable to the Separate Account a monthly administrative charge equal to an
annual rate of 0.40%. This charge compensates Hartford Life for administrative
expenses incurred in the administration of the Separate Account and the
Contracts. Hartford Life will also deduct from the Account Value attributable to
the Separate Account a monthly charge equal to an annual rate of 0.90% for the
mortality risks and expense risks Hartford Life assumes in relation to the
variable portion of the Contracts. If the Cash Surrender Value is not sufficient
to cover a Deduction Amount due on any Monthly Activity Date the Contract may
lapse. See "Deductions and Charges -- Monthly Deductions," page 13 and "Contract
Benefits and Rights -- Lapse and Reinstatement," page 18.
If the Account Value on a Contract Anniversary is less than $50,000,
Hartford Life will deduct on such date an Annual Maintenance Fee of $30. This
fee will help reimburse Hartford Life for administrative and maintenance costs
of the Contracts. See "Deductions and Charges -- Annual Maintenance Fee," page
14.
Hartford Life may set up a provision for income taxes against the assets of
the Separate Account. See "Deductions and Charges -- Charges Against The
Separate Account," page 15 and "Federal Tax Considerations," page 26.
Applicants should review the prospectuses for the Portfolios which accompany
this prospectus for a description of the charges assessed against the assets of
the Portfolios.
Upon surrender of the Contract and partial withdrawals in excess of the
Annual Withdrawal Amount, a contingent deferred sales charge may be assessed. In
Contract Years 1 through 3, this charge is 7.5% of surrendered Account Value
attributable to premiums paid. In Contract Years 4 through 5, this charge is 6%.
In Contract Years 6 through 7, this charge is 4%. In Contract Years 8 through 9,
this charge is 2%. After the 9th Contract Year, there is no charge. The
contingent deferred sales charge is imposed to cover a portion of the sales
expense incurred by Hartford Life in distributing the Contracts. This expense
includes agents commissions, advertising and the printing of prospectuses. See
"Deductions and Charges -- Contingent Deferred Sales Charge," page 15.
During the first nine Contract Years, a premium tax charge will be imposed
on surrender or partial withdrawals. See "Deductions and Charges --Premium Tax
Charge," page 15.
For a discussion of the tax consequences of surrender of the Contract or a
partial withdrawal, see "Federal Tax Considerations," page 26.
DEATH BENEFIT
The Contracts provide for a Face Amount which is the minimum Death Benefit
under the Contract. The Death Benefit may be greater than the Face Amount. At
the death of the Insured, we will pay the Death Proceeds to the beneficiary. The
Death Proceeds equal the Death Benefit less any Indebtedness under the Contract.
See "Contract Benefits and Rights -- Death Benefit," page 15.
ACCOUNT VALUE
The Account Value of the Contract will increase or decrease to reflect the
investment experience of the Portfolios applicable to the Contract and
deductions for the monthly Deduction Amount. There is no minimum guaranteed
Account Value and the Contract Owner bears the risk of the investment in the
Portfolios. See "Contract Benefits and Rights -- Account Value," page 16.
7
<PAGE>
CONTRACT LOANS
A Contract Owner may obtain one or both of two types of cash loans from
Hartford Life. Both types of loans are secured by the Contract. At the time a
loan is requested, the aggregate amount of all loans (including the currently
applied for loan) may not exceed 90% of the difference of the Account Value less
any contingent deferred sales charge and due and unpaid Deduction Amount. See
"Contract Benefits and Rights -- Contract Loans," page 16.
LAPSE
Under certain circumstances a Contract may terminate if the Cash Surrender
Value on any Monthly Activity Date is less than the required Monthly Deduction
Amount. Hartford Life will give written notice to the Contract Owner and a 61
day grace period during which additional amounts may be paid to continue the
Contract. See "Contract Benefits and Rights -- Contract Loans," page 16 and
"Lapse and Reinstatement," page 18.
CANCELLATION AND EXCHANGE RIGHTS
An applicant has a limited right to return his or her Contract for
cancellation. If the applicant returns the Contract, by mail or hand delivery,
to Hartford Life or to the agent who sold the Contract, to be cancelled within
10 days after delivery of the Contract to the applicant (in certain cases, this
free-look period is longer), Hartford Life will return to the applicant within 7
days thereafter the greater of the premiums paid for the Contract or the sum of
(1) the Account Value on the date the returned Contract is received by Hartford
Life or its agent and (2) any deductions under Contract or by the Portfolios for
taxes, charges or fees.
In addition, once the Contract is in effect it may be exchanged during the
first 24 months after its issuance for a permanent life insurance contract on
the life of the Insured without submitting proof of insurability. See "Contract
Benefits and Rights -- Cancellation and Exchange Rights," page 18.
TAX CONSEQUENCES
The current Federal tax law generally excludes all death benefit payments
from the gross income of the Contract beneficiary. The Contracts generally will
be treated as modified endowment contracts. This status does not affect the
Contracts' classification as life insurance, nor does it affect the exclusion of
death benefit payments from gross income. HOWEVER, LOANS, DISTRIBUTIONS OR OTHER
AMOUNTS RECEIVED UNDER A MODIFIED ENDOWMENT CONTRACT ARE TAXED TO THE EXTENT OF
ACCUMULATED INCOME IN THE CONTRACT (GENERALLY, THE EXCESS OF ACCOUNT VALUE OVER
PREMIUMS PAID) AND MAY BE SUBJECT TO A 10% PENALTY TAX. SEE "FEDERAL TAX
CONSIDERATIONS," PAGE 26.
THE COMPANY
Hartford Life Insurance Company ("Hartford Life") was originally
incorporated under the laws of Massachusetts on June 5, 1902. It was
subsequently redomiciled to Connecticut. It is a stock life insurance company
engaged in the business of writing health and life insurance, both individual
and group, in all states of the United States and the District of Columbia. The
offices of Hartford Life are located in Simsbury, Connecticut; however, its
mailing address is P.O. Box 5085, Hartford, CT 06102-5085.
Hartford Life is ultimately 100% owned by Hartford Fire Insurance Company,
one of the largest multiple lines insurance carriers in the United States. On
December 20, 1995, Hartford Fire Insurance Company became an independent,
publicly traded corporation.
Hartford Life is rated A+ (superior) by A.M. Best and Company, Inc., on the
basis of its financial soundness and operating performance. Hartford Life is
rated AA by Standard & Poor's and AA+ by Duff and Phelps on the basis of its
claims paying ability. These ratings do not apply to the investment performance
of the Sub-Accounts of the Separate Account. The ratings apply to Hartford
Life's ability to meet its insurance obligations, including those under the
contract.
Hartford Life is subject to Connecticut law governing insurance companies
and is regulated and supervised by the Connecticut Commissioner of Insurance. An
annual statement in a prescribed form must be filed with that Commissioner on or
before March 1 in each year covering the operations of Hartford Life for the
8
<PAGE>
preceding year and its financial condition on December 31 of such year. Its
books and assets are subject to review or examination by the Commissioner or his
agents at all times, and a full examination of its operations is conducted by
the National Association of Insurance Commissioners ("NAIC") at least once in
every four years. In addition, Hartford Life is subject to the insurance laws
and regulations of any jurisdiction in which it sells its insurance contracts.
Hartford Life is also subject to various Federal and state securities laws and
regulations.
THE SEPARATE ACCOUNT
GENERAL
Separate Account Five ("Separate Account") is a separate account of Hartford
Life established on August 17, 1994 pursuant to the insurance laws of the State
of Connecticut and organized as a unit investment trust registered with the
Securities and Exchange Commission under the Investment Company Act of 1940. The
Separate Account meets the definition of "separate account" under federal
securities law. Under Connecticut law, the assets of the Separate Account are
held exclusively for the benefit of Contract Owners and persons entitled to
payments under the Contracts. The assets for the Separate Account are not
chargeable with liabilities arising out of any other business which Hartford
Life may conduct.
PORTFOLIOS
The underlying investment for the Contracts are shares of the Dean Witter
Select Dimensions Investment Series, an open-end diversified series investment
company with multiple portfolios ("Portfolios"). The assets of each Sub-Account
of the Separate Account are invested exclusively in one of the Portfolios. A
Contract Owner may allocate premiums among the Portfolios. Contract Owners
should review the following brief descriptions of the investment objectives of
the Portfolios in connection with that allocation. There is no assurance that
any of the Portfolios will achieve its stated objectives. Contract Owners are
also advised to read the prospectus for the Portfolios accompanying this
prospectus for more detailed information.
MONEY MARKET PORTFOLIO
Seeks high current income, preservation of capital and liquidity by
investing in the following money market instruments: U.S. Government securities,
obligations of U.S. regulated banks and savings institutions having total assets
of more than $1 billion, or less than $1 billion if such are fully federally
insured as to principal (the interest may not be insured) and high grade
corporate debt obligations maturing in thirteen months or less.
NORTH AMERICAN GOVERNMENT SECURITIES PORTFOLIO
Seeks to earn a high level of current income while maintaining relatively
low volatility of principal, by investing primarily in investment grade
fixed-income securities issued or guaranteed by the U.S., Canadian or Mexican
governments.
DIVERSIFIED INCOME PORTFOLIO
Seeks, as a primary objective, to earn a high level of current income, and
as a secondary objective, to maximize total return, but only to the extent
consistent with its primary objective, by equally allocating its assets among
three separate groupings of fixed-income securities. Up to one-third of the
securities in which the Diversified Income Portfolio may invest will include
securities rated Baa/BBB or lower. See the special considerations for
investments for high yield securities disclosed in the Fund prospectus.
BALANCED PORTFOLIO
Seeks to achieve high total return through a combination of income and
capital appreciation, by investing in a diversified portfolio of common stocks
and investment grade fixed-income securities.
UTILITIES PORTFOLIO
Seeks to provide current income and long-term growth of income and capital
by investing in equity and fixed-income securities of companies in the public
utilities industry.
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<PAGE>
DIVIDEND GROWTH PORTFOLIO
Seeks to provide reasonable current income and long-term growth of income
and capital by investing primarily in common stock of companies with a record of
paying dividends and the potential for increasing dividends.
VALUE-ADDED MARKET PORTFOLIO
Seeks to achieve a high level of total return on its assets through a
combination of capital appreciation and current income, by investing, on an
equally-weighted basis, in a diversified portfolio of common stocks of the
companies which are represented in the Standard & Poor's 500 Composite Stock
Price Index.
CORE EQUITY PORTFOLIO
Seeks long-term growth of capital by investing primarily in common stocks
and securities convertible into common stocks issued by domestic and foreign
companies.
AMERICAN VALUE PORTFOLIO
Seeks long-term capital growth consistent with an effort to reduce
volatility, by investing principally in common stock of companies in industries
which, at the time of the investment, are believed to be undervalued in the
marketplace.
GLOBAL EQUITY PORTFOLIO
Seeks a high level of total return on its assets primarily through long-term
capital growth, and to a lesser extent, from income, through investments in all
types of common stocks and equivalents (such as convertible securities and
warrants), preferred stocks and bonds, and other debt obligations of domestic
and foreign companies, governments, and international organizations.
DEVELOPING GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in common stocks of
smaller and medium-sized companies that, in the opinion of the Investment
Manager, have the potential for growing more rapidly than the economy and which
may benefit from new products or services, technological developments or changes
in management.
EMERGING MARKETS PORTFOLIO
Seeks long-term capital appreciation by investing primarily in equity
securities of companies in emerging market countries. The Emerging Markets
Portfolio may invest up to 35% of its total assets in high risk fixed-income
securities that are rated below investment grade or are unrated (commonly
referred to as "junk bonds"). See the special considerations for investments in
high yield securities disclosed in the Fund prospectus.
The Fund is organized as a Massachusetts business trust and is an open-end
diversified management investment company with multiple portfolios under the
Investment Company Act of 1940. Each Portfolio of the Fund is managed for
investment purposes as if it were a separate fund issuing a separate class of
shares. Shares of the Fund are offered to the Separate Account established by
Hartford Life or one of its affiliated companies specifically to fund the
Contracts and certain flexible premium deferred variable annuity contracts
issued by Hartford Life or one of its affiliates as permitted by the Investment
Company Act of 1940.
The Portfolios are managed in styles similar to other investment companies
whose shares are generally offered to the public which are managed by Dean
Witter InterCapital Inc., the Investment Manager, or by TCW Funds Management,
Inc., the Sub-Adviser to certain of the Portfolios. The portfolios of these
other investment companies may, however, employ different investment practices
and may invest in securities different from those in which their counterpart
Portfolios invest, and consequently will not have identical portfolios or
experience identical investment results.
The Portfolios are available only to serve as the underlying investment for
variable annuity and variable life contracts. A full description of the
Portfolios, their investment objectives, policies and restrictions, risks,
10
<PAGE>
charges and expenses and other aspects of their operation is contained in the
accompanying Fund Prospectus which should be read in conjunction with this
Prospectus before investing, and in the Fund Statement of Additional Information
which may be ordered without charge from Dean Witter Select Dimensions
Investment Series.
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Portfolios simultaneously. Although Hartford Life and the Fund do
not currently foresee any such disadvantages either to variable life insurance
or variable annuity contract owners, the Fund's Board of Trustees intends to
monitor events in order to identify any material conflicts between variable life
and variable annuity contract owners and to determine what action, if any,
should be taken in response thereto. If the Board of Trustees of the Fund were
to conclude that separate Portfolios should be established for variable life and
variable annuity separate accounts, Hartford Life will bear the attendant
expenses.
All investment income of and other distributions to each Sub-Account of the
Separate Account arising from the applicable Portfolio are reinvested in shares
of that Portfolio at net asset value. The income and both realized gains or
losses on the assets of each Sub-Account of the Separate Account are therefore
separate and are credited to or charged against the Sub-Account without regard
to income, gains or losses from any other Sub-Account or from any other business
of Hartford Life. Hartford Life will purchase shares in the Portfolios in
connection with premiums allocated to the applicable Sub-Account in accordance
with Contract Owners directions and will redeem shares in the Portfolios to meet
Contract obligations or make adjustments in reserves, if any. The Portfolios are
required to redeem Portfolio shares at net asset value and to make payment
within seven days.
Hartford Life reserves the right, subject to compliance with the law as then
in effect, to make additions to, deletions from, or substitutions for the
Separate Account and its Sub-Accounts which fund the Contracts. If shares of any
of the Portfolios should no longer be available for investment, or if, in the
judgment of Hartford Life's management, further investment in shares of any
Portfolio should become inappropriate in view of the purposes of the Contracts,
Hartford Life may substitute shares of another Portfolio for shares already
purchased, or to be purchased in the future, under the Contracts. No
substitution of securities will take place without notice to and consent of
Contract Owners and without prior approval of the Securities and Exchange
Commission to the extent required by the Investment Company Act of 1940. Subject
to Contract Owner approval, Hartford Life also reserves the right to end the
registration under the Investment Company Act of 1940 of the Separate Account or
any other separate accounts of which it is the depositor which may fund the
Contracts.
Each Portfolio is subject to investment restrictions which may not be
changed without the approval of a majority of the shareholders of the Fund. See
the accompanying prospectus for the Fund.
INVESTMENT ADVISER
Dean Witter InterCapital Inc. ("InterCapital" or the "Investment Manager"),
a Delaware Corporation, whose address is Two World Trade Center, New York, New
York 10048, is the Fund's Investment Manager. The Investment Manager, which was
incorporated in July, 1992, is a wholly-owned subsidiary of Dean Witter,
Discover & Co., ("DWDC"), a balanced financial services organization providing a
broad range of nationally marketed credit and investment products.
The Fund has retained the Investment Manager to provide administrative
services, manage its business affairs and manage the investment of the Fund's
assets, including the placing of orders for the purchase and sales of portfolio
securities. InterCapital has retained its wholly-owned subsidiary, Dean Witter
Services Company Inc., to perform the aforementioned administrative services for
the Portfolios. For its services, each Portfolio pays the Investment Manager a
monthly fee. See the accompanying Fund Prospectus for a more complete
description of the Investment Manager and the respective fees of the Portfolios.
With regard to the North American Government Securities Portfolio, the
Balanced Portfolio, the Core Equity Portfolio and the Emerging Markets
Portfolio, under a Sub-Advisory Agreement between TCW Funds Management, Inc.
(the "Sub-Adviser") and the Investment Manager, the Sub-Adviser provides these
Portfolios with investment advice and portfolio management, in each case subject
to the overall supervision of the Investment Manager. The Sub-Adviser's address
is 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017.
11
<PAGE>
THE CONTRACT
APPLICATION FOR A CONTRACT
Individuals wishing to purchase a Contract must submit an application to
Hartford Life. A Contract will be issued only on the lives of insureds age 90
and under who supply evidence of insurability satisfactory to Hartford Life.
Acceptance is subject to Hartford Life's underwriting rules and Hartford Life
reserves the right to reject an application for any reason. IF AN APPLICATION
FOR A CONTRACT IS REJECTED, THEN YOUR INITIAL PREMIUM WILL BE RETURNED ALONG
WITH AN ADDITIONAL AMOUNT FOR INTEREST, BASED ON THE CURRENT RATE BEING CREDITED
BY HARTFORD LIFE. No change in the terms or conditions of a Contract will be
made without the consent of the Contract Owner.
The Contract will be effective on the Contract Date only after Hartford Life
has received all outstanding delivery requirements and received the initial
premium. The Contract Date is the date used to determine all future cyclical
transactions on the Contract, e.g., Monthly Activity Date, Contract Months and
Contract Years. The Contract Date may be prior to, or the same as, the date the
Contract is issued ("Issue Date").
If the Coverage Amount is over then current limits established by Hartford
Life, the initial payment will not be accepted with the 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 a
conditional receipt. The fixed conditional insurance will be the insurance
applied for, up to a maximum that varies by age. If no fixed conditional
insurance was in effect, on Contract delivery we will require a sufficient
payment to place the insurance in force.
PREMIUMS
The Contract permits the Contract Owner to pay a large single premium, and
subject to restrictions, additional premiums. The Contract Owner may choose a
minimum initial premium of 80%, 90% or 100% of the Guideline Single Premium
(based on the Face Amount). Under current underwriting rules, which are subject
to change, Applicants between ages 45 and 80 who pay an initial premium of 100%
of the Guideline Single Premium (subject to then current premium limits) are
eligible for simplified underwriting without a medical examination if they meet
simplified underwriting standards as evidenced in their responses in the
application. For Contract Owners who pay an initial premium of 80% or 90% of the
Guideline Single Premium or who are below age 45 or above age 80, standard
underwriting applies, except that substandard underwriting applies only in those
cases that represent substandard risks according to customary underwriting
guidelines. Additional premiums are allowed if they do not cause the Contract to
fail to meet the definition of a life insurance contract under Section 7702 of
the Code. Hartford Life may require evidence of insurability for any additional
premiums which increase the Coverage Amount. Generally, the minimum initial
premium Hartford Life will accept is $10,000. Hartford Life may accept less than
$10,000 under certain circumstances. No premium will be accepted which does not
meet the tax qualification guidelines for life insurance under the Code.
ALLOCATION OF PREMIUMS
Within three business days of receipt of a completed application and the
initial premium at Hartford Life's Home Office, Hartford Life will allocate the
entire premium to the Money Market Portfolio. After the expiration of the Right
To Cancel Period the Account Value in the Money Market Portfolio will be
allocated among the Portfolios in whole percentages to purchase Accumulation
Units in the applicable Sub-Accounts as the Contract Owner directs in the
application. Premiums received on or after the expiration of the Right to Cancel
Period will be allocated among the Sub-Accounts to purchase Accumulation Units
in such Sub-Accounts as directed by the Contract Owner or, in the absence of
directions, as specified in the original application. The number of Accumulation
Units in each Sub-Account to be credited to a Contract (including the initial
allocation to the Money Market Portfolio) will be determined first by
multiplying the premium by the percentage to be allocated to each Portfolio to
determine the portion to be invested in the Sub-Account. Each portion to be
invested in each Sub-Account is then divided by the Accumulation Unit Value of
that particular Sub-Account next computed after receipt of the payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each Sub-Account will vary to reflect the
investment experience of the applicable Portfolio and will be determined on each
Valuation Day by multiplying the Accumulation Unit Value
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<PAGE>
of the particular Sub-Account on the preceding Valuation Day by a "Net
Investment Factor" for that Sub-Account for the Valuation Period then ended. The
Net Investment Factor for each Sub-Account is the net asset value per share of
the corresponding Portfolio at the end of the Valuation Period (plus the per
share dividends or capital gains by that Portfolio if the ex-dividend date
occurs in the Valuation Period then ended) divided by the net asset value per
share of the corresponding Portfolio at the beginning of the Valuation Period.
Applicants should refer to the prospectus for the Portfolios which accompany
this prospectus for a description of how the assets of each Portfolio are valued
since such determination has a direct bearing on the Accumulation Unit Value of
the Sub-Account and therefore the Account Value of a Contract. See also,
"Contract Benefits and Rights -- Account Value," page 16.
All valuations in connection with a Contract, e.g., with respect to
determining Account Value and Cash Surrender Value and in connection with
Contract Loans, or calculation of Death Benefits, or with respect to determining
the number of Accumulation Units to be credited to a Contract with each premium,
other than the initial premium, will be made on the date the request or payment
is received by Hartford Life at its Home Office if such date is a Valuation Day;
otherwise such determination will be made on the next succeeding date which is a
Valuation Day.
DEDUCTIONS AND CHARGES
MONTHLY DEDUCTIONS
On the Contract Date, and on each Monthly Activity Date after the Contract
Date, Hartford Life will deduct an amount ("Deduction Amount") to cover charges
and expenses incurred in connection with a Contract. Each monthly Deduction
Amount will be deducted pro rata from each Sub-Account attributable to the
Contract such that the proportion of Account Value of the Contract 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
Contract may lapse. See "Contract Benefits and Rights -- Lapse and
Reinstatement," page 18. The following is a summary of the monthly deductions
and charges which constitute the Deduction Amount:
COST OF INSURANCE CHARGE: The cost of insurance charge covers Hartford
Life's anticipated mortality costs for standard and substandard risks. Current
cost of insurance rates are lower after the 10th Contract Year and are based on
whether 100%, 90% or 80% of the Guideline Single Premium has been paid. The
current cost of insurance charge will not exceed the guaranteed cost of
insurance charge. This charge is a guaranteed maximum monthly rate multiplied by
the Coverage Amount on the Contract Date or any Monthly Activity Date. For
standard risks, the guaranteed cost of insurance rate is based on the 1980
Commissioners Standard Ordinary Mortality Table, age last birthday. (Unisex
rates may be required in some states.) A table of guaranteed cost of insurance
rates per $1,000 will be included in each Contract; however, Hartford Life
reserves the right to use rates less than those shown in the table. Substandard
risks will be charged at a higher cost of insurance rate that will not exceed
rates based on a multiple of the 1980 Commissioners Standard Ordinary Mortality
Table, age last birthday. The multiple will be based on the insured's
substandard rating.
The Coverage Amount is first set on the Contract Date and then on each
Monthly Activity Date. On such days, it is the Face Amount less the Account
Value subject to a Minimum Coverage Amount. The Coverage Amount remains level
between the Monthly Activity Dates.
The Coverage Amount may be adjusted to continue to qualify the Contracts as
life insurance contracts under the current Federal tax law. Under that law, the
Minimum Coverage Amount is a stated percentage of the Account Value of the
Contract determined on each Monthly Activity Date. The percentages vary
according to the attained age of the Insured.
EXAMPLE:
Face Amount = $100,000
Account Value on the Monthly Activity Date = $30,000
Insured's attained age = 40
Minimum Coverage Amount percentage for age 40 = 150%
On the Monthly Activity Date, the Coverage Amount is $70,000. This is
calculated by subtracting the Account Value on the Monthly Activity Date
($30,000) from the Face Amount ($100,000), subject to a possible
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<PAGE>
Minimum Coverage Amount adjustment. This Minimum Coverage Amount is determined
by taking a percentage of the Account Value on the Monthly Activity Date. In
this case, the Minimum Coverage Amount is $45,000 (150% of $30,000). Since
$45,000 is less than the Face Amount less the Account Value ($70,000), no
adjustment is necessary. Therefore, the Coverage Amount will be $70,000.
Assume that the Account Value in the above example was $50,000. The Minimum
Coverage Amount would be $75,000 (150% of $50,000). Since this is greater than
the Face Amount less the Account Value ($50,000), the Coverage Amount for the
Contract Month is $75,000. (For an explanation of the Death Benefit, see
"Contract Benefits and Rights" on page 15.)
Because the Account Value, and as a result, the Coverage Amount under a
Contract may vary from month to month, the cost of insurance charge may also
vary on each Monthly Activity Date.
TAX EXPENSE CHARGE: Hartford Life will deduct monthly from the Account
Value a tax expense charge equal to an annual rate of 0.40% for the first ten
Contract Years. This charge compensates Hartford Life for premium taxes imposed
by various states and local jurisdictions and for federal taxes imposed under
Section 848 of the Code. The charge includes a premium tax deduction of 0.25%
and a federal tax deduction of 0.15%. The 0.25% premium tax deduction over ten
Contract Years approximates Hartford Life's average expenses for state and local
premium taxes (2.5%). Premium taxes vary, ranging from zero to more than 4.0%.
The premium tax deduction is made whether or not any premium tax applies. The
deduction may be higher or lower than the premium tax imposed. However, Hartford
Life does not expect to make a profit from this deduction. The 0.15% federal tax
deduction helps reimburse Hartford Life for approximate expenses incurred from
federal taxes under Section 848 of the Code. The federal tax deduction is a
factor Hartford Life must use when computing the maximum sales load chargeable
under Securities and Exchange Commission rules.
ADMINISTRATIVE CHARGE: Hartford Life will deduct monthly from the Account
Value attributable to the Separate Account an administrative charge equal to an
annual rate of 0.40%. This charge compensates Hartford Life for administrative
expenses incurred in the administration of the Separate Account and the
Contracts.
MORTALITY AND EXPENSE RISK CHARGE: Hartford Life will deduct monthly from
the Account Value attributable to the Separate Account a charge equal to an
annual rate of 0.90% for the mortality risks and expense risks Hartford Life
assumes in relation to the variable portion of the Contracts. The mortality risk
assumed is that the cost of insurance charges specified in the Contract will be
insufficient to meet claims. Hartford Life also assumes a risk that the Face
Amount (the minimum Death Benefit) will exceed the Coverage Amount on the date
of death plus the Account Value on the date Hartford Life receives written
notice of death. The expense risk assumed is that expenses incurred in issuing
and administering the Contracts will exceed the administrative charges set in
the Contract. Hartford Life may profit from the mortality and expense risk
charge and may use any profits for any proper purpose, including any difference
between the cost it incurs in distributing the Contracts and the proceeds of the
contingent deferred sales charge.
ANNUAL MAINTENANCE FEE: If the Account Value on a Contract Anniversary is
less than $50,000, Hartford Life will deduct on such date an Annual Maintenance
Fee of $30. This fee will help reimburse Hartford Life for administrative and
maintenance costs of the Contracts. The sum of the monthly administrative
charges and the annual maintenance fee will not exceed the cost Hartford Life
incurs in providing administrative services under the Contracts.
TAXES CHARGED AGAINST THE SEPARATE ACCOUNT
Currently, no charge is made to the Separate Account for federal income
taxes that may be attributable to the Separate Account. Hartford Life may,
however, make such a charge in the future. Charges for other taxes, if any,
attributable to the Separate Account may also be made.
CHARGES AGAINST THE PORTFOLIOS
The Separate Account purchases shares of the Portfolios at net asset value.
The net asset value of the Portfolio shares reflects investment advisory fees
and administrative expenses already deducted from the assets of the Portfolios.
These charges are described in the prospectus for the Portfolios.
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<PAGE>
CONTINGENT DEFERRED SALES CHARGE
Upon surrender of the Contract and partial withdrawals in excess of the
Annual Withdrawal Amount, a contingent deferred sales charge may be assessed. In
Contract Years 1 through 3, this charge is 7.5% of surrendered Account Value
attributable to premiums paid. In Contract Years 4 through 5, this charge is 6%.
In Contract Years 6 through 7, this charge is 4%. In Contract Years 8 through 9,
this charge is 2%. After the 9th Contract Year, there is no charge.
In determining the contingent deferred sales charge and the premium tax
charge discussed below, any surrender or partial withdrawal during the first ten
Contract Years will be deemed first from earnings and then from premiums paid.
If an amount equal to all premiums paid has been withdrawn, no charge will be
assessed on a withdrawal of the remaining Account Value.
The contingent deferred sales charge is imposed to cover a portion of the
sales expense incurred by Hartford Life in distributing the Contracts. This
expense includes agents commissions, advertising and the printing of
prospectuses.
See "Contract Benefits and Rights -- Amount Payable on Surrender of the
Contract," page 17.
PREMIUM TAX CHARGE
During the first nine Contract Years, a premium tax charge will be imposed
on surrender or partial withdrawals. The premium tax charge is shown below, as a
percent of Account Value, at the end of each Contract Year:
<TABLE>
<CAPTION>
CONTRACT
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 Contract Year, no premium tax charge will be imposed.
CONTRACT BENEFITS AND RIGHTS
DEATH BENEFIT
While in force, the Contract provides for the payment of the Death Proceeds
to the named beneficiary when the Insured under the Contract dies. The Death
Proceeds payable to the beneficiary equal the Death Benefit less any loans
outstanding. The Death Benefit equals the greater of (1) the Face Amount or (2)
the Account Value multiplied by a specified percentage. The percentages vary
according to the attained age of the Insured and are specified in the Contract.
Therefore, an increase in Account Value may increase the Death Benefit. However,
because the Death Benefit will never be less than the Face Amount, a decrease in
Account Value may decrease the Death Benefit but never below the Face Amount.
EXAMPLES:
<TABLE>
<CAPTION>
A B
----------- -----------
<S> <C> <C>
Face Amount: $100,000 $100,000
Insured's Age: 40 40
Account Value on Date of Death: 46,500 34,000
Specified Percentage: 250% 250%
</TABLE>
15
<PAGE>
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%).
All or part of the Death Proceeds may be paid in cash or applied under a
"Payment Option." See "Other Matters -- Payment Options," page 20.
ACCOUNT VALUE
The Account Value of a Contract will be computed on each Valuation Day. The
Account Value will vary to reflect the investment experience of the Portfolios,
the value of the Loan Account and the monthly Deduction Amounts. There is no
minimum guaranteed Account Value.
The Account Value of a particular Contract is related to the net asset value
of the Portfolios to which premiums on the Contract have been allocated. The
Account Value on any Valuation Day is calculated by multiplying the number of
Accumulation Units credited to the Contract in each Sub-Account as of the
Valuation Day by the Accumulation Unit Value of that Sub-Account and then
summing the result for all the Sub-Accounts credited to the Contract and the
value of the Loan Account. See "The Contract -- Accumulation Unit Values," page
13.
TRANSFER OF ACCOUNT VALUE
While the Contract remains in effect and subject to Hartford Life's transfer
rules then in effect, the Contract Owner may request that part or all of the
Account Value of a particular Sub-Account be transferred to other Sub-Accounts.
Hartford Life reserves the right to restrict the number of such transfers to no
more than 12 per Contract 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 toll
free 1-800-231-5453. Telephone transfers may not be permitted in some states.
The policy of Hartford Life and its agents and affiliates is that they will not
be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. Hartford Life will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine;
otherwise, Hartford Life may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures Hartford Life follows for transactions
initiated by telephone include requirements that callers provide certain
information for identification purposes. All transfer instructions by telephone
are tape recorded.
Hartford Life may modify the right to reallocate Account Value among the
Sub-Accounts if Hartford Life determines, in its sole discretion, that the
exercise of that right by one or more Contract Owners is, or would be, to the
disadvantage of other Contract Owners. Any modification could be applied to
transfers to or from some or all of the Sub-Accounts and could include, but not
be limited to, the requirement of a minimum period between each transfer, not
accepting transfer requests of an agent acting under the power of attorney on
behalf of more than one Contract Owner, or limiting the dollar amount that may
be transferred among the Sub-Accounts at one time. These restrictions may be
applied in any manner reasonably designed to prevent any use of the transfer
right that Hartford Life considered to be disadvantageous to other Contract
Owners.
As a result of a transfer, the number of Accumulation Units credited to the
Sub-Account from which the transfer is made will be reduced by the number
obtained by dividing the amount transferred by the Accumulation Unit Value of
that Sub-Account on the Valuation Day Hartford Life receives the transfer
request. The number of Accumulation Units credited to the Sub-Account to which
the transfer is made will be increased by the number obtained by dividing the
amount transferred by the Accumulation Unit Value of that Sub-Account on the
Valuation Day Hartford Life receives the transfer request.
CONTRACT LOANS
While the Contract is in effect, a Contract Owner may obtain, without the
consent of the beneficiary (provided the designation of beneficiary is not
irrevocable), one or both of two types of cash loans from Hartford Life. Both
types of loans are secured by the Contract. The aggregate loans (including the
currently applied for loan) may not exceed at the time a loan is requested 90%
of the Account Value less any contingent deferred sales charge and due and
unpaid Deduction Amount.
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<PAGE>
The loan amount will be transferred pro rata from each Sub-Account
attributable to the Contract (unless the Contract Owner specifies otherwise) to
the Loan Account. The amounts allocated to the Loan Account will bear interest
at a rate of 4% per annum (6% for "Preferred Loans"). The amount of the Loan
Account that equals the difference between the Account Value and the total of
all premiums paid under the Contract is considered a "Preferred Loan." The loan
interest rate that Hartford Life will charge on all loans is 6% per annum. The
difference between the value of the Loan Account and the Indebtedness will be
transferred on a pro-rata basis from the Sub-Accounts to the Loan Account on
each Monthly Activity Date.
If the aggregate outstanding loan(s) secured by the Contract exceeds the
Account Value of the Contract less any contingent deferred sales charges and due
and unpaid Deduction Amount, Hartford Life will give written notice to the
Contract Owner that unless Hartford Life receives an additional payment within
61 days to reduce the aggregate outstanding loan(s) secured by the Contract, the
Contract may lapse.
All or any part of any loan secured by a Contract may be repaid while the
Contract is still in effect. When loan repayments or interest payments are made,
they will be allocated among the Sub-Account(s), in the same percentage as,
premiums are allocated (unless the Contract Owner requests a different
allocation) and an amount equal to the payment will be deducted from the Loan
Account. Any outstanding loan at the end of a Grace Period must be repaid before
the Contract will be reinstated. See "Contract Benefits and Rights -- Lapse and
Reinstatement," page 18.
A loan, whether or not repaid, will have a permanent effect on the Account
Value because the investment results of each Sub-Account will apply only to the
amount remaining in such Sub-Accounts. The longer a loan is outstanding, the
greater the effect is likely to be. The effect could be favorable or
unfavorable. If the Sub-Accounts earn more than 4% per annum, the annual
interest rate for amounts held in the Loan Account, a Contract Owner's Account
Value will not increase as rapidly as it would have had no loan been made. If
the Sub-Accounts earn less than 4% per annum, the Contract Owner's Account Value
will be greater than it would have been had no loan been made. Also, if not
repaid, the aggregate outstanding loan(s) will reduce the Death Proceeds and
Cash Surrender Value otherwise payable.
AMOUNT PAYABLE ON SURRENDER OF THE CONTRACT
While the Contract is in effect, a Contract Owner may elect, without the
consent of the beneficiary (provided the designation of beneficiary is not
irrevocable), to fully surrender the Contract. Upon surrender, the Contract
Owner will receive the Cash Surrender Value determined as of the day Hartford
Life receives the Contract Owner's written request or the date requested by the
Contract Owner whichever is later. The Cash Surrender Value equals the Account
Value less any contingent deferred sales charges and premium tax charge and all
Indebtedness. Hartford Life will pay the Cash Surrender Value of the Contract
within seven days of receipt by Hartford Life of the written request or on the
effective surrender date requested by the Contract Owner, whichever is later.
The Contract will terminate on the date of receipt of the written request, or
the date the Contract Owner requests the surrender to be effective, whichever is
later. For a discussion of the tax consequences of surrendering the Contract,
see "Federal Tax Considerations," page 26.
If the Contract Owner chooses to apply the surrender proceeds to a payment
option (see "Other Matters -- Payment Options," page 20), the contingent
deferred sales charge will not be imposed to the surrender proceeds applied to
the option. In other words, the surrender proceeds will equal the Cash Surrender
Value without reduction for the contingent deferred sales charge. However, the
premium tax charge, if applicable, will be deducted from the surrender proceeds
to be applied, and amounts withdrawn from Options 1, 5 or 6 will be subject to
the contingent deferred sales charge, if applicable.
PARTIAL WITHDRAWALS
While the Contract is in effect, a Contract Owner may elect, by written
request, to make partial withdrawals from the Cash Surrender Value. The Cash
Surrender Value, after partial withdrawal, must at least equal Hartford Life's
minimum amount rules then in effect; otherwise, the request will be treated as a
request for full surrender. The partial withdrawal will be deducted pro rata
from each Sub-Account, unless the Contract Owner instructs otherwise. The Face
Amount will be reduced proportionate to the reduction in the Account Value due
to the partial withdrawal. Partial withdrawals will be deemed to be first from
earnings, if any, and then from premiums paid. Partial withdrawals in excess of
the Annual Withdrawal Amount will be subject to the contingent deferred sales
charge and any premium tax charges. See "Deductions and Charges -- Contingent
Deferred Sales Charge, Premium Tax Charge." For a discussion of the tax
consequences of partial withdrawals, see "Federal Tax Considerations," page 26.
17
<PAGE>
BENEFITS AT MATURITY
If the Insured is living on the "Maturity Date" (the anniversary of the
Contract Date on which the Insured is age 100), on surrender of the Contract to
Hartford Life, Hartford Life will pay to the Contract Owner the Cash Surrender
Value. In such case, the Contract will terminate and Hartford Life will have no
further obligations under the Contract. (The Maturity Date may be extended by
rider where approved, but see "Income Taxation of Contract Benefits.")
LAPSE AND REINSTATEMENT
The Contract will remain in effect until the Cash Surrender Value is
insufficient to cover a Deduction Amount due on a Monthly Activity Date.
Hartford Life will notify the Contract Owner of the deficiency in writing and
will provide a 61 day period ("Grace Period") to pay an amount sufficient to
cover the Deduction Amounts due.
The Notice will indicate the amount that must be paid. The Contract 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 Contract dies during the Grace Period, the Death Proceeds payable under the
Contract will be reduced by the Deduction Amount(s) due and unpaid. See
"Contract Benefits and Rights -- Death Benefit," page 15.
If the Contract lapses, the Contract Owner may apply for reinstatement of
the Contract by payment of the reinstatement premium (and any applicable
charges) shown in the Contract. A request for reinstatement may be made within
five years of lapse. If a loan was outstanding at the time of lapse, Hartford
Life will require repayment of the loan before permitting reinstatement. In
addition, Hartford Life reserves the right to require evidence of insurability
satisfactory to Hartford Life.
CANCELLATION AND EXCHANGE RIGHTS
An Applicant has a limited right to return a Contract for cancellation. If
the Contract is returned, by mail or personal delivery to Hartford Life or to
the agent who sold the Contract, to be cancelled within 10 days after delivery
of the Contract to the Contract Owner (a longer free-look period is provided in
certain cases), Hartford Life will return to the Applicant within 7 days the
greater of premiums paid for the Contract or the sum of (1) the Account Value on
the date the returned Contract is received by Hartford Life or its agent and (2)
any deductions under Contract or by the Portfolios for taxes, charges or fees.
Once the Contract is in effect, it may be exchanged during the first 24
months after its issuance, for a non-variable flexible premium adjustable life
insurance contract offered by Hartford Life (or an affiliated company) on the
life of the Insured. No evidence of insurability will be required. The new
contract will have, at the election of the Contract Owner, either the same
Coverage Amount under the exchanged contract 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 contract. If a contract loan was outstanding, the
entire loan must be repaid. There may be a cash adjustment required on the
exchange.
SUSPENSION OF VALUATION, PAYMENTS AND TRANSFERS
Hartford Life will suspend all procedures requiring valuation (including
transfers, surrenders and loans) on any day a national stock exchange is closed
or trading is restricted due to an existing emergency as defined by the
Securities and Exchange Commission, or on any day the Commission has ordered
that the right of surrender of the Contracts be suspended for the protection of
Contract Owners, until such condition has ended.
LAST SURVIVOR CONTRACTS
The Contracts are offered on a single life and "last survivor" basis.
Contracts sold on a last survivor basis operate in a manner almost identical to
the single life version. The most important difference is that the last survivor
version involves two Insureds and the Death Proceeds are paid on the death of
the last surviving Insured. The other significant differences between the last
survivor and single life versions are listed below:
18
<PAGE>
1. The cost of insurance charges under the last survivor Contracts 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 to die. See the last survivor illustrations
in "Appendix A," page 31.
2. To qualify for simplified underwriting under a last survivor Contract,
both Insureds must meet the simplified underwriting standards.
3. For a last survivor Contract to be reinstated, both Insureds must be
alive on the date of reinstatement.
4. The Contract provisions regarding misstatement of age or sex, suicide and
incontestability apply to either Insured.
5. Additional tax disclosures applicable to last survivor Contracts are
provided in "Federal Tax Considerations," page 26."
OTHER MATTERS
VOTING RIGHTS
In accordance with its interpretation of presently applicable law, Hartford
Life will vote the shares of the Portfolios at regular and special meetings of
the shareholders of the Portfolios in accordance with instructions from Contract
Owners (or the assignee of the Contract, as the case may be) having a voting
interest in the Separate Account. The number of shares held in the Separate
Account which are attributable to each Contract Owner is determined by dividing
the Contract Owner's interest in each Sub-Account by the net asset value of the
applicable shares of the Portfolios. Hartford Life will vote shares for which no
instructions have been given and shares which are not attributable to Contract
Owners (i.e., shares owned by Hartford Life) in the same proportion as it votes
shares for which it has received instructions. If the Investment Company Act of
1940 or any rule promulgated thereunder should be amended, however, or if
Hartford Life's present interpretation should change, and as a result, Hartford
Life determines it is permitted to vote the shares of the Portfolios in its own
right, it may elect to do so.
The voting interests of the Contract Owner (or the assignee) in the
Portfolios will be determined as follows: Contract Owners may cast one vote for
each full or fractional Accumulation Unit owned under the Contract and allocated
to a Sub-Account the assets of which are invested in the particular Portfolio on
the record date for the shareholder meeting for that Portfolio. If, however, a
Contract Owner has taken a loan secured by the Contract, amounts transferred
from the Sub-Account(s) to the Loan Account in connection with the loan (See
"Contract Benefits and Rights -- Contract Loans," page 16) will not be
considered in determining the voting interests of the Contract Owner. Contract
Owners should review the prospectus for the Portfolios which accompany this
prospectus to determine matters on which shareholders may vote.
Hartford Life may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to cause a change in the sub-classification or investment objective
of one or more of the Portfolios or to approve or disapprove an investment
advisory contract for the Portfolios.
In addition, Hartford Life itself may disregard voting instructions in favor
of changes initiated by a Contract Owner in the investment policy or the
investment adviser of the Portfolios if Hartford Life reasonably disapproves of
such changes. A change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities. If Hartford
Life does disregard voting instructions, a summary of that action and the
reasons for such action will be included in the next periodic report to Contract
Owners.
STATEMENTS TO CONTRACT OWNERS
Hartford Life will maintain all records relating to the Separate Account and
the Sub-Accounts. At least once each Contract Year, Hartford Life will send to
Contract Owners a statement showing the Coverage Amount and the Account Value of
the Contract (indicating the number of Accumulation Units credited to the
Contract in each Sub-Account and the corresponding Accumulation Unit Value), and
any outstanding loan secured by the Contract as of the date of the statement.
The statement will also show premium paid, and Deduction Amounts under the
Contract since the last statement, and any other information required by any
applicable law or regulation.
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<PAGE>
LIMIT ON RIGHT TO CONTEST
Hartford Life may not contest the validity of the Contract after it has been
in effect during the Insured's lifetime for two years from the Issue Date. If
the Contract is reinstated, the two-year period is measured from the date of
reinstatement. Any increase in the Coverage Amount as a result of a premium is
contestable for 2 years from its effective date. In addition, if the Insured
commits suicide in the two-year period, or such period as specified in state
law, the benefit payable will be limited to the Account Value less any
Indebtedness.
MISSTATEMENT AS TO AGE AND SEX
If the age or sex of the Insured is incorrectly stated, the Death Benefit
will be appropriately adjusted as specified in the Contract.
PAYMENT OPTIONS
The surrender proceeds or Death Proceeds under the Contracts may be paid in
a lump sum or may be applied to one of Hartford Life's payment options. The
minimum amount that may be applied under a payment option is $5,000 unless
Hartford Life consents to a lesser amount. Under Options 2, 3 and 4, no
surrender or partial withdrawals are permitted after payments commence. Full
surrender or partial withdrawals may be made from Options 1 or 6, but they are
subject to the contingent deferred sales charge, if applicable. Only a full
surrender is allowed from Option 5. A surrender from Option 5 will also be
subject to the contingent deferred sales charge, if applicable.
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 payment option
is elected. At such times, the proceeds are not subject to the investment
experience of the Separate Account.
The following options are available under the Contracts (Hartford Life may
offer other payment options):
OPTION 1: INTEREST INCOME
This option offers payments of interest, at the rate we declare, on the
amount applied under this option. The interest rate will never be less than
3 1/2% per year.
OPTION 2: LIFE ANNUITY
A life annuity is an annuity payable during the lifetime of the payee and
terminating with the last payment preceding the death of the payee. This option
offers the largest payment amount of any of the life annuity options since there
is no guarantee of a minimum number of payments nor a provision for a death
benefit payable to a beneficiary.
It would be possible under this option for a payee to receive only one
annuity payment if he died prior to the due date of the second annuity payment,
two if he died before the date of the third annuity payment, etc.
OPTION 3: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
This annuity option is an annuity payable monthly during the lifetime of the
payee with the provision that payments will be made for a minimum of 120, 180 or
240 months, as elected. If, at the death of the payee, payments have been made
for less than the minimum elected number of months, then the present value as of
the date of the payee's death, of any remaining guaranteed payments will be paid
in one sum to the beneficiary or beneficiaries designated unless other
provisions have been made and approved by Hartford Life.
OPTION 4: JOINT AND LAST SURVIVOR ANNUITY
An annuity payable monthly during the joint lifetime of the payee and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford Life, the payee may elect
that the payment to the survivor be less than the payment made during the joint
lifetime of the payee and a designated second person.
It would be possible under this option for a payee and designated second
person to receive only one payment in the event of the common or simultaneous
death of the parties prior to the due date for the second payment and so on.
20
<PAGE>
OPTION 5: PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected which may be from
5 to 30 years. Under this option, you may, at any time, request a full surrender
and receive, within seven days, the termination value of the Contract as
determined by Hartford Life.
In the event of the payee's death prior to the end of the designated period,
the present value as of the date of the payee's death, of any remaining
guaranteed payments will be paid in one sum to the beneficiary or beneficiaries
designated unless other provisions have been made and approved by Hartford Life.
Option 5 is an option that does not involve life contingencies.
OPTION 6: DEATH PROCEEDS REMAINING WITH HARTFORD LIFE
Proceeds from the Death Benefit left with Hartford Life. These proceeds will
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 withdrawals
may be made at any time.
VARIABLE AND FIXED ANNUITY PAYMENTS: When an annuity is effected, unless
otherwise specified, the surrender proceeds or Death Proceeds held in the
Sub-Accounts will be applied to provide a variable annuity based on the pro rata
amount in the various Sub-Accounts. Fixed annuities options are also available.
YOU SHOULD CONSIDER WHETHER THE ALLOCATION OF PROCEEDS AMONG SUB-ACCOUNTS OF THE
SEPARATE ACCOUNT FOR YOUR ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT
ALTERNATIVE BEST SUITED TO YOUR RETIREMENT NEEDS.
VARIABLE ANNUITY: The Contract contains tables indicating the minimum
dollar amount of the first monthly payment under the optional variable forms of
annuity for each $1,000 of value of a Sub-Account. The first monthly payment
varies according to the form and type of variable payment annuity selected. The
Contract 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 total first monthly
variable annuity payment is determined by multiplying the proceeds value
(expressed in thousands of dollars) of a Sub-Account by the amount of the first
monthly payment per $1,000 of value obtained from the tables in the Contracts.
The amount of the first monthly variable annuity payment is divided by the
value of an annuity unit (an accounting unit of measure used to calculate the
value of annuity payments) for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due in order to determine the number of annuity units represented by
the first payment. This number of annuity units remains fixed during the annuity
payment period, and in each subsequent month the dollar amount of the variable
annuity payment is determined by multiplying this fixed number of annuity units
by the current annuity unit value.
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP OR DOWN
AS THE INVESTMENT RATE VARIES UP OR DOWN RELATIVE TO THE A.I.R.
FIXED ANNUITY: Fixed annuity payments are determined by multiplying the
amount applied to the annuity by a rate to be determined by Hartford Life which
is no less than the rate specified in the fixed payment annuity tables in the
Contract. The annuity payment will remain level for the duration of the annuity.
Hartford Life will make any other arrangements for income payments as may be
agreed on.
BENEFICIARY
The applicant names the beneficiary in the application for the Contract. The
Contract Owner may change the beneficiary (unless irrevocably named) during the
Insured's lifetime by written request to Hartford Life. If no beneficiary is
living when the Insured dies, the Death Proceeds will be paid to the Contract
Owner if living; otherwise to the Contract Owner's estate.
ASSIGNMENT
The Contract may be assigned as collateral for a loan or other obligation.
Hartford Life is not responsible for any payment made or action taken before
receipt of written notice of such assignment. Proof of interest must be filed
with any claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Contracts.
21
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD LIFE, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ------------------------------- ----------------------------------- ----------------------------------------------
<S> <C> <C>
Louis J. Abdou, 53 Vice President, 1987 Vice President (1987-Present), Hartford Life.
Wendell J. Bossen, 62 Vice President, 1992** President (1992-Present), International
Corporate Marketing Group, Inc.; Executive
Vice President (1984-1992), Mutual Benefit.
Gregory A. Boyko, 44 Vice President, 1995 Vice President and Controller (1995-Present),
Hartford Life; Chief Financial Officer
(1994-1995), IMG American Life; Senior Vice
President (1992-1994), Connecticut Mutual
Life Insurance Company.
Peter W. Cummins, 59 Vice President, 1989 Vice President, Individual Annuity Operations
(1989-Present), Hartford Life.
Ann M. deRaismes, 45 Vice President, 1994 Vice President (1994-Present); Assistant Vice
President (1992); Director of Human
Resources (1991-Present), Hartford Life.
Timothy M. Fitch, 43 Vice President, 1995 Vice President (1995-Present); Assistant Vice
President (1993); Director (1991), Hartford
Life.
Donald R. Frahm, 64 Chairman and Chief Executive Chairman and Chief Executive Officer of the
Officer, 1988 Hartford Insurance Group (1988-Present).
Director, 1988*
Bruce D. Gardner, 45 Vice President, 1996 Vice President (1996-Present); General Counsel
and Director, 1994* Corporate Secretary
(1991-1996), Hartford Life.
Joseph H. Gareau, 49 Executive Vice President and Chief Executive Vice President and Chief Investment
Investment Officer, 1993 Officer, (1993-Present), Hartford Life;
Director, 1993* Senior Vice President and Chief Investment
Officer (1992), ITT Hartford's
Property-Casualty Companies.
J. Richard Garrett, 51 Treasurer, 1994 Treasurer (1994-Present); Vice President
Vice President, 1993 (1993-Present), Hartford Life; Treasurer
(1977), Hartford Insurance Group.
John P. Ginnetti, 50 Executive Vice President, 1994 Executive Vice President and Director Asset
Management Services (1994-Present); Senior
Vice President, (1988), Hartford Life.
Lynda Godkin, 42 General Counsel, 1996 Associate General Counsel and Corporate
Corporate Secretary, 1995 Secretary (1995-Present); Assistant General
Counsel and Secretary (1994); Counsel
(1990), Hartford Life.
Lois W. Grady, 51 Vice President, 1993 Vice President (1993-Present); Assistant Vice
President (1988), Hartford Life.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD LIFE, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ------------------------------- ----------------------------------- ----------------------------------------------
<S> <C> <C>
David A. Hall, 42 Senior Vice President and Actuary, Senior Vice President and Actuary
1992 (1992-Present), Hartford Life.
Joseph Kanarek, 48 Vice President, 1991 Vice President (1991-Present), Hartford Life.
Robert A. Kerzner, 44 Vice President, 1994 Vice President (1994-Present); Regional Vice
President (1991); Life Sales Manager (1990),
Hartford Life.
Kevin J. Kirk, 44 Vice President, 1992 Vice President (1992-Present); Assistant Vice
President; Assistant Director, Asset
Management Services (1985); Hartford Life.
Andrew W. Kohnke, 47 Vice President, 1992 Vice President (1992-Present); Assistant Vice
President (1989), Hartford Life.
Steven M. Maher, 41 Vice President and Actuary, 1993 Vice President and Actuary (1993-Present);
Assistant Vice President (1987), Hartford
Life.
William B. Malchodi, Jr., 45 Vice President, 1994 Vice President (1994-Present); Director of
Director or Taxes, 1992 Taxes (1992-Present); Assistant General
Counsel and Assistant Director of Taxes
(1986), Hartford Insurance Company.
Thomas M. Marra, 37 Executive Vice President, 1996 Executive Vice President and Director
Director, 1994* Individual Life and Annuity Division
(1996-Present); Senior Vice President and
Director, Individual Life and Annuity
Division (1993-1996); Director of Individual
Annuities (1991), Hartford Life.
Robert F. Nolan, 41 Vice President, 1995 Vice President (1995-Present), Assistant Vice
President Hartford Life; Manager Public
Relations (1986), Aetna Life and Casualty
Insurance Company.
Joseph J. Noto, 44 Vice President, 1989 Vice President (1989-Present), Hartford Life.
Leonard E. Odell, Jr., 51 Senior Vice President, 1994 Senior Vice President (1994-Present); Vice
Director, 1994* President and Chief Actuary (1982), Hartford
Life.
Michael C. O'Halloran, 49 Vice President, 1994 Vice President (1994-Present); Senior
Associate General Counsel, 1988 Associate General Counsel and Director
(1988-Present), Law Department, Hartford
Fire Insurance Company.
Craig D. Raymond, 35 Vice President, 1993 Vice President and Chief Actuary
Chief Actuary, 1994 (1994-Present); Vice President (1993);
Assistant Vice President (1992); Actuary
(1989-1994), Hartford Life.
Lowndes A. Smith, 56 President and Chief Operating President and Chief Operating Officer
Officer, 1989 (1989-Present), Hartford Life; Senior Vice
Director, 1981* President and Group Controller (1987),
Hartford Insurance Group.
Edward J. Sweeney, 39 Vice President, 1993 Vice President (1993-Present); Chicago
Regional Manager (1985-1993), Hartford Life.
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD LIFE, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ------------------------------- ----------------------------------- ----------------------------------------------
<S> <C> <C>
James E. Trimble, 39 Vice President and Actuary, 1990 Vice President (1990-Present); Assistant Vice
President (1987-1990), Hartford Life.
Raymond P. Welnicki, 47 Senior Vice President, 1993 Senior Vice President (1994-Present); Vice
Director, 1994* President (1993), Hartford Life; Board of
Directors, Ethix Corp., formerly employed by
Aetna Life & Casualty.
Walter C. Welsh, 49 Vice President, 1995 Vice President (1995-Present); Assistant Vice
President (1993), Hartford Life.
James J. Westervelt, 49 Senior Vice President, Group Senior Vice President and Group Controller
Controller, 1994 (1994-Present); Vice President and Group
Controller (1989), Hartford Insurance Group.
Lizabeth H. Zlatkus, 37 Vice President, 1994 Vice President (1994-Present); Assistant Vice
Director, 1994* President (1992); Hartford Life; formerly
Director, Hartford Insurance Group.
<FN>
- ------------------------
* Denotes date of election to Board of Directors.
** ITT Hartford Affiliated Company.
</TABLE>
DISTRIBUTION OF THE CONTRACTS
Hartford Life intends to sell the Contracts in all jurisdictions where it is
licensed to do business. The Contracts will be sold by life insurance sales
representatives who represent Hartford Life 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 contracts
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 wholly-owned subsidiaries of Hartford Life. The principal
business address of HESCO and HSD is the same as Hartford Life.
The maximum sales commission payable to Hartford Life agents, independent
registered insurance brokers, and other registered broker-dealers is 7.0% of
initial and subsequent premiums. From time to time, Hartford Life may pay or
permit other promotional incentives, in cash or credit or other compensation.
Hartford Life may provide information on various topics to Contract Owners
and prospective Contract Owners in advertising, sales literature or other
materials. These topics may include the relationship between sectors of the
economy and the economy as a whole and its effect on various securities markets,
investment strategies and techniques (such as value investing, dollar cost
averaging and asset allocation), the advantages and disadvantages of investing
in tax-advantaged and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
variable annuities and other investment alternatives, including comparisons
between the Contracts and the characteristics of and market for such
alternatives.
24
<PAGE>
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
The assets of the Separate Account are held by Hartford Life. The assets of
the Separate Account are kept physically segregated and held separate and apart
from the General Account of Hartford Life. Hartford Life maintains records of
all purchases and redemptions of shares of the Portfolio. Additional protection
for the assets of the Separate Account is afforded by Hartford Life'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 Life.
FEDERAL TAX CONSIDERATIONS
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED, LEGAL AND TAX ADVICE MAY BE
NEEDED BY A PERSON, EMPLOYER OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A
CONTRACT DESCRIBED HEREIN.
It should be understood that any detailed description of the Federal income
tax consequences regarding the purchase of these Contracts cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. This discussion
of Federal tax considerations is based upon Hartford Life 's understanding of
current Federal income tax laws as they are currently interpreted.
TAXATION OF HARTFORD LIFE AND THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford Life which is taxed as a
life insurance company under Subchapter L of the Internal Revenue Code ("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 "Contract Benefits and Rights -- Account Value," on page
16). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Contract.
Hartford Life 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 Life 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 CONTRACT BENEFITS
For Federal income tax purposes, the Contracts 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 Contract Owner is generally not taxed on
increments in the contract value until the Contract is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a Contract that is treated as life insurance. Hartford Life intends to monitor
premium levels to assure compliance with the Section 7702 requirements.
During the first fifteen Contract 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 Contract.
The Maturity Date Extension Rider allows a Contract Owner to extend the
Maturity Date to the date of the Insured's death. If the Maturity Date of the
Contract is extended by rider, Hartford Life believes that the Contract will
continue to be treated as a life insurance contract for federal income tax
purposes after the scheduled Maturity Date. However, due to the lack of specific
guidance on this issue, the result is not certain. If the Contract is not
treated as a life insurance contract for federal income tax purposes after the
scheduled
25
<PAGE>
Maturity Date, among other things, the Death Proceeds may be taxable to the
recipient. The Contract Owner should consult a qualified tax adviser regarding
the possible adverse tax consequences resulting from an extension of the
scheduled Maturity Date.
LAST SURVIVOR CONTRACTS
Although Hartford Life believes that the last survivor Contracts 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 Contract 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
Contract does not meet the specified computational rules for the "seven-pay
test" under Section 7702A(c). Therefore, the Contract 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 Contract to be treated as a modified
endowment contract if no additional premiums are paid and there is no change in
the death benefit as the result of the exchange.
A contract that is classified as modified endowment contract is generally
eligible for the beneficial tax treatment accorded to life insurance. That is,
the death benefit is excluded from income and increments in value are not
subject to current taxation. However, a loan, 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 contract (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 Contract 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 Contract Owner's estate for purposes of federal estate tax if the last
surviving Insured owned the Contract. If the Contract Owner was not the last
surviving Insured, the fair market value of the Contract would be included in
the Contract Owner's estate upon the Contract 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.
Federal estate tax is integrated with federal gift tax under a unified rate
schedule. In general, estates less than $600,000 will not incur a federal estate
tax liability. 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 Contract Owner (whether or not he or she is an Insured) transfers
ownership of the Contract 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 Contract. The generation-skipping transfer tax
provisions generally apply to transfers which would be subject to the gift and
estate tax rules. Individuals are generally allowed an aggregate generation
skipping transfer exemption of $1 million. Because these rules are complex, the
Contract Owner should consult with a qualified tax adviser for specific
information if ownership is passing to younger generations.
26
<PAGE>
DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable life insurance contract
(other than a pension plan policy) 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 in accordance with
regulations prescribed by the Treasury Department. If a Contract is not treated
as a life insurance contract, the Contract Owner will be subject to income tax
on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either the company or
the Contract Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford Life monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford Life
intends to administer all contracts 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 segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable contract
owner. The Internal Revenue Service ("IRS") has issued several rulings which
discuss investor control. The IRS has ruled that incidents of ownership by the
contract owner, such as the ability to select and control investments in a
separate account, will cause the contract owner to be treated as the owner of
the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
Prospectus, no other such guidance has been issued. Further, Hartford Life does
not know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Contract Owner could be considered the owner of
the assets for tax purposes. Hartford Life reserves the right to modify the
contracts, as necessary, to prevent Contract Owners from being considered the
owners of the assets in the separate accounts.
LIFE INSURANCE PURCHASED FOR USE IN SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM")
on the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
27
<PAGE>
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Contract
Owner, such amounts will be subject to federal income tax withholding and
reporting, pursuant to the Code.
NON-INDIVIDUAL OWNERSHIP OF CONTRACTS
Legislation has recently been proposed which would limit certain of the tax
advantages now afforded non-individual owners of life insurance contracts.
Prospective Contract Owners which are not individuals should consult a tax
adviser to determine the status of this proposed legislation and its potential
impact on the purchaser.
OTHER
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Contract proceeds depend on the
circumstances of each Contract 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 advisor
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
LEGAL PROCEEDINGS
There are no pending material legal proceedings affecting the Contracts, the
Separate Account or any of the Portfolios.
LEGAL MATTERS
Legal matters in connection with the issue and sale of flexible premium
variable life insurance contracts described in this Prospectus and the
organization of Hartford Life, its authority to issue the Contracts under
Connecticut law and the validity of the forms of the Contracts under Connecticut
law and legal matters relating to the Federal securities and income tax laws
have been passed on by Lynda Godkin, General Counsel of ITT Harford Life
Insurance Companies.
EXPERTS
The financial statements and schedules for Hartford Life included in this
Prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report. Reference is made to said report on the financial statements of Hartford
Life Insurance Company (the Depositor), which includes an explanatory paragraph
with respect to the adoption of new accounting standards changing the method of
accounting for debt and equity securities. The principal business address of
Arthur Andersen LLP is One Financial Plaza, Hartford, CT 06103.
28
<PAGE>
The hypothetical Contract illustrations included in this Prospectus and
Registration Statement have been approved by Michael Winterfield, FSA, MAAA,
Director, Individual Annuity Inforce Management, for Hartford Life, and are
included in reliance upon his opinion as to their reasonableness.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended. This Prospectus does not
contain all information set forth in the registration statement, its amendments
and exhibits, to all of which reference is made for further information
concerning the Separate Account, the Portfolios, Hartford Life, and the
Contracts.
29
<PAGE>
APPENDIX A
ILLUSTRATION OF BENEFITS
The tables in Appendix A illustrate the way in which a Contract operates.
They show how the death benefit and surrender value could vary over an extended
period of time assuming hypothetical gross rates of return equal to constant
after tax annual rates of 0%, 6% and 12%. The tables are based on an initial
premium of $10,000. A male age 45, a female age 55 and a male age 65 with Face
Amounts of $40,161, $33,334 and $19,380, respectively, are illustrated for the
single life Contract. The illustrations for the last survivor Contract assume
male and female of equal ages, including age 55 and 65 for Face Amounts of
$44,053 and $27,778.
The death benefit and surrender value for a Contract would be different from
those shown if the rates of return averaged 0%, 6% and 12% over a period of
years, but also fluctuated above or below those averages for individual Contract
Years. They would also differ if any contract loan were made during the period
of time illustrated.
The tables reflect the deductions of current Contract charges and guaranteed
Contract charges for a single gross interest rate. The death benefits and
surrender values would change if the current cost of insurance charges change.
The amounts shown for the death benefit and surrender value as of the end of
each Contract Year take into account an average daily charge equal to an annual
charge of 0.75% of the average daily net assets of the Portfolios for investment
advisory and administrative services fees. The gross annual investment return
rates of 0%, 6% and 12% on the Portfolio's assets are equal to net annual
investment return rates (net of the 0.75% average daily charge) of -0.75%, 5.25%
and 11.25%, respectively.
In addition the death benefit and surrender value as of the end of each
Contract Year take into account the (1) tax expense charge equal to an annual
rate of 0.40% of Account Value for the first ten Contract Years; (2)
administrative charge equal to an annual rate of 0.40% of Account Value
attributable to the Separate Account; (3) mortality and expense risk charge
equal to an annual rate of 0.90% of Account Value attributable to the Separate
Account; and (4) any Contingent Deferred Sales Charge and Premium Tax Charge
which may be applicable in the first nine Contract Years.
The hypothetical returns shown in the tables are without any tax charges
that may be attributable to the Separate Account in the future. In order to
produce after tax returns of 0%, 6%, and 12%, the Separate Account would have to
earn a sufficient amount in excess of 0% or 6% or 12% to cover any tax charges
(see "Deductions and Charges -- Charges Against The Separate Account -- Taxes,"
page 15).
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 Life 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 Life 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.
30
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- ----------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 40,161 10,756 9,764 40,161
2 11,025 11,740 10,755 40,161 11,575 10,593 40,161
3 11,576 12,724 11,751 40,161 12,463 11,495 40,161
4 12,155 13,794 12,987 40,161 13,427 12,626 40,161
5 12,763 14,956 14,169 40,161 14,474 13,693 40,161
6 13,401 16,219 15,657 40,161 15,613 15,057 40,161
7 14,071 17,592 17,060 40,161 16,851 16,324 40,161
8 14,775 19,083 18,788 40,161 18,198 17,907 40,161
9 15,513 20,704 20,452 40,161 19,666 19,417 40,161
10 16,289 22,465 22,465 40,161 21,268 21,268 40,161
11 17,103 24,501 24,501 40,161 23,113 23,113 40,161
12 17,959 26,724 26,724 40,161 25,145 25,145 40,161
13 18,856 29,153 29,153 41,398 27,386 27,386 40,161
14 19,799 31,808 31,808 43,896 29,864 29,864 41,213
15 20,789 34,714 34,714 46,517 32,590 32,590 43,670
16 21,829 37,895 37,895 49,264 35,574 35,574 46,247
17 22,920 41,367 41,367 52,951 38,832 38,832 49,705
18 24,066 45,156 45,156 56,897 42,386 42,386 53,407
19 25,270 49,292 49,292 61,122 46,266 46,266 57,371
20 26,533 53,807 53,807 65,645 50,502 50,502 61,613
25 33,864 83,601 83,601 96,978 78,372 78,372 90,912
35 55,160 201,997 201,997 214,118 180,092 189,092 200,438
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
31
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- --------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 40,161 10,171 9,192 40,161
2 11,025 10,506 9,546 40,161 10,337 9,380 40,161
3 11,576 10,769 9,831 40,161 10,497 9,564 40,161
4 12,155 11,040 10,275 40,161 10,651 9,891 40,161
5 12,763 11,319 10,577 40,161 10,796 10,061 40,161
6 13,401 11,605 11,089 40,161 10,930 10,421 40,161
7 14,071 11,900 11,411 40,161 11,052 10,569 40,161
8 14,775 12,202 11,941 40,161 11,158 10,902 40,161
9 15,513 12,514 12,282 40,161 11,244 11,016 40,161
10 16,289 12,833 12,833 40,161 11,309 11,309 40,161
11 17,103 13,228 13,228 40,161 11,394 11,394 40,161
12 17,959 13,636 13,636 40,161 11,455 11,455 40,161
13 18,856 14,058 14,058 40,161 11,486 11,486 40,161
14 19,799 14,494 14,494 40,161 11,486 11,486 40,161
15 20,789 14,944 14,944 40,161 11,450 11,450 40,161
16 21,829 15,409 15,409 40,161 11,370 11,370 40,161
17 22,920 15,889 15,889 40,161 11,239 11,239 40,161
18 24,066 16,385 16,385 40,161 11,048 11,048 40,161
19 25,270 16,898 16,898 40,161 10,787 10,787 40,161
20 26,533 17,428 17,428 40,161 10,442 10,442 40,161
25 33,864 20,353 20,353 40,161 6,987 6,987 40,161
35 55,160 27,852 27,852 40,161 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
32
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------ ------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- -------- ------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 40,161 9,586 8,649 40,161
2 11,025 9,340 8,404 40,161 9,169 8,291 40,161
3 11,576 9,026 8,118 40,161 8,747 7,925 40,161
4 12,155 8,721 7,990 40,161 8,319 7,699 40,161
5 12,763 8,425 7,720 40,161 7,883 7,312 40,161
6 13,401 8,138 7,657 40,161 7,438 7,113 40,161
7 14,071 7,860 7,401 40,161 6,980 6,696 40,161
8 14,775 7,591 7,353 40,161 6,506 6,461 40,161
9 15,513 7,330 7,111 40,161 6,013 6,002 40,161
10 16,289 7,076 7,076 40,161 5,498 5,717 40,161
11 17,103 6,865 6,865 40,161 4,978 5,211 40,161
12 17,959 6,659 6,659 40,161 4,427 4,673 40,161
13 18,856 6,459 6,459 40,161 3,843 4,100 40,161
14 19,799 6,264 6,264 40,161 3,221 3,488 40,161
15 20,789 6,073 6,073 40,161 2,558 2,833 40,161
16 21,829 5,888 5,888 40,161 1,845 2,127 40,161
17 22,920 5,707 5,707 40,161 1,075 1,361 40,161
18 24,066 5,531 5,531 40,161 237 526 40,161
19 25,270 5,360 5,360 40,161 0 0 0
20 26,533 5,193 5,193 40,161 0 0 0
25 33,864 4,420 4,420 40,161 0 0 0
35 55,160 3,145 3,145 40,161 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
33
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- ---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 33,334 10,727 9,736 33,334
2 11,025 11,740 10,755 33,334 11,517 10,537 33,334
3 11,576 12,724 11,751 33,334 12,378 11,411 33,334
4 12,155 13,794 12,987 33,334 13,317 12,517 33,334
5 12,763 14,956 14,169 33,334 14,343 13,564 33,334
6 13,401 16,219 15,657 33,334 15,464 14,909 33,334
7 14,071 17,592 17,060 33,334 16,688 16,163 33,334
8 14,775 19,083 18,788 33,334 18,025 17,735 33,334
9 15,513 20,704 20,452 33,334 19,487 19,238 33,334
10 16,289 22,465 22,465 33,334 21,088 21,088 33,334
11 17,103 24,501 24,501 33,334 22,940 22,940 33,334
12 17,959 26,736 26,736 33,334 24,991 24,991 33,334
13 18,856 29,218 29,218 34,478 27,270 27,270 33,334
14 19,799 31,946 31,946 37,377 29,804 29,804 34,891
15 20,789 34,928 34,928 40,517 32,585 32,585 37,799
16 21,829 38,190 38,190 43,919 35,625 35,625 40,969
17 22,920 41,765 41,765 47,195 38,958 38,958 44,023
18 24,066 45,686 45,686 50,712 42,614 42,614 47,301
19 25,270 49,992 49,992 54,492 46,627 46,627 50,824
20 26,533 54,687 54,687 59,609 51,004 51,004 55,594
25 33,864 85,841 85,841 90,992 80,060 80,060 84,864
35 55,160 208,273 208,273 218,687 192,260 192,260 201,873
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
34
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- --------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 33,334 10,142 9,164 33,334
2 11,025 10,506 9,546 33,334 10,279 9,324 33,334
3 11,576 10,769 9,831 33,334 10,412 9,480 33,334
4 12,155 11,040 10,275 33,334 10,539 9,781 33,334
5 12,763 11,319 10,577 33,334 10,661 9,928 33,334
6 13,401 11,605 11,089 33,334 10,774 10,266 33,334
7 14,071 11,900 11,411 33,334 10,875 10,394 33,334
8 14,775 12,202 11,941 33,334 10,959 10,704 33,334
9 15,513 12,514 12,282 33,334 11,021 10,793 33,334
10 16,289 12,833 12,833 33,334 11,055 11,055 33,334
11 17,103 13,228 13,228 33,334 11,106 11,106 33,334
12 17,959 13,636 13,636 33,334 11,127 11,127 33,334
13 18,856 14,058 14,058 33,334 11,117 11,117 33,334
14 19,799 14,494 14,494 33,334 11,073 11,073 33,334
15 20,789 14,944 14,944 33,334 10,988 10,988 33,334
16 21,829 15,409 15,409 33,334 10,854 10,854 33,334
17 22,920 15,889 15,889 33,334 10,656 10,656 33,334
18 24,066 16,385 16,385 33,334 10,375 10,375 33,334
19 25,270 16,898 16,898 33,334 9,991 9,991 33,334
20 26,533 17,428 17,428 33,334 9,479 9,479 33,334
25 33,864 20,353 20,353 33,334 3,955 3,955 33,334
35 55,160 27,852 27,852 33,334 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
35
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------ -------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- -------- ------- --------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 33,334 9,558 8,593 33,334
2 11,025 9,340 8,404 33,334 9,112 8,179 33,334
3 11,576 9,026 8,118 33,334 8,662 7,761 33,334
4 12,155 8,721 7,990 33,334 8,209 7,486 33,334
5 12,763 8,425 7,720 33,334 7,750 7,053 33,334
6 13,401 8,138 7,657 33,334 7,283 6,810 33,334
7 14,071 7,860 7,401 33,334 6,803 6,352 33,334
8 14,775 7,591 7,353 33,334 6,305 6,073 33,334
9 15,513 7,330 7,111 33,334 5,782 5,568 33,334
10 16,289 7,076 7,076 33,334 5,230 5,230 33,334
11 17,103 6,865 6,865 33,334 4,665 4,665 33,334
12 17,959 6,659 6,659 33,334 4,061 4,061 33,334
13 18,856 6,459 6,459 33,334 3,419 3,419 33,334
14 19,799 6,264 6,264 33,334 2,733 2,733 33,334
15 20,789 6,073 6,073 33,334 1,997 1,997 33,334
16 21,829 5,888 5,888 33,334 1,200 1,200 33,334
17 22,920 5,707 5,707 33,334 324 324 33,334
18 24,066 5,531 5,531 33,334 0 0 0
19 25,270 5,360 5,360 33,334 0 0 0
20 26,533 5,193 5,193 33,334 0 0 0
25 33,864 4,420 4,420 33,334 0 0 0
35 55,160 3,145 3,145 33,334 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
36
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- ---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 19,380 10,650 9,660 19,380
2 11,025 11,740 10,755 19,380 11,357 10,380 19,380
3 11,576 12,724 11,751 19,380 12,131 11,169 19,380
4 12,155 13,794 12,987 19,380 12,984 12,190 19,380
5 12,763 14,956 14,169 19,380 13,930 13,156 19,380
6 13,401 16,219 15,657 19,380 14,986 14,436 19,380
7 14,071 17,595 17,063 19,883 16,172 15,650 19,380
8 14,775 19,106 18,810 21,208 17,516 17,228 19,443
9 15,513 20,760 20,508 22,629 19,027 18,780 20,740
10 16,289 22,549 22,549 24,578 20,664 20,664 22,524
11 17,103 24,595 24,595 26,563 22,536 22,536 24,340
12 17,959 26,837 26,837 28,716 24,587 24,587 26,309
13 18,856 29,275 29,275 31,325 26,816 26,816 28,693
14 19,799 31,947 31,947 33,864 29,260 29,260 31,016
15 20,789 34,856 34,856 36,948 31,916 31,916 33,831
16 21,829 38,046 38,046 39,949 34,834 34,834 36,576
17 22,920 41,517 41,517 43,594 38,005 38,005 39,906
18 24,066 45,308 45,308 47,574 41,447 41,447 43,520
19 25,270 49,448 49,448 51,921 45,177 45,177 47,436
20 26,533 53,969 53,969 56,667 49,215 49,215 51,677
25 33,864 83,837 83,837 88,030 74,965 74,965 78,714
35 55,160 202,335 202,335 204,358 175,528 175,528 177,284
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
37
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------- -------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- --------- -------- --------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 19,380 10,062 9,086 19,380
2 11,025 10,506 9,546 19,380 10,104 9,152 19,380
3 11,576 10,769 9,831 19,380 10,123 9,196 19,380
4 12,155 11,040 10,275 19,380 10,116 9,364 19,380
5 12,763 11,319 10,577 19,380 10,077 9,351 19,380
6 13,401 11,605 11,089 19,380 10,002 9,502 19,380
7 14,071 11,900 11,411 19,380 9,880 9,406 19,380
8 14,775 12,202 11,941 19,380 9,703 9,454 19,380
9 15,513 12,514 12,282 19,380 9,455 9,232 19,380
10 16,289 12,833 12,833 19,380 9,124 9,124 19,380
11 17,103 13,228 13,228 19,380 8,730 8,730 19,380
12 17,959 13,636 13,636 19,380 8,217 8,217 19,380
13 18,856 14,058 14,058 19,380 7,564 7,564 19,380
14 19,799 14,494 14,494 19,380 6,738 6,738 19,380
15 20,789 14,944 14,944 19,380 5,699 5,699 19,380
16 21,829 15,409 15,409 19,380 4,387 4,387 19,380
17 22,920 15,889 15,889 19,380 2,723 2,723 19,380
18 24,066 16,385 16,385 19,380 595 595 19,380
19 25,270 16,898 16,898 19,380 0 0 0
20 26,533 17,428 17,428 19,380 0 0 0
25 33,864 20,353 20,353 21,371 0 0 0
35 55,160 27,854 27,854 28,133 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
38
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------ ------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- -------- ------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 19,380 9,475 8,512 19,380
2 11,025 9,340 8,404 19,380 8,923 7,994 19,380
3 11,576 9,026 8,118 19,380 8,340 7,444 19,380
4 12,155 8,721 7,990 19,380 7,720 7,004 19,380
5 12,763 8,425 7,720 19,380 7,056 6,368 19,380
6 13,401 8,138 7,657 19,380 6,338 5,875 19,380
7 14,071 7,869 7,401 19,380 5,553 5,111 19,380
8 14,775 7,591 7,353 19,380 4,684 4,461 19,380
9 15,513 7,330 7,111 19,380 3,712 3,503 19,380
10 16,289 7,076 7,076 19,380 2,616 2,616 19,380
11 17,103 6,865 6,865 19,380 1,379 1,379 19,380
12 17,959 6,659 6,659 19,380 0 0 0
13 18,856 6,459 6,459 19,380 0 0 0
14 19,799 6,264 6,264 19,380 0 0 0
15 20,789 6,073 6,073 19,380 0 0 0
16 21,829 5,888 5,888 19,380 0 0 0
17 22,920 5,707 5,707 19,380 0 0 0
18 24,066 5,531 5,531 19,380 0 0 0
19 25,270 5,360 5,360 19,380 0 0 0
20 26,533 5,193 5,193 19,380 0 0 0
25 33,864 4,420 4,420 19,380 0 0 0
35 55,160 3,145 3,145 19,380 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE DIFFERENT
FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE CONTACT 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.
39
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE / 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- ---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,902 9,906 44,053 10,902 9,906 44,053
2 11,025 11,882 10,894 44,053 11,882 10,894 44,053
3 11,576 12,946 11,970 44,053 12,946 11,970 44,053
4 12,155 14,103 13,292 44,053 14,103 13,292 44,053
5 12,763 15,360 14,568 44,053 15,360 14,568 44,053
6 13,401 16,726 16,159 44,053 16,726 16,159 44,053
7 14,071 18,210 17,674 44,053 18,210 17,674 44,053
8 14,775 19,825 19,526 44,053 19,822 19,523 44,053
9 15,513 21,585 21,331 44,053 21,574 21,320 44,053
10 16,289 23,505 23,505 44,053 23,477 23,477 44,053
11 17,103 25,727 25,727 44,053 25,652 25,652 44,053
12 17,959 28,162 28,162 44,053 28,031 28,031 44,053
13 18,856 30,830 30,830 44,053 30,640 30,640 44,053
14 19,799 33,755 33,755 44,053 33,507 33,507 44,053
15 20,789 36,960 36,960 44,053 36,667 36,667 44,053
16 21,829 40,479 40,479 46,551 40,154 40,154 46,177
17 22,920 44,337 44,337 50,102 43,981 43,981 49,699
18 24,066 48,565 48,565 53,908 48,175 48,175 53,475
19 25,270 53,202 53,202 57,991 52,774 52,774 57,524
20 26,533 58,305 58,305 63,553 57,828 57,828 63,033
25 33,864 92,176 92,176 97,707 91,132 91,132 96,600
35 55,160 230,373 230,373 241,893 219,404 219,404 230,374
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
40
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE / 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- --------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,314 9,332 44,053 10,314 9,332 44,053
2 11,025 10,632 9,669 44,053 10,632 9,669 44,053
3 11,576 10,954 10,012 44,053 10,954 10,012 44,053
4 12,155 11,279 10,509 44,053 11,279 10,509 44,053
5 12,763 11,605 10,860 44,053 11,605 10,860 44,053
6 13,401 11,941 11,422 44,053 11,931 11,412 44,053
7 14,071 12,288 11,796 44,053 12,255 11,763 44,053
8 14,775 12,646 12,383 44,053 12,574 12,311 44,053
9 15,513 13,015 12,782 44,053 12,885 12,652 44,053
10 16,289 13,396 13,396 44,053 13,182 13,182 44,053
11 17,103 13,858 13,858 44,053 13,517 13,517 44,053
12 17,959 14,337 14,337 44,053 13,834 13,834 44,053
13 18,856 14,834 14,834 44,053 14,127 14,127 44,053
14 19,799 15,349 15,349 44,053 14,393 14,393 44,053
15 20,789 15,883 15,883 44,053 14,624 14,624 44,053
16 21,829 16,436 16,436 44,053 14,809 14,809 44,053
17 22,920 17,010 17,010 44,053 14,938 14,938 44,053
18 24,066 17,606 17,606 44,053 14,991 14,991 44,053
19 25,270 18,223 18,223 44,053 14,949 14,949 44,053
20 26,533 18,863 18,863 44,053 14,787 14,787 44,053
25 33,864 22,433 22,433 44,053 11,078 11,078 44,053
35 55,160 31,836 31,836 44,053 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
41
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE / 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------ ------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- -------- ------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,726 8,757 44,053 9,726 8,757 44,053
2 11,025 9,452 8,512 44,053 9,451 8,512 44,053
3 11,576 9,177 8,266 44,053 9,177 8,266 44,053
4 12,155 8,899 8,166 44,053 8,899 8,166 44,053
5 12,763 8,628 7,920 44,053 8,618 7,910 44,053
6 13,401 8,365 7,881 44,053 8,331 7,848 44,053
7 14,071 8,108 7,647 44,053 8,035 7,575 44,053
8 14,775 7,859 7,619 44,053 7,727 7,489 44,053
9 15,513 7,616 7,397 44,053 7,403 7,185 44,053
10 16,289 7,380 7,380 44,053 7,058 7,058 44,053
11 17,103 7,186 7,186 44,053 6,713 6,713 44,053
12 17,959 6,996 6,996 44,053 6,334 6,334 44,053
13 18,856 6,811 6,811 44,053 5,916 5,916 44,053
14 19,799 6,630 6,630 44,053 5,451 5,451 44,053
15 20,789 6,453 6,453 44,053 4,932 4,932 44,053
16 21,829 6,280 6,280 44,053 4,345 4,345 44,053
17 22,920 6,110 6,110 44,053 3,673 3,673 44,053
18 24,066 5,945 5,945 44,053 2,896 2,896 44,053
19 25,270 5,783 5,783 44,053 1,985 1,985 44,053
20 26,533 5,625 5,625 44,053 910 910 44,053
25 33,864 4,885 4,885 44,053 0 0 0
35 55,160 3,633 3,633 44,053 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
42
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- ----------- --------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,897 9,902 27,778 10,897 9,902 27,778
2 11,025 11,862 10,875 27,778 11,862 10,875 27,778
3 11,576 12,903 11,927 27,778 12,902 11,926 27,778
4 12,155 14,037 13,227 27,778 14,021 13,211 27,778
5 12,763 15,274 14,483 27,778 15,229 14,439 27,778
6 13,401 16,623 16,057 27,778 16,535 15,969 27,778
7 14,071 18,094 17,558 27,778 17,948 17,413 27,778
8 14,775 19,698 19,399 27,778 19,482 19,185 27,778
9 15,513 21,447 21,193 27,778 21,155 20,902 27,778
10 16,289 23,354 23,354 27,778 22,988 22,988 27,778
11 17,103 25,561 25,561 27,778 25,115 25,115 27,778
12 17,959 27,981 27,981 29,940 27,485 27,485 29,409
13 18,856 30,632 30,632 32,776 30,076 30,076 32,182
14 19,799 33,537 33,537 35,550 32,914 32,914 34,889
15 20,789 36,721 36,721 38,925 36,007 36,007 38,168
16 21,829 40,211 40,211 42,222 39,396 39,396 41,367
17 22,920 44,035 44,035 46,238 43,088 43,088 45,243
18 24,066 48,227 48,227 50,639 47,104 47,104 49,460
19 25,270 52,820 52,820 55,462 51,466 51,466 54,040
20 26,533 57,887 57,887 60,782 56,231 56,231 59,043
25 33,864 91,514 91,514 96,090 86,546 86,546 90,874
35 55,160 228,720 228,720 231,007 203,577 203,577 205,613
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
43
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS --------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- ---------- -------- --------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,309 9,327 27,778 10,309 9,327 27,778
2 11,025 10,612 9,650 27,778 10,612 9,650 27,778
3 11,576 10,917 9,976 27,778 10,907 9,967 27,778
4 12,155 11,232 10,463 27,778 11,191 10,423 27,778
5 12,763 11,556 10,812 27,778 11,460 10,717 27,778
6 13,401 11,891 11,372 27,778 11,710 11,193 27,778
7 14,071 12,236 11,744 27,778 11,935 11,445 27,778
8 14,775 12,592 12,329 27,778 12,126 11,866 27,778
9 15,513 12,960 12,727 27,778 12,275 12,045 27,778
10 16,289 13,339 13,339 27,778 12,370 12,370 27,778
11 17,103 13,799 13,799 27,778 12,451 12,451 27,778
12 17,959 14,276 14,276 27,778 12,455 12,455 27,778
13 18,856 14,770 14,770 27,778 12,368 12,368 27,778
14 19,799 15,283 15,283 27,778 12,172 12,172 27,778
15 20,789 15,815 15,815 27,778 11,843 11,843 27,778
16 21,829 16,366 16,366 27,778 11,347 11,347 27,778
17 22,920 16,937 16,937 27,778 10,641 10,641 27,778
18 24,066 17,530 17,530 27,778 9,661 9,661 27,778
19 25,270 18,144 18,144 27,778 8,326 8,326 27,778
20 26,533 18,781 18,781 27,778 6,527 6,527 27,778
25 33,864 22,335 22,335 27,778 0 0 0
35 55,160 31,696 31,696 32,014 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
44
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS --------------------------------- ----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------------- ---------- -------- --------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,721 8,752 27,778 9,721 8,752 27,778
2 11,025 9,432 8,493 27,778 9,432 8,493 27,778
3 11,576 9,147 8,236 27,778 9,129 8,220 27,778
4 12,155 8,869 8,136 27,778 8,809 8,077 27,778
5 12,763 8,599 7,891 27,778 8,466 7,760 27,778
6 13,401 8,336 7,852 27,778 8,095 7,614 27,778
7 14,071 8,080 7,619 27,778 7,687 7,230 27,778
8 14,775 7,831 7,592 27,778 7,232 6,996 27,778
9 15,513 7,589 7,370 27,778 6,716 6,499 27,778
10 16,289 7,354 7,354 27,778 6,122 6,122 27,778
11 17,103 7,161 7,161 27,778 5,457 5,457 27,778
12 17,959 6,972 6,972 27,778 4,673 4,673 27,778
13 18,856 6,787 6,787 27,778 3,747 3,747 27,778
14 19,799 6,606 6,606 27,778 2,652 2,652 27,778
15 20,789 6,430 6,430 27,778 1,349 1,349 27,778
16 21,829 6,257 6,257 27,778 0 0 0
17 22,920 6,088 6,088 27,778 0 0 0
18 24,066 5,923 5,923 27,778 0 0 0
19 25,270 5,762 5,762 27,778 0 0 0
20 26,533 5,604 5,604 27,778 0 0 0
25 33,864 4,866 4,866 27,778 0 0 0
35 55,160 3,619 3,619 27,778 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
45
<PAGE>
ITT Hartford Life and Annuity Insurance Company 41
- --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1.
FINANCIAL STATEMENTS
The following unaudited financial statements, reflect, in the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, the results of operations
and the cash flows for the periods presented. Certain reclassifications of prior
year results were made to conform to current presentation. Interim results are
not indicative of the results which may be expected for any other interim period
or the full year. For a description of accounting policies, see Notes to
Consolidated Financial Statements in the 1995 Form 10-K.
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
QUARTER SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
---------- --------------
1996 1995 1996 1995
---- ---- ------ ------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Premiums and other considerations $299 $270 $ 943 $ 720
Net investment income 318 336 651 675
Net realized losses on investments (1) (7) (1) (6)
---- ---- ------ ------
616 599 1,593 1,389
---- ---- ------ ------
Benefits, Claims and Expenses:
Benefits, claims and claim adjustment expenses 392 350 788 716
Amortization of deferred policy acquisition costs 63 50 129 92
Dividends to policyholders 61 69 347 297
Other insurance expenses 34 85 198 193
---- ---- ------ ------
550 554 1,462 1,298
---- ---- ------ ------
Income Before Income Tax 66 45 131 91
Income tax expense 23 15 45 30
---- ---- ------ ------
Net Income $ 43 $ 30 $ 86 $ 61
---- ---- ------ ------
---- ---- ------ ------
</TABLE>
<PAGE>
42 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
(UNAUDITED)
<S> <C> <C>
Assets:
Investments:
Fixed maturities, available for sale, at fair value $ 13,683 $14,400
Equity securities, at fair value 65 63
Mortgage loans, at outstanding principal balance 57 265
Policy loans, at outstanding balance 3,756 3,381
Other investments 99 156
-------- ------------
17,660 18,265
Cash 46 46
Premiums and amounts receivable 121 165
Reinsurance recoverable 6,696 6,221
Accrued investment income 399 394
Deferred policy acquisition costs 2,488 2,188
Deferred income tax 601 420
Other assets 205 234
Separate account assets 42,569 36,264
-------- ------------
$ 70,785 $64,197
-------- ------------
-------- ------------
Liabilities and Stockholder's Equity
Future policy benefits $ 2,677 $ 2,373
Other policyholder funds 22,570 22,598
Other liabilities 1,294 1,233
Separate account liabilities 42,569 36,264
-------- ------------
69,110 62,468
-------- ------------
Common stock -- authorized 1,000 shares, $5,690 par
value,
Issued and outstanding 1,000 shares 6 6
Capital surplus 1,045 1,007
Unrealized loss on investments, net of tax (235) (57)
Retained earnings 859 773
-------- ------------
1,675 1,729
-------- ------------
$ 70,785 $64,197
-------- ------------
-------- ------------
</TABLE>
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
----------------
1996 1995
------- -------
(UNAUDITED)
<S> <C> <C>
Operating Activities:
Net Income $ 86 $ 61
Adjustments to net income:
Net realized investment losses before tax 1 4
Net policyholder investment (gains) losses before tax (4) 2
Net deferred policy acquisition costs (300) (181)
Net amortization of premium on fixed maturities 7 7
Deferred income tax benefits (88) (120)
Decrease in premiums and amounts receivable 20 3
Decrease (increase) in other assets 26 (33)
Increase in reinsurance recoverable (264) (60)
Increase in liability for future policy benefits 304 354
Increase in other liabilities 150 57
(Increase) decrease in accrued investment income (5) 7
------- -------
Cash (Used For) Provided By Operating Activities (67) 101
------- -------
Investing Activities:
Purchases of fixed maturity investments (2,717) (2,150)
Proceeds from sales of fixed maturity investments 1,348 2,835
Maturities and principal paydowns of long-term investments 1,469 574
Net purchases of other investments (116) (1,240)
Net sales (purchases) of short-term investments 232 (894)
------- -------
Cash Provided By (Used For) Investing Activities 216 (875)
------- -------
Financing Activities:
Net (disbursements) receipts for investment and UL-type
contracts (debited) credited to policyholder account balances (187) 837
Capital contributions 38 --
------- -------
Cash (Used For) Provided By Financing Activities (149) 837
------- -------
Net Increase In Cash -- 63
Cash at beginning of period 46 20
------- -------
Cash At End Of Period $ 46 $ 83
------- -------
------- -------
</TABLE>
<PAGE>
44 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(IN MILLIONS)
QUARTER ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY RUNOFF TOTAL
---------- ---------- ---------- ---------- ----------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $252 $218 $100 $ 90 $210 $199 $ 54 $ 92 $616 $599
Benefits, Claims, Expenses and
Taxes 204 186 96 85 204 193 69 105 573 569
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net Income (Loss) $ 48 $ 32 $ 4 $ 5 $ 6 $ 6 $(15) $(13) $ 43 $ 30
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>
INDIVIDUAL LIFE AND ANNUITY DIVISION (ILAD)
The premiums, investment income, management and maintenance fees and cost of
insurance associated with this growing asset base continue to be the source of
ILAD's increased revenues, up 16% from prior year. New deposits of fixed and
variable annuities in the three months ended June 30, 1996 were approximately
$2.7 billion, an increase of over 90% from prior year sales or $1.4 billion, but
are not reported as revenues. Net income, up 50% from the same period last year,
continues to grow as earnings are generated from an existing asset base.
Revenue, new deposit, and net income increases are all indicative of
exceptionally strong, stable growth.
ASSET MANAGEMENT SERVICES (AMS)
Continuing to be an industry leader in deferred compensation products, revenues
in this segment grew by approximately 14% over the same period last year.
Included in 1995 results is a one time benefit of approximately $2 million.
Excluding this benefit, net income rose 33% over prior year. Asset Management
Services is currently engaged in a restructuring process that is anticipated to
result in new product development as well as expense reductions.
SPECIALTY
Net Income in the Specialty segment held steady in the second quarter as
compared to the same period last year. In August of 1996, Congress passed COLI
legislation which provides for a three year phase-out of the interest deduction
on loans. It is expected that the President will sign this bill. In anticipation
of unfavorable tax legislation there were no new deposits of leveraged COLI, but
new products, such as variable COLI and other non-qualified deferred
compensation vehicles, and new international ventures are being developed to
mitigate lost earnings due to leveraged COLI.
RUNOFF
The Runoff segment consists of a closed block of guaranteed rate contracts (GRC)
formerly part of the AMS segment of business. GRC results have been negatively
affected by lower investment earnings on mortgaged-backed securities due to
prepayments experienced in excess of assumed levels. Hartford Life Insurance
Company (HLIC) is considering portfolio management strategies which may
accelerate the recognition of the closed book GRC loss as disclosed in HLIC's
1995 Form 10K Annual Report.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 45
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(IN MILLIONS)
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY RUNOFF TOTAL
---------- ---------- ---------- ---------- --------------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $524 $407 $200 $196 $753 $593 $116 $193 $1,593 $1,389
Benefits, claims, expenses
and taxes 430 340 192 187 739 582 146 219 1,507 1,328
---- ---- ---- ---- ---- ---- ---- ---- ------ ------
Net income (loss) $ 94 $ 67 $ 8 $ 9 $ 14 $ 11 $(30) $(26) $ 86 $ 61
---- ---- ---- ---- ---- ---- ---- ---- ------ ------
---- ---- ---- ---- ---- ---- ---- ---- ------ ------
</TABLE>
INDIVIDUAL LIFE AND ANNUITY DIVISION (ILAD)
Growth in fixed and variable annuity sales, as well as several assumption
reinsurance transactions in the last several years have increased the assets
under management in this segment to approximately $39 billion through June 1996.
The premiums, investment income, management and maintenance fees and cost of
insurance associated with this growing asset base continue to be the source of
ILAD's increased revenues. New deposits of fixed and variable annuities in the
first six months of 1996 were approximately $5 billion, but are not reported as
revenues, an increase over prior year sales of $1.5 billion or 42%.
ASSET MANAGEMENT SERVICES (AMS)
This segment is one of the top providers of deferred compensation products in
the country. Net income increased by 14% over prior year, excluding a one time
benefit of approximately $2 million in 1995. Asset Management services is
currently engaged in a restructuring process that is anticipated to result in
new product development as well as expense reductions.
SPECIALTY
Increased net income in the Specialty segment is attributable to net investment
income and other revenues on the existing block of corporate owned life
insurance (COLI) business. In August of 1996 Congress passed COLI legislation
which provides for a three year phase-out of the interest deduction on loans. It
is anticipated that the President will sign this bill. Although there were no
new deposits of leveraged COLI in the first half of 1996, new products,
including variable COLI and other non-qualified deferred compensation vehicles,
are being developed. Also, expansion into new international ventures should
further mitigate the earnings lost due to leveraged COLI.
RUNOFF
The Runoff segment consists of a closed block of guaranteed rate contracts (GRC)
formerly part of the AMS segment of business. GRC results have been negatively
affected by lower investment earnings on mortgaged-backed securities due to
prepayments experienced in excess of assumed levels. Hartford Life Insurance
Company (HLIC) is considering portfolio management strategies which may
accelerate the recognition of the closed book GRC loss as disclosed in HLIC's
1995 Form 10K Annual Report.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Hartford Life
Insurance Company (a Connecticut corporation and wholly-owned subsidiary of
Hartford Life and Accident Insurance Company) and subsidiaries as of December
31, 1995 and 1994, and the related consolidated statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1995. These consolidated financial statements and the
schedules referred to below are the responsibility of Hartford Life Insurance
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hartford Life Insurance Company and subsidiaries as of December 31, 1995 and
1994, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
As discussed in Note 1 in Notes to Consolidated Financial Statements, Hartford
Life Insurance Company adopted new accounting standards promulgated by the
Financial Accounting Standards Board, changing its methods of accounting, as of
January 1, 1994, for debt and equity securities.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in
the Index to Consolidated Financial Statements and Schedules are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not a required part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic consolidated financial statements and, in our opinion, fairly
state in all material respects the financial data required to be set forth
therein in relation to the basic consolidated financial statements taken as a
whole.
/s/ ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 24, 1996 (except with respect to the matter discussed
in Note 10 as to which the date is October 18, 1996)
F-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
------- ------- ------
<S> <C> <C> <C>
REVENUES
Premiums and other considerations $1,487 $1,100 $747
Net investment income 1,328 1,292 1,051
Net realized (losses) gains (11) 7 16
------ ------ -----
TOTAL REVENUES 2,804 2,399 1,814
------ ------ -----
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim
adjustment expenses 1,422 1,405 1,046
Dividends to policyholders 675 419 227
Amortization of deferred policy
acquisition costs 199 145 113
Other insurance expense 317 227 210
------ ------ -----
TOTAL BENEFITS, CLAIMS AND EXPENSES 2,613 2,196 1,596
------ ------ -----
INCOME BEFORE INCOME TAX EXPENSE 191 203 218
Income tax expense 62 65 75
------ ------ -----
NET INCOME $129 $138 $143
------ ------ -----
------ ------ -----
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
AS OF DECEMBER 31,
------------------
1995 1994
------- --------
ASSETS
<S> <C> <C>
Investments
Fixed maturities
available for sale, at market value
(amortized cost of $14,440 and $14,464) $14,400 $13,429
Equity securities, at market value
(cost of $61 and $76) 63 68
Mortgage loans, at outstanding balance 265 316
Policy loans, at outstanding balance 3,381 2,614
Other investments, at cost 156 107
------- -------
TOTAL INVESTMENTS 18,265 16,534
Cash 46 20
Premiums and amounts receivable 165 160
Reinsurance recoverable 6,221 5,466
Accrued investment income 394 378
Deferred policy acquisition costs 2,188 1,809
Deferred income tax 420 590
Other assets 234 83
Separate account assets 36,264 22,809
------- -------
TOTAL ASSETS $64,197 $47,849
------- -------
------- -------
LIABILITIES
Future policy benefits $2,373 $1,890
Other policyholder funds 22,598 21,328
Other liabilities 1,233 1,000
Separate account liabilities 36,264 22,809
------- -------
TOTAL LIABILITIES 62,468 47,027
------- -------
Commitments and contingencies (Note 9)
STOCKHOLDER'S EQUITY
Common stock
Authorized 1,000 shares, $5,690 par value
Issued and outstanding 1,000 shares 6 6
Additional paid-in capital 1,007 826
Retained earnings 773 644
Unrealized loss on investments, net of tax (57) (654)
------- -------
TOTAL STOCKHOLDER'S EQUITY 1,729 822
------- -------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $64,197 $47,849
------- -------
------- -------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
UNREALIZED LOSS TOTAL
COMMON ADDITIONAL RETAINED ON INVESTMENTS, STOCKHOLDER'S
STOCK PAID-IN-CAPITAL EARNINGS NET OF TAX EQUITY
------ --------------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992 $6 $498 $373 $0 $877
Net income - - 143 - 143
Capital contribution - 180 - - 180
Excess of assets over liabilities
on reinsurance assumed from affiliate - (2) - - (2)
Change in unrealized loss on investments, net of tax - - - (5) (5)
------ --------------- -------- --------------- -------------
BALANCE, DECEMBER 31, 1993 6 676 516 (5) 1,193
------ --------------- -------- --------------- -------------
Net income - - 138 - 138
Capital contribution - 150 - - 150
Dividend paid - - (10) - (10)
Change in unrealized loss on investments, net of tax* - - - (649) (649)
------ --------------- -------- --------------- -------------
BALANCE, DECEMBER 31, 1994 6 826 644 (654) 822
------ --------------- -------- --------------- -------------
Net income - - 129 - 129
Capital contribution - 181 - - 181
Change in unrealized loss on investments, net of tax - - - 597 597
------ --------------- -------- --------------- -------------
BALANCE, DECEMBER 31, 1995 $6 $1,007 $773 ($57) $1,729
------ --------------- -------- --------------- -------------
------ --------------- -------- --------------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 1994 change in unrealized loss on investments, net of tax, included an
unrealized gain of $91 due to adoption of SFAS No. 115 as discussed in Note 1(b)
of Notes to Consolidated Financial Statements.
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
------------- -------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $129 $138 $143
Adjustments to net income:
Net realized (losses) gains 11 (7) (16)
(Decrease) increase in liability to policyholders for realized gains (3) 5 (15)
Net amortization of premium on fixed maturities 21 41 2
Provision for deferred income taxes (172) (128) (121)
Increase in deferred policy acquisition costs (379) (441) (292)
(Increase) decrease in premiums and amounts receivable (81) 10 (28)
Increase in accrued investment income (16) (106) (4)
(Increase) decrease in other assets (177) 101 (36)
(Increase) decrease in reinsurance recoverable (35) 75 (121)
Increase in liability for future policy benefits 483 224 360
Increase in other liabilities 281 191 176
------------- -------------- -------------
CASH PROVIDED BY OPERATING ACTIVITIES 62 103 48
------------- -------------- -------------
INVESTING ACTIVITIES
Purchases of fixed maturities investments (6,228) (9,127) (12,406)
Proceeds from sales of fixed maturities investments 4,848 5,708 8,813
Maturities and principal paydowns of fixed maturities investments 1,741 1,931 2,596
Net purchases of other investments (871) (1,338) (206)
Net (purchases)/sales of short-term investments (24) 135 (564)
------------- -------------- -------------
CASH USED FOR INVESTING ACTIVITIES (534) (2,691) (1,767)
------------- -------------- -------------
FINANCING ACTIVITIES
Net receipts from investment and UL-type contracts credited to
policyholder account balances 498 2,467 1,513
Capital contribution 0 150 180
Dividends paid 0 (10) 0
------------- -------------- -------------
CASH PROVIDED BY FINANCING ACTIVITIES 498 2,607 1,693
------------- -------------- -------------
NET INCREASE (DECREASE) IN CASH 26 19 (26)
Cash at beginning of year 20 1 27
------------- -------------- -------------
CASH AT END OF YEAR $46 $20 $1
------------- -------------- -------------
------------- -------------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
F-5
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS)
1. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These consolidated financial statements include Hartford Life Insurance Company
and its wholly-owned subsidiaries ("Hartford Life" or the "Company"), ITT
Hartford Life and Annuity Insurance Company ("ILA") and ITT Hartford
International Life Reassurance Corporation ("HLRe"), formerly American Skandia
Life Reinsurance Corporation. Hartford Life is a wholly-owned subsidiary of
Hartford Life and Accident Insurance Company ("HLA"). Hartford Life is
ultimately owned by Hartford Fire Insurance Company ("Hartford Fire"), which is
ultimately owned by ITT Hartford Group, Inc. ("ITT Hartford"), formerly a
subsidiary of ITT Corporation ("ITT"). On December 19, 1995, ITT Corporation
distributed all of the outstanding shares of ITT Hartford Group to ITT
Corporation Shareholders of record in an action known herein as the
"Distribution". As a result of the Distribution, ITT Hartford became an
independent publicly traded company.
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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
Company offers life, annuity, pension, and disability insurance products.
These products are distributed and marketed by multiple distribution channels
which include broker-dealers, agents and banks, as well as a captive sales
force. Hartford Life conducts business primarily in the United States and is
licensed to write business in all 50 states. The Company is headquartered in
Simsbury, Connecticut and has 3,045 direct employees.
The consolidated financial statements are prepared in conformity with generally
accepted accounting principles which differ in certain material respects from
the accounting practices prescribed or permitted by various insurance
regulatory authorities.
(B) CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, Hartford Life adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". The new standard requires, among other things,
that securities be classified as "held-to-maturity", "available-for-sale" or
"trading" based on Hartford Life's intentions with respect to the ultimate
disposition of the security and its ability to effect those intentions. The
classification determines the appropriate accounting carrying value (cost basis
or fair value) and, in the case of fair value, whether the adjustment impacts
Stockholder's Equity directly or is reflected in the Consolidated Statements of
Income. Investments in equity securities had previously been and continue to
be recorded at fair value with the corresponding impact included in
Stockholder's Equity. Under SFAS No. 115, Hartford Life's fixed maturities
are classified as "available-for-sale" and accordingly, these investments are
reflected at fair value with the corresponding impact included as a component
of Stockholder's Equity designated as "Unrealized loss on investments, net of
tax." As with the underlying investment security, unrealized gains and losses
on derivative financial instruments are considered in determining the fair
value of the portfolios. The impact of adoption was an increase to
Stockholder's Equity of $91. Hartford Life's cash flows were not impacted by
this change in accounting principle.
(C) REVENUE RECOGNITION
Revenues for universal life policies and investment products consist of policy
charges for the cost of insurance, policy administration and surrender charges
assessed to policy account balances. Premiums for traditional life insurance
policies are recognized as revenues when they are due from policyholders.
Deferred acquisition costs are amortized using the retrospective deposit method
for universal life and other types of contracts where the payment pattern is
irregular or surrender charges are a significant source of profit and the
prospective deposit method is used where investment margins are the primary
source of profit.
F-6
<PAGE>
(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS
Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal,
mortality and morbidity assumptions which vary by plan, year of issue and
policy durations and include a provision for adverse deviation. Other
policyholder funds which represent liabilities for universal life insurance and
investment products reflect policy account balances before applicable surrender
charges.
(E) POLICYHOLDER REALIZED GAINS AND LOSSES
Realized gains and losses on security transactions associated with Hartford
Life's immediate participation guaranteed contracts are excluded from
revenues, since under the terms of the contracts the realized gains and losses
will be credited to policyholders in future years as they are entitled to
receive them.
(F) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, including commissions and certain underwriting
expenses associated with acquiring traditional life insurance products, are
deferred and amortized over the lesser of the estimated or actual contract
life. For universal life insurance and investment products, acquisition costs
are being amortized generally in proportion to the present value of expected
gross profits from surrender charges, investment, mortality and expense
margins.
(G) INVESTMENTS
Hartford Life's investments in fixed maturities include bonds, redeemable
preferred stock and commercial paper which are classified as "available-for-
sale" and accordingly are carried at market value with the after-tax difference
from cost reflected as a component of Stockholder's Equity designated
"Unrealized loss on investments, net of tax". Equity securities, which include
common and non-redeemable preferred stocks, are carried at market value with
the after-tax difference from cost reflected in Stockholder's Equity. Realized
investment gains and losses, after deducting life and pension policyholders'
share, are reported as a component of revenue and are determined on a specific
identification basis.
(H) DERIVATIVE FINANCIAL INSTRUMENTS
Hartford Life uses a variety of derivative financial instruments including,
swaps, caps, floors, options, forwards and exchange traded financial futures as
part of an overall risk management strategy. These instruments, 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. Hartford
Life does not hold or issue derivative financial instruments for trading
purposes. Hartford Life's accounting for derivative financial instruments used
to manage risk is in accordance with the concepts established in SFAS No. 80,
"Accounting for Futures Contracts," SFAS No. 52 , "Foreign Currency
Translation", American Institute of Certified Public Accountants Statement of
Position 86-2, "Accounting for Options" and various Emerging Issues Task Force
pronouncements. Written options are in all cases used in conjunction with other
assets and derivatives as part of an overall risk management strategy.
Derivative instruments are carried at values consistent with the asset or
liability being hedged. Derivatives used to hedge fixed maturities or equities
are carried at fair value with the after-tax difference from cost reflected in
Stockholder's Equity. Derivatives used to hedge other invested assets or
liabilities are carried at cost.
Derivatives, used as part of a risk management strategy, must be designated at
inception as a hedge and measured for effectiveness both at inception and on an
ongoing basis. Hartford Life's minimum correlation threshold for hedge
designation is 80%. If correlation, which is assessed monthly and measured
based on a rolling three month average, falls below 80%, hedge accounting will
be terminated. 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. Synthetic
instrument accounting, consistent with industry practice, provides that the
synthetic asset is accounted for like the financial instrument it is intended
to replicate. Derivatives which fail to meet risk management criteria are
marked to market with the impact reflected in the Consolidated Statements
of Income.
Gains or losses on financial futures contracts entered into in anticipation
of the future receipt of product cash flows are deferred and, at the time of
the ultimate purchase, reflected as a basis adjustment to the purchased
asset. Gains or losses on futures used in invested asset risk management are
deferred and adjusted into the basis of the hedged asset when the contract
futures are closed, except for futures used in duration hedging which are
deferred and basis adjusted on a quarterly basis. The basis adjustments are
amortized into investment income over the remaining asset life.
F-7
<PAGE>
Open forward commitment contracts are marked to market through Stockholder's
Equity. Such contracts are recorded at settlement by recording the purchase of
the specified securities at the previously committed price. Gains or losses
resulting from the termination of the forward commitment contracts before the
delivery of the securities are recognized immediately in the Consolidated
Statements of Income as a component of net investment income.
The cost of options entered into as part of a risk management strategy are
basis adjusted to the underlying asset or liability and amortized over the
remaining life of the hedge. Gains or losses on expiration or termination are
adjusted into the basis of the underlying asset or liability and amortized over
the remaining asset life.
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 income. Should the swap be terminated, the gain or loss is
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 earnings. 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 Consolidated Statements of Income while the change in market value is
recognized as an unrealized gain or loss.
Premiums paid on purchased floor or cap agreements and the premium received on
issued floor or cap 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.
Forward exchange contracts and foreign currency swaps are accounted for in
accordance with SFAS No. 52.
(I) RELATED PARTY TRANSACTIONS
Transactions of Hartford Life with its parent and affiliates relate principally
to tax settlements, insurance coverage, rental and service fees and payment of
dividends and capital contributions. In addition, certain affiliated insurance
companies purchased group annuity contracts from Hartford Life to fund pension
costs and claim annuities to settle casualty claims.
On June 30, 1995, the assets of Lyndon Insurance Company ("Lyndon") were
contributed to ILA. As a result, ILA received approximately $365 in fixed
maturities, equity securities and cash, $26 in receivables, $187 of current
tax liability, $20 in deferred tax liability, and $3 of other liabilities.
The excess of assets over liabilities of $181 were recorded as an increase to
paid-in capital.
Substantially all general insurance expenses related to Hartford Life,
including rent expenses, are initially paid by Hartford Fire. Direct expenses
are allocated to Hartford Life using specific identification and indirect
expenses are allocated using other applicable methods.
The rent paid to Hartford Fire for the space occupied by Hartford Life was $3
in 1995, 1994, and 1993 respectively. Hartford Life expects to pay rent of $3
in 1996, 1997, 1998, 1999, and 2000, respectively and $57 thereafter, over the
contract life of the lease.
(J) DIVIDEND TO POLICYHOLDERS
Dividends to policyholders primarily represent those amounts paid to corporate
owned life insurance ("COLI") policyholders. These dividend liabilities, which
appear as other policyholder funds on the Consolidated Balance Sheets, are
recorded when approved by the board of directors.
See Note (4) for the related party coinsurance agreements.
F-8
<PAGE>
2. INVESTMENTS
(a) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
<S> <C> <C> <C>
1995 1994 1993
------ ------ ------
Interest income $1,338 $1,247 $1,007
Income from other investments 1 54 53
------ ------ ------
GROSS INVESTMENT INCOME 1,339 1,301 1,060
Less: Investment expenses 11 9 9
------ ------ ------
NET INVESTMENT INCOME $1,328 $1,292 $1,051
------ ------ ------
------ ------ ------
(b) UNREALIZED GAINS/(LOSSES) ON EQUITY SECURITIES
As of December 31,
--------------------------
1995 1994 1993
------ ------ ------
Gross unrealized gains $4 $2 $3
Gross unrealized losses (2) (11) (11)
Deferred income tax expenses/(benefit) 1 (3) (3)
------ ------ ------
NET UNREALIZED GAINS (LOSSES) AFTER TAX 1 (6) (5)
Balance at the beginning of the year (6) (5) (0)
------ ------ ------
CHANGE IN NET UNREALIZED GAINS (LOSSES) ON EQUITY SECURITIES $7 ($1) ($5)
------ ------ ------
------ ------ ------
(c) UNREALIZED GAINS/(LOSSES) IN FIXED SECURITIES
As of December 31,
--------------------------
1995 1994 1993
------ ------ ------
Gross unrealized gains $529 $150 $538
Gross unrealized losses (569) (1,185) (290)
Unrealized (losses)/gains credited to policyholder (52) 37 0
Deferred income tax (benefit)/expense (34) (350) 87
------ ------ ------
NET UNREALIZED (LOSSES) GAINS AFTER TAX (58) (648) 161
Balance at the beginning of the year (648) 161 144
------ ------ ------
CHANGE IN NET UNREALIZED GAINS(LOSES)
ON FIXED MATURITIES $590 ($809) $17
------ ------ ------
------ ------ ------
(d) COMPONENTS OF NET REALIZED GAINS/(LOSSES)
Year ended December 31,
--------------------------
1995 1994 1993
------ ------ ------
Fixed maturities $23 ($34) ($12)
Equity securities (6) (11) 0
Real estate and other (25) 47 43
Less: (decrease)/increase in liability to policyholders
for realized gains (3) 5 (15)
------ ------ ------
NET REALIZED (LOSSES) GAINS ($11) $7 $16
------ ------ ------
------ ------ ------
</TABLE>
F-9
<PAGE>
(e) DERIVATIVE INVESTMENTS
A summary of investments, segregated by major category along with the types of
derivatives and their respective notional amounts, are as follows as of
December 31, 1995 :
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENTS
AS OF DECEMBER 31, 1995
(CARRYING AMOUNT)
Caps, Floors & Options Foreign
Carrying ----------------------- Currency
Value Non-Derivative Issued(b) Purchased(c) Futures(d) Swaps(f) Swaps
-------- ----------- -------- ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset-backed securities $5,764 $5,752 ($1) $30 $0 ($17) $0
Inverse floaters(a) 711 794 (30) 16 0 (69) 0
Anticipatory(e) 0 0 0 0 0 0 0
-------- ----------- -------- ----------- --------- -------- -------
TOTAL ASSET-BACKED SECURITIES 6,475 6,546 (31) 46 0 (86) 0
Other bonds and notes 7,118 7,165 (1) 0 0 (22) (24)
Short-term investments 807 807 0 0 0 0 0
-------- ----------- -------- ----------- --------- -------- -------
TOTAL FIXED MATURITIES 14,400 14,518 (32) 46 0 (108) (24)
Other investments 3,865 3,865 0 0 0 0 0
-------- ----------- -------- ----------- --------- -------- -------
TOTAL INVESTMENTS $18,265 $18,383 ($32) $46 $0 ($108) ($24)
-------- ----------- -------- ----------- --------- -------- -------
-------- ----------- -------- ----------- --------- -------- -------
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENTS
AS OF DECEMBER 31, 1995
(NOTIONAL AMOUNT)
(EXCLUDING LIABILITY HEDGES)
Caps, Floors & Options Foreign
Notional ---------------------- Currency
Amount Issued(b) Purchased(c) Futures(d) Swaps(f) Swaps
-------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Asset-backed securities $3,863 $118 $3,133 $322 $290 $0
Inverse floaters(a) 1,601 560 354 6 681 0
Anticipatory(e) 238 0 0 213 25 0
-------- --------- --------- ---------- --------- ---------
TOTAL ASSET-BACKED SECURITIES 5,702 678 3,487 541 996 0
Other bonds and notes 1,365 33 66 322 757 187
Short-term investments 0 0 0 0 0 0
-------- --------- --------- ---------- --------- ---------
TOTAL FIXED MATURITIES 7,067 711 3,553 863 1,753 187
Other investments 18 0 0 0 18 0
-------- --------- --------- ---------- --------- ---------
TOTAL INVESTMENTS $7,085 $711 $3,553 $863 $1,771 $187
-------- --------- --------- ---------- --------- ---------
-------- --------- --------- ---------- --------- ---------
</TABLE>
(a) Inverse floaters are variations of CMO's for which the coupon rates
move inversely with an index rate (e.g. LIBOR). The risk to principal is
considered negligible as the underlying collateral for the securities is
guaranteed or sponsored by government agencies. To address the volatility
risk created by the coupon variability, Hartford Life uses a variety of
derivative instruments, primarily interest rate swaps and issued floors.
(b) Includes issued caps $475 with a weighted average strike rate of 8.5%
(ranging from 7.0% to 10.4%) and over 85% mature in 2000 through 2004. Issued
floors totaled $236, have a weighted average strike rate of 8.1% (ranging
from 5.3% to 10.9%) and mature through 2007 with 76% maturing by 2004.
(c) Comprised of purchased floors of $1.8 billion and purchased caps of $1.7
billion. The floors have a weighted average strike price of 5.8% (ranging from
3.7% to 6.8%) and over 85% mature in 1997 through 1999. The caps have a
weighted average strike price of 7.5% (ranging from 4.5% and 10.1%) and over
82% mature in 1997 through 1999.
(d) Over 95% of futures contracts expire before December 31, 1996.
(e) Deferred gains and losses on anticipatory transactions are included in the
carrying value of bond investments in the consolidated balance sheets. At the
time of the ultimate purchase, they are reflected as a basis adjustment to the
purchased asset. At December 31, 1995, there were $5.3 in net deferred losses
for futures, interest rate swaps and purchased options.
(f) The following table summarizes the maturities by notional value of interest
rate swaps outstanding at December 31, 1995 and the related weighted average
interest pay rate or receive rate assuming current market conditions:
F-10
<PAGE>
<TABLE>
<CAPTION>
MATURITY OF SWAPS ON INVESTMENTS
AS OF DECEMBER 31, 1995
LAST
1996 1997 1998 1999 2000 THEREAFTER TOTAL MATURITY
---- ---- ---- ---- ---- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS
PAY FIXED/RECEIVE VARIABLE
Notional Value $15 $50 $0 $453 $31 $229 $778 2004
Weighted Average Pay Rate 5.0% 7.2% 0.0% 8.1% 7.1% 7.8% 7.8%
Weighted Average Receive Rate 5.8% 5.9% 0.0% 5.8% 5.7% 5.9% 5.9%
PAY VARIABLE/RECEIVE FIXED
Notional Value $100 $68 $25 $25 $35 $190 $443 2007
Weighted Average Pay Rate 5.9% 8.6% 5.9% 0.0% 5.9% 5.4% 5.4%
Weighted Average Receive Rate 2.4% 7.9% 4.0% 0.0% 6.5% 6.9% 6.9%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $50 $18 $36 $12 $200 $234 $550 2004
Weighted Average Pay Rate 5.8% 0.0% 3.7% 3.5% 4.5% 16.3% 5.7%
Weighted Average Receive Rate 5.4% 0.0% 5.6% 5.2% 6.8% 5.9% 6.4%
TOTAL INTEREST RATE SWAPS $165 $136 $61 $490 $266 $653 $1,771 2007
WEIGHTED AVERAGE PAY RATE 5.8% 7.8% 4.6% 7.6% 5.0% 7.3% 6.9%
WEIGHTED AVERAGE RECEIVE RATE 3.6% 7.2% 4.9% 5.4% 6.6% 6.3% 5.8%
</TABLE>
(g) The following table reconciles the derivative notional amounts by derivative
type and by strategy:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
----------------------------------------------------------------------
12/31/94 MATURITIES/ 12/31/95
NOTIONAL AMOUNT ADDITIONS TERMINATIONS NOTIONAL AMOUNT
--------------- --------- ------------ ---------------
<S> <C> <C> <C> <C>
Caps $1,861 $2,666 $2,343 $2,184
Floors 2,131 237 188 2,180
Swaps/Collars/Forwards/Options 4,374 1,355 2,163 3,566
Futures 253 6,125 5,515 863
--------------- --------- ------------ ---------------
TOTAL $8,619 $10,383 $10,209 $8,793
--------------- --------- ------------ ---------------
--------------- --------- ------------ ---------------
BY STRATEGY
----------------------------------------------------------------------
12/31/94 MATURITIES/ 12/31/95
NOTIONAL AMOUNT ADDITIONS TERMINATIONS NOTIONAL AMOUNT
--------------- ---------- ------------ ---------------
Liability $1,725 $729 $746 $1,708
Anticipatory 626 1,564 1,952 238
Asset 3,048 3,153 3,217 2,984
Portfolio 3,220 4,937 4,294 3,863
--------------- ---------- ------------ --------------
TOTAL $8,619 $10,383 $10,209 $8,793
--------------- ---------- ------------ --------------
--------------- ---------- ------------ --------------
</TABLE>
In addition to risk management through derivative financial instruments
pertaining to the investment portfolio, interest rate sensitivity related to
certain Company liabilities was altered primarily through interest rate swap
agreements. The notional
F-11
<PAGE>
amount of the liability agreements in which Hartford Life generally pays one
variable rate in exchange for another, was $1.7 billion at December 31, 1995 and
1994 respectively. The weighted average pay rate is 5.9%; the weighted average
receive rate is 6.0% , and these agreements mature at various times through
2001.
(F) CONCENTRATION OF CREDIT RISK
Hartford Life has a reinsurance recoverable of $5.6 billion from Mutual Benefit
Life Assurance Corporation (Mutual Benefit). The risk of Mutual Benefit
becoming insolvent is mitigated by the reinsurance agreement's requirement that
the assets be kept in a security trust with Hartford Life as sole beneficiary.
Excluding investments in U.S. government and agencies, Hartford Life has no
other significant concentrations of credit risk.
Included in fixed maturity investments at December 31, 1995 were $39 of
Orange County, California Pension Obligation Bonds, $17 of which were carried
in the general account and $22 which were included in Hartford Life's
guaranteed separate accounts. During 1995 all interest payments due were
received. While Orange County is currently operating under Protection of
Chapter 9 of the Federal Bankruptcy Laws, Hartford Life believes the bonds
are not impaired other than on a temporary basis.
(G) FIXED MATURITIES
The schedule below details the amortized cost and fair values of Hartford Life's
fixed maturities by component, along with the gross unrealized gains and losses:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,1995
--------------------------------------------------
GROSS UNREALIZED
AMORTIZED --------------------- MARKET
COST GAINS LOSSES VALUE
---------- ------- ------ -----
<S> <C> <C> <C> <C>
U.S. Government and government agencies and
authorities;
Guaranteed and sponsored $502 $4 ($9) $497
Guaranteed and sponsored-asset backed 3,568 210 (387) 3,391
State, municipalities and political subdivisions 201 4 (3) 202
International governments 291 19 (4) 306
Public utilities 949 29 (2) 976
All other corporate-asset backed 3,065 76 (55) 3,086
All other corporate 5,056 187 (109) 5,134
Short-term investments 808 0 0 808
---------- ------- ----- -----
TOTAL INVESTMENTS $14,440 $529 ($569) $14,440
---------- ------- ----- -----
---------- ------- ----- -----
AS OF DECEMBER 31,1994
--------------------------------------------------
GROSS UNREALIZED
AMORTIZED --------------------- MARKET
COST GAINS LOSSES VALUE
---------- ------- ------ -----
U.S. Government and government agencies
and authorities;
Guaranteed and sponsored $1,516 $1 ($87) $1,430
Guaranteed and sponsored-asset backed 4,256 78 (571) 3,763
State, municipalities and political subdivisions 148 1 (12) 137
International governments 189 1 (14) 176
Public utilities 531 1 (32) 500
All other corporate-asset backed 2,442 30 (121) 2,351
All other corporate 3,717 38 (297) 3,458
Short-term investments 1,665 0 (51) 1,614
--------- ------- -------- -------
TOTAL INVESTMENTS $14,464 $150 ($1,185) $13,429
--------- ------- -------- -------
--------- ------- -------- -------
</TABLE>
F-12
<PAGE>
The amortized cost and estimated fair value of fixed maturities at December 31,
1995, by maturity, are shown below. Asset backed securities are distributed to
maturity year based on estimates of the rate of future prepayments of principal
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting the borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED MARKET
COST VALUE
---------- ---------
<S> <C> <C>
Due in one year or less $3,146 $3,133
Due after one year through five years 6,373 6,316
Due after five years through ten years 3,609 3,644
Due after ten years 1,312 1,307
---------- ---------
TOTAL $14,440 $14,400
---------- ---------
---------- ---------
</TABLE>
Sales of fixed maturities excluding short-term fixed maturities for the years
ended December 31, 1995, 1994, and 1993 resulted in proceeds of $4,848, $5,708,
and $8,813, respectively, resulting in gross realized gains of $91, $71, and
$192, respectively, and gross realized losses of $72, $100, and $219,
respectively, not including policyholder gains and losses. Sales of equity
securities and other investments for the years ended December 31, 1995, 1994,
and 1993 resulted in proceeds of $64, $159, and $127, respectively, resulting in
gross realized gains of $28, $3, and $0, respectively, and gross realized losses
of $59, $14, $0, respectively, not including policyholder gains and losses.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995 AS OF DECEMBER 31, 1994
----------------------- -----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities $14,400 $14,400 $13,429 $13,429
Equity securities 63 63 68 68
Policy loans 3,381 3,381 2,614 2,614
Mortgage loans 265 265 316 316
Investments in partnerships and trusts 94 97 36 42
Miscellaneous 62 62 67 67
LIABILITIES
Other policy claims and benefits $12,727 $12,767 $13,001 $12,374
</TABLE>
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument: fair value for fixed maturities and equity
securities approximate those quotations published by applicable stock exchanges
or are received from other reliable sources; policy and mortgage loan carrying
amounts approximate fair value; investments in partnerships and trusts are based
on external market valuations from partnership and trust management; and other
policy claims and benefits payable are determined by estimating future cash
flows discounted at the current market rate.
3. INCOME TAX
Hartford Life is included in ITT Hartford Group's consolidated U.S. Federal
income tax return and remits to (receives from) ITT Hartford Group, Inc. a
current income tax provision (benefit) computed in accordance with the tax
sharing arrangements between its insurance subsidiaries. The effective tax
rate was 32% in 1995 and 1994, and approximates the U.S. statutory tax rate
of 35% in 1993.
F-13
<PAGE>
The provision for income taxes was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
INCOME TAX EXPENSES
Current $211 $185 $190
Deferred (149) (120) (115)
------- ------- -------
TOTAL $62 $65 $75
------- ------- -------
------- ------- -------
INCOME TAX PROVISION
Tax provision at U.S. statutory rate $67 $71 $76
Tax-exempt income (3) (3) 0
Foreign tax credit (4) (1) 0
Other 2 (2) (1)
------- ------- -------
PROVISION FOR INCOME TAX $62 $65 $75
------- ------- -------
------- ------- -------
</TABLE>
Income taxes paid were $162, $244, and $301 in 1995, 1994, and 1993
respectively. The current taxes due from Hartford Fire were $8 and $46 in 1995
and 1994, respectively.
Deferred tax assets(liabilities) include the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Tax deferred acquisition costs $410 $284
Book deferred acquisition costs and reserves 138 (134)
Employee benefits 8 7
Unrealized net loss on investments 32 353
Investments and other (168) 80
--------- ---------
TOTAL DEFERRED TAX ASSET $420 $590
--------- ---------
--------- ---------
</TABLE>
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax Act
of 1959 permitted the deferral from taxation of a portion of statutory income
under certain circumstances. In these situations, the deferred income was
accumulated in a "Policyholders' Surplus Account" and will be taxable in the
future only under conditions which management considers to be remote; therefore,
no Federal income taxes have been provided on this deferred income. The balance
for tax return purposes of the Policyholders' Surplus Account as of December 31,
1995 was $37.
4. REINSURANCE
Hartford Life cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve Hartford Life of its primary
liability. Hartford Life also assumes insurance from other insurers. Group
life and accident and health insurance business is substantially reinsured to
affiliated companies.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Gross premiums $1,545 $1,316 $1,135
Insurance assumed 591 299 93
Insurance ceded 649 515 481
------- ------- -------
NET RETAINED PREMIUMS $1,487 $1,100 $747
------- ------- -------
------- ------- -------
</TABLE>
F-14
<PAGE>
Life reinsurance recoveries, which reduced death and other benefits, for the
years ended December 31, 1995, 1994 and 1993 approximated $220, $164, and $149,
respectively.
In December 1994, Hartford Life assumed from a third party approximately $500
of corporate owned life insurance reserves on a coinsurance basis. In
December 1995, this block of business was reinsured to HLRe utilizing
modified coinsurance, with the assets and policy liabilities placed in a
separate account. In October 1994, HLRe recaptured approximately $500 of
corporate owned life insurance from a third party reinsurer. Subsequent to
this transaction, Hartford Life and HLRe restructured their coinsurance
agreement from coinsurance to modified coinsurance, with the assets and
policy liabilities placed in the separate account. These transactions did not
have a material impact on consolidated net income.
Also in December 1994, ILA ceded to a third party $1.0 billion in individual
fixed and variable annuities on a modified coinsurance basis. In December 1995,
Hartford Life ceded approximately $1.2 billion in individual variable annuities
on a modified coinsurance basis to a third party. These transactions did not
have a material impact on consolidated net income.
In May 1994, Hartford Life assumed the life insurance policies and the
individual annuities of Pacific Standard with reserves and account values of
approximately $400. Hartford Life received cash and investment grade assets
to support the life insurance and individual annuity contract obligations
assumed.
In November 1993, ILA acquired, through an assumption reinsurance
transaction, substantially all of the individual fixed and variable annuity
business of HLA. As a result of this transaction, the assets and liabilities
of Hartford Life increased approximately $1 billion. The excess of
liabilities assumed over assets received, of $2, was recorded as a decrease
to capital surplus. The remaining $41 in assets and liabilities were
transferred in October 1995. The impact on consolidated net income was not
significant.
In August 1993, Hartford Life received assets of $300 for assuming the group
COLI contract obligations of Mutual Benefit Life Insurance Company, through
an assumption reinsurance transaction. Under the terms of the agreement,
Hartford Life coinsured back 75% of the liabilities to Mutual Benefit Life
Insurance Company. All assets supporting Mutual Benefit's reinsurance
liability to Hartford Life are placed in a "security trust", with Hartford
Life as the sole beneficiary. The impact on 1993 consolidated net income was
not significant.
5. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Hartford Life's employees are included in Hartford Fire's noncontributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. Hartford Life's funding policy is to contribute annually
an amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974 and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of Hartford Life's group pension contracts. The cost to
Hartford Life was approximately $2, $2, and $3 in 1995, 1994 and 1993,
respectively.
Hartford Life provides certain health care and life insurance benefits for
eligible retired employees. A substantial portion of Hartford Life's employees
may become eligible for these benefits upon retirement. Hartford Life'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. Hartford Life has prefunded a
portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense, allocated by
Hartford Fire were immaterial for 1995, 1994, and 1993 respectively.
The assumed rate of future increases in the per capita cost of health care (the
health care trend rate) was 10.1% for 1995, decreasing ratably to 6.0% in the
year 2001. Increasing the health care trend rates by one percent per year would
have an immaterial impact on the accumulated postretirement benefit obligation
and the annual expense. To the extent that the actual experience differs from
the inherent assumptions, the effect will be amortized over the average future
service of the covered employees.
F-15
<PAGE>
6. BUSINESS SEGMENT INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
REVENUES
Individual Life and Annuity $797 $691 $595
Asset Management Services 734 789 794
Specialty Insurance Operations 1,273 919 425
------ ------ ------
TOTAL REVENUES $2,804 $2,399 $1,814
------ ------- ------
------ ------- ------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
YEAR ENDED DECEMBER 31
------------------------
1995 1994 1993
------ ------- -----
INCOME BEFORE INCOME TAX EXPENSE
Individual Life and Annuity $236 $139 $129
Asset Management Services (79) 38 71
Specialty Insurance Operations 34 26 18
------ ------ ------
TOTAL INCOME BEFORE INCOME
TAX EXPENSE $191 $203 $218
------ ------ ------
------ ------ ------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
YEAR ENDED DECEMBER 31
---------------------------
1995 1994 1993
------- ------- -------
IDENTIFIABLE ASSETS
Individual Life and Annuity $36,741 $26,668 $19,147
Asset Management Services 13,962 13,334 12,416
Specialty Insurance Operations 13,494 7,847 6,723
------- ------- -------
TOTAL IDENTIFIABLE ASSETS $64,197 $47,849 $38,286
------- ------- -------
------- ------- -------
</TABLE>
7. STATUTORY NET INCOME AND SURPLUS
Substantially all of the statutory surplus is permanently reinvested or is
subject to dividend restrictions relating to various state regulations which
limit the payment of dividends without prior approval. Statutory net income
and surplus as of December 31 were:
<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Statutory net income $112 $58 $63
Statutory surplus $1,125 $941 $812
</TABLE>
8. SEPARATE ACCOUNTS
Hartford Life maintains separate account assets and liabilities totaling $36.3
billion and $22.8 billion at December 31, 1995 and 1994, respectively which
are reported at fair value. Separate account assets are segregated from other
investments and investment income and gains and losses accrue directly to the
policyholder. Separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts totaling $25.9 billion and $14.8 billion at
December 31, 1995 and 1994, respectively, wherein the policyholder assumes the
investment risk, and guaranteed separate account assets totaling $10.4 billion
and $8.0 billion at December 31, 1995 and 1994, respectively, wherein Hartford
Life contractually guarantees either a minimum return or account value to the
policyholder. Included in the non-guaranteed category are policy loans
totaling $1.7 billion and $0.5 billion at December 31, 1995 and 1994,
respectively. Investment income (including investment gains and losses) and
interest credited to policyholders on separate account assets are not
reflected in the Consolidated Statements of Income. Separate account
management fees, net of minimum guarantees, were $387, $256, and $189, in
1995, 1994, and 1993, respectively.
F-16
<PAGE>
The guaranteed separate accounts include modified guaranteed individual
annuity, and modified guaranteed life insurance. The average credit interest
rate on these contracts is 6.62%. The assets that support these liabilities
were comprised of $10.4 billion in bonds at December 31, 1995. The portfolios
are segregated from other investments and are managed so as to minimize
liquidity and interest rate risk. In order to minimize the risk of
disintermediation associated with early withdrawals, individual annuity and
modified guaranteed life insurance contracts carry a graded surrender charge
as well as a market value adjustment. Additional investment risk is hedged
using a variety of derivatives which totaled $133 million in carrying value
and $2.7 billion in notional amounts at December 31, 1995.
9. COMMITMENTS AND CONTINGENCIES
In August 1994, Hartford Life renewed a two year note purchase facility
agreement which in certain instances obligates Hartford Life to purchase up to
$100 million in collateralized notes from a third party. Hartford Life is
receiving fees for this commitment. At December 31, 1995, Hartford Life had
not purchased any notes under this agreement.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses
incurred by insolvent companies. The amount of any future assessments on
Hartford Life under these laws cannot be reasonably estimated. Most of these
laws do provide, however, that an assessment may be excused or deferred if it
would threaten an insurer's own financial strength. Additionally, guaranty
fund assessments are used to reduce state premium taxes paid by the Company in
certain states. Hartford Life paid guaranty fund assessments of approximately
$10, $8 and $6 in 1995, 1994, and 1993, respectively.
Hartford Life is involved in various legal actions, some of which involve
claims for substantial amounts. In the opinion of management the ultimate
liability with respect to such lawsuits, as well as other contingencies, is
not considered material in relation to the consolidated financial position of
Hartford Life.
F-17
<PAGE>
10. SUBSEQUENT EVENTS
Prior to 1996, Closed Book GRC was reported as a component of the Asset
Management Services Division of the Life segment. The majority of products
included in Closed Book GRC are guaranteed investment contracts with
guaranteed fixed or indexed rates for a specific period. In 1996, Closed Book
GRC is reported as a component of Runoff Operations and had no new or
renewal business as of the end of 1995. Closed Book GRC results have been
negatively affected by lower investment rates and earnings on mortgage backed
securities due to prepayments experienced in excess of assumed levels in
years prior to 1995. Closed Book GRC was also affected by the interest rate
rise in 1994 when the duration of its assets lengthened relative to that of
the liabilities. Due to the reduced investment earnings and duration
mismatch, the portfolio had insufficient assets to fund fully its liability
commitments. During the third quarter of 1996, the Life segment transferred
assets in the amount of $200 million (unaudited) to the Runoff segment to
adequately fund Closed Book GRC so that future cash infusions would be
minimal.
Although the Closed Book GRC asset portfolio as a whole is duration matched
with its liabilities, certain investments continue to have a longer maturity
than their corresponding liabilities and will need to be liquidated prior to
maturity in order to meet the specific liability commitments. To protect the
existing value of these investments, Hartford Life entered into various hedge
transactions in late September 1996 which substantially eliminated further
fluctuation in fair value of the investments due to interest rate changes.
ITT Hartford's accounting policy is to record an other than temporary
impairment charge on a security if it is determined that the Company is
unable to recover all amounts due under the contractual obligations of the
security. In addition, ITT Hartford has established specific criteria to be
used in the impairment evaluation of an individual portfolio of assets.
Specifically, if the asset portfolio is supporting a runoff operation, is
forced to be liquidated prior to maturity to meet liability commitments, and
has a fair value below amortized cost, which will not materially fluctuate
as a result of future interest rate changes, then an other temporary
impairment has been determined to have occurred. Once an impairment charge
has been recorded, ITT Hartford continues to review the impaired securities
for appropriate valuation.
With the initiation of the hedge transactions, which eliminated the
possibility that the fair value of the Closed Book GRC investments would
recover to their current amortized cost, an other than temporary impairment
loss of $82 million after tax was determined to have occurred and was
recorded in September 1996. Also, during the third quarter of 1996, Closed
Book GRC had asset sales resulting in proceeds of $515 million and a realized
loss of $55 million after tax. The asset sales were the result of current
liquidity needs in addition to taking advantage of favorable market
conditions for certain securities. Other charges of $32 million (unaudited)
after tax were also incurred in the third quarter.
During 1995, Closed Book GRC incurred a $68 million after tax loss from
operations. In addition, prior to the above actions the level of the 1995
loss was expected by management to decline by 10% to 25% in 1996 and 1997
with the losses having run off in their entirety by the year 2000. As a
result of the above actions, management expects that the comparable 1996
after tax loss will be in the range of $51 to $55 million, while after tax
losses in 1997 and 1998 will be reduced to the range of $10 to $20 million
per year. Losses from Closed Book GRC in years subsequent to 1998 are
expected to be minimal.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I - SUMMARY OF INVESTMENTS (OTHER THAN INVESTMENTS IN AFFILIATES)
AS OF DECEMBER 31, 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
FAIR REPORTED ON
COST VALUE BALANCE SHEET
-------------- ------------- -----------------
<S> <C> <C> <C>
FIXED MATURITIES
Bonds
U.S. Government and government agencies and authorities
Guaranteed and sponsored $502 $497 $497
Guaranteed and sponsored - asset backed 3,568 3,391 $3,391
States, municipalities and political subdivisions 201 202 $202
International governments 291 306 $306
Public utilities 949 976 $976
All other corporate 5,056 5,134 $5,134
All other corporate - asset backed 3,065 3,086 $3,086
Short-term investments 808 808 $808
---------- --------- ---------
TOTAL FIXED MATURITIES $14,440 $14,400 $14,400
EQUITY SECURITIES
Common stocks - industrial, miscellaneous and all other 61 63 63
TOTAL FIXED MATURITIES AND EQUITY SECURITIES $14,501 $14,463 $14,463
POLICY LOANS 3,381 3,381 3,381
MORTGAGE LOANS 265 265 265
OTHER INVESTMENTS 156 159 156
--------- -------- -------
TOTAL INVESTMENTS $18,303 $18,268 $18,265
--------- -------- -------
--------- -------- -------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Fair value for stocks and bonds approximate those quotations published by
applicable stock exchanges or are received from other reliable sources. The
fair value for short-term investments approximates cost.
Policy and mortgage loans carrying amounts approximate fair value.
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III - SUPPLEMENTAL INSURANCE INFORMATION
(in millions)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Amort. of
Deferred Future Other Premiums and Net Benefits, Claims Deferred Other
Policy Policy Policyholder Other Investment and Claim Adj. Policy Insurance
Acq. Costs Benefits Funds Considerations Income Expenses Acq. Costs Expenses
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
As of December 31, 1995 Year ended December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Individual Life and Annuity $2,088 $706 $4,371 $514 $283 $277 $176 $108
Asset Management Services 87 1,169 8,942 51 683 722 23 68
Specialty Insurance
Operations 13 498 9,285 922 351 423 0 816
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
TOTAL $2,188 $2,373 $22,598 $1,487 $1,317 $1,422 $199 $992
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
As of December 31, 1994 Year ended December 31, 1994
Individual Life and
Annuity $1,708 $582 $4,257 $492 $199 $334 $137 $80
Asset Management Services 101 845 10,160 39 750 695 8 48
Specialty Insurance
Operations 0 463 6,911 569 350 376 0 518
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
TOTAL $1,809 $1,890 $21,328 $1,100 $1,299 $1,405 $145 $646
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
As of December 31, 1993 Year ended December 31, 1993
Individual life and Annuity $1,237 $428 $3,535 $423 $172 $249 $97 $120
Asset Management Services 97 703 9,026 35 759 662 16 45
Specialty Insurance
Operations 0 528 5,673 289 136 135 0 272
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
TOTAL $1,334 $1,659 $18,234 $747 $1,067 $1,046 $113 $437
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Investment income is allocated to the reportable division based on each
division's share of investable funds or on a direct basis, where applicable,
including realized capital gains and losses.
Benefits, claims and claims adjustment expenses include the increase in
liability for future policy benefits and death, disability and other contract
benefits payments.
Other insurance expenses are allocated to the division based upon specific
identification, where possible.
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV - REINSURANCE
(in Millions)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Percentage of
Gross Ceded to Assumed from Net Amount Assumed
Amount Other Companies Other Companies Amount to Net Amount
-------- ----------------- ----------------- -------- ----------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
LIFE INSURANCE IN FORCE $182,716 $112,774 $26,996 $96,938 27.8%
PREMIUMS AND OTHER CONSIDERATIONS
Individual Life and Annuity $549 $163 $122 $508 24.0%
Asset Management Services 51 0 0 51 0.0%
Specialty Insurance Operations 632 162 452 922 49.0%
313 324 17 6 283.3%
-------- ----------------- ----------------- --------
TOTAL $1,545 $649 $591 $1,487 39.7%
-------- ----------------- ----------------- --------
-------- ----------------- ----------------- --------
YEAR ENDED DECEMBER 31, 1994
LIFE INSURANCE IN FORCE $136,929 $87,553 $35,016 $84,392 41.5%
PREMIUMS AND OTHER CONSIDERATIONS
Individual Life and Annuity $448 $71 $106 $483 21.9%
Asset Management Services 39 0 0 39 0.0%
Specialty Insurance Operations 521 140 188 569 33.0%
Accident and Health 308 304 5 9 55.6%
-------- ----------------- ----------------- --------
TOTAL $1,316 $515 $299 $1,100 27.2%
-------- ----------------- ----------------- --------
-------- ----------------- ----------------- --------
YEAR ENDED DECEMBER 31, 1993
LIFE INSURANCE IN FORCE $93,099 $71,415 $27,067 $48,751 55.5%
PREMIUMS AND OTHER CONSIDERATIONS
Individual Life and Annuity $417 $85 $91 $423 21.5%
Asset Management Services 25 0 0 25 0.0%
Specialty Insurance Operations 386 97 0 289 0.0%
Accident and Health 307 299 2 10 20.0%
-------- ----------------- ----------------- --------
TOTAL $1,135 $481 $93 $747 12.4%
-------- ----------------- ----------------- --------
-------- ----------------- ----------------- --------
</TABLE>
S-3
<PAGE>
PART II
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of ___ pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required by
paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of the Company is incorporated by
reference to the Initial Submission, to the Registration Statement
File No. 333-00245 dated January 17, 1996.
(A2) Not Applicable.
(A3a) Principal Underwriting Agreement is incorporated herein.
(A3b) Form of Selling Agreement is incorporated herein.
(A3c) Not applicable.
(A4) Not applicable.
(A5) Forms of Modified Single Premium Variable Life Insurance Policy and
Last Survivor Modified Single Premium Variable Life Insurance Policy
is incorporated by reference as stated above.
(A6a) Certificate of Incorporation of Hartford Life Insurance Company is
incorporated by reference as stated above.
(A6b) Bylaws of Hartford Life Insurance Company is incorporated by
reference as stated above.
(A7) Not Applicable.
<PAGE>
(A8) Not Applicable.
(A9) Not Applicable.
(A10) Form of Application for Modified Single Premium Variable Life
Insurance Policies and Last Survivor Modified Single Premium
Variable Life Insurance Policy is incorporated by reference as
stated above.
(A11) Memorandum describing transfer and redemption procedures is
incorporated by reference as stated above.
(2) Opinion and consent of Scott Richardson, Assistant Counsel is incorporated
by reference as stated above.
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1 (b) or (c) of Part I.
(4) Not applicable.
(5) Opinion and consent of Michael Winterfield, FSA, MAAA is incorporated by
reference as stated above.
(6) Consent of Arthur Andersen LLP Independent Public Accountants is
incorporated herein.
(7) Opinion and consent of Counsel is incorporated by reference as stated
above.
(8) Opinion and consent of Actuary is incorporated by reference as stated
above.
(9) Power of Attorney is incorporated by reference as stated above.
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
The undersigned Registrant hereby represents that the aggregate fees and
charges under the Policy are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by Hartford Life.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant
to authority conferred in that section.
UNDERTAKING ON INDEMNIFICATION
Article VIII of the By Laws of Hartford Life Insurance Company, a Connecticut
corporation, provides for indemnification of its officers, directors and
employees to the extent consistent with statutory requirements.
Connecticut General Laws Section 33-320a provides for indemnification of
officers, directors and employees of a corporation as follows:
b) Except as otherwise provided in this section, a corporation shall
indemnify any person made a party to any proceeding, other than an
action by or in the right of the corporation, by reason of the fact that
he, or the person whose legal representative he is, is or was a
shareholder, director, officer, employee or agent of the corporation, or
an eligible outside party, against judgments, fines, penalties, amounts
paid in settlement and reasonable expenses actually incurred by him, and
the person whose legal representative he is, in connection with such
proceeding. The corporation shall not so indemnify any such person
unless (1) such person, and the person whose legal representative he is,
was successful on the merits in the defense of any proceeding referred
to in this subsection, or(2) it shall be concluded as provided in
subsection (d) of this section that such person, and the person whose
legal representative he is, acted in good faith and in a manner he
reasonably believed to be in the best interests of the corporation or,
in the case of a person serving as a fiduciary of an employee benefit
plan or trust, either in the best interest of the corporation or in the
best interest of the participants and beneficiaries of such employee
benefit plan or trust and consistent with the provisions of such
employee benefit plan or trust and, with respect to any criminal action
or proceeding, that he had no reasonable cause to believe his conduct
was unlawful, or (3) the court, on application as provided in subsection
(e) of this section, shall have determined that in view of all the
circumstances such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine;
except that, in connection with an alleged claim based upon his purchase
or sale of securities of the corporation or of another enterprise, which
he serves or served at the request of the corporation, the corporation
shall only indemnify such person after the court shall have determined,
on application as provided in subsection (e) of this section, that in
view of all the circumstances such person is fairly and reasonably
entitled to be indemnified, and then for such amount as the court shall
determine. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person
did not act in good faith or in a manner which he did not reasonably
believe to be in the
<PAGE>
best interests of the corporation or of the participants and
beneficiaries of such employee benefit plan or trust and consistent with
the provisions of such employee benefit plan or trust, or, with respect
to any criminal action or proceeding, that he had reasonable cause to
believe that his conduct was unlawful.
(c) Except as otherwise provided in this section, a corporation shall
indemnify any person made a party to any proceeding, by or in the right
of the corporation, to procure a judgment in its favor by reason of the
fact that he, or the person whose legal representative he is, is or was
a shareholder, director, officer, employee or agent of the corporation,
or an eligible outside party, against reasonable expenses actually
incurred by him in connection with such proceeding in relation to
matters as to which such person, or the person whose legal
representative he is, is finally adjudged not to have breached his duty
to the corporation, or where the court, on application as provided in
subsection (e) of this section, shall have determined that in view of
all the circumstances such person is fairly and reasonably entitled to
be indemnified, and then for such amount as the court shall determine.
The corporation shall not so indemnify any such person for amounts paid
to the corporation, to a plaintiff or to counsel for a plaintiff in
settling or otherwise disposing of a proceeding, with or without court
approval; or for expenses incurred in defending a proceeding which is
settled or otherwise disposed of without court approval.
(d) The conclusion provided for in subsection (b) of this section may be
reached by any one of the following: (1) The board of directors of the
corporation by a consent in writing signed by a majority of those
directors who were not parties to such proceeding; (2)independent legal
counsel selected by a consent in writing signed by a majority of those
directors who were not parties to such proceeding; (3) in the case of
any employee or agent who is not an officer or director of the
corporation, the corporation's general counsel; or (4) the shareholders
of the corporation by the affirmative vote of at least a majority of the
voting power of shares not owned by parties to such proceeding,
represented at an annual or special meeting of shareholders, duly called
with notice of such purpose stated. Such person shall also be entitled
to apply to a court for such conclusion, upon application as provided in
subsection (e), even though the conclusion reached by any of the
foregoing shall have been adverse to him or to the person whose legal
representative he is.
(e) Where an application for indemnification or for a conclusion as provided
in this section is made to a court, it shall be made to the court in
which the proceeding is pending or to the superior court for the
judicial district where the principal office of the corporation is
located. The application shall be made in such manner and form as may
be required by the applicable rules of the court or, in the absence
thereof, by direction of the court. The court may also direct the
notice be given in such manner as it may require at the expense of the
corporation to the shareholders of the corporation and to such other
persons as the court may designate. In the case of an application to a
court in which a proceeding is pending in which the person seeking
indemnification is a party by reason of the fact that he, or the person
whose legal representative he is, is or was serving at the request of
the corporation as a director, partner, trustee, officer, employee or
agent of another
<PAGE>
enterprise, or as a fiduciary of an employee benefit plan or trust
maintained for the benefit of employees of any other enterprise, timely
notice of such application shall be given by such person to the
corporation.
(f) Expenses which may be indemnifiable under this section incurred in
defending a proceeding may be paid by the corporation in advance of the
final disposition of such proceeding as authorized by the board of
directors upon agreement by or on behalf of the shareholder, director,
officer, employee, agent or eligible outside party, or his legal
representative, to repay such amount if he is later found not entitled
to be indemnified by the corporation as authorized in this section.
(g) A corporation shall not indemnify any shareholder, director, officer,
employee, agent or eligible outside party, other than a shareholder,
director, officer, employee, agent or eligible outside party who is or
was serving at the request of the corporation as a director,officer,
partner, trustee, employee or agent of another enterprise, against
judgments, fines,penalties, amounts paid in settlement and expenses to
an extent either greater or less than that authorized in this section.
No provision made a part of the certificate or incorporation, the
bylaws, a resolution or shareholders or directors, an agreement, or
otherwise on or after October 1, 1982, shall be valid unless consistent
with this section. Notwithstanding the foregoing, the corporation may
procure insurance providing greater indemnification and may share the
premium cost with any shareholder, director, officer, employee, agent or
eligible outside party on such basis as may be agreed upon. The rights
and remedies provided in this section shall be exclusive.
The registrant hereby undertakes that insofar as indemnification for
liability arising under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of the registrant,
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the financ adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of1940, the Registrant certifies that it meets all of the
requirements pursuant to Rule 485(b) under the Securities Act of 1933 for
effectiveness of this Registration Statement and duly caused this
Registration Statement to be signed by the following persons in the
capacities and on the dates indicated.
HARTFORD LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT FIVE (Registrant)
By: /s/ Gregory A. Boyko
-----------------------------------------------
Gregory A. Boyko, Vice President and Controller
HARTFORD LIFE INSURANCE COMPANY (Depositor)
By: /s/ Gregory A. Boyko
------------------------------------------------
Gregory A. Boyko, Vice President and Controller
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and
on the dates indicated.
Donald R. Frahm, Chairman and
Chief Executive Officer, Director *
Bruce D. Gardner, Vice President,
Director * *By: /s/ Lynda Godkin
Joseph H. Gareau, Executive Vice --------------------------
President and Chief Investment Lynda Godkin
Officer, Director * Attorney-in-Fact
John P. Ginnetti, Executive Vice
President, Director *
Thomas M. Marra, Executive Vice Dated: October 11, 1996
President, Director * -------------------------
Leonard E. Odell, Jr., Senior
Vice President, Director *
Lowndes A. Smith, President,
Chief Operating Officer,
Director *
Raymond P. Welnicki, Senior Vice
President, Director *
Lizabeth H. Zlatkus, Vice President
Director *
<PAGE>
PRINCIPAL UNDERWRITER AGREEMENT
THIS AGREEMENT, dated as of the June 26, 1995, made by and between HARTFORD
LIFE INSURANCE COMPANY ("HLIC" or the "Sponsor"), a corporation organized and
existing under the laws of the State of Connecticut, and HARTFORD SECURITIES
DISTRIBUTION COMPANY, INC. ("HSD"), a corporation organized and existing
under the laws of the State of Connecticut,
WITNESSETH:
WHEREAS, the Board of Directors of HLIC has made provision for the
establishment of a separate account within HLIC in accordance with the laws
of the State of Connecticut, which separate account was organized and is
established and registered as a unit investment trust type investment company
with the Securities and Exchange Commission under the Investment Company Act
of 1940 ("1940 Act"), as amended, and which is designated Hartford Life
Insurance Company Separate Account Five (referred to as the "UIT"); and
WHEREAS, HSD offers to the public a certain Modified Single Premium Variable
Life Insurance Policy (the "Policy") issued by HLIC with respect to the UIT
units of interest thereunder which are registered under the Securities Act
of 1933 ("1933 Act"), as amended; and
WHEREAS, HSD has previously agreed to act as distributor in connection with
offers and sales of the Policy under the terms and conditions set forth in
this Principal Underwriter Agreement.
NOW THEREFORE, in consideration of the mutual agreements made herein, HLIC
and HSD agree as follows:
I.
HSD'S DUTIES
1. HSD, as successor principal underwriter to Hartford Equity Sales Company,
Inc. for the Policy, will use its best efforts to effect offers and sales
of the Policy through broker-dealers that are members of the National
Association of Securities Dealers, Inc.and whose registered
representatives are duly licensed as insurance agents of HLIC. HSD is
responsible for compliance with all applicable requirements of the 1933
Act, as amended, the Securities Exchange Act of 1934 ("1934 Act"), as
amended, and the 1940 Act, as amended, and the rules and regulations
relating to the sales and distribution of the Policy, the need for which
arises out of its duties as principal underwriter of said Policy and
relating to the creation of the UIT.
<PAGE>
2. HSD agrees that it will not use any prospectus, sales literature, or any
other printed matter or material or offer for sale or sell the Policy if
any of the foregoing in any way represent the duties, obligations, or
liabilities of HLIC as being greater than, or different from, such
duties, obligations and liabilities as are set forth in this Agreement,
as it may be amended from time to time.
3. HSD agrees that it will utilize the then currently effective prospectus
relating to the UIT's Policies in connection with its selling efforts.
As to the other types of sales materials, HSD agrees that it will use only
sales materials which conform to the requirements of federal and state
insurance laws and regulations and which have been filed, where necessary,
with the appropriate regulatory authorities.
4. HSD agrees that it or its duly designated agent shall maintain records of
the name and address of, and the securities issued by the UIT and held
by, every holder of any security issued pursuant to this Agreement, as
required by the Section 26(a)(4) of the 1940 Act, as amended.
5. HSD's services pursuant to this Agreement shall not be deemed to be
exclusive, and it may render similar services and act as an underwriter,
distributor, or dealer for other investment companies in the offering of
their shares.
6. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties hereunder on the part of
HSD, HSD shall not be subject to liability under a Policy for any act or
omission in the course, or connected with, rendering services hereunder.
II.
1. The UIT reserves the right at any time to suspend or limit the public
offering of the Policies upon 30 days' written notice to HSD, except
where the notice period may be shortened because of legal action taken by
any regulatory agency.
2. The UIT agrees to advise HSD immediately:
(a) Of any request by the Securities and Exchange Commission for amendment
of its 1933 Act registration statement or for additional information;
(b) Of the issuance by the Securities and Exchange Commission of any stop
order suspending the effectiveness of the 1933 Act registration
statement relating to units of interest issued with respect to the UIT
or of the initiation of any proceedings for that purpose;
<PAGE>
(c) Of the happening of any material event, if known, which makes untrue
any statement in said 1933 Act registration statement or which requires
a change therein in order to make any statement therein not misleading.
HLIC will furnish to HSD such information with respect to the UIT and the
Policies in such form and signed by such of its officers and directors
and HSD may reasonably request and will warrant that the statements
therein contained when so signed will be true and correct. HLIC will
also furnish, from time to time, such additional information regarding
the UIT's financial condition as HSD may reasonably request.
III.
COMPENSATION
In accordance with an Expense Reimbursement Agreement between HLIC and HSD,
HSD is obligated to reimburse HSD for all operating expenses associated with
the services provided on behalf of the UIT under this Principal Underwriter
Agreement. No additional compensation is payable in excess of that required
under the Expense Reimbursement Agreement.
IV.
RESIGNATION AND REMOVAL OF PRINCIPAL UNDERWRITER
HSD may resign as a Principal Underwriter hereunder, upon 120 days' prior
written notice to HLIC. However, such resignation shall not become effective
until either the UIT has been completed liquidated and the proceeds of the
liquidation distributed through HLIC to the Policyowners or a successor
Principal Underwriter has been designated and has accepted its duties.
V.
MISCELLANEOUS
1. This Agreement may not be assigned by any of the parties hereto without
the written consent of the other party.
2. All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage
prepaid, addressed as follows:
(a) If to HLIC - Hartford Life Insurance Company, P.O. Box 2999,
Hartford, Connecticut 06104.
(b) If to HSD - Hartford Securities Distribution Company, Inc., P.O. Box
2999, Hartford, Connecticut 06104.
<PAGE>
or to such other address as HSD or HLIC shall designate by written notice
to the other.
3. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall be deemed one
instrument, and an executed copy of this Agreement and all amendments
hereto shall be kept on file by the Sponsor and shall be open to
inspection any time during the business hours of the Sponsor.
4. This Agreement shall inure to the benefit of and be binding upon the
successor of the parties hereto.
5. This Agreement shall be construed and governed by and according to the
laws of the State of Connecticut.
6. This Agreement may be amended from time to time by the mutual agreement
and consent of the parties hereto.
7. (a) This Agreement shall become effective June 26, 1995 and shall continue
in effect for a period of two years from that date and, unless sooner
terminated in accordance with 7(b) below, shall continue in effect from
year to year thereafter provided that its continuance is specifically
approved at least annually by a majority of the members of the Board of
Directors of HLIC.
(b) This Agreement (1) may be terminated at any time, without the payment
of any penalty, either by a vote of a majority of the members of the
Board of Directors of HLIC on 60 days' prior written notice to HSD;
(2) shall immediately terminate in the event of its assignment and
(3) may be terminated by HSD on 60 days' prior written notice to HLIC,
but such termination will not be effective until HLIC shall have an
agreement with one or more persons to act as successor principal
underwriter of the Policies. HSD hereby agrees that it will continue
to act as successor principal underwriter until its successor or
successors assume such undertaking.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
(Seal) HARTFORD LIFE INSURANCE COMPANY
BY: /s/ Thomas M. Marra
---------------------------
Thomas M. Marra
Senior Vice President
Attest: HARTFORD SECURITIES DISTRIBUTION
COMPANY, INC.
/s/ Lynda Godkin BY: /s/ George Jay
- -------------------------- ---------------------------
Lynda Godkin George Jay
Secretary Controller
<PAGE>
BROKER-DEALER SALES AND
SUPERVISION AGREEMENT
This Broker-Dealer Sales and Supervision Agreement ("Agreement")
dated ____________________ is made by and between Hartford Life Insurance
Company and ITT Hartford Life and Annuity Insurance Company (referred to
collectively as "Companies"), Hartford Securities Distribution Company, Inc.
("Distributor"), a broker-dealer registered with the Securities and Exchange
Commission ("SEC") under the Securities and Exchange Act of 1934 ("1934 Act")
and a member of the National Association of Securities Dealers, Inc. ("NASD")
and __________________________________, who is also a broker-dealer registered
with the SEC under the 1934 Act and a member of the NASD ("Broker-Dealer"), and
any and all undersigned insurance agency affiliates ("Affiliates") of Broker-
Dealer.
WHEREAS, Companies offer certain variable life insurance policies and variable
and modified guaranteed annuity contracts which are deemed to be securities
under the Securities Act of 1933 (the "Registered Products"); and
WHEREAS, Companies wish to appoint the Broker-Dealer and Affiliates as agents of
the Companies for the solicitation and procurement of applications for
Registered Products; and
WHEREAS, Distributor is the principal underwriter of the Registered Products;
and
WHEREAS, Distributor anticipates having registered representatives who are
associated with Broker-Dealer ("Registered Representatives"), who are NASD
registered and are duly licensed under applicable state insurance law and
appointed as life insurance agents of Companies solicit and sell the Registered
Products; and
WHEREAS, Distributor acknowledges that the Broker-Dealer will provide certain
supervisory and administrative services to Registered Representatives who are
associated with the Broker-Dealer in connection with the solicitation, service
and sale of the Registered Products; and
WHEREAS, Broker-Dealer agrees to provide the aforementioned supervisory services
to its Registered Representatives who have been appointed by the Companies to
sell the Registered Products.
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties agree to the following:
I. APPOINTMENT OF THE BROKER-DEALER
The Companies hereby appoint Broker-Dealer as an agent of the Companies for
the solicitation and procurement of applications for the Registered
Products offered by the Companies, as outlined in Exhibit A attached
herein, in all states in which the Companies are authorized to do business
and in which Broker-Dealer or any Affiliates are properly licensed.
Distributor hereby authorizes Broker-Dealer under the securities laws to
supervise Registered Representatives in connection with the solicitation,
service and sale of the Registered Products.
II. AUTHORITY OF THE BROKER-DEALER
<PAGE>
Broker-Dealer has the authority to represent Distributor and Companies only
to the extent expressly granted in this Agreement. Broker-Dealer and any
Registered Representatives shall not hold themselves out to be employees of
Companies or Distributor in any dealings with the public. Broker-Dealer
and any Registered Representatives shall be independent contractors as to
Distributor or Companies. Nothing contained herein is intended to create a
relationship of employer and employee between Broker-Dealer and Distributor
or Companies or between Registered Representatives and Distributor or
Companies.
III. BROKER-DEALER REPRESENTATION
Broker-Dealer represents that it is a registered broker-dealer under the
1934 Act, a member in good standing of the NASD, and is registered as a
broker-dealer under state law to the extent necessary to perform the duties
described in this Agreement. Broker-Dealer represents that its Registered
Representatives, who will be soliciting applications for the Registered
Products, will be duly registered representatives associated with Broker-
Dealer and that they will be representatives in good standing with
accreditation as required by the NASD to sell the Registered Products.
Broker-Dealer agrees to abide by all rules and regulations of the NASD,
including its Rules of Fair Practice, and to comply with all applicable
state and federal laws and the rules and regulations of authorized
regulatory agencies affecting the sale of the Registered Products.
IV. BROKER-DEALER OBLIGATIONS
(a) TRAINING AND SUPERVISION
Broker-Dealer has full responsibility for the training and
supervision of all Registered Representatives associated with
Broker-Dealer and any other persons who are engaged directly or
indirectly in the offer or sale of the Registered Products. Broker-
Dealer shall, during the term of this Agreement, establish and
implement reasonable procedures for periodic inspection and
supervision of sales practices of its Registered Representatives.
If a Registered Representative ceases to be a Registered
Representative of Broker-Dealer, is disqualified for continued
registration or has their registration suspended by the NASD or
otherwise fails to meet the rules and standards imposed by Broker-
Dealer, Broker-Dealer shall immediately notify such Registered
Representative that he or she is no longer authorized to solicit
applications, on behalf of the Companies, for the sale of Registered
Products. Broker-Dealer shall immediately notify Distributor of
such termination or suspension.
(b) SOLICITATION
Broker-Dealer agrees to supervise its Registered Representatives so
that they will only solicit applications in states where the
Registered Products are approved for sale in accordance with
applicable state and federal laws. Broker-Dealer shall be notified
by Companies or Distributor of the availability of the Registered
Products in each state.
(c) NO CHURNING
Broker-Dealer and any Registered Representatives shall not make any
misrepresentation or incomplete comparison of products for the
purpose of inducing a policyholder to lapse, forfeit or surrender
its insurance in favor of purchasing a Registered Product.
(d) PROSPECTUS DELIVERY AND SUITABILITY REQUIREMENTS
Broker-Dealer shall ensure that its Registered Representatives
comply with the prospectus delivery requirements under the
Securities Act of 1933. In addition, Broker-Dealer shall ensure
that its Registered Representatives shall not make recommendations
to an applicant to purchase a Registered Product in the absence of
reasonable grounds to believe that the
2
<PAGE>
purchase is suitable for such applicant, as outlined in the
suitability requirements of the 1934 Act and the NASD Rules of Fair
Practice. Broker-Dealer shall ensure that each application
obtained by its Registered Representatives shall bear evidence of
approval by one of its principals indicating that the application
has been reviewed for suitability.
(e) PROMOTIONAL MATERIAL
Broker-Dealer and its Registered Representatives are not authorized
to provide any information or make any representation in connection
with this Agreement or the solicitation of the Registered Products
other than those contained in the prospectus or other promotional
material produced or authorized by Companies or Distributor.
Broker-Dealer agrees that if it develops any promotional material
for sales, training, explanatory or other purposes in connection
with the solicitation of applications for Registered Products,
including generic advertising and/or training materials which may be
used in connection with the sale of Registered Products, it will
obtain the prior written consent of Distributor, and where
appropriate, approval of Companies, such approval not to be
unreasonably withheld.
(f) RECORD KEEPING
Broker-Dealer is responsible for maintaining the records of its
Registered Representatives. Broker-Dealer shall maintain such other
records as are required of it by applicable laws and regulations.
The books, accounts and records maintained by Broker-Dealer that
relate to the sale of the Registered Products, or dealings with the
Companies, Distributor and/or Broker-Dealer shall be maintained so
as to clearly and accurately disclose the nature and details of each
transaction.
Broker-Dealer acknowledges that all the records maintained by
Broker-Dealer relating to the solicitation, service or sale of the
Registered Products subject to this Agreement, including but not
limited to applications, authorization cards, complaint files and
suitability reviews, shall be available to Companies and Distributor
upon request during normal business hours. Companies and
Distributor may retain copies of any such records which Companies
and Distributor, in their discretion, deems necessary or desirable
to keep.
(g) REFUND OF COMPENSATION
Broker-Dealer agrees to repay Companies the total amount of any
compensation which may have been paid to it within thirty (30)
business days of notice of the request for such refund should
Companies for any reason return any premium on a Registered Product
which was solicited by a Registered Representative of Broker-Dealer.
(h) PREMIUM COLLECTION
Broker-Dealer only has the authority to collect initial premiums
unless specifically set forth in the applicable commission schedule.
Unless previously authorized by Distributor, neither Broker-Dealer
nor any of its Registered Representatives shall have any right to
withhold or deduct any part of any premium it shall receive for
purposes of payment of commission or otherwise.
V. COMPANIES AND/OR DISTRIBUTOR OBLIGATIONS
(a) PROSPECTUS/PROMOTIONAL MATERIAL
Companies and/or Distributor will provide Broker-Dealer with
reasonable quantities of the currently effective prospectus for the
Registered Products and appropriate sales promotional
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material which has been filed with the NASD, and applicable state
insurance departments.
(b) COMPENSATION
Distributor will pay Broker-Dealer as full compensation for all
services rendered by Broker-Dealer under this Agreement, commissions
and/or service fees in the amounts, in the manner and for the period
of time as set forth in the Commission Schedules attached to this
Agreement or subsequently made a part hereof, and which are in
effect at the time such Registered Products are sold. The manner of
commission payments (I.E. fronted or trail) is not subject to change
after the effective date of a contract for which the compensation is
payable.
Distributor or Companies may change the Commission Schedules
attached to this Agreement at any time. Such change shall become
effective only when Distributor or Companies provide the Broker-
Dealer with written notice of the change. No such change shall
affect any contracts issued upon applications received by Companies
at Companies' Home Office prior to the effective date of such
change.
Distributor agrees to identify to Broker-Dealer for each such
payment, the name of the Registered Representative of Broker-Dealer
who solicited each contract covered by the payment. Distributor
will not compensate Broker-Dealer for any Registered Product which
is tendered for redemption after acceptance of the application. Any
chargebacks will be assessed against the Broker-Dealer of record at
the time of the redemption.
Distributor will only compensate Broker-Dealer or Affiliates, as
outlined below, for those applications accepted by Companies, and
only after receipt by Companies at Companies' Home Office or at such
other location as Companies may designate from time to time for its
various lines of business, of the required premium and compliance by
Broker-Dealer with any outstanding contract and prospectus delivery
requirements.
In the event that this Agreement terminates for fraudulent
activities or due to a material breach by the Broker-Dealer,
Distributor will only pay to Broker-Dealer or Affiliate commissions
or other compensation earned prior to discovery of events requiring
termination. No further commissions or other compensation shall
thereafter be payable.
(c) COMPENSATION PAYABLE TO AFFILIATES
If Broker-Dealer is unable to comply with state licensing
requirements because of a legal impediment which prohibits a non-
domiciliary corporation from becoming a licensed insurance agency or
prohibits non-resident ownership of a licensed insurance agency,
Distributor agrees to pay compensation to Broker-Dealer's
contractually affiliated insurance agency, a wholly-owned life
agency affiliate of Broker-Dealer, or a Registered Representative or
principal of Broker-Dealer who is properly state licensed. As
appropriate, any reference in this Agreement to Broker-Dealer shall
apply equally to such Affiliate. Distributor agrees to pay
compensation to an Affiliate subject to Affiliates agreement to
comply with the requirements of Exhibit B, attached hereto.
VI. TERMINATION
(a) This Agreement may be terminated by any party by giving thirty (30)
days' notice in writing to the other party.
(b) Such notice of termination shall be mailed to the last known address
of Broker-Dealer appearing on Companies' records, or in the event of
termination by Broker-Dealer, to the Home Office of Companies at
P.O. Box 2999, Hartford, Connecticut 06104-2999.
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(c) Such notice shall be an effective notice of termination of this
Agreement as of the time the notice is deposited in the United
States mail or the time of actual receipt of such notice if
delivered by means other than mail.
(d) This Agreement shall automatically terminate without notice upon the
occurrence of any of the events set forth below:
(1) Upon the bankruptcy or dissolution of Broker-Dealer.
(2) When and if Broker-Dealer commits fraud or gross negligence in the
performance of any duties imposed upon Broker-Dealer by this
Agreement or wrongfully withholds or misappropriates, for Broker-
Dealer's own use, funds of Companies, its policyholders or
applicants.
(3) When and if Broker-Dealer materially breaches this Agreement or
materially violates state insurance or Federal securities laws and
administrative regulations of a state in which Broker-Dealer
transacts business.
(4) When and if Broker-Dealer fails to obtain renewal of a necessary
license in any jurisdiction, but only as to that jurisdiction.
(e) The parties agree that on termination of this Agreement, any
outstanding indebtedness to Companies shall become immediately due
and payable.
VII. GENERAL PROVISIONS
(a) COMPLAINTS AND INVESTIGATIONS
Broker-Dealer shall cooperate with Distributor and Companies in the
investigation and settlement of all complaints or claims against
Broker-Dealer and/or Distributor or Companies relating to the
solicitation or sale of the Registered Products under this
Agreement. Broker-Dealer, Distributor and Companies each shall
promptly forward to the other any complaint, notice of claim or
other relevant information which may come into either one's
possession. Broker-Dealer, Distributor and Companies agree to
cooperate fully in any investigation or proceeding in order to
ascertain whether Broker-Dealer's, Distributor's or Companies'
procedures with respect to solicitation or servicing is consistent
with any applicable law or regulation.
In the event any legal process or notice is served on Broker-Dealer
in a suit or proceeding against Distributor or Companies, Broker-
Dealer shall forward forthwith such process or notice to Companies
at its Home Office in Hartford, Connecticut, by certified mail.
(b) WAIVER
The failure of Distributor or Companies to enforce any provisions of
this Agreement shall not constitute a waiver of any such provision.
The past waiver of a provision by Distributor or Companies shall not
constitute a course of conduct or a waiver in the future of that
same provision.
(c) INDEMNIFICATION
Broker-Dealer shall indemnify and hold Distributor and Companies
harmless from any liability, loss or expense sustained by Companies
or the Distributor (including reasonable attorney fees) on account
of any acts or omissions by Broker-Dealer or persons employed or
appointed by Broker-Dealer, except to the extent Companies' or
Distributor's acts or omissions caused such
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liability Indemnification by Broker-Dealer is subject to the
conditions that Distributor or Companies promptly notify Broker-
Dealer of any claim or suit made against Distributor or Companies,
and that Distributor or Companies allow Broker-Dealer to make such
investigation, settlement, or defense thereof as Broker-Dealer deems
prudent. Broker-Dealer expressly authorizes Companies to charge
against all compensation due or to become due to Broker-Dealer under
this Agreement any monies paid or liabilities incurred by Companies
under this Indemnification provision.
Distributor and Companies shall indemnify and hold Broker-Dealer
harmless from any liability, loss or expense sustained by the
Broker-Dealer (including reasonable attorney fees) on account of any
acts or omissions by Distributor or Companies, except to the extent
Broker-Dealer's acts or omissions caused such liability.
Indemnification by Distributor or Companies is subject to the
condition that Broker-Dealer promptly notify Distributor or
Companies of any claim or suit made against Broker-Dealer, and that
Broker-Dealer allow Distributor or Companies to make such
investigation, settlement, or defense thereof as Distributor or
Companies deems prudent.
(d) ASSIGNMENT
No assignment of this Agreement, or commissions payable hereunder,
shall be valid unless authorized in writing by Distributor. Every
assignment shall be subject to any indebtedness and obligation of
Broker-Dealer that may be due or become due to Companies and any
applicable state insurance regulations pertaining to such
assignments.
(e) OFFSET
Companies may at any time deduct, from any monies due under this
Agreement, every indebtedness or obligation of Broker-Dealer to
Companies or to any of its affiliates.
(f) CONFIDENTIALITY
Companies, Distributor and Broker-Dealer agree that all facts or
information received by any party related to a contract owner shall
remain confidential, unless such facts or information is required to
be disclosed by any regulatory authority or court of competent
jurisdiction.
(g) PRIOR AGREEMENTS
This Agreement terminates all previous agreements, if any, between
Companies, Distributor and Broker-Dealer. However, the execution of
this Agreement shall not affect any obligations which have already
accrued under any prior agreement.
(h) CHOICE OF LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut.
By executing this Broker-Dealer Sales and Supervision Agreement Specifications
Page, Broker-Dealer acknowledges that it has read this Agreement in its entirety
and is in agreement with the terms and conditions outlining the rights of
Distributor, Companies and Broker-Dealer and Affiliates under this Agreement.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement to be
effective as set forth above, upon the later of the execution date below or
approval of Distributor's registration by all appropriate state securities
commissions.
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BROKER-DEALER HARTFORD SECURITIES DISTRIBUTION
COMPANY INC.
By: By:
Title: Title:
Date: Date:
AFFILIATE (IF APPLICABLE) HARTFORD LIFE INSURANCE COMPANY
By: By:
Title: Title:
Date: Date:
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
By:
Title:
Date:
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EXHIBIT B
In accordance with Section V.(c) of the Broker-Dealer-Dealer Sales and
Supervision Agreement, no compensation is payable unless Broker-Dealer and
Registered Representative have first complied with all applicable state
insurance laws, rules and regulations. Distributor must ensure that any Broker-
Dealer with whom Distributor intends to enter into an Agreement and any
Registered Representatives meet the licensing and registration requirements of
the state(s) Broker-Dealer operates in and the NASD.
Companies are required by the Insurance Department in all 50 states to pay
compensation only to individuals and entities that are properly insurance
licensed and appointed. For registered products, Distributor must also comply
with NASD regulations that require Distributor to pay compensation to an NASD
registered Broker-Dealer. Distributor must comply with both state and NASD
requirements.
Distributor requires confirmation that Broker-Dealer holds current state
insurance licenses or markets insurance products through a contractual affiliate
or wholly owned life agency, which is properly insurance licensed. If Broker-
Dealer is properly state licensed then compensation may be paid to Broker-Dealer
in compliance with both state and NASD requirements.
If Broker-Dealer is not state insurance licensed and relies on the licensing of
a contractual affiliate or wholly owned life agency, the SEC has issued a number
of letters indicating that, under specific limited circumstances, it will take
"no action" against insurers (Distributor) paying compensation on registered
products to Broker-Dealer's contractual affiliate or wholly owned life agency.
At the request of Broker-Dealer, Distributor will provide copies of several of
these letters as well as a summary of their requirements.
If Broker-Dealer intends to rely on one of these "no-action" letters, legal
counsel for Broker-Dealer must confirm to Distributor in writing that all of the
circumstances of any one of the SEC no-action letters are applicable. Broker-
Dealer's counsel must summarize each point upon which the no-action relief was
granted and represent that Broker-Dealer's method of operation is identical or
meets the same criteria. Broker-Dealer's counsel must also confirm that, to the
best of counsel's knowledge, the SEC has not rescinded or modified its no-action
position since the letter was released.
The Broker-Dealer Sales and Supervision Agreement will not be finalized and no
new applications for registered products will be accepted or no new compensation
will be payable unless the appropriate proof of state licensing or no-action
relief is confirmed. In addition to a letter from Broker-Dealer's counsel,
copies of the following documentation is required:
-- life insurance licenses for all states in which Broker-Dealer holds
these licenses and intends to operate and/or;
-- life insurance licenses for any contractual affiliate or wholly owned
life agency; and
-- the SEC No-Action Letter that will be relied upon.
If you have any questions regarding these matters, please contact your Life
Licensing and Contracting representative.
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all reference to our Firm) included in or made a part of this
Registration Statement File No. 333-00245 on Form S-6 for Hartford Life
Insurance Company Separate Account Five.
/s/ Arthur Andersen LLP
Hartford, Connecticut
October 25, 1996
